Registration Nos. 33-64667
811-7439
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. _1_ [X]
Post-Effective Amendment No.___ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. _1_ [X]
(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.
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MANNING & NAPIER INSURANCE FUND, INC.
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CROSS REFERENCE SHEET
(as required by Rule 404(c))
PART A
N-1A
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Item No. Location
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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;
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CROSS REFERENCE SHEET (CONT'D)
(as required by Rule 404(c))
N-1A
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Item No. Location
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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
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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
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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.
<PAGE>
The purchaser of a Variable Contract should read this Prospectus in
conjunctionwith the prospectus for his or her Variable Contract.
The date of this Prospectus is XXXXXXXXXX, XXXX.
<PAGE>
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TABLE OF CONTENTS
PAGE
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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
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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
<PAGE> 1
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
<PAGE> 2
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
<PAGE> 3
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
<PAGE> 4
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
<PAGE> 5
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
<PAGE> 6
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
<PAGE> 7
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
<PAGE> 8
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.
<PAGE> 9
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
<PAGE> 10
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.
<PAGE> 11
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 a 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
<PAGE> 12
supervision of the overall business affairs of the Fund including supervision
of service providers to the Fund 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
$5.5 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 EXPENSE CAP
<S> <C> <C>
Moderate Growth Portfolio 1.00%* 1.2%
Growth Portfolio 1.00%* 1.2%
Equity Portfolio 1.00%* 1.2%
Small Cap Portfolio 1.00%* 1.2%
Bond Portfolio .50% .85%
Maximum Horizon Portfolio 1.00%* 1.2%
</TABLE>
*This fee is higher than the mean fee paid by all other mutual funds.
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
<PAGE> 13
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 each Portfolios compliance with applicable regulations, each
Portfolio has 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 Fund
shares and is located at the same address as the Advisor and the Fund. The
Distributor receives no fee from the Fund 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 Portfolio outstanding.
The value of each 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
<PAGE> 14
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
computations 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.
<PAGE> 15
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.
<PAGE> 16
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> 17
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> 18
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> 19
PART B
<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-1
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS OF THE FUND B-1
RISK AND INVESTMENT POLICIES B-2
INVESTMENT RESTRICTIONS B-15
MANAGEMENT B-17
NET ASSET VALUE B-20
REDEMPTION OF SHARES B-20
TAXES B-21
SPECIAL CONSIDERATIONS B-24
DIVIDENDS AND DISTRIBUTIONS B-24
PERFORMANCE INFORMATION B-24
SHAREHOLDER COMMUNICATIONS B-25
ORGANIZATION AND CAPITALIZATION B-25
FINANCIAL STATEMENTS B-26
</TABLE>
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 Portfolios (the
"Portfolios") 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.
<PAGE>
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 each Portfolio may or may not be listed on a national
securities exchange. A Portfolio 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
<PAGE> B-2
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
<PAGE> B-3
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 is established with the Fund's custodian with securities consisting of
cash or U.S. Government or other high grade liquid debt obligations equal to
the amount of the 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
the Funds 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
<PAGE> B-4
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 series 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
<PAGE> B-5
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.
Each Portfolio will pay brokerage and other transaction costs to write and
purchase options on securities, including any closing transactions which the
Portfolio may execute. A 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 Portfolio.
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 Portfolio'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. A 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. Each Portfolio
intends 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
Portfolio's portfolio. Each 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 the Funds custodian in the amount
prescribed.
<PAGE> B-6
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 the Funds 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 Funds 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 Portfolio'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 Portfolio realizes a gain; if it is more, the
Portfolio realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Portfolio realizes a gain; if it is
less, the Portfolio realizes 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.
<PAGE> B-7
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's
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 Portfolio'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 Portfolio'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
<PAGE> B-8
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
series 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 series 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, a Portfolio 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.
<PAGE> B-9
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 Portfolio 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
<PAGE> B-10
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 Fund's 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 will
not 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 Portfolio'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 Portfolio'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
<PAGE> B-11
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
series 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 series 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
<PAGE> B-12
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.
<PAGE> B-13
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, Inc. ("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 funds 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 series 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 series are less likely than other mortgage
pass-throughs to be prepaid prior to their stated maturity. Although some of
the 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.
<PAGE> B-14
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 Portfolio. 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 Portfolio. Any investment
<PAGE> B-15
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 may 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 funds 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
<PAGE> B-16
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 Corporation; 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>
<S> <C> <C>
Position Principal occupations
Name, address and age with Fund During past five years
- ------------------------ ----------- ------------------------------------
B. Reuben Auspitz* President & Executive Vice President, Manning &
1100 Chase Square Director Napier Advisors, Inc. since 1983;
Rochester, NY 14604 Vice President and Director, Manning
DOB: 3/18/47 & Napier Fund, Inc. since 1985;
President and Director, Manning &
Napier Investor Services, Inc. since
1990; Director, President and
Treasurer, Manning & Napier Advisory
Advantage Corporation since 1990;
Director, Manning & Napier Leveraged
Investment Co., since 1994;
Director, Chairman and Treasurer,
Exeter Trust Co., since 1994
Member, Fiduciary Services, L.L.C.
since 1995; Member, Manning & Napier
Associates, L.L.C. since 1995;
Member, Manning & Napier Capital
Co., L.L.C. since 1995
<PAGE> B-17
Martin Birmingham Director Trustee, The Freedom Forum since
Lincoln Tower, 16th 1980; Director, Manning & Napier
Floor Fund, Inc., since 1994; Director
Rochester, NY 14604 Emeritus, ACC Corporation since 1994
DOB: 10/30/21
Stephen B. Ashley Director Chairman and Chief Executive
925 First Federal Plaza Officer, Sibley Real Estate
Rochester, NY 14614 Services, Inc. since 1975;Chairman
DOB: 03/22/40 and Chief Executive Officer, Sibley
Mortgage Corp. since 1975; Director,
Genesee Corp. since 1987; Director,
Hahn Automotive since 1994;
Director, Fannie Mae since 1995;
Director, Manning & Napier Fund,
Inc. since 1996
Harris H. Rusitzky Director President, Blimpie of Central New
One Grove Street York and The Greening Group since
Pittsford, NY 14534 1994; Director, Manning & Napier
DOB: 1/9/35 Fund, Inc., since 1985;
Formerly Director and Corporate
Executive, Serv-Rite Corporation
from 1965-1994
Peter L. Faber* Director Former Partner, Kaye, Scholer,
1211 Avenue of the Fierman, Hays & Handler from 1984-
Americas 1995; Director, Manning & Napier
New York, New York 10036 Fund, Inc. since 1987; Partner,
DOB: 4/29/38 McDermott, Will & Emery since 1995
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Michael J. Magiera Vice Investment Analyst, Manning & Napier
1100 Chase Square President 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 Compliance Officer, Manning & Napier
1100 Chase Square Secretary Advisors, Inc. since 1984; Corporate
Rochester, NY 14604 Secretary & Compliance Officer,
DOB: 7/26/59 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 & Senior Tax Associate, Coopers &
1100 Chase Square Chief Financial Lybrand, L.L.P. from 1990-1994; Tax
Rochester, NY 14604 Officer Manager, Investors Bank & Trust,
DOB: 1/29/68 from 1/94 - 7/94; Mutual Fund Chief
Financial Officer, Manning & Napier
Advisors, Inc. since 1994
<PAGE> B-18
</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 Portfolio 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. Each 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 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 are the property of the
Advisor for copyright and all other purposes and that therefore such words 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.
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.
<PAGE> B-19
CUSTODIAN AND INDEPENDENT ACCOUNTANT
The custodian is Boston Safe Deposit and Trust 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 Portfolios 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 is
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
<PAGE> B-20
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
<PAGE> B-21
income tax on any of its net investment income or net realized capital gains
that are distributed to the separate accounts 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 gains , 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
Portfolio 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 Portfolio.
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
<PAGE> B-22
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 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 Fund 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 Funds 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 as 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 Portfolio.
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
<PAGE> B-24
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, the 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 Portfolio. For example, a change
in a fundamental investment policy for the Manning & Napier Growth Portfolio
would be voted upon only by shareholders of that Portfolio. Additionally,
approval of the Investment Advisory Agreement is a matter to be determined
separately by each Portfolio. Approval by the shareholders of one Portfolio
is effective as to that Portfolio. 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
<PAGE> B-25
such other different rights as the Directors may prescribe and to terminate
any Portfolio of the Fund.
FINANCIAL STATEMENTS
A Statement of Assets and Liabilities of each of the Portfolios as of June
17, 1996, and the report of Coopers & Lybrand LLP, Independent Accountants,
with respect thereto, is set forth below:
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES
JUNE 17, 1996
Manning & Napier Insurance Fund, Inc.
Moderate Maximum
Growth Growth Equity Small Cap Bond Horizon
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
---------- ---------- ---------- ---------- ---------- ----------
ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Cash $ 16,667 $ 16,667 $ 16,667 $ 16,667 $ 16,667 $ 16,667
---------- ---------- ---------- ---------- ---------- ----------
TOTAL ASSETS 16,667 16,667 16,667 16,667 16,667 16,667
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS $ 16,667 $ 16,667 $ 16,667 $ 16,667 $ 16,667 $ 16,667
========== ========== ========== ========== ========== ==========
NET ASSETS CONSIST OF:
Capital Stock $ 17 $ 17 $ 17 $ 17 $ 17 $ 17
Additional paid-in-capital 16,650 16,650 16,650 16,650 16,650 16,650
---------- ---------- ---------- ---------- ---------- ----------
TOTAL NET ASSETS $ 16,667 $ 16,667 $ 16,667 $ 16,667 $ 16,667 $ 16,667
========== ========== ========== ========== ========== ==========
SHARES OUTSTANDING 1,667 1,667 1,667 1,667 1,667 1,667
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
$ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
========== ========== ========== ========== ========== ==========
</TABLE>
<PAGE> B-26
NOTES TO THE STATEMENT OF ASSETS AND LIABILITIES
1. ORGANIZATION
The Manning & Napier Insurance Fund, Inc. (the "Corporation) operates as a
series company and is comprised of six separate funds: 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 (each a "Fund;"
collectively the "Funds"). The Corporation is organized as a Maryland
Corporation and is registered under the Investment Company Act of 1940, as
amended. Each Fund is classified as a diversified, open-ended management
investment company.
The Funds have had no operations to date other than those relating to its
organization and registration of shares, and the sale and issuance of all the
outstanding shares to Manning & Napier Advisors, Inc., the Funds' investment
advisor (the "Advisor").
