MANNING & NAPIER INSURANCE FUND, INC.
MANNING & NAPIER MODERATE GROWTH PORTFOLIO
MANNING & NAPIER GROWTH PORTFOLIO
MANNING & NAPIER MAXIMUM HORIZON PORTFOLIO
MANNING & NAPIER SMALL CAP PORTFOLIO
MANNING & NAPIER EQUITY PORTFOLIO
MANNING & NAPIER BOND PORTFOLIO
Annual Report
December 31, 1998
<PAGE>
Management Discussion and Analysis
Dear Contract Owner:
As you know, a variable annuity is a long-term, retirement-oriented investment
program offering a means to accumulate assets on a tax-deferred basis. This
approach is especially valuable given the extremely high valuations in the
U.S. stock market and uncertainty in the global arenas. The atmosphere in the
financial markets today gives variable annuity holders the opportunity to take
the long-term approach to investing without placing undue emphasis on the
short-term fluctuations of the market.
When we entered 1998, we expected the markets to be volatile and unstable, and
they were. Although a narrow group of large, well-known stocks continued to
climb higher for most of the year, the majority of stocks did not participate
in the climb. We continue to believe the narrow, large-cap U.S. stock market
to be overvalued. This difference in performance has increased the valuation
gap between the blue chip stocks and other sectors of the market, including
smaller companies and foreign stocks. Within this environment, we have been
finding fewer opportunities in the domestic markets and with the effects of
the Asian crisis dissipating, we have increased our holdings in the
international markets.
The trend toward increased globalization of industries and economies is an
important part of our overview. The global markets have also affected the
bond portfolio. With the recent default in Russian debt, as well as problems
in Latin America and Asia, there has been a reassessment of investors risk as
well as an overall flight to quality. This benefited the bond markets. Going
forward, it is unlikely that U.S. long-term interest rates will fall as much
as they have in the past. Therefore, as we look into the new year, we have
incorporated a global perspective into our bond portfolio.
As we head into 1999, we expect volatility in the markets to continue. With
our time-tested strategies and investment approach based on pricing and
fundamentals, it is only natural that we would move away from the overvalued
narrow, large cap market, even though that market continues to be popular. We
have turned our resources toward seeking out areas of attractive valuations
that we feel represent much more reasonably priced alternatives and offer
strong growth potential.
Thank you for your continued support of the Manning & Napier Variable Annuity.
We will make every effort to warrant your continued confidence in our
services.
We wish you a very happy, healthy, and prosperous 1999!
Sincerely,
MANNING & NAPIER ADVISORS, INC.
1
<PAGE>
Performance Update as of December 31, 1998
Objectives - Based Portfolios
(Moderate Growth Portfolio, Growth Portfolio, & Maximum Horizons Portfolio)
Each of the Objectives Based 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.
Over the past year, our concern over the high valuations in the U.S. large cap
market has increased and the gap in valuations between these and smaller
non_U.S. stocks has widened. As a result, these high valuations will require
extraordinary earnings growth to be supported over the long_term, and our
fundamental analysis does not support this level of earnings.
We addressed this concern by increasing our holdings in areas of
undervaluation, particularly foreign securities. Due to our disciplined
management strategies, we are very selective when it comes to the particular
stock choices. We have been continuously upgrading our portfolios throughout
the year with strong strategy fits that also coincide with our value
discipline.
In the bond markets, the weakness in the global markets led to a flight to
quality. This benefited U.S. government bonds and resulted in favorable
returns. Going forward, it is unlikely that long_term interest rates will fall
as much as they have in the past. Therefore, in addition to duration
management, we are now increasingly focusing on sector selection as a means of
adding value to the portfolio.
Manning & Napier Moderate Growth Portfolio
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 10,625 6.25% 6.25%
Inception 1 $ 12,109 21.09% 9.23%
</TABLE>
Lehman Brothers Intermediate Bond Index4
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 10,844 8.44% 8.44%
Inception 1 $ 11,775 17.75% 7.83%
</TABLE>
30-70 Blended Index5
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 11,475 14.75% 14.75%
Inception 1 $ 13,501 35.01% 14.86%
</TABLE>
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Manning & Napier Lehman Brothers
Moderate Growth Intermediate Bond
Portfolio Index 30-70 Blended Index
11/01/96 10,000 10,000 10,000
12/31/96 10,110 10,067 10,211
12/31/97 11,397 10,859 11,764
12/31/98 12,109 11,775 13,501
</TABLE>
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition - Moderate Growth Portfolio - As of 12/31/98
<TABLE>
<CAPTION>
<S> <C>
Stocks 31.8%
Bonds 59.5%
Cash,short-term investments,
and other assets, less liabilities 8.7%
</TABLE>
Please see Page 8 for Footnotes
2
<PAGE>
Performance Update as of December 31, 1998
Objectives - Based Portfolios
(Moderate Growth Portfolio, Growth Portfolio, & Maximum Horizons Portfolio)
Manning & Napier Growth Portfolio
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 10,207 2.07% 2.07%
Inception 1 $ 12,474 24.74% 10.74%
</TABLE>
Lehman Brothers Intermediate Bond Index4
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 10,844 8.44% 8.44%
Inception 1 $ 11,775 17.75% 7.83%
</TABLE>
50-50 Blended Index6
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 11,900 19.00% 19.00%
Inception 1 $ 14,874 48.74% 20.11%
</TABLE>
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Manning & Napier Lehman Brothers
Growth Intermediate Bond
Portfolio Index 50-50 Blended Index
11/01/96 10,000 10,000 10,000
12/31/96 10,250 10,067 10,311
12/31/97 12,221 10,859 12,495
12/31/98 12,474 11,775 14,874
</TABLE>
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition - Growth Portfolio - As of 12/31/98
<TABLE>
<CAPTION>
<S> <C>
Stocks 50.0%
Bonds 48.8%
Cash,short-term investments,
and liabilities, less other assets 1.2%
</TABLE>
Please see Page 8 for Footnotes
3
<PAGE>
Performance Update as of December 31, 1998
Objectives - Based Portfolio
(Moderate Growth Portfolio, Growth Portfolio, & Maximum Horizons Portfolio)
Manning & Napier Maximum Horizons Portfolio
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 10,391 3.91% 3.91%
Inception 1 $ 13,418 34.18% 14.53%
</TABLE>
Standard & Poors (S&P) 500 Total Return Index3
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 12,858 28.58% 28.58%
Inception 1 $ 18,076 80.76% 31.46%
</TABLE>
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Manning & Napier Standard & Poors (S&P)
Maximum Horizons 500 Total Return
Portfolio Index3
11/01/96 10,000 10,000
12/31/96 10,440 10,542
12/31/97 12,913 14,057
12/31/98 13,418 18,076
</TABLE>
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition - Maximum Horizons Portfolio - As of 12/31/98
<TABLE>
<CAPTION>
<S> <C>
Stocks 90.5%
Bonds,Cash,short-term investments,
and liabilities, less other assets 9.5%
</TABLE>
Please see Page 8 for Footnotes
4
<PAGE>
Performance Update as of December 31, 1998
Small Cap Portfolio
The fourth quarter saw a dramatic rebound in large company and small company
stocks, as the Asian crisis and recessionary fears dissipated. Many investors
looking to participate in the market rally returned to the popular blue chip
stocks. As the large capitalization and momentum_driven stocks rose, small
capitalization stocks were overlooked, causing them to underperform. Even
within the small cap arena, larger companies outperformed smaller ones. As a
result of this investor neglect and gravitation toward large capitalization
stocks, small company stocks are at extremely favorable valuations.
