Manning & Napier Insurance Fund, Inc.
Manning & Napier Bond Portfolio
Manning & Napier Equity Portfolio
Manning & Napier Small Cap Portfolio
Manning & Napier Moderate Growth Portfolio
Manning & Napier Growth Portfolio
Manning & Napier Maximum Horizon Portfolio
Annual Report
December 31, 1997
<PAGE>
Management Discussion and Analysis
Dear Contract Owner:
Welcome to 1998 and to another year with the Manning & Napier Variable Annuity
and the Manning & Napier New York Variable Annuity!! Over the past year, we
have watched a "challenging" stock market with its trials and tribulations.
We expected the markets to be volatile and unstable, which held true, and we
watched as the market continued to climb over the year, with notable setbacks
such as the plummet in October of more than 550 points on the Dow Jones
Industrial Average. We approached the stock market cautiously in 1997 which
helped our positioning of our series.
We have seen a steady rise in the globalization of industries and economies.
As stated previously, we believe the U.S. stock market in general is
overvalued. As the market climbed during 1997, many stocks which had been in
our portfolios were sold and their gains locked in. At the same time, we have
been finding fewer promising domestic stocks which have met our investment
criteria. Opportunities have arisen elsewhere and we have been broadening our
universe in searching for them. Throughout the year we have increased our
holdings in foreign stocks while stepping back in the domestic realm.
Bonds, which had an exceptionally strong year, ended the year on a strong note
with some price appreciation. We continue to be optimistic about
opportunities in the bond market, more so than in the domestic stock market.
With inflation low and interest rates declining, long-term bonds have had
attractive real yields. Because lower interest rates mean higher bond prices,
this will benefit bonds, particularly bonds with longer maturities, and we
have positioned our bond holdings accordingly.
As we head into 1998, we expect continued volatility in the markets although
there are reasons to be optimistic. Whereas the overall market appears to be
quite expensive, there are definitely pockets of value within it. We feel it
is very important to be selective in our efforts to compete effectively in
this market. Our investment approach coincides with this belief, and we have
positioned the portfolios in accordance with our outlook and with their
individual objectives.
Thank you for your continued support in the Manning & Napier Variable Annuity
and the Manning & Napier New York Variable Annuity. We will make every effort
to warrant your continued confidence in our services.
We wish you a very happy, healthy, and prosperous 1998.
Sincerely,
MANNING & NAPIER ADVISORS, INC.
1
<PAGE>
Performance Update as of December 31, 1997
BOND PORTFOLIO
Manning & Napier approaches the management of its fixed income portfolio with
the same philosophy as it does the equity arena. We look for the pockets of
value within the market while seeking to protect the portfolio from any undue
risk. The outlook on the bond market is good, and our main emphasis is on the
long-term overview. As inflation stayed in check throughout 1997, we believe
that long-term interest rates will head even lower, accentuating the prices of
the longer-term bonds. We did see some volatility in the short-term arena
earlier in the year. We continue to monitor the short-term factors that
impact the market but only to compare them to the relative effect on our
long-term overview, rather than managing our portfolio for the short-term.
During 1997, the federal government trimmed the budget deficit, and Alan
Greenspan forecast lower than normal economic growth for 1998 as to somewhere
in the 2 % to 3% range (instead of 3% plus). Due to our outlook for slow
economic growth, stable inflation, and low interest rates, we have positioned
our bond portfolio with longer than average durations versus its benchmark.
As we have stated on more than one occasion, the key to success is to focus on
the long-term trends and not the everyday ups and downs of the market.
<TABLE>
<CAPTION>
Manning & Napier Bond Portfolio
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 10,981 9.81% 9.81%
Inception 1 $ 10,915 9.15% 7.79%
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Corporate/Government
Bond Index2
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 10,978 9.78% 9.78%
Inception 1 $ 11,061 10.61% 9.03%
</TABLE>
<graphic>
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Manning & Napier Merrill Lynch Corporate/Government
date Bond Portfolio Bond Index
11/01/96 10,000 10,000
12/31/96 9,940 10,076
03/31/97 9,770 9,997
06/30/97 10,140 10,357
09/30/97 10,523 10,720
12/31/97 10,915 11,061
</TABLE>
<graphic>
<pie chart>
Data for pie chart to follow:
Portfolio Composition - Bond Portfolio - As of 12/31/97
U.S. Treasury Securities - 51%
U.S. Govenment Agencies - 45%
Cash, short-term investments and other assets less liabilities - 4%
<graphic>
<pie chart>
Data for pie chart to follow:
Effective Maturity - Bond Portfolio - As of 12/31/97*
Less than 1 Year - 7.6%
1 - 3 Years - 23.2%
3 - 5 Years - 15.9%
5 - 10 Years - 23.8%
Over 10 Years - 29.5%
* As a percentage of total investments
Please see Page 8 for Footnotes
2
<PAGE>
Performance Update as of December 31, 1997
EQUITY PORTFOLIO
The objective of the Equity Portfolio is to provide long-term capital growth,
without regard to volatility. Stocks are chosen for inclusion in this
portfolio through rigorous analysis by our team of stock analysts. As we head
into 1998, we believe that it is extremely important to be selective in our
choices due to the overvalued atmosphere of large caps in the U.S. markets.
As the U.S. Stock market climbed higher in general in 1997, there were some
notable downturns and we took advantage of them to purchase equities at
attractive valuations.
With the market at extremely high valuations, and in keeping with our overview
concerning the trend toward globalization, we have put more emphasis on
international securities in the portfolio. In choosing international stocks
for the portfolio, we use the same time-tested investment strategies that we
do in choosing domestic stocks. Markets around the were volatile late in the
year, but the Equity Portfolio still turned in a strong return for 1997.
<TABLE>
<CAPTION>
Manning & Napier Equity Portfolio
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 12,146 21.46% 21.46%
Inception 1 $ 12,826 28.26% 23.77%
</TABLE>
<TABLE>
<CAPTION>
Standard & Poor's (S&P)
500 Total Return Index 3
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 13,332 33.32% 33.32%
Inception 1 $ 14,057 40.57% 33.88%
</TABLE>
<graphic>
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Manning & Napier Standard & Poors (S&P)
date Equity Portfolio 500 Total Return Index
11/01/96 10,000 10,000
12/31/96 10,560 10,542
03/31/97 10,720 10,827
06/30/97 12,410 12,713
09/30/97 13,238 13,665
12/31/97 12,826 14,057
</TABLE>
<graphic>
<pie chart>
Data for pie chart to follow:
<TABLE>
<CAPTION>
Portfolio Composition - Equity Portfolio - As of 12/31/97
<S> <C>
Chemicals & Allied Products 8.1%
Consumer & Allied Products 4.1%
Electronics & Electrical Equiptment 5.6%
Health Services 4.7%
Motion Picture Production 4.4%
Paper & Allied Products 7.8%
Retail 26.2%
Technical Instruments & Supplies 5.7%
Telecommunications 7.3%
Cash, Equivalents, & other assets less liabilities 2.5%
Miscellaneous * 23.6%
* Miscellaneous includes:
Amusement & Recreation Services
Crude Petroleum & Natural Gas
Diamonds
Distribution-Wholesale
Engineering Services
Food & Beverage
Industrial & Commercial Machinery
Restaurants
Utilities - Electric
</TABLE>
Please see Page 8 for Footnotes
3
<PAGE>
Performance Update as of December 31, 1997
SMALL CAP PORTFOLIO
The Small Cap portfolio contains stocks that represent companies that are less
well established, but in many cases faster growing, than mid cap stocks or
large cap stocks. In return for this faster growth potential, these stocks
have a tendency to be more volatile than a blue chip stock and in the same
regard require very discriminating choices when it comes to choosing a
particular stock.
Over the year, we focused on several themes in the portfolio; consumer
software, retail, and technical instruments and supplies. Although each stock
is individually chosen, industry-wide factors sometimes prove to be helpful in
choosing stocks with attractive valuations and favorable growth potential.
Our focus on valuations also applies to the management of the Small Cap
portfolio. Over the course of the year, many of the stocks within the
portfolio were sold when they reached the price we had set for them. Once a
stock reaches a particular sell price, it is sold as it no longer offers
significant potential to contribute to long-term return. This management style
may seem a bit conservative, but it has proven itself time and time again.
