<PAGE> 1
Registration Nos. 2-85454
811-3815
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM N-1A
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF l933 X
POST-EFFECTIVE AMENDMENT NO. 17 X
and
REGISTRATION STATEMENT
under
THE INVESTMENT COMPANY ACT OF l940 X
AMENDMENT NO. 18 X
______________________
MANULIFE SERIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
200 Bloor Street East
Toronto, Ontario, Canada M4W lE5
(Address of Principal Executive Offices)
______________________
<TABLE>
<S> <C>
Sheri L. Kocen
Secretary and General Counsel Copy to:
Manulife Series Fund, Inc. W. Randolph Thompson, Esq., Of Counsel
200 Bloor Street East Jones & Blouch L.L.P., Suite 405W
Toronto, Ontario, Canada M4W lE5 1025 Thomas Jefferson St., N.W.
(Name and Address of Agent for Service) Washington, D.C. 20007-0805
</TABLE>
______________________
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
---
X on May 1, 1996 pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a)(1) of Rule 485
---
on May 1, 1996 pursuant to paragraph (a)(1) of Rule 485
---
75 days after filing pursuant to paragraph (a)(2) of Rule 485
---
Election Pursuant to Rule 24f-2
Registrant has registered, pursuant to Rule 24f-2 under the Investment Company
Act of 1940, an indefinite number of its shares of Common Stock for sale under
the Securities Act of 1933 and filed a Rule 24f-2 Notice on February 26, 1996
for its fiscal year ended December 31, 1995.
<PAGE> 2
PART A.
PROSPECTUS
<PAGE> 3
Prospectus
Manulife Series Fund, Inc.
with Executive Offices at
200 Bloor Street East
Toronto, Ontario, Canada M4W 1E5
(416) 926-6100
Manulife Series Fund, Inc. (the "Company"), a Maryland corporation, is a
diversified open-end management investment company, commonly known as a mutual
fund. Shares of the Company are not offered directly to the public but are
sold only to The Manufacturers Life Insurance Company of America
("Manufacturers Life of America") in connection with variable contracts issued
by Manufacturers Life of America. Such variable contracts are described in
their respective prospectuses. The Company offers the following separate
investment portfolios, referred to herein as "Funds," which have the following
investment objectives:
Emerging Growth Equity Fund -- To achieve growth of capital by investing
primarily in equity securities of companies believed to offer growth potential
over both the intermediate and the long term;
Balanced Assets Fund -- To achieve intermediate and long-term growth through
capital appreciation and income by investing in both debt and equity
securities;
Capital Growth Bond Fund -- To achieve growth of capital by investing in
medium-grade or better debt securities, with income as a secondary
consideration;
Money-Market Fund -- To provide maximum current income consistent with capital
preservation and liquidity by investing in high-quality money-market
instruments;
Common Stock Fund -- To achieve intermediate and long-term growth through
capital appreciation and current income by investing in common stocks and other
equity securities of well established companies with promising prospects for
providing an above-average rate of return;
Real Estate Securities Fund -- To achieve a combination of long-term capital
appreciation and satisfactory current income by investing in real estate
related equity and debt securities;
International Fund -- To achieve long-term growth of capital by investing in a
diversified portfolio comprised primarily of common stocks and equity-related
securities of corporations domiciled in countries other than the U.S. and
Canada;
Pacific Rim Emerging Markets Fund -- To achieve long-term growth of capital by
investing in a diversified portfolio comprised primarily of common stocks and
equity-related securities of the countries of the Pacific Rim region; and
<PAGE> 4
Equity Index Fund -- to achieve investment results which approximate the total
return of publicly traded common stocks in the aggregate, as represented by the
Standard & Poor's 500 Composite Stock Price Index.
This Prospectus sets forth concisely the information about the Company that a
prospective purchaser of a variable contract from The Manufacturers Life
Insurance Company of America should know before purchasing such a contract.
Please read this Prospectus and retain it for future reference. Additional
information about the Company has been filed with the Securities and Exchange
Commission and is available upon request and without charge by writing to the
address or calling the number listed above and requesting the "Statement of
Additional Information for Manulife Series Fund, Inc." (hereinafter "Statement
of Additional Information"). The Statement of Additional Information is
incorporated by reference into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THE MONEY-MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT.
Manufacturers Adviser Corporation
Investment Manager
The date of this Prospectus and Statement of Additional Information is May 1,
1996.
<PAGE> 5
Manulife Series Fund, Inc.
Table Of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
The Company
Shareholder Transaction Expenses
Condensed Financial Information
Investment Objectives, Policies And Risks
Emerging Growth Equity Fund
Balanced Assets Fund
Capital Growth Bond Fund
Money-Market Fund
Common Stock Fund
Real Estate Securities Fund
International Fund And Pacific Rim Emerging Markets Fund
Equity Index Fund
Investment Techniques Of The International Fund And Pacific Rim
Emerging Markets Fund
Investment Techniques Of The Equity Index Fund
Foreign Securities
Lending Securities
Management Of The Funds
Investment Management Arrangements
Expenses
Fees
Capital Stock
Taxes, Dividends And Distributions
Purchases And Redemptions Of Shares
Determination Of Net Asset Value
Custodian
Performance Data
</TABLE>
No dealer, salesman, or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, in connection with the offer contained in this Prospectus, and, if
given or made, such other information or representations must not be relied
upon as having been authorized by the Company or the Investment Manager. This
Prospectus does not constitute an offering in any state in which such offering
may not lawfully be made.
1
<PAGE> 6
The Company
Manulife Series Fund, Inc. (the "Company") is a diversified, open-end
management investment company incorporated under Maryland law on July 22, 1983.
The Company was established to serve as the underlying investment medium for
variable life insurance and variable annuity products issued by The
Manufacturers Life Insurance Company of America ("Manufacturers Life of
America"). Both the Company and Manufacturers Life of America are indirect
wholly-owned subsidiaries of The Manufacturers Life Insurance Company
("Manufacturers Life"). Manufacturers Life is a mutual life insurance company
based in Toronto, Canada which, together with its subsidiaries, ranks among the
largest such companies in North America as measured by assets.
As the underlying investment medium for Manufacturers Life of America variable
products, the Company provides a range of investment alternatives. Currently,
the Company offers the following investment portfolios, referred to herein as
"Funds" -- the Emerging Growth Equity Fund, the Balanced Assets Fund, the
Capital Growth Bond Fund, the Money-Market Fund, the Common Stock Fund, the Real
Estate Securities Fund, the International Fund, the Pacific Rim Emerging Markets
Fund, and the Equity Index Fund. As described in the accompanying Prospectus
for such variable product, policyowners may allocate their net premiums among
the Funds. Because the value of certain benefits under the Policies will vary
with the investment performance of the Funds and because the type of investment
and the level of risk preferred by policyowners will vary, policyowners should
carefully review the investment objective, policies and risks of each Fund as
described in this Prospectus.
While policyowners will direct the investment of their net premiums, shares of
the Company are sold only to Manufacturers Life of America. Consequently, the
terms "shareholder" and "shareholders" in this Prospectus refer only to
Manufacturers Life of America. However, Manufacturers Life of America will
vote shares of the Company in accordance with instructions received from
policyowners. Shares for which no timely instructions from policyowners are
received, including shares not attributable to variable products, will be voted
by Manufacturers Life of America in the same proportion within those class of
shares for which instructions are received.
Subject to the supervision of the Company's Board of Directors, Manufacturers
Adviser Corporation (the "Manager") will serve as the Company's investment
manager. As such, the Manager will administer the Funds and direct the
investment and reinvestment of Fund assets.
2
<PAGE> 7
Shareholder Transaction Expenses
<TABLE>
<S> <C>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees
International Fund 0.85%*
Pacific Rim Emerging Markets Fund 0.85%*
Equity Index Fund 0.25%
All Other Funds 0.50%
Other Expenses
International Fund 0.50%
Pacific Rim Emerging Markets Fund 0.65%
Equity Index Fund 0.15%
Total Fund Operating Expenses
International Fund 1.35%
Pacific Rim Emerging Markets Fund 1.50%
Equity Index Fund 0.40%
All Other Funds 0.50%
</TABLE>
* Management fee would drop to 0.70% on assets over $100 million.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
International Fund $14 $43 $74 $162
Pacific Rim Emerging Markets Fund $15 $47 $82 $179
Equity Index Fund $4 $13 $22 $51
All Other Funds $5 $16 $28 $63
</TABLE>
The purpose of this table is to assist investors in understanding the expenses
an investor in the Company will bear. Variable contracts issued by
Manufacturers Life of America provide for charges not reflected in the above
table.
3
<PAGE> 8
Condensed Financial Information
The following condensed financial information for the years and periods
mentioned below has been derived from financial statements audited by Ernst &
Young LLP, independent auditors, whose report with respect thereto appears in
the Statement of Additional Information. Further information about the
performance of the Company is contained in the Company's annual report, which
may be obtained without charge by calling or writing to the Company.
Performance information shown in this section does not reflect expenses that
apply to the separate account or the related insurance policies. Inclusion of
these charges would reduce the performance figures for all periods shown.
Selected data for a share of capital stock outstanding for the periods
indicated.
<TABLE>
<CAPTION>
Emerging Growth Equity Fund
---------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of period $ 18.55 $ 19.42 $ 17.76 $ 16.18 $ 9.95
-------- ------- ------- ------- ------
Income From Investment Operations:
Net investment income (loss) 0.03 0.01 (0.01) (0.02) --
Net realized and unrealized gain
(loss) on investments 5.10 (0.81) 4.16 3.51 7.08
-------- ------- ------- ------- ------
Total from investment operations 5.13 (0.80) 4.15 3.49 7.08
-------- ------- ------- ------- ------
Dividends:
Net investment income (0.01) -- -- -- --
Net realized gain (0.57) (0.07) (2.49) (1.91) (0.85)
--------
(0.58) (0.07) (2.49) (1.91) (0.85)
-------- ------- ------- ------- ------
Net asset value end of period $ 23.10 $ 18.55 $ 19.42 $ 17.76 $16.18
======== ======= ======= ======= ======
Net assets end of period ('000s) $162,426 $97,379 $55,767 $18,504 $9,822
Aggregate return on share
outstanding during entire period 27.75% (4.10)% 23.89% 21.82% 71.34%
Significant Ratios:
Portfolio turnover 145.42% 69.40% 92.95% 126.62% 87.63%
Ratio of expenses to avg. net assets 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets 0.16% 0.07% (0.04)% (0.14)% 0.02%
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets 23.73% (3.02)% 23.61% 23.82% 50.44%
<CAPTION>
Emerging Growth Equity Fund
---------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of period $12.20 $ 8.75 $ 7.61 $10.45 $12.58
------ ------ ------ ------ ------
Income From Investment Operations:
Net investment income (loss) 0.17 0.20 0.14 0.01 0.03
Net realized and unrealized gain
(loss) on investments (1.98) 3.46 1.16 0.18 (0.78)
------ ------ ------ ------ ------
Total from investment operations (1.81) 3.66 1.30 0.19 (0.75)
------ ------ ------ ------ ------
Dividends:
Net investment income (0.17) (0.21) (0.12) (0.01) (0.03)
Net realized gain (0.27) -- (0.04) (3.02) (1.35)
(0.44) (0.21) (0.16) (3.03) (1.38)
------ ------ ------ ------ ------
Net asset value end of period $ 9.95 $12.20 $ 8.75 $ 7.61 $10.45
====== ====== ====== ====== ======
Net assets end of period ('000s) $4,137 $3,859 $2,682 $2,012 $1,377
Aggregate return on share
outstanding during entire period (14.90)% 42.19% 16.94% (4.88)% (6.59)%
Significant Ratios:
Portfolio turnover 100.86% 116.14% 190.06% 196.48% 247.88%
Ratio of expenses to avg. net assets 0.50% 0.50% 0.50% 0.50% 0.20%
Ratio of net investment income to
average net assets 1.55% 1.95% 1.54% 0.06% 0.26%
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets (16.10)% 34.63% 14.77% (16.68)% (6.68)%
</TABLE>
4
<PAGE> 9
<TABLE>
<CAPTION>
Common Stock Fund
-----------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of period $13.36 $ 14.68 $ 13.73 $13.33 $10.48
------- ------- -------- ------- ------
Income From Investment Operations:
Net investment income (loss) 0.24 0.20 0.19 0.18 0.21
------- ------- -------- ------- ------
Net realized and unrealized gain
(loss) on investments 3.67 (0.81) 1.64 0.61 2.94
------- ------- -------- ------- ------
Total from investment operations 3.91 (0.61) 1.83 0.79 3.15
Dividends:
Net investment income -- (0.20) (0.19) (0.18) (0.21)
Net realized gain -- (0.51) (0.69) (0.21) (0.09)
------- ------- -------- ------- ------
00.0 (0.71) (0.88) (0.39) (0.30)
------- ------- -------- ------- ------
Net asset value:
end of period $ 17.27 $ 13.36 $ 14.68 $13.73 $13.33
======= ======= ======== ======= ======
Net assets
end of period ('000s) $60,996 $34,829 $21,651 $9,708 $5,480
Aggregate return on share
outstanding during entire period 29.23% (4.19)% 13.39% 6.07% 30.18%
Significant Ratios:
Portfolio turnover 109.03% 84.78% 88.23% 47.60% 53.01%
Ratio of expenses to average
net assets 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income
to average net assets 1.76% 1.53% 1.39% 1.51% 1.78%
Ratio of net investment income
and realized and unrealized gain
(loss) to average net assets 25.70% (4.49)% 11.50% 7.94% 25.41%
</TABLE>
<TABLE>
<CAPTION>
Common Stock Fund
-----------------
Year Year Year Period
Ended Ended Ended 04/30/87-
12/31/90 12/31/89 12/31/88 12/31/87+
---------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net asset value
beginning of period $ 11.25 $ 8.91 $ 8.36 $ 9.97
------- ------- ------- -------
Income From Investment Operations:
Net investment income (loss) 0.32 0.36 0.28 0.15
------- ------- ------- -------
Net realized and unrealized gain
(loss) on investments (0.77) 2.34 0.56 (1.63)
------- ------- ------- -------
Total from investment operations (0.45) 2.70 0.84 (1.48)
Dividends:
Net investment income (0.32) (0.36) (0.29) (0.13)
Net realized gain -- -- -- --
------- ------- ------- -------
(.032) (0.36) (0.29) (0.13)
------- ------- ------- -------
Net asset value:
end of period $ 10.48 $ 11.25 $ 8.91 $ 8.36
======= ======= ======= =======
Net assets
end of period ('000s) $ 2,873 $ 2,140 $ 1,173 $ 942
Aggregate return on share
outstanding during entire period (4.06)% 30.66% 9.86% (14.98)%
Significant Ratios:
Portfolio turnover 120.84% 120.92% 172.13% 54.87%
Ratio of expenses to average
net assets 0.50% 0.50% 0.50% 0.50%*
Ratio of net investment income
to average net assets 3.06% 3.48% 3.16% 2.28%
Ratio of net investment income
and realized and unrealized gain
(loss) to average net assets (3.40)% 23.77% 9.13% (24.73)%
</TABLE>
+ Effective Date of Registration Statement under the Securities Act of 1933.
* Annualized.
5
<PAGE> 10
<TABLE>
<CAPTION>
Real Estate Securities Fund
---------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of period $ 13.34 $ 14.07 $ 12.75 $10.92 $ 8.16
------- ------- ------- ------ ------
Income From Investment Operations:
Net investment income (loss) 0.67 0.55 0.47 0.45 0.53
Net realized and unrealized gain
(loss) on investments 1.35 (0.93) 2.38 1.83 2.76
------- ------- ------- ------ ------
Total from investment operations 2.02 (0.38) 2.85 2.28 3.29
------- ------- ------- ------ ------
Dividends:
Net investment income (0.26) (0.27) (0.47) (0.45) (0.53)
Net realized gain -- (0.08) (1.06) -- --
------- ------- ------- ------ ------
(0.26) (0.35) (1.53) (0.45) (0.53)
------- ------- ------- ------ ------
Net asset value end of period $ 15.10 $ 13.34 $ 14.07 $12.75 $10.92
======= ======= ======= ====== ======
Net assets end of period ('000s) $52,440 $42,571 $24,106 $7,273 $4,120
Aggregate return on share out-
standing during entire period 15.14% (2.76)% 22.61% 21.29% 41.10%
Significant Ratios:
Portfolio turnover 136.05% 35.60% 143.00% 70.71% 40.29%
Ratio of expenses to average
net assets 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income
to average net assets 5.06% 4.26% 3.93% 4.13% 5.40%
Ratio of net investment income
and realized and unrealized gain
(loss) to average net assets 14.51% (4.48)% 15.23% 20.29% 33.48%
</TABLE>
<TABLE>
<CAPTION>
Real Estate Securities Fund
---------------------------
Year Year Year Period
Ended Ended Ended 04/30/87-
12/31/90 12/31/89 12/31/88 12/31/87+
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net asset value
beginning of period $ 9.24 $ 9.12 $ 8.76 $10.02
------ ------ ------ ------
Income From Investment Operations:
Net investment income (loss) 0.67 0.68 0.70 0.48
Net realized and unrealized gain
(loss) on investments (1.09) 0.15 0.37 (1.30)
------ ------ ------ ------
Total from investment operations (0.42) 0.83 1.07 (0.82)
------ ------ ------ ------
Dividends:
Net investment income (0.66) (0.71) (0.71) (0.44)
Net realized gain -- -- -- --
------ ------ ------ ------
(0.66) (0.71) (0.71) (0.44)
------ ------ ------ ------
Net asset value end of period $ 8.16 $ 9.24 $ 9.12 $ 8.76
====== ====== ====== ======
Net assets end of period ('000s) $2,771 $2,875 $2,488 $2,007
Aggregate return on share out-
standing during entire period (4.53)% 9.23% 11.72% (8.42)%
Significant Ratios:
Portfolio turnover 24.37% 15.09% 23.15% 10.27%
Ratio of expenses to average
net assets 0.50% 0.50% 0.50% 0.50%*
Ratio of net investment income
to average net assets 7.74% 7.29% 7.18% 7.34%*
Ratio of net investment income
and realized and unrealized gain
(loss) to average net assets (4.73)% 8.53% 10.52% (13.19)%
</TABLE>
+ Effective Date of Registration under the Securities Act of 1933.
* Annualized.
6
<PAGE> 11
<TABLE>
<CAPTION>
Balanced Assets Fund
--------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of period $ 13.77 $ 15.18 $ 14.52 $ 14.51 $ 12.35
------- ------- ------- ------- -------
Income From Investment Operations:
Net investment income (loss) 0.53 0.48 0.44 0.51 0.60
Net realized and unrealized gain (loss)
on investments 2.87 (1.11) 1.29 0.37 2.22
------- ------- ------- ------- -------
Total from investment operations 3.40 (0.63) 1.73 0.88 2.82
------- ------- ------- ------- -------
Dividends:
Net investment income (0.02) (0.48) (0.44) (0.51) (0.60)
Net realized gain -- (0.30) (0.63) (0.36) (0.06)
------- ------- ------- ------- -------
Total dividends (0.02) (0.78) (1.07) (0.87) (0.66)
-------- -------- ------- ------- -------
Net asset value end of period $ 17.15 $ 13.77 $ 15.18 $ 14.52 $ 14.51
======== ======= ======= ======= =======
Net assets end of period ('000s) $110,761 $74,737 $58,156 $27,733 $18,515
Aggregate return on share outstanding
during entire period 24.69% (4.15)% 11.99% 6.21% 23.36%
Significant Ratios:
Portfolio turnover 98.99% 86.42% 96.62% 75.83% 41.95%
Ratio of expenses to average
net assets 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets 3.65% 3.37% 3.08% 3.75% 4.52%
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets 21.79% (4.11)% 10.09% 6.99% 20.84%
<CAPTION>
Balanced Assets Fund
--------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of period $ 12.87 $ 11.22 $11.09 $14.11 $12.85
------- ------- ------ ------ ------
Income From Investment Operations:
Net investment income (loss) 0.69 0.75 0.61 0.56 0.68
Net realized and unrealized gain (loss)
on investments (0.50) 1.61 0.22 (0.28) 1.49
------- ------- ------ ------ ------
Total from investment operations 0.19 2.36 0.83 0.28 2.17
------- ------- ------ ------ ------
Dividends:
Net investment income (0.71) (0.71) (0.67) (0.67) (0.66)
Net realized gain -- -- (0.03) (2.63) (0.25)
------- ------- ------ ------ ------
Total dividends (0.71) (0.71) (0.70) (3.30) (0.91)
------- ------- ------ ------ ------
Net asset value end of period $ 12.35 $ 12.87 $11.22 $11.09 $14.11
======= ======= ====== ====== ======
Net assets end of period ('000s) $12,733 $10,412 $8,004 $7,872 $5,285
Aggregate return on share outstanding
during entire period 1.62% 21.33% 7.61% (1.77)% 17.35%
Significant Ratios:
Portfolio turnover 116.03% 131.31% 132.32% 127.46% 81.42%
Ratio of expenses to average
net assets 0.50% 0.50% 0.50% 0.50% 0.20%
Ratio of net investment income to
average net assets 5.71% 6.06% 5.42% 3.60% 4.83%
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets 2.04% 18.69% 7.40% (5.59)% 15.18%
</TABLE>
7
<PAGE> 12
<TABLE>
<CAPTION>
Capital Growth Bond Fund
------------------------
Year Year Year Year Year
Ended- Ended Ended Ended Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of period $ 10.10 $ 11.33 $ 11.12 $ 11.47 $ 10.62
------- ------- ------- ------- -------
Income From Investment Operations:
Net investment income (loss) 0.72 0.72 0.65 0.77 0.83
Net realized and unrealized gain
(loss) on investments 1.32 (1.22) 0.51 (0.11) 0.85
------- ------- ------- ------- -------
Total from investment operations 2.04 (0.50) 1.16 0.66 1.68
------- ------- ------- ------- -------
Dividends:
Net investment income 0.72 (0.72) (0.65) (0.78) (0.83)
Net realized gain 0.12 (0.01) (0.30) (0.23) --
------- ------- ------- ------- -------
Total dividends 0.84 (0.73) (0.95) (1.01) (0.83)
------- ------- ------- ------- -------
Net asset value end of period $ 11.30 $ 10.10 $ 11.33 $ 11.12 $ 11.47
======= ======= ======= ======= =======
Net assets end of period ('000s) $42,694 $33,618 $41,183 $30,695 $29,326
Aggregate return on share outstanding
during entire period 20.24% (4.49)% 10.56% 5.89% 16.38%
Significant Ratios:
Portfolio turnover 84.74% 79.04% 94.75% 153.05% 19.60%
Ratio of expenses to
average net assets 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets 6.36% 6.29% 5.69% 6.76% 7.54%
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets 18.11% (5.23)% 9.28% 5.78% 15.35%
</TABLE>
<TABLE>
<CAPTION>
Capital Growth Bond Fund
------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of period $ 10.82 $ 10.32 $ 10.53 $ 13.09 $ 12.62
------- ------- ------- ------- -------
Income From Investment Operations:
Net investment income (loss) 0.88 0.90 0.92 0.99 1.04
Net realized and unrealized gain
(loss) on investments (0.21) 0.50 (0.17) (1.12) 1.46
------- ------- ------- ------- -------
Total from investment operations 0.67 1.40 0.75 (0.13) 2.50
------- ------- ------- ------- -------
Dividends:
Net investment income (0.87) (0.90) (0.93) (1.20) (1.03)
Net realized gain -- -- (0.03) (1.23) (1.00)
------- ------- ------- ------- -------
Total dividends (0.87) (0.90) (0.96) (2.43) (2.03)
------- ------- ------- ------- -------
Net asset value end of period $ 10.62 $ 10.82 $ 10.32 $ 10.53 $ 13.09
======= ======= ======== ======= =======
Net assets end of period ('000s) $24,818 $22,768 $19,722 $18,095 $17,674
Aggregate return on share outstanding
during entire period 6.58% 13.88% 7.14% (1.69)% 22.37%
Significant Ratios:
Portfolio turnover 40.73% 68.61% 29.36% 55.80% 42.57%
Ratio of expenses to
average net assets 0.50% 0.50% 0.50% 0.50% 0.20%
Ratio of net investment income to
average net assets 8.25% 8.34% 8.48% 8.13% 8.10%
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets 6.51% 12.83% 6.88% (1.68)% 19.72%
</TABLE>
8
<PAGE> 13
<TABLE>
<CAPTION>
Money-Market Fund
-----------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of period $ 10.26 $ 10.23 $ 10.22 $ 10.21 $10.21
------- ------- ------- ------- ------
Income From Investment Operations:
Net investment income (loss) 0.58 0.39 0.27 0.34 0.57
Net realized and unrealized gain
(loss) on investments -- -- -- -- --
------- ------- ------- ------- ------
Total from investment operations 0.58 0.39 0.27 0.34 0.57
Dividends:
Net investment income -- (0.36) (0.26) (0.33) (0.57)
Net realized gain -- -- -- -- --
------- ------- ------- ------- ------
Total dividends 0.00 (0.36) (0.26) (0.33) (0.57)
------- ------- ------- ------- ------
Net asset value end of period $ 10.84 $ 10.26 $ 10.23 $ 10.22 $10.21
======= ======= ======= ======= ======
Net assets end of period ('000s) $35,992 $24,384 $13,860 $10,825 $8,615
Aggregate return on share outstanding
during entire period 5.63% 3.89% 2.73% 3.40% 5.60%
Significant Ratios:
Portfolio turnover None None None None None
Ratio of expenses to
average net assets 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets 5.35% 3.84% 2.67% 3.25% 5.45%
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets 5.35% 3.84% 2.67% 3.25% 5.45%
</TABLE>
<TABLE>
<CAPTION>
Money-Market Fund
-----------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of period $10.16 $10.15 $10.02 $10.14 $10.19
------ ------ ------ ------ ------
Income From Investment Operations:
Net investment income (loss) 0.78 0.88 0.89 0.58 0.60
Net realized and unrealized gain
(loss) on investments -- -- -- -- --
------ ------ ------ ------ ------
Total from investment operations 0.78 0.88 0.89 0.58 0.60
Dividends:
Net investment income (0.73) (0.87) (0.76) (0.70) (0.65)
Net realized gain -- -- -- -- --
------ ------ ------ ------ ------
Total dividends (0.73) (0.87) (0.76) (0.70) (0.65)
------ ------ ------ ------ ------
Net asset value end of period $10.21 $10.16 $10.15 $10.02 $10.14
====== ====== ====== ====== ======
Net assets end of period ('000s) $8,606 $6,037 $5,259 $1,545 $1,198
Aggregate return on share outstanding
during entire period 7.82% 8.88% 7.06% 5.67% 6.07%
Significant Ratios:
Portfolio turnover None None None None None
Ratio of expenses to
average net assets 0.50% 0.50% 0.50% 0.50% 0.20%
Ratio of net investment income to
average net assets 7.41% 8.43% 6.94% 5.50% 5.89%
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets 7.41% 8.43% 6.94% 5.50% 5.89%
</TABLE>
9
<PAGE> 14
<TABLE>
<CAPTION>
International Fund
Year Ended Period
12/31/95 10/04/94-12/31/94+
<S> <C> <C>
Net asset value beginning of period $ 9.82 $ 10.00
------- -------
Income From Investment Operations:
Net investment income (loss) 0.13 0.02
Net realized and unrealized gain (loss) on investments 0.98 (0.18)
------- -------
Total from investment operations 1.11 (0.16)
-------- -------
Dividends:
Net investment income (0.13) (0.02)
Net realized gain (0.13) 0.00
------- -------
(0.26) (0.02)
------- -------
Net asset value end of period $ 10.67 $ 9.28
======= =======
Net assets end of period ('000s) $19,048 $11,290
Aggregate return on share outstanding
during entire period 11.28% (1.54%)
Significant Ratios:
Portfolio turnover 60.95% 0.00%*
Ratio of expenses to average net assets 1.35% 1.35%*
Ratio of net investment income to average net assets 1.49% 1.31%*
Ratio of net investment income and realized
and unrealized gain (loss) to average net assets 11.39% (6.28)%*
</TABLE>
<TABLE>
<CAPTION>
Pacific Rim
Emerging Markets Fund
Year Ended Period
12/31/95 10/04/94-12/31/94+
<S> <C> <C>
Net asset value beginning of period $ 9.41 $ 10.00
------- -------
Income From Investment Operations:
Net investment income (loss) 0.12 0.04
Net realized and unrealized gain (loss) on investments 0.96 (0.59)
------- -------
Total from investment operations 1.08 (0.55)
------- -------
Dividends:
Net investment income (0.09) (0.04)
Net realized gain (0.04) 0.00
------- -------
(0.13) (0.04)
------- -------
Net asset value end of period $ 10.36 $ 9.41
Net assets end of period ('000s) $13,057 $ 7,657
Aggregate return on share outstanding
during entire period 11.47% (5.63)%
Significant Ratios:
Portfolio turnover 54.85% 0.00%*
Ratio of expenses to average net assets 1.50% 1.50%*
Ratio of net investment income to average net assets 1.01%* 1.84%*
Ratio of net investment income and realized
and unrealized gain (loss) to average net assets 11.86% (23.41)%*
</TABLE>
+ Inception date October 4, 1994.
* Annualized.
10
<PAGE> 15
Investment Objectives, Policies And Risks
Each Fund has a different investment objective which it pursues through
separate investment policies as described below. The differences in objectives
and policies among the Funds can be expected to affect the return of each Fund
and the degree of market and financial risk to which each Fund is subject.
The investment objective of each Fund discussed below is a fundamental policy
of that Fund and may not be changed without the approval of the holders of a
majority of the outstanding shares of such Fund. The policies by which a Fund
seeks to achieve its investment objective, however, are not fundamental and may
be changed by the Board of Directors of the Company without the approval of the
shareholders. There can be no assurance that the investment objective of any
Fund will be achieved. The Funds are subject to varying degrees of financial
and market risk. Financial risk refers to the ability of an issuer of a debt
security to pay principal and interest on such security and to the earnings
stability and overall financial soundness of an issuer of an equity security;
market risk refers to the volatility of the reaction of the price of a security
to changes in conditions in the securities markets in general and, with
particular reference to debt securities, changes in the overall level of
interest rates.
Emerging Growth Equity Fund
The investment objective of the Emerging Growth Equity Fund is to achieve
growth of capital by investing primarily in equity securities of companies
believed to offer growth potential over both the intermediate and the long
term. Current income is not a significant consideration.
In pursuit of its objective, the Emerging Growth Equity Fund will invest
primarily in common stocks or in securities convertible into or carrying rights
or warrants to purchase common stock or to participate in earnings. The Fund
will not purchase independent warrants if they are not publicly traded and if
any such purchase would cause more than 2% of the value of its total assets to
be invested in such warrants. In selecting investments, emphasis will be
placed on securities of progressive companies with aggressive and competent
managements. A substantial portion of the Fund's assets may be invested in
emerging growth companies, which at the time of the Fund's investment may be
paying no dividends to their shareholders. Emerging growth companies are
companies believed by management to have above-average prospects for growth as
a result of their providing products or services in emerging industries or
sub-industries.
Investments will be made primarily in securities listed on national securities
exchanges, but the Fund may purchase securities traded in the U.S.
over-the-counter market. When, in the opinion of management, market or
economic conditions warrant a defensive posture, the Fund may place all or a
portion of its assets in fixed-income securities. The Fund may also maintain a
portion of its assets in cash or short-term debt securities pending selection
of particular long-term investments. The Fund may purchase securities on a
forward-commitment, when-issued or delayed-delivery basis. For a discussion of
these securities, please see the Statement of Additional Information.
11
<PAGE> 16
Emerging growth companies may have limited product lines, market or financial
resources, or they may be dependent upon a small management group. An
investment in the Emerging Growth Equity Fund may therefore involve greater
financial risk than is customarily associated with less aggressive companies.
In addition, the Fund may be subject to relatively high levels of market risk.
The securities of aggressive growth companies may be subject to more abrupt or
erratic market movements than other companies or the market averages in
general. Because shares of the Emerging Growth Equity Fund may experience
above-average fluctuations in net asset value, they should be considered as
long-term investments.
Balanced Assets Fund
The investment objective of the Balanced Assets Fund is to achieve intermediate
and long-term growth through capital appreciation and income by investing in
both debt and equity securities.
In pursuit of its objective, the Balanced Assets Fund will invest in common
stocks, preferred stocks or bonds (which may or may not be convertible into or
carry rights to purchase common stock or to participate in earnings) and other
long-term and short-term debt securities. Common stocks will be held for
possible growth of capital as well as for income, while preferred stocks and
debt securities will be held for income and possible capital appreciation as a
result of a decline in the level of prevailing interest rates. The Fund will
maintain at all times a balance between debt securities or preferred stocks, on
the one hand, and common stocks, on the other. At least 25% of the Fund's
assets will be invested in each of the two basic categories. Investments will
be made primarily in securities listed on national securities exchanges, but
the Fund may purchase securities traded in the U.S. over-the-counter market.
The Fund may also maintain a portion of its assets in cash or short-term debt
securities pending selection of particular long-term investments. The Fund may
purchase securities on a forward-commitment, when-issued or delayed-delivery
basis. For a discussion of these securities, please see the Statement of
Additional Information. See the Capital Growth Bond Fund, below, for a
description of the type of debt securities in which the Fund may invest.
Investment in shares of the Balanced Assets Fund should involve less financial
and market risk than an investment in the Emerging Growth Equity Fund.
Capital Growth Bond Fund
The investment objective of the Capital Growth Bond Fund is to achieve growth
of capital by investing in medium-grade or better debt securities, with income
as a secondary consideration.
The Capital Growth Bond Fund differs from most "bond" funds in that its primary
objective is capital appreciation, not income. Opportunities for capital
appreciation will usually exist only when the levels of prevailing interest
rates are falling. During periods when the Manager expects interest rates to
decline, the Fund will invest primarily in intermediate-term and long-term
corporate and government debt securities. However, during periods when the
Manager expects interest rates to rise or believes that market or economic
conditions otherwise
12
<PAGE> 17
warrant such action, the Fund may invest substantially all of its assets in
short-term debt securities to preserve capital and maintain income. The Fund
may also maintain a portion of its assets temporarily in cash or short-term
debt securities pending selection of particular long-term investments.
The Capital Growth Bond Fund will be carefully positioned in relation to the
term of debt obligations and the anticipated movement of interest rates. It is
contemplated that at least 75% of the value of the Fund's total investment in
corporate debt securities, excluding commercial paper, will be represented by
debt securities which have, at the time of purchase, a rating within the four
highest grades as determined by Moody's Investors Service, Inc. (Aaa, Aa, A or
Baa), Standard & Poor's Corporation (AAA, AA, A or BBB), or Fitch's Investors
Service (AAA, AA, A or BBB) and debt securities of banks and other issuers
which, although not rated as a matter of policy by either Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("Standard & Poor's"),
or Fitch's Investors Service ("Fitch's"), are considered by the Manager to have
investment quality comparable to securities receiving ratings within such four
highest grades. Although the Fund does not intend to acquire or hold debt
securities of below investment-grade quality, policyowners should note that
even bonds of the lowest categories of investment-grade quality may have
speculative characteristics, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher-grade bonds. It should be
further noted that should an obligation in the Fund's portfolio drop below
investment grade, the Fund will make every effort to dispose of it promptly so
long as to do so would not be detrimental to the Fund. Government obligations
in which the Capital Growth Bond Fund may invest will be limited to those
issued or guaranteed as to principal or interest by the United States
Government or its agencies or instrumentalities or by the Government of Canada
or any Canadian Crown agency. Any Canadian obligation acquired by the Fund
will be payable in U.S. dollars. The Fund may purchase securities on a
forward-commitment, when-issued or delayed-delivery basis. For a discussion of
these securities, please see the Statement of Additional Information.
The Capital Growth Bond Fund may purchase corporate debt securities which carry
certain equity features, such as conversion or exchange rights or warrants for
the acquisition of stock of the same or a different issuer or participations
based on revenues, sales, or profits. The Fund will not exercise any such
conversion, exchange or purchase rights if, at the time, the value of all
equity interests so owned would exceed 10% of the value of the Fund's total
assets.
Because of the Fund's emphasis on medium-grade or better instruments, an
investment in the Capital Growth Bond Fund should result in less financial risk
than an investment in the Emerging Growth Equity Fund or Balanced Assets Fund.
However, the Capital Growth Bond Fund will be subject to substantial market
risk arising from changes in the level of prevailing interest rates and the
Fund's active management in anticipation of such changes.
13
<PAGE> 18
Money-Market Fund
The investment objective of the Money-Market Fund is to provide maximum current
income consistent with capital preservation and liquidity by investing in a
portfolio of high-quality money market instruments.
In pursuit of its objective, the Money-Market Fund may invest in:
(1) obligations issued or guaranteed as to principal or interest by the United
States Government, or any agency or authority controlled or supervised by and
acting as an instrumentality of the U.S. Government pursuant to authority
granted by Congress, or issued or guaranteed as to principal or interest by the
Government of Canada or any Canadian Crown agency (any Canadian obligation
acquired by the Fund will be payable in U.S. dollars);
(2) obligations (including negotiable certificates of deposit) of U.S. banks
and savings and loan associations which at the date of the investment have
capital, surplus and undivided profits (as of the date of their most recently
published financial statements) in excess of $100,000,000 and foreign branches
of U.S. banks if such banks meet the stated qualifications;
(3) commercial paper which at the date of the investment is rated (or
guaranteed by a company whose commercial paper is rated) A-1 by Standard &
Poor's, P-1 by Moody's, or F-1 by Fitch's, or, if not rated, is issued by a
company which at the date of the investment has an outstanding short-term debt
issue that is so rated or which is determined by management, pursuant to
guidelines adopted and reviewed by the Fund's Board of Directors, to be of
comparable quality to securities that are so rated;
(4) corporate obligations maturing in one year or less which at the date of
investment are rated AA or higher by Standard & Poor's, Fitch's or Moody's or
either (a) are issued by a company with outstanding short-term debt securities
rated A-1 by Standard & Poor's, P-1 by Moody's, or F-1 by Fitch's or (b) are
determined by management, pursuant to guidelines established and reviewed by
the Fund's Board of Directors, to be of comparable quality to securities that
are so rated; and
(5) repurchase agreements with respect to any of the foregoing obligations.
More complete descriptions of the money market instruments in which the Fund
may invest and the debt security ratings used by the Fund are set forth in the
Statement of Additional Information.
All of the Money-Market Fund's investments will mature in 13 months or less and
the portfolio will maintain a dollar-weighted average portfolio maturity of
less than 90 days. By limiting the maturity of its investments, the Fund seeks
to lessen the changes in the value of its assets caused by fluctuations in
short-term interest rates. All of the Money-Market Fund's investments will be
ones whose issuers are determined to present minimal credit risks. The Fund
may purchase securities on a forward-commitment, when-issued or
delayed-delivery
14
<PAGE> 19
basis. For a discussion of these securities, please see the Statement of
Additional Information.
Investment in shares of the Money-Market Fund should involve less market or
financial risk than an investment in any other Fund. However, the Fund's
performance will vary with changes in short-term interest rates.
Common Stock Fund
The investment objective of the Common Stock Fund is to achieve intermediate
and long-term growth through capital appreciation and current income by
investing in common stocks and other equity securities of well established
companies with promising prospects for providing an above average rate of
return.
In pursuit of its objective, the Common Stock Fund will invest principally in
common stocks or in securities convertible into common stocks or carrying
rights or warrants to purchase common stock or to participate in earnings. In
selecting investments, emphasis will be placed on companies with good financial
resources, strong balance sheet, satisfactory rate of return on capital, good
industry position, superior management skills, and earnings that tend to grow
consistently. The Fund's investments are not limited to any particular type or
size of company, but high-quality growth stocks are emphasized.
Investments will be made primarily in securities listed on national securities
exchanges, but the Fund may purchase securities traded in the United States
over-the-counter market. When, in the opinion of management, market or
economic conditions warrant a defensive posture, the Fund may place all or a
portion of its assets in fixed-income securities. The Fund may also maintain a
portion of its assets in cash or short-term debt securities pending selection
of particular long-term investments. The Fund may purchase securities on a
forward-commitment, when-issued or delayed-delivery basis. For a discussion of
these securities, please see the Statement of Additional Information.
Investment in shares of the Common Stock Fund should involve less financial and
market risk than the Emerging Growth Equity Fund, but the Fund may occasionally
experience above-average fluctuations in net asset value, and therefore should
be considered as a long-term investment.
Real Estate Securities Fund
The investment objective of the Real Estate Securities Fund is to achieve a
combination of long-term capital appreciation and satisfactory current income
by investing in real estate related equity and debt securities.
In pursuit of its objective, the Real Estate Securities Fund will invest
principally in real estate investment trust equity and debt securities and
other securities issued by companies which invest in real estate or interests
therein.
The Fund may also purchase the common stocks, preferred stocks, convertible
securities and bonds of companies operating in industry groups relating to the
15
<PAGE> 20
real estate industry. This would include companies engaged in the development
of real estate, building and construction, and other market segments related to
real estate. The Fund will not invest directly in real property nor will it
purchase mortgage notes directly.
Under normal circumstances, at least 65% of the value of the Fund's total
assets will be invested in real estate related equity and debt securities.
When, in the opinion of management, market or economic conditions warrant a
defensive posture, the Fund may place all or a portion of its assets in
fixed-income securities which may or may not be real estate debt related
securities. The Fund may also maintain a portion of its assets in cash or
short-term debt securities pending selection of particular long-term
investments. The Fund may purchase securities on a forward-commitment,
when-issued or delayed-delivery basis. For a discussion of these securities,
please see the Statement of Additional Information.
Because the Fund considers current income in its investment objectives, an
investment in the Real Estate Securities Fund should involve less financial and
market risk than the Emerging Growth Equity Fund. However, the Fund's share
value may experience above-average fluctuation in periods of changing interest
rates and therefore the shares should be considered as long-term investments.
International Fund And
Pacific Rim Emerging Markets Fund
The investment objective of both the International Fund and the Pacific Rim
Emerging Markets Fund is to achieve long-term growth of capital. The Funds
will attempt to achieve their respective investment objectives by investing in
a diversified portfolio that is comprised primarily of common stocks and
equity-related securities of corporations domiciled in countries other than the
United States and Canada. Current income from dividends and interest will not
be an important consideration in the selection of portfolio securities.
Investment Policy. In pursuit of their respective investment objectives, the
International Fund and the Pacific Rim Emerging Markets Fund will vary the
geographical distribution of their investments based upon the continuous
evaluation of political, economic and market trends throughout the world.