Over the course of the year, we continued to increase our holdings in the
energy sector. As of December, this amounted to approximately 6% of the
portfolio and as oil prices reaching their lowest levels in 40 years, these
stocks suffered. Looking forward, we expect a reduction of the excess supply
of oil to lead to an increase in oil prices, which would allow these stocks to
generate above average returns.
Our management strategies and our focus on valuations have enabled us to seek
out several securities that are attractive and appear to be undervalued. We
continue to believe in this value_oriented approach to portfolio management,
which may at times seem conservative, but it has proven itself time and time
again.
Manning & Napier Small Cap Portfolio
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 8,882 -11.18% -11.18%
Inception 1 $ 10,781 7.81% 3.53%
</TABLE>
Standard & Poors (S&P) 500 Total Return Index3
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 12,828 28.58% 28.58%
Inception 1 $ 18,076 80.76% 31.46%
</TABLE>
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Manning & Napier Standard & Poors (S&P)
Small Cap 500 Total Return
Portfolio Index3
11/01/96 10,000 10,000
12/31/96 10,720 10,542
12/31/97 12,138 14,057
12/31/98 10,781 18,076
</TABLE>
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition - Small Cap Portfolio - As of 12/31/98
<TABLE>
<CAPTION>
<S> <C>
Apparel 3.0%
Chemical & Allied Products 5.7%
Communications 3.6%
Computer Equipment 8.2%
Crude Petroleum & Natural Gas 6.3%
Electronics & Electrical Equipment 8.3%
Glass Products 3.6%
Industrial & Commercial Machinery 9.5%
Paper & Allied Products 5.3%
Printing & Publishing 4.8%
Transportation 4.0%
Cash, short-term investments and
other assets less liabilities 23.1%
Miscellaneous * 14.6%
</TABLE>
* Miscellaneous includes:
Agricultural Production
Computer Integrated Systems Design
Management Services
Refuse Systems
Retail_Specialty Stores
Technical Instruments & Supplies
Testing Laboratories
Textile Mill Products
Please see Page 8 for Footnotes
5
<PAGE>
Performance Update as of December 31, 1998
Equity Portfolio
The objective of the Equity Portfolio is to provide long_term capital growth,
accepting stock market volatility. During the fourth quarter of 1998, we saw
the U.S. stock market reached record highs. These record highs have resulted
in the continuation of extremely high valuations in U.S. large_cap stocks and
a widening in the gap in valuations between the large_caps and non_U.S.
stocks.
We use the same fundamental approach to purchase stocks both domestically and
internationally. We feel that the record high valuations in the U.S. stock
market will require extraordinary earnings growth to be supported over the
long_term, and our fundamental analysis does not support this rate of earnings
growth.
As we head into 1999, we believe that it is extremely important to be very
selective in our stock choices. We have positioned the portfolio into areas
of undervaluation, particularly international stocks. We have also purchased
specific U.S. holdings that realized a decline over the course of the year but
that we feel have long_term growth potential.
Manning & Napier Equity Portfolio
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 10,369 3.69% 3.69%
Inception 1 $ 13,299 32.99% 14.06%
</TABLE>
Standard & Poors (S&P) 500 Total Return Index3
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 12,858 28.58% 28.58%
Inception 1 $ 18,076 80.76% 31.46%
</TABLE>
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Manning & Napier Standard & Poors (S&P)
Equity 500 Total Return
Portfolio Index3
11/01/96 10,000 10,000
12/31/96 10,560 10,542
12/31/97 12,826 14,057
12/31/98 13,299 18,076
</TABLE>
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition - Equity Portfolio - As of 12/31/98
<TABLE>
<CAPTION>
<S> <C>
Apparel 3.2%
Business Services 4.3%
Chemical & Allied Products 10.3%
Computer Equipment 8.3%
Crude Petroleum & Natural Gas 4.6%
Electronics & Electrical Equipment 8.3%
Glass Products 4.6%
Leather & Leather Products 3.5%
Paper & Allied Products 11.4%
Restaurants 4.5%
Technical Instruments & Supplies 10.6%
Software 5.6%
Telecommunication Services 4.7%
Transportation - Railroad 3.0%
Miscellaneous * 13.1%
</TABLE>
* Miscellaneous includes:
Diamonds
Health Services
Hotels & Lodging Places
Industrial & Commercial Machinery
Retail_Specialty Stores
Utilities _ Electric
Cash, short_term investments and
liabilities, less other assets
Please see Page 8 for Footnotes
6
<PAGE>
Performance Update as of December 31, 1998
Bond Portfolio
As we stated in the overview, there has been an increased awareness of global
activities and how they have impacted the domestic bond market. With the
recent devaluation of the Russian ruble as a triggering event, there was an
overall flight to quality, and the U.S. fixed income markets were one of its
primary beneficiaries.
Long_term interest rates have fallen significantly over the past few years.
The bond portfolio benefited from this because we had positioned the portfolio
in securities with longer maturities. Going forward, it is unlikely that
long_term interest rates will fall as much as they have in the past.
Therefore, in addition to duration management, we are now increasingly
focusing on sector selection as a means of adding value to the portfolio. We
will continue to monitor the global factors as well as the short_term factors
affecting the bond market, in order to keep our long_term overview.
Manning & Napier Bond Portfolio
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 10,965 9.65% 9.65%
Inception 1 $ 11,969 19.69% 8.65%
</TABLE>
Merrill Lynch Corporate/Government Bond Index2
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
12/31/98 Investment Cumulative Annual
One Year $ 10,953 9.53% 9.53%
Inception 1 $ 12,115 21.15% 9.26%
</TABLE>
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Manning & Napier Merrill Lynch Corporate/
Bond Government Bond
Portfolio Index
11/01/96 10,000 10,000
12/31/96 9,940 10,076
12/31/97 10,915 11,061
12/31/98 11,969 12,115
</TABLE>
[graphic]
<pie chart>
Data for pie chart to follow:
Effective Maturity - Bond Portfolio - As of 12/31/98
<TABLE>
<CAPTION>
<S> <C>
Less than 1 Year 10.3%
1 - 3 Years 34.4%
5 - 10 Years 26.4%
Over 10 Years 28.9%
</TABLE>
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition - Bond Portfolio - As of 12/31/98
<TABLE>
<CAPTION>
<S> <C>
U.S Treasury Securities 53%
U.S. Government Agencies 44%
Cash, short term investments
and liabilities, less other assets 3%
</TABLE>
Please see Page 8 for Footnotes
7
<PAGE>
Footnotes 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 6,391 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 4,601 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% Lehman Brothers Aggregate Bond Index. The Lehman Brothers Aggregate
Bond Index is a market value weighted measure of approximately 7,218
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>
Investment Portfolio - December 31, 1998
Manning & Napier Moderate Growth Portfolio
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL AMOUNT / Value
shares (NOTE 2)
COMMON STOCK - 31.75%
APPAREL - 1.54%