<TABLE>
<CAPTION>
Manning & Napier Small Cap Portfolio
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 11,323 13.23% 13.23%
Inception 1 $ 12,138 21.38% 18.06%
</TABLE>
<TABLE>
<CAPTION>
Standard & Poor's (S&P)
500 Total Return Index 3
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 13,332 33.32% 33.32%
Inception 1 $ 14,057 40.57% 33.88%
</TABLE>
<graphic>
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Manning & Napier Standard & Poors (S&P)
date Small Cap Portfolio 500 Total Return Index
11/01/96 10,000 10,000
12/31/96 10,720 10,542
03/31/97 10,400 10,827
06/30/97 12,730 12,713
09/30/97 13,939 13,665
12/31/97 12,138 14,057
</TABLE>
<graphic>
<pie chart>
Data for pie chart to follow:
<TABLE>
<CAPTION>
Portfolio Composition - Small Cap Portfolio - As of 12/31/97
<S> <C>
Computer Equipment 4.6%
Electronics & Electrical Equipment 8.8%
Glass Products 4.2%
Industrial & Commercial Machinery 5.4%
Paper Mills 4.2%
Primary Metal Industries 7.8%
Printing & Publishing 4.8%
Retail 10.1%
Software 11.2%
Technical Instruments & Supplies 6.6%
Transportation Equipment 5.9%
Cash, Equivalents, & liabilities less other assets 3.8%
Miscellaneous * 22.6%
* Miscellaneous includes:
Agricultural Production
Amusement & Recreation Services
Chemical & Allied Products
Direct Mail Advertising Services
Holding Company
Manufacturing-Miscellaneous
Motion Picture Production
Plastic Products - Miscellaneous
Telecommunications
Textile Mill Products
Training & Education
</TABLE>
Please see Page 8 for Footnotes
4
<PAGE>
Performance Update as of December 31, 1997
OBJECTIVE BASED PORTFOLIOS
(MODERATE GROWTH PORTFOLIO, GROWTH PORTFOLIO, & MAXIMUM HORIZON PORTFOLIO)
The Manning & Napier broad overview of the U.S. stock market identifies
opportunities in long term bonds and particular foreign securities. We
believe that the giant multinationals and the big technology stocks have been
reaching extreme valuations over the past years. We have positioned our
portfolios by reducing our holdings in the volatile technology sector and the
blue chip arena while increasing our exposure in the international markets.
Due to our disciplined management strategies, we are very selective when it
comes to the international markets, which helped to protect us from troubles
in the foreign markets and led us to underweight our holdings in Asian markets
until after the crisis occurred.
Throughout the year, the bond market rallied strongly. Our fixed income
outlook for 1998 is good, with interest rates and inflation holding at nominal
rates. The bonds with longer durations will benefit from this environment.
The use of long bonds to control stock market volatility is a key component of
our risk management strategy, and one that has proved to be beneficial over
the past year.
Each of the particular portfolios is managed toward a specific investment
objective, with the specific asset allocation adjusted throughout the year in
response to the prevailing market conditions and our economic outlook. We
will continue to attempt to manage risk based upon our long-term overview and
work aggressively to find the attractive securities to add to the portfolios.
<TABLE>
<CAPTION>
Manning & Napier
Moderate Growth Portfolio
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 11,273 12.73% 12.73%
Inception 1 $ 11,397 13.97% 11.85%
</TABLE>
<TABLE>
<CAPTION>
Lehman Brothers
Intermediate Bond Index 4
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 10,787 7.87% 7.87%
Inception 1 $ 10,859 8.59% 7.32%
</TABLE>
<TABLE>
<CAPTION>
Balanced Index 5
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 11,520 15.20% 15.20%
Inception 1 $ 11,764 17.64% 14.93%
</TABLE>
<graphic>
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Manning & Napier Lehman Brothers Balanced
date Moderate Growth Portfolio Intermediate Bond Index Index
11/01/96 10,000 10,000 10,000
12/31/96 10,110 10,067 10,211
03/31/97 10,060 10,056 10,286
06/30/97 10,710 10,352 11,036
09/30/97 11,216 10,631 11,493
12/31/97 11,397 10,859 11,764
</TABLE>
<graphic>
<pie chart>
Data for pie chart to follow:
Portfolio Composition - Moderate Growth Portfolio - As of 12/31/97
Stocks - 46.0%
Bonds - 53.8%
Cash, short-term investments, and liabilities less other assets- 0.2%
Please see Page 8 for Footnotes
5
<PAGE>
Performance Update as of December 31, 1997
Objectives-Based Portfolios
(Moderate Growth Portfolio, Growth Portfolio & Maximum Horizon Portfolio)
<TABLE>
<CAPTION>
Manning & Napier
Growth Portfolio
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 11,923 19.23% 19.23%
Inception 1 $ 12,221 22.21% 18.75%
</TABLE>
<TABLE>
<CAPTION>
Lehman Brothers
Intermediate Bond Index 4
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 10,787 7.87% 7.87%
Inception 1 $ 10,859 8.59% 7.32%
</TABLE>
<TABLE>
<CAPTION>
Balanced Index 6
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 12,119 21.19% 21.19%
Inception 1 $ 12,495 24.95% 21.03%
</TABLE>
<graphic>
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Manning & Napier Lehman Brothers Balanced
date Growth Portfolio Intermediate Index Index
11/01/96 10,000 10,000 10,000
12/31/96 10,250 10,067 10,311
03/31/97 10,290 10,056 10,421
06/30/97 11,440 10,352 11,520
09/30/97 12,241 10,631 12,143
12/31/97 12,221 10,859 12,495
</TABLE>
<graphic>
<pie chart>
Data for pie chart to follow:
Portfolio Composition - Growth Portfolio - As of 12/31/97
Stocks - 61.2%
Bonds - 38.3%
Cash, short-term investments and liabilites less other assets - 0.5%
Please see Page 8 for Footnotes
6
<PAGE>
Objectives-Based Portfolios
(Moderate Growth Portfolio, Growth Portfolio & Maximum Horizon Portfolio)
<TABLE>
<CAPTION>
Manning & Napier
Maximum Horizon Portfolio
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 12,369 23.69% 23.69%
Inception 1 $ 12,913 29.13% 24.49%
</TABLE>
<TABLE>
<CAPTION>
Standard & Poor's (S&P)
500 Total Return Index 3
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/97 Investment Cumulative Annual
One Year $ 13,332 33.32% 33.32%
Inception 1 $ 14,057 40.57% 33.88%
</TABLE>
<graphic>
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Manning & Napier Standard & Poors (S&P)
date Maximum Horizon Portfolio 500 Total Return Index
11/01/96 10,000 10,000
12/31/96 10,440 10,542
03/31/97 10,540 10,827
06/30/97 12,190 12,713
09/30/97 13,234 13,665
12/31/97 12,913 14,057
</TABLE>
<pie chart>
Data for pie chart to follow:
Portfolio Composition - Maximum Horizon Portfolio - As of 12/31/97
Stocks 99.2%
Bonds, Cash, short-term investments and liabilities less other assets - 0.8%
Please see Page 8 for Footnotes
7
<PAGE>
Notes to Performance Update
1 Performance numbers for the Funds and Indices are calculated from November
1, 1996, the Funds' inception date. The Funds' performance is historical and
may not be indicative of future results.
2 The Merrill Lynch Corporate/Government Bond Index is a market value
weighted measure of approximately 5,814 corporate and government bonds. The
Index is comprised of investment grade securities with maturities greater than
one year. The Index returns assume reinvestment of coupons and, unlike Fund
returns, do not reflect any fees or expenses.
3 The Standard & Poor's (S&P) 500 Total Return Index is an unmanaged
capitalization_weighted measure of 500 widely held common stocks listed on the
New York Stock Exchange, American Stock Exchange, and Over_the_Counter market.
The Index returns assume reinvestment of income and, unlike Fund returns, do
not reflect any fees or expenses.
4 The Lehman Brothers Intermediate Bond Index is a market value weighted
measure of approximately 3,940 corporate and government securities. The
Index is comprised of investment grade securities with maturities greater
than one year but less than ten years. The Index returns assume reinvestment
of income and, unlike Fund returns, do not reflect any fees or expenses.
5 The 30-70 Blended Index is 30 % S&P 500 Total Return Index (see note 3)
and 70% Lehman Brothers Intermediate Bond Index (see note 4). The Index
returns assume reinvestment of income and, unlike Fund returns, do not reflect
any fees or expenses.
