<PAGE> 1
MANULIFE SERIES FUND, INC.
[ARTWORK]
1995 Annual Report
[LOGO]
MANULIFE FINANCIAL
<PAGE> 2
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy the variable contracts funded by
the Separate Accounts of The Manufacturers Life Insurance
Company of America which invests in Manulife Series Fund,
Inc., unless accompanied or preceded by the current Portfolio
Review and prospectus for the respective Separate Account
and the Manulife Series Fund, Inc.
Variable contracts of The Manufacturers Life Insurance
Company of America are distributed by their affiliated
broker/dealer, ManEquity, Inc., and other broker/dealers
appointed by ManEquity, Inc.
<PAGE> 3
CONTENTS
Shareholder Letter 2
Management Discussion and Analysis 4
Portfolio Review:
Emerging Growth Equity Fund 6
Common Stock Fund 7
Real Estate Securities Fund 8
Balanced Assets Fund 9
Capital Growth Bond Fund 10
Money-Market Fund 11
International Fund 12
Pacific Rim Emerging Markets Fund 14
Comparison to Selected Indices 15
Statement of Investments:
Emerging Growth Equity Fund 20
Common Stock Fund 22
Real Estate Securities Fund 24
Balanced Assets Fund 25
Capital Growth Bond Fund 29
Money-Market Fund 31
International Fund 32
Pacific Rim Emerging Markets Fund 36
Statements of Assets and Liabilities 38
Statements of Operations 40
Statements of Changes in Net Assets 42
Notes to Financial Statements 45
Directors and Officers 59
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MANULIFE SERIES FUND, INC.
Dear Shareholder:
It was an excellent year for both equity and fixed-income investors in 1995,
especially after the declines suffered in 1994. The first half of 1995 was an
exceptional turnaround for both equity and fixed-income investors, with both
markets returning to a firmer footing. The momentum from the first half of 1995
continued through to the end of the year, with both equity and fixed-income
markets posting impressive results.
While the first half of 1995 saw many records broken, the results in the second
half were even more impressive. The Dow Jones Industrial Average broke 5,000 for
the first time on November 22 -- just nine months after crossing 4,000. The Dow
finished the year at an astonishing 5117.12, up 33.45%. The S&P 500 closed the
year at 615.93, up 37.58%, and the NASDAQ Composite Index closed the year at
1052.13, up 39.92%. Fixed-income investors also faired extremely well in 1995,
posting the third-best annual total return since the 1920's.
The second half of 1995 confirmed many of the positive developments that
occurred in the first half of the year. The deficit has become a priority for
both the Republican-dominated Congress and the Clinton administration. In fact,
the President has accepted the notion of balancing the budget over seven years,
even if he remains at odds with the Congress over how best to achieve this.
Admittedly, the lack of agreement on how to achieve the budget targets is
unsettling for the markets, nonetheless it does appear clear that the budget
issue, however resolved, will remain a positive development for the markets.
Another very positive development was that the Federal Reserve managed to
engineer the much anticipated "soft-landing." The very fact that the Fed was
able to do this and achieve the economic climate it created -- moderate economic
growth with low inflation -- was ideal for investors.
The Manulife Series Fund's performance in 1995 has also been very positive.
After a very slow start in the first half of the year, the Emerging Growth
Equity Fund and Common Stock Fund made up significant ground in the second half
of the year relative to their indices. In fact, the Emerging Growth Equity Fund
was Lipper Analytical Services Inc.'s top-performing fund in the "Growth"
category for five-year performance.* While small cap stocks did not fare quite
as well as their large cap counterparts during 1995, the Emerging Growth Equity
Fund returned 27.75%** for the year. The Common Stock Fund's 29.23%** return
reflected the higher returns achieved by large cap stocks during the year.
The Capital Growth Bond Fund also had a very good year, finishing at 20.24%,**
an outstanding return especially considering the overall high quality of the
portfolio. The Balanced Assets Fund returned 24.69%,** reflecting the excellent
results on both the equity and fixed-income funds. Our International Fund and
Pacific Rim Emerging Markets Funds also fared well in the context of
international markets, but clearly the story in 1995 was with the domestic
markets. The Pacific Rim Emerging Markets Fund was another of Lipper's
top-performing funds in the "Pacific Region" category for one-year
performance.+
The Manufacturers Life Insurance Company of America, issuer of Manulife
Financial's variable products, has also been hard at work adding value to the
products it offers. In September, it made available a five-year no-lapse
guarantee on its Venture VUL (formerly Horizon Variable Universal Life) product
for both existing and new customers. This new, optional product feature provides
downside protection in the event of market fluctuations. If certain minimum
premium requirements are met, it guarantees that the life insurance coverage
will not lapse in the first five policy years, regardless of fund performance.
In addition, The Manufacturers Life Insurance Company of America intends to add
to its variable universal life insurance products eight new investment
accounts.++ Seven of the new funds will be managed by four world-class fund
managers: Fidelity Management Trust Company; Goldman Sachs Asset Management;
Salomon Brothers Asset Management Inc.; and Wellington Management Company. The
addition of these fund options has been made possible through the participation
of the variable universal life products in the Venture group of variable
products pioneered by Manulife Financial's new subsidiary, North American
Security Life Insurance Company ("NASL"). NASL is a U.S.-based subsidiary of
North American Life Assurance Company which merged with Manulife Financial on
January 1, 1996. As a result of the merger and our ability to join the Venture
group of products, we are able to benefit from NASL's established relationships
with these fund managers. At the same time, Manulife Series Fund, Inc. is adding
the Equity Index Fund, whose results are intended to track the S&P 500, as an
option for its variable universal life policyowners.++
Certainly, 1995 was an exceptional year for the financial markets, for Manulife
Series Fund, Inc. and for Manulife
2
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Financial. The merger of our parent, Manulife Financial, with North American
Life, has created an incredibly strong company ready to face the challenges we
meet as we move toward the next century and beyond. More specifically, it has
allowed The Manufacturers Life Insurance Company of America the opportunity to
provide its variable life insurance policyholders with more investment options.
If you haven't already been contacted by your registered representative about
these new developments, please feel free to get in touch with him or her, or
contact us directly at P.O. Box 600, Niagara Square Station, Buffalo, NY
14201-0600 or at 1-800-VARILINE (1-800-827-4546).
Sincerely,
[ARTWORK]
Donald A. Guloien
President
Manulife Series Fund, Inc.
February, 1996
* Emerging Growth Equity Fund performance summary: 5 year: No. 1 of 48 funds
surveyed. For 1 year performance the fund ranked 72 of 98 funds surveyed and
for 10 year performance 10 of 28 funds surveyed.
** Past performance is not indicative of future results. Returns do not reflect
insurance related expenses and charges. Results would be lower if those
expenses and charges were included.
+ Pacific Rim Emerging Markets Fund performance summary: 1 year: No. 1 of 5
funds surveyed. The inception date of the Pacific Rim Emerging Markets Fund
is October 4, 1994.
++ Capital Account, Director 2000, Variable Annuity and Lifestyle Variable
Annuity policyholders will initially not have access to any of the new
funds. Plans are underway to provide these fund options for Variable Annuity
and Lifestyle Variable Annuity policyowners.
3
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MANULIFE SERIES FUND, INC.
MANAGEMENT DISCUSSION AND ANALYSIS
Investors will remember 1995 with much satisfaction as both bond and equity
markets produced stellar results. Bond market investors were particularly
pleased since they had experienced the worst market in decades the previous
year. The Federal Reserve was behind this favorable performance as it reversed
its modestly restrictive monetary policy posture at mid-year when it lowered the
Fed Funds rate. Towards year-end the Fed's attempts to fine tune an economic
"soft landing" appeared to be working. By the time all the performance figures
were tallied, many satiated investors wondered how a second year of such great
absolute performance in both bond and stock markets could occur.
Capital markets set their sights on the Fed's monetary policy. Bond markets saw
a slowing economy coupled with benign inflation and reasoned that the Fed would
cut rates. However, incipient strength from 1994 induced the Fed to boost the
Fed Funds rate 50 basis points in February to 6%. The market ignored this move
and long-term treasury yields actually fell during the month. There had been
signs of weakness as economists had begun to lower their economic growth
projections and inflation targets in response to the negative impact of rising
interest rates of the previous year on the cyclical sectors like auto and
home-building. Second quarter Gross Domestic Product (GDP) data confirmed the
markets' suspicions about a weakening economy as it inched forward at a
desultory 0.7% annualized rate. The third quarter saw a rebound of sorts as GDP
rose a still modest 3%. Fourth quarter estimates are around 1% with about the
same projected for the first quarter of 1996.
Long rates fell in every month, but July. Perversely, July was the month when
the Fed cut the Fed Funds rate 25 basis points to 5.75%. At that time economic
data was mixed and the bond market, having rallied very strongly (long treasury
yields had dropped to the 6.5% area from 7.9%), began to have second thoughts
about its move, and rates rebounded to near 7%. August brought resumption of
the rally with long treasury rates ending the year near 6%.
The stock market took its cue from the bond market and ignored the economy. Low
interest rates (backed by continued low inflation) mean investors can value
stocks at higher prices. Corporate restructurings and low wage increases helped
to keep profits rising at a healthy level in most sectors. Corporate takeovers
also boosted stock prices, notably in the media and communications, health and
financial sectors. Technology stocks for the first nine months did
extraordinarily well and, even after that, any stock associated with the
"Internet" enjoyed tremendous popularity and saw valuations driven to extremely
high levels. In general, stock market valuations are not excessive on a
price/earnings multiple at current interest rate levels. Yet, there are nagging
concerns such as: (i) dividend yields have never been this low this century
without a correction, and (ii) we have not gone this long (five years) without
at least a 10% market correction.
Capital markets generally coped well with financial shocks. The Orange County
bankruptcy and the Mexican devaluation came at the end of 1994, but spilled into
1995 with little impact. Other shocks included: the failure of the UK Barings
Bank; the decline of the dollar to a post war low of Y.81 before closing the
year at Y.101; the Japanese bank's bad loan problems and the Fed's forcing the
closing of Daiwa Bank's US operations because it covered up large trading
losses.
Politics rocked the markets at year-end when the Administration and Congress
couldn't agree on a Budget. Needing cash to pay civil servants, but unable to
raise more because it had reached the maximum debt ceiling, the government laid
off workers and closed non-critical operations. This left enough cash to pay
the interest on its debt. As both sides use much political rhetoric to buttress
their positions, it seems inconceivable that the world's AAA yardstick, the US
Treasury, will renege on its debt. The politicians are likely to find some way
to compromise their positions.
Inflation remained essentially under wraps for 1995. Since late 1991 the
Consumer Price Index has stayed near the 3% level. The so called core rate of
inflation - excluding food and energy - while it has ticked higher recently, is
still near 3%. Commodity inflation has been mixed. The main stories here are
surging grain prices as a result of low inventories, moderate crop yields and
strong demands. Petroleum prices spurted late in the year as cold weather
boosted demand.
Continued corporate restructurings, reorganizations and so called
"re-engineering" helped keep inflation in check in 1995. These reorganizations
lead to employee layoffs which have numerous consequences. One is high
productivity and low unit labor costs which, coupled with a low dollar, make the
US economy extremely competitive. Another consequence is that wage increases
have been kept relatively low, while monthly employment gains averaged about
140,000 in 1995, a very modest sum. These have limited consumers' income gains
and have put a lid on their ability to spend. Wages and salaries grew about 5%
in 1995 versus 6.4% in 1994. Total retail sales in 1995 rose about 5% compared
to 7.8% in 1994. Given that inflation rates were similar in both years, the
retail environment was ferocious. Retailers have minimal ability to pass on
price increases because consumers cannot pay more. A consequence of this is
reduced retail margins.
4
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MANULIFE SERIES FUND, INC.
MANAGEMENT DISCUSSION AND ANALYSIS
Business investment spending, which had been the mainstay of the economy since
the recovery began, is now projected to give much more modest support in 1996 as
manufacturing capacity is expanding much faster than demand. Inventories are
still a bit higher than desired notably in the retail sector where Christmas
sales were weaker than expected. The foreign sector which was a modest negative
in 1995 will likely continue to have a minor impact. Weak growth in Europe,
Canada and Mexico will be mitigated by a continued inventory correction that
will reduce imports.
There are no notable imbalances in the economy, so an end to the recovery does
not seem near. Lower short-term rates early in 1996 seem to be in the cards as
the momentum in the economy waned as the year progressed. Industrial production
which began the year strongly, up 6.3% year over year, ended 1995 with a year
over year gain of about 2%. Interest sensitive sectors of the economy should do
well in the first half of 1996. This should be sufficient to rejuvenate the
consumer and get the economy back on a faster growth path. At this time, most
indicators suggest that the extended recovery will continue with some potential
for a modest pick up in economic activity. However, if the economy does not
recover, government officials may have to respond with a greater degree of
fiscal and monetary stimulus than is currently anticipated.
5
<PAGE> 8
MANULIFE SERIES FUND, INC.
EMERGING GROWTH EQUITY FUND
The Emerging Growth Equity Fund returned 27.75% for 1995 versus 39.92% for the
NASDAQ Composite Index and 31.54% for the Lipper Small Company Growth Average.
During the year, the net assets for the Fund grew by 67% to $162.4 million.
Smaller capitalization stocks started 1995 lagging their large capitalization
counterparts on the heels of a falling dollar and concerns over the future pace
of domestic growth. Indeed, economic growth slowed considerably versus 1994 with
the Fed having raised short-term interest rates seven times in the course of a
year. As news of a slowing economy began to take hold early in the year,
investors began to concentrate ownership in those companies that were less
heavily dependent on the US economic cycle. This generally did not bode well for
smaller capitalization names which typically rely more heavily on domestic
growth to drive earnings. These concerns however, failed to impact the wireless
cable sector of the market which saw a sharp rally in the first few months of
the year. The Emerging Growth Equity Fund was able to participate fully in the
rally, which came on the heels of a number of small acquisition announcements.
In the second quarter, smaller stocks rallied sharply and by mid-way through the
year most small-cap averages had caught-up to the larger stock averages. The
Fund's relative performance during this period was negatively impacted by its
large exposure to a number of the healthcare names which were subject to a sharp
correction. The Fund was also negatively affected by an underweight position in
the technology sector which produced strong gains, late in the first half of the
year.
During the second half of the year, the Emerging Growth Equity Fund performed
much better as the tables reversed. Healthcare stocks produced solid gains while
technology weakened throughout the second half. The Emerging Growth Equity Fund
was positively impacted by the Fund's relatively overweight position in
healthcare and underweight position in technology. Small capitalization stocks,
in general, continued to move higher in the third quarter as the rally in the
equity market broadened throughout the year. A strong positive turn for the US
dollar also gave an added boost to smaller domestic companies during this
period.
Overall, small capitalization stocks had an excellent year in 1995 despite
falling behind the large-cap averages. The overwhelming trend throughout 1995
was toward a slowing economy and a weak dollar early in the year which caused
many investors to focus on large multinational companies. Multinational
companies often benefit from a declining dollar and are less dependent on the US
economic cycle resulting in more stable earnings. High levels of initial public
offerings (IPO's) throughout the year also held back small capitalization stocks
as IPO's tend to compete for the same pool of money. This had the effect of
reducing the potential demand for existing small capitalization stocks.
Heading into 1996, small capitalization stocks continue to be attractively
valued relative to their large-cap counterparts. In particular, small-cap growth
stocks appear well-positioned to produce strong earnings growth in an
environment of weaker corporate profits. Furthermore, we remain encouraged by
the prospects for a capital gains tax cut which should provide longer-term
benefits to small-cap investors.
INVESTMENT OBJECTIVE: The fund has a growth investment style, typically
investing in companies whose earnings are expected to grow at a faster than
average rate. It deploys assets utilizing a quantitative investment style which
emphasizes small capitalization companies exhibiting high earnings growth and
earnings momentum.
PORTFOLIO SUMMARY
Net Assets $162.4 million
Number of Equity Issues 80
Number of Short-Term Issues 6
ASSET MIX DISTRIBUTION
[FIGURE 1]
Common Stock 94.9%
Cash and Other 5.1%
<TABLE>
10 LARGEST EQUITY HOLDINGS
COMPANY INDUSTRY % OF FUND
<S> <C> <C>
Teltrend Inc. Communications Equipment 2.89%
American Medical Response Hospital Management 2.08%
Inphynet Medical Management Inc. Hospital Management 2.08%
BHC Financial Inc. Finance: Consumer & Other 2.08%
ITI Technologies Inc. Communications Equipment 2.00%
Mobilemedia Corp. Telephone 1.98%
Belden Inc. Electrical Equipment 1.96%
Global Star Telecom Telephone 1.96%
Arch Communications Group Telephone 1.85%
Blyth Industries Inc. Household Products 1.83%
</TABLE>
6
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MANULIFE SERIES FUND, INC.
COMMON STOCK FUND
The Common Stock Fund returned 29.23% for 1995 versus 37.58% for the Adjusted
Standard & Poor's 500 Index (including dividends). During the year, the net
assets for the Fund grew by 75% to $61.0 million.
1995 began with the equity market taking its cue from bonds, as clear signs of
the economy losing steam produced a sharp rally in the bond market which lasted
throughout the year. Indeed, economic growth slowed considerably from 1994's
torrid pace, as prior Fed interest rate hikes at last took hold. Both retail
sales and housing were the first to show signs of a slowdown, with the
manufacturing sector following suit as the first half of the year wore on. As
the economic slowdown broadened, unemployment began to tick up as less economic
activity meant fewer jobs. Market participants quickly began to anticipate that
the Fed may, indeed, lower short-term interest rates driving bond prices even
higher.
Lower interest rates, coupled with a number of large scale mergers and
acquisitions in the paper, entertainment and technology area, along with
continued strong corporate earnings, all helped to propel stocks to record highs
in the first six months of the year.
During the first half of the year, leadership came from the high-flying
technology sector as well as interest sensitive financials and consumer staples
stocks. With economic growth slowing, consumer cyclical stocks showed poor
relative returns as did utility and energy stocks.
The Common Stock Fund's relative performance during the first six months of the
year was negatively impacted by the Fund's underweighted exposure to the
interest sensitive sector which faired particularly well throughout the first
half of the year. More importantly however, was the Fund's emphasis on the
healthcare sector where a sharp correction took place and severely impacted
performance.
In the second half of the year the equity markets continued to post record highs
on the heels of a continued rally in treasury bonds caused by further signs of a
slowing economy. The Federal Reserve responded early in July, lowering the
Federal Funds Rate by 25 basis points. For the most part, corporate earnings
remained strong despite weakening economic activity as many companies continued
their restructuring efforts. Inflation, which had remained subdued throughout
the first part of the year, continued to do so giving rise to yet another Fed
Rate cut in December, bringing the Federal Funds rate down to 5.50%. The decline
in rates came, despite increased political tensions throughout the fourth
quarter, as both the White House and a Republican Congress battled over deficit
reform. As of year-end, a compromise had yet to be reached.
The strongest gains were made in the healthcare sector followed by energy and
capital goods. Profit taking in the technology sector caused many of the
high-flying technology stocks to give back much of their year long gains. The
retail sector also faired poorly due to a continued slowdown in consumer
spending which lasted throughout most of the year.
In the second half of the year, the Common Stocks Fund's relative performance
was positively impacted by superior stock selection within the technology sector
while avoiding a sharp correction in many of the high-flying semi-conductor
names. Relative performance was also aided by the Fund's increased exposure to
the interest sensitive sectors which continued through to year-end.
Overall, 1995 was an excellent year for the stock market. Throughout the year,
the overwhelming trend was toward a slowing economy as well as a persistent
decline in inflationary expectations which allowed long-term interest rates to
fall substantially. This, coupled with a continuation of strong corporate
profits and an increase in merger and acquisition activity all helped to fuel
one of the best years on record for the equity market.
INVESTMENT OBJECTIVE: The fund emphasizes a disciplined quantitative approach to
growth investing. It seeks financially secure industry leaders, which exhibit
strong earnings growth, often concentrating assets within large capitalization
companies.
PORTFOLIO SUMMARY
Net Assets $61.0 million
Number of Equity Issues 87
Number of Short-Term Issues 10
ASSET MIX DISTRIBUTION
[FIGURE 2]
Common Stock 91.2%
Cash and Other 8.8%
<TABLE>
10 LARGEST EQUITY HOLDINGS
COMPANY INDUSTRY % OF FUND
<S> <C> <C>
Nynex Corp. Telephone 1.99%
Exxon Corp. Energy 1.98%
Philip Morris Companies Inc. Tobacco 1.85%
Mobil Corp. (Rights) Energy 1.84%
Gillette Co. Personal Care 1.79%
MCI Communications Corp. Telephone 1.71%
Atlantic Richfield Co. Energy 1.71%
American International Group Inc. Finance: Insurance 1.66%
General Electric Co. Electrical Equipment 1.59%
Fluor Corp. (Rights) Engineering & Construction 1.49%
</TABLE>
7
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MANULIFE SERIES FUND, INC.
