<PAGE>
As filed with the Securities and Exchange Commission on November 21, 1997
File No. 2-77284 (811-03459)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933 / /
Post-Effective Amendment No. 45 /x/
REGISTRATION STATEMENT UNDER THE INVESTMENT / /
COMPANY ACT OF 1940
Amendment No. 25 /x/
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
600 Dresher Road
Horsham, Pennsylvania 19044
(Address of Principal Executive Offices)
Registrant's Telephone Number: 215-956-8000
- --------------------------------------------------------------------------------
L. STOCKTON ILLOWAY
President
Penn Series Funds, Inc.
Philadelphia, Pennsylvania 19172
(Name and Address of Agent for Service)
Copy to:
RICHARD W. GRANT
C. RONALD RUBLEY
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective (check appropriate box)
X immediately upon filing pursuant to paragraph (b) of Rule 485
--
__ on (date) pursuant to paragraph to paragraph (b) of Rule 485
__ 60 days after filing pursuant to paragraph a (1) of Rule 485
__ on (date) pursuant to paragraph (a) (1) of Rule 485
__ 75 days after filing pursuant to paragraph to paragraph (a)(2)
of Rule 485
__ on (date) pursuant to paragraph (a)(2) of Rule 485
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET TO PROSPECTUS
AND STATEMENT OF ADDITIONAL INFORMATION
Pursuant to Rule 495(a) under the Securities Act of 1933, the following table
indicates the location in the Prospectus and the Statement of Additional
Information of the information called for by the Items of Parts A and B of Form
N-1A.
<TABLE>
<CAPTION>
Statement of Additional
Required by Form N-1A Prospectus Information
- --------------------- ---------- -----------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Not Applicable
3. Condensed Financial Financial Highlights
Information
4. General Description of General Information;
Information; Investment Objectives
and Programs; Additional
Investment Information
Relating to the Funds
5. Management of the Fund Management of the Penn
Series Funds, Inc.
5A. Management Discussion *
of Investment Performance
6. Capital Stock and Other General Information;
Securities Dividends, Distributions
and Taxes; Voting Rights
7. Purchase of Securities Sales and Redemption of
Being Offered Shares
8. Redemption or Repurchase Sale and Redemption of
Shares
9. Pending Legal Proceedings Not Applicable
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Not Applicable
History
</TABLE>
* Information required by Item 5A with respect to all Funds except the Emerging
Growth Fund (which commenced operations on May 1, 1997) is contained in the
Registrant's December 31, 1996 Annual Report to Shareholders.
<PAGE>
<TABLE>
<CAPTION>
Statement of Additional
Required by Form N-1A Prospectus Information
- --------------------- ---------- -----------------------
<S> <C> <C>
13. Investment Objectives Investment Objectives;
and Policies Securities and
Investment Techniques;
Investment Restrictions
14. Management of the Fund Directors and Officers
15. Control Persons and General Information Ownership of Shares
Principal Holders of
Securities
16. Investment Advisory and Investment Advisers; Investment Advisory
Other Services Administrative and Services; Accounting
Corporate Services Agent Services
17. Brokerage Allocation Portfolio Transactions
and Other Practices
18. Capital Stock and Other General Information;
Securities Dividends, Distributions
and Taxes; Voting Rights
19. Purchase, Redemption General Information Net Asset Value of
and Pricing of Securities Shares
Being Offered
20. Tax Status Dividends,
Distributions and
Taxes; Additional
Investment Information
Relating to the Fund
21. Underwriters Not Applicable
22. Calculations of Not Applicable
Performance Data
23. Financial Statements Financial Statements of
Penn Series
</TABLE>
<PAGE>
The Prospectus included as part of Post-Effective Amendment No.44 to the
Registrant's Registration Statement on Form N-1A (File No. 2-77284), filed with
the Securities and Exchange Commission via EDGAR on February 14, 1997 pursuant
to Rule 485(a) under the Securities Act of 1933 and in final form on May 6, 1997
pursuant to Rule 497(c) under such Act, is hereby incorporated by reference as
if set forth full herein. The Prospectus is supplemented by the addition of
unaudited Financial Highlights for each of the Growth Equity, Value Equity,
Small Capitalization, Flexibly Managed, International, Quality Bond, High Yield
Bond and Money Market Funds for the period ended June 30, 1997 and unaudited
Financial Highlights for the Emerging Growth Fund for the period from May 1,
1997 (commencement of operations) through September 30, 1997.
<PAGE>
PENN SERIES FUNDS, INC.
Supplement dated November 21
to the
Prospectus dated May 1, 1997
The Prospectus is hereby amended and supplemented as follows. The following
paragraph and tables are added after the first paragraph under the heading
"Financial Highlights" on pages 3-11 of the Prospectus:
The following tables provide unaudited financial highlights for the Growth
Equity, Value Equity, Small Capitalization, Flexibly Managed, International,
Quality Bond, High Yield Bond, and Money Market Funds for the six month period
ended June 30, 1997. These unaudited financial highlights are part of the
unaudited financial statements which are included in the Semi-Annual Reports to
variable insurance contract owners that invest in Penn Mutual Variable Annuity
Account III and Penn Mutual Variable Life Account I of The Penn Mutual Life
Insurance Company and PIA Variable Annuity Account I of The Penn Insurance and
Annuity Company and incorporated by reference in the Statement of Additional
Information. The following tables also provide unaudited financial highlights
for the Emerging Growth Fund for the period of May 1, 1997 (commencement of
operations) through September 30, 1997. These unaudited financial highlights are
part of the Emerging Growth Fund's unaudited financial statements which are
contained in the Statement of Additional Information.
PENN SERIES FUNDS, INC.
Financial Highlights
For the Six Months Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share
outstanding throughout each period
<TABLE>
<CAPTION>
Growth Equity High Yield Bond Money Market Quality Bond
Fund Fund Fund Fund
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 21.46 $ 8.91 $ 1.00 $ 10.00
------------- ------------- ------------- -------------
Income from investment operations:
Net investment income .................. 0.06 0.4 0.0246 0.31
Net realized and unrealized gain (loss)
on investment transactions .......... 3.36 0.29 0.00 (0.05)
------------- ------------- ------------- -------------
Total from investment operations .... 3.42 0.69 0.0246 0.26
------------- ------------- ------------- -------------
Less distributions:
Dividend from net investment income .... 0.00 0.00 (0.0246) 0.00
Distribution from capital gains ........ 0.00 0.00 0.00 0.00
------------- ------------- ------------- -------------
Total distributions ................. 0.00 0.00 (0.0246) 0.00
------------- ------------- ------------- -------------
Net asset value, end of period ......... $ 24.88 $ 9.60 $ 1.00 $ 10.26
============= ============= ============= =============
Total return ........................ 15.94% 7.74% 2.48% 2.60%
Ratios/Supplemental data:
Net assets, end of period (in thousands) $ 123,798 $ 51,092 $ 38,637 $ 37,330
============= ============= ============= =============
Ratio of expenses to average net assets 0.76% (a) 0.80% (a) 0.71% (a) 0.74% (a)
============= ============= ============= =============
Ratio of net investment income
to average net assets ............... 0.48% (a) 8.98% (a) 4.98% (a) 6.22% (a)
============= ============= ============= =============
Portfolio Turnover Rate ................ 89.3% 64.0% -- 137.6%
============= ============= ============= =============
Average commission rate paid (b) ....... $ 0.0776 -- $ -- --
============= ============= ============= =============
<CAPTION>
International Small Flexibly
Value Equity Equity Capitalization Managed
Fund Fund Fund Fund
------------ ------------- -------------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 19.32 $ 15.61 $ 12.53 $ 18.74
------------- ------------- ------------- -------------
Income from investment operations:
Net investment income .................. 0.14 0.1 0 0.29
Net realized and unrealized gain (loss)
on investment transactions .......... 2.50 1.80 1.93 1.30
------------- ------------- ------------- -------------
Total from investment operations .... 2.64 1.90 1.93 1.59
------------- ------------- ------------- -------------
Less distributions:
Dividend from net investment income .... 0.00 0.00 0.00 0.00
Distribution from capital gains ........ 0.00 0.00 0.00 0.00
------------- ------------- ------------- -------------
Total distributions ................. 0.00 0.00 0.00 0.00
------------- ------------- ------------- -------------
Net asset value, end of period ......... $ 21.96 $ 17.51 $ 14.46 $ 20.33
============= ============= ============= =============
Total return ........................ 13.66% 12.17% 15.40% 8.48%
Ratios/Supplemental data:
Net assets, end of period (in thousands) $ 259,761 $ 127,946 $ 27,626 $ 469,395
============= ============= ============= =============
Ratio of expenses to average net assets 0.76% (a) 1.14% (a) 0.86% (a) 0.76% (a)
============= ============= ============= =============
Ratio of net investment income
to average net assets ............... 1.44% (a) 1.20% (a) 0.74% (a) 3.08% (a)
============= ============= ============= =============
Portfolio Turnover Rate ................ 4.7% 19.3% 54.6% 17.3%
============= ============= ============= =============
Average commission rate paid (b ........ 0.0598 0.0490 0.0556 0.0436
============= ============= ============= =============
</TABLE>
- --------------------------------------------------
(a) Annualized.
(b) Computed by dividing the total amount of commissions paid
by total number of shares purchased and sold during the
period for which commissions were charged, as required by
the SEC.
PENN SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE EMERGING GROWTH FUND
The table below sets forth financial data for
a share outstanding throughout each period
<TABLE>
<CAPTION>
Period ended
September 30, 1997
(Unaudited)
---------------
<S> <C>
Net asset value, beginning of period ... $ 10.00
---------------
Income from investment operations:
- ----------------------------------
Net investment income (loss) ........... 0.00
Net realized and unrealized gain
on investments and foreign currency
related transactions ................ 5.55
---------------
Total from investment operations .... 5.55
---------------
Less distributions:
- -------------------
Dividend from net investment income .... --
Distribution in excess of net
investment income ................... --
Distribution from capital gains ........ --
Distribution from capital .............. --
---------------
Total distributions ................. --
---------------
Net asset value, end of period ......... $ 15.55
===============
Total return ........................ 55.50%
Ratios/Supplemental data:
- ------------------------
Net assets, end of period (in thousands) $ 14,547
===============
Ratio of expenses to average net assets 1.15% (a)
===============
Ratio of net investment income
to average net assets ............... -0.61% (a)
===============
Portfolio turnover rate ................ 139.0% (a)
===============
Average commission rate paid (c) ....... $ 0.0541
===============
</TABLE>
- ----------------------------------------
(a) Annualized.
(b) Had fees not been waived by the investment advisor and administrator of
the Fund, the ratio of expenses to average net assets and the ratio of net
investment income to average net assets would have been 1.37% annualized
and (0.83)% annualized, respectively, for the period ended September 30,
1997.
(c) Computed by dividing the total amount of commissions paid by total number
of shares purchased and sold during the period for which commissions were
charged, as required by the SEC beginning after September 1, 1995.
* For the period from May 1, 1997 (commencement of operations) to September
30, 1997.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
<PAGE>
The Statement of Additional Information included as part of Post-Effective
Amendment No. 44 to the Registrant's Registration Statement on Form N-1A (File
No. 2-77284), and filed with the Securities and Exchange Commission via EDGAR on
February 14, 1997 pursuant to Rule 485(a) under the Securities Act of 1933 and
in final form on May 6, 1997 pursuant to Rule 497(c) under such Act, is hereby
incorporated herein by reference. The unaudited financial statements for the
Growth Equity, Value Equity, Small Capitalization, Emerging Growth, Flexibly
Managed, International, Quality Bond, High Yield Bond and Money Market Funds of
the Registrant for the periods ended June 30, 1997, including the notes thereto
filed with the Securities and Exchange Commission via EDGAR on Form N-30D as
part of the Penn Mutual Variable Life Account I, Penn Mutual Variable Annuity
Account III and PIA Variable Annuity Account I's Semi-Annual Reports to contract
owners are herein incorporated by reference. The Statement of Additional
Information is supplemented by the addition of unaudited financial statements of
the Emerging Growth Fund for the period from May 1 (commencement of operations)
to September 30, 1997 included herewith.
<PAGE>
PENN SERIES FUNDS, INC.
Supplement dated November 21, 1997 to the
Statement of Additional Information dated May 1, 1997
The Statement of Additional Information dated May 1, 1997 is hereby amended and
supplemented by the following. The unaudited financial statements of the Growth
Equity, Value Equity, Small Capitalization, Emerging Growth, Flexibly Managed,
International, Quality Bond, High Yield Bond and Money Market Funds for the
periods ended June 30, 1997 included in the Semi-Annual Reports to variable
insurance contract owners that invest in Penn Mutual Variable Annuity Account
III and Penn Mutual Variable Life Account I of The Penn Mutual Life Insurance
Company and PIA Variable Annuity Account I of The Penn Insurance and Annuity
Company are hereby incorporated herein by reference. A copy of the Semi-Annual
Report to contract owners must accompany this Statement of Additional
Information. The unaudited financial statements of the Emerging Growth Fund for
the period May 1, 1997 (commencement of operations) through September 30, 1997
are included herein.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
<PAGE>
PENN SERIES FUNDS, INC.
