Annual Report - Manulife

[Pages:52]Annual Report

December 31, 1999

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For VistaFund, VistaRRIF, and Vista Life Income Fund. Also applicable to Vista Locked-in Retirement Income Fund Contracts and Accumulation Annuity Contracts. Valuation of the Funds as of December 31, 1999.

The Manufacturers Life Insurance Company, referred to in this document as Manulife Financial, certifies that this Annual Report provides brief and plain disclosure of all material facts relating to the financial statements of the funds and the variable nature of the contract evidenced by the variable life insurance policy. Together with the appropriate Plan Description booklet, it should give you, the owner, a good understanding of how the plan works and whether it is right for you.

Subject to any applicable death and maturity guarantee, any part of the premium or other amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value according to the fluctuations in the market value of the assets of the segregated fund.

This Annual Report and Plan Description booklet make up the Vista Information Folder.

Vista Annual Report

December 31, 1999

D. D'Alessandro President and Chief Executive Officer

Trevor Matthews Senior Vice-President Canadian Individual Insurance Operations

A message to our investors..............................................................2 Fund Managers ................................................................................3 Average Annual Compounded Return.............................................4 Annual Return .................................................................................5 Manulife Short Term Securities Fund .............................................6 Manulife Bond Fund .......................................................................7 Manulife Diversified Investment Fund ...........................................8 Manulife Equity Fund ...................................................................12 Manulife Capital Gains Growth Fund...........................................17 Manulife Global Bond Fund .........................................................18 Manulife American Stock Fund ....................................................19 Manulife Global Equity Fund .......................................................22 General Provisions ........................................................................34 Manulife Financial Segregated Funds Financial Statements ........35 Notes to the Financial Statements .................................................39 Auditors' Report ............................................................................47

Table of Contents

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A message to our investors

I am pleased to present you with the Vista Annual Report for the year ended December 31, 1999. Please read this report as it contains important information that can help you make financial decisions that are right for you. Your financial advisor would be happy to answer any questions that you may have.

Several of the Vista funds performed strongly during 1999. The Manulife American Stock and Manulife Global Equity Funds were rated as two of the 84 "Best of Class" funds by Maclean's magazine in their annual review of over 2,700 funds in Canada. The Manulife Diversified Investment Fund also finished in the top quartile in the Canadian balanced fund category.

In your December 31, 1999 annual statement, we enclosed a letter that talked about a fund restructuring initiative that began in July of 1999. To recap the benefits of this initiative, several of the Vista funds moved to a "fund-on-fund" structure so that identically managed funds were pooled together so that our fund managers would be able to focus on managing one larger fund instead of several smaller funds. We are pleased to announce that the Manulife Short Term Securities Fund and Manulife Global Bond Fund will soon benefit from this re-structuring as well. The Manulife Capital Gains Growth Fund was re-structured in July and the Manulife Bond Fund in November 1999.

We will look for opportunities to complete the fund re-structuring of the remaining Vista funds but due to the high capital gain positions of these funds, they will probably not be converted to a fundon-fund structure in the year to come.

To further gain benefits from fund re-structuring, we have decided to allocate all similar fund mandates to one fund manager. For the Vista family of funds this means that Manulife Short Term Securities Fund will now be managed by Elliott & Page Limited. Elliott & Page currently manages over $16.5 billion in assets under mangement and has shown a long history of excellent financial management. The Manulife Global Bond Fund will now be managed by Oechsle International Advisors, and the mandate will be expanded to also include North American bonds. In 1999, Oechsle passed Manulife Financial's rigorous fund manager selection criteria and was selected to manage the global bond component of Manulife Financial's asset allocation funds that are available in other Manulife Financial vehicles.

New foreign content rules have been delayed once again. In last year's annual report, we informed you that anyone with more than 20% of registered investments in foreign funds might be subject to government penalties after January 1, 2001. The government has not finalized foreign content rules for registered segregated fund policies like Vista, resulting in a delay in the implementation of these rules until after January 1, 2002. At that point, the amount of foreign content that can be held in a registered plan will be 30%.

Thank you for allowing us to serve your investment needs. We hope to bring you continued success in 2000. The Vista family of funds is just one of the many financial vehicles available through the Manulife group of companies and your financial advisor. For example, our Manulife Guaranteed Investment Fund (GIF) encore has a unique combination of features including a broad selection of funds, brand name fund managers and powerful estate planning advantages.

