<PAGE> 1
As Filed with the Securities and Exchange Commission on April 30, 1996.
Registration No. 33--28888
811-5816
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Securities and Exchange Commission
Washington, D.C. 20549
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FORM N-1A
Registration Statement Under the Securities Act of 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 9
and/or
Registration Statement Under The Investment Company Act Of 1940 X
Amendment No. 10
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CANADA LIFE OF AMERICA SERIES FUND, INC.
(Exact Name of Registrant)
330 UNIVERSITY AVENUE
TORONTO, CANADA M5G 1R8
(Address of Principal Executive Office)
Registrant's Telephone Number: (416) 597-1456
Roy W. Linden
330 University Avenue
Toronto, Canada M5G 1R8
(Name and Address of Agent for Service)
Copy to:
Stephen E. Roth, Esquire
Sutherland, Asbill, & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
---
X on May 1, 1996 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(i)
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on pursuant to paragraph (a)(i)
-----------
75 days after filing pursuant to paragraph (a)(ii)
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on pursuant to paragraph (a)(ii) of Rule 485
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If appropriate check the following box:
this Post -Effective Amendment designates a new effective date
--- for a new effective date for a previously filed Post-Effective
Amendment.
Pursuant to Rule 24f-2(a)(1) under the Investment Company Act of 1940, the
Registrant has registered an indefinite number of shares. The Registrant will
file a Rule 24f-2 Notice before June 30, 1996 for its most recent fiscal year
ending December 31, 1995.
PAGE 1
<PAGE> 2
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
Showing Location In Part A (Prospectus) And
Part B (Statement of Additional Information) of Registration
Statement of Information Required By Form N-1A
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<TABLE>
PART A
<CAPTION>
ITEM OF FORM N-1A PROSPECTUS CAPTION
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<S> <C>
1. Cover Page Cover Page
2. Synopsis Synopsis
3. Condensed Financial Information CONDENSED FINANCIAL INFORMATION
4. General Description Of Registrant INTRODUCTION; THE FUND; INVESTMENT OBJECTIVES, POLICIES AND
RISKS; INVESTMENT RESTRICTIONS; DESCRIPTION OF CERTAIN
INVESTMENT PRACTICES
5. Management of the Fund MANAGEMENT OF THE FUND
6. Capital Stock and Other Securities CAPITAL STOCK AND SHAREHOLDER INFORMATION; DIVIDENDS; TAXES
7. Purchase of Securities Being Offered PURCHASES AND REDEMPTION OF SHARES; VALUATION OF SHARES
8. Redemption or Repurchase PURCHASE AND REDEMPTION OF SHARES
9. Pending Legal Proceedings LEGAL PROCEEDINGS
PART B
<CAPTION>
ITEM OF FORM N-1A STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ----------------- -------------------------------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents TABLE OF CONTENTS
12. General Information and History See Prospectus - THE FUND
13. Investment Objectives and Policies INVESTMENT POLICIES; INVESTMENT PRACTICES; INVESTMENT
RESTRICTIONS; SERIES TURNOVER
14. Management Of The Fund MANAGEMENT OF THE FUND - Directors And Officers
15. Control Persons And Principal Holders Of Securities Not Applicable
16. Investment Advisory And Other Services MANAGEMENT OF THE FUND - Custodian, Accounting Services,
Investment Adviser, Sub-Adviser, Advisory Fees And Expenses,
Investment Advisory Agreement, Sub-Advisory Agreement, and
Securities Activities Of The Adviser And Sub-Adviser;
GENERAL INFORMATION - Financial Statements
</TABLE>
PAGE 2
<PAGE> 3
<TABLE>
<S> <C>
17. Brokerage Allocation MANAGEMENT OF THE FUND - Series Transactions And Brokerage
18. Capital Stock And Other Securities GENERAL INFORMATION - Capital Stock
19. Purchase, Redemption and Pricing PURCHASE AND REDEMPTION OF SHARES; DETERMINATION OF
NET ASSET VALUE
20. Tax Status TAXES
21. Underwriters PURCHASE AND REDEMPTION OF SHARES
22. Calculation Of Performance Data SERIES TURNOVER; INVESTMENT EXPERIENCE INFORMATION
23. Financial Statements GENERAL INFORMATION - Financial Statements
</TABLE>
PAGE 3
<PAGE> 4
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 5
CANADA LIFE OF AMERICA SERIES FUND, INC.
ADMINISTRATIVE OFFICE: 6201 Powers Ferry Road, NW, Atlanta, GA 30339
PHONE: 1-800-905-1959
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PROSPECTUS FOR FUND
- --------------------------------------------------------------------------------
Canada Life of America Series Fund, Inc. (The "Fund"), is a diversified
open-end management investment company, commonly known as a mutual fund. Shares
of the Fund are not offered directly to the public, but are sold only to
insurance companies and their separate accounts. The Fund is intended to meet a
wide range of investment objectives by dividing its assets and liabilities into
six different portfolios: Money Market Portfolio; Bond Portfolio; Value Equity
Portfolio; Managed Portfolio; Capital Portfolio; and International Equity
Portfolio. Each portfolio generally operates as a separate fund and issues its
own shares.
MONEY MARKET PORTFOLIO
The Money Market Portfolio seeks the highest possible level of current income
consistent with preservation of capital and liquidity by investing in money
market instruments maturing in thirteen months or less.
BOND PORTFOLIO
The Bond Portfolio seeks as high a level of current income and capital
appreciation as is consistent with preservation of principal, by investing
primarily in fixed income debt instruments.
VALUE EQUITY PORTFOLIO
The Value Equity Portfolio seeks long-term growth of capital and income by
investing in equity securities which are believed to have appreciation
potential.
MANAGED PORTFOLIO
The Managed Portfolio seeks as high a level of return as possible through
capital appreciation and income, consistent with prudent investment risk and
preservation of capital, by investing in equities, fixed income debt
instruments and money market instruments.
CAPITAL PORTFOLIO
The Capital Portfolio seeks capital appreciation, not current income, by
investing in common stocks and securities convertible into or exchangeable for
common stocks, in common stock purchase warrants, in debt securities and in
preferred stocks believed to provide capital appreciation opportunities.
INTERNATIONAL EQUITY PORTFOLIO
The International Equity Portfolio seeks long-term capital appreciation by
investing in equity or equity type securities of companies located outside of
the United States.
The investment objectives of each portfolio are not fundamental policies and
may be changed without shareholder approval. There can be no assurance that any
portfolio will achieve its objectives or that the Money Market Portfolio will
be able to maintain a stable net asset value of $10.00 per share. An investment
in the Money Market Portfolio is neither insured nor guaranteed by the U.S.
Government.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. PLEASE READ THIS
PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. A Statement of
Additional Information dated May 1, 1996, which contains further information
about the Fund, has been filed with the Securities and Exchange Commission and
is incorporated by reference in this Prospectus. A copy of the Statement of
Additional Information may be obtained without charge by writing or calling us
at the address or phone shown above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE AVAILABLE AND ARE BEING MARKETED EXCLUSIVELY AS A POOLED
FUNDING VEHICLE FOR CERTAIN LIFE INSURANCE COMPANIES ISSUING VARIABLE POLICIES.
THIS PROSPECTUS SHOULD BE ACCOMPANIED BY A CURRENT PROSPECTUS OR INFORMATION
STATEMENT FOR THE CORRESPONDING VARIABLE POLICY. BOTH DOCUMENTS SHOULD BE READ
CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
THE SHARES OF THE FUNDS ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY
ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED.
THEY ARE SUBJECT TO MARKET FLUCTUATION, REINVESTMENT RISK AND POSSIBLE LOSS OF
PRINCIPAL INVESTED.
The date of this Prospectus is May 1, 1996.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
CONDENSED FINANCIAL INFORMATION..................................................... 3
THE FUND............................................................................ 9
INVESTMENT OBJECTIVES, POLICIES AND RISKS........................................... 9
Money Market Portfolio......................................................... 9
Bond Portfolio................................................................ 10
Value Equity Portfolio........................................................ 11
Managed Portfolio............................................................. 11
Capital Portfolio............................................................. 12
International Equity Portfolio................................................ 13
INVESTMENT RESTRICTIONS............................................................ 14
DESCRIPTION OF CERTAIN INVESTMENT PRACTICES........................................ 15
When-Issued Securities........................................................ 15
Loans of Portfolio Securities................................................. 14
Put And Call Options.......................................................... 15
Stock Index Futures, Options On Stock Index Futures, And Stock Index Options.. 16
International Investments..................................................... 17
Currency Hedging.............................................................. 17
Repurchase Agreements......................................................... 17
MANAGEMENT OF THE FUND............................................................. 18
Investment Adviser............................................................ 18
Capital Portfolio Sub-Adviser................................................. 18
International Equity Portfolio Sub-Adviser.................................... 18
Advisory Fees And Expenses.................................................... 18
Custodian..................................................................... 19
Transfer Agent And Dividend Disbursing Agent.................................. 19
CAPITAL STOCK AND SHAREHOLDER INFORMATION.......................................... 19
PERFORMANCE INFORMATION............................................................ 20
PURCHASES AND REDEMPTIONS OF SHARES................................................ 21
VALUATION OF SHARES................................................................ 22
DIVIDENDS.......................................................................... 22
TAXES.............................................................................. 22
LEGAL PROCEEDINGS.................................................................. 22
REGISTRATION STATEMENT............................................................. 23
</TABLE>
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION 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 FUND OR THE INVESTMENT ADVISER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH OFFERING
MAY NOT LAWFULLY BE MADE.
2
<PAGE> 7
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The following information for the Money Market, Managed, Bond, Value Equity,
Capital, and International Equity Portfolios has been audited by Ernst & Young
LLP, whose unqualified report thereon for the five year period ended December
31, 1995 and other financial statements of these Portfolios are included in the
Statement of Additional Information. The Capital Portfolio commenced operations
on May 1, 1993 and the International Equity Portfolio commenced operations on
May 1, 1995.
The following financial highlights are computed on the basis of a share
outstanding throughout the period.
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
Period
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended 12/4/89 to
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
$ $ $ $ $ $ $
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period 10.00 10.00 10.00 10.00 10.00 10.00 10.00*
- --------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income 0.49 0.34 0.23 0.27 0.52 0.68 0.05
Net Gains or Losses on Securities
(both realized and unrealized) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total From Investment Operations 0.49 0.34 0.23 0.27 0.52 0.68 0.05
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (0.49) (0.34) (0.23) (0.27) (0.52) (0.68) (0.05)
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Returns of Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Distributions (0.49) (0.34) (0.23) (0.27) (0.52) (0.68) (0.05)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period 10.00 10.00 10.00 10.00 10.00 10.00 10.00
- --------------------------------------------------------------------------------------------------------------------------------
Total Return**** 4.95% 3.40% 2.29% 2.71% 5.25% 6.76% 7.12%***
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period 4,608,718 5,057,319 4,513,726 2,728,842 2,250,519 2,095,711 2,000,000
Ratio of Expenses to Average
Net Assets* 0.75%** 0.75% 0.75% 0.92% 1.25% 1.25% 1.25%***
Ratio of Net Income to Average
Net Assets* 4.98%** 3.43% 2.29% 2.81% 4.80% 6.78% 6.90%***
Portfolio Turnover Rate -- -- -- -- -- -- ---
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</TABLE>
* The Fund commenced operations on December 4, 1989.
** Absent the reimbursement to the Fund's expenses, the Money Market
Portfolio expenses would have been 1.14%.
*** 1989 amounts annualized from December 4, 1989.
**** Total return information has been restated to reflect a new methodology
for factoring in the reinvestment of dividends into the total return
calculation.
3
<PAGE> 8
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
(Continued)
MANAGED PORTFOLIO
<TABLE>
<CAPTION>
Period
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended 12/4/89 to
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
$ $ $ $ $ $ $
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period 12.01 12.77 12.14 11.59 9.66 9.99 10.00*
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income 0.40 0.32 0.31 0.35 0.45 0.50 0.04
Net Gains or Losses on Securities
(both realized and unrealized) 2.38 (0.39) 0.74 0.65 1.98 (0.34) (0.02)
Total From Investment Operations 2.78 (0.07) 1.05 1.00 2.43 0.16 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (0.41) (0.32) (0.31) (0.35) (0.46) (0.49) (0.03)
Distributions (from capital gains) (2.01) (0.37) (0.11) (0.10) (0.04) 0.00 0.00
Returns of Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Distributions (2.42) (0.69) (0.42) (0.45) (0.50) (0.49) (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period 12.37 12.01 12.77 12.14 11.59 9.66 9.99
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return**** 21.92% -0.25% 8.24% 8.02% 23.40% 1.63% 3.02%***
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Ratios/Supplemental Data
Net Assets, End of Period 17,033,045 15,192,354 17,164,547 11,986,858 8,534,720 3,958,203 3,995,145
Ratio of Expenses to Average Net Assets* 0.90%** 0.97% 1.15% 1.25% 1.25% 1.25% 1.25%***
Ratio of Net Income to Average Net Assets* 3.06%** 2.51% 2.50% 2.97% 4.12% 5.22% 5.40%***
Portfolio Turnover Rate 145.14% 27.31% 38.20% 39.62% 71.33% 39.98% 5.90%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Fund commenced operations on December 4, 1989.
** During 1995, the expenses for the Managed Portfolio did not exceed the
reimbursement level.
*** 1989 amounts annualized from December 4, 1989.
**** Total return information has been restated to reflect a new methodology
for factoring in the reinvestment of dividends into the total return
calculation.
4
<PAGE> 9
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
(Continued)
BOND PORTFOLIO
<TABLE>
<CAPTION>
Period
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended 12/4/89 to
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
$ $ $ $ $ $ $
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period 9.75 10.74 10.64 10.65 9.78 9.93 10.00*
- ----------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income 0.65 0.51 0.57 0.65 0.68 0.71 0.05
Net Gains or Losses on Securities
(both realized and unrealized) 1.09 (0.99) 0.56 0.23 0.91 (0.16) (0.07)
Total From Investment Operations 1.74 (0.48) 1.13 0.88 1.59 0.55 (0.02)
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (0.64) (0.51) (0.57) (0.65) (0.69) (0.70) (0.05)
Distributions (from capital gains) (0.15) 0.00 (0.46) (0.24) (0.03) 0.00 0.00
Returns of Capital (0.25) 0.00 0.00 0.00 0.00 0.00 0.00
Total Distributions (1.04) (0.51) (1.03) (0.89) (0.72) (0.70) (0.05)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period 10.45 9.75 10.74 10.64 10.65 9.78 9.93
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return**** 16.77% -3.94% 10.35% 6.65% 16.21% 5.48% -2.08%***
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Ratios/Supplemental Data
Net Assets, End of Period 5,493.594 3,985,744 4,203,387 3,277,660 2,318,565 1,963,858 1,986,257
Ratio of Expenses to Average Net Assets* 0.88%** 0.96% 1.16% 1.25% 1.25% 1.25% 1.26%***
Ratio of Net Income to Average Net Assets* 6.06%** 5.01% 5.01% 6.01% 6.58% 7.17% 7.22%***
Portfolio Turnover Rate 245.32% 43.89% 84.77% 79.77% 112.36% 47.25% 1.10%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Fund commenced operations on December 4, 1989.
** During 1995, the expenses for the Bond Portfolio did not exceed the
reimbursement level.
*** 1989 amounts annualized from December 4, 1989.
**** Total return information has been restated to reflect a new methodology
for factoring in the reinvestment of dividends into the total return
calculation.
5
<PAGE> 10
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
(Continued)
VALUE EQUITY PORTFOLIO
<TABLE>
<CAPTION>
Period
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended 12/4/89 to
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
$ $ $ $ $ $ $
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period 13.46 13.60 13.15 12.26 9.38 10.06 10.00*
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income 0.12 0.14 0.14 0.14 0.15 0.22 0.02
Net Gains or Losses on Securities
(both realized and unrealized) 3.17 0.13 0.61 0.92 3.16 (0.67) 0.05
Total From Investment Operations 3.29 0.27 0.75 1.06 3.31 (0.45) 0.07
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (0.12) (0.14) (0.14) (0.14) (0.17) (0.21) (0.01)
Distributions (from capital gains) (3.12) (0.27) (0.16) (0.03) (0.26) (0.02) 0.00
Returns of Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Distributions (3.24) (0.41) (0.30) (0.17) (0.43) (0.23) (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period 13.51 13.46 13.60 13.15 12.26 9.38 10.06
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return**** 23.66% 2.03% 5.44% 8.37% 34.95% -4.45% 9.85%***
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period 8,244,957 7,379,295 7,062,948 4,711,271 2,874,635 1,882,680 2,012,684
Ratio of Expenses to Average Net Assets* 0.90%** 0.96% 1.14% 1.25% 1.25% 1.25% 1.23%***
Ratio of Net Income to Average Net Assets* 0.81%** 1.03% 1.07% 1.10% 1.39% 2.23% 2.73%***
Portfolio Turnover Rate 103.07% 35.99% 23.70% 6.25% 36.16% 36.39% 13.13%
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</TABLE>
* The Fund commenced operations on December 4, 1989.
** During 1995, the expenses for the Value Equity Portfolio did not exceed
the reimbursement level.
*** 1989 amounts annualized from December 4, 1989.
**** Total return information has been restated to reflect a new methodology
for factoring in the reinvestment of dividends into the total return
calculation.
6
<PAGE> 11
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
(Continued)
CAPITAL PORTFOLIO
<TABLE>
<CAPTION>
Period 5/1/93
Year Ended Year Ended (commencement of operations)
12/31/95 12/31/94 to 12/31/93
$ $ $
===========================================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period 10.48 11.06 10.00*
- -----------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income 0.02 0.01 (0.02)
Net Gains or Losses on Securities
(both realized and unrealized) 3.56 (0.46) 1.32
Total From Investment Operations 3.58 (0.45) 1.30
- -----------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (0.01) (0.01) 0.00
Distributions (from capital gains) (0.50) (0.12) (0.24)
Returns of Capital 0.00 0.00 0.00
Total Distributions (0.51) (0.13) (0.24)
- -----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period 13.55 10.48 11.06
- -----------------------------------------------------------------------------------------------------------
Total Return**** 33.99% -4.11% 18.42%***
- -----------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period 6,366,302 3,847,365 2,917,531
Ratio of Expenses to Average Net Assets* 0.88%** 0.92% 1.01%***
Ratio of Net Income to Average Net Assets * 0.11%** 0.09% -0.21%***
Portfolio Turnover Rate 33.42% 55.99% 21.87%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* The Fund commenced operations on May 1, 1993.
** During 1995, the expenses for the Capital Portfolio did not exceed the
reimbursement level.
*** 1993 amounts annualized from May 1, 1993.
**** Total return information has been restated to reflect a new methodology
for factoring the reinvestment of dividends into the total return
calculation.
7
<PAGE> 12
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
(Continued)
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
For the period 5/1/95
(commencement of operations)
to 12/31/95
$
=========================================================================
<S> <C>
Net Asset Value, Beginning
of Period 10.00*
- -------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income 0.10
Net Gains or Losses on Securities
(both realized and unrealized) 0.49
Total From Investment Operations 0.59
- -------------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (0.10)
Distributions (from capital gains) (0.40)
Returns of Capital 0.00
Total Distributions (0.50)
- -------------------------------------------------------------------------
Net Asset Value, End of Period 10.09
- -------------------------------------------------------------------------
Total Return 8.53%***
- -------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period 2,085,588
Ratio of Expenses to Average Net Assets** 1.20%***
Ratio of Net Income to Average Net Assets ** 1.43%***
Portfolio Turnover Rate 33.56%
- -------------------------------------------------------------------------
</TABLE>
* The Fund commenced operations on May 1, 1995.
** Absent the reimbursement to the Fund's expenses, the International Equity
Portfolio expenses would have been 1.54%
*** 1995 amounts annualized from May 1, 1995.
8
<PAGE> 13
THE FUND
Canada Life of America Series Fund, Inc., a Maryland corporation formed on
February 23, 1989, is a diversified open-end investment company. The Fund
currently has six portfolios, which in many ways operate as separate funds.
These portfolios are the Money Market Portfolio, the Bond Portfolio, the Value
Equity Portfolio, the Managed Portfolio, the Capital Portfolio, and the
International Equity Portfolio. An interest in the Fund is limited to the
assets of the particular portfolios in which shares are held. Shares of the
Fund are not offered directly to the public, but are currently sold only to
Canada Life Insurance Company of America (the "Company"), Canada Life Insurance
Company of New York ("CLNY"), and to certain of their separate accounts to fund
the benefits under certain variable policies (the "policies") issued by the
respective insurance companies. The separate accounts invest in shares of the
Fund in accordance with instructions received from owners of the policies.
Shares of the Fund may also be sold to The Canada Life Assurance Company
("Canada Life"), its affiliates and their separate accounts. The Company and
CLNY are wholly-owned subsidiaries of Canada Life. Canada Life commenced
operations in 1847 and has been actively operating in the United States since
1889. Canada Life is one of the largest life insurance companies in North
America with consolidated assets as of December 31, 1995 of approximately $20.8
billion (U.S. dollars).
Policyowners should consider that the investment return experience of the
particular portfolios they select will effect the value of the policy and the
amount of benefits received under a policy. See the attached Prospectus for the
policy for a description of the relationship between increases or decreases in
the net asset value of Fund shares (and any distributions on such shares) and
the benefits provided under a policy.
INVESTMENT OBJECTIVES, POLICIES AND RISKS
Each portfolio has a different investment objective which it pursues through
separate investment policies. The different investment objectives and policies
among the various portfolios will affect the investment return of each
portfolio. There is no assurance that the investment objective of any portfolio
will be realized. The investment objective of each portfolio is not a
fundamental policy and may be changed without shareholder approval; however,
shareholders will be notified promptly of any such changes.
Each portfolio is subject to a different degree of market and financial risk.
Market risk refers to the volatility of the reaction of the price of a security
to changes in conditions in the securities market in general and, particularly
in the case of debt securities, changes in the overall level of interest rates.
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. Current income
volatility refers to the degree and rapidity with which changes in the overall
level of interest rates become reflected in the level of current income of the
portfolios. This factor will depend upon the overall maturity of the securities
in the portfolio, since changing interest rates will not affect the current
income levels of a pre-existing portfolio of fixed rate securities.
MONEY MARKET PORTFOLIO
The investment objective of the Money Market Portfolio is to provide the
highest possible level of current income, consistent with preservation of
capital and liquidity. The Money Market Portfolio seeks to achieve its
objective by investing in high quality money market instruments, including:
1. obligations issued or guaranteed as to principal and
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;
2. obligations, such as certificates of deposit and banker's
acceptances, of U.S. or Canadian banks, U.S. savings and loans
associations, and Canadian trust companies which at the date of
investment have capital, surplus and undistributed profits as of
the date of their most recent published financial statements of
$500,000,000 or greater;
3. commercial paper or bank loan participations;
4. corporate obligations;
5. obligations issued or guaranteed as to principal and
interest by the Government of Canada, the government of any
province of Canada, or any Canadian or provincial Crown agency;
and
6. repurchase agreements that mature within seven days.
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Money Market instruments are described more fully in the Statement of
Additional Information.
All investments of the Money Market Portfolio will be denominated in U.S.
currency, and the Portfolio will limit its investments to instruments which the
Board of Directors determines present minimal risks and which generally are, at
the time of acquisition, either:
1. rated in one of the two highest rating categories by at
least two nationally recognized statistical rating
organizations (NRSRO); or
2. by one NRSRO if that NRSRO is the only NRSRO that has rated
the instrument or issuer; or
3. if the instrument is not rated, is of comparable quality as
determined by the Board of Directors; or
4. issued by an issuer that has received a rating of the type
described in "1" or "2" above on other securities that are
comparable in priority and security to the instrument.
All of the money market investments will mature in thirteen months or less. The
Money Market Portfolio will use the amortized cost method of securities
valuation. See "Valuation of Shares."
Because of the short-term nature of the Money Market Portfolio's investments, a
portfolio turnover rate is not applicable. Investment in shares of the Money
Market Portfolio should be subject to relatively little market risk and
financial risk, but a high level of current income volatility.
BOND PORTFOLIO
The investment objective of the Bond Portfolio is to provide as high a level of
current income and capital appreciation, as is consistent with preservation of
principal. The Bond Portfolio will seek to achieve its objective by investing
primarily in fixed income debt instruments. All debt instruments will be
denominated in U.S. currency. At least 80% of the assets of the Bond Portfolio
will be invested in the following:
1. obligations issued or guaranteed as to principal and
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;
2. publicly-traded debt instruments which are rated within the
four highest categories by Moody's Investors Service or
Standard & Poor's Corporation, or Duff & Phelps;
3. obligations issued or guaranteed as to principal and
interest by the Government of Canada, the government of any
province of Canada, or any Canadian or provincial Crown agency.
The remaining 20% of total assets of the Bond Portfolio may be invested in
lower quality debt instruments of high yield debt instruments. Generally, these
provide higher yields but are subject to greater market fluctuations and risk
of loss of income and principal than higher quality debt instruments. The Bond
Portfolio will not invest in any instruments which are rated lower than "B."
The Bond Portfolio will not directly purchase common stocks. However, it may
retain up to 20% of the value of its total assets in debt instruments or
preferred shares which are convertible into common shares. The Bond Portfolio
may also invest up to 10% of its total assets in privately placed debt
instruments which carry registration rights exercisable within twelve months of
the date of investment.
Cash and money market instruments of the type in which the Money Market
Portfolio may invest may be held pending investment in accordance with the Bond
Portfolio's investment policies, and to provide for expenses and anticipated
redemption payments. In managing its portfolio, the Bond Portfolio may enter
into repurchase agreements, engage in options trading to the extent described
under "Put And Call Options," and may make loans of portfolio securities.
Investment in shares of the Bond Portfolio should generally be subject to
relatively low financial risk, moderately high market risk and moderately low
current income volatility. However, to the extent the Bond Portfolio invests up
to 20% of its assets in lower quality debt instruments, these instruments could
increase financial risk and income volatility. The Bond Portfolio may have more
than 20% of its assets in lower quality debt instruments if debt instruments
rated in the fourth highest category when purchased are subsequently
downgraded. See "Lower Quality Debt Instruments" in the Statement of Additional
Information.
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PORTFOLIO MANAGER
Robert N. Kase, CFA, is responsible for the day-to-day investment management
and trading activities of the Bond Portfolio. Mr. Kase has been the portfolio
manager for the Bond and Money Market Funds of CL Capital Management, Inc.
("CLCM") since August 1990. Prior to joining the company, he served as a bond
trader in the regional brokerage community. CLCM became responsible for
rendering investment advice on behalf of the Fund on May 1, 1995.