2. TRANSACTIONS WITH AFFILIATES
The Funds have an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which each Fund pays the Advisor a fee,
computed daily and payable monthly. For Manning & Napier Moderate Growth
Portfolio, Manning & Napier Growth Portfolio, Manning & Napier Equity
Portfolio, Manning & Napier Small Cap Portfolio, and Manning & Napier Maximum
Horizon Portfolio the annualized rate is 1.0% of the Fund's average daily net
assets. For Manning & Napier Bond Portfolio, the rate is 0.50% of the Fund's
average daily net assets.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Fund with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise
maintain the Fund's organization. The Advisor also provides the Fund with
necessary office space and portfolio accounting and bookkeeping services. The
salaries of all officers of the Fund and of all Directors who are "affiliated
persons" of the Fund or of the Advisor, and all personnel of the Fund or of
the Advisor performing services relating to research, statistical and
investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary, pay
other expenses of the Fund in order to maintain total expenses for the Fund at
no more than 1.20% of average daily net assets each year for Manning & Napier
Moderate Growth Portfolio, Manning & Napier Growth Portfolio, Manning & Napier
Equity Portfolio, Manning & Napier Small Cap Portfolio, and Manning & Napier
Maximum Horizon Portfolio; and 0.85% of average daily net assets each year for
Manning & Napier Bond Portfolio. The fee waiver and assumption of expenses by
the Advisor is voluntary and may be terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. These services are provided at no additional
cost to the Funds.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Fund.
<PAGE> B-27
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Manning & Napier Insurance Fund,
Inc.:
We have audited the accompanying statement of assets and liabilities of
Manning & Napier Insurance Fund, Inc. (comprising, respectively, 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
"Funds"), as of June 17, 1996. This financial statement is the responsibility
of the Fund's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of assets and
liabilities is free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statement. Our procedures included confirmation of cash held by the
custodian as of June 17, 1996. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in al material respects, the financial position of each of
the respective Funds constituting Manning & Napier Insurance Fund, Inc. as of
June 17, 1996, in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 18, 1996
<PAGE> B-28
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
The Financial Statements filed as part of this Registration
Statement are as follows:
Statement of Assets and Liabilities as of June 17, 1996
Report of Independent Accountants - Coopers & Lybrand LLP
(B) EXHIBITS
(1) (a) Articles of Incorporation. Incorporated by reference to Registrant's
Registration Statement on Form N-1A filed on December 1, 1995.
(b) Articles Supplementary. Filed herewith.
(2) By-laws. Incorporated by reference to Registrant's Registration Statement
on Form N-1A filed on December 1, 1995.
(3) Not Applicable
(4) Not Applicable
(5) Form of Investment Advisory Agreement. Filed herewith.
(6) Form of Distribution Agreement. Filed herewith.
(7) Not Applicable
(8) Form of Custodian Agreement. Filed herewith.
(9) Form of Transfer Agent Agreement between the Registrant and
Manning & Napier Advisors, Inc. Filed herewith.
(10) Opinion of Counsel. Filed herewith.
(11) Consent of Independent Accountants. Filed herewith.
(12) Not Applicable
(13) Purchase Agreement. Filed herewith.
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(27) Financial Data Schedules. Filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
None
<PAGE>
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-ADVISORS
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>
<S> <C> <C>
Name & Principal Positions & Offices Positions & Offices
Business Address with Distributor with Registrant
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 Compliance Officer Compliance Officer
Rochester, NY 14604
George Nobilski 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.
<PAGE>
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 27th day
of June, 1996.
<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
- ----------------------- 6-27-96
B. Reuben Auspitz and Director
/s/Michael J. Magiera Officer
- ----------------------- 6-27-96
Michael J. Magiera
/s/Martin F. Birmingham Director
- ----------------------- 6-27-96
Martin F. Birmingham
/s/Harris H. Rusitzky Director
- ----------------------- 6-27-96
Harris H. Rusitzky
/s/Stephen B. Ashley Director 6-27-96
- -----------------------
Stephen B. Ashley
/s/Peter L. Faber Director
- ----------------------- 6-27-96
Peter L. Faber
/s/Timothy P. Mullaney Treasurer
- ----------------------- 6-27-96
Timothy P. Mullaney
</TABLE>
<PAGE>
EXHIBITS
TO
FORM N-1A
FOR
MANNING & NAPIER INSURANCE FUND, INC.
<PAGE>
INDEX TO EXHIBITS
EX-99.B(1)(b) Articles Supplementary
EX-99.B(5) Form of Investment Advisory Agreement
EX-99.B(6) Form of Distribution Agreement
EX-99.B(8) Form of Custodian Agreement
EX-99.B(9) Form of Transfer Agent Agreement between the Registrant and
Manning & Napier Advisors, Inc.
EX-99.B(10) Opinion of Counsel
EX-99.B(11) Consent of Independent Accountants
EX-99.B(13) Purchase Agreement
EX-27 Financial Data Schedules
<PAGE>
<PAGE>
EXHIBIT EX-99.B(1)(b)
ARTICLES SUPPLEMENTARY
<PAGE>
MANNING & NAPIER INSURANCE FUND, INC.
ARTICLES SUPPLEMENTARY TO THE CHARTER
Manning & Napier Insurance Fund, Inc., a Maryland corporation
having its principal office in Baltimore City, Maryland (hereinafter called
the Corporation), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation, at a meeting
duly convened and held on December 13, 1995, adopted resolutions classifying:
Fifty million (50,000,000) of the unissued shares of the common stock of the
Corporation, par value $.01 per share, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000) as Class A Common Stock; Fifty million
(50,000,000) of the unissued shares of the common stock of the Corporation,
par value $.01 per share, with an aggregate par value of Five Hundred Thousand
Dollars ($500,000) as Class B Common Stock; Fifty million (50,000,000) of the
unissued shares of the common stock of the Corporation, par value $.01 per
share, with an aggregate par value of Five Hundred Thousand Dollars ($500,000)
as Class C Common Stock; Fifty million (50,000,000) of the unissued shares of
the common stock of the Corporation, par value $.01 per share, with an
aggregate par value of Five Hundred Thousand Dollars ($500,000) as Class D
Common Stock; Fifty million (50,000,000) of the unissued shares of the common
stock of the Corporation, par value $.01 per share, with an aggregate par
value of Five Hundred Thousand Dollars ($500,000) as Class E Common Stock;
Fifty million (50,000,000) of the unissued shares of the common stock of the
Corporation, pare value $.01 per share, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000) as Class F Common Stock, by setting before
the issuance of such shares, the preferences, rights, voting powers,
restrictions, limitations as to dividends, qualification or terms of
redemption of, and the conversion or other rights, thereof as hereinafter set
forth.
SECOND: A description of the shares so classified with the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption as set or changed by the Board of Directors of the Corporation is
as follows:
A description, preference, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms
and conditions of redemption of each class of common stock of the Corporation
are set forth in Article Fifth of the Corporations Articles of Incorporation,
as amended, and have not been changed by the Board of Directors of the
Corporation.
THIRD: The shares aforesaid have been duly classified by the
Board of Directors pursuant to authority and power contained in the charter of
the Corporation.
IN WITNESS WHEREOF, Manning & Napier Insurance Fund, Inc. Has
caused these presents to be signed in its name and on its behalf by its Vice
President and attested by its Secretary on January 17, 1996.
Manning & Napier Insurance Fund, Inc.
By: /s/Michael J. Magiera
Michael J. Magiera, Vice President
Attest:
/s/Barbara Lapple
Barbara Lapple, Secretary
THE UNDERSIGNED, Vice President of Manning & Napier Insurance Fund,
Inc., who executed on behalf of said Corporation the foregoing Articles
Supplementary to the Charter, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said corporation, and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/Michael J. Magiera
Michael J. Magiera
<PAGE>
EXHIBIT EX-99.B(5)
FORM OF INVESTMENT ADVISORY AGREEMENT
<PAGE>
MANNING & NAPIER INSURANCE FUND, INC.
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 13th day of December, 1995, by and between MANNING &
NAPIER INSURANCE FUND, INC. (the "Fund"), a corporation organized under the
laws of the State of Maryland, and MANNING & NAPIER ADVISORS, INC. (the
"Advisors").
W I T N E S S E T H:
In consideration of the mutual promises and agreements herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as
follows:
1. In General
The Advisor agrees, all as more fully set forth herein, to act as
managerial investment advisor to the Fund with respect to the investment of
its assets and to supervise and arrange the purchase and sale of securities
held in each portfolio of the Fund and generally administer the affairs of the
Fund.
2. Duties and Obligations of the Advisor
with respect to Management of the Fund
(a) Subject to the succeeding provisions of this section and subject
to the direction and control of the Board of Directors of the Fund, the
Advisor shall:
(i) Decide what securities shall be purchased or sold by each
portfolio of the Fund and when; and
(ii) Arrange for the purchase and the sale of securities held in each
portfolio of the Fund by placing purchase and sale orders for the Fund.
(b) Any investment purchases or sales made by the Advisor shall at
all times conform to, and be in accordance with, any requirements imposed by:
(1) the provisions of the Investment Company Act of 1940, as amended (the
"Act") and of any rules or regulations in force thereunder; (2) any other
applicable provisions of law; (3) the provisions of the Articles of
Incorporation and By-Laws of the Fund as amended from time to time; (4) any
policies and determinations of the Board of Directors of the Fund; and (5) the
fundamental policies of the Fund, as reflected in its registration statement
under the Act, or as amended by the shareholders of the Fund.
(c) The Advisor shall also administer the affairs of the Fund and, in
connection therewith, shall be responsible for (i) maintaining the Fund's
books and records (other than financial or accounting books and records or
those maintained by the Fund's custodian, transfer agent or accounting
services agent); (ii) overseeing the Fund's insurance relationships; (iii)
preparing for the Fund (or assisting counsel and/or auditors in the
preparation of) all required tax returns, proxy statements and reports to the
Fund's shareholders and Directors and reports to and other filings with the
Securities and Exchange Commission and any other governmental agency (the Fund
agreeing to supply or to cause to be supplied to the Advisor all necessary
financial and other information in connection with the foregoing); (iv)
preparing such applications and reports as may be necessary to register or
maintain the Fund's registration and/or the registration of its shares under
the securities or "blue-sky" laws of the various states (the Fund agreeing to
pay all filing fees or other similar fees in connection therewith); (v)
responding to all inquiries or other communications of shareholders, if any,
which are directed to the Advisor, or, if any such inquiry or communication is
more properly to be responded to by the Fund's transfer agent, custodian or
accounting services agent, the negotiation of agreements in relation thereto
and the supervision of the performance of such agreements; and (vi)
authorizing and directing any of the Advisor's directors, officers and
employees who may be elected as directors or officers of the Fund to serve in
the capacities in which they are elected. All services to be furnished by the
Advisor under this Agreement may be furnished through the medium of any such
directors, officers or employees of the Advisor.
<PAGE>
(d) The Advisor shall give the Fund the benefit of its best judgment
and effort in rendering services hereunder, 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. Nothing herein contained
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 this Agreement.