The Emerging Growth Fund
Schedule of Investments
September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Percentage Number
of Portfolio of Shares Value
------------ --------- --------------
<S> <C> <C> <C>
COMMON STOCK ..................................... 98.6%
------------------------------
Advertising ...................................... 0.4%
Universal Outdoor Holdings, Inc. 1,400 $ 52,150
--------------
Agricultural Operations ........................... 1.0%
Scheid Vineyards, Inc. 12,900 141,900
--------------
Audio/ Video Products ............................. 0.6%
Gemstar International Group Ltd 3,600 90,450
--------------
Bank And Trust .................................... 0.3%
Redwood Trust, Inc. 1,600 48,300
--------------
Banking ........................................... 0.4%
MBNA Corp. 1,500 60,750
--------------
Broadcasting ...................................... 0.8%
Emmis Broadcasting Corp. 1,700 80,963
VDI Media 3,000 38,625
--------------
119,588
--------------
Building Maintance & Services ..................... 0.5%
Fairfield Communications Corp. 1,900 71,369
--------------
Business Data Processing .......................... 0.1%
Sybase, Inc. 1,000 18,031
--------------
Business Services ................................. 4.1%
Accustaff, Inc. 4,000 126,000
Caribiner International, Inc. 1,000 40,750
Corporatefamily Solutions, Inc. 2,500 41,250
Hall Kinion & Associates, Inc. 4,900 103,513
Romac International, Inc. 4,800 209,100
Sotheby Holdings, Inc. 3,100 62,969
--------------
583,582
--------------
Cable Operators ................................... 0.8%
Univision Communications, Inc. 2,000 108,500
--------------
Care Facility ..................................... 0.5%
Sunrise Assisted Living 1,900 68,519
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage Number
of Portfolio of Shares Value
------------ --------- --------------
<S> <C> <C> <C>
Commercial Services ............................... 2.3%
Bridgestreet Accomodations 18,900 $ 217,350
Memberworks, Inc. 1,900 42,334
The Profit Recovery Group
International, Inc. 4,500 81,844
--------------
341,528
--------------
Communications .................................... 1.1%
Ciena Corp. 1,000 49,531
Spectrian Corp. 1,700 108,694
--------------
158,225
--------------
Computers ......................................... 3.9%
Box Hill Systems Corp. 5,700 99,750
Great Plains Software, Inc. 400 11,150
Individual, Inc. 2,000 12,031
Information Management
Associates, Inc. 3,800 47,025
Intelligroup, Inc. 12,500 267,969
New Horizons Worldwide, 1,000 12,875
Peerless Systems Corp. 1,800 25,088
Radiant Systems, Inc. 4,100 86,100
--------------
561,988
--------------
Computer Services & Software ...................... 18.5%
Advantage Learning Systems, Inc. 3,200 80,800
Applix, Inc. 1,200 10,800
Arbor Software Corp. 1,300 60,206
Aris Corp. 4,000 85,000
ASI Solutions, Inc. 4,200 39,375
Aspect Development, Inc. 4,000 164,250
Check Point Software Technologies Ltd. 2,900 90,081
Ciber, Inc. 400 18,900
Computer Learning Centers, Inc. 1,800 70,200
Compuware Corp. 2,000 120,750
Crystal Systems Solutions 1,200 32,400
Cybermedia, Inc. 1,000 26,719
Datastream Systems, Inc. 2,200 82,294
E*trade Group, Inc. 4,600 215,913
Ecsoft Group PLC (ADR) 13,400 230,313
Egghead, Inc. 10,000 90,313
Information Management Resources 1,500 42,188
Intersolv, Inc. 4,000 61,875
J. D. Edwards & Co. 3,800 127,775
JDA Software Group, Inc. 800 29,150
Keane, Inc. 2,800 88,900
Legato Systems, Inc. 1,300 46,069
Mastech Corp. 1,100 37,675
Medic Computer Systems 1,000 34,188
Metro Information Services, Inc. 1,400 30,013
Mindspring Enterprises, Inc. 1,200 25,725
Neomedia Technonogies, Inc. 2,500 25,625
Network Solutions, Inc. 700 15,050
New Era of Networks 5,200 72,150
Pervasive Software, Inc. 8,200 93,275
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage Number
of Portfolio of Shares Value
------------ --------- --------------
<S> <C> <C> <C>
Platinum Technology, Inc. 1,000 $ 21,594
Rational Software Corp. 1,000 15,969
Saville Systems Ireland PLC (ADR) 1,000 70,438
Simulated Sciences, Inc. 1,700 33,628
Smallworldwide PLC (ADR) 3,600 76,500
The Vantive Corp. 3,300 79,406
Transactions Systems Architects, Inc. 3,200 130,000
TSI International Software Ltd. 1,600 21,350
Viasoft, Inc. 800 39,600
Vocaltec Communications Ltd. 1,000 24,000
-------------
2,660,457
-------------
Construction ...................................... 0.8%
Hospitality Worldwide Services 9,200 120,750
--------------
Consulting Services ............................... 1.9%
Hagler Bailly, Inc. 2,700 69,188
Maximus, Inc. 6,900 199,669
--------------
268,857
--------------
Data Processing ................................... 0.3%
American Management Systems, Inc. 2,000 38,125
--------------
Distribution Services ............................. 0.7%
Intelligent Electronics, Inc. 4,200 21,263
Microage, Inc. 2,800 81,200
--------------
102,463
--------------
Drugs ............................................. 2.5%
Applied Analytical Industries,
Inc. + 300 6,038
Boron, Lepore & Associates 4,900 114,231
Jones Medical Industries, Inc. 2,000 63,125
Kendle International, Inc. 9,900 185,006
--------------
368,400
--------------
Education ......................................... 2.1%
Abacus Direct Corp. 3,100 98,813
Education Management Corp. 1,200 31,500
Edutrek International, Inc. 1,400 37,100
Sylvan Learning Systems, Inc. 3,000 131,813
--------------
299,226
--------------
Electronics ....................................... 2.7%
Cellstar Corp. 5,200 242,125
Cyberoptics Corp. 1,500 50,766
Intest Corp. 5,500 92,813
--------------
385,704
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage Number
of Portfolio of Shares Value
------------ --------- --------------
<S> <C> <C> <C>
Electronic Components ............................. 4.6%
Aavid Thermal Technologies 500 $ 14,875
Alpha Industries, Inc. 2,100 38,850
Etec Systems, Inc. 1,000 56,875
Flextronics International Ltd 2,000 95,125
KLA-Tencor Corp. 1,700 114,803
Novellus System, Inc. 1,000 125,875
Qlogic Corp. 1,000 41,813
Semtech Corp. 2,400 165,900
-------------
654,116
-------------
Electronics-Defense ............................... 0.1%
Nichols Research Corp. 400 9,850
--------------
Electrical Equipment .............................. 0.3%
Intergrated Process Equipment
Corp. 1,000 36,813
--------------
Electronics-Semiconductors ........................ 1.0%
Photronics, Inc. 2,400 145,275
--------------
Financial Services
Comdicso, Inc. ................................ 2.8% 1,000 32,563
Financial Federal Corp. 7,650 135,788
Resource Bancshares Mortgage Group 2,800 36,488
Sirrom Capital Corp. 2,200 114,538
The Money Store Inc. 2,900 82,288
--------------
401,665
--------------
Healthcare ........................................ 4.0%
Castle Dental Centers, Inc. 7,700 106,838
McKesson Corp. 800 81,550
Renal Care Group, Inc. 1,200 43,050
Resmed, Inc. 500 12,875
Steiner Leisure Ltd. 1,000 37,000
Vision Twenty-One, Inc. 11,200 153,300
Vista Medical Technologies, Inc. 9,800 145,163
--------------
579,776
--------------
Help Support Services ............................. 0.2%
SCB Computer Technology 1,500 31,875
--------------
Hotels ............................................ 3.9%
Execustay Corp. 9,400 110,450
Four Seasons Hotels, Inc. 1,500 61,500
Intrawest Corp. 2,000 37,125
Pegusus Systems, Inc. 1,800 32,681
Signature Resorts, Inc. 1,000 47,438
Suburban Lodges of America 1,300 34,206
Trendwest Resorts, Inc. 9,800 230,300
--------------
553,700
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage Number
of Portfolio of Shares Value
------------ --------- --------------
<S> <C> <C> <C>
Human Resources ................................... 2.7%
Lamalie Associates, Inc. 600 $ 12,825
RCM Technologies 6,600 106,219
Staffmark, Inc. 6,800 260,950
--------------
379,994
--------------
Insurance ......................................... 2.1%
Arm Financial Group, Inc. 2,700 64,294
Liberty Financial Co. 1,900 99,750
Southern Pacific Funding 3,400 47,813
Sunamerica, Inc. 2,250 88,172
--------------
300,029
--------------
Investment ........................................ 0.9%
T. Rowe Price Associates, Inc. 2,000 134,250
--------------
Manufacturing .................................... 1.0%
CN Biosciences, Inc. 400 9,350
General Scanning, Inc. 1,000 34,813
Topro, Inc. 1,000 5,734
Trikon Technologies, Inc. 900 7,734
Wesley Jessen Visioncare 3,000 85,875
--------------
143,506
--------------
Medical ........................................... 3.7%
Bioreliance Corp. 5,300 139,788
Coventry Corp. 5,200 85,638
Cytyc Corp. 2,200 54,863
Ocular Sciences, Inc. 7,800 179,400
Seamed Corp. 1,200 22,200
Spine-Tech, Inc. 1,000 37,688
--------------
519,577
--------------
Medical Services
Covance, Inc. ................................. 1.4% 900 19,463
Lincare Holdings, Inc. 1,600 80,550
Medical Manager Corp. 1,100 23,066
Universal Health Services, Inc. - B 1,700 73,525
--------------
196,604
--------------
Medical Information Systems ....................... 0.8%
HBO & Co. 3,000 113,063
--------------
Office Equipment & Supplies ....................... 1.0%
Granite Financial, Inc 12,200 143,350
--------------
Oil & Gas ......................................... 0.1%
Cal Dive International Inc. 400 15,000
--------------
Personal Services ................................. 0.4%
Interim Services, Inc. 2,000 56,250
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage Number
of Portfolio of Shares Value
------------ --------- --------------
<S> <C> <C> <C>
Pharmaceuticals ................................... 1.8%
Medicis Pharmaceutical Corp. 2,300 $ 104,794
Paraxel International Corp. 2,500 97,813
Vertex Pharmaceuticals, Inc. 1,600 60,450
-------------
263,057
-------------
Real Estate ....................................... 2.2%
Asset Investors Corp. 1,000 4,313
CBCommercial Real Esate Services 4,800 155,400
Lasalle Partners, Inc. 4,400 154,000
--------------
313,713
--------------
Recreational ...................................... 1.0%
Silverleaf Resorts, Inc. 6,100 139,538
--------------
Resorts/Theme Parks ............................... 0.0%
Vistana, Inc. 100 2,175
--------------
Restaurants ....................................... 1.7%
CKE Restaurants, Inc. 3,500 147,000
NPC International, Inc. 2,600 32,988
Star Buffet 4,000 63,250
--------------
243,238
--------------
Retail Merchandising .............................. 0.3%
Dress Barn, Inc. 900 21,684
Pacific Sunwear of California 600 24,638
--------------
46,322
--------------
Retail Stores-Department .......................... 2.5%
Claire's Stores, Inc. 4,900 109,638
Coldwater Creek, Inc. 1,100 31,350
Concepts Direct, Inc. 1,800 35,213
Delia's, Inc. 2,400 54,450
Gadzooks 2,400 50,550
K&G Mens Ctr 1,500 29,250
Piercing Pagoda, Inc. 1,600 50,200
--------------
360,651
--------------
Shoes ............................................. 0.2%
Vans, Inc. 1,800 28,856
--------------
Semiconductors .................................... 1.6%
Galileo Technology Ltd. 500 16,594
Micrel, Inc. 1,000 42,313
Vitesse Semiconductor Corp. 3,300 163,556
--------------
222,463
--------------
Telecommunications ................................ 6.6%
Ace*Comm Corp. 900 19,519
Advanced Fibre Communication 1,200 49,163
Brightpoint, Inc. 3,700 171,356
LCC International, Inc. 1,700 36,869
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage Number
of Portfolio of Shares Value
------------ --------- --------------
<S> <C> <C> <C>
Midcom Communications, Inc. 3,000 $ 20,625
Natural Microsystems Corp. 1,700 64,388
Nextlink Communications 9,600 231,600
P-Com, Inc. 2,000 47,875
Pairgain Tech. 3,800 108,181
Premisys Communications, Inc. 2,000 50,938
Tekelec 3,000 102,188
Uniphase Corp. 500 39,781
-------------
942,483
-------------
Textile-Apparel ................................... 1.4%
Novel Demim Holdings Ltd. 7,400 198,875
--------------
Tobacco ........................................... 1.3%
800-Jr Cigar, Inc. 5,400 189,000
--------------
Transportation-Miscellaneous ...................... 0.7%
Travel Services International, Inc. 4,800 99,000
--------------
TOTAL COMMON STOCK (Cost $12,214,053) 14,132,926
--------------
PREFERRED STOCK ................................... 1.4%
- ------------------------------
Trans World Airlines 8,000 203,000
--------------
TOTAL INVESTMENTS 100.0% $ 14,335,926
==============
</TABLE>
<PAGE>
PENN SERIES FUNDS, INC.
Statement of Assets and Liabilities (in 000's)
================================================================================
September 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Emerging
Growth
Fund
==========
<S> <C>
Investments at value ........................................................... $ 14,336
Cash ........................................................................... 0
Interest, dividends and reclaims receivable .................................... 4
Receivable for investment securities sold ...................................... 1,616
Receivable for capital stock sold .............................................. 38
Net unrealized appreciation on forward foreign currency contracts .............. -
Other assets ................................................................... -
----------
Total Assets ......................................................... 15,994
----------
LIABILITIES:
Cash overdraft ................................................................. 148
Payable for investment securities purchased .................................... 1,257
Payable for capital stock redeemed ............................................. 30
Dividends payable .............................................................. 0
Payable to the investment advisor .............................................. 7
Payable to The Penn Mutual Life Insurance Co. .................................. 0
Net unrealized appreciation on forward foreign currency contracts .............. 0
Other liabilities .............................................................. 5
----------
Total Liabilities ....................................................... 1,447
----------
NET ASSETS ..................................................................... $ 14,547
==========
Shares of $.10 par value capital stock issued
and outstanding ............................................................. 935
Net asset value, offering and redemption price per share ....................... $ 15.55
Net assets consist of:
Capital paid in ............................................................. $ 10,976
Undistributed net investment income ......................................... (21)
Accumulated net realized gain (loss) on investment transactions
and foreign exchange ..................................................... 1,663
Net unrealized appreciation (depreciation) in value of investments,
futures contracts and foreign currency related items ..................... 1,929
----------
Total net assets ...................................................... $ 14,547
==========
(1) Investments at cost ........................................................ $ 12,407
</TABLE>
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF OPERATIONS - FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 (UNAUDITED)
(Dollar Amounts in Thousands)
================================================================================
<TABLE>
<CAPTION>
Emerging
Growth
Fund
=========
<S> <C>
INVESTMENT INCOME:
Dividends .................................................................... $12
Interest ..................................................................... 7
Foreign tax withheld ......................................................... 0
---------
Total investment income ............................................... 19
---------
EXPENSES:
Investment advisory fees ..................................................... 28
Administration fees .......................................................... 5
Accounting fees .............................................................. 3
Custodian fees and expenses .................................................. 9
Other expenses ............................................................... 2
---------
Total expenses ........................................................ 47
Less: Expense waivers ................................................. (7)
---------
Net expenses .................................................... 40
---------
Net investment income (loss) ................................................. (21)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions ............................. 1,663
Net realized foreign exchange gain ....................................... 0
Change in net unrealized appreciation of investments, futures
contracts and foreign currency related items .......................... 1,929
---------
Net realized and unrealized gain on investments .............................. 3,592
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................................... $3,571
=========
</TABLE>
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
====================================================================================================================================
Emerging Growth Fund *
=======================================
Nine months Year
ended ended
09/30/97 December 31,
INCREASE IN NET ASSETS: (unaudited) 1996
================= =================
<S> <C> <C>
OPERATIONS:
Net investment income (loss) .............................................................. $ (21) $ -
Net realized gain on investment transactions .............................................. 1,663 -
Net realized foreign exchange gain ........................................................ - -
Net change in unrealized appreciation / depreciation of investments and
foreign currency related items ......................................................... 1,929 -
----------------- ---------------
Net increase in net assets resulting from operations ................................ 3,571 -
----------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ..................................................................... - -
Net realized capital gains ................................................................ - -
In excess of net investment income ........................................................ - -
Return of capital ......................................................................... - -
----------------- ---------------
Total distributions ................................................................. - -
----------------- ---------------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets from capital share transactions ............................. 10,796 -
----------------- ---------------
TOTAL INCREASE IN NET ASSETS .............................................................. 14,547 -
NET ASSETS, beginning of period ........................................................... - -
----------------- ---------------
NET ASSETS, end of period ................................................................. $ 14,547 $ -
================= ===============
</TABLE>
* Commenced operations on May 1, 1997.
<PAGE>
================================================================================
PENN SERIES FUNDS, INC.
Notes To Financial Statements - SEPTEMBER 30, 1997 (Unaudited)
================================================================================
1 -- Significant Accounting Policies
Penn Series Funds, Inc. (Penn Series) was incorporated in Maryland on April 22,
1982. Penn Series is registered under the Investment Company Act of 1940, as
amended, as an open-end, diversified management investment company.
Penn Series is presently offering shares in the Emerging Growth Fund (the Fund).
It is authorized under its Articles of Incorporation to issue a separate class
of shares in each of two additional funds. Each Fund would have its own
investment objective and policy.
The following is a summary of significant accounting policies followed by Penn
Series in the preparation of its financial statements. The preparation of
financial statements requires the use of management's estimates.
Investment Valuation:
Emerging Growth Fund -- Portfolio securities listed on a national
securities exchange are valued at the last sale price on the securities exchange
or securities market on which such securities primarily are traded or, if there
has been no sale on that day, at the mean between the current closing bid and
asked prices. All other securities for which over-the-counter market quotations
are readily available will be valued on the basis of the mean between the last
current bid and asked prices. When market quotation are not readily available,
or when restricted or other assets are being valued, the securities or assets
will be valued at fair value as determined by The Board.
Foreign Currency Translation -- The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis: market value of investment securities, assets
and liabilities at the current rate of exchange, purchases and sales of
investment securities, income and expenses at the relevant rates of exchange
prevailing on the respective dates of such transactions.
The Fund does not isolate that portion of realized and unrealized gains and
losses on investments in equity securities which are due to changes in the
foreign exchange rate from that which is due to changes in market prices of
equity securities.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the level of governmental
supervision and regulation of foreign securities markets and the possibility of
political or economic instability.
Security Transactions And Investment Income: Security transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date and interest income is accrued as earned. The cost of investment securities
sold is determined by using the specific identification method for both
financial reporting and income tax purposes.
Dividends To Shareholders: Dividends of investment income and realized
capital gains of the Fund will be declared and paid annually. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles.
Federal Income Taxes: It is the policy of the Fund to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income, including realized gains,
to its shareholders. Therefore, no provision is made for federal income or
excise taxes.
2 -- Derivative Financial Instruments
Off-Balance Sheet Risk
The Fund may trade financial instruments with off-balance sheet risk in the
normal course of investing activities and to assist in managing exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments include written options, forward foreign currency exchange
contracts and futures contracts.
The notional or contractual amounts of these instruments represent the
investment the Fund has in particular classes of financial instruments and do
not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transaction are considered.
<PAGE>
================================================================================
PENN SERIES FUNDS, INC.
Notes To Financial Statements - SEPTEMBER 30, 1997 (Unaudited)
================================================================================
2 -- Derivative Financial Instruments, continued
Derivative Financial Instruments Held or Issued for Purposes Other Than Trading
Futures Contracts --The Fund, may enter into financial futures contracts
for the delayed delivery of securities, currency or contracts based on financial
indices on a future date. The Fund is required to deposit either in cash or
securities an amount equal to a certain percentage of the contract amount.
Subsequent payments are made or received by a Fund each day, dependent on daily
fluctuations in the value of the underlying security, and are recorded for
financial statement purposes as unrealized gains or losses by a Fund. The Fund's
investment in financial futures contracts is designed only to hedge against
anticipated future changes in interest or exchange rates. Should interest or
exchange rates move unexpectedly, the Fund may not achieve the anticipated
benefits of the financial futures contracts and may realize a loss.
Written Options -- The Fund, may write covered calls. Additionally, the
Fund may buy put or call options for which premiums are paid whether or not the
option is exercised. Premiums received from writing options which expire are
treated as realized gains. Premiums received from writing options which are
exercised or are closed are offset against the proceeds or amount paid on the
transaction to determine the realized gain or loss. If a put option is exercised
the premium increases the cost basis of the securities purchased by the Fund. As
writer of an option, the Fund may have no control over whether the underlying
securities may be sold (call) and, as a result, bears the market risk of an
unfavorable change in the price of the securities underlying the written option.
Forward Foreign Currency Contracts -- The Fund may enter into forward
foreign currency exchange contracts as a way of managing foreign exchange rate
risk. The Fund may enter into these contracts to fix the U.S. dollar value of a
security that it has agreed to buy or sell for the period between the date the
trade was entered into and the date the security is delivered and paid for. The
Fund may also use these contracts to hedge the U.S. dollar value of securities
it already owns denominated in foreign currencies.