VALUE EQUITY PORTFOLIO
The investment objective of the Value Equity Portfolio is to provide long-term
growth and income by investing in equity securities which are believed to have
appreciation potential. The Investment Adviser's equity investment philosophy
is based upon a fundamental value approach to security evaluation, designed to
preserve capital with a focus on a long-term investment horizon. The Adviser
attempts to accomplish this objective through the purchase of stocks that have
poor current market psychology and are undervalued relative to normal earnings
power. The Value Equity Portfolio will pursue its objective by investing
primarily in common stocks, but may invest in other securities, including
rights, warrants, preferred stock and debt securities convertible into 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, satisfactory rate of return on capital, good industry
position, and superior management skills. The Value Equity Portfolio's
investments are not limited to any particular type or size of company.
Investments will be made primarily in equity securities of companies which are
publicly traded on a U.S. stock exchange or in the over-the-counter market of
the National Association of Securities Dealers. Up to 20% of the Value Equity
Portfolio, by market value, may be invested from time to time in equity
securities listed on Canadian or other foreign stock exchanges.
To provide a prudent degree of diversification, the Value Equity Portfolio will
maintain at all times investments in no less than 30 individual companies, and
will limit holdings in individual companies to 5% of the assets of the Value
Equity Portfolio, by market value. The Value Equity Portfolio may also maintain
up to 25% of its market value in cash or money market instruments, either
pending selection of particular equity investments, or for defensive purposes.
Such money market instruments would be of the type eligible for investment by
the Money Market Portfolio. In managing its portfolio, the Value Equity
Portfolio may enter into repurchase agreements, engage in options trading to
the extent described under "Put And Call Options," and may make loans of
portfolio securities. In addition, the Value Equity Portfolio may invest in
stock index futures, options on stock index futures, and stock index options.
See "Description of Certain Investment Practices."
Investment in shares of the Value Equity Portfolio should be subject to
moderate levels of both market and financial risk.
PORTFOLIO MANAGER
Craig A. Merrigan, CFA, is the Senior Portfolio Manager of CL Capital
Management, Inc. ("CLCM") and is responsible for the day-to-day investment
management and trading activities of the Value Equity Portfolio. He has held
this position since June, 1990. Mr. Merrigan joined the U.S. investment
division of Confederation Life Insurance Company, the predecessor to CLCM, in
June 1987. He is responsible for the management of the Value Equity Portfolio
of the Canada Life of America Series Fund, Inc., as well as the U.S. Value and
Small Cap stock portfolio. Craig Merrigan has managed the Value stock fund
since June 1990, and the Small Cap portfolio since November, 1994. CLCM became
responsible for rendering investment advice on behalf of the Fund on May 1,
1995.
MANAGED PORTFOLIO
The investment objective of the Managed Portfolio is to achieve as high a level
of return as possible, through capital appreciation and income, consistent with
prudent investment risk and preservation of capital. This Portfolio will seek
to achieve its objective by following a fully managed investment policy through
investment in three sectors:
1. the Money Market Sector, which will consist of money market
instruments and other debt instruments, of the type eligible for
investment by the Money Market Portfolio, with maturities not
exceeding one year;
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<PAGE> 16
2. the Bond Sector, which will consist of bonds and other debt
securities, of the type eligible for investment by the Bond
Portfolio, with maturities exceeding one year; and
3. the Equity Sector, which will consist of common stocks,
securities convertible into common stocks and warrants, of the
type eligible for investment by the Value Equity Portfolio.
There are no minimum or maximum percentages as to the amount of the Managed
Portfolio's assets which may be invested in each of the sectors. The asset mix
of the Managed Portfolio will be adjusted based on the Investment Adviser's
analysis of the political and economic outlook over the next six to eighteen
months, taking into account such factors as inflation, growth, trends in
currency values, commodity prices and relative values of stocks and bonds. In
managing its portfolio, the Managed Portfolio may enter into repurchase
agreements, engage in options trading to the extent described under "Put and
Call Options," and may make loans of portfolio securities. In addition, the
Managed Portfolio may invest in stock index futures, options on stock index
futures, and stock index options. See "Description of Certain Investment
Practices."
Investment in shares of the Managed Portfolio should generally be subject to
moderate levels of both market and financial risk and relatively high levels of
current income volatility. However, should the Managed Portfolio invest a
substantial portion of its assets in lower quality debt instruments, market and
financial risk could increase. See "Lower Quality Debt Instruments" in the
Statement of Additional Information.
PORTFOLIO MANAGER
Hubert F. Atkinson, CFA, is Vice President and Chief Investment Officer of CL
Capital Management, Inc. ("CLCM"). He has held this position since joining the
Adviser in March 1989. In his role as Chief Investment Officer, Mr. Atkinson is
responsible for setting overall investment policies, client communication, and
determination of the asset mix for the Managed Portfolio as well as other
balanced accounts managed by CLCM. He is responsible for the management of the
Managed Portfolio, the Capital Portfolio and the International Equity Portfolio
of the Canada Life of America Series Fund, Inc. The Capital Portfolio is also
sub-advised by J. & W. Seligman & Co., Incorporated, and the International
Equity Portfolio is also sub-advised by Canada Life Investment Management Ltd.
Mr. Atkinson has twenty years experience and he also manages certain of the
Adviser's other portfolios. CLCM became responsible for rendering investment
advice on behalf of the Fund on May 1, 1995.
CAPITAL PORTFOLIO
The investment objective of the Capital Portfolio is to provide capital
appreciation, not current income, by investing in common stocks and securities
convertible into or exchangeable for common stocks, in common stock purchase
warrants, in debt securities and in preferred stocks believed to provide
capital appreciation opportunities. Common stocks, for the most part, are
selected for their near or intermediate-term prospects. They may be stocks
believed to be underpriced or stocks of growth companies, cyclical companies,
or companies believed to be undergoing a basic change for the better. They may
be stocks of established, well-known companies or of newer, less-seasoned
companies believed to have better-than-average prospects. The principal
criterion for choice of investments is capital appreciation potential.
The Capital Portfolio may, pending investment and for temporary defensive
purposes, hold cash and invest without limitation in high-grade, short-term
money market instruments, including repurchase agreements, of the types in
which the Money Market Portfolio may invest.
Investment in shares of the Capital Portfolio should generally be subject to
moderate levels of both market and financial risk.
PORTFOLIO MANAGER
Hubert F. Atkinson, CFA, is Vice President and Chief Investment Officer of CL
Capital Management, Inc. He has held this position since joining the Adviser in
March 1989. In his role as Chief Investment Officer, Mr. Atkinson is
responsible for setting overall investment policies, client communication, and
determination of the asset mix for the Managed Portfolio as well as other
balanced accounts managed by CL Capital Management, Inc. He is responsible for
the management of the Managed Portfolio, the Capital Portfolio and the
International Equity Portfolio of the Canada Life of America Series Fund, Inc.
The Capital Portfolio is also sub-advised by J. & W. Seligman & Co.,
Incorporated, and the International Equity Portfolio is also sub-advised by
Canada Life Investment
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<PAGE> 17
Management Ltd. Mr. Atkinson has twenty years experience and he also manages
certain of the Adviser's other portfolios.
SUB-ADVISER PORTFOLIO MANAGER
Loris D. Muzzatti, Managing Director of the Sub-Adviser, is responsible for the
Sub-Adviser's day-to-day investment management of the Capital Portfolio, which
position he has held since April 1993, the inception of the portfolio. He is
also a Vice President and Portfolio Manager of Seligman Capital Fund, Inc. and
a Vice President of Seligman Portfolios, Inc. and the Portfolio Manager of its
Capital Portfolio. Mr. Muzzatti, who joined the Sub-Adviser in 1985, also
manages a portion of the Sub-Adviser's leading institutional accounts.
INTERNATIONAL EQUITY PORTFOLIO
The investment objective of the International Equity Portfolio is to provide
long-term capital appreciation by investing in equity or equity type securities
of companies located outside of the United States. The International Equity
Portfolio seeks diversification by purchasing securities from various countries
that offer different investment opportunities and are affected by different
economic trends. Although the International Equity Portfolio will normally
invest in issuers in developed countries, the fund may also invest in
developing countries. Investments in developing markets provide greater
opportunities for growth although they are expected to be more volatile than
securities in developed markets. Investing in foreign securities may involve
greater risk than investing in domestic securities because of the possibilities
of exchange rate fluctuations, currency exchange controls, lack of uniformity
of accounting, auditing and financial reporting standards, war, expropriation,
and less securities regulations. See "Developing Countries" on page 16.
The International Equity Portfolio is intended for investors who can accept the
risks involved in investments in equity and equity-related securities of
issuers located outside the United States, as well as in foreign currencies and
in the active management techniques that the International Equity Portfolio
generally employs.
The equity and equity-related securities in which the International Equity
Portfolio will primarily invest are common stock, preferred stock, convertible
preferred stock and warrants or other rights to acquire stock that the
Sub-Adviser believes offer the potential for long-term capital appreciation.
The International Equity Portfolio also may invest in securities of foreign
issuers in the form of sponsored and unsponsored American Depository Receipts
("ADRs"), European Depository Receipts ("EDRs") or other similar instruments
representing securities of foreign issuers. EDRs are receipts issued by a
European financial institution evidencing an arrangement similar to ADRs.
Generally, ADRs, in registered form, are designed for trading in U.S.
securities markets and EDRs, in bearer form, are designed for trading in
European securities markets.
As to any specific investment, the Sub-Adviser's analysis will focus on
evaluation of the fundamental value of an enterprise. The International Equity
Portfolio will purchase securities for its portfolio when their market price
appears to be less than their fundamental value in the judgment of the
Sub-Adviser. In selecting specific investments, the Sub-Adviser will attempt to
identify securities with strong potential for appreciation relative to their
downside exposure.
Investment in the International Equity Portfolio will involve the greatest
degree of market and financial risk of any of the Portfolios.
As a nonfundamental policy, the International Equity Portfolio:
1. will limit its exposure to developing markets to a maximum
of 30% of its net assets;
2. will limit its exposure to a single industry group to 25% of
its net assets;
3. will limit its exposure to a single currency, excluding the
Japanese yen, to 20% of the International Equity Portfolio;
4. will normally maintain a minimum of 40 individual company
holdings in the International Equity Portfolio;
5. will maintain exposure to a minimum of 5 of the 11 industry
groups as defined by Merrill Lynch (Appendix A);
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<PAGE> 18
6. may, for defensive purposes only, hedge the International
Equity Portfolio currency exposure through the use of futures,
options, or currency contracts (see "Currency Hedging" on page
16); and
7. may, for short-term investment or defensive purposes only,
invest in short-term instruments of U.S. or foreign issuers.
PORTFOLIO MANAGER
Hubert F. Atkinson, CFA, is Vice President and Chief Investment Officer of CL
Capital Management, Inc. He has held this position since joining the Adviser in
March 1989. In his role as Chief Investment Officer, Mr. Atkinson is
responsible for setting overall investment policies, client communication, and
determination of the asset mix for the Managed Portfolio as well as other
balanced accounts managed by CL Capital Management, Inc. He is responsible
for the management of the Managed Portfolio, the Capital Portfolio and the
International Equity Portfolio of the Canada Life of America Series Fund, Inc.
The Capital Portfolio is also sub-advised by J. & W. Seligman & Co.,
Incorporated, and the International Equity Portfolio is also sub-advised by
Canada Life Investment Management Ltd. Mr. Atkinson has twenty years experience
and he also manages certain of the Adviser's other portfolios.
SUB-ADVISER PORTFOLIO MANAGER
Lance H. Speck, CFA, is a Vice President of the Sub-Adviser, Canada Life
Investment Management Limited, and has 16 years of experience, 14 of which are
with the Sub-Adviser as a manager for institutional clients and mutual funds.
Mr. Speck is responsible for the Sub-Adviser's day-to-day investment management
of the International Equity Portfolio. Mr. Speck also manages certain
institutional international portfolios of the Sub-Adviser.
INVESTMENT RESTRICTIONS
The Fund is subject to a number of restrictions in pursuing its investment
objectives and policies. The following is a brief summary of certain
restrictions. A complete list of the investment restrictions is set forth in
the Statement of Additional Information. There are two classes of investment
restrictions in implementing the investment policies of the portfolios:
fundamental and nonfundamental. Nonfundamental restrictions may be changed by
the Fund's Board of Directors without shareholder approval. Shareholders will
be notified promptly of any such changes. Fundamental restrictions may not be
changed without the affirmative vote of a majority of the outstanding voting
securities of each portfolio affected by the change. A change in a fundamental
policy affecting only one portfolio may be effected with the affirmative vote
of the majority of the outstanding securities of that portfolio only. See
"Capital Stock" in the Statement of Additional Information for more
information.
The Fund's fundamental investment restrictions provide that no portfolio of the
Fund will:
1. invest more than 25% of its total assets in securities of
issuers primarily engaged in any one industry, excluding
obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, obligations of banks or savings
and loan associations, and instruments secured by these
instruments, such as repurchase agreements for U.S. government
securities; or
2. invest more than 5% of its total assets in securities of any
one issuer or purchase more than 10% of the outstanding voting
securities of an issuer, excluding obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities; or
3. borrow money, except from banks as a temporary measure for
extraordinary or emergency purposes (but not for investment or
leveraging), or pledge or mortgage more than 15% of total assets
as security for such indebtedness.
The Fund's nonfundamental restrictions provide that no portfolio of the Fund
will:
1. lend portfolio securities in an amount greater that 30% of
total assets; or
2. invest more than 20% of total assets in securities of
foreign issuers with the exception of the International Equity
Portfolio which may invest 100% of total assets in foreign
securities.
The percentage limitations for fundamental and nonfundamental restrictions, as
well as the investment policies and practices discussed elsewhere in the
Prospectus and the Statement of Additional Information, apply at the time of
investment.
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DESCRIPTION OF CERTAIN INVESTMENT PRACTICES
The following describes certain investment practices that the portfolios may
use in an effort to achieve their respective investment objectives. For more
information regarding investment practices of the portfolios, please see the
Statement of Additional Information.
WHEN-ISSUED SECURITIES
From time to time, in the ordinary course of business, any of the portfolios
may purchase securities, which are defined as permissible portfolio
investments, on a "when-issued" or delayed delivery basis; that is, securities
purchased for delivery beyond the normal settlement date, which usually would
occur within three business days of purchase. Debt instruments are often issued
on this basis. The price of such securities, which may be expressed in yield
terms, is fixed at the time a commitment to purchase is made, but delivery and
payment for the when-issued securities take place at a later date. The delayed
settlement date usually occurs within one month of the purchase. During the
period between purchase and settlement, no payment is made by a portfolio and
no interest accrues to the portfolio. To the extent that assets of a portfolio
are held in cash pending the settlement of a purchase of securities, that
portfolio would earn no income; however, it is the Investment Adviser's
intention that each portfolio will be fully invested to the extent practicable
and subject to the policies stated above. While when-issued securities may be
sold prior to the settlement date, the Investment Adviser intends to purchase
such securities with the purpose of actually acquiring them, unless the sale
appears desirable for investment reasons.
At the time a portfolio makes the commitment to purchase a security on a
when-issued basis, it will record the transaction and reflect the amount due
and the value of the security in determining its net asset value. The market
value of the when-issued securities may be more or less than the purchase price
payable at the settlement date. The Investment Adviser does not believe that a
portfolio's net asset value or income will be adversely affected by the
purchase of securities on a when-issued basis. Each portfolio will establish a
segregated account with the Fund's custodian bank in which it will maintain
cash and U.S. Government securities or other high-grade debt obligations at
least equal in value to commitments for when-issued securities. Such segregated
securities either will mature or, if necessary, be sold on or before the
settlement date.
LOANS OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each portfolio may lend
securities from its portfolio (but not in excess of 30% of its total assets) to
nonaffiliated brokers, dealers, and financial institutions. Any such loans will
be continuously secured by collateral at least equal to the current market
value of the securities loaned plus accrued interest. The Investment Adviser
will review the creditworthiness of the borrower and must have found such
creditworthiness satisfactory. The risk associated with securities lending
undertaken by the Fund should be minimized, because the loans will be fully
secured and the creditworthiness of the borrowers will, in each case, have been
found to be satisfactory.
PUT AND CALL OPTIONS
Each portfolio, with the exception of the Money Market Portfolio, may invest in
options in an attempt to enhance performance or to reduce the risks associated
with investments. A portfolio, with the exception of the Money Market
Portfolio, may invest up to 5% of its assets in premiums on put options,
including put options on stock index futures contracts and put options on stock
indices, provided that the portfolio purchasing put options owns the securities
underlying the puts or securities substantially similar to such underlying
securities. A portfolio may also write call options on securities held by the
portfolio, or on securities which can be readily acquired by exercise of
conversion privileges on convertible securities, provided that not more than
25% of the total assets of a portfolio would be subject to call options,
including call options on stock index futures contracts and call options on
stock indices. The Fund will not sell put options or purchase call options
unless the transaction is for the purpose of closing out existing options
positions. The Fund may enter into closing transactions, exercise its options
or permit them to expire. For information regarding investment by the Value
Equity, Managed, Capital, and International Equity Portfolios in stock index
futures, options on stock index futures, and stock index options, see below.
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STOCK INDEX FUTURES, OPTIONS ON STOCK INDEX FUTURES, AND STOCK INDEX OPTIONS
The Value Equity, Managed, Capital, and International Equity Portfolios may
purchase and sell stock index futures contracts, options on stock index futures
contracts, and stock index options, as described below.
Stock index futures and options thereon will be traded in U.S. domestic markets
such as the Chicago Board of Trade, the International Monetary Market of the
Chicago Mercantile Exchange, and the New York Futures Exchange. A stock 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 market value of a particular index
futures contract reflect changes in the specified index of securities on which
the futures contract is based.
The Value Equity, Managed, Capital, and International Equity Portfolios may
also purchase or sell options on stock index futures. An option on a futures
contract gives the purchaser the right, in return for the premium paid, to
assume a position in a futures contract (a long position if the option is a
call and a short position if the option is a put) at a specified exercise price
at any time during the option exercise period. The writer of the option is
required upon exercise to assume an offsetting futures position (a short
position if the option is a call and a long position if the option is a put).
Upon exercise of the option, the assumption of offsetting futures positions by
the writer and holder of the option will be accompanied by delivery of the
accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract. The portfolio
will not sell put options on futures contracts or purchase call options on
futures contracts unless the transaction is for the purpose of closing out
existing options positions.
The Value Equity, Managed, Capital, and International Equity Portfolios may
also purchase or sell stock index options. Stock index options will also be
traded in national U.S. markets. Stock index options are similar to options on
securities except that on exercise or assignment, the parties to the contract
pay or receive an amount of cash equal to the difference between the closing
value of the index and the exercise price of the option times a specified
multiple.
The portfolios may engage in transactions in futures contracts, options on
futures contracts, and stock index options only for hedging purposes, and not
for speculation. There can be no guarantee that the objectives sought to be
obtained from the use of these instruments will be achieved. For example,
hedging may not be fully effective to the extent that the movements in the
prices of securities being hedged do not correlate perfectly with movements in
the price of futures contracts.
A portfolio will not purchase or sell futures or options on futures if,
thereafter, the sum of amounts of initial margin deposits and premiums paid for
options on futures would exceed 5% of the market value of the portfolios'
assets. In addition, not more than 25% of the total assets of a portfolio may
be subject to long and short futures contracts. Pursuant to regulations and/or
positions of the Commodity Futures Trading Commission and the Securities and
Exchange Commission, a portfolio may be required to segregate cash, U.S.
Government securities, or other appropriate high-grade debt obligations in
connection with its futures, options on futures, and stock index options
transactions in an amount generally equal to the value of the portfolio's
potential obligation under the futures contract or option. The segregation of
such assets will have the effect of limiting the portfolio's ability to
otherwise invest those assets.
Successful use of stock index futures, options on stock index futures, and
stock index options by the portfolios is subject to the ability to correctly
predict movements in the direction of the market. In addition, a lack of
correlation between the index or instrument underlying an options or futures
contract and the assets being hedged, or unexpected adverse price movements,
could render a portfolio's hedging strategy unsuccessful and could result in
losses. Moreover, when an option has been written, in the event of a decline,
the underlying position is only hedged to the extent of the amount of premium
received. Also, there can be no assurance that a liquid secondary market will
exist for any contract purchased or sold, and a portfolio may be required to
maintain a position until exercise or expiration, which could result in losses.
Finally, if a broker or clearing member of an options or futures clearing
corporation were to become insolvent, the portfolio could experience delays and
might not be able to trade or exercise options or futures purchased through
that broker.
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INTERNATIONAL INVESTMENTS
With the exception of the International Equity Portfolio which may have 100% of
its assets in the securities of foreign issuers, each portfolio may invest up
to 20% of its assets in securities of foreign issuers to the extent the
purchase of such foreign securities is otherwise consistent with the
portfolio's objectives. With respect to quality and risk, the Investment
Adviser will attempt to select investments in foreign securities on the same
basis that it selects investments in domestic securities.
Investment in foreign securities presents certain risks including those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, the imposition of foreign taxes, future political and economic
developments including war, expropriations, nationalization, the possible
imposition of currency exchange controls and other foreign governmental laws or
restrictions, reduced availability of public information concerning issuers,
and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.
In addition, transactions in foreign securities may be subject to higher costs,
and the time for settlement of transactions in foreign securities may be longer
than the settlement period for domestic issuers. The Fund's investment in
foreign securities may also result in higher custodial costs and the costs
associated with currency conversions.
DEVELOPING COUNTRIES
Investing in developing countries entails even greater risk than investing in
foreign securities in general. The International Equity Portfolio may invest in
securities of companies located in countries with developing economies or
securities markets. These countries are located in the Asia-Pacific region,
Eastern Europe, Central and South America and Africa. Political and economic
structures in many of these countries may be undergoing significant evolution
and rapid development, and such countries may lack the social, political and
economic stability characteristic of more developed countries. Certain of these
countries may have in the past failed to recognize private property rights and
have at times nationalized or expropriated the assets of private companies. As
a result, the risks of foreign investment generally including the risks of
nationalization or expropriation of assets, may be heightened.
The small size and inexperience of the securities markets in certain of these
countries and the limited volume of trading in securities in those countries
may also make the International Equity Portfolio's' investments in such
countries illiquid and more volatile than investments in developed countries,
and the Portfolio may be required to establish special custody arrangements
before making certain investments in those countries. There may be little
financial or accounting information available with respect to issuers located
in such countries, and it may be difficult as a result to assess the value or
prospects of an investment in such issuers. The laws of some foreign countries
may limit the availability of the International Equity Portfolio to invest in
securities of certain issuers located in those countries.
CURRENCY HEDGING
The International Equity Portfolio may engage in currency hedging to manage
exposure to currency fluctuations. The International Equity Portfolio may buy
and sell options and futures contracts relating to foreign currencies or enter
into forward currency contracts (agreements to exchange one currency for
another at a future date). The International Equity Portfolio may not hedge
more than 100% of the assets of any one currency. There is no assurance that
management of currency exposure will be done at the appropriate time or that
exchange rates will be predicted accurately.
REPURCHASE AGREEMENTS
As part of its investment practices, each portfolio may enter into repurchase
agreements. A repurchase agreement is a transaction where a portfolio buys a
security and simultaneously agrees to sell that same security back to the
original owner at a specified price and date. The repurchase price determines
the yield during the period that the security is held by the portfolio. That
yield is determined by current short term rates and may be more or less than
the interest rate on the underlying security. Should the issuer fail to
repurchase the underlying obligation, the loss to the portfolio, if any, would
be the difference between the repurchase price and the underlying obligation's
market value. The portfolio might experience delays in recovering its money and
may incur costs in enforcing its rights. To
17
<PAGE> 22
minimize this risk, the Investment Adviser will review the creditworthiness of
the bank, broker or dealer with whom the agreement was entered into, and must
find such creditworthiness satisfactory before a portfolio may enter into the
repurchase agreement.
MANAGEMENT OF THE FUND
The Board of Directors supervises the business affairs and investments of the
Fund, which are managed on a daily basis by the Fund's Investment Adviser. The
Board consists of five individuals.
INVESTMENT ADVISER
The Fund's Investment Adviser is CL Capital Management, Inc. (the "Adviser").
The Adviser is a wholly-owned subsidiary of the Company, which in turn is a
wholly-owned subsidiary of Canada Life. The address of the Adviser is 6151
Powers Ferry Road, N.W., Atlanta, Georgia 30339. Subject to the control and
supervision of the Fund's Board of Directors, the Adviser provides management
and investment advisory services to the Fund for the Money Market, Bond, Value
Equity, and Managed Portfolios, and management services for the Capital and
International Equity Portfolios. Management services include management and
administrative services necessary for the operation of the Fund, such as
processing shareholder orders and administering shareholder accounts.
Investment advisory services include providing the Fund with investment
research, advice and supervision, continuously furnishing the Fund with an
investment program for each portfolio, and determining from time to time which
securities shall be purchased, sold or exchanged and what portions of the
portfolio will be held in the various securities in which the portfolio
invests. In addition, the Adviser provides the Fund with office space,
equipment and facilities necessary for the Fund's operation.
The Adviser was incorporated on March 1, 1989 and began rendering investment
advisory services on behalf of the Fund on May 1, 1995. The Adviser has
rendered investment advisory services on behalf of separate accounts sponsored
by Confederation Life Insurance Company (U.S.) in Rehabilitation
("Confederation Life") since CLCM's incorporation in 1989. The Confederation
Life separate accounts advised by CLCM are invested in domestic and
international equity portfolios, long and short term bond portfolios, money
market and small company capital stock portfolios. Canada Life is one of the
largest life insurance companies in North America, with consolidated assets as
of December 31, 1995 of approximately $20.8 billion (U.S. dollars), of which in
excess of $5.2 billion is in U.S. assets.
CAPITAL PORTFOLIO SUB-ADVISER
The Capital Portfolio Sub-Adviser is J. & W. Seligman & Co., Incorporated (the
"Capital Portfolio Sub-Adviser"). The address of the Capital Portfolio
Sub-Adviser is 100 Park Avenue, New York, New York, 10017. Pursuant to a
Sub-Advisory Agreement between the Investment Adviser and the Capital Portfolio
Sub-Adviser, the Capital Portfolio Sub-Adviser provides investment advisory
services to the Capital Portfolio. The investment advisory services include
providing the Capital Portfolio with investment research, advice and
supervision, continuously furnishing an investment program, and determining
from time to time which securities shall be purchased, sold or exchanged.