REAL ESTATE SECURITIES FUND
The Real Estate Securities Fund returned 15.14% for 1995 versus 18.31% for the
National Association of Real Estate's All REIT (NAREIT) Index and 13.82% for the
Lipper Real Estate Fund Average. During the year, the net assets for the Fund
grew 23% to $52.4 million.
The real estate securities market began 1995 on a relatively flat note. During
the first few months of the year, investors began to see evidence of a slowing
economy which caused long-term interest rates to fall. Lower rates coupled with
a strong job market early in the year should have provided a solid fundamental
base for real estate securities to rally. However, these positive fundamentals
were not sufficient enough to offset the negative psychology in the real estate
securities market. Beginning in the second quarter, the REIT market finally
began to rally, as expectations for lower short-term interest rates along with a
powerful rally in the bond market provided the necessary ingredients for real
estate securities to rally.
In the first half of the year, the Real Estate Securities Fund substantially
benefited from the correct decision to overweight the homebuilders, which
extended their late first quarter gains through the second quarter. In fact,
the homebuilding stocks were the first to respond to lower long-term interest
rates, with the REITs rallying more in the second quarter of the year. The
Fund's exposure to the homebuilders more than offset its underweighted exposure
to the office/industrial sector of the REIT market which faired particularly
well during the first six months. As of June 30, 1995 the Real Estate
Securities Fund had gained 5.85%.
In the second half of the year the real estate securities market continued to
move higher as both short and long-term interest rates moved lower. Signs that
investors were slowly returning to the real estate market coupled with tight
supply conditions in a select few sectors of the market gave a real boost to
REIT share prices in the second half of the year. The rally did not occur
gradually, or broadly, however, as REIT share prices faced a sharp correction in
the month of October. This was primarily due to the retail sector of the REIT
market which witnessed a number of apparel retailers seek bankruptcy protection
in the second half of the year. This caused the dividend yield on the average
REIT to widen substantially relative to the yield on 10-year treasury
securities. As interest rates continued to fall throughout the quarter, REIT
yields began to look particularly attractive causing investors to aggressively
purchase REITs beginning in mid-November. Indeed, REIT share prices
outperformed the stock market in the final month of the year. Lower mortgage
rates coupled with expectations of higher corporate earnings also caused many of
the homebuilding stocks to extend their first half gains.
In the second half of the year the Real Estate Securities Fund substantially
benefited from the correct decision to add a storage REIT to the portfolio as
well as adding to the office/industrial sector. The Fund's emphasis on the
hotel/lodging sector did negatively impact Fund performance in the latest
quarter as continued evidence of a slowing economy hurt some select
hotel/lodging stocks.
For the year as a whole, the relative underperformance versus the NAREIT All
REIT Index was solely due to the stellar performance of mortgaged-backed
securities which are included in the NAREIT All REIT Index, which the Fund does
not invest in. For the full year, the Real Estate Securities Fund outperformed
the Lipper Real Estate Fund Average.
INVESTMENT OBJECTIVE: The fund seeks a combination of long-term growth through
capital appreciation, and satisfactory current income, by investing
predominately in well managed financially secure Real Estate Investment Trusts
(REITs) and the common stock of real estate related issuers.
PORTFOLIO SUMMARY
Net Assets $52.4 million
Number of Equity Issues 43
Number of Short-Term Issues 3
ASSET MIX DISTRIBUTION
[FIGURE 3]
Finance (Other REITs) 59.3%
Building 14.0%
Other Corporate 10.8%
Finance (Healthcare REITs) 9.1%
Cash and Other 6.8%
<TABLE>
10 LARGEST EQUITY HOLDINGS
COMPANY INDUSTRY % OF FUND
<S> <C> <C>
La Quinta Inns Inc. Lodging & Restaurants 3.94%
Red Lion Hotels Inc. Lodging & Restaurants 3.62%
Centerpoint Properties Corp. Finance: Real Estate 3.17%
Home Depot Inc. Retail 3.15%
JP Realty Inc. Finance: Real Estate 3.11%
United Dominion Realty Trust Inc. Finance: Real Estate 3.11%
Fleetwood Enterprises Inc. Building 3.06%
National Health Invs Inc. Finance: Healthcare 3.06%
Irvine Apartment Communities Inc. Finance: Real Estate 3.05%
Sun Communities Inc. Finance: Real Estate 3.04%
</TABLE>
8
<PAGE> 11
MANULIFE SERIES FUND, INC.
BALANCED ASSETS FUND
The Balanced Assets Fund returned 24.69% for 1995 versus 25.16% for the Lipper
Balanced Fund Index. During the year, the net assets for the Fund grew by 48%
to $110.8 million.
Overall, 1995 was an excellent year for both the stock and bond markets.
Throughout the year, the overwhelming trend was toward a slowing economy, as
well as a persistent decline in inflationary expectations, which allowed
long-term interest rates to fall substantially. This, coupled with a
continuation of strong corporate profits and an increase in merger and
acquisition activity all helped to fuel one of the best years, on record, for
both the debt and equity markets.
The target mix of the fund was 50/45/5 stocks/bonds/cash, respectively. No
changes in the target mix occurred throughout the year. As of December 31, 1995
the actual mix of the fund was 46/45/9. (Note that within the bond portion of
the fund, the portfolio manager may hold cash as part of the strategy of
managing movements in interest rates).
Given a cautious view on the stock and bond markets, a 5% cash target weighting
was held throughout the year. This move proved somewhat premature as both the
stock and bond markets posted strong gains.
During the first six months of the year, the equity portion of the Balanced
Assets Fund was negatively impacted by the Fund's underweighted exposure to the
interest sensitive sector which faired particularly well throughout the first
half of the year. More importantly, however, was the Fund's emphasis on the
healthcare sector where a sharp correction took place and adversely impacted
performance. In the second half of the year, however, relative performance was
positively impacted by superior stock selection within the technology sector
while at the same time avoiding a sharp correction in many of the high-flying
semi-conductor names. Performance was also aided by the Fund's increased
exposure to the interest sensitive sector which continued to rally in the second
half of the year.
The performance of the fixed-income portion of the Fund was negatively impacted
by its underweighting in the corporate bond sector. While exposure to corporate
bonds was selectively increased throughout the year, a heavier weighting would
have been desirable. Corporate bonds generally outperformed Treasuries during
the year. To a lesser extent, two premature market timing calls caused some
underperformance in the Fund as the market moved in the opposite direction.
However, the bond portion of the Fund had strong relative performance to its
peers and therefore contributed positively to the performance of the Balanced
Assets Fund.
With the market rally of 1995, this position would have benefited the Fund. The
Fund remained well diversified and had an average credit quality of AA3.
Given the economic and financial outlook, there are no planned changes in the
respective equity, fixed-income and cash target weightings.
INVESTMENT OBJECTIVE: The fund seeks intermediate- and long-term growth through
capital appreciation and income by investing in both investment grade debt and
equity securities.
PORTFOLIO SUMMARY
Net Assets $110.8 million
Number of Equity Issues 87
Number of Fixed-Income Issues 47
Number of Short-Term Issues 11
Average Quality (Fixed Income) AA3
ASSET MIX DISTRIBUTION
[FIGURE 4]
Common Stock 46.4%
Fixed Income 42.3%
Cash and Other 11.3%
<TABLE>
10 LARGEST EQUITY HOLDINGS
COMPANY INDUSTRY % OF FUND
<S> <C> <C>
Exxon Corp. Energy 1.07%
Mobil Corp. (Rights) Energy 1.05%
Nynex Corp. Telephone 1.01%
MCI Communications Corp. Telephone 0.99%
American International Group Inc. Finance: Insurance 0.96%
Philip Morris Companies Inc. Tobacco 0.94%
Gillette Co. Personal Care 0.90%
United Healthcare Corp. Hospital Management 0.88%
Atlantic Richfield Co. Energy 0.84%
General Electric Co. Electrical Equipment 0.83%
</TABLE>
9
<PAGE> 12
MANULIFE SERIES FUND, INC.
CAPITAL GROWTH BOND FUND
The Capital Growth Bond Fund returned 20.24% for 1995 versus 21.69% for the
Salomon Brothers Corporate Bond Index. During the year, the net assets of the
Fund grew by 27% to $42.7 million.
Long-term interest rates as represented by the 30-year US Treasury bond fell 193
basis points over the year to close at a yield of 5.95%. The yield on the 2-year
Treasury note over the same period fell 254 basis points.
Interest rates rose initially in the first quarter of the year as economic
indicators continued to show strength. Investors were concerned that economic
growth might lead to higher rates of inflation. On February 1, the Fed raised
both the Fed Funds and the Discount rates by 50 basis points to 6% and 5.25%,
respectively. The increase marked the seventh and final time the Fed would raise
rates before lowering them later in 1995. Subsequent to the rate increase signs
of economic slowing began to appear in the housing and auto sectors, as
consumers began to rein in spending. Employment growth also weakened. The market
subsequently rallied through to the end of the second quarter, as investors felt
that the Fed was succeeding in bringing economic growth to a more sustainable
level while keeping inflation under control. On July 6 the Fed dropped
short-term rates by 25 basis points, sighting that the monetary tightening
initiated in early 1994 had resulted in receding inflationary pressures, enough
to accommodate a modest adjustment in monetary conditions.
Shortly after the Fed rate cut, interest rates rose in the third quarter. While
the rate of inflation remained low, some investors feared the pick up in
economic activity would lead to higher rates of inflation. Investors pushed
rates higher. With the supply from the auctions being absorbed, increased
interest in bonds by Japanese investors, continued weakness in the economy and a
low rate of inflation, the bond market rallied through to the end of the year.
The rally was aided by a cut in short-term rates of 25 basis points by the Fed
on December 20. The cut came as a surprise to some investors, as it was felt
that no further cuts would be made until there was a resolution to the budget
negotiations. Anticipating a favorable budget outcome, the bond market performed
well. Continued slow growth and a low rate of inflation gave investors further
support for their positive outlook on the bond market.
The term of the fund was kept in longer term stance for most of the first
quarter in anticipation of falling rates. A shortening of term in early March,
in anticipation of a short-term backup in rates, proved premature as the market
continued to rally. The Fund was returned to a neutral stance and was not
extended until early July when further drops in interest rates were expected.
Unfortunately, the timing of this move was off as interest rose on investors
fears of potential increases in the rate of inflation. The term of the Fund was
returned to neutral for the remainder of the year.
The performance of corporate bonds in general over Treasuries was positive for
the year. However, some sectors did perform poorly. Specifically, electric
utilities and certain industrial credits did not do well. Increased competition
in the electric utility industry, changing regulations, and a perception of
increased credit risk caused stress in the sector. Within the industrial sector
certain name specific credits suffered from event risk causing them to
underperform. Other industrial sectors like cable and media had a banner year.
The Fund selectively increased its exposure to corporate bonds throughout the
year in the better performing sectors. Exposure to industrials and yankees was
increased, while exposure to the electric utility and telephone industries was
reduced. In addition, exposure to callable bonds was reduced throughout the year
as these bonds perform poorly in bond market rallies. While all these moves
benefited the Fund, the continued underweighting of the corporate sector, was
the primary reason for the Fund's underperformance relative to the Salomon
Brothers Corporate Bond Index. Corporate bonds in general outperformed US
Treasuries for 1995.
The fund was well-diversified and maintained an average credit quality of A1.
INVESTMENT OBJECTIVE: The fund seeks growth of capital, with income as a
secondary consideration, by investing primarily in intermediate- and long-term
corporate and government debt obligations of medium grade or better.
PORTFOLIO SUMMARY
Net Assets $42.7 million
Number of Fixed-Income Issues 39
Number of Short-Term Issues 3
Average Quality A1
Minimum Quality BBB(15.6% of net assets)
Average Maturity 10.2 years
ASSET MIX DISTRIBUTION
[FIGURE 5]
Cash, Short Term and Other 5.2%
Other Corporate 18.5%
Business Credit Institutions 7.3%
Banks 18.0%
Foreign Government 7.5%
Electric Utilities 9.5%
Personal Credit Institutions 9.8%
Treasuries 12.7%
Telephone 11.5%
10
<PAGE> 13
MANULIFE SERIES FUND, INC.
MONEY-MARKET FUND
The Money-Market Fund returned 5.63% for 1995 versus 5.75% for the 90-day
Treasury Bill Index. During the year, the net assets of the Fund grew by 48% to
$36.0 million.
At the start of the year, investors anticipated more tightening moves by the
Fed. Higher interest rates were deemed necessary to slow economic growth to a
steady non-inflationary pace. On February 1, as widely expected, the Fed raised
both the Fed Funds and Discount rates by 50 basis points to 6% and 5.25%,
respectively. The Fund, which was kept short with an average maturity of 31
days, was well-positioned for the rate-hike.
During the second quarter, economic statistics indicated that the US economy had
slowed considerably, inspiring fears of a possible recession. This prompted a
rising speculation that the Fed might need to ease policy in order to stimulate
the economy. As the probability of a rate-cut increased, the Fund began to
purchase longer term securities. This helped to lengthen the average maturity
of the Fund to 70 days by the end of May.
On July 6, the Fed, citing abating inflationary pressures, lowered the Fed Funds
rate by 25 basis points to 5.75%. Money market yields fell sharply in response
to market anticipation that there would be several more rate-cuts in the months
ahead. The bill market started to price in further easing of policy of close to
50 basis points. However, to the disappointment of investors, the Federal
Reserve's policy-making Open Market Committee did not take any policy actions at
their meetings in either August, September or October.
Throughout this period, the Fund did not own any Treasury bills since they
appeared to be overpriced. Instead, the Fund's assets were invested in Federal
Agency securities and high-quality commercial paper.
Although the US economy expanded faster than expected in the third quarter,
there were signs of sluggishness in the manufacturing sector and consumer
spending. This, coupled with favorable inflation, prompted the Fed to ease
again on December 19, cutting the Fed Funds rate by another 25 basis points to
5.5%, while the Discount rate was left unchanged at 5.25%.
The Money-Market Fund finished the year with an average maturity of 77 days.
This reflected the fund manager's optimism that short-term interest rates will
continue to fall in 1996.
INVESTMENT OBJECTIVE: The fund invests in high-quality money-market securities
with maturities of one year or less.
PORTFOLIO SUMMARY
Net Assets $36.0 million
Number of Short-Term Issues 22
Average Maturity 77 days
DISTRIBUTION OF ASSETS BY MATURITY
1 - 30 Days 20.1%
31 - 60 Days 23.9%
61 - 90 Days 29.1%
Over 90 Days 26.9%
ASSET MIX DISTRIBUTION
[FIGURE 6]
U.S. Government 54.0%
Telephone 4.1%
Canadian Government 12.7%
Beverages 4.1%
Energy 4.4%
Business Credit Institutions 12.4%
Personal Credit Institutions 8.3%
11
<PAGE> 14
MANULIFE SERIES FUND, INC.
INTERNATIONAL FUND
The International Fund returned 11.28% for 1995 versus 11.50% for the Financial
Times Actuaries World Index made up of a blend of 45% Europe (including the UK),
30% Pacific Rim (excluding Japan), and 25% Japan. During the year, the net
assets of the Fund grew 69% to $19.0 million.
1995 has generally seen good performances from the world's equity markets,
buoyed by hopes of cuts in interest rates as economic growth slowed and
inflation remained subdued. Wall Street was particularly strong and this fed
through to most of the other markets.
In Japan, however, equities ended the year only slightly up in yen terms after a
strong second half rally. The weakness of the currency which had sparked the
rise meant that Dollar investors suffered a small loss in the Japanese market in
1995. On the economic front, Japan is likely to remain sluggish for some time as
domestic inventories are quite high and European economies are showing signs of
slowdown. In addition, imports are continuing to grow rapidly. On the other
hand, monetary policy is now genuinely loose and with inflation benign, there is
every possibility that the Official Discount Rate will remain at 0.5% throughout
much of 1996. On the corporate side, the worst effects of the yen's dramatic
rise in the first half of the year now appear to be over, with companies
reporting higher profits, and prospects are more optimistic that looser fiscal
and monetary policies will have beneficial effects.
Elsewhere in the Far East, economic growth continues to be above that in other
parts of the world. Although there are signs that some countries will be
experiencing slowdowns during 1996, there was a recovery in many of the regions'
equity markets during the fourth quarter. Despite concerns over economic growth,
the Hong Kong index rose decisively through the 10,000 level on the back of
liberalization of Chinese trading practices, the strength of Wall Street, and
the prospect of further declines in interest rates. The Malaysian economy is
still showing signs of overheating, and the market fell as the measures
announced to slow the economy were deemed to be rather ineffective. Foreign
investors looking for bargains then pushed the market up towards the end of the
year, but the outlook for the beginning of 1996 is uncertain as interest rate
hikes appear more likely. The Thai market took a downturn in the second half of
the year as earnings tumbled, particularly in the property and finance sectors.
UK economic growth slowed sharply in 1995 and inflation surged briefly in
September but has fallen back as pressure from input prices now seems to be
subsiding. Equities rose to new all-time highs during the last quarter of the
year helped by a strong performance from Wall Street, falling gilt yields, the
prospect of lower interest rates (culminating in a 0.25% cut in mid-December),
good corporate results and a surge in bid activity. Short-term interest rates
look likely to fall further. This, and on-going corporate activity should
underpin equities during the first part of the year.
The Swiss market finished the year, after a slow start, as the best performer
among the world's major markets in dollar terms. Initially the strong currency
hampered exporters, but the outlook brightened as interest rates fell and
economic growth elsewhere in Europe started to look less robust. Equities also
received a boost in the last quarter as concerns rose about the single European
currency, capital was directed towards the Swiss currency, strengthening the
currency which led to cuts in interest rates. Elsewhere in Europe, the German
growth rate is already below trend which may justify a cut in the discount rate
in the near future. At the moment economic fundamentals of low inflation and low
growth should be most favorable to German Bonds, but unless monetary union
prospects fade, the risk premium built into the longer end of the market will
probably prevail. In this scenario higher-yielding European bond markets will
probably outperform. The French market, which is underweighted in our
portfolios, came under pressure during the last quarter as the Prime Minister
announced measures to eliminate the annual welfare budget wand and there was
widespread industrial unrest.
During 1996 the direction of interest rates will continue to play a vital role
in determining the direction of the world's equity markets.
12
<PAGE> 15
MANULIFE SERIES FUND, INC.
INTERNATIONAL FUND
INVESTMENT OBJECTIVE: The fund seeks to achieve long-term growth of capital by
investing in a portfolio comprised primarily of common stock issued by companies
located in Western Europe, Australia, the Far East, Mexico, and South America.
PORTFOLIO SUMMARY
Net Assets $19.0 million
Number of Equity Issues 275
Number of Fixed Income Issues 4
Number of Repurchase Agreements 1
ASSET MIX DISTRIBUTION BY COUNTRY
Japan 23.5%
United States (cash and other) 16.3%
United Kingdom 11.6%
Australia 7.9%
Hong Kong 7.5%
Malaysia 5.9%
Germany 4.0%
Switzerland 3.9%
Singapore 3.7%
France 3.3%
Netherlands 2.8%
Italy 1.8%
Sweden 1.8%
Thailand 1.5%
Indonesia 1.2%
Belgium 1.1%
Spain 1.0%
Denmark 0.5%
Norway 0.4%
Finland 0.3%
13
<PAGE> 16
MANULIFE SERIES FUND, INC.
PACIFIC RIM EMERGING MARKETS FUND
The Pacific Rim Emerging Markets Fund returned 11.47% for 1995 versus 8.59% for
the Financial Times Actuaries World Index made up of a blend of 80% Pacific
(excluding Japan) and 20% Japan. During the year, the net assets of the Fund
grew 71% to $13.1 million.
After a cautious start to the year following the crisis in Mexico and the
ensuing repatriation of money from the smaller emerging markets, Pacific Rim
markets generally recovered over the second half of 1995. Economic growth in the
region continues to be above-average, although Hong Kong equities came under
pressure as the economy there slowed. Market sentiment was also adversely
affected by rumors concerning loss of tax concessions on Chinese state owned and
Sino-foreign joint ventures. However, the prospect of US interest rate cuts and
the liberalization of Chinese trading practices sparked a round of bargain
hunting. This together with a rampant Wall Street sent the Hang Seng Index
decisively through the 10,000 level. US interest rates and the China factor
remain the two most important elements determining the performance of the Hong
Kong stock market in 1996. A further reduction in US rates would help stimulate
the flow of monies back to equities, but could also lead to a more significant
recovery in the Hong Kong economy and also the local property market.
