Group Investment Report
December 31, 2005
2
Table of Contents
PAGE
The Importance of Diversification 3
Asset Classes 4
Investment Platform - Style Grid 5
Volatility Rating Overview 6
Fund Managers 8
Rates of Return Overview 10
How to Read Fund Descriptions 12
Funds Available
Asset Allocation 14
Guaranteed Interest Accounts and Money Market 25
Fixed Income 28
Balanced 34BalancedGlobal Balanced
Canadian Equity 44Canadian Large Cap EquityCanadian Small/Mid Cap Equity
U.S. Equity 58U.S. Large Cap Equity
International/Global Equity 65
Investment Watch (i-Watch) 73
Statement of Investment Policies, Procedures and Goals 74
3
The Importance of Diversification
Diversification is the key to a well-balancedportfolio; it is perhaps the most importantconsideration when choosing where to investyour money.
1. Is my money invested in more than one asset class?
An asset class is an investment type defined by the
nature of securities held within a mutual or pooled fund.
For example, broad asset classes include Canadian Bond,
Canadian Equity, U.S. Equity and International/Global
Equity. Predicting the best performing asset class (such as
Canadian Bond, U.S. Equity) with any degree of success
is extremely difficult. If you diversify your portfolio by
asset class, you decrease the chance of losing a large
amount of your investment if an event in the market
affects one asset class adversely. Refer to page 4 for
more information on Manulife asset classes.
2. How volatile are the funds I’m invested in?
Volatility is the fluctuation of a fund’s performance – upor down – based on its historical monthly track record.Where available, Manulife discloses the volatility of fundsbased on the last three years’ worth of performancedata. The greater a fund’s volatility, the greater the range
Why should you diversify your investment portfolio?
Have you ever heard the saying “don’t put all your eggs in one basket?” If you apply that same philosophy to investing, itmeans don't invest all your money in one fund or market. It’s difficult to accurately predict how individual funds ormarkets will perform over time. A well-diversified portfolio offers you the opportunity to achieve better returns on yourinvestments with less risk, helping you reach your long-term retirement savings goals.
When creating your investment portfolio, take these factors into consideration: asset class, volatility and fund managers.
To help ensure you are developing a diversified investment portfolio, ask yourself these questions:
of returns it has experienced over the time period underconsideration. Although a fund’s historical volatility is notnecessarily an accurate indication of future volatility, itdoes provide some valuable insight into the level of riskassociated with the fund. The Volatility RatingOverview on pages 6 – 7 show how different fundsrank relative to the other funds in your plan.
3. What are fund managers doing to ensure the fundI invest in is meeting its stated objectives?
Fund managers typically differentiate themselvesthrough the application of distinct investmentapproaches and expertise, often known as fundmanager style. Investing with more than one fundmanager allows you to take advantage of managers’distinct approaches to investing. Diversifying by fundmanager is a good way to ensure you are benefittingfrom the range of opportunities available to help yourretirement savings grow. The fund manager for eachfund is listed on the corresponding fund page.
Achieving the right balance between asset class, volatility and fund managers in yourinvestment portfolio can help you reach your retirement savings goal.
4
Asset Classes
ASSET ALLOCATION: A fund that invests in a diverse
range of asset classes, investor styles and fund
managers with the goal of maximizing expected return
while minimizing volatility for each investor profile.
GUARANTEED INTEREST ACCOUNT: A fund that
earns a fixed interest rate from the date of deposit until
the date of maturity. The interest rate is determined on
the date of deposit and does not change.
MONEY MARKET: A fund that invests in short-term
securities.
FIXED INCOME: A fund that invests in fixed income
securities that pay interest, such as corporate and
government bonds. The interest rate earned is more
commonly referred to as a ‘coupon rate’ and is
expressed as a percentage.
BALANCED: A fund that invests primarily in a
combination of common and preferred stocks, bonds
and short-term securities. A typical balanced fund
concentrates on capital preservation and growth while
mitigating risk.
GLOBAL BALANCED: A fund that invests in a
combination of common and preferred stocks, bonds
and short-term securities worldwide with the goal of
providing a balance between capital preservation and
growth while minimizing excessive risk.
CANADIAN LARGE CAP EQUITY: A fund that invests
primarily in shares of companies incorporated in
Canada. While the fund may hold some shares of small
companies, it invests primarily in medium to large
companies listed on Canadian stock exchanges.
CANADIAN SMALL/MID CAP EQUITY: A fund that
invests primarily in shares of small and medium
companies incorporated in Canada.
U.S. LARGE CAP EQUITY: A fund that invests primarily
in shares of companies incorporated in the U.S. While
the fund may hold some shares of small companies, the
fund invests primarily in medium to large companies.
INTERNATIONAL EQUITY: A fund that invests
primarily in shares of companies incorporated outside
North America.
GLOBAL EQUITY: A fund that invests in shares of
companies incorporated in one of the following three
geographic regions – Asia, Europe and the Americas.
Each asset class is represented by a differentcolour. The fund pages in this Group InvestmentReport and on Manulife's website are colour-coded to reflect the asset class they represent.
5
Investment Platform – Style GridA
ctiv
ely
Man
aged
Pass
ivel
y M
anag
ed (I
ndex
)
ASS
ET A
LLO
CA
TIO
N20
01 M
anul
ife C
onse
rvat
ive
Asse
t Allo
catio
n Fu
nd
2002
Man
ulife
Mod
erat
e As
set A
lloca
tion
Fund
20
03 M
anul
ife B
alan
ced
Asse
t Allo
catio
n Fu
nd
2004
Man
ulife
Gro
wth
Ass
et A
lloca
tion
Fund
20
05 M
anul
ife A
ggre
ssiv
e As
set A
lloca
tion
Fund
2101
Man
ulife
Con
serv
ativ
e In
dex
Asse
t Allo
catio
n Fu
nd
2102
Man
ulife
Mod
erat
e In
dex
Asse
t Allo
catio
n Fu
nd
2103
Man
ulife
Bal
ance
d In
dex
Asse
t Allo
catio
n Fu
nd
2104
Man
ulife
Gro
wth
Inde
x As
set A
lloca
tion
Fund
2105
Man
ulife
Agg
ress
ive
Inde
x As
set A
lloca
tion
Fund
Shor
t-te
rm
MO
NEY
MA
RK
ET31
32 M
anul
ife C
anad
ian
Mon
ey M
arke
t
Rate
Ant
icip
atio
nYi
eld
Enha
ncem
ent
Sect
or T
radi
ngIn
dex
FIX
ED IN
CO
ME
4161
Man
ulife
McL
ean
Budd
en F
ixed
Inco
me
Fund
4171
Man
ulife
SEA
MAR
K Bo
nd F
und
4141
Man
ulife
Fid
elity
Can
adia
n Bo
ndFu
nd41
31 M
anul
ife C
anad
ian
Bond
Fun
d(M
FC)
4191
Man
ulife
MFC
Glo
bal P
oole
d Ca
nadi
an B
ond
Inde
x Fu
nd
Gro
wth
Core
/Ble
ndV
alu
eSe
ctor
Rot
ator
Inde
x
BA
LAN
CED
5161
Man
ulife
McL
ean
Budd
enBa
lanc
ed G
row
th F
und
5162
Man
ulife
Can
adia
n Ba
lanc
edEt
hics
Fun
d
5164
Man
ulife
McL
ean
Budd
enBa
lanc
ed F
und
5171
Man
ulife
SEA
MAR
K Ba
lanc
edFu
nd
5241
Man
ulife
Jaris
low
sky
Fras
erBa
lanc
ed F
und
5301
Man
ulife
Lei
th W
heel
er D
iver
sifie
dPo
oled
Fun
d
5132
Man
ulife
Elli
ott &
Pag
e M
onth
lyHi
gh In
com
e Fu
nd
5181
Man
ulife
Trim
ark
Inco
me
Gro
wth
Fund
GLO
BA
L B
ALA
NC
ED52
31 M
anul
ife C
I Int
erna
tiona
lBa
lanc
ed F
und
CA
NA
DIA
N L
AR
GE
CA
PEQ
UIT
Y71
21 M
anul
ife E
lliot
t & P
age
Cana
dian
Equi
ty F
und
7161
Man
ulife
McL
ean
Budd
enCa
nadi
an E
quity
Gro
wth
Fun
d
7141
Man
ulife
Fid
elity
Can
adia
n La
rge
Cap
Fund
7164
Man
ulife
McL
ean
Budd
enCa
nadi
an E
quity
Fun
d
7171
Man
ulife
SEA
MAR
K Ca
nadi
anEq
uity
Fun
d
7241
Man
ulife
Jaris
low
sky
Fras
erCa
nadi
an E
quity
Fun
d
7131
Man
ulife
Can
adia
n La
rge
Cap
Valu
e Eq
uity
Fun
d (M
FC)
7181
Man
ulife
Trim
ark
Cana
dian
Fun
d
7351
Man
ulife
Max
xum
Div
iden
dG
row
th F
und
(Mac
kenz
ie)
7192
Man
ulife
Can
adia
n La
rge
Cap
Top
Dow
n Eq
uity
Fun
d (Z
echn
er)
7132
Man
ulife
MFC
Glo
bal P
oole
dCa
nadi
an In
dex
Fund
CA
NA
DIA
N S
MA
LL/M
IDC
AP
EQU
ITY
7122
Man
ulife
Elli
ott &
Pag
e G
row
thO
ppor
tuni
ties
Fund
71
91 M
anul
ife C
anad
ian
Smal
l Cap
Equi
ty F
und
(Tat
ters
all)
U.S
. LA
RG
E C
AP
EQU
ITY
8132
Man
ulife
MFC
Glo
bal P
oole
d U.
S.Eq
uity
Fun
d
8171
Man
ulife
SEA
MAR
K U.
S.Eq
uity
Fund
8142
Man
ulife
Fid
elity
Gro
wth
Am
erica
Fund
8191
Man
ulife
U.S
.Equ
ity F
und
(Ber
nste
in)
8261
Man
ulife
Leg
g M
ason
U.S
.Val
ueFu
nd
8131
Man
ulife
MFC
Glo
bal P
oole
d U.
S.In
dex
Fund
INTE
RN
ATI
ON
AL
EQU
ITY
8172
Man
ulife
SEA
MAR
K In
tern
atio
nal
Equi
ty F
und
8241
Man
ulife
Jaris
low
sky
Fras
erIn
tern
atio
nal E
quity
Fun
d 81
92 M
anul
ife In
tern
atio
nal E
quity
Fun
d(T
empl
eton
)83
21 M
anul
ife B
GI I
nter
natio
nal E
quity
Inde
x Fu
nd
GLO
BA
L EQ
UIT
Y81
61 M
anul
ife M
cLea
n Bu
dden
Glo
bal
Equi
ty F
und
8141
Man
ulife
Fid
elity
Inte
rnat
iona
lPo
rtfol
io F
und
8181
Man
ulife
Trim
ark
Fund
ASSET ALLOCATION
MONEY MARKET
FIXED INCOME
BALANCED GLOBAL BALANCED
2103 M
an
ulife
Bala
nce
d I
nd
ex A
sset
All
oca
tio
n F
un
d
2101 M
an
ulife
Co
nse
rvati
ve I
nd
ex A
sset
All
oca
tio
n F
un
d
2001 M
an
ulife
Co
nse
rvati
ve A
sset
All
oca
tio
n F
un
d
2002 M
an
ulife
Mo
dera
te A
sset
All
oca
tio
n F
un
d
2102 M
an
ulife
Mo
dera
te I
nd
ex A
sset
All
oca
tio
n F
un
d
2003 M
an
uli
fe B
ala
nce
d A
sset
All
oca
tio
n F
un
d
2004 M
an
uli
fe G
row
th A
sset
All
oca
tio
n F
un
d
2104 M
an
uli
fe G
row
th I
nd
ex A
sset
All
oca
tio
n F
un
d
2005 M
an
uli
fe A
gg
ress
ive A
sset
All
oca
tio
n F
un
d
2105 M
an
uli
fe A
gg
ress
ive I
nd
ex A
sset
All
oca
tio
n F
un
d
7351 M
an
uli
fe M
axxu
m D
ivid
en
d G
row
th F
un
d (
Mack
en
zie)
4191 M
an
ulife
MFC
Glo
bal
Po
ole
d C
an
ad
ian
Bo
nd
In
dex F
un
d
4131 M
an
ulife
Can
ad
ian
Bo
nd
Fu
nd
(M
FC)
4161 M
an
ulife
McL
ea
n B
ud
den
Fix
ed
In
com
e F
un
d
4171 M
an
ulife
SEA
MA
RK
Bo
nd
Fu
nd
4141 M
an
ulife
Fid
elity
Can
ad
ian
Bo
nd
Fu
nd
5241 M
an
ulife
Jari
slo
wsk
y F
rase
r B
ala
nce
d F
un
d
5181 M
an
ulife
Tri
mark
In
com
e G
row
th F
un
d
5132 M
an
uli
fe E
llio
tt &
Pag
e M
on
thly
Hig
h I
nco
me F
un
d
5171 M
an
ulife
SEA
MA
RK
Bala
nce
d F
un
d
5162 M
an
ulife
Can
ad
ian
Bala
nce
d E
thic
s Fu
nd
5164 M
an
ulife
McL
ean
Bu
dd
en
Bala
nce
d F
un
d
72
41 M
an
uli
fe J
ari
slo
wsk
y F
rase
r C
an
ad
ian
Eq
uit
y F
un
d
71
81 M
an
uli
fe T
rim
ark
Can
ad
ian
Fu
nd
Vo
lati
lity
Mete
rLO
WH
IGH
A S S E T
3132 M
an
ulife
Can
ad
ian
Mo
ney M
ark
et
Fun
d (
MFC
)
5231 M
an
uli
fe C
I In
tern
ati
on
al
Bala
nce
d F
un
d
5161 M
an
ulife
McL
ean
Bu
dd
en
Bala
nce
d G
row
th F
un
d
5301 M
an
uli
fe L
eit
h W
heele
r D
ivers
ifie
d P
oo
led
Fu
nd
6
Volatility Rating OverviewTh
e tr
iang
le r
epre
sent
s th
e fu
nd's
rat
ing
on t
he v
olat
ility
met
er.
7131
Man
uli
feC
an
ad
ian
Larg
eC
ap
Valu
eEq
uit
yFu
nd
(MFC
)
7
CANADIAN LARGE CAP EQUITY
CANADIAN SMALL\ MID CAP EQUITY
U.S. LARGE CAP EQUITY GLOBAL EQUITYINTERNATIONAL EQUITY
7132 M
an
uli
fe M
FC G
lob
al
Po
ole
d C
an
ad
ian
In
dex F
un
d
8171 M
an
uli
fe S
EA
MA
RK
U.S
. Eq
uit
y F
un
d
8261 M
an
uli
fe L
eg
g M
aso
n U
.S.
Valu
e F
un
d
7131 M
an
uli
fe C
an
ad
ian
Larg
e C
ap
Valu
e E
qu
ity F
un
d (
MFC
)
7141 M
an
uli
fe F
ideli
ty C
an
ad
ian
Larg
e C
ap
Fu
nd
7121 M
an
uli
fe E
llio
tt &
Pag
e C
an
ad
ian
Eq
uit
y F
un
d
7161 M
an
uli
fe M
cLean
Bu
dd
en
Can
ad
ian
Eq
uit
y G
row
th F
un
d
7192 M
an
uli
fe C
an
ad
ian
Larg
e C
ap
To
p D
ow
n E
qu
ity F
un
d (
Zech
ne
r)
7171 M
an
uli
fe S
EA
MA
RK
Can
ad
ian
Eq
uit
y F
un
d
7191 M
an
uli
fe C
an
ad
ian
Sm
all
Cap
Eq
uit
y F
un
d (
Tatt
ers
all
)
7122 M
an
uli
fe E
llio
tt &
Pag
e G
row
th O
pp
ort
un
itie
s Fu
nd
8241 M
an
uli
fe J
ari
slo
wsk
y F
rase
r In
tern
ati
on
al
Eq
uit
y F
un
d
8
172 M
an
uli
fe S
EA
MA
RK
In
tern
ati
on
al
Eq
uit
y F
un
d
8192 M
an
uli
fe I
nte
rnati
on
al
Eq
uit
y F
un
d (
Tem
ple
ton
)
C
L A S S
8142 M
an
uli
fe F
ideli
ty G
row
th A
meri
ca F
un
d
8131 M
an
uli
fe M
FC G
lob
al
Po
ole
d U
.S.
Ind
ex F
un
d
8
191 M
an
uli
fe U
.S.
Eq
uit
y F
un
d (
Bern
stein
)
8132 M
an
uli
fe M
FC G
lob
al
Po
ole
d U
.S.
Eq
uit
y F
un
d
8181 M
an
uli
fe T
rim
ark
Fu
nd
8161 M
an
uli
fe M
cLean
Bu
dd
en
Glo
bal
Eq
uit
y F
un
d
Vo
lati
lity
Mete
rLO
WH
IGH
8
141 M
an
uli
fe F
ideli
ty I
nte
rnati
on
al
Po
rtfo
lio
Fu
nd
7164 M
an
uli
fe M
cLean
Bu
dd
en
Can
ad
ian
Eq
uit
y F
un
d
8321 M
an
uli
fe B
GI
Inte
rnati
on
al
Eq
uit
y I
nd
ex F
un
d
The
vola
tility
rat
ing
is b
ased
on
the
stan
dard
dev
iatio
n of
mon
thly
ret
urns
of
the
fund
or
unde
rlyin
g fu
nds
over
a t
hree
-yea
r pe
riod
as o
f
Dec
embe
r 31
, 20
05.
Stan
dard
dev
iatio
n is
a m
easu
re o
f ris
k an
d in
dica
tes
the
degr
ee t
o w
hich
the
fun
d’s
valu
e ha
s flu
ctua
ted.
A f
und
with
a hi
gh v
olat
ility
has
exp
erie
nced
mor
e va
riabi
lity
in m
onth
-to-
mon
th r
etur
ns t
han
a fu
nd w
ith lo
w v
olat
ility
.
8
Fund Managers
AIM Trimark Investments is one of Canada’s largest
investment management companies. AIM Trimark offers a
diversified suite of investment solutions to institutions,
organizations, companies, high-net worth individuals and
millions of investors in Canada and around the world. A
subsidiary of U.K.-based AMVESCAP PLC, which is among
the world’s largest independent investment managers, AIM
Trimark leverages the global expertise of several hundred
AMVESCAP investment professionals worldwide.
www.aimtrimark.com
Sanford C. Bernstein, LLC (founded in 1967) was
acquired by Alliance Capital Management (founded in
1971) to become AllianceBernstein in the year 2000.
Both equity investment teams remain separate and distinct
entities. AllianceBernstein manages approximately $555
billion US in assets, including $342 billion US for
institutional clients around the world.
www.alliancebernstein.com
Barclays Global Investors (BGI) is one of the world's
largest investment management firms and one of the
world's largest providers of structured investment
strategies including indexing, exchange traded funds
(ETFs), tactical asset allocation and quantitative active
products. BGI manages over $1.7 trillion Cdn for almost
2700 clients in 47 countries around the world. From
offices in Toronto and Montreal, BGI manages over
$56 billion Cdn of assets for 175 Canadian clients. These
clients include pension and savings plans, mutual fund
companies, governments, corporations, charitable
foundations & endowments and universities.
www.barclaysglobal.com
CI Investments was established in the early 1960s. In
1994, CI Financial (then CI Fund Management Inc.) was
listed on the TSX under the symbol (CIX) with assets under
administration at the time of $3.7 billion Cdn. Since then,
CI has grown quickly, launching new funds and products,
and increasing the breadth and depth of product and
portfolio management expertise available to its clients.
Due to these new product launches, strong net sales and
strategic acquisition, CI has grown to manage
approximately $50 billion Cdn in assets as of June 30, 2005.
www.cifunds.com
Elliott & Page Limited has one of the longest track
records in money management in Canada. Founded in
1949, Elliott & Page is one of Canada’s oldest registered
investment counsellors. Today the firm manages more than
$40 billion Cdn in assets, and ranks as one of the nation’s
leading investment counselling firms.
www.elliotandpage.com
Fidelity Investments opened its Canadian operations
in 1987 and has grown to become Canada's eighth
largest mutual fund company, with more than $36 billion
Cdn, as at June 30, 2005 in assets under management.
www.fidelity.ca
Franklin Templeton Investments Corp. is the
Canadian subsidiary of Franklin Resources, Inc., a global
investment management organization known as Franklin
Templeton Investments. Franklin Templeton Investments
Corp has assets under management of $540.2 billion
Cdn, as of December 31, 2005.
www.templeton.ca
Founded in 1962 to serve private clients, Howson
Tattersall Investment Counsel (Howson Tattersall) has
grown over the years to provide investment services to a
wide range of institutional investors for their pension
plans, endowments, foundations and corporate reserves.
In August 2003, Howson Tattersall merged with Lancet
Asset Management, a subsidiary of the Canadian Medical
Association (CMA). The merged firm which has its
headquarters in Toronto, Canada, continues to operate
under the trusted Howson Tattersall name and manages
over $7 billion Cdn in assets including the Saxon Mutual
Funds.
www.htic.ca
9
Jarislowsky Fraser Limited is a registered investment
counselling firm managing pension funds, pooled funds,
endowment funds, and corporate and private portfolios
for clients in North America and Europe. The company
was founded in 1955 as an investment research firm. In
the early 1960s, the firm began to use research material
to counsel private investors and, in 1966, extended its
client base to include pension funds. Today, the firm
manages investment funds on behalf of governments,
corporations, universities, institutions and labour unions
with assets exceeding $58.9 billion Cdn.
www.jfl.ca
Founded in 1972 and headquartered in Toronto, Legg
Mason Canada Inc. serves institutional and private clients
from offices in Montreal, Toronto, Vancouver, and
Waterloo. Legg Mason Canada serves the Canadian
institutional and private client investment communities.
Currently, they manage $12.4 billion Cdn in assets.
www.leggmasoncanada.com
Leith Wheeler Investment Counsel Ltd. is a fully
independent investment counsel firm based in Vancouver,
B.C. Founded in 1982, it manages over $5 billion Cdn for
clients including corporations, endowments and
foundations. As well, they manage assets for multi-
employer and union pension plans in private and public
sectors across Canada.
www.leithwheeler.com
Mackenzie Financial Corporation is an integrated
financial services company, operating directly
in North America and internationally through partner
sub-advisor firms. Mackenzie offers more than 100
investment funds in Canada and the United States and
manages more than $45 billion Cdn for over one million
investors and their financial advisors. In addition
Mackenzie and its subsidiaries offer an array of loan,
deposit and other financial products and services and
employ over 1,400 people.
www.mackenziefinancial.com
McLean Budden Limited is one of Canada's oldest
investment counselling firms. From offices in Toronto,
Montreal, Vancouver and Chicago, the firm manages over
$30 billion Cdn of pension, foundation and mutual fund
assets as well as personal wealth.
www.mcleanbudden.com
MFC Global Investment Management has more
than 100 years of experience managing the assets of The
Manufacturers Life Insurance Company and other clients.
In April 2004, it more than doubled its size through the
merger of Manulife Financial and John Hancock Financial
Services, Inc. Today it is a leading global investment
manager, with over $240 billion Cdn ($206 billion US) in
assets under management as of September 30, 2005.
www.mfcglobal.com
SEAMARK Asset Management Ltd., based in Halifax,
Nova Scotia, was founded in 1982 as Atlantic Canada's first
full-service investment counsel firm. SEAMARK manages
over $10 billion Cdn in assets on behalf of pensions,
endowments, mutual funds and private clients. SEAMARK
has consistently been one of Canada's top performing
investment management firms.
www.seamark.ca
J. Zechner Associates Inc. manages money for
pension funds, institutions, and mutual fund companies,
family trust and endowments. The firm was founded in
1993 by John Zechner and is owned by its investment
professionals. Total assets under management have grown
to over $2 billion Cdn.
www.jzechner.com
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Rates of Return Overview
Gross rates of return (%) as of December 31, 2005. Gross rates show rates before any management fees are deducted.ANNUALIZED RETURN ANNUAL RETURN2
Fund code Fund nameFund name
Year to date1
1year
2year
3year
4year
5year
10year 2005 2004 2003 2002 2001
Page number
ASSET ALLOCATION2001 Manulife Conservative Asset Allocation Fund 7.8 7.8 7.5 8.2 6.4 6.1 n/a 7.8 7.3 9.5 1.1 4.9 15
2101 Manulife Conservative Index Asset Allocation Fund 7.2 7.2 6.9 7.2 5.9 5.5 n/a 7.2 6.6 7.9 2.1 3.7 16
2002 Manulife Moderate Asset Allocation Fund 9.7 9.7 9.2 10.3 7.1 6.2 n/a 9.7 8.8 12.6 -2.2 3.0 17
2102 Manulife Moderate Index Asset Allocation Fund 8.9 8.9 8.1 8.8 5.7 4.5 n/a 8.9 7.2 10.1 -3.0 0.0 18
2003 Manulife Balanced Asset Allocation Fund 11.5 11.5 10.9 12.5 7.7 6.5 n/a 11.5 10.2 15.9 -5.5 1.9 19
2103 Manulife Balanced Index Asset Allocation Fund 10.9 10.9 9.6 10.5 5.7 3.7 n/a 10.9 8.3 12.4 -7.4 -4.2 20
2004 Manulife Growth Asset Allocation Fund 13.6 13.6 12.8 15.1 8.7 7.2 n/a 13.6 12.0 19.9 -8.5 1.5 21
2104 Manulife Growth Index Asset Allocation Fund 14.8 14.8 12.5 13.9 7.1 3.9 n/a 14.8 10.3 16.7 -11.0 -7.9 22
2005 Manulife Aggressive Asset Allocation Fund 16.0 16.0 14.8 17.9 9.7 8.2 n/a 16.0 13.6 24.3 -11.5 2.2 23
2105 Manulife Aggressive Index Asset Allocation Fund 18.7 18.7 15.3 17.1 8.1 3.7 n/a 18.7 12.0 20.9 -15.0 -12.2 24
MONEY MARKET3132 Manulife Canadian Money Market Fund (MFC) 2.8 2.8 2.6 2.7 2.7 3.2 n/a 2.8 2.4 3.0 2.8 5.2 27
Scotia Capital 91-Day Treasury Bill Index 2.6 2.6 2.4 2.6 2.6 3.0 3.8 2.6 2.3 2.9 2.5 4.7
FIXED INCOME4131 Manulife Canadian Bond Fund (MFC)¥ 6.5 6.5 6.7 6.6 7.0 7.2 n/a 6.5 6.9 6.4 8.3 7.9 29
4141 Manulife Fidelity Canadian Bond Fund 7.1 7.1 7.2 7.4 7.8 7.9 8.0 7.1 7.3 7.7 9.0 8.2 30
4161 Manulife McLean Budden Fixed Income Fund 6.3 6.3 7.0 6.8 7.1 7.4 8.0 6.3 7.7 6.5 8.0 8.7 31
4171 Manulife SEAMARK Bond Fund 5.2 5.2 5.9 5.8 6.4 6.8 n/a 5.2 6.5 5.8 8.3 8.0 32
4191 Manulife MFC Global Pooled Canadian Bond Index Fund 6.4 6.4 6.7 6.8 7.3 7.4 n/a 6.4 7.1 6.8 9.0 8.1 33
Scotia Capital Universe Bond Index 6.5 6.5 6.8 6.8 7.3 7.4 7.7 6.5 7.1 6.7 8.7 8.1
BALANCED5132 Manulife Elliott & Page Monthly High Income FundÞ 15.1 18.4 19.7 18.4 19.0 n/a 21.8 22.2 14.8 21.5 35
5161 Manulife McLean Budden Balanced Growth Fund 11.3 11.3 9.9 11.4 6.5 5.7 9.9 11.3 8.5 14.4 -6.9 2.8 36
5162 Manulife Canadian Balanced Ethics Fund 10.9 10.9 9.7 11.1 6.8 5.9 n/a 10.9 8.6 13.8 -5.1 2.7 37
5164 Manulife McLean Budden Balanced Fund 10.9 10.9 9.9 11.0 7.0 6.4 n/a 10.9 8.9 13.4 -4.4 4.4 38
5171 Manulife SEAMARK Balanced Fund 9.7 9.7 7.7 9.7 5.5 5.6 n/a 9.7 5.7 13.9 -6.1 5.8 39
5181 Manulife Trimark Income Growth Fund 6.8 6.8 11.2 12.3 10.1 11.2 10.9 6.8 15.8 14.5 3.8 15.6 40
5241 11.3 11.3 10.4 10.3 7.7 7.0 n/a 11.3 9.6 10.1 0.2 4.3 41
5301 11.6 11.6 12.7 13.8 10.7 n/a n/a 11.6 13.9 16.1 2.0 n/a 42
Balanced Benchmark‡ 10.7 10.7 9.7 10.3 5.5 3.3 7.8 10.7 8.6 11.6 -7.9 -4.8
GLOBAL BALANCED5231 Manulife CI International Balanced Fund 4.0 4.0 5.2 8.0 3.0 -0.9 7.5 4.0 6.4 13.9 -10.5 -15.3 43
Global Balanced Benchmark¢ 0.6 0.6 2.9 2.7 0.2 -1.1 4.9 0.6 5.2 2.5 -6.9 -6.2
1 Year to date (YTD) rates of return are not annualized.2 The rates of return that a fund earned over a specific 12-month period. As an example: a one-year annual return as at June 2005 would measure performance from
¥Page Pooled Bond.