Investments will be shifted among the world's capital markets in accordance
with the ongoing analyses of trends and developments affecting such markets and
securities. Although the International Fund has no limits on geographical
distribution other than the United States and Canada, it is expected to invest
primarily in companies domiciled in western European countries, Australia, the
Far East, Mexico and South America. The Pacific Rim Emerging Markets Fund will
invest primarily in companies domiciled in potentially all countries of the
Pacific Rim region. For purposes of this Fund, the countries of the Pacific
Rim region are India, Pakistan, Japan, Hong Kong, Singapore, Malaysia,
Thailand, Indonesia, Australia, South Korea, Taiwan, Philippines, New Zealand
and China.
Investment in foreign countries often requires approval by the specific country
involved. As a result, although the International Fund and Pacific Rim
Emerging Markets Fund intend to invest as above, not all countries may be
available initially.
16
<PAGE> 21
The International Fund and the Pacific Rim Emerging Markets Fund will, under
normal conditions, invest at least 65% of their net assets in common stocks and
equity-related securities of established larger-capitalization non-U.S.
companies that have attractive long-term prospects for growth of capital.
Equity-related securities in which the Funds may invest include: preferred
stocks, warrants and securities convertible into or exchangeable into common
stocks.
A Fund will invest in the securities of issuers domiciled or primarily traded
in at least five foreign countries if the Fund has invested at least 80% of its
net assets in foreign issuers. If the Fund has less than 20% of its net assets
in foreign issuers, then all of such investment may be in issuers domiciled or
primarily traded in one country. If the Fund has at least 20% but less than
40% of its net assets in foreign issuers, then such investment must be
allocated to issuers domiciled or primarily traded in at least two foreign
countries. Similarly, if the Fund has at least 40% but less than 60% of its
net assets invested in foreign issuers, such investment must be allocated to at
least three foreign countries. Foreign investments must be allocated to at
least four foreign countries if such investments comprise at least 60% but less
than 80% of the Fund's net assets. A Fund will not invest more than 20% of its
net assets in securities of issuers domiciled or primarily traded in any one
country, except that a Fund may invest up to 35% of its net assets in issuers
domiciled or primarily traded in any one of the following countries: Australia,
France, Japan, the United Kingdom, or Germany.
The Funds may, for defensive purposes, invest all or a portion of their assets
in non-convertible fixed income securities denominated in U.S. and non-U.S.
dollars. These non-convertible fixed income securities will include debt of
corporations, foreign governments and supranational organizations. The Funds
may also maintain a portion of their assets in cash or short term debt
securities pending the selection of certain long-term investments.
The International Fund and the Pacific Rim Emerging Markets Fund may also
purchase and sell the following equity-related financial instruments:
- -- exchange-listed call and put options on equity indices.
- -- over-the-counter ("OTC") and exchange-listed equity index futures.
In order to assist in the foreign currency risk management of the International
Fund and the Pacific Rim Emerging Markets Fund, the following foreign currency
related financial instruments may also be purchased and sold:
- -- OTC and exchange-listed call and put options on various currencies in the
portfolio.
- -- OTC foreign currency futures contracts on various currencies in the
portfolio.
Please see Investment Techniques Of The International Fund And Pacific Rim
Emerging Markets Fund--"Options," "Futures," and "Risk Factors In Options And
Futures."
17
<PAGE> 22
Equity Index Fund
The investment objective of the Equity Index Fund is to achieve investment
results which approximate the total return of publicly traded common stocks in
the aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index (the "Index").
Investment Policy. The Equity Index Fund will seek to achieve its objective by
attempting to replicate the aggregate total return of the Index. The Fund is
designed to provide an economical and convenient means of maintaining a widely
diversified investment in the United States equity market as part of an overall
investment strategy. The Fund uses the Index as its standard performance
comparison because it represents more than 70% of the total market value of
all publicly traded common stocks in the United States and is widely viewed
among investors as representative of the performance of publicly traded common
stocks in the United States.
The Index is composed of 500 selected common stocks, over 95% of which are
listed on the New York Stock Exchange. The Index is an unmanaged index of
common stock prices. The performance of the Index is based on changes in the
prices of stocks comprising the Index and assumes the reinvestment of all
dividends paid on such stocks. Taxes, brokerage, commissions and other fees are
disregarded in computing the level of the Index. Standard & Poor's selects the
stocks to be included in the Index on a proprietary basis but does incorporate
such factors as the market capitalization and trading activity of each stock
and its adequacy as representative of stocks in a particular industry group.
Stocks in the Index are weighted according to their market capitalization
(i.e., the number of shares outstanding multiplied by the stock's current
price). "Standard & Poor's (R)", "S&P 500 (R)", "S&P (R)", "Standard & Poor's
500 (R) and "500" are trademarks of McGraw-Hill, Inc.
The Index fluctuates in value with changes in the market value of the 500
stocks included in the Index at any point in time. An investment in the Fund
involves risks similar to the risks of investing directly in the stocks
included in the Index.
The Adviser will not attempt to "manage" the Fund in the traditional portfolio
management sense which generally involves the buying and selling of securities
based upon investment analysis of economic, financial and market factors.
Instead, the Fund, utilizing a "passive" or "indexing" investment approach
attempts to duplicate the performance of the Index. The adverse financial
situation of a company will not directly result in its elimination from the
Fund's portfolio unless, of course, the company in question is removed from the
Index. Conversely, the projected superior financial performance of a company
would not normally lead to an increase in the Fund's holdings of the company.
18
<PAGE> 23
Under normal circumstances, the net assets of the Fund will be invested in any
combination of the following investments: 1) representative common stocks,
2) Standard & Poor's 500 Futures Contracts and 3) Standard & Poor's Depositary
Receipts (R) (see "Investment Techniques of The Equity Index Fund - S&P 500
Futures Contracts").
With regard to the portion of the Fund that can be invested in common stocks,
the method used to select investments for the Fund involves investing in common
stocks in approximately the order of their respective market value weightings
in the Index, beginning with those having the highest weightings. For
diversification purposes, the Fund can purchase stocks with smaller weightings
in order to represent other sectors of the Index. The Fund will invest only in
those stocks, and in such amounts, as its Adviser deems necessary and
appropriate in order for the Fund to approximate the performance of the Index.
There is no minimum or maximum number of stocks included in the Index which the
Fund must hold. Under normal circumstances, it is expected that the portion of
the Fund invested in the stock market would hold between 300 and 500 different
stocks included in the Index. The Fund may compensate for the omission of a
stock that is included in the Index, or for purchasing stocks in other than the
same proportion that they are represented in the Index, by purchasing stocks
that are believed to have characteristics that correspond to those of the
omitted stocks. The Fund may invest in short-term debt securities to maintain
liquidity or pending investment in stocks or Standard & Poor's Stock Index
Futures Contracts (S&P 500 Futures Contracts).
Tracking error is measured by the difference between the total return for the
Index and the total return for the Fund after deductions of fees and expenses.
All tracking error deviations are reviewed to determine the effectiveness of
investment policies and techniques. Tracking error is reviewed at least weekly
and more frequently if such a review is indicated by significant cash balance
changes, market conditions or changes in the composition of the Index. If
deviation accuracy is not maintained, the Fund will rebalance its composition
by selecting securities which, in the opinion of the Adviser, will provide a
more representative sampling of the capitalization of the securities in the
Index as a whole or a more representative sampling of the sector
diversification in the Index.
The Equity Index Fund is not sponsored, endorsed, sold or promoted by Standard
& Poor's ("S&P"). S&P makes no representation or warranty, express or implied,
to the shareholders of the Equity Index Fund or any member of the public
regarding the advisability of investing in securities generally or in the
Equity Index Fund particularly or the ability of the S&P 500 Index to track
general stock market performance. S&P's only relationship to the Company is
the licensing of certain trademarks and trade names of S&P and of the S&P 500
Index which is determined, composed and calculated by S&P without regard to the
Company or the Equity Index Fund. S&P has no obligation to take the needs of
the Company or the shareholders of the Equity Index Fund into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not
responsible for and has not participated in the determination of the prices and
amount of shares of the Equity Index Fund or the timing of the issuance or sale
of the shares of the Equity Index Fund or in the determination or calculation
of the equation by which shares of the Equity Index Fund are to be converted
into cash. S&P has no
19
<PAGE> 24
obligation or liability in connection with the administration, marketing or
trading of the Equity Index Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Company, shareholders of the
Equity Index Fund, or any other person or entity from the use of the S&P 500
Index or any data included therein. S&P makes no express or implied
warranties, and expressly disclaims all warranties of merchantability or
fitness for a particular purpose or use with respect to the S&P 500 Index or
any data included therein. Without limiting any of the foregoing, in no event
shall S&P have any liability for any special, punitive, indirect, or
consequential damages (including lost profits), even if notified of the
possibility of such damages.
Investment Techniques Of The International Fund
And Pacific Rim Emerging Markets Fund
Options. The Funds will not write uncovered OTC or exchange-listed put or call
options on specific equities, equity or market indices, or foreign currency.
The Funds will also not enter into interest rate or foreign currency swaps,
caps, collars or floors.
The International Fund and the Pacific Rim Emerging Markets Fund may purchase
put and call options on various equity indices and sell put or call options
they have previously purchased. An option is a contract that gives the holder
the right to purchase (in the case of a call) or the right to sell (in the case
of a put) a specified amount of an underlying security at a fixed price upon
the exercise of the option. In the case of equity index options, exercises are
settled through the payment of cash rather than the delivery of a security.
The purchase of put and call options on various equity indices is done in order
to hedge against changes in stock prices which may adversely affect the prices
of securities that the portfolio wants to purchase at a later date, to hedge
its existing investments against a decline in value, or to attempt to reduce
the risk of missing a market or industry segment advance.
An equity index is a method of reflecting in a single number the market value
of an agreed-upon basket of different stocks. The index may be designed to be
representative of the stock market as a whole or of a particular broad market
sector or industry. The most common equity indices are value-weighted indices
that reflect the aggregate market value of many different companies by taking
into account prices of the component stocks and the number of shares
outstanding for each respective company included in the index.
The premium paid for a put or call option, plus any transaction costs, will
reduce the benefit, if any, realized by the Fund upon exercise or liquidation
of the option. The option may expire without value to the Fund unless the
price of the underlying equity index changes in an amount in excess of the
premium paid to purchase the option.
Equity index options acquired by the Fund will be traded on locally recognized
exchanges. Options traded in the OTC market may not be as actively traded as
20
<PAGE> 25
those on an exchange and may be considered as illiquid securities. It may also
be more difficult to value such options.
The International Fund and the Pacific Rim Emerging Markets Fund may purchase
and sell put and call options on foreign currencies for the purpose of
protecting against declines in the dollar value of portfolio securities and
against increases in the dollar cost of securities to be acquired. Such
investment strategies will be used as a hedge and not for speculation. The
purchase of put or call options on foreign currencies may constitute an
effective hedge against fluctuations in exchange rates although in the case of
foreign exchange rate movements adverse to the Fund's position, it may forfeit
the entire amount of premium paid plus related transaction costs. Foreign
currency options acquired by the Funds may be traded on either locally
recognized exchanges or the OTC market. As in the case of equity index
options, foreign currency options traded in the OTC market may not be as
actively traded as those on an exchange and may be considered as illiquid
securities.
Futures. The International Fund and the Pacific Rim Emerging Markets Fund may
purchase and sell equity index futures contracts in order to hedge the equity
portion of their assets or equity assets they intend to acquire, with regard to
market risk as distinguished from stock-specific risk. The equity index
futures contracts purchased by the Funds will be both OTC and
locally-recognized-exchange-traded. As in the case of OTC-traded options,
OTC-traded futures may not be as actively traded as those on an exchange and
may be considered as illiquid. It may also be more difficult to value such
futures.
Foreign Currency Futures Contracts. The International Fund and the Pacific Rim
Emerging Markets Fund may enter into contracts for the purchase or sale of a
specific currency at an agreed-upon future date and price set at the time of
the contract.
The Funds will enter into foreign currency futures contracts for hedging
purposes, only with the purpose of protecting the U.S. dollar equivalent of
securities in the Fund that are denominated in non-U.S. dollars.
Proper use of foreign currency futures contracts will protect the Funds against
a loss arising from an adverse change in the relationship between the U.S.
dollar and the particular foreign currency for the period of time from when the
foreign currency futures contract is purchased or sold and the date on which
payment is made or received on the underlying foreign currency.
Foreign currency futures contracts are traded in the inter-bank market and
carry much the same risks as noted above for OTC-traded futures and options.
Risk Factors In Futures And Options. The purchase and sale of futures and
options expose the International Fund and the Pacific Rim Emerging Markets Fund
to risks that are not present in the other Funds.
To the extent that hedging is effective, it will protect the value of the
securities or currencies which are hedged but will accordingly diminish the
potential for gain should the unhedged currency or security position move in a
favorable direction. There is the potential for a hedging transaction using
futures and options to create a loss as a result of imperfect correlation of
21
<PAGE> 26
price movements between the hedging vehicle and the hedged item(s). The risks
of option trading include possible loss of the entire premium paid for the
option or the inability to effect closing transactions at favorable prices.
The risks of trading futures contracts also include the risks of inability to
effect closing transactions or to do so at favorable prices; consequently,
losses from investing in futures contracts are potentially unlimited.
Risk Factors
Investors should recognize that investing in foreign securities involves
special risk considerations, including those that are listed below, which are
not typically associated with investing in U.S. securities.
Investment in the International Fund and the Pacific Rim Emerging Markets Fund
will involve foreign currency risk because the offering price of their shares
will be stated in U.S. dollars while it is anticipated that the overwhelming
majority of their assets will be priced and quoted in other currencies. The
value of the Funds' securities denominated in foreign currencies will be
affected favorably or unfavorably by changes in currency exchange rates and the
Funds' values will be affected by the costs incurred in connection with the
conversions between various currencies.
The securities of non-U.S. issuers held by the Funds generally will not be
registered under, nor will the issuers thereof be subject to, the reporting
requirements of the U.S. Securities and Exchange Commission. As a consequence,
there may be less publicly available information about the foreign issuer than
is available about a U.S. company or government entity. Foreign issuers are
also not subject to the same accounting, auditing and financial reporting
standards, requirements, and practices applicable to U.S. companies.
Stock markets outside the U.S. are generally not as developed or as efficient
as those in the U.S. As a result, the extent and effectiveness of government
regulation of those stock markets and brokers may not be identical to that in
the U.S. Frequently, liquidity in most foreign bond markets is less than
generally exists in the U.S. bond market and, at times, price volatility can be
greater than in the U.S.
Fixed brokerage commissions on certain non-U.S. stock exchanges are generally
higher than negotiated commissions on U.S. exchange-listed securities.
Similarly, the bid-to-ask spreads in foreign bond markets are generally larger
than commissions or bid-to-ask spreads in the U.S. bond market.
Custodial costs related to non-U.S. securities generally exceed those on
comparable U.S. securities.
With respect to certain foreign countries, there is the possibility of
political or social instability, or diplomatic events that could result in
potential restrictions on the flow of international capital, including the
possibility of expropriation or confiscatory taxation.
The Funds' adviser will consider these and other pertinent factors before
investing in foreign securities. Investments in foreign securities will not
22
<PAGE> 27
occur unless the Funds' adviser believes that the potential benefits of the
investment outweigh the risks and that such investments meet the policies,
standards, risk profile and objectives of a particular portfolio.
Accordingly, investment in the shares of the International Fund and the Pacific
Rim Emerging Markets Fund should involve more financial and market risk than
any of the domestic Funds. Because the shares of the International Fund and
the Pacific Rim Emerging Markets Fund may experience above-average fluctuations
in net asset value, they should be considered as long-term investments.
Investment Techniques Of The Equity Index Fund
S&P 500 Futures Contracts. The Equity Index Fund may (i) invest any portion of
its net assets in S&P 500 Futures Contracts until the Fund reaches $25 million
in net assets and (ii) once the Fund reaches $25 million in net assets, invest
no more than 20% of its net assets in S&P 500 Futures Contracts. Investments in
S&P 500 Futures Contracts can be held by the Fund for any length of time. The
Fund may purchase S&P 500 Futures Contracts only for the purpose of hedging,
including protecting against an increase in the price of securities it intends
to purchase, or sell S&P 500 Futures Contracts for the purpose of hedging,
including protecting against a decline in value of securities the Fund already
owns, and not for speculation or to leverage the Fund.
The S&P 500 Futures Contract obligates the seller to deliver and the purchaser
to take an amount of cash equal to a specific dollar amount times the
difference between the value of the Index at the close of the day of the
contract and the price at which the agreement is made. No physical delivery of
the underlying stocks which constitute the Index is made.
No consideration will be paid or received by the Fund upon the purchase or sale
of an S&P 500 Futures Contract. Prior to the purchase or sale of an S&P 500
Futures Contract, the Fund will be required to deposit with the broker an
amount of cash or cash equivalents equal to 5% to 10% of the underlying S&P 500
Futures Contract amount. This deposit is known as the "initial margin" and
serves as the performance bond or good faith deposit on the S&P 500 Futures
Contract. The initial margin is returned to the Fund upon termination of the
S&P 500 Futures Contract, assuming that all contractual obligations have been
satisfied. The initial margin amount is subject to change by the exchange board
of trade on which the S&P 500 Futures Contract is traded and members of such
exchange board of trade may charge a higher amount. Subsequent payments to and
from the broker, known as "variation margin," will be made daily as the price
of the S&P 500 Futures Index fluctuates, making the long and short positions in
the S&P 500 Futures Contracts more or less valuable. The Fund may elect to
close its S&P 500 Futures Contract position at any time prior to the expiration
date of the S&P 500 Futures Contract, by taking the opposite position.
Risk Factors in Standard & Poor's 500 Stock Index Futures Contracts. Although
the Fund intends to purchase or sell S&P 500 Futures Contracts only if market
conditions for this particular investment are favorable, there is no assurance
that a liquid market will exist for the S&P 500 Futures Contract at any
23
<PAGE> 28
particular time. It is common practice for most futures exchanges and boards of
trade to limit the amount of price fluctuation permitted in futures contracts
during a single trading day. Once the predetermined daily price limit has been
reached for a particular futures contract, no trades are permitted to be made
that day at a price beyond the daily price limit. Futures contract prices could
move to the predetermined daily price limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of
futures contract positions and subjecting some owners of futures contracts
positions to substantial losses. In the event of adverse price movements of the
S&P 500 Futures Index, the Fund would be required to make daily cash payments
of variation margin. In such circumstances, an increase in the value of the
portion of the Fund being hedged, if any, may offset partially or completely
losses on the S&P 500 Futures Contract. However, no assurance can be given that
the price of the securities being hedged will correlate with the price
movements in the S&P 500 Futures Contract and thus provide an offset to losses
on the futures contract.
There can be no assurance of the Fund's success at using the S&P 500 Futures
Contract as a hedging vehicle. There is a risk of imperfect correlation between
movements in the price of the securities which are the subject of the hedge and
the price of the S&P 500 Futures Contract. The risk of imperfect correlation
increases as the composition of the Fund's securities diverges from the
securities included in the Index. If the price of the S&P 500 Futures Contract
moves less than the price of the securities which are the subject of the hedge,
the hedge will not be fully effective but, if the price of the securities being
hedged has moved in a favorable direction, the Fund would be in a better
position than if it had not hedged at all. If the price of the securities being
hedged has moved in a favorable direction, this advantage will be partially
offset by changes in the value of the S&P 500 Futures Contract. If the price of
the S&P 500 Futures Contract moves more than the price of the stock, the Fund
will experience either a loss or a gain on the S&P 500 Futures Contract which
will not be completely offset by movements in the price of the securities which
are the subject of the hedge.
The Fund's ability to approximate the performance of the Index will depend to
some extent on the size of cash flows into and out of the Fund. Investment
changes to accommodate these cash flows will be made to maintain the similarity
of the Fund to the Index, to the maximum practicable extent. When S&P 500
Futures Contracts are purchased to hedge against a possible increase in the
price of stocks before the Fund is able to invest its cash in stocks in an
orderly manner, it is possible that the stock market may decline in value
instead: if the Fund then decides not to purchase hedged stocks because of
concern as to possible further stock market decline or for other reasons, the
Fund will realize a loss on the S&P 500 Futures Contract that is not offset by
a reduction in the price of the securities purchased.
24
<PAGE> 29
Standard & Poor's Depositary Receipts. The Equity Index Fund may invest up to
5% of its assets in Standard & Poor's Depositary Receipts ("SPDRS"[R]). SPDRS
are units of beneficial interest in a unit investment trust, representing
proportionate undivided interests in a portfolio of securities in substantially
the same weighting as the component common stocks of the S&P 500. While the
investment objective of such a unit investment trust is to provide investment
results that generally correspond to the price and yield performance of the
component common stocks of the S&P 500, there can be no assurance that this
investment objective will be met fully.
Investment Restrictions
In pursuing their investment objectives and policies, the Funds are subject to
a number of investment restrictions. The following is a brief summary of
certain restrictions that the Company believes to be of interest to variable
contract purchasers. Some of these restrictions are subject to exceptions not
stated here. Such exceptions and a complete list of the investment
restrictions applicable to the Funds and to the Company are set forth in the
Statement of Additional Information under the heading "Investment
Restrictions."
Except for the restrictions specifically identified as fundamental, all
investment restrictions described in this Prospectus and in the Statement of
Additional Information are not fundamental, so that the Board of Directors may
change them without shareholder approval. Fundamental restrictions may not be
changed without the affirmative vote of a majority of the outstanding voting
securities of each Fund affected by the change.
Restrictions that are fundamental and applicable to all Funds include
prohibitions on (i) investing more than 25% of the total assets of any Fund in
the securities of issuers having their principal activities in any particular
industry (except in the case of the Real Estate Securities Fund and with
exceptions for U.S. Government and Government agency securities and certain
money-market instruments), (ii) borrowing money, except for temporary or
emergency purposes and then not in excess of 10% of the total assets of any
Fund, and (iii) purchasing securities of any issuer if the purchase would cause
more than 5% of a Fund's total assets to be invested in the securities of any
one issuer (excluding U.S. Government and Government agency securities and bank
obligations) or cause more than 10% of the voting securities of the issuer to
be held by a Fund, except that up to 25% of each Fund's total assets may be
invested without regard to the restrictions of this clause (iii).
Restrictions that apply to all Funds and that are not fundamental include
prohibitions on pledging, hypothecating, mortgaging or transferring more than
10% of the total assets of any Fund as security for indebtedness. The
Money-Market Fund will not purchase securities of an issuer if it would cause
more than 5% of the Money-Market Fund's total assets to be invested in the
securities of that issuer (excluding U.S. Government and Government agency
securities). The Money-Market Fund will not purchase securities that have not
received the highest short-term debt rating by a nationally recognized
statistical rating organization and are not of comparable quality to securities
so rated if it would cause more than the greater of 1% of its total assets or
$1,000,000 to be invested in the securities of such issuer or if it would cause
more than 5% of its total assets to be invested in securities that were not so
rated or comparable to securities so rated.
25
<PAGE> 30
If a percentage restriction is adhered to at the time of an investment, a later
increase or decrease in the investment's percentage of a Fund's total assets
resulting from a change in the value of such assets will not constitute a
violation of the percentage restriction.
The following is a description of certain investment policies that are subject
to restrictions and that the Company's management believes to be of interest to
variable contract purchasers.
Foreign Securities
Each of the Funds may invest in foreign securities, but, with respect to all
Funds except the International and Pacific Rim Emerging Markets Funds, such
investment is restricted as a matter of non-fundamental policy to securities of
the following types: (i) U.S. dollar denominated obligations of foreign
branches of U.S. banks, (ii) securities represented by American Depository
Receipts listed on a national securities exchange or traded in the U.S.
over-the-counter market, (iii) securities of a corporation organized in a
jurisdiction other than the U.S. and listed on the New York Stock Exchange or
NASDAQ ("Interlisted Securities") or (iv) securities denominated in U.S.
dollars but issued by non U.S. issuers and issued under U.S. federal securities
regulations (for example, U.S. dollar denominated obligations issued or
guaranteed as to principal or interest by the Government of Canada or any
Canadian Crown agency); provided, however, this restriction shall not apply to
the International Fund or the Pacific Rim Emerging Markets Fund. The Equity
Index Fund presently does not invest in foreign securities because none are
included in the Index.
Foreign securities may be subject to foreign government taxes which reduce
their attractiveness. In addition, investing in the securities of foreign
issuers, particularly non-governmental issuers, involves risks which are not
ordinarily associated with investing in domestic issuers. These risks include
political or economic instability in the country involved and the possibility
of imposition of currency controls. In addition, there may be less publicly
available information about a foreign issuer than about a domestic issuer.
Foreign issuers, including foreign branches of U.S. banks, are subject to
different accounting and reporting requirements, which are generally less
extensive than the requirements applicable to domestic issuers. With respect
to certain foreign countries, there is a possibility of expropriation,
confiscatory taxation or diplomatic developments which could affect investment
in those countries. Foreign securities also involve currency risks. The value
of a foreign security denominated in foreign currency changes with variations
in the exchange rates. Fluctuations in exchange rates may also affect the
earning power and asset value of the foreign entity issuing a security, even
one denominated in U.S. dollars. Dividend and interest payments will be
repatriated based on the exchange rate at the time of disbursement, and
restrictions on capital flows may be imposed. Finally, in the event of a
default on any foreign obligation, it may be difficult for the Company to
obtain or to enforce a judgment against the issuer. The Manager will consider
these and other factors before investing in foreign securities and will not
make such investments unless, in its opinion, such investments will meet the
standards and objectives of a particular Fund.
Lending Securities
Each Fund may lend its securities so long as such loans do not represent in
excess of 20% of a Fund's total assets. This is a fundamental policy. The
procedure for lending securities is for the borrower to give the Fund
collateral consisting of cash or cash equivalents. The Fund may invest the
cash collateral
26
<PAGE> 31
and earn additional income or receive an agreed-upon fee from a borrower which
has delivered cash-equivalent collateral. The Company anticipates that its
securities will be lent only under the following conditions: (1) the borrower
must furnish collateral equal at all times to the market value of the
securities lent and the borrower must agree to increase the collateral on a
daily basis if the securities increase in value; (2) the loan will be made in
accordance with New York Stock Exchange rules, which currently require the
borrower, after notice, to redeliver the securities within five business days;
(3) any cash collateral invested by a Fund will be in short-term investments
which give maximum liquidity so that the collateral may be paid back to the
borrower when the securities are returned; (4) the Fund may pay reasonable
service, placement, custodian or other fees in connection with loans of
securities and share a portion of the interest from these investments with the
borrower of the securities; and (5) the Company will limit the amount of
lending of securities so that the aggregate amount of interest received
attributed to securities lent, if considered "other income" for Federal tax
purposes, will not cause the Company to lose its status as a regulated
investment company.
Management Of The Funds
Under Maryland law and the Company's Articles of Incorporation and By-laws, the
business and affairs of the Company are managed under the direction of the
Company's Board of Directors. The Board of Directors is elected by the holders
of the Company's securities. While all of the Company's outstanding securities
are owned by Manufacturers Life of America, shares will be voted as directed by
variable contract policyowners.
The By-laws of the Company provide that the Company need not hold an annual
meeting of shareholders in any year in which none of the following is required
to be acted on by shareholders under the Investment Company Act of 1940:
election of directors; approval of investment advisory agreement; ratification
of selection of independent public accountants; and approval of distribution
agreement. The Company intends to hold shareholder meetings only when required
by law and at other times as may be deemed appropriate by the Board of
Directors.
Investment Management Arrangements
The Fund's investment manager is Manufacturers Adviser Corporation (the
"Manager"), a Colorado corporation whose principal business at the present time
is to provide investment management services to the Company. The Manager was
organized in 1970 and became operational in 1984. The Manager is an indirect
wholly-owned subsidiary of Manufacturers Life. The address of the Manager is
200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5.
The Company has entered into an Investment Advisory Agreement with the Manager
pursuant to which the Manager agrees to manage the investment and reinvestment
of the assets of each Fund and to administer the affairs of the Company subject
to the supervision of the Company's Board of Directors. The Manager provides
the Company with an investment program and with investment research,
supervision and advice necessary for the proper supervision of each Fund.
Subject to review of the Company's Board of Directors and to the investment
objective, policies and restrictions of each Fund, the Manager determines which
securities will be
27
<PAGE> 32
purchased or sold for each Fund. The Manager also serves as the Company's
transfer agent and dividend disbursing agent.
Under a Service Agreement among the Manager, the Company and Manufacturers
Life, Manufacturers Life has agreed to furnish to the Manager personnel, office
space, supplies and equipment required by it and to make available to the
Manager certain statistical and economic data, investment research reports and
other research materials of Manufacturers Life's Investment Department. The
Manager has agreed to reimburse Manufacturers Life for its costs in this
regard.
Management of the Funds
The Manager of the Funds consists of a team of investment professionals each of
whom plays an important role in the management process of each Fund. Team
members work together to develop investment strategies and select securities
for a Fund's portfolio. They are supported by research analysts, traders and
other investment specialists who work alongside the investment professionals in
an effort to utilize all available resources to benefit the shareholders.
<TABLE>
<CAPTION>
Fund Manager(s) Fund Business Experience During Past
Five Years
<S> <C> <C>
Mark A. Schmeer Emerging Growth Equity Fund Investment Management, U.S.
(since 1995) Balanced Assets Fund Equities, The Manufacturers
Common Stock Fund Life Insurance Company - 1995-
Real Estate Securities Fund present; Vice President, Sun Life
Investment Management - 1993-
1995; Manager, U.S. Investments,
Ontario Hydro Corporation - 1986-
1993
Robert Lutzko Emerging Growth Equity Fund Investment Management, U.S. (since 1995)
Equities, The Manufacturers
Life Insurance Company - 1995-
present; U.S. Investment
Manager, Workers Compensation
Board, Toronto - 1989-1995
Catherine Addison Balanced Assets Fund Investment Management, U.S. Fixed
(since 1988) Capital Growth Bond Fund Income, The Manufacturers Life
Insurance Company, 1985-present
Stephen Hill International Fund Investment Management, The
(since 1995) Pacific Rim Emerging Markets Manufacturers Life Insurance
Fund Company, 1995-present; Director,
Invesco Asset Management, 1993-
1994; Consultant, 1993; Director,
Yasuda Trust Europe, 1989-1992
</TABLE>
28
<PAGE> 33
<TABLE>
<CAPTION>
Fund Manager(s) Fund Business Experience During
Past Five Years
<S> <C> <C>
Mark Andrew Hirst International Fund Investment Management, The
(since 1994) Manufacturers Life Insurance
Company, 1986-present
Richard James Crook International Fund Investment Management, The
(since 1994) Pacific Rim Emerging Markets Manufacturers Life Insurance
Company, 1975-present
Emilia Panadero International Fund Investment Management, The
Perez Pacific Rim Emerging Markets Manufacturers Life Insurance
(since 1995) Company, 1989-present
Leslie Grober Real Estate Securities Fund Investment Management, U.S. (since 1995)
Equities, The Manufacturers
Life Insurance Company - 1994-
present; Investment
Representative, Toronto- Dominion
Bank - 1991-1993; Banking, Bank
of Montreal - 1990-1991
Rhonda Chang Common Stock Fund Investment Management, The
(since 1995) Manufacturers Life Insurance
Company - 1994-present;
Investment Analyst, American
International Group - 1990-1994
</TABLE>
Expenses
With respect to the Emerging Growth Equity Fund, Balanced Assets Fund, Capital
Growth Bond Fund, Money-Market Fund, Common Stock Fund and Real Estate
Securities Fund, the Manager has agreed to pay all of the expenses of the
Company except for the following, which are borne by the Company: the
investment management fee, brokerage commissions on portfolio transactions
(including any other direct costs related to the acquisition, disposition,
lending or borrowing of portfolio investments), taxes payable by the Company,
interest and any other costs related to borrowings by the Company, and any
extraordinary or non-recurring expenses (such as legal claims and liabilities
and litigation costs and any indemnification related thereto).
With respect to the International Fund, the Pacific Rim Emerging Markets Fund,
and the Equity Index Fund, the Company shall pay all of the foregoing expenses
plus up to .50%, .65%, and .15%, respectively, of any additional expenses in
connection with the operation of these Funds.
29
<PAGE> 34
Fees
As compensation for its services, the Manager receives a fee from the Company
each day on which the Company's net asset value is determined. With respect to
the Emerging Growth Equity Fund, Balanced Assets Fund, Capital Growth Bond
Fund, Money-Market Fund, Common Stock Fund and Real Estate Securities Fund, the
fee is equivalent to an annual rate of 0.50% of the average daily value of the
aggregate net assets of the Funds. Prior to January 1, 1987, the Manager's fee
was equivalent to an annual rate of 0.20% of such value. The amount of the
daily charge for the fee is divided among the Funds in proportion to their
daily net asset values.
With respect to the International Fund and the Pacific Rim Emerging Markets
Fund, the fee will be equivalent to an annual rate of (i) 0.85% of the average
daily value of the net assets of the first $100 million of each Fund and (ii)
0.70% of the average daily value of the net assets of each Fund in excess of
$100 million. With respect to the Equity Index Fund, the fee will be .25%.
For the years ended December 31, 1993, 1994, and 1995 the Manager received
$743,241, $1,429,270, and $2,281,402, respectively, under the Investment
Advisory Agreement.
Capital Stock
The Company has nine classes of stock, one for each Fund. The shares of each
Fund have equal rights with respect to voting, redemptions, dividends,
distributions and liquidations with regard to that Fund. The shares of each
Fund, when issued and paid for, will be fully paid and non-assessable, will
have no preference, pre-emptive, conversion, exchange or similar rights, and
will be freely transferable. Holders of shares of any Fund are entitled to
redeem their shares as set forth under "Purchases And Redemptions Of Shares."
Taxes, Dividends And Distributions
The Company intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code (the "Code"). Under such provisions,
the Company will not be subject to federal income tax on such part of its net
ordinary income and net realized capital gains that it distributes to
shareholders.
The Company intends to distribute as dividends substantially all of the net
investment income, if any, of each Fund. For dividend purposes, net investment
income of each Fund will consist of all payments of dividends (other than stock
dividends) or interest received by such Fund less the estimated expenses of
such Fund (including fees payable to the Manager). Dividends from the net
investment income of a Fund will be declared at least annually and reinvested
in additional full and fractional shares of that Fund.
The Funds of the Company also presently intend to declare and distribute
annually after the close of their fiscal year all of their net realized capital
gains, if any.
30
<PAGE> 35
Purchases And Redemptions Of Shares
Shares of the Company are currently offered continuously, without sales charge,
at prices equal to the respective net asset values of the Funds, only to
Manufacturers Life of America. The Company sells its shares to Manufacturers
Life of America directly without the use of any underwriter. Manufacturers
Life of America uses shares of the Company to fund benefits under both variable
annuity contracts and variable life insurance policies. The Company's Board of
Directors will monitor the Funds for the existence of any material
irreconcilable conflict between the interests of variable annuity policyowners
investing in the Company and interests of holders of variable life insurance
policies investing in the Company. Manufacturers Life of America will report
any potential or existing conflicts to the directors of the Company. If a
material irreconcilable conflict arises, Manufacturers Life of America will, at
its own cost, remedy such conflict up to and including establishing a new
registered management investment company and segregating the assets underlying
the variable annuity contracts and the variable life insurance policies. The
Company reserves the right to offer its shares in the future to other persons
or entities.
Shares of the Company are sold and redeemed at their net asset value next
computed after a purchase or redemption order is received by the Company.
Depending upon the net asset values at that time, the amount paid upon
redemption may be more or less than the cost of the shares redeemed. Payment
for shares redeemed will be made as soon as possible, but in any event within
seven days after receipt of a request for redemption.
Determination Of Net Asset Value
The net asset value of the shares of each Fund is determined once daily by the
Manager at the close of the regular session of the New York Stock Exchange
("Exchange"), which is generally 4:00 p.m., Eastern time on each day during
which the Exchange is open for trading. The Exchange is open daily Monday
through Friday except on the following business holidays: New Year's Day,
Presidents Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. The net asset value per share of each
Fund is computed by adding the sum of the value of the securities held by that
Fund plus any cash or other assets it holds, subtracting all its liabilities,
and dividing the result by the total number of shares outstanding of that Fund
at such time. The values of all assets and liabilities initially expressed in
foreign currencies are translated into U.S. dollars at the exchange rates
provided by an approved pricing service as of 12:00 p.m. Eastern time.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before 4:00 p.m. Eastern
time on each business day in New York (i.e., a day on which the Exchange is
open). In addition, European or Far Eastern securities trading generally or in
a particular country or countries may not take place on all business days in
New York. Furthermore, trading may take place in certain markets on days which
are not business days in New York and on which a Fund's net asset value is not
31
<PAGE> 36
calculated. Since the Fund does not price on these days, the portfolio will
trade and the net asset value of the Fund's redeemable securities may be
significantly affected on days when shareholders have no access to the Fund. A
Fund calculates net asset value per share, and therefore effects sales,
redemptions and repurchases of its shares, as of the close of the Exchange once
on each day on which the Exchange is open. As a result, such calculation may
not take place contemporaneously with the determination of the prices of the
majority of the portfolio securities used in such calculation. If events
materially affecting the value of such securities occur between the time when
their price is determined and the time when the Fund's net asset value is
calculated, such securities will be valued at fair value as determined in good
faith by, or under the direction of, the Board of Directors.
Except with respect to debt instruments having a remaining maturity of 60 days
or less, securities held by a Fund will be valued as follows: Securities listed
on a securities exchange will be valued at the last sale price or, if there has
been no sale that day, at the last bid price reported as of the close of
trading on the Exchange; provided, however, with respect to the International
Fund and the Pacific Rim Emerging Markets Fund, if a particular country has
adopted conventions with respect to valuations, these will be utilized instead.
Securities traded in the over-the-counter market for which closing prices are
readily available will be valued at the last bid price or yield equivalent as
of the close of trading on the Exchange. However, if closing prices are not
readily available for these securities, quotations will be obtained from more
than one source and the securities will be valued at a mean of the bid prices
so obtained. Securities which are traded both in the over-the-counter market
and on a stock exchange will be valued according to the broadest and most
representative market, and it is expected that for debt securities this
ordinarily will be the over-the-counter market. If market quotations for
assets are or become unavailable, such assets will be valued at their fair
value as determined in good faith by, or under the direction of, the Company's
Board of Directors.
Where appropriate, debt instruments with maturities greater than 60 days are
valued on the basis of a valuation believed to reflect the fair value of the
security, as provided by an approved pricing service. Debt instruments with
remaining maturities of 60 days or less are valued on an amortized cost basis.
Under this method of valuation, a security is initially valued at cost on the
date of purchase (or in the case of securities purchased with more than 60 days
remaining to maturity, the market value on the 61st day prior to maturity); and
thereafter a constant proportionate amortization in value is assumed until
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the security. For purposes of this
method of valuation, the maturity of a variable rate instrument is deemed to be
the next date on which the interest rate is to be adjusted.
Custodian
State Street Bank and Trust Company ("State Street") acts as custodian of the
securities held by each Fund. State Street is authorized to use the facilities
of the Depository Trust Company and the book-entry system of the Federal
Reserve Banks.
32
<PAGE> 37
Custodian For Foreign Funds. Securities purchased for the International Fund
and Pacific Rim Emerging Markets Fund are maintained in the custody of foreign
banks and trust companies which are members of State Street's Global Custody
Network and foreign depositories (foreign sub-custodians). State Street and
each of the foreign custodial institutions holding securities of the Funds has
been approved by the Board in accordance with regulations under the Investment
Company Act of 1940.
The Board reviews, at least annually, whether it is in the best interest of the
International Fund and the Pacific Rim Emerging Markets Fund and its
shareholders to maintain Fund assets in each custodial institution. However,
with respect to foreign sub-custodians, there can be no assurance that the
Fund and the values of its shares will not be adversely affected by acts of
foreign governments, financial or operational difficulties of the foreign
sub-custodians, difficulties and costs of obtaining jurisdiction over, or
enforcing judgments against, the foreign sub-custodians, or application of
foreign law to a Fund's foreign sub-custodial arrangements. Thus the
non-investment risks involved in holding assets abroad may be greater than
those associated with investing in the U.S.
Performance Data
From time to time Manufacturers Life of America may publish advertisements or
distribute sales literature containing performance data relating to the Funds.
All such performance data are based on the actual historical performance of the
Funds for specified periods, and the figures are not intended to indicate
future performance. Performance data will include average annual total return
quotations for one-year, five-year and (when applicable) 10-year periods.
Quotations for the period since inception of a Fund will replace such periods
for a Fund that has not been in existence for a full five-year or 10-year
period. Performance data may also include average annual total return for
other time periods than those listed, and aggregate total return for various
periods of time. More detailed information on the computations is set forth in
the Statement of Additional Information.
Performance data of the Funds will not reflect charges made pursuant to the
terms of the variable life insurance and variable annuity policies funded by
separate accounts that invest in the Company's shares. However, sales
literature containing performance data for the Funds that is part of an
advertisement for variable annuity contracts whose assets may be invested in
the Fund will also contain corresponding performance data for the separate
account funding those contracts. Similarly, sales literature containing
performance data for the Funds that is part of an advertisement for variable
life insurance policies whose assets may be invested in the Fund will also
contain illustrations of the cash surrender and death benefit values for the
same time periods.
33
<PAGE> 38
PART B.
STATEMENT OF
ADDITIONAL INFORMATION
<PAGE> 39
Statement of Additional Information
MANULIFE SERIES FUND, INC.
(the "Company")
This Statement of Additional Information is not a prospectus but should be read
in conjunction with the Company's Prospectus dated May 1, 1996 which may be
obtained from Manulife Series Fund, Inc., 200 Bloor Street East, Toronto,
Ontario, Canada M4W 1E5.
The date of this Statement of Additional Information is May 1, 1996.
The Manufacturers
Life Insurance Company [ARTWORK]
of America
ManEquity, Inc.
<PAGE> 40
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Objectives And Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management Of The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Management Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Holders Of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases And Redemptions Of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes, Dividends And Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reports To Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix A: Money-Market Instruments In Which
The Money-Market Fund May Invest . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix B: Debt Security Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix C: Investment Techniques Of The International
Fund And Pacific Rim Emerging Markets Fund . . . . . . . . . . . . . . . . . . . .
Appendix D: Certain Investment Techniques . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
1
<PAGE> 41
The Company
Manulife Series Fund, Inc. (the "Company") is a diversified open-end management
investment company incorporated under Maryland law on July 22, 1983. The
Company is a series company, which means that it has several different
investment portfolios. Currently, the following investment portfolios are
offered, each of which is referred to herein as a Fund -- the Emerging Growth
Equity Fund, the Balanced Assets Fund, the Capital Growth Bond Fund, the
Money-Market Fund, the Common Stock Fund, the Real Estate Securities Fund, the
International Fund, the Pacific Rim Emerging Markets Fund, and the Equity Index
Fund.
A separate class of the Company's common stock, par value $0.01 per share, is
issued for each Fund. Each class represents an undivided interest in the assets
of the Fund attributable to that class, and a shareholder is entitled to a pro
rata share of all dividends and distributions arising from the net income and
capital gains on the investments of the Fund or Funds in which shares are held.
