<PAGE> 1
Registration No. 2-94157/811-4146
As filed with the Securities and Exchange Commission on March 1, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM N-1A
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 41
and
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 42
-------------------------
MANUFACTURERS INVESTMENT TRUST
(formerly NASL Series Trust)
(Exact Name of Registrant as Specified in Charter)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of Principal Executive Offices)
-------------------------
James D. Gallagher, Esq.
General Counsel
The Manufacturers Life Insurance Company of North America
73 Tremont Street
Boston, Massachusetts 02108
(Name and Address of Agent for Service)
Copies to:
J. Sumner Jones, Esq.
Jones & Blouch L.L.P.
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007
-------------------------
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b)
___ on May 1, 1999 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on (date) pursuant to paragraph (a)(1)
_X_ 75 days after filing pursuant to paragraph (a)(2)
___ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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PART A
PROSPECTUS
<PAGE> 3
MANUFACTURERS INVESTMENT TRUST
116 Huntington Avenue, Boston, Massachusetts 02116
Manufacturers Investment Trust is an open-end management investment
company, commonly known as a mutual fund which is sold without a sales charge.
Shares of the Trust are not offered directly to the public but are sold only to
insurance companies and their separate accounts as the underlying investment
medium for variable contracts. Manufacturers Investment Trust provides a range
of investment objectives through thirty-nine separate investment portfolios. The
names of those portfolios are as follows:
PACIFIC RIM EMERGING MARKETS TRUST
SCIENCE & TECHNOLOGY TRUST
INTERNATIONAL SMALL CAP TRUST
AGGRESSIVE GROWTH TRUST
EMERGING SMALL COMPANY TRUST
SMALL COMPANY BLEND TRUST
MID CAP GROWTH TRUST
MID CAP STOCK TRUST
OVERSEAS TRUST
INTERNATIONAL STOCK TRUST
INTERNATIONAL VALUE TRUST
MID CAP BLEND TRUST
SMALL COMPANY VALUE TRUST
GLOBAL EQUITY TRUST
GROWTH TRUST
LARGE CAP GROWTH TRUST
QUANTITATIVE EQUITY TRUST
BLUE CHIP GROWTH TRUST
REAL ESTATE SECURITIES TRUST
VALUE TRUST
EQUITY INDEX TRUST
GROWTH AND INCOME TRUST
U.S. LARGE CAP VALUE TRUST
EQUITY-INCOME TRUST
INCOME & VALUE TRUST
BALANCED TRUST
HIGH YIELD TRUST
STRATEGIC BOND TRUST
GLOBAL BOND TRUST
TOTAL RETURN TRUST
INVESTMENT QUALITY BOND TRUST
DIVERSIFIED 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
LIFESTYLE CONSERVATIVE 280 TRUST
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO PERSON, INCLUDING ANY DEALER OR SALESPERSON, HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, UNLESS THE INFORMATION OR
REPRESENTATION IS SET FORTH IN THIS PROSPECTUS. IF ANY SUCH INFORMATION OR
REPRESENTATION IS GIVEN, IT SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY MANUFACTURERS INVESTMENT TRUST, THE ADVISER OR ANY SUBADVISERS TO THE TRUST
OR THE PRINCIPAL UNDERWRITER OF THE CONTRACTS. THIS PROSPECTUS IS NOT AN OFFER
TO SELL SHARES OF THE TRUST IN ANY STATE WHERE SUCH OFFER OR SALE WOULD BE
PROHIBITED.
The date of this Prospectus is May 1, 1999.
<PAGE> 4
MANUFACTURERS INVESTMENT TRUST
TABLE OF CONTENTS
RISK/RETURN SUMMARY.............................................................
Investment Objective, Policies and Risks for each Portfolio..............
Risks of Investing in Certain Types of Securities........................
Bar Chart and Performance Tables.........................................
INVESTMENT OBJECTIVES AND POLICIES..............................................
Pacific Rim Emerging Markets Trust.......................................
Science & Technology Trust...............................................
International Small Cap Trust............................................
Aggressive Growth Trust..................................................
Emerging Small Company Trust.............................................
Small Company Blend Trust................................................
Mid Cap Growth Trust.....................................................
Mid Cap Stock Trust......................................................
Overseas Trust...........................................................
International Stock Trust................................................
International Value Trust................................................
Mid Cap Blend Trust......................................................
Small Company Value Trust................................................
Global Equity Trust......................................................
Growth Trust.............................................................
Large Cap Growth Trust...................................................
Quantitative Equity Trust ...............................................
Blue Chip Growth Trust ..................................................
Real Estate Securities Trust.............................................
Value Trust..............................................................
Equity Index Trust.......................................................
Growth and Income Trust .................................................
U.S. Large Cap Value Trust...............................................
Equity-Income Trust .....................................................
Income & Value Trust.....................................................
Balanced Trust...........................................................
High Yield Trust.........................................................
Strategic Bond Trust.....................................................
Global Bond Trust........................................................
Total Return Trust.......................................................
Investment Quality Bond Trust............................................
Diversified Bond Trust...................................................
U.S. Government Securities Trust.........................................
Money Market Trust.......................................................
The Lifestyle Trusts.....................................................
ADDITIONAL INVESTMENT POLICIES AND OTHER RISKS OF INVESTING.....................
Additional Investment Policies...........................................
Hedging and Other Strategic Transactions.................................
Other Risks of Investing.................................................
MANAGEMENT OF THE TRUST.........................................................
Advisory Arrangements....................................................
Subadvisory Arrangements.................................................
Subadvisory Fees.........................................................
Portfolio Turnover.......................................................
GENERAL INFORMATION.............................................................
Taxes....................................................................
Dividends................................................................
Purchase and Redemption of Shares........................................
Year 2000 Issues.........................................................
FINANCIAL HIGHLIGHTS............................................................
<PAGE> 5
RISK/RETURN SUMMARY
Manufacturers Investment Trust is a series trust, which means that it
has a number of portfolios, each with a stated investment objective and separate
investment policies. Currently, there are thirty-nine such portfolios. The
investment objectives, principal investment strategies and principal risks of
investing in each portfolio are set forth below. In addition, performance
information for each portfolio is included with each portfolio description. An
investment in any of the portfolios is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
RISKS OF INVESTING IN EACH PORTFOLIO
The risks of investing in each portfolio are described below. If these risks
materialize, an investor could lose money in the portfolio. Since many of the
thirty-six portfolios described below have similar investment policies or invest
in similar types of securities, the risks of investing in the following types of
securities are described below at the end of the Risk/Return section under
"Risks of Investing in Certain Types of Securities."
Equity Securities
Fixed-Income Securities
Investment Grade Fixed-Income Securities in the Lowest Rating Category
Lower Rated Fixed-Income Securities
Small and Medium-Sized Companies
Foreign Securities
The definition of a non-diversified portfolio and the risks associated with such
a portfolio are also contained in this section.
There can be no assurance that a portfolio will achieve its investment
objective.
PERFORMANCE INFORMATION FOR EACH PORTFOLIO
Each portfolio description contains a bar chart and a performance
table.
Bar Chart. The bar chart shows changes in the performance of each
portfolio from year to year over a ten year period. Portfolios with less than
ten years of performance history show performance from the inception date of the
portfolio.
Performance Table. The table compares each portfolio's one, five and
ten year average annual returns as of December 31, 1998 to those of a broad
market index. If the period since inception of the portfolio is less than one
year, the performance will be aggregate total return rather than an average
annual total return.
Performance information in the Bar Chart and the Performance Table reflect all
fees charged to each portfolio such as advisory fees and all portfolio expenses.
None of the portfolios charge a sales load or a surrender fee.
The bar chart and table shown below provide some indication of the risks of
investing in each portfolio of the Trust. A portfolio's past performance does
not necessarily indicate how the portfolio will perform in the future.
* * * *
PACIFIC RIM EMERGING MARKETS TRUST
Investment Objective. The investment objective of the Pacific Rim Emerging
Markets Trust is to achieve long-term growth of capital.
Investment Policies. Manufacturers Adviser Corporation ("MAC"), the subadviser
to the portfolio, seeks to achieve this investment objective by investing the
portfolio's assets primarily in common stocks and equity-
5
<PAGE> 6
related securities of companies in countries located in the Pacific Rim region.
The countries of the Pacific Rim region are:
- Australia - Hong Kong - Pakistan - Taiwan
- China - Japan - Philippines - Thailand
- India - Malaysia - Singapore
- Indonesia - New Zealand - South Korea
The Pacific Rim Emerging Markets Trust, under normal conditions,
invests at least 65% of its net assets in common stocks and equity-related
securities of established, larger-capitalization non-U.S. companies located in
the Pacific Rim region that have attractive long-term prospects for growth of
capital.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in equity securities and the portfolio may
invest up to 100% of its assets in foreign securities including securities
of companies in emerging market countries. The risks of investing in equity
securities and foreign securities are set forth below under "Risks of
Investing in Certain Types of Securities."
- - Since the portfolio concentrates its investments in the Pacific Rim region,
the portfolio will be affected by economic and political events in this
area.
Performance
[BAR CHART]
1995 1996 1997 1998
11.5% 9.8% -34.1% -4.6%
During the time period shown in the bar chart, the highest quarterly return was
24.41% (for the quarter ended 12/31/98) and the lowest return was -34.12% (for
the quarter ended 12/31/97).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets# -4.61% N/A -7.22% 10/04/94
Blended Financial Times -3.03% N/A -6.19%
Actuaries Index +*
Financial Times Actuaries -6.11% N/A -5.85%
Pacific ex Japan Index
Financial Times Actuaries 6.32% N/A -9.69%
Japan Index
MSCI Pacific Index ++ 2.69% N/A -7.89%
- -----------------------------------------------------------------------------------------------------
</TABLE>
# On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for each of these portfolios is based upon the
performance of the respective predecessor Manulife Series Fund, Inc.
portfolio for periods prior to December 31, 1996.
+ Comprised of 80% Pacific ex Japan and 20% Japan
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
++ The MSCI Pacific Index was added to more accurately reflect the investment
objective of the Pacific Rim Fund.
6
<PAGE> 7
SCIENCE & TECHNOLOGY TRUST
Investment Objective. The investment objective of the Science & Technology Trust
is long-term growth of capital. Current income is incidental to the portfolio's
objective.
Investment Policies. T. Rowe Price Associates, Inc. ("T. Rowe Price"), the
subadviser to the portfolio, seeks to achieve this objective by investing at
least 65% of the portfolio's total assets in the common stocks of companies
expected to benefit from the development, advancement, and use of science and
technology.
Principal Risks of Investing in this Portfolio
- - The products and services of companies in the science and technology
sectors may not prove commercially successful or may become obsolete
quickly. Therefore, a portfolio of these securities may be riskier or more
volatile in price than one that invests in more market sectors.
- - The portfolio invests primarily in equity securities, including securities
of small or unseasoned companies (less than 3 years operating experience).
The risks of investing in equity securities and small or unseasoned
companies are set forth below under "Risks of Investing in Certain Types of
Securities."
- - The portfolio may invest up to 30% of its assets in foreign securities
which increases the risk of investing in the portfolio as described below
under "Risk of Investing in Certain Types of Securities."
Performance
[BAR CHART]
1997 1998
10.7% 43.3%
During the time period shown in the bar chart, the highest quarterly return was
47.10% (for the quarter ended 12/31/98) and the lowest return was -16.91% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Science & Technology 43.32% N/A 26.04% 1/01/97
Lipper Science & Tech Index* 46.95% N/A 25.88%
- ------------------------------------------------------------------------------------------------------
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
7
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INTERNATIONAL SMALL CAP TRUST
Investment Objective. The investment objective of the International Small Cap
Trust is to seek long-term capital appreciation.
Investment Policies. Founders Asset Management LLC ("Founders"), the subadviser
to the portfolio, seeks to achieve this objective by investing the portfolio's
assets primarily in the common stocks of foreign companies which have a market
value or annual revenues of $1 billion or less. These foreign companies may be
located in both developed and lesser developed countries. The International
Small Cap Trust may also invest in fixed-income securities if Founders believes
they may increase in value.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in foreign equity securities, especially
securities of small companies. The risks of investing in foreign
securities, equity securities and small companies are set forth below under
"Risks of Investing in Certain Types of Securities."
- - Because the portfolio invests primarily in foreign securities, which are
generally riskier investments than U.S. securities, investing in this
portfolio is riskier than investing in a portfolio that invests primarily
in U.S. small companies.
Performance
[BAR CHART]
1997 1998
0.8% 11.9%
During the time period shown in the bar chart, the highest quarterly return
was 13.44% (for the quarter ended 12/31/98) and the lowest return was -18.90%
(for the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
International Small Cap 11.86% N/A 7.65% 3/04/96
MSCI World ex US Index* 8.98% N/A 6.64%
MSCI Small Cap World ex US Index+ 4.31% N/A -7.52%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
+ The MSCI Small Cap World ex US Index was added to more accurately reflect the
investment objective of the International Small Cap Fund.
8
<PAGE> 9
AGGRESSIVE GROWTH TRUST
(formerly, the Pilgrim Baxter Growth Trust)
Investment Objective
The investment objective of the Aggressive Growth Trust is to seek
long-term capital appreciation.
Investment Policies
A I M Capital Management, Inc. (also referred to as "A I M Capital"),
the subadviser to the portfolio, seeks to achieve this investment objective by
investing the portfolio's assets principally in common stocks, convertible
bonds, convertible preferred stocks and warrants of companies which in the
opinion of A I M Capital 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. The Aggressive Growth Trust's strategy does not preclude
investment in large, seasoned companies which in the judgment of A I M Capital
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 offer exceptional value based upon
substantially above average earnings growth potential relative to market value.
The portfolio may invest up to 25% of its total assets in foreign securities.
Risks of Investing in This Portfolio
- - The portfolio invests primarily in equity securities with emphasis on
medium-sized and smaller emerging growth companies. The risks of investing
in equity securities and small and medium size companies are set forth
below under "Risks of Investing in Certain Types of Securities."
- - The portfolio may invest up to 25% of its assets in foreign securities. The
risks of investing in foreign securities are set forth below under "Risks
of Investing in Certain Types of Securities." Since the portfolio will only
invest at most 25% of its assets in foreign securities, the risks
associated with foreign securities will not affect the portfolio as much as
a portfolio that invests more of its assets in foreign securities.
Performance*
[BAR CHART]
1997 1998
0.0% 4.3%
During the time period shown in the bar chart, the highest quarterly return was
32.25% (for the quarter ended 12/31/98) and the lowest return was -24.73% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Aggressive Growth Trust (formerly, 4.32% N/A 2.14% 1/01/97
the Pilgrim Baxter Growth Trust)
Russell 200 Growth Index+ 1.23% N/A 6.93%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
9
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* Effective May 1, 1999, the portfolio changed its subadviser and its
investment objective. Performance reflects results prior to these changes.
+ All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
EMERGING SMALL COMPANY TRUST
Investment Objective
The investment objective of the Emerging Small Company Trust is to seek
long-term growth of capital.
Investment Policies
Franklin Advisers, Inc. (also referred to as "Franklin Advisers"), the
subadviser to the portfolio, seeks to achieve the portfolio's investment
objective by investing, under normal market conditions, at least 65% of the
portfolio's total assets in common stock 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. Equity securities also include preferred stocks, securities
convertible into common stocks, and warrants for the purchase of common stocks.
The portfolio may also invest up to 35% (measure at the time of
purchase) of its assets in larger capitalization companies which Franklin
Advisers believes have strong growth potential. The portfolio may invest up to
25% of its total assets in foreign securities although the portfolio currently
intends to limit its investments in foreign securities to 10% of its total
assets. The portfolio may also invest up to 10% of its total assets in real
estate investment trusts ("REITS").
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in small cap equity securities. The risks
of investing in equity securities and the risks of investing in small cap
(small company) securities are set forth below under "Risks of Investing in
Certain Types of Securities."
Performance*
[BAR CHART]
1997 1998
17.1% 0.1%
During the time period shown in the bar chart, the highest quarterly return was
19.46% (for the quarter ended 12/31/98) and the lowest return was -21.09% (for
the quarter ended 09/30/98).
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Emerging Small Company Trust 0.07% N/A 8.80% 1/1/97
Russell 2000 Growth Index+ 1.23% N/A 6.93%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Effective May 1, 1999, the portfolio changed its subadviser and its
investment objective. Performance reflects results prior to these changes.
+ All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
SMALL COMPANY BLEND
Investment Objective
The investment objective of the Small Company Blend is to seek
long-term growth of capital and income. Generation of current dividends will be
a secondary consideration.
Investment Policies
Capital Guardian Trust Company (also referred to as "CGTC"), the
subadviser to the portfolio, seeks to achieve this investment objective by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalization
between $50 million and $1 billion at the time of purchase. In determining
market capitalization, CGTC may consider the value of shares which are publicly
traded.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in equity securities, especially securities
of small or unseasoned companies (less than 3 years operating experience).
The risks of investing in equity securities and small or unseasoned
companies are set forth below under "Risks of Investing in Certain Types of
Securities."
11
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MID CAP GROWTH TRUST
(formerly, the Small/Mid Cap Trust)
Investment Objective
The investment objective of the Mid Cap Growth Trust is to seek
long-term capital appreciation.
Investment Policies
A I M Capital Management, Inc. (also referred to as "A I M Capital"),
the subadviser to the portfolio, seeks to achieve this investment objective by
investing the portfolio's assets principally in common stocks, with emphasis on
medium-sized and smaller emerging growth companies. Any income received from
securities held by the portfolio will be incidental.
The Mid Cap Growth Trust's portfolio is primarily comprised of
securities of two basic categories of companies:
- - "core" companies, which A I M Capital considers to have experienced
above-average and consistent long-term growth in earnings and to have
excellent prospects for outstanding future growth, and
- - "earnings acceleration" companies which A I M Capital believes are
currently enjoying a dramatic increase in profits.
Constellation may also purchase the common stocks of foreign companies.
It is not anticipated, however, that foreign securities will constitute more
than 20% of the value of the portfolio.
Risks of Investing in This Portfolio
- - The portfolio invests primarily in equity securities with emphasis on
medium-sized and smaller emerging growth companies. The risks of investing
in equity securities and small and medium size companies are set forth
below under "Risks of Investing in Certain Types of Securities."
- - The portfolio may invest up to 20% of its assets in foreign securities. The
risks of investing in foreign securities are set forth below under "Risks
of Investing in Certain Types of Securities." Since the portfolio will only
invest at most 20% of its assets in foreign securities, the risks
associated with foreign securities will not affect the portfolio as much as
a portfolio that invests more of its assets in foreign securities.
Performance*
[BAR CHART]
1997 1998
15.3% 28.3%
During the time period shown in the bar chart, the highest quarterly return was
28.29% (for the quarter ended 12/31/98) and the lowest return was -16.12% (for
the quarter ended 09/30/98).
12
<PAGE> 13
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Mid Cap Growth Trust (formerly, 28.29% N/A 17.64% 3/04/96
the Small/Mid Cap Trust)
S&P MidCap 400 Index# 19.12% N/A 22.82%
Russell 2000 Growth Index 1.23% N/A 7.48%
50%/50% Composite Index+ 9.94% N/A 15.08%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Effective May 1, 1999, the portfolio changed its subadviser and its
investment objective. Performance reflects results prior to these changes.
# All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
+ Comprised of 50% of the return of the S&P MidCap 400 Index and 50% of the
return of the Russell Growth Index.
MID CAP STOCK TRUST
Investment Objective
The investment objective of the Mid Cap Stock Trust is to seek
long-term growth of capital.
Investment Policies
Wellington Management Company (also referred to as "Wellington
Management"), the subadviser to the portfolio, seeks to achieve the Trust's
objective by investing the portfolio's assets primarily in equity securities of
companies with market capitalizations within the range represented by of the
Wilshire Mid Cap 750 Index.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in equity securities. The risks of
investing in equity securities are set forth below under "Risks of
Investing in Certain Types of Securities."
- - To the extent that the portfolio emphasizes a mid-capitalization growth
style, the portfolio may underperform in markets that favor other styles.
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OVERSEAS TRUST
(formerly, the International Growth and Income Trust)
Investment Objective
The investment objective of the Overseas Trust is to seek growth of
capital.
Investment Policies
Fidelity Management Trust Company (also referred to as "FMTC"), the
subadviser to the portfolio by normally invests at least 65% the portfolio's
total assets in foreign securities (including American Depositary Receipts
(ADRs) and European Depositary Receipts (EDRs)). The portfolio may also invest
in U.S. issuers. FMTC normally invests the portfolio's assets primarily in
common stocks. FMTC normally allocates investments across countries and regions
considering the size of the market in each country and region relative to the
size of the international market as a whole. FMTC uses fundamental analysis of
each issuer's financial condition and industry position and market and economic
conditions to select investments.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in foreign equity securities. The risks of
investing in equity securities and in foreign securities are set forth
below under "Risks of Investing in Certain Types of Securities."
- - The portfolio may also invest up to 35% of its assets in non-investment
grade debt securities. The risks of investing in these securities are set
forth below under "Risks of Investing in Certain Types of Securities."
Performance*
[BAR CHART]
1995 1996 1997 1998
7.0% 12.6% -0.1% 8.0%
During the time period shown in the bar chart, the highest quarterly return was
20.55% (for the quarter ended 12/31/98) and the lowest return was -20.76% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Overseas Trust (formerly, the 8.04% N/A 6.83% 1/09/95
International Growth and Income
Trust)
Customized Benchmark#+ 14.60% N/A 7.77%
85%/15% Composite Index++ 19.93% N/A 9.94%
MSCI All Country World ex-
US Index## 14.46% N/A 8.18%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Effective May 1, 1999, the portfolio changed its subadviser and its
investment objective. Performance reflects results prior to these changes.
# Comprised of 75% of the return of the MSCI EAFE Index, 15% of the return of
the Salomon Brothers Non-$
14
<PAGE> 15
WGBI 10 Index, and 10% of return of the MSCI Emerging Markets Free ex
Malaysia Index. In February of 1997, the 85%/15% Composite Index was adjusted
to reflect the addition of the MSCI Emerging Markets Free ex Malaysia Index.
This change was made to more accurately reflect the investment objective of
the International Growth and Income Fund.
+ All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
++ Comprised of 85% of the return of the MSCI EAFE Index and 15% of the return
of the Salomon Brothers Non-$ WGBI 10 Index.
## The MSCI All Country World ex-US Index was added to more accurately reflect
the investment objective of the International Growth and Income Fund.
INTERNATIONAL STOCK TRUST
Investment Objective. The investment objective of the International Stock Trust
is long-term growth of capital.
Investment Policies. Rowe Price-Fleming International, Inc. ("Price-Fleming"),
the subadviser to the portfolio, seeks to attain this objective by investing the
portfolio's assets primarily in common stocks of established, non-U.S.
companies. The portfolio may also invest up to 35% of its assets in fixed-income
securities and equity-related securities such as preferred stocks, warrants and
convertible securities. Price-Fleming expects geographic diversification will be
wide, including both developed and emerging markets.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in foreign equity securities including
securities of companies in emerging markets. This and other risks of
investing in foreign securities and equity securities are set forth below
under "Risks of Investing in Certain Types of Securities." Because the
portfolio may invest in foreign securities in emerging markets, an
investment in the portfolio will be riskier than a portfolio that only
invests in developed foreign countries.
Performance
[BAR CHART]
1997 1998
1.4% 14.9%
During the time period shown in the bar chart, the highest quarterly return was
15.38% (for the quarter ended 12/31/98) and the lowest return was -13.59% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
International Stock 14.91% N/A 8.63% 1/01/97
MSCI EAFE Index* 20.33% N/A 10.82%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
15
<PAGE> 16
INTERNATIONAL VALUE TRUST
Investment Objective
The investment objective of the International Value Trust is to seek
long-term growth of capital.
Investment Policies
Templeton Investment Counsel, Inc. (also referred to as "Templeton
Investment"), the subadviser to the portfolio, seeks to achieve this investment
objective by investing, under normal market conditions, primarily in equity
securities of companies located outside the U.S., including in emerging markets.
Equity securities generally entitle the holder to participate in a
company's general operating results. These include common stocks and preferred
stocks. The portfolio also invests in American, European and Global Depositary
Receipts, which are certificates typically issued by a bank or trust company
that give their holders the right to receive securities issued by a foreign or
domestic company. Depending upon current market conditions, the portfolio
generally invests up to 25% of its total assets in debt securities of companies
and governments located anywhere in the world. Debt securities represent an
obligation of the issuer to repay a loan of money to it, and generally provide
for the payment of interest. Debt securities include bonds, notes and
debentures.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in foreign equity securities. The risks of
investing in equity securities and in foreign securities are set forth
below under "Risks of Investing in Certain Types of Securities."
- - The portfolio may invest up to 25% of its assets in debt (fixed-income)
securities including foreign debt securities. The risks of investing in
fixed-income securities and in foreign securities is set forth below under
"Risks of Investing in Certain Types of Securities." Because the portfolio
as a 25% limit on debt securities, these risks will not affect the
portfolio to the same degree as the risks of foreign equity securities.
MID CAP BLEND TRUST
(formerly, the Equity Trust)
Investment Objective. The principal investment objective of the Mid Cap Blend
Trust is growth of capital. Although current income is a secondary objective,
growth of income may accompany growth of capital.
Investment Policies. Fidelity Management Trust Company ("FMTC"), the subadviser
to the portfolio, seeks to attain this objective by investing the portfolio's
assets primarily in common stocks of U.S. issuers or securities convertible into
or which carry the right to buy common stocks. The portfolio may also invest in
non-convertible preferred stocks and fixed-income securities. Normally, the
portfolio will not invest more than 15% of its assets in these securities.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in equity securities. The risks of
investing in equity securities are set forth below under "Risks of
Investing in Certain Types of Securities."
16
<PAGE> 17
Performance
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998
- -11.8% 17.9% 7.9% 16.3% -0.5% 42.8% 20.1% 19.2% 9.4%
</TABLE>
During the time period shown in the bar chart, the highest quarterly return was
42.79% (for the quarter ended 12/31/95) and the lowest return was -25.66% (for
the quarter ended 12/31/87).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Ten Years Date First Available
<S> <C> <C> <C> <C>
Mid Cap Blend Trust (formerly, the 9.41% 17.36% 14.02% 6/18/85
Equity Trust)
Blended Index+ 10.10% 21.11% 17.76%
S&P 500 Index 28.58% 24.06% 19.19%
- ------------------------------------ ------------- ------------- ------------------ -----------------------
</TABLE>
+ Blended Index reflects change from S&P 500 Index to the Russell MidCap Index
as primary benchmark, effective July 1997. This change was made to more
accurately reflect the investment style of the portfolio.
SMALL COMPANY VALUE TRUST
Investment Objective. The investment objective of the Small Company Value Trust
is to seek long-term growth of capital.
Investment Policies. Rosenberg Institutional Equity Management ("Rosenberg"),
the subadviser to the portfolio, seeks to obtain this objective by investing the
portfolio's assets in equity securities of small companies (with market values
of $1 billion or less) which are traded principally in the markets of the United
States.
Rosenberg utilizes several computer models to assist in the stock selection
process.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in equity securities, especially securities
of small or unseasoned companies (less than 3 years operating experience).
The risks of investing in equity securities and small or unseasoned
companies are set forth below under "Risks of Investing in Certain Types of
Securities."
- - The computer models used in the stock selection process may not identify
securities of companies that have long-term growth.
- - The portfolio may invest up to 100% of its assets in U.S. dollar
denominated foreign common stocks. The risks of investing in foreign
securities are set forth below under "Risks of Investing in Certain Types
of Securities." Since the portfolio only invests in U.S. dollar denominated
securities, it will not be subject to the risks of maintaining assets in a
foreign country described in this section.
Performance
[BAR CHART]
1998
-4.7%
17
<PAGE> 18
During the time period shown in the bar chart, the highest quarterly return was
11.80% (for the quarter ended 12/31/98) and the lowest return was -18.31% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Small Company Value -4.72% N/A -7.28% 10/01/97
Russell 2000 Index* -2.55% N/A -4.68%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Trust.
GLOBAL EQUITY TRUST
Investment Objective. The investment objective of the Global Equity Trust is
long-term capital appreciation.
Investment Policies. Morgan Stanley Asset Management Inc. ("Morgan Stanley"),
the subadviser to the portfolio, seeks to achieve this objective by investing
the portfolio's assets primarily in equity securities of issuers throughout the
world, including U.S. issuers and emerging markets.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in foreign equity securities including
securities of companies in emerging markets. Because the portfolio may
invest in foreign securities in emerging markets, an investment in the
portfolio will be riskier than an investment in a portfolio that only
invests in developed foreign countries. The risks of investing in foreign
securities and equity securities are set forth below under "Risks of
Investing in Certain Types of Securities."
Performance
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
23.8% -10.4% 12.8% -0.7% 32.9% 1.7% 7.7% 12.6% 20.8% 12.2%
</TABLE>
During the ten-year period shown in the bar chart, the highest quarterly return
was 32.89% (for the quarter ended 12/31/93) and the lowest return was -16.38%
(for the quarter ended 09/30/90).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Ten Years Date First Available
<S> <C> <C> <C> <C>
Global Equity+ 12.24% 10.84% 10.69% 3/18/88
MSCI World Index* 24.80% 16.19% 11.21%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
+ Current subadviser assignment became effective October 1, 1996.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
18
<PAGE> 19
GROWTH TRUST
Investment Objective
The investment objective of the Growth Trust is to seek long-term
growth of capital.
Investment Policies
State Street Global Advisors (also referred to as "SSgA"), the
subadviser to the portfolio, seeks to achieve this investment objective by
investing primarily in large capitalization growth securities (market
capitalizations of approximately $1 billion or greater). In selecting securities
for the portfolio, SSgA uses independent investment perspectives, such as value
and growth, to identify securities that are undervalued and have superior growth
potential. The portfolio is constructed to take advantage of those securities
with the greatest investment potential while seeking to minimize risk by
maintaining portfolio characteristic similar to the large capitalization growth
segment of the U.S. equity market, as measured by the Russell 1000 Growth Index.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in equity securities. The risks of
investing in equity securities are set forth below under "Risks of
Investing in Certain Types of Securities."
Performance*
[BAR CHART]
1997 1998
25.3% 24.0%
During the time period shown in the bar chart, the highest quarterly return was
25.35% (for the quarter ended 12/31/97) and the lowest return was -12.49% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Growth Trust 23.95% N/A 24.59% 7/15/96
S&P 500 Index 28.58% N/A 33.17%
Russell 1000 Growth+ 38.82% N/A 33.93%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Effective May 1, 1999, the portfolio changed its subadviser and its
investment objective. Performance reflects results prior to these changes.
+ The Russell 1000 Growth Index was added to more accurately reflect the
investment objective of the Growth Fund.
LARGE CAP GROWTH TRUST
(formerly, the Aggressive Automatic Asset Allocation Trust)
19
<PAGE> 20
Investment Objective
The investment objective of the Large Cap Growth Trust is to seek
long-term growth of capital.
Investment Policies
Fidelity Management Trust Company (also referred to as "FMTC"), the
subadviser to the portfolio, normally invests the portfolio's assets primarily
in common stocks. FMTC normally invests at least 65% of the portfolio's total
assets in securities of companies with large market capitalizations. FMTC
defines large market capitalization companies as those with market
capitalizations of $1 billion or more at the time of the portfolio's investment.
FMTC may invest the portfolio's assets in securities of foreign issuers in
addition to securities of domestic issuers. FMTC is not 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. FMTC uses fundamental
analysis of each issuer's financial condition and industry position and market
and economic conditions to select investments.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in equity securities. The risks of
investing in equity securities are set forth below under "Risks of
Investing in Certain Types of Securities."
- - The portfolio may invest in foreign securities. The risks of investing in
foreign securities are set forth below under "Risks of Investing in Certain
Types of Securities."
Performance*
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998
- -7.3% 23.0% 8.2% 10.3% -0.7% 22.8% 13.0% 19.1% 19.1%
</TABLE>
During the time period shown in the bar chart, the highest quarterly return was
22.96% (for the quarter ended 12/31/91) and the lowest return was -13.23% (for
the quarter ended 09/30/90).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Large Cap Growth Trust (formerly, 19.12% 14.34% 10.82% 8/03/89
the Aggressive Automatic Asset
Allocation Trust)
Wilshire 5000 Index+ 23.43% 21.79% 16.46%
MSCI EAFE Index 20.33% 9.50% 5.57%
Customized Benchmark# 17.71% 14.66% 11.88%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Effective May 1, 1999, the portfolio changed its subadviser and its
investment objective. Performance reflects results prior to these changes.
+ All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
# Customized Benchmark is comprised of 47.5% of the return of the Wilshire
5000, 20% of the MSCI
20
<PAGE> 21
EAFE Index, 15% of the return of the Lehman Brothers Aggregate Bond Index, 10%
of the return of the 90 Day T-Bill, and 7.5% of the return of the Merrill Lynch
High Yield Index.
QUANTITATIVE EQUITY TRUST
Subadviser.
Investment Objective. The investment objective of the Quantitative Equity Trust
is intermediate- and long-term growth through capital appreciation and current
income by investing the portfolio's assets in common stocks and other equity
securities of well established companies with promising prospects for providing
an above average rate of return.
Investment Policies. Manufacturers Adviser Corporation ("MAC"), the subadviser
to the portfolio, seeks to achieve this objective by investing principally in
common stocks or in securities convertible into common stock or carrying rights
or warrants to purchase common stocks or to participate in earnings.
Principal Risks of Investing in this Portfolio
- - MAC is assisted by computer models in determining a company's potential to
provide an above average rate of return. If the computer model is not
correct, the securities of the company purchased by the portfolio may not
increase in value and could even decrease in value.
- - The portfolio invests primarily in equity securities. The risks of
investing in equity securities are set forth below under "Risks of
Investing in Certain Types of Securities."
- - The portfolio may invest up to 100% of its assets in U.S. dollar
denominated foreign securities. The risks of investing in foreign
securities are set forth below under "Risks of Investing in Certain Types
of Securities." Since the portfolio only invests in U.S. dollar denominated
securities, it will not be subject to the risks of maintaining assets in a
foreign country described in this section.
Performance
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
30.7% -4.1% -30.2% 6.1% 13.4% -4.2% 29.2% 17.9% 29.8% 26.4%
</TABLE>
During the time period shown in the bar chart, the highest quarterly return was
30.66% (for the quarter ended 12/31/89) and the lowest return was -23.71% (for
the quarter ended 12/31/87).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Ten Years Date First Available
<S> <C> <C> <C> <C>
Quantitative Equity# 26.35% 19.08% 16.74% 4/30/87
S&P 500 Index* 28.58% 24.06% 19.19%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
# On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for each of these portfolios is based upon the
performance of the respective predecessor Manulife Series Fund, Inc.
portfolio for periods prior to December 31, 1996.
21
<PAGE> 22
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
BLUE CHIP GROWTH TRUST
Investment Objective. The primary investment objective of the Blue Chip Growth
Trust is to provide long-term growth of capital. Current income is a secondary
objective.
Investment Policies. T. Rowe Price Associates, Inc. ("T. Rowe Price"), the
subadviser to the portfolio, seeks to achieve this objective by investing at
least 65% of the portfolio's total assets in the common stocks of large and
medium-sized blue chip companies as defined by T. Rowe Price. These are firms
that in T. Rowe Price's view, are well-established in their industries and have
the potential for above-average earnings growth. T. Rowe Price considers blue
chip companies to include companies which have (i) a leading market position,
(ii) a seasoned management team and (iii) strong financial fundamentals. Most of
the portfolio's assets will be invested in U.S. common stocks. However, the
portfolio may also purchase other types of securities such as foreign
securities, convertible stocks and bonds and warrants if consistent with the
portfolio's investment objective.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in equity securities and to a limited
extent in fixed-income securities. The risks of investing in equity
securities and fixed-income securities are set forth below under "Risks of
Investing in Certain Types of Securities." Since the portfolio will only
invest a limited extent in fixed-income securities, the risks associated
with fixed-income securities will not affect the portfolio as much as a
portfolio that invests more of its assets in fixed-income securities.
- - During periods when growth stocks are not in favor with other investors,
the portfolio may not perform as well as a portfolio that invests in value
stocks that can cushion share prices in a down market.
- - The portfolio may invest up to 20% of its assets in foreign securities. The
risks of investing in foreign securities is set forth below under "Risks of
Investing in Certain Types of Securities." Since the portfolio will only
invest at most 20% of its assets in foreign securities, the risks
associated with foreign securities will not affect the portfolio as much as
a portfolio that invests more of its assets in foreign securities.
Performance
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1993 1994 1995 1996 1997 1998
- -3.8% -4.8% 26.5% 25.9% 26.9% 28.5%
</TABLE>
During the time period shown in the bar chart, the highest quarterly return was
28.49% (for the quarter ended 12/31/98) and the lowest return was -12.12% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Blue Chip Growth+ 28.49% 19.86% 15.26% 12/1/92
S&P 500 Index 28.58% 24.06% 21.40%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
+ Current subadviser assignment became effective October 1, 1996.
REAL ESTATE SECURITIES TRUST
Investment Objective. The investment objective of the Real Estate Securities
Trust is to achieve a combination of long-term capital appreciation and
satisfactory current income by investing in real estate related equity and
fixed-income securities.
Investment Policies. Manufacturers Adviser Corporation ("MAC"), the subadviser
to the portfolio, seeks to achieve this objective by investing the portfolio's
assets in real estate investment trusts (also referred to as REITs) and equity
and fixed-income securities issued by companies which invest in real estate or
interests therein. REITs are pooled investment vehicles which invest primarily
in income producing real estate or real estate related loans or interests.
Principal Risks of Investing in this Portfolio
- - Investing in REITs and real estate related securities involves the risks
associated with real estate investing, such as declines in real estate
values, deterioration in general and local economic conditions and
increases in interest rates. Any such developments could negatively affect
the securities held by the portfolio and the value of the portfolio may
decline.
- - REITs and real estate related securities are also subject to the risks
associated with financial building projects such as management skills,
heavy cash flow dependency and increases in operating and building
expenses. Problems which affect the building projects could negatively
affect the securities held by the portfolio and the value of the portfolio
may decline.
- - Shares of REITs may trade less frequently and, therefore are subject to
more erratic price movements than securities of larger issuers.
- - The portfolio may invest in both equity and fixed-income real estate
related securities. The risks of investing in both of these types of
securities are set forth below under "Risks of Investing in Certain Types
of Securities."
- - The portfolio may invest up to 100% of its assets in U.S. dollar
denominated foreign securities. The risks of investing in foreign
securities are described below under "Risks of Investing in Certain Types
of Securities." Since the portfolio only invests in U.S. dollar denominated
securities, it will not be subject to the exchange rate risks described in
this section.
Performance
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
9.2% -4.5% 41.1% 21.3% 22.6% -2.8% 15.1% 34.7% 18.4% -16.4%
</TABLE>
23
<PAGE> 24
During the time period shown in the bar chart, the highest quarterly return was
41.09% (for the quarter ended 12/31/91) and the lowest return was -16.44% (for
the quarter ended 12/31/98).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
One Year Five Years Ten Years Date First Available
<S> <C> <C> <C> <C>
Real Estate Securities# -16.44% 8.33% 12.56% 4/30/87
Morgan Stanley REIT Index+* -16.90% N/A N/A
NAREIT Index -18.82% 9.33% 8.63%
- --------------------------------------------------------------------------------------------------------
</TABLE>
# On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for each of these portfolios is based upon the
performance of the respective predecessor Manulife Series Fund, Inc.
portfolio for periods prior to December 31, 1996.
+ The Morgan Stanley REIT Index commenced on December 30, 1994, therefore the 5
year and 10 year return periods are not applicable for this index.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
VALUE TRUST
Investment Objective. The investment objective of the Value Trust is to realize
an above-average total return over a market cycle of three to five years,
consistent with reasonable risk.
Investment Policies. Miller Anderson & Sherrerd, LLP ("MAS"), the subadviser to
the portfolio, seeks to attain this objective by investing the portfolio's
assets primarily in equity securities of companies with market values usually
greater than $300 million. MAS seeks to select equity securities which MAS
believes to be undervalued by the market.
Principal Risks of Investing in this Portfolio
- - The price of the securities purchased by the portfolio will increase if
other investors in the stock market subsequently believe that the
securities are undervalued and are willing to pay a higher price for them.
If other investors in the stock market continue indefinitely to undervalue
these securities, or if in fact these securities are not undervalued, the
value of the portfolio may decline.
- - The portfolio invests primarily in equity securities. The risks of
investing in equity securities are set forth below under "Risks of
Investing in Certain Types of Securities."
Performance
[BAR CHART]
1997 1998
22.1% -1.7%
During the time period shown in the bar chart, the highest quarterly return was
14.12% (for the quarter ended 06/30/97) and the lowest return was -17.46% (for
the quarter ended 09/30/98).
24
<PAGE> 25
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Value -1.72% N/A 9.59% 1/01/97
S&P 500 Index* 28.58% N/A 30.95%
Russell MidCap Value Index 5.08% N/A 18.83%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
EQUITY INDEX TRUST
Investment Objective. The investment objective of the Equity Index Trust is to
approximate the aggregate total return of publicly traded common stocks which
are included in the Standard & Poor's Composite Stock Price Index (the "S&P 500
Index").
Investment Policies. The portfolio is designed to provide a less costly and
convenient way to invest in the equity securities of a diversified group of U.S.
companies. The portfolio is not actively managed; rather, Manufacturers Adviser
Corporation ("MAC"), the subadviser to the portfolio, tries to match the
performance of the S&P 500 Index by investing the portfolio's assets in common
stocks that are included in the S&P 500 Index in approximately the proportion of
their respective market value weightings in the S&P 500 Index. The S&P 500 Index
fluctuates in value with changes in the market value of the stocks included in
the S&P 500 Index at any point in time.
Principal Risks of Investing in this Portfolio
- - An investment in the Equity Index Trust involves risks similar to the risks
of investing directly in the equity securities included in the Index. The
risks of investing in equity securities are set forth below under "Risks of
Investing in Certain Types of Securities."
- - Since the portfolio is not actively managed, if the S&P 500 Index does not
perform well, MAC will not have the ability to transfer portfolio assets
into other investments.
Performance
[BAR CHART]
1997 1998
33.5% 28.5%
During the time period shown in the bar chart, the highest quarterly return was
33.53% (for the quarter ended 12/31/97) and the lowest return was -9.79% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Equity Index# 28.56% N/A 26.59% 2/14/96
S&P 500 Index 28.58% N/A 26.22%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 26
# On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for each of these portfolios is based upon the
performance of the respective predecessor Manulife Series Fund, Inc.
portfolio for periods prior to December 31, 1996.
GROWTH AND INCOME TRUST
Investment Objective. The investment objective of the Growth and Income Trust is
to provide long-term growth of capital and income consistent with prudent
investment risk.
Investment Policies. Wellington Management Company, LLP ("Wellington
Management"), the subadviser to the portfolio, seeks to achieve the Trust's
objective by investing the portfolio's assets primarily in common stocks of U.S.
issuers which Wellington Management believes are of high quality. Wellington
Management believes that high quality is evidenced by a leadership position
within an industry, a strong financial condition, steady or increasing dividend
payout and strong management skills. The portfolio may also invest in securities
convertible into or which carry the right to buy common stocks. The portfolio
may also invest up to 20% of its assets in foreign securities.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in equity securities. The risks of
investing in equity securities is set forth below under "Risks of Investing
in Certain Types of Securities."
- - Because the portfolio invests primarily in high quality equity securities,
it may underperform portfolios invested in more speculative growth
securities when these securities are in favor in the market.
Performance
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997 1998
10.2% 9.6% 2.9% 29.2% 22.8% 32.8% 26.5%
</TABLE>
During the time period shown in the bar chart, the highest quarterly return was
32.83% (for the quarter ended 12/31/97) and the lowest return was -9.63% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Growth and Income 26.52% 22.36% 18.44% 4/23/91
S&P 500 Index 28.58% 24.06% 19.80%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
U.S. LARGE CAP VALUE TRUST
Investment Objective
26
<PAGE> 27
The investment objective of the U.S. Large Cap Value Trust is to seek
long-term growth of capital and income.
Investment Policies
Capital Guardian Trust Company (also referred to as "CGTC"), the
subadviser to the portfolio, seeks to achieve this investment objective by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalization
greater than $500 million at the time of purchase. In selecting investments,
greater consideration is given to potential appreciation and future dividends
than to current income.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in equity securities, including securities
of medium sized companies. The risks of investing in equity securities and
medium sized companies are set forth below under "Risks of Investing in
Certain Types of Securities."
EQUITY-INCOME TRUST
Investment Objective. The investment objective of the Equity-Income Trust is to
provide substantial dividend income and also long-term capital appreciation.
Investment Policies. T. Rowe Price Associates, Inc. ("T. Rowe Price"), the
subadviser to the portfolio, seeks to attain this objective by investing
primarily in common stocks of well established companies paying above-average
dividends. T. Rowe Price believes that income can contribute significantly to
total return over time. T. Rowe Price seeks to select equity securities that
appear to be undervalued by various measures and may be temporarily out of
favor, but have good prospects for capital appreciation and dividend growth. The
portfolio may purchase other types of securities, such as foreign securities,
preferred stocks, convertible stocks and bonds, warrants and fixed-income
securities when considered consistent with the portfolio's investment objective.
Principal Risks of Investing in this Portfolio
- - The portfolio's emphasis on stocks of established companies paying high
dividends, and its potential investments in fixed-income securities, may
limit its potential appreciation in a broad market advance. The portfolio's
value approach carries the risk that the market will not recognize a
securities intrinsic value for a long time, or that a stock judged to be
undervalued may actually be appropriately priced.
- - The portfolio invests primarily in equity securities. The risks of
investing in equity securities are set forth below under "Risks of
Investing in Certain Types of Securities."
- - The portfolio may invest up to 25% of its assets in foreign securities. The
risks of investing in foreign securities are set forth below under "Risks
of Investing in Certain Types of Securities." Since the portfolio will only
invest at most 25% of its assets in foreign securities, the risks
associated with foreign securities will not affect the portfolio as much as
a portfolio that invests more of its assets in foreign securities.
Performance
[BAR CHART]
1994 1995 1996 1997 1998
0.8% 23.7% 19.9% 29.7% 9.2%
27
<PAGE> 28
During the time period shown in the bar chart, the highest quarterly return was
29.71% (for the quarter ended 12/31/97) and the lowest return was -7.68% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Equity-Income+ 9.21% 16.18% 16.05% 2/19/93
S&P 500 Index 28.58% 24.06% 22.28%
Russell 1000 Value* 15.63% 20.85% 20.34%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
+ Current subadviser assignment became effective October 1, 1996.
* The Russell 1000 Value Index was added to more accurately reflect the
investment objective of the Equity-Income Fund.
INCOME & VALUE TRUST
(formerly, the Moderate Automatic Asset Allocation Trust)
Investment Objective
The investment objective of the Income & Value Trust is to seek the
balanced accomplishment of (a) conservation of principal and (b) long-term
growth of capital and income.
Investment Policies
Capital Guardian Trust Company (also referred to as "CGTC"), the
subadviser to the portfolio, seeks to achieve this investment objective by
investing the portfolio's assets in both equity and fixed-income securities.
CGTC has full discretion to determine the allocation of assets between equity
and fixed-income securities. Generally, between 25% and 75% of the portfolio's
assets will be invested in fixed-income securities unless CGTC determines that
some other proportion would better serve the portfolio's investment objective.
Principal Risks of Investing in this Portfolio
- - The portfolio invests in equity securities. The risks of investing in
equity securities are set forth below under "Risks of Investing in Certain
Types of Securities."
- - The portfolio invests in fixed-income securities, including those rated
below investment grade. The risks of investing in these securities are set
forth below under "Risks of Investing in Certain Types of Securities."
- - The portfolio may invest in mortgage-backed and other asset-backed
securities. Investing in these 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.
Performance*
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998
- -6.2% 21.2% 8.3% 10.1% -1.6% 20.7% 10.0% 15.9% 15.3%
</TABLE>
28
<PAGE> 29
During the time period shown in the bar chart, the highest quarterly return was
21.23% (for the quarter ended 12/31/91) and the lowest return was -10.28% (for
the quarter ended 09/30/90).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Income & Value Trust (formerly, 15.27% 11.76% 9.59% 8/03/89
the Moderate Automatic Asset
Allocation Trust)
Wilshire 5000 Index+ 23.43% 21.79% 16.46%
Lehman Brothers Aggregate Bond 8.67% 7.27% 8.59%
Index
Customized Benchmark# 14.37% 12.25% 10.96%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Effective May 1, 1999, the portfolio changed its subadviser and its
investment objective. Performance reflects results prior to these changes.
+ All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
# Customized Benchmark is comprised of 32.5% of the return of the Wilshire
5000, 10% of the MSCI EAFE Index, 40% of the return of the Lehman Brothers
Aggregate Bond Index, 10% of the return of the 90 Day T-Bill, and 7.5% of the
return of the Merrill Lynch High Yield Index.
BALANCED TRUST
Investment Objective. The investment objective of the Balanced Trust is current
income and capital appreciation.
Investment Policies. Founders Asset Management LLC ("Founders"), the subadviser
to the portfolio, seeks to attain this objective by investing in a balanced
portfolio of common stocks, U.S. and foreign government obligations and a
variety of corporate fixed-income securities. Normally, the Balanced Trust will
invest up to 75% of its total assets in common stocks, securities convertible
into common stocks and preferred stocks. The portfolio will invest at least 25%
of its total assets in investment grade fixed-income securities. The portfolio
may invest, however, in an unlimited amount of fixed-income securities.
Principal Risks of Investing in this Portfolio
- - The portfolio invests significantly in equity securities and also invests
in fixed-income securities. The risks of investing in equity securities and
fixed-income securities are set forth below under "Risks of Investing in
Certain Types of Securities."
- - The portfolio may invest up to 30% of its assets in foreign securities
(with no more than 25% invested in any one foreign country) and may invest
without limitation in American Depository Receipts which increases the risk
of investing in the portfolio as described below under "Foreign
Securities." American Depository Receipts are receipts for the shares of a
foreign-based corporation held in the vault of a U.S. bank. Since these
receipts are U.S. dollar denominated, they are not subject to the risks of
maintaining assets in a foreign country described under "Foreign
Securities."
- - The portfolio may invest up to 25% of its assets in investment grade fixed
income securities. Investment grade fixed income securities in the lowest
rating category involve more risk than these securities in the higher
rating categories as described under "Risks of Investing in Certain Types
of Securities."
29
<PAGE> 30
Performance
[BAR CHART]
1997 1998
17.8% 14.3%
During the time period shown in the bar chart, the highest quarterly return was
14.08% (for the quarter ended 12/31/98) and the lowest return was -2.53% (for
the quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Balanced 14.25% N/A 16.41% 1/01/97
S&P 500 Index* 28.58% N/A 30.95%
Lehman Brothers Aggregate Bond 8.67% N/A 9.18%
Index
50%/50% Composite Index+ 18.99% N/A 20.12%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
+ Comprised of 50% of the return of the S&P Index and 50% of the return of the
Lehman Brothers Aggregate Bond Index.
HIGH YIELD TRUST
Investment Objective. The investment objective of the High Yield Trust is to
realize an above-average total return over a market cycle of three to five
years, consistent with reasonable risk.
Investment Policies. Miller Anderson & Sherrerd, LLP ("MAS"), the subadviser to
the portfolio, seeks to attain this objective by investing the portfolio's
assets primarily in high yield fixed-income securities, including corporate
bonds and other fixed-income securities. The portfolio's average weighted
maturity for the securities that it purchases will be greater than five years.
High yield fixed-income securities are securities rated Ba and lower by Moody's
and BB and lower by Standard & Poor's. Securities rated Baa and lower by Moody's
and BBB by Standard & Poor's are non-investment grade securities commonly known
as "junk bonds." At times, more than 50% of the portfolio's assets may be
invested in mortgage-backed securities. The portfolio may invest up to 100% of
its assets in foreign securities, including emerging market securities.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in non-investment grade fixed-income
securities. The risks of investing in these securities are set forth below
under "Risks of Investing in Certain Types of Securities."
- - The portfolio may invest up to 100% of its assets in foreign securities
including securities of companies in emerging markets. The risks of
investing in foreign securities are set forth below under "Risks of
Investing in Foreign Securities." Because the portfolio may invest up to
100% of its assets in foreign
30
<PAGE> 31
securities, which are generally riskier investments than U.S. securities,
investing in this portfolio is riskier than investing in a portfolio that
invests primarily in U.S. high yield fixed-income securities.
- - The portfolio may invest in mortgage-backed securities. Investing in
mortgage-backed securities subjects the portfolio to prepayment risk.
Prepayments of underlying mortgages 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.
Performance
[BAR CHART]
1997 1998
12.7% 2.8%
During the time period shown in the bar chart, the highest quarterly return was
6.79% (for the quarter ended 06/30/97) and the lowest return was -6.52% (for the
quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
High Yield 2.78% N/A 7.64% 1/01/97
Salomon Brothers High Yield Market 3.60% N/A 8.29%
Index*
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
STRATEGIC BOND TRUST
Investment Objective. The investment objective of the Strategic Bond Trust is to
seek a high level of total return consistent with preservation of capital.
Investment Policies. Salomon Brothers Asset Management Inc ("SBAM"), the
subadviser to the portfolio, invests the Strategic Bond Trust's assets among
five segments of the fixed-income market in amounts which SBAM believes will
best contribute to the achievement of the portfolio's objective, (a) U.S.
Government obligations, (b) investment grade domestic corporate fixed-income
securities, (c) high yield corporate fixed-income securities, (d)
mortgage-backed securities and (e) investment grade and high yield international
fixed-income securities. SBAM will determine the amount of assets to be
allocated to each type of security in which it invests based on its assessment
of the maximum level of total return that can be achieved from a portfolio which
is invested in these securities without incurring undue risks to principal
value.
Principal Risks of Investing in this Portfolio
- - Whether the portfolio achieves its investment objective is significantly
dependent on the ability of SBAM to allocate the portfolio's effectively
among the different investment categories. If SBAM does not correctly
assess the returns that can be achieved from a particular category of
assets, the returns for the portfolio could be volatile and the value of
the portfolio may decline.
31
<PAGE> 32
- - The portfolio invests substantially all of its assets in fixed-income
securities, including a significant amount in non-investment grade
fixed-income securities. The risks of investing in fixed-income securities
is set forth below under "Risks of Investing In Foreign Securities."
- - The portfolio may invest up to 100% of its assets in foreign securities
including securities of companies in emerging markets. Investing in foreign
securities increases the risk of investing in the portfolio. However, the
ability of the portfolio to spread its investments among the fixed-income
markets in a number of different countries may reduce the overall level of
market risk of the portfolio to the extent it may reduce the portfolio's
exposure to a single market. The risks of investing in foreign securities
are set forth below under "Risks of Investing in Foreign Securities."
- - The portfolio may invest in mortgage-backed securities. Investing in
mortgage-backed securities subjects the portfolio to prepayment risk.
Prepayments of underlying mortgages result in a loss of anticipated
interest payments and all or part of any premium paid for the security.
Therefore, the value of the portfolio may decline. Mortgage prepayments
generally increase with falling interest rates and decrease with rising
interest rates.
Performance
[BAR CHART]
1994 1995 1996 1997 1998
- -6.0% 19.2% 14.7% 11.0% 1.3%
During the time period shown in the bar chart, the highest quarterly return was
19.22% (for the quarter ended 12/31/95) and the lowest return was -5.99% (for
the quarter ended 12/31/94).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Strategic Bond 1.31% 7.64% 8.02% 2/19/93
Lehman Brothers Aggregate Bond 8.67% 7.27% 7.24%
Index*
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
GLOBAL BOND TRUST
(formerly, the Global Government Bond Trust)
Investment Objective
The investment objective of the Global Bond Trust is to seek to realize
maximum total return, consistent with preservation of capital and prudent
investment management.
Investment Policies
Pacific Investment Management Company (also referred to as "PIMCO"),
the subadviser to the portfolio, seeks to achieve this investment objective by
investing the portfolio's assets primarily in fixed
32
<PAGE> 33
income securities denominated in major foreign currencies, baskets of foreign
currencies (such as the ECU), and the U.S. dollar.
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 current opinion as to the proper allocation of assets among
domestic and foreign issuers, investments in the securities of issuers located
outside the United States will normally vary between 25% and 75% of the
portfolio's assets. The average portfolio duration of the Global Bond Trust 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.)
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in foreign fixed income securities. The
risks of investing in fixed income securities and in foreign securities are
set forth below under "Risks of Investing in Certain Types of Securities."
- - The portfolio is non-diversified. The definition of a non-diversified
portfolio and the risks associated with such a portfolio are set forth
below under "Risk of Investing in Certain Types of Securities."
Performance*
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
4.5% 13.5% 15.9% 2.3% 19.0% -5.7% 23.2% 13.0% 2.9% 7.6%
</TABLE>
During the time period shown in the bar chart, the highest quarterly return was
23.18% (for the quarter ended 12/31/95) and the lowest return was -5.75% (for
the quarter ended 12/31/94).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Ten Years Date First Available
<S> <C> <C> <C> <C>
Global Bond Trust (formerly, the 7.61% 7.77% 9.29% 3/18/88
Global Government Bond Trust)
Salomon Brothers World Government 15.29% 7.85% 8.97%
Bond Index+
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Effective May 1, 1999, the portfolio changed its subadviser and its
investment objective. Performance reflects results prior to these changes.
+ All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
TOTAL RETURN TRUST
Investment Objective
33
<PAGE> 34
The investment objective of the Total Return Trust is to seek to
realize maximum total return, consistent with preservation of capital and
prudent investment management.
Investment Policies
Pacific Investment Management Company (also referred to as "PIMCO"),
the subadviser to the portfolio, seeks to achieve this investment objective by
investing, under normal market conditions, at least 65% of the portfolio's
assets in a diversified portfolio of fixed income securities of varying
maturities. The average portfolio duration of the Total Return Trust will
normally vary within a three- to six- year time frame based on PIMCO's forecast
for interest rates. (Duration is a measure of the expected life of a fixed
income security on a present value basis.) The portfolio may also invest up to
20% of its assets in securities denominated in foreign currencies, and may
invest beyond this limit in U.S. dollar -denominated securities of foreign
issuers. Portfolio holdings will be concentrated in areas of the bond market
(based on quality, sector, coupon or maturity) which PIMCO believes to be
relatively undervalued.
Principal Risks of Investing in this Portfolio
- - The portfolio invests primarily in fixed income securities. The risks of
investing in fixed income are set forth below under "Risks of Investing in
Certain Types of Securities."
- - The portfolio may also invest in foreign securities. The risks of investing
in foreign securities are set forth below under "Risks of Investing in
Certain Types of Securities."
INVESTMENT QUALITY BOND TRUST
Investment Objective. The investment objective of the Investment Quality Bond
Trust is to provide a high level of current income consistent with the
maintenance of principal and liquidity.
Investment Policies. Wellington Management Company, LLP ("Wellington
Management"), the subadviser to the portfolio, seeks to achieve the Trust's
objective by investing primarily in investment grade corporate bonds and U.S.
Government bonds with intermediate to longer term maturities. At least 65% of
the portfolio's assets will be invested in (i) fixed-income securities of U.S.
and foreign issuers (payable in U.S. dollars) rated "A" or better by Moody's or
Standard & Poor's (or, if unrated, of comparable quality), (ii) U.S. government
securities and (iii) cash and cash equivalents. The portfolio may also invest up
to 20% of its assets in domestic and foreign high yield corporate and government
fixed-income securities, commonly known as "junk bonds."
Principal Risks of Investing in this Portfolio
- - The portfolio invests substantially all of its assets in fixed-income
securities, including non-investment grade fixed-income securities. Because
the portfolio invests in fixed-income securities with intermediate to
longer term maturities, the portfolio will be more sensitive to interest
rate changes than a portfolio that invests in fixed-income securities with
shorter maturities. The risks of investing in these securities are set
forth below under "Risks of Investing in Certain Types of Securities."
34
<PAGE> 35
Performance
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
11.3% -2.7% 16.1% 7.2% 10.0% -4.6% 19.5% 2.6% 9.8% 8.7%
</TABLE>
During the time period shown in the bar chart, the highest quarterly return was
19.49% (for the quarter ended 12/31/95) and the lowest return was -13.18% (for
the quarter ended 12/31/90).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Ten Years Date First Available
<S> <C> <C> <C> <C>
Investment Quality Bond+ 8.73% 6.88% 7.88% 6/18/85
Customized Benchmark#* 9.23% 7.47% 9.52%
Lehman Brothers Aggregate Bond 8.67% 7.27% 9.26%
Index
- ---------------------------------------------------------------------------------------------------------
</TABLE>
+ Current subadviser assignment became effective April 23, 1991.
# Customized Benchmark is comprised of 50% of the return of the Lehman Brothers
Government Bond Index and 50% of the return of the Lehman Brothers Corporate
Bond Index.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
DIVERSIFIED BOND TRUST
(formerly, the Conservative Automatic Asset Allocation Trust)
Investment Objective
The investment objective of the Diversified Bond Trust is to seek high
total return as is consistent with the conservation of capital.
Investment Policies
Capital Guardian Trust Company (also referred to as "CGTC"), the
subadviser to the portfolio, seeks to achieve this investment objective by
investing the portfolio's assets in fixed-income securities, including up to 20%
in fixed-income securities rated below investment grade.
Principal Risks of Investing in this Portfolio
- - The portfolio invests in fixed-income securities, including those rated
below investment grade. The risks of investing in these securities are set
forth below under "Risks of Investing in Certain Types of Securities."
Performance*
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998
- -3.8% 18.8% 7.4% 9.0% -1.8% 18.1% 7.0% 11.4% 10.7%
</TABLE>
35
<PAGE> 36
During the time period shown in the bar chart, the highest quarterly return was
18.80% (for the quarter ended 12/31/91) and the lowest return was -6.26% (for
the quarter ended 09/30/90).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Diversified Bond Trust(formerly, 10.68% 8.88% 8.03% 8/03/89
the Conservative Automatic Asset
Allocation Trust)
90 Day T-Bill+ 5.33% 5.32% 5.36%
Lehman Brothers Aggregate Bond 8.67% 7.27% 8.59%
Index
Customized Benchmark# 11.74% 9.86% 9.37%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Effective May 1, 1999, the portfolio changed its subadviser and its
investment objective. Performance reflects results prior to these changes.
+ All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
# Customized Benchmark is comprised of 20% of the return of the Wilshire 5000,
5% of the MSCI EAFE Index, 50% of the return of the Lehman Brothers Aggregate
Bond Index, 25% of the return of the 90 Day T-Bill.
U.S. GOVERNMENT SECURITIES TRUST
Investment Objective. The investment objective of the U.S. Government Securities
Trust is to obtain a high level of current income consistent with preservation
of capital and maintenance of liquidity.
Investment Polices. Salomon Brothers Asset Management Inc ("SBAM"), the
subadviser to the portfolio, seeks to attain this objective by investing a
substantial portion (at least 80%) of the portfolio's assets in fixed-income
obligations and mortgage-backed securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and derivative securities such as
collateralized mortgage obligations backed by such securities.
Principal Risks of Investing in this Portfolio
- - While the portfolio invests a substantial portion of its assets in
securities which are guaranteed as to principal and interest by the U.S.
Government or one of its agencies or instrumentalities, the market value of
the portfolio could still decline due to interest rate changes. When
interest rates decline, the market value of the portion of the portfolio
invested at higher yields can be expected to rise. Conversely, when
interest rates rise, the market value of a portfolio invested at lower
yields can be expected to decline. Fixed-income securities with longer
maturities are generally more sensitive to interest rate changes than those
with shorter maturities.
- - Investing in mortgage backed securities subjects the portfolio to
prepayment risk. Prepayment of underlying mortgages 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.
36
<PAGE> 37
Performance
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
13.2% 8.6% 14.0% 6.2% 7.6% -1.2% 15.6% 3.4% 8.5% 7.5%
</TABLE>
During the time period shown in the bar chart, the highest quarterly return was
15.57% (for the quarter ended 12/31/95) and the lowest return was -2.02% (for
the quarter ended 03/31/92).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Ten Years Date First Available
<S> <C> <C> <C> <C>
U.S. Government Securities+ 7.49% 6.59% 8.10% 3/18/88
Merrill Lynch 1-10yr Gov't Index* 8.63% 6.50% 8.34%
Salomon Brothers 1-10yr Government 7.95% 6.59% 8.49%
Index#
- ---------------------------------------------------------------------------------------------------------
</TABLE>
+ Current subadviser assignment became effective December 13, 1991.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
# The Salomon Brothers 1-10yr Government Index was added to more accurately
reflect the investment objective of the U.S. Gov't Securities Fund.
MONEY MARKET TRUST
Investment Objective. The investment objective of the Money Market Trust is to
obtain maximum current income consistent with preservation of principal and
liquidity.
Investment Policies. Manufacturers Adviser Corporation ("MAC"), the subadviser
to the portfolio, seeks to achieve this objective by investing in high quality,
U.S. dollar denominated money market instruments. The portfolio may also invest
up to 20% of its assets in high quality, U.S. dollar denominated foreign money
market instruments.
Principal Risks of Investing in this Portfolio
- - An investment in the Money Market Trust is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the Money Market Trust seeks to preserve the value of a
shareholder's investment at $10.00 per share, it is possible to lose money
by investing in this portfolio. For example, the portfolio could lose money
if a security purchased by the portfolio is downgraded and the portfolio
must sell the security at less than the cost of the security.
- - The portfolio may invest up to 20% of its assets in U.S. dollar denominated
foreign securities which increases the risk of investing in the portfolio
as described below under "Foreign Securities." Since the portfolio only
invests in U.S. dollar denominated securities, it will not be subject to
the exchange rate risks described in this section.
37
<PAGE> 38
Performance
[BAR CHART]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
8.6% 7.8% 5.7% 3.4% 2.7% 3.8% 5.6% 5.1% 5.2% 5.0%
</TABLE>
During the time period shown in the bar chart, the highest quarterly return was
8.59% (for the quarter ended 12/31/89) and the lowest return was 0.64% (for the
quarter ended 06/30/93).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Ten Years Date First Available
<S> <C> <C> <C> <C>
Money Market# 5.03% 4.94% 5.27% 6/18/85
U.S. 30 Day T-Bill 4.86% 4.96% 5.29%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
# On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for each of these portfolios is based upon the
performance of the respective predecessor Manulife Series Fund, Inc.
portfolio for periods prior to December 31, 1996.
LIFESTYLE TRUSTS
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT OBJECTIVE INVESTMENT POLICIES PRINCIPAL RISKS
- -------------------------- --------------------------------------- ------------------- ---------------
<S> <C> <C> <C>
Lifestyle Aggressive 1000 To provide long-term growth of capital. 100% Equity* See below
Current income is not a consideration
Lifestyle Growth 820 To provide long-term growth of capital. 80% Equity* See below
Current income is also a consideration. 20% Fixed-Income*
Lifestyle 640 To provide a balance between a high 60% Equity* See below
level of current income and growth of 40% Fixed-Income*
capital with a greater emphasis on
growth of capital.
Lifestyle Moderate 460 To provide a balance between a high 40% Equity* See below
level of current income and growth of 60% Fixed-Income*
capital with a greater emphasis on
income.
Lifestyle Conservative 280 To provide a high level of current 20% Equity* See below
income with some consideration given to 80% Fixed-Income*
growth of capital.
</TABLE>
* Manufacturers Adviser Corporation ("MAC"), the subadviser to the Lifestyle
Trusts, achieves these percentages by investing in other portfolios of the
Trust which invest primarily in either equity securities and fixed-income
securities, as applicable. The portfolios that invest primarily in
fixed-income securities are: (a) the High-Yield Trust, (b) the Strategic Bond
Trust, (c) the Global Bond Trust, (d) the Total Return
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<PAGE> 39
Trust, (c) the Investment Quality Bond Trust, (c) the Diversified Bond Trust,
(f) the U.S. Government Securities Trust and (g) the Money Market Trust. All the
other portfolios of the Trust invest primarily in equity securities.
Principal Risks of Investing in the Lifestyle Trusts
The Lifestyle portfolios are ranked in order of risk. The Lifestyle Aggressive
1000 portfolio is the riskiest of the Lifestyle portfolios since it invests 100%
of its assets in other portfolios of the Trust which invest primarily in equity
securities. The Lifestyle Conservative 280 portfolio is the least risky of the
Lifestyle portfolios since it invests approximately 80% of its assets in other
portfolios of the Trust which invest primarily in fixed-income securities. Each
Lifestyle portfolio is subject to the same risks as the portfolios in which it
invests.
The principal risks of investing in each of the Lifestyle Trusts are
that:
- - To the extent a Lifestyle portfolio invests in other portfolios that invest
primarily in equity securities, the Lifestyle portfolio will be subject to
the risks of investing in equity securities. The risks of investing in
equity securities are set forth below under "Risks of Investing in Certain
Types of Securities."
- - To the extent a Lifestyle portfolio invests in other portfolios that invest
primarily in fixed-income securities, the portfolio will be subject to the
risks of investing in fixed-income securities. Some of the fixed-income
portfolios may invest in non-investment grade securities. The risks of
investing in fixed-income securities, including non-investment grade
securities, are set forth below under "Risks of Investing in Certain Types
of Securities."
- - Each of the Lifestyle portfolios is a non-diversified portfolio so that it
may invest substantially all of its assets in other portfolios of the
Trust. The risks of investing in a non-diversified portfolio are set forth
below.
Performance Lifestyle Aggressive 1000
[BAR CHART]
1997 1998
10.9% 4.9%
During the time period shown in the bar chart, the highest quarterly return was
17.52% (for the quarter ended 12/31/98) and the lowest return was -17.78% (for
the quarter ended 09/30/98).
Lifestyle Growth 820
[BAR CHART]
1997 1998
13.8% 6.2%
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<PAGE> 40
During the time period shown in the bar chart, the highest quarterly return was
13.90% (for the quarter ended 12/31/98) and the lowest return was -13.65% (for
the quarter ended 09/30/98).
Lifestyle 640
[BAR CHART]
1997 1998
14.1% 5.7%
During the time period shown in the bar chart, the highest quarterly return was
10.78% (for the quarter ended 12/31/98) and the lowest return was -10.36% (for
the quarter ended 09/30/98).
Lifestyle Moderate 460
[BAR CHART]
1997 1998
13.7% 9.8%
During the time period shown in the bar chart, the highest quarterly return was
9.76% (for the quarter ended 12/31/98) and the lowest return was -5.15% (for the
quarter ended 09/30/98).
Lifestyle Conservative 280
[BAR CHART]
1997 1998
12.2% 10.2%
During the time period shown in the bar chart, the highest quarterly return was
10.20% (for the quarter ended 12/31/98) and the lowest return was -0.53% (for
the quarter ended 09/30/98).
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
One Year Five Years Life of Portfolio Date First Available
<S> <C> <C> <C> <C>
Lifestyle Aggressive 1000 4.86% N/A 7.91% 1/07/97
Russell 2000 Index* -2.55% N/A 9.20%
Lifestyle Growth 820 6.20% N/A 10.05% 1/07/97
S&P 500 Index 28.58% N/A 30.95%
Lehman Brothers Gov't/Corp. 9.47% N/A 9.61%
Bond Index
Blended Benchmark+ 25.06% N/A 26.75%
Customized Benchmark#++ 9.54% N/A 14.92%
Lifestyle Balanced 640 5.72% N/A 9.93% 1/07/97
Blended Benchmark** 21.35% N/A 22.50%
Customized Benchmark##& 11.70% N/A 15.26%
Lifestyle Moderate 460 9.76% N/A 11.83% 1/08/97
Blended Benchmark@ 17.50% N/A 18.21%
Customized Benchmark@@+++ 12.78% N/A 14.02%
Lifestyle Conservative 280 10.20% N/A 11.28% 1/08/97
Blended Benchmark### 13.53% N/A 13.91%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* All since inception returns for the indices begin on the month-end closest
to the actual inception date of the Trust.
+ Blended Benchmark consists of 80% of the return of the S&P 500 Index and
20% of the return of the Lehman Brothers Government/ Corporate Bond Index.
++ Customized Benchmark was added to more accurately reflect the investment
objective of the Lifestyle Growth Fund.
# Customized Benchmark is comprised of 20% of the return of the Russell 1000,
50% of the Russell 2500, 10% of the MSCI EAFE, 15% of the Lehman Brothers
Gov't/Corp Bond Index, 5% of the US 30-day T-Bill.
** Blended Benchmark consists of 60% of the return of the S&P 500 Index and
40% of the return of the Lehman Brothers Government/ Corporate Bond Index.
## Customized Benchmark is comprised of 25% of the return of the Russell 1000,
30% of the Russell 2500, 5% of the MSCI EAFE, 30% of the Lehman Brothers
Gov't/Corp Bond Index, 10% of the US 30-day T-Bill.
& The Customized Benchmark was added to more accurately reflect the
investment objective of the Lifestyle Balanced Fund.
@ Blended Benchmark consists of 40% of the return of the S&P 500 Index and
60% of the return of the Lehman Brothers Government/ Corporate Bond Index.
@@ The Customized Benchmark was added to more accurately reflect the
investment objective of the Lifestyle Balanced Fund.
+++ Customized Benchmark is comprised of 25% of the return of the Russell 1000,
10% of the Russell 2500, 5% of the MSCI EAFE, 35% of the Lehman Brothers
Gov't/Corp Bond Index, 25% of the US 30-day T-Bill.
### Blended Benchmark consists of 20% of the return of the S&P 500 Index and
80% of the return of the Lehman Brothers Government/ Corporate Bond Index.
41
<PAGE> 42
RISKS OF INVESTING IN CERTAIN TYPES OF SECURITIES
The risks of investing in certain types of securities are described
below. The value of an individual security or a particular type of security can
be more volatile than the market as a whole and can perform differently than the
value of the market as a whole. Additional information regarding these risks is
set forth under "Additional Investment Policies and Other Risks of Investing -
Other Risks of Investing" below.
NON-DIVERSIFIED PORTFOLIOS
Definition of Non-Diversified. Any portfolio that is non-diversified 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.
Risks. Since a non-diversified portfolio may invest a high percentage of its
assets in the securities of a small number of companies, a non-diversified
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. In the case of the Lifestyle Trusts, this
risk is greatly reduced since each Lifestyle Trust invests its assets in other
portfolios of the Trust which have diverse holdings.
EQUITY SECURITIES
Stock markets are volatile. The price of equity securities will
fluctuate and can decline and reduce the value of a portfolio investing in
equities. 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 a portfolio could decline if the
financial condition of the companies the portfolio is invested in decline or if
overall market and economic conditions deteriorate. Even portfolios that invest
in high quality or "blue chip" equity securities or securities of established
companies with large market capitalizations, which generally have strong
financial characteristics, 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.
FIXED-INCOME SECURITIES
Fixed-income securities are generally subject to two principal types of
risks: (a) interest rate risk and (b) credit quality risk.
Interest Rate Risk. Fixed-income securities are affected by changes in interest
rates. When interest rates decline, the market value of the 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.
Credit Quality Risk. 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-income
security deteriorates after a 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. Portfolios that may invest in lower rated fixed-income
securities are riskier than portfolios that may invest in higher rated
fixed-income securities. Additional information on the risks of investing in
investment grade fixed income securities in the lowest rating category and lower
rated fixed-income securities is set forth below.
INVESTMENT GRADE FIXED INCOME SECURITIES IN THE LOWEST RATING CATEGORY
Investment grade fixed income securities in the lowest rating category
(rated "Baa" by Moody's or "BBB" by Standard & Poor's and comparable unrated
securities) involve a higher degree of risk than fixed income securities in the
higher rating 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.
LOWER RATED FIXED-INCOME SECURITIES
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<PAGE> 43
Lower rated fixed-income securities are defined as securities rated below
investment grade (rated Ba and below by Moody's and BB and below by Standard &
Poor's). The principal risks of investing in these securities are as follows:
- - Risk to Principal and Income. 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.
- - Price Volatility. 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.
- - Liquidity. 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.
- - Dependence on Subadviser's Own Credit Analysis. While a subadviser to a
portfolio 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.
SMALL AND MEDIUM SIZE COMPANIES
Small or Unseasoned Companies
- - Survival of Small or Unseasoned Companies. Companies that are small or
unseasoned (less than 3 years of operating history) are more likely than
larger or established companies to fail or not to accomplish their goals.
As a result, the value of their securities could decline significantly.
- - Changes in Earnings and Business Prospectus. Small or unseasoned companies
often 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.
- - Liquidity. The securities of small or unseasoned companies may have limited
marketability and may be difficult to sell.
- - Impact of Buying or Selling Shares. Small or unseasoned 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 impacting the price of the security.
- - Publicly Available Information. There may be less publicly available
information about small or unseasoned companies. Therefore, when making a
decision to purchase a security for a portfolio, a subadviser may not be
aware of problems associated with the company issuing the security.
Medium Size Companies
Investments in the securities of medium sized companies present risks
similar to those associated with small or unseasoned companies although to a
lesser degree due to the larger size of the companies.
FOREIGN SECURITIES
The principal risks of investing in foreign securities are set forth
below. As noted below, many of these risks are heightened in the case of
investments in emerging market countries.
- - Currency Fluctuations. Investments in foreign securities may cause a
portfolio to lose money when converting investments from foreign currencies
into U.S. dollars.
- - Political and Economic Conditions. Investments in foreign securities
subject a portfolio to the political or economic conditions of the foreign
country. These conditions could cause portfolio 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.
- - Removal of Proceeds of Investments from a Foreign Country. Foreign
countries, especially emerging market countries, often have currency
controls or restrictions which may prevent or delay a portfolio from taking
money out of the country or may impose additional taxes on money removed
from the country.
- - Nationalization of Assets. Investments in foreign securities subject a
portfolio to the risk that the company issuing the security may be
nationalized. If the company is nationalized, the value of the company's
securities could decrease in value or even become worthless.
- - Settlement of Sales. Foreign countries, especially emerging market
countries, may have problems associated with settlement of sales. Such
problems could cause the portfolio to suffer a loss if a security to be
sold declines in value while settlement of the sale is delayed.
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<PAGE> 44
- - Investor Protection Standards. Foreign countries, especially emerging
market countries, may have less stringent investor protection and
disclosure standards than the U.S. Therefore, when making a decision to
purchase a security for a portfolio, a subadviser 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.
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<PAGE> 45
INVESTMENT OBJECTIVES AND POLICIES
Each portfolio has a stated investment objective which it pursues
through separate investment policies. There can be no assurance that the
portfolio will achieve its investment objective. The differences in objectives
and policies among the portfolios can be expected to affect the return of each
portfolio and the degree of market and financial risk to which each portfolio is
subject. The risks of investing in each portfolio are described in the
"Risk/Return Summary" above.
The following is a description of the investment objectives and
policies of each portfolio. Additional investment policies of each portfolio are
set forth below under "Additional Investment Policies and Transactions." In
addition, more complete descriptions of the money market instruments and certain
other instruments in which certain portfolios of the Trust may invest and of the
options, futures, currency and other derivative transactions that certain
portfolios may engage in are set forth in the Statement of Additional
Information. A more complete description of the debt security ratings used by
the Trust assigned by Moody's or Standard & Poor's is included in Appendix I in
the Statement of Additional Information.
PACIFIC RIM EMERGING MARKETS TRUST
Investment Objective
The investment objective of the Pacific Rim Emerging Markets Trust is
to achieve long-term growth of capital.
Investment Policies
Manufacturers Adviser Corporation (also referred to as "MAC") manages
the Pacific Rim Emerging Markets Trust. MAC seeks to achieve this investment
objective by investing the portfolio's assets primarily in common stocks and
equity-related securities of companies in countries located in the Pacific Rim
region. Current income from dividends and interest will not be an important
consideration in the selection of portfolio securities.
The Pacific Rim Emerging Markets Trust under normal conditions, invests
at least 65% of its net assets in common stocks and equity-related securities of
established, larger-capitalization non-U.S. companies located in the Pacific Rim
region that have attractive long-term prospects for growth of capital.
Equity-related securities in which the portfolio may invest include: (i)
preferred stocks, (ii) warrants and (iii) securities convertible into or
exchangeable into common stocks.
