<PAGE> 1
As Filed with the Securities and Exchange Commission on April , 1997.
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
Pre-Effective Amendment No.
Post-Effective Amendment No. 10
and/or
Registration Statement Under The Investment Company Act Of 1940
Amendment No. 11
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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, L.L.P.
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, 1997 pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(i)
---
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
---
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, 1997 for its most recent fiscal year
ending December 31, 1996.
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>
<CAPTION>
PART A
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
<CAPTION>
PART B
STATEMENT OF ADDITIONAL
ITEM OF FORM N-1A INFORMATION CAPTION
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<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
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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, 1997, 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, 1997.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
CONDENSED FINANCIAL INFORMATION .................................................................... 5
THE FUND ........................................................................................... 11
INVESTMENT OBJECTIVES, POLICIES AND RISKS .......................................................... 11
Money Market Portfolio ................................................................. 11
Bond Portfolio ......................................................................... 12
Value Equity Portfolio ................................................................. 13
Managed Portfolio ...................................................................... 13
Capital Portfolio ...................................................................... 14
International Equity Portfolio ......................................................... 15
INVESTMENT RESTRICTIONS ............................................................................ 16
DESCRIPTION OF CERTAIN INVESTMENT PRACTICES ........................................................ 17
When-Issued Securities ................................................................. 17
Loans of Portfolio Securities .......................................................... 17
Put And Call Options ................................................................... 17
Stock Index Futures, Options On Stock Index Futures, And Stock Index Options ........... 18
International Investments .............................................................. 18
Currency Hedging ....................................................................... 19
Repurchase Agreements .................................................................. 19
MANAGEMENT OF THE FUND ............................................................................. 20
Investment Adviser ..................................................................... 20
Capital Portfolio Sub-Adviser .......................................................... 20
International Equity Portfolio Sub-Adviser ............................................. 20
Advisory Fees And Expenses ............................................................. 21
Custodian .............................................................................. 21
Transfer Agent And Dividend Disbursing Agent ........................................... 21
CAPITAL STOCK AND SHAREHOLDER INFORMATION .......................................................... 21
PERFORMANCE INFORMATION ............................................................................ 22
PURCHASES AND REDEMPTIONS OF SHARES ................................................................ 23
VALUATION OF SHARES ................................................................................ 24
DIVIDENDS .......................................................................................... 24
TAXES .............................................................................................. 24
LEGAL PROCEEDINGS .................................................................................. 24
REGISTRATION STATEMENT ............................................................................. 24
</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, 1996 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>
Year Ended Year Ended Year Ended Year Ended
12/31/96 12/31/95 12/31/94 12/31/93
$ $ $ $
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period 10.00 10.00 10.00 10.00
Income from Investment Operations
Net Investment Income 0.45 0.49 0.34 0.23
Net Gains or Losses on Securities
(both realized and unrealized) 0.00 0.00 0.00 0.00
Total From Investment Operations 0.45 0.49 0.34 0.23
Less Distributions
Dividends (from net investment income) (0.45) (0.49) (0.34) (0.23)
Distributions (from capital gains) 0.00 0.00 0.00 0.00
Returns of Capital 0.00 0.00 0.00 0.00
Total Distributions (0.45) (0.49) (0.34) (0.23)
Net Asset Value, End of Period 10.00 10.00 10.00 10.00
Total Return 4.58% 4.95% 3.40% 2.29%
Ratios/Supplemental Data
Net Assets, End of Period 7,599,213 4,608,718 5,057,319 4,513,726
Ratio of Expenses to Average Net Assets* 0.75%** 0.75% 0.75% 0.75%
Ratio of Net Income to Average Net Assets* 4.54%** 4.98% 3.43% 2.29%
Portfolio Turnover Rate
<CAPTION>
Period
Year Ended Year Ended Year Ended 2/4/89 to
12/31/93 12/31/92 12/31/91 12/31/90
$ $ $ $
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period 10.00 10.00 10.00 10.00**
Income from Investment Operations
Net Investment Income 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
Total From Investment Operations 0.27 0.52 0.68 0.05
Less Distributions
Dividends (from net investment income) (0.27) (0.52) (0.68) (0.05)
Distributions (from capital gains) 0.00 0.00 0.00 0.00
Returns of Capital 0.00 0.00 0.00 0.00
Total Distributions (0.27) (0.52) (0.68) (0.05)
Net Asset Value, End of Period 10.00 10.00 10.00 10.00
Total Return 2.71% 5.25% 6.76% 7.12%***
Ratios/Supplemental Data
Net Assets, End of Period 2,728,842 2,250,519 2,095,711 2,000,000
Ratio of Expenses to Average Net Assets* 0.92% 1.25% 1.25% 1.25%***
Ratio of Net Income to Average Net Assets* 2.81% 4.80% 6.78% 6.90%***
Portfolio Turnover Rate
</TABLE>
* The Fund commenced operations on December 4, 1989.
** Absent the reimbursement of the Fund's expenses, the Money Market
Portfolio expenses would have been 1.09%.
*** 1989 amounts annualized from December 4, 1989.
3
<PAGE> 8
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
(Continued)
MANAGED PORTFOLIO
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended
12/31/96 12/31/95 12/31/94 12/31/93
$ $ $ $
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period 12.37 12.01 12.77 12.14
Income from Investment Operations
Net Investment Income 0.32 0.40 0.32 0.31
Net Gains or Losses on Securities
(realized and unrealized) 0.27 2.38 (0.39) 0.74
Total From Investment Operations 0.59 2.78 (0.07) 1.05
Less Distributions
Dividends (from net investment income) (0.32) (0.41) (0.32) (0.31)
Distributions (from capital gains) (0.84) (2.01) (0.37) (0.11)
Returns of Capital 0.00 0.00 0.00 0.00
Total Distributions (1.16) (2.42) (0.69) (0.42)
Net Asset Value, End of Period 11.80 12.37 12.01 12.77
Total Return 5.75% 21.92% -0.25% 8.24%
Ratios/Supplemental Data
Net Assets, End of Period 15,972,639 17,033,045 15,192,354 17,164,547
Ratio of Expenses to Average Net Assets* 0.90% 0.90% 0.97% 1.15%
Ratio of Net Income to Average Net Assets* 2.53% 3.06% 2.51% 2.50%
Portfolio Turnover Rate 144.67% 145.14% 27.31% 38.20%
Average Commission Rate Paid 0.0600 -- -- --
<CAPTION>
Year Ended Year Ended Year Ended Year Ended
12/31/92 12/31/91 12/31/90 12/31/89
$ $ $ $
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period 11.59 9.66 9.99 10.00*
Income from Investment Operations
Net Investment Income 0.35 0.45 0.50 0.04
Net Gains or Losses on Securities
(realized and unrealized) 0.65 1.98 (0.34) (0.02)
Total From Investment Operations 1.00 2.43 0.16 0.02
Less Distributions
Dividends (from net investment income) (0.35) (0.46) (0.49) (0.03)
Distributions (from capital gains) (0.10) (0.04) 0.00 0.00
Returns of Capital 0.00 0.00 0.00 0.00
Total Distributions (0.45) (0.50) (0.49) (0.03)
Net Asset Value, End of Period 12.14 11.59 9.66 9.99
Total Return 8.02% 23.40% 1.63% 3.02%**
Ratios/Supplemental Data
Net Assets, End of Period 11,986,858 8,534,720 3,958,203 3,995,145
Ratio of Expenses to Average Net Assets* 1.25% 1.25% 1.25% 1.25%**
Ratio of Net Income to Average Net Assets* 2.97% 4.12% 5.22% 5.40%**
Portfolio Turnover Rate 39.62% 71.33% 39.98% 5.90%
Average Commission Rate Paid
</TABLE>
* The Fund commenced operations on December 4, 1989.
** 1989 amounts annualized from December 4, 1989.
4
<PAGE> 9
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
(Continued)
BOND PORTFOLIO
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended
12/31/96 12/31/95 12/31/94 12/31/93
$ $ $ $
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period 10.45 9.75 10.74 10.64
Income from Investment Operations
Net Investment Income 0.60 0.65 0.51 0.57
Net Gains or Losses on Securities
(both realized and unrealized) (0.09) 1.09 (0.99) 0.56
Total From Investment Operations 0.51 1.74 (0.48) 1.13
Less Distributions
Dividends (from net investment
income) (0.60) (0.64) (0.51) (0.57)
Distributions (from capital gains) 0.00 (0.15) 0.00 (0.46)
Returns of Capital 0.00 (0.25) 0.00 0.00
Total Distributions (0.60) (1.04) (0.51) (1.03)
Net Asset Value, End of Period 10.36 10.45 9.75 10.74
Total Return 4.66% 16.77% -3.94% 10.35%
Ratios/Supplemental Data
Net Assets, End of Period 6,712,914 5,493.594 3,985,744 4,203,387
Ratio of Expenses to Average Net Assets* 0.90%** 0.88% 0.96% 1.16%
Ratio of Net Income to Average Net Assets* 5.73%** 6.06% 5.01% 5.01%
Portfolio Turnover Rate 284.11% 245.32% 43.89% 84.77%
<CAPTION>
Period
Year Ended Year Ended Year Ended Year Ended
12/31/92 12/31/91 12/31/90 12/31/89
$ $ $ $
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period 10.65 9.78 9.93 10.00*
Income from Investment Operations
Net Investment Income 0.65 0.68 0.71 0.05
Net Gains or Losses on Securities
(both realized and unrealized) 0.23 0.91 (0.16) (0.07)
Total From Investment Operations 0.88 1.59 0.55 (0.02)
Less Distributions
Dividends (from net investment
income) (0.65) (0.69) (0.70) (0.05)
Distributions (from capital gains) (0.24) (0.03) 0.00 0.00
Returns of Capital 0.00 0.00 0.00 0.00
Total Distributions (0.89) (0.72) (0.70) (0.05)
Net Asset Value, End of Period 10.64 10.65 9.78 9.93
Total Return 6.65% 16.21% 5.48% -2.08%***
Ratios/Supplemental Data
Net Assets, End of Period 3,277,660 2,318,565 1,963,858 1,986,257
Ratio of Expenses to Average Net Assets* 1.25% 1.25% 1.25% 1.26%***
Ratio of Net Income to Average Net Assets* 6.01% 6.58% 7.17% 7.22%***
Portfolio Turnover Rate 79.77% 112.36% 47.25% 1.10%
</TABLE>
* The Fund commenced operations on December 4, 1989.
** Absent the reimbursement of the Fund's expenses, the Bond Portfolio
expenses would have been 1.07%
*** 1989 amounts annualized from December 4, 1989.
5
<PAGE> 10
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
(Continued)
VALUE EQUITY PORTFOLIO
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended
12/31/96 12/31/95 12/31/94 12/31/93
$ $ $ $
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period 13.51 13.46 13.60 13.15
Income from Investment Operations
Net Investment Income 0.02 0.12 0.14 0.14
Net Gains or Losses on Securities
(both realized and unrealized) 0.80 3.17 0.13 0.61
Total From Investment Operations 0.82 3.29 0.27 0.75
Less Distributions
Dividends (from net investment income) (0.02) (0.12) (0.14) (0.14)
Distributions (from capital gains) (1.31) (3.12) (0.27) (0.16)
Returns of Capital 0.00 0.00 0.00 0.00
Total Distributions (1.33) (3.24) (0.41) (0.30)
Net Asset Value, End of Period 13.00 13.51 13.46 13.60
Total Return 6.94% 23.66% 2.03% 5.44%
Ratios/Supplemental Data
Net Assets, End of Period 8,518,192 8,244,957 7,379,295 7,062,948
Ratio of Expenses to Average Net Assets* 0.90% 0.90% 0.96% 1.14%
Ratio of Net Income to Average Net Assets* 0.17% 0.81% 1.03% 1.07%
Portfolio Turnover Rate 46.78% 103.07% 35.99% 23.70%
Average Commission Rate Paid 0.0600
<CAPTION>
Year Ended Year Ended Year Ended Year Ended
12/31/92 12/31/91 12/31/90 12/31/89
$ $ $ $
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period 12.26 9.38 10.06 10.00*
Income from Investment Operations
Net Investment Income 0.14 0.15 0.22 0.02
Net Gains or Losses on Securities
(both realized and unrealized) 0.92 3.16 (0.67) 0.05
Total From Investment Operations 1.06 3.31 (0.45) 0.07
Less Distributions
Dividends (from net investment income) (0.14) (0.17) (0.21) (0.01)
Distributions (from capital gains) (0.03) (0.26) (0.02) 0.00
Returns of Capital 0.00 0.00 0.00 0.00
Total Distributions (0.17) (0.43) (0.23) (0.01)
Net Asset Value, End of Period 13.15 12.26 9.38 10.06
Total Return 8.37% 34.95% -4.45% 9.85%**
Ratios/Supplemental Data
Net Assets, End of Period 4,711,271 2,874,635 1,882,680 2,012,684
Ratio of Expenses to Average Net Assets* 1.25% 1.25% 1.25% 1.23%**
Ratio of Net Income to Average Net Assets* 1.10% 1.39% 2.23% 2.73%**
Portfolio Turnover Rate 6.25% 36.16% 36.39% 13.13%
Average Commission Rate Paid
</TABLE>
* The Fund commenced operations on December 4, 1989.
** 1989 amounts annualized from December 4, 1989.
6
<PAGE> 11
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
(Continued)
CAPITAL PORTFOLIO
<TABLE>
<CAPTION>
Period
Year Ended Year Ended Year Ended 5/1/93 to
12/31/96 12/31/95 12/31/94 12/31/93
$ $ $ $
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period 13.55 10.48 11.06 10.00*
Income from Investment Operations
Net Investment Income 0.03 0.02 0.01 (0.02)
Net Gains or Losses on Securities
(both realized and unrealized) 1.68 3.56 (0.46) 1.32
Total From Investment Operations 1.71 3.58 (0.45) 1.30
Less Distributions
Dividends (from net investment income) (0.03) (0.01) (0.01) 0.00
Distributions (from capital gains) (1.27) (0.50) (0.12) (0.24)
Returns of Capital 0.00 0.00 0.00 0.00
Total Distributions (1.30) (0.51) (0.13) (0.24)
Net Asset Value, End of Period 13.96 13.55 10.48 11.06
Total Return 12.65% 33.99% -4.11% 18.42%**
Ratios/Supplemental Data
Net Assets, End of Period 6,676,516 6,366,302 3,847,365 2,917,531
Ratio of Expenses to Average Net Assets* 0.90% 0.88% 0.92% 1.01%**
Ratio of Net Income to Average Net Assets* 0.19% 0.11% 0.09% -0.21%**
Portfolio Turnover Rate 54.11% 33.42% 55.99% 21.87%
Average Commission Rate Paid 0.0564
</TABLE>
* The Fund commenced operations on May 1, 1993.
** 1993 amounts annualized from May 1, 1993.
7
<PAGE> 12
CONDENSED FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
(Continued)
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
Year Ended Period
12/31/96 5/1/95 to
12/31/95
$ $
<S> <C> <C> <C>
Net Asset Value, Beginning of Period 10.09 10.00 *
Income from Investment Operations
Net Investment Income 0.16 0.10
Net Gains or Losses on Securities
(both realized and unrealized) 1.83 0.49
Total From Investment Operations 1.99 0.59
Less Distributions
Dividends (from net investment income) (0.16) (0.10)
Distributions (from capital gains) (0.10) (0.40)
Returns of Capital 0.00 0.00
Total Distributions (0.26) (0.50)
Net Asset Value, End of Period 11.82 10.09
Total Return 19.44% 8.53% ***
Ratios/Supplemental Data
Net Assets, End of Period 3,305,190 2,085,588
Ratio of Expenses to Average Net Assets* 1.20%** 1.20% ***
Ratio of Net Income to Average Net Assets * 1.44%** 1.43% ***
Portfolio Turnover Rate 56.28% 33.56%
Average Commission Rate Paid 0.1961
</TABLE>
* The Fund commenced operations on May 1, 1995.
** Absent the reimbursement of the Fund's expenses, the International Equity
Portfolio expenses would have been 1.56%
*** 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, 1996 of approximately $23.3
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 Merrigan, CFA, is the Vice President and Chief Investment Officer of CLCM.
In his role as Chief Investment Officer, Mr. Merrigan is responsible for setting
overall investment policies, client communication, and determination of the
asset mix and the day-to-day investment management of the Value Equity Portfolio
and Managed Portfolio of the Canada Life of America Series Fund, Inc. As well as
other equity and balanced accounts managed by CLCM, Mr. Merrigan is also
responsible for the management of 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. CLCM became responsible for rendering investment advice on
behalf of the Fund on May 1, 1995.
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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;
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
Craig Merrigan, CFA, is the Vice President and Chief Investment Officer of CLCM.
In his role as Chief Investment Officer, Mr. Merrigan is responsible for setting
overall investment policies, client communication, and determination of the
asset mix and the day-to-day investment management of the Value Equity Portfolio
and Managed Portfolio of the Canada Life of America Series Fund, Inc. As well as
other equity and balanced accounts managed by CLCM, Mr. Merrigan is also
responsible for the management of 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. 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.
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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
Craig Merrigan, CFA, is the Vice President and Chief Investment Officer of CLCM.
In his role as Chief Investment Officer, Mr. Merrigan is responsible for setting
overall investment policies, client communication, and determination of the
asset mix and the day-to-day investment management of the Value Equity Portfolio
and Managed Portfolio of the Canada Life of America Series Fund, Inc. As well as
other equity and balanced accounts managed by CLCM, Mr. Merrigan is also
responsible for the management of 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. CLCM became responsible for rendering investment advice on
behalf of the Fund on May 1, 1995.
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".
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.
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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 8 industry groups as
defined by Morgan Stanley (Appendix A);
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"); and
7. may, for short-term investment or defensive purposes only, invest in
short-term instruments of U.S. or foreign issuers.
PORTFOLIO MANAGER
Craig Merrigan, CFA, is the Vice President and Chief Investment Officer of CLCM.
In his role as Chief Investment Officer, Mr. Merrigan is responsible for setting
overall investment policies, client communication, and determination of the
asset mix and the day-to-day investment management of the Value Equity Portfolio
and Managed Portfolio of the Canada Life of America Series Fund, Inc. As well as
other equity and balanced accounts managed by CLCM, Mr. Merrigan is also
responsible for the management of 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. CLCM became responsible for rendering investment advice on
behalf of the Fund on May 1, 1995.
SUB-ADVISER PORTFOLIO MANAGER
Thomas Tibbles, CFA, joined Canada Life Investment Management Limited (CLIM) as
Vice President, Foreign Equities on August 1, 1996. Mr. Tibbles has 10 years of
investment experience, most recently as Vice President, International Equities
at Sun Life Investment Management. For most of his career, he has focused on
research and portfolio management activities related to the international
capital markets. Mr. Tibbles is responsible for the Sub-Adviser's day-to-day
investment management of the International Equity Portfolio. As a result of
restructuring within CLIM's organization, Mr. Tibbles will receive support and
international investment research from five portfolio managers located within
The Canada Life Assurance Company in London, England.
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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.
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
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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.
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
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<PAGE> 21
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.
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.
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<PAGE> 22
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 Portfolios' 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 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
18
<PAGE> 23
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, 1996 of approximately $ 23.3 billion (U.S. dollars), of which in excess of
$5.3 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 $ 14.2 billion at December 31, 1996. The Capital Portfolio
Sub-Adviser also provides investment management or advice to individual and
institutional accounts having a December 31, 1996 value of approximately $4.2
billion.
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 $5.1 billion at December 31, 1996. The International
Equity Portfolio Sub-Adviser also provides investment management to individual
and institutional accounts having a December 31, 1996 value of approximately
Canadian $1.7 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
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<PAGE> 24
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, Canada Life of
America (CLICA) is reimbursing the Fund for expenses (other than advisory fees)
that exceed 0.40% of the Managed, Bond, Value Equity, Capital, and
International Equity Portfolio, and 0.25% of the Money Market Portfolio.
However, CLICA reserves 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.
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
- --------------------------------------------
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<PAGE> 25
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 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
21
<PAGE> 26
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 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.
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<PAGE> 27
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 the 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 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 monthly 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.
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<PAGE> 28
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 Curther 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, DC.
APPENDIX A
The following Morgan Stanley industry sectors represent a reasonable
cross-section of economic activity:
Energy
Materials
Capital Equipment
Consumer Goods
Services
Finance
Multi-Industry
Gold Mines
24
<PAGE> 29
PART B
INFORMATION REQUIRED TO BE IN THE
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 30
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, 1997. 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, 1997.
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<PAGE> 31
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.......................................................................................23
Duff & Phelps (D&P) Fixed Income Rating Scale.........................................................................23
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION FOR FUND PAGE 1
<PAGE> 32
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 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
<PAGE> 33
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.
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
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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.
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
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<PAGE> 35
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.
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.
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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).
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.
- ----------------------------
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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 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.
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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
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
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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
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
8
<PAGE> 40
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.
During the year 1995, the assets of the Value Equity Fund were re-structured
which resulted in a higher portfolio turnover of 103.07% in 1995 verses 35.99%
in 1994. In 1996, the Portfolio Turnover rate returned to a more normal rate of
46.78%.
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.
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, 1996.
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.
<TABLE>
<CAPTION>
AVERAGE ANNUAL COMPOUNDED RATES OF RETURN
(INCEPTION) YEAR ENDED FIVE YEAR PERIOD 12/4/89
FUND PORTFOLIO 12/31/96 ENDED 12/31/96 TO 12/31/96
<S> <C> <C> <C>
Value Equity 6.94% 9.04% 10.30%
Bond 4.66% 6.68% 7.70%
Managed 5.75% 8.50% 9.41%
Money Market 4.58% 3.62% 4.36%
Capital 12.65% *** 14.17%*
International Equity 19.44% *** 15.02%**
</TABLE>
* Calculated from May 1, 1993 to December 31, 1996.
** Calculated from May 1, 1995 to December 31, 1996.
*** Five Year Average Annual Total return information is not
available for the Capital and International Equity Portfolios.
9
<PAGE> 41
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, 1995 AND APRIL 30, 1996,
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.
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:
YIELD = 2((a-b/cd+1)6 -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.
10
<PAGE> 42
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.
11
<PAGE> 43
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*, 55 Director and Chairman Vice President and Treasurer, Canada Life
D. A. Loney*, 51 ** Director and President Vice-President and Director, U.S. Division, Canada Life.
President, OHA Investment Management Limited; Senior
Vice-President, Finance, Ontario Hospital Association. Formerly
E. Y. Baker, 62 Director Vice-President, Investments, Ontario Hospital Association.
Associate Treasurer for Investments, Cornell University. Formerly
J. S. Clarke, 59 Director Senior Investment Officer, Cornell University.
Formerly, Director, Chairman and CEO, The Equitable Foundation;
Executive Vice President and Chief of Staff, and Director, The
D. H. Harris, 72 Director Equitable Life Assurance Society of the U.S.
Vice President and Vice President and Chief Investment Officer, CL Capital
C.A. Merrigan*, 37*** Assistant Treasurer Management, Inc.
D. V. Rough, 50 Treasurer Associate Treasurer, Investment Services, Canada Life.
D. A. Hopkins, 57** 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.
- --------------------------------------------------------------------------------
12
<PAGE> 44
<TABLE>
<CAPTION>
==================================================================================================================================
COMPENSATION TABLE *
==================================================================================================================================
Pension or Retirement
Aggregate Compensation Benefits Accrued as Estimated Annual Total Compensation from
Name/Title from Series Fund Part of Fund Expenses Benefits Upon Retirement Series Fund to Directors
==================================================================================================================================
<S> <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 Fund and the only people compensated
directly by the Fund are the non-affiliated directors.
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:
POSITION WITH ADVISER
R. W. Morrison Chairman
C. A. Merrigan 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
13
<PAGE> 45
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 $14.2 billion at December 31,
1996), and provide investment management or advice to institutional accounts
(having a December 31, 1996 value of approximately $4.2 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 $5.1 billion at
December 31, 1996) and provide investment management to individual and
institutional accounts (having a December 31, 1996 value of approximately
Canadian $1.7 billion). The principal executive officers of the International
Equity Portfolio Sub-Adviser are: J.K. S. Fleming, President; and G.V. Kondrat,
CFA, 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 $262,822, $217,612
and $188,117 for the fiscal years ended December 31, 1996, 1995, and 1994,
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.
14
<PAGE> 46
INVESTMENT ADVISORY AGREEMENT
The Agreement was initially 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 initially 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 initially
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 attributable to policies participating in its registered
separate
15
<PAGE> 47
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.
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
16
<PAGE> 48
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 total aggregate brokerage commissions paid by the Fund were $48,793,
$79,440 and $25,801 for the fiscal years ended December 31, 1996, 1995 and 1994
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:
(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. 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.
17
<PAGE> 49
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 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 98% 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
18
<PAGE> 50
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>
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
19
<PAGE> 51
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, DC, 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, 1996, 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.
20
<PAGE> 52
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 AA 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 A
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 BBB 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
B predominantly speculative with respect to the issuer's B
CCC capacity to pay interest and repay principal in accordance with
CC the terms of the obligations. BB 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 P-1 result of public
interest questions and preparations to meet such obligations.
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.
21
<PAGE> 53
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 Aaa 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
A 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 C 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
AA modest but may vary slightly from time to time because of
AA- economic conditions.
A+
A Protection factors are average but adequate. However, risk
A- factors are more variable and greater in periods of economic
stress.
BBB+ Below average protection factors, but still considered
BBB sufficient for prudent investment. Considerable variability in
BBB- risk during economic cycles.
BB+ Below investment grade, but deemed likely to meet obligations
BB when 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
B not be met when due. Financial protection factors will fluctuate
B- widely 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.
22
<PAGE> 54
PART C
OTHER INFORMATON
<PAGE> 55
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) Financial Data Schedule
* 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.
2
<PAGE> 56
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 Porftolio 2
Managed Portfolio 2
Capital Portfolio 2
International Equity Portfolio 2
</TABLE>
Item 27. Indemnification
Under Section 2-418 of the Maryland General Corporation Law, with respect to
any proceedings against a present or former director, officer, agent or
employee ("corporate representative") of the registrant, except a proceeding
brought by or on the behalf of the registrant, the registrant may indemnify the
corporate representative against expenses, including attorneys' fees and
judgments, fines, and amounts paid in settlement actually and resonably
incurred by the corporate representative in connection with the proceeding, if:
(1) he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the registrant; and (ii) with respect to
any criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. The registrant is also authorized under Section 2-418 of the Maryland
General Corporation Law to indemnify a corporate representative under certain
circumstances against expenses incurred in connection with the defense of a
suit or action by or in the right of the registrant.
Article 11.01 of the Registrant's By-Laws (Exhibit (2) to this registration
statement) provides that Registrant shall indemnify its corporate
representatives, in a manner that is consistent with Maryland law. Article
11.02 precludes indemnification for "disabling conduct" (willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in
the conduct of office) and sets forth reasonable and fair means for determining
whether indemnification shall be made. In addition, Section 10 of the By-Laws
of Canada Life Insurance Company of America provides indemnification for
directors, officers, and employees of the Company serving at the request of the
Canada Life Assurance Company, including directors, offficers and employees of
the Registrant, and Section 16 of the By-Laws of the Canada Life Assurance
Company provides indemnification for directors, officers and employees serving
at the request of the Canada Life Assurance Company, including directors,
officers and employees of the Registrant.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions discussed in Item 27 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 28. Business and other Connections of Investment Adviser
None
Item 29. Principal Underwriters
None
3
<PAGE> 57
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
All management-related service contracts are discussed in Part A
or B of this Registration Statement.
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 Post-Effective Amendment
Registration Statement for Canada Life of America Variable Annuity Account 1 on
Form N-4 (File No. 33- 28889), filed April 1997.
4
<PAGE> 58
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(b) under the
Securities Act of 1933, and has caused this Post-Effective Amendment Number 10
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 24th day of
April, 1997.
CANADA LIFE OF AMERICA SERIES FUND, INC.
<TABLE>
<CAPTION>
(SEAL)
<S> <C>
Attest: /s/ D. A. Hopkins By: /s/ D. A. Loney
----------------- ---------------
D. A. Hopkins, Secretary D. A. Loney, President
Canada Life of America Series Fund, Inc. Canada Life of America Series Fund, Inc.
</TABLE>
As required by the Securities Act of 1933, this Post-Effective Amendment Number
10 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 04/24/97
- ----------------------- ------------
R. W. Morrison
/s/ D. A. Loney President and Director 04/24/97
- ----------------------- ------------
D. A. Loney
/s/ E. Y. Baker Director 04/24/97
- ----------------------- ------------
E. Y. Baker
/s/ J. S. Clarke Director 04/24/97
- ----------------------- ------------
J. S. Clarke
/s/ D. H. Harris Director 04/24/97
- ----------------------- ------------
D. H. Harris
/s/ D. V. Rough Treasurer 04/24/97
- ----------------------- ------------
D. V. Rough
/s/ D. D. Myers Accounting Officer 04/24 /97
- ----------------------- ------------
D. D. Myers
</TABLE>
6
<PAGE> 59
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
- ------- ----------------------
<S> <C>
1 Form of Articles of Incorporation of Canada Life of America Series Fund, Inc.
1 (a) Form of Articles Supplementary
2 By-Laws of Canda Life of America Series Fund, Inc.
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
5 (b) Form of Sub-Investment Advisory Agreement between CL Capital Management, Inc.
(CLCM) and Canada Life Investment Management Limited (CLIM)
5 (c) Form of Sub-Investment Advisory Agreement between CL Capital Management, Inc. (CLCM) and J. & W.
Seligman & Co., Incorporated (Seligman)
8 Form of Custodian Agreement
9 (a) Form of Accounting Services Agreement
9 (b) Form of Dividend Disbursing and Transfer Agent Agreement
9 (c) Form of Participation Agreement
11 Consent of Independent Auditors
13 Form of Subscription Agreement
13 (a) Form of Subscription Agreement for the Capital Series
13 (b) Form of Subscription Agreement for the International Series
16 Sample Performance Data Calculation
27.1 - 27.6 Financial Data Schedule (For SEC use only)
</TABLE>
7
<PAGE> 60
Financial Statements and Schedules
Canada Life of America Series Fund, Inc.
December 31, 1996
with Report of Independent Auditors
<PAGE> 61
CANADA LIFE OF AMERICA SERIES FUND, INC.
FINANCIAL STATEMENTS
AND SCHEDULES
DECEMBER 31, 1996
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors .................................. 1
Audited Financial Statements
Statement of Assets and Liabilities ............................. 2
Statement of Operations ......................................... 3
Statements of Changes in Net Assets ............................. 4
Notes to Financial
Statements ...................................................... 10
Schedules
Financial Highlights - Money Market Series ...................... 15
Financial Highlights - Managed Series ........................... 16
Financial Highlights - Bond Series .............................. 17
Financial Highlights - Value Equity Series ...................... 18
Financial Highlights - Capital Series ........................... 19
Financial Highlights - International Equity Series .............. 20
Schedule of Investments - Money Market Series Portfolio ......... 21
Schedule of Investments - Managed Series Portfolio .............. 22
Schedule of Investments - Bond Series Portfolio ................. 25
Schedule of Investments - Value Equity Series Portfolio ......... 26
Schedule of Investments - Capital Series Portfolio .............. 28
Schedule of Investments - International Equity Series Portfolio . 32
</TABLE>
<PAGE> 62
[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, Value Equity,
Capital and International Equity Series) as of December 31, 1996, 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 each of 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, 1996, 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, 1996, 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 31, 1997
<PAGE> 63
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY VALUE 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) $ 7,686,481 $17,596,215 $ 7,010,648 $ 9,461,493 $ 6,517,559 $ 3,068,576
Cash 1,010 2,916 1,345 220 837,968 405,202
Receivables:
Dividends and interest -- 105,513 87,912 16,610 4,531 3,189
Due from brokers -- 34,895 -- 32,714 13,612 --
--------------------------------------------------------------------------------------
Total assets 7,687,491 17,739,539 7,099,905 9,511,037 7,373,670 3,476,967
--------------------------------------------------------------------------------------
LIABILITIES
Payables:
Investment advisory fees [Note 2] 3,059 8,356 3,311 4,406 3,374 2,370
Other accrued expenses 15,859 21,495 6,496 8,659 6,411 2,338
Directors' fees and expenses payable 3,522 3,425 1,046 1,387 1,053 1,160
Dividends declared 65,838 1,733,624 376,138 949,877 627,720 64,171
Due to Brokers -- -- -- 28,516 58,596 101,738
--------------------------------------------------------------------------------------
Total liabilities 88,278 1,766,900 386,991 992,845 697,154 171,777
--------------------------------------------------------------------------------------
NET ASSETS $ 7,599,213 $15,972,639 $ 6,712,914 $ 8,518,192 $ 6,676,516 $ 3,305,190
======================================================================================
NET ASSETS CONSIST OF:
Capital shares $ 7,599 $ 13,538 $ 6,480 $ 6,554 $ 4,784 $ 2,796
Additional paid-in capital 7,591,614 15,319,055 6,687,102 7,923,573 5,168,177 2,884,526
Net unrealized appreciation
from investments
and foreign currency -- 640,046 19,332 588,065 1,503,555 417,868
--------------------------------------------------------------------------------------
Total net assets $ 7,599,213 $15,972,639 $ 6,712,914 $ 8,518,192 $ 6,676,516 $ 3,305,190
======================================================================================
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 759,921 1,353,782 647,932 655,427 478,390 279,565
======================================================================================
Net asset value per share $ 10.00 $ 11.80 $ 10.36 $ 13.00 $ 13.96 $ 11.82
======================================================================================
</TABLE>
2
See accompanying notes.