Shares of the Company are currently sold only to The Manufacturers Life
Insurance Company of America ("Manufacturers Life of America"), which is an
indirect wholly-owned subsidiary of The Manufacturers Life Insurance Company
("Manufacturers Life"). Manufacturers Life, together with its subsidiaries,
constitutes one of the largest life insurance companies in North America as
measured by assets. Shares will be purchased by Manufacturers Life of America
to fund certain benefits under variable contracts issued by it and also for
general investment purposes.
The Funds' assets will be invested and reinvested by the Company's investment
manager, Manufacturers Adviser Corporation (the "Manager").
Investment Objectives And Policies
The following information supplements the discussions entitled "Investment
Objectives, Policies and Risks" and "Investment Restrictions" in the Prospectus
and should be read in conjunction therewith.
The Prospectus describes the investment objective, policies and restrictions
relating to each of the Funds. Unless otherwise specified, the investment
policies and restrictions of the Funds are not fundamental policies and are
subject to change by the Company's Board of Directors without shareholder
approval. The investment objectives of the Funds and certain restrictions are
fundamental policies and may be changed only by a vote of the lesser of (i) 67%
of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the outstanding
shares. With respect to the submission of a change in an investment objective
or restriction to the holders of the Company's outstanding voting securities,
such matter shall be deemed to have been effectively acted upon with respect to
a particular Fund if a majority of the outstanding voting securities of such
Fund vote for the approval of such matter, notwithstanding (1) that such matter
has not been
2
<PAGE> 42
approved by the holders of a majority of the outstanding voting securities of
any other Fund affected by such matter, and (2) that such matter has not been
approved by the vote of a majority of the outstanding voting securities of the
Company.
A detailed description of the Money-Market Fund's investment policies appears
in Appendix A hereto: "Money-Market Instruments In Which the Money-Market Fund
May Invest." The debt security ratings mentioned in the Prospectus and Appendix
A are defined in Appendix B to this Statement of Additional Information.
Particular investment techniques followed by the International Fund and the
Pacific Rim Emerging Markets Fund are discussed in Appendix C hereto. In
Appendix D certain investment techniques common to all the Funds, namely
forward commitments, when-issued and delayed delivery securities, are
discussed. The following is a complete list of all investment restrictions to
which the Funds are subject and a discussion of the Funds' expected rates of
portfolio turnover.
Investment Restrictions
All of the restrictions through restriction 8 are fundamental policies.
Restrictions 9 through 15 are not fundamental policies.
The Company may not issue senior securities except to the extent that the
borrowing of money in accordance with restriction 3 may constitute the issuance
of a senior security, and each Fund will not:
(1) Invest more than 25% of the value of its total assets in securities of
issuers having their principal activities in any particular industry,
except in the case of the Real Estate Securities Fund, and excluding
United States Government and Government agency securities and
obligations of domestic branches of U.S. banks and savings and loan
associations. For purposes of this restriction, neither finance
companies as a group nor utility companies as a group are considered
to be a single industry. Such companies will be grouped instead
according to their services; for example, gas, electric and telephone
utilities will each be considered a separate industry.
(2) Purchase the securities of any issuer if the purchase would cause more
than 5% of the value of the Fund's total assets to be invested in the
securities of any one issuer (excluding U.S. Government and Government
agency securities and bank obligations(1)) or cause more than 10% of
the
__________________________________
(1) The 5% limitation set forth in restriction 2 is based on a
diversification test contained in the Investment Company Act of 1940. The staff
of the Securities and Exchange Commission has stated in the past that it is
concerned as to whether certain bank obligations should be subject to the
statutory 5% limitation, although the staff has yet to reach a determination on
the issue. Further action by the Commission may make it necessary, or it may be
otherwise advisable, for the Company to revise restriction 2 so that a Fund's
investment in certain obligations of any one bank will not exceed the 5%
limitation (not applicable as to 25% of the value of each Fund's total assets).
Any such revision will be made without submitting the matter to the vote of the
holders of the Company's or the affected Fund's shares.
3
<PAGE> 43
voting securities of the issuer to be held by the Fund, except that up
to 25% of the value of each Fund's total assets may be invested
without regard to these restrictions.
(3) Borrow money, except from banks for temporary or emergency purposes,
including the meeting of redemption requests which might otherwise
require the untimely disposition of securities. Borrowing in the
aggregate by any particular Fund may not exceed 10% of the value of
the Fund's total assets at the time the borrowing is made, and a Fund
may not make additional investments during any period that its
borrowings exceed 5% of the value of the Fund's total assets;
provided, however, effective May 1, 1995, the restriction on making
additional investments during any period that its borrowings exceed 5%
of the value of the Fund's total assets shall not apply to the
International Fund or the Pacific Rim Emerging Markets Fund.
(4) Underwrite securities of other issuers except insofar as the Company
may be considered an underwriter under the Securities Act of 1933 in
selling portfolio securities.
(5) Purchase or sell real estate, except that the Balanced Assets Fund may
invest in mortgage notes and other securities secured by real estate
or interests therein+ and each Fund may invest in securities issued by
companies which invest in real estate or interests therein.(2)
(6) Purchase or sell commodities or commodity contracts; provided,
however, the International Fund and the Pacific Rim Emerging Markets
Fund may purchase and sell futures contracts on financial instruments,
indices and foreign currencies, and options on such futures contracts,
and the Equity Index Fund may purchase and sell S&P 500 Stock Index
Futures Contracts ("S&P 500 Futures Contracts").
(7) Lend money to other persons except by the purchase of obligations in
which the Fund is authorized to invest and by entering into repurchase
agreements.
(8) Lend securities in excess of 20% of the value of its total assets.
(9) Knowingly invest in securities or other investments, including
repurchase agreements maturing in more than seven days, that are
subject to legal or contractual restrictions upon resale or are
otherwise not readily marketable; provided, however, this restriction
shall not apply to the International Fund or the Pacific Rim Emerging
Markets Fund.
(10) Sell securities short or purchase securities on margin except that it
may obtain such short-term credits as may be required to clear
transactions.
__________________________________
(2) In order to meet the requirements of certain state insurance laws and
regulations pertaining to variable life operations, the Balanced Assets Fund
will refrain from investing in mortgage notes and other securities secured by
real estate or interests therein until such time as such investments are
permitted by state insurance regulatory authorities.
4
<PAGE> 44
(11) Write or acquire put or call options; provided, however, this
restriction shall not apply to the International Fund or the Pacific
Rim Emerging Markets Fund.
(12) Purchase securities for the purpose of exercising control or
management.
(13) Purchase securities of other investment companies, except in
connection with a merger, consolidation or reorganization; provided,
however, that this restriction shall not apply to the Equity Index
Fund which shall be permitted to invest up to 5% of its assets in
Standard & Poor's Depositary Receipts.
(14) Pledge, hypothecate, mortgage or transfer (except as provided in
restriction 8) as security for indebtedness any securities held by the
Fund, except in an amount of not more than 10% of the value of the
Fund's total assets and then only to secure borrowings permitted by
restrictions 3 and 10.
(15) Purchase securities of foreign issuers other than (i) U.S. dollar
denominated obligations of foreign branches of U.S. banks, (ii)
securities represented by American Depository Receipts listed on a
national securities exchange or traded in the U.S. over-the-counter
market, (iii) securities of a corporation organized in a jurisdiction
other than the U.S. and listed on the New York Stock Exchange or
NASDAQ ("Interlisted Securities") or (iv) securities issued by non
U.S. issuers but denominated in U.S. dollars and issued pursuant to
U.S. federal securities regulations (for example, U.S. dollar
denominated obligations issued or guaranteed as to principal or
interest by the Government of Canada or any Canadian Crown agency);
provided, however, this restriction shall not apply to the
International Fund or the Pacific Rim Emerging Markets Fund.
If a percentage restriction is adhered to at the time of an investment, a later
increase or decrease in the investment's percentage of a Fund's total assets
resulting from a change in its value will not constitute a violation of the
percentage restriction.
Portfolio Turnover
Each Fund has a different expected rate of portfolio turnover. The Emerging
Growth Equity Fund's portfolio will be actively managed with a degree of
short-term trading made without regard to resulting brokerage costs.
Consequently, it is anticipated that the annual portfolio turnover rate of such
Fund will generally be between 50% and 150%.
By contrast, the Balanced Assets Fund, the Common Stock Fund, and the Real
Estate Securities Fund will not make a practice of short-term trading. However,
purchases and sales of securities will be made whenever necessary to achieve
each of the Fund's objectives without regard to resulting brokerage costs. It
is expected that annual portfolio turnover rates for the Balanced Assets Fund,
the Common Stock Fund, and the Real Estate Securities Fund will be between 25%
and 100%. The Capital Growth Bond Fund intends to engage in short-term trading
as a
5
<PAGE> 45
means of achieving its investment objective. Therefore, it is anticipated that
the annual portfolio turnover rate of such Fund will generally range from 100%
to 200%. Turnover rates for the International and Pacific Rim Emerging Markets
Funds are expected to be approximately 120% and 142%, respectively. Thus, a
range of 100% to 200% would not be out of line. The anticipated turnover rate
for the Equity Index Fund is expected to be approximately 10-15%. There can be
no assurance that the foregoing rates of portfolio turnover will be maintained.
In any particular year, market conditions could result in portfolio activity at
a greater or lesser rate than anticipated. Thus, for the year ended December
31, 1995, the Emerging Growth Equity, Balanced Assets, Capital Growth Bond,
Common Stock, Real Estate Securities, International and Pacific Rim Emerging
Markets Funds had turnover rates of 145.42%, 98.99%, 84.74%, 109.03%, 136.05%,
60.95% and 54.85%, respectively. For the year ended December 31, 1994, the
Emerging Growth Equity, Balanced Assets, Capital Growth Bond, Common Stock,
Real Estate Securities, International, and Pacific Rim Emerging Markets Funds
had turnover rates of 69.40%, 86.42%, 79.04%, 84.78%, 35.60%, 0% and 0%,
respectively. For the year ended December 31, 1993, the Emerging Growth
Equity, Balanced Assets, Capital Growth Bond, Common Stock and Real Estate
Securities Funds had turnover rates of 92.95%, 96.62%, 94.75%, 88.23%, and
143.00%, respectively.
The Money-Market Fund, consistent with its investment objective, will attempt
to maximize yield through portfolio trading. This may involve selling portfolio
instruments and purchasing different instruments to take advantage of
disparities of yields in different segments of the high-grade money market or
among particular instruments within the same segment of the market. As a
result, the Fund may realize short-term gains and losses. This practice, as
well as the relatively short maturity of the obligations to be purchased by the
Fund, may result in frequent replacement of the Fund's portfolio securities.
The rate of portfolio turnover will not be a limiting factor when it is deemed
appropriate to purchase or sell securities for a Fund. The higher portfolio
turnover rates anticipated for the Emerging Growth Equity Fund and Capital
Growth Bond Fund should result in higher brokerage costs for such Funds. The
Company intends to comply with the various requirements of the Internal Revenue
Code so as to qualify as a "regulated investment company" thereunder. Among
such requirements is a limitation of less than 30% of the amount of gross
income which any of the Funds may derive from gains on the sale or other
disposition of securities held for less than three months. Accordingly, the
ability of a particular Fund to effect certain portfolio transactions may be
limited.
6
<PAGE> 46
Management Of The Company
The directors and executive officers of The Company, together with their
principal occupations during the past five years, are listed below:
<TABLE>
<CAPTION>
Name and Address Position with The Company Principal Occupation During Past Five
- ---------------- ------------------------- -------------------------------------
Years
-----
<S> <C> <C>
Edward C. Balzarotti Director Jettron Products Inc. (electronics
56 Route 10 East (56) components manufacturer) East Hanover, NJ
Hanover, NJ 07936
Donald A. Guloien* Director and Senior Vice President, Business
200 Bloor St. East President Development -- 1994-present, The
Toronto, Ontario (38) Manufacturers Life Insurance Company; Vice
Canada M4W 1E5 President, U.S. Individual Business --
1990-1994, The Manufacturers Life
Insurance Company
Francis J. Knott Director President -- 1992-present, VITAL
P.O. Box 314 (49) Resources, Riderwood, MD.; President
Riderwood, Maryland --1985-1992, Videoconferencing Systems,
21139-0314 Inc. (Manufacturers of Videoconferencing
Equipment) Norcross, GA
John D. Richardson* Director Senior Vice President, and General
200 Bloor Street (57) Manager, U.S. Operations -- 1995-present,
East Toronto, The Manufacturers Life Insurance Company;
Ontario Canada M4W 1E5 Senior Vice President and General Manager,
Canadian Operations -- 1992-1994, The
Manufacturers Life Insurance Company;
Senior Vice President, Financial Services
-- 1992, The Manufacturers Life Insurance
Company; Executive Vice Chairman and CFO
--1989-1991, Canada Trust
F. David Rolwing Director President, Montgomery Mutual Insurance
17810 Meeting House Road (61) Co., Sandy Spring, MD
Sandy Spring, MD 20860
Douglas H. Myers Vice President, Finance Assistant Vice President and Controller,
200 Bloor Street and Compliance, Treasurer U.S. Operations -- 1988-present, The
East Toronto, (41) Manufacturers Life Insurance Company
Ontario Canada M4W 1E5
</TABLE>
*Director who is an "interested person," as defined in the Investment Company
Act of 1940.
7
<PAGE> 47
<TABLE>
<CAPTION>
Name and Address Position with The Company Principal Occupation During Past Five
- ---------------- ------------------------- -------------------------------------
Years
-----
<S> <C> <C>
Sheri L. Kocen Secretary and Senior Counsel -- 1990-present, The
200 Bloor Street East General Counsel Manufacturers Life Insurance Company
Toronto, Ontario Canada M4W 1E5 (41)
</TABLE>
Donald A. Guloien, John D. Richardson, Douglas H. Myers and Sheri L. Kocen also
hold positions with companies affiliated with the Company as follows:
<TABLE>
<CAPTION>
Name Affiliated Company Position
- ---- ------------------ --------
<S> <C> <C>
Donald A. Guloien Manulife Reinsurance Corporation
(U.S.A.) Director
The Manufacturers Life Insurance
Company of America Director, President
Manulife Service Corporation President
ManEquity, Inc. Director
John D. Richardson Manulife Financial Holdings Limited Director, President &
Chief Executive Officer
165351 Canada Limited Director
FirstLine Trust Company Director
Manulife Bank of Canada Director
Manulife Investment Management
Corporation Director, Chairman
159139 Canada Inc. Director
Manulife Data Services Limited Director, Chairman
Manulife Reinsurance Corporation
(U.S.A.) Director, President
Manulife Holding Corporation Director
The Manufacturers Life Insurance
Company of America Director, Chairman
The Manufacturers Life Insurance
Company (U.S.A.) Director, Chairman &
President
Douglas H. Myers ManuLife Service Corporation Vice President
Manulife Reinsurance Corporation
(U.S.A.) Vice President
Manulife Holding Corporation Vice President & Treasurer
The Manufacturers Life Insurance
Company of America Vice President, Compliance
and Finance
Manufacturers Adviser Corporation Vice President, Compliance
and Finance, Treasurer
ManEquity, Inc. Director, President
Sheri L. Kocen The Manufacturers Life Insurance
Company of America Assistant Secretary and
Senior Counsel
Manufacturers Adviser Corporation Secretary and General
Counsel
</TABLE>
8
<PAGE> 48
The Company does not pay any remuneration to its directors who are officers or
employees of the Manager or Manufacturers Life. Directors not so affiliated
with the Manager or Manufacturers Life receive $1,250 for each meeting of the
Board they attend, a retainer of $4,000 per year, and are reimbursed for travel
and other out-of-pocket expenses. Such Directors were paid fees in the
aggregate of $61,250 by the Company for attendance at regular meetings of the
Company for the fiscal year ended December 31, 1994. The officers listed above
are furnished to the Company by the Manager in accordance with the Investment
Advisory Agreement and receive no compensation from the Company. These officers
spend only a portion of their time on the affairs of the Company.
Compensation Table
<TABLE>
<CAPTION>
Pension or Estimated Total
Retirement Annual Compensation
Aggregate Benefits Accrued Benefits from Registrant
Name Compensation as part of Upon and Fund Complex
Position from Registrant Fund Expenses Retirement Paid to Directors
- -------- --------------- --------------- ---------- -----------------
<S> <C> <C> <C> <C>
Edward C. Balzarotti $8,750.00 N/A N/A $8,750.00
Director
Donald A. Guloien N/A N/A N/A N/A
Director and
President
Francis J. Knott $8,750.00 N/A N/A $8,750.00
Director
John D. Richardson N/A N/A N/A N/A
Director
F. David Rolwing $8,750.00 N/A N/A $8,750.00
Director
Douglas H. Myers N/A N/A N/A N/A
Vice President,
Finance & Compliance,
Treasurer
Sheri L. Kocen N/A N/A N/A N/A
Secretary and
General Counsel
</TABLE>
9
<PAGE> 49
Investment Management Services
The Manager, Manufacturers Adviser Corporation, supervises and directs the
investments of the Funds pursuant to an Investment Advisory Agreement with the
Company. The Manager is a wholly-owned subsidiary of The Manufacturers Life
Insurance Company of America, a Michigan corporation, which in turn is a
wholly-owned subsidiary of Manulife Reinsurance Corporation (U.S.A.). Manulife
Reinsurance Corporation (U.S.A.) is a life insurance holding company organized
in 1983 under Michigan law and a wholly-owned subsidiary of Manufacturers Life.
Manufacturers Life also indirectly controls the Company.
In addition to directing the Fund's investment activities, the Manager performs
various administrative services for the Company pursuant to the Investment
Advisory Agreement. These services include supervising all aspects of the
Company's operation and providing to the Company, at the Manager's expense,
executive and other personnel required to manage the affairs of the Company and
to perform all necessary clerical and administrative functions other than those
functions performed by other persons retained by the Company such as the
Company's custodian. The Manager also provides to the Company at its own
expense office space and all office facilities necessary for the Company's
operations, and it acts as the Company's transfer agent and dividend disbursing
agent.
The Investment Advisory Agreement provides that the Manager may provide
investment management services to other persons, including affiliates of the
Manager, so long as its doing so does not adversely affect the service it
provides to the Company. The Company has agreed with the Manager that, when
investment opportunities arise that may be appropriate for more than one client
of the Manager, it may allocate investments among them in an impartial manner
believed to be equitable to each client involved and will not favor one client
over another.
At a Special Meeting of the Company's shareholders held on December 29, 1986,
the Investment Advisory Agreement was approved by the affirmative vote of a
majority of the outstanding voting securities of the class (as defined in
paragraph (h) of Rule 18f-2 under the Investment Company Act of 1940) of
capital stock of each Fund of the Company then existing, namely, the Emerging
Growth Equity Fund, Balanced Assets Fund, Capital Growth Bond Fund, and
Money-Market Fund. The votes cast by each such Fund included shares
attributable to policies participating in the sole shareholder's Separate
Accounts.
At the Fund's Annual Meeting of Shareholders held on April 15, 1988, the
Investment Advisory Agreement was approved by the affirmative vote of a
majority of the outstanding securities of the class (as defined in paragraph
(h) of Rule 18f-2 under the Investment Company Act of 1940) of the capital
stock of subsequently established Funds, namely, the Real Estate Securities
Fund and Common Stock Fund. Again, the votes cast by both Funds included shares
attributable to Policies participating in the sole shareholder's Separate
Accounts.
Under a Service Agreement among the Manager, the Company and Manufacturers Life
dated May 3, 1984, Manufacturers Life provides the Manager with personnel,
office space, supplies and equipment required by the Manager and makes
available to the
10
<PAGE> 50
Manager certain statistical and economic data, investment research reports and
other research materials of Manufacturers Life's Investment Department. Under
the Service Agreement, Manufacturers Life is not entitled to any compensation
beyond reimbursement from the Manager for Manufacturers Life's cost in
providing services, supplies, equipment and office space. The Company's Board
of Directors and its sole shareholder unanimously approved the agreement
originally on May 3, 1984, and at the Company's Annual Meeting of Shareholders
held on April 15, 1988, the Service Agreement was continued to May 3, 1989 by
the affirmative vote of a majority of the outstanding voting securities of the
class (as defined in paragraph (h) of Rule 18f-2 under the Investment Company
Act of 1940) of the capital stock of each Fund of the Company. The votes cast
by each Fund included shares attributable to Policies participating in the sole
shareholder's Separate Accounts.
At the meeting of February 15, 1994, the Board of Directors, including a
majority of Directors who are not "interested persons" of any party to the
Service Agreement or Investment Advisory Agreement approved (i) an amendment to
the Investment Advisory Agreement with respect solely to the International Fund
and the Pacific Rim Emerging Markets Fund and (ii) a resolution extending the
terms of the Service Agreement to the International Fund and the Pacific Rim
Emerging Markets Fund. The Amendment to the Investment Advisory Agreement and a
form of Service Agreement containing all major terms of the May 3, 1984 Service
Agreement were presented at a Special Meeting of the Funds' initial
shareholders held on October 4, 1994 and approved thereby.
At the Meeting of November 16, 1994, the Board of Directors, including a
majority of Directors who are not "interested persons" of any party to the
Service Agreement or the Investment Advisory Agreement, voted to continue both
the Service Agreements and the Investment Advisory Agreement until January 1,
1996.
At the Meeting of November 14, 1995, the Board of Directors, including a
majority of Directors who are not "interested persons" of any party to the
Service Agreement or Investment Advisory Agreement approved (i) an amendment to
the Investment Advisory Agreement with respect solely to the Equity Index Fund
and (ii) a resolution extending the terms of the Service Agreement to cover the
Equity Index Fund. At that meeting the Board also voted to continue the Service
Agreements and the Investment Advisory Agreement, as amended, until January 1,
1997. Both the amendment to the Investment Advisory Agreement and the Service
Agreement were approved by the International Fund's and Pacific Rim Emerging
Markets Fund's initial shareholders at a meeting held for that purpose on
October 4, 1994.
The Investment Advisory Agreement and the Service Agreements will continue past
January 1, 1997 from year to year so long as the continuance of each is
specifically approved at least annually either (i) by the Board of Directors of
the Company or (ii) by a vote of a majority of the outstanding voting
securities of the Company, provided that in either event the continuance is
also approved by the vote of a majority of the Directors who are not
"interested persons" of any party to the agreements, cast in person at a
meeting called for the purpose of voting on such approval. The required
shareholder approval of any continuance of either agreement shall be effective
with respect to any Fund of the Company if a majority of the outstanding voting
securities of the class of capital stock
11
<PAGE> 51
of that Fund vote to approve such continuance, notwithstanding that such
continuance may not have been approved by a majority of the outstanding voting
securities of the Company. The Investment Advisory Agreement and the Service
Agreement may be terminated at any time, without payment of any penalty, by the
Board of Directors of the Company or by the vote of a majority of the
outstanding voting securities of the Company, with respect to any Fund of the
Company by the vote of a majority of outstanding voting securities of the class
of capital stock of such Fund, by the Manager or, in the case of the Service
Agreement, by Manufacturers Life, on 60 days' written notice to the other party
or parties to the agreements. Both agreements will automatically terminate in
the event of their assignment.
The Investment Advisory Agreement may be amended by the Company and the Manager
provided such amendment is specifically approved by the vote of a majority of
the outstanding voting securities of the Company and by the vote of a majority
of the directors of the Company who are not interested persons of the Manager
or the Company cast in person at a meeting called for the purpose of voting on
such approval. The required shareholder approval of any amendment shall be
effective with respect to any Fund if a majority of the outstanding voting
securities of the class of capital stock of that Fund vote to approve the
amendment, notwithstanding that the amendment may not have been approved by a
majority of the outstanding voting securities of the Company.
Portfolio Brokerage
Pursuant to the Investment Advisory Agreement, the Manager is responsible for
placing all orders for the purchase and sale of portfolio securities of the
Funds. The Manager has no formula for the distribution of the Company's
brokerage business, its intention being to place orders for the purchase and
sale of securities with the primary objective of obtaining the most favorable
net results for the Company. The cost of securities transactions for each Fund
will consist primarily of brokerage commissions or dealer or underwriter
spreads. Bonds and money market instruments are generally traded on a net basis
and do not normally involve either direct brokerage commissions or transfer
taxes.
Occasionally, securities may be purchased directly from the issuer. For
securities traded primarily in the over-the-counter market, the Manager will,
where possible, deal directly with dealers who make a market in the securities
unless better prices and execution are available elsewhere. Such dealers
usually act as principals for their own account.
In selecting brokers or dealers through whom to effect transactions, the
Manager will consider a number of factors, including price, dealer spread or
commission, if any, size of the transaction, difficulty of execution and the
value and quality of any research, statistical, quotation or valuation services
provided by the broker or dealer. Research services provided by brokers and
dealers include advice, either directly or through publications or writings, as
to the value of securities, the advisability of purchasing or selling
securities, the availability of securities or purchasers or sellers of
securities, and analyses and reports concerning issuers, industries,
securities, economic factors and trends and portfolio strategy. In placing a
purchase or sale order, the Manager may use a broker whose commission in
effecting the transaction is higher than
12
<PAGE> 52
that of some other broker or dealer if the Manager determines in good faith
that the amount of the higher commission is reasonable in relation to the value
of the brokerage and research services provided by such broker, viewed in terms
of either the particular transaction or the Manager's overall responsibilities
with respect to the Company and any other accounts managed by the Manager.
To the extent research services are used by the Manager in rendering investment
advice to the Company, such services would tend to reduce the Manager's
expenses. However, the Manager does not believe that an exact dollar value can
be assigned to these services. Research services received by the Manager from
brokers or dealers executing transactions for the Company will be available
also for the benefit of other portfolios managed by the Manager or
Manufacturers Life, and conversely, research services received by the Manager
or Manufacturers Life in respect of transactions for such other portfolios will
be available for the benefit of the Company.
Manufacturers Life manages a number of portfolios, including the portfolios of
its general account and several separate accounts, and the Manager currently
manages one other portfolio and intends to manage others. Although investment
recommendations or determinations for the Company will be made by the Manager
independently from the investment recommendations or determinations made by it
for any other portfolios or by Manufacturers Life for the portfolios it
manages, investments deemed appropriate for the Company by the Manager may also
be deemed appropriate by it or Manufacturers Life for other portfolios, so that
the same security may be purchased or sold at or about the same time for both
the Company and such other portfolios. In such circumstances, the Manager may
determine or agree with Manufacturers Life that orders for the purchase or sale
of the same security for the Company and one or more other portfolios should be
combined, in which event the transactions will be averaged as to price and
normally allocated as nearly as practicable in proportion to the amounts
desired to be purchased or sold for each portfolio. While in some instances
combined orders could adversely affect the price or volume of a security, the
Company believes that its participation in such transactions on balance will
produce better overall results for the Company.
Capital Stock
The Company was incorporated under the laws of the state of Maryland on July
22, 1983. The authorized capital stock of the Company consists of 1,000,000,000
shares of common stock, par value $0.01 per share. The shares of common stock
are currently divided into the following classes (or series): Emerging Growth
Equity Fund common stock, Balanced Assets Fund common stock, Capital Growth
Bond Fund common stock, Money-Market Fund common stock, Common Stock Fund
common stock, Real Estate Securities Fund common stock, International Fund
common stock, Pacific Rim Emerging Markets Fund and Equity Index Fund common
stock. Each class currently consists of 100,000,000 shares. The Company
reserves the right to later issue additional classes of shares without the
consent of outstanding shareholders, and may allocate its 100,000,000
unclassified shares either to such new classes or to one or more of the
existing class. The shares of each Fund, when issued and paid for, will be
fully paid and non-assessable, will have no preference, pre-emptive,
conversion, exchange or similar rights, and will be
13
<PAGE> 53
freely transferable. Holders of shares of any Fund are entitled to redeem their
shares as set forth under "Purchases And Redemptions Of Shares."
All shares of common stock, of whatever class, are entitled to one vote and all
votes are on an aggregate basis, except that only shares of a particular Fund
are entitled to vote on matters determined by the Board of Directors to affect
only the interests of that Fund. Pursuant to the Investment Company Act of 1940
and the rules and regulations thereunder, certain matters approved by a vote of
all shareholders of the Company may not be binding on a Fund whose shareholders
have not approved such matter. Shares of the Company do not have cumulative
voting rights, which means that the holders of more than half of the Company's
shares voting for the election of directors can elect all of the directors if
they so choose. In such event, the holders of the remaining shares would not be
able to elect any directors.
Each issued and outstanding share is entitled to participate equally in
dividends and distributions declared by the respective Funds and, upon
liquidation or dissolution, in the net assets of such Fund remaining after
satisfaction of outstanding liabilities. For these purposes and for purposes of
determining the sale and redemption prices of shares, any assets which are not
clearly allocable to a particular Fund or Funds will be allocated in the manner
determined by the Board of Directors. Accrued liabilities which are not clearly
allocable to one or more Funds will also be allocated among the Funds in the
manner determined by the Board of Directors. Generally, any assets and accrued
liabilities not clearly allocable to one or more Funds will be allocated to all
of the Funds in proportion to their relative net asset values at the time the
allocation is made, unless an allocation on such basis would be, in the opinion
of the Board of Directors, inappropriate. In the unlikely event that any Fund
incurred liabilities in excess of its assets, the other Funds could be held
liable for such excess.
Principal Holders Of Securities
As of March 1, 1996, Manufacturers Life of America owned 8.3%, 51.1%, 48.9%,
and 100% of the shares attributable to the Capital Growth Bond, International,
Pacific Rim Emerging Markets, and Equity Index Funds, respectively.
As of February 29, 1996 11.90% of the Capital Growth Bond Fund's shares were
attributable to a variable universal life policy owned by IFDA Services, Inc.,
of Springfield, Illinois and 8.74% of the Money-Market Fund shares were
attributable to a variable annuity policy owned by Ali R. Ghahramani of Boca
Raton, Florida.
Purchases And Redemptions Of Shares
Shares of the Company are currently offered continuously, without sales charge,
at prices equal to the respective net asset values of the Funds, only to
Manufacturers Life of America. The Company sells its shares to such company
directly without the use of any underwriter.
14
<PAGE> 54
Shares of the Company are sold and redeemed at their net asset value next
computed after a purchase or redemption order is received by the Company.
Depending upon the net asset values at that time, the amount paid upon
redemption may be more or less than the cost of the shares redeemed. Payment
for shares redeemed will be made as soon as possible, but in any event within
seven days after receipt of a request for redemption. However, the Company may
suspend the right of redemption or postpone the date of payment beyond seven
days during any period when (a) trading on the New York Stock Exchange is
restricted, as determined by the Securities and Exchange Commission, or such
Exchange is closed for other than weekends and holidays; (b) an emergency
exists, as determined by the Commission, as a result of which disposal by the
Company of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Company fairly to determine the value of its net
assets; or (c) the Commission by order so permits for the protection of
security holders of the Company.
Taxes, Dividends And Distributions
The Company intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code (the "Code"). Under such provisions,
the Company will not be subject to federal income tax on such part of its net
ordinary income and net realized capital gains that it distributes to
shareholders. Each Fund of the Company will be treated as a separate
corporation for federal income tax purposes and, therefore, the investment
results of each Fund will determine whether a particular Fund qualifies as a
regulated investment company and for the purposes of determining the Fund's net
ordinary income (or loss) and net realized capital gains (or losses). To
qualify for treatment as a regulated investment company, a Fund must, among
other things, derive in each taxable year at least 90% of its gross income from
dividends, interest and gains from the sale or other disposition of securities,
and must derive less than 30% of its gross income in each taxable year from
gains (without deduction for losses) from the sale or other disposition of
securities held for less than three months.
The Funds of the Company intend to distribute as dividends substantially all of
their net investment income, if any. For dividend purposes, net investment
income of each Fund will consist of all payments of dividends (other than stock
dividends) or interest received by such Fund less the estimated expenses of
such Fund (including fees payable to the Manager). Dividends from the net
investment income of a Fund will be declared at least annually and reinvested
in additional full and fractional shares of that Fund. The Funds of the Company
presently intend to declare and distribute at least annually all of their net
realized capital gains, if any. Section 4982 of the Code imposes an excise tax
on mutual funds which fail to distribute net investment income and capital
gains by the end of the calendar year in accordance with the provisions of the
Act. The Company intends to comply with the Act's requirements and to avoid or
minimize this excise tax.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury Regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and the
Treasury Regulations promulgated thereunder. The Code and these Regulations are
subject to change by legislative or administrative action.
15
<PAGE> 55
Performance Information
As noted in the Prospectus, Manufacturers Life of America may, from time to
time, publish advertisements or distribute sales literature showing the average
annual total return for one-year, five-year and (when applicable) 10-year
periods. The five-year or 10-year figures are replaced by a figure for the
period since inception of younger Funds; the one-year figure would be replaced
by aggregate total return since inception for Funds less than one year old.
Total return quotations for any of the Funds will include the average annual
compounded rates of return required for an account with an initial investment
of $1,000 to equal the redemption value of the account at the end of the
period, which period will end on the last day of the most recently completed
quarter. This calculation reflects all Fund charges and expenses and assumes
reinvestment of all dividends and distributions. Average annual total returns
may also be shown from time to time for other time periods, including
three-year periods, one-year periods ending on the last day of the most
recently completed month, and since inception. In addition, aggregate total
return as of the end of each year since inception may be shown for each of the
Funds, including year-to-date figures for the current year. Aggregate total
return may be expressed as either a percentage change during the period or the
end-of-period dollar value of an initial hypothetical investment. Performance
data may be shown in the form of graphs, charts, tables and examples. Total
returns for the period ending December 31, 1995, were as follows:
16
<PAGE> 56
<TABLE>
<CAPTION>
Avg. Annual Avg. Annual Avg. Annual Avg. Annual Avg. Annual Aggregate
Total Return Total Return Total Return Total Return Since Since
Fund One Year Three Year Five Year 10 Year Inception* Inception*
- ---- -------- ---------- --------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Emerging Growth Equity 27.75% 14.92% 25.94% 14.82% 15.35% 418.04%
Balanced Assets 24.69% 10.20% 11.89% 10.37% 12.50% 288.41%
Capital Growth Bond 20.24% 8.28% 9.37% 9.36% 11.52% 251.12%
Common Stock 29.23% 11.97% 14.15% N/A 9.91% 126.94%
Real Estate Securities 15.14% 11.14% 18.63% N/A 11.17% 150.66%
Money-Market 5.63% 4.07% 4.24% 5.66% 5.95% 94.63%
International 11.28% N/A N/A N/A 7.64% 9.57%
Pacific Rim Emerging
Markets 11.47% N/A N/A N/A 4.17% 5.20%
Equity Index N/A N/A N/A N/A N/A N/A
</TABLE>
* June 26, 1984 for the Emerging Growth Equity, Balanced Assets, Capital
Growth Bond and Money-Market Funds; April 30, 1987 for the Common Stock and
Real Estate Securities Funds; October 4, 1994 for the International and
Pacific Rim Emerging Markets Funds.
17
<PAGE> 57
Aggregate total returns as of the end of each year since inception are as
follows:
<TABLE>
<CAPTION>
Fund 1995 1994 1993 1992 1991 1990
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Emerging Growth Equity 27.75% (4.10)% 23.89% 21.82% 71.34% (14.90)%
Balanced Assets 24.69% (4.15)% 11.99% 6.21% 23.36% 1.62%
Capital Growth Bond 20.24% (4.49)% 10.56% 5.89% 16.38% 6.58 %
Common Stock 29.23% (4.19)% 13.39% 6.07% 30.18% (4.06)%
Real Estate Securities 15.14% (2.76)% 22.61% 21.29% 41.10% (4.53)%
Money-Market 5.63% 3.89% 2.73% 3.40% 5.60% 7.82%
International 11.28% (1.54)% N/A N/A N/A N/A
Pacific Rim Emerging Markets 11.47% (5.63)% N/A N/A N/A N/A
Equity Index N/A N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Fund 1989 1988 1987 1986 1985 1984
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Emerging Growth Equity 42.19% 16.94% (4.88)% (6.59)% 23.38% 5.41%
Balanced Assets 21.33% 7.61% (1.77)% 17.35% 27.30% 13.76%
Capital Growth Bond 13.88% 7.14% (1.69)% 22.37% 26.13% 13.73%
Common Stock 30.66% 9.86% (14.98)% N/A N/A N/A
Real Estate Securities 9.23% 11.72% (8.42)% N/A N/A N/A
Money-Market 8.88% 7.06% 5.67% 6.07% 7.13% 4.78%
International N/A N/A N/A N/A N/A N/A
Pacific Rim Emerging Markets N/A N/A N/A N/A N/A N/A
Equity Index N/A N/A N/A N/A N/A N/A
</TABLE>
All of the above performance data are based on the actual historical
performance of the Funds for specified periods, and the figures are not
intended to indicate future performance. Further, the above performance data do
not reflect charges made pursuant to the terms of the variable life insurance
and variable annuity policies funded by separate accounts that invest in the
Company's shares. If such charges were reflected, returns would be lower.
18
<PAGE> 58
From time to time, in advertisements or in reports to policyowners, the Company
may quote various independent quotation services for the purpose of comparing a
Fund's performance ranking with that of other mutual funds with similar
investment objectives. These rankings are not to be considered indicative of
the future performance of the Funds. The quotation services which are currently
followed by the Company include Lipper Analytical Services, Inc. ("Lipper"),
Morningstar Inc., Variable Annuity Research and Data Service, and Money
Magazine; however, other nationally recognized rating services may be quoted in
the future. The performance of certain unmanaged indices may also be quoted in
advertisements or in reports to policyowners. These indices include Standard &
Poor's 500 Index, National Association of Real Estate A11 REIT's Index, Salomon
Brothers (broad corporate index), Dow Jones Industrial Average, Donoghue Prime
Money Fund Index, three-month Treasury bills, the National Association of
Securities Dealers Automated Quotation System, the Financial Times Actuaries
World Index and the following Lipper Indices: Money-Market Funds, Corporate
Bond Funds, Balanced Funds, Growth Funds, Small-Company Growth Funds, Real
Estate Funds, International Funds and Pacific Region Funds. These comparisons
may include graphs, charts, tables or examples.
General Information
Reports To Shareholders
Annual and semi-annual reports containing financial statements of the Company
will be sent to shareholders.
Name
Manufacturers Life claims ownership of the tradename "Manulife." Under a
separate agreement, Manufacturers Life has granted to the Company the right to
use the "Manulife" tradename and has reserved the right to withdraw its consent
to the use of such name by the Company at any time and to grant the use of such
name to any other users.
Experts
The financial statements of the Company appearing in this Statement of
Additional Information have been audited by Ernst & Young LLP, independent
auditors and the information under the caption "Condensed Financial
Information," appearing in the Prospectus has been derived from financial
statements audited by Ernst & Young LLP to the extent indicated in their reports
thereon appearing elsewhere herein. Such financial statements and condensed
financial information are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
Legal Counsel
Messrs. Jones & Blouch L.L.P., 1025 Thomas Jefferson Street, N.W., Washington,
D.C. 20007, will pass upon legal matters for the Company in connection with the
shares offered pursuant to the Prospectus.
19
<PAGE> 59
Appendix A
Money-Market Instruments In Which The Money-Market Fund May Invest
The Prospectus describes briefly the investment policies of the Money-Market
Fund in terms of the types of instruments in which the Money-Market Fund may
invest. A more complete description of such instruments follows:
1. U.S. Government and Government Agency Obligations -- U.S. Government
obligations are debt securities issued or guaranteed as to principal or
interest by the U.S. Treasury. These securities include Treasury bills, notes
and bonds. U.S. Government agency obligations are debt securities issued or
guaranteed as to principal or interest by an agency or instrumentality of the
U.S. Government pursuant to authority granted by Congress. U.S. Government
agency obligations include, but are not limited to, the Student Loan Marketing
Association, Federal Home Loan Banks, Federal Intermediate Credit Banks, and
the Federal National Mortgage Association. U.S. instrumentality obligations
include, but are not limited to, the Export-Import Bank and Farmers Home
Administration. Some obligations issued or guaranteed by U.S. Government
agencies or instrumentalities are supported by the right of the issuer to
borrow from the U.S. Treasury, such as those issued by Federal Intermediate
Credit Banks; others, such as those issued by the Federal National Mortgage
Association, by discretionary authority of the U.S. Government to purchase
certain obligations of the agency or instrumentality; and others, such as those
issued by the Student Loan Marketing Association, only by the credit of the
agency or instrumentality. No assurance can be given that the U.S. Government
will provide financial support to such U.S. Government sponsored agencies or
instrumentalities in the future, since it is not obligated to do so by law.
2. Canadian Government and Crown Agency Obligations -- Canadian Government
obligations are debt securities issued or guaranteed as to principal or
interest by the Government of Canada pursuant to authority granted by the
Parliament of Canada and approved by the Governor in Council, where necessary.
These securities include Treasury bills, notes, bonds, debentures and
marketable Government of Canada loans. Canadian Crown agency obligations are
debt securities issued or guaranteed by a Crown corporation, company or agency
("Crown agencies") pursuant to authority granted by the Parliament of Canada
and approved by the Governor in Council, where necessary. Certain Crown
agencies are by statute agents of Her Majesty in right of Canada, and their
obligations, when properly authorized, constitute direct obligations of the
Government of Canada. Such obligations include, but are not limited to, those
issued or guaranteed by the Export Development Corporation, Farm Credit
Corporation, Federal Business Development Bank and Canada Post Corporation.
In addition, certain Crown agencies which are not by law agents of Her Majesty
may issue obligations which by statute the Governor in Council may authorize
the Minister of Finance to guarantee on behalf of the Government of Canada.
Other Crown agencies which are not by law agents of Her Majesty may issue or
guarantee obligations not entitled to be guaranteed by the Government of
Canada. No assurance can be given that the Government of Canada will support
the obligations of Crown agencies which are not agents of Her Majesty, which it
has not guaranteed, since it is not obligated to do so by law.
20
<PAGE> 60
Any Canadian obligation acquired by the Money-Market Fund will be payable in
U.S. dollars.
3. Bank Obligations -- Bank obligations include negotiable certificates of
deposit. Certificates of deposit are certificates issued against funds
deposited in a bank. They are for a definite period of time and earn a
specified rate of return. The Fund may acquire obligations of foreign branches
of U.S. banks. These obligations are not insured by the Federal Deposit
Insurance Corporation.
4. Commercial Paper -- Commercial paper consists of unsecured promissory notes
issued by corporations to finance short-term credit needs. Commercial paper is
issued in bearer form with maturities generally not exceeding nine months.
5. Corporate Obligations -- Corporate obligations include bonds and notes
issued by corporations to finance long-term credit needs.