Liz Claiborne, Inc. 75 $ 2,366
---------
BUSINESS SERVICES - 1.59%
National Data Corp. 50 2,434
---------
CHEMICAL & ALLIED PRODUCTS - 5.27%
BIOLOGICAL PRODUCTS - 1.44%
Sigma-Aldrich Corp. 75 2,203
---------
PHARMACEUTICAL PREPARATIONS - 3.83%
Pharmacia & Upjohn, Inc. 50 2,831
Teva Pharmaceutical Industries Ltd. - ADR (Note 8) 75 3,052
---------
5,883
---------
8,086
---------
COMPUTER EQUIPMENT - 1.59%
International Game Technology 100 2,431
---------
CRUDE PETROLEUM & NATURAL GAS - 3.00%
Gulf Canada Resources Ltd. - ADR (Note 8) 700 2,056
Petroleo Brasileiro S.A. (Petrobras) - ADR (Note 8) 225 2,551
---------
4,607
---------
DIAMONDS - 1.25%
De Beers Centenary AG - ADR (Note 8) 150 1,913
---------
ELECTRONICS & ELECTRICAL EQUIPMENT - 5.30%
Motorola, Inc. 50 3,053
Philips Electronics N.V. - ADR (Note 8) 75 5,077
---------
8,130
---------
HEALTH SERVICES - 1.46%
MedPartners, Inc.* 425 2,231
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 5.13%
Eastman Kodak Co. 50 3,600
Millipore Corp. 150 4,266
---------
7,866
---------
TELECOMMUNICATION SERVICES - 3.08%
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR* (Note 8) 65 4,725
---------
TRANSPORTATION - RAILROAD - 2.54%
Canadian National Railway Co.- ADR (Note 8) 75 3,891
---------
TOTAL COMMON STOCK
(Identified Cost $54,899) 48,680
---------
U.S. TREASURY SECURITIES - 49.73%
U.S. TREASURY BONDS - 32.55%
U.S. Treasury Bond, 5.50%, 3/31/2003 $ 19,000 19,570
U.S. Treasury Bond, 6.875%, 8/15/2025 25,000 30,328
---------
TOTAL U.S. TREASURY BONDS
(Identified Cost $45,413 ) 49,898
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Investment Portfolio - December 31, 1998
Manning & Napier Moderate Growth Portfolio(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL AMOUNT / Value
shares (NOTE 2)
U.S. TREASURY SECURITIES (CONTINUED)
U.S. TREASURY NOTES - 17.18%
U.S. Treasury Note, 5.875%, 9/30/2002 $ 20,000 $ 20,794
U.S. Treasury Note, 6.50%, 10/15/2006 5,000 5,550
---------
TOTAL U.S. TREASURY NOTES
(Identified Cost $25,261 ) 26,344
---------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $70,674 ) 76,242
---------
U.S. GOVERNMENT AGENCIES - 19.73%
Federal Home Loan Mortgage Corporation, 5.95%,
11/05/1999 15,000 15,118
Federal National Mortgage Association, 5.67%,
5/26/2000 15,000 15,136
---------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $29,999 ) 30,254
---------
SHORT-TERM INVESTMENTS - 1.20%
Dreyfus Treasury Cash Management Fund
(Identified Cost $1,844 ) 1,844 1,844
---------
TOTAL INVESTMENTS - 102.41%
(Identified Cost $157,416 ) 157,020
LIABILITIES, LESS OTHER ASSETS - (2.41)% (3,696)
---------
NET ASSETS - 100% $153,324
=========
</TABLE>
*Non - income producing security
Federal Tax Information:
At December 31, 1998, the net unrealized depreciation (based on identified
cost for federal income tax purposes of $157,416) was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation $ 9,086
Unrealized depreciation (9,482)
--------
UNREALIZED DEPRECIATION - NET $ (396)
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Investment Portfolio - December 31, 1998
Manning & Napier Growth Portfolio
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 49.96%
APPAREL - 2.44%
Liz Claiborne Inc. 475 $ 14,992
---------
BUSINESS SERVICES - 2.77%
National Data Corp. 350 17,041
---------
CHEMICAL & ALLIED PRODUCTS - 6.52%
BIOLOGICAL PRODUCTS - 1.67%
Sigma-Aldrich Corp. 350 10,281
---------
PHARMACEUTICAL PREPARATIONS - 4.85%
Pharmacia & Upjohn, Inc. 275 15,572
Teva Pharmaceutical Industries Ltd. - ADR
(Note 8) 350 14,241
---------
29,813
---------
40,094
---------
COMPUTER EQUIPMENT - 3.00%
Bell & Howell Co.* 150 5,672
International Game Technology 525 12,764
---------
18,436
---------
CRUDE PETROLEUM & NATURAL GAS - 6.08%
Gulf Canada Resources Ltd. - ADR (Note 8) 2,800 8,225
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 8) 1,350 15,308
Schlumberger Ltd. 300 13,837
---------
37,370
---------
DIAMONDS - 1.87%
De Beers Centenary AG - ADR (Note 8) 900 11,475
---------
ELECTRONICS & ELECTRICAL EQUIPMENT - 7.38%
Motorola, Inc. 300 18,319
Philips Electronics NV- ADR (Note 8) 400 27,075
---------
45,394
---------
GLASS PRODUCTS - 2.38%
Corning, Inc. 325 14,625
---------
HEALTH SERVICES - 1.58%
MedPartners, Inc.* 1,850 9,712
---------
HOTELS & LODGING PLACES - 0.79%
CDL Hotels International Ltd. - ADR (Note 8) 1,900 4,880
---------
PAPER & ALLIED PRODUCTS - 0.90%
Asia Pulp & Paper Co. Ltd. - ADR (Note 8) 675 5,527
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 8.33%
Eastman Kodak Co. 425 30,600
Millipore Corp. 725 20,617
---------
51,217
---------
TELECOMMUNICATION SERVICES - 2.54%
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR * (Note 8) 215 15,628
---------
TRANSPORTATION- RAILROAD- 3.38%
Canadian National Railway Co. - ADR (Note 8) 400 20,750
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Investment Portfolio - December 31, 1998
Manning & Napier Growth Portfolio (continued)
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES/ Value
PRINCIPAL AMOUNT (Note 2)
TOTAL COMMON STOCK
(Identified Cost $342,428) $307,141
---------
U.S. TREASURY SECURITIES - 48.83%
U.S. TREASURY BONDS - 17.36%
U.S. Treasury Bond, 6.875%, 8/15/2025 $ 40,000 48,525
U.S. Treasury Bond, 6.50%, 11/15/2026 50,000 58,188
---------
TOTAL U.S. TREASURY BONDS
(Identified Cost $97,190) 106,713
---------
U.S. TREASURY NOTES - 31.47%
U.S. Treasury Note, 4.50%, 9/30/2000 35,000 34,934
U.S. Treasury Note, 6.25%, 2/15/2003 150,000 158,531
---------
TOTAL U.S. TREASURY NOTES
(Identified Cost $189,466) 193,465
---------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $286,656) 300,178
---------
SHORT-TERM INVESTMENTS - 1.76%
Dreyfus Treasury Cash Management Fund
(Identified Cost $10,807) 10,807 10,807
---------
TOTAL INVESTMENTS - 100.55%
(Identified Cost $639,891) 618,126
---------
OTHER ASSETS, LESS LIABILITIES - (0.55)% (3,369)
---------
NET ASSETS -100% $614,757
=========
</TABLE>
*Non - income producing security
Federal Tax Information:
At December 31, 1998, the net unrealized depreciation (based on identified
cost for federal income tax purposes of $644,308) was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation $ 32,997
Unrealized depreciation (59,179)
---------
UNREALIZED DEPRECIATION - NET $(26,182)
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Investment Portfolio - December 31, 1998
Manning & Napier Maximum Horizons Portfolio
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 90.54%
APPAREL - 2.78%
Liz Claiborne, Inc. 150 $ 4,735
---------
BUSINESS SERVICES - 2.87%
National Data Corp. 100 $ 4,869
---------
CHEMICAL & ALLIED PRODUCTS - 15.12%
BIOLOGICAL PRODUCTS - 2.59%
Sigma-Aldrich Corp. 150 4,406
---------
PHARMACEUTICAL PREPARATIONS - 12.53%
American Home Products Corp. 100 5,631
Celltech plc* (United Kingdom) (Note 8) 900 5,939
Pharmacia & Upjohn, Inc. 100 5,663
Teva Pharmaceutical Industries Ltd. - ADR (Note 8) 100 4,069
---------
21,302
---------
25,708
---------
COMPUTER EQUIPMENT - 8.02%
Bell & Howell Co.* 200 7,563
International Game Technology 250 6,079
---------
13,642
---------
CRUDE PETROLEUM & NATURAL GAS - 9.93%
Gulf Canada Resources Ltd. - ADR (Note 8) 1,000 2,938