<PAGE> 64
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------
MONEY VALUE INTERNATIONAL
MARKET MANAGED BOND EQUITY CAPITAL EQUITY
SERIES SERIES SERIES SERIES SERIES SERIES
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ 321,992 $ 554,039 $ 437,728 $ 14,576 $ 8,121 $ 5,960
Dividends -- 98,737 -- 97,306 76,968 65,275
-----------------------------------------------------------------------------------------
Total investment income 321,992 652,776 437,728 111,882 85,089 71,235
-----------------------------------------------------------------------------------------
Expenses:
Investment advisory fee [note 2] 30,160 94,027 33,135 48,506 35,425 21,569
Directors' fees and expenses 3,600 11,100 3,900 5,700 4,200 1,500
Custodian fees and expenses 8,906 19,600 10,450 12,050 10,574 8,009
Audit and legal fees 4,140 12,765 4,485 6,555 4,830 1,725
Accounting and administration
[note 2] 17,027 36,323 17,256 20,558 15,178 8,659
Miscellaneous 1,440 4,440 1,560 2,280 1,680 600
-----------------------------------------------------------------------------------------
Total expenses 65,273 178,255 70,786 95,649 71,887 42,062
-----------------------------------------------------------------------------------------
Expense reimbursement [note 1] 15,849 -- 9,196 -- -- 9,709
-----------------------------------------------------------------------------------------
Net investment income 272,568 474,521 376,138 16,233 13,202 38,882
-----------------------------------------------------------------------------------------
Realized and unrealized gain
(loss) on investments:
Net realized gain (loss)
from investments
and foreign currency -- 1,259,103 (13,809) 933,644 614,518 25,289
Net change in unrealized
appreciation (depreciation)
from investments and
foreign currency -- (660,286) (40,529) (338,105) 142,801 400,317
-----------------------------------------------------------------------------------------
Net gain(loss) on investments -- 598,817 (54,338) 595,539 757,319 425,606
-----------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations $ 272,568 $ 1,073,338 $ 321,800 $ 611,772 $ 770,521 $ 464,488
=========================================================================================
</TABLE>
3
See accompanying notes.
<PAGE> 65
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
MONEY MARKET SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
---------------------------------
<S> <C> <C>
Operations:
Net investment income $ 272,568 $ 227,240
------------ ------------
Net increase in net assets resulting from operations 272,568 227,240
------------ ------------
Dividends to shareholders from:
Net investment income (272,568) (227,240)
------------ ------------
Fund share transactions [note 4]:
Proceeds from sales of shares 14,764,456 6,063,679
Reinvestment of dividends to shareholders 267,368 216,367
Payments for shares redeemed (12,041,329) (6,728,647)
------------ ------------
2,990,495 (448,601)
------------ ------------
Total increase (decrease) in net assets 2,990,495 (448,601)
Net assets:
Beginning of period 4,608,718 5,057,319
------------ ------------
End of period $ 7,599,213 $ 4,608,718
============ ============
</TABLE>
4
See accompanying notes.
<PAGE> 66
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
MANAGED SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
----------------------------------
<S> <C> <C>
Operations:
Net investment income $ 474,521 $ 525,091
Net realized gain on investments 1,259,103 2,595,807
Net change in unrealized appreciation (depreciation)
on investments (660,286) 275,956
------------ ------------
Net increase in net assets resulting from operations 1,073,338 3,396,854
------------ ------------
Dividends to shareholders from:
Net investment income (474,521) (525,091)
Net realized gain on investments (1,259,103) (2,595,807)
------------ ------------
(1,733,624) (3,120,898)
------------ ------------
Fund share transactions [note 4]:
Proceeds from sales of shares 3,887,311 4,125,099
Reinvestment of dividends to shareholders 3,120,898 917,854
Payments for shares redeemed (7,408,329) (3,478,218)
------------ ------------
(400,120) 1,564,735
------------ ------------
Total increase (decrease) in net assets (1,060,406) 1,840,691
Net assets:
Beginning of period 17,033,045 15,192,354
------------ ------------
End of period $ 15,972,639 $ 17,033,045
============ ============
</TABLE>
5
See accompanying notes.
<PAGE> 67
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
BOND SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
---------------------------------
<S> <C> <C>
Operations:
Net investment income $ 376,138 $ 302,834
Net realized gain(loss) on investments (13,809) 187,760
Net change in unrealized appreciation (depreciation)
on investments (40,529) 274,577
------------ ------------
Net increase in net assets resulting from operations 321,800 765,171
------------ ------------
Dividends to shareholders from:
Net investment income (376,138) (302,834)
Net realized gain on investments -- (72,007)
Paid-in capital -- (115,753)
------------ ------------
(376,138) (490,594)
------------ ------------
Fund share transactions [note 4]:
Proceeds from sales of shares 1,825,512 1,378,433
Reinvestment of dividends to shareholders 490,594 231,985
Payments for shares redeemed (1,042,448) (377,145)
------------ ------------
1,273,658 1,233,273
------------ ------------
Total increase in net assets 1,219,320 1,507,850
Net assets:
Beginning of period 5,493,594 3,985,744
------------ ------------
End of period $ 6,712,914 $ 5,493,594
============ ============
</TABLE>
6
See accompanying notes.
<PAGE> 68
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
VALUE EQUITY SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
-------------------------------
<S> <C> <C>
Operations:
Net investment income $ 16,233 $ 71,064
Net realized gain on investments 933,644 1,825,932
Net change in unrealized depreciation on investments (338,105) (35,433)
----------- -----------
Net increase in net assets resulting from operations 611,772 1,861,563
----------- -----------
Dividends to shareholders from:
Net investment income (16,233) (71,064)
Net realized gain on investments (933,644) (1,825,932)
----------- -----------
(949,877) (1,896,996)
----------- -----------
Fund share transactions [note 4]:
Proceeds from sales of shares 1,841,769 2,087,952
Reinvestment of dividends to shareholders 1,896,996 226,695
Payments for shares redeemed (3,127,425) (1,413,552)
----------- -----------
611,340 901,095
----------- -----------
Total increase in net assets 273,235 865,662
Net assets:
Beginning of period 8,244,957 7,379,295
----------- -----------
End of period $ 8,518,192 $ 8,244,957
=========== ===========
</TABLE>
7
See accompanying notes.
<PAGE> 69
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
CAPITAL SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
----------- -----------
<S> <C> <C>
Operations:
Net investment income $ 13,202 $ 6,101
Net realized gain on investments 614,518 221,180
Net change in unrealized appreciation on investments 142,801 1,339,444
----------- -----------
Net increase in net assets resulting from operations 770,521 1,566,725
----------- -----------
Dividends to shareholders from:
Net investment income (13,202) (6,101)
Net realized gain on investments (614,518) (221,180)
----------- -----------
(627,720) (227,281)
----------- -----------
Fund share transactions [note 4]:
Proceeds from sales of shares 1,452,011 1,573,194
Reinvestment of dividends to shareholders 227,281 45,665
Payments for shares redeemed (1,511,879) (439,366)
----------- -----------
167,413 1,179,493
----------- -----------
Total increase in net assets 310,214 2,518,937
Net assets:
Beginning of period 6,366,302 3,847,365
----------- -----------
End of period $ 6,676,516 $ 6,366,302
=========== ===========
</TABLE>
8
See accompanying notes.
<PAGE> 70
CANADA LIFE OF AMERICA SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
INTERNATIONAL EQUITY SERIES
<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 24, 1995
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31 DECEMBER 31
1996 1995
------------ -------------
<S> <C> <C>
Operations:
Net investment income $ 38,882 $ 20,134
Net realized gain on investments
and foreign currency 25,289 81,556
Net change in unrealized
appreciation on investments
and foreign currency 400,317 17,551
----------- -----------
Net increase in net assets
resulting from operations 464,488 119,241
----------- -----------
Dividends to shareholders from:
Net investment income (38,882) (20,134)
Net realized gain on investments
and foreign currency (25,289) (81,556)
----------- -----------
(64,171) (101,690)
----------- -----------
Fund share transactions [note 4]:
Proceeds from sales of shares 1,079,475 2,070,323
Reinvestment of dividends to shareholders 101,690 --
Payments for shares redeemed (361,880) (2,286)
----------- -----------
819,285 2,068,037
----------- -----------
Total increase in net assets 1,219,602 2,085,588
Net assets:
Beginning of period 2,085,588 --
----------- -----------
End of period $ 3,305,190 $ 2,085,588
=========== ===========
</TABLE>
9
See accompanying notes.
<PAGE> 71
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-end
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
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, Value
Equity Series, Capital Series and International Equity Series. The financial
statements have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and assumptions at
the date of the financial statements. 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. Money market instruments with a remaining maturity
of 60 days or less held by the Value Equity, Bond, Managed, Capital, and
International Equity Series and all instruments held by 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> 72
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 any net realized capital gains in the Managed, Bond, Value
Equity, Capital, and International Equity Series are declared and paid annually.
Dividends from net investment income and capital gains distributions are
recorded on the ex-dividend date. All dividends and distributions are reinvested
in additional shares of the respective 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 assets 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, Value 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 that exceed .40% of the average daily net assets of each
respective series including the International Equity Series. With respect 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, 1996, the
amounts reimbursed were as follows: Money Market Series - $15,849; Bond Series -
$9,196 and International Equity Series - $9,709.
2. INVESTMENT ADVISORY AND DIRECTORS' FEES AND OTHER TRANSACTIONS WITH
AFFILIATED COMPANIES
INVESTMENT ADVISORY FEES
Prior to May 1995, Canada Life of America Investment Management, Inc.
("Advisor") serves as investment manager of the Fund, and as such receives 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
International Equity Series computed at an annual rate of .80% of its net
assets.
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 0.25% of the net assets of such series.
11
<PAGE> 73
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 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, 1996, the investment advisory fee incurred by
the Fund was as follows: Money Market Series - $ 30,160; Managed Series -
$94,027; Bond Series - $ 33,135; Value Equity Series - $48,506; Capital Series -
$ 35,425; and, International Equity Series - $21,569.
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, 1996, the related expenses incurred by the Fund were as follows:
Money Market Series - $17,027; Managed Series - $ 36,323; Bond Series - $17,256;
Value Equity Series - $20,558; Capital Series - $15,178; and, International
Equity Series - $8,659.
DIRECTORS' FEES
Each director who is not an affiliated person receives fees from the Fund for
services as a director.
OTHER
On January 10, 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
sold and 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 sold and 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
sold and shares redeemed.
On January 11, 1996, 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 April 17, 1996, 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 July 8, 1996, 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 November 15, 1996, 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> 74
3. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and the aggregate proceeds from sales (excluding
short term investments) for all Series, for the year ended December 31, 1996 are
presented below :
<TABLE>
<CAPTION>
PROCEEDS
COST OF FROM
SECURITIES SECURITIES
PURCHASED SOLD
--------- ----
<S> <C> <C>
MANAGED SERIES
US Gov't & Its Agencies Bonds $21,054,835 $21,840,807
All other Investments 4,838,904 7,308,403
----------- -----------
TOTAL $25,893,739 $29,149,210
=========== ===========
BOND SERIES
US Gov't & Its Agencies Bonds $18,010,347 $17,469,575
All other Investments 337,643 511,272
----------- -----------
TOTAL $18,347,990 $17,980,847
=========== ===========
VALUE EQUITY SERIES
All other Investments $ 4,461,518 $ 5,671,285
----------- -----------
TOTAL $ 4,461,518 $ 5,671,285
=========== ===========
CAPITAL SERIES
All other Investments $ 3,714,399 $ 4,405,628
----------- -----------
TOTAL $ 3,714,399 $ 4,405,628
=========== ===========
INTERNATIONAL EQUITY SERIES
All other Investments $ 1,969,553 $ 1,471,439
----------- -----------
TOTAL $ 1,969,553 $ 1,471,439
=========== ===========
</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, 1996.
<TABLE>
<CAPTION>
IDENTIFIED
COST OF GROSS GROSS NET
SECURITIES UNREALIZED UNREALIZED UNREALIZED
OWNED APPRECIATION (DEPRECIATION) APPRECIATION
----- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Money Market Series $ 7,686,481 $ - $ - $ -
Managed Series 16,956,170 1,718,131 (1,078,085) 640,046
Bond Series 6,991,316 47,304 (27,972) 19,332
Value Equity Series 8,873,428 1,481,203 (893,138) 588,065
Capital Series 5,014,004 1,772,438 (268,883) 1,503,555
International Equity Series 2,650,708 544,478 (126,610) 417,868
13
</TABLE>
<PAGE> 75
4. CAPITAL SHARE TRANSACTIONS
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
1996 1996 1995 1995
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
MONEY MARKET SERIES
Shares sold 1,476,446 $ 14,764,456 606,368 $ 6,063,679
Shares issued in reinvestment
of dividends 26,737 267,368 21,637 216,367
------------ ------------ ------------ ------------
1,503,183 15,031,824 628,005 6,280,046
Shares redeemed (1,204,133) (12,041,329) (672,865) (6,728,647)
------------ ------------ ------------ ------------
Net increase (decrease) 299,050 $ 2,990,495 (44,860) ($ 448,601)
============ ============ ============ ============
MANAGED SERIES
Shares sold 314,608 $ 3,887,311 302,686 $ 4,125,099
Shares issued in reinvestment
of dividends 253,408 3,120,898 76,706 917,854
------------ ------------ ------------ ------------
568,016 7,008,209 379,392 5,042,953
Shares redeemed (591,398) (7,408,329) (267,105) (3,478,218)
------------ ------------ ------------ ------------
Net increase (decrease) (23,382) ($ 400,120) 112,287 $ 1,564,735
============ ============ ============ ============
BONDS SERIES
Shares sold 173,803 $ 1,825,512 128,480 $ 1,378,433
Shares issued in reinvestment
of dividends 46,932 490,594 23,832 231,985
------------ ------------ ------------ ------------
220,735 2,316,106 152,312 1,610,418
Shares redeemed (98,327) (1,042,448) (35,507) (377,145)
------------ ------------ ------------ ------------
Net increase 122,408 $ 1,273,658 116,805 $ 1,233,273
============ ============ ============ ============
VALUE EQUITY SERIES
Shares sold 135,689 $ 1,841,769 141,018 $ 2,087,952
Shares issued in reinvestment
of dividends 141,566 1,896,996 16,931 226,695
------------ ------------ ------------ ------------
277,255 3,738,765 157,949 2,314,647
Shares redeemed (232,199) (3,127,425) (95,933) (1,413,552)
------------ ------------ ------------ ------------
Net increase 45,056 $ 611,340 62,016 $ 901,095
============ ============ ============ ============
CAPITAL SERIES
Shares sold 99,373 $ 1,452,011 133,640 $ 1,573,194
Shares issued in reinvestment
of dividends 16,700 227,281 4,397 45,665
------------ ------------ ------------ ------------
116,073 1,679,292 138,037 1,618,859
Shares redeemed (107,398) (1,511,879) (35,615) (439,366)
------------ ------------ ------------ ------------
Net increase 8,675 $ 167,413 102,422 $ 1,179,493
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD APRIL 24, 1995
YEAR ENDED DECEMBER 31 (COMMENCEMENT OF OPERATIONS)
------------------------ TO DECEMBER 31, 1995
1996 1996 --------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
INTERNATIONAL EQUITY SERIES
Shares sold 95,832 $ 1,079,475 206,909 $ 2,070,323
Shares issued in reinvestment
of dividends 10,013 101,690 -- --
------------ ------------ ------------ ------------
105,845 $ 1,181,165 206,909 $ 2,070,323
Shares redeemed (32,929) (361,880) (218) (2,286)
------------ ------------ ------------ ------------
Net increase 72,916 $ 819,285 206,691 $ 2,068,037
============ ============ ============ ============
</TABLE>
14
<PAGE> 76
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
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<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 0.45 0.49 0.34 0.23 0.27
------ ------ ------ ------ ------
Total from investment operations 0.45 0.49 0.34 0.23 0.27
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (0.45) (0.49) (0.34) (0.23) (0.27)
------ ------ ------ ------ ------
Total distributions (0.45) (0.49) (0.34) (0.23) (0.27)
------ ------ ------ ------ ------
Net asset value, end of period $10.00 $10.00 $10.00 $10.00 $10.00
====== ====== ====== ====== ======
Total return 4.58% 4.95% 3.40% 2.29% 2.71%
RATIOS TO AVERAGE NET ASSETS /SUPPLEMENTAL DATA :
Net assets, end of period (000's omitted) $7,599 $4,609 $5,057 $4,514 $2,729
Ratio of expenses to average net assets 0.75% 0.75% 0.75% 0.75% 0.92%
Ratio of net investment income to average net
assets 4.54% 4.98% 3.43% 2.29% 2.81%
</TABLE>
See accompanying notes
15
<PAGE> 77
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
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.37 $ 12.01 $ 12.77 $ 12.14 $ 11.59
------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.32 0.40 0.32 0.31 0.35
Net realized and unrealized
gains (losses) on securities 0.27 2.38 (0.39) 0.74 0.65
------- ------- ------- ------- -------
Total from investment operations 0.59 2.78 (0.07) 1.05 1.00
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.32) (0.41) (0.32) (0.31) (0.35)
Distributions from net realized gains (0.84) (2.01) (0.37) (0.11) (0.10)
------- ------- ------- ------- -------
Total distributions (1.16) (2.42) (0.69) (0.42) (0.45)
------- ------- ------- ------- -------
Net asset value, end of period $ 11.80 $ 12.37 $ 12.01 $ 12.77 $ 12.14
======= ======= ======= ======= =======
Total return 5.75% 21.92% -0.25% 8.24% 8.02%
Ratios to average net assets /supplemental data:
Net assets, end of period (000's omitted) $15,973 $17,033 $15,192 $17,165 $11,987
Ratio of expenses to average net assets 0.90% 0.90% 0.97% 1.15% 1.25%
Ratio of net investment income to average net
assets 2.53% 3.06% 2.51% 2.50% 2.97%
Portfolio turnover rate 144.67% 145.14% 27.31% 38.20% 39.62%
Average commission rate paid $0.0600 $0.0611 $0.0735 $0.0899 $0.1009
</TABLE>
See accompanying notes.
16
<PAGE> 78
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
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.45 $9.75 $10.74 $10.64 $10.65
------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.60 0.65 0.51 0.57 0.65
Net realized and unrealized
gains (losses) on securities (0.09) 1.09 (0.99) 0.56 0.23
------ ------ ------ ------ ------
Total from investment operations 0.51 1.74 (0.48) 1.13 0.88
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (0.60) (0.64) (0.51) (0.57) (0.65)
Distributions from net realized gains - (0.15) - (0.46) (0.24)
Distributions from paid-in capital - (0.25) - - -
------ ------ ------ ------ ------
Total distributions (0.60) (1.04) (0.51) (1.03) (0.89)
------ ------ ------ ------ ------
Net asset value, end of period $10.36 $10.45 $ 9.75 $10.74 $10.64
====== ====== ====== ====== ======
Total return 4.66% 16.77% -3.94% 10.35% 6.65%
Ratios to average net assets/supplemental data:
Net assets, end of period (000's omitted) $6,713 $5,494 $3,986 $4,204 $3,278
Ratio of expenses to average net assets 0.90% 0.88% 0.96% 1.16% 1.25%
Ratio of net investment income to average net
assets 5.73% 6.06% 5.01% 5.01% 6.01%
Portfolio turnover rate 284.11% 245.32% 43.89% 84.77% 79.77%
</TABLE>
See accompanying notes.
17
<PAGE> 79
CANADA LIFE OF AMERICA SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
VALUE EQUITY SERIES
The following financial highlights are computed on the basis of a share
outstanding throughout the period.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995 1994 1993 1992
-------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.51 $ 13.46 $ 13.60 $ 13.15 $ 12.26
-------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.02 0.12 0.14 0.14 0.14
Net realized and unrealized
gains on securities 0.80 3.17 0.13 0.61 0.92
-------- ------- ------- ------- ------
Total from investment operations 0.82 3.29 0.27 0.75 1.06
-------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.02) (0.12) (0.14) (0.14) (0.14)
Distributions from net realized gains (1.31) (3.12) (0.27) (0.16) (0.03)
-------- ------- ------- ------- ------
Total distributions (1.33) (3.24) (0.41) (0.30) (0.17)
-------- ------- ------- ------- ------
Net asset value, end of period $ 13.00 $ 13.51 $ 13.46 $ 13.60 $ 13.15
======== ======= ======= ======= =======
Total return 6.94% 23.66% 2.03% 5.44% 8.37%
Ratios to average net assets/supplemental data:
Net assets, end of period (000's omitted) $ 8,519 $ 8,245 $ 7,379 $ 7,063 $ 4,711
Ratio of expenses to average net assets 0.90% 0.90% 0.96% 1.14% 1.25%
Ratio of net investment income to average net
assets 0.17% 0.81% 1.03% 1.07% 1.10%
Portfolio turnover rate 46.78% 103.07% 35.99% 23.70% 6.25%
Average commission rate paid $ 0.0600 $0.0608 $0.0738 $0.0909 $0.1050
</TABLE>
See Accompanying notes.
18
<PAGE> 80
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
1996 1995 1994 1993 *
--------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.55 $ 10.48 $ 11.06 $ 10.00
--------- ------- ------- -------
Income from investment operations:
Net investment income (loss) 0.03 0.02 0.01 (0.02)
Net realized and unrealized gains (losses)
on securities 1.68 3.56 (0.46) 1.32
--------- ------- ------- -------
Total from investment operations 1.71 3.58 (0.45) 1.30
--------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.03) (0.01) (0.01) -
Distributions from net realized gains (1.27) (0.50) (0.12) (0.24)
--------- ------- ------- -------
Total distributions (1.30) (0.51) (0.13) (0.24)
--------- ------- ------- -------
Net asset value, end of period $ 13.96 $ 13.55 $ 10.48 $ 11.06
========= ======= ======= =======
Total return 12.65% 33.99% -4.11% 18.42%**
Ratios to average net assets/supplemental data:
Net assets, end of period (000's omitted) $ 6,677 $ 6,366 $ 3,847 $ 2,918
Ratio of expenses to average net assets 0.90% 0.88% 0.92% 1.01%**
Ratio of net investment income to average net
assets 0.19% 0.11% 0.09% -0.21**
Portfolio turnover rate 54.11% 33.42% 55.99% 21.87%
Average commission rate paid $ 0.0564 $0.0562 $0.0568 $0.0585*
</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> 81
CANADA LIFE OF AMERICA SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
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)
YEAR ENDED TO
DECEMBER 31 DECEMBER 31
1996 1995 *
----------- ----------
<S> <C> <C>
Net asset value, beginning of period $ 10.09 $ 10.00
------- -------
Income from investment operations:
Net investment income 0.16 0.10
Net realized and unrealized gain on securities 1.83 0.49
------- -------
Total from investment operations 1.99 0.59
------- -------
Less distributions:
Dividends from net investment income (0.16) (0.10)
Distributions from net realized gains (0.10) (0.40)
------- -------
Total distributions (0.26) (0.50)
------- -------
Net asset value, end of period $ 11.82 $ 10.09
======= =======
Total return 19.44% 8.53%**
Ratios to average net assets/supplemental data:
Net assets, end of period (000's omitted) $ 3,305 $ 2,086
Ratio of expenses to average net assets 1.20% 1.20%**
Ratio of net investment income to average net
assets 1.44% 1.43%**
Portfolio turnover rate 56.28% 33.56%
Average commission rate paid $0.1961 $0.1951*
</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> 82
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - MONEY MARKET SERIES PORTFOLIO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AOUNT VALUE
---------------------------
<S> <C> <C>
U.S. GOVERNMENT & ITS AGENCIES - 101.1%
Tennessee Valley Authority ( 5.2900% due 02/12/97) $1,000,000 $ 993,814
Tennessee Valley Authority ( 5.1800% due 01/24/97) 1,000,000 996,636
Federal National Mortgage Assoc. ( 5.3700% due 01/22/97) 1,150,000 1,146,388
Federal Home Loan Bank ( 5.2500% due 01/15/97) 1,350,000 1,347,221
Federal Farm Credit Banks ( 5.3100% due 01/13/97) 400,000 399,288
Federal Home Loan Mortgage Corp. ( 5.3700% due 01/07/97) 1,000,000 999,100
Federal Farm Credit Banks ( 5.3500% due 01/06/97) 105,000 104,921
Federal Farm Credit Banks ( 5.2600% due 01/06/97) 1,000,000 999,258
Federal Farm Credit Banks ( 5.2100% due 01/03/97) 250,000 249,923
Federal Home Loan Mortgage Corp. ( 5.4000% due 01/02/97) 450,000 449,932
----------
Total Securities ( identified cost - $7,686,481 ) 7,686,481
OTHER NET LIABILITIES - -1.1% (87,268)
----------
Total net assets $7,599,213
==========
</TABLE>
See accompanying notes.
21
<PAGE> 83
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - MANAGED SERIES PORTFOLIO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AOUNT VALUE
----------------------------------
<S> <C> <C>
SHORT TERM NOTES - 9.7%
Federal Farm Credit Banks ( 5.600 % due 01/07/97) $ 700,000 $ 699,346
Federal Home Loan Mortgage Corp. ( 5.400 due 01/02/97) 850,000 849,873
----------
TOTAL SHORT TERM NOTES 1,549,219
----------
BONDS - 42.5%
U.S. GOVERNMENT & ITS AGENCIES - 42.5%
U.S. Treasury Bond ( 6.250% due 08/15/23 ) 275,000 257,813
U.S. Treasury Bond ( 0.000% due 08/15/20 ) 250,000 49,902
U.S. Treasury Bond ( 7.000% due 07/15/06 ) 1,010,000 1,049,770
U.S. Treasury Bond ( 6.875% due 05/15/06 ) 675,000 696,094
U.S. Treasury Bond ( 6.500% due 05/31/01 ) 450,000 455,203
Federal Farm Credit Banks ( 6.960% due 06/06/00 ) 125,000 125,159
Federal Home Loan Bank ( 6.850% due 12/04/06 ) 160,000 157,112
Federal Home Loan Bank ( 7.375% due 11/21/06 ) 200,000 198,000
Federal Home Loan Bank ( 6.750% due 10/29/01 ) 200,000 200,000
Federal Home Loan Bank ( 7.045% due 08/13/01 ) 250,000 250,250
Federal Home Loan Mortgage Corp ( 5.650% due 10/15/08 ) 160,000 155,478
Federal Home Loan Mortgage Corp ( 7.500% due 08/15/07 ) 160,000 160,800
Federal Home Loan Mortgage Corp ( 7.440% due 09/20/06 ) 175,000 177,625
Federal Home Loan Mortgage Corp ( 7.000% due 03/15/05 ) 105,868 106,235
Federal Home Loan Mortgage Corp ( 6.790% due 05/24/01 ) 150,000 150,750
Federal National Mortgage Association ( 7.500% due 11/01/26 ) 197,860 198,046
Federal National Mortgage Association ( 7.000% due 05/01/26 ) 161,599 158,317
Federal National Mortgage Association ( 5.580% due 11/25/23 ) 75,000 72,133
Federal National Mortgage Association ( 0.000% due 01/25/20 ) 4,546 4,525
Federal National Mortgage Association ( 7.750% due 10/25/18 ) 21,687 21,923
Federal National Mortgage Association ( 7.500% due 03/25/18 ) 50,000 50,566
Federal National Mortgage Association ( 5.000% due 10/25/08 ) 148,086 134,018
Federal National Mortgage Association ( 6.3688% due 03/25/08 ) 155,770 154,512
Federal National Mortgage Association ( 7.000% due 10/25/07 ) 80,000 78,827
Federal National Mortgage Association ( 7.690% due 09/13/06 ) 200,000 205,000
Federal National Mortgage Association ( 0.000% due 03/09/02 ) 50,000 49,504
Federal National Mortgage Association ( 6.450% due 04/12/01 ) 150,000 149,175
Federal National Mortgage Association ( 6.450% due 06/10/99 ) 300,000 300,300
Government National Mortgage Association ( 8.000% due 11/15/26 ) 159,889 163,287
Government National Mortgage Association ( 7.500% due 11/15/26 ) 158,280 158,577
Government National Mortgage Association ( 7.000% due 10/15/25 ) 396,605 388,549
Private Export Funding Corp. ( 6.620% due 10/01/05 ) 150,000 148,500
Student Loan Marketing Assoc. ( 7.020% due 08/01/00 ) 160,000 160,338
----------
TOTAL BONDS 6,786,288
----------
</TABLE>
See accompanying notes.
22
<PAGE> 84
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - MANAGED SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------------------
<S> <C> <C>
COMMON STOCKS - 57.9%
AEROSPACE & DEFENSE - 1.0%
Aerospace & Defense - 1.0%
Aeroflex Inc. 35,600 169,100
-----------
BASIC INDUSTRIES - 0.7%
Iron & Steel - 0.7%
Kentucky Electric Steel Inc. 19,500 112,125
-----------
CONSTRUCTION & REAL ESTATE - 4.2%
Engineering & Construction - 4.2%
Granite Construction Inc. 35,150 667,850
-----------
DURABLES - 0.9%
Consumer Electronics - 0.9%
Newell Co. 4,600 144,900
-----------
ENERGY - 7.7%
Oil & Gas - 7.7%
Pride Petroleum Services Inc. 9,250 215,062
Snyder Oil Corp. 58,100 1,009,487
-----------
1,224,549
-----------
FINANCE - 12.8%
Banks - 4.1%
Coastal Bancorp Inc. 8,800 201,300
Collective Bancorp Inc. 5,000 175,625
Webster Financial Corp. 7,600 279,300
-----------
656,225
-----------
Insurance - 7.6%
Leucadia National Corp. 15,300 409,275
Markel Corporation 9,000 810,000
-----------
1,219,275
-----------
Securities Brokers - 1.1%
Salomon Inc. 3,700 174,363
-----------
Total Finance 2,049,863
-----------
HEALTH - 5.4%
Hospital Services - 5.4%
Matria Healthcare Inc. 102,100 484,975
Tenet Healthcare Corp. 17,100 374,063
-----------
859,038
-----------
</TABLE>
See accompanying notes.
23
<PAGE> 85
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - MANAGED SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------------
<S> <C> <C>
INDUSTRIAL MACHINERY & EQUIPMENT - 3.0%
Industrial Machinery & Equipment - 3.0%
Astec Industries Inc. 37,300 354,350
Spartan Motors Inc. 19,000 128,250
---------------
482,600
---------------
MEDIA & LEISURE - 2.0%
Entertainment - 2.0%
King World Productions Inc. 8,700 320,813
---------------
RETAIL & WHOLESALE - 11.2%
Apparel Stores - 2.8%
Catherines Stores Corp. 40,800 224,400
Cato Corp. 44,050 220,250
---------------
444,650
---------------
Retail & Wholesale, Miscellaneous - 8.4%
Ellett Brothers Inc. 65,800 329,000
Falcon Products Inc. 30,490 434,483
Hasbro Inc. 2,400 93,300
InterTAN Inc. 99,000 482,625
---------------
1,339,408
---------------
TOTAL RETAIL & WHOLESALE 1,784,058
---------------
SERVICES - 7.0%
Services - 7.0%
Dames & Moore Inc. 77,000 1,126,125
---------------
TRANSPORTATION - 2.0%
Air Transportation - 2.0%
Offshore Logistics Inc. 16,500 319,687
---------------
Total Common Stocks 9,260,708
---------------
Total Securities ( identified cost - $16,956,170 ) 17,596,215
OTHER NET LIABILITIES - -10.1% (1,623,576)
---------------
Total net assets $ 15,972,639
===============
</TABLE>
24
<PAGE> 86
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - BOND SERIES PORTFOLIO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------
<S> <C> <C>
SHORT TERM NOTES - 12.4%
Federal Home Loan Bank ( 5.500% due 01/07/97) $ 170,000 $ 169,844
Federal Home Loan Bank ( 5.600% due 01/06/97) 350,000 349,727
Federal Home Loan Mortgage Corp. ( 5.400% due 01/02/97) 315,000 314,953
---------------
TOTAL SHORT TERM NOTES 834,524
---------------
BONDS - 92.0%
U.S. GOVERNMENT & ITS AGENCIES - 89.3%
U.S. Treasury Bond ( 6.250% due 08/15/23 ) 275,000 257,813
U.S. Treasury Bond ( 0.000% due 08/15/20 ) 250,000 49,902
U.S. Treasury Bond ( 7.000% due 07/15/06 ) 840,000 873,076
U.S. Treasury Bond ( 6.875% due 05/15/06 ) 575,000 592,969
Federal Farm Credit Banks ( 6.960% due 06/06/00 ) 125,000 125,159
Federal Home Loan Bank (6.850% due 12/04/06 ) 160,000 157,112
Federal Home Loan Bank (7.375% due 11/21/06 ) 200,000 198,000
Federal Home Loan Bank (6.750% due 10/29/01 ) 200,000 200,000
Federal Home Loan Bank (7.045% due 08/13/01 ) 250,000 250,250
Federal Home Loan Mortgage Corp ( 5.650% due 10/15/08 ) 160,000 155,478
Federal Home Loan Mortgage Corp ( 7.500% due 08/15/07 ) 160,000 160,800
Federal Home Loan Mortgage Corp ( 7.440% due 09/20/06 ) 175,000 177,625
Federal Home Loan Mortgage Corp ( 6.690% due 08/14/01 ) 200,000 201,883
Federal Home Loan Mortgage Corp ( 6.790% due 05/24/01 ) 150,000 150,750
Federal National Mortgage Association ( 7.500% due 11/01/26 ) 197,860 198,046
Federal National Mortgage Association ( 7.000% due 05/01/26 ) 161,599 158,317
Federal National Mortgage Association ( 5.580% due 11/25/23 ) 75,000 72,133
Federal National Mortgage Association ( 0.000% due 01/25/20 ) 3,637 3,620
Federal National Mortgage Association ( 7.750% due 10/25/18 ) 19,084 19,292
Federal National Mortgage Association ( 7.500% due 03/25/18 ) 50,000 50,566
Federal National Mortgage Association ( 5.000% due 10/25/08 ) 105,776 95,727
Federal National Mortgage Association ( 6.3688% due 03/25/08 ) 141,609 140,466
Federal National Mortgage Association ( 7.000% due 10/25/07 ) 80,000 78,827
Federal National Mortgage Association ( 7.690% due 09/13/06 ) 200,000 205,000
Federal National Mortgage Association ( 0.000% due 03/09/02 ) 50,000 49,505
Federal National Mortgage Association ( 6.450% due 04/12/01 ) 100,000 99,450
Federal National Mortgage Association ( 6.650% due 03/26/01 ) 250,000 251,128
Federal National Mortgage Association ( 6.450% due 06/10/99 ) 200,000 200,200
Government National Mortgage Association ( 8.000% due 11/15/26 ) 159,889 163,287
Government National Mortgage Association ( 7.500% due 11/15/26 ) 158,280 158,577
Goverment National Mortgage Association ( 7.000% due 10/15/25 ) 247,878 242,843
Private Export Funding Corp. ( 6.620% due 10/01/05 ) 100,000 99,000
Student Loan Marketing Association ( 7.020% due 08/01/00 ) 160,000 160,338
---------------
5,997,139
---------------
CORPORATE - 2.7%
GE Capital Mortgage Services, Inc. ( 6.500% due 04/25/08 ) 192,457 178,985
---------------
TOTAL BONDS 6,176,124
---------------
Total Securities ( identified cost - $6,991,316 ) 7,010,648
OTHER NET LIABILITIES - -4.4% (297,734)
---------------
Total net assets $ 6,712,914
===============
</TABLE>
See accompanying notes.
