MANUFACTURERS INVESTMENT TRUST, DEFS14C, 1999-03-26

MANUFACTURERS INVESTMENT TRUST
DEFS14C, 1999-03-26

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<PAGE> 1
SCHEDULE 14C INFORMATION

INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934

Check the appropriate box:

[ ] Preliminary Information Statement

[ ] Confidential, for Use of Commission Only (as permitted by Rule
14c-5(d)(2))

[ X ] Definitive information statement

MANUFACTURERS INVESTMENT TRUST
(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

[ X ] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.

(1) Title of each class of securities to which transaction applies:
__________________________________________________

(2) Aggregate number of securities to which transaction applies:
__________________________________________________

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
__________________________________________________

(4) Proposed maximum aggregate value of transactions:
__________________________________________________

(5) Total fee paid.
__________________________________________________

[ ] Fee paid previously with preliminary materials

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
__________________________________________________

(2) Form, Schedule or Registration Statement No.:
__________________________________________________

(3) Filing Party:
__________________________________________________

(4) Date Filed:
__________________________________________________
<PAGE> 2

MANUFACTURERS INVESTMENT TRUST

116 Huntington Avenue
Boston, Massachusetts 02116

March 26, 1999

DEAR VARIABLE ANNUITY AND VARIABLE LIFE CONTRACT OWNERS:

In an effort to enhance the quality and flexibility of your investments,
Management has proposed a number of changes affecting the Manufacturers
Investment Trust (the "Trust") and various Trust portfolios that, pending
shareholder approval, will take effect May 1, 1999. To consider and vote on the
proposals described in the enclosed Notice of Special Meeting of Shareholders, a
Special Meeting of Shareholders of the Trust will be held at 73 Tremont Street,
Boston, Massachusetts, 02108 on April 27, 1999, at 10 a.m., Eastern Standard
Time.

Although you are not a shareholder of the Trust, your purchase payments and
the earnings on such purchase payments under your variable annuity or variable
life contracts issued by the Manufacturers Life Insurance Company of North
America ("Manulife North America"), The Manufacturers Life Insurance Company of
New York ("Manulife New York") and The Manufacturers Life Insurance Company of
America ("Manufacturers America") are invested in shares of one or more of the
portfolios of the Trust through subaccounts of separate accounts established by
Manulife North America, Manulife New York and Manufacturers America for such
purpose. Since the value of your contract depends in part on the investment
performance of the shares of the applicable portfolio of the Trust, you have the
right to instruct Manulife North America, Manulife New York or Manufacturers
America, as appropriate, how the shares of the Trust attributable to your
contract are voted. The number of votes for which you may give instructions for
any portfolio of the Trust is determined by dividing your contract value (or the
reserve for a contract after its maturity date) allocated to the subaccount in
which shares of such portfolio are held by the value per share of that portfolio
of the Trust. Fractional votes are counted. Manulife North America, Manulife New
York and Manufacturers America will vote all shares of the Trust issued to such
companies in proportion to the timely instructions received from owners of the
contracts participating in separate accounts registered under the Investment
Company Act of 1940.

Enclosed you will find a Notice of Special Meeting of Shareholders, a Proxy
Statement for the Trust, and a Voting Instructions Form for each Trust portfolio
in which your contract values were invested as of February 28, 1999. The number
of shares that represents your voting interest (determined as explained above)
<PAGE> 3

appears on each Voting Instructions Form. The Proxy Statement provides
background information and describes, in detail, each of the matters to be voted
on at the Meeting.

We encourage you to read the attached materials in their entirety. The
following is an overview of the key proposals for which you are being asked to
provide voting instructions:

AMENDMENT OF ADVISORY AGREEMENT

All shareholders of the Trust are being asked to consider several revisions
to the current advisory agreement (as revised, the "Amended Advisory Agreement")
between the Trust and Manufacturers Securities Services, LLC ("Manulife
Securities" or the "Adviser"), the investment adviser to the Trust. If approved
by shareholders, the Amended Advisory Agreement would, among other things,
require the Trust to pay certain expenses currently paid by Manulife Securities
which are properly chargeable to the Trust, simplify the manner in which
Manulife Securities could terminate expense limitations, and provide for more
frequent payments of the advisory fee to Manulife Securities (although it would
not change the advisory fee itself, except as noted below).

In addition, the shareholders of the Moderate Asset Allocation Trust, the
Equity Trust, the Aggressive Asset Allocation Trust and the Equity-Income Trust
are being asked to consider increasing the rate of the advisory fee paid to
Manulife Securities by each of these four portfolios. Furthermore, although not
presented for shareholder consideration, the rate of the advisory fee paid to
Manulife Securities will be decreased for the Blue Chip Growth Trust, the
Pilgrim Baxter Growth Trust and the Small/Mid Cap Trust.

The Board of Trustees of the Trust approved the Amended Advisory Agreement
at a meeting held on March 26, 1999.

NEW SUBADVISORY AGREEMENTS

The Board also approved, on March 26, 1999, eight new subadvisory
agreements. Six of these agreements include the appointment of a new subadviser
for the portfolios listed below:

- A I M CAPITAL MANAGEMENT, INC. as subadviser to the Small/Mid Cap Trust
and the Pilgrim Baxter Growth Trust;

- CAPITAL GUARDIAN TRUST COMPANY as subadviser to the Conservative Asset
Allocation Trust and the Moderate Asset Allocation Trust;

- FIDELITY MANAGEMENT TRUST COMPANY as subadviser to the International
Growth and Income Trust (Fidelity Management Trust Company will also
continue as subadviser to the Aggressive Asset Allocation Trust and the
Equity Trust);

<PAGE> 4

- FRANKLIN ADVISERS, INC. as subadviser to the Emerging Small Company
Trust;

- PACIFIC INVESTMENT MANAGEMENT COMPANY as subadviser to the Global
Government Bond Trust; and

- STATE STREET GLOBAL ADVISORS as subadviser to the Growth Trust.

The other two subadvisory agreements are for existing subadvisers,
WELLINGTON MANAGEMENT, LLP and T. ROWE PRICE ASSOCIATES INC. (T. Rowe Price).
Certain technical changes were made to both agreements, and, in the case of T.
Rowe Price, subadvisory fee rates were changed for the Blue Chip Growth Trust
and the Equity-Income Trust.

Information on each of these new subadvisory agreements is included in the
enclosed Information Statement. The Securities and Exchange Commission does not
require the Trust to obtain shareholder approval of these new subadviser
agreements, but does require the Trust to notify shareholders. As a result, the
enclosed Information Statement is for your information only; you are not being
asked to provide voting instructions.

CHANGES TO INVESTMENT OBJECTIVES

In conjunction with the above new subadviser appointments and agreements,
the Board also approved, subject to shareholder approval, changes to the
investment objectives of the following portfolios to reflect the investment
strategies of the new or continuing subadvisers:

- Small/Mid Cap Trust;
- Pilgrim Baxter Growth Trust;
- Conservative Asset Allocation Trust;
- Moderate Asset Allocation Trust;
- Aggressive Asset Allocation Trust;
- International Growth and Income Trust;
- Emerging Small Company Trust;
- Global Government Bond Trust; and

- Growth Trust.

PLEASE NOTE THAT THE BOARD OF TRUSTEES OF THE TRUST HAS UNANIMOUSLY VOTED
IN FAVOR OF EACH PROPOSAL AND RECOMMENDS THAT YOU VOTE FOR THEIR APPROVAL.
<PAGE> 5

IN ORDER FOR SHARES TO BE VOTED AT THE MEETING BASED ON YOUR INSTRUCTIONS,
WE URGE YOU TO READ THE PROXY STATEMENT AND THEN COMPLETE AND MAIL YOUR VOTING
INSTRUCTIONS FORM(S) IN THE ATTACHED POSTAGE-PAID ENVELOPE, ALLOWING SUFFICIENT
TIME FOR THEM TO BE RECEIVED BY APRIL 26, 1999.

If you have any questions regarding any of the proposals, please call (800)
344-1029.
Sincerely,

/s/JOHN D. DESPREZ III

John D. DesPrez III
President
Manufacturers Investment Trust
<PAGE> 6

MANUFACTURERS INVESTMENT TRUST

116 Huntington Avenue
Boston, Massachusetts 02116

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders of
MANUFACTURERS INVESTMENT TRUST:

Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Manufacturers Investment Trust (the "Trust") will be held at 73
Tremont Street, Boston, Massachusetts 02108, on April 27, 1999 at 10:00 a.m.,
Eastern Standard Time. A Proxy Statement which provides information about the
purpose of the Meeting is included with this notice. The Meeting will be held
for the following purposes:

<TABLE>
<S> <C>
Proposal 1 Approval of an Amended and Restated Advisory
Agreement between the Trust, on behalf of each
portfolio, and Manufacturers Securities Services,
LLC ("Manulife Securities" or the "Adviser");
</TABLE>

<TABLE>
<S> <C>
Proposal 1A Approval of an increase, from 0.750% to 0.800%,
in the advisory fee payable to Manulife
Securities in connection with the Moderate
Asset Allocation Trust. (Only shareholders of
the Moderate Asset Allocation Trust will vote
on Proposal 1A);

Proposal 1B Approval of an increase, from 0.750% to 0.850%,
in the advisory fee payable to Manulife
Securities in connection with the Equity Trust.
(Only shareholders of the Equity Trust will
vote on Proposal 1B);

Proposal 1C Approval of an increase, from 0.750% to 0.875%,
in the advisory fee payable to Manulife
Securities in connection with the Aggressive
Asset Allocation Trust. (Only shareholders of
the Aggressive Asset Allocation Trust will vote
on Proposal 1C);

Proposal 1D Approval of an increase, from 0.800% to 0.875%,
in the advisory fee payable to Manulife
Securities in connection with the Equity-Income
Trust. (Only shareholders of the Equity-Income
Trust will vote on Proposal 1D);

Proposal 2 Approval of a change to the investment
objective of the Conservative Asset Allocation
Trust. (Only shareholders of the Conservative
Asset Allocation Trust will vote on Proposal
2);
</TABLE>

<PAGE> 7

<TABLE>
<S> <C>
Proposal 3 Approval of a change to the investment objective of
the Moderate Asset Allocation Trust. (Only
shareholders of the Moderate Asset Allocation Trust
will vote on Proposal 3);
Proposal 4 Approval of a change to the investment objective of
the Aggressive Asset Allocation Trust. (Only
shareholders of the Aggressive Asset Allocation Trust
will vote on Proposal 4);
Proposal 5 Approval of a change to the investment objective of
the Emerging Small Company Trust. (Only shareholders
of the Emerging Small Company Trust will vote on
Proposal 5);
Proposal 6 Approval of a change to the investment objective of
the Pilgrim Baxter Growth Trust. (Only shareholders
of the Pilgrim Baxter Growth Trust will vote on
Proposal 6);
Proposal 7 Approval of a change to the investment objective of
the International Growth and Income Trust. (Only
shareholders of the International Growth and Income
Trust will vote on Proposal 7);
Proposal 8 Approval of a change to the investment objective of
the Global Government Bond Trust. (Only shareholders
of the Global Government Bond Trust will vote on
Proposal 8); and
Proposal 9 Ratification of the selection of
PricewaterhouseCoopers LLP as the independent
accountants for the Trust for its fiscal year ending
December 31, 1999.
</TABLE>

The Board of Trustees has recently reviewed and unanimously endorsed the
proposals set forth in the accompanying Proxy Statement.

THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE FOR
PROPOSALS 1 THROUGH 9.

Each shareholder of record at the close of business on February 28, 1999 is
entitled to receive notice of and to vote at the Meeting.

Sincerely yours,

/s/ JAMES D. GALLAGHER

James D. Gallagher
Secretary

March 26, 1999
Boston, Massachusetts
<PAGE> 8

MANUFACTURERS INVESTMENT TRUST

------------------------

PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1999

------------------------

INFORMATION STATEMENT
PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934

------------------------

MARCH 26, 1999

<PAGE> 9

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROXY STATEMENT
General..................................................... 1
Summary of Proposals........................................ 2
Voting Information.......................................... 5
Proposal 1: Approval of Amended and Restated Advisory
Agreement................................................. 10
Proposal 1A: Approval of an Increase, from 0.750% to
0.800%, in the Advisory Fee Payable to
Manulife Securities in Connection with the
Moderate Asset Allocation Trust.............. 10
Proposal 1B: Approval of an Increase, from 0.750% to
.850%, in the Advisory Fee Payable to
Manulife Securities in Connection with the
Equity Trust................................. 10
Proposal 1C: Approval of an Increase, from 0.750% to
0.875%, in the Advisory Fee Payable to
Manulife Securities in Connection with the
Aggressive Asset Allocation Trust............ 10
Proposal 1D: Approval of an Increase, from 0.800% to
0.875%, in the Advisory Fee Payable to
Manulife Securities in Connection with the
Equity-Income Trust.......................... 10
Proposal 2: Approval of a Change to the Investment Objective
of the Conservative Asset Allocation Trust...... 35
Proposal 3: Approval of a Change to the Investment Objective
of the Moderate Asset Allocation Trust.......... 37
Proposal 4: Approval of a Change to the Investment Objective
of the Aggressive Asset Allocation Trust........ 40
Proposal 5: Approval of a Change to the Investment Objective
of the Emerging Small Company Trust............. 43
Proposal 6: Approval of a Change to the Investment Objective
of the Pilgrim Baxter Growth Trust.............. 47
Proposal 7: Approval of a Change to the Investment Objective
of the International Growth and Income Trust.... 51
Proposal 8: Approval of a Change to the Investment Objective
of the Global Government Bond Trust............. 54
Proposal 9: Ratification of PricewaterhouseCoopers LLP as
the Independent Accountants for the Trust for
its Fiscal Year Ending December 31, 1999........ 58
Other Matters............................................... 59
</TABLE>

i
<PAGE> 10

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INFORMATION STATEMENT
Summary..................................................... 60
New Subadvisory Agreement with A I M Capital Management,
Inc....................................................... 62
New Subadvisory Agreement with Capital Guardian Trust
Company................................................... 69
New Subadvisory Agreement with Fidelity Management Trust
Company................................................... 76
New Subadvisory Agreement with Franklin Advisers, Inc. ..... 84
New Subadvisory Agreement with Pacific Investment Management
Company................................................... 91
New Subadvisory Agreement with State Street Global
Advisors.................................................. 97
New Subadvisory Agreement with Wellington Management
Company, LLP.............................................. 102
New Subadvisory Agreement with T. Rowe Price Associates,
Inc....................................................... 109
Additional Information...................................... 117
Other Matters............................................... 121
Exhibit A -- Manufacturers Investment Trust Amended and
Restated Advisory Agreement

Exhibit B -- Executive Officers and Directors of Subadvisers
</TABLE>

ii
<PAGE> 11

MANUFACTURERS INVESTMENT TRUST

116 Huntington Avenue
Boston, Massachusetts 02116
------------------------

PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD APRIL 27, 1999

------------------------

GENERAL

This Proxy Statement is furnished in connection with the solicitation by
the Board of Trustees (the "Board") of Manufacturers Investment Trust (the
"Trust") of proxies to be used at a special meeting (the "Meeting") of
shareholders to be held at 73 Tremont Street, Boston, Massachusetts 02108, on
April 27, 1999, at 10:00 a.m., Eastern Standard Time. This Proxy Statement is
first being mailed on or about March 26, 1999. Pursuant to the Trust's Agreement
and Declaration of Trust, the Board has designated February 28, 1999 as the
record date for determining shareholders eligible to vote at the Meeting (the
"Record Date"). All shareholders of record at the close of business on February
28, 1999 are entitled to one vote for each share of beneficial interest of the
Trust held.

The Trust is a no-load, open-end management investment company, commonly
known as a mutual fund, registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Trust currently offers shares in 36 investment
portfolios. The shares of the Trust are divided into 36 series corresponding to
the investment portfolios: Pacific Rim Emerging Markets Trust, Science &
Technology Trust, International Small Cap Trust, Emerging Small Company Trust,
Pilgrim Baxter Growth Trust, Small/Mid Cap Trust, International Stock Trust,
Worldwide Growth Trust, Global Equity Trust, Small Company Value Trust, Equity
Trust, Growth Trust, Quantitative Equity Trust, Equity Index Trust, Blue Chip
Growth Trust, Real Estate Securities Trust, Value Trust, International Growth
and Income Trust, Growth and Income Trust, Equity-Income Trust, Balanced Trust,
Aggressive Asset Allocation Trust, High Yield Trust, Moderate Asset Allocation
Trust, Conservative Asset Allocation Trust, Strategic Bond Trust, Global
Government Bond Trust, Capital Growth Bond Trust, Investment Quality Bond Trust,
U.S. Government Securities Trust, Money Market Trust, Lifestyle Aggressive 1000
Trust, Lifestyle Growth 820 Trust, Lifestyle Balanced 640 Trust, Lifestyle
Moderate 460 Trust and Lifestyle Conservative 280 Trust. Each of the above-named
series is referred to in this Proxy Statement as a "Portfolio" and,
collectively, as the "Portfolios." The Lifestyle Aggressive 1000 Trust,
Lifestyle Growth 820 Trust, Lifestyle Balanced

1
<PAGE> 12

640 Trust, Lifestyle Moderate 460 Trust and Lifestyle Conservative 280 Trust are
collectively referred to in this Proxy Statement as the "Lifestyle Trusts."

SUMMARY OF PROPOSALS

<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS OF THE TRUST
NUMBER PROPOSAL WHO WILL VOTE ON THE PROPOSAL
-------- -------- -----------------------------
<S> <C> <C>

Proposal 1 Approval of an Amended and Restated Shareholders of each Portfolio of
Advisory Agreement between the the Trust will vote separately on
Trust, on behalf of each portfolio, this proposal.
and Manufacturers Securities
Services, LLC ("Manulife
Securities" or the "Adviser").

Proposal 1A Approval of an increase, from Shareholders of the Moderate Asset
0.750% to 0.800%, in the advisory Allocation Trust will vote on this
fee payable to Manulife Securities proposal.
in connection with the Moderate
Asset Allocation Trust.

Proposal 1B Approval of an increase, from Shareholders of the Equity Trust
0.750% to 0.850%, in the advisory will vote on this proposal.
fee payable to Manulife Securities
in connection with the Equity
Trust.

Proposal 1C Approval of an increase, from Shareholders of the Aggressive
0.750% to 0.875%, in the advisory Asset Allocation Trust will vote on
fee payable to Manulife Securities this proposal.
in connection with the Aggressive
Asset Allocation Trust.

Proposal 1D Approval of an increase, from Shareholders of the Equity-Income
0.800% to 0.875%, in the advisory Trust will vote on this proposal.
fee payable to Manulife Securities
in connection with the
Equity-Income Trust.

Proposal 2 Approval of a change to the Shareholders of the Conservative
investment objective of the Asset Allocation Trust will vote on
Conservative Asset Allocation this proposal.
Trust.

Proposal 3 Approval of a change to the Shareholders of the Moderate Asset
investment objective of the Allocation Trust will vote on this
Moderate Asset Allocation Trust. proposal.

Proposal 4 Approval of a change to the Shareholders of the Aggressive
investment objective of the Asset Allocation Trust will vote on
Aggressive Asset Allocation Trust. this proposal.

Proposal 5 Approval of a change to the Shareholders of the Emerging Small
investment objective of the Company Trust will vote on this
Emerging Small Company Trust. proposal.

Proposal 6 Approval of a change to the Shareholders of the Pilgrim Baxter
investment objective of the Pilgrim Growth Trust will vote on this
Baxter Growth Trust. proposal.

Proposal 7 Approval of a change to the Shareholders of the International
investment objective of the Growth and Income Trust will vote
International Growth and Income on this proposal.
Trust.

Proposal 8 Approval of a change to the Shareholders of the Global
investment objective of the Global Government Bond Trust will vote on
Government Bond Trust. this proposal.

Proposal 9 Ratification of the selection of All shareholders of the Trust will
PricewaterhouseCoopers LLP as the vote on this proposal.
independent accountants for the
Trust for its fiscal year ending
December 31, 1999.
</TABLE>

2
<PAGE> 13

The Trust does not sell its shares directly to the public, but sells its
shares generally only to insurance companies and their separate accounts as the
underlying investment medium for variable and certain group annuity contracts
("contracts"). Only shares of a particular Portfolio are entitled to vote on
matters which affect only the interests of that Portfolio. As of the record date
for the Special Meeting of Shareholders, the Trust's shares were legally owned
by: (i) The Manufacturers Life Insurance Company of North America ("Manulife
North America"), The Manufacturers Life Insurance Company of New York ("Manulife
New York"), The Manufacturers Life Insurance Company of America ("Manufacturers
America") and The Manufacturers Life Insurance Company (U.S.A.) ("Manufacturers
U.S.A.") and (ii) certain of the Lifestyle Trusts described in this Proxy
Statement. The ultimate parent of each of Manulife North America, Manulife New
York, Manufacturers America and Manufacturers U.S.A. is The Manufacturers Life
Insurance Company ("Manulife"), a Canadian mutual life insurance company whose
principal address is 200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5.

Manulife North America is a stock life insurance company organized under
the laws of Delaware whose principal address is 116 Huntington Avenue, Boston,
Massachusetts 02116. Manulife North America holds shares of the Trust directly
and attributable to variable annuity contracts in The Manufacturers Life
Insurance Company of North America Separate Account A and variable life
contracts in The Manufacturers Life Insurance Company of North America Separate
Account B, both of which are separate accounts registered under the 1940 Act, as
well as in an unregistered separate account.

Manulife New York is a stock life insurance company organized under the
laws of New York whose principal address is International Corporate Center at
Rye, 555 Theodore Fremd Avenue, Suite C-209, Rye, New York 10580. Manulife New
York holds shares of the Trust directly and attributable to variable annuity
contracts in The Manufacturers Life Insurance Company of New York Separate
Account A and variable life contracts in The Manufacturers Life Insurance
Company of New York Separate Account B, both of which are separate accounts
registered under the 1940 Act, as well as in an unregistered separate account.

Manufacturers America is a stock life insurance company organized under the
laws of Pennsylvania and redomesticated under the laws of Michigan whose
principal address is 200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5.
Manufacturers America holds shares of the Trust directly and attributable to
variable annuity contracts in Separate Account 2 and variable life contracts in
Serarate Accounts 3 and 4, all of which are separate accounts registered under
the 1940 Act.

3
<PAGE> 14

Manufacturers U.S.A. is a stock life insurance company organized under the
laws of Pennsylvania and redomesticated under the laws of Michigan whose
principal address is 200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5.
Manufacturers U.S.A. holds shares of the Trust in various unregistered separate
accounts.

The Lifestyle Trusts are funds-of-funds that invest in shares of certain
other Portfolios of the Trust. All of the shares of the Lifestyle Trusts are
owned by Manulife North America, Manulife New York, Manufacturers America and
Manufacturers U.S.A. and their respective separate accounts.

Manulife North America, Manulife New York, Manufacturers America and
Manufacturers U.S.A. have the right to vote upon matters that may be voted upon
at a special shareholders' meeting. The companies will vote all shares of the
Portfolios of the Trust issued to such companies in proportion to the timely
instructions received from owners of the contracts participating in the separate
accounts described above which are registered under the 1940 Act. In addition,
the Trust will vote all shares of the Portfolios held by the Lifestyle Trusts in
proportion to such instructions. The companies, in connection with their
solicitation of voting instructions, are furnishing this Proxy Statement to the
owners of contracts participating in registered separate accounts holding shares
of the Portfolios to be voted on the Proposals included in this Proxy Statement.

THE TRUST WILL FURNISH, WITHOUT CHARGE, A COPY OF THE TRUST'S ANNUAL REPORT
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 TO ANY SHAREHOLDER UPON REQUEST. TO
OBTAIN A REPORT, PLEASE CONTACT THE TRUST BY CALLING (800) 344-1029 OR BY
WRITING TO THE TRUST AT 116 HUNTINGTON AVENUE, BOSTON, MASSACHUSETTS 02116,
ATTN. KEVIN HILL.

4
<PAGE> 15

VOTING INFORMATION

Proxies from the shareholders of each Portfolio are being solicited by the
Board for the Special Meeting of Shareholders to be held on April 27, 1999 at 73
Tremont Street, Boston, Massachusetts 02108 at 10:00 a.m., Eastern Standard
Time, or at such later time as necessary by adjournment. All valid proxies will
be voted in accordance with specifications thereon, or in the absence of
specification, for approval of the Proposals.

Voting instructions may be revoked at any time prior to the voting of the
shares represented thereby by: (i) mailing written instructions addressed to the
Secretary of the Trust at 116 Huntington Avenue, Boston, Massachusetts 02116 or
(ii) signing and returning a new voting instructions form, in each case if
received by the Trust by April 26, 1999. ALL PROPERLY EXECUTED VOTING
INSTRUCTIONS RECEIVED BY APRIL 26, 1999 WILL BE VOTED AS SPECIFIED IN THE VOTING
INSTRUCTION, OR, IF NO SPECIFICATION IS MADE, IN FAVOR OF THE PROPOSALS REFERRED
TO IN THIS PROXY STATEMENT.

In the event the necessary quorum to transact business or the vote required
to approve a Proposal is not obtained at the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting in accordance with
applicable law, to permit further solicitation of proxies. Any such adjournment
as to a matter will require the affirmative vote of the holders of a majority of
the Trust's shares present in person or by proxy at the Meeting and entitled to
vote thereon. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of the
Proposals and will vote against any such adjournment those proxies to be voted
against the Proposals.

Abstentions are counted as shares eligible to vote at the Meeting in
determining whether a quorum is present, but do not count as votes cast with
respect to a Proposal. Under the 1940 Act, the affirmative vote necessary to
approve a matter under consideration may be determined with reference to a
percentage of votes present at the Meeting, which would have the effect of
treating abstentions as if they were votes against a Proposal.

The cost of the preparation and distribution of these proxy materials will
be borne by the Trust. In addition to the solicitation of proxies by the use of
the mails, proxies may be solicited by officers and employees of the Trust,
Manulife Securities or its agents or affiliates, personally or by telephone.
Brokerage houses, banks and other fiduciaries may be requested to forward
soliciting materials to their principals and to obtain authorization for the
execution of proxies. For those services, they will be reimbursed by the Trust
for their out-of-pocket expenses.

Shares which represent interests in a particular Portfolio vote separately
on matters which pertain only to that Portfolio. All of the Proposals (except
the ratification of the selection of independent accountants) will be voted on

5
<PAGE> 16

separately by shareholders of the relevant Portfolios. Proposal 1 will be voted
on by shareholders of each Portfolio voting separately.

Shareholders of the Portfolios of record at the close of business on
February 28, 1999 (the "Record Date") will be entitled to vote at the Meeting or
any adjournment of the Meeting. The holders of 30% of the shares outstanding of
each Portfolio at the close of business on that date present in person or
represented by proxy will constitute a quorum for the Meeting; however, a
majority of the outstanding voting securities of each Portfolio entitled to vote
at the close of business on that date is required to approve each Proposal,
except as noted herein. As used in this Proxy Statement, the vote of a "majority
of the outstanding voting securities" means the affirmative vote of the lesser
of (1) 67% or more of the voting securities of the Trust or a Portfolio, as
applicable, present at the Meeting, if the holders of more than 50% of the
outstanding voting securities of the Trust or a Portfolio, as applicable, are
present or represented by proxy or (2) more than 50% of the outstanding voting
securities of the Trust or a Portfolio, as applicable. Shareholders are entitled
to one vote for each share held and fractional votes for fractional shares held.
No shares have cumulative voting rights.

6
<PAGE> 17

As of the Record Date, the number of votes eligible to be cast at the
Meeting with respect to each Portfolio is as follows:

<TABLE>
<CAPTION>
VOTES HELD BY
NUMBER OF MANULIFE VOTES HELD BY VOTES HELD BY VOTES HELD BY VOTES HELD BY
ELIGIBLE NORTH MANULIFE MANUFACTURERS MANUFACTURERS LIFESTYLE
PORTFOLIO VOTES AMERICA NEW YORK AMERICA U.S.A. TRUSTS*
- --------- ----------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Pacific Rim Emerging
Markets Trust...... 3,376,096 1,674,191 146,952 1,554,953 -- --
Science & Technology
Trust.............. 11,862,521 9,709,087 1,064,324 673,770 415,340 --
International Small
Cap Trust.......... 9,102,688 6,747,043 498,934 247,300 3,496 1,605,915
Emerging Small
Company Trust...... 12,188,630 2,232,401 202,126 7,635,022 230,573 1,888,508
Pilgrim Baxter Growth
Trust.............. 10,405,842 4,353,359 285,346 151,116 103,730 5,512,291
Small/Mid Cap
Trust.............. 20,448,302 18,517,961 1,477,159 453,182 -- --
International Stock
Trust.............. 17,592,511 5,382,380 232,671 3,064,113 -- 8,913,347
Worldwide Growth
Trust.............. 2,615,332 2,325,091 165,607 124,634 -- --
Global Equity Trust.. 43,258,658 40,123,163 2,581,064 293,472 260,959 --
Small Company Value
Trust.............. 13,760,360 5,300,134 246,612 38,919 138,567 8,036,128
Equity Trust......... 75,597,054 67,399,834 4,359,277 1,645,403 140,780 2,051,760
Growth Trust......... 15,548,200 12,236,134 759,687 525,517 229,166 1,797,696
Quantitative Equity
Trust.............. 10,846,364 3,516,239 213,299 5,807,114 937 1,308,775
Equity Index Trust... 4,571,325 -- -- 4,539,523 31,802 --
Blue Chip Growth
Trust.............. 62,283,182 54,090,815 3,893,493 1,560,429 665,532 2,072,913
Real Estate
Securities Trust... 10,484,379 2,390,432 205,636 4,756,941 137,774 2,973,596
Value Trust.......... 17,144,812 9,561,263 553,359 712,586 156,163 6,161,441
International Growth
and Income Trust... 19,035,194 17,275,995 1,601,734 157,465 -- --
Growth and Income
Trust.............. 83,197,518 76,034,160 5,301,273 1,862,085 -- --
Equity-Income Trust.. 58,750,942 48,081,237 5,052,235 1,715,134 543,592 3,358,744
Balanced Trust....... 14,506,384 5,589,012 271,021 8,582,197 64,154 --
Aggressive Asset
Allocation Trust... 17,304,235 15,982,721 900,264 421,250 -- --
High Yield Trust..... 14,500,228 10,011,966 622,223 325,959 317,172 3,222,908
Moderate Asset
Allocation Trust... 45,362,397 42,822,592 2,068,388 471,417 -- --
Conservative Asset
Allocation Trust... 16,367,068 15,512,802 680,248 174,018 -- --
Strategic Bond
Trust.............. 36,458,319 25,344,890 2,848,709 340,552 338,782 7,585,386
Global Government
Bond Trust......... 13,909,584 13,272,403 603,299 33,882 -- --
Capital Growth Bond
Trust.............. 5,371,413 939,991 71,069 4,358,270 2,083 --
</TABLE>

7
<PAGE> 18

- ---------------
* Represents the aggregate number of shares held by the Lifestyle Trusts.

Trustees and officers of the Trust, in the aggregate, own or have the right
to provide voting instructions for less than 1% of each Portfolio's outstanding
shares.

As of February 28, 1999, the percentage ownership of the outstanding shares
of each Portfolio (by shareholder) is indicated below:

<TABLE>
<CAPTION>
MANULIFE
NORTH MANULIFE MANUFACTURERS MANUFACTURERS LIFESTYLE
PORTFOLIO AMERICA NEW YORK AMERICA U.S.A. TRUSTS*
- --------- --------- -------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Pacific Rim Emerging Markets Trust..... 49.59% 4.35% 46.06% -- --
Science & Technology Trust............. 81.85% 8.97% 5.68% 3.50% --
International Small Cap Trust.......... 74.12% 5.48% 2.71% 0.04% 17.64%
Emerging Small Company Trust........... 18.32% 1.66% 62.64% 1.89% 15.49%
Pilgrim Baxter Growth Trust............ 41.84% 2.74% 1.45% 1.00% 52.97%
Small/Mid Cap Trust.................... 90.56% 7.22% 2.22% -- --
International Stock Trust.............. 30.60% 1.32% 17.42% -- 50.67%
Worldwide Growth Trust................. 88.90% 6.33% 4.77% -- --
Global Equity Trust.................... 92.75% 5.97% 0.68% 0.60% --
Small Company Value Trust.............. 38.52% 1.79% 0.28% 1.01% 58.40%
Equity Trust........................... 89.16% 5.77% 2.18% 0.19% 2.71%
Growth Trust........................... 78.70% 4.89% 3.38% 1.47% 11.56%
Quantitative Equity Trust.............. 32.42% 1.97% 53.54% 0.01% 12.07%
Equity Index Trust..................... -- -- 99.30% 0.70% --
Blue Chip Growth Trust................. 86.85% 6.25% 2.51% 1.07% 3.33%
Real Estate Securities Trust........... 22.84% 1.97% 45.46% 1.32% 28.42%
Value Trust............................ 55.77% 3.23% 4.16% 0.92% 35.94%
International Growth and Income
Trust................................ 90.76% 8.42% 0.83% -- --
Growth and Income Trust................ 91.39% 6.37% 2.24% -- --
Equity-Income Trust.................... 81.84% 8.60% 2.92% 0.93% 5.72%
</TABLE>

8
<PAGE> 19

<TABLE>
<CAPTION>
MANULIFE
NORTH MANULIFE MANUFACTURERS MANUFACTURERS LIFESTYLE
PORTFOLIO AMERICA NEW YORK AMERICA U.S.A. TRUSTS*
- --------- --------- -------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Balanced Trust......................... 38.53% 1.87% 59.16% 0.44% --
Aggressive Asset Allocation Trust...... 92.36% 5.20% 2.43% -- --
High Yield Trust....................... 69.05% 4.29% 2.25% 2.19% 22.23%
Moderate Asset Allocation Trust........ 94.40% 4.56% 1.04% -- --
Conservative Asset Allocation Trust.... 94.78% 4.16% 1.06% -- --
Strategic Bond Trust................... 69.52% 7.81% 0.93% 0.93% 20.81%
Global Government Bond Trust........... 95.42% 4.34% 0.24% -- --
Capital Growth Bond Trust.............. 17.50% 1.32% 81.14% 0.04% --
Investment Quality Bond Trust.......... 69.72% 3.69% 1.33% -- 25.27%
U.S. Government Securities Trust....... 66.52% 4.66% 1.79% 1.77% 25.26%
Money Market Trust..................... 80.86% 4.41% 10.47% 0.12% 4.13%
Lifestyle Aggressive 1000 Trust........ 74.40% 9.70% 5.52% 10.40% --
Lifestyle Growth 820 Trust............. 78.64% 10.03% 5.35% 5.98% --
Lifestyle Balanced 640 Trust........... 82.48% 9.08% 1.83% 6.62% --
Lifestyle Moderate 460 Trust........... 85.09% 8.91% 0.51% 5.49% --
Lifestyle Conservative 280 Trust....... 83.07% 6.98% 0.27% 9.68% --
</TABLE>

- ---------------

* Represents the aggregate percentage ownership of the Lifestyle Trusts.

9
<PAGE> 20

PROPOSAL 1

APPROVAL OF AMENDED AND RESTATED
ADVISORY AGREEMENT

PROPOSAL 1A

APPROVAL OF AN INCREASE, FROM 0.750% TO 0.800%, IN THE ADVISORY FEE PAYABLE TO
MANULIFE SECURITIES
IN CONNECTION WITH THE
MODERATE ASSET ALLOCATION TRUST

PROPOSAL 1B

APPROVAL OF AN INCREASE, FROM 0.750% TO .850%, IN THE ADVISORY FEE PAYABLE TO
MANULIFE SECURITIES
IN CONNECTION WITH THE
EQUITY TRUST

PROPOSAL 1C

APPROVAL OF AN INCREASE, FROM 0.750% TO 0.875%, IN THE ADVISORY FEE PAYABLE TO
MANULIFE SECURITIES
IN CONNECTION WITH THE
AGGRESSIVE ASSET ALLOCATION TRUST

PROPOSAL 1D

APPROVAL OF AN INCREASE, FROM 0.800% TO 0.875%, IN THE ADVISORY FEE PAYABLE TO
MANULIFE SECURITIES
IN CONNECTION WITH THE
EQUITY-INCOME TRUST

Manulife Securities has served as investment adviser for the Trust and for
each of the Portfolios of the Trust pursuant to an investment advisory
agreement, dated January 1, 1996, between NASL Financial Services, Inc. and the
Trust (the "Current Advisory Agreement"). Manulife Securities is the successor
to NASL Financial Services, Inc. As Adviser to the Trust, Manulife Securities
has been responsible for, among other things, administering the business and
affairs of the Trust and selecting, contracting with, compensating and
monitoring subadvisers to manage the investment and reinvestment of the assets
of the Portfolios. Manulife Securities does not currently manage any of the
Portfolios' assets on a day-to-day basis.

The Board, including all of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of any party to the Amended Advisory Agreement (the
"Disinterested Trustees") approved, on March 26, 1999, certain proposed
amendments to the Current Advisory Agreement. The provisions of the Amended
Advisory Agreement are substantially similar to the provisions of the Trust's
Current Advisory Agreement except as noted below. Subject to its approval by
shareholders, the Amended Advisory Agreement would require the

10
<PAGE> 21

Trust to pay certain expenses currently paid by Manulife Securities, simplify
the manner in which Manulife Securities could terminate agreed upon expense
limitations and provide for more frequent payments of the advisory fee to
Manulife Securities. In addition, the Amended Advisory Agreement would increase
the rate of the advisory fee payable to Manulife Securities by the Moderate
Asset Allocation Trust, the Equity Trust, the Aggressive Asset Allocation Trust
and the Equity-Income Trust and decrease the rate of the advisory fee payable to
Manulife Securities by the Blue Chip Growth Trust, the Pilgrim Baxter Growth
Trust and the Small/Mid Cap Trust. Under the Amended Advisory Agreement, the
Trust and each of the Portfolios would continue to receive investment advisory
services from Manulife Securities. See "Terms of the Amended Advisory
Agreement -- Expenses Paid by the Trust and Manulife Securities,"
"-- Termination of Expense Limitations" and "-- Advisory Fees" below. If the
shareholders do not approve the Amended Advisory Agreement, Manulife Securities
will continue to act as the Adviser with respect to the Trust and the Portfolios
under the Current Advisory Agreement.

TERMS OF THE AMENDED ADVISORY AGREEMENT

The following description of the terms of the Amended Advisory Agreement is
qualified in its entirety by reference to the form of Amended Advisory Agreement
attached to this Proxy Statement as Exhibit A.

Services to Be Performed by Manulife Securities

Pursuant to the Amended Advisory Agreement, Manulife Securities would
continue to: (1) select and contract with investment subadvisers to manage the
investments and determine the composition of the assets of the Portfolios; (2)
monitor compliance of each subadviser with the investment objectives and related
investment policies; and (3) review and report to the Trustees of the Trust on
the performance of each subadviser. In addition, Manulife Securities may elect
to manage the investments and determine the composition of the assets of the
Lifestyle Trusts although it does not currently intend to do so.

Expenses Paid by Manulife Securities

Pursuant to the Current Advisory Agreement, Manulife Securities provides
the following at its own expense: (1) office space and all necessary office
facilities and equipment; (2) the cost of necessary executive and other
personnel, including personnel for the performance of clerical, accounting and
other office functions, exclusive of those functions that are (a) related to and
to be performed under the Trust's contract for custodial, bookkeeping, transfer
and dividend disbursing agency services by the bank or other financial
institution selected to perform such services and (b) related to the investment
subadvisory services to be provided by any subadviser pursuant to a subadvisory
agreement; (3) accounting, bookkeeping, recordkeeping and related services
(except to the extent they

11
<PAGE> 22

are performed by a bank or other financial institution selected by the Trust)
other than services in respect of the records required to be maintained by any
subadviser under a subadvisory agreement; (4) all other information and
services, other than services of counsel or independent accountants or
investment subadvisory services to be provided by any subadviser under a
subadvisory agreement, required in connection with the preparation of all
registration statements and prospectuses, all annual, semiannual and periodic
reports to shareholders of the Trust, regulatory authorities or others, all
notices and proxy solicitation materials furnished to shareholders of the Trust
or regulatory authorities and all tax returns; (5) the cost of any advertising
or sales literature relating solely to the Trust; (6) the cost of printing and
mailing prospectuses to persons other than current holders of Trust shares or
variable contracts funded by Trust shares; and (7) the compensation of the
Trust's officers and Trustees who are also directors, officers or employees of
Manulife Securities or its affiliates.

Pursuant to the Amended Advisory Agreement, Manulife Securities would
continue to provide the following at its own expense: (1) office space and all
necessary office facilities and equipment (except office space, facilities and
equipment relating to financial, accounting and administrative services noted
below under " -- Expenses Paid by the Trust") (2) the cost of any advertising or
sales literature relating solely to the Trust; and (3) the cost of printing and
mailing prospectuses to persons other than current holders of Trust shares or of
variable contracts funded by Trust shares. In addition, Manulife Securities will
continue to permit individuals who are directors, officers or employees of
Manulife Securities to serve (if duly elected or appointed) as Trustees or
President, Treasurer or Secretary of the Trust, without remuneration from or
other cost to the Trust.

Under the Amended Advisory Agreement, Manulife Securities would also
continue to furnish to the Trust, at the Trust's expense, any other personnel
necessary for the operations of the Trust. Manulife Securities, however, would
not furnish the following: (1) personnel whose functions are related to and to
be performed under any Trust contract for custodial, bookkeeping, transfer and
dividend disbursing agency services by a bank or other financial institution
selected to perform such services; and (2) personnel whose functions are related
to the investment subadvisory services to be provided by any subadviser. See
"-- Expenses Paid by the Trust."

Pursuant to the Amended Advisory Agreement, Manulife Securities will
continue to maintain, at its own expense, relationships with various agents and
other persons employed by the Trust (including the Trust's transfer agent,
custodian, independent accountants and legal counsel) and will assist in the
coordination of their activities on behalf of the Trust. The fees and expenses
of such agents or other persons will be paid by the Trust.