6 The 50-50 Blended Index is 50 % S&P 500 Total Return Index (see note 3)
and 50% LehmanBrothers Aggregate Bond Index. The Lehman Brothers Aggregate
Bond Index is a market value weighted measure of approximately 6,331
corporate, government, and mortgage backed securities. The Index is comprised
of investment grade securities with maturities greater than one year. The
Index returns assume reinvestment of income and, unlike Fund returns, do
not reflect any fees or expenses.
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - December 31, 1997
<S> <C> <C>
PRINCIPAL VALUE
MANNING & NAPIER BOND PORTFOLIO AMOUNT/SHARES (NOTE 2)
U.S. TREASURY SECURITIES - 50.95%
U.S. Treasury Note, 6.50%, 10/15/2006 $ 30,000 $ 31,416
U.S. Treasury Bond, 6.875%, 8/15/2025 35,000 39,014
---------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $66,663) 70,430
---------
U.S. GOVERNMENT AGENCIES - 44.54%
Federal Home Loan Bank Bond, 5.905%, 10/23/1998 10,000 10,011
Federal Home Loan Mortgage Bond, 6.13%, 8/19/1999 15,000 15,074
Federal National Mortage Association Bond, 7.55%,
4/22/2002 15,000 15,903
Student Loan Marketing Association, 7.50%, 3/8/2000 15,000 15,504
Tennessee Valley Authority, 6.875%, 1/15/2002 5,000 5,079
---------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $61,405) 61,571
---------
SHORT-TERM INVESTMENTS - 4.54 %
Dreyfus U.S. Treasury Money Market Reserves
(Identified Cost $6,285) 6,285 6,285
---------
TOTAL INVESTMENTS - 100.03 %
(Identified Cost $134,353) 138,286
---------
LIABILITIES, LESS OTHER ASSETS - (0.03%) (44)
---------
NET ASSETS - 100% $138,242
=========
</TABLE>
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At December 31, 1997, the net unrealized appreciation based on
identified cost for federal income tax purposes of $134,353 was
as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $3,952
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (19)
-------
UNREALIZED APPRECIATION - NET $3,933
=======
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Investment Portfolio - December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
MANNING & NAPIER EQUITY PORTFOLIO SHARES (NOTE 2)
COMMON STOCK - 97.5%
AMUSEMENT & RECREATION SERVICES - 1.9%
Resorts World Bhd - ADR (Note 7) 375 $ 3,155
---------
CHEMICALS & ALLIED PRODUCTS - 8.1%
Pharmacia & Upjohn, Inc. 200 7,325
R.P. Scherer Corp.* 100 6,100
---------
13,425
---------
CONSUMER PRODUCTS - MISCELLANEOUS - 4.1%
Unilever plc - ADR (Note 7) 200 6,900
---------
CRUDE PETROLEUM & NATURAL GAS - 3.6%
YPF Sociedad Anonima - ADR (Note 7) 175 5,983
---------
DIAMONDS - 1.5%
De Beers Centenary AG - ADR (Note 7) 125 2,555
---------
DISTRIBUTION - WHOLESALE - 2.6%
Unisource Worldwide, Inc. 300 4,275
---------
ELECTRONICS & ELECTRICAL EQUIPMENT - 5.6%
Coleman Company, Inc.* 400 6,425
Motorola, Inc. 50 2,853
---------
9,278
---------
ENGINEERING SERVICES - 2.7%
Jacobs Engineering Group, Inc.* 175 4,441
---------
FOOD & BEVERAGE - 7.7%
Diageo plc - ADR (Note 7) 156 5,908
---------
HEALTH SERVICES - 4.7%
MedPartners, Inc.* 350 7,831
---------
INDUSTRIAL & COMMERCIAL MACHINERY - 3.0%
York International Corp. 125 4,945
---------
MOTION PICTURE PRODUCTION - 4.4%
Viacom, Inc. - Class B* 175 7,251
---------
PAPER & ALLIED PRODUCTS - 7.8%
Fort James Corp. 206 7,880
Kimberly-Clark Corp. 100 4,931
---------
12,811
---------
RESTAURANTS - 2.9%
McDonald's Corp. 100 4,775
---------
RETAIL - 26.2%
RETAIL - CATALOG & MAIL ORDER - 9.9%
Comcast Corp. - Class A 250 7,891
Fingerhut Companies, Inc. 400 8,550
---------
16,441
---------
</TABLE>
The accompanying notes are an intergral part of the financial statements.
10
<PAGE>
Investment Portfolio - December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
MANNING & NAPIER EQUITY PORTFOLIO (continued) SHARES (NOTE 2)
RETAIL (continued)
RETAIL - SPECIALTY STORES - 16.3%
Fabri-Centers of America - Class B* 200 $ 4,137
Hancock Fabrics, Inc. 450 6,525
Home Depot, Inc. 112 6,594
Tandy Corp. 250 9,641
---------
26,897
---------
43,338
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 5.7%
Eastman Kodak, Co. 100 6,081
Millipore Corp. 100 3,394
---------
9,475
---------
TELECOMMUNICATIONS - 7.3%
Compania Anonima Nacional Telefonos de
Venezuela (CANTV) - ADR (Note 7) 150 6,244
Telecomunicacoes Brasileiras(Telebras)-ADR
(Note 7) 50 5,822
---------
12,066
---------
UTILITIES - ELECTRIC - 1.8%
Enersis S.A. - ADR (Note 7) 100 2,900
---------
TOTAL COMMON STOCK
(Identified Cost $136,328) 161,312
---------
SHORT-TERM INVESTMENTS - 4.1%
Dreyfus U.S. Treasury Money Market Reserves
(Identified Cost $6,815) 6,815 6,815
---------
TOTAL INVESTMENTS - 101.6%
(Identified Cost $143,143) 168,127
LIABILITIES, LESS OTHER ASSETS - (1.6)% (2,638)
---------
NET ASSETS - 100% $165,489
=========
</TABLE>
* Non-income producing security.
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At December 31, 1997, the net unrealized appreciation based on
identified cost for federal income tax purposes of $143,285 was
as follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost $33,750
Aggregate gross unrealized depreciation for all investments in
which there was an excess of tax cost over value (8,908)
--------
UNREALIZED APPRECIATION - NET $24,842
========
</TABLE>
The accompnaying notes are an integral part of the financial statements.