25
<PAGE> 87
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - VALUE EQUITY SERIES PORTFOLIO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
SHORT TERM NOTE - 6.6% AMOUNT VALUE
------------------------
<S> <C> <C>
Federal Home Loan Mortgage Corp.
( 5.400 % due 01/02/97 ) $ 565,000 $ 564,915
----------
TOTAL SHORT TERM NOTE 564,915
----------
SHARES
------
COMMON STOCKS - 104.4%
AEROSPACE & DEFENSE - 1.8%
Aerospace & Defense - 1.8%
Aeroflex Inc. 31,800 151,050
----------
BASIC INDUSTRIES - 1.5%
Iron & Steel - 1.5%
Kentucky Electric Steel Inc. 21,600 124,200
----------
CONSTRUCTION & REAL ESTATE - 5.4%
Engineering & Construction - 5.4%
Granite Construction Inc. 24,100 457,900
----------
DURABLES - 3.2%
Consumer Electronics - 1.6%
Newell Co. 4,400 138,600
----------
Tools - 1.6%
Black & Decker Corp. 4,500 135,563
----------
TOTAL DURABLES 274,163
----------
ENERGY - 14.1%
Oil & Gas - 14.1%
Patina Oil & Gas Corp. 10,000 92,500
Pride Petroleum Services Inc. 9,400 218,550
Snyder Oil Corp. 51,500 894,812
----------
1,205,862
----------
FINANCE - 24.3%
Banks - 9.3%
Andover Bancorp Inc. 4,760 121,975
Coastal Bancorp Inc. 6,300 144,112
Collective Bancorp, Inc. 5,000 175,625
Walden Bancorp Inc. 4,400 168,300
Webster Financial Corp. 5,000 183,750
----------
793,762
----------
Insurance - 13.0%
Leucadia National Corp. 19,200 513,600
Markel Corp. 6,600 594,000
----------
1,107,600
----------
Securities Brokers - 2.0%
Salomon Inc. 3,700 174,363
----------
TOTAL FINANCE 2,075,725
----------
</TABLE>
See accompanying notes.
26
<PAGE> 88
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - VALUE EQUITY SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------------ ----------------
<S> <C> <C>
HEALTH - 8.7%
Hospital Services - 4.4%
Matria Healthcare Inc. 79,300 376,675
---------------
Medical Facilities Management - 4.3%
Tenet Healthcare Corp. 16,600 363,125
---------------
TOTAL HEALTH 739,800
---------------
INDUSTRIAL MACHINERY & EQUIPMENT - 6.4%
Industrial Machinery & Equipment - 6.4%
Astec Industries Inc. 34,600 328,700
J. Ray McDermott, SA 3,100 68,200
Spartan Motors Inc. 22,000 148,500
---------------
545,400
---------------
MEDIA & LEISURE - 3.9%
Entertainment - 3.9%
King World Productions Inc. 9,000 331,875
---------------
RETAIL & WHOLESALE - 20.8%
Apparel Stores - 5.0%
Catherines Stores Corp. 32,600 179,300
Cato Corp. 49,550 247,750
---------------
427,050
---------------
Retail & Wholesale, Miscellaneous - 15.8%
Ellett Brothers Inc. 66,900 334,500
Falcon Products Inc. 31,230 445,028
Hasbro Inc. 2,400 93,300
InterTAN Inc. 97,300 474,337
---------------
1,347,165
---------------
TOTAL RETAIL & WHOLESALE 1,774,215
---------------
SERVICES - 7.5%
Services - 7.5%
Dames & Moore Inc. 43,600 637,650
---------------
TECHNOLOGY - 2.5%
Computers & Office Equipment - 2.5%
Stratus Computer Inc. 7,800 212,550
---------------
TRANSPORTATION - 4.3%
Air Transportation - 4.3%
Offshore Logistics Inc. 18,900 366,188
---------------
TOTAL COMMON STOCKS 8,896,578
---------------
Total Securities ( identified cost
- $8,873,428 ) 9,461,493
OTHER NET LIABILITIES - -11.0% (943,301)
---------------
TOTAL NET ASSETS $ 8,518,192
===============
</TABLE>
See accompanying notes.
27
<PAGE> 89
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - CAPITAL SERIES PORTFOLIO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------------------------
<S> <C> <C>
COMMON STOCKS - 97.6%
AEROSPACE & DEFENSE - 1.6%
Aerospace & Defense - 1.6%
Boeing Co. 1,000 $ 106,375
---------------
BASIC INDUSTRIES - 4.6%
Chemicals & Plastics - 2.2%
Engelhard Corp. 2,850 54,506
Olin Corp. 800 30,100
Schulman A. Inc. 2,600 63,700
---------------
148,306
---------------
Iron & Steel - 1.3%
Nucor Corp. 1,700 86,700
---------------
Packaging & Containers - 1.1%
Crown Cork & Seal Co., Inc. 1,400 76,125
---------------
TOTAL BASIC INDUSTRIES 311,131
---------------
DURABLES - 4.3%
Autos, Tires, & Accessories - 2.5%
Echlin Inc. 1,900 60,088
Eaton Corp. 1,500 104,625
---------------
164,713
---------------
Consumer Electronics - 1.8%
Newell Co. 3,800 119,700
---------------
TOTAL DURABLES 284,413
---------------
FINANCE - 16.7%
Credit & Other Finance - 12.1%
Dean Witter Discover & Co. 1,700 112,625
Donaldson, Lufkin & Jenrette Inc. 2,400 86,400
Greenpoint Financial Corp. 2,300 108,963
Green Tree Financial Corp. 2,500 96,562
MBNA Corp. 4,400 182,600
St. Paul Bancorp Inc. 1,300 38,187
Travelers Group Inc. 4,000 181,500
---------------
806,837
---------------
Insurance - 4.6%
Amerin Corp. 4,400 113,300
General Re Corp. 500 78,875
Old Republic International Corp. 1,500 40,125
Washington Mutual Inc. 1,700 73,631
---------------
305,931
---------------
TOTAL FINANCE 1,112,768
---------------
</TABLE>
See accompanying notes.
28
<PAGE> 90
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - CAPITAL SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------------------
<S> <C> <C>
HEALTH - 12.2%
Drugs & Pharmaceuticals - 5.2%
Amgen Inc. 1,300 70,688
Biogen Inc. 1,000 38,750
Centocor Inc. 1,800 64,350
Mylan Laboratories 2,900 48,575
Pfizer Inc. 1,500 124,313
---------------
346,676
---------------
Medical Equipment & Supplies - 2.5%
Guidant Corp. 2,000 114,000
Physio-Control International Corp. 2,500 56,250
---------------
170,250
---------------
Medical Facilities Management - 4.5%
Columbia HCA Healthcare Corp. 3,000 122,250
Humana Inc. 2,200 42,075
Mid-Atlantic Medical Services Inc. 3,300 44,137
United HealthCare Corp. 2,000 90,000
---------------
298,462
---------------
TOTAL HEALTH 815,388
---------------
INDUSTRIAL MACHINERY & EQUIPMENT - 3.7%
Electrical Equipment - 1.3%
Ucar International Inc. 2,400 90,300
---------------
Industrial Machinery & Equipment - 1.8%
Illinois Tool Works Inc. 1,500 119,812
---------------
Water Treatment Systems - 0.6%
Ionics Inc. 800 38,400
---------------
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 248,512
---------------
MEDIA & LEISURE - 12.4%
Broadcasting - 1.5%
Viacom Inc. - Class B 2,800 97,650
---------------
Entertainment - 6.9%
Circus Circus Enterprises Inc. 2,750 94,531
Disney (Walt) Co. 900 62,663
HFS Inc. 1,300 77,675
Hilton Hotels Corp. 2,400 62,700
MGM Grand Inc. 2,400 83,700
Mirage Resorts Inc. 3,600 77,850
---------------
459,119
---------------
Leisure Durables & Toys - 3.6%
Harley Davidson Inc. 2,700 126,900
Mattel, Inc. 3,975 110,306
---------------
237,206
---------------
Restaurants - 0.4%
Landry's Seafood Restaurants 1,400 29,925
---------------
TOTAL MEDIA & LEISURE 823,900
---------------
</TABLE>
See accompanying notes.
29
<PAGE> 91
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - CAPITAL SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------------------------
<S> <C> <C>
NONDURABLES - 1.5%
Household Products - 1.5%
Gillette Co. 1,300 101,075
---------------
RETAIL & WHOLESALE - 10.4%
Apparel Stores - 5.4%
Liz Clairborne Inc. 3,400 131,325
Oakley Inc. 6,400 69,600
SAKS Holdings Inc. 2,600 70,200
Tommy Hilfiger Corp. 1,900 91,200
---------------
362,325
---------------
Retail & Wholesale, Miscellaneous - 5.0%
Alco Standard Corp. 2,400 123,900
Estee Lauder Cos. 1,700 86,488
Home Depot, Inc. 2,500 125,313
---------------
335,701
---------------
TOTAL RETAIL & WHOLESALE 698,026
---------------
SERVICES - 2.9%
Advertising - 2.9%
Interpublic Group of Companies Inc. 2,500 118,750
Snyder Communications Inc. 2,700 72,900
---------------
191,650
---------------
TECHNOLOGY - 22.5%
Communications Equipment - 1.5%
Cisco Systems Inc. 1,600 101,800
---------------
Computers & Office Equipment - 2.2%
HCIA, Inc. 1,000 34,500
Xerox Corporation 1,400 73,675
Xilinx Inc 1,000 36,812
---------------
144,987
---------------
Computer Services & Software - 9.8%
First Data Corp. 3,400 124,100
Microsoft Corp. 2,600 214,825
Parametric Technology Corp. 900 46,238
Reynolds & Reynolds Co. 4,000 104,000
Sterling Commerce Inc. 1,200 42,300
Symantec Corp. 7,700 111,650
TCSI Corp. 1,600 10,000
---------------
653,113
---------------
Electronics - 9.0%
Adaptec Inc. 2,200 88,000
Arrow Electronics Inc. 1,600 85,600
Intel Corp. 1,100 144,031
Linear Technology Corp. 1,800 78,975
Maxim Integrated Products Inc. 2,000 86,500
MRV Communications Inc. 2,800 60,900
Motorola Inc. 1,000 61,375
---------------
605,381
---------------
TOTAL TECHNOLOGY 1,505,281
---------------
</TABLE>
See accompanying notes.
30
<PAGE> 92
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - CAPITAL SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
-----------------------------
<S> <C> <C>
UTILITIES - 4.8%
Telephone Services - 4.8%
AT&T Corp. 1,500 65,250
Century Telephone Enterprises 1,800 55,575
Level One Communications Inc. 1,100 39,325
Lucent Technologies Inc. 486 22,478
Premisys Communications Inc. 1,400 47,250
Shiva Corp. 700 24,412
360 Communications Co. 2,800 64,750
---------------
319,040
---------------
Total Common Stocks 6,517,559
---------------
Total Securities ( identified cost - $5,014,004 ) 6,517,559
OTHER NET ASSETS - 2.4% 158,957
---------------
Total net assets $ 6,676,516
===============
</TABLE>
See accompanying notes.
31
<PAGE> 93
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - INTERNATIONAL EQUITY SERIES PORTFOLIO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------
<S> <C> <C> <C>
BONDS - 3.3%
CORPORATE CONVERTIBLE BONDS - 3.3%
JAPAN - 1.7%
Tokyo Electronics Ltd.( 0.9000% due 09/30/03 ) JP YEN 6,000,000 $ 55,104
SOUTH KOREA - 1.6%
Samsung Electronics ( 0.2500% due 12/31/06 ) 50,000 52,000
---------------
TOTAL BONDS 107,104
---------------
Shares
----------------
COMMON STOCKS - 89.5%
ARGENTINA - 1.1%
YPF Sociedad Anonima - sponsored ADR 1,500 $ 37,875
---------------
AUSTRALIA - 1.1%
National Australia Bank Ltd. 3,000 35,265
---------------
AUSTRIA - 1.9%
VA Technologie AG 400 62,715
---------------
BERMUDA - 1.5%
Renaissance re Holdings Ltd. 1,500 49,500
---------------
BRAZIL - 1.5%
Companhia Vale do Rio Doce - sponsored ADR 700 13,473
Pao de Acucar CIA - GDS 2,000 37,000
---------------
50,473
---------------
CHINA - 1.3%
Jilin Chemical Industrial Co. Ltd. - sponsored ADR 900 13,162
Shandong Huaneng Power Co. Ltd. - sponsored ADR 3,000 29,250
---------------
42,412
---------------
FINLAND - 4.2%
Nokia Corp. - sponsored ADR 2,400 138,300
---------------
FRANCE - 6.9%
Elf Aquitaine - sponsored ADR 1,500 67,875
SGS-Thomson Microelectronics NV 1,300 91,000
Societe Generale de Paris 300 32,373
Usinor Sacilor 2,500 36,307
---------------
227,555
---------------
GERMANY - 8.5%
Bayer A.G. - sponsored ADR 1,700 69,275
Depfa Bank 2,500 112,581
Deutsche Telekom AG - sponsored ADR 1,195 24,348
SGL Carbon AG 600 75,569
---------------
281,773
---------------
</TABLE>
See accompanying notes.
32
<PAGE> 94
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - INTERNATIONAL EQUITY SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------------------------
<S> <C> <C>
HONG KONG - 6.7%
Esprit Asia Holdings Ltd. 63,000 27,896
HSBC Holdings PLC 2,800 59,910
Hong Kong Telecommunications Ltd. - sponsored ADR 1,500 24,375
Johnson Electric Holdings Ltd. 20,000 55,333
Manhattan Card Co. Ltd. 50,000 25,372
Varitronix International Ltd. 15,000 27,149
---------------
220,035
---------------
INDONESIA - 0.5%
PT Inti Indorayon Utama 25,000 18,250
---------------
ISRAEL - 0.8%
Teva Pharmaceutical Industries Ltd. - sponsored ADR 500 25,125
---------------
ITALY - 4.1%
Fila Holding SPA - sponsored ADR 650 37,781
Stet D Risp Port - non convertible 16,000 53,923
Telecom Italia Mobile SPA 30,600 43,565
---------------
135,269
---------------
JAPAN - 17.2%
Canon Inc. 3,000 66,166
Daiichi Pharmaceutical Co. Ltd. 3,000 48,074
DDI Corp. 6 39,596
Matsushita Electric Industrial Co. 2,000 32,566
Nihon Plast Co. Ltd. 3,000 20,677
Promise Co. Ltd. 1,400 68,751
Sangetsu Co. Ltd. 2,000 41,699
Sanyo Coca-Cola Bottling Co. 2,000 26,708
Sony Corp. 1,000 65,391
Tokyo Style Co. Ltd. 3,000 41,871
Toyota Motor Corp. 3,000 86,068
Yamatake-Honeywell 2,000 32,222
---------------
569,789
---------------
MEXICO - 0.9%
Panamerican Beverages Inc. 600 28,125
---------------
NETHERLANDS - 6.0%
Dutch State Mines NV 700 68,958
Hollandsche Beton Groep NV 300 62,073
Internationale Nederlanden Groep NV 1,875 67,424
---------------
198,455
---------------
NORWAY - 3.2%
Norsk Hydro A S - sponsored ADR 2,000 107,250
---------------
SPAIN - 2.5%
Telefonica de Espana - sponsored ADR 1,200 83,100
---------------
SWITZERLAND - 7.3%
Bucher Holdings A G 100 68,220
Nestle S A 50 53,734
Novartis AG 106 120,785
---------------
242,739
---------------
TAIWAN - 1.9%
China Steel Corp. - GDS 2,050 40,846
President Enterprises - GDS 1,200 21,600
---------------
62,446
---------------
</TABLE>
See accompanying notes.
33
<PAGE> 95
CANADA LIFE OF AMERICA SERIES FUND, INC.
SCHEDULE OF INVESTMENTS - INTERNATIONAL EQUITY SERIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------------------------
<S> <C> <C>
UNITED KINGDOM - 10.4%
British Petroleum Co. PLC - sponsored ADR 500 70,687
Elan Corp. PLC - sponsored ADR 2,000 66,500
Guinness PLC - sponsored ADR 800 31,317
Mercury Assets Management Group PLC 1,500 31,920
Railtrack Group PLC 15,000 99,084
Vodafone Group PLC - sponsored ADR 1,100 45,513
---------------
345,021
---------------
Total Common Stocks 2,961,472
---------------
Total Securities ( identified cost - $2,650,708) 3,068,576
OTHER NET ASSETS - 7.2% 236,614
---------------
Total net assets $ 3,305,190
===============
</TABLE>
See accompanying notes.
34
<PAGE> 1
EXHIBIT 1
Form of Articles of Incorporation of Canada Life of America Series Fund, Inc.
<PAGE> 2
EXHIBIT 1
CANADA LIFE OF AMERICA
SERIES FUND, INC.
___________________________
ARTICLES OF INCORPORATION
___________________________
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
02-23-89 at 10:51 .m.
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of the 18 page
document on file in this office. DATED 2-7-89.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/
-----------------------------------------
This stamp replaces our previous certification system. Effective:
10/84
<PAGE> 3
ARTICLES OF INCORPORATION
OF
CANADA LIFE OF AMERICA SERIES FUND, INC.
FIRST: The undersigned, whose post office address is 3879 Beacon
Street, Marietta, Georgia 30062, being at least eighteen years of age, does
hereby form a corporation under the general laws of the State of Maryland.
SECOND: The name of the Corporation (which is hereinafter after
called "the Corporation") is Canada Life of America Series Fund, Inc.
THIRD: The Corporation's principal office in the State of
Maryland is in care of The Corporation Trust Incorporated and is located at
32 South Street, Baltimore, Maryland 21202. The name of its resident agent,
who address is the same as the Corporation's principal office in the State
of Maryland, is The Corporation Trust Incorporated. Said resident agent is
a Maryland corporation.
FOURTH: The nature of the business or objects or purposes to be
conducted, transacted, promoted or carried on by the Corporation are as
follows:
To operate and carry on the business of an open-end management
investment company registered under the Investment Company Act of 1940, as
amended ("the 1940 Act"), and to exercise all powers necessary and
appropriate to the conduct of such business.
To subscribe for, invest in, purchase or otherwise acquire, to
own, hold, sell, exchange, or pledge or otherwise dispose of securities of
every nature and kind, whether now in existence or hereafter created.
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
02-23-89 at 10:51 .m.
<PAGE> 4
To issue and sell shares of its own common stock in such amounts
and on such terms and conditions for such purposes and for such amount or
kind of consideration now or hereafter permitted by the General Laws of the
State of Maryland and by these Articles of Incorporation, as its Board of
Directors may determine, consistent with all applicable laws and
regulations, including the 1940 Act.
To redeem, retire, purchase or otherwise acquire, hold, dispose
of, resell, transfer, reissue or cancel (all without the vote or consent of
the shareholders of the corporation) shares of its common stock, in any
manner and to the extent now or hereafter permitted by the General Laws of
the State of Maryland and by these Articles of Incorporation.
To engage in any lawful act or activity for which corporations
may be organized under the Corporations and Associations Code of Maryland,
and to have all the powers of a corporation under the applicable
corporation laws, as in effect from time to time, of the State of Maryland.
FIFTH: The Board of Directors of the Corporation is hereby
empowered to authorize the issuance from time to time of shares of common
stock, whether now or hereafter authorized, for such consideration as the
Board of Directors may deem advisable, subject to such limitations as may
be set forth in these Articles of Incorporation or in the By-Laws of the
Corporation or in the General Laws of the State of Maryland.
No holder of stock of the Corporation shall, as such holder, have
any right to purchase or subscribe for any shares of
-2-
<PAGE> 5
the common stock of the Corporation or any other security of the
Corporation which it may issue or sell (whether out of the number of shares
authorized by these Articles of Incorporation, or out of any shares of the
common stock of the Corporation acquired by it after the issue thereof, or
otherwise) other than such right, if any, as the Board of Directors, in
its discretion, may determine.
The total number of shares of all classes of common stock which
the Corporation is authorized to issue is one billion (1,000,000,000)
shares of par value of one cent ($0.01) per share and an aggregate par
value of ten million dollars ($10,000,000.00). Sixty million (60,000,000)
of such shares may be issued in the following classes, each class
comprising the number of shares and having the designations indicated;
subject, however, to the authority herein granted to the Board of Directors
to increase or decrease any such number of shares:
Equity Class Ten million (10,000,000) Shares
Money Market Class Twenty million (20,000,000) Shares
Bond Class Ten million (10,000,000) Shares
Managed Class Twenty million (20,000,000) Shares
The Board of Directors of the Corporation is authorized, from
time to time, by resolution to classify or reclassify the balance of nine
hundred forty million (940,000,000) authorized shares into one or more
classes that are or may be established or designated from time to time, by
setting or changing the preferences, conversion or other rights, voting
powers,
-3-
<PAGE> 6
restrictions, 1imitations as to dividends, qualifications or terms and
conditions of redemption of such stock and to increase or decrease the
number of authorized shares of any class, but the number of shares of any
class shall not be reduced by the Board of Directors below the number of
shares thereof then outstanding, and the total number of authorized shares
shall not be increased above the number of shares authorized in the
Corporation's Articles of Incorporation except by the filing of record of
the articles supplementary required by Section 2-208.1 of the Maryland
Corporations and Associations Code with the State Department of Assessments
and Taxation of Maryland.
Without limiting the generality of the foregoing, (i) the
corporation may hold as treasury shares, reissue for such consideration and
on such terms as the Board of Directors may determine, or cancel, at its
discretion from time to time, any shares of any class reacquired by the
Corporation; and (ii) the dividends and distributions of investment income
and capital gains with respect to the stock of the Corporation and with
respect to each class that may hereafter be created shall be in such amount
as may be declared from time to time by the Board of Directors, and such
dividends and distributions may vary from class to class to such extent
and for such purposes as the Board of Directors may deem appropriate,
including but not limited to, the purpose of complying with requirements of
regulatory authorities.
SIXTH:
(1) The establishment and designation of any class of
shares in addition to those established and designated in
-4-
<PAGE> 7
Article SIXTH: (2) shall be effective upon (i) the authorization of such
classes by vote of a majority of the Board of Directors, including the
establishment and designation of the preferences, rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of such class and (ii) the filing of record of the
articles supplementary required by Section 2-208 of the Maryland
Corporations and Associations Code with the State Department of Assessments
and Taxation of Maryland. At any time when there are no shares outstanding
or subscribed for a particular class previously established and designated
by the Board of Directors, the class may be liquidated by similar means.
(2) Without limiting the authority set forth herein of the
Board of Directors to establish and designate any further classes, there
are hereby established and designated four classes of stock to be known as:
the Equity Class, the Money Market Class, the Bond Class and the Managed
Class. The shares of said classes and any shares of any further classes
that may from time to time be established and designated by the Board of
Directors (unless provided otherwise by the Board of Directors with respect
to such further classes at the time of establishing and designating such
further classes) shall have the following relative preferences, rights,
voting powers, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption:
(a) Assets Belonging to a Class. All consideration received
by the Corporation for the issue or sale of shares
-5-
<PAGE> 8
of a particular class, together with all assets in which such consideration
is invested or reinvested, all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that class for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books and accounts
of the Corporation. Such consideration, assets, income, earnings, profits,
and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payment derived
from any reinvestment of such proceeds, in whatever form the same may be,
together with any General Items allocated to that class as provided in the
following sentence, are herein referred to as "assets belonging to" that
class. In the event that there are any assets, income, earnings, profits,
and proceeds thereof, funds, or payments which are not readily
indentifiable as belonging to any particular class (collectively "General
Items"), such General Items shall be allocated by or under the supervision
of the Board of Directors to and among any one or more of the classes
established and designated from time to time in such manner and on such
basis as the Board of Directors, in its sole discretion, deems fair and
equitable, and any General Items so allocated to a particular class shall
belong to that class. Each such allocation by the Board of Directors shall
be conclusive and binding for all purposes.
-6-
<PAGE> 9
(b) Liabilities Belonging to a Class. The assets belonging
to each particular class shall be charged with the liabilities of the
Corporation in respect of that class and all expenses, costs, charges and
reserves attributable to that class, and any general liabilities, expenses,
costs, charges or reserves of the Corporation which are not readily
indentifiable as belonging to any particular class shall be allocated and
charged by or under the supervision of the Board of Directors to and among
any one or more of the classes established and designated from time to time
in such manner and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable. The liabilities, expenses, costs,
charges and reserves allocated and so charged to a class are herein
referred to as "liabilities belonging to" that class. Each allocation of
liabilities, expenses, costs, charges and reserves by the Board of
Directors shall be conclusive and binding for all purposes.
(c) Income Belonging to a Class. The Board of Directors
shall have full discretion, to the extent not inconsistent with the
Maryland Corporations and Associations Code and the 1940 Act to determine:
(i) which items shall be treated as income and which items as capital; and
(ii) "income belonging to" a class which income shall include all income,
earnings and profits derived from assets belonging to that class, less any
expenses, costs, charges or reserves belonging to that class, for the
relevant time period. Each such determination and allocation shall be
conclusive and binding.
-7-
<PAGE> 10
(d) Dividends. Dividends and distributions on shares of a
particular class may be declared and paid with such frequency, in such form
and in such amount as the Board of Directors may from time to time
determine. Dividends may be declared daily or otherwise pursuant to a
standing resolution or resolutions adopted only once or with such frequency
as the Board of Directors may determine, after providing for actual and
accrued liabilities belonging to that class.
All dividends on shares of a particular class shall be paid
only out of the income belonging to that class and capital gains
distributions on shares of a particular class shall be paid only out of the
capital gains belonging to that class. All dividends and distributions on
shares of a particular class shall be distributed pro rata to the holders
of that class in proportion to the number of shares of that class held by
such holders at the date and time of record established for the payment of
such dividend or distribution program or procedure, the Board of Directors
may determine that no dividend or distribution shall be payable on shares
as to which the shareholder's purchase order and/or payment have not been
received by the time or times established by the Board of Directors under
such program and procedure.
The Board of Directors shall have the power, in its sole
discretion, to distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains dis-
-8-
<PAGE> 11
tributions, amounts sufficient, in the opinion of the Board of Directors,
to enable the corporation to qualify as a regulated investment company
under the Internal Revenue Code of 1954, as amended, or any successor or
comparable statute thereto, and regulations promulgated thereunder.
However, nothing in the foregoing shall limit the authority of the Board of
Directors to make distributions greater than or less than the amount
necessary to qualify as regulated investment company.
Dividends and distributions may be paid in cash, property or
shares, including authorized but unissued shares or treasury shares, or a
combination of any of the foregoing, as determined by the Board of
Directors or pursuant to any program that the Board of Directors may have
in effect at the time. Any such dividend or distribution paid in shares
will be paid at the current net asset value thereof as defined in Article
SIXTH: (2)(h).
(e) Liquidation. In the event of the liquidation of the
Corporation or of a particular class, the shareholders of each class that
has been established and designated and is being liquidated shall be
entitled to receive, as a class, when and as declared by the Board of
Directors, the excess of the assets belonging to that class over the
liabilities belonging to that class. The holders of shares of any class
shall not be entitled thereby to any distribution upon liquidation of any
other class. The assets so distributable to the shareholders in proportion
to the number of shares of that class held by them and recorded on
-9-
<PAGE> 12
the books of the Corporation. The liquidation of any particular class in
which there are shares then outstanding may be authorized by vote of a
majority of the Board of Directors then in office, subject to the approval
of a majority of the outstanding securities of that class, as defined in
the 1940 Act. In the event that there are any general assets not belonging
to any particular class of stock and available for distribution, such
distribution shall be made to holders of stock of various classes in such
proportion as the Board of Directors determines to be fair and equitable,
and such determination by the Board of Directors shall be final.
(f) Voting. On each matter submitted to a vote of the
shareholders, each holder of a share shall be entitled to one vote for each
share standing in his name on the books of the Corporation, irrespective of
the class thereof, and all shares of all classes shall vote as a single
class ("Single Class Voting"); provided, however, that (i) as to any matter
with respect to which a separate vote of any class is required by the 1940
Act or by the Maryland Corporations and Associations Code, such requirement
as to a separate vote by that class shall apply in lieu of Single Class
Voting as described above; (ii) in the event that the separate vote
requirements referred to in (i) above apply with respect to one or more
classes, then, subject to (iii) below, the shares of all other classes
shall vote as a single class; and (iii) as to any matter which does not
affect the interest of a particular class, only the holders of shares of
the one or
-10-
<PAGE> 13
more affected classes shall be entitled to vote.
(g) Redemption by Shareholder. Each holder or shares of a
particular class shall have the right at such times and on such terms and
conditions as may be permitted by the corporation to require the
corporation to redeem all or any part of his shares of that class at a
redemption price per share equal to the net asset value per share of that
class next determined [in accordance with Article SIXTH: (2)(h)] after the
shares are properly tendered for redemption. Payment of the redemption
price shall be in cash; provided, however, that if the Board of Directors
determines, which determination shall be conclusive, that the conditions
exist which make payment wholly in cash unwise or undesirable, the
Corporation may make payment wholly or partly in securities or other assets
belonging to the class of which the shares being redeemed are part at the
value of such securities or assets used in such determination of net asset
value.
Notwithstanding the foregoing, the Corporation may postpone
payment of the redemption price and may suspend the right of the holders of
shares of any class to require the Corporation to redeem shares of that
class during any period or at any time when and to the extent permissible
under the 1940 Act.
(h) Net Asset Value per Share. The net asset value per share of
any class shall be the quotient obtained by dividing the value of the net
assets of that class (being the value of the assets belonging to that class
less the liabilities belonging to
-11-
<PAGE> 14
that class) by the total number of shares of that class outstanding.
The Board of Directors may determine to maintain the net asset
value per share of any class at a designated constant dollar amount. In
connection therewith, the Board of Directors may adopt procedures not
inconsistent with the 1940 Act for the continuing declarations of income
attributable to that class as dividends payable in additional shares of
that class at the designated constant dollar amount and for the redemption
of shares as necessary to maintain a constant net asset value in the event
of any losses attributable to that class.
(i) Equality. All shares of each particular class shall
represent an equal proportionate interest in the assets belonging to that
class (subject to the liabilities belonging to that class), and each share
of any particular class shall be equal to each other share of that class.
The Board of Directors may from time to time divide or combine the shares
of any particular class into a greater or lesser number of shares of that
class without thereby changing the proportionate beneficial interest in the
assets belonging to that class or in any way affecting the rights of shares
of any other class.
(j) Conversion or Exchange Rights. Subject to compliance with
the requirements of the 1940 Act, the Board of Directors shall have the
authority to provide that holders of shares of any class shall have the
right to convert or exchange said shares into shares of one or more other
classes of shares in accordance with
-12-
<PAGE> 15
such requirements and procedures as may be established by the Board of
Directors.
(k) Fractional Shares. The Corporation may issue, sell, redeem,
repurchase, and otherwise deal in and with shares of its capital stock of
all or any classes in fractional denominations to the same extent as its
whole shares, and shares in fractional denominations shall be shares of
capital stock of all and any classes having proportionately to the
respective fractions represented thereby all the rights of whole shares of
all or any class, including, without limitation, the right to vote, the
right to receive dividends and distributions, and the right to participate
upon liquidation of the corporation, provided that the issue of shares in
fractional denominations or certificates therefor of all or any class shall
be limited to such transactions and be made upon such terms as may be fixed
by or under authority of the By-Laws.
(l) Ownership Record. The Corporation may issue shares in open
account form without issuance or delivery of certificate therefor, in which
case the ownership of such shares shall be reflected exclusively by entry
on the books of the Corporation.