The Indonesian market finished the year slightly ahead of where it started but
this masked a good deal of volatility. Despite a positive economic outlook, the
index was sent plummeting in the first half of the year by, among other things,
the Mexico crisis and the Barings debacle. However, a strong US bond market and
expectations of Fed Fund rate cuts helped support the market in the second half
of the year. Thailand saw the reverse, with the market holding up quite well in
the first six months of the year, but taking a downward turn in the last half of
the year as earnings took a tumble, influenced by poor profits from the property
and finance sectors. Growth should slow in 1996, but only slightly and is
forecast at 8.6% and on fundamental grounds. Thai equities should still prove
attractive.
The Malaysian economy continued to show signs of overheating throughout much of
1995. As the measures announced to slow the economy down seemed to be somewhat
ineffective in addressing both domestic consumption and current account deficit
problems, the equity market fell. Share prices were pushed up in the last
quarter by foreign investors looking for bargains. Political uncertainty appears
to have ended with the November elections eliminating all further rumors of
political leadership struggles until 1999. With interest rate hikes likely in
the first quarter of 1996, the market could be unsettled.
Gross Domestic Product growth in Australia decelerated as 1995 progressed and
is forecast to come in at around 3.4% compared with 5.5% in 1994. The current
account deficit peaked in the second quarter at A$8.1 billion and is
expected to hit A$5.2 billion in the December quarter. Australian equities rose
nearly 15% in local terms, with industrials which make up 66% of the index
being helped by a rally in the bond market. The outlook for Australian equities
looks reasonable as both inflation and money market rates are expected to hold
steady.
Japanese equities were badly hit during the first half of 1995 as the yen
strengthened convincingly against the dollar, hitting the export sector which
struggled to be competitive. However, two interest rate cuts bringing the
Official Discount Rate down to 0.5% and concerted intervention by the central
banks turned the dollar around. This sparked a rally in the share markets and
foreign investors switched money from the smaller Pacific Rim markets into Japan
to rebuild their underweight portfolio positions. However, most of this rise was
offset for dollar investors by the weakness of the yen against the dollar. The
outlook for 1996 is more positive with companies expected to report higher
profits and earnings and evidence beginning to accumulate that the property
market is starting to emerge from its prolonged lethargy.
INVESTMENT OBJECTIVE: The fund seeks to achieve long-term growth of capital by
investing in a diversified portfolio comprised primarily of common stock issued
by companies located in the Pacific Rim, including Japan.
PORTFOLIO SUMMARY
Net Assets $13.1 million
Number of Equity Issues 131
Number of Fixed Income Issues 2
Number of Repurchase Agreements 1
ASSET MIX DISTRIBUTION BY COUNTRY
Australia 23.0%
Japan 16.3%
Malaysia 15.3%
Hong Kong 14.3%
United States (cash and other) 14.2%
Singapore 9.6%
Thailand 4.5%
Indonesia 2.8%
14
<PAGE> 17
COMPARISON TO SELECTED INDICES
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
EMERGING GROWTH EQUITY FUND AND SELECTED INDICES
SINCE INCEPTION -- JUNE 26/84 TO DECEMBER 31/95
AVERAGE ANNUAL TOTAL RETURN
---------------------------
1 Year 5 Year 10 Year Inception
27.75% 25.94% 14.82% 15.35%
<TABLE>
<CAPTION>
Lipper Small
Manulife Series Company Growth NASDAQ Composite
Fund* ($51,804) Index ($46,480) Index ($43,872)
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Inception 10,000 10,000.00 10,000
1984 10,541 10,380.00 10,320
1985 13,006 13,620.64 13,560
1986 12,148 14,388.84 14,550
1987 11,556 13,537.02 13,779
1988 13,514 16,107.70 15,901
1989 19,216 19,804.42 18,970
1990 16,352 17,845.76 15,593
1991 28,018 27,048.82 24,451
1992 34,131 30,440.74 28,240
1993 42,284 35,594.36 32,392
1994 40,551 35,335.00 31,355
1995 51,804 46,480.00 38,924
</TABLE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
COMMON STOCK FUND AND SELECTED INDEX
SINCE INCEPTION -- APRIL 30/87 TO DECEMBER 31/95
AVERAGE ANNUAL TOTAL RETURN
---------------------------
1 Year 5 Year 10 Year Inception
29.23% 14.15% N.A. 9.91%
<TABLE>
<CAPTION>
Manulife Adjusted
Series Fund* Standard & Poor's 500
($22,694) ($28,057)
- -------------------------------------------------------------
<S> <C> <C>
10,000 10,000.00
1987 8,502 8,751.00
1988 9,340 10,204.54
1989 12,204 13,438.36
1990 11,708 13,021.77
1991 15,241 16,989.50
1992 16,165 18,284.10
1993 18,330 20,127.14
1994 17,561 20,393.00
1995 22,694 28,057.00
</TABLE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENTS IN
REAL ESTATE SECURITIES FUND AND SELECTED INDICES
SINCE INCEPTION -- APRIL 30/87 TO DECEMBER 31/95
AVERAGE ANNUAL TOTAL RETURN
---------------------------
1 Year 5 Year 10 Year Inception
15.14% 18.63% N.A. 11.17%
<TABLE>
<CAPTION>
National Association of
Manulife Real Estate All REIT Adjusted
Series Fund* (NAREIT) Index Standard & Poor's 500
($25,066) ($16,934) ($28,057)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
10,000 10,000.00 10,000.00
1987 9,158 8,707.00 8,751.00
1988 10,231 9,696.12 10,204.54
1989 11,176 9,520.62 13,438.36
1990 10,670 7,868.79 13,021.77
1991 15,054 10,676.37 16,989.50
1992 18,260 11,976.75 18,284.10
1993 22,389 14,198.44 20,127.14
1994 21,770 14,313.00 20,393.00
1995 25,066 16,934.00 28,057.00
</TABLE>
15
<PAGE> 18
COMPARISON TO SELECTED INDICES
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
BALANCED ASSETS FUND AND SELECTED INDICES
SINCE INCEPTION -- JUNE 26/84 TO DECEMBER 31/95
AVERAGE ANNUAL TOTAL RETURN
---------------------------
1 Year 5 Year 10 Year Inception
24.69% 11.89% 10.37% 12.50%
<TABLE>
<CAPTION>
Salomon Brothers Adjusted
Manulife Series Corporate Bond Standard & Poor's
Fund* ($38,841) Index ($40,455) 500 ($58,948)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
10,000 10,000.00 10,000.00
1984 11,376 11,926.00 11,175.00
1985 14,481 14,906.31 14,720.83
1986 16,993 17,444.85 17,469.21
1987 16,693 17,805.96 18,386.34
1988 17,963 19,490.40 21,440.31
1989 21,794 22,211.26 28,234.74
1990 22,147 23,830.47 27,359.47
1991 27,323 28,234.34 35,695.90
1992 29,020 30,738.72 38,415.92
1993 32,500 34,464.25 42,288.25
1994 31,150 33,244.00 42,846.00
1995 38,841 40,455.00 58,948.00
</TABLE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CAPITAL GROWTH BOND FUND AND SELECTED INDEX
SINCE INCEPTION -- JUNE 26/84 TO DECEMBER 31/95
AVERAGE ANNUAL TOTAL RETURN
---------------------------
1 Year 5 Year 10 Year Inception
20.24% 9.37% 9.36% 11.52%
<TABLE>
<CAPTION>
Salomon Brothers
Manulife Series Corporate Bond
Fund* ($35,112) Index ($40,455)
- ------------------------------------------------------------
<S> <C> <C>
10,000 10,000.00
1984 11,373 11,926.00
1985 14,345 14,906.31
1986 17,554 17,444.85
1987 17,257 17,805.96
1988 18,489 19,490.40
1989 21,055 22,211.26
1990 22,440 23,830.47
1991 26,117 28,234.34
1992 27,655 30,738.72
1993 30,575 34,464.25
1994 29,202 33,244.00
1995 35,112 40,455.00
</TABLE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
MONEY-MARKET FUND AND SELECTED INDEX
SINCE INCEPTION -- JUNE 26/84 TO DECEMBER 31/95
AVERAGE ANNUAL TOTAL RETURN
---------------------------
1 Year 5 Year 10 Year Inception
5.63% 4.24% 5.66% 5.95%
<TABLE>
<CAPTION>
Manulife Series 90-Day
Fund* ($19,463) Treasury Bills ($19,847)
- --------------------------------------------------------------
<S> <C> <C>
10,000 10,000.00
1984 10,478 10,498.00
1985 11,225 11,318.94
1986 11,907 12,025.25
1987 12,582 12,734.74
1988 13,470 13,595.60
1989 14,666 14,768.90
1990 15,813 15,938.60
1991 16,698 16,855.07
1992 17,266 17,465.22
1993 17,737 18,004.90
1994 18,426 18,768.00
1995 19,463 19,847.00
</TABLE>
* Results are net of investment advisory fee, deducted daily, at an annual rate
of .50% (prior to 1987, .20%). The data shown indicate past performance and
are not representative of expected future results. Actual investment return
and principal value will fluctuate so that an investment in the fund when
redeemed may be worth more or less than when purchased. Policy charges are not
included. Results would be lower if they were.
16
<PAGE> 19
COMPARISON TO SELECTED INDICES
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
INTERNATIONAL FUND AND SELECTED INDICES
SINCE INCEPTION -- OCTOBER 4/94 TO DECEMBER 31/95
AVERAGE ANNUAL TOTAL RETURN
---------------------------
1 Year 5 Year 10 Year Inception
11.28% N.A. N.A. 7.64%
<TABLE>
<CAPTION>
Financial Times
Actuaries Blended Financial
Manulife World Index Times Acturaries
Series Fund* (excluding the U.S.) World Index**
($10,957) ($10,680) ($10,875)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
10,000 10,000.00 10,000.00
1994 9,846 9,878.00 9,753.00
1995 10,957 10,680.00 10,875.00
</TABLE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
PACIFIC RIM EMERGING MARKETS FUND AND SELECTED INDICES
SINCE INCEPTION -- OCTOBER 4/94 TO DECEMBER 31/95
AVERAGE ANNUAL TOTAL RETURN
---------------------------
1 Year 5 Year 10 Year Inception
11.47% N.A. N.A. 4.17%
<TABLE>
<CAPTION>
Financial Times Blended Financial
Manulife Actuaries World Times Actuaries
Series Fund* Pacific Basin Index World Index***
($10,519) ($9,840) ($10,030)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
10,000 10,000.00 10,000.00
1994 9,437 9,785.00 9,237.00
1995 10,519 9,840.00 10,030.00
</TABLE>
* Results are net of investment advisor and expense fees. Investment advisory
fees are deducted daily at an annual rate of 0.85% for each of the
International Fund and Pacific Rim Emerging Markets Fund, and expense fees are
deducted daily at a rate of up to 0.50% and 0.65%, respectively. The advisory
fee will drop to 0.70% on assets in excess of $100 million. The data shown
indicate past performance and are not representative of expected future
results. Actual investment return and principal value will fluctuate so that an
investment in the fund when redeemed may be worth more or less than when
purchased. Policy charges are not included. Results would be lower if they
were.
17
<PAGE> 20
This Page
Intentionally
Left Blank
18
<PAGE> 21
STATEMENT OF INVESTMENTS
& FINANCIAL STATEMENTS
19
<PAGE> 22
EMERGING GROWTH EQUITY FUND
Statement of Investments as of December 31, 1995
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BIOTECHNOLOGY 2.4% ENGINEERING & CONSTRUCTION 1.2%
* Liposome Inc. 131,100 $2,622,000 * American Buildings Co. 87,400 $1,966,500
* Neorx Corp. 198,200 1,263,525 ----------
---------- ENTERTAINMENT 4.5%
3,885,525 * Grand Casinos Inc. 83,100 1,932,075
---------- * Lodgenet Entertainment Corp. 228,200 2,167,900
BROADCASTERS 2.6% * Play by Play Toys & 87,200 1,275,300
* CAI Wireless Systems Inc. 246,375 2,371,359 Novelties
* Heartland Wireless Commun. Inc. 63,900 1,901,025 * Stratosphere Corp. 187,300 1,854,525
---------- ----------
4,272,384 7,229,800
---------- ----------
BUILDING: MATERIAL & HOME 1.3% FINANCE: CONSUMER & OTHERS 5.4%
Texas Industries Inc. (Rights) 40,300 2,135,900 BHC Financial Inc. 187,800 3,371,400
---------- * First Merchants 97,200 1,798,200
CHEMICALS & FERTILIZERS 2.5% Acceptance Corp.
* Cytec Industries Inc. 43,500 2,713,312 National Data Corp. 63,100 1,561,725
* Tetra Technologies Inc. 74,800 1,299,650 * Olympic Financial Limited 127,500 2,071,875
---------- ----------
4,012,962 8,803,200
---------- ----------
COMMUNICATIONS EQUIPMENT 9.9% FINANCE: INSURANCE 2.3%
* Allen Group Inc. (Rights) 83,200 1,861,600 * Capmac Holdings Inc. 53,600 1,346,700
* ITI Technologies Inc. 109,000 3,242,750 Philadelphia Cons. 147,400 2,395,250
* Microcom Inc. 104,000 2,704,000 Holding Corp.
* Network Equipment Tech (Rights) 53,700 1,470,038 ----------
* Pairgain Technologies Inc. 38,200 2,091,450 3,741,950
* Teltrend Inc. 100,300 4,689,025 ----------
---------- HOSPITAL MANAGEMENT 7.5%
16,058,863 * American Medical 104,100 3,383,250
---------- Response
COMPUTER HARDWARE 2.9% * Inphynet Medical 140,500 3,372,000
* Pinnacle Systems Inc. 53,600 1,326,600 Management Inc.
* S3 Inc. 143,600 2,530,950 * Pet Practice Inc. 260,100 2,666,025
* Triquint Semiconductor Inc. 67,100 905,850 * Renal Treatment 63,900 2,811,600
---------- Centers Inc.
4,763,400 ----------
---------- 12,232,875
DRUGS 2.6% ----------
* CIMA Labs Inc. 120,000 720,000 HOSPITAL SUPPLY 3.4%
* Depotech Corp. 74,200 1,428,350 * Circon Corp. 26,800 542,700
* Matrix Pharmaceuticals 110,800 2,077,500 * Diametrics Medical Inc. 183,700 895,537
---------- * Instent Inc. 157,000 2,355,000
4,225,850 * Ventritex Inc. 99,300 1,725,337
---------- ----------
ELECTRICAL EQUIPMENT 2.3% 5,518,574
* BTU International Inc. 120,500 564,844 ----------
Belden Inc. 123,900 3,190,425 HOUSEHOLD PRODUCTS 1.8%
---------- * Blyth Industries Inc. 100,600 2,967,700
3,755,269 ----------
---------- LODGING & RESTAURANTS 2.9%
ELECTRONICS 4.9% * Buffets Inc. 102,600 1,410,750
* Advanced Energy Industries Inc. 133,800 1,204,200 * Prime Hospitality Corp. 268,200 2,682,000
* Cable Design Technologies Corp. 40,800 1,795,200 * Rock Bottom Restaurants Inc. 47,400 616,200
Harman Int'l. Industries Inc. 21,400 858,675 ----------
* LTX Corp. 165,100 1,506,538 4,708,950
* NU Horizons Electronics Corp. 51,000 905,250 ----------
* Silicon VY Group Inc. 67,100 1,694,275 MACHINERY 3.3%
---------- * Raymond Corp. 119,700 2,723,175
7,964,138 * FSI International Inc. 127,400 2,579,850
---------- ----------
5,303,025
----------
*Non Income Producing Securities
See Accompanying Notes
</TABLE>
<PAGE> 23
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE SHORT TERM INVESTMENTS FACE AMOUNT VALUE
(Note 2) (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MANUFACTURING 5.6% U.S. GOVERNMENT AGENCIES 2.7%
* Altron Inc. 80,500 $2,415,000 Federal Home Loan Bank
BMC Industries Inc. 70,000 1,627,500 5.320% due 05/17/1996 500,000 $489,877
* Electroglas Inc. 97,500 2,388,750 Federal Home Loan
LSI Industries Inc. 170,100 2,721,600 Mortgage 5.670%
----------- due 01/16/1996 1,820,000 1,815,700
9,152,850 Federal Home Loan
----------- Mortgage 5.580%
METALS & MINERALS 1.0% due 02/12/1996 2,000,000 1,986,980
Cleveland Cliffs Inc. (Rights) 37,800 1,549,800 ------------
----------- 4,292,557
OFFICE EQUIPMENT 1.4% ------------
* Computer Products Inc. 80,300 923,450 CANADIAN GOVERNMENT
* Metrologic Instruments Inc. 143,000 1,430,000 AGENCIES 0.7%
----------- Canadian Wheat Board 5.630%
2,353,450 due 02/21/1996 1,200,000 1,190,429
----------- ------------
OIL: SERVICES 1.5% BUSINESS CREDIT
Camco International Inc. 16,800 470,400 INSTITUTIONS 0.6%
* Global Industries Inc. 33,600 1,008,000 American Express Credit Corp.
* Pride Pete Services Inc. 94,100 999,813 5.650% due 02/28/1996 1,000,000 990,897
----------- ------------
2,478,213 PERSONAL CREDIT
----------- INSTITUTIONS 0.8%
POLLUTION CONTROL 1.0% Ford Motor Credit Corp. 5.690%
* Newpark Resources Inc. 76,440 1,700,790 due 2/26/96 1,300,000 1,288,494
----------- ------------
RETAIL 4.0% TOTAL SHORT TERM
* Brightpoint Inc. 201,100 2,840,537 INVESTMENTS 4.8% 7,762,377
* Compusa Inc. 53,500 1,665,187 ------------
* Williams Sonoma Inc. 103,500 1,914,750 TOTAL INVESTMENTS 99.7% 161,858,889
----------- ------------
6,420,474 OTHER ASSETS LESS
----------- LIABILITIES 0.3% 567,578
SOFTWARE 5.8% ------------
* Lernout & Hauspie Speech NET ASSETS - EQUIVALENT TO $23.10 PER
Products 54,300 1,520,400 SHARE BASED ON 7,030,732 SHARES
* CKS Group Inc. 40,200 1,567,800 OF CAPITAL STOCK OUTSTANDING. 100.0% $162,426,467
Henry Jack & Assoc. Inc. 111,600 2,762,100 ============
* Health Management Systems Inc. 34,350 1,339,650
* Rational Software Corp. 87,100 1,948,863
* Spectrum Holobyte Inc. 45,500 295,750
-----------
9,434,563
-----------
TELEPHONE 7.6%
* Arch Communications Group Inc. 125,400 3,009,600
* Global Star Telecommunications 86,200 3,189,400
* Metrocall Inc. 150,700 2,882,138
* Mobilemedia Corp. Class 'A' 144,600 3,217,350
-----------
12,298,488
-----------
TEXTILES 2.7%
* Donnkenny Inc. Delaware 18,400 333,500
* Quiksilver Inc. 73,700 2,519,619
Wolverine World Wide Inc. (Rights) 48,700 1,534,050
-----------
4,387,169
-----------
TRANSPORTATION 0.6%
* Stolt Nielsen SA 26,800 773,850
-----------
TOTAL COMMON STOCK 94.9% 154,096,512
-----------
</TABLE>
<PAGE> 24
COMMON STOCK FUND
Statement of Investments as of December 31, 1995
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BEVERAGES 2.4% ELECTRONICS 5.3%
Coca Cola Co. 7,800 $579,150 * Applied Materials Inc. 14,700 $578,812
Pepsico Inc. 16,300 910,762 * Cabletron Systems Inc. 9,300 753,300
--------- * LSI Logic Corp. 16,100 527,275
1,489,912 Linear Technology Corp. 13,900 545,575
--------- * 3COM Corp. 17,900 834,587
CHEMICALS & FERTILIZERS 2.3% ---------
Engelhard Corp. 38,000 826,500 3,239,549
B. F. Goodrich Co. (Rights) 4,100 279,312 ---------
Hercules Inc. 5,200 293,150 ENERGY 11.2%
--------- Atlantic Richfield Co. 9,400 1,041,050
1,398,962 Chevron Corp. 10,900 572,250
--------- Exxon Corp. 15,100 1,209,887
COMMUNICATIONS 0.9% Halliburton Co. 14,300 723,938
* Paging Network Inc. 21,400 521,625 Mobil Corp. (Rights) 10,000 1,120,000
--------- Schlumberger Ltd. 10,700 740,975
COMPUTER HARDWARE 3.6% Texaco Inc. 8,400 659,400
* Cadence Design Systems Inc. (Rights) 6,700 281,400 Unocal Corp. 26,300 765,988
* Digital Equipment Corp. 13,300 852,862 ---------
* Silicon Graphics Inc. 13,100 360,250 6,833,488
* Sun Microsystems Inc. 14,800 675,250 ---------
--------- ENGINEERING & CONSTRUCTION 2.5%
2,169,762 Dresser Industries Inc.