The Capital Portfolio Sub-Adviser was incorporated on April 20, 1978. The
Capital Portfolio Sub-Adviser also serves as manager of seventeen investment
companies in the Seligman Group, the aggregate assets of which were
approximately $11.9 billion at December 31, 1995. The Capital Portfolio
Sub-Adviser also provides investment management or advice to individual and
institutional accounts having a December 31, 1995 value of approximately $3.9
billion.
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<PAGE> 23
INTERNATIONAL EQUITY PORTFOLIO SUB-ADVISER
The International Equity Portfolio Sub-Adviser is Canada Life Investment
Management Limited (the "International Equity Portfolio Sub-Adviser"). The
address of the International Equity Portfolio Sub-Adviser is 130 Adelaide
Street West, Suite 3000, Toronto, Ontario, Canada, M5H 3P5. Pursuant to a
Sub-Advisory agreement between the Investment Adviser and the International
Equity Portfolio Sub-Adviser, the International Equity Portfolio Sub-Adviser
provides investment advisory services to the International Equity Portfolio.
The investment advisory services include providing the International Equity
Portfolio with investment research, advice and supervision, continuously
furnishing an investment program, and determining from time to time which
securities shall be purchased, sold, or exchanged.
The International Equity Portfolio Sub-Adviser was incorporated on February 24,
1977. The International Equity Portfolio Sub-Adviser also serves as manager of
assets of The Canada Life Assurance Company, the aggregate assets of which were
approximately Canadian $3.8 billion at December 31, 1995. The International
Equity Portfolio Sub-Adviser also provides investment management to individual
and institutional accounts having a December 31, 1995 value of approximately
Canadian $2.5 billion.
ADVISORY FEES AND EXPENSES
The Fund pays the Adviser, as full compensation for all facilities and services
it provides to the Fund, a monthly fee computed for each portfolio on a daily
basis, at an annual rate of 0.50% of the net assets of the portfolio except the
International Equity Portfolio which has an annual rate of 0.80%*. With respect
to the Capital Portfolio, the Adviser in turn pays the Capital Portfolio
Sub-Adviser, as full compensation for investment advisory services to the
Capital Portfolio, a monthly fee computed on a daily basis, at an annual
effective rate of 0.25% of the net assets of the Capital Portfolio. With
respect to the International Equity Portfolio, the Adviser in turn pays the
International Equity Portfolio Sub-Adviser, as full compensation for investment
advisory services to the International Equity Portfolio, a monthly fee computed
on a daily basis, at an annual effective rate of 0.30% of the net assets of the
International Equity Portfolio. The Fund incurs certain operating and general
administrative expenses in addition to the Adviser's fee. These expenses, which
are accrued daily, include but are not limited to: taxes; expenses for legal
and auditing services; costs of printing; charges for custodial services;
transfer agent fees, if any; expenses of redemption of shares; Securities and
Exchange Commission fees; expenses of registering shares under federal and
state securities laws; accounting costs; insurance; interest; brokerage costs;
and other expenses properly payable by the Fund. Certain expenses are paid by
the particular portfolio that incurs them, while other expenses are allocated
among the portfolios on the basis of the asset size of the respective
portfolio, or by the Board of Directors as appropriate. At the current time, we
are reimbursing the Fund for expenses that exceed 0.40% of the Managed, Bond,
Value Equity, Capital, and International Equity Portfolio, and 0.25% of the
Money Market Portfolio. During the period between May 1, 1994 and April 30,
1995, we were reimbursing the Fund for expenses that exceeded 0.50% of the
Managed, Bond, Value Equity and Capital Portfolios, and 0.25% of the Money
Market Portfolio. However, we reserve the right to discontinue this
reimbursement at anytime.
* The investment advisory fee for the International Equity Portfolio
exceeds the industry average of investment advisory fees for domestic
funds but does not exceed the industry average of advisory fees for
international funds.
CUSTODIAN
The Chase Manhattan Bank, N.A., Chase Manhattan Plaza, New York, New York,
10081, acts as custodian of the Fund's assets. The Chase Manhattan Bank, N.A.,
is authorized to use the facilities of the Depository Trust Company, the
book-entry system of the Federal Reserve Banks, sub-custodians, and other
depositories as necessary in foreign markets.
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<PAGE> 24
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
CL Capital Management, Inc. serves as the Fund's Transfer Agent and Dividend
Disbursing Agent.
CAPITAL STOCK AND SHAREHOLDER INFORMATION
The Fund is a "series" company which issues shares in separate portfolios of
the same class. Shares of four different portfolios were originally authorized
by the Board of Directors; shares of a fifth portfolio were authorized by the
Board of Directors on February 25, 1993; and shares of a sixth portfolio were
authorized by the Board of Directors on February 23, 1995. The Board of
Directors is authorized to create new portfolios of shares without the
necessity of a vote of shareholders of the Fund. The Board of Directors may
change the designation of any portfolio and may increase or decrease the number
of shares of any portfolio, but may not decrease the number of shares of a
portfolio below the number then outstanding.
The assets received by the Fund on the sale of shares of each portfolio and all
income, earnings, profits and proceeds thereof, subject only to the rights of
creditors, are allocated to each portfolio, and constitute the assets of such
portfolio. The assets of each portfolio are required to be segregated on the
Fund's books of account.
The shares of each portfolio have equal rights and privileges with all other
shares of that portfolio. Each share of a portfolio represents an equal
proportionate interest in that portfolio with each other share. Upon
liquidation of the Fund or any portfolio, shareholders of a portfolio are
entitled to share pro rata in the net assets of that portfolio available for
distribution to shareholders. Shares have no preemptive or conversion rights.
The right of redemption is described under "Purchases And Redemptions of
Shares." Shares of each portfolio are fully paid and non-assessable by the
Fund. The Board of Directors is authorized to classify unissued shares of the
Fund by assigning them to a portfolio for issuance.
Currently, shares of the Fund are being offered to Variable Annuity Account 1
and Annuity Account 2 of the Company, and to Variable Annuity Account 1 of
CLNY. Shares of the Fund may in the future be sold to other separate accounts,
including separate accounts established to receive and invest premiums received
under variable life insurance policies issued by the Company, CLNY, or Canada
Life. It is conceivable that, in the future, it may become disadvantageous for
variable life insurance separate accounts, variable annuity separate accounts,
and group annuity separate accounts to invest in the Fund simultaneously.
Although neither the Company, CLNY, or the Fund currently foresees any such
disadvantages, either to variable life insurance policyowners or to variable
annuity policyowners, if Fund shares are sold to both types of separate
accounts, the Fund's Board of Directors intends to monitor events in order to
identify any material conflicts between the variable life policyowners and the
variable annuity policyowners and to determine what actions, if any, should be
taken in response thereto. Such action could include the sale of Fund shares by
one or more of the separate accounts, which could have adverse consequences.
Material conflicts could result from, for example: 1) changes in state
insurance laws; 2) changes in federal income tax laws; or 3) differences in
voting instructions between those given by variable life insurance
policyowners, variable annuity policyowners, and group annuity participants. If
the Board of Directors were to conclude that separate funds should be
established for variable life, variable annuity separate accounts, and group
annuity separate accounts the Company and CLNY will bear the attendant
expenses, but variable life insurance policyowners, variable annuity
policyowners, and group annuity participants would no longer have the economies
of scale resulting from a larger combined fund.
Each share will have a vote, and fractional shares will be counted. When
issued, shares do not have cumulative voting rights. On matters affecting a
particular portfolio, only the shareholders of that portfolio will be entitled
to vote. On matters relating to all of the portfolios, but affecting each
portfolio differently, separate votes by portfolio will be required.
Shareholders have the right to vote on the election of Directors and on any and
all matters on which by law or the provisions of the Fund's By-Laws they may be
entitled to vote. Shareholders of all portfolios vote for a single set of
Directors. The present Board of Directors was elected at a meeting of
shareholders held on October 15, 1990, and will serve for terms of unlimited
duration (subject to certain removal procedures by the Directors or the
shareholders). The Fund does not intend to hold annual meetings of
shareholders. The Board of Directors has the power to alter the number of
Directors and to appoint successor Directors, provided that immediately after
the appointment of any successor Director at least two-thirds of the Directors
have been elected by the shareholders of the Fund. However, if at any time less
than a majority of Directors holding office has been elected by the
20
<PAGE> 25
shareholders, the Directors are required to call a special meeting of
shareholders for the purpose of electing Directors to fill any existing
vacancies in the Board.
Individual policyowners, and group annuity participants are not the
"shareholders" of the Fund. Rather, the Company, CLNY, and their separate
accounts are the shareholders. The Company and CLNY own Fund shares
attributable to policies participating in their registered separate accounts.
In addition, amounts may be held in these separate accounts, or in the general
account of the Company or CLNY, reflecting charges deducted from policies and
amounts allocated by the Company or CLNY to facilitate commencement of
operations. The Company and CLNY intend to vote all such Fund shares held in
registered separate accounts, or in the general accounts of the Company or
CLNY, in accordance with instructions received from policyowners, to the extent
required by law. Shares for which no voting instructions are received shall be
voted by the Company (or other shareholders) in proportion to the shares for
which voting instructions are received. Fund shares also may be offered to
unregistered separate accounts of the Company, Canada Life or its affiliates.
To the extent that the shares of the Fund are sold in the future to such
unregistered separate accounts, those shares will be voted by the shareholders
at their discretion.
PERFORMANCE INFORMATION
The Fund may, from time to time, include quotations of the total return or
yield of the portfolios, along with the performance of the relevant insurance
company separate account, in advertisements, sales literature or reports to
policyowners or to prospective investors. Total return and yield quotations for
all portfolios reflect only the performance of a hypothetical investment in the
portfolios during the particular time period shown as calculated based on the
historical performance of the portfolios during that period. SUCH QUOTATIONS DO
NOT, IN ANY WAY, INDICATE OR PROJECT FUTURE PERFORMANCE. Quotations of total
return and yield of the Fund's portfolios will not reflect charges or
deductions against the separate accounts of the Company or CLNY or charges and
deductions against the policies. Where relevant, the Prospectuses for the
policies contain performance information about the policies.
The total return of a portfolio refers to the average annual percentage change
in value of an investment in the portfolio held for various periods of time
including, but not limited to, a period measured from the date a portfolio
began operations, as of a stated ending date. When a portfolio has been in
operation 1, 5, and 10 years, respectively, the average annual total return for
these periods will always be provided. Total return quotations will be
expressed as average annual compound rates of return for each of the periods
quoted, will reflect the deduction of a proportional share of portfolio
expenses, and will assume that all dividends and capital gains distributions
during the period are reinvested in the portfolio when made. Quotations of
total return may also be shown for other periods.
The Fund may, from time to time, compare performance information for a
portfolio, in advertisements, sales literature and reports to policyowners or
to prospective investors to:
1) the Standard & Poor's composite index of 500 common stocks,
a widely used index to measure stock market performance. This
unmanaged index does not reflect any "deduction" for the expense
of operating or managing a fund;
2) the Lehman Brothers Government/Corporate Bond Index, an
index that includes the Lehman Brothers Government Bond and
Corporate Bond Indices. These indices are total rate of return
indices. The Government Bond Index includes the Treasury Bond
Index (public obligations of the U.S. Treasury) and the Agency
Bond Index (publicly issued debt of U.S. Government agencies,
quasi-federal corporations, and corporate debt guaranteed by the
U.S. Government). The Corporate Bond Index includes publicly
issued, fixed rate, nonconvertible investment grade
dollar-denominated, SEC registered corporate debt. All issues
have at least a one-year maturity, and all returns are at market
value inclusive of accrued interest. Other independent indices
such as those prepared by Lehman Brothers Bond Indices may also
be used as a source of performance comparison;
3) the Dow Jones Industrial Average, a stock average of 30 blue
chip stock companies that does not represent all new industries.
Other independent averages such as those prepared by Dow Jones &
Company, Inc. may also be used as a source of performance
comparison. Day to day changes may not be reflective of the
overall market when an average is composed of a small number of
companies;
4) the Morgan Stanley Capital International EAFE index which
represents the stock markets of Europe, Australia, New Zealand,
and the Far East and is widely used to measure performance of
world stock
21
<PAGE> 26
markets excluding the U.S. market. This unmanaged
index does not reflect any "deduction" for the expense of
operating or managing a fund;
5) groups of mutual funds whose performance is reported by
Lipper Analytical Services, a widely quoted independent research
firm which ranks mutual funds by overall performance, investment
objectives, and assets, or reported by other services, companies,
publications, or individuals who rank mutual funds by overall
performance of other criteria; and
6) the Consumer Price Index. Other services or publications may
also be cited in advertisements, sales literature, and reports to
policyowners or prospective investors.
The Money Market Portfolio yield quotation refers to the income generated by a
hypothetical investment in the Portfolio over a specified seven-day period if
that level of income were generated for 52 consecutive weeks and expressed as
an annual percentage rate of return. The quotation of compound effective yield
for the Money Market Portfolio refers to the same calculation adjusted to
reflect the compounding effect of earnings on reinvested dividends.
The Bond, Managed, Value Equity, Capital, and International Equity Portfolios
yield quotations refers to the income generated by a hypothetical investment in
the Portfolio over a specified 30 day or one month period expressed as a
percentage rate of return for that period. The yield is calculated by dividing
the net investment income per share for the period by the price per share on
the last day of that period.
See the Statement of Additional Information for more information about the
Fund's performance.
PURCHASES AND REDEMPTIONS OF SHARES
The Fund currently offers its shares, without sales charge, only for purchase
by the Company, CLNY, and their separate accounts. Shares may also be sold to
Canada Life, its affiliates and their separate accounts. The Fund continuously
offers shares in each of its portfolios at prices equal to their respective
net asset values per share next determined after the request is deemed
received by the Fund.
The Fund redeems all full and fractional shares of the Fund for cash. No
redemption fee is charged, although there may be a contingent deferred sales
charge applicable to surrenders or withdrawals under the policies, as described
in the Policy Prospectus. The redemption price is the net asset value per share
of the respective portfolio next determined after the request for redemption is
deemed received. Payment for shares redeemed will generally be made within
seven days after receipt of a proper notice of redemption. The right to redeem
shares or to receive payment with respect to any redemption may be suspended or
postponed for any period during which: 1) 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; 2)
an emergency exists, as determined by the Commission, as a result of which
disposal of securities owned by the Fund is not reasonably practicable or it is
not reasonably practicable for the Fund to fairly determine the value of its
net assets; or 3) the Commission by order so permits for the protection of
shareholders of the Fund.
VALUATION OF SHARES
The net asset value of each portfolio's shares is determined once daily as of
the close of the New York Stock Exchange (usually at 4:00 p.m. Eastern Time)
on each day on which the Exchange is open for trading, except for the business
day after Thanksgiving and the business day after Christmas.
The net asset value of a share is computed by dividing the value of the net
assets of the portfolio by the total number of shares outstanding. Securities
held by the Bond, Value Equity, Managed, Capital, and International Equity
Portfolios, except for money market instruments maturing in 60 days or less,
are valued at their market value if market quotations for the securities are
readily available. Otherwise, such securities are valued at fair value as
determined in good faith by or under the supervision of the Board of Directors.
Actual calculations of fair value may be made by persons acting pursuant to and
under the direction of the Board. Securities held by the Money Market
Portfolio, and money market instruments maturing in 60 days or less that are
held by the other portfolios of the Fund, are valued on an amortized cost
basis. The amortized cost method of valuation involves valuing a security at
cost on the date of acquisition and thereafter assuming a constant accretion of
a discount or amortization of a premium
22
<PAGE> 27
to maturity. The Money Market Portfolio seeks to maintain a constant net asset
value of $10 per share. The Money Market Portfolio will not maintain a
dollar-weighted average portfolio maturity which exceeds 90 days.
For additional information on the valuation of securities, refer to the
Statement of Additional Information.
DIVIDENDS
Dividends from investment income and any net realized capital gains of the
Money Market Portfolio shall be declared daily and reinvested quarterly in
additional shares of the Money Market Portfolio at net asset value. Dividends
from investment income and any net realized capital gains of the Value Equity,
Bond, Managed, Capital, and International Equity Portfolios shall be declared
and reinvested annually in additional shares of the respective Portfolio at its
net asset value.
TAXES
Each portfolio is treated as a separate entity for Federal income tax purposes.
Each portfolio intends to qualify and elect to be taxed as a "regulated
investment company" under Subchapter M of the Internal Revenue Code. Dividends
derived from investment income or any realized capital gains are taxable to the
Fund's shareholders, i.e., the Company, CLNY, their separate accounts, and
Canada Life, its affiliates and their separate accounts, and are therefore not
directly taxable to policyowners.
LEGAL PROCEEDINGS
There are at present no legal proceedings to which the Fund is a party.
REGISTRATION STATEMENT
The Statement of Additional Information and this Prospectus do not include all
the information contained in the Registration Statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 and
reference is hereby made to the Registration Statement for further information
with respect to the Fund and the securities offered hereby. The Registration
Statement is available for inspection by the public at the Securities and
Exchange Commission in Washington, D.C.
APPENDIX A
The following Merrill Lynch industry sectors represent a reasonable
cross-section of economic activity:
Building - Credit Cyclical
Financial
Consumer Services
Consumer Staples
Consumer Cyclicals
Capital Goods- Technology
Capital Goods - Industrial
Energy
Basic Industries
Transportation
Utilities
23
<PAGE> 28
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 29
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
CANADA LIFE OF AMERICA SERIES FUND, INC.
(THE "FUND")
This Statement of Additional Information is not a prospectus, and should be
read in conjunction with the Fund's current Prospectus dated May 1, 1996. A
copy of the Prospectus may be obtained by contacting the Fund at 6201 Powers
Ferry Road, NW, Atlanta, Georgia, 30339, or at (800) 905-1959.
The date of this Statement of Additional Information is May 1, 1996.
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 1
<PAGE> 30
TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT POLICIES............................................................... 3
Obligations Of The U.S. Government, Its Agencies And Instrumentalities....... 3
Certificates Of Deposit...................................................... 3
Banker's Acceptances......................................................... 3
Commercial Paper............................................................. 3
Corporate Obligations ....................................................... 3
Canadian And Provincial Government And Crown Agency Obligations ............. 3
Repurchase Agreements........................................................ 4
INVESTMENT PRACTICES ............................................................. 4
Loans Of Portfolio Securities ............................................... 4
Put And Call Options ........................................................ 5
Stock Index Futures, Options On Stock Index Futures, And Stock Index Options. 5
International Investments.................................................... 7
Currency Hedging............................................................. 7
GNMA Certificates............................................................ 8
Warrants..................................................................... 8
Lower Quality Debt Instruments .............................................. 8
INVESTMENT RESTRICTIONS .......................................................... 9
PORTFOLIO TURNOVER................................................................ 11
INVESTMENT EXPERIENCE INFORMATION ................................................ 11
Performance Quotations ...................................................... 11
Money Market Portfolio Yield Quotations ..................................... 12
Other Portfolio Yield Quotations............................................. 12
Total Return Quotations ..................................................... 13
MANAGEMENT OF THE FUND ........................................................... 13
Directors And Officers ...................................................... 13
Custodian ................................................................... 14
Accounting Services ......................................................... 14
Investment Adviser .......................................................... 14
Capital Portfolio Sub-Adviser ............................................... 15
International Equity Portfolio Sub-Adviser................................... 15
Advisory Fees And Expenses .................................................. 16
Investment Advisory Agreement ............................................... 16
Capital Portfolio Sub-Advisory Agreement .................................... 16
International Equity Portfolio Sub-Advisory Agreement ....................... 17
Securities Activities Of The Adviser And Sub-Advisers ....................... 17
Portfolio Transactions And Brokerage ........................................ 18
PURCHASE AND REDEMPTION OF SHARES ................................................ 18
DETERMINATION OF NET ASSET VALUE ................................................. 19
Money Market Portfolio....................................................... 19
Other Portfolios............................................................. 19
TAXES ............................................................................ 20
GENERAL INFORMATION .............................................................. 20
Capital Stock ............................................................... 20
Additional Information ...................................................... 21
Financial Statements ........................................................ 21
APPENDIX A: DEBT SECURITY RATINGS ................................................ 22
Standard & Poor's Corporation ............................................... 23
Moody's Investment Service, Inc. ............................................ 22
Duff & Phelps (D&P) Fixed Income Rating Scale ............................... 23
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 2
<PAGE> 31
INVESTMENT POLICIES
The following supplements the Fund's "Investment Objectives, Policies and
Risks" set forth in the Prospectus.
Certain money market instruments are described below. They may be used
extensively by the Money Market Portfolio, and may also be used by the other
portfolios, as outlined in the Prospectus.
OBLIGATIONS OF THE U.S. GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES
U.S. Government obligations are debt securities issued or guaranteed as to
principal and 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 and 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,
obligations of the Federal Home Loan Banks, Federal Intermediate Credit Banks,
and the Federal National Mortgage Association. U.S. instrumentality obligations
include, but are not limited to, obligations of 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 or the Federal Reserve Banks, such as
those issued by Federal Intermediate Credit Banks; others are supported by
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others are supported only by the credit
of the agency or instrumentality. The foregoing types of instruments are
hereafter collectively referred to as "obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities."
CERTIFICATES OF DEPOSIT
A certificate of deposit is a short-term, interest bearing, negotiable
certificate issued by a bank or a savings and loan association against funds
deposited in the issuing institution.
BANKER'S ACCEPTANCES
A banker's acceptance is a short-term credit instrument evidencing the
obligation of a bank to pay a draft which has been drawn on it by a customer.
These instruments reflect the obligation of both the bank and the drawer to pay
the face amount of the instrument upon maturity. They are primarily used to
finance the import, export, transfer or storage of goods. They are termed
"accepted" when a bank guarantees their payment at maturity.
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,
is usually sold on a discount basis, and has a maturity at the time of issuance
not exceeding nine months.
CORPORATE OBLIGATIONS
Corporate obligations include bonds and notes issued by corporations, generally
to finance long-term credit needs.
CANADIAN AND PROVINCIAL GOVERNMENT AND CROWN AGENCY OBLIGATIONS
Canadian Government obligations are debt securities issued or guaranteed as to
principal and 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.
Provincial Government obligations are debt securities issued or guaranteed as
to principal and interest by the government of any province of Canada pursuant
to authority granted by the Legislature of any such province and
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 3
<PAGE> 32
approved by the Lieutenant Governor in Council of any such province, where
necessary. These securities include treasury bills, notes, bonds and debentures.
Provincial Crown agency obligations are debt securities issued or guaranteed by
a provincial Crown corporation, company or agency pursuant to authority granted
by a provincial Legislature and approved by the Lieutenant Governor in Council
of such province, where necessary. Certain provincial Crown agencies are by
statute agents of Her Majesty in right of a particular province of Canada, and
their obligations, when properly authorized, constitute direct obligations of
such province. Other provincial Crown agencies, which are not by law agents of
Her Majesty in right of a particular province of Canada, may issue obligations
which by statute the Lieutenant Governor in Council of such province may
guarantee, or may authorize the Treasurer thereof to guarantee, on behalf of
the government of such province.
Finally, other provincial Crown agencies which are not by law agencies of Her
Majesty may issue or guarantee obligations not entitled to be guaranteed by a
provincial government. No assurance can be given that the government of any
province of Canada will support the obligations of provincial Crown agencies
which are not agents of Her Majesty, or which it has not guaranteed, as it is
not obligated to do so by law. Provincial Crown agency obligations described
above include, but are not limited to, those issued or guaranteed by a
provincial railway corporation, a provincial hydroelectric or power commission
or authority, a provincial municipal financing corporation or agency and a
provincial telephone commission or authority.
Any Canadian or Provincial government or Crown Agency obligation acquired by a
Fund portfolio will be denominated in U.S. currency.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction where a portfolio buys a security at
one price and simultaneously agrees to sell that same security back to the
original owner at a specified price and date. Generally, repurchase agreements
are of short duration, often less than one week but on occasion may be for
longer periods. The repurchase price reflects an agreed upon interest rate
unrelated to the coupon rate on the underlying obligation. Repurchase
agreements entered into by the Fund will be with banks, brokers or dealers. All
repurchase agreements entered into by a portfolio will be subject to the
Adviser evaluating the creditworthiness and financial responsibility of the
bank, broker or dealer with whom the agreement was entered into. The Fund's
Board of Directors establishes the standards utilized by the Adviser and
Sub-Advisers in evaluating the credit worthiness of the issuer. Repurchase
agreements will be fully collateralized at all times. Should an issuer of a
repurchase agreement fail to repurchase the underlying obligation, the loss to
the portfolio, if any, would be the difference between the repurchase price and
the underlying obligation's market value. A portfolio might also incur certain
costs in liquidating the underlying obligation. Moreover, if bankruptcy or
other insolvency proceedings should be commenced with respect to the seller,
realization upon the underlying obligation by the Fund might be delayed or
limited.
INVESTMENT PRACTICES
LOANS OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each portfolio may lend
securities from its portfolio (but not in excess of 30% of its total assets),
to brokers, dealers, and financial institutions. Any such loans will be
continuously secured by collateral at least equal to the current market value
of the securities loaned plus accrued interest. The portfolio may, at any time,
call the loan and regain the securities loaned. The Investment Adviser or
Sub-Advisers will review the creditworthiness of the borrower and must have
found such creditworthiness satisfactory prior to entering into any loan. The
Fund's Board of Directors establishes the standards utilized by the Adviser and
Sub-Advisers in evaluating the creditworthiness of the borrower. The risk
involved in loans of portfolio securities is minimized because, if the borrower
were to default, the collateral held by the portfolio should satisfy the
obligation.
The portfolio will retain all rights of beneficial ownership in the loaned
securities, including voting rights and rights to interest or other
distributions, and will have the right to regain record ownership of loaned
securities to exercise such beneficial rights.
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PUT AND CALL OPTIONS
Each portfolio, with the exception of the Money Market Portfolio, may invest up
to 5% of its assets in premiums on put options, provided that the portfolio
owns the securities underlying the puts or securities substantially similar to
such underlying securities. Each portfolio, with the exception of the Money
Market Portfolio, may also write call options on securities held by it, or
which can be readily acquired by exercise of conversion privileges on
convertible securities, provided that not more than 25% of the total assets of
a portfolio would be subject to call options. The Fund will not sell put
options or purchase call options unless the transaction is for the purpose of
closing out existing options positions. Put options purchased by the portfolio
and call options written by the portfolio, and the securities underlying such
options, will be listed on national securities exchanges or traded in the
over-the-counter market. The Fund may enter into closing transactions, exercise
its options or permit them to expire.