SEVENTH: The initial number of Directors of the Corporation shall
be three (3), which number may be increased or decreased pursuant to the
By-Laws of the Corporation, but shall never be less than three (3); and the
names of the Directors who shall act until the initial shareholders'
meeting or until their
-13-
<PAGE> 16
successors are duly chosen and qualified are:
J.G. Fleming 3900 Yonge Street, Apt. 604,
North York, Ontario M5G 1R8
D.A. Loney 1006 Old Powers Ferry Road
Atlanta, GA 30327
D.M. Cooper 387 Greer Road
Toronto, Ontario M5M 3P8
EIGHTH: The Directors or officers of the Corporation shall not be
liable for money damages to the Corporation or to the Corporation's
shareholders in their capacity as a Director or officer, except (i) to the
extent that it is proved that the person actually received an improper
benefit or profit in money, property, or services actually received; or
(ii) to the extent that a judgment or other final adjudication adverse to
the person is entered in a proceeding based on a finding in the proceeding
that the person's action, or failure to act, was the result of active and
deliberate dishonesty and was material to the cause of action adjudicated
in the proceeding.
No such Director, officer, or employee shall be relieved from any
liabilities or expenses arising by reason of "disabling
-14-
<PAGE> 17
conduct," whether or not there is an adjudication of liability. "Disabling
conduct" means willful misfeasance, bad faith, gross negligence, or
reckless disregard or the duties involved in the conduct of office.
NINTH: The following additional provisions not inconsistent with
law are hereby established for the management, conduct, and regulation of
the business and affairs of the Corporation, and for creating, limiting,
defining and regulating the powers of the Corporation and of its Directors
and shareholders:
(1) Custody of Assets. Assets of this Corporation may be
held by or deposited with a custodian as prescribed from time to time by
the Board of Directors or the By-Laws.
(2) Limitations on Borrowing. The By-Laws of this
Corporation, as from time to time amended, may prescribe limitations upon
the borrowing of money and pledging of assets by the Corporation.
TENTH: Meetings of shareholders may be held inside or outside the
State of Maryland, if the By-Laws so provide. The books of the Corporation
may be kept (subject to any provisions of law) inside or outside the State
of Maryland at such place or places as may be designated from time to time
by the Board of Directors or in the By-Laws of the Corporation. Elections
of Directors need not be by ballot unless the By-laws of the Corporation
shall so provide.
-15-
<PAGE> 18
ELEVENTH: The Corporation reserves the right to amend, change or
repeal any provision contained in these Articles of Incorporation, in the
manner now or hereafter prescribed by law, and all rights conferred upon
shareholders herein are granted subject to this reservation.
TWELFTH: The original By-Laws of the Corporation shall be adopted
by the initial Directors named herein. Thereafter the Board of Directors
shall have the power to make, alter or repeal the By-Laws except as the
By-Laws from time to time in effect may require shareholder action for
adoption, alteration or repeal of particular by-law provisions.
THE UNDERSIGNED, being the incorporator herein for the purpose of
forming a corporation pursuant to the general corporation laws of the State
of Maryland, does make these Articles of Incorporation, hereby declaring
and certifying that the facts herein stated are true, and accordingly have
hereunto set my hands and acknowledge the same to be my act on this 22nd
day of February, 1989.
/s/ David A. Hopkins
-----------------------------------
-16-
<PAGE> 19
[LOGO]
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
Gene L. Burnet, Director
DOCUMENT CODE 02 BUSINESS CODE 03 COUNTY 74
------- ------- -------
P.A Religious Close X Stock Nonstock
------------- --- --- --- --- ---
Merging Surviving
(Transferor)_______________________ (Transferee)_______________________
___________________________________ ___________________________________
___________________________________ ___________________________________
<TABLE>
<CAPTION>
CODE AMOUNT FEE REMITTED
---- ------ ------------
<S> <C> <C> <C>
20 490 Organ. & Capitilization NAME CHANGE
---- -----------
61 20 Rec. Fee (Arts. of Inc.) (NEW NAME)
---- -------------------------
62 Rec. Fee (Amendment)
---- -----------------------------------
63 Rec. Fee (Merger or
---- Consolidation) -----------------------------------
64 Rec. Fee (Transfer)
----
65 Rec. Fee (Dissolution)
----
66 Rec. Fee (Revival) Change of Name
---- -----
52 Foreign Qualification
----
50 Cert. of Qual. or Reg. Change of Principle Office
---- -----
51 Foreign Name Registration
----
13 22 1 Certified Copy 16 Change of Resident Agent
---- --- ---- -----
56 Penalty
----
54 For. Supplemental Cert. Change of Resident Agent
---- ----- Address
53 Foreign Resolution
----
73 Certificate of Conveyance
---- Resignation of Resident Agent
------------------------- -----
-------------------------
76 Certificate of Merger/Transfer
----
------------------------------
------------------------------
75 Special Fee Code
---- ----------
80 For. Limited Partnership
----
83 Cert. Limited Partnership
----
84 Amendment to Limited ATTENTION:
---- Partnership --------------------
85 Termination of Limited ------------------------------
---- Partnership ------------------------------
21 Recordation Tax
----
22 State Transfer Tax MAIL TO ADDRESS:
---- --------------
23 Local Transfer Tax
---- [David A. Hopkins Business Card]
31 Corp. Good Standing
---- ---
NA Foreign Corporation
---- Registration
87 Limited Part. Good Standing
---- ---
71 Financial
----
600 _______________________ Personal
----
Property Reports and___________
_______________ late filing
penalties
70 Change of P.O., R.A. or R.A.A.
----
91 Amend/Cancellation, For. Limited Part
----
-- Other_________________________
Other_________________________
TOTAL
FEES 532
----
X Check Cash
---- -----
Documents on _____ checks
-----
</TABLE>
APPROVED BY /s/
----------
<PAGE> 1
EXHIBIT 1(a)
Form of Articles Supplementary
<PAGE> 2
ARTICLES SUPPLEMENTARY
TO
CANADA LIFE OF AMERICA SERIES FUND, INC.
Canada Life of America Series Fund, Inc., an open-end company under
the Investment Company Act of 1940, incorporated in Maryland, having its
principal office in the State of Maryland c/o The Corporation Trust
Incorporated at 32 South Street, Baltimore, Maryland 21202 (hereinafter
referred to as the "Corporation"), hereby certifies to the Maryland State
Department of Assessments and Taxation that:
Pursuant to Article FIFTH of the Corporation's Articles of
Incorporation, the total number of shares of all classes of common stock
which the Corporation is authorized to issue is one billion (1,000,000,000)
shares of par value one cent ($0.0l) per share and an aggregate par value
of ten million dollars ($10,000,000,000). Sixty million (60,000,000) of
such shares were classified upon incorporation in the following classes,
each class comprising the number of shares and having the designations
indicated; subject, however, to the authority therein granted to the Board
of Directors to increase or decrease any such number of shares:
Equity Class Ten million (10,000,000) Shares
Money Market Class Twenty million (20,000,000) Shares
Bond Class Ten million (10,000,000) Shares
Managed Class Twenty million (20,000,000) Shares
Pursuant to the authority contained in Article FIFTH of the
Corporation's Articles of Incorporation and in accordance with Subsection
2-l05(e) of Maryland General Corporation Law, the Corporation's Board of
directors, at a meeting duly convened and held on November 20, 1992,
adopted a resolution classifying (twenty million) shares of the
corporation's authorized but unclassified and unissued shares into the
following series, such series to have the number of shares designated,
subject to the authority of the Board of Directors to increase or decrease
the number so designated and to have the preferences, rights, voting
powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption as set forth in Article SIXTH of the
Corporation's Articles of Incorporation.:
(Capital Class) consisting initially of (twenty million (20 million))
shares of par value one cent ($0.01) per share.
No other changes to the Articles of Incorporation were included in the
resolution.
<PAGE> 3
IN WITNESS WHEREOF, Canada Life of America Series Fund, Inc. has
caused this presents to be signed in its name and on its behalf by its
President and attested to by its Secretary as of the ______ day of _____ ,
1993.
CANADA LIFE OF AMERICA SERIES FUND, INC.
By:
---------------------------------------
D. Allen Loney, President
(SEAL)
Attest:
-------------------------------------
David A. Hopkins Assistant Secretary
THE UNDERSIGNED, President of Canada Life of America Series Fund,
Inc., who executed on behalf of said Corporation the foregoing Articles
Supplementary to said corporation's Articles of Incorporation, of which
this certificate is made a part, hereby acknowledges, in the name and on
behalf of said corporation, that the foregoing Articles Supplementary are
the corporate act of said corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set
forth therein with respect to the approval thereof are true and in all
material respects, under the penalty of perjury.
---------------------------------------
D. Allen Loney, President
<PAGE> 1
EXHIBIT 2
By-Laws of Canada Life
<PAGE> 2
EXHIBIT 2
---------
4/19/89
CANADA LIFE OF AMERICA
SERIES FUND, INC.
______________________
BY-LAWS
______________________
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C><C>
ARTICLE 1. SHAREHOLDERS' MEETINGS ............................................... 1
1.01 Place of Meetings...................................................... 1
1.02 Annual Meeting......................................................... 1
1.03 Special Meetings....................................................... 1
1.04 Notice of Shareholders' Meetings....................................... 1
1.05 Quorum................................................................. 2
1.06 Proxies................................................................ 2
1.07 Voting................................................................. 2
ARTICLE 2. BOARD OF DIRECTORS.................................................... 3
2.01 Number................................................................. 3
2.02 Term of Office......................................................... 3
2.03 Powers................................................................. 4
2.04 Executive Committee and Other Committees............................... 4
2.05 Meetings............................................................... 4
2.06 Quorum................................................................. 5
2.07 Informal Action........................................................ 6
2.08 Compensation........................................................... 6
ARTICLE 3. OFFICERS.............................................................. 6
3.01 Selection.............................................................. 6
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
3.02 Eligibility............................................................ 6
3.03 Additional Officers and Agents......................................... 6
3.04 Chairman of the Board of Directors..................................... 7
3.05 The President.......................................................... 7
3.06 The Secretary.......................................................... 7
3.07 The Treasurer.......................................................... 8
3.08 The Vice-Presidents.................................................... 8
3.09 Other Officers of the Corporation...................................... 8
3.10 Salaries............................................................... 8
ARTICLE 4. VACANCIES ............................................................ 9
4.01 Removals............................................................... 9
4.02 Vacancies.............................................................. 9
ARTICLE 5. CERTIFICATES FOR SHARES .............................................. 10
5.01 Certificates........................................................... 10
5.02 Replacement of Certificates............................................ 11
5.03 Shareholder Open Accounts.............................................. 11
5.04 Transfers.............................................................. 11
5.05 Record Dates........................................................... 12
5.06 Registered Ownership................................................... 13
5.07 Ledger of Shares....................................................... 13
ARTICLE 6. NOTICES .............................................................. 13
6.01 Manner of Giving....................................................... 13
6.02 Waiver................................................................. 14
ARTICLE 7. GENERAL PROVISIONS ................................................... 14
7.01 Disbursement of Funds.................................................. 14
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C><C>
7.02 Voting Shares of Other Corporations.................................... 14
7.03 Execution of Documents Under Seal...................................... 15
7.04 Execution of Other Documents........................................... 15
7.05 Fiscal Year............................................................ 16
7.06 Expenses............................................................... 16
7.07 Custodians............................................................. 16
ARTICLE 8. PURCHASES AND REDEMPTION OF SHARES.................................... 17
8.01 Purchase By Agreement.................................................. 17
8.02 Redemption............................................................. 17
8.03 Suspension of Redemption............................................... 18
8.04 Stabilization of Share Value of Money
Market Class Shares.................................................... 18
ARTICLE 9. SALES LOAD AND ELIGIBLE PURCHASERS ................................... 19
9.01 No Sales Load.......................................................... 19
9.02 Eligible Purchasers.................................................... 19
9.03 Restrictions on Purchase Orders........................................ 19
ARTICLE 10. FRACTIONAL SALES ..................................................... 19
ARTICLE 11. INDEMNIFICATION ...................................................... 20
11.01 Indemnification........................................................ 20
11.02 Disabling Conduct...................................................... 20
11.03 Expenses Prior to Determination........................................ 21
11.04 Provisions Not Exclusive............................................... 22
11.05 General................................................................ 22
ARTICLE 12. AMENDMENTS ........................................................... 22
</TABLE>
iii
<PAGE> 6
BY-LAWS
OF
CANADA LIFE OF AMERICA SERIES FUND, INC.
ARTICLE 1
SHAREHOLDERS' MEETINGS
1.01 Place of Meetings. All meetings of the shareholders of Canada
Life of America Series Fund, Inc. (hereinafter called "the Corporation")
shall be held at such place, within or without the state of Maryland, as is
stated in the notice of meeting.
1.02 Annual Meeting. The annual meeting of shareholders, for the
purpose of electing Directors and such other business as may come before
the meeting, shall be held at such time as the directors may determine;
provided that the Corporation shall not be required to hold an annual
meeting in any year in which none of the following is required to be acted
on by stockholders under the Investment Company Act of 1940, as amended
("the 1940 Act"): (1) election of Directors; (2) approval of the
Corporation's investment advisory agreement; (3) ratification of the
selection of independent public accountants; and (4) approval of the
Corporation's principal underwriting agreement, if any.
1.03 Special Meetings. Special meetings of the shareholders shall be
held whenever called by the Chairman of the Board, the President or a
majority of the Board of Directors. Special meetings shall also be called
by the President at the request of
<PAGE> 7
the holders of a majority of the outstanding shares entitled to vote at
such meeting.
1.04 Notice of Shareholders' Meeting. Notice of each shareholders'
meeting stating the place, date and hour of the meeting and, in the case of
special meetings the purpose or purposes for which the meeting is called,
shall be given by mailing such notice to each shareholder of record at his
address as it appears on the records of the Corporation not less than ten
nor more than thirty days prior to the date of the meeting. Any meeting at
which all shareholders entitled to vote are present either in person or by
proxy or notice of which has been waived in writing by those not present
shall be a legal meeting for the transaction of business notwithstanding
that notice, as herein provided, has not been given.
1.05 Quorum. Except as otherwise expressly required by law or these
By-Laws or the Articles of Incorporation, at any meeting of the
shareholders, the holders of a majority of the outstanding shares entitled
to vote, present in person or represented by proxy, shall constitute a
quorum, but a lesser number may adjourn any meeting from time to time and
the meeting may be held as adjourned without further notice. When a quorum
is present at any meeting, a majority of the shares represented thereat
shall decide any question brought before such meeting unless the question
is one upon which, by express provision of law or of these By-Laws or the
Articles of Incorporation, a larger or different vote is required, in which
case such express provision shall govern.
-2-
<PAGE> 8
1.06 Proxies. Shareholders of record may vote at any meeting either in
person or by proxy in writing dated not more than eleven months before the
date of exercise, which shall be filed with the Secretary of the meeting
before being voted.
1.07 Voting. Each shareholder shal1 be entitled to one vote for each
share which it holds, and to a fraction of a vote equal to any fractional
share which it holds, provided that such shareholder is the holder of such
shares on the record date determined for such meeting in accordance with
Article 5.05. Shares of all classes shall vote as a single class except
where the separate vote of a particular class is required by the 1940 Act,
or the law of Maryland, and the Articles of Incorporation.
ARTICLE 2
BOARD OF DIRECTORS
2.01 Number. The Corporation shall have a Board of Directors
consisting of not less than three and not more than 21 members. The initial
Board of Directors shall consist of three Directors, as specified in the
Articles of Incorporation, subject to the appointment of additional
directors as provided in Section 4.02 of these By-Laws. Thereafter the
number of Directors to constitute the whole Board, within the limits above
stated, shall be that determined from time to time by the Board of
Directors, and shall be stated in any notice given to shareholders for the
-3-
<PAGE> 9
purpose of calling any shareholder meeting for the election of Directors.
2.02 Term of Office. The initial Board of Directors shall serve until
the first meeting of shareholders and until the initial Director's
successors are duly elected and qualified. Thereafter, each Director shall
serve indefinitely and until his successor is duly elected and qualified,
except that the Board of Director may determine a shorter tenure of office
for any of its members so long as such shorter period is stated in the
notice for the meeting of Directors or shareholders at which such election
takes place. Successor Directors shall be elected at the annual meeting of
shareholders or at any meeting held in lieu thereof, or at any special
meeting of shareholders called for the purpose of electing Directors, of by
the Board of Directors. No Director need be a shareholder or a resident of
the state of Maryland.
2.03 Powers. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. All powers of the
Corporation are hereby vested in, and may be exercised by or under the
authority of the Board of Directors except as conferred on or reserved to
the shareholders by the laws of the state of Maryland, the Articles of
Incorporation or the By-Laws of the Corporation.
2.04 Executive Committee and Other Committees. The Board of Directors
may elect from its members an executive committee of not less than three
which may exercise all the powers of the Board of Directors, consistent
with these By-Laws and the 1940 Act, when
-4-
<PAGE> 10
the Board is not in session. The executive committee may make rules for the
holding and conduct of its meetings and keeping the records thereof, and
shall report its action to the Board of Directors.
The Board of Directors may elect from its members such other
committees from time to time as it may desire. The number composing such
committees and the powers conferred upon them shall be determined by the
Board of Directors at its own discretion.
2.05 Meetings. Regular meetings of the Board of Directors may be held
in much places within or without the state of Maryland, and at such times
as the Board may from time to time determine, and if so determined, notices
thereof need not be given. Special meetings of the Board of Directors may
be held at any time or place whenever called by the Chairman of the Board,
the President or a majority of the Directors, notice thereof being given by
the Secretary, the Chairman of the Board or the President, or the Directors
calling the meeting, to each Director. Special meetings of the Board of
Directors may be held upon three days notice or without formal notice
provided all Directors are present or those not present have waived notice
thereof.
Any member of to the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any
such committee, as the case may be, by means of a conference telephone or
similar communications equipment if all
-5-
<PAGE> 11
persons participating in the meeting can hear each other at the the same
time. Participation in a meeting by these means constitutes presence in
person at the meeting. This paragraph shall not be applicable to meetings
held for the purpose of voting in respect of approval of contracts or
agreements whereby a person undertakes to serve or act as investment
adviser of, or principal underwriter for, the Corporation.
2.06 Quorum. A majority of the members of the Board of Directors shall
constitute a quorum for the transaction of business, provided, however,
that where the 1940 Act or any other applicable law requires a different
quorum, including a number of Directors who are not interested persons as
defined in the 1940 Act, to transact business of a specific nature, the
number or classification of Directors so required shall constitute a quorum
for the transaction of such business. A lesser number may adjourn a meeting
from time to time. When a quorum is present at any meeting a majority of
the members of the Board shall decide any question brought before such
meeting except as otherwise expressly required by law, the Articles of
Incorporation or these By-Laws.
2.07 Informal Action. Except as otherwise required by applicable law,
any action to be taken by the Board of Directors may be taken without a
meeting if written consent to such action is signed by all members of the
Board and such written consent is
-6-
<PAGE> 12
filed with the minutes of the Board's proceedings.
2.08 Compensation. Directors may receive compensation for services to
the Corporation in their capacities as Directors or otherwise in such
manner and in such amounts as may be fixed from time to time by the Board.
ARTICLE 3
OFFICERS
3.01 Selection. The officers of the Corporation shall be a President,
a Secretary and a Treasurer. The Board of Directors may, if it so
determines, elect a Chairman of the Board. All officers shall be elected by
the Board of Directors and shall serve at the pleasure of the Board. The
same person may hold more than one office.
3.02 Eligibility. The Chairman of the Board, if any, and the President
shall be Directors of the Corporation. Other officers need not be
Directors.
3.03 Additional Officers and Agents. The Board of Directors may
appoint one or more Vice Presidents, one or more Assistant Treasurers, one
or more Assistant Secretaries and such other officers or agents as it may
deem advisable, and may prescribe their respective duties.
3.04 Chairman of the Board of Directors. The Chairman of the Board, if
any, shall preside at all meetings of the Board of
-7-
<PAGE> 13
Directors at which he is present. He shall have such other authority and
duties as the Board of Directors shall from time to time determine.
3.05 The President. The President shall be the chief executive
officer of the Corporation. Subject to the control of the Board of
Directors, he shall have general and active management of the business,
affairs and property of the Corporation, and shall see that all orders and
resolutions of the Board of Directors are carried into effect. He shall
preside at the meetings of shareholders, and of the Board of Directors
unless a Chairman of the Board has been elected and is present.
3.06 The Secretary. The Secretary shall keep accurate minutes of all
meetings of the shareholders and directors; shall give notice of at
meetings; shall have custody of all books, records and papers of the
Corporation, except such as shall be in the charge of the Treasurer, and
shall perform all duties commonly incident to his office and as provided by
law and shall perform such other duties and have such other powers as the
Board of Directors shall from time to time designate. In his absence an
Assistant Secretary or secretary pro tempore shall perform his duties. The
offices of Secretary and Treasurer may be held by one and the same person.
3.07 The Treasurer. The Treasurer shall, subject to the order of the
Board of Directors and section 7.07 of these By-Laws,
-8-
<PAGE> 14
and in accordance with any arrangements for performance of services by a
custodian, transfer agent or disbursing agent approved by the board, have
the care and custody of the money, funds, securities, valuable papers and
documents of the Corporation, and shall have and exercise under the
supervision of the Board of Directors all powers and duties commonly
incident to his office and as provided by law. He shall keep or cause to
be kept accurate books of account of the Corporation's transactions which
shall be subject at all times to the inspection and control of the Board of
Directors. He shall deposit all funds of the Corporation in such bank or
banks, trust company or trust companies or such firm or firms doing a
banking business as the Board of Directors shall designate. In his absence,
an Assistant Treasurer, if any, shall perform his duties.
3.08 The Vice Presidents. The Vice Presidents, if one or more have
been appointed, shall respectively have such powers and perform such duties
as may be assigned to them by the Board of Directors or the President. In
the absence or disability of the President, a Vice President, if one has
been appointed, shall perform the duties and exercise the powers of the
President.
3.09 Other Officers of the Corporation. The additional officers and
their duties could be specified in the By-Laws; otherwise, the Board will
need to determine the officers and their duties at an initial meeting.
3.10 Salaries. The Salaries of all officers shall be fixed from time
to time by the Board of Directors.
-9-
<PAGE> 15
ARTICLE 4
VACANCIES
4.01 Removals. The shareholders may at any meeting called for the
purpose, by vote of the holders of a majority of the outstanding shares
entitled to vote, remove from office any Director and, unless the number of
Directors constituting the whole Board is accordingly decreased, elect a
successor. To the extent consistent with the 1940 Act, the Board of
Directors may, by vote of not less than a majority of the Directors then in
office, remove from office any Director, officer or agent elected or
appointed by them and may for misconduct remove any of them elected by the
shareholders.
4.02 Vacancies. If the office of any Director becomes or is vacant by
reason of death, resignation, removal, disqualification, increase in the
number of Directors end of term, or otherwise, the remaining Directors may
by vote of a majority of said remaining Directors choose a successor or
successors who shall hold office until the next annual meeting or special
meeting held for the purpose of electing Directors; provided that while
shares of its stock are outstanding, vacancies on the Board of Directors
may be so filled only if, after the filling of the same, at least
two-thirds of the Directors then holding office would be Directors elected
to such office by the shareholders at a meeting or meetings called for the
purpose. In the event that at any time while shares of the Corporation's
stock are outstanding, less than a majority of the Directors were so
elected by the shareholders, a special meeting of the shareholders shall be
called forthwith and
-10-
<PAGE> 16
held as promptly as possible and in any event within sixty days for the
purpose of electing the necessary new members to the Board of Directors,
unless the Securities and Exchange Commission extends that period.
ARTICLE 5
CERTIFICATE FOR SHARES
5.01 Certificates. Each shareholder shall be entitled to a certificate
or certificates representing shares of the Corporation of the class of
shares owned by such shareholder, in such form as shall, in conformity to
law, be prescribed from time to time, by the Board of Directors. Such
certificates shall be signed by the President or a Vice President and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary. If such certificates are counter-signed by a transfer agent or
registrar other than the Corporation or an employee of the Corporation, the
signatures of the aforementioned officers upon such certificates may be
facsimile. In case any officer or officers who have signed, or whose
facsimile signature or signatures have been used on, any such certificate
or certificates shall cease to be such officer or officers of the
Corporation, such certificates may be issued and delivered as though the
person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to
be such officer or officers of the Corporation. All certificates for shares
of a class shall be consecutively numbered or otherwise identified.
-11-
<PAGE> 17
5.02 Replacement of Certificates. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates, heretofore issued by the Corporation, alleged to have
been lost or destroyed. When authorizing such issue of a new
certificate or certificates, the Board of Directors may as a condition
precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates, or its legal representative, to
either advertise the same in such manner as it shall require or to give the
Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed, or both.
5.03 Shareholder Open Accounts. The Corporation may maintain or cause
to be maintained for each shareholder a shareholder open account in which
shall be recorded such shareholder's ownership of shares and all changes
therein. Any certificates need not be issued for shares so recorded in a
shareholder open account unless requested by such shareholder.
5.04 Transfers. Transfers of shares for which certificates have been
issued will be made only upon surrender to the Corporation or its transfer
agent of a certificate for shares of the same class duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, whereupon the Corporation will issue a new certificate to the
person or other entity entitled thereto, cancel the old certificate and
record the transaction on its books. Transfers of stock evidenced by open
-12-
<PAGE> 18
account by Article 5.03 will be made upon delivery to the Corporation or
its transfer agent of instructions for transfer or evidence of assignment
or succession of the shares of a particular class, in each case executed in
such manner and with such supporting evidence as the Corporation or
transfer agent may reasonably require.
5.05 Record Dates. The Board of Directors may fix in advance a date,
not exceeding ninety days preceding the date of any meeting of
shareholders, or the date for the payment of any dividend, or the date for
the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection
with obtaining any consent or for any other lawful purpose, as a record
date for the determination of the shareholders entitled to notice of and,
subject to Article 1.07, to vote at any such meeting, and any adjournment
thereof, or entitled to receive payment of any such dividend, or to any
such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital, or to give such consent, and in
such case such shareholders and only such shareholders as shall be
shareholders of record on the date as fixed shall be entitled to such
notice of and, subject to Article 1.07, to vote at such meeting, and any
adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any shares on
the books of the Corporation after any
-13-
<PAGE> 19
such record date fixed as aforesaid, except as to the right to vote at a
meeting as limited in Article 1.07.
5.06 Registered Ownership. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends and to vote as such owner and shall
not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of Maryland.
5.07 Ledger of Shares. The Secretary shall maintain a ledger of the
names and addresses of at holders of outstanding shares, and the number of
share of each class held by each shareholder, at any place within or
without the state of Maryland as determined from time to time by the
Board of Directors.
ARTICLE 6
NOTICES
6.01 Manner of Giving. Whenever, under any provisions of law or of the
Articles of Incorporation or of these By-Laws, notice is required to be
given to any Director, committee member, officer or shareholder, it shall
not be construed to mean personal notice, but such notice may be given, in
the case of shareholders, in writing, by depositing the same in the United
States mail, in a postpaid sealed wrapper, addressed to such shareholder,
at such address as appears on the books of the Corporation, and, in the
-14-
<PAGE> 20
case of Directors, committee members and officers, by telephone, or by mail
or by telegram to the last business address known to the Secretary of the
Corporation, and such notice shall be deemed to be given at the time when
the same shall be thus mailed or telegraphed or telephoned.
6.02 Waiver. Whenever any notice is required to be given under any
provision of law or of the Articles of Incorporation or of these By-Laws,
a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto. Attendance at any meeting where notice is
required shall be deemed waiver of the requirement for such notice.
ARTICLE 7
GENERAL PROVISIONS
7.01 Disbursement of Funds. All checks, drafts, orders or
instructions for the payment of money and all notes of the Corporation
shall be signed by such officer or officers or such other person or persons
as the Board of Directors may from time to time designated.
7.02 Voting Shares of Other Corporations. Unless otherwise
ordered by the Board of Directors, the President or any Vice-President or
the Treasurer or any Assistant Treasurer shall have full power and
authority to attend and act and vote at any meeting of shareholders of any
other Corporation in which this Corporation may own shares, and at any
such meeting may
-15-
<PAGE> 21
exercise any and all the rights and powers incident to the ownership of
such shares. The President or any Vice President or the Treasurer or any
Assistant Treasurer of the Corporation may execute proxies to vote shares
of other corporations standing in the name of this Corporation.
7.03 Execution of Documents under Seal. All documents not relating to
transactions involving real property to which the seal of the Corporation
is attached shall be signed by (1) any two of the Chairman, President, a
Vice-President who is a Director or any Director or officer designated by
the Board for that purpose; or by any one of such persons, and (2)
Vice-President who is not a Director or such other officer as may be
designated by the Board from time to time for that purpose. Any document
relating to transactions involving real property to which the seal of the
Corporation is attached may be signed by any two of such officers as may be
designated by the Board from time to time for that purpose.
7.04 Execution of Other Documents. Contracts, documents or instruments
in writing requiring execution by the Corporation may be signed by any two
of the officers of the Corporation and such other person or persons
designated by any two of the Chairman of the Board, President and
Vice-Presidents of the Corporation and all contracts, documents or
instruments in writing so signed shall be binding upon the Corporation
without any further authorization or formality. The Board of Directors is
authorized from time to time by resolution to appoint any officer or
officers or any other person or persons on behalf of the Corporation to
sign and deliver
-16-
<PAGE> 22
either contracts, documents instruments in writing generally or to sign
either manually or by facsimile signature and deliver specific contracts,
documents or instruments in writing. The term "contracts, documents or
instruments in writing" as used in this by-law shall include deeds,
mortgages, charges, conveyances, transfers and assignments of property of
all kinds including specifically but without limitation transfers and
assignments of shares, warrants, bonds, debentures or other securities and
all paper writings.
7.05 Fiscal Year. Except as otherwise from time to time provided by
the Board of Directors, the fiscal year of the corporation shall begin
January 1 and end December 31.
7.06 Expenses. Each class of shares of the Corporation shall be
charged with all the expenses, costs, charges, reserves or other
liabilities directly attributable to that class and with that proportion of
the other expenses of the Corporation, including general administrative
expenses and fees of the investment adviser, accountants and attorneys,
which the total net assets of each class of shares bears to the total net
assets of all classes of shares, or as determined to be reasonable by the
Board of Directors. The foregoing charges when determined in the manner
prescribed by the Board of Directors shall be conclusive and binding for
all purposes.
7.07 Custodians. All funds, securities and other investments of the
Corporation shall be deposited in the safe keeping of such banks or other
companies as the Board of Directors of the Corporation may from time to
time determine. Every arrangement
-17-
<PAGE> 23
entered into with any bank or other company for the safe keeping of the
securities and investments of the Corporation shall contain provisions
complying with the 1940 Act and the general rules and regulations
thereunder.
ARTICLE 8
PURCHASES AND REDEMPTION OF SHARES
8.01 Purchase by Agreement. The Corporation may purchase its own
shares by agreement with the owner at a price equal to the net asset value
next computed following the time when the purchase or contract to purchase
is made.
8.02 Redemption. The Corporation shall redeem such shares of a
class as are offered by any shareholder for redemption, without charge,
upon the presentation of a written request therefor, duly executed by
record owner, to the office or agency designated by the Corporation. If the
shareholder has received certificates for shares of a class, the request
must be accompanied by such certificates of that class, duly endorsed for
transfer, in acceptable form; and the Corporation will pay therefor the net
asset value of the shares next determined following the time at which the
request, in acceptable form, is so presented. Payment for said shares
shall ordinarily be made by the Corporation to the shareholder within seven
days after the date on which such shares are presented.
8.03 Suspension of Redemption. The obligations set out in Article
8.02 may be suspended for any period during which the New
-18-
<PAGE> 24
York Stock Exchange shall be closed (other than for customary week-end and
holiday closings) or during which trading on said Exchange is restricted or
an emergency exists, as determined by or under the authority of the
Securities and Exchange Commission or any successor governmental authority,
as a result of which the disposal by the Corporation of securities owned by
it is not reasonably practicable, or it is not reasonably practicable for
the Corporation fairly to determine the value of its net assets; or for
such other periods as the Securities and Exchange Commission or successor
governmental authority by order may permit to protect the Corporation's
shareholders.
8.04 Stabilization of Share Value of Money Market Class Shares. The
Board of Directors may establish procedures reasonably designed to
stabilize the net asset value of the Corporation's Money Market C1ass
shares as computed for the purpose of distribution redemption and
repurchase. If any deviation of the net asset value per share from the
amortized cost price per share of the Corporation's Money Market Class
shares exceeds one-half of one percent, or if there is any other deviation
which the Board of Directors believes would result in a material dilution
to shareholders or purchaser of Money Market Class shares, the Board of
Directors will promptly consider what action, if any, it should initiate.
Such action may include redemption in kind, selling portfolio instruments
prior to maturity to realize capital gains or losses or to shorten the
average portfolio maturity, withholding dividends, splitting, combining or
otherwise recapitalizing outstanding shares, or using
-19-
<PAGE> 25
available market quotations to determine net asset value per share. The
Corporation may reduce the number of its outstanding Money Market Class
shares by requiring shareholders to contribute to capital proportionately
the number of full and fractional Money Market Class shares as is necessary
to maintain the stabilized net asset value of Money Market Class shares.
ARTICLE 9
SALES LOAD AND ELIGIBLE PURCHASERS
9.01 No Sales Load. The Corporation shall sell and distribute its
shares at net asset value without any sales load.
9.02 Eligible Purchasers. Shares of the Corporation may be purchased
only by Eligible Purchasers. Eligible Purchasers are: (a) Canada Life
Insurance Company of America (the "Company") and The Canada Life Assurance
Company, the parent of the Company, its affiliates and their separate
accounts, and (b) investment companies registered pursuant to the 1940 Act.