Forward foreign currency contracts are valued at the forward rate, and are
marked-to-market daily. The change in market value is recorded by the Fund as an
unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
currency contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain the might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts.
3--Investment Advisory and Other Corporation
Administrative and Corporate Services
Under an administrative and corporate services agreement, The Penn Mutual Life
Insurance Company ("Penn Mutual") serves as administrative and corporate
services agent for the Fund. The Fund pays Penn Mutual, on a quarterly basis, an
annual fee equal to 0.15% of each of the Fund's average daily net assets.
Investment Advisory Services
Under the investment advisory agreement, the following advisor manages the
investments of the Fund and provide guidance on certain accounting matters:
<TABLE>
<CAPTION>
Advisor Penn Series Fund
------- ----------------
<S> <C>
Independence Capital Management, Inc. Emerging Growth Fund
(A wholly owned subsidiary of Penn
Mutual)
</TABLE>
The Fund pays the advisor, on a monthly basis, an annual advisory fee based on
the average daily net assets, at the following rates pursuant to the investment
advisory agreement: 0.80%, Independence Capital Management, Inc. currently
serves as the investment advisor and Robertson Stephens acts as sub-advisor to
assist in working to achieve the investment objectives of the Fund.
<PAGE>
================================================================================
PENN SERIES FUNDS, INC.
Notes To Financial Statements - SEPTEMBER 30, 1997 (Unaudited)
================================================================================
3 -- Investment Advisory and Other Corporate Services, continued
Expenses and Limitations Thereon
The Fund bears all expenses of its operations other than those incurred by the
investment advisors under their respective investment advisory agreements and
those incurred by Penn Mutual under its administrative and corporate services
agreement. The investment advisor and Penn Mutual have each voluntarily agreed
to waive fees or reimburse expenses to the extent each of the Fund's expense
ratio (excluding interest, taxes, brokerage, other capitalized expenses, but
including investment advisory and administrative and corporate services fees)
exceeds the applicable expense limitations for the Fund. The expense limitation
for the Fund is 1.15%.
Fees were paid to non-affiliated Directors of Penn Series for the five months
ended September 30,1997. However, no person received compensation from Penn
Series who is an officer, director, or employee of Penn Series, the investment
advisor, administrator, accounting agent or any parent or subsidiary thereof.
4 -- Capital Stock
Transactions in capital stock of the Emerging Growth Fund were as follows:
<TABLE>
<CAPTION>
Period Ended
September 30 1997
--------------------------
Shares Amount
----------- -----------
<S> <C> <C>
Shares sold......................................................... 974,229 $11,516,046
Shares issued to shareholders in reinvestment of
Net investment income.............................................. 0 0
Net realized gain from investment transactions..................... 0 0
Shares reacquired................................................... (38,860) (539,673)
----------- -----------
935,369 $10,976,373
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
5 -- Purchases and Sales of Investments
<TABLE>
<CAPTION>
Emerging Growth Fund
--------------------------
Purchases Sales
----------- -----------
<S> <C> <C>
Long Term U.S. Govt. and Agency Obligations........................ $ 0 $ 0
Other Long-Term Securities......................................... 23,355,856 13,559,145
----------- -----------
Totals........................................................... $23,355,856 $13,559,145
=========== ===========
</TABLE>
<PAGE>
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B:
The Unaudited Financial Statements for the Emerging Growth Fund for
the period from May 1, 1997 (commencement of operations) through
September 30, 1997:
Schedule of Investments-for the five months ended September 30, 1997
Statement of Assets & Liabilities-for the five months ended
September 30, 1997
Statement of Operations-for the five months ended September 30, 1997
Statement of Changes in Net Assets for the five months ended
September 30, 1997
Notes to Financial Statements
The Unaudited Financial Statements of the Growth Equity, Value
Equity, Small Capitalization, Emerging Growth, Flexibly Managed,
International, Quality Bond, High Yield Bond and Money Market Funds
for the periods ended June 30, 1997 are hereby incorporated by
reference to the Statement of Additional Information from Form N-
30D, the Semi-Annual Report to Shareholders dated June 30, 1997:
Schedule of Investments-June 30, 1997
Statement of Assets & Liabilities-June 30, 1997
Statement of Operations-June 30, 1997
Statement of Changes in Net Assets for the periods ended June 30,
1997 and June 30, 1996
Notes to Financial Statements
The Audited Financial Statements of the Growth Equity, Value
Equity, Small Capitalization, Flexibly Managed, International,
Quality Bond, High Yield Bond and Money Market Funds for the fiscal
year ended December 31, 1997
Report of Independent Accountants
Schedules of Investments - December 31, 1996
Statement of Assets and Liabilities - December 31, 1996
Statement of Operations for the year ended December 31, 1996
Statements of Changes in Net Assets for the years ended
December 31, 1996 and 1995
Notes to Financial Statements
C-1
<PAGE>
(b) Exhibits (numbers correspond to numbers in list of exhibits set forth in
Item 24(b) of Form N-1A)
1. Articles of Incorporation -Previously filed on April 26, 1983 as
Exhibit 1 to Post-Effective Amendment No. 24 to this Registration
Statement and incorporated herein by reference.
2. By-Laws - Previously filed on August 27, 1992 as Exhibit 2 to Post-
Effective Amendment No. 37 to this Registration Statement and
incorporated herein by reference.
3. None.
4. None (outstanding shares of common stock are recorded on the books
and records of the Registrant - Certificates of stock are not
issued).
5. (a) Investment Advisory Agreement between the Registrant and T.
Rowe Price Associates, Inc. with respect to the Flexibly
Managed and High Yield Bond Funds - Previously filed on March
10, 1989 as Exhibit 5(a) to Post-Effective Amendment No.33 to
this Registration Statement and incorporated herein by
reference.
(b) Investment Advisory Agreement between the Registrant and
Independence Capital Management, Inc. with respect to the
Growth Equity, Quality Bond and Money Market Funds-Previously
filed on August 27, 1992 as Exhibit 5(b) to Post-Effective
Amendment No. 37 to this Registration Statement and
incorporated herein by reference.
(c) Form of Investment Advisory Agreement between the Registrant
and OpCap Advisors with respect to the Value Equity and Small
Capitalization Funds, filed herewith as Exhibit 5(c).
(d) Investment Advisory Agreement between the Registrant and
Vontobel USA Inc. - Previously filed on August 27,1992 as
Exhibit 5(e) to Post-Effective Amendment No. 37 to this
Registration Statement and incorporated herein by reference.
(e) Investment Advisory Agreement between the Registrant and
Independence Capital Management, Inc. with respect to the
Emerging Growth Fund filed, herewith as Exhibit 5(e).
C-2
<PAGE>
(f) Form of Sub-Advisory Agreement between Independence Capital
Management, Inc. and RS Investment Management, Inc. with
respect to the Emerging Growth Fund, filed herewith as Exhibit
5(f).
6. None. Common stock of the Registrant is sold only to The Penn
Mutual Life Insurance Company and its affiliated insurance companies
for their general or separate accounts.
7. None.
8. (a) Amended and Restated Custodian Agreement between the Registrant
and Provident National Bank - Previously filed on April 26,
1993 as Exhibit 8(a) to Post-Effective Amendment No. 38 to this
Registration Statement and incorporated herein by reference.
(b) Global Custody Agreement between Barclays Bank PLC, Provident
National Bank and the Registrant - Previously filed on April
26, 1993 as Exhibit 8(b) to Post-Effective Amendment No. 38 to
this Registration Statement and incorporated herein by
reference.
9. (a) Administrative and Corporate Services Agreement between the
Registrant and The Penn Mutual Life Insurance Company, filed
herewith as Exhibit 9(a).
(b) Accounting Services Agreement between the Registrant and
Provident Financial Processing Corporation - Previously filed
on March 10, 1990 as Exhibit 9(b) to Post-Effective Amendment
No. 33 to this Registration Statement and incorporated herein
by reference.
(c) Agreement between the Registrant and Provident Financial
Processing Corporation on fees for services under Accounting
Services Agreement - Previously filed on February 24, 1995 as
Exhibit 9(c) to Post-Effective Amendment No. 43 to this
Registration Statement and incorporated herein by reference.
10. Opinion and Consent of Morgan, Lewis & Bockius LLP- Previously filed
on April 29, 1996 as Exhibit 10 to Post-Effective Amendment No. 43
to this Registration Statement and incorporated herein by reference.
C-3
<PAGE>
11. (a) Consent of Coopers & Lybrand L.L.P. - Previously filed on
February 14, 1997 as Exhibit 11(a) to Post-Effective Amendment
No. 44 and incorporated herein by reference.
(b) Powers of Attorney of Directors - Previously filed on February
14, 1997 as Exhibit 11(b) to Post-Effective Amendment No. 44 to
this Registration Statement and incorporated herein by
reference.
12. None.
13. None.
14. None.
15. None.
16. None.
27. Financial Data Schedules. Filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant
The Penn Mutual Life Insurance Company ("Penn Mutual") is the owner of
100% of the outstanding common stock of the Registrant. For further
information on the ownership of the outstanding common stock of the
Registrant, see "General Information" and "Voting Rights" in the
Prospectus and "Ownership of Shares" in the Statement of Additional
Information, which are incorporated hereunder by reference.
Penn Mutual is the record and beneficial owner of 100% of the
outstanding common stock of The Penn Insurance and Annuity Company, a
Delaware corporation.
Penn Mutual is the record and beneficial owner of 100% of the
outstanding common stock of Independence Capital Management., Inc., a
Pennsylvania corporation, and registered investment adviser.
Penn Mutual is the record and beneficiary owner of 100% of the
outstanding common stock of The Penn Janney Fund, Inc. Penn Janney
Fund, Inc. is a Pennsylvania corporation and invests in new business.
Penn Mutual is the record and beneficial owner of 100% of the
outstanding common stock of The Pennsylvania Trust Company, a
Pennsylvania corporation.
C-4
<PAGE>
Penn Mutual is the record and beneficial owner of 100% of the
outstanding common stock of Independence Square Properties, Inc., a
holding corporation incorporated in Delaware.
Independence Square Properties, Inc. is the record and beneficial owner
of 100% of the outstanding common stock of the following corporations:
Penn Glenside Corp., Penn Wayne Corp., St. James Realty Corp.,
Investors' Mortgage Corp. and Christie Street Properties, Inc., all
Pennsylvania corporations; and Indepro Corp., Economic Resources
Associates, Inc. and WPI Investment Company, both Delaware corporations.
Indepro Corp. is the record and beneficial owner of 100% of the
outstanding common stock of Indepro Property Fund I Corp., Indepro
Property Fund II Corp., Commons One Corp. and West Hazleton, Inc., all
Delaware corporations.
Independence Square Properties, Inc. is the record and beneficial owner
of 100% of the outstanding common stock of Janney Montgomery Scott Inc.,
a Delaware corporation, and Hornor, Townsend & Kent, Inc., a
Pennsylvania corporation.
Janney Montgomery Scott Inc. is the record and beneficial owner of 100%
of the outstanding common stock of the following corporations: Addison
Capital Management, Inc., a Pennsylvania corporation; JMS Resources,
Inc., a Pennsylvania corporation; and JMS Investor Services, Inc., a
Delaware corporation.
Penn Mutual and Janney Montgomery Scott Inc. each is the record and
beneficial owner of a subscription agreement for 50% of the common stock
of Penn Janney Advisory, Inc., a Pennsylvania corporation.
Item 26. Number of Holders of Securities
The Penn Mutual Life Insurance Company and its wholly owned subsidiary,
The Penn Insurance and Annuity Company, and their separate accounts, are
the sole record holders of the outstanding shares of the Registrant.
Item 27. Indemnification
Article VII, Section (3) of the Articles of Incorporation of the
Registrant provides generally that directors and officers of the
Registrant shall be indemnified by the Registrant to the full extent
permitted by Maryland law and by the Investment Company Act of 1940, now
or hereinafter in force.
C-5
<PAGE>
Article VI, Section (2) of the By-laws of the Registrant provides
generally that directors and officers of the Registrant shall be
indemnified to the full extent permissible under Maryland law now or
hereafter in force, except that such indemnity shall not protect
directors and officers against liability to the Registrant or any
shareholder to which such person would otherwise be subject by reason of
wilful misfeasance, bad faith, gross negligence or reckless (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, 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 Advisers
T. Rowe Price Associates, Inc.
See Item 28 of Post-Effective Amendment No. 11 to the Form N-1A
Registration Statement of T. Rowe Price Spectrum Funds, Inc. (File 33-
10992), filed December 16, 1996, which is incorporated herein by
reference.
Independence Capital Management, Inc.
Independence Capital Management, a wholly-owned subsidiary of The Penn
Mutual Life Insurance Company, is a Pennsylvania corporation which
provides investment advisory services. To the knowledge of the
Registrant none of the directors or executive officers of Independence
Capital Management is, or have been, at any time during the past two
years, engaged in any other business, profession, vocation, or
employment of a substantial nature, except that certain directors and
officers of Independence Capital Management also hold or have held
various positions with affiliates of Independence Capital Management,
including its parent, The Penn Mutual Life Insurance Company.
OpCap Advisors
See Form ADV Registration Statement of OpCap Advisors filed under the
Investment Advisers Act of 1940, as amended, on July 16, 1997 Schedules
D and F (File No. 801-27180), for information on the business,
profession, vocation or employment of a substantial nature in which
each director or officer of OpCap Advisors, is or has been, at any time
during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee.
C-6
<PAGE>
Vontobel USA Inc.
See Form ADV Registration Statement of Vontobel USA Inc. filed under
the Investment Advisers Act of 1940, as amended, on December 18, 1996
Schedules D and F (File No. 801-21953), for information on the
business, profession, vocation or employment of a substantial nature in
which Vontobel USA Inc., and each director or officer of Vontobel USA
Inc., is or has been, at any time during the past two fiscal years,
engaged for his own account or in the capacity of director, officer,
employee, partner or trustee.
Item 29. Principal Underwriters
Not Applicable.
Item 30. Location of Accounts and Records
Penn Series Funds, Inc.
600 Dresher Road
Horsham, PA 19044
PFPC Inc.
Bellevue Corporate Center
103 Bellevue Parkway
Wilmington, DE 19809
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202
Independence Capital Management, Inc.
600 Dresher Road
Horsham, PA 19044
OpCap Advisors
Oppenheimer Capital
One World Financial Center
New York, NY 10281
Vontobel USA Inc.
450 Park Avenue
New York, NY 10022
Item 31. Management Services
C-7
<PAGE>
Not applicable.
Item 32. Undertakings
The Registrant undertakes to file a post-effective amendment, using
financial statements, which need not be certified, within four to six
months from the effective date of the Registrant's 1933 Act registration
statement.
The Registrant undertakes to furnish each person to whom a prospectus is
delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all the requirements for effectiveness of this Amendment to the
Registration Statement pursuant to Rule 485(b) and has duly caused this Post-
Effective Amendment to this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Horsham, Commonwealth
of Pennsylvania on the 21st day of November, 1997.
PENN SERIES FUNDS, INC.
By: /s/ L. Stockton Illoway
----------------------------------
L. Stockton Illoway, President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to this Registration Statement of the Registrant has been signed below
by the following persons in the capacities indicated on the 21st day of
November, 1997.
Signature Title
/s/ L. Stockton Illoway President (Principal Executive
- -------------------------- Officer) and Director
L. Stockton Illoway
/s/ Steven M. Herzberg Treasurer (Principal
- ------------------------- Financial Officer)
Steven M. Herzberg
/s/ Ann M. Strootman Controller (Principal
- ------------------------- Accounting Officer)
Ann M. Strootman
* Eugene Bay Director
* James S. Greene Director
* L. Stockton Illoway Director
* Richard J. Liburdi Director
* William H. Loesche, Jr. Director
* M. Donald Wright Director
* By: /s/ L. Stockton Illoway
------------------------------------
L. Stockton Illoway, Attorney-In-Fact
C-9
<PAGE>
EXHIBIT INDEX
(1) Articles of Incorporation -Previously filed on April 26, 1983 as
Exhibit 1 to Post-Effective Amendment No. 24 to this Registration
Statement, and incorporated herein by reference.
(2) By-Laws - Previously filed on August 27, 1992 as Exhibit 2 to
Post-Effective Amendment No. 37 to this Registration Statement,
and incorporated herein by reference.
(3) None.
(4) None (outstanding shares of common stock are recorded on the books
and records of the Registrant - Certificates of stock are not
issued).
(5)(a) Investment Advisory Agreement between the Registrant and T. Rowe
Price Associates, Inc. with respect to the Flexibly Managed and
High Yield Bond Funds - Previously filed on March 10, 1989 as
Exhibit 5(a) to Post-Effective Amendment No.33 to this
Registration Statement, and incorporated herein by reference.
(5)(b) Investment Advisory Agreement between the Registrant and
Independence Capital Management, Inc. with respect to the Growth
Equity, Quality Bond and Money Market Funds- Previously filed on
August 27, 1992 as Exhibit 5(b) to Post-Effective Amendment No. 37
to this Registration Statement, and incorporated herein by
reference.