12
<PAGE> 23

Expenses Paid by the Trust

The Current Advisory Agreement provides that the Trust pays the expenses of
its organization, operations and business not specifically assumed or agreed to
be paid by Manulife Securities or any subadviser under a subadvisory agreement.
These expenses include the following: (1) any of the costs of printing and
mailing all registration statements and prospectuses, all annual, semiannual and
periodic reports to shareholders of the Trust, regulatory authorities or others,
all notices and proxy solicitation materials furnished to shareholders of the
Trust or regulatory authorities and all tax returns; (2) compensation of the
officers and Trustees of the Trust (if not otherwise paid by Manulife Securities
as noted under "Amended Advisory Agreement -- Expenses Paid by Manulife
Securities"); (3) registration, filing and other fees in connection with
requirements of regulatory authorities; (4) the charges and expenses of the
custodian appointed by the Trust for custodial services; (5) the charges and
expenses of the independent accountants retained by the Trust and any transfer,
bookkeeping and dividend disbursing agents appointed by the Trust; (6) brokers'
commissions and issue and transfer taxes chargeable to the Trust in connection
with the securities transactions to which the Trust is a party; (7) taxes and
corporate fees payable by the Trust to federal, state or other governmental
agencies; (8) the cost of stock certificates representing shares of the Trust;
(9) legal fees and expenses in connection with the affairs of the Trust,
including registering and qualifying its shares with regulatory authorities;
(10) association membership dues; (11) insurance premiums for fidelity and other
coverage; (12) expenses of shareholders' and directors' meetings; (13) pricing
of the Trust Portfolios and shares; (14) interest on borrowings; and (15)
litigation expenses.

Consistent with the Current Advisory Agreement, the Trust will pay, under
the Amended Advisory Agreement, the expenses of its organization, operations and
business not specifically assumed or agreed to be paid by Manulife Securities or
any subadviser under a subadvisory agreement, including, without limitation, the
following expenses: (1) any of the costs of printing and mailing all
registration statements and prospectuses, all annual, semiannual and periodic
reports to shareholders of the Trust (including holders of variable contracts
funded by Trust shares), regulatory authorities or others, all notices and proxy
solicitation materials furnished to shareholders of the Trust (including holders
of variable contracts funded by Trust shares) or regulatory authorities and all
tax returns; (2) compensation of the officers and Trustees of the Trust (except
persons serving as President, Secretary or Trustee of the Trust who are also
directors, officers or employees of Manulife Securities or its affiliates); (3)
registration, filing and other fees in connection with requirements of
regulatory authorities; (4) the charges and expenses of the custodian appointed
by the Trust for custodial services; (5) the charges and expenses of the
independent accountants retained by the Trust and any transfer, bookkeeping and
dividend disbursing agents appointed by the Trust; (6) brokers' commissions and
issue and transfer taxes chargeable to the Trust in connection with the
securities transactions to
13
<PAGE> 24

which the Trust is a party; (7) taxes and corporate fees payable by the Trust to
federal, state or other governmental agencies; (8) the cost of stock
certificates representing shares of the Trust; (9) legal fees and expenses in
connection with the affairs of the Trust, including registering and qualifying
its shares with regulatory authorities; (10) association membership dues; (11)
insurance premiums for fidelity and other coverage; (12) expenses of
shareholders' and Trustees' meetings; (13) pricing of the Trust Portfolios and
shares; and (14) interest on borrowings. See "Terms of the Amended Advisory
Agreement -- Expenses Paid by Manulife Securities."

In addition to the expenses noted above, the Amended Advisory Agreement
clarifies that the Trust pays for: (1) the costs of edgarization of all
registrations statements, prospectuses and statements of additional information
and reports to shareholders (including holders of variable contracts funded by
Trust shares), regulatory authorities or others; (2) the expenses incurred for
the printing and mailing of all tax returns; (3) the insurance premiums for
errors and omissions and Trustees' and officers' coverage; (4) the cost of any
equipment or services used for obtaining price quotations and valuing Trust
portfolio investments; (5) all charges for equipment or services used for
communications between Manulife Securities or the Trust and the custodian,
transfer agent or any other agent selected by the Trust; and (6) all
nonrecurring expenses including the costs of actions, suits or proceedings to
which the Trust is a party or is threatened to be made a party and the expenses
the Trust may incur as a result of its legal obligation to provide
indemnification to its Trustees, officers, agents and shareholders.

Moreover, the Amended Advisory Agreement requires the Trust to reimburse
Manulife Securities for expenses associated with providing the following
financial, accounting and administrative services: (1) maintaining the existence
and records of the Trust and the registrations and qualifications of Trust
shares under federal law; (2) preparing all notices and proxy solicitation
materials furnished to shareholders of the Trust (including holders of variable
contracts funded by Trust shares); and (3) performing all administrative,
financial, accounting, bookkeeping and record keeping functions of the Trust
including, without limitation, the preparation of all tax returns, all annual,
semiannual and periodic reports to shareholders of the Trust and the preparation
of all regulatory reports, except for any such functions that may be performed
by a third party pursuant to a custodian, transfer agency or service agreement
executed by the Trust. The Trust would reimburse Manulife Securities for
expenses associated with all such services described in (1), (2) and (3) of this
paragraph, including the compensation and related personnel expenses and
expenses of office space, office equipment, utilities and miscellaneous office
expenses, except any of these expenses that are directly attributable to
officers or employees of Manulife Securities who are serving as President,
Treasurer or Secretary of the Trust. Manulife Securities would determine the
expenses for which the Trust would

14
<PAGE> 25

reimburse it pursuant to expense allocation procedures established by Manulife
Securities in accordance with generally accepted accounting principles.

The shifting of certain expenses from Manulife Securities to the Trust
pursuant to the Amended Advisory Agreement is not expected to result in a
material change to the annual operating expense ratio of the Trust or any
Portfolio. See"--Pro Forma Annual Fund Operating Expenses."

Termination of Expense Limitations

Pursuant to the Amended Advisory Agreement, if the total of all expenses
that apply to a Portfolio exceeds a specific annual rate of the average annual
net assets of such Portfolio, Manulife Securities would reduce its advisory fee
or reimburse the Trust for such expenses. The total of all expenses excludes
advisory fees, taxes, portfolio brokerage commissions, interest, litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business. For the expense limitations to apply to
a Portfolio, the total of all such expenses must exceed an annual rate of 0.75%
in the case of the International Small Cap Trust, Global Equity Trust, Global
Government Bond Trust, Worldwide Growth Trust, International Growth and Income
Trust, International Stock Trust and Pacific Rim Emerging Markets Trust, 0.15%
in the case of the Equity Index Trust, and 0.50% in the case of all other
portfolios except the Lifestyle Trusts.* Pursuant to the Amended Advisory
Agreement, Manulife Securities may terminate the expense limitations at any time
on notice to the Trust. Under the Current Advisory Agreement, the expense
limitations continue in effect from year to year unless Manulife Securities
terminates them at any year end with 30 days' notice to the Trust.

Advisory Fees

Pursuant to the Amended Advisory Agreement, Manulife Securities will
receive an advisory fee from the Trust for each Portfolio except for the
Lifestyle Trusts. Manulife Securities' fee is computed separately for each
Portfolio. The fee for each Portfolio is stated as an annual percentage of the
current value of the net assets of that Portfolio. The fee, which is accrued
daily, would also be payable daily. The fee is calculated each day by
multiplying the daily equivalent of the annual percentage prescribed for a
Portfolio by the value of the net assets of the Portfolio at the close of
business on the previous business day of the Trust. Under the Current Advisory
Agreement, the fee is calculated in the same manner, but it is paid on a monthly
basis.

- ---------------

* Manulife Securities has voluntarily agreed to pay the expenses of the
Lifestyle Trusts (other than the expenses of the underlying Portfolios in
which the Lifestyle Trusts invest). Manulife Securities may terminate this
voluntary expense reimbursement at any time.
15
<PAGE> 26

For the Trust's fiscal year ended December 31, 1998, the Trust paid an
investment advisory fee to Manulife Securities in the aggregate amount of
$94,747,706, allocated among the Portfolios as follows:

<TABLE>
<CAPTION>
AMOUNT OF
PORTFOLIO ADVISORY FEE
- --------- ------------
<S> <C>
Pacific Rim Emerging Markets Trust............. $ 214,432
Science & Technology Trust..................... 1,171,088
International Small Cap Trust.................. 1,567.227
Emerging Small Company Trust................... 2,937,353
Pilgrim Baxter Growth Trust.................... 1,216,141
Small/Mid Cap Trust............................ 3,144,346
International Stock Trust...................... 2,019,937
Worldwide Growth Trust......................... 325,977
Global Equity Trust............................ 8,256,515
Small Company Value Trust...................... 1,218,609
Equity Trust................................... 11,504,927
Growth Trust................................... 1,930,442
Quantitative Equity Trust...................... 1,431,591
Equity Index Trust............................. 106,755
Blue Chip Growth Trust......................... 7,964,796
Real Estate Securities Trust................... 1,157,366
Value Trust.................................... 1,695,347
International Growth and Income Trust.......... 2,086,991
Growth and Income Trust........................ 14,353,269
Equity-Income Trust............................ 8,121,714
Balanced Trust................................. 1,699,575
Aggressive Asset Allocation Trust.............. 1,874,673
High Yield Trust............................... 1,160,631
Moderate Asset Allocation Trust................ 4,585,154
Conservative Asset Allocation Trust............ 1,473,082
Strategic Bond Trust........................... 3,178,026
Global Government Bond Trust................... 1,632,065
Capital Growth Bond Trust...................... 384,100
Investment Quality Bond Trust.................. 1,610,817
U.S. Government Securities Trust............... 1,952,935
Money Market Trust............................. 2,771,825
Lifestyle Trusts............................... No Advisory
Fees
</TABLE>

16
<PAGE> 27

For the Trust's fiscal year ended December 31, 1998, the net investment
advisory fee retained by Manulife Securities after payment of subadvisory fees
was $60,018,500, allocated among the Portfolios as follows:

<TABLE>
<CAPTION>
% OF AVERAGE
PORTFOLIO $ AMOUNT ANNUAL NET ASSETS
- --------- ----------- -----------------
<S> <C> <C>
Pacific Rim Emerging Markets
Trust........................ $ 113,523 0.450%
Science & Technology Trust..... 532,313 0.500%
International Small Cap
Trust........................ 687,203 0.482%
Emerging Small Company Trust... 1,398,740 0.500%
Pilgrim Baxter Growth Trust.... 521,202 0.450%
Small/Mid Cap Trust............ 1,588,282 0.505%
International Stock Trust...... 978,062 0.508%
Worldwide Growth Trust......... 130,391 0.400%
Global Equity Trust............ 4,849,996 0.529%
Small Company Value Trust...... 538,775 0.464%
Equity Trust................... 7,936,946 0.517%
Growth Trust................... 939,386 0.414%
Quantitative Equity Trust...... 951,016 0.465%
Equity Index Trust............. 64,053 0.150%
Blue Chip Growth Trust......... 4,666,354 0.542%
Real Estate Securities Trust... 760,356 0.460%
Value Trust.................... 1,028,854 0.485%
International Growth and Income
Trust........................ 1,083,937 0.493%
Growth and Income Trust........ 10,982,615 0.574%
Equity-Income Trust............ 5,841,286 0.575%
Balanced Trust................. 991,604 0.467%
Aggressive Asset Allocation
Trust........................ 999,804 0.400%
High Yield Trust............... 686,353 0.458%
Moderate Asset Allocation
Trust........................ 2,862,446 0.468%
Conservative Asset Allocation
Trust........................ 859,355 0.437%
Strategic Bond Trust........... 2,027,856 0.494%
Global Government Bond Trust... 908,302 0.445%
Capital Growth Bond Trust...... 251,142 0.425%
Investment Quality Bond
Trust........................ 1,089,328 0.440%
U.S. Government Securities
Trust........................ 1,352,268 0.450%
Money Market Trust............. 2,396,762 0.432%
</TABLE>

17
<PAGE> 28

For the Trust's fiscal year ended December 31, 1998, Manulife Securities
paid aggregate subadvisory fees of $34,729,206, allocated among the Portfolios
as follows:

<TABLE>
<CAPTION>
% OF AVERAGE
PORTFOLIO $ AMOUNT ANNUAL NET ASSETS
- --------- ----------- -----------------
<S> <C> <C>
Pacific Rim Emerging Markets
Trust........................ $ 100,909 0.400%
Science & Technology Trust..... 638,775 0.600%
International Small Cap
Trust........................ 880,024 0.618%
Emerging Small Company Trust... 1,538,613 0.550%
Pilgrim Baxter Growth Trust.... 694,939 0.600%
Small/Mid Cap Trust............ 1,556,064 0.495%
International Stock Trust...... 1,041,875 0.542%
Worldwide Growth Trust......... 195,586 0.600%
Global Equity Trust............ 3,406,519 0.371%
Small Company Value Trust...... 679,834 0.586%
Equity Trust................... 3,567,981 0.233%
Growth Trust................... 991,056 0.436%
Quantitative Equity Trust...... 480,575 0.235%
Equity Index Trust............. 42,702 0.100%
Blue Chip Growth Trust......... 3,298,442 0.383%
Real Estate Securities Trust... 397,010 0.240%
Value Trust.................... 666,493 0.315%
International Growth and Income
Trust........................ 1,003,054 0.457%
Growth and Income Trust........ 3,370,654 0.176%
Equity-Income Trust............ 2,280,428 0.225%
Balanced Trust................. 707,971 0.333%
Aggressive Asset Allocation
Trust........................ 874,869 0.350%
High Yield Trust............... 474,278 0.317%
Moderate Asset Allocation
Trust........................ 1,722,708 0.282%
Conservative Asset Allocation
Trust........................ 613,727 0.313%
Strategic Bond Trust........... 1,150,170 0.281%
Global Government Bond Trust... 723,763 0.355%
Capital Growth Bond Trust...... 132,958 0.225%
Investment Quality Bond
Trust........................ 521,489 0.210%
U.S. Government Securities
Trust........................ 600,677 0.200%
Money Market Trust............. 375,063 0.068%
</TABLE>

18
<PAGE> 29

The following is a schedule of the fees and expenses that each Portfolio
paid for the fiscal year ended December 31, 1998, including the advisory fee (as
an annual percentage of the current value of the net assets that each of these
Portfolios currently is obligated to pay to Manulife Securities under the
Current Advisory Agreement):

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
FOR FISCAL YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
OTHER TOTAL ANNUAL
PORTFOLIO ADVISORY FEE EXPENSES* OPERATING EXPENSES
- --------- --------------- --------- ------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets
Trust.......................... 0.850% 0.36% 1.21%
Science & Technology Trust....... 1.100% 0.11% 1.21%
International Small Cap Trust.... 1.100% 0.15% 1.25%
Emerging Small Company Trust..... 1.050% 0.05% 1.10%
Pilgrim Baxter Growth Trust...... 1.050% 0.09% 1.14%
Small/Mid Cap Trust.............. 1.000% 0.04% 1.04%
International Stock Trust........ 1.050% 0.20% 1.25%
Worldwide Growth Trust........... 1.000% 0.21% 1.21%
Global Equity Trust.............. 0.900% 0.11% 1.01%
Small Company Value Trust........ 1.050% 0.18% 1.23%
Equity Trust..................... 0.750% 0.05% 0.80%
Growth Trust..................... 0.850% 0.05% 0.90%
Quantitative Equity Trust........ 0.700% 0.06% 0.76%
Equity Index Trust............... 0.250% 0.30%** 0.55%**
Blue Chip Growth Trust........... 0.925% 0.04% 0.97%
Real Estate Securities Trust..... 0.700% 0.06% 0.76%
Value Trust...................... 0.800% 0.05% 0.85%
International Growth and Income
Trust.......................... 0.950% 0.21% 1.16%
Growth and Income Trust.......... 0.750% 0.04% 0.79%
Equity-Income Trust.............. 0.800% 0.05% 0.85%
Balanced Trust................... 0.800% 0.07% 0.87%
Aggressive Asset Allocation
Trust.......................... 0.750% 0.13% 0.88%
High Yield Trust................. 0.775% 0.06% 0.84%
Moderate Asset Allocation
Trust.......................... 0.750% 0.14% 0.89%
Conservative Asset Allocation
Trust.......................... 0.750% 0.09% 0.84%
Strategic Bond Trust............. 0.775% 0.07% 0.85%
Global Government Bond Trust..... 0.800% 0.14% 0.94%
Capital Growth Bond Trust........ 0.650% 0.07% 0.72%
Investment Quality Bond Trust.... 0.650% 0.07% 0.72%
U.S. Government Securities
Trust.......................... 0.650% 0.07% 0.72%
Money Market Trust............... 0.500% 0.05% 0.55%
Lifestyle Aggressive 1000
Trust.......................... No Advisory Fee 1.13%*** 1.13%***
</TABLE>

19
<PAGE> 30

<TABLE>
<CAPTION>
OTHER TOTAL ANNUAL
PORTFOLIO ADVISORY FEE EXPENSES* OPERATING EXPENSES
- --------- --------------- --------- ------------------
<S> <C> <C> <C>
Lifestyle Growth 820 Trust....... No Advisory Fee 1.02%*** 1.02%***
Lifestyle Balanced 640 Trust..... No Advisory Fee 0.94%*** 0.94%***
Lifestyle Moderate 460 Trust..... No Advisory Fee 0.85%*** 0.85%***
Lifestyle Conservative 280
Trust.......................... No Advisory Fee 0.75%*** 0.75%***
</TABLE>

- ---------------
* Other Expenses include custody fees, registration fees, legal fees, audit
fees, trustees' fees, insurance fees and other miscellaneous expenses.
Advisory fees are reduced or Manulife Securities reimburses the Trust if the
total of all expenses (excluding advisory fees, taxes, portfolio brokerage
commissions, interest, litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Trust's
business) applicable to a Portfolio exceeds a specified annual rate. These
expense limitations continue in effect from year to year unless terminated
by Manulife Securities at any year end upon 30 days' notice to the Trust.

** After reimbursement, for the fiscal year ended December 31, 1998, "Other
Expenses" and "Total Annual Operating Expenses" were 0.15% and 0.40%,
respectively, for the Equity Index Trust.

*** Includes expenses of the underlying Portfolios. Manulife Securities has
voluntarily agreed to pay the expenses of each Lifestyle Trust (other than
the expenses of the underlying Portfolios). This voluntary expense
reimbursement may be terminated at any time. After reimbursement, for the
fiscal year ended December 31, 1998, "Other Expenses" and "Total Annual
Operating Expenses" were 1.11%, 1.00%, 0.92%, 0.83% and 0.72%, respectively,
for the Lifestyle Aggressive 1000 Trust, the Lifestyle Growth 820 Trust, the
Lifestyle Balanced 640 Trust, the Lifestyle Moderate 460 Trust and the
Lifestyle Conservative 280 Trust.

20
<PAGE> 31

The following is a schedule of the fees and expenses that each Portfolio
can expect to incur under the Amended Advisory Agreement:

PRO FORMA
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)

(UNAUDITED)

<TABLE>
<CAPTION>
OTHER TOTAL ANNUAL
PORTFOLIO ADVISORY FEE EXPENSES* OPERATING EXPENSES
- --------- --------------- --------- ------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets
Trust.......................... 0.850% 0.36% 1.21%
Science & Technology Trust....... 1.100% 0.11% 1.21%
International Small Cap Trust.... 1.100% 0.15% 1.25%
Emerging Small Company Trust..... 1.050% 0.05% 1.10%
Pilgrim Baxter Growth Trust...... 1.000% 0.09% 1.09%
Small/Mid Cap Trust.............. 0.950% 0.04% 0.99%
International Stock Trust........ 1.050% 0.20% 1.25%
Worldwide Growth Trust........... 1.000% 0.21% 1.21%
Global Equity Trust.............. 0.900% 0.11% 1.01%
Small Company Value Trust........ 1.050% 0.18% 1.23%
Equity Trust..................... 0.850% 0.05% 0.90%
Growth Trust..................... 0.850% 0.05% 0.90%
Quantitative Equity Trust........ 0.700% 0.06% 0.76%
Equity Index Trust............... 0.250% 0.30% 0.55%
Blue Chip Growth Trust........... 0.875% 0.04% 0.92%
Real Estate Securities Trust..... 0.700% 0.06% 0.76%
Value Trust...................... 0.800% 0.05% 0.85%
International Growth and Income
Trust.......................... 0.950% 0.21% 1.16%
Growth and Income Trust.......... 0.750% 0.04% 0.79%
Equity-Income Trust.............. 0.875% 0.05% 0.93%
Balanced Trust................... 0.800% 0.07% 0.87%
Aggressive Asset Allocation
Trust.......................... 0.875% 0.13% 1.01%
High Yield Trust................. 0.775% 0.06% 0.84%
Moderate Asset Allocation
Trust.......................... 0.800% 0.14% 0.94%
Conservative Asset Allocation
Trust.......................... 0.750% 0.09% 0.84%
Strategic Bond Trust............. 0.775% 0.07% 0.86%
Global Government Bond Trust..... 0.800% 0.14% 0.94%
Capital Growth Bond Trust........ 0.650% 0.07% 0.72%
Investment Quality Bond Trust.... 0.650% 0.07% 0.72%
U.S. Government Securities
Trust.......................... 0.650% 0.07% 0.72%
Money Market Trust............... 0.500% 0.05% 0.55%
Lifestyle Aggressive 1000
Trust.......................... No Advisory Fee 1.13% 1.13%
Lifestyle Growth 820 Trust....... No Advisory Fee 1.03% 1.03%
</TABLE>

21
<PAGE> 32

<TABLE>
<CAPTION>
OTHER TOTAL ANNUAL
PORTFOLIO ADVISORY FEE EXPENSES* OPERATING EXPENSES
- --------- --------------- --------- ------------------
<S> <C> <C> <C>
Lifestyle Balanced 640 Trust..... No Advisory Fee 0.95% 0.95%
Lifestyle Moderate 460 Trust..... No Advisory Fee 0.86% 0.86%
Lifestyle Conservative 280
Trust.......................... No Advisory Fee 0.76% 0.76%
</TABLE>

- ---------------
* Other Expenses include custody fees, registration fees, legal fees, audit
fees, trustees' fees, insurance fees and other miscellaneous expenses.
Advisory fees are reduced or Manulife Securities reimburses the Trust if the
total of all expenses (excluding advisory fees, taxes, portfolio brokerage
commissions, interest, litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Trust's
business) applicable to a portfolio exceeds a specified annual rate. See
"Proposal 1 --Termination of Expense Limitations." These expense limitations
would continue in effect until terminated by Manulife Securities on notice to
the Trust.

The advisory fees payable under the Amended Advisory Agreement are
identical or lower than the advisory fees payable under the Current Advisory
Agreement, except with respect to the Moderate Asset Allocation Trust, the
Equity Trust, the Aggressive Asset Allocation Trust and the Equity-Income Trust.

Moderate Asset Allocation Trust. The advisory fee that the Moderate Asset
Allocation Trust is currently obligated to pay Manulife Securities is 0.750%.
Pursuant to the Amended Advisory Agreement, the advisory fee would increase from
0.750% to 0.800%. Thus, the Moderate Asset Allocation Trust's advisory fee
payable under the Amended Advisory Agreement would increase by 0.050%.

For the Trust's fiscal year ended December 31, 1998, the Moderate Asset
Allocation Trust paid an advisory fee to Manulife Securities in the amount of
$4,588,154. If the Amended Advisory Agreement had been in effect for the fiscal
year ended December 31, 1998, the Moderate Asset Allocation Trust would have
paid an advisory fee to Manulife Securities in the amount of $4,890,830.

Equity Trust. The advisory fee that the Equity Trust is currently
obligated to pay Manulife Securities is 0.750%. Pursuant to the Amended Advisory
Agreement, the advisory fee would increase from 0.750% to 0.850%. Thus, the
Equity Trust's advisory fee payable under the Amended Advisory Agreement would
increase by 0.100%.

For the Trust's fiscal year ended December 31, 1998, the Equity Trust paid
an advisory fee to Manulife Securities in the amount of $11,504,927. If the
Amended Advisory Agreement had been in effect for the fiscal year ended December
31, 1998, the Equity Trust would have paid an advisory fee to Manulife
Securities in the amount of $13,038,917.

22
<PAGE> 33

Aggressive Asset Allocation Trust. The advisory fee that the Aggressive
Asset Allocation Trust is currently obligated to pay Manulife Securities is
0.750%. Pursuant to the Amended Advisory Agreement, the advisory fee would
increase from 0.750% to 0.875%. Thus, the Aggressive Asset Allocation Trust's
advisory fee payable under the Amended Advisory Agreement would increase by
0.125%.

For the Trust's fiscal year ended December 31, 1998, the Aggressive Asset
Allocation Trust paid an advisory fee to Manulife Securities in the amount of
$1,874,673. If the Amended Advisory Agreement had been in effect for the fiscal
year ended December 31, 1998, the Aggressive Asset Allocation Trust would have
paid an advisory fee to Manulife Securities in the amount of $2,187,119.

Equity-Income Trust. The advisory fee that the Equity-Income Trust is
currently obligated to pay Manulife Securities is 0.800%. Pursuant to the
Amended Advisory Agreement, the advisory fee would increase from 0.800% to
0.875%. Thus, the Equity-Income Trust's advisory fee payable under the Amended
Advisory Agreement would increase by 0.075%.

For the Trust's fiscal year ended December 31, 1998, the Equity-Income
Trust paid an advisory fee to Manulife Securities in the amount of $8,121,714.
If the Amended Advisory Agreement had been in effect for the fiscal year ended
December 31, 1998, the Equity-Income Trust would have paid an advisory fee to
Manulife Securities in the amount of $8,883,124.

EXAMPLES: The following actual and pro forma Examples are intended to help
you compare the cost of investing in each of the Portfolios with the cost of
investing in other mutual fund portfolios. The Examples assume that you invest
$10,000 in a particular Portfolio for the time periods indicated and then redeem
all of your shares at the end of those periods. The Examples also assume that
your investment has a 5% return each year and that such Portfolio's operating
expense levels remain the same as set forth in the corresponding expense table
above. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

23
<PAGE> 34

SHAREHOLDER EXPENSES

(UNAUDITED)

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
PORTFOLIO YEAR YEARS YEARS YEARS
- --------- ---- ----- ----- -----
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets Trust........... 123 384 665 1466
Science & Technology Trust................... 123 384 665 1466
International Small Cap Trust................ 127 397 686 1511
Emerging Small Company Trust................. 112 350 606 1340
Pilgrim Baxter Growth Trust.................. 116 362 628 1386
Small/Mid Cap Trust.......................... 106 331 574 1271
International Stock Trust.................... 127 397 686 1511
Worldwide Growth Trust....................... 123 384 665 1466
Global Equity Trust.......................... 103 322 558 1236
Small Company Value Trust.................... 125 390 676 1489
Equity Trust................................. 82 255 444 990
Growth Trust................................. 92 287 498 1108
Quantitative Equity Trust.................... 78 243 422 942
Equity Index Trust........................... 56 176 307 689
Blue Chip Growth Trust....................... 99 309 536 1190
Real Estate Securities Trust................. 78 243 422 942
Value Trust.................................. 87 271 471 1049
International Growth and Income Trust........ 118 368 638 1409
Growth and Income Trust...................... 81 252 439 978
Equity-Income Trust.......................... 87 271 471 1049
Balanced Trust............................... 89 278 482 1073
Aggressive Asset Allocation Trust............ 90 281 488 1084
High Yield Trust............................. 86 268 466 1037
Moderate Asset Allocation Trust.............. 91 284 493 1096
Conservative Asset Allocation Trust.......... 86 268 466 1037
Strategic Bond Trust......................... 87 271 471 1049
Global Government Bond Trust................. 96 300 520 1155
Capital Growth Bond Trust.................... 74 230 401 894
Investment Quality Bond Trust................ 74 230 401 894
U.S. Government Securities Trust............. 74 230 401 894
Money Market Trust........................... 56 176 307 689
Lifestyle Aggressive 1000 Trust.............. 115 359 622 1375
Lifestyle Growth 820 Trust................... 109 340 590 1306
Lifestyle Balanced 640 Trust................. 98 306 531 1178
Lifestyle Moderate 460 Trust................. 89 278 482 1073
Lifestyle Conservative 280 Trust............. 76 237 411 918
</TABLE>

24
<PAGE> 35

PRO FORMA

SHAREHOLDER EXPENSES*

(UNAUDITED)

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
PORTFOLIO YEAR YEARS YEARS YEARS
- --------- ---- ----- ----- -----
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets Trust........... 123 384 665 1466
Science & Technology Trust................... 123 384 665 1466
International Small Cap Trust................ 127 397 686 1511
Emerging Small Company Trust................. 112 350 606 1340
Pilgrim Baxter Growth Trust.................. 111 347 601 1329
Small/Mid Cap Trust.......................... 101 315 547 1213
International Stock Trust.................... 127 397 686 1511
Worldwide Growth Trust....................... 123 384 665 1466
Global Equity Trust.......................... 103 322 558 1236
Small Company Value Trust.................... 125 390 676 1489
Equity Trust................................. 92 287 498 1108
Growth Trust................................. 92 287 498 1108
Quantitative Equity Trust.................... 78 243 422 942
Equity Index Trust........................... 56 176 307 689
Blue Chip Growth Trust....................... 94 293 509 1131
Real Estate Securities Trust................. 78 243 422 942
Value Trust.................................. 87 271 471 1049
International Growth and Income Trust........ 118 368 638 1409
Growth and Income Trust...................... 81 252 439 978
Equity-Income Trust.......................... 94 295 512 1137
Balanced Trust............................... 89 278 482 1073
Aggressive Asset Allocation Trust............ 103 320 555 1230
High Yield Trust............................. 86 268 466 1037
Moderate Asset Allocation Trust.............. 96 300 520 1155
Conservative Asset Allocation Trust.......... 86 268 466 1037
Strategic Bond Trust......................... 87 271 471 1049
Global Government Bond Trust................. 96 300 520 1155
Capital Growth Bond Trust.................... 74 230 401 894
Investment Quality Bond Trust................ 74 230 401 894
U.S. Government Securities Trust............. 74 230 401 894
Money Market Trust........................... 56 176 307 689
Lifestyle Aggressive 1000 Trust.............. 115 359 622 1375
Lifestyle Growth 820 Trust................... 105 328 569 1259
Lifestyle Balanced 640 Trust................. 97 303 325 1166
Lifestyle Moderate 460 Trust................. 88 274 477 1061
Lifestyle Conservative 280 Trust............. 78 243 422 942
</TABLE>

- ---------------

* Reflects expenses an investor can expect to incur under the Amended Advisory
Agreement.

25
<PAGE> 36

THE EXAMPLES ASSUME REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. THE
EXAMPLES SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES OR ANNUAL RETURN OF SHARES OF A PORTFOLIO; ACTUAL EXPENSES AND ANNUAL
RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN. There can be no assurance that
the foregoing pro forma expense ratios would have been the actual expense ratios
for the Portfolios had the Amended Advisory Agreement been in effect for the
period indicated above, or that the foregoing pro forma expense ratios reflect
the actual expense ratios that will be incurred by the Portfolios indicated
above if the Amended Advisory Agreement is approved. The purpose of these tables
is to assist investors in understanding the expenses an investor in each of the
Portfolios will bear. The variable contracts issued by Manulife North America,
Manulife New York, Manufacturers America and Manufacturers U.S.A. provide for
charges not reflected in the above tables.

PAYMENTS TO AFFILIATE OF THE ADVISER

Manufacturers Adviser Corporation ("MAC"), a Colorado corporation, is the
subadviser to the Pacific Rim Emerging Markets Trust, the Money Market Trust,
the Capital Growth Bond Trust, the Quantitative Equity Trust, the Real Estate
Securities Trust, the Equity Index Trust and the Lifestyle Trusts. MAC is an
indirect wholly-owned subsidiary of Manulife Financial and is an affiliate of
the Adviser (other than by reason of serving as a subadviser to a portfolio).

As compensation for its services, MAC receives fees from the Adviser
computed separately for each portfolio for which MAC is the subadviser. For the
year ended December 31, 1998, the Adviser paid to MAC aggregate subadvisory fees
of $1,529,217, allocated as follows:

<TABLE>
<CAPTION>
% OF AVERAGE
PORTFOLIO $ AMOUNT ANNUAL NET ASSETS
- --------- -------- -----------------
<S> <C> <C>
Pacific Rim Emerging Markets
Trust............................ $100,909 0.400%
Money Market Trust................. $375,063 0.068%
Capital Growth Bond Trust.......... $132,958 0.225%
Quantitative Equity Trust.......... $480,575 0.235%
Real Estate Securities Trust....... $397,010 0.240%
Equity Index Trust................. $ 42,702 0.100%
Lifestyle Aggressive 1000 Trust.... N/A N/A
Lifestyle Growth 820 Trust......... N/A N/A
Lifestyle Balanced 640 Trust....... N/A N/A
Lifestyle Moderate 460 Trust....... N/A N/A
Lifestyle Moderate 280 Trust....... N/A N/A
</TABLE>

DURATION AND TERMINATION

The Current Advisory Agreement was most recently submitted to and approved
by shareholders of the Trust at a meeting of the shareholders held on

26
<PAGE> 37

December 5, 1995. This approval occurred in connection with the change of
control of the Adviser as a result of the merger of North American Life
Assurance Company, the former ultimate controlling parent company of Manulife
Securities, and The Manufacturers Life Insurance Company, the current
controlling parent company of Manulife Securities, on January 1, 1996.

If shareholder approval of the proposed amendments is received, the Amended
Advisory Agreement will become effective on May 1, 1999. The initial term of the
Amended Advisory Agreement will continue until May 1, 2001, and thereafter will
continue in effect for successive annual periods provided such continuance is
approved at least annually by (1) a majority of the Trustees of the Trust or the
holders of a majority of the outstanding voting securities of the Trust (as
defined in the 1940 Act); and (2) a majority of the Disinterested Trustees.

LIMITATION OF LIABILITY

The Amended Advisory Agreement is identical to the Current Advisory
Agreement and provides that no Trustee, shareholder, officer, employee or agent
of the Trust shall be held to any personal liability, nor shall their private
property be held for the satisfaction of any obligation or claim or otherwise,
in connection with the affairs of the Trust or any Portfolio. Only the assets
belonging to the Trust or to a particular Portfolio with respect to which such
obligation or claim arose, shall be liable.

EVALUATION BY THE BOARD OF TRUSTEES

At its meeting held on March 26, 1999, the Board of Trustees, including all
of the Disinterested Trustees (with the advice and assistance of independent
legal counsel), approved the Amended Advisory Agreement and recommends that
shareholders approve such agreement.

In connection with the approval of the Amended Advisory Agreement,
including the advisory fee increases for the Moderate Asset Allocation Trust,
the Equity Trust, the Aggressive Asset Allocation Trust and the Equity-Income
Trust, the Board considered numerous factors, including: (i) the nature, quality
and scope of the services provided by Manulife Securities; (ii) performance
information regarding the Trust Portfolios relative to funds with similar
objectives and policies; (iii) performance information regarding the Trust
Portfolios; (iv) the cost and expected profitability to Manulife Securities of
providing portfolio management services to the Trust Portfolios; (v) the
proposed advisory fee and expense ratio for each of the Trust Portfolios in
relation to the fees and expense ratios of other comparable investment
companies; and (vi) the recommendation of Manulife Securities that the advisory
fees for the Moderate Asset Allocation Trust, the Equity Trust, the Aggressive
Asset Allocation Trust and the Equity-Income Trust be increased to be within the
range of other similarly managed investment companies (based on the proposed new
investment objec-

27
<PAGE> 38

tives and/or policies for the Moderate Asset Allocation Trust, the Equity Trust
and the Aggressive Asset Allocation Trust).

In connection with these primary considerations, the Board of Trustees also
considered the benefits to Manulife Securities of its relationship with the
Trust and the commitment of Manulife Securities to maintain the high quality of
the services it provides to the Trust.

MANAGEMENT OF THE ADVISER

Manulife Securities, the successor to NASL Financial Services, Inc., is a
Delaware limited liability company whose principal offices are located at 73
Tremont Street, Boston, Massachusetts 02108. Manulife Securities is a subsidiary
of Manulife North America, the ultimate parent of which is Manulife Financial, a
Canadian mutual life insurance company based in Toronto, Canada. Manulife
Securities is registered as an investment adviser under the Investment Advisers
Act of 1940, as amended, and as a broker-dealer under the Securities and
Exchange Act of 1934, and it is a member of the National Association of
Securities Dealers, Inc. (the "NASD"). Manulife Securities does not serve as
investment adviser to any other investment company.

The table below provides information regarding the directors and executive
officers of The Manufacturers Life Insurance Company of North America, the
controlling and managing member of Manulife Securities.

<TABLE>
<CAPTION>
POSITION WITH
NAME AND PRINCIPAL MANULIFE NORTH AMERICA*
BUSINESS ADDRESS POSITION WITH THE TRUST AND PRINCIPAL OCCUPATION
- ------------------ ----------------------- ------------------------
<S> <C> <C>
John D. Richardson Trustee Director of Manulife
200 Bloor Street East North America; Senior
Toronto, Ontario Executive Vice President
Canada M4W-1E5 and General Manager,
U.S. Operations,
Manulife Financial

John D. DesPrez III President of the Trust Director and Chairman of
73 Tremont Street the Board, Manulife
Boston, MA 02108 North America; Executive
Vice President, U.S.
Operations, Manulife
Financial

Theodore F. Kilkuskie, Jr. Director and President
73 Tremont Street
Boston, MA 02108

Robert Boyda Vice President,
73 Tremont Street Investment Management
Boston, MA 02108 Services

</TABLE>

28
<PAGE> 39

<TABLE>
<CAPTION>
POSITION WITH
NAME AND PRINCIPAL MANULIFE NORTH AMERICA*
BUSINESS ADDRESS POSITION WITH THE TRUST AND PRINCIPAL OCCUPATION
- ------------------ ----------------------- ------------------------
<S> <C> <C>
James Boyle Treasurer of the Trust Vice President,
73 Tremont Street Institutional Markets,
Boston, MA 02108 Manulife Financial

James D. Gallagher Secretary of the Trust Vice President,
73 Tremont Street Secretary and General
Boston, MA 02108 Counsel; Vice President,
Legal Services, Manulife
Financial

Cindy Granata Vice President,
116 Huntington Avenue Information Systems
Boston, MA 02116

Bill Hayward Vice President,
116 Huntington Avenue Administration
Boston, MA 02116

David W. Libbey Vice President,
73 Tremont Street Treasurer and Chief
Boston, MA 02108 Financial Officer

Hugh McHaffie Vice President, U.S.
116 Huntington Avenue Annuities and Product
Boston, MA 02116 Development

Janet Sweeney Vice President,
73 Tremont Street Corporate Services;
Boston, MA 02108 Vice President,
Human Resources,
U.S. Operations,
Manulife Financial

John G. Vrysen Vice President and Chief
73 Tremont Street Actuary, Manulife North
Boston, MA 02108 America; Vice President,
Chief Financial Officer,
U.S. Operations,
Manulife Financial
</TABLE>

- ---------------
* Each officer of Manulife North America serves until his successor is chosen
and qualified or until he sooner dies, resigns, is removed or becomes
disqualified.

PORTFOLIO BROKERAGE

29
<PAGE> 40

will consist primarily of brokerage commissions or dealer or underwriter
spreads. Fixed-income securities and money market instruments are generally
traded on a net basis and do not normally involve either brokerage commissions
or transfer taxes.

Occasionally, securities may be purchased directly from the issuer. For
securities traded primarily in the over-the-counter market, the subadvisers
will, where possible, deal directly with dealers who make a market in the
securities unless better prices and execution are available elsewhere. Such
dealers usually act as principals for their own account.

Selection of Brokers or Dealers to Effect Trades

In selecting brokers/dealers through whom to effect transactions, the
subadvisers will give consideration to a number of factors, including:

- price, dealer spread or commission, if any,

- the reliability, integrity and financial condition of the broker-dealer,

- size of the transaction,

- difficulty of execution, and

- brokerage and research services provided.

Consideration of these factors by a subadviser, either in terms of a
particular transaction or the subadviser's overall responsibilities with respect
to the Trust and any other accounts managed by the subadviser, could result in
the applicable portfolio of the Trust paying a commission or spread on a
transaction that is in excess of the amount of commission or spread another
broker/dealer might have charged for executing the same transaction.

Soft Dollar Considerations

In selecting brokers or dealers, the subadvisers will also give
consideration to the value and quality of any research, statistical, quotation
or valuation services provided by the broker or dealer. In placing a purchase or
sale order, a subadviser may use a broker whose commission in effecting the
transaction is higher than that of some other broker if the subadviser
determines in good faith that the amount of the higher commission is reasonable
in relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either the particular transaction or the subadviser's
overall responsibilities with respect to the Trust and any other accounts
managed by the subadviser. A subadviser may receive products or research that
are used for both research and other purposes, such as administration or
marketing. In such case, the subadviser will make a good faith determination as
to the position attributable to research. Only the portion attributable to
research will be paid through Trust brokerage. The portion not attributable to
research will be paid by the subadviser.

30
<PAGE> 41

Brokerage and research services provided by brokers or dealers include
advice, either directly or through publication or writings, as to:

- the value of securities,

- the advisability of purchasing or selling securities,

- the availability of securities or purchasers or sellers of securities,
and

- analyses and reports concerning (a) issuers, (b) industries, (c)
securities, (d) economic factors and trends and (e) portfolio strategy.

Research services are received primarily in the form of written reports,
computer generated services, telephone contacts and personal meetings with
security analysts. In addition, such services may be provided in the form of
meetings arranged with corporate and industry spokespersons, economists,
academicians and government representatives. In some cases, research services
are generated by third parties but are provided to the subadviser by or through
a broker.

To the extent research services are used by the subadvisers in rendering
investment advice to the Trust, such services would tend to reduce the
subadvisers' expenses. However, the subadvisers do not believe that an exact
dollar value can be assigned to these services. Research services received by
the subadvisers from brokers/dealers executing transactions for the Trust will
be available also for the benefit of other portfolios managed by the
subadvisers.

Sales Volume Considerations

Consistent with the foregoing considerations and the Rules of Fair Practice
of the NASD, sales of contracts for which the broker or dealer or an affiliate
thereof is responsible may be considered as a factor in the selection of such
brokers or dealers. A higher cost broker or dealer will not be selected,
however, solely on the basis of sales volume, but will be selected in accordance
with the criteria set forth above.

Brokerage Commissions Paid to Affiliated Brokers

During the year ended December 31, 1998, the following brokers may be
deemed to have been affiliated brokers of the listed Portfolios.

<TABLE>
<CAPTION>
BROKER PORTFOLIO EXPLANATION
- ------ --------- -----------
<S> <C> <C>
Salomon Smith Barney Inc. U.S. Government Securities Affiliated broker due to the
Trust position of Salomon Brothers
Strategic Bond Trust Asset Management Inc. as
subadviser to these portfolios.