9.03 Restrictions on Purchase Orders. The Corporation reserves the
right to reject purchases under circumstances where an Eligible Purchaser
or amount involved would be considered disadvantageous to the Corporation.
ARTICLE 10
FRACTIONAL SHARES
10.01 The Board of Directors may authorize the issue from time to time
of shares of the Corporation in fractional
-20-
<PAGE> 26
denominations, provided that the transactions in which and the terms upon
which shares in fractional denominations may be issued may from time to
time be determined and limited by or under authority of the Board of
Directors.
ARTICLE 11
INDEMNIFICATION
11.01 Indemnification. Every person who is or was a Director, officer
or employee of the Corporation or of any other Corporation which he served
at the request of this Corporation and in which this Corporation owns or
owned shares of capital stock or of which it is or was a creditor shall
have a right to be indemnified by this Corporation to the full extent
permitted by applicable law, against all liability, judgments, fines,
penalties, settlements and reasonable expenses incurred by him in
connection with or resulting from any threatened or actual claim, action,
suit or proceeding, whether criminal, civil or administrative, in which he
may become involved as a party or otherwise by reason of his being or
having been a Director, officer or employee, except as provided in Articles
11.02 and 11.03 of these By-Laws
11.02 Disabling Conduct. No such Director, officer or employee shall
be indemnified for any liabilities or expenses arising by reason of such
person's "disabling conduct," whether or not there is an adjudication of
liability. "Disabling conduct" means willful misfeasance, bad faith, gross
negligence, or
-21-
<PAGE> 27
reckless disregard of the duties involved in the conduct of office.
Whether any such liability arose out of disabling conduct shall be
determined: (a) by a final decision on the merits (including, but not
limited to, a dismissal for insufficient evidence of any disabling conduct)
by a court, or other body before whom the proceeding was brought, that the
person to be indemnified was not liable by reason of disabling conduct; or
(b) in the absence of such a decision, by a reasonable determination,
based upon a review of the facts, that such person was not liable by reason
of disabling conduct, (i) by the vote of a majority of a quorum of
Directors who are neither interested persons of the Corporation nor parties
to the action, suit, or proceeding in question ("disinterested, non-party
Directors"), or (ii) by independent legal counsel in a written opinion if a
quorum of disinterested, non-party Directors so directs or if such quorum
is not obtainable, or (iii) by majority vote of the shareholders, or (iv)
by any other reasonable and fair means not inconsistent with any of the
above.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that any liability
or expense arose by reason of disabling conduct.
11.03 Expenses Prior to Determination. The Corporation shall pay or
reimburse, from time to time, all reasonable expenses
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<PAGE> 28
incurred by a present or former Director or officer of the Corporation in
connection with any threatened, pending or completed action, suit or
proceeding (whether civil, criminal, administrative or investigative) in
which such present or former Director or officer is a party, in advance of
the final disposition of the proceeding, to the fullest extent permitted
by, and in accordance with the applicable requirements of, the 1940 Act and
the Maryland General Corporation Law.
11.04 Provisions Not Exclusive. The indeminfication provided by this
Article II shall not be deemed exclusive of any rights to which those
seeking indemnification may be entitled under any law, agreement, vote of
shareholders, or otherwise.
11.05 General. No indemnification provided by this Article shall be
inconsistent with the 1940 Act, the Securities Act of 1933, or the Maryland
General Corporation Law.
Any indemnification provided by this Article shall continue as to a
person who has ceased to be a Director, officer, or employee, and shall
inure to the benefit of the heirs, executors and administrators of such
person.
ARTICLE 12
AMENDMENTS
12.01 By Board of Directors. Except as otherwise provided by law, the
Board of Directors shall have the power, by a majority
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<PAGE> 29
vote of the entire Board of Directors at any meeting hereof, to make,
alter or repeal the By-Laws of the Corporation.
-24-
<PAGE> 1
EXHIBIT 4
Forms of Certificates for Shares of the Fund
<PAGE> 2
NUMBER [CORPORATE EMBLEM] SHARES
______ ______
CANADA LIFE OF AMERICA SERIES FUND, INC.
THIS CERTIFIES THAT _______________________________________ is the owner of
___________________________________________ Shares of the Capital Stock of
Equity Series
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _______ day of ______________ A.D. 19___.
[CORPORATE SEAL]
<PAGE> 3
NUMBER [CORPORATE EMBLEM] SHARES
______ ______
CANADA LIFE OF AMERICA SERIES FUND, INC.
THIS CERTIFIES THAT _______________________________________ is the owner of
___________________________________________ Shares of the Capital Stock of
Bond Series
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _______ day of ______________ A.D. 19___.
[CORPORATE SEAL]
<PAGE> 4
NUMBER [CORPORATE EMBLEM] SHARES
______ ______
CANADA LIFE OF AMERICA SERIES FUND, INC.
THIS CERTIFIES THAT _______________________________________ is the owner of
___________________________________________ Shares of the Capital Stock of
Money Market Series
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _______ day of ______________ A.D. 19___.
[CORPORATE SEAL]
<PAGE> 5
NUMBER [CORPORATE EMBLEM] SHARES
______ ______
CANADA LIFE OF AMERICA SERIES FUND, INC.
THIS CERTIFIES THAT _______________________________________ is the owner of
___________________________________________ Shares of the Capital Stock of
Managed Series
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _______ day of ______________ A.D. 19___.
[CORPORATE SEAL]
<PAGE> 1
EXHIBIT 5(a)
Form of Sub-Investment Adivisory Agreement Between CL Capital Management, Inc.
(CLCM) and Canada Life of America Series Fund, Inc.
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of May, 1995, between CL CAPITAL MANAGEMENT,
INC., a Georgia corporation (hereafter referred to as the "Investment Advisor"),
and CANADA LIFE OF AMERICA SERIES FUND, INC., a Maryland corporation
(hereinafter referred to as the "Fund").
WITNESSETH
WHEREAS, the Fund engages in business as a diversified, open-end,
management investment company registered under the Investment Company Act of
1940, as amended (hereinafter referred to as the "Investment Company Act") and
currently has six classes of stock, designated the Equity Series, the Bond
Series, the Money Market Series, Capital Series, International Equity Series and
the Managed Series (each a "Series"; together, the "Series"); and
WHEREAS, the Investment Adviser engages principally in rendering
management and investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Investment Adviser is willing to provide management and
investment advisory services to the aforementioned Series, on the terms and
conditions set forth in this Investment Advisory Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Adviser hereby agree to this
Agreement as follows:
ARTICLE I
DUTIES OF THE INVESTMENT ADVISER
The Fund hereby employs the Investment Adviser to act as the manager and
investment adviser of each Series of the Fund now established and, upon written
notice thereof to the Investment Adviser, of each Series established hereafter,
and to furnish (or in connection with management services, arrange for
affiliates to furnish), the management and investment advisory services
described below, subject to the supervision of the Board of Directors of the
Fund, for the period and on the terms and conditions set forth in this
Agreement. The Investment Adviser hereby accepts such employment and agrees
during such period, at its own expense, to render, or arrange for the rendering
of, such services and to assume the obligations herein set forth for the
compensation provided for herein. In connection therewith, the Investment
Adviser may retain subadvisers with respect to one or more Series to render such
services and to assume the obligations herein set forth, subject to the
provisions of the Investment Company Act. The Investment Adviser and its
affiliates shall for all purposes herein be deemed to be independent contractors
and shall, unless otherwise expressly provided or authorized, have no authority
to act for or represent the Fund in any way or otherwise be deemed agents of the
Fund.
(a) Management Services. The Investment Adviser shall perform (or arrange
for the performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund, including
<PAGE> 3
processing shareholder orders, administering shareholder accounts and handling
shareholder relations. The Investment Adviser shall provide the Fund with office
space, equipment, facilities and such other services as the Investment Adviser,
subject to review by the Board of Directors of the Fund, shall from time to time
determine to be necessary or useful to perform its obligations under this
Agreement. The Investment Adviser shall also, on behalf of the Fund, conduct
relations with custodians, depositories, transfer agents, dividend disbursing
agents, other shareholder service agents, accountants, attorneys, underwriters,
brokers and dealers, corporate fiduciaries, insurers, banks and such other
persons in any such other capacity deemed to be necessary or desirable. The
Investment Adviser shall make reports to the Board of Directors of the Fund of
its performance of obligations hereunder and furnish advice and recommendations
with respect to such other aspects of the business and affairs of the Fund as it
shall determine to be desirable.
(b) Investment Advisory Services. The Investment Adviser shall provide
the Fund with such investment research, advice and supervision as the latter may
from time to time consider necessary for the proper supervision of the assets of
each Series of the Fund, shall furnish continuously an investment program for
each Series, shall determine from time to time which securities shall be
purchased, sold or exchanged and what portions of the Series shall be held in
the various securities in which the Series invests or cash, and shall take such
steps as are necessary to implement any overall investment plan for each Series,
including providing or obtaining such services as may be necessary in managing,
acquiring or disposing of investments. The Investment Adviser's services shall
be subject always to the control and supervision of the Board of Directors, the
restrictions of the Articles of Incorporation and By-Laws of the Fund, as
amended from time to time, the provisions of the Investment Company Act, the
statements relating to the Series' investment objectives, investment policies
and investment restrictions as the same are set forth in the currently effective
prospectus relating to the shares of the Fund under the Securities Act of 1933,
as amended (the "Prospectus"), appropriate state insurance laws, and any
applicable provisions of the Internal Revenue Code of 1986. The Investment
Adviser shall also make decisions for the Fund as to the manner in which voting
rights, rights to consent to corporate action and any other rights pertaining to
the Fund's portfolio securities shall be exercised. Should the Board of
Directors of the Fund at any time make any definite determination as to
investment policy and notify the Investment Adviser thereof in writing, the
Investment Adviser shall be bound by such determination for the period, if any,
specified in such notice or until similarly notified that such determination has
been revoked.
The Investment Adviser shall take, on behalf of the Fund, all actions
which it deems necessary to implement the investment policies determined as
provided above, and in particular to place all orders for the purchase or sale
of portfolio securities for the Fund's account with brokers or dealers selected
by it, and to that end, the Investment Adviser is authorized as the agent of the
Fund to give instructions to the Custodian of the Fund as to deliveries of
securities and payments of cash for the account of the Fund. In connection with
the selection of such brokers or dealers and the placing of such orders with
respect to assets of the Fund, the Investment Adviser is directed at all times
to seek to obtain best execution and price within the policy guidelines
determined by the Board of Directors of the Fund and set forth in the
Prospectus.
-2-
<PAGE> 4
Subject to this requirement and the provisions of the Investment Company Act,
the Securities Exchange Act of 1934, as amended, and other applicable provisions
of law, the Investment Adviser may select brokers or dealers with which it or
the Fund is affiliated.
In addition to seeking the best price and execution, the Investment
Adviser may also take into consideration research and statistical information
and wire and other quotation services provided to the Investment Adviser.
However, the Investment Adviser shall select only brokers whose commissions it
believes are reasonable. The Investment Adviser will periodically evaluate the
statistical data, research and other investment services provided to it by
brokers and dealers. Such services may be used by the Investment Adviser in
connection with the performance of its obligations under this Agreement or in
connection with other advisory or investment operations.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
(a) The Investment Adviser. The Investment Adviser assumes the expense
of and shall pay for maintaining the staff and personnel necessary to perform
its obligations under this Agreement, and shall at its own expense provide the
office space, equipment and facilities which it is obligated to provide under
Article I hereof, and shall pay all compensation of officers of the Fund and all
Directors of the Fund who are affiliated persons of the Investment Adviser.
(b) The Fund. The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund, including, without limitation, the following: taxes,
expenses for legal and auditing services, costs of printing proxies, stock
certificates, shareholder reports and prospectuses (except to the extent such
prospectuses are used in connection with the sale and distribution of investment
company securities), charges of the Custodian and Transfer Agent, expenses of
redemption of shares, Securities and Exchange Commission fees, expenses of
registering the shares under federal and state securities laws, fees and actual
out-of-pocket expenses of Directors who are not affiliated persons of the
Investment Adviser, accounting and pricing costs (including the daily
calculation of the net asset value), insurance, interest, brokerage costs,
litigation and other extraordinary or non-recurring expenses, and other expenses
properly payable by the Fund.
-3-
<PAGE> 5
ARTICLE III
COMPENSATION OF THE INVESTMENT ADVISER
For the services rendered, the facilities furnished and expenses assumed
by the Investment Adviser, each Series of the Fund shall pay to the Investment
Adviser at the end of each calender month a fee based upon the average daily
value of the net assets of the Series, as determined and computed in accordance
with the description of the determination of the net asset value contained in
the Prospectus, at the annual rate specified below:
<TABLE>
<S> <C>
Equity Series .50%
Bond Series .50%
Managed Series .50%
Capital Series .50%
Money Market Series .50%
International Equity Series .80%
</TABLE>
commencing with respect to each Series on the day following the effectiveness
hereof with respect to such Series. During any period when the determination of
net asset value is suspended by the Board of Directors of the Fund, the net
asset value of a Series as of the last business day prior to such suspension
shall for this purpose be deemed to be the net asset value at the close of each
succeeding business day until net asset value is again determined.
ARTICLE IV
LIMITATION OF LIABILITY OF THE INVESTMENT ADVISOR
The 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, except for (i) willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties hereunder, and (ii) negligence
or misconduct in connection with management services. As used in this Article
IV, the term "Investment Adviser" shall include any affiliates of the Investment
Adviser performing services for the Fund contemplated hereby and Directors,
officers, and employees of the Investment Adviser and such affiliates.
ARTICLE V
ACTIVITIES OF THE INVESTMENT ADVISER
The services of the Investment Adviser to the Fund are not deemed to be
exclusive, and the Investment Adviser is free to render services to others, so
long as the Investment Adviser's services under this Agreement are not impaired.
It is understood that Directors, officers, employees, and shareholders of the
Fund are or may become interested in the Investment Adviser, as Directors,
officers, employees, and shareholders or otherwise, and the Investment Adviser
may become interested in the Fund as a shareholder or otherwise.
-4-
<PAGE> 6
It is agreed that the Investment Adviser may use any supplemental
investment research obtained for the benefit of the Fund in providing investment
advice to its other investment advisory accounts. The Investment Adviser or its
affiliates may use such information in managing their own accounts. Conversely,
such supplemental information obtained by the placement of business for the
Investment Adviser or other entities advised by the Investment Adviser will be
considered by and may be useful to the Investment Adviser in carrying out its
obligations to the Fund.
Securities held by the Fund may also be held by separate investment
accounts or other mutual funds for which the Investment Adviser may act as an
adviser or by the Investment Adviser or its affiliates. Because of different
investment objectives or other factors, a particular security may be bought by
the Investment Adviser or its affiliates or for one or more clients when one or
more clients are selling the same security. If purchases or sales of securities
for the Fund or other entities for which the Investment Adviser or its
affiliates act as investment adviser or for their advisory clients arise for
consideration at or about the same time, the Fund agrees that the Investment
Adviser may make transactions in such securities, insofar as feasible, for the
respective entities and clients in a manner deemed equitable to all. To the
extent that transactions on behalf of more than one client of the Investment
Adviser during the same period may increase the demand for securities being
purchased or the supply of securities being sold, the Fund recognizes that there
may be an adverse effect on price.
It is agreed that, on occasions when the Investment Adviser deems the
purchase or sale of a security to be in the best interest of the Fund as well as
other accounts or companies, it may, to the extent permitted by applicable laws
or regulations, but will not be obligated to, aggregate the securities to be
sold or purchased for other accounts or companies in order to obtain favourable
execution and lower brokerage commissions. In that event, allocation of the
securities purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Investment Adviser in the manner it considers
to be most equitable and consistent with its fiduciary obligations to the Fund
and to such other accounts or companies. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position obtainable for a
Series of the Fund.
ARTICLE VI
BOOKS AND RECORDS
The Investment Adviser agrees that all books and records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any such books, records or information upon the
Fund's request. All such books and records shall be made available, within five
business days of a written request, to the Fund's accountants or auditors during
regular business hours at the Investment Adviser's offices. The Fund or its
authorized representative shall have the right to copy any records in the
possession of the Investment Adviser which pertain to the Fund. Such books,
records, information or reports shall be available to properly constituted
governmental authorities consistent with state and federal law and/or
-5-
<PAGE> 7
regulations. The Investment Adviser shall keep confidential and shall not
disclose or use any records or information obtained pursuant to this Agreement
except as expressly required by state or federal law and/or regulations. In the
event of the termination of this Agreement, all such books, records, or other
information shall be returned to the Fund free from any claim or assertion of
rights by the Investment Adviser.
ARTICLE VII
DURATION AND TERMINATION OF THIS AGREEMENT
As to the Equity Series, Bond Series, Managed Series, Money Market
Series, Capital Series and International Series of the Fund, this Agreement
shall become effective as of the date first above written. As to each Series of
the Fund created subsequent to the effective date of this Agreement, this
Agreement shall not become effective unless and until it is approved by the
Fund's Board of Directors, including a majority of Directors who are not parties
to this Agreement or interested persons of any such party to this Agreement, and
shall continue in effect until the date of the first annual or special meeting
of shareholders of such Series. This Agreement shall continue in effect from
year to year with respect to each Series of the Fund so long as such continuance
is specifically approved at least annually by (i) the Board of Directors of the
Fund, or by the vote of a majority of the outstanding voting securities of such
Series of the Fund and (ii) a majority of those Directors of the Fund who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time as to any Series or all
Series, without the payment of any penalty, by the Board of Directors of the
Fund, or by vote of a majority of the outstanding voting securities of such
Series, or by the Investment Adviser, on sixty days written notice to the other
party. This Agreement may be terminated for "cause" at any time by the Board of
Directors of the Fund. "Cause" is defined and limited for this purpose to mean
willful misfeasance, bad faith, or gross negligence by the Investment Adviser in
the performance of its duties or reckless disregard by it of its obligations and
duties under this Agreement. If this Agreement is terminated only with respect
to one or more, but less than all, of the Series, the Agreement shall remain in
effect with respect to the remaining Series. This Agreement shall Automatically
terminate in the event of its assignment.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of a majority of outstanding voting
securities of each Series of the Fund affected by such amendment, and (ii) a
majority of those Directors of the Fund who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
-6-
<PAGE> 8
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
The term "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with laws of the State of
Georgia, and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Georgia, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
CL CAPITAL MANAGEMENT, INC.
By: /s/ Hubert Atkinson
----------------------------
/s/
----------------------------
CANADA LIFE OF AMERICA SERIES FUND, INC.
By: /s/
----------------------------
/s/
----------------------------
-7-
<PAGE> 1
EXHIBIT 5(b)
Form of Sub-Investment Adivisory Agreement Between CL Capital Management, Inc.
(CLCM) and Canada Life Investment Management Limited (CLIM)
<PAGE> 2
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of May, 1995 between CL Capital Management,
Inc. (the "Investment Advisor"), a Georgia corporation, and Canada Life
Investment Management Limited (the "Sub-Investment Adviser"), a Canadian
corporation:
WITNESSETH:
WHEREAS, Canada Life of America Series Fund, Inc., a Maryland Corporation
(the "Fund") is engaged in business as a diversified open-end management
investment company and is registered as such under the Investment Company Act of
1940 (the "Investment Company Act"); and
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments; and
WHEREAS, the Fund is currently comprised of six classes of stock
(together with any classes subsequently added, the "Series"), each of which
pursues its investment objectives through separate investment policies; and
WHEREAS, the Sub-Investment Adviser is engaged principally in the
business of rendering advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Fund has employed the Investment Adviser to act as
investment manager of the Fund as set forth in the Investment Advisory Agreement
between the Fund and the Investment Adviser dated May 1, 1995 (the "Investment
Advisory Agreement"); and
WHEREAS, the Fund and the Investment Adviser desire to retain the
Sub-Investment Adviser to render certain investment advisory services to the
International Equity Series in the manner and on the terms hereinafter set
forth;
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Investment Adviser and the Sub-Investment Adviser
hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-INVESTMENT ADVISER
The Investment Adviser hereby employs the Sub-Investment Adviser to act
as the investment adviser of the International Equity Series of the Fund, and to
furnish the investment advisory services described below, subject to the
supervision of the Board of Directors of the Fund and the Investment Adviser,
for the period and on the terms and conditions set forth in this Agreement. The
Sub-Investment Adviser herby accepts such employment and agrees during such
period, at its own expense, to render, or arrange for the rendering of, such
services and to assume the obligations herein set forth for the compensation
provided for herein. The Sub-Investment Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Fund in
any way or shall in no way be deemed an agent of the Fund.
<PAGE> 3
2
The Sub-Investment Adviser, shall provide the International Equity Series
with such investment research, advice and supervision as the latter may from
time to time consider necessary for the proper supervision of the assets of such
Series, shall furnish continuously an investment program for such Series, shall
determine from time to time which securities shall be purchased, sold or
exchanged, determine how voting and other rights with respect to the securities
of the International Equity Series shall be exercised, and what portions of such
Series shall be held in the various securities in which the Series invests or
cash, and shall take such steps as are necessary to implement any overall
investment plan for such Series, including providing or obtaining such services
as may be necessary in managing, acquiring or disposing of investments. The
Sub-Investment Adviser's services shall be subject always to the control and
supervision of the Board of Directors of the Fund and the Investment Adviser,
the restrictions of the Articles of Incorporation and By-Laws of the Fund, as
amended from time to time, the provisions of the Investment Company Act, the
statements relating to the investment objectives of the International Equity
Series, investment policies and investment restrictions as the same are set
forth in the currently effective registration statement relating to the shares
of the Fund under the Securities Act of 1933, as amended and the Investment
Company Act of 1940, as amended (the "Registration Statement"), appropriate
state insurance laws, and any applicable provisions of the Internal Revenue Code
of 1986. Should the Board of Directors of the Fund at any time make any definite
determination as to investment policy and notify the Sub-Investment Adviser
thereof in writing, the Sub-Investment Adviser shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked.
Investment Adviser acknowledges and agrees that it has sole
responsibility to ensure that Sub-Investment Adviser is properly informed of
such policies and restrictions applicable to the International Equity Series
including without limitation as are, (i) contained in the Fund's Prospectus,
(ii) set forth in the Internal Revenue Code of 1986, as amended, (iii) set forth
pursuant to state insurance laws.
Investment Adviser also acknowledges and agrees that it will be
responsible to provide Sub-Investment Adviser with all necessary compliance
reports to enable Sub-Investment Adviser to make purchases and sales for the
International Equity Series in accordance with the policies and restrictions to
which such Series is subject. Investment Adviser also agrees that it or the Fund
is responsible to provide or contract to provide accounting, custodial and any
other administrative services necessary to administer the business and other
affairs of the Fund.
The Sub-Investment Adviser shall take, on behalf of the International
Equity Series, all actions which it deems necessary to implement the investment
policies determined as provided above, and in particular to place all orders for
the purchase or sale of portfolio securities for the Series' account with
brokers or dealers selected by it, and to that end, the Sub-Investment Adviser
is authorized as the agent of the Fund to give instructions to the Custodian of
the Fund as to deliveries of securities and payments of cash for the account of
the International Equity Series. In connection with the selection of such
brokers or dealers and the placing of such orders with respect to assets of the
International Equity Series, the Sub-Investment Adviser is directed at all times
<PAGE> 4
3
to seek to obtain best execution and price within the policy guidelines
determined by the Board of Directors of the Fund and set forth in the
Registration Statement. Subject to this requirement and the provisions of the
Investment Company Act, the Securities Exchange Act of 1934, as amended, and
other applicable provisions of law, the Sub-Investment Adviser may select
brokers or dealers with which it or the Fund is affiliated.
In addition to seeking the best price and execution, the Sub-Investment
Adviser may also take into consideration research and statistical information
and wire and other quotation services provided to the Sub-Investment Adviser
which may justify brokerage commissions at a higher cost to the Series then may
result when allocating brokerages to other brokers on the basis of seeking best
price and execution. However, the Sub-Investment Adviser shall select only
brokers whose commissions it believes are reasonable. The Sub-Investment Adviser
will periodically evaluate the statistical data, research and other investment
services provided to it by brokers and dealers. Such services may be used by the
Sub-Investment Adviser in connection with the performance of its obligations
under this Agreement or in connection with other advisory or investment
operations.
ARTICLE II
SUB-INVESTMENT ADVISORY FEE
The payment of investment advisory fees and the allocation of charges and
expenses between the Fund and the Investment Adviser are set forth in the
Investment Advisory Agreement, and nothing in this Sub-Investment Advisory
Agreement shall change or affect that arrangement. The payment of investment
advisory fees and the apportionment of any expenses related to the services of
the Sub-Investment Adviser shall be the sole concern of the Investment Adviser
and the Sub-Investment Adviser and shall not be the responsibility of the Fund.
For the services rendered pursuant to this Agreement, Investment Adviser
will pay the Sub-Investment Adviser at the end of each calendar month, a fee,
calculated daily based upon the average daily value of the net assets of the
International Equity Series of the Fund, as determined and computed in
accordance with the description of the determination of the net asset value
contained in the Registration Statement for the Fund, at the annual rate of
0.30%.
ARTICLE III
LIMITATION OF LIABILITY
Subject to Section 36 of the Investment Company Act of 1940, as amended,
the 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
hereunder except for wilful misfeasance, bad faith or gross negligence in the
<PAGE> 5
4
performance of its duties or by reason of reckless disregard of its obligations
and duties hereunder.
ARTICLE IV
ACTIVITIES OF THE SUB-INVESTMENT ADVISER
The services of the Sub-Investment Adviser to the International Equity
Series are not deemed to be exclusive, and the Sub-Investment Adviser is free to
render services to others.
It is agreed that the Sub-Investment Adviser may use any supplemental
investment research obtained for the benefit of the International Equity Series
in providing investment advice to its other investment advisory accounts. The
Sub-Investment Adviser or its affiliates may use such information in managing
their own accounts. Conversely, such supplemental information obtained by the
placement of business for the Sub-Investment Adviser or other entities advised
by the Sub-Investment Adviser will be considered by and may be useful to the
Sub-Investment Adviser in carrying out its obligations to the International
Equity Series.
Securities held by the International Equity Series may also be held by
separate investment accounts or other mutual funds for which the Sub-Investment
Adviser may act as an adviser or by the Sub-Investment Adviser or its
affiliates. Because of different investment objectives or other factors, a
particular security may be bought by the Sub-Investment Adviser or its
affiliates or for one or more clients when one or more clients are selling the
same security. If purchases or sales of securities for the International Equity
Series or other entities for which the Sub-Investment Adviser or its affiliates
act as investment adviser or for their advisory clients arise for consideration
at or about the same time, the Sub-Investment Adviser may make transactions in
such securities, insofar as feasible, for the respective entities and clients in
a manner deemed equitable to all. To the extent that transactions on behalf of
more than one client of the Sub-Investment Adviser during the same period may
increase the demand for securities being purchased or the supply of securities
being sold, it is recognized that there may be an adverse effect on price.
It is agreed that, on occasions when the Sub-Investment Adviser deems the
purchase or sale of a security to be in the best interest of the International
Equity Series as well as other accounts or companies, it may, to the extent
permitted by applicable laws or regulations, but will not be obligated to,
aggregate the securities to be sold or purchased for other accounts or companies
in order to obtain favourable execution and lower brokerage commissions. In that
event, allocation of the securities purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Sub-Investment Adviser in the
manner it considers to be most equitable and consistent with its fiduciary
obligations to the International Equity Series and to such other accounts or
companies. It is recognized that in some cases this procedure may adversely
affect the size of the position obtainable for the International Equity Series.
<PAGE> 6
5
ARTICLE V
BOOKS AND RECORDS
The Sub-Investment Adviser agrees that all books and records which it
maintains for the International Equity Series shall be made available, within
five business days of a written request, to the Fund's accountants or auditors
during regular business hours at the Sub-Investment Adviser's offices. The Fund
or its authorized representative shall have the right to copy any records in the
possession of the Sub-Investment Adviser which pertain to the Fund and as the
Fund shall require in accordance with applicable law. Such books, records,
information or reports shall be available to properly constitute governmental
authorities consistent with state and federal law and/or regulations. The
Sub-Investment Adviser shall keep confidential and shall not disclose or use any
records or information obtained pursuant to this Agreement except as expressly
required by state or federal law and/or regulations.
In the event of the termination of this Agreement, all such books, records, or
other information shall be returned to the Fund free from any claim or assertion
of rights by the Sub-Investment Adviser. The Fund shall make available to the
Sub-Investment Adviser on a reasonable basis all books and records which it
maintains for the International Equity Series.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written,
and shall continue in effect until the date of the first annual or special
meeting of shareholders of the International Equity Series, but not later than
sixteen months after the effective date of the Securities Act of 1933
Registration Statement for the International Equity Series. Thereafter, this
Agreement shall continue in effect from year to year with respect to the
International Equity Series so long as such continuance is specifically approved
at least annually by (i) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the International Equity
Series, and (ii) a majority of those Directors of the Fund who are not parties
to this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Directors of the Fund, or by vote of a majority of the
outstanding voting securities of the International Equity Series, or by the
Investment Adviser, on sixty days written notice to the other party. This
Agreement may be terminated for "cause" at any time by the Board of Directors of
the Fund. "Cause" is defined and limited for this purpose to mean wilful
misfeasance, bad faith, or gross negligence by the Sub-Investment Adviser in the
performance of its duties or reckless disregard by it of its obligations and
duties under this Agreement. This Agreement shall automatically terminate in the
event of its assignment or in the event of the termination of the Investment
<PAGE> 7
6
Advisory Agreement between the Fund and the Investment Adviser. This Agreement
may be terminated without penalty, by Sub-Investment Adviser on sixty days
notice.
ARTICLE VII
DEFINITIONS
The terms "assignment," "interested person," and "majority of the
outstanding voting securities," when used in this Agreement, shall have the
respective meanings specified under the Investment Company Act.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
When required by applicable law, this Agreement may be amended by the
parties only if such amendment is specifically approved by (i) the vote of a
majority of the outstanding voting securities shares of the International
Equity Series, and (ii) a majority of those Directors of the Fund who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
The Investment Adviser agrees to advise the Sub-Investment Adviser
immediately:
(a) of any request by the SEC for amendments to the Prospectus or for
additional information.
(b) of the issuance by the SEC of any stop order suspending the
effectiveness of the Fund's Prospectus or the initiation of any proceedings for
that purpose.
(c) of the happening of any material event which makes untrue any
statement made in the Fund's Prospectus or which requires the making of a change
in either of them in order to make the statements therein not misleading.
(d) of all actions of the SEC with respect to any amendments to the
Fund's Prospectus.
(e) of the happening of any event relating to the Investment Adviser
which would have a material effect on its business.
The Sub-Investment Adviser agrees to advise the Investment Adviser
immediately:
(a) of the happening of any material event which makes untrue any
statement made in the Fund's Prospectus or which requires the making of a change
in either of them in order to make the statements therein not misleading, and
<PAGE> 8
7
(b) of the happening of any event relating to the Sub-Investment
Adviser which would have a material effect on its business.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed and interpreted in accordance with the
laws of the State of Georgia, and the applicable provisions of the Investment
Company Act.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
CL CAPITAL MANAGEMENT, INC.
By: /s/ Hubert Atkinson
-------------------------------------
/s/
-------------------------------------
CANADA LIFE INVESTMENT MANAGEMENT LIMITED
By: /s/
-------------------------------------
/s/
-------------------------------------
<PAGE> 1
EXHIBIT 5(c)
Form of Sub-Investment Adivisory Agreement Between CL Capital Management. Inc.
(CLCM) and J.& W. Seligman & Co., Incorporated (Seligman)
<PAGE> 2
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of May, 1995 between CL Capital Management,
Inc. (the "Investment Advisor"), a Georgia corporation, and J&W Seligman &
Company Incorporated (the "Sub-Investment Adviser"), a Delaware Corporation:
WITNESSETH:
WHEREAS, Canada Life of America Series Fund, Inc., a Maryland Corporation
(the "Fund") is engaged in business as a diversified open-end management
investment company and is registered as such under the Investment Company Act of
1940 (the "Investment Company Acts); and
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments; and
WHEREAS, the Fund is currently comprised of six classes of stock
(together with any classes subsequently added, the "Series"), each of which
pursues its investment objectives through separate investment policies; and
WHEREAS, the Sub-Investment Adviser is engaged principally in the
business of rendering advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Fund has employed the Investment Adviser to act as
investment manager of the Fund as set forth in the Investment Advisory Agreement
between the Fund and the Investment Adviser dated May 1, 1995 (the "Investment
Advisory Agreement"); and
WHEREAS, the Fund and the Investment Adviser desire to retain the
Sub-Investment Adviser to render certain investment advisory services to the
International Series in the manner and on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Investment Adviser and the Sub-Investment Adviser
hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-INVESTMENT ADVISOR
The Investment Adviser hereby employs the Sub-Investment Adviser to act
as the investment adviser of the Capital Series of the Fund, and to furnish the
investment advisory services described below, subject to the supervision of the
Board of Directors of the Fund and the Investment Adviser, for the period and on
the terms and conditions set forth in this Agreement. The Sub-Investment Adviser
herby accepts such employment and agrees during such period, at its own expense,
to render, or arrange for the rendering of, such services and to assume the
obligations herein set forth for the compensation provided for herein. The
Sub-Investment Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
shall in no way be deemed an agent of the Fund.