Ex-99.B(5)(c) Form of Investment Advisory Agreement between the Registrant and
OpCap Advisors with respect to the Value Equity and Small
Capitalization Funds, filed herewith.
(5)(d) Investment Advisory Agreement between the Registrant and Vontobel
USA Inc. -Previously filed on August 27,1992 as Exhibit 5(e) to
Post-Effective Amendment No. 37 to this Registration Statement,
and incorporated herein by reference.
Ex-99.B(5)(e) Investment Advisory Agreement between the Registrant and
Independence Capital Management, Inc. with respect to the Emerging
Growth Fund, filed herewith.
Ex-99.B(5)(f) Form of Investment Sub-Advisory Agreement between Independence
Capital Management, Inc. and RS Investment Management, Inc. with
respect to the Emerging Growth Fund, filed herewith.
C-10
<PAGE>
(6) None. Common stock of the Registrant is sold only to The Penn
Mutual Life Insurance Company and its affiliated insurance
companies for their general or separate accounts.
(7) None.
(8)(a) Amended and Restated Custodian Agreement between the Registrant
and Provident National Bank - Previously filed on April 26, 1993
as Exhibit 8(a) to Post-Effective Amendment No. 38 to this
Registration Statement, and incorporated herein by reference.
(8)(b) Global Custody Agreement between Barclays Bank P.C., Provident
National Bank and the Registrant - Previously filed on April 26,
1993 as Exhibit 8(b) to Post-Effective Amendment No. 38 to this
Registration Statement, and incorporated herein by reference.
Ex-99.B(9)(a) Administrative and Corporate Services Agreement between the
Registrant and The Penn Mutual Life Insurance Company, filed
herewith.
(9)(b) Accounting Services Agreement between the Registrant and Provident
Financial Processing Corporation - Previously filed on March 10,
1990 as Exhibit 9(b) to Post-Effective Amendment No. 33 to this
Registration Statement, and incorporated herein by reference.
(9)(c) Agreement between the Registrant and Provident Financial
Processing Corporation on fees for services under Accounting
Services Agreement -Previously filed on February 24, 1995 as
Exhibit 9(c) to Post-Effective Amendment No. 43 to this
Registration Statement, and incorporated herein by reference.
(10) Opinion and Consent of Morgan, Lewis & Bockius LLP- Previously
filed on April 29, 1996 as Exhibit (10) to Post-Effective
Amendment No. 43 to this Registration Statement and incorporated
herein by reference.
(11)(a) Consent of Coopers & Lybrand L.L.P. incorporated herein by
reference to Post-Effective Amendment No. 44 to this Registration
Statement filed on February 14, 1997.
(11)(b) Powers of Attorney of Directors incorporated herein by reference
to Post-Effective Amendment No. 44 to this Registration Statement
filed on February 14, 1997.
(12) None.
C-11
<PAGE>
(13) None.
(14) None.
(15) None.
(16) None.
Ex-27 Financial Data Schedules. Filed herewith.
C-12
<PAGE>
Exhibit 99.B(5)(c)
INVESTMENT ADVISORY AGREEMENT
Between
PENN SERIES FUNDS, INC.
And
OPCAP ADVISORS
Relating To The
VALUE EQUITY FUND
And
SMALL CAPITALIZATION FUND
INVESTMENT ADVISORY AGREEMENT, made as of the 5th day of November, 1997, by
and between PENN SERIES FUNDS, INC. ("Penn Series"), a corporation organized and
existing under the laws of the State of Maryland, and OPCAP ADVISORS
("Adviser"), a general partnership organized and existing under the laws of the
State of Delaware.
WITNESSETH:
WHEREAS, Penn Series is an open-end management investment company
registered as such under the federal Investment Company Act of 1940, as amended
(the "Act"); and
WHEREAS, Penn Series is authorized to issue shares in separate series with
each series representing interests in a separate fund of securities and other
assets; and
WHEREAS, Adviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, Penn Series desires Adviser to render investment advisory services
to Penn Series, and Adviser desires to provide such services, in the manner and
on the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. Investment Advisory Services. Adviser shall serve as investment
adviser and shall supervise and direct the investments of the Value Equity and
Small Capitalization Funds of Penn Series (collectively the "Funds" and
individually the " Fund") in accordance with the investment objectives, program
and restrictions applicable to the Funds as provided in Penn Series' prospectus
and statement of additional information, as amended from time to time, and such
other limitations as may be imposed by law or as Penn Series may impose with
notice in writing to Adviser. No investment will be made by Adviser for a Fund
if that investment is in violation of the objectives, program, restrictions or
limitations of the Fund. Adviser shall not
<PAGE>
take custody of any assets of Penn Series, but shall issue settlement
instructions to the custodian designated by Penn Series (the "Custodian").
Adviser shall obtain and evaluate such information relating to the economy,
industries, businesses, securities markets and securities as it may deem
necessary or useful in the discharge of its obligations hereunder and shall
formulate and implement a continuing program for the management of the assets
and resources of each Fund in a manner consistent with the investment objectives
of the Fund. In furtherance of this duty, Adviser, as agent and attorney-in-fact
for Penn Series, is authorized, in its discretion and without prior consultation
with Penn Series, to:
i. buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds, and other securities or assets; and
ii. place orders and negotiate the commissions (if any) for the
execution of transactions in securities with or through such
brokers, dealers, underwriters or issuers as Adviser may select,
in conformance with the provisions of Paragraph 4 herein;
provided, however, that Adviser shall make no investment for a Fund that is in
violation of the objectives, program, restrictions or limitations of the Fund.
2. Accounting and Related Services. Adviser agrees to cooperate with the
Accounting Services Agent appointed by Penn Series pursuant to the Accounting
Services Agreement. As requested from time to time, Adviser shall provide Penn
Series and its Accounting Services Agent with such information as may be
reasonably necessary to properly account for financial transactions with respect
to each Fund.
3. Fees.
a. Fee Rate. For all of the services rendered to Penn Series hereunder,
Adviser shall be paid a fee by Penn Series, at the annual rate of 0.50%
of each Fund's average daily net assets.
b. Method of computation. The fee for each Fund shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid
monthly to Adviser as of the first business, day of the next succeeding
calendar month. The daily fee will be computed by multiplying the
fraction of one over the number of calendar days in the year by the
annual rate applicable to the Fund as set forth above, and multiplying
this product by the net assets of the Fund. The Fund's net assets, for
purposes of the calculations described above, will be determined in
accordance with Penn Series' prospectus and statement of additional
information as of the close of business on the most recent previous
business day on which Penn Series was open for business.
2
<PAGE>
c. Expense Limitation. The expense limitation of each Fund, as a
percentage of the Fund's average net assets, is 1.00%. To the extent
that the Fund's total expenses for a fiscal year (excluding interest,
taxes, brokerage, other expenses which are capitalized in accordance
with generally accepted accounting principles, and extraordinary
expenses, but including investment advisory and administrative and
corporate services fees before any adjustment pursuant to this
provision) exceed the expense limitation for the Fund in an amount up
to and including 0.10% of the average daily net assets of the Fund,
such excess amount shall be a liability of Adviser to Penn Series. The
liability (if any) of Adviser to pay Penn Series such excess amount
shall be determined on a daily basis. If, at the end of each month,
there is any liability of Adviser to pay Penn Series such excess
amount, the advisory fee shall be reduced by such liability. If, at the
end of each month there is no liability of Adviser to pay Penn Series
such excess amount and if payments of the advisory fee at the end of
prior months during the fiscal year have been reduced in excess of that
required to maintain expenses within the expense limitation, such
excess reduction shall be recaptured by Adviser and shall be payable by
Penn Series to Adviser along with the advisory fee payable to Adviser
for that month.
4. Brokerage. In executing portfolio transactions and selecting brokers
or dealers for a Fund, Adviser will use its best efforts to seek the best price
and the most favorable execution of its orders. In assessing the best price and
the most favorable execution for any transaction, Adviser shall consider the
breadth of the market in the security, the price of the security, the skill,
financial condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any. Where best price and most favorable
execution will not be compromised, Adviser may take into account the research
and related services that the broker has provided to Penn Series or the Adviser.
In addition, Adviser is authorized to take into account the sale of variable
contracts which are invested in Penn Series shares in allocating to brokers or
dealers purchase and sale orders for portfolio securities, provided that Adviser
believes that the quality of the transaction and commission are comparable to
what they would be with other qualified firms. Adviser shall regularly advise
Penn Series' board of directors as to all payments of commissions and as to its
brokerage policies and practices and shall follow such instructions with respect
thereto as may be given by Penn Series' board.
5. Use of the Services of Others. Adviser may employ, retain or
otherwise avail itself of the services or facilities of other persons or
organizations for the purpose of providing itself or Penn Series, as
appropriate, with such statistical and other factual information, such advice
regarding economic factors and trends, such advice as to occasional transactions
in specific securities or such other information, advice or assistance as
Adviser may deem necessary, appropriate or convenient for the discharge of its
obligations hereunder or otherwise helpful to Penn Series, or in the discharge
of Adviser's overall responsibilities with respect to the other accounts which
it serves as investment adviser.
3
<PAGE>
6. Personnel, Office Space, and Facilities. Adviser at its own expense
shall furnish or provide and pay the cost of such office space, office
equipment, office personnel, and office services as it, or any affiliated
corporation of Adviser, requires in the performance of services under this
Agreement.
7. Ownership of Software and Related Material. All computer programs,
magnetic tapes, written procedures and similar items developed and used by
Adviser or any affiliate in performance of this Agreement are the property of
Adviser and will not become the property of Penn Series.
8. Certain Personnel. Adviser agrees to permit individuals who are
officers or employees of Adviser to serve (if duly elected or appointed) as
officers, directors, members of any committee of directors, members of any
advisory board, or members of any other committee of Penn Series, without
remuneration or other cost to Penn Series. Adviser shall pay all salaries,
expenses, and fees of officers and/or directors of Penn Series who are
affiliated with Adviser.
9. Reports to Penn Series and Cooperation with Accountants. Adviser, and
any affiliated corporation of Adviser performing services for Penn Series
described in this Agreement, shall furnish to or place at the disposal of Penn
Series, such information, reports, evaluations, analyses and opinions as Penn
Series may, at any time or from time to time, reasonably request or as Adviser
may deem helpful, to reasonably ensure compliance with applicable laws and
regulations or for any other purpose. Adviser and its affiliates shall
cooperate with Penn Series' independent public accountants and take all
reasonable action in the performance of services and obligations under this
Agreement to assure that the information needed by such accountants is made
available to them for the expression of their opinion without any qualification
as to the scope of their examination, including, but not limited to, their
opinion included in Penn Series' annual report under the Act and annual
amendment to Penn Series' registration statement under the Act.
10. Reports to Adviser. Penn Series shall furnish or otherwise make
available to Adviser such prospectuses, financial statements, proxy statements,
reports, and other information relating to the business and affairs of Penn
Series, as Adviser may, at any time or from time to time, reasonably require in
order to discharge its obligations under this Agreement.
11. Ownership of Records. All records required to be maintained and kept
current by Penn Series pursuant to the provisions of rules or regulations of the
Securities and Exchange Commission under Section 31(a) of the Act and that are
maintained and kept current by Adviser or any affiliated corporation of Adviser
on behalf of Penn Series are the property of Penn Series. Such records will be
preserved by Adviser itself or through an affiliated corporation for the periods
prescribed in Rule 3la-2 under the Act, where applicable, or in such other
applicable rules that may be adopted time under the Act. Such records may be
inspected by representatives
4
<PAGE>
of Penn Series at reasonable times, and, in the event of termination of this
Agreement, will be promptly delivered to Penn Series.
12. Services to Other Clients. Nothing herein contained shall limit the
freedom of Adviser or any affiliated person of Adviser to render investment
supervisory and other services to other investment companies, to act as
investment adviser or investment counselor to other persons, firms or
corporations, or to engage in other business activities, but so long as this
Agreement or any extension, renewal or amendment hereof shall remain in effect
as to a Fund, or until Adviser shall otherwise consent, Adviser shall be the
only investment adviser to the Fund. It is understood that Adviser may give
advice and take action for its other clients which may differ from advice given,
or the timing or nature of action taken, for a Fund. Adviser is not obligated
to initiate transactions for a Fund in any security which Adviser, its
principals, affiliates or employees may purchase or sell for its or their own
accounts or for other clients.
13. Confidential Relationship. Information furnished by one party to
another, including a party's respective agents and employees, is confidential
and shall not be disclosed to third parties unless required by law. Adviser, on
behalf of itself and its affiliates and representatives, agrees to keep
confidential all records and other information relating to Penn Series, except
after prior notification to and approval in writing by Penn Series, which
approval shall not be unreasonably withheld and may not be withheld where
Adviser or any affiliate may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by Penn Series.
14. Proxies. Subject to such direction and oversight by Penn Series as
the Board of Directors of Penn Series shall deem appropriate, Adviser shall vote
proxies solicited by or with respect to the issuers of securities held in each
Fund.
15. Instructions, Opinion of Counsel and Signatures. At any time Adviser
may apply to an officer of Penn Series for instructions, and may consult legal
counsel for Penn Series, in respect of any matter arising in connection with
this Agreement, and Adviser shall not be liable for any action taken or omitted
by it or by any affiliate in good faith in accordance with such instructions or
with the advice or opinion of Penn Series' legal counsel. Adviser and its
affiliates shall be protected in acting upon any instruction, advice, or opinion
provided by Penn Series or its legal counsel and upon any other paper or
document delivered by Penn Series or its legal counsel believed by Adviser to be
genuine and to have been signed by the proper person or persons and shall not be
held to have notice of any change of authority of any officer or agent of Penn
Series, until receipt of written notice thereof from Penn Series.
16. Compliance with Governmental Rules and Regulations. Except as such
responsibility may be placed upon Adviser or any affiliate expressly by or by
fair implication of, the terms of this Agreement, and except for the accuracy of
information furnished to Penn Series by Adviser or any affiliate, Penn Series
assumes full responsibility for the preparation, contents and distribution of
the prospectuses for Penn Series, for complying with all applicable
5
<PAGE>
requirements of the Act, the Securities Exchange Act of 1934, the Securities Act
of 1933, and any other laws, rules and regulations of governmental authorities
having jurisdiction over Penn Series.
17. Limitation of Liability. Neither Adviser nor any of its affiliates,
their officers, directors, employees or agents, or any person performing
executive, administrative, trading, or other functions for Penn Series (at the
direction or request of Adviser), or Adviser or its affiliates in connection
with the discharge of obligations undertaken or reasonably assumed with respect
to this Agreement, shall be liable for any error of judgment or mistake of law
or for any loss suffered by Penn Series in connection with the matters to which
this Agreement relates, except for such error, mistake or loss resulting from
willful misfeasance, bad faith, negligence or misconduct in the performance of
its, his or her duties on behalf of Penn Series or constituting or resulting
from a failure to comply with any term of this Agreement. Adviser shall not be
responsible for any loss incurred by reason of any act or omission of the
Custodian or of any broker, dealer, underwriter or issuer selected by Adviser
with reasonable care.
18. Obligations of Penn Series and Adviser. It is expressly agreed that
the obligations of Penn Series and Adviser hereunder shall not be binding upon
any of their directors, shareholders, nominees, officers, agents or employees,
personally. The execution and delivery of this Agreement have been authorized
by the board of directors of Penn Series and signed by an authorized officer of
Penn Series, acting as such, and shall bind Penn Series.
19. Indemnification by Penn Series. Penn Series will indemnify and hold
Adviser harmless from all loss, cost, damage and expense, including reasonable
expenses for legal counsel, incurred by Adviser resulting from: (i) any action
or omitting to act by Adviser or any affiliated corporation, with respect to any
service described in this Agreement, upon instructions reasonably believed by
Adviser or any affiliated corporation to have been executed by an individual who
has been identified in writing by Penn Series as a duly authorized officer of
Penn Series; or (ii) any action by Adviser or any affiliated corporation, with
respect to any service described in this Agreement, upon information provided by
Penn Series in form and under policies agreed to by Adviser and Penn Series.
Adviser shall not be entitled to such indemnification in respect of actions or
omissions constituting negligence or willful misconduct of Adviser or its
affiliates, agents or contractors, or constituting a failure by Adviser or any
affiliate to comply with any term of this Agreement. Prior to the confession of
any claim against Adviser which may be subject to this indemnification, Adviser
shall give Penn Series reasonable opportunity to defend against said claim in
its own name or in the name of Adviser.
20. Indemnification by Adviser. Adviser will indemnify and hold harmless
Penn Series from all loss, cost, damage and expense, including reasonable
expenses for legal counsel, incurred by Penn Series resulting from any claim,
demand, action or suit arising out of Adviser's or any affiliate's failure to
comply with any term of this Agreement or which arise out of the willful
misfeasance, bad faith, negligence or misconduct of Adviser, its affiliates,
their agents or contractors. Penn Series shall not be entitled to such
indemnification in respect of actions or
6
<PAGE>
omissions constituting negligence or willful misconduct of Penn Series or its
agents or contractors or constituting a failure by Penn Series to comply with
any term of this Agreement; provided, that such negligence or misconduct is not
attributable to Adviser or any person that is an affiliate of Adviser or an
affiliate of an affiliate of Adviser. Prior to confessing any claim against it
which may be subject to this indemnification, Penn Series shall give Adviser
reasonable opportunity to defend against said claim in its own name or in the
name of Penn Series. For purposes of this Section 20 and of Section 19 hereof,
no broker or dealer shall be deemed to be acting as agent or contractor of Penn
Series, Adviser or any affiliate of Adviser, in effecting or executing any
portfolio transaction for the Fund.
