<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 4, 1999
REGISTRATION NO. 333-71437
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
(X) PRE-EFFECTIVE AMENDMENT NO. 1
( ) POST-EFFECTIVE AMENDMENT NO.
------------------------
MANUFACTURERS INVESTMENT TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
116 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02116
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
------------------------
NAME AND ADDRESS OF AGENT FOR SERVICE:
JAMES D. GALLAGHER, ESQ.
73 TREMONT STREET
BOSTON, MASSACHUSETTS 02108
(617) 266-6008
(REGISTRANT'S AREA CODE AND TELEPHONE NUMBER)
------------------------
WITH A COPY TO:
SARAH E. COGAN, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Registration Statement becomes effective.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
------------------------
TITLE OF SECURITIES BEING REGISTERED:
SHARES OF BENEFICIAL INTEREST ($.01 PAR VALUE) OF
GLOBAL EQUITY TRUST AND INVESTMENT QUALITY BOND TRUST, EACH A SERIES OF THE
REGISTRANT
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OR AMOUNT OF ITS SHARES
UNDER THE SECURITIES ACT OF 1933 PURSUANT TO SECTION 24(f) UNDER THE INVESTMENT
COMPANY ACT OF 1940; ACCORDINGLY, NO FEE IS PAYABLE HEREWITH BECAUSE OF RELIANCE
UPON SECTION 24(f).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(a) UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
ITEM OF FORM N-14 LOCATION IN THE PROSPECTUS/PROXY STATEMENT
- -------------------------------- ------------------------------------------
<S> <C>
PART A
1. Beginning of Registration Cover Page; Cross Reference Sheet; Notice
Statement and Outside of Special Meeting of Shareholders
Front Cover Page of
Prospectus
2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
3. Fee Table, Synopsis Summary
Information, and Risk
Factors
4. Information About the Summary; Information About the
Transaction Reorganization; Additional Information
About the Trust; Agreement and Plan of
Reorganization
5. Information About the Summary; Information About the
Registrant Reorganization; Additional Information
on Investment Policies and Techniques
and Risk Factors; Additional Information
About the Trust
6. Information About the Summary; Information About the
Company Being Acquired Reorganization; Additional Information
on Investment Policies and Techniques
and Risk Factors; Additional Information
About the Trust
7. Voting Information Voting Information
8. Interest of Certain Persons Voting Information; Financial Statements
and Experts and Experts
9. Additional Information Not Applicable
Required for Reoffering by
Persons Deemed to be
Underwriters
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM OF FORM N-14 LOCATION IN THE PROSPECTUS/PROXY STATEMENT
- -------------------------------- ------------------------------------------
<S> <C>
PART B
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information About Statement of Additional Information
the Registrant
13. Additional Information About Statement of Additional Information
the Company Being Acquired
14. Financial Statements Financial Statements and Experts; Pro
Forma Financial Statements; Historical
Financial Statements
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
</TABLE>
<PAGE> 4
PART A
INFORMATION REQUIRED IN THE
PROSPECTUS/PROXY STATEMENT
<PAGE> 5
PRELIMINARY COPY -- FOR THE INFORMATION OF THE
SECURITIES AND EXCHANGE COMMISSION ONLY
MANUFACTURERS INVESTMENT TRUST
116 Huntington Avenue
Boston, Massachusetts 02116
March 26, 1999
DEAR VARIABLE ANNUITY AND VARIABLE LIFE CONTRACT OWNERS:
A Special Meeting of Shareholders of the Manufacturers Investment Trust
(the "Trust") will be held at 73 Tremont Street, Boston, Massachusetts 02108, on
April 27, 1999, at 10:00 a.m., Eastern Standard Time, for the purpose of
considering a reorganization proposal that will combine two of the Trust's
portfolios with two other Trust portfolios.
Although you are not a shareholder of the Trust, your purchase payments and
the earnings on such purchase payments under your variable annuity or variable
life contracts issued by The Manufacturers Life Insurance Company of North
America ("Manulife North America"), The Manufacturers Life Insurance Company of
New York ("Manulife New York") and The Manufacturers Life Insurance Company of
America ("Manufacturers America") are invested in shares of one or more of the
portfolios of the Trust through subaccounts of separate accounts established by
Manulife North America, Manulife New York and Manufacturers America for such
purpose. Since the value of your contract depends in part on the investment
performance of the shares of the applicable portfolio of the Trust, you have the
right to instruct Manulife North America, Manulife New York or Manufacturers
America, as appropriate, how the shares of the Trust attributable to your
contract are voted. The number of votes for which you may give instructions for
any portfolio of the Trust is determined by dividing your contract value (or the
reserve for a contract after its maturity date) allocated to the subaccount in
which shares of such portfolio are held by the value per share of that portfolio
of the Trust. Fractional votes are counted. Manulife North America, Manulife New
York and Manufacturers America will vote all shares of the Trust issued to such
companies in proportion to the timely instructions received from owners of the
contracts participating in separate accounts registered under the Investment
Company Act of 1940.
Contract owners whose assets are invested in either the Worldwide Growth
Trust or the Capital Growth Bond Trust (collectively, the "Transferor
Portfolios") of the Trust are being asked to consider a reorganization proposal
whereby the Transferor Portfolios would merge with and into the Global Equity
Trust and the Investment Quality Bond Trust (collectively, the "Acquiring
Portfolios"), respectively, of the Trust. As a result of the reorganization,
contract owners whose assets are invested in the Transferor Portfolios will be
able to pursue substantially similar investment goals in the context of a larger
fund with potentially greater economies of scale and better performance. Such
larger funds should enhance the ability of portfolio managers to effect
portfolio transactions on more favorable terms and give portfolio managers
greater investment flexibility and the ability to select a larger number of
portfolio securities, with the attendant benefits of increased diversification.
It is anticipated that the investment advisory fees and the
<PAGE> 6
annualized expenses as a percentage of average net assets paid by the Acquiring
Portfolios generally will be comparable to or lower than those paid by the
corresponding Transferor Portfolios. There are certain differences between the
investment objectives, policies and restrictions of the Transferor Portfolios
and the Acquiring Portfolios, as summarized in the tables beginning on page 9
and included under the caption "Investment Objectives and Policies" in the
enclosed Prospectus/Proxy Statement.
The value of your investment will not be affected in the reorganization
transaction. Furthermore, in the opinion of legal counsel, the transaction will
not be subject to federal income taxes. The Transferor Portfolios and the
Acquiring Portfolios will bear the expenses of the reorganization.
For these reasons and the additional reasons discussed in the enclosed
Prospectus/Proxy Statement, the Board of Trustees of the Trust unanimously
recommends that you vote FOR approval of the reorganization proposal.
Enclosed you will find a Notice of Special Meeting of Shareholders, a
Prospectus/Proxy Statement for the Trust and a Voting Instructions Form for each
Transferor Portfolio in which your contract values were invested as of February
28, 1999 (the record date for the Meeting). The number of shares that represent
your voting interest (determined as explained above) appears on each Voting
Instructions Form. The Prospectus/Proxy Statement provides background
information and describes, in detail, the matters to be voted on at the Meeting.
We encourage you to read the attached materials in their entirety.
If you have any questions regarding the reorganization, please call (800)
344-1029.
Sincerely yours,
JOHN D. DESPREZ III
President
Manufacturers Investment Trust
<PAGE> 7
PRELIMINARY COPY -- FOR THE INFORMATION OF THE
SECURITIES AND EXCHANGE COMMISSION ONLY
MANUFACTURERS INVESTMENT TRUST
116 Huntington Avenue
Boston, Massachusetts 02116
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
March 26, 1999
To the Shareholders of
MANUFACTURERS INVESTMENT TRUST:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Manufacturers Investment Trust (the "Trust"), will be held at 73
Tremont Street, Boston, Massachusetts 02108 on April 27, 1999 at 10:00 a.m.,
Eastern Standard Time. A Prospectus/Proxy Statement which provides information
about the purpose of the Meeting is included with this notice. The Meeting will
be held for the following purposes:
Item 1 To consider and act upon a proposal to approve an Agreement and
Plan of Reorganization (the "Plan") of the Trust on behalf of the
Worldwide Growth Trust and the Capital Growth Bond Trust portfolios
(collectively, the "Transferor Portfolios") and the Global Equity
Trust and the Investment Quality Bond Trust portfolios
(collectively, the "Acquiring Portfolios"). The following table
depicts each Transferor Portfolio and the corresponding Acquiring
Portfolio into which such Transferor Portfolio will be merged:
<TABLE>
<CAPTION>
TRANSFEROR PORTFOLIO CORRESPONDING ACQUIRING PORTFOLIO
-------------------- ---------------------------------
<S> <C>
Worldwide Growth Trust Global Equity Trust
Capital Growth Bond Trust Investment Quality Bond Trust
</TABLE>
Shareholders of each Transferor Portfolio will vote separately on Item 1.
Item 2 Transaction of any other business that may properly come before the
Meeting.
The Board of Trustees of the Trust has recently reviewed and unanimously
endorsed the proposal set forth in the accompanying Prospectus/Proxy Statement.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE FOR ITEM 1.
<PAGE> 8
Approval of the Plan will require the affirmative vote of the holders of at
least a "majority of the outstanding voting securities" (as defined in this
Prospectus/Proxy Statement) of each of the Transferor Portfolios. By approving
the Plan, shareholders of the Transferor Portfolios will be deemed to have
waived certain of the Trust's investment limitations solely insofar as they
might be deemed to apply to the transactions contemplated by the Plan.
Each shareholder of record at the close of business on February 28, 1999 is
entitled to receive notice of and to vote at the Meeting.
Sincerely yours,
JAMES D. GALLAGHER
Secretary
March 26, 1999
Boston, Massachusetts
<PAGE> 9
PRELIMINARY COPY -- FOR THE INFORMATION OF THE
SECURITIES AND THE EXCHANGE COMMISSION ONLY
PROSPECTUS/PROXY STATEMENT DATED MARCH , 1999
Relating to the Acquisition of the Assets of
WORLDWIDE GROWTH TRUST
AND
CAPITAL GROWTH BOND TRUST
OF
MANUFACTURERS INVESTMENT TRUST
By and in exchange for shares of
GLOBAL EQUITY TRUST
AND
INVESTMENT QUALITY BOND TRUST
OF
MANUFACTURERS INVESTMENT TRUST
116 Huntington Avenue
Boston, Massachusetts 02116
(800) 344-1029
GENERAL
This Prospectus/Proxy Statement relates to the proposed transfer of all of
the assets and liabilities of the Worldwide Growth Trust and the Capital Growth
Bond Trust (collectively, the "Transferor Portfolios") of the Manufacturers
Investment Trust (the "Trust") to the Global Equity Trust and the Investment
Quality Bond Trust (collectively, the "Acquiring Portfolios"), respectively, of
the Trust in exchange for shares of such Acquiring Portfolio (the
"Reorganization"). As a result of the Reorganization, each shareholder of a
Transferor Portfolio will receive that number of shares of the corresponding
Acquiring Portfolio equal in value at the time of the exchange to the value of
such shareholder's shares of the Transferor Portfolio at such date. The terms
and conditions of the Reorganization are more fully described in this
Prospectus/Proxy Statement and in the Agreement and Plan of Reorganization
attached hereto as Exhibit A.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS/PROXY STATEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 10
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the Acquiring Portfolios
that a prospective investor ought to know before investing. For a more detailed
discussion of the investment objectives, policies, restrictions and risks of the
Acquiring Portfolios, see the prospectus for the Trust dated May 1, 1998, which
is incorporated by reference into this Prospectus/Proxy Statement. A copy of the
prospectus may be obtained without charge by writing to the Trust at the address
noted above or by calling toll free (800) 344-1029. A Statement of Additional
Information dated March , 1999 (the "Statement of Additional Information")
containing additional information about the Reorganization and the Trust has
been filed with the Securities and Exchange Commission (the "Commission") and is
incorporated by reference into this Prospectus/Proxy Statement. A copy of the
Statement of Additional Information may be obtained without charge by writing to
the Trust at the address noted above or by calling toll free (800) 344-1029. If
shareholders have any questions regarding the Reorganization, please call (800)
344-1029.
The Trust is a no-load, open-end management investment company, commonly
known as a mutual fund, registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Trust currently offers shares in 36 investment
portfolios. The shares of the Trust are divided into 36 series corresponding to
the investment portfolios. Each Transferor Portfolio and each Acquiring
Portfolio is a series of the Trust. In this Prospectus/Proxy Statement, for
simplicity, certain actions are described as being taken by either a Transferor
Portfolio or an Acquiring Portfolio, each of which is a portfolio of the Trust,
although all actions are actually taken by the Trust on behalf of the applicable
portfolio.
The Trust does not sell its shares directly to the public, but sells its
shares generally only to insurance companies and their separate accounts as the
underlying investment medium for variable contracts and group annuity contracts
("contracts"). Only shares of a particular portfolio are entitled to vote on
matters which affect only the interests of that portfolio. As of the record date
for the Special Meeting of Shareholders, the shares of the Transferor Portfolios
were legally owned by The Manufacturers Life Insurance Company of North America
("Manulife North America"), The Manufacturers Life Insurance Company of New York
("Manulife New York"), The Manufacturers Life Insurance Company of America
("Manufacturers America") and The Manufacturers Life Insurance Company (U.S.A.)
("Manufacturers U.S.A."). The ultimate parent of each of Manulife North America,
Manulife New York and Manufacturers America, is The Manufacturers Life Insurance
Company ("Manulife"), a Canadian mutual life insurance company whose principal
address is 200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5.
2
<PAGE> 11
Manulife North America is a stock life insurance company organized under
the laws of Delaware. Manulife North America holds shares of the Transferor
Portfolios attributable to variable annuity contracts in The Manufacturers Life
Insurance Company of North America Separate Account A and variable life
contracts in The Manufacturers Life Insurance Company of North America Separate
Account B, both of which are separate accounts registered under the 1940 Act, as
well as in an unregistered separate account.
Manulife New York is a stock life insurance company organized under the
laws of New York. Manulife New York holds shares of the Transferor Portfolios
attributable to variable annuity contracts in The Manufacturers Life Insurance
Company of New York Separate Account A and variable life contracts in The
Manufacturers Life Insurance Company of New York Separate Account B, both of
which are separate accounts registered under the 1940 Act, as well as in an
unregistered separate account.
Manufacturers America is a stock life insurance company organized under the
laws of Pennsylvania and redomesticated under the laws of Michigan.
Manufacturers America holds shares of the Transferor Portfolios attributable to
variable annuity contracts in Separate Account Two and variable life contracts
in Separate Accounts Three and Four, all of which are separate accounts
registered under the 1940 Act.
Manufacturers U.S.A. is a stock life insurance company organized under the
laws of Pennsylvania and redomesticated under the laws of Michigan whose
principal address is 200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5.
Manufacturers U.S.A. holds shares of the Trust in various unregistered separate
accounts.
Manulife North America, Manulife New York, Manufacturers America and
Manufacturers U.S.A. have the right to vote upon matters that may be voted upon
at a special shareholders' meeting. The companies will vote all shares of the
Portfolios issued to such companies in proportion to the timely instructions
received from owners of the contracts ("contractholders" or "contract owners")
participating in separate accounts described above which are registered under
the 1940 Act. The companies, in connection with their solicitation of voting
instructions, are furnishing this Prospectus/Proxy Statement to the owners of
contracts participating in registered separate accounts holding shares of the
Portfolios to be voted on the Proposal included in this Prospectus/Proxy
Statement.
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/PROXY STATEMENT. IF ANY SUCH
3
<PAGE> 12
INFORMATION IS GIVEN, IT SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE TRUST, THE ADVISER OR ANY SUBADVISERS TO THE TRUST OR THE PRINCIPAL
UNDERWRITER OF THE CONTRACTS. THIS PROSPECTUS/PROXY STATEMENT IS NOT AN OFFER TO
SELL SHARES OF THE TRUST IN ANY STATE WHERE SUCH OFFER OR SALE WOULD BE
PROHIBITED.
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.
4
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary..................................................... 5
Information About the Reorganization........................ 24
Voting Information.......................................... 30
Additional Information on Investment Policies and Techniques
and Risk Factors.......................................... 32
Additional Information About the Trust...................... 44
Financial Statements and Experts............................ 63
Legal Matters............................................... 63
Appendix.................................................... A-1
Exhibit A -- Agreement and Plan of Reorganization
</TABLE>
SUMMARY
The following is a summary of certain information contained in this
Prospectus/Proxy Statement. This summary is qualified by reference to the more
complete information contained elsewhere in this Prospectus/Proxy Statement, the
prospectus of the Trust and the Agreement and Plan of Reorganization attached to
this Prospectus/Proxy Statement as Exhibit A. Shareholders should read this
entire Prospectus/Proxy Statement carefully.
PROPOSED TRANSACTION. The Board of Trustees of the Trust (the "Board"),
including all of the Trustees who are not "interested persons" of the Trust (the
"Independent Trustees"), has unanimously approved an Agreement and Plan of
Reorganization (the "Plan") providing for the transfer of all of the assets and
liabilities of each Transferor Portfolio to the corresponding Acquiring
Portfolio in exchange for shares of such corresponding Acquiring Portfolio.
Subject to its approval by the shareholders of the Transferor Portfolios
and the owners of the variable contracts issued by such shareholders, the Plan
provides for the tax-free reorganization of the Transferor Portfolios, including
(a) the transfer of all of the assets, subject to all of the liabilities, of the
Transferor Portfolios in exchange for the Acquiring Portfolio shares; (b) the
liquidation of the Transferor Portfolios; and (c) the distribution to Transferor
Portfolio shareholders of such Acquiring Portfolio shares. As a result of the
Reorganization, each holder of shares of each Transferor Portfolio specified in
the table below will become a holder of shares of the Acquiring Portfolio listed
opposite such Transferor Portfolio (each Transferor or Acquiring Portfolio being
referred to herein as the "corresponding" Transferor or Acquiring
5
<PAGE> 14
Portfolio to the respective Acquiring or Transferor Portfolio listed opposite
its name).
<TABLE>
<CAPTION>
TRANSFEROR PORTFOLIO ACQUIRING PORTFOLIO
<S> <C>
- ----------------------------------------------------------
Worldwide Growth Trust Global Equity Trust
- ----------------------------------------------------------
Investment Quality Bond
Capital Growth Bond Trust Trust
</TABLE>
The total value of all shares of each Acquiring Portfolio issued in the
Reorganization will equal the total value of the net assets of the corresponding
Transferor Portfolio being acquired by such Acquiring Portfolio. The number of
full and fractional shares of an Acquiring Portfolio received by a shareholder
of the corresponding Transferor Portfolio will be equal in value to the value of
that shareholder's shares of the corresponding Transferor Portfolio as of the
close of regularly scheduled trading on the New York Stock Exchange on the
closing date of the Reorganization (the "Effective Time of the Reorganization").
The Effective Time of the Reorganization is expected to occur on April 30, 1999
or on such later day as the parties may mutually agree (the "Exchange Date"). As
a result, shareholders should carefully consider the information about the
Acquiring Portfolios presented in this Prospectus/ Proxy Statement in connection
with voting on the Reorganization.
There are certain differences between the investment objectives, policies
and restrictions of the Acquiring Portfolios and the corresponding Transferor
Portfolios, as discussed below. See "Investment Objectives and Policies." The
fee structure of the Transferor Portfolios will also change, as discussed below.
The existing purchase, redemption and dividend policies of the Transferor
Portfolios will remain substantially unchanged. The consummation of the
Reorganization is contingent on the satisfaction of the conditions described
below under "Information About the Reorganization -- Agreement and Plan of
Reorganization."
If the Reorganization were to have been consummated as of December 31,
1998, the approximate resulting aggregate net assets of the Acquiring Portfolios
would be (1) $969,269,523 in the case of the Global Equity Trust and (2)
$377,222,690 in the case of the Investment Quality Bond Trust.
No gain or loss will be recognized by the Transferor Portfolios or the
Acquiring Portfolios or shareholders of the Transferor Portfolios for federal
income tax purposes as a result of the Reorganization. For further information
about the tax consequences of the Reorganization, see "Information about the
Reorganization -- Federal Income Tax Consequences."
Under Massachusetts law, shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
6
<PAGE> 15
However, the Declaration of Trust disclaims 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
Trust or the Trustees. Moreover, the Declaration of Trust provides for
indemnification out of the Trust property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust. Thus, the
risk of a shareholder's incurring financial loss on account of shareholder
liability is considered by the Trust to be remote, since it is limited to
circumstances in which the disclaimer is inoperative, inadequate insurance
existed (e.g., fidelity bonding and errors and omissions insurance) and the
Trust itself is unable to meet its obligations.
INVESTMENT MANAGEMENT. Manulife Securities Services, LLC ("Manulife
Securities") currently serves as investment adviser to the Trust and each of its
portfolios. Manulife Securities, a wholly-owned subsidiary of Manulife North
America, is a Delaware limited liability company whose principal offices are
located at 73 Tremont Street, Boston, Massachusetts 02108. In addition, each
portfolio of the Trust has a separate subadviser which is responsible for the
day-to-day decision making. Each of the subadvisers to the portfolios of the
Trust is registered as an investment adviser under the Investment Advisers Act
of 1940 or is otherwise exempt from registration.
The following table illustrates the current management arrangements for the
Transferor Portfolios and the management arrangements to be in effect for the
corresponding Acquiring Portfolios upon consummation of the Reorganization:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
MANAGEMENT ARRANGEMENTS
CURRENT MANAGEMENT ARRANGEMENTS UPON CONSUMMATION OF THE REORGANIZATION
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Transferor Investment Acquiring Investment
Portfolio Adviser Subadviser Portfolio Adviser Subadviser
- -----------------------------------------------------------------------------------------
Worldwide Manulife Founders* Global Manulife Morgan
Growth Trust Securities Equity Securities Stanley
Trust
- -----------------------------------------------------------------------------------------
Capital Growth Manulife MAC** Investment Manulife Wellington
Bond Trust Securities Quality Securities
Bond
Trust
- -----------------------------------------------------------------------------------------
</TABLE>
- ---------------
* Founders Asset Management, LLC ("Founders").
** Manufacturers Adviser Corporation ("MAC"), an indirect wholly owned
subsidiary of Manulife.
7
<PAGE> 16
SUBADVISORY ARRANGEMENTS. It is anticipated that following consummation of
the Reorganization and pursuant to existing agreements with Manulife Securities,
each of Morgan Stanley Asset Management Inc. ("Morgan Stanley") and Wellington
Management Company LLP ("Wellington Management") will continue to serve in its
current capacity.
MORGAN STANLEY
Morgan Stanley has been the subadviser to the Global Equity Trust since
October 1, 1996. Morgan Stanley, a wholly-owned subsidiary of Morgan Stanley,
Dean Witter, Discover & Co., conducts a worldwide portfolio management business,
providing a broad range of portfolio management services to customers in the
United States and abroad. Its principal offices are located at 1221 Avenue of
the Americas, New York, New York 10020.
Morgan Stanley, Dean Witter, Discover & Co. is a global financial services
firm with three major businesses: securities, asset management and credit
services.
Frances Campion has been primarily responsible for the portfolio management
of the Global Equity Trust since January 1, 1997. 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.
WELLINGTON MANAGEMENT
Wellington Management is subadviser to the Investment Quality Bond Trust.
Founded in 1933, Wellington Management is a Massachusetts limited liability
partnership whose principal business address is 75 State Street, Boston,
Massachusetts 02109. Wellington Management is a professional investment
counseling firm which provides investment services to investment companies,
employee benefit plans, endowments, foundations and other institutions and
individuals.
Thomas L. Pappas, Senior Vice President of Wellington Management, has
served as portfolio manager to the Investment Quality Bond Trust since March
1994. Mr. Pappas has been a portfolio manager with Wellington Management since
1987.
8
<PAGE> 17
INVESTMENT OBJECTIVES AND POLICIES. The following table sets forth the
investment objective and approach of each Transferor Portfolio and its
corresponding Acquiring Portfolio. There are certain differences in the
investment objectives and approaches of the portfolios that should be
considered.
PORTFOLIO INVESTMENT OBJECTIVE AND APPROACH
Worldwide Growth Trust Seeks to achieve long-term growth
capital by normally investing at
least 65% of its total assets in
equity securities of growth
companies in a variety of markets
throughout the world.
Global Equity Trust Seeks to achieve long-term capital
appreciation by investing
primarily in equity securities
throughout the world, including
U.S. issuers and emerging markets.
Capital Growth Bond Trust Seeks to achieve growth of capital
by investing in medium-grade or
better debt securities, with
income as a secondary
consideration.
Investment Quality Bond Trust Seeks to achieve a high level of
current income consistent with the
maintenance of principal and
liquidity by investing primarily
in a diversified portfolio of
investment grade corporate bonds
and U.S. Government bonds with
intermediate to longer term
maturities. Up to 20% of the
portfolio's assets may be invested
in non-investment grade fixed
income securities.
The investment objectives and policies of each Transferor Portfolio are set
forth below, together with a discussion of the primary differences, if any, from
those of its corresponding Acquiring Portfolio. Each Transferor Portfolio and
Acquiring Portfolio has a stated investment objective which it pursues through
separate investment policies. 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 Transferor Portfolio and
corresponding Acquiring Portfolio is subject.
9
<PAGE> 18
The investment objectives of each Acquiring Portfolio represent fundamental
policies of each such Acquiring Portfolio and may not be changed without the
approval of the holders of a majority of the outstanding shares of the Acquiring
Portfolio. Except for certain investment restrictions, the policies by which an
Acquiring Portfolio seeks to achieve its investment objectives may be changed by
the Trust's Board without the approval of shareholders.
The following is a description of the investment objective and policies of
each Transferor Portfolio and the corresponding Acquiring Portfolio. More
complete descriptions of the money market instruments in which the Transferor
Portfolios and Acquiring Portfolios may invest and of the options, futures,
currency and other derivative transactions that certain Transferor Portfolios
and Acquiring Portfolios may engage in are set forth in the Statement of
Additional Information. A description of the debt security ratings used by the
Transferor Portfolios and Acquiring Portfolios and assigned by Moody's Investors
Service, Inc. ("Moody's") or Standard and Poor's Corporation ("Standard &
Poor's") is included in the Appendix to this Prospectus/Proxy Statement.
Because the value of securities and the income derived therefrom may
fluctuate according to the earnings of the issuers and changes in economic and
market conditions, there can be no assurance that the investment objective of
any of the Transferor Portfolios or Acquiring Portfolios will be achieved.
WORLDWIDE GROWTH TRUST AND GLOBAL EQUITY TRUST
Worldwide Growth Trust
The investment objective of the Worldwide Growth Trust is long-term growth
of capital. The Worldwide Growth Trust seeks to attain this objective by
investing, under normal circumstances, at least 65% of the portfolio's total
assets in equity securities of growth companies in a variety of markets
throughout the world.
The Worldwide Growth Trust will emphasize common stocks of both emerging
and established growth companies that generally have proven performance records
and strong market positions. The portfolio's holdings will usually consist of
investments in companies in various countries throughout the world, but it will
always invest at least 65% of its total assets in three or more countries. The
portfolio will not invest more than 50% of its total assets in the securities of
any one foreign country.
The Worldwide Growth Trust has the ability to purchase securities in any
foreign country as well as in the United States. Foreign investments of the
portfolio may include securities issued by companies located in countries not
considered to be major industrialized nations. Such countries are subject to
10
<PAGE> 19
more economic, political and business risk than major industrialized nations,
and the securities they issue are expected to be more volatile and more
uncertain as to payments of interest and principal. Investments of the portfolio
may include securities created through the Brady Plan, a program under which
heavily indebted countries have restructured their bank debt into bonds.
Since the Worldwide Growth Trust's assets will be invested primarily in
foreign securities and since substantially all of the portfolio's revenues will
be received in foreign currencies, the portfolio's net asset values will be
affected by changes in currency exchange rates. The portfolio will pay dividends
in dollars and will incur currency conversion costs.
The Worldwide Growth Trust may invest in convertible securities, preferred
stocks, bonds, debentures, and other corporate obligations when the subadviser
believes that these investments offer opportunities for capital appreciation.
Current income will not be a substantial factor in the selection of these
securities.
The portfolio will only invest in bonds, debentures, and corporate
obligations -- other than convertible securities and preferred stocks -- rated
investment grade (BBB or higher) at the time of purchase or, if unrated, of
comparable quality in the opinion of the subadviser. Convertible securities and
preferred stocks purchased by the portfolio may be rated in medium and lower
categories by Moody's or Standard & Poor's (Ba or lower by Moody's and BB or
lower by Standard & Poor's), but will not be rated lower than B. The portfolio
may also invest in unrated convertible securities and preferred stocks in
instances in which the subadviser believes that the financial condition of the
issuer or the protection afforded by the terms of the securities limits risk to
a level similar to that of securities eligible for purchase by the portfolio
rated in categories no lower than B. At no time will the portfolio have more
than 5% of its total assets invested in any fixed-income securities (excluding
preferred stocks) which are unrated or are rated below investment grade either
at the time of purchase or as a result of a reduction in rating after purchase.
The portfolio is not required to dispose of debt securities 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 such securities to less than 5% of its total assets.
Up to 100% of the assets of the Worldwide Growth Trust may be invested
temporarily in 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, if the subadviser determines it to be appropriate
for purposes of enhancing liquidity or preserving capital in light of
11
<PAGE> 20
prevailing market or economic conditions. The portfolio may also acquire
certificates of deposit and bankers' acceptances of banks which meet criteria
established by the Trust's Trustees. While the portfolio is in a defensive
position, the opportunity to achieve capital growth will be limited, and, to the
extent that this assessment of market conditions is incorrect, the portfolio
will be foregoing the opportunity to benefit from capital growth resulting from
increases in the value of equity investments.
The Worldwide Growth Trust may invest in the securities of small and
medium-sized companies. The subadviser considers small and medium-sized
companies to be those which are still in the developing stages of their life
cycles and are attempting to achieve rapid growth in both sales and earnings.
Investments in small sized companies involve greater risk than is customarily
associated with more established companies. For a description of these risks see
"Additional Information on Investment Policies and Techniques and Risk
Factors -- Small Company and Emerging Growth Securities."
The Worldwide Growth Trust will be subject to special risks as a result of
its ability to invest up to 100% of its total assets in foreign securities.
These risks are described under the caption "Additional Information on
Investment Policies and Techniques and Risk Factors -- Foreign Securities."
Moreover, substantial investments in foreign securities may have adverse tax
implications as described under "Additional Information About the Trust -- Tax
Matters."
The Worldwide Growth Trust is currently authorized to use all of the
various investment strategies referred to as "Hedging and Other Strategic
Transactions" under "Additional Information on Investment Policies and
Techniques and Risk Factors." The Statement of Additional Information contains a
description of these strategies and of certain risks associated therewith.
Global Equity Trust
The investment objective of the Global Equity Trust is long-term capital
appreciation. The Global Equity Trust 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 located in the U.S. and emerging market countries.
Under normal circumstances, at least 65% of the value of the total assets
of the Global Equity Trust will be invested in equity securities and at least
20% of the value of the portfolio's total assets will be invested in the common
stocks of U.S. issuers. The portfolio may also invest in money market
12
<PAGE> 21
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 dealt in on a regulated market. As a result of the absence of a public
trading market, such securities may pose liquidity risks.
The subadviser's approach is oriented to individual stock selection and is
value driven. In selecting stocks for the portfolio, the subadviser initially
identifies those stocks that it believes to be undervalued in relation to the
issuer's assets, cash flow, earnings and revenues, and then evaluates the future
value of such stocks by running the results of an in-depth study of the issuer
through a dividend discount model. In selecting investments, the subadviser
utilizes the research of a number of sources, including an international
affiliate of the subadviser. Portfolio holdings are regularly reviewed and
subjected to fundamental analysis to determine whether they continue to conform
to the subadviser'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.
The Global Equity Trust will be subject to special risks as a result of its
ability to invest up to 100% of its total assets in foreign securities. These
risks, including the risks of the possible increased likelihood of expropriation
or the return to power of a communist regime which would institute policies to
expropriate, nationalize or otherwise confiscate investments are described under
the caption "Additional Information on Investment Policies and Techniques and
Risk Factors -- Foreign Securities." Moreover, substantial investments in
foreign securities may have adverse tax implications as described under
"Additional Information About the Trust -- Tax Matters."
The Global Equity Trust is currently authorized to use all of the various
investment strategies referred to as "Hedging and Other Strategic Transactions."
The Statement of Additional Information contains a description of these
strategies and of certain risks associated therewith.
13
<PAGE> 22
Differences between the Worldwide Growth Trust and the Global Equity Trust
<TABLE>
<CAPTION>
WORLDWIDE GROWTH TRUST GLOBAL EQUITY TRUST COMMENT
- ---------------------- ------------------- -------
<S> <C> <C>
Authorized to invest Authorized to invest The Global Equity
in any country, in any country, Trust will, under
including the United including the United normal circumstances,
States. States; under normal have at least 20% of
circumstances, its portfolio
invests at least 20% invested in the
of the value of the United States,
portfolio's total whereas the Worldwide
assets in the common Growth Trust is not
stocks of U.S. required to maintain
issuers. this level of
investment.
(Historically,
however, the
Worldwide Growth
Trust has invested
more than 20% of its
assets in the United
States.)
Emphasizes the common Emphasizes common The Global Equity
stocks of both stocks of undervalued Trust seeks to invest
emerging and companies (i.e., in undervalued
established growth value investing). companies, whereas
companies (i.e., the Worldwide Growth
growth investing). Trust seeks to invest
in growth companies.
</TABLE>
CAPITAL GROWTH BOND TRUST AND INVESTMENT QUALITY BOND TRUST
Capital Growth Bond Trust
The investment objective of the Capital Growth Bond Trust is to achieve
growth of capital by investing debt securities of medium-grade or better debt
securities, with income as a secondary consideration.
The Capital Growth Bond Trust differs from most "bond" funds in that its
primary objective is capital appreciation, not income. Opportunities for capital
appreciation will usually exist only when the levels of prevailing interest
rates are falling. During periods when the subadviser expects interest rates to
decline, the portfolio will invest primarily in intermediate-term and long-term
corporate and government debt securities. However, during periods when the
subadviser expects interest rates to rise or believes that market or economic
conditions otherwise warrant such action, the portfolio may invest
14
<PAGE> 23
substantially all its assets in short-term debt securities to preserve capital
and maintain income. The portfolio may also maintain a portion of its assets
temporarily in cash or short-term debt securities pending selection of
particular long-term investments.
The Capital Growth Bond Trust will be carefully positioned in relation to
the term of debt obligations and the anticipated movement of interest rates. It
is contemplated that at least 75% of the value of the portfolio's total
investment in corporate debt securities, excluding commercial paper, will be
represented by debt securities which have, at the time of purchase, a rating
within the four highest grades as determined by Moody's (Aaa, Aa, A or Baa),
Standard & Poor's (AAA, AA, A or BBB), or Fitch's Investors Service ("Fitch's")
(AAA, AA, A or BBB) and debt securities of banks and other issuers which,
although not rated as a matter of policy by either Moody's, Standard & Poor's,
or Fitch's, are considered by the subadviser to have investment quality
comparable to securities receiving ratings within such four highest grades.
Although the portfolio does not intend to acquire or hold debt securities of
below investment-grade quality, shareholders should note that even bonds of the
lowest categories of investment-grade quality may have speculative
characteristics, and 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 bonds. It should be further noted
that should an obligation in the portfolio drop below investment grade, the
portfolio will make every effort to dispose of it promptly so long as to do so
would not be detrimental to the portfolio.
Government obligations in which the Capital Growth Bond Trust may invest
include those of foreign governments provided they are denominated in U.S.
dollars. The portfolio may purchase securities on a forward-commitment,
when-issued or delayed-delivery basis.
The Capital Growth Bond Trust may purchase corporate debt securities which
carry certain equity features, such as conversion or exchange rights or warrants
for the acquisition of stock of the same or a different issuer or participations
based on revenues, sales, or profits. The portfolio will not exercise any such
conversion, exchange or purchase rights if, at the time, the value of all equity
interests so owned would exceed 10% of the value of the portfolio's total
assets.
The Capital Growth Bond Trust will be subject to certain risks as a result
of its ability to invest up to 100% of its total assets in the following types
of foreign securities: (i) U.S. dollar denominated obligations of foreign
branches of U.S. banks, (ii) securities represented by American Depository
Receipts ("ADRs") listed on a national securities exchange or traded in the U.S.
over-the-counter market, (iii) securities of a corporation organized in a
jurisdiction
15
<PAGE> 24
other than the U.S. and listed on the New York Stock Exchange or NASDAQ or (iv)
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). Moreover, substantial investments in
foreign securities may have adverse tax implications.
The Capital Growth Bond Trust is currently authorized to use all of the
investment strategies referred to as "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. The Statement of Additional
Information contains a description of these strategies and of certain risks
associated therewith.
Investment Quality Bond Trust
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.
The Investment Quality Bond Trust seeks to achieve its objective by
investing the portfolio's assets primarily in investment grade corporate bonds
and U.S. Government bonds with intermediate to longer term maturities.
Investment management will emphasize sector analysis, which focuses on relative
value and yield spreads among security types and among quality, issuer, and
industry sectors, call protection and credit research. Credit research on
corporate bonds is based on both quantitative and qualitative criteria
established by the subadviser, such as an issuer's industry, operating and
financial profiles, business strategy, management quality, and projected
financial and business conditions. The subadviser will attempt to maintain a
highly steady and possibly growing income stream.
At least 65% of the Investment Quality Bond Trust's assets will be invested
in:
(1) marketable debt securities of domestic issuers 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 the subadviser);
(2) securities issued or guaranteed as to principal or interest by the U.S.
Government or its agencies or instrumentalities, including mortgage
backed securities; and
(3) cash and certain cash equivalent securities.
16
<PAGE> 25
The balance of the Investment Quality Bond Trust's investments may include:
domestic and foreign debt securities rated below "A" by Moody's and Standard &
Poor's (and unrated securities of comparable quality as determined by the
subadviser), 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
mortgage securities. At least 65% of the Investment Quality Bond Trust's assets
will be invested in bonds and debentures.
In pursuing its investment objective, the Investment Quality Bond Trust may
invest up to 20% of its assets in domestic and foreign high yield (high risk)
corporate and government debt securities, commonly known as "junk bonds" (i.e.,
rated "Ba" or below by Moody's or "BB" or below by Standard & Poor's, or if
unrated, of comparable quality as determined by the subadviser). No minimum
rating standard is required for a purchase by the portfolio. Domestic and
foreign high yield debt securities involve comparatively greater risks,
including price volatility and risk of default in the payment of interest and
principal, than higher-quality 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
the subadviser. While such securities are considered investment grade quality
and are deemed to have adequate capacity for payment of principal and interest,
investments in such securities involve a higher degree of risk than that
associated with investments in debt securities in the higher rating categories;
such securities lack outstanding investment characteristics and in fact 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 bonds. While
the Investment Quality Bond Trust may only invest up to 20% of its assets in
bonds rated below "Baa" by Moody's or "BBB" by Standard & Poor's (or, if
unrated, of comparable quality as determined by the subadviser), it is not
required to dispose of bonds that may be downgraded after being purchased by the
Investment Quality Bond Trust, even though such downgrade may cause the
portfolio to exceed this 20% maximum.
The Investment Quality Bond Trust is currently authorized to use all of the
various investment strategies referred to as "Hedging and Other Strategic
Transactions." The Statement of Additional Information contains a description of
these strategies and of certain risks associated therewith. The Investment
Quality Bond Trust will be subject to certain risks as a result of its ability
to invest up to 20% of its assets in foreign securities. These risks are
described
17
<PAGE> 26
under the caption "Additional Information on Investment Policies and Techniques
and Risk Factors -- Foreign Securities" in this Prospectus. Moreover,
substantial investments in foreign securities may have adverse tax implications
as described under "Additional Information About the Trust -- Tax Matters."
Differences between the Capital Growth Bond Trust and the Investment Quality
Bond Trust
<TABLE>
<CAPTION>
CAPITAL GROWTH INVESTMENT QUALITY
BOND TRUST BOND TRUST COMMENT
-------------- ------------------ -------
<S> <C> <C>
Differs from most Stated fundamental The Investment
bond funds in that investment objective Quality Bond Trust
its primary is to provide a high seeks current
investment objective level of current income, not capital
is capital income. appreciation.
appreciation, not
income.
Stated fundamental Stated fundamental Because the
investment objective investment objective Investment Quality
is to achieve growth is to provide a high Bond Trust's
of capital by level of current investment approach
investing in income consistent is not contained in
medium-grade or with the maintenance its objective, it is
better debt of principal and non- fundamental and
securities, with liquidity. can be changed by
income as a secondary the Trust's Board
consideration. without shareholder
approval, unlike the
investment approach
of the Capital
Growth Bond Trust.
</TABLE>
18
<PAGE> 27
<TABLE>
<CAPTION>
CAPITAL GROWTH INVESTMENT QUALITY
BOND TRUST BOND TRUST COMMENT
-------------- ------------------ -------
<S> <C> <C>
Does not invest in Authorized to invest The Investment
debt securities rated up to 35% of its Quality Bond Trust
below BBB or unrated total assets in debt will be subject to
securities of similar securities rated the additional risks
quality. below A, and may associated with
invest up to 20% of investing in lower
its assets in high rated securities.
yield (high risk)
debt securities
rated below
investment grade
(commonly known as
"junk bonds") and
unrated securities
of similar quality.
Historically,
however, the
Investment Quality
Bond Trust has not
invested more than
15% of its assets in
high yield (high
risk) debt
securities.
</TABLE>
ADDITIONAL INVESTMENT TRUST PORTFOLIOS. In addition to the Transferor
Portfolios and the Acquiring Portfolios referred to above, the Trust currently
offers the following thirty-two additional portfolios.
Pacific Rim Emerging Markets Trust
Science & Technology Trust
International Small Cap Trust
Emerging Small Company Trust (formerly, Emerging Growth Trust)
Pilgrim Baxter Growth Trust
Small/Midcap Trust
International Stock Trust
Small Company Value Trust
Equity Trust
Growth Trust
Quantitative Equity Trust
Equity Index Trust
Blue Chip Growth Trust
Real Estate Securities Trust
Value Trust
International Growth and Income Trust
19
<PAGE> 28
Growth and Income Trust
Equity-Income Trust
Balanced Trust
Aggressive Asset Allocation Trust
High Yield Trust
Moderate Asset Allocation Trust
Conservative Asset Allocation Trust
Strategic Bond Trust
Global Government Bond Trust
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
FEES AND EXPENSES. The tables which follow set forth the ratios of
expenses to average net assets and expense examples for each of the Transferor
Portfolios and the corresponding Acquiring Portfolios for the fiscal year ended
December 31, 1998, and the pro forma expense ratios and expense examples for the
shares of the corresponding Acquiring Portfolios as if the Reorganization had
occurred at the commencement of the fiscal year ended December 31, 1998, based
upon the fee arrangements that will be in place upon the consummation of the
Reorganization. Therefore, the tables describe the fees and expenses a
shareholder can expect to incur if the Reorganization is consummated.
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
FOR FISCAL YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
WORLDWIDE GLOBAL
GROWTH TRUST EQUITY TRUST PRO FORMA
------------ ------------ ---------
<S> <C> <C> <C>
Advisory Fee...................... 1.00% 0.90% 0.90%
Other Expenses*................... 0.21% 0.11% 0.11%
Total Annual Operating Expenses... 1.21% 1.01% 1.01%
</TABLE>
20
<PAGE> 29
<TABLE>
<CAPTION>
CAPITAL GROWTH INVESTMENT QUALITY
BOND TRUST BOND TRUST PRO FORMA
-------------- ------------------ ---------
<S> <C> <C> <C>
Advisory Fee................ 0.65% 0.65% 0.65%
Other Expenses*............. 0.07% 0.07% 0.07%
Total Annual Operating
Expenses.................. 0.72% 0.72% 0.72%
</TABLE>
- ---------------
* "Other Expenses" include custody fees, registration fees, legal fees, audit
fees, trustees' fees, insurance fees and other miscellaneous expenses.
Advisory fees are reduced or Manulife Securities reimburses the Trust if the
total of all expenses (excluding advisory fees, taxes, portfolio brokerage
commissions, interest, litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Trust's
business) applicable to a portfolio exceeds a specified annual rate (e.g.,
.75% in the case of the Worldwide Growth Trust and the Global Equity Trust or
.50% in the case of the Capital Growth Bond Trust and the Investment Quality
Bond Trust). These expense limitations continue in effect from year to year
unless terminated by Manulife Securities at any year end upon 30 days' notice
to the Trust.
EXAMPLES: These Examples are intended to help you compare the cost of investing
in the Transferor Portfolios with the cost of investing in other mutual fund
portfolios. The Examples assume that you invest $10,000 in a particular
portfolio for the time periods indicated and then redeem all of your shares at
the end of those periods. The Examples also assume that your investment has a 5%
return each year and that such portfolio's operating expense levels remain the
same as set forth in the table above. Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
Worldwide Growth Trust and Global Equity Trust
<TABLE>
<CAPTION>
WORLDWIDE GLOBAL
GROWTH TRUST EQUITY TRUST PRO FORMA
-------------- ------------------ ---------
<S> <C> <C> <C>
1 Year.................. $ 123 $ 103 $ 103
3 Years................. $ 384 $ 322 $ 322
5 Years................. $ 665 $ 558 $ 558
10 Years................ $1,466 $1,236 $1,236
</TABLE>
21
<PAGE> 30
Capital Growth Bond Trust and Investment Quality Bond Trust
<TABLE>
<CAPTION>
CAPITAL GROWTH INVESTMENT QUALITY
BOND TRUST BOND TRUST PRO FORMA
-------------- ------------------ ---------
<S> <C> <C> <C>
1 Year.................. $ 74 $ 74 $ 74
3 Years................. $ 230 $ 230 $ 230
5 Years................. $ 401 $ 401 $ 401
10 Years................ $ 894 $ 894 $ 894
</TABLE>
THE EXAMPLES ASSUME REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. THE
EXAMPLES SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES OR ANNUAL RETURN OF SHARES OF AN ACQUIRING PORTFOLIO; ACTUAL EXPENSES
AND ANNUAL RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN. There can be no
assurance that the foregoing pro forma expense ratios would have been the actual
expense ratios for the corresponding Acquiring Portfolios had the Reorganization
been consummated when assumed above, or that the foregoing pro forma expense
ratios reflect the actual expense ratios that will be incurred by the
corresponding Acquiring Portfolios indicated above if the Reorganization is
consummated. The purpose of these tables is to assist investors in understanding
the expenses an investor in each of the Transferor Portfolios and corresponding
Acquiring Portfolios will bear. The variable contracts issued by Manulife North
America, Manulife New York and Manufacturers America provide for charges not
reflected in the above table.
The expense ratio of the Global Equity Trust is lower than that of the
Worldwide Growth Trust, while the expense ratio of the Investment Quality Bond
Trust is substantially the same as that of the Capital Growth Bond Trust.
The Board of Trustees of the Trust, including all of the Independent
Trustees, has unanimously concluded that (i) the Reorganization is in the best
interests of each Transferor Portfolio, as well as its shareholders and the
contractholders whose contract values are invested in shares thereof; and (ii)
the interests of existing shareholders of the Transferor Portfolios and
contractholders would not be diluted as a result of the Reorganization. The
Trust's Board has unanimously recommended to shareholders approval of the
Reorganization. See "Information About the Reorganization -- Reasons for the
Reorganization."
PURCHASE AND REDEMPTION. The purchase and redemption procedures with
respect to the Transferor Portfolios are identical to those of the corresponding
Acquiring Portfolios. Shares of the Trust are offered continuously, without
sales charge, at prices equal to the respective net asset values of the
portfolio being purchased. The Trust sells its shares directly without the use
of any underwriter. Shares of the Trust are sold and redeemed at their net asset
22
<PAGE> 31
value next computed after a purchase payment or redemption request is received
by the shareholder from the contractholder or after any other purchase or
redemption order is received by the Trust. Depending upon the net asset values
at that time, the amount paid upon redemption may be more or less than the cost
of the shares when they were purchased. 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.
DIVIDENDS AND DISTRIBUTIONS. The dividends and distributions procedures
with respect to the Transferor Portfolios are identical to those of the
corresponding Acquiring Portfolios. The Trust intends to declare as dividends
substantially all of the net investment income, if any, of each of the Acquiring
Portfolios. For dividend purposes, net investment income of each of the
Acquiring Portfolios, will consist of all payments of dividends (other than
stock dividends) or interest received by such portfolio less the estimated
expenses of such portfolio (including fees payable to Manulife Securities).
Dividends from the net investment income and the net realized short-term and
long-term capital gains, if any, for each Acquiring Portfolio, will be declared
not less frequently than annually and reinvested in additional full and
fractional shares of that Acquiring Portfolio or paid in cash.
FEDERAL INCOME TAX CONSEQUENCES. The Trust will have received an opinion
from Simpson Thacher & Bartlett, counsel to the Trust in connection with the
Reorganization, to the effect that, based upon certain facts, assumptions and
representations, the Reorganization will constitute a tax-free reorganization
within the meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"). If the Reorganization constitutes a tax-free
reorganization, no gain or loss will be recognized by the Transferor Portfolios
or the Acquiring Portfolios or the shareholders of the Transferor Portfolios as
a result of the Reorganization. See "Information About the
Reorganization -- Federal Income Tax Consequences."