<PAGE> 3
2
The Sub-Investment Adviser, shall provide the Capital Series with such
investment research, advice and supervision as the latter may from time to time
consider necessary for the proper supervision of the assets of such Series,
shall furnish continuously an investment program for such Series, shall
determine from time to time which securities shall be purchased, sold or
exchanged, determine how voting and other rights with respect to the securities
of the Series shall be exercised, and what portions of the Series shall be held
in the various securities in which the Series invests or cash, and shall take
such steps as are necessary to implement any overall investment plan for such
Series, including providing or obtaining such services as may be necessary in
managing, acquiring or disposing of investments. The Sub-Investment Adviser's
services shall be subject always to the control and supervision of the Board of
Directors of the Fund and the Investment Adviser, the restrictions of the
Articles of Incorporation and By-Laws of the Fund, as amended from time to time,
the provisions of the Investment Company Act, the statements relating to the
investment objectives of the International Series, investment policies and
investment restrictions as the same are set forth in the currently effective
registration statement relating to the shares of the Fund under the Securities
Act of 1933, as amended and the Investment Company Act of 1940, as amended (the
"Registration Statement"), appropriate state insurance laws, and any applicable
provisions of the Internal Revenue Code of 1986. Should the Board of Directors
of the Fund at any time make any definite determination as to investment policy
and notify the Sub-Investment Adviser thereof in writing, the Sub-Investment
Adviser shall be bound by such determination for the period, if any, specified
in such notice or until similarly notified that such determination has been
revoked.
Investment Adviser acknowledges and agrees that it has sole
responsibility to ensure that Sub-Investment Adviser is properly informed of
such policies and restrictions applicable to the Series including without
limitation as are, (i) contained in the Fund's Prospectus, (ii) set forth in the
Internal Revenue Code of 1986, as amended, (iii) set forth pursuant to state
insurance laws.
Investment Adviser also acknowledges and agrees that it will be
responsible to provide Sub-Investment Adviser with all necessary compliance
reports to enable Sub-Investment Adviser to make purchases and sales for the
Series in accordance with the policies and restrictions to which the Series is
subject. Investment Adviser also agrees that it or the Fund is responsible to
provide or contract to provide accounting, custodial and any other
administrative services necessary to administer the business and other affairs
of the Fund.
The Sub-Investment Adviser shall take, on behalf of the International
Equity Series, all actions which it deems necessary to implement the investment
policies determined as provided above, and in particular to place all orders for
the purchase or sale of portfolio securities for the Series' account with
brokers or dealers selected by it, and to that end, the Sub-Investment Adviser
is authorized as the agent of the Fund to give instructions to the Custodian of
the Fund as to deliveries of securities and payments of cash for the account of
the International Series. In connection with the selection of such brokers or
dealers and the placing of such orders with respect to assets of the
International Series, the Sub-Investment Adviser is directed at all times to
seek to obtain best execution and price within the policy guidelines determined
<PAGE> 4
3
by the Board of Directors of the Fund and set forth in the Registration
Statement. Subject to this requirement and the provisions of the Investment
Company Act, the Securities Exchange Act of 1934, as amended, and other
applicable provisions of law, the Sub-Investment Adviser may select brokers or
dealers with which it or the Fund is affiliated.
In addition to seeking the best price and execution, the Sub-Investment
Adviser may also take into consideration research and statistical information
and wire and other quotation services provided to the Sub-Investment Adviser
which may justify brokerage commissions at a higher cost to the Series then may
result when allocating brokerages to other brokers on the basis of seeking best
price and execution. However, the Sub-Investment Adviser shall select only
brokers whose commissions it believes are reasonable. The Sub-Investment Adviser
will periodically evaluate the statistical data, research and other investment
services provided to it by brokers and dealers. Such services may be used by the
Sub-Investment Adviser in connection with the performance of its obligations
under this Agreement or in connection with other advisory or investment
operations.
ARTICLE II
SUB-INVESTMENT ADVISORY FEE
The payment of investment advisory fees and the allocation of charges and
expenses between the Fund and the Investment Adviser are set forth in the
Investment Advisory Agreement, and nothing in this Sub-Investment Advisory
Agreement shall change or affect that arrangement. The payment of investment
advisory fees and the apportionment of any expenses related to the services of
the Sub-Investment Adviser shall be the sole concern of the Investment Adviser
and the Sub-Investment Adviser and shall not be the responsibility of the Fund.
For the services rendered pursuant to this Agreement, Investment Adviser
will pay the Sub-Investment Adviser at the end of each calendar month, a fee,
calculated daily based upon the average daily value of the net assets of the
International Series of the Fund, as determined and computed in accordance with
the description of the determination of the net asset value contained in the
Registration Statement for the Fund, at the annual rate of 0.25%.
ARTICLE III
LIMITATION OF LIABILITY
Subject to Section 36 of the Investment Company Act of 1940, as amended,
the 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
hereunder except for (i) wilful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of reckless disregard of its
obligations and duties hereunder.
<PAGE> 5
4
ARTICLE IV
ACTIVITIES OF THE SUB-INVESTMENT ADVISER
The services of the Sub-Investment Adviser to the Capital Series are not
deemed to be exclusive, and the Sub-Investment Adviser is free to render
services to others.
It is agreed that the Sub-Investment Adviser may use any supplemental
investment research obtained for the benefit of the Capital Series in providing
investment advice to its other investment advisory accounts. The Sub-Investment
Adviser or its affiliates may use such information in managing their own
accounts. Conversely, such supplemental information obtained by the placement of
business for the Sub-Investment Adviser or other entities advised by the
Sub-Investment Adviser will be considered by and may be useful to the
Sub-Investment Adviser in carrying out its obligations to the International
Series.
Securities held by the Capital Series may also be held by separate
investment accounts or other mutual funds for which the Sub-Investment Adviser
may act as an adviser or by the Sub-Investment Adviser or its affiliates.
Because of different investment objectives or other factors, a particular
security may be bought by the Sub-Investment Adviser or its affiliates or for
one or more clients when one or more clients are selling the same security. If
purchases or sales of securities for the Capital Series or other entities for
which the Sub-Investment Adviser or its affiliates act as investment adviser or
for their advisory clients arise for consideration at or about the same time,
the Sub-Investment Adviser may make transactions in such securities, insofar as
feasible, for the respective entities and clients in a manner deemed equitable
to all. To the extent that transactions on behalf of more than one client of the
Sub-Investment Adviser during the same period may increase the demand for
securities being purchased or the supply of securities being sold, it is
recognized that there may be an adverse effect on price.
It is agreed that, on occasions when the Sub-Investment Adviser deems the
purchase or sale of a security to be in the best interest of the Capital Series
as well as other accounts or companies, it may, to the extent permitted by
applicable laws or regulations, but will not be obligated to, aggregate the
securities to be sold or purchased for other accounts or companies in order to
obtain favourable execution and lower brokerage commissions. In that event,
allocation of the securities purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Sub-Investment Adviser in the manner it
considers to be most equitable and consistent with its fiduciary obligations to
the Capital Series and to such other accounts or companies. It is recognized
that in some cases this procedure may adversely affect the size of the position
obtainable for the Capital Series.
<PAGE> 6
5
ARTICLE V
BOOKS AND RECORDS
The Sub-Investment Adviser agrees that all books and records which it
maintains for the Capital Series shall be made available, within five business
days of a written request, to the Fund's accountants or auditors during regular
business hours at the Sub-Investment Adviser's offices. The Fund or its
authorized representative shall have the right to copy any records in the
possession of the Sub-Investment Adviser which pertain to the Fund and as the
Fund shall require in accordance with applicable law. Such books, records,
information or reports shall be available to properly constitute governmental
authorities consistent with state and federal law and/or regulations. The
Sub-Investment Adviser shall keep confidential and shall not disclose or use any
records or information obtained pursuant to this Agreement except as expressly
required by state or federal law and/or regulations.
In the event of the termination of this Agreement, all such books, records, or
other information shall be returned to the Fund free from any claim or assertion
of rights by the Sub-Investment Adviser. The Fund shall make available to the
Sub-Investment Adviser on a reasonable basis all books and records which it
maintains for the International Series.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written,
and shall continue in effect until the date of the first annual or special
meeting of shareholders of the Capital Series, but not later than sixteen months
after the effective date of the Securities Act of 1933 Registration Statement
for the International Series. Thereafter, this Agreement shall continue in
effect from year to year with respect to the International Series so long as
such continuance is specifically approved at least annually by (i) the Board of
Directors of the Fund, or by the vote of a majority of the outstanding voting
securities of the International Series, and (ii) a majority of those Directors
of the Fund who are not parties to this Agree or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Directors of the Fund, or by vote of a majority of the
outstanding voting securities of the Capital Series, or by the Investment
Adviser, on sixty days written notice to the other party. This Agreement may be
terminated for "cause" at any time by the Board of Directors of the Fund.
"Cause" is defined and limited for this purpose to mean wilful misfeasance, bad
faith, or gross negligence by the Sub-Investment Adviser in the performance of
its duties or reckless disregard by it of its obligations and duties under this
Agreement. This Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the Investment Advisory
Agreement between the Fund and the Investment Adviser. This Agreement may be
terminated without penalty, by Sub-Investment Adviser on sixty days notice.
<PAGE> 7
6
ARTICLE VII
DEFINITIONS
The terms "assignment," "interested person," and "majority of the
outstanding voting securities," when used in this Agreement, shall have the
respective meanings specified under the Investment Company Act.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
When required by applicable law, this Agreement may be amended by the
parties only if such amendment is specifically approved by (i) the vote of a
majority of the outstanding voting securities shares of the International
Series, and (ii) a majority of those Directors of the Fund who are not parties
to this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
The Investment Adviser agrees to advise Sub-Investment Adviser
immediately:
(a) of any request by the SEC for amendments to the Prospectus or for
additional information.
(b) of the issuance by the SEC of any stop order suspending the
effectiveness of the Fund's Prospectus or the initiation of any proceedings for
that purpose.
(c) of the happening of any material event which makes untrue any
statement made in the Fund's Prospectus or which requires the making of a change
in either of them in order to make the statements therein not misleading, and
(d) of all action of the SEC with respect to any amendments to the
Fund's Prospectus.
(e) of the happening of any event relating to Investment Adviser which
would have a material effect on its business.
The Sub-Investment Adviser agrees to advise Investment Adviser
immediately:
(a) of the happening of any material event which makes untrue any
statement made in the Fund's Prospectus or which requires the making of a change
in either of them in order to make the statements therein not misleading, and
(b) of the happening of any event relating to Investment Adviser which
would have a material effect on its business.
<PAGE> 8
7
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed and interpreted in accordance with the
laws of the State of New York, and the applicable provisions of the Investment
Company Act.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
CL CAPITAL MANAGEMENT, INC.
By: /s/ Hubert Atkinson
----------------------------------
/s/
----------------------------------
J & W SELIGMAN & COMPANY INCORPORATED
By: /s/
----------------------------------
/s/
----------------------------------
<PAGE> 1
EXHIBIT 8
Form of Custodian Agreement
<PAGE> 2
CUSTODY AGREEMENT
Agreement made as of this day of , between CANADA LIFE OF
AMERICA SERIES FUND, INC., a corporation organized and existing under the laws
of the State of Maryland, and duly registered as a management investment company
under the Investment Company Act of 1940, having its principal office and place
of business at 330 University Ave., Toronto, Canada M5G 1R8 (hereinafter called
the "FUND"), and CHASE MANHATTAN BANK, N.A., a New York corporation authorized
to do a banking business, having its principal office and place of business at
One Chase Manhattan Plaza, New York, N.Y. 10081 (hereinafter called the
"Custodian").
WITNESSETH:
that for and in consideration of the mutual promises hereinafter set forth the
Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include the Chairman, the
President, and Vice President, the Secretary, any Assistant Secretary, the
Treasurer, any Assistant Treasurer or any other person, whether or not any such
person is an Officer or employee of the Fund, duly authorized by the Board of
Directors of the Fund to give Oral Instructions and Written Instructions on
behalf of the Fund as certified in a Certificate in the form annexed hereto as
Appendix A or such other Certificate as may be received by the Custodian from
time to time.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its successor
or successors and its nominee or nominees.
3. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian which is actually received by the Custodian and which bears or
purports to bear the
<PAGE> 3
signature (including a facsimile signature) of any two Officers of the Fund.
4. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees, provided the Custodian has
received a certified copy of a resolution of the Fund's Board of Directors
specifically approving deposits in DTC. The term "Depository" shall further
mean and include any other person authorized to act as a depository under the
Investment Company Act of 1940, its successor or successors and its nominee or
nominees, specifically identified in a certified copy of a resolution of the
Fund's Board of Directors specifically approving deposits therein by the
Custodian.
5. "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and principal
by the government of the United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers acceptances, repurchase
and reverse repurchase agreements with respect to the same, to the extent
permitted by law and bank time deposits, where the purchase and sale of such
securities normally requires settlement in federal funds on the same day as such
purchase or sale.
6. "Officers" shall be deemed to include the Chairman, the President,
any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any
Assistant Treasurer or any other person or persons duly authorized by the Board
of Directors of the Fund to execute any Certificate, instruction, notice or
other instrument on behalf of the certified fund as in a Certificate in the form
annexed hereto as Appendix B or such other Certificate as may be received by the
Custodian from time to time.
7. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from a person reasonably believed by the Custodian to
be an Authorized Person. The Custodian may electronically record any Oral
Instructions given by telephone, and any other telephone discussions regarding
the accounts or transactions pursuant to this Agreement.
8. "Security" shall be deemed to include, without limitation, stock,
both common and preferred, Money Market Securities, bonds, debentures, notes,
mortgages or other obligations, and any certificates, receipts, warrants or
other instruments representing rights to receive, purchase, sell or subscribe
for the same, or evidencing or representing any other rights or interest
therein, or any property or assets.
9. "Series" shall mean the various portfolios of the Fund as
described from time to time in the Fund's current and effective prospectus.
<PAGE> 4
10. "Shares" shall mean shares of capital stock of the Fund, each of
which is allocated to a particular Series.
11. "Written Instructions" shall mean written communications actually
received by the Custodian from a person reasonably believed by the Custodian to
be an Authorized Person. Written Instructions shall include instructions sent by
telex, TWX, facsimile transmission, bank wire or other such teleprocess or by
any other such method acceptable to the Custodian whereby the receiver of such
communications is reasonably able to verify by codes or otherwise (including
signature comparison or verification) the authenticity of the sender of such
communication. Written Instructions shall also include instructions transmitted
electronically through the Custodian's Info Cash or Customer Data Entry System.
The Fund agrees to give and to process any Written Instructions in accordance
with the terms and conditions for the use of any test arrangements,
authentication methods or other security devices used with respect to Written
Instructions which the Custodian may require. The Fund shall safeguard any
testkeys, identification codes or other security devices made available by the
Custodian and agree to be responsible for any loss, liability or damage incurred
by the Custodian or the Fund resulting from the Custodian acting in accordance
with instructions from any unauthorized person using the proper security device.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of all Securities and all cash at any time owned by the Fund during
the period of this Agreement other than cash from time to time deposited in a
checking account in accordance with Section 17(f) of the Investment Company Act
of 1940, as amended.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as thereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. The Fund will deliver or cause to be delivered to the Custodian
all Securities and all cash owned by it, including cash received for the
issuance of its Shares, at any time during the period of this Agreement other
than cash from time to time deposited in a checking account in accordance with
Section 17(f) of the Investment Company Act of 1940, as amended, and shall
<PAGE> 5
specify with respect to Securities and cash delivered to the Custodian the
Series to which the same are specifically allocated. The Custodian shall
segregate, keep and maintain the assets of the Series separate and apart. The
Custodian will not be responsible for any Securities and cash not actually
received by it. The Custodian will be entitled to reverse any credits made,
including, without limitation, credits on the payable data for interest,
dividends or redemptions, on the Fund's behalf where such credits have been
previously made and moneys are not finally collected within a reasonable period
of time, as determined by the Custodian in its sole discretion. The Fund shall
deliver to the Custodian a certified resolution of the Board of Directors of the
Fund authorizing the Custodian to use the Book-Entry System. The Custodian is
hereby instructed on a continuous and on-going basis to deposit in the
Book-Entry System all Securities eligible for deposit therein, regardless of the
Series to which the same are specifically allocated, and to utilize the
Book-Entry System to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and deliveries and
returns of Securities collateral, regardless of the Series to which the same are
specifically allocated.
Prior to a deposit of Securities in the Depository the Fund shall
deliver to the Custodian a certified resolution of the Board of Directors of the
Fund authorizing the Custodian to use the Depository. The Custodian is hereby
instructed on a continuous and ongoing basis until instructed to the contrary by
a Certificate actually received by the Custodian to deposit in the Depository
all Securities specifically allocated to such Series and eligible for deposit
therein, regardless of the Series to which the same are specifically allocated,
and to utilize the Depository to the extent possible with respect to such
Securities in connection with its performance thereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities collateral.
Securities and moneys specifically allocated to a Series deposited in either the
Book-Entry System or the Depository will be represented in accounts which
include only assets held by the Custodian for customers, including, but not
limited to, accounts in which the Custodian acts in a fiduciary or
representative capacity and shall be specifically allocated on the Custodian's
books to the separate account for such Series.
2. The Custodian shall establish and maintain separate accounts, in
the name of each Series, and shall credit to the separate account for each
Series all moneys received by it for the account of the Fund with respect to
such Series. Money credited to a separate account for a Series shall be
disbursed by the Custodian only:
(a) In payment for Securities purchased for such Series as
provided in Article IV hereof:
<PAGE> 6
(b) In payment of dividends or distributions with respect to
Shares of such Series, as provided in Article V hereof;
(c) In payment of original issue or other taxes with respect to
Shares of such Series, as provided in Article VI hereof;
(d) In payment for Shares of such Series redeemed by it, as
provided in Article VI hereof;
(e) Pursuant to Certificates setting forth the name and address
of the person to whom the payment is to be made, the Series account from which
payment is to be made, and the purpose for which payment is to be made; or
(f) In payment of the fees and in reimbursement of the expenses
and liabilities of the Custodian attributable to such Series, as provided in
Article VIII hereof.
3. Promptly after the close of business on each day the Custodian
shall furnish each Series of the Fund with confirmations and a summary, of all
transfers to or from the account of each Series thereunder during said day.
Where Securities are transferred to the account of the Fund hereunder for a
Series, the Custodian shall also by book entry or otherwise identify the
Securities belonging to such Series which compose a portion of the fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, as may be requested by the
Fund, or its independent accountants, the Custodian shall furnish to the Fund
and its independent accountants a detailed statement on a per Series basis of
the Securities and moneys held for the Fund under the Agreement, and shall
afford such independent accountants reasonable opportunity to determine the
adequacy and accuracy of all records reflecting such securities and money held
for the Fund hereunder.
4. All Securities held for the Fund, which are issued or issuable
only in bearer form, except such Securities as are held in the Book-Entry
System, shall be held by the Custodian in that form; all other Securities held
for the Fund may be registered in the name of the Fund, in the name of the
Custodian, in the name of any duly appointed registered nominee of the Custodian
as the Custodian may from time to time determine, or in the name of the
Book-Entry System or the Depository or their successor or successors, or their
nominee or nominees. The Fund agrees to furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in its name or in the name of its registered nominee or
in the name of the Book-Entry System or the Depository any Securities which it
may hold hereunder any which may, from time to time, be registered in the name
of the Fund. The Custodian
<PAGE> 7
shall hold all such Securities which are specifically allocated to a Series not
held in the Book-Entry System or in the Depository in a separate bank custody
account in the name of such Series physically segregated at all times from those
of any other person or persons.
5. Unless otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System or the
Depository with respect to Securities and therein deposited, shall with respect
to all Securities held for the Fund in accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, or retired, or otherwise
become payable, to the extent that the Custodian is actually aware of such
opportunities;
(c) Exchange Securities for other Securities where the exchange
is purely ministerial as, for example, the exchange of Securities in temporary
form for Securities in definitive form or the mandatory exchange of
certificates;
(d) Execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect;
(e) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of a
Series all rights and similar securities issued with respect to any Securities
held by the Custodian for such Series hereunder;
(f) Sell fractional interests resulting from a stock split or a
stock dividend and credit the appropriate account(s) with the proceeds thereof,
and, in connection with any such sale, take any action the Custodian deems, in
good faith, to be appropriate (including, without limitation, appointing a
broker to effectuate such sale), in which case the Custodian shall be held
harmless for any such action;
(g) Deliver to the Fund promptly all written information,
received by the Bank including, without limitation notices, proxies, (signed in
blank, if issued in the name of the Custodian's nominee or a nominee of the
Depository or Book-Entry System), consents, authorizations, and disclosure
materials to which the Fund would be entitled as the record owner of the
Securities held by the Custodian hereunder. In addition, the Custodian shall
follow coupon payments, redemptions, exchanges or similar matters with respect
to Securities and advise the Fund of rights issued, tender offers or any other
discretionary rights with respect to Securities, in each case, of which the
Custodian
<PAGE> 8
receives notice from the issuers of the Securities or as to which notice is
published in publications routinely utilized by the Custodian for this purpose.
6. Upon receipt of a Certificate or Written Instruction and not
otherwise, the Custodian, directly or through the use of the Book-Entry System
or the Depository shall:
(a) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may be exercised;
(b) Delivery any Securities held for the Fund in exchange for
other Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization or any
corporation, or the exercise of any conversion privilege and receive and hold
hereunder specifically allocated to such Series any cash or other Securities
received in exchange;
(c) Deliver any Securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidating, recapitalization or sale of
assets of any corporation, and receive and hold hereunder specifically allocated
to such Series such certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the assets of the
Series specified in such Certificate and take such other steps as shall be
stated in such Certificate to be for the purposes of effectuating any duly
authorized plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase of Securities by the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money market Securities, a Certificate or Written Instruction, and
(ii) with respect to each purchase of Money Market Securities, a Certificate,
Oral Instructions or Written Instructions, specifying with respect to each such
purchases:
(a) the Series to which the purchased Securities are to be
specifically allocated,
(b) the name of the issuer and the title of the Securities,
<PAGE> 9
(c) the number of shares or the principal amount purchased and
accrued interest, if any,
(d) the date of purchase and settlement,
(e) the purchase price per unit,
(f) the total amount payable upon such purchase, and
(g) the name of the person from whom or the broker through whom
the purchase was made.
The Custodian shall upon receipt of Securities purchased by or for the Fund pay
out of the monies held for the account of the Series to which such Securities
are to be specifically allocated the total amount payable to the person from
whom or the broker through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such Certificate, Oral
Instructions or Written Instructions.
2. Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, a Certificate or Written Instruction, and (ii) with
respect to each sale of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect to each such
sales:
(a) the Series to which such Securities were specifically
allocated,
(b) the name of the issuer and the title of the Security,
(c) the number of shares or principal amount sold, and accrued
interest, if any,
(d) the date of sale,
(e) the sale price per unit,
(f) the total amount payable to the Fund upon such sale, and
(g) the name of the broker through whom or the person to whom
the sale was made.
The Custodian shall deliver the Securities against payment therefor from the
person to whom or the broker, dealer or other agent through whom the sale was
made, provided, however, that the Custodian shall be authorized, in accordance
with customary securities processing practice, to deliver Securities against a
receipt, with the exception of collecting payment from such person, broker,
dealer or other agent to whom Securities were
<PAGE> 10
delivered, before the close of business on the same day. The Custodian shall not
make delivery of Securities unless the total amount payable to the Fund upon
such sale conforms to the total amount payable as set forth in such Certificate,
Oral Instructions or Written Instructions. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to it, and
may deliver Securities and arrange for payment in accordance with customary
securities processing practices.
3. Notwithstanding the above, any payment or delivery in respect of
Securities may be made, in accordance with the customary or established
securities trading or securities processing practices and procedures of the
jurisdiction or market in which such transaction occurs, including without
limitation, delivery of Securities to a purchase, broker, dealer or their agents
against a receipt with the expectation of receiving later payment and free
delivery.
4. All collection and receipt of funds, Securities or other property
pursuant to this Agreement and all payment and delivery of funds, securities or
other property pursuant to this Agreement shall be made by the Custodian as
agent for the Fund and at the risk of the Fund, except as otherwise provided
herein, including, without limitation, the risk associated with the securities
processing practice of delivering securities against a receipt and the risk that
the counterparty in any transaction into which the Fund enters will not transfer
funds, Securities or other property hereunder or otherwise perform in accordance
with the Funds expectation of such counterparty's obligations thereunder.
5. The Custodian, in its discretion, may credit or debit the accounts
hereunder on a contractual settlement date with cash or Securities with respect
to any sale, exchange or purchase of Securities. Otherwise, such transactions
will be credited or debited to the accounts on the data cash or Securities are
actually received by the Custodian and reconciled to the accounts.
(i) The Custodian may reverse credits or debits made to the
accounts in its discretion if the related transaction fails to settle within a
reasonable period, determined by the Custodian in its discretion, after the
contractual settlement date for the related transaction.
(ii) If any Securities delivered pursuant hereto are returned by
the recipient thereof, the Custodian may reverse the credits and debits of the
particular transaction at any time.
<PAGE> 11
ARTICLE V
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares of any Series of the Fund,
it shall deliver to the Custodian a Certificate duly specifying:
(a) the Series,
(b) the name of the insurance company separate account to which
the shares are sold and from which money is to be received, and
(c) The amount of money to be received by the Custodian for the
sale of such Shares and specifically allocated to the separate account in the
name of the Fund for such Series.
2. Upon receipt of such money from the transfer agent, the Custodian
shall credit such money to the separate account in the name of the Fund for the
Series for which such money wee received.
3. Upon issuance of any Shares of any Series described in the
foregoing provisions of this Article, the Custodian shall pay, out of the money
held for the account of the Fund, all original issue or other taxes required to
be paid by the Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Whenever the Fund shall hereafter redeem the Shares of any Series,
it shall furnish to the Custodian a Certificate specifying:
(a) the Series of Shares redeemed,
(b) the name of the insurance company separate account to which
money is to be paid, and
(b) the amount to be paid for such Shares.
ARTICLE VI
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held by
the Custodian in the separate account for such Series shall be insufficient to
pay the total amount payable upon a purchase of Securities to be specifically
allocated to such Series as set forth in a Certificate or Oral Instructions
issued pursuant to Article IV, or which results in an overdraft in the separate
account of such Series for some other reason, or if the Fund is for any other
reason indebted to
<PAGE> 12
the Custodian with respect to a Series (except a borrowing for investment or for
temporary or emergency purposes using Securities as collateral pursuant to a
separate agreement and subject to the provisions of paragraph 2 of this Article
VII), such overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund for such Series payable on demand and shall bear interest
from the date incurred at a rate per annum (based on a 360-day year for the
actual number of days involved) equal to 1/2% over the Custodian's prime
commercial lending rate in effect from time to time, such rate to be adjusted on
the effective date of any change in such prime commercial lending rate but in no
event to be less than 6% per annum. Any such overdraft or indebtedness shall be
reduced by an amount equal to the total of all amounts due the Fund with respect
to such Series which have not been collected by the Custodian on behalf of the
Fund when due because of the negligent failure of the Custodian to make timely
demand or presentation for payment. In addition, the Fund hereby agrees that the
Custodian shall have a continuing lien and security interest in and to any
property specifically allocated to such Series at any time held by it for the
benefit of such Series or in which the Fund may have an interest which is then
in the custodian's possession or control or in possession or control of any
third party acting in the Custodian's behalf. The Fund authorized the Custodian,
in its sole discretion, at any time, and upon reasonable notice to the Fund, to
charge any such overdraft or indebtedness together with interest due thereon
against any balance of account standing to such Series' credit on the
Custodian's books.
ARTICLE VIII
CONCERNING THE CUSTODIAN
1. The Custodian shall exercise the standard of care of a
professional custodian engaged in the banking or trust company industry and
having professional expertise in financial and securities processing
transactions and custody. Except as hereinafter provided, neither the Custodian
nor its nominees nor its agents (which the Custodian is hereby authorized to
retain to perform certain of its functions hereunder and which may include
subsidiaries or affiliates of the Custodian) shall be liable for any lose or
damage, including counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own negligence
or willful misconduct. The Custodian may, with respect to questions of law,
apply for and obtain the advice and opinion of counsel to the Fund or of its own
counsel, at the expense of the Fund, and shall by fully protected with respect
to anything done or omitted by it in good faith in conformity with such advice
or opinion. The custodian shall be liable to the Fund for any loss of damage
<PAGE> 13
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence or willful misconduct on the part of the Custodian or
any of its employees. In the event that the Custodian should determine that
there has been any lose or damage involving Securities of the Fund deposited
with any Depository, the Custodian shall take such action with respect to its
rights and remedies, if any, against such Depository as the Custodian shall
reasonably deem appropriate. The Custodian shall credit to the Fund's account
hereunder the amount, if any, as determined by the Custodian, of the payments,
if any, recovered by the Custodian from, or for the account of, any Depository
as reimbursement for the lose of, or damage to, any Securities deposited by the
Custodian hereunder with said Depository. With respect to any lose or damage
which the Custodian may be liable hereunder, the Custodian shall be liable to
the Fund only to the extent of the Fund's general damages, determined based on
the market value of the property which is the subject of the lose at the date of
discovery of the loss. General damages shall mean only those damages as directly
and necessarily result from the Custodian's negligence or willful misconduct
without reference to any special conditions or circumstances of the Fund's
Series or of any transaction.
2. Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased by or
for the Fund, the legality of the purchase thereof, of the property of the
amount paid therefor;
(b) The legality of the sale of any Securities by or for the
Fund, or the propriety of the amount for which the same are sold;
(c) The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any Shares, of the
propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any dividend
by the Fund;
(f) The legality of any borrowing by the Fund using Securities
as collateral;
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by the
final crediting of the account representing the Securities belonging to
<PAGE> 14
the Fund which compose a portion of the fungible bulk of Securities registered
in the name of the Custodian (or its nominee) or in the name of the Book-Entry
System or the Depository or their successor or successors, or their nominee or
nominees, as shown on the Custodian's account on the books of the Book-Entry
system or the Depository.
4. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the transfer
agent of the Fund nor to take any action to effect payment or distribution by
the transfer agent of the Fund of any amount paid by the Custodian to the
transfer agent of the Fund in accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (1) it shall be directed to take such action by a
Certificate, (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action, and (iii) it shall
agree to take such action.
6. The Custodian Shall not be under any duty or obligation to
ascertain whether any Securities at any time delivered to or held by it for the
account of the Fund and specifically allocated to a Series are such as properly
may be held by the Fund and allocated to such Series under the provisions of its
Articles of Incorporation and its then current prospectus.
7. Without limiting the generality of the foregoing, the Custodian
shall have no duty or responsibility;
(a) to supervise the investment of, or make recommendations
with respect to the purchase, retention or sale of, Securities or other property
hereunder;
(b) for any act or omission (except as may be otherwise
specifically permitted herein), or for the solvency or notice to the Fund of the
solvency, of any broker or agent which is selected by the Custodian (in the
absence of gross negligence or willful misconduct by the Custodian in such
selection) or by the Fund or any other person to effect any transaction
hereunder;
(c) to evaluate, or report to the Fund regarding the financial
condition of any party of which the Custodian delivers Securities, Shares,
payment or any other property pursuant to this Agreement; or
(d) for any lose occasioned by delay in the actual receipt of
notice by the Custodian of any payment, redemption or other transaction in
respect to which the Custodian is authorized to take some action pursuant to
this Agreement.
<PAGE> 15
8. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The Custodian
may charge such compensation and any expenses incurred by the Custodian in the
performance of its duties with respect to a Series against any money
specifically allocated to a Series. Unless and until the Fund instructs the
Custodian by a Certificate to apportion any loss, damage, liability or expense
among this Series in a specified manner, the Custodian shall also be entitled to
charge against any money held by it for the account of any Series on a pro rata
basis among such Series (based on such Series' net asset value at the time of
the charge to the aggregate net asset value of all Series at that time) the
amount of any loss, damage, liability or expense, including counsel fees, for
which the Custodian shall be entitled to reimbursement under the provisions of
this Agreement.
9. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the Custodian and reasonably
believed the Custodian to be a Certificate. The Custodian shall be entitled to
rely upon any Oral Instructions and any Written Instructions actually received
by the Custodian pursuant to Articles IV or V hereof. The Fund agrees to forward
to the Custodian a Certificate confirming such Oral Instructions or Written
Instructions in such manner so that such a Certificate or facsimile thereof is
received by the Custodian, whether by hand delivery, telecopier or other similar
device, or otherwise, by the close of business of the same day that such Oral
Instructions or Written Instructions are given to the Custodian. The Fund agrees
that the fact that such confirming instructions are not received by the
custodian shall in no way affect the validity of the transactions or
enforceabilty of the transaction hereby authorized by the Fund. The Fund agrees
that the Custodian shall incur no liability to the Fund in acting upon Oral
Instructions or Written Instructions given to the Custodian hereunder concerning
such transactions provided that the Custodian reasonably believes that such
instructions were received from an Authorized Person. In the event that a
confirming Certificate is not received by the Custodian, the Custodian shall
notify the Fund of such fact, no later than ten days after receipt by the
Custodian of such unconfirmed Oral Instructions or Written Instructions.
Further, the Custodian shall incur no liability of the failure of any confirming
certificate or facsimile to conform to such Oral Instructions or Written
Instructions or for the Custodian's inability to produce such confirming
Certificate or facsimile at any subsequent time.
10. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be made readily available to the Fund as
described below. Such books and records shall be prepared and maintained as
required by the Investment Company Act of 1940, as amended, and other applicable
securities laws and rules and regulations. The Fund, or the Fund's
<PAGE> 16
authorized representatives, shall have reasonable access to such books and
records during the Custodian's normal business hours. Upon the reasonable
request of the Fund, copies of such books and records shall be provided by the
Custodian to the Fund or the Fund's authorized representative at the Fund's
expense.