A put option gives the holder (buyer) the right to sell a security at a
specified price (the "exercise" price) at any time until a certain date (the
expiration date). In effect, the buyer of a put who also owns the related
security is protected by ownership of a put option against any decline in that
security's price below the exercise price less the amount paid for the option.
The ability to purchase put options allows a portfolio to protect capital gains
in an appreciated security it owns, without being required to actually sell
that security.
In writing "covered" call options, a portfolio gives the holder (purchaser) the
right to purchase the underlying security at a specified price (the "exercise"
price) at any time prior to the expiration of the option, normally within nine
months. Immediately upon writing the option, the portfolio receives a payment
from the purchaser of the option known as a "premium." If the option is not
exercised, the premium will generate additional revenues for the portfolio or,
if the market price of the underlying security declines, it reduces the amount
of loss the portfolio would otherwise incur. However, if the market price of
the underlying security rises above the exercise price and the option is
exercised, the portfolio will lose the opportunity to profit from that portion
of the rise which is in excess of the exercise price plus the premium for the
call. Therefore, a portfolio will write call options only when the Adviser
believes that the option premium will yield a greater return to the portfolio
than any capital appreciation that might occur on the underlying security
during the life of the option, or when the Adviser believes that the option
will reduce the risk involved in owning the underlying security. For
information regarding investment by the Value Equity, Managed, Capital and
International Equity Portfolios in stock index futures, options on stock index
futures, and stock index options, see below.
STOCK INDEX FUTURES, OPTIONS ON STOCK INDEX FUTURES, AND STOCK INDEX OPTIONS
Purchase or sales of stock index futures contracts may be used by the Value
Equity, Managed, Capital, and International Equity Portfolio to attempt to
protect the portfolio's current or intended investments from fluctuations in
securities prices. By establishing an appropriate "short" position in index
futures, a portfolio may seek to protect the value of its portfolio against an
overall decline in the market for such securities. Alternatively, in
anticipation of a generally rising market, a portfolio can seek to avoid losing
the benefit of apparently low current prices by establishing a "long" position
in stock index futures and later liquidating that position as particular
securities are in fact acquired. To the extent that these hedging strategies
are successful, the portfolio will be effected to a lesser degree by adverse
overall market price movements than would otherwise be the case.
A portfolio will incur brokerage fees when it purchases and sells futures
contracts, and it will be required to maintain margin deposits. Initially, when
purchasing or selling futures contracts the portfolio will be required to
deposit with the broker an amount of cash or U.S. Government securities equal
to approximately 5% to 10% of the contract amount. This amount is subject to
change by the exchange or board of trade on which the contract is traded and
members of such exchange or board of trade may impose their own higher
requirements. This amount is known as "initial margin" and is in the nature of
a performance bond or good faith deposit on the contract, which is returned to
the portfolio upon termination of the futures position, assuming all
contractual obligations have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker will be made daily as the price of
the index of securities underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "mark-to-market." At any time prior to the expiration of a
futures contract, the portfolio may elect to close the position by taking an
opposite position at the then prevailing price, which will operate to terminate
the portfolio's' existing position in the contract.
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The Value Equity, Managed, Capital, and International Equity Portfolios may
also purchase and write call and put options on stock index futures contracts
in order to hedge the portfolio's investments. A call option on a futures
contract gives the purchaser the right, in return for the premiums 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.
The Value Equity, Managed, Capital, and International Equity Portfolios may
also purchase and sell options on stock indices. Options on stock indices are
similar to options on stock except that: (a) the expiration cycles of stock
index options are monthly, while those of stock options are currently
quarterly; and (b) the delivery requirements are different. Instead of giving
the right to take or make delivery of stock at a specified price, an option on
a stock index gives the holder the right to receive a cash "exercise settlement
amount" equal to: (a) the amount, if any, by which the fixed exercise price of
the option exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the date of exercise;
multiplied by (b) a fixed "index multiplier." Receipt of this cash amount will
depend upon the closing level of the stock index upon which the option is based
being greater than (in the case of a call) or less than (in the case of a put)
the exercise price of the option. The amount of cash received will be equal to
such difference between the closing price of the index and the exercise price
of the option expressed in dollars times a specified multiple. The writer of
the option is obligated, in return for the premium received, to make delivery
of this amount. The writer may offset its position in stock index options prior
to expiration by entering into a closing transaction on an exchange or, in the
case of options owned by the portfolio, it may let the option expire
unexercised.
When a portfolio has a long position in a futures contract, the portfolio will
either cover the position, or establish a segregated asset account containing
cash, U.S. Government securities, or other appropriate high grade debt
obligations equal in value to the purchase price of the contract (less any
margin on deposit). When a portfolio has a short position in a futures
contract, the portfolio will either cover the position, or establish a
segregated asset account with cash, U.S. Government securities, or other
appropriate high-grade debt obligations equal to the market value of the
instruments underlying the futures contract (less any margin on deposit). Call
options sold by a portfolio with respect to futures contracts will be covered
by, among other things: entering into a long position in the same contract at a
price no higher than the strike price of the call option; or by ownership of
the instruments underlying, or instruments, the prices of which are expected to
move relatively consistently with the instruments underlying, the futures
contracts. Call options sold by a portfolio on a stock index will be covered by
the portfolio's holding a portfolio of stocks substantially replicating the
movement of the index underlying the call option. Put options sold by the
portfolio with respect to futures contracts or stock indices will be written
only to close out existing positions.
There can be no assurance of the Value Equity, Managed, Capital, and
International Equity Portfolios' successful use of stock index futures, options
on stock index futures, or stock index options as hedging devices. For example,
if the portfolio has hedged against the possibility of a decline in the market
adversely affecting stocks held in its portfolio and stock prices increase
instead, the portfolio will lose part or all of the benefit of the increased
value of its stocks which it has hedged because it will have offsetting losses
in its futures positions. In addition, in such situations, if the portfolio has
insufficient cash, it may have to sell securities to meet daily variation
margin requirements. Such sales of securities may be, but will not necessarily
be, at increased prices which reflect the rising market. The portfolio may have
to sell securities at a time when it may be disadvantageous to do so.
Additional risks arise because of the imperfect correlation between movements
in the price of the stock index option or stock index future and movements in
the price of the securities which are the subject of the hedge. In addition to
the possibility that there may be an imperfect correlation, or no correlation
at all, between movements in the index and the portion of the portfolio being
hedged, the price of stock index options or futures may not correlate perfectly
with the movement in the stock index due to certain market distortions. First,
all participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between the index and
futures markets. Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market also may cause temporary price distortions. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the stock index and movements in the
price of stock index futures, a correct forecast of general market trends still
may not result in a successful hedging transaction.
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In addition, there can be no assurance that a liquid secondary market will
exist for any contract purchased or sold, and a portfolio may be required to
maintain a position until exercise or expiration, which could result in losses.
Most futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may
be made that day at a price beyond that limit. Futures contract prices could
move to the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions. If a
futures market were to become unavailable, in the event of an adverse movement,
the portfolio 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, and an option writer would remain obligated until
exercise or expiration. Finally, if a broker or clearing member of an options
or futures clearing corporation were to become insolvent, the portfolio could
experience delays and might not be able to trade or exercise options or futures
purchased through that broker. In addition, the portfolio 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 to effect the portfolios' futures transactions. While the
principal purpose of hedging is to limit the affects of adverse market
movements, the attendant expense may cause the portfolios' returns to be less
than if hedging had not taken place. The overall effectiveness of hedging
therefore depends on the portfolios' accuracy in predicting future changes in
interest rate levels or securities price movements, as well as on the expense
of hedging.
INTERNATIONAL INVESTMENTS
The following information is of particular importance to the International
Equity Portfolio. International investments can involve significant risks in
addition to those inherited in U.S. investments. The value of assets
denominated in foreign currencies can fluctuate significantly as a result of
changes in value of foreign currencies against the U.S. dollar. Many
international markets have less trading volume and liquidity than U.S. Markets
which may result in volatile security prices. Accounting and disclosure
standards in many international markets are neither uniform nor comparable to
U.S. standards, and it may be difficult to obtain reliable information about a
company's operations and financial condition. The costs of investing in
international markets (brokerage commissions, custodian fees, withholding
taxes, etc.) are higher than similar costs of investing in the U.S.
International markets and may offer less investor protection than U.S. markets.
It may be difficult to enforce legal rights in foreign countries. There may be
less government supervision and regulation of companies, brokers, and markets.
Trading and settlement practices may result in increased risk because of failed
trades or broker insolvency.
Investing in developing countries entails even greater risk. The International
Equity Portfolio may invest in securities of companies located in countries
with developing economies or securities markets. These countries are located in
the Asia-Pacific region, Eastern Europe, Central and South America and Africa.
Political and economic structures in many of these countries may be undergoing
significant evolution and rapid development, and such countries may lack the
social, political and economic stability characteristic of more developed
countries. Certain of these countries may have in the past failed to recognize
private property rights and have at times nationalized or expropriated the
assets of private companies. As a result, the risks of foreign investment
generally including the risks of nationalization or expropriation of assets,
may be heightened.
The small size and inexperience of the securities markets in certain of these
countries and the limited volume of trading in securities in those countries
may also make the International Equity Portfolio's investments in such
countries illiquid and more volatile than investments in developed countries,
and this Portfolio may be required to establish special custody arrangements
before making certain investments in those countries. There may be little
financial or accounting information available with respect to issuers located
in such countries, and it may be difficult as a result to assess the value or
prospects of an investment in such issuers. The laws of some foreign countries
may limit the availability of the International Equity Portfolio to invest in
securities of certain issuers located in those countries.
CURRENCY HEDGING
Because investment in foreign securities will usually involve currencies of
foreign countries, the value of the assets of the International Equity
Portfolio as measured in U.S. dollars will be affected by changes in foreign
currency exchange rates. To manage exposure to currency fluctuations, the
International Equity Portfolio may buy and sell options and futures relating to
foreign currencies or enter into forward currency contracts (agreements to
exchange one currency for another at a future date).
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<PAGE> 36
Successful hedging will depend on the International Equity Portfolio
Sub-Adviser's skill in analyzing and predicting exchange rates, and could
result in an opportunity loss to the International Equity Portfolio if
currencies do not perform as expected. For example, if a currency rose in
value against the U.S. dollar at a time when the currency had been hedged by
selling that currency for dollars, the Portfolio would not have an opportunity
to benefit from the currency's appreciation.
GNMA CERTIFICATES
The Bond, Managed, and Capital Portfolios may each invest in securities of the
Government National Mortgage Agency ("GNMA"), a government corporation within
the U.S. Department of Housing and Urban Development. GNMA Certificates are
mortgage-backed securities representing part ownership in a pool of mortgage
loans. These loans, which are issued by lenders such as mortgage bankers,
commercial banks, and savings and loan associations, are either insured by the
Federal Housing Administration or guaranteed by the Veterans Administration. A
pool of these mortgages is assembled and, after being approved by GNMA, is
offered to investors through securities dealers. The timely payment of interest
and principal on each mortgage is guaranteed by GNMA and backed by the full
faith and credit of the U.S. Government.
GNMAs are called "pass-through" securities because both interest and principal
payments, including prepayments, are passed through to the holder of the
security. The payment of principal on the underlying mortgages may exceed the
minimum required by the schedule of payments for the mortgages. Such
prepayments are made at the option of the mortgagors for a wide variety of
reasons reflecting their individual circumstances. A portfolio, when such
prepayments are passed through to it, may be able to reinvest them only at a
lower rate of interest. The Adviser or Sub-Advisers, in determining the
attractiveness of GNMA Certificates in comparison to alternative fixed-income
securities, and in choosing specific GNMA Certificates issues, will make
assumptions as to the likely speed of prepayment. Actual experience may vary
from this assumption, resulting in a higher or lower investment return than
anticipated.
WARRANTS
The Value Equity, Managed, Capital, and International Equity Portfolios may
invest in warrants. A warrant is a right to buy a certain security at a set
price during a certain time period. Warrants purchased by these Portfolios will
be traded on a national securities exchange or in the over-the-counter market.
LOWER QUALITY DEBT INSTRUMENTS
Up to 20% of the total assets of the Bond Portfolio may be invested in lower
quality debt instruments (i.e. BB or B as rated by Standard & Poors and Duff &
Phelps or Ba or B as rated by Moody's Investors Service) and the Managed
Portfolio also may invest a substantial portion of its assets in such
instruments. Furthermore, debt instruments with higher ratings, and especially
those rated as investment grade but not high quality (i.e., rated BBB by
Standard & Poors and Duff & Phelps or Baa by Moody's Investor Service) may,
after purchase by either Portfolio, have their ratings lowered due to the
deterioration of the issuer's financial position. The Bond and Managed
Portfolios may both invest without limit in investment grade debt instruments
that are not "high quality" debt instruments and that may be downgraded to
lower quality at any time after being purchased by a Portfolio.
Lower quality debt instruments entail certain risks. These lower-rated
fixed-income securities are considered, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation and will generally involve more
credit risk than securities in the higher rating categories. The market values
of such securities tend to reflect individual corporate developments to a
greater extent than do higher-rated securities, which react primarily to
fluctuations in the general level of interest rates. Such lower-rated
securities also tend to be more sensitive to economic conditions than
higher-rated securities. Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, regarding lower-rated bonds may depress
prices and liquidity for such securities. To the extent a portfolio invests in
these securities, factors adversely affecting the market value of high-yielding
securities will adversely affect a portfolio's net asset value. In addition, a
portfolio may incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its
portfolio holdings. Although some risk is inherent in all securities ownership,
holders of fixed-income securities have a claim on the assets
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 8
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of the issuer prior to the holders of common stock. Therefore, an investment
in fixed-income securities generally entails less risk than an investment in
common stock of the same issuer.
High-yielding securities may be issued by corporations in the growth stage of
their development. They may also be issued in connection with a corporate
reorganization or as part of a corporate takeover. Companies that issue such
high-yielding securities are often highly leveraged and may not have more
traditional methods of financing available to them. Therefore, the risk
associated with acquiring the securities of such issuers generally is greater
than is the case with higher-rated securities. For example, during an economic
downturn or a sustained period of rising interest rates, highly leveraged
issuers of high-yielding securities may experience financial stress. During
such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific corporate developments,
the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss due to default by the
issuer is significantly greater for the holders of high-yielding securities
because such securities are generally unsecured and are often subordinated to
other creditors of the issuers.
High-yielding securities frequently have call or buy-back features that would
permit an issuer to call or repurchase the security from a portfolio. If a call
were exercised by the issuer during a period of declining interest rates, a
portfolio would likely have to replace such called security with a lower
yielding security, thus decreasing the net investment income to the portfolio.
A portfolio may have difficulty disposing of certain high-yielding securities
for which there is a thin trading market. Because not all dealers maintain
markets in all high-yielding securities, there is no established retail
secondary market for many of these securities, and the Fund anticipates that
they could be sold only to a limited number of dealers or institutional
investors. To the extent there is a secondary trading market for high-yielding
securities, it is generally not as liquid as that for higher-rated securities.
The lack of a liquid secondary market for certain securities may make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing a portfolio's assets. Market quotations are generally available on many
high-yield issues only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales.
The market for high-yielding securities has not weathered a major economic
recession, and it is not known how one might affect that market. It is likely,
however, that any such recession could severely affect the market for and the
values of such securities, as well as the ability of the issuers of such
securities to repay principal and pay interest thereon.
A portfolio may acquire high-yielding securities that are sold without
registration under the federal securities laws and therefore carry restrictions
on resale. A portfolio may incur special costs in disposing of such securities,
but will generally incur no costs when the issuer is responsible for
registering the securities.
A portfolio also may acquire high-yielding securities during an initial
underwriting. Such securities involve special risks because they are new
issues. The Fund has no arrangement with any person concerning the acquisition
of such securities, and the Investment Adviser will carefully review the credit
and other characteristics pertinent to such new issues.
From time to time, there have been proposals for legislation designed to limit
the use of certain high-yielding securities in connection with leveraged
buy-outs, mergers and acquisitions, or to limit the deductibility of interest
payments on such securities. Such proposals, if enacted into law, could
generally reduce the market for such securities, could negatively affect the
financial condition of issuers of high-yielding securities by removing or
reducing a source of future financing, and could negatively affect the value of
specific high-yield issues. However, the likelihood of any such legislation or
the effect thereof is uncertain.
INVESTMENT RESTRICTIONS
The Fund is subject to two classes of investment restrictions in implementing
the investment policies of the portfolios: fundamental and nonfundamental.
Nonfundamental restrictions may be changed by the Fund's Board of Directors
without shareholder approval. Shareholders will be notified promptly of any
such changes. Fundamental restrictions may not be changed without the
affirmative vote of a majority of the outstanding voting securities of each
STATEMENT OF ADDITIONAL INFORMATION FOR FUNDPage 9
<PAGE> 38
portfolio affected by the change. A change in a fundamental policy affecting
only one portfolio may be effected with the affirmative vote of the majority of
the outstanding securities of that portfolio only.
The Fund's fundamental investment restrictions provide that no portfolio of the
Fund will:
1. issue senior securities, except to the extent that the
borrowing of money, as permitted in restriction 6, may constitute
the issuance of a senior security;
2. invest more than 25% of its total assets in securities of
issuers primarily engaged in any one industry, excluding
obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, obligations of banks or savings
and loan associations, and instruments secured by these
instruments, such as repurchase agreements for U.S. government
securities. For purposes of this restriction, neither finance
companies nor utilities, 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;
3. invest more than 5% of its total assets in securities of any
one issuer or purchase more than 10% of the outstanding voting
securities of an issuer, excluding obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities;
4. purchase or sell commodities, commodity contracts, real
estate or real estate mortgages, interests in oil, gas or other
mineral exploration or development programs, except that each
portfolio may purchase securities of issuers which invest or deal
in any of the above, and except that each portfolio may invest in
securities secured by real estate or real estate mortgages. This
restriction does not apply to purchases and sales of covered call
options and put options to the extent described in restriction 9;
moreover, the Value Equity, Managed, Capital, and International
Equity Portfolios may purchase and sell stock index futures
contracts, options on stock index futures contracts, and stock
index options as described in the Prospectus and in the Statement
of Additional Information. This restriction also does not apply
to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities;
5. underwrite securities of other issuers except insofar as the
Fund may be deemed an underwriter under the Securities Act of
1933 in selling shares of each portfolio;
6. borrow money, except from banks as a temporary measure for
extraordinary or emergency purposes (but not for investment or
leveraging), or pledge or mortgage more than 15% of total assets
as security for such indebtedness. The aggregate amount of any
such indebtedness may not exceed 10% of total assets at the time
a loan is made, and a portfolio may not make additional
investments during any period that its borrowings exceed 5% of
total assets. Borrowings in relation to the entry into stock
index futures contracts, options on stock index futures
contracts, and stock index options shall not be deemed to be a
violation of this restriction, and the Value Equity, Managed,
Capital, and International Equity Portfolios entry into
collateral arrangements with respect to stock index futures
contracts, options on stock index futures contracts, and stock
index options with respect to initial or variation margins will
not be deemed to be pledges of these portfolio's assets;
7. purchase securities on margin, make short sales of
securities, or maintain a short position, except that the Fund
may obtain short term credit as may be necessary for the
clearance of securities transactions, and except that the Value
Equity, Managed, Capital, and International Equity Portfolios may
purchase or sell stock index futures contracts and may make
initial and variation margin payments in connection with
purchases or sales of stock index futures contracts, options on
stock index futures contracts, and stock index options;
8. lend money, except through the purchase of obligations in
which a portfolio is authorized to invest or by entering into
repurchase agreements; and
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9. write call options if more than 25% of the value of a
portfolio's total assets would be subject to call options. Call
options may only be written on securities held, or which can be
readily acquired by exercise of conversion privileges on
convertible securities or, in the case of options written on
stock indices, written on an index the movement of which is
substantially replicated by a portfolio of stocks held by the
portfolio. Put options may only be purchased if 5% or less of
total assets would be invested in premiums on put options. The
Value Equity, Managed, Capital, and International Equity
Portfolios may purchase or sell options on stock index futures
contracts and stock index options as described in the Prospectus
and Statement of Additional Information. Call options may be
purchased and put options may be sold only for the purpose of
closing out existing options positions.
The Fund's nonfundamental restrictions provide that no portfolio of the Fund
will:
1. invest more than 10% of total assets in securities or other
investments, including repurchase agreements, that are subject to
legal or contractual restrictions upon resale or are otherwise
not readily marketable;
2. invest more than 5% of total assets in securities of other
investment companies, or purchase more than 3% of the total
outstanding voting stock of any single investment company, or
invest more than 10% of total assets in securities issued by
investment companies, other than in connection with a merger,
consolidation, acquisition or reorganization;
3. lend portfolio securities in an amount greater than 30% of
total assets; or
4. invest more than 20% of total assets in securities of
foreign issuers with the exception of the International Equity
Portfolio which may invest 100% of total assets in foreign
securities.
If a percentage restriction (for either a fundamental or nonfundamental
restriction) is adhered to at the time of investment, a later increase or
decrease in percentage beyond the specified limit resulting from a change in
values of assets or amount of total assets shall not be considered a violation
of the restriction.
In addition to the investment restrictions described above, the Fund will
comply with restrictions contained in any current insurance laws in order that
the assets of the separate accounts of the Company, CLNY and their affiliates
may be invested in shares of the Fund.
PORTFOLIO TURNOVER
Normally, the annual rate of portfolio turnover will differ for each portfolio
and will vary from year to year. Portfolio turnover is calculated by dividing
the lesser of purchases or sales of portfolio securities during the fiscal year
by the monthly average of the value of the portfolio's securities, excluding
from the computation all securities, including options, with maturities at the
time of acquisition of one year or less. A high rate of portfolio turnover
generally involves correspondingly greater brokerage commission expenses, which
are borne directly by the portfolios. The rate of portfolio turnover will not
be a limiting factor when it is deemed appropriate to purchase or sell
securities for a portfolio.
No portfolio turnover rate can be calculated for the Money Market Portfolio due
to the short maturities of the instruments purchased. Portfolio turnover should
not affect the income or net asset value of the Money Market Portfolio because
brokerage commissions are not normally charged on the purchase or sale of money
market instruments.
INVESTMENT EXPERIENCE INFORMATION
THE INFORMATION PROVIDED IN THIS SECTION SHOWS THE HISTORICAL INVESTMENT
EXPERIENCE OF THE FUND. IT DOES NOT REPRESENT OR PROJECT FUTURE INVESTMENT
PERFORMANCE.
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 11
<PAGE> 40
The Fund commenced operations on December 4, 1989. The rates of return shown
below depict the actual investment experience of each portfolio of the Fund for
the periods shown. The Capital Portfolio commenced operations on May 1, 1993
and the International Equity Portfolio commenced operations on May 1, 1995.
PERFORMANCE QUOTATIONS
The rates of return shown below are based on actual investment performance,
after the deduction of investment advisory fees and direct Fund expenses of the
portfolios of the Fund. The rates are average annual compounded rates of return
for the period ending on December 31, 1995.
These rates of return figures do not reflect charges or deductions against the
separate accounts of the Company or CLNY or charges and deductions against the
policies. Accordingly, these rates of return do not illustrate how actual
investment performance will affect benefits or Policy values. Where relevant,
the prospectuses for the Policies also contain performance information.
Moreover, these rates of return are not an estimate, projection or guarantee
of future performance.
AVERAGE ANNUAL COMPOUNDED RATES OF RETURN
<TABLE>
<CAPTION>
YEAR ENDED 12/4/89 (INCEPTION)
FUND PORTFOLIO 12/31/95 TO 12/31/95
-------------------- ---------- -------------------
<S> <C> <C>
Value Equity 23.66% 10.87%
Bond 16.77% 8.22%
Managed 21.92% 10.03%
Money Market 4.95% 4.25%
Capital 33.99% 8.74%*
International Equity ** 8.38%***
</TABLE>
* Calculated from May 1, 1993 to December 31, 1995.
** The date of inception for the International Equity Portfolio was
05/01/95, therefore, only a rate of return from the date of inception is
provided to December 31, 1995.
Additional information regarding the investment performance of the portfolios
of the Fund appears in the Fund Prospectus. The total return figures shown
above are in part a function of the Fund's expenses and have been reduced by
the advisory fees. During the period between May 1, 1994 and April 30, 1995,
the Fund was reimbursed for expenses (other than the advisory fee) that
exceeded 0.50% of the Managed, Bond, Value Equity and Capital Portfolios and
0.25% of the Money Market Portfolio. If not for this reimbursement, the figures
shown above would have been smaller.
MONEY MARKET PORTFOLIO YIELD QUOTATIONS
The Fund may make current yield and effective yield quotations available for
the Money Market Portfolio. Current annualized yield quotations for the Money
Market Portfolio are based on the portfolio's net investment income per share
for a seven day period and exclude any realized or unrealized gains or losses
on portfolio securities. The yield is computed by determining the net change in
value for a hypothetical account having a balance of one share at the beginning
of the period, excluding any realized or unrealized gains or losses, and
dividing by the price per share at the beginning of the period (expected to
remain constant at $10). The net change is then annualized by multiplying it by
365/7, with the current yield figure carried to the nearest one-hundredth of
one percent. The effective yield of the Money Market Portfolio for a seven day
period is computed by expressing the unannualized return for that period on a
compounded, annualized basis.
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 12
<PAGE> 41
The Money Market portfolio's actual yields will fluctuate, and are not
necessarily indicative of future actual yields. Actual yields are dependent on
such variables as portfolio quality, average portfolio maturity, the type of
instruments in which investments are made, changes in interest rates on money
market instruments, portfolio expenses and other factors. In addition, the
yield quotation does not reflect the charges deducted from the Separate Account
(see the Prospectus for the policy). If these charges were deducted to reflect
the effective yield to a policyowner, that yield would be lower than the yield
calculated for the Money Market Portfolio.
OTHER PORTFOLIO YIELD QUOTATIONS
The yield quotations of the Bond, Managed, Value Equity, Capital, and
International Equity Portfolios are based on a specified 30 day or one month
period and are computed by dividing the net investment income per share earned
during the period by the maximum offering price per share on the last date of
the period, according to the following equation:
6
YIELD = 2((a-b/cd+1)-1)
Where:
a = dividends and interest earned during the period by the Portfolio.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
TOTAL RETURN QUOTATIONS
Total return quotations are computed by finding the average annual compounded
rates of return over the relevant periods that would equate the initial amount
invested to the ending redeemable value, according to the following equation:
N
P(1+T) = ERV
Where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
N = number of years.
ERV = ending redeemable value (at the end of the applicable period of a
hypothetical $1,000 payment made at the beginning of the
applicable period).