11
<PAGE>
Investment Portfolio - December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
MANNING & NAPIER SMALL CAP PORTFOLIO SHARES (NOTE 2)
COMMON STOCK - 96.2%
AGRICULTURAL PRODUCTION - 2.0%
Sylvan, Inc.* 225 $ 3,150
---------
AMUSEMENT & RECREATION SERVICES - 1.7%
Grand Casinos, Inc.* 200 2,725
---------
CHEMICAL & ALLIED PRODUCTS - 3.5%
Orion-yhtyma OY - B Shares (Finland) (Note 7) 210 5,551
---------
COMPUTER EQUIPMENT- 4.6%
Bell & Howell Co.* 300 7,256
---------
DIRECT MAIL ADVERTISING SERVICES - 1.8%
Harte-Hanks Communications, Inc. 75 2,784
---------
ELECTRONICS & ELECTRICAL EQUIPMENT - 8.8%
Coleman Company, Inc.* 425 6,827
Glenayre Technologies, Inc.* 275 2,716
Harman International Industries, Inc. 100 4,244
---------
13,787
---------
GLASS PRODUCTS - 4.2%
Libbey, Inc. 175 6,628
---------
HOLDING COMPANIES - 1.0%
C.P. Pokphand Co. (Hong Kong) (Note 7) 10,000 1,574
---------
INDUSTRIAL & COMMERCIAL MACHINERY - 5.4%
Comfort Systems USA, Inc.* 225 4,444
NN Ball & Roller, Inc. 450 3,994
---------
8,438
---------
MANUFACTURING - MISCELLANEOUS - 3.8%
Penn Engineering & Manufacturing Corp. 250 6,000
---------
MOTION PICTURE PRODUCTION - 1.7%
Groupe AB SA* - ADR (Note 7) 425 2,736
---------
PAPER MILLS - 4.2%
Schweitzer-Mauduit International, Inc. 175 6,519
---------
PLASTIC PRODUCTS - MISCELLANEOUS - .02%
Pt Tri Polyta Indonesia -ADR (Note 7) 525 361
---------
PRIMARY METAL INDUSTRIES - 7.8%
American Superconductor Corp.* 250 2,125
Gibraltar Steel Corp.* 275 5,431
Wolverine Tube, Inc.* 150 4,650
---------
12,206
---------
PRINTING & PUBLISHING - 4.8%
Scholastic Corp.* 200 7,500
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Investment Portfolio - December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
MANNING & NAPIER SMALL CAP PORTFOLIO (continued) SHARES (NOTE 2)
RETAIL - 10.1%
RETAIL - RECREATIONAL GOODS - 3.6%
West Marine, Inc.* 250 $ 5,594
---------
RETAIL - SPECIALTY STORES - 6.5%
Hancock Fabrics, Inc. 300 4,350
Loehmann's Holdings, Inc. 375 2,156
Talbots, Inc. 200 3,625
---------
10,131
---------
15,725
---------
SOFTWARE - 11.2%
Apache Medical Systems, Inc.* 200 256
Broderbund Software, Inc.* 175 4,484
Electronic Arts, Inc.* 100 3,781
HCIA, Inc.* 300 3,563
Symantec Corp.* 250 5,484
---------
17,567
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 6.6%
OPTICAL SUPPLIES - 3.1%
Sola International, Inc.* 150 4,875
---------
SURGICAL & MEDICAL INSTRUMENTS - 3.5%
CardioGenesis Corp.* 100 625
Eclipse Surgical Technologies, Inc.* 300 1,763
Physio-Control International Corp.* 200 3,175
---------
5,563
---------
10,438
---------
TELECOMMUNICATIONS - 2.3%
Vimpel Communications - ADR* (Note 7) 100 3,563
---------
TEXTILE MILL PRODUCTS - 2.9%
Albany International Corp. - Class A 200 4,600
---------
TRAINING & EDUCATION - 1.7%
Firearms Training Systems, Inc.* 525 2,723
---------
TRANSPORTATION EQUIPMENT - 5.9%
Federal Signal Corp. 225 4,866
Miller Industries, Inc.* 400 4,300
---------
9,166
---------
TOTAL COMMON STOCK
(Identified Cost $152,498) 150,997
---------
SHORT-TERM INVESTMENTS - 4.9%
Dreyfus U.S. Treasury Money Market Reserves
(Identified Cost $7,614) 7,614 7,614
---------
TOTAL INVESTMENTS - 101.1%
(Identified Cost $160,112) 158,611
LIABILITIES, LESS OTHER ASSETS - (1.1)% (1,813)
---------
NET ASSETS - 100% $156,798
=========
</TABLE>
* Non-income producing security
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Investment Portfolio - December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
MANNING & NAPIER SMALL CAP PORTFOLIO (continued)
FEDERAL TAX INFORMATION:
At December 31, 1997, the net unrealized depreciation based on
identified cost for federal income tax purposes of $160,112 was
as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $ 16,384
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (17,885)
---------
UNREALIZED DEPRECIATION - NET $ (1,501)
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Investment Portfolio - December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Value
MANNING & NAPIER MODERATE GROWTH PORTFOLIO SHARES (Note 2)
COMMON STOCK - 46.0%
AMUSEMENT & RECREATIONAL SERVICES - 0.6%
Resorts World Bhd. - ADR (Note 7) 100 $ 841
---------
CHEMICALS & ALLIED PRODUCTS - 4.6%
Pharmacia & Upjohn, Inc. 100 3,663
R.P. Scherer Corp.* 50 3,050
---------
6,713
---------
COMPUTER EQUIPMENT - 1.7%
International Game Technology 100 2,525
---------
CONSUMER PRODUCTS - MISCELLANEOUS - 2.4%
Unilever plc - ADR (Note 7) 100 3,450
---------
CRUDE PETROLEUM & NATURAL GAS - 4.2%
Petroleo Brasileiro S.A. (Petrobras) - ADR (Note 7) 125 2,923
Union Texas Petroleum Holdings, Inc. 150 3,122
---------
6,045
---------
DIAMONDS- 0.7%
De Beers Centenary AG - ADR (Note 7) 50 1,022
---------
DISTRIBUTION - WHOLESALE - 2.0%
Unisource Worldwide, Inc. 200 2,850
---------
ELECTRONIC EQUIPMENT - 2.0%
Motorola, Inc. 50 2,853
---------
ENGINEERING SERVICES - 0.4%
Jacobs Engineering Group, Inc.* 25 634
---------
FOOD & BEVERAGE - 3.8%
Allied Domecq plc - ADR (Note 7) 350 3,167
Diageo plc - ADR (Note 7) 62 2,348
---------
5,515
---------
HEALTH SERVICES - 1.9%
MedPartners, Inc.* 125 2,797
---------
INDUSTRIAL & COMMERCIAL MACHINERY - 0.7%
York International Corp. 25 989
---------
MANAGEMENT SERVICES - 1.3%
National Data Corp. 50 1,806
---------
MOTION PICTURES - 2.9%
Viacom, Inc. - Class B* 100 4,144
---------
RESTAURANTS - 4.1%
McDonald's Corp. 125 5,969
---------
RETAIL - 0.8%
Hancock Fabrics, Inc. 75 1,088
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 8.1%
Eastman Kodak Co. 75 4,561
Mallinckrodt, Inc. 100 3,800
Millipore Corp. 100 3,394
---------
11,755
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Investment Portfolio - December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Shares/Principal Value
MANNING & NAPIER MODERATE GROWTH PORTFOLIO (continued) Amount (Note 2)
TELECOMMUNICATIONS- 3.8%
Compania Anonima Nacional Telefonos de
Venezuela (CANTV) - ADR(Note 7) 50 $ 2,081
Telecom Italia SpA - ADR (Note 7) 25 1,600
Telecomunicacoes Brasileiras (Telebras) -
ADR (Note 7) 15 1,747
---------
5,428
---------
TOTAL COMMON STOCK
(Identified Cost $64,542) 66,424
---------
U.S. TREASURY SECURITIES - 22.6%
U.S. TREASURY BONDS- 15.5%
U.S. Treasury Bond, 6.875%, 8/15/2025 (Identified Cost $20,487) $ 20,000 22,294
---------
U.S. TREASURY NOTES- 7.1%
U.S. Treasury Note, 5.875%, 9/30/2002 5,000 5,030
U.S. Treasury Note, 6.50%, 10/15/2006 5,000 5,236
---------
TOTAL U.S. TREASURY NOTES
(Identified Cost $10,088) 10,266
---------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $30,575 ) 32,560
---------
U.S. GOVERNMENT AGENCIES - 31.2%
Federal Home Loan Mortgage Corporation, 5.95%, 11/5/1999 15,000 15,034
Federal National Mortgage Association, 5.375%, 6/10/1998 15,000 14,979
Tennessee Valley Authority, 5.95%, 9/15/1998 15,000 15,025
---------
TOTAL U.S. GOVERNMANT AGENCIES
(Identified Cost $44,961) 45,038
---------
SHORT-TERM INVESTMENTS - 2.3%
Dreyfus U.S. Treasury Money Market Reserves (Identified Cost $3,401) 3,401 3,401
---------
TOTAL INVESTMENTS - 102.1%
(Identified Cost $143,479) 147,423
LIABILITIES, LESS OTHER ASSETS - (2.1)% (3,037)
---------
NET ASSETS - 100% $144,386
=========
</TABLE>
*Non-income producing security
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At December 31, 1997, the net unrealized appreciation based on
identified cost for federal income tax purposes of $143,479 was