Petroleo Brasileiro S.A. (Petrobras) - ADR (Note 8) 250 2,835
Schlumberger Ltd. 150 6,919
YPF Sociedad Anonima - ADR (Note 8) 150 4,191
---------
16,883
---------
DIAMONDS - 0.75%
De Beers Centenary AG - ADR (Note 8) 100 1,275
---------
DOLLS & STUFFED TOYS - 2.68%
Mattel, Inc. 200 4,563
---------
ELECTONICS & ELECTRICAL EQUIPMENT - 8.57%
Motorola, Inc. 100 6,107
Philips Electronics N.V.- ADR (Note 8) 125 8,461
---------
14,568
---------
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES -3.26%
Fannie Mae 75 5,550
---------
GLASS PRODUCTS - 2.65%
Corning, Inc. 100
4,500
---------
HEALTH SERVICES - 2.08%
MedPartners, Inc.* 675 3,544
---------
HOTELS & LODGING PLACES - 1.66%
CDL Hotels International Ltd. - ADR (Note 8) 1,100 2,826
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Investment Portfolio - December 31, 1998
Manning & Napier Maximum Horizons Portfolio(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES/ Value
PRINCIPAL AMOUNT (Note 2)
PAPER & ALLIED PRODUCTS - 10.55%
Aracruz Celulose S.A. - ADR (Note 8) 300 $ 2,400
Asia Pulp & Paper Co. Ltd. - ADR (Note 8) 500 4,094
Fort James Corp. 150 6,000
Kimberly-Clark Corp. 100 5,450
---------
17,944
---------
PRINTING & PUBLISHING - 2.57%
South China Morning Post (Holdings) Ltd. -
ADR (Note 8) 1,700 4,362
---------
RESTAURANTS - 5.63%
McDonald's Corp. 125 9,578
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 5.91%
Eastman Kodak Co. 100 7,200
Millipore Corp. 100 2,844
---------
10,044
---------
TELECOMMUNICATION SERVICES - 3.21%
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR (Note 8) 75 5,452
---------
TRANSPORTATION - RAILROAD - 2.29%
Canadian National Railway Co. - ADR (Note 8) 75 3,891
---------
TOTAL COMMON STOCK
(Identified Cost $165,438) 153,930
---------
U.S. TREASURY SECURITIES- 10.68%
U.S. Treasury Bond, 6.50%, 11/15/2026 $ 5,000 5,819
U.S. Treasury Note, 5.375%, 6/30/2003 12,000 12,341
---------
TOTAL U.S. TREASURY SECURITIES (Identified Cost $17,966) 18,160
---------
SHORT-TERM INVESTMENTS - 1.62%
Dreyfus Treasury Cash Management Fund
(Identified Cost $2,757) 2,757 2,757
---------
TOTAL INVESTMENTS - 102.84%
(Identified Cost $186,161) 174,843
LIABILITIES, LESS OTHER ASSETS - (2.84)% (4,824)
---------
NET ASSETS - 100% $170,019
=========
</TABLE>
* Non - income producing security
Federal Tax Information:
At December 31, 1998, the net unrealized depreciation (based on identified
cost for federal income tax purposes of $187,939) was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation $ 15,299
Unrealized depreciation (28,395)
----------
UNREALIZED DEPRECIATION - NET ($13,096)
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Investment Portfolio - December 31, 1998
Manning & Napier Small Cap Portfolio
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 76.87%
AGRICULTURAL PRODUCTION - 2.40%
Sylvan, Inc.* 225 $ 3,347
---------
APPAREL - 3.05%
Novel Denim Holdings Ltd.* 200 4,250
---------
CHEMICAL & ALLIED PRODUCTS - 5.67%
Cypress Bioscience, Inc*. 950 2,850
Orion-Yhtyma OY - B Shares (Finland) (Note 8) 210 5,038
---------
7,888
---------
COMMUNICATIONS - 3.64%
Granite Broadcasting Corp.* 400 2,400
Microcell Telecommunications, Inc. - ADR*(Note 8) 450 2,672
---------
5,072
---------
COMPUTER EQUIPMENT - 8.15%
Bell & Howell Co.* 300 11,344
---------
COMPUTER INTEGRATED SYSTEMS DESIGN - 0.05%
Apache Medical Systems, Inc.* 200 75
---------
CRUDE PETROLEUM & NATURAL GAS - 6.33%
Gulf Canada Resources Ltd. - ADR (Note 8) 3,000 8,812
---------
ELECTRONICS & ELECTRICAL EQUIPMENT - 8.24%
Gold Peak Industries Ltd. (Hong Kong)(Note 8) 8,000 2,246
Scientific-Atlanta, Inc. 200 4,562
The Carbide/Graphite Group, Inc.* 175 2,581
Ultralife Batteries, Inc.* 400 2,075
---------
11,464
---------
GLASS PRODUCTS - 3.64%
Libbey, Inc. 175 5,064
---------
INDUSTRIAL & COMMERCIAL MACHINERY - 9.52%
Comfort Systems USA, Inc.* 225 4,022
Hussmann International, Inc. 225 4,359
Lam Research Corp.* 125 2,227
NN Ball & Roller, Inc. 450 2,644
---------
13,252
---------
MANAGEMENT SERVICES - 2.48%
Boron, Lepore & Associates, Inc.* 100 3,450
---------
PAPER & ALLIED PRODUCTS - 5.31%
Schweitzer-Mauduit International, Inc. 175 2,702
Smurfit-Stone Container Corp. 297 4,696
---------
7,398
---------
PRINTING & PUBLISHING - 4.82%
Scholastic Corp.* 125 6,703
---------
REFUSE SYSTEMS - 1.35%
Newpark Resources, Inc.* 275 1,873
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Investment Portfolio - December 31, 1998
Manning & Napier Small Cap Portfolio(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES/ Value
PRINCIPAL AMOUNT (Note 2)
RETAIL - SPECIALTY STORES - 1.81%
Hancock Fabrics, Inc. 300 $ 2,513
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 2.26%
CardioGenesis Corp.* 100 563
Sola International, Inc.* 150 2,587
---------
3,150
---------
TESTING LABORATORIES - 1.38%
Paradigm Geophysical Ltd.* 375 1,922
---------
TEXTILE MILL PRODUCTS - 2.80%
Albany International Corp. - Class A 206 3,901
---------
TRANSPORTATION - 3.97%
Guangshen Railway Co. Ltd.- ADR (Note 8) 575 3,450
Trico Marine Services, Inc.* 425 2,072
---------
5,522
---------
TOTAL COMMON STOCK
(Identified Cost $128,209) 107,000
---------
SHORT-TERM INVESTMENTS - 23.10%
Dreyfus Treasury Cash Management Fund 7,258 7,258
U.S. Treasury Bill, 2/04/1999 $ 25,000 24,898
---------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $32,156) 32,156
---------
TOTAL INVESTMENTS - 99.97%
(Identified Cost $160,365) 139,156
OTHER ASSETS, LESS LIABILITIES - 0.03% 41
---------
NET ASSETS - 100% $139,197
=========
</TABLE>
* Non - income producing security
Federal Tax Information:
At December 31, 1998, the net unrealized depreciation (based on identified
cost for federal income tax purposes of $160,365) was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation $ 13,793
Unrealized depreciation (35,002)
----------
UNREALIZED DEPRECIATION - NET ($21,209)
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Investment Portfolio - December 31, 1998
Manning & Napier Equity Portfolio
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 100.05%
APPAREL - 3.22%
Liz Claiborne, Inc. 175 $ 5,523
---------
BUSINESS SERVICES - 4.25%
National Data Corp. 150 7,303
---------
CHEMICAL & ALLIED PRODUCTS - 10.25%
Celltech plc* (United Kingdom) (Note 8) 950 6,269
Pharmacia & Upjohn, Inc. 200 11,325
---------
17,594
---------
COMPUTER EQUIPMENT - 8.34%
Bell & Howell Co.* 250 9,453
International Game Technology 200 4,863
---------
14,316
---------
CRUDE PETROLEUM & NATURAL GAS - 4.66%
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 8) 275 3,118
YPF Sociedad Anonima - ADR (Note 8) 175 4,889
---------
8,007
---------
DIAMONDS - 2.04%
De Beers Centenary AG - ADR (Note 8) 275 3,506
---------
ELECTRONICS & ELECTRICAL EQUIPMENT - 8.29%
Motorola, Inc. 150 9,159
Philips Electronics N.V.- ADR (Note 8) 75 5,077
---------
14,236
---------
GLASS PRODUCTS - 4.59%
Corning, Inc. 175 7,875
---------
HEALTH SERVICES - 2.14%
MedPartners, Inc.* 700 3,675
---------
HOTELS & LODGING PLACES - 2.24%
CDL Hotels International Ltd - ADR (Note 8) 1,500 3,853
---------
INDUSTRIAL & COMMERCIAL MACHINERY - 2.97%
York International Corp. 125 5,102
---------
LEATHER & LEATHER PRODUCTS - 3.54%