PRINCIPAL RISK FACTORS. The risks associated with an investment in an
Acquiring Portfolio, in general, are those typically associated with investing
in a managed portfolio of the specific types of instruments in which such
Acquiring Portfolio invests. Both of the Acquiring Portfolios may invest to
varying degrees in the securities of foreign issuers and the Investment Quality
Bond Trust may invest in high yield (high risk) securities which entail certain
additional risks. Further information relating to these and other risks
associated with an investment in the Acquiring Portfolios is set forth below
under "Additional Information on Investment Policies and Techniques and Risk
Factors."
23
<PAGE> 32
WORLDWIDE GROWTH TRUST AND GLOBAL EQUITY TRUST
Risks of investment in these portfolios relate primarily to fluctuations in
stock prices and risks associated with foreign investing.
CAPITAL GROWTH BOND TRUST AND INVESTMENT QUALITY BOND TRUST
Risks of investment in these portfolios relate primarily to exposure to
interest rate and credit risks with respect to fixed-income securities.
Investment in the Investment Quality Bond Trust includes the additional risks
associated with its ability to invest up to 20% of its assets in high yield
(high risk) debt securities, commonly known as "junk bonds," including the
greater risk of default by the issuers of such bonds, and its ability to invest
up to 20% of its assets in foreign securities.
INFORMATION ABOUT THE REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION. The following summary of the Plan is
qualified in its entirety by reference to the form of the Plan attached to this
Prospectus/Proxy Statement as Exhibit A. The Plan provides that each Acquiring
Portfolio will acquire all of the assets, subject to all of the liabilities, of
the corresponding Transferor Portfolio in exchange for shares of such Acquiring
Portfolio. Subject to the satisfaction of the conditions described below, such
acquisitions shall take place on April 30, 1999 (the "Exchange Date"), or such
later date as may be agreed upon by the parties. The net asset value per share
for each Acquiring Portfolio and each Transferor Portfolio will be determined by
dividing each Acquiring Portfolio's assets, less liabilities, by the total
number of its outstanding shares. Portfolio assets will be valued in accordance
with the valuation practices of the Acquiring Portfolios. See "General
Information -- Shares of the Trust" in the Prospectus.
The number of full and fractional shares of an Acquiring Portfolio received
by a shareholder of the corresponding Transferor Portfolio will be equal in
value to the value of that shareholder's shares of the corresponding Transferor
Portfolio as of the close of regularly scheduled trading on the New York Stock
Exchange on the Exchange Date of the Reorganization. As promptly as practicable
after the Exchange Date, each Transferor Portfolio will liquidate and distribute
pro rata to its shareholders of record as of the close of regularly scheduled
trading on the New York Stock Exchange on the Exchange Date the shares of the
corresponding Acquiring Portfolio received by that Transferor Portfolio in the
Reorganization. Such liquidation and distribution will be accomplished by the
establishment of accounts on the share records of the Acquiring Portfolios in
the names of the shareholders of the corresponding Transferor Portfolio, each
account representing the respec-
24
<PAGE> 33
tive pro rata number of shares of such Acquiring Portfolio due the shareholder.
After such distribution, the Trust shall take all necessary steps under
Massachusetts law, the Trust's Declaration of Trust and any other applicable law
to effect a complete dissolution of each Transferor Portfolio.
The Board has determined, with respect to the Transferor Portfolios and the
Acquiring Portfolios, that the interests of shareholders and of contractholders
whose contract values are invested in shares of such portfolios will not be
diluted as a result of the Reorganization and that participation in the
Reorganization is in the best interests of such portfolios and such shareholders
and contractholders.
Certain of the existing investment limitations of the Transferor Portfolios
that require shareholder approval for amendment prohibit each Transferor
Portfolio from engaging in activities such as investing more than a stated
percentage of its assets in an issuer's securities. By approving the Plan, the
shareholders of the Transferor Portfolios will be deemed to have agreed to waive
any such limitations solely insofar as they might be deemed to apply to the
Reorganization.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan, including that the affirmative vote of the holders of at
least a majority of the outstanding voting securities of each Transferor
Portfolio entitled to vote approve the Reorganization and that the Commission
grant exemptive relief from certain provisions of the 1940 Act that otherwise
would preclude consummation of the Reorganization. As used in this Prospectus/
Proxy Statement, a "majority of the outstanding voting securities" means the
affirmative vote of the lesser of (1) 67% or more of the voting securities of a
portfolio present at the Meeting, if the holders of more than 50% of the
outstanding voting securities of such portfolio are present or represented by
proxy or (2) more than 50% of the outstanding voting securities of the
portfolio. On November 13, 1998, the Trust filed an Application with the
Commission requesting exemption from certain provisions of the 1940 Act as they
relate to the proposed Reorganization. Manulife, Manufacturers Securities,
Manulife North America, Manulife New York, Manufacturers America, Manufacturers
U.S.A. and Manufacturers Adviser Corporation also are parties to the
Application. Copies of the Application may be obtained from the Commission in
the manner explained below. See "Additional Information About the Trust." In
addition, the proposal to approve the Plan will not be submitted to shareholders
of the Transferor Portfolios, and the Special Meeting of Shareholders therefore
will not be held, until such time as the Commission has granted the exemptive
relief referred to in the preceding sentence. There can be no assurance that the
Commission will grant such
25
<PAGE> 34
exemptive relief or that it will be granted in time for the Special Meeting of
Shareholders to be held on April [27], 1999, as scheduled.
The Plan may be terminated and the Reorganization abandoned at any time
prior to the Effective Time of the Reorganization, before or after approval by
the shareholders of the Transferor Portfolios, by either the Transferor
Portfolios or the Acquiring Portfolios if (i) any material condition or covenant
set forth in the Plan has not been fulfilled or waived by the party entitled to
its benefits, or (ii) there has been a material breach or default by the other
party or (iii) the Board determines that proceeding with the Reorganization is
not in the best interests of the Transferor Portfolios or the Acquiring
Portfolios, respectively, or their respective shareholders or contractholders.
The Plan provides that either party may waive compliance with any of the
covenants or conditions made therein for its benefit, except for certain
conditions regarding the receipt of regulatory approvals.
The expenses of the Reorganization (other than registration fees payable
for the registration of shares of the Acquiring Portfolios in connection with
the Reorganization, which will be payable by such Acquiring Portfolios),
including the cost of a proxy soliciting agent that has been retained will be
borne by the Transferor Portfolios and the Acquiring Portfolios. See "Voting
Information."
Approval of the Plan will require a majority of the outstanding voting
securities of each Transferor Portfolio. See "Voting Information." If the
Reorganization is not approved by the shareholders of each Transferor Portfolio
or is not consummated for any other reason, the Board will consider other
possible courses of action. See "Voting Information." THE BOARD HAS UNANIMOUSLY
RECOMMENDED APPROVAL OF THE PLAN.
Shareholders of each Transferor Portfolio will receive shares of the
corresponding Acquiring Portfolio in accordance with the procedures provided for
in the Plan as described above. Each such share will be fully paid and
nonassessable when issued (except as noted under "Summary -- Proposed
Transaction") and transferable without restrictions and will have no preemptive
or conversion rights.
DESCRIPTION OF THE SECURITIES TO BE ISSUED. The Trust has an unlimited
number of authorized shares of beneficial interest, par value $0.01 per share.
These authorized shares may be divided into series and classes thereof. The
Declaration of Trust authorizes the Board to issue shares in different series.
In addition, the Declaration of Trust authorizes the Board to create new series
and to name the rights and preferences of the shareholders of each of the
series. The Board does not need additional shareholder action to divide the
shares into separate series or to name the shareholders' rights and preferences.
26
<PAGE> 35
Each Transferor Portfolio and Acquiring Portfolio is a series of the Trust.
Currently, none of the Trust series issues multiple classes of shares, although
they may do so in the future. Each share of each series represents an equal
proportionate interest in that series with each other share of that series. The
shares of each series of the Trust participate equally in the earnings,
dividends and assets of the particular series. Fractional shares have
proportionate fractional rights to full shares. Expenses of the Trust which are
not attributable to a specific series are allocated to all series of the Trust
in a fair and equal manner, as determined by management of the Trust. Generally,
shares of each series will vote separately, for example, to approve an
investment advisory agreement. Shares of all series will vote together when the
1940 Act requires it, for example, to elect the Trustees or to select
independent accountants. The Trust is not required to hold shareholder meetings
annually, although shareholder meetings may be called from time to time. There
are no conversion or preemptive rights in connection with shares of the Trust.
REASONS FOR THE REORGANIZATION. The principal purpose of the
Reorganization is to provide a means by which shareholders of each of the
Transferor Portfolios, in combination with the corresponding Acquiring
Portfolios, can pursue substantially similar investment objectives and policies
in the context of a larger fund with better investment performance and
potentially greater economies of scale.
In determining whether to approve the Reorganization and recommend its
approval to shareholders, the Board (including the Independent Trustees (with
the advice and assistance of independent legal counsel), made an inquiry into a
number of matters and considered the following factors, among others: (1)
expense ratios and available information regarding the fees and expenses of each
Transferor Portfolio and each corresponding Acquiring Portfolio (historical and
pro forma), as well as of similar funds; (2) the compatibility of the investment
objectives, policies and restrictions of each Transferor Portfolio and each
corresponding Acquiring Portfolio; (3) the advantages to each Transferor
Portfolio of investing in larger asset pools with potentially greater
diversification; (4) the historical performance of each Transferor Portfolio and
each Acquiring Portfolio; (5) the investment experience, expertise and resources
of each subadviser to the Transferor Portfolios and the Acquiring Portfolios;
(6) the terms and conditions of the Reorganization and whether the
Reorganization would result in dilution of shareholder or contractholder
interests; (7) any direct and indirect costs to be incurred by each Transferor
Portfolio and each corresponding Acquiring Portfolio as a result of the
Reorganization; (8) the tax consequences of the Reorganization; and (9) possible
alternatives to the Reorganization.
27
<PAGE> 36
In reaching the decision to recommend approval of the Reorganization, the
Board concluded that the participation of each Transferor Portfolio and each
corresponding Acquiring Portfolio in the Reorganization is in the best interests
of each Transferor Portfolio and each corresponding Acquiring Portfolio, as well
as the best interests of shareholders and the contractholders whose contract
values are invested in shares of the Transferor Portfolios and the Acquiring
Portfolios, and that the interests of existing shareholders and contractholders
will not be diluted as a result of this transaction. Their conclusion was based
on a number of factors, including the following:
1. The expense ratios of the Acquiring Portfolios are comparable or lower
(without giving effect to fee waivers) than those of the corresponding
Transferor Portfolios.
2. The Reorganization will permit shareholders of each Transferor Portfolio
to pursue similar investment goals in the context of a larger fund
immediately following consummation of the Reorganization. It is
anticipated that the combined Transferor and Acquiring Portfolios will
experience more rapid asset growth in the future than would have been
the case for the Transferor Portfolios standing alone. Such larger funds
should enhance the ability of portfolio managers to effect portfolio
transactions on more favorable terms and give portfolio managers greater
investment flexibility and the ability to select a larger number of
portfolio securities, with the attendant benefits of increased
diversification.
3. (a) The one year annualized return as of December 31, 1998 of the Global
Equity Trust exceeded that of the Worldwide Growth Trust. The historical
performance of these portfolios could not be compared meaningfully for
any longer period, as the inception date for the Worldwide Growth Trust
was January 1, 1997.
(b) While the ten year annualized return as of December 31, 1998 of the
Capital Growth Bond Trust exceeded that of the Investment Quality Bond
Trust, the one year annualized return and the five year annualized
return as of December 31, 1998 of the Investment Quality Bond Trust
exceeded that of the Capital Growth Bond Trust.
FEDERAL INCOME TAX CONSEQUENCES. As a condition to the consummation of the
Reorganization, the Transferor Portfolios and the Acquiring Portfolios will have
received an opinion from Simpson Thacher & Bartlett to the effect that, based on
the facts and assumptions stated therein, for federal income tax purposes: (1)
the Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code with respect to each Transferor Portfolio and its
corresponding Acquiring Portfolio; (2) no gain or loss will be
28
<PAGE> 37
recognized by any of the Transferor Portfolios or the corresponding Acquiring
Portfolios upon the transfer of all of the assets and liabilities, if any, of
each Transferor Portfolio to its corresponding Acquiring Portfolio solely in
exchange for shares of the Acquiring Portfolio or upon the distribution of the
shares of the Acquiring Portfolio to the holders of shares of the Transferor
Portfolio solely in exchange for all of their shares of the Transferor
Portfolio; (3) no gain or loss will be recognized by shareholders of any of the
Transferor Portfolios upon the exchange of such Transferor Portfolio's shares
solely for shares of the corresponding Acquiring Portfolio; (4) the holding
period and tax basis of the shares of each Acquiring Portfolio received by each
holder of shares of the corresponding Transferor Portfolio pursuant to the
Reorganization will be the same as the holding period and tax basis of the
shares of the Transferor Portfolio held by the shareholder (provided the shares
of the Transferor Portfolios were held as a capital asset on the date of the
Reorganization) immediately prior to the Reorganization; and (5) the holding
period and tax basis of the assets of each of the Transferor Portfolios acquired
by its corresponding Acquiring Portfolio will be the same as the holding period
and tax basis of those assets to each of the Transferor Portfolios immediately
prior to the Reorganization.
CAPITALIZATION. The following tables show the capitalization of each
Transferor Portfolio and the corresponding Acquiring Portfolio as of December
31, 1998, and on a pro forma combined basis as of those dates for the
Reorganization giving effect to the proposed acquisition of assets at net asset
value.
<TABLE>
<CAPTION>
PRO FORMA
WORLDWIDE GLOBAL EQUITY FOR
GROWTH TRUST TRUST REORGANIZATION
-------------- ------------------ --------------
<S> <C> <C> <C>
DECEMBER 31, 1998
Net Assets............. $40,705,902 $928,563,621 $ 969,269,523
Net Asset Value Per
Share................ $ 15.15 $ 20.38 $ 20.38
Shares Outstanding..... 2,687,308 45,570,323 47,567,669
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
CAPITAL GROWTH INVESTMENT QUALITY FOR
BOND TRUST BOND TRUST REORGANIZATION
-------------- ------------------ --------------
<S> <C> <C> <C>
DECEMBER 31, 1998
Net Assets............. $65,111,946 $312,110,744 $ 377,222,690
Net Asset Value Per
Share................ $ 12.09 $ 12.46 $ 12.46
Shares Outstanding..... 5,386,315 25,049,137 30,274,815
</TABLE>
29
<PAGE> 38
VOTING INFORMATION
Proxies from the shareholders of each Transferor Portfolio are being
solicited by the Board for the Special Meeting of Shareholders to be held on
April 27, 1999 at 73 Tremont Street, Boston, Massachusetts 02108, at 10:00 a.m.,
Eastern Standard Time, or at such later time as necessary by adjournment. All
valid proxies will be voted in accordance with the specification thereon, or in
the absence of specification, for approval of the Plan. Approval of the Plan
will require a majority of the outstanding voting securities of each Transferor
Portfolios.
Voting instructions may be revoked at any time prior to the voting of the
shares represented thereby by: (i) mailing written instructions addressed to the
Secretary of the Trust at 116 Huntington Avenue, Boston, Massachusetts 02116 or
(ii) signing and returning a new voting instructions form, in each case if
received by the Trust by April 26, 1999. ALL PROPERLY EXECUTED VOTING
INSTRUCTIONS RECEIVED BY APRIL 26, 1999 WILL BE VOTED AS SPECIFIED IN THE VOTING
INSTRUCTIONS, OR, IF NO SPECIFICATION IS MADE, IN FAVOR OF THE PROPOSALS
REFERRED TO IN THIS PROSPECTUS/PROXY STATEMENT.
In the event the necessary quorum to transact business or the vote required
to approve a Proposal is not obtained at the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting in accordance with
applicable law, to permit further solicitation of proxies. Any such adjournment
as to a matter will require the affirmative vote of the holders of a majority of
the Trust's shares present in person or by proxy at the Meeting and entitled to
vote thereon. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of the
Proposals and will vote against any such adjournment those proxies to be voted
against the Proposals.
Abstentions are counted as shares eligible to vote at the Meeting in
determining whether a quorum is present, but do not count as votes cast with
respect to the Reorganization proposal. Under the 1940 Act, the affirmative vote
necessary to approve a matter under consideration may be determined with
reference to a percentage of votes present at the Meeting, which would have the
effect of treating abstentions as if they were votes against the Reorganization
proposal.
The cost of the preparation and distribution of these proxy materials will
be borne by the Transferor Portfolios and the Acquiring Portfolios. In addition
to the solicitation of proxies by the use of the mails, proxies may be solicited
by officers and employees of the Trust, or of its agents or affiliates,
personally or by telephone. Brokerage houses, banks and other fiduciaries may be
requested to forward soliciting materials to their principals and to obtain
30
<PAGE> 39
authorization for the execution of proxies. For those services, they will be
reimbursed by the Transferor Portfolios and the Acquiring Portfolios for their
out-of-pocket expenses.
Under the Plan, shareholders of each Transferor Portfolio will receive
shares of the corresponding Acquiring Portfolio, as described above, with an
aggregate net asset value equal to the value of the shareholder's investment in
each Transferor Portfolio at the effective time of the transaction. This method
of valuation is also consistent with interpretations of Rule 22c-1 under the
1940 Act by the Commission's Division of Investment Management. Any shareholder
of a Transferor Portfolio may redeem shares at the then-current net asset value
prior to the Exchange Date.
Shareholders of the Transferor Portfolios of record at the close of
business on February 28, 1999 (the "Record Date") will be entitled to vote at
the Meeting or any adjournment of the Meeting. The holders of 30% of the shares
outstanding of each such Transferor Portfolio at the close of business on that
date present in person or represented by proxy will constitute a quorum for the
Meeting; however, as noted above under "Information About the
Reorganization -- Agreement and Plan of Reorganization," a majority of the
outstanding voting securities of each Transferor Portfolio at the close of
business on that date is required to approve the Reorganization. Shareholders
are entitled to one vote for each share held and fractional votes for fractional
shares held. Shares of the Transferor Portfolios are sold only to Manulife North
America, Manulife New York, Manufacturers America and Manufacturers U.S.A. and
to the separate accounts of these insurance companies mentioned earlier.
Although, as of the Record Date, Manulife North America, Manulife New York,
Manufacturers America and Manufacturers U.S.A. legally owned all of the shares
of the Transferor Portfolios, the companies will vote all shares of the
Transferor Portfolios issued to such companies in proportion to the timely
instructions received from owners of the contracts participating in the separate
accounts described above which are registered under the 1940 Act.
31
<PAGE> 40
As of the Record Date, the number of votes eligible to be cast at the
Meeting with respect to each Transferor Portfolio is as follows:
<TABLE>
<CAPTION>
VOTES HELD BY
VOTES HELD BY VOTES HELD BY MANUFAC-
NUMBER OF MANULIFE MANULIFE TURERS
PORTFOLIO ELIGIBLE VOTES* NORTH AMERICA NEW YORK AMERICA
- --------- ---------------------- ---------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Worldwide Growth
Trust.............. 2,615,332 2,325,091 165,607 124,634
---------------- ---------------- ------------- -------------
Capital Growth Bond
Trust.............. 1,448,413 939,991 71,069 435,270
---------------- ---------------- ------------- -------------
<CAPTION>
VOTES HELD
BY
MANUFAC-
TURERS
PORTFOLIO U.S.A.
- --------- ---------------
<S> <C>
Worldwide Growth
Trust.............. --
---------
Capital Growth Bond
Trust.............. 2,083
---------
</TABLE>
- ---------------
* Represents number of shares issued and outstanding as of February 28, 1999.
Trustees and officers of the Trust, in the aggregate, own, or have the
right to provide voting instructions for, less than 1% of each portfolio's
outstanding shares.
As of February 28, 1999, (i) Manulife North America, Manulife New York,
Manufacturers America and Manufacturers U.S.A. owned 88.9%, 6.3%, 4.8% and 0.0%,
of the Worldwide Growth Trust's shares, respectively, and (ii) Manulife North
America, Manulife New York, Manuracturers America and Manufacturers U.S.A. owned
64.9%, 4.9%, 30.1% and 0.1% of the Capital Growth Bond Trust's shares,
respectively.
The votes of the shareholders of the Acquiring Portfolios are not being
solicited to approve the Reorganization, since their approval or consent is not
required with respect to the Reorganization.
The Plan was approved for the Transferor Portfolios and the Acquiring
Portfolios by unanimous vote of the Board, including in each case all of the
Trustees then serving who were not interested persons of the Trust (other than
in their capacity as Trustees of the Trust).
ADDITIONAL INFORMATION ON INVESTMENT POLICIES
AND TECHNIQUES AND RISK FACTORS
INVESTMENT RESTRICTIONS GENERALLY. The Trust is subject to a number of
restrictions in pursuing its investment objectives and policies. The following
is a brief summary of certain restrictions that may be of interest to
contractholders. Some of these restrictions are subject to exceptions not stated
here. Such exceptions and a complete list of the investment restrictions
applicable to the individual portfolios and to the Trust are set forth in the
32
<PAGE> 41
Statement of Additional Information under the caption "Investment Restrictions."
Except for the restrictions specifically identified as fundamental, all
investment restrictions described in this Prospectus/Proxy Statement and in the
Statement of Additional Information are not fundamental, so that the Board may
change them without shareholder approval. Fundamental policies may not be
changed without the affirmative vote of a majority of the outstanding voting
securities of a portfolio.
INDUSTRY CONCENTRATION. As a matter of fundamental policy, each Acquiring
Portfolio and Transferor Portfolio is prohibited from investing more than 25% of
its total assets in the securities of issuers having their principal activities
in any particular industry (with exceptions for U.S. Government securities and
certain other obligations).
BORROWING. As a matter of fundamental policy, each Acquiring Portfolio and
Transferor Portfolio is prohibited from borrowing money, except for temporary or
emergency purposes (but not for leveraging) and then not in excess of 33 1/3% of
the value of the total assets of the portfolio at the time the borrowing is
made. In addition, each Acquiring Portfolio and Transferor Portfolio may borrow
in connection with reverse repurchase agreements, mortgage dollar rolls and
other similar transactions. Reverse repurchase agreements and mortgage dollar
rolls may be considered a form of borrowing and will be treated as a borrowing
for purposes of the restriction on borrowing in excess of 33 1/3% of the value
of the total assets of a portfolio. A portfolio will not purchase securities
while borrowings (other than reverse repurchase agreements, mortgage dollar
rolls and similar transactions) exceed 5% of total assets.
ISSUER DIVERSIFICATION. As a matter of fundamental policy, each Acquiring
Portfolio and Transferor Portfolio is prohibited from purchasing securities of
any issuer if the purchase would cause more than 5% of the value of a
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 a portfolio, except that up to 25% of the
value of each Acquiring Portfolio or Transferor Portfolio's total assets may be
invested without regard to this restriction.
INVESTMENTS IN REAL ESTATE-RELATED SECURITIES. As a matter of fundamental
policy, each Acquiring Portfolio and Transferor Portfolio may not purchase or
sell real estate, except that each Acquiring Portfolio and Transferor Portfolio
may invest in mortgages and mortgage backed securities and securities issued by
companies which invest in real estate or interests therein.
INVESTMENTS IN COMMODITIES. As a matter of fundamental policy, each
Acquiring Portfolio and Transferor Portfolio may not purchase or sell com-
33
<PAGE> 42
modities or commodity contracts except that each Acquiring Portfolio and
Transferor Portfolio may purchase and sell futures contracts on financial
instruments and indices and options on such futures contract and futures
contracts on foreign currencies and options on such futures contracts.
INVESTMENTS IN ILLIQUID SECURITIES. Restrictions that apply to the
Acquiring Portfolios and the Transferor Portfolios and that are not fundamental
include prohibitions on knowingly investing more than 15% of the net assets of
any portfolio in "illiquid" securities (including repurchase agreements maturing
in more than seven days but excluding master demand notes).
PLEDGING ASSETS. Restrictions that apply to the Acquiring Portfolios and
the Transferor Portfolios and that are not fundamental include prohibitions on
pledging, hypothecating, mortgaging or transferring more than 10% of the total
assets of any portfolio as security for indebtedness (except that the applicable
percent is 15% in the case of the Worldwide Growth Trust).
INVESTMENTS IN OTHER FUNDS. Restrictions that apply to the Acquiring
Portfolios and the Transferor Portfolios and that are not fundamental include
prohibitions on purchasing securities of other investment companies, other than
in connection with a merger, consolidation or reorganization, if the purchase
would cause more than 10% of the value of a portfolio's total assets to be
invested in investment company securities.
HIGH YIELD (HIGH RISK) SECURITIES.
GENERAL
The Investment Quality Bond Trust, unlike the Capital Growth Bond Trust,
may invest up to 20% of its assets in "high yield" (high risk) securities.
Securities rated below investment grade and comparable unrated 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 involve greater risks than higher rated securities. Under rating
agency guidelines, medium- and lower-rated securities and comparable unrated
securities will likely have some quality and protective characteristics that are
outweighed by large uncertainties or major risk exposures to adverse conditions.
Certain of the debt securities in which the Investment Quality Bond Trust 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 Caa or lower by Moody's or CCC or lower by Standard &
Poor's). These securities are considered to have extremely poor prospects of
ever attaining any real investment standing, to have a current identifiable
vulnerability to default, to be unlikely to have the capacity to pay interest
and repay principal when due in the event of adverse
34
<PAGE> 43
business, financial or economic conditions, and/or to be in default or not
current in the payment of interest or principal. Such securities are considered
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations. Accordingly, it is
possible that these types of factors could, in certain instances, reduce the
value of securities held by the Investment Quality Bond Trust with a
commensurate effect on the value of the Investment Quality Bond Trust's shares.
Because the Investment Quality Bond Trust will invest primarily in fixed-
income securities, the net asset value of its shares can be expected to change
as general levels of interest rates fluctuate, although 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 can generally be expected
to rise. Conversely, when interest rates rise, the value of a fixed-income
portfolio can generally be expected to decline.
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
certain of these securities also tend to be more sensitive to individual
corporate developments and changes in economic conditions than higher-rated
securities. In addition, such 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, so that 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.
FOREIGN SOVEREIGN DEBT SECURITIES
Investing in foreign sovereign debt securities will expose the Investment
Quality Bond Trust, unlike the Capital Growth Bond Trust, to the direct or
indirect consequences of political, social or economic changes in the developing
and emerging countries that issue the securities. The ability and willingness of
sovereign obligors in developing and emerging countries or the governmental
authorities that control repayment of their external debt to pay principal and
interest on such debt when due may depend on general
35
<PAGE> 44
economic and political conditions within the relevant country. Countries such as
those in which the Investment Quality Bond Trust may invest have historically
experienced, and may continue to experience, high rates of inflation, high
interest rates, exchange rate trade difficulties and extreme poverty and
unemployment. Many of these countries are also characterized by political
uncertainty or instability. Additional factors which may influence the ability
or willingness to service debt include, but are not limited to, a country's cash
flow situation, the availability of sufficient foreign exchange on the date a
payment is due, the relative size of its debt service burden to the economy as a
whole, and its government's policy towards the International Monetary Fund, the
World Bank and other international agencies.
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, its access to international
credits and investments, fluctuations in interest rates and the extent of its
foreign reserves. 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. 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 foreign governments, multilateral organizations and others 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 to implement such reforms, achieve such levels of economic
performance or repay principal or interest when due may result in the
cancellation of such third parties' commitments to lend funds, which may further
impair the obligor's ability or willingness to timely service its debts. The
cost of servicing external debt will also generally be adversely affected by
rising international interest rates, because many external debt obligations bear
interest at rates which are adjusted based upon international interest rates.
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.
As a result of the foregoing, a governmental obligor may default on its
obligations. If such an event occurs, the Investment Quality Bond Trust may have
limited legal recourse against the issuer and/or guarantor. Remedies
36
<PAGE> 45
must, in some cases, be pursued in the courts of the defaulting party itself,
and the ability of the holder of 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.
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, which 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 Investment Quality Bond Trust may
invest will not be subject to similar restructuring arrangements or to requests
for new credit which may adversely affect its 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.
FOREIGN SECURITIES. Each of the Acquiring Portfolios and the Transferor
Portfolios, to the extent stated above under the description of such portfolios,
may invest in securities of foreign issuers. Such foreign securities may be
denominated in foreign currencies. The Global Equity Trust may, without
limitation, invest up to 100% of its assets in securities issued by foreign
entities and/or denominated in foreign currencies.
Securities of foreign issuers include obligations of foreign branches of
U.S. banks and of foreign banks, common and preferred stocks, debt securities
issued by foreign governments, corporations and supranational organizations, and
American Depository Receipts, European Depository Receipts and Global Depository
Receipts ("ADRs," "EDRs" and "GDRs"). 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, reflect any
changes in exchange rates and otherwise involve risks associated with investing
in foreign securities. ADRs in which the Acquiring Portfolios
37
<PAGE> 46
and Transferor Portfolios may invest may be sponsored or unsponsored. There
may be less information available about foreign issuers of unsponsored ADRs.
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.
Foreign securities may be subject to foreign government taxes which reduce
their attractiveness. See "Additional Information About the Trust -- Tax
Matters." In addition, investing in securities denominated in foreign currencies
and in the securities of foreign issuers, particularly non-governmental issuers,
involves risks which are not ordinarily associated with investing in domestic
issuers. These risks include political or economic instability in the country
involved and the possibility of imposition of currency controls. Since the
Acquiring Portfolios and the Transferor Portfolios may invest in securities
denominated or quoted in currencies other than the United States dollar, changes
in foreign currency exchange rates may affect the value of investments in the
Acquiring Portfolios and the Transferor Portfolios and the unrealized
appreciation or depreciation of investments insofar as United States investors
are concerned. Foreign currency exchange rates are determined by forces of
supply and demand on the foreign exchange markets. These forces are, in turn,
affected by the international balance of payments and other economic and
financial conditions, government intervention, speculation and other factors.
The Acquiring Portfolios and the Transferor Portfolios may incur transaction
charges in exchanging foreign currencies.
There may be less publicly available information about a foreign issuer
than about a domestic issuer. Foreign issuers, including foreign branches of
U.S. banks, are subject to different accounting and reporting requirements which
are generally less extensive than the requirements applicable to domestic
issuers. Foreign stock markets (other than Japan) have substantially less volume
than the United States exchanges and securities of foreign issuers are generally
less liquid and more volatile than those of comparable domestic issuers. There
is frequently less governmental regulation of exchanges, broker-dealers and
issuers than in the United States, and brokerage costs may be higher. In
addition, investments in foreign companies may be subject to the possibility of
nationalization, withholding of dividends at the source, expropriation or
confiscatory taxation, currency blockage, political or economic instability or
diplomatic developments that could adversely affect the value of those
investments. Finally, in the event of a default on any foreign obligation, it
may be difficult for the Trust to obtain or to enforce a judgment against the
issuer.
38
<PAGE> 47
Foreign markets, especially emerging markets, may have different clearance
and settlement procedures, and in certain 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 temporary periods when a portion of the assets of a
portfolio is uninvested and no return is earned thereon. 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 values of the portfolio
securities or, if the portfolio has entered into a contract to sell the
security, possible liability to the purchaser. Certain foreign markets,
especially emerging markets, may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. A portfolio could be adversely affected by
delays in, or a refusal to grant, any required governmental approval for
repatriation of capital, as well as by the application to the portfolio of any
restrictions on investments.
In addition to the foreign securities listed above, the Worldwide Growth
Trust and the Investment Quality Bond Trust may also invest in foreign sovereign
debt securities, which involve certain additional risks. See "Additional
Information on Investment Policies and Techniques and Risk Factors," and High
Yield (High Risk) Securities -- Foreign Sovereign Debt Securities" above.
SMALL COMPANY AND EMERGING GROWTH SECURITIES. The Worldwide Growth Trust
may invest in small-sized and emerging growth companies (collectively,
"small-sized companies"). Investing in securities of small-sized companies may
involve greater risks since these securities may have limited marketability and,
thus, may be more volatile. Because small-sized companies normally have fewer
shares outstanding than larger companies, it may be more difficult to buy or
sell significant amounts of such shares without an unfavorable impact on
prevailing prices. In addition, small-sized companies are typically subject to a
greater degree of changes in earnings and business prospects than are larger,
more established companies. There is typically less publicly available
information concerning small-sized companies than for larger, more established
companies. Companies with small market capitalizations may also be dependent
upon a single proprietary product or market niche, may have limited product
lines, markets or financial resources, or may depend on a limited management
group. Although investing in securities of small-sized companies offers
potential for above-average returns if the companies are successful, the risk
exists that the companies will not succeed and the prices of the companies'
shares could significantly decline in value. Therefore, an investment in a
portfolio that invests in small-sized company securities may
39
<PAGE> 48
involve a greater degree of risk than an investment in other mutual funds that
seek capital appreciation by investing in better-known, larger companies.
WARRANTS. Subject to certain restrictions, each of the Acquiring
Portfolios and the Transferor Portfolios 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.
LENDING SECURITIES. Each Acquiring Portfolio and Transferor Portfolio may
lend its securities so long as such loans do not represent in excess of 33 1/3%
of a portfolio's total assets. This is a fundamental policy. 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 its 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 increase in value; (2) the
loan will 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.
WHEN-ISSUED SECURITIES ("FORWARD COMMITMENTS"). In order to help ensure
the availability of suitable securities, each of the Acquiring Portfolios and
the Transferor Portfolios may purchase debt securities on a "when-issued" or on
a "forward delivery" basis, which means 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 (referred to as "forward commitments"). It is expected that, 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 sell the securities before the settlement date, if such action is deemed
advisable. In general, a portfolio does not pay for the securities or start
earning interest on them until the obligations are scheduled
40
<PAGE> 49
to be settled, but it does, in the meantime, record the transaction and reflect
the value each day of the securities in determining its net asset value. 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. 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 have its investment portfolio managed
properly will limit the extent to which the portfolio may purchase when-issued
or forward delivery securities. 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.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS. Each of the
Acquiring Portfolios and the Transferor Portfolios may enter into repurchase
agreements and reverse 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. Under a repurchase agreement, at the time the
portfolio acquires a security, it agrees to resell it to the original seller (a
financial institution or broker/dealer which meets the guidelines established by
the Trustees) and must deliver the security (and/or securities that may be added
to or substituted for it under the repurchase agreement) to the original seller
on an agreed-upon date in the future. The repurchase price is in excess of the
purchase price. The arrangement is in economic effect a loan collateralized by
securities.
The Trustees have adopted procedures that establish certain
creditworthiness, asset and collateralization requirements for the
counterparties to a portfolio's repurchase agreements. The Trustees will
regularly monitor the use of repurchase agreements and the subadvisers will,
pursuant to procedures adopted by the Trustees, continuously monitor the amount
of collateral held with respect to a repurchase transaction so that it equals or
exceeds the amount of the obligation.
A 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, there may be possible delays and
expenses in liquidating the instrument purchased, decline in its value and loss
of interest. Securities subject to repurchase agreements will be valued every
business day and additional collateral will be requested if necessary so that
the
41
<PAGE> 50
value of the collateral is at least equal to the value of the repurchase
obligation, including the interest accrued thereon.
Each Acquiring Portfolio and Transferor Portfolio 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 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
deemed to be payment of interest. 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. 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. 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.
MORTGAGE DOLLAR ROLLS. Each Acquiring Portfolio and Transferor Portfolio
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. 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 transaction as described above.
HEDGING AND OTHER STRATEGIC TRANSACTIONS. Each of the Acquiring Portfolios
and the Transferor Portfolios may be authorized to use a variety of investment
strategies described below for hedging purposes only, including
42
<PAGE> 51
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. The description in this
Prospectus/Proxy Statement of each Acquiring Portfolio and each Transferor
Portfolio indicates which, if any, of these types of transactions may be used by
each such portfolio. Limitations on the portion of a portfolio's assets that may
be used in connection with the investment strategies described below are set out
in the Statement of Additional Information.
Subject to the constraints described above, an individual portfolio may (if
and to the extent so authorized) purchase and sell (or write) exchange-listed
and over-the-counter put and call options on securities, financial futures
contracts and fixed-income indices and other financial instruments, enter into
financial futures contracts (including stock index futures), enter into interest
rate transactions, and enter into currency transactions (collectively, these
transactions are referred to in this Prospectus/Proxy Statement as "Hedging and
Other Strategic Transactions"). A portfolio's interest rate transactions may
take the form of swaps, caps, floors and collars, and 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:
- 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 those securities for investment purposes;
- to manage the effective maturity or duration of a portfolio's securities;
and
- to establish a position in the derivatives markets as a temporary
substitute for purchasing or selling particular securities.
A portfolio may use any or all types of Hedging and Other Strategic
Transactions which it is authorized to use at any time; no particular strategy
will dictate the use of one type of transaction rather than another, as use of
any authorized Hedging and Other Strategic Transaction will be a function of
numerous variables, including market conditions. The ability of a portfolio to
utilize Hedging and Other Strategic Transactions successfully will depend on, in
addition to the factors described above, its subadviser's ability to predict
pertinent market movements, which cannot be assured. These skills are different
from those needed to select a portfolio's securities. None of the
43
<PAGE> 52
portfolios is 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 Commodity Futures Trading Commission (the "CFTC")) and
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. The use of certain Hedging and Other Strategic
Transactions will require that a portfolio segregate cash, liquid high grade
debt obligations or other assets to the extent a portfolio's obligations are not
otherwise "covered" through ownership of the underlying security, financial
instrument or currency. Risks associated with Hedging and Other Strategic
Transactions are described in "Hedging and Other Strategic Transactions -- Risk
Factors" in the Statement of Additional Information. 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, also appears in the Statement of Additional Information.
ILLIQUID SECURITIES. Each of the Acquiring Portfolios and the Transferor
Portfolios is precluded from investing in excess of 15% of its net assets in
securities that are not readily marketable. 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.
Excluded from the 15% limitation are securities that are restricted as to
resale but for which a ready market is available pursuant to exemption provided
by Rule 144A adopted pursuant to the Securities Act of 1933 ("1933 Act") or
other exemptions from the registration requirements of the 1933 Act. Whether
securities sold pursuant to Rule 144A are readily marketable for purposes of the
Trust's investment restriction is a determination to be made by the subadvisers
subject to the Trustees' oversight and for which the Trustees are ultimately
responsible. The subadvisers will also monitor the liquidity of Rule 144A
securities held by the portfolios for which they are responsible. To the extent
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.
ADDITIONAL INFORMATION ABOUT THE TRUST
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. The following discussion sets
forth information regarding the performance of each Transferor Portfolio and
Acquiring Portfolio for the period ended December 31, 1998.
44
<PAGE> 53
There are several ways to evaluate a portfolio's historical performance. One can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. WITH RESPECT TO ALL
PERFORMANCE INFORMATION PRESENTED, IT IS IMPORTANT TO UNDERSTAND THAT PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. RETURN AND PRINCIPAL FLUCTUATE,
AND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
PERFORMANCE TABLES
The following performance table for each Transferor Portfolio and Acquiring
Portfolio shows two types of total return information: CUMULATIVE TOTAL RETURN
AND AVERAGE ANNUAL TOTAL RETURN. A CUMULATIVE TOTAL RETURN is an expression of a
portfolio's total change in share value in percentage terms over a set period of
time -- one, five and ten years (or since the portfolio's inception if less than
the applicable period). An AVERAGE ANNUAL TOTAL RETURN takes the portfolio's
cumulative total return for a time period greater than one year and shows what
would have happened if the portfolio had performed at a constant rate each year.
Because the Global Equity Trust has had a portfolio management change, the
performance table for the Global Equity Trust shows an average annual total
return for the period since the current portfolio manager assumed
responsibility. THE TABLES SHOW ALL CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS,
NET OF FEES AND EXPENSES OF THE TRUST, BUT DO NOT REFLECT THE INSURANCE
(SEPARATE ACCOUNT) EXPENSES (INCLUDING A POSSIBLE CONTINGENT DEFERRED SALES
CHARGE) OF THE VARIABLE ANNUITY AND VARIABLE LIFE PRODUCTS THAT INVEST IN THE
TRUST. IF THESE WERE INCLUDED, PERFORMANCE WOULD BE LOWER.
GRAPH -- CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
The following performance graph for each Transferor Portfolio and Acquiring
Portfolio shows the change in value of a $10,000 investment over the life of
each portfolio. Each portfolio's performance is compared with the performance of
one or more broad-based securities indices as a "benchmark." All performance
information includes the reinvestment of dividends and capital gain
distributions, as well as the deduction of ongoing management fees and portfolio
operating expenses. The benchmarks used for comparison are unmanaged and include
reinvestment of dividends and capital gain distributions, if any, but do not
reflect any fees or expenses. Portfolios that invest in multiple asset classes
are compared with a customized benchmark. This benchmark is comprised of a set
percentage allocation from each of the asset classes in which the portfolio
invests.
45
<PAGE> 54
PORTFOLIO MANAGER'S COMMENTARY
Following is a commentary by the portfolio manager regarding each
Transferor Portfolio's and Acquiring Portfolio's performance during the period
ended December 31, 1998. The views expressed are those of the portfolio manager
as of December 31, 1998, and are subject to change based on market and other
conditions. Information about a Portfolio's holdings, asset allocation or
country diversification is historical and is no indication of future portfolio
composition, which will vary.
46
<PAGE> 55
The following information regarding the Worldwide Growth Trust was included
in the Trust's Annual Report dated December 31, 1998:
WORLDWIDE GROWTH TRUST
INVESTMENT OBJECTIVE & POLICIES: To achieve long-term growth of capital by
investing, under normal circumstances, at least 65% of the Trust's total assets
in equity securities of growth companies in a variety of markets throughout the
world. The Portfolio may purchase securities in any foreign country, as well as
the US, emphasizing common stocks of both emerging and established growth
companies that generally have proven performance records and strong market
positions.
SUBADVISER: Founders Asset Management, LLC
PORTFOLIO MANAGER: Michael W. Gerding
INCEPTION DATE: January 1, 1997
47
<PAGE> 56
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
WORLDWIDE GROWTH TRUST MSCI WORLD INDEX
---------------------- ----------------
<S> <C> <C>
December 1996 10000 10000
10120 10122
10208 10240
March 1997 10208 10040
10320 10370
10912 11012
June 1997 11176 11563
11624 12097
11176 11290
September 1997 11696 11905
11288 11280
11224 11482
December 1997 11329 11623
11547 11949
12136 12759
March 1998 12491 13300
12636 13432
12878 13265
June 1998 12781 13582
12733 13562
11022 11756
September 1998 10909 11966
11256 13049
11716 13827
December 1998 12287 14505
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual
Total Return Cumulative Total Return
--------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
MSCI World Index* 24.80% 20.44% 45.05%
Worldwide Growth Trust (at net asset
value) 8.46% 10.88% 22.87%
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Worldwide Growth Trust gained 8.46%, while the MSCI World
Index gained 24.80% for the year.
ENVIRONMENT: We have been dramatically underweight in the US compared to
the benchmark MSCI World Index. Long-term, we believe the US is still one of the
most attractive places to invest. However, we have remained cautious based on
our concerns about company valuations relative to their growth rates. Many US
companies have had tremendous runs during the current eight-year economic
expansion and it is only natural that it may become more difficult for them to
sustain earnings growth going forward. We are already seeing indications of
slowing earnings growth on a company-by-company basis. We long believed that the
European economy would grow faster than the US in 1998; we think that this trend
will continue. But we are watching the European economy carefully since it
continues to deal with high
48
<PAGE> 57
unemployment and still has higher interest rates than many other countries. Our
Japanese weighting is now 9.0%. We believe things are slowly changing in the
Japanese economy, and we have found several companies there with reasonable
valuations that appear to be able to grow their businesses again.
OUTLOOK: Looking ahead, we believe 1999 may be dominated by deflation
throughout the world. It may weigh more heavily in the US, particularly if the
domestic economy slows. We will continue to use hands-on research to focus on
those companies with unique products and market niches, as well as those with
quality management that can control costs. We will continue to pay close
attention to the quality of a company's earnings.
49
<PAGE> 58
The following information regarding the Capital Growth Bond Trust was
included in the Trust's Annual Report dated December 31, 1998:
CAPITAL GROWTH BOND TRUST
INVESTMENT OBJECTIVE & POLICIES: To achieve growth of capital by investing in
fixed income securities of medium grade or better, with income as a secondary
consideration. This Portfolio differs from most bond funds in that its primary
objective is capital appreciation, not income. It is expected that at least 75%
of the portfolio's total investment in corporate fixed income securities,
excluding commercial paper, will be represented by investment grade fixed income
securities.
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGER: Cathy Addison
INCEPTION DATE: June 26, 1984
50
<PAGE> 59
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
[GRAPH]
<TABLE>
<CAPTION>
SALOMON BROTHERS BIG LEHMAN BROTHERS AGGREGATE
CAPITAL GROWTH BOND TRUST BOND INDEX-CORPORATE BOND INDEX
------------------------- -------------------- -------------------------
<S> <C> <C> <C>
Jun. 1984 10000 10000 10000
Dec. 1984 11373 11682 11711
Jun. 1985 12859 12998 12995
Dec. 1985 14345 14282 14301
Jun. 1986 15949 15574 15596
Dec. 1986 17554 16489 16488
Jun. 1987 17405 16443 16461
Dec. 1987 17257 16917 16941
Jun. 1988 17873 17783 17786
Dec. 1988 18489 18268 18278
Jun. 1989 19772 19956 19958
Dec. 1989 21055 20906 20933
Jun. 1990 21747 21497 21524
Dec. 1990 22440 22807 22806
Jun. 1991 24278 23827 23824
Dec. 1991 26117 26448 26455
Jun. 1992 28885 27201 27173
Dec. 1992 27665 28455 28414
Jun. 1993 29115 30459 30376
Dec. 1993 30575 31270 31184
Jun. 1994 29889 30099 29977
Dec. 1994 29202 30379 30274
Jun. 1995 32157 33875 33739
Dec. 1995 35112 36016 35868
Jun. 1996 34307 35561 35429
Dec. 1996 35989 37318 37164
Jun. 1997 36881 38459 38319
Dec. 1997 39126 40908 40763
Jun. 1998 40523 42532 42360
Dec. 1998 42233 44476 44299
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
-------------------------------------------------------------------
Periods Ending December 31, 1996 1 Year 5 Year 10 Year Inception 5 Year 10 Year Inception
<S> <C> <C> <C> <C> <C> <C> <C>
Salomon Brothers BIG Bond Index
(Corporate)+* 8.72% 7.30% 9.31% 10.84% 42.23% 145.47% 344.76%
Lehman Brothers Aggregate Bond
Index 8.67% 7.27% 9.26% 10.81% 42.06% 142.37% 342.99%
Capital Growth Bond Trust (at net
asset value) 7.95% 6.67% 8.61% 10.44% 38.08% 128.44% 322.33%
</TABLE>
+ Salomon Brothers Broad Investment Grade Index -- Corporate Component.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For 1998, the Capital Growth Bond Trust returned 7.95%
compared to 8.67% for the Lehman Brothers Aggregate Index.
ENVIRONMENT: The positive performance due to the Portfolio's long duration
position was offset by the overweight position in corporate bonds, as spreads
widened due to flight to quality trades and a deteriorating economic outlook.
Crumbling global markets and their expected adverse impact on the US economy
accelerated the downward trend in yields in the second half of the year. The
"Asian Flu" combined with the Russian default resulted in higher borrowing costs
and liquidity shortages for the emerging markets. The Federal Reserve cut
interest rates by 75 basis points to contain the global financial decline and to
stave off threats of an impending US recession. The
51
<PAGE> 60
last quarter saw the reversal of the flight to quality trades as investors
regained their appetite for risky assets.
OUTLOOK: Buoyed by relentless consumer spending, the US continues its
steady economic growth and low inflation. The manufacturing sector is suffering
due to weak external economies, sustained wage pressure, and lack of pricing
power. With steady domestic growth, low inflation and worldwide deflation in
commodities, the bond market seems poised for lower rates. Barring a major
crisis, we see the Federal Reserve moving rates lower toward the second half of
the year. Corporate spreads should tighten modestly given the continued economic
strength in a low inflationary environment. The Portfolio will continue to
maintain a long duration versus the index in anticipation of a further interest
rate drop, and an overweight position in corporate bonds in anticipation of
their better relative performance.
52
<PAGE> 61
The following information regarding the Global Equity Trust was included in
the Trust's Annual Report dated December 31, 1998:
GLOBAL EQUITY TRUST
INVESTMENT OBJECTIVE & POLICIES: To achieve long-term capital appreciation by
investing the Portfolio's assets primarily in equity securities of issuers
throughout the world, including United States issuers and emerging markets.
SUBADVISER: Morgan Stanley Asset Management Inc.