J.P. Morgan Securities Inc. International Growth and Affiliated brokers due to the
J.P. Morgan Securities Ltd. Income Trust position of J.P. Morgan as
subadviser to this portfolio.
</TABLE>

31
<PAGE> 42

<TABLE>
<CAPTION>
BROKER PORTFOLIO EXPLANATION
- ------ --------- -----------
<S> <C> <C>
Dresdner Bank Global Government Bond Affiliated broker due to the
Trust position of Oechsle
International Advisers, L.P. as
the subadviser to this
portfolio.

Fidelity Capital Markets Equity Trust Affiliated broker due to the
Conservative Asset position of Fidelity Management
Allocation Trust Trust Company as subadviser to
Moderate Asset Allocation these portfolios.
Trust
Aggressive Asset
Allocation
Trust

Morgan Stanley & Co. Inc. Global Equity Trust Affiliated brokers due to the
Morgan Stanley International Value Trust position of Morgan Stanley as
Dean Witter Reynolds High Yield Trust subadviser to the Global Equity
Trust and the position of Miller
Anderson & Sherrerd, LLP as
subadviser to the Value Trust
and the High Yield Trust.

Fred Alger & Company Inc. Small/Mid Cap Trust Affiliated broker due to the
position of Fred Alger
Management, Inc. as subadviser
to the Small/Mid Cap Trust.

Robert Fleming International Stock Trust Affiliated brokers due to the
Ord Minnet position of Rowe Price-Fleming
International, Inc. as
subadviser to the International
Stock Trust.
</TABLE>

For the fiscal year ended December 31, 1998, the Trust paid brokerage
commissions in connection with portfolio transactions of $11,980,539, including
the following brokerage commissions paid to affiliated brokers in connection
with the Global Equity Trust, the Small/Mid Cap Trust and the International
Stock Trust:

<TABLE>
<CAPTION>
YEAR ENDED
PORTFOLIO 12/31/98
- --------- ----------
<S> <C>
Global Equity Trust............................. $ 91,860
Small/Mid Cap Trust............................. $1,029,644
International Stock Trust....................... $ 9,073
</TABLE>

For the year ended December 31, 1998, brokerage commissions were paid to
Morgan Stanley & Co. Incorporated by the Global Equity Trust as follows:

<TABLE>
<CAPTION>
% OF PORTFOLIO'S
BROKERAGE % OF AGGREGATE
COMMISSIONS $ AMOUNT OF
REPRESENTED TRANSACTIONS
PORTFOLIO COMMISSIONS FOR THE PERIOD FOR THE PERIOD
- --------- ----------- ---------------- ---------------
<S> <C> <C> <C>
Global Equity Trust....... $ 91,860 0.170% 0.030%
</TABLE>

32
<PAGE> 43

For the year ended December 31, 1998, brokerage commissions were paid to
Fred Alger & Company Incorporated by the Small/Mid Cap Trust as follows:

<TABLE>
<CAPTION>
% OF PORTFOLIO'S
BROKERAGE % OF AGGREGATE
COMMISSIONS $ AMOUNT OF
REPRESENTED TRANSACTIONS
PORTFOLIO COMMISSIONS FOR THE PERIOD FOR THE PERIOD
- --------- ----------- ---------------- ---------------
<S> <C> <C> <C>
Small/Mid Cap Trust....... $1,029,644 99.580% 0.050%
</TABLE>

For the year ended December 31, 1998, brokerage commissions were paid to
Robert Fleming by the International Stock Trust as follows:

<TABLE>
<CAPTION>
% OF PORTFOLIO'S
BROKERAGE % OF AGGREGATE
COMMISSIONS $ AMOUNT OF
REPRESENTED TRANSACTIONS
PORTFOLIO COMMISSIONS FOR THE PERIOD FOR THE PERIOD
- --------- ----------- ---------------- ---------------
<S> <C> <C> <C>
International Stock
Trust................... $8,658 3.320% 0.010%
</TABLE>

For the year ended December 31, 1998, brokerage commissions were paid to
Ord Minnet by the International Stock Trust as follows:

<TABLE>
<CAPTION>
% OF PORTFOLIO'S
BROKERAGE % OF AGGREGATE
COMMISSIONS $ AMOUNT OF
REPRESENTED TRANSACTIONS
PORTFOLIO COMMISSIONS FOR THE PERIOD FOR THE PERIOD
- --------- ----------- ---------------- ---------------
<S> <C> <C> <C>
International Stock
Trust................... $415 0.160% 0%
</TABLE>

REQUIRED VOTE

Approval of the Amended Advisory Agreement will require the affirmative
vote of a majority of the outstanding voting securities of each Portfolio of the
Trust.

Shareholders of the Worldwide Growth Trust and the Capital Growth Bond
Trust are also receiving a separate Prospectus/Proxy Statement in connection
with the proposed transfer of all of the assets and liabilities of the Worldwide
Growth Trust and the Capital Growth Bond Trust to the Global Equity Trust and
the Investment Quality Bond Trust, respectively. If these transfers receive the
necessary shareholder approval, the Worldwide Growth Trust and the Capital
Growth Bond Trust will be merged with and into the Global Equity Trust and the
Investment Quality Bond Trust, respectively, and effective May 1, 1999, the
Worldwide Growth Trust and the Capital Growth Bond Trust will no longer be
separate Portfolios of the Trust. However, shareholders of the Worldwide Growth
Trust and the Capital Growth Bond Trust are being asked to vote on this Proposal
1.

In the event that the proposed amendments to the Current Advisory Agreement
are not approved at the Meeting, Manulife Securities will continue to act as the
Adviser with respect to the Trust and the Portfolios under the Current

33
<PAGE> 44

Advisory Agreement. THE BOARD HAS UNANIMOUSLY RECOMMENDED APPROVAL OF THE
AMENDED ADVISORY AGREEMENT.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
EACH PORTFOLIO OF THE TRUST VOTE "FOR" PROPOSAL 1.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE MODERATE ASSET ALLOCATION TRUST VOTE "FOR" PROPOSAL 1A.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE EQUITY TRUST VOTE "FOR" PROPOSAL 1B.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE AGGRESSIVE ASSET ALLOCATION TRUST VOTE "FOR" PROPOSAL 1C.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE EQUITY-INCOME TRUST VOTE "FOR" PROPOSAL 1D.

34
<PAGE> 45

PROPOSAL 2

APPROVAL OF A CHANGE TO THE INVESTMENT OBJECTIVE OF
THE CONSERVATIVE ASSET ALLOCATION TRUST

Effective May 1, 1999, Capital Guardian Trust Company ("CGTC") will replace
Fidelity Management Trust Company ("FMTC") as subadviser to the Conservative
Asset Allocation Trust. See "Information Statement -- New Subadvisory Agreement
with Capital Guardian Trust Company." In connection with the Board's approval of
this change in subadviser, the Board, including the Disinterested Trustees, has
considered and unanimously approved (on the recommendation of the Adviser)
changing the investment objective and certain non-fundamental policies of the
Portfolio to reflect the investment strategies of CGTC. Based upon the
foregoing, the Board also approved changing the name of the Conservative Asset
Allocation Trust to the Diversified Bond Trust, effective May 1, 1999.

The investment objective of the Portfolio is a fundamental policy which
means that, under the 1940 Act, it may not be changed without the approval of
shareholders of that Portfolio. There can be no assurance that the Portfolio
will attain its investment objective.

- The current investment objective of the Conservative Asset Allocation
Trust is to obtain the highest total return consistent with a
conservative level of risk tolerance.

- If shareholders approve this Proposal 2, the Portfolio's investment
objective instead will be to seek high total return as is consistent with
the conservation of capital. As a result, the Portfolio would no longer
invest in equity securities.

The Portfolio will be subject to special risks as a result of its ability
to invest in fixed-income securities. Fixed-income securities are generally
subject to two principal types of risks: (1) interest rate risk and (2) credit
quality risk. Fixed-income securities are affected by changes in interest rates.
When interest rates decline, the market value of fixed-income securities can
generally be expected to

35
<PAGE> 46

rise. Conversely, when interest rates rise, the market value of fixed-income
securities can generally be expected to decline. Fixed-income securities are
also subject to the risk that the issuer of the security will not repay all or a
portion of the principal borrowed and will not make all interest payments. If
the credit quality of a fixed-income security deteriorates after the Portfolio
has purchased the security, the market value of the security may decrease and
lead to a decrease in the value of the Portfolio's investments. Investment grade
fixed-income securities in the lowest rating category involve a higher degree of
risk than fixed-income securities in the higher rated categories. While such
securities are considered investment grade quality and are deemed to have
adequate capacity for payment of principal and interest, such securities lack
outstanding investment characteristics and have speculative characteristics as
well.

For temporary defensive purposes, the Portfolio will be able to invest all
or a portion of its assets in cash and cash equivalents. This reserve position
provides flexibility in meeting redemption requests and in the timing of new
investments. In addition, this reserve position serves as a short-term defense
during periods of unusual market conditions.

The Portfolio will also be authorized to use all of the various investment
strategies referred to under "Hedging and Other Strategic Transactions" in the
Trust's current Prospectus. However, it is not presently contemplated that any
of these strategies will be used to a significant degree by the Portfolio. The
Trust's current Statement of Additional Information contains a description of
these strategies and of certain risks associated therewith.

The Portfolio has a number of additional investment policies and
restrictions that are described in the Trust's Statement of Additional
Information.

REQUIRED VOTE

Only shareholders of the Conservative Asset Allocation Trust will vote on
this Proposal 2. Approval of the proposal to change the investment objective
will require the affirmative vote of a majority of the outstanding voting
securities of the Portfolio.

If shareholders approve the proposed change to the Portfolio's investment
objective, such change will become effective on May 1, 1999.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE CONSERVATIVE ASSET ALLOCATION TRUST VOTE "FOR" PROPOSAL 2.

36
<PAGE> 47

PROPOSAL 3

APPROVAL OF A CHANGE TO THE INVESTMENT OBJECTIVE OF
THE MODERATE ASSET ALLOCATION TRUST

Effective May 1, 1999 the Capital Guardian Trust Company ("CGTC") will
replace Fidelity Management Trust Company ("FMTC") as subadviser to the Moderate
Asset Allocation Trust. See "Information Statement -- New Subadvisory Agreement
with Capital Guardian Trust Company." In connection with the Board's approval of
this change in subadviser, the Board, including each of the Disinterested
Trustees, has considered and unanimously approved (on the recommendation of the
Adviser) changing the investment objective and certain non-fundamental policies
of the Portfolio to reflect the proposed investment strategies of CGTC. Based
upon the foregoing, the Board approved changing the name of the Moderate Asset
Allocation Trust to the Income & Value Trust, effective May 1, 1999.

- The current investment objective of the Moderate Asset Allocation Trust
is to obtain the highest total return consistent with a moderate level of
risk tolerance.

- If shareholders approve this Proposal 3, the Portfolio's investment
objective instead will be to seek the balanced accomplishment of (a)
conservation of principal and (b) long-term growth of capital and income.
As a result, the Portfolio would place greater emphasis on conserving
principal and long-term growth of capital than on obtaining the highest
total return consistent with a moderate level of risk tolerance.

37
<PAGE> 48

income securities are affected by changes in interest rates. When interest rates
decline, the market value of fixed-income securities generally can be expected
to rise. Conversely, when interest rates rise, the market value of fixed income
securities generally can be expected to decline. Fixed-income securities are
also subject to the risk that the issuer of the security will not repay all or a
portion of the principal borrowed and will not make all interest payments. If
the credit quality of a fixed-income security deteriorates after the Portfolio
has purchased the security, the market value of the security may decrease and
lead to a decrease in the value of the Portfolio's investments. Investments in
lower rated fixed-income securities are riskier than portfolios that may invest
in higher rated fixed-income securities.

The Portfolio will also be subject to special risks as a result of its
ability to invest in equity securities. Equity securities held by the Portfolio
will be listed on national securities exchanges or in the national
over-the-counter ("OTC") market (also known as NASDAQ) and may include American
Depository Receipts ("ADRs"). Stock markets are volatile. The price of equity
securities will fluctuate and can decline and reduce the value of the Portfolio.
The price of equity securities fluctuates based on changes in a company's
financial condition and overall market and economic conditions. The value of
equity securities purchased by the Portfolio could decline significantly if the
financial condition of the companies it is invested in declines or if overall
market and economic conditions deteriorate. Even investments in high quality or
"blue chip" equity securities of established companies with large market
capitalizations, which generally have strong financial conditions, can be
negatively impacted by poor overall market and economic conditions. Companies
with large market capitalizations may also have less growth potential than
smaller companies and may be able to react less quickly to change in the
marketplace.

Investing in mortgage-backed and other asset-backed securities subjects the
Portfolio to prepayment risk. Prepayments of underlying mortgages or pools of
assets result in a loss of anticipated interest payments and all or part of any
premium paid for the security. Therefore, the Portfolio could make less money
than expected or could lose money. Mortgage prepayments generally increase with
falling interest rates and decrease with rising interest rates.

For temporary defensive purposes, the Portfolio will be able to invest all
or a portion of its assets in fixed-income securities, cash and cash
equivalents. This reserve position provides flexibility in meeting redemption
requests and in the timing of new investments. In addition, this reserve
position serves as a short-term defense during periods of unusual market
conditions.

The Portfolio will be authorized to use all of the various investment
strategies referred to under "Hedging and Other Strategic Transactions" in the
Trust's current Prospectus. However, it is not presently contemplated that any
of these strategies will be used to a significant degree by the Portfolio. The
Trust's

38
<PAGE> 49

current Statement of Additional Information contains a description of these
strategies and of certain risks associated therewith.

The Portfolio has a number of additional investment policies and
restrictions that are described in the Trust's Statement of Additional
Information.

REQUIRED VOTE

Only shareholders of the Moderate Asset Allocation Trust will vote on this
Proposal 3. Approval of the proposal to change the Portfolio's investment
objective will require the affirmative vote of a majority of the outstanding
voting securities of the Portfolio.

If shareholders approve the proposed change to the Portfolio's investment
objective, such change will become effective on May 1, 1999.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE MODERATE ASSET ALLOCATION TRUST VOTE "FOR" PROPOSAL 3.

39
<PAGE> 50

PROPOSAL 4

APPROVAL OF A CHANGE TO THE INVESTMENT OBJECTIVE OF
THE AGGRESSIVE ASSET ALLOCATION TRUST

Effective May 1, 1999, Fidelity Management Trust Company ("FMTC"), the
subadviser to the Aggressive Asset Allocation Trust, proposes to change the
manner in which it manages the Portfolio. The Board, including the Disinterested
Trustees, has considered and unanimously approved (on the recommendation of the
Adviser) changing the investment objective and certain non-fundamental policies
of the Portfolio to reflect the proposed investment strategies of FMTC. Based
upon the foregoing, the Board also approved changing the name of the Portfolio
to the Large Cap Growth Trust, effective May 1, 1999. In connection with the
change in investment objective, the Board approved a new subadvisory agreement
with FMTC (see "Information Statement -- New Subadvisory Agreement with Fidelity
Management Trust Company").

- The current investment objective of the Aggressive Asset Allocation Trust
is to obtain the highest total return consistent with an aggressive level
of risk tolerance.

- If shareholders approve this Proposal 4, the Portfolio's investment
objective instead will be to seek long-term growth of capital. As a
result, the Portfolio would place greater emphasis on seeking long-term
growth of capital than on obtaining the highest total return consistent
with an aggressive level of risk tolerance.

The changes to the Portfolio's non-fundamental investment policies do not
require shareholder approval. Such changes will be implemented upon the
effectiveness of the change to the Portfolio's fundamental investment objective
proposed above. Upon implementation of such changes, FMTC will normally invest
the Portfolio's assets primarily in common stocks. FMTC will normally invest at
least 65% of the Portfolio's total assets in securities of companies with large
market capitalizations. FMTC will define companies with "large market
capitalizations" as those with market capitalizations of $1 billion or more at
the time of the Portfolio's investment. Companies whose capitalization falls
below this level after purchase continue to be considered to have a large market
capitalization for purposes of the 65% policy. FMTC may invest the Portfolio's
assets in securities of foreign issuers in addition to securities of domestic
issuers. FMTC will not be constrained by any particular investment style. At any
given time, FMTC may tend to buy "growth" stocks or "value" stocks or a
combination of both types. In buying and selling securities for the Portfolio,
FMTC will rely on fundamental analysis of each issuer and its potential for
success in light of

40
<PAGE> 51

its current financial condition, its industry position, and economic and market
conditions. Factors considered will include growth potential, earnings estimates
and management.

The Portfolio will be subject to special risks as a result of its ability
to invest in equity securities. Stock markets are volatile. The price of equity
securities will fluctuate and can decline and reduce the value of the Portfolio.
The price of equity securities fluctuates based on changes in a company's
financial condition and overall market and economic conditions. The value of
equity securities purchased by the Portfolio could decline significantly if the
financial condition of the companies it is invested in declines or if overall
market and economic conditions deteriorate. Even investments in high quality or
"blue chip" equity securities of established companies with large market
capitalizations, which generally have strong financial conditions, can be
negatively impacted by poor overall market and economic conditions. Companies
with large market capitalizations may also have less growth potential than
smaller companies and may be able to react less quickly to change in the
marketplace.

The Portfolio will also be subject to special risks as a result of its
ability to invest in foreign securities. Investments in foreign securities may
cause the Portfolio to lose money when converting instruments from foreign
currencies into U.S. dollars. Investments in foreign securities also may subject
the Portfolio to the political or economic conditions of the foreign country and
the risk that the company issuing the security may be nationalized. These
conditions could cause the Portfolio's investments to lose value if these
conditions deteriorate for any reason. This risk increases in the case of
emerging market countries which are more likely to be politically unstable.
Moreover, if a company is nationalized, the value of the company's securities
could decrease in value or even become worthless. In addition, foreign
countries, especially emerging market countries, may also have less stringent
investor protection and disclosure standards than the U.S. Therefore, when
making a decision to purchase a security for a portfolio, FMTC may not be aware
of problems associated with the company issuing the security and may not enjoy
the same legal rights as those provided in the U.S. Foreign countries,
especially emerging market countries, also often have problems associated with
the removal of proceeds of investments from a foreign country and the settlement
of sales. Currency control restrictions may prevent or delay the Portfolio from
taking money out of the country or may impose additional taxes on money removed
from the country, and settlement of sales problems could cause the Portfolio to
suffer a loss if a security to be sold declines in value while settlement of
sale is delayed.

41
<PAGE> 52

term defense during periods of unusual market conditions. During unusual market
conditions, the Portfolio may also temporarily use a different investment
strategy for defensive purposes. If FMTC uses a temporary defensive policy,
different factors could affect the Portfolio's performance and the Portfolio may
not achieve its investment objective.

The Portfolio will be authorized to use all of the various investment
strategies referred to under "Hedging and Other Strategic Transactions" in the
Trust's current Prospectus. The Trust's current Statement of Additional
Information contains a description of these strategies and of certain risks
associated therewith.

The Portfolio has a number of additional investment policies and
restrictions that are described in the Trust's Statement of Additional
Information.

REQUIRED VOTE

Only shareholders of the Aggressive Asset Allocation Trust will vote on
this Proposal 4. Approval of the proposed change to the Portfolio's investment
objective will require the affirmative vote of a majority of the outstanding
voting securities of the Portfolio.

If shareholders approve the proposed change to the Portfolio's investment
objective, such change will become effective on May 1, 1999.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE AGGRESSIVE ASSET ALLOCATION TRUST VOTE "FOR" PROPOSAL 4.

42
<PAGE> 53

PROPOSAL 5

APPROVAL OF A CHANGE TO THE INVESTMENT OBJECTIVE OF
THE EMERGING SMALL COMPANY TRUST

Effective May 1, 1999, Franklin Advisers, Inc. ("Franklin Advisers") will
replace Warburg Pincus Asset Management, Inc. ("Warburg") as subadviser to the
Emerging Small Company Trust. See "Information Statement -- New Subadvisory
Agreement with Franklin Advisers, Inc." In connection with the Board's approval
of this change in subadviser, the Board, including the Disinterested Trustees,
has considered and unanimously approved (on the recommendation of the Adviser)
changing the investment objective and certain non-fundamental policies of the
Portfolio to reflect the investment strategies of Franklin Advisers.

- The current investment objective of the Emerging Small Company Trust is
maximum capital appreciation.

- If shareholders approve this Proposal 5, the Portfolio's investment
objective instead will be to seek long-term growth of capital.

The changes to the Portfolio's non-fundamental investment policies do not
require shareholder approval. Such changes will be implemented upon the
effectiveness of the change to the Portfolio's fundamental investment objective
proposed above. Upon implementation of such changes, Franklin Advisers will seek
to attain the Portfolio's investment objective by investing, under normal market
conditions, at least 65% of the Portfolio's total assets in equity securities of
small capitalization ("small cap") growth companies. In general, companies in
which the Portfolio invests will have market cap values (share price times the
number of common stock shares outstanding) of less than $1.5 billion at the time
of purchase. The securities of small cap companies are traded on the New York
Stock Exchange, the American Stock Exchange and in the over-the-counter market.
Equity securities also include common stocks, preferred stocks, securities
convertible into common stocks and warrants for the purchase of common stocks.

The Portfolio may invest up to 35% (measured at the time of purchase) of
its total assets in any combination of the following if such investment presents
a favorable investment opportunity consistent with the Portfolio's investment
goal: (i) equity securities of larger capitalization companies which Franklin
Advisers believes have the strong growth potential and (ii) relatively
well-known, larger companies in mature industries which Franklin Advisers
believes have the potential for capital appreciation.

43
<PAGE> 54

The Portfolio may invest up to 25% of its total assets in foreign
securities, including those of developing or undeveloped markets, and sponsored
or unsponsored American, European and Global Depository Receipts. The Portfolio,
however, currently intends to limit its investments in foreign securities to 10%
of its total assets.

The Portfolio may invest up to 10% of its total assets in real estate
investment trusts ("REITs"). In addition, the Portfolio may invest up to 5% of
its total assets in corporate debt securities that Franklin Advisers believes
have the potential for capital appreciation as a result of improvements in the
creditworthiness of the issuer. Corporate debt securities may include bonds,
notes and debentures. The Portfolio may invest in both rated and unrated debt
securities. The Portfolio will only purchase securities rated B or above by
Moody's Investors Services ("Moody's") or Standard & Poor's Corporation
("Standard & Poor's") (or comparable unrated securities). The Portfolio will not
invest more than 5% of its total assets in non-investment grade securities
(rated lower Baa by Moody's or BBB by Standard & Poor's or comparable unrated
securities). The receipt of income from debt securities is incidental to the
Portfolio's investment goal of capital growth.

The Portfolio will also be subject to special risks as a result of its
ability to invest in small cap equity securities. Small cap equity securities
include the risk that the small company is more likely than larger or
established companies to fail or not to accomplish its goals. As a result, the
value of the company's securities could decline significantly. In addition,
small companies have a greater degree of change in earnings and business
prospects than larger or established companies, resulting in more volatility in
the price of their securities. The securities of small companies may also have
limited marketability. This factor could cause the value of the Portfolio's
investments to decrease if it needs to sell such securities when there are few
outstanding buyers. In addition, small companies usually have fewer outstanding
shares than larger or established companies. Therefore, it may be more difficult
to buy or sell large amounts of these shares without unfavorably

44
<PAGE> 55

The Portfolio will also be subject to special risks as a result of its
ability to invest up to 25% of its assets in foreign securities. Investments in
foreign securities may cause the Portfolio to lose money when converting
instruments from foreign currencies into U.S. dollars. Investments in foreign
securities also may subject the Portfolio to the political or economic
conditions of the foreign country and the risk that the company issuing the
security may be nationalized. These conditions could cause the Portfolio's
investments to lose money if these conditions deteriorate for any reason. This
risk increases in the case of emerging market countries which are more likely to
be politically unstable. Moreover, if a company is nationalized, the value of
the company's securities could decrease in value or even become worthless. In
addition, foreign countries, especially emerging market countries, may also have
less stringent investor protection and disclosure standards than the U.S.
Therefore, when making a decision to purchase a security for the Portfolio,
Franklin Advisers may not be aware of problems associated with the company
issuing the security and may not enjoy the same legal rights as those provided
in the U.S. Foreign countries, especially emerging market countries, also often
have problems associated with the removal of proceeds of investments from a
foreign country and the settlement of sales. Currency control restrictions may
prevent or delay the Portfolio from taking money out of the country or may
impose additional taxes on money removed from the country, and settlement of
sales problems could cause the Portfolio to suffer a loss if a security to be
sold declines in value while settlement of sale is delayed. Since the Portfolio
intends to limit its investments in foreign securities to 10% of its total
assets, and at no time will invest no more than 25% of its assets in foreign
securities, these risks associated with foreign securities will not affect the
Portfolio as much as a portfolio that invests more of its assets in foreign
securities.

For temporary defensive purposes, the Portfolio will be able to invest all
or a portion of its assets in repurchase agreements, cash and cash equivalents.
This reserve position provides flexibility in meeting redemption requests and in
the timing of new investments. In addition, this reserve position serves as a
short-term defense during periods of unusual market conditions.

The Portfolio may write (sell) covered put and call options and may buy put
and call options on securities and securities indices. In addition, the
Portfolio may buy and sell futures and options on futures with respect to
securities, indices and currencies. These investment strategies are referred to
under "Hedging and Other Strategic Transactions" in the Trust's current
Prospectus. The Trust's current Statement of Additional Information contains a
description of these strategies and of certain risks associated therewith.

45
<PAGE> 56

The Portfolio has a number of additional investment policies and
restrictions that are described in the Trust's Statement of Additional
Information.

REQUIRED VOTE

Only shareholders of the Emerging Small Company Trust will vote on this
Proposal 5. Approval of the proposal to change the Portfolio's investment
objective will require the affirmative vote of a majority of the outstanding
voting securities of the Portfolio.

If shareholders approve the proposed change to the Portfolio's investment
objective, such change will become effective on May 1, 1999.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE EMERGING SMALL COMPANY TRUST VOTE "FOR" PROPOSAL 5.

46
<PAGE> 57

PROPOSAL 6

APPROVAL OF A CHANGE TO THE INVESTMENT OBJECTIVE OF
THE PILGRIM BAXTER GROWTH TRUST

Effective May 1, 1999, A I M Capital Management, Inc. ("AIM") will replace
Pilgrim Baxter & Associates, Ltd. ("PBA") as subadviser to the Pilgrim Baxter
Growth Trust. See "Information Statement -- New Subadvisory Agreement with A I M
Capital Management, Inc." In connection with the Board's approval of this change
in subadviser, the Board, including the Disinterested Trustees, has considered
and unanimously approved (on the recommendation of the Adviser) changing the
investment objective and certain non-fundamental policies of the Portfolio to
reflect the investment strategies of AIM. Based upon the foregoing, the Board
also approved changing the name of the Portfolio to the Aggressive Growth Trust,
effective May 1, 1999.

- The current investment objective of the Pilgrim Baxter Growth Trust is
capital appreciation.

- If shareholders approve this Proposal 6, the Portfolio's investment
objective instead will be to seek long-term capital appreciation.

The changes to the Portfolio's non-fundamental investment policies do not
require shareholder approval. Such changes will be implemented upon the
effectiveness of the change to the Portfolio's fundamental investment objective
proposed above. Upon implementation of such changes, AIM will seek to attain the
Portfolio's investment objective by investing the Portfolio's assets principally
in common stocks, convertible bonds, convertible preferred stocks and warrants
of companies which, in the judgment of AIM, are expected to achieve earnings
growth over time at a rate in excess of 15% per year. Many of these companies
are in the small and medium-sized category. AIM will be particularly interested
in investing the Portfolio's assets in companies that are likely to benefit from
new or innovative products, services or processes that should enhance such
companies' prospects for future growth in earnings. As a result of this policy,
the market prices of many of the securities purchased and held by the Portfolio
may fluctuate widely. Any income received from securities held by the Portfolio
will be incidental.

The Portfolio will invest primarily in securities of two basic categories
of companies: (i) "core" companies which AIM considers to have experienced
above-average and consistent long-term growth in earnings and to have excellent
prospects for outstanding future growth; and (ii) "earnings acceleration"

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companies" which AIM believes are currently enjoying a dramatic increase in
profits.

The Portfolio's strategy would not preclude investment in large, seasoned
companies which, in the judgment of AIM, possess superior potential returns
similar to companies with formative growth profiles. The Portfolio may also
invest in established smaller companies (under $500 million in market
capitalization) which AIM believes offers exceptional value based upon
substantially above average earnings growth potential relative to market value.

The Portfolio may invest in non-equity securities such as corporate bonds
or U.S. Government obligations during periods when, in the judgment of AIM,
prevailing market, financial or economic conditions warrant, as well as when
such holdings are advisable in light of a change in circumstances of a
particular company or within a particular industry.

The Portfolio may invest up to 25% of its total assets in foreign
securities. American Depository Receipts ("ADRs") and European Depository
Receipts ("EDRs") and other securities representing underlying securities of
foreign issuers would be treated as foreign securities and would be included in
this 25% limitation.

The Portfolio will be subject to special risks as a result of its ability
to invest primarily in equity securities with an emphasis on small and
medium-sized companies. Stock markets are volatile. The price of equity
securities will fluctuate and can decline and reduce the value of the Portfolio.
The price of equity securities fluctuates based on changes in a company's
financial condition and overall market and economic conditions. The value of
equity securities purchased by the Portfolio could decline significantly if the
financial condition of the companies it is invested in declines or if overall
market and economic conditions deteriorate. Even investments in high quality or
"blue chip" equity securities of established companies with large market
capitalizations, which generally have strong financial conditions, can be
negatively impacted by poor overall market and economic conditions. Companies
with large market capitalizations may also have less growth potential than
smaller companies and may be able to react less quickly to change in the
marketplace.

Small companies are more likely than larger or established companies to
fail or not to accomplish their goals. As a result, the value of the company's
securities could decline significantly. In addition, small companies have a
greater degree of change in earnings and business prospects than larger or
established companies, resulting in more volatility in the price of their
securities. The securities of small companies may also have limited
marketability. This factor could cause the value of the Portfolio's investments
to decrease if it needs to sell such securities when there are few outstanding
buyers. In addition, small companies usually have fewer outstanding shares than
larger or established companies. Therefore, it may be more difficult to buy or
sell large amounts of these shares without unfavorably

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impacting the price of the security. Moreover, there may be less publicly
available information about small companies. Thus, when making a decision to
purchase a security for the Portfolio, AIM may not be aware of problems
associated with the company issuing the security. Investments in the securities
of medium-sized companies present risks similar to those associated with small
companies although to a lesser degree due to the larger size of the companies.

The Portfolio will also be subject to special risks as a result of its
ability to invest up to 25% of its assets in foreign securities. Investments in
foreign securities may cause the Portfolio to lose money when converting
instruments from foreign currencies into U.S. dollars. Investments in foreign
securities also may subject the Portfolio to the political or economic
conditions of the foreign country and the risk that the company issuing the
security may be nationalized. These conditions could cause the Portfolio's
investments to lose value if these conditions deteriorate for any reason. This
risk increases in the case of emerging market countries which are more likely to
be politically unstable. Moreover, if a company is nationalized, the value of
the company's securities could decrease in value or even become worthless. In
addition, foreign countries, especially emerging market countries, may also have
less stringent investor protection and disclosure standards than the U.S.
Therefore, when making a decision to purchase a security for the Portfolio, AIM
may not be aware of problems associated with the company issuing the security
and may not enjoy the same legal rights as those provided in the U.S. Foreign
countries, especially emerging market countries, also often have problems
associated with the removal of proceeds of investments from a foreign country
and the settlement of sales. Currency control restrictions may prevent or delay
the Portfolio from taking money out of the country or may impose additional
taxes on money removed from the country, and settlement of sales problems could
cause the Portfolio to suffer a loss if a security to be sold declines in value
while settlement of sale is delayed. Since the Portfolio will invest no more
than 25% of its assets in foreign securities, these risks associated with
foreign securities will not affect the Portfolio as much as a portfolio that
invests more of its assets in foreign securities.

For temporary defensive purposes, the Portfolio will be able to invest all
or a portion of its assets in bonds, repurchase agreements, cash and cash
equivalents. This reserve position provides flexibility in meeting redemption
requests and in the timing of new investments. In addition, this reserve
position serves as a short-term defense during periods of unusual market
conditions.

The Portfolio may purchase and sell stock index futures contracts, purchase
options on stock index futures as a hedge against changes in market conditions,
purchase and sell futures contracts and purchase related options in order to
hedge the value of its portfolio against changes in market conditions, write
(sell) covered call options (up to 25% of the value of the Portfolio's net
assets), enter into foreign exchange transactions to hedge against possible
variations in foreign

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exchange rates between currencies of countries in which the Portfolio is
invested including: the direct purchase or sale of foreign currency, the
purchase or sale of options on futures contracts with respect to foreign
currency, the purchase or sale of forward contracts, exchange traded futures
contracts and options on futures contracts. These investment strategies are
referred to under "Hedging and Other Strategic Transactions" in the Trust's
current Prospectus. The Trust's current Statement of Additional Information
contains a description of these strategies and of certain risks associated
therewith.

The Portfolio has a number of additional investment policies and
restrictions that are described in the Trust's Statement of Additional
Information.

REQUIRED VOTE

Only shareholders of the Pilgrim Baxter Growth Trust will vote on this
Proposal 6. Approval of the proposal to change the Portfolio's investment
objective will require the affirmative vote of a majority of the outstanding
voting securities of the Portfolio.

If shareholders approve the proposed change to the Portfolio's investment
objective, such change will become effective on May 1, 1999.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE PILGRIM BAXTER GROWTH TRUST VOTE "FOR" PROPOSAL 6.

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PROPOSAL 7

APPROVAL OF A CHANGE TO THE INVESTMENT OBJECTIVE OF
THE INTERNATIONAL GROWTH AND INCOME TRUST

Effective May 1, 1999, Fidelity Management Trust Company ("FMTC") will
replace J.P. Morgan Investment Management Inc. ("J.P. Morgan") as subadviser to
the International Growth and Income Trust. See "Information Statement -- New
Subadvisory Agreement with Fidelity Management Trust Company." In connection
with the Board's approval of this change in subadviser, the Board, including the
Disinterested Trustees, has considered and unanimously approved (on the
recommendation of the Adviser) changing the investment objective and certain
non-fundamental policies of the Portfolio to reflect the investment strategies
of FMTC. Based upon the foregoing, the Board approved changing the name of the
Portfolio to the Overseas Trust, effective May 1, 1999.

- The current investment objective of the International Growth and Income
Trust is to seek long-term growth of capital and income.

- If shareholders approve this Proposal 7, the Portfolio's investment
objective instead will be to seek growth of capital. As a result, the
Portfolio would no longer seek long-term growth of income.

The changes to the Portfolio's non-fundamental investment policies do not
require shareholder approval. Such changes will be implemented upon the
effectiveness of the change to the Portfolio's fundamental investment objective
proposed above. Upon implementation of such changes, FMTC will normally invest
at least 65% of the Portfolio's total assets in foreign securities, including
American Depository Receipts ("ADRs") and European Depository Receipts ("EDRs").
The Portfolio may also invest in U.S. issuers. FMTC will normally invest the
Portfolio's assets primarily in common stocks. FMTC will normally diversify the
Portfolio's investments across different countries and regions. In allocating
the Portfolio's assets across countries and regions, FMTC will consider the size
of the market in each country and region relative to the size of the
international market as a whole. In buying and selling securities for the
Portfolio, FMTC will rely on fundamental analysis of each issuer and its
potential for success in light of its current financial condition, its industry
position, and economic and market conditions. Factors considered will include
growth potential, earnings estimates and management.

The Portfolio will be subject to special risks as a result of its investing
primarily in foreign equity securities. Investments in foreign securities may
cause the Portfolio to lose money when converting instruments from foreign
currencies

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into U.S. dollars. Investments in foreign securities also may subject the
Portfolio to the political or economic conditions of the foreign country and the
risk that the company issuing the security may be nationalized. These conditions
could cause the Portfolio's investments to lose value if these conditions
deteriorate for any reason. This risk increases in the case of emerging market
countries which are more likely to be politically unstable. Moreover, if a
company is nationalized, the value of the company's securities could decrease in
value or even become worthless. In addition, foreign countries, especially
emerging market countries, may also have less stringent investor protection and
disclosure standards than the U.S. Therefore, when making a decision to purchase
a security for the Portfolio, FMTC may not be aware of problems associated with
the company issuing the security and may not enjoy the same legal rights as
those provided in the U.S. Foreign countries, especially emerging market
countries, also often have problems associated with the removal of proceeds of
investments from a foreign country and the settlement of sales. Currency control
restrictions may prevent or delay the Portfolio from taking money out of the
country or may impose additional taxes on money removed from the country, and
settlement of sales problems could cause the Portfolio to suffer a loss if a
security to be sold declines in value while settlement of sale is delayed.

The Portfolio will also be subject to special risks as a result of its
ability to invest in equity securities. Stock markets are volatile. The price of
equity securities will fluctuate and can decline and reduce the value of the
Portfolio. The price of equity securities fluctuates based on changes in a
company's financial condition and overall market and economic conditions. The
value of equity securities purchased by the Portfolio could decline
significantly if the financial condition of the companies it is invested in
declines or if overall market and economic conditions deteriorate. Even
investments in high quality or "blue chip" equity securities of established
companies with large market capitalizations, which generally have strong
financial conditions, can be negatively impacted by poor overall market and
economic conditions. Companies with large market capitalizations may also have
less growth potential than smaller companies and may be able to react less
quickly to change in the marketplace.

For temporary defensive purposes, the Portfolio will be able to invest all
or a portion of its assets in bonds, preferred stocks, repurchase agreements,
cash and cash equivalents denominated in either U.S. dollars or foreign
currencies. This reserve position provides flexibility in meeting redemption
requests and in the timing of new investments. In addition, this reserve
position serves as a short-term defense during periods of unusual market
conditions. During unusual market conditions, the Portfolio may also temporarily
use a different investment strategy for defensive purposes. If FMTC uses a
temporary defensive policy, different factors could affect the Portfolio's
performance and the Portfolio may not achieve its investment objective.

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The Portfolio will be authorized to use all of the various investment
strategies referred to under "Hedging and Other Strategic Transactions" in the
Trust's current Prospectus. The Trust's current Statement of Additional
Information contains a description of these strategies and of certain risks
associated therewith.

The Portfolio has a number of additional investment policies and
restrictions that are described in the Trust's Statement of Additional
Information.

REQUIRED VOTE

Only shareholders of the International Growth and Income Trust will vote on
this Proposal 7. Approval of the proposed change to the Portfolio's investment
objective will require the affirmative vote of a majority of the outstanding
voting securities of the Portfolio.

If shareholders approve the proposed change to the Portfolio's investment
objective, such change will become effective on May 1, 1999.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE INTERNATIONAL GROWTH AND INCOME TRUST VOTE "FOR" PROPOSAL 7.

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PROPOSAL 8

APPROVAL OF A CHANGE TO THE INVESTMENT OBJECTIVE OF
THE GLOBAL GOVERNMENT BOND TRUST

Effective May 1, 1999, Pacific Investment Management Company ("PIMCO") will
replace Oechsle International Advisors, LLC ("Oechsle LLC") as subadviser to the
Global Government Bond Trust. See "Information Statement -- New Subadvisory
Agreement with Pacific Investment Management Company." In connection with the
Board's approval of this change in subadviser, the Board, including the
Disinterested Trustees, has considered and unanimously approved (on the
recommendation of the Adviser) changing the investment objective and certain
non-fundamental policies of the Portfolio to reflect the investment strategies
of PIMCO. Based upon the foregoing, the Board approved changing the name of the
Portfolio to the Global Bond Trust, effective May 1, 1999.

- The current investment objective of the Global Government Bond Trust is
to seek a high level of total return by placing primary emphasis on high
current income and the preservation of capital.

- If shareholders approve this Proposal 8, the Portfolio's investment
objective instead will be to seek to realize maximum total return,
consistent with preservation of capital and prudent investment
management. As a result, the Portfolio would place greater emphasis on
realizing a maximum total return than on obtaining high current income.

Under normal circumstances at least 65% of its assets will be invested in
fixed-income securities of issuers located in at least three countries (one of
which may be the United States). These securities may be represented by futures
contracts (including related options) with respect to such securities, and
options on such securities, when PIMCO deems it appropriate to do so. Depending
on PIMCO's judgment as to the proper allocation of assets among domestic and
foreign issuers, investments in the securities of issuers located outside the
United States will generally vary between 25% and 75% of the Portfolio's assets.
The

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Portfolio may also invest up to 10% of its assets in fixed-income securities
that are rated below investment grade but rated B or higher by Moody's Investors
Services ("Moody's") or Standard & Poor's Corporation ("Standard & Poor's") (or
if unrated, determined by PIMCO to be of comparable quality). The average
portfolio duration of the Portfolio will normally vary within a three to seven
year time frame. (Duration is a measure of the expected life of a fixed-income
security on a present value basis.)

In selecting securities for the Portfolio, PIMCO will utilize economic
forecasting, interest rate anticipation, credit and call risk analysis, foreign
currency exchange rate forecasting and other security selection techniques. The
proportion of the Portfolio's assets committed to investment in securities with
particular characteristics (such as maturity, type and coupon rate) will vary
based on PIMCO's outlook for the U.S. and foreign economies, the financial
markets and other factors.

The Portfolio will be subject to special risks as a result of it investing
primarily in foreign fixed-income securities. Investments in foreign securities
may cause the Portfolio to lose money when converting instruments from foreign
currencies into U.S. dollars. Investments in foreign securities also may subject
the Portfolio to the political or economic conditions of the foreign country and
the risk that the company issuing the security may be nationalized. These
conditions could cause the Portfolio's investments to lose value if these
conditions deteriorate for any reason. This risk increases in the case of
emerging market countries which are more likely to be politically unstable.
Moreover, if a company is nationalized, the value of the company's securities
could decrease in value or even become worthless. In addition, foreign
countries, especially emerging market countries, may also have less stringent
investor protection and disclosure standards than the U.S. Therefore, when
making a decision to purchase a security for a portfolio, PIMCO may not be aware
of problems associated with the company issuing the security and may not enjoy
the same legal rights as those provided in the U.S. Foreign countries,
especially emerging market countries, also often have problems associated with
the removal of proceeds of investments from a foreign country and the settlement
of sales. Currency control restrictions may prevent or delay the Portfolio from
taking money out of the cause the Portfolio to suffer a loss if a security to be
sold declines in value while settlement of sale is delayed.