as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $ 8,445
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (4,501)
--------
UNREALIZED APPRECIATION - NET $ 3,944
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Investment Portfolio - December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Value
MANNING & NAPIER GROWTH PORTFOLIO SHARES (Note 2)
COMMON STOCK - 61.2%
AMUSEMENT & RECREATIONAL SERVICES - 1.1%
Resorts World Bhd. -ADR (Note 7) 425 $ 3,576
---------
CHEMICALS & ALLIED PRODUCTS - 6.0%
Pharmacia & Upjohn, Inc. 275 10,072
R.P. Scherer Corp.* 150 9,150
---------
19,222
---------
COMPUTER EQUIPMENT - 3.7%
Bell & Howell Co.* 100 2,419
International Game Technology 375 9,469
---------
11,888
---------
CONSUMER PRODUCTS - MISCELLANEOUS - 1.1%
Unilever plc - ADR (Note 7) 100 3,450
---------
CRUDE PETROLEUM & NATURAL GAS - 4.2%
Petroleo Brasileiro S.A. (Petrobras) - ADR (Note 7) 350 8,185
Union Texas Petroleum Holdings, Inc. 250 5,203
---------
13,388
---------
DIAMONDS- 1.3%
De Beers Centenary AG - ADR (Note 7) 200 4,088
---------
DISTRIBUTION - WHOLESALE - 1.8%
Unisource Worldwide, Inc. 400 5,700
---------
ELECTRONIC EQUIPMENT - 3.1%
Motorola, Inc. 175 9,986
---------
ENGINEERING SERVICES - 0.2%
Jacobs Engineering Group, Inc.* 25 634
---------
FOOD & BEVERAGE - 4.0%
Allied Domecq plc - ADR (Note 7) 500 4,525
Diageo plc - ADR (Note 7) 218 8,257
---------
12,782
---------
HEALTH SERVICES - 2.6%
MedPartners, Inc.* 375 8,391
---------
INDUSTRIAL & COMMERCIAL MACHINERY - 1.3%
York International Corp. 100 3,956
---------
MOTION PICTURES - 3.9%
Viacom, Inc. - Class B* 300 12,431
---------
PAPER & ALLIED PRODUCTS - 3.0%
Asia Pulp & Paper Co. Ltd. - ADR (Note 7) 450 4,528
Kimberly-Clark Corp. 100 4,931
---------
9,459
---------
RESTAURANTS - 3.4%
McDonald's Corp. 225 10,744
Viad Corp. 250 4,828
---------
15,572
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Shares/Principal Value
MANNING & NAPIER GROWTH PORTFOLIO (continued) Amount (Note 2)
RETAIL - 1.3%
Fingerhut Companies, Inc. 125 $ 2,672
Hancock Fabrics, Inc. 100 1,450
---------
4,122
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 9.6%
Eastman Kodak Co. 250 15,203
Mallinckrodt, Inc. 250 9,500
Millipore Corp. 175 5,939
---------
30,642
---------
TELECOMMUNICATIONS- 8.1%
Compania Anonima Nacional Telefonos de
Venezuela (CANTV) - ADR (Note 7) 175 7,284
Frontier Corp. 200 4,813
Telecom Italia SpA - ADR (Note 7) 50 3,200
Telecomunicacoes Brasileiras (Telebras) - ADR (Note 7) 90 10,479
---------
25,776
---------
TOTAL COMMON STOCK
(Identified Cost $196,773) 195,063
---------
U.S. TREASURY SECURITIES - 38.3%
U.S. TREASURY BONDS- 19.3%
U.S. Treasury Bond, 6.875%, 8/15/2025 (Identified Cost $57,796) $ 55,000 61,308
U.S. TREASURY NOTES- 19.0%
U.S. Treasury Note, 6.25%, 6/30/2002 10,000 10,203
U.S. Treasury Note, 5.875%, 9/30/2002 50,000 50,297
---------
TOTAL U.S. TREASURY NOTES
(Identified Cost $59,994) 60,500
---------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $117,790) 121,808
---------
SHORT-TERM INVESTMENTS - 0.6%
Dreyfus U.S. Treasury Money Market Reserves (Identified Cost $1,820) 1,820 1,820
---------
TOTAL INVESTMENTS - 100.1%
(Identified Cost $316,383) 318,691
LIABILITIES, LESS OTHER ASSETS - (0.1%) (463)
---------
NET ASSETS - 100% $318,228
=========
</TABLE>
*Non-income producing security
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At December 31, 1997, the net unrealized appreciation based on
identified cost for federal income tax purposes of $316,383 was
as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $ 16,146
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (13,838)
---------
UNREALIZED APPRECIATION - NET $ 2,308
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
Investment Portfolio - December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
MANNING & NAPIER MAXIMUM HORIZON PORTFOLIO SHARES (NOTE 2)
COMMON STOCK - 99.2%
AMUSEMENT & RECREATIONAL SERVICES - 1.3%
Resorts World Bhd. - ADR (Note 7) 250 $ 2,103
---------
CHEMICAL & ALLIED PRODUCTS - 9.7%
Celltech plc* (United Kingdom) (Note 7) 900 4,405
Pharmacia & Upjohn, Inc. 150 5,494
R.P. Scherer Corp.* 100 6,100
---------
15,999
---------
COMPUTER EQUIPMENT - 6.8%
Bell & Howell Co.* 200 4,838
International Game Technology 250 6,312
11,150
---------
COMPUTER INTEGRATED SYSTEMS DESIGN - 5.9%
HBO & Co. 200 9,600
---------
CONSUMER PRODUCTS - MISCELLANEOUS - 2.1%
Unilever plc - ADR (Note 7) 100 3,450
---------
CRUDE PETROLEUM & NATURAL GAS - 9.6%
Petroleo Brasileiro S.A. (Petrobras) - ADR (Note 7) 250 5,847
Union Texas Petroleum Holdings, Inc. 225 4,683
YPF Sociedad Anonima - ADR (Note 7) 150 5,128
---------
15,658
---------
DIAMONDS - 1.2%
De Beers Centenary AG - ADR (Note 7) 100 2,044
---------
DISTRIBUTION - WHOLESALE - 1.6%
Unisource Worldwide, Inc. 187 2,665
---------
ELECTONICS & ELECTRICAL PRODUCTS - 7.2%
Coleman Company, Inc.* 375 6,023
Motorola, Inc. 100 5,706
---------
11,729
---------
ENGINEERING SERVICES - 0.4%
Jacobs Engineering Group, Inc.* 25 634
---------
FOOD & BEVERAGE - 5.5%
Allied Domecq plc - ADR (Note 7) 600 5,430
Diageo plc - ADR (Note 7) 93 3,522
---------
8,952
---------
HEALTH SERVICES - 3.1%
MedPartners, Inc.* 225 5,034
---------
INDUSTRIAL & COMMERCIAL MACHINERY - 1.8%
York International Corp. 75 2,967
---------
MOTION PICTURES - 5.1%
Viacom, Inc. - Class B* 200 8,288
---------
NONDEPOSITORY CREDIT INSTITUTIONS - 2.8%
Takefuji Corp. (Japan) (Note 7) 100 4,581
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
Investment Portfolio - December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
MANNING & NAPIER MAXIMUM HORIZON PORTFOLIO (continued) SHARES (NOTE 2)
PAPER & ALLIED PRODUCTS - 8.7%
Aracruz Celulose S.A. - ADR (Note 7) 300 $ 4,313
Asia Pulp & Paper Co. Ltd. - ADR (Note 7) 500 5,031
Kimberly-Clark Corp. 100 4,931
---------
14,275
---------
RESTAURANTS - 3.7%
McDonald's Corp. 125 5,969
---------
RETAIL - 2.5%
Fingerhut Companies, Inc. 125 2,672
Hancock Fabrics, Inc. 100 1,450
---------
4,122
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 8.5%
Eastman Kodak Co. 125 7,601
Mallinckrodt, Inc. 75 2,850
Millipore Corp. 100 3,394
---------
13,845
---------
TELECOMMUNICATIONS - 11.7%
Compania Anonima Nacional Telefonos de
Venezuela (CANTV) - ADR (Note 7) 100 4,163
Frontier Corp. 300 7,219
Telecom Italia SpA - ADR (Note 7) 75 4,800
Telecomunicacoes Brasileiras(Telebras) - ADR (Note 7) 25 2,911
---------
19,093
---------
TOTAL COMMON STOCK
(Identified Cost $153,602) 162,158
---------
SHORT-TERM INVESTMENTS - 2.2%
Dreyfus U.S. Treasury Money Market Reserves (Identified Cost $3,648) 3,648 3,648
---------
TOTAL INVESTMENTS - 101.4%
(Identified Cost $157,250) 165,806
OTHER ASSETS, LESS LIABILITIES - (1.4)% (2,268)
---------
NET ASSETS - 100% $163,538
=========
</TABLE>
*Non-income producing security
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At December 31, 1997, the net unrealized appreciation based on
identified cost for federal income tax purposes of $158,250 was
as follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost $20,174
Aggregate gross unrealized depreciation for all investments in
which there was an excess of tax cost over value (11,618)
---------
UNREALIZED APPRECIATION - NET $8,556
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
MANNING & NAPIER INSURANCE FUND, INC.