--------- (Rights) 25,000 609,375
CONGLOMERATES 0.3% Fluor Corp. (Rights) 13,800 910,800
ITT Industries Inc. 8,400 201,600 ---------
--------- 1,520,175
DRUGS 5.8% ---------
Bristol Myers Squibb Co. 7,300 626,887 ENTERTAINMENT 3.6%
Johnson & Johnson 8,700 744,937 Carnival Corp. Class 'A' 20,800 507,000
Medtronic Inc. 11,700 653,738 HBO & Co. 2,600 199,225
Pfizer Inc. 12,800 806,400 ITT Corp. New 8,400 445,200
* R P Scherer Corp. Delaware 14,200 697,575 * Promus Hotel Corp. 20,100 447,225
--------- * Viacom Inc. Class 'B' 12,300 582,713
3,529,537 ---------
--------- 2,181,363
ELECTRIC UTILITIES 4.8% ---------
Dominion Resources Inc. Va. 13,000 536,250 FINANCE: BANKS 8.3%
Duke Power Co. 13,600 644,300 BankAmerica Corp. 8,400 543,900
FPL Group Inc. (Rights) 15,500 718,812 Bankers Trust N.Y. Corp. 10,100 671,650
Pacific Gas & Electric Co. 19,900 564,662 Chemical Banking Corp. 11,200 658,000
Southern Co. 19,600 482,650 Citicorp 12,700 854,075
--------- Fleet Financial Group Inc. 15,700 639,775
2,946,674 MBNA Corp. 13,300 490,438
--------- J P Morgan & Co. Inc. 6,700 537,675
ELECTRICAL EQUIPMENT 1.6% Nationsbank Corp. 9,800 682,325
General Electric Co. 13,500 972,000 ---------
--------- 5,077,838
---------
FINANCE: CONSUMER &
OTHER 1.4%
T. Rowe Price & Assoc. Inc 1,500 73,875
Travelers Group Inc. 12,700 798,513
---------
872,388
---------
FINANCE: INSURANCE 4.1%
American International 10,950 1,012,875
Group Inc.
Chubb Corp. 6,000 580,500
General Re Corp. 3,300 511,500
ITT Hartford Group Inc. 8,400 406,350
---------
2,511,225
*Non Income Producing Securities ---------
See Accompanying Notes FOODS 0.9%
CPC Internationl Inc. 7,500 514,688
---------
</TABLE>
22
<PAGE> 25
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HOSPITAL MANAGEMENT 1.4% TRANSPORTATION 0.6%
United Healthcare Corp. 13,400 $877,700 Southwest Airlines Co. 16,700 $388,275
--------- ----------
HOSPITAL SUPPLY 0.7% TOTAL COMMON STOCK 91.2% 55,668,887
Becton Dickinson & Co. 6,000 450,000 ----------
--------- -------------------------------------------------------------
SHORT TERM INVESTMENTS FACE AMOUNT VALUE
(Note 2)
METALS & MINERALS 0.8% -------------------------------------------------------------
Aluminum Co. of America 9,000 475,875 U.S. GOVERNMENT AGENCIES 3.7%
--------- Federal Home Loan Bank 5.470%
NATURAL GAS PIPELINES 1.2% due 03/27/1996 280,000 276,341
Coastal Corp. 19,400 722,650 Federal Home Loan Mortgage 5.670%
--------- due 01/16/1996 1,000,000 997,637
OFFICE EQUIPMENT 1.4% Federal Natl. Mortgage Assoc. 5.470%
Xerox Corp. 6,300 863,100 due 02/02/1996 110,000 109,465
--------- Federal Natl. Mortgage Assoc. 5.500%
PERSONAL CARE 2.9% due 03/22/1996 250,000 246,906
Gillette Co. 20,900 1,089,413 Federal Natl. Mortgage Assoc. 5.490%
Kimberly Clark Corp. (Rights) 8,500 703,375 due 03/28/1996 600,000 592,040
--------- ----------
1,792,788 2,222,389
--------- ----------
RETAIL 6.6% CANADIAN GOVERNMENT 3.0%
Albertsons Inc. 26,000 854,750 AGENCIES
Liz Claiborne 3,100 86,025 Canadian Wheat Board 5.600%
Nike Inc. Class 'B' 10,800 751,950 due 03/29/1996 240,000 236,715
* Office Max Inc. 20,800 465,400 Canadian Wheat Board 5.450%
Sears Roebuck & Co. 22,700 885,300 due 04/03/1996 1,000,000 985,921
* Tommy Hilfiger Corp. 8,100 343,237 Export Development Corp. 5.800%
Wal Mart Stores Inc. 28,500 637,688 due 01/03/1996 630,000 629,797
--------- ----------
4,024,350 1,852,433
--------- ----------
SOFTWARE 5.8%
America Online Inc. 5,800 217,500 BEVERAGES 0.2%
* Cisco Systems Inc. 8,200 611,925 Pepsico Inc. 5.620%
General Motors Corp. 9,900 514,800 due 02/23/1996 100,000 99,173
Class 'E' ----------
* Informix Corp. 26,500 795,000
* Microsoft Corp. 6,500 570,375 PERSONAL CREDIT INSTITUTIONS 1.6%
* Oracle Systems Corp. 14,100 597,488 Ford Motor Credit Corp. 5.690%
Paychex Inc. 5,000 249,375 due 02/26/1996 1,000,000 991,149
--------- ----------
3,556,463
---------
TELEPHONE 8.9% TOTAL SHORT TERM INVESTMENTS 8.5% 5,165,144
* Airtouch 26,700 754,275 ----------
Communications Inc.
GTE Corp. 16,300 717,200 TOTAL INVESTMENTS 99.7% 60,834,031
* LCI International Inc. 11,800 241,900 ----------
MCI Communications Corp. 40,000 1,045,000 OTHER ASSETS LESS
NYNEX Corp. 22,500 1,215,000 LIABILITIES 0.3% 161,897
Pacific Telesis Group 17,800 598,525 ----------
(Rights)
SBC Communications Inc. 14,500 833,750 NET ASSETS - EQUIVALENT TO $17.27
--------- PER SHARE BASED ON 3,532,074
5,405,650 SHARES OF CAPITAL STOCK
--------- OUTSTANDING. 100.0% $60,995,928
TOBACCO 1.9% ===========
Philip Morris 12,500 1,131,250
Companies Inc. ---------
</TABLE>
23
<PAGE> 26
REAL ESTATE SECURITIES FUND
Statement of Investments as of December 31, 1995
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BUILDING 14.0% LODGING & RESTAURANTS 7.6%
* Congoleum Corp. Class 'A' 19,200 $ 206,400 La Quinta Inns Inc. 75,500 $2,066,813
Engle Homes Inc. 57,000 484,500 * Red Lion Hotels Inc. 108,400 1,897,000
----------
Fleetwood Enterprises Inc. 62,400 1,606,800 3,963,813
* Hovnanian Enterprises Inc. Class 'A' 31,800 238,500 ----------
Hughes Supply Inc. (Rights) 19,100 539,575 RETAIL 3.2%
* Schottenstein Homes Inc. 77,000 904,750 Home Depot Inc. 34,500 1,651,687
* NVR Inc. 22,300 223,000 ----------
Sherwin Williams Co. (Rights) 38,700 1,577,025 TOTAL COMMON STOCK 93.2% 48,851,613
Stanley Works (Rights) 30,400 1,565,600
--------- ------------------------------------------------------------
7,346,150 SHORT TERM INVESTMENTS FACE AMOUNT VALUE
--------- (Note 2)
------------------------------------------------------------
FINANCE - HEALTH CARE 9.1% U.S. GOVERNMENT AGENCIES 0.4%
Health & Retirement Properties Trust 64,800 1,053,000 Federal Home Loan Bank 5.570%
Meditrust 30,600 1,067,175 due 02/15/1996 215,000 213,503
National Health Invs. Inc. 48,400 1,603,250 ----------
Nationwide Health Properties Inc. 25,000 1,048,375 CANADIAN GOVERNMENT AGENCIES 2.9%
--------- Canadian Wheat Board 5.600%
4,771,800 due 03/29/1996 1,100,000 1,084,942
--------- Export Development Corp. 5.800%
FINANCE - REAL ESTATE 59.3% due 01/03/1996 450,000 449,855
Avalon Properties Inc. 29,000 623,500 ----------
Bay Apartment Community Inc. 31,900 773,575 1,534,797
CBL & Assoc. Properties Inc. 72,200 1,570,350 ----------
Carr Realty Corp. 42,300 1,031,062
Catellus Development Corp. 89,000 534,000 TOTAL SHORT TERM
Centerpoint Properties Corp. 71,900 1,662,687 INVESTMENTS 3.3% 1,748,300
Chelsea GCA Realty Inc. 34,800 1,044,000 ----------
Colonial Properties Trust 39,500 1,007,250 TOTAL INVESTMENTS 96.5% 50,599,913
Developers Diversified Realty 17,300 519,000 ----------
Duke Realty Investments Inc. 33,300 1,044,788 OTHER ASSETS LESS LIABILITIES
Evans Withycombe Residential 10,000 214,975 LIABILITIES 3.5% 1,840,204
Felcor Suite Hotels Inc. 56,700 1,573,425 ----------
Highwoods Properties Inc. 36,800 1,039,600 NET ASSETS - EQUIVALENT TO $15.10
Irvine Apartment Communities Inc. 83,000 1,597,750 PER SHARE BASED ON 3,472,861
JP Realty Inc. 74,500 1,629,688 SHARES OF CAPITAL
Liberty Property 76,600 1,589,450 STOCK OUTSTANDING. 100.0% $52,440,117
Macerich Co. 50,000 1,000,000 ===========
Merry Land ANO Investment Co. 65,800 1,554,525
National Golf Properties Inc. 26,400 603,900
Rouse Co. 52,600 1,071,725
Shurgard Storage Centers Inc. Class 'A' 39,000 1,053,000
Simon Property Group Inc. 61,600 1,501,500
Sovran Self Storage Inc. 59,300 1,564,038
Spieker Properties Inc. 20,600 517,575
Summit Properties Inc. 79,100 1,572,113
Sun Communities Inc. 60,500 1,595,687
United Dominion Realty Trust Inc. 108,600 1,629,000
----------
31,118,163
----------
</TABLE>
* Non Income Producing Securities
See Accompanying Notes
24
<PAGE> 27
BALANCED ASSETS FUND
Statement of Investments as of December 31, 1995
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
BONDS FACE AMOUNT VALUE BONDS FACE AMOUNT VALUE
(Note 2) (Note 2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S GOVERNMENT
OBLIGATIONS 12.8% BANKS (CONTINUED)
United States Treasury Notes 4.375% MBNA Corp. 7.490%
due 11/15/1996 745,000 $739,532 due 09/14/1999 1,000,000 $1,052,240
United States Treasury Notes 6.500% Nationsbank Corp. 4.750%
due 05/15/1997 260,000 264,347 due 08/15/1996 500,000 497,220
United States Treasury Notes 5.125% Norwest Corp. 6.650%
due 04/30/1998 500,000 498,985 due 10/15/2023 500,000 490,755
United States Treasury Notes Republic New York Corp. 9.500%
5.8750% due 04/15/2014 500,000 648,380
due 08/15/1998 2,705,000 2,747,685 ---------
United States Treasury Notes 8.000% 8,655,650
due 05/15/2001 735,000 822,737 ---------
United States Treasury Notes 7.500% BEVERAGES 1.1%
due 05/15/2002 690,000 765,037 Coca Cola Enterprises Inc. 8.500%
United States Treasury Notes 6.250% due 02/01/2022 1,000,000 1,197,500
due 02/15/2003 3,160,000 3,296,765 ---------
United States Treasury Notes 6.500% BUSINESS CREDIT 1.4%
due 08/15/2005 2,300,000 2,450,213 INSTITUTIONS
United States Treasury Notes 5.875% Avco Financial Services Inc. 7.500%
due 11/15/2005 1,630,000 1,666,675 due 11/15/1996 500,000 508,290
United States Treasury Bonds 7.625% Chrysler Financial Corp. 7.200%
due 02/15/2025 790,000 966,020 due 05/26/1998 500,000 515,510
---------- CIT Group Holdings Inc. 8.750%
TOTAL U.S GOVERNMENT 14,217,996 due 04/15/1998 500,000 533,015
---------- ---------
1,556,815
---------
CABLE EQUIPMENT 0.9%
CANADIAN PROVINCIAL 2.0% Tele Communications Inc. 7.375%
GOVERNMENT due 02/15/2000 1,000,000 1,037,070
Province of Ontario 8.000% ---------
due 10/17/2001 1,000,000 1,094,660 COMMUNICATIONS 1.1%
Province of Quebec 8.800% EQUIPMENT
DUE 04/15/2003 1,000,000 1,145,010 GTE Corp 8.750%
---------- due 11/01/2021 1,000,000 1,187,500
2,239,670 ---------
----------
ITALIAN GOVERNMENT 0.9%
Republic of Italy 6.875% ELECTRIC UTILITIES 3.7%
due 09/27/2023 1,000,000 976,550 Baltimore Gas & Electric Co. 6.125%
---------- due 07/01/2003 1,000,000 1,000,030
TOTAL FOREIGN GOVERNMENT 2.9% 3,216,220 Carolina Power & Light Co. 6.875%
---------- due 10/01/1998 500,000 502,805
TOTAL GOVERNMENT 15.7% 17,434,216 Northern States Power Co. 7.875%
---------- due 10/01/2001 1,000,000 1,091,340
BANKS 7.8% Pacific Gas & Electric Co. 6.250%
Bank of New York Inc. 6.625% due 08/01/2003 1,000,000 1,002,360
due 06/15/2003 1,000,000 1,027,720 Philadelphia Electric Co. 6.500%
Bank of Nova Scotia 9.000% due 05/01/2003 500,000 506,605
due 10/01/1999 1,000,000 1,098,870 ---------
BankAmerica Corp. 8.125% 4,103,140
due 02/01/2002 1,000,000 1,094,790 ---------
Chemical Bank New York 6.625% HOUSEHOLD PRODUCTS 1.2%
due 08/15/2005 1,000,000 1,023,480 Procter & Gamble ESOP 9.360%
Citicorp 7.125% due 01/01/2021 1,000,000 1,277,500
due 06/01/2003 500,000 525,755 ---------
Kansallis Osake Pankki N Y 10.000% LODGING & RESTAURANTS 0.9%
due 05/01/2002 1,000,000 1,196,440 ITT Corp New 6.250%
due 11/15/2000 1,000,000 1,003,560
</TABLE>
See Accompanying Notes
25
<PAGE> 28
BALANCED ASSETS FUND (CONTINUED)
Statement of Investments as of December 31, 1995
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
BONDS FACE AMOUNT VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NEWSPAPER 1.0% COMMUNICATIONS EQUIPMENT 0.5%
News America Holdings Inc. 8.500% * Paging Network Inc. 22,800 $555,750
due 02/15/2005 1,000,000 $1,125,950 ---------
---------- COMPUTER HARDWARE 1.8%
PERSONAL CREDIT INSTITUTIONS 3.4% * Cadence Design Systems Inc. (Rights) 6,100 256,200
* Digital Equipment Corp. 10,700 686,138
Associates Corp. North America 6.125% * Silicon Graphics Inc. 13,900 382,250
due 02/01/1998 500,000 505,000 * Sun Microsystems Inc. 13,600 620,500
Commercial Credit Group Inc. 7.375% ---------
due 04/15/2005 1,000,000 1,078,590 1,945,088
Ford Motor Credit Corp. 6.375% ---------
due 04/15/2000 1,000,000 1,016,970 CONGLOMERATE 0.2%
General Electric Capital Corp. 8.850% ITT Industries Inc. 9,000 216,000
due 04/01/2005 500,000 597,360 ---------
Household Finance Corp. 7.750% DRUGS 2.9%
due 06/01/1999 500,000 528,705 Bristol Myers Squibb Co. 7,800 669,825
---------- Johnson & Johnson 8,000 685,000
3,726,625 Medtronic Inc. 8,300 491,700
---------- Pfizer Inc. 11,400 718,200
* R P Scherer Corp. 12,500 614,063
---------
PETROLEUM 1.0% 3,178,788
Ultramar Corp. 8.000% ---------
due 03/15/2005 1,000,000 1,109,470 ELECTRIC UTILITIES 2.4%
---------- Dominion Resources Inc. Va. 11,500 474,375
Duke Power Co. 11,000 521,125
TELEPHONE 3.1% FPL Group Inc. (Rights) 14,500 672,437
MCI Communications Corp. 7.750% Pacific Gas & Electric Co. 18,500 524,938
due 03/23/2025 1,000,000 1,060,460 Southern Co. 19,600 482,650
New Jersey Bell Telephone Co. 5.875% ---------
due 12/01/2006 500,000 488,210 2,675,525
New York Telephone Co. 7.000% ---------
due 12/01/2033 1,000,000 991,430 ELECTRICAL EQUIPMENT 0.8%
Pacific Bell 6.625% General Electric Co. 12,700 914,400
due 10/15/2034 900,000 871,560 ---------
---------- ELECTRONICS 2.6%
3,411,660 * Applied Materials Inc. 11,200 441,000
---------- * Cabletron Systems Inc. 9,800 793,800
TOTAL CORPORATE 26.6% 29,392,440 * LSI Logic Corp. 14,200 465,050
---------- Linear Technology Corp. 11,400 447,450
TOTAL BONDS 42.3% 46,826,656 * 3COM Corp. 16,800 783,300
---------- ---------
- -------------------------------------------------------------- 2,930,600
COMMON STOCK SHARES VALUE ---------
(Note 2) ENERGY 5.8%
- -------------------------------------------------------------- Atlantic Richfield Co. 8,400 930,300
BEVERAGES 1.2% Chevron Corp. 9,700 509,250
Coca Cola Co. 6,900 512,325 Exxon Corp. 14,800 1,185,850
Pepsico Inc. 14,500 810,188 Halliburton Co. 12,100 612,563
---------- Mobil Corp. (Rights) 10,400 1,164,800
1,322,513 Schlumberger Ltd. 9,400 650,950
---------- Texaco Inc. 8,000 628,000
CHEMICALS & FERTILIZERS 1.1% Unocal Corp. 24,600 716,475
Engelhard Corp. 34,500 750,375 ---------
B F Goodrich Co. (Rights) 3,800 258,875 6,398,188
Hercules Inc. 4,600 259,325 ---------
---------- ENGINEERING & CONSTRUCTION 1.1%
1,268,575 Dresser Industries Inc. (Rights) 22,800 555,750
---------- Fluor Corp. (Rights) 10,700 706,200
---------
1,261,950
---------
</TABLE>
* Non Income Producing Securities
See Accompanying Notes
26
<PAGE> 29
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ENTERTAINMENT 1.8% PERSONAL CARE 1.5%
Carnival Corp. Class 'A' 14,600 $355,875 Kimberly Clark Corp. (Rights) 7,800 $645,450
ITT Corp. New 9,000 477,000 Gillette Co. 19,200 1,000,800
HBO & Co. 2,400 183,900 ----------
* Promus Hotel Corp. 21,200 471,700 1,646,250
* Viacom Inc. Class 'B' 11,000 521,125 ----------
--------- RETAIL 3.5%
2,009,600 Albertsons Inc. 24,000 789,000
--------- Liz Claiborne 3,000 83,250
FINANCE: BANKS 4.0% Nike Inc. Class "B" 10,800 751,950
BankAmerica Corp. 6,700 433,825 * Office Max Inc. 21,900 490,012
Bankers Trust NY Corp. 9,200 611,800 Sears Roebuck & Co. 20,900 815,100
Chemical Banking Corp. 10,200 599,250 * Tommy Hilfiger Corp. 7,700 326,287
Citicorp 11,200 753,200 Wal-Mart Stores Inc. 27,900 624,263
Fleet Financial Group Inc. 13,500 550,125 ----------
J P Morgan & Co. Inc. 6,400 513,600 3,879,862
MBNA Corp. 11,800 435,125 ----------
Nationsbank Corp. 7,600 529,150 SOFTWARE 2.9%