The countries of the Pacific Rim region are:
- - Australia - Hong Kong - Pakistan - Taiwan
- - China - Japan - Philippines - Thailand
- - India - Malaysia - Singapore
- - Indonesia - New Zealand - South Korea
The Pacific Rim Emerging Markets Trust may also invest up to 35% of its
assets in countries outside the Pacific Rim region. MAC's decision to invest in
a particular country or particular region will be based upon its evaluation of
political, economic and market trends in the country or region and throughout
the world. MAC will shift investments among countries and the world's capital
markets in accordance with its ongoing analyses of trends and developments
affecting such markets and securities.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Pacific Rim Emerging Markets Trust may
invest all or a portion of its assets in non-convertible, fixed-income
securities and cash and cash equivalents. These investments may be denominated
in either U.S. or non-U.S. dollars. These securities may include debt of
corporations, foreign governments and supranational organizations. To the extent
the portfolio is in a defensive position, its opportunity to achieve its
investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The Pacific Rim Emerging Markets Trust may also purchase and sell the
following equity-related financial instruments:
- exchange-listed call and put options on equity indices,
- over-the-counter ("OTC") and exchange-listed equity index
futures,
- OTC and exchange-listed call and put options on currencies in the
portfolio, and
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<PAGE> 46
- OTC foreign currency futures contracts on currencies in the
portfolio.
A call option gives the holder the right to buy shares of the
underlying security at a fixed price before a specified date in the future. A
put option gives the holder the right to sell a specified number of shares of
the underlying security at a particular price within a specified time period.
See "Hedging and Other Strategic Transactions" for further information
on these strategies.
SCIENCE & TECHNOLOGY TRUST
Investment Objective
The investment objective of the Science & Technology Trust is long-term
growth of capital. Current income is incidental to the portfolio's objective.
Investment Policies
T. Rowe Price Associates, Inc. (also referred to as "T. Rowe Price")
manages the Science & Technology Trust. The Science & Technology Trust invests
at least 65% of its total assets in the common stocks of companies expected to
benefit from the development, advancement, and use of science and technology.
Industries likely to be represented in the portfolio include:
- computers, including software and electronic components,
- telecommunications,
- media and information services,
- health care, including pharmaceuticals, medical devices, and
biotechnology,
- environmental services,
- chemicals and synthetic materials, and
- defense and aerospace.
The Science & Technology Trust may also invest in companies that are expected to
benefit from technological advances even if they are not directly involved in
research and development.
Most of the assets of the Science & Technology Trust are invested in
U.S. common stocks. However, the portfolio may also purchase other types of
securities, for example, (i) U.S. and non U.S. dollar denominated foreign
securities (up to 30% of total assets), (ii) convertible stocks and bonds, and
(iii) warrants.
The selection of investments for the portfolio is based on an
assessment of a company's fundamental prospects, rather than on a company's
size. As a result, portfolio holdings can range from securities of small
companies developing new technologies to securities of blue chip firms with
established track records of developing and marketing technological advances.
Temporary Defensive Investing
The Science & Technology Trust holds a certain portion of its assets in
money market reserves which can consist of shares of the T. Rowe Price Reserve
Investment Fund (an internal money market fund) as well as U.S. and foreign
dollar-denominated money market securities, including repurchase agreements, in
the two highest rating categories, maturing in one year or less. To meet
redemption requests or pending investment of its assets or during unusual market
conditions, the portfolio may invest without limitation in these securities. To
the extent the portfolio is in a defensive position, its ability to achieve its
investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The Science & Technology Trust may also engage in a variety of
investment practices, such as buying and selling futures and options. The
portfolio may invest up to 10% of its total assets in hybrid instruments. Hybrid
instruments are a type of high-risk derivative which can combine the
characteristics of securities, futures and options. The Statement of Additional
Information contains a more detailed description of such instruments and the
risks associated with them.
The Science & Technology Trust is currently authorized to use all of
the various investment strategies referred to under "Hedging and Other Strategic
Transactions."
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<PAGE> 47
INTERNATIONAL SMALL CAP TRUST
Investment Objective
The investment objective of the International Small Cap Trust is to
seek long-term capital appreciation.
Investment Policies
Founders Asset Management LLC (also referred to as "Founders") manages
the International Small Cap Trust. Founders pursues this investment objective by
investing primarily in securities issued by foreign companies which have total
stock market capitalizations or annual revenues of $1 billion or less ("small
company securities"). These securities may represent companies in both developed
and lesser developed countries throughout the world.
At least 65% of the portfolio's total assets are normally invested in
foreign securities representing a minimum of three countries (other than the
United States). The portfolio may invest in larger foreign companies or U.S.
based companies if, in Founders' opinion, they represent better prospects for
capital appreciation.
Foreign investments of the International Small Cap Trust may include
securities issued by companies located in countries not considered to be major
industrialized nations (emerging markets). Investments in the portfolio also may
include securities created through the Brady Plan, a program under which heavily
indebted countries have restructured their bank debt into bonds. See "Other
Instruments -- High Yield Foreign Sovereign Debt Securities" in the Statement of
Additional Information.
The International Small Cap Trust invests primarily in equity
securities. When Founders believes that other investments offer opportunities
for capital appreciation, the portfolio may also invest in:
- convertible securities,
- bonds,
- debentures, and
- other corporate obligations
The portfolio only invests in fixed-income securities that, at the time
of purchase, have the following ratings (or, if unrated, are determined to be of
comparable quality by Founders):
Bonds, Debentures and Corporate Convertible Securities
Rating Agency Obligations and Preferred Stocks
- --------------------------------------------------------------------------------
Moody's Baa or higher (Investment Grade) B or higher
Standard & Poor's BBB or higher (Investment Grade) B or higher
The portfolio will never have more than 5% of its total assets invested in any
fixed-income securities (excluding preferred stocks) which are unrated or rated
below investment grade (measured at the time of purchase or as a result of a
reduction in rating after purchase). The portfolio is not required to dispose of
fixed-income securities whose ratings are downgraded below investment grade
subsequent to the portfolio's purchase of such securities, unless such a
disposition is necessary to reduce the portfolio's holdings of such securities
to less than 5% of its total assets. The risks of investing in these securities
are set forth above under "Risks of Investing in Certain Types of Securities."
Because the portfolio normally will invest primarily in equity securities, the
risks associated with fixed-income securities will not affect the portfolio as
much as a portfolio that invests more of its assets in fixed-income securities.
Temporary Defense Investing
To meet redemptions or pending investment of its assets or during
unusual market conditions, the International Small Cap Trust may invest up to
100% of its assets temporarily in the following securities:
- cash,
- cash equivalents,
- U.S. government obligations,
- U.S. Treasury STRIPS,
- commercial paper,
- bank obligations,
- repurchase agreements, and
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<PAGE> 48
negotiable U.S. dollar-denominated obligations of domestic and foreign
branches of U.S. depository institutions, U.S. branches of foreign
depository institutions, and foreign depository institutions.
The portfolio may also acquire certificates of deposit and bankers' acceptances
of banks which meet criteria established by the Trust's Trustees. To the extent
the portfolio is in a defensive position, its ability to achieve its investment
objective will be limited.
Use of Hedging and Other Strategic Transactions.
The International Small Cap Trust is currently authorized to use all of
the various investment strategies referred to under "Hedging and Other Strategic
Transactions."
AGGRESSIVE GROWTH TRUST
(formerly, the Pilgrim Baxter Growth Trust)
Investment Objective
The investment objective of the Aggressive Growth Trust is to seek
long-term capital appreciation.
Investment Policies
A I M Capital Management, Inc. (also referred to as "A I M") manages
the Aggressive Growth Trust. A I M seeks to achieve this investment objective by
investing the portfolio's assets principally in common stocks, convertible
bonds, convertible preferred stocks and warrants of companies which in the
opinion of A I M 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. A I M 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.
Aggressive Growth Trust's portfolio is primarily comprised of
securities of two basic categories of companies:
- - "core" companies, which A I M considers to have experienced above-average
and consistent long-term growth in earnings and to have excellent prospects
for outstanding future growth, and
- - "earnings acceleration" companies which A I M believes are currently
enjoying a dramatic increase in profits.
The Aggressive Growth Trust's strategy does not preclude investment in
large, seasoned companies which in the judgment of A I M 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 offer exceptional value based upon substantially
above average earnings growth potential relative to market value.
The Aggressive Growth Trust may invest in non-equity securities, such
as corporate bonds or U.S. Government obligations during periods when, in the
opinion of A I M, prevailing market, financial, or economics 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 are treated as foreign securities and included in this 25%
limitation.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Aggressive Growth Trust may invest all or
a portion of its assets in bonds, repurchase agreements, cash and cash
equivalents.
Use of Hedging and Other Strategic Transactions
Aggressive Growth Trust 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,
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<PAGE> 49
- - 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 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 of futures contracts.
See "Hedging and Other Strategic Transactions" for further information
on these strategies.
EMERGING SMALL COMPANY TRUST
Investment Objective
The investment objective of the Emerging Small Company Trust is to seek
long-term growth of capital.
Investment Policies
Franklin Advisers, Inc. (also referred to as "Franklin Advisers")
manages the Emerging Small Company Trust. Franklin Advisers seeks to achieve the
portfolio's investment objective by investing, under normal market conditions,
at least 65% of the portfolio's total assets in common stock 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 preferred stocks, securities convertible into
common stocks, and warrants for the purchase of common stocks.
The portfolio may also invest up to 35% (measured at the time of
purchase) of its total assets in any combination of the following if the
investment presents a favorable investment opportunity consistent with the
portfolio's investment goal:
- equity securities of larger capitalization companies which the
Subadviser believes have the potential for strong growth potential,
and
- relatively well-known, larger companies in mature industries which the
Subadviser believes have the potential for capital appreciation.
The Subadviser will choose small cap companies that it believes are
positioned for rapid growth in revenues, earnings or assets, and that it can
acquire at a price it believes to be reasonable. The Subadviser looks for
companies it believes have distinct and sustainable competitive advantages, such
as a particular marketing or product niche, proven technology and industry
leadership. The Subadviser uses a disciplined "bottoms up" approach to stock
selection, blending fundamental and quantitative analysis. The Subadviser
diversifies the portfolio's assets across many industries, and from time to time
may invest substantially in certain sectors, including technology and
biotechnology. Small companies often pay no dividends, and current income is not
a factor in the selection of stocks.
The portfolio may invest up to 5% of its total assets in corporate debt
securities that the Subadviser believes have the potential for capital
appreciation as a result of improvements in the creditworthiness of the issuer.
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 rate B or above by Moody's or S&P (or comparable unrated
securities). The portfolio will not invest more than 5% of its total assets in
non-investment grade securities (rated lower than BBB by S&P or Baa by Moody'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 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 Depositary Receipts. The portfolio
currently intends to limit its investments in foreign securities to 10% of its
total assets.
The portfolio may also invest up to 10% of its total assets in real
estate investment trusts ("REITS"). See "Real Estate Securities Trust" below for
a discussion of REITS and the risks of investing in these trusts.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Emerging Small Company Trust may invest
all or a portion of its assets in repurchase agreements, cash and cash
equivalents.
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Use of Hedging and Other Strategic Transactions
The Emerging Small Company Trust may:
- - write (sell) covered put and call options and may buy put and call options
on securities and securities indices, and
- - buy and sell futures and options on futures with respect to securities,
indices and currencies.
See "Hedging and Other Strategic Transactions" for further information on these
strategies.
SMALL COMPANY BLEND TRUST
Investment Objective
The investment objective of the Small Company Blend Trust is to seek
long-term growth of capital and income. Generation of current dividends will be
a secondary consideration.
Investment Policies
Capital Guardian Trust Company (also referred to as "CGTC") manages the
Small Company Blend Trust. CGTC seeks to achieve this investment objective by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalization
between $50 million and $1 billion at the time of purchase. In determining
market capitalization, CGTC may consider the value of shares which are publicly
traded. The portfolio may hold ADRs and other U.S. registered securities of
foreign issuers which are denominated in U.S. dollars.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Capital Guardian Equity Trust may invest
all or a portion of its assets in bonds, cash and cash equivalents. CGTC's
judgment regarding the current investment outlook will determine the relative
amounts to be invested in these different asset classes.
Use of Hedging and Other Strategic Transactions
The Small Company Blend Trust is currently authorized to use all of the
investment strategies referred to under "Hedging and Other Strategic
Transactions." However, it is not presently contemplated that any of these
strategies will be used to a significant degree by the portfolio.
MID CAP GROWTH TRUST
(formerly, the Small/Mid Cap Trust)
Investment Objective
The investment objective of the Mid Cap Growth Trust is to seek
long-term capital appreciation.
Investment Policies
A I M Capital Management, Inc. (also referred to as "A I M") manages
the Constellation Trust. A I M seeks to achieve this investment objective by
investing the portfolio's assets principally in common stocks, with emphasis on
medium-sized and smaller emerging growth companies. A I M 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' prospectus 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.
Mid Cap Growth Trust's portfolio is primarily comprised of securities
of two basic categories of companies:
- - "core" companies, which A I M considers to have experienced above-average
and consistent long-term growth in earnings and to have excellent prospects
for outstanding future growth, and
- - "earnings acceleration" companies which A I M believes are currently
enjoying a dramatic increase in profits.
Mid Cap Growth Trust may also purchase the common stocks of foreign
companies. It is not anticipated, however, that foreign securities will
constitute more than 20% of the value of the portfolio. American Depositary
Receipts ("ADRs")
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and European Depositary Receipts ("EDRs") and other securities representing
underlying securities of foreign issuers are treated as foreign securities and
included in this 20% limitation.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Mid Cap Growth Trust may invest all or a
portion of its assets in bonds, repurchase agreements, cash and cash equivalents
denominated in U.S. dollars or foreign currency.
Use of Hedging and Other Strategic Transactions
Mid Cap Growth Trust 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),
- - foreign exchange transactions to hedge against possible variations in
foreign exchange rates between currencies of countries in which the
portfolio is invested including: the direct purchase of sale of foreign
currency, the purchase or sale of options on futures contract with respect
to foreign currency, the purchase or sale of forward contracts, exchange
traded futures contracts and options of futures contracts.
See "Hedging and Other Strategic Transactions" for further information on
these strategies.
MID CAP STOCK TRUST
Investment Objective
The investment objective of the Mid Cap Stock Trust is to seek
long-term growth of capital.
Investment Policies
Wellington Management Company (also referred to as "Wellington
Management") manages the Mid Cap Stock Trust. Wellington Management seeks to
achieve the Trust's objective by investing primarily in equity securities of
companies with market capitalizations that approximately match the range of
capitalization of the Wilshire Mid Cap 750 Index.
Wellington Management's investment approach combines proprietary
fundamental analysis with a quantitative screening process. Fundamental analysis
involves the assessment of a company through such factors as its business
environment, management, balance sheet, income statement, anticipated earnings,
revenues, earnings and other related measures of value. In analyzing companies
for investment, Wellington Management looks for, among other things, a strong
balance sheet, attractive industry dynamics, strong competitive advantages, and
attractive relative value within the context of a security's primary trading
market.
Wellington Management's proprietary quantitative screening process
seeks to narrow the universe of eligible stocks to a selective group of
companies worthy of investment consideration. Wellington Management then
attempts to identify the "best of class" companies for purchase in the
portfolio. The security selection process focuses on the identification of
industry niches which offer high secular growth prospects and attractive market
dynamics. Securities are sold when the investment has achieved its intended
purpose, or because it is no longer considered attractive.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Mid Cap Growth Trust may invest all or a
portion of its assets in bonds, cash and cash equivalents.
Use of Hedging and Other Strategic Transactions
The Mid Cap Stock Trust does not currently intend to use any Hedging
and Other Strategic Transactions.
OVERSEAS TRUST
(formerly, the International Growth and Income Trust)
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Investment Objective
The investment objective of the Overseas Trust is to seek growth of
capital.
Investment Policies
Fidelity Management Trust Company (also referred to as "FMTC") manages
the Overseas Trust. FMTC normally invests at least 65% the portfolio's total
assets in foreign securities (including American Depositary Receipts (ADRs) and
European Depositary Receipts (EDRs)). FMTC normally invests the portfolio's
assets primarily in common stocks.
The portfolio normally diversifies its investments across different
countries and regions. In allocating the portfolio's assets across countries and
region, 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 relies on
fundamental analysis of each issuer and its potential for success in light of
its current financial condition, it industry position and economic and market
conditions. Factors include growth potential, earnings estimates and management.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Overseas Trust may 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. During
unusual market conditions, the Overseas Trust may also temporarily use a
different investment strategy for defensive purposes.
Use of Hedging and Other Strategic Transactions
The Overseas Trust is currently authorized to use all of the various
investment strategies referred to under "Hedging and Other Strategic
Transactions."
INTERNATIONAL STOCK TRUST
Investment Objective
The investment objective of the International Stock Trust is long-term
growth of capital.
Investment Policies
Rowe Price-Fleming International, Inc. (also referred to as
"Price-Fleming") manages the International Stock Trust. Price-Fleming seeks to
attain this objective by investing the portfolio's assets primarily in common
stocks of established, non-U.S. companies. Geographic diversification will be
wide, including both developed and emerging markets. The portfolio invests in at
least three countries outside the United States.
The International Stock Trust invests substantially all of its assets
in common stocks. However, the portfolio may also invest in a variety of other
equity-related securities, such as preferred stocks, warrants and convertible
securities, as well as corporate and governmental debt securities, when
considered consistent with the portfolio's investment objectives and program.
The portfolio will not purchase any debt security which at the time of purchase
is rated below investment grade ("B" or below by Moody's or "BB" or below by
Standard & Poor's or comparable unrated securities). However, the portfolio may
retain a security which is downgraded to below investment grade after purchase.
Under normal market conditions, the portfolio's investment in securities other
than common stocks, is limited to no more than 35% of total assets. The
International Stock Trust will hold a certain portion of its assets in U.S. and
foreign dollar-denominated money market securities, including repurchase
agreements, in the two highest rating categories, maturing in one year or less.
This reserve position provides flexibility in meeting redemptions, requests and
expenses, and the timing of new investments.
Price-Fleming blends a "bottom-up" approach, based on its fundamental
research, with an awareness of a country's economic status and Price-Flemings
outlook. A company's prospects for achieving and sustaining above-average,
long-term earnings growth is generally Price-Fleming's primary focus. However,
valuation factors, such as price/earnings, price/cash flow, and price/book value
are also important considerations.
It is the present intention of Price-Fleming to invest in companies
based in (or governments of or within) the:
- Far East (for example, Japan, Hong Kong, Singapore and Malaysia),
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- Europe (for example, the United Kingdom, Germany, Hungary, Poland,
Netherlands, France, Spain and Switzerland),
- South Africa,
- Australia,
- Canada,
- Latin America, and
- such other areas and countries as Price-Fleming may determine from
time to time to be consistent with the portfolio's investment
objective.
It is expected that the portfolio's investments will ordinarily be traded on
exchanges located in the respective countries in which the various issuers of
such securities are principally based.
In determining the appropriate distribution of investments among
various countries and geographic regions, Price-Fleming ordinarily considers the
following factors:
- prospects for relative economic growth between foreign countries;
- expected levels of inflation;
- government policies influencing business conditions;
- the outlook for currency relationships; and
- the range of individual investment opportunities available to
international investors.
In analyzing companies for investment, Price-Fleming ordinarily looks
for one or more of the following characteristics:
- above-average earnings growth per share;
- high return on invested capital;
- healthy balance sheet;
- sound financial and accounting policies and overall financial
strength;
- strong competitive advantages;
- effective research and product development and marketing;
- efficient service;
- pricing flexibility;
- strength of management; and
- general operating characteristics which will enable the companies to
compete successfully in their marketplace.
While current dividend income is not a prerequisite in the selection of
International Stock Trust companies, the companies in which the portfolio
invests normally will have a record of paying dividends, and will generally be
expected to increase the amounts of such dividends in future years as earnings
increase.
The International Stock Trust may purchase the securities of certain
foreign investment portfolios or trusts called passive foreign investment
companies. Such trusts have been the only or primary way to invest in certain
countries. In addition to bearing their proportionate share of the International
Stock Trust's expenses (management fees and operating expenses), shareholders
will also indirectly bear similar expenses of such passive foreign investment
companies. Capital gains on the sale of such holdings are considered ordinary
income regardless of how long the portfolio held its investment. In addition,
the portfolio may be subject to corporate income tax and an interest charge on
certain dividends and capital gains earned from these investments, regardless of
whether such income and gains are distributed to shareholders. To avoid such tax
and interest, the portfolio intends to treat these securities as sold on the
last day of its fiscal year and recognize any gains for tax purposes at that
time; deductions for losses are allowable only to the extent of any gains
resulting from these deemed sales for prior taxable years will not be
recognized. Such gains will be considered ordinary income, which the portfolio
will be required to distribute even though it has not sold the security.
The portfolio may also invest a limited amount in fixed-income
securities. The risks of investing in these securities are set forth above under
"Risks of Investing in Certain Types of Securities." Because the portfolio will
only invest a limited amount in fixed income securities, the risks associated
with these securities will not affect the portfolio as much as a portfolio that
invests more of its assets in fixed-income securities.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the International Stock Trust may invest all
or a significant portion of its assets in
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- U.S. Government and corporate debt obligations rated investment
grade or above (or comparable unrated securities);
- U.S. and foreign dollar-denominated money market securities,
including repurchase agreements, in the two highest rating
categories, maturing in one year or less; and
- shares of the T. Rowe Price Reserve Investment Fund, an internal
T. Rowe Price money market fund that was established for the
exclusive use of the T. Rowe Price family of mutual funds and
other clients of T. Rowe Price and Price-Fleming.
When the portfolio is in a defensive position, the ability to achieve its
investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The International Stock Trust may also engage in a variety of
investment management practices, such as buying and selling futures and options
and engaging in foreign currency exchange contracts. The portfolio may invest up
to 10% of its total assets in hybrid instruments. Hybrid instruments are a type
of high-risk derivative which can combine the characteristics of securities,
futures and options. The Statement of Additional Information contains a more
complete description of such instruments and the risks associated therewith.
The International Stock Trust is currently authorized to use all of the
various investment strategies referred to under "Hedging and Other Strategic
Transactions."
INTERNATIONAL VALUE TRUST
Investment Objective
The investment objective of the International Value Trust is to seek
long-term growth of capital.
Investment Policies
Templeton Investment Counsel, Inc. (also referred to as "Templeton
Investment") manages the International Value Trust. Templeton Investment seeks
to achieve this investment objective by investing, under normal market
conditions, primarily in equity securities of companies located outside the
U.S., including in emerging markets.
Equity securities generally entitle the holder to participate in a
company's general operating results. These include common stocks and preferred
stocks. The portfolio also invests in American, European and Global Depositary
Receipts, which are certificates typically issued by a bank or trust company
that give their holders the right to receive securities issued by a foreign or
domestic company. Depending upon current market conditions, the portfolio
generally invests up to 25% of its total assets in debt securities of companies
and governments located anywhere in the world. Debt securities represent an
obligation of the issuer to repay a loan of money to it, and generally provide
for the payment of interest. Debt securities include bonds, notes and
debentures.
Templeton Investment's investment philosophy is "bottom-up,"
value-oriented, and long-term. In choosing equity investments, Templeton
Investment will focus on the market price of a company's securities relative to
its evaluation of the company's long-term earnings, asset value and cash flow
potential. A company's historical value measure, including price/earnings ratio,
profit margins and liquidation value, will also be considered.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the International Value Trust may not invest,
or may invest less, in international stocks. At these times, the International
Value Trust may invest all or a portion of its assets in U.S. securities, cash
and cash equivalents.
Use of Hedging and Other Strategic Transactions
The International Value Trust does not currently intend to use any of the
strategies referred to under "Hedging and Other Strategic Transactions."
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MID CAP BLEND TRUST
(formerly, Equity Trust)
Investment Objective
The principal investment objective of the Mid Cap Blend Trust is growth
of capital. Although current income is a secondary objective, growth of income
may accompany growth of capital.
Investment Policies
Fidelity Management Trust Company (also referred to as "FMTC") manages
the Mid Cap Blend Trust. FMTC seeks to attain this objective by investing the
portfolio's assets primarily in common stocks of U.S. issuers or securities
convertible into or which carry the right to buy common stocks. The Mid Cap
Blend Trust invests primarily in securities listed on national securities
exchanges, but from time to time it may also purchase securities traded in the
over-the-counter market. Portfolio securities may be selected with a view toward
either short-term or long-term capital growth.
The portfolio may also invest in non-convertible preferred stocks and
fixed-income securities. Normally, the portfolio will not invest more than 15%
of its assets in these securities. The risks of investing in these securities
are set forth above under "Risks of Investing in Certain Types of Securities."
Since the portfolio will only invest a limited extent in fixed-income
securities, the risks associated with fixed-income securities will not affect
the portfolio as much as a portfolio that invests more of its assets in
fixed-income securities.
The portfolio may invest up to 20% of its assets in foreign securities.
The risks of investing in foreign securities are set forth above under "Risks of
Investing in Certain Types of Securities." Since the portfolio will, at most,
invest 20% of its assets in foreign securities, the risks associated with
foreign securities will not affect the portfolio as much as a portfolio that
invests more of its assets in foreign securities.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Mid Cap Blend Trust may place any portion
of its assets in:
- investment grade debt securities (i.e., rated in one of the four
highest bond rating categories assigned by Moody's or Standard &
Poor's). The Mid Cap Blend Trust is not required to dispose of
such instruments in the event they are downgraded.
- preferred stocks,
- U.S. Government Securities, or
- cash.
When the portfolio is in a defensive position or awaiting investment of its
assets, the ability to achieve its investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The Mid Cap Blend Trust is currently authorized to use all of the
various investment strategies referred to under "Hedging and Other Strategic
Transactions." However, it is not presently anticipated that any of these
strategies will be used to a significant degree by the portfolio.
SMALL COMPANY VALUE TRUST
Investment Objective
The investment objective of the Small Company Value Trust is to seek
long-term growth of capital.
Investment Policies
Rosenberg Institutional Equity Management (also referred to as
"Rosenberg") manages the Small Company Value Trust. Rosenberg pursues this
objective by investing, under normal circumstances, at least 80% of the
portfolio's assets in common stocks of companies with total market
capitalization of less than $1 billion ("small capitalization securities") which
are traded principally in the markets of the United States. Because the
companies in which the Small Company Value Trust invests
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typically do not distribute significant amounts of company earnings to
shareholders, the Small Company Value Trust's objective places relatively
greater emphasis on capital appreciation than on current income.
Rosenberg uses a quantitative stock selection process to seek long-term
growth of capital. Rosenberg identifies and purchases those stocks which are
undervalued (i.e., stocks which are currently cheaper than stocks with similar
characteristics). Rosenberg seeks to construct a portfolio with characteristics
similar to those of the Small Company Value Trust's benchmark (currently the
Russell 2000 Index). These characteristics include market capitalization,
historic volatility or "beta" (a stock's relative volatility) and industry
weightings. In managing the portfolio, Rosenberg utilizes several computer
models to assess a company's fundamental value and earnings potential as well as
investor sentiment about the company. For additional information on Rosenberg's
computer models, general investment philosophy and strategy, see "Additional
Information Regarding Subadvisers" in the Statement of Additional Information.
The Small Company Value Trust may also invest without limit in common
stocks of foreign issuers which are listed on a United States securities
exchange or trade in the United States in the over-the-counter market. The Small
Company Value Trust will not invest in securities which are principally traded
outside of the United States.
Temporary Defensive Investing
To meet redemption requests or pending investment in common stocks or
during unusual market conditions, the Small Company Value Trust may also
temporarily hold a portion of its assets not invested in small capitalization
securities in the following instruments:
- full faith and credit obligations of the United States government
(e.g. U.S. Treasury Bills), and
- short-term notes, commercial paper or other money market
instruments of high quality (i.e., rated at least "A-2" or "AA"
by Standard & Poor's or "Prime 2" or "Aa" by Moody's) issued by
companies having an outstanding debt issue rated at least "AA" by
Standard & Poor's or at least "Aa" by Moody's or determined by
Rosenberg to be of comparable quality to any of the foregoing.
When the portfolio is in a defensive position, the ability to achieve
its investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The Small Company Value Trust is currently authorized to use all of the
investment strategies referred to under "Hedging and Other Strategic
Transactions."
GLOBAL EQUITY TRUST
Investment Objective
The investment objective of the Global Equity Trust is long-term
capital appreciation.
Investment Policies
Morgan Stanley Asset Management Inc. (also referred to as "Morgan
Stanley") manages the Global Equity Trust. Morgan Stanley seeks to attain this
objective by investing the portfolio's assets primarily in:
- common and preferred stocks,
- convertible securities,
- rights and warrants to purchase common stocks,
- American and Global Depository Receipts, and
- other equity securities of issuers throughout the world,
including issuers in the U.S. and emerging markets.
Under normal circumstances, at least 65% of the value of the total
assets of the Global Equity Trust are invested in equity securities and at least
20% of the value of the portfolio's total assets are invested in the common
stocks of U.S. issuers. The portfolio may also invest in money market
instruments. Although the portfolio intends to invest primarily in securities
listed on stock exchanges, it will also invest in equity securities that are
traded over-the-counter or that are not admitted to listing on a stock exchange
or traded on a regulated market. As a result of the absence of a public trading
market, such securities may pose liquidity risks.
In selecting stocks for the portfolio, Morgan Stanley initially
identifies those stocks that it believes to be undervalued in relation to the
issuer's assets, cash flow, earnings and revenues. Morgan Stanley then evaluates
the future
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value of such stocks by running the results of an in-depth study of the issuer
through a dividend discount model. Portfolio holdings are reviewed regularly and
fundamental analysis of the holdings is conducted to determine whether they
continue to conform to Morgan Stanley's value criteria. Equity securities which
no longer conform to such investment criteria will be sold. Although the
portfolio will not invest for short-term trading purposes, investment securities
may be sold from time to time without regard to the length of time they have
been held.
The Global Equity Trust may engage in forward foreign currency
exchanges and when-issued or delayed delivery securities.
Temporary Defensive Investing
To meet redemption requests or pending investments of its assets or
during unusual market conditions, the Global Equity Trust may invest up to 100%
of its assets temporarily in the following securities:
- U.S. government obligations,
- commercial paper,
- bank obligations,
- repurchase agreements,
- and negotiable U.S. dollar-denominated obligations of domestic
and foreign branches of U.S. depository institutions, U.S.
branches of foreign depository institutions, and foreign
depository institutions, in cash, or in other cash equivalents.
The portfolio may also acquire certificates of deposit and bankers' acceptances
of banks which meet criteria established by the Trust's Trustees. When the
portfolio is in a defensive position, the ability to achieve its investment
objective will be limited.
Use of Hedging and Other Strategic Transactions
The Global Equity Trust is currently authorized to use all of the
various investment strategies referred to under "Hedging and Other Strategic
Transactions." With the exception of currency transactions, however, it is not
presently anticipated that any of these strategies will be used to a significant
degree by the portfolio.
GROWTH TRUST
Investment Objective
The investment objective of the Growth Trust is to seek long-term
growth of capital.
Investment Policies
State Street Global Advisors (also referred to as "SSgA") manages the
Growth Trust. SSgA seeks to achieve this investment objective by investing
primarily in large capitalization growth securities (market capitalizations of
approximately $1 billion or greater). In selecting securities for the portfolio,
SSgA uses independent investment perspectives, value and growth, to identify
securities that are undervalued and have superior growth potential. The
portfolio is constructed to take advantage of those securities with the greatest
investment potential while seeking to minimize risk by maintaining portfolio
characteristic similar to the large capitalization growth segment of the U.S.
equity market, as measured by the Russell 1000 Growth Index.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Growth Trust may invest all or a portion
of its assets in bonds, cash and cash equivalents.
Use of Hedging and Other Strategic Transactions
The Growth Trust may purchase and sell futures contracts.
See "Hedging and Other Strategic Transactions" for further information
on these strategies.
LARGE CAP GROWTH TRUST
(formerly, the Aggressive Asset Allocation Trust)
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Investment Objective
The investment objective of the Large Cap Growth Trust is to seek
long-term growth of capital.
Investment Policies
Fidelity Management Trust Company (also referred to as "FMTC") manages
the Large Cap Growth Trust. FMTC normally invests the portfolio's assets
primarily in common stocks. FMTC normally invests at least 65% of the
portfolio's total assets in securities of companies with large market
capitalizations. FMTC defines large market capitalization companies 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 is not 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 relies 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 include growth potential, earnings
estimates and management.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Large Cap Growth Trust may 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.
During unusual market conditions, the Overseas Trust may also temporarily use a
different investment strategy for defensive purposes.
Use of Hedging and Other Strategic Transactions
The Large Cap Stock Trust is currently authorized to use all of the
various investment strategies referred to under "Hedging and Other Strategic
Transactions."
QUANTITATIVE EQUITY TRUST
Investment Objective
The investment objective of the Quantitative Equity Trust is to achieve
intermediate- and long-term growth through capital appreciation and current
income by investing in common stocks and other equity securities of well
established companies with promising prospects for providing an above average
rate of return.
Investment Policies
Manufacturers Adviser Corporation (also referred to as "MAC") manages
the Quantitative Equity Trust. MAC pursues this investment objective by
investing principally in common stocks or in securities convertible into common
stock or carrying rights or warrants to purchase common stocks or to participate
in earnings.
The Quantitative Equity Trust will invest principally in common stocks
or in securities convertible into common stocks or carrying rights or warrants
to purchase common stock or to participate in earnings. In selecting
investments, MAC places emphasis on companies with:
- good financial resources,
- strong balance sheet,
- satisfactory rate of return on capital,
- good industry position,
- superior management skills, and
- earnings that tend to grow at above average rates.
The portfolio's investments are not limited to securities of any particular type
or size of company, but high-quality growth and income stocks are emphasized.
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Investments are made primarily in securities listed on national
securities exchanges, but the Quantitative Equity Trust may purchase securities
traded in the United States over-the-counter market. The portfolio may purchase
securities on a forward-commitment, when-issued or delayed-delivery basis.
The Quantitative Equity Trust may invest in the following types of
foreign securities:
- U.S. dollar denominated obligations of foreign branches of U.S.
banks,
- securities represented by ADRs listed on a national securities
exchange or traded in the U.S. over-the-counter market,
- securities of a corporation organized in a jurisdiction other
than the U.S. and listed on the New York Stock Exchange or
NASDAQ, and
- securities denominated in U.S. dollars but issued by non U.S.
issuers and issued under U.S. Federal securities regulations (for
example, U.S. dollar denominated obligations issued or guaranteed
as to principal or interest by the Government of Canada or any
Canadian Crown agency).
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Quantitative Equity Trust may place all or
a portion of its assets in fixed-income securities, and cash and cash
equivalents. To the extent the portfolio is in a defensive position, the ability
to achieve its investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The Quantitative Equity Trust does not presently use any of the
investment strategies referred to under "Hedging and Other Strategic
Transactions" although it is authorized to use all of them.
BLUE CHIP GROWTH TRUST
Investment Objective
The primary investment objective of the Blue Chip Growth Trust is to
provide long-term growth of capital. Current income is a secondary objective.
Investment Policies
T. Rowe Price Associates, Inc. (also referred to as "T Rowe Price")
manages the Blue Chip Growth Trust. The portfolio invests at least 65% of its
total assets in the common stocks of large and medium-sized blue chip companies.
These are firms that in T. Rowe Price's view, are well established in their
industries and have the potential for above-average earnings growth.
In identifying blue chip companies, T. Rowe Price generally considers
the following characteristics:
- LEADING MARKET POSITIONS. Blue chip companies often have leading
market positions that are expected to be maintained or enhanced
over time. Strong positions, particularly in growing industries,
can give a company pricing flexibility as well as the potential
for good unit sales. These factors, in turn, can lead to higher
earnings growth and greater share price appreciation.
- SEASONED MANAGEMENT TEAMS. Seasoned management teams with a track
record of providing superior financial results are important for
a company's long-term growth prospects. T. Rowe Price analysts
will evaluate the depth and breadth of a company's management
experience.
- STRONG FINANCIAL FUNDAMENTALS. Companies should demonstrate
faster earnings growth than their competitors and the market in
general; high profit margins relative to competitors; strong cash
flow; a healthy balance sheet with relatively low debt; and a
high return on equity with a comparatively low dividend payout
ratio.
T. Rowe Price evaluates the growth prospects of companies and the
industries in which they operate. T. Rowe Price seeks to identify companies with
strong market franchises in industries that appear to be strategically poised
for long-term growth. This investment approach reflects T. Rowe Price's belief
that the combination of solid company fundamentals (with emphasis on the
potential for above-average growth in earnings) along with a positive outlook
for the overall industry will ultimately reward investors with a higher stock
price. While primary emphasis is placed on a company's prospects for future
growth, the portfolio will not purchase securities that, in T. Rowe Price's
opinion, are overvalued considering the underlying
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business fundamentals. In the search for substantial capital appreciation, the
portfolio looks for stocks which are attractively priced relative to their
anticipated long-term value.
Most of the assets of the portfolio are invested in U.S. common stocks.
However, the portfolio may also purchase other types of securities, for example,
(i) U.S. and non-U.S. dollar denominated foreign securities (up to 20% of its
total assets) including ADRs, (ii) convertible stocks and bonds, and (iii)
warrants. Investments in convertible securities, preferred stocks and debt
securities are limited to 25% of total assets.
The Blue Chip Growth Trust may invest in debt securities of any type
without regard to quality or rating. Such securities would be issued by
companies which meet the investment criteria for the portfolio but may include
non-investment grade debt securities (junk bonds). The portfolio will not
purchase a non-investment-grade debt security if, immediately after such
purchase, the portfolio would have more than 5% of its total assets invested in
such securities.
Temporary Defensive Investing
The Blue Chip Growth Trust may hold a certain portion of its assets in
money market reserves which can consist of shares of the T. Rowe Price Reserve
Investment Fund (an internal money market fund) as well as U.S. and foreign
dollar-denominated money market securities, including repurchase agreements, in
the two highest rating categories, maturing in one year or less. To meet
redemption requests or pending investment of its assets or during unusual market
conditions, the Blue Chip Growth Trust may invest without limitation in such
securities. To the extent the portfolio is in a defensive position, its ability
to achieve its investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The Blue Chip Growth Trust may also engage in a variety of investment
management practices, such as buying and selling futures and options and is
currently authorized to use all of the various investment strategies referred to
under "Hedging and Other Strategic Transactions." The portfolio may invest up to
10% of its total assets in hybrid instruments, which are a type of high-risk
derivative which can combine the characteristics of securities, futures and
options. The Statement of Additional Information contains a description of these
strategies and of certain risks associated therewith.
REAL ESTATE SECURITIES TRUST
Investment Objective
The investment objective of the Real Estate Securities Trust is to
achieve a combination of long-term capital appreciation and satisfactory current
income by investing in real estate related equity and fixed-income securities.
Investment Policies
Manufacturers Adviser Corporation (also referred to as "MAC") manages
the Real Estate Securities Trust. MAC seeks to attain this objective by
investing principally (at least 65% of total assets) in real estate investment
trust ("REIT") equity and debt securities and other securities issued by
companies which invest in real estate or real estate related interests. REITs
are pooled investment vehicles which invest primarily in income producing real
estate or real estate related loans or interests.
The Real Estate Securities Trust may also purchase common stocks,
preferred stocks, convertible securities and bonds of companies operating in
industry groups related to the real estate industry. This includes companies
engaged in the development of real estate, building and construction, and other
market segments related to real estate. The portfolio will not invest directly
in real property nor will it purchase mortgage notes directly.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Real Estate Securities Trust may place all
or a portion of its assets in fixed-income securities which may or may not be
real estate debt related securities, including cash or short-term debt
securities. To the extent the portfolio is in a defensive position, its
opportunity to achieve its investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The Real Estate Securities Trust does not presently use any of the
investment strategies referred to under "Hedging and Other Strategic
Transactions."
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VALUE TRUST
Investment Objective
The investment objective of the Value Trust is to realize an
above-average total return over a market cycle of three to five years,
consistent with reasonable risk.
Investment Policies
Miller Anderson & Sherrerd, LLP (also referred to as "MAS") manages the
Value Trust. MAS seeks to attain this objective by investing primarily in common
and preferred stocks, convertible securities, rights and warrants to purchase
common stocks, ADRs and other equity securities of companies with equity
capitalizations usually greater than $300 million.
Under normal circumstances, the Value Trust invests at least 65% of its
total assets in equity securities. The portfolio may also invest in obligations
issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities, corporate bonds, foreign bonds, zero coupons bonds,
repurchase agreements, cash equivalents, foreign currencies, investment company
securities and derivatives, including when-issued or delayed delivery
securities, forward foreign currency exchange contracts, futures, options and
swaps. The Value Trust may invest without limit in ADRs and may invest up to 5%
of its total assets in foreign equities excluding ADRs.
MAS' approach is to select equity securities which are deemed to be
undervalued relative to the stock market in general as measured by the S&P 500
Index. MAS bases it evaluations on value measures such as price/earnings ratios
and price/book ratios, as well as fundamental research. While MAS emphasizes
capital return somewhat more than income return, the Value Trust's total return
will consist of both capital and income returns. Stocks that are deemed to be
under-valued in the marketplace have, under most market conditions, provided
higher dividend income returns than stocks that are deemed to have long-term
earnings growth potential and which normally sell at higher price/earnings
ratios.
Use of Hedging and Other Strategic Transactions
The Value Trust is currently authorized to use all of the various
investment strategies referred to under "Hedging and Other Strategic
Transactions." The Statement of Additional Information contains a description of
these strategies and of certain risks associated therewith.
Special Risks
The principal risks of investing in the Value Trust are described in
the "Risk/Return Summary" in the beginning of this Prospectus. Some of the
companies whose securities are purchased by the Value Trust may be small or
medium sized. The risks of investing in small or medium sized companies are set
forth under "Risks of Investing in Certain Types of Securities."
EQUITY INDEX TRUST
Investment Objective
The investment objective of the Equity Index Trust is to approximate
the aggregate total return of publicly traded common stocks which are included
in the Standard & Poor's 500 Composite Stock Price Index (the "Index").
Investment Policies
The portfolio is designed to provide a less costly and convenient way
to invest in the equity securities of a diversified group of U.S. companies. The
portfolio is not actively managed; rather MAC tries to duplicate the performance
of the Index by investing the portfolio's assets in the common stocks that are
included in the Index in approximately the proportion of their respective market
value weightings in the Index.
The portfolio uses the Index as its standard performance comparison
because the Index (i) represents more than 70% of the total market value of all
publicly traded common stocks in the United States and (ii) is widely viewed
among investors as representative of the performance of publicly traded common
stocks in the United States.
The Index is an unmanaged index composed of 500 selected common stocks,
over 95% of which are listed on the New York Stock Exchange. The performance of
the Index is based on changes in the prices of stocks comprising the Index and
assumes the reinvestment of all dividends paid on such stocks. Taxes, brokerage
commissions and other fees are
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disregarded in computing the level of the Index. Standard & Poor's1 selects the
stocks to be included in the Index on a proprietary basis but does incorporate
such factors as the market capitalization and trading activity of each stock and
its adequacy as representative of stocks in a particular industry group. Stocks
in the Index are weighted according to their market capitalization (i.e., the
number of shares outstanding multiplied by the stock's current price).
Since MAC attempts to match the performance of the Index, the adverse
financial situation of a company will not result in its elimination from the
portfolio unless, of course, the company in question is removed from the Index.
Conversely, the projected superior financial performance of a company would not
normally lead to an increase in the portfolio's holdings of the company.
Under normal circumstances, the net assets of the Equity Index Trust
will be invested in any combination of the following investments:
- representative common stocks
- Standard & Poor's 500 Futures Contracts, and
- Standard & Poor's Depository Receipts(R).
With regard to the portion of the Equity Index Trust invested in common
stocks, the method used to select investments for the portfolio involves
investing in common stocks in approximately the order of their respective market
value weightings in the Index, beginning with those having the highest
weightings. For diversification purposes, the portfolio can purchase stocks with
smaller weightings in order to represent other sectors of the Index.
There is no minimum or maximum number of stocks included in the Index
which the Equity Index Trust must hold. Under normal circumstances, it is
expected that the portion of the portfolio invested in stocks would be between
300 and 500 different stocks included in the Index. The portfolio may compensate
for the omission of a stock that is included in the Index, or for purchasing
stocks in other than the same proportion that they are represented in the Index,
by purchasing stocks that are believed by MAC to have characteristics that
correspond to those of the omitted stocks.
Tracking error is measured by the difference between the total return
for the Index and the total return for the portfolio after deductions of fees
and expenses. All tracking error deviations are reviewed to determine the
effectiveness of investment policies and techniques. Tracking error is reviewed
at least weekly and more frequently if such a review is indicated by significant
cash balance changes, market conditions or changes in the composition of the
Index. If deviation accuracy is not maintained, the Equity Index Trust will
rebalance its composition by selecting securities which, in the opinion of MAC,
will provide a more representative sampling of the capitalization of the
securities in the Index as a whole or a more representative sampling of the
sector diversification in the Index.
The portfolio may also invest in short-term debt securities to maintain
liquidity or pending investment in stocks or Standard & Poor's Stock Index
Futures Contracts (S&P 500 Futures Contracts).
Standard & Poor's licenses certain trademarks and trade names to the
Trust but disclaims any responsibility or liability to the Trust and its
shareholders. See Appendix II in the Statement of Additional Information for
such disclaimer.
Use of Hedging and Other Strategic Transactions
The Equity Index Trust may invest an unlimited portion of its net
assets in S&P 500 Futures Contracts as long as the portfolio has net assets of
$25 million or less. If the portfolio's net assets equal or exceed $25 million,
it may invest no more than 20% of its net assets in S&P 500 Futures Contracts. A
more complete description of this investment strategy appears under "Hedging and
Other Strategic Transactions" below in this Prospectus and in the Statement of
Additional Information.
GROWTH AND INCOME TRUST
Investment Objective
The investment objective of the Growth and Income Trust is to provide
long-term growth of capital and income consistent with prudent investment risk.
Investment Policies
Wellington Management Company, LLP (also referred to as "Wellington
Management") manages the Growth and Income Trust. Wellington Management seeks to
achieve the portfolio's objective by investing primarily in a diversified
portfolio
- ----------
1"Standard & Poor's(R)," "S&P 500(R)," "S&P(R)," "Standard & Poor's 500(R)" and
"500" are trademarks of McGraw-Hill, Inc.
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of common stocks of U.S. issuers which Wellington Management believes
are of high quality. Wellington Management believes that high quality is
evidenced by:
- a leadership position within an industry,
- a strong or improving balance sheet,
- relatively high return on equity,
- steady or increasing dividend payout, and
- strong management skills.
The Growth and Income Trust's investments primarily emphasize dividend-paying
stocks of larger companies. The portfolio may also invest in securities
convertible into or which carry the right to buy common stocks. These securities
include those convertible securities issued in the Euromarket, preferred stocks
and debt securities.
Wellington Management selects portfolio investments on the basis of
fundamental analysis, which it utilizes to identify those securities that
provide the potential for long-term growth of capital and income. Fundamental
analysis involves assessing a company and its business environment, management,
balance sheet, income statement, anticipated earnings and dividends and other
related measures of value. When selecting securities of issuers domiciled
outside of the United States, Wellington Management also monitors and evaluates
the economic and political climate and the principal securities markets of the
country in which each company is located. Securities are sold when the
investment has achieved its intended purpose, or because it is no longer
considered attractive.
The Growth and Income Trust invests primarily in securities listed on
national securities exchanges, but from time to time it may also purchase
securities traded in the over-the-counter market. The Growth and Income Trust
may also invest up to 20% of its assets in foreign securities. The risks of
investing in foreign securities are set forth above under "Risks of Investing in
Certain Types of Securities." Since the portfolio will only invest at most 20%
of its assets in foreign securities, the risks associated with foreign
securities will not affect the portfolio as much as a portfolio that invests
more of its assets in foreign securities.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Growth and Income Trust may invest up to
100% of its assets in securities which are authorized for purchase by the
Investment Quality Bond Trust (excluding non-investment grade securities) or the
Money Market Trust. To the extent the portfolio is in a defensive position, its
ability to achieve its investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The Growth and Income Trust is currently authorized to use all of the
various investment strategies referred to under "Hedging and Other Strategic
Transactions." However, it is not presently anticipated that any of these
strategies will be used to a significant degree by the portfolio.
U.S. LARGE CAP VALUE TRUST
Investment Objective
The investment objective of the U.S. Large Cap Value Trust is to seek
long-term growth of capital and income.
Investment Policies
Capital Guardian Trust Company (also referred to as "CGTC") manages the
U.S. Large Cap Value Trust. CGTC seeks to achieve this investment objective by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalization
greater than $500 million at the time of purchase. In selecting investments,
greater consideration is given to potential appreciation and future dividends
than to current income. The portfolio may hold ADRs and other U.S. registered
securities of foreign issuers which are denominated in U.S. dollars.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the U.S. Large Cap Value Trust may invest all
or a portion of its assets in preferred stocks, bonds, cash and cash
equivalents. CGTC's judgment regarding the current investment outlook will
determine the relative amounts to be invested in these different asset classes.
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Use of Hedging and Other Strategic Transactions
The U.S. Large Cap Value Trust is currently authorized to use all of the
investment strategies referred to under "Hedging and Other Strategic
Transactions." However, it is not presently contemplated that any of these
strategies will be used to a significant degree by the portfolio.
EQUITY-INCOME TRUST
Investment Objective
The investment objective of the Equity-Income Trust is to provide
substantial dividend income and also long-term capital appreciation.
Investment Policies
T. Rowe Price Associates, Inc. (also referred to as "T. Rowe Price")
manages the Equity-Income Trust. T. Rowe Price seeks to attain this objective by
investing, under normal circumstances, at least 65% of the portfolio's total
assets in the common stocks of established companies paying above-average
dividends. T. Rowe Price believes that income can contribute significantly to
total return over time and expects the portfolio's yield to exceed that of the
S&P 500 Index. Dividends can also help reduce the portfolio's volatility during
periods of market turbulence and help offset losses when stock prices are
falling.
The Equity-Income Trust will generally consider companies with the
following characteristics:
- established operating histories;
- above-average dividend yield relative to the S&P 500 Index;
- low price/earnings ratios relative to the S&P 500 Index;
- sound balance sheets and other financial characteristics; and
- low stock price relative to a company's underlying value, as
measured by assets, cash flow or business franchises.
The Equity-Income Trust tends to take a "value" approach and invests in
stocks and other securities that appear to be temporarily undervalued by various
measures and may be temporarily out of favor, but have good prospects for
capital appreciation and dividend growth. Value investors seek to buy a stock
(or other security) when its price is low in relation to what they believe to be
its real worth or future prospects. By identifying companies whose stocks are
currently out of favor, value investors hope to realize significant appreciation
as other investors recognize a stock's intrinsic value. Finding undervalued
stocks requires considerable research to identify the particular stocks, to
analyze each company's underlying financial condition and prospects, and to
assess the likelihood that a stock's underlying value will be recognized by the
market and reflected in its price.
The Equity-Income Trust may also purchase other types of securities,
for example,
- - U.S. and non-U.S. dollar denominated foreign securities including ADRs (up
to 25% of total assets),
- - preferred stocks,
- - convertible stocks and bonds, and
- - warrants.
The Equity-Income Trust may also invest in debt securities of any type,
including municipal securities and non-investment grade debt securities
(commonly known as "junk bonds") without regard to quality or rating. The
portfolio will not purchase a non-investment-grade debt security if immediately
after such purchase the portfolio would have more than 10% of its total assets
invested in such securities.
The portfolio may invest in fixed-income securities including up to 10%
in non-investment grade fixed income securities. The risks of investing in
fixed-income securities are set forth above under "Risks of Investing in Certain
Types of Securities. Since the portfolio invests primarily in equity securities,
the risks associated with fixed-income securities will not affect the portfolio
as much as a portfolio that invests more of its assets in fixed-income
securities.
Temporary Defensive Investing
The Equity-Income Trust may hold a certain portion of its assets in
money market reserves which can consist of shares of the T. Rowe Price Reserve
Investment Fund (an internal money market fund) as well as U.S. and foreign
dollar-denominated money market securities, including repurchase agreements, in
the two highest rating categories, maturing in one
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year or less. To meet requests or pending investment of its assets or during
unusual market conditions, the portfolio may invest without limitation in such
securities. To the extent the portfolio is in a defensive position, its ability
to achieve its investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The Equity-Income Trust may also engage in a variety of investment
management practices, such as buying and selling futures and options. The
portfolio may invest up to 10% of its total assets in hybrid instruments. Hybrid
instruments are a type of high-risk derivative which can combine the
characteristics of securities, futures and options. Such securities may bear
interest or pay dividends at below market (or even relatively nominal) rates.
The Statement of Additional Information contains more complete description of
such instruments and the risks associated therewith.
The Equity-Income Trust is currently authorized to use all of the
various investment strategies referred to under "Hedging and Other Strategic
Transactions."
INCOME & VALUE TRUST
(formerly, the Moderate Asset Allocation Trust)
Investment Objective
The investment objective of the Income & Value Trust is to seek the
balanced accomplishment of (a) conservation of principal and (b) long-term
growth of capital and income.
Investment Policies
Capital Guardian Trust Company (also referred to as "CGTC") manages the
Income & Value Trust. CGTC seeks to achieve this investment objective by
investing the portfolio's assets in both equity and fixed-income securities.
CGTC has full discretion to determine the allocation of assets between equity
and fixed-income securities. Generally, between 25% and 75% of the portfolio's
assets will be invested in fixed-income securities unless CGTC determines that
some other proportion would better serve the portfolio's investment objective.
FIXED INCOME SECURITIES. At least 80% of the fixed-income portion of
the portfolio will consist of the following:
- - securities rated "Baa" or better at the time of purchase by Moody's
Investors Service, Inc. or BBB by Standard & Poor's Corporation or deemed
by CGTC to be of equivalent investment quality including mortgage-related
and asset backed securities (see "Other Risks of Investing" below for a
description of these securities);
- - securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities;
- - cash or cash equivalents including commercial bank obligations and
commercial paper.
Fixed income securities may include ADRs, Yankee Bonds and Eurodollar
instruments which are U.S. dollar denominated.
EQUITY SECURITIES. Equity securities shall be listed on national
securities exchanges or in the national OTC market (also known as NASDAQ) and
may include ADRs and other U.S. registered securities of foreign issuers which
are denominated in U.S. dollars.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Income & Value Trust may invest all or a
portion of its assets in fixed-income securities, cash and cash equivalents.
Use of Hedging and Other Strategic Transactions
The Income & Value Trust is currently authorized to use all of the investment
strategies referred to under "Hedging and Other Strategic Transactions."
However, it is not presently contemplated that any of these strategies will be
used to a significant degree by the portfolio.
BALANCED TRUST
Investment Objective
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The investment objective of the Balanced Trust is current income and
capital appreciation.
Investment Policies
Founders Asset Management LLC (also referred to as "Founders") is the
manager of the Balanced Trust. Founders seeks to attain this objective by
investing the portfolio's assets in a balanced portfolio of (i) common stocks,
(ii) U.S. and foreign government obligations and (iii) a variety of corporate
fixed-income securities.
The Balanced Trust normally invests up to 75% of its total assets in
common stocks, convertible corporate obligations, and preferred stocks. The
portfolio emphasizes investment in dividend-paying common stocks with the
potential for increased dividends, as well as capital appreciation. The
portfolio also may invest in non-dividend-paying stocks if, in Founders'
opinion, they offer better prospects for capital appreciation.
The Balanced Trust may invest in fixed-income securities, convertible
securities and preferred stocks that have the following ratings:
Convertible Securities and
Rating Agency Fixed-Income Securities Preferred Stocks
- -------------------------------------------------------------------------------
Moody's B or higher B or higher*
Standard & Poor's B or higher B or higher*
* Subject to the 5% limitation on convertible securities set forth below.
The Balanced Trust will invest at least 25% of its total assets in investment
grade fixed-income securities. The portfolio may invest however, in an unlimited
amount of fixed-income securities.
Up to 5% of the Balanced Trust's total assets may be invested in
lower-grade ("Ba" or less by Moody's, "BB" or less by Standard & Poor's) or
unrated fixed income and convertible securities (commonly referred to as junk
bonds), where Founders determines that such securities present attractive
opportunities. Investments in preferred stocks are not subject to this 5% limit
and the portfolio may invest without limitation in unrated preferred stocks. The
portfolio will not, however, invest in fixed income securities, convertible
securities or preferred stocks rated lower than "B" (or comparable unrated
securities). The portfolio is not required to dispose of fixed-income
securities, convertible securities or preferred stocks whose ratings are
downgraded below these ratings subsequent to the portfolio's purchase of the
securities, unless such a disposition is necessary to reduce the portfolio's
holdings of fixed income securities and convertible securities to less that 5%
of its total assets.
The Balanced Trust may invest without limit in ADRs may invest up to
30% of its total assets in foreign securities (other than ADRs). The portfolio
will not invest more than 25% of its total assets in the securities of issuers
located in any one country.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, up to 100% of the assets of the Balanced Trust
may be invested temporarily in the following securities:
- U.S. Government obligations,
- U.S. Treasury STRIPS,
- commercial paper
- bank obligations,
- repurchase agreements, and
- negotiable U.S. dollar-denominated obligations of domestic and
foreign branches of U.S. depository institutions, U.S. branches
of foreign depository institutions, and foreign depository
institutions, in cash, or in other cash equivalents.
The portfolio may also acquire certificates of deposit and bankers'
acceptances of banks which meet criteria established by the Trust's Board of
Trustees. To the extent the portfolio is in a defensive position, the ability to
achieve its investment objective will be limited.
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Use of Hedging and Other Strategic Transactions
The Balanced Trust is currently authorized to use all of the various
investment strategies referred to under "Hedging and Other Strategic
Transactions."
HIGH YIELD TRUST
Investment Objective
The investment objective of the High Yield Trust is to realize an
above-average total return over a market cycle of three to five years,
consistent with reasonable risk.
Investment Policies
Miller Anderson & Sherrerd, LLP (also referred to as "MAS") manages the
High Yield Trust. MAS seeks to attain this objective by investing primarily (at
least 65% under normal market conditions) of the portfolio's total assets in
high yield debt securities, including corporate bonds and other fixed-income
securities (such as preferred stocks and convertible securities) which have the
following ratings( or, if unrated, are considered to be of equivalent quality):
Corporate Bonds, Preferred Stocks and
Rating Agency Convertible Securities
------------------------------------------------------------------
Moody's . Ba through C
Standard & Poor's BB through D
Securities rated less than Baa by Moody's or BBB by Standard & Poor's are
classified as non-investment grade securities and are commonly referred to as
junk bonds.
The High Yield Trust expects to achieve its objective through
maximizing current income although the portfolio may seek capital growth
opportunities when consistent with its objective. The portfolio's average
weighted maturity ordinarily will be greater than five years.
MAS invests the portfolio's assets in high yield securities, which are
chosen based on its analysis of economic and industry trends and individual
security characteristics. MAS conducts a credit analysis on each security
considered for investment to evaluate the security's potential return relative
to its risk. In-depth financial analysis is used to uncover opportunities in
undervalued issues. A high level of diversification is also maintained to limit
credit exposure to individual issuers.
MAS' fixed-income strategy has two primary components: (i) value
investing and (ii) maturity and duration management. Value investing is where
MAS seeks to identify undervalued sectors and securities through analysis of
credit quality, option characteristics and liquidity. MAS uses quantitative
models in conjunction with judgment and experience to evaluate and select
securities with embedded put or call options (options which are part of the
security) which represent opportunities for price appreciation. Successful value
investing will permit a portfolio to benefit from the price appreciation of
individual securities during periods when interest rates are unchanged.
Maturity and duration management of a portfolio is the active
management of the portfolio in anticipation of cyclical interest rate changes.
Adjustments are not made in an effort to capture short-term, day-to- day
movements in the market, but instead are implemented in anticipation of longer
term shifts in the levels of interest rates. MAS makes adjustments to shorten
portfolio maturity and duration to limit capital losses during periods when
interest rates are expected to rise. Conversely, MAS makes adjustments to
lengthen maturity to produce capital appreciation in periods when interest rates
are expected to fall. The foundation for maturity and duration strategy lies in
analysis of the U.S. and global economies, focusing on levels of real interest
rates, monetary and fiscal policy actions, and cyclical indicators.
The High Yield Trust may invest greater than 50% of its total assets in
mortgage-backed securities. These include securities which represent pools of
mortgage loans made by lenders such as commercial banks, savings and loan
associations, mortgage bankers and others. The pools are assembled by various
governmental, government-related and private organizations. The portfolio's
primary emphasis will be in mortgage-backed securities issued by the various
government-related organizations. However, the portfolio may invest, without
limit, in mortgage-backed securities issued by private issuers rated investment
grade by Moody's or Standard & Poor's (or deemed by MAS to be of comparable
investment quality). It is not anticipated that greater than 25% of the
portfolio's assets will be invested in mortgage pools comprised of private
organizations. See the discussion regarding mortgage-backed securities under
"Other Risks of Investing" as well as
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"Investment Policies -- Other Instruments" in the Statement of Additional
Information for a more detailed description of these investments and of certain
risks associated therewith.
The High Yield Trust may invest up to 100% of its assets in foreign
bonds and other fixed-income securities denominated in foreign currencies,
where, in the opinion of MAS, the combination of current yield and currency
value offer attractive expected returns. Foreign securities in which the
portfolio may invest include emerging market securities. MAS' approach to
emerging markets investing is based on its evaluation of both short-term and
long-term international economic trends and the relative attractiveness of
emerging markets and individual emerging market securities. Emerging markets
describes any country which is generally considered to be an emerging, or
developing country by the international financial community, such as the
International Bank for Reconstruction and Development (more commonly known as
the World Bank) and the International Finance Corporation. The portfolio may
also invest in securities created through the Brady Plan. The Brady Plan is a
program under which heavily indebted countries have restructured their bank debt
into bonds.
Temporary Defensive Investing
To meet redemptions or pending investment of its assets or during
unusual market conditions, up to 100% of the High Yield Trust's assets may be
invested in cash, cash equivalents and repurchase agreements. To the extent that
the portfolio is in a defensive position, the ability to achieve its investment
objective will be limited.
Use of Hedging and Other Strategic Transactions
The High Yield Trust is currently authorized to use all of the various
investment strategies referred to under "Hedging and Other Strategic
Transactions."
STRATEGIC BOND TRUST
Investment Objective
The investment objective of the Strategic Bond Trust is to seek a high
level of total return consistent with preservation of capital.
Investment Policies
Salomon Brothers Asset Management Inc (also referred to as "SBAM")
manages the Strategic Bond Trust. SBAM seeks to achieve this objective by
allocating the portfolio's assets among five sectors of the fixed-income market
listed below.
- U.S. Government obligations,
- investment grade U.S. corporate fixed-income securities,
- high yield corporate fixed-income securities,
- mortgage-backed securities, and
- investment grade and high yield international fixed-income
securities.
SBAM's allocation process is based on its analysis of current economic
and market conditions and the relative risks and opportunities presented in
these markets. SBAM will determines the amount of assets to be allocated to each
type of security in which the portfolio invests based on its assessment of the
maximum level of total return that can be achieved from a portfolio which is
invested in these securities without incurring undue risks to principal value.
In making this determination, SBAM relies in part on quantitative analytical
techniques that measure relative risks and opportunities of each type of
security. SBAM also relies on its own assessment of economic and market
conditions both on a global and local (country) basis. SBAM considers economic
factors which include current and projected levels of growth and inflation,
balance of payment status and monetary policy. The allocation of assets to
international debt securities is further influenced by current and expected
currency relationships and political and sovereign factors. The portfolio's
assets may not always be allocated to the highest yielding securities if SBAM
believes that such investments would impair the portfolio's ability to preserve
shareholder capital. SBAM will continuously review this allocation of assets and
make such adjustments as it deems appropriate. The portfolio does not plan to
establish a minimum or a maximum percentage of the assets which it will invest
in any particular type of fixed-income security.
SBAM is an affiliate of Salomon Brothers Inc. ("SBI"), and in making
investment decisions is able to draw on the research and market expertise of SBI
with respect to fixed-income securities.
The types and characteristics of the U.S. government obligations,
mortgage-backed securities, investment grade corporate fixed-income securities
and investment grade international fixed-income securities purchased by the
Strategic
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Bond Trust are set forth in the discussion of investment objectives
and policies for the Investment Quality Bond, U.S. Government Securities and
Global Government Bond Trusts, and in the section entitled "Other Investments"
in the Statement of Additional Information. The types and characteristics of the
money market securities purchased by the portfolio are set forth in the
discussion of investment objectives of the Money Market Trust. Potential
investors should review these other discussions in considering an investment in
shares of the Strategic Bond Trust. The Strategic Bond Trust may invest without
limitation in high yield domestic and foreign fixed-income securities and up to
100% of the Strategic Bond Trust's assets may be invested in foreign securities.
SBAM has discretion to select the range of maturities of the various
fixed-income securities in which the portfolio invests. Such maturities may vary
substantially from time to time depending on economic and market conditions.
The high yield sovereign fixed-income securities in which the Strategic
Bond Trust may invest are U.S. dollar-denominated and non-dollar-denominated
fixed-income securities issued or guaranteed by governments or governmental
entities of developing and emerging countries. SBAM expects that these countries
will consist primarily of those which have issued or have announced plans to
issue Brady Bonds, but the portfolio is not limited to investing in the debt of
such countries. Brady Bonds are debt securities issued under the framework of
the Brady Plan.
SBAM intends to concentrate the portfolio's investments in sovereign
debt in Latin American countries, including Mexico and Central and South
American and Caribbean countries. SBAM also expects to take advantage of
additional opportunities for investment in the debt of North African countries
(such as Nigeria and Morocco), Eastern European countries (such as Poland and
Hungary), and Southeast Asian countries (such as the Philippines). Sovereign
governments may include national, provincial, state, municipal or other foreign
governments with authority to impose taxes. Governmental entities may include
the agencies and instrumentalities of such governments, as well as state-owned
enterprises.
Although SBAM does not anticipate investing in excess of 75% of the
portfolio's assets in domestic and developing country fixed-income securities
that are rated below investment grade, the portfolio may invest a greater
percentage in such securities when, in the opinion of the SBAM, the yield
available from such securities outweighs their additional risks. By investing a
portion of the portfolio's assets in securities rated below investment grade, as
well as through investments in mortgage-backed securities and international debt
securities, as described below, SBAM seeks to provide investors with a higher
yield than a high-quality domestic corporate bond fund with less risk than a
fund that invests principally in securities rated below investment grade.
Certain of the debt securities in which the portfolio may invest may have, or be
considered comparable to securities having, the lowest ratings for
non-subordinated debt instruments assigned by Moody's or Standard & Poor's
(i.e., rated C by Moody's or CCC or lower by Standard & Poor's).
In light of the risks associated with investing in high yield corporate
and sovereign debt securities, SBAM considers various factors in evaluating the
credit worthiness of an issue. These factors will typically include:
Corporate Debt Securities Sovereign Debt Instruments
- ---------------------------------------- ---------------------------------------
- - issuer's financial resources, - economic and political conditions
- - issuer's sensitivity to economic within the issuer's country,
conditions and trends, - issuer's external and overall
- - operating history of the issuer, and amount of debt, and its ability to
- - experience and track record of the pay principal and interest when due,
issuer's management - issuer's access to capital markets
and other sources of funding, and
- issuer's debt service payment
history
SBAM also reviews the ratings, if any, assigned to a security by any
recognized rating agencies, although its judgment as to the quality of a debt
security may differ from that suggested by the rating published by a rating
service. The Strategic Bond Trust's ability to achieve its investment objective
may be more dependent on SBAM's credit analysis than would be the case if it
invested in higher quality debt securities.
Temporary Defensive Investing
The Strategic Bond Trust currently intends to invest substantially all
of its assets in fixed-income securities. To meet redemption requests or pending
investment of assets, however, the Strategic Bond Trust may invest up to 20% of
its assets in high-quality short-term money market instruments. During unusual
market conditions, the Strategic Bond Trust may invest its assets without limit
in high-quality short-term money market instruments. To the extent the portfolio
is in a defensive position, the ability to achieve its investment objective will
be limited.
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Use of Hedging and Other Strategic Transactions
The Strategic Bond Trust is currently authorized to use all of the
various investment strategies referred to under "Hedging and Other Strategic
Transactions." With the exception of currency transactions, however, it is not
presently anticipated that any of these strategies will be used to a significant
degree by the portfolio.
GLOBAL BOND TRUST
(formerly, the Global Government Bond Trust)
Investment Objective
The investment objective of the Global Bond Trust is to seek to realize
maximum total return, consistent with preservation of capital and prudent
investment management.
Investment Policies
Pacific Investment Management Company (also referred to as "PIMCO")
manages the Global Bond Trust. PIMCO seeks to achieve this investment objective
by investing the portfolio's assets primarily in fixed income securities
denominated in major foreign currencies, baskets of foreign currencies (such as
the euro), and the U.S. dollar.
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 current opinion as to the proper allocation of assets among
domestic and foreign issuers, investments in the securities of issuers located
outside the United States will normally vary between 25% and 75% of the
portfolio's assets. The portfolio may 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 S&P (or, if unrated, determined by PIMCO to be of comparable
quality). The average portfolio duration of the Global Bond Trust 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 utilizes economic
forecasting, interest rate anticipation, credit and call risk analysis, foreign
currency exchange rate forecasting, and other security selection techniques. The
proportion of the Global Bond Trust'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 types of fixed income securities in which the Global Bond Trust may
invest include the following securities which unless otherwise noted may be
issued by domestic or foreign issuers and may be denominated in U.S. dollars or
foreign currencies:
- - securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities;
- - corporate debt securities, including convertible securities and corporate
commercial paper;
- - mortgage-backed and other asset-backed securities;
- - inflation-indexed bonds issued by both governments and corporations;
- - structured notes, including hybrid or "indexed" securities;
- - catastrophe bonds;
- - loan participations;
- - delayed funding loan and revolving credit facilities;
- - bank certificates of deposit, fixed time deposits and bankers' acceptances;
- - debt securities issued by states or local governments and their agencies,
authorities and other instrumentalities;
- - repurchase agreements and reverser repurchase agreements;
- - obligations of foreign governments or their subdivisions, agencies and
instrumentalities; and
- - obligations of international agencies or supranational entities.
Fixed income securities may have fixed, variable, or floating rates of interest,
including rates of interest that vary inversely at a multiple of a designated or
floating rate, or that vary according to change in relative values of
currencies.
Temporary Defensive Investing
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To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Global Bond Trust 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.
Use of Hedging and Other Strategic Transactions
Global Bond Trust may:
- - purchase and sell options on domestic and foreign securities, securities
indexes 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 Global Bond Trust may use the above-mentioned strategies to obtain market
exposure to the securities in which the portfolio primarily invests and to hedge
currency risk.
See "Hedging and Other Strategic Transactions" for further information on these
strategies.
TOTAL RETURN TRUST
Investment Objective
The investment objective of the Total Return Trust is to seek to
realize maximum total return, consistent with preservation of capital and
prudent investment management.
Investment Policies
Pacific Investment Management Company (also referred to as "PIMCO")
manages the Total Return Trust. PIMCO seeks to achieve this investment objective
by investing, under normal market conditions, at least 65% of the portfolio's
assets in a diversified portfolio of fixed income securities of varying
maturities. The average portfolio duration of the Total Return Trust will
normally vary within a three- to six- year time frame based on PIMCO's forecast
for interest rates. (Duration is a measure of the expected life of a fixed
income security on a present value basis.)
The portfolio may 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 S&P (or if unrated, determined by PIMCO to be of comparable quality).
The portfolio may also invest up to 20% of its assets in securities denominated
in foreign currencies, and may invest beyond this limit in U.S.
dollar-denominated securities of foreign issuers. Portfolio holdings will be
concentrated in areas of the bond market (based on quality, sector, coupon or
maturity) which PIMCO believes to be relatively undervalued.
In selecting securities for the portfolio, PIMCO utilizes economic
forecasting, interest rate anticipation, credit and call risk analysis, foreign
currency exchange rate forecasting, and other security selection techniques. The
proportion of the Total Return Trust'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 types of fixed income securities in which the Total Return Trust
may invest include the following securities which unless otherwise noted may be
issued by domestic or foreign issuers and may be denominated in U.S. dollars or
foreign currencies:
- - securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities;
- - corporate debt securities, including convertible securities and corporate
commercial paper;
- - mortgage-backed and other asset-backed securities;
- - inflation-indexed bonds issued by both governments and corporations;
- - structured notes, including hybrid or "indexed" securities,
- - catastrophe bonds;
- - loan participations;
- - delayed funding loan and revolving credit facilities;
- - bank certificates of deposit, fixed time deposits and bankers' acceptances;
- - debt securities issued by states or local governments and their agencies,
authorities and other instrumentalities;
- - repurchase agreements and reverser repurchase agreements;
- - obligations of foreign governments or their subdivisions, agencies and
instrumentalities; and
- - obligations of international agencies or supranational entities.
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Fixed income securities may have fixed, variable, or floating rates of interest,
including rates of interest that vary inversely at a multiple of a designated or
floating rate, or that vary according to change in relative values of
currencies.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Total Return Trust may invest all or a
portion of its assets in repurchase agreements, cash and cash equivalents.
Use of Hedging and Other Strategic Transactions
Total Return Trust may:
- - purchase and sell options on domestic and foreign securities, securities
indexes 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 Total Return Trust may use the above-mentioned strategies to obtain market
exposure to the securities in which the portfolio primarily invests and to hedge
currency risk. As a non-fundamental operating policy, PIMCO intends to use
foreign currency-related strategic transactions in an effort to hedge foreign
currency risk with respect to at least 75% of the assets of the portfolio
denominated in currencies other than the U.S. dollar.
See "Hedging and Other Strategic Transactions" for further information on these
strategies.
INVESTMENT QUALITY BOND TRUST
Investment Objective
The investment objective of the Investment Quality Bond Trust is to
provide a high level of current income consistent with the maintenance of
principal and liquidity.
Investment Policies
Wellington Management Company, LLP (also referred to as "Wellington
Management") manages the Investment Quality Bond Trust. Wellington Management
seeks to achieve the portfolio's objective by investing primarily in investment
grade corporate bonds and U.S. government bonds with intermediate to longer term
maturities. Wellington Management's investment decisions derive from a
three-pronged analysis, including:
- sector analysis,
- credit research, and
- call protection.
Sector analysis focuses on the differences in yields among security types,
issuers, and industry sectors. Credit research focuses on both quantitative and
qualitative criteria established by Wellington Management, such as call
protection (payment guarantees) an issuer's industry, operating and financial
profiles, business strategy, management quality, and projected financial and
business conditions. Individual purchase and sale decisions are made on the
basis of relative value and the contribution of a security to the desired
characteristics of the overall portfolio. Factors considered include:
- - Relative valuation of available alternatives,
- - Impact on portfolio yield, quality and liquidity, and
- - Impact on portfolio maturity and sector weights.
Wellington Management attempts to maintain a high, steady and possibly growing
income stream.
At least 65% of the Investment Quality Bond Trust's assets are invested
in bonds and debentures, including:
- marketable debt securities of U.S. and foreign issuers (payable
in U.S. dollars) rated at the time of purchase "A" or better by
Moody's or Standard & Poor's (or, if unrated, of comparable
quality as determined by Wellington Management);
- securities issued or guaranteed as to principal or interest by
the U.S. Government or its agencies or instrumentalities,
including mortgage-backed securities (described below under
"Other Risks of Investing"); and
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- cash and cash equivalent securities which are authorized for
purchase by the Money Market Trust.
The balance (no more than 35%) of the Investment Quality Bond Trust's
assets may be invested in:
- U.S. and foreign debt securities rated below "A" by Moody's and
Standard & Poor's (and unrated securities of comparable quality
as determined by Wellington Management),
- preferred stocks,
- convertible securities (including those issued in the
Euromarket), and
- securities carrying warrants to purchase equity securities,
privately placed debt securities, asset-backed securities and
privately issued and commercial mortgage-backed securities.
In pursuing its investment objective, the Investment Quality Bond Trust
may invest up to 20% of its assets in U.S. and foreign high yield (high risk)
corporate and government debt securities (commonly known as "junk bonds"). These
instruments are rated "Ba" or below by Moody's or "BB" or below by Standard &
Poor's (or, if unrated, are deemed of comparable quality as determined by
Wellington Management). The high yield sovereign debt securities in which the
portfolio will invest are described above under "Strategic Bond Trust." No
minimum rating standard is required for a purchase of high yield securities by
the portfolio. While the Investment Quality Bond Trust may only invest up to 20%
of its assets in securities rated in these rating categories at the time of
investment, it is not required to dispose of bonds that may be downgraded after
purchase, even though such downgrade may cause the portfolio to exceed this 20%
maximum.
The risks of investing in foreign securities are set forth above under
"Risks of Investing in Certain Types of Securities." Since the portfolio will,
at most, invest 20% of its assets in foreign securities, the risks associated
with foreign securities will not affect the portfolio as much as a portfolio
that invests more of its assets in foreign securities.
The Investment Quality Bond Trust may also invest in debt securities
carrying the fourth highest quality rating ("Baa" by Moody's or "BBB" by
Standard & Poor's) and unrated securities of comparable quality as determined by
Wellington Management, subject to the 35% limitation described above.
Temporary Defensive Investing
To meet redemptions or pending investment of its assets or during
unusual market conditions, the Investment Quality Bond Trust may invest in cash
and cash equivalents. To the extent the portfolio is in a defensive position,
the ability to achieve its investment objective will be limited.
Use of Hedging and Other Strategic Transactions
The Investment Quality Bond Trust is currently authorized to use all of
the various investment strategies referred to under "Hedging and Other Strategic
Transactions."
Special Risks
The Investment Quality Bond Trust will be subject to certain risks as a
result of its ability to invest up to 20% in foreign securities. The principal
risks of investing in the Investment Quality Bond Trust are described in the
"Risk/Return Summary" in the beginning of this Prospectus.
DIVERSIFIED BOND TRUST
(formerly, the Conservative Asset Allocation Trust)
Investment Objective
The investment objective of the Diversified Bond Trust is to seek high
total return as is consistent with the conservation of capital.
Investment Policies
Capital Guardian Trust Company (also referred to as "CGTC") manages the
Diversified Bond Trust. CGTC seeks to achieve this investment objective by
investing at least 75% of the portfolio's assets in one or a combination of the
following categories:
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- - fixed-income securities rated at the time of purchase within the three
highest investment grade ratings (A or better) assigned by Moody's Investor
Service, Inc. (Moody's) or Standard & Poor's Corporation (S&P) or
fixed-income securities not rated by Moody's or S&P deemed by CGTC to be of
equivalent investment quality;
- - up to 15% of the portfolio's assets in fixed-income securities rated at the
time of purchase below the three highest investment grade ratings assigned
by Moody's or S&P (Baa and below by Moody's and BBB and below by S&P) or
fixed-income securities not rated by Moody's or S&P deemed by CGTC to be of
equivalent investment quality;
- - up to 20% of the portfolio's assets in Eurodollar fixed-income securities;
- - securities issued or guaranteed by the U.S. Government, the Canadian
Government or its Provinces, or their respective agencies and
instrumentalities;
- - interest bearing short-term investments, such as commercial paper, bankers'
acceptances, bank certificates of deposit and other cash equivalents, and
cash.
The remaining 25% of the portfolio's assets may be invested in other
fixed-income securities, including securities rated below the three highest
investment grade ratings described in b) above and mortgage-backed securities
(see "Other Risks of Investing" below for a description of mortgage-backed
securities).
Fixed income securities may include ADRs, Yankee Bonds and Eurodollar
instruments which are U.S. dollar denominated.
All portfolio investment percentages described above are measured at the time of
purchase of a security for the portfolio.
Temporary Defensive Investing
To meet redemption requests or pending investment of its assets or
during unusual market conditions, the Diversified Bond Trust may invest all or a
portion of its assets in cash and cash equivalents.