Moderate Maximum
Bond Equity Small Cap Growth Growth Horizon
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Investments in securities (Note 2):
At identified cost $ 134,353 $ 143,143 $ 160,112 $ 143,479 $ 316,383 $ 157,250
========== ========== =========== ========== ========== ==========
At value $ 138,286 $ 168,127 $ 158,611 $ 147,423 $ 318,691 $ 165,806
Cash -- 12 125 41 76 37
Dividends receivable -- 154 68 132 275 255
Interest receivable 2,514 -- -- 1,120 2,180 --
Receivable from investment advisor (Note 3) 13,759 12,991 13,004 13,233 12,716 13,040
---------- ---------- ----------- ---------- ---------- ----------
TOTAL ASSETS 154,559 181,284 171,808 161,949 333,938 179,138
---------- ---------- ----------- ---------- ---------- ----------
LIABILITIES:
Accrued Directors' fees (Note 3) 6,867 6,867 6,867 6,867 6,867 6,867
Audit fee payable 4,920 4,920 4,920 4,920 4,920 4,920
Payable for securities purchased -- -- -- 1,665 -- --
Custodian fee payable 84 82 -- 140 -- 97
Other payables and accrued expenses 4,446 3,926 3,223 3,971 3,923 3,716
---------- ---------- ----------- ---------- ---------- ----------
TOTAL LIABILITIES 16,317 15,795 15,010 17,563 15,710 15,600
---------- ---------- ----------- ---------- ---------- ----------
NET ASSETS $ 138,242 $ 165,489 $ 156,798 $ 144,386 $ 318,228 $ 163,538
========== ========== =========== ========== ========== ==========
NET ASSETS CONSIST OF:
Capital stock $ 127 $ 130 $ 129 $ 127 $ 261 $ 127
Additional paid-in-capital 127,325 129,670 130,711 127,363 292,132 126,836
Undistributed net investment income 6,857 628 -- 4,552 4,329 1,186
Accumulated net realized gain
on investments -- 10,077 27,459 8,400 19,198 26,833
Net unrealized appreciation
(depreciation) on investments 3,933 24,984 (1,501) 3,944 2,308 8,556
---------- ---------- ----------- ---------- ---------- ----------
TOTAL NET ASSETS $ 138,242 $ 165,489 $ 156,798 $ 144,386 $ 318,228 $ 163,538
========== ========== =========== ========== ========== ==========
SHARES OUTSTANDING 12,743 12,954 12,921 12,741 26,149 12,690
========== ========== =========== ========== ========== ==========
NET ASSET VALUE PER SHARE $ 10.85 $ 12.78 $ 12.13 $ 11.33 $ 12.17 $ 12.89
========== ========== =========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
Statement of Operations
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
MANNING & NAPIER INSURANCE FUND, INC.
Moderate Maximum
Bond Equity Small Cap Growth Growth Horizon
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- ----------- ----------- -----------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C> <C>
Interest $ 7,965 $ 692 $ 753 $ 5,516 $ 5,230 $ 1,235
Dividends -- 1,814 752 667 1,247 1,774
Other Income -- -- 1,546 -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Investment Income 7,965 2,506 3,051 6,183 6,477 3,009
----------- ----------- ----------- ----------- ----------- -----------
EXPENSES:
Management fees (Note 3) 649 1,561 1,548 1,358 1,789 1,519
Directors' fees (Note 3) 6,867 6,867 6,867 6,867 6,867 6,867
Audit fee 4,000 4,000 4,000 4,000 4,000 4,000
Custodian fee 120 320 800 450 400 570
Miscellaneous 3,876 3,676 3,196 3,545 3,596 3,426
----------- ----------- ----------- ----------- ----------- -----------
Total Expenses 15,512 16,424 16,411 16,220 16,652 16,382
Less Reduction of Expenses (Note 3) (14,408) (14,551) (14,552) (14,591) (14,505) (14,559)
----------- ----------- ----------- ----------- ----------- -----------
Net Expenses 1,104 1,873 1,859 1,629 2,147 1,823
----------- ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME 6,861 633 1,192 4,554 4,330 1,186
----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments
(identified cost basis) -- 11,664 28,497 8,400 19,221 26,923
Net change in unrealized appreciation
(depreciation) on investments 5,506 16,925 (11,265) 3,328 (288) 3,213
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 5,506 28,589 17,232 11,728 18,933 30,136
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 12,367 $ 29,222 $ 18,424 $ 16,282 $ 23,263 $ 31,322
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
MANNING & NAPIER INSURANCE FUND, INC.
Bond Portfolio Equity Portfolio
---------------- ------------------
For the For the For the For the
Year period year period
ended 11/1/961 to ended 11/1/961 to
12/31/97 12/31/96 12/31/97 12/31/96
---------------- ------------- ------------------ -------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 6,861 $ 781 $ 633 $ 602
Net realized gain (loss) on investments -- -- 11,664 (1,587)
Net change in unrealized appreciation
(depreciation) on investments 5,506 (1,573) 16,925 8,059
---------------- ------------- ------------------ -------------
Net increase (decrease) in net assets
from operations 12,367 (792) 29,222 7,074
---------------- ------------- ------------------ -------------
DISTRIBUTIONS TO
SHAREHOLDERS (Note 2):
From net investment income (785) -- (607) --
---------------- ------------- ------------------ -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase in net assets from
capital share transactions (Note 5) 785 126,667 607 129,193
---------------- ------------- ------------------ -------------
Net increase in net assets 12,367 125,875 29,222 136,267
NET ASSETS:
Beginning of period 125,875 -- 136,267 --
---------------- ------------- ------------------ -------------
END OF PERIOD $ 138,242 $ 125,875 $ 165,489 $ 136,267
================ ============= ================== =============
MANNING & NAPIER INSURANCE FUND, INC.
Small Cap Portfolio
---------------------
For the For the
year period
ended 11/1/961 to
12/31/97 12/31/96
--------------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,192 $ 113
Net realized gain (loss) on investments 28,497 (684)
Net change in unrealized appreciation
(depreciation) on investments (11,265) 9,764
--------------------- -------------
Net increase (decrease) in net assets
from operations 18,424 9,193
--------------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS (Note 2):
From net investment income (113) --
--------------------- -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase in net assets from
capital share transactions (Note 5) 113 129,181
--------------------- -------------
Net increase in net assets 18,424 138,374
NET ASSETS:
Beginning of period 138,374 --
--------------------- -------------
END OF PERIOD $ 156,798 $ 138,374
===================== =============
</TABLE>
1Commencement of Operations.
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
Statement of Changes in Net Assets - continued
<TABLE>
<CAPTION>
Moderate Growth Growth Maximum Horizon
----------------- ----------- -----------------
Portfolio Portfolio Portfolio
----------------- ----------- -----------------
For the For the For the For the For the
Year period year period year
ended 11/1/961 to ended 11/1/961 to ended
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97
----------------- ------------ ----------- ------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 4,554 $ 821 $ 4,330 $ 634 $ 1,186
Net realized gain (loss) on investments 8,400 -- 19,221 (23) 26,923
Net change in unrealized appreciation
(depreciation) on investments 3,328 616 (288) 2,596 3,213
----------------- ------------ ----------- ------------- -----------------
Net increase (decrease) in net assets
from operations 16,282 1,437 23,263 3,207 31,322
----------------- ------------ ----------- ------------- -----------------
DISTRIBUTIONS TO
SHAREHOLDERS (Note 2):
From net investment income (823) -- (635) -- (296)
----------------- ------------ ----------- ------------- -----------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase in net assets from
capital share transactions (Note 5) 823 126,667 165,726 126,667 296
----------------- ------------ ----------- ------------- -----------------
Net increase in net assets 16,282 128,104 188,354 129,874 31,322
NET ASSETS:
Beginning of period 128,104 -- 129,874 -- 132,216
----------------- ------------ ----------- ------------- -----------------
END OF PERIOD $ 144,386 $ 128,104 $ 318,228 $ 129,874 $ 163,538
================= ============ =========== ============= =================
For the
period
11/1/961 to
12/31/96
-------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C>
OPERATIONS:
Net investment income $ 296
Net realized gain (loss) on investments (90)
Net change in unrealized appreciation
(depreciation) on investments 5,343
-------------
Net increase (decrease) in net assets
from operations 5,549
-------------
DISTRIBUTIONS TO
SHAREHOLDERS (Note 2):
From net investment income --
-------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase in net assets from
capital share transactions (Note 5) 126,667
-------------
Net increase in net assets 132,216
NET ASSETS:
Beginning of period --
-------------
END OF PERIOD $ 132,216
=============
</TABLE>
1Commencement of Operations.
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
MANNING & NAPIER INSURANCE FUND, INC.