--------- * America Online Inc. 5,400 202,500
4,426,075 * Cisco Systems Inc. 7,100 529,837
--------- General Motors Corp. Class 'E' 8,800 457,600
* Informix Corp. 27,800 834,000
* Microsoft Corp. 4,800 421,200
FINANCE: CONSUMER & OTHER 0.6% * Oracle Systems Corp. 12,200 516,975
T. Rowe Price & Assoc. Inc. 1,300 64,025 Paychex Inc. 4,400 219,450
Travelers Group Inc. 10,200 641,325 ----------
--------- 3,181,562
705,350 ----------
--------- TELEPHONE 4.7%
* Airtouch Communications Inc. 28,300 799,475
FINANCE: INSURANCE 2.4% GTE Corp. 14,300 629,200
American International Group Inc. 11,550 1,068,375 * LCI International Inc. 10,500 215,250
Chubb Corp. 5,800 561,150 MCI Communications Corp. 41,800 1,092,025
General Re Corp. 3,500 542,500 NYNEX Corp. 20,800 1,123,200
ITT Hartford Group Inc. 9,000 435,375 Pacific Telesis Group 15,900 534,637
--------- SBC Communications Inc. 14,000 805,000
2,607,400 ----------
--------- 5,198,787
FOODS 0.4% ----------
CPC Interrnational Inc. 6,600 452,925 TOBACCO 0.9%
--------- Philip Morris Companies Inc. 11,500 1,040,750
----------
HOSPITAL MANAGEMENT 0.9%
United Healthcare Corp. 14,800 969,400 TRANSPORTATION 0.3%
--------- Southwest Airlines Co. 14,400 334,800
HOSPITAL SUPPLY 0.4% ----------
Becton Dickinson & Co. 5,500 412,500
--------- TOTAL COMMON STOCK 46.4% 51,465,563
METALS & MINERALS 0.3% ----------
Aluminum Co. of America 6,400 338,400
---------
NATURAL GAS PIPELINES 0.6%
Coastal Corp. 18,900 704,025
---------
OFFICE EQUIPMENT 0.8%
Xerox Corp. 6,500 890,500
---------
</TABLE>
27
<PAGE> 30
BALANCED ASSETS FUND (CONTINUED)
Statement of Investments as of December 31, 1995
<TABLE>
- ------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS FACE AMOUNT VALUE
(Note 2)
- ------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT 0.9%
United States Treasury Bills 5.150%
due 06/20/1996 1,000,000 $975,534
------------
U.S. GOVERNMENT AGENCIES 2.5%
Federal Home Loan Bank 5.320%
due 05/17/1996 820,000 803,399
Federal Home Loan Mortgage 5.520%
due 01/11/1996 1,380,000 1,377,884
Federal National Mortgage Assoc. 5.550%
due 02/20/1996 500,000 496,146
Federal National Mortgage Assoc. 5.500%
due 03/22/1996 125,000 123,453
------------
2,800,882
------------
CANADIAN GOVERNMENT 0.5%
Government of Canada Treasury Bills
5.500%
due 03/26/1996 500,000 493,507
------------
CANADIAN GOVERNMENT AGENCIES 2.0%
Canadian Wheat Board 5.600%
due 03/29/1996 1,310,000 1,292,067
Export Development Corp. 5.800%
due 01/03/1996 942,000 941,696
------------
2,233,763
------------
BUSINESS CREDIT INSTITUTIONS 1.4%
American Express Credit Corp. 5.650% 1,500,000
due 02/28/1996 1,486,346
------------
PERSONAL CREDIT INSTITUTIONS 3.1%
Ford Motor Credit Co. 5.690%
due 02/26/1996 1,500,000 1,486,723
General Electric Capital Corp. 5.650%
due 01/30/1996 2,000,000 1,990,897
------------
3,477,620
------------
TOTAL SHORT TERM INVESTMENTS 10.4% 11,467,652
------------
TOTAL INVESTMENTS 99.1% 109,759,871
------------
OTHER ASSETS LESS LIABILITIES 0.9% 1,000,868
------------
NET ASSETS - EQUIVALENT TO $17.15
PER SHARE BASED ON 6,457,180 SHARES
OF CAPITAL STOCK OUTSTANDING. 100.0% $110,760,739
============
</TABLE>
See Accompanying Notes
28
<PAGE> 31
CAPITAL GROWTH BOND FUND
Statement of Investments as of December 31, 1995
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
BONDS FACE AMOUNT VALUE BONDS FACE AMOUNT VALUE
(Note 2) (Note 2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS 12.7% BEVERAGES 2.8%
United States Treasury Notes 6.750% Coca Cola Enterprises Inc. 8.500%
Due 04/30/2000 160,000 $168,374 due 02/01/2022 1,000,000 $1,197,500
United States Treasury Notes 7.875% ----------
Due 08/15/2001 840,000 938,171 BUSINESS CREDIT 7.3%
United States Treasury Notes 7.250% INSTITUTIONS
Due 05/15/2004 120,000 133,200 Avco Financial Services Inc. 7.500%
United States Treasury Notes 6.500% due 11/15/1996 1,000,000 1,016,580
Due 08/15/2005 2,190,000 2,333,029 Chrysler Financial Corp. 7.200%
United States Treasury Notes 5.875% due 05/26/1998 1,000,000 1,031,020
Due 11/15/2005 1,690,000 1,728,025 CIT Group Holdings Inc. 8.750%
United States Treasury Bonds 7.625% due 04/15/1998 1,000,000 1,066,030
Due 02/15/2025 100,000 122,281 ----------
--------- 3,113,630
TOTAL U.S. GOVERNMENT 5,423,080 ----------
--------- CABLE EQUIPMENT 2.4%
Tele Communications Inc. 7.375%
CANADIAN PROVINCIAL 5.2% due 02/15/2000 1,000,000 1,037,070
GOVERNMENT ----------
Province of Ontario 8.000% COMMUNICATIONS 2.8%
due 10/17/2001 1,000,000 1,094,660 EQUIPMENT
Province of Quebec 8.800% GTE Corp. 8.750%
due 04/15/2003 1,000,000 1,145,010 due 11/01/2021 1,000,000 1,187,500
--------- ----------
2,239,670
---------
ITALIAN GOVERNMENT 2.3% ELECTRIC UTILITIES 9.5%
Republic of Italy 6.875% Baltimore Gas & Electric Co. 6.125%
due 09/27/2023 1,000,000 976,550 due 07/01/2003 1,000,000 1,000,030
--------- Gulf States Utilities Co. 7.350%
TOTAL FOREIGN GOVERNMENT 7.5% 3,216,220 due 11/01/1998 1,000,000 1,026,550
--------- Northern States Power Co. 6.375%
TOTAL GOVERNMENT 20.2% 8,639,300 due 04/01/2003 1,000,000 1,020,210
--------- Pacific Gas & Electric Co. 6.250%
due 08/01/2003 1,000,000 1,002,360
BANKS 18.0% ----------
Bank of Nova Scotia 9.000% 4,049,150
due 10/01/1999 1,000,000 1,098,870 ----------
Bank of New York Inc. 6.625% HOUSEHOLD PRODUCTS 3.0%
due 06/15/2003 1,000,000 1,027,720 Procter & Gamble ESOP 9.360%
Chemical Bank New York 6.625% due 01/01/2021 1,000,000 1,277,500
due 08/15/2005 1,000,000 1,023,480 ----------
Citicorp 7.125% LODGING & RESTAURANTS 2.3%
due 06/01/2003 1,000,000 1,051,510 ITT Corp New 6.250%
Kansallis Osake Pankki N Y 10.000% due 11/15/2000 1,000,000 1,003,560
due 05/01/2002 1,000,000 1,196,440 ----------
Norwest Corp. 6.650% NEWSPAPERS 2.6%
due 10/15/2023 1,000,000 981,510 News America Holdings Inc. 8.500%
Republic New York Corp. 9.500% due 02/15/2005 1,000,000 1,125,950
due 04/15/2014 1,000,000 1,296,760 ----------
---------
7,676,290
---------
</TABLE>
See Accompanying Notes
29
<PAGE> 32
CAPITAL GROWTH BOND FUND (CONTINUED)
Statement of Investments as of December 31, 1995
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
BONDS FACE AMOUNT VALUE SHORT TERM INVESTMENTS FACE AMOUNT VALUE
(Note 2) (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PERSONAL CREDIT
INSTITUTIONS 9.8% U.S. GOVERNMENT AGENCIES 3.5%
Associates Corp. North America 6.125% Federal Home Loan Bank 5.550%
due 02/01/1998 1,000,000 $1,010,000 due 02/21/1996 150,000 $148,821
Commercial Credit Group Inc. 7.375% Federal Home Loan Mortgage 5.520%
due 04/15/2005 1,000,000 1,078,590 due 01/11/1996 1,190,000 1,188,175
Ford Motor Credit Corp. 6.375% Federal National Mortgage Assoc. 5.520%
due 04/15/2000 1,000,000 1,016,970 due 03/15/1996 155,000 153,241
Household Finance Corp. 7.750% ----------
due 06/01/1999 1,000,000 1,057,410 1,490,237
---------- ----------
4,162,970 TOTAL SHORT TERM
---------- INVESTMENTS 3.5% 1,490,237
PETROLEUM 2.6% ----------
Ultramar Corp. 8.000%
due 03/15/2005 1,000,000 1,109,470 TOTAL INVESTMENTS 98.3% 41,984,131
---------- ----------
TELEPHONE 11.5% OTHER ASSETS LESS
AT & T Corp. 5.125% LIABILITIES 1.7% 709,655
due 04/01/2001 1,000,000 971,010 ----------
Bellsouth Savings ESOP 9.190% NET ASSETS - EQUIVALENT TO $11.30 PER
due 07/01/2003 790,624 890,164 SHARE BASED ON 3,779,382 SHARES OF
CAPITAL STOCK
Cincinnati Bell Telephone Co. 7.300% OUTSTANDING 100.0% $42,693,786
due 04/30/1996 1,000,000 1,000,940 ===========
MCI Communications Corp. 7.750%
due 03/23/2025 1,000,000 1,060,460
New York Telephone Co. 7.000%
due 12/01/2033 1,000,000 991,430
----------
4,914,004
----------
TOTAL CORPORATE 74.6% 31,854,594
----------
TOTAL BONDS 94.8% 40,493,894
----------
</TABLE>
See Accompanying Notes
30
<PAGE> 33
MONEY - MARKET FUND
Statement of Investments as of December 31, 1995
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS FACE AMOUNT VALUE SHORT TERM INVESTMENTS FACE AMOUNT VALUE
(Note 2) (Note 2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS 5.4% BEVERAGES 4.1%
UNITED STATES TREASURY Pepsico Inc. 5.620%
BILLS 5.035% due 02/23/96 1,500,000 $1,487,589
DUE 06/27/1996 2,000,000 $1,950,209 -----------
----------
U.S. GOVERNMENT AGENCIES 48.6% BUSINESS CREDIT 12.4%
INSTITUTIONS
FEDERAL HOME LOAN BANK American Express
5.550% Credit Corp. 5.590%
DUE 02/21/1996 350,000 347,248 due 04/25/96 1,500,000 1,473,215
FEDERAL HOME LOAN MORTGAGE CIT Group Holdings
5.670% Inc. 5.630%
DUE 01/16/1996 4,000,000 3,990,550 due 03/01/1996 1,500,000 1,485,925
FEDERAL HOME LOAN MORTGAGE J C Penney Funding
5.570% Corp. 5.650%
DUE 02/15/1996 2,335,000 2,318,743 due 02/22/1996 1,500,000 1,487,758
FEDERAL NATIONAL MORTGAGE -----------
ASSOC 5.620% 4,446,898
DUE 01/11/1996 150,000 149,766 -----------
FEDERAL NATIONAL MORTGAGE ENERGY 4.4%
ASSOC 5.500%
DUE 03/22/1996 1,780,000 1,757,972 Texaco Inc. 5.650%
FEDERAL NATIONAL MORTGAGE due 01/30/1996 1,600,000 1,592,718
ASSOC. 5.490% -----------
DUE 03/28/1996 755,000 744,983
FEDERAL NATIONAL MORTGAGE PERSONAL CREDIT 8.3%
ASSOC. 5.500% INSTITUTIONS
DUE 03/28/1996 1,955,000 1,929,015 Ford Motor Credit
Corp. 5.690%
FEDERAL NATIONAL MORTGAGE due 02/26/1996 1,500,000 1,486,723
ASSOC. 5.380%
DUE 04/24/1996 3,785,000 3,720,516 General Electric
Capital Corp.
5.570%
FEDERAL NATIONAL MORTGAGE due 03/06/1996 1,500,000 1,484,915
ASSOC. 5.350% -----------
DUE 04/26/1996 1,715,000 1,685,435 2,971,638
FEDERAL NATIONAL MORTGAGE -----------
ASSOC. 5.150%
DUE 06/27/1996 880,000 857,592 TELEPHONE 4.1%
---------- AT & T Corp. 5.650%
17,501,820 due 02/15/1996 1,500,000 1,489,406
---------- -----------
CANADIAN GOVERNMENT 4.1%
OBLIGATIONS TOTAL CORPORATE 33.3% 11,988,249
GOVERNMENT OF CANADA -----------
TREASURY BILLS 5.500%
DUE 03/26/1996 1,500,000 1,480,521 TOTAL INVESTMENTS 100.0% 35,998,414
---------- -----------
CANADIAN GOVERNMENT 8.6% OTHER ASSETS LESS
AGENCIES LIABILITIES 0.0% (6,415)
Canadian Wheat Board 5.600% -----------
DUE 03/29/1996 1,600,000 1,578,098 NET ASSETS - EQUIVALENT TO
$10.84 PER SHARE
EXPORT DEVELOPMENT CORP. BASED ON 3,320,455
5.800% SHARES OF CAPITAL
DUE 01/03/1996 1,500,000 1,499,517 STOCK OUTSTANDING. 100.0% $35,991,999
---------- ===========
3,077,615
----------
TOTAL FOREIGN GOVERNMENT 12.7% 4,558,136
----------
TOTAL GOVERNMENT 66.7% 24,010,165
----------
</TABLE>
See Accompanying Notes
31
<PAGE> 34
INTERNATIONAL FUND
Statement of Investments as of December 31, 1995
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUSTRALIA 7.9% FRANCE (CONTINUED)
Amcor Limited 15,000 $105,916 Eaux (Cie Generale) 350 $34,943
Australia & New Zealand Bank Group 20,000 93,801 Erid Beghin Say 65 11,150
Brambles Industries Limited 11,500 128,215 Havas 125 9,917
Broken Hill Property 10,700 151,108 L' Oreal 160 42,834
CSR Limited 33,000 107,433 Lafarge 340 21,905
* Crown Limited 27,858 51,765 LVMH Moet Hennessy 280 58,321
Gio Australia Holding 58,000 134,934 Lyonnaise Des Eaux SA 130 12,517
National Australia Bank 20,000 179,872 Peugeot SA 165 21,766
Newcrest Mining 24,000 100,966 Pinault Printemps Redoute SA 55 10,973
News Corporation 14,000 74,714 Rhone Poulenc SA 1,000 21,421
Normandy Mining Limited 8,000 11,595 Soc Elf Aquitaine 700 51,574
* Novus Petroleum 70,000 84,287 Societe Generale 280 34,593
Pasminco Limited 47,000 57,641 Total 730 49,268
Santos Limited 35,510 103,727 Valeo 155 7,179
WMC Limited 19,500 125,227 -------
--------- 624,081
1,511,201 -------
--------- GERMANY 4.0%
BELGIUM 1.1% Allianz AG Holding 55 107,201
Soc Gen De Belgique 2,562 214,153 Basf AG 140 31,181
--------- Bayer Motoren Werk 40 20,495
DENMARK 0.5% Bayer AG 160 42,217
Den Danske Bank 125 8,622 Commerzbank AG 90 21,269
Novo Nordisk AS 75 10,266 Daimler Benz AG 110 55,364
Tele Danmark AS 1,285 70,122 Deutsche Bank AG 1,175 55,674
Unidanmark 115 5,696 Dresdner Bank AG 1,105 29,503
---------
94,706 Hoechst AG 125 33,897
--------- Linde AG 85 49,596
FINLAND 0.3% Mannesmann AG 120 38,204
Enso Gutzeit OY 2,230 14,869 * Metallgesellschaft 5,895 129,037
Kesko 565 7,028 Siemens AG 130 71,140
Metsa Serla OY 335 10,321 Veba AG 1,150 48,821
Nokia (AB) OY Series 'K' 235 9,293 Volkswagen AG 75 25,075
Nokia (AB) OY Series 'A' 320 12,581 -------
--------- 758,674
54,092 -------
---------
FRANCE 3.3% HONG KONG 7.5%
Alcatel Alst(Cge) 405 34,918 Amoy Properties 20,000 19,916
Banque National Paris 670 30,223 Cheung Kong(Holdings) 6,000 36,547
Carrefour 75 45,502 China Light & Power 18,000 82,871
Christian Dior 100 10,782 * Florens Group 60,000 39,185
Cie De St Gobain 245 26,716 Grand Hotel Holdings 78,000 29,001
Cie De Suez 1,100 45,375 Guangdong Investment 70,000 42,095
* CSF(Thomson) 265 5,904 Hang Seng Bank 14,000 125,380
* Danone (Ex Bsn) 220 36,300 Hong Kong & China Gas 30,000 48,303
Hong Kong Electric 15,000 49,176
Hong Kong Land Holdings (U.S. Dollars) 10,000 18,500
</TABLE>
+ Convertible Bond
* Non Income Producing Securities
See Accompanying Notes
32
<PAGE> 35
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HONG KONG (CONTINUED) JAPAN (CONTINUED)
Hong Kong Telecommunications 72,800 $129,924 Hitachi Zosen Corp. 16,000 $82,906
HSBC Holdings 16,000 242,095 Itochu Corp. 32,000 215,400
Hutchison Whampoa 25,000 152,279 Kamigumi Co. 4,000 38,392
Hysan Development 10,000 26,447 Kawasaki Steel Corp. 30,000 104,600
Manhattan Card Co. 80,000 34,142 * Kyocera Corp. (U.S. Dollar Warrants) 10 12,500
New World Development Co. 17,000 74,090 Marubeni Corp. 9,000 48,726
* New World Infrastructure Ltd. 20,028 38,334 Marui Co. 2,000 41,646
Sun Hung Kai Properties 8,000 65,438 + Matsushita Electric Works 2.70%
Swire Pacific 14,000 108,632 due 5/31/2002 5,000,000 Yen Par Value 59,177
+ Wharf Capital International 5.00% Mitsubishi Estate 5,000 62,470
due 7/15/2000 25,000 U.S. Dollar Par value 26,750 Mitsubishi Heavy Industries 15,000 119,564
Wharf(Holdings) 8,000 26,641 Mitsui Fudosan Co. 3,000 36,901
Wheelock & Co. 10,000 17,135 Mori Seiki Co. 3,000 67,700
--------- + NEC Corp. 1.70%
1,432,881 due 3/31/1999 10,000,000 Yen Par Value 128,717
--------- NGK Spark Plug Co. 7,000 88,136
INDONESIA 1.2% Namco 1,500 49,976
Astra International 15,000 31,161 Nippon Express Co. 4,000 38,508
Bank International Indonesia 19,000 62,946 Nippon Fire & Marine 10,000 67,797
HM Sampoerna 3,000 30,314 Nippon Sanso Corp. 20,000 96,077
Kalbe Farma 7,000 23,726 Nippon Sheet Glass 18,000 78,276
Matahari Putra Pri 33,500 58,971 * Nippon Telegraph & Telephone Crp. 4 32,349
* Tambang Timah 15,000 18,533 Nippon Zeon Co. 20,000 107,506
* Telekomunikasi Industries 9,000 11,808 Nomura Securities 6,000 130,751
--------- Onward Kashiyama 6,000 97,627
237,459 Promise Co. 3,000 144,407
--------- Rengo Co. 15,000 100,242
ITALY 1.8% Ricoh Co. 24,000 262,663
Assic Generali 1,900 46,001 Royal Co. 5,000 81,356
Credito Italiano 15,900 18,522 Sakura Bank 10,000 126,877
* Eni Spa 18,000 62,904 Sangetsu Co. 2,000 50,363
Stet 33,800 84,148 * Sekisui House (U.S. Dollar Warrants) 100 25,000
Telecom Italia 32,600 50,703 Shimizu Corp. 6,000 61,017
Telecom Italia 7,800 9,538 Sony Corp. 4,000 239,806
* Telecom Italia 7,800 8,202 Sumitomo Densetsu 2,000 26,731