Þ
‡ Comprised of 35% S&P/TSX Composite Index, 35% Scotia Capital Universe Bond Index (Total Return), 10% S&P 500 Index ($C), 10% MSCI EAFE Index ($C), and 10% 91-Day T-bills.
¢ Comprised of 60% MSCI World Index and 40% JP Morgan Government Bond Index.† On May 21, 2004, the underlying fund changed from the Elliott & Page Blue Chip fund to the Elliott & Page Canadian Equity Fund. Performance prior to this data was derived from the
Elliott & Page Blue Chip Fund.§ On September 30, 2002, the underlying fund changed from Elliot & Page Pooled Canadian Equity to Manulife Canadian Large Cap Value Equity. Performance prior to this date was
derived from the Elliott & Page Pooled Canadian Equity.£ The non-shaded area represents the returns of a similarly managed fund for the period before the start date of the Manulife fund.¤ On June 1, 2003, the underlying fund changed from the Elliott & Page Emerging Growth to Elliott & Page Growth Opportunities. Performance prior to this date was derived from the
Elliott & Page Emerging Growth.
Manulife Leith Wheeler Diversified Pooled Fund
Manulife Jarislowsky Fraser Balanced Fund
July 1, 2004 to June 30, 2005.On September 30, 2002, the underlying fund changed from Elliott & Page Pooled Bond to the Manulife Canadian Bond. Performance prior to this date was derived from the Elliott &
The Manulife Elliot & Page Monthly High Income Fund's primary objective is to provide investors with a steady flow of monthly income and capital growth. The fund investsin a variety of equity securities, fixed income securities and income trusts. .
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ANNUALIZED RETURN ANNUAL RETURN2
Fund code Fund nameFund name
Year to date1
1year
2year
3year
4year
5year
10year 2005 2004 2003 2002 2001
Page number
CANADIAN LARGE CAP EQUITY7121 Manulife Elliott & Page Canadian Equity Fund† 24.5 24.5 20.4 20.6 10.8 6.2 n/a 24.5 16.5 20.9 -13.9 -10.5 45
7131 Manulife Canadian Large Cap Value Equity Fund (MFC)§ 24.3 24.3 22.6 23.7 15.8 11.3 n/a 24.3 20.9 26.0 -5.0 -5.2 46
7132 Manulife MFC Global Pooled Canadian Index Fund 24.2 24.2 19.2 21.6 12.0 6.5 n/a 24.2 14.5 26.6 -12.7 -12.7 47
7141 Manulife Fidelity Canadian Large Cap Fund 32.7 32.7 23.8 24.4 13.8 9.7 12.2 32.7 15.4 25.7 -12.9 -5.1 48
7161 Manulife McLean Budden Canadian Equity Growth Fund 22.9 22.9 17.2 21.6 11.4 9.3 14.5 22.9 11.8 30.7 -14.1 1.0 49
7164 Manulife McLean Budden Canadian Equity Fund 21.3 21.3 16.6 19.5 12.2 10.6 15.2 21.3 12.1 25.4 -7.1 4.7 50
7171 Manulife SEAMARK Canadian Equity Fund 19.9 19.9 14.9 18.7 12.0 11.1 n/a 19.9 10.1 26.6 -5.7 7.7 51
7181 Manulife Trimark Canadian Fund 11.3 11.3 11.3 15.2 8.7 8.2 10.5 11.3 11.2 23.4 -8.7 6.5 52
7192 Manulife Canadian Large Cap Top Down Equity Fund (Zechner) 17.3 17.3 17.2 22.1 9.0 n/a n/a 17.3 17.0 32.6 -22.5 n/a 53
7241 Manulife Jarislowsky Fraser Canadian Equity Fund 27.6 27.6 24.2 24.4 17.2 14.8 n/a 27.6 20.9 24.7 -1.9 5.5 54
7351 Manulife Maxxum Dividend Growth Fund (Mackenzie)£ 12.8 14.8 16.0 9.8 10.1 14.4 17.7 18.2 -6.8 11.5 55
S&P/TSX Composite Index 24.1 24.1 19.2 21.7 12.1 6.6 11.0 24.1 14.5 26.7 -12.4 -12.6
CANADIAN SMALL/MID CAP EQUITY7122 Manulife Elliott & Page Growth Opportunities Fund¤ 22.3 22.3 22.2 26.0 18.3 14.0 n/a 22.3 22.1 34.1 -2.2 -1.7 56
7191 Manulife Canadian Small Cap Equity Fund (Tattersall) 15.5 15.5 16.6 22.3 16.8 18.3 n/a 15.5 17.8 34.6 1.5 24.7 57
BMO Nesbitt Burns Small Cap Index 19.7 19.7 16.9 24.9 17.9 14.8 11.3 19.7 14.1 42.7 -0.9 3.4
U.S. LARGE CAP EQUITY8131 Manulife MFC Global Pooled U.S. Index Fund 1.3 1.3 2.1 2.9 -4.4 -4.9 n/a 1.3 2.9 4.6 -23.2 -7.1 59
8132 Manulife MFC Global Pooled U.S. Equity Fund 5.3 5.3 7.0 5.1 -4.7 -7.4 n/a 5.3 8.7 1.4 -28.9 -17.4 60
8142 Manulife Fidelity Growth America Fund 8.0 8.0 5.5 7.0 -1.2 -2.2 7.1 8.0 3.0 10.1 -22.1 -6.1 61
8171 Manulife SEAMARK U.S. Equity Fund 1.2 1.2 -1.0 3.6 -3.7 -2.2 n/a 1.2 -3.2 13.5 -22.8 4.2 62
8191 Manulife U.S. Equity Fund (Bernstein) 1.4 1.4 2.3 2.9 -2.7 -3.9 n/a 1.4 3.3 3.9 -17.7 -9.1 63
8261 Manulife Legg Mason U.S. Value Fund 4.0 4.0 4.4 8.7 1.1 0.6 n/a 4.0 4.8 17.9 -18.7 -2.7 64
S&P 500 Index ($ Cdn) 1.6 1.6 2.4 3.4 -3.9 -4.4 7.4 1.6 3.3 5.3 -22.7 -6.5
INTERNATIONAL EQUITY8172 Manulife SEAMARK International Equity Fund 6.1 6.1 4.2 5.7 -0.8 -3.1 n/a 6.1 2.3 8.9 -18.0 -11.8 66
8192 Manulife International Equity Fund (Templeton) 9.8 9.8 12.1 13.3 4.4 1.7 n/a 9.8 14.4 15.6 -18.2 -8.0 67
8241 Manulife Jarislowsky Fraser International Equity Fund 5.0 5.0 5.4 5.8 0.1 -1.6 9.1 5.0 5.9 6.6 -15.1 -10.7 68
8321 Manulife BGI International Equity Index Fund 11.2 11.2 11.2 11.6 3.8 -0.6 4.3 11.2 11.2 13.2 -16.6 -16.3 69
MSCI EAFE Index ($ Cdn) 10.4 10.4 11.4 12.2 4.3 -0.2 4.5 10.4 12.4 13.9 -16.3 -16.4
GLOBAL EQUITY8141 Manulife Fidelity International Portfolio Fund 11.8 11.8 9.3 10.7 2.8 0.6 8.7 11.8 6.9 13.5 -17.7 -7.9 70
8161 Manulife McLean Budden Global Equity Fund 5.7 5.7 5.6 6.6 -0.1 -1.4 n/a 5.7 5.5 8.5 -17.6 -6.6 71
8181 Manulife Trimark Fund 6.8 6.8 6.7 7.6 4.5 5.9 10.2 6.8 6.6 9.4 -4.1 11.7 72
MSCI World Index ($ Cdn) 6.6 6.6 7.0 7.8 0.0 -2.4 5.8 6.6 7.3 9.4 -20.2 -11.4
Manulife Return: These numbers represent the gross rates of return of the Manulife fund.
Additional Historical Information: In order to provide historic gross rates of return information, we have included the returns for each of the respective underlying funds.
The investment mangement fees (IMFs) you pay appear on the secure member website at www.manulife.ca/GRO.
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How to Read Fund Descriptions
Fund code:
A specific code has been assigned to each fund. This code
makes it easier for you and Manulife to identify a specific
fund. Use this code in all communications with Manulife.
When you use Manulife’s secure website and telephone
services to access your account, you will be able to identify
funds using the fund codes.
Asset class:
The fund pages in this Group Investment Report and on
the website (www.manulife.ca/GRO) reflect the colour
of their asset classes. For more information on asset
classes, read page 5.
2
1
Volatility meter:
You can use the volatility meter of each fund to help you
choose funds that suit your tolerance for risk. The volatility
meter is based on the standard deviation of monthly
returns of the fund or the underlying fund over a three-
year period where available. For any funds with less than a
three-year history, the rating was based on the next
longest available time period. Generally, the greater the
return you hope to earn on your investments, the greater
risk you must assume. A fund with high volatility has
experienced larger fluctuations of monthly returns than a
fund with low volatility. Investors expect the potential for
higher return in exchange for assuming the higher risk of
more volatile investments. Volatility is ranked from lowest
to highest - the left side represents low volatility and the
right side represents high volatility.
How the underlying fund is invested:
The pie chart depicts the mix of investments held by the
underlying fund.
Top holdings:
The primary security holdings based on the percentage
weighting of the underlying fund’s net market value.
Fund commentary/Underlying fund commentary:
These commentaries offer the fund managers' reviews of
fund activity and/or performance over a specified time
period. They include an outlook reflecting economic trends
or conditions that may affect the fund. Commentaries
appear in the format provided by the fund manager(s).
Underlying fund:
The market-based investment options in your group plan
are fund-on-fund investments which invest in existing
pooled or mutual funds (referred to as underlying funds).
When a deposit is made into a Manulife fund, the deposit
is used to purchase units of the corresponding underlying
fund. For example, if you purchase units of the “Manulife
Trimark Canadian Fund,” this Manulife fund invests in
units of the “Trimark Canadian Fund.” Due to the timing
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Volatility meter
Based on three−year standard deviation from Globe HySales
GLOBAL EQUITY Code 8141
Manulife Fidelity International Portfolio Fund
United Kingdom 9.70%
Germany 3.80%
Australia 2.90%
Switzerland 3.20%
Canada 5.40%
Japan 14.70%
Other 18.60%United States 41.70%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
BP PLC −
Ericsson LM Telephone −
Genentech Inc. −
GlaxoSmithKline PLC −
Goldman Sachs −
Monster Worldwide −
Novartis AG −
Peabody Energy Corp −
Total SA −
Univision Communication −
Total 10.10%
Underlying fund commentary
(As at December 31, 2005)
Global equity markets performed well during the fourthquarter of 2005, with the MSCI World index gaining 3.7%(all returns in Canadian−dollar terms). The Japanese equitymarket posted strong gains, advancing (+13%), followed bythe Asia ex−Japan region (+7.0%) and the U.S. (+2.9%).The European equity market lagged the other regions butstill posted positive returns (+2.6%). Japanese equitiesmirrored the strong gains of the previous quarter, surging toa five−year high. Improving economic conditions andearnings growth continued to attract overseas investors toJapanese equities. The financials, industrials, and materialssectors performed particularly well with the latter sectorbenefiting from rising gold prices, which broke through the$500 US barrier in December. Weaker performance wasseen in the energy and telecommunication−services sectors.Energy prices fell to more moderate levels due to a softeningin demand. The Fund rose 3.7% during the fourth quarter,trailing the return of its benchmark index slightly. Securityselection was the primary driver of relative returns,particularly within the Japanese market. The largestdetractor from performance was being overweight theunderperforming energy sector.Lead portfolio manager, Dick Habermann, continues toobserve differing levels of strength in global economies.Persistently high oil prices and strong raw material demandin China are continuing themes. Mr. Habermann isunderweighted in the U.S. where continued interest rate hikes and sustained high energy prices have negatively impacted consumer sentiment. European stocks are alsounderweighted, despite improved corporate earnings,structural problems persist. Japan is overweight in the Fundand Mr. Habermann remains positive in his outlook for theJapanese market.
UNDERLYING FUND −> Fidelity International Portfolio−A
Objective This fund invests primarily in equity securities of companies anywhere in theworld with the objective of achieving long−term capital growth. The fund is not subjectto any geographic constraints with regard to the allocation of portfolio assets amongdifferent markets.
Managed by Fidelity Investments Canada Ltd.
Fund managers Richard Habermann, BA, MBA.
Inception date November 1987 Total assets $1,337.2 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Fidelity Int’l PortfolioFidelity International Portfolio−A
11.8 6.9
13.5
−17.7 −7.9 −7.3
23.7 27.8 27.7 19.4
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Fidelity Int’l PortfolioMSCI World ($ Cdn)Fidelity International Portfolio−A
$21,922*
$17,129
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe MSCI World ($ Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Fidelity Int’l Portfolio 11.77% 9.31% 10.69% 0.57% 5.57% Jul 1997
MSCI World ($ Cdn) 6.58% 6.96% 7.78% −2.41% −
Rate of return expectation The fund seeks to achieve returns comparable to, or better than, the MSCI World Index ($ Cdn).
Source: Bell Globemedia Publishing Inc.
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123
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of these transactions, each Manulife fund may contain a
small cash component in addition to the underlying fund's
cash component. The goal of the fund-on-fund strategy is
to produce returns on the Manulife fund that are similar
to the returns on the underlying fund.
Objective:
The fund’s primary investment goal(s) as determined by
the fund manager.
Managed by:
The fund management company that manages the
underlying fund.
Fund managers:
The name of the lead fund manager(s) responsible for the
investment decisions regarding the underlying fund.
Inception date:
The date the underlying fund was made available for
purchase by investors.
Total assets:
The total market value of all the assets invested in the
underlying fund as of the specified date.
Historical gross returns:
Historical performance of the fund over a specified time
period. All performance histories are offered for illustrative
purposes only and are not a guarantee of future
performance. Unit values will fluctuate with the market
value of the underlying fund’s assets. Gross returns are the
rates of return earned before the deduction of investment
management fees. An individual investing in the fund
earns a net return after applicable management fees are
charged. Management fees can vary by client depending
on the products purchased. The returns shown here are
returns for the Manulife fund and/or the underlying fund.
Returns for individual plans will differ as investment
management fees are applied.
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Year by year returns:
The one-year return of the fund for each year specified,
based upon calendar year from January to December.
Overall past performance:
The graph shows you how a $10,000 investment in a fund
would change in value for the specific number of years
compared with a related broad-based index.
Index:
The index shown represents a broad-based market view
and is not necessarily the fund’s specific benchmark. It
should be used as a reference to compare funds against a
broad asset class. The fund’s objective may differ from the
style of the index.
Annual compound returns:
The return for historical period specified, converted to an
annualized rate.
Manulife inception date:
The first full month the fund was made available for
investment by Manulife Group Savings and Retirement
Solutions.
Rate of return expectation:
The benchmark the fund manager expects to meet or
exceed over the long-term.
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Asset Allocation
Asset allocation funds are portfolios of underlying funds diversified by fund manager, asset class and
investor style. Asset allocation funds are designed to make investing convenient. They provide fund
participants with a balance of capital growth and preservation consistent with five investor styles ranging
from conservative to aggressive. Asset allocation funds diversify by investing in a number of underlying
funds so plan members do not need to manage these portfolios.
Manulife offers two types of asset allocation funds: five actively-managed asset allocation funds and five
passively-managed index asset allocation funds. The actively-managed funds strive to out-perform a
variety of benchmark index composites while the passively-managed portfolios are designed to track to
the returns of these benchmark index composites. (Please note: The passively-managed index asset
allocation funds do not track to the same benchmarks as their actively managed counterparts.)
The funds are re-balanced periodically to maintain their respective long-term target asset mixes which
ensures each fund's underlying composition fulfills its objectives.
Asset Allocation FUND PAGECODE NUMBER
Manulife Conservative Asset Allocation Fund 2001 15
Manulife Moderate Asset Allocation Fund 2002 17
Manulife Balanced Asset Allocation Fund 2003 19
Manulife Growth Asset Allocation Fund 2004 21
Manulife Aggressive Asset Allocation Fund 2005 23
Index Asset Allocation
Manulife Conservative Index Asset Allocation Fund 2101 16
Manulife Moderate Index Asset Allocation Fund 2102 18
Manulife Balanced Index Asset Allocation Fund 2103 20
Manulife Growth Index Asset Allocation Fund 2104 22
Manulife Aggressive Index Asset Allocation Fund 2105 24
Volatility meter
Based on three−year standard deviation from Globe HySales
ASSET ALLOCATION Code 2001
Manulife Conservative Asset Allocation Fund
Bonds 70.20%
Money Market 9.50%
US Equity 5.70%
Canadian Equity 11.60%
Int’l Equity 3.00%
How the fund is invested
Target allocationMLI Cdn Universe Bond (TAL) 28.70%
MLI Cdn Bond (MFC) 24.00%
MLI Mortgage Backed Fund (MFC) 17.50%
MLI Cdn Money Market (MFC) 9.50%
MLI U.S. Equity (Bernstein) 5.70%
MLI Cdn Large Cap Val Equity (MFC) 5.10%
MLI Cdn Large Cap Growth Eq (MB) 4.20%
MLI International Equ (Templeton) 3.00%
MLI Cdn Lg Cap Top Dn Eq (Zechner) 2.30%
Total 100.00%
Fund commentary
(As at December 31, 2005)
The economic and market fundamentals are sound, andvaluation levels are reasonably attractive. Investor sentimenthas been dampened by the increase in the price of oil and bythe U.S. trade and budget deficits. On the positive side,inflation remains tame and earnings continue to grow at anattractive rate, although that rate is decreasing.
For the year, all of the Portfolio’s components added toperformance. The largest single performance contributioncame from Canadian equities such as the MLI CanadianLarge Cap Value Equity Fund and the MLI Canadian LargeCap Growth Fund both of which had strong, double−digitgains. Other contributors were Canadian bonds such as theMLI Canadian Bond Fund and the MLI Canadian UniverseBond Fund with single−digit gains.
The consensus outlook is that the market will grow slowly,displaying single−digit positive returns. The Portfolio is well−positioned to offer capital protection in volatile markets aswell as conservative upside potential when markets arepositive. The Portfolio remains fully invested, weightedprimarily in a diversified portfolio of fixed income holdingswith a smaller exposure to a broad range of domestic, U.S.,and international equities and management styles.
Objective The Manulife Conservative Asset Allocation Fund is managed to provide ahigh level of current income and capital preservation with some consideration given togrowth of capital. This fund is diversified by asset class and investment styles with theobjective of achieving superior risk−adjusted returns over the long term. The fund willgenerally maintain 80% of its investments in bond funds and 20% in equity funds,though each segment may vary up to 10% from time to time.
Managed by Manulife Financial
Fund managers Various (please refer to target allocation on this page).
Inception date February 1999 Total assets $220.0 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in February 1999.
0.0%
5.0%
10.0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Conservative Asset Allocation
7.8 7.3
9.5
1.1
4.9
8.1
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
Jan99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Conservative Asset AllocationBlend: MLI Conservative Asset Allocation
$15,168*
$14,291
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Conservative AssetAllocation
7.77% 7.54% 8.19% 6.07% 6.21% Feb 1999
Blend: MLI ConservativeAsset Allocation
7.57% 6.84% 7.17% 5.19% −
Rate of return expectation Over the long term, the fund attempts to outperform a benchmark portfolio that is comprised of thefollowing:· 7% BARRA Value Total Return Index· 5% BARRA Growth Total Return Index· 5% S&P 500 Total Return Index ($ Cdn)· 3% MSCI EAFE Total Return Index ($ Cdn)· 53% Scotia Capital Universe Bond Total Return Index· 9% Scotia Capital 91−Day T−bill Total Return Index· 18% Scotia Capital Mortgage Total Return Index
Source: Bell Globemedia Publishing Inc.
15
Volatility meter
Based on three−year standard deviation from Globe HySales
ASSET ALLOCATION Code 2101
Manulife Conservative Index Asset Allocation Fund
Bonds 80.00%
US Equity 7.00%
Int’l Equity 3.00%
Canadian Equity 10.00%
How the fund is invested
Target allocationMFC Global Pooled Cdn Bond Index 55.00%
MFC Global Pooled Short Term 25.00%
MFC Global Pooled Canadian Index 10.00%
MFC Global Pooled U.S. Equity Index 7.00%
MLI BGI International Eq Index 3.00%
Total 100.00%
Underlying fund commentary
(As at December 31, 2005)
For the year, all of the Portfolio’s asset classes added toperformance. The largest contribution to the Portfolio’sperformance came from Canadian large−cap equities with again of 24.1% as measured by the S&P/TSX CompositeIndex. To a lesser extent, positive performance byinternational large−cap equities and U.S. large−cap equities,also contributed to the Portfolio’s performance.
The Portfolio was rebalanced in April, May, July, August, andSeptember. The Fund was rebalanced so frequently(primarily) to respond to the outperformance of theCanadian equities market and the fact that eachrebalancing did not move the Portfolio all the way back tothe target mix, but left the Portfolio overweight in Canadianequities. This was done to reduce transaction costs andexploit the momentum of the Canadian equities market.
Objective The Manulife Conservative Index Asset Allocation Fund is managed toprovide a high level of current income and capital preservation with some considerationgiven to growth of capital. This fund is expected to track the performance of a blend ofmarket indices that is diversified by asset class. It will generally maintain 80% of itsinvestments in passively managed bond funds and 20% in passively managed equityfunds though each segment may vary up to 10% from time to time.
Managed by Manulife Financial
Fund managers Various (please refer to target allocation on this page).
Inception date June 1999 Total assets $6.9 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in June 1999.
0.0%
2.0%
4.0%
6.0%
8.0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Conservative Index Asset Alloc
7.2 6.6
7.9
2.1
3.7
7.3
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Conservative Index Asset AllocBlend: MLI Conservative Indx Asset Alloc
$14,579* $14,454
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Conservative IndexAsset Alloc
7.19% 6.87% 7.21% 5.45% 5.90% Jun 1999
Blend: MLI ConservativeIndx Asset Alloc
7.00% 6.68% 7.06% 5.28% −
Rate of return expectation Over the long term, the fund attempts to track the performance of a benchmark portfolio that iscomprised of the following:· 10% S&P/TSX Composite Total Return Index· 7% S&P 500 Total Return Index ($ Cdn)· 3% MSCI EAFE Total Return Index ($ Cdn)· 55% Scotia Capital Universe Bond Total Return Index· 25% Scotia Capital 91−Day T−bill Total Return Index
Source: Bell Globemedia Publishing Inc.
16
Volatility meter
Based on three−year standard deviation from Globe HySales
ASSET ALLOCATION Code 2002
Manulife Moderate Asset Allocation Fund
Bonds 59.80%
US Equity 9.30%
Int’l Equity 5.10%
Canadian Equity 25.80%
How the fund is invested
Target allocationMLI Cdn Universe Bond (TAL) 23.70%
MLI Cdn Bond (MFC) 21.10%
MLI Mortgage Backed Fund (MFC) 15.00%
MLI U.S. Equity (Bernstein) 9.30%
MLI Cdn Large Cap Val Equity (MFC) 8.80%
MLI Cdn Large Cap Growth Eq (MB) 6.50%
MLI International Equ (Templeton) 5.10%
MLI Cdn Small Cap Equ (Tattersall) 4.20%
MLI Cdn Lg Cap Top Dn Eq (Zechner) 3.80%
MLI Growth Opportunities Fund (MFC) 2.50%
Total 100.00%
Fund commentary
(As at December 31, 2005)
The economic and market fundamentals are sound andvaluation levels are reasonably attractive. Investor sentimenthas been dampened by the increase in the price of oil and bythe U.S. trade and budget deficits. On the positive side,inflation remains tame, and earnings continue to grow at anattractive rate, although that rate is decreasing.
For the year, all of the Portfolio’s components added toperformance. The largest single performance contributioncame from Canadian equities such as the MLI CanadianLarge Cap Value Equity Fund and the MLI Canadian LargeCap Growth Fund both of which had strong, double−digitgains. Other contributors were Canadian bonds such as theMLI Canadian Bond Fund and the MLI Canadian UniverseBond Fund with single−digit gains.
The consensus outlook is that the market will grow slowly,displaying single−digit positive returns. The Portfolio is well−positioned to offer capital protection in volatile markets aswell as moderate upside potential when markets arepositive. The Portfolio remains fully invested, with a slightmajority of the holdings in a diversified fixed incomeportfolio, while maintaining a comfortable exposure to abroad range of domestic, U.S., and international equitiesand management styles.
Objective The Manulife Moderate Asset Allocation Fund is managed to provide abalance between current income and growth of capital with a greater emphasis onincome and capital preservation. This fund is diversified by asset class and investmentstyles with the objective of achieving superior risk−adjusted returns over the long term.The fund will generally maintain 60% of its investments in bond funds and 40% in equityfunds, though each segment may vary up to 10% from time to time.
Managed by Manulife Financial
Fund managers Various (please refer to target allocation on this page).
Inception date February 1999 Total assets $323.3 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in February 1999.
−5%
0%
5%
10%
15%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Moderate Asset Allocation
9.7 8.8
12.6
−2.2
3.0
7.5
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
Jan99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Moderate Asset AllocationBlend: MLI Moderate Asset Allocation
$15,590*
$14,219
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Moderate AssetAllocation
9.68% 9.25% 10.35% 6.23% 6.63% Feb 1999
Blend: MLI Moderate AssetAllocation
9.82% 8.36% 9.06% 4.59% −
Rate of return expectation Over the long term, the fund attempts to outperform a benchmark portfolio that is comprised of thefollowing:· 13% BARRA Value Total Return Index· 9% BARRA Growth Total Return Index· 3% Nesbitt Burns Small Cap Index· 9% S&P 500 Total Return Index ($ Cdn)· 6% MSCI EAFE Total Return Index ($ Cdn)· 44% Scotia Capital Universe Bond Total Return Index· 3% Scotia Capital 91−Day T−bills Total Return Index· 13% Scotia Capital Mortgage Total Return Index
Source: Bell Globemedia Publishing Inc.
17
Volatility meter
Based on three−year standard deviation from Globe HySales
ASSET ALLOCATION Code 2102
Manulife Moderate Index Asset Allocation Fund
Bonds 60.00%
US Equity 15.00%
Int’l Equity 4.00%
Canadian Equity 21.00%
How the fund is invested
Target allocationMFC Global Pooled Cdn Bond Index 39.00%
MFC Global Pooled Canadian Index 21.00%
MFC Global Pooled Short Term 21.00%
MFC Global Pooled U.S. Equity Index 15.00%
MLI BGI International Eq Index 4.00%
Total 100.00%
Underlying fund commentary
(As at December 31, 2005)
For the year, all of the Portfolio’s asset classes added toperformance. The largest contribution to the Portfolio’sperformance came from Canadian large−cap equities with again of 24.1% as measured by the S&P/TSX CompositeIndex. To a lesser extent, positive performance byinternational large−cap equities and U.S. large−cap equities,also contributed to the Portfolio’s performance.
The Portfolio was rebalanced in April, May, July, August, andSeptember. The Fund was rebalanced (primariy) to respondto the outperformance of the Canadian equities market andthe fact that each rebalancing did not move the Portfolio allthe way back to the target mix, but left the Portfoliooverweight in Canadian equities. This was done to reducetransaction costs and exploit the momentum of theCanadian equities market.
Objective The Manulife Moderate Index Asset Allocation Fund is managed to provide abalance between current income and growth of capital with a greater emphasis onincome and capital preservation. This fund is expected to track the performance of ablend of market indices that is diversified by asset class. It will generally maintain 60% ofits investments in passively managed bond funds and 40% in passively managed equityfunds though each segment may vary up to 10% from time to time.
Managed by Manulife Financial
Fund managers Various (please refer to target allocation on this page).