11. The Custodian shall provide the Fund with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own system of internal
accounting control as may be available and as the Fund, or its independent
accountants, may reasonably request from time to time.
12. On the date hereof, the Custodian maintains appropriate insurance
coverages, for its own protection, in amounts which the Custodian deems
appropriate. The Custodian agrees to promptly notify the Fund in the event such
insurance ceases for any reason to be maintained.
13. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibility as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE IX
TERMINATION
1. Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than sixty (60) days after the date of
giving of such notice. In the event such notice is given by the Fund, it shall
be accompanied by a copy of a resolution of the Board of Directors of the Fund,
certified by the Secretary or any Assistant Secretary, electing to terminate
this Agreement and designating a successor custodian or custodians, each of
which shall be a bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. In the event such notice is given by the
Custodian, the Fund shall, on or before the termination date, deliver to the
Custodian a copy of a resolution of its Board of Directors, certified by the
Secretary or any Assistant Secretary, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon
the date set forth in such notice this Agreement shall terminate, and the
Custodian shall upon receipt of a notice of acceptance by the successor
custodian on that date deliver directly to the successor custodian all
Securities and moneys then owned by the Fund and held by it as Custodian, after
deducting all fees and expenses for the payment or reimbursement of which it
shall then be entitled.
<PAGE> 17
2. If a successor custodian is not designated by the Fund of the
Custodian, in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and monies then owned
by the Fund, be deemed to be its own custodian and the Custodian shall thereby
by relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry System which
cannot be delivered to the Fund to hold such Securities hereunder in accordance
with this Agreement.
ARTICLE X
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its corporate seal, setting forth the names
and the signatures of the present Authorized Persons. The Fund agrees to furnish
to the Custodian a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or in the event that
other or additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or upon Written
Instructions bearing or purporting to bear the signatures (including facsimile
signatures) of the present Authorized Persons as set forth in the last delivered
Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Fund under its corporate seal, setting forth the names
and the signatures of the present Officers of the Fund. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event any such
present Officer ceases to be an Officer of the Fund, or in the event that other
or additional Officers are elected or appointed. Until such new Certificate
shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Certificates bearing or purporting to bear the
signatures (including facsimile signatures) of the Officers as set forth in the
last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its principal office
or at such other place as the Custodian may from time to time designate in
writing.
<PAGE> 18
4. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its principal office or
at such other place as the Fund may from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the some formality as this
Agreement and approved by a resolution of the Board of Directors of the Fund.
6. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent of the
Fund, authorized or approved by a resolution of its Board of Directors.
7. This Agreement shall be governed and construed in accordance with
the laws of the State of New York. The headings of the provisions or paragraphs
hereof are included for convenience of reference only and do not form a part of
this Agreement.
8. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate Officers, thereunto duly authorized and
their respective corporate seals to be hereunto affixed, as of the day and year
first above written.
CANADA LIFE OF AMERICA SERIES FUND, INC.
By:
------------------------------------
Attest:
- -------------------------
CHASE MANHATTAN BANK, N.A.
By:
------------------------------------
Attest:
- -------------------------
<PAGE> 19
APPENDIX A
I, , , and I, ,
of CANADA LIFE OF AMERICA SERIES FUND, INC., a Maryland
Corporation (the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the Board of
Directors of the Fund in conformity with the Fund's Articles of Incorporation
and By-Laws to give Oral Instructions and Written Instructions on behalf of the
Fund, and the signatures set forth opposite their respective names are their
true and correct signatures:
Name Signature
- ------------------------------ ---------------------------
IN WITNESS WHEREOF, we have hereunto set our hands and the seal of CANADA
LIFE OF AMERICA SERIES FUND, INC. as of ,19 .
---------------------------
---------------------------
<PAGE> 20
APPENDIX B
I, , , and I, ,
of CANADA LIFE OF AMERICA SERIES FUND, INC., a Maryland
Corporation (the "FUND"), do hereby certify that:
The following individuals are duly authorized by the Board of Directors
of the Fund to execute any Certificate, instruction, notice or other instrument
on behalf of the Fund and serve in the following positions with the Fund and
each individual has been duly elected or appointed by the Board of Directors of
the Fund to each such position and qualified therefor in conformity with the
Fund's Articles of Incorporation and By-Laws, and the signatures set forth
opposite their respective names are their true and correct signatures:
Name Position Signature
- ---------------------- ------------------- -------------------------
IN WITNESS WHEREOF, we have hereunto set our hands and the seal of CANADA
LIFE OF AMERICA SERIES FUND, INC. as of , 19 .
--------------------------
--------------------------
Secretary
<PAGE> 1
EXHIBIT 9(a)
Form of Accounting Services Agreement
<PAGE> 2
ACCOUNTING SERVICES AGREEMENT
BETWEEN
CANADA LIFE INSURANCE COMPANY OF AMERICA
AND
CANADA LIFE OF AMERICA SERIES FUND, INC.
THIS AGREEMENT, entered into this ____ day of ______________, 1989, by
and between Canada Life Insurance Company of America, a Michigan corporation,
hereinafter referred to as "CLICA," and Canada Life of America Series Fund,
Inc., a Maryland corporation, hereinafter referred to as "Fund."
WITNESSETH:
WHEREAS, the Fund currently issues shares in four portfolios, which,
together with any subsequently created portfolios, shall hereinafter be referred
to as the "Portfolios";
WHEREAS, the Fund desires to obtain certain accounting and other services
from CLICA; and
WHEREAS, CLICA desires to provide such services for the Fund;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties agree as follows:
I. CLICA agrees to:
A. Maintain all books, accounts, ledgers, journals, supporting
documents and supplementary records pertaining to the business of the Fund
which constitute the record forming the basis for financial statements
required of the Fund by
<PAGE> 3
law or required by resolution of the Fund Board of Directors. These
records shall be the property of the Fund, and shall be available to the
Fund for inspection, audit, and copying upon request of the Fund. In
addition, the records shall be made available to authorized regulatory
authorities.
B. Obtain pricing information, price the assets of the Fund,
and calculate the net asset value of each of the Portfolios of the Fund
in accordance with the Fund's current prospectus and communicate same to
the Fund's transfer agent on each day that the net asset value per share
is calculated for the Portfolios.
C. Provide the personnel and facilities necessary to process
payment of all Fund expenditures, as authorized by the Fund.
D. Maintain all records of a financial nature pertaining to
Fund portfolio transactions as are required by law or resolution of the
Fund Board of Directors. These records shall be subject to the provisions
of I.A. above.
E. Prepare monthly and quarterly financial statements, any
statistical reports requested by the Fund Board of Directors and
supporting accounting work papers.
F. Provide the Fund Board of Directors with the quarterly
financial statements and statistical reports.
- 2 -
<PAGE> 4
G. Prepare such other reports and analyses as requested by the
Fund Board of Directors to be presented at their meetings.
H. Prepare financial statements and any other related per
share data required for inclusion in the annual and semi-annual reports
to shareholders and amendments to the Fund's registration statement.
I. Prepare for timely filing all the Fund's required
governmental (state and federal) reports, tax returns and other filings,
which CLICA is not otherwise required to prepare pursuant to the terms of
other agreements in effect between the Fund and CLICA.
J. Prepare recommendations to the Fund Board of Directors
regarding the payment of income dividends and capital gains
distributions.
K. Maintain or cause to be maintained all other books,
accounts and other documents that are required to be maintained by Rule
31a-1 under the Investment Company Act of 1940 that are not required to
be maintained for the Fund pursuant to some other agreement between the
Fund and CLICA or another party. These books, accounts and documents
shall be subject to the provisions of I.A. above.
L. Preserve or cause to be preserved for the periods required
in Rule 3la-2 under the Investment Company Act of 1940 all records
covered by this Agreement that are required
- 3 -
<PAGE> 5
to be maintained by Rule 31a-1. These records shall be subject to the
provisions of I.A. above.
II. The Fund agrees to pay to CLICA the following amounts as consideration
for the services performed under this Agreement:
A. The costs of accounting services performed by CLICA that
are identifiable as expenses incurred directly and exlusively for the
benefit of the Fund;
B. With respect to the costs of accounting services performed
by CLICA but that are not readily identifiable as expenses incurred
directly and exclusively for the benefit of the Fund shall be paid by the
Fund as follows:
1. Until CLICA notifies the Fund otherwise, the cost of
accounting services performed by CLICA shall be calculated
on a time log and bill basis; i.e., as a percentage of the
salary of personnel attributable to accounting services
functions.
2. Upon written notice by CLICA to the Fund, the cost
of accounting services shall be calculated by CLICA in
accordance with its Functional Cost Accounting System
whereby an appropriate percentage of time and other costs
associated with the provision of accounting services to the
Fund will be allocated to the Fund.
The manner of calculation of costs of accounting services shall be
reviewed and amended by the parties as necessary from time to time.
- 4 -
<PAGE> 6
III. The parties hereto mutually agree:
A. That this Agreement shall become effective on the 28th day
of August, 1989, shall remain in effect until August 28, 1990, and shall
continue in effect from year to year thereafter, unless sooner terminated
as hereinafter provided, so long as the continuance of the Agreement is
approved at least annually by a majority of the Directors who are not
parties to the Agreement or "interested persons" as that term is defined
in the Investment Company Act of 1940.
B. That either party may terminate this Agreement at any time
by giving 60 days' written notice of such termination to the other party,
or at any time for cause.
C. That any amendment to this Agreement must be in writing,
executed by both parties hereto.
D. That notices and other writings delivered or mailed postage
prepaid to the Fund or to CLICA at 330 University Avenue, Toronto,
Ontario, Canada M5G 1R8 shall be deemed to have been properly delivered
or given hereunder to the respective parties.
E. That neither the Fund shareholders nor Fund directors,
officers or employees shall be personally liable hereunder.
F. That this Agreement is subject to and shall be construed
according to the laws of the state of Maryland.
- 5 -
<PAGE> 7
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed in its name and on its behalf and under its corporate or trust
seal by and through its duly authorized officers on the day and year above
stated.
ATTEST: CANADA LIFE OF AMERICA
SERIES FUND, INC.
- ------------------------- ----------------------------------------
By: Its Assistant By:
Secretary
- ------------------------- ----------------------------------------
ATTEST: CANADA LIFE INSURANCE COMPANY
OF AMERICA
- ------------------------- ----------------------------------------
By: Its Assistant By: Its Vice President
Secretary
- ------------------------- ----------------------------------------
- 6 -
<PAGE> 1
EXHIBIT 9(b)
Form of Dividend Disbursing and transfer Agent Agreement
<PAGE> 2
DIVIDEND DISBURSING AND TRANSFER AGENT AGREEMENT
BETWEEN
CANADA LIFE OF AMERICA SERIES FUND, INC.
AND
CANADA LIFE OF AMERICA INVESTMENT MANAGEMENT, INC.
This Dividend Disbursing and Transfer Agent Agreement made this
_________ day of ___________ between CANADA LIFE OF AMERICA SERIES FUND, INC., a
Maryland corporation (hereinafter called the "Fund"), and CANADA LIFE OF AMERICA
INVESTMENT MANAGEMENT, INC., a Georgia corporation (hereinafter called the
"Agent");
WITNESSETH:
WHEREAS, the Fund desires to enter into a Dividend Disbursing and
Transfer Agent Agreement with Agent under which Agent will provide the services
as set forth in detail in this Agreement, and Agent is desirous of providing
such services upon the terms and conditions hereinafter provided,
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein and for other good and valuable consideration, it is
agreed as follows:
1. The Agent shall perform all the usual and ordinary services
of stock transfer agent and dividend disbursing agent for the Fund,
including those set forth below. The Agent shall:
(a) keep the stock transfer books or records of the Fund
and addresses of all shareholders, the number and date of issuance
of full and fractional shares held by each, the number and date of
certificates for the shares and the number and date of
cancellation of each share certificate and each certificate
surrendered for cancellation;
(b) handle the issuance and redemption of Fund shares;
(c) effect and record shareholder transfers of ownership
and changes in forms of registration;
(d) cause all shareholder reports and proxies to be
properly addressed and mailed in connection with shareholders
meetings;
(e) tabulate all proxies; and
<PAGE> 3
(f) prepare and mail all required shareholder federal
and state and other income tax information forms.
2. The Agent shall also act as the Fund's dividend agent in
allocating and causing ordinary income dividends and capital gains
distributions to be disbursed to shareholders.
3. The Fund shall pay the Agent such compensation for its
services as may mutually be agreed upon by the parties from time to time.
4. The Agent agrees to act in good faith in furnishing the
services provided for herein. At the Agent's option it may furnish all
necessary facilities and personnel directly or it may retain a separate
organization for the purpose of performing all or any portion of the
Agent's obligations under this Agreement. The Agent assumes no
responsibility under this Agreement other than to render in good faith
the services called for hereunder.
5. The Agent agrees that in all matters relating to the
services to be performed by it hereunder, it will use its best efforts to
act in conformity with the terms of the Articles of Incorporation,
By-Laws, Registration Statement and current Prospectus of the Fund. Each
of the parties agrees that in all matters relating to the performance of
this Agreement, it will use its best efforts to conform to and comply
with the requirements of the Investment Company Act of 1940 and all other
applicable federal, state or other laws and regulations.
6. To the extent required by Section 31 of the Investment
Company Act of 1940 and the rules and regulations thereunder, Agent
agrees that all records maintained by it (or its sub-agent) relating to
the services to be performed by Agent under this Agreement are the
property of the Fund and will be preserved and surrendered promptly to
the Fund on request. The Fund may inspect, audit and copy all pertinent
records relating to the Fund's operations. The Agent shall permit
appropriate regulatory authorities reasonable access to its books and
records upon the request of such regulatory authorities.
7. The services of the Agent as provided herein are not to be
deemed to be exclusive, and it shall be free to render services of any
kind to any other group, firm, individual or association, including other
investment companies, and to engage in any other business or activity.
- 2 -
<PAGE> 4
8. This Agreement may be amended at any time by mutual written
consent of the parties.
9. This Agreement shall be effective as of the date of
execution, and may be terminated by either party hereto upon sixty (60)
days' written notice given by one to the other, provided that no such
notice of termination given by the Agent to the Fund shall be effective
unless and until a substitute person or entity has been engaged by the
Fund to perform the services required hereunder for the Fund, or the Fund
has certified to the Agent that other arrangements have been made by it
to provide such services. The Fund may terminate this Agreement at
any time if the Agent fails to perform its obligations under this
Agreement in a satisfactory manner.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto affixed, as of the day and year first
above written.
CANADA LIFE OF AMERICA SERIES
FUND, INC.
By:
------------------------------------
------------------------------------
ATTEST:
- ------------------------------------
CANADA LIFE OF AMERICA INVESTMENT
MANAGEMENT, INC.
By:
------------------------------------
------------------------------------
ATTEST:
- ------------------------------------
<PAGE> 1
EXHIBIT 9(c)
Form of Participation Agreement
<PAGE> 2
PARTICIPATION AGREEMENT
THIS AGREEMENT, is hereby entered into on this _______ day of ________,
1989, between Canada Life Insurance Company of America ("CLICA"), a life
insurance company organized under the laws of the State of Michigan, for itself
and on behalf of its Variable Annuity Account 1 ("Separate Account"), a separate
account established by CLICA in accordance with the laws of the State of
Michigan; and the Canada Life of America Series Fund, Inc. ("Fund"), an open-end
management investment company organized under the laws of the State of Maryland.
WITNESSETH:
WHEREAS, the Separate Account has been established by CLICA pursuant to
the Michigan Insurance Code in connection with certain variable annuity policies
("Policies") proposed to be issued to the public by CLICA; and
WHEREAS, the Separate Account has been registered as a unit investment
trust under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the income, gains and losses, whether or not realized, from
assets allocated to the Separate Account are, in accordance with the applicable
Policies, to be credited to or charged against such Separate Account without
regard to other income, gains or losses of CLICA; and
WHEREAS, the Separate Account is subdivided into various sub-accounts
("Sub-accounts") under which income, gains and losses, whether or not realized,
from assets allocated to each such Sub-account are, in accordance with the
applicable Policies, to be credited to or charged against such Sub-accounts
without regard to other income, gains or losses of other sub-accounts or of
CLICA; and
WHEREAS, the Fund is registered as an open-end management investment
company organized under the laws of the State of Maryland and will operate in
accordance with the 1940 Act; and
WHEREAS, the Fund is divided into various series ("Series"), each Series
being subject to certain fundamental investment policies and restrictions which
may not be changed without a majority vote of the shareholders of such Series;
and
<PAGE> 3
WHEREAS, certain Series will serve as the underlying investment medium
for certain Sub-accounts; and
WHEREAS, Canada Life of America Financial Series, Inc., the principal
underwriter for the Policies to be funded by the Separate Account, is a
broker-dealer registered as such under the Securities Exchange Act of 1934;
NOW THEREFORE, in consideration of the foregoing and of mutual covenants
and conditions set forth herein and for other good and valuable consideration,
CLICA, the Separate Account, and the Fund hereby agree as follows:
1. The Policies funded through the Separate Account will provide for
the allocation of premium payments among certain Sub-accounts for investment in
such shares of the Series as may be offered from time to time in the prospectus
of the Policies. The selection of the particular Sub-account is to be made by
the Policy owner and such selection may be changed or the policy value may be
transferred among Sub-accounts in accordance with the terms of the Policies.
2. No representation is made as to the number or amount of such
Policies to be sold; however, CLICA, through Canada Life of America Financial
Services, Inc., will make reasonable efforts to market such Policies.
3. The Fund agrees to sell to CLICA those shares of the Fund which
the Separate Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section, CLICA (or its
designated agent) shall be the designee of the Fund for receipt of such orders
from Policy owners and receipt by such designee shall constitute receipt by the
Fund; provided that the Fund receives notice of such order by 9:30 a.m. New York
time on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which the Fund
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission.
The Fund agrees to make Fund shares available indefinitely for purchase
at the applicable net asset value per share by the CLICA and the Separate
Account on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Directors of the Fund (hereinafter the "Directors") may refuse to sell
shares of any Series to CLICA, or suspend or terminate the offering of shares of
any
- 2 -
<PAGE> 4
Series if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Directors acting in good faith
and in light of their fiduciary duties under federal and any applicable state
laws, necessary in the best interests of the shareholders of such Series.
CLICA shall pay for the Fund shares on the next Business Day after an
order to purchase shares is made in accordance with the provisions of this
Section. Payment shall be in federal funds transmitted by wire or by a credit
for any shares redeemed.
4. The Fund agrees to redeem for cash, on CLICA's request, any full
or fractional shares of the Fund held by CLICA, executing such requests on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section, CLICA
(or its designated agent) shall be the designee of the Fund for receipt of
requests for redemption from Policy owners and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption by 9:30 a.m. New York time on the next following Business
Day.
The Fund ordinarily shall make payment to CLICA for shares on the day the
Fund receives notice from CLICA, but the Fund may delay payment for up to seven
calendar days after the request is received. Payment shall be in federal funds
transmitted by wire.
5. Transfer of Series shares will be by book entry. No stock
certificates will be issued to the Separate Account unless the Separate Account
so requests. Shares of each Series will be recorded in an appropriate title for
the corresponding Sub-account on the books of CLICA. If, however, state law
requires transfer other than by book entry, then the Series agrees to provide
the required form of transfer.
6. The Fund shall make the net asset value per share for each Series
available to CLICA on a daily basis as soon as reasonably practicable after the
net asset value per share is calculated and shall use its best efforts to make
such net asset value per share available by 7 p.m. New York time.
7. The Fund shall furnish notice on the ex-dividend date to CLICA of
any dividend or distribution payable on any shares underlying Sub-accounts. All
of such dividends and distributions as are payable on shares of a Series
recorded in the title for the corresponding Sub-account shall be automatically
reinvested in additional shares of that Series. The Fund shall notify CLICA of
the number of shares so issued.
8. The Fund shall pay all its expenses incidental to its performance
under this Agreement. The Fund shall see to it
- 3 -
<PAGE> 5
that all of its shares are registered and authorized for issue in accordance
with applicable federal and state laws prior to their purchase by CLICA for the
Sub-accounts. The Fund shall bear the expenses for the cost of registration of
its shares, preparation of its prospectus, proxy materials and reports, the
printing and distribution of such items to each Policy owner who has allocated
net amounts to any Sub-account, the preparation of all statements and notices
required by any federal or state law, and taxes imposed upon the Fund on the
issue or transfer of the Fund's shares subject to this Agreement. The parties
shall cooperate in the printing of the prospectuses of the Policies and the
Fund. The Fund shall provide CLICA with a reasonable quantity of Fund
prospectuses and reports to be sent to existing Policy owners.
9. CLICA shall make no representations concerning the Fund or its
shares except those contained in the then-current prospectus of the Fund and in
printed information subsequently issued on behalf of the Fund and approved in
writing by the Fund as supplemental to such prospectus, or otherwise approved by
the Fund in writing.
10. The Fund represents that each Series of the Fund shall comply with
Section 817(h) of the Internal Revenue Code of 1986, and the regulations issued
thereunder (Reg. Section 1.817-5), relating to the diversification requirements
for variable annuity, endowment, and life insurance contracts, and any
amendments or other modifications to such Section or regulations.
The Fund represents that each Portfolio of the Fund is currently
qualified or will be qualified as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986, as amended, (the "Code") and
that every effort will be made to maintain such qualification (under Subchapter
M or any successor or similar provision) and that the Fund will notify CLICA
orally (followed by written notice) or by wire immediately upon having a
reasonable basis for believing that any Series of the Fund has ceased to so
qualify or that any Series might not so qualify in the future.
11. It is understood among the parties to this Agreement that, subject
to obtaining any applicable regulatory approval which may be conditioned on the
parties complying with certain requirements, shares of the Series may be offered
in the future to separate accounts of various insurance companies in addition to
CLICA and in connection with insurance contracts or policies other than the
Policies. It is also understood among the parties that shares of the Series only
may be offered to the other persons identified in paragraph (f) of Regulation
Section 1.817-5, in order that the Separate Account can rely on the look-through
provisions of said paragraph.
- 4 -
<PAGE> 6
12. The Fund represents and warrants that all of its officers,
employees, investment advisers, and other individuals or entities dealing with
the money and/or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund in an amount not less than the minimal coverage as required currently
by Section 17(g) and Rule 17g-1 of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
13. This Agreement shall terminate:
(a) at any time on six months' written notice by the Fund to CLICA or
on six months' written notice by CLICA to the Fund without the payment of any
penalty (provided, however, if CLICA is not able, acting in good faith, to
obtain suitable substitute investment media within six months, this Agreement
shall terminate one year from the date of the notice of termination); or
(b) at the option of CLICA or of the Fund upon institution of formal
enforcement proceedings against the Fund or the Fund's investment adviser by the
Securities and Exchange Commission, or if CLICA or the Fund is determined by the
CLICA or the Fund to have failed to perform its obligations under this Agreement
in a satisfactory manner; or
(c) upon a vote of the holders of a majority of the shares underlying
the Policies having an interest in a particular Sub-account to substitute the
shares of another investment company for the corresponding Fund shares in
accordance with the terms of the Policies for which those shares had been
selected to serve as the underlying investment medium. CLICA will give 60 days'
prior written notice to the Fund upon the occurrence of the earlier of the
following actions taken for the purpose of substituting shares of the Fund: (1)
an application made to the SEC or (2) a proposed Policy owner vote; or
(d) in the event the shares of the Fund are not registered, issued, or
sold in accordance with applicable state and/or federal law or such law
prohibits the use of such shares as an underlying investment for the Policies
issued or to be issued by CLICA. Prompt notice of such an event shall be given
by each party to the other in the event the conditions of this provision occur;
or
(e) upon assignment of this Agreement, at the option of any party not
assigning this Agreement.
- 5 -
<PAGE> 7
14. Each notice required by this Agreement shall be given in writing
and delivered via certified mail -- return receipt requested to:
David A. Hopkins, Esq.
Canada Life Insurance Company of America
6201 Powers Ferry Road, N.W.
Atlanta, Georgia 30339
Douglas V. Rough
Canada Life of America Series Fund, Inc.
330 University Avenue
Toronto, Ontario Canada M5G 1R8
15. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
The Fund agrees that all records and other data pertaining to the
Policies are the exclusive property of CLICA and that any such records and other
data shall be furnished to CLICA by the Fund upon termination of this Agreement
for any reason whatsoever. CLICA shall have the right to inspect, audit and copy
all pertinent records pertaining to the Policies. This shall not preclude the
Fund from keeping copies of such data or records for its own files subject to
the provision. of this section.
16. CLICA and the Separate Account agree to look solely to the assets
of the Fund for the Satisfaction of any liability of the Fund, with respect to
this Agreement and will not seek recourse against the members of the Board of
Directors of the Fund, or its officers, employees, agents, or shareholders, or
any of them, or any of their personal assets for such satisfaction.
17. The Fund agrees to indemnify and hold harmless CLICA, each member
of its Board of Directors, each of its officers, and any person that controls
CLICA within the meaning of section 15 of the Securities Act of 1933 against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation (including legal
and other expenses) to which CLICA may become subject under any statute, at
common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements arise as a result of
CLICA's reliance on any information contained in a then-current prospectus,
Statement of Additional Information, or report of the Fund; or any current
information communicated to CLICA in writing by the Fund.
- 6 -
<PAGE> 8
The Fund shall, at all times, have the right, but not the obligation, to
take over and conduct, in the name of CLICA and/or the Separate Account, the
investigation and defense of any claim by a third party for which
indemnification may be sought, and in such event, CLICA and/or the Separate
Account shall cooperate in every way with the Fund.
18. CLICA agrees to indemnify and hold harmless the Fund, each member
of its Boards of Directors, each of its officers, and each person that controls
the Fund within the meaning of the Securities Act of 1933 against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of CLICA) or litigation (including legal and other expenses)
to which the Fund may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements arise as a result of the Fund's
reliance on any information contained in the then-current prospectus, Statement
of Additional Information, or contract of the Separate Account; or any
information communicated to the Fund in writing by CLICA.
CLICA shall, at all times, have the right, but not the obligation, to
take over and conduct, in the name of the Fund, the investigation and defense of
any claim by a third party for which indemnification may be sought, and in such
event, the Fund shall cooperate in every way with CLICA and/or the Separate
Account.
19. This Agreement shall be construed in accordance with the laws of
the State of Maryland.
20. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant and the terms hereof shall be
interpreted and construed in accordance therewith.
- 7 -
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested as of the date first above written.
CANADA LIFE INSURANCE
COMPANY OF AMERICA ON
BEHALF OF ITSELF AND
VARIABLE ANNUITY ACCOUNT 1
Attest:
By:
- ----------------------------- ------------------------------------
- ----------------------------- ------------------------------------
CANADA LIFE OF AMERICA SERIES
FUND, INC.
Attest:
By:
- ----------------------------- ------------------------------------
- ----------------------------- ------------------------------------
- 8 -
<PAGE> 1
EXHIBIT 11
Consent of Independent Auditors
<PAGE> 2
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 31, 1997 in Post-Effective Amendment No. 10 to the Registration
Statement (Form N-1A No. 33-28888) and related Prospectus of Canada Life of
America Series Fund, Inc. (dated May 1, 1997).
/s/Ernst & Young LLP
Ernst & Young LLP
Atlanta, Georgia
April 17, 1997
<PAGE> 1
EXHIBIT 13
Form of Subscription Agreement
<PAGE> 2
CANADA LIFE OF AMERICA SERIES FUND, INC.
SUBSCRIPTION AGREEMENT
1. SHARE SUBSCRIPTION. Canada Life Insurance Company of America
("CLICA"), on its own behalf and on behalf of Canada Life of America Variable
Annuity Account 1, a separate account of CLICA, hereby agrees to purchase from
Canada Life of America Series Fund, Inc. (the "Fund"), a series-type mutual fund
with four series (the "Series"), the following shares (par value one cent) of
each of the below-named Series at a per-share purchase price indicated below, on
the terms and conditions set forth herein and in the Prospectus described below:
<TABLE>
<CAPTION>
AMOUNT PRICE SHARES
SERIES PURCHASED SHARE PURCHASED
- ------ --------- ----- ---------
<S> <C> <C> <C>
Money Market Series $2 million $10.00 200,000
Bond Series $2 million $10.00 200,000
Equity Series $2 million $10.00 200,000
Managed Series $4 million $10.00 400,000
</TABLE>
CLICA hereby tenders $2 million per Series for the Money Market Series, the Bond
Series, and the Equity Series, and $4 million for the Managed Series as shown
above for an aggregate purchase price of $10 million.
CLICA understands that the Fund filed a Registration Statement (No.
33-28888) on Form N-1A, which contains the Prospectus describing the Fund and
the Shares, and that the Registration Statement was declared effective on
____________, 1989. By its signature hereto, the undersigned hereby acknowledges
receipt of a copy of the Prospectus.
2. REPRESENTATIONS AND WARRANTIES. CLICA hereby represents and
warrants as follows:
(a) It is aware that no Federal or state agency has made any
findings or determination as to the fairness for investment, nor any
recommendations or endorsement, of the Shares;
(b) It has such knowledge and experience of financial and
business matters as will enable it to utilize the information made
available to it in connection with the offering of the Shares, to
evaluate the merits and risks of the prospective investment and to make
an informed investment decision;
(c) It recognizes that the Fund has only recently been
organized and has no financial or operating history and, further, that
investment in the Fund involves certain risks, and it has taken full
cognizance of and
<PAGE> 3
understands all of the risks related to the purchase of the Shares, and
it acknowledges that it has suitable financial resources and anticipated
income to bear the economic risk of such an investment;
(d) It is purchasing the Shares on behalf of Variable Annuity
Account 1 for its own account, for investment, in order to provide seed
money for the fund and not with any intention of distribution or resale
of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933 or exemption
therefrom;
(f) It has been furnished with, and has carefully read, this
Agreement and the Prospectus and such material documents relating to the
Fund as it has requested and as have been provided to it by the Fund; and
(g) It has also had the opportunity to ask questions of, and
receive answers from, the Fund concerning the Fund and the terms of the
offering.
IN WITNESS WHEREOF, the undersigned have executed this instrument
on ______________, 1989.
CANADA LIFE INSURANCE COMPANY OF AMERICA
By:
------------------------------------
------------------------------------
CANADA LIFE OF AMERICA SERIES FUND, INC.
By:
------------------------------------
------------------------------------
<PAGE> 1
EXHIBIT 13(a)
Form of Subscription Agreement for the Capital Series
<PAGE> 2
CANADA LIFE OF AMERICA SERIES FUND, INC.
SUBSCRIPTION AGREEMENT
1. SHARE SUBSCRIPTION. Canada Life Insurance Company of America
("CLICA"), on its own behalf and on behalf of Canada Life of America Variable
Annuity Account 1, a separate account of CLICA, hereby agrees to purchase from
Canada Life of America Series Fund, Inc. (the "Fund"), a series-type mutual
fund with five series (the "Series"), the following shares (par value one cent)
at a per-share purchase price indicated below, on the terms and conditions set
forth herein and in the Prospectus described below:
<TABLE>
<CAPTION>
AMOUNT PRICE/ SHARES
SERIES PURCHASED SHARE PURCHASED
- ------ --------- ----- ---------
<S> <C> <C> <C>
Capital Series $[2] million $10.00 [200,000]
</TABLE>
CLICA hereby tenders $[2] million for purchase of such Shares of the Capital
Series as shown above.
CLICA understands that the Fund has filed Post-Effective Amendment No. 5
to its Registration Statement on Form N-1A (No. 33-28888), which contains the
Prospectus describing the Capital Series and the Shares, and that the
Post-Effective Amendment to the Registration Statement will be effective on or
about May 1, 1993. By its signature hereto, the undersigned hereby acknowledges
receipt of a copy of the Prospectus.
2. REPRESENTATIONS AND WARRANTIES. CLICA hereby represents and
warrants at follows:
(a) It is aware that no federal or state agency has made any
findings or determinations as to the fairness for investment, nor any
recommendations or endorsements, of the Shares;
(b) It has such knowledge and experience of financial and
business matters as will enable it to utilize the information made
available to it in connection with the offering of the Shares, to
evaluate the merits and risks of the prospective investment and to make
an informed investment decision;
(c) It recognizes that the Capital Series has only recently
been organized and has no financial or operating history and, further,
that investment in the Capital Series involves certain risks, and it has
taken full cognizance of and understands all of the risks related to the
purchase of the Shares, and it acknowledges that it has suitable
financial resources and
<PAGE> 3
anticipated income to bear the economic risk of such an investment;
(d) It is purchasing the Shares on behalf of Variable Annuity
Account 1 for its own account, for investment, in order to provide seed
money for the Capital Series and not with any intention of distribution
or resale of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933 or exemption
therefrom;
(f) It has been furnished with, and has carefully read, this
Agreement and the Prospectus and such material documents relating to the
Capital Series and the Fund as it has requested and as have been provided
to it by the Capital Series and the Fund; and
(g) It has also had the opportunity to ask questions of, and
receive answers from, the Capital Series and the Fund concerning the
Capital Series and the Fund and the terms of the offering.
IN WITNESS WHEREOF, the undersigned have executed this instrument
on ___________________, 1993.
CANADA LIFE INSURANCE COMPANY
OF AMERICA
By:
------------------------------------
------------------------------------
CANADA LIFE OF AMERICA SERIES
FUND, INC.
By:
------------------------------------
------------------------------------
<PAGE> 1
EXHIBIT 13(b)
Form of Subscription Agreement for the International Series
<PAGE> 2
CANADA LIFE OF AMERICA SERIES FUND, INC.