(e) Nothing in this Agreement shall prevent the Advisor or any
affiliated person (as defined in the Act) of the Advisor from acting as
investment advisor or manager and/or principal underwriter for any other
person, firm or corporation and shall not in any way limit or restrict the
Advisor or any such affiliated person from buying, selling or trading any
securities or hedging instruments for its or their own accounts or for the
accounts of others from whom it or they may be acting, provided, however, that
the Advisor expressly represents that it will undertake no activities which,
in its judgment, will adversely affect the performance of its obligations to
the Fund under this Agreement. The Fund agrees that the words "Manning &
Napier" in its name are derived from the name of the Advisor and are the
property of the Advisor for copyright and all other purposes and that
therefore such words 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".
(f) 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 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.
3. Broker-Dealer Relationships
The Advisor is responsible for decisions to buy and sell securities for
the Fund, broker-dealer selection, and negotiation of brokerage commission
rates. The Advisor's primary consideration in effecting a securities
transaction will be execution at the best available securities price. 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. In selecting a broker-dealer to execute each
particular transaction, the Advisor will take the following into
consideration: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
Accordingly, the price to the Fund in any transaction may be less favorable
than that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Directors of the Fund may determine,
the Advisor shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides brokerage or research
services to the Advisor an amount of commission for effecting a portfolio
transaction in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction, if the Advisor determines
in good faith that such amount of commission was reasonable in relation to the
earch services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Advisor's overall responsibilities with
respect to the Fund. 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,
<PAGE>
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. In this Agreement,
the terms "broker" and "broker-dealer" shall include futures commission
merchants.
4. Allocation of Expenses
The Advisor agrees that it will furnish the Fund, at the Advisor's
expense, with all office space and facilities, and equipment and clerical
personnel necessary for carrying out its duties under this Agreement. The
Advisor will also pay all compensation of all Directors, officers and
employees of the Fund who are affiliated persons of the Advisor. All costs and
expenses not expressly assumed by the Advisor under this Agreement shall be
paid by the Fund, including, but not limited to (i) interest and taxes; (ii)
brokerage commissions; (iii) insurance premiums; (iv) compensation and
expenses to its Directors other than those affiliated with the Advisor; (v)
legal and audit expenses; (vi) fees and expenses of the Fund's custodian,
shareholder servicing or transfer agent and accounting services agent; (vii)
expenses incident to the issuance of its shares on the payment of, or
reinvestment of, dividends; (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 which the Fund may have to indemnify its
officers and Directors with respect thereto.
5. Compensation of the Advisor
The Fund agrees to pay the Advisor and the Advisor agrees to accept as
full compensation for all services rendered by the Advisor hereunder, an
annual management fee payable monthly and computed on the net asset value of
the Fund as of the close of business each business day at the annual rates
included on Schedule A to this Agreement.
6. Duration and Termination
(a) This Agreement shall go into effect on the date set forth above
and shall, unless terminated as hereinafter provided, continue in effect until
the first meeting of the Fund's shareholders and if approved at that meeting,
thereafter from year to year, but only so long as such continuance is
specifically approved at least annually by the Fund's Board of Directors,
including the vote of a majority of the Directors who are not parties to this
Agreement or "interested persons" (as defined in the Act) of any such party
cast in person at a meeting called for the purpose of voting of such approval,
or by the vote of the holders of a "majority" (as so defined) of the
27 outstanding voting securities of the Fund and by such a vote of the
Directors.
(b) This Agreement may be terminated by the Advisor at any time
without penalty upon giving the Fund sixty (60) days' written notice (which
notice may be waived by the Fund) and may be terminated by the Fund at any
time without penalty upon giving the Advisor sixty (60) days' written notice
(which notice may be waived by the Advisor), provided that such termination by
the Fund shall be directed or approved by the vote of the holders of a
majority (as defined in the Act) of the voting securities of the Fund at the
time outstanding and entitled to vote. This Agreement shall automatically
terminate in the event of its assignment (as so defined).
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by duly authorized persons and their seals to be
hereunto affixed, all as of the day and year first above written.
MANNING & NAPIER INSURANCE FUND, INC.
By: /s/B. Reuben Auspitz
B. Reuben Auspitz, President
<PAGE>
MANNING & NAPIER ADVISORS, INC.
By:/s/William Manning
William Manning, President
SCHEDULE A
FEE SCHEDULE
The Fund agrees to pay the Advisor as full compensation for all services
rendered by the Advisor hereunder, an annual management fee payable monthly
and computed on the net asset value of the Fund as of the close of business
each business day at the annual rates listed below:
For the Moderate Growth Portfolio, Growth Portfolio, Equity Portfolio, Small
Cap Portfolio, and the Maximum Horizon Portfolio, the Fund will pay the
Advisor an annual management fee payable monthly and computed on the net asset
value of the Fund as of the close of business each business day at the annual
rate of 1% of such net asset value. For the Bond Portfolio, the Fund will pay
the Advisor an annual management fee payable monthly and computed on the net
asset value of the Fund as of the close of business each business day at the
annual rate of .50% of such net asset value.
<PAGE>
EXHIBIT EX-99B(6)
FORM OF DISTRIBUTION AGREEMENT
<PAGE>
MANNING & NAPIER INSURANCE FUND, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of the 13th day of December, 1995 by and
between Manning & Napier Insurance Fund, Inc., a Maryland corporation (the
"Fund"), and Manning & Napier Investor Services, Inc., a New York corporation
(the "Broker").
R E C I T A L S
WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Broker is registered as a broker dealer under the Securities
Exchange Act of 1934, as amended; and
WHEREAS, the Fund and the Broker desire to enter an agreement to provide
distribution services for the common stock shares of the Fund's Portfolios
(collectively, the "Portfolio Shares") on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. Appointment. The Fund hereby appoints the Broker as Distributor of
the Portfolio Shares for the period and on the terms set forth in this
Agreement. The Broker accepts such appointment and agrees to render the
services herein set forth.
2. Duties as Distributor. The Broker shall give the Fund the benefit
of its best judgment, efforts and facilities in rendering its services as
Distributor. The Broker will act as Distributor subject to the supervision of
the Fund's Board of Directors and the following understanding: (i) nothing
herein contained shall be deemed to relieve or deprive the Board of Directors
of the Fund of its responsibility for and control of the conduct of the Fund's
affairs; and (ii) in all matters relating to the performance of this
Agreement, the Broker will act in conformity with the Articles, By-laws and
Prospectus and SAI of the Fund and with the instructions and directions of the
Fund's Board of Directors and will conform to and comply with the requirements
of the 1940 Act and all other applicable Federal or state laws and
regulations. In carrying out its obligations hereunder, the Broker shall:
(a) receive orders for the purchase of the Portfolio Shares, accept or
reject such orders on behalf of the Fund in accordance with the Fund's
currently effective Prospectus and SAI and transmit such orders as are so
accepted to the Fund's or its transfer agent as promptly as possible;
(b) receive requests for redemption from holders of the Portfolio Shares
and transmit such redemption requests to the Fund's or its transfer agent as
promptly as possible; and
(c) respond to inquiries from the holders of the Portfolio Shares
concerning the status of their accounts with the Fund.
3. Distribution of Portfolio Shares. The Broker shall be exclusive
distributor of the Portfolio Shares. It is mutually understood and agreed that
the Broker does not undertake to sell all or any specific portion of Portfolio
Shares. The Fund shall not sell any of its Portfolio shares except through the
Broker. Notwithstanding the provisions of the foregoing sentence:
(a) the Fund may issue its Portfolio Shares at their net asset value to
any shareholder of the Fund purchasing such shares with dividends or other
cash distributions received from the Fund pursuant to an offer made to all
shareholders of the Portfolio Shares;
(b) the Broker may, and when requested by the Fund shall, suspend its
efforts to effectuate sales of the Portfolio Shares at any time when in the
opinion of the Broker or of the Fund no sales should be made because of market
or other economic considerations or abnormal circumstances of any kind;
(c) the Fund may withdraw the offering of the Portfolio Shares: (i) at
any time with the consent of the Broker, or (i) without such consent when so
required by the provisions of any statute or of any order, rule or regulation
of any governmental body having jurisdiction; and
<PAGE>
(d) the price at which the Portfolio Shares may be sold (the "offering
price") shall be the net asset value per share, which shall be determined in
the manner established from time to time by the Fund's Board of Directors and
as set forth in the Fund's then current Prospectus and SAI.
4. Control by Board of Directors. Any distribution activities
undertaken by the Broker pursuant to this Agreement, as well as any other
activities undertaken by the Broker on behalf of the Fund pursuant thereto,
shall at all times be subject to any applicable directives of the Board of
Directors of the Fund.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Broker shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Registration Statement of the Fund under the
Securities Act of 1933 and the 1940 Act;
(c) the provisions of the Articles of the Fund;
(d) the provisions of the By-laws of the Fund;
(e) the rules and regulations of the National Association of Securities
Dealers, Inc. ("NASD") and all other self-regulatory organizations applicable
to the sale of investment company shares; and
(f) any other applicable provisions of state and Federal law.
6. Expenses. The expenses connected with the Portfolio shares shall
be allocable between the Fund and the Broker as follows:
(a) The Broker shall furnish, at its expense and without cost to the
Fund, the services of personnel to the extent that such services are required
to carry out its obligations under this Agreement.
(b) The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund (other than those expressly assumed by the Fund's investment
advisor), including, without limitation: (i) interest and taxes; (ii)
brokerage commissions; (iii) insurance premiums; (iv) compensation and
expenses to its Directors other than those affiliated with the Advisor; (v)
legal and audit expenses; (vi) fees and expenses of the Fund's custodian,
shareholder servicing or transfer agent and accounting services agent; (vii)
expenses incident to the issuance of its shares on the payment of, or
reinvestment of, dividends; (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 which the Fund may have to indemnify its
officers and Directors with respect thereto; and all other charges and costs
of the Fund's operation unless otherwise explicitly provided herein.
7. Delegation of Responsibilities. The Broker may, but shall not be
under any duty to, perform services on behalf of the Fund which are not
required by this Agreement upon the request of the Fund's Board of Directors.
Such services will be performed on behalf of the Fund and the Broker's charge
in rendering such services may be billed monthly to the Fund. Payment or
assumption by the Broker of any Fund expense that the Broker is not required
to pay or assume under this Agreement shall not relieve the Broker of any of
its obligations to the Fund nor obligate the Broker to pay or assume any
similar Fund expenses on any subsequent occasions.
8. Compensation. The Broker shall receive no compensation for the
services to be rendered and the expenses assumed by it pursuant to this
Agreement.
<PAGE>
9. Non-Exclusivity. The services of the Broker to the Fund are not to
be deemed to be exclusive, and the Broker shall be free to render distribution
or other services to others (including other investment companies) and to
engage in other activities. It is understood and agreed that officers or
directors of the Broker may serve as officers or directors of the Fund, and
that officers or directors of the Fund may serve as officers or directors of
the Broker to the extent permitted by law; and that the officers and directors
of the Broker are not prohibited from engaging in any other business activity
or from rendering services to any other person, or from serving as partners,
officers, trustees or directors of any other firm, trust or corporation,
including other investment companies.