Inception date June 1999 Total assets $9.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. This solid area represents the gross returns of the Manulife fund since itsinception in June 1999.
−5%
0%
5%
10%
15%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Moderate Index Asset Allocation
8.9 7.2
10.1
−3.0 0.0
5.8
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Moderate Index Asset AllocationBlend: MLI Moderate Index Asset Alloc
$14,333* $14,290
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Moderate Index AssetAllocation
8.95% 8.08% 8.76% 4.54% 5.62% Jun 1999
Blend: MLI Moderate IndexAsset Alloc
8.70% 7.79% 8.54% 4.37% −
Rate of return expectation Over the long term, the fund attempts to track the performance of a benchmark portfolio that iscomprised of the following:· 21% S&P/TSX Composite Total Return Index· 15% S&P 500 Total Return Index ($ Cdn)· 4% MSCI EAFE Total Return Index ($ Cdn)· 39% Scotia Capital Universe Bond Total Return Index· 21% Scotia Capital 91−Day T−bill Total Return Index
Source: Bell Globemedia Publishing Inc.
18
Volatility meter
Based on three−year standard deviation from Globe HySales
ASSET ALLOCATION Code 2003
Manulife Balanced Asset Allocation Fund
Int’l Equity 7.60%
US Equity 14.10%
Bonds 39.00%
Canadian Equity 39.30%
How the fund is invested
Target allocationMLI Cdn Universe Bond (TAL) 15.60%
MLI U.S. Equity (Bernstein) 14.10%
MLI Cdn Bond (MFC) 13.60%
MLI Cdn Large Cap Growth Eq (MB) 13.40%
MLI Cdn Large Cap Val Equity (MFC) 10.00%
MLI Mortgage Backed Fund (MFC) 9.80%
MLI International Equ (Templeton) 7.60%
MLI Cdn Small Cap Equ (Tattersall) 6.00%
MLI Cdn Lg Cap Top Dn Eq (Zechner) 5.90%
MLI Growth Opportunities Fund (MFC) 4.00%
Total 100.00%
Fund commentary
(As at December 31, 2005)
The economic and market fundamentals are sound andvaluation levels are reasonably attractive. Investor sentimenthas been dampened by the increase in the price of oil and bythe U.S. trade and budget deficits. On the positive side,inflation remains tame, and earnings continue to grow at anattractive rate, although that rate is decreasing.
For the year, all of the Portfolio’s components added toperformance. The largest single performance contributioncame from Canadian equities such as the MLI CanadianLarge Cap Value Equity Fund and the MLI Canadian LargeCap Growth Fund both of which had strong, double−digitgains. Other contributors were Canadian bonds such as theMLI Canadian Bond Fund and the MLI Canadian UniverseBond Fund with single−digit gains.
The consensus outlook is that the market will grow slowly,displaying single−digit positive returns. The Portfolio is well−positioned to offer relative value in volatile markets as wellas upside potential when markets are positive. The Portfolioremains fully invested with a balanced exposure to adiversified fixed income portfolio and a broad range ofdomestic, U.S., and international equities and managementstyles.
Objective The Manulife Balanced Asset Allocation Fund is managed to provide abalance between growth of capital and current income with a greater emphasis ongrowth of capital. This fund is diversified by asset class and investment styles with theobjective of achieving superior risk−adjusted returns over the long term. The fund willgenerally maintain 60% of its investments in equity funds and 40% in bond funds,though each segment may vary up to 10% from time to time.
Managed by Manulife Financial
Fund managers Various (please refer to target allocation on this page).
Inception date February 1999 Total assets $1,239.0 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in February 1999.
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Balanced Asset Allocation
11.5 10.2
15.9
−5.5 1.9
8.8
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
$17,000
Jan99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Balanced Asset AllocationBlend: MLI Balanced Asset Allocation
$16,370*
$14,236
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Balanced AssetAllocation
11.49% 10.87% 12.51% 6.52% 7.39% Feb 1999
Blend: MLI Balanced AssetAllocation
11.87% 9.94% 11.05% 3.95% −
Rate of return expectation Over the long term, the fund attempts to outperform a benchmark portfolio that is comprised of thefollowing:· 18% BARRA Value Total Return Index· 14% BARRA Growth Total Return Index· 5% Nesbitt Burns Small Cap Total Return Index· 14% S&P 500 Total Return Index ($ Cdn)· 9% MSCI EAFE Total Return Index ($ Cdn)· 31% Scotia Capital Universe Bond Total Return Index· 1% Scotia Capital 91−Day T−bill Total Return Index· 8% Scotia Capital Mortgage Total Return Index
Source: Bell Globemedia Publishing Inc.
19
Volatility meter
Based on three−year standard deviation from Globe HySales
ASSET ALLOCATION Code 2103
Manulife Balanced Index Asset Allocation Fund
Int’l Equity 12.00%
US Equity 18.00%
Canadian Equity 30.00%
Bonds 40.00%
How the fund is invested
Target allocationMFC Global Pooled Canadian Index 30.00%
MFC Global Pooled Cdn Bond Index 25.00%
MFC Global Pooled U.S. Equity Index 18.00%
MFC Global Pooled Short Term 15.00%
MLI BGI International Eq Index 12.00%
Total 100.00%
Underlying fund commentary
(As at December 31, 2005)
For the year, all of the Portfolio’s asset classes added toperformance. The largest contribution to the Portfolio’sperformance came from Canadian large−cap equities with again of 24.1% as measured by the S&P/TSX CompositeIndex. To a lesser extent, positive performance byinternational large−cap equities and U.S. large−cap equities,also contributed to the Portfolio’s performance.
The Portfolio was rebalanced in April, May, July, August, andSeptember. The Fund was rebalanced so frequently(primarily) to respond to the outperformance of theCanadian equities market and the fact that eachrebalancing did not move the Portfolio all the way back tothe target mix, but left the Portfolio overweight in Canadianequities. This was done to reduce transaction costs andexploit the momentum of the Canadian equities market.
Objective The Manulife Balanced Index Asset Allocation Fund is managed to provide abalance between growth of capital and current income with a greater emphasis ongrowth of capital. This fund is expected to track the performance of a blend of marketindices that is diversified by asset class. It will generally maintain 60% of its investmentsin passively managed equity funds and 40% in passively managed bond funds thougheach segment may vary up to 10% from time to time.
Managed by Manulife Financial
Fund managers Various (please refer to target allocation on this page).
Inception date June 1999 Total assets $41.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in June 1999.
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Balanced Index Asset Alloc
10.9 8.3
12.4
−7.4 −4.2
5.2
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Balanced Index Asset AllocBlend: MLI Balanced Index Asset Alloc
$14,094* $14,180
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Balanced Index AssetAlloc
10.93% 9.62% 10.52% 3.67% 5.35% Jun 1999
Blend: MLI Balanced IndexAsset Alloc
10.66% 9.27% 10.36% 3.56% −
Rate of return expectation Over the long term, the fund attempts to track the performance of a benchmark portfolio that iscomprised of the following:· 30% S&P/TSX Composite Total Return Index· 18% S&P 500 Total Return Index ($ Cdn)· 12% MSCI EAFE Total Return Index ($ Cdn)· 25% Scotia Capital Universe Bond Total Return Index· 15% Scotia Capital 91−Day T−bill Total Return Index
Source: Bell Globemedia Publishing Inc.
20
Volatility meter
Based on three−year standard deviation from Globe HySales
ASSET ALLOCATION Code 2004
Manulife Growth Asset Allocation Fund
Canadian Equity 54.80%
US Equity 17.50%
Int’l Equity 9.40%
Bonds 18.30%
How the fund is invested
Target allocationMLI Cdn Large Cap Growth Eq (MB) 18.80%
MLI U.S. Equity (Bernstein) 17.50%
MLI Cdn Large Cap Val Equity (MFC) 12.00%
MLI International Equ (Templeton) 9.40%
MLI Cdn Small Cap Equ (Tattersall) 9.20%
MLI Cdn Lg Cap Top Dn Eq (Zechner) 8.60%
MLI Cdn Universe Bond (TAL) 7.40%
MLI Cdn Bond (MFC) 6.30%
MLI Growth Opportunities Fund (MFC) 6.20%
MLI Mortgage Backed Fund (MFC) 4.60%
Total 100.00%
Fund commentary
(As at December 31, 2005)
The economic and market fundamentals are sound andvaluation levels are reasonably attractive. Investor sentimenthas been dampened by the increase in the price of oil and bythe U.S. trade and budget deficits. On the positive side,inflation remains tame, and earnings continue to grow at anattractive rate, although that rate is decreasing.
For the year, all of the Portfolio’s components added toperformance. The largest single performance contributioncame from Canadian equities such as the MLI CanadianLarge Cap Value Equity Fund and the MLI Canadian LargeCap Growth Fund both of which had strong, double−digit gains. Other contributors were Canadian bonds such asthe MLI Canadian Bond Fund and the MLI CanadianUniverse Bond Fund with single−digit gains.
The consensus outlook is that the market will grow slowly,displaying single−digit positive returns. The Portfolio is well−positioned to offer relative value in volatile markets as wellas healthy growth potential in positive markets. ThePortfolio remains fully invested, with a majority exposure toequities, diversified by a broad range of domestic, U.S., andinternational equities and management styles.
Objective The Manulife Growth Asset Allocation Fund is managed to provide long−term growth of capital with some consideration given to current income. This fund isdiversified by asset class and investment styles with the objective of achieving superiorrisk−adjusted returns over the long term. The fund will generally maintain 80% of itsinvestments in equity funds and 20% in bond funds though each segment may vary upto 10% from time to time.
Managed by Manulife Financial
Fund managers Various (please refer to target allocation on this page).
Inception date February 1999 Total assets $492.0 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in February 1999.
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Growth Asset Allocation
13.6 12.0
19.9
−8.5 1.5
10.5
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
$17,000
$18,000
Jan99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Growth Asset AllocationBlend: MLI Growth Asset Allocation
$17,616*
$15,121
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Growth AssetAllocation
13.61% 12.82% 15.12% 7.22% 8.53% Feb 1999
Blend: MLI Growth AssetAllocation
15.15% 12.46% 14.46% 4.52% −
Rate of return expectation Over the long term, the fund attempts to outperform a benchmark portfolio that is comprised of thefollowing:· 25% BARRA Value Total Return Index· 19% BARRA Growth Total Return Index· 11% Nesbitt Burns Small Cap Total Return Index· 15% S&P 500 Total Return Index ($ Cdn)· 10% MSCI EAFE Total Return Index ($ Cdn)· 17% Scotia Capital Universe Bond Total Return Index· 3% Scotia Capital Mortgage Total Return Index
Source: Bell Globemedia Publishing Inc.
21
Volatility meter
Based on three−year standard deviation from Globe HySales
ASSET ALLOCATION Code 2104
Manulife Growth Index Asset Allocation Fund
Int’l Equity 12.00%
US Equity 18.00%
Bonds 20.00%
Canadian Equity 50.00%
How the fund is invested
Target allocationMFC Global Pooled Canadian Index 50.00%
MFC Global Pooled U.S. Equity Index 18.00%
MFC Global Pooled Cdn Bond Index 15.00%
MLI BGI International Eq Index 12.00%
MFC Global Pooled Short Term 5.00%
Total 100.00%
Underlying fund commentary
(As at December 31, 2005)
For the year, all of the Portfolio’s asset classes added toperformance. The largest contribution to the Portfolio’sperformance came from Canadian large−cap equities with again of 24.1% as measured by the S&P/TSX CompositeIndex. To a lesser extent, positive performance byinternational large−cap equities and U.S. large−cap equities,also contributed to the Portfolio’s performance.
The Portfolio was rebalanced in April, May, July, August, andSeptember. The Fund was rebalanced so frequently(primarily) to respond to the outperformance of theCanadian equities market and the fact that eachrebalancing did not move the Portfolio all the way back tothe target mix, but left the Portfolio overweight in Canadianequities. This was done to reduce transaction costs andexploit the momentum of the Canadian equities market.
Objective The Manulife Growth Index Asset Allocation Fund is managed to providelong−term growth of capital with some consideration given to current income. This fundis expected to track the performance of a blend of market indices that is diversified byasset class. It will generally maintain 80% of its investments in passively managed equityfunds and 20% in passively managed bond funds though each segment may vary up to10% from time to time.
Managed by Manulife Financial
Fund managers Various (please refer to target allocation on this page).
Inception date June 1999 Total assets $25.2 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in June 1999.
−20%
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Growth Index Asset Allocation
14.8 10.3
16.8
−11.0 −7.9 4.4
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Growth Index Asset AllocationBlend: MLI Growth Index Asset Allocation
$14,709* $14,798
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Growth Index AssetAllocation
14.84% 12.53% 13.92% 3.91% 6.04% Jun 1999
Blend: MLI Growth IndexAsset Allocation
14.54% 11.98% 13.59% 3.72% −
Rate of return expectation Over the long term, the fund attempts to track the performance of a benchmark portfolio that iscomprised of the following:·50% S&P/TSX Composite Total Return Index·18% S&P 500 Total Return Index ($ Cdn)·12% MSCI EAFE Total Return Index ($ Cdn)·15% Scotia Capital Universe Bond Total Return Index· 5% Scotia Capital 91−Day T−bill Total Return Index
Source: Bell Globemedia Publishing Inc.
22
Volatility meter
Based on three−year standard deviation from Globe HySales
ASSET ALLOCATION Code 2005
Manulife Aggressive Asset Allocation Fund
Canadian Equity 73.50%
Int’l Equity 9.30%
US Equity 17.20%
How the fund is invested
Target allocationMLI Cdn Large Cap Growth Eq (MB) 24.30%
MLI U.S. Equity (Bernstein) 17.20%
MLI Cdn Large Cap Val Equity (MFC) 15.30%
MLI Cdn Lg Cap Top Dn Eq (Zechner) 12.80%
MLI Cdn Small Cap Equ (Tattersall) 12.70%
MLI International Equ (Templeton) 9.30%
MLI Growth Opportunities Fund (MFC) 8.40%
Total 100.00%
Fund commentary
(As at December 31, 2005)
The economic and market fundamentals are sound andvaluation levels are reasonably attractive. Investor sentimenthas been dampened by the increase in the price of oil and bythe U.S. trade and budget deficits. On the positive side,inflation remains tame and earnings continue to grow at anattractive rate, although that rate is decreasing.
For the year, all of the Portfolio’s components added toperformance. The largest single performance contributioncame from Canadian equities such as the MLI CanadianLarge Cap Value Equity Fund and the MLI Canadian LargeCap Growth Fund both of which had strong, double−digitgains. Other contributors were Canadian bonds such as theMLI Canadian Bond Fund and the MLI Canadian UniverseBond Fund with single−digit gains.
The consensus outlook is that the market will grow slowly,displaying single−digit positive returns. The Portfolio is well−positioned to offer relative value in volatile markets as wellas significant upside potential in positive markets. ThePortfolio remains fully invested and with a full exposure toequities, diversified by a broad range of domestic, U.S., andinternational equities and management styles.
Objective The Manulife Aggressive Asset Allocation Fund is managed to provide long−term growth of capital with no consideration given to current income. This fund isdiversified by asset class and investment styles with the objective of achieving superiorrisk−adjusted returns over the long term. This fund will generally maintain 100% of itsinvestments in equity funds though each segment may vary up to 10% from time to time.
Managed by Manulife Financial
Fund managers Various (please refer to target allocation on this page).
Inception date February 1999 Total assets $289.2 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in February 1999.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Aggressive Asset Allocation
16.0 13.6
24.3
−11.5 2.2
11.6
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
Jan99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Aggressive Asset AllocationBlend: MLI Aggressive Asset Allocation
$18,895*
$15,426
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Aggressive AssetAllocation
15.95% 14.76% 17.86% 8.18% 9.64% Feb 1999
Blend: MLI Aggressive AssetAllocation
17.84% 14.41% 17.39% 4.46% −
Rate of return expectation Over the long term, the fund attempts to outperform a benchmark portfolio that is comprised of thefollowing:· 31% BARRA Value Total Return Index· 20% BARRA Growth Total Return Index· 19% Nesbitt Burns Small Cap Total Return Index· 18% S&P 500 Total Return Index ($ Cdn)· 12% MSCI EAFE Total Return Index ($ Cdn)
Source: Bell Globemedia Publishing Inc.
23
Volatility meter
Based on three−year standard deviation from Globe HySales
ASSET ALLOCATION Code 2105
Manulife Aggressive Index Asset Allocation Fund
Canadian Equity 70.00%
Int’l Equity 12.00%
US Equity 18.00%
How the fund is invested
Target allocationMFC Global Pooled Canadian Index 70.00%
MFC Global Pooled U.S. Equity Index 18.00%
MLI BGI International Eq Index 12.00%
Total 100.00%
Underlying fund commentary
(As at December 31, 2005)
For the year, all of the Portfolio’s asset classes added toperformance. The largest contribution to the Portfolio’sperformance came from Canadian large−cap equities with again of 24.1% as measured by the S&P/TSX CompositeIndex. To a lesser extent, positive performance byinternational large−cap equities and U.S. large−cap equities,also contributed to the Portfolio’s performance.
The Portfolio was rebalanced in April, May, July, August, andSeptember. The Fund was rebalanced so frequently(primarily) to respond to the outperformance of theCanadian equities market, and the fact that eachrebalancing did not move the Portfolio all the way back tothe target mix, but left the Portfolio overweight in Canadianequities. This was done to reduce transaction costs andexploit the momentum of the Canadian equities market.
Objective The Manulife Aggressive Index Asset Allocation Fund is managed to providelong−term growth of capital with no consideration given to current income. This fund isexpected to track the performance of a blend of equity market indices that is diversifiedby geographic region. This fund will generally maintain 100 % of its investments inpassively managed equity funds though each segment may vary up to 10% from time totime.
Managed by Manulife Financial
Fund managers Various (please refer to target allocation on this page).
Inception date June 1999 Total assets $17.3 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in June 1999.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Aggressive Index Asset Alloc
18.7 12.0
20.9
−15.0−12.2 3.9
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Aggressive Index Asset AllocBlend: MLI Aggressive Index Asset Alloc
$15,032* $15,098
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Aggressive Index AssetAlloc
18.70% 15.29% 17.14% 3.69% 6.39% Jun 1999
Blend: MLI AggressiveIndex Asset Alloc
18.27% 14.47% 16.63% 3.58% −
Rate of return expectation Over the long term, the fund attempts to track the performance of a benchmark portfolio that iscomprised of the following:· 70% S&P/TSX Composite Total Return Index· 18% S&P 500 Total Return Index ($ Cdn)· 12% MSCI EAFE Total Return Index ($ Cdn)
Source: Bell Globemedia Publishing Inc.
24
25
Guaranteed Interest Accountsand Money Market
Guaranteed Interest Accounts (GIA)
Similar to guaranteed investment certificates (GICs) offered by banks and trust
companies, these accounts guarantee an interest rate from the date of contribution
until maturity. At maturity, original investments and interest earned will reinvest for
the same term unless you provide Manulife with different instructions.
When contributions are invested in these accounts, they earn the current interest
rate at the time of the deposit. That interest is credited to the account monthly and
is compounded annually. Each contribution made to a GIA accumulates for the
term selected at the guaranteed rate in effect on the date Manulife’s head office
receives the contribution. The GIA operates on a compound interest basis which
means the guaranteed interest rate applies to both principal and accumulated
interest.
Manulife offers GIAs for these terms: daily interest, 1-year, 2-year, 3-year, 4-year, 5-
year and 10-year.
Money Market
Money Market funds invest in high-quality, short-term fixed income securities. By
investing in fixed income securities, these funds are essentially making a short-term
loan to a government or corporation and earning interest on its principal. Money
Market funds are typically managed to maintain liquidity, protect the initial
investment and provide a moderate level of income. These funds are ideal for
investors who want to preserve capital, who are saving for the short term or who
want to maintain a cash reserve and are comfortable only with the very lowest
levels of volatility.
Guaranteed Interest Accounts and Money Market Funds FUND PAGE
CODE NUMBER
Manulife Daily Interest Account 1000 26
Manulife Guaranteed Interest
Accounts 1001, 1002, 1003, 1004, 1005, 1010 26
Manulife Canadian Money Market Fund (MFC) 3132 27
26
HOW THE DAILY INTEREST ACCOUNT WORKS
Similar to a daily interest account at a bank or trust company, this account earns interestdaily at the current rate for that account. While Manulife always guarantees the principaland interest, the interest rate may change at any time.
Deposits begin earning interest when received by Manulife Financial's head office. AsManulife Financial receives deposits, those funds begin to earn interest at a rate similarto a bank savings account.
HOW THE DAILY INTEREST ACCOUNT IS PROTECTED
Manulife Financial is a founding member of Assuris. With Assuris, consumers may beentitled to protection against the loss of their savings and retirement incomes if amember financial institution becomes insolvent. You can call Assuris at 1-800-268-8099for details about maximum coverage guarantees.
Volatility and risk
This account is backed by the general assets of ManulifeFinancial. It has the lowest risk and lowest volatility, butearns the lowest rate of interest over the long term.Consider this account as a short-term holding accountwhile you decide on your long-term investment strategy.Once you have determined your investment strategy, youcan transfer your funds at any time.
Manulife Daily Interest Accounts
Code 1000GUARANTEED INTEREST ACCOUNTSVOLATILITY METER
WHAT THESE ACCOUNTS OFFER
• Guaranteed returns when held to maturity • Principal and interest backed by the assets of Manulife Financial• Choice of 1, 2, 3, 4, 5 and 10-year terms
Investment codes respectively (1001, 1002, 1003, 1004, 1005, 1010)
HOW THE GUARANTEED INTEREST ACCOUNT IS PROTECTED
Manulife Financial is a founding member of Assuris. With Assuris, consumers may beentitled to protection against the loss of their savings and retirement incomes if amember financial institution becomes insolvent. You can call Assuris at 1-800-268-8099for details about maximum coverage guarantees.
Volatility and risk
These accounts offer good returns and excellent investmentsecurity. Consider these accounts if you are an investor whoneeds guaranteed security for your investment and cancommit to investments for a fixed period of time. There isno volatility associated with the return in this account andthere is minimal risk as this is a guaranteed investmentbacked by the general assets of Manulife Financial.
Manulife Guaranteed Interest Accounts
Codes 1001, 1002, 1003, 1004, 1005, 1010GUARANTEED INTEREST ACCOUNTSVOLATILITY METER
Sources : Manulife Financial
Volatility meter
Based on three−year standard deviation from Globe HySales
MONEY MARKET Code 3132
Manulife Canadian Money Market Fund (MFC)
Cash 99.75%
Other 0.25%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Short Term Investment 100.00%
Total 100.00%
Underlying fund commentary
(As at December 31, 2005)
During the first two−thirds of the year, the Bank of Canadaleft interest rates unchanged with the overnight rate at2.5%. In the second and third quarters, sentiment started tochange with the futures market pricing in a possible rateincrease in September. A 25−basis−point increase took placeon September 7, followed by another in October and a thirdin December bringing the overnight rate to 3.25% by year−end.
The Federal Reserve has been tightening for the lasteighteen months, and while an end may be in sight, at leastone or two more increases seem likely. The Bank of Canadaalso appears to be in a tightening mode, with a similarnumber of increases expected. The Fund will continue tomaintain an average term to maturity, between neutral andslightly longer, adding yield on weakness in the treasury billcurve and taking profits on strength.
UNDERLYING FUND −> MLI Cdn Money Market (MFC)
Objective The Manulife Canadian Money Market Fund is managed to achieve aconsistent level of interest income while preserving capital and maintaining liquidity. Thisfund invests primarily in money market securities guaranteed by the Government ofCanada, its provinces or municipalities, corporations and chartered banks.
Managed by Manulife Financial
Fund managers MFC Global Invest Mgmt (Tor)−Mgmt Team
Inception date January 1999 Total assets $238.8 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 2002. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
0.0%
2.0%
4.0%
6.0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Canadian Money MarketMLI Cdn Money Market (MFC)
2.8 2.4 3.0 2.8
5.2 5.7
4.8
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$11,000
$12,000
$13,000
Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Canadian Money Market91 Day Treasury Bill IndexMLI Cdn Money Market (MFC) $12,996*
$12,801
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe 91 Day Treasury Bill Index.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Canadian MoneyMarket
2.80% 2.60% 2.74% − 2.78% Jul 2002
91 Day Treasury Bill Index 2.58% 2.44% 2.60% 3.00% −
Rate of return expectation The fund is expected to outperform the SCM 91 Day T−bill Total Return Index over a moving three−year annualized period.
Source: Bell Globemedia Publishing Inc.
27
28
Fixed Income
Fixed income funds invest in debt securities issued by corporations, as well as
federal, provincial and municipal governments. By investing in bonds, the fund
earns a specified amount of interest based on the coupon rate (interest rate) on
the bonds. These funds are exposed to risks relating to the issuers' ability to repay
the debt at maturity plus changes in interest rates.
Bond funds are appropriate for investors who have less tolerance for volatility and
would like to emphasize preservation of capital.
Fixed Income FUND PAGE
CODE NUMBER
Manulife Canadian Bond Fund (MFC) 4131 29
Manulife Fidelity Canadian Bond Fund 4141 30
Manulife McLean Budden Fixed Income Fund 4161 31
Manulife SEAMARK Bond Fund 4171 32
Manulife MFC Global Pooled Canadian Bond Index Fund 4191 33
Volatility meter
Based on three−year standard deviation from Globe HySales
FIXED INCOME Code 4131
Manulife Canadian Bond Fund (MFC)
Provincial Bonds 18.40%
Other 21.73%
Municipal Bonds 0.16%
Federal Bonds 32.27%
Corporate Debentures 27.44%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Gov’t of Canada, 4.50%, September 1, 2007 7.47%
Gov’t of Canada, 5.75%, June 1, 2033 5.95%
Gov’t of Canada, 6.00%, June 1, 2011 4.13%
Province of Ontario, 5.60%, June 2, 2035 4.10%
Gov’t of Canada, 8.00%, June 1, 2023 3.69%
Gov’t of Canada, 4.50%, June 1, 2015 3.57%
Province of Quebec, 5.50%, December 1, 2014 3.12%
Canada Housing Trust, 3.55%, March 15, 2009 2.59%
Province of Quebec, 6.25%, June 1, 2032 2.58%
Province of Ontario, 4.50%, March 8, 2015 2.06%
Total 39.26%
Underlying fund commentary
(As at December 31, 2005)
The Bank of Canada resumed tightening in September,bringing the rate to 3.25% by year−end. The yield curve forGovernment of Canada bonds flattened significantly: yieldson two−year bonds rose to 3.85% while yields on 30−yearbonds fell to 4.04%.
The Federal Reserve raised rates eight times in 2005,bringing the rate to 4.25%. Longer−maturity Treasuriesrallied considerably, with 30−year yields declining to 4.53partly due to a glut in global savings. Demand alsostemmed from the recycling of trade surpluses of Asianexporting countries into U.S. Treasuries, demand from assetliability matching activities, and tame core inflation numbers.Fixed−income credit spreads in the U.S. widened; weaknesswas concentrated in the auto and auto part manufacturingsectors. Credit spreads in Canada were relatively unchanged.
A flattening bias in yield curve positioning positivelyimpacted portfolio returns while the contribution fromduration was mixed.
The growth of the North American economy is expected tobe slower in 2006. The housing market and its effect onconsumers is expected to lead the slowdown. With coreinflation in the U.S. and Canada gradually declining, bothcentral banks have hinted they will soon end their tighteningcycles. The Fund managers are reviewing their yield curveand duration strategies to position the portfolio for the newenvironment.
UNDERLYING FUND −> MLI Cdn Bond (MFC)
Objective The Manulife Canadian Bond Fund is managed to maximize stable, long−term growth through a combination of income and capital appreciation. This fund investsprimarily in securities guaranteed by the Government of Canada, its provinces ormunicipalities, corporations and chartered banks.
Managed by Manulife Financial
Fund managers MFC Global Invest Mgmt (Tor)−Mgmt Team
Inception date January 1999 Total assets $357.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in September 1998. The underlying fund was changed on September 30, 2002from the Elliott & Page Pooled Bond Fund to the Manulife Canadian Bond Fund.
−5.0%
0.0%
5.0%
10.0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Canadian Bond
6.5 6.9 6.4 8.3 7.9
9.9
−3.1
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Canadian BondSC Universe Bond Total Return Index
$15,059*
$15,587
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe SC Universe Bond Total Return Index.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Canadian Bond 6.50% 6.68% 6.60% 7.19% 6.54% Sep 1998
SC Universe Bond TotalReturn Index
6.46% 6.80% 6.77% 7.42% −
Rate of return expectation Over the long term, the fund is expected to outperform the SCM Universe Bond Total Return Indexover a moving three−year annualized period by 0.5% per year.