Bond Portfolio Equity Portfolio
---------------- ------------------
For the For the For the For the
year period year period
ended 11/1/961 to ended 11/1/961 to
12/31/97 12/31/96 12/31/97 12/31/96
---------------- ------------- ------------------ -------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.94 $ 10.00 $ 10.56 $ 10.00
---------------- ------------- ------------------ -------------
Income from investment operations:
Net investment income (loss) 0.538 0.062 0.048 0.047
Net realized and unrealized gain (loss) on investments 0.434 (0.122) 2.219 0.513
---------------- ------------- ------------------ -------------
Total from investment operations 0.972 (0.060) 2.267 0.560
---------------- ------------- ------------------ -------------
Less distributions to sharheolders:
From net investment income (0.062) -- (0.047) --
---------------- ------------- ------------------ -------------
NET ASSET VALUE - END OF PERIOD $ 10.85 $ 9.94 $ 12.78 $ 10.56
================ ============= ================== =============
Total return2 9.81% (0.60%) 21.46% 5.60%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses * 0.85% 0.85%3 1.20% 1.20%3
Net investment income (loss)* 5.29% 3.92%3 0.41% 2.84%3
Portfolio turnover 0% 0% 50% 29%
Average commission rate paid -- -- $ 0.0602 $ .0.0661
NET ASSETS - END OF PERIOD $ 138,242 $ 125,875 $ 165,489 $ 136,267
================ ============= ================== =============
MANNING & NAPIER INSURANCE FUND, INC.
Small Cap Portfolio
---------------------
For the For the
year period
ended 11/1/961 to
12/31/97 12/31/96
--------------------- -------------
<S> <C> <C>
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.72 $ 10.00
--------------------- -------------
Income from investment operations:
Net investment income (loss) (0.027) 0.009
Net realized and unrealized gain (loss) on investments 1.446 0.711
--------------------- -------------
Total from investment operations 1.419 0.720
--------------------- -------------
Less distributions to sharheolders:
From net investment income (0.009) --
--------------------- -------------
NET ASSET VALUE - END OF PERIOD $ 12.13 $ 10.72
===================== =============
Total return2 13.23% 7.20%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses * 1.20% 1.20%3
Net investment income (loss)* (0.23%) 0.55%3
Portfolio turnover 149% 9%
Average commission rate paid $ 0.0200 $ 0.0356
NET ASSETS - END OF PERIOD $ 156,798 $ 138,374
===================== =============
</TABLE>
* The investment advisor did not impose its management fee and paid a portion
of the Fund's expenses. If these expenses had been incurred
by the Fund, and had 1996 expenses been limited by state securities law, the
net investment income per share and the ratios would have been
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $(0.827) $ 0.036 $ (1.269) $ 0.025 $(1.357) ($0.012)
Ratios (to average net assets):
Expenses 14.27% 2.50%3 12.44% 2.50%3 12.53% 2.50%3
Net investment income (loss) (8.13)% 2.27%3 (10.83)% 1.54%3 (11.56)% (0.75%)3
</TABLE>
1 Commencement of operations.
2 Represents aggregate total return for the period indicated.
3 Annualized.
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
MANNING & NAPIER INSURANCE FUND, INC.
<S> <C> <C> <C> <C> <C>
Moderate Growth Growth Maximum Horizon
Portfolio Portfolio Portfolio
----------------- ----------- -----------------
For the For the For the For the For the
year period year period year
ended 11/1/961 to ended 11/1/961 to ended
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.11 $ 10.00 $ 10.25 $ 10.00 $ 10.44
----------------- ------------- ----------- ------------- -----------------
Income from investment operations:
Net investment income (loss) 0.357 0.065 0.166 0.050 0.093
Net realized and unrealized gain (loss) on
investments 0.928 0.045 1.804 0.200 2.380
----------------- ------------- ----------- ------------- -----------------
Total from investment operations 1.285 0.110 1.970 0.250 2.473
----------------- ------------- ----------- ------------- -----------------
Less distributions to shareholders:
From net investment income (0.065) -- (0.050) -- (0.023)
----------------- ------------- ----------- ------------- -----------------
NET ASSET VALUE - END OF PERIOD $ 11.33 $ 10.11 $ 12.17 $ 10.25 $ 12.89
================= ============= =========== ============= =================
Total return 2 12.73% 1.10% 19.23% 2.50% 23.69%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses * 1.20% 1.20%3 1.20% 1.20%3 1.20%
Net investment income (loss)* 3.35% 4.08%3 2.42% 3.11%3 0.78%
Portfolio turnover 53% 0% 90% 3% 120%
Average commission rate paid $ 0.0565 $ 0.0700 $ 0.0524 $ 0.0696 $ 0.0535
NET ASSETS - END OF PERIOD $ 144,386 $ 128,104 $ 318,228 $ 129,874 $ 163,538
================= ============= =========== ============= =================
MANNING & NAPIER INSURANCE FUND, INC.
<S> <C>
For the
period
11/1/961 to
12/31/96
Per share data (for a share outstanding
throughout each period):
<S> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.00
-------------
Income from investment operations:
Net investment income (loss) 0.023
Net realized and unrealized gain (loss) on
investments 0.417
-------------
Total from investment operations 0.440
-------------
Less distributions to shareholders:
From net investment income --
-------------
NET ASSET VALUE - END OF PERIOD $ 10.44
=============
Total return 2 4.40%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses * 1.20%3
Net investment income (loss)* 1.43%3
Portfolio turnover 4%
Average commission rate paid $ 0.0691
NET ASSETS - END OF PERIOD $ 132,216
=============
</TABLE>
* The investment advisor did not impose its management fee and paid a portion
of the Fund's expenses. If these expenses had been incurred by the Fund, and
had 1996 expenses been limited by state securities law, the net investment
income per share and the ratios would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $(1.024) $ 0.044 $(0.505) $ 0.029 $(1.285) $ 0.002
Ratios (to average net assets):
Expenses 14.16% 2.50%3 10.98% 2.50%3 12.76% 2.50%3
Net investment income (loss) (9.61)% 2.78%3 (7.36)% 1.81%3 (10.78)% 0.13%3
</TABLE>
1 Commencement of operations.
2 Represents aggregate total return for the period indicated.
3 Annualized.
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
Notes to Financial Statements
1. ORGANIZATION
Manning & Napier Bond Portfolio (Bond Portfolio), Manning & Napier Equity
Portfolio (Equity Portfolio), Manning & Napier Small Cap Portfolio (Small Cap
Portfolio), Manning & Napier Moderate Growth Portfolio (Moderate Growth
Portfolio), Manning & Napier Growth Portfolio (Growth Portfolio), and Manning
& Napier Maximum Horizon Portfolio (Maximum Horizon Portfolio) are no-load
diversified series (collectively the Funds) of Manning & Napier Insurance
Fund, Inc. (the "Corporation"). The Corporation is organized in Maryland and
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. It was established for the purpose of
providing a vehicle for the investment of assets of various separate accounts
established exclusively for the purpose of providing an investment vehicle for
variable annuity contracts. Currently, shares of the Corporation are offered
only to separate accounts funding variable annuity contracts issued by Keyport
Life Insurance Company and Liberty Life Insurance Company of Boston.
The total authorized capital stock of the Corporation consists of 500 million
shares of common stock each having a par value of $0.01. As of December 31,
1997, 300 million shares have been designated in total among six series of
which 50 million each have been designated: Class A - Moderate Growth
Portfolio, Class B - Growth Portfolio, Class C - Maximum Horizon Portfolio,
Class D - Equity Portfolio, Class E - Small Cap Portfolio, and Class F - Bond
Portfolio.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options
and corporate bonds, listed on an exchange are valued at the last quoted
sales price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an
exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities,
will normally be valued on the basis of evaluated bid prices provided by the
Funds' pricing service.
Securities for which representative valuations or prices are not available
from the Fund's pricing service are valued at fair value as determined in good
faith by the Advisor under procedures approved by and under the general
supervision and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at
amortized cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income and expenses are recorded on an accrual basis.
Most expenses of the Corporation can be attributed to a specific fund.
Expenses which cannot be directly attributed are apportioned among the funds
in the Corporation.
FEDERAL INCOME TAXES
The Funds policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Funds are not subject to
federal income tax to the extent the Funds qualify as Regulated Investment
Companies as defined in Subchapter M in the Internal Revenue Code and
distribute to shareholders each year their taxable income, including any net
realized gains on investments in accordance with requirements of the Internal
Revenue Code. Accordingly, no provision for federal income tax have been
made in the financial statements.