10. Term. This Agreement shall become effective at the close of
business on the date hereof and shall continue in force and effect, subject to
Section 12 hereof, for two years from the date hereof.
11. Renewal. Following the expiration of its initial two-year term,
this Agreement shall continue in force and effect from year to year, provided
that such continuance is specifically approved at least annually:
(a)(i) by the Fund's Board of Directors or (ii) by the vote of a majority
of the outstanding voting securities of the Portfolio Shares (as defined in
Section 2(a)(42) of the 1940 Act, and
(b) by the affirmative vote of a majority of the directors who are not
parties to this Agreement or "interested persons" (as defined by the 1940 Act)
of any such party and have no direct or indirect financial interest in the
operation of this Agreement or any agreement related to this Agreement, by
votes cast in person at a meeting specifically called for the purpose of
voting on such approval.
Notwithstanding any provision of this paragraph to the contrary, if the
holders of any one series of the Portfolio Shares of the Fund fail to approve
this Agreement, the Broker may continue to serve as distributor to the other
Portfolio Shares of the Fund whose holders approved this Agreement and, in the
manner and to the extent permitted by the 1940 Act, to the series of Portfolio
Shares of the Fund which did not approve this Agreement.
12. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by vote of the Fund's Board of Directors
or by vote of a majority of the members of the Board of Directors of the Fund
who are not "interested persons" of the Fund and have no direct or indirect
financial interest in the operation of this Agreement or in any agreement
related to this Agreement, by vote of a majority of the Portfolio Shares of
the Fund's outstanding voting securities (as defined in Section 2(a)(42) of
the 1940 Act), or by the Broker, on sixty (60) days' written notice to the
other party. The notice provided for herein may be waived by either party.
This Agreement shall automatically terminate in the event of its assignment,
the term "assignment" having the meaning defined in Section 2(a)(4) of the
1940 Act.
13. Amendments. This Agreement may be amended by the parties hereto
only if such amendment is specifically approved (i) by the Board of Directors
of the Fund or by the vote of a majority of outstanding voting securities of
the Portfolio Shares, and (ii) by a majority of those directors who are not
parties to this Agreement or "interested persons" of any such party, which
vote must be cast in person at a meeting called for the purpose of voting on
such approval.
14. Liability of the Distributor. In the performance of its duties
hereunder, the Broker shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to
ensure the accuracy of all services performed under this Agreement, but the
Broker shall not be liable for any act or omission which loss does not
constitute willful misfeasance, bad faith or gross negligence on the part of
the Broker or reckless disregard by the Broker of its duties under this
Agreement.
15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
Until further notice to the other party, it is agreed that the address of the
Fund for this purpose and that of the Broker shall be 1100 Chase Square,
Rochester, New York 14604.
<PAGE>
16. Questions of Interpretation. This Agreement shall be implemented
and continued in a manner consistent with the provisions of the 1940 Act. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act,
shall be resolved by reference to such term or provision of the 1940 Act and
to interpretations thereof, if any, by the United States Courts or, in the
absence of any controlling decision of any such court, by rules, regulations
or orders of the SEC issued pursuant to said Act. In addition, where the
effect of a requirement of the 1940 reflected in any provision of this
Agreement is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
MANNING & NAPIER INSURANCE FUND, INC.
By:/s/B. Reuben Auspitz
B. Reuben Auspitz, President
MANNING & NAPIER INVESTOR SERVICES, INC.
By:/s/B. Reuben Auspitz
B. Reuben Auspitz, President
<PAGE>
EXHIBIT EX-99.B(8)
FORM OF CUSTODIAN AGREEMENT
<PAGE>
FORM OF
CUSTODY AGREEMENT
AGREEMENT dated as of May 31, 1996, between Manning & Napier
Insurance Fund, Inc., a corporation organized under the laws of the
State of Maryland (the "Fund"), having its principal office and place
of business at 1100 Chase Square, Rochester, New York 14604, and
BOSTON SAFE DEPOSIT AND TRUST COMPANY (the "Custodian"), a
Massachusetts trust company with its principal place of business at
One Boston Place, Boston, Massachusetts 02108.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
(a) Affiliated Person shall have the meaning of the term within Section
2(a)3 of the 1940 Act.
(b) "Authorized Person" shall be deemed to include the Chairman of the
Board of Directors, the President, and any Vice President, the Secretary, the
Treasurer or any other person, whether or not any such person is an officer or
employee of the Fund, duly authorized by the Board of Directors of the Fund
to give Oral Instructions and Written Instructions on behalf of the Fund and
listed in the certification annexed hereto as Appendix A or such other
certification as may be received by the Custodian from time to time.
(c) "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency Securities, its successor or
successors and its nominee or nominees.
(d) Business Day shall mean any day on which the Fund, the Custodian, the
Book-Entry System and appropriate clearing corporation(s) are open for
business.
(e) "Certificate" shall mean any notice, instruction or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf of
the Fund by any two Authorized Persons or any two officers thereof.
(f) "Articles of Incorporation" shall mean the Articles of Incorporation
of the Fund dated November 1, 1995 as the same may be amended from time to
time.
<PAGE>
(g) "Depository" shall mean The Depository Trust Company (DTC), a clearing
agency registered with the Securities and Exchange Commission under Section
17(a) of the Securities Exchange Act of 1934, as amended, its successor or
successors and its nominee or nominees, in which the Custodian is hereby
specifically authorized to make deposits. The term "Depository" shall further
mean and include any other person to be named in a Certificate authorized to
act as a depository under the 1940 Act, its successor or successors and its
nominee or nominees.
(h) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and principal
by the government of the United States or agencies or instrumentalities
thereof ("U.S. government securities"), commercial paper, bank certificates of
deposit, bankers' acceptances and short-term corporate obligations, where the
purchase or sale of such securities normally requires settlement in federal
funds on the same day as such purchase or sale, and repurchase and reverse
repurchase agreements with respect to any of the foregoing types of
securities.
(i) "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from a person reasonably believed by the Custodian to be an
Authorized Person.
(j) "Prospectus" shall mean the Fund's current prospectus and statement
of additional information relating to the registration of the Fund's Shares
under the Securities Act of 1933, as amended.
(k) "Shares" refers to shares of common stock, $0.01 par value per share,
of the Fund.
(l) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodities interests and investments from time to time owned by
the Fund.
(m) "Transfer Agent" shall mean the person which performs the transfer
agent, dividend disbursing agent and shareholder servicing agent functions for
the Fund.
(n) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the Custodian
to be an Authorized Person by any system, including, without limitation,
electronic transmissions, facsimile and telex.
(o) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time.
Appointment of Custodian.
(a) The Fund hereby constitutes and appoints the Custodian as custodian of
all the Securities and monies at the time owned by or in the possession of the
Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
3. Compensation.
(a) The Fund will compensate the Custodian for its services rendered under
this Agreement in accordance with the fees set forth in the Fee Schedule
annexed hereto as Schedule A and incorporated herein. Such Fee Schedule
does not include out-of-pocket disbursements of the Custodian for which the
Custodian shall be entitled to bill separately. Out-of-pocket disbursements
shall include, but shall not be limited to, the items specified in the
Schedule of Out-of-Pocket charges annexed hereto as Schedule B and
incorporated herein, which schedule may be modified by the Custodian upon not
less than thirty days prior written notice to the Fund.
(b) Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule A of this Agreement a revised Fee Schedule, dated
and signed by an Authorized Officer or authorized representative of each party
hereto.
<PAGE>
(c) The Custodian will bill the Fund as soon as practicable after the end
of each calendar month, and said billings will be detailed in accordance with
Schedule A, as amended from time to time. The Fund will promptly pay to the
Custodian the amount of such billing.
4. Custody of Cash and Securities.
(a) Receipt and Holding of Assets.
The Fund will deliver or cause to be delivered to the Custodian all Securities
and monies owned by it at any time during the period of this Agreement. The
Custodian will not be responsible for such Securities and monies until
actually received by it. The Fund shall instruct the Custodian from time to
time in its sole discretion, by means of Written Instructions, or, in
connection with the purchase or sale of Money Market Securities, by means of
Oral Instructions confirmed in writing in accordance with Section 11(i) hereof
or Written Instructions, as to the manner in which and in what amounts
Securities and monies are to be deposited on behalf of the Fund in the
Book-Entry System or the Depository; provided, however, that prior to the
deposit of Securities of the Fund in the Book-Entry System or the Depository,
including a deposit in connection with the settlement of a purchase or sale,
the Custodian shall have received a Certificate specifically approving such
deposits by the Custodian in the Book-Entry System or the Depository.
Securities and monies of the Fund deposited in the Book-Entry System or the
Depository will be represented in accounts which include only assets held by
the Custodian for customers, including but not limited to accounts for which
the Custodian acts in a fiduciary or representative capacity.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain a separate account for the Fund and shall credit to the separate
account all monies received by it for the account of such Fund and shall
disburse the same only:
1. In payment for Securities purchased for the Fund, as provided in
Section 5 hereof;
2. In payment of dividends or distributions with respect to the Shares, as
provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect to the Shares,
as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by the Fund, as provided
in Section 8 hereof;
5. Pursuant to Written Instructions setting forth the name and address of
the person to whom the payment is to be made, the amount to be paid and the
purpose for which payment is to be made, provided that in the event of
disbursements pursuant to this sub-section 4(b)(5), the Fund shall indemnify
and hold the Custodian harmless from any claims or losses arising out of such
disbursements in reliance on such Written Instructions which it, in good
faith, believes to be received from duly Authorized Persons; or
6. In payment of fees and in reimbursement of the expenses and liabilities
of the Custodian attributable to the Fund, as provided in Sections 11(h) and
11(j).
(c) Confirmation and Statements. Promptly after the close of business
on each day, the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of the Fund during said day.
Where securities purchased by the Fund are in a fungible bulk of securities
registered in the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Depository or the Book-Entry System,
the Custodian shall by book entry or otherwise identify the quantity of those
securities belonging to the Fund. At least monthly, the Custodian shall
furnish the Fund with a detailed statement of the Securities and monies held
for the Fund under this Agreement.
(d) Registration of Securities and Physical Separation. All Securities
held for the Fund which are issued or issuable only in bearer form, except
such Securities as are held in the Book-Entry System, shall be held by the
Custodian in that form; all other Securities held for the Fund may be
registered in the name of the Fund, in the name of the Custodian, in the name
<PAGE>
of any duly appointed registered nominee of the Custodian as the Custodian may
from time to time determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or nominees.