* Telecom Italia Mob 32,600 57,373 Sumitomo Trust & Banking 10,000 141,404
--------- TDK Corp. 3,000 153,123
337,391 * Takashimaya Co. (U.S. Dollar Warrants) 30 12,750
--------- Takeda Chemical Industries 5,000 82,324
JAPAN 23.5% Tokyo Electron 2,000 77,482
Almetax Manufacturing Co. 4,000 46,102 Toray Industries Inc. 5,000 32,930
Amway Japan Limited 1,000 42,228 Toshiba Corp. 20,000 156,707
Arabian Oil Co. 1,000 41,646 Tostem Corp. 1,000 33,220
+ Bot Cayman Finance 4.25% Toyo Engineering 14,000 88,136
due 3/31/2049 10,000,000 Yen Par Value 133,656 Yamato Kogyo Co. 10,000 96,852
Canon Sales Company Inc. 2,100 55,932 ---------
Chiyoda Co. 5,000 116,223 4,483,112
Circle K Japan Co. 2,000 88,136 ---------
Daiichi Clinical 1,000 25,860
Daiwa Securities 6,000 91,816
Fuji Oil Co. 6,000 42,421
</TABLE>
33
<PAGE> 36
INTERNATIONAL FUND (CONTINUED)
Statement of Investments as of December 31, 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MALAYSIA 5.9% SINGAPORE (CONTINUED)
Arab Malaysian Financial 19,000 $80,797 Keppel Corp. 4,000 $35,631
DCB Holdings Berhad 50,000 145,687 Marco Polo Development Ltd. 13,000 19,943
DCB Holdings Berhad (Warrants) 5,000 4,961 Overseas Chinese Bank 8,000 100,106
IJM Corp. Berhad 12,000 19,089 Singapore Airlines 7,000 65,323
IOI Corp. 64,000 62,748 Singapore Land 5,000 32,344
* IOI Corp. (Warrants) 16,000 2,929 Singapore Press Holdings 1,200 21,209
Leader Universal Holdings 14,666 33,493 Ssangyong Cement 5,000 13,927
Malayan Bank Berhad 10,000 84,262 United Overseas Bank 8,000 76,918
Malaysian International Shipping 9,000 23,566 United Overseas Land 23,000 43,740
Nylex (Malaysia) Berhad 23,000 69,733 ---------
* Petronas Gas Berhad 20,000 68,118 697,406
Resorts World Berhad 14,000 74,969 ---------
RJ Reynolds Berhad 34,000 78,316 SPAIN 1.0%
Telekom Malaysia 24,000 187,109 Argentaria 300 12,366
UMW Holdings Berhad 7,000 18,742 BCO Bilbao Vizcaya 500 18,013
Westmont Industries 7,000 24,255 * BCO Esp De Credito 1,600 11,080
YTL Corp. 22,000 138,599 BCO Popular ESP 100 18,442
--------- BCO Santander SA 300 15,061
1,117,373 Empire Nac Electricio 600 33,982
--------- Iberdrola SA 2,000 18,302
NETHERLANDS 2.8% Repsol SA 800 26,216
ABN AMRO Holdings NV 755 34,393 Telefonica De Esp 2,200 30,470
Heineken NV 120 21,290 ---------
Ing Groep NV 665 44,425 183,932
KLM 165 5,799 ---------
Kon PTT Nederland 1,115 40,509 SWEDEN 1.8%
Philips Electronic 3,815 137,889 Electrolux AB 450 18,468
Royal Dutch Petrol 1,350 188,615 Volvo AB Series 'A' 4,800 98,679
Unilever NV 410 57,615 Volvo AB Series 'B' 10,700 219,167
Wolters Kluwer 150 14,190 ---------
--------- 336,314
544,725 ---------
--------- SWITZERLAND 3.9%
NORWAY 0.4% Baloise Holdings 15 31,209
Den Norske Bank 20,125 52,742 BBC Brown Boveri 20 23,234
Kvaerner AS 110 3,682 Ciba Geigy AG 65 57,196
Norsk Hydro AS 280 11,759 CS Holding 445 45,619
Orkla A/S 115 5,719 Holderbk Financial Glarus 10 7,672
--------- Nestle SA 120 132,744
73,902 Roche Holdings AG 5 70,004
--------- Roche Holdings AG 15 118,661
SINGAPORE 3.7% Sandoz AG 100 91,547
Amtek Engineering 81,000 117,391 Schw Bankverein 55 22,458
City Developments 5,000 36,409 Schw Bankgesellsch 40 43,346
Development Bank Singapore 3,000 37,328 Schweiz Bankverein 64 13,066
Fraser & Neave 4,000 50,901 Schw Ruckversicher 30 34,902
Jurong Shipyard 6,000 46,236 Winterthur 85 60,130
---------
751,788
---------
</TABLE>
34
<PAGE> 37
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THAILAND 1.5% UNITED KINGDOM (CONTINUED)
Advanced Information Services 3,000 $50,258 Prudential Corp. 5,000 $32,187
Bank of Ayudhya Public Co. Ltd. 8,000 44,780 Redland 1,000 6,034
Dhana Siam Financial & Sec. 4,000 22,866 Reed International 2,000 30,486
Krung Thai Bank Place 12,300 49,805 Reuters Holdings 3,000 27,465
Land & House 2,000 32,870 RTZ Corp. 1,000 14,536
Matichon Public Company Ltd. 4,000 23,660 Shell Transportation & Trading 9,000 119,017
National Petrochem 14,000 27,233 Smith & Nephew 6,500 18,827
Nawarat Patanakarn 5,000 22,430 Smithkline Beecham 3,000 33,080
PTT Explortation & Products 2,000 20,961 Smithkline Beecham/BEC 2,000 21,805
------- Standard Chartered 21,000 178,723
294,863 Tesco 6,000 27,675
------- Tomkins 24,000 104,923
UNITED KINGDOM 11.6% Unilever 2,000 41,078
Abbey National 5,000 49,387 Vodafone Group 5,000 17,938
Airtours 20,000 113,371 Whitbread 3,000 31,705
Allied Domecq Place 2,000 16,276 -----------
BAA 7,000 52,943 2,202,036
BAT Industries 4,000 35,223 -----------
BOC Group 1,000 13,993 TOTAL COMMON STOCK 83.7% 15,950,089
Barclays 3,000 34,384 -----------
Bass 2,000 22,317 --------------------------------------------------------------------
Blue Circle Industries 2,000 10,638 REPURCHASE AGREEMENT FACE AMOUNT VALUE
Boots Co. 2,000 18,108 (Note 2)
British Aerospace 1,000 12,359 --------------------------------------------------------------------
* British Aerospace (Warrants) 40 194 UNITED STATES 13.1%
British Airways 3,000 21,711 State Street Bank and Trust Co. 5.150%
British Petroleum 9,000 75,128 due 01/02/1996-Collateralized by
British Telecom 14,000 76,751 $2,544,137 U.S. Treasury Bond 12.00%
BTR 9,000 45,846 due 05/15/2005 2,489,000 2,489,000
Cable & Wireless 5,000 35,797 -----------
Cadbury Schweppes 4,571 37,731 TOTAL INVESTMENTS 96.8% 18,439,089
Forte 6,000 30,797 -----------
General Electric 3,000 16,493 OTHER ASSETS LESS
Glaxo Wellcome 5,470 77,730 LIABILITIES 3.2% 608,449
Grand Metropolitan 21,500 154,764 -----------
Great Universal Stores 13,000 138,197 NET ASSETS - EQUIVALENT TO $10.67 PER SHARE
Guinness 3,000 22,061 BASED ON 1,785,480 SHARES OF CAPITAL STOCK
Hanson 6,000 17,891 OUTSTANDING. 100.0% $19,047,538
HSBC Holdings 5,000 78,079 ===========
Imperial Chemical Industries 2,000 23,684
Marks & Spencer 4,000 27,955
National Westminster 4,000 40,286
Lloyds TSB Group 33,408 171,995
P & O 2,000 14,785
Pearson 1,000 9,683
</TABLE>
35
<PAGE> 38
PACIFIC RIM EMERGING MARKETS FUND
Statement of Investments as of December 31, 1995
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUSTRALIA 23.0% INDONESIA 2.8%
Australia & NZ Bank Group 20,000 $93,801 Astra International 25,000 $51,935
Amcor Limited 22,000 155,344 Bank International Indonesia 30,000 99,388
Broken Hill Property 30,300 427,902 HM Sampoerna 5,000 50,523
CSR Limited 50,000 162,777 Kalbe Farma 5,000 16,947
* Crown Limited 132,143 245,546 Matahari Putra Pri 55,000 96,818
Gio Australia Holding 85,000 197,748 Tambang Timah Series 'B' 20,000 24,710
Lend Lease Corp. 10,000 144,938 Telekomunikasi Industries Series 'B 15,000 19,681
National Australia Bank 35,000 314,776 --------
Newcrest Mining 30,000 126,208 360,002
News Corporation 24,000 128,081 --------
Normandy Mining Ltd. 33,000 47,830 JAPAN 16.3%
* Novus Petroleum 190,500 229,382 Almetax Manufacturing Co. 2,000 23,051
Pasminco Limited 148,000 181,507 Amway Japan Limited 1,000 42,228
Santos Limited 54,921 160,428 Arabian Oil Co. 500 20,823
WMC Limited 60,000 385,313 Blue Grass Co. 1,000 26,634
--------- Canon Sales Company Inc. 3,150 83,898
3,001,581 Chiyoda Co. 2,000 46,489
--------- Circle K Japan Co. 1,000 44,068
HONG KONG 14.3% Daiwa Securities 2,000 30,605
Amoy Properties 30,000 29,874 Fuji Oil Co. 4,000 28,281
Cheung Kong(Holdings) 10,000 60,912 Hitachi Zosen Corp. 5,000 25,908
China Light & Power 25,000 115,099 Itochu Corp. 15,000 100,969
* Florens Group 65,000 42,451 Kamigumi Co. 2,000 19,196
Grand Hotel Holdings 98,000 36,437 Kawasaki Steel Corp. 5,000 17,434
Guangdong Investments 90,000 54,122 * Kyocera Corp. (U.S Dollar Warrants) 5 6,250
Hang Seng Bank 18,000 161,203 Marubeni Corp. 3,000 16,242
Hong Kong & China Gas 35,000 56,353 Marui Co. 1,000 20,823
Hong Kong Electric 20,000 65,567 Mitsubishi Estate 3,000 37,482
Hong Kong Land Holding (U.S. Dollars) 20,000 37,000 Mitsubishi Heavy Industries 5,000 39,855
Hong Kong Telecommunications 94,000 167,759 Mitsui Fudosan Co. 2,000 24,600
HSBC Holdings 21,800 329,855 Mori Seiki Co. 1,000 22,567
Hutchison Whampoa 34,000 207,100 Namco 1,000 33,317
Hysan Development 10,000 26,447 + NEC Corp. 1.70%
Manhattan Card Co. 40,000 17,071 due 03/31/1999 5,000,000 Yen Par Value 64,359
New World Development Co. 27,000 117,672 NGK Spark Plug Co. 3,000 37,772
* New World Infrastructure Ltd. 20,045 38,366 Nippon Express Co. 2,000 19,254
Sun Hung Kai Properties 10,000 81,798 Nippon Fire & Marine 5,000 33,898
Swire Pacific 18,000 139,670 Nippon Sanso Corp. 9,000 43,235
+ Wharf Capital International 5.00% Nippon Sheet Glass 6,000 26,092
due 07/15/2000 30,000 U.S. Dollar Par Value 32,100 * Nippon Telegraph & Telephone Corp. 5 40,921
Wharf Holdings 10,000 33,301 Nippon Zeon Co. 7,000 37,627
Wheelock & Co. 15,000 25,703 Nomura Securities 3,000 65,375
---------
1,875,860
---------
+ Convertible Bond
* Non Income Producing Securities
See Accompanying Notes
</TABLE>
36
<PAGE> 39
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
(Note 2) (Note 2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JAPAN (CONTINUED) SINGAPORE 9.6%
Onward Kashiyama 2,000 $32,543 Amtek Engineering 120,000 $173,913
Promise Co. 1,500 72,203 City Developments 8,000 58,254
Rengo Co. 5,000 33,414 Development Bank Singapore 8,000 99,540
Ricoh Co. 11,000 120,387 Fraser & Neave 7,000 89,077
Sakura Bank 5,000 63,438 Jurong Shipyard 9,000 69,353
Sangetsu Co. 2,000 50,363 Keppel Corp. 8,000 71,262
* Sekisui House 50 12,500 Marco Polo Development Ltd . 25,000 38,353
(U.S. Dollar Warrants) Overseas Chinese Bank 14,000 175,186
Shimizu Corp. 3,000 30,508 Singapore Airlines 15,000 139,979
Sony Corp. 2,000 119,903 Singapore Land 9,000 58,218
Sumitomo Densetsu 1,000 13,366 Singapore Press Holdings 2,600 45,953
Sumitomo Trust & Banking 4,000 56,562 Ssangyong Cement 8,000 22,284
TDK Corp. 2,000 102,082 United Overseas Bank 13,000 124,991
* Takashimaya Co. 20 8,500 United Overseas Land 45,000 85,578
(U.S. Dollar Warrants) -----------
Takeda Chemical Industries 5,000 82,325 1,251,941
Tokyo Electronics 1,000 38,741 -----------
Toray Industries Inc. 5,000 32,930 THAILAND 4.5%
Toshiba Corp. 7,000 54,848 Advanced Information Service 7,000 117,269
Tostem Corp. 1,000 33,220 Bank of Ayudhya Public Co Ltd. 15,000 83,962
Toyo Engineering 11,000 69,249 Dhana Siam Financial & Securities 12,000 68,599
Yamato Kogyo Co. 2,000 19,371 Krung Thai Bank 25,300 102,445
--------- Land & House 4,000 65,740
2,125,706 Matichon Public Company Ltd. 10,000 59,150
--------- National Petrochem 19,000 36,784
MALAYSIA 15.3% Nawarat Patanakarn 6,000 25,727
Arab Malaysian Financial 43,000 182,856 PTT Exploration & Product 3,000 31,441
DCB Holdings Berhad 66,000 192,306 -----------
* DCB Holdings Berhad (Warrants) 11,250 11,163 591,117
IJM Corp. Berhad 22,000 34,996 -----------
IOI Corp. 105,000 102,945 TOTAL COMMON STOCK 85.8% 11,201,390
* IOI Corp. (Warrants) 26,250 4,806 -----------
Leader Universal Holdings 35,333 80,691 -----------------------------------------------------------------------
Malayan Bank Berhad 11,000 92,688 REPURCHASE AGREEMENT FACE AMOUNT VALUE
Malaysia International Shipping 18,000 47,132 (Note 2)
Nylex(Malaysia) Berhad 47,000 142,497 -----------------------------------------------------------------------
* Petronas Gas Berhad 39,000 132,831 U.S. DOLLAR 7.1%
Resorts World Berhad 31,000 166,004 State Street Bank and Trust Co. 5.150%
RJ Reynolds Berhad 64,000 147,419 due 01/02/1996-Collateralized by
Telekom Malaysia 43,000 335,236 $948,537 U.S. Treasury Bond 12.00%
Westmont Industries 11,000 38,115 due 05/15/2005 929,000 929,000
YTL Corp. 45,000 283,498 -----------
--------- TOTAL INVESTMENTS 92.9% 12,130,390
1,995,183 -----------
--------- OTHER ASSETS LESS LIABILITIES 7.1% 926,709
-----------
NET ASSETS - EQUIVALENT TO $10.36 PER SHARE
BASED ON 1,260,885 SHARES OF CAPITAL STOCK
OUTSTANDING. 100.0% $13,057,099
===========
</TABLE>
37
<PAGE> 40
Statements of Assets and Liabilities as of December 31, 1995
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK REAL ESTATE BALANCED
EQUITY FUND FUND SECURITIES FUND ASSETS FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at market value (cost-
Emerging Growth Equity Fund; $149,186,228,
Common Stock Fund: $52,113,405, Real Estate
Securities Fund; $48,999,671, Balanced Assets Fund:
$98,285,735, Capital Growth Bond Fund: $39,971,441,
Money Market Fund: $35,998,414, International Fund:
$17,269,015, Pacific Rim Emerging Markets Fund:
$11,505,710)
(Note 2)............................................... $161,858,889 $60,834,031 $50,599,913 $109,759,871
Cash................................................... 10,003 6,354 14,188 4,854
Cash - foreign currencies (cost
International Fund: $546,598
Pacific Rim Emerging Markets Fund: $860,393)*.......... --- --- --- ---
Receivable for undelivered sales....................... 5,632,745 179,942 3,245,631 179,942
Investment income receivable........................... 2,580 115,521 258,891 958,446
Tax reclaims receivable................................ --- --- --- ---
------------ ----------- ----------- ------------
Total assets........................................... 167,504,217 61,135,848 54,118,623 110,903,113
------------ ----------- ----------- ------------
LIABILITIES:
Payable for investment advisory fees (Note 8) 66,607 25,350 21,717 46,268
Payable for undelivered purchases...................... 5,011,143 114,570 1,656,789 96,106
Withholding taxes payable.............................. --- --- --- ---
------------ ----------- ----------- ------------
Total liabilities...................................... 5,077,750 139,920 1,678,506 142,374
------------ ----------- ----------- ------------
NET ASSETS.............................................. $162,426,467 $60,995,928 $52,440,117 $110,760,739
============ =========== =========== ============
REPRESENTED BY:
Paid In Capital (Note 5)................................ $131,407,798 $49,933,954 $47,634,128 $94,335,408
Net unrealized appreciation of
investments............................................. 12,672,661 8,720,626 1,600,242 11,474,136
Net unrealized appreciation on
translation of assets and liabilities in
foreign currencies*................................... --- --- --- ---
Undistributed net realized gain
(loss) on investments................................... 18,139,742 1,506,587 839,886 1,682,448
Undistributed net realized gain (loss) on transactions
in foreign currencies*.................................. --- --- --- ---
Undistributed net investment income .................... 206,266 834,761 2,365,861 3,268,747
------------ ----------- ----------- ------------
NET ASSETS.............................................. $162,426,467 $60,995,928 $52,440,117 $110,760,739
============ =========== =========== ============
Capital stock outstanding (Note 5)...................... 7,030,732 3,532,074 3,472,861 6,457,180
============ =========== =========== ============
Net asset value, offering and redemption
prices per share........................................ $23.10 $17.27 $15.10 $17.15
============ =========== =========== ============
</TABLE>
* International & Pacific Rim Emerging Markets Funds only.