Source: Bell Globemedia Publishing Inc.29
Volatility meter
Based on three−year standard deviation from Globe HySales
FIXED INCOME Code 4141
Manulife Fidelity Canadian Bond Fund
Municipal Bonds 5.50%
Provincial Bonds 24.20%
Federal Bonds 11.30%
Other 30.60%
Corporate Debentures 28.40%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Province of Nova Scotia, 6.25%, June 1, 2011 5.88%
Gov’t of Canada, 5.25%, June 1, 2012 2.92%
Gov’t of Canada, 8.00%, June 1, 2023 2.63%
Gov’t of Canada, 4.25%, December 1, 2021 2.55%
Province of Newfoundland, 6.15%, April 17, 2028 1.88%
Province of Manitoba, 7.75%, December 22,2025
1.87%
Province of New Brunswick, 5.88%, December 6,2012
1.78%
Province of Quebec, 6.00%, October 1, 2029 1.75%
Canada Housing Trust, 3.75%, March 15, 2010 1.54%
Province of Quebec, 5.25%, October 1, 2013 1.51%
Total 24.31%
Underlying fund commentary
(As at December 31, 2005)
Canadian bonds, as measured by the RBC CM CanadianBond Market index, rose 0.7% during the fourth quarter of2005. The Bank of Canada upheld its tightening stance byraising its key overnight rate to 3.25% with 25−basis−pointincreases in October and December. The yield curvecontinued to flatten during the three−month period, asseveral strong economic indicators pushed shorter−datedyields higher. Decades−low unemployment, resilient retailsales, and strong productivity growth − even in themanufacturing sector − have been indicative of a solidCanadian economy. The yield on the benchmarkGovernment of Canada 10−year bond held steady asheadline inflation retreated along with gasoline prices. In thecorporate bond market, spreads remained tight. The Fundrose 0.5% in this environment to trail its benchmark indexslightly. The Fund’s modest overweight exposure toprovincial bonds, the best performer during the quarter,helped relative performance.
The portfolio manager, David Prothro, continues to hold anoverweighted position in structured products at the expenseof corporate bonds. In the current market environment, Mr.Prothro prefers corporate bonds with shorter maturities.Federal bonds remain underweight relative to thebenchmark index. A barbell strategy remains in place to takeadvantage of a flattening yield curve.
As spreads between corporate and government bondsremain very tight, Mr. Prothro is watchful of the Fund’sposition in corporate bonds. Instead, the Fund has focusedon yield opportunities in the asset−backed and commercial−mortgage−backed securities markets for more attractiverisk−return characteristics. If short−term rates continue torise in 2006, bond markets will face a more challengingenvironment than they have in the past few years.
UNDERLYING FUND −> Fidelity Canadian Bond
Objective This fund aims to provide a steady flow of income and invests primarily inCanadian fixed income securities. It delivers enhanced return potential through adisciplined investment approach, which seeks to add value primarily through securityselection and yield−curve strategies rather than interest rate anticipation.
Managed by Fidelity Investments Canada Ltd.
Fund managers David Prothro, BA, MBA, CFA
Inception date February 1988 Total assets $344.7 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−5%
0%
5%
10%
15%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Fidelity Canadian BondFidelity Canadian Bond−A
7.1 7.3 7.7 9.0 8.2 10.4
−0.8
9.1 9.9 12.1
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Fidelity Canadian BondRBC CM Canadian Bond Market IndexFidelity Canadian Bond−A
$20,999* $20,651
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe RBC CM Canadian Bond Market Index.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Fidelity Canadian Bond 7.14% 7.23% 7.38% 7.87% 7.35% Jul 1997
RBC CM Canadian BondMarket Index
6.50% 6.80% 6.74% 7.37% −
Rate of return expectation The fund seeks to achieve returns comparable to, or better than, the RBC CM Canadian Bond MarketIndex.
Source: Bell Globemedia Publishing Inc.
30
Volatility meter
Based on three−year standard deviation from Globe HySales
FIXED INCOME Code 4161
Manulife McLean Budden Fixed Income Fund
Other 10.61%
Provincial Bonds 22.02%
Municipal Bonds 0.54%
Federal Bonds 37.37%
Corporate Debentures 29.46%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Gov’t of Canada, 5.75%, June 1, 2029 9.17%
Gov’t of Canada, 4.00%, September 1, 2010 5.62%
Gov’t of Canada, 8.00%, June 1, 2027 5.01%
Gov’t of Canada, 4.50%, June 1, 2015 4.58%
Gov’t of Canada, 5.25%, June 1, 2012 4.45%
Province of Ontario, 6.50%, March 8, 2029 4.30%
Gov’t of Canada, 4.25%, September 1, 2008 4.08%
Province of Quebec, 6.00%, October 1, 2012 3.01%
Province of Ontario, 4.50%, March 8, 2015 2.73%
Province of Ontario, 5.38%, December 2, 2012 2.58%
Total 45.53%
Underlying fund commentary
(As at December 31, 2005)
The fourth quarter ended with a continued overweightposition in long−term bonds that resulted in a duration thatwas 0.7 of a year longer than the Index, up 0.1 of a yearfrom the beginning of the period. Relative to the Index,mid−term bonds remained overweight by 8% throughoutthe quarter resulting in an underweight position in short−term bonds. There were no net changes in the provincial orcorporate sector weights. New additions in the corporatesector included Bank of Nova Scotia, CARDS II Trust Asset−Backed Security (ABS), National Bank of Canada andManulife Bank, all with a 5−year term and a 7−yearEnbridge Pipelines position. These were offset with sales ofvarious shorter dated bank and ABS paper. The U.S. payposition was increased 1.5% to end the quarter at 7%.
The Fund’s performance for the quarter was moderatelyahead of the Index. The key contribution came fromduration management as the Fund maintained aconsiderably longer duration than the Index during a periodof declining yields for long−term bonds. The higher yieldsprovided by the U.S. pay component also added value.
UNDERLYING FUND −> MB Fixed Income
Objective The McLean Budden Fixed Income Fund is managed for a balance of securityand growth over a period of at least four years. This fund provides moderate real rates ofreturn, primarily through income, by investing in a diversified portfolio of high qualityCanadian debt securities such as bonds, debentures and T−bills.
Managed by McLean Budden Limited
Fund managers Cort Conover, CFA; Peter Kotsopoulos, CFA; Tony Magri, CFA, MBA;Paul Marcogliese, CFA and Cindy Nam
Inception date January 1981 Total assets $3,276.3 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−5%
0%
5%
10%
15%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI McLean Budden Fixed IncomeMB Fixed Income
6.3 7.7 6.5 8.0 8.7 11.8
−2.1
12.6 11.3 12.6
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI McLean Budden Fixed IncomeSC Universe Bond Total Return IndexMB Fixed Income
$20,906* $20,712
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe SC Universe Bond Total Return Index.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI McLean Budden FixedIncome
6.31% 6.99% 6.83% 7.44% 7.20% Jul 1997
SC Universe Bond TotalReturn Index
6.46% 6.80% 6.77% 7.42% −
Rate of return expectation Scotia Capital Universe Bond Index + 0.5% (annualized) over a moving four−year period.
Source: Bell Globemedia Publishing Inc.
31
Volatility meter
Based on three−year standard deviation from Globe HySales
FIXED INCOME Code 4171
Manulife SEAMARK Bond Fund
Municipal Bonds 8.11%
Provincial Bonds 22.18%
Other 6.15%
Corporate Debentures 34.84%
Federal Bonds 28.72%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Province of Ontario, 6.50%, March 8, 2029 9.27%
Gov’t of Canada, 5.00%, June 1, 2014 6.85%
Canada Housing Trust, 4.05%, March 15, 2011 5.72%
Province of British Columbia, 5.62%, August 17,2028
5.63%
Canada Housing Trust, 3.75%, March 15, 2010 5.47%
Quebec Housing, 11.38%, September 6, 2010 5.35%
Toronto Dominion Bank, 5.20%, September 4,2012
4.93%
Citibank Canada, 4.78%, June 15, 2009 4.23%
Royal Bank of Canada, 7.10%, January 25, 2015 4.12%
Gov’t of Canada, 8.00%, June 1, 2023 4.01%
Total 55.58%
Underlying fund commentary
(As at December 31, 2005)
The Canadian yield curve continued to flatten during thequarter. The two-year bond yield increased 53 basis pointsto 3.83%, while the 30-year bond yield declined 17 basispoints to 4.04%. The rise in the front end of the yield curvewas driven by two rate hikes by the Bank of Canada (BoC),increasing the Bank Rate to 3.50%. The decline in thelonger end of the yield curve reflects an expectation thatfurther rate hikes will dampen future growth prospects.
The U.S. Federal Reserve (Fed) in December adopted a lesshawkish tone, indicating the end is in sight to the U.S. ratetightening cycle. The BoC appears to have more work todo. While inflation remains benign, tight labour marketsand capacity utilization make one or possibly two more BoCrate hikes likely in 2006. We therefore expect the short−endof the Canadian yield curve to continue to rise, while thelonger end stabilizes near current levels.
The Fund is positioned to take advantage of the anticipatedupward rate adjustment. It is focused on high credit qualityissues out of concern that credit spreads for lower qualityborrowers could widen from the current unusually narrowconditions.
UNDERLYING FUND −> SEAMARK Pooled Canadian Bond
Objective The SEAMARK Pooled Canadian Bond Fund is managed to preserve capitalwhile generating current income. The fund will seek to enhance returns throughmoderate capital gains under appropriate market conditions while seeking to preventcapital losses under adverse conditions. The fund will invest primarily in Canadian dollardenominated fixed income investments.
Managed by SEAMARK Asset Management Ltd.
Fund managers Tom R. MacLaren, BBA, FCSI, CFA; Rob Weatherston, CFA; Remi Roger,CFA; and Heather Hurshman, MA.
Inception date June 1997 Total assets $72.3 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in August 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−5%
0%
5%
10%
15%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI SEAMARK Bond
5.2 6.5 5.8 8.3 8.0
10.6
−2.5
8.9
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
$17,000
$18,000
$19,000
Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI SEAMARK BondSC Universe Bond Total Return IndexSEAMARK Pooled Canadian Bond
$17,465*
$18,034
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe SC Universe Bond Total Return Index.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI SEAMARK Bond 5.24% 5.87% 5.84% 6.76% 6.39% Aug 1997
SC Universe Bond TotalReturn Index
6.46% 6.80% 6.77% 7.42% −
Rate of return expectation The fund’s performance is benchmarked against the Scotia Capital Universe Bond Index. Returns inexcess of this benchmark, is an objective only, and is not guaranteed by any party.
Source: Bell Globemedia Publishing Inc.
32
Volatility meter
Based on three−year standard deviation from Globe HySales
FIXED INCOME Code 4191
Manulife MFC Global Pooled Canadian Bond IndexFund
Cash 0.06%
Provincial Bonds 24.17%
Municipal Bonds 2.17%
Federal Bonds 44.04%
Corporate Debentures 29.56%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Gov’t of Canada, 5.50%, June 1, 2010 8.10%
Gov’t of Canada, 6.00%, June 1, 2008 4.83%
Gov’t of Canada, 5.50%, June 1, 2009 4.61%
Gov’t of Canada, 4.50%, September 1, 2007 4.28%
Gov’t of Canada, 5.75%, June 1, 2033 3.62%
Gov’t of Canada, 5.00%, June 1, 2014 2.78%
Gov’t of Canada, 5.25%, June 1, 2013 2.49%
Gov’t of Canada, 9.00%, June 1, 2025 2.17%
Gov’t of Canada, 4.50%, June 1, 2015 1.85%
Province of Quebec, 6.25%, June 1, 2032 1.64%
Total 36.37%
Underlying fund commentary
(As at December 31, 2005)
The Bank of Canada resumed tightening in September,bringing the rate to 3.25% by year−end. The yield curve forGovernment of Canada bonds flattened significantly; yieldson two−year bonds rose to 3.85%, while yields on 30−yearbonds fell to 4.04%.
The Federal Reserve raised rates eight times in 2005,bringing the rate to 4.25%. Longer−maturity Treasuriesrallied considerably, with 30−year yields declining to 4.53partly due to a glut in global savings. Demand alsostemmed from the recycling of trade surpluses of Asianexporting countries into U.S. Treasuries, demand from assetliability matching activities, and tame core inflation numbers.Fixed−income credit spreads in the U.S. widened; weaknesswas concentrated in the auto and auto part manufacturingsectors. Credit spreads in Canada were relatively unchanged.
A flattening bias in yield curve positioning positivelyimpacted portfolio returns, while the contribution fromduration was mixed.
The growth of the North American economy is expected tobe slower in 2006. The housing market and its effect onconsumers is expected to lead the slowdown. With coreinflation in the U.S. and Canada gradually declining, bothcentral banks have hinted they will soon end their tighteningcycles. The Fund managers are reviewing their yield curveand duration strategies to position the portfolio for the newenvironment.
UNDERLYING FUND −> MFC Global Pooled Cdn Bond Index
Objective The MFC Global Pooled Canadian Bond Index Fund is managed to provide arate of return based on the performance of the Scotia Capital Universe Bond Index. Thisfund seeks to earn returns that replicate, as closely as possible, the Scotia Capital UniverseBond Index. This is a passively managed fund. To achieve its investment objective, thefund will invest directly in bonds and may use derivative instruments in order to replicatethe securities of the Scotia Capital Universe Bond Index.
Managed by MFC Global Investment Management (Toronto)
Fund managers MFC Global Invest Mgmt (Tor)−Mgmt Team
Inception date April 1999 Total assets $120.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 2001. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
0%
5%
10%
15%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI MFC Global Pooled Cdn Bond IndxMFC Global Pooled Cdn Bond Index
6.4 7.1 6.8 9.0 8.1
10.0
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
Mar99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI MFC Global Pooled Cdn Bond IndxSC Universe Bond Total Return IndexMFC Global Pooled Cdn Bond Index
$15,269* $15,469
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe SC Universe Bond Total Return Index.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI MFC Global Pooled CdnBond Indx
6.40% 6.75% 6.76% − 7.06% Oct 2001
SC Universe Bond TotalReturn Index
6.46% 6.80% 6.77% 7.42% −
Rate of return expectation Over the long term, the fund is expected to track the performance of the Scotia Capital Universe BondTotal Return Index.
Source: Bell Globemedia Publishing Inc.
33
34
Balanced
Balanced funds typically aim to provide investors with a balance of capital growth
and income. Balanced funds accomplish this by investing in a blend of equity and
fixed income securities. Balanced fund managers typically set a long-term target for
the mix of bonds and equities in the fund and may make moderate changes to the
mix to reflect their outlook on which asset class represents the best opportunity.
Balanced funds are ideal for investors who seek a diversified portfolio with an
average level of volatility and who do not want to manage the mix of asset classes
on their own. Balanced funds are appropriate for investors who are looking for a
mix of growth and income over the long-term and are comfortable with some
short-term volatility in their investment returns.
Balanced FUND PAGE
CODE NUMBER
Manulife Elliott & Page Monthly High Income Fund 5132 35
Manulife McLean Budden Balanced Growth Fund 5161 36
Manulife Canadian Balanced Ethics Fund 5162 37
Manulife McLean Budden Balanced Fund 5164 38
Manulife SEAMARK Balanced Fund 5171 39
Manulife Trimark Income Growth Fund 5181 40
Manulife Jarislowsky Fraser Balanced Fund 5241 41
Manulife Leith Wheeler Diversified Pooled Fund 5301 42
Global Balanced
Manulife CI International Balanced Fund 5231 43
Volatility meter
Based on three−year standard deviation from Globe HySales
BALANCED Code 5132
Manulife Elliott & Page Monthly High Income Fund
Other 10.11%
REIT 4.30%
Oil & Gas Income Trust 8.10%
Cash 4.75%
Non−Oil & Gas Income Trust 17.29%
Bond 16.80%Stock 38.65%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
E&P Money Fund − I (MFC) 9.42%
BCE Inc. 4.00%
Petro−Canada 3.11%
ARC Energy Trust 2.94%
TD Bank 2.76%
BFI Canada Income Fund 2.51%
Bank of Nova Scotia 2.23%
Power Financial Corp. 1.95%
Sun Life Financial Inc. 1.91%
Brookfield Asset Management 1.90%
Total 32.73%
Underlying fund commentary
(As at December 31, 2005)
Every asset class posted positive returns in 2005. Incometrusts, as measured by the Scotia Capital Income Trust IndexOverall, performed best, returning 29.40%. Canadianequities, as measured by the S&P/TSX Index, returned24.13%. Bonds, as measured by the Scotia Capital BondUniverse Overall, lagged returning 6.46%. Energy pricesdominated the news, with the price of oil increasing 40%.
The Fund managers’ decision to hold an underweight inenergy, based on valuation, had the greatest impact on Fundperformance: the managers do not weight energy heavily,not wanting to sacrifice future capital for a higher level ofcurrent income. During the year, the Fund’s equity allocationwas increased to 39%, bonds and cash were increased toapproximately 30%, and the income trust weighting wasdecreased to 31%. Equities appeared to be more attractivelyvalued than income trusts. The risk profile of the Fund,however, was not changed significantly, and the asset mixremains 70% equities and income trusts and 30% cash andbonds, compared to 60% equities and 40% bonds for thebenchmark.
The federal government’s announcement that it would leavethe tax treatment of income trusts unchanged and increasethe dividend tax credit was positive for both income trustsand dividend−paying stocks, and should remain so in 2006.In September, the Bank of Canada began raising rates:continued increases and consequent changes in bond priceswould prove to be negative for the portfolio, which is highlyinterest sensitive. The Fund managers will continue to seeksecurities that are undervalued and provide the best risk−return profile.
UNDERLYING FUND −> Elliott & Page Monthly High Income Fund
Objective The Elliott & Page Monthly High Income Fund seeks to provide investors witha steady flow of monthly income and capital growth through investments in Canadianfixed income and large cap securities. The Fund may also invest in units or royalty trustsand real estate investment trusts.
Managed by MFC Global Investment Management (Toronto)
Fund managers Alan Wicks, CFA
Inception date September 1997 Total assets $3,435.9 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in December 2004. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI E&P Monthly High IncomeElliott & Page Monthly High Income
15.1 21.8 22.2
14.8 21.5
30.6
8.0 −2.5
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$0
$10,000
$20,000
$30,000
$40,000
Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI E&P Monthly High IncomeBlend: 60% S&P/TSX, 40% Scotia UniverseElliott & Page Monthly High Income
$30,506*
$17,876
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI E&P Monthly HighIncome
15.09% − − − 17.18% Dec 2004
Blend: 60% S&P/TSX, 40%Scotia Universe
15.95% 13.43% 14.37% 6.96% −
Rate of return expectation Over the long term, the fund is expected to outperform a benchmark portfolio that is comprised of:· 60% S&P/TSX Composite Total Return Index· 40% Scotia Capital Universe Bond Index
Source: Bell Globemedia Publishing Inc.
35
Volatility meter
Based on three−year standard deviation from Globe HySales
BALANCED Code 5161
Manulife McLean Budden Balanced Growth Fund
International Equity 12.93%
United States Equity 14.69%
Cash 6.16%
Other 0.12%
Bond 34.37%
Canadian Equity 31.73%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
MB Global Equity Growth 8.71%
Gov’t of Canada, 5.75%, June 1, 2029 3.39%
Gov’t of Canada, 4.50%, June 1, 2015 1.96%
Gov’t of Canada, 5.25%, June 1, 2012 1.90%
Talisman Energy 1.85%
Province of Ontario, 6.50%, March 8, 2029 1.72%
Manulife Financial 1.65%
Royal Bank of Canada 1.65%
Bank of Nova Scotia 1.60%
TD Bank 1.60%
Total 26.03%
Underlying fund commentary
(As at December 31, 2005)
Most global equity markets generated positive returnsduring the quarter despite continued tightening by severalmajor central banks. The Bank of Canada and the U.S.Federal Reserve increased overnight rates by 50 basis pointsduring the period, while the European Central Bankannounced its first interest rate increase in five years, movingthe region’s benchmark rate off a six−decade low.
The Fund registered a solid 2.7% return for the quarter andoutpaced the benchmark with relatively favourable resultsachieved in all underlying asset classes. Within the Canadianequity component, strong stock selection in energy andmaterials more than offset negative sector allocation duringthe period. Globally, strong stock selection within energy,combined with an underweight position in thisunderperforming sector, drove relative results. The bondportfolio benefited from its long duration position as theyield curve continued to flatten during the period. Theimpact from asset mix was minimal during the quarter.
Asset mix changes during the period were modest. TheFund began the quarter targeting total equity contentslightly higher than benchmark, while remainingunderweight in bonds and overweight in cash. During thethird quarter, when the adverse impact of hurricanes in the U.S. led to a spike in macroeconomic and inflation risks, cashlevels were raised. As subsequent economic data showedevidence of stabilization, the Fund’s targeted cash allocationwas reduced by 1.0% with half of the proceeds used toincrease the overweight position in foreign equities and theother half deployed into bonds. Relative to the benchmark,the Fund closed out 2005 with an asset mix target thatcontinued to favour global equities at the expense ofCanadian equities, while remaining underweight in bonds and modestly overweight in cash.
UNDERLYING FUND −> MB Balanced Growth
Objective The McLean Budden Balanced Growth Fund is managed for a balance ofsecurity and growth. This fund invests in Canadian and foreign equities and fixed incomesecurities issued by Canadian governments and corporations. This fund provides superiorreal rates of return both through income and capital appreciation.
Managed by McLean Budden Limited
Fund managers Tony Magri, CFA, MBA; Doug Andrews; Alan Daxner; John Ackerl,CFA, MBA; and Mary Hallward, BA, MBA
Inception date January 1997 Total assets $2,226.6 million
Historical gross returnsGross rates of return are before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−10%
0%
10%
20%
30%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI McLean Budden Balanced GrowthMB Balanced Growth
11.3 8.5 14.4
−6.9 2.8
12.2 13.7
6.5
16.2 22.1
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI McLean Budden Balanced GrowthBlend: MLI McLean Budden Balanced GrowthMB Balanced Growth
$20,504*
$19,242
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI McLean BuddenBalanced Growth
11.30% 9.87% 11.36% 5.72% 7.64% Jul 1997
Blend: MLI McLean BuddenBalanced Growth
13.11% 11.37% 12.13% 5.09% −
Rate of return expectation Over a moving four−year period, the fund strives to outperform by 1% per year a benchmark portfoliocomposed of the following:· 37% Scotia Capital Universe Bond Index· 33% BMO/TSX Composite Cap 10% Index· 25% MSCI World Index ($ Cdn)· 5% Scotia Capital 91−Day T−bill Index
Source: Bell Globemedia Publishing Inc.
36
Volatility meter
Based on three−year standard deviation from Globe HySales
BALANCED Code 5162
Manulife Canadian Balanced Ethics Fund
Cash 3.54%
International Equity 27.55%
Canadian Equity 32.55%
Bond 36.36%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
MB Select Fixed Income 36.36%
MB Select Canadian Equity 32.55%
MB Select Global Equity 27.55%
Total 96.46%
Underlying fund commentary
(As at December 31, 2005)
Most global equity markets generated positive returnsduring the quarter despite continued tightening by severalmajor central banks. The Bank of Canada and the U.S.Federal Reserve increased overnight rates by 50 basis pointsduring the period, while the European Central Bankannounced its first interest rate increase in five years, movingthe region’s benchmark rate off a six−decade low.
The Fund registered a solid 2.4% return for the quarter andoutpaced the benchmark with relatively strong resultsachieved in all underlying asset classes. Within the Canadianequity component, stock selection bolstered results as keyholdings, Dofasco and Placer Dome, were targets oftakeover offers. Globally, relatively weak results intelecommunication services were more than offset by strongstock selection in energy. The bond portfolio benefited fromits long duration position as the yield curve continued toflatten during the period. The impact from asset mix wasminimal during the quarter.
Asset mix changes during the period were modest. TheFund began the quarter targeting total equity contentslightly higher than benchmark, while remainingunderweight in bonds and overweight in cash. During the third quarter, when the adverse impact of hurricanes in the U.S. led to a spike in macroeconomic and inflation risks, cashlevels were raised. As subsequent economic data showedevidence of stabilization, the Fund’s targeted cash allocationwas reduced by 1.0%, with half of the proceeds used toincrease the overweight position in foreign equities and theother half deployed into bonds. Relative to the benchmark,the Fund closed out 2005 with an asset mix target thatcontinued to favour global equities at the expense ofCanadian equities, while remaining underweight in bonds and modestly overweight in cash.
UNDERLYING FUND −> MB Select Balanced
Objective The McLean Budden Select Balanced Fund is managed to provide a superiorreal rate of return through both income and capital appreciation. This fund invests inCanadian and global equities and fixed income securities issued by Canadiangovernments and corporations. The fund screens for tobacco, alcohol, and gamingcompanies. Companies must adhere to employment standards and may not derive morethan 10% of their gross annual revenue from armaments.
Managed by McLean Budden Limited
Fund managers McLean Budden − Mgmt. Team
Inception date September 2000 Total assets $57.4 million
Historical gross returnsGross rates of return are before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in February 2001. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start of theManulife fund.
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Canadian Balanced EthicsMB Select Balanced
10.9 8.6 13.8
−5.1 2.7
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Canadian Balanced EthicsBlend: MLI Canadian Balanced EthicsMB Select Balanced
$12,627*
$10,710
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Canadian BalancedEthics
10.88% 9.72% 11.07% − 5.58% Feb 2001
Blend: MLI CanadianBalanced Ethics
10.99% 9.93% 10.58% 3.30% −
Rate of return expectation Over a moving four−year period, the fund strives to outperform by 1% per year a benchmark portfoliocomposed of the following:· 33% S&P/TSX Composite Index· 25% MSCI World Index ($ Cdn)· 37% Scotia Capital Universe Bond Index· 5% Scotia 91−Day T−bill Index
Source: Bell Globemedia Publishing Inc.
37
Volatility meter
Based on three−year standard deviation from Globe HySales
BALANCED Code 5164
Manulife McLean Budden Balanced Fund
United States Equity 12.61%
International Equity 15.20%
Cash 5.26%
Other 0.20%
Bond 34.66%
Canadian Equity 32.07%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Gov’t of Canada, 5.75%, June 1, 2029 3.25%
Gov’t of Canada, 8.00%, June 1, 2027 1.87%
Royal Bank of Canada 1.68%
Gov’t of Canada, 5.25%, June 1, 2012 1.62%
Province of Ontario, 6.50%, March 8, 2029 1.60%
Gov’t of Canada, 4.00%, September 1, 2010 1.56%
Bank of Nova Scotia 1.49%
EnCana Corp. 1.45%
Manulife Financial 1.45%
Gov’t of Canada, 4.25%, September 1, 2008 1.28%
Total 17.25%
Underlying fund commentary
(As at December 31, 2005)
Most global equity markets generated positive returnsduring the quarter despite continued tightening by severalmajor central banks. The Bank of Canada and the U.S.Federal Reserve increased overnight rates by 50 basis pointsduring the period, while the European Central Bankannounced its first interest rate increase in five years, movingthe region’s benchmark rate off a six−decade low.
The Fund registered a solid 2.5% return for the quarter andoutpaced the benchmark with relatively strong resultsachieved in all underlying asset classes. Within the Canadianequity component, stock selection bolstered results as keyholdings, Dofasco and Placer Dome, were targets oftakeover offers. Globally, relatively weak results intelecommunication services were more than offset by strongstock selection in energy. The bond portfolio benefitedfrom its long duration position as the yield curve continuedto flatten during the period. The impact from asset mix wasminimal during the quarter.
Asset mix changes during the period were modest. TheFund began the quarter targeting total equity contentslightly higher than benchmark, while remainingin underweight bonds and overweight in cash. During the third quarter, when the adverse impact of hurricanes in the U.S. led to a spike in macroeconomic and inflation risks, cashlevels were raised. As subsequent economic data showedevidence of stabilization, the Fund’s targeted cash allocationwas reduced by 1.0%, with half of the proceeds used toincrease the overweight position in foreign equities and theother half deployed into bonds. Relative to the benchmark,the Fund closed out 2005 with an asset mix target thatcontinued to favour global equities at the expense ofCanadian equities, while remaining underweight in bonds and modestly overweight in cash.
UNDERLYING FUND −> MB Balanced
Objective The fund aims to provide a superior real rate of return through both incomeand capital appreciation by investing in a diversified portfolio of equity and fixed incomeassets. The Canadian equity component is managed on a 50/50 blend of growth andvalue styles. The foreign equities have a growth bias.