The Fund reserves the right to instruct the Custodian as to the method of
registration and safekeeping of the Securities. The Fund agrees to furnish to
the Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository,
any Securities which it may hold for the account of the Fund and which may
from time to time be registered in the name of the Fund. The Custodian shall
hold all such Securities specifically allocated to the Fund which are not held
in the Book-Entry System or the Depository in a separate account for the Fund
in the name of the Fund physically segregated at all times from those of any
other person or persons.
(e) Segregated Accounts. Upon receipt of a Written Instruction the
Custodian will establish segregated accounts on behalf of the Fund to hold
liquid or other assets as it shall be directed by a Written Instruction and
shall increase or decrease the assets in such segregated accounts only as it
shall be directed by subsequent Written Instruction.
(f) Collection of Income and Other Matters Affecting Securities. Unless
otherwise instructed to the contrary by a Written Instruction, the Custodian
by itself, or through the use of the Book-Entry System or the Depository with
respect to Securities therein deposited, shall with respect to all Securities
held for the Fund in accordance with this Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon all Securities
which may mature or be called, redeemed, retired or otherwise become payable.
Notwithstanding the foregoing, the Custodian shall have no responsibility to
the Fund for monitoring or ascertaining any call, redemption or retirement
dates with respect to put bonds which are owned by the Fund and held by the
Custodian or its nominees. Nor shall the Custodian have any responsibility or
liability to the Fund for any loss by the Fund for any missed payments or
other defaults resulting therefrom; unless the Custodian received timely
notification from the Fund specifying the time, place and manner for the
presentment of any such put bond owned by the Fund and held by the Custodian
or its nominee. The Custodian shall not be responsible and assumes no
liability to the Fund for the accuracy or completeness of any notification the
Custodian may furnish to the Fund with respect to put bonds;
3. Surrender Securities in temporary form for definitive Securities;
4. Execute any necessary declarations or certificates of ownership under
the Federal income tax laws or the laws or regulations of any other taxing
authority now or hereafter in effect; and
5. Hold directly, or through the Book-Entry System or the Depository with
respect to Securities therein deposited, for the account of the Fund all
rights and similar Securities issued with respect to any Securities held by
the Custodian hereunder for the Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt of a
Written Instruction and not otherwise, except for subparagraphs 5, 6, 7, and 8
of this section 4(g) which may be effected by Oral or Written Instructions,
the Custodian, directly or through the use of the Book-Entry System or the
Depository, shall:
1. Execute and deliver or cause to be executed and delivered to such
persons as may be designated in such Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the authority of the Fund as
owner of any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for the Fund in
exchange for other Securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
3. Deliver or cause to be delivered any Securities held for the Fund to
any protective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and receive and hold
under the terms of this Agreement in the separate account for the Fund such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
<PAGE>
4. Make or cause to be made such transfers or exchanges of the assets
specifically allocated to the separate account of the Fund and take such other
steps as shall be stated in Written Instructions to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
5. Deliver Securities upon sale of such Securities for the account of the
Fund pursuant to Section 5;
6. Deliver Securities upon the receipt of payment in connection with any
repurchase agreement related to such Securities entered into by the Fund;
7. Deliver Securities owned by the Fund to the issuer thereof or its agent
when such Securities are called, redeemed, retired or otherwise become
payable; provided, however, that in any such case the cash or other
consideration is to be delivered to the Custodian. Notwithstanding the
foregoing, the Custodian shall have no responsibility to the Fund for
monitoring or ascertaining any call, redemption or retirement dates with
respect to the put bonds which are owned by the Fund and held by the Custodian
or its nominee. Nor shall the Custodian have any responsibility or liability
to the Fund for any loss by the Fund for any missed payment or other default
resulting therefrom; unless the Custodian received timely notification from
the Fund specifying the time, place and manner for the presentment of any such
put bond owned by the Fund and held by the Custodian or its nominee. The
Custodian shall not be responsible and assumes no liability to the Fund for
the accuracy or completeness of any notification the Custodian may furnish to
the Fund with respect to put bonds;
8. Deliver Securities for delivery in connection with any loans of
Securities made by the Fund but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund which may be in
the form of cash or U.S. government securities or aletter of credit;
9. Deliver Securities for delivery as security in connection with any
borrowings by the Fund requiring a pledge of Fund assets, but only against
receipt of amounts borrowed;
10. Deliver Securities upon receipt of Written Instructions from the Fund
for delivery to the Transfer Agent or to the holders of Shares in connection
with distributions in kind, as may be described from time to time in the
Fund's Prospectus, in satisfaction of requests by holders of Shares for
repurchase or redemption;
11. Deliver Securities as collateral in connection with short sales by the
Fund of common stock for which the Fund owns the stock or owns preferred
stocks or debt securities convertible or exchangeable, without payment or
further consideration, into shares of the common stock sold short;
12. Deliver Securities for any purpose expressly permitted by and in
accordance with procedures described in the Fund's Prospectus; and
13. Deliver Securities for any other proper business purpose, but only
upon receipt of, in addition to Written Instructions, a certified copy of a
resolution of the Board of Directors signed by an Authorized Person and
certified by the Secretary of the Fund, specifying the Securities to be
delivered, setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper business purpose, and naming the person
or persons to whom delivery of such Securities shall be made.
(h) Endorsement and Collection of Checks, Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders for the
payment of money received by the Custodian for the account of the Fund.
5. Purchase and Sale of Investments of the Fund.
(a) Promptly after each purchase of Securities for the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, a Written Instruction, and (ii) with
<PAGE>
respect to each purchase of Money Market Securities, either a Written
Instruction or Oral Instruction, in either case specifying with respect to
each purchase: (1) the name of the issuer and the title of the Securities;
(2) the number of shares or the principal amount purchased and accrued
interest, if any; (3) the date of purchase and settlement; (4) the purchase
price per unit; (5) the total amount payable upon such purchase; (6) the name
of the person from whom or the broker through whom the purchase was made, if
any; (7) whether or not such purchase is to be settled through the Book-Entry
System or the Depository; and (8) whether the Securities purchased are to be
deposited in the Book-Entry System or the Depository. The Custodian shall
receive the Securities purchased by or for the Fund and upon receipt of
Securities shall pay out of the monies held for the account of the Fund the
total amount payable upon such purchase, provided that the same conforms to
the total amount payable as set forth in such Written or Oral Instruction.
(b) Promptly after each sale of Securities of the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, a Written Instruction, and (ii) with respect to
each sale of Money Market Securities, either Written Instruction or Oral
Instructions, in either case specifying with respect to such sale: (1) the
name of the issuer and the title of the Securities; (2) the number of shares
or principal amount sold, and accrued interest, if any; (3) the date of sale;
(4) the sale price per unit; (5) the total amount payable to the Fund upon
such sale; (6) the name of the broker through whom or the person to whom the
sale was made; and (7) whether or not such sale is to be settled through the
Book-Entry System or the Depository. The Custodian shall deliver or cause to
be delivered the Securities to the broker or other person designated by the
Fund upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable to the Fund as set
forth in such Written or Oral Instruction. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to it, and
may deliver Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
6. Lending of Securities.
If the Fund is permitted by the terms of the Articles of Incorporation
and as disclosed in its Prospectus to lend securities, within 24 hours after
each loan of Securities, the Fund shall deliver to the Custodian a Written
Instruction specifying with respect to each such loan: (a) the name of the
issuer and the title of the Securities; (b) the number of shares or the
principal amount loaned; (c) the date of loan and delivery; (d) the total
amount to be delivered to the Custodian, and specifically allocated against
the loan of the Securities, including the amount of cash collateral and the
premium, if any, separately identified; (e) the name of the broker, dealer or
financial institution to which the loan was made; and (f) whether the
Securities loaned are to be delivered through the Book-Entry System or the
Depository.
Promptly after each termination of a loan of Securities, the Fund shall
deliver to the Custodian a Written Instruction specifying with respect to each
such loan termination and return of Securities: (a) the name of the issuer
and the title of the Securities to be returned; (b) the number of shares or
the principal amount to be returned; (c) the date of termination; (d) the
total amount to be delivered by the Custodian (including the cash collateral
for such Securities minus any offsetting credits as described in said Written
Instruction); (e) the name of the broker, dealer or financial institution from
which the Securities will be returned; and (f) whether such return is to be
effected through the Book-Entry System or the Depository. The Custodian shall
receive all Securities returned from the broker, dealer or financial
institution to which such Securities were loaned and upon receipt thereof
shall pay the total amount payable upon such return of Securities as set forth
in the Written Instruction. Securities returned to the Custodian shall be
held as they were prior to such loan.
7. Payment of Dividends or Distributions.
(a) The Fund shall furnish to the Custodian the vote of the Board of
Directors of the Fund certified by the Secretary (i) authorizing the
declaration of distributions on a specified periodic basis and authorizing the
Custodian to rely on Oral or Written Instructions specifying the date of the
declaration of such distribution, the date of payment thereof, the record date
as of which shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of the record date and the
<PAGE>
total amount payable to the Transfer Agent on the payment date, or (ii)
setting forth the date of declaration of any distribution by the Fund, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders
of record as of the record date and the total amount payable to the Transfer
Agent on the payment date.
(b) Upon the payment date specified in such vote, Oral Instructions or
Written Instructions, as the case may be, the Custodian shall pay out the
total amount payable to the Transfer Agent of the Fund.
8. Sale and Redemption of Shares of the Fund.
(a) Whenever the Fund shall sell any Shares, the Fund shall deliver or
cause to be delivered to the Custodian a Written Instruction duly specifying:
1. The number of Shares sold, trade date, and price; and
2. The amount of money to be received by the Custodian for the sale of
such Shares.
The Custodian understands and agrees that Written Instructions may be
furnished subsequent to the purchase of Shares and that the information
contained therein will be derived from the sales of Shares as reported to the
Fund by the Transfer Agent.
(b) Upon receipt of money from the Transfer Agent, the Custodian shall
credit such money to the separate account of the Fund.
(c) Upon issuance of any Shares in accordance with the foregoing
provisions of this Section 8, the Custodian shall pay all original issue or
other taxes required to be paid in connection with such issuance upon the
receipt of a Written Instruction specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares are redeemed, the
Fund shall cause the Transfer Agent to promptly furnish to the Custodian
Written Instructions, specifying:
1. The number of Shares redeemed; and
2. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information contained in such
Written Instructions will be derived from the redemption of Shares as reported
to the Fund by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the
number of Shares received by the Transfer Agent for redemption and that such
Shares are valid and in good form for redemption, the Custodian shall make
payment to the Transfer Agent of the total amount specified in a Written
Instruction issued pursuant to paragraph (d) of this Section 8.
(f) Notwithstanding the above provisions regarding the redemption of
Shares, whenever such Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the Custodian,
unless otherwise instructed by a Written Instruction shall, upon receipt of
advice from the Fund or its agent stating that the redemption is in good form
for redemption in accordance with the check redemption procedure, honor the
check presented as part of such check redemption privilege out of the monies
specifically allocated to the Fund in such advice for such purpose.