Use of Hedging and Other Strategic Transactions
The Diversified Bond Trust is currently authorized to use all of the investment
strategies referred to under "Hedging and Other Strategic Transactions."
However, it is not presently contemplated that any of these strategies will be
used to a significant degree by the portfolio.
U.S. GOVERNMENT SECURITIES TRUST
Investment Objective
The investment objective of the U.S. Government Securities Trust is to
obtain a high level of current income consistent with preservation of capital
and maintenance of liquidity.
Investment Policies
SBAM manages the U.S. Government Securities Trust. SBAM seeks to attain
this objective by investing a substantial portion of the portfolio's assets in
debt obligations and mortgage-backed securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities and derivative securities such as
collateralized mortgage obligations backed by such securities. The portfolio may
also invest a portion of its assets in the types of securities in which the
Investment Quality Bond Trust may invest.
At least 80% of the total assets of the U.S. Government Securities
Trust are invested in:
- mortgage-backed securities guaranteed by the Government National
Mortgage Association that are supported by the full faith and
credit of the U.S. government and which are the "modified
pass-through" type of mortgage-backed security ("GNMA
Certificates"). Such securities entitle the holder to receive all
interest and principal payments due whether or not payments are
actually made on the underlying mortgages;
- U.S. Treasury obligations (including repurchase agreements
collateralized by U.S. Treasury obligations);
- obligations issued or guaranteed by agencies or instrumentalities
of the U.S. Government which are backed by their own credit and
may not be backed by the full faith and credit of the U.S.
Government (including repurchase agreements collateralized by
these obligations);
- mortgage-backed securities guaranteed by agencies or
instrumentalities of the U.S. Government which are supported by
their own credit but not the full faith and credit of the U.S.
Government, such as the Federal Home Loan Mortgage Corporation
and the Federal National Mortgage Association; and
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- collateralized mortgage obligations issued by private issuers for
which the underlying mortgage-backed securities serving as
collateral are backed (i) by the credit alone of the U.S.
Government agency or instrumentality which issues or guarantees
the mortgage-backed securities, or (ii) by the full faith and
credit of the U.S. Government.
The U.S. Government Securities Trust must comply with diversification
requirements established pursuant to the Code for investments of separate
accounts funding contracts. Under these requirements, the value of the assets of
the portfolio are subject to the following restrictions:
- no more than 55% of the value of the portfolio's assets may be
represented by any one investment;
- no more than 70% of the value of the portfolio's assets may be
represented by any two investments;
- no more than 80% of the value of the portfolio's assets may be
represented by any three investments; and
- no more than 90% of the value of the portfolio's assets may be
represented by any four investments.
To determine the portfolio's compliance with the requirements above, all
securities of the same issuer are treated as a single investment and each U.S.
Government agency or instrumentality is treated as a separate issuer. As a
result of these requirements, the U.S. Government Securities Trust may not
invest more than 55% of the value of its assets in GNMA Certificates or in
securities issued or guaranteed by any other single U.S. Government agency or
instrumentality.
Mortgage-Backed Securities
See "Other Risks of Investing for a description of mortgage-backed
securities and the risks associated with investing in them.
Use of Hedging and Other Strategic Transactions
The U.S. Government Securities Trust is currently authorized to use
only certain of the various investment strategies referred to under "Hedging and
Other Strategic Transactions." Specifically, the U.S. Government Securities
Trust may:
- write covered call options and put options on securities and
purchase call and put options on securities,
- write covered call and put options on securities indices and
purchase call and put options on securities indices,
- enter into futures contracts on financial instruments and
indices, and
- write and purchase put and call options on such futures
contracts.
It is not presently anticipated that any of these strategies will be used to a
significant degree by the portfolio.
MONEY MARKET TRUST
Investment Objective
The investment objective of the Money Market Trust is to obtain maximum
current income consistent with preservation of principal and liquidity.
Investment Policies
Manufacturers Adviser Corporation (also referred to as "MAC") manages
the Money Market Trust. MAC seeks to achieve the portfolio's objective by
investing the portfolio's assets in high quality, U.S. dollar denominated money
market instruments of the following types:
- obligations issued or guaranteed as to principal and interest by
the U.S. Government, or any agency or authority controlled or
supervised by and acting as an instrumentality of the U.S.
Government pursuant to authority granted by Congress ("U.S.
Government Securities"), or obligations of foreign governments
including those issued or guaranteed as to principal or interest
by the Government of Canada, the government of any province of
Canada, or any Canadian or provincial Crown agency (any foreign
obligation acquired by the portfolio must be payable in U.S.
dollars);
- certificates of deposit, bank notes, time deposits, Eurodollars,
Yankee obligations and bankers' acceptances of U.S. banks,
foreign branches of U.S. banks, foreign banks and U.S. savings
and loan associations which at the date of investment have
capital, surplus and undivided profits as of the date of their
most recent published financial statements in excess of
$100,000,000 (or less than $100,000,000 if the principal amount
of such bank obligations is insured by the Federal Deposit
Insurance Corporation or the Saving Association Insurance Fund);
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- commercial paper which at the date of investment is rated (or
guaranteed by a company whose commercial paper is rated) within
the two highest rating categories by any NRSRO (such as "P-1" or
"P-2" by Moody's or "A-1" or "A-2" by Standard & Poor's) or, if
not rated, is issued by a company which MAC acting pursuant to
guidelines established by the Trust's Trustees, has determined to
be of minimal credit risk and comparable quality;
- corporate obligations maturing in 397 days or less which at the
date of investment are rated within the two highest rating
categories by any NRSRO (such as "Aa" or higher by Moody's or
"AA" or higher by Standard & Poor's);
- short-term obligations issued by state and local governmental
issuers;
- securities that have been structured to be eligible money market
instruments such as participation interests in special purpose
trusts that meet the quality and maturity requirements in whole
or in part due to features for credit enhancement or for
shortening effective maturity; and
- repurchase agreements with respect to any of the foregoing
obligations.
Commercial paper may include variable amount master demand notes, which
are obligations that permit investment of fluctuating amounts at varying rates
of interest. Such notes are direct lending arrangements between the Money Market
Trust and the note issuer. MAC monitors the creditworthiness of the note issuer
and its earning power and cash flow. MAC will also consider situations in which
all holders of such notes would redeem at the same time. Variable amount master
demand notes are redeemable on demand.
All of the Money Market Trust's investments will mature in 397 days or
less and the portfolio maintains a dollar-weighted average portfolio maturity of
90 days or less. By limiting the maturity of its investments, the Money Market
Trust seeks to lessen the changes in the value of its assets caused by
fluctuations in short-term interest rates. In addition, the Money Market Trust
invests only in securities which the Trust's Trustees determine to present
minimal credit risks and which at the time of purchase are "eligible securities"
as defined by Rule 2a-7 under the 1940 Act. The Money Market Trust also intends
to maintain, to the extent practicable, a constant per share net asset value of
$10.00. There is no assurance that the portfolio will be able to do so.
The Money Market Trust may invest up to 20% of its assets in any of the
U.S. dollar denominated foreign securities described above.
Use of Hedging and Other Strategic Transactions
The Money Market Trust is not authorized to use any of the various
investment strategies referred to under "Hedging and Other Strategic
Transactions."
THE LIFESTYLE TRUSTS
There are five Lifestyle Trusts (each of which is a fund of funds) --
Aggressive 1000, Growth 820, Balanced 640, Moderate 460 and Conservative 280.
The Lifestyle Trusts differ from the portfolios previously described in that
each Lifestyle Trust invests in a number of the other portfolios of the Trust
("Underlying Portfolios"). Each Lifestyle Trust has its own investment objective
and policies.
LIFESTYLE AGGRESSIVE 1000 TRUST.
Investment Objective
The investment objective of the Lifestyle Aggressive 1000 Trust is to
provide long-term growth of capital. Current income is not a consideration.
Investment Policies
Manufacturers Adviser Corporation (also referred to as "MAC") seeks to
achieve this objective by investing 100% of the portfolio's assets in Underlying
Portfolios which invest primarily in equity securities.
LIFESTYLE GROWTH 820 TRUST.
Investment Objective
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The investment objective of the Lifestyle Growth 820 Trust is to
provide long-term growth of capital. Current income is also a consideration.
Investment Policies
MAC seeks to achieve this objective by investing approximately 20% of
the portfolio's assets in Underlying Portfolios which invest primarily in
fixed-income securities and approximately 80% of its assets in Underlying
Portfolios which invest primarily in equity securities.
LIFESTYLE BALANCED 640 TRUST.
Investment Objective
The investment objective of the Lifestyle Balanced 640 Trust is to
provide a balance between a high level of current income and growth of capital
with a greater emphasis on growth of capital.
Investment Policies
MAC seeks to achieve this objective by investing approximately 40% of
the portfolio's assets in Underlying Portfolios which invest primarily in
fixed-income securities and approximately 60% of its assets in Underlying
Portfolios which invest primarily in equity securities.
LIFESTYLE MODERATE 460 TRUST.
Investment Objective
The investment objective of the Lifestyle Moderate 460 Trust is to
provide a balance between a high level of current income and growth of capital
with a greater emphasis on income.
Investment Policies
MAC seeks to achieve this objective by investing approximately 60% of
the portfolio's assets in Underlying Portfolios which invest primarily in
fixed-income securities and approximately 40% of its assets in Underlying
Portfolios which invest primarily in equity securities.
LIFESTYLE CONSERVATIVE 280 TRUST.
Investment Objective
The investment objective of the Lifestyle Conservative 280 Trust is to
provide a high level of current income with some consideration given to growth
of capital.
Investment Policies
MAC seeks to achieve this objective by investing approximately 80% of
the portfolio's assets in Underlying Portfolios which invest primarily in
fixed-income securities and approximately 20% of its assets in Underlying
Portfolios which invest primarily in equity securities.
Additional Information Concerning the Lifestyle Trusts
The Lifestyle Trusts are designed to provide a variety of comprehensive
investment programs designed for differing investment orientations. Each program
is implemented by means of selected long-term investment allocations among the
Underlying Portfolios.
The portfolios eligible for purchase by the Lifestyle Trusts consist of
all of the non-Lifestyle Trusts. The Underlying Portfolios are grouped according
to whether they invest primarily in fixed-income securities or equity
securities. The Underlying Portfolios investing primarily in fixed-income
securities are the:
- High Yield,
- Strategic Bond,
- Global Bond,
- Total Return,
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- Investment Quality Bond,
- Diversified Bond,
- U.S. Government Securities, and
- Money Market Trusts
The other Underlying Portfolios invest primarily in equity securities. Because
substantially all of the securities in which the Lifestyle Trusts may invest are
Underlying Portfolios, each of the Lifestyle Trusts is non-diversified for
purposes of the 1940 Act.
Each Lifestyle Trust has a target percentage allocation between the two
types of Underlying Portfolios (fixed-income and equity). Variations in the
percentages are permitted up to 10% in either direction. For example, based on
its investment allocation of approximately 80% of assets in fixed-income
securities and 20% of assets in equity securities, the Lifestyle Conservative
280 Trust may have a fixed-income/equity allocation of 10%/90% or 30%/70%.
Variations beyond the permissible deviation range of 10% are not permitted.
However, in light of market or economic conditions, the Adviser may determine
that the normal percentage limitations should be exceeded to protect the
portfolio or to achieve the portfolio's objective.
Within the prescribed percentage allocations between the two types of
Underlying Portfolio, MAC selects the percentage levels to be maintained in
specific portfolios. On each valuation day, the assets of each Lifestyle Trust
are rebalanced to maintain the selected percentage levels for the specific
portfolios. MAC may from time to time adjust the percent of assets invested in
any specific portfolios held by a Lifestyle Trust. Such adjustments may be made
to increase or decrease the Lifestyle Trust's holdings of particular assets
classes, such as common stocks of foreign issuers, or to adjust portfolio
quality or the duration of fixed-income securities. Adjustments may also be made
to increase or reduce the percent of the Lifestyle Trust's assets subject to the
management of a particular Subadviser. In addition, changes may be made to
reflect some fundamental change in the investment environment.
Investors in any of the Lifestyle Trusts bear both the expenses of a
particular Lifestyle Trust and indirectly the expenses of its Underlying
Portfolios. Currently, however, the Lifestyle Trusts are not responsible for
their own expenses (other than the expenses of their Underlying Portfolios)
since the Adviser and MAC do not currently receive fees for managing the
Lifestyle Trusts and the Adviser has voluntarily agreed to pay the expenses of
each Lifestyle Trust (excluding the expenses of the Underlying Portfolios). Both
of these voluntary expense reimbursement/advisory fee waivers may be terminated
at any time. While these expense reimbursements/advisory fee waivers are in
effect, however, there is no difference in expenses between investing in a
Lifestyle Trust and investing in the Underlying Portfolios of the Lifestyle
Trust. However, if either of these expense reimbursements/advisory fee waivers
were eliminated, investors may be able to realize lower aggregate expenses by
investing directly in the Underlying Portfolios rather than investing indirectly
in the Underlying Portfolios by investing in the Lifestyle Trusts. An investor
who chooses to invest directly in the Underlying Portfolios rather than by
investing in the Lifestyle Trusts would, however, not receive the asset
allocation services provided by MAC in its management of the Lifestyle Trusts.
Temporary Defensive Investing
Although substantially all of the assets of the Lifestyle Trusts will
be invested in shares of the Underlying Portfolios, the Lifestyle Trusts may
invest up to 100% of their assets in cash or money market instruments of the
type in which the Money Market Trust is authorized to invest for the purpose of:
- meeting redemption requests,
- making other anticipated cash payments, or
- protecting the portfolio in the event MAC determines that market
or economic conditions warrant a defensive posture.
Use of Hedging and Other Strategic Transactions
The Lifestyle Trusts are not authorized to use any of the various
investment strategies referred to under "Hedging and Other Strategic
Transactions."
ADDITIONAL INVESTMENT POLICIES AND TRANSACTIONS
ADDITIONAL INVESTMENT POLICIES
Subject to certain restrictions, each of the portfolios of the Trust may use the
following investment strategies and purchase the following types of securities.
LENDING OF PORTFOLIO SECURITIES
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Each portfolio may lend its securities so long as such loans do not
represent more than 331/3% of a portfolio's total assets. As collateral for the
lent securities, the borrower gives the lending portfolio collateral equal to at
least 100% of the value of the lent securities The collateral may consist of
cash, cash equivalents or securities issued or guaranteed by the U.S. government
or its agencies or instrumentalities. The borrower must also agree to increase
the collateral if the value of the lent securities increases. As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the collateral should the borrower of the securities fail financially.
WHEN-ISSUED SECURITIES ("FORWARD COMMITMENTS")
In order to help ensure the availability of suitable securities, each
of the portfolios may purchase debt securities on a "when-issued" or on a
"forward delivery" basis. These terms mean that the obligations will be
delivered to the portfolio at a future date, which may be a month or more after
the date of commitment. While awaiting delivery of the obligations purchased on
such bases, a portfolio will establish a segregated account consisting of cash
or high quality debt securities equal to the amount of the commitments to
purchase when-issued or forward delivery securities. At the time delivery is
made, the value of when-issued or forward delivery securities may be more or
less than the transaction price, and the yields then available in the market may
be higher than those obtained in the transaction.
REPURCHASE AGREEMENTS
Each of the portfolio's may enter into repurchase agreements.
Repurchase agreements involve the acquisition by a portfolio of debt securities
subject to an agreement to resell them at an agreed-upon price. The arrangement
is in economic effect a loan collateralized by securities. The portfolio's risk
in a repurchase transaction is limited to the ability of the seller to pay the
agreed-upon sum on the delivery date. In the event of bankruptcy or other
default by the seller, the instrument purchased may decline in value, interest
payable on the instrument may be lost and there may be possible delays and
expense in liquidating the instrument. Securities subject to repurchase
agreements will be valued every business day and additional collateral will be
requested if necessary so that the value of the collateral is at least equal to
the value of the repurchased obligation, including the interest accrued thereon.
REVERSE REPURCHASE AGREEMENTS
Each portfolio of the Trust may enter into "reverse" repurchase
agreements. Under a reverse repurchase agreement, a portfolio may sell a debt
security and agree to repurchase it at an agreed upon time and at an agreed upon
price. The portfolio will maintain in a segregated custodial account cash,
Treasury bills or other U.S. Government Securities having an aggregate value
equal to the amount of such commitment to repurchase including accrued interest,
until payment is made. While a reverse repurchase agreement may be considered a
form of leveraging and may, therefore, increase fluctuations in a portfolio's
net asset value per share, each portfolio will cover the transaction as
described above.
FOREIGN REPURCHASE AGREEMENTS
The Overseas Trust may enter into foreign repurchase agreements.
Foreign repurchase agreements may be less well secured that U.S. repurchase
agreements, and may be denominated in foreign currencies. They also may involve
greater risk of loss if the counterparty defaults. Some counterparties in these
transactions may be less creditworthy than those in U.S. markets.
MORTGAGE DOLLAR ROLLS
Each portfolio of the Trust (except the Money Market Trust and the
Lifestyle Trusts) may enter into mortgage dollar rolls. Under a mortgage dollar
roll, a portfolio sells mortgage-backed securities for delivery in the future
(generally within 30 days) and simultaneously contracts to repurchase
substantially similar (same type, coupon and maturity) securities on a specified
future date. At the time a portfolio enters into a mortgage dollar roll, it will
establish a segregated account with its custodian bank in which it will maintain
cash, U.S. Government Securities or other liquid assets equal in value to its
obligations in respect of dollar rolls, and accordingly, such dollar rolls will
not be considered borrowings.
A portfolio may only enter into covered rolls. A "covered roll" is a
specific type of dollar roll for which there is an offsetting cash or cash
equivalent security position which matures on or before the forward settlement
date of the dollar roll transaction. Dollar roll transactions involve the risk
that the market value of the securities sold by the portfolio may decline below
the repurchase price of those securities. While a mortgage dollar roll may be
considered a form of leveraging, and may, therefore, increase fluctuations in a
portfolio's net asset value per share, each portfolio will cover the transaction
as described above.
WARRANTS
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Subject to certain restrictions, each portfolio of the Trust, except
the Money Market Trust and the Lifestyle Trusts, may purchase warrants,
including warrants traded independently of the underlying securities. Warrants
are rights to purchase securities at specific prices valid for a specific period
of time. Their prices do not necessarily move parallel to the prices of the
underlying securities, and warrant holders receive no dividends and have no
voting rights or rights with respect to the assets of an issuer. Warrants cease
to have value if not exercised prior to the expiration date.
ILLIQUID SECURITIES
Each portfolio of the Trust is precluded from investing in excess of
15% of its net assets in securities that are not readily marketable, except that
the Money Market Trust may not invest in excess of 10% of its net assets in such
securities. Investment in illiquid securities involves the risk that, because of
the lack of consistent market demand for such securities, the Trust may be
forced to sell them at a discount from the last offer price.
* * * *
These investment strategies and securities are described further in the
Statement of Additional Information.
HEDGING AND OTHER STRATEGIC TRANSACTIONS
Individual portfolios may be authorized to use a variety of investment
strategies for hedging purposes only, including hedging various market risks
(such as interest rates, currency exchange rates and broad or specific market
movements) and managing the effective maturity or duration of debt instruments
held by the portfolio. Hedging refers to protecting against possible changes in
the market value of securities a portfolio already owns or plans to buy or
protecting unrealized gains in the portfolio. The hedging and other strategic
transactions which may be used are described below:
- - exchange-listed and over-the-counter put and call options on securities,
financial futures contracts and fixed-income indices and other financial
instruments,
- - financial futures contracts (including stock index futures),
- - interest rate transactions*, and
- - currency transactions**
Collectively, these transactions are referred to in this Prospectus as "Hedging
and Other Strategic Transactions." The description in this Prospectus of each
portfolio indicates which, if any, of these types of transactions may be used by
the portfolio.
* A portfolio's interest rate transactions may take the form of swaps, caps,
floors and collars.
** A portfolio's currency transactions may take the form of currency forward
contracts, currency futures contracts, currency swaps and options on
currencies or currency futures contracts.
Hedging and Other Strategic Transactions may be used for the following
purposes:
- - to attempt to protect against possible changes in the market value of
securities held or to be purchased by a portfolio resulting from securities
markets or currency exchange rate fluctuations,
- - to protect a portfolio's unrealized gains in the value of its securities,
- - to facilitate the sale of a portfolio's securities for investment purposes,
- - to manage the effective maturity or duration of a portfolio's securities or
- - to establish a position in the derivatives markets as a temporary
substitute for purchasing or selling particular securities.
The ability of a portfolio to utilize Hedging and Other Strategic Transactions
successfully will depend in part on its Subadviser's ability to predict
pertinent market movements, which cannot be assured. The skills required to
successfully utilize Hedging and Other Strategic Transactions are different from
those needed to select a portfolio's securities. While a Subadviser will only
use Hedging and Other Strategic Transactions in a portfolio for hedging purposes
only, if the transaction is not successful it could result in a loss to the
portfolio. These transactions may also increase the volatility of a portfolio
and may involve a small investment of cash relative to the magnitude of the
risks assumed. In addition, these transactions could result in a loss to the
portfolio if the counterparty to the transaction does not perform as promised. A
detailed discussion of various Hedging and Other Strategic Transactions,
including applicable regulations of the CFTC and the requirement to segregate
assets with respect to these transactions, appears in the Statement of
Additional Information.
OTHER RISKS OF INVESTING
The information below regarding the risks of investing in certain types
of securities supplements the disclosure in the "Risk/Return Summary."
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INVESTMENT GRADE FIXED INCOME SECURITIES IN THE LOWEST RATING CATEGORY
Investment grade fixed income securities in the lowest rating category
(rated "Baa" by Moody's or "BBB" by Standard & Poor's and comparable unrated
securities) involve a higher degree of risk than fixed income securities in the
higher rating 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 example, changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case with higher grade securities.
LOWER RATED FIXED-INCOME SECURITIES
Lower rated fixed-income securities are defined as securities rated below
investment grade (rated Ba and below by Moody's and BB and below by Standard &
Poor's).
General Risks
- - Risk to Principal and Income. 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.
Issuers of these securities may even go into default or become bankrupt.
- - Price Volatility. 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.
The price of these securities is affected more than higher rated
fixed-income securities by the market's perception of their credit quality
especially during times of adverse publicity. In the past, economic
downturns or an increase in interest rates have, at times, caused more
defaults by issuers of these securities and may do so in the future.
Economic downturns and increases in interest rates have an even greater
affect on highly leveraged issuers of these securities.
- - Liquidity. 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
and these securities may have to be sold at prices below their market value
in order to meet redemption requests or to respond to changes in market
conditions.
- - Dependence on Subadviser's Own Credit Analysis. While a subadviser to a
portfolio may rely on ratings by established credit rating agencies, it
will also supplement such ratings with its own independent review of the
credit quality of the issuer. Therefore, 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.
Additional Risks Regarding Lower Rated Corporate Fixed-Income
Securities
Lower rated corporate debt securities (and comparable unrated
securities) tend to be more sensitive to individual corporate developments and
changes in economics conditions than higher-rated corporate fixed-income
securities. Issuers of lower rated corporate debt securities may also be highly
leveraged, increasing the risk that principal and income will not be repaid.
Additional Risks Regarding Lower Rated Foreign Government Fixed-Income
Securities
Lower rated foreign government fixed-income securities are subject to
the risks of investing in emerging market countries described below under
"Foreign Securities." In addition, the ability and willingness of a foreign
government to make payments on debt when due may be affected by the prevailing
economic and political conditions within the country. Emerging market countries
may experience high inflation, interest rates and unemployment as well as
exchange rate trade difficulties and political uncertainty or instability. These
factors increase the risk that a foreign government will not make payments when
due.
SMALL AND MEDIUM SIZE COMPANIES
Small or Unseasoned Companies
- - Survival of Small or Unseasoned Companies. Companies that are small or
unseasoned (less than 3 years of operating history) are more likely than
larger or established companies to fail or not to accomplish their goals.
As a result, the
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value of their securities could decline significantly. These companies are
less likely to survive since they are often dependent upon a small number
of products, may have limited financial resources and a small management
group.
- - Changes in Earnings and Business Prospectus. Small or unseasoned companies
often 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.
- - Liquidity. The securities of small or unseasoned companies may have limited
marketability. This factor could cause the value of a portfolio's
investment's to decrease if it needs to sell such securities when there are
few interested buyers.
- - Impact of Buying or Selling Shares. Small or unseasoned 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 impacting the price of the security.
- - Publicly Available Information. There may be less publicly available
information about small or unseasoned companies. Therefore, when making a
decision to purchase a security for a portfolio, a subadviser may not be
aware of problems associated with the company issuing the security.
Medium Size Companies
- - Investments in the securities of medium sized companies present risks
similar to those associated with small or unseasoned companies although to
a lesser degree due to the larger size of the companies.
FOREIGN SECURITIES
The principal risks of investing in foreign securities are set forth
below. As noted below, many of these risks are greater in the case of
investments in emerging market countries.
- - Currency Fluctuations. Investments in foreign securities may cause a
portfolio to lose money when converting investments from foreign currencies
into U.S. dollars. A portfolio may attempt to lock in an exchange rate by
purchasing a foreign currency exchange contract prior to the settlement of
an investment in a foreign security. However, it may not always be
successful in doing so and the portfolio could still lose money.
- - Political and Economics Conditions. Investments in foreign securities
subject a portfolio to the political or economic conditions of the foreign
country. These conditions could cause portfolio 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. Political instability could cause the value of any investment in
the securities o fan issuer based in a foreign country to decrease or could
prevent or delay the portfolio from selling its investment and taking the
money out of the country.
- - Removal of Proceeds of Investments from a Foreign Country. Foreign
countries, especially emerging market countries, often have currency
controls or restrictions which may prevent or delay a portfolio from taking
money out of the country or may impose additional taxes on money removed
from the country. Therefore, a portfolio could lose money if it is not
permitted to remove capital from the country or if there is a delay in
taking the assets out of the country, since the value of the assets could
decline during this period or the exchange rate to convert the assets into
U.S. dollars could worsen.
- - Nationalization of Assets. Investments in foreign securities subject a
portfolio to the risk that the company issuing the security may be
nationalized. If the company is nationalized, the value of the company's
securities could decrease in value or even become worthless.
- - Settlement of Sales. Foreign countries, especially emerging market
countries, may also have problems associated with settlement of sales. Such
problems could cause the portfolio to suffer a loss if a security to be
sold declines in value while settlement of the sale is delayed.
- - Investor Protection Standards. Foreign countries, especially emerging
market countries, may have less stringent investor protection and
disclosure standards than the U.S. Therefore, when making a decision to
purchase a security for a portfolio, a subadviser 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.
STRIPPED SECURITIES
Stripped securities are the separate income or principal components of
a debt security. The risks associated with stripped securities are similar to
those of other debt securities, although stripped securities may be more
volatile, and the value of certain types of stripped securities may move in the
same direction as interest rates. U.S. Treasury securities that have been
stripped by a Federal Reserve Bank are obligations issued by the U.S. Treasury.
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ASSET-BACKED SECURITIES
Asset-backed securities include interests in pools of debt securities,
commercial or consumer loans, or other receivables. The value of these
securities depends on many factors, including changes in interest rates, the
availability of information concerning the pool and its structure, the credit
quality of the underlying assets, the market's perception of the servicer of the
pool, and any credit enhancement provided. In addition, these securities may be
subject to prepayment risk.
MORTGAGE-BACKED SECURITIES
The mortgage-backed securities represent participating interests in
pools of residential mortgage loans which are guaranteed by the U.S. Government,
its agencies or instrumentalities. However, the guarantee of these types of
securities relates to the principal and interest payments and not the market
value of such securities. In addition, the guarantee only relates to the
mortgage-backed securities held by the portfolio and not the purchase of shares
of the portfolio.
Mortgage-backed securities are issued by lenders such as mortgage
bankers, commercial banks, and savings and loan associations. Such securities
differ from conventional debt securities which provide for the periodic payment
of interest in fixed amounts (usually semiannually) with principal payments at
maturity or on specified dates. Mortgage-backed securities provide periodic
payments which are, in effect, a "pass-through" of the interest and principal
payments (including any prepayments) made by the individual borrowers on the
pooled mortgage loans.
The yield of mortgage-backed securities is based on the average life of
the underlying pool of mortgage loans. The actual life of any particular pool
may be shortened by unscheduled or early payments of principal and interest.
Principal prepayments may result from the sale of the underlying property or the
refinancing or foreclosure of underlying mortgages. The occurrence of
prepayments is affected by a wide range of economic, demographic and social
factors and, accordingly, it is not possible to accurately predict the average
life of a particular pool. The actual prepayment experience of a pool of
mortgage loans may cause the yield realized by the portfolio to differ from the
yield calculated on the basis of the average life of the pool. In addition, if
the portfolio purchases mortgage-backed securities at a premium, the premium may
be lost in the event of early prepayment which may result in a loss to the
portfolio.
Prepayments tend to increase during periods of falling interest rates,
while during periods of rising interest rates prepayments are likely to decline.
Monthly interest payments received by the portfolio have a compounding effect
which will increase the yield to shareholders as compared to debt obligations
that pay interest semiannually. Because of the reinvestment of prepayments of
principal at current rates, mortgage-backed securities may be less effective
than Treasury bonds of similar maturity at maintaining yields during periods of
declining interest rates. Also, although the value of debt securities may
increase as interest rates decline, the value of these pass-through type of
securities may not increase as much due to their prepayment feature.
* * *
Additional risks of investing in the types of securities mentioned above are
contained in the Statement of Additional Information.
MANAGEMENT OF THE TRUST
ADVISORY ARRANGEMENTS
Manufacturers Securities Services, LLC (the "Adviser") is the adviser
to the Trust. The Adviser is a Delaware limited liability company whose
principal offices are located at 73 Tremont Street, Boston, Massachusetts 02108.
The Adviser is registered as an investment adviser under the Investment Advisers
Act of 1940, as amended, and as a broker-dealer under the Securities Exchange
Act of 1934, as amended, and it is a member of the National Association of
Securities Dealers, Inc. (the "NASD"). In addition, the Adviser serves as
principal underwriter of certain contracts issued by The Manufacturers Life
Insurance Company of North America.
The Adviser administers the business and affairs of the Trust. The
Adviser also selects, contracts with and compensates Subadvisers to manage the
investment and reinvestment of the assets of all portfolios of the Trust. (The
Adviser does not manage any of the Trust portfolio assets.) The Adviser also (i)
monitors the compliance of the Subadvisers with the investment objectives and
related policies of each portfolio, (ii) reviews the performance of the
Subadvisers and (iii) reports periodically on such performance to the Trustees
of the Trust.
The Trust has received an order from the Securities and Exchange
Commission permitting the Adviser to appoint a Subadviser or change the terms of
a subadvisory agreement pursuant to an agreement that is not approved by
shareholders. The
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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. This order does not, however, permit the
Adviser to appoint a Subadviser that is an affiliate of the Adviser or the Trust
(other than by reason of serving as Subadviser to a portfolio) (an "Affiliated
Subadviser") or to change a subadvisory fee of an Affiliated Subadviser without
the approval of shareholders. Currently, MAC is an Affiliated Subadviser.
As compensation for its services, the Adviser receives a fee from the
Trust computed separately for each portfolio, except for the Lifestyle Trusts
for which the Adviser makes no charge. The fee for each portfolio is stated as
an annual percentage of the current value of the net assets of the portfolio.
The fee, which is accrued daily and payable monthly, 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. The following table presents
(i) a schedule of the management fees each portfolio currently is obligated to
pay the Adviser as a percentage of average annual net assets and (ii) the
investment advisory fee paid by each portfolio of the Trust for the year ended
December 31, 1998.
<TABLE>
<CAPTION>
ADVISORY FEE ADVISORY FEE
AS A PERCENTAGE OF AS A
PORTFOLIO NET ASSETS DOLLAR AMOUNT
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Pacific Rim Emerging Markets Trust.............. .850% $ 214,432
Science & Technology Trust...................... 1.100% 1,171,088
International Small Cap Trust................... 1.100% 1,567,227
Aggressive Growth Trust......................... 1.000% 1,216,141
Emerging Small Company Trust.................... 1.050% 2,937,353
Small Company Blend Trust....................... 1.05% Not Applicable
Mid Cap Growth Trust............................ .950% 3,144,346
Mid Cap Stock Trust............................. .925% Not Applicable
Overseas Trust.................................. .950% 2,086,991
International Stock Trust....................... 1.050% 2,019,937
International Value Trust....................... 1.000% Not Applicable
Mid Cap Blend Trust............................. .850% 11,504,927
Small Company Value Trust....................... 1.050% 1,218,609
Global Equity Trust............................. .900% 8,256,515
Growth Trust.................................... .850% 1,930,442
Large Cap Growth Trust.......................... .875% 1,874,673
Quantitative Equity Trust....................... .700% 1,431,591
Blue Chip Growth Trust.......................... .875% 7,964,796
Real Estate Securities Trust.................... .700% 1,157,366
Value Trust..................................... .800% 1,695,347
Equity Index Trust.............................. .250% 106,755
Growth and Income Trust......................... .750% 14,353,269
U.S. Large Cap Value Trust...................... .875% Not Applicable
Equity-Income Trust............................. .875% 8,121,714
Income & Value Trust............................ .800% 4,585,154
Balanced Trust.................................. .800% 1,699,575
High Yield Trust................................ .775% 1,160,631
Strategic Bond Trust............................ .775% 3,178,026
Global Bond Trust............................... .800% 1,632,065
Total Return Trust.............................. .775% Not Applicable
Investment Quality Bond Trust................... .650% 1,610,817
Diversified Bond Trust.......................... .750% 1,473,082
U.S. Government Securities Trust................ .650% 1,952,935
Money Market Trust.............................. .500% 2,771,825
Lifestyle Trusts................................ no advisory fees
Total for all Portfolios........................ Not Applicable $94,037,629
</TABLE>
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The following table presents the net investment advisory fee retained
by the Adviser (after payment of subadvisory fees) for the year ended December
31, 1998, both as (i) a percentage of a portfolio's average annual net assets
and (ii) as a dollar amount.
<TABLE>
<CAPTION>
AS A PERCENTAGE OF AS A
PORTFOLIO AVERAGE ANNUAL NET ASSETS DOLLAR AMOUNT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Pacific Rim Emerging Markets Trust.............. .450% $ 113,523
Science & Technology Trust...................... .500% 532,313
International Small Cap Trust................... .482% 687,203
Aggressive Growth Trust......................... .450% 521,202
Emerging Small Company Trust.................... .500% 1,398,740
Small Company Blend Trust....................... Not Applicable Not Applicable
Mid Cap Growth Trust............................ .505% 1,588,282
Mid Cap Stock Trust............................. Not Applicable Not Applicable
Overseas Trust.................................. .493% 1,083,937
International Stock Trust....................... .508% 978,062
International Value Trust....................... Not Applicable Not Applicable
Mid Cap Blend Trust............................. .517% 7,936,946
Small Company Value Trust....................... .464% 538,775
Global Equity Trust............................. .529% 4,849,996
Growth Trust.................................... .414% 939,386
Large Cap Growth Trust.......................... .400% 999,804
Quantitative Equity Trust....................... .465% 951,016
Blue Chip Growth Trust.......................... .542% 4,666,354
Real Estate Securities Trust.................... .460% 760,356
Value Trust..................................... .485% 1,028,854
Equity Index Trust.............................. .150% 64,053
Growth and Income Trust......................... .574% 10,982,615
U.S. Large Cap Value Trust...................... Not Applicable Not Applicable
Equity-Income Trust............................. .575% 5,841,286
Income & Value Trust............................ .468% 2,862,446
Balanced Trust.................................. .467% 991,604
High Yield Trust................................ .458% 686,353
Strategic Bond Trust............................ .494% 2,027,856
Global Bond Trust............................... .445% 908,302
Total Return Trust.............................. Not Applicable Not Applicable
Investment Quality Bond Trust................... .440% 1,089,328
Diversified Bond Trust.......................... .437% 859,355
U.S. Government Securities Trust................ .450% 1,352,258
Money Market Trust.............................. .432% 2,396,762
Lifestyle Trusts................................ no advisory fees
Total for all Portfolios........................ Not Applicable $59,636,967
</TABLE>
SUBADVISORY ARRANGEMENTS
The subadvisers to each of the Trust portfolio's are as follows:
SUBADVISER PORTFOLIO
A I M Capital Management, Inc. Mid Cap Growth Trust
Aggressive Growth Trust
Capital Guardian Trust Company Small Company Blend Trust
U.S. Large Cap Value Trust
Income & Value Trust
Diversified Bond Trust
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Fidelity Management Trust Company Mid Cap Blend Trust
Large Cap Growth Trust
Overseas Trust
Franklin Advisers, Inc. Emerging Small Company Trust
Founders Asset Management LLC International Small Cap Trust
Balanced Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Real Estate Securities Trust
Equity Index Trust
Money Market Trust
Lifestyle Trusts
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
SUBADVISER PORTFOLIO
Morgan Stanley Asset Management Inc. Global Equity Trust
Pacific Investment Management Company Global Bond Trust
Total Return Trust
Rosenberg Institutional Equity Management Small Company Value Trust
Rowe Price-Fleming International, Inc. International Stock Trust
Salomon Brothers Asset Management Inc U.S. Government Securities Trust
Strategic Bond Trust
State Street Global Advisors Growth Trust
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Templeton Investment Counsel, Inc. International Value Trust
Wellington Management Company, LLP Growth and Income Trust
Investment Quality Bond Trust
Mid Cap Stock Trust
Each of the Trust's Subadvisers, except Capital Guardian Trust Company, Fidelity
Management Trust Company and State Street Global Advisors, is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended.
A I M CAPITAL MANAGEMENT, INC.
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER(S)
Mid Cap Growth Robert M. Kippes
Charles David Scavone
David P. Barnard
Kenneth A. Zschappel
Aggressive Growth Robert M. Kippes
Charles David Scavone
Kenneth A. Zschappel
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INFORMATION REGARDING A I M CAPITAL MANAGEMENT, INC.
A I M Capital Management, Inc.. ("A I M") is an indirect wholly owned
subsidiary of A I M Management Group Inc., whose principal business address is
11 Greenway Plaza, Houston, Texas 77046. A I M Management Group, Inc. founded in
1976, is a holding company engaged in the financial services business and is an
indirect wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific Region.
A I M is the investment adviser for separately managed accounts, such
as corporate and municap pension plans, insurance companies, charitable
institutions and private individuals. A I M manages over $_____ billion of
assets as of December 31, 1998.
PORTFOLIO MANAGERS
Robert M. Kippes. Mr. Kippes is vice president of A I M and senior portfolio
manager for several of the A I M funds, including the A I M Aggressive Growth
Fund and the A I M Constellation Fund. Mr. Kippes also serves as head of A I M's
Small/Mid Cap Growth investment management unit. Mr Kippes joined A I M in 1989
as a research assistant. In 1992 he was named head of equity research and
portfolio manager. In 1994 he was promoted to his current position.
Charles David Scavone. Mr. Scavone is vice president and senior portfolio
manager of A I M. He is involved in managing several of the A I M funds,
including the A I M Aggressive Growth Fund and the A I M Constellation Fund. Mr.
Scavone has been in the investment business since 1991. Prior to joining A I M
in 1996, he was associate portfolio manager at Van Kampen American Capital
Management, Inc. Prior to joining Van Kampen in 1994, he was an equity research
analyst/assistant portfolio manager at Texas Commerce Investment Management
Company in Houston.
David P. Barnard. Mr. Barnard is vice president of A I M and a senior portfolio
manager. He is involved in managing several of the A I M funds, including the A
I M Aggressive Growth Fund and the A I M Constellation Fund. Mr. Barnard joined
A I M in 1982.
Kenneth A. Zschappel. Mr. Zschappel is assistant vice president and senior
portfolio manager of A I M. He is involved in managing several of the A I M
funds, including the A I M Aggressive Growth Fund and the A I M Constellation
Fund. Mr. Zschappel joined A I M in 1990 and in 1992 became a portfolio analyst
for equity securities, specializing in technology and health care. He was
elected investment officer of A I M in 1995.
CAPITAL GUARDIAN TRUST COMPANY
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER(S)
Small Company Blend Michael R. Ericksen (since May 1, 1999)
Bryan Jacoboski (since May 1, 1999)
James S. Kange (since May 1, 1999)
Robert G. Kirby (since May 1, 1999)
Committee*
U.S. Large Cap Value Donnalisa P. Barnum (since May 1, 1999)
Income & Value Michael R. Ericksen (since May 1, 1999)
David I. Fisher (since May 1, 1999)
Bryan Jacoboski (since May 1, 1999)
Theodore R. Samuels
Eugene P Stein (since May 1, 1999)
Committee*
Diversified Bond James S. Baker (since May 1, 1999)
James R. Mulally (since May 1, 1999)
John W. Ressner (since May 1, 1999)
* A portion of the portfolio is managed by a committee of senior research
analysts.
INFORMATION REGARDING CAPITAL GUARDIAN TRUST COMPANY
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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. 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 in the Investment Advisers Act of
1940 and is therefore not a registered investment adviser.
PORTFOLIO MANAGERS
James S. Baker. James Baker is a Vice President and portfolio manager for CGTC.
He joined the CGTC organization in 1987.
Donnalisa P. Barnum. Donnalisa Barnum is a Senior Vice President and portfolio
manager for CGTC. She joined the CGTC organization in 1986.
Michael R. Ericksen. Michael Ericksen is a Senior Vice President and portfolio
manager for CGTC. She joined the CGTC organization in 1987.
David I. Fisher. David Fisher is Chairman of the Board of The Capital Group
Companies, Inc., and Chairman of the Board and a member of the Executive
Committee and Investment committee of Capital Guardian Trust Company. He joined
the CGTC organization in 1989.
Bryan Jacoboski. Bryan Jacoboski is a Vice President and portfolio manager for
CGTC. She joined CGTC in 1994. Prior to joining the CGTC organization in 1994,
he spent 11 years with Paine-Webber where he was a Managing Director in equity
research.
James S. Kang. James Kang is Vice President for Capital Research International.
He joined the CGTC organization in 1988.
Robert G. Kirby. Robert Kirby is a Senior Partner of The Capital Group Partners
L.P. and Chairman Emeritus and a portfolio manager of CGTC. He joined the CGTC
organization in 1968.
John W. Ressner. John Ressner is Executive Vice President, Research Director,
member of the Management Committee for Capital Research Company, an Executive
Vice President and portfolio manager-Fixed Income for Capital Research
International and a member of CGTC's Investment Committee. He joined the CGTC
organization in 1988.
Theodore R. Samuels. Theodore Samuels is a Senior Vice President and a Director
for CGTC. He joined the CGTC organization in 1981.
Eugene P. Stein. Eugene Stein is Executive Vice President, a Director, a
portfolio manager and Chairman of the Investment Committee for CGTC. She joined
the CGTC organization in 1972.
James R. Mulally. James Mulally is Senior Vice President, a Director, and
Chairman of the Fixed -Income Investment Sub-Committee for CGTC. He joined the
CGTC organization in 1980.
FIDELITY MANAGEMENT TRUST COMPANY
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER(S)
Mid Cap Blend Trust Katherine Collins (since July 1997)
Richard B. Fentin (since July 1997)
Large Cap Growth Trust Karen Firestone (since May 1, 1999)
Overseas Trust Rick Mace (since May 1, 1999)
INFORMATION REGARDING FIDELITY MANAGEMENT TRUST COMPANY
Fidelity Management Trust Company ("FMTC") is located at 82 Devonshire
Street, Boston, Massachusetts 02109. FMTC is a wholly-owned subsidiary of
Fidelity Investments which was founded in 1946. Headquartered in Boston,
Fidelity also has offices in London, Tokyo and Hong Kong. Today, Fidelity
Investments, along with its affiliates, is the largest privately-held investment
management firm in the United States, managing over $752 billion as of
December 31, 1998.
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Fidelity Investments is a privately-held company (there is no outside
ownership), and no ownership changes are anticipated.
FMTC was established by Fidelity Investments in 1981 to provide
investment management services for institutional clients. FMTC is a bank as
defined in the Investment Advisers Act of 1940 and is therefore not a registered
investment adviser. FMTC currently manages in excess of $58 billion for more
than 267 institutional clients. FMTC offers institutional investors
clearly-defined equity, fixed income, international, high yield bond, real
estate and alternative disciplines. Each discipline serves either as a
stand-alone investment option or in combination with other disciplines to meet
specific client investment objectives.
PORTFOLIO MANAGERS
Katherine Collins. Ms. Collins joined Fidelity Investments in 1990. She
is also the portfolio manager of Fidelity Mid Cap Stock Fund and Fidelity
Advisor Mid Cap Stock Fund. Ms. Collins previously served as sector leader of
Fidelity's consumer equity research group from 1996 to January 1997. She was
named manager of Fidelity Select Leisure, Fidelity Select Consumer Industries
and Fidelity Advisor Consumer Industries portfolios in 1996. From 1994 to 1995,
Ms. Collins was assistant director of research. From 1992 to 1994, she managed
Fidelity Select Construction and Housing Portfolio. Ms. Collins is a Chartered
Financial Analyst.
Richard B. Fentin. Mr. Fentin, Senior Vice President, joined Fidelity
Investments in 1979. He has also managed the Fidelity Value Fund since March,
1996, and previously managed the same fund during 1992. Prior to 1993, Mr.
Fentin also managed Fidelity Puritan Fund, Fidelity Growth Company Fund,
Fidelity Select Precious Metal Portfolio and Fidelity Trust Portfolio: Growth
Fund and served as a research assistant for the Fidelity Magellan Fund.
Karen Firestone. Ms. Firestone joined Fidelity Investments in 1983 and
has worked as an analyst and manager. Ms. Firestone also manages Fidelity
Advisor Large Cap Fund.
Rick Mace. Mr. Mace jointed Fidelity Investments in 1987 and has worked
as an analyst and manager. Mr. Mace also manages Fidelity Advisor Overseas Fund.
FOUNDERS ASSET MANAGEMENT LLC
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER*
Balanced Trust Brian F. Kelly (January 1997)
International Small Cap Trust Michael W. Gerding (since March 1996)
* To facilitate the day-to-day investment management of each Trust, Founders
employs a unique team-and-lead-manager system. The management team is composed
of several members of the Investment Department, including lead portfolio
managers, portfolio traders and research analysts. Team members share
responsibility for providing ideas, information, knowledge and expertise in the
management of the portfolios. Daily decisions on portfolio selection for the
portfolio rests with a lead portfolio manager assigned to the portfolio. The
lead portfolio manager is listed for each Trust.
INFORMATION REGARDING FOUNDERS ASSET MANAGEMENT LLC
Founders Asset Management LLC ("Founders"), located at 2930 East Third
Avenue, Denver, Colorado 80206, is a registered investment adviser which was
first established as an asset manager in 1938. Founders is a 90%-owned
subsidiary of Mellon Bank. N.A., with the remaining 10% held by certain Founders
executives and portfolio managers. Mellon Bank is a wholly-owned subsidiary of
Mellon Bank Corporation, a publicly-owned multibank holding company which
provides a comprehensive range of financial products and services in domestic
and selected international markets. As of December 31, 1998, Founders had over
$7.6 billion of assets under management, including approximately $5.4 billion
in mutual fund accounts and $2.2 billion in other advisory accounts.
Founders is a "growth-style" manager of equity portfolios and gives
priority to the selection of individual securities that have the potential to
provide superior results over time, despite short-term volatility. Under normal
circumstances, Founders' approach to investment management gives greater
emphasis to the fundamental financial, marketing and operating strengths of the
companies whose securities it buys, and less emphasis to the short-term impact
of changes in macroeconomic and market conditions. Founders focuses on
purchasing the stocks of companies with strong management and market positions
that have earnings prospects that are significantly above the average for their
market sectors.
PORTFOLIO MANAGERS
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Michael W. Gerding. Mr. Gerding, Senior Vice President of Investments,
is a chartered financial analyst who has been part of Founders' investment
department since 1990. Prior to joining Founders, he served as a portfolio
manager and research analyst with NCNB Texas for several years. Mr. Gerding
earned a BBA in finance and an MBA from Texas Christian University.
Brian F. Kelly. Mr. Kelly, Vice President of Investments, joined
Founders in 1996. Prior to joining Founders, he served as portfolio manager for
Invesco Trust Company (1993-1996) and as a senior investment analyst for Sears
Investment Management Company (1986-1993). A graduate of the University of Notre
Dame, Mr. Kelly received his MBA and JD from the University of Iowa. He is also
a Certified Public Accountant.
FRANKLIN ADVISERS, INC.
PORTFOLIO SUBADVISED PORTFOLIO MANAGER
Emerging Small Company Trust Edward Jamieson (since May 1, 1999)
Michael McCarthy (since May 1, 1999)
Aidan O'Connell (since May 1, 1999)
INFORMATION REGARDING FRANKLIN ADVISERS, INC.
Franklin Advisers, Inc. ("Franklin Advisers"), located at 777 Mariners
Island Blvd, San Mateo, CA 94404, has been in the business of providing
investment advisory services since 1985. Franklin Advisers is wholly owned by
Franklin Resources, a publicly owned company engaged in the financial services
industry through its subsidiaries. Charles B. Johnson and Rupert H. Johnson are
the principal shareholders of Resources. As of December 31, 1998, Franklin
Advisers and its affiliates manage over $220 billion of assets.
PORTFOLIO MANAGERS
Edward Jamieson. Mr. Jamieson joined the Franklin Templeton Group in 1987.
Michael McCarthy. Mr. McCarthy joined the Franklin Templeton Group in 1992.
Aidan O'Connell. Mr. O'Connell joined the Franklin Templeton Group in May, 1998.
Before joining Franklin Templeton, Mr. O'Connell worked at Hambrecht & Quist.
MANUFACTURERS ADVISER CORPORATION
PORTFOLIO SUBADVISED PORTFOLIO MANAGER(S)*
Pacific Rim Emerging Stephen Hill (since October 1994)
Markets Trust Richard James Crook (since October 1994)
Hugh Williams (since January 1999)
Quantitative Equity Trust Mark Schmeer (since August 1995)
Rhonda Chang (since August 1995)
Real Estate Securities Trust Mark Schmeer (since August 1995)
Leslie Grober (since August 1995)
Equity Index Leslie Grober (since October 1995)
Brett Hryb (since October 1997)
Lifestyle Trusts Committee
* Dates also include the time period the portfolio manager managed any
predecessor Manulife Series Fund, Inc. portfolio.
Management of the above portfolios is provided by a team of investment
professionals each of whom plays an important role in the management process of
each portfolio. Team members work together to develop investment strategies
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and select securities for a portfolio. They are supported by research analysts,
traders and other investment specialists who work alongside the investment
professionals in an effort to utilize all available resources to benefit the
shareholders.
ADDITIONAL INFORMATION REGARDING MANUFACTURERS ADVISER CORPORATION
Manufacturers Adviser Corporation ("MAC") is a Colorado corporation. Its
principal business at the present time is to provide investment management
services to the portfolios listed above. MAC is an indirect wholly-owned
subsidiary of Manulife Financial. The address of MAC is 200 Bloor Street East,
Toronto, Ontario, Canada M4W 1E5. As of December 31, 1998, MAC together with
Manulife Financial had approximately $63 billion of assets under management.
PORTFOLIO MANAGERS
Mark Schmeer. Mr. Schmeer joined MAC in 1995. He is an investment manager
of U.S. Equities at Manulife Financial. Prior to 1995, Mr. Schmeer was a Vice
President of Sun Life Investment Management, where he served from 1993 to 1995.
Mr. Schmeer was a manager of U.S. Investments for Ontario Hydro Corporation from
1986 to 1993.
Leslie Grober. Mr. Grober joined MAC in 1995. He has been an investment
manager of U.S. Equities at Manulife Financial since 1994. Mr. Grober was an
investment representative of Toronto-Dominion Bank from 1991 to 1993. Prior to
that he was employed by the Bank of Montreal.
Brett Hryb. Mr. Hryb joined MAC in 1996. Prior to joining MAC, he worked
for Global Accounting at Elliott & Page, an affiliate of MAC. Mr. Hryb
specializes in equity index portfoios.
Rhonda Chang. Ms. Chang joined MAC in 1995. She has been an investment
manager at Manulife Financial since 1994. From 1990 to 1994, Ms. Chang was an
investment analyst with American International Group.
Stephen Hill. Mr. Hill joined MAC in 1995. He is also an investment manager
at Manulife Financial. Prior to 1995, Mr. Hill was a director of INVESCO Asset
Management, where he served from 1993 and 1994. Mr. Hill was a director of
Yasuda Trust Europe from 1989 to 1992.
Richard James Crook. Mr. Crook joined MAC in 1994. He has been an
investment manager at Manulife Financial since 1975.
Hugh Williams. Mr. Williams joined MAC in 1998 and was appointed to
permanent staff on January 1, 1999. He is responsible for equity portfolios in
the Pacific Asia region, excluding Japan and Australia. Prior to joining MAC,
Mr. Williams managed Asian and Australian portfolios for Prudential Portfolio
Managers.
MILLER ANDERSON & SHERRERD, LLP
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER(S)
Value Trust Robert J. Marcin (since January 1997)
Richard M. Behler (since January 1997)
Nicholas J. Kovich (since January 1997)
High Yield Trust Robert E. Angevine (since January 1997)
Thomas L. Bennett (since January 1997)
Stephen F. Esser (since January 1997)
INFORMATION REGARDING MILLER ANDERSON & SHERRERD, LLP
Miller Anderson & Sherrerd, LLP ("MAS") is a Pennsylvania limited liability
partnership founded in 1969 and is located at One Tower Bridge, West
Conshohocken, PA 19428. MAS provides investment services to employee benefit
plans, endowment funds, foundations and other institutional investors. MAS is a
division of Morgan Stanley Dean witer Investment Management Inc. which as of
December 31, 1998 had approximately $163.4 billion in assets under management.
MAS is an indirectly wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.
PORTFOLIO MANAGERS
Robert J. Marcin. Mr. Marcin joined MAS as a portfolio manager in 1988. He
is primarily responsible for the management of the Value and Core Equity
Portfolios of MAS Funds, Van Kemper Series Fund, Inc. and Morgan Stanley Dean
Witter Universal Funds, Inc.
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Nicholas J. Kovich. Mr. Kovich joined MAS as a portfolio manager in 1988.
He is also primarily responsible for the management of the Value and Core Equity
Portfolios of MAS Funds, Van Kampen Series Fund, Inc. and Morgan Stanley Dean
Witter Universal Funds, Inc.
Richard M. Behler. Mr. Behler joined MAS as a portfolio manager in 1995. He
is also primarily responsible for the management of the Value Portfolios of MAS
Funds, Morgan Stanley Fund, Inc. and Morgan Stanley Dean Witter Universal Funds,
Inc. Prior to joining MAS, Mr. Behler served as portfolio manager from 1992 to
1995 for Moore Capital Management.
Robert E. Angevine. Mr. Angevine joined Morgan Stanley Asset Management in
1988. He is primarily responsible for the management of the High Yield and Fixed
Income portfolios of MAS Funds and Morgan Stanley Dean Witter Universal Funds,
Inc.
Thomas L Bennett. Mr. Bennett joined MAS in 1984. He is also primarily
responsible for the management of the High Yield portfolios of MAS Funds and
Morgan Stanley Dean Witter Universal Funds, Inc.
Stephen F. Esser. Mr. Esser joined MAS in 1988. He is also primarily
responsible for the management of the High Yield portfolios of MAS Funds and
Morgan Stanley Universal Funds, Inc.
MORGAN STANLEY ASSET MANAGEMENT
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER
Global Equity Frances Campion (since January 1997)
Richard Boon (since February 1999)
Paul Boyne (since February 1999)
INFORMATION REGARDING MORGAN STANLEY ASSET MANAGEMENT
Morgan Stanley Asset Management ("Morgan Stanley"), with principal offices
at 1221 Avenue of the Americas, New York, New York 10020, has been the
Subadviser to the Global Equity Trust since October 1, 1996. Morgan Stanley, a
wholly-owned subsidiary of Morgan Stanley Dean Witter & Co., conducts a
worldwide portfolio management business, providing a broad range of portfolio
management services to customers in the United States and abroad. At December
31, 1998, Morgan Stanley and its institutional investment management affiliates
had approximately $163.4 billion of combined assets under management as
investment managers or as fiduciary advisers.
Morgan Stanley Dean Witter & Co. is a global financial services firm with
three major businesses: securities, asset management and credit services.
On December 1, 1998, Morgan Stanley Asset Management Inc. changed it name
to Morgan Stanley Dean Witter Investment Management Inc. but continues to do
business in certain instances using the name Morgan Stanley Asset Management.
PORTFOLIO MANAGER
Frances Campion. Ms. Campion joined Morgan Stanley in January 1990 as a
global equity fund manager and is now a Managing Director of Morgan Stanley &
Co. Incorporated. Her responsibilities include day-to-day management of the
Global Equity Portfolio of Morgan Stanley Institutional Fund, Inc. Prior to
joining Morgan Stanley, Ms. Campion was a U.S. equity analyst with Lombard Odler
Limited where she had responsibility for the management of global portfolios.
Ms. Campion has eleven years global investment experience. She is a graduate of
University of College, Dublin.
Richard Boon. Mr. Boon joined Morgan Stanley's Global Equity team in
Setpember 1995 and became a Principal in December 1998. In addition to portfolio
management, his responsiblities include security analysis on North American and
Australian equities. Prior to joing Morgan Stanley, he spent seven year in
investment banking; working for Deutsche Bank as a member of their Equity
Capital Markets Group; advising the UK Post Office on its proposed
privatization; and with Ord Minnett Securities in their Mergers & Acquisitions
dvivision. He is a graduate of Cantebury and Victoria Unviersities, New Zealand.
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Paul Boyne. Paul Boyne joined Morgan Stanley in 1993 after working as a
Chartered Accountant with Grant Thornton International in Dublin. At Morgan
Stanley, he assists in the implementation of the Global Equity Program and the
analysis of North American and Irish equities. He is currently completing a
post-graduate degree with University College, Dublin. Mr. Boyne became a
Principal in December 1998.
PACIFIC INVESTMENT MANAGEMENT COMPANY
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER
Global Bond Trust Lee R. Thomas, III (since May 1, 1999)
Total Return Trust William H. Gross (since May 1, 1999)
INFORMATION REGARDING PACIFIC INVESTMENT MANAGEMENT COMPANY
Pacific Investment Management Company ("PIMCO"), founded in 1971, is a
subsidiary of PIMCO Advisors, L.P. The general partners of PIMCO Advisors 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 an indirect wholly-owned subsidiary of Pacific Life
Insurance Company, and PIMCO Partners LLC, a California limited liability
company 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's address is 840 Newport Center Drive, Suite 300, Newport Beach,
California 92660. PIMCO had approximately $157.96 billion of assets under
management as of December 31, 1998 and PIMCO Advisors, L.P. had approximately
$244.2 billion of assets under management as of December 31, 1998.
PORTFOLIO MANAGERS
Lee R. Thomas, III. Lee Thomas is Managing Director and Senior
International Portfolio Manager at PIMCO. Mr. Thomas joined PIMCO in 1995.
William H. Gross. William Gross is the Managing Director and a Fixed Income
Portfolio Manager at PIMCO. Mr. Gross is one of the founders of PIMCO.
AXA ROSENBERG INVESTMENT MANAGEMENT
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER(S)*
Small Company Value Trust Barr M. Rosenberg (since October 1997)
Kenneth Reid (since October 1997)
Floyd Coleman (since October 1997)
*Management of the Small Company Value Trust is overseen by Dr. Rosenberg and
Dr. Reid who are responsible for research and the design and maintenance of AXA
Rosenberg's portfolio system, and by Mr. Coleman who is responsible for
monitoring the Small Company Value Trust's performance against the relevant
benchmark and for monitoring cash balances.
INFORMATION REGARDING AXA ROSENBERG INVESTMENT MANAGEMENT
AXA Rosenberg Investment Management ("AXA Rosenberg") is a professional
investment management firm which provides investment advisory services to a
substantial number of institutional investors. AXA Rosenberg is a Delaware
limited liability company whose principal business address is Four Orinda Way,
Suite 300E, Orinda, CA 94563. AXA Rosenberg is part of a global group of
investment adviser companies under common ownership. The owners of AXA Rosenberg
are AXA Investment Managers, Barr M. Rosenberg, Marlis S. Fritz and Kenneth
Reid. As of December 31, 1998, AXA Rosenberg managed approximately $7.6 billion
of assets.
PORTFOLIO MANAGERS
Barr M. Rosenberg. Dr. Rosenberg has been employed by AXA Rosenberg since
the company's inception in 1985. Dr. Rosenberg is the managing director of Barr
Rosenberg Research Center, an affiliated company. As such, he has ultimate
responsibility for AXA Rosenberg's securities valuation and portfolio
optimization systems used to manage the Small Company Value Trust and for the
implementation of the decisions developed therein. His area of special
concentration is the design of AXA Rosenberg's proprietary securities valuation
model. Dr. Rosenberg earned a B.A. degree from the University of California,
Berkeley in 1963. He earned an M.Sc. from the London School of Economics in
1965, and a Ph.D. from Harvard University, Cambridge, Massachusetts, in 1968.
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Kenneth Reid. Dr. Reid has been employed by AXA Rosenberg for the past
thirteen years. Dr. Reid is a Chief Executive Officer for Rosenberg. His work is
focused on the design and estimation of AXA Rosenberg's valuation models and he
has primary responsibility for analyzing the empirical evidence that validates
and supports the day-to-day recommendations of AXA Rosenberg's securities
valuation models. Dr. Reid earned both a B.A. degree in 1973 and an M.D.S. in
1975 from Georgia State University, Atlanta. In 1982, he earned a Ph.D. from the
University of California, Berkeley, where he was awarded the American Bankers
Association Fellowship.
Floyd Coleman. Mr. Coleman has been a trader and portfolio manager for AXA
Rosenberg since 1988. He received a B.S. from Northwestern University in 1982, a
M.S. from Polytechnic Institute, Brooklyn in 1984 and a M.B.A. from Harvard
Business School in 1988.
ROWE PRICE-FLEMING INTERNATIONAL, INC.
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER
International Stock Trust Committee
INFORMATION REGARDING ROWE PRICE-FLEMING INTERNATIONAL, INC.
Rowe Price-Fleming International, Inc. ("Price-Fleming") is located at 100
East Pratt Street, Baltimore, Maryland 21202. Price-Fleming has offices in
Baltimore, London, Tokyo, Hong Kong, Singapore and Buenos Aires. Price-Fleming
was incorporated in Maryland in 1979 as a joint venture between T. Rowe Price
Associates, Inc. ("T. Rowe Price") and Robert Fleming Holdings Limited
("Flemings").
T. Rowe Price, Flemings, and Jardine Fleming Group Limited ("Jardine
Fleming") are owners of Price-Fleming. The common stock of Price-Fleming is 50%
owned by a wholly-owned subsidiary of T. Rowe Price, 25% by a subsidiary of
Flemings, and 25% by Jardine Fleming. (Half of Jardine Fleming is owned by
Flemings and half by Jardine Matheson Holdings Limited.) T. Rowe Price has the
right to elect a majority of the Board of Directors of Price-Fleming, and
Flemings has the right to elect the remaining directors, one of whom will be
nominated by Jardine Fleming.
SALOMON BROTHERS ASSET MANAGEMENT INC
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER*
U.S. Government Securities Trust Roger Lavan (since 1991)
Strategic Bond Trust Roger Lavan (since 1993)
*Mr. Lavan have been assisted in the management of the Strategic Bond Trust by
Peter Wilby since February, 1993 and by David Scott since January, 1995.
INFORMATION REGARDING SALOMON BROTHERS ASSET MANAGEMENT INC
Salomon Brothers Asset Management Inc ("SBAM") is a wholly-owned subsidiary
of Citigroup. SBAM was incorporated in 1987 and, together with affiliates in
London, Frankfurt and Hong Kong, provides a full range of fixed-income and
equity investment advisory services for individual and institutional clients
around the world, including European and Far East central banks, pension funds,
endowments, insurance companies, and services as investment adviser to various
investment companies. Citigroup is a diversified financial services company
engaged in investment services, asset management, consumer finance and insurance
services. As of December 31, 1998, SBAM and its worldwide investment advisory
affiliates managed approximately $27 billion in assets. SBAM's business offices
are located at Seven World Trade Center, New York, New York 10048.
In connection with SBAM's service as Subadviser to the Strategic Bond
Trust, SBAM's London-based affiliate, Salomon Brothers Asset Management Limited
("SBAM Limited"), whose business address is Victoria Plaza, 111 Buckingham
Palace Road, London SW1W OSB, England, provides certain advisory services to
SBAM with regard to currency transactions and investments in non-dollar
denominated debt securities for the benefit of the Strategic Bond Trust. SBAM
Limited is compensated by SBAM at no additional expense to the Strategic Bond
Trust. SBAM Limited is a subsidiary of Salomon Smith Barney Holdings Inc, which
is in turn a subsidiary of Travelers. SBAM Limited is a member of the Investment
Management Regulatory Organization Limited in the United Kingdom and is
registered as an investment adviser in the United States pursuant to the
Investment Advisers Act of 1940, as amended.
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PORTFOLIO MANAGERS
Roger Lavan. Mr. Lavan joined SBAM in 1990 and is a Director in the fixed
income department. He is a Portfolio Manager responsible for SBAM's investment
company and institutional portfolios which invest primarily in mortgage-backed
and U.S. government debt securities. Prior to joining SBAM, Mr. Lavan spent four
years analyzing portfolios for Salomon Brothers Fixed Income Sales and Product
Support departments.
Peter Wilby. Mr. Wilby, who joined SBAM in 1989, is a Managing Director and
Senior Portfolio Manager responsible for investment company and institutional
portfolio investments in high yield U.S. corporate debt securities and high
yield foreign sovereign debt securities. From 1984 to 1989, Mr. Wilby was
employed by Prudential Capital Management Group ("Prudential"), where he served
as Director of Prudential's credit research unit and as a corporate and
sovereign credit analyst. Mr. Wilby also managed high yield bonds and leveraged
equities for Prudential mutual funds and institutional portfolios.
David Scott. Mr. Scott is Managing Director and a Senior Portfolio Manager
with SBAM Limited in London with primary responsibility for managing long-term
global bond portfolios. He also plays an integral role in developing strategy.
Mr. Scott manages currency transactions and investments in non-dollar
denominated securities for the Strategic Bond Trust. Prior to joining SBAM in
April 1994, Mr. Scott worked at J.P. Morgan from 1990 to 1994 where he had
responsibility for global and non-dollar portfolios for clients including
departments of various governments, pension funds and insurance companies.
STATE STREET GLOBAL ADVISORS
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER
Growth Trust Peter B. Wiley, CFA (since May 1, 1999)*
Peter Stonberg, CFA (since May 1, 1999
Dean S. Barr, CFA (since May 1, 1999)
*Lead Portfolio Manager
INFORMATION REGARDING STATE STREET GLOBAL ADVISORS
State Street Global Advisors ("SSgA"), located at Two International Place,
Boston, Massachusetts 02110, has been in the business of providing investment
advisory services since 1978. As of December 31, 1998, SSgA had approximately
$470 billion under management. SSgA is a division of State Street Bank and Trust
Company.
PORTFOLIO MANAGER
Peter B. Wiley, CFA. Peter Wiley is a principal at SSgA. He is responsible
for the large capitalization growth strategy of SSgA as well as general research
and portfolio management duties. Prior to joining SSgA in 1997, he was a
portfolio manager in the equity group at Colonial Management Associates. Prior
to joining Colonial, he was a research faculty member at the Massachusetts
Institute of Technology, Lincoln Laboratory.
Peter Stonberg, CFA. Peter Stonberg is a principal of SSgA and the head of
the SSgA U.S. Active Equity Investments. Peter Stonberg joined SSgA in 1981 with
over 15 years of investment management.
Dean S. Barr. Dean Barr is a principal of SSgA and Director of Research. He
is also responsible for the worldwide development and enhancement of SSgA active
investment strategies. Prior to joing SSgA in 1997, he was the Chief Executive
Officer of Advanced Investment Technology, a quantitative money management firm.
T. ROWE PRICE ASSOCIATES, INC.
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER(S)
Blue Chip Growth Trust Investment advisory committee composed
of the following members:
Larry J. Puglia, Chairman (since
October 1996)
Brian W.H. Berghuis
Robert W. Smith
Thomas J. Huber
William J. Stromberg
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Equity-Income Trust Investment advisory committee composed
of the following members:
Brian C. Rogers, Chairman (since
October 1996)
Stephen W. Boesel
Richard P. Howard
Michael F. Sola
William J. Stromberg
Science & Technology Trust Investment advisory committee composed
of the following members:
Charles A. Morris, Chairman (since
January 1997)
Jill L. Hauser
Brian D. Stansky
INFORMATION REGARDING T. ROWE PRICE ASSOCIATES, INC.
T. Rowe Price Associates, Inc. ("T. Rowe Price"), whose address is at 100
East Pratt Street, Baltimore, Maryland 21202, was founded in 1937 by the late
Thomas Rowe Price, Jr. As of December 31, 1998, T. Rowe Price and its affiliates
have managed over $148 billion for over seven million individual and
institutional investor accounts.
PORTFOLIO MANAGERS
The committee chairman has day-to-day responsibility for managing the
portfolio and works with the committee in developing and executing the
portfolio's investment program.
Larry J. Puglia. Mr. Puglia, who joined T. Rowe Price in 1990, is a
Managing Director of T. Rowe Price and has been managing investments since 1993.
Brian C. Rogers. Mr. Rogers, who joined T. Rowe Price in 1982, is a
Managing Director of T. Rowe Price and has been managing investments since 1983.
Charles A. Morris. Mr. Morris, who joined T. Rowe Price in 1987, is a
Managing Director of T. Rowe Price and has been managing investments since 1991.
TEMPLETON INVESTMENT COUNSEL, INC.
PORTFOLIO SUBADVISED PORTFOLIO MANAGER
International Value Trust Lead Portfolio Manager
Gary R. Clemens (since May 1, 1999)
The following individual has secondary
portoflio management responsibilities:
Edgerton Scott, III CFA (since
May 1, 1999)
INFORMATION REGARDING TEMPLETON INVESTMENT COUNSEL, INC.
Templeton Investment Counsel, Inc. ("Templeton Investment"), located at 777
Mariners Island Blvd, San Mateo, CA 94404, has been in the business of providing
investment advisory services since 1979. As of December 31, 1998, Templeton
Investment and its affiliates manage over $220 billion in assets. Templeton
Investment is wholly owned by Templeton Global Investors, Inc., which is wholly
owned by Templeton Worldwide, Inc., which is wholly owned by Franklin Resources,
Inc..
PORTFOLIO MANAGERS
Gary R. Clemons. Mr. Clemons is a Senior Vice President of Templeton
Investment. He joined the Franklin Templeton Group in 1990.
Edgerton Scott, III. Mr. Scott is Vice President of Templeton Investment.
He joined the Franklin Templeton Group in 1996. Prior to joining Franklin
Templeton, Mr. Scott served as an investment analyst for the Portola Group and
Aeltus Investment Management.
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WELLINGTON MANAGEMENT COMPANY, LLP
PORTFOLIOS SUBADVISED PORTFOLIO MANAGER
Growth and Income Trust Matthew E. Megargel (since February 1992)
Investment Quality Bond Trust Thomas L. Pappas (since March 1994)
Mid Cap Stock Trust Frank V. Wisneski (since May 1, 1999)
INFORMATION REGARDING WELLINGTON MANAGEMENT COMPANY, LLP
Wellington Management Company, LLP ("Wellington Management") a
Massachusetts limited liability partnership is a professional investment
counseling firm with its principal business offices located at 75 State Street,
Boston, Massachusetts 02109. 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
investment management authority with respect to approximately $212 billion of
client assets. The managing partners of Wellington Management are Robert W.
Doran, Duncan M. McFarland and John R. Ryan.
PORTFOLIO MANAGERS
Matthew E. Megargel. Mr. Megargel, Senior Vice President of Wellington
Management, joined Wellington Management in 1983 as a research analyst and took
on additional responsibilities as a portfolio manager in 1988. In 1991, he
became solely a portfolio manager with Wellington Management.
Thomas L. Pappas. Mr. Pappas, Senior Vice President of Wellington
Management, has been a portfolio manager with Wellington Management since 1987.
Frank V. Wisneski. Mr. Wisneski, Senior Vice President of Wellington
Management, joined Wellington Management in 1969 as a research analyst and has
been investing in small and mid-cap companies since 1975.
SUBADVISORY FEES
Under the terms of each of the Subadvisory Agreements, the Subadviser
manages the assets of the assigned portfolios, subject to the supervision of the
Adviser and the Trustees of the Trust. The Subadviser formulates a continuous
investment program for each such portfolio consistent with its investment
objectives and policies outlined in this Prospectus. Each Subadviser regularly
reports to the Adviser and the Trustees of the Trust with respect to the
implementation of such programs.
As compensation for their services, the Subadvisers receive fees from the
Adviser 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 such
portfolio. The fees are calculated on the basis of the average of all valuations
of net assets of each 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 may be
reduced with respect to such excess. The following is a schedule of the
management fees the Adviser currently is obligated to pay the Subadvisers out of
the advisory fee it receives from each portfolio as specified above:
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets Trust...... .400% .350% .275% .225%
Science & Technology Trust ............. .600% .600% .600% .600%
International Small Cap Trust ......... .650% .600% .500% .400%
Aggressive Growth Trust ............... .500% .500% .500% .450%
Emerging Small Company Trust .......... .600% .600% .520% .500%
Small Company Blend Trust ............. .550% .550% .550% .550%
Mid Cap Growth Trust .................. .500% .475% .450% .400%
Mid Cap Stock Trust ................... .450% .425% .400% .375%
Overseas Trust ........................ .500% .500% .500%** .450%***
International Stock Trust ............. .750%* .500%* .500%* .450%*
International Value Trust ............. .625% .465% .375% .350%
Mid Cap Blend Trust ................... .350% .350% .350% .350%
Small Company Value Trust ............. .600% .575% .525% .475%
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Global Equity Trust ................... .500% .450% .375% .325%
Growth Trust .......................... .400% .400% .350% .300%
Large Cap Growth Trust ................ .400% .400% .400%** .350%***
Quantitative Equity Trust ............. .275% .225% .175% .150%
Blue Chip Growth Trust ................ .400% .400% .400% .350%
Real Estate Securities Trust .......... .275% .225% .175% .150%
Value Trust ........................... .400% .300% .200% .200%
Equity Index Trust .................... .100% .100% .100% .100%
Growth and Income Trust ............... .325% .275% .225% .150%
U.S. Large Cap Value Trust ............ .400% .400% .400% .350%
Equity-Income Trust ................... .400% .400% .400% .350%
Income & Value Trust .................. .350% .350% .350% .300%
Balanced Trust ........................ .375% .325% .275% .225%
High Yield Trust ...................... .350% .300% .250% .200%
Strategic Bond Trust**** .............. .350% .300% .250% .200%
Global Bond Trust .................... .375% .350% .300% .250%
Total Return Trust .................... .300% .300% .250% .250%
Investment Quality Bond Trust ......... .225% .225% .150% .100%
Diversified Bond Trust ................ .350% .300% .250% .200%
U.S. Government Securities Trust ...... .225% .225% .150% .100%
Money Market Trust .................... .075% .075% .075% .020%
Lifestyle Trusts ...................... no subadvisory fee
</TABLE>
*.750% up to $20 million, .600% from $20 million up to $50 million, .50% from
$50 million up to $200 million of the current value of the net assets of the
portfolio. When the current value of the net assets of the portfolio equals or
exceeds $200 million, the fee is .500% of the current value of the net assets of
the portfolio. When the current value of the net assets of the portfolio equals
or exceeds $500 million, the fee is .450% of the current value of the net assets
of the portfolio.
**$200 Million to $750 Million
***$750 Million or higher
**** In connection with the subadvisory consulting agreement between SBAM and
SBAM Limited, SBAM will pay SBAM Limited, as full compensation for all services
provided under the subadvisory consulting agreement, a portion of its
subadvisory fee, such amount being an amount equal to the fee payable under
SBAM's subadvisory agreement multiplied by the current value of the net assets
of the portion of the assets of the Strategic Bond Trust that SBAM Limited has
been delegated to manage divided by the current value of the net assets of the
portfolio.
- -.300% $50 million to $150 million; .250% $150 million to $200 million
For the year ended December 31, 1998, the Adviser paid aggregate
subadvisory fees of $34,400,662, allocated among the portfolios as follows:
<TABLE>
<CAPTION>
AS A PERCENTAGE OF AS A
AVERAGE NET ASSETS DOLLAR AMOUNT
<S> <C> <C>
Pacific Rim Emerging Markets Trust... .400% $ 100,909
Science & Technology Trust .......... .600% 638,775
International Small Cap Trust ....... .618% 880,024
Aggressive Growth Trust ............. .600% 694,939
Emerging Small Company Trust ........ .550% 1,538,613
Mid Cap Growth Trust ................ .495% 1,556,064
Overseas Trust ...................... .457% 1,003,054
International Stock Trust ........... .542% 1,041,875
Mid Cap Blend Trust ................. .233% 3,567,981
Small Company Value Trust ........... .586% 679,834
Global Equity Trust ................. .371% 3,406,519
Growth Trust ........................ .436% 991,056
Large Cap Growth Trust .............. .350% 874,869
Quantitative Equity Trust ........... .235% 480,575
Blue Chip Growth Trust .............. .383% 3,298,442
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Real Estate Securities Trust ........ .240% 397,010
Value Trust ......................... .315% 666,493
Equity Index Trust .................. .100% 42,702
Growth and Income Trust ............. .176% 3,370,654
Equity-Income Trust ................. .225% 2,280,428
Income & Value Trust ................ .282% 1,722,708
Balanced Trust ...................... .333% 707,971
High Yield Trust .................... .317% 474,278
Strategic Bond Trust ................ .281% 1,150,170
Global Bond Trust ................... .355% 723,763
Investment Quality Bond Trust ....... .210% 521,489
Diversified Bond Trust .............. .313% 613,727
U.S. Government Securities Trust .... .200% 600,677
Money Market Trust .................. .068% 375,063
Lifestyle Trusts .................... Not Applicable Not Applicable
</TABLE>
**$287,543 of this amount was paid to SBAM Limited
PORTFOLIO TURNOVER
Each of the portfolios, except the Global Equity, Blue Chip Growth, Equity,
Equity-Income, Mid Cap Growth and Growth and Income Trusts, anticipates that its
annual portfolio turnover rate will exceed 100%. A high portfolio turnover rate
generally involves correspondingly greater brokerage commission expenses, which
must be borne directly by the portfolio. The portfolio turnover rate of each of
the Trust's portfolios may vary from year to year, as well as within a year.
Portfolio Turnover rates are set forth in the Financial Highlights at the end of
this Prospectus. See also "Portfolio Turnover" in the Statement of Additional
Information.
GENERAL INFORMATION
TAXES
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
DIVERSIFICATION REQUIREMENTS APPLICABLE TO INSURANCE COMPANY SEPARATE ACCOUNTS
The Trust intends to take the steps necessary to qualify each portfolio as
a regulated investment company under Subchapter M of the Internal Revenue Code
(the "Code") and believes that each portfolio will so qualify. As a result of
qualifying as a regulated investment company, each portfolio will not be subject
to U.S. Federal income tax on its net investment income and net capital gain )
that it distributes to its shareholders in each taxable year provided that it
distributes to its shareholders at least 90% of its net investment income for
such taxable year. Net investment income is defined as investment company
taxable income, as that term is defined in the Code, determined without regard
to the deduction for dividends paid. Net capital gain is defined as the excess
of its net realized long-term capital gain over its net realized short-term
capital loss Each portfolio is subject to a nondeductible 4% excise tax
calculated as a percentage of certain undistributed amounts of ordinary income
and capital gain net income. To the extent possible, each portfolio intends to
make sufficient distributions to avoid the application of both corporate income
and excise taxes.
Because only insurance company separate accounts will own shares in the
portfolios, each insurance company separate account will be treated as owning
its proportionate share of the assets of any portfolio in which it invests,
provided that the portfolio qualifies as a regulated investment company.