6. Repurchase Agreements -- Repurchase agreements are arrangements involving
the purchase of obligations by the Fund and the simultaneous agreement to
resell the same obligations on demand or at a specified future date and at an
agreed upon price. A repurchase agreement can be viewed as a loan made by the
Fund to the seller of the obligation with such obligation serving as collateral
for the seller's agreement to repay the amount borrowed with interest. Such
transactions afford an opportunity for the Fund to earn a return on cash which
is only temporarily available. Repurchase agreements entered into by the Fund
will be with banks, brokers or dealers. Although repurchase agreements involve
certain risks not associated with direct investments in debt securities, the
Fund follows procedures established by its Board of Directors which are
designed to minimize such risks. Accordingly, repurchase agreements will be
limited to transactions with financial institutions believed by the Manager to
present minimum credit risks. Should an issuer of a repurchase agreement fail
to repurchase the underlying security, the loss to the fund, if any, would be
the difference between the repurchase price and the security's market value.
The Fund might also incur certain costs in liquidating the underlying security.
Moreover, if bankruptcy proceedings should be commenced with respect to the
seller, realization upon the security by the Fund might be delayed or limited.
Generally, repurchase agreements are of a short duration, often less than one
week but on occasion for longer periods.
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Appendix B
Debt Security Ratings
The Balanced Assets Fund, Capital Growth Bond Fund and Money-Market Fund will
invest in certain instruments that are rated by investment services.
Definitions of such ratings used by the Funds appear below:
STANDARD & POOR'S CORPORATION
("S&P")
Commercial Paper:
A-1 The rating A-1 is the highest rating assigned by S&P to commercial
paper which is considered by S&P to have the following
characteristics: Liquidity ratios of the issuer are adequate to meet
cash requirements. Long-term senior debt is rated "A" or better. The
issuer has access to at least two additional channels of borrowing.
Basic earnings and cash flow have an upward trend with allowance made
for unusual circumstances. Typically, the issuer's industry is well
established and the issuer has a strong position within the industry.
The reliability and quality of management are unquestioned.
Bonds:
AAA This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay principal and
interest for bonds in this category than for bonds in the A category.
MOODY'S INVESTORS SERVICE, INC. ("Moody's")
Commercial Paper:
P-1 The rating P-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings
are the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain
areas; (3) evaluation of the issuer's products in relation to
competition and
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customer acceptance; (4) liquidity; (5) amount and quality of
long-term debt; (6) trend of earnings over a period of 10 years; (7)
financial strength of a parent company and the relationships which
exist with the issuer; and (8) recognition by the management of
obligations which may be present or may arise as a result of public
interest questions and preparations to meet such obligations.
Bonds:
Aaa Bonds which are rated Aaa by Moody's are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated Aa by Moody's are judged to be of high quality
by all standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A by Moody's possess many favorable investment
attributes and are to be considered as upper medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa Bonds which are rated Baa by Moody's are considered as medium-grade
obligations, that is, they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics as well.
FITCH'S INVESTORS SERVICE ("Fitch's")
Commercial Paper:
F-1 The rating F-1 is the highest rating assigned by Fitch's to commercial
paper. Paper assigned this rating is regarded as having the strongest
degree of assurance for timely repayment.
Bonds:
AAA Bonds rated AAA by Fitch's are of investment grade of the highest
quality. Issuers of such bonds have an extraordinary ability to pay
interest and repay principal which is unlikely to be affected by
reasonably foreseeable events.
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AA Bonds rated AA by Fitch's are of high-quality investment grade. The
ability to pay interest and repay principal, while very strong, is
somewhat less than for AAA rated bonds, and is more subject to
possible changes than the higher-rated instruments over the life of
the issue.
A Bonds rated A by Fitch's are of good-quality investment grade. The
ability of A-rated bonds to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and other circumstances than bonds with higher
ratings.
BBB Bonds rated BBB by Fitch's are of investment grade and of satisfactory
quality whose ability to pay interest and repay principal is
considered adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to weaken their financial
strength than for bonds of higher ratings.
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Appendix C
Investment Techniques Of The
International Fund And
Pacific Rim Emerging Markets Fund
Forward Commitments And When-Issued And Delayed Delivery Securities
The International Fund and the Pacific Rim Emerging Markets Fund may enter into
forward commitments for the purchase or sale of securities and may purchase or
sell securities on a "when-issued" or "delayed-delivery" basis. Forward
commitments and when-issued or delayed-delivery transactions arise when
securities are purchased by a Fund with payment and delivery taking place in
the future in order to secure what is considered to be an advantageous price or
yield to the Fund at the time of entering into the transaction. However, the
price of or yield on a comparable security available when delivery takes place
may vary from the price of or yield on the security at the time that the
forward commitment or when-issued or delayed-delivery transaction was entered
into. Agreements for such purchases might be entered into, for example, when a
Fund anticipates a decline in interest rates and is able to obtain a more
advantageous price or yield by committing currently to purchase securities to
be issued later. When a Fund purchases securities on a forward-commitment,
when-issued or delayed-delivery basis, it does not pay for the securities until
they are received, and the Fund is required to create a segregated account with
the Fund's custodian and to maintain in that account cash, U.S. Government
securities or other liquid high-grade debt obligations in an amount equal to or
greater than, on a daily basis, the amount of the Fund's forward commitments,
when-issued or delayed-delivery commitments.
A Fund will enter into forward commitments and make commitments to purchase
securities on a when-issued or delayed-delivery basis only with the intention
of actually acquiring the securities. However, the Fund may sell these
securities before the settlement date if it is deemed advisable as a matter of
investment strategy. Forward commitments and when-issued and delayed-delivery
transactions are generally expected to settle within three months from the date
the transactions are entered into, although the Fund may close out its position
prior to the settlement date by entering into a matching sale transaction.
Although none of the Funds intends to make such purchases for speculative
purposes and each Fund intends to adhere to the policies of the SEC, purchases
of securities on such bases may involve more risk than other types of
purchases. For example, by committing to purchase securities in the future, a
Fund subjects itself to a risk of loss on such commitments as well as on its
Fund securities. Also, a Fund may have to sell assets which have been set aside
in order to meet redemptions. In addition, if a Fund determines it is advisable
as a matter of investment strategy to sell the forward commitment or
when-issued or delayed-delivery securities before delivery, that Fund may incur
a gain or loss because of market fluctuations since the time the commitment to
purchase such securities was made. Any such gain or loss would be treated as a
capital gain or loss and would be treated for tax purposes as such. When the
time comes to pay for the securities to be purchased under a forward commitment
or on a when-issued or delayed-delivery basis, a Fund will meet its obligations
from the then available
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cash flow or the sale of securities, or, although it would not normally expect
to do so, from the sale of the forward commitment or when-issued or delayed-
delivery securities themselves (which may have a value greater or less than a
Fund's payment obligation).
Warrants
The International Fund and the Pacific Rim Emerging Markets Fund may purchase
warrants and similar rights, which are rights to purchase securities at
specific prices valid for a specific period of time. Their prices do not
necessarily move parallel to the prices of the underlying securities, and
warrant holders receive no dividends and have no voting rights or rights with
respect to the assets of an issuer. Warrants cease to have value if not
exercised prior to the expiration date.
Foreign Securities
No maximum percentage limitation applies to investments in foreign securities
by the International Fund and the Pacific Rim Emerging Markets Fund.
Foreign securities involve currency risks. The value of a foreign security
denominated in foreign currency changes with variations in the exchange rates.
Fluctuations in exchange rates may also affect the earning power and asset
value of the foreign entity issuing a security, even one denominated in U.S.
dollars. Dividend and interest payments will be repatriated based on the
exchange rate at the time of disbursement, and restrictions on capital flows
may be imposed.
Foreign securities may be subject to foreign government taxes which reduce
their attractiveness. Other risks of investing in such securities include
political or economic instability in the country involved, the difficulty of
predicting international trade patterns and the possibility of imposition of
exchange controls. The prices of such securities may be more volatile than
those of domestic securities. In addition, there may be less publicly available
information about a foreign issuer than about a domestic issuer. Foreign
issuers generally are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to domestic issuers. There
is generally less regulation of stock exchanges, brokers, banks and listed
companies abroad than in the United States, and settlements may be slower and
may be subject to failure. With respect to certain foreign countries, there is
a possibility of expropriation of assets or nationalization, imposition of
withholding taxes on dividend or interest payments, possible difficulty in
obtaining and enforcing judgments against foreign entities or diplomatic
developments which could affect investment in these countries. Losses and other
expenses may be incurred in converting between various currencies in connection
with purchases and sales of foreign securities.
Eurodollar Securities
Negotiable certificates of deposit and time deposits of foreign branches of
American or foreign banks payable in United States dollars are known as
Eurodollar deposits. Eurodollar securities also include bonds underwritten by
an international syndicate and sold "at issue" to non-U.S. investors. Such
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securities are not registered with the SEC or issued domestically and are
primarily traded in foreign markets. Certain risks applicable to foreign
securities apply to Eurodollar instruments. Investment risks from these
securities include political and economic developments, possible foreign
withholding taxes on interest, possible seizure of foreign deposits, or the
possible establishment of exchange controls affecting payment on these
securities. See "Foreign Securities," above, for additional information about
foreign securities. In addition to those risks, foreign branches of American
and foreign banks have extensive government regulations which may limit both
the amount and type of loans and interest rates. In addition, the banking
industry's profitability is closely linked to prevailing money market
conditions for financing lending operations. Both general economic conditions
and credit risks play an important part in the operations of the industry.
American banks are required to maintain reserves, are limited in how much they
can lend a single borrower and are subject to other regulations to promote
financial soundness. Not all of these laws and regulations apply to foreign
branches of American and foreign banks. In addition, foreign countries have
accounting and reporting principles that differ from those in the United
States.
Transactions In Options, Futures And Forward Contracts
To the extent provided below, the International Fund and the Pacific Rim
Emerging Markets Fund may enter into transactions in options, futures and
forward contracts on a variety of instruments and indices, in order to protect
against declines in the value of Fund securities and increases in the cost of
securities to be acquired. In general, these two Funds will limit their use of
futures contracts and options on futures contracts so that the contracts or
options thereon are for "bona fide hedging" purposes as defined under
regulations of the Commodity Futures Trading Commission (CFTC). These
instruments will be used for hedging purposes and not for speculation or to
leverage the Funds.
Options On Securities
The International Fund and the Pacific Rim Emerging Markets Fund may purchase
put options and call options. The Funds may purchase put options on securities
to protect their holdings against a substantial decline in market value. The
purchase of put options on securities will enable a Fund to preserve, at least
partially, unrealized gains in an appreciated security in its Fund without
actually selling the security. In addition, the Fund will continue to receive
interest or dividend income on the security. The Funds may also purchase call
options on securities to protect against substantial increases in prices of
securities the Funds intend to purchase pending their ability to invest in an
orderly manner in those securities. The Funds may sell put or call options they
have previously purchased, which could result in a net gain or loss depending
on whether the amount received on the sale is more or less than the premium and
other transaction costs paid on the put or call option which was bought.
There is no assurance that a liquid secondary market on an exchange will exist
for any particular option, or at any particular time, and for some options,
such as over-the-counter options, no secondary market on an exchange may exist.
If a Fund is unable to effect a closing purchase transaction, the Fund will not
sell
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the underlying security until the option expires or the Fund delivers the
underlying security upon exercise.
Securities Index Options
The International Fund and the Pacific Rim Emerging Markets Fund may purchase
call and put options on securities indexes for the purpose of hedging against
the risk of unfavorable price movements adversely affecting the value of a
Fund's securities or securities it intends to purchase. Unlike a stock option,
which gives the holder the right to purchase or sell a specified stock at a
specified price, an option on a securities index gives the holder the right to
receive a cash "exercise settlement amount" equal to (i) the difference between
the exercise price of the option and the value of the underlying stock index on
the exercise date, multiplied by (ii) a fixed "index multiplier."
The effectiveness of hedging through the purchase of securities index options
will depend upon the extent to which price movements in the portion of the
securities Fund being hedged correlate with price movements in the selected
securities index. Perfect correlation is not possible because the securities
held or to be acquired by a Fund will not exactly match the composition of the
securities indexes on which options are written. In the purchase of securities
index options, the principal risk is that the premium and transaction costs
paid by a Fund in purchasing an option will be lost if the changes (increase in
the case of a call, decrease in the case of a put) in the level of the index do
not exceed the cost of the option.
Over-The-Counter Options
Options traded in the over-the-counter market may not be as actively traded as
those on an exchange. Accordingly, it may be more difficult to value such
options. In addition, it may be difficult to enter into closing transactions
with respect to options traded over-the-counter. The International Fund and the
Pacific Rim Emerging Markets Fund will engage in such transactions only with
firms of sufficient credit so as to minimize these risks. Such options may be
considered illiquid securities.
Futures Transactions
The International Fund and the Pacific Rim Emerging Markets Fund may trade in
certain futures contracts. A futures contract is a bilateral agreement to buy
or sell a security (or deliver a cash settlement price, in the case of a
contract relating to an index or otherwise not calling for physical delivery at
the end of trading in the contracts) for a set price in the future. No purchase
price is paid or received when the contract is entered into. Instead, a good
faith deposit known as initial margin is made with the broker and subsequent
daily payments known as variation margin are made to and by the broker
reflecting changes in the value of the security or level of the index. Futures
contracts are designated by boards of trade which have been designated
"contracts markets" by the CFTC. By using futures contracts as a risk
management technique, given the greater liquidity in the futures market than in
the cash market, it might be possible to accomplish certain results more
quickly and with lower transactions costs.
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Purchases or sales of securities index futures contracts may be used to attempt
to protect a Fund's current or intended investments from broad fluctuations in
securities prices, and interest rate and foreign currency futures contracts are
purchased or sold to attempt to hedge against the effects of interest or
exchange rate changes on a Fund's current or intended investments in fixed
income or foreign securities. The International Fund and the Pacific Rim
Emerging Markets Fund may trade in foreign currency futures contracts. In the
event that an anticipated decrease in the value of Fund securities occurs as a
result of a general stock market decline, a general increase in interest rates
or a decline in the dollar value of foreign currencies in which Fund securities
are denominated, the adverse effects of such changes may be offset, in whole or
part, by gains on the sale of futures contracts. In addition, the increased
cost of Fund securities to be acquired, caused by a general rise in the dollar
value of foreign currencies or by a rise in stock prices or a decline in
interest rates, may be offset, in whole or part, by gains on futures contracts
purchased by a Fund. A Fund will incur brokerage fees when it purchases and
sells futures contracts, and it will be required to maintain margin deposits.
(See "Risks Of Transactions In Options, Futures Contracts And Forward Currency
Contracts," below.) Positions taken in the futures markets are not normally
held until delivery or cash settlement is required, but are instead liquidated
through offsetting transactions which may result in a gain or a loss. While
futures positions taken by a Fund will usually be liquidated in this manner,
the Fund may instead make or take delivery of underlying securities whenever it
appears economically advantageous to the Fund to do so. A clearing organization
associated with the exchange on which futures are traded assumes responsibility
for closing out transactions and guarantees that, as between the clearing
members of an exchange, the sale and purchase obligations will be performed
with regard to all positions that remain open at the termination of the
contract.
Securities Index Futures Contracts
A securities index futures contract does not require the physical delivery of
securities, but merely provides for profits and losses resulting from changes
in the market value of the contract to be credited or debited at the close of
each trading day to the respective accounts of the parties to the contract. On
the contract's expiration date a final cash settlement occurs and the futures
positions are simply closed out. Changes in the market value of a particular
index futures contract reflect changes in the specified index of securities on
which the future is based.
By establishing an appropriate "short" position in index futures, a Fund may
seek to protect the value of its Fund against an overall decline in the market
for such securities. Alternatively, in anticipation of a generally rising
market, a Fund can seek to avoid losing the benefit of apparently low current
prices by establishing a "long" position in securities index futures and later
liquidating that position as particular securities are in fact acquired. To the
extent that these hedging strategies are successful, the Fund will be affected
to a lesser degree by adverse overall market price movements than would
otherwise be the case.
Options On Futures Contracts
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The International Fund and the Pacific Rim Emerging Markets Fund may also
purchase and sell exchange-traded call and put options on futures contracts of
the type which the particular Fund is authorized to enter into. A call option
on a futures contract gives the purchaser the right, in return for the premium
paid, to purchase a futures contract (assume a "long" position), at a specified
exercise price at any time before the option expires. A put option gives the
purchaser the right, in return for the premium paid, to sell a futures contract
(assume a "short" position), for a specified exercise price, at any time before
the option expires.
Upon the exercise of a call, the writer of the option is obligated to sell the
futures contract (to deliver a "long" position to the option holder) at the
option exercise price, which will presumably be lower than the current market
price of the contract in the futures market. Upon exercise of a put, the writer
of the option is obligated to purchase the futures contract (deliver a "short"
position to the option holder) at the option exercise price which will
presumably be higher than the current market price of the contract in the
futures market. When the holder of an option exercises it and assumes a long
futures position, in the case of a call, or a short futures position, in the
case of a put, its gain will be credited to its futures margin account, while
the loss suffered by the writer of the option will be debited to its account
and must be immediately paid by the writer. However, as with the trading of
futures, most participants in the options markets do not seek to realize their
gains or losses by exercise of their option rights. Instead, the holder of an
option will usually realize a gain or loss by buying or selling an offsetting
option at a market price that will reflect an increase or a decrease from the
premium originally paid.
Options on futures contracts can be used by a Fund to hedge substantially the
same risks as might be addressed by the direct purchase or sale of the
underlying futures contracts. If the Fund purchases an option on a futures
contract, it may obtain benefits similar to those that would result if it held
the futures position itself. Purchases of options on futures contracts may
present less risk in hedging than the purchase and sale of the underlying
futures contracts since the potential loss is limited to the amount of the
premium plus related transaction costs.
The purchase of put options on futures contracts is a means of hedging a Fund
of securities against a general decline in market prices. The purchase of a
call option on a futures contract represents a means of hedging against a
market advance when a Fund is not fully invested. Unlike a futures contract,
the Fund's risk in purchasing an option is limited to the premium paid for the
option, but the cost of the premium paid will offset any gain in the option.
While the holder of an option on a futures contract may normally terminate its
position by selling or purchasing an offsetting option of the same series, a
Fund's ability to establish and close out options positions at fairly
established prices will be subject to the existence of a liquid market. The
Funds will not purchase options on futures contracts unless, in the Investment
Manager's opinion, the market for such options has sufficient liquidity that
the risks associated with such options transactions are not at unacceptable
levels.
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Limitations On Purchase And Sale Of Futures Contracts And Options On Futures
Contracts
The International Fund and the Pacific Rim Emerging Markets Fund will not
engage in transactions in futures contracts and related options for
speculation. These two Funds may enter into futures contracts and buy and sell
related options as described above. The Funds will not purchase or sell futures
contracts or related options unless the futures contracts or options thereon
are purchased for "bona fide hedging" purposes (as that term is defined under
the CFTC regulations). In instances involving the purchase of futures contracts
by a Fund, an amount of cash and cash equivalents, equal to the cost of such
futures contracts (less any related margin deposits), will be deposited in a
segregated account with its custodian, thereby insuring that the use of such
futures contracts and options is unleveraged. In instances involving the sale
of futures contracts by a Fund, the securities underlying such futures
contracts or options will at all times be maintained by the Fund.
Positions in futures contracts may be closed out only on an exchange or a board
of trade which provides the market for such futures. Although the Funds intend
to purchase or sell futures only on exchanges or boards of trade where there
appears to be an active market, there is no guarantee that such will exist for
any particular contract or at any particular time. If there is not a liquid
market at a particular time, it may not be possible to close a futures position
at such time, and, in the event of adverse price movements, a Fund would
continue to be required to make daily cash payments of maintenance margin.
However, in the event futures positions are used to hedge Fund securities, the
securities will not be sold until the futures positions can be liquidated. In
such circumstances, an increase in the price of securities, if any, may
partially or completely offset losses on the futures contracts.
Foreign Currency Options, Foreign Currency Futures Contracts And Options On
Futures
The International Fund and the Pacific Rim Emerging Markets Fund may purchase
or sell exchange-traded or over-the-counter foreign currency options, foreign
currency futures contracts and related options on foreign currency futures
contracts as a hedge against possible variations in foreign exchange rates. The
purchase of an option on foreign currency may constitute an effective hedge
against fluctuations in exchange rates although, in the event of rate movements
adverse to the Fund's position, it may forfeit the entire amount of the premium
plus related transaction costs.
Certain differences exist among foreign currency hedging instruments. Foreign
currency options provide the holder the right to buy or to sell a currency at a
fixed price on or before a future date. Listed options are third-party
contracts (performance is guaranteed by an exchange or clearing corporation)
which are issued by a clearing corporation, traded on an exchange and have
standardized prices and expiration dates. Over-the-counter options are
two-party contracts and have negotiated prices and expiration dates. See
"Over-The-Counter Options," above. A futures contract on a foreign currency is
an agreement between two parties to buy and sell a specified amount of a
currency for a set price on a future date. Futures contracts and listed options
on futures contracts are traded
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on boards of trade or futures exchanges. Options traded in the over-the-counter
market may not be as actively traded as those on an exchange, so it may be more
difficult to value such options. In addition, it may be difficult to enter into
closing transactions with respect to options traded over-the-counter.
A Fund will not speculate in foreign currency options, futures or related
options. Accordingly, a Fund will not hedge a currency substantially in excess
of the market value of the securities denominated in that currency which it
owns or the expected acquisition price of securities which it anticipates
purchasing.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of Fund securities or prevent losses if the prices
of such securities decline. These hedging transactions also preclude the
opportunity for gain if the value of the hedged currency should rise.
Forward Foreign Currency Exchange Contracts
When a Fund invests in foreign securities, the securities are usually
denominated in foreign currency, and the Fund may temporarily hold foreign
currency in connection with such investments. As a result, the value of the
Fund's assets will be subject to fluctuations based on changes in the relative
value of the foreign currency and the United States dollar. To control the
effects of this exchange risk, the International Fund and the Pacific Rim
Emerging Markets Fund may enter into forward foreign currency exchange
contracts (forward currency contracts), which are agreements to purchase or
sell foreign currencies at a specified future date and price. Foward currency
contracts are usually used to fix the United States dollar value of securities
a Fund has agreed to buy or sell (transaction hedging). The Funds may also use
forward currency contracts to hedge the United States dollar value of
securities it already owns (position hedging).
In general, forward currency contracts are not regulated by any governmental
authority, or guaranteed by a third party or traded on an exchange.
Accordingly, each party to a forward currency contract is dependent upon the
creditworthiness and good faith of the other. Creditworthiness is evaluated by
the Manager.
Risks Of Transactions In Options, Futures Contracts And Forward Currency
Contracts
Although the International Fund and the Pacific Rim Emerging Markets Fund will
enter into transactions in futures contracts, options on securities and
securities indexes, options on futures contracts, foward currency contracts and
certain currency options as described above for hedging purposes, their use
does involve the following risks. A lack of correlation between the index or
instrument underlying an option or futures contract and the assets being
hedged, or unexpected adverse price movements, could render a Fund's hedging
strategy unsuccessful and could result in losses. Over-the-counter transactions
in options on foreign currencies and options on securities also involve a lack
of an organized exchange trading environment, making them less liquid, and
making it more difficult to value them than if they were exchange-traded.
In addition, there can be no assurance that a liquid secondary market will
exist for any futures contract purchased, and a Fund may be required to
maintain a
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position until exercise or expiration, which could result in losses. If a
futures market were to become unavailable, in the event of an adverse movement,
the Fund would be required to continue to make daily cash payments of variation
margin if it could not close a futures position. If an options market were to
become unavailable and a closing transaction could not be entered into, an
option holder would be able to realize profits or limit losses only by
exercising an option. Finally, if a broker or clearing member of an options or
futures clearing corporation were to become insolvent, the Funds could
experience delays and might not be able to trade or exercise options or futures
purchased through that broker. In addition, the Funds could have some or all of
their positions closed out without their consent. If substantial and
widespread, these insolvencies could ultimately impair the ability of the
clearing corporations themselves. While the principal purpose of hedging is to
limit the effects of adverse market movements, the attendant expense may cause
the Fund's returns to be less than if hedging had not taken place. The overall
effectiveness of hedging therefore depends on the Manager's accuracy in
predicting future changes in interest rate levels or securities price
movements, as well as on the expense of hedging.
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Appendix D
CERTAIN INVESTMENT TECHNIQUES
Forward Commitments and When-Issued and Delayed-Delivery Securities
The Funds may enter into forward commitments for the purchase or sale of
securities and may purchase or sell securities on a "when-issued" or
"delayed-delivery" basis. Forward commitments and when-issued or
delayed-delivery transactions arise when securities are purchased by a Fund
with payment and delivery taking place in the future in order to secure what is
considered to be an advantageous price or yield to the Fund at the time of
entering into the transaction. However, the price of or yield on a comparable
security available when delivery takes place may vary from the price of or
yield on the security at the time that the forward commitment or when-issued or
delayed-delivery transaction was entered into. Agreements for such purchases
might be entered into, for example, when a Fund anticipates a decline in
interest rates and is able to obtain a more advantageous price or yield by
committing currently to purchase securities to be issued later. When a Fund
purchases securities on a forward-commitment, when-issued or delayed-delivery
basis, it does not pay for the securities until they are received, and the Fund
is required to create a segregated account with the Fund's custodian and to
maintain in that account cash, U.S. Government securities or other liquid
high-grade debt obligations in an amount equal to or greater than, on a daily
basis, the amount of the Fund's forward commitments, when- issued or
delayed-delivery commitments.
A Fund will only enter into forward commitments and make commitments to
purchase securities on a when-issued or delayed-delivery basis with the
intention of actually acquiring the securities. However, the Fund may sell
these securities before the settlement date if it is deemed advisable as a
matter of investment strategy. Forward commitments and when-issued and
delayed-delivery transactions are generally expected to settle within three
months from the date the transactions are entered into, although the Fund may
close out its position prior to the settlement date by entering into a matching
sale transaction.
Although none of the Funds intends to make such purchases for speculative
purposes and each Fund intends to adhere to the policies of the SEC, purchases
of securities on such bases may involve more risk than other types of
purchases. For example, by committing to purchase securities in the future, a
Fund subjects itself to a risk of loss on such commitments as well as on its
portfolio securities. Also, a Fund may have to sell assets which have been set
aside in order to meet redemptions. In addition, if a Fund determines it is
advisable as a matter of investment strategy to sell the forward commitment or
when-issued or delayed-delivery securities before delivery, that Fund may incur
a gain or loss because of market fluctuations since the time the commitment to
purchase such securities was made. Any such gain or loss would be treated as a
capital gain or loss and would be treated for tax purposes as such. When the
time comes to pay for the securities to be purchased under a forward commitment
or on a when-issued or delayed-delivery basis, a Fund will meet its obligations
from the then available cash flow or the sale of securities, or, although it
would not normally
34
<PAGE> 74
expect to do so, from the sale of the forward commitment or when-issued or
delayed delivery securities themselves (which may have a value greater or less
than a Fund's payment obligation).
S&P 500 Futures Contracts
The Equity Index Fund intends to purchase S&P 500 Futures Contracts. When the
Fund purchases S&P Futures Contracts, it will be required to deposit with the
broker an amount of cash or cash equivalents equal to 5% to 10% of the
underlying S&P 500 Futures Contracts amount. The balance of the S&P 500
Futures Contracts amount will be placed in a segregated account with the Fund's
custodian. That segregated account shall consist of cash, U.S. Government
Securities or other liquid high-grade debt obligations and will be marked daily
to market.
35
<PAGE> 75
Report of Independent Auditors
To the Board of Directors
Manulife Series Fund, Inc.
We have audited the accompanying statements of assets and liabilities, including
the statements of investments of Manulife Series Fund, Inc. (comprised of the
Emerging Growth Equity Fund, Common Stock Fund, Real Estate Securities Fund,
Balanced Assets Fund, Capital Growth Bond Fund, Money Market Fund,
International Fund and Pacific Rim Emerging Markets Fund) as of December 31,
1995 and the related statements of operations, for the year then ended, the
statements of changes in net assets, and the financial highlights for each of
the periods presented herein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights, based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Manulife Series Fund, Inc. at
December 31, 1995, the results of their operations for the year then ended, the
changes in their net assets and the financial highlights for each of the
periods presented therein, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 2, 1996
36
<PAGE> 76
STATEMENT OF INVESTMENTS
& FINANCIAL STATEMENTS
<PAGE> 77
EMERGING GROWTH EQUITY FUND
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BIOTECHNOLOGY 2.4% ENGINEERING & CONSTRUCTION 1.2%
* Liposome Inc. 131,100 $2,622,000 * American Buildings Co. 87,400 $1,966,500
* Neorx Corp. 198,200 1,263,525 ----------
---------- ENTERTAINMENT 4.5%
3,885,525 * Grand Casinos Inc. 83,100 1,932,075
---------- * Lodgenet Entertainment Corp. 228,200 2,167,900
BROADCASTERS 2.6% * Play by Play Toys & 87,200 1,275,300
* CAI Wireless Systems Inc. 246,375 2,371,359 Novelties
* Heartland Wireless Commun. Inc. 63,900 1,901,025 * Stratosphere Corp. 187,300 1,854,525
---------- ----------
4,272,384 7,229,800
---------- ----------
BUILDING: MATERIAL & HOME 1.3% FINANCE: CONSUMER & OTHERS 5.4%
Texas Industries Inc. (Rights) 40,300 2,135,900 BHC Financial Inc. 187,800 3,371,400
---------- * First Merchants 97,200 1,798,200
CHEMICALS & FERTILIZERS 2.5% Acceptance Corp.
* Cytec Industries Inc. 43,500 2,713,312 National Data Corp. 63,100 1,561,725
* Tetra Technologies Inc. 74,800 1,299,650 * Olympic Financial Limited 127,500 2,071,875
---------- ----------
4,012,962 8,803,200
---------- ----------
COMMUNICATIONS EQUIPMENT 9.9% FINANCE: INSURANCE 2.3%
* Allen Group Inc. (Rights) 83,200 1,861,600 * Capmac Holdings Inc. 53,600 1,346,700
* ITI Technologies Inc. 109,000 3,242,750 Philadelphia Cons. 147,400 2,395,250
* Microcom Inc. 104,000 2,704,000 Holding Corp.
* Network Equipment Tech (Rights) 53,700 1,470,038 ----------
* Pairgain Technologies Inc. 38,200 2,091,450 3,741,950
* Teltrend Inc. 100,300 4,689,025 ----------
---------- HOSPITAL MANAGEMENT 7.5%
16,058,863 * American Medical 104,100 3,383,250
---------- Response
COMPUTER HARDWARE 2.9% * Inphynet Medical 140,500 3,372,000
* Pinnacle Systems Inc. 53,600 1,326,600 Management Inc.
* S3 Inc. 143,600 2,530,950 * Pet Practice Inc. 260,100 2,666,025
* Triquint Semiconductor Inc. 67,100 905,850 * Renal Treatment 63,900 2,811,600
---------- Centers Inc.
4,763,400 ----------
---------- 12,232,875
DRUGS 2.6% ----------
* CIMA Labs Inc. 120,000 720,000 HOSPITAL SUPPLY 3.4%
* Depotech Corp. 74,200 1,428,350 * Circon Corp. 26,800 542,700
* Matrix Pharmaceuticals 110,800 2,077,500 * Diametrics Medical Inc. 183,700 895,537
---------- * Instent Inc. 157,000 2,355,000
4,225,850 * Ventritex Inc. 99,300 1,725,337
---------- ----------
ELECTRICAL EQUIPMENT 2.3% 5,518,574
* BTU International Inc. 120,500 564,844 ----------
Belden Inc. 123,900 3,190,425 HOUSEHOLD PRODUCTS 1.8%
---------- * Blyth Industries Inc. 100,600 2,967,700
3,755,269 ----------
---------- LODGING & RESTAURANTS 2.9%
ELECTRONICS 4.9% * Buffets Inc. 102,600 1,410,750
* Advanced Energy Industries Inc. 133,800 1,204,200 * Prime Hospitality Corp. 268,200 2,682,000
* Cable Design Technologies Corp. 40,800 1,795,200 * Rock Bottom Restaurants Inc. 47,400 616,200
Harman Int'l. Industries Inc. 21,400 858,675 ----------
* LTX Corp. 165,100 1,506,538 4,708,950
* NU Horizons Electronics Corp. 51,000 905,250 ----------
* Silicon VY Group Inc. 67,100 1,694,275 MACHINERY 3.3%
---------- * Raymond Corp. 119,700 2,723,175
7,964,138 * FSI International Inc. 127,400 2,579,850
---------- ----------
5,303,025
----------
</TABLE>
*Non Income Producing Securities
See Accompanying Notes
20
<PAGE> 78
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE SHORT TERM INVESTMENTS FACE AMOUNT VALUE
(Note 2) (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MANUFACTURING 5.6% U.S. GOVERNMENT AGENCIES 2.7%
* Altron Inc. 80,500 $2,415,000 Federal Home Loan Bank
BMC Industries Inc. 70,000 1,627,500 5.320% due 05/17/1996 500,000 $489,877
* Electroglas Inc. 97,500 2,388,750 Federal Home Loan
LSI Industries Inc. 170,100 2,721,600 Mortgage 5.670%
----------- due 01/16/1996 1,820,000 1,815,700
9,152,850 Federal Home Loan
----------- Mortgage 5.580%
METALS & MINERALS 1.0% due 02/12/1996 2,000,000 1,986,980
Cleveland Cliffs Inc. (Rights) 37,800 1,549,800 ------------
----------- 4,292,557
OFFICE EQUIPMENT 1.4% ------------
* Computer Products Inc. 80,300 923,450 CANADIAN GOVERNMENT
* Metrologic Instruments Inc. 143,000 1,430,000 AGENCIES 0.7%
----------- Canadian Wheat Board 5.630%
2,353,450 due 02/21/1996 1,200,000 1,190,429
----------- ------------
OIL: SERVICES 1.5% BUSINESS CREDIT
Camco International Inc. 16,800 470,400 INSTITUTIONS 0.6%
* Global Industries Inc. 33,600 1,008,000 American Express Credit Corp.
* Pride Pete Services Inc. 94,100 999,813 5.650% due 02/28/1996 1,000,000 990,897
----------- ------------
2,478,213 PERSONAL CREDIT
----------- INSTITUTIONS 0.8%
POLLUTION CONTROL 1.0% Ford Motor Credit Corp. 5.690%
* Newpark Resources Inc. 76,440 1,700,790 due 2/26/96 1,300,000 1,288,494
----------- ------------
RETAIL 4.0% TOTAL SHORT TERM
* Brightpoint Inc. 201,100 2,840,537 INVESTMENTS 4.8% 7,762,377
* Compusa Inc. 53,500 1,665,187 ------------
* Williams Sonoma Inc. 103,500 1,914,750 TOTAL INVESTMENTS 99.7% 161,858,889
----------- ------------
6,420,474 OTHER ASSETS LESS
----------- LIABILITIES 0.3% 567,578
SOFTWARE 5.8% ------------
* Lernout & Hauspie Speech NET ASSETS - EQUIVALENT TO $23.10 PER
Products 54,300 1,520,400 SHARE BASED ON 7,030,732 SHARES
* CKS Group Inc. 40,200 1,567,800 OF CAPITAL STOCK OUTSTANDING. 100.0% $162,426,467
Henry Jack & Assoc. Inc. 111,600 2,762,100 ============
* Health Management Systems Inc. 34,350 1,339,650
* Rational Software Corp. 87,100 1,948,863
* Spectrum Holobyte Inc. 45,500 295,750
-----------
9,434,563
-----------
TELEPHONE 7.6%
* Arch Communications Group Inc. 125,400 3,009,600
* Global Star Telecommunications 86,200 3,189,400
* Metrocall Inc. 150,700 2,882,138
* Mobilemedia Corp. Class 'A' 144,600 3,217,350
-----------
12,298,488
-----------
TEXTILES 2.7%
* Donnkenny Inc. Delaware 18,400 333,500
* Quiksilver Inc. 73,700 2,519,619
Wolverine World Wide Inc. (Rights) 48,700 1,534,050
-----------
4,387,169
-----------
TRANSPORTATION 0.6%
* Stolt Nielsen SA 26,800 773,850
-----------
TOTAL COMMON STOCK 94.9% 154,096,512
-----------
</TABLE>
21
<PAGE> 79
COMMON STOCK FUND
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BEVERAGES 2.4% ELECTRONICS 5.3%
Coca Cola Co. 7,800 $579,150 * Applied Materials Inc. 14,700 $578,812
Pepsico Inc. 16,300 910,762 * Cabletron Systems Inc. 9,300 753,300
--------- * LSI Logic Corp. 16,100 527,275
1,489,912 Linear Technology Corp. 13,900 545,575
--------- * 3COM Corp. 17,900 834,587
CHEMICALS & FERTILIZERS 2.3% ---------
Engelhard Corp. 38,000 826,500 3,239,549
B. F. Goodrich Co. (Rights) 4,100 279,312 ---------
Hercules Inc. 5,200 293,150 ENERGY 11.2%
--------- Atlantic Richfield Co. 9,400 1,041,050
1,398,962 Chevron Corp. 10,900 572,250
--------- Exxon Corp. 15,100 1,209,887
COMMUNICATIONS 0.9% Halliburton Co. 14,300 723,938
* Paging Network Inc. 21,400 521,625 Mobil Corp. (Rights) 10,000 1,120,000
--------- Schlumberger Ltd. 10,700 740,975
COMPUTER HARDWARE 3.6% Texaco Inc. 8,400 659,400
* Cadence Design Systems Inc. (Rights) 6,700 281,400 Unocal Corp. 26,300 765,988
* Digital Equipment Corp. 13,300 852,862 ---------
* Silicon Graphics Inc. 13,100 360,250 6,833,488
* Sun Microsystems Inc. 14,800 675,250 ---------
--------- ENGINEERING & CONSTRUCTION 2.5%
2,169,762 Dresser Industries Inc.
--------- (Rights) 25,000 609,375
CONGLOMERATES 0.3% Fluor Corp. (Rights) 13,800 910,800
ITT Industries Inc. 8,400 201,600 ---------
--------- 1,520,175
DRUGS 5.8% ---------
Bristol Myers Squibb Co. 7,300 626,887 ENTERTAINMENT 3.6%
Johnson & Johnson 8,700 744,937 Carnival Corp. Class 'A' 20,800 507,000
Medtronic Inc. 11,700 653,738 HBO & Co. 2,600 199,225
Pfizer Inc. 12,800 806,400 ITT Corp. New 8,400 445,200
* R P Scherer Corp. Delaware 14,200 697,575 * Promus Hotel Corp. 20,100 447,225
--------- * Viacom Inc. Class 'B' 12,300 582,713
3,529,537 ---------
--------- 2,181,363
ELECTRIC UTILITIES 4.8% ---------
Dominion Resources Inc. Va. 13,000 536,250 FINANCE: BANKS 8.3%
Duke Power Co. 13,600 644,300 BankAmerica Corp. 8,400 543,900
FPL Group Inc. (Rights) 15,500 718,812 Bankers Trust N.Y. Corp. 10,100 671,650
Pacific Gas & Electric Co. 19,900 564,662 Chemical Banking Corp. 11,200 658,000
Southern Co. 19,600 482,650 Citicorp 12,700 854,075
--------- Fleet Financial Group Inc. 15,700 639,775
2,946,674 MBNA Corp. 13,300 490,438
--------- J P Morgan & Co. Inc. 6,700 537,675
ELECTRICAL EQUIPMENT 1.6% Nationsbank Corp. 9,800 682,325
General Electric Co. 13,500 972,000 ---------
--------- 5,077,838
---------
FINANCE: CONSUMER &
OTHER 1.4%
T. Rowe Price & Assoc. Inc 1,500 73,875
Travelers Group Inc. 12,700 798,513
---------
872,388
---------
FINANCE: INSURANCE 4.1%
American International 10,950 1,012,875
Group Inc.
Chubb Corp. 6,000 580,500
General Re Corp. 3,300 511,500
ITT Hartford Group Inc. 8,400 406,350
---------
2,511,225
---------
FOODS 0.9%
CPC Internationl Inc. 7,500 514,688
---------
</TABLE>
*Non Income Producing Securities
See Accompanying Notes
22
<PAGE> 80
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HOSPITAL MANAGEMENT 1.4% TRANSPORTATION 0.6%
United Healthcare Corp. 13,400 $877,700 Southwest Airlines Co. 16,700 $388,275
--------- ----------
HOSPITAL SUPPLY 0.7% TOTAL COMMON STOCK 91.2% 55,668,887
Becton Dickinson & Co. 6,000 450,000 ----------
--------- -------------------------------------------------------------
SHORT TERM INVESTMENTS FACE AMOUNT VALUE
(Note 2)
METALS & MINERALS 0.8% -------------------------------------------------------------
Aluminum Co. of America 9,000 475,875 U.S. GOVERNMENT AGENCIES 3.7%
--------- Federal Home Loan Bank 5.470%
NATURAL GAS PIPELINES 1.2% due 03/27/1996 280,000 276,341
Coastal Corp. 19,400 722,650 Federal Home Loan Mortgage 5.670%
--------- due 01/16/1996 1,000,000 997,637
OFFICE EQUIPMENT 1.4% Federal Natl. Mortgage Assoc. 5.470%
Xerox Corp. 6,300 863,100 due 02/02/1996 110,000 109,465
--------- Federal Natl. Mortgage Assoc. 5.500%
PERSONAL CARE 2.9% due 03/22/1996 250,000 246,906
Gillette Co. 20,900 1,089,413 Federal Natl. Mortgage Assoc. 5.490%
Kimberly Clark Corp. (Rights) 8,500 703,375 due 03/28/1996 600,000 592,040
--------- ----------
1,792,788 2,222,389
--------- ----------
RETAIL 6.6% CANADIAN GOVERNMENT 3.0%
Albertsons Inc. 26,000 854,750 AGENCIES
Liz Claiborne 3,100 86,025 Canadian Wheat Board 5.600%
Nike Inc. Class 'B' 10,800 751,950 due 03/29/1996 240,000 236,715
* Office Max Inc. 20,800 465,400 Canadian Wheat Board 5.450%
Sears Roebuck & Co. 22,700 885,300 due 04/03/1996 1,000,000 985,921
* Tommy Hilfiger Corp. 8,100 343,237 Export Development Corp. 5.800%
Wal Mart Stores Inc. 28,500 637,688 due 01/03/1996 630,000 629,797
--------- ----------
4,024,350 1,852,433
--------- ----------
SOFTWARE 5.8%
America Online Inc. 5,800 217,500 BEVERAGES 0.2%
* Cisco Systems Inc. 8,200 611,925 Pepsico Inc. 5.620%
General Motors Corp. 9,900 514,800 due 02/23/1996 100,000 99,173
Class 'E' ----------
* Informix Corp. 26,500 795,000
* Microsoft Corp. 6,500 570,375 PERSONAL CREDIT INSTITUTIONS 1.6%
* Oracle Systems Corp. 14,100 597,488 Ford Motor Credit Corp. 5.690%
Paychex Inc. 5,000 249,375 due 02/26/1996 1,000,000 991,149
--------- ----------
3,556,463
---------
TELEPHONE 8.9% TOTAL SHORT TERM INVESTMENTS 8.5% 5,165,144
* Airtouch 26,700 754,275 ----------
Communications Inc.