Managed by McLean Budden Limited
Fund managers Susan Shuter, Ted Thompson, Benoit Paradis, Hans Van Monsjou, Alan Daxner, Doug Andrews, Colin Sinclare, Roger Beachemin and John Ackerl
Inception date March 1999 Total assets $1,450.6 million
Historical gross returnsGross rates of return are before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in August 2004. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−5%
0%
5%
10%
15%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI McLean Budden BalancedMB Balanced
10.9 8.9
13.4
−4.4
4.4
12.9
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
$17,000
$18,000
Mar99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI McLean Budden BalancedBlend: MLI McLean Budden BalancedMB Balanced
$17,070*
$15,396
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI McLean BuddenBalanced
10.86% − − − 11.24% Aug 2004
Blend: MLI McLean BuddenBalanced
13.11% 11.37% 12.13% 5.09% −
Rate of return expectation The rate of return is expected to exceed the benchmark by 1%. The benchmark is composed of:·33% BMO/TSX Comp. Cap 10% ·25% MSCI World ·37% SC Universe Bond ·5% SC 91−Day T−Bills
Source: Bell Globemedia Publishing Inc.
38
Volatility meter
Based on three−year standard deviation from Globe HySales
BALANCED Code 5171
Manulife SEAMARK Balanced Fund
International Equity 7.90%
United States Equity 20.35%
Cash 0.80%
Bond 35.34%
Canadian Equity 35.61%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Canada Housing Trust, 3.75%, March 15, 2010 4.37%
TD Bank 5 3.30%
Gov’t of Canada, 4.50%, June 1, 2015 2.98%
Alberta Municipal Finance, 5.85%, June 1, 2012 2.54%
Province of Ontario, 5.00%, March 8, 2014 2.32%
Thomson Corporation
Royal Bank of Canada
Suncor Energy
Petro-Canada
Sun Life Financial Inc.
Total 25.84%
Underlying fund commentary
(As at December 31, 2005)
North American markets recovered from a sharp Octobercorrection to finish modestly higher for the quarter. Thecorrection was driven by renewed concerns over U.S.inflation and the level of future economic growth. Marketsbegan recovering in late October as inflation and growthconcerns eased, and the price per barrel of oil stabilized inthe high $50 US range.
The Fund returned 1.04% for the quarter. Modest fixed income underperformance resulted from the Fund’sdefensive positioning with limited exposure to higher riskbonds out of concern that credit spreads could widenfrom current unusually narrow conditions.
The Canadian stock market posted a 2.86% return for thequarter. The Fund was well positioned in general terms, butunderperformed our expectations due to disappointingdeclines towards year end in the price of Quebecor World,Thomson, and BCE. Better performance came from oursubstantial materials and financials holdings as well as fromCN Rail and Gildan Activewear.
Financials and materials stocks were the S&P500’s bestperformers. The Fund’s de−emphasis on these two sectors,in the U.S., combined with a pullback by technology, healthcare and consumer holdings, that have generally done wellthis year, led the Fund’s U.S. equities to lag the index. Theportfolio’s best performing stocks were in financials andenergy with JP Morgan and Citigroup both out−performingthe S&P 500 Financials' index and Schlumberger, the world’slargest oilfield services company, appreciating 15%.
UNDERLYING FUND −> SEAMARK Pooled Balanced
Objective The SEAMARK Pooled Balanced Fund is managed to preserve capital andminimize market value fluctuations while generating superior long−term returns throughcapital gains augmented by current income. The fundwill invest in fixed income andequity investments.
Managed by SEAMARK Asset Management Ltd.
Fund managers Peter Marshall, B.Comm.; Tom R. MacLaren, BBA, FCSI, CFA;George V. Loughery, CGA, CFA; and Lance Speck, CFA.
Inception date June 1997 Total assets $1,037.4 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in August 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI SEAMARK Balanced
9.7 5.7
13.9
−6.1
5.8
16.6 16.9
9.5
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI SEAMARK BalancedBlend: MLI SEAMARK BalancedSEAMARK Pooled Balanced
$20,305*
$15,658
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI SEAMARK Balanced 9.65% 7.67% 9.72% 5.58% 8.20% Aug 1997
Blend: MLI SEAMARKBalanced
8.42% 8.08% 8.57% 2.62% −
Rate of return expectation The fund’s performance is benchmarked against a blend of: · 5% Scotia Capital 91−Day T−bills · 40% Scotia Capital Universe Bond Index · 30% S&P/TSX Composite Total Return Index · 25% MSCI world (ex Canada) Index ($ Cdn)
Returns in excess of this benchmark, is an objective only, and is not guaranteed by any party.
Source: Bell Globemedia Publishing Inc.
1.80%
2.12%
2.19%
2.20%
2.02%
39
Volatility meter
Based on three−year standard deviation from Globe HySales
BALANCED Code 5181
Manulife Trimark Income Growth Fund
Cash 2.16%
United States Equity 16.44%
International Equity 5.35%
Bond 38.42%
Canadian Equity 37.63%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Canada Govt 5.75%, June 1, 2029 5.11%
Bank of Nova Scotia 3.53%
TD Bank 3.44%
Gov’t of Canada, June 1, 2014 2.87%
BCE Inc. 2.70%
Loblaw Companies 2.29%
IGM Financial 2.19%
Onex Corporation 2.05%
CIBC 2.04%
Canada Housing Trust, February 15, 2008 1.86%
Total 28.08%
Underlying fund commentary
(As at December 31, 2005).
Ross Stores Inc. and The Bank of Nova Scotia were majorcontributors to the Fund’s performance in the fourthquarter of 2005. Earlier this year, Ross Stores had problemswith new inventory management systems that adverselyaffected results. The stock did well in the fourth quarter, asstrong same−store−sales results are an indication that theseproblems are being resolved. The Bank of Nova Scotia hastremendous growth prospects embedded in its Mexicansubsidiaryrepresenting a competitive advantage for thebank versus its industry peers.
As yields continue to rise, the portfolio management team ismaintaining the Fund’s modified duration at approximately0.5 years shorter than the benchmark Scotia CapitalUniverse Bond Index. Recently, the declining attractiveness ofcorporate spreads has been such that the Fund’s corporateweighting has been reduced slightly, although it remainsslightly higher than the benchmark index at 30% versus26%, respectively.
The Fund has underperformed in the short term due to anabsence of energy holdings. The Trimark discipline involvesinvesting in businesses with strong opportunities for growthat attractive prices. Investing in a business only at a discountto its true economic value is a key risk managementmechanism for the Fund. At the beginning of 1999, theFund had made significant investments in energy companiesthat generated strong returns for the Fund from 1999 to2004. Valuations of energy businesses are now veryexpensive and the team has moved capital into newbusinesses that it believes will significantly outperformenergy stocks over the next three to five years.
UNDERLYING FUND −> Trimark Income Growth
Objective The Trimark Income Growth Fund seeks to generate capital growth andincome over the long term. The fund invests primarily in Canadian equities, fixed−income securities of Canadian issuers, both government and corporate,and foreign equities and fixed−income securities up to the maximum allowable foreigncontent limit.
Managed by AIM Trimark Investments
Fund managers Geoff MacDonald, BBA, MBA, CFA; Alfred Samson; Rex Chong, CFA,MBA; and Anthony Imbesi, CFA, BComm.
Inception date September 1987 Total assets $1,856.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Trimark Income GrowthTrimark Income Growth − SC
6.8
15.8 14.5
3.8
15.6 18.3
12.8
−1.2
4.6
19.9
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
$26,000
$28,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Trimark Income GrowthBlend: 60% S&P/TSX, 40% Scotia UniverseTrimark Income Growth − SC
$27,215*
$23,847
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Trimark Income Growth 6.84% 11.22% 12.31% 11.20% 9.44% Oct 1997
Blend: 60% S&P/TSX, 40%Scotia Universe
15.95% 13.43% 14.37% 6.96% −
Rate of return expectation To be the top of its respective category over the long term, while striving to outperform a benchmarkportfolio composed of:· 60% S&P/TSX Composite Index· 40% Scotia Capital Universe Bond Index
Source: Bell Globemedia Publishing Inc.
40
Volatility meter
Based on three−year standard deviation from Globe HySales
BALANCED Code 5241
Manulife Jarislowsky Fraser Balanced Fund (Availableto Registered Plans Only)
International Equity 11.00%
United States Equity 12.40%
Cash 7.90%
Canadian Equity 33.60%
Bond 35.10%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Bank of Nova Scotia 2.30%
Nexen 2.20%
Royal Bank of Canada 2.10%
Manulife Financial 2.00%
Talisman Energy 2.00%
TD Bank 1.90%
Shell Canada 1.60%
Canadian Tire Corporation 1.20%
Imperial Oil 1.20%
TransCanada Corp. 1.20%
Total 17.70%
Underlying fund commentary
(As at December 31, 2005)
Raw material prices soared as supply shortages materializedwith the start of the rebuilding of New Orleans andsurrounding areas following the devastating hurricanes. Onthe other hand, the price of oil slipped below $60 US/barrelfor the first time since mid−summer in response to earlysigns of slowing demand. Around the world, in recent years,the real strength in equities has been in smaller companies.Starved for yield as interest rates declined, investors moveddown the capitalization spectrum in search of greatercapital gains.
On the equity side, strong performance continued to mainlycome from sectors where we were underexposed. Thisincluded stocks that had smaller capitalization or a cyclicalelement, a trend that has continued for several years. Theextended rally in the energy sector also came to an end. Inaddition, this year’s strong run in the Japanese stock markethas hampered relative performance in the EAFE portfolio.
An inverted yield curve has historically been the harbinger ofrecession. We do not necessarily anticipate such anoutcome at this point in time. However, it is likely that highenergy prices, a slowing real estate market, low savingsrates, and high borrowing levels will eventually lead to aslowdown in the global economy. It is only a matter of timebefore the more cyclical companies begin to suffer earningssetbacks. At that time, money will flow out of the high betastocks in those sectors and into the more defensive, higher−quality areas that we favour such as consumer staples andhealth care companies. Our philosophy points us towardscompanies that are able to continue to grow earnings in apredictable manner no matter what direction the economyis heading.
UNDERLYING FUND −> JF Balanced
Objective The Jarislowsky Fraser Balanced Fund is a diversified portfolio consisting offixed income assets, North American equities and International equities. It seeks to addvalue through longer−term asset mix positioning and stock selection rather than short−term trading. The portfolio’s volatility is kept to a minimum by implementing onlyincremental asset mix changes and buying large cap, blue−chip equity holdings and highquality, non−cyclical bonds.
Managed by Jarislowsky Fraser Ltd.
Fund managers Jarislowsky Fraser − Mgmt. Team
Inception date April 1997 Total assets $3,762.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 2001. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
0%
5%
10%
15%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI JF BalancedJF Balanced
11.3 9.6 10.1
0.2
4.3
17.9
7.6 11.0
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
Mar97 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI JF BalancedBlend: MLI JF BalancedJF Balanced
$22,758*
$20,510
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI JF Balanced 11.26% 10.43% 10.34% − 8.36% Oct 2001
Blend: MLI JF Balanced 12.64% 11.01% 11.77% 5.76% −
Rate of return expectation Benchmark changed as at July 1, 2005. Over the long term, this fund is expected to outperform abenchmark comprised of the following:· 30% S&P/TSX Composite Index,· 13% S&P 500 Index ($Cdn),· 10% MSCI EAFE Index ($Cdn),· 40% Scotia Capital Universe Bond Index,· 7% Scotia Capital 91−Day T−Bill Index
Source: Bell Globemedia Publishing Inc.
41
Volatility meter
Based on three−year standard deviation from Globe HySales
BALANCED Code 5301
Manulife Leith Wheeler Diversified Pooled Fund
United States Equity 11.22%
International Equity 14.72%
Cash 4.48%
Canadian Equity 34.51%
Bond 35.07%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Leith Wheeler International Fund 14.72%
Nexen 3.22%
TD Bank 3.07%
Manulife Financial 2.96%
Canada Housing Trust 5.1%, September 15, 2007 2.59%
Gov’t of Canada, June 1, 2011 2.47%
Gov’t of Canada, June 1, 2033 2.35%
Gov’t of Canada, June 1, 2013 2.24%
Province of Ontario, March 8, 2033 2.10%
Canada Housing Trust, March 15, 2010 1.90%
Total 37.62%
Underlying fund commentary
(As at December 31, 2005)
For the third successive year, the Canadian equity marketproduced double-digit gains resulting in a three-year totalmarket return of almost 22% per annum. Internationalequity performance was also very strong in 2005 with themarket gaining 10% for the year. In comparison, the U.S.equity market appreciated 4.9% in $U.S. terms; however, this increase was offset by a decline in the value of the U.S.dollar versus the Loonie resulting in a relatively flat year for U.S. equities.
Long-term interest rates continued to fall over the course ofthe fourth quarter and the year. Overall, declining long termrates had a positive impact on the portfolio.
In this market environment, we are pleased by the absolutereturn achieved by the portfolio in 2005 with the fundreturning 11.4% for the year.
Over this time frame, the Diversified Fund has beenoverweighted in Canadian equity and has benefited from thisperiod of exceptional strength. Part of our overweighting inCanadian equities has been funded by underweightingthe much weaker U.S. equity market. While the U.S. dollarappreciated against most of the world’s major currencies in2005 (Yen, Euro and Sterling), it continued to decline relativeto the Canadian dollar.
We now find that the increase in the valuation of many ofthe companies in our Canadian equity portfolio has reducedtheir expected return forecasts. This has resulted in areduction in the Canadian equity weighting of the portfolioto a more neutral position. However, we are expectingreasonable returns, particularily in comparison to bonds,from the stocks we continue to hold.
UNDERLYING FUND −> Leith Wheeler Diversified Pool
Objective The objective of the Leith Wheeler Diversified Pooled Fund seeks to provideinvestors with a relatively stable, superior long−term rate of return through a balancedportfolio of common shares and fixed income securities.
Managed by Leith Wheeler Inv Counsel Ltd.
Fund managers Leith Wheeler Inv. Counsel − Mgmt. Team
Inception date February 2001 Total assets $133.1 million
Historical gross returnsGross rates of return are before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 2003. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
0%
5%
10%
15%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Leith Wheeler DiversifiedLeith Wheeler Diversified Pool
11.6 13.9
16.1
2.0
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
Feb01 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Leith Wheeler DiversifiedBlend: MLI Leith Wheeler DiversifiedLeith Wheeler Diversified Pool
$15,957*
$12,889
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Leith WheelerDiversified
11.60% 12.74% − − 14.81% Oct 2003
Blend: MLI Leith WheelerDiversified
12.54% 10.80% 11.66% 4.60% −
Rate of return expectation The fund’s performance is benchmarked against a blend of:· 35% S&P/TSX Composite Index · 12.5% S&P 500 Index ($ Cdn)· 12.5% MSCI EAFE Index ($ Cdn) · 35% Scotia Capital Universe Bond Index· 5% Scotia Capital 91−Day T−bill Index
Source: Bell Globemedia Publishing Inc.
42
Volatility meter
Based on three−year standard deviation from Globe HySales
GLOBAL BALANCED Code 5231
Manulife CI International Balanced Fund
Cash 8.10%
Bond 22.12%
United States Equity 27.11%
International Equity 42.68%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Government of France, 4.00%, April 25, 2009 1.90%
Government of Netherlands, 3.00%, January 15,2010
1.83%
Canada Housing Trust, 5.10%, September 15,2007
1.75%
Republic of Germany, 5.00%, January 4, 2012 1.73%
Microsoft 1.46%
Federal Home Loan Bank, 3.63%, June 20, 2007 1.15%
General Electric 1.13%
Government of Mexico, 10.00%, December 5,2024
1.12%
Everest Re Group 1.05%
Samsung Electronics 0.99%
Total 14.11%
Underlying fund commentary
(As at December 31, 2005)
International equity markets were a mixed picture in 2005,with the emerging markets and Japan providing strongreturns. However, the strength of the Canadian dollaragainst the U.S. dollar and especially against the Euro andYen reduced returns for Canadian investors on foreignsecurities.
Looking ahead, we anticipate another year of globaleconomic growth, which should create a constructivebackdrop for equity markets − even as the composition ofgrowth and relative market performance is likely to shift.We would not be surprised to see foreign markets continueto outpace the U.S. market in 2006. Valuations remainmore attractive in many foreign markets. Even thoughinterest rates may rise this year in Europe and Japan,monetary policy in those regions is likely to remain moreaccommodative.
Markets in Europe and non−Japan Asia are trading at anattractive 12 to 13 times earnings, while many emergingmarket stocks still trade on single−digit multiples. Withgovernment bond yields still quite low in most nations,comparisons of bond yields to equity earnings yields stillsuggest that equities on average are still more than 40%undervalued relative to bonds. Accordingly, we continue tofavour equities in the Fund, which maintained a target of70% equities and 30% fixed income.
In the Fund, holdings in the consumer discretionary, energy,financial and health−care sectors added the most relativevalue over the quarter. An overweight allocation toconsumer discretionary stocks and underweight allocationto energy stocks also helped performance. Geographically,the Fund’s holdings outperformed the benchmark’s regionalconstituents in all regions, and exposure to emergingmarket stocks was also beneficial to relative performance.
UNDERLYING FUND −> CI International Balanced
Objective The CI International Balanced Fund is managed to provide maximum long−term total return. The fund invests primarily in equities, equity−related securities andfixed income securities of issuers located throughout the world. The fund is not limitedto how much it invests in a country or asset class or keeps invested in each asset class.This will vary according to market conditions.
Managed by CI Investments Inc.
Fund managers William Sterling, PhD, Robert Beckwitt, BA and Greg Gigliotti
Inception date October 1994 Total assets $525.0 million
Historical gross returnsGross rates of return are before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in February 2001. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund. Note: Gross returns have been estimated as net return plus managementexpense ratio.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI CI International BalancedCI International Balanced
4.0 6.4 13.9
−10.5−15.3 4.0
22.9 22.6 18.8 16.2
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI CI International BalancedBlend: MLI CI International BalancedCI International Balanced
$20,506*
$15,964
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe composite benchmark, as outlined in the Rate of return expectation below.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI CI InternationalBalanced
3.97% 5.15% 8.00% − −0.44% Feb 2001
Blend: MLI CI InternationalBalanced
0.57% 2.87% 2.75% −1.08% −
Rate of return expectation Over the long term, the fund is expected to outperform a benchmark portfolio that is comprised of:· 60% MSCI World Index ($ Cdn)· 40% JP Morgan Government Bond Index
Source: Bell Globemedia Publishing Inc.
43
44
Canadian Equity
Canadian Equity funds typically aim to achieve long-term capital growth by
investing in a diversified portfolio of shares issued by Canadian companies. Some
Canadian Equity funds invest a portion of their assets in shares of foreign
companies. A share represents an ownership stake in a company; therefore, how
the fund performs depends on the success of the company holdings within the
fund. A fund's performance can also be affected by factors such as currency
exchange rates and economic and political trends.
Canadian Large Cap Equity funds are ideal for investors who have a long-term
focus, prefer to invest in Canadian companies, and are comfortable accepting
some degree of volatility.
Canadian Small/Mid Cap Equity funds are suitable for investors who have a long-
term focus, prefer to invest in Canadian companies, and are comfortable accepting
a higher degree of volatility.
Canadian Large Cap Equity FUND PAGE
CODE NUMBER
Manulife Elliott & Page Canadian Equity Fund 7121 45
Manulife Canadian Large Cap Value Equity Fund (MFC) 7131 46
Manulife MFC Global Pooled Canadian Index Fund 7132 47
Manulife Fidelity Canadian Large Cap Fund 7141 48
Manulife McLean Budden Canadian Equity Growth Fund 7161 49
Manulife McLean Budden Canadian Equity Fund 7164 50
Manulife SEAMARK Canadian Equity Fund 7171 51
Manulife Trimark Canadian Fund 7181 52
Manulife Canadian Large Cap Top Down Equity Fund (Zechner) 7192 53
Manulife Jarislowsky Fraser Canadian Equity Fund 7241 54
Manulife Maxxum Dividend Growth Fund (Mackenzie) 7351 55
Canadian Small/Mid Cap Equity
Manulife Elliott & Page Growth Opportunities Fund 7122 56
Manulife Canadian Small Cap Equity Fund (Tattersall) 7191 57
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7121
Manulife Elliott & Page Canadian Equity Fund
Cash 0.50%
Information Technology 4.98%
Industrials 6.90%
Consumer Discretionary 6.70%
Other 10.14%
Materials 18.91%
Energy 25.35%Financials 26.52%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Royal Bank of Canada 5.25%
Manulife Financial 4.65%
EnCana Corp. 4.45%
TD Bank 4.44%
Bank of Nova Scotia 3.72%
Talisman Energy 3.46%
Falconbridge 3.29%
Shell Canada 3.22%
TELUS 3.10%
Canadian National Railway 3.03%
Total 38.61%
Underlying fund commentary
(As at December 31, 2005)
The Canadian stock market generated a gain of 2.9% in thefourth quarter, finishing the year with a total gain of 24.2%.Market performance was evenly split over the quarter withfive sectors posting positive gains and five sectors postingnegative gains. Materials led all sectors with a gain of 10%,followed by financials (+7.7%) and utilities (+5.9%).consumer staples (−7.2%), telecommunications (−6.2%)and energy (−2.1%) lagged. The stock market began thequarter with a pullback in October that spread across allsectors, but rebounded strongly in November and Decemberas the economy, employment and consumer confidenceremained strong.
During the quarter the Fund initiated several positions in U.S. equities to compliment the portfolio strategy. The Fundnow holds high-quality U.S. growth stocks in the industrial,consumer discretionary, consumer staples and health caresectors. The Fund remains invested in nine out of tensectors with overweight positions in energy, materials,industrials and consumers (staples and discretionary) andunderweight financials, utilities, health care and technology.
While it appears that we may be headed toward anotherminority government, the event itself is unlikely to impactthe market to any significant degree. With Canada in anenviable position among G7 nations as the only memberwith a government surplus, of greater interest is how muchthe new government will flow back to Canadians and inwhat form. Over the near−term, we are likely to seecontinued interest rate hikes in Canada; continued strongglobal demand for our energy and commodities, which willkeep upward pressure on our dollar; and a moderatelystrong economy with low unemployment.
UNDERLYING FUND −> Elliott & Page Canadian Equity − Class A
Objective The Elliott & Page Canadian Equity Fund seeks to provide long−term capitalgrowth. The fund invests primarily in equity securities of large, established Canadiancompanies and Canadian securities that offer potential for capital growth.
Managed by MFC Global Investment Management (Toronto)
Fund managers Shauna Sexsmith, BA, CFA
Inception date February 1994 Total assets $250.4 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in August 1997. Underlying fund was changed on May 21, 2004 from theElliott & Page Blue Chip Fund to the Elliott & Page Canadian Equity Fund.
−20%
0%
20%
40%
60%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Elliott & Page Canadian EquityElliott & Page Canadian Equity−Cl A
24.5 16.5 20.9
−13.9−10.5 8.5
49.9
7.7 14.2 19.7
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$0
$10,000
$20,000
$30,000
$40,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Elliott & Page Canadian EquityS&P/TSX Total ReturnElliott & Page Canadian Equity−Cl A
$31,707*
$26,850
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P/TSX Total Return.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Elliott & Page CanadianEquity
24.50% 20.41% 20.57% 6.21% 10.44% Aug 1997
S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% −
Rate of return expectation Over the long term, the fund is expected to outperform the S&P/TSX Composite Index.
Source: Bell Globemedia Publishing Inc.45
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7131
Manulife Canadian Large Cap Value Equity Fund (MFC)
Information Technology 4.84%
Telecommunication Services 5.13%
Other 9.42%
Consumer Discretionary 6.62%
Cash 8.46%
Materials 13.68%
Energy 18.24%Financials 33.61%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Petro−Canada 4.98%
TD Bank 4.49%
Royal Bank of Canada 3.86%
Talisman Energy 3.86%
BCE Inc. 3.76%
Bank of Nova Scotia 3.68%
Power Corp of Canada 3.46%
Power Financial Corp. 3.44%
Sun Life Financial Inc. 3.33%
Husky Energy 3.17%
Total 38.03%
Underlying fund commentary
(As at December 31, 2005)
The past year was strong for Canadian investors and theS&P/TSX Composite Index returned 24.13%. Energy,returning 63.43%, utilities, returning 38.29%, andfinancials, returning 23.93%, were the best−performingsectors; the laggards were health care, returning −2.65%and information technology, returning −15.77%. Energyprices dominated the news in 2005, as the price of oilincreased 40%. The energy sector was by far the top−performing sector of the stock market, accounting for morethan half of the year’s gain on the S&P/TSX Index.
The Fund managers’ decision to hold an underweight inenergy, based on valuation, had the greatest impact onFund performance. The Fund’s turnover remains low, andfew changes were made to the portfolio during the year.The most significant change was the addition of incometrusts. During the year, Precision Drilling converted from anequity to an income trust, thus becoming the first incometrust held by the portfolio. The risk profile of the Fund hasnot changed significantly, and the asset mix, relative to theS&P/TSX Index, remains unchanged at 90% in equities and10% in cash.
Standard & Poor announced in September that it wouldinclude income trust units in the S&P/TSX Composite Indexin two steps, after the close on December 16, 2005, and onMarch 17, 2006. This move increases the Fund’s investmentuniverse and should provide greater investmentopportunities in 2006. The addition of 72 trusts to the TSXIndex will boost the energy sector’s weighting toapproximately 30% of the TSX Index. It is unlikely that theFund would ever overweight the energy sector, unlessvaluations became extremely compelling. The Fund willcontinue to purchase good−quality companies at attractivevaluations and sell companies that become overpriced.
UNDERLYING FUND −> MLI Cdn Large Cap Val Equity (MFC)
Objective The Fund is managed to achieve above average long−term capital growth,primarily through investment in common shares of listed Canadian companies withrelatively large market capitalization.
Managed by Manulife Financial
Fund managers MFC Global Invest Mgmt (Tor)−Mgmt Team
Inception date January 1999 Total assets $480.5 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 1997. The underlying fund was changed on September 30, 2002 fromthe Elliott & Page Pooled Canadian Equity Fund to the Manulife Canadian Large CapValue Equity Fund.
−10%
0%
10%
20%
30%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Canadian Large Cap Value Equity
24.3 20.9
26.0
−5.0 −5.2
10.4 6.4
−5.3
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Canadian Large Cap Value EquityS&P/TSX Total Return
$20,020*
$19,502
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P/TSX Total Return.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Canadian Large CapValue Equity
24.31% 22.57% 23.71% 11.26% 7.25% Jul 1997
S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% −
Rate of return expectation The fund is expected to outperform the S&P/TSX Composite Total Return Index over moving three−year annualized period by 1.5% per year.
Source: Bell Globemedia Publishing Inc.
46
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7132
Manulife MFC Global Pooled Canadian Index Fund
Cash 1.32%
Information Technology 4.39%
Consumer Discretionary 6.40%
Industrials 5.99%
Other 7.60%
Materials 16.82%
Energy 25.76%Financials 31.72%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Royal Bank of Canada 5.14%
Manulife Financial 4.73%
Bank of Nova Scotia 4.00%
EnCana Corp. 3.95%
TD Bank 3.81%
Suncor Energy 2.94%
Bank of Montreal 2.85%
Canadian Natural Resources 2.71%
Sun Life Financial Inc. 2.38%
BCE Inc. 2.26%
Total 34.77%
Underlying fund commentary
(As at December 31, 2005)
For the calendar year ending December 31, the S&P/TSXComposite Index advanced 24.13%. Almost all of the tensectors increased over the course of the year, save forinformation technology, health care, and consumer staples,returning −15.77%, −2.65%, and −1.09%, respectively. Thebest−performing sectors were energy, utilities, andfinancials, returning 63.43%, 38.29%, and 23.93%respectively.
Given the large weightings in the S&P/TSX Index for energy,financials, and materials, it is not surprising that the marketdid so well, as these were among the best performers forthe year. For example, the energy, mining, banks, andinsurance sectors all rose in excess of 20% in 2005.
The Canadian economy continues to grow at a steady pace,evidenced by real GDP growth rising at a 3.2% year−over−year rate in October. The labour market finished 2005 withthe unemployment rate at 6.5% which, while an increase,still represents multi−decade lows. The new housing marketfinished strong despite short−term interest rate hikes andrising home prices.
Headline inflation slowed to an annual pace of 2% inNovember from 2.6% in October. The core rate, however,came in a tick ahead of market expectations. An above−consensus core rate of 1.6% does not sound alarm bells, butthe threat of tight labour markets and rising inflationexpectations warrant further action by the Bank of Canada.