The Funds uses the identified cost method for determining realized gains or
losses on investments for both financial statement and federal income tax
reporting purposes.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Funds.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, foreign denominated investments or
character reclassification between net
27
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTION OF INCOME AND GAINS (continued)
income and net gains. As a result, net investment income (loss) and net
investment gain (loss) on investment transactions for a reporting period may
differ significantly from distributions to shareholders during such period.
As a result, the Funds may periodically make reclassifications among its
capital accounts without impacting the Funds net asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchase and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Funds may purchase or sell forward foreign currency contracts in order to
hedge a portfolio position or specific transaction. Risks may arise if the
counter parties to a contract are unable to meet the terms of the contract or
if the value of the foreign currency moves unfavorably.
At December 31, 1997, the Funds had no open foreign currency exchange
contracts.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent asset and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Funds have an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Fund pays the Advisor a fee,
computed daily and payable monthly, at an annual rate based upon the following
percentages of average daily net assets: 0.50% for Bond Portfolio and 1.00%
for the Equity Portfolio, Small Cap Portfolio, Moderate Growth Portfolio,
Growth Portfolio, and the Maximum Horizon Portfolio. For the year ended
December 31, 1997, the fees amounted to: $649 for the Bond Portfolio; $1,561
for the Equity Portfolio; $1,548 for the Small Cap Portfolio; $1,358 for the
Moderate Growth Portfolio; $1,789 for the Growth Portfolio; and $1,519 for the
Maximum Horizon Portfolio.
Under the Funds Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Funds with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise
maintain the Funds organization. The Advisor also provides the Funds with
necessary office space and portfolio accounting and bookkeeping services. The
salaries of all officers of the Funds and of all Directors who are "affiliated
persons" of the Funds or of the Advisor, and all personnel of the Funds or of
the Advisor performing services relating to research, statistical and
investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary pay
other expenses of the Funds in order to maintain total expenses for the Equity
Portfolio, Small Cap Portfolio, Moderate Growth Portfolio, Growth Portfolio,
and Maximum Horizon Portfolio at no more than 1.20%, and for the Bond
Portfolio at no more than 0.85% of average daily net assets each year.
Accordingly, the Advisor did not impose any of its fee and paid expenses
amounting to $16,759 for the Bond Portfolio, $15,990 for the Equity Portfolio,
$16,004 for the Small Cap Portfolio, $16,233 for the Moderate Growth
Portfolio, $15,716 for the Growth Portfolio, and $16,040 for the Maximum
Horizon Portfolio, for the year ended December 31, 1997.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Funds. These services are provided at no additional
cost to the Fund.
28
<PAGE>
Notes to Financial Statements
3. TRANSACTIONS WITH AFFILIATES (continued)
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Funds shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Funds.
The compensation of the non-affiliated Directors totaled $6,867 for each Fund
for the year ended December 31, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, for the
year ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Purchases Sales
-------------- --------------
Fund Other Issuers Government Other Issuers Government
- -------------------------
Bond Portfolio -- $ 9,957 -- --
Equity Portfolio $ 83,305 -- $ 64,133 $ 10,688
Small Cap Portfolio $ 160,960 $ 85,159 $ 134,577 $ 84,965
Moderate Growth Portfolio $ 65,064 $ 15,079 $ 25,775 $ 45,329
Growth Portfolio $ 188,527 $ 142,491 $ 58,508 $ 101,593
Maximum Horizon Portfolio $ 134,829 $ 46,265 $ 102,313 $ 76,496
</TABLE>
5. CAPITAL STOCK TRANSACTIONS
Transactions in capital shares of Funds were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Year For the Period
Ended 12/31/97 11/1/96 to 12/31/96
-------------- -------------------
Fund Shares Amount Shares Amount
- ------------------------- -------------- -------- ------------------- --------
Bond Portfolio
- -------------------------
Sold -- -- 12,667 $126,667
Reinvested 76 $ 785 -- --
Equity Portfolio
- -------------------------
Sold -- -- 12,907 $129,193
Reinvested 47 $ 607 -- --
Small Cap Portfolio
- -------------------------
Sold -- -- 12,913 $129,181
Reinvested 8 $ 113 -- --
Moderate Growth Portfolio
- -------------------------
Sold -- -- 12,667 $126,667
Reinvested 74 $ 823 -- --
Growth Portfolio
- -------------------------
Sold 13,429 $165,091 12,667 $126,667
Reinvested 53 $ 635 -- --
-------------- -------- ------------------- --------
Total 13,482 $165,726 12,667 $126,667
============== ======== =================== ========
Maximum Horizon Portfolio
- -------------------------
Sold -- -- 12,667 $126,667
Reinvested 23 $ 296 -- --
</TABLE>
There were no shares repurchased during the year ended December 31, 1997 or
the period November 1, 1996 to December 31, 1996.
29
<PAGE>
Notes to Financial Statements
6. FINANCIAL INSTRUMENTS
The Funds may trade in financial instruments with off-balance sheet risk
in the normal course of their investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options, forward foreign currency exchange contracts, and futures contracts
and may involve, to a varying degree, elements of risk in excess of the
amounts recognized for financial statement purposes. No such investments were
held by the Funds on December 31, 1997.
.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. There
risks include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of foreign companies and foreign
governments and their markets may be less liquid and their prices more
volatile than those of securities of comparable domestic companies and the
United States Government.
30
<PAGE>
Independent Accountant's Report
To the Shareholders and Board of Directors of
Manning & Napier Insurance Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Manning & Napier Insurance Fund, Inc. (comprising, respectively, Manning &
Napier Moderate Growth Portfolio, Manning & Napier Growth Portfolio, Manning &
Napier Equity Portfolio, Manning & Napier Small Cap Portfolio, Manning &
Napier Bond Portfolio, and Manning & Napier Maximum Horizon Portfolio - the
"Funds"), including the schedule of portfolio investments, as of December 31,
1997, and the related statement of operations for the year then ended, the
statement of changes in net assets for the year then ended and the period
November 1, 1996 through December 31, 1996, and the financial highlights for
the periods indicated in the financial highlights table herein. These
financial statement are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statement. Our procedures included confirmation of securities owned
as of December 31, 1997 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above presents fairly, in al material respects, the financial position
of each of the respective Funds constituting Manning & Napier Insurance Fund,
Inc. as of December 31, 1997 the results of its operations for the year then
ended, the changes in its net assets for the year then ended and the period
November 1, 1996 to December 31, 1996, and the financial highlights for each of
the periods indicated in the financial highlights table herein, in conformity
with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
January 23, 1998
31
<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0001003369
<NAME> MANNING & NAPIER INSURANCE FUND, INC.
<SERIES>
<NAME> MANNING & NAPIER BOND PORTFOLIO
<NUMBER> 1
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<PERIOD-TYPE> 12-MOS
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 134353
<INVESTMENTS-AT-VALUE> 138286
<RECEIVABLES> 16273
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 154559
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16317
<TOTAL-LIABILITIES> 16317
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 127452
<SHARES-COMMON-STOCK> 12743
<SHARES-COMMON-PRIOR> 12667
<ACCUMULATED-NII-CURRENT> 6857
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3933
<NET-ASSETS> 138242
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7965
<OTHER-INCOME> 0
<EXPENSES-NET> 1104
<NET-INVESTMENT-INCOME> 6861
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 5506
<NET-CHANGE-FROM-OPS> 12367
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 785
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 76
<NET-CHANGE-IN-ASSETS> 12367
<ACCUMULATED-NII-PRIOR> 781
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 649
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15512
<AVERAGE-NET-ASSETS> 133782
<PER-SHARE-NAV-BEGIN> 9.94
<PER-SHARE-NII> 0.538
<PER-SHARE-GAIN-APPREC> 0.434
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.062
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.85
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0001003369
<NAME> MANNING & NAPIER INSURANCE FUND, INC.
<SERIES>
<NAME> MANNING & NAPIER EQUITY PORTFOLIO
<NUMBER> 5
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<PERIOD-TYPE> 12-MOS
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 143143
<INVESTMENTS-AT-VALUE> 168127
<RECEIVABLES> 13157
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 181284
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15795
<TOTAL-LIABILITIES> 15795
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 129800
<SHARES-COMMON-STOCK> 12954
<SHARES-COMMON-PRIOR> 12907
<ACCUMULATED-NII-CURRENT> 628
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10077
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24984
<NET-ASSETS> 165489
<DIVIDEND-INCOME> 1814
<INTEREST-INCOME> 692
<OTHER-INCOME> 0
<EXPENSES-NET> 1873
<NET-INVESTMENT-INCOME> 633
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