GTE Corp. 16,300 717,200 TOTAL INVESTMENTS 99.7% 60,834,031
* LCI International Inc. 11,800 241,900 ----------
MCI Communications Corp. 40,000 1,045,000 OTHER ASSETS LESS
NYNEX Corp. 22,500 1,215,000 LIABILITIES 0.3% 161,897
Pacific Telesis Group 17,800 598,525 ----------
(Rights)
SBC Communications Inc. 14,500 833,750 NET ASSETS - EQUIVALENT TO $17.27
--------- PER SHARE BASED ON 3,532,074
5,405,650 SHARES OF CAPITAL STOCK
--------- OUTSTANDING. 100.0% $60,995,928
TOBACCO 1.9% ===========
Philip Morris 12,500 1,131,250
Companies Inc. ---------
</TABLE>
23
<PAGE> 81
REAL ESTATE SECURITIES FUND
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BUILDING 14.0% LODGING & RESTAURANTS 7.6%
* Congoleum Corp. Class 'A' 19,200 $ 206,400 La Quinta Inns Inc. 75,500 $2,066,813
Engle Homes Inc. 57,000 484,500 * Red Lion Hotels Inc. 108,400 1,897,000
----------
Fleetwood Enterprises Inc. 62,400 1,606,800 3,963,813
* Hovnanian Enterprises Inc. Class 'A' 31,800 238,500 ----------
Hughes Supply Inc. (Rights) 19,100 539,575 RETAIL 3.2%
* Schottenstein Homes Inc. 77,000 904,750 Home Depot Inc. 34,500 1,651,687
* NVR Inc. 22,300 223,000 ----------
Sherwin Williams Co. (Rights) 38,700 1,577,025 TOTAL COMMON STOCK 93.2% 48,851,613
Stanley Works (Rights) 30,400 1,565,600
--------- ------------------------------------------------------------
7,346,150 SHORT TERM INVESTMENTS FACE AMOUNT VALUE
--------- (Note 2)
------------------------------------------------------------
FINANCE - HEALTH CARE 9.1% U.S. GOVERNMENT AGENCIES 0.4%
Health & Retirement Properties Trust 64,800 1,053,000 Federal Home Loan Bank 5.570%
Meditrust 30,600 1,067,175 due 02/15/1996 215,000 213,503
National Health Invs. Inc. 48,400 1,603,250 ----------
Nationwide Health Properties Inc. 25,000 1,048,375 CANADIAN GOVERNMENT AGENCIES 2.9%
--------- Canadian Wheat Board 5.600%
4,771,800 due 03/29/1996 1,100,000 1,084,942
--------- Export Development Corp. 5.800%
FINANCE - REAL ESTATE 59.3% due 01/03/1996 450,000 449,855
Avalon Properties Inc. 29,000 623,500 ----------
Bay Apartment Community Inc. 31,900 773,575 1,534,797
CBL & Assoc. Properties Inc. 72,200 1,570,350 ----------
Carr Realty Corp. 42,300 1,031,062
Catellus Development Corp. 89,000 534,000 TOTAL SHORT TERM
Centerpoint Properties Corp. 71,900 1,662,687 INVESTMENTS 3.3% 1,748,300
Chelsea GCA Realty Inc. 34,800 1,044,000 ----------
Colonial Properties Trust 39,500 1,007,250 TOTAL INVESTMENTS 96.5% 50,599,913
Developers Diversified Realty 17,300 519,000 ----------
Duke Realty Investments Inc. 33,300 1,044,788 OTHER ASSETS LESS LIABILITIES
Evans Withycombe Residential 10,000 214,975 LIABILITIES 3.5% 1,840,204
Felcor Suite Hotels Inc. 56,700 1,573,425 ----------
Highwoods Properties Inc. 36,800 1,039,600 NET ASSETS - EQUIVALENT TO $15.10
Irvine Apartment Communities Inc. 83,000 1,597,750 PER SHARE BASED ON 3,472,861
JP Realty Inc. 74,500 1,629,688 SHARES OF CAPITAL
Liberty Property 76,600 1,589,450 STOCK OUTSTANDING. 100.0% $52,440,117
Macerich Co. 50,000 1,000,000 ===========
Merry Land ANO Investment Co. 65,800 1,554,525
National Golf Properties Inc. 26,400 603,900
Rouse Co. 52,600 1,071,725
Shurgard Storage Centers Inc. Class 'A' 39,000 1,053,000
Simon Property Group Inc. 61,600 1,501,500
Sovran Self Storage Inc. 59,300 1,564,038
Spieker Properties Inc. 20,600 517,575
Summit Properties Inc. 79,100 1,572,113
Sun Communities Inc. 60,500 1,595,687
United Dominion Realty Trust Inc. 108,600 1,629,000
----------
31,118,163
----------
</TABLE>
* Non Income Producing Securities
See Accompanying Notes
24
<PAGE> 82
BALANCED ASSETS FUND
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
BONDS FACE AMOUNT VALUE BONDS FACE AMOUNT VALUE
(Note 2) (Note 2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S GOVERNMENT
OBLIGATIONS 12.8% BANKS (CONTINUED)
United States Treasury Notes 4.375% MBNA Corp. 7.490%
due 11/15/1996 745,000 $739,532 due 09/14/1999 1,000,000 $1,052,240
United States Treasury Notes 6.500% Nationsbank Corp. 4.750%
due 05/15/1997 260,000 264,347 due 08/15/1996 500,000 497,220
United States Treasury Notes 5.125% Norwest Corp. 6.650%
due 04/30/1998 500,000 498,985 due 10/15/2023 500,000 490,755
United States Treasury Notes Republic New York Corp. 9.500%
5.8750% due 04/15/2014 500,000 648,380
due 08/15/1998 2,705,000 2,747,685 ---------
United States Treasury Notes 8.000% 8,655,650
due 05/15/2001 735,000 822,737 ---------
United States Treasury Notes 7.500% BEVERAGES 1.1%
due 05/15/2002 690,000 765,037 Coca Cola Enterprises Inc. 8.500%
United States Treasury Notes 6.250% due 02/01/2022 1,000,000 1,197,500
due 02/15/2003 3,160,000 3,296,765 ---------
United States Treasury Notes 6.500% BUSINESS CREDIT 1.4%
due 08/15/2005 2,300,000 2,450,213 INSTITUTIONS
United States Treasury Notes 5.875% Avco Financial Services Inc. 7.500%
due 11/15/2005 1,630,000 1,666,675 due 11/15/1996 500,000 508,290
United States Treasury Bonds 7.625% Chrysler Financial Corp. 7.200%
due 02/15/2025 790,000 966,020 due 05/26/1998 500,000 515,510
---------- CIT Group Holdings Inc. 8.750%
TOTAL U.S GOVERNMENT 14,217,996 due 04/15/1998 500,000 533,015
---------- ---------
1,556,815
---------
CABLE EQUIPMENT 0.9%
CANADIAN PROVINCIAL 2.0% Tele Communications Inc. 7.375%
GOVERNMENT due 02/15/2000 1,000,000 1,037,070
Province of Ontario 8.000% ---------
due 10/17/2001 1,000,000 1,094,660 COMMUNICATIONS 1.1%
Province of Quebec 8.800% EQUIPMENT
DUE 04/15/2003 1,000,000 1,145,010 GTE Corp 8.750%
---------- due 11/01/2021 1,000,000 1,187,500
2,239,670 ---------
----------
ITALIAN GOVERNMENT 0.9%
Republic of Italy 6.875% ELECTRIC UTILITIES 3.7%
due 09/27/2023 1,000,000 976,550 Baltimore Gas & Electric Co. 6.125%
---------- due 07/01/2003 1,000,000 1,000,030
TOTAL FOREIGN GOVERNMENT 2.9% 3,216,220 Carolina Power & Light Co. 6.875%
---------- due 10/01/1998 500,000 502,805
TOTAL GOVERNMENT 15.7% 17,434,216 Northern States Power Co. 7.875%
---------- due 10/01/2001 1,000,000 1,091,340
BANKS 7.8% Pacific Gas & Electric Co. 6.250%
Bank of New York Inc. 6.625% due 08/01/2003 1,000,000 1,002,360
due 06/15/2003 1,000,000 1,027,720 Philadelphia Electric Co. 6.500%
Bank of Nova Scotia 9.000% due 05/01/2003 500,000 506,605
due 10/01/1999 1,000,000 1,098,870 ---------
BankAmerica Corp. 8.125% 4,103,140
due 02/01/2002 1,000,000 1,094,790 ---------
Chemical Bank New York 6.625% HOUSEHOLD PRODUCTS 1.2%
due 08/15/2005 1,000,000 1,023,480 Procter & Gamble ESOP 9.360%
Citicorp 7.125% due 01/01/2021 1,000,000 1,277,500
due 06/01/2003 500,000 525,755 ---------
Kansallis Osake Pankki N Y 10.000% LODGING & RESTAURANTS 0.9%
due 05/01/2002 1,000,000 1,196,440 ITT Corp New 6.250%
due 11/15/2000 1,000,000 1,003,560
---------
</TABLE>
See Accompanying Notes
25
<PAGE> 83
BALANCED ASSETS FUND (CONTINUED)
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
BONDS FACE AMOUNT VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NEWSPAPER 1.0% COMMUNICATIONS EQUIPMENT 0.5%
News America Holdings Inc. 8.500% * Paging Network Inc. 22,800 $555,750
due 02/15/2005 1,000,000 $1,125,950 ---------
---------- COMPUTER HARDWARE 1.8%
PERSONAL CREDIT INSTITUTIONS 3.4% * Cadence Design Systems Inc. (Rights) 6,100 256,200
* Digital Equipment Corp. 10,700 686,138
Associates Corp. North America 6.125% * Silicon Graphics Inc. 13,900 382,250
due 02/01/1998 500,000 505,000 * Sun Microsystems Inc. 13,600 620,500
Commercial Credit Group Inc. 7.375% ---------
due 04/15/2005 1,000,000 1,078,590 1,945,088
Ford Motor Credit Corp. 6.375% ---------
due 04/15/2000 1,000,000 1,016,970 CONGLOMERATE 0.2%
General Electric Capital Corp. 8.850% ITT Industries Inc. 9,000 216,000
due 04/01/2005 500,000 597,360 ---------
Household Finance Corp. 7.750% DRUGS 2.9%
due 06/01/1999 500,000 528,705 Bristol Myers Squibb Co. 7,800 669,825
---------- Johnson & Johnson 8,000 685,000
3,726,625 Medtronic Inc. 8,300 491,700
---------- Pfizer Inc. 11,400 718,200
* R P Scherer Corp. 12,500 614,063
---------
PETROLEUM 1.0% 3,178,788
Ultramar Corp. 8.000% ---------
due 03/15/2005 1,000,000 1,109,470 ELECTRIC UTILITIES 2.4%
---------- Dominion Resources Inc. Va. 11,500 474,375
Duke Power Co. 11,000 521,125
TELEPHONE 3.1% FPL Group Inc. (Rights) 14,500 672,437
MCI Communications Corp. 7.750% Pacific Gas & Electric Co. 18,500 524,938
due 03/23/2025 1,000,000 1,060,460 Southern Co. 19,600 482,650
New Jersey Bell Telephone Co. 5.875% ---------
due 12/01/2006 500,000 488,210 2,675,525
New York Telephone Co. 7.000% ---------
due 12/01/2033 1,000,000 991,430 ELECTRICAL EQUIPMENT 0.8%
Pacific Bell 6.625% General Electric Co. 12,700 914,400
due 10/15/2034 900,000 871,560 ---------
---------- ELECTRONICS 2.6%
3,411,660 * Applied Materials Inc. 11,200 441,000
---------- * Cabletron Systems Inc. 9,800 793,800
TOTAL CORPORATE 26.6% 29,392,440 * LSI Logic Corp. 14,200 465,050
---------- Linear Technology Corp. 11,400 447,450
TOTAL BONDS 42.3% 46,826,656 * 3COM Corp. 16,800 783,300
---------- ---------
- -------------------------------------------------------------- 2,930,600
COMMON STOCK SHARES VALUE ---------
(Note 2) ENERGY 5.8%
- -------------------------------------------------------------- Atlantic Richfield Co. 8,400 930,300
BEVERAGES 1.2% Chevron Corp. 9,700 509,250
Coca Cola Co. 6,900 512,325 Exxon Corp. 14,800 1,185,850
Pepsico Inc. 14,500 810,188 Halliburton Co. 12,100 612,563
---------- Mobil Corp. (Rights) 10,400 1,164,800
1,322,513 Schlumberger Ltd. 9,400 650,950
---------- Texaco Inc. 8,000 628,000
CHEMICALS & FERTILIZERS 1.1% Unocal Corp. 24,600 716,475
Engelhard Corp. 34,500 750,375 ---------
B F Goodrich Co. (Rights) 3,800 258,875 6,398,188
Hercules Inc. 4,600 259,325 ---------
---------- ENGINEERING & CONSTRUCTION 1.1%
1,268,575 Dresser Industries Inc. (Rights) 22,800 555,750
---------- Fluor Corp. (Rights) 10,700 706,200
---------
1,261,950
---------
</TABLE>
* Non Income Producing Securities
See Accompanying Notes
26
<PAGE> 84
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ENTERTAINMENT 1.8% PERSONAL CARE 1.5%
Carnival Corp. Class 'A' 14,600 $355,875 Kimberly Clark Corp. (Rights) 7,800 $645,450
ITT Corp. New 9,000 477,000 Gillette Co. 19,200 1,000,800
HBO & Co. 2,400 183,900 ----------
* Promus Hotel Corp. 21,200 471,700 1,646,250
* Viacom Inc. Class 'B' 11,000 521,125 ----------
--------- RETAIL 3.5%
2,009,600 Albertsons Inc. 24,000 789,000
--------- Liz Claiborne 3,000 83,250
FINANCE: BANKS 4.0% Nike Inc. Class "B" 10,800 751,950
BankAmerica Corp. 6,700 433,825 * Office Max Inc. 21,900 490,012
Bankers Trust NY Corp. 9,200 611,800 Sears Roebuck & Co. 20,900 815,100
Chemical Banking Corp. 10,200 599,250 * Tommy Hilfiger Corp. 7,700 326,287
Citicorp 11,200 753,200 Wal-Mart Stores Inc. 27,900 624,263
Fleet Financial Group Inc. 13,500 550,125 ----------
J P Morgan & Co. Inc. 6,400 513,600 3,879,862
MBNA Corp. 11,800 435,125 ----------
Nationsbank Corp. 7,600 529,150 SOFTWARE 2.9%
--------- * America Online Inc. 5,400 202,500
4,426,075 * Cisco Systems Inc. 7,100 529,837
--------- General Motors Corp. Class 'E' 8,800 457,600
* Informix Corp. 27,800 834,000
* Microsoft Corp. 4,800 421,200
FINANCE: CONSUMER & OTHER 0.6% * Oracle Systems Corp. 12,200 516,975
T. Rowe Price & Assoc. Inc. 1,300 64,025 Paychex Inc. 4,400 219,450
Travelers Group Inc. 10,200 641,325 ----------
--------- 3,181,562
705,350 ----------
--------- TELEPHONE 4.7%
* Airtouch Communications Inc. 28,300 799,475
FINANCE: INSURANCE 2.4% GTE Corp. 14,300 629,200
American International Group Inc. 11,550 1,068,375 * LCI International Inc. 10,500 215,250
Chubb Corp. 5,800 561,150 MCI Communications Corp. 41,800 1,092,025
General Re Corp. 3,500 542,500 NYNEX Corp. 20,800 1,123,200
ITT Hartford Group Inc. 9,000 435,375 Pacific Telesis Group 15,900 534,637
--------- SBC Communications Inc. 14,000 805,000
2,607,400 ----------
--------- 5,198,787
FOODS 0.4% ----------
CPC Interrnational Inc. 6,600 452,925 TOBACCO 0.9%
--------- Philip Morris Companies Inc. 11,500 1,040,750
----------
HOSPITAL MANAGEMENT 0.9%
United Healthcare Corp. 14,800 969,400 TRANSPORTATION 0.3%
--------- Southwest Airlines Co. 14,400 334,800
HOSPITAL SUPPLY 0.4% ----------
Becton Dickinson & Co. 5,500 412,500
--------- TOTAL COMMON STOCK 46.4% 51,465,563
METALS & MINERALS 0.3% ----------
Aluminum Co. of America 6,400 338,400
---------
NATURAL GAS PIPELINES 0.6%
Coastal Corp. 18,900 704,025
---------
OFFICE EQUIPMENT 0.8%
Xerox Corp. 6,500 890,500
---------
</TABLE>
27
<PAGE> 85
BALANCED ASSETS FUND (CONTINUED)
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS FACE AMOUNT VALUE
(Note 2)
- ------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT 0.9%
United States Treasury Bills 5.150%
due 06/20/1996 1,000,000 $975,534
------------
U.S. GOVERNMENT AGENCIES 2.5%
Federal Home Loan Bank 5.320%
due 05/17/1996 820,000 803,399
Federal Home Loan Mortgage 5.520%
due 01/11/1996 1,380,000 1,377,884
Federal National Mortgage Assoc. 5.550%
due 02/20/1996 500,000 496,146
Federal National Mortgage Assoc. 5.500%
due 03/22/1996 125,000 123,453
------------
2,800,882
------------
CANADIAN GOVERNMENT 0.5%
Government of Canada Treasury Bills
5.500%
due 03/26/1996 500,000 493,507
------------
CANADIAN GOVERNMENT AGENCIES 2.0%
Canadian Wheat Board 5.600%
due 03/29/1996 1,310,000 1,292,067
Export Development Corp. 5.800%
due 01/03/1996 942,000 941,696
------------
2,233,763
------------
BUSINESS CREDIT INSTITUTIONS 1.4%
American Express Credit Corp. 5.650% 1,500,000
due 02/28/1996 1,486,346
------------
PERSONAL CREDIT INSTITUTIONS 3.1%
Ford Motor Credit Co. 5.690%
due 02/26/1996 1,500,000 1,486,723
General Electric Capital Corp. 5.650%
due 01/30/1996 2,000,000 1,990,897
------------
3,477,620
------------
TOTAL SHORT TERM INVESTMENTS 10.4% 11,467,652
------------
TOTAL INVESTMENTS 99.1% 109,759,871
------------
OTHER ASSETS LESS LIABILITIES 0.9% 1,000,868
------------
NET ASSETS - EQUIVALENT TO $17.15
PER SHARE BASED ON 6,457,180 SHARES
OF CAPITAL STOCK OUTSTANDING. 100.0% $110,760,739
============
</TABLE>
See Accompanying Notes
28
<PAGE> 86
CAPITAL GROWTH BOND FUND
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
BONDS FACE AMOUNT VALUE BONDS FACE AMOUNT VALUE
(Note 2) (Note 2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS 12.7% BEVERAGES 2.8%
United States Treasury Notes 6.750% Coca Cola Enterprises Inc. 8.500%
Due 04/30/2000 160,000 $168,374 due 02/01/2022 1,000,000 $1,197,500
United States Treasury Notes 7.875% ----------
Due 08/15/2001 840,000 938,171 BUSINESS CREDIT 7.3%
United States Treasury Notes 7.250% INSTITUTIONS
Due 05/15/2004 120,000 133,200 Avco Financial Services Inc. 7.500%
United States Treasury Notes 6.500% due 11/15/1996 1,000,000 1,016,580
Due 08/15/2005 2,190,000 2,333,029 Chrysler Financial Corp. 7.200%
United States Treasury Notes 5.875% due 05/26/1998 1,000,000 1,031,020
Due 11/15/2005 1,690,000 1,728,025 CIT Group Holdings Inc. 8.750%
United States Treasury Bonds 7.625% due 04/15/1998 1,000,000 1,066,030
Due 02/15/2025 100,000 122,281 ----------
--------- 3,113,630
TOTAL U.S. GOVERNMENT 5,423,080 ----------
--------- CABLE EQUIPMENT 2.4%
Tele Communications Inc. 7.375%
CANADIAN PROVINCIAL 5.2% due 02/15/2000 1,000,000 1,037,070
GOVERNMENT ----------
Province of Ontario 8.000% COMMUNICATIONS 2.8%
due 10/17/2001 1,000,000 1,094,660 EQUIPMENT
Province of Quebec 8.800% GTE Corp. 8.750%
due 04/15/2003 1,000,000 1,145,010 due 11/01/2021 1,000,000 1,187,500
--------- ----------
2,239,670
---------
ITALIAN GOVERNMENT 2.3% ELECTRIC UTILITIES 9.5%
Republic of Italy 6.875% Baltimore Gas & Electric Co. 6.125%
due 09/27/2023 1,000,000 976,550 due 07/01/2003 1,000,000 1,000,030
--------- Gulf States Utilities Co. 7.350%
TOTAL FOREIGN GOVERNMENT 7.5% 3,216,220 due 11/01/1998 1,000,000 1,026,550
--------- Northern States Power Co. 6.375%
TOTAL GOVERNMENT 20.2% 8,639,300 due 04/01/2003 1,000,000 1,020,210
--------- Pacific Gas & Electric Co. 6.250%
due 08/01/2003 1,000,000 1,002,360
BANKS 18.0% ----------
Bank of Nova Scotia 9.000% 4,049,150
due 10/01/1999 1,000,000 1,098,870 ----------
Bank of New York Inc. 6.625% HOUSEHOLD PRODUCTS 3.0%
due 06/15/2003 1,000,000 1,027,720 Procter & Gamble ESOP 9.360%
Chemical Bank New York 6.625% due 01/01/2021 1,000,000 1,277,500
due 08/15/2005 1,000,000 1,023,480 ----------
Citicorp 7.125% LODGING & RESTAURANTS 2.3%
due 06/01/2003 1,000,000 1,051,510 ITT Corp New 6.250%
Kansallis Osake Pankki N Y 10.000% due 11/15/2000 1,000,000 1,003,560
due 05/01/2002 1,000,000 1,196,440 ----------
Norwest Corp. 6.650% NEWSPAPERS 2.6%
due 10/15/2023 1,000,000 981,510 News America Holdings Inc. 8.500%
Republic New York Corp. 9.500% due 02/15/2005 1,000,000 1,125,950
due 04/15/2014 1,000,000 1,296,760 ----------
---------
7,676,290
---------
</TABLE>
See Accompanying Notes
29
<PAGE> 87
CAPITAL GROWTH BOND FUND (CONTINUED)
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
BONDS FACE AMOUNT VALUE SHORT TERM INVESTMENTS FACE AMOUNT VALUE
(Note 2) (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PERSONAL CREDIT
INSTITUTIONS 9.8% U.S. GOVERNMENT AGENCIES 3.5%
Associates Corp. North America 6.125% Federal Home Loan Bank 5.550%
due 02/01/1998 1,000,000 $1,010,000 due 02/21/1996 150,000 $148,821
Commercial Credit Group Inc. 7.375% Federal Home Loan Mortgage 5.520%
due 04/15/2005 1,000,000 1,078,590 due 01/11/1996 1,190,000 1,188,175
Ford Motor Credit Corp. 6.375% Federal National Mortgage Assoc. 5.520%
due 04/15/2000 1,000,000 1,016,970 due 03/15/1996 155,000 153,241
Household Finance Corp. 7.750% ----------
due 06/01/1999 1,000,000 1,057,410 1,490,237
---------- ----------
4,162,970 TOTAL SHORT TERM
---------- INVESTMENTS 3.5% 1,490,237
PETROLEUM 2.6% ----------
Ultramar Corp. 8.000%
due 03/15/2005 1,000,000 1,109,470 TOTAL INVESTMENTS 98.3% 41,984,131
---------- ----------
TELEPHONE 11.5% OTHER ASSETS LESS
AT & T Corp. 5.125% LIABILITIES 1.7% 709,655
due 04/01/2001 1,000,000 971,010 ----------
Bellsouth Savings ESOP 9.190% NET ASSETS - EQUIVALENT TO $11.30 PER
due 07/01/2003 790,624 890,164 SHARE BASED ON 3,779,382 SHARES OF
CAPITAL STOCK
Cincinnati Bell Telephone Co. 7.300% OUTSTANDING 100.0% $42,693,786
due 04/30/1996 1,000,000 1,000,940 ===========
MCI Communications Corp. 7.750%
due 03/23/2025 1,000,000 1,060,460
New York Telephone Co. 7.000%
due 12/01/2033 1,000,000 991,430
----------
4,914,004
----------
TOTAL CORPORATE 74.6% 31,854,594
----------
TOTAL BONDS 94.8% 40,493,894
----------
</TABLE>
See Accompanying Notes
30
<PAGE> 88
MONEY - MARKET FUND
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS FACE AMOUNT VALUE SHORT TERM INVESTMENTS FACE AMOUNT VALUE
(Note 2) (Note 2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS 5.4% BEVERAGES 4.1%
UNITED STATES TREASURY Pepsico Inc. 5.620%
BILLS 5.035% due 02/23/96 1,500,000 $1,487,589
DUE 06/27/1996 2,000,000 $1,950,209 -----------
----------
U.S. GOVERNMENT AGENCIES 48.6% BUSINESS CREDIT 12.4%
INSTITUTIONS
FEDERAL HOME LOAN BANK American Express
5.550% Credit Corp. 5.590%
DUE 02/21/1996 350,000 347,248 due 04/25/96 1,500,000 1,473,215
FEDERAL HOME LOAN MORTGAGE CIT Group Holdings
5.670% Inc. 5.630%
DUE 01/16/1996 4,000,000 3,990,550 due 03/01/1996 1,500,000 1,485,925
FEDERAL HOME LOAN MORTGAGE J C Penney Funding
5.570% Corp. 5.650%
DUE 02/15/1996 2,335,000 2,318,743 due 02/22/1996 1,500,000 1,487,758
FEDERAL NATIONAL MORTGAGE -----------
ASSOC 5.620% 4,446,898
DUE 01/11/1996 150,000 149,766 -----------
FEDERAL NATIONAL MORTGAGE ENERGY 4.4%
ASSOC 5.500%
DUE 03/22/1996 1,780,000 1,757,972 Texaco Inc. 5.650%
FEDERAL NATIONAL MORTGAGE due 01/30/1996 1,600,000 1,592,718
ASSOC. 5.490% -----------
DUE 03/28/1996 755,000 744,983
FEDERAL NATIONAL MORTGAGE PERSONAL CREDIT 8.3%
ASSOC. 5.500% INSTITUTIONS
DUE 03/28/1996 1,955,000 1,929,015 Ford Motor Credit
Corp. 5.690%
FEDERAL NATIONAL MORTGAGE due 02/26/1996 1,500,000 1,486,723
ASSOC. 5.380%
DUE 04/24/1996 3,785,000 3,720,516 General Electric
Capital Corp.
5.570%
FEDERAL NATIONAL MORTGAGE due 03/06/1996 1,500,000 1,484,915
ASSOC. 5.350% -----------
DUE 04/26/1996 1,715,000 1,685,435 2,971,638
FEDERAL NATIONAL MORTGAGE -----------
ASSOC. 5.150%
DUE 06/27/1996 880,000 857,592 TELEPHONE 4.1%
---------- AT & T Corp. 5.650%
17,501,820 due 02/15/1996 1,500,000 1,489,406
---------- -----------
CANADIAN GOVERNMENT 4.1%
OBLIGATIONS TOTAL CORPORATE 33.3% 11,988,249
GOVERNMENT OF CANADA -----------
TREASURY BILLS 5.500%
DUE 03/26/1996 1,500,000 1,480,521 TOTAL INVESTMENTS 100.0% 35,998,414
---------- -----------
CANADIAN GOVERNMENT 8.6% OTHER ASSETS LESS
AGENCIES LIABILITIES 0.0% (6,415)
Canadian Wheat Board 5.600% -----------
DUE 03/29/1996 1,600,000 1,578,098 NET ASSETS - EQUIVALENT TO
$10.84 PER SHARE
EXPORT DEVELOPMENT CORP. BASED ON 3,320,455
5.800% SHARES OF CAPITAL
DUE 01/03/1996 1,500,000 1,499,517 STOCK OUTSTANDING. 100.0% $35,991,999
---------- ===========
3,077,615
----------
TOTAL FOREIGN GOVERNMENT 12.7% 4,558,136
----------
TOTAL GOVERNMENT 66.7% 24,010,165
----------
</TABLE>
See Accompanying Notes
31
<PAGE> 89
INTERNATIONAL FUND
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUSTRALIA 7.9% FRANCE (CONTINUED)
Amcor Limited 15,000 $105,916 Eaux (Cie Generale) 350 $34,943
Australia & New Zealand Bank Group 20,000 93,801 Erid Beghin Say 65 11,150
Brambles Industries Limited 11,500 128,215 Havas 125 9,917
Broken Hill Property 10,700 151,108 L' Oreal 160 42,834
CSR Limited 33,000 107,433 Lafarge 340 21,905
* Crown Limited 27,858 51,765 LVMH Moet Hennessy 280 58,321
Gio Australia Holding 58,000 134,934 Lyonnaise Des Eaux SA 130 12,517
National Australia Bank 20,000 179,872 Peugeot SA 165 21,766
Newcrest Mining 24,000 100,966 Pinault Printemps Redoute SA 55 10,973
News Corporation 14,000 74,714 Rhone Poulenc SA 1,000 21,421
Normandy Mining Limited 8,000 11,595 Soc Elf Aquitaine 700 51,574
* Novus Petroleum 70,000 84,287 Societe Generale 280 34,593
Pasminco Limited 47,000 57,641 Total 730 49,268
Santos Limited 35,510 103,727 Valeo 155 7,179
WMC Limited 19,500 125,227 -------
--------- 624,081
1,511,201 -------
--------- GERMANY 4.0%
BELGIUM 1.1% Allianz AG Holding 55 107,201
Soc Gen De Belgique 2,562 214,153 Basf AG 140 31,181
--------- Bayer Motoren Werk 40 20,495
DENMARK 0.5% Bayer AG 160 42,217
Den Danske Bank 125 8,622 Commerzbank AG 90 21,269
Novo Nordisk AS 75 10,266 Daimler Benz AG 110 55,364
Tele Danmark AS 1,285 70,122 Deutsche Bank AG 1,175 55,674
Unidanmark 115 5,696 Dresdner Bank AG 1,105 29,503
---------
94,706 Hoechst AG 125 33,897
--------- Linde AG 85 49,596
FINLAND 0.3% Mannesmann AG 120 38,204
Enso Gutzeit OY 2,230 14,869 * Metallgesellschaft 5,895 129,037
Kesko 565 7,028 Siemens AG 130 71,140
Metsa Serla OY 335 10,321 Veba AG 1,150 48,821
Nokia (AB) OY Series 'K' 235 9,293 Volkswagen AG 75 25,075
Nokia (AB) OY Series 'A' 320 12,581 -------
--------- 758,674
54,092 -------
---------
FRANCE 3.3% HONG KONG 7.5%
Alcatel Alst(Cge) 405 34,918 Amoy Properties 20,000 19,916
Banque National Paris 670 30,223 Cheung Kong(Holdings) 6,000 36,547
Carrefour 75 45,502 China Light & Power 18,000 82,871
Christian Dior 100 10,782 * Florens Group 60,000 39,185
Cie De St Gobain 245 26,716 Grand Hotel Holdings 78,000 29,001
Cie De Suez 1,100 45,375 Guangdong Investment 70,000 42,095
* CSF(Thomson) 265 5,904 Hang Seng Bank 14,000 125,380
* Danone (Ex Bsn) 220 36,300 Hong Kong & China Gas 30,000 48,303
Hong Kong Electric 15,000 49,176
Hong Kong Land Holdings (U.S. Dollars) 10,000 18,500
</TABLE>
+ Convertible Bond
* Non Income Producing Securities
See Accompanying Notes
32
<PAGE> 90
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HONG KONG (CONTINUED) JAPAN (CONTINUED)
Hong Kong Telecommunications 72,800 $129,924 Hitachi Zosen Corp. 16,000 $82,906
HSBC Holdings 16,000 242,095 Itochu Corp. 32,000 215,400
Hutchison Whampoa 25,000 152,279 Kamigumi Co. 4,000 38,392
Hysan Development 10,000 26,447 Kawasaki Steel Corp. 30,000 104,600
Manhattan Card Co. 80,000 34,142 * Kyocera Corp. (U.S. Dollar Warrants) 10 12,500
New World Development Co. 17,000 74,090 Marubeni Corp. 9,000 48,726
* New World Infrastructure Ltd. 20,028 38,334 Marui Co. 2,000 41,646
Sun Hung Kai Properties 8,000 65,438 + Matsushita Electric Works 2.70%
Swire Pacific 14,000 108,632 due 5/31/2002 5,000,000 Yen Par Value 59,177
+ Wharf Capital International 5.00% Mitsubishi Estate 5,000 62,470
due 7/15/2000 25,000 U.S. Dollar Par value 26,750 Mitsubishi Heavy Industries 15,000 119,564
Wharf(Holdings) 8,000 26,641 Mitsui Fudosan Co. 3,000 36,901
Wheelock & Co. 10,000 17,135 Mori Seiki Co. 3,000 67,700
--------- + NEC Corp. 1.70%
1,432,881 due 3/31/1999 10,000,000 Yen Par Value 128,717
--------- NGK Spark Plug Co. 7,000 88,136
INDONESIA 1.2% Namco 1,500 49,976
Astra International 15,000 31,161 Nippon Express Co. 4,000 38,508
Bank International Indonesia 19,000 62,946 Nippon Fire & Marine 10,000 67,797
HM Sampoerna 3,000 30,314 Nippon Sanso Corp. 20,000 96,077
Kalbe Farma 7,000 23,726 Nippon Sheet Glass 18,000 78,276
Matahari Putra Pri 33,500 58,971 * Nippon Telegraph & Telephone Crp. 4 32,349
* Tambang Timah 15,000 18,533 Nippon Zeon Co. 20,000 107,506
* Telekomunikasi Industries 9,000 11,808 Nomura Securities 6,000 130,751
--------- Onward Kashiyama 6,000 97,627
237,459 Promise Co. 3,000 144,407
--------- Rengo Co. 15,000 100,242
ITALY 1.8% Ricoh Co. 24,000 262,663
Assic Generali 1,900 46,001 Royal Co. 5,000 81,356
Credito Italiano 15,900 18,522 Sakura Bank 10,000 126,877
* Eni Spa 18,000 62,904 Sangetsu Co. 2,000 50,363
Stet 33,800 84,148 * Sekisui House (U.S. Dollar Warrants) 100 25,000
Telecom Italia 32,600 50,703 Shimizu Corp. 6,000 61,017
Telecom Italia 7,800 9,538 Sony Corp. 4,000 239,806
* Telecom Italia 7,800 8,202 Sumitomo Densetsu 2,000 26,731
* Telecom Italia Mob 32,600 57,373 Sumitomo Trust & Banking 10,000 141,404
--------- TDK Corp. 3,000 153,123
337,391 * Takashimaya Co. (U.S. Dollar Warrants) 30 12,750
--------- Takeda Chemical Industries 5,000 82,324
JAPAN 23.5% Tokyo Electron 2,000 77,482
Almetax Manufacturing Co. 4,000 46,102 Toray Industries Inc. 5,000 32,930
Amway Japan Limited 1,000 42,228 Toshiba Corp. 20,000 156,707
Arabian Oil Co. 1,000 41,646 Tostem Corp. 1,000 33,220
+ Bot Cayman Finance 4.25% Toyo Engineering 14,000 88,136
due 3/31/2049 10,000,000 Yen Par Value 133,656 Yamato Kogyo Co. 10,000 96,852
Canon Sales Company Inc. 2,100 55,932 ---------
Chiyoda Co. 5,000 116,223 4,483,112
Circle K Japan Co. 2,000 88,136 ---------
Daiichi Clinical 1,000 25,860
Daiwa Securities 6,000 91,816
Fuji Oil Co. 6,000 42,421
</TABLE>
33
<PAGE> 91
INTERNATIONAL FUND (CONTINUED)
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MALAYSIA 5.9% SINGAPORE (CONTINUED)
Arab Malaysian Financial 19,000 $80,797 Keppel Corp. 4,000 $35,631
DCB Holdings Berhad 50,000 145,687 Marco Polo Development Ltd. 13,000 19,943
DCB Holdings Berhad (Warrants) 5,000 4,961 Overseas Chinese Bank 8,000 100,106
IJM Corp. Berhad 12,000 19,089 Singapore Airlines 7,000 65,323
IOI Corp. 64,000 62,748 Singapore Land 5,000 32,344
* IOI Corp. (Warrants) 16,000 2,929 Singapore Press Holdings 1,200 21,209
Leader Universal Holdings 14,666 33,493 Ssangyong Cement 5,000 13,927
Malayan Bank Berhad 10,000 84,262 United Overseas Bank 8,000 76,918
Malaysian International Shipping 9,000 23,566 United Overseas Land 23,000 43,740
Nylex (Malaysia) Berhad 23,000 69,733 ---------
* Petronas Gas Berhad 20,000 68,118 697,406
Resorts World Berhad 14,000 74,969 ---------
RJ Reynolds Berhad 34,000 78,316 SPAIN 1.0%
Telekom Malaysia 24,000 187,109 Argentaria 300 12,366
UMW Holdings Berhad 7,000 18,742 BCO Bilbao Vizcaya 500 18,013
Westmont Industries 7,000 24,255 * BCO Esp De Credito 1,600 11,080
YTL Corp. 22,000 138,599 BCO Popular ESP 100 18,442
--------- BCO Santander SA 300 15,061
1,117,373 Empire Nac Electricio 600 33,982
--------- Iberdrola SA 2,000 18,302
NETHERLANDS 2.8% Repsol SA 800 26,216
ABN AMRO Holdings NV 755 34,393 Telefonica De Esp 2,200 30,470
Heineken NV 120 21,290 ---------
Ing Groep NV 665 44,425 183,932
KLM 165 5,799 ---------
Kon PTT Nederland 1,115 40,509 SWEDEN 1.8%
Philips Electronic 3,815 137,889 Electrolux AB 450 18,468
Royal Dutch Petrol 1,350 188,615 Volvo AB Series 'A' 4,800 98,679
Unilever NV 410 57,615 Volvo AB Series 'B' 10,700 219,167
Wolters Kluwer 150 14,190 ---------
--------- 336,314
544,725 ---------
--------- SWITZERLAND 3.9%
NORWAY 0.4% Baloise Holdings 15 31,209
Den Norske Bank 20,125 52,742 BBC Brown Boveri 20 23,234
Kvaerner AS 110 3,682 Ciba Geigy AG 65 57,196
Norsk Hydro AS 280 11,759 CS Holding 445 45,619
Orkla A/S 115 5,719 Holderbk Financial Glarus 10 7,672
--------- Nestle SA 120 132,744
73,902 Roche Holdings AG 5 70,004
--------- Roche Holdings AG 15 118,661
SINGAPORE 3.7% Sandoz AG 100 91,547
Amtek Engineering 81,000 117,391 Schw Bankverein 55 22,458
City Developments 5,000 36,409 Schw Bankgesellsch 40 43,346
Development Bank Singapore 3,000 37,328 Schweiz Bankverein 64 13,066
Fraser & Neave 4,000 50,901 Schw Ruckversicher 30 34,902
Jurong Shipyard 6,000 46,236 Winterthur 85 60,130
---------
751,788
---------
</TABLE>
34
<PAGE> 92
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THAILAND 1.5% UNITED KINGDOM (CONTINUED)
Advanced Information Services 3,000 $50,258 Prudential Corp. 5,000 $32,187
Bank of Ayudhya Public Co. Ltd. 8,000 44,780 Redland 1,000 6,034
Dhana Siam Financial & Sec. 4,000 22,866 Reed International 2,000 30,486
Krung Thai Bank Place 12,300 49,805 Reuters Holdings 3,000 27,465
Land & House 2,000 32,870 RTZ Corp. 1,000 14,536
Matichon Public Company Ltd. 4,000 23,660 Shell Transportation & Trading 9,000 119,017
National Petrochem 14,000 27,233 Smith & Nephew 6,500 18,827
Nawarat Patanakarn 5,000 22,430 Smithkline Beecham 3,000 33,080
PTT Explortation & Products 2,000 20,961 Smithkline Beecham/BEC 2,000 21,805
------- Standard Chartered 21,000 178,723
294,863 Tesco 6,000 27,675
------- Tomkins 24,000 104,923
UNITED KINGDOM 11.6% Unilever 2,000 41,078
Abbey National 5,000 49,387 Vodafone Group 5,000 17,938
Airtours 20,000 113,371 Whitbread 3,000 31,705
Allied Domecq Place 2,000 16,276 -----------
BAA 7,000 52,943 2,202,036
BAT Industries 4,000 35,223 -----------
BOC Group 1,000 13,993 TOTAL COMMON STOCK 83.7% 15,950,089
Barclays 3,000 34,384 -----------
Bass 2,000 22,317 --------------------------------------------------------------------
Blue Circle Industries 2,000 10,638 REPURCHASE AGREEMENT FACE AMOUNT VALUE
Boots Co. 2,000 18,108 (Note 2)
British Aerospace 1,000 12,359 --------------------------------------------------------------------
* British Aerospace (Warrants) 40 194 UNITED STATES 13.1%
British Airways 3,000 21,711 State Street Bank and Trust Co. 5.150%
British Petroleum 9,000 75,128 due 01/02/1996-Collateralized by
British Telecom 14,000 76,751 $2,544,137 U.S. Treasury Bond 12.00%
BTR 9,000 45,846 due 05/15/2005 2,489,000 2,489,000
Cable & Wireless 5,000 35,797 -----------
Cadbury Schweppes 4,571 37,731 TOTAL INVESTMENTS 96.8% 18,439,089
Forte 6,000 30,797 -----------
General Electric 3,000 16,493 OTHER ASSETS LESS
Glaxo Wellcome 5,470 77,730 LIABILITIES 3.2% 608,449
Grand Metropolitan 21,500 154,764 -----------
Great Universal Stores 13,000 138,197 NET ASSETS - EQUIVALENT TO $10.67 PER SHARE
Guinness 3,000 22,061 BASED ON 1,785,480 SHARES OF CAPITAL STOCK
Hanson 6,000 17,891 OUTSTANDING. 100.0% $19,047,538
HSBC Holdings 5,000 78,079 ===========
Imperial Chemical Industries 2,000 23,684
Marks & Spencer 4,000 27,955
National Westminster 4,000 40,286
Lloyds TSB Group 33,408 171,995
P & O 2,000 14,785
Pearson 1,000 9,683
</TABLE>
35
<PAGE> 93
PACIFIC RIM EMERGING MARKETS FUND
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUSTRALIA 23.0% INDONESIA 2.8%
Australia & NZ Bank Group 20,000 $93,801 Astra International 25,000 $51,935
Amcor Limited 22,000 155,344 Bank International Indonesia 30,000 99,388
Broken Hill Property 30,300 427,902 HM Sampoerna 5,000 50,523
CSR Limited 50,000 162,777 Kalbe Farma 5,000 16,947
* Crown Limited 132,143 245,546 Matahari Putra Pri 55,000 96,818
Gio Australia Holding 85,000 197,748 Tambang Timah Series 'B' 20,000 24,710
Lend Lease Corp. 10,000 144,938 Telekomunikasi Industries Series 'B 15,000 19,681
National Australia Bank 35,000 314,776 --------
Newcrest Mining 30,000 126,208 360,002
News Corporation 24,000 128,081 --------
Normandy Mining Ltd. 33,000 47,830 JAPAN 16.3%
* Novus Petroleum 190,500 229,382 Almetax Manufacturing Co. 2,000 23,051
Pasminco Limited 148,000 181,507 Amway Japan Limited 1,000 42,228
Santos Limited 54,921 160,428 Arabian Oil Co. 500 20,823
WMC Limited 60,000 385,313 Blue Grass Co. 1,000 26,634
--------- Canon Sales Company Inc. 3,150 83,898
3,001,581 Chiyoda Co. 2,000 46,489
--------- Circle K Japan Co. 1,000 44,068
HONG KONG 14.3% Daiwa Securities 2,000 30,605
Amoy Properties 30,000 29,874 Fuji Oil Co. 4,000 28,281
Cheung Kong(Holdings) 10,000 60,912 Hitachi Zosen Corp. 5,000 25,908
China Light & Power 25,000 115,099 Itochu Corp. 15,000 100,969
* Florens Group 65,000 42,451 Kamigumi Co. 2,000 19,196
Grand Hotel Holdings 98,000 36,437 Kawasaki Steel Corp. 5,000 17,434
Guangdong Investments 90,000 54,122 * Kyocera Corp. (U.S Dollar Warrants) 5 6,250
Hang Seng Bank 18,000 161,203 Marubeni Corp. 3,000 16,242
Hong Kong & China Gas 35,000 56,353 Marui Co. 1,000 20,823
Hong Kong Electric 20,000 65,567 Mitsubishi Estate 3,000 37,482
Hong Kong Land Holding (U.S. Dollars) 20,000 37,000 Mitsubishi Heavy Industries 5,000 39,855
Hong Kong Telecommunications 94,000 167,759 Mitsui Fudosan Co. 2,000 24,600
HSBC Holdings 21,800 329,855 Mori Seiki Co. 1,000 22,567
Hutchison Whampoa 34,000 207,100 Namco 1,000 33,317
Hysan Development 10,000 26,447 + NEC Corp. 1.70%
Manhattan Card Co. 40,000 17,071 due 03/31/1999 5,000,000 Yen Par Value 64,359
New World Development Co. 27,000 117,672 NGK Spark Plug Co. 3,000 37,772
* New World Infrastructure Ltd. 20,045 38,366 Nippon Express Co. 2,000 19,254
Sun Hung Kai Properties 10,000 81,798 Nippon Fire & Marine 5,000 33,898
Swire Pacific 18,000 139,670 Nippon Sanso Corp. 9,000 43,235
+ Wharf Capital International 5.00% Nippon Sheet Glass 6,000 26,092
due 07/15/2000 30,000 U.S. Dollar Par Value 32,100 * Nippon Telegraph & Telephone Corp. 5 40,921
Wharf Holdings 10,000 33,301 Nippon Zeon Co. 7,000 37,627
Wheelock & Co. 15,000 25,703 Nomura Securities 3,000 65,375
---------
1,875,860
---------
</TABLE>
+ Convertible Bond
* Non Income Producing Securities
See Accompanying Notes
36
<PAGE> 94
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JAPAN (CONTINUED) SINGAPORE 9.6%
Onward Kashiyama 2,000 $32,543 Amtek Engineering 120,000 $173,913
Promise Co. 1,500 72,203 City Developments 8,000 58,254
Rengo Co. 5,000 33,414 Development Bank Singapore 8,000 99,540
Ricoh Co. 11,000 120,387 Fraser & Neave 7,000 89,077
Sakura Bank 5,000 63,438 Jurong Shipyard 9,000 69,353
Sangetsu Co. 2,000 50,363 Keppel Corp. 8,000 71,262
* Sekisui House 50 12,500 Marco Polo Development Ltd . 25,000 38,353
(U.S. Dollar Warrants) Overseas Chinese Bank 14,000 175,186
Shimizu Corp. 3,000 30,508 Singapore Airlines 15,000 139,979
Sony Corp. 2,000 119,903 Singapore Land 9,000 58,218
Sumitomo Densetsu 1,000 13,366 Singapore Press Holdings 2,600 45,953
Sumitomo Trust & Banking 4,000 56,562 Ssangyong Cement 8,000 22,284
TDK Corp. 2,000 102,082 United Overseas Bank 13,000 124,991
* Takashimaya Co. 20 8,500 United Overseas Land 45,000 85,578
(U.S. Dollar Warrants) -----------
Takeda Chemical Industries 5,000 82,325 1,251,941
Tokyo Electronics 1,000 38,741 -----------
Toray Industries Inc. 5,000 32,930 THAILAND 4.5%
Toshiba Corp. 7,000 54,848 Advanced Information Service 7,000 117,269
Tostem Corp. 1,000 33,220 Bank of Ayudhya Public Co Ltd. 15,000 83,962
Toyo Engineering 11,000 69,249 Dhana Siam Financial & Securities 12,000 68,599
Yamato Kogyo Co. 2,000 19,371 Krung Thai Bank 25,300 102,445
--------- Land & House 4,000 65,740
2,125,706 Matichon Public Company Ltd. 10,000 59,150
--------- National Petrochem 19,000 36,784
MALAYSIA 15.3% Nawarat Patanakarn 6,000 25,727
Arab Malaysian Financial 43,000 182,856 PTT Exploration & Product 3,000 31,441
DCB Holdings Berhad 66,000 192,306 -----------
* DCB Holdings Berhad (Warrants) 11,250 11,163 591,117
IJM Corp. Berhad 22,000 34,996 -----------
IOI Corp. 105,000 102,945 TOTAL COMMON STOCK 85.8% 11,201,390
* IOI Corp. (Warrants) 26,250 4,806 -----------
Leader Universal Holdings 35,333 80,691 -----------------------------------------------------------------------
Malayan Bank Berhad 11,000 92,688 REPURCHASE AGREEMENT FACE AMOUNT VALUE
Malaysia International Shipping 18,000 47,132 (Note 2)
Nylex(Malaysia) Berhad 47,000 142,497 -----------------------------------------------------------------------
* Petronas Gas Berhad 39,000 132,831 U.S. DOLLAR 7.1%
Resorts World Berhad 31,000 166,004 State Street Bank and Trust Co. 5.150%
RJ Reynolds Berhad 64,000 147,419 due 01/02/1996-Collateralized by
Telekom Malaysia 43,000 335,236 $948,537 U.S. Treasury Bond 12.00%
Westmont Industries 11,000 38,115 due 05/15/2005 929,000 929,000
YTL Corp. 45,000 283,498 -----------
--------- TOTAL INVESTMENTS 92.9% 12,130,390
1,995,183 -----------
--------- OTHER ASSETS LESS LIABILITIES 7.1% 926,709
-----------
NET ASSETS - EQUIVALENT TO $10.36 PER SHARE
BASED ON 1,260,885 SHARES OF CAPITAL STOCK
OUTSTANDING. 100.0% $13,057,099
===========
</TABLE>
37
<PAGE> 95
Statements of Assets and Liabilities as of December 31, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK REAL ESTATE BALANCED
EQUITY FUND FUND SECURITIES FUND ASSETS FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at market value (cost-
Emerging Growth Equity Fund; $149,186,228,
Common Stock Fund: $52,113,405, Real Estate
Securities Fund; $48,999,671, Balanced Assets Fund:
$98,285,735, Capital Growth Bond Fund: $39,971,441,
Money Market Fund: $35,998,414, International Fund:
$17,269,015, Pacific Rim Emerging Markets Fund:
$11,505,710)
(Note 2)............................................... $161,858,889 $60,834,031 $50,599,913 $109,759,871
Cash................................................... 10,003 6,354 14,188 4,854
Cash - foreign currencies (cost
International Fund: $546,598
Pacific Rim Emerging Markets Fund: $860,393)*.......... --- --- --- ---
Receivable for undelivered sales....................... 5,632,745 179,942 3,245,631 179,942
Investment income receivable........................... 2,580 115,521 258,891 958,446
Tax reclaims receivable................................ --- --- --- ---
------------ ----------- ----------- ------------
Total assets........................................... 167,504,217 61,135,848 54,118,623 110,903,113
------------ ----------- ----------- ------------
LIABILITIES:
Payable for investment advisory fees (Note 8) 66,607 25,350 21,717 46,268
Payable for undelivered purchases...................... 5,011,143 114,570 1,656,789 96,106
Withholding taxes payable.............................. --- --- --- ---
------------ ----------- ----------- ------------
Total liabilities...................................... 5,077,750 139,920 1,678,506 142,374
------------ ----------- ----------- ------------
NET ASSETS.............................................. $162,426,467 $60,995,928 $52,440,117 $110,760,739
============ =========== =========== ============
REPRESENTED BY:
Paid In Capital (Note 5)................................ $131,407,798 $49,933,954 $47,634,128 $94,335,408
Net unrealized appreciation of
investments............................................. 12,672,661 8,720,626 1,600,242 11,474,136
Net unrealized appreciation on
translation of assets and liabilities in
foreign currencies*................................... --- --- --- ---
Undistributed net realized gain
(loss) on investments................................... 18,139,742 1,506,587 839,886 1,682,448
Undistributed net realized gain (loss) on transactions
in foreign currencies*.................................. --- --- --- ---
Undistributed net investment income .................... 206,266 834,761 2,365,861 3,268,747
------------ ----------- ----------- ------------
NET ASSETS.............................................. $162,426,467 $60,995,928 $52,440,117 $110,760,739
============ =========== =========== ============
Capital stock outstanding (Note 5)...................... 7,030,732 3,532,074 3,472,861 6,457,180
============ =========== =========== ============
Net asset value, offering and redemption
prices per share........................................ $23.10 $17.27 $15.10 $17.15
============ =========== =========== ============
</TABLE>
* International & Pacific Rim Emerging Markets Funds only.