PORTFOLIO MANAGER: Frances Campion
INCEPTION DATE: March 18, 1988+
53
<PAGE> 62
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
GLOBAL EQUITY TRUST MSCI WORLD INDEX
------------------- ----------------
<S> <C> <C>
February 1988 10000 10000
9890 10000
10000 10128
9761 9927
9870 9915
9681 10104
9252 9550
9771 9957
10209 10622
10110 10994
December 1988 10120 11095
10568 11498
10439 11428
10279 11356
10528 11620
10658 11337
10887 11211
11775 12480
11924 12180
12383 12526
12024 12110
12183 12596
December 1989 12532 13002
12014 12397
11864 11868
11745 11153
11338 10994
12421 12154
12594 12070
12891 12182
11757 11043
10531 9882
11093 10806
11052 10630
December 1990 11226 10854
11593 11254
12462 12297
12094 11937
12125 12032
12342 12307
11618 11549
12156 12097
12073 12060
12208 12379
12373 12582
11877 12035
December 1991 12663 12914
12746 12677
12818 12460
12363 11876
12718 12043
13315 12524
12948 12106
12707 12140
12749 12437
12456 12326
12110 11994
12561 12211
December 1992 12571 12312
12613 12355
12791 12650
13567 13386
14306 14009
15102 14334
14975 14216
15357 14511
16196 15178
16281 14900
16568 15313
15538 14450
December 1993 16706 15159
17704 16162
17747 15955
17205 15270
17709 15745
17450 15788
17644 15747
18065 16049
18659 16535
17979 16103
18206 16564
17029 15849
December 1994 16996 16005
16068 15768
16057 16001
16694 16775
17096 17363
17130 17515
17073 17513
18062 18393
17926 17986
18108 18514
17687 18226
17812 18862
December 1995 18301 19417
18494 19772
18665 19896
19108 20231
19767 20710
19582 20732
19570 20840
18484 20107
18912 20342
19085 21143
18981 21294
20206 22491
December 1996 20610 22135
20656 22405
21176 22667
21003 22222
21197 22953
22674 24373
23792 25593
24781 26776
23573 24988
24845 26350
23920 24967
24036 25413
December 1997 24896 25726
25012 26447
26964 28241
28442 29438
28738 29730
28409 29361
28025 30062
27573 30019
23267 26020
23925 26485
26160 28883
27189 30606
Dec-98 27943 32105
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Periods Ending --------------------------------------------------- Since
December 31, 1998 1 Year 5 Year 10 Year Inception Oct. 1, 1996 5 Year 10 Year Inception
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MSCI World Index* 24.80% 16.19% 11.21% 11.46% 20.40% 193.83% 478.38% 221.05%
Global Equity Trust
(at net asset value) 12.24% 10.84% 10.69% 10.00% 18.49% 67.27% 176.13% 179.43%
</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.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the Global Equity Trust returned 12.24%, lagging
the MSCI World Index return of 24.80%.
ENVIRONMENT: Stock selection in the US was the major cause of the
Portfolio's underperformance for the year, as the value discipline kept the
Portfolio out of the large growth stocks (particularly in the technology sector)
which drove the market. The overweight in continental Europe was a positive
contributor as Europe rallied strongly ahead because of the Euro conversion. The
Portfolio's Japanese stocks performed well, although Japanese and other Asian
markets underperformed the US and Europe.
OUTLOOK: The flight to growth and liquidity in 1998 has meant that the
large cap/mid cap valuation premium has reached historic proportions. We expect
that patient exploitation of this valuation anomaly will be rewarded
54
<PAGE> 63
over time. The Portfolio is managed to reflect our bottom up value discipline.
The price to cash flow ratio of the Portfolio is less than 9 times, versus 14.2
times for the MSCI World Index. This provides some comfort in what seems, after
the fourth quarter rally, once again an expensive equity world. Overall, the
Portfolio is defensively positioned for a continuation of volatile financial
market conditions in 1999. The slowdown in global growth occurring outside the
US, particularly in Japan, but increasingly in Europe, suggests caution is
warranted. Indeed, despite aggressive global easing in monetary policy, led by
the Federal Reserve, it seems a near certainty that earnings expectations for
1999 are far too optimistic.
55
<PAGE> 64
The following information regarding the Investment Quality Bond Trust
included in the Trust's Annual Report dated December 31, 1998:
INVESTMENT QUALITY BOND TRUST
INVESTMENT OBJECTIVE & POLICIES: To provide a high level of current income
consistent with the maintenance of principal and liquidity by investing
primarily in a diversified investment grade corporate bonds and US Government
bonds with intermediate to long term maturities.
SUBADVISER: Wellington Management Company, LLP
PORTFOLIO MANAGER: Thomas L. Pappas
INCEPTION DATE: June 18, 1985**
56
<PAGE> 65
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND LEHMAN BROTHERS AGGREGATE
TRUST BOND INDEX CUSTOMIZED BENCHMARK
----------------------- ------------------------- --------------------
<S> <C> <C> <C>
May 85 10000 10000 10000
9978 10000 10000
10330 9965 9965
10458 10152 10165
10518 10213 10201
10664 10428 10421
10802 10678 10670
Dec. 85 10872 11005 11007
10906 11066 11077
11182 11502 11564
11386 11860 11931
11392 11923 11989
11251 11695 11785
11408 12002 12088
11810 12108 12158
11996 12410 12455
11921 12287 12340
12130 12465 12529
12341 12640 12691
Dec. 86 12313 12688 12760
12521 12867 12968
12635 12956 13051
12954 12897 12987
12568 12544 12613
12495 12495 12557
12679 12667 12722
12640 12657 12691
12565 12589 12620
12275 12321 12320
12720 12759 12765
12909 12861 12864
Dec. 87 12596 13036 13063
12992 13495 13532
13179 13656 13697
13086 13527 13568
13069 13454 13484
12999 13364 13399
13232 13686 13708
13162 13615 13645
13151 13651 13688
13419 13959 13985
13606 14221 14230
13454 14049 14078
Dec. 88 13489 14065 14124
13606 14267 14318
13583 14165 14220
13606 14226 14284
13788 14523 14581
14055 14905 14953
14480 15358 15424
14735 15685 15736
14492 15453 15519
14650 15532 15588
14990 15914 15969
15063 16065 16101
Dec. 89 15014 16108 16124
14638 15917 15909
14686 15968 15948
14104 15979 15953
13938 15832 15800
14291 16300 16276
14522 16563 16543
14645 16791 16743
14278 16566 16493
14128 16704 16610
14060 16916 16783
14346 17280 17142
Dec. 90 14604 17549 17396
14740 17767 17600
15039 17918 17800
15053 18042 17955
15006 18236 18171
15066 18342 18269
15036 18333 18255
15171 18588 18495
15605 18989 18919
16024 19375 19312
16173 19590 19489
16308 19770 19682
Dec-91 16951 20357 20339
16667 20080 20053
16802 20211 20189
16682 20098 20087
16761 20242 20200
17169 20625 20612
17404 20910 20920
17828 21336 21463
17985 21552 21647
18204 21808 21930
17906 21518 21577
17906 21522 21576
Dec. 92 18173 21865 21957
18581 22284 22447
18942 22674 22929
19067 22770 23007
19168 22929 23184
19168 22959 23186
19547 23374 23725
19630 23508 23882
20026 23919 24446
20108 23984 24522
20174 24072 24630
19894 23868 24343
Dec. 93 19993 23997 24462
20257 24321 24867
19762 23897 24310
19184 23307 23663
18978 23121 23456
18960 23118 23398
18926 23068 23341
19272 23527 23851
19307 23555 23867
19012 23209 23477
18960 23188 23442
18908 23137 23402
Dec. 94 19064 23296 23570
19410 23758 24039
19843 24323 24644
19982 24471 24822
20283 24814 25195
21115 25774 26296
21281 25962 26515
21207 25905 26408
21466 26219 26775
21688 26473 27062
22058 26817 27443
22409 27219 27919
Dec. 95 22779 27601 28348
22890 27783 28526
22428 27299 27896
22243 27108 27662
22051 26956 27458
21992 26902 27410
22267 27263 27789
22326 27337 27850
22286 27290 27776
22699 27765 28301
23151 28381 28998
23603 28867 29561
Dec. 96 23367 28598 29206
23426 28687 29243
23485 28759 29325
23190 28439 28941
23574 28866 29369
23785 29140 29661
24102 29487 30038
24864 30283 31014
24568 30026 30631
24969 30470 31129
25265 30912 31596
25392 31054 31765
Dec. 97 25646 31368 32100
26090 31769 32532
26048 31744 32483
26132 31852 32588
26251 32017 32764
26519 32321 33128
26721 32596 33439
26788 32665 33449
27021 33197 33963
27795 33974 34972
27571 33794 34643
27772 33986 34974
Dec. 98 27884 34088 35063
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Periods Ending Since Since** Since
December 31, 1998 1 Year 5 Year 10 Year Inception Inception 5 Year 10 Year Inception
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Customized Benchmark+* 9.23% 7.47% 9.52% 9.74% 8.95% 43.34% 148.26% 250.63%
Lehman Brothers
Aggregate Bond Index 8.67% 7.27% 9.26% 9.51% 8.50% 42.06% 142.37% 240.88%
Investment Quality Bond
Trust (at net asset
value) 8.73% 6.88% 7.88% 8.12% 8.49% 39.47% 113.52% 178.84%
</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.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the Investment Quality Bond Trust returned 8.73%
versus 9.23% for the customized benchmark of 50% Lehman Brothers Government Bond
Index and 50% Lehman Brothers Corporate Bond Index.
ENVIRONMENT: Low inflation and growth prospects helped Treasury yields
pierce below 6.0%, but from there Treasuries left other sectors behind rallying
another 1.0% or so. Investors searched for safety in a volatile world
environment as hedge funds collapsed and some foreign issuers threatened
defaults. This all triggered a massive flight to quality never seen before.
Corporate bonds lagged Treasuries as credit fundamentals weakened in investors'
eyes
57
<PAGE> 66
and with lower rates came increased prepayment risk to the detriment of mortgage
prices.
OUTLOOK: Looking forward, we believe the panic buying of Treasuries since
July, driven by fears of a worldwide recession, will reverse itself over time,
especially as we cycle into a new year. Corporates, including high yield, and
mortgages -- two areas which have lagged against Treasuries -- are set up to
deliver much better performance. In fact, high quality corporates and mortgages
offer attractive yields over 1% higher than comparable Treasuries, and many
decent high yield issues yield upwards of 10% on a nominal basis. Though
maintaining relative high quality in the Portfolio, we will continue to search
for attractively priced alternatives to Treasuries.
58
<PAGE> 67
TAX MATTERS. 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 following 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.
TAX STATUS
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 Acquiring Portfolio and Transferor 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.
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.
SOURCES OF GROSS INCOME
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.
59
<PAGE> 68
DIVERSIFICATION OF ASSETS
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
Acquiring 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 Acquiring 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.
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. A portfolio
investing in securities of a passive foreign investment company may be subject
to U.S. federal income taxes and interest charges (and the investment yield of a
portfolio making such an investment will be reduced by these taxes and interest
charges) on a portion of its distributions on and gain with respect to shares of
the passive foreign investment company even if such amounts are paid as a
dividend to its shareholders. Shareholders will bear the cost of these taxes and
interest charges. Alternatively, a portfolio may elect to (i) treat the
60
<PAGE> 69
passive foreign investment company as a "qualified electing fund" (assuming the
company agrees to provide certain information to the Internal Revenue Service)
and include annually in income its proportionate share of the company's ordinary
earnings and capital gains (whether or not distributed) or (ii) mark to market
its stock in the passive foreign investment company and thereby recognize as
ordinary income any increase in the value of such shares, and as ordinary loss
any decrease in such value to the extent of prior increases.
ADDITIONAL TAX CONSIDERATIONS
If a portfolio failed to qualify as a regulated investment company, owners
of contracts based on the portfolio (i) 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
Manulife Securities 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.
OTHER INFORMATION.
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 will be declared not
less frequently than annually and reinvested in additional full and fractional
shares of that portfolio or paid in cash.
CUSTODIAN
State Street Bank and Trust Company ("State Street") 225 Franklin Street,
Boston, Massachusetts 02110, currently acts as custodian and book-
61
<PAGE> 70
keeping 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.
ADDITIONAL INFORMATION
Additional information concerning the operations and management of the
Trust (including the Transferor Portfolios and the Acquiring Portfolios) is
incorporated herein by reference from its current prospectus and current
statement of additional information, each dated May 1, 1998, copies of which may
be obtained without charge by contacting the Trust at the address or telephone
number set forth on the cover page of this Prospectus/Proxy Statement.
The Trust is subject to the informational requirements of the Securities
and Exchange Act of 1934 and the 1940 Act, and in accordance therewith, files
reports, proxy material and other information about each of the Transferor
Portfolios and Acquiring Portfolios with the Securities and Exchange Commission.
Such reports, proxy material and other information filed by the Trust can
be inspected and copied at the Public Reference Facilities maintained by the
Commission, located at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of
such material can be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549 at prescribed rates. In addition, copies of recent
information filed by the Trust may be obtained from the Commission's Internet
address at http://www.sec.gov.
THE TRUST WILL FURNISH, WITHOUT CHARGE, A COPY OF THE TRUST'S ANNUAL REPORT
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 TO A SHAREHOLDER UPON REQUEST. TO
OBTAIN A REPORT, PLEASE CONTACT THE TRUST AT THE ADDRESS OR TELEPHONE NUMBER SET
FORTH ON THE COVER PAGE OF THIS PROSPECTUS/PROXY STATEMENT.
62
<PAGE> 71
FINANCIAL STATEMENTS AND EXPERTS
The financial statements and financial highlights of the Acquiring
Portfolios and the Transferor Portfolios for the fiscal year ended December 31,
1998 included and incorporated by reference into this Prospectus/Proxy Statement
have been so included and incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, One Post Office Square,
Boston, Massachusetts 02109, given on the authority of said firm as experts in
accounting and auditing.
LEGAL MATTERS
Certain matters concerning the issuance of shares of the Acquiring
Portfolios will be passed upon by James D. Gallagher, Secretary of the Trust.
Certain tax consequences of the Reorganization will be passed upon by Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017.
63
<PAGE> 72
APPENDIX
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.
A-1
<PAGE> 73
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.
A-2
<PAGE> 74
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.
A-3
<PAGE> 75
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.
A-4
<PAGE> 76
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this 26th day
of February, 1999, by Manufacturers Investment Trust (the "Trust"), a
Massachusetts business trust, on behalf of the Worldwide Growth Trust and the
Capital Growth Bond Trust (collectively, the "Transferor Portfolios") and the
Global Equity Trust and the Investment Quality Bond Trust (collectively, the
"Acquiring Portfolios").
The following table depicts each specific Transferor Portfolio and the
corresponding Acquiring Portfolio into which such Transferor Portfolio will be
merged:
<TABLE>
<CAPTION>
TRANSFEROR PORTFOLIO ACQUIRING PORTFOLIO
- -------------------- -------------------
<S> <C>
Worldwide Growth Trust Global Equity Trust
Capital Growth Bond Trust Investment Quality Bond Trust
</TABLE>
WHEREAS, the Board of Trustees of the Trust has determined that the
transfer of all of the assets and liabilities of each Transferor Portfolio to
the corresponding Acquiring Portfolio, noted above, is in the best interests of
each Transferor Portfolio and the corresponding Acquiring Portfolio, as well as
the best interests of shareholders and holders of variable life and annuity
contracts funded by shares of the Transferor Portfolios and the Acquiring
Portfolios, and that the interests of existing shareholders and contract owners
would not be diluted as a result of this transaction;
WHEREAS, the Trust intends to provide for the reorganization of the
Transferor Portfolios (the "Reorganization") through the acquisition by the
Acquiring Portfolios of all of the assets, subject to all of the liabilities, of
the Transferor Portfolios in exchange for shares of beneficial interest, par
value $.01 per share, of the Acquiring Portfolios (the "Acquiring Portfolio
Shares"), the liquidation of the Transferor Portfolios and the distribution to
Transferor Portfolio shareholders of such Acquiring Portfolio Shares, all
pursuant to the provisions of Section 368(a)(1) of the Internal Revenue Code of
1986, as amended (the "Code");
<PAGE> 77
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the Transferor Portfolios and the Acquiring Portfolios hereto agree as follows:
1. TRANSFER OF ASSETS OF THE TRANSFEROR PORTFOLIOS IN EXCHANGE FOR THE ACQUIRING
PORTFOLIO SHARES AND LIQUIDATION OF THE TRANSFEROR PORTFOLIOS
(a) Plan of Reorganization.
(i) The Trust on behalf of each Transferor Portfolio listed above, will
convey, transfer and deliver the assets of each Transferor Portfolio to the
Acquiring Portfolio set forth opposite its name in the table above (each such
Acquiring Portfolio being the "Corresponding Acquiring Portfolio" of the
Transferor Portfolio set forth opposite its name, and each such Transferor
Portfolio being the "Corresponding Transferor Portfolio" of the Acquiring
Portfolio set forth opposite its name) all of the then existing assets of such
Transferor Portfolio (consisting, without limitation, of portfolio securities
and instruments, dividend and interest receivables, cash and other assets). In
consideration thereof, the Trust on behalf of each Acquiring Portfolio will (A)
assume and pay, to the extent that they exist on or after the Effective Time of
the Reorganization (as defined in Section 1(b)(i) hereof), all of the
obligations and liabilities of the Corresponding Transferor Portfolio and (B)
issue and deliver to the Corresponding Transferor Portfolio full and fractional
shares of beneficial interest of the Corresponding Acquiring Portfolio, with
respect to each Corresponding Acquiring Portfolio equal to that number of full
and fractional Acquiring Portfolio Shares as determined in Section 1(c) hereof.
Any shares of capital stock (if any), par value $.01 per share, of the
Transferor Portfolios ("Transferor Portfolio Shares") held in the treasury of
the Trust at the Effective Time of the Reorganization shall thereupon be
retired. Such transactions shall take place on the date provided for in Section
1(b) hereof (the "Exchange Date"). All computations for the Transferor
Portfolios and the Acquiring Portfolios shall be performed by State Street Bank
and Trust Company (the "Custodian"), as custodian and pricing agent for the
Transferor Portfolios and the Acquiring Portfolios. The determination of said
Custodian shall be conclusive and binding on all parties in interest.
(ii) As of the Effective Time of the Reorganization, each Transferor
Portfolio will liquidate and distribute pro rata to its shareholders of record
("Transferor Portfolio shareholders") as of the Effective Time of the
Reorganization the Acquiring Portfolio Shares received by such Transferor
Portfolio pursuant to Section 1(a)(i) in actual or constructive exchange for the
shares of the Transferor Portfolio held by the Transferor Portfolio sharehold-
2
<PAGE> 78
ers. Such liquidation and distribution will be accomplished by the transfer of
the Corresponding Acquiring Portfolio Shares then credited to the account of
each Transferor Portfolio on the books of the Corresponding Acquiring Portfolio,
to open accounts on the share records of the Corresponding Acquiring Portfolio
in the names of the Transferor Portfolio shareholders and representing the
respective pro rata number of the Acquiring Portfolio Shares due such
shareholders. The Acquiring Portfolios will not issue certificates representing
the Acquiring Portfolio Shares in connection with such exchange.
(iii) As soon as practicable after the Effective Time of the
Reorganization, the Trust shall take all the necessary steps under Massachusetts
law, the Trust's Declaration of Trust and any other applicable law to effect a
complete dissolution of the Transferor Portfolios.
(b) Exchange Date and Effective Time of the Reorganization.
(i) Subject to the satisfaction of the conditions to the Reorganization
specified in this Plan, the Reorganization shall occur as of the close of
regularly scheduled trading on the New York Stock Exchange (the "Effective Time
of the Reorganization") on the day (the "Exchange Date") which is the later of
(A) the final adjournment of the meeting of the holders of Transferor Portfolio
shares at which this Plan will be considered, (B) April 30, 1999 and (C) such
later day as the parties may mutually agree.
(ii) All acts taking place on the Exchange Date shall be deemed to take
place simultaneously as of the Effective Time of the Reorganization unless
otherwise provided.
(iii) In the event that on the proposed Exchange Date (A) the New York
Stock Exchange shall be closed to trading or trading thereon shall be
restricted, or (B) trading or the reporting of trading on said Exchange or
elsewhere shall be disrupted so that accurate valuation of the net assets of the
Acquiring Portfolios or the Transferor Portfolios is impracticable, the Exchange
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
(iv) On the Exchange Date, portfolio securities of the Transferor
Portfolios shall be transferred by the Custodian to the accounts of the
Corresponding Acquiring Portfolios duly endorsed in proper form for transfer, in
such condition as to constitute good delivery thereof in accordance with the
custom of brokers, and shall be accompanied by all necessary federal and state
stock transfer stamps or a check for the appropriate purchase price thereof.
(c) Valuation.
(i) The net asset value of the shares of each Acquiring Portfolio and the
net value of the assets of each Corresponding Transferor Portfolio to be
3
<PAGE> 79
transferred in exchange therefore shall be determined as of the Effective Time
of the Reorganization. The net asset value of the Acquiring Portfolio Shares
shall be computed by the Custodian in the manner set forth in the Trust's
Declaration of Trust or By-laws and then current prospectus and statement of
additional information and shall be computed to not less than two decimal
places. The net value of the assets of each Transferor Portfolio to be
transferred shall be computed by the Custodian by calculating the value of the
assets transferred by the Transferor Portfolio and by subtracting therefrom the
amount of the liabilities assigned and transferred to the Corresponding
Acquiring Portfolio, said assets and liabilities to be valued in the manner set
forth in the Trust's Declaration of Trust or By-laws and then current prospectus
and statement of additional information.
(ii) The number of Acquiring Portfolio Shares to be issued (including
fractional shares, if any) by each Acquiring Portfolio in exchange for the
Corresponding Transferor Portfolio's assets shall be determined by an exchange
ratio computed by dividing the net value of such Transferor Portfolio's assets
by the net asset value per share of such Acquiring Portfolio, both as determined
in accordance with Section 1(c)(i).
(iii) All computations of value shall be made by the Custodian in
accordance with its regular practice as pricing agent for the Acquiring
Portfolios and the Transferor Portfolios.
2. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING PORTFOLIOS
Each of the Acquiring Portfolios represents and warrants as follows:
(a) Organization, Existence, etc. The Trust is a business trust that is
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to carry on its business as it
is now being conducted. Each Acquiring Portfolio is a validly existing series of
shares of such business trust representing interests therein under the laws of
Massachusetts. Each Acquiring Portfolio and the Trust has all necessary federal,
state and local authorization to own all of its properties and assets and to
carry on its business as now being conducted.
(b) Registration as Investment Company. The Trust is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end investment
company of the management type; such registration has not been revoked or
rescinded and is in full force and effect.
(c) Current Offering Documents. The current prospectus and statement of
additional information of the Trust, each dated May 1, 1998, as amended,
included in the Trust's registration statement on Form N-1A filed
4
<PAGE> 80
with the Commission, comply in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act") and the Act and do
not contain an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(d) Capitalization. The Trust has an unlimited number of authorized shares
of beneficial interest, par value $.01 per share, of which as of January 15,
1999 there were outstanding the following numbers of shares of the Acquiring
Portfolios: 45,422,874 shares of the Global Equity Trust and 25,146,929 shares
of the Investment Quality Bond Trust, and no shares of such portfolios were held
in the treasury of the Trust. All of the outstanding shares of the Trust have
been duly authorized and are validly issued, fully paid and nonassessable
(except as disclosed in the Trust's prospectus and recognizing that under
Massachusetts law, shareholders of a Trust portfolio could, under certain
circumstances, be held personally liable for the obligations of such Trust
portfolio). Because the Trust is an open-end investment company engaged in the
continuous offering and redemption of its shares, the number of outstanding
shares may change prior to the Effective Time of the Reorganization. All of the
issued and outstanding shares of each of the Acquiring Portfolios have been
offered and sold in compliance in all material respects with applicable
registration requirements of the Securities Act and applicable state securities
laws.
(e) Financial Statements. The financial statements of the Trust for the
fiscal year ended December 31, 1998, which have been audited by
PricewaterhouseCoopers LLP, fairly present the financial position of the
Acquiring Portfolios as of the dates thereof and the respective results of
operations and changes in net assets for each of the periods indicated in
accordance with generally accepted accounting principles ("GAAP").
(f) Shares to be Issued Upon Reorganization. The Acquiring Portfolio
Shares to be issued in connection with the Reorganization will be duly
authorized and upon consummation of the Reorganization will be validly issued,
fully paid and nonassessable (except as disclosed in the Trust's prospectus and
recognizing that under Massachusetts law, shareholders of a Trust portfolio
could, under certain circumstances, be held personally liable for the
obligations of such portfolio).
(g) Authority Relative to this Plan. The Trust, on behalf of the Acquiring
Portfolios, has the power to enter into this Plan and to carry out its
obligations hereunder. The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been duly authorized
by the Trust's Board of Trustees and no other proceedings by the Trust other
than those contemplated under this Plan are necessary to author-
5
<PAGE> 81
ize its officers to effectuate this Plan and the transactions contemplated
hereby. The Trust is not a party to or obligated under any provision of its
Declaration of Trust or By-laws, or under any indenture or contract provision or
any other commitment or obligation, or subject to any order or decree, which
would be violated by or which would prevent its execution and performance of
this Plan in accordance with its terms.
(h) Liabilities. There are no liabilities of the Acquiring Portfolios,
whether actual or contingent and whether or not determined or determinable,
other than liabilities disclosed or provided for in the Trust's Financial
Statements with respect to the Acquiring Portfolios and liabilities incurred in
the ordinary course of business subsequent to December 31, 1998 or otherwise
previously disclosed to the Trust with respect to the Acquiring Portfolios, none
of which has been materially adverse to the business, assets or results of
operations of the Acquiring Portfolios.
(i) No Material Adverse Change. Since December 31, 1998, there has been no
material adverse change in the financial condition, results of operations,
business, properties or assets of the Acquiring Portfolios, other than those
occurring in the ordinary course of business (for these purposes, a decline in
net asset value and a decline in net assets due to redemptions do not constitute
a material adverse change).
(j) Litigation. There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Trust, threatened which would adversely affect the
Trust or the Acquiring Portfolios' assets or business or which would prevent or
hinder consummation of the transactions contemplated hereby, there are no facts
which would form the basis for the institution of administrative proceedings
against the Trust or the Acquiring Portfolios and, to the knowledge of the
Trust, there are no regulatory investigations of the Trust or the Acquiring
Portfolios, pending or threatened, other than routine inspections and audits.
(k) Contracts. No default exists under any material contract or other
commitment to which the Trust, on behalf of any Acquiring Portfolio, is subject.
(l) Taxes. The federal income tax returns of the Trust with respect to
each Acquiring Portfolio, and all other income tax returns required to be filed
by the Trust with respect to each Acquiring Portfolio, have been filed for all
taxable years to and including December 31, 1997, and all taxes payable pursuant
to such returns have been paid. To the knowledge of the Trust, no such return is
under audit and no assessment has been asserted in respect of any such return.
All federal and other taxes owed by the Trust with respect to the Acquiring
Portfolios have been paid so far as due. The Trust and each
6
<PAGE> 82
Acquiring Portfolio currently are, and will continue to be up until and at the
Exchange Date, in compliance with Section 817(h) of the Code.
(m) No Approvals Required. Except for the Registration Statement (as
defined in Section 4(a) hereof) and the approval of the Transferor Portfolios'
shareholders (referred to in Section 6(a) hereof), the exemptive relief
requested in the Exemptive Application (as defined in Section 4(e) hereof), no
consents, approvals, authorizations, registrations or exemptions under federal
or state laws are necessary for the consummation by the Trust of the
Reorganization, except such as have been obtained as of the date hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR PORTFOLIOS
Each of the Transferor Portfolios represents and warrants as follows:
(a) Organization, Existence, etc. The Trust is a business trust that is
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to carry on its business as it
is now being conducted. Each Transferor Portfolio is a validly existing series
of shares of such business trust representing interests therein under the laws
of Massachusetts. Each Transferor Portfolio and the Trust has all necessary
federal, state and local authorization to own all of its properties and assets
and to carry on its business as now being conducted.
(b) Registration as Investment Company. The Trust is registered under the
Act as an open-end investment company of the management type; such registration
has not been revoked or rescinded and is in full force and effect.
(c) Current Offering Documents. The current prospectus and statement of
additional information of the Trust, each dated May 1, 1998, as amended,
included in the Trust's registration statement on Form N-1A filed with the
Commission, comply in all material respects with the requirements of the
Securities Act and the Act and do not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(d) Capitalization. The Trust has an unlimited number of authorized shares
of beneficial interest, par value $.01 per share, of which as of January 15,
1999 there were outstanding the following numbers of shares of the Transferor
Portfolios: 2,779,692 shares of the Worldwide Growth Trust and 5,432,114 shares
of the Capital Growth Bond Trust, and no shares of such portfolios were held in
the treasury of the Trust. All of the outstanding shares of the Trust have been
duly authorized and are validly issued, fully paid and
7
<PAGE> 83
nonassessable (except as disclosed in the Trust's prospectus and recognizing
that under Massachusetts law, shareholders of a Trust portfolio could, under
certain circumstances, be held personally liable for the obligations of such
Trust portfolio). Because the Trust is an open-end investment company engaged in
the continuous offering and redemption of its shares, the number of outstanding
shares may change prior to the Effective Time of the Reorganization. All such
shares will, at the Exchange Date, be held by the shareholders of record of the
Transferor Portfolios as set forth on the books and records of the Trust in the
amounts set forth therein, and as set forth in any list of shareholders of
record provided to the Acquiring Portfolios for purposes of the Reorganization,
and no such shareholders of record will have any preemptive rights to purchase
any Transferor Portfolio shares, and the Transferor Portfolios do not have
outstanding any options, warrants or other rights to subscribe for or purchase
any Transferor Portfolio shares (other than any existing dividend reinvestment
plans of the Transferor Portfolios or as set forth in this Plan), nor are there
outstanding any securities convertible into any shares of the Transferor
Portfolios (except pursuant to any existing exchange privileges described in the
current prospectus and statement of additional information of the Trust). All of
each Transferor Portfolio's issued and outstanding shares have been offered and
sold in compliance in all material respects with applicable registration
requirements of the Securities Act and applicable state securities laws.
(e) Financial Statements. The Trust's Financial Statements fairly present
the financial position of the Transferor Portfolios as of the dates thereof and
the respective results of operations and changes in net assets for each of the
periods indicated in accordance with GAAP.
(f) Authority Relative to this Plan. The Trust, on behalf of the
Transferor Portfolios, has the power to enter into this Plan and to carry out
its obligations hereunder. The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been duly authorized
by the Trust's Board of Trustees and no other proceedings by the Trust other
than those contemplated under this Plan are necessary to authorize its officers
to effectuate this Plan and the transactions contemplated hereby. The Trust is
not a party to or obligated under any provision of its Declaration of Trust or
By-laws, or under any indenture or contract provision or any other commitment or
obligation, or subject to any order or decree, which would be violated by or
which would prevent its execution and performance of this Plan in accordance
with its terms.
(g) Liabilities. There are no liabilities of the Transferor Portfolios,
whether actual or contingent and whether or not determined or determinable,
other than liabilities disclosed or provided for in the Trust's Financial
8
<PAGE> 84
Statements with respect to the Transferor Portfolios and liabilities incurred in
the ordinary course of business subsequent to December 31, 1998 or otherwise
previously disclosed to the Trust with respect to the Transferor Portfolios,
none of which has been materially adverse to the business, assets or results of
operations of the Transferor Portfolios.
(h) No Material Adverse Change. Since December 31, 1998, there has been no
material adverse change in the financial condition, results of operations,
business, properties or assets of the Transferor Portfolios, other than those
occurring in the ordinary course of business (for these purposes, a decline in
net asset value and a decline in net assets due to redemptions do not constitute
a material adverse change).
(i) Litigation. There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Trust, threatened which would adversely affect the
Trust or the Transferor Portfolios' assets or business or which would prevent or
hinder consummation of the transactions contemplated hereby, there are no facts
which would form the basis for the institution of administrative proceedings
against the Trust or the Transferor Portfolios and, to the knowledge of the
Trust, there are no regulatory investigations of the Trust or the Transferor
Portfolios, pending or threatened, other than routine inspections and audits.
(j) Contracts. The Trust, on behalf of the Transferor Portfolios, is not
subject to any contracts or other commitments (other than this Plan) which will
not be terminated with respect to the Transferor Portfolios without liability to
the Trust or the Transferor Portfolios as of or prior to the Effective Time of
the Reorganization.
(k) Taxes. The federal income tax returns of the Trust with respect to
each Transferor Portfolio, and all other income tax returns required to be filed
by the Trust with respect to each Transferor Portfolio, have been filed for all
taxable years to and including December 31, 1997, and all taxes payable pursuant
to such returns have been paid. To the knowledge of the Trust, no such return is
under audit and no assessment has been asserted in respect of any such return.
All federal and other taxes owed by the Trust with respect to the Transferor
Portfolios have been paid so far as due. The Trust and each Transferor Portfolio
currently are, and will continue to be up until and at the Exchange Date, in
compliance with Section 817(h) of the Code.
(l) No Approvals Required. Except for the Registration Statement (as
defined in Section 4(a) hereof) and the approval of the Transferor Portfolios'
shareholders referred to in Section 6(a) hereof, the exemptive relief requested
by the Exemptive Application, no consents, approvals, authorizations,
registrations or exemptions under federal or state laws are necessary for the
9
<PAGE> 85
consummation by the Trust of the Reorganization, except such as have been
obtained as of the date hereof.
4. COVENANTS OF THE ACQUIRING PORTFOLIOS
Each of the Acquiring Portfolios covenants to the following:
(a) Registration Statement. On behalf of the Acquiring Portfolios, the
Trust shall file with the Commission a Registration Statement on Form N-14 (the
"Registration Statement") under the Securities Act relating to the Acquiring
Portfolio Shares issuable hereunder and the proxy statement of the Transferor
Portfolios relating to the meeting of the Transferor Portfolios' shareholders
referred to in Section 5(a) herein. At the time the Registration Statement
becomes effective, the Registration Statement (i) will comply in all material
respects with the provisions of the Securities Act and the rules and regulations
of the Commission thereunder (the "Regulations") and (ii) will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and at the time the Registration Statement becomes effective, at the time of the
Transferor Portfolios shareholders' meeting referred to in Section 5(a) hereof,
and at the Effective Time of the Reorganization, the prospectus/proxy statement
(the "Prospectus") and statement of additional information (the "Statement of
Additional Information") included therein, as amended or supplemented by any
amendments or supplements filed by the Trust, will not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) Cooperation in Effecting Reorganization. The Acquiring Portfolios
agree to use all reasonable efforts to effectuate the Reorganization, to
continue in operation thereafter, and to obtain any necessary regulatory
approvals for the Reorganization. The Acquiring Portfolios shall furnish such
data and information relating to each Acquiring Portfolio as shall be reasonably
requested for inclusion in the information to be furnished to the Transferor
Portfolio shareholders in connection with the meeting of the Transferor
Portfolios' shareholders for the purpose of acting upon this Plan and the
transactions contemplated herein.
(c) Operations in the Ordinary Course. Except as otherwise contemplated by
this Plan, each of the Acquiring Portfolios shall conduct its business in the
ordinary course until the consummation of the Reorganization, it being
understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions.
10
<PAGE> 86
(d) Exemptive Application. The Acquiring Portfolios shall use all
reasonable efforts to cause the Commission to grant the exemptive relief
requested in the Exemptive Application filed on November 13, 1998 by the Trust
(the "Exemptive Application"), substantially in the form requested in the
Exemptive Application, including filing any necessary or advisable amendments to
the Exemptive Application.
5. COVENANTS OF THE TRANSFEROR PORTFOLIOS
Each of the Transferor Portfolios covenants to the following:
(a) Meeting of the Transferor Portfolios' Shareholders. The Trust shall
call and hold a meeting of the shareholders of each Transferor Portfolio for the
purpose of acting upon this Plan and the transactions contemplated herein. The
Trust shall not hold such meeting until such time as the Commission shall have
granted the exemptive relief requested in the Exemptive Application
substantially in the form requested in the Exemptive Application.
(b) Portfolio Securities. With respect to the assets to be transferred in
accordance with Section 1(a), each Transferor Portfolio's assets shall consist
of all property and assets of any nature whatsoever, including, without
limitation, all cash, cash equivalents, securities, claims and receivables
(including dividend and interest receivables) owned, and any deferred or prepaid
expenses shown as an asset on the Trust's books. At least five (5) business days
prior to the Exchange Date, each Transferor Portfolio will provide the Trust,
for the benefit of each Corresponding Acquiring Portfolio, with a list of its
assets and a list of its stated liabilities. Each Transferor Portfolio shall
have the right to sell any of the securities or other assets shown on the list
of assets prior to the Exchange Date but will not, without the prior approval of
the Trust, on behalf of the Corresponding Acquiring Portfolio, respectively,
acquire any additional securities other than securities which the Corresponding
Acquiring Portfolio is permitted to purchase, pursuant to its investment
objective and policies or otherwise (taking into consideration its own portfolio
composition as of such date). In the event that any Transferor Portfolio holds
any investments that its Corresponding Acquiring Portfolio would not be
permitted to hold, the Transferor Portfolio will dispose of such securities
prior to the Exchange Date to the extent practicable and to the extent that its
shareholders would not be materially affected in an adverse manner by such a
disposition. In addition, the Trust will prepare and deliver immediately prior
to the Effective Time of the Reorganization, a Statement of Assets and
Liabilities of each Transferor Portfolio, prepared in accordance with GAAP
(each, a "Schedule"). All securities to be listed in the Schedule for a
Transferor Portfolio as of the Effective Time of the Reorganization will be
owned by such Transferor Portfolio free and clear of any liens, claims, charges,
options and
11
<PAGE> 87
encumbrances, except as indicated in such Schedule, and, except as so indicated,
none of such securities is or, after the Reorganization as contemplated hereby,
will be subject to any restrictions, legal or contractual, on the disposition
thereof (including restrictions as to the public offering or sale thereof under
the Securities Act) and, except as so indicated, all such securities are or will
be readily marketable.
(c) Registration Statement. In connection with the preparation of the
Registration Statement, the Transferor Portfolios will cooperate with the
Acquiring Portfolios and will furnish to the Trust the information relating to
the Transferor Portfolios required by the Securities Act and the Regulations to
be set forth in the Registration Statement (including the Prospectus and
Statement of Additional Information). At the time the Registration Statement
becomes effective, the Registration Statement, insofar as it relates to the
Transferor Portfolios, (i) will comply in all material respects with the
provisions of the Securities Act and the Regulations and (ii) will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and at the time the Registration Statement becomes effective, at the time of the
Transferor Portfolios' shareholders' meeting referred to in Section 5(a) and at
the Effective Time of the Reorganization, the Prospectus and Statement of
Additional Information, as amended or supplemented by any amendments or
supplements filed by the Trust, insofar as they relate to the Transferor
Portfolios, will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall apply only to
statements in or omissions from the Registration Statement, Prospectus or
Statement of Additional Information made in reliance upon and in conformity with
information furnished by the Transferor Portfolios for use in the Registration
Statement, Prospectus or Statement of Additional Information as provided in this
Section 5(c).
(d) Cooperation in Effecting Reorganization. The Transferor Portfolios
agree to use all reasonable efforts to effectuate the Reorganization and to
obtain any necessary regulatory approvals for the Reorganization.
(e) Operations in the Ordinary Course. Except as otherwise contemplated by
this Plan, each of the Transferor Portfolios shall conduct its business in the
ordinary course until the consummation of the Reorganization, it being
understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions.
(f) Contract Terminations. Prior to the Effective Time of the
Reorganization, the investment subadvisory agreement between Manulife Securities
12
<PAGE> 88
and (i) Founders Asset Management, LLC ("Founders"), but only with respect to
the Worldwide Growth Trust and (ii) Manufacturers Adviser Corporation ("MAC"),
but only with respect to the Capital Growth Bond Trust, shall each be
terminated, such termination to be effective prior to or as of the Effective
Time of the Reorganization.
(g) Exemptive Application. The Transferor Portfolios shall use all
reasonable efforts to cause the Commission to grant the exemptive relief
requested in the Exemptive Application, substantially in the form requested in
the Exemptive Application, including filing any necessary or advisable
amendments to the Exemptive Application.
(h) Statement of Earnings and Profits. As promptly as practicable, but in
any case within 60 days after the Exchange Date, the Trust on behalf of each
Transferor Portfolio, shall prepare a statement of the earnings and profits of
each Transferor Portfolio for federal income tax purposes, and of any capital
loss carryovers and other items that the Acquiring Portfolios will succeed to
and take into account as a result of Section 381 of the Code.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
TRANSFEROR PORTFOLIOS
The obligations of each Transferor Portfolio with respect to the consummation of
the Reorganization are subject to the satisfaction of the following conditions:
(a) Approval by the Transferor Portfolios' Shareholders. This Plan and the
transactions contemplated by the Reorganization shall have been approved by the
requisite vote of the shares of each Transferor Portfolio entitled to vote on
the matter ("Transferor Shareholder Approval").
(b) Covenants, Warranties and Representations. Each of the Acquiring
Portfolios shall have complied with each of its covenants contained herein, each
of the representations and warranties contained herein shall be true in all
material respects as of the Effective Time of the Reorganization (except as
otherwise contemplated herein), and there shall have been no material adverse
change (as described in Section 2(i)) in the financial condition, results of
operations, business, properties or assets of each of the Acquiring Portfolios
since December 31, 1998.
(c) Regulatory Approval. The Registration Statement shall have been
declared effective by the Commission and no stop orders under the Securities Act
pertaining thereto shall have been issued, the Commission shall have granted the
exemptive relief requested in the Exemptive Application substantially in the
form requested in the Exemptive Application, and all other approvals,
registrations, and exemptions under federal and state laws consid-
13
<PAGE> 89
ered to be necessary shall have been obtained (collectively, the "Regulatory
Approvals").
(i) Tax Opinion. The Trust shall have received the opinion of Simpson
Thacher & Bartlett, dated on or before the Exchange Date, addressed to and in
form and substance satisfactory to the Trust, as to certain of the federal
income tax consequences under the Code of the Reorganization, insofar as it
relates to each Transferor Portfolio and its Corresponding Acquiring Portfolio,
and to shareholders of each Transferor Portfolio (the "Tax Opinion"). For
purposes of rendering the Tax Opinion, Simpson Thacher & Bartlett may rely
exclusively and without independent verification, as to factual matters, upon
the statements made in this Plan, the Prospectus and Statement of Additional
Information, and upon such other written representations as the President or
Treasurer of the Trust will have verified as of the Effective Time of the
Reorganization. The Tax Opinion will be to the effect that, based on the facts
and assumptions stated therein, for federal income tax purposes: (i) the
Reorganization will constitute a reorganization within the meaning of section
368(a)(1) of the Code with respect to each Transferor Portfolio and its
Corresponding Acquiring Portfolio; (ii) no gain or loss will be recognized by
any of the Transferor Portfolios or the Corresponding Acquiring Portfolios upon
the transfer of all the assets and liabilities, if any, of each Transferor
Portfolio to its Corresponding Acquiring Portfolio solely in exchange for shares
of the Acquiring Portfolio or upon the distribution of the shares of the
Acquiring Portfolio to the holders of the shares of the Transferor Portfolio
solely in exchange for all of the shares of the Transferor Portfolio; (iii) no
gain or loss will be recognized by shareholders of any of the Transferor
Portfolios upon the exchange of shares of such Transferor Portfolio solely for
shares of the Corresponding Acquiring Portfolio; (iv) the holding period and tax
basis of the shares of the Acquiring Portfolio received by each holder of shares
of the Transferor Portfolio pursuant to the Reorganization will be the same as
the holding period and tax basis of shares of the Transferor Portfolio held by
the shareholder (provided the shares of the Transferor Portfolio were held as a
capital asset on the date of the Reorganization) immediately prior to the
Reorganization; and (v) the holding period and tax basis of the assets of each
of the Transferor Portfolios acquired by the Corresponding Acquiring Portfolio
will be the same as the holding period and tax basis of those assets to each of
the Transferor Portfolios immediately prior to the Reorganization.
14
<PAGE> 90
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING PORTFOLIOS
The obligations of each Acquiring Portfolio with respect to the consummation of
the Reorganization are subject to the satisfaction of the following conditions:
(a) Approval by the Transferor Portfolios' Shareholders. The Transferor
Shareholder Approval shall have been obtained.
(b) Covenants, Warranties and Representations. Each of the Transferor
Portfolios shall have complied with each of its covenants contained herein, each
of the representations and warranties contained herein shall be true in all
material respects as of the Effective Time of the Reorganization (except as
otherwise contemplated herein), and there shall have been no material adverse
change (as described in Section 3(h) in the financial condition, results of
operations, business, properties or assets of each of the Transferor Portfolios
since December 31, 1998.
(c) Portfolio Securities. All securities to be acquired by each Acquiring
Portfolio in the Reorganization shall have been approved for acquisition by
Manulife Securities as consistent with the investment policies of such Acquiring
Portfolio.
(d) Regulatory Approval. The Regulatory Approvals shall have been
obtained.
(e) Contract Terminations. The agreements referred to in Section 5(f)
shall have been terminated as provided therein.
(f) Distribution of Income and Gains. The Trust on behalf of the
Transferor Portfolios shall have distributed to the shareholders of each
Transferor Portfolio all of such Transferor Portfolio's investment company
taxable income (without regard to the deductions for dividends paid) as defined
in Section 852(b)(2) of the Code for its taxable year ending on the Exchange
Date and all of its net capital gain as such term is used in Section 852(b)(3)
of the Code, after reduction by any capital loss carryforward, for its taxable
year ending on the Exchange Date.
(g) Tax Opinion. The Trust shall have received the Tax Opinion.
8. AMENDMENTS; TERMINATIONS; NO SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS
(a) Amendments. The parties hereto may, by agreement in writing authorized
by the Board of Trustees amend this Plan at any time before or after approval
hereof by the shareholders of the Transferor Portfolios, but after
15
<PAGE> 91
such approval, no amendment shall be made which substantially changes the terms
hereof.
(b) Waivers. At any time prior to the Effective Time of the
Reorganization, either the Transferor Portfolios or the Acquiring Portfolios may
by written instrument signed by it (i) waive any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein, except that conditions set forth in Sections 6(c) and 7(d) may
not be waived.
(c) Termination by the Transferor Portfolios. The Trust, on behalf of the
Transferor Portfolios, may terminate this Plan with respect to one or more of
the Transferor Portfolios at any time prior to the Effective Time of the
Reorganization by notice to the Acquiring Portfolios, the Trust and Manulife
Securities if (i) a material condition to the performance of one or more of the
Transferor Portfolios hereunder or a material covenant of one or more of the
Acquiring Portfolios contained herein shall not be fulfilled on or before the
date specified for the fulfillment thereof or (ii) a material default or
material breach of this Plan shall be made by one or more of the Acquiring
Portfolios.
(d) Termination by the Acquiring Portfolios. The Trust, on behalf of the
Acquiring Portfolios, may terminate this Plan with respect to one or more of the
Acquiring Portfolios at any time prior to the Effective Time of the
Reorganization by notice to the Transferor Portfolios, the Trust and Manulife
Securities if (i) a material condition to the performance of one or more of the
Acquiring Portfolios hereunder or a material covenant of one or more of the
Transferor Portfolios contained herein shall not be fulfilled on or before the
date specified for the fulfillment thereof or (ii) a material default or
material breach of this Plan shall be made by one or more of the Transferor
Portfolios.
(e) Termination by the Trust. This Plan may be terminated by the Trust at
any time prior to the Effective Time of the Reorganization, whether before or
after approval of this Plan by the shareholders of the Transferor Portfolios,
without liability on the part of any party hereto, its Directors, Trustees,
officers or shareholders or Manulife Securities, on notice to the other parties
in the event that the Board of Trustees determines that proceeding with this
Plan is not in the best interests of the shareholders or contract owners of the
Transferor Portfolios or the Acquiring Portfolios.
(f) Unless the parties hereto shall otherwise agree in writing, this Plan
shall terminate without liability as of the close of business on September 1,
1999 if the Effective Time of the Reorganization is not on or prior to such
date.
16
<PAGE> 92
(g) Survival. No representations, warranties or covenants in or pursuant
to this Plan, except for the provisions of Section 5(h) and Section 9 of this
Plan, shall survive the Reorganization.
9. EXPENSES; INSURANCE
The expenses of the Reorganization will be borne by the Transferor
Portfolios and the Acquiring Portfolios. Such expenses include, without
limitation, (i) expenses incurred in connection with the entering into and the
carrying out of the provisions of this Plan; (ii) expenses associated with the
preparation and filing of the Registration Statement (other than registration
fees payable to the Commission in respect of the registration of the Acquiring
Portfolio shares registered thereby, which shall be payable by the respective
Acquiring Portfolios in which such shares represent interests); (iii) fees and
expenses of preparing and filing such forms as are necessary under any
applicable state securities laws in connection with the Reorganization; (iv)
postage; (v) printing; (vi) accounting fees; (vii) legal fees and (viii)
solicitation costs relating to the Reorganization.
10. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Plan shall be in writing and shall be given by hand, certified
mail or by facsimile transmission, shall be deemed given when received and shall
be addressed to the parties hereto at their respective addresses listed below or
to such other persons or addresses as the relevant party shall designate as to
itself from time to time in writing delivered in like manner:
if to the Trust (for itself or on
behalf of the Transferor
Portfolios or the Acquiring Portfolios):
73 Tremont Street
Boston, Massachusetts 02108
Attention: James D. Gallagher, Esq.
Facsimile: (617) 266-8201
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Sarah E. Cogan, Esq.
Facsimile: (212) 455-2502
17
<PAGE> 93
11. RELIANCE
All covenants and agreements made under this Plan shall be deemed to have
been material and relied upon by the Transferor Portfolios, the Acquiring
Portfolios and the Trust notwithstanding any investigation made by such party or
on its behalf.