21. Further Assurances. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
22. Dual Interests. It is understood that some person or persons may be,
or from time to time become, directors, officers, or shareholders of both Penn
Series and Adviser (including its affiliates), and that the existence of any
such dual interest shall not affect the validity hereof or of any transactions
hereunder except as otherwise provided by a specific provision of applicable
law.
23. Term of Agreement. The term of this Agreement shall begin on the date
first above written and, unless terminated as hereinafter provided, shall
continue in effect so long as such continuation shall be specifically approved
at least annually (a) by either the board of directors of Penn Series, or by a
vote of a majority of the outstanding voting securities of the series of shares
of Penn Series representing interests in a Fund and (b) by the vote of a
majority of the directors of Penn Series who are not parties to this Agreement
or interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. Adviser shall furnish to Penn Series,
promptly upon its request, such information as may reasonably be necessary to
evaluate the terms of this Agreement with respect to a Fund or any extension,
renewal or amendment hereof.
24. Amendment and Assignment of Agreement. This Agreement may not be
amended or assigned without the affirmative vote of a majority of the
outstanding voting securities of the series of shares of Penn Series
representing interests in a Fund, and, without affecting any claim for damages
or other right that Penn Series may have as a result thereof, this Agreement
shall automatically and immediately terminate in the event of its assignment.
25. Change in Partners of Adviser. Adviser will notify Penn Series of any
change in the membership of Adviser's partnership within a reasonable time after
such change.
26. Termination of Agreement. This Agreement may be terminated by Penn
Series or by Adviser, without payment of any penalty, upon 60 days' prior notice
in writing from Penn Series to Adviser, or upon 90 days' prior notice in writing
from Adviser to Penn Series; provided, that in the case of termination by Penn
Series, such action shall have been authorized by
7
<PAGE>
resolution of a majority of its directors who are not interested persons of any
party to this Agreement, or by vote of a majority of the outstanding voting
securities of the series of shares of Penn Series representing interests in the
affected Fund.
27. Miscellaneous.
a. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of
the provisions hereof or otherwise affect their construction or
effect.
b. Interpretation. Nothing herein contained shall be deemed to
require Penn Series to take any action contrary to its Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory
requirement to which it is subject or by which it is bound, or to
relieve or deprive the board of directors of Penn Series of its
responsibility for and control of the conduct of the affairs of Penn
Series.
c. Definitions. 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 Act shall be reference to such
term or provision of the 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
Securities and Exchange Commission validly issued pursuant to the Act.
Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested person," "assignment," and "affiliated
person," as used herein, shall have the meanings assigned to them by
Section 2(a) of the Act. In addition, where the effect of a
requirement of the Act reflected in any provision of this Agreement is
relaxed by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or of general application, such
provision shall be deemed to incorporate the effect of such rule,
regulation or order.
d. Notice. Notice under the Agreement shall be in writing, addressed
and delivered or sent by registered or certified mail, postage
prepaid, to the addressed party at such address as such party may
designate for the receipt of such notices, Until further notice, it is
agreed that for this purpose the address of Penn Series is 600 Dresher
Road, Horsham, PA 19044, Attention: President, and that of Adviser is
One World Financial Center, New York, New York 10281, Attention:
General Counsel.
e. State Law. The Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Maryland
except where such state laws have been preempted by Federal law.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first above written.
Attest: PENN SERIES FUNDS, INC.
- ----------------------------- ----------------------------------
Secretary President
Attest: OPCAP ADVISORS
- ----------------------------- By: ------------------------------
Secretary
9
<PAGE>
Ex-99.B(5)(e)
INVESTMENT ADVISORY AGREEMENT
Between
PENN SERIES FUNDS, INC.
and
INDEPENDENCE CAPITAL MANAGEMENT, INC.
Relating to
PENN SERIES EMERGING GROWTH FUND
INVESTMENT ADVISORY AGREEMENT, made as of by and between PENN SERIES FUNDS,
INC. ("Penn Series"), a corporation organized and existing under the laws of the
State of Maryland, and INDEPENDENCE CAPITAL MANAGEMENT, INC. ("Adviser"), a
corporation organized and existing under the laws of the State of Pennsylvania.
WITNESSETH:
WHEREAS, Penn Series is an open-end management investment company
registered as such under the Investment Company Act of 1940, as amended (the
"Act") and is authorized to issue shares in separate series with each series
representing interests in a separate fund of securities and other assets; and
WHEREAS, Adviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the federal Investment Advisers Act of 1940, as amended; and
WHEREAS, Penn Series desires Adviser to render investment advisory services
to Penn Series in the manner and on the terms and conditions hereinafter set
forth:
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. Investment Advisory Services. Adviser shall serve as investment
adviser and shall supervise and direct the investments of the Emerging Growth
Fund of Penn Series ("the Fund"), in accordance with the investment objectives,
program and restrictions applicable to the Fund as provided in Penn Series'
Prospectus and Statement of Additional Information, as amended from time to
time, and such other limitations as may be imposed by law or as Penn Series may
impose with notice in writing to Adviser. No investment will be made by Adviser
for the Fund if
<PAGE>
that investment is in violation of the objectives, program, restrictions or
limitations of the Fund. Adviser shall not take custody of any assets of Penn
Series, but shall issue settlement instructions to the custodian designated by
Penn Series (the "Custodian"). Adviser shall obtain and evaluate such
information relating to the economy, industries, businesses, securities markets
and securities as it may deem necessary or useful in the discharge of its
obligations hereunder and shall formulate and implement a continuing program for
the management of the assets and resources of the Fund in a manner consistent
with the investment objectives of the Fund. In furtherance of this duty,
Adviser, as agent and attorney-in-fact with respect to Penn Series, is
authorized, in its discretion and without prior consultation with Penn Series,
to:
(i) buy, sell, exchange, convert, lend, and otherwise trade in any stocks,
bonds, and other securities or assets; and
(ii) place orders and negotiate the commissions (if any) for the execution
of transactions in securities with or through such brokers, dealers,
underwriters or issuers as Adviser may select, in conformance with the
provisions of Paragraph 4 herein;
provided, however, that Adviser shall make no investment for the Fund that is in
violation of the objectives, program, restrictions or limitations of the Fund.
2. Accounting and Related Services. Adviser agrees to cooperate with the
Accounting Services Agent appointed by Penn Series pursuant to the Accounting
Services Agreement entered into by Penn Series and the Accounting Services
Agreement. As requested from time to time, Adviser shall provide Penn Series
and its Accounting Services Agent with such information as may be reasonably
necessary to properly account for financial transactions with respect to the
Fund.
3. Fee.
A. Payment of Fee. For the services rendered to Penn Series under
this Agreement, Penn Series will pay Adviser a fee based on
average daily net assets of the Fund.
B. Fee Rate. The fee shall be paid at the following rates:
(i) Eighty basis points (0.80%) of the first $25,000,000 of average
daily net assets of the Fund;
(ii) Seventy-five basis points (0.75%) of the next $25,000,000 of
average daily net assets of the Fund; and
-2-
<PAGE>
(iii) Seventy basis points (0.70%) of average daily net assets of the
Fund in excess of $50,000,000.
C. Method of computation. The fee for the Fund shall be accrued
for each calendar day and the sum of the daily fee accruals shall be
paid monthly to Adviser as of the first business day of the next
succeeding calendar month. The daily fee will be computed by
multiplying the fraction of one over the number of calendar days in
the year by the annual rate applicable to the Fund as set forth above,
and multiplying this product by the net assets of the Fund. The Fund's
net assets, for purposes of the calculations described above, will be
determined in accordance with Penn Series' Prospectus and Statement of
Additional Information as of the close of business on the most recent
previous business day on which Penn Series was open for business.
D. Expense Limitation. The expense limitation of the Fund, as a
percentage of the Funds average daily net assets, is 1.15%. To the
extent that the Fund's total expenses for a fiscal year (excluding
interest, taxes, brokerage, other expenses which are capitalized in
accordance with generally accepted accounting principles, and
extraordinary expenses, but including investment advisory and
administrative and corporate service fees before any adjustment
pursuant to this provision) exceed the expense limitation for the
Fund, one-half of such excess amount shall be a liability of Adviser
to Penn Series. The liability (if any) of Adviser to pay Penn Series
one-half of such excess amount shall be determined on a daily basis.
If, at the end of each month, there is any liability of Adviser to pay
Penn Series such excess amount, the advisory fee shall be reduced by
such liability. If, at the end of each month, there is no liability of
Adviser to pay Penn Series such excess amount and if payments of the
advisory fee at the end of prior months during the fiscal year have
been reduced in excess of that required to maintain expenses within
the expense limitation, such excess reduction shall be recaptured by
Adviser and shall be payable by Penn Series to Adviser along with the
advisory fee payable to Adviser for that month. If, at the end of the
fiscal year, there is any remaining liability of Adviser to pay Penn
Series such excess amount (which has not been paid through reduction
of the advisory fee), Adviser shall remit to Penn Series an amount
sufficient to pay such remaining liability.
4. Brokerage. In executing portfolio transactions and selecting brokers
or dealers for the Fund, Adviser will use its best efforts to seek the best
price and the most favorable execution of its orders. In assessing the best
price and the most favorable execution for any transaction, Adviser shall
consider the breadth of the market in the security, the price of the security,
the skill, financial condition and execution capability of the broker or dealer,
and the reasonableness of the commission, if any. Where best price and most
favorable execution will not be compromised, Adviser may take into account the
research and related services that the broker has provided to Penn Series or the
Adviser. It is understood that the Adviser will not be deemed to have acted
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<PAGE>
unlawfully or to have breached a fiduciary duty to the Fund or be in breach of
any obligation owing to the Fund under this Agreement, or otherwise, by reason
of its having directed a securities transaction on behalf of the Fund to a
broker-dealer in compliance with the provisions of Section 28(e) of the
Securities Exchange Act of 1934 or as described from time to time in the Penn
Series' Prospectus and Statement of Additional Information. In addition,
Adviser is authorized to take into account the sale of variable contracts which
are invested in Penn Series shares in allocating to brokers or dealers purchase
and sale orders for portfolio securities, provided that Adviser believes that
the quality of the transaction and commission are comparable to what they would
be with other qualified firms. Adviser shall regularly advise Penn Series'
Board of Directors as to all payments of commissions and as to its brokerage
policies and practices and shall follow such instructions with respect thereto
as may be,,given by Penn Series' board.
5. Use of the Services of Others. Adviser may (at its cost except as
contemplated in Section 4 of this Agreement) employ, retain or otherwise avail
itself of a subadviser to assist it in performing its duties and meeting its
responsibilities under this Agreement, and may delegate to such subadviser
duties assumed by the Adviser under this Agreement. In addition, Adviser may (at
its cost, except as contemplated in Section 4 of this Agreement) employ, retain
or otherwise avail itself of the services or facilities of other persons or
organizations for the purpose of providing itself or Penn Series, as
appropriate, with such statistical and other factual information, such advice
regarding economic factors and trends, such advice as to occasional transactions
in specific securities or such other information, advice or assistance as
Adviser may deem necessary, appropriate or convenient for the discharge of its
obligations hereunder or otherwise helpful to Penn Series, or in the discharge
of Adviser's overall responsibilities with respect to the other accounts which
it serves as investment adviser.
6. Personnel, Office Space, and Facilities. Adviser at its own expense
shall furnish or provide and pay the cost of such office space, office
equipment, office personnel, and office services as it, or any affiliated
corporation of Adviser, requires in the performance of services under this
Agreement.
7. Ownership of Software and Related Material. All computer programs,
magnetic tapes, written procedures and similar items developed and used by
Adviser or any affiliate in performance of this Agreement are the property of
Adviser and will not become the property of Penn Series.
8. Certain Personnel. Adviser agrees to permit individuals who are
officers or employees of Adviser to serve (if duly elected or appointed) as
officers, directors, members of any committee of directors, members of any
advisory board, or members of any other committee of Penn Series, without
remuneration or other cost to Penn Series. Adviser shall pay all salaries,
expenses, and fees of officers and/or directors of Penn Series who are
affiliated with Adviser.
9. Reports to Penn Series and Cooperation with Accountants. Adviser, and
any affiliated corporation of Adviser performing services for Penn Series
described in this Agreement,
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<PAGE>
shall furnish to or place at the disposal of Penn Series, such information,
reports, evaluations, analyses and opinions as Penn Series may, at any time or
from time to time, reasonably request or as Adviser may deem helpful, to
reasonably ensure compliance with applicable laws and regulations or for any
other purpose. Adviser and its affiliates shall cooperate with Penn Series'
independent public accountants and take all reasonable action in the performance
of services and obligations under this Agreement to assure that the information
needed by such accountants is made available to them for the expression of their
opinion without any qualification as to the scope of their examination,
including, but not limited to, their opinion included in Penn Series' annual
report under the Act and annual amendment to Penn Series' registration statement
under the Act.
10. Reports to Adviser. Penn Series shall furnish or otherwise make
available to Adviser such prospectuses, financial statements, proxy statements,
reports, and other information relating to the business and affairs of Penn
Series, as Adviser may, at any time or from time to time, reasonably require in
order to discharge its obligations under this Agreement.
11. Ownership of Records. All records required to be maintained and
kept current by Penn Series pursuant to the provisions of rules or regulations
of the Securities and Exchange Commission under Section 31(a) of the Act and
that are maintained and kept current by Adviser or any affiliated corporation of
Adviser on behalf of Penn Series are the property of Penn Series. Such records
will be preserved by Adviser itself or through an affiliated corporation for the
periods prescribed in Rule 3la-2 under the Act, where applicable, or in such
other applicable rules that may be adopted time under the Act. Such records may
be inspected by representatives of Penn Series at reasonable times, and, in the
event of termination of this Agreement, will be promptly delivered to Penn
Series.
12. Services to Other Clients. Nothing herein contained shall limit
the freedom of Adviser or any affiliated person of Adviser to render investment
supervisory and other services to other investment companies, to act as
investment adviser or investment counselor to other persons, firms or
corporations, or to engage in other business activities. It is understood that
Adviser may give advice and take action for its other clients which may differ
from advice given, or the timing or nature of action taken, for the Fund.
Adviser is not obligated to initiate transactions for the Fund in any security
which Adviser, its principals, affiliates or employees may purchase or sell for
its or their own accounts or for other clients.
13. Confidential Relationship. Information furnished by one party to
another, including a party's respective agents and employees, is confidential
and shall not be disclosed to third parties unless required by law. Adviser, on
behalf of itself and its affiliates and representatives, agrees to keep
confidential all records and other information relating to Penn Series, except
after prior notification to and approval in writing by Penn Series, which
approval shall not be unreasonably withheld, and may not be withheld where
Adviser or any affiliate may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by Penn Series.
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<PAGE>
14. Proxies. Subject to such direction and oversight by Penn Series
as the Board of Directors of Penn Series shall deem appropriate, Adviser shall
vote proxies solicited by or with respect to the issuers of securities held in
the Fund.
15. Instructions, Opinion of Counsel and Signatures. At any time
Adviser may apply to an officer of Penn Series for instructions, and may consult
legal counsel for Penn Series, in respect of any matter arising in connection
with this Agreement, and Adviser shall not be liable for any action taken or
omitted by it or by any affiliate in good faith in accordance with such
instructions or with the advice or opinion of Penn Series' legal counsel.
Adviser and its affiliates shall be protected in acting upon any instruction,
advice, or opinion provided by Penn Series or its legal counsel and upon any
other paper or document delivered by Penn Series or its legal counsel believed
by Adviser to be genuine and to have been signed by the proper person or persons
and shall not be held to have notice of any change of authority of any officer
or agent of Penn Series, until receipt of written notice thereof from Penn
Series.
16. Compliance with Governmental Rules and Regulations. Except as
such responsibility may be placed upon Adviser or any affiliate expressly by,
or by fair implication of, the terms of this Agreement, and except for the
accuracy of information furnished to Penn Series by Adviser or any affiliate,
Penn Series assumes full responsibility for the preparation, contents and
distribution of the prospectuses for Penn Series, for complying with all
applicable requirements of the Act, the Securities Exchange Act of 1934, the
Securities Act of 1933, and any other laws, rules and regulations of
governmental authorities having jurisdiction over Penn Series.
17. Limitation of Liability. Neither Adviser nor any of its
affiliates, their officers, directors, employees or agents, or any person
performing executive, administrative, trading, or other functions for Penn
Series (at the direction or request of Adviser), or Adviser or its affiliates in
connection with the discharge of obligations undertaken or reasonably assumed
with respect to this Agreement, shall be liable for any error of judgment or
mistake of law or for any loss suffered by Penn Series in connection with the
matters to which this Agreement relates, except for such error, mistake or loss
resulting from willful misfeasance, bad faith, negligence or misconduct in the
performance of its, his or her duties on behalf of Penn Series or constituting
or resulting from a failure to comply with any term of this Agreement. Adviser
shall not be responsible for any loss incurred by reason of any act or omission
of the Custodian or of any broker, dealer, underwriter or issuer selected by
Adviser with reasonable care.