See Accompanying Notes
38
<PAGE> 41
<TABLE>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH MONEY - MARKET INTERNATIONAL PACIFIC RIM EMERGING
BOND FUND FUND FUND MARKETS FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at market value (cost-
Emerging Growth Equity Fund; $149,186,228,
Common Stock Fund: $52,113,405, Real Estate
Securities Fund; $48,999,671, Balanced Assets Fund:
$98,285,735, Capital Growth Bond Fund: $39,971,441,
Money Market Fund: $35,998,414, International Fund:
$17,269,015, Pacific Rim Emerging Markets Fund:
$11,505,710)
(Note 2)............................................... $41,984,131 $35,998,414 $18,439,089 $12,130,390
Cash................................................... 7,291 8,573 28,184 33,259
Cash - foreign currencies (cost
International Fund: $546,598
Pacific Rim Emerging Markets Fund: $860,393)*.......... --- --- 547,004 862,205
Receivable for undelivered sales....................... --- --- 53,729 516,949
Investment income receivable........................... 720,600 --- 50,507 4,645
Tax reclaims receivable................................ --- --- 15,074 ---
----------- ----------- ----------- -----------
Total assets........................................... 42,712,022 36,006,987 19,133,587 13,547,448
----------- ----------- ----------- -----------
LIABILITIES:
Payable for investment advisory fees (Note 8) 18,236 14,988 21,260 16,156
Payable for undelivered purchases...................... 0 --- 57,668 474,078
Withholding taxes payable.............................. --- --- 7,121 115
----------- ----------- ----------- -----------
Total liabilities...................................... 18,236 14,988 86,049 490,349
----------- ----------- ----------- -----------
NET ASSETS.............................................. $42,693,786 $35,991,999 $19,047,538 $13,057,099
=========== =========== =========== ===========
REPRESENTED BY:
Paid In Capital (Note 5)................................ $41,739,537 $34,307,615 $17,930,657 $12,421,144
Net unrealized appreciation of
investments............................................. 2,012,690 --- 1,170,074 624,680
Net unrealized appreciation on
translation of assets and liabilities in
foreign currencies*................................... --- --- 406 373
Undistributed net realized gain
(loss) on investments................................... (1,060,038) --- 3,920 14,126
Undistributed net realized gain (loss) on transactions
in foreign currencies*.................................. --- --- (60,286) (3,621)
Undistributed net investment income .................... 1,597 1,684,384 2,767 397
----------- ----------- ----------- -----------
NET ASSETS.............................................. $42,693,786 $35,991,999 $19,047,538 $13,057,099
=========== =========== =========== ===========
Capital stock outstanding (Note 5)...................... 3,779,382 3,320,455 1,785,480 1,260,885
=========== =========== =========== ===========
Net asset value, offering and redemption
prices per share........................................ $11.30 $10.84 $10.67 $10.36
=========== =========== =========== ===========
</TABLE>
39
<PAGE> 42
Statements of Operations for the Year Ended December 31, 1995
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK REAL ESTATE BALANCED
EQUITY FUND FUND SECURITIES FUND ASSETS FUND
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 2):
Interest....................................................... $ 826,889 $ 295,300 $ 277,831 $ 3,022,480
Dividends**.................................................... 23,376 771,938 2,320,479 826,873
----------- ----------- --------- -----------
Total investment income........................................ 850,265 1,067,238 2,598,310 3,849,353
----------- ----------- --------- -----------
EXPENSES:
Investment advisory fees (Note 8).............................. 643,999 232,477 232,449 456,917
General expenses (Note 8)...................................... --- --- --- ---
----------- ----------- --------- -----------
Total Expenses................................................. 643,999 232,477 232,449 456,917
----------- ----------- --------- -----------
Net investment income (Note 2)................................. 206,266 834,761 2,365,861 3,392,436
----------- ----------- --------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) :
Net realized gain (loss) on:
Investment transactions (excluding short term investments) 18,252,359 2,091,782 1,242,307 2,741,674
Foreign currency transactions*................................. --- --- --- ---
----------- ----------- --------- -----------
Net realized gain ............................................. 18,252,359 2,091,782 1,242,307 2,741,674
----------- ----------- --------- -----------
Net unrealized appreciation on:
Investment transactions (excluding short term investments) 12,756,627 9,276,249 3,176,323 14,094,035
Translation of assets and liabilites in foreign currencies*.... --- --- --- ---
----------- ----------- --------- -----------
Net unrealized appreciation.................................... 12,756,627 9,276,249 3,176,323 14,094,035
----------- ----------- --------- -----------
Net realized and unrealized gain............................... 31,008,986 11,368,031 4,418,630 16,835,709
----------- ----------- --------- -----------
INCREASE IN NET ASSETS DERIVED
FROM OPERATIONS................................................ $31,215,252 $12,202,792 $6,784,491 $20,228,145
=========== =========== ========== ===========
</TABLE>
** Net of withholding taxes of $41,289 and $15,842 for International
and Pacific Rim Emerging Markets funds, respectively.
* International and Pacific Rim Emerging Markets Funds only.
See Accompanying Notes
40
<PAGE> 43
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
PACIFIC RIM
CAPITAL GROWTH MONEY - MARKET INTERNATIONAL EMERGING
BOND FUND FUND FUND MARKETS FUND
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 2):
Interest....................................................... $ 2,739,692 $ 1,838,797 $ 143,986 $ 58,812
Dividends**.................................................... --- --- 331,975 215,991
----------- ----------- ---------- -----------
Total investment income........................................ 2,739,692 1,838,797 475,961 274,803
----------- ----------- ---------- -----------
EXPENSES:
Investment advisory fees (Note 8).............................. 198,316 154,412 154,896 95,770
General expenses (Note 8)...................................... --- --- 91,115 73,235
----------- ----------- ---------- -----------
Total Expenses................................................. 198,316 154,412 246,011 169,005
----------- ----------- ---------- -----------
Net investment income (Note 2)................................. 2,541,376 1,684,385 229,950 105,798
----------- ----------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) :
Net realized gain (loss) on:
Investment transactions (excluding short term investments) 677,362 --- 239,190 79,497
Foreign currency transactions*................................. --- --- (68,901) (23,307)
----------- ----------- ---------- -----------
Net realized gain ............................................. 677,362 --- 170,289 56,190
----------- ----------- ---------- -----------
Net unrealized appreciation on:
Investment transactions (excluding short term investments) 4,016,399 --- 1,358,135 1,075,255
Translation of assets and liabilites in foreign currencies*.... --- --- 2,542 380
----------- ----------- ---------- -----------
Net unrealized appreciation.................................... 4,016,399 --- 1,360,677 1,075,635
----------- ----------- ---------- -----------
Net realized and unrealized gain............................... 4,693,761 --- 1,530,966 1,131,825
----------- ----------- ---------- -----------
INCREASE IN NET ASSETS DERIVED
FROM OPERATIONS................................................ $ 7,235,137 $ 1,684,385 $1,760,916 $ 1,237,623
=========== =========== =========== ===========
</TABLE>
41
<PAGE> 44
Statements of Changes in Net Assets
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK REAL ESTATE
EQUITY FUND FUND SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ......................... $206,266 $55,087 $834,761 $453,596 $2,365,861 $1,547,952
Net realized gain (loss) from investment and
foreign currency transactions.................. 18,252,359 3,929,965 2,091,782 429,006 1,242,307 (342,136)
Net unrealized appreciation (depreciation) of
investments and translation of assets and
liabilities in foreign currencies.............. 12,756,627 (6,390,916) 9,276,249 (2,211,994) 3,176,323 (2,832,671)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets derived from
operations..................................... 31,215,252 (2,405,864) 12,202,792 (1,329,392) 6,784,491 (1,626,855)
------------ ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.......................... (35,611) (19,476) --- (453,596) (852,969) (697,202)
Net realized gain.............................. (3,730,311) (331,996) --- (1,246,124) --- (230,087)
------------ ----------- ----------- ----------- ----------- -----------
Total distributions to shareholders............ (3,765,922) (351,472) 0 (1,699,720) (852,969) (927,289)
------------ ----------- ----------- ----------- ----------- -----------
FROM CAPITAL STOCK TRANSACTIONS (NOTE 5):
Net proceeds from sale of capital stock........ 46,820,911 49,160,218 17,959,899 18,029,178 11,341,799 22,118,718
Net asset value of shares issued to shareholder
for reinvestment of dividends.................. 3,765,922 351,472 --- 1,699,720 852,969 927,289
------------ ----------- ----------- ----------- ----------- -----------
50,586,833 49,511,690 17,959,899 19,728,898 12,194,768 23,046,007
Cost of capital stock reacquired............... (12,989,112) (5,141,457) (3,995,283) (3,522,116) (8,257,316) (2,026,894)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets derived from
capital stock transactions..................... 37,597,721 44,370,233 13,964,616 16,206,782 3,937,452 21,019,113
------------ ----------- ----------- ----------- ----------- -----------
Net increase in net assets..................... 65,047,051 41,612,897 26,167,408 13,177,670 9,868,974 18,464,969
NET ASSETS:
Beginning of period 97,379,416 55,766,519 34,828,520 21,650,850 42,571,143 24,106,174
------------ ----------- ----------- ----------- ----------- -----------
End of period 1995 and 1994 including
undistributed net investment income of
$206,266 and $35,611 respectively in the
Emerging Growth Equity Fund, $834,761 and NIL
respectively in the Common Stock Fund,
$2,365,861 and $852,969 respectively in the
Real Estate Securities Fund, $3,268,747 and
$5,545 respectively in the Balanced Assets
Fund, $1,597 and $6,094 respectively in the
Capital Growth Bond Fund, $1,684,384 and
$1,404 respectively in the Money - Market
Fund, $2,767 and $4,793 respectively in the
International Fund, and $397 and $5,439
respectively in the Pacific Rim Emerging
Markets Fund.
(Note 2)....................................... $162,426,467 $97,379,416 $60,995,928 $34,828,520 $52,440,117 $42,571,143
============ =========== =========== =========== =========== ===========
See Accompanying Notes
</TABLE>
42
<PAGE> 45
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED ASSETS CAPITAL GROWTH MONEY - MARKET
FUND BOND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ......................... $3,392,436 $2,500,365 $2,541,376 $2,497,883 $1,684,385 $776,905
Net realized gain (loss) from investment and
foreign currency transactions.................. 2,741,674 228,164 677,362 (1,307,483) --- ---
Net unrealized appreciation (depreciation) of
investments and translation of assets and
liabilities in foreign currencies.............. 14,094,035 (5,783,362) 4,016,399 (3,268,785) --- ---
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets derived from
operations..................................... 20,228,145 (3,054,833) 7,235,137 (2,078,385) 1,684,385 776,905
------------ ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.......................... (129,234) (2,499,752) (2,545,873) (2,500,018) (1,405) (779,386)
Net realized gain.............................. --- (1,581,823) (425,137) (24,868) --- ---
------------ ----------- ----------- ----------- ----------- -----------
Total distributions to shareholders............ (129,234) (4,081,575) (2,971,010) (2,524,886) (1,405) (779,386)
------------ ----------- ----------- ----------- ----------- -----------
FROM CAPITAL STOCK TRANSACTIONS (NOTE 5):
Net proceeds from sale of capital stock........ 24,303,441 32,214,527 12,263,927 11,243,241 36,173,191 27,553,996
Net asset value of shares issued to shareholder
for reinvestment of dividends.................. 129,234 4,081,575 2,971,010 2,524,886 1,405 779,386
------------ ----------- ----------- ----------- ----------- -----------
24,432,675 36,296,102 15,234,937 13,768,127 36,174,596 28,333,382
Cost of capital stock reacquired............... (8,507,590) (12,578,846) (10,423,191) (16,730,043) (26,250,063) (17,806,853)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets derived from
capital stock transactions..................... 15,925,085 23,717,256 4,811,746 (2,961,916) 9,924,533 10,526,529
------------ ----------- ----------- ----------- ----------- -----------
Net increase in net assets..................... 36,023,996 16,580,848 9,075,873 (7,565,187) 11,607,513 10,524,048
NET ASSETS:
Beginning of period 74,736,743 58,155,895 33,617,913 41,183,100 24,384,486 13,860,438
------------ ----------- ----------- ----------- ----------- -----------
End of period 1995 and 1994 including
undistributed net investment income of
$206,266 and $35,611 respectively in the
Emerging Growth Equity Fund, $834,761 and NIL
respectively in the Common Stock Fund,
$2,365,861 and $852,969 respectively in the
Real Estate Securities Fund, $3,268,747 and
$5,545 respectively in the Balanced Assets
Fund, $1,597 and $6,094 respectively in the
Capital Growth Bond Fund, $1,684,384 and
$1,404 respectively in the Money - Market
Fund, $2,767 and $4,793 respectively in the
International Fund, and $397 and $5,439
respectively in the Pacific Rim Emerging
Markets Fund.
(Note 2)....................................... $110,760,739 $74,736,743 $42,693,786 $33,617,913 $35,991,999 $24,384,486
============ =========== =========== =========== =========== ===========
See Accompanying Notes
</TABLE>
43
<PAGE> 46
Statements of Changes in Net Assets (continued)
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PACIFIC RIM EMERGING
FUND MARKETS FUND
YEAR ENDED * PERIOD ENDED YEAR ENDED * PERIOD ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ........................... $229,950 $34,077 $105,798 $32,721
Net realized gain (loss) from investment and
foreign currency transactions.................... 170,289 (6,873) 56,190 511
Net unrealized appreciation (depreciation) of
investments and translation of assets and
liabilities in foreign currencies................ 1,360,677 (190,197) 1,075,635 (450,582)
---------- ---------- ----------- ----------
Increase (decrease) in net assets derived from
operations....................................... 1,760,916 (162,993) 1,237,623 (417,350)
---------- ---------- ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income............................ (231,976) (29,284) (110,840) (27,282)
Net realized gain................................ (219,782) --- (46,196) ---
---------- ---------- ----------- ----------
Total distributions to shareholders.............. (451,758) (29,284) (157,036) (27,282)
---------- ---------- ----------- ----------
FROM CAPITAL STOCK TRANSACTIONS:
Net proceeds from sale of capital stock.......... 6,682,274 11,463,599 5,286,274 8,107,883
Net asset value of shares issued to shareholder
for reinvestment of dividends.................... 451,758 29,284 157,036 27,282
---------- ---------- ----------- ----------
7,134,032 11,492,883 5,443,310 8,135,165
Cost of capital stock reacquired................. (686,059) (10,199) (1,124,015) (33,316)
---------- ---------- ----------- ----------
Increase in net assets derived from capital stock
transactions..................................... 6,447,973 11,482,684 4,319,295 8,101,849
---------- ---------- ----------- ----------
Net increase in net assets....................... 7,757,131 11,290,407 5,399,882 7,657,217
NET ASSETS:
Beginning of period.............................. 11,290,407 --- 7,657,217 ---
---------- ---------- ----------- ----------
End of period 1995 and 1994 including
undistributed net investment income of
$206,266 and $35,611 respectively in the
Emerging Growth Equity Fund, $824,761 and
NIL respectively in the Common Stock Fund,
$2,365,861 and $852,969 respectively in the
Real Estate Securities Fund, $3,268,747 and
$5,545 respectively in the Balanced Assets
Fund, $1,597 and $6,094 respectively in the
Capital Growth Bond Fund, $1,684,384 and
$1,404 respectively in the Money - Market
Fund, $2,767 and $4,793 respectively in the
International Fund, and $397 and $5,439
respectively in the Pacific Rim Emerging
Markets Fund.
(Note 2)......................................... $19,047,538 $11,290,407 $13,057,099 $7,657,217
=========== =========== =========== ==========
</TABLE>
* Inception date October 4, 1994
See Accompanying Notes
44
<PAGE> 47
Notes to Financial Statements, December 31, 1995
1. ORGANIZATION
Manulife Series Fund, Inc. ("MSFI"), incorporated on July 22, 1983, and
domiciled in the State of Maryland, is a no-load, diversified open-end
management investment company. MSFI was incorporated for the purpose of
investing premiums from variable contracts issued by The Manufacturers Life
Insurance Company of America. MSFI is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 and its shares are
registered under the Securities Act of 1933. The effective date of the initial
registration was June 26, 1984. Separate Accounts One, Two, Three and Four of
The Manufacturers Life Insurance Company of America (the "Separate Accounts")
have purchased their shares of the common stock of MSFI as an investment and
not with a view towards resale, distribution or redemption. On October 4,
1994, MSFI launched the International Fund and Pacific Rim Emerging Markets
Fund with initial Seed money from The Manufacturers Life Insurance Company of
America of $10,000,000 and $7,000,000, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A) SECURITY VALUATION.
Except with respect to debt instruments having a remaining maturity of 60 days
or less, securities held by MSFI are valued as follows: Securities listed on a
securities exchange are valued at the last sale price or, if there has been no
sale that day, at the last bid price reported as of the close of trading on the
New York Stock Exchange. Securities traded in the over-the-counter market
are valued at the last bid price or yield equivalent as of the close of trading
on the New York Stock Exchange. Securities which are traded both in the
over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market, and for debt securities this
ordinarily will be the over-the-counter market. Although the practice of each
fund is to purchase only assets having a readily ascertainable market value, if
market quotations for such assets are unavailable, such assets are valued at
their fair value as determined in good faith by MSFI's Board of Directors.
There were no such securities held at December 31, 1995.
Debt instruments held with a remaining maturity of 60 days or less are valued
on an amortized cost basis. Under this method of valuation, the security is
initially valued at cost on the date of purchase (or in the case of securities
purchased with more than 60 days remaining to maturity, the market value on the
61st day prior to maturity); and thereafter a constant proportionate
amortization in value is assumed until maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. For purposes of this method of valuation, the maturity of a
variable rate instrument is deemed to be the next date on which the interest
rate is to be adjusted.
B) INTERNATIONAL AND PACIFIC RIM EMERGING MARKETS FUNDS.
Apart from the accounting policies mentioned above there are other significant
accounting policies followed by MSFI in preparation of financial statements for
the International and Pacific Rim Emerging Markets Funds.
Generally securities will be valued as described above on the exchanges which
they are traded, however, where a country has adopted other conventions with
respect to valuations, these will be utilized instead. Trading in securities
on European and Far Eastern exchanges and over-the counter markets is normally
completed well before 4:00 P.M. eastern time. As a result, if events
materially affecting the value of such securities occur between the time when
their price is determined and the time the Funds net asset value is calculated,
such securities will be valued at fair value as determined in good faith by
MSFI's Board of Directors. There were no such securities held at December 31,
1995.
The values of all assets and liabilities initially expressed in foreign
currencies are translated into US dollars at the exchange rate of such
currencies against the US dollar as provided by the pricing service as of
12:00 P.M. New York time.
The Funds may utilize derivative securities such as futures contracts and
related options and foreign currency contracts for bonafide hedging purposes,
and not in speculation or to leverage the fund. (See prospectus for details).
The primary risks associated with the use of futures contracts are imperfect
correlation between the change in market value of the securities held by the
Fund and the prices of futures contracts, and the possibility of an illiquid
market. Risks associated with forward currency contracts include movement in
the value of the foreign currency relative to the US dollar and the ability of
the counterpart to perform. Futures and forward currency contracts are valued
based upon their quoted daily settlement prices. Fluctuations in the value of
such contracts are recorded as unrealized appreciation (depreciation) until
terminated, at which time realized gains (losses) are recognized. Unrealized
appreciation (depreciation) related to open futures and forward currency
contracts may be required to be treated as realized gain (loss) for tax
purposes. There were no such futures or contracts held at December 31, 1995.
Foreign dividends are recorded on the ex-date or as soon after the ex-date that
the Fund is aware of such dividends, net of all non-rebatable tax withholdings.
C) FEDERAL INCOME TAXES.
It is MSFI's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholder. Therefore, no Federal income tax provision
is required.
D) DIVIDENDS TO SHAREHOLDER.
Dividends to shareholder are recorded on the ex-dividend date.
E) OTHER.
Security transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recorded as earned. Dividend
income is recorded on the ex-dividend date.
45
<PAGE> 48
Notes to Financial Statements, December 31, 1995 (continued)
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term securities for the year
ended December 31, 1995
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK REAL ESTATE
EQUITY FUND FUND SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASES
U.S. Government
Obligations.............. $ -- $ -- $ --
Corporate Bonds.......... -- -- --
Common Stocks............ 204,309,555 58,731,200 62,905,509
------------ ----------- -----------
$204,309,555 $58,731,200 $62,905,509
============ =========== ===========
SALES
U.S. Government
Obligations.............. $ -- $ -- $ --
Corporate Bonds.......... -- -- --
Common Stocks............ 168,970,035 45,706,444 56,803,017
------------ ----------- -----------
$168,970,035 $45,706,444 $56,803,017
============ =========== ===========
</TABLE>
Effective January 1, 1995 realized and unrealized gains and losses are
determined by the specific identification method. Previously, these gains and
losses were based on average cost. This change in method decreased net realized
gain and increased unrealized appreciation for financial statement purposes by
immaterial amounts. There was no effect on the net increase in net assets
resulting from operations, on the net assets of the Fund, or for federal
tax purposes.