Canada’s international trade surplus stood at $7.2 billion inOctober. Higher natural gas prices helped push the value oftotal exports up by 1% to $40 billion and imports rose by1.2% to $33 billion. This trade report shows that theCanadian economy has carried forward momentum fromthe third quarter into the fourth.
UNDERLYING FUND −> MFC Global Pooled Canadian Index
Objective The MFC Global Pooled Canadian Index Fund seeks to achieve investmentresults that approximate the total return of the S&P/TSX Composite Index, one of themost watched indexes of the Canadian Equity Market.
Managed by MFC Global Investment Management (Toronto)
Fund managers MFC Global Invest Mgmt (Tor)−Mgmt Team
Inception date January 1998 Total assets $129.8 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in January 1998.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI MFC Global Pooled Cdn Index
24.2
14.5
26.6
−12.7−12.7 7.9
30.9
0.4
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI MFC Global Pooled Cdn IndexS&P/TSX Total Return
$19,464* $19,193
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P/TSX Total Return.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI MFC Global Pooled CdnIndex
24.22% 19.23% 21.64% 6.53% 8.68% Jan 1998
S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% −
Rate of return expectation Over the long term, the fund is expected to track the performance of the S&P/TSX Composite Index.
Source: Bell Globemedia Publishing Inc.
47
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7141
Manulife Fidelity Canadian Large Cap Fund
Cash 1.30%
Telecommunication Services 4.30%
Information Technology 5.00%
Consumer Discretionary 4.90%
Other 7.40%
Materials 14.20%
Energy 30.50%Financials 32.40%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Bank of Montreal −
Canadian National Railway −
Canadian Natural Resources −
EnCana Corp. −
Imperial Oil −
Research In Motion −
Sun Life Financial −
TD Bank −
TELUS −
Talisman Energy −
Total 44.60%
Underlying fund commentary
(As at December 31, 2005)
The Canadian equity market, as represented by the S&P/TSXComposite Index, posted a modest gain of 2.4% over thequarter, bringing the year-to-date total return to 21.9%.Materials rose 9.4% as prices of precious metals such asgold and copper rallied in response to indications thatconstrained resource supply would be insufficient to meetglobal demand, particularly from China and India. Financialsgained 7.1% as the banks continued to report strongearnings in a slow rising interest rate environment. Theindustrials and utilities sectors both gained during the quarteras investors purchased dividend stocks following the lateNovember government announcement of an increase in thedividend tax credit. Energy fell for the first time this year by−2.4% as global oil and gas supply improved for the firsttime since the hurricanes and prices subsequently retreatedto lower levels. As corporate spending on research anddevelopment remained constrained, the healthcare and techsectors lagged in performance during the quarter, andended the year down −3.5% and −15.8% respectively. TheCanadian dollar remained near its high of $86 US, while theBank of Canada kept a hawkish stance on inflation bytightening the lending rate by 50 basis points during thequarter. The Fund rose 1.8% for the quarter endingDecember 30, compared to benchmark at 2.9%, bringingthe one−year total return to 28.7%. Large cap stocks have outperformed the broader marketrecently. Doug Lober believes this will likely continue asinvestors seek sector leadership, the earnings growth andconsistant dividend yield. With Bank of Canada’s tighteningstance on interest rates and potential uncertainty in consumer spending, he remains focused on companies that can exceed estimates while trading at reasonable valuations, and willing to concentrate on fewer quality names rather than general broad market exposure.
UNDERLYING FUND −> Fidelity Canadian Large Cap
Objective The Fidelity Canadian Large Cap Fund aims to achieve long−term capitalgrowth by investing primarily in equity securities of Canadian companies with a focus onlarge companies. The portfolio manager searches for investment opportunities by usingFidelity’s traditional bottom−up investment style, selecting securities for the fund on astock−by−stock basis.
Managed by Fidelity Investments Canada Ltd.
Fund managers Doug Lober
Inception date February 1988 Total assets $73.1 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Fidelity Cdn Large CapFidelity Canadian Large Cap−A
32.7
15.4 25.7
−12.9 −5.1
24.5
36.0
−9.1 5.8
21.2
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Fidelity Cdn Large CapS&P/TSX Total ReturnFidelity Canadian Large Cap−A
$29,904*
$26,850
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P/TSX Total Return.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Fidelity Cdn Large Cap 32.73% 23.75% 24.39% 9.73% 11.03% Jul 1997
S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% −
Rate of return expectation Over the long term, the fund is expected to outperform the S&P/TSX Composite Index.
Source: Bell Globemedia Publishing Inc.
48
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7161
Manulife McLean Budden Canadian Equity GrowthFund
Cash 2.00%
Industrials 6.91%
Consumer Discretionary 11.44%
Other 9.72%
Information Technology 11.00%
Materials 13.74%
Energy 19.65%Financials 25.54%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Talisman Energy 6.30%
TD Bank 5.11%
Royal Bank of Canada 5.06%
Bank of Nova Scotia 4.96%
Manulife Financial 4.85%
Magna International 4.18%
Research In Motion 3.94%
Cameco Corp. 3.93%
Canadian National Railway 3.85%
Canadian Natural Resources 3.83%
Total 46.01%
Underlying fund commentary
(As at December 31, 2005)
The Fund increased its commitment to informationtechnology during the quarter. The Index’s inclusion ofincome trusts (at half weight), in December resulted in achange in the weight of a number of sectors, most notablyenergy (increased) and financials (decreased). The remainingweight in income trusts will be added mid−March 2006. Atthe Fund level, these moves resulted in an increase in theunderweight position in energy. Fund activity saw energyholdings, Canadian Natural Resources, Cameco andTalisman, reduced following strong price gains while therewas buying in EnCana. In industrials, the elimination ofCanadian Pacific Railway more than offset additions toCanadian National Railway and Finning. Materials saw somebuying in Novelis, while Dofasco was reduced on a sharpjump in value, as it was the target of two suitors, Arcelorand ThyssenKrupp. Thomson and Magna were increased inconsumer discretionary, while the only activity in health carewas a reduction in Biovail as the stock rallied strongly onnews of the U.S. Food and Drug Administration’s approvalof its pain relief medication Tramadol ER. In financials,Manulife was increased. Information technology holdingResearch In Motion was increased while ATI Technologieswas reduced. The Fund continues to favour informationtechnology while maintaining a relatively low exposure tomaterials, financials and energy.
The Fund posted a solid absolute return and outperformedthe Index for the quarter due to good stock selection inenergy (Cameco) and materials (Dofasco and Alcan), whichmore than offset weak results in consumer discretionary(Thomson and Magna). Sector allocation had a modestlynegative impact with a high commitment to consumerstaples combined with low exposure to financials the mostnotable factors.
UNDERLYING FUND −> MB Canadian Equity Growth
Objective The McLean Budden Canadian Equity Growth Fund is managed for a balanceof security and growth over a period of at least four years. This stock fund invests in adiversified portfolio of Canadian stocks and convertible securities. The fund wasdeveloped to provide superior rates of return, primarily through capital appreciation, byinvesting in a diversified portfolio of Canadian equities.
Managed by McLean Budden Limited
Fund managers Bill Giblin; Bruce Murray; Mary Hallward, BA, MBA; Doug Andrews;John Durfy; and Miranda Hubbs
Inception date September 1980 Total assets $2,422.5 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 1997. In order to provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
60%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI McLean Budden Cdn Equity GrowthMB Canadian Equity Growth
22.9 11.8
30.7
−14.1 1.0
18.3 26.6
−2.6
18.6
41.9
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$0
$10,000
$20,000
$30,000
$40,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI McLean Budden Cdn Equity GrowthBMO/TSX Composite Cap 10% Index TotalMB Canadian Equity Growth
$35,900*
$33,726
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe BMO/TSX Composite Cap 10% Index Total.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI McLean Budden CdnEquity Growth
22.90% 17.23% 21.56% 9.28% 10.50% Jul 1997
BMO/TSX Composite Cap10% Index Total
24.13% 19.20% 21.66% 7.57% −
Rate of return expectation This fund is expected to outperform the BMO/TSX Composite Cap 10% Index over a movingfour−year annualzed period by 1.5% per year.
Source: Bell Globemedia Publishing Inc.
49
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7164
Manulife McLean Budden Canadian Equity Fund
Cash 3.72%
Information Technology 6.93%
Other 12.37%
Industrials 7.08%
Consumer Discretionary 7.94%
Materials 16.96%
Energy 17.64%Financials 27.36%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Royal Bank of Canada 5.37%
Bank of Nova Scotia 4.57%
Manulife Financial 4.31%
EnCana Corp. 4.26%
Canadian National Railway 3.64%
Alcan Inc. 3.58%
TD Bank 3.54%
CIBC 3.43%
Magna International 2.87%
Talisman Energy 2.84%
Total 38.41%
Underlying fund commentary
(As at December 31, 2005)
The Fund increased its commitment to materials during thequarter while the S&P/TSX Composite Index’s reclassificationof Rogers Communications from consumer discretionary totelecommunication services had little impact on the Fund’srelative exposure to the two sectors. The Index’s inclusion ofincome trusts (at half weight), in December resulted in achange in the weight of a number of sectors, most notablyenergy (increased) and financials (decreased). The remainingweight in income trusts will be added mid−March 2006. Atthe Fund level, these moves resulted in an increase in theunderweight position in energy. Other Fund activity sawCanadian Natural Resources, Cameco and Talisman allreduced within energy. In industrials, buying in CanadianNational Railway, Finning and Quebecor World was offset byreductions in Canadian Pacific Railway. The materials sectorwas increased as buying in Inco, NOVA Chemicals andNovelis offset trimming in Placer Dome and Dofasco, eachexperiencing a sharp jump on takeover offers. Consumerstaples holdings, George Weston and Shoppers Drug Mart,were reduced. MDS was a new addition to health care. Infinancials, there was an increase in Manulife. In informationtechnology, additions to Research In Motion more thanoffset the elimination of GEAC following its acquisition by aprivate equity firm, and a reduction in ATI Technologies.Finally, there was some buying in TELUS withintelecommunication services. The Fund continues to favourinformation technology and remains significantlyunderweight the energy sector and to a lesser extentfinancials.
UNDERLYING FUND −> MB Canadian Equity
Objective The Fund aims to provide superior real rate of return primarily throughcapital appreciation, by investing in a diversified portfolio of Canadian equities. Securityselections will emphasize companies which are undervalued or have prospects for aboveaverage earnings growth.
Managed by McLean Budden Limited
Fund managers Benoit Paradis; Hans Van Monsjou, BComm, CFA; Doug Andrews;Alan Daxner; Colin Sinclare; Susan Shuter, CFA, MBA; Ted Thompson; John Ackerl, CFA,MBA; and Roger Beachemin.
Inception date March 1998 Total assets $2,465.0 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in April 2003. In order to provide further historical information, the shadedarea represents the returns of the underlying fund for the period before the start date ofthe Manulife fund.
−10%
0%
10%
20%
30%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI McLean Budden Canadian EquityMB Canadian Equity
21.3
12.1
25.4
−7.1 4.7
23.8 23.6
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
Mar98 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI McLean Budden Canadian EquityS&P/TSX Total ReturnMB Canadian Equity
$22,681*
$16,947
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P/TSX Total Return.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI McLean BuddenCanadian Equity
21.34% 16.65% − − 23.59% Apr 2003
S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% −
Rate of return expectation The gross rate of return over a full economic cycle is expected to exceed the S&P/TSX CompositeIndex.
Source: Bell Globemedia Publishing Inc.
50
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7171
Manulife SEAMARK Canadian Equity Fund
Consumer Discretionary 15.44%
Telecommunication Services 4.26%
Cash 1.14%
Other 7.28%
Industrials 8.58%
Materials 16.72%
Energy 17.74%Financials 28.84%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
TD Bank n 8.74%
Royal Bank of Canada 7.39%
Petro−Canada 5.58%
Thomson Corporation 5.31%
Alcan Inc. 4.62%
Suncor Energy 4.56%
BCE Inc. 4.26%
Sun Life Financial Inc. 4.24%
Great−West Lifeco 4.20%
Bank of Montreal 4.14%
Total 53.04%
Underlying fund commentary
(As at December 31, 2005)
This quarter, for the first time in 2005, the energy sector didnot lead the market, giving way to the materials andfinancial sectors. The Fund was well positioned in generalterms, but underperformed our expectations for the quarterdue to disappointing declines towards year end in the stockprice of Quebecor World, Thomson, and BCE. Betterperformance came from our substantial materials andfinancial holdings, as well as from CN Rail, GildanActivewear, and CHC Helicopter.
Strong demand from Asia drove base metals higher.Aluminum and zinc surged over 20%, benefiting Alcan andTeck Cominco. Newmont Mining performed well as goldcontinued to climb. We also saw increased M&A activity, apotential harbinger of more gains to come, as Barrick Goldpurchased Placer Dome to form the world’s largest goldproducer.
Banks and life insurance companies reported good financialresults, benefiting from strong consumer demand for creditand investment products, low levels of loan losses, and goodexpense management. Major Fund holdings TD Bank, RoyalBank and Bank of Montreal all exceeded the financialssector return.
The outlook for the Canadian market remains generallypositive, with strong corporate earnings environmentsupported by good economic growth. This could betempered by renewed strength from the Canadian dollar,rising interest rates, or unforeseen geopolitical events.
UNDERLYING FUND −> SEAMARK Pooled Canadian Equity
Objective The SEAMARK Pooled Canadian Equity Fund is managed to preserve andenhance capital through long−term capital gains with some current dividend income. Thefund will invest primarily in Canadian equity securities.
Managed by SEAMARK Asset Management Ltd.
Fund managers Peter Marshall, B.Comm; George V. Loughery, CGA, CFA; and Chad King, CA, CFA.
Inception date June 1997 Total assets $196.5 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in August 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−10%
0%
10%
20%
30%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI SEAMARK Canadian Equity
19.9
10.1
26.6
−5.7
7.7
27.4 22.4
−5.5
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
$26,000
Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI SEAMARK Canadian EquityS&P/TSX Total ReturnSEAMARK Pooled Canadian Equity
$25,434*
$20,131
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P/TSX Total Return.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI SEAMARK CanadianEquity
19.92% 14.88% 18.67% 11.14% 11.00% Aug 1997
S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% −
Rate of return expectation The fund’s performance is benchmarked against the S&P/TSX Composite Total Return Index. Returnsin excess of this benchmark, is an objective only, and is not guaranteed by any party.
Source: Bell Globemedia Publishing Inc.
51
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7181
Manulife Trimark Canadian Fund
Cash 1.93%
Telecommunication Services 6.17%
Other 13.33%
Industrials 9.03%
Materials 9.21%
Consumer Staples 13.34%
Consumer Discretionary 18.09%Financials 28.90%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Bank of Nova Scotia 4.97%
TD Bank 4.97%
Thomson Corporation 4.22%
BCE Inc. 3.42%
Power Corp of Canada 3.25%
Royal Bank of Canada 3.23%
Molson Coors Canada 2.81%
Barrick Gold Corp. 2.69%
Toromont Industries 2.66%
Petro−Canada 2.58%
Total 34.80%
Underlying fund commentary
(As at December 31, 2005).
Kinross Gold Corp. and The Toronto−Dominion Bank weremajor contributors to the Fund’s performance in the fourthquarter. Kinross’ stock benefited from higher gold prices inthe quarter, as well as optimism over the company’s newCEO. Strategic moves made by TD Bank’s managementearlier this year - such as TD Waterhouse’s merger withAmeritrade and TD Bank North’s acquisition of HudsonUnited Bancorp, a regional bank in northeastern UnitedStates - have brought attention to the bank’s growthstrategy.
The Fund’s management team views the increasedconcentration of the Canadian market as increasingly riskyfor investors. Energy alone now represents over 25% of theS&P/TSX Composite Index. To have 25% of the Fund’s assetsin a relatively narrow and volatile sector that has alreadyexperienced huge returns would expose unitholders to thepossibility of significant capital loss. The Fund is aconcentrated portfolio, but is well−diversified by businessline and is well−positioned to offer better downsideprotection than funds that more closely mimic the S&P/TSXComposite Index. The Fund is further diversified throughforeign investments that provide exposure to sectors under−represented in Canada.
UNDERLYING FUND −> Trimark Canadian − SC
Objective The Trimark Canadian Fund seeks to provide strong capital growth with ahigh degree of reliability over the long term; it invests primarily in common shares ofCanadian companies.
Managed by AIM Trimark Investments
Fund managers Ian Hardacre, CFA, MBA
Inception date September 1981 Total assets $1,320.4 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−10%
0%
10%
20%
30%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Trimark CanadianTrimark Canadian − SC
11.3 11.2
23.4
−8.7
6.5
18.1 18.3
−3.6 4.8
28.1
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
$26,000
$28,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Trimark CanadianS&P/TSX Total ReturnTrimark Canadian − SC
$26,133*
$26,850
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P/TSX Total Return.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Trimark Canadian 11.31% 11.27% 15.16% 8.24% 8.00% Oct 1997
S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% −
Rate of return expectation To be the top of its respective category over the long−term, while striving to outerform the S&P/TSXComposite Total Return Index.
Source: Bell Globemedia Publishing Inc.
52
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7192
Manulife Canadian Large Cap Top Down Equity Fund(Zechner)
Telecommunication Services 8.69%
Industrials 8.93%
Energy 11.75%
Materials 9.39%
Consumer Discretionary 11.10%
Other 13.22%
Cash 14.14%Financials 22.78%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
TD Bank 4.81%
Royal Bank of Canada 4.57%
BCE Inc. 4.45%
TELUS 4.23%
Rogers Communications 3.78%
Manulife Financial 3.32%
Sun Life Financial Inc. 3.04%
Petro−Canada 2.98%
Falconbridge 2.22%
Nortel Networks Corp. 2.13%
Total 35.53%
Underlying fund commentary
(As at December 31, 2005)
For the fourth quarter of 2005 the SP/TSX composite indexwas up by 2.87%. Sector performance was mixed with fivesectors up and five sectors down. The basic materials sectorwas the big winner with a 9.44% quarterly gain on a14.75% increase in the gold sub−sector. Financials werealso strong while telecom, staples, health care and energylagged the market as they all fell during the quarter.
With a return of 2.83% the Fund performance was right inline with the market averages for the quarter. The Fund hada relatively high cash position as many stocks reached ourshort−term price targets. Value was added by beingunderweight energy stocks and overweight golds during thequarter and through strong stock picking in financials andbasic materials.
Within the stock market we still have a defensive posturewith overweight sector positions in consumer staples,telecom and health care. We also remain overweight intechnology as the companies are still growing andgenerating cash while valuations look more attractive thanthey have since the early 1990s. The largest ’alphagenerating’ names in the portfolio for the year aheadinclude Rogers and Telus in wireless communications, mid−sized gold stocks such as Glamis, Goldcorp, Agnico andLamgold as well as the travel stocks which, in our view,should benefit from a rising Canadian dollar and falling oilprices. Our stock strategy is premised on the view thatglobal economic growth is in the process of slowing downdue to the combined impact of record debt levels and risinginterest rates. Commoditiy prices are being artificiallysustained at high levels due to an influx of financial investorsinto those markets. Commodity prices could fall sharply asthese funds ultimately move elsewhere. With over 30% ofthe Canadian market in energy, this index could beextremely volatile and we expect it to be lower by year−end.
UNDERLYING FUND −> MLI Cdn Lg Cap Top Dn Eq (Zechner)
Objective The fund is managed to achieve above average long−term capital growth,primarily through investment in common shares of listed Canadian companies withrelatively large market capitalization. The fund employs a mix of growth and sectorrotation and is driven by top−down sector themes while also incorporating bottom−upsecurity selection. This fund has the ability to shift completely out of sectors as well ascarry very large weights (up to 400% of TSX weight in some cases) in attractive sectors.
Managed by Manulife Financial
Fund managers J. Zechner Associates − Mgmt. Team
Inception date July 2001 Total assets $166.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 2001.
−40%
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Cdn Large Cap Top Down Equity
17.3 17.0
32.6
−22.5
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
Dec01 Dec02 Dec03 Dec04 Dec05
MLI Cdn Large Cap Top Down EquityS&P/TSX Total ReturnMLI Cdn Lg Cap Top Dn Eq (Zechner)
$14,660*
$15,798
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P/TSX Total Return.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Cdn Large Cap TopDown Equity
17.35% 17.16% 22.11% − 14.13% Oct 2001
S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% −
Rate of return expectation The fund is expected to outperform the S&P/TSX Composite Total Return Index over moving three−year annualized period by 1.5% per year.
Source: Bell Globemedia Publishing Inc.
53
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7241
Manulife Jarislowsky Fraser Canadian Equity Fund
Cash 1.70%
Industrials 4.70%
Consumer Staples 7.70%
Other 10.10%
Consumer Discretionary 7.70%
Materials 4.80%
Energy 31.30%Financials 32.00%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Bank of Nova Scotia 6.90%
Nexen 6.40%
Royal Bank of Canada 6.30%
Manulife Financial 5.90%
Talisman Energy 5.90%
TD Bank 5.50%
Jarislowsky Special Equity Fund 5.30%
Shell Canada 4.60%
Imperial Oil 3.50%
Great−West Lifeco 3.40%
Total 53.70%
Underlying fund commentary
(As at December 31, 2005)
Raw material prices soared as supply shortages materialized,with the start of the rebuilding of New Orleans andsurrounding areas following the devastating hurricanes. Onthe other hand, the price of oil slipped below $60 US/barrelfor the first time since mid−summer in response to earlysigns of slowing demand. In Canada, cyclical stocksextended their year−long rally as investors focused onseveral high profile takeover situations in the fourth quarter.The rally in gold stocks was also a major factor in the fourthquarter and year as a whole.
After an extended period of strong performance, ourCanadian equity portfolios lagged the S&P/TSX index duringthe fourth quarter. Our overweight position in high quality,large capitalization oil and gas companies has helpedgenerate substantial outperformance over the past fewyears. However, these same stocks were caught in thedownward revaluation of the sector as a whole, during thesudden decline in the price of oil in October.
An inverted yield curve has historically been the harbinger ofrecession. We do not necessarily anticipate such anoutcome at this point in time. However, it is likely that highenergy prices, a slowing real estate market, low savingsrates, and high borrowing levels will eventually lead to aslowdown in the global economy. It is only a matter of timebefore the more cyclical companies begin to suffer earningssetbacks. At that time, money will flow out of the high betastocks in those sectors and into the more defensive, higherquality areas that we favour. Our philosophy points ustowards companies that are able to continue to growearnings in a predictable manner, no matter what directionthe economy is heading.
UNDERLYING FUND −> JF Canadian Equity
Objective Jarislowsky Fraser’s equity style emphasizes buying long−term growth at areasonable price. Internal resources are primarily relied on to generate investment ideas.Each year, the investment professionals contact and interview more than 200 Canadiancompanies. The portfolio focuses on industry leaders with strong balance sheets andcash flow as well as depth and quality at the management level.
Managed by Jarislowsky Fraser Ltd.
Fund managers Jarislowsky Fraser − Mgmt. Team
Inception date April 1997 Total assets $3,864.2 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 2001. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI JF Canadian EquityJF Canadian Equity
27.6 20.9 24.7
−1.9 5.5
31.5 25.5
11.4
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$0
$10,000
$20,000
$30,000
$40,000
$50,000
Mar97 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI JF Canadian EquityS&P/TSX Total ReturnJF Canadian Equity
$44,825*
$22,254
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P/TSX Total Return.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI JF Canadian Equity 27.60% 24.20% 24.35% − 18.32% Oct 2001
S&P/TSX Total Return 24.13% 19.21% 21.66% 6.63% −
Rate of return expectation Over the long term, this fund is expected to outperform the S&P/TSX Composite Index.
Source: Bell Globemedia Publishing Inc.
54
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN LARGE CAP EQUITY Code 7351
Manulife Maxxum Dividend Growth Fund (Mackenzie)
Other 8.09%
Energy 7.45%
Industrials 2.41%
Information Technology 2.78%
Consumer Staples 7.68%
Cash 14.24%
Consumer Discretionary 15.71%Financials 41.64%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Manulife Financial 5.71%
TD Bank 5.23%
Ensign Energy Services 5.00%
Citigroup 4.51%
Bank of Nova Scotia 4.04%
CIBC 3.35%
TJX Companies 3.13%
Yellow Pages Income Fund 2.92%
Magna International 2.68%
Reitmans (Canada) 2.61%
Total 39.18%
Underlying fund commentary
(As at December 31, 2005)
The Mackenzie Maxxum Dividend Growth Fund returned5.1% for the six−month period ending Dec 31, 2005, wellshort of the S&P/TSX Composite Index (TSX) of 14.8%. Theshortfall relative to the broad Canadian market was primarilydue to the Fund’s very low exposure to the resource sectors.The two other factors were a cash position of approximately15% and the foreign holdings, accounting for 18% of theFund which mirrored the performance of the U.S. market.
Not surprising, the best performers were energy stocks, ledby Ensign Energy Services (+59%) followed by TalismanEnergy (+35%). However, as mentioned, the Fund’s totalexposure to oil and gas stocks was very low at only 8%compared to the Canadian benchmark of 27%.
The largest industry exposure at 37% remains financialservices which has been a core part of the portfolio for manyyears. The group once again delivered solid performance,led by Royal Bank (+21%) and Manulife Financial (+18%).The only disappointment in the group was Fairfax (−13%)which was negatively impacted by Hurricane Katrina.
Global growth is likely to moderate this year, in response toa mid−cycle U.S. consumer−led slowdown but a recessionshould be avoided and inflation is benign. The exceptionalgains experienced this year in Canada are unlikely to berepeated but equity prices should make further gains givenreasonable valuation levels, low interest rates and sustainedglobal economic growth. As well, given the U.S. hasunderperformed Canada for the last four consecutive years,one could certainly argue for a reversal of fortunes whichwould assist the Fund’s relative performance. As always, theMaxxum team continues to search for high quality,attractively valued dividend−paying stocks.
UNDERLYING FUND −> Mackenzie Maxxum Dividend Growth
Objective The Manulife Maxxum Dividend Growth Fund, managed by MackenzieFinancial, seeks a satisfactory return from a balance between long−term growth securitiesand current income securities. This fund is a conservative Canadian equity fund with abias towards stocks currently offering an attractive dividend yield. The fund will also investin growth companies and low−yielding stocks that exhibit good long−term potential forcapital gains.
Managed by Mackenzie Financial Corporation
Fund managers Bill Procter, MBA
Inception date May 1975 Total assets $1,255.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in January 2005. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Maxxum Dividend Growth (Mack)Mackenzie Maxxum Dividend Growth
12.8 17.7 18.2
−6.8
11.5
32.0
2.2 1.8
29.2 33.6
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$20,000
$30,000
$40,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Maxxum Dividend Growth (Mack)S&P/TSX 60 Total Return IndexMackenzie Maxxum Dividend Growth
$37,324*
$30,251
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P/TSX 60 Total Return Index.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Maxxum DividendGrowth (Mack)
12.78% − − − 12.78% Jan 2005
S&P/TSX 60 Total ReturnIndex
26.29% 19.90% 21.75% 5.74% −
Rate of return expectation Over the long term, the fund is expected to outperform the S&P/TSX 60 Index.
Source: Bell Globemedia Publishing Inc.
55
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN SMALL/MID CAP EQUITY Code 7122
Manulife Elliott & Page Growth Opportunities Fund
Cash 1.28%
Health Care 5.06%
Financials 6.16%
Consumer Discretionary 5.27%
Industrials 11.29%
Other 19.80%
Energy 23.69%Materials 27.45%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
E&P Money Fund − I (MFC) 9.35%
Teck Cominco Ltd. 2.33%
Mullen Group Income Fund 2.18%
Yamana Gold Inc. 2.14%
Geac Computer Corporation 2.11%
Real Resources 2.10%
Trican Well Service 2.00%
Penn West Energy Trust 1.97%
Trinidad Energy Services 1.79%
Russel Metals 1.77%
Total 27.74%
Underlying fund commentary
(As at December 31, 2005)
It was an exceptional year for the markets, commodities,and the currency. The S&P/TSX Composite Index climbedover 24.13%, nearing record levels not seen since 2000.Meanwhile, the Nesbitt Burns Small Cap Index (NBSCI) rose19.68 % and closed the year at an all−time high. A recordcrude price of $70.85 a barrel was reached on August 30,the day after Hurricane Katrina hit. Incessant investordemand drove gold to $541 an ounce, its highest price sinceJanuary 1981. Meanwhile, commodities such as copper,zinc, and silver continued their uptrends, driving theCanadian dollar to its highest level since January 1992.
Strong gains for the Elliot & Page Growth OpportunitiesFund were driven by strength in the resources and interest−sensitive sectors. The energy, financials, and materials sectorsappreciated significantly in the NBSCI, rising 62.1%, 31.2%,and 18.9%, respectively.