Fixed-income securities are generally subject to two principal types of
risks: (1) interest rate risk and (2) credit quality risk. First, fixed-income
securities are affected by changes in interest rates. When interest rates
decline, the market value of fixed-income securities generally can be expected
to rise. Conversely, when interest rates rise, the market value of fixed-income
securities generally can be expected to decline. Second, fixed-income securities
are subject to the risk that the issuer of the security will not repay all or a
portion of the principal borrowed and will not make all interest payments. If
the credit quality of a fixed-

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income security deteriorates after the Portfolio has purchased the security, the
market value of the security may decrease and lead to a decrease in the value of
the Portfolio's investments. Investment grade fixed-income securities in the
lowest rating category involve a higher degree of risk than fixed-income
securities in the higher rated categories. While such securities are considered
investment grade quality and are deemed to have adequate capacity for payment of
principal and interest, such securities lack outstanding investment
characteristics and have speculative characteristics as well.

The Portfolio will also be subject to special risks as a result of its
ability to invest up to 10% of its assets in fixed-income securities that are
rated below investment grade but rated B or higher by Moody's or Standard &
Poor's (or if unrated, determined by PIMCO to be of comparable quality). These
securities may include lower rated fixed-income securities (securities rated Ba
and B by Moody's and BB and B by Standard & Poor's). Investing in lower rated
fixed-income securities is considered speculative. While these securities
generally provide greater income potential than investments in higher rated
securities, there is a greater risk that principal and interest payments will
not be made. In addition, the price of lower rated fixed-income securities may
be more volatile than securities in the higher rating categories. This
volatility may increase during periods of economic uncertainty or change.
Moreover, the market for lower rated fixed-income securities may have more
limited trading than the market for investment grade fixed-income securities.
Therefore, it may be more difficult to sell these securities. Finally, while
PIMCO may rely on ratings by established credit rating agencies, the assessment
of the credit risk of lower rated fixed-income securities is more dependent on
the subadviser's evaluation than the assessment of the credit risk of higher
rated securities.

The Portfolio is non-diversified and thus is limited as to the percentage
of its assets that may be invested in any one issuer only by its own investment
restrictions and the diversification requirements of the Internal Revenue Code.
Since a non-diversified portfolio may invest a high percentage of its assets in
the securities of a small number of companies, the Portfolio may be affected
more than a diversified portfolio by a change in the financial condition of any
of these companies or by the financial markets' assessment of any of these
companies.

For temporary defensive purposes, the Portfolio may invest all or a portion
of its assets in repurchase agreements, cash and cash equivalents denominated in
either U.S. dollars or foreign currencies. This reserve position provides
flexibility in meeting redemption requests and in the timing of new investments.
In addition, this reserve position may serve as a short-term defense during
periods of unusual market conditions.

The Portfolio may purchase and sell options on domestic and foreign
securities, securities indices and currencies, purchase and sell futures and
options on futures, purchase and sell currency or securities on a forward basis,
enter into interest rate, index, equity and currency rate swap agreements. The
Portfolio may
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use these strategies to obtain market exposure to the securities in which the
Portfolio will primarily invest and to hedge currency risk. These investment
strategies are referred to under "Hedging and Other Strategic Transactions" in
the Trust's current Prospectus. The Trust's current Statement of Additional
Information contains a description of these strategies and of certain risks
associated therewith.

The Portfolio has a number of additional investment policies and
restrictions that are described in the Trust's Statement of Additional
Information.

REQUIRED VOTE

Only shareholders of the Global Government Bond Trust will vote on this
Proposal 8. Approval of the proposal to change the Portfolio's investment
objective will require the affirmative vote of a majority of the outstanding
voting securities of the Portfolio.

If shareholders approve the proposed change to the Portfolio's investment
objective, such change will become effective on May 1, 1999.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
THE GLOBAL GOVERNMENT BOND TRUST VOTE "FOR" PROPOSAL 8.

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PROPOSAL 9

RATIFICATION OF PRICEWATERHOUSECOOPERS LLP
AS THE INDEPENDENT ACCOUNTANTS FOR THE TRUST
FOR ITS FISCAL YEAR ENDING DECEMBER 31, 1999

The Board, including each of the Disinterested Trustees, has selected
PricewaterhouseCoopers LLP to serve as the independent accountants for the Trust
for the Trust's fiscal year ending December 31, 1999, subject to the right of
the Trust to terminate such employment immediately without penalty by the
affirmative vote of a majority of the outstanding voting securities of the Trust
at any meeting called for such purpose. Proxies not limited to the contrary will
be voted in favor of ratifying the selection of PricewaterhouseCoopers LLP,
under Section 32(a) of the 1940 Act, as the independent accountants for the
Trust.

PricewaterhouseCoopers LLP served as the independent accountants for the
Trust during its most recent fiscal year ended December 31, 1998.
PricewaterhouseCoopers LLP is the successor entity to Coopers & Lybrand L.L.P.
Apart from its fees received for its services as the Trust's independent
accountants, PricewaterhouseCoopers LLP has no director or material indirect
interest in the Trust. A representative of PricewaterhouseCoopers LLP is
expected to be present at the Meeting (or available at the Meeting via
telephone), and will have an opportunity to make a statement if he or she
desires to do so. Such representative is also expected to be available to
respond to appropriate questions.

REQUIRED VOTE

Ratification of the selection of PricewaterhouseCoopers LLP as the
independent accountants for the Trust requires the affirmative vote of a
majority of the outstanding shares of the Trust present in person or represented
by proxy at the Meeting, assuming that a quorum is present.

THE BOARD, INCLUDING THE DISINTERESTED TRUSTEES, RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 9.

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OTHER MATTERS

The Board does not know of any matters to be presented at the Meeting other
than those mentioned in this Proxy Statement. If any other matters properly come
before the Meeting, the shares represented by proxies will be voted in
accordance with the best judgment of the person or persons voting the proxies.

The Trust is not required to hold annual meetings of shareholders and,
therefore, it cannot be determined when the next meeting of shareholders will be
held. Shareholder proposals to be presented at any future meeting of
shareholders of the Trust must be received by the Trust a reasonable time before
the Trust's solicitation of proxies for that meeting in order for such proposals
to be considered for inclusion in the proxy materials related to that meeting.

The Trust does not have a principal underwriter or administrator since
shares are sold only to insurance companies and their separate accounts as the
underlying investment medium for variable contracts. However, Manulife
Securities and an affiliated broker/dealer serve as principal underwriter of
certain contracts issued by affiliates of the Trust.

BY ORDER OF THE BOARD OF TRUSTEES

March 26, 1999

Boston, Massachusetts

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS WHO
DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO COMPLETE, SIGN, DATE
AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE.

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INFORMATION STATEMENT

PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934

SUMMARY

As Adviser to the Trust, Manulife Securities selects, contracts with,
compensates and monitors subadvisers to manage the investment and reinvestment
of the assets of each of the Portfolios. In addition, Manulife Securities
monitors the compliance of the subadvisers with the investment objectives and
related policies of each portfolio and reviews the performance of the
subadvisers and reports periodically on such performance to the Trustees of the
Trust. Manulife Securities does not currently manage any of the Portfolios'
assets on a day-to-day basis.

On March 26, 1999, the Board approved eight new subadvisory agreements,
each to take effect as of May 1, 1999. Six of these new subadvisory agreements
involve the appointment of: A I M Capital Management, Inc. as subadviser to the
Small/Mid Cap Trust and the Pilgrim Baxter Growth Trust; Capital Guardian Trust
Company as subadviser to the Conservative Asset Allocation Trust and the
Moderate Asset Allocation Trust; Fidelity Management Trust Company as subadviser
to the International Growth and Income Trust (with Fidelity Management Trust
Company continuing as subadviser to the Aggressive Asset Allocation Trust and
the Equity Trust); Franklin Advisers, Inc. as subadviser to the Emerging Small
Company Trust; Pacific Investment Management Company as subadviser to the Global
Government Bond Trust; and State Street Global Advisors as subadviser to the
Growth Trust. Two of the new subadvisory agreements are with the following
existing subadvisers: T. Rowe Price Associates, Inc. will continue as subadviser
to the Science & Technology Trust, the Blue Chip Growth Trust and the
Equity-Income Trust; and Wellington Management Company, LLP will continue as
subadviser to the Growth and Income Trust and the Investment Quality Bond Trust.

The Trust has received an order from the Securities and Exchange Commission
(the "Commission") permitting it to appoint a subadviser or change the terms of
a subadvisory agreement pursuant to an agreement that is not approved by
shareholders. The Trust, therefore, is able to change subadvisers or the fees
paid to subadvisers from time to time without the expense and delays associated
with obtaining shareholder approval of the change. However, a condition of this
order is that notice be sent to shareholders informing them of the new
agreements. Therefore, this Information Statement is being supplied to
shareholders to inform them about the eight new subadvisory agreements and will
be mailed on or about March 26, 1999.

WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.

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NEW SUBADVISORY AGREEMENT
WITH A I M CAPITAL MANAGEMENT, INC.

On February 26, 1999, Manulife Securities gave notice to Fred Alger
Management, Inc. and to the Board that the subadvisory agreement dated January
2, 1996 (the "Alger Old Subadvisory Agreement") would terminate effective as of
the time the net asset value of shares of the Trust is determined on Friday,
April 30, 1999.

Manulife Securities terminated the Alger Old Subadvisory Agreement
primarily due to the fact that the investment style of investing in both small
and mid cap securities was no longer an appropriate investment style for the
Trust. Rather, the Board, based on the recommendation of management of the Trust
and of Manulife Securities, decided to offer portfolios that either invest
primarily in small cap securities or primarily in mid cap securities.

As a result, at a meeting held on March 26, 1999, the Board, including the
Disinterested Trustees, voted to approve a subadvisory agreement between the
Adviser and A I M Capital Management, Inc. ("AIM") with respect to the Small/Mid
Cap Trust. In addition, due to the change in subadviser, on March 26, 1999, the
Board unanimously approved changing certain non-fundamental policies of the
Small/Mid Cap Trust so they would reflect AIM's proposed investment strategies.

At a meeting held on March 26, 1999, the Board, including the Disinterested
Trustees, voted to accept the resignation of Pilgrim Baxter & Associates ("PBA")
as subadviser to the Pilgrim Baxter Growth Trust, and to approve a subadvisory
agreement between the Adviser and AIM with respect to the Pilgrim Baxter Growth
Trust. Effective May 1, 1999, AIM will replace PBA as subadviser to the Pilgrim
Baxter Growth Trust. In addition, due to the change in subadviser, on March 26,
1999, the Board unanimously approved changing the investment objective and
certain non-fundamental policies of the Pilgrim Baxter Growth Trust so they
would reflect AIM's proposed investment strategies.

In connection with the foregoing, the Board also approved changing the
names of the Small/Mid Cap Trust and the Pilgrim Baxter Growth Trust to the Mid
Cap Growth Trust and the Aggressive Growth Trust, respectively, effective May 1,
1999. See "Proposal 6" in the Proxy Statement for a description of the proposed
changes to the Pilgrim Baxter Growth Trust's investment objective.

MANAGEMENT AND CONTROL OF A I M CAPITAL MANAGEMENT, INC.

AIM is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046. AIM
is an indirect wholly-owned subsidiary of A I M Management Group Inc. whose
principal business address is 11 Greenway Plaza, Suite 100, Houston, Texas
77046. AIM has acted as an investment adviser since its organization in 1986.
AIM, together with other subsidiaries of A I M Management Group Inc., manage or
advise over 110 investment portfolios encompassing a broad range of

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investment objectives. AIM is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended.

For information regarding the executive officers and directors of AIM, see
Exhibit B hereto.

APPROVAL OF NEW SUBADVISORY AGREEMENT

The current subadviser to the Small/Mid Cap Trust is Alger, pursuant to the
Alger Old Subadvisory Agreement.

The current subadviser to the Pilgrim Baxter Growth Trust is PBA, pursuant
to a subadvisory agreement (the "PBA Old Subadvisory Agreement") dated December
31, 1996.

The Board of Trustees of the Trust has approved a new subadvisory agreement
between AIM and Manulife Securities to become effective as of May 1, 1999 (the
"AIM New Subadvisory Agreement") in connection with the provision of subadvisory
services to the Small/Mid Cap Trust and the Pilgrim Baxter Growth Trust. As
discussed above under "Information Statement -- Summary," shareholder approval
of the AIM New Subadvisory Agreement is not required.

DESCRIPTION OF NEW AND OLD SUBADVISORY AGREEMENTS

While the provisions of the AIM New Subadvisory Agreement are substantially
similar to the provisions of the Alger Old Subadvisory Agreement and the PBA Old
Subadvisory Agreement, a number of the differences between the agreements are
noted below. Under the AIM New Subadvisory Agreement, unless the Adviser gives
AIM written instructions to the contrary, AIM shall vote or abstain from voting
all proxies solicited by or with respect to the issuers of securities in which
assets of the Portfolios may be invested. The subadvisory fees payable under the
AIM New Subadvisory Agreement will be, at certain asset levels, lower than the
fees paid under the Alger Old Subadvisory Agreement and the PBA Old Subadvisory
Agreement.

Under the terms of the Alger Old Subadvisory Agreement and the PBA Old
Subadvisory Agreement, Alger and PBA manage the investment and reinvestment of
the assets of the Small/Mid Cap Trust and the Pilgrim Baxter Growth Trust,
respectively, subject to the supervision of the Trust's Board of Trustees. Under
the terms of the AIM New Subadvisory Agreement, AIM will manage the investment
and reinvestment of the assets of each Portfolio, subject to the supervision of
the Trust's Board of Trustees. AIM will formulate a continuous investment
program for each Portfolio consistent with each Portfolio's investment
objectives and policies. AIM will implement such programs by purchases and sales
of securities and will regularly report to the Adviser and the Trustees of the
Trust with respect to the implementation of such programs. AIM, at its expense,
will furnish all necessary investment and management facilities, includ-
63
<PAGE> 74

ing salaries of personnel required for it to execute its duties, as well as
sufficient administrative facilities to perform its obligations.

As compensation for its services, Manulife Securities receives an advisory
fee computed separately for each Portfolio. The fee for each Portfolio is stated
as an annual percentage of the value of the net assets of the Portfolio. The
fee, which is accrued daily, is calculated for each day by multiplying the daily
equivalent of the annual percentage prescribed for a Portfolio by the value of
the net assets of the Portfolio at the close of business on the previous
business day of the Trust. See "Proposal 1 -- Advisory Fees" in the Proxy
Statement. The following is a schedule of the advisory fees the Portfolios
currently are obligated to pay the Adviser.

<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE
- --------- ------------
<S> <C>
Small/Mid Cap Trust.................... 1.000%
Pilgrim Baxter Growth Trust............ 1.050%
</TABLE>

As compensation for their services, each of Alger and PBA currently
receives, and AIM will receive, a fee from the Adviser computed separately for
each applicable Portfolio. The fee for each Portfolio is stated as an annual
percentage of the value of the net assets of such Portfolio. The fees are
calculated on the basis of the average of all valuations of net assets of a
Portfolio made at the close of business on each business day of the Trust during
the period for which such fees are paid. Once the average net assets of a
Portfolio exceed specified amounts, the fee is reduced with respect to such
excess. The following is a schedule of the management fees the Adviser currently
is obligated to pay Alger and PBA under the Alger Old Subadvisory Agreement and
the PBA Old Subadvisory Agreement, respectively, and will be obligated to pay
AIM under the AIM New Subadvisory Agreement, out of the advisory fee it receives
from each Portfolio as specified above. THESE FEES ARE PAID BY THE ADVISER OUT
OF THE ADVISORY FEE IT RECEIVES FOR EACH PORTFOLIO AND ARE NOT ADDITIONAL
CHARGES TO EITHER PORTFOLIO. APPROVAL OF THE AIM NEW SUBADVISORY AGREEMENT HAS
NOT RESULTED IN ANY INCREASE IN THE RATE OF THE ADVISORY FEES PAYABLE TO
MANULIFE SECURITIES BUT HAS RESULTED, AT CERTAIN ASSET LEVELS, IN A DECREASE IN
THE RATE OF THE SUBADVISORY FEES AND, THEREFORE, AN INCREASE IN THE PERCENTAGE
OF ADVISORY FEES RETAINED BY MANULIFE SECURITIES.

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
SMALL/MID CAP TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Alger Old Subadvisory
Agreement............... 0.525% 0.500% 0.475% 0.450%
AIM New Subadvisory
Agreement............... 0.500% 0.475% 0.450% 0.400%
</TABLE>

64
<PAGE> 75

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PILGRIM BAXTER GROWTH TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- --------------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
PBA Old Subadvisory
Agreement............... 0.600% 0.600% 0.500% 0.500%
AIM New Subadvisory
Agreement............... 0.500% 0.500% 0.500% 0.450%
</TABLE>

The Alger Old Subadvisory Agreement required approval of the agreement as
to the Small/Mid Cap Trust by both (i) the Trustees of the Trust including a
majority of Trustees who are not "interested persons" (as defined in the 1940
Act) of any party to the agreement and (ii) a majority of the outstanding voting
securities of the Small/Mid Cap Trust. The PBA Old Subadvisory Agreement
required approval of the agreement as to the Pilgrim Baxter Growth Trust by both
(i) the Trustees of the Trust including a majority of Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to the agreement
and (ii) a majority of the outstanding voting securities of the Pilgrim Baxter
Growth Trust. The AIM New Subadvisory Agreement requires only approval of the
Trustees of the Trust, including a majority of Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to the agreement.

The AIM New Subadvisory Agreement will continue in effect as to each
Portfolio for an initial term of two years from the date of its execution and
shall continue in effect thereafter only so long as such continuance is
specifically approved at least annually as required by the 1940 Act. Any
required shareholder approval of any continuance of the AIM New Subadvisory
Agreement shall be effective with respect to a Portfolio if a majority of the
outstanding voting securities of that Portfolio vote to approve such
continuance, notwithstanding that such continuance may not have been approved by
a majority of the outstanding voting securities of any other portfolio of the
Trust affected by the AIM New Subadvisory Agreement.

The AIM New Subadvisory Agreement may be terminated at any time, without
the payment of any penalty, on 60 days' written notice to the other party or
parties to the AIM New Subadvisory Agreement and to the Trust, as appropriate:
(i) by the Trustees of the Trust; (ii) by the vote of a majority of the
outstanding voting securities of the Trust, or, with respect to either
Portfolio, by the vote of a majority of the outstanding voting securities of
such Portfolio; (iii) by AIM or (iv) by the Adviser. The AIM New Subadvisory
Agreement will automatically terminate in the event of its assignment.

The AIM New Subadvisory Agreement may be amended by the Adviser and AIM
provided such amendment is specifically approved by the vote of a majority of
the Trustees of the Trust and a majority of the Trustees of the Trust who are
not interested persons of any party to the AIM New Subadvisory Agreement cast in
person at a meeting called for the purpose of voting on such approval. The Alger
Old Subadvisory Agreement and the PBA Old Subadvisory

65
<PAGE> 76

Agreement, in addition, provided that any such amendment must be specifically
approved by the vote of a majority of the outstanding voting securities of each
of the Portfolios of the Trust affected by the amendment. The required
shareholder approval would have been effective with respect to any affected
Portfolio of the Trust if a majority of the outstanding voting securities of
that Portfolio voted to approve the amendment, notwithstanding that the
amendment may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio of the Trust affected by the amendment or
(b) all the Portfolios of the Trust. Shareholder approval is not required for an
amendment to the AIM New Subadvisory Agreement.

The AIM New Subadvisory Agreement provides that AIM will not be liable to
the Trust or the Adviser for any losses suffered by the Adviser, the Trust or
any shareholders of the Trust resulting from any matters to which the agreement
relates other than losses resulting from AIM's willful misfeasance, bad faith or
gross negligence in the performance of, or from reckless disregard of, its
duties.

BOARD OF TRUSTEE CONSIDERATIONS

At its meeting duly held on March 26, 1999, the Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the AIM New Subadvisory Agreement (with
the advice and assistance of independent legal counsel), approved the AIM New
Subadvisory Agreement.

The Board considered numerous factors in connection with the approval of
the AIM New Subadvisory Agreement as it applies to each of the Small/Mid Cap
Trust and the Pilgrim Baxter Growth Trust, including, but not limited to: (i)
the nature and quality of the services provided by Alger and PBA under their
respective agreements and the fees payable therefor, (ii) the nature and quality
of the services to be provided by AIM in connection with the proposed changes to
the Small/Mid Cap Trust's investment policies and the proposed material changes
to the Pilgrim Baxter Growth Trust's investment objective and policies, (iii)
the background and experience of the investment personnel who will manage the
Portfolios, (iv) the fees to be paid to AIM and other comparable investment
companies, (v) performance information regarding each Portfolio and other
comparable investment companies and (vi) the proposed subadvisory fees in
relation to the fees of other comparable portfolios.

In evaluating the AIM New Subadvisory Agreement, the Board, in particular,
focused on the fact that the AIM New Subadvisory Agreement is substantially
similar to the Alger Old Subadvisory Agreement and the PBA Old Subadvisory
Agreement, other than, for example, the changes noted above. The Board was also
given audited financial statements of AIM. In addition, the Board was provided
with an analysis of its fiduciary obligations in connection with such
considerations. In considering the AIM New Subadvisory Agreement, the Trustees
discussed the information provided to them and their fiduciary obligations.

66
<PAGE> 77

SUBADVISORY FEES PAID

For the year ended December 31, 1998, the Adviser paid Alger the following
subadvisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Small/Mid Cap Trust................. $1,556,064 0.495%
</TABLE>

For the year ended December 31, 1998, the Adviser paid PBA the following
subadvisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Pilgrim Baxter Growth Trust......... $ 694,939 0.600%
</TABLE>

ADVISORY FEES PAID

For the year ended December 31, 1998, the Portfolio paid the Adviser the
following advisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Small/Mid Cap Trust................. $3,144,346 1.000%
Pilgrim Baxter Growth Trust......... $1,216,141 1.050%
</TABLE>

For the year ended December 31, 1998, the net investment advisory fees
retained by the Adviser after payment of the subadvisory fee for the Portfolios
were as follows:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Small/Mid Cap Trust................. $1,588,282 0.505%
Pilgrim Baxter Growth Trust......... $ 521,202 0.450%
</TABLE>

PRIOR TRUSTEE AND SHAREHOLDER APPROVAL OF THE ALGER OLD SUBADVISORY AGREEMENT
AND THE PBA OLD SUBADVISORY AGREEMENT

The Alger Old Subadvisory Agreement was most recently approved by the Board
of Trustees at a meeting held on June 29, 1998. The Alger Old Subadvisory
Agreement was most recently approved by the sole shareholder of the Small/Mid
Cap Trust on December 15, 1995.

The PBA Old Subadvisory Agreement was most recently approved by the Board
of Trustees at a meeting held on June 29, 1998. The PBA Old Subadvisory
Agreement was most recently approved by the sole shareholder of the Pilgrim
Baxter Growth Trust on January 1, 1997.

67
<PAGE> 78

OWNERSHIP OF THE TRUST

For information regarding the shareholders and ownership of the shares of
the Trust, see "General" in the Proxy Statement.

BROKERAGE TRANSACTIONS

In addition to the factors that AIM will consider in selecting brokers and
dealers through whom to effect transactions discussed in "Additional
Information -- Portfolio Brokerage," AIM will consider the value of the expected
contribution of the broker-dealer to the investment performance of the Portfolio
on a continuing basis. Moreover, AIM will be authorized to allocate the orders
placed by it on behalf of the Portfolios to such brokers and dealers who also
provide research or statistical material, or other services to the Portfolios or
to AIM. Such allocation shall be in such amount and proportions as AIM shall
determine and AIM will report on said allocations regularly to the Trustees
indicating the brokers to whom such allocations have been made and the basis
therefore. A description of the portfolio brokerage policies applicable to each
Portfolio is set forth under "Additional Information -- Portfolio Brokerage"
below.

OTHER INVESTMENT COMPANIES ADVISED BY AIM

AIM does not act as investment adviser or subadviser to any registered
investment company having similar investment objectives and policies to those of
the Pilgrim Baxter Growth Trust (assuming that the changes proposed in Proposal
6 are approved by shareholders). However AIM does act as investment subadviser
to two other registered investment companies having similar investment
objectives and policies to those of the Small/Mid Cap Trust. The size of each of
these funds and the rate of AIM's compensation for each fund is as follows:

<TABLE>
<CAPTION>
BETWEEN
$30,000,000
TO AND
ASSETS AS OF FIRST INCLUDING EXCESS OVER
FUND 12/31/98 $30,000,000 $150,000,000 $150,000,000
- ---- --------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
AIM Constellation
Fund*.................. $14,638,792,392 1.000% 0.750% 0.625%
AIM Capital Appreciation
Portfolio**............ $ 269,108,625 0.375% 0.375% 0.375%
</TABLE>

- ---------------

* AIM receives 50% of the fee received for the AIM Constellation Fund.

** The rate of AIM's compensation is 0.375% of the average daily net assets at
all asset levels.

AIM has agreed to voluntarily reduce its fees at higher asset levels for
the AIM Constellation Fund. For the fiscal year ended October 31, 1998, AIM
reduced its fee by $1,537,353.

AIM has not waived, reduced or otherwise agreed to reduce its compensation
under any applicable contract for the AIM Capital Appreciation Portfolio.

68
<PAGE> 79

NEW SUBADVISORY AGREEMENT
WITH CAPITAL GUARDIAN TRUST COMPANY

At a meeting held on March 26, 1999, the Board, including the Disinterested
Trustees, voted to accept the resignation of Fidelity Management Trust Company
("FMTC") as subadviser to the Conservative Asset Allocation Trust and the
Moderate Asset Allocation Trust and to approve a subadvisory agreement between
the Adviser and Capital Guardian Trust Company ("CGTC") with respect to the
Conservative Asset Allocation Trust and the Moderate Asset Allocation Trust.
Effective May 1, 1999, CGTC will replace FMTC, as subadviser to the Conservative
Asset Allocation Trust and the Moderate Asset Allocation Trust.

In addition, due to the change in subadviser, on March 26, 1999, the Board
unanimously approved changing the investment objective and certain non-
fundamental policies of the Portfolios so they would reflect CGTC's proposed
investment strategies. In connection with the foregoing, the Board also approved
changing the names of the Conservative Asset Allocation Trust and the Moderate
Asset Allocation Trust to the Diversified Bond Trust and the Income & Value
Trust, respectively, effective May 1, 1999. See "Proposal 2" and "Proposal 3" in
the Proxy Statement for a description of the proposed changes to each
Portfolio's investment objective.

MANAGEMENT AND CONTROL OF CAPITAL GUARDIAN TRUST COMPANY

CGTC is located at 333 South Hope Street, Los Angeles, California 90071.
CGTC is a wholly-owned subsidiary of Capital Group International, Inc. which
itself is a wholly-owned subsidiary of The Capital Group Companies, Inc. Both
Capital Group International, Inc. and The Capital Group Companies, Inc. are
located at 333 South Hope Street, Los Angeles, California 90071. CGTC has been
providing investment management services since 1968 and manages approximately
$77 billion of assets as of December 31, 1998. CGTC is a bank as defined under
the Investment Advisers Act of 1940, as amended, and is therefore not required
to be registered thereunder as an investment adviser.

For information regarding the executive officers and directors of CGTC, see
Exhibit B hereto.

APPROVAL OF NEW SUBADVISORY AGREEMENT

The current subadviser to the Conservative Asset Allocation Trust and the
Moderate Asset Allocation Trust is FMTC, pursuant to a subadvisory agreement
(the "FMTC Old Subadvisory Agreement") dated January 1, 1996, as amended
December 31, 1996, between FMTC and Manulife Securities.

The Board of Trustees of the Trust has approved a new subadvisory agreement
between CGTC and Manulife Securities to become effective as of May 1, 1999 (the
"CGTC New Subadvisory Agreement") in connection with
69
<PAGE> 80

the provision of subadvisory services to the Conservative Asset Allocation Trust
and the Moderate Asset Allocation Trust. As discussed above under "Information
Statement -- Summary," shareholder approval of the CGTC New Subadvisory
Agreement is not required.

DESCRIPTION OF NEW AND OLD SUBADVISORY AGREEMENTS

While the provisions of the CGTC New Subadvisory Agreement are
substantially similar to the provisions of the FMTC Old Subadvisory Agreement, a
number of the differences between the agreements are noted below. The CGTC New
Subadvisory Agreement would permit CGTC, when delegated by the Adviser and
agreed to by CGTC, to vote proxies for shareholder meetings of companies the
securities of which are held by the Portfolio. In performing its services, CGTC
may delegate all or any of its duties and responsibilities to other affiliates
of The Capital Group Companies, Inc., provided, however, that CGTC will remain
responsible for such delegated duties. Moreover, the subadvisory fees payable
under the CGTC New Subadvisory Agreement will be, at certain asset levels,
higher than the fees paid under the FMTC Old Subadvisory Agreement and, at
certain other asset levels, the same or lower than the fees paid under the FMTC
Old Subadvisory Agreement.

Under the terms of the FMTC Old Subadvisory Agreement and the CGTC New
Subadvisory Agreement, FMTC manages and CGTC will manage the investment and
reinvestment of the assets of each Portfolio, subject to the supervision of the
Trust's Board of Trustees. CGTC will formulate a continuous investment program
for each Portfolio consistent with each Portfolio's investment objectives and
policies. CGTC will implement such programs by purchases and sales of securities
and will regularly report to the Adviser and the Trustees of the Trust with
respect to the implementation of such programs. CGTC, at its expense, will
furnish all necessary investment and management facilities, including salaries
of personnel required for it to execute its duties, as well as administrative
facilities, including bookkeeping, clerical personnel, and equipment necessary
for the efficient conduct of the investment affairs of each Portfolio.

As compensation for its services, Manulife Securities receives an advisory
fee computed separately for each Portfolio. The fee for each Portfolio is stated
as an annual percentage of the value of the net assets of the Portfolio. The
fee, which is accrued daily, is calculated for each day by multiplying the daily
equivalent of the annual percentage prescribed for a Portfolio by the value of
the net assets of the Portfolio at the close of business on the previous
business day of the Trust. While the shareholders of the Moderate Asset
Allocation Trust are being asked to approve an advisory fee increase for the
Portfolio, the following is a schedule of the advisory fees that the
Conservative Asset Allocation Trust and the Moderate Asset Allocation Trust
currently are obligated to pay the Adviser. See "Proposal 1 -- Advisory Fees" in
the Proxy Statement.

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<PAGE> 81

<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE
--------- ------------
<S> <C>
Conservative Asset Allocation Trust.............. 0.750%
Moderate Asset Allocation Trust.................. 0.750%
</TABLE>

As compensation for its services, FMTC currently receives, and CGTC will
receive, a fee from the Adviser computed separately for each Portfolio. The fee
for each Portfolio is stated as an annual percentage of the value of the net
assets of such Portfolio. The fees are calculated on the basis of the average of
all valuations of net assets of a Portfolio made at the close of business on
each business day of the Trust during the period for which such fees are paid.
Once the average net assets of a Portfolio exceed specified amounts, the fee
rate is reduced with respect to such excess. The following is a schedule of the
management fees the Adviser currently is obligated to pay FMTC under the FMTC
Old Subadvisory Agreement, and will be obligated to pay CGTC under the CGTC New
Subadvisory Agreement, out of the advisory fee it receives from each Portfolio
as specified above. THESE FEES ARE PAID BY THE ADVISER OUT OF THE ADVISORY FEE
IT RECEIVES FOR EACH PORTFOLIO AND ARE NOT ADDITIONAL CHARGES TO EITHER
PORTFOLIO. APPROVAL OF THE CGTC NEW SUBADVISORY AGREEMENT HAS NOT RESULTED IN
ANY INCREASE IN THE RATE OF THE ADVISORY FEES PAYABLE TO MANULIFE SECURITIES FOR
THE CONSERVATIVE ASSET ALLOCATION TRUST, BUT HAS RESULTED, FOR BOTH THE
CONSERVATIVE ASSET ALLOCATION TRUST AND THE MODERATE ASSET ALLOCATION TRUST, AT
CERTAIN ASSET LEVELS, IN AN INCREASE IN THE RATE OF THE SUBADVISORY FEES AND, AT
CERTAIN OTHER ASSET LEVELS, IN NO CHANGE OR A DECREASE IN THE RATE OF THE
SUBADVISORY FEES PAYABLE TO CGTC. AS NOTED UNDER "PROPOSAL 1 -- ADVISORY FEES"
IN THE PROXY STATEMENT, SHAREHOLDERS OF THE MODERATE ASSET ALLOCATION TRUST ARE
BEING ASKED TO APPROVE AN INCREASE IN THE RATE OF THE ADVISORY FEE PAYABLE TO
MANULIFE SECURITIES.

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
CONSERVATIVE ASSET FIRST AND AND EXCESS OVER
ALLOCATION TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ------------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
FMTC Old Subadvisory
Agreement.......... 0.350% 0.300% 0.250% 0.175%
CGTC New Subadvisory
Agreement.......... 0.350% 0.300% 0.250% 0.200%
</TABLE>

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
MODERATE ASSET FIRST AND AND EXCESS OVER
ALLOCATION TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ---------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
FMTC Old Subadvisory
Agreement.......... 0.375% 0.325% 0.275% 0.200%
CGTC New Subadvisory
Agreement.......... 0.350% 0.350% 0.350% 0.300%
</TABLE>

71
<PAGE> 82

The FMTC Old Subadvisory Agreement required approval of the agreement as to
a Portfolio by both (i) the Trustees of the Trust including a majority of
Trustees who are not "interested persons" (as defined in the 1940 Act) of any
party to the agreement and (ii) a majority of the outstanding voting securities
of a Portfolio. The CGTC New Subadvisory Agreement requires only approval of the
Trustees of the Trust, including a majority of Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to the agreement.

The CGTC New Subadvisory Agreement will continue in effect as to each
Portfolio for an initial term of two years from the date of its execution and
shall continue in effect thereafter only so long as such continuance is
specifically approved at least annually either by the Trustees of the Trust or
by the vote of a majority of the outstanding voting securities of each
Portfolio, provided that in either event such continuance shall also be approved
by the vote of a majority of the Trustees of the Trust who are not "interested
persons" (as defined in the 1940 Act) of any party to the CGTC New Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. Any required shareholder approval of any continuance of the CGTC New
Subadvisory Agreement shall be effective with respect to a Portfolio if a
majority of the outstanding voting securities of that Portfolio vote to approve
such continuance, notwithstanding that such continuance may not have been
approved by a majority of the outstanding voting securities of any other
portfolio of the Trust affected by the CGTC New Subadvisory Agreement.

The CGTC New Subadvisory Agreement may be terminated at any time, without
the payment of any penalty, on 60 days' written notice to the other party or
parties to the CGTC New Subadvisory Agreements and to the Trust, as appropriate:
(i) by the Trustees of the Trust; (ii) by the vote of a majority of the
outstanding voting securities of the Trust, or, with respect to either
Portfolio, by the vote of a majority of the outstanding voting securities of
such Portfolio; (iii) by CGTC or (iv) by the Adviser. The CGTC New Subadvisory
Agreement will automatically terminate in the event of its assignment.

The CGTC New Subadvisory Agreement may be amended by the Adviser and CGTC
provided such amendment is in writing and specifically approved by the vote of a
majority of the Trustees of the Trust and a majority of the Trustees of the
Trust who are not interested persons of any party to the CGTC New Subadvisory
Agreement cast in person at a meeting called for the purpose of voting on such
approval. The FMTC Old Subadvisory Agreement provided that any such amendment
must be specifically approved by the vote of a majority of the outstanding
voting securities of each of the Portfolios of the Trust affected by the
amendment and by the vote of a majority of the Trustees of the Trust who are not
interested persons of any party to the agreement cast in person at a meeting
called for the purpose of voting on such approval. The required shareholder
approval would have been effective with respect to any affected Portfolio of the
Trust if a majority of the outstanding voting securities of that Portfolio voted
to

72
<PAGE> 83

approve the amendment, notwithstanding that the amendment may not have been
approved by a majority of the outstanding voting securities of (a) any other
Portfolio of the Trust affected by the amendment or (b) all the Portfolios of
the Trust. Shareholder approval is not required for an amendment to the CGTC New
Subadvisory Agreement.

The CGTC New Subadvisory Agreement provides that CGTC will not be liable to
the Trust or the Adviser for any losses suffered by such parties resulting from
any matters to which the agreement relates other than losses resulting from
CGTC's willful misfeasance, bad faith or gross negligence in the performance of,
or from reckless disregard of, its duties.

BOARD OF TRUSTEE CONSIDERATIONS

At its meeting duly held on March 26, 1999, the Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the CGTC New Subadvisory Agreement
(with the advice and assistance of independent legal counsel), approved the CGTC
New Subadvisory Agreement.

The Board considered numerous factors in connection with the approval of
the CGTC New Subadvisory Agreement as it applies to each of the Conservative
Asset Allocation Trust and the Moderate Asset Allocation Trust, including, but
not limited to: (i) the nature and quality of the services provided by FMTC and
the fees payable therefor, (ii) the nature and quality of the services to be
provided by CGTC in connection with the proposed material changes to the
Portfolios' investment objectives and policies, (iii) the background and
experience of the investment personnel who will manage the Portfolios, (iv) the
fees to be paid to CGTC and other comparable investment companies, (v)
performance information regarding each Portfolio and other comparable investment
companies, and (vi) the proposed subadvisory fees in relation to the fees of
other comparable portfolios.

In evaluating the CGTC New Subadvisory Agreement, the Board, in particular,
focused on the fact that the CGTC New Subadvisory Agreement is substantially
similar to the FMTC Old Subadvisory Agreement, other than, for example, the
changes noted above. The Board was also given audited financial statements of
CGTC. In addition, the Board was provided with an analysis of its fiduciary
obligations in connection with such considerations. In considering the CGTC New
Subadvisory Agreement, the Trustees discussed the information provided to them
and their fiduciary obligations.

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<PAGE> 84

SUBADVISORY FEES PAID

For the year ended December 31, 1998, the Adviser paid FMTC the following
subadvisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Conservative Asset Allocation
Trust............................. $ 613,727 0.313%
Moderate Asset Allocation Trust..... $1,722,708 0.282%
</TABLE>

ADVISORY FEES PAID

For the year ended December 31, 1998, the Portfolio paid the Adviser the
following advisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Conservative Asset Allocation
Trust............................. $1,473,082 0.750%
Moderate Asset Allocation Trust..... $4,585,154 0.750%
</TABLE>

For the year ended December 31, 1998, the net investment advisory fees
retained by the Adviser after payment of the subadvisory fee for the Portfolios
were as follows:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Conservative Asset Allocation
Trust............................. $ 859,355 0.437%
Moderate Asset Allocation Trust..... $2,862,446 0.468%
</TABLE>

PRIOR TRUSTEE AND SHAREHOLDER APPROVAL OF THE FMTC
OLD SUBADVISORY AGREEMENT

The FMTC Old Subadvisory Agreement was most recently approved by the Board
of Trustees at a meeting held on December 17, 1998 in connection with annual
approval of the FMTC Old Subadvisory Agreement. The FMTC Old Subadvisory
Agreement was most recently approved by shareholders at a meeting held on
December 5, 1995. This approval of the FMTC Old Subadvisory Agreement occurred
in connection with the change of control of the Adviser as a result of the
merger of North American Life Assurance Company, the former ultimate controlling
parent company of Manulife Securities, and The Manufacturers Life Insurance
Company, the current controlling parent company of Manulife Securities, on
January 1, 1996.

OWNERSHIP OF THE TRUST

For information regarding the shareholders and ownership of the Trust, see
"General" in the Proxy Statement.

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<PAGE> 85

BROKERAGE TRANSACTIONS

A description of the portfolio brokerage policies applicable to each
Portfolio is set forth under "Additional Information -- Portfolio Brokerage"
below.

OTHER INVESTMENT COMPANIES ADVISED BY CGTC

CGTC currently acts as subadviser to two other registered investment
companies having similar investment objectives and policies to those of the
Conservative Asset Allocation Trust (assuming that the changes proposed in
Proposal 2 are approved by shareholders). The size of each of these funds and
the rate of CGTC's compensation for each fund is as follows:

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $100,000,000
ASSETS AS OF FIRST AND AND EXCESS OVER
FUND 1/31/98 $50,000,000 $100,000,000 $300,000,000 $300,000,000
---- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
American General Domestic
Bond Fund -- Series 3..... $5,827,537 0.350% 0.200% 0.180% 0.150%
American General Domestic
Bond Fund -- Series 2..... $5,501,497 0.350% 0.200% 0.180% 0.150%
</TABLE>

CGTC currently acts as subadviser to two other registered investment
companies having similar investment objectives and policies to those of the
Moderate Asset Allocation Trust (assuming that the changes proposed in Proposal
3 are approved by shareholders). The size of each of these funds and the rate of
CGTC's compensation for each fund is as follows:

<TABLE>
<CAPTION>
BETWEEN
$25,000,000
ASSETS AS OF FIRST AND EXCESS OVER
FUND 1/31/98 $25,000,000 $50,000,000 $50,000,000
---- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
American General Domestic
Balanced Fund -- Series 3............ $6,359,179 0.550% 0.400% 0.200%
American General Domestic Balanced
Fund -- Series 2..................... $5,778,410 0.550% 0.400% 0.200%
</TABLE>

CGTC's fees vary based upon the level of service provided. While the
investment objectives and policies of the above funds are similar to the
Conservative Asset Allocation Trust or the Moderate Asset Allocation Trust, the
services provided by CGTC are not the same, and thus comparison of fees may not
be directly comparable.

CGTC has not waived, reduced or otherwise agreed to reduce its compensation
under any applicable contract for any of the above referenced funds.

75
<PAGE> 86

NEW SUBADVISORY AGREEMENT
WITH FIDELITY MANAGEMENT TRUST COMPANY

At a meeting held on March 26, 1999, the Board, including the Disinterested
Trustees, voted to accept the resignation of J.P. Morgan Investment Management,
Inc. ("J.P. Morgan") as subadviser to the International Growth and Income Trust
and to approve a new subadvisory agreement between the Adviser and Fidelity
Management Trust Company ("FMTC") with respect to the International Growth and
Income Trust, as well as the Aggressive Asset Allocation Trust and the Equity
Trust, for which Portfolios FMTC currently serves as subadviser. Effective May
1, 1999, FMTC will replace J.P. Morgan as subadviser to the International Growth
and Income Trust and will continue to serve as subadviser to the Aggressive
Asset Allocation Trust and the Equity Trust. In addition, in connection with its
approval of the new subadvisory agreement, the Board, including the
Disinterested Trustees, approved a proposed change in the manner in which FMTC
manages the Aggressive Asset Allocation Trust. Subject to shareholder approval,
effective May 1, 1999, FMTC will manage the Aggressive Asset Allocation Trust
using new investment strategies.