Therefore, each portfolio intends to meet the additional diversification
requirements that are applicable to insurance company separate accounts under
Subchapter L of the Code. These requirements generally provide that no more than
55% of the value of the assets of a portfolio may be represented by any one
investment; no more than 70% by any two investments; no more than 80% by any
three investments; and no more than 90% by any four investments. For these
purposes, all securities of the same issuer are treated as a single investment
and each United States government agency or instrumentality is treated as a
separate issuer.
If a portfolio failed to qualify as a regulated investment company, owners
of contracts based on the portfolio:
- - would be treated as owning shares of the portfolio (rather than their
proportionate share of the assets of such portfolio) for purposes of the
diversification requirements under Subchapter L of the Code, and as a
result might be taxed currently on the investment earnings under their
contracts and thereby lose the benefit of tax deferral, and
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- - the portfolio would incur regular corporate federal income tax on its
taxable income for that year and be subject to certain distribution
requirements upon requalification.
In addition, if a portfolio failed to comply with the diversification
requirements of the regulations under Subchapter L of the Code, owners of
contracts based on the portfolio might be taxed on the investment earnings under
their contracts and thereby lose the benefit of tax deferral. Accordingly,
compliance with the above rules is carefully monitored by the Adviser and the
Subadvisers and it is intended that the portfolios will comply with these rules
as they exist or as they may be modified from time to time. Compliance with the
tax requirements described above may result in a reduction in the return under a
portfolio, since, to comply with the above rules, the investments utilized (and
the time at which such investments are entered into and closed out) may be
different from that Subadvisers might otherwise believe to be desirable.
FOREIGN INVESTMENTS
Portfolios investing in foreign securities or currencies may be required to
pay withholding or other taxes to foreign governments. Foreign tax withholding
from dividends and interest, if any, is generally imposed at a rate between 10%
and 35%. The investment yield of any portfolio that invests in foreign
securities or currencies will be reduced by these foreign taxes.
TAX IMPLICATIONS FOR INSURANCE CONTRACTS WITH INVESTMENTS ALLOCATED TO THE TRUST
For information regarding the tax implications for the purchaser of a
variable annuity or life insurance contracts who allocates investments to a
portfolio of the Trust, please refer to the prospectus for the contract.
* * * *
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury Regulations currently in effect. It is not
intended to be a complete explanation or a substitute for consultation with
individual tax advisors. The Code and Regulations are subject to change,
possibly with retroactive effect. See "Additional Information Concerning Taxes"
in the Statement of Additional Information for additional information on taxes.
DIVIDENDS
The Trust intends to declare as dividends substantially all of the net
investment income, if any, of each portfolio. Dividends from the net investment
income and the net capital gain, if any, for each portfolio except the Money
Market Trust will be declared not less frequently than annually and reinvested
in additional full and fractional shares of that portfolio or paid in cash.
Dividends from net investment income and net capital gain, if any, for the Money
Market Trust will be declared and reinvested, or paid in cash, daily.
PURCHASE AND REDEMPTION OF SHARES
Shares of each portfolio of the Trust are offered continuously, without
sales charge, at a price equal to their net asset value. The Trust sells its
shares directly without the use of any underwriter. Shares of each portfolio of
the Trust are sold and redeemed at their net asset value next computed after a
purchase payment or redemption request is received by the shareholder from the
contract owner or after any other purchase or redemption order is received by
the Trust. Depending upon the net asset value at that time, the amount paid upon
redemption may be more or less than the cost of the shares redeemed. Payment for
shares redeemed will be made as soon as possible, but in any event within seven
days after receipt of a request for redemption.
Calculation of Net Asset Value
The net asset value of the shares of each portfolio is determined once
daily as of the close of trading of the New York Stock Exchange, Monday through
Friday, except that no determination is required on:
(i) days on which changes in the value of such portfolio's portfolio securities
will not materially affect the current net asset value of the shares of the
portfolio,
(ii) days during which no shares of such portfolio are tendered for redemption
and no order to purchase or sell such shares is received by the Trust, or
(iii) the following business holidays or the days on which such holidays are
observed by the New York Stock Exchange: New Year's Day, Martin Luther King,
Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
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The net asset values per share of all portfolios, except the Money Market
Trust, are computed by:
(i) adding the sum of the value of the securities held by each portfolio plus
any cash or other assets it holds,
(ii) subtracting all its liabilities, and
(iii) dividing the result by the total number of shares outstanding of that
portfolio at such time.
Securities held by each of the portfolios, except securities held by the Money
Market and Lifestyle Trusts and money market instruments with remaining
maturities of 60 days or less, are valued at their market value if market
quotations are readily available. Otherwise, such securities are valued at fair
value as determined in good faith by the Trustees or their designee although the
actual calculations may be made by persons acting pursuant to the direction of
the Trustees.
All instruments held by the Money Market Trust and money market instruments
with a remaining maturity of 60 days or less held by the other portfolios are
valued on an amortized cost basis. Underlying Portfolio shares held by the
Lifestyle Trust are valued at their net asset value.
Generally, trading (i) in non-U.S. securities, (ii) U.S. Government
Securities and (iii) money market instruments is substantially completed each
day at various times prior to the close of trading of the New York Stock
Exchange. The values of such securities used in computing the net asset value of
a portfolio's shares are generally determined as of such times. Occasionally,
events which affect the values of such securities may occur between the times at
which they are generally determined and the close of the New York Stock Exchange
and would therefore not be reflected in the computation of a portfolio's net
asset value. In such event, these securities will then be valued at their fair
value as determined in good faith by the Trustees or their designee. Fair value
pricing in these circumstances will help ensure that shareholders buying and
selling shares on this date receive a price that accurately reflects the value
of the securities as of the close of the New York Stock Exchange as opposed to a
price that reflects values of securities which are no longer accurate. Fair
value pricing in these circumstances will also help ensure that aggressive
traders are not able to purchase shares of a portfolio at a deflated price that
reflects stale security valuations and then immediately sell these shares at a
gain.
YEAR 2000 ISSUES
The Trust makes extensive use of information systems in the operations of
its various businesses, including for the exchange of financial data and other
information with customers, suppliers and other counterparties. The Trust also
uses software and information systems provided by third parties in its
accounting, business and investment systems.
The Year 2000 risk, as it is commonly known, is the result of computer
programs being written using two digits, rather than four, to define the
applicable year. Any of the Trust's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in systems failures or miscalculations causing
disruptions of operations, including among other things, a temporary inability
to process transactions, make payments or engage in other normal business
activities.
The systems used by the Trust have been assessed as part of a
comprehensive written plan conducted by The Manufacturers Life Insurance
Company (collectively with its subsidiaries "Manulife Financial"), to ensure
that computer systems and processes of Manulife Financial and its subsidiaries
and affiliates, including the Trust, will continue to perform through the end
of this century and in the next.
In 1996, in order to make Manulife Financial's systems Year 2000
compliant, a program was instituted to modify or replace both Manulife
Financial's information technology systems ("IT systems") and embedded
technology systems ("Non-IT systems"). The phases of this program include (i)
an inventory and assessment of all systems to determine which are critical,
(ii) planning and designing the required modifications and replacements, (iii)
making these modifications and replacements, (iv) testing modified or replaced
systems, (v) redeploying modified or replaced systems and (vi) final management
review and certification. For most IT and non-IT systems identified as
critical, certification has been completed for the Trust. Of those systems
classified as critical, management believes that over 99% were Year 2000
compliant at the end of 1998. Management continues to focus attention on the
remaining 1% of critical systems. Those that affect the Trust are expected to
be compliant by the end of the first quarter in 1999. Management believes that
the Trust's non-critical systems will be Year 2000 compliant by the end of the
first quarter 1999.
In addition to efforts directed at Manulife Financial's own systems,
Manulife Financial is presently consulting vendors, customers, and other third
parties with which it deals in an effort to ensure that no material aspect of
Manulife Financial's operations will be hindered by Year 2000 problems of these
third parties. This process includes providing third parties with
questionnaires regarding the state of their Year 2000 readiness and, where
possible or where appropriate, conducting further due diligence activities.
Manulife Financial recognizes the importance of preparing for the change
to the Year 2000 and, in January 1999, commenced preparation of contingency
plans, in the event that Manulife Financial's Year 2000 program has not fully
resolved its Year 2000 issues. The Year 2000 Project Management Office for
Manulife Financial's U.S. Division is coordinating the preparation of the Year
2000 contingency plan on behalf of U.S. Division affiliates and subsidiaries.
Contingency planning is targeted for completion by mid-1999.
Management currently believes that, with modifications to existing software
and conversions to new software, the Year 2000 risk will not pose significant
operational problems for Manulife Financial's computer systems. As part of the
Year 2000 program, critical systems were "time-shift" tested in the Year 2000
and beyond to confirm that they will continue to function properly before,
during and after the change to the Year 2000. However, there can be no assurance
that Manulife Financial's Year 2000 program, including consulting third parties
and its contingency planning, will avoid any material adverse effect on Manulife
Financial's operations, customer relations or financial condition. Manulife
Financial estimates the total cost of its Year 2000 program will be
approximately $59 million, of which $49.5 million has been incurred through
December 31, 1998; however, there can be no assurance that the actual cost
incurred will not be materially higher than such estimate. Most costs will be
expensed as incurred; however, those costs attributed to the purchase of new
software and hardware will generally be capitalized. The total cost of the Year
2000 program is not expected to have a material effect on Manulife Financial's
net operating income.
101
<PAGE> 102
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help investors understand the
financial performance of each portfolio of the Trust for the past five years (or
since inception in the case of portfolios whose commencement of operations was
less than 5 years ago). Certain information reflect financial results for a
single share of a Trust portfolio. The total returns presented in the table
represent the rate that an investor would have earned (or lost) on an investment
in a particular Trust portfolio (assuming reinvestment of all dividends and
distributions). The financial statements of the Trust at December 31, 1998 have
been audited by PricewaterhouseCoopers LLP independent accountants. The report
of PricewaterhouseCoopers LLP is included, along with the Trust's financial
statements, in the Trust's annual report which has been incorporated by
reference into the Statement of Additional Information and is available upon
request.
102
<PAGE> 103
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- -----------------------------------------------------------------------------------------------------------------------------------
PACIFIC RIM EMERGING MARKETS TRUST
-------------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 10/01/1994*
---------------------------------------------------- TO
1998 1997 1996 1995 12/31/1994
------------ --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ........................................ $ 7.16 $ 10.90 $ 10.36 $ 9.41 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.08 0.05 0.07 0.12 0.04
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ................................ (0.41) (3.77) 0.94 0.96 (0.59)
-------- -------- -------- -------- --------
Total from investment
operations ..................... (0.33) (3.72) 1.01 1.08 (0.55)
LESS DISTRIBUTIONS:
Dividends from net investment income .......... -- -- (0.08) (0.09) (0.04)
Distributions from capital gains .............. -- (0.02) (0.39) (0.04) --
-------- -------- -------- -------- --------
Total distributions ................. -- (0.02) (0.47) (0.13) (0.04)
-------- -------- -------- -------- --------
Net asset value, end of period ..................... $ 6.83 $ 7.16 $ 10.90 $ 10.36 $ 9.41
======== ======== ======== ======== ========
Total return ........................ (4.61%) (34.12%) 9.81% 11.47% (5.63%)+
Net assets, end of period (000's) .................. $ 27,995 $ 23,850 $ 23,241 $ 13,057 $ 7,657
Ratio of operating expenses to
average net assets ............................... 1.21% 1.42% 1.50% 1.50% 1.50%(A)
Ratio of net investment income to
average net assets ............................... 1.21% 0.65% 0.78% 1.01% 1.84%(A)
Portfolio turnover rate ............................ 62% 63% 48% 55% 0%(A)
</TABLE>
- ----------------------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
<PAGE> 104
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- -----------------------------------------------------------------------------------
SCIENCE &
TECHNOLOGY TRUST
----------------------------
YEAR ENDED 01/01/1997*
DECEMBER 31, TO
1998 12/31/1997
----------- -------------
<S> <C> <C>
Net asset value, beginning
of period ................................... $ 13.62 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ...................... (0.09) (0.04)
Net realized and unrealized gain
on investments and foreign currency
transactions ........................... 5.99 1.38
--------- ---------
Total from investment
operations ................ 5.90 1.34
LESS DISTRIBUTIONS:
Distributions from capital gains ......... -- (0.22)
--------- ---------
Total distributions ............ -- (0.22)
--------- ---------
Net asset value, end of period ................ $ 19.52 $ 13.62
========= =========
Total return ................... 43.32% 10.71%
Net assets, end of period (000's) ............. $ 179,285 $ 67,348
Ratio of operating expenses to
average net assets .......................... 1.21% 1.26%
Ratio of net investment loss to
average net assets .......................... (0.73%) (0.54%)
Portfolio turnover rate ....................... 105% 121%
</TABLE>
- --------------------------------------
* Commencement of operations
<PAGE> 105
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- -------------------------------------------------------------------------------------------------
INTERNATIONAL
SMALL CAP TRUST
----------------------------------------------
YEARS ENDED
DECEMBER 31, 03/04/1996*
---------------------------- TO
1998 1997 12/31/1996
------------ ------------ -----------
<S> <C> <C> <C>
Net asset value, beginning
of period .................................... $ 13.70 $ 13.60 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................... 0.07 0.08 0.06
Net realized and unrealized gain
on investments and foreign currency
transactions ............................ 1.56 0.03 1.09
--------- ---------- ---------
Total from investment
operations ................. 1.63 0.11 1.15
LESS DISTRIBUTIONS:
Dividends from net investment income (0.05) (0.01) (0.05)
--------- ---------- ---------
Net asset value, end of period ................. $ 15.28 $ 13.70 $ 13.60
========= ========== =========
Total return .................... 11.86% 0.79% 9.20% +
Net assets, end of period (000's) .............. $ 147,898 $ 128,576 $ 97,218
Ratio of operating expenses to
average net assets ........................... 1.25% 1.31% 1.29%(A)
Ratio of net investment income to
average net assets ........................... 0.44% 0.63% 0.93%(A)
Portfolio turnover rate ........................ 45% 74% 50%(A)
</TABLE>
- --------------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
<PAGE> 106
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- -------------------------------------------------------------------------
EMERGING SMALL
COMPANY TRUST
----------------------------
YEAR ENDED 01/01/1997 *
DECEMBER 31, TO
1998 12/31/97
------------ ------------
<S> <C> <C>
Net asset value, beginning
of period .......................... $ 24.13 $ 20.60
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............. (0.12) (0.02)
Net realized and unrealized gain
on investments ................ 0.17 3.55
-------- -------
Total from investment
operations ....... 0.05 3.53
LESS DISTRIBUTIONS:
Distributions from capital gains (0.36) --
-------- -------
Net asset value, end of period ....... $ 23.82 $ 24.13
======== =======
Total return .......... 0.07% 17.14%
Net assets, end of period (000's) .... $300,637 $275,774
Ratio of operating expenses to
average net assets ................. 1.10% 1.11%
Ratio of net investment loss to
average net assets ................. (0.54%) (0.13%)
Portfolio turnover rate .............. 77% 120%
</TABLE>
- ----------------------------------------
* Commencement of operations
<PAGE> 107
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- --------------------------------------------------------------------------------
PILGRIM BAXTER
GROWTH TRUST
----------------------------
YEAR ENDED 01/01/1997*
DECEMBER 31, TO
1998 12/31/97
------------- ------------
<S> <C> <C>
Net asset value, beginning
of period .......................... $ 12.50 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............. (0.07) (0.03)
Net realized and unrealized gain
on investments ................ 0.61 0.03
------- -------
Total from investment
operations ....... 0.54 --
------- -------
Net asset value, end of period ....... $ 13.04 $ 12.50
====== =======
Total return .......... 4.32% 0.00%
Net assets, end of period (000's) .... $143,010 $93,335
Ratio of operating expenses to
average net assets ................. 1.14% 1.18%
Ratio of net investment loss to
average net assets ................. (0.64%) (0.46%)
Portfolio turnover rate .............. 189% 63%
</TABLE>
- ---------------------------------------
* Commencement of operations
<PAGE> 108
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- --------------------------------------------------------------------
SMALL/MID CAP TRUST
-----------------------------------------
YEARS ENDED
DECEMBER 31, 03/04/1996*
---------------------------- TO
1998 1997 12/31/1996
------------ ------------- ----------
<S> <C> <C> <C>
Net asset value, beginning
of period .............................. $ 15.41 $ 13.37 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ................. (0.04) (0.04) --
Net realized and unrealized gain
on investments and foreign currency
transactions ...................... 4.40 2.08 0.87
-------- -------- --------
Total from investment
operations ........... 4.36 2.04 0.87
-------- -------- --------
Net asset value, end of period ........... $ 19.77 $ 15.41 $ 13.37
======== ======== ========
Total return .............. 28.29% 15.26% 6.96%+
Net assets, end of period (000's) ........ $395,109 $268,377 $176,062
Ratio of operating expenses to
average net assets ..................... 1.04% 1.05% 1.10%(A)
Ratio of net investment loss to
average net assets ..................... (0.27%) (0.33%) (0.02%)(A)
Portfolio turnover rate .................. 150% 151% 67% (A)
</TABLE>
- ---------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
<PAGE> 109
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- ----------------------------------------------------------------------------------
INTERNATIONAL STOCK
TRUST
----------------------------
YEAR ENDED 01/01/1997 *
DECEMBER 31, TO
1998 12/31/97
------------ -------------
<S> <C> <C> <C>
Net asset value, beginning
of period .................................... $ 11.47 $ 11.47
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................... 0.09 0.04
Net realized and unrealized gain
on investments and foreign currency
transactions ............................ 1.62 0.12
-------- --------
Total from investment
operations ................. 1.71 0.16
Less Distributions
Dividends from net investment income (0.09) (0.03)
Distributions from capital gains .......... (0.11) (0.13)
-------- --------
Total Distributions .................. (0.20) (0.16)
-------- --------
Net asset value, end of period ................. $ 12.98 $ 11.47
======== ========
Total return .................... 14.91% 1.38%
Net assets, end of period (000's) .............. $234,103 $145,253
Ratio of operating expenses to
average net assets ........................... 1.25% 1.38%
Ratio of net investment income to
average net assets ........................... 0.82% 0.56%
Portfolio turnover rate ........................ 27% 43%
</TABLE>
- ----------------------------------------
* Commencement of operations
<PAGE> 110
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- ------------------------------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY TRUST
--------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period...... $ 19.38 $ 17.84 $ 16.10 $ 15.74 $ 15.73 $ 12.00 $ 12.24 $ 11.00 $ 12.57 $ 10.15
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.17 0.19 0.12 0.29 0.05 0.12 0.10 0.16 0.12 0.10
Net realized and
unrealized gain(loss)
on investments and
foreign currency
transactions............ 2.27 3.16 1.89 0.84 0.22 3.79 (0.19) 1.23 (1.41) 2.32
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Total from investment
operations........... 2.44 3.35 2.01 1.13 0.27 3.91 (0.09) 1.39 (1.29) 2.42
LESS DISTRIBUTIONS:
Dividends from net
investment income....... (0.36) (0.27) (0.27) (0.08) (0.02) (0.18) (0.15) (0.15) (0.04) --
Distributions from
capital gains........... (1.08) (1.54) -- (0.69) (0.24) -- -- -- (0.24) --
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Total distributions... (1.44) (1.81) (0.27) (0.77) (0.26) (0.18) (0.15) (0.15) (0.28) --
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Net asset value,
end of period............ $ 20.38 $ 19.38 $ 17.84 $ 16.10 $ 15.74 $ 15.73 $ 12.00 $ 12.24 $ 11.00 $ 12.57
======== ======== ======== ======== ======== ======== ======== ======= ======= =======
Total return.......... 12.24% 20.80% 12.62% 7.68% 1.74% 32.89% (0.72%) 12.80% (10.43%) 23.84%
Net assets, end of
period (000's)........... $928,564 $868,413 $726,842 $648,183 $616,138 $377,871 $116,731 $89,003 $63,028 $26,223
Ratio of operating
expenses to average
net assets............... 1.01% 1.01% 1.01% 1.05% 1.08% 1.16% 1.16% 1.23% 1.28% 1.62%
Ratio of net investment
income to average net
assets................... 0.84% 1.02% 0.78% 0.61% 0.44% 0.77% 1.12% 1.47% 1.97% 1.82%
Portfolio turnover rate... 32% 33% 169% 63% 52% 52% 69% 74% 67% 109%
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- -----------------------------------------------------------------------------
SMALL COMPANY
VALUE TRUST
-----------------------------
YEAR ENDED 10/01/1997*
DECEMBER 31, TO
1998 12/31/1997
------------ -----------
<S> <C> <C>
Net asset value, beginning
of period .................................... $ 11.94 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.01 0.01
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ............................... (0.57) (0.57)
-------- -------
Total from investment operations ........ (0.56) (0.56)
LESS DISTRIBUTIONS:
Dividends from net investment income....... (0.01) --
-------- -------
Net asset value, end of period ................. $ 11.37 $ 11.94
======== =======
Total return ............................ (4.72%) (4.48%)+
Net assets, end of period (000's) .............. 162,335 67,091
Ratio of operating expenses to
average net assets ........................... 1.23% 1.19%(A)
Ratio of net investment income to
average net assets ........................... 0.16% 0.54%(A)
Portfolio turnover rate ........................ 131% 81%(A)
</TABLE>
- ------------
* Commencement of operations
+ Non-annualized
(A) Annualized
<PAGE> 112
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST
-------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993* 1992 1991 1990 1989
---------- ---------- ---------- -------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period...... $ 21.50 $ 22.62 $ 20.79 $ 14.66 $ 15.57 $ 13.97 $ 13.12 $ 11.33 $ 19.14 $ 15.17
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.08 0.08 0.13 0.10 0.11 0.07 0.64 0.14 0.24 0.29
Net realized and
unrealized gain(loss) on
investments and foreign
currency transactions.... 2.13 3.31 3.77 6.14 (0.18) 2.11 0.38 1.88 (1.95) 3.87
---------- ---------- ---------- -------- -------- -------- -------- ------- ------- -------
Total from investment
operations............ 2.21 3.39 3.90 6.24 (0.07) 2.18 1.02 2.02 (1.71) 4.16
LESS DISTRIBUTIONS:
Dividends from net
investment income....... (0.07) (0.14) (0.09) (0.11) (0.05) (0.58) (0.17) (0.23) (0.29) (0.12)
Distributions from
capital gains.......... (4.16) (4.37) (1.98) -- (0.79) -- -- -- (5.81) (0.07)
---------- ---------- ---------- -------- -------- -------- -------- ------- ------- -------
Total distributions.... (4.23) (4.51) (2.07) (0.11) (0.84) (0.58) (0.17) (0.23) (6.10) (0.19)
Net asset value,
end of period............ $ 19.48 $ 21.50 $ 22.62 $ 20.79 $ 14.66 $ 15.57 $ 13.97 $ 13.12 $ 11.33 $ 19.14
========== ========== ========== ======== ======== ======== ======== ======= ======= =======
Total return........... 9.41% 19.25% 20.14% 42.79% (0.53)% 16.31% 7.93% 17.94% (11.79)% 27.70%
Net assets, end of
period (000's)........... $1,556,169 $1,521,382 $1,345,461 $988,800 $534,562 $387,842 $192,626 $88,235 $36,564 $32,108
Ratio of operating
expenses to average
net assets............... 0.80% 0.80% 0.80% 0.80% 0.84% 0.88% 0.95% 0.89% 0.97% 1.02%
Ratio of net investment
income to average
net assets............... 0.42% 0.35% 0.71% 0.63% 0.88% 0.50% 7.31% 2.23% 2.74% 1.90%
Portfolio turnover rate... 93% 224% 223% 88% 132% 173% 782% 172% 95% 111%
____________
* Net investment income per share was calculated using the average shares method for fiscal year 1993.
</TABLE>
<PAGE> 113
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH TRUST
----------------------------------
YEARS ENDED
DECEMBER 31, 07/15/1996*
-------------------- to
1998 1997 12/31/1996
-------- -------- -----------
<S> <C> <C> <C>
Net asset value, beginning
of period ............................... $ 17.21 $ 13.73 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................... 0.06 0.08 0.09
Net realized and unrealized gain
on investments and foreign currency
transactions ........................... 4.00 3.40 1.23
-------- -------- -------
Total from investment operations ..... 4.06 3.48 1.32
LESS DISTRIBUTIONS:
Dividends from net investment income. (0.07) -- (0.09)
Distribution from capital gains ......... (0.70) -- --
-------- -------- -------
Total distributions .................. (0.77) -- --
-------- -------- -------
Net asset value, end of period ........... $ 20.50 $ 17.21 $ 13.73
======== ======== =======
Total return ......................... 23.95% 25.35% 10.53%+
Net assets, end of period (000's) ........ $299,994 $167,388 $56,807
Ratio of operating expenses to
average net assets ...................... 0.90% 0.95% 1.01%(A)
Ratio of net investment income to
average net assets ...................... 0.42% 0.74% 2.57%(A)
Portfolio turnover rate .................. 136% 179% 215%(A)
</TABLE>
- --------------
* Commencement of operations
+ Non-Annualized
(A) Annualized
<PAGE> 114
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quantitative Equity Trust
----------------------------------------------------------------------------------------------------
Years Ended December 31,
----------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
--------- --------- -------- -------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................... $ 22.50 $ 17.33 $ 17.27 $ 13.36 $ 14.68 $ 13.73 $ 13.33 $ 10.48 $ 11.25 $ 8.91
INCOME FROM INVESTMENT
operations:
Net investment
income (A)............... 0.20 0.26 0.26 0.24 0.20 0.19 0.18 0.21 0.32 0.36
Net realized
and unrealized
gain (loss)
on investments
and foreign
currency transactions.. 5.42 4.91 2.83 3.67 (0.81) 1.64 0.61 2.94 (0.77) 2.34
--------- --------- -------- -------- -------- -------- ------- ------- ------- -------
Total from
investment
operations..... 5.62 5.17 3.09 3.91 (0.61) 1.83 0.79 3.15 (0.45) 2.70
LESS DISTRIBUTIONS:
Dividends from net
investment income..... (0.25) ---- (0.50) ---- (0.20) (0.19) (0.18) (0.21) (0.32) (0.36)
Distributions from
capital gains......... (2.65) ---- (2.53) ---- (0.51) (0.69) (0.21) (0.09) ---- ----
Total
distributions.. (2.90) ---- (3.03) ---- (0.71) (0.88) (0.39) (0.30) (0.32) (0.36)
--------- --------- -------- -------- -------- -------- ------- ------- ------- -------
Net asset value,
end of period................ $ 25.22 $ 22.50 $ 17.33 $ 17.27 $ 13.36 $ 14.68 $ 13.73 $ 13.33 $ 10.48 $ 11.25
========= ========= ======== ======== ======== ======== ======= ======= ======= =======
Total return... 26.35% 29.83% 17.92 29.23% (4.19%) 13.39% 6.07% 30.18% (4.06%) 30.66%
Net assets, end of
period (000's)................ $ 254,475 $ 167,530 $ 91,900 $ 60,996 $ 34,829 $ 21,651 $ 9,708 $ 5,480 $ 2,872 $ 2,138
Ratio of operating
expenses to average
net assets (B).............. 0.76% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment
income to average net
assets...................... 1.06% 1.50% 1.81% 1.76% 1.53% 1.39% 1.51% 1.78% 3.06% 3.48%
Portfolio turnover rate....... 225% 114% 105% 109% 85% 88% 48% 53% 121% 121%
</TABLE>
- ------------------------------
(A) After investment adviser expense reimbursement per share of $0.05 for the
year ended December 31, 1997.
(B) The ratio of operating expenses, before reimbursement from the investment
adviser, was 0.77% for the year ended December 31, 1997.
<PAGE> 115
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Index Trust
----------------------------------------------
Years Ended 02/14/1996 *
December 31, to
--------------------------
1998 1997 12/31/1996
-------- -------- ------------
<S> <C> <C> <C>
Net asset value, beginning
of period ................................. $ 12.48 $ 10.69 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (B) .............. 0.18 0.32 0.19
Net realized and unrealized gain
on investments ....................... 3.36 3.26 1.29
-------- -------- -------
Total from investment
operations .............. 3.54 3.58 1.48
LESS DISTRIBUTIONS:
Dividends from net investment income.... (0.18) (0.32) (0.19)
Distributions from capital gains........ (0.41) (1.47) (0.60)
-------- -------- -------
Total distributions........... (0.59) (1.79) (0.79)
-------- -------- -------
Net asset value, end of period............... $ 15.43 $ 12.48 $ 10.69
Total return.................. 28.56% 33.53% 14.86%+
Net assets, end of period (000's)............ $ 63,292 $ 27,075 $ 7,818
Ratio of operating expenses to
average net assets (C)..................... 0.40% 0.40% 0.40%(A)
Ratio of net investment income to
average net assets......................... 1.70% 3.64% 4.74%(A)
Portfolio turnover rate...................... 3% 7% 27%(A)
</TABLE>
- ---------------------------------------------
* Commencement of operations
(A) Annualized
(B) After investment adviser expense reimbursement per share of $0.02 and $0.01
for the years ended December 31, 1998 and 1997, respectively.
(C) The ratios of operating expenses, before reimbursement from the investment
adviser, was 0.55% and 0.57% for the years ended December 31, 1998 and
1997, respectively.
<PAGE> 116
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Blue Chip Growth Trust
-----------------------------------------------------------------------------------------
Years Ended December 31, 12/11/1992*
---------------------------------------------------------------------------- to
1998 1997 1996 1995 1994 1993 12/31/1992
----------- --------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period........................... $ 15.00 $ 14.31 $ 11.40 $ 9.05 $ 9.55 $ 9.93 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income
(B).............. 0.05 0.09 0.03 0.03 0.04 0.05 --
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions................... 4.19 3.13 2.92 2.36 (0.50) (0.42) (0.07)
----------- --------- --------- --------- --------- --------- --------
Total from
investment
operations......... 4.24 3.22 2.95 2.39 (0.46) (0.37) (0.07)
LESS DISTRIBUTIONS:
Dividends from net investment
income... (0.08) (0.03) (0.04) (0.04) (0.04) (0.01) --
Distributions from capital
gains....... (0.24) (2.50) -- -- -- -- --
----------- --------- --------- --------- --------- --------- --------
Total distributions.... (0.32) (2.53) (0.04) (0.04) (0.04) (0.01) --
----------- --------- --------- --------- --------- --------- --------
Net asset value, end of period........ $ 18.92 $ 15.00 $ 14.31 $ 11.40 $ 9.05 $ 9.55 $ 9.93
=========== ========= ========= ========= ========= ========= ========
Total return........... 28.49% 26.94% 25.90% 26.53% (4.80%) (3.80%) (0.70%)+
Net assets, end of period (000's)..... $ 1,141,162 $ 708,807 $ 422,571 $ 277,674 $ 151,727 $ 104,966 $ 31,118
Ratio of operating expenses to
average net assets (C).............. 0.97% 0.975 0.975 0.975 0.975 0.975 1.06%(A)
Ratio of net investment income to
average net assets.................. 0.37% 0.74% 0.26% 0.42% 0.65% 0.75% 1.04%(A)
Portfolio turnover rate............... 42% 37% 159% 57% 33% 12% 0%(A)
</TABLE>
- --------------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
(B) After investment adviser and subadviser expense reimbursement per share of
$0.006, $0.004, $0.006 and $0.01 for the years ended December 31, 1996,
1995, 1994 and 1993, respectively.
(C) The ratio of operating expenses, before reimbursement from the investment
adviser and subadviser, was 1.02%, 1.03%, 1.06% and 1.09% for the years
ended December 31, 1996,1995, 1994 and 1993, respectively.
<PAGE> 117
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Real Estate Securities Trust
------------------------------------------------------------------------------------------------
Years Ended December 31,
------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
--------- --------- -------- -------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period....................... $ 20.07 $ 16.95 $ 15.10 $ 13.34 $ 14.07 $ 12.75 $ 10.92 $ 8.16 $ 9.24 $ 9.12
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(B).......................... 0.78 0.80 0.74 0.67 0.55 0.47 0.45 0.53 0.67 0.68
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions............... (3.72) 2.32 4.31 1.35 (0.93) 2.38 1.83 2.76 (1.09) 0.15
--------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Total from
investment
operations....... (2.94) 3.12 5.05 2.02 (0.38) 2.85 2.28 3.29 (0.42) 0.83
LESS DISTRIBUTIONS:
Dividends from net investment
income..................... (0.53) -- (1.39) (0.26) (0.27) (0.47) (0.45) (0.53) (0.66) (0.71)
Distributions from capital
gains...................... (1.84) -- (1.81) -- (0.08) (1.06) -- -- -- --
--------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Total
distributions...... (2.37) -- (3.20) (0.26) (0.35) (1.53) (0.45) (0.53) (0.66) (0.71)
--------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Net asset value, end of period.... $ 14.76 $ 20.07 $ 16.95 $ 15.10 $ 13.34 $ 14.07 $ 12.75 $ 10.92 $ 8.16 $ 9.24
========= ======== ======== ======== ======== ======== ======= ======= ======= =======
Total return....... (16.44%) 18.41% 34.69% 15.14% (2.76%) 22.61% 21.29% 41.10% (4.53%) 9.23%
Net assets, end of period (000's). $ 161,832 $ 161,759 $ 76,220 $ 52,440 $ 42,571 $ 24,106 $ 7,273 $ 4,120 $ 2,774 $ 2,874
Ratio of operating expenses to
average net assets (C).......... 0.76% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets.............. 5.57% 5.42% 5.22% 5.06% 4.26% 3.93% 4.13% 5.40% 7.74% 7.29%
Portfolio turnover rate........... 122% 148% 231% 136% 36% 143% 71% 40% 24% 15%
</TABLE>
- ----------------------------------
(A) Annualized
(B) After investment adviser and subadviser expense reimbursement per share of
$0.04 for the year ended December 31, 1997.
(C) The ratio of operating expenses, before reimbursement from the investment
adviser, was 0.77% for the year ended December 31, 1997.
<PAGE> 118
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value Trust
----------------------------
Year Ended 01/01/1997*
December 31, to
1998 12/31/97
----------- -----------
<S> <C> <C>
Net asset value, beginning
of period.................................. $ 14.81 $ 12.50
Income from investment operations:
Net investment income................... 0.18 0.10
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions.......................... (0.45) 2.67
--------- ---------
Total from investment
operations.................. (0.27) 2.77
Less distributions:
Dividends from net investment income ... (0.18) (0.10)
Distributions from capital gains ....... (0.30) (0.36)
--------- ---------
Total distributions........... (0.48) (0.46)
--------- ---------
Net asset value, end of period............... $ 14.06 $ 14.81
========= =========
Total return.................. (1.72%) 22.14%
Net assets, end of period (000's)............ $ 255,554 $ 144,672
Ratio of operating expenses to
average net assets......................... 0.85% 0.96%
Ratio of net investment income to
average net assets......................... 1.50% 1.50%
Portfolio turnover rate...................... 45% 43%
</TABLE>
- ----------------------------------------------
* Commencement of operations
<PAGE> 119
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Growth and Income Trust
-------------------------------------------------------
Years Ended December 31, 01/09/1995*
------------------------------------- to
1998 1997 1996 12/31/1995
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period................................... $ 11.01 $ 11.77 $ 10.47 $ 10.00
Income from investment operations:
Net investment income.................... 0.06 0.23 0.17 0.11
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions........................... 0.88 (0.26) 1.15 0.59
--------- --------- --------- --------
Total from investment
operations................ 0.94 (0.03) 1.32 0.70
Less distributions:
Dividends from net investment income..... (0.26) (0.22) (0.02) (0.12)
Distributions from capital gains......... (0.36) (0.51) -- (0.11)
--------- --------- --------- --------
Total distributions............ (0.62) (0.73) (0.02) (0.23)
--------- --------- --------- --------
Net asset value, end of period................ $ 11.33 $ 11.01 $ 11.77 $ 10.47
========= ========= ========= ========
Total return................... 8.04% (0.08%) 12.61% 6.98%+
Net assets, end of period (000's)............. $ 218,551 $ 203,776 $ 189,010 $ 88,638
Ratio of operating expenses to
average net assets.......................... 1.16% 1.12% 1.11% 1.47%(A)
Ratio of net investment income to
average net assets.......................... 0.61% 2.08% 1.82% 0.71%(A)
Portfolio turnover rate....................... 150% 166% 148% 112%(A)
</TABLE>
- ----------------------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
<PAGE> 120
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth and Income Trust
-----------------------------------------------------------------------------------------------
Years Ended December 31, 04/23/1991*
--------------------------------------------------------------------------------- to
1998 1997 1996 1995 1994 1993 1992 12/31/1991
----------- ----------- ----------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period........................ $ 23.89 $ 19.38 $ 16.37 $ 13.04 $ 13.05 $ 12.10 $ 11.08 $ 10.00
INCOME FROM INVESTMENT PERATIONS:
Net investment income............ 0.19 0.22 0.22 0.27 0.25 0.17 0.20 0.13
Net realized and
unrealized gain
on investments and
foreign currency
transactions................... 5.98 5.73 3.41 3.45 0.11 0.98 0.92 0.95
----------- ----------- ----------- --------- --------- --------- --------- --------
Total from
investment
operations............... 6.17 5.95 3.63 3.72 0.36 1.15 1.12 1.08
LESS DISTRIBUTIONS:
Dividends from net
investment in.................. (0.22) (0.24) (0.26) (0.26) (0.19) (0.18) (0.10) ----
Distributions from
capital gains.................. (1.41) (1.20) (0.36) (0.13) (0.18) (0.02) ---- ----
----------- ----------- ----------- --------- --------- --------- --------- --------
Total
distributions............ (1.63) (1.44) (0.62) (0.39) (0.37) (0.20) (0.10) ----
----------- ----------- ----------- --------- --------- --------- --------- --------
Net asset value, end of period..... $ 28.43 $ 23.89 $ 19.38 $ 16.37 $ 13.04 $ 13.05 $ 12.10 $ 11.08
=========== =========== =========== ========= ========= ========= ========= ========
Total return............. 26.52% 32.83% 22.84% 29.20% 2.85% 9.62% 10.23% 10.80%+
Net assets, end of period (000's).. $ 2,290,118 $ 1,605,387 $ 1,033,738 $ 669,387 $ 409,534 $ 288,765 $ 130,984 $ 57,404
Ratio of operating expenses to
average net assets............... 0.79% 0.79% 0.80% 0.80% 0.82% 0.85% 0.85% 0.98%(A)
Ratio of net investment income to
average net assets............... 0.85% 1.14% 1.56% 2.23% 2.40% 2.29% 2.78% 2.92%(A)
Portfolio turnover rate............ 16% 34% 49% 39% 42% 39% 44% 62%(A)
</TABLE>
- -------------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
<PAGE> 121
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity-Income Trust
---------------------------------------------------------------------
Years Ended December 31, 02/19/1993*
------------------------------------------------------- to
1998 1997 1996 1995 1994** 12/31/1993
----------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period.............................. $ 17.24 $ 15.41 $ 13.81 $ 11.33 $ 11.31 $ 10.00
Income from investment operations:
Net investment income.................. 0.34 0.34 0.21 0.17 0.12 0.07
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions......................... 1.26 3.68 2.39 2.49 (0.03) 1.24
----------- --------- --------- --------- --------- --------
Total from investment
operations..................... 1.60 4.02 2.60 2.66 0.09 1.31
Less distributions:
Dividends from net investment
income............................... (0.33) (0.21) (0.16) (0.08) (0.05) --
Distributions from capital gains....... (0.73) (1.98) (0.84) (0.10) (0.02) --
----------- --------- --------- --------- --------- --------
Total distributions............ (1.06) (2.19) (1.00) (0.18) (0.07) --
----------- --------- --------- --------- --------- --------
Net asset value, end of period........... $ 17.78 $ 17.24 $ 15.41 $ 13.81 $ 11.33 $ 11.31
=========== ========= ========= ========= ========= ========
Total return................... 9.21% 29.71% 19.85% 23.69% 0.79% 13.10%+
Net assets, end of period (000's)........ $ 1,088,342 $ 941,705 $ 599,486 $ 396,827 $ 221,835 $ 86,472
Ratio of operating expenses to
average net assets..................... 0.85% 0.85% 0.85% 0.85% 0.87% 0.94%(A)
Ratio of net investment income to
average net assets..................... 2.13% 2.47% 1.78% 1.63% 1.08% 1.30%(A)
Portfolio turnover rate.................. 21% 25% 158% 52% 26% 33%(A)
</TABLE>
- ----------------------------------------
* Commencement of operations
** Net investment income per share was calculated using the average shares
method for fiscal year 1994.
+ Non-annualized
(A) Annualized
<PAGE> 122
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Balanced Trust
---------------------------
Year Ended 01/01/1997*
December 31, to
1998 12/31/97
----------- -----------
<S> <C> <C>
Net asset value, beginning
of period.................................. $ 19.33 $ 16.41
Income from investment operations:
Net investment income................... 0.41 0.51
Net realized and unrealized gain
on investments and foreign currency
transactions.......................... 2.23 2.41
--------- ---------
Total from investment
operations............... 2.64 2.92
Less distributions:
Dividends from net investment income (0.48) --
Distributions from capital gains........ (2.09) --
--------- ---------
Total distributions........... (2.57) --
--------- ---------
Net asset value, end of period............... $ 19.40 $ 19.33
Total return.................. 14.25% 17.79%
Net assets, end of period (000's)............ $ 254,454 $ 177,045
Ratio of operating expenses to
average net assets......................... 0.87% 0.88%
Ratio of net investment income to
average net assets......................... 2.71% 2.97%
Portfolio turnover rate...................... 199% 219%
</TABLE>
- --------------------------------------------
* Commencement of operations
<PAGE> 123
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Aggressive Asset Allocation Trust
-------------------------------------------------------------------------------------------------------------
Years Ended December 31, 08/03/1989*
------------------------------------------------------------------------------------------------ to
1998 1997 1996 1995 1994 1993 1992 1991 1990 12/31/89
--------- --------- --------- --------- --------- --------- --------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period............. $ 14.36 $ 13.45 $ 12.85 $ 11.17 $ 12.03 $ 11.25 $ 10.72 $ 9.08 $ 9.88 $ 10.00
INCOME FROM
INVESTMENT
operations:
Net investment
income......... 0.24 0.29 0.36 0.35 0.31 0.34 0.30 0.36 0.36 0.08
Net realized
and unrealized
gain (loss) on
investments
and foreign
currency
transactions.... 2.43 2.01 1.21 2.07 (0.41) 0.79 0.55 1.69 (1.07) (0.20)
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Total from
investment
operations.. 2.67 2.30 1.57 2.42 (0.10) 1.13 0.85 2.05 (0.71) (0.12)
LESS DISTRIBUTIONS:
Dividends from
net investment
income........... (0.29) (0.38) (0.33) (0.33) (0.31) (0.30) (0.32) (0.41) (0.07) ----
Distributions
from capital
gains............ (1.48) (1.01) (0.64) (0.41) (0.45) (0.05) ---- ---- (0.02) ----
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Total
distributions (1.77) (1.39) (0.97) (0.74) (0.76) (0.35) (0.32) (0.41) (0.09) ----
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Net asset value,
end of period...... $ 15.26 $ 14.36 $ 13.45 $ 12.85 $ 11.17 $ 12.03 $ 11.25 $ 10.72 $ 9.08 $ 9.88
Total
return....... 19.12% 19.09% 13.00% 22.77% (0.69%) 10.30% 8.24% 22.96% (7.27%) (1.20%)+
Net assets, end of
period (000's)..... $ 262,882 $ 243,533 $ 226,699 $ 211,757 $ 184,662 $ 174,448 $ 151,627 $ 124,632 $ 91,581 $ 87,301
Ratio of operating
expenses to
average net
assets............. 0.88% 0.90% 0.90% 0.91% 0.89% 0.86% 0.89% 0.88% 0.78% 0.89%(A)
Ratio of net
investment
income to
average
net assets......... 1.58% 1.99% 2.73% 2.76% 2.90% 2.96% 3.08% 3.63% 4.08% 3.32%(A)
Portfolio
turnover rate........ 64% 91% 75% 111% 136% 92% 123% 172% 82% 22%(A)
</TABLE>
- ---------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
<PAGE> 124
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moderate Asset Allocation Trust
----------------------------------------------------------------------------------------------------------------
Years Ended December 31, 08/03/1989*
------------------------------------------------------------------------------------------------- to
1998 1997 1996 1995 1994 1993 1992 1991 1990 12/31/89
--------- --------- --------- --------- --------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period........ $ 12.95 $ 12.49 $ 12.39 $ 10.79 $ 11.76 $ 11.14 $ 10.72 $ 9.29 $ 10.03 $ 10.00
Income from
investment
operations:
Net investment
income....... 0.40 0.48 0.54 0.50 0.45 0.41 0.41 0.42 0.48 0.11
Net realized
and
unrealized
gain (loss)
on
investments
and foreign
currency
transactions. 1.51 1.29 0.60 1.65 (0.65) 0.67 0.43 1.50 (1.10) (0.08)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
Total from
investment
operations... 1.91 1.77 1.14 2.15 (0.20) 1.08 0.84 1.92 (0.62) 0.03
Less
distributions:
Dividends from
net
investment
in........... (0.46) (0.57) (0.52) (0.45) (0.40) (0.39) (0.42) (0.49) (0.10) ----
Distributions
from
capital
gains........ (1.04) (0.74) (0.52) (0.10) (0.37) (0.07) ---- ---- (0.02) ----
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
distri-
butions...... (1.50) (1.31) (1.04) (0.55) (0.77) (0.46) (0.42) (0.49) (0.12) ----
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value,
end of period.... $13.36 $12.95 $12.49 $12.39 $10.79 $11.76 $11.14 $10.72 $9.29 $10.03
Total
return....... 15.27% 15.87% 9.96% 20.68% (1.61%) 10.06% 8.30% 21.23% (6.23%) 0.30%+
Net assets, end of
period (000's)... $ 618,011 $ 609,142 $ 624,821 $ 650,136 $ 604,491 $ 644,257 $ 505,967 $ 420,074 $ 327,328 $ 318,439
Ratio of operating
expenses to
average net
assets........... 0.84% 0.85% 0.84% 0.84% 0.85% 0.84% 0.87% 0.86% 0.73% 0.79%(A)
Ratio of net
investment
income to
average net
assets........... 2.89% 3.37% 4.17% 4.09% 4.01% 4.02% 4.21% 4.38% 5.10% 4.51%(A)
Portfolio
turnover rate.... 85% 78% 78% 129% 180% 135% 169% 168% 76% 41%(A)
</TABLE>
- -----------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
<PAGE> 125
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (For A Share Outstanding Throughout The Period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conservative Asset Allocation Trust
----------------------------------------------------------------------------------------------------------------
Years Ended December 31, 08/03/1989*
------------------------------------------------------------------------------------------------- to
1998 1997 1996 1995 1994 1993 1992 1991 1990 12/31/1989
--------- --------- --------- --------- --------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period........ $ 11.78 $ 11.64 $ 11.59 $ 10.34 $ 11.26 $ 10.78 $ 10.63 $ 9.56 $ 10.11 $ 10.00
Income from
investment
operations:
Net investment
income....... 0.51 0.54 0.57 0.54 0.55 0.50 0.47 0.58 0.62 0.15
Net realized
and
unrealized
gain (loss)on
investments
and foreign
currency
transactions. 0.69 0.67 0.20 1.26 (0.76) 0.44 0.26 1.15 (1.01) (0.04)
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from
investment
operations... 1.20 1.21 0.77 1.80 (0.21) 0.94 0.73 1.73 (0.39) 0.11
Less
distributions:
Dividends from
net
investment
income....... (0.55) (0.59) (0.56) (0.55) (0.46) (0.46) (0.58) (0.66) (0.13) ----
Distributions
from capital
gains........ (0.60) (0.48) (0.16) ---- (0.25) ---- ---- ---- (0.03) ----
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
distri-
butions...... (1.15) (1.07) (0.72) (0.55) (0.71) (0.46) (0.58) (0.66) (0.16) ----
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value,
end of period.... $ 11.83 $ 11.78 $ 11.64 $ 11.59 $ 10.34 $ 11.26 $ 10.78 $ 10.63 $ 9.56 $ 10.11
Total return... 10.68% 11.44% 7.03% 18.07% (1.84%) 8.99% 7.36% 18.80% (3.84%) 1.10%+
Net assets, end
of period
(000's).......... $ 196,800 $ 204,348 $ 208,466 $ 224,390 $ 216,716 $ 250,117 $ 201,787 $ 165,167 $ 149,901 $ 141,191
Ratio of operating
expenses to
average net
assets........... 0.89% 0.89% 0.87% 0.87% 0.87% 0.86% 0.89% 0.88% 0.76% 0.82%(A)
Ratio of net
investment income
to average net
assets........... 4.03% 4.39% 4.59% 4.68% 4.86% 4.78% 4.99% 5.65% 6.68% 6.00%(A)
Portfolio
turnover rate.... 125% 86% 73% 110% 220% 170% 252% 211% 78% 85%(A)
</TABLE>
- -------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
<PAGE> 126
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD TRUST
--------------------------
YEAR ENDED 01/01/1997*
DECEMBER 31, TO
1998 12/31/97
------------ -----------
<S> <C> <C>
Net asset value, beginning of period.......... $ 13.56 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income....................... 0.91 0.46
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions............................... (0.53) 1.13
-------- -------
Total from investment operations........ 0.38 1.59
LESS DISTRIBUTIONS:
Dividends from net investment income........ (0.89) (0.46)
Distributions from capital gains............ (0.13) (0.07)
-------- -------
Total distributions..................... (1.02) (0.53)
-------- -------
Net asset value, end of period................ $ 12.92 $ 13.56
======== =======
Total return............................ 2.78% 12.68%
Net assets, end of period (000's)............. $192,354 $92,748
Ratio of operating expenses to
average net assets........................... 0.84% 0.89%
Ratio of net investment income to
average net assets........................... 8.34% 7.40%
Portfolio turnover rate....................... 94% 75%
</TABLE>
- ---------------
* Commencement of operations
<PAGE> 127
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- ----------------------------------------------------------------------------------------------------------------------
STRATEGIC BOND TRUST
---------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 2/19/1993*
------------------------------------------------------- TO
1998 1997 1996 1995 1994 12/31/93
-------- -------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $ 12.38 $ 11.94 $ 11.26 $ 9.91 $ 10.88 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................ 0.76 0.67 0.62 0.78 0.57 0.33
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions................................ (0.59) 0.57 0.92 1.04 (1.22) 0.55
-------- -------- -------- -------- ------- -------
Total from investment operations........ 0.17 1.24 1.54 1.82 (0.65) 0.88
LESS DISTRIBUTIONS:
Dividends from net investment income......... (0.71) (0.71) (0.86) (0.47) (0.28) --
Distributions from capital gains............. (0.12) (0.09) -- -- (0.04) --
-------- -------- -------- -------- ------- -------
Total distributions..................... (0.83) (0.80) (0.86) (0.47) (0.32) --
-------- -------- -------- -------- ------- -------
Net asset value, end of period................ $ 11.72 $ 12.38 $ 11.94 $ 11.26 $ 9.91 $ 10.88
======== ======== ======== ======== ======= =======
Total return............................ 1.31% 10.98% 14.70% 19.22% (5.99%) 8.8%+
Net assets, end of period (000's)............. $443,414 $365,590 $221,277 $122,704 $84,433 $53,640
Ratio of operating expenses to
average net assets........................... 0.85% 0.87% 0.86% 0.92% 0.91% 1.00%(A)
Ratio of net investment income to
average net assets........................... 7.59% 7.54% 8.20% 8.76% 7.49% 6.56%(A)
Portfolio turnover rate....................... 209% 131% 165% 181% 197% 356%(A)
</TABLE>
- -------------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
<PAGE> 128
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- -----------------------------------------------------------------------------------------------------------------------------------
GLOBAL GOVERNMENT BOND TRUST
------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period...... $ 14.07 $ 14.97 $ 14.56 $ 12.47 $ 13.93 $ 12.47 $ 12.88 $ 11.59 $ 10.50 $10.21
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.81 0.93 0.93 1.16 0.74 0.59 0.42 0.55 0.25 0.45
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions............ 0.20 (0.57) 0.79 1.62 (1.54) 1.67 (0.16) 1.21 1.13 --
-------- -------- -------- -------- -------- -------- ------- ------- ------- ------
Total from investment
operations.......... 1.01 0.36 1.72 2.78 (0.80) 2.26 0.26 1.76 1.38 0.45
LESS DISTRIBUTIONS:
Dividends from net
investment income....... (0.95) (1.23) (1.31) (0.69) (0.30) (0.70) (0.43) (0.46) (0.24) (0.09)
Distributions from
capital gains........... (0.40) (0.03) -- -- (0.36) (0.10) (0.24) (0.01) (0.05) (0.07)
-------- -------- -------- -------- -------- -------- ------- ------- ------- ------
Total distributions... (1.35) (1.26) (1.31) (0.69) (0.66) (0.80) (0.67) (0.47) (0.29) (0.16)
-------- -------- -------- -------- -------- -------- ------- ------- ------- ------
Net asset value,
end of period............ $ 13.73 $ 14.07 $ 14.97 $ 14.56 $ 12.47 $ 13.93 $ 12.47 $ 12.88 $ 11.59 $10.50
======== ======== ======== ======== ======== ======== ======= ======= ======= ======
Total return.......... 7.61% 2.95% 13.01% 23.18% (5.75%) 18.99% 2.27% 15.86% 13.49% 4.49%
Net assets, end of
period (000's)........... $196,990 $216,117 $249,793 $235,243 $208,513 $196,817 $67,859 $28,251 $11,582 $4,065
Ratio of operating
expenses to average
net assets............... 0.94% 0.93% 0.90% 0.93% 0.96% 1.06% 1.05% 1.14% 1.21% 1.50%
Ratio of net investment
income to average net
assets................... 5.46% 5.87% 6.38% 6.83% 6.10% 5.61% 6.71% 17.28% 6.62% 7.15%
Portfolio turnover rate... 140% 160% 167% 171% 157% 154% 132% 164% 142% 50%
</TABLE>
- --------------
<PAGE> 129
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT QUALITY BOND TRUST
-------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991* 1990 1989
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 12.13 $ 11.89 $ 12.32 $ 11.01 $ 12.12 $ 11.58 $ 11.33 $ 10.74 $ 12.37 $ 11.55
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.62 0.77 0.77 0.77 0.66 0.60 0.63 0.76 1.12 0.75
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions 0.40 0.30 (0.50) 1.28 (1.23) 0.53 0.15 0.85 (1.50) 0.51
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
Total from
investment
operations 1.02 1.07 0.27 2.05 (0.57) 1.13 0.78 1.61 (0.38) 1.26
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.69) (0.83) (0.70) (0.74) (0.54) (0.59) (0.53) (1.02) (1.25) (0.44)
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
Net asset value, end
of period $ 12.46 $ 12.13 $ 11.89 $ 12.32 $ 11.01 $ 12.12 $ 11.58 $ 11.33 $ 10.74 $ 12.37
======== ======== ======== ======== ======== ======= ======= ======= ======= =======
Total return 8.73% 9.75% 2.58% 19.49% (4.64%) 10.01% 7.21% 16.07% (2.73%) 11.34%
Net assets, end of
period (000's) $312,111 $188,545 $152,961 $143,103 $111,423 $99,474 $60,185 $38,896 $20,472 $26,965
Ratio of operating expenses to
average net assets 0.72% 0.74% 0.73% 0.74% 0.76% 0.77% 0.80% 0.85% 0.70% 0.83%
Ratio of net investment income to
average net assets 6.89% 7.15% 6.95% 6.91% 6.49% 6.03% 6.96% 7.47% 8.41% 8.77%
Portfolio turnover rate 41% 47% 68% 137% 140% 33% 59% 115% 120% 351%
</TABLE>
- ------------------------------
* The Investment Quality Bond Trust is the successor to the Bond Trust effective
April 23, 1991.
<PAGE> 130
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES TRUST
------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------
1998** 1997 1996 1995 1994 1993 1992 1991 1990 1989*
-------- -------- -------- -------- -------- -------- -------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ................ $ 13.50 $ 13.32 $ 13.65 $ 12.64 $ 13.48 $ 13.05 $ 12.85 $ 11.83 $ 10.98 $ 9.81
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (A) ............. 0.79 0.75 0.83 0.89 0.77 0.48 0.10 0.19 1.07 0.20
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ......... 0.18 0.31 (0.41) 0.99 (0.95) 0.49 0.65 1.40 (0.13) 1.08
-------- -------- -------- -------- -------- -------- -------- ------- ------- ------
Total from investment
operations ..... 0.97 1.06 0.42 1.88 (0.18) 0.97 0.75 1.59 0.94 1.28
LESS DISTRIBUTIONS:
Dividends from net
investment income .... (0.65) (0.88) (0.75) (0.87) (0.51) (0.46) (0.38) (0.53) (0.08) (0.11)
Distributions from capital
gains ................ -- -- -- -- (0.15) (0.08) (0.17) (0.04) (0.01) --
-------- -------- -------- -------- -------- -------- -------- ------- ------- ------
Total
distribution .. (0.65) (0.88) (0.75) (0.87) (0.66) (0.54) (0.55) (0.57) (0.09) --
-------- -------- -------- -------- -------- -------- -------- ------- ------- ------
Net asset value, end of
period ................... $ 13.82 $ 13.50 $ 13.32 $ 13.65 $ 12.64 $ 13.48 $ 13.05 $ 12.85 $ 11.83 $10.98
======== ======== ======== ======== ======== ======== ======== ======= ======= ======
Total return ..... 7.49% 8.47% 3.38% 15.57% (1.25%) 7.64% 6.19% 14.01% 8.63% 13.16%
Net assets, end of
period (000's) ........... $363,615 $251,277 $204,053 $216,788 $188,813 $222,072 $125,945 $29,246 $10,469 $5,905
Ratio of operating expenses to
average net assets (B) ... 0.72% 0.72% 0.71% 0.71% 0.73% 0.75% 0.76% 0.87% 1.04% 0.90%
Ratio of net investment income
to average net assets .... 5.92% 6.27% 6.36% 6.46% 5.68% 5.05% 6.12% 7.09% 7.70% 6.66%
Portfolio turnover rate .... 287% 110% 178% 212% 387% 213% 141% 233% 284% 330%
</TABLE>
- ---------------------------
** Net investment income per share was calculated using the average shares
method for fiscal year 1998.
* The U.S. Government Securities Trust is the successor to the Convertible
Securities Trust effective May 1, 1989.
(A) After investment adviser expense reimbursement per share of $0.01 for the
year ended December 31, 1989.
(B) The ratio of operating expenses, before reimbursement from the investment
adviser, was 1.62% for the year ended December 31, 1989.
<PAGE> 131
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET TRUST
---------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ................... $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .... 0.50 0.50 0.49 0.55 0.38 0.27 0.33 0.56 0.75 0.72
LESS DISTRIBUTIONS:
Dividends from net
investment income ...... (0.50) (0.50) (0.49) (0.55) (0.38) (0.27) (0.33) (0.56) (0.75) (0.72)
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Net asset value, end of
period ...................... $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
======== ======== ======== ======== ======== ======== ======= ======= ======= =======
Total return ........ 5.03% 5.15% 5.05% 5.62% 3.78% 2.69% 3.36% 5.71% 7.76% 8.56%
Net assets, end of
period (000's) .............. $609,837 $439,714 $363,566 $258,117 $276,674 $132,274 $89,535 $79,069 $85,040 $19,403
Ratio of operating expenses to
average net assets .......... 0.55% 0.54% 0.55% 0.54% 0.57% 0.59% 0.60% 0.60% 0.57% 0.79%
Ratio of net investment income to
average net assets .......... 4.94% 5.03% 4.97% 5.48% 3.93% 2.66% 3.28% 5.65% 7.27% 8.26%
</TABLE>
- -----------------------------
<PAGE> 132
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- --------------------------------------------------------------------------------
LIFESTYLE
AGGRESSIVE 1000 TRUST
-----------------------------
YEAR ENDED 01/07/1997*
DECEMBER 31, TO
1998 12/31/1997
------------ -----------
<S> <C> <C>
Net asset value, beginning
of period ............................. $ 13.47 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (B) .......... 0.07 0.05
Net realized and unrealized gain
on investments ................... 0.62 1.26
------- -------
Total from investment
operations .......... 0.69 1.31
LESS DISTRIBUTIONS:
Dividends from net investment income (0.07) (0.05)
Distributions from capital gains ... (0.70) (0.29)
------- -------
Total distributions ...... (0.77) (0.34)
------- -------
Net asset value, end of period .......... $ 13.39 $ 13.47
======= =======
Total return ............. 4.86% 10.89%+
Net assets, end of period (000's) ....... $80,525 $49,105
Ratio of operating expenses to
average net assets (C) ................ 0.00% 0.00%(A)
Ratio of net investment income to
average net assets .................... 0.48% 1.29%(A)
Portfolio turnover rate ................. 59% 67%(A)
</TABLE>
- --------------------------
+ Non-annualized
(A) Annualized
(B) After investment adviser expense reimbursement per share of $0.017 and
$0.007 for the years ended December 31, 1998 and 1997, respectively.
(C) The ratios of operating expenses, before reimbursement, from the investment
adviser, was 0.02% and 0.03% for the years ended December 31, 1998 and
1997, respectively
<PAGE> 133
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- --------------------------------------------------------------------------------
LIFESTYLE
GROWTH 820 TRUST
---------------------------
YEAR ENDED 01/07/1997*
DECEMBER 31, TO
1998 12/31/1997
------------ ------------
<S> <C> <C>
Net asset value, beginning
of period ............................. $ 13.77 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (B) .......... 0.24 0.30
Net realized and unrealized gain
on investments ................... 0.63 1.38
-------- --------
Total from investment
operations .......... 0.87 1.68
LESS DISTRIBUTIONS:
Dividends from net investment
income ............................ (0.24) (0.30)
Distributions from capital gains ... (0.62) (0.11)
-------- --------
Total distributions ...... (0.86) (0.41)
-------- --------
Net asset value, end of period .......... $ 13.78 $ 13.77
======== ========
Total return ............. 6.20% 13.84% +
Net assets, end of period (000's) ....... $380,309 $217,158
Ratio of operating expenses to
average net assets (C) ................ 0.00% 0.00%(A)
Ratio of net investment income to
average net assets .................... 1.74% 2.44%(A)
Portfolio turnover rate ................. 49% 51%(A)
</TABLE>
- -----------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
(B) After investment adviser expense reimbursement per share of $0.006 and
$0.004 for the years ended December 31, 1998 and 1997, respectively
(C) The ratio of operating expenses, before reimbursement from the investment
adviser, was 0.02% and 0.03% for the years ended December 31, 1998 and
1997, respectively.
<PAGE> 134
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- --------------------------------------------------------------------------------
LIFESTYLE
BALANCED 640 TRUST
---------------------------
YEAR ENDED 01/07/1997*
DECEMBER 31, TO
1998 12/31/1997
------------ -------------
<S> <C> <C>
Net asset value, beginning
of period ............................. $ 13.56 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (B) .......... 0.31 0.50
Net realized and unrealized gain
on investments ................... 0.47 1.19
-------- --------
Total from investment
operations .......... 0.78 1.69
LESS DISTRIBUTIONS:
Dividends from net investment
income ............................ (0.31) (0.50)
Distributions from capital gains ... (0.54) (0.13)
-------- --------
Total distributions ...... (0.85) (0.63)
-------- --------
Net asset value, end of period .......... $ 13.49 $ 13.56
======== ========
Total return ............. 5.72% 14.11%+
Net assets, end of period (000's) ....... $377,531 $186,653
Ratio of operating expenses to
average net assets (C) ................ 0.00% 0.00%(A)
Ratio of net investment income to
average net assets .................... 2.21% 3.24%(A)
Portfolio turnover rate ................. 52% 44%(A)
</TABLE>
- ----------------------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
(B) After investment adviser expense reimbursement per share of $0.004 and
$0.005 for the years ended December 31, 1998 and 1997, respectively
(C) The ratios of operating expenses, before reimbursement from the investment
adviser, was 0.02% and 0.03% for the years ended December 31, 1998 and
1997, respectively.
<PAGE> 135
<TABLE>
<CAPTION>
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- --------------------------------------------------------------------------------
LIFESTYLE
MODERATE 460 TRUST
-----------------------------
YEAR ENDED 01/07/1997*
DECEMBER 31, TO
1998 12/31/1997
------------ ------------
<S> <C> <C>
Net asset value, beginning
of period ............................. $ 13.35 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (B) .......... 0.45 0.65
Net realized and unrealized gain
on investments ................... 0.84 0.98
--------- -------
Total from investment
operations .......... 1.29 1.63
LESS DISTRIBUTIONS:
Dividends from net investment
income ............................ (0.45) (0.65)
Distributions from capital gains ... (0.28) (0.13)
--------- -------
Total distributions ...... (0.73) (0.78)
--------- -------
Net asset value, end of period .......... $ 13.91 $ 13.35
========= =======
Total return ............. 9.76% 13.7% +
Net assets, end of period (000's) ....... $ 138,128 $52,746
Ratio of operating expenses to
average net assets (C) ................ 0.00% 0.00%(A)
Ratio of net investment income to
average net assets .................... 3.03% 3.91%(A)
Portfolio turnover rate ................. 45% 39%(A)
</TABLE>
- ------------------------
* Commencement of operations + Non-annualized (A) Annualized (B) After
investment adviser expense reimbursement per share of $0.004 and $0.005 for
the years ended December 31, 1998 and 1997, respectively. (C) The ratios
of operating expenses, before reimbursement from the investment adviser,
was 0.02% and 0.03% for the years ended December 31, 1998 and 1997,
respectively.
<PAGE> 136
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- --------------------------------------------------------------------------------
LIFESTYLE
CONSERVATIVE 280 TRUST
--------------------------
YEAR ENDED 01/07/1997*
DECEMBER 31, TO
1998 12/31/1997
------------ -----------
Net asset value, beginning
of period ............................. $ 13.01 $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (B) .......... 0.50 0.76
Net realized and unrealized gain
on investments ................... 0.79 0.67
------- -------
Total from investment
operations .......... 1.29 1.43
LESS DISTRIBUTIONS:
Dividends from net investment
income ............................ (0.50) (0.76)
Distributions from capital gains ... (0.27) (0.16)
------- -------
Total distributions ...... (0.77) (0.92)
------- -------
Net asset value, end of period .......... $ 13.53 $ 13.01
======= =======
Total return ............. 10.20% 12.15%+
Net assets, end of period (000's) ....... $78,404 $19,750
Ratio of operating expenses to
average net assets (C) ................ 0.00% 0.00%(A)
Ratio of net investment income to
average net assets .................... 2.98% 3.95%(A)
Portfolio turnover rate ................. 32% 38%(A)
- ------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
(B) After investment adviser expense reimbursement per share of $0.007 and
$0.006 for the years ended December 31, 1998 and 1997, respectively.
(C) The ratios of operating expenses, before reimbursement from the investment
adviser, was 0.03% and 0.03% for the years ended December 31, 1998 and
1997, respectively.
<PAGE> 137
[BACK COVER]
Additional information about the Trust's investments is available in
the Trust's annual and semi-annual reports to shareholders. The Trust's annual
report contains a discussion of the market conditions and investment strategies
that significantly affected the Trust's performance during its last fiscal year.
Additional information about the Trust is also contained in the
Statement of Additional Information dated the same date as this Prospectus. The
Statement of Additional Information is incorporated by reference into this
Prospectus. The annual and semi-annual reports, the Statement of Additional
Information and other information about the Trust are available upon request and
without charge by writing the Trust at 116 Huntington Avenue, Boston, MA 02116
or calling the Trust at (800) 344-1029. Shareholder inquiries should also be
directed to this address and phone number.
Information about the Trust (including the Statement of Additional
Information) can be reviewed and copied at the SEC's Public Reference Room in
Washington D.C. Information on the operation of the Public Reference Room may be
obtained by calling the Securities and Exchange Commission ("SEC") at
1-800-SEC-0330. Reports and other information about the Trust are available on
the SEC's Internet site at http://www.sec.gov and copies of this information may
be obtained, upon payment of a duplicating fee, by writing the Public Reference
Section of the SEC, Washington D.C. 20549-6009.
<PAGE> 138
Part B
Statement of Additional Information
<PAGE> 139
STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
MANUFACTURERS INVESTMENT TRUST
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Trust's Prospectus dated May 1, 1999, which may be
obtained from Manufacturers Investment Trust, 116 Huntington Avenue, Boston,
Massachusetts, 02116. The Annual Report for Manufacturers Investment Trust is
incorporated by reference into the Statement of Additional Information. The
Annual Report is available upon request and without charge by calling (800)
344-1029.
The date of this Statement of Additional Information is May 1, 1999.
<PAGE> 140
TABLE OF CONTENTS
INVESTMENT POLICIES.............................................................
Money Market Instruments......................................................
U.S. Government and Government Agency Obligations ..........................
Canadian and Provincial Government and Crown Agency Obligations ............
Certificates of Deposit and Bankers' Acceptances ...........................
Commercial Paper ...........................................................
Corporate Obligations ......................................................
Repurchase Agreements ......................................................
Other Instruments ............................................................
Warrants ...................................................................
Reverse Repurchase Agreements ..............................................
Mortgage Securities ........................................................
Asset-Backed Securities ....................................................
Zero-Coupon Securities and Pay-in-Kind Bonds ...............................
High Yield (High Risk) Domestic Corporate Debt Securities ..................
High Yield Foreign Sovereign Debt Securities (Brady Bonds) .................
Hybrid Instruments .........................................................
ADRs, EDRs and GDRs ........................................................
Additional Investment Policies ...............................................
Lending Securities .........................................................
When-Issued Securities ("Forward Commitments") .............................
Mortgage Dollar Rolls ......................................................
Illiquid Securities ........................................................
RISK FACTORS ...................................................................
High Yield (High Risk) Securities ............................................
Foreign Securities ...........................................................
HEDGING AND OTHER STRATEGIC TRANSACTIONS .......................................
General Characteristics of Options............................................
General Characteristics of Futures Contracts and Options on Futures
Contracts....................................................................
Options on Securities Indices and Other Financial Indices ....................
Currency Transactions ........................................................
Combined Transactions ........................................................
Swaps, Caps, Floors and Collars ..............................................
Eurodollar Instruments .......................................................
Risk Factors..................................................................
Risks of Hedging and Other Strategic Transactions Outside the United States...
Use of Segregated and Other Special Accounts..................................
Other Limitations ............................................................
INVESTMENT RESTRICTIONS ........................................................
Fundamental...................................................................
Nonfundamental................................................................
PORTFOLIO TURNOVER..............................................................
MANAGEMENT OF THE TRUST.........................................................
Compensation of Trustees .....................................................
INVESTMENT MANAGEMENT ARRANGEMENTS .............................................
The Advisory Agreement .......................................................
The Subadvisory Agreements ...................................................
Information Applicable to Both the Advisory Agreement and the Subadvisory
Agreements ..................................................................
PORTFOLIO BROKERAGE ............................................................
PURCHASE AND REDEMPTION OF SHARES ..............................................
DETERMINATION OF NET ASSET VALUE ...............................................
2
<PAGE> 141
PERFORMANCE DATA ...............................................................
THE INSURANCE COMPANIES ........................................................
HISTORY OF THE TRUST ...........................................................
ORGANIZATION OF THE TRUST ......................................................
ADDITIONAL INFORMATION CONCERNING TAXES ........................................
REPORTS TO SHAREHOLDERS ........................................................
INDEPENDENT ACCOUNTANTS ........................................................
LEGAL COUNSEL ..................................................................
ADDITIONAL INFORMATION REGARDING SUBADVISERS ...................................
APPENDIX I - Debt Security Rating ..............................................
APPENDIX II Standard & Poor's Corporation Disclaimers ..........................
3
<PAGE> 142
INVESTMENT POLICIES
The following discussion supplements "Investment Objectives and Policies"
set forth in the Prospectus of the Trust.
MONEY MARKET INSTRUMENTS
The Money Market Trust invests in the types of money market instruments
described below. Certain of the instruments listed below may also be purchased
by the other portfolios in accordance with their investment policies. In
addition, each portfolio may purchase money market instruments (and other
securities as noted under each portfolio description) for temporary defensive
purposes, except that the U.S. Government Securities Trust and the Equity Index
Trust may not invest in Canadian and Provincial Government and Crown Agency
Obligations.
1. U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS.
U.S. Government Obligations. U.S. Government obligations are debt
securities issued or guaranteed as to principal or interest by the U.S.
Treasury. These securities include treasury bills, notes and bonds.
U.S. Agency Obligations. U.S. Government agency obligations are debt
securities issued or guaranteed as to principal or interest by an agency or
instrumentality of the U.S. Government pursuant to authority granted by
Congress. U.S. Government agency obligations include, but are not limited to:
* Student Loan Marketing Association,
* Federal Home Loan Banks,
* Federal Intermediate Credit Banks and
* the Federal National Mortgage Association.
U.S. Instrumentality Obligations. U.S. instrumentality obligations
also include, but are not limited to, the Export-Import Bank and Farmers Home
Administration.
Some obligations issued or guaranteed by U.S. Government agencies or
instrumentalities are supported by the right of the issuer to borrow from the
U.S. Treasury or the Federal Reserve Banks, such as those issued by Federal
Intermediate Credit Banks. Others, such as those issued by the Federal National
Mortgage Association, are supported by discretionary authority of the U.S.
Government to purchase certain obligations of the agency or instrumentality. In
addition, other obligations such as those issued by the Student Loan Marketing
Association, are supported only by the credit of the agency or instrumentality.
There are also separately traded interest components of securities issued or
guaranteed by the U.S. Treasury.
No assurance can be given that the U.S. Government will provide financial
support for the obligations of such U.S. Government-sponsored agencies or
instrumentalities in the future, since it is not obligated to do so by law. In
this document, these types of instruments will be referred to collectively as
"U.S. Government securities."
2. CANADIAN AND PROVINCIAL GOVERNMENT AND CROWN AGENCY OBLIGATIONS.
Canadian Government Obligations. Canadian Government obligations are
debt securities issued or guaranteed as to principal or interest by the
Government of Canada pursuant to authority granted by the Parliament of Canada
and approved by the Governor in Council, where necessary. These securities
include treasury bills, notes, bonds, debentures and marketable Government of
Canada loans.
Canadian Crown Obligations. Canadian Crown agency obligations are debt
securities issued or guaranteed by a Crown corporation, company or agency
("Crown agencies") pursuant to authority granted by the Parliament of Canada and
approved by the Governor in Council, where necessary. Certain Crown agencies are
by statute agents of Her Majesty in right of Canada, and their obligations, when
properly authorized, constitute direct obligations of the Government of Canada.
These obligations include, but are not limited to, those issued or guaranteed by
the:
* Export Development Corporation,
* Farm Credit Corporation,
* Federal Business Development Bank, and
* Canada Post Corporation.
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In addition, certain Crown agencies which are not by law agents of Her Majesty
may issue obligations which by statute the Governor in Council may authorize the
Minister of Finance to guarantee on behalf of the Government of Canada. Other
Crown agencies which are not by law agents of Her Majesty may issue or guarantee
obligations not entitled to be guaranteed by the Government of Canada. No
assurance can be given that the Government of Canada will support the
obligations of Crown agencies which are not agents of Her Majesty, which it has
not guaranteed, since it is not obligated to do so by law.
Provincial Government Obligations. Provincial Government obligations
are debt securities issued or guaranteed as to principal or interest by the
government of any province of Canada pursuant to authority granted by the
provincial Legislature and approved by the Lieutenant Governor in Council of
such province, where necessary. These securities include treasury bills, notes,
bonds and debentures.
Provincial Crown Agency Obligations. Provincial Crown agency
obligations are debt securities issued or guaranteed by a provincial Crown
corporation, company or agency ("Provincial Crown Agencies") pursuant to
authority granted by the provincial Legislature and approved by the Lieutenant
Governor in Council of such province, where necessary. Certain provincial Crown
agencies are by statute agents of Her Majesty in right of a particular province
of Canada, and their obligations, when properly authorized, constitute direct
obligations of such province. Other provincial Crown agencies which are not by
law agents of Her Majesty in right of a particular province of Canada may issue
obligations which by statute the Lieutenant Governor in Council of such province
may guarantee, or may authorize the Treasurer thereof to guarantee, on behalf of
the government of such province. Finally, other provincial Crown agencies which
are not by law agencies of Her Majesty may issue or guarantee obligations not
entitled to be guaranteed by a provincial government. No assurance can be given
that the government of any province of Canada will support the obligations of
Provincial Crown Agencies which are not agents of Her Majesty and which it has
not guaranteed, as it is not obligated to do so by law. Provincial Crown Agency
obligations described above include, but are not limited to, those issued or
guaranteed by a:
* provincial railway corporation,
* provincial hydroelectric or power commission or authority,
* provincial municipal financing corporation or agency, and
* provincial telephone commission or authority.
Any Canadian obligation acquired by the Money Market Trust will be payable in
U.S. dollars.
3. CERTIFICATES OF DEPOSIT AND BANKERS' ACCEPTANCES.
Certificates of Deposit. Certificates of deposit are certificates
issued against funds deposited in a bank or a savings and loan. They are issued
for a definite period of time and earn a specified rate of return.
Bankers' Acceptances. Bankers' acceptances are short-term credit
instruments evidencing the obligation of a bank to pay a draft which has been
drawn on it by a customer. These instruments reflect the obligations both of the
bank and of the drawer to pay the face amount of the instrument upon maturity.
They are primarily used to finance the import, export, transfer or storage of
goods. They are "accepted" when a bank guarantees their payment at maturity.
All portfolios of the Trust may acquire obligations of foreign banks and
foreign branches of U.S. banks. These obligations are not insured by the Federal
Deposit Insurance Corporation.
4. COMMERCIAL PAPER.
Commercial paper consists of unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is issued in
bearer form with maturities generally not exceeding nine months. Commercial
paper obligations may include variable amount master demand notes.
Variable Amount Master Demand Notes. Variable amount master demand
notes are obligations that permit the investment of fluctuating amounts at
varying rates of interest pursuant to direct arrangements between a portfolio,
as lender, and the borrower. These notes permit daily changes in the amounts
borrowed. The investing (i.e., "lending") portfolio has the right to increase
the amount under the note at any time up to the full amount provided by the note
agreement, or to decrease the amount, and the borrower may prepay up to the full
amount of the note without penalty. Because variable amount master demand notes
are direct lending arrangements between the lender and borrower, it is not
generally contemplated that such instruments will be traded. There is no
secondary market for these notes, although they are redeemable (and thus
immediately repayable by the borrower) at face value, plus accrued interest, at
any time.
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A portfolio will only invest in variable amount master demand notes issued
by companies which, at the date of investment, have an outstanding debt issue
rated "Aaa" or "Aa" by Moody's or "AAA" or "AA" by S&P and which the applicable
Subadviser has determined present minimal risk of loss to the portfolio. A
Subadviser will look generally at the financial strength of the issuing company
as "backing" for the note and not to any security interest or supplemental
source such as a bank letter of credit. A variable amount master demand note
will be valued on each day a portfolio's net asset value is determined. The net
asset value will generally be equal to the face value of the note plus accrued
interest unless the financial position of the issuer is such that its ability to
repay the note when due is in question.
5. CORPORATE OBLIGATIONS.
Corporate obligations include bonds and notes issued by corporations to
finance long-term credit needs.
6. REPURCHASE AGREEMENTS.
Repurchase agreements are arrangements involving the purchase of an
obligation by a portfolio and the simultaneous agreement to resell the same
obligation on demand or at a specified future date and at an agreed upon price.
A repurchase agreement can be viewed as a loan made by a portfolio to the seller
of the obligation with such obligation serving as collateral for the seller's
agreement to repay the amount borrowed with interest. Repurchase agreements
permit a portfolio the opportunity to earn a return on cash which is only
temporarily available. A portfolio may enter into a repurchase agreements with
banks, brokers or dealers. However, a portfolio will enter into a repurchase
agreement with a broker or dealer only if the broker or dealer agrees to deposit
additional collateral should the value of the obligation purchased by the
portfolio decrease below the resale price.