In 2006, material changes will be made to the Fund, due tothe adoption of a new benchmark. Effective January 1, theFund will be using the blended NBSCI, which will includeincome trusts representing nearly one−third of thebenchmark. Sectors with significant adjustments includeenergy, materials, and financials. The energy and financialsector weightings will increase by approximately 4% each,while the materials sector weighting will decline by nearly8%.
The Fund managers are optimistic about the beginning of2006. Near−term momentum remains positive, the period isseasonally strong, inflation remains benign, valuationsremain reasonable, and it appears that the Fed could benear the end of its tightening phase, with the real estatemarket cooling.
UNDERLYING FUND −> Elliott & Page Growth Opportunities Fund
Objective The Elliott & Page Growth Opportunities Fund seeks long−term capitalgrowth. The fund invests primarily in high−quality securities and convertible instrumentsof small and mid cap Canadian companies.
Managed by MFC Global Investment Management (Toronto)
Fund managers Ted Whitehead, B.Comm, CFA
Inception date November 1998 Total assets $730.8 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in August 1997. The underlying fund was changed on June 1, 2003 from theElliott & Page Emerging Growth Fund to the Elliott & Page Growth Opportunities Fund.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI E&P Growth Opportunities
22.3 22.1
34.1
−2.2 −1.7 −1.6
24.7
−12.3
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
$26,000
$28,000
Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI E&P Growth OpportunitiesBMO Nesbitt Burns Cdn Small Cap Index
$25,346*
$27,315
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe BMO Nesbitt Burns Cdn Small Cap Index.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI E&P GrowthOpportunities
22.29% 22.18% 26.04% 13.99% 8.74% Aug 1997
BMO Nesbitt Burns CdnSmall Cap Index
19.68% 16.87% 24.92% 14.85% −
Rate of return expectation Over the long term, the fund is expected to outperform the Nesbitt Burns Canadian Small Cap Index.
Source: Bell Globemedia Publishing Inc.
56
Volatility meter
Based on three−year standard deviation from Globe HySales
CANADIAN SMALL/MID CAP EQUITY Code 7191
Manulife Canadian Small Cap Equity Fund (Tattersall)
Information Technology 3.04%
Financials 6.94%
Energy 10.67%
Consumer Discretionary 9.91%
Cash 12.70%
Other 15.92%
Industrials 18.26%Materials 22.56%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Lundin Mining 3.34%
Gentry Resources 2.87%
NQL Energy Services 2.32%
GSI Group 2.06%
Martinrea International 2.01%
Enerflex Systems 1.99%
Intertape Polymer Group 1.99%
Aur Resources 1.96%
Canadian Hydro Developers 1.88%
Total 20.42%
Underlying fund commentary
(As at December 31, 2005)
The Canadian equity markets were able to achieve a modestgain during the fourth quarter. A decline in the price of oiland uncertainty over the federal election outcomepresumably sent investors to the sidelines, in spite ofreassuring words from the Finance Minister about incometrusts and lower taxes on dividend income.
The portfolio increased by 4.4% for the quarter − about inline with the index − but lagged for the year with a gain ofonly 12.5%. Our performance was restrained by a growingunderexposure to the energy sector, minimal exposure toincome trusts, several problem stocks in the industrialproducts category, plus our ongoing preference for microcapnames. Buying and selling were about in line with E&P SmallCap Value during the quarter, and the cash reserve increasedfrom 1% to 10% as of December 31.
As the fixation with energy stocks and income trusts beginsto wane, we are hoping for improved relative performancefrom the fund. We recognize that the price of oil will likelyremain high by historical standards, but the recentescalation in the price of energy will lead to conservation,alternative sources and increased production from existingwells. This will have a moderating effect on the price of oil,but we are not convinced that this possibility is included inthe price of many oil stocks. So, we expect to replace oursale candidates in the energy sector of the portfolio, but notincrease the exposure significantly.
UNDERLYING FUND −> MLI Cdn Small Cap Equ (Tattersall)
Objective The fund is managed to achieve above average long−term capital growth,primarily through investment in common shares of listed Canadian companies withrelatively small market capitalization. The manager uses a value−oriented investmentstyle to select stocks that will, as a group, out perform market averages over time.
Managed by Manulife Financial
Fund managers Howson Tattersall − Mgmt. Team
Inception date January 1999 Total assets $287.7 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund sinceJanuary 1999. To provide further historical information, the shaded area represents thereturns of the underlying fund for the period before the start date of the Manulife fund.
0%
10%
20%
30%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Canadian Small Cap Equity
15.5 17.8
34.6
1.5
24.7
9.4 9.0
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
$26,000
$28,000
Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Canadian Small Cap EquityBMO Nesbitt Burns Cdn Small Cap Index
$27,651* $25,788
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe BMO Nesbitt Burns Cdn Small Cap Index.
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Canadian Small CapEquity
15.51% 16.65% 22.34% 18.31% 15.64% Jan 1999
BMO Nesbitt Burns CdnSmall Cap Index
19.68% 16.87% 24.92% 14.85% −
Rate of return expectation The fund is expected to outperform the NB Small Cap (Weighted) Total Return Index over movingthree−year annualized period by 2.0% per year.
Source: Bell Globemedia Publishing Inc.
57
58
U.S. Equity
U.S. Equity funds are a form of foreign equity and invest in shares of U.S. companies.
These types of funds typically aim to achieve long-term capital growth by investing
in shares of companies based in the United States. A share represents an
ownership stake in a company; therefore, how the fund performs depends on the
success of the company holdings within the fund. The fund’s performance can also
be affected by such factors as currency exchange rates and economic and political
trends.
These funds are ideal for investors who have a long-term focus, want to include
U.S. holdings in their portfolios, and are comfortable with a higher-than-average
level of volatility.
U.S. Equity funds can vary greatly depending on such factors as the size and types
of companies in which they invest and the criteria the manager uses to decide the
best companies to invest in.
U.S. Large Cap Equity FUND PAGE
CODE NUMBER
Manulife MFC Global Pooled U.S. Index Fund 8131 59
Manulife MFC Global Pooled U.S. Equity Fund 8132 60
Manulife Fidelity Growth America Fund 8142 61
Manulife SEAMARK U.S. Equity Fund 8171 62
Manulife U.S. Equity Fund (Bernstein) 8191 63
Manulife Legg Mason U.S. Value Fund 8261 64
Volatility meter
Based on three−year standard deviation from Globe HySales
U.S. LARGE CAP EQUITY Code 8131
Manulife MFC Global Pooled U.S. Index Fund
Cash 4.32%
Energy 9.15%
Consumer Discretionary 11.80%
Industrials 11.30%
Health Care 12.24%
Information Technology 15.12%
Other 15.30%Financials 20.77%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
General Electric 3.23%
Exxon Mobil 3.05%
Citigroup 2.14%
Microsoft 2.09%
Procter & Gamble 1.69%
Bank of America 1.62%
Johnson & Johnson 1.56%
American International Group 1.54%
Pfizer 1.50%
Altria Group Inc. 1.36%
Total 19.78%
Underlying fund commentary
(As at December 31, 2005)
Financial markets performed largely as expected in 2005.The S&P 500 generated a modest 4.91% (U.S.) total return,small and mid cap stocks outperformed large cap whilegrowth and value performed in line with each other. TheFed continued to tighten and earnings growth moderated.Energy prices dominated the news as oil rose 40% to closethe year at $61 per barrel. As a result, the energy sectorwas by far the top−performing sector of the stock market.
While GDP growth seems likely to moderate as we movefurther into 2006, there is plenty of positive economic news.Payroll employment is growing, consumer sentiment isstrong, wages are growing, business investment is strong,and inflation remains well behaved.
In 2006, some of the bearish factors that held back stocks in2005 may improve. Above normal energy inventories maycause oil prices to moderate; the second year of thePresidential cycle is somewhat better for stocks; the Fed willlikely soon end its policy of tightening; and the deteriorationof both the trade and budget deficits may moderate.
In each of the past two years, the stock market providedpositive but modest returns as strong earnings growth wasoffset by a declining P/E ratio. For the coming year, thereappears to be a good chance for both strong earningsgrowth and an increase in the market’s valuation, therebyresulting in only the second year of positive double−digitreturns since 1999.
UNDERLYING FUND −> MFC Global Pooled U.S. Equity Index
Objective The Fund aims to achieve investment results that approximate the totalreturn of the S&P 500 Stock Index, one of the most well−regarded benchmarks for the U.S. equity market. This is a passively managed fund. To achieve its investment objective,the fund will invest directly in common shares and may use derivative instruments such asfutures in order to replicate the returns of the S&P 500 Stock Index. The fund may alsoinvest a portion of its funds in cash.
Managed by MFC Global Investment Management (Toronto)
Fund managers MFC Global Invest Mgmt (Tor)−Mgmt Team
Inception date January 1998 Total assets $98.4 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in January 1998.
−50%
0%
50%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI MFC Global Pooled U.S. Index
1.3 2.9 4.6−23.2 −7.1 −6.0
14.0
40.9
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
$17,000
Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI MFC Global Pooled U.S. IndexS&P 500 Composite Total Return Idx($Cdn)
$11,738* $11,856
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P 500 Composite Total Return Idx($Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI MFC Global Pooled U.S.Index
1.31% 2.11% 2.92% −4.91% 2.02% Jan 1998
S&P 500 Composite TotalReturn Idx($Cdn)
1.61% 2.43% 3.37% −4.40% −
Rate of return expectation Over the long term, the fund is expected track the performance of the S&P 500 Total Return Index($ Cdn).
Source: Bell Globemedia Publishing Inc.
59
Volatility meter
Based on three−year standard deviation from Globe HySales
U.S. LARGE CAP EQUITY Code 8132
Manulife MFC Global Pooled U.S. Equity Fund
Health Care 12.02%
Energy 8.86%
Consumer Discretionary 12.11%
Industrials 9.07%
Information Technology 18.08%
Other 17.01%Financials 22.85%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Bank of America 3.69%
Microsoft 2.82%
Citigroup 2.65%
Medtronic Inc. 2.63%
Wachovia 2.61%
Fannie Mae 2.60%
Johnson & Johnson 2.51%
ConocoPhillips 2.43%
General Electric 2.40%
Pepsico Inc. 2.17%
Total 26.51%
Underlying fund commentary
(As at December 31, 2005)
Financial markets performed largely as expected in 2005.The S&P 500 generated a modest 4.91% (U.S.) total return,small and mid cap stocks outperformed large cap whilegrowth and value performed in line with each other. TheFed continued to tighten and earnings growth moderated.Energy prices dominated the news as oil rose 40% to closethe year at $61 per barrel. As a result, the energy sectorwas by far the top−performing sector of the stock market.
While GDP growth seems likely to moderate as we movefurther into 2006, there is plenty of positive economic news.Payroll employment is growing, consumer sentiment isstrong, wages are growing, business investment is strong,and inflation remains well behaved.
In 2006, some of the bearish factors that held back stocks in2005 may improve. Above normal energy inventories maycause oil prices to moderate; the second year of thePresidential cycle is somewhat better for stocks; the Fed willlikely soon end its policy of tightening; and the deteriorationof both the trade and budget deficits may moderate.
In each of the past two years, the stock market providedpositive but modest returns as strong earnings growth wasoffset by a declining P/E ratio. For the coming year, thereappears to be a good chance for both strong earningsgrowth and an increase in the market’s valuation, therebyresulting in only the second year of positive double−digitreturns since 1999.
UNDERLYING FUND −> MFC Global Pooled U.S. Equity
Objective The MFC Global Pooled U.S. Equity Fund is managed for aggressive growthover a period of at least four years. The fund is invested broadly, principally in large andmid−capitalization stocks.
Managed by MFC Global Investment Management (Toronto)
Fund managers MFC Global Invest Mgmt (Tor)−Mgmt Team
Inception date January 1998 Total assets $9.5 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in September 1998. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−50%
0%
50%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI MFC Global Pooled U.S. EquityMFC Global Pooled U.S. Equity
5.3 8.7 1.4−28.9−17.4
11.4 19.4
44.3
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI MFC Global Pooled U.S. EquityS&P 500 Composite Total Return Idx($Cdn)MFC Global Pooled U.S. Equity
$12,635*
$11,856
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P 500 Composite Total Return Idx($Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI MFC Global Pooled U.S.Equity
5.32% 6.99% 5.08% −7.39% 1.72% Sep 1998
S&P 500 Composite TotalReturn Idx($Cdn)
1.61% 2.43% 3.37% −4.40% −
Rate of return expectation Over the long term, the fund is expected to outperform the S&P 500 Total Return Index ($ Cdn).
Source: Bell Globemedia Publishing Inc.
60
Volatility meter
Based on three−year standard deviation from Globe HySales
U.S. LARGE CAP EQUITY Code 8142
Manulife Fidelity Growth America Fund
Cash 0.40%
Consumer Staples 7.20%
Consumer Discretionary 13.60%
Health Care 10.10%
Financials 11.70%
Other 13.90%
Energy 18.30%Information Technology 24.80%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
BJ Services −
Exxon Mobil −
Genentech Inc. −
KLA−Tencor −
Liz Claiborne −
Noble Corp. −
Peabody Energy Corp −
Sprint Nextel Corp. −
Texas Instruments −
UnitedHealth Group −
Total 25.10%
Underlying fund commentary
(As at December 31, 2005)
U.S. equity markets, as represented by the S&P 500 indexrose 2.9% in Canadian−dollar terms during the fourthquarter of 2005. The markets rose as energy pricesmoderated, allowing U.S. consumer to continue to be theengine of economic growth. The market rallied towardsyear−end on speculation that the U.S. Federal Reserve willsoon end their tightening cycle. In the fourth quarter, theFund gained 1.6%, underperforming its benchmark by1.3% and effective stock selection in the energy and industrials sectors was the greatest contributor to the Fund’s return, while an unfavourable overweight position in the energy sector and an unfavourable underweight position in the financials sector were the greatest detractors from the Fund’s return.At the end of the period, the Fund’s largest overweightpositions, relative to its benchmark index, were in theinformation technology and energy sectors respectively.The most notable change in exposure occurred within thetelecommunication services sector, which was modified froma modest underweight to a modest overweight position. TheFund’s largest underweight positions at the end of theperiod were in the financials and industrials sectorrespectively.The portfolio manager, John Power, believes the long−termoutlook for U.S. energy companies is extremely positive, ascontinued supply constraints coupled with steadily increasingglobal demand will serve to keep energy prices at historicallyhigh levels. His notable overweight position within theinformation technology sector is based on his belief thatcorporations are poised to increase their technologyspending. Within this sector, he favours the semiconductorindustry. Conversely, he has taken a very selective approachto the industrial and financial sectors, which he believeshave less favourable growth prospects and may, in manyinstances, be overvalued.
UNDERLYING FUND −> Fidelity Growth America−A
Objective The Fund seeks to achieve long−term capital growth by investing primarily inequity securities of U.S. companies. The fund may invest in small, medium and largecompanies. The portfolio manager searches for investment opportunities by usingFidelity’s traditional bottom−up investment style, selecting securities for the fund on astock−by−stock basis.
Managed by Fidelity Investments Canada Ltd.
Fund managers John Power
Inception date September 1990 Total assets $143.7 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−40%
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Fidelity Growth AmericaFidelity Growth America−A
8.0 3.0 10.1
−22.1 −6.1 −8.0
16.2 24.5
36.8
21.9
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
$26,000
$28,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Fidelity Growth AmericaS&P 500 Composite Total Return Idx($Cdn)Fidelity Growth America−A
$18,679*
$19,551
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P 500 Composite Total Return Idx($Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Fidelity Growth America 8.03% 5.46% 6.99% −2.18% 3.76% Jul 1997
S&P 500 Composite TotalReturn Idx($Cdn)
1.61% 2.43% 3.37% −4.40% −
Rate of return expectation The fund seeks to achieve returns comparable to, or better than, the S&P 500 Total Return Index($ Cdn).
Source: Bell Globemedia Publishing Inc.
61
Volatility meter
Based on three−year standard deviation from Globe HySales
U.S. LARGE CAP EQUITY Code 8171
Manulife SEAMARK U.S. Equity Fund
Cash 2.07%
Health Care 19.32%
Financials 11.97%
Other 2.09%
Industrials 11.50%
Other sectors 3.05%
Consumer Discretionary 26.22%Information Technology 23.78%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Citigroup 4.05%
General Electric 4.00%
Amgen 3.93%
Time Warner Inc. 3.86%
Comcast Corp. 3.42%
Agilent Technologies Inc. 3.20%
Cisco Systems 3.11%
McGraw−Hill Companies 3.00%
Biomet Inc. 2.99%
Wyeth 2.95%
Total 34.51%
Underlying fund commentary
(As at December, 31 2005)
The S&P 500 recovered from a sharp correction in Octoberto finish modestly higher for the quarter. The correction wasdriven by renewed concerns over U.S. inflation and the levelof future economic growth.
The Fund returned 1.78% (U.S.$), for the quarter, with thebest performing stocks in financials and energy. JP Morganand Bank of America both out−performed the S&P 500Financials index and Schlumberger, the world’s largestoilfield services company, appreciated 15%. Record cashflows for oil companies, maturing oilfields and futuredevelopment from more remote and less conventionalsources, bode well for Schlumberger going forward. As inCanada, financials and materials stocks were the S&P 500’sbest performers. A pullback by technology, health care andconsumer holdings, that have generally done well this year,led the Fund to lag the index.
Heading into 2006, the Fund is focused on health care,media and entertainment, and technology. In health care,earnings growth for pharmaceutical companies is set to re−accelerate as revenue losses from patent expirations subsideand companies continue to restructure their cost bases. Inmedia & entertainment, companies such as Viacom andTime Warner continue to restructure in order to unlockshareholder value. With increasing demand for content andhistorically low valuations these stocks provide solid value. Intechnology, we like the prospects for Teradyne and AppliedMaterials, two semiconductor equipment stocks which wereweak in 2005 as the semiconductor industry struggled withexcess inventory and manufacturing capacity. With excessinventory worked off and a transition underway to fasterand more complex chips, these companies should benefitfrom increased industry spending.
UNDERLYING FUND −> SEAMARK Pooled U.S. Equity
Objective The SEAMARK Pooled U.S. Equity Fund is managed to preserve and enhancecapital through long−term capital gains with some current dividend income. The fund willinvest primarily in U.S. equity securities.
Managed by SEAMARK Asset Management Ltd.
Fund managers Peter Marshall, B.Comm; George V. Loughery, CGA, CFA; and Lance Speck, CFA.
Inception date June 1997 Total assets $140.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in August 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−40%
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI SEAMARK U.S. Equity
1.2 −3.2
13.5
−22.8 4.2 12.8
33.5 32.2
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI SEAMARK U.S. EquityS&P 500 Composite Total Return Idx($Cdn)SEAMARK Pooled U.S. Equity
$19,000*
$13,565
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P 500 Composite Total Return Idx($Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI SEAMARK U.S. Equity 1.19% −1.02% 3.61% −2.19% 6.58% Aug 1997
S&P 500 Composite TotalReturn Idx($Cdn)
1.61% 2.43% 3.37% −4.40% −
Rate of return expectation The fund’s performance is benchmarked against the S&P 500 Total Return Index ($ Cdn). Returns inexcess of this benchmark, is an objective only, and is not guaranteed by any party.
Source: Bell Globemedia Publishing Inc.
62
Volatility meter
Based on three−year standard deviation from Globe HySales
U.S. LARGE CAP EQUITY Code 8191
Manulife U.S. Equity Fund (Bernstein)
Consumer Discretionary 13.29%
Energy 9.06%
Consumer Staples 12.40%
Industrials 10.49%
Other 16.22%
Information Technology 13.60%Financials 24.94%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
General Electric 3.72%
Citigroup 2.72%
Exxon Mobil 2.70%
Microsoft 2.63%
Procter & Gamble 2.08%
Bank of America 2.05%
Altria Group Inc. 1.93%
Intel 1.87%
Pfizer 1.58%
IBM 1.57%
Total 22.85%
Underlying fund commentary
(As at December 31, 2005)
The S&P 500 increased 2.8% for the quarter as increasedhopes that the Federal Reserve is nearing the end of its ratetightening cycle offset concerns of an economic slowdownin 2006. Positive economic data provided an additionalboost to U.S. and global equity markets. Specifically, reportsindicated that economic growth, retail sales excludingautomobiles and consumer confidence were all higher.Growth stocks outperformed their value counterparts as theRussell 1000 Growth Index rose 3.7% compared to a 1.9%increase for the Russell 1000 Value Index. Cyclically sensitivestocks gained, including industrial resources andtransportation stocks. In contrast, energy shares fell as oilprices retreated from their recent highs.
Within the U.S. equity market, valuation differencesbetween attractively−priced and expensive stocks areunusually compressed and the value opportunity remainsbelow average. A central tenet of our strategy is to keep therisks in the portfolio proportional to the value opportunitywe identify. We continue to use our large, bottom−upresearch effort to uncover value opportunities that do existamong individual stocks.
UNDERLYING FUND −> MLI U.S. Equity (Bernstein)
Objective The fund is managed to achieve long−term capital appreciation, primarilythrough investments in equity securities of large, well−capitalized U.S. corporations. Themanager’s approach is research based and value−oriented.
Managed by Manulife Financial
Fund managers Alliance Bernstein Inv Mgmt.−Mgmt. Team
Inception date January 1999 Total assets $318.9 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 2001. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI U.S. EquityMLI U.S. Equity (Bernstein)
1.4 3.3 3.9−17.7 −9.1−12.6
22.6
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI U.S. EquityS&P 500 Composite Total Return Idx($Cdn)MLI U.S. Equity (Bernstein)
$8,741* $8,610
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P 500 Composite Total Return Idx($Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI U.S. Equity 1.38% 2.35% 2.86% − −0.33% Oct 2001
S&P 500 Composite TotalReturn Idx($Cdn)
1.61% 2.43% 3.37% −4.40% −
Rate of return expectation The fund is expected to outperform the S&P 500 Total Return Index ($ Cdn) over moving three−yearannualized period by 1.5% per year.
Source: Bell Globemedia Publishing Inc.
63
Volatility meter
Based on three−year standard deviation from Globe HySales
U.S. LARGE CAP EQUITY Code 8261
Manulife Legg Mason U.S. Value Fund
Financials 16.20%
Other 5.80%
Telecommunication Services 9.90%
Industrials 7.50%
Health Care 17.60%
Information Technology 16.70%Consumer Discretionary 26.30%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Sprint Nextel 6.44%
UnitedHealth Group 5.69%
Amazon.com 5.58%
Tyco International 5.52%
Google 4.38%
AES Corp. 4.16%
JP Morgan Chase & Co 3.80%
eBay 3.42%
Aetna 3.28%
Qwest Communications Intl. 3.21%
Total 45.48%
Underlying fund commentary
(As at December 31, 2005)
The Fund’s fundamental investment objective is investmentsprimarily in equity securities of companies based in theUnited States that the portfolio advisors view as undervaluedand that offer potential for above average total returns inthe form of capital gains over a longer term. A portion ofthe fund may invest in large foreign companies traded onnon−U.S. exchanges.
The major U.S. equity market indices posted respectablereturns for the fourth quarter of 2005, primarily driven bystrong returns in November. A powerful rally in bothabsolute and relative terms led this Fund’s manager to thefifteenth consecutive calendar year of outperformancerelative to the S&P 500 Index. Holdings in the electroniccommerce sector rallied strongly. Google (+31.1%) postedstronger−than−expected quarterly results, Expedia (+21.0%)responded to strong revenue and profit growth alongwith a turnaround at its Hotels.com subsidiary, while Yahoo(+15.8%) saw its differentiation strategy bear fruit. Thelong−term growth potential for the managed care industrywas recognized in steady performance by these holdings.Substantial cost savings from the repurchase of Qwest’shigh−coupon bonds was rewarded with a nearly 40%advance in that stock in the quarter.
Stocks have advanced by less than their underlying earningsgrowth rate for the last two years, resulting in a compressionof valuations. An optimistic economic outlook and theanticipated end to Federal Reserve Board tightening shouldallow for some multiple expansion in 2006. Combined withprofit growth of roughly 10%, and a couple of points ofdividend yield, this should result in returns in the 12% to15% range for the year. We think large−capitalization willoutperform small caps, on a combination of more attractivevaluation and superior cash flow generation, and also thatgrowth stocks will outperform value stocks.
UNDERLYING FUND −> Legg Mason U.S. Value Pool
Objective The Legg Mason U.S. Value Fund is managed to invest primarily in commonshares of companies based in the United States that the portfolio advisor views asundervalued and that offer potential for above average total returns in the form of capitalgains over a longer−term. A portion of the fund may invest in large foreign companiestraded on non−U.S. exchanges.
Managed by Legg Mason Canada Inc.
Fund managers Bill Miller, CFA and Mary Chris Gay
Inception date May 2000 Total assets $626.8 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 2001. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Legg Mason U.S. ValueLegg Mason U.S. Value Pool
4.0 4.8
17.9
−18.7 −2.7
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Legg Mason U.S. ValueS&P 500 Composite Total Return Idx($Cdn)Legg Mason U.S. Value Pool
$9,087*
$7,259
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe S&P 500 Composite Total Return Idx($Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Legg Mason U.S. Value 4.03% 4.43% 8.73% − 2.67% Oct 2001
S&P 500 Composite TotalReturn Idx($Cdn)
1.61% 2.43% 3.37% −4.40% −
Rate of return expectation Over the long−term, the fund is expected to outperform the S&P 500 Index ($ Cdn).
Source: Bell Globemedia Publishing Inc.
64
65
International/Global Equity
International Equity funds invest in shares of non-North American companies.
Global Equity funds typically aim to achieve long-term capital growth by investing
in shares of companies in Asia, Europe and the Americas.
A share represents an ownership stake in a company; therefore, how the fund
performs depends on the success of the company holdings within the fund. The
fund’s performance can also be affected by such factors as currency exchange rates
and economic and political trends around the world.
International/Global Equity funds are ideal for investors who have a long-term
focus, want to include foreign holdings in their portfolio, and are comfortable with
a higher degree of volatility.
These funds vary greatly depending on such factors as the size and types of
companies in which they invest, the countries or regions in which they invest, and
the criteria the fund manager uses to decide the best companies to invest in.
International Equity FUND PAGE
CODE NUMBER
Manulife SEAMARK International Equity Fund 8172 66
Manulife International Equity Fund (Templeton) 8192 67
Manulife Jarislowsky Fraser International Equity Fund 8241 68
Manulife BGI International Equity Index Fund 8321 69
Global Equity
Manulife Fidelity International Portfolio Fund 8141 70
Manulife McLean Budden Global Equity Fund 8161 71
Manulife Trimark Fund 8181 72
Volatility meter
Based on three−year standard deviation from Globe HySales
INTERNATIONAL EQUITY Code 8172
Manulife SEAMARK International Equity Fund
Mexico 9.05%
Germany 5.35%
Spain 4.93%
Netherlands 5.68%
Japan 7.99%
Switzerland 10.43%
Other 20.90%United Kingdom 35.67%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Telefonica SA 4.93%
Royal Bank Scotland Group PLC 4.55%
Barclays Bank PLC 4.43%
Pearson PLC 4.32%
Nestle 4.24%
Nokia 4.10%
Cemex 4.00%
XL Capital 3.89%
Canon Inc. 3.47%
Rio Tinto 3.28%
Total 41.21%
Underlying fund commentary
(As at December 31, 2005)
Stock selection, rather than country allocation, remains thekey focus of the International Equity Fund as we believe thisa better source of value added over longer periods of time.The Fund outperformed the index during the quarterdespite a low exposure to Japan, which was the strongestperforming global market during the period.
From its low at the end of July, the Japanese market hasgained more than 36%. Such a macro driven move of anequity market is rare and should not be consideredsustainable or even stable. Fundamentals are indeed on themend in Japan but they have not improved nearly as muchas the market has appreciated in the past three months. Thehealth of most Japanese companies continues to lag theirglobal peers.
Looking out into 2006 we expect the market to rewardcompanies that deliver steady growth over time without areliance on a strong upward trend in commodity prices. Theportfolio is well-positioned to benefit from current strengthin base metal prices through our holdings in BHP Billiton andRio Tinto. As the commodity cycle continues, there may bean opportunity to capture these gains.
UNDERLYING FUND −> SEAMARK Pooled International Equity
Objective The SEAMARK International Equity Fund is managed to preserve andenhance capital through long−term, capital gains with some dividend income. The fundinvests primarily in the equity securities of companies domiciled outside of Canada andthe United States.
Managed by SEAMARK Asset Management Ltd.