In addition, due to these subadviser and portfolio management changes, on
March 26, 1999, the Board unanimously approved changing the investment objective
and certain non-fundamental policies of each of the Aggressive Asset Allocation
Trust and the International Growth and Income Trust so they would reflect FMTC's
proposed investment strategies. In connection with the foregoing, the Board also
approved changing the names of the Aggressive Asset Allocation Trust, the Equity
Trust and the International Growth and Income Trust to the Large Cap Growth
Trust, the Mid Cap Blend Trust and the Overseas Trust, respectively, effective
May 1, 1999. See "Proposal 4" and "Proposal 7" in the Proxy Statement for a
description of the proposed change to the investment objective of each of the
Aggressive Asset Allocation Trust and the International Growth and Income Trust.

MANAGEMENT AND CONTROL OF FIDELITY MANAGEMENT TRUST COMPANY

FMTC is a wholly-owned subsidiary of FMR Corp. FMR Corp. was organized in
1972 and is the parent company of Fidelity Management & Research Company
("FMR"), an investment adviser organized in 1946. FMR is headquartered in
Boston, Massachusetts and has affiliates in London, Tokyo and Hong Kong
("Fidelity Investments"). Fidelity Investments is the largest mutual fund
company in the United States, managing over $765 billion in assets as of
December 31, 1998. FMR Corp. and Fidelity Investments are privately held (there
is no outside ownership). The principal business address of each of FMTC, FMR
Corp. and FMR is 82 Devonshire Street, Boston, Massachusetts 02109.

FMTC was established in 1981 to provide investment management services for
institutional clients. FMTC currently manages in excess of $58 billion for more
than 267 institutional clients. FMTC is a bank as defined under

76
<PAGE> 87

the Investment Advisers Act of 1940, as amended, and is therefore not required
to be registered thereunder as an investment adviser.

For information regarding the executive officers and directors of FMTC, see
Exhibit B hereto.

APPROVAL OF NEW SUBADVISORY AGREEMENT

The current subadviser to the Aggressive Asset Allocation Trust and the
Equity Trust is FMTC, pursuant to a subadvisory agreement (the "FMTC Old
Subadvisory Agreement") dated January 1, 1996, as amended December 31, 1996,
between FMTC and Manulife Securities.

The current subadviser to the International Growth and Income Trust is J.P.
Morgan, pursuant to a subadvisory agreement (the "J.P. Morgan Old Subadvisory
Agreement") dated January 1, 1996, between J.P. Morgan and Manulife Securities.

The Board of Trustees of the Trust has approved a new subadvisory agreement
between FMTC and Manulife Securities to become effective as of May 1, 1999 (the
"FMTC New Subadvisory Agreement") in connection with the provision of
subadvisory services to the Aggressive Asset Allocation Trust, the Equity Trust
and the International Growth and Income Trust. As discussed above under
"Information Statement -- Summary," shareholder approval of the FMTC New
Subadvisory Agreement is not required.

DESCRIPTION OF NEW AND OLD SUBADVISORY AGREEMENTS

While the provisions of the FMTC New Subadvisory Agreement are
substantially similar to the provisions of the FMTC Old Subadvisory Agreement
and the J.P. Morgan Old Subadvisory Agreement, a number of the differences
between the agreements are noted below. The subadvisory fees payable under the
FMTC New Subadvisory Agreement will be, at certain asset levels, higher than the
fees paid under the FMTC Old Subadvisory Agreement and the J.P. Morgan Old
Subadvisory Agreement and, at certain other asset levels, the same or lower than
the fees paid under the FMTC Old Subadvisory Agreement and the J.P. Morgan Old
Subadvisory Agreement.

Under the terms of the FMTC Old Subadvisory Agreement and the J.P. Morgan
Old Subadvisory Agreement, each of FMTC and J.P. Morgan manages the investment
and reinvestment of the assets of the Aggressive Asset Allocation Trust and the
Equity Trust, and the International Growth and Income Trust, respectively,
subject to the supervision of the Trust's Board of Trustees. Under the terms of
the FMTC New Subadvisory Agreement, FMTC will manage the investment and
reinvestment of the assets of each Portfolio, subject to the supervision of the
Trust's Board of Trustees. FMTC will formulate a continuous investment program
for each Portfolio consistent with each Portfolio's investment objectives and
policies. FMTC will implement such programs by

77
<PAGE> 88

purchases and sales of securities and will regularly report to the Adviser and
the Trustees of the Trust with respect to the implementation of such programs.
FMTC, at its expense, will furnish all necessary investment and management
facilities, including salaries of personnel required for it to execute its
duties, as well as administrative facilities, including bookkeeping, clerical
personnel, and equipment necessary for the efficient conduct of the investment
affairs of each Portfolio.

As compensation for its services, Manulife Securities receives an advisory
fee computed separately for each Portfolio. The fee for each Portfolio is stated
as an annual percentage of the value of the net assets of the Portfolio. The
fee, which is accrued daily, is calculated for each day by multiplying the daily
equivalent of the annual percentage prescribed for a Portfolio by the value of
the net assets of the Portfolio at the close of business on the previous
business day of the Trust. While the shareholders of the Aggressive Asset
Allocation Trust and the Equity Trust are being asked to approve advisory fee
increases for such Portfolios, the following is a schedule of the advisory fees
the Portfolios currently are obligated to pay the Adviser. See "Proposal
1 -- Advisory Fees" in the Proxy Statement.

<TABLE>
<CAPTION>
ADVISORY
PORTFOLIO FEE
--------- --------
<S> <C>
Aggressive Asset Allocation Trust................... 0.750%
Equity Trust........................................ 0.750%
International Growth and Income Trust............... 0.950%
</TABLE>

As compensation for its services, each of FMTC and J.P. Morgan currently
receives under the FMTC Old Subadvisory Agreement and the J.P. Morgan Old
Subadvisory Agreement, respectively, and FMTC will receive under the FMTC New
Subadvisory Agreement, a fee from the Adviser computed separately for each
applicable Portfolio. The fee for each Portfolio is stated as an annual
percentage of the value of the net assets of such Portfolio. The fees are
calculated on the basis of the average of all valuations of net assets of a
Portfolio made at the close of business on each business day of the Trust during
the period for which such fees are paid. Once the average net assets of a
Portfolio exceed specified amounts, the fee is reduced with respect to such
excess. The following is a schedule of the management fees the Adviser currently
is obligated to pay FMTC and J.P. Morgan under the FMTC Old Subadvisory
Agreement and the J.P. Morgan Old Subadvisory Agreement, respectively, and will
be obligated to pay FMTC under the FMTC New Subadvisory Agreement, out of the
advisory fee it receives from each Portfolio as specified above. THESE FEES ARE
PAID BY THE ADVISER OUT OF THE ADVISORY FEE IT RECEIVES FOR EACH PORTFOLIO AND
ARE NOT ADDITIONAL CHARGES TO ANY PORTFOLIO. APPROVAL OF THE FMTC NEW
SUBADVISORY AGREEMENT HAS NOT RESULTED IN ANY INCREASE IN THE RATE OF THE
ADVISORY FEES PAYABLE TO MANULIFE SECURITIES FOR THE INTERNATIONAL GROWTH AND
INCOME TRUST. HOWEVER, APPROVAL OF THE FMTC NEW SUBADVISORY AGREEMENT HAS
RESULTED, AT

78
<PAGE> 89

CERTAIN ASSET LEVELS, IN AN INCREASE IN THE RATE OF THE SUBADVISORY FEES PAYABLE
TO FMTC FOR THE INTERNATIONAL GROWTH AND INCOME TRUST AND THE AGGRESSIVE ASSET
ALLOCATION TRUST. IN ADDITION, APPROVAL OF THE FMTC NEW SUBADVISORY AGREEMENT
HAS RESULTED, AT CERTAIN ASSET LEVELS, IN AN INCREASE IN THE RATE OF THE
SUBADVISORY FEES PAYABLE TO FMTC AND, AT CERTAIN OTHER ASSET LEVELS, IN A
DECREASE IN THE RATE OF THE SUBADVISORY FEES PAYABLE TO FMTC FOR THE EQUITY
TRUST. AS NOTED ABOVE UNDER "PROPOSAL 1 -- ADVISORY FEES" IN THE PROXY
STATEMENT, SHAREHOLDERS OF THE AGGRESSIVE ASSET ALLOCATION TRUST AND THE EQUITY
TRUST ARE BEING ASKED TO APPROVE INCREASES IN THE RATES OF THE ADVISORY FEES
PAYABLE TO MANULIFE SECURITIES.

<TABLE>
<CAPTION>
BETWEEN BETWEEN BETWEEN
$50,000,000 $200,000,000 $500,000,000
AGGRESSIVE ASSET FIRST AND AND AND EXCESS OVER
ALLOCATION TRUST $50,000,000 $200,000,000 $500,000,000 $750,000,000 $750,000,000
- ---------------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
FMTC Old Subadvisory
Agreement.......... 0.400% 0.350% 0.300% 0.225% 0.225%

FMTC New Subadvisory
Agreement.......... 0.400% 0.400% 0.400% 0.400% 0.350%
</TABLE>

<TABLE>
<CAPTION>
BETWEEN BETWEEN BETWEEN
$50,000,000 $200,000,000 $500,000,000
FIRST AND AND AND EXCESS OVER
EQUITY TRUST $50,000,000 $200,000,000 $500,000,000 $750,000,000 $750,000,000
- ------------ ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
FMTC Old Subadvisory
Agreement.......... 0.375% 0.325% 0.275% 0.200% 0.200%

FMTC New Subadvisory
Agreement.......... 0.350% 0.350% 0.350% 0.350% 0.350%
</TABLE>

<TABLE>
<CAPTION>
BETWEEN BETWEEN BETWEEN
INTERNATIONAL $50,000,000 $200,000,000 $500,000,000
GROWTH AND FIRST AND AND AND EXCESS OVER
INCOME TRUST $50,000,000 $200,000,000 $500,000,000 $750,000,000 $750,000,000
- ------------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
J.P. Morgan Old
Subadvisory
Agreement.......... 0.500% 0.450% 0.400% 0.350% 0.350%

FMTC New Subadvisory
Agreement.......... 0.500% 0.500% 0.500% 0.500% 0.450%
</TABLE>

The FMTC Old Subadvisory Agreement required approval of the agreement as to
the Aggressive Asset Allocation Trust and the Equity Trust by both (i) the
Trustees of the Trust including a majority of Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to the agreement and (ii) a
majority of the outstanding voting securities of the Aggressive Asset Allocation
Trust and the Equity Trust. The J.P. Morgan Old Subadvisory Agreement

79
<PAGE> 90

required approval of the agreement as to the International Growth and Income
Trust by both (i) the Trustees of the Trust including a majority of Trustees who
are not "interested persons" (as defined in the 1940 Act) of any party to the
agreement and (ii) a majority of the outstanding voting securities of the
International Growth and Income Trust. The FMTC New Subadvisory Agreement
requires only approval of the Trustees of the Trust, including a majority of
Trustees who are not "interested persons" (as defined in the 1940 Act) of any
party to the agreement.

The FMTC New Subadvisory Agreement will continue in effect as to each
Portfolio for an initial term of two years from the date of its execution and
shall continue in effect thereafter only so long as such continuance is
specifically approved at least annually either by the Trustees of the Trust or
by the vote of a majority of the outstanding voting securities of each
Portfolio, provided that in either event such continuance shall also be approved
by the vote of a majority of the Trustees of the Trust who are not "interested
persons" (as defined in the 1940 Act) of any party to the FMTC New Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. Any required shareholder approval of any continuance of the FMTC New
Subadvisory Agreement shall be effective with respect to a Portfolio if a
majority of the outstanding voting securities of that Portfolio vote to approve
such continuance, notwithstanding that such continuance may not have been
approved by a majority of the outstanding voting securities of any other
Portfolio of the Trust affected by the FMTC New Subadvisory Agreement or all the
Portfolios of the Trust.

The FMTC New Subadvisory Agreement may be terminated at any time, without
the payment of any penalty, on 60 days' written notice to the other party or
parties to the FMTC New Subadvisory Agreement and to the Trust, as appropriate:
(i) by the Trustees of the Trust; (ii) with respect to any Portfolio, by the
vote of a majority of the outstanding voting securities of such Portfolio; (iii)
by FMTC, or (iv) by the Adviser. The FMTC New Subadvisory Agreement will
automatically terminate in the event of its assignment.

Subject to the provisions of the 1940 Act, as modified by or interpreted by
any applicable order or orders of the Commission or any rules or regulations
adopted by, or interpretive releases of, the Commission, the FMTC New
Subadvisory Agreement may be amended by the Adviser and FMTC provided such
amendment is specifically approved by the vote of a majority of the Trustees of
the Trust who are not interested persons of any party to the FMTC New
Subadvisory Agreement cast in person at a meeting called for the purpose of
voting on such approval. The FMTC Old Subadvisory Agreement and the J.P. Morgan
Old Subadvisory Agreement provided that any such amendment must be specifically
approved by the vote of a majority of the outstanding voting securities of each
of the Portfolios of the Trust affected by the amendment and by the vote of a
majority of the Trustees of the Trust who are not interested

80
<PAGE> 91

persons of any party to the agreement cast in person at a meeting called for the
purpose of voting on such approval. The required shareholder approval would have
been effective with respect to any affected Portfolio of the Trust if a majority
of the outstanding voting securities of that Portfolio voted to approve the
amendment, notwithstanding that the amendment may not have been approved by a
majority of the outstanding voting securities of (a) any other Portfolio of the
Trust affected by the amendment or (b) all the Portfolios of the Trust.
Shareholder approval is not required for an amendment to the FMTC New
Subadvisory Agreement.

The FMTC New Subadvisory Agreement provides that FMTC will not be liable to
the Trust, the Adviser, any shareholder of the Trust, or any contractholder
whose contract values are invested in shares of the Trust for any losses
suffered by such parties resulting from any matters to which the agreement
relates other than losses resulting from FMTC's willful misfeasance, bad faith
or gross negligence in the performance of, or from reckless disregard of, its
duties.

BOARD OF TRUSTEE CONSIDERATIONS

At its meeting duly held on March 26, 1999, the Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the FMTC New Subadvisory Agreement
(with the advice and assistance of independent legal counsel), approved the FMTC
New Subadvisory Agreement.

The Board considered numerous factors in connection with the approval of
the FMTC New Subadvisory Agreement as it applies to each of the Aggressive Asset
Allocation Trust, the Equity Trust and the International Growth and Income
Trust, including, but not limited to: (i) the nature and quality of the services
provided by FMTC and J.P. Morgan under their respective agreements and the fees
payable therefor, (ii) the nature and quality of the services to be provided by
FMTC under the FMTC New Subadvisory Agreement, which includes those to be
provided in connection with the proposed material changes to the investment
objective and policies of each of the Aggressive Asset Allocation Trust and the
International Growth and Income Trust, (iii) the background and experience of
the investment personnel who will manage the Portfolios, (iv) the fees to be
paid to FMTC under the FMTC New Subadvisory Agreement and other comparable
investment companies, (v) performance information regarding each Portfolio and
other comparable investment companies, and (vi) the proposed subadvisory fees in
relation to the fees of other comparable portfolios.

In evaluating the FMTC New Subadvisory Agreement, the Board, in particular,
focused on the fact that the FMTC New Subadvisory Agreement is substantially
similar to the FMTC Old Subadvisory Agreement and the J.P. Morgan Old
Subadvisory Agreement, other than, for example, the changes noted above. The
Board was also given audited financial statements of FMTC. In

81
<PAGE> 92

addition, the Board was provided with an analysis of its fiduciary obligations
in connection with such considerations. In considering the FMTC New Subadvisory
Agreement, the Trustees discussed the information provided to them and their
fiduciary obligations.

SUBADVISORY FEES PAID

For the year ended December 31, 1998, the Adviser paid FMTC the following
subadvisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
----------- ------------
<S> <C> <C>
Aggressive Asset Allocation
Trust............................ $ 874,869 0.350%
Equity Trust....................... $ 3,567,981 0.233%
</TABLE>

For the year ended December 31, 1998, the Adviser paid J.P. Morgan the
following subadvisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
----------- ------------
<S> <C> <C>
International Growth and Income
Trust............................ $ 1,003,054 0.457%
</TABLE>

ADVISORY FEES PAID

For the year ended December 31, 1998, the Portfolio paid the Adviser the
following advisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
----------- ------------
<S> <C> <C>
Aggressive Asset Allocation
Trust............................ $ 1,874,673 0.750%
Equity Trust....................... $11,504,927 0.750%
International Growth and Income
Trust............................ $ 2,086,991 0.950%
</TABLE>

For the year ended December 31, 1998, the net investment advisory fees
retained by the Adviser after payment of the subadvisory fee for the Portfolios
were as follows:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
----------- ------------
<S> <C> <C>
Aggressive Asset Allocation
Trust............................ $ 999,804 0.400%
Equity Trust....................... $ 7,936,946 0.517%
International Growth and Income
Trust............................ $ 1,083,937 0.493%
</TABLE>

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<PAGE> 93

PRIOR TRUSTEE AND SHAREHOLDER APPROVAL OF THE FMTC OLD SUBADVISORY
AGREEMENT AND THE J.P. MORGAN OLD SUBADVISORY AGREEMENT

The J.P. Morgan Old Subadvisory Agreement was most recently approved by the
Board of Trustees at a meeting held on June 29, 1998 in connection with annual
approval of the J.P. Morgan Old Subadvisory Agreement. The J.P. Morgan Old
Subadvisory Agreement was most recently approved by shareholders at a meeting
held on December 5, 1995. This approval of the J.P. Morgan Old Subadvisory
Agreement occurred in connection with the change of control of the Adviser as a
result of the merger of North American Life Assurance Company, the former
ultimate controlling parent company of Manulife Securities, and The
Manufacturers Life Insurance Company, the current controlling parent company of
Manulife Securities, on January 1, 1996.

OWNERSHIP OF THE TRUST

For information regarding the shareholders and ownership of the Trust, see
"General" in the Proxy Statement.

BROKERAGE TRANSACTIONS

A description of the portfolio brokerage policies applicable to each
Portfolio is set forth under "Additional Information -- Portfolio Brokerage"
below.

OTHER INVESTMENT COMPANIES ADVISED BY FMTC

FMTC does not currently act as investment adviser to any other portfolios
registered under the 1940 Act with investment objectives and policies similar to
the Aggressive Asset Allocation Trust, the Equity Trust or the International
Growth and Income Trust (assuming that the changes proposed in Proposal 4 and
Proposal 7 are approved by shareholders).

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<PAGE> 94

NEW SUBADVISORY AGREEMENT
WITH FRANKLIN ADVISERS, INC.

At a meeting held on March 26, 1999, the Board, including the Disinterested
Trustees, voted to accept the resignation of Warburg Pincus Asset Management
Inc. ("Warburg Pincus") as subadviser to the Emerging Small Company Trust and to
approve a subadvisory agreement between the Adviser and Franklin Advisers, Inc.
("Franklin Advisers") with respect to the Emerging Small Company Trust.
Effective May 1, 1999, Franklin Advisers will replace Warburg Pincus as
subadviser to the Emerging Small Company Trust.

In addition, due to the change in subadviser, on March 26, 1999, the Board
unanimously approved changing the investment objective and certain non-
fundamental policies of the Portfolio so it would reflect Franklin Advisers'
proposed investment strategies. See "Proposal 5" in the Proxy Statement for a
description of the proposed changes to the Portfolio's investment objective.

MANAGEMENT AND CONTROL OF FRANKLIN ADVISERS, INC.

Franklin Advisers is a California corporation which provides investment
advisory services. As of December 31, 1998, Franklin Advisers and its affiliates
managed approximately $220 billion in assets. Franklin Advisers is a wholly-
owned subsidiary of Franklin Resources, Inc. Both are located at 777 Mariners
Island Boulevard, San Mateo, California 94404. Franklin Advisers is registered
as an investment adviser under the Investment Advisers Act of 1940, as amended.

For information regarding the executive officers and directors of Franklin
Advisers, see Exhibit B hereto.

APPROVAL OF NEW SUBADVISORY AGREEMENT

The current subadviser to the Emerging Small Company Trust is Warburg
Pincus pursuant to a subadvisory agreement (the "Warburg Pincus Old Subadvisory
Agreement") dated December 31, 1996, between Warburg, Pincus Counsellors, Inc.
and Manulife Securities. Warburg Pincus is the successor entity to Warburg,
Pincus Counsellors, Inc.

The Board of Trustees of the Trust has approved a new subadvisory agreement
between Franklin Advisers and Manulife Securities to become effective as of May
1, 1999 (the "Franklin New Subadvisory Agreement") in connection with the
provision of subadvisory services to the Emerging Small Company Trust. As
discussed above under "Information Statement -- Summary," shareholder approval
of the Franklin New Subadvisory Agreement is not required.

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<PAGE> 95

DESCRIPTION OF NEW AND OLD SUBADVISORY AGREEMENTS

While the provisions of the Franklin New Subadvisory Agreement are
substantially similar to the provisions of the Warburg Pincus Old Subadvisory
Agreement, a number of the differences between the agreements are noted below.
The subadvisory fees payable under the Franklin New Subadvisory Agreement are,
at certain asset levels, higher than the fees paid under the Warburg Pincus Old
Subadvisory Agreement and, at certain asset levels, lower than the fees paid
under the Warburg Pincus Old Subadvisory Agreement.

Under the terms of the Warburg Pincus Old Subadvisory Agreement and the
Franklin New Subadvisory Agreement, Warburg Pincus manages and Franklin Advisers
will manage the investment and reinvestment of the assets of the Portfolio,
subject to the supervision of the Trust's Board of Trustees. Franklin Advisers
will formulate a continuous investment program for the Portfolio consistent with
the Portfolio's investment objectives and policies. Franklin Advisers will
implement such program by purchases and sales of securities and will
periodically report to the Adviser and the Trustees of the Trust with respect to
the implementation of such program. In addition, Franklin Advisers will
purchase, sell, exchange or convert foreign currency in the spot or forward
markets as necessary to facilitate transactions in international securities for
the Portfolio. Franklin Advisers, at its expense, will furnish all necessary
investment and management facilities, including salaries of personnel required
for it to execute its duties, as well as administrative facilities, including
bookkeeping, clerical personnel and equipment necessary for the efficient
conduct of the investment affairs of the Portfolio.

As compensation for its services, Manulife Securities receives an advisory
fee computed separately for the Portfolio. The fee for the Portfolio is stated
as an annual percentage of the value of the net assets of the Portfolio. The
fee, which is accrued daily, is calculated for each day by multiplying the daily
equivalent of the annual percentage prescribed for the Portfolio by the value of
the net assets of the Portfolio at the close of business on the previous
business day of the Trust. See "Proposal 1 -- Advisory Fees" in the Proxy
Statement. The following is a schedule of the advisory fees the Portfolio
currently is obligated to pay the Adviser.

<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE
--------- ------------
<S> <C>
Emerging Small Company Trust..................... 1.050%
</TABLE>

As compensation for its services, Warburg Pincus currently receives, and
Franklin Advisers will receive, a fee from the Adviser computed separately for
the Portfolio. The fee for the Portfolio is stated as an annual percentage of
the value of the net assets of the Portfolio. The fees are calculated on the
basis of the average of all valuations of net assets of the Portfolio made at
the close of business on each business day of the Trust during the period for
which such fees are paid. Once the average net assets of the Portfolio exceed
specified amounts,

85
<PAGE> 96

the fee is reduced with respect to such excess. The following is a schedule of
the management fees the Adviser currently is obligated to pay Warburg Pincus
under the Warburg Pincus Old Subadvisory Agreement, and will be obligated to pay
Franklin Advisers under the Franklin New Subadvisory Agreement, out of the
advisory fee it receives from the Portfolio as specified above. THESE FEES ARE
PAID BY THE ADVISER OUT OF THE ADVISORY FEE IT RECEIVES FOR THE PORTFOLIO AND
ARE NOT ADDITIONAL CHARGES TO THE PORTFOLIO. APPROVAL OF THE FRANKLIN NEW
SUBADVISORY AGREEMENT HAS NOT RESULTED IN ANY INCREASE IN THE RATE OF THE
ADVISORY FEES PAYABLE TO MANULIFE SECURITIES, BUT HAS RESULTED, AT CERTAIN ASSET
LEVELS, IN AN INCREASE IN THE RATE OF THE SUBADVISORY FEES AND, AT CERTAIN ASSET
LEVELS, IN A DECREASE IN THE RATE OF THE SUBADVISORY FEES.

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
EMERGING SMALL FIRST AND AND EXCESS OVER
COMPANY TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- -------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Warburg Pincus Old
Subadvisory
Agreement.............. 0.550% 0.550% 0.550% 0.550%
Franklin New Subadvisory
Agreement.............. 0.600% 0.600% 0.520% 0.500%
</TABLE>

The Warburg Pincus Old Subadvisory Agreement required approval of the
agreement as to the Portfolio by both (i) the Trustees of the Trust including a
majority of Trustees who are not "interested persons" (as defined in the 1940
Act) of any party to the agreement and (ii) a majority of the outstanding voting
securities of the Portfolio. The Franklin New Subadvisory Agreement requires
only approval of the Trustees of the Trust, including a majority of Trustees who
are not "interested persons" (as defined in the 1940 Act) of any party to the
agreement.

The Franklin New Subadvisory Agreement will continue in effect as to the
Portfolio for an initial term of two years from the date of its execution and
shall continue in effect thereafter only so long as such continuance is
specifically approved at least annually either by the Trustees of the Trust or
by the vote of a majority of the outstanding voting securities of the Portfolio,
provided that in either event such continuance shall also be approved by the
vote of a majority of the Trustees of the Trust who are not "interested persons"
(as defined in the 1940 Act) of any party to the Franklin New Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. Any required shareholder approval of any continuance of the Franklin
New Subadvisory Agreement shall be effective with respect to the Portfolio if a
majority of the outstanding voting securities of the Portfolio vote to approve
such continuance, notwithstanding that such continuance may not have been
approved by a majority of the outstanding voting securities of any other
portfolio of the Trust affected by the Franklin New Subadvisory Agreement or all
the Portfolios of the Trust.

86
<PAGE> 97

The Franklin New Subadvisory Agreement may be terminated at any time,
without the payment of any penalty, on 60 days' written notice to the other
party or parties to the Franklin New Subadvisory Agreements and to the Trust, as
appropriate: (i) by the Trustees of the Trust; (ii) by the vote of a majority of
the outstanding voting securities of the Trust, or, with respect to the
Portfolio, by the vote of a majority of the outstanding voting securities of the
Portfolio; (iii) by Franklin Advisers or (iv) by the Adviser. The Franklin New
Subadvisory Agreement will automatically terminate in the event of its
assignment.

The Franklin New Subadvisory Agreement may be amended by the Adviser and
Franklin Advisers provided such amendment is specifically approved by the vote
of a majority of the Trustees of the Trust and a majority of the Trustees of the
Trust who are not interested persons of any party to the Franklin New
Subadvisory Agreement cast in person at a meeting called for the purpose of
voting on such approval. The Warburg Pincus Old Subadvisory Agreement, in
addition, provided that any such amendment must be specifically approved by the
vote of a majority of the outstanding voting securities of each of the
portfolios of the Trust affected by the amendment. The required shareholder
approval would have been effective with respect to any affected Portfolio of the
Trust if a majority of the outstanding voting securities of that Portfolio voted
to approve the amendment, notwithstanding that the amendment may not have been
approved by a majority of the outstanding voting securities of (a) any other
Portfolio of the Trust affected by the amendment or (b) all the Portfolios of
the Trust. Shareholder approval is not required for an amendment to the Franklin
New Subadvisory Agreement.

The Franklin New Subadvisory Agreement provides that Franklin Advisers will
not be liable to the Trust or the Adviser for any losses suffered by such
parties resulting from any matters to which the agreement relates other than
losses resulting from Franklin Advisers' willful misfeasance, bad faith or gross
negligence in the performance of, or from reckless disregard of, its duties.

BOARD OF TRUSTEE CONSIDERATIONS

At its meeting duly held on March 26, 1999, the Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the Franklin New Subadvisory Agreement
(with the advice and assistance of independent legal counsel), approved the
Franklin New Subadvisory Agreement.

The Board considered numerous factors in connection with the approval of
the Franklin New Subadvisory Agreement as it applies to the Emerging Small
Company Trust, including, but not limited to: (i) the nature and quality of the
services provided by Warburg Pincus and the fees payable therefor, (ii) the
nature and quality of the services to be provided by Franklin Advisers in
connection with the proposed material changes to the Portfolio's investment
objectives and policies, (iii) the background and experience of the investment
87
<PAGE> 98

personnel who will manage the Portfolio, (iv) the fees to be paid to Franklin
Advisers and other comparable investment companies, (v) performance information
regarding each Portfolio and other comparable investment companies, and (vi) the
proposed subadvisory fees in relation to the fees of other comparable
portfolios.

In evaluating the Franklin New Subadvisory Agreement, the Board, in
particular, focused on the fact that the Franklin New Subadvisory Agreement is
substantially similar to the Warburg Pincus Old Subadvisory Agreement other
than, for example, the changes noted above. The Board was also given audited
financial statements of Franklin Advisers. In addition, the Board was provided
with an analysis of its fiduciary obligations in connection with such
considerations. In considering the Franklin New Subadvisory Agreement, the
Trustees discussed the information provided to them and their fiduciary
obligations.

SUBADVISORY FEES PAID

For the year ended December 31, 1998, the Adviser paid Warburg Pincus the
following subadvisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Emerging Small Company Trust........ $1,538,613 0.550%
</TABLE>

ADVISORY FEES PAID

For the year ended December 31, 1998, the Portfolio paid the Adviser the
following advisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Emerging Small Company Trust........ $2,937,353 1.050%
</TABLE>

For the year ended December 31, 1998, the net investment advisory fees
retained by the Adviser after payment of the subadvisory fee for the Portfolio
were as follows:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Emerging Small Company Trust........ $1,398,740 0.500%
</TABLE>

PRIOR TRUSTEE AND SHAREHOLDER APPROVAL OF THE
WARBURG PINCUS OLD SUBADVISORY AGREEMENT

The Warburg Pincus Old Subadvisory Agreement was most recently approved by
the Board of Trustees at a meeting held on September 29, 1998. The Warburg
Pincus Old Subadvisory Agreement was most recently approved by the sole
shareholder of the Portfolio on January 1, 1997.

88
<PAGE> 99

OWNERSHIP OF THE TRUST

For information regarding the shareholders and ownership of the Trust, see
"General" in the Proxy Statement.

BROKERAGE TRANSACTIONS

A description of the portfolio brokerage policies applicable to the
Portfolio is set forth under "Additional Information -- Portfolio Brokerage"
below.

OTHER INVESTMENT COMPANIES ADVISED BY FRANKLIN ADVISERS

Franklin Advisers acts as investment adviser to three other registered
investment companies having similar investment objectives and policies to those
of the Emerging Small Company Trust (assuming that the changes proposed in
Proposal 5 are approved by shareholders). The size of each of these funds is as
follows:

<TABLE>
<CAPTION>
ASSETS AS OF
FRANKLIN SMALL CAP GROWTH FUND 4/30/98
------------------------------ --------------
<S> <C>
Class A...................................... $3,957,972,469
Class B...................................... $ 731,707,459
Advisor Class................................ $ 118,682,860
</TABLE>

<TABLE>
<CAPTION>
ASSETS AS OF
FRANKLIN VALUEMARK FUNDS SMALL CAP FUND 12/31/98
--------------------------------------- ------------
<S> <C>
Class 1........................................ $315,459,858
Class 2........................................ N/A*
</TABLE>

- ---------------
* Class 2 went effective January 5, 1999, after the fund's fiscal year end.

<TABLE>
<CAPTION>
TEMPLETON VARIABLE PRODUCT SERIES ASSETS AS OF
SMALL CAP INVESTMENTS FUND 12/31/98
- --------------------------------- ------------
<S> <C>
Class 1.......................................... $ 230,861
Class 2.......................................... $6,211,229
</TABLE>

Under its management agreement, each of the Franklin Small Cap Growth Fund,
the Franklin Valuemark Funds Small Cap Fund and the Templeton Variable Product
Series Small Cap Investments Fund pays Franklin Advisers a management fee based
upon each fund's average daily net assets, computed at the following annual
rates:

<TABLE>
<CAPTION>
BETWEEN BETWEEN BETWEEN BETWEEN
$100,000,000 $250,000,000 $10 BILLION $12.5 BILLION EXCESS
FIRST AND AND AND AND OVER
FUND $100,000,000 $250,000,000 $10 BILLION $12.5 BILLION $15 BILLION $15 BILLION
- ---- ------------- ------------- ------------ ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Franklin Small Cap
Growth Fund........ 0.625% 0.500% 0.450% 0.440% 0.420% 0.400%
</TABLE>

89
<PAGE> 100

<TABLE>
<CAPTION>
BETWEEN
$500,000,000 EXCESS
FIRST AND OVER
FUND $500,000,000 $1 BILLION $1 BILLION
- ---- ------------- ------------- ----------
<S> <C> <C> <C>
Franklin Valuemark Funds
Small Cap Fund.......................... 0.750% 0.625% 0.500%
</TABLE>

<TABLE>
<CAPTION>
BETWEEN
$200,000,000 EXCESS
FIRST AND OVER
FUND $200,000,000 $1.2 BILLION $1.2 BILLION
- ---- ------------- ------------- ------------
<S> <C> <C> <C>
Templeton Variable Product Series
Small Cap Investments Fund.............. 0.750% 0.650% 0.550%
</TABLE>

Franklin Advisers has not waived, reduced or otherwise agreed to reduce its
compensation under any applicable contract for the current and last fiscal year
for either the Franklin Valuemark Funds Small Cap Fund or the Franklin Small Cap
Growth Fund.

Franklin Advisers has agreed in advance to waive management fees and to
make certain payments to reduce fund expenses as necessary so that total fund
operating expenses do not exceed 1.00% of the Templeton Variable Product Series
Small Cap Investments Fund's Class 1 net assets and 1.25% of the Templeton
Variable Product Series Small Cap Investments Fund's Class 2 net assets through
1999.

90
<PAGE> 101

NEW SUBADVISORY AGREEMENT
WITH PACIFIC INVESTMENT MANAGEMENT COMPANY

At a meeting held on March 26, 1999, the Board, including the Disinterested
Trustees, voted to accept the resignation of Oechsle International Advisors, LLC
("Oechsle LLC") as subadviser to the Global Government Bond Trust and to approve
a subadvisory agreement between the Adviser and Pacific Investment Management
Company ("PIMCO") with respect to the Global Government Bond Trust. Effective
May 1, 1999, PIMCO will replace Oechsle LLC as subadviser to the Global
Government Bond Trust.

In addition, due to the change in subadviser, on March 26, 1999, the Board
unanimously approved changing the investment objective and certain non-
fundamental policies of the Portfolio so they would reflect PIMCO's proposed
investment strategies. In connection with the foregoing, the Board also approved
changing the name of the Global Government Bond Trust to the Global Bond Trust,
effective May 1, 1999. See "Proposal 8" in the Proxy Statement for a description
of the proposed changes to the Portfolio's investment objective.

MANAGEMENT AND CONTROL OF PACIFIC INVESTMENT MANAGEMENT TRUST COMPANY

PIMCO is located at 840 Newport Center Drive, Suite 300, Newport Beach,
California 92660. PIMCO, founded in 1971, is a subsidiary of PIMCO Advisors,
L.P., whose principal business address is 800 Newport Center Drive, Newport
Beach, California 92660. The general partners of PIMCO Advisors, L.P. are PIMCO
Partners, G.P. and PIMCO Advisors Holdings L.P. ("PAH"). PIMCO Partners G.P. is
a general partnership between PIMCO Holding LLC, a Delaware limited liability
company, and PIMCO Partners LLC, a California limited liability company. PIMCO
Holding LLC is an indirect wholly-owned subsidiary of Pacific Life Insurance
Company, whose principal business address is 700 Newport Center Drive, Newport
Beach, California 92660. PIMCO Holding LLC and PIMCO Partners LLC are controlled
by the current Managing Directors and two former Managing Directors of PIMCO.
PIMCO Partners G.P. is the sole general partner of PAH. PIMCO had approximately
$157.96 billion in assets under management as of December 31, 1998 and PIMCO
Advisors, L.P. had approximately $244.2 billion in assets under management as of
December 31, 1998. PIMCO is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended.

For information regarding the executive officers and directors of PIMCO,
see Exhibit B hereto.

APPROVAL OF NEW SUBADVISORY AGREEMENT

The current subadviser to the Global Government Bond Trust is Oechsle LLC
pursuant to a subadvisory agreement (the "Oechsle Old Subadvisory

91
<PAGE> 102

Agreement") dated October 8, 1998, between Oechsle LLC and Manulife Securities.

The Board of Trustees of the Trust has approved a new subadvisory agreement
between PIMCO and Manulife Securities to become effective as of May 1, 1999 (the
"PIMCO New Subadvisory Agreement") in connection with the provision of
subadvisory services to the Global Government Bond Trust. As discussed above
under "Information Statement -- Summary," shareholder approval of the PIMCO New
Subadvisory Agreement is not required.

DESCRIPTION OF NEW AND OLD SUBADVISORY AGREEMENTS

While the provisions of the PIMCO New Subadvisory Agreement are
substantially similar to the provisions of the Oechsle Old Subadvisory
Agreement, a number of the differences between the agreements are noted below.
The subadvisory fees payable under the PIMCO New Subadvisory Agreement are the
same as the fees paid under the Oechsle Old Subadvisory Agreement.

Under the terms of the Oechsle Old Subadvisory Agreement and the PIMCO New
Subadvisory Agreement, Oechsle LLC manages and PIMCO will manage the investment
and reinvestment of the assets of the Portfolio, subject to the supervision of
the Trust's Board of Trustees. PIMCO will formulate a continuous investment
program for the Portfolio consistent with the Portfolio's investment objectives
and policies. PIMCO will implement such program by purchases and sales of
securities and will regularly report to the Adviser and the Trustees of the
Trust with respect to the implementation of such program. PIMCO, at its expense,
furnishes all necessary investment and management facilities, including salaries
of personnel required for it to execute its duties, as well as administrative
facilities, including bookkeeping, clerical personnel, and equipment necessary
for the efficient conduct of the investment affairs of the Portfolio.

<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE
--------- ------------
<S> <C>
Global Government Bond Trust................... 0.800%
</TABLE>

92
<PAGE> 103

As compensation for its services, Oechsle LLC currently receives, and PIMCO
will receive, a fee from the Adviser computed separately for the Portfolio. The
fee for the Portfolio is stated as an annual percentage of the value of the net
assets of the Portfolio. The fees are calculated on the basis of the average of
all valuations of net assets of the Portfolio made at the close of business on
each business day of the Trust during the period for which such fees are paid.
Once the average net assets of the Portfolio exceed specified amounts, the fee
is reduced with respect to such excess. The following is a schedule of the
management fees the Adviser currently is obligated to pay Oechsle LLC under the
Oechsle Old Subadvisory Agreement, and will be obligated to pay PIMCO under the
PIMCO New Subadvisory Agreement, out of the advisory fee it receives from the
Portfolio as specified above. THESE FEES ARE PAID BY THE ADVISER OUT OF THE
ADVISORY FEE IT RECEIVES FOR THE PORTFOLIO AND ARE NOT ADDITIONAL CHARGES TO THE
PORTFOLIO. APPROVAL OF THE PIMCO NEW SUBADVISORY AGREEMENT HAS NOT RESULTED IN
ANY INCREASE IN THE RATE OF THE ADVISORY FEES PAYABLE TO MANULIFE SECURITIES OR
IN THE RATE OF THE SUBADVISORY FEES.

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
GLOBAL GOVERNMENT BOND TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ---------------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Oechsle Old Subadvisory
Agreement............... 0.375% 0.350% 0.300% 0.250%
PIMCO New Subadvisory
Agreement............... 0.375% 0.350% 0.300% 0.250%
</TABLE>

The Oechsle Old Subadvisory Agreement required, and the PIMCO New
Subadvisory Agreement requires, approval of the agreement by the Trustees of the
Trust, including a majority of Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the agreement.

The PIMCO New Subadvisory Agreement will continue in effect as to the
Portfolio for an initial term of two years from the date of its execution and
shall continue in effect thereafter only so long as such continuance is
specifically approved at least annually either by the Trustees of the Trust or
by the vote of a majority of the outstanding voting securities of the Portfolio,
provided that in either event such continuance shall also be approved by the
vote of a majority of the Trustees of the Trust who are not "interested persons"
(as defined in the 1940 Act) of any party to the PIMCO New Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. Any required shareholder approval of any continuance of the PIMCO New
Subadvisory Agreement shall be effective with respect to the Portfolio if a
majority of the outstanding voting securities of the Portfolio vote to approve
such continuance, notwithstanding that such continuance may not have been
approved by a majority of the outstanding voting securities of any other
portfolio of the Trust affected by the PIMCO New Subadvisory Agreement or by all
the Portfolios of the Trust.

93
<PAGE> 104

The PIMCO New Subadvisory Agreement may be terminated at any time, without
the payment of any penalty, on 60 days' written notice to the other party or
parties to the PIMCO New Subadvisory Agreements and to the Trust, as
appropriate: (i) by the Trustees of the Trust; (ii) by the vote of a majority of
the outstanding voting securities of the Trust, or by the vote of a majority of
the outstanding voting securities of the Portfolio; (iii) by PIMCO; or (iv) by
the Adviser. The PIMCO New Subadvisory Agreement will automatically terminate in
the event of its assignment.

The PIMCO New Subadvisory Agreement may be amended by the Adviser and PIMCO
provided such amendment is in writing and specifically approved by the vote of a
majority of the Trustees of the Trust and a majority of the Trustees of the
Trust who are not interested persons of any party to the PIMCO New Subadvisory
Agreement cast in person at a meeting called for the purpose of voting on such
approval. The Oechsle Old Subadvisory Agreement, in addition, provided that any
such amendment must be specifically approved by the vote of a majority of the
outstanding voting securities of the Portfolio. The required shareholder
approval would have been effective if a majority of the outstanding voting
securities of the Portfolio voted to approve the amendment, notwithstanding that
the amendment may not have been approved by a majority of the outstanding voting
securities of any other Portfolio subject to the agreement. Shareholder approval
is not required for an amendment to the PIMCO New Subadvisory Agreement.