The total return quotation calculations reflect the deduction of a proportional
share of portfolio expenses and assume that all dividends and capital gains
during the period are invested in the portfolio when made. The calculations
also assume a complete redemption as of the end of the particular period.
MANAGEMENT OF THE FUND
DIRECTORS AND OFFICERS
The Directors and executive officers of the Fund and their principal
occupations for at least the last five years are set forth below. Unless
otherwise noted below, the address of each director and executive officer is
330 University Avenue, Toronto, Canada, M5G 1R8.
<TABLE>
<CAPTION>
NAME, AGE AND ADDRESS POSITION(S) WITH THE FUND PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
<S> <C> <C>
R. W. Morrison*, 54 Director and Chairman Vice President and Treasurer, Canada Life
D. A. Loney*, 50 ** Director and President Vice-President and Director, U.S. Division, Canada Life.
E. Y. Baker, 61 Director President, OHA Investment Management Limited; Senior
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 13
<PAGE> 42
<TABLE>
<S> <C> <C>
Vice-President, Finance, Ontario Hospital Association.
Formerly Vice-President, Investments, Ontario Hospital
Association.
J. S. Clarke, 58 Director Associate Treasurer for Investments, Cornell
University. Formerly Senior Investment Officer, Cornell
University.
D. H. Harris, 71 Director Formerly, Director, Chairman and CEO, The Equitable
Foundation; Executive Vice President and Chief of
Staff, and Director, The Equitable Life Assurance
Society of the U.S.
H. F. Atkinson*, 43 Vice President and Vice President and Chief Investment Officer, CL Capital
*** Assistant Treasurer Management, Inc.
D. V. Rough, 49 Treasurer Associate Treasurer, Investment Services, Canada Life.
D. A. Hopkins, 56** Secretary Chief Counsel, U.S. Division , Canada Life.
</TABLE>
* Director who is an "interested person", as defined in the Investment
Company Act of 1940, as amended, because of the director's affiliation
with the Company or the Adviser.
** The business address is 6201 Powers Ferry Road, N.W., Atlanta, Georgia
30339.
*** The business address is 6151 Powers Ferry Road, N.W., Suite 550, Atlanta,
Georgia 30339.
As of the date of this Statement of Additional Information, officers and
directors of the Fund do not own any of the outstanding shares of the Fund.
Directors who are not officers or employees of the Company or the Adviser are
paid a fee plus actual out-of-pocket expenses by the Fund for each meeting of
the Board of Directors attended.
<TABLE>
<CAPTION>
==================================================================================================================
COMPENSATION TABLE *
==================================================================================================================
Aggregate Pension or Estimated Annual Total Compensation from
Compensation Retirement Benefits Benefits Series Fund
from Series Accrued as Part of Upon to
Name/Title Fund Fund Expenses Retirement Directors
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
E. Y. Baker,
Director $8,000 N/A N/A $8,000
- ------------------------------------------------------------------------------------------------------------------
J. S. Clarke, Director $8,000 N/A N/A $8,000
- ------------------------------------------------------------------------------------------------------------------
D. H. Harris, Director $8,000 N/A N/A $8,000
==================================================================================================================
</TABLE>
* There are no direct employees of the Series Fund and the only people
compensated directly by the Series Fund are the non-affiliated directors.
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 14
<PAGE> 43
CUSTODIAN
The Chase Manhattan Bank, N.A., Chase Manhattan Plaza, New York, NY, 10081,
acts as custodian of the Fund's assets. The Chase Manhattan Bank, N.A. is
authorized to use the facilities of the Depository Trust Company, the
book-entry system of the Federal Reserve Banks, sub-custodians, and other
depositories as necessary in foreign markets.
ACCOUNTING SERVICES
The Fund has entered into an accounting services agreement with Canada Life
Insurance Company of America ("the Company"), whereby the Company provides
certain accounting and record keeping services to the Fund.
INVESTMENT ADVISER
The Fund has entered into an Investment Advisory Agreement ("the Agreement")
with CL Capital Management, Inc., (the "Adviser"). The principal business
address of the Adviser is 6151 Powers Ferry Road, N.W., Suite 550, Atlanta,
Georgia 30339. The Adviser is a wholly-owned subsidiary of the Company, which
is a wholly-owned subsidiary of The Canada Life Assurance Company ("Canada
Life"). The principal executive officers of the Adviser are:
NAME POSITION WITH ADVISER
R. W. Morrison Chairman
H. F. Atkinson Vice President and Chief Investment Officer
D. A. Loney President
D. V. Rough Treasurer
D. A. Hopkins Secretary
Pursuant to the Agreement, the Fund has retained the Adviser to provide
management and investment advisory services to the Fund for the Money Market,
Bond, Value Equity and Managed Portfolios, and management services for the
Capital and International Equity Portfolios. As part of the investment advisory
services provided to the Fund, the Adviser directs the investment of the Fund's
assets, including the placing of orders for the purchase and sale of
securities. The Adviser also continuously furnishes an investment program for
each portfolio (except the Capital and International Equity Portfolio), and has
responsibility for making decisions to buy, sell or hold any particular
security. The Adviser obtains and evaluates such information and advice
relating to the economy, securities markets, and specific securities as it
considers necessary or useful to continuously manage the assets of the
portfolios in a manner consistent with their investment objectives, policies
and restrictions. The Adviser considers analysis from various sources, makes
necessary investment decisions and effects transactions accordingly. The
Sub-Investment Adviser, J. & W. Seligman & Co. Incorporated, provides
investment advisory services for the Capital Portfolio and the Sub-Investment
Adviser, Canada Life Investment Management Limited, provides investment
advisory services for the International Equity Portfolio. The Adviser also
determines the manner in which voting rights and any other rights pertaining to
the Fund's portfolio securities will be exercised. The Adviser also performs
certain management services for the Fund, including processing shareholder
orders, administering shareholder accounts, handling shareholder relations,
conducting relations with custodians, depositories, transfer agents, dividend
disbursing agents, accountants, attorneys, brokers and dealers, insurers, and
other persons. The Adviser is, at all times, subject to the direction and
supervision of the Board of Directors of the Fund.
CAPITAL PORTFOLIO SUB-ADVISER
The Sub-Investment Adviser of the Capital Portfolio (the "Capital Portfolio
Sub-Adviser") is J. & W. Seligman & Co. Incorporated. Their address is 100 Park
Avenue, New York, New York, 10017. Pursuant to a Sub-Advisory Agreement between
the Adviser and the Capital Portfolio Sub-Adviser, the Capital Portfolio
Sub-Adviser provides investment advisory services to the Capital Portfolio.
These services include providing investment research, advice and supervision,
continuously furnishing an investment program, and determining from time to
time which securities shall be purchased, sold or exchanged.
The Capital Portfolio Sub-Adviser was incorporated on April 20, 1978. They also
serve as manager of 17 investment companies in the Seligman Group (the
aggregate assets of which were approximately $11.9 billion at
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 15
<PAGE> 44
December 31, 1995), and provide investment management or advice to
institutional accounts (having a December 31, 1995 value of approximately
$3.9 billion). A majority of the outstanding voting securities are owned by
William C. Morris.
INTERNATIONAL EQUITY PORTFOLIO SUB-ADVISER
The Sub-Investment Adviser of the International Equity Portfolio (the
"International Equity Portfolio Sub-Adviser") is Canada Life Investment
Management Limited. Their address is 130 Adelaide Street West, Suite 3000,
Toronto, Ontario, Canada, M5H 3P5. Pursuant to a Sub-Advisory Agreement between
the Adviser and the International Equity Portfolio Sub-Adviser, the
International Equity Portfolio Sub-Adviser provides investment advisory
services to the International Equity Portfolio. These services include
providing investment research, advice and supervision, continuously furnishing
an investment program, and determining from time to time which securities shall
be purchased, sold, or exchanged. The advisory fee is deducted from net assets.
The International Equity Portfolio Sub-Adviser was incorporated on February 24,
1977. They also serve as manager of assets of The Canada Life Assurance Company
(the aggregate assets of which were approximately Canadian $3.8 billion at
December 31, 1995) and provide investment management to individual and
institutional accounts (having a December 31, 1995 value of approximately
Canadian $2.5 billion). The principal executive officers of the International
Equity Portfolio Sub-Adviser are: F. M. Ryan, President; P. Walter, Vice
President; D. Vaidila, Vice President; and J. Fleming, Vice President.
ADVISORY FEE AND EXPENSES
The Fund pays the Adviser, as full compensation for all services and facilities
provided by the Adviser to the Fund and expenses of the Fund assumed by the
Adviser, a monthly fee computed for each portfolio on a daily basis, at an
annual rate of 0.50% of the net assets of each portfolio except the
International Equity Portfolio which has an annual rate of 0.80%. With
respect to the Capital and International Equity Portfolio, the Adviser in turn
pays the Sub-Advisers, as full compensation for investment advisory services to
the respective Portfolio, a monthly fee computed on a daily basis, at an annual
rate of 0.25% of the net assets of the Capital Portfolio and 0.30% of the net
assets of the International Equity Portfolio.
The aggregate total advisory fees incurred by the Fund were $217,612, $188,117
and $150,497 for the fiscal years ended December 31, 1995, 1994, and 1993,
respectively.
Each portfolio is charged for the expenses incurred in its operations as well
as for a portion of the Fund's general administrative expenses, allocated on
the basis of the asset size of the respective portfolio, or by the Board of
Directors as appropriate. Expenses other than the Adviser's fee that are borne
directly and paid individually by a portfolio include, but are not limited to,
brokerage commissions, dealer markups, taxes, custody fees, and other costs
properly payable by the portfolio. Expenses which are allocated among the
portfolios include, but are not limited to, Directors' fees and expenses,
independent accountant fees, transfer agent fees, expenses of redemption,
Securities and Exchange Commission fees, registration costs, insurance costs,
legal fees, and all other costs of the Fund's operation properly payable by the
Fund and allocable among the portfolios.
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 16
<PAGE> 45
INVESTMENT ADVISORY AGREEMENT
The Agreement was approved by the Fund's Board of Directors, including a
majority of the Directors who are not interested persons of the Adviser, on
February 23, 1995. On April 13, 1995, the Agreement was approved by an
affirmative vote of a majority of outstanding securities, with the Company
voting Fund shares attributable to policies participating in its registered
separate accounts in accordance with instructions received from policyowners,
as required by law. Unless terminated earlier, as described below, the
Agreement thereafter will continue in effect from year to year if approved
annually by the Board of Directors of the Fund or by a majority of the
outstanding shares of each portfolio, and by a majority of the Directors who
are not parties to the Agreement or interested persons, as defined by the
Investment Company Act of 1940, as amended, of any such party. The Agreement is
not assignable and may be terminated without penalty by the Fund or the Adviser
on 60 days notice. The Agreement may be terminated by the Fund for cause at any
time.
The Agreement in no way restricts the Adviser from acting as investment manager
or adviser to others. If the question of continuance of the Agreement (or
adoption of any new agreement) is presented to shareholders, continuance (or
adoption) with respect to a portfolio shall be effective only if approved by an
affirmative vote of a majority of the outstanding voting securities of that
portfolio. If the shareholders of any one or more of the series should fail to
approve the Agreement, the Adviser may nonetheless serve as Adviser with
respect to any portfolio whose shareholders approved the Agreement.
The Agreement provides that the Adviser shall not be liable to the Fund or to
any shareholder of the Fund for any error of judgment or mistake of law or for
any act or omission in the management of the Fund, except for willful
misfeasance, bad faith, gross negligence, or reckless disregard on the part of
the Adviser in the performance of its duties thereunder, and except for
negligence or misconduct in connection with management services.
CAPITAL PORTFOLIO SUB-ADVISORY AGREEMENT
The Capital Portfolio Sub-Advisory Agreement was approved by the Fund's Board
of Directors, including a majority of the directors who are not interested
persons of the Fund, the Adviser, or the Capital Portfolio Sub-Adviser on
February 23, 1995. On April 13, 1995, the Agreement was approved by an
affirmative vote of a majority of outstanding shares of the Capital Portfolio,
with the Company voting Fund shares attributable to policies participating in
its registered separate accounts in accordance with instructions received from
policyowners, as required by law. Unless terminated earlier, as described
below, the Agreement will continue in effect from year to year if approved
annually by the Board of Directors of the Fund including a majority of the
Directors who are not parties to the Agreement or interested persons, as
defined by the Investment Company Act of 1940, as amended, of any such parties
or by a majority of the outstanding shares of the Capital Portfolio. The
Agreement is not assignable and may be terminated at any time without penalty
by the Board of Directors of the Fund or by vote of a majority of the
outstanding shares of the Capital Portfolio, or by the Investment Adviser or
Capital Portfolio Sub-Investment Adviser on 60 days notice to the other party.
The Agreement may be terminated by the Fund for cause at any time.
The services of the Capital Portfolio Sub-Investment Adviser to the Capital
Portfolio are not deemed to be exclusive, and they are free to render services
to others. Securities held by the Capital Portfolio may also be held by
separate investment accounts or other mutual funds for which the Capital
Portfolio Sub-Investment Adviser may act as an adviser or by the Capital
Portfolio Sub-Investment Adviser or its affiliates.
The Agreement provides that the Capital Portfolio Sub-Investment Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Fund, and the performance of its duties under the Agreement except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
the Agreement.
INTERNATIONAL EQUITY PORTFOLIO SUB-ADVISORY AGREEMENT
The International Equity Portfolio Sub-Advisory Agreement was approved by the
Fund's Board of Directors, including a majority of the directors who are not
interested persons of the Fund, the Adviser, or the International Equity
Portfolio Sub-Adviser on February 23, 1995. On April 13, 1995, the Agreement
was approved by an affirmative vote of a majority of outstanding shares of the
International Equity Portfolio, with the Company voting Fund shares
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 17
<PAGE> 46
attributable to policies participating in its registered separate accounts in
accordance with instructions received from policyowners, as required by law.
Unless terminated earlier, as described below, the Agreement will continue in
effect from year to year if approved annually by the Board of Directors of the
Fund including a majority of the Directors who are not parties to the Agreement
or interested persons, as defined by the Investment Company Act of 1940, as
amended, of any such parties or by a majority of the outstanding shares of the
International Equity Portfolio. The Agreement is not assignable and may be
terminated at any time without penalty by the Board of Directors of the Fund or
by vote of a majority of the outstanding shares of the International Equity
Portfolio, or by the Adviser or International Equity Portfolio Sub-Investment
Adviser on 60 days notice to the other party. The Agreement may be terminated
by the Fund for cause at any time.
The services of the International Equity Portfolio Sub-Investment Adviser to
the International Equity Portfolio are not deemed to be exclusive, and they are
free to render services to others. Securities held by the International Equity
Portfolio may also be held by separate investment accounts or other mutual
funds for which the International Equity Portfolio Sub-Investment Adviser may
act as an adviser or by the International Equity Portfolio Sub-Investment
Adviser or its affiliates.
The Agreement provides that the International Equity Portfolio Sub-Investment
Adviser shall not be liable for any error of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission in the
management of the Fund, and the performance of its duties under the Agreement
except for willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of reckless disregard of its obligations and duties
under the Agreement.
SECURITIES ACTIVITIES OF THE ADVISER AND SUB-ADVISERS
Securities held by the Fund may also be held by the Company, CLNY, their
affiliates and separate accounts, or by other separate accounts or mutual funds
for which the Adviser or Sub-Advisers act as an adviser. Because of different
investment objectives or other factors, a particular security may be bought by
the Company, the Adviser, or the Sub-Advisers for one or more of their clients,
when one or more other clients are selling the same security. If purchases or
sales of securities for one or more of the Fund's portfolios or for other
entities for which the Adviser, Sub-Advisers, or their affiliates act as an
investment adviser are made at or about the same time, transactions in such
securities will be made, insofar as being feasible, for the Fund's portfolios,
the Company, and other clients in a manner deemed equitable to all. To the
extent that transactions on behalf of more than one client of the Adviser or
Sub-Advisers during the same period may increase the demand for securities
being purchased or the supply of securities being sold, there may be an adverse
effect on price.
The Adviser or Sub-Advisers may manage other portfolios than the Fund's.
Although investment recommendations or determinations for the Fund's portfolios
will be made by the Adviser or Sub-Advisers independently from the investment
recommendations and determinations made by it for any other portfolio,
investments deemed appropriate for the Fund's portfolios may also be deemed
appropriate for other portfolios. This may result in the same security being
purchased or sold at or about the same time for both the Fund and such other
portfolios.
On occasions when the Adviser or Sub-Advisers deem the purchase or sale of a
security to be in the best interests of the Fund as well as other accounts or
companies, they may determine that orders for the purchase or sale of the same
security for the Fund's portfolios and one or more other portfolios should be
combined, in which event, the transactions will be priced and allocated, and
expenses will be allocated, in a manner deemed by them to be equitable and in
the best interests of the Fund's portfolios and such other portfolios. While in
some instances, combined orders could adversely impact the price or the volume
of a security obtainable for a portfolio of the Fund, the Fund believes that its
participation in such transactions on balance will produce better overall
results for the Fund.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser or Sub-Advisers are responsible for placing all orders for the
purchase and sale of portfolio securities of the Fund. The Adviser or
Sub-Advisers have no formula for the distribution of the Fund's brokerage
business, their 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 Fund. The cost of securities transactions for each portfolio
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 brokerage commissions or transfer taxes.
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 18
<PAGE> 47
In placing orders, consistent with obtaining the most favorable net results,
the Adviser or Sub-Advisers will take into account various factors, including
price, dealers spread or commission, if any, size of the transaction and
difficulty of execution. While the Adviser or Sub-Advisers generally seek
reasonably competitive spreads or commissions, the portfolio will not
necessarily be paying the lowest spread or commission available.
Although the Adviser or Sub-Advisers seek to obtain the most favorable net
results in effecting transactions for each portfolio, brokers who provide
supplemental investment research to them may receive orders for transactions by
the Fund. Such supplemental research ordinarily consists of assessments and
analyses of the business or prospects of a company, industry, or economic
sector. If, in the judgment of the Adviser or Sub-Advisers, the Fund will be
benefited by such supplemental research services, they are authorized to pay
commissions to brokers furnishing such services which are in excess of
commissions which another broker may charge for the same transaction. However,
the Adviser or Sub-Advisers shall only select brokers whose commissions are
believed to be reasonable. Information so received will be in addition to and
not in lieu of the services required to be performed by the Adviser or
Sub-Advisers under the Agreement. The expenses of the Adviser or Sub-Adviser
will not necessarily be reduced as a result of the receipt of such supplemental
information. In some cases, the Adviser or Sub-Advisers may use such
supplemental research in providing investment advice to other advisory accounts
and they will periodically evaluate the statistical data, research and other
investment services provided by brokers.
Occasionally, securities may be purchased directly from the issuer. For
securities traded primarily in the over-the-counter market, the Adviser or
Sub-Advisers 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.
The Fund aggregate total paid brokerage commissions were $79,440, $25,801 and
$25,313, for the fiscal years ended December 31, 1995, 1994 and 1993
respectively.
PURCHASE AND REDEMPTION OF SHARES
The Fund currently offers its shares, without sales charge, only for purchase
by the Company, CLNY, and their separate accounts. The Fund may also offer its
shares to Canada Life, its affiliates and their separate accounts. It is
possible that, subject to obtaining any required regulatory approvals, at some
later date the Fund may offer shares to other investors. The Fund continuously
offers shares in each of the portfolios at prices equal to the net asset value
of the respective portfolio. The Fund does not have a principal underwriter.
The Fund will redeem all full and fractional shares of the Fund for cash. No
redemption fee is charged, although there may be a contingent deferred sales
charge applicable to surrenders or withdrawals under the policies, as described
in the Policy Prospectus. The redemption price is the net asset value of the
respective portfolio next determined after the request is deemed to be
received. Payment for shares redeemed will generally be made within seven days
after receipt of a proper notice of redemption. However, the Fund may suspend
the right of redemption or postpone the date of payment beyond seven days
during any period when:
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 19
<PAGE> 48
(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 Fund of securities owned by it is
not reasonably practicable or it is not reasonably practicable
for the Fund to fairly determine the value of its net assets; or
(c) the Commission by order so permits for the protection of
security holders of the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value of each portfolio's shares is determined once daily as of
the close of the New York Stock Exchange (usually 4:00 p.m. Eastern Time) on
each day on which the Exchange is open for trading, except for the business day
after Thanksgiving and the business day after Christmas. The net asset value of
a share is computed by dividing the value of the net assets of the portfolio by
the total number of shares outstanding.
MONEY MARKET PORTFOLIO
The net asset value per share of the Money Market Portfolio is computed by
dividing the total value of the portfolio's securities and other assets, less
liabilities (including dividends payable), by the number of shares outstanding.
The value of the assets is determined by valuing the portfolio securities at
amortized cost, pursuant to Rule 2a-7 under the Investment Company Act. The
amortized cost method of valuation involves valuing a security at cost at the
time of purchase and thereafter assuming a constant amortization to maturity of
any discount or premium, regardless of the impact of fluctuating interest rates
on the market value of the instrument.
The purpose of the amortized cost method of valuation is to attempt to maintain
a constant net asset value per share of $10. While this method provides
certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the portfolio
would receive if it sold its portfolio securities. Under the direction of the
Board of Directors, certain procedures have been adopted to monitor and
stabilize the price per share. Calculations are made to compare the value of
the portfolio securities, valued at amortized cost, with market values. Market
valuations are obtained by using actual quotations provided by market makers,
estimates of market value, or values obtained from yield data relating to
classes of money market instruments published by reputable sources at the bid
prices for those instruments. If a deviation of 1/2 of 1% or more between the
portfolio $10 per share net asset value and the net asset value calculated by
reference to market valuations has occurred, or if there are any other
deviations which the Board of Directors believes will result in dilution or
other unfair results material to shareholders, the Board of Directors will
consider what action, if any, should be initiated.
The market value of debt securities usually reflects yields generally available
on securities of similar quality. When yields decline, the market value of a
portfolio holding higher yielding securities can be expected to increase; when
yields increase, the market value of a portfolio invested at lower yields can
be expected to decline. In addition, if the portfolio has net redemptions at a
time when interest rates have increased, the portfolio may be forced to sell
portfolio securities prior to maturity at a price below the portfolio's
carrying value. Also, because the portfolio generally will be valued at
amortized cost rather than market value, any yield quoted may be different from
the yield that would result if the entire portfolio were valued at market
value, since the amortized cost method does not take market fluctuations into
consideration.
OTHER PORTFOLIOS
The net asset value per share of the portfolios other than the Money Market
Portfolio is computed by dividing the total value of the portfolio's securities
and other assets, less liabilities, by the number of portfolio shares then
outstanding. Securities other than money market instruments maturing in 60 days
or less which are traded on a national exchange are valued at the last sale
price as of the close of business on the day the securities are being valued,
or, lacking any sales, at the last bid price. Securities (other than money
market instruments maturing in 60 days or less) traded in the over-the-counter
market are valued at the last bid price or at yield equivalent as obtained from
one or more dealers that make markets in the securities. Securities which are
traded both in the over-the-counter market and on a national exchange are
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. Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the Board of
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 20
<PAGE> 49
Directors. Money market instruments with maturities of 60 days or less are
valued using the amortized cost method of valuation.
TAXES
Each portfolio of the Fund intends to qualify as a "regulated investment
company" under the provisions of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). Under such provisions, a regulated investment
company will not be subject to federal income tax on such part of its net
investment income and net realized capital gains that it distributes to
shareholders. Each portfolio intends to distribute to shareholders
substantially all such net investment income and capital gains.
To qualify for treatment as a regulated investment company, each portfolio
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. Special tax
issues arise in connection with the use of options, including issues affecting
the required holding periods of securities under Subchapter M; compliance with
these provisions could adversely effect investment performance.
To ensure that the Fund is not subject to a nondeductible 4% excise tax, each
portfolio intends to distribute at least 97% of ordinary income for any year by
the end of that calendar year and at least 98% of capital gain net income for
the one year period ending October 31 of such year, unless an election is made
to use the company's taxable year, plus certain other amounts. A regulated
investment company will be considered to have paid dividends for purposes of
these rules if the company pays the dividends by the end of any January and if
such dividends were declared in the preceding December and were payable to
shareholders of record on a date in December.
Section 817(h) of the Code and regulations of the Code issued by the Treasury
Department impose additional diversification requirements upon each portfolio.
These requirements are in addition to the diversification requirements under
Subchapter M of the Code and the Investment Company Act of 1940, and effect
federal tax treatment at the shareholder level. Since the only shareholders of
the Fund are insurance companies and their separate accounts, no discussion is
included herein regarding federal income tax consequences to shareholders. Each
portfolio intends to comply with the requirements of Section 817(h). For
information concerning the consequences of failure to meet the requirements of
Section 817(h), see the Prospectus for the policy.
The discussions of "Taxes" in the Prospectus and the foregoing are general and
abbreviated summaries of the applicable provisions of the Code and Treasury
Regulations currently in effect, as interpreted by the courts and the Internal
Revenue Service. Neither is intended as a complete explanation or as a
substitute for consultation with individual tax advisers.
GENERAL INFORMATION
CAPITAL STOCK
The Fund was incorporated on February 23, 1989 under the laws of Maryland with
four portfolios: Money Market; Managed; Bond; and Value Equity. The Capital
Portfolio was authorized by the Fund's Board of Directors on February 25, 1993
and the International Equity Portfolio was authorized by the Fund's Board of
Directors on February 23, 1995. The authorized stock of the Fund consists of
one billion (1,000,000,000) shares of common stock, with a par value of one
cent. A total of 90,000,000 shares of the authorized capital stock is currently
divided into the following classes:
<TABLE>
<CAPTION>
Portfolio Shares
-------------------- ----------
<S> <C>
Money Market 20,000,000
Managed 20,000,000
Bond 10,000,000
Value Equity 10,000,000
Capital 20,000,000
International Equity 10,000,000
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 21
<PAGE> 50
The Board of Directors may change the designation of any portfolio and may
increase or decrease the number of shares of any portfolio, but may not
decrease the number of shares then outstanding.
Each issued and outstanding share is entitled to participate equally in
dividends and distributions declared by the respective portfolio and, upon
liquidation or dissolution, in the net assets of such portfolio remaining after
satisfaction of outstanding liabilities.
All shares of common stock have equal voting rights (regardless of the net
asset value per share), except that on matters effecting only one portfolio
only shares of the respective portfolio are entitled to vote. The shares do not
have cumulative voting rights. Accordingly, the holders of more than 50% of the
shares of the Fund voting for the election of directors can elect all of the
directors of the Fund if they choose to do so, and in such event the holders of
the remaining shares would not be able to elect any directors.