See Accompanying Notes
38
<PAGE> 96
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH MONEY - MARKET INTERNATIONAL PACIFIC RIM EMERGING
BOND FUND FUND FUND MARKETS FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at market value (cost-
Emerging Growth Equity Fund; $149,186,228,
Common Stock Fund: $52,113,405, Real Estate
Securities Fund; $48,999,671, Balanced Assets Fund:
$98,285,735, Capital Growth Bond Fund: $39,971,441,
Money Market Fund: $35,998,414, International Fund:
$17,269,015, Pacific Rim Emerging Markets Fund:
$11,505,710)
(Note 2)............................................... $41,984,131 $35,998,414 $18,439,089 $12,130,390
Cash................................................... 7,291 8,573 28,184 33,259
Cash - foreign currencies (cost
International Fund: $546,598
Pacific Rim Emerging Markets Fund: $860,393)*.......... --- --- 547,004 862,205
Receivable for undelivered sales....................... --- --- 53,729 516,949
Investment income receivable........................... 720,600 --- 50,507 4,645
Tax reclaims receivable................................ --- --- 15,074 ---
----------- ----------- ----------- -----------
Total assets........................................... 42,712,022 36,006,987 19,133,587 13,547,448
----------- ----------- ----------- -----------
LIABILITIES:
Payable for investment advisory fees (Note 8) 18,236 14,988 21,260 16,156
Payable for undelivered purchases...................... 0 --- 57,668 474,078
Withholding taxes payable.............................. --- --- 7,121 115
----------- ----------- ----------- -----------
Total liabilities...................................... 18,236 14,988 86,049 490,349
----------- ----------- ----------- -----------
NET ASSETS.............................................. $42,693,786 $35,991,999 $19,047,538 $13,057,099
=========== =========== =========== ===========
REPRESENTED BY:
Paid In Capital (Note 5)................................ $41,739,537 $34,307,615 $17,930,657 $12,421,144
Net unrealized appreciation of
investments............................................. 2,012,690 --- 1,170,074 624,680
Net unrealized appreciation on
translation of assets and liabilities in
foreign currencies*................................... --- --- 406 373
Undistributed net realized gain
(loss) on investments................................... (1,060,038) --- 3,920 14,126
Undistributed net realized gain (loss) on transactions
in foreign currencies*.................................. --- --- (60,286) (3,621)
Undistributed net investment income .................... 1,597 1,684,384 2,767 397
----------- ----------- ----------- -----------
NET ASSETS.............................................. $42,693,786 $35,991,999 $19,047,538 $13,057,099
=========== =========== =========== ===========
Capital stock outstanding (Note 5)...................... 3,779,382 3,320,455 1,785,480 1,260,885
=========== =========== =========== ===========
Net asset value, offering and redemption
prices per share........................................ $11.30 $10.84 $10.67 $10.36
=========== =========== =========== ===========
</TABLE>
39
<PAGE> 97
Statements of Operations for the Year Ended December 31, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK REAL ESTATE BALANCED
EQUITY FUND FUND SECURITIES FUND ASSETS FUND
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 2):
Interest....................................................... $ 826,889 $ 295,300 $ 277,831 $ 3,022,480
Dividends**.................................................... 23,376 771,938 2,320,479 826,873
----------- ----------- ---------- -----------
Total investment income........................................ 850,265 1,067,238 2,598,310 3,849,353
----------- ----------- ---------- -----------
EXPENSES:
Investment advisory fees (Note 8).............................. 643,999 232,477 232,449 456,917
General expenses (Note 8)...................................... --- --- --- ---
----------- ----------- ---------- -----------
Total Expenses................................................. 643,999 232,477 232,449 456,917
----------- ----------- ---------- -----------
Net investment income (Note 2)................................. 206,266 834,761 2,365,861 3,392,436
----------- ----------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) :
Net realized gain (loss) on:
Investment transactions (excluding short term investments) 18,252,359 2,091,782 1,242,307 2,741,674
Foreign currency transactions*................................. --- --- --- ---
----------- ----------- ---------- -----------
Net realized gain ............................................. 18,252,359 2,091,782 1,242,307 2,741,674
----------- ----------- ---------- -----------
Net unrealized appreciation on:
Investment transactions (excluding short term investments) 12,756,627 9,276,249 3,176,323 14,094,035
Translation of assets and liabilites in foreign currencies*.... --- --- --- ---
----------- ----------- ---------- -----------
Net unrealized appreciation.................................... 12,756,627 9,276,249 3,176,323 14,094,035
----------- ----------- ---------- -----------
Net realized and unrealized gain............................... 31,008,986 11,368,031 4,418,630 16,835,709
----------- ----------- ---------- -----------
INCREASE IN NET ASSETS DERIVED
FROM OPERATIONS................................................ $31,215,252 $12,202,792 $6,784,491 $20,228,145
=========== =========== ========== ===========
</TABLE>
** Net of withholding taxes of $41,289 and $15,842 for International
and Pacific Rim Emerging Markets funds, respectively.
* International and Pacific Rim Emerging Markets Funds only.
See Accompanying Notes
40
<PAGE> 98
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
PACIFIC RIM
CAPITAL GROWTH MONEY - MARKET INTERNATIONAL EMERGING
BOND FUND FUND FUND MARKETS FUND
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 2):
Interest....................................................... $ 2,739,692 $ 1,838,797 $ 143,986 $ 58,812
Dividends**.................................................... --- --- 331,975 215,991
----------- ----------- ---------- -----------
Total investment income........................................ 2,739,692 1,838,797 475,961 274,803
----------- ----------- ---------- -----------
EXPENSES:
Investment advisory fees (Note 8).............................. 198,316 154,412 154,896 95,770
General expenses (Note 8)...................................... --- --- 91,115 73,235
----------- ----------- ---------- -----------
Total Expenses................................................. 198,316 154,412 246,011 169,005
----------- ----------- ---------- -----------
Net investment income (Note 2)................................. 2,541,376 1,684,385 229,950 105,798
----------- ----------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) :
Net realized gain (loss) on:
Investment transactions (excluding short term investments) 677,362 --- 239,190 79,497
Foreign currency transactions*................................. --- --- (68,901) (23,307)
----------- ----------- ---------- -----------
Net realized gain ............................................. 677,362 --- 170,289 56,190
----------- ----------- ---------- -----------
Net unrealized appreciation on:
Investment transactions (excluding short term investments) 4,016,399 --- 1,358,135 1,075,255
Translation of assets and liabilites in foreign currencies*.... --- --- 2,542 380
----------- ----------- ---------- -----------
Net unrealized appreciation.................................... 4,016,399 --- 1,360,677 1,075,635
----------- ----------- ---------- -----------
Net realized and unrealized gain............................... 4,693,761 --- 1,530,966 1,131,825
----------- ----------- ---------- -----------
INCREASE IN NET ASSETS DERIVED
FROM OPERATIONS................................................ $ 7,235,137 $ 1,684,385 $1,760,916 $ 1,237,623
=========== =========== ========== ===========
</TABLE>
41
<PAGE> 99
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK REAL ESTATE
EQUITY FUND FUND SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ......................... $206,266 $55,087 $834,761 $453,596 $2,365,861 $1,547,952
Net realized gain (loss) from investment and
foreign currency transactions.................. 18,252,359 3,929,965 2,091,782 429,006 1,242,307 (342,136)
Net unrealized appreciation (depreciation) of
investments and translation of assets and
liabilities in foreign currencies.............. 12,756,627 (6,390,916) 9,276,249 (2,211,994) 3,176,323 (2,832,671)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets derived from
operations..................................... 31,215,252 (2,405,864) 12,202,792 (1,329,392) 6,784,491 (1,626,855)
------------ ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.......................... (35,611) (19,476) --- (453,596) (852,969) (697,202)
Net realized gain.............................. (3,730,311) (331,996) --- (1,246,124) --- (230,087)
------------ ----------- ----------- ----------- ----------- -----------
Total distributions to shareholders............ (3,765,922) (351,472) 0 (1,699,720) (852,969) (927,289)
------------ ----------- ----------- ----------- ----------- -----------
FROM CAPITAL STOCK TRANSACTIONS (NOTE 5):
Net proceeds from sale of capital stock........ 46,820,911 49,160,218 17,959,899 18,029,178 11,341,799 22,118,718
Net asset value of shares issued to shareholder
for reinvestment of dividends.................. 3,765,922 351,472 --- 1,699,720 852,969 927,289
------------ ----------- ----------- ----------- ----------- -----------
50,586,833 49,511,690 17,959,899 19,728,898 12,194,768 23,046,007
Cost of capital stock reacquired............... (12,989,112) (5,141,457) (3,995,283) (3,522,116) (8,257,316) (2,026,894)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets derived from
capital stock transactions..................... 37,597,721 44,370,233 13,964,616 16,206,782 3,937,452 21,019,113
------------ ----------- ----------- ----------- ----------- -----------
Net increase in net assets..................... 65,047,051 41,612,897 26,167,408 13,177,670 9,868,974 18,464,969
NET ASSETS:
Beginning of period 97,379,416 55,766,519 34,828,520 21,650,850 42,571,143 24,106,174
------------ ----------- ----------- ----------- ----------- -----------
End of period 1995 and 1994 including
undistributed net investment income of
$206,266 and $35,611 respectively in the
Emerging Growth Equity Fund, $834,761 and NIL
respectively in the Common Stock Fund,
$2,365,861 and $852,969 respectively in the
Real Estate Securities Fund, $3,268,747 and
$5,545 respectively in the Balanced Assets
Fund, $1,597 and $6,094 respectively in the
Capital Growth Bond Fund, $1,684,384 and
$1,404 respectively in the Money - Market
Fund, $2,767 and $4,793 respectively in the
International Fund, and $397 and $5,439
respectively in the Pacific Rim Emerging
Markets Fund.
(Note 2)....................................... $162,426,467 $97,379,416 $60,995,928 $34,828,520 $52,440,117 $42,571,143
============ =========== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes
42
<PAGE> 100
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED ASSETS CAPITAL GROWTH MONEY - MARKET
FUND BOND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ......................... $3,392,436 $2,500,365 $2,541,376 $2,497,883 $1,684,385 $776,905
Net realized gain (loss) from investment and
foreign currency transactions.................. 2,741,674 228,164 677,362 (1,307,483) --- ---
Net unrealized appreciation (depreciation) of
investments and translation of assets and
liabilities in foreign currencies.............. 14,094,035 (5,783,362) 4,016,399 (3,268,785) --- ---
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets derived from
operations..................................... 20,228,145 (3,054,833) 7,235,137 (2,078,385) 1,684,385 776,905
------------ ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.......................... (129,234) (2,499,752) (2,545,873) (2,500,018) (1,405) (779,386)
Net realized gain.............................. --- (1,581,823) (425,137) (24,868) --- ---
------------ ----------- ----------- ----------- ----------- -----------
Total distributions to shareholders............ (129,234) (4,081,575) (2,971,010) (2,524,886) (1,405) (779,386)
------------ ----------- ----------- ----------- ----------- -----------
FROM CAPITAL STOCK TRANSACTIONS (NOTE 5):
Net proceeds from sale of capital stock........ 24,303,441 32,214,527 12,263,927 11,243,241 36,173,191 27,553,996
Net asset value of shares issued to shareholder
for reinvestment of dividends.................. 129,234 4,081,575 2,971,010 2,524,886 1,405 779,386
------------ ----------- ----------- ----------- ----------- -----------
24,432,675 36,296,102 15,234,937 13,768,127 36,174,596 28,333,382
Cost of capital stock reacquired............... (8,507,590) (12,578,846) (10,423,191) (16,730,043) (26,250,063) (17,806,853)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets derived from
capital stock transactions..................... 15,925,085 23,717,256 4,811,746 (2,961,916) 9,924,533 10,526,529
------------ ----------- ----------- ----------- ----------- -----------
Net increase in net assets..................... 36,023,996 16,580,848 9,075,873 (7,565,187) 11,607,513 10,524,048
NET ASSETS:
Beginning of period 74,736,743 58,155,895 33,617,913 41,183,100 24,384,486 13,860,438
------------ ----------- ----------- ----------- ----------- -----------
End of period 1995 and 1994 including
undistributed net investment income of
$206,266 and $35,611 respectively in the
Emerging Growth Equity Fund, $834,761 and NIL
respectively in the Common Stock Fund,
$2,365,861 and $852,969 respectively in the
Real Estate Securities Fund, $3,268,747 and
$5,545 respectively in the Balanced Assets
Fund, $1,597 and $6,094 respectively in the
Capital Growth Bond Fund, $1,684,384 and
$1,404 respectively in the Money - Market
Fund, $2,767 and $4,793 respectively in the
International Fund, and $397 and $5,439
respectively in the Pacific Rim Emerging
Markets Fund.
(Note 2)....................................... $110,760,739 $74,736,743 $42,693,786 $33,617,913 $35,991,999 $24,384,486
============ =========== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes
43
<PAGE> 101
Statements of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PACIFIC RIM EMERGING
FUND MARKETS FUND
YEAR ENDED * PERIOD ENDED YEAR ENDED * PERIOD ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ........................... $229,950 $34,077 $105,798 $32,721
Net realized gain (loss) from investment and
foreign currency transactions.................... 170,289 (6,873) 56,190 511
Net unrealized appreciation (depreciation) of
investments and translation of assets and
liabilities in foreign currencies................ 1,360,677 (190,197) 1,075,635 (450,582)
---------- ---------- ----------- ----------
Increase (decrease) in net assets derived from
operations....................................... 1,760,916 (162,993) 1,237,623 (417,350)
---------- ---------- ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income............................ (231,976) (29,284) (110,840) (27,282)
Net realized gain................................ (219,782) --- (46,196) ---
---------- ---------- ----------- ----------
Total distributions to shareholders.............. (451,758) (29,284) (157,036) (27,282)
---------- ---------- ----------- ----------
FROM CAPITAL STOCK TRANSACTIONS:
Net proceeds from sale of capital stock.......... 6,682,274 11,463,599 5,286,274 8,107,883
Net asset value of shares issued to shareholder
for reinvestment of dividends.................... 451,758 29,284 157,036 27,282
---------- ---------- ----------- ----------
7,134,032 11,492,883 5,443,310 8,135,165
Cost of capital stock reacquired................. (686,059) (10,199) (1,124,015) (33,316)
---------- ---------- ----------- ----------
Increase in net assets derived from capital stock
transactions..................................... 6,447,973 11,482,684 4,319,295 8,101,849
---------- ---------- ----------- ----------
Net increase in net assets....................... 7,757,131 11,290,407 5,399,882 7,657,217
NET ASSETS:
Beginning of period.............................. 11,290,407 --- 7,657,217 ---
---------- ---------- ----------- ----------
End of period 1995 and 1994 including
undistributed net investment income of
$206,266 and $35,611 respectively in the
Emerging Growth Equity Fund, $824,761 and
NIL respectively in the Common Stock Fund,
$2,365,861 and $852,969 respectively in the
Real Estate Securities Fund, $3,268,747 and
$5,545 respectively in the Balanced Assets
Fund, $1,597 and $6,094 respectively in the
Capital Growth Bond Fund, $1,684,384 and
$1,404 respectively in the Money - Market
Fund, $2,767 and $4,793 respectively in the
International Fund, and $397 and $5,439
respectively in the Pacific Rim Emerging
Markets Fund.
(Note 2)......................................... $19,047,538 $11,290,407 $13,057,099 $7,657,217
=========== =========== =========== ==========
</TABLE>
* Inception date October 4, 1994
See Accompanying Notes
44
<PAGE> 102
Notes to Financial Statements, December 31, 1995
1. ORGANIZATION
Manulife Series Fund, Inc. ("MSFI"), incorporated on July 22, 1983, and
domiciled in the State of Maryland, is a no-load, diversified open-end
management investment company. MSFI was incorporated for the purpose of
investing premiums from variable contracts issued by The Manufacturers Life
Insurance Company of America. MSFI is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 and its shares are
registered under the Securities Act of 1933. The effective date of the initial
registration was June 26, 1984. Separate Accounts One, Two, Three and Four of
The Manufacturers Life Insurance Company of America (the "Separate Accounts")
have purchased their shares of the common stock of MSFI as an investment and
not with a view towards resale, distribution or redemption. On October 4,
1994, MSFI launched the International Fund and Pacific Rim Emerging Markets
Fund with initial Seed money from The Manufacturers Life Insurance Company of
America of $10,000,000 and $7,000,000, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A) SECURITY VALUATION.
Except with respect to debt instruments having a remaining maturity of 60 days
or less, securities held by MSFI are valued as follows: Securities listed on a
securities exchange are valued at the last sale price or, if there has been no
sale that day, at the last bid price reported as of the close of trading on the
New York Stock Exchange. Securities traded in the over-the-counter market
are valued at the last bid price or yield equivalent as of the close of trading
on the New York Stock Exchange. Securities which are traded both in the
over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market, and for debt securities this
ordinarily will be the over-the-counter market. Although the practice of each
fund is to purchase only assets having a readily ascertainable market value, if
market quotations for such assets are unavailable, such assets are valued at
their fair value as determined in good faith by MSFI's Board of Directors.
There were no such securities held at December 31, 1995.
Debt instruments held with a remaining maturity of 60 days or less are valued
on an amortized cost basis. Under this method of valuation, the security is
initially valued at cost on the date of purchase (or in the case of securities
purchased with more than 60 days remaining to maturity, the market value on the
61st day prior to maturity); and thereafter a constant proportionate
amortization in value is assumed until maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. For purposes of this method of valuation, the maturity of a
variable rate instrument is deemed to be the next date on which the interest
rate is to be adjusted.
B) INTERNATIONAL AND PACIFIC RIM EMERGING MARKETS FUNDS.
Apart from the accounting policies mentioned above there are other significant
accounting policies followed by MSFI in preparation of financial statements for
the International and Pacific Rim Emerging Markets Funds.
Generally securities will be valued as described above on the exchanges which
they are traded, however, where a country has adopted other conventions with
respect to valuations, these will be utilized instead. Trading in securities
on European and Far Eastern exchanges and over-the counter markets is normally
completed well before 4:00 P.M. eastern time. As a result, if events
materially affecting the value of such securities occur between the time when
their price is determined and the time the Funds net asset value is calculated,
such securities will be valued at fair value as determined in good faith by
MSFI's Board of Directors. There were no such securities held at December 31,
1995.
The values of all assets and liabilities initially expressed in foreign
currencies are translated into US dollars at the exchange rate of such
currencies against the US dollar as provided by the pricing service as of
12:00 P.M. New York time.
The Funds may utilize derivative securities such as futures contracts and
related options and foreign currency contracts for bonafide hedging purposes,
and not in speculation or to leverage the fund. (See prospectus for details).
The primary risks associated with the use of futures contracts are imperfect
correlation between the change in market value of the securities held by the
Fund and the prices of futures contracts, and the possibility of an illiquid
market. Risks associated with forward currency contracts include movement in
the value of the foreign currency relative to the US dollar and the ability of
the counterpart to perform. Futures and forward currency contracts are valued
based upon their quoted daily settlement prices. Fluctuations in the value of
such contracts are recorded as unrealized appreciation (depreciation) until
terminated, at which time realized gains (losses) are recognized. Unrealized
appreciation (depreciation) related to open futures and forward currency
contracts may be required to be treated as realized gain (loss) for tax
purposes. There were no such futures or contracts held at December 31, 1995.
Foreign dividends are recorded on the ex-date or as soon after the ex-date that
the Fund is aware of such dividends, net of all non-rebatable tax withholdings.
C) FEDERAL INCOME TAXES.
It is MSFI's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholder. Therefore, no Federal income tax provision
is required.
D) DIVIDENDS TO SHAREHOLDER.
Dividends to shareholder are recorded on the ex-dividend date.
E) OTHER.
Security transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recorded as earned. Dividend
income is recorded on the ex-dividend date.
45
<PAGE> 103
Notes to Financial Statements, December 31, 1995 (continued)
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term securities for the year
ended December 31, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK REAL ESTATE
EQUITY FUND FUND SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASES
U.S. Government
Obligations.............. $ -- $ -- $ --
Corporate Bonds.......... -- -- --
Common Stocks............ 204,309,555 58,731,200 62,905,509
------------ ----------- -----------
$204,309,555 $58,731,200 $62,905,509
============ =========== ===========
SALES
U.S. Government
Obligations.............. $ -- $ -- $ --
Corporate Bonds.......... -- -- --
Common Stocks............ 168,970,035 45,706,444 56,803,017
------------ ----------- -----------
$168,970,035 $45,706,444 $56,803,017
============ =========== ===========
</TABLE>
Effective January 1, 1995 realized and unrealized gains and losses are
determined by the specific identification method. Previously, these gains and
losses were based on average cost. This change in method decreased net realized
gain and increased unrealized appreciation for financial statement purposes by
immaterial amounts. There was no effect on the net increase in net assets
resulting from operations, on the net assets of the Fund, or for federal
tax purposes.
4. TAX BASIS OF INVESTMENTS
Investment information based on the cost for Federal income tax purposes of the
securities (excluding short-term investments) held at December 31, 1995 is as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK REAL ESTATE
EQUITY FUND FUND SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate gross unrealized
appreciation..................... $ 23,359,711 $ 9,508,857 $ 2,297,662
Aggregate gross unrealized
depreciation..................... (10,687,050) (788,231) (697,421)
----------- ---------- ----------
Net unrealized appreciation
(depreciation)................... $ 12,672,661 $ 8,720,626 $ 1,600,241
============ =========== ===========
Aggregate cost of securities
for federal income tax purposes.. $141,423,851 $46,948,261 $47,251,371
============ =========== ===========
</TABLE>
46
<PAGE> 104
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
BALANCED ASSETS CAPITAL GROWTH INTERNATIONAL PACIFIC RIM EMERGING
FUND BOND FUND FUND MARKETS FUND
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PURCHASES
U.S. Government
Obligations.............. $20,584,568 $18,293,621 $ --- $ ---
Corporate Bonds.......... 20,133,718 17,317,880 463,275 153,625
Common Stocks............ 54,281,414 --- 13,490,837 9,721,763
----------- ----------- ----------- ----------
$94,999,700 $35,611,501 $13,954,112 $9,875,388
=========== =========== =========== ==========
SALES
U.S. Government
Obligations.............. $22,480,322 $19,016,869 $ --- $ ---
Corporate Bonds.......... 7,812,173 12,281,218 114,416 57,208
Common Stocks............ 51,946,450 --- 7,469,713 4,918,616
----------- ----------- ----------- ----------
$82,238,945 $31,298,087 $ 7,584,129 $ 4,975,824
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
BALANCED ASSETS CAPITAL GROWTH INTERNATIONAL PACIFIC RIM EMERGING
FUND BOND FUND FUND MARKETS FUND
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aggregate gross
unrealized
appreciation.................... $12,256,680 $2,037,777 $1,593,732 $ 979,279
Aggregate gross
unrealized
depreciation.................... (782,544) (25,087) (423,658) (354,599)
----------- ----------- ----------- ----------
Net unrealized
appreciation
(depreciation).................. $11,474,136 $2,012,690 $1,170,074 $624,680
=========== =========== =========== ===========
Aggregate cost of
securities for
federal income
tax purposes.................... $86,818,083 $38,481,204 $14,780,015 $10,576,710
=========== =========== =========== ===========
</TABLE>
47
<PAGE> 105
Notes to Financial Statements, December 31, 1995 (continued)
5. CAPITAL STOCK AND DISTRIBUTIONS
At December 31, 1995 there were 1,000,000,000 shares of $0.01
par value common stock authorized.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK
EQUITY FUND FUND
- ------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................... 2,232,451 2,635,224 1,190,184 1,257,276
Shares issued to
shareholders in
reinvestment of
dividends...................... 164,511 19,037 -- 124,906
--------- --------- --------- ---------
Total issued................... 2,396,962 2,654,261 1,190,184 1,382,182
Shares redeemed................ (615,559) (276,202) (264,451) (250,842)
--------- --------- --------- ---------
Net increase................... 1,781,403 2,378,059 925,733 1,131,340
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH MONEY - MARKET
BOND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................... 1,094,742 1,035,750 3,422,196 2,666,868
Shares issued to
shareholders in
reinvestment of
dividends...................... 263,567 244,349 132 75,920
--------- ---------- ---------- ----------
Total issued................... 1,358,309 1,280,099 3,422,328 2,742,788
Shares redeemed................ (907,815) (1,586,192) (2,477,727) (1,721,462)
--------- ---------- ---------- ----------
Net increase................... 450,494 (306,093) 944,601 1,021,326
========= ========== ========== ==========
</TABLE>
During 1995, The Manufacturers Life Insurance Company of America withdrew
$6,500,000 of its investment and accumulated earnings from Capital Growth
Bond Fund. At December 31, 1995 the value of The Manufacturers Life Insurance
Company of America's investments and accumulated earnings were: Capital Growth
Bond Fund $4,263,248; International Fund $10,957,026 and Pacific Rim Emerging
Markets Fund $7,363,984.
48
<PAGE> 106
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
REAL ESTATE BALANCED ASSETS
SECURITIES FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................... 815,153 1,558,907 1,589,739 2,170,644
Shares issued to
shareholders in
reinvestment of
dividends...................... 57,730 65,711 8,032 291,143
-------- --------- --------- ---------
Total issued................... 872,883 1,624,618 1,597,771 2,461,787
Shares redeemed................ (590,162) (147,295) (566,288) (866,562)
-------- --------- --------- ---------
Net increase................... 282,721 1,477,323 1,031,483 1,595,225
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PACIFIC RIM
FUND EMERGING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................... 659,837 1,148,011 546,094 814,513
Shares issued to
shareholders in
reinvestment of
dividends...................... 42,491 2,981 15,245 2,900
-------- --------- --------- ---------
Total issued................... 702,328 1,150,992 561,339 817,413
Shares redeemed................ (66,801) (1,039) (114,449) (3,418)
-------- --------- --------- ---------
Net increase................... 635,527 1,149,953 446,890 813,995
========= ========= ========= =========
</TABLE>
*Inception date
October 4, 1994
49
<PAGE> 107
Notes to Financial Statements, December 31, 1995 (continued)
6. INDUSTRY DISCLOSURE
As December 31, 1995 the International Fund and Pacific Rim Emerging Markets
Fund portfolio diversification was as follows:
<TABLE>
<CAPTION>
Industry International Fund Pacific Rim Emerging
Markets Fund
- -------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries 6.27% 8.57%
Capital Goods 6.58% 6.90%
Conglomerates 7.20% 5.51%
Consumer goods 16.31% 7.15%
Consumer Services 2.84% 5.06%
Finance 19.02% 20.49%
General Business 3.18% 3.59%
Miscellaneous 8.84% 16.71%
Real Estate 1.38% 1.68%
Repurchase Agreements 13.09% 7.13%
Technology 3.49% 2.97%
Transportation .28% .15%
Utilities 11.52% 14.09%
--------------------------------------------
Total 100.00% 100.00%
============================================
</TABLE>
7. FOREIGN EXCHANGE CONTRACTS
The International and Pacific Rim Emerging Markets Fund will, from time to
time, enter into foreign currency exchange contracts. There are costs and
risks associated with such currency transactions. No type of foreign currency
transaction will eliminate fluctuations in the prices of the Fund's foreign
securities nor will prevent loss if the prices of such securities should
decline. No future or forward foreign exchange contracts were held by the fund
at December 31, 1995.
8. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MSFI has an Investment Advisory Agreement with Manufacturers Adviser
Corporation ("the Adviser"), a wholly-owned subsidiary of Manufacturer's Life
Insurance Company of America which in turn is a wholly-owned subsidiary of The
Manufacturers Life Insurance Company of Michigan ("MLIM"). MLIM is a life
insurance holding company organized in 1983 under Michigan law and a
wholly-owned subsidiary of The Manufacturers Life Insurance Company ("Manulife
Financial"), a mutual life insurance company based in Toronto, Canada.
The Adviser is responsible for the management of MSFI's Funds and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operation of MSFI. For such services, the Adviser receives daily
compensation at the annual rate of .50% from the Emerging Growth Equity Fund,
Common Stock Fund, Real Estate Securities Fund, Balanced Assets Fund, Capital
Growth Bond Fund and the Money - Market Fund.
For the International Fund and Pacific Rim Emerging Markets Fund, the Adviser
receives the following for investment management: i) .85% of the average
daily value of the aggregate net assets of each Fund on the first $100 million
and ii) .70% of the average daily value of the aggregate net assets of each
Fund in excess of $100 million. In addition, the Funds will reimburse the
Adviser for general expenses necessary to the operation of the funds at the
rate of i) up to .50% of the daily net assets of the portfolio for the
International Fund and ii) up to .65% of the daily net assets of the portfolio
for the Pacific Rim Emerging Markets Fund.
Certain officers and/or directors of MSFI are officers and/or directors of the
Adviser, MHC, MLIM, and Manulife Financial, however, there are no common
directors of MSFI and the Adviser.
50
<PAGE> 108
9. FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding for the
periods indicated.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.......................... $18.55 $19.42 $17.76 $16.18 $9.95
-------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................. 0.03 0.01 (0.01) (0.02) --
Net realized and unrealized gain or
(loss) on investments........................ 5.10 (0.81) 4.16 3.51 7.08
-------- -------- -------- -------- -------
Total from investment operations............ 5.13 (0.80) 4.15 3.49 7.08
-------- -------- -------- -------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income........................ (0.01) 0.00 -- -- --
Net realized gain............................ (0.57) (0.07) (2.49) (1.91) (0.85)
-------- -------- -------- -------- -------
Total dividend distributions................. (0.58) (0.07) (2.49) (1.91) (0.85)
-------- -------- -------- -------- -------
Net asset value, end of period............... $23.10 $18.55 $19.42 $17.76 $16.18
======== ======== ======== ======== =======
Net assets, end of period (in 000's)......... $162,426 $97,379 $55,767 $18,504 $9,822
Aggregate return on share outstanding
during entire period......................... 27.75 % (4.10)% 23.89 % 21.82 % 71.34 %
Significant ratios :
Portfolio turnover........................... 145.42 % 69.40 % 92.95 % 126.62 % 87.63 %
Ratio of expenses to average
net assets................................... 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %
Ratio of net investment income to
average net assets........................... 0.16 % 0.07 % (0.04)% (0.14)% 0.02 %
Ratio of net investment income and
realized and unrealized gain(loss)
to average net assets........................ 23.73 % (3.02)% 23.61 % 23.82 % 50.44 %
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/90 DEC. 31/89 DEC. 31/88 DEC. 31/87 DEC. 31/86
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.......................... $12.20 $ 8.75 $ 7.61 $10.45 $12.58
-------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................. 0.17 0.20 0.14 0.01 0.03
Net realized and unrealized gain or
(loss) on investments........................ (1.98) 3.46 1.16 0.18 (0.78)
-------- -------- -------- -------- -------
Total from investment operations............ (1.81) 3.66 1.30 0.19 (0.75)
-------- -------- -------- -------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income........................ (0.17) (0.21) (0.12) (0.01) (0.03)
Net realized gain............................ (0.27) -- (0.04) (3.02) (1.35)
-------- -------- -------- -------- -------
Total dividend distributions................. (0.44) (0.21) (0.16) (3.03) (1.38)
-------- -------- -------- -------- -------
Net asset value, end of period............... $ 9.95 $12.20 $ 8.75 $ 7.61 $10.45
======== ======== ======== ======== =======
Net assets, end of period (in 000's)......... $ 4,137 $ 3,859 $ 2,682 $ 2,012 $ 1,377
Aggregate return on share outstanding
during entire period......................... (14.90)% 42.19 % 16.94 % (4.88)% (6.59)%
Significant ratios :
Portfolio turnover........................... 100.86 % 116.14 % 190.06 % 196.48 % 247.88 %
Ratio of expenses to average
net assets................................... 0.50 % 0.50 % 0.50 % 0.50 % 0.20 %
Ratio of net investment income to
average net assets........................... 1.55 % 1.95 % 1.54 % 0.06 % 0.26 %
Ratio of net investment income and
realized and unrealized gain(loss)
to average net assets........................ (16.10)% 34.63 % 14.77 % (16.68)% (6.68)
</TABLE>
51
<PAGE> 109
Notes to Financial Statements, December 31, 1995 (continued)
9. FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of capital stock outstanding for the
periods indicated.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period........................ $13.36 $14.68 $13.73 $13.33 $10.48
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.24 0.20 0.19 0.18 0.21
Net realized and unrealized gain or
(loss) on investments...................... 3.67 (0.81) 1.64 0.61 2.94
------- ------- ------- ------- -------
Total from investment operations.......... 3.91 (0.61) 1.83 0.79 3.15
------- ------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... --- (0.20) (0.19) (0.18) (0.21)
Net realized gain.......................... --- (0.51) (0.69) (0.21) (0.09)
------- ------- ------- ------- -------
Total dividend distributions............... 0.00 (0.71) (0.88) (0.39) (0.30)
------- ------- ------- ------- -------
Net asset value, end of period............. $17.27 $13.36 $14.68 $13.73 $13.33
======= ======= ======= ======= =======
Net assets, end of period (in 000's)....... $60,996 $34,829 $21,651 $9,708 $5,480
Aggregate return on share outstanding
during entire period....................... 29.23 % (4.19) % 13.39 % 6.07 % 30.18 %
Significant ratios :
Portfolio turnover......................... 109.03 % 84.78 % 88.23 % 47.60 % 53.01 %
Ratio of expenses to average
net assets................................. 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %
Ratio of net investment income to
average net assets......................... 1.76 % 1.53 % 1.39 % 1.51 % 1.78 %
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... 25.70 % (4.49) % 11.50 % 7.94 % 25.41 %
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD APRIL 30/87
DEC. 31/90 DEC. 31/89 DEC. 31/88 TO DEC. 31/87 +
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period........................ $11.25 $ 8.91 $ 8.36 $ 9.97
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.32 0.36 0.28 0.15
Net realized and unrealized gain or
(loss) on investments...................... (0.77) 2.34 0.56 (1.63)
------- ------- ------- -------
Total from investment operations.......... (0.45) 2.70 0.84 (1.48)
------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... (0.32) (0.36) (0.29) (0.13)
Net realized gain.......................... --- --- --- ---
------- ------- ------- -------
Total dividend distributions............... (0.32) (0.36) (0.29) (0.13)
------- ------- ------- -------
Net asset value, end of period............. $10.48 $11.25 $ 8.91 $ 8.36
======= ======= ======= =======
Net assets, end of period (in 000's)....... $ 2,873 $ 2,140 $ 1,173 $ 942
Aggregate return on share outstanding
during entire period....................... (4.06)% 30.66 % 9.86 % (14.98)%
Significant ratios :
Portfolio turnover......................... 120.84 % 120.92 % 172.13 % 54.87 %
Ratio of expenses to average
net assets................................. 0.50 % 0.50 % 0.50 % 0.50 % *
Ratio of net investment income to
average net assets......................... 3.06 % 3.48 % 3.16 % 2.28 % *
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... (3.40)% 23.77 % 9.13 % (24.73)%
</TABLE>
+ Effective Date of Registration Statement under the Securities Act of 1933.