The PIMCO New Subadvisory Agreement provides that PIMCO will not be liable
to the Trust or the Adviser for any losses suffered by such parties resulting
from any matters to which the agreement relates other than losses resulting from
PIMCO's willful misfeasance, bad faith or gross negligence in the performance
of, or from reckless disregard of, its duties.

BOARD OF TRUSTEE CONSIDERATIONS

At its meeting duly held on March 26, 1999, the Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the PIMCO New Subadvisory Agreement
(with the advice and assistance of independent legal counsel), approved the
PIMCO New Subadvisory Agreement.

The Board considered numerous factors in connection with the approval of
the PIMCO New Subadvisory Agreement as it applies to the Global Government Bond
Trust, including, but not limited to: (i) the nature and quality of the services
provided by Oechsle LLC and the fees payable therefor, (ii) the nature and
quality of the services to be provided by PIMCO in connection with the proposed
material changes to the Portfolio's investment objectives and policies, (iii)
the background and experience of the investment personnel who will manage the
Portfolio, (iv) the fees to be paid to PIMCO and other comparable investment
companies, (v) performance information regarding the
94
<PAGE> 105

Portfolio and other comparable investment companies, and (vi) the proposed
subadvisory fees in relation to the fees of other comparable portfolios.

In evaluating the PIMCO New Subadvisory Agreement, the Board, in
particular, focused on the fact that the PIMCO New Subadvisory Agreement is
substantially similar to the Oechsle Old Subadvisory Agreement, other than, for
example, the changes noted above. The Board was also given audited financial
statements of PIMCO. In addition, the Board was provided with an analysis of its
fiduciary obligations in connection with such considerations. In considering the
PIMCO New Subadvisory Agreement, the Trustees discussed the information provided
to them and their fiduciary obligations.

SUBADVISORY FEES PAID

For the year ended December 31, 1998, the Adviser paid Oechsle LLC the
following subadvisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
-------- ------------
<S> <C> <C>
Global Government Bond Trust......... $723,763 0.355%
</TABLE>

ADVISORY FEES PAID

For the year ended December 31, 1998, the Portfolio paid the Adviser the
following advisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Global Government Bond Trust........ $1,632,065 0.800%
</TABLE>

For the year ended December 31, 1998, the net investment advisory fees
retained by the Adviser after payment of the subadvisory fee for the Portfolio
were as follows:

<TABLE>
<CAPTION>
$ OF AVERAGE
$ AMOUNT NET ASSETS
-------- ------------
<S> <C> <C>
Global Government Bond Trust......... $908,302 0.445%
</TABLE>

PRIOR TRUSTEE AND SHAREHOLDER APPROVAL OF THE
OECHSLE OLD SUBADVISORY AGREEMENT

The Oechsle Old Subadvisory Agreement was most recently approved by the
Board of Trustees, including a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to the Oechsle Old
Subadvisory Agreement, at a meeting held on June 29, 1998. Pursuant to the order
received by the Trust from the Securities and Exchange Commission discussed
above under "Information Statement -- Summary," no shareholder approval was
required for the Oechsle Old Subadvisory Agreement.

95
<PAGE> 106

OWNERSHIP OF THE TRUST

For information regarding the shareholders and ownership of the Trust, see
"General" in the Proxy Statement.

BROKERAGE TRANSACTIONS

A description of the portfolio brokerage policies applicable to the
Portfolio is set forth under "Additional Information -- Portfolio Brokerage"
below.

OTHER INVESTMENT COMPANIES ADVISED BY PIMCO

PIMCO acts as investment adviser to two other registered investment
companies having similar investment objectives and policies to those of the
Global Government Bond Trust (assuming that the changes proposed in Proposal 8
are approved by shareholders). The size of these funds and the rate of PIMCO's
compensation for such investment companies are as follows:

<TABLE>
<CAPTION>
FEE RATE FOR FEE RATE FOR THE
ASSETS AS OF THE FIRST EXCESS OVER
FUND 12/31/98 $200,000,000 $200,000,000
---- ------------ ------------ ----------------
<S> <C> <C> <C>
PIMCO Global Bond Fund.......... $967,782,223 0.250% 0.250%
Forward Global Fund............. $ 29,802,970 0.350% 0.300%
</TABLE>

PIMCO has not waived, reduced or otherwise agreed to reduce its
compensation under any applicable contract for either the PIMCO Global Bond Fund
or the Forward Global Fund.

96
<PAGE> 107

NEW SUBADVISORY AGREEMENT
WITH STATE STREET GLOBAL ADVISORS

At a meeting held on March 26, 1999, the Board, including the Disinterested
Trustees, voted to accept the resignation of Founders Asset Management LLC
("Founders") as subadviser to the Growth Trust and to approve a subadvisory
agreement between the Adviser and the State Street Global Advisors division of
State Street Bank and Trust Company ("State Street") with respect to the Growth
Trust. Effective May 1, 1999, State Street will replace Founders as subadviser
to the Growth Trust.

In addition, due to the change in subadviser, on March 26, 1999, the Board
unanimously approved changing certain non-fundamental policies of the Portfolio
so they would reflect State Street's proposed investment strategies.

MANAGEMENT AND CONTROL OF STATE STREET GLOBAL ADVISORS

State Street is located at Two International Place, Boston, Massachusetts
02110. State Street has been in the business of providing investment advisory
services since 1978. As of December 31, 1998, State Street had approximately
$485 billion in assets under management. State Street is a division of State
Street Bank and Trust Company, whose principal address is 225 Franklin Street,
Boston, Massachusetts 02110. State Street is a "bank" as defined under the
Investment Advisers Act of 1940, as amended, and is therefore not required to be
registered thereunder as an investment adviser.

For information regarding the executive officers and directors of State
Street, see Exhibit B hereto.

APPROVAL OF NEW SUBADVISORY AGREEMENT

The current subadviser to the Growth Trust is Founders pursuant to a
subadvisory agreement (the "Founders Old Subadvisory Agreement") dated April 1,
1996.

The Board of Trustees of the Trust has approved a new subadvisory agreement
between State Street and Manulife Securities to become effective as of May 1,
1999 (the "State Street New Subadvisory Agreement") in connection with the
provision of subadvisory services to the Growth Trust. As discussed above under
"Information Statement -- Summary," shareholder approval of the State Street New
Subadvisory Agreement is not required.

DESCRIPTION OF NEW AND OLD SUBADVISORY AGREEMENTS

While the provisions of the State Street New Subadvisory Agreement are
substantially similar to the provisions of the Founders Old Subadvisory
Agreement, a number of the differences between the agreements are noted below.
The subadvisory fees payable under the State Street New Subadvisory

97
<PAGE> 108

Agreement are, at certain asset levels, lower than the fees paid under the
Founders Old Subadvisory Agreement.

Under the terms of the Founders Old Subadvisory Agreement and the State
Street New Subadvisory Agreement, Founders manages and State Street will manage
the investment and reinvestment of the assets of the Portfolio, subject to the
supervision of the Trust's Board of Trustees. State Street will formulate a
continuous investment program for the Portfolio consistent with the Portfolio's
investment objectives and policies. State Street will implement such program by
purchases and sales of securities and will regularly report to the Adviser and
the Trustees of the Trust with respect to the implementation of such program.
State Street, at its expense, will furnish all necessary investment and
management facilities, including salaries of personnel required for it to
execute its duties, as well as administrative facilities, including bookkeeping,
clerical personnel, and equipment necessary for the efficient conduct of the
investment affairs of the Portfolio.

As compensation for its services, Manulife Securities receives an advisory
fee computed separately for the Portfolio. The fee for the Portfolio is stated
as an annual percentage of the value of the net assets of the Portfolio. The
fee, which is accrued daily, is calculated for each day by multiplying the daily
equivalent of the annual percentage prescribed for a Portfolio by the value of
the net assets of the Portfolio at the close of business on the previous
business day of the Trust. See "Proposal 1 -- Advisory Fees" in the Proxy
Statement. The following is a schedule of the advisory fees the Portfolio
currently is obligated to pay the Adviser.

<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE
- --------- ------------
<S> <C>
Growth Trust................................... 0.850%
</TABLE>

As compensation for its services, Founders currently receives, and State
Street will receive, a fee from the Adviser computed separately for the
Portfolio. The fee for the Portfolio is stated as an annual percentage of the
value of the net assets of the Portfolio. The fees are calculated on the basis
of the average of all valuations of net assets of the Portfolio made at the
close of business on each business day of the Trust during the period for which
such fees are paid. Once the average net assets of the Portfolio exceed
specified amounts, the fee is reduced with respect to such excess. The following
is a schedule of the management fees the Adviser currently is obligated to pay
Founders under the Founders Old Subadvisory Agreement, and will be obligated to
pay State Street under the State Street New Subadvisory Agreement, out of the
advisory fee it receives from the Portfolio as specified above. THESE FEES ARE
PAID BY THE ADVISER OUT OF THE ADVISORY FEE IT RECEIVES FOR THE PORTFOLIO AND
ARE NOT ADDITIONAL CHARGES TO THE PORTFOLIO. APPROVAL OF THE STATE STREET NEW
SUBADVISORY AGREEMENT HAS NOT RESULTED IN ANY INCREASE IN THE RATE OF THE
ADVISORY FEES PAYABLE TO MANULIFE SECURITIES BUT HAS RESULTED, AT CERTAIN ASSET
LEVELS, IN A

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<PAGE> 109

DECREASE IN THE RATE OF THE SUBADVISORY FEES AND, THEREFORE, AN INCREASE IN THE
PERCENTAGE OF THE ADVISORY FEES RETAINED BY MANULIFE SECURITIES.

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
GROWTH TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Founders Old
Subadvisory
Agreement.......... 0.450% 0.450% 0.350% 0.300%
State Street New
Subadvisory
Agreement.......... 0.400% 0.400% 0.350% 0.300%
</TABLE>

The Founders Old Subadvisory Agreement required approval of the agreement
as to a Portfolio by both (i) the Trustees of the Trust including a majority of
Trustees who are not "interested persons" (as defined in the 1940 Act) of any
party to the agreement and (ii) a majority of the outstanding voting securities
of a Portfolio. The State Street New Subadvisory Agreement requires only
approval of the Trustees of the Trust, including a majority of Trustees who are
not "interested persons" (as defined, in the 1940 Act) of any party to the
agreement.

The State Street New Subadvisory Agreement will continue in effect as to
the Portfolio for an initial term of two years from the date of its execution
and shall continue in effect thereafter only so long as such continuance is
specifically approved at least annually either by the Trustees of the Trust or
by the vote of a majority of the outstanding voting securities of the Portfolio,
provided that in either event such continuance shall also be approved by the
vote of a majority of the Trustees of the Trust who are not "interested persons"
(as defined in the 1940 Act) of any party to the State Street New Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. Any required shareholder approval of any continuance of the State
Street New Subadvisory Agreement shall be effective with respect to a Portfolio
if a majority of the outstanding voting securities of the Portfolio vote to
approve such continuance, notwithstanding that such continuance may not have
been approved by a majority of the outstanding voting securities of any other
portfolio of the Trust affected by the State Street New Subadvisory Agreement or
by all the Portfolios of the Trust.

The State Street New Subadvisory Agreement may be terminated at any time,
without the payment of any penalty, on 60 days' written notice to the other
party or parties to the State Street New Subadvisory Agreement and to the Trust,
as appropriate: (i) by the Trustees of the Trust; (ii) by the vote of a majority
of the outstanding voting securities of the Trust, or by the vote of a majority
of the outstanding voting securities of the Portfolio; (iii) by State Street or
(iv) by the Adviser. The State Street New Subadvisory Agreement will
automatically terminate in the event of its assignment.

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<PAGE> 110

The State Street New Subadvisory Agreement may be amended by the Adviser
and State Street provided such amendment is in writing and specifically approved
by the vote of a majority of the Trustees of the Trust and a majority of the
Trustees of the Trust who are not interested persons of any party to the State
Street New Subadvisory Agreement cast in person at a meeting called for the
purpose of voting on such approval. The Founders Old Subadvisory Agreement, in
addition, provided that any such amendment must be specifically approved by the
vote of a majority of the outstanding voting securities of each of the
Portfolios of the Trust affected by the amendment. The required shareholder
approval would have been effective with respect to any affected Portfolio of the
Trust if a majority of the outstanding voting securities of that Portfolio voted
to approve the amendment, notwithstanding that the amendment may not have been
approved by a majority of the outstanding voting securities of (a) any other
Portfolio of the Trust affected by the amendment or (b) all the Portfolios of
the Trust. Shareholder approval is not required for an amendment to the State
Street New Subadvisory Agreement.

The State Street New Subadvisory Agreement provides that State Street will
not be liable to the Trust or the Adviser for any losses suffered by such
parties resulting from any matters to which the agreement relates other than
losses resulting from State Street's willful misfeasance, bad faith or gross
negligence in the performance of, or from reckless disregard of, its duties.

BOARD OF TRUSTEE CONSIDERATIONS

At its meeting duly held on March 26, 1999, the Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the State Street New Subadvisory
Agreement (with the advice and assistance of independent legal counsel),
approved the State Street New Subadvisory Agreement.

The Board considered numerous factors in connection with the approval of
the State Street New Subadvisory Agreement as it applies to the Growth Trust,
including, but not limited to: (i) the nature and quality of the services
provided by Founders and the fees payable therefor, (ii) the nature and quality
of the services to be provided by State Street in connection with the proposed
changes to the Portfolio's policies, (iii) the background and experience of the
investment personnel who will manage the Portfolio, (iv) the fees to be paid to
State Street and other comparable investment companies, (v) performance
information regarding the Portfolio and other comparable investment companies,
and (vi) the proposed subadvisory fees in relation to the fees of other
comparable portfolios.

In evaluating the State Street New Subadvisory Agreement, the Board, in
particular, focused on the fact that the State Street New Subadvisory Agreement
is substantially similar to the Founders Old Subadvisory Agreement, other than,
for example, the changes noted above. The Board was also given audited financial
statements of State Street. In addition, the Board was provided with an analysis
of its fiduciary obligations in connection with such considerations. In
considering

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<PAGE> 111

the State Street New Subadvisory Agreement, the Trustees discussed the
information provided to them and their fiduciary obligations.

SUBADVISORY FEES PAID

For the year ended December 31, 1998, the Adviser paid Founders the
following subadvisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
-------- ------------
<S> <C> <C>
Growth Trust......................... $991,056 0.436%
</TABLE>

ADVISORY FEES PAID

For the year ended December 31, 1998, the Portfolio paid the Adviser the
following advisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Growth Trust........................ $1,930,442 0.850%
</TABLE>

For the year ended December 31, 1998, the net investment advisory fees
retained by the Adviser after payment of the subadvisory fee for the Portfolio
were as follows:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
-------- ------------
<S> <C> <C>
Growth Trust......................... $939,386 0.414%
</TABLE>

PRIOR TRUSTEE AND SHAREHOLDER APPROVAL OF THE FOUNDERS
OLD SUBADVISORY AGREEMENT

The Founders Old Subadvisory Agreement was most recently approved by the
Board of Trustees at a meeting held on December 11, 1997 in connection with the
merger of Founders Asset Management, Inc. with and into Founders Asset
Management LLC which occurred on April 4, 1998. Pursuant to the order received
by the Trust from the Securities and Exchange Commission discussed above under
"Information Statement -- Summary," no shareholder approval was required for the
Founders Old Subadvisory Agreement.

OWNERSHIP OF THE TRUST

For information regarding the shareholders and ownership of the Trust, see
"General" in the Proxy Statement.

BROKERAGE TRANSACTIONS

A description of the portfolio brokerage policies applicable to the
Portfolio is set forth under "Additional Information -- Portfolio Brokerage"
below.

OTHER INVESTMENT COMPANIES ADVISED BY STATE STREET

State Street does not currently act as investment adviser to any other
portfolios with investment objectives and policies similar to the Growth Trust.

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<PAGE> 112

NEW SUBADVISORY AGREEMENT
WITH WELLINGTON MANAGEMENT COMPANY, LLP

At a meeting held on March 26, 1999, the Board, including the Disinterested
Trustees, voted to approve a new subadvisory agreement between the Adviser and
Wellington Management Company, LLP ("Wellington Management") with respect to the
Growth and Income Trust and the Investment Quality Bond Trust. Effective May 1,
1999, Wellington Management will continue to serve as subadviser to the Growth
and Income Trust and the Investment Quality Bond Trust pursuant to the new
subadvisory agreement.

MANAGEMENT AND CONTROL OF WELLINGTON MANAGEMENT

Wellington Management is located at 75 State Street, Boston, Massachusetts
02109. Wellington Management, a Massachusetts limited liability partnership, is
a professional investment counseling firm. Wellington Management and its
predecessor organizations have provided investment services to investment
companies, employee benefit plans, endowments, foundations and other
institutions and individuals since 1928. As of December 31, 1998, Wellington
Management had discretionary investment authority with respect to approximately
$211 billion in client assets. Wellington Management is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended.

Wellington Management is managed by its active partners. The managing
partners of Wellington Management as of December 31, 1998 were Robert W. Doran,
Duncan M. McFarland and John R. Ryan. For information regarding the executive
officers and partners of Wellington Management, see Exhibit B hereto.

APPROVAL OF NEW SUBADVISORY AGREEMENT

Wellington Management is the current subadviser to the Growth and Income
Trust and the Investment Quality Bond Trust pursuant to a subadvisory agreement
(the "Wellington Old Subadvisory Agreement") dated January 1, 1996, between
Wellington Management and Manulife Securities.

The Board of Trustees of the Trust has approved a new subadvisory agreement
between Wellington Management and Manulife Securities to become effective as of
May 1, 1999 (the "Wellington New Subadvisory Agreement") in connection with the
provision of subadvisory services to the Growth and Income Trust and the
Investment Quality Bond Trust. As discussed above under "Information
Statement -- Summary," shareholder approval of the Wellington New Subadvisory
Agreement is not required.

DESCRIPTION OF NEW AND OLD SUBADVISORY AGREEMENTS

While the provisions of the Wellington New Subadvisory Agreement are
substantially similar to the provisions of the Wellington Old Subadvisory

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<PAGE> 113

Agreement, a number of the differences between the agreements are noted below.
The subadvisory fees payable under the Wellington New Subadvisory Agreement are
the same as the fees paid under the Wellington Old Subadvisory Agreement.

Under the terms of the Wellington Old Subadvisory Agreement and the
Wellington New Subadvisory Agreement, Wellington Management manages the
investment and reinvestment of the assets of each Portfolio, subject to the
supervision of the Trust's Board of Trustees. Wellington Management formulates a
continuous investment program for each Portfolio consistent with each
Portfolio's investment objectives and policies. Wellington Management implements
such programs by purchases and sales of securities and reports to the Adviser
and the Trustees of the Trust with respect to the implementation of such
programs. Wellington Management, at its expense, furnishes all necessary
investment and management facilities, including salaries of personnel required
for it to execute its duties, as well as administrative facilities, including
bookkeeping, clerical personnel, and equipment necessary for the efficient
conduct of the investment affairs of each Portfolio.

As compensation for its services, Manulife Securities receives an advisory
fee computed separately for each Portfolio. The fee for each Portfolio is stated
as an annual percentage of the value of the net assets of such Portfolio. The
fee, which is accrued daily, is calculated for each day by multiplying the daily
equivalent of the annual percentage prescribed for a Portfolio by the value of
the net assets of the Portfolio at the close of business on the previous
business day of the Trust. See "Proposal 1 -- Advisory Fees" in the Proxy
Statement. The following is a schedule of the advisory fees the Portfolios
currently are obligated to pay the Adviser.

<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE
- --------- ------------
<S> <C>
Growth and Income Trust........................ 0.750%
Investment Quality Bond Trust.................. 0.650%
</TABLE>

As compensation for its services, Wellington Management receives a fee from
the Adviser computed separately for each applicable Portfolio. The fee for each
Portfolio is stated as an annual percentage of the value of the net assets of
such Portfolio. The fees are calculated on the basis of the average of all
valuations of net assets of a Portfolio made at the close of business on each
business day of the Trust during the period for which such fees are paid. Once
the average net assets of a Portfolio exceed specified amounts, the fee is
reduced with respect to such excess. The following is a schedule of the
management fees the Adviser is obligated to pay Wellington Management under the
Wellington Old Subadvisory Agreement and the Wellington New Subadvisory
Agreement, out of the advisory fee it receives from each Portfolio as specified
above. THESE FEES ARE PAID BY THE ADVISER OUT OF THE ADVISORY FEE IT RECEIVES
FOR EACH PORTFOLIO AND ARE NOT ADDITIONAL CHARGES TO EITHER PORTFOLIO. APPROVAL
OF THE WELLINGTON

103
<PAGE> 114

NEW SUBADVISORY AGREEMENT HAS NOT RESULTED IN ANY INCREASE IN THE RATE OF THE
ADVISORY FEES PAYABLE TO MANULIFE SECURITIES OR IN THE RATE OF THE SUBADVISORY
FEES.

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
GROWTH AND FIRST AND AND EXCESS OVER
INCOME TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Wellington Old
Subadvisory
Agreement.......... 0.325% 0.275% 0.225% 0.150%
Wellington New
Subadvisory
Agreement.......... 0.325% 0.275% 0.225% 0.150%
</TABLE>

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
INVESTMENT QUALITY FIRST AND AND EXCESS OVER
BOND TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ------------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Wellington Old
Subadvisory
Agreement.......... 0.225% 0.225% 0.150% 0.100%
Wellington New
Subadvisory
Agreement.......... 0.225% 0.225% 0.150% 0.100%
</TABLE>

The Wellington Old Subadvisory Agreement required approval of the agreement
as to a Portfolio by both (i) the Trustees of the Trust including a majority of
Trustees who are not "interested persons" (as defined in the 1940 Act) of any
party to the agreement and (ii) a majority of the outstanding voting securities
of a Portfolio. The Wellington New Subadvisory Agreement requires only approval
of the Trustees of the Trust, including a majority of Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to the agreement.

The Wellington New Subadvisory Agreement will continue in effect as to each
Portfolio for an initial term of two years from the date of its execution and
shall continue in effect thereafter only so long as such continuance is
specifically approved at least annually either by the Trustees of the Trust or
by the vote of a majority of the outstanding voting securities of each
Portfolio, provided that in either event such continuance shall also be approved
by the vote of a majority of the Trustees of the Trust who are not "interested
persons" (as defined in the 1940 Act) of any party to the Wellington New
Subadvisory Agreement, cast in person at a meeting called for the purpose of
voting on such approval. Any required shareholder approval of any continuance of
the Wellington New Subadvisory Agreement shall be effective with respect to a
Portfolio if a majority of the outstanding voting securities of that Portfolio
vote to approve such continuance, notwithstanding that such continuance may not
have been approved by a majority of the outstanding voting securities of any
other portfolio of the

104
<PAGE> 115

Trust affected by the Wellington New Subadvisory Agreement or by all the
Portfolios of the Trust.

The Wellington New Subadvisory Agreement may be terminated at any time,
without the payment of any penalty, on 60 days' written notice to the other
party or parties to the Wellington New Subadvisory Agreement and to the Trust,
as appropriate: (i) by the Trustees of the Trust; (ii) by the vote of a majority
of the outstanding voting securities of the Trust, or with respect to either
Portfolio, by the vote of a majority of the outstanding voting securities of
such Portfolio; (iii) by Wellington Management or (iv) by the Adviser. The
Wellington New Subadvisory Agreement will automatically terminate in the event
of its assignment.

The Wellington New Subadvisory Agreement may be amended by the Adviser and
Wellington Management provided such amendment is specifically approved by the
vote of a majority of the Trustees of the Trust who are not interested persons
of any party to the Wellington New Subadvisory Agreement cast in person at a
meeting called for the purpose of voting on such approval. The Wellington Old
Subadvisory Agreement, in addition, provided that any such amendment must be
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Portfolios of the Trust affected by the amendment. The
required shareholder approval would have been effective with respect to any
affected portfolio of the Trust if a majority of the outstanding voting
securities of that Portfolio voted to approve the amendment, notwithstanding
that the amendment may not have been approved by a majority of the outstanding
voting securities of (a) any other Portfolio of the Trust affected by the
amendment or (b) all the Portfolios of the Trust. Shareholder approval is not
required for an amendment to the Wellington New Subadvisory Agreement.

The Wellington New Subadvisory Agreement provides that Wellington
Management will not be liable to the Trust or the Adviser for any losses
suffered by such parties resulting from any matters to which the agreement
relates other than losses resulting from Wellington Management's willful
misfeasance, bad faith or gross negligence in the performance of, or from
reckless disregard of, its duties.

BOARD OF TRUSTEE CONSIDERATIONS

At its meeting duly held on March 26, 1999, the Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the Wellington New Subadvisory
Agreement (with the advice and assistance of independent legal counsel),
approved the Wellington New Subadvisory Agreement.

The Board considered numerous factors in connection with the approval of
the Wellington New Subadvisory Agreement as it applies to the Growth and

105
<PAGE> 116

Income Trust and the Investment Quality Bond Trust, including, but not limited
to: (i) the nature and quality of the services provided by Wellington
Management, (ii) the background and experience of the investment personnel who
will manage each Portfolio, (iii) the fees to be paid to Wellington Management
and other comparable investment companies, (iv) performance information
regarding each Portfolio and other comparable investment companies, and (v) the
proposed subadvisory fees in relation to fees of other comparable portfolios.

In evaluating the Wellington New Subadvisory Agreement, the Board, in
particular, focused on the fact that the Wellington New Subadvisory Agreement is
substantially similar to the Wellington Old Subadvisory Agreement, other than,
for example, the changes noted above. The Board was also given audited financial
statements of Wellington Management. In addition, the Board was provided with an
analysis of its fiduciary obligations in connection with such considerations. In
considering the Wellington New Subadvisory Agreement, the Trustees discussed the
information provided to them and their fiduciary obligations.

SUBADVISORY FEES PAID

For the year ended December 31, 1998, the Adviser paid Wellington
Management the following subadvisory fees:

<TABLE>
<CAPTION>
% OF
AVERAGE
$ AMOUNT NET ASSETS
---------- ----------
<S> <C> <C>
Growth and Income Trust.............. $3,370,654 0.176%
Investment Quality Bond Trust........ $ 521,489 0.210%
</TABLE>

ADVISORY FEES PAID

For the year ended December 31, 1998, the Portfolios paid the Adviser the
following advisory fees:

<TABLE>
<CAPTION>
% OF
AVERAGE
$ AMOUNT NET ASSETS
----------- ----------
<S> <C> <C>
Growth and Income Trust............. $14,353,269 0.750%
Investment Quality Bond Trust....... $ 1,610,817 0.650%
</TABLE>

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<PAGE> 117

For the year ended December 31, 1998, the net investment advisory fees
retained by the Adviser after payment of the subadvisory fee for the Portfolios
were as follows:

<TABLE>
<CAPTION>
% OF
AVERAGE
$ AMOUNT NET ASSETS
----------- ----------
<S> <C> <C>
Growth and Income Trust............. $10,962,615 0.574%
Investment Quality Bond Trust....... $ 1,089,328 0.440%
</TABLE>

PRIOR TRUSTEE AND SHAREHOLDER APPROVAL OF THE
WELLINGTON OLD SUBADVISORY AGREEMENT

The Wellington Old Subadvisory Agreement was most recently approved by the
Board of Trustees at a meeting held on September 24, 1998 in connection with
annual approval of the Wellington Old Subadvisory Agreement. The Wellington Old
Subadvisory Agreement was most recently approved by shareholders at a meeting
held on December 5, 1995. This approval of the Wellington Old Subadvisory
Agreement occurred in connection with the change of control of the Adviser as a
result of the merger of North American Life Assurance Company, the former
ultimate controlling parent company of Manulife Securities, and The
Manufacturers Life Insurance Company, the current controlling parent company of
Manulife Securities, on January 1, 1996.

OWNERSHIP OF THE TRUST

For information regarding the shareholders and ownership of the Trust, see
"General" in the Proxy Statement.

BROKERAGE TRANSACTIONS

A description of the portfolio brokerage policies applicable to each
Portfolio is set forth under "Additional Information -- Portfolio Brokerage"
below.

OTHER INVESTMENT COMPANIES ADVISED BY WELLINGTON MANAGEMENT

Wellington Management acts as investment adviser to two other registered
investment companies having investment objectives and policies similar to the

107
<PAGE> 118

Growth and Income Trust. The size of each of these funds and the rate of
Wellington Management's compensation for each fund is as follows:

<TABLE>
<CAPTION>
ASSETS AS OF
12/31/98 FIRST NEXT NEXT OVER
FUND ($ MILLION) $50,000,000 $150,000,000 $300,000,000 $500,000,000
- ---- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NAF Growth and Income
Fund............... $265.8 0.325% 0.275% 0.225% 0.150%
SunAmerica AS Trust
Growth & Income
Fund............... $ 52.2 0.325% 0.225% 0.200% 0.150%
</TABLE>

Wellington Management acts as investment adviser to three other registered
investment companies having investment objectives and policies similar to the
Investment Quality Bond Trust. The size of each of these funds and the rate of
Wellington Management's compensation for each fund is as follows:

<TABLE>
<CAPTION>
ASSETS AS OF
12/31/98 FIRST NEXT OVER
FUND ($ MILLION) $200,000,000 $300,000,000 $500,000,000
- ---- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NAF Investment Quality
Bond Fund.............. $17.5 0.225% 0.150% 0.100%
</TABLE>

<TABLE>
<CAPTION>
ASSETS AS OF
12/31/98 FIRST NEXT OVER
FUND ($ MILLION) $50,000,000 $50,000,000 $100,000,000
- ---- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
SunAmerica AS Trust
Fund............... $17.4 0.225% 0.125% 0.100%
Horace Mann Income
Fund............... $14.0 0.250% 0.200% 0.150%
</TABLE>

Wellington Management has not waived, reduced or otherwise agreed to reduce
its compensation under any applicable contract for any of the above referenced
funds.

108
<PAGE> 119

NEW SUBADVISORY AGREEMENT
WITH T. ROWE PRICE ASSOCIATES, INC.

At a meeting held on March 26, 1999, the Board, including the Disinterested
Trustees, voted to approve a new subadvisory agreement between the Adviser and
T. Rowe Price Associates, Inc. ("T. Rowe Price") with respect to the Science &
Technology Trust, the Blue Chip Growth Trust and the Equity-Income Trust.
Effective May 1, 1999, T. Rowe Price will continue to serve as subadviser to
each of the Science & Technology Trust, the Blue Chip Growth Trust and the
Equity-Income Trust pursuant to the new subadvisory agreement.

MANAGEMENT AND CONTROL OF T. ROWE PRICE

T. Rowe Price is located at 100 East Pratt Street, Baltimore, Maryland
21202. T. Rowe Price was founded in 1937 by the late Thomas Rowe Price, Jr. As
of December 31, 1998, T. Rowe Price and its affiliates managed over $147 billion
for over 7 million individual and institutional investor accounts. T. Rowe Price
is registered as an investment adviser under the Investment Advisers Act of
1940, as amended.

For information regarding the executive officers and directors of T. Rowe
Price, see Exhibit B hereto.

APPROVAL OF NEW SUBADVISORY AGREEMENT

T. Rowe Price is the current subadviser to the Science & Technology Trust,
the Blue Chip Growth Trust and the Equity-Income Trust pursuant to a subadvisory
agreement (the "TRP Old Subadvisory Agreement") dated October 1, 1996, as
amended December 31, 1996, between T. Rowe Price and Manulife Securities.

The Board of Trustees of the Trust has approved a new subadvisory agreement
between T. Rowe Price and Manulife Securities to become effective as of May 1,
1999 (the "TRP New Subadvisory Agreement") in connection with the provision of
subadvisory services to the Science & Technology Trust, the Blue Chip Growth
Trust and the Equity-Income Trust. As discussed above under "Information
Statement -- Summary," shareholder approval of the TRP New Subadvisory Agreement
is not required.

DESCRIPTION OF NEW AND OLD SUBADVISORY AGREEMENTS

While the provisions of the TRP New Subadvisory Agreement are substantially
similar to the provisions of the TRP Old Subadvisory Agreement, a number of the
differences between the agreements are noted below. The subadvisory fees for the
Science & Technology Trust payable under the TRP New Subadvisory Agreement are
the same as the fees paid under the TRP Old Subadvisory Agreement. The
subadvisory fees for the Blue Chip Growth Trust payable under the TRP New
Subadvisory Agreement will be, at certain asset

109
<PAGE> 120

levels, higher than the fees paid under the TRP Old Subadvisory Agreement and,
at certain asset levels, the same or lower than the fees paid under the TRP Old
Subadvisory Agreement. The subadvisory fees for the Equity-Income Trust payable
under the TRP New Subadvisory Agreement will be, at certain asset levels, higher
than the fees paid under the TRP Old Subadvisory Agreement.

Under the terms of the TRP Old Subadvisory Agreement and the TRP New
Subadvisory Agreement, T. Rowe Price manages the investment and reinvestment of
the assets of each Portfolio, subject to the supervision of the Trust's Board of
Trustees. T. Rowe Price formulates a continuous investment program for each
Portfolio consistent with each Portfolio's investment objectives and policies.
T. Rowe Price implements such programs by purchases and sales of securities and
reports to the Adviser and the Trustees of the Trust with respect to the
implementation of such programs. T. Rowe Price, at its expense, furnishes all
necessary investment and management facilities, including salaries of personnel
required for it to execute its duties, as well as administrative facilities,
including bookkeeping, clerical personnel, and equipment necessary for the
efficient conduct of the investment affairs of each Portfolio.

As compensation for its services, Manulife Securities receives an advisory
fee computed separately for each Portfolio. The fee for each Portfolio is stated
as an annual percentage of the value of the net assets of such Portfolio. The
fee, which is accrued daily, is calculated for each day by multiplying the daily
equivalent of the annual percentage prescribed for a Portfolio by the value of
the net assets of the Portfolio at the close of business on the previous
business day of the Trust. While the shareholders of the Equity-Income Trust are
being asked to approve an advisory fee increase, the following is a schedule of
the advisory fees that the Science & Technology Trust, the Blue Chip Growth
Trust and the Equity-Income Trust currently are obligated to pay the Adviser.
See "Proposal 1 -- Advisory Fees" in the Proxy Statement.

<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE
- --------- ------------
<S> <C>
Science & Technology Trust....................... 1.100%
Blue Chip Growth Trust........................... 0.925%
Equity-Income Trust.............................. 0.800%
</TABLE>

As compensation for its services, T. Rowe Price receives a fee from the
Adviser computed separately for each applicable Portfolio. The fee for each
Portfolio is stated as an annual percentage of the value of the net assets of
such Portfolio. The fees are calculated on the basis of the average of all
valuations of net assets of a Portfolio made at the close of business on each
business day of the Trust during the period for which such fees are paid. Once
the average net assets of a Portfolio exceed specified amounts, the fee is
reduced with respect to such excess. The following is a schedule of the
management fees the Adviser is obligated to pay T. Rowe Price under the TRP Old
Subadvisory Agreement and the TRP New Subadvisory Agreement, out of the advisory
fee it receives from

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<PAGE> 121

each Portfolio as specified above. THESE FEES ARE PAID BY THE ADVISER OUT OF THE
ADVISORY FEE IT RECEIVES FOR EACH PORTFOLIO AND ARE NOT ADDITIONAL CHARGES TO
ANY OF THE PORTFOLIOS. APPROVAL OF THE TRP NEW SUBADVISORY AGREEMENT HAS NOT
RESULTED IN ANY INCREASE IN THE RATE OF THE SUBADVISORY FEES PAYABLE TO T. ROWE
PRICE FOR THE SCIENCE & TECHNOLOGY TRUST. HOWEVER, APPROVAL OF THE TRP NEW
SUBADVISORY AGREEMENT HAS RESULTED, AT CERTAIN ASSET LEVELS, IN AN INCREASE IN
THE RATE OF THE SUBADVISORY FEES PAYABLE TO T. ROWE PRICE AND, AT CERTAIN OTHER
ASSET LEVELS, IN A DECREASE IN THE RATE OF THE SUBADVISORY FEES PAYABLE TO T.
ROWE PRICE FOR THE BLUE CHIP GROWTH TRUST. IN ADDITION, APPROVAL OF THE TRP NEW
SUBADVISORY AGREEMENT HAS RESULTED, AT CERTAIN ASSET LEVELS, IN AN INCREASE IN
THE RATE OF THE SUBADVISORY FEES PAYABLE TO T. ROWE PRICE FOR THE EQUITY-INCOME
TRUST. AS NOTED UNDER "PROPOSAL 1 -- ADVISORY FEES" IN THE PROXY STATEMENT,
SHAREHOLDERS OF THE EQUITY-INCOME TRUST ARE BEING ASKED TO APPROVE AN ADVISORY
FEE INCREASE PAYABLE TO MANULIFE SECURITIES. IN ADDITION, IN CONNECTION WITH THE
APPROVAL OF THE NEW ADVISORY AGREEMENT, THE BLUE CHIP GROWTH TRUST ADVISORY FEE
PAYABLE TO MANULIFE SECURITIES WILL BE REDUCED.

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
SCIENCE & FIRST AND AND EXCESS OVER
TECHNOLOGY TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ---------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
TRP Old Subadvisory
Agreement.......... 0.600% 0.600% 0.600% 0.600%
TRP New Subadvisory
Agreement.......... 0.600% 0.600% 0.600% 0.600%
</TABLE>

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
BLUE CHIP GROWTH TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ---------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
TRP Old Subadvisory
Agreement.......... 0.500% 0.450% 0.400% 0.325%
TRP New Subadvisory
Agreement.......... 0.400% 0.400% 0.400% 0.350%
</TABLE>

<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
EQUITY-INCOME TRUST $50,000,000 $200,000,000 $500,000,000 $500,000,000
- ------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
TRP Old Subadvisory
Agreement.......... 0.400% 0.300% 0.200% 0.200%
TRP New Subadvisory
Agreement.......... 0.400% 0.400% 0.400% 0.350%
</TABLE>

The TRP Old Subadvisory Agreement required approval of the agreement as to
a Portfolio by both (i) the Trustees of the Trust including a majority of
Trustees who are not "interested persons" (as defined in the 1940 Act) of any

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<PAGE> 122

party to the agreement and (ii) a majority of the outstanding voting securities
of a Portfolio. The TRP New Subadvisory Agreement requires only approval of the
Trustees of the Trust, including a majority of Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to the agreement.

The TRP New Subadvisory Agreement will continue in effect as to each
Portfolio for an initial term of two years from the date of its execution and
shall continue in effect thereafter only so long as such continuance is
specifically approved at least annually either by the Trustees of the Trust or
by the vote of a majority of the outstanding voting securities of each
Portfolio, provided that in either event such continuance shall also be approved
by the vote of a majority of the Trustees of the Trust who are not "interested
persons" (as defined in the 1940 Act) of any party to the TRP New Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. Any required shareholder approval of any continuance of the TRP New
Subadvisory Agreement shall be effective with respect to a Portfolio if a
majority of the outstanding voting securities of that Portfolio vote to approve
such continuance, notwithstanding that such continuance may not have been
approved by a majority of the outstanding voting securities of any other
portfolio of the Trust affected by the TRP New Subadvisory Agreement or by all
the Portfolios of the Trust.

The TRP New Subadvisory Agreement may be terminated at any time, without
the payment of any penalty, on 60 days' written notice to the other party or
parties to the TRP New Subadvisory Agreement and to the Trust, as appropriate:
(i) by the Trustees of the Trust; (ii) by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Portfolio, by
the vote of a majority of the outstanding voting securities of such Portfolio;
(iii) by T. Rowe Price or (iv) by the Adviser. The TRP New Subadvisory Agreement
will automatically terminate in the event of its assignment.

The TRP New Subadvisory Agreement may be amended by the Adviser and T. Rowe
Price provided such amendment is specifically approved by the vote of a majority
of the Trustees of the Trust who are not interested persons of any party to the
TRP New Subadvisory Agreement cast in person at a meeting called for the purpose
of voting on such approval. The TRP Old Subadvisory Agreement, in addition,
provided that any such amendment must be specifically approved by the vote of a
majority of the outstanding voting securities of each of the Portfolios of the
Trust affected by the amendment. The required shareholder approval would have
been effective with respect to any affected Portfolio of the Trust if a majority
of the outstanding voting securities of that Portfolio voted to approve the
amendment, notwithstanding that the amendment may not have been approved by a
majority of the outstanding voting securities of (a) any other Portfolio of the
Trust affected by the amendment or (b) all the Portfolios of the Trust.
Shareholder approval is not required for an amendment to the TRP New Subadvisory
Agreement.

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<PAGE> 123

The TRP New Subadvisory Agreement provides that T. Rowe Price will not be
liable to the Trust or the Adviser for any losses suffered by such parties
resulting from any error of judgment made in the good faith exercise of T. Rowe
Price's investment discretion in connection with selecting portfolio investments
other than losses resulting from T. Rowe Price's willful misfeasance, bad faith
or gross negligence in the performance of, or from reckless disregard of, its
duties. The TRP New Subadvisory Agreement also provides that T. Rowe Price will
not be liable to the Trust or the Adviser for any losses suffered by such
parties resulting from any other matters to which the agreement relates other
than losses resulting from T. Rowe Price's willful misfeasance, bad faith or
gross negligence in the performance of, or from disregard of, its duties.

BOARD OF TRUSTEE CONSIDERATIONS

At its meeting duly held on March 26, 1999, the Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the TRP New Subadvisory Agreement (with
the advice and assistance of independent legal counsel), approved the TRP New
Subadvisory Agreement.

The Board considered numerous factors in connection with the approval of
the TRP New Subadvisory Agreement as it applies to the Science & Technology
Trust, the Blue Chip Growth Trust and the Equity-Income Trust, including, but
not limited to: (i) the nature and quality of the services provided by T. Rowe
Price, (ii) the background and experience of the investment personnel who will
manage each Portfolio, (iii) the fees to be paid to T. Rowe Price and other
comparable investment companies, (iv) performance information regarding each
Portfolio and other comparable investment companies, and (v) the proposed
subadvisory fees in relation to fees of other comparable portfolios.