Matters in which the interests of all portfolios are substantially identical
(such as the election of directors or the approval of independent auditors)
will be voted on by all shareholders without regard to the separate portfolio.
Matters that effect all the portfolios but where the interests of the
portfolios are not substantially identical (such as approval of the investment
advisory agreement) would be voted on separately by each portfolio. Matters
effecting only one portfolio, such as a change in its fundamental policies, are
voted on separately by each portfolio.
Matters requiring separate shareholder voting by a portfolio shall have been
effectively acted upon with respect to any portfolio if a majority of the
outstanding voting securities of that portfolio votes for approval of the
matter, notwithstanding that: 1) the matter has not been approved by a majority
of the outstanding voting securities of any other portfolio; or 2) the matter
has not been approved by a majority of the outstanding voting securities of the
Fund.
The phrase "a majority of the outstanding voting securities" of a portfolio (or
of the Fund) means the vote of the lesser of: 1) 67% of the shares of a
portfolio (or of the Fund) present at a meeting if the holders of more than 50%
of the outstanding shares are present in person or by proxy; or 2) more than
50% of the outstanding shares of a Portfolio (or the Fund).
ADDITIONAL INFORMATION
This Statement of Additional Information and the Prospectus do not contain all
the information set forth in the registration statement and exhibits relating
thereto, which the Fund has filed with the Securities and Exchange Commission,
Washington, D.C., under the Securities Act of 1933 and the Investment Company
Act of 1940, to which reference is hereby made.
FINANCIAL STATEMENTS
The Fund's statement of assets and liabilities, including the schedules of
investments, as of December 31, 1995, and the related statement of operations
for the year then ended, the statements of changes in net assets and the
financial highlights for the periods indicated therein, as well as the Report
of Independent Auditors, are contained herein. Ernst & Young LLP, 600 Peachtree
Street, Atlanta, Georgia, 30308, serves as independent auditors for the Fund.
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 22
<PAGE> 51
APPENDIX A
DEBT INSTRUMENT RATINGS
The Fund will invest in certain instruments that are rated by investment rating
services. Definitions of such ratings 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.
A-2 This designation indicates that capacity for timely payment of debt
having an original maturity of no more than 365 days is strong; however,
the relative degree of safety is not as high as for issues
designated A-1.
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.
BB Bonds rated BB, B, CCC, and CC are regarded, on balance, as predominantly
B speculative with respect to the issuer's capacity to pay interest and repay
CCC principal in accordance with the terms of the obligations. BB
CC indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
NR Not rated by the indicated rating agency.
MOODY'S INVESTMENT 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 customer acceptance; 4) liquidity; 5) amount and quality
of long-term debt; 6) trend of earnings over a period of ten 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.
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 23
<PAGE> 52
P-2 The rating P-2 indicates that, in Moody's opinion, the issuer or
supporting institution has a strong ability for repayment of senior
short-term debt obligations. Strong ability for repayment will
normally be evidenced by many of the characteristics listed under the
description of P-1. Earnings trends and coverage ratios, while sound, may
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more effected by external conditions. Ample
alternate liquidity is maintained.
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 a "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.
Ba Bonds which are rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during other good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B Bonds which are rated B by Moody's generally lack characteristics of
the desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long period of
time may be small.
Caa Bonds which are rated Caa by Moody's are of poor standing. Such issues
may be in default or there may be present elements of danger with respect
to principal or interest.
Ca Bonds which are rated Ca by Moody's represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C Bonds which are rated C by Moody's are the lowest rated class of
bonds and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
DUFF & PHELPS (D&P) FIXED INCOME RATING SCALE
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is modest but
AA may vary slightly from time to time because of economic conditions.
AA-
A+ Protection factors are average but adequate. However, risk factors are
A more variable and greater in periods of economic stress.
A-
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 24
<PAGE> 53
BBB+ Below average protection factors, but still considered sufficient for
BBB prudent investment. Considerable variability in risk during economic
BBB- cycles.
BB+ Below investment grade, but deemed likely to meet obligations when
BB due. Present or prospective financial protection factors
BB- fluctuate according to industry conditions or company fortunes.
Overall quality may move up or down frequently within this category.
B+ Below investment grade and possessing risk that obligations will not be
B met when due. Financial protection factors will fluctuate widely
B- according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in quality rating within
this category or into a higher or lower quality rating grade.
CCC Well below investment grade securities. May be in default or have
considerable uncertainty as to timely payment of interest, preferred
dividends and/or principal. Protection factors are narrow and risk
can be substantial with unfavorable economic/industry conditions, and/or
with unfavorable company developments.
STATEMENT OF ADDITIONAL INFORMATION FOR FUND Page 25
<PAGE> 54
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
CANADA LIFE OF AMERICA SERIES FUND, INC.
Report of Independent Auditors......................................... 1
Statement of Net Assets and Liabilities
as of December 31, 1995.............................................. 2
Statement of Operations for the
year ended December 31, 1995......................................... 3
Statements of Changes in Net Assets for the
years ended December 31, 1995 and 1994............................... 4
Notes to Financial Statements.......................................... 10
Financial Highlights for the years ended
December 31, 1995, 1994, 1993, 1992 and 1991......................... 15
Schedule of Investments as of December 31, 1995........................ 21
</TABLE>
<PAGE> 55
[ERNST & YOUNG LLP LETTERHEAD]
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Canada Life of America Series Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the schedules of investments, of Canada Life of America Series Fund, Inc.
(comprising, respectively, the Money Market, Managed, Bond, Equity, Capital
Series and International Equity Series) as of December 31, 1995, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Company'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 securities
owned as of December 31, 1995, by correspondence with the custodian and brokers
or by other appropriate auditing procedures where replies from brokers were not
received. 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 series constituting the Canada Life of America Series Fund,
Inc. at December 31, 1995, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods indicated
therein, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Atlanta, Georgia
January 23, 1996
1
<PAGE> 56
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
MONEY INTERNATIONAL
MARKET MANAGED BOND EQUITY CAPITAL EQUITY
SERIES SERIES SERIES SERIES SERIES SERIES
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at
market value (Identified cost -
See accompanying Schedules of
Investments - Series Portfolios) $4,739,692 $20,119,786 $5,876,864 $10,080,454 $6,451,469 $2,144,853
Cash (49,535) 58,299 58,989 69,833 145,070 31,044
Receivables:
Dividends and interest - 100,002 65,752 12,694 5,776 2,081
Due from brokers - - - 23,750 - 71,088
--------------------------------------------------------------------------------
Total assets 4,690,157 20,278,087 6,001,605 10,186,731 6,602,315 2,249,066
--------------------------------------------------------------------------------
LIABILITIES
Payables:
Investment advisory fees [Note 2] 2,056 8,386 2,520 4,229 2,724 1,445
Other accrued expenses 15,239 41,311 13,200 15,755 5,007 952
Directors' fees and expenses payable 3,506 7,842 1,696 2,857 1,002 391
Dividends declared 60,638 3,120,898 490,595 1,896,996 227,280 101,690
Due to brokers - 66,625 - 21,937 - 59,000
--------------------------------------------------------------------------------
Total liabilities 81,439 3,245,042 508,011 1,941,774 236,013 163,478
--------------------------------------------------------------------------------
NET ASSETS $4,608,718 $17,033,045 $5,493,594 $ 8,244,957 $6,366,302 $2,085,588
================================================================================
NET ASSETS CONSIST OF:
Capital shares $ 4,609 $ 13,772 $ 5,255 $ 6,104 $ 4,697 $ 2,067
Additional paid-in capital 4,604,109 15,718,942 5,428,478 7,312,683 5,000,851 2,065,970
Net unrealized appreciation from
investments and foreign currency - 1,300,331 59,861 926,170 1,360,754 17,551
--------------------------------------------------------------------------------
Total net assets $4,608,718 $17,033,045 $5,493,594 $ 8,244,957 $6,366,302 $2,085,588
================================================================================
Shares authorized ($.01 par value) 20,000,000 20,000,000 10,000,000 10,000,000 20,000,000 10,000,000
================================================================================
Shares outstanding 460,872 1,377,164 525,523 610,371 469,715 206,892
================================================================================
Net asset value per share $ 10.0000 $ 12.3682 $ 10.4536 $ 13.5081 $ 13.5535 $ 10.0903
================================================================================
</TABLE>
See accompanying notes. 2
<PAGE> 57
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
----------------------------
MONEY INTERNATIONAL
MARKET MANAGED BOND EQUITY CAPITAL EQUITY
SERIES SERIES SERIES SERIES SERIES SERIES
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $268,386 $577,952 $357,520 $57,716 $11,173 $16,726
Dividends - 123,145 - 107,677 53,739 22,536
-----------------------------------------------------------------------------
Total investment income 268,386 701,097 357,520 165,393 64,912 39,262
-----------------------------------------------------------------------------
Expenses:
Investment advisory fee [note 2] 22,973 86,438 25,186 44,380 27,305 11,330
Directors' fees and expenses 3,850 14,000 4,200 7,000 4,550 1,400
Custodian fees and expenses 8,775 16,368 7,540 13,349 7,716 3,149
Audit and legal fees 3,080 11,200 3,360 5,600 3,640 1,120
Accounting and administration [note 2] 12,100 44,000 13,200 22,000 14,300 4,400
Miscellaneous 1,100 4,000 1,200 2,000 1,300 400
-----------------------------------------------------------------------------
Total expenses 51,878 176,006 54,686 94,329 58,811 21,799
-----------------------------------------------------------------------------
Expense reimbursement [note 1] 10,732 - - - - 2,671
-----------------------------------------------------------------------------
Net investment income 227,240 525,091 302,834 71,064 6,101 20,134
-----------------------------------------------------------------------------
Realized and unrealized gain on investments:
Net realized gain from investments
and foreign currency - 2,596,807 187,760 1,825,932 221,180 81,556
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency - 275,956 274,577 (35,433) 1,339,444 17,551
-----------------------------------------------------------------------------
Net gain on investments - 2,871,763 442,337 1,790,499 1,560,624 99,107
-----------------------------------------------------------------------------
Net increase in net assets resulting
from operations $227,240 $3,396,854 $765,171 $1,861,563 $1,566,725 $119,241
=============================================================================
</TABLE>
*The International Equity Series commenced operations on April 24, 1995.
See accompanying notes. 3
<PAGE> 58
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NOT ASSETS
MONEY MARKET SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994
---------------------------------
<S> <C> <C>
Operations:
Net investment income $ 227,240 $ 146,294
Net realized gain from investments - -
---------- ----------
Net increase in net assets resulting from operations 227,240 146,294
---------- ----------
Dividends to shareholders from:
Net investment income (227,240) (146,294)
Net realized gain from investments - -
---------- ----------
(227,240) (146,294)
---------- ----------
Fund share transactions [note 4]:
Proceeds from sales of shares 6,063,679 5,290,374
Reinvestment of dividends to shareholders 216,367 120,262
Payments for shares redeemed (6,728,647) (4,867,043)
---------- ----------
(448,601) 543,593
---------- ----------
Total increase (decrease) in net assets (448,601) 543,593
Net assets:
Beginning of period 5,057,319 4,513,726
---------- ----------
End of period $4,608,718 $5,057,319
========== ==========
</TABLE>
See accompanying notes. 4
<PAGE> 59
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NOT ASSETS
MANAGED SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994
---------------------------------
<S> <C> <C>
Operations:
Not investment income $ 526,091 $ 434,400
Net realized gain from investments 2,595,807 483,452
Net change in unrealized appreciation (depreciation)
from investments 275,956 (1,008,336)
----------- ------------
Net increase (decrease) in net assets resulting
from operations 3,396,854 (90,484)
----------- ------------
Dividends to shareholders from:
Net investment income (525,091) (434,400)
Net realized gain from investments (2,595,807) (483,453)
----------- ------------
(3,120,898) (917,853)
----------- ------------
Fund share transactions [note 41]:
Proceeds from sales of shares 4,125,099 2,692,955
Reinvestment of dividends to shareholders 917,854 488,770
Payments for shares redeemed (3,478,218) (4,145,581)
----------- ------------
1,564,735 (963,856)
----------- ------------
Total increase (decrease) in net assets 1,840,691 (1,972,193)
Net assets:
Beginning of period 15,192,354 17,164,547
----------- ------------
End of period $17,033,045 $15,192,354
=========== ===========
</TABLE>
See accompanying notes. 5
<PAGE> 60
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
BOND SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994
-------------------------------------
<S> <C> <C>
Operations:
Net investment income $ 302,834 $ 231,985
Net realized gain (loss) from investments 187,760 (115,753)
Net change in unrealized appreciation (depreciation)
from investments 274,577 (327,542)
---------- ----------
Net increase (decrease) in net assets resulting
from operations 765,171 (211,310)
---------- ----------
Dividends to shareholders from:
Net investment income (302,834) (231,985)
Net realized gain from investments (72,007) -
Paid-in capital (115,753) -
---------- ----------
(490,594) (231,985)
---------- ----------
Fund share transactions [note 4]:
Proceeds from sales of shares 1,378,433 1,417,939
Reinvestment of dividends to shareholders 231,985 389,524
Payments for shares redeemed (377,145) (1,581,811)
---------- ----------
1,233,273 225,652
---------- ----------
Total increase (decrease) in net assets 1,507,850 (217,643)
Net assets:
Beginning of period 3,985,744 4,203,387
---------- ----------
End of period $5,493,594 $3,985,744
========== ==========
</TABLE>
See accompanying notes. 6
<PAGE> 61
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NOT ASSETS
EQUITY SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994
----------------------------
<S> <C> <C>
Operations:
Net investment income $ 71,064 $ 76,363
Net realized gain from investments 1,825,932 150,332
Net change in unrealized depreciation from investments (35,433) (81,166)
---------- ----------
Net increase in net assets resulting from operations 1,861,563 145,529
---------- ----------
Dividends to shareholders from:
Net investment income (71,064) (76,363)
Net realized gain from investments (1,825,932) (150,332)
---------- ----------
(1,896,996) (226,695)
---------- ----------
Fund share transactions [note 4):
Proceeds from sales of shares 2,087,952 1,834,814
Reinvestment of dividends to shareholders 226,695 137,366
Payments for shares redeemed (1,413,552) (1,574,667)
---------- ----------
901,095 397,513
---------- ----------
Total increase in net assets 865,662 316,347
Net assets:
Beginning of period 7,379,295 7,062,948
---------- ----------
End of period $8,244,957 $7,379,295
========== ==========
</TABLE>
See accompanying notes. 7
<PAGE> 62
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
CAPITAL SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994
-----------------------------
<S> <C> <C>
Operations:
Net investment income $ 6,101 $ 3,475
Net realized gain from investments 221,180 42,190
Net change in unrealized appreciation (depreciation)
from investments 1,339,444 (213,035)
---------- ----------
Net increase (decrease) in net assets resulting from
operations 1,566,725 (167,370)
---------- ----------
Dividends to shareholders from:
Net investment income (6,101) (3,475)
Net realized gain from investments (221,189) (42,190)
---------- ----------
(227,281) (45,665)
---------- ----------
Fund share transactions [note 4]:
Proceeds from sales of shares 1,573,194 1,697,735
Reinvestment of dividends to shareholders 45,665 47,831
Payments for shares redeemed (439,366) (602,697)
---------- ----------
1,179,493 1,142,869
---------- ----------
Total increase in net assets 2,518,937 929,834
Net assets:
Beginning of period 3,847,365 2,917,531
---------- ----------
End of period $6,366,302 $3,847,365
========== ==========
</TABLE>
See accompanying notes. 8
<PAGE> 63
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
INTERNATIONAL EQUITY SERIES
<TABLE>
<CAPTION>
FOR THE PERIOD APRIL 24, 1995
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31
1995
----------------------------
<S> <C>
Operations:
Net investment income $ 20,134
Net realized gain from investments and foreign currency 81,556
Net change in unrealized appreciation from investments
and foreign currency 17,551
----------
Net increase in net assets resulting from operations 119,241
----------
Dividends to shareholders from:
Net investment income (20,134)
Net realized gain from investments and foreign currency (81,556)
----------
(101,690)
----------
Fund share transactions [note 41]:
Proceeds from sales of shares 2,070,323
Reinvestment of dividends to shareholders -
Payments for shares redeemed (2,286)
----------
2,068,037
----------
Total increase in net assets 2,085,588
Net assets:
Beginning of period -
----------
End of period $2,085,588
==========
</TABLE>
See accompanying notes. 9
<PAGE> 64
CANADA LIFE OF AMERICA SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Canada Life of America Series Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified,
open-ended management investment company. The fund was incorporated on
February 23, 1989 and commenced operations on December 4, 1989, with the
exception of the Capital Series and International Equity Series which commenced
operations on April 23, 1993 and April 24, 1995 respectively. The shares of
the Fund are sold only to Canada Life Insurance Company of America and Canada
Life Insurance Company of America and Canada Life Insurance Company of New York
to certain of their separate accounts to fund the benefits under certain
variable annuity contracts. The Fund's shares are offered in six different
Series - Money Market Series, Managed Series, Bond Series, Equity Series,
Capital Series, and International Equity Series. The policies described below
are followed by the Fund in conformity with generally accepted accounting
principles.
SECURITIES VALUATION
Securities listed or traded on the New York or American Stock Exchanges are
valued at the last sale price on that Exchange, or if there were no sales, at
the closing bid price. Securities traded only in the over-the-counter market
are valued at the last bid price. Securities held in the International Equity
Series for which market quotations are not readily available, are valued using
dealer-supplied valuations or at their fair market value as determined in good
faith in accordance with the procedures approved by the Board of Directors.
Money market instruments with a remaining maturity of 60 days or less held by
the Equity, Bond, Managed, Capital, and International Equity Series and all
instruments held by the Money Market Series are valued at amortized cost, which
approximates market.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in foreign currency are
translated into U.S. dollars at the prevailing rates of exchange at end of
period. Purchases and sales of investment securities, income and expenses are
translated into U.S. dollars at the rate of exchange prevailing on the
respective dates of such transactions.
Net realized gains and losses on foreign currency transactions represent net
gains and losses from sales and maturities of investments in foreign securities
usually denominated in foreign currencies, currency gains and losses realized
between the trade and settlement dates on securities transactions, and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received. The effects of changes in foreign currency
exchange rates on investments in securities are included with the net realized
and unrealized gain or loss on investment securities.
10
<PAGE> 65
SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded on the trade date (the date the order to
buy or sell is executed), and dividend income is recorded on the ex-dividend
date. Interest income is recorded on the accrual basis. Gains and losses on
sales of investments are calculated on the identified cost basis for financial
reporting and tax purposes. Bond premiums and discounts are amortized for both
financial and tax reporting purposes.
FEDERAL INCOME TAXES
It is the policy of the Fund to comply with the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute all of its taxable income. Therefore,
no provision for income taxes has been recorded.
DISTRIBUTION OF INCOME AND GAINS
Dividends from net investment income and any net realized capital gains in the
Money Market Series are declared daily and paid quarterly. Dividends from net
investment income and net realized capital gains in the Managed, Bond, Equity,
Capital Series and International Equity Series at the net asset value per
share.
EXPENSES
Allocable expenses of the Fund are charged to each Series based on the ratio of
the net assets of each Series to the combined net asset of the Fund.
Non-allocable expenses are charged to each Series based on specific
identification. All expenses are accrued daily.
Prior to May, 1995 Canada Life Insurance Company of America has agreed to
reimburse the Managed, Bond, Equity and Capital Series for operating expenses,
exclusive of the advisory fee, that exceed .50% of the average daily net assets
of each respective series; subsequent to this date, Canada Life Insurance
Company of America increased the reimbursement amount to cover operating
expenses the exceed .40% of the average daily net assets of each respective
series including the International Equity Series. With respet to the Money
Market Series, Canada Life Insurance Company of America has agreed to reimburse
for operating expenses, exclusive of the advisory fee, that exceed .25% of its
average daily net assets. For the year ended December 31, 1995, the amounts
reimbursed were as follows: Money Market Series - $10,732 and International
Equity Series - $2,671.
2. INVESTMENT ADVISORY AND DIRECTORS' FEES AND OTHER TRANSACTION WITH
AFFILIATED COMPANIES
INVESTMENT ADVISORY FEES
Prior to May 1995, Canada Life of America Investment Management, Inc.
("Advisor") served as investment manager of the Fund, and as such received from
the Fund a monthly fee computed for each of the Series on a daily basis, at an
annual rate of 0.50% of the net assets of the Series. Effective May 1, 1995,
the Advisor merged with CL Capital Management Inc., a wholly-owned subsidiary
of Canada Life Insurance Company of America. CL Capital Management Inc.
("Advisor") receives from the Fund a monthly fee computed for each of the
Series on a daily basis, at an annual rate of .50% of the net assets of the
Series except for the International Equity Series which is computed at an
annual rate of .80% of its net assets.
11
<PAGE> 66
With respect to the Capital Series, the Advisor in turn pays J. & W. Seligman &
Co. (the "Sub-Advisor"), as full compensation for investment advisory services
to the Capital Series, a monthly fee computed on a daily basis, at an annual
effective rate of .25% of the net assets of such Series.
With respect to the International Equity Series, the Advisor in turn pays
Canada Life Investment Management Limited, (the "Sub-Advisor"), a wholly-owned
subsidiary of the Canada Life Assurance Company, as full compensation for
investment advisory services to the International Equity Series, a monthly fee
computed on a daily basis, at an annual effective rate of 0.30% of the net
assets of such Series.
For the year ended December 31, 1995, the investment advisory fee incurred by
the Fund was as follows: Money Market Series - $22,973; Managed Series -
$86,438; Bond Series - $25,186; Equity Series - $44,380; Capital Series -
$27,305; and, International Equity Series - $11,330.
ACCOUNTING SERVICES
Under an accounting services agreement, Canada Life Insurance Company of
America provides accounting and administrative services to the Fund. For the
year ended December 31, 1995, the related expenses incurred by the Fund were as
follows: Money Market Series - $12,100; Managed Series - $44,000; Bond Series
- - $13,200; Equity Series - $22,000; Capital Series - $14,300; and, International
Equity Series - $4,400.
DIRECTORS' FEES
Each director who is not an affiliated person receives fees from the Fund for
services as a director.
OTHER
On October 7, 1994, the General Account of Canada Life Insurance Company of
America withdrew a portion of its initial investment in the Managed Series in
the amount of $500,000. This capital share transaction is reflected in shares
redeemed.
On January 10, 1995, the General Account of Canada Life Insurance Comapny of
America withdrew a portion of its initial investment in the Managed Series and
Equity Series for a total amoount of $1,000,000 at $500,000 each. This capital
share transaction is reflected in shares redeemed.
On April 6, 1995, the General Account of Canada Life Insurance Company of
America withdrew a portion of its initial investment in the Managed Series and
Equity Series for a total amount of $1,000,000 at $500,000 each. This capital
share transaction is reflected in shares redeemed.
On April 24, 1995, Canada Life Insurance Company of America invested $2,000,000
in the International Equity Series Fund.
On October 24, 1995, the General Account of Canada Life Insurance Company of
America withdrew a portion of its initial investment in the Managed Series in
the amount of $500,000. This capital share transaction is reflected in shares
redeemed.
12
<PAGE> 67
3. INVESTMENT TRANSACTION
The aggregate cost of purchase and the proceeds from sales (excluding short
term investments) for all Series, for the year ended December 31, 1995, except
for the period April 24, 1995 (commencement of operations) to December 31, 1995
for the International Equity Series, are presented below:
<TABLE>
<CAPTION>
PROCEEDS
COST OF FROM
SECURITIES SECURITIES
PURCHASED SOLD
---------- ----------
<S> <C> <C>
MANAGED SERIES
US Gov't & Its Agencies Bonds $12,589,436 $ 9,793,153
All other Investments 12,973,469 15,302,985
----------- -----------
TOTAL $25,562,905 $25,096,138
=========== ===========
BOND SERIES
US Gov't & Its Agencies Bonds $11,460,605 $ 8,669,213
All other Investments 1,484,158 2,997,778
----------- -----------
TOTAL $12,944,763 $11,666,991
=========== ===========
EQUITY SERIES
All other Investments $10,544,808 $ 9,790,788
----------- -----------
TOTAL $10,544,808 $ 9,790,788
=========== ===========
CAPITAL SERIES
All other Investments $ 3,154,942 $ 1,938,123
----------- -----------
TOTAL $ 3,154,942 $ 1,938,123
=========== ===========
INTERNATIONAL EQUITY SERIES
All other Investments $ 2,681,460 $ 634,818
----------- -----------
TOTAL $ 2,681,460 $ 634,818
=========== ===========
</TABLE>
The information in the following table is presented on the basis of cost for
federal income tax purposes, and is as of December 31, 1995.
<TABLE>
<CAPTION>
IDENTIFIED
COST OF GROSS GROSS NET
SECURITIES UNREALIZED UNREALIZED UNREALIZED
OWNED APPRECIATION (DEPRECIATION) APPRECIATION
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Money Market Series $4,739,692 $ - $ - $ -
Managed Series 18,819,455 1,635,472 (335,141) 1,300,331
Bond Series 5,817,004 77,483 (17,622) 59,861
Equity Series 9,154,284 1,208,265 (282,095) 926,170
Capital Series 5,090,715 1,503,952 (143,198) 1,360,754
International Equity Series 2,127,303 161,350 (143,799) 17,551
</TABLE>
13
<PAGE> 68
4. CAPITAL SHARE TRANSACTIONS
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
1995 1995 1994 1994
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
MONEY MARKET SERIES
Shares sold 606,368 $6,063,679 529,037 $5,290,374
Shares issued in reinvestment
of dividends 21,637 216,367 12,026 120,262
-------- ---------- -------- ----------
628,005 6,280,046 541,063 5,410,636
Shares redeemed (672,865) (6,728,647) (486,704) (4,867,043)
-------- ---------- -------- ----------
Net increase (decrease) (44,860) ($448,601) 54,359 $ 543,593
======== ========== ======== ==========
MANAGED SERIES
Shares sold 302,686 $4,125,099 213,015 $2,692,955
Shares issued in reinvestment
of dividends 76,706 917,854 38,464 488,770
-------- ---------- -------- ----------
379,392 5,402,953 251,479 3,181,725
Shares redeemed (267,105) (3,478,218) (330,669) (4,145,581)
-------- ---------- -------- ----------
Net increase (decrease) 112,287 $1,564,735 (79,190) ($963,856)
======== ========== ======== ==========
BONDS SERIES
Shares sold 128,480 $1,378,433 133,841 $1,417,939
Shares issued in reinvestment
of dividends 23,832 231,985 36,361 389,524
-------- ---------- -------- ----------
152,312 1,610,418 170,202 1,807,463
Shares redeemed (35,507) (377,145) (152,729) (1,581,811)
-------- ---------- -------- ----------
Net increase 116,805 $1,233,273 17,473 $225,652
======== ========== ======== ==========
EQUITY SERIES
Shares sold 141,018 $2,087,952 135,115 $1,834,814
Shares issued in reinvestment
of dividends 16,931 226,695 10,151 137,366
-------- ---------- -------- ----------
157,949 2,314,647 145,266 1,972,180
Shares redeemed (95,933) (1,413,552) (116,379) (1,574,667)
-------- ---------- -------- ----------
Net increase 62,016 $ 901,095 28,887 $ 397,513
======== ========== ======== ==========
CAPITAL SERIES
Shares sold 133,640 $1,573,194 156,064 $1,697,735
Shares issued in reinvestment
of dividends 4,397 45,665 4,376 47,831
-------- ---------- -------- ----------
138,037 1,618,859 160,440 1,745,566
Shares redeemed (35,615) (439,366) (57,058) (602,697)
-------- ---------- -------- ----------
Net increase 102,422 $1,179,493 103,382 $1,142,869
======== ========== ======== ==========
</TABLE>
FOR THE PERIOD APRIL 24, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INTERNATIONAL EQUITY SERIES
Shares sold 206,909 $2,070,323
Shares issued in reinvestment
of dividends
------- ----------
206,090 $2,070,323
Shares redeemed (218) ($2,286)
------- ----------
Net increase 206,691 $2,068,037
======= ==========
</TABLE>
14
<PAGE> 69
CANADA LIFE OF AMERICA SERIES FUND, INC
FINANCIAL HIGHLIGHTS
MONEY MARKET SERIES
The following financial highlights are computed on the basis of a share
outstanding throughout the period.