Gucci Group - ADR (Note 8) 125 6,078
---------
PAPER & ALLIED PRODUCTS - 11.39%
Aracruz Celulose S.A. - ADR (Note 8) 450 3,600
Asia Pulp & Paper Co. Ltd. -ADR (Note 8) 550 4,503
Fort James Corp. 150 6,000
Kimberly-Clark Corp. 100 5,450
---------
19,553
---------
RESTAURANTS - 4.46%
McDonald's Corp. 100 7,663
---------
RETAIL - SPECIALTY STORES - 2.20 %
Hancock Fabrics, Inc. 450 3,769
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Investment Portfolio - December 31, 1998
Manning & Napier Equity Portfolio(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
SOFTWARE - 5.65%
Oracle Corp.* 225 $ 9,703
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 10.59%
MEASURING & CONTROLLING DEVICES - 6.40%
Millipore Corp. 200 5,688
Teradyne, Inc.* 125 5,297
---------
10,985
---------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 4.19 %
Eastman Kodak Co. 100 7,200
---------
18,185
---------
TELECOMMUNICATION SERVICES - 4.71%
Compania Anonima Nacional Telefonos de
Venezuela (CANTV) - ADR (Note 7) 250 4,453
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR* (Note 8) 50 3,634
---------
8,087
---------
TRANSPORTATION - RAILROAD - 3.02%
Canadian National Railway Co. - ADR (Note 8) 100 5,187
---------
UTILITIES- ELECTRIC - 1.50%
Enersis S.A. - ADR (Note 8) 100 2,581
---------
TOTAL COMMON STOCK
(Identified Cost $180,751) 171,796
---------
SHORT-TERM INVESTMENTS - 3.15%
Dreyfus Treasury Cash Management Fund
(Identified Cost $5,399) 5,399 5,399
---------
TOTAL INVESTMENTS - 103.20%
(Identified Cost $186,150) 177,195
LIABILITIES, LESS OTHER ASSETS - (3.20)% (5,501)
---------
NET ASSETS - 100% $171,694
=========
</TABLE>
* Non - income producing security
Federal Tax Information:
At December 31, 1998, the net unrealized depreciation (based on identified
cost for federal income tax purposes of $188,922) was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation $ 23,630
Unrealized depreciation (35,357)
---------
UNREALIZED DEPRECIATION - NET $(11,727)
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
Investment Portfolio - December 31, 1998
Manning & Napier Bond Portfolio
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE
AMOUNT/SHARES (NOTE 2)
U.S. TREASURY SECURITIES - 52.61 %
U.S. Treasury Note, 4.50%, 09/30/2000 $ 4,000 $ 3,993
U.S. Treasury Note, 6.50%, 10/15/2006 30,000 33,300
U.S. Treasury Bond, 6.875%, 8/15/2025 35,000 42,459
---------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $70,622) 79,752
---------
U.S. GOVERNMENT AGENCIES - 44.04%
Federal Home Loan Bank Bond, 4.63%, 10/09/2001 15,000 14,833
Federal Home Loan Mortgage Bond, 6.13%, 8/19/1999 15,000 15,104
Federal National Mortage Association Bond, 7.55%,
4/22/2002 15,000 16,089
Student Loan Marketing Association, 7.50%, 3/8/2000 15,000 15,426
Tennessee Valley Authority, 6.375%, 6/15/2005 5,000 5,309
---------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $66,003) 66,761
---------
SHORT-TERM INVESTMENTS - 5.51%
Dreyfus Treasury Cash Management Fund
(Identified Cost $8,353) 8,353 8,353
---------
TOTAL INVESTMENTS - 102.16%
(Identified Cost $144,978) 154,866
LIABILITIES, LESS OTHER ASSETS - (2.16)% (3,283)
---------
NET ASSETS - 100% $151,583
=========
</TABLE>
FEDERAL TAX INFORMATION:
At December 31, 1998, the net unrealized appreciation (based on identified
cost for federal income tax purposes of $ 144,978) was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation $10,071
Unrealized depreciation (183)
--------
UNREALIZED APPRECIATION - NET $ 9,888
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1998
MANNING & NAPIER INSURANCE FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Moderate Maximum
Growth Growth Horizon Small Cap Equity Bond
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- ----------- ----------- ----------
ASSETS:
Investments in securities (Note 2):
At identified cost $ 157,416 $ 639,891 $ 186,161 $ 160,365 $ 186,150 $ 144,978
=========== =========== =========== =========== =========== ==========
At value $ 157,020 $ 618,126 $ 174,843 $ 139,156 $ 177,195 $ 154,866
Cash -- 21 -- -- -- --
Dividends receivable 54 384 135 34 159 --
Interest receivable 1,512 5,405 44 -- -- 2,462
Receivable for securities sold -- -- -- 3,949 -- --
Receivable from investment advisor
(Note 3) 10,548 6,438 10,332 10,482 10,339 11,091
----------- ----------- ----------- ----------- ----------- ----------
TOTAL ASSETS 169,134 630,374 185,354 153,621 187,693 168,419
----------- ----------- ----------- ----------- ----------- ----------
LIABILITIES:
Accrued Directors' fees (Note 3) 7,700 7,700 7,700 7,700 7,700 7,700
Audit fee payable 4,970 4,970 4,970 4,970 4,970 4,970
Other payables and accrued expenses 3,140 2,947 2,665 1,754 3,329 4,166
----------- ----------- ----------- ----------- ----------- ----------
TOTAL LIABILITIES 15,810 15,617 15,335 14,424 15,999 16,836
----------- ----------- ----------- ----------- ----------- ----------
NET ASSETS $ 153,324 $ 614,757 $ 170,019 139,197 $ 171,694 $ 151,583
=========== =========== =========== =========== =========== ==========
NET ASSETS CONSIST OF:
Capital stock $ 140 $ 517 $ 159 166 $ 141 $ 134
Additional paid-in-capital 140,303 612,836 155,696 158,133 140,507 134,176
Undistributed net investment income 4,808 14,450 2,068 537 1,615 7,371
Accumulated net realized gain
on investments 8,469 8,719 23,414 1,570 38,386 14
Net unrealized appreciation
(depreciation) on investments (396) (21,765) (11,318) (21,209) (8,955) 9,888
----------- ----------- ----------- ----------- ----------- ----------
TOTAL NET ASSETS $ 153,324 $ 614,757 $ 170,019 $ 139,197 $ 171,694 $ 151,583
=========== =========== =========== =========== =========== ==========
SHARES OUTSTANDING 14,007 51,677 15,943 16,632 14,082 13,357
=========== =========== =========== =========== =========== ==========
NET ASSET VALUE PER SHARE $ 10.95 $ 11.90 $ 10.66 $ 8.37 $ 12.19 $ 11.35
=========== =========== =========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1998
MANNING & NAPIER INSURANCE FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Moderate Maximum
Growth Growth Horizon Small Cap Equity Bond
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- ----------- ----------- -----------
INVESTMENT INCOME:
Interest $ 5,460 $ 15,484 $ 1,087 1,364 $ 381 $ 8,603
Dividends 1,122 6,003 2,693 989 3,216 --
----------- ----------- ----------- ----------- ----------- -----------
Total Investment Income 6,582 21,487 3,780 2,353 3,597 8,603
----------- ----------- ----------- ----------- ----------- -----------
EXPENSES:
Management fees (Note 3) 1,478 5,862 1,658 1,533 1,652 724
Directors' fees (Note 3) 7,700 7,700 7,700 7,700 7,700 7,700
Audit fee 3,050 3,050 3,050 3,050 3,050 3,050
Custodian fee 1,000 2,100 1,000 1,000 1,000 1,000
Miscellaneous 571 622 573 573 571 572
----------- ----------- ----------- ----------- ----------- -----------
Total Expenses 13,799 19,334 13,981 13,856 13,973 13,046
Less Reduction of Expenses (Note 3) (12,026) (12,300) (11,990) (12,015) (11,991) (11,815)
----------- ----------- ----------- ----------- ----------- -----------
Net Expenses 1,773 7,034 1,991 1,841 1,982 1,231
----------- ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME 4,809 14,453 1,789 512 1,615 7,372