18. Obligations of Penn Series and Adviser. It is expressly agreed
that the obligations of Penn. Series and Adviser hereunder shall not be binding
upon any of their directors, shareholders, nominees, officers, agents or
employees, personally. The execution and delivery of this Agreement have been
authorized by the Board of Directors of Penn Series and signed by an authorized
officer of Penn Series, acting as such, and shall bind Penn Series.
19. Indemnification by Penn Series. Penn Series will indemnify and
hold Adviser harmless from all loss, cost, damage and expense, including
reasonable expenses for legal counsel,
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incurred by Adviser resulting from: (i) any action or omitting to act by Adviser
or any affiliated corporation, with respect to any service described in this
Agreement, upon instructions reasonably believed by Adviser or any affiliated
corporation to have been executed by an individual who has been identified in
writing by Penn Series as a duly authorized officer of Penn Series; or (ii) any
action by Adviser or any affiliated corporation, with respect to any service
described in this Agreement, upon information provided by Penn Series in form
and under policies agreed to by Adviser and Penn Series. Adviser shall not be
entitled to such indemnification in respect of actions or omissions constituting
negligence or willful misconduct of Adviser or its affiliates, agents or
contractors, or constituting a failure by Adviser or any affiliate to comply
with any term of this Agreement. Prior to the confession of any claim against
Adviser which may be subject to this indemnification, Adviser shall give Penn
Series reasonable opportunity to defend against said claim in its own name or in
the name of Adviser.
20. Indemnification by Adviser. Adviser will indemnify and hold
harmless Penn Series from all loss, cost, damage and expense, including
reasonable expenses for legal counsel, incurred by Penn Series resulting from
any claim, demand, action or suit arising out of Adviser's or any affiliate's
failure to comply with any term of this Agreement or which arise out of the
willful misfeasance, bad faith, negligence or misconduct of Adviser, its
affiliates, their agents or contractors. Penn Series shall not be entitled to
such indemnification in respect of actions or omissions constituting negligence
or willful misconduct of Penn Series or its agents or contractors or
constituting a failure by Penn Series to comply with any term of this Agreement;
provided, that such negligence or misconduct is not attributable to Adviser or
any person that is an affiliate of Adviser or an affiliate of an affiliate of
Adviser. Prior to confessing any claim against it which may be subject to this
indemnification, Penn Series shall give Adviser reasonable opportunity to defend
against said claim in its own name or in the name of Penn Series. For purposes
of this Section 20 and of Section 19 hereof, no broker or dealer shall be deemed
to be acting as agent or contractor of Adviser or any affiliate of Adviser, in
effecting or executing any portfolio transaction for the Fund.
21. Further Assurances. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
22. Dual Interests. It is understood that some person or persons may
be, or from time to time become, directors, officers, or shareholders of both
Penn Series and Adviser (including its affiliates), and that the existence of
any such dual interest shall not affect the validity hereof or of any
transactions hereunder except as otherwise provided by a specific provision of
applicable law.
23. Term of Agreement. The term of this Agreement shall begin on the
date first above written, and unless sooner terminated as hereinafter provided,
this Agreement shall remain in effect until two years from date of execution.
Thereafter, this Agreement shall continue in effect from year to year with
respect to the Fund, subject to the termination provisions and all other terms
and conditions hereof, so long as such continuation shall be specifically
approved at least annually (a) by either the board of directors of Penn Series,
or by a vote of a majority of the
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<PAGE>
outstanding voting securities of the series of shares of Penn Series
representing interests in the Fund and (b) in either event by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the directors of Penn Series who are not parties to this Agreement
or interested persons of any such party. Adviser shall furnish to Penn Series,
promptly upon its request, such information as may reasonably be necessary to
evaluate the terms of this Agreement with respect to the Fund or any extension,
renewal or amendment hereof.
24. Amendment and Assignment of Agreement. This Agreement may not be
amended or assigned without the affirmative vote of a majority of the
outstanding voting securities of the series of shares of Penn Series
representing interests in the Fund, and, without affecting any claim for damages
or other right that Penn Series may have as a result thereof, this Agreement
shall automatically and immediately terminate in the event of its assignment.
25. Termination of Agreement. This Agreement may be terminated by
Penn Series or by Adviser, without the payment of any penalty, upon 60 days'
prior notice in writing from Penn Series to Adviser, or upon 90 days' prior
notice in writing from Adviser to Penn Series; provided, that in the case of
termination by Penn Series, such action shall have been authorized by resolution
of a majority of its directors who are not interested persons of any party to
this Agreement, or by vote of a majority of the outstanding voting securities of
the series of shares of Penn Series representing interests in the Fund.
26. Miscellaneous.
A. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate
any of the provisions hereof or otherwise affect their
construction or effect.
B. Interpretation. Nothing herein contained shall be deemed to
require Penn Series to take any action contrary to its Articles
of Incorporation or By-Laws, or any applicable statutory or
regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the board of directors of Penn
Series of its responsibility for and control of the conduct of
the affairs of Penn Series.
C. Definitions. 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 Act shall be reference to
such term or provision of the 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 Securities and Exchange Commission validly issued
pursuant to the Act. Specifically, the terms "vote of a majority
of the outstanding voting securities," "interested person,"
"assignment," and "affiliated person," as used herein, shall have
the meanings assigned to them by Section 2(a) of the Act. In
addition, where the effect of a requirement of the Act reflected
in any provision of this Agreement is relaxed by a
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<PAGE>
rule, regulation or order of the Securities and Exchange
Commission, whether of special or of general application, such
provision shall be deemed to incorporate the effect of such rule,
regulation or order.
D. Notice. Notice under the Agreement shall be in writing,
addressed and delivered or sent by registered or certified mail,
postage prepaid, to the addressed party at such address as such
party may designate for the receipt of such notices, Until
further notice, it is agreed that for this purpose the address of
Penn Series is Penn Series Funds, Inc., 600 Dresser Road,
Horsham, PA 19044, Attention: President, and that of Adviser is
Independence Capital Management, Inc., 600 Dresser Road, Horsham,
PA 19044, Attention: President.
E. State Law. The Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Maryland
except where such state laws have been preempted by Federal
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first above written.
PENN SERIES FUNDS, INC.
By: /s/ L. Stockton Illoway
---------------------------
L. Stockton Illoway
President
INDEPENDENCE CAPITAL
MANAGEMENT, INC.
By: /s/ Peter M. Sherman
---------------------------
Peter M. Sherman
President
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<PAGE>
Ex-99.b(5)(f)
INVESTMENT SUB-ADVISORY AGREEMENT
Between
INDEPENDENCE CAPITAL MANAGEMENT, INC.
and
RS INVESTMENT MANAGEMENT, INC.
Relating to
PENN SERIES EMERGING GROWTH FUND
INVESTMENT SUB-ADVISORY AGREEMENT, made as of _______________ by and
between INDEPENDENCE CAPITAL MANAGEMENT, INC. ("Adviser"), a corporation
organized and existing under the laws of the State of Pennsylvania, and RS
INVESTMENT MANAGEMENT, INC. ("Sub-Adviser"), a corporation organized and
existing under the laws of the State of California.
WITNESSETH:
WHEREAS, Penn Series Funds, Inc. ("Penn Series") is an open-end
management investment company registered as such under the Investment Company
Act of 1940, as amended (the "Act"), and is authorized to issue shares in
separate series with each series representing interests in a separate fund of
securities and other assets; and
WHEREAS, Adviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the federal Investment Advisers Act of 1940, as amended; and
WHEREAS, Sub-Adviser is engaged principally in the business of
rendering investment advisory services and is registered as an investment
adviser under the federal Investment Advisers Act of 1940, as amended; and
WHEREAS, Adviser renders investment advisory services to Penn Series
pursuant to an investment advisory agreement entered into by Penn Series and
Adviser;
WHEREAS, Adviser desires Sub-Adviser to render investment sub-advisory
services to Penn Series in the manner and on the terms and conditions
hereinafter set forth;
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. Investment Sub-Advisory Services. Sub-Adviser shall serve as
investment sub-adviser and shall supervise and direct the cash, securities and
other assets of the Emerging Growth Fund of Penn Series ("the Fund"), and to
exercise all rights incidental to ownership in accordance with the investment
objectives, program and restrictions applicable to the Fund as provided in Penn
Series' Prospectus and Statement of Additional Information, as amended from time
to time, and such other limitations as may be imposed by law or as Penn Series
may impose with notice in writing to Sub-Adviser. To enable Sub-Adviser to fully
exercise its discretion, Adviser hereby appoints Sub-Adviser as agent and
attorney-in-fact for the Fund with full power and authority to buy, sell and
otherwise deal in securities and contracts for the Fund. No investment will be
made by Sub-Adviser for the Fund if that investment is in violation of the
objectives investment restrictions or limitations of the Fund set out in the
prospectus and the SAI previously delivered to the Sub-Advisor or to be
delivered. Sub-Adviser shall not take custody of any assets of Penn Series, but
shall issue settlement: instructions to the custodian designated by Penn Series
(the "Custodian"). Sub-Adviser shall, in its discretion, obtain and evaluate
such information relating to the economy, industries, businesses, securities
markets and securities as it may deem necessary or useful in the discharge of
its obligations hereunder and shall formulate and implement a continuing program
for the management of the assets and resources of the Fund in a manner
consistent with the investment objectives of the Fund. In furtherance of this
duty, Sub-Adviser, as agent and attorney-in-fact with respect to Adviser and
Penn Series, is authorized, in its discretion and without prior consultation
with Penn Series, to:
(i) buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds, and other securities or assets; and
(ii) place orders and negotiate the commissions (if any) for the
execution of transactions in securities with or through such
brokers, dealers, underwriters or issuers as Sub-Adviser may
select, in conformance with the provisions of Paragraph 4
herein; and
(iii) to take such other actions Sub-Adviser deems to be
appropriate;
provided, however, that Sub-Adviser shall make no investment for the Fund that
is in violation of the objectives, program, restrictions or limitations of the
Fund.
2. Accounting and Related Services. Sub-Adviser agrees to cooperate
with the Accounting Services Agent appointed by Penn Series pursuant to the
Accounting Services Agreement entered into by Penn Series and the Accounting
Services Agent. As requested from time to time, Sub-Adviser shall provide Penn
Series and its Accounting Services Agent with such information as may be
reasonably necessary to properly account for financial transactions with respect
to the Fund.
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<PAGE>
3. Fee.
A. Payment of Fee. For the services Sub-Adviser renders to Penn Series
under this Agreement, Adviser will pay Sub-Adviser a fee based on the
average daily net assets of the Fund.
B. Fee Rate. The fee shall be paid at the following rates:
(i) Seventy basis points (0.70%) of the first $25,000,000 of average
daily net assets of the Fund;
(ii) Sixty-five basis points (0.65%) of the next $25,000,000 of
average daily net assets of the Fund; and
(iii) Sixty basis points (0.60%) of average daily net
assets of the Fund in excess of $50,000,000.
C. Method of computation. The fee shall be accrued for each calendar
day and the sum of the daily fee accruals shall be paid monthly to Sub-
Adviser as of the first business day of the next succeeding calendar
month. The daily fee will be computed by multiplying the fraction of one
over the number of calendar days in the year by the annual rate applicable
to the Fund as set forth above, and multiplying this product by the net
assets of the Fund. The Fund's net assets, for purposes of the
calculations described above, will be determined in accordance with Penn
Series' Prospectus and Statement of Additional Information as of the close
of business on the most recent previous business day on which Penn Series
was open for business.
D. Expense Limitation. The expense limitation of the Fund, as a
percentage of the Funds average daily net assets, is 1.15%. To the extent
that the Fund's total expenses for a fiscal year (excluding interest,
taxes, brokerage, other expenses which are capitalized in accordance with
generally accepted accounting principles, and extraordinary expenses, but
including investment advisory and administrative and corporate service
fees before any adjustment pursuant to this provision) exceed the expense
limitation for the Fund, one-half of such excess amount shall be a
liability of Sub-Adviser to Adviser. The liability (if any) of Sub-Adviser
to pay Adviser one-half of such excess amount shall be determined on a
daily basis. If, at the end of each month, there is any liability of Sub-
Adviser to pay Adviser such excess amount, the fee shall be reduced by
such liability. If, at the end of each month, there is no liability of
Sub-Adviser to pay Adviser such excess amount and if payments of the fee
at the end of prior months during the fiscal year have been reduced in
excess of that required in this subsection, such excess reduction shall be
recaptured by Sub-Adviser and shall be payable by Adviser to Sub-Adviser
along
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<PAGE>
with the fee payable to Sub-Adviser for that month. If, at the end of the
fiscal year, there is any remaining liability of Sub-Adviser to pay
Adviser such excess amount (which has not been paid through reduction of
the fee), Sub-Adviser shall remit to Adviser an amount sufficient to pay
such remaining liability.
4. Brokerage. In executing portfolio transactions and selecting brokers or
dealers for the Fund, Sub-Adviser will use its best efforts to seek the best
price and the most favorable execution of its orders. In assessing the best
price and the most favorable execution for any transaction, Sub-Adviser shall
consider the breadth of the market in the security, the price of the security,
the skill, financial condition and execution capability of the broker or dealer,
and the reasonableness of the commission, if any. Where best price and most
favorable execution will not be compromised, Sub-Adviser may take into account
the research and related services that the broker has provided to Penn Series or
the Sub-Adviser. It is understood that the Sub-Adviser will not be deemed to
have acted unlawfully or to have breached a fiduciary duty to the Fund or be in
breach of any obligation owing to the Fund under this Agreement, or otherwise,
by reason of its having directed a securities transaction on behalf of the Fund
to a broker-dealer in compliance with the provisions of Section 28(e) of the
Securities Exchange Act of 1934 or as described from time to time in the Penn
Series' Prospectus and Statement of Additional Information. In addition, Sub-
Adviser is authorized to take into account the sale of variable contracts which
are invested in Penn Series shares in allocating to brokers or dealers purchase
and sale orders for portfolio securities, provided that Sub-Adviser believes
that the quality of the transaction and commission are comparable to what they
would be with other qualified firms. Sub-Adviser shall advise Penn Series' Board
of Directors, when requested, as to all payments of commissions and as to its
brokerage policies and practices and shall follow such instructions with respect
thereto as may be given by Penn Series' board.
5. Use of the Services of Others. Sub-Adviser may (at its cost except as
contemplated by Section 4 of this Agreement) employ, retain or otherwise avail
itself of the services or facilities of other persons or organizations for the
purpose of providing Penn Series, Adviser or itself, as appropriate, with such
statistical and other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in specific
securities or such other information, advice or assistance as Sub-Adviser may
deem necessary, appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to Penn Series and Adviser, or in the discharge
of Sub-Adviser's overall responsibilities with respect to the other accounts
which it serves as investment adviser.
6. Personnel, Office Space, and Facilities. Sub-Adviser at its own expense
shall furnish or provide and pay the cost of such office space, office
equipment, office personnel, and office services as it, or any affiliated
corporation of Sub-Adviser, requires in the performance of services under this
Agreement.
7. Ownership of Software and Related Material. All computer programs,
magnetic tapes, written procedures and similar items developed and used by Sub-
Adviser or any affiliate in
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<PAGE>
performance of this Agreement are the property of Sub-Adviser and will not
become the property of Penn Series or Adviser.
8. Reports to Penn Series and Cooperation with Accountants.
Sub-Adviser, and any affiliated corporation of Sub-Adviser performing services
for Adviser and Penn Series described in this Agreement, shall furnish to or
place at the disposal of Penn Series and Adviser, such information, reports,
evaluations, analyses and opinions as Penn Series Adviser may, at any time or
from time to time, reasonably request or as Sub-Adviser may deem helpful, to
reasonably ensure compliance with applicable laws and regulations or for any
other purpose. Sub-Adviser and its affiliates shall cooperate with Penn Series'
independent public accountants and take all reasonable action in the performance
of services and obligations under this Agreement to assure that the information
needed by such accountants is made available to them .
9. Reports to Sub-Adviser. Penn Series and/or Adviser shall furnish
or otherwise make available to Sub-Adviser such prospectuses, statements of
additional information, financial statements, proxy statements, reports, and
other information relating to the business and affairs of Penn Series at or
prior to the time such documents are made available to the public.
10. Ownership of Records. All records required to be maintained and
kept current by Penn Series pursuant to the provisions of rules or regulations
of the Securities and Exchange Commission under Section 31(a) of the Act and
that are maintained and kept current by Sub-Adviser or any affiliated
corporation of Sub-Adviser on behalf of Penn Series are the property of Penn
Series. Such records will be preserved by Sub-Adviser itself or through an
affiliated corporation for the periods prescribed in Rule 3la-2 under the Act,
where applicable, or in such other applicable rules that may be adopted time
under the Act. Such records may be inspected by representatives of Penn Series
and Adviser at reasonable times, and upon reasonable notice to Sub-Adviser and,
in the event of termination of this Agreement, will be promptly delivered to
Adviser and Penn Series upon request.
11. Services to Other Clients. Subject to compliance with the 1940
Act, nothing herein contained shall be deemed to prohibit Sub-Adviser or any of
its affiliated persons from acting, and being separately compensated for acting,
in one or more capacities on behalf of the Fund. Nothing herein contained shall
limit the freedom of Sub-Adviser or any affiliated person of Sub-Adviser to
render investment supervisory and other services to other investment companies,
to act as investment Sub-Adviser or investment counselor to other persons, firms
or corporations, or to engage in other business activities. It is understood
that Sub-Adviser may give advice and take action for its other clients which may
differ from advice given, or the timing or nature of action taken, for the Fund.