* Annualized.
52
<PAGE> 110
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period........................ $13.34 $14.07 $12.75 $10.92 $8.16
------- -------- ------- ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.67 0.55 0.47 0.45 0.53
Net realized and unrealized gain or
(loss) on investments...................... 1.35 (0.93) 2.38 1.83 2.76
------- -------- ------- ------ -------
Total from investment operations........... 2.02 (0.38) 2.85 2.28 3.29
------- -------- ------- ------ -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... (0.26) (0.27) (0.47) (0.45) (0.53)
Net realized gain.......................... --- (0.08) (1.06) --- ---
------- -------- ------- ------ -------
Total dividend distributions............... (0.26) (0.35) (1.53) (0.45) (0.53)
------- -------- ------- ------ -------
Net asset value, end of period............. $15.10 $13.34 $14.07 $12.75 $10.92
======= ======= ======= ====== =======
Net assets, end of period (in 000's)....... $52,440 $42,571 $24,106 $7,273 $4,120
Aggregate return on share outstanding
during entire period....................... 15.14 % (2.76) % 22.61 % 21.29 % 41.10 %
Significant ratios :
Portfolio turnover......................... 136.05 % 35.60 % 143.00 % 70.71 % 40.29 %
Ratio of expenses to average
net assets................................. 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %
Ratio of net investment income to
average net assets......................... 5.06 % 4.26 % 3.93 % 4.13 % 5.40 %
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... 14.51 % (4.48) % 15.23 % 20.29 % 33.48 %
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD APRIL 30/87
DEC. 31/90 DEC. 31/89 DEC. 31/88 TO DEC. 31/87 +
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period........................ $ 9.24 $ 9.12 $ 8.76 $10.02
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.67 0.68 0.70 0.48
Net realized and unrealized gain or
(loss) on investments...................... (1.09) 0.15 0.37 (1.30)
------ ------ ------ ------
Total from investment operations.......... (0.42) 0.83 1.07 (0.82)
------ ------ ------ ------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... (0.66) (0.71) (0.71) (0.44)
Net realized gain.......................... --- --- --- ---
------ ------ ------ ------
Total dividend distributions............... (0.66) (0.71) (0.71) (0.44)
------ ------ ------ ------
Net asset value, end of period............. $ 8.16 $ 9.24 $ 9.21 $ 8.76
====== ====== ====== ======
Net assets, end of period (in 000's)....... $2,771 $2,875 $2,488 $2,007
Aggregate return on share outstanding
during entire period....................... (4.53)% 9.23 % 11.72 % (8.42)%
Significant ratios :
Portfolio turnover......................... 24.37 % 15.09 % 23.15 % 10.27 %
Ratio of expenses to average
net assets................................. 0.50 % 0.50 % 0.50 % 0.50 % *
Ratio of net investment income to
average net assets......................... 7.74 % 7.29 % 7.18 % 7.34 % *
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... (4.73)% 8.53 % 10.52 % (13.19)%
</TABLE>
+ Effective Date of Registration under the Securities Act of 1933.
* Annualized.
53
<PAGE> 111
Notes to Financial Statements, December 31, 1995 (continued)
9. FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of capital stock outstanding for the
periods indicated.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED ASSETS FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of period........................ $13.77 $15.18 $14.52 $14.51 $12.35
-------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.53 0.48 0.44 0.51 0.60
Net realized and unrealized gain or
(loss) on investments...................... 2.87 (1.11) 1.29 0.37 2.22
-------- ------- ------- ------- -------
Total from investment operations.......... 3.40 (0.63) 1.73 0.88 2.82
-------- ------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... (0.02) (0.48) (0.44) (0.51) (0.60)
Net realized gain.......................... -- (0.30) (0.63) (0.36) (0.06)
-------- ------- ------- ------- -------
Total dividend distributions............... (0.02) (0.78) (1.07) (0.87) (0.66)
-------- ------- ------- ------- -------
Net asset value, end of period............. $17.15 $13.77 $15.18 $14.52 $14.51
======== ======= ======= ======= =======
Net assets, end of period (in 000's)....... $110,761 $74,737 $58,156 $27,733 $18,515
Aggregate return on share outstanding
during entire period....................... 24.69 % (4.15)% 11.99 % 6.21 % 23.36%
Significant ratios :
Portfolio turnover......................... 98.99 % 86.42 % 96.62 % 75.83 % 41.95%
Ratio of expenses to average
net assets................................. 0.50 % 0.50 % 0.50 % 0.50 % 0.50%
Ratio of net investment income to
average net assets......................... 3.65 % 3.37 % 3.08 % 3.75 % 4.52%
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... 21.79 % (4.11)% 10.09 % 6.99 % 20.84%
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/90 DEC. 31/89 DEC. 31/88 DEC. 31/87 DEC. 31/86
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.......................... $12.87 $11.22 $11.09 $14.11 $12.85
-------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.69 0.75 0.61 0.56 0.68
Net realized and unrealized gain or
(loss) on investments........................ (0.50) 1.61 0.22 (0.28) 1.49
-------- -------- -------- -------- -------
Total from investment operations............ 0.19 2.36 0.83 0.28 2.17
-------- -------- -------- -------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income........................ (0.71) (0.71) (0.67) (0.67) (0.66)
Net realized gain............................ -- -- (0.03) (2.63) (0.25)
-------- -------- -------- -------- -------
Total dividend distributions................. (0.71) (0.71) (0.70) (3.30) (0.91)
-------- -------- -------- -------- -------
Net asset value, end of period............... $12.35 $12.87 $11.22 $11.09 $14.11
======== ======== ======== ======== =======
Net assets, end of period (in 000's)......... $ 12,733 $10,412 $ 8,004 $ 7,872 $ 5,285
Aggregate return on share outstanding
during entire period......................... 1.62 % 21.33 % 7.61 % (1.77)% 17.35 %
Significant ratios :
Portfolio turnover........................... 116.03 % 131.31 % 132.32 % 127.46 % 81.42 %
Ratio of expenses to average
net assets................................... 0.50 % 0.50 % 0.50 % 0.50 % 0.20 %
Ratio of net investment income to
average net assets........................... 5.71 % 6.06 % 5.42 % 3.60 % 4.83 %
Ratio of net investment income and
realized and unrealized gain(loss)
to average net assets........................ 2.04 % 18.69 % 7.40 % (5.59)% 15.18 %
</TABLE>
54
<PAGE> 112
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period........................ $10.10 $11.33 $11.12 $11.47 $10.62
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.72 0.72 0.65 0.77 0.83
Net realized and unrealized gain or
(loss) on investments...................... 1.32 (1.22) 0.51 (0.11) 0.85
------- ------- ------- ------- -------
Total from investment operations.......... 2.04 (0.50) 1.16 0.66 1.68
------- ------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... (0.72) (0.72) (0.65) (0.78) (0.83)
Net realized gain.......................... (0.12) (0.01) (0.30) (0.23) --
------- ------- ------- ------- -------
Total dividend distributions............... (0.84) (0.73) (0.95) (1.01) (0.83)
------- ------- ------- ------- -------
Net asset value, end of period............. $11.30 $10.10 $11.33 $11.12 $11.47
======= ======= ======= ======= =======
Net assets, end of period (in 000's)....... $42,694 $33,618 $41,183 $30,695 $29,326
Aggregate return on share outstanding
during entire period....................... 20.24 % (4.49)% 10.56 % 5.89 % 16.38 %
Significant ratios :
Portfolio turnover......................... 84.74 % 79.04 % 94.75 % 153.05 % 19.60 %
Ratio of expenses to average
net assets................................. 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %
Ratio of net investment income to
average net assets......................... 6.36 % 6.29 % 5.69 % 6.76 % 7.54 %
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... 18.11 % (5.23)% 9.28 % 5.78 % 15.35 %
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/90 DEC. 31/89 DEC. 31/88 DEC. 31/87 DEC. 31/86
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.......................... $10.82 $10.32 $10.53 $13.09 $12.62
-------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.88 0.90 0.92 0.99 1.04
Net realized and unrealized gain or
(loss) on investments........................ (0.21) 0.50 (0.17) (1.12) 1.46
-------- -------- -------- -------- -------
Total from investment operations............ 0.67 1.40 0.75 (0.13) 2.50
-------- -------- -------- -------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income........................ (0.87) (0.90) (0.93) (1.20) (1.03)
Net realized gain............................ -- -- (0.03) (1.23) (1.00)
-------- -------- -------- -------- -------
Total dividend distributions................. (0.87) (0.90) (0.96) (2.43) (2.03)
-------- -------- -------- -------- -------
Net asset value, end of period............... $10.62 $10.82 $10.32 $10.53 $13.09
======== ======== ======== ======== =======
Net assets, end of period (in 000's)......... $ 24,818 $22,768 $19,722 $18,095 $17,674
Aggregate return on share outstanding
during entire period......................... 6.58 % 13.88 % 7.14 % (1.69)% 22.37 %
Significant ratios :
Portfolio turnover........................... 40.73 % 68.61 % 29.36 % 55.80 % 42.57 %
Ratio of expenses to average
net assets................................... 0.50 % 0.50 % 0.50 % 0.50 % 0.20 %
Ratio of net investment income to
average net assets........................... 8.25 % 8.34 % 8.48 % 8.13 % 8.10 %
Ratio of net investment income and
realized and unrealized gain(loss)
to average net assets........................ 6.51 % 12.83 % 6.88 % (1.68)% 19.72 %
</TABLE>
55
<PAGE> 113
Notes to Financial Statements, December 31, 1995 (continued)
9. FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of capital stock outstanding for the
periods indicated.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of period.............................. $10.26 $10.23 $10.22 $10.21 $10.21
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.58 0.39 0.27 0.34 0.57
Net realized and unrealized loss on investments
and foreign currency transactions and translation --- --- --- --- ---
------- ------- ------- ------- -------
Total from investment operations................ 0.58 0.39 0.27 0.34 0.57
------- ------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income............................ --- (0.36) (0.26) (0.33) (0.57)
Net realized gain................................ --- --- --- --- ---
------- ------- ------- ------- -------
Total dividend distributions..................... 0.00 (0.36) (0.26) (0.33) (0.57)
------- ------- ------- ------- -------
Net asset value, end of period................... $10.84 $10.26 $10.23 $10.22 $10.21
======= ======= ======= ======= =======
Net assets, end of period (in 000's)............. $35,992 $24,384 $13,860 $10,825 $8,615
Aggregate return on share outstanding
during entire period............................. 5.63 % 3.89 % 2.73 % 3.40 % 5.60 %
Significant ratios :
Portfolio turnover............................... None None None None None
Ratio of expenses to average
net assets....................................... 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %
Ratio of net investment income to
average net assets............................... 5.35 % 3.84 % 2.67 % 3.25 % 5.45 %
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets............................ 5.35 % 3.84 % 2.67 % 3.25 % 5.45 %
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/90 DEC. 31/89 DEC. 31/88 DEC. 31/87 DEC. 31/86
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.......................... $10.16 $10.15 $10.02 $10.14 $10.19
-------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.78 0.88 0.89 0.58 0.60
Net realized and unrealized loss on
investments and foreign currency
transactions and translation................. -- -- -- -- --
-------- -------- -------- -------- -------
Total from investment operations............ 0.78 0.88 0.89 0.58 0.60
-------- -------- -------- -------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income........................ (0.73) (0.87) (0.76) (0.70) (0.65)
Net realized gain............................ -- -- -- -- --
-------- -------- -------- -------- -------
Total dividend distributions................. (0.73) (0.87) (0.76) (0.70) (0.65)
-------- -------- -------- -------- -------
Net asset value, end of period............... $10.21 $10.16 $10.15 $10.02 $10.14
======== ======== ======== ======== =======
Net assets, end of period (in 000's)......... $ 8,606 $ 6,037 $ 5,259 $ 1,545 $ 1,198
Aggregate return on share outstanding
during entire period......................... 7.82 % 8.88 % 7.06 % 5.67 % 6.07 %
Significant ratios :
Portfolio turnover........................... None None None None None
Ratio of expenses to average
net assets................................... 0.50 % 0.50 % 0.50 % 0.50 % 0.20 %
Ratio of net investment income to
average net assets........................... 7.41 % 8.43 % 6.94 % 5.50 % 5.89 %
Ratio of net investment income and
realized and unrealized gain(loss)
to average net assets........................ 7.41 % 8.43 % 6.94 % 5.50 % 5.89 %
</TABLE>
56
<PAGE> 114
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL FUND PACIFIC RIM EMERGING MARKETS FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED +PERIOD ENDED YEAR ENDED +PERIOD ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period........................ $9.82 $10.00 $9.41 $10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.13 0.02 0.12 0.04
Net realized and unrealized loss on
investments and foreign currency
transactions and translation............... 0.98 (0.18) 0.96 (0.59)
------- ------- ------- -------
Total from investment operations........... 1.11 (0.16) 1.08 (0.55)
------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... (0.13) (0.02) (0.09) (0.04)
Net realized gain.......................... (0.13) 0.00 (0.04) 0.00
------- ------- ------- -------
Total dividend distributions............... (0.26) (0.02) (0.13) (0.04)
------- ------- ------- -------
Net asset value, end of period............. $10.67 $9.82 $10.36 $9.41
======= ======= ======= =======
Net assets, end of period (in 000's)....... $19,048 $11,290 $13,057 $7,657
Aggregate return on share outstanding
during entire period....................... 11.28 % (1.54) % 11.47 % (5.63) %
Significant ratios :
Portfolio turnover......................... 60.95 % 0.00 % 54.85 % 0.00 %
Ratio of expenses to average
net assets................................. 1.35 % 1.35 % * 1.50 % 1.50 % *
Ratio of net investment income to
average net assets......................... 1.49 % 1.31 % * 1.01 % 1.84 % *
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... 11.39 % (6.28) % * 11.86 % (23.41) % *
</TABLE>
* Inception Date October 4, 1994
** Annualized
57
<PAGE> 115
PART C.
OTHER INFORMATION
<PAGE> 116
Item 24. Financial Statements and Exhibits
(a) Financial Statements:*
Report of Independent Auditors dated February 2, 1996
Statement of investments as of December 31, 1995
Statement of assets and liabilities as of December 31, 1995
Statement of operations for the period ended December 31, 1995
Statement of changes in net assets for the periods Ended
December 31, 1995 and 1994
Notes to Financial Statements, December 3l, 1995
(b) Exhibits, including those previously filed and incorporated
herein by reference.
(1) Articles of Incorporation of Manulife Series
Fund, Inc. Previously filed as Exhibit (1)
to Post-Effective Amendment No. 15, December
1, 1995.**
(1)(a) Articles Supplementary of Manulife Series
Fund, Inc. Previously filed as Exhibit
(1)(a) to Post-Effective Amendment No. 15,
December 1, 1995.**
(1)(b) Articles Supplementary of Manulife Series
Fund, Inc. Previously filed as Exhibit
(1)(b) to Post-Effective Amendment No. 15,
December 1, 1995.**
(1)(c) Articles Supplementary of Manulife Series
Fund, Inc. Previously filed as Exhibit
(1)(c) to Post-Effective Amendment No. 15,
December 1, 1995.**
(2) By-laws of Manulife Series Fund, Inc.,
previously filed as Exhibit (2) to
Post-Effective Amendment No. 8, May 1, 1991.
(4)(a) Specimen Certificate of Emerging Growth
Equity Fund Common Stock, previously filed as
Exhibit (4)(a) to Pre-Effective Amendment
No. 1, May 9, 1984.
(4)(b) Specimen Certificate of Balanced Assets Fund
Common Stock, previously filed as Exhibit
(4)(b) to Pre-Effective Amendment No. 1, May
9, 1984.
____________________
* Included in Part B of this registration statement.
** Filed electronically.
<PAGE> 117
(ii)
(4)(c) Specimen Certificate of Capital Growth Bond
Fund Common Stock, previously filed as
Exhibit (4)(c) to Pre-Effective Amendment
No. 1, May 9, 1984.
(4)(d) Specimen Certificate of Money-Market Fund
Common Stock, previously filed as Exhibit
(4)(d) to Pre-Effective Amendment No. 1, May
9, 1984.
(4)(e) Specimen Certificate of Common Stock Fund
Common Stock, previously filed as Exhibit
(4)(e) to Pre-Effective Amendment No. 4,
March 13, 1987.
(4)(f) Specimen Certificate of Real Estate
Securities Fund Common Stock, previously
filed as Exhibit (4)(f) to Post-Effective
Amendment No. 4, March 13, 1987.
(4)(g) Specimen Certificate of International Fund
Common Stock, previously filed as Exhibit
(4)(g) to Post-Effective Amendment No. 14,
March 1, 1994.
(4)(h) Specimen Certificate of Pacific Rim Emerging
Markets Fund Common Stock, previously filed
as Exhibit (4)(h) to Post-Effective Amendment
No. 14, March 1, 1994.
(4)(i) Specimen Stock Certificate of Equity Index
Fund. Previously filed as Exhibit (4)(i) to
Post-Effective Amendment No. 15, December 1,
1995.**
(5)(a) Investment Advisory Agreement Between
Manulife Series Fund, Inc. and Manufacturers
Adviser Corporation. Previously filed as
Exhibit (5)(a) to Post-Effective Amendment
No. 15, December 1, 1995.**
(5)(a)(i) Amendment to Investment Advisory Agreement
Between Manulife Series Fund, Inc. and
Manufacturers Adviser Corporation dated
September 30, 1994. Previously filed as
Exhibit (5)(a)(i) to Post-Effective Amendment
No. 15, December 1, 1995.**
(5)(a)(ii) Form of Amendment to Investment Advisory
Agreement Between Manulife Series Fund, Inc.
and Manufacturers Adviser Corporation.
Previously filed as Exhibit (5)(a)(ii) to
Post-Effective Amendment No. 15, December 1,
1995.**
(5)(b) Service Agreement Among The Manufacturers
Life Insurance Company, Manulife Series Fund,
Inc. and Manufacturers Adviser Corporation,
previously filed as Exhibit (5)(b) to
Pre-Effective Amendment No. 1, May 9, 1984.
** filed electronically.
<PAGE> 118
(iii)
(5)(b)(i) Service Agreement among The Manufacturers
Life Insurance Company, Manulife Series Fund,
Inc. and Manufacturers Adviser Corporation
dated October 4, 1994.
(8)(i) Custodian Agreement Between State Street Bank
and Trust Company and Manulife Series Fund,
Inc., previously filed as Exhibit (8) to
Post-Effective Amendment No. 9, February 28,
1992.
(8)(ii) Amendment to Custodian Agreement between
State Street Bank and Trust Company and
Manulife Series Fund, Inc., previously filed
as Exhibit (8)(ii) to Post-Effective
Amendment No. 14, March 1, 1994.
(9)(i) License Agreement For Use of Name Between The
Manufacturers Life Insurance Company and
Manulife Series Fund, Inc., previously filed
as Exhibit 9 to Registrant's registration
statement on Form N-1, July 27, 1983.
(9)(ii) Form of License Agreement Between Manulife
Series Fund, Inc. and Standard & Poor's.**
(10) Consent of Jones & Blouch L.L.P.
(11) Consent of Ernst & Young LLP.
(13) Investment Undertaking from The Manufacturers
Life Insurance Company of America dated May
3, 1984, previously filed as Exhibit 13 to
Post-Effective Amendment No. 1, December 14,
1984.
(13)(a) Investment Undertaking from The Manufacturers
Life Insurance Company of America dated
February 17, 1987, previously filed as
Exhibit 13(a) to Post-Effective Amendment No.
4, March 13, 1987.
(13)(b) Investment Undertaking from The Manufacturers
Life Insurance Company of America dated
October 4, 1994, previously filed as Exhibit
(13)(b) to Post-Effective Amendment No. 14,
February 28, 1995.
(13)(c) Form of Investment Undertaking from The
Manufacturers Life Insurance Company.
Previously filed as Exhibit (13)(c) to
Post-Effective Amendment No. 15, December 1,
1995.**
(16) Computation of performance quotations.
(17) Financial Data Schedules.
** Filed Electronically.
<PAGE> 119
Item 25. Persons Controlled by or Under Common Control with Registrant
Separate Accounts of The Manufacturers Life Insurance Company of
America ("Manufacturers Life of America"), a corporation organized under the
laws of the State of Michigan, own all of the Registrant's outstanding
securities. Shares held by such Separate Accounts will be voted as directed by
owners of life insurance and annuity contracts participating in such separate
accounts. Manufacturers Life of America is an indirect wholly-owned subsidiary
of The Manufacturers Life Insurance Company, a mutual life insurance company
organized under the laws of Canada. The subsidiaries of The Manufacturers Life
Insurance Company are as follows:
THE MANUFACTURERS LIFE INSURANCE COMPANY
(Subsidiaries Organization Chart
- - including certain Significant Investments)
The Manufacturers Life Insurance Company (Canada)
1. ManuLife Holdings (Hong Kong) Limited - H.K. (100%)
2. ManuLife Financial Systems (Hong Kong) Limited - H.K. (100%)
3. P.T. Asuransi Jiwa Dharmala Manulife - Indonesia (51%)
4. ManuLife (International) Limited - Bermuda (100%)
5. OUB Manulife Pte. Ltd. - Singapore (50%)
6. Manulife (Malaysia) SDN. BHD. - Malaysia (100%)
7. Manulife (Thailand) Ltd. - Thailand (100%)
8. Young Poong Manulife Insurance Company - Korea (50%)
9. Ennal, Inc. - Ohio (100%)
10. 495603 Ontario Limited - Ontario (100%)
11. 994744 Ontario Inc. - Ontario (100%)
12. 1056416 Ontario Limited - Ontario (100%)
13. 484551 Ontario Limited - Ontario (100%)
(a) 911164 Ontario Limited - Ontario (100%)
<PAGE> 120
14. NAWL (North American Wood Logan Holding Company) - Delaware (85%)
(a) Wood Logan Associate Inc. - Connecticut (85%)
(b) North American Security Life Insurance Company - Delaware (100%)
(i) NASL Financial Services, Inc. - Massachusetts (100%)
(ii) First North American Life Assurance Company - New York (100%)
(iii) North American Funds - Massachusetts (100%)
(iv) NASL Series Trust - Massachusetts (100%)
15. Domlife Realty Limited - Canada (100%)
16. Balmoral Developments Inc. - Canada (100%)
17. Cantay Holdings Inc. - Ontario (100%)
18. 576986 Ontario Inc. - Ontario (100%)
19. KY Holding Corporation - Canada (100%)
20. 172846 Canada Limited - Canada (100%)
21. First North American Realty, Inc. - Minnesota (100%)
22. North American Capital Corporation - Ontario (100%)
23. Elliott & Page Mutual Fund Corporation - Ontario (100%)
24. TBD Life Insurance Company - Canada (100%)
25. The North American Group Inc. - Canada (100%)
26. Capitol Bankers Life Insurance Company - Minnesota (100%)
27. Manulife Investment Management Corporation - Canada (100%)
(a) 159139 Canada Inc. - Canada (50%)
i. Altamira Management Ltd. - Canada (60.96%)
A. ACI2 Limited - Cayman (100%)
a/ Regent Pacific Group Limited-Cayman (63.8%)
a.1 Manulife Regent Investment Corporation - [ ]
Barbados (100%) [50%]
b.1 Manulife Regent Investment Asia Limited - [ ]
Hong Kong (100%) [ ]
B. Altamira Financial Services Inc. - Ontario (100%)
a/ AIS Securities (Partnership) - Ontario (100%) [ 5%]
b/ Altamira Investment Services Inc. - Ontario (100%)
(a) AIS Securities (Partnership) -
Ontario (100%) [95%]
(b) Altamira (Alberta) Ltd. - Alberta (100%)
(c) Capital Growth Financial Services Inc. - Ontario
(100%)
<PAGE> 121
28. Manulife International Investment Management Limited - U.K. (100%)
(a) Manulife International Fund Management Limited - U.K. (100%)
29. ManuCab Ltd. - Canada (100%)
(a) Plazcab Service Limited - Canada (100%)
30. Manulife Data Services Inc.- Barbados (100%)
(a) Manulife Regent Investment Corporation - Barbados - (100%) [50%]
(b) Manulife Regent Investment Asia Limited - Hong Kong (100%)
31. 16351 Canada Limited - Canada (100%)
32. Manufacturers Life Capital Corporation Inc. - Canada (100%)
33. Townvest Inc. - Ontario (100%)
34. Manulife Financial Holdings Limited - Ontario (100%)
(a) Family Financial Services Limited - Ontario (100%)
i. 742166 Ontario Inc. - Ontario (100%)
ii. Family Trust Corporation - Ontario (100%)
A. Family Financial Mortgage Corporation - Ontario (100%)
B. Family Realty Firstcorp Limited - Ontario (100%)
C. Thos. N. Shea Investment Corporation Limited
- Ontario (100%)
(b) Manulife Bank of Canada - Canada (100%)
i. Manulife Securities International Ltd. - Canada (100%)
ii. Cabot Financial Services Corporation - Ontario (100%)
iii.Cabot Investments Limited - Ontario (100%)
35. NALACO Mortgage Corporation - Ontario (100%)
(a) Underwater Gas Developers Limited - Ontario (100%)
36. Manulife (International) Reinsurance Limited - Bermuda (100%)
(a) Manulife (International) P&C Limited - Bermuda (100%)
(b) Manufacturers P&C Limited - Bermuda (100%)
37. FNA Financial Inc. - Canada (100%)
(a) NAL Resources Management Limited - Canada (100%)
(b) First North America Insurance Company - Canada (100%)
(c) NAL Trustco Inc. - Ontario (100%)
(d) North American Life Financial Services Inc. - Ontario (100%)
(e) Nalafund Investors Limited - Canada - (100%)
(f) Seamark Asset Management Ltd. - Canada (69.175%)
(g) Elliott & Page Limited - Ontario (100%)
38. NAL Resources Limited - Alberta (100%)
<PAGE> 122
39. Manulife Reinsurance Corporation (U.S.A.) - Michigan (100%)
(a) Manulife Reinsurance Limited - Bermuda (100%)
(b) Manulife Holding Corporation - Delaware (100%)
i. Manufacturers Life Mortgage Securities
Corporation - Delaware (100%)
ii. Underwriters International Inc. - Delaware (50%)
iii. Capital Design Corporation - California - (100%)
iv. ManEquity, Inc. - Colorado (100%)
v. Manulife Service Corporation - Colorado (100%)
(c) The Manufacturers Life Insurance Company (U.S.A.)
- Michigan (100%)
(d) The Manufacturers Life Insurance Company of America
- Michigan (100%)
i. Manulife Series Fund, Inc. - Maryland (100%)
ii. Manufacturers Adviser Corporation - Colorado (100%)
40. The Manufacturers Investment Corporation-Michigan (100%)
41. Manulife Property Management of Washington D.C., Inc. -
Washington, D.C. (100%)
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Emerging Growth Equity Fund 4
Common Stock
Balanced Assets Fund 4
Common Stock
Capital Growth Bond Fund 4
Common Stock
Money-Market Fund 4
Common Stock
Common Stock Fund 4
Common Stock
Real Estate Securities Fund 4
Common Stock
International Fund 4
Common Stock
Pacific Rim Emerging Markets 4
Fund Common Stock
Equity Index Fund
Common Stock 4
</TABLE>
<PAGE> 123
Item 27. Indemnification
(a) Undertaking pursuant to Rule 484. Insofar as indemnification for
liability arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a 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.
(b) Indemnification provisions. Under Section 2-418 of the Maryland
General Corporation Law, with respect to any proceeding against a present or
former director, officer, agent or employee (a "corporate representative") of
the Registrant, except a proceeding brought by or on behalf of the Registrant,
the Registrant may indemnify the corporate representative against expenses,
including attorneys' fees, and judgments, fines, penalties, and amounts paid in
settlement, if such expenses were actually and reasonably incurred by the
corporate representative in connection with the proceeding, if: (i) he acted in
good faith; (ii) in the case of conduct in his official capacity he reasonably
believed that his conduct was in the best interests of the Registrant, and in
all other cases he reasonably believed that his conduct was not opposed to the
best interests of the Registrant; and (iii) with respect to any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful.
The Registrant is also authorized under Section 2-418 of the Maryland General
Corporation Law to indemnify a corporate representative under certain
circumstances against reasonable expenses incurred in connection with the
defense of a suit or action by or in the right of the Registrant except where
the corporate representative has been adjudged liable to the Registrant. Under
the Registrant's Articles of Incorporation and By-laws, directors and officers
of Registrant are entitled to indemnification by the Registrant to the fullest
extent permitted under Maryland law and the Investment Company Act of 1940.
Reference is made to Article VI(4) of Registrant's Articles of Incorporation,
Article V of Registrant's By-laws and Section 2-418 of the Maryland General
Corporation Law.
Liability Insurance
At a meeting of the Executive Committee of the Board of Directors of
The Manufacturers Life Insurance Company held October 21, 1993, the purchase of
Directors and Officers (D&O) liability insurance was approved. It became
effective December 1, 1993. It provides global coverage for all Directors and
Officers of The Manufacturers Life Insurance Company and its subsidiaries.
<PAGE> 124
The coverage provided:
1. Insures Directors and Officers against loss arising from claims
against them for certain acts in cases where they are not indemnified
by The Manufacturers Life Insurance Company or a subsidiary.
2. Insures The Manufacturers Life Insurance Company against loss arising
from claims against Directors and Officers for certain wrongful acts,
but only where the corporation indemnifies the Directors or Officers
as required or permitted under applicable statutory or by- law
provisions.
In general, the D&O coverage encompasses:
- - past, present and future Directors and Officers of The Manufacturers
Life Insurance Company and subsidiaries
- - defense costs and settlements (if legally obligated to be paid)
resulting from third party claims in connection with 'wrongful acts'
committed by a Director or Officer within the scope of their duties
- - claims made basis (i.e. policy responds to claims filed/reported
during the policy term, including claims arising from events
transpiring before the policy was in force as long as no
Director/Officer was aware of the events prior to coverage placement).
Item 28. Business and Other Connections of Investment Adviser
Manufacturers Adviser Corporation ("Manager") is engaged in providing
investment management services to the Registrant. The Manager currently
provides investment management services to one other client and intends to
provide such services to others. The names of each director and officer of the
Manager and the business of a substantial nature of each during the past two
fiscal years are as follows:
<TABLE>
<CAPTION>
Position With Business of a Substantial
Name Manager Nature During Past Two Years
- ---------------- ------------- ----------------------------
<S> <C> <C>
George Corey Director President, Exxel Management and
Marketing Corporation, Flemington, New Jersey
(management and marketing consulting) since 1983
Bernadette B. Murphy Director Executive Director, Strategies and
Selections, M. Kimelman & Co., l00 Park Avenue, New York, N.Y.
George Slye Director Founding Partner, Vice Chairman and part owner, Spaulding
and Slye Corporation Burlington, Massachusetts (real estate
development and construction); Trustee, University Hospital,
Boston, Massachusetts; Director, Hill Development
Corporation, Middletown, Connecticut
</TABLE>
<PAGE> 125
<TABLE>
<CAPTION>
Position With Business of a Substantial
Name Manager Nature During Past Two Years
- ---------------- ------------- ----------------------------
<S> <C> <C>
Richard R. Director Director of Research, Neuberger & Berman,
Schmaltz 605 Third Avenue, New York, N.Y.
10158-3698, 1992 to present
Joseph B. Mounsey President Senior Vice President, Investments, The
Manufacturers Life Insurance Company,
Toronto, Canada, 1994 - present
Robert Laughton Vice President Investment Management, U.S. Fixed Income,
The Manufacturers Life Insurance
Company, Toronto, Canada
Mark A. Schmeer Vice President Investment Management, U.S. Equities, The
Manufacturers Life Insurance Company - 1995-
present; Vice President, Sun Life Investment
Management - 1993-1995
Douglas H. Myers Vice President, Assistant Vice President and Controller,
Compliance and U.S. Individual, 1988 - present, The Manu-
Vice President, facturers Life Insurance Company
Finance and
Treasurer
David Chia Vice President, Compliance Audit Officer, 1993-present,
Compliance The Manufacturers Life Insurance Company
London Branch
Catherine Addison Vice President Investment Management, U.S. Fixed Income,
The Manufacturers Life Insurance Company
Stephen Hill Vice President Investment Management, The Manufacturers Life
Insurance Company (London), 1995-present; Director,
Invesco Asset Management, 1993-1994
Emilia Panadero Vice President Investment Management, The Manufacturers
Perez Life Insurance Company (London)
Robert Lutzko Vice President Investment Management, U.S. Equities, The Manufacturers
Life Insurance Company - 1995-present; U.S. Investment
Manager, Workers Compensation Board, Toronto - 1989-1995
Mark Andrew Hirst Vice President Investment Management, The Manufacturers Life
Insurance Company (London)
</TABLE>
<PAGE> 126
<TABLE>
<CAPTION>
Position With Business of a Substantial
Name Manager Nature During Past Two Years
- ---------------- ------------- ----------------------------
<S> <C> <C>
Richard James Vice President Investment Management, The Manufacturers
Crook Life Insurance Company (London)
Leslie Grober Vice President Investment Management, U.S. Equities, The
Manufacturers Life Insurance Company, Toronto,
Canada - 1994-present; Investment Representative,
Toronto-Dominion Bank - 1991-1993
Rhonda Chang Vice President Investment Management, The Manufacturers Life
Insurance Company, Toronto, Canada - 1994-present;
Investment Analyst, American International
Group - 1990-1994
Christian Assistant Vice Investment Marketing, The Manufacturers
Montini President Life Insurance Company, Toronto, Canada - 1995-present;
Investment Marketing, North American Life Assurance
Company, Toronto, Canada - 1991-1995
Sheri L. Kocen Secretary and Senior Counsel, 1990 - present
General Counsel The Manufacturers Life Insurance Company, Toronto, Canada
</TABLE>
Item 29. Principal Underwriters
Not applicable.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained
under Section 31(a) of the Investment Company Act of 1940 are kept by
Manufacturers Adviser Corporation, 200 Bloor Street East, Toronto, Ontario M4W
1E5, the Registrant's investment manager.
Item 31. Management Services
Not applicable.
<PAGE> 127
Item 32. Undertakings
Undertaking to provide annual report upon request
(a) Registrant undertakes to file an amendment to the registration
statement with certified financial statements showing the initial capital
received before accepting subscriptions from any persons in excess of 25 if the
Registrant proposes to raise its initial capital pursuant to Section 14(a)(3)
of the 1940 Act.
(b) 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 1993 Act registration
statement.
(c) Registrant undertakes to provide a copy of Registrant's latest
annual report to shareholders to each person to whom a prospectus is delivered
upon request and without charge.
<PAGE> 128
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Manulife Series Fund, Inc., has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in this City of Toronto, Province of
Ontario, Canada on the 19th day of April, 1996.
MANULIFE SERIES FUND, INC.
By:/s/ Donald A. Guloien
----------------------------------
Donald A. Guloien, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ John D. Richardson Director and Chairman April 19, 1996
- -----------------------------
John D. Richardson
/s/ Donald A. Guloien Director and President April 19, 1996
- ----------------------------- (Principal Executive
Donald A. Guloien Officer)
/s/ Edward C. Balzarotti Director April 19, 1996
- -----------------------------
Edward C. Balzarotti
/s/ Francis J. Knott Director April 19, 1996
- -----------------------------
Francis J. Knott
/s/ F. David Rolwing Director April 19, 1996
- -----------------------------
F. David Rolwing
/s/ Douglas H. Myers Vice President-Finance April 19, 1996
- ----------------------------- and Treasurer (Principal
Douglas H. Myers Financial and Accounting
Officer)
</TABLE>
<PAGE> 129
EXHIBITS
<PAGE> 130
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- ------------------
<S> <C> <C>
(1) Articles of Incor- Previously filed as
poration of Manulife Exhibit (1) to Post-
Series Fund, Inc.** Effective Amendment
No. 15, December 1, 1995.
(1)(a) Articles Supplementary Previously filed as
of Manulife Series Fund, Exhibit (1)(a) to Post-
Inc.** Effective Amendment
No. 15, December 1, 1995.
(1)(b) Articles Supplementary of Previously filed as
Manulife Series Fund, Inc.** Exhibit (1)(b) to Post-
Effective Amendment
No. 15, December 1, 1995.
(1)(c) Articles Supplementary of Previously filed as
Manulife Series Fund, Inc.** Exhibit (1)(c) to Post-Effective
Amendment No. 15, December 1, 1995.
(2) By-laws of Manulife Series Previously filed as
Fund, Inc. Exhibit (2) to Post-Effective
Amendment No. 8, May 1, 1991.
(4)(a) Specimen Certificate of Previously filed as
Emerging Growth Equity Exhibit (4)(a) to Pre-
Fund Common Stock Effective Amendment
No. 1, May 9, 1984.
(4)(b) Specimen Certificate Previously filed as
of Balanced Assets Exhibit (4)(b) to Pre-
Fund Common Stock Effective Amendment
No. 1, May 9, 1984.
(4)(c) Specimen Certificate Previously filed as
of Capital Growth Bond Exhibit (4)(c) to Pre-
Fund Common Stock Effective Amendment
No. 1, May 9, 1984.
</TABLE>
** Filed Electronically.
<PAGE> 131
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- ------------------
<S> <C> <C>
(4)(d) Specimen Certificate Previously filed as
of Money-Market Fund Exhibit (4)(d) to Pre-
Common Stock Effective Amendment
No. 1, May 9, 1984.
(4)(e) Specimen Certificate Previously filed as
of Common Stock Fund Exhibit (4)(e) to Pre-
Common Stock Effective Amendment
No. 4, March 13, 1987.
(4)(f) Specimen Certificate Previously filed as
of Real Estate Securities Exhibit (4)(f) to
Fund Common Stock Post-Effective Amendment
No. 4, March 13, 1987.
(4)(g) Specimen Certificate Previously filed as
of International Fund Exhibit (4)(g) to Post-
Common Stock. Effective Amendment
No. 12, March 1, 1994.
(4)(h) Specimen Certificate of Previously filed as
Pacific Rim Emerging Exhibit (4)(h) to Post-
Markets Fund Common Stock Effective Amendment
No. 12, March 1, 1994.
(4)(i) Specimen Stock Certificate Previously filed as
of Equity Index Fund Exhibit (4)(i) to Post-
Common Stock.** Effective Amendment No. 15,
December 1, 1995.
(5)(a) Investment Advisory Previously filed as
Agreement Between Manulife Exhibit (5)(a) to Post-
Series Fund, Inc. and Effective Amendment
Manufacturers Adviser No. 15, December 1,
Corporation.** 1995.
(5)(a)(i) Amendment to Investment Previously filed as
Advisory Agreement Between Exhibit (5)(a)(i) to
Manulife Series Fund, Inc. Post-Effective Amendment
and Manufacturers Adviser No. 15, December 1, 1995.
Corporation dated September
30, 1994.**
</TABLE>
** Filed Electronically.
<PAGE> 132
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- ------------------
<S> <C> <C>
(5)(a)(ii) Form of Amendment to Invest- Previously filed as
ment Advisory Agreement Exhibit (5)(a)(ii) to
Between Manulife Series Fund, Post-Effective Amendment
Inc.,and Manufacturers No. 15, December 1, 1995.
Adviser Corporation.**
(5)(b) Service Agreement Among Previously filed as
The Manufacturers Life Exhibit (5)(b) to Pre-
Insurance Company, Manu- Effective Amendment
life Series Fund, Inc. No. 1, May 9, 1984.
and Manufacturers Adviser
Corporation.
(5)(b)(i) Service Agreement among Previously filed as
The Manufacturers Life Exhibit (5)(b)(i) to
Insurance Company, Manulife to Post-Effective
Series Fund, Inc. and Amendment No. 14,
Manufacturers Adviser February 28, 1995.
Corporation.
(8)(i) Custodian Agreement Between Previously filed as
State Street Bank and Trust Exhibit (8) to Post-
Company and Manulife Series Effective Amendment
Fund, Inc. No. 9, February 28,
1992.
(8)(ii) Amendment to Custodian Previously filed as
Agreement between State Exhibit (8)(ii) to
Street Bank and Trust Post-Effective Amend-
Company and Manulife Series ment No. 14, March 1,
Fund, Inc. 1994.
(9)(i) License Agreement For Use Previously filed as
of Name Between The Manu- Exhibit 9 to Regis-
facturers Life Insurance trant's registration
Company and Manulife Series statement on Form N-1,
Fund, Inc. July 27, 1983.
(9)(ii) Form of License Agreement
Between Manulife Series Fund,
Inc. and Standard & Poor's.**
(10) Consent of Jones & Blouch L.L.P.