Sincerely,

Harold Hugel Vice-President Savings & Retirement Services

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Fund Managers

Altamira Management Ltd. is an independent investment management firm founded in 1969 and long recognized as one of Canada's leading fund managers, with over $8.5 billion in assets under management. Altamira was responsible for managing the Manulife Short Term Securities Fund in 1999.

Altamira Management Ltd.

Elliott & Page Limited has been managing investments for Canadians since 1949 and currently has over $16.5 billion in assets under administration in pension, mutual fund and other accounts. It is a whollyowned subsidiary of Manulife Financial. Elliott & Page assumed management of the Manulife Equity Fund and Manulife Bond Fund in March 1998 and will assume management of the Manulife Short Term Securities Fund in mid-2000.

Elliott & Page Limited

Manulife International Investment Management Limited is the U.K.-based international investment arm of Manulife Financial. The international investment office has been in operation in London, England since 1948 and over the years, has established a reputation for managing international and pension assets with above-average long-term returns. They manage over $6.5 billion in assets.

Manulife International Investment Management Limited manages the Manulife Global Equity Fund and was responsible for managing the Manulife Global Bond Fund in 1999.

Manulife International Investment Management Limited

Founded in 1982, Seamark Asset Management Limited is 32% owned by the senior managers and 68% owned by Manulife Financial. It manages over $4.0 billion in investments for mostly pension and private clients. Seamark assumed management of the Manulife Diversified Investment Fund and Manulife American Stock Fund in March 1998.

Seamark Asset Management Ltd.

One of the largest investment counsel firms in Canada, Sceptre Investment Counsel Limited manages over $18 billion in assets. This company has been in business since 1955 and administers a family of seven no-load mutual funds, pension funds and other accounts. Sceptre assumed management of the Manulife Capital Gains Growth Fund in March 1998.

Sceptre Investment Counsel Limited

Oechsle International Advisors was founded in 1986. The firm specializes in international and global investments for institutional clients, from its offices located in Boston, London, Frankfurt and Tokyo. Today, the firm manages over $19 billion in assets. Oechsle will assume management of the Manulife Global Bond Fund in mid-2000.

Oechsle International Advisors, L.P.

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Average Annual Compounded Return*

as at December 31, 1999

The Vista Family of Funds

Option 1 (Vista Load)

Unit MER(%)

Rates of Return (%)

Values 1999 1 Yr 2 Yr 3 Yr 5 Yr 10 Yr

MONEY MARKET & INCOME FUNDS

Manulife Short Term Securities

$18.11 1.625 3.11 3.31 2.82 3.98 5.54

Manulife Bond

$21.64 1.625 -3.66 1.07 3.00 6.87 7.70

BALANCED & GROWTH FUNDS

Manulife Diversified Investment

$22.82 1.625 12.61 8.48 8.42 10.24 8.09

Manulife Equity

$19.82 1.625 7.71 4.98 5.58 8.27 6.41

Manulife Capital Gains Growth

$15.78 1.625 11.56 -5.89 -5.52 1.41 3.95

GLOBAL FUNDS

Manulife Global Bond

$10.95 1.625 -15.64 -1.11 -2.35 1.83 -

Manulife American Stock

$32.70 1.625 36.42 36.91 32.05 26.74 -

Manulife Global Equity

$22.83 1.625 53.26 36.47 25.29 17.95 12.02

The Vista Family of Funds Option 2

(Vista No Load)

MONEY MARKET & INCOME FUNDS Manulife Short Term Securities Manulife Bond

BALANCED & GROWTH FUNDS Manulife Diversified Investment Manulife Equity Manulife Capital Gains Growth

GLOBAL FUNDS Manulife Global Bond Manulife American Stock Manulife Global Equity

Unit Values

$16.73 $20.00

$21.06 $18.27 $14.56

$10.53 $31.49 $21.97

Rates of Return (%) MER(%) 1999 1 Yr 2 Yr 3 Yr 5 Yr 10 Yr

2.375 2.31 2.53 2.04 3.20 4.75 2.375 -4.43 0.29 2.20 6.06 6.89

2.375 11.71 7.65 7.59 9.40 7.27 2.375 6.85 4.16 4.77 7.44 5.59 2.375 10.66 -6.64 -6.26 0.64 3.16

2.375 -16.31 -1.90 -3.12 1.04 2.375 35.34 35.86 31.04 25.79 2.375 52.03 35.39 24.31 17.05 11.16

Note: Vista Load and No Load unit values, rates of return and MERs are shown above. For information on other classes of units, please refer to Notes to the Financial Statements.