----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments 8,469 8,719 24,566 1,595 38,529 14
Net change in unrealized appreciation
(depreciation) on investments (4,340) (24,073) (19,874) (19,708) (33,939) 5,955
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 4,129 (15,354) 4,692 (18,113) 4,590 5,969
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 8,938 $ (901) $ 6,481 $ (17,601) $ 6,205 $ 13,341
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
Statements of Changes in Net Assets
MANNING & NAPIER INSURANCE FUND INC
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MODERATE GROWTH Maximum Horizon
Portfolio Growth Portfolio Portfolio
----------------- ------------------ -----------------
For the For the For the For the For the
year year year year year
ended ended ended ended ended
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98
----------------- ---------- ------------------ ---------- -----------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 4,809 $ 4,554 $ 14,453 $ 4,330 $ 1,789
Net realized gain on investments 8,469 8,400 8,719 19,221 24,566
Net change in unrealized appreciation
(depreciation) on investments (4,340) 3,328 (24,073) (288) (19,874)
----------------- ---------- ------------------ ---------- -----------------
Net increase (decrease)
from operations 8,938 16,282 (901) 23,263 6,481
----------------- ---------- ------------------ ---------- -----------------
DISTRIBUTIONS TO
SHAREHOLDERS(Note 2):
From net investment income (4,553) (823) (4,332) (635) (2,062)
From net realized gain on investments (8,400) -- (19,198) -- (26,832)
----------------- ---------- ------------------ ---------- -----------------
Total distributions to shareholders (12,953) (823) (23,530) (635) (28,894)
----------------- ---------- ------------------ ---------- -----------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share
transactions (Note 5) 12,953 823 320,960 165,726 28,894
----------------- ---------- ------------------ ---------- -----------------
Net increase in net assets 8,938 16,282 296,529 188,354 6,481
NET ASSETS:
Beginning of Year 144,386 128,104 318,228 129,874 163,538
----------------- ---------- ------------------ ---------- -----------------
END OF YEAR $ 153,324 $ 144,386 $ 614,757 $ 318,228 $ 170,019
================= ========== ================== ========== =================
<S> <C>
For the
year
ended
12/31/97
----------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 1,186
Net realized gain on investments 26,923
Net change in unrealized appreciation
(depreciation) on investments 3,213
----------
Net increase (decrease)
from operations 31,322
----------
DISTRIBUTIONS TO
SHAREHOLDERS(Note 2):
From net investment income (296)
From net realized gain on investments --
----------
Total distributions to shareholders (296)
----------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share
transactions (Note 5) 296
----------
Net increase in net assets 31,322
NET ASSETS:
Beginning of Year 132,216
----------
END OF YEAR $ 163,538
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
Statements of Changes in Net Assets - (continued)
MANNING & NAPIER INSURANCE FUND INC
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Small Cap Equity Bond
Portfolio Portfolio Portfolio
--------- ---------- ----------
For the For the For the For the For the For the
year year year year year year
ended ended ended ended ended ended
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
---------- ---------- ---------- ----------- ---------- -----------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 512 $ 1,192 $ 1,615 $ 633 $ 7,372 $ 6,861
Net realized gain on investments 1,595 28,497 38,529 11,664 14 --
Net change in unrealized appreciation
(depreciation) on investments (19,708) (11,265) (33,939) 16,925 5,955 5,506
---------- ---------- ---------- ----------- ---------- -----------
Net increase (decrease)
from operations (17,601) 18,424 6,205 29,222 13,341 12,367
---------- ---------- ---------- ----------- ---------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS (NOTE 2) :
From net investment income -- (113) (628) (607) (6,858) (785)
From net realized gain on
investments (27,459) -- (10,220) -- -- --
---------- ---------- ---------- ----------- ---------- -----------
Total distributions to shareholders (27,459) (113) (10,848) (607) (6,858) (785)
---------- ---------- ---------- ----------- ---------- -----------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share
transactions (Note 5) 27,459 113 10,848 607 6,858 785
---------- ---------- ---------- ----------- ---------- -----------
Net increase in net assets (17,601) 18,424 6,205 29,222 13,341 12,367
---------- ---------- ---------- ----------- ---------- -----------
NET ASSETS:
Beginning of Year 156,798 138,374 165,489 136,267 138,242 125,875
---------- ---------- ---------- ----------- ---------- -----------
END OF YEAR $139,197 $ 156,798 $ 171,694 $ 165,489 $151,583 $138,242
========== ========== ========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
Financial Highlights
MANNING & NAPIER INSURANCE FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Moderate
Growth Growth
Portfolio Portfolio
----------- -----------
For the For the For the For the For the For the
year year period year year period
ended ended 11/1/96 1to ended ended 11/1/96 1to
12/31/98 12/31/97 12/31/96 12/31/98 12/31/97 12/31/96
---------- ----------- ------------- ---------- ----------- -------------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 11.33 $ 10.11 $ 10.00 $ 12.17 $ 10.25 $ 10.00
---------- ----------- ------------- ---------- ----------- -------------
Income from investment operations:
Net investment income* 0.343 0.357 0.065 0.202 0.166 0.050
Net realized and unrealized gain (loss)
on investments 0.293 0.928 0.045 0.003 4 1.804 0.200
---------- ----------- ------------- ----------- ----------- -------------
Total from investment operations 0.636 1.285 0.110 0.205 1.970 0.250
---------- ----------- ------------- ----------- ----------- -------------
Less distributions to shareholders:
From net investment income (0.357) (0.065) -- (0.087) (0.050) --
From net realized gain on investments (0.659) -- -- (0.388) -- --
---------- ----------- ------------- ----------- ----------- -------------
Total distributions to shareholders (1.016) (0.065) -- (0.475) (0.050) --
---------- ----------- ------------- ----------- ----------- -------------
NET ASSET VALUE - END OF PERIOD $ 10.95 $ 11.33 $ 10.11 $ 11.90 $ 12.17 $ 10.25
========== =========== ============= =========== =========== =============
Total return 2 6.25% 12.73% 1.10% 2.07% 19.23% 2.50%
Ratios to average net
assets / Supplemental Data:
Expenses * 1.20% 1.20% 1.20% 1.20% 1.20% 1.20%3
Net investment income * 3.25% 3.35% 4.08% 2.47% 2.42% 3.11%3
Portfolio turnover 69% 53% 0% 138% 90% 3%3
NET ASSETS - END OF PERIOD $ 153,324 $ 144,386 $ 128,104 $ 614,757 $ 318,228 $ 129,874
========== =========== ============= =========== =========== =============
</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) $(0.516) $(1.024) $ 0.044 $0.030 $(0.505) $0.029
Ratios (to average net assets):