Generally, repurchase agreements are of a short duration, often less than
one week but on occasion for longer periods. Securities subject to repurchase
agreements will be valued every business day and additional collateral will be
requested if necessary so that the value of the collateral is at least equal to
the value of the repurchase obligation, including the interest accrued thereon.
The Subadvisers, on behalf of the portfolios they advise, shall engage in a
repurchase agreement transactions only with those banks or broker/dealers who
meet the Trustee's quantitative and qualitative criteria regarding
creditworthiness, asset size and collateralization requirements. The
counterparties to a repurchase agreement transactions are limited to a:
* Federal Reserve System member bank,
* primary government securities dealer reporting to the Federal Reserve Bank
of New York's Market Reports Division, or
* broker/dealer which reports U.S. Government securities positions to the
Federal Reserve Board.
However, the Trustees reserve the right to change the criteria used to select
such financial institutions and broker/dealers. The Trustees will regularly
monitor the use of repurchase agreements and the Subadvisers will, pursuant to
procedures adopted by the Trustees, continuously monitor transaction to ensure
that the collateral held with respect to a repurchase agreement equals or
exceeds the amount of the respective obligation.
The risk to a portfolio in a repurchase agreement transaction is limited to
the ability of the seller to pay the agreed-upon sum on the delivery date. If an
issuer of a repurchase agreement fails to repurchase the underlying obligation,
the loss to the portfolio, if any, would be the difference between the
repurchase price and the underlying obligation's market value. A portfolio might
also incur certain costs in liquidating the underlying obligation. Moreover, if
bankruptcy or other insolvency proceedings are commenced with respect to the
seller, realization upon the underlying obligation by the Trust might be delayed
or limited.
7. FOREIGN REPURCHASE AGREEMENTS
Foreign repurchase agreements involve an agreement to purchase a foreign
security and to sell that security back to the original seller at an agreed-upon
price in either U.S. dollars or foreign currency. Unlike typical U.S. repurchase
agreements, foreign repurchase agreements may not be fully collateralized at all
times. The value of a security purchased by a portfolio may be more or less than
the price at which the counterparty has agreed to repurchase the security. In
the event of default by the counterparty, the portfolio may suffer a loss if the
value of the security purchased is less than the agreed-upon repurchase price,
or if the portfolio is unable to successfully assert a claim to the collateral
under foreign laws. As a result, foreign repurchase agreements may involve
higher credit risks than repurchase agreements in U.S. markets, as well as risks
associated with currency fluctuations. In addition, as with other emerging
market investments, repurchase agreements with
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counterparties located in emerging markets, or relating to emerging markets, may
involve issuers or counterparties with lower credit ratings than typical U.S.
repurchase agreements.
OTHER INSTRUMENTS
The following discussion provides an explanation of some of the other
instruments in which certain portfolios (as indicated) may invest.
1. WARRANTS
Subject to certain restrictions, each of the portfolios except the Money
Market Trust and the Lifestyle Trusts may purchase warrants, including warrants
traded independently of the underlying securities. Warrants are rights to
purchase securities at specific prices and are valid for a specific period of
time. Warrant prices do not necessarily move parallel to the prices of the
underlying securities, and warrant holders receive no dividends and have no
voting rights or rights with respect to the assets of an issuer. The price of a
warrant may be more volatile than the price of its underlying security, and a
warrant may offer greater potential for capital appreciation as well as capital
loss. Warrants cease to have value if not exercised prior to the expiration
date. These factors can make warrants more speculative than other types of
investments.
2. REVERSE REPURCHASE AGREEMENTS
Each portfolio of the Trust may enter into "reverse" repurchase agreements.
Under a reverse repurchase agreement, a portfolio sells a debt security and
agrees to repurchase it at an agreed upon time and at an agreed upon price. The
portfolio retains record ownership of the security and the right to receive
interest and principal payments thereon. At an agreed upon future date, the
portfolio repurchases the security by remitting the proceeds previously
received, plus interest. The difference between the amount the portfolio
receives for the security and the amount it pays on repurchase is payment of
interest. In certain types of agreements, there is no agreed-upon repurchase
date and interest payments are calculated daily, often based on the prevailing
overnight repurchase rate. A reverse repurchase agreement may be considered a
form of leveraging and may, therefore, increase fluctuations in a portfolio's
net asset value per share. Each portfolio will cover its repurchase agreement
transactions by maintaining in a segregated custodial account cash, Treasury
bills or other U.S. Government securities having an aggregate value at least
equal to the amount of such commitment to repurchase including accrued interest,
until payment is made.
3. MORTGAGE SECURITIES
Prepayment of Mortgages. Mortgage securities differ from conventional
bonds in that principal is paid over the life of the securities rather than at
maturity. As a result, a portfolio which invests in mortgage securities receives
monthly scheduled payments of principal and interest, and may receive
unscheduled principal payments representing prepayments on the underlying
mortgages. When a portfolio reinvests the payments and any unscheduled
prepayments of principal it receives, it may receive a rate of interest which is
higher or lower than the rate on the existing mortgage securities. For this
reason, mortgage securities may be less effective than other types of debt
securities as a means of locking in long term interest rates.
In addition, because the underlying mortgage loans and assets may be
prepaid at any time, if a portfolio purchases mortgage securities at a premium,
a prepayment rate that is faster than expected will reduce yield to maturity,
while a prepayment rate that is slower than expected will increase yield to
maturity. Conversely, if a portfolio purchases these securities at a discount,
faster than expected prepayments will increase yield to maturity, while slower
than expected payments will reduce yield to maturity.
Adjustable Rate Mortgage Securities. Adjustable rate mortgage
securities are similar to the fixed rate mortgage securities discussed above,
except that unlike fixed rate mortgage securities, adjustable rate mortgage
securities are collateralized by or represent interests in mortgage loans with
variable rates of interest. These variable rates of interest reset periodically
to align themselves with market rates. Most adjustable rate mortgage securities
provide for an initial mortgage rate that is in effect for a fixed period,
typically ranging from three to twelve months. Thereafter, the mortgage interest
rate will reset periodically in accordance with movements in a specified
published interest rate index. The amount of interest due to an adjustable rate
mortgage holder is determined in accordance with movements in a specified
published interest rate index by adding a pre-determined increment or "margin"
to the specified interest rate index. Many adjustable rate mortgage securities
reset their interest rates based on changes in:
* one-year, three-year and five-year constant maturity Treasury Bill rates,
* three-month or six-month Treasury Bill rates,
* 11th District Federal Home Loan Bank Cost of Funds,
* National Median Cost of Funds, or
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* one-month, three-month, six-month or one-year London Interbank Offered Rate
("LIBOR") and other market rates.
During periods of increasing rates, a portfolio will not benefit from such
increase to the extent that interest rates rise to the point where they cause
the current coupon of adjustable rate mortgages held as investments to exceed
any maximum allowable annual or lifetime reset limits or "cap rates" for a
particular mortgage. In this event, the value of the mortgage securities in a
portfolio would likely decrease. During periods of declining interest rates,
income to a portfolio derived from adjustable rate mortgages which remain in a
mortgage pool may decrease in contrast to the income on fixed rate mortgages,
which will remain constant. Adjustable rate mortgages also have less potential
for appreciation in value as interest rates decline than do fixed rate
investments. Also, a portfolio's net asset value could vary to the extent that
current yields on adjustable rate mortgage securities held as investments are
different than market yields during interim periods between coupon reset dates.
Privately-Issued Mortgage Securities. Privately-issued mortgage
securities provide for the monthly principal and interest payments made by
individual borrowers to pass through to investors on a corporate basis, and in
privately issued collateralized mortgage obligations, as further described
below. Privately-issued mortgage securities are issued by private originators
of, or investors in, mortgage loans, including:
* mortgage bankers,
* commercial banks,
* investment banks,
* savings and loan associations, and
* special purpose subsidiaries of the foregoing.
Since privately-issued mortgage certificates are not guaranteed by an
entity having the credit status of the Government National Mortgage Association
(GNMA) or Federal Home Loan Mortgage Corporation (FHLMC), such securities
generally are structured with one or more types of credit enhancement. For a
description of the types of credit enhancements that may accompany
privately-issued mortgage securities, see "Types of Credit Support" below. A
portfolio which invests in mortgage securities will not limit its investments to
asset-backed securities with credit enhancements.
Collateralized Mortgage Obligations ("CMOs"). CMOs generally are bonds
or certificates issued in multiple classes that are collateralized by or
represent an interest in mortgages. CMOs may be issued by single-purpose,
stand-alone finance subsidiaries or trusts of financial institutions, government
agencies, investment banks or other similar institutions. Each class of CMOs,
often referred to as a "tranche," may be issued with a specific fixed coupon
rate (which may be zero) or a floating coupon rate. Each class of CMO's also has
a stated maturity or final distribution date. Principal prepayments on the
underlying mortgages may cause the CMOs to be retired substantially earlier than
their stated maturities or final distribution dates. Interest is paid or accrued
on CMOs on a monthly, quarterly or semiannual basis. The principal of and
interest on the underlying mortgages may be allocated among the several classes
of a series of a CMO in many ways. The general goal sought to be achieved in
allocating cash flows on the underlying mortgages to the various classes of a
series of CMOs is to create tranches on which the expected cash flows have a
higher degree of predictability than the underlying mortgages. As a general
matter, the more predictable the cash flow is on a CMO tranche, the lower the
anticipated yield will be on that tranche at the time of issuance. As part of
the process of creating more predictable cash flows on most of the tranches in a
series of CMOs, one or more tranches generally must be created that absorb most
of the volatility in the cash flows on the underlying mortgages. The yields on
these tranches are relatively higher than on tranches with more predictable cash
flows. Because of the uncertainty of the cash flows on these tranches, and the
sensitivity of these transactions to changes in prepayment rates on the
underlying mortgages, the market prices of and yields on these tranches tend to
be highly volatile.
CMOs purchased by the portfolios may be:
(1) collateralized by pools of mortgages in which each mortgage is guaranteed as
to payment of principal and interest by an agency or instrumentality of the U.S.
Government;
(2) collateralized by pools of mortgages in which payment of principal and
interest is guaranteed by the issuer and the guarantee is collateralized by U.S.
Government securities; or
(3) securities for which the proceeds of the issuance are invested in mortgage
securities and payment of the principal and interest is supported by the credit
of an agency or instrumentality of the U.S. Government.
STRIPS. In addition to the U.S. Government securities discussed above,
certain portfolios may invest in separately traded interest components of
securities issued or guaranteed by the U.S. Treasury. The interest components of
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selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities program ("STRIPS"). Under the
STRIPS program, the interest components are individually numbered and separately
issued by the U.S. Treasury at the request of depository financial institutions,
which then trade the component parts independently.
Stripped Mortgage Securities. Stripped mortgage securities are
derivative multi-class mortgage securities. Stripped mortgage securities may be
issued by agencies or instrumentalities of the U.S. Government, or by private
issuers, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing.
Stripped mortgage securities have greater volatility than other types of
mortgage securities in which the portfolios invest. Although stripped mortgage
securities are purchased and sold by institutional investors through several
investment banking firms acting as brokers or dealers, the market for such
securities has not yet been fully developed. Accordingly, stripped mortgage
securities may be illiquid and, together with any other illiquid investments,
will not exceed 15% of a portfolio's net assets. See " Other Investment
Policies. - Illiquid Securities".
Stripped mortgage securities are usually structured with two classes that
receive different proportions of the interest and principal distributions on a
pool of mortgage assets. A common type of stripped mortgage security will have
one class receiving some of the interest and most of the principal from the
mortgage assets, while the other class will receive most of the interest and the
remainder of the principal. In the most extreme case, one class will receive all
of the interest (the interest only or "IO" class), while the other class will
receive all of the principal (the principal only or "PO" class). The yield to
maturity on an IO class is extremely sensitive to changes in prevailing interest
rates and the rate of principal payments (including prepayments) on the related
underlying mortgage assets. A rapid rate of principal payments may have a
material adverse effect on an investing portfolio's yield to maturity. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, such portfolio may fail to fully recoup its initial investment in
these securities even if the securities are rated highly.
As interest rates rise and fall, the value of IOs tends to move in the same
direction as interest rates. The value of the other mortgage securities
described in the Prospectus and Statement of Additional Information, like other
debt instruments, will tend to move in the opposite direction to interest rates.
Accordingly, the Trust believes that investing in IOs, in conjunction with the
other mortgage securities described in the Prospectus and SAI, will contribute
to a portfolio's relatively stable net asset value.
In addition to the stripped mortgage securities described above, each of the
Strategic Bond, High Yield Trust and Value Trust may invest in similar
securities such as Super principal only and Levered interest only which are more
volatile than Pos and IOs. Risks associated with instruments such as Super POs
are similar in nature to those risks related to investments in POs. Risks
associated with Levered IOs and IOettes are similar in nature to those
associated with IOs. The Strategic Bond Trust may also invest in other similar
instruments developed in the future that are deemed consistent with the
investment objectives, policies and restrictions of the portfolio.
Under the Internal Revenue Code of 1986, as amended (the "Code"), POs may
generate taxable income from the current accrual of original issue discount,
without a corresponding distribution of cash to the portfolio.
Inverse Floaters. Each of the Strategic Bond Trust, High Yield Trust
and Value Trust may invest in inverse floaters. Inverse floaters may be issued
by agencies or instrumentalities of the U.S. Government, or by private issuers,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing. Inverse
floaters have greater volatility than other types of mortgage securities in
which the portfolio invests (with the exception of stripped mortgage securities
and there is a risk that the market value will vary from the amortized cost).
Although inverse floaters are purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers, the
market for such securities has not yet been fully developed. Accordingly,
inverse floaters may be illiquid together with any other illiquid investments,
will not exceed 15% of a portfolio's net assets. See "Other Investment Policies
- - Illiquid Securities".
Inverse floaters are derivative mortgage securities which are structured as
a class of security that receives distributions on a pool of mortgage assets.
Yields on inverse floaters move in the opposite direction of short-term interest
rates and at an accelerated rate.
Types of Credit Support. Mortgage securities are often backed by a
pool of assets representing the obligations of a number of different parties. To
lessen the impact of an obligor's failure to make payments on underlying assets,
mortgage securities may contain elements of credit support. A discussion of
credit support is described below under "Asset-Backed Securities."
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4. ASSET-BACKED SECURITIES
The securitization techniques used to develop mortgage securities are also
being applied to a broad range of other assets. Through the use of trusts and
special purpose corporations, automobile and credit card receivables are being
securitized in pass-through structures similar to mortgage pass-through
structures or in a pay-through structure similar to the CMO structure.
Generally, the issuers of asset-backed bonds, notes or pass-through
certificates are special purpose entities and do not have any significant assets
other than the receivables securing such obligations. In general, the collateral
supporting asset-backed securities is of a shorter maturity than mortgage loans.
As a result, investment in these securities should be subject to less volatility
than mortgage securities. Instruments backed by pools of receivables are similar
to mortgage-backed securities in that they are subject to unscheduled
prepayments of principal prior to maturity. When the obligations are prepaid,
the portfolio must reinvest the prepaid amounts in securities with the
prevailing interest rates at the time. Therefore, a portfolio's ability to
maintain an investment including high-yielding asset-backed securities will be
affected adversely to the extent that prepayments of principal must be
reinvested in securities which have lower yields than the prepaid obligations.
Moreover, prepayments of securities purchased at a premium could result in a
realized loss. A portfolio will only invest in asset-backed securities rated, at
the time of purchase, AA or better by S&P or Aa or better by Moody's or that the
Subadviser believes are of comparable quality.
As with mortgage securities, asset-backed securities are often backed by a
pool of assets representing the obligation of a number of different parties and
use similar credit enhancement techniques. For a description of the types of
credit enhancement that may accompany asset-backed securities, see "Types of
Credit Support" below. A portfolio will not limit its investments to
asset-backed securities with credit enhancements. Although asset-backed
securities are not generally traded on a national securities exchange, such
securities are widely traded by brokers and dealers, and will not be considered
illiquid securities for the purposes of the investment restriction on illiquid
securities under "Additional Investment Policies" below.
Types of Credit Support. To lessen the impact of an obligor's failure
to make payments on underlying assets, mortgage securities and asset-backed
securities may contain elements of credit support. Such credit support falls
into two categories:
* liquidity protection, and
* default protection
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the pass-through of
payments due on the underlying pool of assets occurs in a timely fashion.
Default protection provides against losses resulting from ultimate default and
enhances the likelihood of ultimate payment of the obligations on at least a
portion of the assets in the pool. This protection may be provided through
guarantees, insurance policies or letters of credit obtained by the issuer or
sponsor from third parties, through various means of structuring the transaction
or through a combination of such approaches. A portfolio will not pay any
additional fees for such credit support, although the existence of credit
support may increase the price of a security.
Some examples of credit support include:
* "senior-subordinated securities" (multiple class securities with one or
more classes subordinate to other classes as to the payment of principal
thereof and interest thereon, with the result that defaults on the
underlying assets are borne first by the holders of the subordinated
class),
* creation of "reserve funds" (where cash or investments, sometimes funded
from a portion of the payments on the underlying assets, are held in
reserve against future losses), and
* "over-collateralization" (where the scheduled payments on, or the principal
amount of, the underlying assets exceed those required to make payment on
the securities and pay any servicing or other fees).
The ratings of mortgage securities and asset-backed securities for which
third-party credit enhancement provides liquidity protection or default
protection are generally dependent upon the continued creditworthiness of the
provider of the credit enhancement. The ratings of these securities could be
reduced in the event of deterioration in the creditworthiness of the credit
enhancement provider even in cases where the delinquency and loss experienced on
the underlying pool of assets is better than expected.
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The degree of credit support provided for each issue is generally based on
historical information concerning the level of credit risk associated with the
underlying assets. Delinquency or loss greater than anticipated could adversely
affect the return on an investment in mortgage securities or asset-backed
securities.
5. ZERO COUPON SECURITIES AND PAY-IN-KIND BONDS
Zero coupon securities and pay-in-kind bonds involve special risk
considerations. Zero coupon securities are debt securities that pay no cash
income but are sold at substantial discounts from their value at maturity. When
a zero coupon security is held to maturity, its entire return, which consists of
the amortization of discount, comes from the difference between its purchase
price and its maturity value. This difference is known at the time of purchase,
so that investors holding zero coupon securities until maturity know at the time
of their investment what the return on their investment will be. Certain zero
coupon securities also are sold at substantial discounts from their maturity
value and provide for the commencement of regular interest payments at a
deferred date. The portfolios also may purchase pay-in-kind bonds. Pay-in-kind
bonds are bonds that pay all or a portion of their interest in the form of debt
or equity securities.
Zero coupon securities and pay-in-kind bonds are subject to greater price
fluctuations in response to changes in interest rates than ordinary
interest-paying debt securities with similar maturities. The value of zero
coupon securities usually appreciates during periods of declining interest rates
and usually depreciates during periods of rising interest rates.
Issuers of Zero Coupon Securities and Pay-In-Kind Bonds. Zero coupon
securities and pay-in-kind bonds may be issued by a wide variety of corporate
and governmental issuers. Although zero coupon securities and pay-in-kind bonds
are generally not traded on a national securities exchange, these securities are
widely traded by brokers and dealers and, to the extent they are widely traded,
will not be considered illiquid for the purposes of the investment restriction
under "Additional Investment Policies" below.
Tax Considerations. Current Federal income tax law requires the holder
of a zero coupon security or certain pay-in-kind bonds to accrue income with
respect to these securities prior to the receipt of cash payments. To maintain
its qualification as a regulated investment company and avoid liability for
Federal income and excise taxes, a portfolio may be required to distribute
income accrued with respect to these securities and may have to dispose of
portfolio securities under disadvantageous circumstances in order to generate
cash to satisfy these distribution requirements.
6. LOANS AND OTHER DIRECT DEBT INSTRUMENTS
Each portfolio may invest in loans and other direct debt instruments to the
extent authorized by its investment policies. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower to
lenders or lending syndicates (loans and loan participations), to suppliers of
goods or services (trade claims or other receivables), or to other parties.
Direct debt instruments involve a risk of loss in case of default or insolvency
of the borrower and may offer less legal protection to the purchaser in the
event of fraud or misrepresentation, or there may be a requirement that a
portfolio supply additional cash to a borrower on demand.
7. HIGH YIELD (HIGH RISK) DOMESTIC CORPORATE DEBT SECURITIES
High yield U.S. corporate debt securities in which the portfolios may
invest include bonds, debentures, notes and commercial paper and will generally
be unsecured. Most of these debt securities will bear interest at fixed rates.
However, the portfolios may also invest in debt securities with variable rates
of interest or debt securities which involve equity features, such as contingent
interest or participation based on revenues, sales or profits (i.e., interest or
other payments, often in addition to a fixed rate of return, that are based on
the borrower's attainment of specified levels of revenues, sales or profits and
thus enable the holder of the security to share in the potential success of the
venture).
The market for high yield U.S. corporate debt securities has undergone
significant changes since it was first established. Issuers in the U.S. high
yield market originally consisted primarily of growing small capitalization
companies and larger capitalization companies whose credit quality had declined
from investment grade. During the mid-1980s, participants in the U.S. high yield
market issued high yield securities principally in connection with leveraged
buyouts and other leveraged recapitalizations. In late 1989 and 1990, the volume
of new issues of high yield U.S. corporate debt declined significantly and
liquidity in the market decreased. Since early 1991, the volume of new issues of
high yield U.S. corporate debt securities has increased substantially and
secondary market liquidity has improved. During the same periods, the U.S. high
yield debt market exhibited strong returns, and it continues to be an attractive
market in terms of yield and yield spread over U.S. Treasury securities.
Currently, most new offerings of U.S. high yield securities are being issued to
refinance higher coupon debt and to raise funds for general corporate purposes
as well as to provide financing in connection with leveraged transactions.
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8. BRADY BONDS
Brady Bonds are debt securities issued under the framework of the "Brady
Plan," an initiative announced by former U.S. Treasury Secretary Nicholas F.
Brady in 1989 as a mechanism for debtor nations to restructure their outstanding
external commercial bank indebtedness. The Brady Plan framework, as it has
developed, involves the exchange of external commercial bank debt for newly
issued bonds (Brady Bonds). Brady Bonds may also be issued in respect of new
money being advanced by existing lenders in connection with the debt
restructuring. Investors should recognize that Brady Bonds have been issued only
recently, and accordingly do not have a long payment history. Brady Bonds issued
to date generally have maturities between 15 and 30 years from the date of
issuance and have traded at a deep discount from their face value. In addition
to Brady Bonds, the portfolios may invest in emerging market governmental
obligations issued as a result of debt restructuring agreements outside of the
scope of the Brady Plan.
Agreements implemented under the Brady Plan to date are designed to achieve
debt and debt-service reduction through specific options negotiated by a debtor
nation with its creditors. As a result, the financial packages offered by each
country differ. The types of options have included:
* the exchange of outstanding commercial bank debt for bonds issued at 100%
of face value which carry a below-market stated rate of interest (generally
known as par bonds),
* bonds issued at a discount from face value (generally known as discount
bonds),
* bonds bearing an interest rate which increases over time, and
* bonds issued in exchange for the advancement of new money by existing
lenders.
Discount bonds issued to date under the framework of the Brady Plan have
generally borne interest computed semi-annually at a rate equal to 13/16 of one
percent above the current six-month LIBOR rate. Regardless of the stated face
amount and interest rate of the various types of Brady Bonds, the portfolios
will purchase Brady Bonds in secondary markets, as described below, in which the
price and yield to the investor reflect market conditions at the time of
purchase.
Certain sovereign bonds are entitled to "value recovery payments" in
certain circumstances, which in effect constitute supplemental interest payments
but generally are not collateralized. Certain Brady Bonds have been
collateralized as to principal due at maturity (typically 15 to 30 years from
the date of issuance) by U.S. Treasury zero coupon bonds with a maturity equal
to the final maturity of such Brady Bonds, although the collateral is not
available to investors until the final maturity of the Brady Bonds. Collateral
purchases are financed by the International Monetary Fund (the "IMF"), the World
Bank and the debtor nations' reserves. In addition, interest payments on certain
types of Brady Bonds may be collateralized by cash or high-grade securities in
amounts that typically represent between 12 and 18 months of interest accruals
on these instruments, with the balance of the interest accruals being
uncollateralized.
The portfolios may purchase Brady Bonds with no or limited
collateralization, and must rely for payment of interest and (except in the case
of principal collateralized Brady Bonds) principal primarily on the willingness
and ability of the foreign government to make payment in accordance with the
terms of the Brady Bonds.
Brady Bonds issued to date are purchased and sold in secondary markets
through U.S. securities dealers and other financial institutions and are
generally maintained through European transactional securities depositories. A
substantial portion of the Brady Bonds and other sovereign debt securities in
which the portfolios invest are likely to be acquired at a discount.
9. SOVEREIGN DEBT OBLIGATIONS
Each portfolio may invest in sovereign debt obligations to the extent
authorized by its investment polices. Sovereign debt obligations are issued or
guaranteed by foreign governments or their agencies, including debt of Latin
American nations or other developing countries. Sovereign debt may be in the
form of conventional securities or other types of debt instruments such as loan
or loan participations. Sovereign debt of developing countries may involve a
high degree of risk, and may be in default or present the risk of default.
Governmental entities responsible for repayment of the debt may be unable or
unwilling to repay principal and pay interest when due, and may require
renegotiation or rescheduling of debt payments. In addition, prospects for
repayment and payment of interest may depend on political as well as economic
factors. Although some sovereign debt, such as Brady Bonds, is collateralized by
U.S. Government securities, repayment of principal and payment of interest is
not guaranteed by the U.S. Government.
10. INDEXED SECURITIES
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Each portfolio may invest in indexed securities to the extent authorized by
its investment policies. Indexed securities are instruments whose prices are
indexed to the prices of other securities, securities indices, currencies, or
other financial indicators. Indexed securities typically, but not always, are
debt securities or deposits whose value at maturity or coupon rate is determined
by reference to a specific instrument or statistic.
Currency indexed securities typically are short term to intermediate term
debt securities whose maturity values or interest rates are determined by
reference to the values of one or more specified foreign currencies, and may
offer higher yields than U.S. dollar denominated securities. Currency indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting in a
security that performs similarly to a foreign denominated instrument, or their
maturity value may decline when foreign currencies increase, resulting a a
security whose price characteristics are similar to a put on the underlying
currency. Currency indexed securities may also have prices that depend on the
values of a number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the United
States and abroad. Indexed securities may be more volatile than the underlying
instruments. Indexed securities are also subject to the credit risks associated
with the issuer of the security, and their values may decline substantially if
the issuer's creditworthiness deteriorates. Recent issuers of indexed securities
have included banks, corporations, and certain U.S. Government agencies.
11. HYBRID INSTRUMENTS
Hybrid instruments (a type of potentially high-risk derivative) combine the
elements of futures contracts or options with those of debt, preferred equity or
a depository instrument ("Hybrid Instruments").
Characteristics of Hybrid Instruments. Generally, a Hybrid Instrument
is a debt security, preferred stock, depository share, trust certificate,
certificate of deposit or other evidence of indebtedness on which a portion of
or all interest payments, and/or the principal or stated amount payable at
maturity, redemption or retirement, is determined by reference to the following:
* prices, changes in prices, or differences between prices of securities,
currencies, intangibles, goods, articles or commodities (collectively,
"Underlying Assets") or
* an objective index, economic factor or other measure, such as interest
rates, currency exchange rates, commodity indices, and securities indices
(collectively "Benchmarks").
Hybrid Instruments may take a variety of forms, including, but not limited to:
* debt instruments with interest or principal payments or redemption terms
determined by reference to the value of a currency or commodity or
securities index at a future point in time,
* preferred stock with dividend rates determined by reference to the value of
a currency, or
* convertible securities with the conversion terms related to a particular
commodity.
Uses of Hybrid Instruments. Hybrid Instruments provide an efficient
means of creating exposure to a particular market, or segment of a market, with
the objective of enhancing total return. For example, a portfolio may wish to
take advantage of expected declines in interest rates in several European
countries, but avoid the transaction costs associated with buying and
currency-hedging the foreign bond positions.
One approach is to purchase a U.S. dollar-denominated Hybrid Instrument
whose redemption price is linked to the average three-year interest rate in a
designated group of countries. The redemption price formula would provide for
payoffs of greater than par if the average interest rate was lower than a
specified level, and payoffs of less than par if rates were above the specified
level. Furthermore, the investing portfolio could limit the downside risk of the
security by establishing a minimum redemption price so that the principal paid
at maturity could not be below a predetermined minimum level if interest rates
were to rise significantly.
The purpose of this type of arrangement, known as a structured security
with an embedded put option, is to give the portfolio the desired European bond
exposure while avoiding currency risk, limiting downside market risk, and
lowering transactions costs. Of course, there is no guarantee that such a
strategy will be successful and the value of the portfolio may decline; for
example, if interest rates may not move as anticipated or credit problems could
develop with the issuer of the Hybrid Instrument.
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Risks of Investing in Hybrid Instruments. The risks of investing in
Hybrid Instruments are a combination of the risks of investing in securities,
options, futures and currencies. Therefore, an investment in a Hybrid Instrument
may include significant risks not associated with a similar investment in a
traditional debt instrument with a fixed principal amount, is denominated in
U.S. dollars, or that bears interest either at a fixed rate or a floating rate
determined by reference to a common, nationally published Benchmark. The risks
of a particular Hybrid Instrument will depend upon the terms of the instrument,
but may include, without limitation, the possibility of significant changes in
the Benchmarks or the prices of Underlying Assets to which the instrument is
linked. These risks generally depend upon factors unrelated to the operations or
credit quality of the issuer of the Hybrid Instrument and that may not be
readily foreseen by the purchaser. Such factors include economic and political
events, the supply and demand for the Underlying Assets, and interest rate
movements. In recent years, various Benchmarks and prices for Underlying Assets
have been highly volatile, and such volatility may be expected in the future.
See " Hedging and Other Strategic Transactions" below for a description of
certain risks associated with investments in futures, options, and forward
contracts.
VOLATILITY. Hybrid Instruments are potentially more volatile and carry
greater market risks than traditional debt instruments. Depending on the
structure of the particular Hybrid Instrument, changes in a Benchmark may be
magnified by the terms of the Hybrid Instrument and have an even more dramatic
and substantial effect upon the value of the Hybrid Instrument. Also, the prices
of the Hybrid Instrument and the Benchmark or Underlying Asset may not move in
the same direction or at the same time.
LEVERAGE RISK. Hybrid Instruments may bear interest or pay preferred
dividends at below market (or even relatively nominal) rates. Alternatively,
Hybrid Instruments may bear interest at above market rates, but bear an
increased risk of principal loss (or gain). For example, an increased risk of
principal loss (or gain) may result if "leverage" is used to structure a Hybrid
Instrument. Leverage risk occurs when the Hybrid Instrument is structured so
that a change in a Benchmark or Underlying Asset is multiplied to produce a
greater value change in the Hybrid Instrument, thereby magnifying the risk of
loss, as well as the potential for gain.
LIQUIDITY RISK. Hybrid Instruments may also carry liquidity risk since
the instruments are often "customized" to meet the portfolio needs of a
particular investor. Therefore, the number of investors that would be willing
and able to buy such instruments in the secondary market may be smaller than for
more traditional debt securities. In addition, because the purchase and sale of
Hybrid Instruments could take place in an over-the-counter market without the
guarantee of a central clearing organization or in a transaction between a
portfolio and the issuer of the Hybrid Instrument, the creditworthiness of the
counter party or issuer of the Hybrid Instrument would be an additional risk
factor which the portfolio would have to consider and monitor.
LACK OF US REGULATION. Hybrid Instruments may not be subject to
regulation of the Commodities Futures Trading Commission ("CFTC"), which
generally regulates the trading of commodity futures by U.S. persons, the
Securities and Exchange Commission ("SEC"), which regulates the offer and sale
of securities by and to U.S. persons, or any other governmental regulatory
authority.
The various risks discussed above with respect to Hybrid Instruments
particularly the market risk of such instruments, may cause significant
fluctuations in the net asset value of a portfolio.
12. ADRS, EDRS AND GDRS
Securities of foreign issuers may include American Depository Receipts,
European Depository Receipts and Global Depository Receipts ("ADRs," "EDRs" and
"GDRs," respectively ). Depository Receipts are certificates typically issued by
a bank or trust company that give their holders the right to receive securities
issued by a foreign or domestic corporation.
ADRs are U.S. dollar-denominated securities backed by foreign securities
deposited in a U.S. securities depository. ADRs are created for trading in the
U.S. markets. The value of an ADR will fluctuate with the value of the
underlying security, will reflect any changes in exchange rates and otherwise
involve risks associated with investing in foreign securities.
Securities of foreign issuers also include EDRs and GDRs, which are
receipts evidencing an arrangement with a non-U.S. bank similar to that for ADRs
and are designed for use in non-U.S. securities markets. EDRs and GDRs are not
necessarily quoted in the same currency as the underlying security.
ADDITIONAL INVESTMENT POLICES
The following provides a more detailed explanation of some of the
investment policies of the portfolios.
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1. LENDING SECURITIES
Each portfolio may lend its securities so long as its loans of securities
do not represent in excess of 33% of such portfolio's total assets. This lending
limitation is a fundamental restriction which may not be changed without
shareholder approval. The procedure for lending securities is for the borrower
to give the lending portfolio collateral consisting of cash, cash equivalents or
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities. The lending portfolio may invest the cash collateral and earn
additional income or receive an agreed upon fee from a borrower which has
delivered cash equivalent collateral.
The Trust anticipates that securities will be loaned only under the
following conditions:
(1) the borrower must furnish collateral equal at all times to the market value
of the securities loaned and the borrower must agree to increase the collateral
on a daily basis if the securities loaned increase in value;
(2) the loan must be made in accordance with New York Stock Exchange rules,
which presently require the borrower, after notice, to redeliver the securities
within five business days; and
(3) the portfolio making the loan may pay reasonable service, placement,
custodian or other fees in connection with loans of securities and share a
portion of the interest from these investments with the borrower of the
securities.
As with other extensions of credit, there are risks of delay in recovery or even
loss of rights in the collateral should the borrower of the securities fail
financially.
2. WHEN-ISSUED SECURITIES ("FORWARD COMMITMENTS")
In order to help ensure the availability of suitable securities, each of
the portfolios may purchase debt securities on a "when-issued" or on a "forward
delivery" basis. Purchasing securities on a when-issued or forward delivery
basis means that the obligations will be delivered to the portfolio at a future
date, which may be one month or longer after the date of the commitment
("forward commitments"). Except as may be imposed by these factors, there is no
limit on the percent of a portfolio's total assets that may be committed to such
transactions.
Under normal circumstances, a portfolio purchasing securities on a
when-issued or forward delivery basis will take delivery of the securities, but
the portfolio may, if deemed advisable, sell the securities before the
settlement date. In general, a portfolio does not pay for the securities, or
start earning interest on them, until the obligations are scheduled to be
settled. The portfolio does, however, record the transaction and reflect the
value each day of the securities in determining its net asset value. At the time
of delivery, the value of when-issued or forward delivery securities may be more
or less than the transaction price, and the yields then available in the market
may be higher than those obtained in the transaction. While awaiting delivery of
the obligations purchased on such bases, a portfolio will establish a segregated
account consisting of cash or high quality debt securities equal to the amount
of the commitments to purchase when-issued or forward delivery securities. The
availability of liquid assets for this purpose and the effect of asset
segregation on a portfolio's ability to meet its current obligations, to honor
requests for redemption, and to otherwise manage its investment portfolio will
limit the extent to which the portfolio may purchase when-issued or forward
delivery securities.
3. MORTGAGE DOLLAR ROLLS
Each portfolio of the Trust (except the Money Market Trust and the
Lifestyle Trusts) may enter into mortgage dollar rolls. Under a mortgage dollar
roll, a portfolio sells mortgage-backed securities for delivery in the future
(generally within 30 days) and simultaneously contracts to repurchase
substantially similar securities (of the same type, coupon and maturity)
securities on a specified future date. During the roll period, the portfolio
forgoes principal and interest paid on the mortgage-backed securities. A
portfolio is compensated by the difference between the current sale price and
the lower forward price for the future purchase (often referred to as the
"drop"), as well as by the interest earned on the cash proceeds of the initial
sale. A portfolio may also be compensated by receipt of a commitment fee. A
portfolio may only enter into "covered rolls". A covered roll is a specific type
of dollar roll for which there is an offsetting cash or cash equivalent security
position which matures on or before the forward settlement date of the dollar
roll transaction. Dollar roll transactions involve the risk that the market
value of the securities sold by the portfolio may decline below the repurchase
price of those securities. While a mortgage dollar roll may be considered a form
of leveraging, and may, therefore, increase fluctuations in a portfolio's net
asset value per share, each portfolio will cover the mortgage dollar roll
transaction as described above.
4. ILLIQUID SECURITIES
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Each of the portfolios, except the Money Market Trust, may not invest more
than 15% of its net assets in securities that are not readily marketable
("illiquid securities"). The Money Market Trust may not invest more than 10% of
its net assets in illiquid securities. Investment in illiquid securities
involves the risk that, because of the lack of consistent market demand for such
securities, a portfolio may be forced to sell them at a discount from the last
offer price.
Rule 144A Securities are Excluded from the Limitation on Illiquid
Securities. Securities that are restricted as to resale but for which a ready
market is available pursuant to an exemption provided by Rule 144A of the
Securities Act of 1933 ("1933 Act") or other exemptions from the registration
requirements of the 1933 Act are excluded from the 10% and 15% limitations on
illiquid securities. The Subadvisers decide, subject to the Trustees' oversight,
whether securities sold according to Rule 144A are readily marketable for
purposes of the Trust's investment restriction. The Subadvisers will also
monitor the liquidity of Rule 144A securities held by the portfolios for which
they are responsible. To the extent that Rule 144A securities held by a
portfolio should become illiquid because of a lack of interest on the part of
qualified institutional investors, the overall liquidity of the portfolio could
be adversely affected.
Section 4(2) Commercial Paper is Excluded from the Limitation on
Illiquid Securities. The Money Market Trust may invest in commercial paper
issued in reliance on the exemption from registration afforded by Section 4(2)
of the 1933 Act. Section 4(2) commercial paper is restricted as to the
disposition under Federal securities law, and is generally sold to institutional
investors, such as the Trust, who agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be made in an exempt transaction. Section 4(2) commercial
paper is normally resold to other institutional investors like the Money Market
Trust through or with the assistance of the issuer or investment dealers who
make a market in Section 4(2) commercial paper, thus providing liquidity. The
Money Market Trust's Subadviser believes that Section 4(2) commercial paper
meets its criteria for liquidity and is quite liquid. The Money Market Trust
intends, therefore, to treat Section 4(2) commercial paper as liquid and not
subject to the investment limitation applicable to illiquid securities. The
Money Market Trust's Subadviser will monitor the liquidity of 4(2) commercial
paper held by the Money Market Trust, subject to the Trustees' oversight.
RISK FACTORS
HIGH YIELD (HIGH RISK) SECURITIES
The following discussion supplements the disclosure regarding the risks of
investing in non-investment grade securities.
GENERAL. Certain of the portfolios may invest in high yield (high
risk) securities. High yield securities are those rated below investment grade
and comparable unrated securities. These securities offer yields that fluctuate
over time, but generally are superior to the yields offered by higher rated
securities. However, securities rated below investment grade also have greater
risks than higher rated securities as described below.
Interest Rate Risk. To the extent a portfolio invests primarily in
fixed-income securities, the net asset value of the portfolio's shares can be
expected to change as general levels of interest rates fluctuate. However, the
market values of securities rated below investment grade (and comparable unrated
securities) tend to react less to fluctuations in interest rate levels than do
those of higher-rated securities. Except to the extent that values are affected
independently by other factors (such as developments relating to a specific
issuer) when interest rates decline, the value of a fixed-income portfolio
generally rise. Conversely, when interest rates rise, the value of a
fixed-income portfolio will decline.
Liquidity. The secondary markets for high yield corporate and
sovereign debt securities are not as liquid as the secondary markets for
investment grade securities. The secondary markets for high yield debt
securities are concentrated in relatively few market makers and participants are
mostly institutional investors. In addition, the trading volume for high yield
debt securities is generally lower than for investment grade securities.
Furthermore, the secondary markets could contract under adverse market or
economic conditions independent of any specific adverse changes in the condition
of a particular issuer.
These factors may have an adverse effect on the ability of portfolios
investing in high yield securities to dispose of particular portfolio
investments. These factors also may limit the portfolios from obtaining accurate
market quotations to value securities and calculate net asset value. If a
portfolio investing in high yield debt securities is not able to obtain precise
or accurate market quotations for a particular security, it will be more
difficult for the Trustees to value that portfolio's investments. Therefore, the
Trustees may have to use a greater degree of judgment in making such valuations.
Less liquid secondary markets may also affect a portfolio's ability to sell
securities at their fair value. Each portfolio may invest up to 15% (10% in the
case of the Money Market Trust) of its net assets, measured at the time of
investment, in illiquid securities. These securities may be more difficult to
value and to sell at fair value. If the secondary markets for high
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yield debt securities are affected by adverse economic conditions, the
proportion of a portfolio's assets invested in illiquid securities may increase.
NON-INVESTMENT GRADE CORPORATE DEBT SECURITIES. While the market
values of securities rated below investment grade (and comparable unrated
securities) tend to react less to fluctuations in interest rate levels than do
those of higher-rated securities, the market values of non-investment grade
corporate debt securities tend to be more sensitive to individual corporate
developments and changes in economic conditions than higher-rated securities.
In addition, these securities generally present a higher degree of credit
risk. Issuers of these securities are often highly leveraged and may not have
more traditional methods of financing available to them. Therefore, their
ability to service their debt obligations during an economic downturn or during
sustained periods of rising interest rates may be impaired. The risk of loss due
to default by such issuers is significantly greater than with investment grade
securities because such securities generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness.
NON-INVESTMENT GRADE FOREIGN SOVEREIGN DEBT SECURITIES. Investing in
non-investment grade foreign sovereign debt securities will expose portfolios to
the consequences of political, social or economic changes in the developing and
emerging market countries that issue the securities. The ability and willingness
of sovereign obligors in these countries to pay principal and interest on such
debt when due may depend on general economic and political conditions within the
relevant country. Developing and emerging market countries have historically
experienced (and may continue to experience) high inflation and interest rates,
exchange rate trade difficulties, extreme poverty and unemployment. Many of
these countries are also characterized by political uncertainty or instability.
The ability of a foreign sovereign obligor to make timely payments on its
external debt obligations will also be strongly influenced by:
* the obligor's balance of payments, including export performance,
* the obligor's access to international credits and investments,
* fluctuations in interest rates, and
* the extent of the obligor's foreign reserves.
OBLIGOR'S BALANCE OF PAYMENTS. A country whose exports are
concentrated in a few commodities or whose economy depends on certain strategic
imports could be vulnerable to fluctuations in international prices of these
commodities or imports. To the extent that a country receives payment for its
exports in currencies other than dollars, its ability to make debt payments
denominated in dollars could be adversely affected.
OBLIGOR'S ACCESS TO INTERNATIONAL CREDITS AND INVESTMENTS. If a
foreign sovereign obligor cannot generate sufficient earnings from foreign trade
to service its external debt, it may need to depend on continuing loans and aid
from foreign governments, commercial banks, and multilateral organizations, and
inflows of foreign investment. The commitment on the part of these entities to
make such disbursements may be conditioned on the government's implementation of
economic reforms and/or economic performance and the timely service of its
obligations. Failure in any of these efforts may result in the cancellation of
these third parties' lending commitments, thereby further impairing the
obligor's ability or willingness to service its debts on time.
OBLIGOR'S FLUCTUATIONS IN INTEREST RATES. The cost of servicing
external debt is generally adversely affected by rising international interest
rates since many external debt obligations bear interest at rates which are
adjusted based upon international interest rates.
OBLIGOR'S FOREIGN RESERVES. The ability to service external debt will
also depend on the level of the relevant government's international currency
reserves and its access to foreign exchange. Currency devaluations may affect
the ability of a sovereign obligor to obtain sufficient foreign exchange to
service its external debt.
THE CONSEQUENCES OF A DEFAULT. As a result of the previously listed
factors, a governmental obligor may default on its obligations. If a default
occurs, the portfolio holding foreign sovereign debt securities may have limited
legal recourse against the issuer and/or guarantor. Remedies must, in some
cases, be pursued in the courts of the defaulting party itself, and the ability
of the holder of the foreign sovereign debt securities to obtain recourse may be
subject to the political climate in the relevant country. In addition, no
assurance can be given that the holders of commercial bank debt will not contest
payments to the holders of other foreign sovereign debt obligations in the event
of default under their commercial bank loan agreements.
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Sovereign obligors in developing and emerging countries are among the
world's largest debtors to commercial banks, other governments, international
financial organizations and other financial institutions. These obligors have in
the past experienced substantial difficulties in servicing their external debt
obligations. This difficulty has led to defaults on certain obligations and the
restructuring of certain indebtedness. Restructuring arrangements have included,
among other things:
* reducing and rescheduling interest and principal payments by negotiating
new or amended credit agreements or converting outstanding principal and
unpaid interest to Brady Bonds, and
* obtaining new credit to finance interest payments.
Holders of certain foreign sovereign debt securities may be requested to
participate in the restructuring of such obligations and to extend further loans
to their issuers. There can be no assurance that the Brady Bonds and other
foreign sovereign debt securities in which the portfolios may invest will not be
subject to similar restructuring arrangements or to requests for new credit
which may adversely affect a portfolio's holdings. Furthermore, certain
participants in the secondary market for such debt may be directly involved in
negotiating the terms of these arrangements and may therefore have access to
information not available to other market participants.
Securities in the Lowest Rating Categories. Certain debt securities in
which the portfolios may invest may have (or be considered comparable to
securities having) the lowest ratings for non-subordinated debt instruments
assigned by Moody's or Standard & Poor's. These securities are rated Caa or
lower by Moody's or CCC or lower by Standard & Poor's. These securities are
considered to have the following characteristics:
* extremely poor prospects of ever attaining any real investment standing,
* current identifiable vulnerability to default,
* unlikely to have the capacity to pay interest and repay principal when due
in the event of adverse business, financial or economic conditions,
* are speculative with respect to the issuer's capacity to pay interest and
repay principal in accordance with the terms of the obligations, and/or
* are default or not current in the payment of interest or principal.
Accordingly, it is possible that these types of characteristics could, in
certain instances, reduce the value of securities held by a portfolio with a
commensurate effect on the value of the portfolio's shares.
FOREIGN SECURITIES
The following discussion supplements the disclosure regarding the
risks of investing in foreign securities in the Prospectus.
Different Accounting and Reporting Requirements. There may be less
publicly available information about a foreign issuer than a domestic issuer.
Foreign issuers, including foreign branches of U.S. banks, are subject to
different accounting and reporting requirements. These requirements are
generally less extensive than the requirements in the U.S.
Liquidity. Foreign stock markets (other than Japan) have substantially
less volume than the U.S. exchanges. Securities of foreign issuers are generally
less liquid and more volatile than those of comparable domestic issuers.
Less Government Regulation. Foreign exchanges, broker-dealers and
issuers frequently have less governmental regulation than comparable entities in
the United States. In addition, brokerage costs for foreign issuers may be
higher than those for U.S. issuers.
Political Instability; Nationalization. Investments in foreign
companies may be subject to the possibility of :
* nationalization of the foreign company,
* withholding of dividends at the source,
* expropriation or confiscatory taxation,
* currency blockage,
* political or economic instability, and/or
* diplomatic developments that could adversely affect the value of those
investments.
Clearance and Settlement Procedures. Foreign markets, especially
emerging markets, may have different clearance and settlement procedures. In
certain emerging markets there have been times when settlements have been unable
to keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Delays in settlement could result in
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temporary periods when a portion of the assets of a portfolio is uninvested and
no return is earned on these assets. The inability of a portfolio to make
intended security purchases due to settlement problems could cause the portfolio
to miss attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result in losses to a portfolio due
to subsequent declines in value of the portfolio securities or, if the portfolio
has entered into a contract to sell the security, possible liability to the
purchaser.
Enforcement of Judgment in the Case of Default. In the event of a default
on any foreign obligation, it may be difficult for the investing portfolios to
obtain or to enforce a judgment against the foreign issuer.
HEDGING AND OTHER STRATEGIC TRANSACTIONS
The following discussion supplements "Hedging and Other Strategic
Transactions" set forth in the Prospectus of the Trust.
As described in the Prospectus, an individual portfolio may be authorized
to use a variety of investment strategies. Strategies described below will be
used for hedging purposes only, including hedging various market risks (such as
interest rates, currency exchange rates and broad or specific market movements),
and managing the effective maturity or duration of debt instruments held by the
portfolios (such investment strategies and transactions are referred to as
"Hedging and Other Strategic Transactions"). The description in the Prospectus
of each portfolio indicates which, if any, of these types of transactions may be
used by the portfolios.
A detailed discussion of Hedging and Other Strategic Transactions follows.
No portfolio that is authorized to use any of these investment strategies will
be obligated to pursue any of the strategies and no portfolio makes any
representation as to the availability of these techniques at this time or at any
time in the future. In addition, a portfolio's ability to pursue certain of
these strategies may be limited by the Commodity Exchange Act, as amended,
applicable rules and regulations of the CFTC thereunder and U.S. Federal income
tax considerations.
GENERAL CHARACTERISTICS OF OPTIONS
Put options and call options typically have similar structural
characteristics and operational mechanics regardless of the underlying
instrument on which they are purchased or sold. Thus, the following discussion
relates to each of the particular types of options discussed in greater detail
below. In addition, many Hedging and Other Strategic Transactions involving
options require segregation of portfolio assets in special accounts, as
described below under "Use of Segregated and Other Special Accounts."
Put Options. A put option gives the purchaser of the option, upon payment
of a premium, the right to sell (and the writer the obligation to buy) the
underlying security, commodity, index, currency or other instrument at the
exercise price. A portfolio's purchase of a put option on a security, for
example, might be designed to protect its holdings in the underlying instrument
(or, in some cases, a similar instrument) against a substantial decline in the
market value of such instrument by giving the portfolio the right to sell the
instrument at the option exercise price.
If and to the extent authorized to do so, a portfolio may purchase
and sell put options on securities (whether or not it holds the securities in
its portfolio) and on securities indices, currencies and futures contracts. A
portfolio will not sell put options if, as a result, more than 50% of the
portfolio's assets would be required to be segregated to cover its potential
obligations under put options other than those with respect to futures
contracts.
RISK OF SELLING PUT OPTIONS. In selling put options, a portfolio faces
the risk that it may be required to buy the underlying security at a
disadvantageous price above the market price.
Call Options. A call option, upon payment of a premium, gives the purchaser
of the option the right to buy (and the seller the obligation to sell) the
underlying instrument at the exercise price. A portfolio's purchase of a call
option on an underlying instrument might be intended to protect the portfolio
against an increase in the price of the underlying instrument that it intends to
purchase in the future by fixing the price at which it may purchase the
instrument. An "American" style put or call option may be exercised at any time
during the option period, whereas a "European" style put or call option may be
exercised only upon expiration or during a fixed period prior to expiration.
PARTIAL HEDGE OR INCOME TO THE PORTFOLIO. If a portfolio sells a call
option, the premium that it receives may serve as a partial hedge, to the extent
of the option premium, against a decrease in the value of the underlying
securities or
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instruments held by the portfolio or will increase the portfolio's income.
Similarly, the sale of put options can also provide portfolio gains.
COVERING OF OPTIONS. All call options sold by a portfolio must be
"covered" (that is, the portfolio must own the securities or futures contract
subject to the call or must otherwise meet the asset segregation requirements
described below for so long as the call is outstanding).
RISK OF SELLING CALL OPTIONS. Even though a portfolio will receive the
option premium to help protect it against loss, a call option sold by the
portfolio will expose the portfolio during the term of the option to possible
loss of the opportunity to sell the underlying security or instrument with a
gain.
Exchange-listed Options. Exchange-listed options are issued by a regulated
intermediary such as the Options Clearing Corporation ("OCC"), which guarantees
the performance of the obligations of the parties to the options. The discussion
below uses the OCC as an example, but is also applicable to other similar
financial intermediaries.
OCC-issued and exchange-listed options, with certain exceptions, generally
settle by physical delivery of the underlying security or currency, although in
the future, cash settlement may become available. Index options and Eurodollar
instruments (which are described below under "Eurodollar Instruments") are cash
settled for the net amount, if any, by which the option is "in-the-money" at the
time the option is exercised. "In-the-money" means the amount by which the value
of the underlying instrument exceeds, in the case of a call option, or is less
than, in the case of a put option, the exercise price of the option. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.
A portfolio's ability to close out its position as a purchaser or seller of
an OCC-issued or exchange-listed put or call option is dependent, in part, upon
the liquidity of the particular option market. Among the possible reasons for
the absence of a liquid option market on an exchange are:
* insufficient trading interest in certain options,
* restrictions on transactions imposed by an exchange,
* trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities, including
reaching daily price limits,
* interruption of the normal operations of the OCC or an exchange,
* inadequacy of the facilities of an exchange or the OCC to handle current
trading volume, or
* a decision by one or more exchanges to discontinue the trading of options
(or a particular class or series of options), in which event the relevant
market for that option on that exchange would cease to exist, although any
such outstanding options on that exchange would continue to be exercisable
in accordance with their terms.
The hours of trading for listed options may not coincide with the hours
during which the underlying financial instruments are traded. To the extent that
the option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that would not be reflected in the corresponding option
markets.
OTC Options. Over-the-counter ("OTC") options are purchased from or sold to
counterparties such as securities dealers, financial institutions through direct
bilateral agreement with the counterparty. In contrast to exchange-listed
options, which generally have standardized terms and performance mechanics, all
of the terms of an OTC option, including such terms as method of settlement,
term, exercise price, premium, guaranties and security, are determined by
negotiation of the parties. It is anticipated that any portfolio authorized to
use OTC options will generally only enter into OTC options that have cash
settlement provisions, although it will not be required to do so.
Unless the parties provide for it, no central clearing or guaranty function
is involved in an OTC option. As a result, if a counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with a portfolio or fails to make a cash settlement
payment due in accordance with the terms of that option, the portfolio will lose
any premium it paid for the option as well as any anticipated benefit of the
transaction. Thus, the Subadviser must assess the creditworthiness of each such
counterparty or any guarantor or credit enhancement of the counterparty's credit
to determine the likelihood that the terms of the OTC option will be met. A
portfolio will enter into OTC option transactions only with U.S. Government
securities dealers recognized by the Federal Reserve Bank of New York as
"primary dealers," or broker-dealers, domestic or foreign banks, or other
financial institutions that are deemed creditworthy by the Subadviser. In the
absence of a change in the current position of the staff of the SEC, OTC options
purchased by a portfolio and the amount of
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the portfolio's obligation pursuant to an OTC option sold by the portfolio (the
cost of the sell-back plus the in-the-money amount, if any) or the value of the
assets held to cover such options will be deemed illiquid.
Types of Options That May Be Purchased. If and to the extent authorized to
do so, a portfolio may purchase and sell call options on securities indices,
currencies, and futures contracts, as well as and on Eurodollar instruments that
are traded on U.S. and foreign securities exchanges and in the OTC markets.
Each portfolio reserves the right to invest in options on instruments and
indices which may be developed in the future to the extent consistent with
applicable law, the portfolio's investment objective and the restrictions set
forth herein.
GENERAL CHARACTERISTICS OF FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
If and to the extent authorized to do so, a portfolio may trade financial
futures contracts (including stock index futures contracts which are described
below) or purchase or sell put and call options on those contracts for the
following purposes:
* as a hedge against anticipated interest rate, currency or market changes,
* for duration management,
* for risk management purposes.
Futures contracts are generally bought and sold on the commodities exchanges
where they are listed with payment of initial and variation margin as described
below. The sale of a futures contract creates a firm obligation by a portfolio,
as seller, to deliver to the buyer the specific type of financial instrument
called for in the contract at a specific future time for a specified price (or,
with respect to certain instruments, the net cash amount). Options on futures
contracts are similar to options on securities except that an option on a
futures contract gives the purchaser the right, in return for the premium paid,
to assume a position in a futures contract and obligates the seller to deliver
that position.
Use Will Be Consistent with Applicable Regulatory Requirements. A
portfolio's use of financial futures contracts and options thereon will in all
cases be consistent with applicable regulatory requirements and in particular
with the rules and regulations of the CFTC and will be entered into only for
bona fide hedging, risk management (including duration management) or to attempt
to increase income or gains.
Margin. Maintaining a futures contract or selling an option on a futures
contract will typically require a portfolio to deposit with a financial
intermediary, as security for its obligations, an amount of cash or other
specified assets ("initial margin") that initially is from 1% to 10% of the face
amount of the contract (but may be higher in some circumstances). Additional
cash or assets ("variation margin") may be required to be deposited thereafter
daily as the mark-to-market value of the futures contract fluctuates. The
purchase of an option on a financial futures contract involves payment of a
premium for the option without any further obligation on the part of a
portfolio. If a portfolio exercises an option on a futures contract it will be
obligated to post initial margin (and potentially variation margin) for the
resulting futures position just as it would for any futures position.
No portfolio will enter into a futures contract or option thereon if,
immediately thereafter, the sum of the amount of its initial margin and premiums
on open futures contracts and options thereon would exceed 5% of the current
fair market value of the portfolio's total assets; however, in the case of an
option that is in-the-money at the time of the purchase, the in-the-money amount
may be excluded in calculating the 5% limitation. The segregation requirements
with respect to futures contracts and options thereon are described below under
"Use of Segregated and Other Special Accounts."
Settlement. Futures contracts and options thereon are generally settled by
entering into an offsetting transaction, but no assurance can be given that a
position can be offset prior to settlement or that delivery will occur.
Value of Futures Contracts Sold by a Portfolio. The value of all futures
contracts sold by a portfolio (adjusted for the historical volatility
relationship between such portfolio and the contracts) will not exceed the total
market value of the portfolio's securities.
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STOCK INDEX FUTURES
Definition. A stock index futures contract (an "Index Future") is a
contract to buy a certain number of units of the relevant index at a specified
future date at a price agreed upon when the contract is made. A unit is the
value at a given time of the relevant index.
Uses of Index Futures. Below are some examples of how Index Futures may be
used:
* In connection with a portfolio's investment in common stocks, a portfolio
may invest in Index Futures while the Subadviser seeks favorable terms from
brokers to effect transactions in common stocks selected for purchase.
* A portfolio may also invest in Index Futures when a subadviser believes
that there are not enough attractive common stocks available to maintain
the standards of diversity and liquidity set for the portfolio's pending
investment in such stocks when they do become available.
* Through the use of Index Futures, a portfolio may maintain a pool of assets
with diversified risk without incurring the substantial brokerage costs
which may be associated with investment in multiple issuers. This may
permit a portfolio to avoid potential market and liquidity problems (e.g.,
driving up or forcing down the price by quickly purchasing or selling
shares of a portfolio security) which may result from increases or
decreases in positions already held by a portfolio.
* A portfolio may also invest in Index Futures in order to hedge its equity
positions.
May be Used only for Hedging Purposes. Hedging and Other Strategic
Transactions involving futures contracts and options on futures contracts will
be purchased, sold or entered into only for bona fide hedging, risk management
or appropriate portfolio management purposes and not for speculative purposes.
None of the portfolios will act as a "commodity pool" (i.e., a pooled investment
vehicle which trades in commodity futures contracts and options thereon and the
operator of which is registered with the CFTC).
OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES
If and to the extent authorized to do so, a portfolio may purchase and sell
call and put options on securities indices and other financial indices ("Options
on Financial Indices"). In so doing, the portfolio can achieve many of the same
objectives it would achieve through the sale or purchase of options on
individual securities or other instruments.
Description of Options on Financial Indices. Options on Financial Indices
are similar to options on a security or other instrument except that, rather
than settling by physical delivery of the underlying instrument, Options on
Financial Indices settle by cash settlement. Cash settlement means that the
holder has the right to receive, upon exercise of the option, an amount of cash
if the closing level of the index upon which the option is based exceeds, in the
case of a call (or is less than, in the case of a put) the exercise price of the
option. This amount of cash is equal to the excess of the closing price of the
index over the exercise price of the option, which also may be multiplied by a
formula value. The seller of the option is obligated to make delivery of this
amount. The gain or loss on an option on an index depends on price movements in
the instruments comprising the market or other composite on which the underlying
index is based, rather than price movements in individual securities, as is the
case for options on securities. In the case of an OTC option, physical delivery
may be used instead of cash settlement.
CURRENCY TRANSACTIONS
If and to the extent authorized to do so, a portfolio may engage in
currency transactions with counterparties to hedge the value of portfolio
securities denominated in particular currencies against fluctuations in relative
value. Currency transactions include:
* forward currency contracts,
* exchange-listed currency futures contracts and options thereon,
* exchange-listed and OTC options on currencies, and
* currency swaps.
A forward currency contract involves a privately negotiated obligation to
purchase or sell (with delivery generally required) a specific currency at a
future date at a price set at the time of the contract. A currency swap is an
agreement to exchange cash flows based on the notional difference among two or
more currencies and operates similarly to an interest rate swap, which is
described below under "Swaps, Caps, Floors and Collars." A portfolio may enter
into currency transactions only with counterparties that are deemed creditworthy
by the subadviser.
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A portfolio's dealings in forward currency contracts and other currency
transactions such as futures contracts, options, options on futures contracts
and swaps will be limited to hedging and other non-speculative purposes,
including transaction hedging, position hedging, cross hedging and proxy
hedging. A portfolio will not enter into a transaction to hedge currency
exposure to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held by the portfolio
that are denominated or generally quoted in or currently convertible into the
currency, other than with respect to proxy hedging as described below.
Transaction Hedging. Transaction hedging is entering into a currency
transaction with respect to specific assets or liabilities of a portfolio, which
will generally arise in connection with the purchase or sale of the portfolio's
securities or the receipt of income from them.
Position Hedging. Position hedging is entering into a currency transaction
with respect to portfolio securities positions denominated or generally quoted
in that currency.
Cross Hedging. A portfolio may cross-hedge currencies by entering into
transactions to purchase or sell one or more currencies that are expected to
increase or decline in value relative to other currencies to which the portfolio
has or in which the portfolio expects to have exposure.
Proxy Hedging. To reduce the effect of currency fluctuations on the value
of existing or anticipated holdings of its securities, a portfolio may also
engage in proxy hedging. Proxy hedging is often used when the currency to which
a portfolio's holdings are exposed is generally difficult to hedge or
specifically difficult to hedge against the dollar. Proxy hedging entails
entering into a forward contract to sell a currency, the changes in the value of
which are generally considered to be linked to a currency or currencies in which
some or all of a portfolio's securities are or are expected to be denominated,
and to buy dollars. The amount of the contract would not exceed the market value
of the portfolio's securities denominated in linked currencies.
Risk of Currency Transactions. Currency transactions are subject to risks
different from other portfolio transactions, as discussed below under "Risk
Factors." If a portfolio enters into a currency hedging transaction, the
portfolio will comply with the asset segregation requirements described below
under "Use of Segregated and Other Special Accounts."
COMBINED TRANSACTIONS
To the extent authorized to do so, a portfolio may enter into multiple
transactions, including multiple options transactions, multiple futures
transactions, multiple currency transactions (including forward currency
contracts), multiple interest rate transactions and any combination of futures,
options, currency and interest rate transactions. A combined transaction will
usually contain elements of risk that are present in each of its component
transactions. Although a portfolio will normally enter into combined
transactions to reduce risk or otherwise more effectively achieve the desired
portfolio management goal, it is possible that the combination will instead
increase the risks or hinder achievement of the portfolio's objective.
SWAPS, CAPS, FLOORS AND COLLARS
Among the Hedging and Other Strategic Transactions into which a portfolio
may be authorized to enter are (a) interest rate, currency and index swaps and
(b) the purchase or sale of related caps, floors and collars and other
derivatives. A portfolio will enter into these transactions primarily:
* to preserve a return or spread on a particular investment or portion of its
portfolio,
* to protect against currency fluctuations,
* to protect against any increase in the price of securities a portfolio
anticipates purchasing at a later date, or
* as a duration management technique.
A portfolio will use these transactions for non-speculative purposes and will
not sell interest rate caps or floors if it does not own securities or other
instruments providing the income the portfolio may be obligated to pay.
Interest Rate Swaps. Interest rate swaps involve the exchange by a
portfolio with another party of respective commitments to pay or receive
interest (for example, an exchange of floating rate payments for fixed rate
payments with respect to a notional amount of principal).
Currency Swaps. A currency swap is an agreement to exchange cash flows on a
stated amount based on changes in the values of the reference indices.
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Caps. The purchase of a cap entitles the purchaser to receive payments on a
stated principal amount from the party selling the cap to the extent that a
specified index exceeds a predetermined interest rate.
Floors. The purchase of a floor entitles the purchaser to receive payments
on a stated principal amount from the party selling the floor to the extent that
a specific index falls below a predetermined interest rate or amount.
INTEREST RATE FLOORS. The purchase of an interest rate floor entitles
the purchaser to receive payments of interest on a stated principal amount from
the party selling the interest rate floor to the extent that a specified index
falls below a predetermined interest rate or amount.
Collar. A collar is a combination of a cap and a floor that preserves a
certain return within a predetermined range of interest rates or values.
1940 Act Considerations. A portfolio will usually enter into interest rate
swaps on a net basis. A net basis means that the two payment streams are netted
out in a cash settlement on the payment date(s) specified in the instrument,
with the portfolio receiving (or paying, if applicable) only the net amount of
the two payments. If these swaps, caps, floors, collars and other similar
derivatives are entered into for good faith hedging or other non-speculative
purposes, they do not constitute senior securities under the Investment Company
Act of 1940, as amended (the "1940 Act") and, thus, will not be treated as being
subject to the portfolio's borrowing restrictions.
Counterparties to these Transactions. A portfolio will not enter into any
swap, cap, floor, collar or other derivative transaction unless the counterparty
is deemed creditworthy by the Subadviser. If a counterparty defaults, a
portfolio may have contractual remedies pursuant to the agreements related to
the transaction.
Liquidity. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Caps, floors and collars are generally less
liquid than swaps.
The liquidity of swap agreements will be determined by a Subadviser based
on various factors, including:
* the frequency of trades and quotations,
* the number of dealers and prospective purchasers in the marketplace,
* dealer undertakings to make a market,
* the nature of the security (including any demand or tender features), and
* the nature of the marketplace for trades (including the ability to assign
or offset a portfolio's rights and obligations relating to the investment).
Such determination will govern whether a swap will be deemed to be within the
15% restriction on investments in securities that are not readily marketable.
Each portfolio will maintain cash and appropriate liquid assets in a
segregated custodial account to cover its current obligations under swap
agreements. If a portfolio enters into a swap agreement on a net basis, it will
segregate assets with a daily value at least equal to the excess, if any, of the
portfolio's accrued obligations under the swap agreement over the accrued amount
the portfolio is entitled to receive under the agreement. If a portfolio enters
into a swap agreement on other than a net basis, it will segregate assets with a
value equal to the full amount of the portfolio's accrued obligations under the
agreement. See also, "Use of Segregated and Other Special Accounts."
EURODOLLAR INSTRUMENTS
To the extent authorized to do so, a portfolio may make investments in
Eurodollar instruments, which are typically dollar-denominated futures contracts
or options on those contracts that are linked to the LIBOR. In addition, foreign
currency denominated instruments are available from time to time. Eurodollar
futures contracts enable purchasers to obtain a fixed rate for the lending of
funds and sellers to obtain a fixed rate for borrowings. A portfolio might use
Eurodollar futures contracts and options thereon to hedge against changes in
LIBOR, to which many interest rate swaps and fixed income instruments are
linked.
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RISK FACTORS
Hedging and Other Strategic Transactions have special risks associated with
them, including:
* possible default by the counterparty to the transaction,
* markets for the securities used in these transactions could be illiquid,
* to the extent the Subadviser's assessment of market movements is incorrect,
the risk that the use of the Hedging and Other Strategic Transactions could
result in losses to the portfolio.
Losses resulting from the use of Hedging and Other Strategic Transactions
will reduce a portfolio's net asset value, and possibly income. Losses can be
greater than if Hedging and Other Strategic Transactions had not been used.
* Options and Futures Transactions
Options transactions are subject to the following additional risks:
* Option transactions could force the sale or purchase of portfolio
securities at inopportune times or for prices higher than current market
values (in the case of put options) or lower than current market values (in
the case of call options), or could cause a portfolio to hold a security it
might otherwise sell (in the case of a call option).
* Options markets could become illiquid in some circumstances and certain
over-the-counter options could have no markets. As a result, in certain
markets, a portfolio might not be able to close out a transaction without
incurring substantial losses.
Futures transactions are subject to the following additional risks:
* The degree of correlation between price movements of futures contracts and
price movements in the related securities position of a portfolio could
create the possibility that losses on the hedging instrument are greater
than gains in the value of the portfolio's position.
* Futures markets could become illiquid. As a result, in certain markets, a
portfolio might not be able to close out a transaction without incurring
substantial losses.
Although a portfolio's use of futures and options for hedging should tend to
minimize the risk of loss due to a decline in the value of the hedged position,
it will tend, at the same time, to limit the potential gain that might result
from an increase in value.
Currency Hedging. In additional to the general risks of Hedging and Other
Strategic Transactions described above, currency hedging transactions have the
following risks:
* Currency hedging can result in losses to a portfolio if the currency being
hedged fluctuates in value to a degree or direction that is not
anticipated.
* Proxy hedging involves determining the correlation between various
currencies. If the Subadviser's determination of this correlation is
incorrect, the portfolio losses could be greater than if the proxy hedging
were not used.
* Foreign government exchange controls and restrictions on repatriation of
currency can negatively affect currency transactions. These forms of
governmental actions can result in losses to a portfolio if it is unable to
deliver or receive currency or monies to settle obligations. Such
governmental actions could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs.
CURRENCY FUTURES CONTRACTS AND OPTIONS ON CURRENCY FUTURES CONTRACTS.
Currency futures contracts are subject to the same risks that apply to the use
of futures contracts generally. In addition, settlement of a currency futures
contract for the purchase of most currencies must occur at a bank based in the
issuing nation. Trading options on currency futures contracts is relatively new,
and the ability to establish and close out positions on these options is subject
to the maintenance of a liquid market that may not always be available.
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RISKS OF HEDGING AND OTHER STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES
When conducted outside the United States, Hedging and Other Strategic
Transactions will not only be subject to the risks described above but could
also be adversely affected by:
* foreign governmental actions affecting foreign securities, currencies or
other instruments,
* less stringent regulation of these transactions in many countries as
compared to the United States,
* the lack of have clearing mechanisms and related guarantees in some
countries for these transactions,
* more limited availability of data on which to make trading decisions than
in the United States,
* delays in a portfolio's ability to act upon economic events occurring in
foreign markets during non-business hours in the United States,
* the imposition of different exercise and settlement terms and procedures
and margin requirements than in the United States, and
* lower trading volume and liquidity.
USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS
Use of extensive Hedging and Other Strategic Transactions by a portfolio
will require, among other things, that the portfolio segregate cash, liquid high
grade debt obligations or other assets with its custodian, or a designated
sub-custodian, to the extent the portfolio's obligations are not otherwise
"covered" through ownership of the underlying security, financial instrument or
currency.
In general, either the full amount of any obligation by a portfolio to pay
or deliver securities or assets must be covered at all times by (a) holding the
securities, instruments or currency required to be delivered. or (b) subject to
any regulatory restrictions, segregating an amount of cash or liquid high grade
debt obligations at least equal to the current amount of the obligation. The
segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. Some
examples of cover requirements are set forth below:
Call Options. A call option on securities written by a portfolio will
require the portfolio to hold the securities subject to the call (or securities
convertible into the needed securities without additional consideration) or to
segregate cash or liquid high grade debt obligations sufficient to purchase and
deliver the securities if the call is exercised. A call option sold by a
portfolio on an index will require the portfolio to own portfolio securities
that correlate with the index or to segregate cash or liquid high grade debt
obligations equal to the excess of the index value over the exercise price on a
current basis.
Put Options. A put option on securities written by a portfolio will require
the portfolio to segregate cash or liquid high grade debt obligations equal to
the exercise price.
OTC Options. OTC options entered into by a portfolio, including those on
securities, currency, financial instruments or indices, and OTC-issued and
exchange-listed index options will generally provide for cash settlement,
although a portfolio will not be required to do so. As a result, when a
portfolio sells these instruments it will segregate an amount of cash or liquid
high grade debt obligations equal to its obligations under the options.
OTC-issued and exchange-listed options sold by a portfolio other than those
described above generally settle with physical delivery, and the portfolio will
segregate an amount of cash or liquid high grade debt securities equal to the
full value of the option. OTC options settling with physical delivery or with an
election of either physical delivery or cash settlement will be treated the same
as other options settling with physical delivery.
Currency Contracts. Except when a portfolio enters into a forward contract
in connection with the purchase or sale of a security denominated in a foreign
currency or for other non-speculative purposes, which requires no segregation, a
currency contract that obligates the portfolio to buy or sell a foreign currency
will generally require the portfolio to hold an amount of that currency or
liquid securities denominated in that currency equal to a portfolio's
obligations or to segregate cash or liquid high grade debt obligations equal to
the amount of the portfolio's obligations.
Futures Contracts and Options on Futures Contracts. In the case of a
futures contract or an option on a futures contract, a portfolio must deposit
initial margin and, in some instances, daily variation margin, in addition to
segregating assets sufficient to meet its obligations under the contract. These
assets may consist of cash, cash equivalents, liquid debt, equity securities or
other acceptable assets.
Swaps. A portfolio will calculate the net amount, if any, of its
obligations relating to swaps on a daily basis and will segregate an amount of
cash or liquid high grade debt obligations having an aggregate value at least
equal to this net amount.
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Caps. Floors and Collars. Caps, floors and collars require segregation of
assets with a value equal to a portfolio's net obligation, if any.
Hedging and Other Strategic Transactions may be covered by means other than
those described above when consistent with applicable regulatory policies. A
portfolio may also enter into offsetting transactions so that its combined
position, coupled with any segregated assets, equals its net outstanding
obligation. A portfolio could purchase a put option, for example, if the
exercise price of that option is the same or higher than the exercise price of a
put option sold by the portfolio. In addition, if it holds a futures contracts
or forward contract, a portfolio could, instead of segregating assets, purchase
a put option on the same futures contract or forward contract with an exercise
price as high or higher than the price of the contract held. Other Hedging and
Strategic Transactions may also be offset in combinations. If the offsetting
transaction terminates on or after the time the primary transaction terminates,
no segregation is required, but if it terminates prior to that time, assets
equal to any remaining obligation would need to be segregated.
OTHER LIMITATIONS
No portfolio will maintain open short positions in futures contracts, call
options written on futures contracts, and call options written on securities
indices if, in the aggregate, the current market value of the open positions
exceeds the current market value of that portion of its securities portfolio
being hedged by those futures and options, plus or minus the unrealized gain or
loss on those open positions. The gain or loss on these open positions will be
adjusted for the historical volatility relationship between that portion of the
portfolio and the contracts (e.g., the Beta volatility factor).
For purposes of this limitation, to the extent the portfolio has written
call options on specific securities in that portion of its portfolio, the value
of those securities will be deducted from the current market value of that
portion of the securities portfolio. If this limitation should be exceeded at
any time, the portfolio will take prompt action to close out the appropriate
number of open short positions to bring its open futures and options positions
within this limitation.
INVESTMENT RESTRICTIONS
There are two classes of investment restrictions to which the Trust is
subject in implementing the investment policies of the portfolios: (a)
fundamental and (b) nonfundamental. Nonfundamental restrictions are subject to
change by the Trustees of the Trust without shareholder approval. Fundamental
restrictions may only be changed by a vote of the lesser of (i) 67% or more of
the shares represented at a meeting at which more than 50% of the outstanding
shares are represented or (ii) more than 50% of the outstanding shares.
When submitting an investment restriction change to the holders of the
Trust's outstanding voting securities, the matter shall be deemed to have been
effectively acted upon with respect to a particular portfolio if a majority of
the outstanding voting securities of the portfolio vote for the approval of the
matter, notwithstanding (1) that the matter has not been approved by the holders
of a majority of the outstanding voting securities of any other portfolio
affected by the matter, and (2) that the matter has not been approved by the
vote of a majority of the outstanding voting securities of the Trust.
Restrictions (1) through restriction (8) are fundamental. Restrictions (9)
through (15) are nonfundamental.
FUNDAMENTAL
The Trust may not issue senior securities, except to the extent that the
borrowing of money in accordance with restriction (3) may constitute the
issuance of a senior security. (For purposes of this restriction, purchasing
securities on a when-issued or delayed delivery basis and engaging in Hedging
and Other Strategic Transactions will not be deemed to constitute the issuance
of a senior security.) In addition, unless a portfolio is specifically excepted
by the terms of a restriction, each portfolio will not:
(1) Invest more than 25% of the value of its total assets in securities of
issuers having their principal activities in any particular industry,
excluding U. S. Government securities and obligations of domestic branches
of U.S. banks and savings and loan associations, except that this
restriction shall not apply to the Real Estate Securities Trust and the
Lifestyle Trusts. (The Trust has determined to forego the exclusion from
the above policy of obligations of domestic branches of U.S. savings and
loan associations and to limit the exclusion of obligations of domestic
branches of U.S. banks to the Money Market Trust.)
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<PAGE> 166
For purposes of this restriction, neither finance companies as a group nor
utility companies as a group are considered to be a single industry. Such
companies will be grouped instead according to their services; for example,
gas, electric and telephone utilities will each be considered a separate
industry. Also for purposes of this restriction, foreign government issuers
and supranational issuers are not considered members of any industry.
(2) Purchase the securities of any issuer if the purchase would cause more than
5% of the value of the portfolio's total assets to be invested in the
securities of any one issuer (excluding U. S. Government securities) or
cause more than 10% of the voting securities of the issuer to be held by
the portfolio, except that up to 25% of the value of each portfolio's total
assets may be invested without regard to these restrictions. The Global
Bond Trust and the Lifestyle Trusts are not subject to these restrictions.
(3) Borrow money, except that each portfolio may borrow (i) for temporary or
emergency purposes (not for leveraging) up to 33 1/3% of the value of the
portfolio's total assets (including amounts borrowed) less liabilities
(other than borrowings) and (ii) in connection with reverse repurchase
agreements, mortgage dollar rolls and other similar transactions.
(4) Underwrite securities of other issuers except insofar as the Trust may be
considered an underwriter under the 1933 Act in selling portfolio
securities.
(5) Purchase or sell real estate, except that each portfolio may invest in
securities issued by companies which invest in real estate or interests
therein and each of the portfolios other than the Money Market Trust may
invest in mortgages and mortgage-backed securities.
(6) Purchase or sell commodities or commodity contracts, except that each
portfolio other than the Money Market Trust may purchase and sell futures
contracts on financial instruments and indices and options on such futures
contracts and each portfolio other than the Money Market Trust and U.S.
Government Securities Trust may purchase and sell futures contracts on
foreign currencies and options on such futures contracts.
(7) Lend money to other persons, except by the purchase of obligations in which
the portfolio is authorized to invest and by entering into repurchase
agreements. For purposes of this restriction, collateral arrangements with
respect to options, forward currency and futures transactions will not be
deemed to involve the lending of money.
(8) Lend securities in excess of 33 1/3% of the value of its total assets. For
purposes of this restriction, collateral arrangements with respect to
options, forward currency and futures transactions will not be deemed to
involve loans of securities.
NONFUNDAMENTAL
Unless a portfolio is specifically excepted by the terms of a restriction, each
portfolio will not:
(9) Knowingly invest more than 15% of the value of its net assets in securities
or other investments, including repurchase agreements maturing in more than
seven days but excluding master demand notes, that are not readily
marketable, except that the Money Market Trust may not invest in excess of
10% of its net assets in such securities or other investments.
(10) Sell securities short or purchase securities on margin, except that it may
obtain such short-term credits as may be required to clear transactions.
For purposes of this restriction, collateral arrangements with respect to
Hedging and Other Strategic Transactions will not be deemed to involve the
use of margin.