(11) Consent of Ernst & Young LLP.
</TABLE>
<PAGE> 133
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- ------------------
<S> <C> <C>
(13) Investment Undertaking Previously filed as
from The Manufacturers Exhibit 13 to Post-
Life Insurance Company of Effective Amendment
America dated May 3, 1984 No. 1, December 14, 1984.
(13)(a) Investment Undertaking Previously filed as
from The Manufacturers Exhibit 13(a) to Post-
Life Insurance Company of Effective Amendment
America dated February 17, No. 4, March 13, 1984.
1987
(13)(b) Investment Undertaking Previously filed as
from The Manufacturers Exhibit (13)(b) to Post-
Life Insurance Company of Effective Amendment No.
America dated October 4, 14, February 28, 1995.
1994
(13)(c) Form of Investment Under- Previously filed as
Taking from the Manufacturers Exhibit (13)(c) to Post-
Life Insurance Company.** Effective Amendment
No. 15, December 1, 1995.
(16) Computation of performance
quotations.
(17) Financial Data Schedules.
</TABLE>
<PAGE> 1
EXHIBIT (9)(ii)
<PAGE> 2
LICENSE AGREEMENT
LICENSE AGREEMENT, dated as of (_____________________) (the "Commencement
Date") by and between STANDARD & POOR'S, a division of McGraw- Hill, Inc.
("S&P"), a New York corporation, having an office at 25 Broadway, New York, New
York 10004, and (____________________) ("Licensee"), a (____________________)
having an office at (____________________).
WHEREAS, S&P compiles, calculates, maintains and owns rights in and to the
S&P 500 Composite Stock Price Index and to the proprietary data therein
contained (such rights being hereinafter individually and collectively referred
to as the "S&P 500 Index"); and
WHEREAS, S&P uses in commerce and has trade name and trademark rights to
the designations "Standard & Poor's(R)", "S&P(R)", "Standard & Poor's 500",
"S&P 500(R)" and "500", in connection with the S&P 500 Index (such rights being
hereinafter individually and collectively referred to as the "S&P Marks"); and
WHEREAS, Licensee wishes to use the S&P 500 Index as a component of the
product or products described in Exhibit A attached hereto and made a part
hereof (individually and collectively referred to as the "Product"); and
WHEREAS, Licensee wishes to use the S&P Marks in connection with the
marketing and/or promotion of the Product and in connection with making
disclosure about the Product under applicable law, rules and regulations in
order to indicate that S&P is the source of the S&P 500 Index; and
______________________________________________________________________________
S&P 500 STND. FORM LICENSE AGREEMENT (PUBLIC FUNDS)
<PAGE> 3
WHEREAS, Licensee wishes to obtain S&P's authorization to use the S&P 500
Index and the S&P Marks in connection with the Product pursuant to the terms
and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of License.
(a) Subject to the terms and conditions of this Agreement, S&P hereby
grants to Licensee a non-transferable, non-exclusive license (i) to use the S&P
500 Index as a component of the Product to be marketed and/or promoted by
Licensee and (ii) to use and refer to the S&P Marks in connection with the
distribution, marketing and promotion of the Product (including in the name of
the Product) and in connection with making such disclosure about the Product as
Licensee deems necessary or desirable under any applicable law, rules,
regulations or provisions of this Agreement, but, in each case, only to the
extent necessary to indicate the source of the S&P 500 Index. It is expressly
agreed and understood by Licensee that no rights to use the S&P 500 Index and
the S&P Marks are granted hereunder other than those specifically described and
expressly granted herein.
(b) S&P agrees that no person or entity (other than the Licensee) shall
need to obtain a license from S&P with respect to the Product.
2. Term.
The term of this Agreement shall commence on the Commencement Date and
shall continue in effect thereafter until it is terminated in accordance with
its terms.
3. License Fees.
(a) Licensee shall pay to S&P the license fees ("License Fees") specified
and provide the data called for in Exhibit B, attached hereto and made a part
hereof.
<PAGE> 4
(b) During the term of this Agreement and for a period of one (1) year
after its termination, S&P shall have the right, during normal business hours
and upon reasonable notice to Licensee, to audit on a confidential basis the
relevant books and records of Licensee to determine that License Fees have been
accurately determined. The costs of such audit shall be borne by S&P unless it
determines that it has been underpaid by five percent (5%) or more; in such
case, costs of the audit shall be paid by Licensee.
4. Termination.
(a) At any time during the term of this Agreement, either party may give
the other party sixty (60) days prior written notice of termination if the
terminating party believes in good faith that material damage or harm is
occurring to the reputation or goodwill of that party by reason of its
continued performance hereunder, and such notice shall be effective on the date
specified therein of such termination, unless the other party shall correct the
condition causing such damage or harm within the notice period.
(b) In the case of breach of any of the material terms or conditions of
this Agreement by either party, the other party may terminate this Agreement by
giving sixty (60) days prior written notice of its intent to terminate, and
such notice shall be effective on the date specified therein for such
termination unless the breaching party shall correct such breach within the
notice period.
(c) S&P shall have the right, in its sole discretion, to cease
compilation and publication of the S&P 500 Index and, in such event, to
terminate this Agreement if S&P does not offer a replacement or substitute
index. In the event that S&P intends to discontinue the S&P 500 Index, S&P
shall give Licensee at least one (1) year's written notice prior to such
discontinuance, which notice shall specify whether a replacement or substitute
index will be made available. Licensee shall have the option hereunder within
sixty (60) days after receiving such written notice from S&P to notify S&P in
writing of its intent to use the replacement or substitute index, if any, under
the terms of this Agreement. In the event that Licensee does not exercise such
option or no substitute or replacement index is made available,
<PAGE> 5
this Agreement shall be terminated as of the date specified in the S&P notice
and the License Fees to the date of such termination shall be computed as
provided in Subsection 4(f).
(d) Licensee may terminate this Agreement upon ninety (90) days prior
written notice to S&P if (i) Licensee is informed of the final adoption of any
legislation or regulation or the issuance of any interpretation that in
Licensee's reasonable judgment materially impairs Licensee's ability to market
and/or promote the Product; (ii) any material litigation or regulatory
proceeding regarding the Product is threatened or commenced; or (iii) Licensee
elects to terminate the public offering or other distribution of the Product,
as may be applicable. In such event the License Fees to the date of such
termination shall be computed as provided in Subsection 4(f).
(e) S&P may terminate this Agreement upon ninety (90) days (or upon such
lesser period of time if required pursuant to a court order) prior written
notice to Licensee if (i) S&P is informed of the final adoption of any
legislation or regulation or the issuance of any interpretation that in S&P's
reasonable judgment materially impairs S&P's ability to license and provide the
S&P 500 Index and S&P Marks under this Agreement in connection with such
Product; or (ii) any litigation or proceeding is threatened or commenced and
S&P reasonably believes that such litigation or proceeding would have a
material and adverse effect upon the S&P Marks and/or the S&P 500 Index or upon
the ability of S&P to perform under this Agreement. In such event the License
Fees to the date of such termination shall be computed as provided in
Subsection 4(f).
(f) In the event of termination of this Agreement as provided in
Subsections 4(a), (b), (c), (d) or (e), the License Fees to the date of such
termination shall be computed by prorating the amount of the applicable annual
License Fees shown in Exhibit B on the basis of the number of elapsed days in
the current term. Any excess License Fees amount paid by Licensee for the
current term shall be refunded by S&P.
(g) Upon termination of this Agreement, Licensee shall cease to use the
S&P 500 Index and the S&P Marks in connection with the Product; provided that
<PAGE> 6
Licensee may continue to utilize any previously printed materials which contain
the S&P Marks for a period of ninety (90) days following such termination.
5. S&P's Obligations.
(a) It is the policy of S&P to prohibit its employees who are directly
responsible for changes in the components of the S&P 500 Index from purchasing
or beneficially owning any interest in the Product and S&P believes that its
employees comply with such policy. Licensee shall have no responsibility for
ensuring that such S&P employees comply with such S&P policy and shall have no
duty to inquire whether any purchasers or sellers of the Product are such S&P
employees. S&P shall have no liability to the Licensee with respect to its
employees' adherence or failure to adhere to such policy.
(b) S&P shall not and is in no way obliged to engage in any marketing or
promotional activities in connection with the Product or in making any
representation or statement to investors or prospective investors in connection
with the promotion by Licensee of the Product.
(c) S&P agrees to provide reasonable support for Licensee's development
and educational efforts with respect to the Product as follows: (i) S&P shall
provide Licensee, upon request but subject to any agreements of confidentiality
with respect thereto, copies of the results of any marketing research conducted
by or on behalf of S&P with respect to the S&P 500 Index; and (ii) S&P shall
respond in a timely fashion to any reasonable requests for information by
Licensee regarding the S&P 500 Index.
(d) S&P or its agent shall calculate and disseminate the S&P 500 Index
at least once each fifteen (15) seconds in accordance with its current
procedures, which procedures may be modified by S&P.
(e) S&P shall promptly correct or instruct its agent to correct any
mathematical errors made in S&P's computations of the S&P 500 Index which are
brought to S&P's attention by Licensee, provided that nothing in this Section 5
shall give Licensee the right to exercise any judgment or require any
<PAGE> 7
changes with respect to S&P's method of composing, calculating or determining
the S&P 500 Index; and, provided further, that nothing herein shall be deemed
to modify the provisions of Section 9 of this Agreement.
6. Informational Materials Review.
Licensee shall use its best efforts to protect the goodwill and reputation
of S&P and of the S&P Marks in connection with its use of the S&P Marks under
this Agreement. Licensee shall submit to S&P for its review and approval all
informational materials pertaining to and to be used in connection with the
Product, including, where applicable, all prospectuses, plans, registration
statements, advertisements, brochures and promotional and any other similar
informational materials (including documents required to be filed with
governmental or regulatory agencies) that in any way use or refer to S&P, the
S&P 500 Index, or the S&P Marks (the "Informational Materials"). S&P's approval
shall be required with respect to the use of and description of S&P, the S&P
Marks and the S&P 500 Index and shall not be unreasonably withheld or delayed
by S&P. Specifically, S&P shall notify Licensee, by facsimile transmission in
accordance with Subsection 12(d) hereof, of its approval or disapproval of any
Informational Materials within forty-eight (48) hours (excluding Saturday,
Sunday and New York Stock Exchange Holidays) following receipt thereof from
Licensee. Any disapproval shall state S&P's reasons therefor. Any failure by
S&P to respond within such forty-eight (48) hour period shall be deemed to
constitute a waiver of S&P's right to review such Informational Materials.
Informational Materials shall be addressed to S&P, c/o Shirley Petersen,
Product Manager - Index Services, at the address specified in Subsection 12(d).
Once Informational Materials have been approved by S&P, subsequent
Informational Materials which do not alter the use or description of S&P, the
S&P Marks or the S&P 500 Index need not be submitted for review and approval by
S&P.
7. Protection of Value of License.
(a) During the term of this Agreement, S&P shall use its best efforts to
maintain in full force and effect federal registrations for "Standard &
Poor's(R)", "S&P(R)" and "S&P 500(R)". S&P shall at S&P's own expense and sole
<PAGE> 8
discretion exercise S&P's common law and statutory rights against infringement
of the S&P Marks, copyrights and other proprietary rights.
(b) Licensee shall cooperate with S&P in the maintenance of such rights
and registrations and shall take such actions and execute such instruments as
S&P may from time to time reasonably request, and shall use the following
notice when referring to the S&P 500 Index or the S&P Marks in any
Informational Material:
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's
500", and "500" are trademarks of McGraw-Hill, Inc. and have been
licensed for use by ____________________. The Product is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's
makes no representation regarding the advisability of investing in the
Product.
or such similar language as may be approved in advance by S&P, it being
understood that such notice need only refer to the specific S&P Marks referred
to in the Informational Material
8. Proprietary Rights.
(a) Licensee acknowledges that the S&P 500 Index is selected,
coordinated, arranged and prepared by S&P through the application of methods
and standards of judgment used and developed through the expenditure of
considerable work, time and money by S&P. Licensee also acknowledges that the
S&P 500 Index and the S&P Marks are the exclusive property of S&P, that S&P has
and retains all proprietary rights therein (including, but not limited to
trademarks and copyrights) and that the S&P 500 Index and its compilation and
composition and changes therein are in the control and discretion of S&P.
(b) S&P reserves all rights with respect to the S&P 500 Index and the
S&P Marks except those expressly licensed to Licensee hereunder.
(c) Each party shall treat as confidential and shall not disclose or
transmit to any third party any documentation or other written materials that
<PAGE> 9
are marked as "Confidential and Proprietary" by the providing party
("Confidential Information"). Confidential Information shall not include (i)
any information that is available to the public or to the receiving party
hereunder from sources other than the providing party (provided that such
source is not subject to a confidentiality agreement with regard to such
information) or (ii) any information that is independently developed by the
receiving party without use of or reference to information from the providing
party. Notwithstanding the foregoing, either party may reveal Confidential
Information to any regulatory agency or court of competent jurisdiction if such
information to be disclosed is (a) approved in writing by the other party for
disclosure or (b) required by law, regulatory agency or court order to be
disclosed by a party, provided, if permitted by law, that prior written notice
of such required disclosure is given to the other party and provided further
that the providing party shall cooperate with the other party to limit the
extent of such disclosure. The provisions of this Subsection 8(C) shall survive
any termination of this Agreement for a period of five (5) years from
disclosure by either party to the other of the last item of such Confidential
Information.
9. Warranties; Disclaimers.
(a) S&P represents and warrants that S&P has the right to grant the
rights granted to Licensee herein and that, subject to the terms and conditions
of this Agreement, the license granted herein shall not infringe any trademark,
copyright or other proprietary right of any person not a party to this
Agreement.
(b) Licensee agrees expressly to be bound itself by and furthermore to
include all of the following disclaimers and limitations in each prospectus
relating to the Product and upon request to furnish a copy thereof to S&P:
The Product is not sponsored, endorsed, sold or promoted by Standard &
Poor's ("S&P"). S&P makes no representation or warranty, express or implied, to
the owners of the Product or any member of the public regarding the
advisability of investing in securities generally or in the Product
particularly or the ability of the S&P 500 Index to track general stock market
<PAGE> 10
performance. S&P's only relationship to the Licensee is the licensing of
certain trademarks and trade names of S&P and of the S&P 500 Index which is
determined, composed and calculated by S&P without regard to the Licensee or
the Product. S&P has no obligation to take the needs of the Licensee or the
owners of the Product into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and has not
participated in the determination of the prices and amount of the Product or
the timing of the issuance or sale of the Product or in the determination or
calculation of the equation by which the Product is to be converted into cash.
S&P has no obligation or liability in connection with the administration,
marketing or trading of the Product.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF SUCH DAMAGES.
Any changes in the foregoing disclaimers and limitations must be approved
in advance in writing by an authorized officer of S&P.
(c) Each party represents and warrants to the other that it has the
authority to enter into this Agreement according to its terms and that its
performance does not violate any laws, regulations or agreements applicable to
it.
(d) Licensee represents and warrants to S&P that the Product shall at
all times comply with the description in Exhibit A.
<PAGE> 11
(e) Licensee represents and warrants to S&P that the Product shall not
violate any applicable law, including but not limited to banking, commodities
and securities laws.
(f) Neither party shall have any liability for lost profits or indirect,
punitive, special, or consequential damages arising out of this Agreement, even
if notified of the possibility of such damages. Without diminishing the
disclaimers and limitations set forth in Subsection 9(b), in no event shall the
cumulative liability of S&P to Licensee exceed the average annual License Fees
actually paid to S&P hereunder.
(g) Use of any marks by Licensee in connection with its Product
(including in the name of such Product) which are not the S&P Marks is at
Licensee's sole risk.
(h) The provisions of this Section 9 shall survive any termination of
this Agreement.
10. Indemnification.
(a) Licensee shall indemnify and hold harmless S&P, its affiliates and
their officers, directors, employees and agents against any and all judgments,
damages, costs or losses of any kind (including reasonable attorneys' and
experts' fees) as a result of any claim, action or proceeding that arises out
of or relates to (a) this Agreement, except insofar as it relates to a breach
by S&P of its representations or warranties hereunder, or (b) the Product;
provided, however, that S&P notifies Licensee promptly of any such claim,
action or proceeding. Licensee shall periodically reimburse S&P for its
reasonable expenses incurred under this Subsection lO(a). S&P shall have the
right, at its own expense, to participate in the defense of any claim, action
or proceeding against which it is indemnified hereunder; provided, however, it
shall have no right to control the defense, consent to judgment, or agree to
settle any such claim, action or proceeding without the written consent of
Licensee without waiving the indemnity hereunder. Licensee, in the defense of
any such claim, action or proceeding except with the written consent of S&P,
shall not consent to entry of any judgment or enter into any settlement which
<PAGE> 12
either (a) does not include, as an unconditional term, the grant by the
claimant to S&P of a release of all liabilities in respect of such claims or
(b) otherwise adversely affects the rights of S&P. This provision shall survive
the termination or expiration of this Agreement.
(b) S&P shall indemnify and hold harmless Licensee, its affiliates and
their officers, directors, employees and agents against any and all judgments,
damages, costs or losses of any kind (including reasonable attorneys' and
experts' fees) as a result of any claim, action, or proceeding that arises out
of or relates to any breach by S&P of its representations or warranties under
this Agreement; provided, however, that (a) Licensee notifies S&P promptly of
any such claim, action or proceeding; (b) Licensee grants S&P control of its
defense and/or settlement; and (c) Licensee cooperates with S&P in the defense
thereof. S&P shall periodically reimburse Licensee for its reasonable expenses
incurred under this Subsection lO(b). Licensee shall have the right, at its own
expense, to participate in the defense of any claim, action or proceeding
against which it is indemnified hereunder; provided, however, it shall have no
right to control the defense, consent to judgment, or agree to settle any such
claim, action or proceeding without the written consent of S&P without waiving
the indemnity hereunder. S&P, in the defense of any such claim, action or
proceeding, except with the written consent of Licensee, shall not consent to
entry of any judgment or enter into any settlement which either (a) does not
include, as an unconditional term, the grant by the claimant to Licensee of a
release of all liabilities in respect of such claims or (b) otherwise adversely
affects the rights of Licensee. This provision shall survive the termination or
expiration of this Agreement.
11. Suspension of Performance.
Neither S&P nor Licensee shall bear responsibility or liability for any
losses arising out of any delay in or interruptions of their respective
performance of their obligations under this Agreement due to any act of God,
act of governmental authority, act of the public enemy or due to war, the
outbreak or escalation of hostilities, riot, fire, flood, civil commotion,
insurrection, labor difficulty (including, without limitation, any strike, or
other work stoppage or slow down), severe or adverse weather conditions,
<PAGE> 13
communications line failure, or other similar cause beyond the reasonable
control of the party so affected.
12. Other Matters.
(a) This Agreement is solely and exclusively between the parties hereto
and shall not be assigned or transferred by either party, without the prior
written consent of the other party, and any attempt to so assign or transfer
this Agreement without such written consent shall be null and void.
(b) This Agreement constitutes the entire agreement of the parties
hereto with respect to its subject matter and may be amended or modified only
by a writing signed by duly authorized officers of both parties. This Agreement
supersedes all previous agreements between the parties with respect to the
subject matter of this Agreement. There are no oral or written collateral
representations, agreements, or understandings except as provided herein.
(c) No breach, default, or threatened breach of this Agreement by
either party shall relieve the other party of its obligations or liabilities
under this Agreement with respect to the protection of the property or
proprietary nature of any property which is the subject of this Agreement.
(d) Except as set forth in Section 6 hereof with respect to Informational
Materials, all notices and other communications under this Agreement shall be
(i) in writing, (ii) delivered by hand, by registered or certified mail, return
receipt requested, or by facsimile transmission to the address or facsimile
number set forth below or such address or facsimile number as either party
shall specify by a written notice to the other and (iii) deemed given upon
receipt.
Notice to S&P: Standard & Poor's
25 Broadway
New York,New York 10004
Attn: James G. Branscome
Senior Vice President
Equity Information Services
<PAGE> 14
Fax #: (212) 412-0294
Notice to Licensee: _____________________________
_____________________________
_____________________________
Attn: ______________________
Fax #: _____________________
(e) This Agreement shall be interpreted, construed and enforced in
accordance with the laws of the State of New York.
(f) Each party agrees that in connection with any legal action or
proceeding arising with respect to this Agreement, they will bring such action
or proceeding only in the United States District Court for the Southern
District of New York or in the Supreme Court of the State of New York in and
for the First Judicial Department and each party agrees to submit to the
jurisdiction of such court and venue in such court and to waive any claim that
such court is an inconvenient forum.
IN WITNESS WHEREOF, the parties have caused this Ageement to be executed as of
the date first set forth above.
STANDARD AND POOR'S
a division of McGraw-Hill, Inc.
BY: __________________________ BY: __________________________
TITLE: _______________________ TITLE: _______________________
<PAGE> 15
EXHIBIT A
[For Publicly Offered Funds]
Product
Product: [ ] (the "Product") is a publicly offered
mutual fund whose investment objective is to track the price and yield
performance of publicly-traded common stocks of companies as represented by the
S&P 500 Index.
<PAGE> 16
EXHIBIT B
LICENSE FEES
Licensee shall pay S&P License Fees computed as follows:
The annual License Fees shall be the greater of $50,000 (the "Minimum
Annual Fee") or 1 basis point (.0001) of the average daily net assets of the
Product computed quarterly. The Minimum Annual Fee shall be payable on the
Commencement Date. Amounts in excess of the Minimum Annual Fee shall be paid to
S&P within thirty (30) days after the close of each calendar quarter in which
they are incurred; each such payment shall be accompanied by a statement
setting forth the basis for its calculation. For the first year of this
Agreement, the annual License Fees for the Product shall not exceed $50,000
(the "Maximum Annual Fee"); thereafter, the Maximum Annual Fee shall be
increased annually on each anniversary of the Commencement Date by the amount
of the increase (if any) in the Consumer Price Index ("CPI") for Urban
Consumers, All Items, as issued by the Bureau of Labor Statistics, U.S.
Department of Labor, over the prior twelve month period.
<PAGE> 1
EXHIBIT (10)
<PAGE> 2
Jones & Blouch L.L.P.
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007
(202) 223-3500
April 22, 1996
The Board of Directors
Manulife Series Fund, Inc.
200 Bloor Street East
Toronto, Ontario M4W 1E5
Dear Sirs:
We hereby consent to the reference to this firm under the caption
"Legal Matters" in the Statement of Additional Information included in
post-effective amendment No. 17 to the registration statement on Form N-1A, to
be filed with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, File No. 2-85454 (amendment No. 18 to the registration statement
under the Investment Company Act of 1940) by Manulife Series Fund, Inc.
Very truly yours,
Jones & Blouch L.L.P.
Jones & Blouch L.L.P.
<PAGE> 1
EXHIBIT (11)
<PAGE> 2
Consent of Independent Auditors
We consent to the references to our firm under the captions "Condensed Financial
Information" and "Experts" and to the use of our report dated February 2, 1996
accompanying the financial statements of Manulife Series Fund, Inc. in
Post-effective Amendment No. 17 to the Registration Statement No. 2-85454 on
Form N-1A and related Prospectus and Statement of Additional Information of
Manulife Series Fund, Inc.
Ernst & Young LLP
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
April 22, 1996
<PAGE> 1
EXHIBIT 16
<PAGE> 2
EMERGING GROWTH EQUITY FUND
TOTAL RETURN SINCE INCEPTION
<TABLE>
<CAPTION>
Shares
A B A/B Purchased
Initial Dividend With Shares
Investment Per Share NAV Dividends Outstanding
---------- --------- --- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
JUNE 26, 1984 $1,000 10.1195 98.8191
MARCH 15, 1985 0.4413 11.5057 0.0384 3.7947 102.6138
APRIL 30, 1985 0.0261 10.8096 0.0024 0.2463 102.8601
JULY 30, 1985 0.0343 12.3338 0.0028 0.2880 103.1481
OCTOBER 31, 1985 0.0285 11.3848 0.0025 0.2579 103.4060
MARCH 14, 1986 1.5112 12.3582 0.1223 12.6466 116.0526
APRIL 30, 1986 0.0264 11.9873 0.0022 0.2553 116.3079
APRIL 30, 1987 0.0049 14.1421 0.0003 0.0349 116.3428
JULY 30, 1987 0.0140 13.8992 0.0010 0.1163 116.4591
DECEMBER 31, 1987 2.3165 7.6066 0.3045 35.4618 151.9209
MAY 12, 1988 0.0072 8.6613 0.0008 0.1215 152.0424
AUGUST 2, 1988 0.0189 8.6793 0.0022 0.3345 152.3769
NOVEMBER 2, 1988 0.0421 8.5060 0.0049 0.7466 153.1235
DECEMBER 30, 1988 0.0781 8.6917 0.0090 1.3781 154.5016
MARCH 28, 1989 0.0015 9.3359 0.0002 0.0309 154.5325
MAY 3, 1989 0.0652 10.0765 0.0065 1.0045 155.5370
AUGUST 8, 1989 0.0587 11.1889 0.0052 0.8088 156.3458
NOVEMBER 7, 1989 0.0356 11.3370 0.0031 0.4847 156.8305
DECEMBER 28, 1989 0.0528 12.0330 0.0044 0.6901 157.5206
MARCH 29, 1990 0.0005 11.6844 0.0000 0.0000 157.5206
MAY 2, 1990 0.0585 11.1337 0.0053 0.8349 158.3555
JULY 30, 1990 0.0594 12.4561 0.0048 0.7601 159.1156
OCTOBER 25, 1990 0.0244 9.8084 0.0025 0.3978 159.5134
DECEMBER 28, 1990 0.2980 9.8260 0.0303 4.8333 164.3467
MARCH 18, 1991 0.0005 12.5783 0.0000 0.0000 164.3467
APRIL 25, 1991 0.0125 13.5385 0.0009 0.1479 164.4946
DECEMBER 30, 1991 0.8440 15.9250 0.0530 8.7182 173.2128
SEPTEMBER 10, 1992 0.0253 15.4630 0.0016 0.2771 173.4899
DECEMBER 30, 1992 1.8862 17.4341 0.1082 18.7716 192.2615
SEPTEMBER 9, 1993 0.9508 19.7694 0.0481 9.2478 201.5093
DECEMBER 30, 1993 1.5439 19.2064 0.0804 16.2013 217.7106
DECEMBER 31, 1993 19.4219 217.7106
JULY 27, 1994 0.0044 16.8576 0.0003 0.0653 217.7759
SEPTEMBER 6, 1994 0.0705 18.5666 0.0038 0.8275 218.6034
DECEMBER 30, 1994 18.5500 218.6034
SEPTEMBER 13, 1995 0.5846 22.8916 0.0255 5.5744 224.1778
DECEMBER 31, 1995 0.0000 23.1085 0.0000 0.0000 224.1778
Asset Value December 31, 1995 $23.1085
------------
ERV $5,180.41
Total Return T = ERV - 1 x 100 = 5180.41 - 1 x 100 = 418.04.%
--- ---------
P 1,000
1/n .0868
Average Annual Total Return T = ERV - 1 x 100 = 5,180.41 - 1 x 100 = 15.35%
--- ---------
P 1,000
</TABLE>
<PAGE> 3
EMERGING GROWTH EQUITY FUND
ONE YEAR RETURN
<TABLE>
<CAPTION>
Shares
A B A/B Purchased
Initial Dividend With Shares
Investment Per Share NAV Dividends Outstanding
---------- --------- --- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1994 $1,000 18.5500 53.9084
SEPTEMBER 13, 1995 0.5846 22.8916 0.0255 1.3747 55.2831
DECEMBER 31, 1995 0.0000 23.1085 55.2831
Asset Value December 31, 1995 $23.1085
------------
ERV $1,277.51
Total Return T = ERV - 1 x 100% = 1,277.51 - 1 x 100 = 27.75%
--- --------
P 1,000
</TABLE>
<PAGE> 4
EMERGING GROWTH EQUITY FUND
THREE YEAR RETURN
<TABLE>
<CAPTION>
A B A/B Purchased
Initial Dividend With Shares
Investment Per Share NAV Dividends Outstanding
---------- --------- --- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 30, 1992 1,000.0000 0.0000 17.7525 0.0000 56.3301
SEPTEMBER 9, 1993 0.9508 19.7694 0.0481 2.7095 59.0396
DECEMBER 30, 1993 1.5439 19.2064 0.0804 4.7468 63.7864
DECEMBER 31, 1993 19.4219 0.0000 63.7864
JULY 27, 1994 0.0044 16.8576 0.0003 0.0191 63.8055
SEPTEMBER 6, 1994 0.0705 18.5666 0.0038 0.2425 64.0480
DECEMBER 30, 1994 18.5500 0.0000 64.0480
SEPTEMBER 13, 1995 0.5846 22.8916 0.0255 1.6332 65.6812
DECEMBER 31, 1995 0.0000 23.1085 0.0000 65.6812
Asset Value December 31, 1995 $23.1085
------------
ERV $1,517.79
Total Return T = ERV - 1 x 100 = 1,517.79 - 1 x 100 = 51.78%
--- --------
P 1,000
1/n .333
Average Annual Total Return T = ERV - 1 x 100 = 1,517.79 - 1 x 100 = 14.92%
--- -------
P 1,000
</TABLE>
<PAGE> 5
EMERGING GROWTH EQUITY FUND
FIVE YEAR RETURN
<TABLE>
<CAPTION>
A B A/B Purchased
Initial Dividend With Shares
Investment Per Share NAV Dividends Outstanding
---------- --------- --- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 28, 1990 1,000.0000 9.9499 0.0000 100.5035
MARCH 18, 1991 0.0005 12.5783 0.0000 0.0000 100.5035
APRIL 25, 1991 0.0125 13.5385 0.0009 0.0905 100.5940
DECEMBER 30, 1991 0.8440 15.9250 0.0530 5.3315 105.9255
SEPTEMBER 10, 1992 0.0253 15.4630 0.0016 0.1695 106.0950
DECEMBER 30, 1992 1.8862 17.4341 0.1082 11.4795 117.5745
SEPTEMBER 9, 1993 0.9508 19.7694 0.0481 5.6553 123.2298
DECEMBER 30, 1993 1.5439 19.2064 0.0804 9.9077 133.1375
DECEMBER 31, 1993 19.4219 133.1375
JULY 27, 1994 0.0044 16.8576 0.0003 0.0399 133.1774
SEPTEMBER 6, 1994 0.0705 18.5666 0.0038 0.5061 133.6835
DECEMBER 30, 1994 18.5500 133.6835
SEPTEMBER 13, 1995 0.5846 22.8916 0.0255 3.4089 137.0924
DECEMBER 31, 1995 0.0000 23.1085 0.0000 137.0924
Asset Value December 31, 1995 $23.1085
-------------
ERV $3,168.00
Total Return T = ERV - 1 x 100 = 3,168.00 - 1 x 100 = 216.8%
--- --------
P 1,000
1/n .200
Average Annual Total Return T = ERV - 1 x 100 = 3,168.00 - 1 x 100 = 25.94%
--- --------
P 1,000
</TABLE>
<PAGE> 6
EMERGING GROWTH EQUITY FUND
TEN YEAR RETURN
<TABLE>
<CAPTION>
Shares
A B A/B Purchased
Initial Dividend With Shares
Investment Per Share NAV Dividends Outstanding
---------- --------- --- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1985 $1,000 12.5774 79.5077
MARCH 14, 1986 1.5112 12.3582 0.1223 9.7238 89.2315
APRIL 30, 1986 0.0264 11.9873 0.0022 0.1963 89.4278
APRIL 30, 1987 0.0049 14.1421 0.0003 0.0268 89.4546
JULY 30, 1987 0.0140 13.8992 0.0010 0.0895 89.5441
DECEMBER 31, 1987 2.3165 7.6066 0.3045 27.2662 116.8103
MAY 12, 1988 0.0072 8.6613 0.0008 0.0934 116.9037
AUGUST 2, 1988 0.0189 8.6793 0.0022 0.2572 117.1609
NOVEMBER 2, 1988 0.0421 8.5060 0.0049 0.5741 117.7350
DECEMBER 30, 1988 0.0781 8.6917 0.0090 1.0596 118.7946
MARCH 28, 1989 0.0015 9.3359 0.0002 0.0238 118.8184
MAY 3, 1989 0.0652 10.0765 0.0065 0.7723 119.5907
AUGUST 8, 1989 0.0587 11.1889 0.0052 0.6219 120.2126
NOVEMBER 7, 1989 0.0356 11.3370 0.0031 0.3727 120.5853
DECEMBER 28, 1989 0.0528 12.0330 0.0044 0.5306 121.1159
MARCH 29, 1990 0.0005 11.6844 0.0000 0.0000 121.1159
MAY 2, 1990 0.0585 11.1337 0.0053 0.6419 121.7578
JULY 30, 1990 0.0594 12.4561 0.0048 0.5844 122.3422
OCTOBER 25, 1990 0.0244 9.8084 0.0025 0.3059 122.6481
DECEMBER 28, 1990 0.2980 9.8260 0.0303 3.7162 126.3643
MARCH 18, 1991 0.0005 12.5783 0.0000 0.0000 126.3643
APRIL 25, 1991 0.0125 13.5385 0.0009 0.1137 126.4780
DECEMBER 30, 1991 0.8440 15.9250 0.0530 6.7033 133.1813
SEPTEMBER 10, 1992 0.0253 15.4630 0.0016 0.2131 133.3944
DECEMBER 30, 1992 1.8862 17.4341 0.1082 14.4333 147.8277
SEPTEMBER 9, 1993 0.9508 19.7694 0.0481 7.1105 154.9382
DECEMBER 30, 1993 1.5439 19.2064 0.0804 12.4570 167.3952
DECEMBER 31, 1993 19.4219 167.3952
JULY 27, 1994 0.0044 16.8576 0.0003 0.0502 167.4454
SEPTEMBER 6, 1994 0.0705 18.5666 0.0038 0.6363 168.0817
DECEMBER 30, 1994 18.5500 168.0817
SEPTEMBER 13, 1995 0.5846 22.8916 0.0255 4.2861 172.3678
DECEMBER 31, 1995 0.0000 23.1085 0.0000 172.3678
Asset Value December 31, 1995 $23.1085
------------
ERV $3,983.16
Total Return T = ERV - 1 x 100 = 3,983.16 - 1 x 100 = 298.32%
--- ---------
P 1,000
1/n .1
Average Annual Total Return T = ERV - 1 x 100 = 3,983.16 - 1 x 100 = 14.82%
--- ---------
P 1,000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> EMERGING GROWTH EQUITY FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 149,186,228
<INVESTMENTS-AT-VALUE> 161,858,889
<RECEIVABLES> 5,635,325
<ASSETS-OTHER> 10,003
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 167,504,217
<PAYABLE-FOR-SECURITIES> 5,011,143
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 66,607
<TOTAL-LIABILITIES> 5,077,750
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 131,407,798
<SHARES-COMMON-STOCK> 7,030,732
<SHARES-COMMON-PRIOR> 5,249,329
<ACCUMULATED-NII-CURRENT> 206,266
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18,139,742
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,672,661
<NET-ASSETS> 162,426,467
<DIVIDEND-INCOME> 23,376
<INTEREST-INCOME> 826,889
<OTHER-INCOME> 0
<EXPENSES-NET> (643,999)
<NET-INVESTMENT-INCOME> 206,266
<REALIZED-GAINS-CURRENT> 18,252,359
<APPREC-INCREASE-CURRENT> 12,756,627
<NET-CHANGE-FROM-OPS> 31,215,252
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (35,611)
<DISTRIBUTIONS-OF-GAINS> (3,730,311)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,232,451
<NUMBER-OF-SHARES-REDEEMED> (615,559)
<SHARES-REINVESTED> 164,511
<NET-CHANGE-IN-ASSETS> 65,047,051
<ACCUMULATED-NII-PRIOR> 35,611
<ACCUMULATED-GAINS-PRIOR> 3,617,694
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 643,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 643,000
<AVERAGE-NET-ASSETS> 131,544,807
<PER-SHARE-NAV-BEGIN> 18.55
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 5.10
<PER-SHARE-DIVIDEND> (0.58)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 23.10
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> BALANCED ASSETS FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 98,285,735
<INVESTMENTS-AT-VALUE> 109,759,871
<RECEIVABLES> 1,138,388
<ASSETS-OTHER> 4,854
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 110,903,113
<PAYABLE-FOR-SECURITIES> 96,106
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46,268
<TOTAL-LIABILITIES> 142,374
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 94,335,408
<SHARES-COMMON-STOCK> 6,457,180
<SHARES-COMMON-PRIOR> 5,425,697
<ACCUMULATED-NII-CURRENT> 3,268,747
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,682,448
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,474,136
<NET-ASSETS> 110,760,739
<DIVIDEND-INCOME> 826,873
<INTEREST-INCOME> 3,022,480
<OTHER-INCOME> 0
<EXPENSES-NET> (456,917)
<NET-INVESTMENT-INCOME> 3,392,436
<REALIZED-GAINS-CURRENT> 2,741,674
<APPREC-INCREASE-CURRENT> 14,094,035
<NET-CHANGE-FROM-OPS> 20,228,145
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (129,234)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,589,739
<NUMBER-OF-SHARES-REDEEMED> (566,288)
<SHARES-REINVESTED> 8,032
<NET-CHANGE-IN-ASSETS> 36,023,996
<ACCUMULATED-NII-PRIOR> 5,545
<ACCUMULATED-GAINS-PRIOR> (1,059,226)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 457,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 457,000
<AVERAGE-NET-ASSETS> 92,832,027
<PER-SHARE-NAV-BEGIN> 13.77
<PER-SHARE-NII> 0.63
<PER-SHARE-GAIN-APPREC> 2.87
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.15
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> CAPITAL GROWTH BOND FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 39,971,441
<INVESTMENTS-AT-VALUE> 41,984,131
<RECEIVABLES> 720,600
<ASSETS-OTHER> 7,291
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42,712,022
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,236
<TOTAL-LIABILITIES> 18,236
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,739,537
<SHARES-COMMON-STOCK> 3,779,382
<SHARES-COMMON-PRIOR> 3,328,888
<ACCUMULATED-NII-CURRENT> 1,597
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,060,038)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,012,690
<NET-ASSETS> 42,693,786
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,739,692
<OTHER-INCOME> 0
<EXPENSES-NET> (198,316)
<NET-INVESTMENT-INCOME> 2,541,376
<REALIZED-GAINS-CURRENT> 677,362
<APPREC-INCREASE-CURRENT> 4,016,399
<NET-CHANGE-FROM-OPS> 7,235,137
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,545,873)
<DISTRIBUTIONS-OF-GAINS> (425,137)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,094,742
<NUMBER-OF-SHARES-REDEEMED> (907,815)
<SHARES-REINVESTED> 263,567
<NET-CHANGE-IN-ASSETS> 9,075,873
<ACCUMULATED-NII-PRIOR> 6,094
<ACCUMULATED-GAINS-PRIOR> (13,122,263)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 198,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 198,000
<AVERAGE-NET-ASSETS> 39,952,419
<PER-SHARE-NAV-BEGIN> 10.10
<PER-SHARE-NII> 0.72
<PER-SHARE-GAIN-APPREC> 1.32
<PER-SHARE-DIVIDEND> (0.84)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.30
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> MONEY MARKET FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 35,998,414
<INVESTMENTS-AT-VALUE> 35,998,414
<RECEIVABLES> 0
<ASSETS-OTHER> 8,573
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 36,006,987
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,988
<TOTAL-LIABILITIES> 14,988
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 34,307,615
<SHARES-COMMON-STOCK> 3,320,455
<SHARES-COMMON-PRIOR> 2,375,854
<ACCUMULATED-NII-CURRENT> 1,684,384
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 35,991,999
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,838,797
<OTHER-INCOME> 0
<EXPENSES-NET> (154,412)
<NET-INVESTMENT-INCOME> 1,684,385
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,684,385
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,405)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,422,196
<NUMBER-OF-SHARES-REDEEMED> (2,477,727)
<SHARES-REINVESTED> 132
<NET-CHANGE-IN-ASSETS> 11,607,513
<ACCUMULATED-NII-PRIOR> 1,404
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 154,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 154,000
<AVERAGE-NET-ASSETS> 31,483,896
<PER-SHARE-NAV-BEGIN> 10.26
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.84
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 05
<NAME> COMMON STOCK FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 52,113,405
<INVESTMENTS-AT-VALUE> 60,834,031
<RECEIVABLES> 295,463
<ASSETS-OTHER> 6,354
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 61,135,848
<PAYABLE-FOR-SECURITIES> 114,570
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,350
<TOTAL-LIABILITIES> 139,920
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49,933,954
<SHARES-COMMON-STOCK> 3,532,074
<SHARES-COMMON-PRIOR> 2,606,341
<ACCUMULATED-NII-CURRENT> 834,761
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,506,587
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,720,626
<NET-ASSETS> 60,995,928
<DIVIDEND-INCOME> 771,938
<INTEREST-INCOME> 295,300
<OTHER-INCOME> 0
<EXPENSES-NET> (232,477)
<NET-INVESTMENT-INCOME> 834,761
<REALIZED-GAINS-CURRENT> 2,091,782
<APPREC-INCREASE-CURRENT> 9,276,249
<NET-CHANGE-FROM-OPS> 12,202,792
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,190,184
<NUMBER-OF-SHARES-REDEEMED> (264,451)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 26,167,408
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (585,195)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 232,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 232,000
<AVERAGE-NET-ASSETS> 47,464,003
<PER-SHARE-NAV-BEGIN> 13.36
<PER-SHARE-NII> 0.24
<PER-SHARE-GAIN-APPREC> 3.67
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.27
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 06
<NAME> REAL ESTATE FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 48,999,671
<INVESTMENTS-AT-VALUE> 50,599,913
<RECEIVABLES> 3,504,522
<ASSETS-OTHER> 14,188
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 54,118,623
<PAYABLE-FOR-SECURITIES> 1,656,789
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21,717
<TOTAL-LIABILITIES> 1,678,506
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 47,634,128
<SHARES-COMMON-STOCK> 3,472,861
<SHARES-COMMON-PRIOR> 3,190,140
<ACCUMULATED-NII-CURRENT> 2,365,861
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 839,886
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,600,242
<NET-ASSETS> 52,440,117
<DIVIDEND-INCOME> 2,320,479
<INTEREST-INCOME> 277,831
<OTHER-INCOME> 0
<EXPENSES-NET> (232,449)
<NET-INVESTMENT-INCOME> 2,365,861
<REALIZED-GAINS-CURRENT> 1,242,307
<APPREC-INCREASE-CURRENT> 3,176,323
<NET-CHANGE-FROM-OPS> 6,784,491
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (852,969)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 815,153
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<TABLE> <S> <C>
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<NAME> INTERNATIONAL FUND
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<S> <C>
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<NAME> PACIFIC RIM EMERGING MARKETS FUND
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<S> <C>
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