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00 $10.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.49 0.34 0.23 0.27 0.52
------ ------ ------ ------ ------
Total from investment operations 0.49 0.34 0.23 0.27 0.52
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (0.49) (0.34) (0.23) (0.27) (0.52)
------ ------ ------ ------ ------
Total distributions (0.49) (0.34) (0.23) (0.27) (0.52)
------ ------ ------ ------ ------
Net asset value, end of period $10.00 10.00 $10.00 $10.00 $10.00
====== ===== ====== ====== ======
Total Return 4.95% 3.40% 2.29% 2.71% 5.25%
RATIOS TO AVERAGE NET ASSETS /SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $4,609 $5,057 $4,514 $2,729 $2,251
Ratio of expenses to average net assets 0.75% 0.75% 0.75% 0.92% 1.25%
Ratio of net investment income to average net
assets 4.98% 3.43% 2.29% 2.81% 4.80%
</TABLE>
See accompanying notes.
15
<PAGE> 70
CANADA LIFE OF AMERICA SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
MANAGED SERIES
The following financial highlights are computed on the basis of a share
outstanding throughout the period.
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.01 $12.77 $12.14 $11.59 $ 9.66
------ ------ ------ ------ -------
Income from investment operations:
Net investment income 0.40 0.32 0.31 0.35 0.45
Net realized and unrealized
gains (losses) on securities 2.38 (0.39) 0.74 0.65 1.98
------ ------- ------ ------ -------
Total from investment operations 2.78 (0.07) 1.05 1.00 2.43
------ ------- ------ ------ -------
Less distributions:
Dividends from net investment income (0.41) (0.32) (0.31) (0.35) (0.46)
------- ------- ------- ------- --------
Distributions from net realized gains (2.01) (0.37) (0.11) (0.10) (0.04)
------- ------- ------ ------- --------
Total distributions (2.42) (0.69) (0.42) (0.45) (0.50)
------- ------- ------- ------- --------
Net asset value, end of period $12.37 $12.01 $12.77 $12.14 $11.59
====== ====== ====== ====== =======
Total return 21.92% -0.25% 8.24% 8.02% 23.40%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATE:
Net assets, end of period (000's omitted) $17,033 $15,192 $17.165 $11,987 $8.535
Ratio of expenses to average net assets 0.90% 0.97% 1.15% 1.25% 1.25%
Ratio of net investment income to average net
assets 3.06% 2.51% 2.50% 2.97% 4.12%
Portfolio turnover rate 145.14% 27.31% 38.20% 39.62% 71.33%
</TABLE>
See accompanying notes.
16
<PAGE> 71
CANADA LIFE OF AMERICA SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
BOND SERIES
The following financial highlights are computed on the basis of a share
outstanding throughout the period.
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.75 $10.74 $10.64 $10.65 $9.78
----- ------ ------ ------ -----
Income from investment operations:
Net investment income 0.65 0.51 0.57 0.65 0.68
Net realized and unrealized
gains (losses) on securities 1.09 (0.99) 0.56 0.23 0.91
----- ------- ------ ------ -----
Total from investment operations 1.74 (0.48) 1.13 0.88 1.59
----- ------- ------ ------ -----
Less distributions:
Dividends from net investment income (0.64) (0.51) (0.57) (0.65) (0.69)
Distributions from net realized gains (0.15) - (0.46) (0.24) (0.03)
Distributions from paid-in capital (0.25) - - - -
------ - - - -
------ ------ ------ ------
Total distributions (1.04) (0.51) (1.03) (0.89) (0.72)
------ ------ ------ ------ ------
Net asset value, end of period $10.45 $9.75 $10.74 $10.64 $10.65
====== ===== ====== ====== ======
Total return 16.77% -3.94% 10.35% 6.65% 16.21%
RATIOS TO AVERAGE NET ASSETS /SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $5,494 $3,986 $4,204 $3,278 $2,319
Ratio of expenses to average net assets 0.88% 0.96% 1.16% 1.25% 1.25%
Ratio of net investment income to average net
assets 6.06% 5.01% 5.01% 6.01% 6.58%
Portfolio turnover rate 245.32% 43.89% 84.77% 79.77% 112.36%
</TABLE>
See accompanying notes.
17
<PAGE> 72
CANADA LIFE OF AMERICA SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
EQUITY SERIES
The following financial highlights are computed on the basis of a share
outstanding throughout the period.
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.46 $13.60 $13.15 $12.26 $ 9.38
------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.12 0.14 0.14 0.14 0.15
Net realized and unrealized
gains on securities 3.17 0.13 0.61 0.92 3.16
------ ------ ------ ------ ------
Total from investment operations 3.29 0.27 0.75 1.06 3.31
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (0.12) (0.14) (0.14) (0.14) (0.17)
Distributions from net realized gains (3.12) (0.27) 0.16 (0.03) (0.26)
------ ------ ------ ------ ------
Total distributions (3.24) (0.41) (0.30) (0.17) (0.43)
------ ------ ------ ------ ------
Net asset value, end of period $13.51 $13.46 $13.60 $13.15 $12.26
====== ====== ====== ====== ======
Total return 23.66% 2.03% 5.44% 8.37% 34.95%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $8,245 $7,379 $7,063 $4,711 $2,875
Ratio of expenses to average net assets 0.90% 0.96% 1.14% 1.25% 1.25%
Ratio of net investment income to average net
assets 0.81% 1.03% 1.07% 1.10% 1.39%
Portfolio turnover rate 103.07% 35.99% 23.70% 6.25% 36.16%
</TABLE>
See accompanying notes.
18
<PAGE> 73
CANADA LIFE OF AMERICA SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
CAPITAL SERIES
The following financial highlights are computed on the basis of a share
outstanding throughout the period.
<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 23, 1993
(COMMENCEMENT
OF OPERATIONS) TO
YEAR ENDED DECEMBER 31 DECEMBER 31
1995 1994 1993*
------ ------ ------
<S> <C> <C> <C>
Net asset value, beginning of period $10.48 $11.06 $10.00
------ ------ ------
Income from investment operations:
Net investment income (loss) 0.02 0.01 (0.02)
Net realized and unrealized gains (losses)
on securities 3.56 (0.46) 1.32
------ ------ ------
Total from investment operations 3.58 (0.45) 1.30
------ ------ ------
Less distributions:
Dividends from net investment income (0.01) (0.01) -
Distributions from net realized gains (0.50) (0.12) (0.24)
------ ------ ------
Total distributions (0.51) (0.13) (0.24)
------ ------ ------
Net asset value, end of period $13.55 $10.48 $11.06
====== ====== ======
Total return 33.99% -4.11% 18.42%**
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $6,366 $3,847 $2,918
Ratio of expenses to average net assets 0.88% 0.92% 1.01%**
Ratio of net investment income to average
net assets 0.11% 0.09% -0.21%**
Portfolio turnover rate 33.42% 55.99% 21.87%
</TABLE>
* The Fund commenced operations on April 23, 1993. The net asset value
at the beginning of the 1993 period is as of the close of business on
April 23, 1993.
** 1993 amounts annualized from April 23, 1993.
See accompanying notes 19
<PAGE> 74
CANADA LIFE OF AMERICA SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
INTERNATIONAL EQUITY SERIES
The following financial highlights are computed on the basis of a share
outstanding throughout the period.
<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 24, 1995
(COMMENCEMENT
OF OPERATIONS)
TO DECEMBER 31
1995*
------
<S> <C>
Net asset value, beginning of period $10.00
------
Income from investment operations:
Net investment income 0.10
Net realized and unrealized gain on securities 0.49
------
Total from investment operations 0.59
------
Less distributions:
Dividends from net investment income (0.10)
Distributions from net realized gains (0.40)
------
Total distributions (0.50)
------
Net asset value, end of period $10.09
======
Total return 8.53%**
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $2,086
Ratio of expenses to average net assets 1.20%***
Ratio of net investment income to average net assets 1.43%**
Portfolio turnover rate 33.56%
</TABLE>
* The Fund commenced operations on April 24, 1995. The net asset value at
the beginning of the 1995 period is as of the close of business on April
24, 1995.
** 1995 amounts annualized from April 24, 1995.
See accompanying notes. 20
<PAGE> 75
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - MONEY MARKET SERIES PORTFOLLO
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES - 102.8%
Federal Home Loan Mortgage Corp. (5.430% due 01/22/96) $1,200,000 $1,196,189
Federal Farm Credit Banks (5.500% due 01/18/96) 700,000 698,181
Federal National Mortgage Assoc. (5.450% due 01/17/96) 1,200,000 1,197,084
Tennessee Valley Authority (5.570% due 01/17/96) 600,000 598,431
Federal Home Loan Bank (5.670% due 01/02/96) 1,050,000 1,049,807
----------
Total Securities (identified cost - $4,739,692) 4,739,692
OTHER NET LIABILITIES - -2.8% (130,974)
----------
Total net assets $4,608,718
==========
</TABLE>
See accompanying notes. 21
<PAGE> 76
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - MANAGED SERIES PORTFOLIO
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------
<S> <C> <C>
SHORT TERM INVESTMENT - 8.2%
Federal Farm Credit Banks (5.530% due 01/09/96) $ 890,000 $ 889,906
Federal Farm Credit Banks (5.550% due 01/05/96) 500,000 499,691
-----------
TOTAL SHORT TERM 1,388,597
-----------
BONDS -46.6%
U.S. GOVERNMENT & ITS AGENCIES - 44.2%
U.S. Treasury Bond (6.250% due 08/15/23) 200,000 205,625
U.S. Treasury Bond (7.500% due 02/15/05) 100,000 113,531
U.S. Treasury Bond (7.875% due 11/15/99) 100,000 108,750
U.S. Treasury Bond (7.125% due 10/15/98) 290,000 303,956
Federal Farm Credit Banks (6.960% due 06/06/00) 250,000 251,203
Federal Home Loan Banks (5.650% due 05/29/99) 300,000 302,277
Federal Home Loan Banks (5.250% due 033/10/99) 300,000 302,295
Federal Home Loan Mortgage Corp (7.500% due 12/01/25) 299,000 306,942
Federal Home Loan Mortgage Corp (8.500% due 06/01/18) 63,681 66,069
Federal Home Loan Mortgage Corp (8.500% due 05/01/18) 56,059 58,161
Federal Home Loan Mortgage Corp (8.500% due 08/01/17) 113,251 117,498
Federal Home Loan Mortgage Corp (8.500% due 06/01/17) 32,047 33,248
Federal Home Loan Mortgage Corp (8.500% due 05/01/17) 16,340 16,953
Federal Home Loan Mortgage Corp (950.41 due 09/15/15) 4,000 60,000
Federal Home Loan Mortgage Corp (7.000% due 03/15/08) 150,000 149,460
Federal Home Loan Mortgage Corp (7.000% due 02/15/08) 150,000 149,858
Federal Home Loan Mortgage Corp (7.000% due 04/15/07) 103,631 103,461
Federal Home Loan Mortgage Corp (6.945% due 11/09/05) 150,000 152,734
Federal Home Loan Mortgage Corp (7.230% due 09/30/05) 150,000 153,000
Federal Home Loan Mortgage Corp (6.820% due 06/29/05) 150,000 153,000
Federal Home Loan Mortgage Corp (6.970% due 06/16/05) 150,000 153,750
Federal Home Loan Mortgage Corp (7.290% due 04/07/04) 150,000 151,500
Federal Home Loan Mortgage Corp (6.445% due 10/21/02) 150,000 152,352
Federal National Mortgage Association (7.500% due 12/01/25) 452,000 463,583
Federal National Mortgage Association (8.500% due 05/25/25) 300,000 300,597
Federal National Mortgage Association (6.500% due 10/25/22) 292,277 279,124
Federal National Mortgage Association (8.500% due 12/25/21) 150,000 149,633
Federal National Mortgage Association (0.000% due 01/25/20) 87,987 85,945
Federal National Mortgage Association (7.750% due 10/25/18) 25,000 25,486
Federal National Mortgage Association (0.000% due 12/25/15) 7,783 7,728
Federal National Mortgage Association (5.000% due 10/25/08) 156,011 147,083
Federal National Mortgage Association (7.000% due 10/25/07) 73,283 74,266
Federal National Mortgage Association (7.000% due 05/25/07) 151,773 152,828
Federal National Mortgage Association (7.000% due 10/25/05) 100,000 102,117
Federal National Mortgage Association (6.900% due 03/10/04) 150,000 150,375
Government National Mortgage Association (7.500% due 12/15/25) 294,000 302,636
Government National Mortgage Association (7.000% due 10/15/25) 407,438 412,658
Government National Mortgage Association (9.500% due 05/20/25) 129,144 136,448
Government National Mortgage Association (8.000% due 09/15/24) 147,001 153,248
Government National Mortgage Association (8.000% due 06/15/23) 147,000 153,248
Government National Mortgage Association (8.000% due 08/15/22) 294,001 306,496
Government National Mortgage Association (7.991% due 04/16/10) 301,633 304,046
Private Export Funding Corp. (6.620% due 10/01/05) 150,000 156,750
Student Loan Marketing Assoc. (6.700% due 10/10/00) 100,000 102,277
-----------
7,532,195
-----------
</TABLE>
See Accompanying notes 22
<PAGE> 77
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - MANAGED SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Principal Market
Amount Value
----------------------------
<S> <C> <C>
CORPORATE - 2.4%
GE Capital Mortgage Services, Inc. (7.000% due 05/25/24) 100,000 102,676
GE Capital Mortgage Services, Inc. (6.500% due 04/25/08) 192,457 186,418
K Mart Corp. (8.375% due 07/01/22) 130,000 88,400
K Mart Corp. (8.250% due 01/01/22) 50,000 34,000
----------------
411,494
-----------------
TOTAL BONDS 7,943,689
----------------
COMMON STOCKS - 63.3% Shares
-------------
AEROSPACE & DEFENSE - 0.6%
Aerospace & Defense - 0.6%
Aeroflex, Inc. 24,900 105,825
-----------------
BASIC INDUSTRIES - 1.5%
Iron & Steel - 1.5%
Kentucky Electric Steel, Inc. 30,800 254,100
----------------
CONSTRUCTION & REAL ESTATE - 6.0%
Engineering & Construction - 6.0%
Granite Construction, Inc. 32,700 1,030,050
-----------------
ENERGY - 3.5%
Oil & Gas - 3.5%
Pride Petroleum Services, Inc. 23,450 249,156
Snyder Oil Corporation 29,000 351,625
------------------
600,781
------------------
FINANCE - 10.8%
Banks - 3.1%
Coastal Bancorp, Inc. 6,200 108,500
Mercanatile Bankshares Corporation 5,700 158,888
Walden Bancorp Inc. 14,000 266,000
----------------
533,388
----------------
Insurance - 7.7%
Leucadia National Corporation 18,800 470,000
Markel Corporation 11,100 838,050
----------------
1,308,050
----------------
TOTAL FINANCE 1,841,438
</TABLE>
See accompanying notes. 23
<PAGE> 78
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - MANAGED SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------------------------
<S> <C> <C>
HEALTH - 12.0%
Drugs & Pharmaceuticals - 5.4%
Schering-Plough Corporation 5,000 273,750
Warner-Lambert Company 6,600 641,025
---------
914,775
---------
Hospital Services - 6.6%
Tokos Medical Corp. of Delaware 58,800 536,550
Tenet Healthcare Corporation 28,000 581,000
---------
1,117,550
---------
TOTAL HEALTH 2,032,325
---------
INDUSTRIAL MACHINERY & EQUIPMENT - 3.0%
Industrial Machinery & Equipment - 3.0%
Astec Industries, Inc. 39,300 388,087
Bettis Corporation 25,100 128,637
---------
516,724
---------
MEDIA & LEISURE - 5.7%
Entertainment - 4.0%
Cedar Fair L.P. 5,800 214,600
King World Productions, Inc. 12,000 466,500
---------
681,100
---------
Publishing - 1.7%
Knight-Ridder, Inc. 4,600 287,500
---------
TOTAL MEDIA & LEISURE 968,600
---------
RETAIL & WHOLESALE - 11.7%
Apparel Stores - 4.3%
Catherines Stores Corporation 30,700 253,275
Cato Corporation 42,450 328,988
Liz Claiborne, Inc. 5,200 144,300
---------
726,563
---------
Retail & Wholesale, Miscellaneous - 7.4%
Ellett Brothers Inc. 41,500 332,000
Falcon Products, Inc. 23,190 304,369
InterTAN, Inc. 86,000 623,500
---------
1,259,869
---------
TOTAL RETAIL & WHOLESALE 1,986,432
---------
</TABLE>
See accompanying notes. 24
<PAGE> 79
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - MANAGED SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1995
<TABLE>
MARKET
SHARES VALUE
----------------------------
<S> <C> <C>
SERVICES - 3.3%
Services - 3.3%
Dames & Moore, Inc. 46,900 568,662
TECHNOLOGY - 2.4%
Computers & Office Equipment - 2.4%
GBC Technologies, Inc. 25,000 229,688
Stratus Computers, Inc. 5,000 173,125
-----------
402,813
-----------
TRANSPORTATION - 2.8%
Air Transportation - 2.8%
Offshore Logistics, Inc. 38,000 479,750
-----------
Total Common Stocks 10,787,500
-----------
Total Securities (identified cost - $18,819,455) 20,119,786
OTHER NET LIABILITIES - -18.1% (3,086,741)
-----------
Total net assets $17,033,045
===========
</TABLE>
See accompanying notes. 25
<PAGE> 80
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - BOND SERIES PORTFOLIO
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Principal Market
Amount Value
-------------------------------
<S> <C> <C>
BONDS - 107.0%
U.S. Government & its Agencies - 100.7%
U.S. Treasury Bond (7.500% due 02/15/05) $ 450,000 $ 510,890
Federal Farm Credit Banks (6.960% due 06/06/00) 250,000 251,202
Federal Home Loan Banks (5.650% due 03/29/99) 200,000 201,518
Federal Home Loan Banks (5.250% due 03/10/99) 200,000 201,530
Federal Home Loan Mortgage Corp (7.500% due 12/01/25) 198,657 203,934
Federal Home Loan Mortgage Corp (8.500% due 06/01/18) 36,389 37,754
Federal Home Loan Mortgage Corp (8.500% due 05/01/18) 45,845 47,564
Federal Home Loan Mortgage Corp (8.500% due 08/01/17) 75,953 78,802
Federal Home Loan Mortgage Corp (8.500% due 06/01/17) 25,858 26,827
Federal Home Loan Mortgage Corp (8.500% due 05/01/17) 12,244 12,703
Federal Home Loan Mortgage Corp (950.41 due 09/15/15) 3,000 45,000
Federal Home Loan Mortgage Corp (7.000% due 03/15/08) 100,000 99,640
Federal Home Loan Mortgage Corp (7.000% due 02/15/08) 100,000 99,905
Federal Home Loan Mortgage Corp (7.000% due 04/15/07) 62,179 62,077
Federal Home Loan Mortgage Corp (6.945% due 11/09/05) 100,000 101,822
Federal Home Loan Mortgage Corp (7.230% due 09/30/05) 100,000 102,000
Federal Home Loan Mortgage Corp (6.820% due 06/29/05) 100,000 102,000
Federal Home Loan Mortgage Corp (6.970% due 06/16/05) 100,000 102,500
Federal Home Loan Mortgage Corp (7.290% due 04/07/04) 100,000 101,000
Federal Home Loan Mortgage Corp (6.445% due 10/21/02) 100,000 101,568
Federal National Mortgage Association (7.500% due 12/01/25) 300,000 308,434
Federal National Mortgage Association (8.500% due 05/25/25) 200,000 200,398
Federal National Mortgage Association (6.500% due 10/25/22) 224,828 214,711
Federal National Mortgage Association (8.500% due 12/25/21) 100,000 99,755
Federal National Mortgage Association (0.000% due 01/25/20) 70,390 68,756
Federal National Mortgage Association (7.750% due 10/25/18) 22,000 22,428
Federal National Mortgage Association (0.000% due 12/25/15) 4,578 4,546
Federal National Mortgage Association (5.000% due 10/25/08) 109,979 103,685
Federal National Mortgage Association (7.000% due 10/25/07) 47,634 48,273
Federal National Mortgage Association (7.000% due 05/25/07) 113,830 114,621
Federal National Mortgage Association (7.000% due 10/25/05) 75,000 76,588
Federal National Mortgage Association (6.900% due 03/10/04) 100,000 100,250
Government National Mortgage Association (7.500% due 12/15/25) 196,000 201,758
Government National Mortgage Association (7.000% due 10/15/25) 254,649 257,911
Government National Mortgage Association (9.500% due 05/20/25) 86,096 90,965
Government National Mortgage Association (8.000% due 09/15/24) 98,001 102,166
Government National Mortgage Association (8.000% due 06/15/23) 98,000 102,165
Government National Mortgage Association (8.000% due 08/15/22) 196,001 204,331
Government National Mortgage Association (7.991% due 04/16/10) 258,541 260,610
Private Export Funding Corp. (6.620% due 10/01/05) 100,000 104,500
Student Loan Mortgage Association (6.700% due 10/10/00) 100,000 102,277
Student Loan Mortgage Association (6.590% due 06/12/00) 250,000 252,475
---------
5,531,839
---------
</TABLE>
See accompanying notes. 26
<PAGE> 81
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - BOND SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------------------------
<S> <C> <C>
Corporate - 6.3%
GE Capital Mortgage Services, Inc. (7.000% due 05/25/24) 75,000 77,007
GE Capital Mortgage Services, Inc. (6.500% due 04/25/08) 192,457 186,418
K Mart Corp. (8.375% due 07/01/22) 95,000 64,600
K Mart Corp. (8.250% due 01/01/22) 25,000 17,000
----------
345,025
----------
TOTAL BONDS 5,876,864
----------
Total Securities (identified cost - $5,817,004) 5,876,864
OTHER NET LIABILITIES - -7.0% (383,270)
----------
Total net assets $5,493,594
==========
</TABLE>
See accompanying notes. 27
<PAGE> 82
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - EQUITY SERIES PORTFOLIO
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ---------
<S> <C> <C>
SHORT TERM INVESTMENT - 6.9%
Federal Farm Credit Bank (5.550% due 01/05/96) $570,000 $ 569,648
---------
TOTAL SHORT TERM 569,648
---------
COMMON STOCKS - 115.4% SHARES
----------
AEROSPACE & DEFENSE - 1.9%
Aerospace & Defense - 1.9%
Aeroflex, Inc. 36,000 153,000
---------
BASIC INDUSTRIES - 2.6%
Iron & Steel - 2.6%
Kentucky Electric Steel, Inc. 25,900 213,675
---------
CONSTRUCTION & REAL ESTATE - 6.5%
Engineering & Construction - 6.5%
Granite Construction, Inc. 17,000 535,500
---------
ENERGY - 6.4%
Oil & Gas - 6.4%
Pride Petroleum Services, Inc. 19,800 210,375
Snyder Oil Corporation 25,900 314,037
---------
524,412
---------
FINANCE - 16.1%
Banks - 6.0%
Coastal Bancorp, Inc. 6,200 108,500
Mercantile Bankshares Corporation 5,700 158,887
Walden Bancorp, Inc. 12,300 233,700
---------
501,087
---------
Insurance - 10.1%
Leucadia National Corporation 13,600 340,000
Market Corporation 6,600 498,300
---------
838,300
---------
TOTAL FINANCE 1,339,387
---------
</TABLE>
See accompanying notes. 28
<PAGE> 83
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - EQUITY SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
-------------------------------
<S> <C> <C>
HEALTH - 25.2%
Drugs & Pharmaceuticals - 9.2%
Schering-Plough Corporation 5,000 273,750
Warner-Lambert Company 5,000 485,625
------------
759,375
-------------
Medical Supplies - 1.6%
Allied Healthcare Products 8,500 136,000
-------------
Medical Facilities Management - 14.4%
Healthdyne Inc. 16,500 142,313
Tenet Healthcare Corporation 26,500 549,875
Tokos Medical Corp. of Delaware 54,100 493,663
--------------
1,185,851
---------------
TOTAL HEALTH 2,081,226
---------------
Industrial Machinery & Equipment - 5.4%
Industrial Machinery & Equipment - 5.4%
Astec Industries, Inc. 32,400 319,950
Bettis Corporation 24,100 123,512
----------------
443,462
----------------
MEDIA & LEISURE - 11.8%
Entertainment - 8.3%
Cedar Fair L.P. 6,100 225,700
King World Productions, Inc. 11,700 454,838
-----------------
680,538
-----------------
Publishing - 3.5%
Knight-Ridder, Inc. 4,600 287,500
-----------------
TOTAL MEDIA & LEISURE 968,038
-----------------
RETAIL & WHOLESALE - 21.8%
Apparel Stores - 9.6%
Catherines Stores Corporation 31,000 258,225
Cato Corporation 50,450 390,987
Liz Claiborne, Inc. 5,100 141,525
--------------
790,737
---------------
Retail & Wholesale, Miscellaneous - 12.2%
Ellet Brothers, Inc. 31,500 252,000
Falcon Products, Inc. 23,800 312,375
InterTAN, Inc. 60,800 440,800
----------------
1,005,175
------------------
TOTAL RETAIL & WHOLESALE 1,795,912
-------------------
</TABLE>
29
<PAGE> 84
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - EQUITY SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Market
Shares Value
-------------------------
<S> <C> <C>
SERVICES - 6.4%
Services - 6.4%
Dames & Moore, Inc. 43,600 528,650
-------------
TECHNOLOGY - 5.1%
Computers & Office Equipment - 5.1%
GBC Technologies, Inc. 26,700 245,306
Stratus Computer, Inc. 4,900 169,663
-------------
414,969
-------------
TRANSPORTATION - 6.2%
Air Transportation - 6.2%
Offshore Logistics, Inc. 40,600 512,574
-------------
Total Common Stocks 9,510,806
-------------
Total Securities (identified cost - $9,154,284) 10,080,454
OTHER NET LIABILITIES - -22.3% (1,835,497)
-------------
Total net assets $ 8,244,957
=============
</TABLE>
See accompanying notes. 30
<PAGE> 85
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - CAPITAL SERIES PORTFOLLO
DECEMBER 31, 1995
<TABLE>
<CAPTION> MARKET
SHARES VALUE
-------------------
<S> <C> <C>
COMMON STOCK - 101.3%
AEROSPACE & DEFENSE - 1.8%
Aerospace & Defense - 1.8%
Boeing 1,500 $117,562
--------
BASIC INDUSTRIES - 5.3%
Chemicals & Plastics - 2.1%
Engelhard Corp. 3,150 68,512
Schulman A. Inc. 2,900 65,250
133,762
--------
Iron & Steel - 1.7%
Nucor Corp. 1,900 108,538
--------
Packaging & Containers - 1.5%
Crown Cork & Seal Co., Inc. 2,300 96,025
--------
TOTAL BASIC INDUSTRIES 338,325
--------
DURABLES - 5.1%
Autos, Tires, & Accessories - 2.4%
Cooper Tire & Rubber Co. 2,500 61,562
Eaton Corp. 1,700 91,163
--------
152,725
--------
Consumer Electronics - 1.7%
Newell Co. 4,200 108,675
--------
Home Furnishings - 1.0%
Ethan Allen Interiors, Inc. 3,200 65,200
--------
TOTAL DURABLES 326,600
--------
FINANCE - 13.0%
Credit & Other Finance - 8.3%
Dean Witter Discover & Co. 1,900 89,300
Donaldson, Lufkin & Jenrette, Inc. 2,600 81,250
Green Tree Financial Corp. 2,800 73,850
MBNA Corp. 3,200 118,000
Travelers Group, Inc. 2,600 163,475
--------
525,875
--------
Federal Sponsored Credit - 1.2%
Federal National Mortgage Association 600 74,475
--------
</TABLE>
See accompanying notes 31
<PAGE> 86
Canada Life of America Series Fund, Inc.