(11) Write or purchase options on securities, financial indices or currencies,
except to the extent a portfolio is specifically authorized to engage in
Hedging and Other Strategic Transactions.
(12) Purchase securities for the purpose of exercising control or management.
(13) Purchase securities of other investment companies if the purchase would
cause more than 10% of the value of the portfolio's total assets to be
invested in investment company securities, provided that (i) no investment
will be made in the securities of any one investment company if immediately
after such investment more than 3% of the outstanding voting securities of
such company would be owned by the portfolio or more than 5% of the value
of the portfolio's
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<PAGE> 167
total assets would be invested in such company and (ii) no restrictions
shall apply to a purchase of investment company securities in connection
with:
(a) a merger, consolidation or reorganization,
(b) the investment of collateral received in connection with the
lending of securities in the Navigator Securities Lending Trust,*
or
(c) the purchase of shares of the T. Rowe Price Reserve Investment
Fund, a T. Rowe Price Associates, Inc. money market fund.
(However, a portfolio of the Trust may not invest more than 25%
of its total assets in the T. Rowe Price Reserve Investment
Fund).**
For purposes of this restriction, privately issued collateralized mortgage
obligations will not be treated as investment company securities if issued
by "Exemptive Issuers." Exemptive Issuers are defined as unmanaged,
fixed-asset issuers that (a) invest primarily in mortgage-backed
securities, (b) do not issue redeemable securities as defined in Section
2(a)(32) of the 1940 Act, (c) operate under general exemptive orders
exempting them from all provisions of the 1940 Act, and (d) are not
registered or regulated under the 1940 Act as investment companies. This
restriction (13) shall not apply to the Lifestyle Trusts.
*State Street Bank and Trust Company ("State Street"), the Trust's custodian,
pursuant to an agreement with the Trust, provides a security lending service to
the Trust. In connection with the service, collateral from securities lent may
be invested in the Navigator Securities Lending Trust. The Navigator Securities
Lending Trust is a registered investment company managed by State Street that is
sold only to mutual fund lending clients of State Street. In connection with the
creation of the Navigator Securities Lending Trust, State Street received from
the SEC exemption from certain provisions of the 1940 Act in order to permit its
mutual fund clients to invest in the Navigator Securities Lending Trust. State
Street received exemption from Section 12(d)(1) of the 1940 Act and various
provisions of Section 17 of the 1940 Act.
**The T. Rowe Price Reserve Investment Fund is a money market fund registered
under the 1940 Act which is managed by T. Rowe Price Associates, Inc. and which
is sold only to advisory clients of T. Rowe Price Associates, Inc. and Rowe
Price-Fleming International, Inc. and their affiliates. T. Rowe Price
Associates, Inc. and Rowe Price-Fleming International, Inc. have received from
the SEC exemptive relief from certain provisions of the 1940 Act in order to
permit their mutual fund sub-advisory clients to invest in the T. Rowe Price
Reserve Investment Fund.
(14) Pledge, hypothecate, mortgage or transfer (except as provided in
restriction (8)) as security for indebtedness any securities held by the
portfolio, except in an amount of not more than 10%* of the value of the
portfolio's total assets and then only to secure borrowings permitted by
restrictions (3) and (10). For purposes of this restriction, collateral
arrangements with respect to Hedging and Other Strategic Transactions will
not be deemed to involve a pledge of assets.
*33 1/3% in the case of the Small Company Value, Blue Chip Growth,
Equity-Income, International Stock, Science & Technology Trusts, Small
Company Blend, U.S. Large Cap Value, Total Return, Foreign and Mid-Cap
Stock Trusts.
15% in the case of the International Small Cap, Growth and Balanced Trusts.
50% in the case of the Value Trust.
If a percentage restriction is adhered to at the time of an investment, a
later increase or decrease in the investment's percentage of the value of a
portfolio's total assets resulting from a change in such values or assets will
not constitute a violation of the percentage restriction, except in the case of
the Money Market Trust where the percentage limitation of restriction (9) must
be met at all times.
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<PAGE> 168
ADDITIONAL INVESTMENT RESTRICTIONS
MONEY MARKET TRUST
In addition to the above policies, the Money Market Trust is subject to
certain restrictions required by Rule 2a-7 under the 1940 Act. In order to
comply with such restrictions, the Money Market Trust will, among other things,
not purchase the securities of any issuer if it would cause:
* more than 5% of its total assets to be invested in the securities of any
one issuer (excluding U.S. Government securities and repurchase agreements
fully collateralized by U.S. Government securities), except as permitted by
Rule 2a-7 for certain securities for a period of up to three business days
after purchase,
* more than 5% of its total assets to be invested in "second tier
securities," as defined by Rule 2a-7, or
* more than the greater of $1 million or 1% of its total assets to be
invested in the second tier securities of that issuer.
PORTFOLIO TURNOVER
The annual rate of portfolio turnover will normally differ for each
portfolio and may vary from year to year as well as within a year. A high rate
of portfolio turnover (100% or more) generally involves correspondingly greater
brokerage commission expenses, which must be borne directly by the portfolio. No
portfolio turnover rate can be calculated for the Money Market Trust due to the
short maturities of the instruments purchased. Portfolio turnover is calculated
by dividing the lesser of purchases or sales of portfolio securities during the
fiscal year by the monthly average of the value of the portfolio's securities.
(Excluded from the computation are all securities, including options, with
maturities at the time of acquisition of one year or less). The portfolio
turnover rates for the portfolios of the Trust for the years ended December 31,
1998 and 1997 were as follows:
PORTFOLIO 1998 1997
- ------------------------------------------------------------------------------
Pacific Rim Emerging Markets Trust 62% 63%
Science & Technology Trust 105% 121%
International Small Cap Trust 45% 74%
Aggressive Growth Trust 189% 63%
Emerging Small Company Trust 77% 120%
Mid Cap Growth Trust 150% 151%
Overseas Trust 150% 166%
International Stock Trust 27% 43%
Mid Cap Blend Trust 93% 224%
Small Company Value Trust 131% 81%(A)(1)
Global Equity Trust 32% 33%
Growth Trust 136% 179%
Large Cap Growth Trust 64% 91%
Quantitative Equity Trust 225% 114%
Blue Chip Growth Trust 42% 37%
Real Estate Securities Trust 122% 148%
Value Trust 45% 43%
Equity Index Trust 3% 7%
Growth & Income Trust 16% 34%
Equity-Income Trust 21% 25%
Income & Value Trust 85% 78%
Balanced Trust 199% 219%
High Yield Trust 94% 75%
Strategic Bond Trust 209% 131%
Global Bond Trust 140% 160%
Investment Quality Bond Trust 41% 47%
Diversified Bond Trust 125% 86%
U.S. Government Securities Trust 287% 110%
Money Market Trust N/A N/A
Lifestyle Aggressive 1000 Trust 59% 67%(A)(2)
Lifestyle Growth 820 Trust 49% 51%(A)(2)
Lifestyle Balanced 640 Trust 52% 44%(A)(2)
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<PAGE> 169
<TABLE>
<CAPTION>
PORTFOLIO 1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
Lifestyle Moderate 460 Trust 45% 39%(A)(2)
Lifestyle Conservative 260 Trust 32% 38%(A)(2)
</TABLE>
(A) Annualized -
(1) Commencement of Operations - 10/01/97.
(2) Commencement of Operations - 01/07/97.
Prior rates of portfolio turnover do not provide an accurate guide as to
what the rate will be in any future year, and prior rates are not a limiting
factor when it is deemed appropriate to purchase or sell securities for a
portfolio.
MANAGEMENT OF THE TRUST
The Trustees and officers of the Trust, together with information as to
their principal occupations during the past five years, are listed below:
<TABLE>
<CAPTION>
=============================================================================================================
NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION
THE TRUST DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Don B. Allen Trustee Senior Lecturer, William E. Simon Graduate School of
136 Knickerbocker Road Business Administration, University of Rochester
Pittsford, NY 14534
Age: 69
</TABLE>
<TABLE>
<CAPTION>
=============================================================================================================
NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION
THE TRUST DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John D. DesPrez III President Executive Vice President, US Operations, Manulife
73 Tremont Street Financial, January 1999 to date; Senior Vice President,
Boston, MA 02108 Annuities, Manulife Financial, September 1996 to January
1999; President and Director, Manulife North America,
Age: 42 September 1996 to January 1999; President, North American
Funds, March 1993 to September 1996; Vice President and
General Counsel, Manulife North America, 1991 to 1994;
- -------------------------------------------------------------------------------------------------------------
Charles L. Bardelis Trustee President and Executive Officer, Island Commuter Corp.
297 Dillingham Ave. (Marine Transport)
Falmouth, MA 02540
Age: 57
- -------------------------------------------------------------------------------------------------------------
Samuel Hoar Trustee Senior Mediator, Judicial Arbitration Mediation Services
73 Tremont Street "JAMS/Endispute," June 1994 to date; Partner, Goodwin,
Boston, MA 02108 Proctor and Hoar, prior to June 1994
Age: 71
- -------------------------------------------------------------------------------------------------------------
John D. Richardson* Chairman of Senior Executive Vice President and General Manager, U.S.
200 Bloor Street East Trustees Operations, Manulife Financial, January 1999 to date;
Toronto, Ontario, Canada Executive Vice President and General Manager, U.S.
M4W 1E5 Operations, Manulife Financial, January 1995 to January
Age: 61 1999; Senior Vice President and General Manager, Canadian
Operations, Manulife Financial, June 1992 to January 1995
- -------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 170
<TABLE>
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
F. David Rolwing Trustee Chairman, President and CEO, Montgomery Mutual Insurance
17810 Meeting House Road Company, 1991 to date
Sandy Spring, MD 20860
Age: 64
- -------------------------------------------------------------------------------------------------------------
John G. Vrysen Vice President Vice President, Chief Financial Officer, U.S. Operations,
73 Tremont Street Manulife Financial, January 1996 to date; Vice President
Boston, MA 02108 and Actuary, Manulife North America, January 1986 to date
Age: 43
- -------------------------------------------------------------------------------------------------------------
James D. Gallagher Secretary Vice President, Legal Services, Manulife Financial,
73 Tremont Street January 1996 to date; Vice President, Secretary and
Boston, MA 02108 General Counsel, Manulife North America, June 1994 to
date; Vice President and Associate General Counsel, The
Age: 44 Prudential Insurance Company of America, 1990 to 1994
- -------------------------------------------------------------------------------------------------------------
James R. Boyle Treasurer Vice President, Institutional Markets, Manulife Financial,
73 Tremont Street 1998 to present; Vice President Administration, Manulife
Boston, MA 02108 North America, 1996 to 1998; Vice President, Treasurer and
Chief Administrative Officer, North America Funds, June
Age: 39 1994 to September 1996.
==============================================================================================================
</TABLE>
*Trustee who is an "interested person," as defined in the 1940 Act.
DUTIES AND COMPENSATION OF TRUSTEES
The Trust is organized as a Massachusetts Business Trust. Under the Trust's
Declaration of Trust, the Trustees are responsible for managing the affairs of
the Trust, including the appointment of advisers and subadvisers. The Trustees
may appoint officers of the Trust who assist in managing the day-to-day affairs
of the Trust.
The Trust does not pay any remuneration to its Trustees who are officers or
employees of the Adviser or its affiliates. Trustees not so affiliated receive
an annual retainer of $30,000, a fee of $7,500 for each quarterly meeting of the
Trustees that they attend in person and a fee of $3,750 per day for attending
any duly constituted in person meeting of the Trustees, other than a quarterly
meeting. Trustees are reimbursed for travel and other out-of-pocket expenses.
The officers listed above are furnished to the Trust pursuant to the Advisory
Agreement described below and receive no compensation from the Trust. These
officers spend only a portion of their time on the affairs of the Trust.
COMPENSATION TABLE
<TABLE>
<CAPTION>
===============================================================================================
NAMES OF PERSON, POSITION AGGREGATE COMPENSATION FROM TOTAL COMPENSATION FROM TRUST
TRUST FOR PRIOR FISCAL YEAR* COMPLEX FOR PRIOR FISCAL YEAR*#
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Don B. Allen, Trustee $60,000 $60,000
- -----------------------------------------------------------------------------------------------
Charles L. Bardelis, Trustee 60,000 60,000
- -----------------------------------------------------------------------------------------------
Samuel Hoar, Trustee 60,000 60,000
- -----------------------------------------------------------------------------------------------
Robert J. Myers, Former Trustee 60,000 60,000
- -----------------------------------------------------------------------------------------------
John D. Richardson, Trustee -- --
- -----------------------------------------------------------------------------------------------
F. David Rolwing, Trustee 60,000 60,000
===============================================================================================
</TABLE>
*Compensation received for services as Trustee.
#Trust Complex includes all portfolios of the Trust.
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<PAGE> 171
INVESTMENT MANAGEMENT ARRANGEMENTS
The following information supplements the material appearing in the
Prospectus under the caption "Management of the Trust." Copies of the Advisory
and Subadvisory Agreements discussed below have been filed with and are
available from the SEC.
Information Regarding the Adviser. Manufacturers Securities Services, LLC
("MSS" or the "Adviser"), the successor to NASL Financial Services, Inc., is a
Delaware limited liability corporation whose principal offices are located at 73
Tremont Street, Boston, Massachusetts 02108. The ultimate parent of MSS is The
Manufacturers Life Insurance Company ("Manulife Financial"), a Canadian mutual
life insurance company based in Toronto, Canada. MSS is registered as an
investment adviser under the Investment Advisers Act of 1940 and as a
broker-dealer under the Securities Exchange Act of 1934. It is a member of the
National Association of Securities Dealers, Inc. (the "NASD"). In addition, MSS
serves as principal underwriter of certain contracts issued by The Manufacturers
Life Insurance Company of North America ("Manulife North America") and The
Manufacturers Life Insurance Company of New York.
Approval of the Advisory Agreement and Subadvisory Agreements.
The Advisory Agreement was approved by the Trustees on [March 26, 1999] and
by the shareholders on [April 27, 1999]. Each Subadvisory Agreement (except
those described below under "The Subadvisory Agreements") were approved by the
Trustees on September 28, 1995, and by the shareholders of the portfolios on
December 5, 1995. These subadvisory agreement approvals occurred in connection
with the change of control of MSS as a result of the merger of North American
Life Assurance Company, the then ultimate controlling parent of MSS, with
Manulife Financial on January 1, 1996.
Appointment of Fred Alger Management, Inc.
On December 15, 1995, the Trustees appointed Fred Alger Management, Inc.
("Alger") pursuant to a new Subadvisory Agreement with Alger (the "Alger
Subadvisory Agreement") to manage the Small/Mid Cap Trust. The Alger Subadvisory
Agreement and an amendment to the Advisory Agreement, both to provide for the
management of the Small/Mid Cap Trust, were approved by the Trustees, including
a majority of the Trustees who are not parties to the agreements or interested
persons of any party to such agreements on December 15, 1995. The Alger
Subadvisory Agreement and the related amendment to the Advisory Agreement were
approved by the sole shareholder of the Small/Mid Cap Trust on _March 1, 1996.
October 1, 1996 Subadviser Resignations
Effective October 1, 1996, the following subadvisers resigned their
positions as subadviser to the stated portfolios:
* Oechsle International Advisors, LLC ("Oechsle International") as subadviser
to the Global Equity Trust,
* Wellington Management Company, LLP as subadviser to the Money Market Trust,
* Goldman Sachs Asset Management as subadviser to the Equity-Income Trust
(formerly, the Value Equity Trust), and
* Roger Engemann Management Co., Inc. as subadviser to the Blue Chip Growth
Trust (formerly, the Pasadena Growth Trust).
On September 27, 1996, the Trustees then appointed the following new
subadvisers:
* Morgan Stanley Asset Management Inc. ("Morgan Stanley") pursuant to a new
subadvisory agreement ("Morgan Stanley Subadvisory Agreement") to manage
the Global Equity Trust,
* T. Rowe Price Associates, Inc. ("T. Rowe Price") pursuant to a new
subadvisory agreement ("T. Rowe Price Subadvisory Agreement") to manage the
Blue Chip Growth and Equity-Income Trusts, and
* Manufacturers Adviser Corporation ("MAC") pursuant to a new subadvisory
agreement ("MAC Subadvisory Agreement") to manage the Money Market Trust as
well as the Pacific Rim Emerging Markets, Real Estate Securities,
Quantitative Equity, Capital Growth Bond and Equity Index Trusts.
33
<PAGE> 172
All such Subadvisory Agreements were approved by the Trustees, including a
majority of the Trustees who are not parties to the agreements or interested
persons of any party to such agreements, on September 27, 1996 (with an
effective date of October 1, 1996) and by the shareholders of the respective
portfolios on December 20, 1996.
New Subadvisers for New Portfolios
On September 27, 1996, the Trustees also appointed the following new
subadvisers:
* T. Rowe Price pursuant to the T. Rowe Price Subadvisory Agreement to manage
the Science and Technology Trust,
* Miller Anderson & Sherrerd, LLP ("MAS") pursuant to a new subadvisory
agreement ("MAS Subadvisory Agreement") to manage the Value and High Yield
Trusts,
* Warburg Pincus Asset Management, Inc. ("Warburg") pursuant to a new
subadvisory agreement ("Warburg Subadvisory Agreement") to manage the
Emerging Small Company Trust (formerly, the Emerging Growth Trust),
* Rowe Price-Fleming International, Inc. ("Price-Fleming") pursuant to a new
subadvisory agreement ("Price-Fleming Subadvisory Agreement") to manage the
International Stock Trust, and
* Pilgrim Baxter & Associates, Ltd. ("PBA") pursuant to a new subadvisory
agreement ("PBA Subadvisory Agreement") to manage the Pilgrim Baxter Growth
Trust.
Such Subadvisory Agreements and amendments to the Advisory Agreement, to provide
for the management of the newly-established portfolios, were approved by the
Trustees, including a majority of the Trustees who are not parties to the
agreements or interested persons of any party to such agreements, on September
27, 1996 and by the sole shareholder of each portfolio on _January 1, 1997.
Appointment of MAC to Manage the Lifestyle Portfolios
On December 13, 1996, the Trustees appointed MAC pursuant to the amended
MAC Subadvisory Agreement to also manage each of the Lifestyle portfolios. The
amended MAC Subadvisory Agreement was approved by the Trustees, including a
majority of the Trustees who are not parties to the agreement or interested
persons of any party to such agreement, on December 13, 1996. The amended MAC
Subadvisory Agreement was approved by the sole shareholder of each of the
Lifestyle Trusts on January 1, 1997.
Appointment of Rosenberg Institutional Equity Management to Manage the
Small Company Value Trust
On September 26, 1997, the Trustees appointed Rosenberg Institutional
Equity Management ("Rosenberg") to manage the Small Company Value Trust pursuant
to a new subadvisory agreement (the "Rosenberg Subadvisory Agreement"). The
Rosenberg Subadvisory Agreement and an amendment to the Advisory Agreement, both
to provide for the management of the Small Company Value Trust were approved by
the Trustees, including a majority of the Trustees who are not parties to the
agreement or interested persons of any party to such agreement, on September 26,
1997. The Rosenberg Subadvisory Agreement was approved by the sole shareholder
of the Small Company Value Trust on September 30, 1997.
Change of Control of Salomon Brothers Asset Management Inc
On November 17, 1997, the Trustees appointed Salomon Brothers Asset
Management Inc ("SBAM") pursuant to a new subadvisory agreement ("SBAM
Subadvisory Agreement") to manage the U.S. Government Securities and Strategic
Bond Trusts effective upon the change of control of SBAM with Travelers becoming
the ultimate parent company of SBAM. This change of control occurred on November
28, 1997. In addition, on November 17, 1997 the Trustees approved a new
subadvisory consulting agreement with Salomon Brothers Asset Management Limited
("SBAM Limited") ("Subadvisory Consulting Agreement") to provide certain
advisory services to SBAM with regard to currency transactions and investments
in non-dollar denominated debt securities for the benefit of the Strategic Bond
Trust. The SBAM Subadvisory Agreement and Subadvisory Consulting Agreement were
approved by the Trustees, including a majority of the Trustees who are not
parties to the agreements or interested persons of any party to such agreements,
on November 17, 1997. SBAM had previously managed the U.S. Government Securities
and Strategic Bond Trusts pursuant to a Subadvisory Agreement dated January 1,
1996. SBAM Limited had previously provided certain advisory services to SBAM
with regard to currency transactions and investments in non-dollar denominated
debt securities for the benefit of the Strategic Bond Trust pursuant to a
Subadvisory Consulting Agreement dated January 1, 1996.
34
<PAGE> 173
Change of Control of Founders Asset Management, Inc.
On December 11, 1997, the Trustees appointed Founders Asset Management LLC
("Founders") pursuant to a new subadvisory agreement (the "Founders Subadvisory
Agreement") to manage the International Small Cap, Growth, Worldwide Growth and
Balanced Trusts, effective upon the merger of Founders Asset Management, Inc.
with and into Founders Asset Management LLC which occurred on April 4, 1998. The
Founders Subadvisory Agreement was approved by the Trustees, including a
majority of the Trustees who are not parties to the agreement or interested
persons of any party to such agreement, on December 11, 1997. Founders Asset
Management, Inc., previously managed these Trusts pursuant to a Subadvisory
Agreement dated January 4, 1996, as amended June 20, 1996 and December 31, 1996.
Change of Control of Oechsle International Advisors, L.P.
On June 29, 1998, the Trustees appointed Oechsle International Advisors,
LLC ("Oechsle LLC") pursuant to a new subadvisory agreement (the "Oechsle LLC
Subadvisory Agreement") to manage the Global Government Bond Trust. The Oechsle
LLC Subadvisory Agreement was approved by the Trustees, including a majority of
the Trustees who are not parties to the agreement or interested persons of any
party to such agreement, on June 29, 1998, effective upon the reorganized and
recapitalized Oechsle International Advisors, L.P. which occurred on October 8,
1998. Oechsle International Ad visors, L.P. previously managed the Global
Government Bond Trust pursuant to a Subadvisory Agreement dated January 1, 1996.
Resignation of Certain Subadvisers Effective May 1, 1999
Effective May 1, 1999, the following subadvisers have resigned from
managing the portfolios indicated:
Fidelity Management Trust Company Conservative Asset Allocation Trust
Fidelity Management Trust Company Moderate Asset Allocation Trust
Founders Asset Management LLC Growth Trust
Founders Asset Management LLC Worldwide Trust
J.P. Morgan Investment Management Inc. International Growth and Income Trust
Manufacturers Advisers Corporation Capital Growth Bond Trust
Oechsle International Advisors, L.P. Global Government Bond Trust
Pilgrim Baxter & Associates, Ltd. Pilgrim Baxter Growth Trust
Warburg Pincus Asset Management Emerging Small Company Trust
New Subadvisers to Manage Certain Portfolios Effective May 1, 1999
On January 29, 1999, the Trustees made the following appointments:
A I M Capital Management, Inc. was appointed to manage:
* Mid Cap Growth Trust (formerly, the Small/Mid Cap Trust),
* the Aggressive Growth Trust (formerly, the Pilgrim Baxter Growth Trust)
Capital Guardian Trust Company was appointed to manage the following portfolios:
* Small Company Blend Trust
* U.S. Large Cap Value Trust
* Income & Value Trust (formerly the Moderate Asset Allocation Trust)
* Diversified Bond Trust (formerly the Conservative Asset Allocation Trust)
Fidelity Management Trust Company was appointed to manage:
* Large Cap Growth (formerly, the Aggressive Automatic Asset Allocation
Trust)
* Overseas Trust (formerly, the International Growth and Income Trust)
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<PAGE> 174
Franklin Advisers, Inc. was appointed to manage:
* Emerging Small Company Trust
Pacific Investment Management Company (PIMCO) was appointed to manage:
* Global Bond Trust (formerly, the Global Government Bond Trust)
* Total Return Trust
State Street Global Advisors was appointed to manage the Growth Trust.
Templeton Investment Counsel, Inc. was appointed to manage the International
Value Trust.
Wellington Management Company was appointed to manage the Mid-Cap Stock Trust.
THE ADVISORY AGREEMENT
Duties of the Adviser and Expenses Paid by the Adviser. Under the terms of
the Advisory Agreement, the Adviser administers the business and affairs of the
Trust. The Adviser is responsible for performing or paying for various
administrative services for the Trust, including providing at the Adviser's
expense:
* office space and all necessary office facilities and equipment, and
* individuals who are directors, officers or employees of the Adviser to
serve (if duly elected or appointed) as Trustees, President, Treasurer or
Secretary of the Trust, without remuneration from or other cost to the
Trust.
The Adviser shall, at the Trust's expense, perform all administrative,
compliance, financial, accounting, bookkeeping and recordkeeping functions,
except for those functions that may be performed by a third party pursuant to a
custodian, transfer agency or service agreement executed by the Trust. The
Adviser shall also furnish to the Trust, at the Trust's expense, any personnel
necessary for these functions.
The Adviser pays the cost of any advertising or sales literature relating
solely to the Trust, 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 to providing the services described above, the Adviser selects,
contracts with, and compensates subadvisers to manage the investment and
reinvestment of the assets of the Trust portfolios. The Adviser monitors the
compliance of such subadvisers with the investment objectives and related
policies of each portfolio, and reviews the performance of such subadvisers and
reports periodically on such performance to the Trustees of the Trust.
Expense Reimbursement. Advisory fees are reduced or the Adviser 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 the annual rate
specified below of the average annual net asset of the portfolio:
.15% in the case of the Equity Index Trust,
.75% in the case of the International Small Cap, Global Equity, Global Bond,
Foreign, Worldwide Growth, Overseas, International Stock and Pacific Rim
Emerging Markets Trusts,
0% in the case of the Lifestyle portfolios (other than the expenses of the
Underlying Trusts), and
.50% in the case of all other portfolios.
The expense limitation will continue in effect from year to year unless
otherwise terminated by the Adviser upon notice to the Trust. These voluntary
expense reimbursement may be terminated at any time.
Adviser Compensation. As compensation for its services, the Adviser
receives a fee from the Trust 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 such portfolio. The fee, which is accrued and paid daily, is
calculated for each day by multiplying the daily equivalent of the annual
percentage prescribed for a portfolio by the value of its net assets at the
close of business on the previous business
36
<PAGE> 175
day of the Trust. The management fees
each portfolio currently is obligated to pay the Adviser is as set forth in the
Prospectus. No management fees are currently payable by the Lifestyle Trusts.
For the years ended December 31, 1998, 1997 and 1996 the aggregate
investment advisory fee paid by the Trust under the fee schedule then in effect,
absent the expense limitation provision, was $94,037,629, $70,536,995 and
$46,515,018 allocated among the portfolios as follows:
<TABLE>
<CAPTION>
PORTFOLIO 1998 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets Trust ..... $ 214,432 $ 229,135 N/A
Science & Technology Trust ............. 1,171,088 369,324 N/A
International Small Cap Trust .......... 1,567,227 1,347,708 $ 492,152(1)
Aggressive Growth Trust ................ 1,216,141 502,149 N/A
Emerging Small Company Trust ........... 2,937,353 2,331,739 N/A
Mid Cap Growth Trust ................... 3,144,346 2,145,327 756,997(1)
Overseas Trust ......................... 2,086,991 1,965,899 1,327,151
International Stock Trust .............. 2,019,937 860,656 N/A
Mid Cap Blend Trust .................... 11,504,927 10,703,211 8,774,975
Small Company Value Trust .............. 1,218,609 134,688(2) N/A
Global Equity Trust .................... 8,256,515 7,256,254 6,234,116
Growth Trust ........................... 1,930,442 935,029 119,620(3)
Large Cap Growth Trust ................. 1,874,673 1,766,662 1,656,217
Quantitative Equity Trust .............. 1,431,591 913,996 N/A
Blue Chip Growth Trust ................. 7,964,796 5,156,008 3,317,165
Real Estate Securities Trust ........... 1,157,366 831,191 N/A
Value Trust ............................ 1,695,347 523,446 N/A
Equity Index Trust ..................... 106,755 42,212 N/A
Growth & Income Trust .................. 14,353,269 10,037,637 6,298,799
Equity-Income Trust .................... 8,121,714 6,141,959 3,939,929
Income & Value Trust ................... 4,585,154 4,584,121 4,764,110
Balanced Trust ......................... 1,699,575 1,261,070 N/A
High Yield Trust ....................... 1,160,631 314,373 N/A
Strategic Bond Trust ................... 3,178,026 2,240,478 1,298,996
Global Bond Trust ..................... 1,632,065 1,837,451 1,934,856
Investment Quality Bond Trust .......... 1,610,817 1,047,782 965,766
Diversified Bond Trust ................. 1,473,082 1,521,047 1,643,494
U.S. Government Securities Trust ....... 1,952,935 1,401,568 1,401,130
Money Market Trust ..................... 2,771,825 2,134,875 1,589,545
Lifestyle Aggressive 1000 Trust ........ N/A N/A N/A
Lifestyle Growth 820 Trust ............. N/A N/A N/A
Lifestyle Balanced 640 Trust ........... N/A N/A N/A
Lifestyle Moderate 460 Trust ........... N/A N/A N/A
Lifestyle Conservative 280 Trust ....... N/A N/A N/A
</TABLE>
1 For the period March 4, 1996 (commencement of operations) to December 31,
1996.
2 For the period October 1, 1997 (commencement of operations) to December 31,
1997.
3 For the period July 15, 1996 (commencement of operations) to December 31,
1996.
Prior to January 1, 1997, the predecessor to the Trust, Manulife Series Fund,
Inc., had a direct investment advisory arrangement with MAC on behalf of the
Pacific Rim Emerging Markets, Quantitative Equity, Equity Index and Real Estate
Securities Trusts. As of that date, the existing investment advisory agreement
was replaced by a subadvisory arrangement between MAC and MSS whereby MAC serves
as subadviser to the portfolios.
37
<PAGE> 176
For the year ended December 31, 1996, the aggregate investment advisory fee
paid by the portfolios below to MAC under the fee schedule then in effect was as
follows:
PORTFOLIO 1996
- ---------------------------------------------------------------
Pacific Rim Emerging Markets Trust.................. $161,272
Quantitative Equity Trust........................... 380,315
Equity Index Trust.................................. 11,227
Real Estate Securities Trust........................ 292,384
THE SUBADVISORY AGREEMENTS
Duties of the Subadvisers. Under the terms of each of the current
subadvisory agreements, including the SBAM Limited Consulting Agreement
(collectively "Subadvisory Agreements"), the Subadviser manages the investment
and reinvestment of the assets of the assigned portfolios, subject to the
supervision of the Trust's Trustees. The Subadviser formulates a continuous
investment program for each such portfolio consistent with its investment
objectives and policies outlined in the Prospectus. Each Subadviser implements
such programs by purchases and sales of securities and regularly reports to the
Adviser and the Trustees of the Trust with respect to the implementation of such
programs. Each Subadviser, 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 conduct of the investment
affairs of the assigned portfolios.
Subadvisory Fees. As compensation for their services, the Subadvisers
receive fees from the Adviser 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 the portfolio. The fees are calculated on the basis of the average
of all valuations of net assets of each 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, in
the case of certain portfolios, the fee is reduced with respect to such excess.
The schedule of the management fees the Adviser currently is obligated to pay
the Subadvisers out of the advisory fee it receives from each portfolio is as
set forth in the Prospectus.
SBAM Limited Subadvisory Consulting Agreement. The Prospectus refers to a
subadvisory consulting agreement between SBAM and SBAM Limited which is subject
to certain conditions as set forth in the Prospectus. Under that agreement SBAM
Limited provides certain investment advisory services to SBAM relating to
currency transactions and investments in non-dollar denominated debt securities
for the benefit of the Strategic Bond Trust.
OWNERSHIP OF SBAM LIMITED. SBAM Limited is a wholly owned subsidiary
of Salomon Brothers Europe Limited ("SBEL"). Salomon (International) Finance AG
("SIF") owns 100% of SBEL's Convertible Redeemable Preference Shares and 36.8%
of SBEL's Ordinary Shares, while the remaining 63.2% of SBEL's Ordinary Shares
are owned by Salomon Brothers Holding Company Inc. ("SBH"). SIF is wholly owned
by SBH, which is, in turn, a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc.
FEE PAID TO SBAM LIMITED. SBAM pays SBAM Limited, as full compensation
for all services provided under the subadvisory consulting agreement, a portion
of its subadvisory fee. The amount paid to SBAM Limited is equal to the fee
payable under SBAM's subadvisory agreement multiplied by the current value of
the net assets of the portion of the assets of the Strategic Bond Trust that
SBAM Limited has been delegated to manage divided by the current value of the
net assets of the portfolio. The Trust will not incur any expenses in connection
with SBAM Limited's services.
Amount of Subadvisory Fees Paid. For the years ended December 31, 1998,
1997 and 1996, the Adviser paid aggregate subadvisory fees of $34,400,662,
$26,185,717 and $15,882,911, respectively, allocated among the portfolios as
follows:
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<PAGE> 177
<TABLE>
<CAPTION>
PORTFOLIO 1998 1997 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets Trust $ 100,909 $ 107,828 N/A
Science & Technology Trust ....... 638,775 201,450 N/A
International Small Cap Trust .... 880,024 760,136 $ 284,403(1)
Aggressive Growth Trust .......... 694,939 286,942 N/A
Emerging Small Company Trust ..... 1,538,613 1,221,387 N/A
Mid Cap Growth Trust ............. 1,556,064 1,078,894 385,464(1)
Overseas Trust ................... 1,003,054 951,446 653,719
International Stock Trust ........ 1,041,875 487,128 N/A
Mid Cap Blend Trust .............. 3,567,981 3,354,190 2,256,365
Small Company Value Trust ........ 679,834 76,634(2) N/A
Global Equity Trust .............. 3,406,519 3,045,314 2,677,373
Growth Trust ..................... 991,056 495,015 63,328(3)
Large Cap Growth Trust ........... 874,869 831,665 622,181
Quantitative Equity Trust ........ 480,575 318,784 N/A
Blue Chip Growth Trust ........... 3,298,442 2,298,963 1,452,025
Real Estate Securities Trust ..... 397,010 292,169 N/A
Value Trust ...................... 666,493 233,286 N/A
Equity-Index Trust ............... 42,702 16,885 N/A
Growth and Income Trust .......... 3,370,654 2,507,394 1,761,319
Equity-Income Trust .............. 2,280,428 1,785,490 1,235,667
Income & Value Trust ............. 1,722,708 1,722,433 1,454,194
Balanced Trust ................... 707,971 537,310 N/A
High Yield Trust ................. 474,278 138,181 N/A
Strategic Bond Trust ............. 1,150,170 847,735 527,906
Global Bond Trust ................ 723,763 801,544 845,379
Investment Quality Bond Trust .... 521,489 362,694 334,303
Diversified Trust ................ 613,727 631,791 618,391
U.S. Government Securities Trust . 600,677 473,424 473,786
Money Market Trust ............... 375,063 319,605 237,108
Lifestyle Aggressive 1000 Trust .. N/A N/A N/A
Lifestyle Growth 820 Trust ....... N/A N/A N/A
Lifestyle Balanced 640 Trust ..... N/A N/A N/A
Lifestyle Moderate 460 Trust ..... N/A N/A N/A
Lifestyle Conservative 280 Trust . N/A N/A N/A
</TABLE>
1 For the period March 4, 1996 (commencement of operations) to December 31,
1996.
2 For the period October 1, 1997 (commencement of operations) to December 31,
1997.
3 For the period July 15, 1996 (commencement of operations) to December 31,
1996.
Of this amount, $287,543 was paid by SBAM to SBAM Limited under the Subadvisory
Consulting Agreement.
Of this amount, $211,934 was paid by SBAM to SBAM Limited under the
Subadvisory Consulting Agreement
Of this amount, $131,977 was paid by SBAM to SBAM Limited under the
Subadvisory Consulting Agreement.
INFORMATION APPLICABLE TO BOTH THE ADVISORY AGREEMENT AND THE SUBADVISORY
AGREEMENTS
Expenses Paid by the Trust. Subject to the expense limitations discussed
above, the Trust is responsible for the payment of all expenses of its
organization, operations and business, except those that the Adviser or
Subadvisers have agreed to pay pursuant to the Advisory or Subadvisory
Agreements. Expenses borne by the Trust include:
* reimbursement of the Adviser's expense of providing administrative,
compliance, financial, accounting, bookkeeping and recordkeeping functions
to the Trust,
* charges and expenses of the custodian, independent accountants and
transfer, bookkeeping and dividend disbursing agent appointed by the Trust;
* brokers' commissions;
* issue and transfer taxes on securities transactions to which the Trust is a
party;
* taxes and fees payable by the Trust; and
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<PAGE> 178
* legal fees and expenses in connection with the affairs of the Trust,
including registering and qualifying its shares with regulatory authorities
and in connection with any litigation; and
* costs for printing annual and semi annual reports, prospectuses and proxy
statements and mailing these documents to shareholders (including holders
of variable contracts funded by Trust shares).
Term of the Advisory Agreement and Each Subadvisory Agreement. The Advisory
Agreement and each Subadvisory Agreement will initially continue in effect as to
a portfolio for a period no more than two years from the date of its execution
(or the execution of an amendment making the agreement applicable to that
portfolio)and thereafter if such continuance is specifically approved at least
annually either (a) by the Trustees or (b) by the vote of a majority of the
outstanding voting securities of the Trust. In either event, such continuance
shall also be approved by the vote of the majority of the Trustees who are not
interested persons of any party to the Agreements.
Any required shareholder approval of any continuance of any of the
Agreements shall be effective with respect to any portfolio if a majority of the
outstanding voting securities of that portfolio vote to approve such continuance
even if such 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 of the portfolios of the Trust.
Failure of Shareholders to Approve Continuance of the Advisory Agreement.
If the outstanding voting securities of any portfolio fail to approve any
continuance of the Advisory Agreement, the Adviser may continue to act as
investment adviser or subadviser with respect to such portfolio pending the
required approval of the continuance of such Agreement or a new agreement with
either the Adviser or a different advise, or other definitive action. In the
case of the Adviser, the compensation received during such period will be no
more than (a) its actual costs incurred in furnishing investment advisory and
management services to such portfolio or (b) the amount it would have received
under the Advisory Agreement in respect of such portfolio, whichever is less.
Termination of the Agreements. The Advisory Agreement and the Subadvisory
Agreements 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 Agreements, and
also to the Trust in the case of the Subadvisory Agreements. The following
parties may terminate the agreements:
* the Trustees of the Trust;
* a majority of the outstanding voting securities of the Trust, or with
respect to any portfolio, a majority of the outstanding voting securities
of such portfolio;
* the Adviser,
* in the case of the Subadvisory Agreements, by the respective Subadviser.
The Agreements will automatically terminate in the event of their assignment.
Amendments to the Agreements. The Advisory Agreement and the Subadvisory
Agreements may be amended by the parties to the agreement provided the amendment
is approved by the vote of a majority of the outstanding voting securities of
the Trust (except as noted below) and by the vote of a majority of the Trustees
of the Trust who are not interested persons of the Trust, the Adviser or the
applicable Subadviser (including SBAM Limited).
The required shareholder approval of any amendment shall be effective with
respect to any portfolio if a majority of the outstanding voting securities of
that portfolio vote to approve the amendment, even if 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.
As noted under "Subadvisory Arrangements" in the Prospectus, the Trust has
received an order from the SEC permitting the Adviser to appoint a subadviser
(other than an Affiliated Subadviser) or change a subadvisory fee or otherwise
amendment a subadvisory agreement (other than for an Affiliated Subadviser)
pursuant to an agreement that is not approved by shareholders.
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
40
<PAGE> 179
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 or
dealers to implement 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 and dealers, the
Subadvisers will give consideration to the value and quality of any research,
statistical, quotation or valuation services provided by the broker or dealer to
the Subadviser. 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 portion 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.
Brokerage and research services provided by brokers and dealers include
advice, either directly or through publications 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, political and legal 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 analyst. 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, such services
would tend to reduce such party's 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 or dealers executing
transactions for portfolios of the Trust will also be available 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-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-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.
Allocation of Trades by the Subadvisers. The Subadvisers manage a number of
accounts other than the Trust's portfolios. Although investment determinations
for the Trust's portfolios will be made by the Subadvisers independently from
the investment determinations made by them for any other account, investments
deemed appropriate for the Trust's portfolios
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<PAGE> 180
by the Subadvisers may also be deemed appropriate by them for other accounts.
Therefore, the same security may be purchased or sold at or about the same time
for both the Trust's portfolios and other accounts. In such circumstances, the
Subadvisers may determine that orders for the purchase or sale of the same
security for the Trust's portfolios and one or more other accounts should be
combined. In this event the transactions will be priced and allocated in a
manner deemed by the Subadvisers to be equitable and in the best interests of
the Trust portfolios and such other accounts. While in some instances combined
orders could adversely affect the price or volume of a security, the Trust
believes that its participation in such transactions on balance will produce
better overall results for the Trust.
Brokerage Commissions Paid. For the years ended December 31, 1998, 1997 and
1996, the Trust paid brokerage commissions in connection with portfolio
transactions of $11,980,539, $14,209,750 and $13,006,480, respectively,
allocated among the portfolios as follows:
<TABLE>
<CAPTION>
PORTFOLIO 1998 1997 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets Trust.................. $ 106,176 $ 148,339 N/A
Science & Technology Trust.......................... 130,494 71,708 N/A
International Small Cap Trust....................... 258,535 420,472 $ 349,8691
Aggressive Growth Trust............................. 238,538 73,688 N/A
Emerging Small Company Trust........................ 369,979 490,019 N/A
Mid Cap Growth Trust................................ 1,033,940 645,611 237,7771
Overseas Trust...................................... 837,199 700,640 871,203
International Stock Trust........................... 260,776 424,132 N/A
Mid Cap Blend Trust................................. 2,738,492 5,018,862 4,407,265
Small Company Value Trust........................... 501,974 111,6732 N/A
Global Equity Trust................................. 532,673 1,147,235 2,398,805
Growth Trust........................................ 573,019 352,035 110,5103
Large Cap Growth Trust.............................. 109,827 214,279 177,940
Quantitative Equity Trust........................... 627,626 307,370 N/A
Blue Chip Growth Trust.............................. 626,069 449,346 966,411
Real Estate Securities Trust........................ 586,437 736,968 N/A
Value Trust......................................... 387,203 210,067 N/A
Equity-Index Trust.................................. 4,150 266 N/A
Growth & Income Trust............................... 851,452 1,129,311 1,084,722
Equity-Income Trust................................. 433,416 472,154 2,021,601
Income & Value Trust................................ 194,852 366,800 320,288
Balanced Trust...................................... 549,826 588,464 N/A
High Yield Trust.................................... N/A N/A N/A
Strategic Bond Trust................................ N/A N/A N/A
Global Bond Trust................................... N/A N/A N/A
Investment Quality Bond Trust....................... N/A N/A N/A
Diversified Bond Trust.............................. 27,886 56,949 60,089
U.S. Government Securities Trust.................... N/A N/A N/A
Money Market Trust.................................. N/A N/A N/A
Lifestyle Aggressive 1000 Trust..................... N/A N/A N/A
Lifestyle Growth 820 Trust.......................... N/A N/A N/A
Lifestyle Balanced 640 Trust........................ N/A N/A N/A
Lifestyle Moderate 460 Trust........................ N/A N/A N/A
Lifestyle Conservative 280 Trust.................... N/A N/A N/A
</TABLE>
1 For the period March 4, 1996 (commencement of operations) to December 31,
1996.
2 For the period October 1, 1997 (commencement of operations) to December 31,
1997.
3 For the period July 15, 1996 (commencement of operations) to December 31,
1996.
Brokerage Commissions Paid to Affiliated Brokers
The following brokers are affiliated brokers of the listed portfolios:
42
<PAGE> 181
<TABLE>
<CAPTION>
Broker Portfolio Explanation
- ------ --------- -----------
<S> <C> <C>
Goldman Sachs & Co. Equity-Income Trust (prior to Affiliated broker due to the position of Goldman
October 1, 1996) Sachs Asset Management as subadviser to the
portfolio. Goldman Sachs resigned as subadviser to
the portfolio on October 1, 1996.
Salomon Brothers Inc. U.S. Government Securities Affiliated broker due to the position of SBAM as
Strategic Bond Trust subadviser to these portfolios.
J.P. Morgan Securities Inc. Overseas (formerly,International Affiliated brokers due to the position of J. P.
J.P. Morgan Securities Ltd. Growth and Income Trust) Morgan as subadviser to this portfolio. J.P.
Morgan resigned as subadviser to this portfolio on
May 1, 1999.
Dresdner Bank Global EquityTrust (prior to Affiliated broker due to the position of Oechsle
October 1,1996) Global Bond International as subadviser to these portfolios.
Trust formerly, Global Oechsle International resigned as subadviser to
Government Bond Trust) the Global Equity Trust on October 1, 1996 and as
subadviser to the Global Bond Trust on May 1,
1999.
Fidelity Capital Markets Mid Cap Blend (formerly, the Affiliated broker due to the position of Fidelity
Equity Trust) Management Trust Company ("FMTC") as subadviser to
Diversified Bond Trust these portfolios. FMTC resigned as subadviser to
(formerly, the Conservative the Income & Value Trust and the Diversified Bond
Asset Allocation Trust) Trust on May 1, 1999.
Income & Value Trust (formerly,
the Moderate Asset Allocation
Trust)
Large Cap Growth Trust
(formerly, the Aggressive Asset
Allocation Trust)
Morgan Stanley & Co. Incorporated Global Equity Trust, Affiliated broker due to the position of Morgan
Morgan Stanley International Value Trust, Stanley as subadviser to the the Global Equity
Dean Witter Reynolds High Yield Trust Trust and the position of Miller Anderson &
Sherrerd, LLP as subadviser to the Value Trust and
the High Yield Trust. Morgan Stanley has been the
subadviser to this Global Equity Trust since
October 1, 1996 and Miller Anderson & Sherrerd,
LLC has been the subadviser to the Value Trust and
the High Yield Trust since September 27, 1996.
Fred Alger & Company Incorporated Mid Cap Growth (formerly, the Affiliated broker due to the position of Fred
Small/Mid Cap Trust) Alger Management, Inc. as the subadviser to Trust.
Effective May 1, 1999, Fred Alger Management ceased to
Manage the Mid Cap Growth Portfolio
Robert Fleming International Stock Trust Affiliated brokers due to the position of Rowe
Ord Minnet Price-Fleming International, Inc. as the
subadviser to the International Stock
State Street Brokerage Services, Growth Trust Affiliated broker due to the position of State
Inc. Street Global Advisors as the subadviser to the
Large Cap Growth Trust
</TABLE>
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<PAGE> 182
COMMISSIONS PAID TO GOLDMAN, SACHS & CO.
For the period January 1, 1996 to September 30, 1996,
brokerage commissions were paid to GOLDMAN, SACHS & CO. by the Equity-Income
Trust as follows:
PERIOD ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Equity-Income Trust................................. $75,615 3.74% 0.01%
</TABLE>
COMMISSION PAID TO SALOMON BROTHERS INC.
For the years ended December 31, 1998, 1997 and 1996, no brokerage commissions
were paid to SALOMON BROTHERS INC. by either the U.S. Government Securities
Trust or Strategic Bond Trust.
COMMISSION PAID TO J.P. MORGAN SECURITIES
For the years ended December 31, 1998, 1997 and 1996, brokerage commissions were
paid to J.P. MORGAN SECURITIES by the Overseas Trust as follows:
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Overseas Trust...................................... N/A N/A N/A
</TABLE>
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Overseas Trust...................................... $516 0.07% 0.34%
</TABLE>
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Overseas Trust...................................... N/A N/A N/A
</TABLE>
COMMISSIONS PAID TO DRESDNER BANK
For the years ended December 31, 1998, 1997 and 1996, no brokerage
commissions were paid to DRESDNER BANK by either the Global Equity (prior to
October 1, 1996) or the Global Bond Trusts.
For the years ended December 31, 1998, 1997 and 1996, brokerage
commissions were paid to FIDELITY CAPITAL MARKETS by the Equity Trust, the Large
Cap Growth Trust, the Income & Value Trust and the Diversified Bond Trust as
follows:
44
<PAGE> 183
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Mid Cap Blend Trust................................. N/A N/A N/A
Large Cap Growth Trust.............................. N/A N/A N/A
Income & Value Trust................................ N/A N/A N/A
Diversified Bond Trust.............................. N/A N/A N/A
</TABLE>
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Mid Cap Blend Trust................................. $13,286 0.26% 0.08%
Large Cap Growth Trust.............................. N/A N/A N/A
Income & ValueTrust................................. N/A N/A N/A
Diversified Bond Trust.............................. N/A N/A N/A
</TABLE>
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Equity Trust........................................ N/A N/A N/A
Large Cap Growth Trust.............................. N/A N/A N/A
Income & Value Trust................................ N/A N/A N/A
Diversified Bond Trust.............................. N/A N/A N/A
</TABLE>
COMMISSIONS PAID TO MORGAN STANLEY & CO. INCORPORATED
For the years ended December 31, 1998, 1997 and 1996,
brokerage commissions were paid to MORGAN STANLEY & CO. INCORPORATED by the
Global Equity Trust, the Value Trust and the High Yield Trust as follows:
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Global Equity Trust................................. $91,860 .17% .03%
Value Trust......................................... N/A N/A N/A
High Yield Trust.................................... N/A N/A N/A
</TABLE>
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Global Equity Trust................................. $92,873 8.10% 0.28%
Value Trust......................................... N/A N/A N/A
High Yield Trust.................................... N/A N/A N/A
</TABLE>
45
<PAGE> 184
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Global Equity Trust................................. $487,347 20.32% 0.02%
Value Trust......................................... N/A N/A N/A
High Yield Trust.................................... N/A N/A N/A
</TABLE>
COMMISSIONS PAID TO MORGAN STANLEY INTERNATIONAL
For the years ended December 31, 1998, 1997 and 1996,
brokerage commissions were paid to MORGAN STANLEY INTERNATIONAL by the Global
Equity Trust, the Value Trust and the High Yield Trust as follows:
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Global Equity Trust................................. N/A N/A N/A
Value Trust......................................... N/A N/A N/A
High Yield Trust.................................... N/A N/A N/A
</TABLE>
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Global Equity Trust................................. $711 0.06% 0.00%
Value Trust......................................... N/A N/A N/A
High Yield Trust.................................... N/A N/A N/A
</TABLE>
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Global Equity Trust................................. N/A N/A N/A
Value Trust......................................... N/A N/A N/A
High Yield Trust.................................... N/A N/A N/A
</TABLE>
COMMISSIONS PAID TO DEAN WITTER REYNOLDS
For the years ended December 31, 1998, 1997 and 1996,
brokerage commissions were paid to DEAN WITTER REYNOLDS by the Global Equity
Trust, the Value Trust and the High Yield Trust as follows:
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Global Equity Trust................................. N/A N/A N/A
Value Trust......................................... N/A N/A N/A
High Yield Trust.................................... N/A N/A N/A
</TABLE>
46
<PAGE> 185
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Global Equity Trust................................. N/A N/A N/A
Value Trust......................................... N/A N/A N/A
High Yield Trust.................................... N/A N/A N/A
</TABLE>
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Global Equity Trust................................. N/A N/A N/A
Value Trust......................................... N/A N/A N/A
High Yield Trust.................................... N/A N/A N/A
</TABLE>
COMMISSIONS PAID TO FRED ALGER & COMPANY INCORPORATED
For the years ended December 31,1998 and 1997 and the period March 4,
1996 (commencement of operations of the Mid Cap Growth Trust) to December 31,
1996, brokerage commissions were paid to FRED ALGER & COMPANY INCORPORATED as
follows:
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Mid Cap Growth Trust................................ $1,029,644 99.58% .05%
</TABLE>
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Mid Cap Growth Trust................................ $637,395 98.73% 0.19%
</TABLE>
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
Mid Cap Growth Trust................................ $221,408 93.12% 0.02%
</TABLE>
47
<PAGE> 186
COMMISSIONS PAID TO ROBERT FLEMING
For the years ended December 31, 1998 and 1997 brokerage commissions were paid
to ROBERT FLEMING as follows:
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
International Stock Trust........................... $8,658 3.32% .01%
</TABLE>
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
International Stock Trust........................... $4,839 1.14% 0%
</TABLE>
COMMISSIONS PAID TO ORD MINNET
For the years ended December 31, 1998 and 1997 brokerage commissions were paid
to ORD MINNET as follows:
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
International Stock Trust........................... $415 .16% 0%
</TABLE>
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
<S> <C> <C> <C>
International Stock Trust........................... $1,655 0.39% 0%
</TABLE>
PURCHASE AND REDEMPTION OF SHARES
The Trust will redeem all full and fractional portfolio shares for
cash at the net asset value per share of each portfolio. Payment for shares
redeemed will generally be made within seven days after receipt of a proper
notice of redemption. However, the Trust may suspend the right of redemption or
postpone the date of payment beyond seven days during any period when:
* trading on the New York Stock Exchange is restricted, as determined by the
SEC, or such Exchange is closed for other than weekends and holidays;
* an emergency exists, as determined by the SEC, as a result of which
disposal by the Trust of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Trust fairly to
determine the value of its net assets; or
* the SEC by order so permits for the protection of security holders of the
Trust.
48
<PAGE> 187
DETERMINATION OF NET ASSET VALUE
The following supplements the discussion of the valuation of portfolio
assets set forth in the Prospectus under "Purchase and Redemption of Shares."
Except for the types of securities described below, securities held by
the portfolios will be valued as follows:
* Securities which are traded on stock exchanges (including securities
traded in both the over-the-counter market and on an exchange) are valued
at the last sales price as of the close of the regularly scheduled trading
of the New York Stock Exchange on the day the securities are being valued,
or, lacking any sales, at the closing bid prices.
* Securities traded only in the over-the-counter market are valued at the
last bid prices quoted by brokers that make markets in the securities at
the close of trading on the New York Stock Exchange.
* Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by the
Trustees or their designee.
* Shares of the Underlying Portfolios held by the Lifestyle Trusts are
valued at their net asset value as described in the Prospectus under
"Purchase and Redemption of Shares."
Non-Negotiable Security. A non-negotiable security not treated as an
illiquid security because it may be redeemed with the issuer, subject to a
penalty for early redemption, shall be assigned a value that takes into account
the reduced amount that would be received if it were currently liquidated.
Debt Instruments with Remaining Maturities of 60 Days or less; All
Instruments Held by the Money Market Trust. Debt instruments with a remaining
maturity of 60 days or less held by each of the portfolios, other than the Money
Market Trust, and all instruments held by the Money Market Trust, will be valued
on an amortized cost basis. Under this method of valuation, the instrument is
initially valued at cost (or in the case of instruments initially valued at
market value, at the market value on the day before its remaining maturity is
such that it qualifies for amortized cost valuation). After the initial
valuation, the Trust assumes a constant proportionate amortization in value
until maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price that
would be received upon sale of the instrument.
MONEY MARKET TRUST - RULE 2a-7. The Money Market Trust uses the
amortized cost valuation method in reliance upon Rule 2a-7 under the 1940 Act.
As required by this rule, the Money Market Trust will maintain a dollar weighted
average maturity of 90 days or less. In addition, the Money Market Trust is only
permitted to purchase securities that the Subadviser determines present minimal
credit risks and at the time of purchase are "eligible securities," as defined
by Rule 2a-7. Generally, eligible securities must be rated by a nationally
recognized statistical rating organization in one of the two highest rating
categories for short-term debt obligations or be of comparable quality. The
Money Market Trust will invest only in obligations that have remaining
maturities of 397 days or less.
The Trustees have established procedures designed to stabilize, to the
extent reasonably possible, the Money Market Trust's price per share as computed
for the purpose of sales and redemptions at $10.00. The procedures include a
direction to the Adviser to establish procedures that will allow for the
monitoring of the propriety of the continued use of amortized cost valuation to
maintain a constant net asset value of $10.00 per share. The procedures also
include a directive to the Adviser that requires that to determine net asset
value per share based upon available market quotations, the Money Market Trust
shall value weekly (a) all portfolio instruments for which market quotations are
readily available at market, and (b) all portfolio instruments for which market
quotations are not readily available or are not obtainable from a pricing
service, at their fair value as determined in good faith by the Trustees (the
actual calculations, however, may be made by persons acting pursuant to the
direction of the Trustees.) If the fair value of a security needs to be
determined, the Subadviser will provide determinations, in accordance with
procedures and methods established by the Trustees of the Trust, of the fair
value of securities held by the Money Market Trust.
In the event that the deviation from the amortized cost exceeds .50 of
1% or $.05 per share in net asset value, the Adviser shall promptly call a
special meeting of the Trustees to determine what, if any, action should be
initiated. Where the Trustees believe the extent of any deviation from the Money
Market Trust's amortized cost price per share may result in material dilution or
other unfair results to investors or existing shareholders, they shall take the
action they deem appropriate to eliminate or reduce to the extent reasonably
practical such dilution or unfair results. The actions that may be taken by the
Trustees include, but are not limited to:
* redeeming shares in kind;
49
<PAGE> 188
* selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten the average portfolio maturity of the Money Market
Trust;
* withholding or reducing dividends;
* utilizing a net asset value per share based on available market quotations;
or
* investing all cash in instruments with a maturity on the next business day.
The Money Market Trust may also reduce the number of shares outstanding by
redeeming proportionately from shareholders, without the payment of any monetary
compensation, such number of full and fractional shares as is necessary to
maintain the net asset value at $10.00 per share. Any such redemption will be
treated as a negative dividend for purposes of the Net Investment Factor under
the contracts issued by Manulife North America, Manulife New York, Manufacturers
America and Manufacturers USA.
PERFORMANCE DATA
Each of the portfolios may quote total return figures in its
advertising and sales materials. The figures will always include the average
annual total return for recent one period and, when applicable, five and ten
year periods and where less than five or ten years, the period since the
portfolio became available for investment. In the case of the Pacific Rim
Emerging Markets, Real Estate Securities, Quantitative Equity and Equity Index
Trusts, such quotations will be for periods that include the performance of the
predecessor portfolios of Manulife Series Fund, Inc.
The average annual total return is the average annual compounded rate
of return that equates the initial amount invested to the market value of such
investment on the last day of the period for which such return is calculated.
For purposes of the calculation, it is assumed that an initial payment of $1,000
is made on the first day of the period for which the return is calculated and
that all dividends and distributions are reinvested at the net asset value on
the reinvestment dates during the period. All recurring fees, such as advisory
fees charged to the Trust, and all Trust expenses are reflected in the
calculations. There are no non-recurring fees, such as sales loads, surrender
charges or account fees, charged by the Trust. If the period since inception is
less than one year, the figures will be based on an aggregate total return
rather than an average annual total return.
TOTAL ANNUALIZED RETURN
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Trust Portfolio One Year Ended Five Years Ended Since Inception or 10 Years, Date first
12/31/98 12/31/98 whichever is shorter through Available
12/31/98
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets Trust# -4.61% N/A -7.22% 10/04/94
Science and Technology Trust 43.32% N/A 26.04% 01/01/97
International Small Cap Trust 11.86% N/A 7.65% 03/04/96
Aggressive Growth Trust 4.32% N/A 2.14% 01/01/97
Emerging Small Company Trust 0.07% N/A 8.80% 01/01/97
Mid Cap Growth 28.29% N/A 17.64% 03/04/96
Overseas Trust 7.95% N/A 6.81% 01/09/95
International Stock Trust 14.91% N/A 8.63% 01/01/97
Mid-Cap Blend 9.41% 17.36% 14.02% 06/18/85
Small Company Value Trust -4.72 N/A -7.28% 10/01/97
Global Equity Trust 12.24% 10.84% 10.69% 03/18/88
Growth Trust 23.95% N/A 24.59% 07/15/96
Large Cap Growth Trust 19.12% 14.34% 10.82% 08/03/89
Quantitative Equity Trust 26.35% 19.08% 16.74% 04/30/87
</TABLE>
50
<PAGE> 189
<TABLE>
<S> <C> <C> <C> <C>
Blue Chip Equity Trust 28.49% 19.86% 15.26% 12/11/92
Real Estate Securities Trust# -16.44% 8.33% 12.56%* 04/30/87
Value Trust -1.72% N/A 9.59% 01/01/97
Equity Index Trust# 28.56% N/A 26.59% 02/14/96
Growth & Income Trust 26.52% 22.36% 18.44% 04/23/91
Equity-Income Trust 9.21% 16.18% 16.05% 02/19/93
Balanced Trust 14.25% N/A 16.41% 01/01/97
High Yield Trust 2.78% N/A 7.64% 01/01/97
Strategic Bond Trust 1.31% 7.64% 8.02% 02/19/93
Global Bond Trust 7.61% 7.77% 9.29% 03/18/88
Investment Quality Bond Trust 8.73% 6.88% 5.91%* 06/18/85
Diversified Bond Trust 10.68% 8.88% 8.03% 08/03/89
U.S. Government Securities Trust 7.49% 6.59% 8.10% 03/18/88
Money Market Trust# 5.03% 4.94% 5.27%* 06/18/85
Lifestyle Aggressive 1000 Trust 4.86% N/A 7.91% 01/07/97
Lifestyle Growth 820 Trust 6.20% N/A 10.05% 01/07/97
Lifestyle Balanced 640 Trust 5.72% N/A 9.93% 01/07/97
Lifestyle Moderate 460 Trust 9.76% N/A 11.83% 01/07/97
Lifestyle Conservative 280 Trust 10.20% N/A 11.28% 01/07/97
</TABLE>
* 10 Years
#On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for these Trust portfolios is based upon the performance
of their respective predecessor Manulife Series Fund, Inc. portfolios for
periods prior to December 31, 1996.
The Trust may also from time to time include in advertising and sales
literature the following:
* information regarding its portfolio subadvisers, such as information
regarding a subadviser's specific investment expertise, client base, assets
under management or other relevant information;
* quotations about the Trust, its portfolios or its investment subadvisers
that appear in various publications and media; and
* general discussions of economic theories, including, but not limited to,
discussions of how demographics and political trends may effect future
financial markets, as well as market or other relevant information.
The Trust may also from time to time advertise the performance of
certain portfolios relative to that of unmanaged indices, including but not
limited to the:
* Dow Jones Industrial Average,
* Lehman Brothers Bond, Government Corporate, Corporate and Aggregate
Indices,
* S&P 500 Index,
* Value Line Composite, and
* Morgan Stanley Capital International Europe, Australia and Far East
("EAFE") and World Indices.
The Trust may also advertise the performance rankings assigned to
certain portfolios or their investment Subadvisers by various statistical
services, including but not limited to:
51
<PAGE> 190
* SEI,
* Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis and
Variable Insurance Products Performance Analysis,
* Variable Annuity Research and Data Service, Intersec Research Survey of
Non-U.S. Equity Fund Returns,
* Frank Russell International Universe, and
* any other data which may be presented from time to time by analysts such as
Dow Jones, Morning Star, Chase International Performance, Wilson
Associates, Stanger, CDA Investment Technology, the Consumer Price Index
("CPI"), The Bank Rate Monitor National Index, IBC/Donaghue's Average U.S.
Government and Agency, or as such data may appear in various publications,
including The Wall Street Journal, New York Times, Forbes, Barrons,
Fortune, Money Magazine, Financial World and Financial Services Week.
THE INSURANCE COMPANIES
The Trust currently serves as the underlying investment medium for
sums invested in variable contracts issued by:
* The Manufacturers Life Insurance Company of North America, ("Manulife North
America"), formerly North American Security Life Insurance Company, a
Delaware stock life insurance company controlled by Manulife Financial.
Manulife Financial is a mutual life insurance company located at 116
Huntington Avenue, Boston, MA 02108.
* The Manufacturers Life Insurance Company of New York ("Manulife New York"),
formerly First North American Life Assurance Company, a New York stock life
insurance company that is a wholly owned subsidiary of Manulife North
America. Manulife New York's corporate offices are located at Corporate
Center at Rye, 555 Theodore Fremd Avenue, Suite C-209, Rye New York
10580-9966.
* The Manufacturers Life Insurance Company of America ("Manufacturers
America"), a stock life insurance company organized under the laws of
Pennsylvania and redomesticated under the laws of Michigan. Manufactures
America is an indirect wholly owned subsidiary of Manulife Financial and is
located 200 Bloor Street in Toronto, Canada, M4W 1E5.
* The Manufacturers Life Insurance Company (U.S.A.) ("Manufacturers USA"), a
stock life insurance company organized under the laws of Pennsylvania and
redomesticiated under the laws of Michigan. Manufacturers USA is an
indirect wholly owned subsidiary of Manulife Financial and is 200 Bloor
Street in Toronto, Canada, M4W 1E5.
Currently, the four insurance companies described above are the only
shareholders of the Trust (excluding shares of certain portfolios of the Trust
which are held by the Lifestyle Portfolios) except in the case of the Growth and
Income Trust where Manulife North America owns Trust shares attributable to such
portfolio's initial capitalization. Each shareholder holds Trust shares
attributable to variable contracts in their separate accounts. The Trust may be
used for other purposes in the future, such as funding annuity contracts issued
by other insurance companies. Trust shares are not offered directly to, and may
not be purchased directly by members of the public. The paragraph below lists
the entities that are eligible to be shareholders of the Trust.
Entities Eligible to Be Shareholders of the Trust. In order to reflect
the conditions of Section 817(h) and other provisions of the Code and
regulations thereunder, the By-laws of the Trust provide that shares of the
Trust may be purchased only by the following eligible shareholders:
(a) separate accounts of Manulife North America or of other insurance
companies;
(b) Manulife North America;
(c) MSS;
(d) any corporation related in a manner specified in Section 267(b) of
the Code to Manulife North America or to MSS, and
(e) any trustee of a qualified pension or retirement plan.
As a matter of operating policy, shares of the Trust may be purchased only by
the eligible shareholders of categories (a), (b) and (d).
Voting of Shares by the Insurance Companies. 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 any Trust shareholders' meeting.
These companies will vote all shares of the portfolios of the Trust issued to
such companies in proportion to the timely voting instructions received from
owners of the contracts participating in separate accounts of such insurance
companies registered under the Investment Company Act of 1940. In addition, the
Trust will vote all shares of the portfolios of the Trust issued to Lifestyle
Trusts in proportion to such instructions.
52
<PAGE> 191
Mixed Variable Annuity and Variable Life Funding. Shares of the Trust
may be sold to both variable annuity separate accounts and variable life
insurance separate accounts of affiliated insurance companies. The Trust
currently does not foresee any disadvantages to the owners of variable annuity
or variable life insurance contracts arising from the fact that the interests of
those owners may differ. Nevertheless, the Trust's Board of Trustees will
monitor events in order to identify any material irreconcilable conflicts which
may possibly arise due to differences of tax treatment or other considerations
and to determine what action, if any, should be taken in response thereto. Such
an action could include the withdrawal of a separate account from participation
in the Trust.
HISTORY OF THE TRUST
Trust Name Change. Prior to October 1, 1997, the name of the Trust was
NASL Series Trust.
Merger of Manulife Series Fund, Inc. into the Trust. Effective
December 31, 1996, Manulife Series Fund, Inc., a registered management
investment company with nine portfolios, was merged into the Trust. The net
assets of four of the portfolios of Manulife Series Fund, Inc. were transferred
to comparable existing portfolios of the Trust, and the remaining five
portfolios -- the Pacific Rim Emerging Markets, Real Estate Securities, Common
Stock, Capital Growth and Equity Index Trusts were merged into newly created
portfolios of the Trust.
Prior Names of Portfolios.
Some of the names of the portfolios have been changed at various
times. The prior name of the portfolio and the date of the name change are set
forth below.
<TABLE>
<CAPTION>
EXISTING NAME PRIOR NAME DATE OF CHANGE
<S> <C> <C>
Emerging Small Company Emerging Growth November 1, 1998
Quantitative Equity Common Stock December 31, 1996
Equity -Income Value Equity December 31, 1996
Blue Chip Growth Pasadena Growth October 1, 1996
Large Cap Growth Aggressive Asset Allocation May 1, 1999
Income & Value Moderate Asset Allocation May 1, 1999
Diversified Bond Conservative Asset Allocation May 1, 1999
Foreign International Growth & Income May 1, 1999
Mid Cap Growth Small/Mid Cap May 1, 1999
Aggressive Growth Pilgrim Baxter Growth May 1, 1999
Global Bond Global Government Bond May 1, 1999
Mid-Cap Blend Equity May 1, 1999
</TABLE>
Organization of the Trust. The Trust was originally organized on
August 3, 1984 as "NASL Series Fund, Inc." (the "FUND"), a Maryland corporation.
Effective December 31, 1988, the Fund was reorganized as a Massachusetts
business trust. Pursuant to such reorganization, the Trust assumed all the
assets and liabilities of the Fund and carried on its business and operations
with the same investment management arrangements as were in effect for the Fund
at the time of the reorganization. The assets and liabilities of each of the
Fund's separate portfolios were assumed by the corresponding portfolios of the
Trust.
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ORGANIZATION OF THE TRUST
Classification. The Trust is a no-load, open-end management investment
company registered with the SEC under the 1940 Act. Each of the portfolios,
except the Global Bond Trust and the five Lifestyle Trusts, are diversified for
purposes of the 1940 Act.
Powers of the Trustees of the Trust. Under Massachusetts law and the
Trust's Declaration of Trust and By-Laws, the management of the business and
affairs of the Trust is the responsibility of its Trustees.
The Declaration of Trust authorizes the Trustees of the Trust without
shareholder approval to do the following:
* Issue an unlimited number of full and fractional shares of beneficial
interest having a par value of $.01 per share,
* Divide such shares into an unlimited number of series of shares and to
designate the relative rights and preferences thereof, and
* Issue additional series of shares or separate classes of existing series of
shares.
Shares of the Trust. The shares of each portfolio, when issued and
paid for, will be fully paid and non-assessable and will have no preemptive or
conversion rights. Shares of each portfolio have equal rights with regard to
redemptions, dividends, distributions and liquidations with respect to that
portfolio. Holders of shares of any portfolio are entitled to redeem their
shares as set forth under "Purchase and Redemption of Shares."
Each issued and outstanding share is entitled to participate equally
in dividends and distributions declared by the respective portfolio and upon
liquidation in the net assets of such portfolio remaining after satisfaction of
outstanding liabilities. For these purposes and for purposes of determining the
sale and redemption prices of shares, any assets that are not clearly allocable
to a particular portfolio will be allocated in the manner determined by the
Trustees. Accrued liabilities which are not clearly allocable to one or more
portfolios will also be allocated among the portfolios in the manner determined
by the Trustees.
Shareholder Voting. Shareholders of each portfolio of the Trust are
entitled to one vote for each full share held (and fractional votes for
fractional shares held) irrespective of the relative net asset values of the
shares of the portfolio. All shares entitled to vote are voted by series.
However, when voting for the election of Trustees and when otherwise permitted
by the 1940 Act, shares are voted in the aggregate and not by series. Only
shares of a particular portfolio are entitled to vote on matters determined by
the Trustees to affect only the interests of that portfolio. Pursuant to the
1940 Act and the rules and regulations thereunder, certain matters approved by a
vote of a majority of all the shareholders of the Trust may not be binding on a
portfolio whose shareholders have not approved such matter. There will normally
be no meetings of shareholders for the purpose of electing Trustees unless and
until less than a majority of the Trustees holding office has been elected by
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Holders of not less than
two-thirds of the outstanding shares of the Trust may remove a Trustee by a vote
cast in person or by proxy at a meeting called for such purpose. Shares of the
Trust do not have cumulative voting rights, which means that the holders of more
than 50% of the Trust's shares voting for the election of Trustees can elect all
of the Trustees if they so choose. In such event, the holders of the remaining
shares would not be able to elect any Trustees.
Shareholder Liability. Under Massachusetts law, shareholders of the
Trust could, under certain circumstances, be held personally liable for the
obligations of the Trust. However, the Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation,
or instrument entered into or executed by the Trustees or any officer of the
Trust. The Declaration of Trust also provides for indemnification out of the
property of a Trust portfolio for all losses and expenses of any shareholder
held personally liable for the obligations of such portfolio. In addition, the
Declaration of Trust provides that the Trust shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the Trust and satisfy any judgment thereon, but only out of the property of the
affected portfolio. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which a
particular portfolio would be unable to meet its obligations.
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ADDITIONAL INFORMATION CONCERNING TAXES
The following discussion is a general and abbreviated summary of
certain additional tax considerations affecting a portfolio and its
shareholders. No attempt is made to present a detailed explanation of all
Federal, state, local and foreign tax concerns, and the discussions set forth
here and in the Prospectus do not constitute tax advice. Investors are urged to
consult their own tax advisors with specific questions relating to Federal,
state and local or foreign taxes.
Since the portfolios' shareholders are the separate accounts of
insurance companies, no discussion is included herein as to the U.S. Federal
income tax consequences to the holder of a variable annuity or life insurance
contract who allocates investments to a portfolio. For information concerning
the U.S. Federal income tax consequences to such holders, see the prospectus for
such contract. Holders of variable annuity or life insurance contracts should
consult their tax advisors about the application of the provisions of the tax
law described in this Statement of Additional Information in light of their
particular tax situations.
The Trust believes that each portfolio will qualify as a regulated
investment company under Subchapter M of the Code. As a result of qualifying as
a regulated investment company, each portfolio will not be subject to U.S.
Federal income tax on its net investment income (i.e., its investment company
taxable income, as that term is defined in the Code, determined without regard
to the deduction for dividends paid) and net capital gain (i.e., the excess of
its net realized long-term capital gain over its net realized short-term capital
loss), if any, that it distributes to its shareholders in each taxable year,
provided that it distributes to its shareholders at least 90% of its net
investment income for such taxable year.
The Trust intends to take the steps necessary to qualify each
portfolio as a regulated investment company under Subchapter M of the Code and
believes that each portfolio will so qualify. As a result of qualifying as a
regulated investment company, each portfolio will not be subject to U.S. Federal
income tax on its net investment income (i.e., its investment company taxable
income, as that term is defined in the Code, determined without regard to the
deduction for dividends paid) and net capital gain (i.e., the excess of its net
realized long-term capital gain over its net realized short-term capital loss),
if any, that it distributes to its shareholders in each taxable year, provided
that it distributes to its shareholders at least 90% of its net investment
income for such taxable year.
If any portfolio of the Trust does not qualify as a regulated
investment company, it will be subject to U.S. Federal income tax on its net
investment income and net capital gains. A portfolio will be subject to a
non-deductible 4% excise tax to the extent that the portfolio does not
distribute by the end of each calendar year (a) at least 98% of its ordinary
income for the calendar year; (b) at least 98% of its capital gain net income
for the one-year period ending, as a general rule, on October 31 of each year;
and (c) 100% of the undistributed ordinary income and capital gain net income
from the preceding calendar years (if any) pursuant to the calculations in (a)
and (b). For this purpose, any income or gain retained by a portfolio that is
subject to corporate tax will be considered to have been distributed by
year-end. Each portfolio is subject to a nondeductible 4% excise tax calculated
as a percentage of certain undistributed amounts of ordinary income and capital
gain net income. To the extent possible, each portfolio intends to make
sufficient distributions to avoid the application of both corporate income and
excise taxes. Under current law, distributions of net investment income and net
capital gain are not taxed to a life insurance company to the extent applied to
increase the reserves for the company's variable annuity and life insurance
contracts.
To qualify as a regulated investment company, a portfolio must, among
other things, derive its income from certain sources. Specifically, in each
taxable year a portfolio must derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income (including, but not limited to, gains from options, futures or forward
contracts) derived with respect to its business of investing in stock,
securities or currencies.
To qualify as a regulated investment company, a portfolio must also
satisfy certain requirements with respect to the diversification of its assets.
A portfolio must have, at the close of each quarter of the taxable year, at
least 50% of the value of its total assets represented by cash, cash items,
United States Government securities, securities of other regulated investment
companies, and other securities which, in respect of any one issuer, do not
represent more than 5% of the value of the assets of the portfolio nor more than
10% of the voting securities of that issuer. In addition, at those times not
more than 25% of the value of the portfolio's assets may be invested in
securities (other than United States Government securities or the securities of
other regulated investment companies) of any one issuer, or of two or more
issuers which the portfolio controls and which are engaged in the same or
similar trades or businesses or related trades or businesses.
Because only insurance company separate accounts will own shares in
the portfolios, each insurance company separate account will be treated as
owning its proportionate share of the assets of any portfolio in which it
invests, provided that the portfolio qualifies as a regulated investment
company. Therefore, each portfolio intends to meet the additional
diversification
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requirements that are applicable to insurance company separate accounts under
Subchapter L of the Code. These requirements generally provide that no more than
55% of the value of the assets of a portfolio may be represented by any one
investment; no more than 70% by any two investments; no more than 80% by any
three investments; and no more than 90% by any four investments. For these
purposes, all securities of the same issuer are treated as a single investment
and each United States government agency or instrumentality is treated as a
separate issuer.
A portfolio may make investments that produce income that is not
matched by a corresponding cash distribution to the portfolio, such as
investments in pay-in-kind bonds or in obligations such as certain Brady Bonds
and zero-coupon securities having original issue discount (i.e., an amount in
excess of the stated redemption price of the security at maturity over its issue
price), or market discount (i.e., an amount equal to the excess of the stated
redemption price at maturity of the security over its basis immediately after it
was acquired) if the portfolio elects to accrue market discount on a current
basis. In addition, income may continue to accrue for Federal income tax
purposes with respect to a non-performing investment. Any such income would be
treated as income earned by a portfolio and therefore would be subject to the
distribution requirements of the Code. Because such income may not be matched by
a corresponding cash distribution to a portfolio, such portfolio may be required
to borrow money or dispose of other securities to be able to make distributions
to its investors. In addition, if an election is not made to currently accrue
market discount with respect to a market discount bond, all or a portion of any
deduction for any interest expense incurred to purchase or hold such bond may be
deferred until such bond is sold or otherwise disposed.
Certain of the portfolios may engage in hedging or derivatives
transactions involving foreign currencies, forward contracts, options and
futures contracts (including options, futures and forward contracts on foreign
currencies) and short- sales (see "HEDGING AND OTHER STRATEGIC TRANSACTIONS").
Such transactions will be subject to special provisions of the Code that, among
other things, may affect the character of gains and losses realized by a
portfolio (that is, may affect whether gains or losses are ordinary or capital),
accelerate recognition of income of a portfolio and defer recognition of certain
of the portfolio's losses. These rules could therefore affect the character,
amount and timing of distributions to shareholders. In addition, these
provisions (1) will require a portfolio to "mark-to-market" certain types of
positions in its portfolio (that is, treat them as if they were closed out) and
(2) may cause a portfolio to recognize income without receiving cash with which
to pay dividends or make distributions in amounts necessary to satisfy the
distribution requirement and avoid the 4% excise tax. Each portfolio intends to
monitor its transactions, will make the appropriate tax elections and will make
the appropriate entries in its books and records when it acquires any option,
futures contract, forward contract or hedged investment in order to mitigate the
effect of these rules.
Portfolios investing in foreign securities or currencies may be
required to pay withholding or other taxes to foreign governments. Foreign tax
withholding from dividends and interest, if any, is generally imposed at a rate
between 10% and 35%. If a portfolio purchases shares in a "passive foreign
investment company" (a "PFIC"), the portfolio may be subject to U.S. Federal
income tax on a portion of any "excess distribution" or gain from the
disposition of such shares even if such income is distributed as a taxable
dividend by the portfolio to its shareholders. Additional charges in the nature
of interest may be imposed on the portfolio in respect of deferred taxes arising
from such distributions or gains. If a portfolio were to invest in a PFIC and
elected to treat the PFIC as a "qualified electing fund" under the Code, in lieu
of the foregoing requirements, the portfolio would be required to include in
income each year a portion of the ordinary earnings and net capital gain of the
qualified electing fund, even if not distributed to the portfolio.
Alternatively, under recently enacted legislation, a portfolio can elect to
mark-to-market at the end of each taxable year its shares in a PFIC; in this
case, the portfolio would recognize as ordinary income any increase in the value
of such shares, and as ordinary loss any decrease in such value to the extent it
did not exceed prior increases included in income. Under either election, a
portfolio might be required to recognize in a year income in excess of its
distributions from PFICs and its proceeds from dispositions of PFIC stock during
that year, and such income would nevertheless be subject to the distribution
requirements and would be taken into account for purposes of the 4% excise tax.