Expenses 9.34% 14.16% 2.50%3 3.30% 10.98% 2.50%3
Net investment income (loss) (4.89)% (9.61)% 2.78%3 0.37% (7.36)% 1.81%3
</TABLE>
1 Commencement of operations.
2 Represents aggregate total return for the period indicated.
3 Annualized.
4 The amount shown for a share outstanding does not correspond with the
aggregate net loss on investments for the period due to the timing of
sales and repurchases of fund shares in relation to fluxtuating market
values of the investments of the Fund.
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
Financial Highlights - continued
MANNING & NAPIER INSURANCE FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Maximum Horizon Small Cap
Portfolio Portfolio
----------------- ---------------
For the For the For the For the For the For the
year year period year year period
ended ended 11/1/96 1to ended ended 11/1/96 1to
12/31/98 12/31/97 12/31/96 12/31/98 12/31/97 12/31/96
----------- ----------------- ------------ ---------- --------------- ------------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 12.89 $ 10.44 $ 10.00 $ 12.13 $ 10.72 $ 10.00
----------- ----------------- ------------ ---------- --------------- ------------
Income from investment operations:
Net investment income (loss)* 0.127 0.093 0.023 0.031 (0.027) 0.009
Net realized and unrealized gain (loss)
on investments (0.079)4 2.380 0.417 (1.666) 1.446 0.711
----------- ----------------- ------------ ---------- --------------- ------------
Total from investment operations 0.048 2.473 0.440 (1.635) 1.419 0.720
----------- ----------------- ------------ ---------- --------------- ------------
Less distributions to shareholders:
From net investment income (0.163) (0.023) -- -- (0.009) --
From net realized gain on investments (2.115) -- -- (2.125) -- --
----------- ----------------- ------------ ---------- --------------- ------------
Total distributions to shareholders (2.278) (0.023) -- (2.125) (0.009) --
----------- ----------------- ------------ ---------- --------------- ------------
NET ASSET VALUE - END OF PERIOD $ 10.66 $ 12.89 $ 10.44 $ 8.37 $ 12.13 $ 10.72
=========== ================= ============ ========== =============== ============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Total return 2 3.91% 23.69% 4.40% (11.18)% 13.23% 7.20%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses * 1.20% 1.20% 1.20%3 1.20% 1.20% 1.20%3
Net investment income (loss)* 1.08% 0.78% 1.43%3 0.33% (0.23%) 0.55%3
Portfolio turnover 100% 120% 4% 155% 72% 9%
NET ASSETS - END OF PERIOD $170,019 $163,538 $132,216 $139,197 $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) ($0.723) $ (1.285) $ 0.002 $(0.705) $ (1.357) $(0.012)
Ratios (to average net assets):
Expenses 8.43% 12.76% 2.50%3 9.04% 12.53% 2.50%3
Net investment income (loss) (6.15)% (10.78)% 0.13%3 (7.51)% (11.56%) (0.75%)3
</TABLE>
1 Commencement of operations.
2 Represents aggregate total return for the period indicated.
3 Annualized.
4 The amount shown for a share outstanding does not correspond with the
aggregate net gain on investments for the period due to the timing of sales
and repurchases of fund shares in relation to fluxtuating market values of the
investments of the Fund.
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
Financial Highlights - continued
MANNING & NAPIER INSURANCE FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Equity Portfolio Bond Portfolio
------------------ ----------------
For the For the For the For the For the
Year year period year year
ended ended 11/1/96 1to ended ended
12/31/98 12/31/97 12/31/96 12/31/98 12/31/97
------------------ ---------- ------------- ---------------- ----------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 12.78 $ 10.56 $ 10.00 $ 10.85 $ 9.94
------------------ ---------- ------------- ---------------- ----------
Income from investment operations:
Net investment income* 0.115 0.048 0.047 0.552 0.538
Net realized and unrealized gain (loss)
on investments 0.133 2.219 0.513 0.486 0.434
------------------ ---------- ------------- ---------------- ----------
Total from investment operations 0.248 2.267 0.560 1.038 0.972
------------------ ---------- ------------- ---------------- ----------
Less distributions to shareholders:
From net investment income (0.040) (.047) -- (0.538) (0.062)
From net realized gain on investments (0.789) -- -- -- --
------------------ ---------- ------------- ---------------- ----------
Total distribution to shareholders (0.838) (0.047) -- (0.538) (0.062
------------------ ---------- ------------- ---------------- ----------
NET ASSET VALUE - END OF PERIOD $ 12.19 12.78 $ 10.56 $ 11.35 $ 10.85
================== ========== ============= ================ ==========
Total return2 3.69% 21.46% 5.60% 9.65% 9.81%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses * 1.20% 1.20% 1.20%3 0.85% 0.85%
Net investment income * 0.98% 0.41% 2.84%3 5.09% 5.29%
Portfolio turnover 68% 50% 29% 11% 0%
NET ASSETS - END OF PERIOD $ 171,694 165,489 $ 136,267 $ 151,583 $ 138,242
================== ========== ============= ================ ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
For the
period
11/1/96 1to
12/31/96
-------------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.00
-------------
Income from investment operations:
Net investment income* 0.062
Net realized and unrealized gain (loss)
on investments (0.122)
-------------
Total from investment operations (0.060)
-------------
Less distributions to shareholders:
From net investment income --
From net realized gain on investments ---
-------------
Total distribution to shareholders
NET ASSET VALUE - END OF PERIOD $ 9.94
-------------
Total return2 (0.60)%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses * 0.85%3
Net investment income * 3.92%3
Portfolio turnover 0%
NET ASSETS - END OF PERIOD $ 125,875
=============
</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 beenas follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ (0.737) $ (1.268) $0.025 $(0.333) $(0.827) $0.036
Ratios (to average net assets):
Expenses 8.46 % 12.44% 2.50%3 9.01% 14.27% 2.50%3
Net investment income (loss) (6.28 )% (10.83)% 1.54%3 (3.07)% (8.13)% 2.27%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 Moderate Growth Portfolio (Moderate Growth Portfolio),
Manning & Napier Growth Portfolio (Growth Portfolio), Manning & Napier
Maximum Horizon Portfolio (Maximum Horizon Portfolio), Manning & Napier
Small Cap Portfolio (Small Cap Portfolio), Manning & Napier Equity Portfolio
(Equity Portfolio), and Mannig & Napier Bond Portfolio (Bond 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 300
million shares of common stock each having a par value of $0.01. As of
December 31, 1998, the shares are currently classified into six classes of
shares including: 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 latest
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 established 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 approximated 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 that 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, if any, 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
27
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES(continued)
DISTRIBUTIONS OF INCOME AND GAINS(continued)
result of deferral of certain losses, foreign denominated investments or
character reclassification between net 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.