9. Indebtedness.
(a) The Fund will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money for temporary
administrative or emergency purposes using Securities as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian Written Instructions stating with respect to each such
borrowing: (1) the name of the bank; (2) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan agreement; (3) the
<PAGE>
time and date, if known, on which the loan is to be entered into (the
"borrowing date"); (4) the date on which the loan becomes due and payable; (5)
the total amount payable to the Fund on the borrowing date; (6) the market
value of Securities to be delivered as collateral for such loan, including the
name of the issuer, the title and the number of shares or the principal amount
of any particular Securities; (7) whether the Custodian is to deliver such
collateral through the Book-Entry System or the Depository; and (8) a
statement that such loan is in conformance with the 1940 Act and the Fund's
Prospectus.
(b) Upon receipt of the Written Instruction referred to in subparagraph
(a) above, the Custodian shall deliver on the borrowing date the specified
collateral and the executed promissory note, if any, against delivery by the
lending bank of the total amount of the loan payable, provided that the same
conforms to the total amount payable as set forth in the Written Instruction.
The Custodian may, at the option of the lending bank, keep such collateral in
its possession, but such collateral shall be subject to all rights therein
given the lending bank by virtue of any promissory note or loan agreement.
The Custodian shall deliver as additional collateral in the manner directed by
the Fund from time to time such Securities as may be specified in Written
Instruction to collateralize further any transaction described in this Section
9. The Fund shall cause all Securities released from collateral status to be
returned directly to the Custodian, and the Custodian shall receive from time
to time such return of collateral as may be tendered to it. In the event that
the Fund fails to specify in Written Instruction all of the information
required by this Section 9, the Custodian shall not be under any obligation to
deliver any Securities. Collateral returned to the Custodian shall be held
hereunder as it was prior to being used as collateral.
10. Persons Having Access to Assets of the Fund.
(a) No trustee or agent of the Fund, and no officer, director, employee or
agent of the Fund's investment adviser, of any sub-investment adviser of the
Fund, or of the Fund's administrator, shall have physical access to the assets
of the Fund held by the Custodian or be authorized or permitted to withdraw
any investments of the Fund, nor shall the Custodian deliver any assets of the
Fund to any such person. No officer, director, employee or agent of the
Custodian who holds any similar position with the Fund's investment adviser,
with any sub-investment adviser of the Fund or with the Fund's administrator
shall have access to the assets of the Fund.
(b) Nothing in this Section 10 shall prohibit any duly authorized officer,
employee or agent of the Fund, or any duly authorized officer, director,
employee or agent of the investment adviser, of any sub-investment adviser of
the Fund or of the Fund's administrator, from giving Oral Instructions or
Written Instructions to the Custodian or executing a Certificate so long as it
does not result in delivery of or access to assets of the Fund prohibited by
paragraph (a) of this Section 10.
11. Concerning the Custodian.
(a) Standard of Conduct. Notwithstanding any other provision of this
Agreement, neither the Custodian nor its nominee shall be liable for any loss
or damage, including counsel fees, resulting from its action or omission to
act or otherwise, except for any such loss or damage arising out of the gross
negligence or willful misconduct of the Custodian or any of its employees,
sub-custodians or agents. The Custodian may, with respect to questions of
law, apply for and obtain the advice and opinion of counsel to the Fund or of
its own counsel, at the expense of the Fund, and shall be fully protected with
respect to anything done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall not be liable to the Fund for any
loss or damage resulting from the use of the Book-Entry System or the
Depository.
(b) Limit of Duties. Without limiting the generality of the foregoing,
the Custodian shall be under no duty or obligation to inquire into, and shall
not be liable for:
1. The validity of the issue of any Securities purchased by the Fund, the
legality of the purchase thereof, or the propriety of the amount paid
therefor;
2. The legality of the sale of any Securities by the Fund or the propriety
of the amount for which the same are sold;
<PAGE>
3. The legality of the issue or sale of any Shares, or the sufficiency of
the amount to be received therefor;
4. The legality of the redemption of any Shares, or the propriety of the
amount to be paid therefor;
5. The legality of the declaration or payment of any distribution of the
Fund;
6. The legality of any borrowing for temporary or emergency administrative
purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable for,
or considered to be the Custodian of, any money, whether or not represented by
any check, draft, or other instrument for the payment of money, received by it
on behalf of the Fund until the Custodian actually receives and collects such
money directly or by the final crediting of the account representing the
Fund's interest in the Book-Entry System or the Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall not be under
any duty or obligation to take action to effect collection of any amount due
to the Fund from the Transfer Agent nor to take any action to effect payment
or distribution by the Transfer Agent of any amount paid by the Custodian to
the Transfer Agent in accordance with this Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be under
any duty or obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default, or if payment
is refused after due demand or presentation, unless and until (a) it shall be
directed to take such action by a Certificate and (b) it shall be assured to
its satisfaction of reimbursement of its costs and expenses in connection with
any such action.
(f) Appointment of Agents and Sub-Custodians. The Custodian may appoint
one or more banking institutions, including but not limited to banking
institutions located in foreign countries, to act as Depository or
Depositories or as sub-custodian or as sub-custodians of Securities and monies
at any time owned by the Fund. The Custodian shall use reasonable care in
selecting a Depository and/or sub-custodian located in a country other than
the United States ("Foreign Sub-Custodian"), and shall oversee the maintenance
of any Securities or monies of the Fund by any Foreign Sub-Custodian. In
addition, the Custodian shall hold the Fund harmless from, and indemnify the
Fund against, any loss that occurs as a result of the failure of any Foreign
Sub-Custodian to exercise reasonable care with respect to the safekeeping of
Securities and monies of the Fund. Notwithstanding the generality of the
foregoing, however, the Custodian shall not be liable for any losses resulting
from or caused by events or circumstances beyond its reasonable control,
including, but not limited to, losses resulting from nationalization,
expropriation, devaluation, revaluation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting the Fund's property; or acts of war,
terrorism, insurrection or revolution; or any other similar act or event
beyond the Custodian's control.
(g) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be held by
the Fund under the provisions of the Articles of Incorporation and the
Prospectus.
(h) Compensation of the Custodian. The Custodian shall be entitled to
receive, and the Fund agrees to pay to the Custodian, such compensation as may
be agreed upon from time to time between the Custodian and the Fund. The
Custodian may charge against any monies held on behalf of the Fund pursuant to
this Agreement such compensation and any expenses incurred by the Custodian in
the performance of its duties pursuant to this Agreement. The Custodian shall
also be entitled to charge against any money held on behalf of the Fund
pursuant to this Agreement the amount of any loss, damage, liability or
expense incurred with respect to the Fund, including counsel fees, for which
it shall be entitled to reimbursement under the provisions of this Agreement.
The expenses which the Custodian may charge against such account include,
but are not limited to, the expenses of sub-custodians and foreign branches of
<PAGE>
the Custodian incurred in settling transactions outside of Boston,
Massachusetts or New York City, New York involving the purchase and sale of
Securities.
(i) Reliance on Certificates and Instructions. The Custodian shall be
entitled to rely upon any Certificate, notice or other instrument in writing
received by the Custodian and reasonably believed by the Custodian to be
genuine and to be signed by an officer or Authorized Person of the Fund. The
Custodian shall be entitled to rely upon any Written Instructions or Oral
Instructions actually received by the Custodian pursuant to the applicable
Sections of this Agreement and reasonably believed by the Custodian to be
genuine and to be given by an Authorized Person. The Fund agrees to forward
to the Custodian Written Instructions from an Authorized Person confirming
such Oral Instructions in such manner so that such Written Instructions are
received by the Custodian, whether by hand delivery, telex or otherwise, by
the close of business on the same day that such Oral Instructions are given to
the Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions provided such instructions reasonably
appear to have been received from a duly Authorized Person.
(j) Overdraft Facility and Security for Payment. In the event that the
Custodian is directed by Written Instruction (or Oral Instructions confirmed
in writing in accordance with Section 11(i) hereof) to make any payment or
transfer of monies on behalf of the Fund for which there would be, at the
close of business on the date of such payment or transfer, insufficient monies
held by the Custodian on behalf of the Fund, the Custodian may, in its sole
discretion, provide an overdraft (an "Overdraft") to the Fund in an amount
sufficient to allow the completion of such payment or transfer. Any Overdraft
provided hereunder: (a) shall be payable on the next Business Day, unless
otherwise agreed by the Fund and the Custodian; and (b) shall accrue interest
from the date of the Overdraft to the date of payment in full by the Fund at a
rate agreed upon in writing, from time to time, by the Custodian and the Fund.
The Custodian and the Fund acknowledge that the purpose of such Overdraft is
to temporarily finance the purchase of Securities for prompt delivery in
accordance with the terms hereof, to meet unanticipated or unusual redemption,
to allow the settlement of foreign exchange contracts or to meet other
emergency expenses not reasonably foreseeable by the Fund. The Custodian
shall promptly notify the Fund in writing (an "Overdraft Notice") of any
Overdraft by facsimile transmission or in such other manner as the Fund and
the Custodian may agree in writing. To secure payment of any Overdraft, the
Fund hereby grants to the Custodian a continuing security interest in and
right of setoff against the Securities and cash in the Fund's account from
time to time in the full amount of such Overdraft. Should the Fund fail to
pay promptly any amounts owed hereunder, the Custodian shall be entitled to
use available cash in the Fund's account and to liquidate Securities in the
account as is necessary to meet the Fund's obligations under the Overdraft.
In any such case, and without limiting the foregoing, the Custodian shall be
entitled to take such other actions(s) or exercise such other options, powers
and rights as the Custodian now or hereafter has as a secured creditor under
the Massachusetts Uniform Commercial Code or any other applicable law.
(k) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by
officers and auditors employed by the Fund and by the appropriate employees of
the Securities and Exchange Commission.
The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
12. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter until
such time as this Agreement may be terminated in accordance with the
provisions hereof.
(b) Either of the parties hereto may terminate this Agreement by giving to
<PAGE>
the other party a notice in writing specifying the date of such termination,
which shall be not less than 60 days after the date of receipt of such notice.
In the event such notice is given by the Fund, it shall be accompanied by a
certified vote of the Board of Directors of the Fund, electing to terminate
this Agreement and designating a successor custodian or custodians, which
shall be a person qualified to so act under the 1940 Act.
In the event such notice is given by the Custodian, the Fund shall, on or
before the termination date, deliver to the Custodian a certified vote of the
Board of DirectorsTrustees of the Fund, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the Custodian may
designate a successor custodian, which shall be a person qualified to so act
under the 1940 Act. If the Fund fails to designate a successor custodian, the
Fund shall upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities (other than
Securities held in the Book-Entry System which cannot be delivered to the
Fund) and monies then owned by the Fund, be deemed to be its own custodian and
the Custodian shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement, other than the duty with respect to Securities
held in the Book-Entry System which cannot be delivered to the Fund.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 12, this Agreement shall terminate to the extent specified in such
notice, and the Custodian shall upon receipt of a notice of acceptance by the
successor custodian on that date deliver directly to the successor custodian
all Securities and monies then held by the Custodian on behalf of the Fund,
after deducting all fees, expenses and other amounts for the payment or
reimbursement of which it shall then be entitled.