ADDITIONAL TAX CONSIDERATIONS. If a portfolio failed to qualify as a
regulated investment company, (i) owners of contracts based on the portfolio
would be treated as owning shares of the portfolio (rather than their
proportionate share of the assets of such portfolio) for purposes of the
diversification requirements under Subchapter L of the Code, and as a result
might be taxed currently on the investment earnings under their contracts and
thereby lose the benefit of tax deferral, and (ii) the portfolio would incur
regular corporate federal income tax on its taxable income for that year and be
subject to certain distribution requirements upon requalification. In addition,
if a portfolio failed to comply with the diversification requirements of the
regulations under Subchapter L of the Code, owners of contracts based on the
portfolio might be taxed on the investment earnings under their contracts and
thereby lose the benefit of tax deferral. Accordingly, compliance with the above
rules is carefully monitored by the Adviser and the Subadvisers and it is
intended that the portfolios will comply with these rules as they exist or as
they may be modified from time to time. Compliance with the tax requirements
described above may result in a reduction in the return under a portfolio,
since, to comply with the above rules, the investments utilized (and the time at
which such investments are entered into and closed out) may be different from
that Subadvisers might otherwise believe to be desirable.
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OTHER INFORMATION. For more information regarding the tax implications
for the purchaser of a variable annuity or life insurance contracts who
allocates investments to a portfolio of the Trust, please refer to the
prospectus for the contract.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury Regulations currently in effect. It is not
intended to be a complete explanation or a substitute for consultation with
individual tax advisors. For the complete provisions, reference should be made
to the pertinent Code sections and the Treasury Regulations promulgated
thereunder. The Code and Regulations are subject to change, possibly with
retroactive effect.
REPORTS TO SHAREHOLDERS
The financial statements of the Trust at December 31, 1998 are
incorporated herein by reference from its Annual Report to Shareholders filed
with the SEC pursuant to Section 30(b) of the 1940 Act and Rule 30b2-1.
INDEPENDENT ACCOUNTANTS
The financial statements of the Trust at December 31, 1998, including
the related Financial Highlights which appear in the Prospectus, have been
audited by PricewaterhouseCoopers LLP, independent accountants, as indicated in
their report with respect thereto, and are included herein in reliance upon said
report given on the authority of said firm as experts in accounting and
auditing. PricewaterhouseCoopers LLP has offices at One Post Office Square,
Boston, MA 02109.
CUSTODIAN
State Street Bank and Trust Company, ("State Street") 225 Franklin
Street, Boston, Massachusetts 02110, currently acts as custodian and bookkeeping
agent of all the Trust assets. State Street has selected various banks and trust
companies in foreign countries to maintain custody of certain foreign
securities. State Street is authorized to use the facilities of the Depository
Trust Company, the Participants Trust Company and the book-entry system of the
Federal Reserve Banks.
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APPENDIX I
DEBT SECURITY RATINGS
STANDARD & POOR'S RATINGS GROUP ("S&P")
Commercial Paper:
A-1 The rating A-1 is the highest rating assigned by S&P to
commercial paper. This designation indicates that the
degree of safety regarding timely payment is either
overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted
with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation
is strong. However, the relative degree of safety is not as
high for issuers designated "A-1."
Bonds:
AAA Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely
strong.
AA Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the higher rated
issues only in small degree.
A Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity
to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated
categories.
BB-B-CCC
-CC Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance
with the terms of the obligations. BB indicates the lowest
degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality
and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse
conditions.
D Bonds rated D are in default. The D category is used when
interest payments or principal payments are not made on the
date due even if the applicable grace period has not
expired. The D rating is also used upon the filing of a
bankruptcy petition if debt service payments are
jeopardized.
The ratings set forth above may be modified by the addition of a plus
or minus to show relative standing within the major rating
categories.
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
Commercial Paper:
P-1 The rating P-1 is the highest commercial paper rating
assigned by Moody's. Issuers rated P-1 (or related
supporting institutions) have a superior capacity for
repayment of short-term promissory obligations. P-1
repayment capacity will normally be evidenced by the
following characteristics: (1) leading market positions in
established industries; (2) high rates of return on funds
employed; (3) conservative capitalization structures with
moderate reliance on debt and ample asset protection; (4)
broad margins in earnings coverage of fixed financial
charges and high internal cash generation; and (5) well
established access to a range of financial markets and
assured sources of alternate liquidity.
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P-2 Issuers rated P-2 (or related supporting institutions) have
a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternative liquidity is maintained.
Bonds:
Aaa Bonds which are rated Aaa by Moody's are judged to be of
the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa Bonds which are rated Aa by Moody's are judged to be of
high quality by all standards. Together with the Aaa group,
they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds which are rated A by Moody's possess many favorable
investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment
sometime in the future.
Baa Bonds which are rated Baa by Moody's are considered as
medium grade obligations, that is, they are neither highly
protected nor poorly secured. Interest payments and
principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as well.
B Bonds which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal
payments or of maintenance and other terms of the contract
over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements
of danger with respect to principal or interest.
Ca Bonds which are rated Ca represent obligations which are
speculative in high degree. Such issues are often in
default or have other marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds
and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment
standing.
Moody's applies numerical modifiers "1," "2" and "3" to certain of
its rating classifications. The modifier "1" indicates that the security ranks
in the higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.
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APPENDIX II
STANDARD & POOR'S CORPORATION DISCLAIMERS
The Equity Index Trust is not sponsored, endorsed, sold or promoted by
Standard & Poor's ("S&P"). S&P makes no representation or warranty, express or
implied, to the shareholders of the Equity Index Trust or any member of the
public regarding the advisability of investing in securities generally or in the
Equity Index Trust particularly or the ability of the S&P 500 Index to track
general stock market performance. S&P's only relationship to the Trust is the
licensing of certain trademarks and trade names of S&P and of the S&P 500 Index
which is determined, composed and calculated by S&P without regard to the Trust
or the Equity Index Trust. S&P has no obligation to take the needs of the Trust
or the shareholders of the Equity Index Trust into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for and has
not participated in the determination of the prices and amount of shares of the
Equity Index Trust or the timing of the issuance or sale of the shares of the
Equity Index Trust or in the determination or calculation of the equation by
which shares of the Equity Index Trust are to be converted into cash. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Equity Index Trust.
S&P does not guarantee the accuracy and/or the completeness of the S&P
500 Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Trust, shareholders of the Equity
Index Trust, or any other person or entity from the use of the S&P 500 Index or
any data included therein. S&P makes no express or implied warranties, and
expressly disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to the S&P 500 Index or any data included
therein. Without limiting any of the foregoing, in no event shall S&P have any
liability for any special, punitive, indirect, or consequential damages
(including lost profits), even if notified of the possibility of such damages.
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PART C
OTHER INFORMATION
<PAGE> 200
ITEM 23. EXHIBITS
(a)(1) Agreement and Declaration of Trust dated September 29, 1988
-- previously filed as exhibit (1)(a) to post-effective
amendment no. 31 filed on February 28, 1996.
(a)(2) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Redesignation of the Series
of Shares known as the "Convertible Securities Trust" to
the "U.S. Government Bond Trust" dated May 1, 1989 --
previously filed as exhibit (1)(b) to post-effective
amendment no. 31 filed on February 28, 1996.
(a)(3) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Conservative, Moderate and
Aggressive Asset Allocation Trusts dated May 1, 1989 --
previously filed as exhibit (1)(c) to post-effective
amendment no. 31 filed on February 28, 1996.
(a)(4) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Growth & Income Trust dated
February 1, 1991 -- previously filed as exhibit (1)(d) to
post-effective amendment no. 31 filed on February 28, 1996.
(a)(5) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Redesignation of the Series
of Shares known as the "Bond Trust" to the "Investment
Quality Bond Trust" dated April 16, 1991 -- previously
filed as exhibit (1)(e) to post-effective amendment no. 31
filed on February 28, 1996.
(a)(6) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Redesignation of the Series
of Shares known as the "U.S. Government Bond Trust" to the
"U.S. Government Securities Trust" dated June 14, 1991 --
previously filed as exhibit (1)(f) to post-effective
amendment no. 31 filed on February 28, 1996.
(a)(7) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Pasadena Growth Trust,
Growth Trust and Strategic Income Trust dated August 7,
1992 -- previously filed as exhibit (1)(g) to
post-effective amendment no. 31 filed on February 28, 1996.
(a)(8) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Redesignation of the Series
of Shares known as the "Strategic Income Trust" to the
"Strategic Bond Trust" and the Series of Shares known as
the "Growth Trust" to the "Value Equity Trust" dated April
4,1993 -- previously filed as exhibit (1)(h) to
post-effective amendment no. 31 filed on February 28, 1996.
(a)(9) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - International Growth and
Income Trust dated December 28, 1994 -- previously filed as
exhibit (1)(i) to post-effective amendment no. 31 filed on
February 28, 1996.
(a)(10) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Small/Mid Cap Trust, dated
February 1, 1996 -- previously filed as exhibit (1)(j) to
post-effective amendment no. 34 filed on October 4, 1996.
(a)(11) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - International Small Cap
Trust dated February 1, 1996 -- previously filed as exhibit
(1)(k) to post-effective amendment no. 34 filed on October
4, 1996.
<PAGE> 201
(a)(12) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Growth Trust dated July 9,
1996 -- previously filed as exhibit (1)(l) to post-
effective amendment no. 34 filed on October 4, 1996.
(a)(13) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Value Trust, High Yield
Trust, International Stock Trust, Science & Technology
Trust, Balanced Trust, Worldwide Growth Trust, Emerging
Growth Trust, Pilgrim Baxter Growth Trust, Pacific Rim
Emerging Markets Trust, Real Estate Securities Trust,
Capital Growth Bond Trust, Equity Index Trust, Common
Stock Trust, Lifestyle Conservative 280 Trust, Lifestyle
Moderate 460 Trust, Lifestyle Balanced 640 Trust,
Lifestyle Growth 820 Trust, Lifestyle Aggressive 1000
Trust -- and Redesignation of the Series of Shares known
as the "Pasadena Growth Trust" to the "Blue Chip Growth
Trust" and the Series of Shares known as the "Value Equity
Trust" to the "Equity-Income Trust" -- previously filed as
exhibit (1)(m) to post-effective amendment no. 35 filed on
December 18, 1996.
(a)(14) Establishment and Designation of Additional Series of
Shares of Beneficial Interest - Small Company Value Trust
dated September 30, 1997 -- previously filed as exhibit
(1)(m) to post-effective amendment no. 39 filed on March
2, 1998.
(a)(15) Form of Establishment and Designation of Additional Series
of Shares of Beneficial Interest for the Small Company
Blend, U.S. Large Cap Value, Total Return, Foreign and
Mid-Cap Stock - FILED HEREWITH
(a)(15) Amendment to the Agreement and Declaration of Trust (name
change) -- previously filed as exhibit (1)(n) to
post-effective amendment no. 39 filed on March 2, 1998.
(b) By-laws of Manufacturers Investment Trust -- previously
filed as exhibit (2) to post-effective amendment no. 38
filed September 17, 1997.
(c) Form of Specimen Share Certificate -- previously filed as
exhibit (2) to post-effective amendment no. 38 filed
September 17, 1997.
(d)(1) Amended and Restated Advisory Agreement between
Manufacturers Investment Trust and Manufacturers
Securities Services, LLC - FILED HEREWITH.
(d)(2) Subadvisory Agreement Between NASL Financial Services, Inc.
and Wellington Management Company - FILED HEREWITH
(d)(3) Subadvisory Agreement Between Manufacturers Securities
Services, LLC and Salomon Brothers Asset Management Inc --
previously filed as exhibit (5)(b)(iii) to post-effective
amendment no. 39 filed on March 2, 1998.
(d)(4) Subadvisory Consulting Agreement Between Salomon Brothers
Asset Management Inc and Salomon Brothers Asset Management
Limited -- previously filed as exhibit (5)(b)(iv) to post-
effective amendment no. 39 filed on March 2, 1998.
(d)(5) Subadvisory Agreement between Manufacturers Securities
Services, LLC and Founders Asset Management LLC -
previously filed as exhibit (5)(b)(vi) to post effective
amendment no. 40 filed April 30, 1998.
2
<PAGE> 202
(d)(6) Amendment to Subadvisory Agreement between NASL Financial
Services, Inc. and Founders Asset Management, Inc. adding
the Growth Trust -- previously filed as exhibit (5)(b)
(xiii) to post effective amendment no. 33 filed July 10,
1996.
(d)(7) Form of Amendment to Subadvisory Agreement between NASL
Financial Services, Inc. and Founders Asset Management,
Inc. dated October 1, 1996 adding the Worldwide Growth and
Balanced Trusts -- previously filed as exhibit (5)(b)(xii)
to post-effective amendment no. 34 filed on October 4,
1996.
(d)(8) Subadvisory Agreement between Manufacturers Securities
Services, LLC and T. Rowe Price Associates, Inc. - FILED
HEREWITH
(d)(9) Form of Subadvisory Agreement between NASL Financial
Services, Inc. and Rowe Price-Fleming International, Inc.
adding the International Stock Trust -- previously filed
as exhibit (5)(b)(xiv) to post-effective amendment no. 34
filed on October 4, 1996.
(d)10) Subadvisory Agreement between NASL Financial Services,
Inc. and Morgan Stanley Asset Management, Inc. dated
October 1, 1996 providing for the Global Equity Trust --
previously filed as exhibit (5)(b)(xv) to post-effective
amendment no. 35 filed on December 18, 1996.
(d)(11) Subadvisory Agreement between NASL Financial Services,
Inc. and Miller Anderson & Sherrerd, LLP dated October 1,
1996 adding the Value and High Yield Trusts -- previously
filed as exhibit (5)(b)(xvi) to post-effective amendment
no. 35 filed on December 18, 1996.
(d)(12) Form of Subadvisory Agreement between NASL Financial
Services, Inc. and Manufacturers Adviser Corporation dated
October 1, 1996 providing for the Money Market Trust --
previously filed as exhibit (5)(b)(xviii) to
post-effective amendment no. 34 filed on October 4, 1996.
(d)(13) Form of Amendment to Subadvisory Agreement between NASL
Financial Services, Inc. and Manufacturers Adviser
Corporation dated December 31, 1996 adding the Pacific Rim
Emerging Markets, Common Stock, Real Estate Securities,
Equity Index, Capital Growth Bond, Lifestyle Conservative
280, Lifestyle Moderate 460, Lifestyle Balanced 640,
Lifestyle Growth 820 and Lifestyle Aggressive 1000 Trusts
-- previously filed as exhibit (5)(b)(xx) to post-effective
amendment no. 35 filed on December 18, 1996.
(d)(14) Subadvisory Agreement between Manufacturers Securities
Services, LLC and Fidelity Management Trust Company -
FILED HEREWITH
(d)(15) Form of Subadvisory Agreement between Manufacturers
Securities Services, LLC and AXA Rosenberg Investment
Management LLC FILED HEREWITH.
(d)(16) Subadvisory Agreement between Manufacturers Securities
Services, LLC and AIM Advisors, Inc. -FILED HEREWITH
(d)(17) Subadvisory Agreement between Manufacturers Securities
Services, LLC and Capital Guardian Trust Company -FILED
HEREWITH
(d)(18) Form of Subadvisory Agreement between Manufacturers
Securities Services, LLC and Franklin Advisers, Inc.
-FILED HEREWITH
3
<PAGE> 203
(d)(19) Form of Subadvisory Agreement between Manufacturers
Securities Services, LLC and Pacific Investment Management
Company -TO BE FILED BY AMENDMENT
(d)(20) Form of Subadvisory Agreement between Manufacturers
Securities Services, LLC and State Street Global Advisors
-TO BE FILED BY AMENDMENT
(d)(21) Form of Subadvisory Agreement between Manufacturers
Securities Services, LLC and Templeton Investment Counsel,
Inc. -TO BE FILED BY AMENDMENT
(e) Not Applicable
(f) Not Applicable
(g) Custodian Agreement Between NASL Series Fund, Inc. and
State Street Bank and Trust Company dated March 24, 1988
-- previously filed as exhibit (2) to post-effective
amendment no. 38 filed September 17, 1997.
(h) Not Applicable
(i)(1) Opinion and Consent of Ropes & Gray dated October 27, 1988.
-- previously filed as exhibit (2) to post-effective
amendment no. 38 filed September 17, 1997.
(i)(2) Opinion and Consent of Tina M. Perrino, Esq. dated April
12, 1991. previously filed as exhibit (2) to post-effective
amendment no. 38 filed September 17, 1997.
(i)(3) Opinion and Consent of Tina M. Perrino, Esq. dated October
22, 1992. previously filed as exhibit (2) to post-effective
amendment no. 38 filed September 17, 1997.
(i)(4) Opinion and Consent of Betsy A. Seel, Esq. dated October
19, 1994. previously filed as exhibit (2) to post-effective
amendment no. 38 filed September 17, 1997.
(i)(5) Opinion and Consent of Betsy A. Seel, Esq. -- previously
filed as exhibit (10)(a)(v) to post effective amendment no.
30 filed December 14, 1995.
(i)(6) Opinion and Consent of Betsy A. Seel, Esq. -- previously
filed as exhibit (10)(a)(vi) to post effective amendment
no. 33 filed July 10, 1996.
(i)(7) Opinion and Consent of Betsy Anne Seel, Esq. -- previously
filed as exhibit (10)(a)(vii) to post-effective amendment
no. 35 filed on December 18, 1996.
(i)(8) Opinion and Consent of Betsy Anne Seel, Esq. - FILED
HEREWITH
(j) Consent of PricewaterhouseCoopers LLP - FILED HEREWITH.
(k) Not Applicable
(l) Not Applicable
(m) Not Applicable
4
<PAGE> 204
(n) Financial Data Schedule - FILED HEREWITH
(o) Not Applicable
(p)(1) Powers of Attorney - Don B. Allen, Charles L. Bardelis,
Samuel Hoar, Robert J. Myers, Trustees, dated September
27, 1996. previously filed as exhibit (2) to
post-effective amendment no. 38 filed September 17, 1997.
(p)(2) Power of Attorney -- John D. DesPrez III, President --
previously filed as exhibit (18)(e) to post-effective
amendment no. 34 filed on October 4, 1996.
(p)(3) Power of Attorney -- John D. Richardson, Chairman of the
Board, and F. David Rolwing, Trustee -- previously filed as
exhibit (18)(e) to post-effective amendment no. 36 filed on
April 30, 1997.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The Trust has four shareholders:
(i) The Manufacturers Life Insurance Company of North America (formerly North
American Security Life Insurance Company) ("Manulife North America"),
(ii) its wholly-owned subsidiary, The Manufacturers Life Insurance Company of
New York (formerly First North American Life Assurance Company) ("Manulife
New York"),
(iii) The Manufacturers Life Insurance Company of America ("Manulife America")
and
(iv) The Manufacturers Life Insurance Company (U.S.A.) ("Manulife USA").
Manulife North America, Manulife New York, Manulife America and Manulife USA
hold Trust shares attributable to variable contracts in their respective
separate accounts. The Lifestyle Trusts are also shareholders of certain of the
non-Lifestyle Trust portfolios. The companies will vote all shares of each
portfolio of the Trust issued to such companies in proportion to timely
instructions received from owners of the contracts participating in separate
accounts registered under the Investment Company Act of 1940. The Trust will
vote all shares of a portfolio issued to a Lifestyle Trust in proportion to such
instructions.
THE MANUFACTURERS LIFE INSURANCE COMPANY
Manulife Corporate Organization
The Manufacturers Life Insurance Company (Canada)
1. Cantay Holdings Inc. - Ontario (100%)
2. 484551 Ontario Limited - Ontario (100%)
a. 911164 Ontario Inc. - Ontario (100%)
3. Churchill Lifestyles Corp. (100%)
4. 495603 Ontario Limited - Ontario (100%)
5. 1198183 Ontario Limited - Ontario (100%)
6. 1198184 Ontario Limited - Ontario (100%)
7. 1235434 Ontario Limited - Ontario (100%)
8. 576986 Ontario Inc. - Ontario (100%)
9. Balmoral Developments Inc. - Ontario (100%)
5
<PAGE> 205
10. Manulife Bank of Canada - Canada (100%)
11. Manulife Securities International Ltd. - Canada (100%)
12. Family Realty First Corp. - Ontario (100%)
13. NAL Resources Limited - Alberta (100%)
14. Manulife International Capital Corporation Limited - Ontario (100%)
a. Regional Power Inc. - Ontario (100%)
i. La Regionale Power (Port Cartier) Inc. - Ontario (100%)
ii. La Regionale Power Angliers Inc. - Ontario (100%)
iii. Addalam Power Corporation - Philippines (100%)
15. Peel-de Maisonneuve Investments Ltd. - Canada (100%)
a. 2932121 Canada Inc. - Canada (100%)
16. FNA Financial Inc. - Canada (100%)
a. NAL Trustco Inc. - Ontario (100%)
b. First North American Insurance Company - Canada (100%)
c. Elliott & Page Limited - Ontario (100%)
d. Seamark Asset Management Ltd. - Canada (67.86%)
e. NAL Resources Management Limited - Canada (100%)
i. NAL Energy Inc. - Alberta (100%)
17. ManuCab Ltd. - Canada (100%)
a. Plazcab Service Limited - Newfoundland (100%)
18. Manufacturers Life Capital Corporation Inc. - Canada (100%)
19. The North American Group Inc. - Ontario (100%)
20. 994744 Ontario Inc. - Ontario (100%)
21. 1268337 Ontario Inc. - Ontario (100%)
22. 3426505 Canada Inc. - Canada (100%)
23. The Manufacturers Investment Corporation - Michigan (100%)
a. Manulife Reinsurance Corporation (U.S.A.) - Michigan (100%)
i. The Manufacturers Life Insurance Company (U.S.A.) - Michigan (100%)
(1) Dover Leasing Investments, LLC - Delaware (99%)
(2) The Manufacturers Life Insurance Company of America - Michigan
(100%)
(a) Manulife Holding Corporation - Delaware (100%)
(i) Manufacturers Adviser Corporation - Colorado (100%)
(ii) Succession Plainning International, Inc. -
Wisconsin (100%)
(iii) ManEquity, Inc. - Colorado (100%)
(iv) Manulife Property Management of Washington, D.C.
Inc. - Washington, D.C. (100%)
(v) ManuLife Service Corporation - Colorado (100%)
(vi) Manulife Leasing Company, LLC - Delaware (80%)
(3) Capitol Bankers Life Insurance Company - Michigan (100%)
(4) Ennal, Inc. - Ohio (100%)
(5) Manulife-Wood Logan Holding Co. Inc. - Delaware (62.5%)
(a) Wood Logan Associates, Inc. - Connecticut (100%)
(i) Wood Logan Distributors, Inc. - Connecticut (100%)
(b) The Manufacturers Life Insurance Company of North America
- Delaware (100%)
(i) Manufacturers Securities Services, LLC -
Massachusetts (100%)
6
<PAGE> 206
(ii) The Manufacturers Life Insurance Company of New York
- New York (100%)
ii. Manulife Reinsurance Limited - Bermuda (100%)
(1) MRL Holding, LLC - Delaware (99%)
(a) Manulife-Wood Logan Holding Co. Inc. - Delaware (22.5%)
iii. MRL Holding, LLC - Delaware (1%)
24. Manulife International Investment Management Limited - U.K. (100%)
a. Manulife International Fund Management Limited - U.K. (100%)
25. WT(SW) Properties Ltd. - U.K. (100%)
26. Manulife Europe Ruckversicherungs-Aktiengesellschaft - Germany (100%)
27. Manulife International Holdings Limited - Bermuda (100%)
a. Manulife (International) Limited - Bermuda (100%)
i. Zhong Hong Life Insurance Co., Ltd. - China (51%)
ii. The Manufacturers (Pacific Asia) Insurance Company Limited - H.K.
(100%)
iii. Newtime Consultants Limited - H.K. (100%)
28. Manulife (International) Reinsurance Limited - Bermuda (100%)
a. Manulife (International) P & C Limited - Bermuda (100%)
b. Manufacturers P & C Limited - Barbados (100%)
c. Manufacturers Life Reinsurance Limited - Barbados (100%)
29. Chinfon-Manulife Insurance Company Limited - Bermuda (100%)
30. Manulife (Malaysia) SDN. BHD. - Malaysia (100%)
31. Manulife (Thailand) Ltd. - Thailand (100%)
32. Young Poong Manulife Insurance Company - Korea (100%)
33. Manulife Data Services Inc. - Barbados (100%)
a. Manulife Funds Direct (Barbados) Limited - Barbados (100%)
i. Manulife Funds Direct (Hong Kong) Limited - H.K. (100%)
34. OUB Manulife Pte. Ltd. - Singapore (100%)
35. Manulife Holdings (Hong Kong) Limited - H.K. (100%)
36. ManuLife Financial Systems (Hong Kong) Limited - H.K. (100%)
37. P.T. Asuransi Jiwa Dhamala ManuLife - Indonesia (51%)
a. P.T. AMP Panin Life - Indonesia (100%)
ITEM 25. INDEMNIFICATION
Sections 6.4 and 6.5 of the Agreement and Declaration of Trust of the
Registrant provide that the Registrant shall indemnify each of its Trustees and
officers against all liabilities, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and against
all expenses, including but not limited to accountants and counsel fees,
reasonably incurred in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Trustee or officer may be or
may have been involved as a party or otherwise or with which such person may be
or may have been threatened, while in office or thereafter, by reason of being
or having been such a Trustee or officer, except that indemnification shall not
be provided if it shall have been finally adjudicated in a decision on the
merits by the court or other body before which the proceeding was brought that
such Trustee or officer (i) did not act in good faith in the reasonable belief
that his or her action was in the best interests of the Registrant or (ii) is
liable to the Registrant or its shareholders by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such person's office.
7
<PAGE> 207
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management of the Trust" in the Prospectus and "Investment Management
Arrangements" in the Statement of Additional Information for information
regarding the business of the Adviser and each of the Subadvisers. For
information as to the business, profession, vocation or employment of a
substantial nature of each director, officer or partner of the Adviser and each
of the Subadvisers, reference is made to the respective Form ADV, as amended,
filed under the Investment Advisers Act of 1940, each of which is herein
incorporated by reference.
ITEM 27. PRINCIPAL UNDERWRITERS
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained under
Section 31(a) of the Investment Company Act of 1940 are kept by Manufacturers
Securities Services, LLC (the successor to NASL Financial Services, Inc.), the
Registrant's investment adviser, at its offices at 73 Tremont Street, Boston,
Massachusetts 02108,
by Fidelity Management Trust Company, the investment subadviser to the Equity,
Conservative Asset Allocation, Moderate Asset Allocation and Aggressive Asset
Allocation Trusts, at its offices at 82 Devonshire Street, Boston, MA 02109,
by Wellington Management Company, the investment subadviser to the Growth and
Income and Investment Quality Bond Trusts, at its offices at 75 State Street,
Boston, Massachusetts 02109,
by Salomon Brothers Asset Management Inc, the investment subadviser to the U.S.
Government Securities and Strategic Bond Trusts, at its offices at 7 World Trade
Center, New York, New York 10048,
by Founders Asset Management, Inc, the investment subadviser for the Growth,
International Small Cap, Worldwide Growth and Balanced Trusts, at its offices at
2930 East Third Avenue, Denver, Colorado 80206,
by T. Rowe Price Associates, Inc., the investment subadviser to the Blue Chip
Growth, Science & Technology and Equity-Income Trusts, at its offices at 100
East Pratt Street, Baltimore, MD 21202,
by Rowe Price-Fleming International, Inc., the investment subadviser to the
International Stock Trust, at its offices at 100 East Pratt Street, Baltimore,
MD 21202,
by Morgan Stanley Asset Management, Inc., the investment subadviser of the
Global Equity Trust, at its offices at 1221 Avenue of the Americas, New York,
New York 10020,
by Miller Anderson & Sherrerd, LLP, the investment subadviser to the Value and
High Yield Trusts, at its offices at One Tower Bridge, Conshohocken PA 19428,
by Manufacturers Adviser Corporation, the investment subadviser to the Pacific
Rim Emerging Markets, Common Stock, Real Estate Securities, Equity Index,
Capital Growth Bond, Lifestyle and Money Market Trusts, at its offices at 200
Bloor Street East, Toronto, Ontario, Canada M4W lE5,
8
<PAGE> 208
by AXA Rosenberg Investment Management LLC, the investment subadviser to the
Small Company Value Trust, at its offices at Four Orinda Way, Orinda, California
94563,
by AIM Advisors, Inc., the investment subadviser to the Mid Cap Growth and
Aggressive Growth Trusts, at its offices at 11 Greenway Plaza, Houston, Texas,
77046,
By Capital Guardian Trust Company, the investment subadviser to the Small
Company Blend, U.S. Large Cap Value, Income & Value and Diversified Bond Trusts,
at its offices at 333 South Hope Street, Los Angeles, California 90071,
by Pacific Investment Management Company, the investment subadviser to the
Global Bond and Total Return Trusts, at its offices at 840 Newport Center Drive,
Suite 300, Newport Beach, California 92660,
by Templeton Investment Counsel, Inc., the investment subadviser to the
International Value Trust, at its offices 777 Mariners Island Blvd., San Mateo,
CA 94404.
By Franklin Advisers, Inc. the investment adviser to the Emerging Small Company
Trust, at its offices 777 Mariners Island Blvd., San Mateo, CA 94404.
by the Registrant at its principal business offices located at 73 Tremont
Street, Boston, Massachusetts 02108 and 116 Huntington Avenue, Boston,
Massachusetts 02116 or
by State Street Bank and Trust Company, the custodian and transfer agent for the
Trust, at its offices at 225 Franklin Street, Boston, Massachusetts 02110.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Previously given.
9
<PAGE> 209
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant, Manufacturers Investment Trust has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Boston, and
Commonwealth of Massachusetts, on 26th day of February, 1999.
MANUFACTURERS INVESTMENT TRUST
------------------------------
(Registrant)
By: /s/ John D. Desprez III
-----------------------
John D. DesPrez III, President
Attest:
/s/ James D. Gallagher
- ----------------------
James D. Gallagher, Secretary
<PAGE> 210
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
* Trustee **
- ---------------------- ---------
Don B. Allen (Date)
/s/ John D. DesPrez President **
- ---------------------- (Chief Executive Officer) ---------
John D. DesPrez III (Date)
* Trustee **
- ---------------------- ---------
Charles L. Bardelis (Date)
* Trustee **
- ---------------------- ---------
Samuel Hoar (Date)
* Trustee **
- ---------------------- and Chairman ---------
John D. Richardson (Date)
* Trustee **
- ---------------------- ---------
F. David Rolwing (Date)
/s/ James Boyle Vice President and **
- --------------------- Treasurer (Prin- ----------
James Boyle cipal Financial and (Date)
Accounting Officer)
*By /s/ James D. Gallagher **
---------------------- ----------
James D. Gallagher (Date)
Attorney-in-Fact Pursuant to
Powers of Attorney
**February 26, 1999
<PAGE> 211
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(a)(15) Form of Establishment and Designation of Additional Series of
Shares of Beneficial Interest for the Small Company Blend, U.S.
Large Cap Value, Total Return, Foreign and Mid-Cap Stock
(d)(1) Amended and Restated Advisory Agreement between Manufacturers
Investment Trust and Manufacturers Securities Services, LLC
(d)(2) Subadvisory Agreement Between Manufacturers Securities Services,
LLC and Wellington Management Company
(d)(8) Subadvisory Agreement between Manufacturers Securities Services,
LLC and T. Rowe Price Associates, Inc.
(d)(14) Subadvisory Agreement between Manufacturers Securities Services,
LLC and Fidelity Management Trust Company
(d)(16) Subadvisory Agreement between Manufacturers Securities Services,
LLC and AIM Advisors, Inc.
(d)(15) Form of Subadvisory Agreement between Manufacturers Securities
Services, LLC and AXA Rosenberg Investment Management LLC
(d)(17) Subadvisory Agreement between Manufacturers Securities Services,
LLC and Capital Guardian Trust Company
(d)(18) Form of Subadvisory Agreement between Manufacturers Securities
Services, LLC and Franklin Advisers, Inc.
(d)(19) Form of Subadvisory Agreement between Manufacturers Securities
Services, LLC and Pacific Investment Management Company
(d)(20) Form of Subadvisory Agreement between Manufacturers Securities
Services, LLC and State Street Global Advisors
(d)(21) Form of Subadvisory Agreement between Manufacturers Securities
Services, LLC and Templeton Investment Counsel, Inc.
(i)(8) Opinion and Consent of Betsy Anne Seel, Esq.
(j) Consent of PricewaterhouseCoopers LLP
(n) Financial Data Schedules
<PAGE> 1
EXHIBIT (a)(15)
MANUFACTURERS INVESTMENT TRUST
Establishment and Designation
of Additional Series of Shares of Beneficial Interest
($0.01 par value per share)
The undersigned, being a majority of the Trustees of Manufacturers
Investment Trust (the "Trust"), acting pursuant to Section 4.1(a) of the
Agreement and Declaration of Trust of the Trust dated September 29, 1988 (the
"Declaration of Trust") hereby establish and designate the following new Series
of Shares (as defined in the Declaration of Trust), such Series of Shares to
have the following special and relative rights:
1. The new Series of Shares shall be designated:
1. "Small Company Blend"
2. "U.S. Large Cap Value"
3. "Total Return"
4. "Foreign"
1. "Mid Cap Stock"
2. The new Series of Shares shall have the relative rights and preferences
described in Section 4.2 of the Declaration of Trust, provided that the
Trustees, in their absolute discretion, may amend any previously
established relative rights and preferences as they may deem necessary or
desirable to enable the Trust to comply with the Investment Company Act of
1940 or other applicable law.
<PAGE> 2
In witness whereof, the undersigned have executed this instrument in
duplicate original counterparts and have caused a duplicate original to be
lodged among the records of the Trust this _____ day of ____________, 199__.
- ------------------------ -----------------------------
Don B. Allen John D. Richardson
- ------------------------ -----------------------------
Charles L. Bardelis F. David Rolwing
- ------------------------
Samuel Hoar
The Agreement and Declaration of Trust of the Trust, dated September 29, 1988, a
copy of which together with all amendments thereto is on file in the office of
the Secretary of The Commonwealth of Massachusetts, provides that this
instrument was executed by the Trustees of the Trust as Trustees and not
individually and that the obligations of this instrument are not binding upon
any of them or the shareholders of the Trust individually, but are binding only
upon the assets belonging to the Trust, or the particular Series of Shares in
question, as the case may be.
<PAGE> 1
EXHIBIT (d)(1)
MANUFACTURERS INVESTMENT TRUST
AMENDED AND RESTATED
ADVISORY AGREEMENT
Advisory Agreement dated January 1, 1996, as amended and restated
___________, 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.
b. The Adviser will furnish to the Trust the following:
<PAGE> 2
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 recordkeeping 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 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,
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<PAGE> 3
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 all officers 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.
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;
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<PAGE> 4
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 AGENTS. 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;
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;
1. 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
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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 each 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.
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
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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
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 if 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
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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.
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.
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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.
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, President
By: __________________________________
James D. Gallagher, Vice President,
Secretary and General Counsel
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APPENDIX A
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 net assets of the Portfolio. (formerly,
the Moderate Asset Allocation Trust)
13. Diversified Bond Trust: .75% of the net assets of the Portfolio. (formerly,
the Conservative Asset Allocation Trust)
14. Overseas: .95% of the net assets of the Portfolio. (formerly, the
International Growth and Income Trust)
15. Mid Cap Growth Trust: .95% of the net assets of the Portfolio. (formerly,
the Small/Mid Cap Trust)
16. International Small Cap Trust: 1.10% of the net assets of the Portfolio.
17. Growth Trust: .85% of the 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.
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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.
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.
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The Percentage Fee for each 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.
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APPENDIX B
The Expense Limit for each Portfolio for the purposes of paragraph 2.d.i(C)
shall be .50% for each Portfolio except the following:
PORTFOLIO PERCENT
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%
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EXHIBIT (d)(2)
MANUFACTURERS INVESTMENT TRUST
SUBADVISORY AGREEMENT
AGREEMENT made this 29th day of January 1999, between Manufacturers
Securities Services, LLC, a Delaware limited liability (the "Adviser"), and
Wellington Management Company LLP, a Massachusetts limited liability partnership
(the "Subadviser"). In consideration of the mutual covenants contained herein,
the parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and, subject
to the supervision of the Trustees of Manufacturers Investment Trust (the
"Trust") and the terms of this Agreement, to manage the investment and
reinvestment of the assets of each of the portfolios of the Trust specified in
Appendix A to this Agreement as it shall be amended by the Adviser and the
Subadviser from time to time (the "Portfolio" or "Portfolios"). The Subadviser
will be an independent contractor and will have no authority to act for or
represent the Trust or Adviser in any way or otherwise be deemed an agent unless
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the Trust,
the Subadviser will manage the investments and determine the composition of
the assets of the Portfolios. In fulfilling its obligations to manage the
investments and reinvestments of the assets of the Portfolios, the
Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial and
other information affecting the economy generally and individual
companies or industries the securities of which are included in the
Portfolios or are under consideration for inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for each
Portfolio consistent with the investment objectives and related
investment policies for each such Portfolio as described in the
Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these investment
programs by the purchase and sale of securities including the placing
of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to the
implementation of these investment programs; and
v. make recommendations, in accordance with procedures and methods
established by the Trustees of the Trust, for the fair value of
securities held by the Portfolios for which market quotations are not
readily available for purposes of enabling the Trust's Custodian to
calculate net asset value.
b. The Subadviser, at its expense, will furnish (i) all necessary investment
and management facilities, including salaries of personnel required for it
to execute its duties faithfully, and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the investment affairs of the Portfolios (excluding
determination of net asset value and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all transactions
subject to the following conditions: the Subadviser will place all orders
with brokers, dealers, or issuers, and will negotiate brokerage commissions
if applicable. The Subadviser is directed at all times to seek to execute
brokerage transactions for the Portfolios in accordance with such polices
or practices as may be established by the Trustees and described in the
Trust's registration statement as amended. The Subadviser may pay a
broker-dealer which provides research and brokerage services a higher
spread or commission for a
<PAGE> 2
particular transaction than otherwise might have been charged by another
broker-dealer, if the Subadviser determines that the higher spread or
commission is reasonable in relation to the value of the brokerage and
research services that such broker-dealer provides, viewed in terms of
either the particular transaction or the Subadviser's overall
responsibilities with respect to accounts managed by the Subadviser. The
Subadviser may use for the benefit of the Subadviser's other Clients, or
make available to companies affiliated with the Subadviser or to its
directors for the benefit of its clients, any such brokerage and research
services that the Subadviser obtains from brokers or dealers.
d. The Subadviser will maintain all accounts, books and records with respect
to the Portfolios as are required of an investment adviser of a registered
investment company pursuant to the Investment Company Act of 1940 (the
"Investment Company Act") and Investment Advisers Act of 1940 (the
"Investment Advisers Act") and the rules thereunder.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its partners or employees shall be liable
to the Adviser or Trust for any loss suffered by the Adviser or Trust resulting
from its acts or omissions as Subadviser to the Portfolios, except for losses
resulting from willful misfeasance, bad faith, or gross negligence in the
performance of, or from reckless disregard of, the duties of the Subadviser or
any of its partners or employees.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons affiliated
with the Subadviser to better enable it to fulfill its obligations under this
Agreement for the provision of certain personnel and facilities to the
Subadviser.
6. REGULATION
The Subadviser 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.
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on the
later of: (i) its execution, (ii) approval of the Agreement by the Trustees of
the Trust and (iii) disclosure of the terms of the Agreement in the Prospectus
of the Trust . 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 a majority of the outstanding voting securities of each of the Portfolios,
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. Any
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.
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If any required shareholder approval of this Agreement or any continuance
of the Agreement is not obtained, the Subadviser will continue to act as
investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
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 such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser, on sixty days' written notice to the Trust and the other
party. This Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under the
Investment Advisers Act or under the laws of any jurisdiction in which the
Subadviser is required to be registered as an investment adviser in order
to perform its obligations under this Agreement;
b. the Subadviser 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 managing general partner or controlling partner of the Subadviser or
the portfolio manager of any Portfolio changes.
9. SALES LITERATURE
The Adviser will not use the Subadviser's name in Trust literature without
prior review and approval by the Subadviser, which will not be unreasonably
withheld or delayed.
10. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the 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. Any required
shareholder approval shall be effective with respect to any Portfolio if a
majority of the outstanding voting securities 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.
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11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to the Portfolios listed in Appendix A.
12. HEADINGS
The headings in the sections of this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
13. 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
applicable party 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 paragraph.
14. 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.
15. 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.
16. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust establishing the Trust, dated
September 28, 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,
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 which the
obligee or claimant dealt, shall be liable.
17. PRIOR AGREEMENTS
With respect to each Portfolio, this Agreement supercedes all prior
agreements between the Adviser and the Subadviser regarding the provisions of
subadvisory services to the Portfolio by the Subadviser, including, without
limitation, the Agreement dated January 1, 1996 between the Adviser and the
Subadviser which is terminated as of the effective date of this Agreement with
respect to the Portfolios of the Trust.
4
<PAGE> 5
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 Securities Services, LLC
by: The Manufacturers Life Insurance Company of North America,
Managing Member
by: _____________________________________
Ted Kilkuskie, President
by: _____________________________________
James D. Gallagher, Vice President, Secretary
and General Counsel
Wellington Management Company, LLP
by: ________________________
5
<PAGE> 6
APPENDIX A
The Subadviser shall serve as investment subadviser for each of the
following portfolios of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
<S> <C> <C> <C> <C>
Growth and Income Trust............ .325% .275% .225% .150%
Investment Quality Bond Trust...... .225% .225% .150% .100%
Mid-Cap Growth Trust............... .450% .425% .400% .375%
</TABLE>
The Subadviser Percentage Fee for each Portfolio shall be accrued for each
calendar day and the sum of the daily fee accruals shall be paid monthly to the
Subadviser. The daily fee accruals 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.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
6
<PAGE> 1
EXHIBIT (d)(8)
MANUFACTURERS INVESTMENT TRUST
SUBADVISORY AGREEMENT
AGREEMENT made this 28th day of January, 1999, between Manufacturers
Securities Services, LLC, a Delaware limited liability company (the "Adviser"),
and T. Rowe Price Associates, Inc., a Maryland Corporation (the "Subadviser").
In consideration of the mutual covenants contained herein, the parties agree as
follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of Manufacturers Investment Trust
(the "Trust") and the terms of this Agreement, to manage the investment and
reinvestment of the assets of the Portfolios specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Subadviser from time to
time (the "Portfolios"). The Subadviser will be an independent contractor and
will have no authority to act for or represent the Trust or Adviser in any way
except as expressly authorized in this Agreement or another writing by the Trust
and Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs; and
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Portfolios in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as
amended. The Subadviser may pay a broker-dealer which provides research
and brokerage services a higher spread or commission for a particular
transaction than otherwise might have been charged by another
broker-dealer, if the Subadviser determines that the higher spread or
commission is reasonable in relation to the value of the brokerage and
research services that such
<PAGE> 2
broker-dealer provides, viewed in terms of either the particular
transaction or the Subadviser's overall responsibilities with respect
to accounts managed by the Subadviser. The Subadviser may use for the
benefit of the Subadviser's other clients, or make available to
companies affiliated with the Subadviser or to its directors for the
benefit of its clients, any such brokerage and research services that
the Subadviser obtains from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its employees shall be liable to the
Adviser or Trust for any loss suffered by the Adviser or Trust resulting from
any error of judgment made in the good faith exercise of the Subadviser's
investment discretion in connection with selecting Portfolio investments except
for losses resulting from willful misfeasance, bad faith or gross negligence of,
or from reckless disregard of, the duties of the Subadviser or any of its
partners or employees; and neither the Subadviser nor any of its employees shall
be liable to the Adviser or Trust for any loss suffered by the Adviser or Trust
resulting from any other matters to which this Agreement relates (I.E., those
other matters specified in Sections 2 and 8 of this Agreement), except for
losses resulting from willful misfeasance, bad faith, or gross negligence in the
performance of, or from disregard of, the duties of the Subadviser or any of its
partners or employees.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and partners of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser 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 Certificate of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
2
<PAGE> 3
7. REGULATION
The Subadviser 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.
8. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on
the later of: (i) its execution, (ii) the date of the meeting of the Trustees of
the Trust, at which meeting this Agreement is approved as described below and
(iii) disclosure of the terms of this Agreement in the Prospectus of the Trust.
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 a majority of the
outstanding voting securities of each of the Portfolios, 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 any required shareholder approval of this Agreement or any
continuance of the Agreement is not obtained, the Subadviser will continue to
act as investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or a new contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
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 such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Subadviser 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. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
3
<PAGE> 4
10. PROVISION OF CERTAIN INFORMATION BY THE ADVISER
The Adviser shall furnish the Subadviser with copies of the Trust's
Prospectus and Statement of Additional Information, and any reports made by the
Trust to its shareholders, as soon as practicable after such documents become
available. The Adviser shall furnish the Subadviser with any further documents,
materials or information that the Subadviser may reasonably request to enable it
to perform its duties pursuant to this Agreement."
11. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transaction for the
Portfolio in any security which the Subadviser, its principals, affiliates or
employees may purchase or sell for their own accounts or other clients."
12. 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 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. Any required
shareholder approval shall be effective with respect to any Portfolio if a
majority of the outstanding voting securities 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.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
15. 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
applicable party 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 paragraph.
16. 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.
17. 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.
4
<PAGE> 5
18. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust dated September 28, 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, 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 which the obligee or claimant dealt,
shall be liable.
18. PRIOR AGREEMENTS
With respect to each Portfolio, this Agreement supercedes all prior
agreements between the Adviser and the Subadviser regarding the provisions of
subadvisory services to the Portfolio by the Subadviser, including, without
limitation, the Agreement dated October 1, 1996, as amended December 31, 1996
between the Adviser and the Subadviser which is terminated as of the effective
date of this Agreement with respect to the Portfolio.
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 Securities Services, LLC
by: The Manufacturers Life Insurance Company of North America, Managing
Member
by:
-------------------------------------
Ted Kilkuskie, President
by:
-------------------------------------
James D. Gallagher, Vice President, Secretary
and General Counsel
T. Rowe Price Associates, Inc.
by:
-------------------------------------
Darrell N. Braman,
Vice President
5
<PAGE> 6
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
<S> <C> <C> <C> <C>
Blue Chip Growth Trust.................... .400% .400% .400% .350%
Equity-Income Trust...................... .400% .400% .400% .350%
(formerly, the Value Equity Trust)
Science & Technology Trust................ .600% .600% .600% .600%
</TABLE>
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals 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.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
6
<PAGE> 1
EXHIBIT (d)(14)
MANUFACTURERS INVESTMENT TRUST
AMENDED SUBADVISORY AGREEMENT
AGREEMENT made this__ day of January, 1999, between Manufacturers
Securities Services, LLC, a Delaware limited liability company (the "Adviser'),
and Fidelity Management Trust Company, a Massachusetts Corporation (the
"Subadviser"). In consideration of the mutual covenants contained herein, the
parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of Manufacturers Investment Trust
(the "Trust") and terms of this Agreement, to manage the investment and
reinvestment of the assets of each of the portfolios of the Trust specified in
Appendix A to this Agreement as it shall be amended by the Adviser and the
Subadviser from time to time (the "Portfolio" or "Portfolios"). The Subadviser
will be an independent contractor and will have no authority to act for or
represent the Trust or Adviser in any way or otherwise be deemed an agent unless
expressly authorized in this Agreement or another writing by the Trust and
Adviser. The Subadviser represents that it is a "bank" as defined under the
Investment Advisers Act.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. The Subadviser will manage the investments and determine the
composition of the assets of the Portfolios, subject always to the
direction and control of the Trustees of the Trust, and in accordance
with the provisions of the Trust's registration statement. In
fulfilling its obligations to manage the investments and reinvestments
of the assets of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical,
financial and other information affecting the economy
generally and individual companies or industries the
securities of which are included in the Portfolios or
are under consideration for inclusion in the
Portfolios;
ii. formulate and implement a continuous investment
program for each Portfolio consistent with the
investment objectives and related investment policies
for each such Portfolio as described in the Trust's
registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of
securities and other investments authorized under the
Trust's registration statement including the placing
of orders for such purchases and sales.
iv. regularly report to the Trustees of the Trust with
respect to the implementation of these investment
programs; and
v. provide determinations of the fair value of certain
securities when market quotations are not readily
available for purposes of calculating net asset value
for the Trust's Custodian in accordance with
procedures and methods established by the Trustees of
the Trust.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: the Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is
directed at all times to seek to execute brokerage transactions
<PAGE> 2
for the Portfolios in accordance with such policies or practices as may
be established by the Trustees and described in the Trust's
registration statement as amended. The Subadviser may pay a
broker-dealer which provided research and brokerage services a higher
commission for a particular transaction than otherwise might have been
charged by another broker-dealer, if the Subadviser determines that the
higher commission is reasonable in relation to the value of the
brokerage and research services that such broker-dealer provides,
viewed in terms of either the particular transaction or the
Subadviser's overall responsibilities with respect to accounts managed
by the Subadviser. The Subadviser may use for the benefit of the
Subadviser's other clients, or make available to companies affiliated
with the Subadviser or to its directors for the benefit of its clients,
any such brokerage and research services that the Subadviser obtains
from brokers or dealers.
d. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its directors, officers or employees
shall be liable to the Adviser or Trust for any loss suffered by the Adviser or
Trust resulting from its acts or omissions as Subadviser to the Portfolios,
except for losses resulting from willful misfeasance, bad faith, or gross
negligence in the performance of, or from reckless disregard of, the duties of
the Subadviser or any of its directors, officers or employees. The Subadviser,
its directors, officers or employees shall not be liable to the Adviser or Trust
for any loss suffered as a consequence of any action or inaction of the
Custodian in failing to observe the instructions of the Subadviser.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities to
the Subadviser.
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
stockholders or otherwise; that directors, officers, agents and stockholders of
the Subadviser are or may be interested in the Trust as Trustees, officers,
shareholders or otherwise; that the Subadviser 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 Subadviser, respectively, or by specific provision of
applicable law.
7. REGULATION
The Subadviser 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 of require pursuant to applicable laws and regulations.
2
<PAGE> 3
8. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on
the later of: (i) approval by the Trustees of Manufacturers Investment Trust,
(ii) its execution and (ii) disclosure of the provisions of the Agreement in the
prospectus of Manufacturers Investment Trust. Thereafter, 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 a majority of the outstanding
voting securities of each of the Portfolios, 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. Any required shareholder approval of the
Agreement or any continuance of the Agreement shall be effective with respect to
any Portfolio if a majority of the outstanding voting securities of that
Portfolio vote 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 any required shareholder approval of this Agreement or any
continuance of the Agreement is not obtained, the Subadviser will continue to
act as investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust or, with respect to any Portfolio, by
the vote of a majority of the outstanding voting securities of such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser ceases to be exempt from registration as an Investment
Adviser under the Investment Advisers Act or under the laws of any
jurisdiction in which the Subadviser is required to be registered as an
investment adviser in order to perform its obligations under this
Agreement;
b. the Subadviser 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
Subadviser or the portfolio manager of any Portfolio changes.
10. USE OF SUBADVISER'S NAME
The Adviser will not use the Subadviser's name (or that of any
affiliate) in Trust literature without prior review and approval by the
Subadviser, which will not be unreasonably withheld or delayed.
3
<PAGE> 4
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 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. Any required
shareholder approval shall be effective with respect to any Portfolio if a
majority of the outstanding voting securities 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 with respect to the Portfolios listed in Appendix A.
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
applicable party 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 paragraph.
15. SEVERABILITY
Should any portion of this Agreement for any reason be held to 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 28,
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, 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 which the obligee or
claimant dealt, shall be liable.
18. PRIOR AGREEMENTS
With respect to each Portfolio, this Agreement supercedes all prior
agreements between the Adviser and the Subadviser regarding the provisions of
subadvisory services to the Portfolio by the Subadviser, including, without
limitation, the Agreement dated January 1, 1996, as amended December 31, 1996
between the Adviser and the Subadviser which is terminated as of the effective
date of this Agreement with respect to the Portfolio.
4
<PAGE> 5
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 Securities Services, LLC
by: The Manufacturers Life Insurance Company of
North America, Managing Member
by:
--------------------------------------
Ted Kilkuskie, President
by:
--------------------------------------
James D. Gallagher, Vice President, Secretary
and General Counsel
[SEAL] Fidelity Management Trust Company
by:
--------------------------------------
5
<PAGE> 6
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolios of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $750,000,000 $750,000,000
<S> <C> <C> <C> <C>
Overseas .................................. .500% .500% .500% .450%
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $750,000,000 $750,000,000
Large Cap Stock............................ .400% .400% .400% .350%
(formerly, the Aggressive Asset Allocation Trust)
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
Mid-Cap Blend.............................. .350% .350% .350% .350%
(formerly, Equity)
</TABLE>
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals 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.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
6
<PAGE> 1
EXHIBIT (d)(16)
MANUFACTURERS INVESTMENT TRUST
SUBADVISORY AGREEMENT
AGREEMENT made this 28th day of January, 1999, between Manufacturers
Securities Services, LLC, a Delaware limited liability company (the "Adviser"),
and A I M Capital Management, Inc., (the "Subadviser"). In consideration of the
mutual covenants contained herein, the parties agree as follows:
WHEREAS, the Adviser represents that it is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act") as an investment adviser
and engages in the business of acting as an investment adviser;
WHEREAS, the Subadviser represents that it is registered under the Advisers Act
as an investment adviser and as an investment adviser and engages in the
business of acting as an investment adviser;
WHEREAS, the Adviser represents that it has entered into an investment advisory
agreement wtih the Manufacturers Investment Trust, dated as of January 1, 1996,
as amended (the "Advisory Agreement"), pursuant to which the Adviser shall act
as the investment adviser to the Portfolios specified in Appendix A and has the
authority to delegate certain of its responsibilities thereunder;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of the Trust and the Adviser and the
terms of this Agreement, to manage the investment and reinvestment of the assets
of the Portfolios specified in Appendix A to this Agreement as it shall be
amended by the Adviser and the Subadviser from time to time (the "Portfolios").
The Subadviser will be an independent contractor and will have no authority to
act for or represent the Trust or Adviser in any way except as expressly
authorized in this Agreement or another writing by the Trust and Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER
a. Subject always to the direction and control of the Trustees of the
Trust and the Adviser, the Subadviser will manage the investments and
determine the composition of the assets of the Portfolios in accordance
with the Portfolios' registration statement, as amended. The Adviser
agrees promptly to provide for the duration of this Agreement copies of
all amendments and supplements to the current Registration Statement,
Prospectus and the Statement of Additional Information ("Statement")
that relate to: (i) the Subadviser, (ii) any of the Portfolios or (iii)
the management of any of the Portfolios, on or before the effective
date thereof. Until the Adviser delivers any such amendment or
supplement to the Subadviser, the Subadviser shall be fully protected
in relying on the Registration Statement, Prospectus and Statement as
previously furnished to the Subadviser.
In fulfilling its obligations to manage the investments and reinvestments of the
assets of the Portfolios, the Subadviser will:
i. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement;
ii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iii. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs; and
<PAGE> 2
iv. provide assistance to the Trust's Custodian, upon request, to
enable Custodian to discharge its responsibilities regarding
the fair value of securities held by the Portfolios for which
market quotations are not readily available.
v. Unless the Adviser gives the Subadviser written instruction to
the contrary, the Subadviser shall use its good faith judgment
in a manner which it reasonably believes best serves the
interests of the Portfolios' shareholders to 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.
vi. The Subadviser has adopted a written code of ethics that it
reasonably believes complies with the requirements of Rule
17j-1 under the Investment Company Act, which it will provide
to the Trust. The Subadviser has policies and procedures
regarding the detection and prevention and the misuse of
material, nonpublic information by the Subadviser and it
employees as required by the Insider Trading and Securities
Fraud Enforcement Act of 1988.
The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii) sufficient
administrative facilities to perform its obligations under this
Agreement.
The Portfolios will bear certain other expenses to be incurred in its
operation, including, but not limited to, investment advisory fees,
subadvisory fees (other than sub-advisory fees paid pursuant to this
Agreement) and administration fees; fees for necessary professional and
brokerage services; costs relating to local administration of
securities; fees for any pricing service; the costs of regulatory
compliance; and pro rata costs associated with maintaining the Trust's
legal existence and shareholder relations. All other expenses not
specifically assumed by the Subadviser hereunder are borne by the
Adviser or the Trust.
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is
directed at all times to seek to execute brokerage transactions for the
Portfolios in accordance with such policies or practices as may be
established by the Trustees and described in the Trust's registration
statement. The Subadviser's primary consideration in effecting a
security transaction will be execution at the most favorable price. In
selecting a broker-dealer to execute each particular transaction, the
Subadviser will take the following into consideration: the best net
price available; the reliability, integrity and financial condition of
the broker-dealer, the size of and difficulty in executing the order;
and the value of the expected contribution of the broker-dealer to the
investment performance of the Portfolio on a continuing basis.
Accordingly, the price to a Portfolio in any transaction may be less
favorable than that available from another broker-dealer if the
difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies as the Trustees
may from time to time determine, the Subadviser shall not be deemed to
have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused a
Portfolio to pay a broker or dealer that provides brokerage and
research services to the Subadviser a higher spread or commission for a
particular transaction than otherwise might have been charged by
another broker-dealer, if the Subadviser determines that the higher
spread or commission is reasonable in relation to the value of the
brokerage and research services that such broker-dealer provides,
viewed in terms of either the particular transaction or the
Subadviser's overall responsibilities with respect to accounts managed
by the Subadviser. The Subadviser is further 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 the Subadviser. Such allocation shall
be in such amount and proportions as the Subadviser shall determine and
the Subadviser will report on said allocations regularly to the
Trustees indicating the brokers to whom such allocations have been made
and the basis therefor. The Subadviser may use for the benefit of the
Subadviser's other clients, or make available to companies affiliated
with the Subadviser or to its directors for the benefit of its clients,
any such brokerage and research services that the Subadviser obtains
from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and
2
<PAGE> 3
regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold to attempt to obtain a more
favorable price or lower brokerage commissions and efficient execution.
In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the
Subadviser in the manner the Subadviser considers to be the most
equitable and consistent with its fiduciary obligations to the
Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder. The Adviser
will maintain and preserve all books and other records not related to
the Portfolios' investment transactions as required of an investment
adviser of a registered investment company pursuant to the Investment
Company Act of 1940.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its directors, officers or employees
shall be liable to the Adviser or the Trust for any error of judgment or mistake
of law or for any loss suffered by the Adviser, the Trust or any shareholders of
the Trust in connection with the matters to which this Agreement relates except
for losses resulting from willful misfeasance, bad faith or gross negligence in
the performance of, or from the reckless disregard of, the duties of the
Subadviser.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
shareholders or otherwise; that employees, agents and partners of the Subadviser
are or may be interested in the Trust as trustees, officers, shareholders or
otherwise; that the Subadviser 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 certificate of incorporation of the
Subadviser, respectively, or by specific provision of applicable law.
6. REGULATION
The Subadviser 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.
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on
the later of (i) its execution, (ii) the date of the meeting of the Board of
Trustees of the Trust, at which meeting this Agreement is approved and (iii)
disclosure of the terms of this Agreement with respect to a Portfolio in the
prospectus of Manufacturers Investment Trust. The Agreement will continue in
effect for an initial term of two years and shall continue in effect thereafter
only if approved as required by the Investment Company Act. Any 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.
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
3
<PAGE> 4
majority of the outstanding voting securities of such Portfolio, on sixty days'
written notice to the Adviser and the Subadviser, or by the Adviser or
Subadviser on sixty days' written notice to the Trust and the other party. This
Agreement will automatically terminate, without the payment of any penalty, in
the event of its assignment (as defined in the Investment Company Act) or in the
event the Advisory Agreement between the Adviser and the Trust terminates for
any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Subadviser 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. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
9. SERVICES TO OTHER CLIENTS
The Trust and the Adviser understand that the Subadviser now acts, will
continue to act and may in the future act, as an investment adviser to fiduciary
and other managed accounts and as investment adviser or subadviser to other
investment companies, including any offshore entities, or accounts, and the
Trust has no objection to the Subadviser's so acting, provided that whenever the
Portfolios and one or more other investment companies or accounts managed or
advised by the Subadviser have available funds for investment, investments
suitable and appropriate for each will be allocated in accordance with a formula
believed to be equitable to each company and account. The Trust recognizes that
in some cases this procedure may adversely affect the size of the position
obtainable for the Portfolios. In addition, the Trust understands that the
persons employed by the Subadviser to assist in the performance of the
Subadviser's duties under this Agreement will not devote their full time to such
service and nothing contained in this Agreement shall be deemed to limit or
restrict the right of the Subadviser or any affiliate of the Subadviser to
engage in and devote time and attention to other businesses or to render
services of what ever kind or nature. Further, the Trust and the Adviser
understand that the Subadviser and its affiliates may give advice and take
action for its accounts, including investment companies, which differs from
advice given on the timing or nature of action taken for the Portfolio. The
Subadviser is not obligated to initiate transactions for a Portfolio in any
security which the Subadviser, its affiliates or employees may purchase or sell
for their own accounts or other clients.
10. 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 Trustees of the Trust 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. Any required shareholder approval shall
be effective with respect to any Portfolio if a majority of the outstanding
voting securities 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.
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
4
<PAGE> 5
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
13. 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
applicable party 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 paragraph.
14. 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.
15. 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 or the Advisers 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 or the Advisers Act, the Investment Company Act and the
Advisers Act shall control.
16. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust dated September 28, 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, 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.
17. USE OF NAME
The Adviser and its affiliates may use the name "A I M Capital
Management, Inc.," "AIM Capital Management," or AIM Capital" (collectively, the
"AIM Names") only for so long as this Agreement or any extension, renewal, or
amendment hereof remains in effect. At such times as this Agreement shall no
longer be in effect, the Adviser and its affiliates shall cease to use such
names or any other name indicating that it is advised by or otherwise connected
with the Subadviser and shall promptly change it name accordingly. The Adviser
acknowledges that it has authority to use the AIM Names through permission of
the Subadviser, and agrees that the Subadviser reserves to itself and any
successor to its business the right to grant the non-exclusive right to use the
aforementioned names or any similar names to any other corporation or entity,
including, but not limited to, any investment company of which the Subadviser or
any subsidiary or affiliate thereof or any successor to the business of any
thereof shall be the investment adviser.
5
<PAGE> 6
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 Securities Services, LLC
by: The Manufacturers Life Insurance Company of
North America, Managing Member
by:
-------------------------------------
Ted Kilkuskie, President
by:
-------------------------------------
James D. Gallagher, Vice President, Secretary
and General Counsel
A I M Capital Management, Inc.
by:
-------------------------------------
Gary T. Crum, President
by:
-------------------------------------
Nancy L. Martin, Vice President, General Counsel
and Assistant Secretary
6
<PAGE> 7
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolios of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
<S> <C> <C> <C> <C>
Mid Cap Growth Trust...................... .500% .475% .450% .400%
Aggressive Growth Trust................... .500% .500% .500% .450%
</TABLE>
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals 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.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
7
<PAGE> 1
EXHIBIT (d)(15)
MANUFACTURERS INVESTMENT TRUST
SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of January, 1999, between Manufacturers
Securities Services, LLC, a Delaware limited liability company (the "Adviser"),
and AXA Rosenberg Investment Management LLC, a Delaware limited liability
company (the "Subadviser"). In consideration of the mutual covenants contained
herein, the parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of Manufacturers Investment Trust
(the "Trust") and the terms of this Agreement, to manage the investment and
reinvestment of the assets of the Portfolios specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Subadviser from time to
time (the "Portfolios"). The Subadviser will be an independent contractor and
will have no authority to act for or represent the Trust or Adviser in any way
except as expressly authorized in this Agreement or another writing by the Trust
and Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs; and
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Portfolios in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as
amended. The Subadviser may pay a broker-dealer which provides research
and brokerage services a higher spread or commission for a particular
transaction than otherwise might have been charged by another
broker-dealer, if the Subadviser determines that the higher
<PAGE> 2
spread or commission is reasonable in relation to the value of the
brokerage and research services that such broker-dealer provides,
viewed in terms of either the particular transaction or the
Subadviser's overall responsibilities with respect to accounts managed
by the Subadviser. The Subadviser may use for the benefit of the
Subadviser's other clients, or make available to companies affiliated
with the Subadviser or to its directors for the benefit of its clients,
any such brokerage and research services that the Subadviser obtains
from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its employees or partners shall be
liable to the Adviser or Trust for any loss suffered by the Adviser or Trust
resulting from any error of judgment made in the good faith exercise of the
Subadviser's investment discretion in connection with selecting Portfolio
investments except for losses resulting from willful misfeasance, bad faith or
gross negligence of, or from reckless disregard of, the duties of the Subadviser
or any of its partners or employees; and neither the Subadviser nor any of its
employees or partners shall be liable to the Adviser or Trust for any loss
suffered by the Adviser or Trust resulting from any other matters to which this
Agreement relates (I.E., those other matters specified in Sections 2 and 7 of
this Agreement), except for losses resulting from willful misfeasance, bad
faith, or gross negligence in the performance of, or from disregard of, the
duties of the Subadviser or any of its partners or employees.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that employees, agents and partners of the Subadviser are
or may be interested in the Trust as trustees, officers, shareholders or
otherwise; that the Subadviser 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 partnership agreement of the
Subadviser, respectively, or by specific provision of applicable law.
6. REGULATION
The Subadviser 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.
2
<PAGE> 3
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on
the later of (i) its execution and (ii) the date of the meeting of the Board of
Trustees of the Trust, at which meeting this Agreement is approved as described
below. 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 a majority
of the outstanding voting securities of each of the Portfolios, 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. Any 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 any required shareholder approval of this Agreement or any
continuance of the Agreement is not obtained, the Subadviser will continue to
act as investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
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 such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Subadviser 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. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
9. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transaction for a
Portfolio in any security which the Subadviser, its partners, affiliates or
employees may purchase or sell for their own accounts or other clients.
3
<PAGE> 4
10. 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 Trustees of the Trust 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. Any required shareholder approval shall
be effective with respect to any Portfolio if a majority of the outstanding
voting securities 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.
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
13. 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
applicable party 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 paragraph.
14. 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.
15. 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.
16. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust dated September 28, 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, 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 which the obligee or claimant dealt,
shall be liable.
4
<PAGE> 5
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 Securities Services, LLC
by: The Manufacturers Life Insurance Company of
North America, Managing Member
by:
-------------------------------------
John D. DesPrez III, Chairman
by:
-------------------------------------
James D. Gallagher, Vice President, Secretary
and General Counsel
AXA Rosenberg Investment Management LLC
by:
-------------------------------------
Kenneth Reid,
General Partner
5
<PAGE> 6
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
Small Company Value Portfolio: .600% of the first $50,000,000, .575%
between $50,000,000 and $200,000,000, .525% between $200,000,000 and
$500,000,000 and .475% on the excess over $500,000,000 of the current
value of the net assets of the Portfolio.
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals 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.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
6
<PAGE> 1
EXHIBIT (d)(17)
MANUFACTURERS INVESTMENT TRUST
SUBADVISORY AGREEMENT
AGREEMENT made this 25th day of January, 1999, between Manufacturers
Securities Services, LLC, a Delaware limited liability company (the "Adviser"),
and Capital Guardian Trust Company, a California state-chartered trust company
(the "Subadviser"). In consideration of the mutual covenants contained herein,
the parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of Manufacturers Investment Trust
(the "Trust") and the terms of this Agreement, to manage the investment and
reinvestment of the assets of the Portfolios specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Subadviser from time to
time (the "Portfolios"). The Subadviser will be an independent contractor and
will have no authority to act for or represent the Trust or Adviser in any way
except as expressly authorized in this Agreement or another writing by the Trust
and Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
applicable provisions specifically identified as the Subadviser's
responsibility in the Portfolios' registration statement, as amended.
In fulfilling its obligations to manage the investments and
reinvestments of the assets of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs;
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available; and
vi. when delegated by the Adviser with such delegation being
agreed to by the Subadviser, vote proxies for shareholder
meetings of companies the securities of which are held by the
Portfolios.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the Subadviser's
activities contemplated hereunder.
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage
<PAGE> 2
commissions if applicable. The Subadviser is directed at all times to
seek to execute brokerage transactions for the Portfolios in accordance
with such policies or practices as may be established by the Trustees
and described in the Trust's registration statement as amended. The
Subadviser may pay a broker-dealer which provides research and
brokerage services a higher spread or commission for a particular
transaction than otherwise might have been charged by another
broker-dealer, if the Subadviser determines that the higher spread or
commission is reasonable in relation to the value of the brokerage and
research services that such broker-dealer provides, viewed in terms of
either the particular transaction or the Subadviser's overall
responsibilities with respect to accounts managed by the Subadviser.
The Subadviser may use for the benefit of the Subadviser's other
clients, or make available to companies affiliated with the Subadviser
or to its directors for the benefit of its clients, any such brokerage
and research services that the Subadviser obtains from brokers or
dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of the Subadviser pursuant to
the Investment Company Act of 1940 (the "Investment Company Act") and
the rules thereunder.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its directors, officers or employees
shall be liable to the Adviser or the Trust for any error of judgment or mistake
of law or for any loss suffered by the Adviser or Trust in connection with the
matters to which this Agreement relates except for losses resulting from willful
misfeasance, bad faith or gross negligence in the performance of, or from the
reckless disregard of, the duties of the Subadviser.
[INSERT 1 - WE PREFER NOT TO PUT INDEMMITY PROVISIONS IN OUR SUBADVISER
AGREEMENTS]
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that employees, agents and partners of the Subadviser are
or may be interested in the Trust as trustees, officers, shareholders or
otherwise; that the Subadviser 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 partnership agreement of the
Subadviser, respectively, or by specific provision of applicable law.
6. REGULATION
The Subadviser 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.
2
<PAGE> 3
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on
the later of: (i) its execution and (ii) the date of the meeting of the Board of
Trustees of the Trust, at which meeting this Agreement is approved as described
below and (iii) disclosure of the terms of this Agreement with respect to a
Portfolio in the prospectus of Manufacturers Investment Trust. 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 a majority of the outstanding
voting securities of each of the Portfolios, 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. Any 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 any required shareholder approval of this Agreement or any
continuance of the Agreement is not obtained, the Subadviser will continue to
act as investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
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 such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser ceased to be exempt from registration as an Investment
Adviser under the Investment Advisor Act of 1940;
b. the Subadviser 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, excluding class-action securities suits regarding holdings of
the Portfolios; and
c. any material change in actual control or management of the Subadviser
or the portfolio manager of any Portfolio.
9. SERVICES TO OTHER CLIENTS
The Adviser understands, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transactions for a
Portfolio in any security which the Subadviser, its partners, affiliates or
employees may purchase or sell for their own accounts or other clients.
3
<PAGE> 4
10. AMENDMENTS TO THE AGREEMENT
All amendments to this Agreement shall be in writing and mutually
agreed to by the parties. Further, this Agreement may be amended by the parties
only if such amendment is specifically approved by the vote of a majority of the
Trustees of the Trust 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. Any required
shareholder approval shall be effective with respect to any Portfolio if a
majority of the outstanding voting securities 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.
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
13. 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
applicable party 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 paragraph.
14. 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.
15. 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.
16. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust dated September 28, 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, 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.
17. DELEGATION OF DUTIES
4
<PAGE> 5
In performing its services under this Agreement, the Subadviser may
delegate all or any of its duties and responsibilities to other affiliates of
The Capital Group Companies, Inc.; provided, however, the Subadviser shall
remain responsible under this Agreement for all such delegated duties.
18. ADVISER'S REPRESENTATIONS
The Adviser hereby warrants and represents to the Subadviser that (a)
it has obtained all applicable licenses, permits, registrations and approvals
that may be required in order to serve in its designated capacities with respect
to the Trust, and shall continue to keep current such licenses, permits,
registrations and approvals for so long as this Agreement is in effect; (b) it
is not prohibited by the 1940 Act or other applicable laws and regulations from
performing the services contemplated by this Agreement; (c) it will immediately
notify the Subadviser of the occurrences of any event that would disqualify it
from serving in its designated capacities with respect to the Trust; and (d)
this Agreement has been duly and validly authorized, executed and delivered on
behalf of the Adviser and is a valid and binding Agreement of the Adviser
enforceable in accordance with its terms.
19. USE OF NAME
The parties agree that the name "Capital Guardian Trust Company," the
names of the Subadviser's affiliates within The Capital Group Companies, Inc.,
and any derivative or logo or trade or service mark, are the valuable property
of the Subadviser and its affiliates. The Trust and the Adviser shall have the
right to use such name(s), derivatives, logos, trade or service marks only with
the prior written approval of the Subadviser, which approval shall not be
unreasonably withheld so long as this Agreement is in effect. Upon termination
of this Agreement, the Trust and the Adviser shall forthwith cease to use such
names(s), derivatives, logos, trade or service marks. The Trust and the Adviser
agree that they will review with the Subadviser any advertisement, sales
literature or notice prior to its use that make reference to the Subadviser so
that the Subadviser may review the context in which it is referred to, it being
agreed that the Subadviser shall have no responsibility to ensure the adequacy
of the form or content of such materials for purposes of the 1940 Act or other
applicable laws and regulations. If the Trust or the Adviser makes any
unauthorized use of the Subadviser's name(s), derivatives, logos, trade or
service marks, the parties acknowledge that the Subadviser shall suffer
irreparable harm for which monetary damages are inadequate and thus, the
Subadviser shall be entitled to injunctive relief.
5
<PAGE> 6
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 Securities Services, LLC
by: The Manufacturers Life Insurance Company of
North America, Managing Member
by:
-------------------------------------
Ted Kilkuskie, President
by:
-------------------------------------
James D. Gallagher, Vice President, Secretary
and General Counsel
Capital Guardian Trust Company
by:
-------------------------------------
6
<PAGE> 7
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
Portfolios of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
<S> <C> <C> <C> <C>
Small Cap Trust........................... .550% .550% .550% .550%
Capital Guardian Equity Trust............. .400% .400% .400% .350%
Capital Guardian Balanced Trust........... .350% .350% .350% .300%
Fixed -Income Trust....................... .350% .300% .250% .200%
</TABLE>
The Subadviser Fee for each Portfolio represents in full the
compensation to be paid by the Adviser to the Subadviser, and no discounts or
aggregation between accounts shall be applied.
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals will be computed by multiplying the
fraction of one over the number of calendar days in the year [SUCH NUMBER OF
CALENDAR DAYS TO BE DETERMINED AT THE BEGINNING OF EACH CALENDAR YEAR AND
APPLIED THROUGHOUT THE CALENDAR YEAR]* by the applicable annual rates 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.
[* I MUST CONFIRM ADDITION OF THIS DISCLOSURE WITH OUR ACCOUNTING AREA.]
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
7
<PAGE> 1
EXHIBIT (d)(18)
MANUFACTURERS INVESTMENT TRUST
SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of February, 1999, between Manufacturers
Securities Services, LLC, a Delaware limited liability company (the "Adviser"),
and Franklin Advisers, Inc., a California Corporation (the "Subadviser"). In
consideration of the mutual covenants contained herein, the parties agree as
follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of Manufacturers Investment Trust
(the "Trust") and the terms of this Agreement, to manage the investment and
reinvestment of the assets of the Portfolios specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Subadviser from time to
time (the "Portfolios"). The Subadviser will be an independent contractor and
will have no authority to act for or represent the Trust or Adviser in any way
except as expressly authorized in this Agreement or another writing by the Trust
and Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. Prior to the effective
date of this Agreement, Adviser shall provide Subadviser with a current
copy of the Trust's Registration Statement. Thereafter, Adviser shall
promptly notify the Subadviser in writing of any changes to such
Registration Statement that relate to the Subadviser or the Portfolios.
In fulfilling its obligations to manage the investments and
reinvestments of the assets of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. periodically report to the Trustees of the Trust and the
Adviser with respect to the implementation of these investment
programs; and
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available.
vi. purchase, sell, exchange or convert foreign currency in the
spot or forward markets as necessary to facilitate
transactions in international securities for the Portfolios.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value,
proxy voting services and shareholder accounting services).
<PAGE> 2
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is
directed at all times to seek to execute brokerage transactions for the
Portfolios in accordance with such policies or practices as may be
established by the Trustees and described in the Trust's registration
statement as amended. The Subadviser may pay a broker-dealer which
provides research and brokerage services a higher spread or commission
for a particular transaction than otherwise might have been charged by
another broker-dealer, if the Subadviser determines that the higher
spread or commission is reasonable in relation to the value of the
brokerage and research services that such broker-dealer provides,
viewed in terms of either the particular transaction or the
Subadviser's overall responsibilities with respect to accounts managed
by the Subadviser. The Subadviser may use for the benefit of the
Subadviser's other clients, or make available to companies affiliated
with the Subadviser or to its directors for the benefit of its clients,
any such brokerage and research services that the Subadviser obtains
from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
f. Subadviser shall not be expected or required to take any action other
than the rendering of investment-related advice with respect to
lawsuits involving securities presently or formerly held in the
Portfolios, or the issuers thereof, including actions involving
bankruptcy. Should Subadviser desire to undertake litigation against an
issuer on behalf of a Portfolio, the Subadviser shall obtain the prior
written consent of the Adviser to undertake such litigation. If the
Adviser consents to such litigation, the Adviser agrees to pay the
portion of any reasonable legal fees associated with the action (and
the Adviser may then receive reimbursement from the Portfolio for
payment of such legal fees) or the Portfolio will forfeit any claim to
any assets the Subadviser may recover on behalf of the Portfolio up to
the amount of such legal fees owed by the Adviser to the Subadviser. If
the Adviser does not consent to such litigation, the Adviser agrees to
hold Subadviser harmless for excluding the Portfolio from such action
and agrees to indemnify the Subadviser against any claims the Portfolio
may have against the Subadviser resulting from the Portfolio's
exclusion.
In the case of class action suits involving issuers held in the
Portfolios, Subadviser may include information about a Portfolio for
purposes of participating in any settlement with the prior written
permission of the Adviser which will not be unreasonably withheld.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its directors, officers or employees
shall be liable to the Adviser or the Trust for any error of judgment or mistake
of law or for any loss suffered by the Adviser or Trust in connection with the
2
<PAGE> 3
matters to which this Agreement relates except for losses resulting from willful
misfeasance, bad faith or gross negligence in the performance of, or from the
reckless disregard of, the duties of the Subadviser or any of its directors.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that employees, agents and partners of the Subadviser are
or may be interested in the Trust as trustees, officers, shareholders or
otherwise; that the Subadviser 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 partnership agreement of the
Subadviser, respectively, or by specific provision of applicable law.
6. REGULATION
The Subadviser 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.
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on
the later of (i) its execution and (ii) the date of the meeting of the Board of
Trustees of the Trust, at which meeting this Agreement is approved as described
below. 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 a majority
of the outstanding voting securities of each of the Portfolios, 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. Any 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 any required shareholder approval of this Agreement or any
continuance of the Agreement is not obtained, the Subadviser will continue to
act as investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
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 such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
3
<PAGE> 4
b. the Subadviser 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. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
9. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transactions for a
Portfolio in any security which the Subadviser, its partners, affiliates or
employees may purchase or sell for their own accounts or other clients.
10. 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 Trustees of the Trust 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. Any required shareholder approval shall
be effective with respect to any Portfolio if a majority of the outstanding
voting securities 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.
4
<PAGE> 5
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
13. 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
applicable party 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 paragraph.
14. 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.
15. 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.
16. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust dated September 28, 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, 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.