For the year ended December 31, 1998, the funds distributed long-term
capital gains as follows: Maximum Horizons Portfolio, $3,754, and Small Cap
Portfolio, $3,407.
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 exchange rates; and b) purchases 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 portfolio positions or specific transaction. Risks may arise
if the counterparties 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, 1998, 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: 1.00% for the Moderate
Growth Portfolio , Growth Portfolio, Maximum Horizon Portfolio, Small Cap
Portfolio, and the Equity Portfolio and 0.50% for the Bond Portfolio. For
the year ended December 31, 1998, the fees amounted to: $1,478 for the
Moderate Growth Portfolio; $5,862 for the Growth Portfolio; $1,658 for the
Maximum Horizon Portfolio; $1533 for the Small Cap Portfolio; $1,652 for the
Equity Portfolio; and $724 for the Bond 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
Moderate Growth Portfolio, Growth Portfolio, Maximum Horizon Portfolio,
Small Cap Portfolio, and the Equity 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 $10,548 for the Moderate Growth Portfolio, $6,438
for the Growth Portfolio, $10,332 for the Maximum Horizon Portfolio,
$10,482 for the Small Cap Portfolio, $10,339 for the Equity Portfolio, and
$11,091 for the Bond Portfolio, for the year ended December 31, 1998.
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. TRANSACTIONS WITH AFFILIATES(CONTINUED)
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.
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 $7,700 for each
Fund for the year ended December 31, 1998.
4. BENEFICIAL OWNERSHIP
At December 31, 1998, the Advisor was a significant shareholder in each
of the Funds, and Keyport Life Insurance Company was a significant
shareholder in the Growth Portfolio.
5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, for
the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Purchases Sales
Fund Other Issuers Government Other Issuers Government
-------------- ----------- -------------- -----------
Moderate Growth Portfolio $ 47,619 $ 60,174 $ 65,724 $ 34,974
Growth Portfolio $ 570,577 $ 488,424 $ 425,386 $ 324,778
Maximum Horizon Portfolio $ 109,027 $ 60,193 $ 120,859 $ 43,115
Small Cap Portfolio $ 106,881 $ 105,043 $ 132,752 $ 104,997
Equity Portfolio $ 116,779 -- $ 110,893 --
Bond Portfolio -- $ 24,161 -- $ 15,104
</TABLE>
6. CAPITAL STOCK TRANSACTIONS
Transactions in capital shares of Funds were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the year ended For the year ended
12/31/98 12/31/97
Fund Shares Amount Shares Amount
------------------- ---------- ------------------ --------
Moderate Growth Portfolio
Reinvested 1,266 $ 12,953 74 $ 823
Growth Portfolio
Sold 39,407 $ 498,864 13,429 165,091
Reinvested 2,171 23,530 53 635
Repurchased (16,050) (201,434) -- --
------------------- ---------- ------------------ --------
Total 25,528 $ 320,960 13,482 $165,726
=================== ========== ================== ========
Maximum Horizon Portfolio
Reinvested 3,253 28,894 23 $ 296
Small Cap Portfolio
Reinvested 3,711 27,459 8 113
Equity Portfolio
Reinvested 1,128 10,848 47 607
Bond Portfolio
Reinvested 614 6858 75 785
</TABLE>
There were no shares repurchased during the the year ended December 31,
1998, other than in Growth Portfolio.
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS
7. 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, 1998.
8. 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. These 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
securities of comparable domestic companies and the United States
Government.
30
<PAGE>
Independent Accountants Report
TO SHAREHOLDERS AND THE BOARD OF DIRECTORS OF
MANNING & NAPIER INSURANCE FUND, INC.:
In our opinion, the accompanying statements of assets and liabilities,
including portfolios of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in
all material respects, the financial position of the 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") at December 31, 1998, the results of their operations, the changes
in their net assets, and their financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") 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 audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits,
which included confirmation of securities at December 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
BOSTON, MASSACHUSETTS
FEBRUARY 5, 1999
31
<PAGE>
<PAGE>
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0001003369
[NAME] MANNING & NAPIER INSURANCE FUND, INC.
[SERIES]
[NAME] MANNING & NAPIER MODERATE GROWTH PORTFOLIO
[NUMBER] 2
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[PERIOD-TYPE] 12-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 157416
[INVESTMENTS-AT-VALUE] 157020
[RECEIVABLES] 12114
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 169134
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 15810
[TOTAL-LIABILITIES] 15810
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 140443
[SHARES-COMMON-STOCK] 14007
[SHARES-COMMON-PRIOR] 12741
[ACCUMULATED-NII-CURRENT] 4808
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 8469
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (396)
[NET-ASSETS] 153324
[DIVIDEND-INCOME] 1122
[INTEREST-INCOME] 5460
[OTHER-INCOME] 0
[EXPENSES-NET] 1773
[NET-INVESTMENT-INCOME] 4809
[REALIZED-GAINS-CURRENT] 8469
[APPREC-INCREASE-CURRENT] (4340)
[NET-CHANGE-FROM-OPS] 8938
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 4553
[DISTRIBUTIONS-OF-GAINS] 8400
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 0
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 1266
[NET-CHANGE-IN-ASSETS] 8938
[ACCUMULATED-NII-PRIOR] 4552
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1478
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 13799
[AVERAGE-NET-ASSETS] 147833
[PER-SHARE-NAV-BEGIN] 11.33
[PER-SHARE-NII] 0.343
[PER-SHARE-GAIN-APPREC] 0.293
[PER-SHARE-DIVIDEND] 0.357
[PER-SHARE-DISTRIBUTIONS] 0.659
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.95
[EXPENSE-RATIO] 1.20
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0001003369
[NAME] MANNING & NAPIER INSURANCE FUND, INC.
[SERIES]
[NAME] MANNING & NAPIER GROWTH PORTFOLIO
[NUMBER] 3
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[PERIOD-TYPE] 12-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 639891
[INVESTMENTS-AT-VALUE] 618126
[RECEIVABLES] 12248
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 630374
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 15617
[TOTAL-LIABILITIES] 15617
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 613353
[SHARES-COMMON-STOCK] 51677
[SHARES-COMMON-PRIOR] 26149
[ACCUMULATED-NII-CURRENT] 14450
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 8719
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (21765)
[NET-ASSETS] 614757
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[LEGEND]
[RESTATED]
[CIK] 0001003369
[NAME] MANNING & NAPIER INSURANCE FUND, INC.
[SERIES]
[NAME] MANNING & NAPIER MAXIMUM HORIZON PORTFOLIO
[NUMBER] 4
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[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
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[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (11318)
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[LEGEND]
[RESTATED]
[CIK] 0001003369
[NAME] MANNING & NAPIER INSURANCE FUND, INC.
[SERIES]
[NAME] MANNING & NAPIER SMALL CAP PORTFOLIO
[NUMBER] 6
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
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[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (21209)
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[NET-INVESTMENT-INCOME] 512
[REALIZED-GAINS-CURRENT] 1595
[APPREC-INCREASE-CURRENT] (19708)
[NET-CHANGE-FROM-OPS] (17601)
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[NET-CHANGE-IN-ASSETS] (17601)
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[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-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
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[INVESTMENTS-AT-COST] 186150
[INVESTMENTS-AT-VALUE] 177195
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[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (8955)
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[APPREC-INCREASE-CURRENT] (33939)
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[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-31-1998
[PERIOD-START] JAN-01-1998
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[PERIOD-TYPE] 12-MOS
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[INVESTMENTS-AT-VALUE] 154866
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[OTHER-ITEMS-LIABILITIES] 16836
[TOTAL-LIABILITIES] 16836
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[PAID-IN-CAPITAL-COMMON] 134310
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