Sub-Adviser is not obligated to initiate transactions for the Fund in any
security which Sub-Adviser, its principals, affiliates or employees may purchase
or sell for its or their own accounts or for other clients.
12. Confidential Relationship. Information furnished by Penn Series or
by one party to another, including Penn Series' or a party's respective agents
and employees, is confidential and
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<PAGE>
shall not be disclosed to third parties unless required by law. Sub-Adviser, on
behalf of itself and its affiliates and representatives, agrees to keep
confidential all records and other information relating to Adviser or Penn
Series (as the case may be), except after prior notification to and approval in
writing by Adviser or Penn Series (as the case may be), which approval shall not
be unreasonably withheld, and may not be withheld, where Sub-Adviser or any
affiliate may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, when so requested by Adviser and Penn Series.
13. Proxies. Subject to such oversight by Penn Series as the Board of
Directors of Penn Series shall deem appropriate, Sub-Adviser shall vote proxies
solicited by or with respect to the issuers of securities held in the Fund.
14. Instructions, Opinion of Counsel and Signatures. At any time
Sub-Adviser may apply to an officer of Penn Series for instructions, and may
consult legal counsel for Penn Series, in respect of any matter arising in
connection with this Agreement, and Sub-Adviser shall not be liable for any
action taken or omitted by it or by any affiliate in good faith in accordance
with such instructions or with the advice or opinion of Penn Series' legal
counsel. Sub-Adviser and its affiliates shall be protected in acting upon any
instruction, advice, or opinion provided by Penn Series or its legal counsel and
upon any other paper or document delivered by Penn Series or its legal counsel
believed by Sub-Adviser to be genuine and to have been signed by the proper
person or persons and shall not be held to have notice of any change of
authority of any officer or agent of Penn Series, until receipt of written
notice thereof from Penn Series. Sub-Adviser shall inform Adviser of all
applications to Penn Series for instructions and all consultations with legal
counsel for Penn Series at the time of such application or consultation.
15. Compliance with Governmental Rules and Regulations. Except as such
responsibility may be placed upon Sub-Adviser or any affiliate by the terms of
this Agreement, and except for the accuracy of information furnished to Penn
Series by Sub-Adviser or any affiliate, Sub-Adviser does not assume
responsibility for the preparation, contents and distribution of the
prospectuses for Penn Series, for complying with any applicable requirements of
the Act, the Securities Exchange Act of 1934, the Securities Act of 1933, or any
other laws, rules and regulations of governmental authorities having
jurisdiction over Penn Series.
16. Limitation of Liability. Neither Sub-Adviser nor any of its
affiliates, their respective officers, directors, employees or agents, or any
person performing executive, administrative, trading, or other functions for
Penn Series (at the direction or request of Sub-Adviser), or Sub-Adviser or its
affiliates in connection with the discharge of obligations undertaken or
reasonably assumed with respect to this Agreement, shall be liable for any error
of judgment or mistake of law or for any loss suffered by Penn Series in
connection with the matters to which this Agreement relates, except for such
error, mistake or loss resulting from willful misfeasance, bad faith, negligence
or willful misconduct in the performance of its, his or her duties on behalf of
Penn Series or constituting or resulting from a failure to comply with any term
of this Agreement. Sub-Adviser shall not be responsible for any loss incurred by
reason of any act or omission of the Custodian or of any broker, dealer,
underwriter or issuer selected by Sub-Adviser with reasonable care.
-6-
<PAGE>
17. Obligations of Adviser and Sub-Adviser. It is expressly agreed that
the obligations of Adviser and Sub-Adviser hereunder shall not be binding upon
any of their directors, shareholders, nominees, officers, agents or employees,
personally. The execution and delivery of this Agreement have been authorized in
accordance with the governing documents of each party and in accordance with
applicable law, and shall be signed by an authorized officer of each party,
acting as such, and shall be binding on each party.
18. Indemnification by Adviser. Adviser will indemnify and hold
Sub-Adviser harmless from all loss, cost, damage and expense, including
reasonable expenses for legal counsel, incurred by Sub-Adviser resulting from:
(i) any action or omitting to act by Sub-Adviser or any affiliated corporation,
with respect to any service described in this Agreement, upon instructions
reasonably believed by Sub-Adviser or any affiliated corporation to have been
executed by an individual who has been identified in writing by Penn Series as a
duly authorized officer of Penn Series or Adviser; or (ii) any action by
Sub-Adviser or any affiliated corporation, with respect to any service described
in this Agreement upon information provided by Penn Series or Adviser in form
and under policies agreed to by Sub-Adviser and Penn Series or Adviser.
Sub-Adviser shall not be entitled to such indemnification in respect of actions
or omissions constituting negligence or willful misconduct of Sub-Adviser or its
affiliates, agents or contractors, or constituting a failure by Sub-Adviser or
any affiliate to comply with any term of this Agreement. Prior to the confession
of any claim against Adviser which may be subject to this indemnification,
Sub-Adviser shall give Adviser reasonable opportunity to defend against said
claim in its own name or in the name of Sub-Adviser.
19. Indemnification by Sub-Adviser. Sub-Adviser will indemnify and hold
harmless Penn Series and Adviser from all loss, cost, damage and expense,
including reasonable expenses for legal counsel, incurred by Penn Series and
Adviser resulting from any claim, demand, action or
-7-
<PAGE>
suit arising out of Sub-Adviser's or any affiliate's failure to comply with any
term of this Agreement or which arise out of the willful misfeasance, bad faith,
negligence or misconduct of Sub-Adviser, its affiliates, their agents or
contractors. Adviser shall not be entitled to such indemnification in respect of
actions or omissions constituting negligence or willful misconduct of Penn
Series or Adviser, or their agents or contractors or constituting a failure by
Adviser to comply with any term of this Agreement; provided, that such
negligence or misconduct is not attributable to Sub-Adviser or any person that
is an affiliate of Sub-Adviser or an affiliate of an affiliate of Sub-Adviser.
Prior to confessing any claim against it which may be subject to this
indemnification, Adviser shall give Sub-Adviser reasonable opportunity to defend
against said claim in its own name or in the name of Adviser. For purposes of
this Section 19 and of Section 18 hereof, no broker or dealer shall be deemed to
be acting as agent or contractor of Sub-Adviser or any affiliate of Sub-Adviser,
in effecting or executing any portfolio transaction for the Fund.
20. Further Assurances. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
21. Term of Agreement. The term of this Agreement shall begin on the
date first above written, and unless sooner terminated as hereinafter provided,
this Agreement shall remain in effect until two years from date of execution.
Thereafter, this Agreement shall continue in effect from year to year with
respect to the Fund, subject to the termination provisions and all other terms
and conditions hereof, so long as such continuation shall be specifically
approved at least annually (a) by either the board of directors of Penn Series,
or by a vote of a majority of the outstanding voting securities of the series of
shares of Penn Series representing interests in the Fund and (b) in either event
by the vote, cast in person at a meeting called for the purpose of voting on
such approval, of a majority of the directors of Penn Series who are not parties
to this Agreement or interested persons of any such party. Sub-Adviser shall
furnish to Penn Series, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement with respect to
the Fund or any extension, renewal or amendment hereof.
22. Amendment and Assignment of Agreement. This Agreement may not be
amended or assigned without the written consent of the parties hereto, and
without the affirmative vote of a majority of the outstanding voting securities
of the series of shares of Penn Series representing interests in the Fund, and,
without affecting any claim for damages or other right that any party hereto may
have as a result thereof, this Agreement shall automatically and immediately
terminate in the event of its assignment.
23. Termination of Agreement. This Agreement may be terminated by
Adviser, Penn Series or by Sub-Adviser, without payment of any penalty, upon 60
days' prior notice in writing from Penn Series to Sub-Adviser, or upon 90 days'
prior notice in writing from Sub-Adviser to Penn Series; provided, that in the
case of termination by Adviser or Penn Series, such action shall have been
authorized by resolution of a majority of its directors who are not interested
persons of
-8-
<PAGE>
any party to this Agreement, or by vote of a majority of the outstanding voting
securities of the series of shares of Penn Series representing interests in the
Fund.
24. Miscellaneous.
A. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or
delineate any of the provisions hereof or otherwise affect
their construction or effect.
B. Interpretation. Nothing herein contained shall be deemed to
require Penn Series to take any action contrary to its
Articles of Incorporation or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject
or by which it is bound, or to relieve or deprive the board
of directors of Penn Series of its responsibility for and
control of the conduct of the affairs of Penn Series.
C. Definitions. Any question of interpretation of any terms or
provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the Act shall
be reference to such term or provision of the 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
Securities and Exchange Commission validly issued pursuant
to the Act. Specifically, the terms "vote of a majority of
the outstanding voting securities," "interested person,"
"assignment," and "affiliated person," as used herein,
shall have the meanings assigned to them by Section 2(a) of
the Act. In addition, where the effect of a requirement of
the Act reflected in any provision of this Agreement is
relaxed by a rule, regulation or order of the Securities
and Exchange Commission, whether of special or of general
application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
D. Notice. Notice under the Agreement shall be in writing,
addressed and delivered or sent by registered or certified
mail, postage prepaid, to the addressed party at such
address as such party may designate for the receipt of such
notices, Until further notice, it is agreed that for this
purpose the address of Adviser is Independence Capital
Management, Inc., 600 Dresser Road, Horsham, PA 19044,
Attention: President, and that of Sub-Adviser is Robertson
Stephens Investment Management, Inc., 555 California
Street, San Francisco, CA 94104, Attention: General
Counsel.
E. State Law. The Agreement shall be construed and enforced in
accordance with and governed by the laws of Pennsylvania
except where such state laws have been preempted by Federal
law.
-9-
<PAGE>
F. Counterparts. This Agreement may be entered into in
counterparts, each of which when so executed and delivered
shall be deemed to be an original, and together shall
constitute one document.
G. Entire Agreement; Severability. This Agreement is the
entire agreement of the parties and supersedes all prior or
contemporaneous written or oral negotiations,
correspondence, agreements and understandings regarding the
subject matter hereof. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity
or enforceability of any and all other provisions hereof.
H. No Third Party Beneficiaries. Neither party intends for
this Agreement to benefit any third-party not expressly
named in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first above written.
Attest: INDEPENDENCE CAPITAL
MANAGEMENT, INC.
By:
- ---------------------------- ----------------------------
Secretary Peter M. Sherman
President
Attest: RS INVESTMENT
MANAGEMENT, INC.
By:
- ---------------------------- ----------------------------
Secretary
----------------------------
(Print Name)
----------------------------
(Title)
-10-
<PAGE>
Exhibit 99.B(9)(a)
ADMINISTRATIVE AND CORPORATE SERVICES AGREEMENT
AGREEMENT, made and entered into as of May 1, 1997, by and between PENN
SERIES FUNDS, INC., a Maryland corporation ("Penn Series"), and THE PENN
MUTUAL LIFE INSURANCE COMPANY, a Pennsylvania mutual life insurance company
("Penn Mutual").
WITNESSETH:
WHEREAS, Penn Series is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), offering multiple series (or classes) of capital stock and each
series (or class) representing interests in a separate fund or portfolios of
investments ("Fund or Funds"); and
WHEREAS, Penn Mutual currently serves as Administrative and Corporate
Services Agent for Penn Series and in such capacity provides administrative and
corporate services to Penn Series; and
WHEREAS Penn Series and Penn Mutual desire Penn Mutual to continue
providing administrative services to its existing Funds and to provide
administrative services to the new Penn Series Emerging Growth Fund; and
WHEREAS, Penn Series and Penn Mutual desire to amend and restate their
existing Administrative and Corporate Services Agreement, dated as of May 1,
1989 and amended as of November 1, 1992 and March 1, 1995;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Penn Series hereby appoints Penn Mutual its Administrative and
Corporate Services Agent to administer its corporate affairs, subject to the
overall supervision of the Board of Directors of Penn Series, for the period and
on the terms set forth in this Agreement. Penn Mutual accepts such appointment
and agrees to furnish the services herein set forth in return for the
compensation as provided in Paragraph 7 of this Agreement.
2. Penn Mutual will administer all aspects of Penn Series' operations
other than those administered by Penn Series' Investment Advisers pursuant to
the Investment Advisory Agreements, Penn Series' Accounting Services Agent
pursuant to the Accounting Services Agreement, Penn Series' Custodian under the
Custodian Agreement and Penn Series' Transfer Agent under the Transfer Agency
Agreement. In performing its duties as Administrative and Corporate Services
Agent, Penn Mutual will act in conformity with the Articles of Incorporation,
By-Laws, and 1940 Act registration statement of Penn Series and with the
instructions and directions of the Board of Directors of Penn Series and will
conform to and comply with the
<PAGE>
requirements of the 1940 Act and all other applicable Federal or state laws
and regulations.
3. The services which Penn Mutual shall provide as Administrative and
Corporate Services Agent include but are not limited to:
(a) the maintenance of all books and records pertaining to Penn
Series' affairs, except those that are required to be maintained by Penn
Series' Investment Advisers, Accounting Services Agent, Custodian, or
Transfer Agent;
(b) the preparation of such annual, semi-annual or other reports or
proxy statements as Penn Series may be required to file with the Securities
and Exchange Commission or to distribute to its shareholders;
(c) the preparation of any registration statements or amendments to
registration statements which Penn Series may be required or may desire to
file with the Securities and Exchange Commission;
(d) the preparation of such filings as may be required for compliance
with the securities laws of any state or other jurisdiction;
(e) the preparation of such applications or requests as Penn Series
may desire to make to the Securities and Exchange Commission or its staff
for exemption from, or interpretation of any provision of the 1940 Act or
any other applicable Federal securities statute;
(f) the preparation of Penn Series' Federal and state tax returns and
any other filings required for tax purposes other than those required to be
made by Penn Series' Custodian, Transfer Agent, Accounting Services Agent,
or Investment Advisers;
(g) such services as Penn Series' Board of Directors may require in
connection with its oversight of Penn Series' Investment Advisers,
Accounting Services Agent, Custodian, or Transfer Agent, including the
periodic collection and presentation of data concerning the investment
performance of Penn Series' various investment portfolios;
(h) the organization of all meetings of Penn Series' Board of
Directors;
(i) the organization of all meetings of Penn Series' shareholders;
(j) the collection and presentation of any financial or other data
required by Penn Series' Board of Directors, accountants, or counsel;
(k) the preparation and negotiation of any amendments to, or
substitutes for,
-2-
<PAGE>
the present agreements with Penn Series' Investment Advisers, Accounting
Services Agent, Custodian, or Transfer Agent; and
(l) such other services as the Penn Series' Board of Directors may
reasonably request.
4. Penn Mutual shall permit any of its directors, officers, or employees
who may be elected as directors or officers of Penn Series to serve in the
capacities in which they are elected. Any of the services to be furnished by
Penn Series under this Agreement may be furnished through the medium of such
directors, officers, or employees of Penn Mutual.
5. Penn Mutual shall bear all of the following expenses in connection
with the services to be rendered under this Agreement.
(a) all rent and other expense involved in the provision of office
space for Penn Series and for Penn Mutual in connection with its
performance of services under this Agreement;
(b) the salaries and expenses of all personnel of Penn Series and Penn
Mutual incurred in connection with the provision of administrative services
to Penn Series, except the fees and expenses of directors of Penn Series
who are not interested persons (as defined in the 1940 Act) of Penn Series
or affiliated persons (as defined in the 1940 Act) of Penn Mutual or of
Penn Series' Investment Advisers; and
(c) all expenses incurred by Penn Mutual or Penn Series in connection
with administering the ordinary course of Penn Series' business, other than
those excluded pursuant to Paragraph 6 below.
6. Nothing in this Agreement shall require Penn Mutual to bear, or to
reimburse Penn Series for,
(a) the costs of printing and mailing the items referred to in
Paragraph 3(b) above, or any prospectuses included in registration
statements referred to in Paragraph 3(c) or required by law, regulation or
regulatory authorities;
(b) compensation of member of Penn Series' Board of Directors who are
not interested persons (as defined in the 1940 Act) of Penn Series or
affiliated persons (as defined in the 1940 Act) of Penn Mutual or of Penn
Series' Investment Advisers;
(c) registration, filing, or other fees imposed by the Securities and
Exchange Commission or other regulatory authorities;
(d) the charges and expenses of Penn Series' Investment Advisers,
-3-
<PAGE>
Accounting Services Agent, Custodian, and Transfer Agent;
(e) the fees and expenses of legal counsel and independent accountants
for Penn Series;
(f) brokers' commissions and any issue or transfer taxes chargeable to
Penn Series in connection with its securities transactions;
(g) taxes and corporate fees payable by Penn Series to Federal, state
or other governmental entities;
(h) the fees of any trade association of which Penn Series may be a
member; and
(i) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of Penn Series' business.
7. Penn Series shall pay Penn Mutual as full compensation to services
rendered and all facilities furnished hereunder a fee computed at the annual
rate of 0.15% of the average daily net assets of Penn Series. Such fee shall be
payable at such intervals not more frequently than monthly and not less
frequently than quarterly as the officers of Penn Series may from time to time
determine and specify in writing to Penn Mutual. Such fee shall be calculated
on the basis of the average of all valuations of the net assets of Penn Series
made as of the close of business on each valuation day during the period for
which such fee is paid and be prorated among the several investment portfolios
(or Funds) in proportion to the average total net assets of each such portfolio
(or Fund) during the period.