5
<PAGE> 6
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 Securities Services, LLC
by: The Manufacturers Life Insurance Company of North
America, Managing Member
by:
-------------------------------------
Ted Kilkuskie, President
by:
-------------------------------------
James D. Gallagher, Vice President, Secretary
and General Counsel
Franklin Advisers, Inc.
by:
-------------------------------------
6
<PAGE> 7
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
<S> <C> <C> <C> <C>
Emerging Small Company Trust.............. .600% .600% .520% .500%
</TABLE>
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals 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.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
7
<PAGE> 1
EXHIBIT (d)(19)
MANUFACTURERS INVESTMENT TRUST
SUBADVISORY AGREEMENT
AGREEMENT made this 11th day of February, 1999, between Manufacturers
Securities Services, LLC, a Delaware limited liability company (the "Adviser"),
and Pacific Investment Management Company, a Delaware general partnership (the
"Subadviser"). In consideration of the mutual covenants contained herein, the
parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of Manufacturers Investment Trust
(the "Trust") and the terms of this Agreement, to manage the investment and
reinvestment of the assets of the Portfolios specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Subadviser from time to
time (the "Portfolios"). The Subadviser will be an independent contractor and
will have no authority to act for or represent the Trust or Adviser in any way
except as expressly authorized in this Agreement or another writing by the Trust
and Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs; and
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is
directed at all times to seek to execute brokerage transactions for the
Portfolios in accordance with such policies or practices as may be
established by the Trustees and described in the Trust's registration
statement as amended. The Subadviser may pay a broker-dealer which
provides research and brokerage services a higher spread or commission
for a particular transaction than otherwise might have been charged by
another broker-dealer, if the Subadviser determines that the higher
spread or commission is reasonable in relation to the value of the
brokerage and research services that such
<PAGE> 2
broker-dealer provides, viewed in terms of either the particular
transaction or the Subadviser's overall responsibilities with respect
to accounts managed by the Subadviser. The Subadviser may use for the
benefit of the Subadviser's other clients, or make available to
companies affiliated with the Subadviser or to its directors for the
benefit of its clients, any such brokerage and research services that
the Subadviser obtains from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its directors, officers or employees
shall be liable to the Adviser or the Trust for any error of judgment or mistake
of law or for any loss suffered by the Adviser or Trust in connection with the
matters to which this Agreement relates except for losses resulting from willful
misfeasance, bad faith or gross negligence in the performance of, or from the
reckless disregard of, the duties of the Subadviser or any of its directors.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that employees, agents and partners of the Subadviser are
or may be interested in the Trust as trustees, officers, shareholders or
otherwise; that the Subadviser 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 partnerhsip agreement of the
Subadviser, respectively, or by specific provision of applicable law.
6. REGULATION
The Subadviser 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.
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on
the later of (i) its execution, (ii) the date of the meeting of the Board of
Trustees of the Trust, at which meeting this Agreement is approved as described
below and (iii) disclosure of the terms of this Agreement in the prospectus of
Manufacturers Investment Trust. 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 a majority of the outstanding voting securities of each of the
Portfolios, provided that in either event such continuance shall also be
ap-
2
<PAGE> 3
proved 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. Any 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 any required shareholder approval of this Agreement or any
continuance of the Agreement is not obtained, the Subadviser will continue to
act as investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
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 such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Subadviser 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. any change in partners of the Subadviser or the portfolio manager of
any Portfolio.
9. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transactions for a
Portfolio in any security which the Subadviser, its partners, affiliates or
employees may purchase or sell for their own accounts or other clients.
10. 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 Trustees of the Trust 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. Any required shareholder approval shall
be effective with respect to any Portfolio if a majority of the outstanding
voting securities 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.
3
<PAGE> 4
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
13. 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
applicable party 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 paragraph.
The Subadviser is expressly authorized to rely upon any and all
instructions, approvals and notices given on behalf of the Adviser by any one or
more of those persons designated as representatives of the Adviser whose names,
titles and specimen signatures appear in APPENDIX "B" attached hereto. The
Adviser may amend such Appendix B from time to time by written notice to the
Subadviser. The Subadviser shall continue to rely upon these instructions until
notified by the Adviser to the contrary.
14. 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.
15. 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.
16. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust dated September 28, 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, 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.
17. REPRESENTATIONS
The Adviser represents to the Subadviser that the Adviser has all
necessary power and authority to execute, deliver and perform this Agreement and
all transactions contemplated hereby, and such execution, delivery and
performance will not violate any applicable law, rule, regulation, governing
document (e.g., Certificate of Incorporation or Bylaws), contract or other
material agreement binding upon the Adviser.
The Subadviser represents to the Adviser that the Subadviser has all
necessary power and authority to execute, deliver and perform this Agreement and
all transactions contemplated hereby, and such execution, delivery and
4
<PAGE> 5
performance will not violate any applicable law, rule, regulation, governing
document (e.g., Certificate of Incorporation or Bylaws), contract or other
material agreement binding upon the Adviser.
18. DELIVERY OF PART II OF FORM ADV
Concurrently with the execution of this Agreement, the Subadviser is
delivering to the Adviser a copy of Part II of its Form ADV, as revised, on
file with the Securities and Exchange Commission. The Adviser acknowledges
receipt of such copy.
[FUTURES AND OPTIONS DISCLOSURE. THIS IS NOT CUSTOMARILY CONTAINED IN OUR
SUBADVISORY AGREEMENTS ALTHOUGH WE WILL, OF COURSE, OPEN BROKERAGE ACCOUNTS FOR
TRADING OPTIONS AND FUTURES. WE HAVE SEVERAL OPEN ALREADY.]
5
<PAGE> 6
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 Securities Services, LLC
by: The Manufacturers Life Insurance Company of North
America, Managing Member
by:
-------------------------------------
Ted Kilkuskie, President
by:
-------------------------------------
James D. Gallagher, Vice President, Secretary
and General Counsel
Pacific Investment Management Company
By: PIMCO Management Inc., a general partner
by:
-------------------------------------
Name:
Title: Managing Director
6
<PAGE> 7
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
<S> <C> <C> <C> <C>
Global Bond Trust........................ .% .% .% .%
Total Return Trust........................ .% .% .% .%
</TABLE>
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals 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.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
7
<PAGE> 8
APPENDIX B
LIST OF AUTHORIZED PERSONS
John D. DesPrez III
Robert Boyda
James Boyle
James D. Gallagher
Gordon Shone
8
<PAGE> 1
EXHIBIT (d)(20)
MANUFACTURERS INVESTMENT TRUST
SUBADVISORY AGREEMENT
AGREEMENT made this 21st day of January 1999, between Manufacturers
Securities Services, LLC, a Delaware limited liability company (the "Adviser"),
and State Street Global Advisors, a division of State Street Bank and Trust
Company, a Massachusetts trust company (the "Subadviser"). In consideration of
the mutual covenants contained herein, the parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of Manufacturers Investment Trust
(the "Trust") and the terms of this Agreement, to manage the investment and
reinvestment of the assets of the Portfolios specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Subadviser from time to
time (the "Portfolios"). The Subadviser will be an independent contractor and
will have no authority to act for or represent the Trust or Adviser in any way
except as expressly authorized in this Agreement or another writing by the Trust
and Adviser.
The Subadviser represents that it is a "bank" as such term is defined
in the Investment Advisers Act and, therefore, is not required to be registered
under the Investment Advisers Act.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. In fulfilling its
obligations to manage the investments and reinvestments of the assets
of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to
the implementation of these investment programs; and
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is
directed at all times to seek to execute brokerage transactions for the
Portfolios in accordance with such policies or practices as may be
established by the Trustees and
<PAGE> 2
described in the Trust's registration statement as amended. The
Subadviser may pay a broker-dealer which provides research and
brokerage services a higher spread or commission for a particular
transaction than otherwise might have been charged by another
broker-dealer, if the Subadviser determines that the higher spread or
commission is reasonable in relation to the value of the brokerage and
research services that such broker-dealer provides, viewed in terms of
either the particular transaction or the Subadviser's overall
responsibilities with respect to accounts managed by the Subadviser.
The Subadviser may use for the benefit of the Subadviser's other
clients, or make available to companies affiliated with the Subadviser
or to its directors for the benefit of its clients, any such brokerage
and research services that the Subadviser obtains from brokers or
dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its directors, officers or employees
shall be liable to the Adviser or the Trust for any error of judgment or mistake
of law or for any loss suffered by the Adviser or Trust in connection with the
matters to which this Agreement relates except for losses resulting from willful
misfeasance, bad faith or gross negligence in the performance of, or from the
reckless disregard of, the duties of the Subadviser or any of its directors.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that employees, agents and partners of the Subadviser are
or may be interested in the Trust as trustees, officers, shareholders or
otherwise; that the Subadviser 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 partnership agreement of the
Subadviser, respectively, or by specific provision of applicable law.
6. REGULATION
The Subadviser 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.
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<PAGE> 3
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on
the later of (i) its execution, (ii) the date of the meeting of the Board of
Trustees of the Trust, at which meeting this Agreement is approved as described
below and (iii) disclosure of the terms of this Agreement with respect to a
Portfolio in the prospectus of Manufacturers Investment Trust. 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 a majority of the outstanding
voting securities of each of the Portfolios, 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. Any 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 any required shareholder approval of this Agreement or any
continuance of the Agreement is not obtained, the Subadviser will continue to
act as investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
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 such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be a "bank" as such term is defined under the
Investment Advisers Act;
b. the Subadviser 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. any change in control of the Subadviser within the meaning of the
Investment Company Act of 1940 or any change in the portfolio manager
of any Portfolio.
9. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transactions for a
Portfolio in any security which the Subadviser, its partners, affiliates or
employees may purchase or sell for their own accounts or other clients.
10. AMENDMENTS TO THE AGREEMENT
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<PAGE> 4
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the Trustees of the Trust 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. Any required shareholder approval shall
be effective with respect to any Portfolio if a majority of the outstanding
voting securities 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.
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
13. 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, the
Subadviser or the Adviser, as applicable, 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
paragraph.
14. 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.
15. 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.
16. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust dated September 28, 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, 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.
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<PAGE> 5
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 Securities Services, LLC
by: The Manufacturers Life Insurance Company of North
America, Managing Member
by:
-------------------------------------
Ted Kilkuskie, President
by:
-------------------------------------
James D. Gallagher, Vice President, Secretary
and General Counsel
State Street Global Advisors, a division of State
Street Bank and Trust Company
by:
-------------------------------------
5
<PAGE> 6
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
<S> <C> <C> <C> <C>
Large Cap Growth Trust.................... .400% .400% .350% .300%
</TABLE>
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals 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.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
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<PAGE> 1
EXHIBIT (d)(21)
MANUFACTURERS INVESTMENT TRUST
SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of February, 1999, between Manufacturers
Securities Services, LLC, a Delaware limited liability company (the "Adviser"),
and Templeton Investment Counsel, Inc, a Florida Corporation (the "Subadviser").
In consideration of the mutual covenants contained herein, the parties agree as
follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of Manufacturers Investment Trust
(the "Trust") and the terms of this Agreement, to manage the investment and
reinvestment of the assets of the Portfolios specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Subadviser from time to
time (the "Portfolios"). The Subadviser will be an independent contractor and
will have no authority to act for or represent the Trust or Adviser in any way
except as expressly authorized in this Agreement or another writing by the Trust
and Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the
Trust, the Subadviser will manage the investments and determine the
composition of the assets of the Portfolios in accordance with the
Portfolios' registration statement, as amended. Prior to the effective
date of this Agreement, Adviser shall provide Subadviser with a current
copy of the Trust's Registration Statement. Thereafter, Adviser shall
promptly notify the Subadviser in writing of any changes to such
Registration Statement that relate to the Subadviser or the Portfolios.
In fulfilling its obligations to manage the investments and
reinvestments of the assets of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolios or are under consideration for
inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of securities
including the placing of orders for such purchases and sales;
iv. periodically report to the Trustees of the Trust and the
Adviser with respect to the implementation of these investment
programs; and
v. provide assistance to the Trust's Custodian regarding the fair
value of securities held by the Portfolios for which market
quotations are not readily available.
vi. purchase, sell, exchange or convert foreign currency in the
spot or forward markets as necessary to facilitate
transactions in international securities for the Portfolios.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value,
proxy voting services and shareholder accounting services).
<PAGE> 2
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is
directed at all times to seek to execute brokerage transactions for the
Portfolios in accordance with such policies or practices as may be
established by the Trustees and described in the Trust's registration
statement as amended. The Subadviser may pay a broker-dealer which
provides research and brokerage services a higher spread or commission
for a particular transaction than otherwise might have been charged by
another broker-dealer, if the Subadviser determines that the higher
spread or commission is reasonable in relation to the value of the
brokerage and research services that such broker-dealer provides,
viewed in terms of either the particular transaction or the
Subadviser's overall responsibilities with respect to accounts managed
by the Subadviser. The Subadviser may use for the benefit of the
Subadviser's other clients, or make available to companies affiliated
with the Subadviser or to its directors for the benefit of its clients,
any such brokerage and research services that the Subadviser obtains
from brokers or dealers.
d. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
e. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and Investment Advisers Act of 1940
(the "Investment Advisers Act") and the rules thereunder.
f. Subadviser shall not be expected or required to take any action other
than the rendering of investment-related advice with respect to
lawsuits involving securities presently or formerly held in the
Portfolios, or the issuers thereof, including actions involving
bankruptcy. Should Subadviser desire to undertake litigation against an
issuer on behalf of a Portfolio, the Subadviser shall obtain the prior
written consent of the Adviser to undertake such litigation. If the
Adviser consents to such litigation, the Adviser agrees to pay the
portion of any reasonable legal fees associated with the action (and
the Adviser may then receive reimbursement from the Portfolio for
payment of such legal fees) or the Portfolio will forfeit any claim to
any assets the Subadviser may recover on behalf of the Portfolio up to
the amount of such legal fees owed by the Adviser to the Subadviser. If
the Adviser does not consent to such litigation, the Adviser agrees to
hold Subadviser harmless for excluding the Portfolio from such action
and agrees to indemnify the Subadviser against any claims the Portfolio
may have against the Subadviser resulting from the Portfolio's
exclusion.
In the case of class action suits involving issuers held in the
Portfolios, Subadviser may include information about a Portfolio for
purposes of participating in any settlement with the prior written
permission of the Adviser which will not be unreasonably withheld.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its directors, officers or employees
shall be liable to the Adviser or the Trust for any error of judgment or mistake
of law or for any loss suffered by the Adviser or Trust in connection with the
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<PAGE> 3
matters to which this Agreement relates except for losses resulting from willful
misfeasance, bad faith or gross negligence in the performance of, or from the
reckless disregard of, the duties of the Subadviser or any of its directors.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that employees, agents and partners of the Subadviser are
or may be interested in the Trust as trustees, officers, shareholders or
otherwise; that the Subadviser 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 partnership agreement of the
Subadviser, respectively, or by specific provision of applicable law.
6. REGULATION
The Subadviser 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.
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on
the later of (i) its execution and (ii) the date of the meeting of the Board of
Trustees of the Trust, at which meeting this Agreement is approved as described
below. 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 a majority
of the outstanding voting securities of each of the Portfolios, 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. Any 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 any required shareholder approval of this Agreement or any
continuance of the Agreement is not obtained, the Subadviser will continue to
act as investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
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 such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
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<PAGE> 4
b. the Subadviser 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. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
9. SERVICES TO OTHER CLIENTS
The Adviser understand, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transactions for a
Portfolio in any security which the Subadviser, its partners, affiliates or
employees may purchase or sell for their own accounts or other clients.
10. 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 Trustees of the Trust 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. Any required shareholder approval shall
be effective with respect to any Portfolio if a majority of the outstanding
voting securities 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.
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<PAGE> 5
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
13. 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
applicable party 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 paragraph.
14. 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.
15. 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.
16. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust dated September 28, 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, 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.
5
<PAGE> 6
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 Securities Services, LLC
by: The Manufacturers Life Insurance Company of
North America, Managing Member
by:
-------------------------------------
Ted Kilkuskie, President
by:
-------------------------------------
James D. Gallagher, Vice President, Secretary
and General Counsel
Templeton Investment Counsel, Inc.
by:
-------------------------------------
6
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APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the "Subadviser
Percentage Fee"):
<TABLE>
<CAPTION>
BETWEEN BETWEEN
$50,000,000 $200,000,000
FIRST AND AND EXCESS OVER
PORTFOLIO $50,000,000 $200,000,000 $500,000,000 $500,000,000
<S> <C> <C> <C> <C>
International Value Trust............................. .625% .465% .375% .350%
</TABLE>
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Subadviser. The daily fee accruals 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.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
7
<PAGE> 1
EXHIBIT (i)(8)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
73 TREMONT STREET
BOSTON, MASSACHUSETTS 02108
February 26, 1999
To Whom it may concern:
This opinion is written in reference to the shares of beneficial interest, $.01
par value (the "Shares") of the following series of Manufacturers Investment
Trust, a Massachusetts business trust (the "Trust"), to be offered and sold
pursuant to a Registration Statement on Form N-1A (registration no. 2-94157)
(the "Registration Statement") filed by the Trust pursuant to the Securities Act
of 1933:
SMALL COMPANY BLEND
US LARGE CAP VALUE
TOTAL RETURN
INTERNATIONAL VALUE
MID CAP STOCK
I have examined such records and documents and reviewed such questions of law as
I deemed necessary for purposes of this opinion.
1. The Trust has been duly recorded under the laws of the Commonwealth
of Massachusetts and is a validly existing Massachusetts business trust.
2. The Shares have been duly authorized and, when sold, issued and paid
for in the manner contemplated by the Registration Statement, will be legally
issued, fully paid and non-assessable.
I consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement.
Very truly yours,
Betsy Anne Seel
Betsy Anne Seel, Esq.
<PAGE> 1
EXHIBIT (j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into this Post-Effective Amendment
No. 41 under the Securities Act of 1933 and Amendment No. 42 under the
Investment Company Act of 1940 to the Registration Statement on Form N-1A (File
No. 2-94157/811-4146) of our report dated February 22, 1999, on our audits of
the financial statements and financial highlights of Manufacturers Investment
Trust, which is incorporated by reference in the Registration Statement. We also
consent to the reference to our Firm as "Experts" under the captions "Financial
Highlights" in Part A and "Independent Accountants" in Part B of the
Registration Statement.
/s/PricewaterhouseCoopers LLP
Boston, Massachusetts
February 26, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 1
<NAME> EQUITY TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1,723,815,103
<INVESTMENTS-AT-VALUE> 1,754,864,861
<RECEIVABLES> 18,253,961
<ASSETS-OTHER> 7,978
<OTHER-ITEMS-ASSETS> 760
<TOTAL-ASSETS> 1,773,127,560
<PAYABLE-FOR-SECURITIES> 18,248,591
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 198,710,366
<TOTAL-LIABILITIES> 216,958,957
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,355,757,829
<SHARES-COMMON-STOCK> 79,876,398
<SHARES-COMMON-PRIOR> 70,757,532
<ACCUMULATED-NII-CURRENT> 6,563,301
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 162,788,319
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,059,154
<NET-ASSETS> 1,556,168,603
<DIVIDEND-INCOME> 16,458,990
<INTEREST-INCOME> 2,346,747
<OTHER-INCOME> 0
<EXPENSES-NET> 12,292,752
<NET-INVESTMENT-INCOME> 6,512,985
<REALIZED-GAINS-CURRENT> 164,974,244
<APPREC-INCREASE-CURRENT> (36,887,920)
<NET-CHANGE-FROM-OPS> 128,086,324
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,882,009
<DISTRIBUTIONS-OF-GAINS> 288,587,683
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,508,634
<NUMBER-OF-SHARES-REDEEMED> 13,775,537
<SHARES-REINVESTED> 14,385,769
<NET-CHANGE-IN-ASSETS> 34,786,503
<ACCUMULATED-NII-PRIOR> 4,882,008
<ACCUMULATED-GAINS-PRIOR> 286,447,188
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,504,927
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,292,752
<AVERAGE-NET-ASSETS> 1,533,990,248
<PER-SHARE-NAV-BEGIN> 21.50
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> 2.13
<PER-SHARE-DIVIDEND> (.07)
<PER-SHARE-DISTRIBUTIONS> (4.16)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.48
<EXPENSE-RATIO> .80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 2
<NAME> INVESTMENT QUALITY BOND TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 365,095,490
<INVESTMENTS-AT-VALUE> 371,158,253
<RECEIVABLES> 6,101,422
<ASSETS-OTHER> 1,068
<OTHER-ITEMS-ASSETS> 998
<TOTAL-ASSETS> 377,261,741
<PAYABLE-FOR-SECURITIES> 74,665
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 65,076,332
<TOTAL-LIABILITIES> 65,150,997
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 290,848,389
<SHARES-COMMON-STOCK> 25,049,137
<SHARES-COMMON-PRIOR> 15,549,187
<ACCUMULATED-NII-CURRENT> 17,104,902
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,905,310)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,062,763
<NET-ASSETS> 312,110,744
<DIVIDEND-INCOME> 37,714
<INTEREST-INCOME> 18,819,640
<OTHER-INCOME> 0
<EXPENSES-NET> 1,795,035
<NET-INVESTMENT-INCOME> 17,062,319
<REALIZED-GAINS-CURRENT> 1,251,275
<APPREC-INCREASE-CURRENT> 2,352,727
<NET-CHANGE-FROM-OPS> 20,666,321
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,620,376
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,528,927
<NUMBER-OF-SHARES-REDEEMED> 3,019,631
<SHARES-REINVESTED> 990,654
<NET-CHANGE-IN-ASSETS> 123,565,801
<ACCUMULATED-NII-PRIOR> 11,620,376
<ACCUMULATED-GAINS-PRIOR> (3,114,002)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,610,817
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,795,035
<AVERAGE-NET-ASSETS> 247,817,839
<PER-SHARE-NAV-BEGIN> 12.13
<PER-SHARE-NII> .62
<PER-SHARE-GAIN-APPREC> .40
<PER-SHARE-DIVIDEND> .69
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.46
<EXPENSE-RATIO> .72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 3
<NAME> MONEY MARKET TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 607,101,829
<INVESTMENTS-AT-VALUE> 607,101,829
<RECEIVABLES> 2,818,354
<ASSETS-OTHER> 2,388
<OTHER-ITEMS-ASSETS> 528
<TOTAL-ASSETS> 609,923,099
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 85,944
<TOTAL-LIABILITIES> 85,944
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 609,837,155
<SHARES-COMMON-STOCK> 60,983,716
<SHARES-COMMON-PRIOR> 43,971,354
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 609,837,155
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 30,423,945
<OTHER-INCOME> 0
<EXPENSES-NET> 3,032,205
<NET-INVESTMENT-INCOME> 27,391,740
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 27,391,740
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 27,391,740
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 122,669,097
<NUMBER-OF-SHARES-REDEEMED> 108,395,909
<SHARES-REINVESTED> 2,739,174
<NET-CHANGE-IN-ASSETS> 170,123,617
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,771,825
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,032,205
<AVERAGE-NET-ASSETS> 554,364,919
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .50
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .50
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 4
<NAME> GLOBAL EQUITY TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 798,788,461
<INVESTMENTS-AT-VALUE> 942,141,714
<RECEIVABLES> 2,063,922
<ASSETS-OTHER> 4,649
<OTHER-ITEMS-ASSETS> 11,760
<TOTAL-ASSETS> 944,222,045
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,658,424
<TOTAL-LIABILITIES> 15,658,424
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 691,376,446
<SHARES-COMMON-STOCK> 45,570,323
<SHARES-COMMON-PRIOR> 44,813,235
<ACCUMULATED-NII-CURRENT> 5,423,428
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 88,388,781
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 143,353,253
<NET-ASSETS> 928,563,621
<DIVIDEND-INCOME> 16,064,908
<INTEREST-INCOME> 889,878
<OTHER-INCOME> 0
<EXPENSES-NET> 9,253,234
<NET-INVESTMENT-INCOME> 7,701,552
<REALIZED-GAINS-CURRENT> 88,388,784
<APPREC-INCREASE-CURRENT> 6,402,579
<NET-CHANGE-FROM-OPS> 100,858,385
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16,146,783
<DISTRIBUTIONS-OF-GAINS> 48,191,144
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,136,030
<NUMBER-OF-SHARES-REDEEMED> 6,383,984
<SHARES-REINVESTED> 3,005,041
<NET-CHANGE-IN-ASSETS> 60,150,874
<ACCUMULATED-NII-PRIOR> 15,666,642
<ACCUMULATED-GAINS-PRIOR> 48,191,141
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,256,515
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,253,234
<AVERAGE-NET-ASSETS> 917,390,564
<PER-SHARE-NAV-BEGIN> 19.38
<PER-SHARE-NII> 0.17
<PER-SHARE-GAIN-APPREC> 2.27
<PER-SHARE-DIVIDEND> (0.36)
<PER-SHARE-DISTRIBUTIONS> (1.08)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.38
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 5
<NAME> GLOBAL GOVERNMENT BOND TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 201,246,366
<INVESTMENTS-AT-VALUE> 206,291,742
<RECEIVABLES> 6,226,087
<ASSETS-OTHER> 961
<OTHER-ITEMS-ASSETS> 174,912,700
<TOTAL-ASSETS> 387,431,490
<PAYABLE-FOR-SECURITIES> 1,844,124
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 188,597,238
<TOTAL-LIABILITIES> 190,441,362
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 182,390,879
<SHARES-COMMON-STOCK> 14,349,764
<SHARES-COMMON-PRIOR> 15,362,187
<ACCUMULATED-NII-CURRENT> 18,056,312
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,555,642)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,098,579
<NET-ASSETS> 196,990,128
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,060,373
<OTHER-INCOME> 0
<EXPENSES-NET> 1,915,249
<NET-INVESTMENT-INCOME> 11,145,124
<REALIZED-GAINS-CURRENT> 823,898
<APPREC-INCREASE-CURRENT> 2,817,202
<NET-CHANGE-FROM-OPS> 14,786,224
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,017,074
<DISTRIBUTIONS-OF-GAINS> 5,897,775
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 889,721
<NUMBER-OF-SHARES-REDEEMED> 3,414,282
<SHARES-REINVESTED> 1,512,137
<NET-CHANGE-IN-ASSETS> (19,126,995)
<ACCUMULATED-NII-PRIOR> 12,595,749
<ACCUMULATED-GAINS-PRIOR> 5,850,749
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,632,065
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,915,249
<AVERAGE-NET-ASSETS> 204,008,064
<PER-SHARE-NAV-BEGIN> 14.07
<PER-SHARE-NII> .81
<PER-SHARE-GAIN-APPREC> .20
<PER-SHARE-DIVIDEND> .95
<PER-SHARE-DISTRIBUTIONS> .40
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.73
<EXPENSE-RATIO> .94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 6
<NAME> U.S. GOVERNMENT SECURITIES TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 456,974,903
<INVESTMENTS-AT-VALUE> 461,605,988
<RECEIVABLES> 3,627,528
<ASSETS-OTHER> 1,311
<OTHER-ITEMS-ASSETS> 884
<TOTAL-ASSETS> 465,235,711
<PAYABLE-FOR-SECURITIES> 101,552,964
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 67,274
<TOTAL-LIABILITIES> 101,620,238
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 342,108,320
<SHARES-COMMON-STOCK> 26,319,483
<SHARES-COMMON-PRIOR> 18,616,392
<ACCUMULATED-NII-CURRENT> 18,004,465
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,128,397)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,631,085
<NET-ASSETS> 363,615,473
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 19,211,329
<OTHER-INCOME> 727,545
<EXPENSES-NET> 2,154,130
<NET-INVESTMENT-INCOME> 17,784,744
<REALIZED-GAINS-CURRENT> 2,537,744
<APPREC-INCREASE-CURRENT> 1,073,117
<NET-CHANGE-FROM-OPS> 21,395,605
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,043,750
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,633,765
<NUMBER-OF-SHARES-REDEEMED> 4,927,141
<SHARES-REINVESTED> 996,467
<NET-CHANGE-IN-ASSETS> 112,338,138
<ACCUMULATED-NII-PRIOR> 13,028,158
<ACCUMULATED-GAINS-PRIOR> (3,395,966)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,952,935
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,154,130
<AVERAGE-NET-ASSETS> 300,451,486
<PER-SHARE-NAV-BEGIN> 13.50
<PER-SHARE-NII> .79
<PER-SHARE-GAIN-APPREC> .18
<PER-SHARE-DIVIDEND> .65
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.82
<EXPENSE-RATIO> .72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 7
<NAME> CONVERVATIVE ASSET ALLOCATION TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 196,500,659
<INVESTMENTS-AT-VALUE> 213,338,307
<RECEIVABLES> 1,133,108
<ASSETS-OTHER> 936
<OTHER-ITEMS-ASSETS> 139,584
<TOTAL-ASSETS> 214,611,935
<PAYABLE-FOR-SECURITIES> 11,155,888
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,656,076
<TOTAL-LIABILITIES> 17,811,964
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161,996,655
<SHARES-COMMON-STOCK> 16,629,497
<SHARES-COMMON-PRIOR> 17,341,644
<ACCUMULATED-NII-CURRENT> 7,979,316
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,986,111
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,837,648
<NET-ASSETS> 196,799,971
<DIVIDEND-INCOME> 701,087
<INTEREST-INCOME> 8,960,772
<OTHER-INCOME> 0
<EXPENSES-NET> 1,744,686
<NET-INVESTMENT-INCOME> 7,917,173
<REALIZED-GAINS-CURRENT> 10,151,359
<APPREC-INCREASE-CURRENT> 2,097,641
<NET-CHANGE-FROM-OPS> 20,200,261
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,864,663
<DISTRIBUTIONS-OF-GAINS> 9,705,964
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,037,883
<NUMBER-OF-SHARES-REDEEMED> 3,396,362
<SHARES-REINVESTED> 1,646,332
<NET-CHANGE-IN-ASSETS> (7,548,151)
<ACCUMULATED-NII-PRIOR> 8,844,386
<ACCUMULATED-GAINS-PRIOR> 9,582,317
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,473,082
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,744,686
<AVERAGE-NET-ASSETS> 196,411,009
<PER-SHARE-NAV-BEGIN> 11.78
<PER-SHARE-NII> 0.51
<PER-SHARE-GAIN-APPREC> 0.69
<PER-SHARE-DIVIDEND> (0.55)
<PER-SHARE-DISTRIBUTIONS> (0.60)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.83
<EXPENSE-RATIO> 0.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 8
<NAME> MODERATE ASSET ALLOCATION TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 572,085,831
<INVESTMENTS-AT-VALUE> 669,935,871
<RECEIVABLES> 3,856,331
<ASSETS-OTHER> 3,012
<OTHER-ITEMS-ASSETS> 830,053
<TOTAL-ASSETS> 674,625,267
<PAYABLE-FOR-SECURITIES> 20,908,462
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35,705,924
<TOTAL-LIABILITIES> 56,614,386
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 451,192,284
<SHARES-COMMON-STOCK> 46,262,770
<SHARES-COMMON-PRIOR> 47,035,794
<ACCUMULATED-NII-CURRENT> 17,849,145
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 51,115,611
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 97,850,040
<NET-ASSETS> 618,010,881
<DIVIDEND-INCOME> 4,739,336
<INTEREST-INCOME> 18,057,871
<OTHER-INCOME> 0
<EXPENSES-NET> 5,156,498
<NET-INVESTMENT-INCOME> 17,640,709
<REALIZED-GAINS-CURRENT> 51,848,087
<APPREC-INCREASE-CURRENT> 16,988,917
<NET-CHANGE-FROM-OPS> 86,948,362
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (20,941,772)
<DISTRIBUTIONS-OF-GAINS> (47,173,913)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 616,674
<NUMBER-OF-SHARES-REDEEMED> 6,707,081
<SHARES-REINVESTED> 5,317,384
<NET-CHANGE-IN-ASSETS> 8,869,241
<ACCUMULATED-NII-PRIOR> 20,941,772
<ACCUMULATED-GAINS-PRIOR> 46,265,268
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,585,154
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,156,498
<AVERAGE-NET-ASSETS> 611,353,787
<PER-SHARE-NAV-BEGIN> 12.95
<PER-SHARE-NII> 0.40
<PER-SHARE-GAIN-APPREC> 1.51
<PER-SHARE-DIVIDEND> (0.46)
<PER-SHARE-DISTRIBUTIONS> (1.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.36
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTEMENT TRUST
<SERIES>
<NUMBER> 9
<NAME> AGGRESSIVE ASSET ALLOCATION TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 230,494,314
<INVESTMENTS-AT-VALUE> 287,711,708
<RECEIVABLES> 979,904
<ASSETS-OTHER> 6,359
<OTHER-ITEMS-ASSETS> 488,104
<TOTAL-ASSETS> 289,186,675
<PAYABLE-FOR-SECURITIES> 1,374,253
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,930,098
<TOTAL-LIABILITIES> 26,304,351
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 177,559,273
<SHARES-COMMON-STOCK> 17,226,649
<SHARES-COMMON-PRIOR> 16,957,017
<ACCUMULATED-NII-CURRENT> 3,977,606
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,991,737
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 57,217,394
<NET-ASSETS> 262,881,724
<DIVIDEND-INCOME> 2,732,093
<INTEREST-INCOME> 3,414,827
<OTHER-INCOME> 0
<EXPENSES-NET> 2,188,115
<NET-INVESTMENT-INCOME> 3,958,805
<REALIZED-GAINS-CURRENT> 24,484,460
<APPREC-INCREASE-CURRENT> 14,927,862
<NET-CHANGE-FROM-OPS> 43,785,939
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,765,263
<DISTRIBUTIONS-OF-GAINS> 24,329,301
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,272,177
<NUMBER-OF-SHARES-REDEEMED> 2,991,236
<SHARES-REINVESTED> 1,988,692
<NET-CHANGE-IN-ASSETS> 19,348,495
<ACCUMULATED-NII-PRIOR> 4,765,263
<ACCUMULATED-GAINS-PRIOR> 23,728,297
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,874,673
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,188,115
<AVERAGE-NET-ASSETS> 249,956,443
<PER-SHARE-NAV-BEGIN> 14.36
<PER-SHARE-NII> 0.24
<PER-SHARE-GAIN-APPREC> 2.43
<PER-SHARE-DIVIDEND> (0.29)
<PER-SHARE-DISTRIBUTIONS> (1.48)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.26
<EXPENSE-RATIO> 0.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 10
<NAME> GROWTH AND INCOME TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1,525,483,288
<INVESTMENTS-AT-VALUE> 2,353,162,989
<RECEIVABLES> 2,396,808
<ASSETS-OTHER> 9,083
<OTHER-ITEMS-ASSETS> 11,464
<TOTAL-ASSETS> 2,355,580,344
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 65,462,737
<TOTAL-LIABILITIES> 65,462,737
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,372,968,505
<SHARES-COMMON-STOCK> 80,554,624
<SHARES-COMMON-PRIOR> 67,200,511
<ACCUMULATED-NII-CURRENT> 16,252,305
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 73,217,857
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 827,679,701
<NET-ASSETS> 2,290,117,607
<DIVIDEND-INCOME> 29,071,911
<INTEREST-INCOME> 2,321,710
<OTHER-INCOME> 0
<EXPENSES-NET> 15,122,829
<NET-INVESTMENT-INCOME> 16,270,792
<REALIZED-GAINS-CURRENT> 73,188,872
<APPREC-INCREASE-CURRENT> 360,559,727
<NET-CHANGE-FROM-OPS> 450,020,911
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,313,773
<DISTRIBUTIONS-OF-GAINS> 99,563,470
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,731,896
<NUMBER-OF-SHARES-REDEEMED> 5,821,777
<SHARES-REINVESTED> 4,443,994
<NET-CHANGE-IN-ASSETS> 684,730,329
<ACCUMULATED-NII-PRIOR> 15,315,008
<ACCUMULATED-GAINS-PRIOR> 99,563,470
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14,353,269
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15,122,829
<AVERAGE-NET-ASSETS> 1,913,769,263
<PER-SHARE-NAV-BEGIN> 23.89
<PER-SHARE-NII> 0.19
<PER-SHARE-GAIN-APPREC> 5.98
<PER-SHARE-DIVIDEND> (0.22)
<PER-SHARE-DISTRIBUTIONS> (1.41)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 28.43
<EXPENSE-RATIO> .79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 11
<NAME> BLUE CHIP GROWTH TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 865,615,480
<INVESTMENTS-AT-VALUE> 1,193,925,534
<RECEIVABLES> 780,764
<ASSETS-OTHER> 4,016
<OTHER-ITEMS-ASSETS> 9,885
<TOTAL-ASSETS> 1,194,720,199
<PAYABLE-FOR-SECURITIES> 1,733,254
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51,825,422
<TOTAL-LIABILITIES> 53,558,676
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 759,244,551
<SHARES-COMMON-STOCK> 60,320,107
<SHARES-COMMON-PRIOR> 47,268,444
<ACCUMULATED-NII-CURRENT> 3,087,681
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 50,519,173
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 328,310,054
<NET-ASSETS> 1,141,161,523
<DIVIDEND-INCOME> 8,750,119
<INTEREST-INCOME> 2,793,349
<OTHER-INCOME> 0
<EXPENSES-NET> 8,359,236
<NET-INVESTMENT-INCOME> 3,184,232
<REALIZED-GAINS-CURRENT> 50,695,303
<APPREC-INCREASE-CURRENT> 174,851,600
<NET-CHANGE-FROM-OPS> 228,722,564
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,121,547
<DISTRIBUTIONS-OF-GAINS> 11,715,254
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19,497,392
<NUMBER-OF-SHARES-REDEEMED> 7,377,854
<SHARES-REINVESTED> 932,125
<NET-CHANGE-IN-ASSETS> 432,354,065
<ACCUMULATED-NII-PRIOR> 4,121,547
<ACCUMULATED-GAINS-PRIOR> 11,503,937
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,964,796
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,359,236
<AVERAGE-NET-ASSETS> 861,059,092
<PER-SHARE-NAV-BEGIN> 15.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 4.19
<PER-SHARE-DIVIDEND> 0.08
<PER-SHARE-DISTRIBUTIONS> 0.24
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.92
<EXPENSE-RATIO> 0.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 12
<NAME> EQUITY-INCOME TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 971,230,017
<INVESTMENTS-AT-VALUE> 1,149,866,637
<RECEIVABLES> 3,540,809
<ASSETS-OTHER> 4,982
<OTHER-ITEMS-ASSETS> 146,575
<TOTAL-ASSETS> 1,153,559,003
<PAYABLE-FOR-SECURITIES> 3,367,010
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 61,849,929
<TOTAL-LIABILITIES> 65,216,939
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 833,141,439
<SHARES-COMMON-STOCK> 61,194,993
<SHARES-COMMON-PRIOR> 54,625,052
<ACCUMULATED-NII-CURRENT> 21,363,276
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 55,199,183
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 178,636,530
<NET-ASSETS> 1,088,342,064
<DIVIDEND-INCOME> 26,767,253
<INTEREST-INCOME> 3,443,950
<OTHER-INCOME> 0
<EXPENSES-NET> 8,579,820
<NET-INVESTMENT-INCOME> 21,631,383
<REALIZED-GAINS-CURRENT> 55,707,234
<APPREC-INCREASE-CURRENT> 10,010,999
<NET-CHANGE-FROM-OPS> 87,356,659
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 18,698,833
<DISTRIBUTIONS-OF-GAINS> 40,844,225
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,021,748
<NUMBER-OF-SHARES-REDEEMED> 6,770,818
<SHARES-REINVESTED> 3,319,011
<NET-CHANGE-IN-ASSETS> 146,637,477
<ACCUMULATED-NII-PRIOR> 18,699,879
<ACCUMULATED-GAINS-PRIOR> 40,321,049
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,121,714
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,579,820
<AVERAGE-NET-ASSETS> 1,015,214,197
<PER-SHARE-NAV-BEGIN> 17.24
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 1.26
<PER-SHARE-DIVIDEND> (0.33)
<PER-SHARE-DISTRIBUTIONS> (0.73)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.78
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 13
<NAME> STRATEGIC BOND TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 548,171,483
<INVESTMENTS-AT-VALUE> 542,661,385
<RECEIVABLES> 9,995,985
<ASSETS-OTHER> 1,939
<OTHER-ITEMS-ASSETS> 15,141,644
<TOTAL-ASSETS> 567,800,953
<PAYABLE-FOR-SECURITIES> 46,530,217
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 77,856,241
<TOTAL-LIABILITIES> 124,386,458
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 430,651,157
<SHARES-COMMON-STOCK> 37,824,324
<SHARES-COMMON-PRIOR> 29,537,067
<ACCUMULATED-NII-CURRENT> 30,661,851
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (12,398,155)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,500,358)
<NET-ASSETS> 443,414,495
<DIVIDEND-INCOME> 941
<INTEREST-INCOME> 34,069,851
<OTHER-INCOME> 577,975
<EXPENSES-NET> 3,505,020
<NET-INVESTMENT-INCOME> 31,143,747
<REALIZED-GAINS-CURRENT> (12,240,332)
<APPREC-INCREASE-CURRENT> (14,036,603)
<NET-CHANGE-FROM-OPS> 4,866,812
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 22,915,842
<DISTRIBUTIONS-OF-GAINS> 3,897,165
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,586,115
<NUMBER-OF-SHARES-REDEEMED> 4,550,160
<SHARES-REINVESTED> 2,251,302
<NET-CHANGE-IN-ASSETS> 77,824,287
<ACCUMULATED-NII-PRIOR> 22,584,781
<ACCUMULATED-GAINS-PRIOR> 3,714,537
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,178,026
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,505,020
<AVERAGE-NET-ASSETS> 410,067,886
<PER-SHARE-NAV-BEGIN> 12.38
<PER-SHARE-NII> .76
<PER-SHARE-GAIN-APPREC> (.59)
<PER-SHARE-DIVIDEND> .71
<PER-SHARE-DISTRIBUTIONS> .12
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.72
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 14
<NAME> INTERNATIONAL GROWTH AND INCOME TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 231,932,220
<INVESTMENTS-AT-VALUE> 244,930,492
<RECEIVABLES> 479,920
<ASSETS-OTHER> 1,069
<OTHER-ITEMS-ASSETS> 22,347,198
<TOTAL-ASSETS> 267,758,679
<PAYABLE-FOR-SECURITIES> 49,772
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49,158,196
<TOTAL-LIABILITIES> 49,207,968
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 206,405,452
<SHARES-COMMON-STOCK> 19,281,824
<SHARES-COMMON-PRIOR> 18,516,347
<ACCUMULATED-NII-CURRENT> (159,968)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (871,637)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,998,272
<NET-ASSETS> 218,550,711
<DIVIDEND-INCOME> 3,420,961
<INTEREST-INCOME> 474,190
<OTHER-INCOME> 0
<EXPENSES-NET> 2,546,007
<NET-INVESTMENT-INCOME> 1,349,144
<REALIZED-GAINS-CURRENT> 431,540
<APPREC-INCREASE-CURRENT> 16,672,663
<NET-CHANGE-FROM-OPS> 15,249,708
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,087,750
<DISTRIBUTIONS-OF-GAINS> 6,913,043
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 23,788,371
<NUMBER-OF-SHARES-REDEEMED> 23,984,496
<SHARES-REINVESTED> 961,602
<NET-CHANGE-IN-ASSETS> 14,774,257
<ACCUMULATED-NII-PRIOR> 4,240,740
<ACCUMULATED-GAINS-PRIOR> 6,185,857
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,086,991
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,546,007
<AVERAGE-NET-ASSETS> 219,683,213
<PER-SHARE-NAV-BEGIN> 11.01
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0.88
<PER-SHARE-DIVIDEND> (0.26)
<PER-SHARE-DISTRIBUTIONS> (0.36)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.33
<EXPENSE-RATIO> 1.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 15
<NAME> SMALL/MID CAP TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 430,730,502
<INVESTMENTS-AT-VALUE> 489,689,898
<RECEIVABLES> 28,523,422
<ASSETS-OTHER> 1,498
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 518,214,818
<PAYABLE-FOR-SECURITIES> 28,260,210
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 94,845,455
<TOTAL-LIABILITIES> 123,105,665
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 282,287,629
<SHARES-COMMON-STOCK> 19,987,550
<SHARES-COMMON-PRIOR> 17,417,967
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 53,862,128
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 58,959,396
<NET-ASSETS> 395,109,153
<DIVIDEND-INCOME> 1,080,302
<INTEREST-INCOME> 1,358,380
<OTHER-INCOME> 0
<EXPENSES-NET> 3,285,530
<NET-INVESTMENT-INCOME> (846,848)
<REALIZED-GAINS-CURRENT> 55,888,821
<APPREC-INCREASE-CURRENT> 26,206,105
<NET-CHANGE-FROM-OPS> 81,248,078
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,614,995
<NUMBER-OF-SHARES-REDEEMED> 4,045,412
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 126,732,641
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,179,845)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,144,346
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,285,530
<AVERAGE-NET-ASSETS> 314,434,584
<PER-SHARE-NAV-BEGIN> 15.41
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 4.40
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.77
<EXPENSE-RATIO> 1.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 16
<NAME> INTERNATIONAL SMALL CAP TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 139,606,164
<INVESTMENTS-AT-VALUE> 162,909,997
<RECEIVABLES> 169,323
<ASSETS-OTHER> 714
<OTHER-ITEMS-ASSETS> 571,741
<TOTAL-ASSETS> 163,651,775
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,753,566
<TOTAL-LIABILITIES> 15,753,566
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 128,321,067
<SHARES-COMMON-STOCK> 9,677,870
<SHARES-COMMON-PRIOR> 9,382,231
<ACCUMULATED-NII-CURRENT> 500,048
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,266,024)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,303,833
<NET-ASSETS> 147,898,209
<DIVIDEND-INCOME> 958,698
<INTEREST-INCOME> 1,445,861
<OTHER-INCOME> 0
<EXPENSES-NET> 1,776,878
<NET-INVESTMENT-INCOME> 627,681
<REALIZED-GAINS-CURRENT> 277,904
<APPREC-INCREASE-CURRENT> 14,673,325
<NET-CHANGE-FROM-OPS> 15,481,083
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 437,568
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,587,840
<NUMBER-OF-SHARES-REDEEMED> 7,319,705
<SHARES-REINVESTED> 27,503
<NET-CHANGE-IN-ASSETS> 19,322,499
<ACCUMULATED-NII-PRIOR> 444,269
<ACCUMULATED-GAINS-PRIOR> (4,503,928)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,567,227
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,776,878
<AVERAGE-NET-ASSETS> 142,504,067
<PER-SHARE-NAV-BEGIN> 13.70
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 1.56
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.28
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 17
<NAME> GROWTH TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 262,982,421
<INVESTMENTS-AT-VALUE> 307,865,577
<RECEIVABLES> 17,392,880
<ASSETS-OTHER> 1,043
<OTHER-ITEMS-ASSETS> 2,102,848
<TOTAL-ASSETS> 327,362,348
<PAYABLE-FOR-SECURITIES> 17,811,168
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,556,704
<TOTAL-LIABILITIES> 27,367,872
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 237,085,606
<SHARES-COMMON-STOCK> 14,636,163
<SHARES-COMMON-PRIOR> 9,727,676
<ACCUMULATED-NII-CURRENT> 956,654
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 17,078,088
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 44,883,156
<NET-ASSETS> 299,994,476
<DIVIDEND-INCOME> 1,643,176
<INTEREST-INCOME> 1,363,734
<OTHER-INCOME> 0
<EXPENSES-NET> 2,049,975
<NET-INVESTMENT-INCOME> 956,935
<REALIZED-GAINS-CURRENT> 17,266,771
<APPREC-INCREASE-CURRENT> 31,040,331
<NET-CHANGE-FROM-OPS> 49,254,549
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,960,998
<DISTRIBUTIONS-OF-GAINS> 21,211,052
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,117,245
<NUMBER-OF-SHARES-REDEEMED> 652,129
<SHARES-REINVESTED> 443,371
<NET-CHANGE-IN-ASSETS> 86,945,155
<ACCUMULATED-NII-PRIOR> 785,667
<ACCUMULATED-GAINS-PRIOR> 7,467,441
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,930,442
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,049,975
<AVERAGE-NET-ASSETS> 227,110,808
<PER-SHARE-NAV-BEGIN> 17.21
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 4.00
<PER-SHARE-DIVIDEND> 0.07
<PER-SHARE-DISTRIBUTIONS> 0.70
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.50
<EXPENSE-RATIO> 0.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 18
<NAME> EMERGING SMALL COMPANY TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 311,281,290
<INVESTMENTS-AT-VALUE> 352,665,470
<RECEIVABLES> 4,281
<ASSETS-OTHER> 1,415
<OTHER-ITEMS-ASSETS> 331
<TOTAL-ASSETS> 352,671,497
<PAYABLE-FOR-SECURITIES> 2,237
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52,032,442
<TOTAL-LIABILITIES> 52,034,679
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 255,414,101
<SHARES-COMMON-STOCK> 12,622,863
<SHARES-COMMON-PRIOR> 11,426,808
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,838,537
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 41,384,180
<NET-ASSETS> 300,636,818
<DIVIDEND-INCOME> 376,692
<INTEREST-INCOME> 1,185,567
<OTHER-INCOME> 0
<EXPENSES-NET> 3,075,226
<NET-INVESTMENT-INCOME> (1,512,967)
<REALIZED-GAINS-CURRENT> 3,917,918
<APPREC-INCREASE-CURRENT> (1,704,887)
<NET-CHANGE-FROM-OPS> 700,064
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 4,130,364
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,113,895
<NUMBER-OF-SHARES-REDEEMED> 2,076,031
<SHARES-REINVESTED> 158,191
<NET-CHANGE-IN-ASSETS> 24,862,737
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,030,117
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,937,353
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,075,226
<AVERAGE-NET-ASSETS> 279,747,877
<PER-SHARE-NAV-BEGIN> 24.13
<PER-SHARE-NII> (0.12)
<PER-SHARE-GAIN-APPREC> 0.17
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.36)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.82
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 19
<NAME> QUANTITATIVE EQUITY TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 219,387,564
<INVESTMENTS-AT-VALUE> 260,275,964
<RECEIVABLES> 894,529
<ASSETS-OTHER> 4,566
<OTHER-ITEMS-ASSETS> 894
<TOTAL-ASSETS> 261,175,953
<PAYABLE-FOR-SECURITIES> 177,274
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,523,819
<TOTAL-LIABILITIES> 6,701,093
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 185,938,728
<SHARES-COMMON-STOCK> 10,091,805
<SHARES-COMMON-PRIOR> 7,446,999
<ACCUMULATED-NII-CURRENT> 2,089,131
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25,558,601
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 40,888,400
<NET-ASSETS> 254,474,860
<DIVIDEND-INCOME> 3,105,391
<INTEREST-INCOME> 615,150
<OTHER-INCOME> 0
<EXPENSES-NET> 1,553,105
<NET-INVESTMENT-INCOME> 2,167,436
<REALIZED-GAINS-CURRENT> 25,556,516
<APPREC-INCREASE-CURRENT> 21,957,322
<NET-CHANGE-FROM-OPS> 49,681,274
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,960,998
<DISTRIBUTIONS-OF-GAINS> 21,211,052
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,525,086
<NUMBER-OF-SHARES-REDEEMED> 897,490
<SHARES-REINVESTED> 1,017,210
<NET-CHANGE-IN-ASSETS> 86,945,155
<ACCUMULATED-NII-PRIOR> 1,960,998
<ACCUMULATED-GAINS-PRIOR> 21,202,387
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,431,591
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,553,105
<AVERAGE-NET-ASSETS> 204,552,039
<PER-SHARE-NAV-BEGIN> 22.50
<PER-SHARE-NII> 0.20
<PER-SHARE-GAIN-APPREC> 5.42
<PER-SHARE-DIVIDEND> 0.25
<PER-SHARE-DISTRIBUTIONS> 2.65
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.22
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 20
<NAME> BALANCED TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 241,595,921
<INVESTMENTS-AT-VALUE> 261,577,703
<RECEIVABLES> 3,603,390
<ASSETS-OTHER> 979
<OTHER-ITEMS-ASSETS> 82,572
<TOTAL-ASSETS> 265,264,644
<PAYABLE-FOR-SECURITIES> 4,948,112
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,862,702
<TOTAL-LIABILITIES> 10,810,814
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 215,885,424
<SHARES-COMMON-STOCK> 13,116,139
<SHARES-COMMON-PRIOR> 9,159,210
<ACCUMULATED-NII-CURRENT> 5,554,804
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13,030,307
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19,981,782
<NET-ASSETS> 254,453,830
<DIVIDEND-INCOME> 2,186,714
<INTEREST-INCOME> 5,402,006
<OTHER-INCOME> 0
<EXPENSES-NET> 1,841,847
<NET-INVESTMENT-INCOME> 5,746,873
<REALIZED-GAINS-CURRENT> 13,096,202
<APPREC-INCREASE-CURRENT> 9,091,108
<NET-CHANGE-FROM-OPS> 27,743,788
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,637,642
<DISTRIBUTIONS-OF-GAINS> 20,360,461
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,060,496
<NUMBER-OF-SHARES-REDEEMED> 453,357
<SHARES-REINVESTED> 1,349,790
<NET-CHANGE-IN-ASSETS> 77,409,187
<ACCUMULATED-NII-PRIOR> 4,637,642
<ACCUMULATED-GAINS-PRIOR> 20,294,566
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,699,575
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,841,847
<AVERAGE-NET-ASSETS> 212,444,069
<PER-SHARE-NAV-BEGIN> 19.33
<PER-SHARE-NII> 0.41
<PER-SHARE-GAIN-APPREC> 2.23
<PER-SHARE-DIVIDEND> (0.48)
<PER-SHARE-DISTRIBUTIONS> (2.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.40
<EXPENSE-RATIO> 0.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 21
<NAME> REAL ESTATE SECURITIES TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 205,179,058
<INVESTMENTS-AT-VALUE> 190,126,859
<RECEIVABLES> 12,183,822
<ASSETS-OTHER> 1,974
<OTHER-ITEMS-ASSETS> 139
<TOTAL-ASSETS> 202,312,794
<PAYABLE-FOR-SECURITIES> 12,502,810
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27,977,813
<TOTAL-LIABILITIES> 40,480,623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 179,159,667
<SHARES-COMMON-STOCK> 10,965,526
<SHARES-COMMON-PRIOR> 8,059,178
<ACCUMULATED-NII-CURRENT> 7,502,774
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (9,778,071)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (15,052,199)
<NET-ASSETS> 161,832,171
<DIVIDEND-INCOME> 13,375,777
<INTEREST-INCOME> 85,069
<OTHER-INCOME> 0
<EXPENSES-NET> 1,258,348
<NET-INVESTMENT-INCOME> 9,202,498
<REALIZED-GAINS-CURRENT> (11,066,977)
<APPREC-INCREASE-CURRENT> (28,378,705)
<NET-CHANGE-FROM-OPS> (30,243,184)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,711,304
<DISTRIBUTIONS-OF-GAINS> 16,427,838
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,414,938
<NUMBER-OF-SHARES-REDEEMED> 1,717,232
<SHARES-REINVESTED> 1,208,641
<NET-CHANGE-IN-ASSETS> 72,978
<ACCUMULATED-NII-PRIOR> 4,808,797
<ACCUMULATED-GAINS-PRIOR> 16,198,159
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,157,366
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,258,348
<AVERAGE-NET-ASSETS> 165,337,964
<PER-SHARE-NAV-BEGIN> 20.07
<PER-SHARE-NII> 0.78
<PER-SHARE-GAIN-APPREC> (3.72)
<PER-SHARE-DIVIDEND> 0.53
<PER-SHARE-DISTRIBUTIONS> 1.84
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.76
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 22
<NAME> CAPITAL GROWTH BOND TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 62,269,093
<INVESTMENTS-AT-VALUE> 65,199,949
<RECEIVABLES> 1,161,209
<ASSETS-OTHER> 272
<OTHER-ITEMS-ASSETS> 60
<TOTAL-ASSETS> 66,361,490
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,249,544
<TOTAL-LIABILITIES> 1,249,544
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 59,728,997
<SHARES-COMMON-STOCK> 5,386,315
<SHARES-COMMON-PRIOR> 4,557,940
<ACCUMULATED-NII-CURRENT> 3,404,123
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (952,030)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,930,856
<NET-ASSETS> 65,111,946
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,831,261
<OTHER-INCOME> 0
<EXPENSES-NET> 425,173
<NET-INVESTMENT-INCOME> 3,406,088
<REALIZED-GAINS-CURRENT> (94,997)
<APPREC-INCREASE-CURRENT> 1,239,956
<NET-CHANGE-FROM-OPS> 4,551,047
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,103,100
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,205,016
<NUMBER-OF-SHARES-REDEEMED> 649,082
<SHARES-REINVESTED> 272,441
<NET-CHANGE-IN-ASSETS> 11,122,001
<ACCUMULATED-NII-PRIOR> 3,103,100
<ACCUMULATED-GAINS-PRIOR> (857,064)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 384,100
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 425,173
<AVERAGE-NET-ASSETS> 59,092,366
<PER-SHARE-NAV-BEGIN> 11.85
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> .29
<PER-SHARE-DIVIDEND> .66
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.09
<EXPENSE-RATIO> .72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 23
<NAME> PACIFIC RIM EMERGING MARKETS TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 31,843,131
<INVESTMENTS-AT-VALUE> 28,734,610
<RECEIVABLES> 76,682
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 2,375,219
<TOTAL-ASSETS> 31,186,634
<PAYABLE-FOR-SECURITIES> 29,330
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,161,846
<TOTAL-LIABILITIES> 3,191,176
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,584,657
<SHARES-COMMON-STOCK> 4,100,531
<SHARES-COMMON-PRIOR> 3,329,953
<ACCUMULATED-NII-CURRENT> 13,097
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,513,217)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,108,521)
<NET-ASSETS> 27,995,458
<DIVIDEND-INCOME> 416,434
<INTEREST-INCOME> 193,446
<OTHER-INCOME> 0
<EXPENSES-NET> 304,524
<NET-INVESTMENT-INCOME> 305,356
<REALIZED-GAINS-CURRENT> (6,979,917)
<APPREC-INCREASE-CURRENT> 5,942,247
<NET-CHANGE-FROM-OPS> (860,836)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,770,616
<NUMBER-OF-SHARES-REDEEMED> 6,000,038
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,145,134
<ACCUMULATED-NII-PRIOR> (92,260)
<ACCUMULATED-GAINS-PRIOR> (494,317)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 214,432
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 304,524
<AVERAGE-NET-ASSETS> 25,227,241
<PER-SHARE-NAV-BEGIN> 7.16
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> (0.41)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.83
<EXPENSE-RATIO> 1.21
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 24
<NAME> INTERNATIONAL STOCK TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 230,621,990
<INVESTMENTS-AT-VALUE> 252,247,541
<RECEIVABLES> 1,567,589
<ASSETS-OTHER> 897
<OTHER-ITEMS-ASSETS> 126,720
<TOTAL-ASSETS> 253,942,747
<PAYABLE-FOR-SECURITIES> 1,179
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,838,797
<TOTAL-LIABILITIES> 19,839,976
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 213,550,898
<SHARES-COMMON-STOCK> 18,031,034
<SHARES-COMMON-PRIOR> 12,661,021
<ACCUMULATED-NII-CURRENT> (77,076)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,001,210)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,625,551
<NET-ASSETS> 234,102,771
<DIVIDEND-INCOME> 3,504,223
<INTEREST-INCOME> 479,626
<OTHER-INCOME> 0
<EXPENSES-NET> 2,397,374
<NET-INVESTMENT-INCOME> 1,586,475
<REALIZED-GAINS-CURRENT> 1,821,899
<APPREC-INCREASE-CURRENT> 22,818,165
<NET-CHANGE-FROM-OPS> 26,199,748
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,596,410
<DISTRIBUTIONS-OF-GAINS> 1,781,309
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,278,906
<NUMBER-OF-SHARES-REDEEMED> 15,182,565
<SHARES-REINVESTED> 273,672
<NET-CHANGE-IN-ASSETS> 88,849,874
<ACCUMULATED-NII-PRIOR> 9,928
<ACCUMULATED-GAINS-PRIOR> (894,628)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,019,937
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,397,374
<AVERAGE-NET-ASSETS> 192,374,345
<PER-SHARE-NAV-BEGIN> 11.47
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 1.62
<PER-SHARE-DIVIDEND> (0.09)
<PER-SHARE-DISTRIBUTIONS> (0.11)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.98
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 25
<NAME> EQUITY INDEX TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 58,101,513
<INVESTMENTS-AT-VALUE> 67,866,052
<RECEIVABLES> 68,122
<ASSETS-OTHER> 1,771
<OTHER-ITEMS-ASSETS> 1,327
<TOTAL-ASSETS> 67,936,272
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,644,087
<TOTAL-LIABILITIES> 4,644,087
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,182,642
<SHARES-COMMON-STOCK> 4,101,821
<SHARES-COMMON-PRIOR> 2,168,839
<ACCUMULATED-NII-CURRENT> 841
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 305,419
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,764,539
<NET-ASSETS> 63,292,185
<DIVIDEND-INCOME> 538,155
<INTEREST-INCOME> 363,199
<OTHER-INCOME> 0
<EXPENSES-NET> 174,938
<NET-INVESTMENT-INCOME> 726,416
<REALIZED-GAINS-CURRENT> 50,182
<APPREC-INCREASE-CURRENT> 9,449,307
<NET-CHANGE-FROM-OPS> 11,070,857
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 725,595
<DISTRIBUTIONS-OF-GAINS> 1,258,052
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,175,437
<NUMBER-OF-SHARES-REDEEMED> 374,434
<SHARES-REINVESTED> 131,978
<NET-CHANGE-IN-ASSETS> 36,217,583
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 641,467
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 106,755
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 235,708
<AVERAGE-NET-ASSETS> 42,702,202
<PER-SHARE-NAV-BEGIN> 12.48
<PER-SHARE-NII> 0.18
<PER-SHARE-GAIN-APPREC> 3.36
<PER-SHARE-DIVIDEND> 0.18
<PER-SHARE-DISTRIBUTIONS> 0.41
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.43
<EXPENSE-RATIO> 0.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 26
<NAME> SCIENCE & TECHNOLOGY TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 176,266,660
<INVESTMENTS-AT-VALUE> 223,681,796
<RECEIVABLES> 1,317,278
<ASSETS-OTHER> 468
<OTHER-ITEMS-ASSETS> 2,922
<TOTAL-ASSETS> 225,002,464
<PAYABLE-FOR-SECURITIES> 1,089,128
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44,628,773
<TOTAL-LIABILITIES> 45,717,901
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 134,665,921
<SHARES-COMMON-STOCK> 9,185,871
<SHARES-COMMON-PRIOR> 4,944,146
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,796,692)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 47,415,136
<NET-ASSETS> 179,284,563
<DIVIDEND-INCOME> 149,214
<INTEREST-INCOME> 357,897
<OTHER-INCOME> 0
<EXPENSES-NET> 1,288,537
<NET-INVESTMENT-INCOME> (781,426)
<REALIZED-GAINS-CURRENT> (1,741,037)
<APPREC-INCREASE-CURRENT> 49,026,105
<NET-CHANGE-FROM-OPS> 46,493,576
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,255,104
<NUMBER-OF-SHARES-REDEEMED> 2,013,379
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 111,936,987
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,055,655)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,171,088
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,288,537
<AVERAGE-NET-ASSETS> 106,462,516
<PER-SHARE-NAV-BEGIN> 13.62
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> 5.99
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.52
<EXPENSE-RATIO> 1.21
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURES INVESTMENT TRUST
<SERIES>
<NUMBER> 27
<NAME> PILGRIM BAXTER GROWTH TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 149,035,783
<INVESTMENTS-AT-VALUE> 182,572,336
<RECEIVABLES> 266,040
<ASSETS-OTHER> 2,074
<OTHER-ITEMS-ASSETS> 87
<TOTAL-ASSETS> 182,840,537
<PAYABLE-FOR-SECURITIES> 1,367,579
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,463,354
<TOTAL-LIABILITIES> 39,830,933
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 130,938,310
<SHARES-COMMON-STOCK> 10,963,332
<SHARES-COMMON-PRIOR> 7,466,705
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (21,465,259)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 33,536,553
<NET-ASSETS> 143,009,604
<DIVIDEND-INCOME> 23,405
<INTEREST-INCOME> 556,246
<OTHER-INCOME> 0
<EXPENSES-NET> 1,324,698
<NET-INVESTMENT-INCOME> (745,047)
<REALIZED-GAINS-CURRENT> (17,375,070)
<APPREC-INCREASE-CURRENT> 26,770,878
<NET-CHANGE-FROM-OPS> 8,650,761
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,155,418
<NUMBER-OF-SHARES-REDEEMED> 4,658,791
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 49,674,458
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,090,189)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,216,141
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,324,698
<AVERAGE-NET-ASSETS> 115,822,977
<PER-SHARE-NAV-BEGIN> 12.50
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> 0.61
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.04
<EXPENSE-RATIO> 1.14
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 28
<NAME> WORLDWIDE GROWTH TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 43,532,418
<INVESTMENTS-AT-VALUE> 48,389,017
<RECEIVABLES> 54,247
<ASSETS-OTHER> 154
<OTHER-ITEMS-ASSETS> 88,978
<TOTAL-ASSETS> 48,532,396
<PAYABLE-FOR-SECURITIES> 1,483,489
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,343,005
<TOTAL-LIABILITIES> 7,826,494
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37,799,250
<SHARES-COMMON-STOCK> 2,687,308
<SHARES-COMMON-PRIOR> 1,727,778
<ACCUMULATED-NII-CURRENT> (43,324)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,906,812)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,856,599
<NET-ASSETS> 40,705,902
<DIVIDEND-INCOME> 308,680
<INTEREST-INCOME> 330,845
<OTHER-INCOME> 0
<EXPENSES-NET> 394,380
<NET-INVESTMENT-INCOME> 245,145
<REALIZED-GAINS-CURRENT> (1,819,275)
<APPREC-INCREASE-CURRENT> 4,084,752
<NET-CHANGE-FROM-OPS> 2,436,858
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 206,728
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,300,707
<NUMBER-OF-SHARES-REDEEMED> 959,530
<SHARES-REINVESTED> 13,682
<NET-CHANGE-IN-ASSETS> 16,443,867
<ACCUMULATED-NII-PRIOR> (7,360)
<ACCUMULATED-GAINS-PRIOR> (87,537)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 325,977
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 394,380
<AVERAGE-NET-ASSETS> 32,597,723
<PER-SHARE-NAV-BEGIN> 14.04
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 1.09
<PER-SHARE-DIVIDEND> (0.07)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.15
<EXPENSE-RATIO> 1.21
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 29
<NAME> VALUE TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 269,400,468
<INVESTMENTS-AT-VALUE> 260,704,513
<RECEIVABLES> 1,195,217
<ASSETS-OTHER> 1,015
<OTHER-ITEMS-ASSETS> 163
<TOTAL-ASSETS> 261,900,908
<PAYABLE-FOR-SECURITIES> 353,892
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,992,530
<TOTAL-LIABILITIES> 6,346,422
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 266,380,258
<SHARES-COMMON-STOCK> 18,172,964
<SHARES-COMMON-PRIOR> 9,770,288
<ACCUMULATED-NII-CURRENT> 981
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,130,798)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (8,695,955)
<NET-ASSETS> 255,554,486
<DIVIDEND-INCOME> 3,587,520
<INTEREST-INCOME> 1,410,276
<OTHER-INCOME> 0
<EXPENSES-NET> 1,809,480
<NET-INVESTMENT-INCOME> 3,188,316
<REALIZED-GAINS-CURRENT> 3,711,085
<APPREC-INCREASE-CURRENT> (14,016,429)
<NET-CHANGE-FROM-OPS> (7,117,028)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,187,336)
<DISTRIBUTIONS-OF-GAINS> (3,711,085)
<DISTRIBUTIONS-OTHER> (1,531,744)
<NUMBER-OF-SHARES-SOLD> 8,926,276
<NUMBER-OF-SHARES-REDEEMED> 1,126,616
<SHARES-REINVESTED> 603,016
<NET-CHANGE-IN-ASSETS> 110,882,862
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (599,054)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,695,347
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,809,480
<AVERAGE-NET-ASSETS> 211,918,389
<PER-SHARE-NAV-BEGIN> 14.81
<PER-SHARE-NII> 0.18
<PER-SHARE-GAIN-APPREC> (0.45)
<PER-SHARE-DIVIDEND> (0.18)
<PER-SHARE-DISTRIBUTIONS> (0.30)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.06
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURES INVESTMENT TRUST
<SERIES>
<NUMBER> 30
<NAME> HIGH YIELD TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 214,744,353
<INVESTMENTS-AT-VALUE> 206,488,426
<RECEIVABLES> 4,304,535
<ASSETS-OTHER> 672
<OTHER-ITEMS-ASSETS> 9,939,556
<TOTAL-ASSETS> 220,733,189
<PAYABLE-FOR-SECURITIES> 450,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27,928,938
<TOTAL-LIABILITIES> 28,378,938
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 201,485,764
<SHARES-COMMON-STOCK> 14,892,838
<SHARES-COMMON-PRIOR> 6,841,409
<ACCUMULATED-NII-CURRENT> 46,904
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (766,078)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (8,255,927)
<NET-ASSETS> 192,354,251
<DIVIDEND-INCOME> 212,017
<INTEREST-INCOME> 13,548,623
<OTHER-INCOME> 0
<EXPENSES-NET> 1,265,217
<NET-INVESTMENT-INCOME> 12,495,423
<REALIZED-GAINS-CURRENT> 685,329
<APPREC-INCREASE-CURRENT> (9,230,531)
<NET-CHANGE-FROM-OPS> 3,254,351
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,153,316
<DISTRIBUTIONS-OF-GAINS> 463,039
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,574,213
<NUMBER-OF-SHARES-REDEEMED> 2,584,913
<SHARES-REINVESTED> 1,062,130
<NET-CHANGE-IN-ASSETS> 99,606,596
<ACCUMULATED-NII-PRIOR> 26,259
<ACCUMULATED-GAINS-PRIOR> 273,457
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,160,631
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,265,217
<AVERAGE-NET-ASSETS> 149,749,349
<PER-SHARE-NAV-BEGIN> 13.56
<PER-SHARE-NII> 0.91
<PER-SHARE-GAIN-APPREC> (0.53)
<PER-SHARE-DIVIDEND> (0.89)
<PER-SHARE-DISTRIBUTIONS> (0.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.92
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 31
<NAME> LIFESTYLE CONSERVATIVE 280 TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 75,226,549
<INVESTMENTS-AT-VALUE> 78,403,466
<RECEIVABLES> 395,891
<ASSETS-OTHER> 56
<OTHER-ITEMS-ASSETS> 176
<TOTAL-ASSETS> 78,799,589
<PAYABLE-FOR-SECURITIES> 388,023
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,028
<TOTAL-LIABILITIES> 396,051
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 74,934,128
<SHARES-COMMON-STOCK> 5,793,024
<SHARES-COMMON-PRIOR> 1,517,524
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 292,493
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,176,917
<NET-ASSETS> 78,403,538
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 1,356,487
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 1,356,487
<REALIZED-GAINS-CURRENT> 823,331
<APPREC-INCREASE-CURRENT> 2,705,774
<NET-CHANGE-FROM-OPS> 4,885,592
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,356,416
<DISTRIBUTIONS-OF-GAINS> 135,411
<DISTRIBUTIONS-OTHER> 510,860
<NUMBER-OF-SHARES-SOLD> 4,305,187
<NUMBER-OF-SHARES-REDEEMED> 184,127
<SHARES-REINVESTED> 154,440
<NET-CHANGE-IN-ASSETS> 58,653,518
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 115,432
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,424
<AVERAGE-NET-ASSETS> 45,593,889
<PER-SHARE-NAV-BEGIN> 13.01
<PER-SHARE-NII> .50
<PER-SHARE-GAIN-APPREC> .79
<PER-SHARE-DIVIDEND> .50
<PER-SHARE-DISTRIBUTIONS> .27
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.53
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANICAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 32
<NAME> LIFESTYLE MODERATE 460 TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 133,704,425
<INVESTMENTS-AT-VALUE> 138,127,751
<RECEIVABLES> 399,930
<ASSETS-OTHER> 395
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 138,528,076
<PAYABLE-FOR-SECURITIES> 390,099
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,225
<TOTAL-LIABILITIES> 400,324
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 132,067,297
<SHARES-COMMON-STOCK> 9,928,301
<SHARES-COMMON-PRIOR> 3,951,276
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,637,129
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,423,326
<NET-ASSETS> 138,127,752
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 2,862,066
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 2,862,066
<REALIZED-GAINS-CURRENT> 3,004,283
<APPREC-INCREASE-CURRENT> 3,159,452
<NET-CHANGE-FROM-OPS> 9,025,801
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,862,066
<DISTRIBUTIONS-OF-GAINS> 371,970
<DISTRIBUTIONS-OTHER> 1,336,619
<NUMBER-OF-SHARES-SOLD> 6,252,966
<NUMBER-OF-SHARES-REDEEMED> 608,000
<SHARES-REINVESTED> 332,059
<NET-CHANGE-IN-ASSETS> 85,382,122
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 341,434
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22,891
<AVERAGE-NET-ASSETS> 94,603,395
<PER-SHARE-NAV-BEGIN> 13.35
<PER-SHARE-NII> .45
<PER-SHARE-GAIN-APPREC> .84
<PER-SHARE-DIVIDEND> .45
<PER-SHARE-DISTRIBUTIONS> .28
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.91
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 33
<NAME> LIFESTYLE BALANCED 640 TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 370,073,124
<INVESTMENTS-AT-VALUE> 377,529,630
<RECEIVABLES> 1,983,575
<ASSETS-OTHER> 1,316
<OTHER-ITEMS-ASSETS> 1,823
<TOTAL-ASSETS> 379,516,344
<PAYABLE-FOR-SECURITIES> 1,432,799
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 551,692
<TOTAL-LIABILITIES> 1,984,491
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 373,226,327
<SHARES-COMMON-STOCK> 27,977,460
<SHARES-COMMON-PRIOR> 13,767,095
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,151,380)
<OVERDISTRIBUTION-GAINS> 3,086,187
<ACCUM-APPREC-OR-DEPREC> 7,456,506
<NET-ASSETS> 377,531,453
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 6,372,564
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 6,372,564
<REALIZED-GAINS-CURRENT> 4,367,852
<APPREC-INCREASE-CURRENT> 3,981,875
<NET-CHANGE-FROM-OPS> 14,722,291
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,372,564
<DISTRIBUTIONS-OF-GAINS> 2,747,394
<DISTRIBUTIONS-OTHER> 4,367,852
<NUMBER-OF-SHARES-SOLD> 13,995,601
<NUMBER-OF-SHARES-REDEEMED> 983,046
<SHARES-REINVESTED> 1,197,810
<NET-CHANGE-IN-ASSETS> 190,878,151
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,682,201
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 66,836
<AVERAGE-NET-ASSETS> 288,131,956
<PER-SHARE-NAV-BEGIN> 13.56
<PER-SHARE-NII> .31
<PER-SHARE-GAIN-APPREC> .47
<PER-SHARE-DIVIDEND> .31
<PER-SHARE-DISTRIBUTIONS> .54
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.49
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 34
<NAME> LIFESTYLE GROWTH 820 TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 370,150,154
<INVESTMENTS-AT-VALUE> 380,308,296
<RECEIVABLES> 1,994,130
<ASSETS-OTHER> 1,403
<OTHER-ITEMS-ASSETS> 707
<TOTAL-ASSETS> 382,304,536
<PAYABLE-FOR-SECURITIES> 1,828,186
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 167,347
<TOTAL-LIABILITIES> 1,995,533
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 373,041,015
<SHARES-COMMON-STOCK> 27,594,335
<SHARES-COMMON-PRIOR> 15,767,894
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,890,154)
<OVERDISTRIBUTION-GAINS> 2,798,969
<ACCUM-APPREC-OR-DEPREC> 10,158,142
<NET-ASSETS> 380,309,003
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 5,257,312
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 5,257,312
<REALIZED-GAINS-CURRENT> 4,176,809
<APPREC-INCREASE-CURRENT> 7,959,295
<NET-CHANGE-FROM-OPS> 17,393,416
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,257,312
<DISTRIBUTIONS-OF-GAINS> 2,747,990
<DISTRIBUTIONS-OTHER> 6,975,778
<NUMBER-OF-SHARES-SOLD> 11,372,979
<NUMBER-OF-SHARES-REDEEMED> 790,640
<SHARES-REINVESTED> 1,244,102
<NET-CHANGE-IN-ASSETS> 163,151,346
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,455,773
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 68,077
<AVERAGE-NET-ASSETS> 301,969,881
<PER-SHARE-NAV-BEGIN> 13.77
<PER-SHARE-NII> .24
<PER-SHARE-GAIN-APPREC> .63
<PER-SHARE-DIVIDEND> .24
<PER-SHARE-DISTRIBUTIONS> .62
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.78
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 35
<NAME> LIFESTYLE AGGRESSIVE 1000 TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 78,027,462
<INVESTMENTS-AT-VALUE> 80,522,359
<RECEIVABLES> 552,650
<ASSETS-OTHER> 302
<OTHER-ITEMS-ASSETS> 2,428
<TOTAL-ASSETS> 81,077,739
<PAYABLE-FOR-SECURITIES> 324,673
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 228,061
<TOTAL-LIABILITIES> 552,734
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 79,045,165
<SHARES-COMMON-STOCK> 6,015,574
<SHARES-COMMON-PRIOR> 3,644,612
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,015,057)
<OVERDISTRIBUTION-GAINS> 966,235
<ACCUM-APPREC-OR-DEPREC> 2,494,897
<NET-ASSETS> 80,525,005
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 311,250
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 311,250
<REALIZED-GAINS-CURRENT> 491,956
<APPREC-INCREASE-CURRENT> 2,264,970
<NET-CHANGE-FROM-OPS> 3,068,176
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 311,250
<DISTRIBUTIONS-OF-GAINS> 609,117
<DISTRIBUTIONS-OTHER> 1,458,191
<NUMBER-OF-SHARES-SOLD> 2,940,289
<NUMBER-OF-SHARES-REDEEMED> 804,663
<SHARES-REINVESTED> 235,336
<NET-CHANGE-IN-ASSETS> 31,420,478
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,526,530
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,393
<AVERAGE-NET-ASSETS> 64,931,978
<PER-SHARE-NAV-BEGIN> 13.47
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> .62
<PER-SHARE-DIVIDEND> .07
<PER-SHARE-DISTRIBUTIONS> .70
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.39
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MANUFACTURERS INVESTMENT TRUST ANNUAL REPORT DATED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000756913
<NAME> MANUFACTURERS INVESTMENT TRUST
<SERIES>
<NUMBER> 36
<NAME> SMALL COMPANY VALUE TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 171,522,010
<INVESTMENTS-AT-VALUE> 179,894,549
<RECEIVABLES> 1,299,742
<ASSETS-OTHER> 534
<OTHER-ITEMS-ASSETS> 791
<TOTAL-ASSETS> 181,195,616
<PAYABLE-FOR-SECURITIES> 1,874,851
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16,986,033
<TOTAL-LIABILITIES> 18,860,884
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 171,044,173
<SHARES-COMMON-STOCK> 14,274,275
<SHARES-COMMON-PRIOR> 5,618,018
<ACCUMULATED-NII-CURRENT> 122,775
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (17,204,755)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,372,539
<NET-ASSETS> 162,334,732
<DIVIDEND-INCOME> 1,463,524
<INTEREST-INCOME> 155,121
<OTHER-INCOME> 0
<EXPENSES-NET> 1,430,183
<NET-INVESTMENT-INCOME> 188,462
<REALIZED-GAINS-CURRENT> (16,508,567)
<APPREC-INCREASE-CURRENT> 9,615,252
<NET-CHANGE-FROM-OPS> (6,704,853)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 56,196
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,982,319
<NUMBER-OF-SHARES-REDEEMED> 1,330,303
<SHARES-REINVESTED> 4,241
<NET-CHANGE-IN-ASSETS> 95,243,648
<ACCUMULATED-NII-PRIOR> 56,115
<ACCUMULATED-GAINS-PRIOR> (761,428)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,218,609
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,430,183
<AVERAGE-NET-ASSETS> 116,058,003
<PER-SHARE-NAV-BEGIN> 11.94
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> (0.57)
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.37
<EXPENSE-RATIO> 1.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