12. HEADINGS; COUNTERPARTS; GOVERNING LAW;
ASSIGNMENT
(a) The section and paragraph headings contained in this Plan are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
(b) This Plan may be executed in any number of counterparts, each of which
shall be deemed an original.
(c) This Plan shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts.
(d) This Plan shall bind and inure to the benefit of the Trust, the
Transferor Portfolios and the Acquiring Portfolios and their respective
successors and assigns, but no assignment or transfer hereof or of any rights or
obligations hereunder shall be made by any party without the written consent of
the other parties. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person, firm or corporation, other than the
parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Plan.
(e) The name "Manufacturers Investment Trust" is the designation of the
Trustees under a Declaration of Trust dated September 29, 1988, as amended, and
all persons dealing with the Trust must look solely to the Trust's property for
the enforcement of any claims against the Trust, as neither the Trustees,
officers, agents or shareholders assume any personal liability for obligations
entered into on behalf of the Trust. No series of the Trust shall be liable for
claims against any other series of the Trust.
18
<PAGE> 94
IN WITNESS WHEREOF, the undersigned have executed this Plan as of the date
first above written.
MANUFACTURERS INVESTMENT TRUST
on behalf of the Transferor Portfolios
BY: /s/ JOHN D. DESPREZ III
---------------------------------------------------
Name: John D. DesPrez III
Title: President
MANUFACTURERS INVESTMENT TRUST
on behalf of the Acquiring Portfolios
BY: /s/ JAMES BOYLE
---------------------------------------------------
Name: James Boyle
Title: Treasurer
19
<PAGE> 95
[THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA]
[THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK]
[THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA]
VOTING INSTRUCTIONS FORM
VOTING PURSUANT TO THESE INSTRUCTIONS WILL BE AS SPECIFIED. IF NO SPECIFICATION
IS MADE AS TO AN ITEM, VOTING WILL BE FOR SUCH ITEM. A SEPARATE VOTING
INSTRUCTION FORM IS PROVIDED FOR EACH MANUFACTURERS INVESTMENT TRUST PORTFOLIO
IN WHICH YOUR CONTRACT VALUES WERE INVESTED AS OF FEBRUARY 28, 1999. PLEASE
SIGN, DATE AND RETURN ALL VOTING INSTRUCTION FORMS RECEIVED IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
VOTING INSTRUCTIONS MUST BE RECEIVED BY APRIL [26], 1999 TO BE VOTED FOR
THE MEETING TO BE HELD ON APRIL [27], 1999.
[NAME OF TRANSFEROR PORTFOLIO]
THESE VOTING INSTRUCTIONS ARE SOLICITED BY [THE MANUFACTURERS LIFE
INSURANCE COMPANY OF NORTH AMERICA] [THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NEW YORK] [THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA] IN CONNECTION
WITH A SOLICITATION OF PROXIES BY THE BOARD OF TRUSTEES OF MANUFACTURERS
INVESTMENT TRUST.
The undersigned hereby instructs [The Manufacturers Life Insurance Company of
North America] [The Manufacturers Life Insurance Company of New York] [The
Manufacturers Life Insurance Company of America] to vote the shares of
Manufacturers Investment Trust (the "Trust") attributable to his or her variable
annuity or variable life contract at the Special Meeting of Shareholders to be
held at 73 Tremont Street, Boston, Massachusetts 02108 at 10:00 a.m., April
[27], 1999, and any adjournments thereof, as indicated below.
Date:
PLEASE SIGN IN BOX BELOW
If a contract is held jointly, each contract owner should sign. If only one
signs, his or her signature will be binding. If the contract owner is a
corporation, the President or a Vice President should sign in his or her own
name, indicating title. If the contract owner is a partnership, a partner should
sign in his or her own name, indicating that he or she is a "Partner." If the
contract owner is a trust, the trustee should sign in his or her own name,
indicating that he or she is a "Trustee."
Signature(s), Title(s), if applicable
<PAGE> 96
INDICATE YOUR VOTE BELOW BY FILLING IN THE APPROPRIATE BOXES
IN THIS MANNER [-] USING BLUE OR BLACK INK OR DARK PENCIL.
PLEASE DO NOT USE RED INK.
- --------------------------------------------------------------------------------
THIS VOTING INSTRUCTION, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE CONTRACT HOLDER. IF NO DIRECTION IS MADE, THIS VOTING
INSTRUCTION WILL BE VOTED FOR ALL PROPOSALS. PLEASE REFER TO THE
PROSPECTUS/PROXY STATEMENT FOR A DISCUSSION OF THE PROPOSALS.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Approval of Agreement and Plan of
Reorganization. [ ] [ ] [ ]
2. To transact such other business as may
properly come before the Meeting.
</TABLE>
- --------------------------------------------------------------------------------
PLEASE MARK YOUR VOTING INSTRUCTION FORM, DATE AND SIGN IT ON THE REVERSE SIDE,
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE> 97
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 98
MANUFACTURERS INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
MARCH , 1999
This Statement of Additional Information is available to the shareholders
of the Worldwide Growth Trust and the Capital Growth Bond Trust in connection
with the proposed transfer of all of the assets and liabilities of the Worldwide
Growth Trust and the Capital Growth Bond Trust to, and in exchange for shares
of, the Global Equity Trust and the Investment Quality Bond Trust, respectively.
This Statement of Additional Information includes the Statement of Additional
Information of the Trust dated May 1, 1998.
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus/Proxy Statement dated March , 1999
(the "Prospectus/Proxy Statement"), which may be obtained without charge by
writing to Manufacturers Investment Trust (the "Trust") at 116 Huntington
Avenue, Boston, Massachusetts 02116, or by calling toll free 1-800-344-1029.
i
<PAGE> 99
TABLE OF CONTENTS FOR PART B
<TABLE>
<S> <C>
Statement of Additional Information of the Trust, dated May
1, 1998
Manufacturers Investment Trust -- Capital Growth Bond Trust
and Investment Quality Bond Trust
Pro Forma Combining Statement of Assets and
Liabilities -- December 31, 1998 (Unaudited)
Pro Forma Combining Statement of Operations -- For the
Year Ended December 31, 1998 (Unaudited)
Pro Forma Combining Schedule of Portfolio
Investments -- December 31, 1998 (Unaudited)
Notes to the Pro Forma Financial Statements -- December
31, 1998 (Unaudited)
</TABLE>
<PAGE> 100
- --------------------------------------------------------------------------------
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, 1998 which may be
obtained from Manufacturers Investment Trust, 116 Huntington Avenue, Boston,
Massachusetts, 02116.
The date of this Statement of Additional Information is May 1, 1998.
<PAGE> 101
TABLE OF CONTENTS
INVESTMENT POLICIES ...................................................... 3
Money Market Instruments ............................................ 3
Other Instruments ................................................... 5
HEDGING AND OTHER STRATEGIC TRANSACTIONS ................................. 11
General Characteristics of Options................................... 11
General Characteristics of Futures Contracts and Options on Futures
Contracts ........................................................... 13
Options on Securities Indices and Other Financial Indices ........... 14
Currency Transactions ............................................... 14
Combined Transactions ............................................... 15
Swaps, Caps, Floors and Collars ..................................... 15
Eurodollar Instruments .............................................. 16
Risk Factors ........................................................ 16
Risks of Hedging and Other Strategic Transactions Outside the
United States ....................................................... 17
Use of Segregated and Other Special Accounts ........................ 17
Other Limitations ................................................... 18
INVESTMENT RESTRICTIONS .................................................. 18
Fundamental ......................................................... 18
Nonfundamental ...................................................... 19
PORTFOLIO TURNOVER ....................................................... 21
MANAGEMENT OF THE TRUST .................................................. 22
Compensation of Trustees ............................................ 23
INVESTMENT MANAGEMENT ARRANGEMENTS ....................................... 24
The Advisory Agreement .............................................. 25
The Subadvisory Agreements .......................................... 27
Agreement with Prior Subadviser ..................................... 29
PORTFOLIO BROKERAGE ...................................................... 30
PURCHASE AND REDEMPTION OF SHARES ........................................ 34
DETERMINATION OF NET ASSET VALUE ......................................... 34
PERFORMANCE DATA ......................................................... 36
ORGANIZATION OF THE TRUST ................................................ 37
Shares of the Trust ................................................. 38
Principal Holders of Securities ..................................... 38
ADDITIONAL INFORMATION CONCERNING TAXES .................................. 39
REPORTS TO SHAREHOLDERS .................................................. 40
INDEPENDENT ACCOUNTANTS .................................................. 40
LEGAL COUNSEL ............................................................ 40
ADDITIONAL INFORMATION REGARDING SUBADVISERS ............................. 40
2
<PAGE> 102
INVESTMENT POLICIES
The following discussion supplements "Investment Objectives and Policies"
set forth in the Prospectus of Manufacturers Investment Trust (the "Trust").
MONEY MARKET INSTRUMENTS
The Money Market Trust will be invested 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
and all portfolios may purchase such instruments to invest otherwise idle cash
or for defensive purposes, except that the U.S. Government Securities Trust and
the Equity Index Trust may not invest in the instruments described in 2. below.
1. U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS. 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. 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, the Student Loan Marketing Association, Federal
Home Loan Banks, Federal Intermediate Credit Banks and the Federal National
Mortgage Association. U.S. instrumentality obligations 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, by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others, such
as those issued by the Student Loan Marketing Association, only by the credit of
the agency or instrumentality. There are also separately traded interest
components of securities issued or guaranteed by the United States Treasury. No
assurance can be given that the U.S. Government will provide financial support
to such U.S. Government sponsored agencies or instrumentalities in the future,
since it is not obligated to do so by law. The foregoing types of instruments
are hereafter collectively referred to as "U.S. Government securities."
2. CANADIAN AND PROVINCIAL GOVERNMENT AND CROWN AGENCY 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 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.
Such 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. 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 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 Legislature of any such province and approved by the
Lieutenant Governor in Council of any such province, where necessary. These
securities include treasury bills, notes, bonds and debentures. 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 a 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
3
<PAGE> 103
Canada will support the obligations of provincial Crown agencies which are not
agents of Her Majesty, 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,
a provincial hydroelectric or power commission or authority, a provincial
municipal financing corporation or agency and a 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 are certificates issued against funds deposited in a bank or a savings
and loan. They are for a definite period of time and earn a specified rate of
return. 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 obligation 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 termed
"accepted" when a bank guarantees their payment at maturity.
Trust portfolios 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 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 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, and 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. 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 master demand note will
be valued each day a portfolio's net asset value is determined, which 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 obligations by a portfolio and the simultaneous agreement to
resell the same obligations 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. Such transactions afford an opportunity for a portfolio to earn a
return on cash which is only temporarily available. Repurchase agreements
entered into by the portfolio will be 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.
In selecting sellers with whom the portfolio will enter into repurchase
transactions, the Trustees have adopted procedures that establish certain credit
worthiness, asset and collateralization requirements and limit the
counterparties to repurchase transactions to those financial institutions which
are members of the Federal Reserve System and for a primary government
securities dealer reporting to the Federal Reserve Bank of New York's Market
Reports Division or a broker/dealer which meet certain credit worthiness
criteria or which report 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 Subadviser will,
pursuant to
4
<PAGE> 104
procedures adopted by the Trustees, continuously monitor that the collateral
held with respect to a repurchase transaction equals or exceeds the amount of
the obligations.
Should an issuer of a repurchase agreement fail 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 should be
commenced with respect to the seller, realization upon the underlying obligation
by the Trust might be delayed or limited. Generally, repurchase agreements are
of a short duration, often less than one week but on occasion for longer
periods.
OTHER INSTRUMENTS
The following provides a more detailed explanation of some of the other
instruments in which certain portfolios may invest.
1. MORTGAGE SECURITIES
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 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 have the opposite
effect of increasing yield to maturity. Conversely, if a portfolio purchases
these securities at a discount, faster than expected prepayments will increase,
while slower than expected payments will reduce, yield to maturity.
Adjustable rate mortgage securities, are similar to the 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 the one-year, three-year and five-year constant maturity Treasury rates, the
three-month or six-month Treasury Bill rate, the 11th District Federal Home Loan
Bank Cost of Funds, the National Median Cost of Funds, the one-month,
three-month, six-month or one-year London Interbank Offered Rate ("LIBOR") and
other market rates.
A portfolio will not benefit from increases in interest rates 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. Also, the portfolio's net asset value could vary to the extent that
current yields on adjustable rate mortgage securities are different than market
yields during interim periods between coupon reset dates. During periods of
declining interest rates, income to a portfolio derived from adjustable rate
mortgages which remain in a mortgage pool will 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.
PRIVATELY-ISSUED MORTGAGE SECURITIES. Privately-issued pass through
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
5
<PAGE> 105
guaranteed by an entity having the credit status of GNMA or 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 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, and 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 thereof
to changes in prepayment rates on the underlying mortgages, the market prices of
and yield on these tranches tend to be highly volatile.
CMOs purchased 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 United States Treasury. The interest
components of 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 United States Treasury at the request of depository
financial institutions, which then trade the component parts independently.
STRIPPED MORTGAGE SECURITIES. Stripped mortgage securities are derivative
multiclass 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 portfolio invests. 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 are
generally illiquid and to such extent, together with any other illiquid
investments, will not exceed 15% of a portfolio's net assets.
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 not only to changes in prevailing
interest rates but also the rate of principal payments
6
<PAGE> 106
(including prepayments) on the related underlying mortgage assets, and a rapid
rate of principal payments may have a material adverse effect on the portfolio's
yield to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the portfolio may fail to fully recoup its
initial investment in these securities even if the securities are rated AAA by
S&P.
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 this Prospectus, 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
herein, will contribute to a portfolio's relatively stable net asset value.
In addition to the stripped mortgage securities described above, the
Strategic Bond, High Yield and Value Trusts may invest in similar securities
such as Super POs and Levered IOs which are more volatile than POs, IOs and
IOettes. Risks associated with instruments such as Super POs are similar in
nature to those risks related to investments in POs. Risks connected 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. The Strategic Bond, High Yield and Value Trusts may
invest in inverse floaters which are also derivative mortgage securities.
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). 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 are generally illiquid and
to such extent, together with any other illiquid investments, will not exceed
15% of a portfolio's net assets.
Inverse floaters are structured as a class of security that receives
distributions on a pool of mortgage assets and whose yields move in the opposite
direction of short-term interest rates and at an accelerated rate. Inverse
floaters may be volatile and there is a risk that their market value will vary
from their amortized cost.
2. 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 shorter maturity than mortgage loans. As a result,
investment in these securities should result in greater price stability for the
portfolio's shares. 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 the yields of which reflect
interest rates prevailing at the time. Therefore, a portfolio's ability to
maintain a portfolio which includes high-yielding asset-backed securities will
be adversely affected 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 which,
in the opinion of the investment subadviser, 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 privately-issued mortgage 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
7
<PAGE> 107
generally traded on a national securities exchange, such securities are widely
traded by brokers and dealers, and to such extent will not be considered
illiquid securities for the purposes of the investment restriction under
"Investment Restrictions" below.
TYPES OF CREDIT SUPPORT. Mortgage securities and asset-backed securities
are often backed by a pool of assets representing the obligations of a number of
different parties. To lessen the effect of failure by obligors on underlying
assets to make payments, such securities may contain elements of credit support.
Such credit support falls into two categories: (i) liquidity protection and (ii)
protection against losses resulting from ultimate default by an obligor on the
underlying assets. 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 occurs in a timely fashion.
Protection against losses resulting from ultimate default enhances the
likelihood of ultimate payment of the obligations on at least a portion of the
assets in the pool. Such 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. The Trust will not pay any additional fees for
such credit support, although the existence of credit support may increase the
price of a security.
The ratings of mortgage securities and asset-backed securities for which
third-party credit enhancement provides liquidity protection or protection
against losses from default are generally dependent upon the continued
creditworthiness of the provider of the credit enhancement. The ratings of such
securities could be subject to reduction in the event of deterioration in the
creditworthiness of the credit enhancement provider even in cases where the
delinquency and loss experience on the underlying pool of assets is better than
expected.
Examples of credit support arising out of the structure of the transaction
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 of the
securities and pay any servicing or other fees). The degree of credit support
provided for each issue is generally based on historical information with
respect to the level of credit risk associated with the underlying assets.
Delinquency or loss in excess of that which is anticipated could adversely
affect the return on an investment in such security.
3. 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 tend to be subject to greater
price fluctuations in response to changes in interest rates than are ordinary
interest-paying debt securities with similar maturities. The value of zero
coupon securities appreciates more during periods of declining interest rates
and depreciates more during periods of rising interest rates.
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, such securities are widely traded by brokers and dealers and, to such
extent, will not be considered illiquid for the purposes of the investment
restriction under "Investment Restrictions" below.
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
8
<PAGE> 108
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.
4. HIGH YIELD (HIGH RISK) DOMESTIC CORPORATE DEBT SECURITIES
The market for high yield U.S. corporate debt securities has undergone
significant changes in the past decade. 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-1980's, 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.
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 which involve equity features, such as contingent interest or
participations 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).
5. HIGH YIELD FOREIGN SOVEREIGN DEBT SECURITIES
The Strategic Bond, Investment Quality Bond and High Yield Trusts expect
that a significant portion of their emerging market governmental debt
obligations will consist of "Brady Bonds." In addition, the Worldwide Growth,
International Small Cap, Moderate Asset Allocation and Aggressive Asset
Allocation Trusts may also invest in 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,
contemplates 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 of between 15 and 30 years from the date of issuance
and have traded at a deep discount from their face value. The Trusts may invest
in Brady Bonds of emerging market countries that have been issued to date, as
well as those which may be issued in the future. In addition to Brady Bonds, the
Trusts 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 of such
debt which carry a below-market stated rate of interest (generally known as par
bonds), bonds issued at a discount from face value of such debt (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 stated 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. Brady Bonds issued to date have traded at a deep discount from
their face value. 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
9
<PAGE> 109
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 Trusts may purchase Brady Bonds with no or limited collateralization, and
will be relying 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.
6. HYBRID INSTRUMENTS
Hybrid instruments (a type of potentially high-risk derivative) have been
developed and combine the elements of futures contracts or options with those of
debt, preferred equity or a depository instrument (hereinafter "Hybrid
Instruments"). Generally, a Hybrid Instrument will be 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 prices, changes in prices, or differences between
prices, of securities, currencies, intangibles, goods, articles or commodities
(collectively "Underlying Assets") or by another objective index, economic
factor or other measure, such as interest rates, currency exchange rates,
commodity indices, and securities indices (collectively "Benchmarks"). Thus,
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.
Hybrid Instruments can be 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 transactions
costs associated with buying and currency-hedging the foreign bond positions.
One solution would be 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 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 arrangement, known as a structured
security with an embedded put option, would be 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 the
strategy will be successful and the portfolio could lose money if, for example,
interest rates do not move as anticipated or credit problems develop with the
issuer of the Hybrid.
The risks of investing in Hybrid Instruments reflect a combination of the
risks of investing in securities, options, futures and currencies. Thus, an
investment in a Hybrid Instrument may entail significant risks that are not
associated with a similar investment in a traditional debt instrument that has a
fixed principal amount, is denominated in U.S. dollars or 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, of course, 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. Such risks
generally depend upon factors which are unrelated to the operations or credit
quality of the issuer of the Hybrid Instrument and which may not be readily
foreseen by the purchaser, such as 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. Reference is also made to the
discussion below of futures, options, and forward contracts for a description of
certain risks associated with such investments.
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.
10
<PAGE> 110
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.
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). The latter scenario may result if "leverage" is used to structure the
Hybrid Instrument. Leverage risk occurs when the Hybrid Instrument is structured
so that a given 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.
Hybrid Instruments may also carry liquidity risk since the instruments are
often "customized" to meet the portfolio needs of a particular investor, and
therefore, the number of investors that are willing and able to buy such
instruments in the secondary market may be smaller than that 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 the
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. Hybrid
Instruments also 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 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, particularly the market risk of
such instruments, may in turn cause significant fluctuations in the net asset
value of the portfolio.
HEDGING AND OTHER STRATEGIC TRANSACTIONS
As described in the Prospectus under "Hedging and Other Strategic
Transactions," an individual portfolio may be authorized to use a variety of
investment strategies. These strategies 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 portfolio (such
investment strategies and transactions are referred to herein 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 portfolio.
A detailed discussion of Hedging and Other Strategic Transactions follows
below. No portfolio which is authorized to use any of these investment
strategies will be obligated, however, to pursue any of such 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 the
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 general
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."
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. 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 a security, financial futures contract, index, currency or other
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
11
<PAGE> 111
fixed period prior to expiration. 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" (that
is, 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) at the time the option is exercised. 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: (1) insufficient
trading interest in certain options, (2) restrictions on transactions imposed by
an exchange, (3) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying securities,
including reaching daily price limits, (4) interruption of the normal operations
of the OCC or an exchange, (5) inadequacy of the facilities of an exchange or
the OCC to handle current trading volume or (6) 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.
Over-the-counter ("OTC") options are purchased from or sold to securities
dealers, financial institutions or other parties (collectively referred to as
"Counterparties" and individually referred to as a "Counterparty") 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 Commission, OTC options purchased by a portfolio
and the amount of 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.
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 instruments held by the portfolio or
will increase the portfolio's income. Similarly, the sale of put options can
also provide portfolio gains.
If and to the extent authorized to do so, a portfolio may purchase and
sell call options on securities and on Eurodollar instruments that are traded on
U.S. and foreign securities exchanges and in the OTC markets, and on securities
indices, currencies and futures contracts. All calls sold by a portfolio must be
"covered" (that is, the portfolio must own the securities
12
<PAGE> 112
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.
Even though a portfolio will receive the option premium to help protect it
against loss, a call sold by the portfolio will expose the portfolio during the
term of the option to possible loss of opportunity to realize appreciation in
the market price of the underlying security or instrument and may require the
portfolio to hold a security or instrument that it might otherwise have sold.
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.
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. 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.
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 as a hedge
against anticipated interest rate, currency or market changes, for duration
management and for risk management purposes. Futures contracts are generally
bought and sold on the commodities exchanges on which 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.
A portfolio's use of financial futures contracts and options thereon will
in all cases be consistent with applicable regulatory requirements and in
particular 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. 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. 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.
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 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. The segregation requirements with
respect to futures contracts and options thereon are described below under "Use
of Segregated and Other Special Accounts."
STOCK INDEX FUTURES. A stock index futures contract (an "Index Future") is
a contract to buy an integral 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.
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
13
<PAGE> 113
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.
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. 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. Options on securities indices and other 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 indices
settle by cash settlement; that is, an option on an index gives the holder 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
(except if, in the case of an OTC option, physical delivery is specified). 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, in return for the premium received, 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, market segment,
industry or other composite on which the underlying index is based, rather than
price movements in individual securities, as is the case with respect to options
on securities.
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 currency forward 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, which may be any fixed number of
days from the date of the contract agreed upon by the parties, 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.
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 and position 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 portfolio securities or the receipt of
income from them. Position hedging is entering into a currency transaction with
respect to portfolio securities positions denominated or generally quoted in
that currency. 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.
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. 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 is exposed is difficult to hedge
generally or 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.
14
<PAGE> 114
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
If and 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, instead of a single Hedging
and Other Strategic Transaction, as part of a single or combined strategy when,
in the judgment of the subadviser, it is in the best interests of the portfolio
to do so. A combined transaction will usually contain elements of risk that are
present in each of its component transactions. Although combined transactions
will normally be entered into by a portfolio based on the subadviser's judgment
that the combined strategies will 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 management objective.
SWAPS, CAPS, FLOORS AND COLLARS
Among the Hedging and Other Strategic Transactions into which a portfolio
may be authorized to enter are interest rate, currency and index swaps, the
purchase or sale of related caps, floors and collars and other derivatives. A
portfolio will enter into these transactions primarily to seek to preserve a
return or spread on a particular investment or portion of its portfolio, to
protect against currency fluctuations, as a duration management technique or to
protect against any increase in the price of securities a portfolio anticipates
purchasing at a later date. 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 involve the exchange by a portfolio
with another party of their 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). A currency swap is an agreement to
exchange cash flows on a notional amount based on changes in the values of the
reference indices. The purchase of a cap entitles the purchaser to receive
payments on a notional principal amount from the party selling the cap to the
extent that a specified index exceeds a predetermined interest rate. The
purchase of an interest rate floor entitles the purchaser to receive payments of
interest on a notional 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. The purchase of a floor entitles the purchaser to receive
payments on a notional principal amount from the party selling the floor to the
extent that a specific index falls below a predetermined interest rate or
amount. A collar is a combination of a cap and a floor that preserves a certain
return with a predetermined range of interest rates or values.
A portfolio will usually enter into interest rate swaps on a net basis,
that is, two payment streams are netted out in a cash settlement on the payment
date or dates specified in the instrument, with the portfolio receiving or
paying, as the case may be, only the net amount of the two payments. Inasmuch as
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. 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. 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 more recent
innovations for which standardized documentation has not yet been fully
developed and, for that reason, they are less liquid than swaps.
The liquidity of swap agreements will be determined by a Subadviser based
on various factors, including (1) the frequency of trades and quotations, (2)
the number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features), and (5) 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.
15
<PAGE> 115
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
If and 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 London Interbank
Offered Rate ("LIBOR"), although 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.
RISK FACTORS
Hedging and Other Strategic Transactions have special risks associated
with them, including possible default by the Counterparty to the transaction,
illiquidity and, to the extent the subadviser's view as to certain market
movements is incorrect, the risk that the use of the Hedging and Other Strategic
Transactions could result in losses greater than if they had not been used. Use
of put and call options could result in losses to a portfolio, force the sale or
purchase of portfolio securities at inopportune times or for prices higher than
(in the case of put options) or lower than (in the case of call options) current
market values, or cause a portfolio to hold a security it might otherwise sell.
The use of futures and options transactions entails certain special risks.
In particular, the variable 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. In addition,
futures and options markets could be 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. Although a portfolio's use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time it will tend to
limit any potential gain to a portfolio that might result from an increase in
value of the position. Finally, the daily variation margin requirements for
futures contracts create a greater ongoing potential financial risk than would
purchases of options, in which case the exposure is limited to the cost of the
initial premium.
Currency hedging involves some of the same risks and considerations as
other transactions with similar instruments. Currency transactions can result in
losses to a portfolio if the currency being hedged fluctuates in value to a
degree or in a direction that is not anticipated. Further, the risk exists that
the perceived linkage between various currencies may not be present or may not
be present during the particular time that a portfolio is engaging in proxy
hedging. Currency transactions are also subject to risks different from those of
other portfolio transactions. Because currency control is of great importance to
the issuing governments and influences economic planning and policy, purchases
and sales of currency and related instruments can be adversely affected by
government exchange controls, limitations or restrictions on repatriation of
currency, and manipulations or exchange restrictions imposed by governments.
These forms of governmental actions can result in losses to a portfolio if it is
unable to deliver or receive currency or monies in settlement of obligations and
could also cause hedges it has entered into to be rendered useless, resulting in
full currency exposure as well as incurring transaction costs. Buyers and
sellers of currency futures contracts are subject to the same risks that apply
to the use of futures contracts generally. Further, 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. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.
Losses resulting from the use of Hedging and Other Strategic Transactions
will reduce a portfolio's net asset value, and possibly income, and the losses
can be greater than if Hedging and Other Strategic Transactions had not been
used.
16
<PAGE> 116
RISKS OF HEDGING AND OTHER STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES
When conducted outside the United States, Hedging and Other Strategic
Transactions may not be regulated as rigorously as in the United States, may not
involve a clearing mechanism and related guarantees, and will be subject to the
risk of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of positions taken as
part of non-U.S. Hedging and Other Strategic Transactions also could be
adversely affected by: (1) other complex foreign political, legal and economic
factors, (2) lesser availability of data on which to make trading decisions than
in the United States, (3) delays in a portfolio's ability to act upon economic
events occurring in foreign markets during non-business hours in the United
States, (4) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the United States and (5) lower
trading volume and liquidity.
USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS
Use of many 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 the
securities, instruments or currency required to be delivered, or, subject to any
regulatory restrictions, an amount of cash or liquid high grade debt obligations
at least equal to the current amount of the obligation must be segregated with
the custodian or sub-custodian. 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. A call option on securities written by a
portfolio, for example, 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 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 liquid high grade debt obligations equal to the excess of the index
value over the exercise price on a current basis. A put option on securities
written by a portfolio will require the portfolio to segregate liquid high grade
debt obligations equal to the exercise price. 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 liquid high grade debt obligations
equal to the amount of the portfolio's obligations.
OTC options entered into by a portfolio, including those on securities,
currency, financial instruments or indices, and OCC-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 assets equal to its obligations under
the options. OCC-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 assets 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.
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 to
purchase or provide securities or currencies, or to pay the amount owed at the
expiration of an index-based futures contract. These assets may consist of cash,
cash equivalents, liquid debt or equity securities or other acceptable assets. A
portfolio will accrue the net amount of the excess, if any, of its obligations
relating to swaps over its entitlements with respect to each swap on a daily
basis and will segregate with its custodian, or designated sub-custodian, an
amount of cash or liquid high grade debt obligations having an aggregate value
equal to at least the accrued excess. 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 in related options and Hedging and Other Strategic Transactions. A
portfolio could purchase a put option, for example, if the strike price of that
option is the same or higher than the strike price of a put option sold by the
portfolio. Moreover, instead of segregating assets if it holds a futures
contracts or forward contract, a portfolio could purchase a put option on the
same futures contract or forward contract with a
17
<PAGE> 117
strike price as high or higher than the price of the contract held. Other
Hedging and Other Strategic Transactions may also be offset in combinations. If
the offsetting transaction terminates at the time of or after the primary
transaction, 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, adjusted for the historical volatility
relationship between that portion of the portfolio and the contracts (e.g., the
Beta volatility factor). For purposes of the limitation stated in the
immediately preceding sentence, 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.
The degree to which a portfolio may utilize Hedging and Other Strategic
Transactions may also be affected by certain provisions of the Code.
INVESTMENT RESTRICTIONS
There are two classes of investment restrictions to which the Trust is
subject in implementing the investment policies of the portfolios: fundamental
and 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.
With respect to the submission of a change in an investment restriction 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.
All of the restrictions 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 United States 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.) 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.
18
<PAGE> 118
(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 United States 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 Government Bond Trust, the Emerging Growth 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 Securities Act of 1933 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
(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 (A) in reliance on
Section 12(d)(1)(G) of the 1940 Act, or (B) 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 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 merger, consolidation or reorganization or in connection
with the investment of collateral received in connection with the lending
of securities in the Navigator Securities Lending Trust.* For purposes of
this restriction, privately issued
19
<PAGE> 119
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.
(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% (33 1/3% in the case of
the Small Company Value, Blue Chip Growth, Equity-Income, International
Stock and Science & Technology Trusts, 15% in the case of the
International Small Cap, Growth, Balanced and Worldwide Growth Trusts and
50% in the case of the Value Trust) 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.
(15) Purchase securities of foreign issuers, except that (A) the Aggressive
Asset Allocation Trust may invest up to 35% of its assets in such
securities; (B) the Growth, Balanced and Science & Technology Trusts may
each invest up to 30% of its assets in such securities, (C) the
Equity-Income and Moderate Asset Allocation Trusts may each invest up to
25% of its assets in such securities; (D) the Pilgrim Baxter Growth and
Conservative Asset Allocation Trusts each may invest up to 15% of its
assets in such securities; (E) the Value Trust may invest up to 5% of its
assets in foreign securities; (F) each other portfolio other than the U.S.
Government Securities and Equity Index Trusts may invest up to 20% of its
total assets in such securities (in the case of the Small/Mid Cap, Growth,
Balanced and Value Trusts, ADRs and U.S. dollar-denominated securities are
not included in the applicable percentage limit); and (G) the foregoing
restriction shall not apply to the Small Company Value, International
Small Cap, Worldwide Growth, Global Equity, Pacific Rim Emerging Markets,
International Stock, High Yield, Global Government Bond, International
Growth and Income, Strategic Bond, Capital Growth Bond, Real Estate
Securities and Quantitative Equity 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 Trust. The Navigator 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 Trust, State Street received from the Securities and Exchange
Commission exemption from certain provisions of the 1940 Act in order to permit
its mutual fund clients to invest in the Navigator Trust. State Street received
exemption from Section 12(d)(1) of the 1940 Act and various provisions of
Section 17 of the 1940 Act.
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, inter alia, not
purchase the securities of any issuer if it would cause (i) 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, (ii) more than 5% of
its total assets to be invested in "second tier securities," as defined by Rule,
or (iii) more than the greater of $1 million or 1% of its total assets to be
invested in the second tier securities of that issuer.
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.
20
<PAGE> 120
PORTFOLIO TURNOVER
The annual rate of portfolio turnover will normally differ for each
portfolio and may vary from year to year. 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
(excluding from the computation all securities, including options, with
maturities at the time of acquisition of one year or less). 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. The portfolio turnover rate may
vary from year to year, as well as within a year. The portfolio turnover rates
for the portfolios of the Trust for the years ended December 31, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------------
<S> <C> <C>
Pacific Rim Emerging Markets Trust 63% 48%
Science & Technology Trust 121% N/A
International Small Cap Trust 74% 50%*
Emerging Growth Trust 120% N/A
Pilgrim Baxter Growth Trust 63% N/A
Small/Mid Cap Trust 151% 67%*
International Stock Trust 43% N/A
Worldwide Growth Trust 84% N/A
Global Equity Trust 33% 169%
Small Company Value Trust 81%* N/A
Equity Trust 224% 223%
Growth Trust 179% 215%*
Quantitative Equity Trust 114% 105%
Equity Index Trust 7% 27%*
Blue Chip Growth Trust 37% 159%
Real Estate Securities Trust 148% 231%
Value Trust 43% N/A
International Growth and Income Trust 166% 148%
Growth and Income Trust 34% 49%
Equity-Income Trust 25% 158%
Balanced Trust 219% N/A
Aggressive Asset Allocation Trust 91% 75%
High Yield Trust 75% N/A
Moderate Asset Allocation Trust 78% 78%
Conservative Asset Allocation Trust 86% 73%
Strategic Bond Trust 131% 165%
Global Government Bond Trust 160% 167%
Capital Growth Bond Trust 73% 58%
Investment Quality Bond Trust 47% 68%
U.S. Government Securities Trust 110% 178%
Money Market Trust N/A N/A
Lifestyle Aggressive 1000 Trust 67% N/A
Lifestyle Growth 820 Trust 51% N/A
Lifestyle Balanced 640 Trust 44% N/A
Lifestyle Moderate 460 Trust 39% N/A
Lifestyle Conservative 260 Trust 38% N/A
</TABLE>
*Annualized
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. Each portfolio of
21
<PAGE> 121
the Trust intends to comply with the various requirements of the Code so as to
qualify as a "regulated investment company" thereunder.
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>
================================================================================
POSITION WITH PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE THE TRUST DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------
<S> <C> <C>
Don B. Allen Trustee Senior Lecturer, William E.
136 Knickerbocker Road Simon Graduate School of
Pittsford, NY 14534 Business Administration,
Age: 68 University of Rochester
- --------------------------------------------------------------------------------
John D. DesPrez III President Senior Vice President,
73 Tremont Street Annuities, Manulife Financial,
Boston, MA 02108 September 1996 to date;
Age: 41 President and Director,
Manulife North America,
September 1996 to date;
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
297 Dillingham Ave. Officer, Island Commuter Corp.
Falmouth, MA 02540 (Marine Transport)
Age: 56
- --------------------------------------------------------------------------------
Samuel Hoar Trustee Senior Mediator, Judicial
73 Tremont Street Arbitration Mediation Services
Boston, MA 02108 "JAMS/Endispute," June 1994 to
Age: 70 date; Partner, Goodwin,
Proctor and Hoar, prior to
June 1994
- --------------------------------------------------------------------------------
John D. Richardson* Chairman of Executive Vice President and
200 Bloor Street East Trustees General Manager, U.S.
Toronto, Ontario, Canada Operations, Manulife
M4W 1E5 Financial, January 1995 to
Age: 60 date; Senior Vice President
and General Manager, Canadian
Operations, Manulife
Financial, June 1992 to
January 1995
- --------------------------------------------------------------------------------
F. David Rolwing Trustee Chairman, President and CEO,
17810 Meeting House Road Montgomery Mutual Insurance
Sandy Spring, MD 20860 Company, 1991 to date
Age: 63
- --------------------------------------------------------------------------------
Robert J. Myers Trustee Consulting Actuary
9610 Wire Avenue (self-employed), April 1983 to
Silver Springs, MD 20921 date; Member, Prospective
Age: 85 Payment Assessment Commission,
June 1993 to date
- --------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 122
<TABLE>
<CAPTION>
================================================================================
POSITION WITH PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE THE TRUST DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------
<S> <C> <C>
John G. Vrysen Vice President Vice President, Chief
73 Tremont Street Financial Officer, U.S.
Boston, MA 02108 Operations,Manulife
Age: 42 Financial, January 1996 to
date; Vice President and
Actuary, Manulife North
America, January 1986 to date
- --------------------------------------------------------------------------------
James D. Gallagher Secretary Vice President, Legal
73 Tremont Street Services, Manulife Financial,
Boston, MA 02108 January 1996 to date; Vice
Age: 43 President, Secretary and
General Counsel, Manulife
North America, June 1994 to
date; Vice President and
Associate General Counsel, The
Prudential Insurance Company
of America, 1990 to 1994
- --------------------------------------------------------------------------------
Richard C. Hirtle Vice President Vice President, Strategic Development,
73 Tremont Street and Treasurer Annuities, Manulife Financial, December
Boston, MA 02108 1997 to date; Vice President, Strategic
Age: 42 Development, Manulife North America,
December 1997 to date, Vice President,
Chief Financial Officer, Annuities,
Manulife Financial, January 1996 to
December 1997; Vice President,
Treasurer and Chief Financial
Officer, Manulife North
America, November 1988 to
December 1997
================================================================================
</TABLE>
*Trustee who is an "interested person," as defined in the 1940 Act.
COMPENSATION OF TRUSTEES
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 meeting of the
Trustees that they attend in person and a fee of $200 for each such meeting
conducted by telephone. 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.
<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 $57,500 $62,000
- -------------------------------------------------------------------------------------------
Charles L. Bardelis, Trustee 57,500 62,000
- -------------------------------------------------------------------------------------------
Samuel Hoar, Trustee 57,500 62,000
- -------------------------------------------------------------------------------------------
Robert J. Myers, Trustee 57,500 62,000
- -------------------------------------------------------------------------------------------
John D. Richardson, Trustee -- --
- -------------------------------------------------------------------------------------------
F. David Rolwing, Trustee 57,500 62,000
===========================================================================================
</TABLE>
23
<PAGE> 123
*Compensation received for services as Trustee.
#Trust Complex includes all portfolios of the Trust as well as all portfolios of
North American Funds (from January 1, 1997 to September 30, 1997) of which the
predecessor to Manufacturers Securities Services, LLC was the investment
adviser.
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 Securities and Exchange Commission.
The Trust, formerly a Maryland corporation known as "NASL Series Fund,
Inc." (the "Fund"), was reorganized as a Massachusetts business trust effective
December 31, 1988. 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. 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 portfolios of the Trust, and the remaining five
portfolios -- the Pacific Rim Emerging Markets, Real Estate Securities, Common
Stock, Capital Growth and Equity Index Portfolios -- were transferred to the
Trust and reconstituted as new portfolios of the Trust.
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. 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.
The Advisory Agreement and each Subadvisory Agreement (except those
described below) were approved by the Trustees on September 28, 1995 and by the
shareholders of the portfolios on December 5, 1995. These approvals occurred in
connection with the change of control of MSS as a result of the merger of North
American Life Assurance Company, the ultimate controlling parent of MSS, with
The Manufacturers Life Insurance Company ("Manulife Financial") on January 1,
1996.
On December 15, 1995, the Trustees appointed Fred Alger Management, Inc.
("Alger") pursuant to a new Subadvisory Agreement with Alger ("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. The Alger Subadvisory Agreement and the related
amendment to the Advisory Agreement have been approved by the sole shareholder
of the Small/Mid Cap Trust.
Effective October 1, 1996, Oechsle International Advisors, L.P. ("Oechsle
International"), Wellington Management Company, LLP, Goldman Sachs Asset
Management and Roger Engemann Management Co., Inc., the Subadvisers of the
Global Equity, Money Market, Equity-Income and Blue Chip Growth Trusts,
respectively, resigned their positions as Subadvisers of those portfolios. On
September 27, 1996, the Trustees (i) appointed Morgan Stanley Asset Management
Inc. ("Morgan Stanley") pursuant to a new Subadvisory Agreement with Morgan
Stanley ("Morgan Stanley Subadvisory Agreement") to manage the Global Equity
Trust, (ii) appointed T. Rowe Price Associates, Inc. ("T. Rowe Price") pursuant
to a new Subadvisory Agreement with T. Rowe Price ("T. Rowe Price Subadvisory
Agreement") to manage the Blue Chip Growth and Equity-Income Trusts, and (iii)
appointed Manufacturers Adviser Corporation ("MAC") pursuant to a new
Subadvisory Agreement with MAC ("MAC Subadvisory Agreement") to manage the Money
Market Trust. 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.
24
<PAGE> 124
Also on September 27, 1996, the Trustees (i) appointed Miller Anderson &
Sherrerd, LLP ("MAS") pursuant to a new Subadvisory Agreement with MAS ("MAS
Subadvisory Agreement") to manage the Value and High Yield Trusts, (ii)
appointed Warburg Pincus Asset Management, Inc. ("Warburg") pursuant to an
agreement with Warburg ("Warburg Subadvisory Agreement") to manage the Emerging
Growth Trust, (iii) appointed T. Rowe Price pursuant to the T. Rowe Price
Subadvisory Agreement to also manage the Science & Technology Trust, (iv)
appointed Rowe Price-Fleming International, Inc. ("Price-Fleming") pursuant to a
new Subadvisory Agreement with Price Fleming ("Price-Fleming Subadvisory
Agreement") to manage the International Stock Trust, (v) appointed Pilgrim
Baxter & Associates, Ltd. ("PBA") to manage the Pilgrim Baxter Growth Trust
pursuant to an agreement with PBA ("PBA Subadvisory Agreement"), (vi) appointed
MAC pursuant to the MAC Subadvisory Agreement to also manage the Pacific Rim
Emerging Markets, Real Estate Securities, Quantitative Equity, Capital Growth
Bond and Equity Index Trusts and (vii) appointed the Adviser to manage the
Lifestyle Trusts pursuant to an amendment to the Advisory Agreement. Such
Subadvisory Agreements or amended Subadvisory Agreement 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.
On December 13, 1996, the Trustees appointed MAC pursuant to the amended
MAC Subadvisory Agreement to also manage each of the Lifestyle Trusts. 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 September 26, 1997, the Trustees appointed Rosenberg Institutional
Equity Management ("Rosenberg") to manage the Small Company Value Trust pursuant
to an agreement with Rosenberg. This 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.
On November 17, 1997, the Trustees appointed Salomon Brothers Asset
Management Inc ("SBAM") pursuant to a new subadvisory agreement with SBAM ("SBAM
Subadvisory Agreement") to manage the U.S. Government Securities and Strategic
Bond Trusts. In addition, on that date 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.
On December 11, 1997, the Trustees appointed Founders Asset Management LLC
("Founders") pursuant to a new Subadvisory Agreement with Founders ("Founders
Subadvisory Agreement") to manage the International Small Cap, Growth, Worldwide
Growth and Balanced Trusts. 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. The predecessor to Founders, Founder 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.
THE ADVISORY AGREEMENT
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 (i) office space and all necessary office facilities and
equipment, (ii) necessary executive and other personnel for managing the affairs
of the Trust and for performing certain clerical, accounting and other office
functions, and (iii) all other information and services, other than services of
counsel, independent accountants or investment subadvisory services provided by
any subadviser under a subadvisory agreement, required in connection with the
preparation of all tax returns and
25
<PAGE> 125
documents required to comply with the Federal securities laws. 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 and the
compensation of the Trust's officers and Trustees that are officers, directors
or employees of the Adviser or its affiliates. In addition, 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 an annual rate of .75% in the case of the International Small
Cap, Global Equity, Global Government Bond, Worldwide Growth, International
Growth and Income, International Stock and Pacific Rim Emerging Markets Trusts,
.50% in the case of all other portfolios except for the Equity Index Trust, or
.15% in the case of the Equity Index Trust of the average annual net assets of
such portfolio. The expense limitation will continue in effect from year to year
unless otherwise terminated at any year end by the Adviser on 30 days' notice to
the Trust. In addition, in the case of the Lifestyle Trusts, the Adviser has
voluntarily agreed to pay the expenses of the Lifestyle Trusts (other than the
expenses of the Underlying Trusts). This voluntary expense reimbursement may be
terminated at any time.
In addition to providing the services and expense limitation described
above, the Adviser selects, contracts with and compensates subadvisers to manage
the investment and reinvestment of the assets of the Trust portfolios, except
for the Lifestyle Trusts. 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.
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 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 its net assets at the close of
business on the previous business 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, 1997, 1996 and 1995 the aggregate
investment advisory fee paid by the Trust under the fee schedule then in effect,
absent the expense limitation provision, was $70,977,648, $46,515,018 and
$33,808,255 allocated among the portfolios as follows:
<TABLE>
<CAPTION>
PORTFOLIO 1997 1996 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets Trust .. $ 229,135 N/A N/A
Science & Technology Trust .......... 369,324 N/A N/A
International Small Cap Trust ....... 1,347,708 $ 492,152(1) N/A
Emerging Growth Trust ............... 2,331,739 N/A N/A
Pilgrim Baxter Growth Trust ......... 502,149 N/A N/A
Small/Mid Cap Trust ................. 2,145,327 756,997(1) N/A
International Stock Trust ........... 860,656 N/A N/A
Worldwide Growth Trust .............. 124,952 N/A N/A
Global Equity Trust ................. 7,256,254 6,234,116 $ 5,513,312
Small Company Value Trust ........... 134,688(2) N/A N/A
Equity Trust ........................ 10,703,211 8,774,975 5,643,363
Growth Trust ........................ 935,029 119,620(3) N/A
Quantitative Equity Trust ........... 913,996 N/A N/A
Equity Index Trust .................. 42,212 N/A N/A
Blue Chip Growth Trust .............. 5,156,008 3,317,165 2,115,434
Real Estate Securities Trust ........ 831,191 N/A N/A
Value Trust ......................... 523,446 N/A N/A
International Growth and Income Trust 1,965,899 1,327,151 450,200(4)
Growth and Income Trust ............. 10,037,637 6,298,799 3,922,671
Equity-Income Trust ................. 6,141,959 3,939,929 2,459,247
Balanced Trust ...................... 1,261,070 N/A N/A
Aggressive Asset Allocation Trust ... 1,766,662 1,656,217 1,463,421
</TABLE>
26
<PAGE> 126
<TABLE>
<CAPTION>
PORTFOLIO 1997 1996 1995
================================================================================
<S> <C> <C> <C>
High Yield Trust .................. 314,373 N/A N/A
Moderate Asset Allocation Trust ... 4,584,121 4,764,110 4,667,061
Conservative Asset Allocation Trust 1,521,047 1,643,494 1,639,903
Strategic Bond Trust .............. 2,240,478 1,298,996 767,448
Global Government Bond Trust ...... 1,837,451 1,934,856 1,757,909
Capital Growth Bond Trust ......... 315,701 N/A N/A
Investment Quality Bond Trust ..... $1,047,782 $ 965,766 $ 798,045
U.S. Government Securities Trust .. 1,401,568 1,401,130 1,291,668
Money Market Trust ................ 2,134,875 1,589,545 1,318,573
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.
(4) For the period January 9, 1995 (commencement of operations) to December 31,
1995.
For the years ended December 31, 1996 and 1995, the aggregate investment
advisory fee paid by the portfolios below to MAC under the fee schedule then in
effect was as follows:
<TABLE>
<CAPTION>
PORTFOLIO 1996 1995
- --------------------------------------------------------------
<S> <C> <C>
Pacific Rim Emerging Markets Trust $161,272 $ 95,770
Quantitative Equity Trust..... 380,315 232,477
Equity Index Trust............ 11,227 N/A
Real Estate Securities Trust.. 292,384 232,449
Capital Growth Bond Trust..... 215,033 198,316
</TABLE>
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, Real Estate
Securities and Capital Growth Bond Portfolios. 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.
THE SUBADVISORY AGREEMENTS
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.
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
27
<PAGE> 127
specified amounts, 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.
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. SBAM pays 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. The
Trust will not incur any expenses in connection with SBAM Limited's services.
SBAM Limited is a wholly owned subsidiary of Salomon Brothers Europe Limited
("SBEL"). Salomon (International) Finance A G ("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 Inc.