In evaluating the TRP New Subadvisory Agreement, the Board, in particular,
focused on the fact that the TRP New Subadvisory Agreement is substantially
similar to the TRP Old Subadvisory Agreement, other than, for example, the
changes noted above. The Board was also given audited financial statements of T.
Rowe Price. In addition, the Board was provided with an analysis of its
fiduciary obligations in connection with such considerations. In considering the
TRP New Subadvisory Agreement, the Trustees discussed the information provided
to them and their fiduciary obligations.

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<PAGE> 124

SUBADVISORY FEES PAID

For the year ended December 31, 1998, the Adviser paid T. Rowe Price the
following subadvisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Science & Technology Trust.......... $ 638,775 0.600%
Blue Chip Growth Trust.............. $3,298,442 0.383%
Equity-Income Trust................. $2,280,428 0.225%
</TABLE>

ADVISORY FEES PAID

For the year ended December 31, 1998, the Portfolios paid the Adviser the
following advisory fees:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Science & Technology Trust.......... $1,171,088 1.100%
Blue Chip Growth Trust.............. $7,964,796 0.925%
Equity-Income Trust................. $8,121,714 0.800%
</TABLE>

For the year ended December 31, 1998, the net investment advisory fees
retained by the Adviser after payment of the subadvisory fee for the Portfolios
were as follows:

<TABLE>
<CAPTION>
% OF AVERAGE
$ AMOUNT NET ASSETS
---------- ------------
<S> <C> <C>
Science & Technology Trust.......... $ 532,313 0.500%
Blue Chip Growth Trust.............. $4,666,354 0.542%
Equity-Income Trust................. $5,841,286 0.575%
</TABLE>

PRIOR TRUSTEE AND SHAREHOLDER APPROVAL OF THE
TRP OLD SUBADVISORY AGREEMENT

The TRP Old Subadvisory Agreement was most recently approved by the Board
of Trustees at a meeting held on September 24, 1998. The TRP Old Subadvisory
Agreement was approved by shareholders of the Blue Chip Growth Trust and the
Equity-Income Trust at a meeting held on December 20, 1996 in connection with
initial approval of the TRP Old Subadvisory Agreement. The TRP Old Subadvisory
Agreement was approved by the sole shareholder of the Science & Technology Trust
on January 1, 1997.

OWNERSHIP OF THE TRUST

For information regarding the shareholders and ownership of the Trust, see
"General" in the Proxy Statement.

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<PAGE> 125

BROKERAGE TRANSACTIONS

A description of the portfolio brokerage policies applicable to each
Portfolio is set forth under "Additional Information -- Portfolio Brokerage"
below.

OTHER INVESTMENT COMPANIES ADVISED BY T. ROWE PRICE

T. Rowe Price currently acts as investment adviser and subadviser to
several registered investment companies having similar investment objectives and
policies to those of the Science & Technology Trust, the Blue Chip Growth Trust
and the Equity-Income Trust.

For its services to each such investment company sponsored and managed by
T. Rowe Price ("Price Funds"), T. Rowe Price is paid a management fee consisting
of two elements: a "group" fee and an "individual" fund fee. The "group" fee
varies based on the combined net assets of certain Price Funds distributed by T.
Rowe Price Investment Services, Inc. (excluding T. Rowe Price Index Trust, T.
Rowe Price Spectrum Funds and any institutional and private label mutual funds)
(the "Combined Price Funds"). Each such investment company pays, as a portion of
the "group" fee, an amount equal to the ratio of its daily net assets to the
daily net assets of all the Combined Price Funds. In addition to the group fee,
each investment company pays a flat "individual" fund fee based on its net
assets. The current "group" fee rate at various asset levels of the Combined
Price Funds are as follows: 0.480% of the first $1 billion, 0.450% on the next
$1 billion, 0.450% on the next $1 billion, 0.390% on the next $1 billion, 0.370%
on the next $1 billion, 0.360% on the next $2 billion, 0.350% on the next $2
billion, 0.340% on the next $5 billion, 0.330% on the next $10 billion, 0.310%
on the next $16 billion, 0.305% on the next $30 billion and 0.300% thereafter.

T. Rowe Price also acts as investment subadviser to several registered
investment companies ("Subadvised Mutual Funds") having similar investment
objectives and policies to those of the Science & Technology Trust, the Blue
Chip Growth Trust and the Equity-Income Trust. For this purpose, the Subadvised
Mutual Funds are mutual funds that are not sponsored by T. Rowe Price.

The table below sets forth the name of each investment company having
similar investment objectives and policies to the Portfolios, the annual rate of
compensation (i.e., for the Price Funds, the "individual fee" and "group fee"
charged by T. Rowe Price Associates, Inc. as a percentage of average daily net
assets and, for the Subadvised Mutual Funds, the fee T. Rowe Price is paid for
its services as subadviser to the respective portfolio), and net assets as of
December 31, 1998.

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<PAGE> 126

<TABLE>
<CAPTION>
NET ASSETS
AS OF
INVESTMENT ANNUAL RATE OF 12/31/98
INVESTMENT COMPANY OBJECTIVE COMPENSATION ($ MILLION)
- ------------------ ---------------- -------------------- -----------
<S> <C> <C> <C>
T. ROWE PRICE MUTUAL FUNDS:
T. Rowe Price Dividend Income 0.250% $13,495.1
Equity Income Fund Capital Growth (individual fee)
0.320% (group fee)
T. Rowe Price Dividend Income 0.850% on all assets $ 527.0
Equity Income Portfolio Capital Growth (covers both
investment
management and
operating expenses)

SUBADVISED MUTUAL FUNDS:
Endeavor Series Trust Dividend Income 0.400% on all assets $ 262.4
Equity Income Portfolio Capital Growth
EQ Advisors Trust Dividend Income 0.400% on all assets $ 244.4
T. Rowe Price Equity Capital Growth
Income Portfolio
John Hancock Variable Series Dividend Income 0.500% on all assets $ 123.3
Trust 1: Large Cap Value Capital Growth
Portfolio
Maxim Series Trust Dividend Income 0.500% on first $20 $ 209.7
Maxim T. Rowe Price Capital Growth million; 0.400% on
Equity/Income next $30 million;
0.400% on all assets
once assets exceed
$50 million
North American Funds Dividend Income 0.400% $ 176.1
Equity-Income Funds Capital Growth
SBL Fund Dividend Income 0.500% on first $20 $ 204.0
Series O (Equity Income Capital Growth million; 0.400% on
Series) next $30 million;
0.400% on all assets
once assets exceed
$50 million
Security First Trust Growth and 0.350% on all assets $ 313.9
Growth and Income Series Income

T. ROWE PRICE MUTUAL FUND:
T. Rowe Price Capital Growth 0.300% $ 4,330.1
Blue Chip Growth Fund Income (individual fee)
0.320% (group fee)

SUBADVISED MUTUAL FUNDS:
Fortis Series Fund Capital Growth 0.500% on first $ 182.7
Blue Chip Stock Series Income $100 million;
0.450% on excess
over
$100 million

Toronto Dominion Green Line U.S. Capital Growth 0.500% on all assets $ 113.6
Blue Chip Equity Fund Income
</TABLE>

116
<PAGE> 127

SUBADVISED MUTUAL FUNDS:
Toronto Dominion Green Line Capital Growth 0.600% on all assets $ 164.2
Science & Technology Fund
VALIC American General Series Capital Growth 0.600% on first $500 $ 1,357.1
Portfolio Company Science & million; 0.550% on
Technology Fund assets over
$500 million
</TABLE>

T. Rowe Price has not waived, reduced or otherwise agreed to reduce its
compensation under any applicable contract for any of the investment companies
listed above.

ADDITIONAL INFORMATION

PORTFOLIO BROKERAGE

Pursuant to the subadvisory agreements, the subadvisers are responsible for
placing all orders for the purchase and sale of portfolio securities of the
Trust. The subadvisers have no formula for the distribution of the Trust's
brokerage business; rather, they place orders for the purchase and sale of
securities with the primary objective of obtaining the most favorable overall
results for the applicable portfolio of the Trust. The cost of securities
transactions for each portfolio will consist primarily of brokerage commissions
or dealer or underwriter spreads. Fixed-income securities and money market
instruments are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes.

Selection of Brokers or Dealers to Effect Trades

In selecting brokers/dealers through whom to effect transactions, the
subadvisers will give consideration to a number of factors, including:

- price, dealer spread or commission, if any,

- the reliability, integrity and financial condition of the broker-dealer,

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<PAGE> 128

- size of the transaction,

- difficulty of execution, and

- brokerage and research services provided.

Soft Dollar Considerations

Brokerage and research services provided by brokers or dealers include
advice, either directly or through publication or writings, as to:

- the value of securities,

- the advisability of purchasing or selling securities,

- the availability of securities or purchasers or sellers of securities,
and

- analyses and reports concerning (a) issuers, (b) industries, (c)
securities, (d) economic factors and trends and (e) portfolio strategy.

To the extent research services are used by the subadvisers in rendering
investment advice to the Trust, such services would tend to reduce the

118
<PAGE> 129

subadvisers' expenses. However, the subadvisers do not believe that an exact
dollar value can be assigned to these services. Research services received by
the subadvisers from brokers/dealers executing transactions for the Trust will
be available also for the benefit of other portfolios managed by the
subadvisers.

Sales Volume Considerations

Brokerage Commissions Paid to Affiliated Brokers

During the year ended December 31, 1998, the following brokers may be
deemed to have been affiliated brokers of the listed Portfolios.

<TABLE>
<CAPTION>
BROKER PORTFOLIO EXPLANATION
- ------ --------- -----------
<S> <C> <C>
Salomon Smith Barney Inc. U.S. Government Affiliated broker due to the
Securities Trust position of Salomon Brothers
Strategic Bond Asset Management Inc. as
Trust subadviser to these
portfolios.

J.P. Morgan Securities Inc. International Growth Affiliated brokers due to the
J.P. Morgan Securities Ltd. and Income Trust position of J.P. Morgan as
subadviser to this portfolio.

Dresdner Bank Global Government Affiliated broker due to the
Bond Trust position of Oechsle
International Advisers, L.P.
as subadviser to this
portfolio.

Fidelity Capital Markets Equity Trust Affiliated broker due to the
Conservative Asset position of Fidelity
Allocation Trust Management Trust Company as
Moderate Asset subadviser to these
Allocation Trust portfolios.
Aggressive Asset
Allocation Trust

Morgan Stanley & Co. Inc. Global Equity Trust Affiliated brokers due to the
Morgan Stanley Value Trust position of Morgan Stanley as
International High Yield Trust subadviser to the Global
Dean Witter Reynolds Equity Trust and the position
of Miller Anderson &
Sherrerd, LLP as subadviser
to the Value Trust and the
High Yield Trust.
</TABLE>

119
<PAGE> 130

<TABLE>
<CAPTION>
BROKER PORTFOLIO EXPLANATION
- ------ --------- -----------
<S> <C> <C>
Fred Alger & Small/Mid Cap Trust Affiliated broker due to the
Company Inc. position of Fred Alger
Management, Inc. as
subadviser to the Small/Mid
Cap Trust.

Robert Fleming International Stock Affiliated brokers due to the
Ord Minnet Trust position of Rowe
Price-Fleming International,
Inc. as subadviser to the
International Stock Trust.
</TABLE>

For the year ended December 31, 1998, brokerage commissions were paid to
Morgan Stanley & Co. Incorporated by the Global Equity Trust as follows:

<TABLE>
<CAPTION>
% OF PORTFOLIO'S
BROKERAGE % OF AGGREGATE
COMMISSIONS $ AMOUNT OF
REPRESENTED TRANSACTIONS
PORTFOLIO COMMISSIONS FOR THE PERIOD FOR THE PERIOD
- --------- ----------- ---------------- ----------------
<S> <C> <C> <C>
Global Equity Trust....... $91,860 0.170% 0.030%
</TABLE>

For the year ended December 31, 1998, brokerage commissions were paid to
Fred Alger & Company Incorporated by the Small/Mid Cap Trust as follows:

<TABLE>
<CAPTION>
% OF PORTFOLIO'S
BROKERAGE % OF AGGREGATE
COMMISSIONS $ AMOUNT OF
REPRESENTED TRANSACTIONS
PORTFOLIO COMMISSIONS FOR THE PERIOD FOR THE PERIOD
- --------- ----------- ---------------- ----------------
<S> <C> <C> <C>
Small/Mid Cap Trust....... $1,029,644 99.580% 0.050%
</TABLE>

For the year ended December 31, 1998, brokerage commissions were paid to
Robert Fleming by the International Stock Trust as follows:

<TABLE>
<CAPTION>
% OF PORTFOLIO'S
BROKERAGE % OF AGGREGATE
COMMISSIONS $ AMOUNT OF
REPRESENTED TRANSACTIONS
PORTFOLIO COMMISSIONS FOR THE PERIOD FOR THE PERIOD
- --------- ----------- ---------------- ----------------
<S> <C> <C> <C>
International Stock
Trust................... $8,658 3.320% 0.010%
</TABLE>

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<PAGE> 131

For the year ended December 31, 1998, brokerage commissions were paid to
Ord Minnet by the International Stock Trust as follows:

<TABLE>
<CAPTION>
% OF PORTFOLIO'S
BROKERAGE % OF AGGREGATE
COMMISSIONS $ AMOUNT OF
REPRESENTED TRANSACTIONS
PORTFOLIO COMMISSIONS FOR THE PERIOD FOR THE PERIOD
- --------- ----------- ---------------- ----------------
<S> <C> <C> <C>
International Stock
Trust................... $415 0.160% 0%
</TABLE>

OTHER MATTERS

Manulife Securities, the Adviser to the Trust, is located at 73 Tremont
Street, Boston, Massachusetts 02108. The Trust does not have a principal
underwriter or administrator since shares are sold only to insurance companies
and their separate accounts as the underlying investment medium for variable
contracts. However, Manulife Securities and an affiliated broker dealer serve as
principal underwriter of certain contracts issued by affiliates of the Trust.

The cost of the preparation, printing and distribution of this Information
Statement is an expense of the Trust.

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<PAGE> 132

EXHIBIT A

MANUFACTURERS INVESTMENT TRUST
AMENDED AND RESTATED ADVISORY AGREEMENT

Advisory Agreement dated January 1, 1996 as amended and restated
, 1999 between Manufacturers Investment Trust (formerly, NASL Series
Trust), a Massachusetts business trust (the "Fund" or the "Trust") and
Manufacturers Securities Services, LLC (the successor to NASL Financial
Services, Inc.), a Delaware limited liability company ("MSS" or the "Adviser").
In consideration of the mutual covenants contained herein, the parties agree as
follows:

1. APPOINTMENT OF ADVISER

The Trust hereby appoints MSS, subject to the supervision of the Trustees
of the Trust and the terms of this Agreement, as the investment adviser for each
of the portfolios of the Trust specified in Appendix A to this Agreement as it
shall be amended by the Adviser and the Trust from time to time (the
"Portfolios"). The Adviser accepts such appointment and agrees to render the
services and to assume the obligations set forth in this Agreement commencing on
its effective date. The Adviser will be an independent contractor and will have
no authority to act for or represent the Trust in any way or otherwise be deemed
an agent unless expressly authorized in this Agreement or another writing by the
Trust and the Adviser.

2. DUTIES OF THE ADVISER

a. Subject to the general supervision of the Trustees of the Trust and the
terms of this Agreement, the Adviser will at its own expense, except as noted
below, select and contract with investment subadvisers ("Subadvisers") to manage
the investments and determine the composition of the assets of the Portfolios;
provided, that any contract with a Subadviser (the "Subadvisory Agreement")
shall be in compliance with and approved as required by the Investment Company
Act of 1940, as amended ("Investment Company Act"), except for such exemptions
therefrom as may be granted to the Trust or the Adviser. Subject always to the
direction and control of the Trustees of the Trust, the Adviser will monitor
compliance of each Subadviser with the investment objectives and related
investment policies, as set forth in the Trust's registration statement with the
Securities and Exchange Commission, of any Portfolio or Portfolios under the
management of such Subadviser, and review and report to the Trustees of the
Trust on the performance of such Subadviser.

With respect to any one or more of the Lifestyle Trusts named in Appendix
A, the Adviser may elect to manage the investments and determine the composition
of the assets of a Lifestyle Trust, subject to the approval of the Trustees of
the Trust.
A-1
<PAGE> 133

b. The Adviser will furnish to the Trust the following:

i. Office and Other Facilities. The Adviser shall furnish to the
Trust office space in the offices of the Adviser or in such other place as
may be agreed upon by the parties hereto from time to time, and all
necessary office facilities and equipment;

ii. Trustees and Officers. The Adviser agrees to permit individuals
who are directors, officers or employees of the Adviser to serve (if duly
elected or appointed) as Trustees or President, Treasurer or Secretary of
the Trust, without remuneration from or other cost to the Trust.

iii. Other Personnel. The Adviser shall furnish to the Trust, at the
Trust's expense, any other personnel necessary for the operations of the
Trust. The Adviser shall not, however, furnish to the Trust personnel for
the performance of functions (a) related to and to be performed under the
Trust contract for custodial, bookkeeping, transfer and dividend disbursing
agency services by the bank or other financial institution selected to
perform such services and (b) related to the investment subadvisory
services to be provided by any Subadviser pursuant to a Subadvisory
Agreement.

iv. Financial, Accounting, and Administrative Services. The Adviser
shall:

(1) maintain the existence and records of the Trust; maintain the
registrations and qualifications of Trust shares under federal law;
prepare all notices and proxy solicitation materials furnished to
shareholders of the Trust (including holders of variable contracts
funded by Trust shares), and

(2) perform all administrative, compliance, financial, accounting,
bookkeeping and record keeping functions of the Trust, including,
without limitation, the preparation of all tax returns, all annual,
semiannual and periodic reports to shareholders of the Trust and the
preparation of all regulatory reports, except for any such functions
that may be performed by a third party pursuant to a custodian, transfer
agency or service agreement executed by the Trust.

The Trust shall reimburse the Adviser for its expenses associated with all
such services described in (1) and (2) above, including the compensation and
related personnel expenses and expenses of office space, office equipment,
utilities and miscellaneous office expenses, except any such expenses directly
attributable to officers or employees of the Adviser who are serving as
President, Treasurer or Secretary of the Trust. The Adviser shall determine the
expenses to be reimbursed by the Trust pursuant to expense allocation procedures
established by the Adviser in accordance with generally accepted accounting
principles.

v. Liaisons with Agents. The Adviser, at its own expense, shall
maintain liaisons with the various agents and other persons employed by the
A-2
<PAGE> 134

Trust (including the Trust's transfer agent, custodian, independent
accountants and legal counsel) and assist in the coordination of their
activities on behalf of the Trust. Fees and expenses of such agents and
other persons will be paid by the Trust.

vi. Reports to Trust. The Adviser shall furnish to, or place at the
disposal of, the Trust such information, reports, valuations, analyses and
opinions as the Trust may, at any time or from time to time, reasonably
request or as the Adviser may deem helpful to the Trust, provided that the
expenses associated with any such materials furnished by the Adviser at the
request of the Trust shall be borne by the Trust.

c. In addition to negotiating and contracting with Subadvisers as set forth
in section (2)(a) of this Agreement and providing facilities, personnel and
services as set forth in section (2)(b), the Adviser will pay:

i. the cost of any advertising or sales literature relating solely to
the Trust;

ii. the cost of printing and mailing prospectuses to persons other
than current holders of Trust shares or holders of variable contracts
funded by Trust shares; and

iii. the compensation of the President, Treasurer and Secretary and
Trustees of the Trust who are also directors, officers or employees of the
Adviser or its affiliates.

d. i. For purposes of section 2(d), the following definitions shall apply:

(A) "EXPENSES" means all the expenses of a Portfolio excluding: (i)
taxes, (ii) portfolio brokerage commissions, (iii) interest, (iv)
litigation and indemnification expenses and other extraordinary expenses
not incurred in the ordinary course of the Trust's business, and (v) any
advisory fees.

(B) "EXPENSE LIMIT" means the percent, specified in Appendix B to this
Agreement, of a portfolio's average daily net assets on an annualized
basis.

ii. The Adviser agrees to reduce its advisory fee for a Portfolio
of the Trust in an amount equal to the amount by which the Expenses of
such Portfolio exceed the Expense Limit set forth in Appendix B and, if
necessary, to remit to that Portfolio an amount necessary to ensure that
such expenses do not exceed that Expense Limit. The expense limit
contained in this paragraph 2(d) shall continue in effect until
terminated by the Adviser upon notice to the Trust. Any termination of
the expense limit shall be effective only as to expenses accruing after
the date of such termination.

A-3
<PAGE> 135

3. EXPENSES ASSUMED BY THE TRUST

The Trust will pay all expenses of its organization, operations and
business not specifically assumed or agreed to be paid by the Adviser, as
provided in this Agreement, or by a Subadviser, as provided in a Subadvisory
Agreement. Without limiting the generality of the foregoing, in addition to
certain expenses described in section 2 above, the Trust shall pay or arrange
for the payment of the following:

a. Edgarization, Printing and Mailing. Costs of Edgarization,
printing and mailing (i) all registration statements (including all
amendments thereto) and prospectuses/statements of additional information
(including all supplements thereto), all annual, semiannual and periodic
reports to shareholders of the Trust (including holders of variable
contracts funded by Trust shares), regulatory authorities or others, (ii)
all notices and proxy solicitation materials furnished to shareholders of
the Trust (including holders of variable contracts funded by Trust shares)
or regulatory authorities and (iii) all tax returns;

b. Compensation of Officers and Trustees. Compensation of the
officers and Trustees of the Trust (other than persons serving as
President, Treasurer, Secretary or Trustee of the Trust who are also
directors, officers or employees of the Adviser or its affiliates);

c. Registration and Filing Fees. Registration, filing and other fees
in connection with requirements of regulatory authorities, including,
without limitation, all fees and expenses of registering and maintaining
the registration of the Trust under the Investment Company Act and the
registration of the Trust's shares under the Securities Act of 1933, as
amended;

d. Custodial Services. The charges and expenses of the custodian
appointed by the Trust for custodial services;

e. Accounting Fees. The charges and expenses of the independent
accountants retained by the Trust;

f. Transfer, Bookkeeping and Dividend Disbursing Agent. The charges
and expenses of any transfer, bookkeeping and dividend disbursing agents
appointed by the Trust;

g. Commissions. Broker's commissions and issue and transfer taxes
chargeable to the Trust in connection with securities transactions to which
the Trust is a party;

h. Taxes. Taxes and corporate fees payable by the Trust to federal,
state or other governmental agencies and the expenses incurred in the
preparation of all tax returns;

i. Stock Certificates. The cost of stock certificates, if any,
representing shares of the Trust;
A-4
<PAGE> 136

j. Legal Services. Legal services and expenses in connection with the
affairs of the Trust, including registering and qualifying its shares with
regulatory authorities;

k. Membership Dues. Association membership dues;

l. Insurance Premiums. Insurance premiums for fidelity, errors and
omissions, directors and officers and other coverage;

m. Shareholder and Trustee Meetings. Expenses of shareholders and
Trustee meetings;

n. Pricing. Pricing of the Trust Portfolios and shares, including the
cost of any equipment or services used for obtaining price quotations and
valuing Trust portfolio investments;

o. Interest. Interest on borrowings;

p. Communication Equipment. All charges for equipment or services
used for communication between the Adviser or the Trust and the custodian,
transfer agent or any other agent selected by the Trust; and

q. Nonrecurring and Extraordinary Expense. Such nonrecurring expenses
as may arise, including the costs of actions, suits, or proceedings to
which the Trust is, or is threatened to be made, a party and the expenses
the Trust may incur as a result of its legal obligation to provide
indemnification to its Trustees, officers, agents and shareholders.

4. COMPENSATION OF ADVISER

Subject to the provisions of section 2(d) of this Agreement, the Trust will
pay the Adviser with respect to the Portfolio the compensation specified in
Appendix A to this Agreement.

5. NON-EXCLUSIVITY

The services of the Adviser to the Trust are not to be deemed to be
exclusive, and the Adviser shall be free to render investment advisory or other
services to others (including other investment companies) and to engage in other
activities. It is understood and agreed that the directors, officers and
employees of the Adviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from serving as
partners, officers, directors, trustees or employees of any other firm or
corporation, including other investment companies.

6. SUPPLEMENTAL ARRANGEMENTS

The Adviser may enter into arrangements with other persons affiliated with
the Adviser to better enable it to fulfill its obligations under this Agreement
for the provision of certain personnel and facilities to the Adviser.
A-5
<PAGE> 137

7. CONFLICTS OF INTEREST

It is understood that Trustees, officers, agents and shareholders of the
Trust are or may be interested in the Adviser as directors, officers,
stockholders, or otherwise; that directors, officers, agents and stockholders of
the Adviser are or may be interested in the Trust as Trustees, officers,
shareholders or otherwise; that the Adviser may be interested in the Trust; and
that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Articles of
Incorporation of the Adviser, respectively, or by specific provision of
applicable law.

8. REGULATION

The Adviser shall submit to all regulatory and administrative bodies having
jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.

9. DURATION AND TERMINATION OF AGREEMENT

This Agreement shall become effective on the later of: (i) its execution
and (ii) the date of the meeting of the shareholders of the Trust, at which
meeting this Agreement is approved by the vote of a majority of the outstanding
voting securities (as defined in the Investment Company Act) of the Portfolios.
The Agreement will continue in effect for a period more than two years from the
date of its execution only so long as such continuance is specifically approved
at least annually either by the Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Trust provided that in
either event such continuance shall also be approved by the vote of a majority
of the Trustees of the Trust who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval. The required
shareholder approval of the Agreement or of any continuance of the Agreement
shall be effective with respect to any Portfolio if a majority of the
outstanding voting securities of the series (as defined in Rule 18f- 2(h) under
the Investment Company Act) of shares of that Portfolio votes to approve the
Agreement or its continuance, notwithstanding that the Agreement or its
continuance may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the Agreement or (b) all the
Portfolios of the Trust.

If the shareholders of a series of shares of any Portfolio fail to approve
the Agreement or any continuance of the Agreement, the Adviser will continue to
act as investment adviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of a new contract with the
Adviser or a different adviser or other definitive action; provided, that the
compensation received by the Adviser in respect of such Portfolio during such
A-6
<PAGE> 138

period will be no more than its actual costs incurred in furnishing investment
advisory and management services to such Portfolio or the amount it would have
received under the Agreement in respect of such Portfolio, whichever is less.

This Agreement may be terminated at any time, without the payment of any
penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Portfolio by
the vote of a majority of the outstanding voting securities of the series of
shares of such Portfolio, on sixty days' written notice to the Adviser, or by
the Adviser on sixty days' written notice to the Trust. This Agreement will
automatically terminate, without payment of any penalty, in the event of its
assignment (as defined in the Investment Company Act).

10. PROVISION OF CERTAIN INFORMATION BY ADVISER

The Adviser will promptly notify the Trust in writing of the occurrence of
any of the following events:

a. the Adviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in which
the Adviser is required to be registered as an investment adviser in order
to perform its obligations under this Agreement;

b. the Adviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, public board or body, involving the affairs of the Trust; and

c. the chief executive officer or controlling stockholder of the
Adviser or the portfolio manager of any Portfolio changes.

11. AMENDMENTS TO THE AGREEMENT

This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Portfolios affected by the amendment and by the vote
of a majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Portfolio if a majority of the outstanding voting securities
of the series of shares of that Portfolio vote to approve the amendment,
notwithstanding that the amendment may not have been approved by a majority of
the outstanding voting securities of (a) any other Portfolio affected by the
amendment or (b) all the Portfolios of the Trust.

12. ENTIRE AGREEMENT

This Agreement contains the entire understanding and agreement of the
parties.

A-7
<PAGE> 139

13. HEADINGS

The headings in the sections of this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.

14. NOTICES

All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or Adviser
in person or by registered mail or a private mail or delivery service providing
the sender with notice of receipt. Notice shall be deemed given on the date
delivered or mailed in accordance with this section.

15. SEVERABILITY

Should any portion of this Agreement for any reason be held to be void in
law or in equity, the Agreement shall be construed, insofar as is possible, as
if such portion had never been contained herein.

16. GOVERNING LAW

The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.

17. LIMITATION OF LIABILITY

The Declaration of Trust establishing the Trust, dated September 29, 1988,
a copy of which, together with all amendments thereto (the "Declaration"), is on
file in the office of the Secretary of The Commonwealth of Massachusetts,
provides that the name "Manufacturers Investment Trust" refers to the Trustees
under the Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder, officer, employee or agent of the Trust
shall be held to any personal liability, nor shall resort be had to their
private property, for the satisfaction of any obligation or claim or otherwise,
in connection with the affairs of the Trust or any Portfolio thereof, but only
the assets belonging to the Trust, or to the particular Portfolio with respect
to which such obligation or claim arose, shall be liable.

A-8
<PAGE> 140

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.

MANUFACTURERS INVESTMENT TRUST

By:

---------------------------------
John D. DesPrez III, President

MANUFACTURERS SECURITIES
SERVICES, LLC

By: The Manufacturers Insurance
Company of North America,
its managing member

By:
---------------------------------
Theodore F. Kilkuskie, Jr.,
President

By:

---------------------------------
James D. Gallagher,
Vice President,
Secretary and General Counsel

A-9
<PAGE> 141

APPENDIX A
(to Manufacturers Investment Trust Amended and
Restated Advisory Agreement)

<TABLE>
<C> <S>
1. Global Equity Trust: .90% of the current net assets of the
Portfolio.
2. Blue Chip Growth Trust: .875% of the current net assets of
the Portfolio.
3. Mid Cap Blend Trust: .85% of the current net assets of the
Portfolio. (Formerly the Equity Trust)
4. Equity-Income Trust: .875% of the current net assets of the
Portfolio.
5. Growth and Income Trust: .75% of the current net assets of
the Portfolio.
6. Strategic Bond Trust: .775% of the current net assets of the
Portfolio.
7. Global Bond Trust: .80% of the current net assets of the
Portfolio. (Formerly, the Global Government Bond Trust)
8. Investment Quality Bond Trust: .65% of the current net
assets of the Portfolio.
9. U.S. Government Securities Trust: .65% of the current net
assets of the Portfolio.
10. Money Market Trust: .50% of the current net assets of the
Portfolio.
11. Large Cap Growth Trust: .875% of the current net assets of
the Portfolio. (Formerly, the Aggressive Asset Allocation
Trust)
12. Income & Value Trust: .80% of the current net assets of the
Portfolio. (Formerly, the Moderate Asset Allocation Trust)
13. Diversified Bond Trust: .75% of the current net assets of
the Portfolio. (Formerly, the Conservative Asset Allocation
Trust)
14. Overseas Trust: .95% of the current net assets of the
Portfolio.
(Formerly, the International Growth and Income Trust)
15. Mid Cap Growth Trust: .95% of the current net assets of the
Portfolio. (Formerly, the Small/Mid Cap Trust)
16. International Small Cap Trust: 1.10% of the current net
assets of the Portfolio.
17. Growth Trust: .85% of the current net assets of the
Portfolio.
18. Value Trust: .80% of the current net assets of the
Portfolio.
19. High Yield Trust: .775% of the current net assets of the
Portfolio.
20. International Stock Trust: 1.05% of the current net assets
of the Portfolio.
21. Science & Technology Trust: 1.10% of the current net assets
of the Portfolio.
22. Balanced Trust: .80% of the current net assets of the
Portfolio.
</TABLE>

A-10
<PAGE> 142
<TABLE>
<C> <S>
23. Emerging Small Company Trust: 1.05% of the current net
assets of the Portfolio.
24. Aggressive Growth Trust: 1.00% of the current net assets of
the Portfolio.
(Formerly, the Pilgrim Baxter Growth Trust)
25. Pacific Rim Emerging Markets Trust: .85% of the current net
assets of the Portfolio.
26. Real Estate Securities Trust: .70% of the current net assets
of the Portfolio.
27. Equity Index Trust: .25% of the current net assets of the
Portfolio.
28. Quantitative Equity Trust: .70% of the current net assets of
the Portfolio.
29. Lifestyle Conservative 280 Trust: 0% of the current net
assets of the Portfolio.
30. Lifestyle Moderate 460 Trust: 0% of the current net assets
of the Portfolio.
31. Lifestyle Balanced 640 Trust: 0% of the current net assets
of the Portfolio.
32. Lifestyle Growth 820 Trust: 0% of the current net assets of
the Portfolio.
33. Lifestyle Aggressive 1000 Trust: 0% of the current net
assets of the Portfolio.
34. Small Company Value Trust: 1.05% of the current assets of
the Portfolio.
35. Small Company Blend Trust: 1.05% of the current net assets
of the Portfolio.
36. U.S. Large Cap Value Trust: .875% of the current net assets
of the Portfolio.
37. Total Return Trust: .775% of the current net assets of the
Portfolio.
38. International Value Trust: 1.00% of the current net assets
of the Portfolio.
39. Mid-Cap Stock Trust: .925% of the current net assets of the
Portfolio.
40. Capital Growth Bond Trust: .650% of the current net assets
of the Portfolio.
41. Worldwide Growth Trust: 1.00% of the current net assets of
the Portfolio.
</TABLE>

The Percentage Fee for the Portfolio shall be paid daily to the Adviser.
The daily fee will be computed by multiplying the fraction of one over the
number of calendar days in the year by the applicable annual rate described in
the preceding paragraph, and multiplying this product by the net assets of the
Portfolio as determined in accordance with the Trust's prospectus and statement
of additional information as of the close of business on the previous business
day on which the Trust was open for business.

A-11
<PAGE> 143

APPENDIX B
(to Manufacturers Investment Trust Amended and
Restated Advisory Agreement)

The Expense Limit for the Portfolio for the purposes of paragraph 2.d.i(B)
shall be .50% for the Portfolio except the following:

<TABLE>
<CAPTION>
PORTFOLIO PERCENT
- --------- -------
<S> <C>
Global Equity Trust......................................... .75%
Global Bond Trust........................................... .75%
(formerly, the Global Government Bond Trust)
Overseas Trust.............................................. .75%
(formerly, the International Growth and Income Trust)
International Small Cap Trust............................... .75%
International Stock Trust................................... .75%
Worldwide Growth Trust...................................... .75%
Pacific Rim Emerging Markets Trust.......................... .75%
Equity Index Trust.......................................... .15%
Lifestyle Conservative 280 Trust............................ 0%
Lifestyle Moderate 460 Trust................................ 0%
Lifestyle Balanced 640 Trust................................ 0%
Lifestyle Growth 820 Trust.................................. 0%
Lifestyle Aggressive 1000 Trust............................. 0%
International Value Trust................................... .75%
</TABLE>

A-12
<PAGE> 144

EXHIBIT B

EXECUTIVE OFFICERS AND DIRECTORS OF SUBADVISERS

A I M CAPITAL MANAGEMENT, INC.

The principal executive officers and directors of A I M Capital Management,
Inc. ("AIM") and their principal occupations are shown below. The business
address of each officer and director is 11 Greenway Plaza, Suite 100, Houston,
TX 77046.

<TABLE>
<CAPTION>
NAME POSITION WITH AIM PRINCIPAL OCCUPATION
- ---- ----------------- --------------------
<S> <C> <C>
Charles T. Bauer, C.F.A. Director and Chairman Chairman of the Board of
Directors, A I M
Management Group Inc.; A
I M Advisors, Inc., A I M
Capital Management, Inc.,
A I M Distributors, Inc.,
A I M Fund Services,
Inc., and Fund Management
Company; and Vice
Chairman and Director,
AMVESCAP PLC.
Gary T. Crum Director and President Director and President, A
I M Capital Management,
Inc.; Director and Senior
Vice President, A I M
Management Group Inc. and
A I M Advisors, Inc.; and
Director, A I M
Distributors, Inc. and
AMVESCAP PLC.
Robert H. Graham Director and Senior Vice Director, President and
President Chief Executive Officer,
A I M Management Group
Inc.; Director and
President, A I M
Advisors, Inc.; Director
and Senior Vice
President, A I M Capital
Management, Inc., A I M
Distributors, Inc., A I M
Fund Services, Inc., and
Fund Management Company;
Director, AMVESCAP PLC.
Robert G. Alley, C.F.A. Senior Vice President Senior Vice President, A
I M Capital Management,
Inc.; and Vice President,
A I M Advisors, Inc.
</TABLE>

B-1
<PAGE> 145

<TABLE>
<CAPTION>
NAME POSITION WITH AIM PRINCIPAL OCCUPATION
- ---- ----------------- --------------------
<S> <C> <C>
Stuart W. Coco Senior Vice President Senior Vice President,
A I M Capital Management,
Inc.; and Vice President,
A I M Advisors, Inc.
Karen Dunn Kelley Senior Vice President Senior Vice President,
A I M Capital Management,
Inc.; and Vice President,
A I M Advisors, Inc.
Jonathan C. Schoolar,
C.F.A. Senior Vice President and Senior Vice President,
Portfolio Manager A I M Capital Management,
Inc.; and Vice President,
A I M Advisors, Inc.
Ronald P. Stein Senior Vice President Sr. Vice President, A I M
Management Inc.; and Vice
President, A I M
Advisors, Inc.
John J. Arthur, C.P.A. Vice President and Director, Senior Vice
Treasurer President, A I M
Advisors, Inc.; and Vice
President and Treasurer,
A I M Management Group
Inc.
Nancy L. Martin, C.P.A. Vice President, General Vice President, General
Counsel and Assistant Counsel and Assistant
Secretary Secretary, A I M Capital
Management, Inc., Vice
President, Associate
General Counsel and
Assistant Secretary,
A I M Advisors, Inc.;
Assistant General Counsel
and Assistant Secretary,
A I M Management Group
Inc., A I M Distributors
Inc., A I M Fund
Services, Inc. and Fund
Management Company.
</TABLE>

B-2
<PAGE> 146

CAPITAL GUARDIAN TRUST COMPANY

The principal executive officers and directors of Capital Guardian Trust
Company ("CGTC") and their principal occupations are shown below. The business
address of each officer and director is also noted below.

<TABLE>
<CAPTION>
NAME POSITION WITH CGTC PRINCIPAL OCCUPATION
- ---- ------------------ --------------------
<S> <C> <C>
Donnalisa Barnum Senior Vice President Vice President, Capital
11100 Santa Monica International Limited.
Boulevard
15th Floor
Los Angeles, CA
90025-3384

Andrew F. Barth Director Executive Vice President
333 South Hope Street and Research Manager,
55th Floor Capital Guardian
Los Angeles, CA Research Company.
90071-1447

Michael D. Beckman Senior Vice President, Director, Capital
135 South State Treasurer and Director Guardian
College Boulevard Trust Company of Nevada;
Brea, CA 92821-5804 Treasurer, Capital
Guardian Research
Company.

Elizabeth A. Burns Senior Vice President Senior Vice President,
630 Fifth Avenue Capital Guardian Trust
36th Floor Company.
New York, NY
10111-0121

Larry P. Clemmensen Director Director, American Funds
333 South Hope Street Distributors, Inc.;
55th Floor Chairman of the Board,
Los Angeles, CA American Funds Service
90071-1447 Company; Director and
President, The Capital
Group Companies, Inc.;
Senior Vice President
and Director, Capital
Research and Management
Company; President and
Director, Capital
Management Services,
Inc.; Treasurer, Capital
Strategy Research, Inc.;
Senior Vice President,
Capital Income Builder,
Inc. and Capital World
Growth & Income Fund,
Inc.
</TABLE>

B-3
<PAGE> 147

<TABLE>
<CAPTION>
NAME POSITION WITH CGTC PRINCIPAL OCCUPATION
- ---- ------------------ --------------------
<S> <C> <C>
Roberta A. Conroy Senior Vice President, Senior Vice President and
11100 Santa Monica Director and Counsel Secretary, Capital
Boulevard International, Inc. and
15th Floor Emerging Markets Growth
Los Angeles, CA Fund, Inc.; Assistant
90025-3384 General Counsel, The
Capital Group Companies,
Inc.; Secretary, Capital
Management Services,
Inc.

John B. Emerson Senior Vice President Deputy Assistant to the
333 South Hope Street President, White House
55th Floor Coordinator, Deputy
Los Angeles, CA Director of Presidential
90071-1447 Personnel, The White
House.

Michael E. Ericksen Senior Vice President,
25 Bedford Street Capital International,
London, England WC2E 9HN Limited.

David I. Fisher Senior Vice President Chairman and Director,
11100 Santa Monica The Capital Group
Boulevard Companies, Inc. and
15th Floor Capital Guardian Trust
Los Angeles, CA Company; Vice Chairman
90025-3384 and Director, Capital
International, Inc.,
Capital International
K.K., Capital
International Limited
and Emerging Markets
Growth Fund, Inc.;
President and Director,
Capital Group
International, Inc. and
Capital International
Limited (Bermuda);
Presidente du Conseil,
Capital International
S.A.; Director, Capital
Group Research, Inc.,
Capital Research
International,
EuroPacific Growth Fund
and New Perspective
Fund.

William Flumenbaum Senior Vice President, Vice President, Capital
333 South Hope Street Capital Guardian Trust Guardian Trust Company
55th Floor Company Personal of Nevada; Director,
Los Angeles, CA Investment Management Principal Gifts -- UCLA
90071-1447 Division Development; Executive
Director, UCLA Jonssson
Cancer Center
Foundation, Deputy
Director UCLA Health
Science Development.
</TABLE>

B-4
<PAGE> 148

<TABLE>
<CAPTION>
NAME POSITION WITH CGTC PRINCIPAL OCCUPATION
- ---- ------------------ --------------------
<S> <C> <C>
Richard N. Havas Senior Vice President Capital International
1 Place Ville-Marie Limited, Capital
Suite 2821 Research International
Montreal, Quebec, and Capital Guardian
Canada H3B 4R4 Canada, Inc.

Frederick M. Hughes, Jr. Senior Vice President Senior Vice President,
333 South Hope Street Capital Guardian Trust
55th Floor Company.
Los Angeles, CA
90071-1447

William H. Hurt Senior Vice President Chairman, Capital
333 South Hope Street and Director Guardian Trust Company
55th Floor of Nevada and Capital
Los Angeles, CA Strategy Research, Inc.
90071-1447

Robert G. Kirby Chairman Emeritus Senior Partners, The
333 South Hope Street Capital Group Partners
55th Floor L.P.
Los Angeles, CA
90071-1447

Nancy J. Kyle Senior Vice President President, Capital
630 Fifth Avenue and Director Guardian Canada, Inc.
36th Floor and Vice President,
New York, NY Emerging Markets Growth
10111-0121 Fund, Inc.