13. Limitation of Liability.
The Fund and the Custodian agree that the obligations of the Fund under
this Agreement shall not be binding upon any of the Directors, shareholders,
nominees, officers, employees or agents, whether past, present or future, of
the Fund, individually, but are binding only upon the assets and property of
the Fund, as provided in the Articles of Incorporation. The execution and
delivery of this Agreement have been authorized by the Directors of the Fund,
and signed by an authorized officer of the Fund, acting as such, and neither
such authorization by such Directors nor such execution and delivery by such
officer shall be deemed to have been made by any of them or any shareholder of
the Fund individually or to impose any liability on any of them or any
shareholder of the Fund personally, but shall bind only the assets and
property of the Fund as provided in the Articles of Incorporation.
14. Miscellaneous.
(a) Annexed hereto as Appendix A is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of the
present Authorized Persons. The Fund agrees to furnish to the Custodian a new
certification in similar form in the event that any such present Authorized
Person ceases to be such an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last
delivered certification.
(b) Annexed hereto as Appendix B is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of the
present officers of the Fund. The Fund agrees to furnish to the Custodian a
new certification in similar form in the event any such present officer ceases
to be an officer of the Fund or in the event that other or additional officers
are elected or appointed. Until such new certification shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement upon the signature of an officer as set forth in the last delivered
certification.
(c) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at One
Boston Place, Boston, Massachusetts 02108 or at such other place as the
Custodian may from time to time designate in writing.
<PAGE>
(d) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund, shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its offices at 1100
Chase Square, Rochester, New York 14604, or at such other place as the Fund
may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality as this
Agreement, (i) authorized, or ratified and approved by a vote of the Board of
Directors of the Fund, including a majority of the members of the Board of
Directors of the Fund who are not "interested persons" of the Fund (as defined
in the 1940 Act), or (ii) authorized, or ratified and approved by such other
procedures as may be permitted or required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund
authorized or approved by a vote of the Board of Directors of the Fund
provided, however, that the Custodian may assign the Agreement to an
Affiliated Person and any attempted assignment without such written consent
shall be null and void. Nothing in this Agreement shall give or be construed
to give or confer upon any third party any rights hereunder.
(g) The Fund represents that a copy of the Articles of Incorporation is on
file with the Secretary of the State of Maryland.
(h) This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
(i) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(j) This agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective representatives duly authorized as of the day
and year first above written.
MANNING & NAPIER INSURANCE FUND, INC.
By: /s/B. Reuben Auspitz
Name: B. Reuben Auspitz
Title: President
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/Stephen P. Browne
Name: Stephen P. Browne
Title: Vice President
<PAGE>
EXHIBIT EX-99.B(9)
FORM OF TRANSFER AGENT AGREEMENT
BETWEEN THE REGISTRANT AND MANNING
AND NAPIER ADVISORS, INC.
<PAGE>
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made as of this 27th day of June, 1996, by and
between MANNING & NAPIER INSURANCE FUND, INC. (the "Fund"), a Maryland
corporation, and MANNING & NAPIER ADVISORS, INC. (the "Transfer Agent" or
"M&N"), a New York corporation.
WHEREAS, the Fund is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Transfer Agent will be a transfer agent registered under the
Securities Exchange Act of 1934; and
WHEREAS, the Transfer Agent and the Fund are parties to an Advisory
Agreement dated December 13, 1995, (the "Advisory Agreement").
WHEREAS, the Fund desires the Transfer Agent to provide, and the Transfer
Agent is willing to provide, in addition to the services provided under the
Advisory Agreement, transfer agent services to Shareholders of the Fund's
portfolios listed in Schedule A ("Shareholders") which is attached hereto
and made a part of this Agreement, and such other portfolios, or classes of
portfolios, as the Fund and the Transfer Agent may agree on ("Portfolios"),
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Transfer Agent hereby agree as
follows:
ARTICLE 1. Retention of the Transfer Agent. The Fund hereby retains
the Transfer Agent to act as the Transfer Agent of the Portfolios and to
furnish the Portfolios with the transfer agent services as set forth below.
The Transfer Agent hereby accepts such employment to perform the duties set
forth below.
The Transfer Agent shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund in any way and shall
not be deemed an agent of the Fund. All of the Transfer Agent's duties shall
be subject always to the objectives, policies and restrictions contained in
the Fund's current registration statement under the 1940 Act, to the Fund's
Articles of Incorporation and By-Laws, to the provisions of the 1940 Act, and
to any other guidelines that may be established by the Fund's directors and
which are furnished to the Transfer Agent by the Fund.
The Fund warrants that it has or shall deliver to the Transfer Agent:
(a) a copy of the Articles of Incorporation of the Fund,
incorporating all amendments thereto, certified by the Secretary or Assistant
Secretary of the Fund;
(b) the Fund's Secretary's or Assistant Secretary's certificate as to
the authorized outstanding Shares of the Fund ("Shares"), its address to
which notices may be sent, the names and specimen signatures of its
officers who are authorized to sign instructions or requests to the Transfer
Agent on behalf of the Fund, and the name and address of legal counsel to
the Fund. In the event of any future amendment or change in respect of any
of the foregoing, prompt written notification of such change shall be given
by the Fund to the Transfer Agent together with copies of all relevant
resolutions, instruments or other documents, specimen signatures,
certificates, opinions or the like as the Transfer Agent may deem necessary
or appropriate.
ARTICLE 2. Transfer Agent Services. The Transfer Agent will act as
Transfer Agent for the Portfolios' accounts and, as such, will record in an
account (the "Account") the total number of Shares of each Portfolio issued
and outstanding from time to time and will maintain Share transfer records in
which it will note the names and registered addresses of Shareholders, and the
number of Shares from time to time owned by each of them. Each Shareholder
will be assigned one or more account numbers.
<PAGE>
The Transfer Agent is authorized to set up accounts for Shareholders and
record transactions in the accounts on the basis of instructions received from
Shareholders when accompanied by remittance in an appropriate amount and form
as provided in the Fund's then current prospectus. Whenever Shares are
purchased or issued, the Transfer Agent shall credit the Account with the
Shares issued, credit the proper number of Shares to the appropriate
Shareholder and issue certificates upon request.
Likewise, whenever the Transfer Agent has occasion to redeem Shares owned
by a Shareholder, the Fund authorizes the Transfer Agent to process the
transaction by making appropriate entries in its Share transfer records and
debiting the Account.
Upon notification by the Fund's custodian of the receipt of funds through
the Federal Reserve wire system or conversion into Federal funds of funds
transmitted by other means for the purchase of Shares in accordance with the
Fund's current prospectus, the Transfer Agent shall notify the Fund of such
deposits on a daily basis.
The Transfer Agent shall credit each Shareholder's account with the
number of Shares purchased according to the price of the Shares in effect for
such purchases determined in the manner set forth in the Fund's then current
prospectus. The Transfer Agent shall process each order for the redemption of
Shares from or on behalf of a Shareholder, and shall cause proceeds to be
remitted in accordance with the Shareholder's instructions and the then
current prospectus.
The requirements as to instruments of transfer and other documentation,
the applicable redemption price and the time of payment shall be as provided
for in the then current prospectus, subject to such supplemental requirements
consistent with such prospectus as may be established by mutual agreement
between the Fund and the Transfer Agent.
If the Transfer Agent or the Fund's Distributor determines that a request
for redemption does not comply with the requirements for redemption, the
Transfer Agent shall promptly so notify the Shareholder, together with the
reason therefor, and shall effect such redemption at the price next determined
after receipt of documents complying with said standards.
On each day that the Fund's Custodian and the New York Stock Exchange are
open for business ("Business Day"), the Transfer Agent shall notify the
Custodian of the amount of cash or other assets required to meet payments made
pursuant to the provisions of this Article 2, and the Fund shall instruct the
Custodian to make available from time to time sufficient funds or other assets
therefor.
The authority of the Transfer Agent to perform its responsibilities as to
purchases and redemptions shall be suspended upon receipt by it of
notification from the Securities and Exchange Commission or the Directors of
the suspension of the determination of the Fund's net asset value.
In registering transfers, the Transfer Agent may rely upon the opinion of
counsel in not requiring complete documentation, in registering transfers
without inquiry into adverse claims, in delaying registration for purposes of
such inquiry, or in refusing registration where in its judgment an adverse
claim requires such refusal.
ARTICLE 3. Limitation of Liability of the Transfer Agent. The duties
of the Transfer Agent shall be confined to those expressly set forth herein,
and no implied duties are assumed by or may be asserted against the Transfer
Agent hereunder. The Transfer Agent shall not be liable for any error of
judgment or mistake of law or for any act or omission in carrying out its
duties hereunder, except a loss resulting from willful misfeasance, bad faith
or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable state law which cannot be waived or
modified hereby. (As used in this Article 3, the term "Transfer Agent" shall
include directors, officers, employees, sub-contractors and other corporate
agents of the Transfer Agent as well as that corporation itself.)
So long as the Transfer Agent does not violate the standard of care set
forth herein, the Fund assumes full responsibility and shall indemnify the
<PAGE>
Transfer Agent and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise, and from and against any
and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses and attorney's fees) arising directly or indirectly out
of said administration, transfer agency, and dividend disbursing relationships
to the Fund or any other service rendered to the Fund hereunder. The indemnity
and defense provisions set forth herein shall indefinitely survive the
termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In
order that the indemnification provision contained herein shall apply,
however, it is understood that in any case in which the Fund may be asked to
indemnify or hold the Transfer Agent harmless, the Fund shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Transfer Agent will use all reasonable
care to identify and notify the Fund promptly concerning any situation which
presents or appears likely to present the probability of such a claim for
indemnification against the Fund, but failure to do so in good faith shall not
effect the rights hereunder.
The Transfer Agent may apply to the Fund at any time for instructions and
may consult counsel for the Fund or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Transfer Agent's duties and the Transfer Agent shall not be liable or
accountable for any action taken or omitted by it in good faith in accordance
with such instruction or with the opinion of such counsel, accountants or
other experts.
The Transfer Agent shall be protected in acting upon any document which
it reasonably believes to be genuine and to have been signed or presented by
the proper person or persons. Nor shall the Transfer Agent be held to have
notice of any change of authority of any officers, employee or agent of the
Fund until receipt of written notice thereof from the Fund.
ARTICLE 4. Activities of the Transfer Agent. The services of the
Transfer Agent rendered to the Fund are not to be deemed to be exclusive. The
Transfer Agent is free to render such services to others and to have other
businesses and interests. It is understood that directors, officers,
employees and Shareholders of the Fund are or may be or become interested in
the Transfer Agent, as directors, officers, employees and shareholders of the
Transfer Agent and its counsel are or may be or become similarly interested in
the Fund, and that the Transfer Agent may be or become interested in the Fund
as a Shareholder or otherwise.