For the years ended December 31, 1997, 1996 and 1995, the Adviser paid
aggregate subadvisory fees of $26,369,969, $15,882,911 and $12,007,940,
respectively, allocated among the portfolios as follows:
<TABLE>
<CAPTION>
PORTFOLIO 1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets Trust $ 107,828 N/A N/A
Science & Technology Trust ....... 201,450 N/A N/A
International Small Cap Trust .... 760,136 $ 284,403(1) N/A
Emerging Growth Trust ............ 1,221,387 N/A N/A
Pilgrim Baxter Growth Trust ...... 286,942 N/A N/A
Small/Mid Cap Trust .............. 1,078,894 385,464(1) N/A
International Stock Trust ........ 487,128 N/A N/A
Worldwide Growth Trust ........... 74,971 N/A N/A
Global Equity Trust .............. 3,045,314 2,677,373 $2,415,918
Small Company Value Trust ........ 76,634(2) N/A N/A
Equity Trust ..................... 3,354,190 2,256,365 1,628,673
Growth Trust ..................... 495,015 63,328(3) N/A
Quantitative Equity Trust ........ 318,784 N/A N/A
Equity-Index Trust ............... 16,885 N/A N/A
Blue Chip Growth Trust ........... 2,298,963 1,452,025 978,146
Real Estate Securities Trust ..... 292,169 N/A N/A
Value Trust ...................... 233,286 N/A N/A
International Growth and Income
Trust ............................ 951,446 653,719 232,320(4)
Growth and Income Trust .......... 2,507,394 1,761,319 1,267,236
Equity-Income Trust .............. 1,785,490 1,235,667 864,812
Balanced Trust ................... 537,310 N/A N/A
Aggressive Asset Allocation Trust 831,665 622 181 560,019
High Yield Trust ................. 138,181 N/A N/A
Moderate Asset Allocation Trust .. 1,722,433 1,454,194 1,433,417
Conservative Asset Allocation
Trust ............................ 631,791 618,391 616,971
Strategic Bond Trust ............. 847,735 + 527,906 ++ 322,077+++
Global Government Bond Trust ..... 801,544 845,379 771,716
Capital Growth Bond Trust ........ 109,281 N/A N/A
Investment Quality Bond Trust .... 362,694 334,303 276,246
U.S. Government Securities Trust . 473,424 473,786 442,603
Money Market Trust ............... 319,605 237,108 197,786
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
</TABLE>
28
<PAGE> 128
<TABLE>
<CAPTION>
PORTFOLIO 1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
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.
(4) For the period January 9, 1995 (commencement of operations) to December 31,
1995.
+ 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.
+++ Of this amount, $63,231 was paid by SBAM to SBAM Limited under the
Subadvisory Consulting Agreement.
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 which the Adviser or Subadvisers have agreed to pay
pursuant to the Advisory or Subadvisory Agreements. Expenses borne by the Trust
include charges and expenses of the custodian, independent accountants and
transfer, bookkeeping and dividend disbursing agent appointed by the Trust;
brokers' commissions and issue and transfer taxes on securities transactions to
which the Trust is a party; taxes and fees payable by the Trust; and 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.
The Advisory Agreement and each Subadvisory Agreement will 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 only so long as such continuance is specifically approved at
least annually either by the Trustees 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 the majority of the Trustees
who are not interested persons of any party to the Agreements, cast in person at
a meeting called for the purpose of voting on such approval. The 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 the series of shares of beneficial interest of that portfolio vote
to approve such continuance, notwithstanding that such continuance may not have
been approved by a majority of the outstanding voting securities of (i) any
other portfolio affected by the Agreement or (ii) all of the portfolios of the
Trust.
If the holders of any series of shares of beneficial interest of any
portfolio fail to approve any continuance of the Advisory Agreement or the
Subadvisory Agreement, the Adviser or Subadviser (including SBAM Limited) may
continue to act as investment adviser or subadviser with respect to such
portfolio pending the required approval of the continuance of such Agreement, of
a new contract with the Adviser or Subadviser or different adviser or
subadviser, or other definitive action. In the case of the Adviser, the
compensation received in respect of such a 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 Advisory Agreement in respect of such portfolio, whichever is less. In the
case of the Subadvisers, the compensation received in respect of such a
portfolio during such period will be no more than that permitted by Rule 15a-4
under the 1940 Act.
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 to the Trust in the case of the
Subadvisory Agreements, (i) by the Trustees of the Trust; (ii) by the vote of a
majority of the outstanding voting securities of the Trust, or with respect to
any portfolio, by the vote of a majority of the outstanding voting securities of
the series of shares of beneficial interest of such portfolio; and (iii) by the
Adviser, and in the case of the Subadvisory Agreements, by the respective
Subadvisers. The Agreements will automatically terminate in the event of their
assignment.
The Advisory Agreement may be amended by the Trust and the Adviser and the
Subadvisory Agreements by the Adviser and respective Subadvisers provided such
amendment is specifically 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) cast in
person at a
29
<PAGE> 129
meeting called for the purpose of voting on such approval. 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, notwithstanding that the amendment may not have
been approved by a majority of the outstanding voting securities of (i) any
other portfolio affected by the amendment or (ii) all the portfolios of the
Trust. As noted under "Subadvisory Arrangements" in the Prospectus, the Trust
has received an order from the Securities and Exchange Commission permitting the
Adviser to appoint a subadviser (other than an Affiliated Subadviser) or change
a subadvisory fee (other than for an Affiliated Subadviser) pursuant to an
agreement that is not approved by shareholders.
AGREEMENT WITH PRIOR SUBADVISER
The Conservative, Moderate and Aggressive Asset Allocation Trusts for
which Sass Investors acted as Subadviser up until December 13, 1991, and the
Bond Trust (now Investment Quality Bond Trust) for which Sass Investors acted as
Subadviser up until April 23, 1991, acquired certain taxable revenue bonds, the
value of which has declined substantially due to the default of the bonds caused
by the Conservatorship of Executive Life Insurance Company. The Trust retained
legal counsel to advise it as to any potential claims it may have arising out of
its purchase of such bonds. On the basis of the advice received and, to avoid
any prejudice resulting from the passage of time, the Trust has sought to obtain
agreements from certain persons which would toll the running of statutes of
limitations that might in time bar the assertion of any claims related to its
purchase of the bonds. In February 1991 the Trust entered into an agreement with
Sass Investors, its principals and affiliated companies concerning any claims
the Trust may have arising out of Sass Investors' performance under the Sass
Subadvisory Agreement in connection with the purchase or sale of the
aforementioned bonds. The parties agreed that the running of time under any
statute of limitations or by way of laches with respect to any claims or
defenses arising out of such purchase or sale would be tolled until thirty days
after termination of the agreement by either party giving written notice to the
other.
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, their intention being to place orders for the purchase and
sale of securities with the primary objective of obtaining the most favorable
overall results for the Trust. The cost of securities transactions for each
portfolio will consist primarily of brokerage commissions or dealer or
underwriter spreads. Bonds 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.
In selecting brokers or dealers through whom to effect transactions, the
Subadvisers will give consideration to a number of factors, including price,
dealer spread or commission, if any, the reliability, integrity and financial
condition of the broker-dealer, size of the transaction and difficulty of
execution. 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 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. In selecting brokers and dealers, the
Subadvisers will also give consideration to the value and quality of any
research, statistical, quotation or valuation services provided by the broker or
dealer. In placing a purchase or sale order, a Subadviser may use a broker whose
commission in effecting the transaction is higher than that of some other broker
if the Subadviser determines in good faith that the amount of the higher
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker, viewed in terms of either the particular
transaction or the Subadviser's overall responsibilities with respect to the
Trust and any other accounts managed by the Subadviser. 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
issuers, industries, securities, economic factors and trends and portfolio
strategy. 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.
30
<PAGE> 130
To the extent research services are used by the Subadvisers in rendering
investment advice to the Trust, such services would tend to reduce the
Subadvisers' expenses. However, the Subadvisers do not believe that an exact
dollar value can be assigned to these services. Research services received by
the Subadvisers from brokers or dealers executing transactions for the Trust
will be available also for the benefit of other portfolios managed by the
Subadvisers.
The Subadvisers manage a number of accounts other than the Trust's
portfolios. Although investment recommendations or determinations for the
Trust's portfolios will be made by the Subadvisers independently from the
investment recommendations and determinations made by them for any other
account, investments deemed appropriate for the Trust's portfolios by the
Subadvisers may also be deemed appropriate by them for other accounts, so that
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 which 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.
For the years ended December 31, 1997, 1996 and 1995, the Trust paid
brokerage commissions in connection with portfolio transactions of $14,209.750,
$13,006,480 and $6,609,957, respectively, allocated among the portfolios as
follows:
<TABLE>
<CAPTION>
PORTFOLIO 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets
Trust ............................. $ 148,339 N/A N/A
Science & Technology Trust ........ 71,708 N/A N/A
International Small Cap Trust ..... 420,472 $349,869(1) N/A
Emerging Growth Trust ............. 490,019 N/A N/A
Pilgrim Baxter Growth Trust ....... 73,688 N/A N/A
Small/Mid Cap Trust ............... 645,611 237,777(1) N/A
International Stock Trust ......... 424,132 N/A N/A
Worldwide Growth Trust ............ 73,362 N/A N/A
Global Equity Trust ............... 1,147,235 2,398,805 $2,684,254
Small Company Value Trust ......... 111,6732 N/A N/A
Equity Trust ...................... 5,018,862 4,407,265 861,497
Growth Trust ...................... 352,035 110,510(3) N/A
Quantitative Equity Trust ......... 307,370 N/A N/A
Equity-Index Trust ................ 266 N/A N/A
Blue Chip Growth Trust ............ 449,346 966,411 388,904
Real Estate Securities Trust ...... 736,968 N/A N/A
Value Trust ....................... 210,067 N/A N/A
International Growth and Income
Trust ............................. 700,640 871,203 374,962(4)
Growth and Income Trust ........... 1,129,311 1,084,722 697,618
Equity-Income Trust ............... 472,154 2,021,601 606,918
Balanced Trust .................... 588,464 N/A N/A
Aggressive Asset Allocation Trust . 214,279 177,940 286,517
High Yield Trust .................. N/A N/A N/A
Moderate Asset Allocation Trust ... 366,800 320,288 604,766
Conservative Asset Allocation Trust 56,949 60,089 104,521
Strategic Bond Trust .............. N/A N/A N/A
Global Government Bond Trust ...... N/A N/A N/A
Capital Growth Bond Trust ......... N/A N/A N/A
Investment Quality Bond Trust ..... N/A N/A N/A
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
</TABLE>
31
<PAGE> 131
<TABLE>
<CAPTION>
PORTFOLIO 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
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.
(4) For the period January 9, 1995 (commencement of operations)
to December 31, 1995.
Goldman Sachs & Co., prior to October 1, 1996, was an affiliated broker of
the Equity-Income Trust due to the position of Goldman Sachs Asset Management as
subadviser to this Trust portfolio. Salomon Brothers Inc. is an affiliated
broker of the U.S. Government Securities and Strategic Bond Trusts due to the
position of SBAM as subadviser to these Trust portfolios. J.P. Morgan Securities
Inc. and J.P. Morgan Securities Ltd. are affiliated brokers of the International
Growth and Income Trust due to the position of J.P. Morgan Investment Management
Inc. as subadviser to this Trust portfolio. Dresdner Bank is an affiliated
broker of the Global Equity (prior to October 1, 1996) and Global Government
Bond Trusts due to the position of Oechsle International as subadviser to these
Trust portfolios. Fidelity Capital Markets is an affiliated broker of the Equity
and Asset Allocation Trusts due to the position of Fidelity Management Trust
Company as subadviser to these Trust portfolios. Morgan Stanley & Co.
Incorporated and Morgan Stanley International are affiliated brokers of the
Global Equity Trust (since October 1, 1996) due to the position of Morgan
Stanley as subadviser to this Trust portfolio. Fred Alger & Company is an
affiliated broker of the Small/Mid Cap Trust due to the position of Fred Alger
Management, Inc. as the subadviser to the Small/Mid Cap Trust.
For the period January 1, 1996 to September 30, 1996 and for the year
ended December 31, 1995, brokerage commissions were paid to GOLDMAN, SACHS & CO.
by the Equity-Income portfolio as follows:
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31, 1996
% 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%
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
% of
aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
- -------------------------------------------------------------------------------------
Equity-Income Trust........... $63,836 10.52% 0.19%
</TABLE>
For the years ended December 31, 1997, 1996 and 1995, no brokerage
commissions were paid to SALOMON BROTHERS INC. by either the U.S. Government
Securities or Strategic Bond portfolios.
For the years ended December 31, 1997, 1996 and 1995, brokerage
commissions were paid to J.P. MORGAN SECURITIES by the International Growth and
Income portfolio as follows:
32
<PAGE> 132
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
% of
aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Growth and
Income Trust............... $516 0.07% 0.34%
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
% of
aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Growth and
Income Trust............... N/A N/A N/A
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
% of
aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Growth and
Income Trust............... $554* 0.15% 0.41%
</TABLE>
For the years ended December 31, 1997, 1996 and 1995, no brokerage
commissions were paid to DRESDNER BANK by either the Global Equity (prior to
October 1, 1996) or the Global Government Bond portfolios.
For the years ended December 31, 1997, 1996 and 1995, brokerage
commissions were paid to FIDELITY CAPITAL MARKETS by the Equity and Asset
Allocation portfolios as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
% 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 .......................$13,286 0.26% 0.08%
Aggressive Asset Allocation Trust .. N/A N/A N/A
Moderate Asset Allocation Trust .... N/A N/A N/A
Conservative Asset Allocation Trust N/A N/A N/A
</TABLE>
33
<PAGE> 133
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
% 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
Aggressive Asset Allocation Trust .. N/A N/A N/A
Moderate Asset Allocation Trust .... N/A N/A N/A
Conservative Asset Allocation Trust N/A N/A N/A
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
% 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
Aggressive Asset Allocation Trust . $3,240 1.13% 0.08%
Moderate Asset Allocation Trust ... 8,815 1.46% 0.07%
Conservative Asset Allocation Trust 1,920 1.84% 0.05%
</TABLE>
For the years ended December 31, 1997 and 1996, brokerage commissions were
paid to MORGAN STANLEY by the Global Equity portfolio as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
% 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........... $93,584 8.16% 0.28%
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
% 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%
</TABLE>
For the year ended December 31, 1997 and the period March 4, 1996
(commencement of operations of the Small/Mid Cap Trust) to December 31, 1996,
brokerage commissions were paid to FRED ALGER & COMPANY as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
% of
aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Small/Mid Cap Trust........... $637,395 98.73% 0.19%
</TABLE>
34
<PAGE> 134
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
% of
aggregate
% of Portfolio's Brokerage $ amount of
Commissions Represented transactions
Portfolio Commissions for the period for the period
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Small/Mid Cap Trust........... $221,408 93.12% 0.02%
</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 (a) trading on the
New York Stock Exchange is restricted, as determined by the Securities and
Exchange Commission, or such Exchange is closed for other than weekends and
holidays; (b) an emergency exists, as determined by the Commission, 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 (c) the Commission by order so permits
for the protection of security holders of the Trust.
DETERMINATION OF NET ASSET VALUE
The following supplements the discussion of the valuation of portfolio
assets set forth in the Prospectus under the caption "Purchase and Redemption of
Shares."
Securities held by the portfolios, except for debt instruments with
remaining maturities of 60 days or less, all debt instruments held by the Money
Market Trust and shares of the Underlying Portfolios held by the Lifestyle
Trusts, 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 or under the direction of the Trustees. 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."
Generally, trading in non-U.S. securities, as well as U.S. Government
securities and money market instruments, is substantially completed each day at
various times prior to the close of the regularly scheduled 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. For instance, if a fund with portfolio
securities primarily listed on foreign exchanges which trade on Saturdays or
other customary U.S. national business holidays, does not price on these days,
the portfolio will trade and the net asset value of the fund's redeemable
securities may be significantly affected on days when the investor has no access
to the fund. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value as
determined in good faith by the Subadvisers under procedures established and
regularly reviewed by the Trustees.
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); thereafter, 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.
35
<PAGE> 135
The Money Market Trust uses the amortized cost valuation method in
reliance upon Rule 2a-7 under the 1940 Act. As required by the Rule, the Money
Market Trust will maintain a dollar weighted average maturity of 90 days or
less. In addition, the Money Market Trust is permitted to purchase only
securities that the Trustees determine to present minimal credit risks and which
are at the time of purchase "eligible securities," as defined by the Rule.
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 thirteen
months 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. Such procedures include a
direction to the Adviser to establish procedures which 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. Such procedures include
a directive to the Adviser that requires that on determining 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,
although the actual calculations 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 for which market quotations
are not readily available for purposes of enabling the Money Market Trust's
Custodian to calculate net asset value. The Adviser, with the Subadviser's
assistance, periodically (but no less frequently than annually) shall prepare a
written report to the Trustees verifying the accuracy of the pricing system or
estimate. A non-negotiable security which is 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. In the event that the
deviation from the amortized cost exceeds .50 of 1% or more or a difference of
$.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 such
action as 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: (a) redeeming shares in kind; (b)
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten the average portfolio maturity of the Money Market Trust;
(c) withholding or reducing dividends;(d) utilizing a net asset value per share
based on available market quotations; (e)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.
PERFORMANCE DATA
Each of the portfolios may quote total return figures in its advertising
and sales materials. Such figures will always include the average annual total
return for recent one year and, when applicable, five and ten year periods and
where less than five or ten years, the period since the portfolio, including its
predecessor prior to the reorganization of the Fund on December 31, 1988, became
available for investment. In the case of the Pacific Rim Emerging Markets, Real
Estate Securities, Quantitative Equity, Capital Growth Bond and Equity Index
Trusts, such quotations will be for periods that include the performance of the
predecessor portfolios of Manulife Series Fund, Inc. Where the period since
inception is less than one year, the total return quoted will be the aggregate
return for the period. 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.
36
<PAGE> 136
<TABLE>
<CAPTION>
TOTAL ANNUALIZED RETURN
- -------------------------------------------------------------------------------------------------------------
Trust One Year Ended Five Year Ended Since Inception or 10 Years, Date first
12/31/97 12/31/97 whichever is shorter through Available
12/31/97
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging
Markets# -34.12% N/A -8.01% 10/04/94
Science and Technology N/A N/A 10.71% 01/01/97
International Small Cap 0.79% N/A 5.40% 03/04/96
Emerging Growth N/A N/A 18.23% 01/01/97
Pilgrim Baxter Growth N/A N/A 0.00% 01/01/97
Small/Mid Cap 15.26% N/A 12.17% 03/04/96
International Stock N/A N/A 1.38% 01/01/97
Worldwide Growth N/A N/A 13.29% 01/01/97
Global Equity 20.80% 14.64% 9.77% 03/18/88
Small Company Value Trust N/A N/A -4.48% 10/01/97
Equity 19.25% 18.80% 15.14%** 06/18/85
Growth 25.35% N/A 25.03% 07/15/96
Quantitative Equity # 29.83% 16.54% 15.12%** 04/30/87
Equity Index # 33.53% N/A 25.56% 02/14/96
Blue Chip Growth 26.94% 13.12% 12.81% 12/11/92
Real Estate Securities # 18.41% 15.97% 15.88%** 04/30/87
Value N/A N/A 22.14% 01/01/97
International Growth and
Income -0.08% N/A 6.43% 01/09/95
Growth and Income 32.83% 18.90% 17.27% 04/23/91
Equity-Income 29.71% N/A 17.79% 02/19/93
Balanced N/A N/A 17.79% 01/01/97
Aggressive. Asset
Allocation 19.09% 12.60% 9.87% 08/03/89
High Yield N/A N/A 12.68% 01/01/97
Moderate Asset Allocation 15.87% 10.74% 8.95% 08/03/89
Conservative Asset
Allocation 11.44% 8.55% 7.72% 08/03/89
Strategic Bond 10.98% N/A 9.46% 02/19/93
Global Government Bond 2.95% 9.95% 8.88% 03/18/88
Capital Growth Bond # 8.72% 7.19% 8.53%** 06/26/84
Investment Quality Bond 9.75% 7.13% 5.75%** 06/18/85
</TABLE>
37
<PAGE> 137
<TABLE>
<CAPTION>
TOTAL ANNUALIZED RETURN
- -------------------------------------------------------------------------------------------------------------
Trust One Year Ended Five Year Ended Since Inception or 10 Years, Date first
12/31/97 12/31/97 whichever is shorter through Available
12/31/97
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Securities 8.47% 6.62% 7.24% 03/18/88
Money Market# 5.15% 4.47% 5.45%** 06/18/85
Lifestyle Aggressive 1000 N/A N/A 10.89% 01/07/97
Lifestyle Growth 820 N/A N/A 13.84% 01/07/97
Lifestyle Balanced 640 N/A N/A 14.11% 01/07/97
Lifestyle Moderate 460 N/A N/A 13.70% 01/07/97
Lifestyle Conservative 280 N/A N/A 12.15% 01/07/97
</TABLE>
* Aggregate total return from October 1, 1997 (inception date) to December 31,
1997.
** 10 Years
# Performance presented for these Trust portfolios is based upon the performance
of their respective predecessor Manulife Series Fund, Inc. portfolios for
periods prior to the consummation of the reorganization effective December 31,
1996. Performance presented for each of these Trust portfolios is based on the
historical expenses and performance of its predecessor Manulife Series Fund,
Inc. portfolio and, therefore, does not reflect for periods prior to December
31, 1996, the current Trust expenses that an investor would incur as a holder of
shares of such Trust portfolio.
The Trust may also from time to time include in advertising and sales
literature the following: 1) information regarding its portfolio subadvisers,
such as information regarding a subadvisers specific investment expertise,
client base, assets under management or other relevant information; 2)
quotations about the Trust, its portfolios or its investment subadvisers that
appear in various publications and media; and 3) 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.
ORGANIZATION OF THE TRUST
SHARES OF THE TRUST
The Declaration of Trust authorizes the Trustees of the Trust to issue an
unlimited number of full and fractional shares of beneficial interest having a
par value of $.01 per share, to divide such shares into an unlimited number of
series of shares and to designate the relative rights and preferences thereof,
all without shareholder approval. The Trust currently has thirty-six series of
shares as described in the Prospectus. 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. Holders of shares of any portfolio are entitled to redeem
their shares as set forth under "Purchase and Redemption of Shares." The Trust
reserves the right to later issue additional series of shares or separate
classes of existing series of shares without the consent of outstanding
shareholders.
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 which 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.
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, except that 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
38
<PAGE> 138
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.
Under Massachusetts law, shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust. 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 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. The Declaration of Trust also 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 a particular 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.
PRINCIPAL HOLDERS OF SECURITIES
The Trust currently has four shareholders: Manulife North America, The
Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of America ("Manufacturers America") and The Manufacturers
Life Insurance Company (U.S.A.). Each shareholder holds Trust shares
attributable to variable and variable life contracts in their separate accounts.
Each shareholder will solicit voting instructions from such variable and
variable life contract owners and vote all shares held in proportion to the
instructions received.
Reflecting 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).
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.
The Trust believes that each portfolio will qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (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.
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
39
<PAGE> 139
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 intends to make sufficient distributions
to avoid imposition of both the corporate level tax and the excise tax.
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.
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.
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.
40
<PAGE> 140
REPORTS TO SHAREHOLDERS
The financial statements of the Trust at December 31, 1997 are
incorporated herein by reference from its annual report to shareholders filed
with the Securities and Exchange Commission pursuant to Section 30(b) of the
1940 Act and Rule 30b2-1.
INDEPENDENT ACCOUNTANTS
The financial statements of the Trust at December 31, 1997, including the
related Financial Highlights which appear in the Prospectus, have been audited
by Coopers & Lybrand L.L.P., 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. Coopers & Lybrand has offices at One Post Office Square, Boston, MA
02109.
LEGAL COUNSEL
Messrs. Jones & Blouch L.L.P., 1025 Thomas Jefferson Street, N.W.,
Washington, DC 20007, have passed upon certain legal matters relating to the
Federal securities laws.
ADDITIONAL INFORMATION REGARDING SUBADVISERS
ROSENBERG INSTITUTIONAL EQUITY MANAGEMENT
INVESTMENT PHILOSOPHY. Rosenberg believes that stock prices do not
perfectly reflect the "fundamental value" of companies but rather the market's
assessment of how well the company is positioned to generate future earnings
and/or future cash flow. Rosenberg identifies and purchases those stocks which
are undervalued (i.e., stocks which are currently cheaper than similar stocks
with the same characteristics.) Rosenberg believes that the market will over
time recognize the "better value" and that the mispricing will be corrected as
the stocks in the Small Company Value Trust are purchased by other investors.
In determining whether or not a stock is attractive, Rosenberg considers
the company's current estimated fundamental value as determined by Rosenberg's
proprietary appraisal model, the company's future earnings, and investor
sentiment toward the stock. The Small Company Value Trust is composed of
undervalued stocks from every sector represented in the benchmark (currently,
the Russell 2000 Index).
STOCK SELECTION. Fundamental valuation of stocks is key to Rosenberg's
investment process, and the heart of the valuation process lies in Rosenberg's
proprietary appraisal model.
An important feature of the appraisal model is the classification of
companies into one or more of 166 groups of "similar" businesses. Each company
is broken down into its individual business segments, and each segment is
compared with similar business operations of other companies. Rosenberg
appraises the company's assets, operating earnings and sales within each
business segment, accepting the market's valuation of that category of business
as fair. Rosenberg then integrates the segment appraisals into balance sheet,
income statement, and sales valuation models for the total company, and
simultaneously adjusts the segment appraisals to include appraisals for
variables which are declared only for the total company, such as taxes, capital
structure, and pension funding.
The difference between Rosenberg's appraisal and the market price is
believed to represent an opportunity for profit. For each stock, Rosenberg
develops "appraisal alphas" (i.e., the expected rate of extraordinary return) by
adjusting for the rate at which the market has corrected for such valuations in
the past.
A second sphere of analysis is captured by Rosenberg's proprietary
earnings change model, which analyzes more than 20 variables to predict
individual company earnings over a one year horizon. The value of the projected
earnings change is converted to an "earnings change alpha" by multiplying the
projected change by the market's historical response to changes of that
magnitude.
41
<PAGE> 141
Finally, Rosenberg's proprietary investor sentiment model quantifies
investor sentiment about features of stocks which influence price. This model
measures company quality and also captures market enthusiasm towards individual
stocks by looking at broker recommendations and analyst estimates. Investor
sentiment alphas are developed by multiplying the model's sentiment scores by
the market's historical response to such scores.
Each company's earnings change alpha and investor sentiment alpha is added
to its appraisal alpha to arrive at a total company alpha. Stocks with large
positive total company alphas are candidates for purchase. Stocks held in a
portfolio with total company alphas that are only slightly positive, zero or
negative are candidates for sale.
Before trading, Rosenberg systematically analyzes the short-term price
behavior of individual stocks to determine the timing of trades. Rosenberg
develops a "trading alpha" for each stock (i.e., the expected short-term
extraordinary return) which is designed to enable the Small Company Value Trust
to purchase stocks from supply and to sell stocks into demand, greatly reducing
trading costs.
OPTIMIZATION. Rosenberg's portfolio optimization system seeks to optimize
the trade-off between risk and reward relative to the benchmark. It exploits the
information developed by Rosenberg's stock selection models to maximize return
relative to the benchmark. The optimizer recommends positions in companies which
in aggregate constitute the most efficient portfolio. The optimizer
simultaneously considers total company alphas, trading alphas, and risk and
quantifies the expected "net benefit" to the portfolio of each recommended
transaction. A stock is considered for sale when a higher alpha stock with
complementary risk characteristics has been identified. In the U.S. markets,
portfolios are reoptimized continuously throughout the day, allowing Rosenberg
to respond immediately to investment opportunities, subject to certain
limitations on short-term trading applicable by virtue of the Small Company
Value Trust's intention to qualify as a regulated investment company under the
Code.
TRADING. Rosenberg's trading system aggregates the recommended transaction
for the Small Company Value Trust and determines the feasibility of each
recommendation in light of the stock's liquidity, the expected transaction
costs, and general market conditions. Trades are executed through any one of
four trading strategies: traditional brokerage, networks, accommodation, and
package or "basket" trades designed to facilitate large volume trading with
little or no price disturbance.
Rosenberg continuously monitors trading costs to determine the impact of
commission and price disturbance on the Small Company Value Trust.
42
<PAGE> 142
Pro Forma Financial Statements
<PAGE> 143
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES-DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
CAPITAL INVESTMENT
GROWTH BOND QUALITY BOND PRO FORMA PRO FORMA
ASSETS TRUST TRUST ADJUSTMENTS COMBINED
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investments in securities, at value (Includes a
repurchase agreement of $8,461,000 in the
Capital Growth Bond Trust)
(See accompanying portfolio of investments) ......... $ 56,164,078 $ 233,996,126 $ 290,160,204
Cash .................................................. -- 839 839
Receivables:
Fund shares sold ............................... 6,224 77,769 83,993
Dividends and interest ......................... 781,411 3,412,921 4,194,332
Other assets .......................................... 124 428 552
------------- ------------- -------------
Total assets ............................... 56,951,837 237,488,083 294,439,920
============= ============= =============
LIABILITIES
Payables:
Investments purchased .......................... -- 286,633 286,633
Fund shares redeemed ........................... 94,754 -- 94,754
Dividend and interest withholding tax .......... -- 773 773
Custodian fee .................................. 2,634 5,871 8,505
Securities lending ............................. 2,860,600 48,636,883 51,497,483
Other accrued expenses ......................... 3,904 12,980 16,884
------------- ------------- -------------
Total liabilities .......................... 2,961,892 48,943,140 51,905,032
------------- ------------- -------------
NET ASSETS ............................................ $ 53,989,945 $ 188,544,943 $ 242,534,888
============= ============= =============
Net assets consist of:
Undistributed net investment income
(Note 2) ..................................... $ 3,103,100 $ 11,620,376 $ 14,723,476
Accumulated undistributed net realized
loss on investments .......................... (857,064) (3,114,002) (3,971,066)
Unrealized appreciation on investments ......... 1,690,900 3,710,810 5,401,710
Capital shares at par value of $.01 (Note 3) ... 45,580 155,492 ($1,070) (A) 200,002
Additional paid-in capital ..................... 50,007,429 176,172,267 1,070 (A) 226,180,766
------------- ------------- ----------- -------------
Net assets ............................... $ 53,989,945 $ 188,544,943 $ 242,534,888
============= ============= =============
Capital shares outstanding (Note 3) ................... 4,557,940 15,549,187 (106,996) (B) 20,000,131
------------- ------------- ----------- -------------
Net asset value, offering price and redemption price
per share ........................................... $ 11.85 $ 12.13 $ 12.13
============= ============= =============
Investments in securities, at identified cost (Note 2) $ 54,473,178 $ 230,285,316 $ 284,758,494
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 144
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
CAPITAL INVESTMENT
GROWTH BOND QUALITY BOND PRO FORMA PRO FORMA
TRUST TRUST ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment Income:
Interest .............................. 3,304,323 $ 12,713,368 $ 16,017,691
Total income .................... 3,304,323 12,713,368 16,017,691
------------ ------------ ------------
Expenses:
Investment adviser fee ................ 315,701 1,047,782 1,363,483
Custodian fee ......................... 30,794 117,680 148,474
Audit and legal fees .................. 4,196 21,627 25,823
Registration and filing fees .......... 754 1,961 2,715
Trustee fees and expenses ............. 1,576 4,533 6,109
Miscellaneous ......................... 478 1,775 2,253
------------ ------------ ------------
Expenses before reimbursement
by investment adviser ............... 353,499 1,195,358 1,548,857
Reimbursement of expenses by
investment adviser .................. 110,604 -- $ (110,604) (C) --
------------ ------------ ------------ ------------
Net expenses .................... 242,895 1,195,358 110,604 (C) 1,548,857
------------ ------------ ------------ ------------
Net investment income ........... 3,061,428 11,518,010 (110,604) (C) 14,468,834
------------ ------------ ------------ ------------
Realized and unrealized gain on investments:
Net realized gain on investments ...... 48,206 560,958 609,164
Change in unrealized appreciation
on investments ...................... 1,026,927 3,072,046 4,098,973
------------ ------------ ------------
Net gain on investments .......... 1,075,133 3,633,004 4,708,137
------------ ------------ ------------
Net increase(decrease) in net assets resulting
from operations ............................ $ 4,136,561 $ 15,151,014 $ (110,604) (C) $ 19,176,971
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 145
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
(SHOWING PERCENTAGES OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
PREFERRED STOCKS - 0.09%
MINING - 0.09%
270 270 Fairfield Manufacturing, Incorporated $279,450 $279,450
------------ ------------
TOTAL PREFERRED STOCKS
(Cost: $279,450) $279,450 $279,450
------------ ------------
U.S. TREASURY OBLIGATIONS - 31.07%
U.S. TREASURY BONDS - 28.94%
$750,000 $750,000 6.375% due 08/15//27 $791,017 791,017
1,065,000 1,065,000 6.625% due 02/15/27 1,156,185 1,156,185
235,000 235,000 6.75% due 08/15/26 258,721 258,721
-----------
$3,100,000 3,100,000 7.50% due 11/15/16 3,618,289 3,618,289
1,500,000 1,500,000 9.25% due 02/15/16 2,035,305 2,035,305
3,100,000 3,100,000 11.625% due 11/15/04 4,114,754 4,114,754
20,000,000 20,000,000 11.875% due 11/15/03 26,015,600 26,015,600
31,200,000 31,200,000 12.00% due 08/15/13 45,971,328 45,971,328
------------ ------------
2,205,923 81,755,276 83,961,199
U.S. TREASURY NOTES - 2.13%
4,000,000 4,000,000 5.75% due 10/31/00 4,005,000 4,005,000
------------
1,000,000 1,000,000 6.125% due 08/15/07 1,027,660 1,027,660
360,000 360,000 6.375% due 05/15/99 363,319 363,319
750,000 750,000 7.25% due 05/15/04 809,415 809,415
----------- ------------
2,200,394 4,005,000 6,205,394
----------- ------------ ------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $88,489,277) $4,406,317 $85,760,276 $90,166,593
----------- ------------ ------------
U.S. GOVERNMENT
AGENCY OBLIGATIONS - 8.17%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 2.36%
686,436 686,436 6.00% due 02/01/03 - 07/01/03 680,376 680,376
500,000 500,000 6.50% due 08/17/11 502,030 502,030
900,000 900,000 6.50% due 06/25/19, REMIC 906,462 906,462
3,716,307 3,716,307 7.00% due 06/01/23 - 01/01/26 3,762,878 3,762,878
972,480 972,480 7.50% due 06/01/10 - 04/01/11 1,000,164 1,000,164
------------ ------------
6,851,910 6,851,910
FEDERAL NATIONAL
MORTGAGE ASSOCIATION - 0.34%
1,000,000 1,000,000 5.90% due 10/25/19, REMIC 992,180 992,180
------------ ------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 5.47%
184,992 184,992 6.50% due 07/15/08 - 05/15/09 186,840 186,840
7,618,933 7,618,933 7.00% due 04/15/23 - 02/15/24 7,706,919 7,706,919
3,711,486 3,711,486 7.50% due 04/15/02 - 01/15/24 3,811,843 3,811,843
2,095,593 2,095,593 8.00% due 06/15/23 - 10/15/23 2,181,386 2,181,386
1,867,573 1,867,573 8.50% due 09/15/16 - 04/15/22 1,985,240 1,985,240
816 816 9.50% due 10/15/09 905 905
------------ ------------
15,873,133 15,873,133
------------ ------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (Cost: $23,053,945) $23,717,223 $23,717,223
------------ ------------
</TABLE>
<PAGE> 146
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
(SHOWING PERCENTAGES OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS - 1.04%
GOVERNMENT OF CANADA - 0.38
$1,000,000 $1,000,000 Province of Quebec, 8.80% due 04/15/03 $1,108,760 $1,108,760
-----------
REPUBLIC OF ARGENTINA - 0.66%
$1,800,000 1,800,000 11.00% due 10/09/06 $1,921,500 1,921,500
------------ ------------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost:$3,082,094) $1,108,760 $1,921,500 $3,030,260
----------- ------------ ------------
CORPORATE BONDS - 33.65%
APPAREL & TEXTILES - 0.14%
Clark-Schwebel, Incorporated,
95,000 95,000 10.50% due 04/15/06 103,550 103,550
Collins & Aikman Products Company,
250,000 250,000 11.50% due 04/15/06 280,938 280,938
Pillowtex Corporation,
30,000 30,000 9.00% due 12/15/07 30,750 30,750
------------ ------------
415,238 415,238
AUTOMOBILES - 1.07%
Ford Motor Credit Corporation,
1,000,000 1,000,000 6.375% due 06/15/03 1,004,200 1,004,200
Chrysler Corporation,
2,000,000 2,000,000 7.45% due 02/01/97 2,114,380 2,114,380
----------- ------------
3,118,580 3,118,580
BANKING - 6.26%
BankAmerica Corporation,
1,475,000 1,475,000 9.625% due 02/13/01 1,611,216 1,611,216
Bank of New York, Incorporated
1,000,000 1,000,000 6.625% due 06/15/03 1,012,810 1,012,810
Bank of Nova Scotia Halifax,
1,000,000 1,000,000 9.00% due 10/01/99 1,046,530 1,046,530
BCH Cayman Islands, Ltd.
1,000,000 1,000,000 6.50% due 02/15/06 984,880 984,880
1,000,000 1,000,000 Citicorp, 7.125% due 06/01/03 1,038,210 1,038,210
1,300,000 1,300,000 Credit National, 7.00% due 11/14/05 1,306,500 1,306,500
Export-Import Bank of Korea,
1,550,000 1,550,000 6.375% due 02/15/06 1,106,018 1,106,018
First Financial Caribbean Corporation,
450,000 450,000 7.84% due 10/10/06 473,062 473,062
First Republic Bancorp,
825,000 825,000 7.75% due 09/15/12 843,777 843,777
Korea Development Bank,
715,000 715,000 7.125% due 09/17/01 599,342 599,342
National Westminster Bank PLC,
1,000,000 1,000,000 9.45% due 05/01/01 1,092,470 1,092,470
2,000,000 2,000,000 NBD Bancorp, 8.25% due 11/01/24 2,370,320 2,370,320
Norwest Corporation,
900,000 900,000 6.00% due 03/15/00 897,534 897,534
Republic New York Corporation,
1,000,000 1,000,000 9.50% due 04/15/14 1,271,700 1,271,700
----------- ------------
2,300,000 2,300,000 U.S. Bancorp, 7.50% due 06/01/26 2,486,530
------------
5,354,130 12,786,769 18,170,899
</TABLE>
<PAGE> 147
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
(SHOWING PERCENTAGES OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BROADCASTING - 0.28%
Chancellor Broadcasting Company,
$225,000 $225,000 8.125% due 12/15/07 $220,219 $220,219
Granite Broadcasting Corporation,
275,000 275,000 10.375% due 05/15/05 288,062 288,062
Jacor Communications Company,
$60,000 $60,000 8.75% due 06/15/07 61,500 61,500
Young Broadcasting, Incorporated,
250,000 250,000 9.00% due 01/15/06 250,000 250,000
------------ ------------
819,781 819,781
BUSINESS SERVICES - 0.52%
International Lease Finance
1,500,000 1,500,000 Corporation, 7.50% due 03/01/99 1,521,855 1,521,855
------------ ------------
CHEMICALS - 0.15%
Huntsman Corporation,
135,000 135,000 9.50% due 07/01/07 141,750 141,750
Sovereign Specialty Chemicals,
35,000 35,000 9.50% due 08/01/07 35,963 35,963
Texas-Petro Chemical Corporation,
250,000 250,000 11.125% due 07/01/06 270,000 270,000
------------ ------------
447,713 447,713
COMPUTERS & BUSINESS EQUIPMENT - 0.41%
$1,000,000 1,000,000 GTE Corporation, 8.75% due 11/01/21 $1,197,820 1,197,820
----------- ------------
CONGLOMERATES - 0.34%
1,000,000 1,000,000 ITT Corporation, 6.25% due 11/15/00 983,300 983,300
----------- ------------
COSMETICS & TOILETRIES - 0.09%
Revlon Worldwide Corporation,
370,000 370,000 Series B, zero coupon due 03/15/01 258,075 258,075
------------ ------------
DRUGS & HEALTH CARE - 1.79%
Allegiance Corporation,
2,570,000 2,570,000 7.00% due 10/15/26 2,652,882 2,652,882
Columbia/HCA Healthcare Corporation,
1,000,000 1,000,000 8.70% due 02/10/10 1,078,130 1,078,130
-----------
Owens & Minor, Incorporated,
250,000 250,000 10.875% due 06/01/06 277,500 277,500
Tenet Healthcare Corporation,
850,000 850,000 7.875% due 01/15/03 860,625 860,625
Vencor, Incorporated,
335,000 335,000 8.625% due 07/15/07 334,163 334,163
------------ ------------
1,078,130 4,125,170 5,203,300
ELECTRIC UTILITIES - 1.64%
Baltimore Gas and Electric Company,
1,000,000 1,000,000 6.125% due 07/01/03 997,830 997,830
Cleveland Electric Illuminating
1,010,000 1,010,000 Company, 7.19% due 07/01/00 1,024,958
Duke Energy Company,
700,000 700,000 7.50% due 04/01/99 712,159
------------
Northern States Power Company
1,000,000 1,000,000 6.375% due 04/01/03 1,008,120 1,008,120
</TABLE>
<PAGE> 148
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
(SHOWING PERCENTAGES OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ELECTRIC UTILITIES - CONTINUED
Pacific Gas & Electric Company
$1,000,000 $1,000,000 6.25% due 08/01/03 $1,002,710 $1,002,710
----------- ------------
3,008,660 $1,737,117 4,745,777
ELECTRONICS - 0.09%
Fairchild Semiconductor Corporation,
$250,000 250,000 10.125% due 03/15/07 262,500 262,500
------------ ------------
FINANCIAL SERVICES - 8.01%
American General Finance
1,270,000 1,270,000 Corporation, 8.00% due 02/15/05 1,313,663 1,313,663
900,000 900,000 Amerus Capital I, 8.85% due 02/01/27 959,526 959,526
Associates Corporation of North America,
300,000 300,000 9.125% due 04/01/00 318,327 318,327
Associates Corporation of North America,
1,000,000 1,000,000 6.125% due 02/01/98 999,980 999,980
BanPonce Financial Corporation,
2,150,000 2,150,000 6.75% due 08/09/01 2,170,790 2,170,790
Bear Stearns Capital Trust, Incorporated
1,000,000 1,000,000 7.00% due 01/15/27 1,012,858 1,012,858
350,000 350,000 Beneficial Corporation, 8.40% due 05/15/08 396,868
396,868
1,000,000 1,000,000 CEZ Finance BV, 7.125% due 07/15/07 989,890 989,890
CIT Group Holdings, Incorporated,
1,000,000 1,000,000 8.75% due 04/15/98 1,007,880 1,007,880
Commercial Credit Group, Incorporated,
1,000,000 1,000,000 7.375% due 04/15/05 1,055,060 1,055,060
Dime Capital Trust I,
1,200,000 1,200,000 9.33% due 05/06/27 1,357,392 1,357,392
Donaldson Lufkin and Jenrette, Incorporated
1,000,000 1,000,000 5.625% due 02/15/16 984,640 984,640
Fifth Third Capital Trust, Incorporated,
1,000,000 1,000,000 8.136% due 03/15/27 1,113,341 1,113,341
General Electric Capital Corporation,
600,000 600,000 8.88% due 06/18/03 681,348
Household Finance Corporation,
1,000,000 1,000,000 7.75% due 06/01/99 1,020,790 1,020,790
Japan Financial Corporation,
1,500,000 1,500,000 8.70% due 07/30/01 1,619,610
500,000 500,000 9.125% due 10/11/00 537,605
Pindo Deli Financial Mauritius, Ltd.,
100,000 100,000 10.75% due 10/01/07 86,000
Salomon, Incorporated,
1,000,000 1,000,000 5.75% due 03/31/98 999,410 999,410
Southern Company Capital Trust, Incorporated
1,000,000 1,000,000 8.19% due 02/01/37 1,057,140 1,057,140
-----------
Sun Canada Financial Company,
1,500,000 1,500,000 7.25% due 12/15/15 1,576,275 1,576,140
Tembec Finance Corporation,
240,000 240,000 9.875% due 09/30/05 244,800 244,800
U.S. West Capital Funding,
1,515,000 1,515,000 Incorporated, 6.95% due 01/15/37 1,560,556 1,560,556
Western Financial Savings,
200,000 200,000 8.875% due 08/01/07 192,472 192,472
------------ ------------
10,240,989 13,015,232 23,256,221
</TABLE>
<PAGE> 149
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
(SHOWING PERCENTAGES OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FOOD & BEVERAGES - 0.05%
Del Monte Foods Company,
$275,000 $275,000 Step up to 12.50% due 12/15/07 $157,437 $157,437
------------ ------------
FUNERAL SERVICES - 0.35%
Service Corporation International,
$1,000,000 1,000,000 6.75% due 06/01/01 $1,011,650 1,011,650
----------- ------------
HOMEBUILDERS - 0.04%
Standard Pacific Corporation,
115,000 115,000 8.50% due 06/15/07 114,856 114,856
------------ ------------
HOUSEHOLD PRODUCTS - 0.44%
1,000,000 1,000,000 Proctor & Gamble Profit, Series A, 1,284,854 1,284,854
----------- ------------
9.36% due 01/01/21
INDUSTRIALS - 2.93%
Acindar Industria, Argentina,
75,000 75,000 11.25% due 02/15/04 73,875 73,875
Advanced Micro Devices,
275,000 275,000 Incorporated, 11.00% due 08/01/03 294,250 294,250
Cincinnati Milacron, Incorporated,
870,000 870,000 7.875% due 05/15/00 890,709 890,709
Concentric Network Corporation,
40,000 40,000 12.75% due 12/15/07 40,950 40,950
Decision Holdings Corporation,
85,000 85,000 Step up to 11.50% due 08/01/08 54,400 54,400
EchoStar DBS Corporation,
250,000 250,000 12.50% due 07/01/02 270,000 270,000
Elgin National Industries,
210,000 210,000 Incorporated, 11.00% due 11/01/07 217,875 217,875
GCI, Incorporated,
250,000 250,000 9.75% due 08/01/07 258,125 258,125
Globalstar L.P. Capital Corporation,
350,000 350,000 10.75% due 11/01/04 343,000 343,000
Grupo Industrial Durango,
300,000 300,000 12.625% due 08/01/03 335,250 335,250
Guitar Center Management,
120,000 120,000 11.00% due 07/01/06 133,800 133,800
Hylsa SA De CV,
205,000 205,000 9.25% due 09/15/07 200,900 200,900
International Wire Group,
150,000 150,000 Incorporated, 11.75% due 06/01/05 165,298 165,298
Iridium LLC/Capital Corporation,
370,000 370,000 11.25% due 07/15/05 364,450 364,450
JCAC, Incorporated,
100,000 100,000 10.125% due 06/15/06 108,750 108,750
Key Plastics, Incorporated,
95,000 95,000 10.25% due 03/15/07 100,700 100,700
LDM Technologies, Incorporated,
160,000 160,000 10.75% due 01/15/07 174,400 174,400
Moog, Incorporated,
150,000 150,000 10.00% due 05/01/06 165,000 165,000
</TABLE>
<PAGE> 150
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
(SHOWING PERCENTAGES OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIALS - CONTINUED
Neenah Corporation,
$85,000 $85,000 11.125% due 05/01/07 $92,863 $92,863
News America Holdings,
1,800,000 1,800,000 Incorporated, 9.25% due 02/01/13 2,143,962 2,143,962
Park Ohio Industries,
210,000 210,000 Incorporated, 9.25% due 12/01/07 213,150 213,150
Pioneer Americas Acquisition
175,000 175,000 Corporation, 9.25% due 06/15/07 176,313 176,313
Repap New Brunswick, Incorporated,
275,000 275,000 10.625% due 04/15/05 261,250 261,250
Rifkin Acquisitions Partners LP,
150,000 150,000 11.125% due 01/15/06 164,625 164,625
Scotsman Group, Incorporated,
65,000 65,000 8.625% due 12/15/07 65,522 65,522
YPF Sociedad Anonima,
1,150,000 1,150,000 8.00% due 02/15/04 1,187,570 1,187,570
------------ ------------
8,496,987 8,496,987
INSURANCE - 1.62%
Jackson National Life Insurance
1,000,000 1,000,000 Company, 8.15% due 03/15/27 1,098,520 1,098,520
Ohio National Life Insurance
1,150,000 1,150,000 Company, 8.50% due 05/15/26 1,285,401 1,285,401
Security Benefit Life Company,
1,150,000 1,150,000 8.75% due 05/15/16 1,306,862 1,306,862
------------
Zurich Reinsurance Centre Holdings Incorporated
$1,000,000 1,000,000 7.125% due 10/15/23 $1,023,600 1,023,600
----------- ------------
1,023,600 3,690,783 4,714,383
LEISURE TIME - 0.26%
Argosy Gaming Company,
210,000 210,000 13.25% due 06/01/04 219,450 219,450
Hollywood Casino, Incorporated,
205,000 205,000 12.75% due 11/01/03 219,862 219,862
Plitt Theatres, Incorporated,
95,000 95,000 10.875% due 06/15/04 102,719 102,719
Riviera Holdings Corporation,
200,000 200,000 10.00% due 08/15/04 198,500 198,500
------------ ------------
740,531 740,531
METAL & METAL PRODUCTS - 0.04%
140,000 140,000 CSN Iron SA, 9.125% due 06/01/07 116,200 116,200
------------ ------------
NATURAL GAS - 0.35%
Columbia Gas Systems, Incorporated
1,000,000 1,000,000 7.05% due 11/28/07 1,021,490 1,021,490
----------- ------------
NEWSPAPERS - 0.38%
News America Holdings, Incorporated
1,000,000 1,000,000 8.50% due 02/15/05 1,096,610 1,096,610
----------- ------------
NON-BANK FINANCE - 0.38%
KFW International Financial, Incorporated,
1,000,000 1,000,000 9.125% due 05/15/01 1,090,080 1,090,080
------------ ------------
</TABLE>
<PAGE> 151
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
(SHOWING PERCENTAGES OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
PETROLEUM SERVICES - 1.38%
Cross Timbers Oil Company,
$55,000 $55,000 8.75% due 11/01/09 $56,100 $56,100
210,000 210,000 9.25% due 04/01/07 218,400 218,400
Energy Corporation of America,
200,000 200,000 Incorporated, 9.50% due 05/15/07 200,000 200,000
Newfield Exploration Company,
340,000 340,000 7.45% due 10/15/07 331,740 331,740
Petroliam Nasional BHD,
1,450,000 1,450,000 7.125% due 08/15/05 1,383,010 1,383,010
Petroleos Mexicanos,
370,000 370,000 8.85% due 09/15/07 366,300 366,300
Plains Resources, Incorporated,
350,000 350,000 10.25% due 03/15/06 377,125 377,125
------------
Ultramar Corporation,
$1,000,000 1,000,000 8.00% due 03/15/05 $1,082,340 1,082,340
----------- ------------
1,082,340 2,932,675 4,015,015
PUBLISHING - 0.07%
Sullivan Graphics, Incorporated,
210,000 210,000 12.75% due 08/01/05 212,100 212,100
------------ ------------
REAL ESTATE - 0.36%
MEPC Finance, Incorporated
1,000,000 1,000,000 7.50% due 05/01/03 1,044,770 1,044,770
----------- ------------
RETAIL TRADE - 0.74%
J. Crew Group, Incorporated,
135,000 135,000 Step up to 13.125% due 10/15/08 60,750 60,750
J.C. Penney Company, Incorporated,
1,900,000 1,900,000 7.40% due 04/01/37 2,081,545 2,081,545
------------ ------------
2,142,295 2,142,295
STEEL - 0.15%
AK Steel Corporation,
115,000 115,000 9.125% due 12/15/06 117,587 117,587
Silgan Holdings, Incorporated,
65,000 65,000 9.00% due 06/01/09 66,463 66,463
Weirton Steel Corporation,
250,000 250,000 11.375% due 07/01/04 260,000 260,000
------------ ------------
444,050 444,050
TELECOMMUNICATION SERVICES - 0.59%
Esprit Telecom Group PLC,
60,000 60,000 11.50% due 12/15/07 61,800 61,800
Tele-Communications, Incorporated,
1,500,000 1,500,000 9.25% due 04/15/02 1,646,505 1,646,505
------------ ------------
1,708,305 1,708,305
TELEPHONE - 1.77%
BellSouth Savings, ESOT
667,674 667,674 9.19% due 07/01/03 729,614 729,614
-----------
Benedek Communications,
215,000 215,000 Step up to 13.25% due 05/15/06 161,250 161,250
Clearnet Communications,
300,000 300,000 Step up to 14.75% due 12/15/05 236,250 236,250
Comcast Cable Communications,
1,000,000 1,000,000 8.50% due 05/01/27 1,174,860 1,174,860
</TABLE>
<PAGE> 152
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
(SHOWING PERCENTAGES OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
TELEPHONE - CONTINUED
GST Telecommunications,
$210,000 $210,000 Incorporated, 12.75% due 11/15/07 $219,975 $219,975
Intermedia Communications,
250,000 250,000 Incorporated, 8.875% due 11/01/07 256,875 256,875
Lenfest Communications, Incorporated
200,000 200,000 8.375% due 11/01/05 205,500 205,500
MobileMedia Communications,
250,000 250,000 Incorporated, 9.375% due 11/01/07* 28,750 28,750
NEXTEL Communications, Incorporated,
660,000 660,000 Step up to 9.75% due 10/31/07 405,075 405,075
Teleport Communications Group,
270,000 270,000 Step up to 11.125% due 07/01/07 220,050 220,050
WorldCom, Incorporated,
1,450,000 1,450,000 7.55% due 04/01/04 1,518,426 1,518,426
------------ ------------
$729,614 4,427,011 5,156,625
TRANSPORTATION SERVICES - 0.32%
Iron Mountain, Incorporated,
75,000 75,000 8.75% due 09/30/09 76,875 76,875
Johnstown American Industries,
300,000 300,000 Incorporated, 11.75% due 08/15/05 327,000 327,000
Southern Railway Company,
470,000 470,000 8.75% due 10/15/03 526,353 526,353
------------ ------------
930,228 930,228
TRANSPORTATION EQUIPMENT - 0.25%
Argo-Tech Corporation,
300,000 300,000 8.625% due 10/01/07 300,750 300,750
Hayes Wheels International,
200,000 200,000 Incorporated, 11.00% due 07/15/06 223,000 223,000
K & F Industries, Incorporated,
55,000 55,000 9.25% due 10/15/07 56,375 56,375
Walbro Corporation,
150,000 150,000 9.875% due 07/15/05 152,250 152,250
------------ ------------
732,375 732,375
TOTAL CORPORATE BONDS
(Cost: $61,821,757) $34,301,353 $63,325,363 $97,626,716
----------- ------------ ------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.54%
Asset Securitization Corporation,
Series 1992-D5, Class A1B,
2,110,000 2,110,000 6.66% due 02/14/41 2,146,925 2,146,925
CS First Boston Mortgage Securities
Corporation, Series 1992-C2,
400,000 400,000 Class A2, 6.52% due 07/17/07 400,875 400,875
First Union-Lehman Brothers Commercial
Mortgage Trust II, Series 1997-C2,
1,915,000 1,915,000 Class A2, 6.60% due 05/18/07 1,915,000 1,915,000
------------ ------------
4,462,800 4,462,800
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (Cost: $4,451,145) $4,462,800 $4,462,800
------------ ------------
</TABLE>
<PAGE> 153
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
(SHOWING PERCENTAGES OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FIXED INCOME - OTHER - 2.35%
MISCELLANEOUS ASSET BACKED SECURITIES -
2.35% American Express Master Trust,
Series 1992, Class A,
$1,500,000 $1,500,000 6.60% due 05/15/00 $1,510,770 $1,510,770
Carco Auto Loan Master Trust, Series 1997-1,
$1,000,000 1,000,000 Class A, 6.689% due 08/15/04 $1,010,240 1,010,240
Discover Card Master Trust I, Series 1997-2,
1,000,000 1,000,000 Class A, 6.72% due 04/16/10 1,009,790 1,009,790
Mortgage Index Amortizing Trust, Series 1997-1,
1,000,000 1,000,000 Class A-1, 7.00% due 08/25/04 1,003,750 1,003,750
Premier Auto Trust, Series 1993, Class A2,
290,036 290,036 4.65% due 11/02/99 287,861 287,861
------------
Residential Funding Mortgage Securities,
1,000,000 1,000,000 Series 1996-S1, Class A12, 7.25% due 01/25/26 1,010,621 1,010,621
Residential Funding Mortgage Securities,
981,758 981,758 Series 1996-S3, Class A5, 7.25% due 01/25/26 991,647 991,647
----------- ------------
TOTAL FIXED INCOME - OTHER
(Cost: $6,751,834) $5,026,048 $1,798,631 $6,824,679
----------- ------------ ------------
SHORT TERM INVESTMENT - 17.74%
2,860,600 48,636,883 51,497,483 Navigator Securities
Lending Trust, 5.74% 2,860,600 48,636,883 51,497,483
----------- ------------ ------------
REPURCHASE AGREEMENT - 4.32%
4,094,000 4,094,000 Repurchase Agreement with Lehman Brothers 4,094,000 4,094,000
dated 12/31/97 at 6.57% to be repurchased at
$4,095,494 on 01/02/98, collateralized by
$11,080,000 U.S. Treasury Treasury Strip, zero
coupon due 11/15/13 (valued at $4,305,555,
including interest)
8,461,000 8,461,000 Repurchase Agreement with State Street Bank & 8,461,000 8,461,000
Trust Company dated 12/31/97 at 5.85% to be ----------- ------------
repurchased at $8,463,750 0n 01/02/98,
collateralized by $8,415,000 U.S. Treasury
Notes, 5.875% due 01/31/99 ( valued at
$8,840,554, including interest)
$ 8,461,000 $ 4,094,000 $ 12,555,000
----------- ------------ ------------
TOTAL INVESTMENTS
(Cost: $284,758,494) $56,164,078 $233,996,126 $290,160,204
=========== ============ ============
</TABLE>
<PAGE> 154
MANUFACTURERS INVESTMENT TRUST
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF COMBINATION. The Pro Forma Combining Schedule of Portfolio
Investments, the Statement of Assets and Liabilities and the Statement of
Operations reflect the accounts of the Manufacturers Investment Trust Investment
Quality Bond ("Investment Quality Bond") and Capital Growth Bond ("Capital
Growth Bond") Trusts, two of thirty six investment Portfolios offered by the
Manufacturers Investment Trust (the "Trust") for the year ended December 31,
1997. These statements have been derived from the books and records of each
Portfolio utilized in calculating daily net asset value at December 31, 1997.