Schedule of Investments - Bond Series Portfolio (Continued)
December 31, 1995
<TABLE>
<CAPTION>
Market
Shares Value
-----------------------
<S> <C> <C>
Insurance - 3.5%
Amerin Corp. 4,900 131,075
General Re Corp. 600 93,000
---------
224,075
---------
Total Finance 824,425
---------
Health - 19.3%
Drugs & Pharmaceuticals - 6.8%
Amgen, Inc. 3,000 178,125
Bristol-Myers Squibb Co. 1,500 128,812
Johnson & Johnson, Inc. 1,500 128,438
---------
435,375
---------
Medical Equipment & Supplies - 5.1%
Arrow International Inc. 3,000 119,250
Cordis Corp. 700 70,350
Guidant Corp. 1,900 80,275
Physio-Control International Corp. 2,900 51,838
---------
321,713
---------
Medical Facilities Management - 7.4%
Columbia HCA Healthcare Corp. 2,200 111,650
Humana Inc. 2,400 65,700
Mid-Atlantic Medical Services Inc. 3,600 87,300
United HealthCare Corp. 2,200 144,100
U.S. Healthcare, Inc. 1,400 65,100
---------
473,850
---------
Total Health 1,230,938
---------
Industrial Machinery & Equipment - 3.3%
Electrical Equipment - 1.8%
General Electric Co. 1,600 115,200
---------
Industrial Machinery & Equipment - 1.5%
Illinois Tool Works, Inc. 1,600 94,400
---------
Total Industrial Machinery & Equipment 209,600
---------
Media & Leisure - 11.2%
Broadcasting - 1.8%
Viacom, Inc. Class B 2,400 113,700
---------
Entertainment - 5.4%
Circus Circus Enterprises Inc. 1,750 48,781
Disney (Walt) Co. 1,500 88,500
HFS, Inc. 1,700 138,975
Mirage Resorts, Inc. 2,000 69,000
---------
345,256
---------
</TABLE>
See accompanying notes. 32
<PAGE> 87
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - BOND SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION> MARKET
SHARES VALUE
--------------- --------------
<S> <C> <C>
Leisure Durables & Toys - 3.3%
Harley Davidson, Inc. 3,500 100,625
Mattel, Inc. 3,500 107,625
-------
208,250
-------
Restaurants - 0.7%
Brinker International, Inc. 3,100 46,888
-------
TOTAL MEDIA & LEISURE 714,094
-------
NONDURABLES - 5.8%
Beverages - 2.1%
PepsiCo. Inc. 2,400 134,100
-------
Foods - 1.7%
CPC International, Inc. 1,600 109,800
-------
Household Products - 2.0%
Gillette Co. 1,400 72,975
Tambrands, Inc. 1,200 57,300
-------
130,275
-------
TOTAL NONDURABLES 374,175
-------
RETAIL & WHOLESALE - 12.0%
Apparel Stores - 4.4%
Liz Claiborne, Inc. 1,600 44,400
Oakley, Inc. 3,500 119,000
Tommy Hilfiger Corp. 2,700 114,413
-------
277,813
-------
General Mercandise Stores- 3.6%
Borders Group, Inc. 5,000 92,500
Nordstrom, Inc. 2,200 89,100
Nine West Group, Inc. 1,300 48,750
-------
230,350
-------
Retail & Wholesale, Miscellaneous - 4.0%
Alco Standard Corp. 2,600 118,625
Home Depot, Inc. 2,800 134,050
-------
252,675
-------
TOTAL RETAIL & WHOLESALE 760,838
-------
SERVICES - 1.9%
Advertising - 1.9%
Interpublic Group of Companies, Inc. 2,800 121,450
-------
</TABLE>
See accompanying notes. 33
<PAGE> 88
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - CAPITAL SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------------------------
<S> <C> <C>
TECHNOLOGY - 18.1%
Communications Equipment - 1.1%
Cisco Systems, Inc. 900 67,162
Computers & Office Equipment - 3.2%
Bay Networks Inc. 1,500 61,688
Officemax Inc. 3,200 71,600
Xerox Corporation 500 68,500
----------
201,788
----------
Computer Services & Software - 11.2%
First Data Corp. 1,900 127,062
Informix Corp. 2,900 87,000
Microsoft Corp. 1,400 122,850
Parametric Technology Corp. 1,000 66,500
Reynolds & Reynolds Company 2,200 85,525
Sybase, Inc. 2,300 82,800
Symantec Corp. 3,900 90,675
Xilinx, Inc. 1,700 51,850
----------
714,262
----------
Electronics - 2.6%
Intel Corp. 1,200 68,100
LSI Logic Corporation 1,100 36,025
Motorola, Inc. 1,100 62,700
----------
166,825
----------
TOTAL TECHNOLOGY 1,150,037
----------
UTILITIES - 4.5%
Telephone Services - 4.5%
AT&T Corp. 1,600 103,600
Century Telephone Enterprises 2,000 63,500
Worldcom Inc. 3,300 116,325
----------
283,425
----------
Total Common Stocks 6,451,469
----------
Total Securities (identified cost - $5,090,715) 6,451,469
OTHER NET LIABILITIES - -1/3% (85,167)
----------
Total net assets $6,366,302
==========
</TABLE>
See accompanying notes. 34
<PAGE> 89
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - MONEY MARKET SERIES PORTFOLIO
DECEMBER 31, 1995
MARKET
SHARES VALUE
---------------------------
COMMON STOCKS - 102.8%
ARGENTINA - 2.6%
YPF Sociedad Anonima - sponsored ADR 2,500 $ 54,063
---------
AUSTRALIA - 1.3%
National Australia Bank Ltd. 3,000 27,002
---------
BERMUDA - 2.2%
Renaissancere Holdings Ltd. 1,500 45,563
----------
CANADA - 2.8%
Petro Canada - Installment Receipts 10,000 57,500
-----------
CHINA - 1.0%
Shandong Huaneng Power Company Ltd.
-sponsored ADR 3,000 20,250
------------
FINLAND - 4.5%
Nokia Corporation - sponsored ADR 2,400 93,300
----------
FRANCE - 7.5%
Construction Industrielles Mediteranienne 1,000 26,583
Elf Aquitaine - sponsored ADR 1,500 55,125
Rhone Poulenc SA - sponsored ADR 2,000 42,750
Usinor Sacilor 2,500 32,769
----------
157,227
-----------
GERMANY - 10.0%
Adidas A.G. - sponsored ADR 2,000 53,625
Bayer A.G. - sponsored ADR 1,700 44,956
Depfa Bank 1,200 46,700
SGL Carbon AG 800 62,601
----------
207,882
----------
HONG KONG - 2.2%
Jardine Strategic Holdings Ltd. 15,000 45,900
-----------
INDONESIA - 1.4%
Semen Cibinong-F 12,000 29,911
------------
ISREAL - 2.2%
Teva Pharmaceutical - sponsored ADR 1,000 46,375
----------
ITALY - 6.0%
De Rigo SPA - sponsored ADR 3,000 68,250
Telecom Italia Mobile SPA 55,000 57,893
-----------
126,143
-----------
JAPAN - 21.5%
Chofu Seisakusho Co. 2,000 53,707
Daiichi Pharmaceutical Co. Ltd. 3,000 42,752
Fuji Photo Film Co. Ltd. -
unsponsored ADR 1,000 58,125
Hitachi Ltd. 2,000 20,164
Matsushita Electric Industrial Co. 2,000 32,573
Mitsui Wood Systems Inc. 2,000 25,205
Mos Food Services 1,000 25,593
----------
258,119
----------
35
<PAGE> 90
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - INTERNATIONAL EQUITY SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------------------
<S> <C> <C>
Sangetsu Co. Ltd. 1,000 25,205
Sanyo Coca-Cola Bottling Co. 1,000 14,542
Shimano Inc. 1,000 17,644
Sony Corp. 1,000 60,008
Tokyo Style Co. Ltd. 3,000 51,477
Toyota Motor Corp. 1,000 21,231
---------
190,107
---------
TOTAL JAPAN 448,226
---------
NETHERLANDS - 13.2%
DSM NV 300 24,704
Hollandsche Beton Groep NV 500 76,420
Internationale Nederlanden Groep NV 750 50,156
Koninlijke PTT Nederland NV 1,200 43,644
Oce-Van Der Grinten NV 600 36,532
Vendex International NV 1,500 44,635
---------
276,091
---------
NORWAY - 4.0%
Norsk Hydro A S - sponsored ADR 2,000 83,750
---------
SPAIN - 2.4%
Telefonica de Espana - sponsored ADR 1,200 50,250
---------
SOUTH KOREA - 2.9%
Samsung Electronics - Global Depository Shares 1,000 60,000
---------
SWITZERLAND - 6.2%
Butcher Holdings A G 50 30,418
Ciba Geigy A G 50 44,105
Nestle S A 50 55,447
---------
129,970
---------
TAIWAN - 1.7%
China Steel Corp GDS - sponsored ADR 2,000 34,750
---------
UNITED KINGDOM - 7.2%
British Gas PLC - sponsored ADR 800 31,300
British Petroleum Co. PLC - sponsored ADR 500 51,063
Elan Corporation PLC - sponsored ADR 800 38,900
Guinness PLC - sponsored ADR 800 29,437
---------
150,700
---------
Total Common Stocks 2,144,853
---------
Total Securities (identified cost - $2,127,303) 2,144,853
OTHER NET LIABILITIES - -2.8% (59,265)
---------
Total net assets $2,085,588
=========
</TABLE>
See accompanying notes. 36
<PAGE> 91
PART C
OTHER INFORMATION
<PAGE> 92
PART C
CANADA LIFE OF AMERICA SERIES FUND, INC.
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
(1) Form of Articles of Incorporation of Canada Life of America
Series Fund, Inc.*
(a) Form of Articles Supplementary****
(b) Amendment to the Articles Supplementary*****
(2) By-Laws of Canada Life of America Series Fund, Inc*
(3) Not applicable.
(4) Forms of Certificates for Shares of the Fund**
(5) (a) Form of Investment Advisory Agreement with CL Capital
Management, Inc. (CLCM) and the Series Fund*****
(b) Form of Sub-Investment Advisory Agreement between CL
Capital Management, Inc. (CLCM) and Canada Life Investment
Management Limited (CLIM)*****
(c) Form of Sub-Investment Advisory Agreement between CL
Capital Management, Inc. (CLCM) and J. & W. Seligman & Co.,
Incorporated (Seligman)*****
(6) Not applicable
(7) Not applicable
(8) Form of Custodian Agreement**
(9) (a) Form of Accounting Services Agreement**
(b) Form of Dividend Disbursing and Transfer Agent
Agreement**
(c) Form of Participation Agreement**
(10) Not applicable
(11) Consent of Independent Auditors
(12) Not applicable
(13) Form of Subscription Agreement
(a) Form of Subscription Agreement for the Capital Series****
(b) Form of Subscription Agreement for the International Series*****
(14) Not applicable.
(15) Not applicable.
(16) Sample Performance Data Calculation.***
(17.1-17.6) Financial Data Schedules
* Incorporated herein by Reference to exhibits filed with the Registrant's
initial Registration Statement on Form N-1A (File No. 33-28888), filed on
May 31, 1989.
** Incorporated herein by Reference to exhibits filed with the Pre-Effective
Amendment to this Registration Statement on Form N-1A (File No. 33-28888),
filed on September 5, 1989.
*** Incorporated herein by Reference to exhibits filed with the
Post-Effective Amendment No. 2 to this Registration Statement on Form N-1A
(File No. 33-28888), filed on May 1, 1990.
**** Incorporated herein by Reference to exhibits filed with the
Post-Effective Amendment No 5. to this Registration Statement on Form N-1A
(File No. 33-28888), filed on March 5, 1993.
***** Incorporated herein by Reference to exhibits filed with the
Post-Effective Amendment No. 8 to this Registration Statement on Form N-1A
(File No. 33-28888), filed on April 17, 1995.
<PAGE> 93
Item 25. Persons Controlled by or Under Common Control with Registrant.*
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record
Title of Class Holders
-------------- ----------------
<S> <C>
Money Market Portfolio 2
Equity Portfolio 2
Bond Portfolio 2
Managed Portfolio 2
Capital Portfolio 2
International Equity Portfolio 2
</TABLE>
Item 27. Indemnification*
Item 28. Business and other Connections of Investment Adviser
None
Item 29. Principal Underwriters*
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the rules
thereunder will be maintained at the offices of the Fund at 330
University Avenue, Toronto, Ontario M5G 1R8 and at
6201 Powers Ferry Road, N.W., Suite 600, Atlanta, Georgia 30339.
Item 31. Management Services*
Item 32. Undertaking
The Registrant undertakes to furnish a copy of the Registrant's
most recent Annual Report to Shareholder's free of charge upon
request.
- -------------
* Incorporated herein by Reference to Part C of the Pre-Effective Amendment to
this Registration Statement on Form N-1A (File No. 33-28888), filed on
September 5, 1989.
<PAGE> 94
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule 485 under the
Securities Act of 1933, and has caused this Post-Effective Amendment Number 9
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, and the State of New York, on this 28th day of
February, 1996.
CANADA LIFE OF AMERICA SERIES FUND, INC.
(SEAL)
Attest: /s/ D. A. Hopkins By /s/ D. A. Loney
----------------------------- ----------------------
D. A. Hopkins, Secretary D. A. Loney, President
Canada Life of America Series Canada Life of America
Fund, Inc. Series Fund, Inc.
As required by the Securities Act of 1933, this Post-Effective Amendment Number
9 has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ R. W. Morrison Chairman and Director 02/28/96
- ------------------
R. W. Morrison
/s/ D. A. Loney President and Director 02/28/96
- ------------------
D. A. Loney
/s/ E. Y. Baker Director 02/28/96
- ------------------
E. Y. Baker
/s/ J. S. Clarke Director 02/28/96
- ------------------
J. S. Clarke
/s/ D. H. Harris Director 02/28/96
- ------------------
D. H. Harris
/s/ D. V. Rough Treasurer 02/28/96
- ------------------
D. V. Rough
/s/ D. D. Myers Accounting Officer 02/28/96
- ------------------
D. D. Myers
</TABLE>
<PAGE> 95
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
-------------- -------------------------------
<S> <C>
11 Consent of Independent Auditors
17.1-17.6 Financial Data Schedules (for SEC use only)
</TABLE>
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed Financial
Information" and "Financial Statements" and to the use of our report dated
January 23, 1996 in Post-Effective Amendment No. 9 to the Registration Statement
(Form N-1A No. 33-28888) and related Prospectus of Canada Life of America Series
Fund, Inc. (dated May 1, 1996).
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Atlanta, Georgia
April 24, 1996
<PAGE> 1
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1995
AUDITED FINANCIAL STATEMENTS OF CANADA LIFE OF AMERICA SERIES FUND, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[SERIES]
[NUMBER] 1
[NAME] MONEY MARKET
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-START] JAN-01-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 4,740
[INVESTMENTS-AT-VALUE] 4,740
[RECEIVABLES] 0
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] (50)
[TOTAL-ASSETS] 4,690
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 81
[TOTAL-LIABILITIES] 81
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 4,604
[SHARES-COMMON-STOCK] 5
[SHARES-COMMON-PRIOR] 5
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 4,609
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 268
[OTHER-INCOME] 0
[EXPENSES-NET] (41)
[NET-INVESTMENT-INCOME] 227
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 227
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (227)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 606
[NUMBER-OF-SHARES-REDEEMED] (673)
[SHARES-REINVESTED] 22
[NET-CHANGE-IN-ASSETS] (449)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 23
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 52
[AVERAGE-NET-ASSETS] 4,565
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0.49
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] (0.49)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.00
[EXPENSE-RATIO] 0.75
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE> 1
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1995
AUDITED FINANCIAL STATEMENTS OF CANADA LIFE OF AMERICA SERIES FUND, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[SERIES]
[NUMBER] 2
[NAME] MANAGED
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-START] JAN-01-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 18,819
[INVESTMENTS-AT-VALUE] 20,120
[RECEIVABLES] 100
[ASSETS-OTHER] 58
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 20,278
[PAYABLE-FOR-SECURITIES] 67
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,178
[TOTAL-LIABILITIES] 3,245
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 15,719
[SHARES-COMMON-STOCK] 14
[SHARES-COMMON-PRIOR] 13
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1,300
[NET-ASSETS] 17,033
[DIVIDEND-INCOME] 123
[INTEREST-INCOME] 578
[OTHER-INCOME] 0
[EXPENSES-NET] (176)
[NET-INVESTMENT-INCOME] 525
[REALIZED-GAINS-CURRENT] 2,596
[APPREC-INCREASE-CURRENT] 276
[NET-CHANGE-FROM-OPS] 3,397
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (525)
[DISTRIBUTIONS-OF-GAINS] (2,596)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 303
[NUMBER-OF-SHARES-REDEEMED] (267)
[SHARES-REINVESTED] 77
[NET-CHANGE-IN-ASSETS] 1,841
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 86
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 176
[AVERAGE-NET-ASSETS] 17,142
[PER-SHARE-NAV-BEGIN] 12.01
[PER-SHARE-NII] 0.40
[PER-SHARE-GAIN-APPREC] 2.38
[PER-SHARE-DIVIDEND] (0.41)
[PER-SHARE-DISTRIBUTIONS] (2.01)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 12.37
[EXPENSE-RATIO] 0.90
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE> 1
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1995
AUDITED FINANCIAL STATEMENTS OF CANADA LIFE OF AMERICA SERIES FUND, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[SERIES]
[NUMBER] 3
[NAME] BOND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-START] JAN-01-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 5,817
[INVESTMENTS-AT-VALUE] 5,877
[RECEIVABLES] 66
[ASSETS-OTHER] 59
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 6,002
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 508
[TOTAL-LIABILITIES] 508
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 5,429
[SHARES-COMMON-STOCK] 5
[SHARES-COMMON-PRIOR] 4
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 60
[NET-ASSETS] 5,494
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 358
[OTHER-INCOME] 0
[EXPENSES-NET] (55)
[NET-INVESTMENT-INCOME] 303
[REALIZED-GAINS-CURRENT] 187
[APPREC-INCREASE-CURRENT] 275
[NET-CHANGE-FROM-OPS] 765
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (303)
[DISTRIBUTIONS-OF-GAINS] (72)
[DISTRIBUTIONS-OTHER] (116)
[NUMBER-OF-SHARES-SOLD] 129
[NUMBER-OF-SHARES-REDEEMED] (36)
[SHARES-REINVESTED] 24
[NET-CHANGE-IN-ASSETS] 1,508
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 25
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 55
[AVERAGE-NET-ASSETS] 4,999
[PER-SHARE-NAV-BEGIN] 9.75
[PER-SHARE-NII] 0.65
[PER-SHARE-GAIN-APPREC] 1.09
[PER-SHARE-DIVIDEND] (0.64)
[PER-SHARE-DISTRIBUTIONS] (0.15)
[RETURNS-OF-CAPITAL] (0.25)
[PER-SHARE-NAV-END] 10.45
[EXPENSE-RATIO] 0.88
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE> 1
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1995
AUDITED FINANCIAL STATEMENTS OF CANADA LIFE OF AMERICA SERIES FUND, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[SERIES]
[NUMBER] 4
[NAME] VALUE EQUITY
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-START] JAN-01-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 9,154
[INVESTMENTS-AT-VALUE] 10,080
[RECEIVABLES] 36
[ASSETS-OTHER] 70
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 10,186
[PAYABLE-FOR-SECURITIES] 22
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,919
[TOTAL-LIABILITIES] 1,941
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 7,313
[SHARES-COMMON-STOCK] 6
[SHARES-COMMON-PRIOR] 5
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 926
[NET-ASSETS] 8,245
[DIVIDEND-INCOME] 107
[INTEREST-INCOME] 58
[OTHER-INCOME] 0
[EXPENSES-NET] (94)
[NET-INVESTMENT-INCOME] 71
[REALIZED-GAINS-CURRENT] 1,826
[APPREC-INCREASE-CURRENT] (35)
[NET-CHANGE-FROM-OPS] 1,862
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (71)
[DISTRIBUTIONS-OF-GAINS] (1,826)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 141
[NUMBER-OF-SHARES-REDEEMED] (96)
[SHARES-REINVESTED] 17
[NET-CHANGE-IN-ASSETS] 866
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 44
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 94
[AVERAGE-NET-ASSETS] 8,776
[PER-SHARE-NAV-BEGIN] 13.46
[PER-SHARE-NII] 0.12
[PER-SHARE-GAIN-APPREC] 3.17
[PER-SHARE-DIVIDEND] (0.12)
[PER-SHARE-DISTRIBUTIONS] (3.12)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 13.51
[EXPENSE-RATIO] 0.90
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE> 1
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1995
AUDITED FINANCIAL STATEMENTS OF CANADA LIFE OF AMERICA SERIES FUND, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[SERIES]
[NUMBER] 5
[NAME] CAPITAL
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-START] JAN-01-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 5,091
[INVESTMENTS-AT-VALUE] 6,451
[RECEIVABLES] 6
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 145
[TOTAL-ASSETS] 6,602
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 236
[TOTAL-LIABILITIES] 236
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 5,000
[SHARES-COMMON-STOCK] 5
[SHARES-COMMON-PRIOR] 4
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1,361
[NET-ASSETS] 6,366
[DIVIDEND-INCOME] 54
[INTEREST-INCOME] 11
[OTHER-INCOME] 0
[EXPENSES-NET] (59)
[NET-INVESTMENT-INCOME] 6
[REALIZED-GAINS-CURRENT] 221
[APPREC-INCREASE-CURRENT] 1,340
[NET-CHANGE-FROM-OPS] 1,567
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (6)
[DISTRIBUTIONS-OF-GAINS] (221)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 134
[NUMBER-OF-SHARES-REDEEMED] (36)
[SHARES-REINVESTED] 4
[NET-CHANGE-IN-ASSETS] 2,519
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 27
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 59
[AVERAGE-NET-ASSETS] 5,412
[PER-SHARE-NAV-BEGIN] 10.48
[PER-SHARE-NII] 0.02
[PER-SHARE-GAIN-APPREC] 3.56
[PER-SHARE-DIVIDEND] (0.01)
[PER-SHARE-DISTRIBUTIONS] (0.50)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 13.55
[EXPENSE-RATIO] 0.88
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE> 1
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1995
AUDITED FINANCIAL STATEMENTS OF CANADA LIFE OF AMERICA SERIES FUND, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[SERIES]
[NUMBER] 6
[NAME] INTERNATIONAL EQUITY
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] 8-MOS
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-START] APR-24-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 2,127
[INVESTMENTS-AT-VALUE] 2,145
[RECEIVABLES] 73
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 31
[TOTAL-ASSETS] 2,249
[PAYABLE-FOR-SECURITIES] 59
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 105
[TOTAL-LIABILITIES] 164
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 2,066
[SHARES-COMMON-STOCK] 2
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 17
[NET-ASSETS] 2,085
[DIVIDEND-INCOME] 22
[INTEREST-INCOME] 17
[OTHER-INCOME] 0
[EXPENSES-NET] (19)
[NET-INVESTMENT-INCOME] 20
[REALIZED-GAINS-CURRENT] 82
[APPREC-INCREASE-CURRENT] 17
[NET-CHANGE-FROM-OPS] 119
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (20)
[DISTRIBUTIONS-OF-GAINS] (82)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 207
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 2,085
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 11
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 22
[AVERAGE-NET-ASSETS] 2,054
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0.10
[PER-SHARE-GAIN-APPREC] 0.49
[PER-SHARE-DIVIDEND] (0.10)
[PER-SHARE-DISTRIBUTIONS] (0.40)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.09
[EXPENSE-RATIO] 1.20
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