Fund managers Peter Marshall, B.Comm; George V. Loughery, CGA, CFA; and Lance Speck, CFA.
Inception date June 1997 Total assets $63.8 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in August 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
60%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI SEAMARK International Equity
6.1 2.3 8.9
−18.0−11.8
14.3
41.8 38.0
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI SEAMARK International EquityMSCI EAFE ($ Cdn)SEAMARK Pooled International Equity
$19,886*
$12,977
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe MSCI EAFE ($ Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI SEAMARKInternational Equity
6.13% 4.17% 5.74% −3.10% 7.92% Aug 1997
MSCI EAFE ($ Cdn) 10.45% 11.42% 12.23% −0.22% −
Rate of return expectation The fund’s performance is benchmarked against the MSCI EAFE Index ($ Cdn). Returns in excess of thisbenchmark, is an objective only, and is not guaranteed by any party.
Source: Bell Globemedia Publishing Inc.
66
Volatility meter
Based on three−year standard deviation from Globe HySales
INTERNATIONAL EQUITY Code 8192
Manulife International Equity Fund (Templeton)
Switzerland 4.99%
Hong Kong 5.65%
Netherlands 9.13%
Korea 5.99%
France 7.29%
Japan 13.28%
United Kingdom 22.99%Other 30.68%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Kookmin Bank 1.94%
BAE Systems Canada 1.91%
Nomura Holdings Inc. 1.88%
Cheung Kong Hld 1.64%
Samsung Electronics 1.61%
UBS AG 1.58%
ING Groep NV 1.54%
CI Master LP 1.53%
Accor Sa Adr 1.51%
Securitas AB B 1.50%
Total 16.64%
Underlying fund commentary
(As at December 31, 2005)
In a year marked by record−breaking energy prices, thefourth quarter posted a good performance. During thatsame period, the European Central Bank raised rates 25basis points to 2.25% for the first time in 29 months due toexcess liquidity concerns and the more solid footing of theeconomy. Crude oil prices declined slightly while natural gasbecame the topic of a bitter dispute between Moscow andKiev over Russian natural gas exports transiting throughUkraine.
Meanwhile corporate profit growth in the U.S., Japan, andGermany was very strong. Stock market performance,particularly in the non−U.S. markets, continued to reflect thegood news. Foreign investors helped push the Nikkei Indexbeyond the 15 000 mark with an inflow of capital intoJapanese equities. However, only a select group of Japanesecompanies have met our valuation parameters for stockselection, and as such we have added them to our bargainlist. We have found increasing value in the globaltelecommunications industry, particularly in Europe. Over thepast several years, telecom companies have focused oncutting costs, repairing balance sheets, and growing cashflow and are now returning cash to shareholders. Indeed,the dividend yield for many telecommunications stocks isnow more attractive than European utility stocks, aphenomenon not seen in the past ten plus years.
We believe that the broad−based economic expansionshould continue over the foreseeable future. In our view,populating our portfolios with stocks that we considerundervalued is the correct approach to address our clients’investment needs.
UNDERLYING FUND −> MLI International Equ (Templeton)
Objective The fund is managed to achieve long−term capital appreciation, primarilythrough investments in equity securities of companies outside Canada and the UnitedStates. Franklin Templeton’s investment philosophy is based on identifying undervaluedcompanies that, over time, may produce the greatest share price returns with minimumrisk. Bottom up analysis and a worldwide network of experienced research professionalsare used to identify undervalued stocks.
Managed by Manulife Financial
Fund managers Franklin Templeton Mgmt − Mgmt. Team
Inception date January 1999 Total assets $350.8 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 2001. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI International EquityMLI International Equ (Templeton)
9.8 14.4 15.6
−18.2 −8.0 3.7
19.8
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI International EquityMSCI EAFE ($ Cdn)MLI International Equ (Templeton)
$13,569*
$10,619
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe MSCI EAFE ($ Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI International Equity 9.85% 12.12% 13.27% − 6.55% Oct 2001
MSCI EAFE ($ Cdn) 10.45% 11.42% 12.23% −0.22% −
Rate of return expectation The fund is expected to outperform the MSCI EAFE Total Return Index ($ Cdn) over moving three−yearannualized period by 2.0% per year.
Source: Bell Globemedia Publishing Inc.
67
Volatility meter
Based on three−year standard deviation from Globe HySales
INTERNATIONAL EQUITY Code 8241
Manulife Jarislowsky Fraser International Equity Fund
Other 60.00%
Japan 14.70%
United Kingdom 25.30%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
ING Groep NV 3.80%
AXA 3.60%
Total SA 3.60%
Reed Elsevier NV 3.10%
Banco Santander S A 3.00%
Fresenius Med Care Hlds Pfd 3.00%
Nestle 2.90%
Royal Bank of Scotland Group 2.90%
Air Liquide(L) 2.80%
HSBC Holdings PLC 2.80%
Total 31.50%
Underlying fund commentary
(As at December 31, 2005)
World economies remain unbalanced with the heavilyindebted American consumer on the demand side and theChinese producer on the supply side. With a U.S. currentaccount deficit nearing $800 billion (70% of the world’s external deficits), the state of disequilibrium in the world isincreasingly precarious. So far, those imbalances have beensustained by Asia’s huge savings surplus as well as the oilexporting countries. The year 2006 could be the time whenU.S. consumption finally slows. The effects would be feltworldwide with lesser developed economies hurting themost.
The Jarislowsky Fraser International Equity Fund returned2.3% compared with 4.8 % for the MSCI EAFE Index ($ Cdn)for the fourth quarter of 2005.
We believe it will be problematic for value and cyclical stocksto extend their 2005 rally into 2006 as it will be difficult tosustain the same level of earnings growth. Anothercharacteristic of our portfolio is its greater exposure to largecapitalization stocks than the MSCI EAFE Index. Largecapitalization stocks have significantly underperformed theIndex over the last few years and are currently inexpensiverelative to small capitalization stocks. The expected slowingin earnings momentum for the overall market shouldtherefore bode well for the relative outperformance of largecapitalization stocks and our portfolio.
UNDERLYING FUND −> JF International Equity
Objective The Jarislowsky Fraser International Equity Fund focuses on the largecapitalization multinationals, which have demonstrated global leadership in their sectorand which have a minimum of $1 billion US of market capitalization. These companieshave consistent growth records and high returns on invested capital and dominantmarket positions.
Managed by Jarislowsky Fraser Ltd.
Fund managers Jarislowsky Fraser − Mgmt. Team
Inception date April 1995 Total assets $2,477.0 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 2001. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI JF International EquityJF International Equity
5.0 5.9 6.6−15.1−10.7
9.1
27.7 34.8
20.1 15.1
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
$26,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI JF International EquityMSCI EAFE ($ Cdn)JF International Equity
$22,294*
$15,381
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe MSCI EAFE ($ Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI JF International Equity 4.97% 5.43% 5.81% − 1.26% Oct 2001
MSCI EAFE ($ Cdn) 10.45% 11.42% 12.23% −0.22% −
Rate of return expectation Over the long term, this fund is expected to outperform the MSCI EAFE Index ($ Cdn).
Source: Bell Globemedia Publishing Inc.
68
Volatility meter
Based on three−year standard deviation from Globe HySales
INTERNATIONAL EQUITY Code 8321
Manulife BGI International Equity Index Fund
Netherlands 4.90%
Australia 5.21%
Switzerland 6.86%
Germany 6.71%
France 8.95%
Other 18.94%
United Kingdom 22.78%Japan 25.65%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
BP PLC 2.18%
HSBC Holdings PLC 1.77%
Toyota Motor Corporation 1.47%
GlaxoSmithKline PLC 1.44%
Total SA 1.37%
Vodafone Group PLC 1.33%
Royal Dutch Shell PLC 1.21%
Novartis AG 1.19%
Nestle SA 1.18%
Roche Holdings 1.03%
Total 14.17%
Underlying fund commentary
(As at December 31, 2005)
Continental Europe seems to be experiencing a recoverywith solid gains in France, Germany and Switzerland.Business confidence has returned across the region,unemployment has begun to fall and corporate earnings arebetter than expected. Consumer spending tends to lag dueto the cumbersome labour laws in Europe, but asunemployment slowly decreases, spending will improve.
In the UK, consumer spending picked up in the fourthquarter, but is expected to be sluggish going forward. Someof the reasons include large consumer debt burdens, lowunemployment and weak productivity growth. Other non−Continental countries such as Norway continue to see risingequity markets as demand for oil (Norway) and financialservices (Switzerland) continue to increase.
Over the past six months, foreigners’ net investment inJapanese equities have surged to the strongest level in morethan a decade, helping to explain why Japan’s stock markethas leapt almost 40% since its low back in April. An upturnin consumer spending and hiring has kindled hopes thatthis time Japan’s recovery may be sustained, while itsexport−dominated stock market is expected to benefit fromthe global upswing.
UNDERLYING FUND −> BGI Daily EAFE Equity Index
Objective The BGICL Daily EAFE Equity Index Fund’s objective is to match the returns ofthe MSCI EAFE Index ("index") as closely as possible. BGICL uses an indexing approach,where they own assets to match those of the index, in about the same names, weights,sectors, and countries. The index currently contains over 1000 of the world’s largestpublicly traded firms, in 21 countries that are in the developed markets outside NorthAmerica. This fund is considered foreign in registered plans.
Managed by Barclays Global Investors Canada Ltd.
Fund managers Rajiv Silgardo
Inception date April 1999 Total assets $288.1 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in November 2003. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI BGI International Eq IndexBGI Daily EAFE Equity Index
11.2 11.2 13.2
−16.6−16.3−10.8
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
Mar99 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI BGI International Eq IndexMSCI EAFE ($ Cdn)BGI Daily EAFE Equity Index
$9,962* $10,614
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe MSCI EAFE ($ Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI BGI International EqIndex
11.25% 11.24% − − 13.29% Nov 2003
MSCI EAFE ($ Cdn) 10.45% 11.42% 12.23% −0.22% −
Rate of return expectation Over the long term, this fund is expected to track the return and risk profile of the MSCI EAFE Index($ Cdn).
Source: Bell Globemedia Publishing Inc.
69
Volatility meter
Based on three−year standard deviation from Globe HySales
GLOBAL EQUITY Code 8141
Manulife Fidelity International Portfolio Fund
United Kingdom 9.70%
Germany 3.80%
Australia 2.90%
Switzerland 3.20%
Canada 5.40%
Japan 14.70%
Other 18.60%United States 41.70%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
BP PLC −
Ericsson LM Telephone −
Genentech Inc. −
GlaxoSmithKline PLC −
Goldman Sachs −
Monster Worldwide −
Novartis AG −
Peabody Energy Corp −
Total SA −
Univision Communication −
Total 10.10%
Underlying fund commentary
(As at December 31, 2005)
Global equity markets performed well during the fourthquarter of 2005, with the MSCI World index gaining 3.7%(all returns in Canadian−dollar terms). The Japanese equitymarket posted strong gains, advancing (+13%), followed bythe Asia ex−Japan region (+7.0%) and the U.S. (+2.9%).The European equity market lagged the other regions butstill posted positive returns (+2.6%). Japanese equitiesmirrored the strong gains of the previous quarter, surging toa five−year high. Improving economic conditions andearnings growth continued to attract overseas investors toJapanese equities. The financials, industrials, and materialssectors performed particularly well with the latter sectorbenefiting from rising gold prices, which broke through the$500 US barrier in December. Weaker performance wasseen in the energy and telecommunication−services sectors.Energy prices fell to more moderate levels due to a softeningin demand. The Fund rose 3.7% during the fourth quarter,trailing the return of its benchmark index slightly. Securityselection was the primary driver of relative returns,particularly within the Japanese market. The largestdetractor from performance was being overweight theunderperforming energy sector.Lead portfolio manager, Dick Habermann, continues toobserve differing levels of strength in global economies.Persistently high oil prices and strong raw material demandin China are continuing themes. Mr. Habermann isunderweighted in the U.S. where continued interest rate hikes and sustained high energy prices have negatively impacted consumer sentiment. European stocks are alsounderweighted, despite improved corporate earnings,structural problems persist. Japan is overweight in the Fundand Mr. Habermann remains positive in his outlook for theJapanese market.
UNDERLYING FUND −> Fidelity International Portfolio−A
Objective This fund invests primarily in equity securities of companies anywhere in theworld with the objective of achieving long−term capital growth. The fund is not subjectto any geographic constraints with regard to the allocation of portfolio assets amongdifferent markets.
Managed by Fidelity Investments Canada Ltd.
Fund managers Richard Habermann, BA, MBA.
Inception date November 1987 Total assets $1,337.2 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI Fidelity Int’l PortfolioFidelity International Portfolio−A
11.8 6.9
13.5
−17.7 −7.9 −7.3
23.7 27.8 27.7 19.4
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI Fidelity Int’l PortfolioMSCI World ($ Cdn)Fidelity International Portfolio−A
$21,922*
$17,129
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe MSCI World ($ Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Fidelity Int’l Portfolio 11.77% 9.31% 10.69% 0.57% 5.57% Jul 1997
MSCI World ($ Cdn) 6.58% 6.96% 7.78% −2.41% −
Rate of return expectation The fund seeks to achieve returns comparable to, or better than, the MSCI World Index ($ Cdn).
Source: Bell Globemedia Publishing Inc.
70
Volatility meter
Based on three−year standard deviation from Globe HySales
GLOBAL EQUITY Code 8161
Manulife McLean Budden Global Equity Fund
Japan 10.27%
Switzerland 5.18%
Sweden 2.18%
France 3.61%
Germany 7.25%
United Kingdom 13.22%
Other 14.44%United States 43.85%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Citigroup 2.95%
Pfizer 2.37%
BP PLC 2.08%
Deutsche Bk−Adr 1.94%
Toyota 1.94%
Microsoft 1.86%
Fannie Mae 1.76%
Alcoa 1.72%
Nestle 1.49%
HSBC Holdings PLC 1.48%
Total 19.59%
Underlying fund commentary
(As at December 31, 2005)
Most global equity markets generated positive returnsduring the quarter despite continued tightening by severalmajor central banks. The Bank of Canada and the U.S.Federal Reserve increased overnight rates by 50 basis pointsduring the period, while the European Central Bankannounced its first interest rate increase in five years movingthe region’s benchmark rate off a six−decade low.
The Fund posted a solid absolute return and outperformedthe Index for the quarter due to good stock selection inenergy (Transocean and Schlumberger) which more thanoffset weak results in telecommunication services (FranceTelecom and NTT). Overall sector allocation was relativelyneutral.
There was a significant amount of activity during the quarteras six companies were added and seven eliminated. TheFund increased its weighting in materials and utilities whilelowering exposure to consumer discretionary and financials.There was no significant activity in energy, however,exposure to industrials was raised as the addition of Fanucand buying in Deutsche Post offset selling in Fluor and theelimination of ABB.
UNDERLYING FUND −> MB Global Equity
Objective The McLean Budden Global Equity Fund is managed to provide a superiorrate of return, primarily through capital appreciation. The fund invests in a diversifiedportfolio of 60−80 non−Canadian equities. Security selections emphasize large companieswith prospects for above average earnings growth.
Managed by McLean Budden Limited
Fund managers Mary Hallward, BA, MBA; Bruce Murray; Bill Giblin; Brian Dawson,BA, CFA; Bruce MacNabb; and Benoit Paradis.
Inception date June 1996 Total assets $1,505.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in July 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−20%
0%
20%
40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI McLean Budden Global EquityMB Global Equity
5.7 5.5 8.5−17.6 −6.6 1.4
29.0 24.4 20.9
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI McLean Budden Global EquityMSCI World ($ Cdn)MB Global Equity
$19,235*
$16,384
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe MSCI World ($ Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI McLean Budden GlobalEquity
5.69% 5.58% 6.56% −1.41% 5.45% Jul 1997
MSCI World ($ Cdn) 6.58% 6.96% 7.78% −2.41% −
Rate of return expectation The fund is expected to outperform the MSCI World Index ($ Cdn) over a moving four−yearannualized period by 1.0% per year.
Source: Bell Globemedia Publishing Inc.
71
Volatility meter
Based on three−year standard deviation from Globe HySales
GLOBAL EQUITY Code 8181
Manulife Trimark Fund
Other 7.64%
Japan 5.10%
France 4.78%
Netherlands 5.38%
Ireland 7.39%
Mexico 11.16%
United Kingdom 21.00%United States 37.55%
How the underlying fund is invested
Top holdings within the underlying fund(As at December 31, 2005)
Cemex 5.10%
WPP Group 4.48%
Reed Elsevier PLC 4.41%
Grupo Televisa 4.01%
Sherwin−Williams Co. 3.23%
Engelhard Corp. 3.16%
Smiths Group PLC 3.14%
Canon Inc. 3.11%
Oracle 3.10%
Compass Group PLC 3.07%
Total 36.81%
Underlying fund commentary
(As at December 31, 2005).
Today, there is a consensus that the world is running out ofoil, natural gas and base/precious metals, and as such,buying into companies that will benefit from these risingcommodity prices is the smart thing to do. However, theportfolio management team believes that consensus can bevery dangerous for investing. The consensus on emergingmarkets 10 years ago and "new economy" businesses in thetechnology, media and telecommunications sectors fiveyears ago have proven to be destructive to returns over longperiods of time.
The team maintains they are not experts in forecastingcommodity prices in the short term. As such, they have shiedaway from investing in businesses whose fortunes dependon commodity prices. The higher the price goes, the morepeople will look for a substitute or just simply use less of it.At the same time, the higher priced commodity leads tomore supply coming on stream as producers of thecommodity try to capitalize on the high prices. Thecombination of falling demand and increasing supply alwaysleads to lower prices of a commodity product. The teamdoes not believe this time is different.
Looking forward, the team is encouraged by the progress ofthe companies in the Fund and their long−term prospects. Ina market that continues to be increasingly focused on short−term results and "consensus" investing, the team continuesto firmly believe that investors who can think in terms oflonger time periods, such as three to five years, should standto benefit. As always, the portfolio management teamcontinually strives to upgrade the quality of the portfoliowith the long term in mind.
UNDERLYING FUND −> Trimark Fund
Objective The Trimark Fund seeks to achieve strong capital growth with a high degreeof reliability over the long term. The fund invests primarily in equities of companiesanywhere in the world.
Managed by AIM Trimark Investments
Fund managers Tye Bousada, CFA; and Dana Love, MSc, CFA.
Inception date September 1981 Total assets $2,578.6 million
Historical gross returnsGross rates of return are shown before investment management fees have beendeducted. The solid area represents the gross returns of the Manulife fund since itsinception in October 1997. To provide further historical information, the shaded arearepresents the returns of the underlying fund for the period before the start date of theManulife fund.
−10%
0%
10%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
MLI TrimarkTrimark Fund − SC
6.8 6.6 9.4
−4.1
11.7 14.2
17.1
7.7
17.9 16.6
*Only full calendar year returns are shown.
Overall past performanceThis graph shows how a $10,000 investment in this fund would have changed in value over time, based on grossreturns.
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
$26,000
$28,000
Jan96 Dec96 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05
MLI TrimarkMSCI World ($ Cdn)Trimark Fund − SC
$26,561*
$17,129
*For illustration purposes only. Includes mutual/pooled fund performance as indicated. Actual fund performance couldbe expected to vary.
Annual compound returns (As at December 31, 2005)
This table shows the historical annual compound total return of the fund compared withthe MSCI World ($ Cdn).
1−year 2−year 3−year 5−yearSince
inception
Manulifeinception
date
MLI Trimark 6.78% 6.67% 7.59% 5.95% 8.22% Oct 1997
MSCI World ($ Cdn) 6.58% 6.96% 7.78% −2.41% −
Rate of return expectation To be the top of its respective category over the long term, while striving to outperform the MSCIWorld Index ($ Cdn).
Source: Bell Globemedia Publishing Inc.
72
73
i-Watch
The philosophy
The Investment Management Services (IMS) team focuses on quality, not quantity. They believe past performance is not an accurate indicator of future performance, butrather high-quality investment firms who adhere todocumented investment policies and procedures are morelikely to deliver superior results over time. It is their job tomonitor the fund managers on Manulife's platform soinvestors don’t have to. They understand how important itis for Manulife Financial’s stakeholders to have sufficientinformation to make prudent investment decisions. This iswhy i-Watch exists.
Investment Management Services
One of Manulife Financial’s core competencies is providinginvestment management services in the countries in whichwe operate, including the U.S., Canada, Hong Kong, Japan,and other countries in the Far East. In Canada, theInvestment Management Services team is comprised of ateam of analysts and industry professionals whosecredentials match professionals in the most respectedinvestment consulting firms.
By operating objectively and independently of any businessunits, the IMS team ensures fund partners meet stringentrequirements for fund management. Given that moneymanagement is a global concern, team members oftenconsult with their Manulife counterparts throughout theworld. Fund partners adhere to the same best practicesparticularly when IMS is selecting or monitoring investmentfunds representing non-North American mandates.
i-Watch
Fund selection
Funds available through Manulife Financial are screened andselected using a strict process. Performance is one screeningcriterion, but is not the most important determinant offuture returns. In IMS’ view, the consideration of aninvestment firm’s qualitative aspects, together with itsquantitative aspects, is a better indicator of the fund’s long-term viability.
Reflecting this viewpoint, Manulife Financial’s selectionprocess includes an in-depth review of factors thatdetermine the underlying quality of the fund manager.IMS emphasizes their qualitative review in the decision-making process and screens for the following qualities:
• The stability of the organization, including successionplanning and adherence to a code of ethics.
• The depth, quality and overall experience level of thepeople managing the assets.
• A clearly defined investment process that has beenapplied consistently over time.
• A record of performance that compares favourably toappropriate benchmarks and peer managers.
• Risk characteristics that are in line with investmentmandates.
The IMS team of independent professionals get ‘behindthe numbers’ by visiting and interviewing fund managerson a regular basis, probing issues in a way that can onlycome from years of experience.
Ongoing monitoring process
While the selection process is important, the ongoing
monitoring process makes i-Watch unique. Once an
investment fund is selected, the IMS team continues to
apply the same level of analysis used to select the fund
manager originally. With regular on-site due diligence
meetings, the IMS team conducts ongoing systematic
reviews of every fund available through Manulife Financial.
The due diligence review includes a comprehensive
examination of the evolving characteristics of the fund and
face-to-face meetings with the fund manager.
We believe in forming long-term relationships with our
manager partners. If a fund fails to live up to its mandate,
we will work with the fund manager to address specific
concerns. If these additional steps fail to address our
expectations, the fund manager will be replaced or the
mandate will be capped. The choice of actions is based on
minimizing any disruption to investors.
74
Pension legislation requirements
Pension law requires plan sponsors to establish
appropriate policies and investment strategies for their
pension plan assets. A sound governance plan includes a
statement of investment policies, procedures and goals
that is commonly referred to as the “SIPP&G”. This
documentation helps ensure the pension plan is operating
in the best interests of its plan members. A sound
governance plan outlines the steps and processes plan
sponsors need to follow to set-up and maintain a pension
plan. As part of their responsibilities, plan sponsors must
exercise due diligence in selecting and monitoring
investment managers; offer a range of investment
alternatives; give plan members the opportunity to make
regular investment changes; and provide plan members
with detailed investment information.
Clearly identifying and defining the roles and
responsibilities of each participant in the governance and
operation of the pension plan is an important part of this
plan management. Pension management roles and
activities are identified in the lists that follow.
Plan sponsor obligations
The plan sponsor is required to:
• Select the fund custodian to administer the pension
fund assets.
• Communicate with plan members on plan
documentation.
• Establish and review, a statement of investment policies,
procedures and goals annually or as required.
• Educate and inform plan members about the risk and
return characteristics of each asset class and the
benefits of diversification.
• Communicate information on historic rates of return
and fees for each investment option, the expected
future returns and the importance of diversification.
• Monitor fund performance and report results to the
plan members.
• Select the classes of assets and investment alternatives
that are appropriate investments for the pension fund.
Statement of Investment Policies, Procedures and Goals
• Provide plan members information received from the
investment agencies in connection with the various
investment alternatives offered under the plan.
• Review and approve any benefit payments from the
plan.
• Maintain overall responsibility for the administration of
plan member accounts.
Manulife Financial’s obligations
As the plan fiduciary and fund custodian, Manulife is
required to:
• Establish and maintain records for each plan member.
• Maintain detailed records of all plan transactions.
• Select and monitor the investment agencies.
• Establish, monitor and review performance
benchmarks for the investment funds.
• Select and offer an appropriate range of investment
funds to allow for an acceptable level of liquidity and
to provide for investment diversification to maximize
return and minimize risk.
• Process allocations to the funds and disbursements of
benefit payments from the fund as directed by the
plan sponsor.
• Provide plan sponsors with regular investment reviews
obtained by investment agencies.
Fund manager obligations
As the investment agency, the fund manager is required to:
• Present current economic analysis and related
investment strategy.
• Be responsible for the timing and selection of
individual securities.
• Be responsible for maintaining an appropriate level of
liquidity through diligent cash management and timely
scheduling of maturities.
• Present regular reviews in investment performance.
• Monitor the investment performance of the individual
securities to meet or exceed established performance
benchmarks and to maximize return and minimize risk.
75
Information availableManulife currently offers the Guaranteed Interest Accounts
and market-based investment funds described in this
report to help achieve the specific objectives of plan
sponsors. Plan sponsors may use the information provided
in this Group Investment Report to establish a customized
statement of investment policies, procedures and goals,
based on their plan’s specific investment strategies.
General information regarding the market-based funds for
a pension plan’s statement of investment policies,
procedures and goals is provided below. Information
specific to each fund is found on the fund description
pages in this report.
Market-based funds
All funds are established and maintained under the
authority of the Insurance Companies Act. The funds may
invest in underlying mutual funds or other segregated
funds in accordance with applicable guidelines established
by Canadian securities regulators.
We intend to maintain a reasonable portfolio
diversification. We do not intend to invest in securities for
the purpose of exercising control or management. No
fund may purchase more than 10% of the common stock
of any one corporation unless the investment is made
through a mutual or pooled fund that complies with
applicable investment regulations.
Limitation on loans
There will be no plan loans from the funds.
Limitation on share ownership
No single security will represent more than 10% of the book
value of any fund, with the exception of the index funds.
Derivatives
A derivative is a financial instrument whose characteristics
and value depend on the value of such underlying
instruments or assets as stocks, bonds or cash. Two
examples are futures and options.
A future is a standardized, transferable, exchange-traded
contract that requires delivery of a commodity, bond,
currency or stock index at a specified price on a specified
future date.
An option is the right, but not obligation, to buy (a call
option) or sell (a put option) a specific amount of a given
stock, bond, currency, index or debt at a specified price
during a specified period of time.
The funds may, from time to time, invest in or use
derivative instruments consistent with their investment
objectives to the extent, and for the purposes, permitted
by Canadian securities regulators.
The Manulife market-based funds do not invest directly in
derivatives. However, except where otherwise specified,
the underlying fund may invest in derivatives for hedging
or achieving the duration target. In particular, the use of
derivative instruments is prohibited in the acquisition of
investment exposures not otherwise permitted in the
underlying fund’s investment objectives and description.
Voting rights
The fund manager will exercise any voting rights on the
shares in the best interests of the investment objectives of
the fund.
Valuation of investments notregularly traded
Securities and other investments will be valued using the
best available quotation in Manulife Financial’s estimation.
Conflict of interest
No employee of Manulife or any fund manager shall act
on investment knowledge or information of the fund to
his or her direct or indirect benefit, unless the knowledge
or information has been generally disclosed to the public
and the employee satisfies all the requirements of
Manulife’s Code of Business Conduct and Conflict of
Interest Statement.
Group retirement and savings products and services are offered throughManulife Financial (The Manufacturers Life Insurance Company).Manulife Financial is a leading Canadian-based financial services group serving millions of customers in19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, andprimarily through John Hancock in the United States, the Company offers clients a diverse range offinancial protection products and wealth management services through its extensive network ofemployees, agents and distribution partners.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘0945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.
Manulife Financial and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including ManulifeFinancial Corporation.
GP0083E (12/2005)
A secure website designed to help you.
At www.manulife.ca/GRO, you can:• find your plan level Investment Management Fees on-line,
• get a duplicate RRSP tax receipt,
• check account balances,
• view personal rates of return,
• receive detailed investment information on the funds offered,
• see current unit values and Guaranteed Interest Accounts (GIA) rates,
• view your transaction history, and
• much more.
You need your customer number and your personal identification number (PIN) to access this service. If you need a PIN,or have forgotten it, call toll-free 1-888-727-7766 and press '0' to speak with a Customer Service Representative.
Available 24 hours a day, 7 days a weekat www.manulife.ca/GRO.