The Pro Forma statements reflect the proposed transfer of the assets and
liabilities of Capital Growth Bond in exchange for shares of Investment Quality
Bond. Under generally accepted accounting principles ("GAAP"), the Investment
Quality Bond will be the surviving entity for accounting purposes. The Pro Forma
financial statements have been adjusted to reflect the anticipated fee
arrangements for the surviving entity and do not reflect the expenses of either
Portfolio in carrying out its obligations under the Agreement and Plan of
Reorganization.
The Pro Forma Combining Schedule of Portfolio Investments, Statement of Assets
and Liabilities and Statement of Operations should be read in conjunction with
the historical financial statements of Investment Quality Bond and Capital
Growth Bond incorporated by reference in the Statement of Additional
Information.
Manufacturers Securities Services, LLC ("MSS"), a wholly-owned subsidiary of The
Manufacturers Life Insurance Company of North America ("MNA"), serves as
investment adviser to Investment Quality Bond and Capital Growth Bond for which
it receives a fee for services, computed daily and paid monthly, at the annual
rate 0.65% of the average daily net assets of each Trust. MNA is controlled by
The Manufacturers Life Insurance Company ("Manulife Financial"), a mutual life
insurance company based in Toronto, Canada.
Pro Forma Adjustments:
- ----------------------
(A) Adjustment to reflect amount allocated to capital shares ($0.01 par value)
for shares redeemed in reorganization.
(B) Adjustment to reflect reduction in outstanding shares relative to Net Asset
Value upon reorganization.
(C) Adjustment to reflect change in expense structure due to reorganization.
<PAGE> 155
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES - JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
CAPITAL INVESTMENT
GROWTH BOND QUALITY BOND PRO FORMA PRO FORMA
ASSETS TRUST TRUST ADJUSTMENTS COMBINED
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investments in securities, at value (Includes a
repurchase agreement of $8,774,000 in the
Capital Growth Bond Trust)
(See accompanying portfolio of investments) ........ $ 59,033,529 $ 303,758,821 $ 362,792,350
Cash ................................................. 108 383 491
Receivables:
Dividends and interest ........................ 869,922 4,485,559 5,355,481
Other assets ......................................... 382 1,422 1,804
------------- ------------- -------------
Total assets .............................. 59,903,941 308,246,185 368,150,126
------------- ------------- -------------
LIABILITIES
Payables:
Investments purchased ......................... -- 184,229 184,229
Dividend and interest withholding tax ......... -- 297 297
Custodian fee ................................. 2,718 5,510 8,228
Securities lending ............................ 1,270,000 61,573,772 62,843,772
Other accrued expenses ........................ 3,052 9,651 12,703
------------- ------------- -------------
Total liabilities ......................... 1,275,770 61,773,459 63,049,229
------------- ------------- -------------
NET ASSETS ........................................... $ 58,628,171 $ 246,472,726 $ 305,100,897
============= ============= =============
Net assets consist of:
Undistributed net investment income
(Note 2) .................................... $ 1,609,693 $ 7,417,531 $ 9,027,224
Accumulated undistributed net realized
loss on investments ......................... (940,353) (2,361,931) (3,302,284)
Unrealized appreciation on investments ........ 2,141,657 4,408,576 6,550,233
Capital shares at par value of $.01 (Note 3) . 50,560 206,413 $ (1,457)(A) 255,516
Additional paid-in capital .................... 55,766,614 236,802,137 1,457 (A) 292,570,208
------------- ------------- ------------- -------------
Net assets .............................. $ 58,628,171 $ 246,472,726 $ 305,100,897
============= ============= =============
Capital shares outstanding (Note 3) .................. 5,055,965 20,641,355 (145,733)(B) 25,551,587
------------- ------------- ------------- -------------
Net asset value, offering price and redemption price
per share .......................................... $ 11.60 $ 11.94 $ 11.94
============= ============= =============
Investments in securities, at identified cost (Note 2) $ 56,891,872 $ 299,350,245 $ 356,242,117
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 156
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
CAPITAL INVESTMENT
GROWTH BOND QUALITY BOND PRO FORMA PRO FORMA
TRUST TRUST ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Interest ................................. 1,809,966 $ 8,165,783 $ 9,975,749
Dividends ................................ -- 15,188 15,188
----------- ----------- -----------
Total income ....................... 1,809,966 8,180,971 9,990,937
----------- ----------- -----------
Expenses:
Investment adviser fee ................... 181,151 691,242 872,393
Custodian fee ............................ 13,035 53,100 66,135
Audit and legal fees ..................... 2,388 8,319 10,707
Registration and filing fees ............. 2,597 6,763 9,360
Trustee fees and expenses ................ 841 3,014 3,855
Miscellaneous ............................ 261 1,002 1,263
----------- ----------- -----------
Total expenses ..................... 200,273 763,440 963,713
----------- ----------- -----------
Net investment income .............. 1,609,693 7,417,531 9,027,224
----------- ----------- -----------
Realized and unrealized gain(loss)on investments:
Net realized gain(loss) on investments ... (83,289) 752,071 668,782
Change in unrealized appreciation
on investments ......................... 450,757 697,766 1,148,523
----------- ----------- -----------
Net gain on investments ............. 367,468 1,449,837 1,817,305
----------- ----------- -----------
Net increase in net assets resulting
from operations ............................... $ 1,977,161 $ 8,867,368 $10,844,529
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 157
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - 0.08%
INDUSTRIALS - 0.04%
17 17 Sinking Fund Holdings Group, Incorporated $151,725 $151,725
PUBLISHING - 0.04%
1,380 1,380 Primedia, Incorporated 134,205 134,205
------------ ------------
TOTAL COMMON STOCKS
(Cost: $290,172) $285,930 $285,930
PREFERRED STOCK - 0.08%
MINING - 0.08%
270 270 Fairfield Manufacturing, Incorporated $289,575 $289,575
------------ ------------
TOTAL PREFERRED STOCK
(Cost: $279,450) $289,575 $289,575
------------ ------------
WARRANTS - 0.00%
SOFTWARE - 0.00%
Concentric Network Corporation
40 40 (Expiration Date 12/15/2007, strike price
$10.86) 3,800 3,800
------------ ------------
TOTAL WARRANTS
(Cost: $0) $3,800 $3,800
------------ ------------
U.S. TREASURY OBLIGATIONS - 35.12%
U.S. TREASURY BONDS - 32.05%
$1,595,000 $1,595,000 6.375% due 08/15/2027 $1,751,502 $1,751,502
1,065,000 1,065,000 6.625% due 02/15/2027 1,202,619 1,202,619
235,000 235,000 6.750% due 08/15/2026 269,037 269,037
-----------
$4,000,000 4,000,000 7.500% due 11/15/2016 $4,801,880 4,801,880
1,800,000 1,800,000 8.125% due 05/15/2021 2,343,654 2,343,654
25,800,000 25,800,000 11.875% due 11/15/2003 33,249,750 33,249,750
49,000,000 49,000,000 12.000% due 08/15/2013 72,650,340 72,650,340
------------ ------------
3,223,158 113,045,624 116,268,782
U.S. TREASURY NOTES - 3.07%
3,000,000 3,000,000 5.875% due 02/28/1999 3,007,980 3,007,980
4,700,000 1,000,000 6.125% due 08/15/2007 4,890,209 4,890,209
360,000 360,000 6.375% due 05/15/1999 362,588 362,588
2,000,000 2,000,000 6.500% due 08/31/2001 2,054,380 2,054,380
750,000 750,000 7.250% due 05/15/2004 813,750 813,750
----------- ------------
11,128,907 11,128,907
----------- ------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $125,551,192) $14,352,065 $113,045,624 $127,397,689
----------- ------------ ------------
U.S. GOVERNMENT
AGENCY OBLIGATIONS - 7.69%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.82%
610,135 610,135 6.000% due 02/01/2003 - 07/01/2003 608,784 608,784
400,000 400,000 6.300% due 03/15/2023 404,624 404,624
1,400,000 1,400,000 6.500% due 08/17/2011 - 06/25/2019 1,410,772 1,410,772
3,291,861 3,291,861 7.000% due 06/01/2023 - 01/01/2026 3,342,317 3,342,317
808,756 808,756 7.500% due 06/01/2010 - 04/01/2011 833,053 833,053
------------ ------------
6,599,550 6,599,550
</TABLE>
<PAGE> 158
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FEDERAL NATIONAL
MORTGAGE ASSOCIATION - 1.08%
$1,000,000 $1,000,000 5.900% due 10/25/2019 $998,120 $998,120
3,000,000 3,000,000 6.000% due 06/01/2028 2,920,290 2,920,290
------------ ------------
3,918,410 3,918,410
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 4.79%
170,214 170,214 6.500% due 07/15/2008 - 05/15/2009 172,378 172,378
7,183,067 7,183,067 7.000% due 04/15/2023 - 02/15/2024 7,308,688 7,308,688
6,282,961 6,282,961 7.500% due 04/15/2002 - 01/15/2024 6,463,195 6,463,195
1,866,148 1,866,148 8.000% due 06/15/2023 - 10/15/2023 1,940,216 1,940,216
1,420,594 1,420,594 8.500% due 09/15/2016 - 04/15/2022 1,505,673 1,505,673
798 798 9.500% due 10/15/2009 898 898
------------ ------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (Cost: $27,240,920) $27,909,008 $27,909,008
------------ ------------
FOREIGN GOVERNMENT OBLIGATIONS - 1.46%
GOVERNMENT OF CANADA - 0.93%
1,000,000 1,000,000 Province of Quebec, 8.800% due 04/15/2003 1,104,380 1,104,380
2,000,000 2,000,000 Province of Quebec, 8.625% due 01/19/2005 2,286,580 2,286,580
------------ ------------
1,104,380 2,286,580 3,390,960
----------- ------------ ------------
REPUBLIC OF ARGENTINA - 0.53%
1,800,000 1,800,000 11.000% due 10/09/2006 1,908,000 1,908,000
------------ ------------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $5,336,025) $1,104,380 $4,194,580 $5,298,960
----------- ------------ ------------
CORPORATE BONDS - 31.82%
AIR TRAVEL - 0.28%
Argo-Tech Corporation,
150,000 150,000 8.625% due 10/01/2007 150,000 150,000
Continental Airlines,
840,000 840,000 6.648% due 09/15/2017 857,119 857,119
------------ ------------
1,007,119 1,007,119
APPAREL & TEXTILES - 0.08%
Clark-Schwebel, Incorporated,
95,000 95,000 10.50% due 04/15/2006 105,925 105,925
Collins & Aikman Products Company,
150,000 150,000 11.50% due 04/15/2006 166,500 166,500
------------ ------------
272,425 272,425
AUTOMOBILES - 0.93%
Chrysler Corporation,
2,000,000 2,000,000 7.45% due 02/01/2097 2,214,520 2,214,520
Ford Motor Credit Corporation,
1,000,000 1,000,000 6.375% due 04/15/2000 1,007,380 1,007,380
-----------
LDM Technologies, Incorporated
160,000 160,000 10.75% due 01/15/2007 168,000 168,000
------------ ------------
3,221,900 168,000 3,389,900
BANKING - 4.12%
BankAmerica Corporation,
1,475,000 1,475,000 9.625% due 02/13/2001 1,598,959 1,598,959
</TABLE>
<PAGE> 159
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BANKING - CONTINUED
Bank of New York, Incorporated
$1,000,000 $1,000,000 6.625% due 06/15/2003 $1,019,180 $1,019,180
Bank of Nova Scotia Halifax,
1,000,000 1,000,000 9.00% due 10/01/1999 1,035,870 1,035,870
1,000,000 1,000,000 Citicorp, 7.125% due 06/01/2003 1,039,850 1,039,850
$1,300,000 1,300,000 Credit National, 7.00% due 11/14/2005 $1,326,000 1,326,000
Export-Import Bank of Korea,
1,550,000 1,550,000 6.375% due 02/15/2006 1,173,288 1,173,288
First Financial Caribbean Corporation,
530,000 530,000 7.84% due 10/10/2006 559,378 559,378
First Republic Bancorp,
825,000 825,000 7.75% due 09/15/2012 862,546 862,546
Korea Development Bank,
715,000 715,000 7.125% due 09/17/2001 635,470 635,470
National Westminster Bank PLC,
1,000,000 1,000,000 9.45% due 05/01/2001 1,085,510 1,085,510
2,000,000 2,000,000 NBD Bancorp, 8.25% due 11/01/2024 2,402,060 2,402,060
Norwest Corporation,
900,000 900,000 6.00% due 03/15/2000 901,701 901,701
------------
Republic New York Corporation,
1,000,000 1,000,000 9.50% due 04/15/2014 1,296,050 1,296,050
----------- ------------
4,390,950 10,544,912 14,935,862
BROADCASTING - 0.09%
Century Communications Corporation,
225,000 225,000 Zero coupon due 01/15/2008 102,094 102,094
Granite Broadcasting Corporation,
150,000 150,000 8.875% due 05/15/2008 151,687 151,687
Jacor Communications Company,
20,000 20,000 8.00% due 02/15/2010 20,000 20,000
60,000 60,000 8.75% due 06/15/2007 62,400 62,400
------------ ------------
336,181 336,181
BUILDING MATERIALS & CONSTRUCTION - 0.03%
Grove Worldwide, LLC
120,000 120,000 9.25% due 05/01/2008 117,600 117,600
------------ ------------
BUSINESS SERVICES - 0.06%
Psinet, Incorporated,
140,000 140,000 10.00% due 02/15/2005 142,800 142,800
Silgan Holdings, Incorporated
65,000 65,000 9.00% due 06/01/2009 67,275 67,275
------------ ------------
210,075 210,075
CHEMICALS - 0.11%
Huntsman Corporation,
135,000 135,000 9.50% due 07/01/2007 135,000 135,000
Pioneer Amers Acquisition Corporation,
75,000 75,000 9.25% due 06/15/2007 74,250 74,250
Sovereign Specialty Chemicals,
75,000 75,000 9.50% due 08/01/2007 76,875 76,875
Texas-Petro Chemical Corporation,
120,000 120,000 11.125% due 07/01/2006 130,800 130,800
------------ ------------
416,925 416,925
</TABLE>
<PAGE> 160
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COAL - 0.10%
P&L Coal Holdings Corporation,
$350,000 $350,000 9.625% due 05/15/2008 $359,625 $359,625
------------ ------------
COMPUTERS & BUSINESS EQUIPMENT - 0.08%
100,000 100,000 Concentric Network Corporation,
12.75% due 12/15/2007 105,750 105,750
Decisionone Corporation,
100,000 100,000 9.75% due 08/01/2007 96,500 96,500
Verio, Incorporated,
100,000 100,000 10.375% due 04/01/2005 103,000 103,000
------------ ------------
305,250 305,250
CONGLOMERATES - 0.27
$1,000,000 1,000,000 ITT Corporation, 6.25% due 11/15/2000 $974,600 974,600
----------- ------------
COSMETICS & TOILETRIES - 0.03%
Revlon Worldwide Corporation,
160,000 160,000 Series B, zero coupon due 03/15/2001 124,400 124,400
------------ ------------
DRUGS & HEALTH CARE - 1.79%
Allegiance Corporation,
2,830,000 2,830,000 7.00% due 10/15/2026 2,892,062 2,892,062
Beckman Instruments, Incorporated,
240,000 240,000 7.10% due 03/04/2003 241,656 241,656
Dailey International, Incorporated,
100,000 100,000 9.50% due 02/15/2008 97,750 97,750
Healthsouth Corporation,
2,000,000 2,000,000 6.875% due 06/15/2005 2,000,740 2,000,740
Owens & Minor, Incorporated,
250,000 250,000 10.875% due 06/01/2006 272,500 272,500
Tenet Healthcare Corporation,
850,000 850,000 7.875% due 01/15/2003 864,875 864,875
Universal Hospital Services,
120,000 120,000 10.25% due 03/01/2008 120,000 120,000
------------ ------------
6,489,583 6,489,583
ELECTRICAL EQUIPMENT - 0.19%
Costilla Energy, Incorporated,
225,000 225,000 10.25% due 10/01/2006 228,375 228,375
Energy Corporation of America, Incorporated,
200,000 200,000 9.50% due 05/15/2007 195,500 195,500
Tesoro Petroleum Corporation,
135,000 135,000 9.00% due 07/01/2008 134,229 134,229
150,000 150,000 Wesco Distribution, Incorporated,
9.125% due 06/01/2008 148,500 148,500
------------ ------------
706,604 706,604
ELECTRIC UTILITIES - 1.31%
Baltimore Gas and Electric Company,
1,000,000 1,000,000 6.125% due 07/01/2003 1,005,840 1,005,840
Cleveland Electric Illuminating
1,010,000 1,010,000 Company, 7.19% due 07/01/2000 1,025,463 1,025,463
Duke Energy Company,
700,000 700,000 7.50% due 04/01/1999 707,812 707,812
Empresa Nacional De Electric,
1,000,000 1,000,000 7.325% due 02/01/2037 977,050 977,050
------------
</TABLE>
<PAGE> 161
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ELECTRIC UTILITIES - CONTINUED
Northern States Power Company of Minnesota
$1,000,000 $1,000,000 6.375% due 04/01/2003 $1,015,770 $1,015,770
Pacific Gas & Electric Company
1,000,000 1,000,000 6.25% due 08/01/2003 1,010,470 1,010,470
----------- ------------
3,032,080 $2,710,325 4,742,405
ELECTRONICS - 0.03%
Fairchild Semiconductor Corporation,
$120,000 120,000 10.125% due 03/15/2007 123,600 123,600
------------ ------------
FINANCIAL SERVICES - 10.37%
530,000 530,000 Allstate Financing, 7.83% due 12/01/2045 561,747 561,747
American General Finance
1,270,000 1,270,000 Corporation, 8.00% due 02/15/2005 1,308,443 1,308,443
900,000 900,000 Amerus Capital I, 8.85% due 02/01/2027 956,502 956,502
Amresco Commerce Mortgage
100,000 100,000 9.875% due 03/15/2005 101,000 101,000
2,000,000 2,000,000 Amvescap, PLC, 6.60% due 05/15/2005 2,021,900 2,021,900
Associates Corporation of North America,
300,000 300,000 9.125% due 04/01/2000 315,597 315,597
BanPonce Financial Corporation,
2,150,000 2,150,000 6.75% due 08/09/2001 2,182,185 2,182,185
Bear Stearns Capital Trust, Incorporated
1,000,000 1,000,000 7.00% due 07/15/1998 1,019,903 1,019,903
Beneficial Corporation,
350,000 350,000 8.40% due 05/15/2008 403,372 403,372
Cigna Corporation,
740,000 740,000 7.875% due 05/15/2027 830,332 830,332
Commercial Credit Group, Incorporated,
1,000,000 1,000,000 7.375% due 04/15/2005 1,068,380 1,068,380
Dime Capital Trust I,
1,200,000 1,200,000 9.33% due 05/06/2027 1,405,512 1,405,512
Donaldson Lufkin and Jenrette, Incorporated
1,000,000 1,000,000 5.625% due 02/15/2016 989,910 989,910
Equitable Companies, Incorporated
770,000 770,000 7.00% due 04/01/2028 786,663 786,663
Equitable Life Assured Society,
680,000 680,000 7.70% due 12/01/2015 750,162 750,162
Fifth Third Capital Trust, Incorporated,
1,000,000 1,000,000 8.136% due 03/15/2027 1,092,200 1,092,200
General Electric Capital Corporation,
600,000 600,000 8.88% due 06/18/2003 677,226 677,226
Globalstar LP/Globalstar Capital,
205,000 205,000 10.75% due 11/01/2004 194,750 194,750
Household Finance Corporation,
1,000,000 1,000,000 7.75% due 06/01/1999 1,016,610 1,016,610
Iridium Operating LLC/Iridium Capital,
285,000 285,000 10.875% due 07/15/2005 285,113 285,113
Japan Finance Corporation,
1,500,000 1,500,000 8.70% due 07/30/2001 1,611,150 1,611,150
500,000 500,000 9.125% due 10/11/2000 533,050 533,050
Liberty Mutual Insurance Company,
550,000 550,000 8.20% due 05/04/2007 620,406 620,406
700,000 700,000 8.50% due 05/15/2025 836,780 836,780
</TABLE>
<PAGE> 162
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL SERVICES - CONTINUED
Lumbermans Mutual Casualty Company,
$675,000 $675,000 9.15% due 07/01/2026 $813,274 $813,274
Olympic Financial, Ltd.,
100,000 100,000 11.50% due 03/15/2007 100,250 100,250
Pindo Deli Financial Mauritius, Ltd.,
100,000 100,000 10.75% due 10/01/2007 70,000 70,000
Private Export Funding Corporation,
1,175,000 1,175,000 6.49% due 07/15/2007 1,232,645 1,232,645
2,000,000 2,000,000 6.62% due 10/01/2005 2,101,240 2,101,240
3,650,000 3,650,000 6.90% due 01/31/2003 3,823,375 3,823,375
200,000 200,000 7.30% due 01/31/2002 210,312 210,312
Rifkin Acquisitions Participation LP,
80,000 80,000 11.125% due 01/15/2006 88,000 88,000
Southern Company Capital Trust, Incorporated
$1,000,000 1,000,000 8.19% due 02/01/2037 $1,081,660 1,081,660
-----------
Sun Canada Financial Company,
1,500,000 1,500,000 7.25% due 12/15/2015 1,625,655 1,625,655
Tembec Finance Corporation,
115,000 115,000 9.875% due 09/30/2005 121,325 121,325
2,300,000 2,300,000 United States Bancorp, 7.50% due 06/01/2026 2,572,044 2,572,044
United States West Capital Funding,
2,035,000 2,035,000 Incorporated, 6.25% due 07/15/2005 2,030,564 2,030,564
Western Financial Savings,
200,000 200,000 8.875% due 08/01/2007 184,000 184,000
------------ ------------
6,268,663 31,354,573 37,623,236
FOOD & BEVERAGES - 0.06%
Aurora Foods,
50,000 50,000 8.75% due 07/01/2008 50,550 50,550
Del Monte Foods Company,
275,000 275,000 Step up to 12.50% due 12/15/2007 178,750 178,750
------------ ------------
229,300 229,300
FUNERAL SERVICES - 0.28%
Service Corporation International,
1,000,000 1,000,000 6.75% due 06/01/2001 1,014,450 1,014,450
----------- ------------
GAS & PIPELINE UTILITIES - 0.29%
Columbia Gas Systems, Incorporated,
1,000,000 1,000,000 7.05% due 11/28/2007 1,023,190 1,023,190
----------- ------------
HOMEBUILDERS - 0.07%
Engle Homes, Incorporated,
150,000 150,000 9.25% due 02/01/2008 147,000 147,000
Standard Pacific Corporation,
115,000 115,000 8.50% due 06/15/2007 116,725 116,725
------------ ------------
263,725 263,725
HOUSEHOLD PRODUCTS - 0.36%
Proctor & Gamble ESOP, Series A,
1,000,000 1,000,000 9.36% due 01/01/2021 1,321,810 1,321,810
----------- ------------
INDUSTRIALS - 1.47%
Advanced Micro Devices,
275,000 275,000 Incorporated, 11.00% due 08/01/2003 290,125 290,125
</TABLE>
<PAGE> 163
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIALS - CONTINUED
Cincinnati Milacron, Incorporated,
$870,000 $870,000 7.875% due 05/15/2000 $889,084 $889,084
Falcon Building Products, Incorporated,
165,000 165,000 9.50% due 06/15/2007 161,700 161,700
Gaylord Container Corporation,
95,000 95,000 9.375% due 06/15/2007 91,438 91,438
Laroche Industry, Incorporated,
85,000 85,000 9.50% due 09/15/2007 82,875 82,875
Lin Holdings Corporation,
300,000 300,000 Step up to 10.00% due 03/01/2008 201,000 201,000
Moog, Incorporated,
150,000 150,000 10.00% due 05/01/2006 160,500 160,500
Neenah Corporation,
85,000 85,000 11.125% due 05/01/2007 92,650 92,650
News America Holdings,
1,800,000 1,800,000 Incorporated, 9.25% due 02/01/2013 2,189,232 2,189,232
Numatics, Incorporated,
25,000 25,000 9.625% due 04/01/2008 25,250 25,250
YPF Sociedad Anonima,
1,150,000 1,150,000 8.00% due 02/15/2004 1,158,395 1,158,395
------------ ------------
5,342,249 5,342,249
INSURANCE - 1.55%
Amerus Life Holdings, Incorporated,
715,000 715,000 6.95% due 06/15/2005 713,938 713,938
Jackson National Life Insurance
1,000,000 1,000,000 Company, 8.15% due 03/15/2027 1,168,240 1,168,240
Ohio National Life Insurance
1,150,000 1,150,000 Company, 8.50% due 05/15/2026 1,332,390 1,332,390
Security Benefit Life Company,
1,150,000 1,150,000 8.75% due 05/15/2016 1,344,073 1,344,073
------------
Zurich Reinsurance Centre Holdings Incorporated
$1,000,000 1,000,000 7.125% due 10/15/2023 $1,048,310 1,048,310
----------- ------------
1,048,310 4,558,641 5,606,951
LEISURE TIME - 0.38%
Argosy Gaming Company,
105,000 105,000 13.25% due 06/01/2004 117,862 117,862
Hollywood Casino, Incorporated,
150,000 150,000 12.75% due 11/01/2003 164,250 164,250
Viacom, Incorporated,
1,035,000 1,035,000 7.75% due 06/01/2005 1,102,741 1,102,741
------------ ------------
1,384,853 1,384,853
NEWSPAPERS - 0.31%
News America Holdings, Incorporated
1,000,000 1,000,000 8.50% due 02/15/2005 1,107,750 1,107,750
----------- ------------
NON-BANK FINANCE - 0.30%
KFW International Financial, Incorporated,
1,000,000 1,000,000 9.125% due 05/15/2001 1,082,450 1,082,450
------------ ------------
</TABLE>
<PAGE> 164
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OFFICE FURNISHINGS & SUPPLIES - 0.75%
Boise Cascade Office Products Company,
$2,700,000 $2,700,000 7.05% due 05/15/2005 $2,726,190 $2,726,190
------------ ------------
PAPER - 0.49%
185,000 185,000 American Pad & Paper Company,
13.00% due 11/15/2005 185,925 185,925
Boise Cascade Corporation,
1,000,000 1,000,000 9.90% due 10/01/2001 1,103,200 1,103,200
Domtar, Incorporated,
75,000 75,000 9.50% due 08/01/2016 81,687 81,687
Grupo Industrial Durango GIDUSA,
120,000 120,000 12.625% due 08/01/2003 127,800 127,800
Repap New Brunswick, Incorporated,
275,000 275,000 10.625% due 04/15/2005 277,750 277,750
------------ ------------
1,776,362 1,776,362
PETROLEUM SERVICES - 0.64%
100,000 100,000 Abraxas Pee Corporation,
11.50% due 11/01/2004 103,500 103,500
Cross Timbers Oil Company,
55,000 55,000 8.75% due 11/01/2009 55,275 55,275
150,000 150,000 9.25% due 04/01/2007 154,500 154,500
Great Lakes Carbon Corporation,
65,000 65,000 10.25% due 05/15/2008 66,300 66,300
Newfield Exploration Company,
445,000 445,000 7.45% due 10/15/2007 452,472 452,472
Petroleos Mexicanos,
250,000 250,000 8.85% due 09/15/2007 240,000 240,000
Plains Resources, Incorporated,
170,000 170,000 10.25% due 03/15/2006 181,475 181,475
------------
Ultramar Corporation,
$1,000,000 1,000,000 8.00% due 03/15/2005 $1,083,350 1,083,350
----------- ------------
1,083,350 1,253,522 2,336,872
PUBLISHING - 0.15%
300,000 300,000 Scholastic Corporation,
7.00% due 12/15/2003 309,744 309,744
Sullivan Graphics, Incorporated,
210,000 210,000 12.75% due 08/01/2005 219,975 219,975
------------ ------------
529,719 529,719
REAL ESTATE - 0.29%
MEPCO Finance, Incorporated
1,000,000 1,000,000 7.50% due 05/01/2003 1,049,890 1,049,890
----------- ------------
RETAIL TRADE - 0.65%
Duane Reade, Incorporated,
100,000 100,000 9.25 % due 02/15/2008 101,250 101,250
Guitar Center Management Company,
120,000 120,000 Incorporated, 11.00% due 07/01/2006 132,600 132,600
J.C. Penney Company, Incorporated,
1,900,000 1,900,000 7.40% due 04/01/2037 2,119,013 2,119,013
------------ ------------
2,352,863 2,352,863
</TABLE>
<PAGE> 165
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
STEEL - 0.15%
Accuride Corporation,
$95,000 $95,000 9.25% due 02/01/2008 $95,000 $95,000
Acindar Industria, Argentina,
75,000 75,000 11.25% due 02/15/2004 75,188 75,188
Bayou Steel Corporation, Louisiana Place,
150,000 150,000 9.50% due 05/15/2008 148,687 148,687
140,000 140,000 CSN Iron SA, 9.125% due 06/01/2007 112,000 112,000
Weirton Steel Corporation,
100,000 100,000 11.375% due 07/01/2004 106,500 106,500
------------ ------------
537,375 537,375
TELECOMMUNICATION SERVICES - 1.09%
American Mobile Satellite Corporation,
35,000 35,000 12.25% due 04/01/2008 32,550 32,550
BTI Telecom Corporation,
150,000 150,000 10.50% due 09/15/2007 150,750 150,750
EchoStar DBS Corporation,
60,000 60,000 12.50% due 07/01/2002 67,350 67,350
Facilicom International, Incorporated,
70,000 70,000 10.50% due 01/15/2008 68,950 68,950
GCI, Incorporated,
250,000 250,000 9.75% due 08/01/2007 261,250 261,250
GST Telecommunications, Incorporated,
210,000 210,000 12.75% due 11/15/2007 245,700 245,700
Innova S De RL,
200,000 200,000 12.875% due 04/01/2007 203,000 203,000
ITC Deltacom, Incorporated,
105,000 105,000 8.875% due 03/01/2008 107,100 107,100
Level 3 Commerce, Incorporated,
245,000 245,000 9.125% due 05/01/2008 238,262 238,262
RSL Communications PLC,
170,000 170,000 9.125% due 03/01/2008 164,900 164,900
Tele-Communications, Incorporated,
1,500,000 1,500,000 9.25% due 04/15/2002 1,653,480 1,653,480
533,000 533,000 9.65% due 10/01/2003 581,690 581,690
Viatel, Incorporated,
158,000 158,000 11.25% due 04/15/2008 165,900 165,900
------------ ------------
3,940,882 3,940,882
TELEPHONE - 1.84%
Allbritton Communications Company,
160,000 160,000 8.875% due 02/01/2008 172,800 172,800
BellSouth Savings, ESOT
$623,625 623,625 9.19% due 07/01/2003 $671,844 671,844
Comcast Cable Communications,
1,000,000 1,000,000 8.50% due 05/01/2027 1,132,990 1,132,990
GTE Corporation,
1,000,000 1,000,000 8.75% due 11/01/2021 1,222,790 1,222,790
-----------
E Spire Communications, Incorporated,
200,000 200,000 Step up to 12.75% due 04/01/2006 157,000 157,000
Intermedia Communications, Incorporated,
250,000 250,000 8.875% due 11/01/2007 255,625 255,625
80,000 80,000 8.60% due 06/01/2008 80,600 80,600
</TABLE>
<PAGE> 166
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
TELEPHONE - CONTINUED
IXC Communications, Incorporated,
$185,000 $185,000 9.00% due 04/15/2008 $185,925 $185,925
KMC Telecom Holdings, Incorporated,
425,000 425,000 Step up to 12.50% due 02/15/2008 246,500 246,500
McLeodUSA, Incorporated,
35,000 35,000 8.375% due 03/15/2008 35,088 35,088
MobileMedia Communications, Incorporated,
250,000 250,000 9.375% due 11/01/2007* 77,500 77,500
NEXTEL Communications, Incorporated,
660,000 660,000 Step up to 9.75% due 10/31/2007 430,650 430,650
Nextlink Communications, Incorporated,
250,000 250,000 9.45% due 04/15/2008 153,750 153,750
Paging Network, Incorporated,
150,000 150,000 10.125% due 08/01/2007 155,250 155,250
Telecommunications Techniques Company,
160,000 160,000 9.75% due 05/15/2008 163,600 163,600
World Common, Incorporated,
1,450,000 1,450,000 7.55% due 04/01/2004 1,535,579 1,535,579
------------ ------------
$1,894,634 4,782,857 6,677,491
TRANSPORTATION - 0.26%
Johnstown American Industries,
195,000 195,000 Incorporated, 11.75% due 08/15/2005 215,962 215,962
K& F Industry, Incorporated,
105,000 105,000 9.25% due 10/15/2007 106,050 106,050
MTL, Incorporated,
100,000 100,000 10.00% due 06/15/2006 99,000 99,000
Southern Railway Company,
470,000 470,000 8.75% due 10/15/2003 527,467 527,467
------------ ------------
948,479 948,479
TOYS, AMUSEMENTS & SPORTING GOODS - 0.29%
Brunswick Corporation,
$1,000,000 1,000,000 7.125% due 08/01/2027 1,037,790 1,037,790
----------- ------------
TOTAL CORPORATE BONDS
(Cost: $111,564,422) $28,469,367 $86,956,664 $115,426,031
----------- ------------ ------------
MUNICIPAL BONDS - 0.47%
ALABAMA - 0.27%
Huntsville, Alabama Solid Waste Disposal,
1,000,000 1,000,000 5.95% due 10/01/2003 991,020 991,020
MARYLAND 0.20%
Baltimore, Maryland, Series B,
750,000 750,000 6.375% due 10/15/2002 716,125 716,125
------------ ------------
TOTAL MUNICIPAL BONDS
(Cost: $1,710,168) $1,707,145 $1,707,145
------------ ------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.11%
First Union-Lehman Brothers Commercial
Mortgage Trust II, Series 1997-C2,
1,950,000 1,950,000 Class A2, 6.60% due 07/18/1998 1,989,975 1,989,975
------------
</TABLE>
<PAGE> 167
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS - CONTINUED
Residential Funding Mortgage Security I,
Incorporated, Series 1996-S1, Class A12,
$1,000,000 $1,000,000 7.25% due 01/25/2026 $1,024,565 $1,024,565
Residential Funding Mortgage Security I,
Incorporated, Series 1996-S3, Class A5,
976,506 976,506 7.25% due 01/25/2026 1,000,002 1,000,002
----------- ------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (Cost: $3,939,532) $2,024,567 $1,989,975 $4,014,542
----------- ------------ ------------
ASSET BACKED SECURITIES - 2.14%
American Express Master Trust,
Series 1992, Class A,
$1,500,000 1,500,000 6.60% due 05/15/2000 1,508,895 1,508,895
Asset Securitization Corporation,
2,110,000 2,110,000 6.66% due 02/14/2041 2,174,081 2,174,081
Carco Auto Loan Master Trust, Series 1997-1,
1,000,000 1,000,000 Class A, 6.689% due 08/15/2004 1,015,420 1,015,420
Credit Suisse First Boston,
400,000 400,000 6.52% due 07/17/2007 409,372 409,372
Green Tree Financial Corporation,
500,000 500,000 5.98% due 08/01/2008 500,155 500,155
Discover Card Master Trust I, Series 1997-2,
1,000,000 1,000,000 Class A, 6.792% due 04/16/2010 1,018,730 1,018,730
Mortgage Index Amortizing Trust, Series 1997-1,
1,000,000 1,000,000 Class A-1, 7.00% due 08/25/2004 1,005,000 1,005,000
-----------
Premier Auto Trust, Series 1993, Class A2,
142,781 142,781 4.65% due 11/02/1999 142,245 142,245
------------ ------------
TOTAL ASSET BACKED SECURITIES
(Cost: $7,644,464) $3,039,150 $4,734,748 $7,773,898
----------- ------------ ------------
SHORT TERM INVESTMENTS - 17.32%
$1,270,000 $61,573,772 $62,843,772 Navigator Securities
Lending Trust, 5.54% $1,270,000 $61,573,772 $62,843,772
----------- ------------ ------------
REPURCHASE AGREEMENTS - 2.71%
$1,068,000 $1,068,000 Repurchase Agreement with Swiss Bank 1,068,000 1,068,000
Dated 06/30/1998 at 5.70% to be repurchased at
$1,068,169 on 07/01/1998, collateralized by
$843,000 U.S. Treasury Bonds, 8.00%
due 11/15/2021 (valued at $1,081,411,
including interest)
</TABLE>
<PAGE> 168
MANUFACTURERS INVESTMENT TRUST - CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST - INVESTMENT QUALITY BOND TRUST
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS - JUNE 30, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
Capital Investment Capital Investment
Growth Quality Pro Forma Growth Quality Pro Forma
Bond Bond Combined Security Description Bond Bond Combined
---- ---- -------- -------------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
REPURCHASE AGREEMENTS - CONTINUED
$8,774,000 $8,774,000 Repurchase Agreement with State Street Bank & 8,774,000 8,774,000
Trust Company dated 06/30/1998 at 5.71% to be
repurchased at $8,775,392 on 07/01/1998,
collateralized by $6,620,000 U.S. Treasury
Bonds, 8.75% due 05/15/2017 ( valued at
$8,953,550, including interest)
TOTAL REPURCHASE AGREEMENTS $8,774,000 $1,068,000 $9,842,000
----------- ------------ ------------
TOTAL INVESTMENTS
(Cost: $356,242,117) $59,033,529 $303,758,821 $362,792,350
=========== ============ ============
</TABLE>
<PAGE> 169
MANUFACTURERS INVESTMENT TRUST
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF COMBINATION. The Pro Forma Combining Schedule of Portfolio
Investments, the Statement of Assets and Liabilities and the Statement of
Operations reflect the accounts of the Manufacturers Investment Trust Investment
Quality Bond ("Investment Quality Bond") and Capital Growth Bond ("Capital
Growth Bond") Trusts, two of thirty six investment Portfolios offered by the
Manufacturers Investment Trust (the "Trust") for the six months ended June 30,
1998. These statements have been derived from the books and records of each
Portfolio utilized in calculating daily net asset value at June 30, 1998.
The Pro Forma statements reflect the proposed transfer of the assets and
liabilities of Capital Growth Bond in exchange for shares of Investment Quality
Bond. Under generally accepted accounting principles ("GAAP"), the Investment
Quality Bond will be the surviving entity for accounting purposes. The Pro Forma
financial statements have been adjusted to reflect the anticipated fee
arrangements for the surviving entity and do not reflect the expenses of either
Portfolio in carrying out its obligations under the Agreement and Plan of
Reorganization.
The Pro Forma Combining Schedule of Portfolio Investments, Statement of Assets
and Liabilities and Statement of Operations should be read in conjunction with
the historical financial statements of Investment Quality Bond and Capital
Growth Bond incorporated by reference in the Statement of Additional
Information.
Manufacturers Securities Services, LLC ("MSS"), a wholly-owned subsidiary of The
Manufacturers Life Insurance Company of North America ("MNA"), serves as
investment adviser to Investment Quality Bond and Capital Growth Bond for which
it receives a fee for services, computed daily and paid monthly, at the annual
rate 0.65% of the average daily net assets of each Trust. MNA is controlled by
The Manufacturers Life Insurance Company ("Manulife Financial"), a mutual life
insurance company based in Toronto, Canada.
Pro Forma Adjustments:
(A) Adjustment to reflect amount allocated to capital shares ($0.01 par value)
for shares redeemed in reorganization.
(B) Adjustment to reflect reduction in outstanding shares relative to Net Asset
Value upon reorganization.