ARTICLE 5. Term of this Agreement. This Agreement shall remain in
effect for 2 years after the date of the Agreement and shall continue in
effect thereafter, for periods of one year so long as such continuance is
specifically approved (i) by the vote of a majority of the Directors of the
Fund and (ii) by the majority of the Directors of the Fund who are not parties
to this Agreement or interested persons of any such party, cast in person at a
Board of Directors meeting called for the purpose of voting on such approval.
M&N reserves the right to terminate this Agreement if the Advisory Agreement
is terminated for any reason.
In the event of a material breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing of such breach
and upon receipt of such notice, the breaching party shall have 45 days to
remedy the breach or the non-breaching party may terminate this Agreement
immediately.
This Agreement shall not be assignable by either party without the
written consent of the other party, provided that a transfer of this Agreement
and the Transfer Agent's responsibility hereunder to any company that is under
common control wih the Transfer Agent shall not be considered an assignment.
ARTICLE 6. Amendments. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved (i) by vote of a
majority of the Directors of the Fund, and (ii) by the vote of a majority of
the Directors of the Fund who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Directors meeting
called for the purpose of voting on such approval.
<PAGE>
For special cases, the parties hereto may amend such procedures set forth
herein as may be appropriate or practical under the circumstances, and the
Transfer Agent may conclusively assume that any special procedure which has
been approved by the Fund does not conflict with or violate any requirements
of its Articles of Incorporation, By-Laws or prospectus, or any rule,
regulation or requirement of any regulatory body.
ARTICLE 7. Certain Records. The Transfer Agent shall maintain
customary records in connection with its duties as specified in this
Agreement. Any records required to be maintained and preserved pursuant to
Rules 31a-1 and 31a-2 under the 1940 Act which are prepared or maintained by
the Transfer Agent on behalf of the Fund shall be prepared and maintained at
the expense of the Transfer Agent, but shall be the property of the Fund and
will be made available to or surrendered promptly to the Fund on request.
In case of any request or demand of such records by another party, the
Transfer Agent shall notify the Fund and follow the Fund's instructions as to
permitting or refusing such inspection; provided that the Transfer Agent may
exhibit such records to any person in any case where it is advised by its
counsel that it may be held liable for failure to do so, unless (in cases
involving potential exposure only to civil liability) the Fund has agreed to
indemnify the Transfer Agent against such liability.
ARTICLE 8. Definition of Certain Terms. The terms "interested person"
and "affiliated person", when used in this Agreement, shall have the
respective meanings specified in the 1940 Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.
ARTICLE 9. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party
giving notice: if to the Fund, at 1100 Chase Square, Rochester, NY 14604, and
if to the Transfer Agent at 1100 Chase Square, Rochester, NY 14604.
ARTICLE 10. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 11. Multiple Originals. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 12. Miscellaneous. The Transfer Agent agrees to provide its
services as set forth in this Agreement without charge.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
MANNING & NAPIER INSURANCE FUND, INC.
By: /s/B. Reuben Auspitz
B. Reuben Auspitz, President
MANNING & NAPIER ADVISORS, INC.
By: /s/William Manning
William Manning, President
<PAGE>
SCHEDULE A
TO THE TRANSFER AGENT AGREEMENT
DATED 6-27-96
BETWEEN
MANNING & NAPIER INSURANCE FUND, INC.
AND
MANNING & NAPIER ADVISORS, INC.
Portfolios subject to the terms and conditions of this Transfer Agent
Agreement:
Moderate Growth Portfolio
Growth Portfolio
Equity Portfolio
Small Cap Portfolio
Bond Portfolio
Maximum Horizon Portfolio
<PAGE>
EXHIBIT EX-99.B(10)
OPINION OF COUNSEL
<PAGE>
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
June 4, 1996
Board of Directors
Manning & Napier Insurance Fund, Inc.
1100 Chase Square
Rochester, NY 14604
Re: Opinion of Counsel - Manning & Napier Insurance Fund, Inc.
Gentlemen:
You have requested our Opinion of Counsel in connection with the filing with
the Securities and Exchange Commission of a Pre-Effective Amendment to a
Registration Statement on Form N-1A with respect to Manning & Napier Insurance
Fund, Inc.
We have made such examination of the law and have examined such records and
documents as in our judgment are necessary or appropriate to enable us to
render the opinions expressed below.
We are of the following opinions:
1. Manning & Napier Insurance Fund, Inc. ("Fund") is an open-end
management investment company.
2. The Fund is a corporation created and validly existing pursuant to
the Maryland Laws.
3. All of the prescribed Fund procedures for the issuance of the shares
have been followed, and, when such shares are issued in accordance with the
Prospectus contained in the Registration Statement for such shares, all state
requirements relating to such Fund shares will have been complied with.
4. Upon the acceptance of purchase payments made by shareholders in
accordance with the Prospectus contained in the Registration Statement and
upon compliance with applicable law, such shareholders will have
legally-issued, fully paid, non-assessable shares of the Fund.
You may use this opinion letter, or a copy thereof, as an exhibit to the
Registration.
Sincerely,
BLAZZARD, GRODD & HASENAUER, P.C.
By: /s/Raymond A. O'Hara III
Raymond A. O'Hara III
<PAGE>
EXHIBIT EX-99.B(11)
CONSENT OF INDEPENDENT ACCOUNTANTS
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A (File No. 33-64667) of Manning & Napier
Insurance Fund, Inc. of our report dated June 18, 1996, relating to the
statement of assets and liabilities of 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.
/s/ COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 18, 1996
EXHIBIT EX-99.B(13)
PURCHASE AGREEMENT
<PAGE>
PURCHASE AGREEMENT
Manning & Napier Insurance Fund, Inc. (the Fund), a corporation organized
under the laws of the State of Maryland, and Manning & Napier Advisors, Inc.
(the Advisor), a corporation organized under the laws of the State of New
York, hereby agree as follows:
1. The Fund offers the Advisor and the Advisor hereby purchases
shares of the Fund, par value $.001 per share (the Shares), consisting of (a)
1,667 shares in the Funds Moderate Growth Portfolio at a price of $10.00 per
share; (b) 1,667 shares in the Funds Growth Portfolio at a price of $10.00
per share; (c) 1,667 shares in the Funds Equity Portfolio at a price of
$10.00 per share; (d) 1,667 shares in the Funds Small Cap Portfolio at a
price of $10.00 per share; (e) 1,667 shares in the Funds Bond Portfolio at a
price of $10.00 per share; and (f) 1,667 shares in the Funds Maximum Horizon
Portfolio at a price of $10.00 per share (collectively, the Initial Shares).
The Fund hereby acknowledges receipt from the Advisor of an aggregate amount
of One Hundred Thousand Dollars ($100,000) in full payment of the Initial
Shares.
2. The Advisor represents and warrants to the Fund that the Initial
Shares are being acquired for investment purposes and not for the purpose of
distributing them.
3. The parties hereby acknowledge that any Shares acquired by the
Advisor, other than the Initial Shares, have not been acquired to fulfill the
requirements of Section 14 of the Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 17th day of June, 1996.
MANNING & NAPIER INSURANCE FUND, INC.
By: /s/B. Reuben Auspitz
B. Reuben Auspitz, President
MANNING & NAPIER ADVISORS, INC.
By: /s/William Manning
William Manning, President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 000100369
<NAME> MANNING & NAPIER INSURANCE FUND, INC.
<SERIES>
<NAME> MANNING & NAPIER BOND PORTFOLIO
<NUMBER> 2
<CAPTION>
<S> <C>
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUN-17-1996
<PERIOD-END> JUN-17-1996
<PERIOD-TYPE> INTERIM
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 16,667
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,667
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16,667
<SHARES-COMMON-STOCK> 1,667
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 16,667
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,667
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 16,667
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 16,667
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 000100369
<NAME> MANNING & NAPIER INSURANCE FUND, INC.
<SERIES>
<NAME> MANNING & NAPIER EQUITY PORTFOLIO
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<S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 000100369
<NAME> MANNING & NAPIER INSURANCE FUND, INC.
<SERIES>
<NAME> MANNING & NAPIER GROWTH PORTFOLIO
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 000100369
<NAME> MANNING & NAPIER INSURANCE FUND, INC.
<SERIES>
<NAME> MANNING & NAPIER MODERATE GROWTH PORTFOLIO
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<CAPTION>
<S>
<C>
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 000100369
<NAME> MANNING & NAPIER INSURANCE FUND, INC.
<SERIES>
<NAME> MANNING & NAPIER MAXIMUM HORIZON PORTFOLIO
<NUMBER> 1
<CAPTION>
<S>
<C>
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<FISCAL-YEAR-END> DEC-31-1996
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 000100369
<NAME> MANNING & NAPIER INSURANCE FUND, INC.
<SERIES>
<NAME> MANNING & NAPIER SMALL CAP PORTFOLIO
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<CAPTION>
<S>
<C>
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</TABLE>
MANNING & NAPIER INSURANCE FUND, INC.
1100 CHASE SQUARE
ROCHESTER, NEW YORK 14604
(716) 325-6880
June 26, 1996 VIA EDGAR
Securities and Exchange Commission
Division of Investment Management
Office of Insurance Products
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Manning & Napier Insurance Fund, Inc.
Pre-Effective Amendment No. 1 to Form N-1A
File Nos. 33-64667 and 811-7439
Dear Sir/Madam:
Manning & Napier Insurance Fund, Inc. The above-captioned registrant, requests
acceleration of the effective date of the above-captioned registration
statement and requests that said registration statement become effective at
10:00 a.m. on June 28, 1996, or as soon thereafter as practicable.
Sincerely,
MANNING & NAPIER INSURANCE
FUND, INC.
/s/Sandie Thomas
Sandie Thomas
Compliance Administrator
MANNING & NAPIER INVESTOR SERVICES, INC.
1100 CHASE SQUARE
ROCHESTER, NEW YORK 14604
(716) 325-6880
June 26, 1996 VIA EDGAR
Securities and Exchange Commission
Division of Investment Management
Office of Insurance Products
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Manning & Napier Insurance Fund, Inc.
Pre-Effective Amendment No. 1 to Form N-1A
File Nos. 33-64667 and 811-7439
Dear Sir/Madam:
Manning & Napier Investor Services, Inc. as principal underwriter for the
above-captioned registrant, joins the registrant in its request to accelerate
the effective date of the above-captioned registration statement and requests
that said registration statement become effective at 10:00 a.m. on June 28,
1996, or as soon thereafter as practicable.
Sincerely,
MANNING & NAPIER INVESTOR
SERVICES, INC.
/s/Sandie Thomas
Sandie Thomas
Compliance Administrator