* Average annual compounded returns are the rates of return averaged over the specified time frame.

The one to ten year indicated rates of return are the historical annual compounded total return which are net of management fees but do not take into account other charges (e.g. front-end or back-end fees) which would have reduced the return. The rates of return for each respective time period are used only to illustrate the effects of the compound growth rate and are not intended to reflect future values of the fund or return on investment. The month-end unit value shown for each fund has been calculated for performance comparison only. All performance data represents past return and is not necessarily indicative of future performance.

Investors should read the important information about these segregated funds contained in the Information Folder before investing. Unit values and investment return will fluctuate.

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The Vista Family of Funds Option 1

(Vista Load)

MONEY MARKET & INCOME FUNDS Manulife Short Term Securities Manulife Bond

BALANCED & GROWTH FUNDS Manulife Diversified Investment Manulife Equity Manulife Capital Gains Growth

GLOBAL FUNDS Manulife Global Bond Manulife American Stock Manulife Global Equity

Rates of Return (%) 1999 1998 1997 1996 1995

3.11 3.51 -3.66 6.03

1.84 4.23 7.27 6.98 7.49 18.69

12.61 4.50 7.71 2.32 11.56 -20.62

8.29 9.65 16.53 6.79 11.03 13.84 -4.77 12.41 13.15

-15.64 15.92 36.42 37.40 53.26 21.53

-4.77 7.59 9.30 22.85 11.08 27.83 5.60 7.37 8.12

Annual Return**

as at December 31, 1999

The Vista Family of Funds Option 2

(Vista No Load)

MONEY MARKET & INCOME FUNDS Manulife Short Term Securities Manulife Bond

BALANCED & GROWTH FUNDS Manulife Diversified Investment Manulife Equity Manulife Capital Gains Growth

GLOBAL FUNDS Manulife Global Bond Manulife American Stock Manulife Global Equity

Rates of Return (%) 1999 1998 1997 1996 1995

2.31 2.74 -4.43 5.23

1.09 3.46 6.46 6.14 6.67 17.85

11.71 3.74 6.85 1.53 10.66 -21.24

7.46 8.81 15.66 5.99 10.18 13.00 -5.48 11.57 12.31

-16.31 14.98 35.34 36.38 52.03 20.57

-5.49 6.77 8.47 21.92 10.22 26.96 4.79 6.57 7.32

**Annual returns are the simple one-year calendar rates of return earned by each fund for each year.

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Manulife Short Term Securities

Fund

RRSP content: Canadian

Portfolio Mix

The Manulife Short Term Securities Fund invests in high quality, low risk securities maturing in one year or less, such as Treasury Bills and Corporate Paper. The objective of the Fund is to earn the highest return possible with minimum risk. It is targeted to fixed-income investors with shorter investment horizons than those who would invest in the Manulife Bond Fund.

Top Three Holdings

1. Gov of Canada T-Bills 2. Canada Trustco Mortgage Co 3. Hong Kong Bank of Canada BA

Interest Rate

4.890

Maturity % of Invested

Date

Assets

2000/02/07 2000/05/01 2000/01/28

69.28 10.50 10.18

90% Cash* 10% Corporate Bonds

*Money invested in short-term notes and other assets.

Manulife Short Term Securities Fund

Composition of the Manulife Short Term Securities Fund

as at December 31, 1999 (Note: All figures shown are

in Canadian dollars)

The Manulife Short-Term Securities Fund's basis of computing cost is First in - First out.

PAR VALUE/ NO. OF SHARES NAME

INTEREST MATURITY RATE DATE

BOOK VALUE $(000's)

MARKET VALUE $(000's)

SHORT TERM NOTES ( 88.96% )

47,780,000 GOV OF CANADA T-BILLS 7,220,000 GOV OF CANADA T-BILLS 7,000,000 HONGKONG BANK OF CANADA BA

CORPORATE BONDS ( 10.45% )

2000/02/17

47,483

47,483

2000/12/07

6,859

6,859

2000/01/28

6,974

6,974

61,316

61,316

7,200,000 CANADA TRUSTCO MORTGAGE CO

4.890 2000/05/01

7,200

7,200

7,200

7,200

CASH & EQUIVALENTS ( 0.04% )

CASH

TOTAL INVESTED ASSETS

25

25

25

25

68,541 68,541

TOTAL OTHER ASSETS LESS LIABILITIES ( 0.55% )

376

376

TOTAL NET ASSETS ( 100% )

68,917 68,917

(See notes to the Financial Statements starting on page 39)

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