<PAGE> 170
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING STATEMENT OF ASSETS
AND LIABILITIES -- DECEMBER 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL INVESTMENT
GROWTH BOND QUALITY BOND PRO FORMA PRO FORMA
TRUST TRUST ADJUSTMENTS COMBINED
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (See
accompanying portfolio of investments)..... $65,199,949 $371,158,253 $436,358,202
Cash......................................... 60 998 1,058
Receivables:
Fund shares sold........................... 92,685 689,154 781,839
Dividends and interest..................... 1,068,524 5,412,268 6,480,792
Other assets................................. 272 1,068 1,340
----------- ------------ ------------
Total assets........................ 66,361,490 377,261,741 443,623,231
----------- ------------ ------------
LIABILITIES
Payables:
Investments purchased...................... -- 74,665 74,665
Dividend and interest withholding tax...... 2,251 583 2,834
Custodian fee.............................. 2,542 10,859 13,401
Securities lending......................... 1,238,220 65,034,495 66,272,715
Other accrued expenses..................... 6,531 30,395 36,926
----------- ------------ ------------
Total liabilities................... 1,249,544 65,150,997 66,400,541
----------- ------------ ------------
NET ASSETS................................... $65,111,946 $312,110,744 $377,222,690
=========== ============ ============
Net assets consist of:
Undistributed net investment income (Note
2)....................................... $ 3,404,123 $ 17,104,902 $ 20,509,025
Accumulated undistributed net realized loss
on investments........................... (952,030) (1,905,310) (2,857,340)
Unrealized appreciation on investments..... 2,930,856 6,062,763 8,993,619
Capital shares at par value of $.01 (Note
3)....................................... 53,863 250,491 $ (1,606)(A) 302,748
Additional paid-in capital................. 59,675,134 290,597,898 1,606(A) 350,274,638
----------- ------------ --------- ------------
Net assets.......................... $65,111,946 $312,110,744 $377,222,690
=========== ============ ============
Capital shares outstanding (Note 3).......... 5,386,315 25,049,137 (160,637)(B) 30,274,815
----------- ------------ --------- ------------
Net asset value, offering price and
redemption price per share................. $ 12.09 $ 12.46 $ 12.46
=========== ============ ============
Investments in securities, at identified cost
(Note 2)................................... $62,269,093 $365,095,490 $427,364,583
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 171
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL INVESTMENT
GROWTH BOND QUALITY BOND PRO FORMA PRO FORMA
TRUST TRUST ADJUSTMENTS COMBINED
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Interest...................................... $3,831,261 $18,819,640 $22,650,901
Dividends..................................... -- 37,714 37,714
---------- ----------- -----------
Total income........................... 3,831,261 18,857,354 22,688,615
---------- ----------- -----------
Expenses:
Investment adviser fee........................ 384,100 1,610,817 1,994,917
Custodian fee................................. 26,138 123,974 150,112
Audit and legal fees.......................... 5,187 19,340 24,527
Printing and postage fees..................... 5,986 24,721 30,707
Registration and filing fees.................. 1,012 4,180 5,192
Trustee fees and expenses..................... 1,988 7,437 9,425
Miscellaneous................................. 762 4,566 5,328
---------- ----------- -----------
Total expenses......................... 425,173 1,795,035 2,220,208
---------- ----------- -----------
Net investment income.................. 3,406,088 17,062,319 20,468,407
---------- ----------- -----------
Realized and unrealized gain(loss)on
investments:
Net realized gain(loss) on investments........ (94,997) 1,251,275 1,156,278
Change in unrealized appreciation on
investments................................. 1,239,956 2,352,727 3,592,683
---------- ----------- -----------
Net gain on investments................ 1,144,959 3,604,002 4,748,961
---------- ----------- -----------
Net increase in net assets resulting from
operations.................................... $4,551,047 $20,666,321 $25,217,368
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 172
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
COMMON STOCKS -- 0.03%
INDUSTRIALS -- 0.00%
$ 629 $ 629 SF Holding Group $ 1,258
------------
PUBLISHING -- 0.03%
1,380 1,380 Primedia, Incorporated 133,170
------------
TELECOMMUNICATIONS SERVICES -- 0.00%
35 35 American Mobile Satellite Corporation 1,148
425 425 KMC Telecom Holdings, Incorporated 1,115
------------
2,263
TELEPHONE -- 0.00%
63 63 Viatel, Incorporated 6,946
------------
TOTAL COMMON STOCKS
(Cost: $137,172) $ 143,637
============
PREFERRED STOCK -- 0.08%
INDUSTRIALS -- 0.02%
17 17 SF Holding Group 73,525
MINING -- 0.06%
270 270 Fairfield Manufacturing, Incorporated 259,875
------------
TOTAL PREFERRED STOCK
(Cost: $432,450) $ 333,400
============
WARRANTS -- 0.00%
SOFTWARE -- 0.00%
Concentric Network Corporation
40 40 (Expiration Date 12/15/2007, strike price
$10.86) 4,805
------------
TOTAL WARRANTS
(Cost: $0) $ 4,805
============
U.S. TREASURY OBLIGATIONS -- 31.57%
U.S. TREASURY BONDS -- 26.74%
$2,995,000 $ 2,995,000 6.375% due 08/15/2027 $ 3,442,363
1,065,000 1,065,000 6.625% due 02/15/2027 1,259,693
235,000 235,000 6.750% due 08/15/2026 281,523
-----------
$ 9,000,000 9,000,000 7.500% due 11/15/2016 11,179,710
11,500,000 11,500,000 11.875% due 11/15/2003 15,009,340
56,000,000 56,000,000 12.000% due 08/15/2013 85,496,320
------------
4,983,579 111,685,370
U.S. TREASURY NOTES -- 4.83%
1,000,000 1,000,000 4.625% due 11/30/2000 1,000,620
3,000,000 3,000,000 5.875% due 02/28/1999 3,005,610
6,100,000 6,100,000 6.125% due 08/15/2007 6,662,359
1,000,000 1,000,000 6.375% due 05/15/1999 1,006,250
5,600,000 5,600,000 6.500% due 08/31/2001 5,856,368
800,000 800,000 7.250% due 05/15/2004 896,624
1,500,000 1,500,000 7.500% due 02/15/2005 1,717,500
800,000 800,000 7.875% due 11/15/2004 926,872
-----------
21,072,203
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $133,000,379) $26,055,782 $111,685,370
=========== ============
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$ 1,258
------------
133,170
------------
1,148
1,115
------------
2,263
6,946
------------
$ 143,637
============
73,525
259,875
------------
$ 333,400
============
4,805
------------
$ 4,805
============
$2,995,000 3,442,363
1,065,000 1,259,693
235,000 281,523
11,179,710
15,009,340
85,496,320
------------
116,668,949
1,000,000 1,000,620
3,000,000 3,005,610
6,100,000 6,662,359
1,000,000 1,006,250
5,600,000 5,856,368
800,000 896,624
1,500,000 1,717,500
800,000 926,872
------------
21,072,203
$137,741,152
============
</TABLE>
<PAGE> 173
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
<-> U.S. TREASURY NOTES -- CONTINUED
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 12.17%
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 2.72%
$ 6,509,100 $ 6,509,100 6.000% due 02/01/2003 - 11/01/2013 $ 6,533,152
400,000 400,000 6.300% due 03/15/2023 408,124
1,221,845 1,221,845 6.500% due 08/17/2011 - 06/25/2019 1,231,682
3,579,597 3,579,597 7.500% due 06/01/2010 - 05/01/2028 3,677,202
------------
11,850,160
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 3.80%
1,000,000 1,000,000 5.900% due 10/25/2019 999,060
13,486,567 13,486,567 6.000% due 06/01/2028 - 12/01/2028 13,309,489
1,496,241 1,496,241 6.447% due 01/01/2008 1,570,742
685,704 685,704 7.085% due 08/01/2003 700,275
------------
16,579,566
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 5.65%
4,852,510 4,852,510 6.000% due 08/15/2008 - 12/15/2013 4,901,263
155,105 155,105 6.500% due 07/15/2008 - 05/15/2009 157,931
9,347,495 9,347,495 7.000% due 04/15/2023 - 04/15/2026 9,565,612
6,878,939 6,878,939 7.500% due 04/15/2002 - 07/15/2028 7,097,637
1,632,069 1,632,069 8.000% due 06/15/2023 - 10/15/2023 1,702,444
1,166,636 1,166,666 8.500% due 09/15/2016 - 04/15/2022 1,243,998
778 778 9.500% due 10/15/2009 836
------------
24,669,721
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost: $52,439,238) $ 53,099,447
============
FOREIGN GOVERNMENT OBLIGATIONS -- 0.78%
GOVERNMENT OF CANADA -- 0.78%
2,000,000 2,000,000 Province of Quebec, 8.625% due 01/19/2005 2,286,780
$1,000,000 1,000,000 Province of Quebec, 8.800% due 04/15/2003 $ 1,122,130
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS (Cost:
$3,351,542) $ 1,122,130 $ 2,286,780
=========== ============
CORPORATE BONDS -- 33.45%
AIR TRAVEL -- 0.91%
150,000 150,000 Argo-Tech Corporation,
8.625% due 10/01/2007 142,500
915,000 915,000 Continental Airlines,
6.648% due 09/15/2017 900,470
1,300,000 1,300,000 6.900% due 01/02/2018 1,305,174
1,600,000 1,600,000 SCL Term Aereo Santiago SA,
6.950% due 07/01/2012 1,600,000
------------
3,948,144
APPAREL & TEXTILES -- 0.01%
25,000 25,000 Collins & Aikman Products Company,
11.50% due 04/15/2006 26,000
------------
AUTOMOBILES -- 0.75%
2,000,000 2,000,000 Chrysler Corporation,
7.450% due 02/01/2097 2,274,480
1,000,000 1,000,000 Ford Motor Credit Corporation,
6.375% due 04/15/2000 1,013,220
-----------
3,287,700
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$ 6,533,152
408,124
1,231,682
3,677,202
------------
11,850,160
999,060
13,309,489
1,570,742
700,275
------------
16,579,566
4,901,263
157,931
9,565,612
7,097,637
1,702,444
1,243,998
836
------------
24,669,721
$ 53,099,447
============
2,286,780
$1,000,000 1,122,130
------------
$ 3,408,910
============
142,500
900,470
1,305,174
1,600,000
------------
3,948,144
26,000
------------
2,274,480
1,013,220
------------
3,287,700
</TABLE>
<PAGE> 174
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
AUTO PARTS -- 0.07%
$ 95,000 $ 95,000 Accuride Corporation,
9.250% due 02/01/2008 $ 95,000
210,000 210,000 LDM Technologies, Incorporated
10.750% due 01/15/2007 205,800
------------
300,800
BANKING -- 4.15%
1,475,000 1,475,000 BankAmerica Corporation,
9.625% due 02/13/2001 1,596,275
$1,000,000 1,000,000 Bank of New York, Incorporated
6.625% due 06/15/2003 $ 1,043,800
1,000,000 1,000,000 Bank of Nova Scotia Halifax,
9.00% due 10/01/1999 1,026,725
1,000,000 1,000,000 Citicorp, 7.125% due 06/01/2003 1,057,390
1,300,000 1,300,000 Credit National, 7.00% due 11/14/2005 1,326,000
1,550,000 1,550,000 Export-Import Bank of Korea,
6.375% due 02/15/2006 1,319,453
530,000 530,000 First Financial Caribbean Corporation,
7.840% due 10/10/2006 556,166
825,000 825,000 First Republic Bank, San Francisco,
7.750% due 09/15/2012 807,209
120,000 120,000 Grove Worldwide LLC/Capital, Incorporated
9.250% due 05/01/2008 108,000
715,000 715,000 Korea Development Bank,
7.125% due 09/17/2001 677,591
965,000 965,000 Liberty Financial Companies, Incorporated,
6.750% due 11/15/2008 996,440
1,000,000 1,000,000 National Westminster Bank PLC,
9.450% due 05/01/2001 1,088,650
2,000,000 2,000,000 NBD Bancorp, 8.250% due 11/01/2024 2,451,800
900,000 900,000 Norwest Corporation,
6.000% due 03/15/2000 906,120
1,000,000 1,000,000 Republic New York Corporation,
9.500% due 04/15/2014 1,305,890
-----------
1,745,000 1,745,000 Sprint Capital Corporation,
6.875% due 11/15/2028 1,813,578
------------
4,433,805 13,647,282
BROADCASTING -- 0.37%
250,000 250,000 Adelphia Communications Corporation
8.375% due 02/01/2008 256,250
Century Communications Corporation,
600,000 600,000 Zero coupon due 01/15/2008 307,500
20,000 20,000 8.875% due 01/15/2007 22,100
60,000 60,000 EchoStar DBS Corporation
12.500% due 07/01/2002 69,000
180,000 180,000 Echostar Satellite Broadcast Corporation,
Step up to 13.125% due 03/15/2004 179,550
Falcon Holding Group LP,
75,000 75,000 Series B, 8.375% due 04/15/2010 75,375
150,000 150,000 Series B, Step up to 9.285% due 04/15/2010 103,125
125,000 125,000 Frontiervision Holdings LP,
Step up to 11.875% due 09/15/2007 104,375
125,000 125,000 Frontiervision LP/Capital,
Step up to 11.875% due 09/15/2007 104,531
175,000 175,000 Granite Broadcasting Corporation,
8.875% due 05/15/2008 166,250
55,000 55,000 Jacor Communications Company,
8.750% due 06/15/2007 59,675
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$ 95,000
205,800
------------
300,800
1,596,275
$1,000,000
1,043,800
1,000,000
1,026,725
1,000,000 1,057,390
1,326,000
1,319,453
556,166
807,209
108,000
677,591
996,440
1,088,650
2,451,800
906,120
1,000,000
1,305,890
1,813,578
------------
18,081,087
256,250
307,500
22,100
69,000
179,550
75,375
103,125
104,375
104,531
166,250
59,675
</TABLE>
<PAGE> 175
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
<-> BROADCASTING -- CONTINUED
$ 125,000 $ 125,000 Revlon Consumer Products Corporation
8.625% due 02/01/2008 $ 113,750
50,000 50,000 Young Broadcasting, Incorporated
8.750% due 06/15/2007 50,250
------------
1,611,731
BUSINESS SERVICES -- 0.29%
1,000,000 1,000,000 Federal Express Corporation
6.720% due 01/15/2022 1,047,760
65,000 65,000 Silgan holdings, Incorporated
9.00% due 06/01/2009 65,812
150,000 150,000 World Color Press, Incorporated
8.375% due 11/15/2008 150,000
------------
1,263,572
CHEMICALS -- 0.08%
95,000 95,000 Huntsman Corporation,
9.500% due 07/01/2007 94,763
100,00 100,000 Pioneer Americas Acquisition Corporation,
9.250% due 06/15/2007 80,000
75,000 75,000 Sovereign Specialty Chemicals,
9.500% due 08/01/2007 74,625
120,000 120,000 Texas-Petro Chemical Corporation,
11.125% due 07/01/2006 117,600
------------
366,988
COAL -- 0.09%
400,000 400,000 P&L Coal Holdings Corporation,
Series B, 9.625% due 05/15/2008 404,000
------------
COMPUTERS & BUSINESS EQUIPMENT -- 0.04%
125,000 125,000 Concentric Network Corporation,
12.750% due 12/15/2007 127,500
100,000 100,000 Decisionone Corporation,
9.750% due 08/01/2007 46,000
------------
173,500
COSMETICS & TOILETRIES -- 0.02%
160,000 160,000 Revlon Worldwide Corporation,
Series B, zero coupon due 03/15/2001 92,000
------------
DRUGS & HEALTH CARE -- 1.48%
2,830,000 2,830,000 Allegiance Corporation,
7.000% due 10/15/2026 2,994,565
Columbia/HCA Healthcare Corporation
5,000 5,000 7.000% due 07/01/2007 4,770
195,000 195,000 7.250% due 05/20/2008 187,317
300,000 300,000 Dailey International, Incorporated,
9.500% due 02/15/2008 138,000
2,000,000 2,000,000 Healthsouth Corporation,
6.875% due 06/15/2005 1,914,700
225,000 225,000 Owens & Minor, Incorporated,
10.875% due 06/01/2006 241,031
850,000 850,000 Tenet Healthcare Corporation,
7.875% due 01/15/2003 867,000
120,000 120,000 Universal Hospital Services,
10.25% due 03/01/2008 102,300
------------
6,449,683
ELECTRICAL EQUIPMENT -- 0.20%
130,000 130,000 Classic Cable, Incorporated
9.875% due 08/01/2008 135,850
225,000 225,000 Costilla Energy, Incorporated,
10.250% due 10/01/2006 157,500
325,000 325,000 Energy Corporation of America, Incorporated,
9.500% due 05/15/2007 303,875
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$ 113,750
50,250
------------
1,611,731
1,047,760
65,812
150,000
------------
1,263,572
94,763
80,000
74,625
117,600
------------
366,988
404,000
------------
127,500
46,000
------------
173,500
92,000
------------
2,994,565
4,770
187,317
138,000
1,914,700
241,031
867,000
102,300
------------
6,449,683
135,850
157,500
303,875
</TABLE>
<PAGE> 176
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
<-> ELECTRICAL EQUIPMENT -- CONTINUED
$ 120,000 $ 120,000 Fairchild Semiconductor Corporation,
10.125% due 03/15/2007 $ 120,000
150,000 150,000 Wesco Distribution, Incorporated,
9.125% due 06/01/2008 150,000
------------
867,225
ELECTRIC UTILITIES -- 1.34%
$1,000,000 1,000,000 Baltimore Gas and Electric Company,
6.125% due 07/01/2003 $ 1,027,870
150,000 150,000 Calpine Corporation,
8.750% due 07/15/2007 158,751
1,010,000 1,010,000 Cleveland Electric Illuminating Company,
7.19% due 07/01/2000 1,024,928
700,000 700,000 Duke Energy Company,
7.50% due 04/01/1999 703,780
1,000,000 1,000,000 Empresa Nacional De Electric,
7.325% due 02/01/2037 881,490
------------
1,000,000 1,000,000 Northern States Power Company of Minnesota
6.375% due 04/01/2003 1,031,300
1,000,000 1,000,000 Pacific Gas & Electric Company
6.25% due 08/01/2003 1,034,710
-----------
3,093,880 2,768,949
FINANCIAL SERVICES -- 10.21%
425,000 425,000 Ahmanson HF & Company,
7.875% due 09/01/2004 459,867
565,000 565,000 Allstate Financing, 7.83% due 12/01/2045 625,698
American General Finance Corporation,
1,000,000 1,000,000 6.54% due 08/12/2002 1,025,370
1,270,000 1,270,000 8.00% due 02/15/2005 1,303,376
1,000,000 1,000,000 Amerus Capital, 8.85% due 02/01/2027 1,029,310
100,000 100,000 Amresco Commerce Mortgage
9.875% due 03/15/2005 70,000
2,000,000 2,000,000 Amvescap, PLC, 6.60% due 05/15/2005 2,049,040
610,000 610,000 Associates Corporation of North America,
5.75 % due 11/01/2003 615,472
300,000 300,000 9.125% due 04/01/2000 313,335
BanPonce Financial Corporation,
2,150,000 2,150,000 6.75% due 08/09/2001 2,171,220
260,000 260,000 6.80% due 12/21/2005 262,137
1,000,000 1,000,000 Bear Stearns Capital Trust, Incorporated
7.00% due 01/15/2027 1,003,199
350,000 350,000 Beneficial Corporation, 8.40% due 05/15/2008 409,455
790,000 790,000 Cigna Corporation, 7.875% due 05/15/2027 845,371
1,000,000 1,000,000 Commercial Credit Group, Incorporated,
7.375% due 04/15/2005 1,087,650
200,000 200,000 Contifinancial Corporation, 8.125% due
04/01/2008 140,000
1,200,000 1,200,000 Dime Capital Trust, 9.33% due 05/06/2027 1,296,096
1,000,000 1,000,000 Donaldson Lufkin and Jenrette, Incorporated
5.625% due 02/15/2016 988,160
770,000 770,000 Equitable Companies, Incorporated
7.00% due 04/01/2028 800,153
680,000 680,000 Equitable Life Assured Society,
7.70% due 12/01/2015 756,038
1,000,000 1,000,000 Fifth Third Capital Trust, Incorporated,
Series A, 8.136% due 03/15/2027 1,130,050
600,000 600,000 Ford Credit Auto Owner Trust,
5.81% due 03/15/2002 604,122
600,000 600,000 General Electric Capital Corporation,
8.88% due 06/18/2003 684,012
250,000 250,000 Globalstar LP/Globalstar Capital,
10.75% due 11/01/2004 180,000
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$ 120,000
150,000
------------
867,225
$1,000,000
1,027,870
158,751
1,024,928
703,780
881,490
------------
1,000,000
1,031,300
1,000,000
1,034,710
------------
5,862,829
459,867
625,698
1,025,370
1,303,376
1,029,310
70,000
2,049,040
615,472
313,335
2,171,220
262,137
1,000,000
1,003,199
409,455
845,371
1,000,000
1,087,650
140,000
1,296,096
1,000,000
988,160
800,153
756,038
1,000,000
1,130,050
604,122
684,012
180,000
</TABLE>
<PAGE> 177
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
<-> FINANCIAL SERVICES -- CONTINUED
$1,000,000 $ 1,000,000 Household Finance Corporation,
7.75% due 06/01/1999 $ 1,009,340
$ 300,000 300,000 International Lease Finance Corporation,
6.00% due 06/15/2003 $ 303,441
225,000 225,000 Iridium Operating LLC/Iridium Capital,
11.25% due 07/15/2005 192,375
Japan Finance Corporation,
1,500,000 1,500,000 8.70% due 07/30/2001 1,618,695
500,000 500,000 9.125% due 10/11/2000 531,980
1,000,000 1,000,000 KFW International Finance, Incorporated
9.125% due 05/15/2001 1,086,890
Liberty Mutual Insurance Company,
550,000 55,0000 8.20% due 05/04/2007 630,289
700,000 700,000 8.50% due 05/15/2025 821,436
675,000 675,000 Lumbermans Mutual Casualty Company,
9.15% due 07/01/2026 788,656
100,000 100,000 Olympic Financial, Ltd.,
11.50% due 03/15/2007 76,000
Private Export Funding Corporation,
1,175,000 1,175,000 6.49% due 07/15/2007 1,265,792
2,000,000 2,000,000 6.62% due 10/01/2005 2,133,040
3,650,000 3,650,000 6.90% due 01/31/2003 3,880,388
200,000 200,000 7.30% due 01/31/2002 212,718
80,000 80,000 Rifkin Acquisitions Participation LP,
11.125% due 01/15/2006 88,000
1,000,000 1,000,000 Southern Company Capital Trust, Incorporated
8.19% due 02/01/2037 1,105,770
-----------
1,500,000 1,500,000 Sun Canada Financial Company,
7.25% due 12/15/2015 1,658,265
80,000 80,000 Tembec Finance Corporation,
9.875% due 09/30/2005 83,600
1,600,000 1,600,000 Toyota Motor Credit Corporation,
5.625% due 11/13/2003 1,616,208
2,774,000 2,774,000 United States Bancorp, 7.50% due 06/01/2026 3,168,823
2,165,000 2,165,000 United States West Capital Funding,
Incorporated, 6.25% due 07/15/2005 2,239,195
275,000 275,000 Western Financial Savings,
8.875% due 08/01/2007 206,250
------------
6,324,169 38,242,113
FOOD & BEVERAGES -- 0.63%
50,000 50,000 Aurora Foods, 8.75% due 07/01/2008 52,000
50,000 50,000 9.875% due 02/15/2007 54,500
290,000 290,000 Del Monte Foods Company,
Step up to 12.50% due 12/15/2007 198,650
Joseph E. Seagram & Sons, Incorporated,
1,000,000 1,000,000 6.625% due 12/15/2005 994,380
1,350,000 1,350,000 7.50% due 12/15/2018 1,357,979
75,000 75,000 Tricon Global Restaurants, Incorporated,
7.65% due 05/15/2008 78,560
------------
2,736,069
FUNERAL SERVICES -- 0.23%
1,000,000 1,000,000 Service Corporation International,
6.75% due 06/01/2001 1,023,510
-----------
GAS & PIPELINE UTILITIES -- 0.72%
1,000,000 1,000,000 Columbia Gas Systems, Incorporated,
7.05% due 11/28/2007 1,042,660
2,000,000 2,000,000 Sonat, Incorporated, 6.875% due 06/01/2005 2,083,500
------------
1,042,660 2,083,500
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$1,000,000
$ 1,009,340
303,441
192,375
1,618,695
531,980
1,086,890
630,289
821,436
788,656
76,000
1,265,792
2,133,040
3,880,388
212,718
88,000
1,000,000
1,105,770
1,658,265
83,600
1,616,208
3,168,823
2,239,195
206,250
------------
44,566,282
52,000
54,500
198,650
994,380
1,357,979
78,560
------------
2,736,069
1,000,000
1,023,510
------------
1,000,000
1,042,660
2,083,500
------------
3,126,160
</TABLE>
<PAGE> 178
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
HOMEBUILDERS -- 0.05%
$ 90,000 $ 90,000 Engle Homes, Incorporated,
9.25% due 02/01/2008 $ 90,000
115,000 115,000 Standard Pacific Corporation,
8.50% due 06/15/2007 116,725
------------
206,725
HOUSEHOLD PRODUCTS -- 0.30%
$1,000,000 1,000,000 Proctor & Gamble ESOP, Series A,
9.36% due 01/01/2021 $ 1,330,400
-----------
INDUSTRIAL MACHINERY -- 0.06%
240,000 240,000 Beckman Instruments, Incorporated,
7.10% due 03/04/2003 241,394
25,000 25,000 Numatics, Incorporated, 9.625% due
04/01/2008 23,375
------------
264,769
INDUSTRIALS -- 1.89%
270,000 270,000 Advanced Micro Devices, Incorporated,
11.00% due 08/01/2003 286,200
70,000 70,000 American Standard, Incorporated,
7.625% due 02/15/2010 70,700
75,000 75,000 AMSC Acquisition Company, Incorporated,
Series B, 12.25% due 04/01/2008 45,375
80,000 80,000 Arco Chemical Company, 9.80% due 02/01/2020 80,044
150,000 150,000 Armco, Incorporated, 8.875% due 12/01/2008 148,500
50,000 50,000 9.00% due 09/15/2007 50,500
150,000 150,000 Bayou Steel Corporation,
9.50% due 05/15/2008 141,000
870,000 870,000 Cincinnati Milacron, Incorporated,
7.875% due 05/15/2000 880,755
20,000 20,000 Consumers International, Incorporated,
10.25% due 04/01/2005 21,400
70,000 70,000 Container Corporation of America,
10.75% due 05/01/2002 72,800
Falcon Building Products, Incorporated,
165,000 165,000 9.50% due 06/15/2007 144,375
100,000 100,000 Series B, Step up to 10.50% due 06/15/2007 57,500
190,000 190,000 Fisher Scientific International,
Incorporated,
9.00% due 02/01/2008 188,100
75,000 75,000 Galey & Lord, Incorporated,
9.125% due 03/01/2008 65,250
150,000 150,000 Gaylord Container Corporation,
9.375% due 06/15/2007 127,500
55,000 55,000 ITC Delaware Tacom, Incorporated,
9.75% due 11/15/2008 56,925
85,000 85,000 Laroche Industry, Incorporated,
9.50% due 09/15/2007 68,000
400,000 400,000 Lin Holdings Corporation,
Step up to 10.00% due 03/01/2008 276,000
100,000 100,000 Mark IV Industries, Incorporated,
7.75% due 04/01/2006 99,020
150,000 150,000 Moog, Incorporated, 10.00% due 05/01/2006 153,750
180,000 180,000 Neenah Corporation, 11.125% due 05/01/2007 184,950
2,645,000 2,645,000 News America Holdings, Incorporated,
9.25% due 02/01/2013 3,276,441
55,000 55,000 Nortek, Incorporated, 8.875% due 08/01/2008 56,100
75,000 75,000 9.25% due 03/15/2007 76,875
100,000 100,000 Pindo Deli Finance Mauritius, Ltd.,
10.75% due 10/01/2007 54,375
45,000 45,000 Purina Mills, Incorporated,
9.00% due 03/15/2010 45,900
1,500,000 1,500,000 USA Waste Services, Incorporated,
6.125% due 07/15/2001 1,509,300
------------
8,237,635
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$ 90,000
116,725
------------
206,725
$1,000,000
1,330,400
------------
241,394
23,375
------------
264,769
286,200
70,700
45,375
80,044
148,500
50,500
141,000
880,755
21,400
72,800
144,375
57,500
188,100
65,250
127,500
56,925
68,000
276,000
99,020
153,750
184,950
3,276,441
56,100
76,875
54,375
45,900
1,509,300
------------
8,237,635
</TABLE>
<PAGE> 179
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
INSURANCE -- 1.67%
$ 715,000 $ 715,000 Amerus Life Holdings, Incorporated,
6.95% due 06/15/2005 $ 719,561
1,300,000 1,300,000 Cigna Corporation, 7.40% due 05/15/2007 1,381,744
300,000 300,000 Conseco, Incorporated, 6.80% due 06/15/2005 280,320
1,000,000 1,000,000 Jackson National Life Insurance Company,
8.15% due 03/15/2027 1,148,430
1,150,000 1,150,000 Ohio National Life Insurance Company,
8.50% due 05/15/2026 1,355,206
1,150,000 1,150,000 Security Benefit Life Company,
8.75% due 05/15/2016 1,290,491
------------
$1,000,000 1,000,000 Zurich Reinsurance Centre Holdings
Incorporated
7.125% due 10/15/2023 $ 1,090,400
-----------
1,090,400 6,175,752
LEISURE TIME -- 0.23%
200,000 200,000 AMC Entertainment, Incorporated,
9.50% due 03/15/2009 204,000
195,000 195,000 Argosy Gaming Company,
13.25% due 06/01/2004 218,644
55,000 55,000 Fitzgerald's Gaming Corporation,
12.25% due 12/15/2004 29,700
110,000 110,000 Loews Cineplex Entertainment Corporation,
8.875% due 08/01/2008 113,025
175,000 175,000 Station Casinos, Incorporated,
8.875% due 12/01/2008 177,625
150,000 150,000 Time Warner Telecom LLC,
9.75% due 07/15/2008 156,750
120,000 120,000 True Temper Sports, Incorporated,
10.875% due 12/01/2008 119,400
------------
1,019,144
NEWSPAPERS -- 0.26%
1,000,000 1,000,000 News America Holdings, Incorporated
8.50% due 02/15/2005 1,122,270
-----------
PAPER -- 0.96%
185,000 185,000 American Pad & Paper Company,
13.00% due 11/15/2005 106,375
1,000,000 1,000,000 Boise Cascade Corporation,
9.90% due 10/01/2001 1,062,720
2,850,000 2,850,000 Boise Cascade Office Products Company,
7.05% due 05/15/2005 2,675,438
75,000 75,000 Domtar, Incorporated,
9.50% due 08/01/2016 75,359
120,000 120,000 Grupo Industrial Durango GIDUSA,
12.625% due 08/01/2003 105,000
275,000 275,000 Repap New Brunswick, Incorporated,
10.625% due 04/15/2005 184,250
------------
4,209,142
PETROLEUM SERVICES -- 0.94%
100,000 100,000 Abraxas Petro/CN Abraxas,
Series D, 11.50% due 11/01/2004 76,000
125,000 125,000 Cross Timbers Oil Company,
9.25% due 04/01/2007 115,625
1,000,000 1,000,000 Newfield Exploration Company,
7.45% due 10/15/2007 974,390
250,000 250,000 Petroleos Mexicanos,
8.85% due 09/15/2007 222,500
170,000 170,000 Plains Resources, Incorporated,
10.25% due 03/15/2006 170,000
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$ 719,561
1,381,744
280,320
1,148,430
1,355,206
1,290,491
$1,000,000
1,090,400
------------
7,266,152
204,000
218,644
29,700
113,025
177,625
156,750
119,400
------------
1,019,144
1,000,000
1,122,270
------------
106,375
1,062,720
2,675,438
75,359
105,000
184,250
------------
4,209,142
76,000
115,625
974,390
222,500
170,000
</TABLE>
<PAGE> 180
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
<-> PETROLEUM SERVICES -- CONTINUED
$1,000,000 $ 1,000,000 Ultramar Corporation,
8.00% due 03/15/2005 $ 1,084,490
-----------
$ 1,400,000 1,400,000 YPF Sociedad Anonima,
10.00% due 11/02/2028 $ 1,436,750
------------
1,084,490 2,995,265
PUBLISHING -- 0.42%
115,000 115,000 Big Flowers Press Holdings, Incorporated,
8.625% due 12/01/2008 116,150
300,000 300,000 Scholastic Corporation,
7.00% due 12/15/2003 312,207
270,000 270,000 Sullivan Graphics, Incorporated,
12.75% due 08/01/2005 274,050
1,035,000 1,035,000 Viacom, Incorporated, 7.75% due 06/01/2005 1,122,799
------------
1,825,206
REAL ESTATE -- 0.24%
1,000,000 1,000,000 MEPCO Finance, Incorporated
7.50% due 05/01/2003 1,065,210
-----------
RETAIL GROCERY -- 0.03%
90,000 90,000 Disco SA, 9.875% due 05/15/2008 76,725
65,000 65,000 Statler Brothers Holdings, Incorporated,
9.00% due 07/01/2004 63,050
------------
139,775
RETAIL TRADE -- 0.72%
300,000 300,000 Duane Reade, Incorporated,
9.25 % due 02/15/2008 309,000
120,000 120,000 Guitar Center Management Company,
Incorporated,
11.00% due 07/01/2006 126,000
2,500,000 2,500,000 J.C. Penney Company, Incorporated,
7.40% due 04/01/2037 2,717,900
------------
3,152,900
SANITARY SERVICES -- 0.02%
105,000 105,000 Allied Waste North America,
7.625% due 01/01/2006 105,788
------------
SOFTWARE -- 0.14%
Psinet, Incorporated,
250,000 250,000 10.00% due 02/15/2005 245,000
75,000 75,000 11.50% due 11/01/2008 78,562
190,000 190,000 Verio, Incorporated,
10.375% due 04/01/2005 185,250
100,000 100,000 11.25% due 12/01/2008 100,500
------------
609,312
STEEL -- 0.13%
75,000 75,000 Acindar Industria, Argentina,
11.25% due 02/15/2004 60,000
225,000 225,000 Alaska Steel Corporation,
9.125% due 12/15/2006 235,688
75,000 75,000 Amersteel Corporation, 8.75% due 04/15/2008 72,000
140,000 140,000 CSN Iron SA, 9.125% due 06/01/2007 85,400
115,000 115,000 Weirton Steel Corporation,
11.375% due 07/01/2004 102,350
------------
555,438
TELECOMMUNICATION SERVICES -- 1.20%
205,000 205,000 BTI Telecom Corporation,
10.50% due 09/15/2007 154,775
320,000 320,000 GCI, Incorporated,
9.75% due 08/01/2007 316,800
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$1,000,000
$ 1,084,490
1,436,750
------------
4,079,755
116,150
312,207
274,050
1,122,799
------------
1,825,206
1,000,000
1,065,210
------------
76,725
63,050
------------
139,775
309,000
126,000
2,717,900
------------
3,152,900
105,788
------------
245,000
78,562
185,250
100,500
------------
609,312
60,000
235,688
72,000
85,400
102,350
------------
555,438
154,775
316,800
</TABLE>
<PAGE> 181
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
<-> TELECOMMUNICATION SERVICES -- CONTINUED
$ 210,000 $ 210,000 GST Telecommunications, Incorporated,
12.75% due 11/15/2007 $ 195,300
200,000 200,000 Innova S De RL,
12.875% due 04/01/2007 130,000
105,000 105,000 ITC Deltacom, Incorporated,
8.875% due 03/01/2008 105,525
425,000 425,000 KMC Telecom Holdings, Incorporated,
Step up to 12.50% due 02/15/2008 204,000
425,000 425,000 NTL Incorporated,
Step up to 12.38% due 10/01/2008 263,500
105,000 105,000 Qwest Communications International,
Incorporated,
7.50% due 11/01/2008 109,069
Rogers Cantel, Incorporated,
100,000 100,000 8.30% due 10/01/2007 100,500
100,000 100,000 9.375% due 06/01/2008 105,500
Tele-Communications, Incorporated,
1,500,000 1,500,000 9.25% due 04/15/2002 1,667,925
533,000 533,000 9.65% due 10/01/2003 588,256
1,270,000 1,270,000 USA Networks, Incorporated,
6.75% due 11/15/2005 1,274,751
------------
5,215,901
TELEPHONE -- 2.10%
275,000 275,000 Allbritton Communications Company,
8.875% due 02/01/2008 277,062
$ 591,974 591,974 BellSouth Savings, ESOT
9.19% due 07/01/2003 $ 652,035
1,100,000 1,100,000 Comcast Cable Communications,
8.50% due 05/01/2027 1,350,932
1,000,000 1,000,000 Compania De Telecomunicaciones,
7.625% due 07/15/2006 953,280
175,000 175,000 E Spire Communications, Incorporated,
Step up to 10.625% due 07/01/2008 70,000
200,000 200,000 E Spire communications Insurance,
Step up to 12.75% due 04/01/2006 120,000
1,000,000 1,000,000 GTE Corporation,
8.75% due 11/01/2021 1,288,180
-----------
75,000 75,000 Hyperion Telecommunications, Incorporated,
Series B, 12.25% due 09/01/2004 75,750
Intermedia Communications, Incorporated,
80,000 80,000 8.60% due 06/01/2008 76,400
250,000 250,000 8.875% due 11/01/2007 241,250
200,000 200,000 IXC Communications, Incorporated,
9.00% due 04/15/2008 201,500
50,000 50,000 Jacor Communications Company,
9.75% due 12/15/2006 55,250
160,000 160,000 L 3 Communications Corporation,
8.00% due 08/01/2008 160,400
245,000 245,000 Level 3 Communications, Incorporated,
9.125% due 05/01/2008 242,856
50,000 50,000 MGC Communications, Incorporated,
13.00% due 10/01/2004 32,500
150,000 150,000 MJD Communications, Incorporated,
9.50% due 05/01/2008 147,750
250,000 250,000 MobileMedia Communications, Incorporated,
9.375% due 11/01/2007 25,000
775,000 775,000 NEXTEL Communications, Incorporated,
Step up to 9.75% due 10/31/2007 472,750
400,000 400,000 Nextlink Communications, Incorporated,
9.45% due 04/15/2008 230,000
200,000 200,000 Paging Network, Incorporated,
10.125% due 08/01/2007 192,000
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$ 195,300
130,000
105,525
204,000
263,500
109,069
100,500
105,500
1,667,925
588,256
1,274,751
------------
5,215,901
277,062
$ 591,974
652,035
1,350,932
953,280
70,000
120,000
1,000,000
1,288,180
75,750
76,400
241,250
201,500
55,250
160,400
242,856
32,500
147,750
25,000
472,750
230,000
192,000
</TABLE>
<PAGE> 182
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
<-> TELEPHONE -- CONTINUED
$ 150,000 $ 150,000 Price Communications Wireless,
9.125% due 12/15/2006 $ 150,750
160,000 160,000 RSL Communications PLC,
12.00% due 11/01/2008 164,800
160,000 160,000 Telecommunications Techniques Company,
9.75% due 05/15/2008 157,600
125,000 125,000 Viatel, Incorporated,
11.25% due 04/15/2008 127,813
1,575,000 1,575,000 World Common, Incorporated,
7.55% due 04/01/2004 1,717,506
------------
$ 1,940,215 7,243,149
TRANSPORTATION -- 0.28%
205,000 205,000 Iron Mountain, Incorporated,
8.75% due 09/30/2009 211,150
195,000 195,000 Johnstown American Industries, Incorporated,
11.75% due 08/15/2005 205,725
175,000 175,000 K& F Industry, Incorporated,
9.25% due 10/15/2007 176,750
100,000 100,000 MTL, Incorporated,
10.00% due 06/15/2006 97,000
470,000 470,000 Southern Railway Company,
8.75% due 10/15/2003 527,598
------------
1,218,223
TOYS, AMUSEMENTS & SPORTING GOODS -- 0.22%
$1,000,000 1,000,000 Brunswick Corporation,
7.125% due 08/01/2027 945,720
-----------
TOTAL CORPORATE BONDS
(Cost: $142,701,380) $27,784,429 $118,155,680
=========== ============
MUNICIPAL BONDS -- 1.49%
ALABAMA -- 0.23%
1,000,000 1,000,000 Huntsville, Alabama Solid Waste Disposal,
5.95% due 10/01/2003 1,012,240
CALIFORNIA -- 0.51%
2,000,000 2,000,000 Orange County, California Pension
Obligation,
7.36% due 09/01/2010 2,231,000
FLORIDA -- 0.26%
1,000,000 1,000,000 Miami Beach, Florida Redevelopment Agency,
8.95% due 12/01/2022 1,152,800
MARYLAND -- 0.17%
705,000 705,000 Baltimore, Maryland, Series B,
6.375% due 10/15/2002 727,031
MICHIGAN -- 0.32%
1,335,000 1,335,000 Detroit, Michigan, Downtown Development
Authority,
6.20% due 07/01/2008 1,386,397
------------
TOTAL MUNICIPAL BONDS
(Cost: $6,468,739) $ 6,509,468
============
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$ 150,750
164,800
157,600
127,813
1,717,506
------------
9,183,364
211,150
205,725
176,750
97,000
527,598
------------
1,218,223
$1,000,000
945,720
------------
$145,940,109
============
1,012,240
2,231,000
1,152,800
727,031
1,386,397
------------
$ 6,509,468
============
</TABLE>
<PAGE> 183
MANUFACTURERS INVESTMENT TRUST -- CAPITAL GROWTH BOND TRUST
MANUFACTURERS INVESTMENT TRUST -- INVESTMENT QUALITY BOND TRUST
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998 (UNAUDITED) -- (CONTINUED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ------------------------------------------- --------------------------
CAPITAL INVESTMENT CAPITAL INVESTMENT
GROWTH QUALITY PRO FORMA GROWTH QUALITY
BOND BOND COMBINED SECURITY DESCRIPTION BOND BOND
---- ---- -------- -------------------- ---- ----
<C> <C> <C> <S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.46%
$1,000,000 $ 1,000,000 Residential Funding Mortgage Security I,
Incorporated, Series 1996-S1, Class A12,
7.25% due 01/25/2026 $ 1,024,961
971,317 971,317 Residential Funding Mortgage Security I,
Incorporated, Series 1996-S3, Class A5,
7.25% due 01/25/2026 995,454
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost: $1,974,241) $ 2,020,415
===========
ASSET BACKED SECURITIES -- 2.98%
$ 600,000 600,000 AESOP Funding II LLC, Series 1998-1, Class
A,
6.14% due 05/20/2006 $ 599,922
1,500,000 1,500,000 American Express Master Trust, Series 1992,
Class A,
6.60% due 05/15/2000 1,508,895
2,110,000 2,110,000 Asset Securitization Corporation,
6.66% due 02/14/2041 2,218,918
1,000,000 1,000,000 Carco Auto Loan Master Trust, Series 1997-1,
Class A,
6.689% due 08/15/2004 1,004,280
2,500,000 2,500,000 Chase Commercial Mortgage Securities
Corporation,
6.39% due 11/18/2008 2,582,725
530,000 530,000 Credit Suisse First Boston,
6.52% due 07/17/2007 552,822
1,000,000 1,000,000 Discover Card Master Trust I, Series 1997-2,
Class A,
6.792% due 04/16/2010 1,008,990
1,950,000 1,950,000 First Union-Lehman Brothers Commercial,
6.60% due 01/18/1999 2,026,694
500,000 500,000 Green tree Financial Corporation,
5.98% due 08/01/2008 501,195
------------
1,000,000 1,000,000 Mortgage Index Amortizing Trust, Series
1997-1, Class A-1,
6.682% due 08/25/2004 1,020,703
-----------
TOTAL ASSET BACKED SECURITIES
(Cost: $12,727,727) $ 3,033,973 $ 9,991,171
=========== ============
SHORT TERM INVESTMENTS -- 15.19%
1,238,220 65,034,495 66,272,715 Navigator Securities Lending Trust, 5.17% 1,238,220 65,034,495
----------- ------------
REPURCHASE AGREEMENTS -- 1.80%
3,914,000 3,914,000 Repurchase Agreement with Paribas
Corporation dated 12/31/1998 at 4.80% to
be repurchased at $3,916,087 on
01/04/1999, collateralized by $3,658,000
U.S. Treasury Notes, 7.75% due 02/15/2001
(valued at $3,990,277, including interest) 3,914,000
3,945,000 3,945,000 Repurchase Agreement with State Street Bank
& Trust Company dated 12/31/1998 at 4.80%
to be repurchased at $3,947,104 on
01/04/1999, collateralized by $3,840,000
U.S. Treasury Notes, 5.50% due 02/28/2003
(valued at $4,027,200, including interest) 3,945,000
TOTAL REPURCHASE AGREEMENTS $ 3,945,000 $ 3,914,000
=========== ============
TOTAL INVESTMENTS
(Cost: $427,364,583) $65,199,949 $371,158,253
=========== ============
<CAPTION>
VALUE
- ---------- ------------
CAPITAL
GROWTH PRO FORMA
BOND COMBINED
---- --------
<C> <C>
$1,000,000
$ 1,024,961
971,317
995,454
------------
$ 2,020,415
============
599,922
1,508,895
2,218,918
1,000,000
1,004,280
2,582,725
552,822
1,000,000
1,008,990
2,026,694
501,195
1,000,000
1,020,703
------------
$ 13,025,144
============
1,238,220 66,272,715
------------
3,914,000
3,945,000
3,945,000
$ 7,859,000
============
$436,358,202
============
</TABLE>
<PAGE> 184
MANUFACTURERS INVESTMENT TRUST
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF COMBINATION. The Pro Forma Combining Schedule of Portfolio
Investments, the Statement of Assets and Liabilities and the Statement of
Operations reflect the accounts of the Manufacturers Investment Trust Investment
Quality Bond ("Investment Quality Bond") and Capital Growth Bond ("Capital
Growth Bond") Trusts, two of thirty six investment Portfolios offered by the
Manufacturers Investment Trust (the "Trust") for the year ended December 31,
1998. These statements have been derived from the books and records of each
Portfolio utilized in calculating daily net asset value at December 31, 1998.
The Pro Forma statements reflect the proposed transfer of the assets and
liabilities of Capital Growth Bond in exchange for shares of Investment Quality
Bond. Under generally accepted accounting principles ("GAAP"), the Investment
Quality Bond will be the surviving entity for accounting purposes. The Pro Forma
financial statements have been adjusted to reflect the anticipated fee
arrangements for the surviving entity and do not reflect the expenses of either
Portfolio in carrying out its obligations under the Agreement and Plan of
Reorganization.
The Pro Forma Combining Schedule of Portfolio Investments, Statement of
Assets and Liabilities and Statement of Operations should be read in conjunction
with the historical financial statements of Investment Quality Bond and Capital
Growth Bond incorporated by reference in the Statement of Additional
Information.
Manufacturers Securities Services, LLC ("MSS"), a wholly-owned subsidiary
of The Manufacturers Life Insurance Company of North America ("MNA"), serves as
investment adviser to Investment Quality Bond and Capital Growth Bond for which
it receives a fee for services, computed daily and paid monthly, at the annual
rate 0.65% of the average daily net assets of each Trust. MNA is controlled by
The Manufacturers Life Insurance Company ("Manulife Financial"), a mutual life
insurance company based in Toronto, Canada.
Pro Forma Adjustments:
(A) Adjustment to reflect amount allocated to capital shares ($0.01 par
value) for shares redeemed in reorganization.
(B) Adjustment to reflect reduction in outstanding shares relative to Net
Asset Value upon reorganization.
<PAGE> 185
PART C
OTHER INFORMATION
<PAGE> 186
ITEM 15. 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.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(1)(a) Registrant's Agreement and Declaration of Trust, dated
September 29, 1988 is incorporated by reference to Exhibit
(1)(a) to Post-Effective Amendment No. 31 filed February 28,
1996.
(1)(b) 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 is
incorporated by reference to Exhibit (1)(b) to
Post-Effective Amendment No. 31 filed February 28, 1996.
(1)(c) Establishment and Designation of Additional Series of Shares
of Beneficial Interest -- Conservative, Moderate and
Aggressive Asset Allocation Trusts, dated May 1, 1989 is
incorporated by reference to Exhibit (1)(c) to
Post-Effective Amendment No. 31 filed February 28, 1996.
(1)(d) Establishment and Designation of Additional Series of Shares
of Beneficial Interest -- Growth & Income Trust, dated
February 1, 1991 is incorporated by reference to Exhibit
(1)(d) to Post-Effective Amendment No. 31 filed February 28,
1996.
(1)(e) 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 is incorporated by
reference to Exhibit (1)(e) to Post-Effective Amendment No.
31 filed February 28, 1996.
(1)(f) 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 is
incorporated by reference to Exhibit (1)(f) to
Post-Effective Amendment No. 31 filed February 28, 1996.
</TABLE>
C-1
<PAGE> 187
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(1)(g) Establishment and Designation of Additional Series of Shares
of Beneficial Interest -- Pasadena Growth Trust, Growth
Trust and Strategic Income Trust, dated August 7, 1992 is
incorporated by reference to Exhibit (1)(g) to
Post-Effective Amendment No. 31 filed February 28, 1996.
(1)(h) 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 is incorporated by reference to Exhibit (1)(h) to
Post-Effective Amendment No. 31 filed February 28, 1996.
(1)(i) Establishment and Designation of Additional Series of Shares
of Beneficial Interest -- International Growth and Income
Trust, dated December 28, 1994 is incorporated by reference
to Exhibit (1)(i) to Post-Effective Amendment No. 31 filed
February 28, 1996.
(1)(j) Establishment and Designation of Additional Series of Shares
of Beneficial Interest -- Small/ Mid Cap Trust, dated
February 1, 1996 is incorporated by reference to Exhibit
(1)(j) to Post-Effective Amendment No. 34 filed October 4,
1996.