Karin L. Larson Director Director, The Capital
11100 Santa Monica Group Companies, Inc.;
Boulevard President, Director and
15th Floor Director of Research,
Los Angeles, CA Capital Guardian
90025-3384 Research Company;
Chairperson, President
and Director, Capital
Group Research, Inc.;
President, Director and
Director of
International Research,
Capital Research
International.

D. James Martin Director Senior Vice President
333 South Hope Street and Director, Capital
55th Floor Guardian Research
Los Angeles, CA Company.
90071-1447

John R. McIlwraith Senior Vice President Senior Vice President
One Market, Stuart and Director and Director, Capital
Tower International Limited.
Suite 1800
San Francisco, CA
94105-1409
</TABLE>

B-5
<PAGE> 149

<TABLE>
<CAPTION>
NAME POSITION WITH CGTC PRINCIPAL OCCUPATION
- ---- ------------------ --------------------
<S> <C> <C>
James R. Mulally Senior Vice President Senior Vice President,
11100 Santa Monica and Directo Capital International
Boulevard Limited, Director,
15th Floor Capital Guardian
Los Angeles, CA Research Company, Vice
90025-3384 President, Capital
Research Company.

Shelby Notkin Senior Vice President Director, Capital
One Market, Stuart Guardian Trust Company of Nevada.
Tower
Suite 1800
San Francisco, CA
94105-1409

Mary M. O'Hern Senior Vice President Senior Vice President,
333 South Hope Street Capital International
55th Floor Limited, Vice President,
Los Angeles, CA Capital International,
90071-1447 Inc.

Jeffrey C. Paster Senior Vice President Senior Vice President,
One Market, Stuart Capital Guardian Trust
Tower Company.
Suite 1800
San Francisco, CA
94105-1409

Robert V. Pennington Senior Vice President President, Capital
630 Fifth Avenue Guardian Trust Company
36th Floor of Nevada.
New York, NY
10111-0121

Jason M. Pilalas Director Senior Vice President
333 South Hope Street and Director, Capital
55th Floor Guardian Research
Los Angeles, CA Company.
90071-1447

Robert Ronus President and Director Chairman and Director,
333 South Hope Street Capital Guardian Canada,
55th Floor Inc., Capital Guardian
Los Angeles, CA Research Company and
90071-1447 Capital Research
International; Director,
The Capital Group
Companies, Inc., Capital
Group International,
Inc. and Capital
International Fund S.A.;
Directeur, Capital
International S.A.,
Senior Vice President,
Capital International
Limited.
</TABLE>

B-6
<PAGE> 150

<TABLE>
<CAPTION>
NAME POSITION WITH CGTC PRINCIPAL OCCUPATION
- ---- ------------------ --------------------
<S> <C> <C>
Theodore R. Samuels Senior Vice President Director, Capital
333 South Hope Street and Director Guardian
55th Floor Research Company.
Los Angeles, CA
90071-1447

Lionel A. Sauvage Senior Vice President Director, Capital
1110 State Monica Guardian Research Company; Vice
Boulevard President, Capital
11th Floor International Research,
Los Angeles, CA Inc.
90025-3384

John H. Seiter Executive Vice President Senior Vice President,
333 South Hope Street of Client Relations & Capital Group
55th Floor Marketing and Director International, Inc.;
Los Angeles, CA Vice President, The
90071-1447 Capital Group Companies,
Inc.

Robert L. Spare Senior Vice President Senior Vice President,
333 South Hope Street Capital Guardian Trust
55th Floor Company.
Los Angeles, CA
90071-1447

Eugene P. Stein Executive Vice President Director, Capital
333 South Hope Street and Director Guardian
55th Floor Research Company.
Los Angeles, CA
90071-1447

Bente L. Strong Senior Vice President Personal Investment
630 Fifth Avenue Management Division;
36th Floor Publisher, Capital
New York, NY Publishing's The
10111-0121 American Benefactor
Magazine.

Philip A. Swan Senior Vice President Senior Vice President,
11100 Santa Monica Capital Guardian Trust
Boulevard Company.
15th Floor
Los Angeles, CA
90025-3384
</TABLE>

B-7
<PAGE> 151

<TABLE>
<CAPTION>
NAME POSITION WITH CGTC PRINCIPAL OCCUPATION
- ---- ------------------ --------------------
<S> <C> <C>
Shaw B. Wagener Director Capital International
333 South Hope Street Asia Pacific Management
55th Floor Company, S.A., Capital
Los Angeles, CA International Management
90071-1447 Company, Capital
International Emerging
Countries Fund and
Capital International
Latin American Fund;
President and Director,
Capital International,
Inc.; Senior Vice
President, Capital Group
International, Inc. and
Emerging Markets Growth
Fund, Inc.

Eugene M. Waldron Senior Vice President Vice President, Loomis,
Washington Harbour Sayles & Company.
3000 K Street N.W.
Suite 230
Washington, D.C.
20007-5124

N. Dexter Williams Senior Vice President, Capital Guardian Trust
One Market, Stuart Company Personal Senior Vice President,
Tower Investment Management American Funds
Suite 1800 Division Distributors, Inc.
San Francisco, CA
94105-1409
</TABLE>

B-8
<PAGE> 152

FIDELITY MANAGEMENT TRUST COMPANY

The principal executive officers and directors of Fidelity Management Trust
Company ("FMTC") and their principal occupations are shown below. Except as
noted below, the business address of each officer and director is 82 Devonshire
Street, Boston, Massachusetts 02109.

<TABLE>
<CAPTION>
POSITION WITH
NAME FMTC PRINCIPAL OCCUPATION
- ---- ------------- --------------------
<S> <C> <C>
John F. McNamara Director Chairman of the Board,
President and Chief Executive
Officer
Denis M. McCarthy Director
30 Whiting Road
Wellesley, MA 02481
John P. Wilkins Director President,
Wilkins Investment Wilkins Investment Counsel, Inc.
Counsel Inc.
160 Federal Street, 17th
Floor
Boston, MA 02110
Ralph B. Vogel Director
675 Hale Street
Beverly Farms, MA 01915
Robert L. Reynolds Director
Edward E. Madden Director Vice Chairman

LEGAL, RISK AND COMPLIANCE
John P. O'Reilly, Jr. Director Executive Vice President
Vincent P. Walsh Officer Vice President

CLIENT SERVICES
Charles McKenzie Officer Senior Vice President
Kim S. Adelman Officer Vice President
Paul M. Cahill, Jr. Officer Vice President
Mary Cross Officer Vice President
Patrick DeMayo Officer Vice President
Kenneth Fazio Officer Vice President
Erica Fotta Officer Vice President
Garrett Williams Officer Vice President

HUMAN RESOURCES
Eileen M. Pyne Officer Senior Vice President

OPERATIONS/FINANCE/CHANNELS
John E. Murphy Director Senior Vice President,
Chief Financial Officer
and Treasurer
Daniel Persechini Officer Vice President, Finance
Marybeth Richardson Officer Vice President, Finance
John Burke Officer Vice President, Operations
David Censorio Officer Vice President, Operations
Sally Miller Officer Vice President, Operations
Louis Russo Officer Vice President, Operations
Rhonda Snow Officer Vice President, Operations
John DiBenedeto Officer Vice President, Channels
Cheryl Gladstone Officer Vice President, Channels
Steven M. Quackenbush Officer Vice President, Channels
</TABLE>

B-9
<PAGE> 153

<TABLE>
<CAPTION>
POSITION WITH
NAME FMTC PRINCIPAL OCCUPATION
- ---- ------------- --------------------
<S> <C> <C>
OPERATIONS/FINANCE/CHANNELS
(CONTINUED)
Regina C. Sullivan Officer Vice President, Channels
Michael Hall Officer Vice President, Reporting
PRODUCT/DEVELOPMENT, MARKETING
AND MARKETING SUPPORT
Michael Forrester Officer Senior Vice President
Bill Fink Officer Senior Vice President
Jeffrey Gandel Officer Vice President
SALES MANAGEMENT
Jeffrey Lagarce Officer Senior Vice President
Bradford J. Allinson Officer Senior Vice President
Stephen Bard Officer Senior Vice President
Arthur J. Greenwood Officer Senior Vice President
Walter Lindsay Officer Senior Vice President
William Lynch Officer Senior Vice President
R. Reuel Stanley Officer Senior Vice President
David Yearwood Officer Senior Vice President
Robert Allen Officer Vice President
Matthew Appelstein Officer Vice President
Lawrence Reale Officer Vice President
Robert Fitzpatrick Officer Vice President
James T. Mattera Officer Vice President
Mark D. Toomey Officer Vice President
SYSTEMS
Margaret Smith Officer Senior Vice President
Tricia Cristoforo Officer Vice President
Kevin Long Officer Vice President
John Saxe Officer Assistant Vice President
INVESTMENTS, EQUITY
Karen Firestone Officer Senior Vice President
Ren Y. Cheng Officer Senior Vice President
Jennifer Farrelly Officer Senior Vice President
Timothy Heffernan Officer Senior Vice President
Cesar Hernandez Officer Senior Vice President
Robert Lawrence Director Senior Vice President
Robert L. Macdonald Officer Senior Vice President
John McDowell Officer Senior Vice President
Neal Miller Officer Senior Vice President
Stephen Petersen Officer Senior Vice President
Kennedy Richardson Officer Senior Vice President
Scott Stewart Officer Senior Vice President
Beth Terrana Officer Senior Vice President
George Vanderheiden Officer Senior Vice President
John Avery Officer Vice President
Katherine Collins Officer Vice President
Joseph Day Officer Vice President
</TABLE>

B-10
<PAGE> 154

<TABLE>
<CAPTION>
POSITION WITH
NAME FMTC PRINCIPAL OCCUPATION
- ---- ------------- --------------------
<S> <C> <C>
INVESTMENTS, EQUITY
(CONTINUED)
Stephen DuFour Officer Vice President
Richard Fentin Officer Vice President
Steve Snider Officer Vice President
Tom Sprague Officer Vice President
Myra Wonisch Officer Vice President
INVESTMENTS, FIXED INCOME
Dwight Churchill Officer Senior Vice President
Boyce Greer Officer Senior Vice President
Robert Middlebrook Officer Senior Vice President
Robert K. Duby Officer Vice President
Andrew J. Dudley Officer Vice President
George Fischer Officer Vice President
Robin Lee Foley Officer Vice President
Robert Galusza Officer Vice President
Kevin Grant Officer Vice President
Norm Lind Officer Vice President
Charles Morrison Officer Vice President
Ford E. O'Neil Officer Vice President
Thomas J. Silvia Officer Vice President
Mark Sommer Officer Vice President
Christine Thompson Officer Vice President
INVESTMENTS, HIGH YIELD
Margaret Eagle Officer Senior Vice President
Bart Grenier Officer Senior Vice President
John Carlson Officer Vice President
Barry Coffman Officer Vice President
Tom Hense Officer Vice President
Mark Notkin Officer Vice President
Thomas T. Soviero Officer Vice President
INVESTMENTS, REAL ESTATE
Barry Greenfield Officer Senior Vice President
Mike E. Miles Officer Senior Vice President
Lee Sandwen Officer Senior Vice President
Michael Elizondo Officer Vice President
Thomas P. Lavin Officer Vice President
Mark P. Snyderman Officer Vice President
PERSONAL TRUST
James Cornell Officer Senior Vice President
Deborah C. Segal Officer Vice President
Deborah Adams Officer Trust Officer
Kathleen Brooks Officer Trust Officer
Amy Z. Resnic Officer Trust Officer
OTHER OFFICERS
John P. O'Reilly, Jr. Director Institutional Trust; Assistant
Clerk
</TABLE>

B-11
<PAGE> 155

<TABLE>
<CAPTION>
POSITION WITH
NAME FMTC PRINCIPAL OCCUPATION
- ---- ------------- --------------------
<S> <C> <C>
OTHER OFFICERS
(CONTINUED)
Eileen M. Pyne Officer Affirmative Action Officer;
CRA Liaison
John E. Murphy Director Bank Secrecy Act Compliance
Officer; Security Officer
Lisa Menelly Officer Clerk
William Corson Officer Assistant Clerk
Douglas Kant Officer Assistant Clerk
John Kimpel Officer Assistant Clerk
Emily Kuvin Officer Assistant Clerk
Regina Sullivan Officer Assistant Clerk
</TABLE>

B-12
<PAGE> 156

FRANKLIN ADVISERS, INC.

The principal executive officers and directors of Franklin Advisers, Inc.
("Franklin Advisers") and their principal occupations are shown below. The
business address of each officer and director is 777 Mariners Island Blvd., San
Mateo, CA 94404.

<TABLE>
<CAPTION>
POSITION WITH
NAME FRANKLIN ADVISERS PRINCIPAL OCCUPATION
- ---- ----------------- --------------------
<S> <C> <C>
Charles B. Johnson Chairman of the Board President, Chief
and Director Executive Officer and
Director, Franklin
Resources, Inc.;
Chairman of the Board
and Director, Franklin
Advisory Services, Inc.,
Franklin Investment
Advisory Services, Inc.
and Franklin Templeton
Distributors, Inc.;
Director, Franklin/
Templeton Investor
Services, Inc. and
Franklin Templeton
Services, Inc.; officer
and/or director or
trustee, as the case may
be, of most of the other
subsidiaries of Franklin
Resources, Inc. and of
50 of the investment
companies in the
Franklin Templeton Group
of Funds.
Rupert H. Johnson, Jr. President and Director Executive Vice President
and Director, Franklin
Resources, Inc. and
Franklin Templeton
Distributors, Inc.;
President and Director,
Franklin Investment
Advisory Services, Inc.;
Senior Vice President
and Director, Franklin
Advisory Services, Inc.;
Director, Franklin/
Templeton Investor
Services, Inc.; and
officer and/or director
or trustee, as the case
may be, of most of the
other subsidiaries of
Franklin Resources, Inc.
and of 53 of the
investment companies in
the Franklin Templeton
Group of Funds.
</TABLE>

B-13
<PAGE> 157

<TABLE>
<CAPTION>
POSITION WITH
NAME FRANKLIN ADVISERS PRINCIPAL OCCUPATION
- ---- ----------------- --------------------
<S> <C> <C>
R. Martin Wiskemann Senior Vice President Portfolio Manager,
and Director Franklin Advisers, Inc.;
Senior Vice President,
Franklin Management,
Inc.; Vice President and
Director, ILA Financial
Services, Inc.; and
officer and/or director
or trustee, as the case
may be, of 15 of the
investment companies in
the Franklin Templeton
Group of Funds.
Harmon E. Burns Executive Vice President Executive Vice President
and Director, Franklin
Resources, Inc.,
Franklin Templeton
Distributors, Inc. and
Franklin Templeton
Services, Inc.;
Director, Franklin
Investment Advisory
Services, Inc. and
Franklin/Templeton
Investor Services, Inc.;
and officer and/or
director or trustee, as
the case may be, of most
of the other
subsidiaries of Franklin
Resources, Inc. and of
53 of the investment
companies in the
Franklin Templeton Group
of Funds.
</TABLE>

B-14
<PAGE> 158

<TABLE>
<CAPTION>
POSITION WITH
NAME FRANKLIN ADVISERS PRINCIPAL OCCUPATION
- ---- ----------------- --------------------
<S> <C> <C>
Martin L. Flanagan Executive Vice President Senior Vice President
and Chief Financial and Chief Financial
Officer Officer, Franklin
Resources, Inc.,
Franklin/Templeton
Investor Services, Inc.
and Franklin Mutual
Advisers, Inc.;
Executive Vice President
and Director, Templeton
Worldwide, Inc.;
Executive Vice
President, Chief
Operating Officer and
Director, Templeton
Investment Counsel,
Inc.; Chief Financial
Officer, Franklin
Advisory Services, Inc.
and Franklin Investment
Advisory Services, Inc.;
President and Director,
Franklin Investment
Advisory Services, Inc.;
President and Director,
Franklin Templeton
Services, Inc.; officer
and/or director of some
of the other
subsidiaries of Franklin
Resources, Inc.; and
officer and/or director
or trustee, as the case
may be, of 53 of the
investment companies in
the Franklin Templeton
Group of Funds.
</TABLE>

B-15
<PAGE> 159

<TABLE>
<CAPTION>
POSITION WITH
NAME FRANKLIN ADVISERS PRINCIPAL OCCUPATION
- ---- ----------------- --------------------
<S> <C> <C>
Deborah R. Gatzek Executive Vice President Senior Vice President
and Assistant Secretary and General Counsel,
Franklin Resources,
Inc.; Senior Vice
President, Franklin
Templeton Services, Inc.
and Franklin Templeton
Distributors, Inc.; Vice
President, Franklin
Advisory Services, Inc.
and Franklin Mutual
Advisers, Inc.; Vice
President, Chief Legal
Officer and Chief
Operating Officer,
Franklin Investment
Advisory Services, Inc.;
and officer of 54 of the
investment companies in
the Franklin Templeton
Group of Funds.
Edward B. Jamieson Executive Vice President Portfolio Manager,
Franklin Advisers, Inc.
and Franklin Management,
Inc.; and officer and
trustee of four of the
investment companies in
the Franklin Templeton
Group of Funds.
Thomas J. Kenny Executive Vice President Portfolio Manager,
Franklin Advisers, Inc.;
and officer of eight of
the investment companies
in the Franklin
Templeton Group of
Funds.
Jack H. Lemein Executive Vice President Portfolio Manager,
Franklin Advisers, Inc.;
and Vice President,
Franklin Management,
Inc. and Franklin
Templeton Distributors,
Inc.
</TABLE>

B-16
<PAGE> 160

PACIFIC INVESTMENT MANAGEMENT COMPANY

The principal executive officers and directors of Pacific Investment
Management Company ("PIMCO") and their principal occupations are shown below.
The business address of each officer and director is 840 Newport Center Drive,
Suite 300, Newport Beach, CA 92660.

<TABLE>
<CAPTION>
NAME POSITION WITH PIMCO PRINCIPAL OCCUPATION
---- ------------------- --------------------
<S> <C> <C>
George C. Allan Senior Vice President Systems
Tamara J. Arnold Senior Vice President Account Manager
Michael R. Asay Senior Vice President Financial Engineer
Brian P. Baker Vice President Account Manager
Leslie A. Burbi Executive Vice President Portfolio Manager
Stephen B. Beaumont Vice President Account Manager
William R. Benz, II Managing Director Account Manager
Gregory A. Bishop Vice President Marketing
John B. Brynjolfsson Senior Vice President Portfolio Manager
Andrew Brick Senior Vice President Portfolio Manager
R. Wesley Burns Managing Director Operations
Carl J. Cohen Vice President Account Manager
Jerry L. Coleman Vice President Systems
Cyrille Conseil Vice President Portfolio Manager
Doug Cummings Vice President Marketing
Wendy W. Cupps Senior Vice President Account Manager
Chris P. Dialynas Managing Director Portfolio Manager
David J. Dorff Vice President Financial Engineer
Michael G. Dow Senior Vice President Marketing
Anita Dunn Vice President Office Service
A. Benjamin Ehlert Executive Vice President Portfolio Manager
Robert A. Ettl Executive Vice President Portfolio Manager
Anthony L. Faillace Vice President Portfolio Manager
Ursula T. Frisch Vice President Account Manager
William H. Gross Managing Director Portfolio Manager
John L. Hague Managing Director Portfolio Manager
Gordon C. Hally Executive Vice President Account Manager
Pasi M. Hamalainen Executive Vice President Portfolio Manager
John P. Hardaway Senior Vice President Operations
Brent R. Harris Managing Director Marketing
Joseph D. Hotteshol Vice President Operations
Raymond C. Hayes Vice President Marketing
</TABLE>

B-17
<PAGE> 161

<TABLE>
<CAPTION>
NAME POSITION WITH PIMCO PRINCIPAL OCCUPATION
---- ------------------- --------------------
<S> <C> <C>
Robert G. Herin Vice President Systems
David C. Hinman Senior Vice President Account Manager
Liza M. Hocson Vice President Finance
Douglas M. Hodge Executive Vice President Account Manager
Brent L. Holden Executive Vice President Account Manager
Dwight F. Holloway, Senior Vice President Account Manager
Jr.
Jane T. Howe Vice President Portfolio Manager
Mark T. Hudoff Senior Vice President Portfolio Manager
Margaret E. Isberg Managing Director Marketing
Thomas J. Kelleher Vice President Marketing
James M. Keller Senior Vice President Portfolio Manager
Raymond G. Kennedy Senior Vice President Portfolio Manager
Mark R. Kiesel Vice President Portfolio Manager
Sharon K. Kilmer Executive Vice President Portfolio Manager
Steven P. Kirkbaumer Vice President Marketing
John S. Loftus Executive Vice President Account Manager
David C. Lown Vice President Account Manager
Andre J. Mallegol Vice President Marketing
Michael E. Martini Vice President Portfolio Manager
Scott A. Mather Senior Vice President Portfolio Manager
Benjamin L. Mayer Vice President Portfolio Manager
Joseph McDevitt Executive Vice President Account Manager
Dean S. Meiling Managing Director Account Manager
Jonathan D. Moll Vice President Account Manager
Kristen S. Monson Senior Vice President Account Manager
James F. Muzzy Managing Director Account Manager
Doris S. Nakamura Vice President Portfolio Manager
Douglas J. Ongaro Vice President Marketing
Thomas J. Otterbein Senior Vice President Account Manager
Victoria M. Paradis Vice President Marketing
Elizabeth M. Philipp Vice President Account Manager
David J. Pittman Vice President Marketing
William F. Podlich, Managing Director Executive Office
III
William C. Powers Managing Director Portfolio Manager
Terry A. Randall Vice President Operations
Scott L. Roney Senior Vice President Account Manager
</TABLE>

B-18
<PAGE> 162

<TABLE>
<CAPTION>
NAME POSITION WITH PIMCO PRINCIPAL OCCUPATION
---- ------------------- --------------------
<S> <C> <C>
Michael J. Rosborough Senior Vice President Portfolio Manager
Seth R. Ruthen Vice President Account Manager
Jeffrey M. Sargent Vice President Shareholder Services
Ernest L. Schmider Executive Vice President, Legal
Chief Administrative and
Legal Officer
Leland T. Scholey Senior Vice President Marketing
Richard W. Selby Senior Vice President Systems
Denise C. Seliga Vice President Compliance Officer
Rita J. Seymour Vice President Account Manager
Christopher Sullivan Vice President Account Manager
Cheryl L. Sylvester Vice President Account Manager
Lee R. Thomas Managing Director Portfolio Manager
William S. Thompson Chief Executive Officer Executive Office
and Managing Director
Benjamin L. Trosky Managing Director Portfolio Manager
Richard E. Tyson Vice President Operations
Peter A. Van de Zilver Vice President Portfolio Manager
Koichi Watanabe Vice President Account Manager
Marilyn K. Wegener Vice President Operations
Paul C. Westhead Vice President Account Manager
George W. Wood Executive Vice President Account Manager
Michael A. Yetter Senior Vice President Financial Engineer
David Young Vice President Account Manager
</TABLE>

B-19
<PAGE> 163

STATE STREET GLOBAL ADVISORS

The principal executive officers and directors of the State Street Global
Advisors division of State Street Bank and Trust Company ("State Street") and
their principal occupations are shown below. The business address of each
officer and director is 225 Franklin Street, Boston, MA 02110.

<TABLE>
<CAPTION>
POSITION WITH
NAME STATE STREET PRINCIPAL OCCUPATION
- ---- ------------- --------------------
<S> <C> <C>
Michael N. Carter Chairman and Chief Chairman and Chief
Executive Officer Executive Officer.
David A. Spina President and Chief President and Chief
Operating Officer Operating Officer.
Tenley E. Albright, M.D. Executive Director Chairman, Western
Resources, Inc.
I. MacAllister Booth Executive Director Retired Chairman,
President and Chief
Executive Officer,
Polaroid Corporation.
Truman S. Casner Executive Director Partner, Ropes & Gray.
Nader F. Darehshori Executive Director Chairman, President and
Chief Executive Officer,
Houghton Mifflin
Company.
Arthur L. Goldstein Executive Director Chairman and Chief
Executive Officer,
Ionics Incorporated.
David P. Gruber Executive Director Chairman and Chief
Executive Officer,
Wyman-Gordon Company.
Charles F. Kaye Executive Director Chairman, Transportation
Investments,
Incorporated.
John M. Kucharski Executive Director Chairman and Chief
Executive Officer, EG&G,
Inc.
Charles R. LaMantia Executive Director President and Chief
Executive Officer,
Arthur D. Little, Inc.
David B. Perini Executive Director Chairman, Perini
Corporation.
Dennis J. Picard Executive Director Chairman and Chief
Executive Officer,
Ratheon Company.
Robert E. Weissman Executive Director Chairman and Chief
Executive Officer,
Cognizant Corporation.
</TABLE>

B-20
<PAGE> 164

WELLINGTON MANAGEMENT COMPANY, LLP

The managing partners of Wellington Management Company, LLP ("Wellington
Management") and their principal occupations are shown below. The business
address of each such person is 75 State Street, Boston, MA 02109.

<TABLE>
<CAPTION>
POSITION WITH
NAME WELLINGTON MANAGEMENT PRINCIPAL OCCUPATION
- ---- --------------------- --------------------
<S> <C> <C>
Robert W. Doran Chairman Chairman
John R. Ryan Senior Vice President Senior Vice
President
Duncan M. McFarland President and Chief President and Chief
Executive Officer Executive Officer
</TABLE>

The general partners of Wellington Management and their principal
occupations are shown below. The business address of each such person is 75
State Street, Boston, MA 02109.

<TABLE>
<CAPTION>
POSITION WITH
NAME WELLINGTON MANAGEMENT PRINCIPAL OCCUPATION
- ---- --------------------- --------------------
<S> <C> <C>
Kenneth L. Abrams Senior Vice President Senior Vice
President
Nicholas C. Adams Senior Vice President Senior Vice
President
Rand L. Alexander Senior Vice President Senior Vice
President
Deborah L. Allinson Senior Vice President Senior Vice
President
James H. Averill Senior Vice President Senior Vice
President
Karl E. Bandtel Senior Vice President Senior Vice
President
Marie-Claude Bernal Senior Vice President Senior Vice
President
William N. Booth Senior Vice President Senior Vice
President
Paul Braverman Senior Vice President Senior Vice
President
Robert A. Bruno Senior Vice President Senior Vice
President
Maryann E. Carroll Senior Vice President Senior Vice
President
Pamela Dippell Senior Vice President Senior Vice
President
Robert W. Doran Senior Vice President Senior Vice
President
Charles T. Freeman Senior Vice President Senior Vice
President
Laurie A. Gabriel Senior Vice President Senior Vice
President
Frank J. Gilday Senior Vice President Senior Vice
President
John H. Gooch Senior Vice President Senior Vice
President
Nicholas P. Greville Senior Vice President Senior Vice
President
Paul Hamel Senior Vice President Senior Vice
President
William C. S. Hicks Senior Vice President Senior Vice
President
Lucius T. Hill, III Senior Vice President Senior Vice
President
Paul D. Kaplan Senior Vice President Senior Vice
President
John C. Keogh Senior Vice President Senior Vice
President
George C. Lodge, Jr. Senior Vice President Senior Vice
President
Nancy T. Lukitsh Senior Vice President Senior Vice
President
</TABLE>

B-21
<PAGE> 165

<TABLE>
<CAPTION>
POSITION WITH
NAME WELLINGTON MANAGEMENT PRINCIPAL OCCUPATION
- ---- --------------------- --------------------
<S> <C> <C>
Mark T. Lynch Senior Vice President Senior Vice
President
Christine S. Manfredi Senior Vice President Senior Vice
President
Patrick J. McCloskey Senior Vice President Senior Vice
President
Earl E. McEvoy Senior Vice President Senior Vice
President
Duncan M. McFarland Senior Vice President Senior Vice
President
Paul M. Mecray III Senior Vice President Senior Vice
President
Matthew E. Megargel Senior Vice President Senior Vice
President
James N. Mordy Senior Vice President Senior Vice
President
Diane C. Nordin Senior Vice President Senior Vice
President
Stephen T. O'Brien Senior Vice President Senior Vice
President
Edward P. Owens Senior Vice President Senior Vice
President
Saul J. Pannell Senior Vice President Senior Vice
President
Thomas L. Pappas Senior Vice President Senior Vice
President
Jonathan M. Payson Senior Vice President Senior Vice
President
Stephen M. Pazuk Senior Vice President Senior Vice
President
Robert D. Rands Senior Vice President Senior Vice
President
Eugene E. Record, Jr. Senior Vice President Senior Vice
President
James A. Rullo Senior Vice President Senior Vice
President
John R. Ryan Senior Vice President Senior Vice
President
Joseph H. Schwartz Senior Vice President Senior Vice
President
Theodore Shasta Senior Vice President Senior Vice
President
Binkley C. Shorts Senior Vice President Senior Vice
President
Trond Skramstad Senior Vice President Senior Vice
President
Catherine A. Smith Senior Vice President Senior Vice
President
Stephen A. Soderberg Senior Vice President Senior Vice
President
Brendan J. Swords Senior Vice President Senior Vice
President
Harriett Tee Taggart Senior Vice President Senior Vice
President
Perry M. Traquina Senior Vice President Senior Vice
President
Gene R. Tremblay Senior Vice President Senior Vice
President
Michael A. Tyler Senior Vice President Senior Vice
President
Mary Ann Tynan Senior Vice President Senior Vice
President
Clare Villari Senior Vice President Senior Vice
President
Ernst H. von Metzsch Senior Vice President Senior Vice
President
James L. Walters Senior Vice President Senior Vice
President
Kim Williams Senior Vice President Senior Vice
President
Francis V. Wisneski Senior Vice President Senior Vice
President
</TABLE>

B-22
<PAGE> 166

T. ROWE PRICE ASSOCIATES, INC.

The principal executive officers and directors of T. Rowe Price Associates,
Inc. ("T. Rowe Price") and their principal occupations are shown below. The
business address of each officer or director is noted below.

<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME T. ROWE PRICE AND BUSINESS ADDRESS
---- ------------- --------------------
<S> <C> <C>
George A. Roche Chief Executive Officer Chairman of the Board,
100 East Pratt Street President and Managing
Baltimore, MD 21202 Director of T. Rowe
Price; Chairman of the
Board of TRP Finance,
Inc.; Director of
Price-Fleming, T. Rowe
Price Retirement Plan
Services, Inc., and T.
Rowe Price Strategic
Partners, Inc.; and
Director and Vice
President of T. Rowe
Price Threshold Fund
Associates, Inc., TRP
Suburban Second, Inc.,
and TRP Suburban, Inc.
James E. Halbkat, Jr. Director President of U.S.
P.O. Box 23109 Monitor Corporation, a
Hilton Head Island, SC provider of public
29925 response systems.
Richard L. Menschel Director Limited Partner of The
85 Broad Street, Goldman Sachs Group,
2nd Floor L.P., an investment
New York, NY 10004 banking firm.
Robert L. Strickland Director Retired Chairman of
2000 W. First Street, Lowe's Companies, Inc.,
Suite 604 a retailer of specialty
Winston-Salem, NC home supplies, as of
27104 January 31, 1998 and
continues to serve as a
Director; and Director
of Hannaford Bros.,
Co., a food retailer.
Philip C. Walsh Director Retired mining industry
Pleasant Valley executive.
Peapack, NJ 07977
Anne Marie Whittemore Director Partner of the law firm
One James Center of McGuire, Woods,
Richmond, VA 23219 Battle & Boothe L.L.P;
and Director of Owens &
Minor, Inc., Fort James
Corporation, and
Albemarle Corporation.
</TABLE>

B-23
<PAGE> 167

<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME T. ROWE PRICE AND BUSINESS ADDRESS
---- ------------- --------------------
<S> <C> <C>
Henry H. Hopkins Director Managing Director of T.
One James Center Rowe Price; Director of
Richmond, VA T. Rowe Price Insurance
23219 Agency, Inc.; Vice
President and Director
of T. Rowe Price
(Canada), Inc., T. Rowe
Price Investment
Services, Inc., T. Rowe
Price Services, Inc.,
T. Rowe Price Threshold
Fund Associates, Inc.,
T. Rowe Price Trust
Company, TRP
Distribution, Inc., and
TRPH Corporation;
Director of T. Rowe
Price Insurance Agency,
Inc.; Vice President of
Price-Fleming, T. Rowe
Price Real Estate
Group, Inc., T. Rowe
Price Retirement Plan
Services, Inc., T. Rowe
Price Stable Asset
Management, Inc., and
T. Rowe Price Strategic
Partners Associates,
Inc.
James A. C. Kennedy III Director Managing Director of T.
100 East Pratt Street Rowe Price; President
Baltimore, MD 21202 and Director of T. Rowe
Price Strategic
Partners Associates,
Inc.; Director and Vice
President of T. Rowe
Price Threshold Fund
Associates, Inc.
John H. LaPorte, Jr. Director Managing Director of T.
100 East Pratt Street Rowe Price.
Baltimore, MD 21202
William T. Reynolds Director Managing Director of T.
100 East Pratt Street Rowe Price; Chairman of
Baltimore, MD 21202 the Board of T. Rowe
Price Stable Asset
Management, Inc.;
Director of TRP
Finance, Inc.
</TABLE>

B-24
<PAGE> 168

<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME T. ROWE PRICE AND BUSINESS ADDRESS
---- ------------- --------------------
<S> <C> <C>
James S. Riepe Director Vice-Chairman of the
100 East Pratt Street Board and Managing
Baltimore, MD 21202 Director of T. Rowe
Price; Chairman of the
Board and President of
T. Rowe Price Trust
Company; Chairman of
the Board of T. Rowe
Price (Canada), Inc.,
T. Rowe Price
Investment Services,
Inc., T. Rowe Price
Investment
Technologies, Inc., T.
Rowe Price Retirement
Plan Services, Inc.,
and T. Rowe Price
Services, Inc.;
Director of
Price-Fleming, T. Rowe
Price Insurance Agency,
Inc., and TRPH
Corporation; Director
and President of TRP
Distribution, Inc., TRP
Suburban Second, Inc.,
and TRP Suburban, Inc.;
and Director and Vice
President of T. Rowe
Price Stable Asset
Management, Inc.
Brian C. Rogers Director Managing Director of T.
100 East Pratt Street Rowe Price; Vice
Baltimore, MD 21202 President of T. Rowe
Price Trust Company.
M. David Testa Director Vice-Chairman of the
100 East Pratt Street Board, Chief Investment
Baltimore, MD 21202 Officer, and Managing
Director of T. Rowe
Price; Chairman of the
Board of Price-Fleming;
President and Director
of T. Rowe Price
(Canada), Inc.;
Director and Vice
President of T. Rowe
Price Trust Company;
and Director of TRPH
Corporation.
</TABLE>

B-25
<PAGE> 169

<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME T. ROWE PRICE AND BUSINESS ADDRESS
---- ------------- --------------------
<S> <C> <C>
Edward C. Bernard Executive Officer Managing Director of T.
100 East Pratt Street Rowe Price; Director
Baltimore, MD 21202 and President of T.
Rowe Price Insurance
Agency, Inc. and T.
Rowe Price Investment
Services, Inc.;
Director of T. Rowe
Price Services, Inc.;
Vice President of TRP
Distribution, Inc.
Michael A. Goff Executive Officer Managing Director of T.
100 East Pratt Street Rowe Price; Director
Baltimore, MD 21202. and President of T.
Rowe Price Investment
Technologies, Inc.
Charles E. Vieth Executive Officer Managing Director of T.
100 East Pratt Street Rowe Price; Director
Baltimore, MD 21202 and President of T.
Rowe Price Retirement
Plan Services, Inc.;
Director and Vice
President of T. Rowe
Price Investment
Services, Inc. and T.
Rowe Price Services,
Inc.; Vice President of
T. Rowe Price (Canada),
Inc., T. Rowe Price
Trust Company, and TRP
Distribution, Inc.
</TABLE>

B-26
<PAGE> 170

<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME T. ROWE PRICE AND BUSINESS ADDRESS
---- ------------- --------------------
<S> <C> <C>
Alvin M. Younger, Jr. Executive Officer Chief Financial
100 East Pratt Street Officer, Managing
Baltimore, MD 21202 Director, Secretary,
and Treasurer of T.
Rowe Price; Director,
Vice President,
Treasurer, and
Secretary of TRP
Suburban Second, Inc.
and TRP Suburban, Inc.;
Director of TRP
Finance, Inc.;
Secretary and Treasurer
for Price-Fleming, T.
Rowe Price (Canada),
Inc., T. Rowe Price
Insurance Agency, Inc.,
T. Rowe Price
Investment Services,
Inc., T. Rowe Price
Real Estate Group,
Inc., T. Rowe Price
Retirement Plan
Services, Inc., T. Rowe
Price Services, Inc.,
T. Rowe Price Stable
Asset Management, Inc.,
T. Rowe Price Strategic
Partners Associates,
Inc., T. Rowe Price
Threshold Fund
Associates, Inc., T.
Rowe Price Trust
Company, TRP
Distribution, Inc., and
TRPH Corporation;
Treasurer and Clerk of
T. Rowe Price Insurance
Agency of
Massachusetts, Inc.
</TABLE>

B-27
<PAGE> 171

[THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NORTH AMERICA]
[THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NEW YORK]
[THE MANUFACTURERS LIFE INSURANCE COMPANY
OF AMERICA]

VOTING INSTRUCTIONS FORM

VOTING PURSUANT TO THESE INSTRUCTIONS
WILL BE AS SPECIFIED.

IF NO SPECIFICATION IS MADE AS TO AN ITEM, VOTING WILL BE FOR SUCH ITEM. A
SEPARATE VOTING INSTRUCTION FORM IS PROVIDED FOR EACH MANUFACTURERS INVESTMENT
TRUST PORTFOLIO IN WHICH YOUR CONTRACT VALUES WERE INVESTED AS OF FEBRUARY 28,
1999. PLEASE SIGN, DATE AND RETURN ALL VOTING INSTRUCTION FORMS RECEIVED IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.

VOTING INSTRUCTIONS MUST BE RECEIVED BY APRIL 26, 1999 TO BE VOTED FOR THE
MEETING TO BE HELD ON APRIL 27, 1999.

[NAME OF PORTFOLIO]

THESE VOTING INSTRUCTIONS ARE SOLICITED BY [THE MANUFACTURERS LIFE
INSURANCE COMPANY OF NORTH AMERICA] [THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NEW YORK] [THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA] IN
CONNECTION WITH A SOLICITATION OF PROXIES BY THE BOARD OF TRUSTEES OF
MANUFACTURERS INVESTMENT TRUST.

The undersigned hereby instructs [The Manufacturers Life Insurance Company of
North America] [The Manufacturers Life Insurance Company of New York] [The
Manufacturers Life Insurance Company America] to vote the shares of
Manufacturers Investment Trust (the "Trust") attributable to his or her
contract at the Special Meeting of Shareholders to be held at 73 Tremont
Street, Boston, Massachusetts 02108 at 10:00 a.m., April 27, 1999, and any
adjournments thereof, as indicated below.

Date:
- ---------------------------
<PAGE> 172

PLEASE SIGN IN BOX BELOW

If a contract is held jointly, each contract owner should sign. If only one
signs, his or her signature will be binding. If the contract owner is a
corporation, the President or a Vice President should sign in his or her own
name, indicating title. If the contract owner is a partnership, a partner should
sign in his or her own name, including that he or she is a "Partner." If the
contract owner is a trust, the trustee should sign in his or her own name,
indicating that he or she is a "Trustee."

------------------------------------------------------
Signature(s), Title(s), if applicable
<PAGE> 173

- --------------------------------------------------------------------------------

THIS INSTRUCTION CARD, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE CONTRACT OWNER. IF NO DIRECTION IS MADE, THIS VOTING
INSTRUCTION CARD WILL BE VOTED FOR ALL PROPOSALS RELATED TO YOUR PORTFOLIO.
PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE PROPOSALS.

VOTE ONLY FOR THE PROPOSALS WHICH APPLY TO YOUR PORTFOLIO

PLEASE MARK YOUR VOTING INSTRUCTION FORM, DATE AND
SIGN IT ON THE REVERSE SIDE, AND RETURN IT PROMPTLY
IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
INDICATE YOUR VOTE BELOW BY FILLING IN THE APPROPRIATE BOXES

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. ALL PORTFOLIOS. Approval of an Amended and Restated
Advisory Agreement between the Trust, on behalf of
the Portfolio, and Manulife Securities. [ ] [ ] [ ]
1A. MODERATE ASSET ALLOCATION TRUST ONLY. Approval
of an increase in the advisory fee. [ ] [ ] [ ]
1B. EQUITY TRUST ONLY. Approval of an increase in the
advisory fee. [ ] [ ] [ ]
1C. AGGRESSIVE ASSET ALLOCATION TRUST ONLY.
Approval of an increase in the advisory fee. [ ] [ ] [ ]
1D. EQUITY INCOME TRUST ONLY. Approval of an
increase in the advisory fee. [ ] [ ] [ ]
2. CONSERVATIVE ASSET ALLOCATION TRUST ONLY. Approval
of a change to the investment objective of the
Conservative Asset Allocation Trust. [ ] [ ] [ ]
3. MODERATE ASSET ALLOCATION TRUST ONLY. Approval of
a change to the investment objective of the
Moderate Asset Allocation Trust. [ ] [ ] [ ]
4. AGGRESSIVE ASSET ALLOCATION TRUST ONLY. Approval
of a change to the investment objective of the
Aggressive Asset Allocation Trust. [ ] [ ] [ ]
5. EMERGING SMALL COMPANY TRUST ONLY. Approval of a
change to the investment objective of the
Emerging Small Company Trust. [ ] [ ] [ ]
6. PILGRIM BAXTER GROWTH TRUST ONLY. Approval of a
change to the investment objective of the
Pilgrim Baxter Growth Trust. [ ] [ ] [ ]
7. INTERNATIONAL GROWTH AND INCOME TRUST ONLY. Approval
of a change to the investment objective of the
International Growth and Income Trust. [ ] [ ] [ ]
8. GLOBAL GOVERNMENT BOND TRUST ONLY. Approval of
a change to the investment objective of the
Global Government Bond Trust. [ ] [ ] [ ]
9. ALL PORTFOLIOS. Ratification of the selection of
PricewaterhouseCoopers LLP as the independent
accountants for the Trust for its fiscal year
ending December 31, 1999. [ ] [ ] [ ]
10. To transact such other business as may properly come
before the Meeting. [ ] [ ] [ ]
</TABLE>

- --------------------------------------------------------------------------------