8. With respect to each of the Growth Equity, Value Equity, Small
Capitalization, International Equity, Quality Bond and Money Market Funds of
Penn Series, to the extent that the Fund's total expenses for a fiscal year
(excluding interest, taxes, brokerage, other expenses which are capitalized in
accordance with generally accepted accounting principles, and extraordinary
expenses, but including investment advisory and administrative and corporate
services fees before any adjustment pursuant to this provision) exceed the
expense limitation for the Fund by more than 0.10% of the average daily net
assets of the Fund, such excess amount shall be a liability of Penn Mutual to
Penn Series. The liability (if any) of Penn Mutual to pay Penn Series such
excess amounts shall be determined on a daily basis. With respect to each of
the Emerging Growth, Flexibly Managed and High Yield Bond Funds, to the extent
that the Fund's total expenses for a fiscal year exceed the expense limitation
for the Fund, one-half of such excess amount shall be a liability of Penn Mutual
to Penn Series. The liability (if any) of Penn Mutual to pay Penn Series one-
half of such excess amounts shall be determined on a daily basis. With respect
to each Fund of Penn Series, if, at the end of each fee payment period, there is
any liability of Penn Mutual to pay Penn Series any such excess amount, the
administrative services fee shall be reduced by such liability. If, at the end
of each fee payment period, there is
-4-
<PAGE>
no liability of Penn Mutual to pay Penn Series any such excess amount, and if
payments of the administrative services fee at the end of prior fee payment
periods during the fiscal year have been reduced in excess of that required to
maintain expenses within the expense limitation, such excess reduction shall be
recaptured by Penn Mutual and shall be payable by Penn Series to Penn Mutual
along with the administrative services fee payable to Penn Mutual for that
period. If, at the end of the fiscal year, there is any remaining liability of
Penn Mutual to pay Penn Series any such excess amounts (which have not been paid
through reduction of the administrative services fee), Penn Mutual shall remit
to Penn Series an amount sufficient to pay such remaining liability. The expense
limitations of the Penn Series Funds, as a percentage of the Fund's average
daily net assets, are as follows:
<TABLE>
<CAPTION>
Fund Expense Limitation
---- ------------------
<S> <C>
Growth Equity Fund 1.00%
Value Equity Income Fund 1.00%
Small Capitalization Fund 1.00%
Emerging Growth Fund 1.15%
Flexibly Managed Equity Fund 1.00%
International Equity Fund 1.50%
Quality Bond Fund 0.90%
High Yield Bond Fund 0.90%
Money Market Fund 0.80%
</TABLE>
9. Penn Mutual assumes no responsibility under this Agreement other than
to render the services called for hereunder, and specifically assumes no
responsibilities for investment advice or the investment or reinvestment of Penn
Series' assets.
10. Neither Penn Mutual nor any of its trustees, officers or employees,
nor any persons performing executive, administrative or other functions shall be
liable for any error of judgment or mistake of law or for any loss suffered by
Penn Series in connection with the matters to which this Agreement relates,
except for loss resulting from willful misfeasance, bad faith or gross
negligence in the performance of its or his or her duties on behalf of Penn
Mutual or from reckless disregard by Penn Mutual or any such person of Penn
Mutual's duties under this Agreement.
11. This Agreement shall continue in effect with respect to a given Fund
for a period more than two years from the date of its execution only so long as
such continuation is specifically approved at least annually by either the Board
of Directors of Penn Series or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) representing interests in that Fund,
provided that in either event such continuation shall also be approved by the
vote of a majority of the directors who are not interested persons of Penn
Series, as defined in the 1940 Act, cast by them in person at a meeting called
for the purpose of voting on such approval; provided, however, that:
-5-
<PAGE>
(a) this Agreement may at any time be terminated by Penn Series with
respect to any Fund, without the payment of any penalty, on 60 days' notice
to Penn Mutual either by vote of the Board of Directors of Penn Series or
by vote of a majority of the outstanding voting securities (as defined in
the 1940 Act) representing interests in that Fund;
(b) this Agreement may be terminated by Penn Mutual at any time,
without the payment of any penalty, on 90 days' written notice to Penn
Series; and
(c) this Agreement shall immediately terminate in event of its
assignment as defined in the 1940 Act.
12. The services of Penn Mutual to Penn Series provided under this
Agreement are not to be deemed to be exclusive and Penn Mutual shall be free to
provide similar services to others. Nothing in this Agreement shall limit or
restrict the right of any trustee, officer or employee of Penn Mutual who may
also be a director, officer or employee of Penn Series to engage in any other
business or to devote his or her other time and attention in part to the
management or other aspects of any business, whether of a similar or a
dissimilar nature.
13. It is understood that directors, officers, agents and stockholders of
Penn Series are or may be interested in Penn Mutual as trustees, officers, or
otherwise; that trustees, officers, agents and policyholders of Penn Mutual are
or may be interested in Penn Series as directors, officers, stockholders or
otherwise; and that Penn Mutual may be interested in Penn Series as a
shareholder or otherwise. The existence of any such dual interest shall not
affect the validity hereof or of and transactions hereunder.
14. This Agreement may be amended by mutual written consent.
15. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid: (a) to Penn Mutual at 600 Dresher Road, Horsham PA 19044,
Attention: President; or (b) to Penn Series at 600 Dresher Road, Horsham, PA
19044, Attention: President.
16. This Agreement contains the entire agreement between the parties
hereto and supersedes all prior agreements, understandings and arrangements with
respect to the subject matter hereof.
17. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
PENN SERIES FUNDS, INC.
By: /s/ James B. McElwain
------------------------------------------
James B. McElwain
Executive Vice President
THE PENN MUTUAL LIFE INSURANCE COMPANY
By: /s/ L. Stockton Illoway
------------------------------------------
L. Stockton Illoway
Senior Vice President,
Marketing and Field Sales Support
-7-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> PENN SERIES GROWTH EQUITY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 90,241,255
<INVESTMENTS-AT-VALUE> 121,159,849
<RECEIVABLES> 3,243,691
<ASSETS-OTHER> 876
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 124,404,416
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 606,150
<TOTAL-LIABILITIES> 606,150
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 87,451,010
<SHARES-COMMON-STOCK> 4,975,571
<SHARES-COMMON-PRIOR> 4,942,020
<ACCUMULATED-NII-CURRENT> 276,778
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,151,884
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 30,918,594
<NET-ASSETS> 123,798,266
<DIVIDEND-INCOME> 574,913
<INTEREST-INCOME> 137,696
<OTHER-INCOME> 0
<EXPENSES-NET> 435,831
<NET-INVESTMENT-INCOME> 276,778
<REALIZED-GAINS-CURRENT> 5,343,998
<APPREC-INCREASE-CURRENT> 11,447,198
<NET-CHANGE-FROM-OPS> 17,067,974
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 304,907
<NUMBER-OF-SHARES-REDEEMED> 271,356
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 17,758,806
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (192,114)
<GROSS-ADVISORY-FEES> 271,290
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 435,831
<AVERAGE-NET-ASSETS> 114,461,195
<PER-SHARE-NAV-BEGIN> 21.46
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 3.36
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.88
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> PENN SERIES MONEY MARKET
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 38,559,585
<INVESTMENTS-AT-VALUE> 38,559,585
<RECEIVABLES> 275,147
<ASSETS-OTHER> 297
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38,835,029
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 198,506
<TOTAL-LIABILITIES> 198,506
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,638,055
<SHARES-COMMON-STOCK> 38,638,055
<SHARES-COMMON-PRIOR> 34,502,151
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,532)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 38,636,532
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,010,108
<OTHER-INCOME> 0
<EXPENSES-NET> 126,114
<NET-INVESTMENT-INCOME> 883,994
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 883,994
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 883,994
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22,683,325
<NUMBER-OF-SHARES-REDEEMED> 19,408,451
<SHARES-REINVESTED> 861,030
<NET-CHANGE-IN-ASSETS> 4,135,904
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,532)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 70,005
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 126,114
<AVERAGE-NET-ASSETS> 35,822,224
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> PENN SERIES FLEXIBLY MANAGED FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 400,550,423
<INVESTMENTS-AT-VALUE> 467,177,806
<RECEIVABLES> 4,172,514
<ASSETS-OTHER> 1,420
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 471,351,740
<PAYABLE-FOR-SECURITIES> 1,096,823
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 860,209
<TOTAL-LIABILITIES> 1,957,032
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 381,520,330
<SHARES-COMMON-STOCK> 23,085,300
<SHARES-COMMON-PRIOR> 21,265,896
<ACCUMULATED-NII-CURRENT> 6,614,674
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14,631,424
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 66,628,280
<NET-ASSETS> 469,394,708
<DIVIDEND-INCOME> 3,281,503
<INTEREST-INCOME> 4,955,142
<OTHER-INCOME> 0
<EXPENSES-NET> 1,621,971
<NET-INVESTMENT-INCOME> 6,614,674
<REALIZED-GAINS-CURRENT> 14,637,401
<APPREC-INCREASE-CURRENT> 14,862,923
<NET-CHANGE-FROM-OPS> 36,114,998
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,388,801
<NUMBER-OF-SHARES-REDEEMED> 569,397
<SHARES-REINVESTED> 70,850,569
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 5,978
<GROSS-ADVISORY-FEES> 1,065,767
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,621,971
<AVERAGE-NET-ASSETS> 429,839,549
<PER-SHARE-NAV-BEGIN> 18.74
<PER-SHARE-NII> 0.29
<PER-SHARE-GAIN-APPREC> 1.30
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.33
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> PENN SERIES HIGH YIELD BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 48,082,833
<INVESTMENTS-AT-VALUE> 49,905,595
<RECEIVABLES> 1,637,666
<ASSETS-OTHER> 354
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51,543,615
<PAYABLE-FOR-SECURITIES> 400,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52,075
<TOTAL-LIABILITIES> 452,075
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49,700,841
<SHARES-COMMON-STOCK> 5,323,411
<SHARES-COMMON-PRIOR> 4,941,766
<ACCUMULATED-NII-CURRENT> 2,113,809
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,545,872)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,822,762
<NET-ASSETS> 51,091,540
<DIVIDEND-INCOME> 72,364
<INTEREST-INCOME> 2,228,987
<OTHER-INCOME> 0
<EXPENSES-NET> 187,542
<NET-INVESTMENT-INCOME> 2,113,809
<REALIZED-GAINS-CURRENT> 1,994,018
<APPREC-INCREASE-CURRENT> (578,688)
<NET-CHANGE-FROM-OPS> 3,529,139
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 872,603
<NUMBER-OF-SHARES-REDEEMED> 490,958
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,049,981
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,539,890)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 116,765
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 187,542
<AVERAGE-NET-ASSETS> 47,092,942
<PER-SHARE-NAV-BEGIN> 8.91
<PER-SHARE-NII> 0.40
<PER-SHARE-GAIN-APPREC> 0.29
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.60
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> PENN SERIES QUALITY BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 36,341,306
<INVESTMENTS-AT-VALUE> 36,821,305
<RECEIVABLES> 1,455,908
<ASSETS-OTHER> 324
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38,277,537
<PAYABLE-FOR-SECURITIES> 888,480
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 59,362
<TOTAL-LIABILITIES> 947,842
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 36,695,507
<SHARES-COMMON-STOCK> 3,637,369
<SHARES-COMMON-PRIOR> 3,760,294
<ACCUMULATED-NII-CURRENT> 1,132,003
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (977,814)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 479,999
<NET-ASSETS> 37,329,695
<DIVIDEND-INCOME> 10,300
<INTEREST-INCOME> 1,255,853
<OTHER-INCOME> 0
<EXPENSES-NET> 134,150
<NET-INVESTMENT-INCOME> 1,132,003
<REALIZED-GAINS-CURRENT> (97,449)
<APPREC-INCREASE-CURRENT> (81,034)
<NET-CHANGE-FROM-OPS> 953,520
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 274,455
<NUMBER-OF-SHARES-REDEEMED> 397,380
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (281,646)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 81,892
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 134,150
<AVERAGE-NET-ASSETS> 36,698,300
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.31
<PER-SHARE-GAIN-APPREC> (0.05)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.26
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> PENN SERIES VALUE EQUITY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 181,643,829
<INVESTMENTS-AT-VALUE> 260,720,844
<RECEIVABLES> 306,431
<ASSETS-OTHER> 1,646
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 261,028,921
<PAYABLE-FOR-SECURITIES> 359,912
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 907,857
<TOTAL-LIABILITIES> 1,267,769
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 175,903,667
<SHARES-COMMON-STOCK> 11,829,135
<SHARES-COMMON-PRIOR> 10,387,893
<ACCUMULATED-NII-CURRENT> 1,636,509
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,143,961
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 79,077,015
<NET-ASSETS> 259,761,152
<DIVIDEND-INCOME> 1,445,333
<INTEREST-INCOME> 1,049,053
<OTHER-INCOME> 0
<EXPENSES-NET> 857,877
<NET-INVESTMENT-INCOME> 1,636,509
<REALIZED-GAINS-CURRENT> 3,143,961
<APPREC-INCREASE-CURRENT> 25,506,428
<NET-CHANGE-FROM-OPS> 30,286,898
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,749,462
<NUMBER-OF-SHARES-REDEEMED> 308,220
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 59,087,259
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 563,108
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 857,877
<AVERAGE-NET-ASSETS> 227,109,792
<PER-SHARE-NAV-BEGIN> 19.32
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 2.50
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.96
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> PENN SERIES INTERNATIONAL EQUITY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 103,487,100
<INVESTMENTS-AT-VALUE> 128,905,195
<RECEIVABLES> 588,414
<ASSETS-OTHER> 887
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 129,494,496
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,548,987
<TOTAL-LIABILITIES> 1,548,987
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98,167,923
<SHARES-COMMON-STOCK> 7,307,523
<SHARES-COMMON-PRIOR> 6,688,564
<ACCUMULATED-NII-CURRENT> 316,593
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,361,551
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,099,442
<NET-ASSETS> 127,945,509
<DIVIDEND-INCOME> 1,018,292
<INTEREST-INCOME> 294,781
<OTHER-INCOME> 0
<EXPENSES-NET> 647,191
<NET-INVESTMENT-INCOME> 675,882
<REALIZED-GAINS-CURRENT> 5,296,558
<APPREC-INCREASE-CURRENT> 7,610,865
<NET-CHANGE-FROM-OPS> 13,583,305
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 983,754
<NUMBER-OF-SHARES-REDEEMED> 364,795
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 23,527,921
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 420,608
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 637,191
<AVERAGE-NET-ASSETS> 113,091,738
<PER-SHARE-NAV-BEGIN> 15.61
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 1.80
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.51
<EXPENSE-RATIO> 1.14
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> PENN SERIES SMALL CAPITALIZATION FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 24,354,237
<INVESTMENTS-AT-VALUE> 27,675,739
<RECEIVABLES> 237,480
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,913,342
<PAYABLE-FOR-SECURITIES> 244,868
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 42,931
<TOTAL-LIABILITIES> 287,799
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,827,927
<SHARES-COMMON-STOCK> 1,910,984
<SHARES-COMMON-PRIOR> 1,287,316
<ACCUMULATED-NII-CURRENT> 78,983
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,397,131
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,321,502
<NET-ASSETS> 27,625,543
<DIVIDEND-INCOME> 75,331
<INTEREST-INCOME> 95,668
<OTHER-INCOME> 0
<EXPENSES-NET> 92,016
<NET-INVESTMENT-INCOME> 78,983
<REALIZED-GAINS-CURRENT> 1,398,282
<APPREC-INCREASE-CURRENT> 2,024,857
<NET-CHANGE-FROM-OPS> 3,502,122
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 700,139
<NUMBER-OF-SHARES-REDEEMED> 76,471
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 11,491,511
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,151)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 53,194
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 92,016
<AVERAGE-NET-ASSETS> 21,454,118
<PER-SHARE-NAV-BEGIN> 12.53
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 1.93
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.46
<EXPENSE-RATIO> 0.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> PENN SERIES EMERGING GROWTH FUND
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 12,407,042
<INVESTMENTS-AT-VALUE> 14,335,903
<RECEIVABLES> 1,657,527
<ASSETS-OTHER> 200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,993,630
<PAYABLE-FOR-SECURITIES> 1,298,956
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 147,980
<TOTAL-LIABILITIES> 1,446,936
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,976,373
<SHARES-COMMON-STOCK> 934,853
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (21,226)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,662,686
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,928,862
<NET-ASSETS> 14,546,694
<DIVIDEND-INCOME> 11,760
<INTEREST-INCOME> 7,180
<OTHER-INCOME> 0
<EXPENSES-NET> 40,166
<NET-INVESTMENT-INCOME> (21,226)
<REALIZED-GAINS-CURRENT> 1,662,686
<APPREC-INCREASE-CURRENT> 1,928,862
<NET-CHANGE-FROM-OPS> 3,570,322
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,516,046
<NUMBER-OF-SHARES-REDEEMED> 539,673
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,546,694
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31,715
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 47,690
<AVERAGE-NET-ASSETS> 9,511,084
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