SUBSCRIPTION AGREEMENT
1. Share Subscription Canada Life Insurance Company of America
("CLICA"), on its own behalf and on behalf of Canada Life of America Variable
Annuity Account 1 ("Account 1"), a separate account of CLICA, hereby agrees to
purchase from Canada Life of America Series Fund, Inc. (the "Fund"), a
series-type mutual fund with six series, the following shares (the "Shares")
(par value one cent) at a per-share purchase price indicated below, on the terms
and conditions set forth herein and in the Prospectus described below:
<TABLE>
<CAPTION>
AMOUNT PRICE/ SHARES
SERIES PURCHASED SHARE PURCHASED
- ------ --------- ----- ---------
<S> <C> <C> <C>
International $2 million $10.00 200,000
Equity Series
</TABLE>
CLICA hereby tenders $2 million for purchase of such Shares of the International
Equity Series (the "Series) an shown above.
CLICA understands that the Fund has filed Post-Effective Amendment
No.7 to its Registration Statement on Form N-1A (No. 33-28888), which contains
the Prospectus describing the Series and the Shares, and that the Post-Effective
Amendment to the Registration Statement will be effective on or about May 1,
1995. By its signature hereto, the undersigned hereby acknowledges receipt of a
copy of the Prospectus.
2. Representations and Warranties CLICA hereby represents and
warrants as follows:
(a) It is aware that no federal or state agency has made any
findings or determinations as to the fairness for investment, nor any
recommendations or endorsements, of the Shares;
(b) It has such knowledge and experience of financial and
business matters as will enable it to utilize the information made
available to it in connection with the offering of the Shares, to
evaluate the merits and risks of the prospective investment and to make
an informed investment decision;
(c) It recognizes that the Series has only recently been
organized and has no financial or operating history and, further, that
investment in the Series involves certain risks, and it has taken full
cognizance of and understands all of the risks related to the purchase of
the Shares, and it acknowledges that it has suitable financial resources
and anticipated income to bear the economic risk of such an investment;
<PAGE> 3
(d) It is purchasing the Shares on behalf of Account 1 for its
own account, for investment, in order to provide seed money for the
Series and not with any intention of distribution or resale of the
Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933 or exemption
therefrom;
(f) It has been furnished with, and has carefully read, this
Agreement and the Prospectus and such material documents relating to the
Series and the Fund an it has requested and as have been provided to it
by the Series and the Fund; and
(g) It has also had the opportunity to ask questions of, and
receive answers from, the Series and the Fund concerning the Series and
the Fund and the terms of the offering.
IN WITNESS WHEREOF, the undersigned have executed this instrument on
April 24, 1995.
CANADA LIFE INSURANCE COMPANY
OF AMERICA
By: /s/
------------------------------------
/s/
------------------------------------
CANADA LIFE OF AMERICA SERIES
FUND, INC.
By: /s/
------------------------------------
/s/
------------------------------------
<PAGE> 1
EXHIBIT 16
Sample Performance Data Calculation
<PAGE> 2
Exhibit 16
CANADA LIFE OF AMERICA SERIES FUND, INC.
Money Market Series
7-DAY CURRENT YIELD
Current Yield = ( Base period return/7 ) x 365
where Base period return = the net change, exclusive of capital changes,
in the value of 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
<TABLE>
<CAPTION>
Date Dividend per Share
<S> <C>
Dec 31 .003547750
Dec 30
Dec 29 .001773900
Dec 28 .001988400
Dec 27 .005309450
Dec 26
Dec 25
----------
.012619500
</TABLE>
( (.012619500/10) / 7 ) x 365 = 6.58 %
= 7-Day Current Yield
at December 31, 1989
7-DAY EFFECTIVE YIELD
__ __
| 365/7 |
Effective Yield = | ( Base period return + 1 ) | - 1
|__ __|
where Base period return = the net change, exclusive of capital changes,
in the value of 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
__ __
| 365/7 |
|((.012619500/10) + 1) | - 1 = 6.80%
|__ __| = 7-Day Effective Yield
at December 31, 1989
- 1 -
<PAGE> 3
Exhibit 16
CANADA LIFE OF AMERICA SERIES FUND, INC.
Money Market, Managed, Bond, and Equity Series
TOTAL RETURN
Total Return = ((ERV/P ) - 1 )
where ERV = is the value, at the end of the applicable period, of a
hypothetical $1,000 investment made at the beginning of
the applicable period. It is assumed that all dividends
and capital gains distributions are reinvested.
p = a hypothetical initial investment of $1,000
<TABLE>
<CAPTION>
Total Return to December 31, 1989
ERV P Return
<S> <C> <C> <C>
Money Market Series $1,005.10 1,000.00 0.51%
------
Managed Series 1,001.61 1,000.00 0.16%
------
Bond Series 998.41 1,000.00 -0.16%
------
Equity Series 1,005.59 1,000.00 0.56%
------
</TABLE>
- 2 -
<PAGE> 4
Exhibit 16
CANADA LIFE OF AMERICA SERIES FUND, INC.
Money Market, Managed, Bond, and Equity Series
AVERAGE ANNUAL TOTAL RETURN
1/n
Total Return = ((ERV/P ) - 1 )
where ERV = is the value, at the end of the applicable period, of a
hypothetical $1,000 investment made at the beginning of
the applicable period. It is assumed that all dividends
and capital gains distributions are reinvested.
P = a hypothetical initial investment of $1,000
n = number of years
= 27/365 [December 4, 1989 - December 31, 1989]
<TABLE>
<CAPTION>
Average Annual Total Return at December 31, 1989
ERV P Return
<S> <C> <C> <C>
Money Market Series $1,005.10 1,000.00 7.12%
------
Managed Series 1,001.61 1,000.00 2.20%
------
Bond Series 998.41 1,000.00 -2.13%
------
Equity Series 1,005.59 1,000.00 7.83%
------
</TABLE>
- 3 -
<PAGE> 5
Money Market Series
<TABLE>
<CAPTION>
Cumulative
Date TNA Shares Cumulative Fund Daily Dividend Dividend Reinvestment Shares Shares After
Dividend Net Income Per Share Per Share Price Bought Reinvestment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04-Dec-89 2,000,000.00 200,000.000 415.37 415.37 0.002076850 0.002076850 1.00000
O5-Dec-89 2,000,000.00 200,000.000 803.33 387.96 0.001939800 0.004016650 1.00000
06-Dec-89 2,000,000.00 200,000.000 1,191.30 387.97 0.001939850 0.005956500 1.00000
07-Dec-89 2,000,000.00 200,000.000 1,579.26 387.96 0.001939800 0.007896300 1.00000
08-Dec-89 2,000,000.00 200,000.000 1,967.23 387.97 0.001939850 0.009836150 1.00000
1l-Dec-89 2,000,000.00 200,000.000 3,131.13 1,163.90 0.005819500 0.015655650 1.00000
12-Dec-89 2,000,000.00 200,000.000 3,519.10 387.97 0.001939850 0.017595500 1.00000
13-Dec-89 2,000,000.00 200,000.000 3,907.06 387.96 0.001939800 0.019535300 1.00000
14-Dec-89 2,000,000.00 200,000.000 4,506.68 599.62 0.002998100 0.022533400 1.00000
l5-Dec-89 2,00O,000.00 200,000.000 4,898.73 392.05 0.001960250 0.024493650 1.00000
18-Dec-89 2,000,000.00 200,000.000 6,074.82 1,176.09 0.005880450 0.030374100 1.00000
19-Dec-89 2,000,000.00 200,000.000 6,466.85 392.03 0.001960150 0.032334250 1.00000
20-Dec-89 2,000,000.00 200,000.000 6,858.88 392.03 0.001960150 0.034294400 1.00000
21-Dec-89 2,000,000.00 200,000.000 7,315.82 456.94 0.002284700 0.036579100 1.00000
27-Dec-89 2,000,000.00 200,000.000 9,686.17 2,370.35 0.011851750 0.048430850 1.00000
28-Dec-89 2,000,000.00 200,000.000 10,124.94 438.77 0.002193850 0.050624700 1.00000
29-Dec-89 2,000,000.00 200,000.000 9,493.35 (631.59) 0.000000000 0.050624700 1.00000
31-Dec-89 2,000,000.00 200,000.000 10,202.91 709.56 0.003547800 0.051014550 10.0000 0.005101455 1.00510
----------- --------
Avg. 200,000.000 10,202.91
Cumulative Cumulative Series Series Series
Total Total Average Cumulative 7-Day 7-Day
NAV Adjusted Return Return Annual Total 7-Day Div. Current Effective
Date for Divs (Annual) (Inception) Return Per Share Yield Yield
(1) (1) (2) (4) (5)
<S> <C> <C> <C> <C> <C> <C> <C>
04-Dec-89
O5-Dec-89
06-Dec-89
07-Dec-89
08-Dec-89
1l-Dec-89
12-Dec-89
13-Dec-89
14-Dec-89
l5-Dec-89
18-Dec-89
19-Dec-89
20-Dec-89
21-Dec-89
27-Dec-89
28-Dec-89
29-Dec-89
31-Dec-89 10.0510 0.51% 0.51% 7.12% 0.012619500 6.58% 6.80%
</TABLE>
<PAGE> 6
Bond Series
<TABLE>
<CAPTION>
Net Dividend Reinvestment Shares Shares After
Date TNA Shares NAV Dividend Income Per Share Price Bought Reinvestment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04-Dec-89 2,000,415.15 200,000.000 10.0021 415.15 1.00000
O5-Dec-89 1,998,362.11 200,000.000 9.9918 387.75 1.00000
06-Dec-89 1,998,958.20 200,000.000 9.9948 387.78 1.00000
07-Dec-89 1,996,278.87 200,000.000 9.9814 387.77 1.00000
08-Dec-89 1,999,797.88 200,00O.000 9.9990 387.80 1.00000
1l-Dec-89 1,998,757.24 200,000.000 9.9938 1,163.28 1.00000
12-Dec-89 1,998,955.06 200,000.000 9.9948 387.77 1.00000
13-Dec-89 2,000,061.40 200,000.000 10.0003 387.77 1.00000
14-Dec-89 2,001,725.88 200,000.000 10.0086 841.17 1.00000
15-Dec-89 2,001,331.64 200,000.000 10.0067 426.04 1.00000
18-Dec-89 2,008,894.19 200,000.000 10.0445 1,278.01 1.00000
19-Dec-89 2,005,291.24 200,000.000 10.0265 429.10 1.00000
20-Dec-89 2,006,847.95 200,000.000 10.0342 429.11 1.00000
21-Dec-89 2,005,846.65 200,000.000 10.0292 436.59 1.00000
27-Dec-89 1,992,614.55 200,000.000 9.9631 2,574.72 1.00000
28-Dec-89 1,997,751.21 200,000.000 9.9888 429.26 1.00000
29-Dec-89 1,996,335.62 200,000.000 9.9817 (599.03) 1.00000
31-Dec-89 1,986,185.58 200,000.000 9.9309 10,616.19 537.20 0.05308 9.9169 0.005352575 1.00535
----------- ---------
Avg. 200,000.000 10,687.24
Cumulative Cumulative
Total Total Average Annual
NAV Adjusted Return Return Total 30-Day
Date for Divs (Annual) (Inception) Return Yield
(1) (1) (2) (3)
<S> <C> <C> <C> <C> <C>
04-Dec-89
O5-Dec-89
06-Dec-89
07-Dec-89
08-Dec-89
1l-Dec-89
12-Dec-89
13-Dec-89
14-Dec-89
15-Dec-89
18-Dec-89
19-Dec-89
20-Dec-89
21-Dec-89
27-Dec-89
28-Dec-89
29-Dec-89
31-Dec-89 9.9841 -0.16% -0.16% -2.13% N/A
</TABLE>
<PAGE> 7
Managed Series
<TABLE>
<CAPTION>
Net Dividend Reinvestment Shares Shares After
Date TNA Shares NAV Dividend Income Per Share Price Bought Reinvestment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04-Dec-89 4,000,831.34 400,000.000 10.0021 831.34 1.00000
05-Dec-89 3,993,713.23 400,000.000 9.9843 776.53 1.00000
06-Dec-89 3,989,924.07 400,000.000 9.9748 776.63 1.O0OOO
07-Dec-89 3,984,134.45 400,000.000 9.9603 776.68 1.00000
08-Dec-89 3,998,215.55 400,000.000 9.9955 776.76 1.00000
1l-Dec-89 4,001,957.16 400,000.000 10.0049 2,745.71 1.00000
12-Dec-89 4,016,544.65 400,000.000 10.0414 862.09 1.00000
13-Dec-89 4,019,523.86 400,000.000 10.0488 449.39 1.00000
14-Dec-89 4,009.572.68 400.000.000 10.0239 997.77 1.00000
15-Dec-89 4,002,864.91 400,000.000 10.0072 493.47 1.00000
18-Dec-89 3,980,119.89 400,000.000 9.9503 1,480.77 1.00000
19-Dec-89 3,971,376.92 400,000.000 9.9284 497.10 1.00000
20-Dec-89 3,977,282.18 400,000.000 9.9432 497.18 1.00000
21-Dec-89 3,979,817.90 400,000.000 9.9495 504.63 1.0000O
27-Dec-89 3,988,538.84 400,000.000 9.9713 3,920.50 1.00000
28-Dec-89 4,000,561.73 400,000.000 10.0014 496.99 1.O0O0O
29-Dec-89 4,008,273.24 400,000.000 10.0207 (1,077.19) 1.00000
31-Dec-89 3,992,793.82 400,000.000 9.9820 13,712.30 583.30 0.03428 10.0344 0.003416323 1.00342
----------- ----------
Avg. 400,000.000 16,389.65
Cumulative Cumulative
Total Total Average Annual
NAV Adjusted Return Return Total 30-Day
Date for Divs (Annual) (Inception) Return Yield
(1) (1) (2) (3)
<S> <C> <C> <C> <C> <C>
04-Dec-89
05-Dec-89
06-Dec-89
07-Dec-89
08-Dec-89
1l-Dec-89
12-Dec-89
13-Dec-89
14-Dec-89
15-Dec-89
18-Dec-89
19-Dec-89
20-Dec-89
21-Dec-89
27-Dec-89
28-Dec-89
29-Dec-89
31-Dec-89 10.0161 0.16% 0.16% 2.20% N/A
</TABLE>
<PAGE> 8
Equity Series
<TABLE>
<CAPTION>
Net Dividend Reinvestment Shares Shares After
Date TNA Shares NAV Dividend Income Per Share Price Bought Reinvestment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04-Dec-89 2,000,415.15 200,000.000 10.0021 415.15 1.00000
05-Dec-89 1,994,043.86 200,000.000 9.9702 387.75 1.00000
06-Dec-89 1,988,568.18 200,000.000 9.9428 387.73 1.00000
07-Dec-89 1,984,693.59 200,000.000 9.9235 387.91 1.00000
08-Dec-89 1,995,931.56 200,000.000 9.9797 387.96 1.00000
11-Dec-89 2,001,905.90 200,000.000 10.0095 1,683.44 l.O0OOO
12-Dec-89 2,019,736.78 200,000.000 10.0987 499.63 1.00000
13-Dec-89 2,021,164.28 200,000.000 10.1058 (16.25) 1.00000
14-Dec-89 2,005,413.61 200,000.000 10.0271 (6.91) 1.O0OOO
l5-Dec-89 1,998,370.50 200,000.000 9.9919 (18.11) 1.00000
18-Dec-89 1,959,060.20 200,000.000 9.7953 (54.05) 1.00000
19-Dec-89 1,953,392.72 200,000.000 9.7670 (17.48) 1.00000
20-Dec-89 1,958,362.81 200,000.000 9.7918 (17.40) 1.00000
21-Dec-89 1,963,029.70 200,000.000 9.8151 (8.11) 1.00000
27-Dec-89 1,994,774.26 200,000.000 9.9739 1,050.82 1.00000
28-Dec-89 2,002,293.79 200.000.000 10.0115 (17.97) 1.00000
29-Dec-89 2,014,094.66 200,000.000 10.0705 (455.38) 1.00000
31-Dec-89 2,009,909.59 200,000.000 10.0495 1,291.23 (119.21) 0.00646 10.1994 0.000632993 1.00063
----------- --------
Avg. 200,000.000 4,469.52
Cumulative Cumulative
Total Total Average Annual
NAV Adjusted Return Return Total 30-Day
Date for Divs (Annual) (Inception) Return Yield
(1) (1) (2) (3)
<S> <C> <C> <C> <C> <C>
04-Dec-89
05-Dec-89
06-Dec-89
07-Dec-89
08-Dec-89
11-Dec-89
12-Dec-89
13-Dec-89
14-Dec-89
l5-Dec-89
18-Dec-89
19-Dec-89
20-Dec-89
21-Dec-89
27-Dec-89
28-Dec-89
29-Dec-89
31-Dec-89 10.0559 0.56% 0.56% 7.83% N/A
</TABLE>
<PAGE> 9
Exhibit 16
CANADA LIFE OF AMERICA SERIES FUND, INC.
Managed, Bond, and Equity Series
30-DAY YIELD
__ __
| __ __ 6 |
| | a-b | |
Yield = 2 | | --- + 1 | -1 |
| | cd | |
| |__ __| |
|__ __|
where a = dividends and interest earned during the period
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
Yields for the 30-day period ended January 31, 1990
<TABLE>
<CAPTION>
a b c d Yield
<S> <C> <C> <C> <C> <C>
Managed $17,972.60 $4,163.76 400.000.000 $9.6339 4.34%
------
Bond 14,324.21 2,083.89 200,000.000 9.7018 7.69%
------
Equity 202.21 2,081.37 200,000.000 9.5659 -0.81%
------
</TABLE>
- 4 -
<PAGE> 10
MANAGED SERIES - 30-Day Yield (Jan/90)
<TABLE>
<CAPTION>
Nominal Security Coupon Maturity Mkt Value Price Accrued Total Yield Income (a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
800,000 UNITSA 8.1250 15-Aug-19 771,496.00 96.43700000 30,027.17 801,523.17 8.454207676 5,646.87
550,000 UNITSA 7.8750 15-Nov-99 530,233.00 96.40600000 9,332.53 539,565.53 8.418280266 3,785.18
100,000 CITICO 8.6250 15-Nov-94 97,869.60 97.86960000 1,820.83 99,690.43 9.178688998 762.52
100,000 GENMOA 8.4000 01-Aug-93 97,629.20 97.62920000 4,200.00 101,829.20 9.206998584 781.28
100,000 HOUSCO 8.4000 03-Aug-94 97,073.80 97.07380000 4,153.33 101,227.13 9.207296412 776.69
100,000 FORMOT 8.2500 15-May-96 95,890.20 95.89020000 1,741.67 97,631.87 9.118480062 741.88
100,000 ICIN 8.8750 15-Nov-06 94,702.80 94.70280000 1,873.61 96,576.41 9.509802426 765.35
105,000 EXXON 8.2500 15-Oct-94 103,308.35 98.38890526 2,550.62 105,858.97 8.668812344 764.73
100,000 PACTEL 7.8000 01-Mar-07 88,050.70 88.05070000 3,250.00 91,300.70 9.199287254 699.92
100,000 PHILAD 7.5000 15-Jan-99 87,023.00 87.02300000 333.33 87,356.33 9.699978266 706.13
100,000 DUKPOW 7.3750 01-Dec-02 85,462.70 85.46270000 1,229.17 86,691.87 9.156645480 661.51
105,000 BEATR 13.7500 01-Nov-97 108,150.00 103.00000000 3,328.65 111,478.65 13.11045612 1,217.95
1,000 AMOCO 53,500.00 53.50000000
800 PENNEI 0.56 53,500.00 66.87500000 448.00 149.33
2,000 MASCO 0.13 Ex Jan 8 48,000.00 24.00000000 260.00 86.67
200 MASCO 0.13 Bot Jan 26 4,800.00 24.00000000 1.16
900 TEXAIC 52,425.00 58.25000000
1,300 SEAROE 51,837.50 39.87500000
1,300 PPGIND 51,675.00 39.75000000
1,350 DUPOND 51,300.00 38.00000000
700 WESTEL 50,575.00 72.25000000
800 GENELE 49,800.00 62.25000000
900 TORCH 0.35 Ex Jan 4 44,775.00 49.75000000 315.00 105.00
100 TORCH 0.35 Bot Jan 26 4,975.00 49.75000000 1.56
1,100 MAYDEP 49,500.00 45.00000000
1,900 BANAME 49,400.00 26.00000000
500 IBM 49,250.00 98.50000000
1,900 KEYCOR 49,162.50 25.87500000
2,450 ARCDAN 0.025 49,000.00 20.00000000 61.25 20.42
1,500 MCDONA 48,937.50 32.62500000
1,500 BORDEN 48,750.00 32.50000000
1,250 COREFI 48,750.00 39.00000000
600 UNILEV 48,225.00 80.37500000
700 BRITPE 48,125.00 68.75000000
1,600 BANCON 47,600.00 29.75000000
800 MOBILC 0.65 47,300.00 59.12500000 520.00 173.33
1,500 ALCO 47,250.00 31.50000000
1,000 EXXON 47,000.0O 47.00000000
900 BRISMS 46,800.00 52.00000000
1,200 EASTKO 45,600.00 38.00000000
800 ITT 43,200.00 54.00000000
1,100 AMERTT 42,900.00 39.00000000
800 GREAAP 0.175 41,400.00 51.75000000 140.00 46.67
800 NCR 0.33 Ex Jan 8 53,700.00 67.12500000 264.00 88.00
(200) NCR 0.33 Sold Jan 17 (13,425.00) 67.12500000 (9.53)
------------ --------- ------------ ---------
3,712,476.85 65,849.16 2,320,730.26 17,972.60
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Expenses (b) 31-Jan-90 7,856.65 Avg Shrs O/S (c) Yield = [((a-b/cd) + 1) - 6 -1] x 2
31-Dec-89 3,692.89 400,000.000 = 4.34%
-------- ====
4,163.76 Ending NAV/Shr (d) 9.6339
</TABLE>
<PAGE> 11
BOND SERIES - 30-Day Yield (Jan/90)
<TABLE>
<CAPTION>
Nominal Security Coupon Maturity Mkt Value Price Accrued Total Yield Income
(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
550,000 UNITSA 8.1250 15-Aug-19 530,403.50 96.43700000 20,643.68 551,047.18 8.454207676 3,882.22
400,000 UNITSA 7.8750 15-Nov-99 385,624.00 96.40600000 6,787.29 392,411.29 8.418280266 2,752.86
100,000 CITICO 8.6250 15-Nov-94 97,869.60 97.86960000 1,820.83 99,690.43 9.178688998 762.52
100,000 GENMOA 8.4000 01-Aug-93 97,629.20 97.62920000 4,200.00 101,829.20 9.206998584 781.28
100,000 HOUSCO 8.4000 03-Aug-94 97,073.80 97.07380000 4,153.33 101,227.13 9.207296412 776.69
100,000 FORMOT 8.2500 15-May-96 95,890.20 95.89020000 1,741.67 97,631.87 9.118480062 741.88
100,000 ICIN 8.8750 15-Nov-06 94,702.80 94.70280000 1,873.61 96,576.41 9.509802426 765.35
95,000 EXXON 8.2500 15-Oct-94 93,469.46 98.38890526 2,307.71 95,777.17 8.668812344 691.90
100,000 PACTEL 7.8000 01-Mar-07 88,050.70 88.05070000 3,250.00 91,300.70 9.199287254 699.92
100,000 PHILAD 7.5000 15-Jan-99 87,023.00 87.02300000 333.33 87,356.33 9.699978266 706.13
100,000 DUKPOW 7.3750 01-Dec-02 85,462.70 85.46270000 1,229.17 86,691.87 9.156645480 661.51
95,000 BEATR 13.7500 01-Nov-97 97,850.00 103.00000000 3,011.63 100,861.63 13.11045612 1,101.95
------------ --------- ------------ ---------
1,851,048.96 51,352.25 1,902,401.21 14,324.21
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Expenses (b) 31-Jan-90 3,934.42 Avg Shrs O/S (c) Yield = [((a-b/cd) + 1) - 6 -1] x 2
31-Dec-89 1,850.53 200,000.000 = 7.69%
-------- ====
2,083.89 Ending NAV/Shr (d) 9.7018
</TABLE>
<PAGE> 12
EQUITY SERIES - 30-Day Yield (Jan/90)
<TABLE>
<CAPTION>
Nominal Security Coupon/ Maturity Mkt Value Price Accrued Total Yield Income
Rate (a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2,500 MASCO 0.13 Ex Jan 8 60,000.00 24.00000000 325.00 108.33
300 MASCO 0.13 Bot Jan 26 7,200.00 24.00000000 1.73
800 UNILEV 64,300.00 80.37500000
1,200 AMOCO 64,200.00 53.50000000
1,100 TEXAIC 64,075.00 58.25000000
1,600 SEAROE 63,800.00 39.87500000
1,600 PPGIND 63,600.00 39.75000000
1,650 DUPOND 62,700.00 38.00000000
1,000 GENELE 62,250.00 62.25000000
1,900 MCDONA 61,987.50 32.62500000
900 BRITPE 61,875.00 68.75000000
1,900 BORDEN 61,750.00 32.50000000
1,300 EXXON 61,100.00 47.00000000
3,050 ARCDAN 0.025 61,000.00 20.00000000 76.25 25.42
1,550 COREFI 60,450.00 39.00000000
900 PENNEI 0.56 60,187.50 66.87500000 504.00 168.00
1,900 ALCO 59,850.00 31.50000000
2,300 BANAME 59,800.00 26.00000000
1,100 TORCH 0.35 Ex Jan 4 54,725.00 49.75000000 385.00 128.33
100 TORCH 0.35 Bot Jan 26 4,975.00 49.75000000 1.56
2,300 KEYCOR 59,512.50 25.87500000
2,000 BANCON 59,500.00 29.75000000
1,000 MOBILC 0.65 59,125.00 59.12500000 650.00 216.67
600 IBM 59,100.00 98.50000000
800 WESTEL 57,800.00 72.25000000
1,100 BRISMS 57,200.00 52.00000000
1,500 EASTKO 57,000.00 38.00000000
1,400 AMERTT 54,600.00 39.00000000
1,000 ITT 54,000.00 54.00000000
800 NCR 0.33 Ex Jan 8 53,700.00 67.12500000 264.00 88.00
(200) NCR 0.33 Sold Jan 17 (13,425.00) 67.12500000 (9.53)
1,000 GREAAP 0.175 51,750.00 51.75000000 175.00 58.33
1,150 MAYDEP 51,750.00 45.00000000
------------ -------- ---- ------
1,781,437.50 2,379.25 0.00 786.84
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Expenses (b) 31-Jan-90 3,919.70 Avg Shrs O/S (c) Yield = [((a-b/cd) + 1) - 6 -1] x 2
31-Dec-89 1,838.33 200,000.000 = -0.81%
-------- =====
2,081.37 Ending NAV/Shr (d) 9.5659
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1996 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
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 7,686
<INVESTMENTS-AT-VALUE> 7,686
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 7,687
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 88
<TOTAL-LIABILITIES> 88
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,592
<SHARES-COMMON-STOCK> 760
<SHARES-COMMON-PRIOR> 461
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,599
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 322
<OTHER-INCOME> 0
<EXPENSES-NET> (49)
<NET-INVESTMENT-INCOME> 273
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 273
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 273
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,476
<NUMBER-OF-SHARES-REDEEMED> (1,204)
<SHARES-REINVESTED> 27
<NET-CHANGE-IN-ASSETS> 2,990
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 30
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 65
<AVERAGE-NET-ASSETS> 6,000
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.45)
<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>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1996 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
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 16,956
<INVESTMENTS-AT-VALUE> 17,596
<RECEIVABLES> 141
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 3
<TOTAL-ASSETS> 17,740
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,767
<TOTAL-LIABILITIES> 1,767
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,319
<SHARES-COMMON-STOCK> 1,354
<SHARES-COMMON-PRIOR> 1377
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 640
<NET-ASSETS> 15,973
<DIVIDEND-INCOME> 99
<INTEREST-INCOME> 554
<OTHER-INCOME> 0
<EXPENSES-NET> 178
<NET-INVESTMENT-INCOME> 474
<REALIZED-GAINS-CURRENT> 1,259
<APPREC-INCREASE-CURRENT> (660)
<NET-CHANGE-FROM-OPS> 1073
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 474
<DISTRIBUTIONS-OF-GAINS> 1259
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 315
<NUMBER-OF-SHARES-REDEEMED> (591)
<SHARES-REINVESTED> 253
<NET-CHANGE-IN-ASSETS> (1,060)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 94
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 178
<AVERAGE-NET-ASSETS> 18,749
<PER-SHARE-NAV-BEGIN> 12.37
<PER-SHARE-NII> 0.32
<PER-SHARE-GAIN-APPREC> 0.27
<PER-SHARE-DIVIDEND> (0.32)
<PER-SHARE-DISTRIBUTIONS> (0.84)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.80
<EXPENSE-RATIO> 0.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1996 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> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 6,991
<INVESTMENTS-AT-VALUE> 7,011
<RECEIVABLES> 88
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 7,100
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 387
<TOTAL-LIABILITIES> 387
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,687
<SHARES-COMMON-STOCK> 648
<SHARES-COMMON-PRIOR> 525
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19
<NET-ASSETS> 6,713
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 438
<OTHER-INCOME> 0
<EXPENSES-NET> 62
<NET-INVESTMENT-INCOME> 376
<REALIZED-GAINS-CURRENT> (14)
<APPREC-INCREASE-CURRENT> (40)
<NET-CHANGE-FROM-OPS> 322
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 376
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 174
<NUMBER-OF-SHARES-REDEEMED> (98)
<SHARES-REINVESTED> 47
<NET-CHANGE-IN-ASSETS> 1,219
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 33
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 71
<AVERAGE-NET-ASSETS> 6,568
<PER-SHARE-NAV-BEGIN> 10.45
<PER-SHARE-NII> 0.60
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.60
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.36
<EXPENSE-RATIO> 0.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1996 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> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 8,873
<INVESTMENTS-AT-VALUE> 9,462
<RECEIVABLES> 49
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,511
<PAYABLE-FOR-SECURITIES> 29
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 964
<TOTAL-LIABILITIES> 993
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,924
<SHARES-COMMON-STOCK> 655
<SHARES-COMMON-PRIOR> 610
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 588
<NET-ASSETS> 8,518
<DIVIDEND-INCOME> 97
<INTEREST-INCOME> 15
<OTHER-INCOME> 0
<EXPENSES-NET> 96
<NET-INVESTMENT-INCOME> 16
<REALIZED-GAINS-CURRENT> 934
<APPREC-INCREASE-CURRENT> (338)
<NET-CHANGE-FROM-OPS> 612
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16)
<DISTRIBUTIONS-OF-GAINS> (934)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 136
<NUMBER-OF-SHARES-REDEEMED> (232)
<SHARES-REINVESTED> 142
<NET-CHANGE-IN-ASSETS> 273
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 49
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 9,670
<PER-SHARE-NAV-BEGIN> 13.51
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.80
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> (1.31)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.00
<EXPENSE-RATIO> 0.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1996 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> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 5,014
<INVESTMENTS-AT-VALUE> 6,518
<RECEIVABLES> 18
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 838
<TOTAL-ASSETS> 7,374
<PAYABLE-FOR-SECURITIES> 29
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 964
<TOTAL-LIABILITIES> 993
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,168
<SHARES-COMMON-STOCK> 478
<SHARES-COMMON-PRIOR> 469
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,504
<NET-ASSETS> 6,677
<DIVIDEND-INCOME> 8
<INTEREST-INCOME> 77
<OTHER-INCOME> 0
<EXPENSES-NET> 72
<NET-INVESTMENT-INCOME> 13
<REALIZED-GAINS-CURRENT> 615
<APPREC-INCREASE-CURRENT> 143
<NET-CHANGE-FROM-OPS> 771
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (13)
<DISTRIBUTIONS-OF-GAINS> (615)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 100
<NUMBER-OF-SHARES-REDEEMED> (107)
<SHARES-REINVESTED> 17
<NET-CHANGE-IN-ASSETS> 310
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 42
<AVERAGE-NET-ASSETS> 7,001
<PER-SHARE-NAV-BEGIN> 13.55
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 1.68
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> (1.27)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.96
<EXPENSE-RATIO> 0.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1996
AUDITED FINANCIAL STATEMENTS OF CANADA LIFE OF AMERICA SERIES FUND, INC. FOR
THE 12 MONTH PERIOD ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> INTERNATIONAL EQUITY
<MULTIPLIER> 1,000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2,651
<INVESTMENTS-AT-VALUE> 3,069
<RECEIVABLES> 3
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 405
<TOTAL-ASSETS> 3,477
<PAYABLE-FOR-SECURITIES> 102
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 70
<TOTAL-LIABILITIES> 172
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,885
<SHARES-COMMON-STOCK> 280
<SHARES-COMMON-PRIOR> 207
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 418
<NET-ASSETS> 3,305
<DIVIDEND-INCOME> 65
<INTEREST-INCOME> 6
<OTHER-INCOME> 0
<EXPENSES-NET> 32
<NET-INVESTMENT-INCOME> 39
<REALIZED-GAINS-CURRENT> 25
<APPREC-INCREASE-CURRENT> 400
<NET-CHANGE-FROM-OPS> 464
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (39)
<DISTRIBUTIONS-OF-GAINS> (25)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 96
<NUMBER-OF-SHARES-REDEEMED> (33)
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 1,220
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 42
<AVERAGE-NET-ASSETS> 2,694
<PER-SHARE-NAV-BEGIN> 10.09
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 1.83
<PER-SHARE-DIVIDEND> (0.16)
<PER-SHARE-DISTRIBUTIONS> (0.10)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.82
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