4. TAX BASIS OF INVESTMENTS
Investment information based on the cost for Federal income tax purposes of the
securities (excluding short-term investments) held at December 31, 1995 is as
follows:
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK REAL ESTATE
EQUITY FUND FUND SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate gross unrealized
appreciation..................... $ 23,359,711 $ 9,508,857 $ 2,297,662
Aggregate gross unrealized
depreciation..................... (10,687,050) (788,231) (697,421)
----------- ---------- ----------
Net unrealized appreciation
(depreciation)................... $ 12,672,661 $ 8,720,626 $ 1,600,241
============ =========== ===========
Aggregate cost of securities
for federal income tax purposes.. $141,423,851 $46,948,261 $47,251,371
============ =========== ===========
</TABLE>
46
<PAGE> 49
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
BALANCED ASSETS CAPITAL GROWTH INTERNATIONAL PACIFIC RIM EMERGING
FUND BOND FUND FUND MARKETS FUND
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PURCHASES
U.S. Government
Obligations.............. $20,584,568 $18,293,621 $ --- $ ---
Corporate Bonds.......... 20,133,718 17,317,880 463,275 153,625
Common Stocks............ 54,281,414 --- 13,490,837 9,721,763
----------- ----------- ----------- ----------
$94,999,700 $35,611,501 $13,954,112 $9,875,388
=========== =========== =========== ==========
SALES
U.S. Government
Obligations.............. $22,480,322 $19,016,869 $ --- $ ---
Corporate Bonds.......... 7,812,173 12,281,218 114,416 57,208
Common Stocks............ 51,946,450 --- 7,469,713 4,918,616
----------- ----------- ----------- ----------
$82,238,945 $31,298,087 $ 7,584,129 $ 4,975,824
=========== =========== =========== ===========
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
BALANCED ASSETS CAPITAL GROWTH INTERNATIONAL PACIFIC RIM EMERGING
FUND BOND FUND FUND MARKETS FUND
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aggregate gross
unrealized
appreciation.................... $12,256,680 $2,037,777 $1,593,732 $ 979,279
Aggregate gross
unrealized
depreciation.................... (782,544) (25,087) (423,658) (354,599)
----------- ----------- ----------- ----------
Net unrealized
appreciation
(depreciation).................. $11,474,136 $2,012,690 $1,170,074 $624,680
=========== =========== =========== ===========
Aggregate cost of
securities for
federal income
tax purposes.................... $86,818,083 $38,481,204 $14,780,015 $10,576,710
=========== =========== =========== ===========
</TABLE>
47
<PAGE> 50
Notes to Financial Statements, December 31, 1995 (continued)
5. CAPITAL STOCK AND DISTRIBUTIONS
At December 31, 1995 there were 1,000,000,000 shares of $0.01
par value common stock authorized.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH COMMON STOCK
EQUITY FUND FUND
- ------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................... 2,232,451 2,635,224 1,190,184 1,257,276
Shares issued to
shareholders in
reinvestment of
dividends...................... 164,511 19,037 -- 124,906
--------- --------- --------- ---------
Total issued................... 2,396,962 2,654,261 1,190,184 1,382,182
Shares redeemed................ (615,559) (276,202) (264,451) (250,842)
--------- --------- --------- ---------
Net increase................... 1,781,403 2,378,059 925,733 1,131,340
========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH MONEY - MARKET
BOND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- ------------------------------------------------------------------------------------------------------------------------
Shares sold.................... 1,094,742 1,035,750 3,422,196 2,666,868
Shares issued to
shareholders in
reinvestment of
dividends...................... 263,567 244,349 132 75,920
--------- ---------- ---------- ----------
Total issued................... 1,358,309 1,280,099 3,422,328 2,742,788
Shares redeemed................ (907,815) (1,586,192) (2,477,727) (1,721,462)
--------- ---------- ---------- ----------
Net increase................... 450,494 (306,093) 944,601 1,021,326
========= ========== ========== ==========
</TABLE>
During 1995, The Manufacturers Life Insurance Company of America withdrew
$6,500,000 of its investment and accumulated earnings from Capital Growth
Bond Fund. At December 31, 1995 the value of The Manufacturers Life Insurance
Company of America's investments and accumulated earnings were: Capital Growth
Bond Fund $4,263,248; International Fund $10,957,026 and Pacific Rim Emerging
Markets Fund $7,363,984.
48
<PAGE> 51
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
REAL ESTATE BALANCED ASSETS
SECURITIES FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................... 815,153 1,558,907 1,589,739 2,170,644
Shares issued to
shareholders in
reinvestment of
dividends...................... 57,730 65,711 8,032 291,143
-------- --------- --------- ---------
Total issued................... 872,883 1,624,618 1,597,771 2,461,787
Shares redeemed................ (590,162) (147,295) (566,288) (866,562)
-------- --------- --------- ---------
Net increase................... 282,721 1,477,323 1,031,483 1,595,225
========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PACIFIC RIM
FUND EMERGING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- ------------------------------------------------------------------------------------------------------------------------------
Shares sold.................... 659,837 1,148,011 546,094 814,513
Shares issued to
shareholders in
reinvestment of
dividends...................... 42,491 2,981 15,245 2,900
-------- --------- --------- ---------
Total issued................... 702,328 1,150,992 561,339 817,413
Shares redeemed................ (66,801) (1,039) (114,449) (3,418)
-------- --------- --------- ---------
Net increase................... 635,527 1,149,953 446,890 813,995
========= ========= ========= =========
</TABLE>
*Inception date
October 4, 1994
49
<PAGE> 52
Notes to Financial Statements, December 31, 1995 (continued)
6. INDUSTRY DISCLOSURE
As December 31, 1995 the International Fund and Pacific Rim Emerging Markets
Fund portfolio diversification was as follows:
<TABLE>
Industry International Fund Pacific Rim Emerging
Markets Fund
- -------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries 6.27% 8.57%
Capital Goods 6.58% 6.90%
Conglomerates 7.20% 5.51%
Consumer goods 16.31% 7.15%
Consumer Services 2.84% 5.06%
Finance 19.02% 20.49%
General Business 3.18% 3.59%
Miscellaneous 8.84% 16.71%
Real Estate 1.38% 1.68%
Repurchase Agreements 13.09% 7.13%
Technology 3.49% 2.97%
Transportation .28% .15%
Utilities 11.52% 14.09%
--------------------------------------------
Total 100.00% 100.00%
============================================
</TABLE>
7. FOREIGN EXCHANGE CONTRACTS
The International and Pacific Rim Emerging Markets Fund will, from time to
time, enter into foreign currency exchange contracts. There are costs and
risks associated with such currency transactions. No type of foreign currency
transaction will eliminate fluctuations in the prices of the Fund's foreign
securities nor will prevent loss if the prices of such securities should
decline. No future or forward foreign exchange contracts were held by the fund
at December 31, 1995.
8. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MSFI has an Investment Advisory Agreement with Manufacturers Adviser
Corporation ("the Adviser"), a wholly-owned subsidiary of Manufacturer's Life
Insurance Company of America which in turn is a wholly-owned subsidiary of The
Manufacturers Life Insurance Company of Michigan ("MLIM"). MLIM is a life
insurance holding company organized in 1983 under Michigan law and a
wholly-owned subsidiary of The Manufacturers Life Insurance Company ("Manulife
Financial"), a mutual life insurance company based in Toronto, Canada.
The Adviser is responsible for the management of MSFI's Funds and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operation of MSFI. For such services, the Adviser receives daily
compensation at the annual rate of .50% from the Emerging Growth Equity Fund,
Common Stock Fund, Real Estate Securities Fund, Balanced Assets Fund, Capital
Growth Bond Fund and the Money - Market Fund.
For the International Fund and Pacific Rim Emerging Markets Fund, the Adviser
receives the following for investment management: i) .85% of the average
daily value of the aggregate net assets of each Fund on the first $100 million
and ii) .70% of the average daily value of the aggregate net assets of each
Fund in excess of $100 million. In addition, the Funds will reimburse the
Adviser for general expenses necessary to the operation of the funds at the
rate of i) up to .50% of the daily net assets of the portfolio for the
International Fund and ii) up to .65% of the daily net assets of the portfolio
for the Pacific Rim Emerging Markets Fund.
Certain officers and/or directors of MSFI are officers and/or directors of the
Adviser, MHC, MLIM, and Manulife Financial, however, there are no common
directors of MSFI and the Adviser.
50
<PAGE> 53
9. FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding for the
periods indicated.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.......................... $18.55 $19.42 $17.76 $16.18 $9.95
-------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................. 0.03 0.01 (0.01) (0.02) --
Net realized and unrealized gain or
(loss) on investments........................ 5.10 (0.81) 4.16 3.51 7.08
-------- -------- -------- -------- -------
Total from investment operations............ 5.13 (0.80) 4.15 3.49 7.08
-------- -------- -------- -------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income........................ (0.01) 0.00 -- -- --
Net realized gain............................ (0.57) (0.07) (2.49) (1.91) (0.85)
-------- -------- -------- -------- -------
Total dividend distributions................. (0.58) (0.07) (2.49) (1.91) (0.85)
-------- -------- -------- -------- -------
Net asset value, end of period............... $23.10 $18.55 $19.42 $17.76 $16.18
======== ======== ======== ======== =======
Net assets, end of period (in 000's)......... $162,426 $97,379 $55,767 $18,504 $9,822
Aggregate return on share outstanding
during entire period......................... 27.75 % (4.10)% 23.89 % 21.82 % 71.34 %
Significant ratios :
Portfolio turnover........................... 145.42 % 69.40 % 92.95 % 126.62 % 87.63 %
Ratio of expenses to average
net assets................................... 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %
Ratio of net investment income to
average net assets........................... 0.16 % 0.07 % (0.04)% (0.14)% 0.02 %
Ratio of net investment income and
realized and unrealized gain(loss)
to average net assets........................ 23.73 % (3.02)% 23.61 % 23.82 % 50.44 %
</TABLE>
51
<PAGE> 54
Notes to Financial Statements, December 31, 1995 (continued)
<TABLE>
<ER,6,6,6,6,6>
9. FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of capital stock outstanding for the
periods indicated.
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period........................ $13.36 $14.68 $13.73 $13.33 $10.48
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.24 0.20 0.19 0.18 0.21
Net realized and unrealized gain or
(loss) on investments...................... 3.67 (0.81) 1.64 0.61 2.94
------- ------- ------- ------- -------
Total from investment operations.......... 3.91 (0.61) 1.83 0.79 3.15
------- ------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... --- (0.20) (0.19) (0.18) (0.21)
Net realized gain.......................... --- (0.51) (0.69) (0.21) (0.09)
------- ------- ------- ------- -------
Total dividend distributions............... 0.00 (0.71) (0.88) (0.39) (0.30)
------- ------- ------- ------- -------
Net asset value, end of period............. $17.27 $13.36 $14.68 $13.73 $13.33
======= ======= ======= ======= =======
Net assets, end of period (in 000's)....... $60,996 $34,829 $21,651 $9,708 $5,480
Aggregate return on share outstanding
during entire period....................... 29.23 % (4.19) % 13.39 % 6.07 % 30.18 %
Significant ratios :
Portfolio turnover......................... 109.03 % 84.78 % 88.23 % 47.60 % 53.01 %
Ratio of expenses to average
net assets................................. 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %
Ratio of net investment income to
average net assets......................... 1.76 % 1.53 % 1.39 % 1.51 % 1.78 %
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... 25.70 % (4.49) % 11.50 % 7.94 % 25.41 %
</TABLE>
52
<PAGE> 55
<TABLE>
<ER,6,6,6,6,6>
- -----------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period........................ $13.34 $14.07 $12.75 $10.92 $8.16
------- -------- ------ ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.67 0.55 0.47 0.45 0.53
Net realized and unrealized gain or
(loss) on investments...................... 1.35 (0.93) 2.38 1.83 2.76
------- -------- ------ ------ -------
Total from investment operations.......... 2.02 (0.38) 2.85 2.28 3.29
------- -------- ------ ------ -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... (0.26) (0.27) (0.47) (0.45) (0.53)
Net realized gain.......................... --- (0.08) (1.06) --- ---
------- -------- ------ ------ -------
Total dividend distributions............... (0.26) (0.35) (1.53) (0.45) (0.53)
------- -------- ------ ------ -------
Net asset value, end of period............. $15.10 $13.34 $14.07 $12.75 $10.92
======= ======= ======= ======= =======
Net assets, end of period (in 000's)....... $52,440 $42,571 $24,106 $7,273 $4,120
Aggregate return on share outstanding
during entire period....................... 15.14 % (2.76) % 22.61 % 21.29 % 41.10 %
Significant ratios :
Portfolio turnover......................... 136.05 % 35.60 % 143.00 % 70.71 % 40.29 %
Ratio of expenses to average
net assets................................. 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %
Ratio of net investment income to
average net assets......................... 5.06 % 4.26 % 3.93 % 4.13 % 5.40 %
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... 14.51 % (4.48) % 15.23 % 20.29 % 33.48 %
</TABLE>
53
<PAGE> 56
Notes to Financial Statements, December 31, 1995 (continued)
9. FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of capital stock outstanding for the
periods indicated.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED ASSETS FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of period........................ $13.77 $15.18 $14.52 $14.51 $12.35
-------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.53 0.48 0.44 0.51 0.60
Net realized and unrealized gain or
(loss) on investments...................... 2.87 (1.11) 1.29 0.37 2.22
-------- ------- ------- ------- -------
Total from investment operations.......... 3.40 (0.63) 1.73 0.88 2.82
-------- ------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... (0.02) (0.48) (0.44) (0.51) (0.60)
Net realized gain.......................... -- (0.30) (0.63) (0.36) (0.06)
-------- ------- ------- ------- -------
Total dividend distributions............... (0.02) (0.78) (1.07) (0.87) (0.66)
-------- ------- ------- ------- -------
Net asset value, end of period............. $17.15 $13.77 $15.18 $14.52 $14.51
======== ======= ======= ======= =======
Net assets, end of period (in 000's)....... $110,761 $74,737 $58,156 $27,733 $18,515
Aggregate return on share outstanding
during entire period....................... 24.69 % (4.15)% 11.99 % 6.21 % 23.36%
Significant ratios :
Portfolio turnover......................... 98.99 % 86.42 % 96.62 % 75.83 % 41.95%
Ratio of expenses to average
net assets................................. 0.50 % 0.50 % 0.50 % 0.50 % 0.50%
Ratio of net investment income to
average net assets......................... 3.65 % 3.37 % 3.08 % 3.75 % 4.52%
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... 21.79 % (4.11)% 10.09 % 6.99 % 20.84%
</TABLE>
54
<PAGE> 57
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period........................ $10.10 $11.33 $11.12 $11.47 $10.62
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.72 0.72 0.65 0.77 0.83
Net realized and unrealized gain or
(loss) on investments...................... 1.32 (1.22) 0.51 (0.11) 0.85
------- ------- ------- ------- -------
Total from investment operations.......... 2.04 (0.50) 1.16 0.66 1.68
------- ------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... (0.72) (0.72) (0.65) (0.78) (0.83)
Net realized gain.......................... (0.12) (0.01) (0.30) (0.23) --
------- ------- ------- ------- -------
Total dividend distributions............... (0.84) (0.73) (0.95) (1.01) (0.83)
------- ------- ------- ------- -------
Net asset value, end of period............. $11.30 $10.10 $11.33 $11.12 $11.47
======= ======= ======= ======= =======
Net assets, end of period (in 000's)....... $42,694 $33,618 $41,183 $30,695 $29,326
Aggregate return on share outstanding
during entire period....................... 20.24 % (4.49)% 10.56 % 5.89 % 16.38 %
Significant ratios :
Portfolio turnover......................... 84.74 % 79.04 % 94.75 % 153.05 % 19.60 %
Ratio of expenses to average
net assets................................. 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %
Ratio of net investment income to
average net assets......................... 6.36 % 6.29 % 5.69 % 6.76 % 7.54 %
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... 18.11 % (5.23)% 9.28 % 5.78 % 15.35 %
</TABLE>
55
<PAGE> 58
Notes to Financial Statements, December 31, 1995 (continued)
<TABLE>
<ER,6,6,6,6,6>
9. FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of capital stock outstanding for the
periods indicated.
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/93 DEC. 31/92 DEC. 31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value
beginning of period.............................. $10.26 $10.23 $10.22 $10.21 $10.21
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.58 0.39 0.27 0.34 0.57
Net realized and unrealized loss on investments
and foreign currency transactions and translation --- --- --- --- ---
------- ------- ------- ------- -------
Total from investment operations................ 0.58 0.39 0.27 0.34 0.57
------- ------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income............................ --- (0.36) (0.26) (0.33) (0.57)
Net realized gain................................ --- --- --- --- ---
------- ------- ------- ------- -------
Total dividend distributions..................... 0.00 (0.36) (0.26) (0.33) (0.57)
------- ------- ------- ------- -------
Net asset value, end of period................... $10.84 $10.26 $10.23 $10.22 $10.21
======= ======= ======= ======= =======
Net assets, end of period (in 000's)............. $35,992 $24,384 $13,860 $10,825 $8,615
Aggregate return on share outstanding
during entire period............................. 5.63 % 3.89 % 2.73 % 3.40 % 5.60 %
Significant ratios :
Portfolio turnover............................... None None None None None
Ratio of expenses to average
net assets....................................... 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %
Ratio of net investment income to
average net assets............................... 5.35 % 3.84 % 2.67 % 3.25 % 5.45 %
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets............................ 5.35 % 3.84 % 2.67 % 3.25 % 5.45 %
</TABLE>
56
<PAGE> 59
<TABLE>
<ER,6,6,6,6>
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL FUND PACIFIC RIM EMERGING MARKETS FUND
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED +PERIOD ENDED YEAR ENDED +PERIOD ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period........................ $9.82 $10.00 $9.41 $10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.13 0.02 0.12 0.04
Net realized and unrealized loss on
investments and foreign currency
transactions and translation............... 0.98 (0.18) 0.96 (0.59)
------- ------- ------- -------
Total from investment operations........... 1.11 (0.16) 1.08 (0.55)
------- ------- ------- -------
DIVIDEND DISTRIBUTIONS:
Net investment income...................... (0.13) (0.02) (0.09) (0.04)
Net realized gain.......................... (0.13) 0.00 (0.04) 0.00
------- ------- ------- -------
Total dividend distributions............... (0.26) (0.02) (0.13) (0.04)
------- ------- ------- -------
Net asset value, end of period............. $10.67 $9.82 $10.36 $9.41
======= ======= ======= =======
Net assets, end of period (in 000's)....... $19,048 $11,290 $13,057 $7,657
Aggregate return on share outstanding
during entire period....................... 11.28 % (1.54) % 11.47 % (5.63) %
Significant ratios :
Portfolio turnover......................... 60.95 % 0.00 % 54.85 % 0.00 %
Ratio of expenses to average
net assets................................. 1.35 % 1.35 % * 1.50 % 1.50 % *
Ratio of net investment income to
average net assets......................... 1.49 % 1.31 % * 1.01 % 1.84 % *
Ratio of net investment income and
realized and unrealized gain (loss)
to average net assets...................... 11.39 % (6.28) % * 11.86 % (23.41) % *
<FN>
* Inception Date October 4, 1994
** Annualized
</TABLE>
57
<PAGE> 60
Report of Independent Auditors
The Board of Directors
Manulife Series Fund, Inc.
We have audited the accompanying statements of assets and liabilities,
including the statements of investments of Manulife Series fund, Inc.
(comprised of the Emerging Growth Equity Fund, Common Stock Fund, Real Estate
Securities Fund, Balanced Assets Fund, Capital Growth Bond Fund, Money Market
Fund, International Fund and Pacific Rim Emerging Markets Fund) as of December
31, 1995 and the related statements of operations for the year then ended, the
statements of changes in net assets, and the financial highlights for each of
the periods presented herein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights, based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Manulife Series Fund, Inc. at
December 31, 1995, the results of their operations for the year then ended, the
changes in their net assets and the financial highlights for each of the
periods presented herein, in conformity with generally accepted accounting
principles.
[ARTWORK] - Ernst & Young LLP
Philadelphia, Pennsylvania
February 2, 1996
58
<PAGE> 61
Directors & Officers
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
NAME POSITION WITH PRINCIPAL OCCUPATIONS
THE COMPANY DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*Edward C. Balzarotti Director President, Jettron Products Inc., East Hanover, NJ.
Donald A. Guloien Director Senior Vice President, Business Development - 1994 -
and President present, The Manufacturers Life Insurance Company; Vice
President, U.S. Individual Business - 1990 - 1994,
The Manufacturers Life Insurance Company;
Marketing Vice President, U.S. Individual Business -
1988 - 1990, The Manufacturers Life Insurance Company.
*Francis J. Knott Director President - 1992 - present, VITAL Resources;
Chairman - 1989 - 1992, Videoconferencing Systems,
Inc.; prior thereto, President, Videoconferencing
Systems, Inc Norcross, GA.
*F. David Rolwing Director President, Montgomery Mutual Insurance Company,
Sandy Spring, MD.
John D. Richardson Director Senior Vice President, and General Manager, U.S.
and Chariman Operations - 1995 - present, The Manufacturers Life
Insurance Company; Senior Vice President and General
Manager, Canadian Operations - 1992 - 1994, The
Manufacturers Life Insurance Company; Senior Vice
President, Financial Services - 1992, The Manufacturers
Life Insuarance Company; Executive Vice Chairman & CFO
- 1989 - 1991, Canada Trust.
Douglas H. Myers Vice President, Assistant Vice President and Controller - 1988 - present
Compliance The Manufacturers Life Insurance Company.
Vice President,
Finance and
Treasurer
Sheri L. Kocen Secretary and Senior Counsel - 1990 - present, The Manufacturers
General Counsel Life Insurance Company; prior thereto
Associate General Counsel - 1985 - 1989, Prudential
Capital Corporation, Los Angeles, CA.
</TABLE>
* Audit Committee Member
59
<PAGE> 62
NOTES
<PAGE> 63
<PAGE> 64
[LOGO]
MANULIFE FINANCIAL
Manulife Financial and the block design are registered service marks of
The Manufacturers Life Insurance Company and are used by it
and its subsidiaries.
IM5058AR 02/96 Printed in Canada