(1)(k) Establishment and Designation of Additional Series of Shares
of Beneficial Interest -- International Small Cap Trust,
dated February 1, 1996 is incorporated by reference to
Exhibit (1)(k) to Post-Effective Amendment No. 34 filed
October 4, 1996.
(1)(l) Establishment and Designation of Additional Series of Shares
of Beneficial Interest -- Growth Trust, dated July 9, 1996
is incorporated by reference to Exhibit (1)(l) to
Post-Effective Amendment No. 34 filed October 4, 1996.
(1)(m) 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" is incorporated by reference to Exhibit (1)(m) to
Post-Effective Amendment No. 35 filed December 18, 1996.
(1)(n) Establishment and Designation of Additional Series of Shares
of Beneficial Interest -- Small Company Value Trust, dated
September 30, 1997 is incorporated by reference to Exhibit
(1)(m) to Post-Effective Amendment No. 39 filed March 2,
1998.
(1)(o) Amendment to the Agreement and Declaration of Trust (name
change) is incorporated by reference to Exhibit (1)(n) to
Post-Effective Amendment No. 39 filed March 2, 1998.
(2) Registrant's By-Laws are incorporated by reference to
Exhibit (2) to Post-Effective Amendment No. 38 filed
September 17, 1997.
(3) Not Applicable
(4) Agreement and Plan of Reorganization (filed herewith as
Exhibit A to the Prospectus/Proxy Statement).
(5) Included in Exhibits 1 and 2 hereto.
(6)(a) Advisory Agreement between NASL Series Trust and NASL
Financial Services, Inc. is incorporated by reference to
Exhibit (5)(a)(1) to Post-Effective Amendment No. 30 filed
December 14, 1995.
(6)(b) Amendment to Advisory Agreement between NASL Series Trust
and NASL Financial Services, Inc. adding the Growth Trust is
incorporated by reference to Post-Effective Amendment No. 30
filed December 14, 1995.
</TABLE>
C-2
<PAGE> 188
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(6)(c) Amendment to Advisory Agreement between NASL Series Trust
and NASL Financial Services, Inc., dated October 1, 1996
reducing advisory fee for Blue Chip Growth Trust is
incorporated by reference to Exhibit (5)(a)(3) to
Post-Effective Amendment No. 34 filed October 4, 1996.
(6)(d) Amendment to Advisory Agreement between NASL Series Trust
and NASL Financial Services, Inc. adding Emerging Growth
Trust, Pilgrim Baxter Growth Trust, Pacific Rim Emerging
Markets Trust, International Stock Trust, Worldwide Growth
Trust, Science & Technology Trust, Common Stock Trust, Real
Estate Securities Trust, Value Trust, Equity Index Trust,
Balanced Trust, High Yield Trust, Capital Growth Bond Trust,
Lifestyle Conservative 280 Trust, Lifestyle Moderate 460
Trust, Lifestyle Balanced 640 Trust, Lifestyle Growth 820
Trust and Lifestyle Aggressive 1000 Trust is incorporated by
reference to Exhibit (5)(a)(4) to Post-Effective Amendment
No. 35 filed December 18, 1996.
(6)(e) Amendment to Advisory Agreement between NASL Series Trust
and NASL Financial Services, Inc. adding Small Company Value
Trust is incorporated by reference to Exhibit (5)(a)(5) to
Post-Effective Amendment No. 39 filed March 2, 1998.
(6)(f) Subadvisory Agreement between NASL Financial Services, Inc.
and Oechsle International Advisors, L.P. is incorporated by
reference to Exhibit (5)(b)(i) to Post-Effective Amendment
No. 37 filed August 1, 1997.
(6)(g) Subadvisory Agreement between NASL Financial Services, Inc.
and Wellington Management Company is incorporated by
reference to Exhibit (5)(b)(ii) to Post-Effective Amendment
No. 37 filed August 1, 1997.
(6)(h) Subadvisory Agreement between Manufacturers Securities
Services, LLC and Salomon Brothers Asset Management Inc. is
incorporated by reference to Exhibit 5(b)(iii) to Post-
Effective Amendment No. 39 filed March 2, 1998.
(6)(i) Subadvisory Consulting Agreement between Salomon Brothers
Asset Management Inc. and Salomon Brothers Asset Management
Limited is incorporated by reference to Exhibit (5)(b)(iv)
to Post-Effective Amendment No. 39 filed March 2, 1998.
(6)(j) Subadvisory Agreement between NASL Financial Services, Inc.
and J.P. Morgan Investment Management Inc. is incorporated
by reference to Exhibit (5)(b)(v) to Post-Effective
Amendment No. 37 filed August 1, 1997.
(6)(k) Form of Subadvisory Agreement between NASL Financial
Services, Inc. and Fred Alger Management, Inc. is
incorporated by reference to Exhibit (5)(b)(xi) to
Post-Effective Amendment No. 30 filed December 14, 1995.
(6)(l) Subadvisory Agreement between Manufacturers Securities
Services, LLC and Founders Asset Management, LLC is
incorporated by reference to Exhibit (5)(b)(vi) to
Post-Effective Amendment No. 40 filed April 30, 1998.
(6)(m) Amendment to Subadvisory Agreement between NASL Financial
Services, Inc. and Founders Asset Management, Inc. adding
the Growth Trust is incorporated by reference to Exhibit
(5)(b)(xiii) to Post-Effective Amendment No. 33 filed July
10, 1996.
(6)(n) 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 is incorporated by reference to Exhibit
(5)(b)(xii) to Post-Effective Amendment No. 34 filed October
4, 1996.
(6)(o) Subadvisory Agreement between NASL Financial Services, Inc.
and T. Rowe Price Associates, Inc., dated October 1, 1996
providing for the Blue Chip Growth and Equity-Income Trusts
is incorporated by reference to Exhibit (5)(b)(xiii) to
Post-Effective Amendment No. 35 filed December 18, 1996.
</TABLE>
C-3
<PAGE> 189
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(6)(p) Form of Subadvisory Agreement between NASL Financial
Services, Inc. and Rowe Price-Fleming International, Inc.
adding the International Stock Trust is incorporated by
reference to Exhibit (5)(b)(xiv) to Post-Effective Amendment
No. 34 filed October 4, 1996.
(6)(q) Subadvisory Agreement between NASL Financial Services, Inc.
and Morgan Stanley Asset Management, Inc., dated October 1,
1996 providing for the Global Equity Trust is incorporated
by reference to Exhibit (5)(b)(xv) to Post-Effective
Amendment No. 35 filed December 18, 1996.
(6)(r) Subadvisory Agreement between NASL Financial Services, Inc.
and Miller Anderson & Sherrerd, LLP, dated October 1, 1996
adding the Value and High Yield Trusts is incorporated by
reference to Exhibit (5)(b)(xvi) to Post-Effective Amendment
No. 35 filed December 18, 1996.
(6)(s) Form of Subadvisory Agreement between NASL Financial
Services, Inc. and Warburg Pincus Counsellors, Inc. adding
the Emerging Growth Trust is incorporated by reference to
Exhibit (5)(b)(xvii) to Post-Effective Amendment No. 34
filed October 4, 1996.
(6)(t) Form of Subadvisory Agreement between NASL Financial
Services, Inc. and Manufacturers Adviser Corporation, dated
October 1, 1996 providing for the Money Market Trust is
incorporated by reference to Exhibit (5)(b)(xviii) to
Post-Effective Amendment No. 34 filed October 4, 1996.
(6)(u) Subadvisory Agreement between NASL Financial Services, Inc.
and Pilgrim Baxter & Associates, Inc., dated December 31,
1996 adding the Pilgrim Baxter Growth Trust is incorporated
by reference to Exhibit (5)(b)(xix) to Post-Effective
Amendment No. 35 filed December 18, 1996.
(6)(v) 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 is
incorporated by reference to Exhibit (5)(b)(xx) to
Post-Effective Amendment No. 35 filed December 18, 1996.
(6)(w) Subadvisory Agreement between NASL Financial Services, Inc.
and Fidelity Management Trust Company, dated January 1, 1996
and as amended December 31, 1996 providing for the Equity,
Conservative Asset Allocation, Moderate Asset Allocation and
Aggressive Asset Allocation Trusts is incorporated by
reference to Exhibit (5)(b)(xxi) to Post-Effective Amendment
No. 35 filed December 18, 1996.
(6)(x) Form of Amendment to Subadvisory Agreement between NASL
Financial Services, Inc. and T. Rowe Price Associates, Inc.,
dated December 31, 1996 adding the Science & Technology
Trust is incorporated by reference to Exhibit (5)(b)(xxii)
to Post-Effective Amendment No. 35 filed December 18, 1996.
(6)(y) Form of Subadvisory Agreement between Manufacturers
Securities Services, LLC (formerly NASL Financial Services,
Inc.) and Rosenberg Institutional Equity Management
regarding the Small Company Value Trust is incorporated by
reference to Exhibit (2) to Post-Effective Amendment No. 38
filed September 17, 1997.
(7) Not Applicable
(8) Not Applicable
(9) Custodian Agreement Between NASL Series Fund, Inc. and State
Street Bank and Trust Company, dated March 24, 1988 is
incorporated by reference to Exhibit (2) to Post-Effective
Amendment No. 38 filed September 17, 1997.
(10) Not Applicable
</TABLE>
C-4
<PAGE> 190
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(11) Opinion of James D. Gallagher, Esq., regarding legality of
issuance of shares and other matters (previously filed).
(12) Form of Opinion of Simpson Thacher & Bartlett on tax matters
(previously filed).
(13) Not Applicable
(14)(a) Consent of PricewaterhouseCoopers LLP (filed herewith).
(14)(b) Consent of Simpson Thacher & Bartlett (previously filed).
(14)(c) Consent of James D. Gallagher (previously filed).
(15) Not Applicable
(16)(a) Powers of Attorney -- Don B. Allen, Charles L. Bardelis, and
Samuel Hoar, Trustees, dated September 27, 1996 is
incorporated by reference to Exhibit (2) to Post-Effective
Amendment No. 38 filed September 17, 1997.
(16)(b) Powers of Attorney -- John D. Richardson, Chairman of the
Board, and F. David Rowling, Trustee is incorporated by
reference to Exhibit (18)(e) to Post-Effective Amendment No.
36 filed April 30, 1997.
(17)(a) Prospectus of the Trust, dated May 1, 1998 (previously
filed).
(17)(b) Statement of Additional Information of the Trust, dated May
1, 1998 (filed herewith as part of Part B to the
Prospectus/Proxy Statement).
(17)(c) Intentionally omitted.
(17)(d) Annual Report of the Trust for the year ended December 31,
1998 (filed herewith).
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a
part of this Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act of 1933, the reoffering prospectus will contain the
information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(b) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as part of an amendment to the
Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the
initial bona fide offering of them.
C-5
<PAGE> 191
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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
the 4th day of March, 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
C-6
<PAGE> 192
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.
<TABLE>
<C> <S> <C>
* Trustee **
- ------------------------------------------ -------------------
Don B. Allen (Date)
/s/ JOHN D. DESPREZ III 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 **
- ------------------------------------------ (Principal Financial and Accounting -------------------
James Boyle Officer) (Date)
*By: /s/ JAMES D. GALLAGHER **
------------------------------------ -------------------
James D. Gallagher (Date)
Attorney-in-Fact Pursuant to
Powers of Attorney
** March 4, 1999
-------------------
</TABLE>
C-7
<PAGE> 193
MANUFACTURERS INVESTMENT TRUST
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
4 Agreement and Plan of Reorganization (filed herewith as
Exhibit A to the Prospectus/Proxy Statement).
14(a) Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
17(d) Annual Report of the Trust for the year ended December 31,
1998.
</TABLE>
<PAGE> 1
EXHIBIT 14(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion into this Pre-Effective Amendment No. 1 under
the Securities Act of 1933 to the Registration Statement on Form N-14
(Registration No. 333-71437) of our report dated February 22, 1999 on our audits
of the financial statements and financial highlights of Manufacturers Investment
Trust, for the year ended December 31, 1998. We also consent to the references
to our Firm under the captions "Financial Statements and Experts" and
"Independent Accountants" in Parts A and B of the Registration Statement,
respectively.
/s/PricewaterhouseCoopers LLP
Boston, Massachusetts
March 1, 1999
<PAGE> 1
MANUFACTURERS INVESTMENT TRUST
PRESIDENT'S MESSAGE
February 22, 1999
Dear Fellow Investors:
It is my pleasure to present to you the 1998 audited financial statements of the
Manufacturers Investment Trust (the "Trust"), the mutual fund that is the
underlying investment vehicle for your variable insurance product or retirement
plan. The financial statements that follow reflect operations for the period
ending December 31, 1998. During 1998, total net assets of the Trust grew from
$10.45 billion as of December 31, 1997, to $13.40 billion as of December 31,
1998, reflecting the ongoing interest in tax-deferred variable insurance
products as vehicles for retirement and estate planning.
As can be read in the enclosed commentaries from our prestigious investment
managers, 1998 was a tumultuous year for investors, no matter the asset class or
investment style. Asia, Latin America, and many of the emerging markets
struggled with deep recessions, and Russia faced default and a currency
collapse. The US and Europe, however, enjoyed prosperity while being immersed in
significant market volatility. Despite a solid expansion in the first half of
1998, the equity markets in the third quarter reacted to a host of economic,
political and financial concerns with large drops, including a 19% fall from
July to August in large company stocks, with much deeper corrections impacting
smaller companies. However, the market rebounded in the fourth quarter, passing
the Dow's 9300 mark that many thought impossible, due in part to three Federal
Reserve interest rate reductions, hopes of increasing stability in some of the
troubled economies around the world, and the surging Internet market phenomenon.
Domestically, the majority of the market gains were limited to a small group of
large capitalization Fortune 100 companies and technology stocks, while small
cap value stocks, energy and real estate stocks struggled.
At Manulife Financial, we are committed to helping you meet your long-term
financial goals by delivering you a full range of investment options and
expertise. Part of this commitment is the ongoing review of performance and the
events that impact our investment managers. To this end, we will be adding more
high quality portfolios and managers in May 1999 to enhance our current slate of
investment offerings.
We encourage you to work closely with a professional financial advisor to
periodically review your investment program to ensure that you are making
choices that best meet your own needs, whether it be increasing your portfolio's
diversity, pursuing greater defensive strategies during market volatility, or
adjusting your asset allocation to better reflect your investment horizon.
Thank you for choosing Manulife Financial. We look forward to serving your
investment needs throughout 1999 and into the next millennium.
Sincerely,
/s/ John D. DesPrez III
- -------------------------------
John D. DesPrez III
President
<PAGE> 2
MANUFACTURERS INVESTMENT TRUST
INDEX TO ANNUAL REPORT
<TABLE>
<CAPTION>
Page
----
<S> <C>
Portfolio Performance and Manager's Commentary......................................................... iii
Report of Independent Accountants...................................................................... 1
Statements of Assets and Liabilities................................................................... 2
Statements of Operations............................................................................... 9
Statements of Changes in Net Assets.................................................................... 16
Financial Highlights................................................................................... 28
Portfolio of Investments:
Pacific Rim Emerging Markets Trust................................................................ 64
Science & Technology Trust........................................................................ 68
International Small Cap Trust..................................................................... 69
Emerging Small Company Trust...................................................................... 70
Pilgrim Baxter Growth Trust....................................................................... 73
Small/Mid Cap Trust............................................................................... 75
International Stock Trust......................................................................... 77
Worldwide Growth Trust............................................................................ 81
Global Equity Trust............................................................................... 83
Small Company Value Trust......................................................................... 85
Equity Trust...................................................................................... 94
Growth Trust...................................................................................... 99
Quantitative Equity Trust......................................................................... 101
Equity Index Trust................................................................................ 103
Blue Chip Growth Trust............................................................................ 111
Real Estate Securities Trust...................................................................... 114
Value Trust....................................................................................... 115
International Growth and Income Trust............................................................. 117
Growth and Income Trust........................................................................... 119
Equity-Income Trust............................................................................... 121
Balanced Trust.................................................................................... 124
Aggressive, Moderate and Conservative Asset Allocation Trusts..................................... 127
High Yield Trust.................................................................................. 162
Strategic Bond Trust.............................................................................. 167
Global Government Bond Trust...................................................................... 175
Capital Growth Bond Trust......................................................................... 177
Investment Quality Bond Trust..................................................................... 179
U.S. Government Securities Trust.................................................................. 187
Money Market Trust................................................................................ 188
Lifestyle Aggressive 1000 Trust................................................................... 190
Lifestyle Growth 820 Trust........................................................................ 190
Lifestyle Balanced 640 Trust...................................................................... 190
Lifestyle Moderate 460 Trust...................................................................... 190
Lifestyle Conservative 280 Trust.................................................................. 191
Notes to Financial Statements.......................................................................... 192
</TABLE>
ii
<PAGE> 3
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO PERFORMANCE AND MANAGER'S COMMENTARY
TRUST PERFORMANCE
In the following pages we have set forth information regarding the performance
of each Portfolio of the Manufacturers Investment Trust (the "Trust"), excluding
the Money Market Trust. There are several ways to evaluate a Portfolio's
historical performance. One can look at the total percentage change in value,
the average annual percentage change or the growth of a hypothetical $10,000
investment. WITH RESPECT TO ALL PERFORMANCE INFORMATION PRESENTED, IT IS
IMPORTANT TO UNDERSTAND THAT PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
RETURN AND PRINCIPAL FLUCTUATE, AND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.
PERFORMANCE TABLES
The Performance Tables show two types of total return information: CUMULATIVE
AND AVERAGE ANNUAL TOTAL RETURNS. A CUMULATIVE TOTAL RETURN is an expression of
a Portfolio's total change in share value in percentage terms over a set period
of time --one, five and ten years (or since the Portfolio's inception if less
than the applicable period). An AVERAGE ANNUAL TOTAL RETURN takes the
Portfolio's cumulative total return for a time period greater than one year and
shows what would have happened if the Portfolio had performed at a constant rate
each year. In addition, eight Portfolios have had portfolio management changes,
namely the Global Equity, Equity, Blue Chip Growth, Equity-Income, Aggressive
Asset Allocation, Moderate Asset Allocation, Conservative Asset Allocation and
U.S. Government Securities Trusts. For these Portfolios, the tables show an
average annual total return for the period since the current portfolio manager
assumed responsibility. THE TABLES SHOW ALL CUMULATIVE AND AVERAGE ANNUAL TOTAL
RETURNS, NET OF FEES AND EXPENSES OF THE TRUST, BUT DO NOT REFLECT THE INSURANCE
(SEPARATE ACCOUNT) EXPENSES (INCLUDING A POSSIBLE CONTINGENT DEFERRED SALES
CHARGE) OF THE VARIABLE ANNUITY AND VARIABLE LIFE PRODUCTS THAT INVEST IN THE
TRUST. IF THESE WERE INCLUDED, PERFORMANCE WOULD BE LOWER.
GRAPH -- CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
The performance graph for each Portfolio shows the change in value of a $10,000
investment over the life of each Portfolio. Each Portfolio's performance is
compared with the performance of one or more broad-based securities indices as a
"benchmark." All performance information includes the reinvestment of dividends
and capital gain distributions, as well as the deduction of ongoing management
fees and Portfolio operating expenses. The benchmarks used for comparison are
unmanaged and include reinvestment of dividends and capital gains distributions,
if any, but do not reflect any fees or expenses. Portfolios that invest in
multiple asset classes are compared with a customized benchmark. This benchmark
is comprised of a set percentage allocation from each of the asset classes in
which the Portfolio invests.
PORTFOLIO MANAGER'S COMMENTARY
Finally, we have provided a commentary by each portfolio manager regarding each
Portfolio's performance during the period ended December 31, 1998. The views
expressed are those of the portfolio manager as of December 31, 1998, and are
subject to change based on market and other conditions. Information about a
Portfolio's holdings, asset allocation or country diversification is historical
and is no indication of future portfolio composition, which will vary.
iii
<PAGE> 4
PACIFIC RIM EMERGING MARKETS TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To achieve long-term growth of capital by investing, under
& POLICIES: normal conditions, at least 65% of the Trust's net assets in
common stocks and equity-related securities of established,
larger-capitalization, non-US companies in the Pacific Rim
that have attractive long-term prospects for capital growth.
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGERS: Richard James Crook, Stephen Hill, and Hugh Williams
INCEPTION DATE: October 4, 1994
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
PACIFIC RIM BLENDED FINANCIAL FINANCIAL TIMES
EMERGING MARKETS TIMES ACTUARIES PACIFIC EX JAPAN FINANCIAL TIMES MSCI PACIFIC
TRUST INDEX INDEX JAPAN INDEX INDEX
---------------- ----------------- ---------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Sept. 1994 10000.00 10000.00 10000.00 10000.00 10000.00
Dec. 1994 9473.00 9231.00 9082.00 9844.00 9750.00
Mar. 1995 9303.00 9290.00 9191.00 9573.00 9597.00
Jun. 1995 9748.00 9588.00 9697.00 8976.00 9203.00
Sept.1995 10097.00 9949.00 10059.00 9322.00 9588.00
Dec. 1995 10548.00 10302.00 10374.00 9790.00 10042.00
Mar. 1996 11184.00 11128.00 11414.00 9783.00 10255.00
Jun. 1996 11289.00 11173.00 11426.00 9927.00 10317.00
Sept. 1996 11422.00 11277.00 11718.00 9365.00 9901.00
Dec. 1996 11582.00 11693.00 12654.00 8204.00 9198.00
Mar. 1997 11284.00 10989.00 12076.00 7218.00 8289.00
Jun. 1997 11964.00 12066.00 12870.00 8904.00 9869.00
Sept.1997 10328.00 10571.00 11306.00 7688.00 8648.00
Dec. 1997 7630.00 7858.00 8244.00 6100.00 6868.00
Mar. 1998 7971.00 8273.00 8688.00 6267.00 7090.00
Jun. 1998 6458.00 6537.00 6548.00 5937.00 6468.00
Sept. 1998 5850.00 6040.00 6150.00 5100.00 5589.00
Dec. 1998 7279.00 7620.00 7740.00 6485.00 7053.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total
Return Cumulative Total Return
--------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
Blended Financial Times Actuaries Index+* -3.03% -6.19% -23.80%
Financial Times Actuaries Pacific ex-Japan Index -6.11% -5.85% -22.60%
Financial Times Actuaries Japan Index 6.32% -9.69% -35.15%
MSCI Pacific Index++ 2.69% -7.89% -29.47%
Pacific Rim Emerging Markets Trust (at net asset value) -4.61% -7.22% -27.21%
+ Comprised of 80% Pacific ex-Japan and 20% Japan
++ The MSCI Pacific Index was added to more accurately reflect the investment objective of the Pacific Rim
Trust.
* All since inception returns for the indices begin on the month-end closest to the actual inception date of the
Trust.
</TABLE>
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the Pacific Rim Emerging Markets Trust declined
4.61%, compared to a rise in the MSCI Pacific Index of 2.69%.
ENVIRONMENT: In Asia, the beginning of the year saw a strong recovery in
markets; however, later in the year they continued the slide initiated by the
devaluation of the Thai baht in June 1997. In many cases, equity markets
registered their lowest points for the previous ten years. Previously optimistic
economic forecasts were hastily redrafted as evidence mounted for the most
severe recession that Asia has probably ever faced. However, the last quarter of
the year saw markets and currencies turning around sharply as cuts in US
interest rates allowed Asian economies to make regular and substantial cuts to
their own interest rates. By the end of the year, many equity markets were
almost back to the levels at which they opened the year, and some (notably
Korea) showed substantial net gains for the year. Japan has again had a rather
lackluster year, as consumer confidence and the overall economy remained at very
low levels.
OUTLOOK: Some of the economic data released during the fourth quarter indicates
that the recently introduced packages are starting to have a positive effect.
The yen is still strengthening against the dollar, but the authorities are
likely to try and curb its rise above 110 yen. The Asian economies are probably
over the worst, but we have seen the classic bear rally. Too much of an economic
improvement has been discounted into share prices, particularly in the smaller
Asian markets. We are cautious of the markets in the short-term, but on a
12-month view, we are more optimistic.
iv
<PAGE> 5
SCIENCE & TECHNOLOGY TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To achieve long-term growth of capital by investing at least
& POLICIES: 65% of the Trust's total assets in the common stocks of
companies expected to benefit from the development,
advancement, and use of science and technology. Current
income is incidental to the portfolio's objective.
SUBADVISER: T. Rowe Price Associates, Inc.
PORTFOLIO MANAGERS: Charles A. Morris, Jill L. Hauser, Joseph Klein III, and
Brian D. Stansky
INCEPTION DATE: January 1, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
LIPPER SCIENCE & TECHNOLOGY
SCIENCE & TECHNOLOGY TRUST INDEX
-------------------------- --------------------------------
<S> <C> <C>
December 1996 10000.00 10000.00
10744.00 10760.00
9896.00 9787.00
March 1997 9344.00 9050.00
9704.00 9446.00
10840.00 10570.00
June 1997 11040.00 10668.00
12336.00 12164.00
12168.00 12239.00
September 1997 12616.00 12758.00
11680.00 11410.00
11632.00 11313.00
December 1997 11071.00 10783.00
11242.00 10974.00
12607.00 12280.00
March 1998 12827.00 12381.00
13436.00 12912.00
12323.00 11965.00
June 1998 12981.00 12667.00
12339.00 12548.00
9575.00 10192.00
September 1998 10787.00 11395.00
12063.00 12264.00
13510.00 13639.00
December 1998 15867.00 15846.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total
Return Cumulative Total Return
---------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
Lipper Science and Technology Index* 46.95% 25.88% 58.46%
Science & Technology Trust (at net asset value) 43.32% 26.04% 58.67%
* All since inception returns for the indices begin on the month-end closest to the actual inception date of the
Trust
</TABLE>
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the Science & Technology Trust returned 43.32%,
slightly trailing the 46.95% return of the Lipper Science & Technology Index.
ENVIRONMENT: Science and technology stocks mirrored the profile of the broader
market. After a strong showing in the first half of the year, these stocks fell
sharply from mid-July to early October. Science and technology companies were
challenged by slowing sales of personal computers, weakness in the developing
markets of Asia and Latin America, and fear of budgetary pressures from Year
2000 conversions. However, with interest rates falling across the globe and
positive earnings pronouncements from leadership technology companies, science
and technology stocks rallied significantly from early October through year-end.
At year-end, the Trust was comprised of holdings that were diversified among
several segments of the science and technology sector. The Trust benefited most
from its exposure to stocks in the electronic technology and information
services sectors, while stocks in the business services and transportation
sector hindered performance.
OUTLOOK: We continue to be encouraged about the intermediate-term prospects for
science and technology stocks. However, given the sector's torrid rally during
the fall and our near-term concerns, we cannot rule out the possibility of a
modest, yet healthy, correction in science and technology stocks during the
early part of 1999. As many longer-term shareholders appreciate, short-term
volatility goes hand in hand with the potential for significant long-term
capital appreciation.
v
<PAGE> 6
INTERNATIONAL SMALL CAP TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To achieve long-term capital appreciation through
& POLICIES: investments in the common stocks of foreign companies with
market capitalizations or annual revenues of $1 billion or
less.
SUBADVISER: Founders Asset Management LLC
PORTFOLIO MANAGERS: Michael W. Gerding
INCEPTION DATE: March 4, 1996
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP MSCI WORLD EX US SMALL
TRUST MSCI WORLD EX US INDEX CAP
----------------------- ---------------------- ----------------------
<S> <C> <C> <C>
10000 10000 10000
March 1996 10048 10061 10190
10344 10093 10702
10576 10309 10531
June 1996 10624 10616 10485
10240 10438 9921
10304 10486 10019
September 1996 10424 10181 10071
10632 10223 10012
10832 10502 10189
December 1996 10920 10435 9848
11033 10868 9707
11298 10719 9881
March 1997 11257 10388 9613
10998 10548 9305
11496 10561 10014
June 1997 11641 10629 10209
11601 11332 9943
11143 11940 9347
September 1997 11560 12162 9240
11086 11269 8750
11151 11904 8101
December 1997 11006 11009 7681
11255 10888 8099
11801 10994 8839
March 1998 12476 11466 9035
12827 12215 9026
13359 12619 9030
June 1998 13383 12720 8683
13383 12657 8534
11514 12727 7346
September 1998 10853 12813 7059
11328 11179 7608
11804 10863 7961
December 1998 12311 11997 8012
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
------------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
MSCI World ex-US Index* 8.98% 6.64% 19.97%
MSCI World ex-US Small Cap Index+ 4.31% -7.52% -19.88%
International Small Cap Trust (at net asset value) 11.86% 7.65% 23.11%
+ The MSCI Small Cap World ex-US Index was added to more accurately reflect the investment objective of the
International Small Cap Trust.
* All since inception returns for the indices begin on the month-end closest to the actual inception date of the
Trust.
</TABLE>
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the International Small Cap Trust gained 11.86%,
compared to the MSCI World ex-US Small Cap Index return of 4.31%.
ENVIRONMENT: Our strongest performance came from the Trust's telecommunications
and technology stocks in Europe, as these industries rebounded dramatically from
the lows set in the second week of October 1998. Although our Japanese weighting
is lower than the benchmark, it did contribute positively to the performance of
the Trust in the fourth quarter. In the International Small Cap Trust, our
bottom up, stock-by-stock focus on rapidly growing small companies has led us to
a substantial overweighting in Europe. Approximately 71% of the Trust was
invested in Europe at period-end, with the largest weights in the UK, Germany,
and France. Because it has been so difficult to find growing companies in Japan,
our weight there at the close of the period was very low, at 5.6%. Because of
the crisis in Asia, earnings growth has been nearly non-existent, and
consequently, we owned only two names in the rest of Asia, with a weight of only
2.5%.
OUTLOOK: It is our belief that the global economy is slowing, and that this
trend will continue into 1999. We believe our focus on Europe will position us
well going into 1999, particularly as we believe Europe will enjoy some of the
strongest economic growth in the world. We are confident in the companies we
own, and we expect earnings growth that is much faster than the market as a
whole.
vi
<PAGE> 7
EMERGING SMALL COMPANY TRUST
(FORMERLY EMERGING GROWTH TRUST)
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To maximize capital appreciation by investing at least 65%
& POLICIES: of the Trust's total assets in common stocks or warrants of
US emerging growth companies that represent attractive
opportunities for maximum capital appreciation.
SUBADVISER: Warburg Pincus Asset Management, Inc.
PORTFOLIO MANAGERS: Elizabeth B. Dater and Stephen J. Lurito
INCEPTION DATE: January 1, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
[EMERGING SMALL COMPANY TRUST PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
EMERGING SMALL COMPANY TRUST RUSSELL 2000 GROWTH INDEX
---------------------------- -------------------------
<S> <C> <C>
December 1996 10000.00 10000.00
10186.00 10250.00
9731.00 9631.00
March 1997 9133.00 8951.00
9079.00 8848.00
10127.00 10177.00
June 1997 10578.00 10523.00
11191.00 11062.00
11298.00 11394.00
September 1997 12293.00 12303.00
11651.00 11564.00
11514.00 11288.00
December 1997 11823.00 11295.00
11303.00 11144.00
12386.00 12128.00
March 1998 13077.00 12637.00
13103.00 12714.00
12223.00 11790.00
June 1998 12551.00 11911.00
11210.00 10916.00
9189.00 8396.00
September 1998 9904.00 9248.00
10435.00 9730.00
10982.00 10485.00
December 1998 11722.00 11434.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
------------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
Russell 2000 Growth Index* 1.23% 6.93% 14.34%
Emerging Small Company Trust (at net asset value) 0.07% 8.80% 17.22%
* All since inception returns for the indices begin on the month-end closest to the actual inception date of the
Trust.
</TABLE>
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Emerging Small Company Trust gained 0.07% for the year,
compared to the Russell 2000 Growth Index which gained 1.23%.
ENVIRONMENT: The last quarter of 1998 was a heartening one for small cap
investors, given the disappointing performance prior to that period. Sparked by
the Federal Reserve's three interest rate cuts and a surging technology sector,
small cap growth stocks bounced back strongly. The showing allowed the Russell
2000 Growth Index to reclaim much of the performance it had previously lost,
though the benchmark still finished the year considerably behind large cap
stocks, as measured by the S&P 500. We are optimistic that small caps can
maintain that upward momentum, and possibly build on it, in 1999. Perhaps the
biggest reason for our optimism is valuations. Recent gains notwithstanding,
small cap stocks are trading at historically compelling multiples compared to
large cap stocks. Lending further support is the group's profit outlook, which
remains solid. Additional grounds for optimism are the relatively large cash
positions in many small cap and aggressive growth mutual funds; the ongoing
acquisition of smaller companies by larger firms; and, perhaps most importantly,
the recent easing of extreme risk aversion that so gripped investors in August
and September.
OUTLOOK: We are positive on the small cap market's prospects throughout 1999,
and believe the Trust is well positioned in terms of sector weightings and
individual holdings to benefit from what stands to be a far more supportive
backdrop for small cap stocks than the one that prevailed in 1998. We will
continue to place significant emphasis on companies with highly visible earnings
and the proven ability to generate consistent earnings growth.
vii
<PAGE> 8
PILGRIM BAXTER GROWTH TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To achieve capital appreciation by investing at least 65% of
& POLICIES: the Trust's assets in common stocks and convertible
securities of small and medium sized companies that the
subadviser believes have an outlook for strong earnings
growth and the potential for significant capital
appreciation.
SUBADVISER: Pilgrim Baxter & Associates, Ltd.
PORTFOLIO MANAGERS: Gary L. Pilgrim
INCEPTION DATE: January 1, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
PILGRIM BAXTER GROWTH TRUST RUSSELL 2000 GROWTH INDEX
--------------------------- -------------------------
<S> <C> <C>
December 1996 10000.00 10000.00
10128.00 10250.00
9296.00 9631.00
March 1997 8488.00 8951.00
8504.00 8848.00
9384.00 10177.00
June 1997 9792.00 10523.00
10584.00 11062.00
10256.00 11394.00
September 1997 10704.00 12303.00
10088.00 11564.00
9872.00 11288.00
December 1997 10000.00 11295.00
9600.00 11144.00
10432.00 12128.00
March 1998 10920.00 12637.00
10976.00 12714.00
9944.00 11790.00
June 1998 10480.00 11911.00
9544.00 10916.00
7384.00 8396.00
September 1998 7888.00 9248.00
8328.00 9730.00
9120.00 10485.00
December 1998 10432.00 11434.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total
Return Cumulative Total Return
--------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
Russell 2000 Growth Index* 1.23% 6.93% 14.34%
Pilgrim Baxter Growth Trust (at net asset value) 4.32% 2.14% 4.32%
* All share inception returns for the indices begin on the month-end closest to the actual inception date of the
Trust.
</TABLE>
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Pilgrim Baxter Growth Trust returned 4.32% for 1998,
outperforming the Russell 2000 Growth Index, which was up 1.23%.
ENVIRONMENT: We entered the fourth quarter with the S&P 500 Index up 6% and the
Russell 2000 Index down 16% for the year--a remarkable divergence of returns. It
is obvious that large cap stocks outperformed small cap stocks for the first
three quarters of 1998; however, what was not so obvious was that superior
performance was concentrated in the largest of the large cap stocks. During the
fourth quarter, we saw the gap in relative valuation and performance begin to
close. From October 8 through December 31, the Russell 2000 Index advanced 36.4%
while the S&P advanced 28.5%. The technology sector was the most significant
contributor to our performance during the quarter.
OUTLOOK: Looking ahead, we are optimistic that the market will more fairly
reward companies that are able to achieve analysts' earnings expectations. It
seems to us that in an economic environment characterized by a more difficult
and slower setting for earnings, smaller, niche-oriented companies should be
more sought after by investors. Certainly, the relative valuations for the
smaller companies that make up our portfolio continue to look attractive. We
will continue to pursue a strategy of investing in the best small growth
companies that we can find.
viii
<PAGE> 9
SMALL/MID CAP TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To achieve long-term capital appreciation by investing,
& POLICIES: under normal conditions, at least 65% of the Trust's total
assets in equity securities of companies that, at the time
of purchase, have a market value between $500 million and $5
billion
SUBADVISER: Fred Alger Management, Inc.
PORTFOLIO MANAGER: David D. Alger
INCEPTION DATE: March 4, 1996
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
RUSSELL 2000 GROWTH S&P MIDCAP 400 50%/50% COMPOSITE
SMALL/MIDCAP TRUST INDEX INDEX INDEX
------------------ ------------------- -------------- -----------------
<S> <C> <C> <C> <C>
Feb. 1996 10000.00 10000.00 10000.00 10000.00
Mar. 1996 10312.00 10198.00 10120.00 10159.00
10824.00 10981.00 10429.00 10704.00
10976.00 11544.00 10570.00 11051.00
Jun. 1996 10504.00 10794.00 10411.00 10609.00
9368.00 9476.00 9707.00 9602.00
9904.00 10177.00 10267.00 10235.00
Sept. 1996 10456.00 10702.00 10714.00 10721.00
10248.00 10240.00 10745.00 10506.00
10864.00 10525.00 11351.00 10948.00
Dec. 1996 10696.00 10730.00 11363.00 11060.00
11232.00 10998.00 11790.00 11406.00
10584.00 10334.00 11693.00 11015.00
Mar. 1997 9984.00 9604.00 11195.00 10391.00
10064.00 9493.00 11485.00 10466.00
10848.00 10920.00 12489.00 11710.00
Jun. 1997 11448.00 11290.00 12840.00 12073.00
12520.00 11869.00 14111.00 12980.00
12384.00 12225.00 14094.00 13167.00
Sept. 1997 13264.00 13201.00 14905.00 14071.00
12544.00 12408.00 14256.00 13342.00
12576.00 12112.00 14467.00 13282.00
Dec. 1997 12328.00 12119.00 15029.00 13544.00
12320.00 11957.00 14743.00 13324.00
13408.00 13013.00 15964.00 14464.00
Mar. 1998 14288.00 13559.00 16684.00 15094.00
14176.00 13642.00 16989.00 15278.00
13720.00 12651.00 16224.00 14379.00
Jun. 1998 14792.00 12780.00 16327.00 14498.00
14536.00 11713.00 15694.00 13612.00
11592.00 9009.00 12773.00 10774.00
Sept. 1998 12408.00 9923.00 13965.00 11823.00
13128.00 10440.00 15213.00 12660.00
14080.00 11250.00 15972.00 13467.00
Dec. 1998 15816.00 12268.00 17902.00 14889.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total
Return Cumulative Total Return
--------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
S&P Mid Cap 400 Index* 19.12% 22.82% 79.02%
Russell 2000 Growth Index 1.23% 7.48% 22.68%
50%/50% Composite Index+ 9.94% 15.08% 48.89%
Small/Mid Cap Trust (at net asset value) 28.29% 17.64% 58.16%
+ Comprised of 50% of the return of the S&P MidCap 400 Index and 50% of the return of the Russell Growth Index.
* All since inception returns for the indices begin on the month-end closest to the actual inception date of the
Trust.
</TABLE>
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For 1998, the Small/Mid Cap Trust returned 28.29%, while the
composite index comprised of 50% S&P Mid Cap 400 Index and 50% Russell 2000
Growth Index returned 9.94%.
ENVIRONMENT: Although 1998 proved to be another profitable year for the US stock
market, the success of an asset class seemed directly correlated with its market
cap size. Large cap stocks led the charge, with mid cap stocks a distant second.
Several small cap indices posted flat or negative annual returns. Amid a very
volatile stock market, investors placed a premium on earnings stability and
liquidity. Rapidly growing smaller companies attracted limited investor
interest. The Trust enhanced performance by investing heavily in mid cap stocks
and having a higher than normal cash position during the sell off in August.
Additionally, the strength of several holdings among different sectors also
augmented the Trust's relative success.
OUTLOOK: Despite a strong fourth quarter, small cap and mid cap growth stocks
remain at extremely low multiples relative to large caps, despite offering
faster, albeit less consistent, earnings growth. Amid a low interest rate, low
inflation environment where economic growth is potentially slowing, rapidly
growing stocks should be rewarded. We anticipate that the relative multiples of
small and mid cap stocks will rise to historically normal levels. We will
continue to find opportunity within this unique asset class on a bottom up,
company to company basis.
ix
<PAGE> 10
INTERNATIONAL STOCK TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve long-term growth of capital by investing the
POLICIES: Trust's assets primarily in common stocks of established,
non-US companies. The Trust may also invest up to 35% of its
assets in other equity-related securities, such as preferred
stocks, warrants and convertible securities, as well as
corporate and governmental debt securities. The subadviser
intends to geographically diversify the portfolio, including
holdings in developed, newly industrialized, and emerging
markets.
SUBADVISER: Rowe Price-Fleming International, Inc.
PORTFOLIO MANAGERS: Martin G. Wade, Mark J.T. Edwards, John R. Ford, James B.M.
Seddon and David J.L. Warren
INCEPTION DATE: January 1, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
[INTERNATIONAL STOCK TRUST PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
INTERNATIONAL STOCK TRUST MSCI EAFE INDEX
------------------------- ---------------
<S> <C> <C>
December 1996 10000.00 10000.00
9929.00 9652.00
10026.00 9813.00
March 1997 10018.00 9850.00
10097.00 9905.00
10733.00 10552.00
June 1997 11183.00 11136.00
11474.00 11319.00
10424.00 10476.00
September 1997 11086.00 11065.00
10247.00 10217.00
10229.00 10115.00
December 1997 10264.00 10206.00
10604.00 10675.00
11221.00 11363.00
March 1998 11615.00 11715.00
11696.00 11810.00
11642.00 11756.00
June 1998 11651.00 11847.00
11803.00 11970.00
10300.00 10490.00
September 1998 10067.00 10171.00
10962.00 11234.00
11437.00 11812.00
December 1998 11650.00 12281.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
-------------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
MSCI EAFE Index* 20.33% 10.82% 22.81%
International Stock Trust (at net asset value) 14.91% 8.63% 16.50%
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the International Stock Trust returned 14.91%,
underperforming the 20.33% return of the MSCI EAFE Index.
ENVIRONMENT: The MSCI EAFE benchmark's annual performance was helped by the
weakness of the dollar which contributed about one-third of the gain. Europe, up
29%, was the strongest international region in 1998, while Latin America, down
35%, was the weakest. Country allocation relative to the benchmark was negative
over the year. Underweighting Japan, in particular, and Asia to a lesser extent,
added value. However, these gains were offset largely by our position in Latin
America, with smaller negatives from overweighting Norway and underweighting the
buoyant Finnish and German markets. Stock selection was positive for the year,
with holdings in the Netherlands, Belgium, France, and Japan particularly
successful.
OUTLOOK: Looking forward, we see international economies growing more slowly.
Our cautious stance in the Pacific Rim and Japan will help shield the portfolio
from the pain that those markets must go through before they can emerge as
fundamentally healthy investment centers. Our outlook for currencies favors the
new Euro currency over the dollar and the yen, although we do not anticipate
major moves in the year ahead. Confidence has clearly returned to global stock
markets after the difficult third quarter. Looking ahead, we believe that this
renewed confidence, coupled with healthy if unspectacular economic growth in
Europe and signs that we are at least closer to the bottom in Asia will lead to
reasonable performance from international equity markets in 1999.
x
<PAGE> 11
WORLDWIDE GROWTH TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve long-term growth of capital by investing, under
POLICIES: normal circumstances, at least 65% of the Trust's total
assets in equity securities of growth companies in a variety
of markets throughout the world. The Trust may purchase
securities in any foreign country, as well as the US,
emphasizing common stocks of both emerging and established
growth companies that generally have proven performance
records and strong market positions.
SUBADVISER: Founders Asset Management LLC
PORTFOLIO MANAGER: Michael W. Gerding
INCEPTION DATE: January 1, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
WORLDWIDE GROWTH TRUST MSCI WORLD INDEX
---------------------- ----------------
<S> <C> <C>
December 1996 10000.00 10000.00
10120.00 10122.00
10208.00 10240.00
March 1997 10208.00 10040.00
10320.00 10370.00
10912.00 11012.00
June 1997 11176.00 11563.00
11624.00 12097.00
11176.00 11290.00
September 1997 11696.00 11905.00
11288.00 11280.00
11224.00 11482.00
December 1997 11329.00 11623.00
11547.00 11949.00
12136.00 12759.00
March 1998 12491.00 13300.00
12636.00 13432.00
12878.00 13265.00
June 1998 12781.00 13582.00
12733.00 13562.00
11022.00 11756.00
September 1998 10909.00 11966.00
11256.00 13049.00
11716.00 13827.00
December 1998 12287.00 14505.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
-------------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
MSCI World Index* 24.80% 20.44% 45.05%
Worldwide Growth Trust (at net asset value) 8.46% 10.88% 22.87%
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Worldwide Growth Trust gained 8.46%, while the MSCI World Index
gained 24.80% for the year.
ENVIRONMENT: We have been dramatically underweight in the US compared to the
benchmark MSCI World Index. Long-term, we believe the US is still one of the
most attractive places to invest. However, we have remained cautious based on
our concerns about company valuations relative to their growth rates. Many US
companies have had tremendous runs during the current eight-year economic
expansion and it is only natural that it may become more difficult for them to
sustain earnings growth going forward. We are already seeing indications of
slowing earnings growth on a company-by-company basis. We long believed that the
European economy would grow faster than the US in 1998; we think that this trend
will continue. But we are watching the European economy carefully since it
continues to deal with high unemployment and still has higher interest rates
than many other countries. Our Japanese weighting is now 9.0%. We believe things
are slowly changing in the Japanese economy, and we have found several companies
there with reasonable valuations that appear to be able to grow their businesses
again.
OUTLOOK: Looking ahead, we believe 1999 may be dominated by deflation throughout
the world. It may weigh more heavily in the US, particularly if the domestic
economy slows. We will continue to use hands-on research to focus on those
companies with unique products and market niches, as well as those with quality
management that can control costs. We will continue to pay close attention to
the quality of a company's earnings.
xi
<PAGE> 12
GLOBAL EQUITY TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve long-term capital appreciation by investing the
POLICIES: Trust's assets primarily in equity securities of issuers
throughout the world, including United States issuers and
emerging markets.
SUBADVISER: Morgan Stanley Asset Management Inc.
PORTFOLIO MANAGER: Frances Campion
INCEPTION DATE: March 18, 1988+
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
GLOBAL EQUITY TRUST MSCI WORLD INDEX
------------------- ----------------
<S> <C> <C>
February 1988 10000.00 10000.00
9890.00 10000.00
10000.00 10128.00
9761.00 9927.00
9870.00 9915.00
9681.00 10104.00
9252.00 9550.00
9771.00 9957.00
10209.00 10622.00
10110.00 10994.00
December 1988 10120.00 11095.00
10568.00 11498.00
10439.00 11428.00
10279.00 11356.00
10528.00 11620.00
10658.00 11337.00
10887.00 11211.00
11775.00 12480.00
11924.00 12180.00
12383.00 12526.00
12024.00 12110.00
12183.00 12596.00
December 1989 12532.00 13002.00
12014.00 12397.00
11864.00 11868.00
11745.00 11153.00
11338.00 10994.00
12421.00 12154.00
12594.00 12070.00
12891.00 12182.00
11757.00 11043.00
10531.00 9882.00
11093.00 10806.00
11052.00 10630.00
December 1990 11226.00 10854.00
11593.00 11254.00
12462.00 12297.00
12094.00 11937.00
12125.00 12032.00
12342.00 12307.00
11618.00 11549.00
12156.00 12097.00
12073.00 12060.00
12208.00 12379.00
12373.00 12582.00
11877.00 12035.00
December 1991 12663.00 12914.00
12746.00 12677.00
12818.00 12460.00
12363.00 11876.00
12718.00 12043.00
13315.00 12524.00
12948.00 12106.00
12707.00 12140.00
12749.00 12437.00
12456.00 12326.00
12110.00 11994.00
12561.00 12211.00
December 1992 12571.00 12312.00
12613.00 12355.00
12791.00 12650.00
13567.00 13386.00
14306.00 14009.00
15102.00 14334.00
14975.00 14216.00
15357.00 14511.00
16196.00 15178.00
16281.00 14900.00
16568.00 15313.00
15538.00 14450.00
December 1993 16706.00 15159.00
17704.00 16162.00
17747.00 15955.00
17205.00 15270.00
17709.00 15745.00
17450.00 15788.00
17644.00 15747.00
18065.00 16049.00
18659.00 16535.00
17979.00 16103.00
18206.00 16564.00
17029.00 15849.00
December 1994 16996.00 16005.00
16068.00 15768.00
16057.00 16001.00
16694.00 16775.00
17096.00 17363.00
17130.00 17515.00
17073.00 17513.00
18062.00 18393.00
17926.00 17986.00
18108.00 18514.00
17687.00 18226.00
17812.00 18862.00
December 1995 18301.00 19417.00
18494.00 19772.00
18665.00 19896.00
19108.00 20231.00
19767.00 20710.00
19582.00 20732.00
19570.00 20840.00
18484.00 20107.00
18912.00 20342.00
19085.00 21143.00
18981.00 21294.00
20206.00 22491.00
December 1996 20610.00 22135.00
20656.00 22405.00
21176.00 22667.00
21003.00 22222.00
21197.00 22953.00
22674.00 24373.00
23792.00 25593.00
24781.00 26776.00
23573.00 24988.00
24845.00 26350.00
23920.00 24967.00
24036.00 25413.00
December 1997 24896.00 25726.00
25012.00 26447.00
26964.00 28241.00
28442.00 29438.00
28738.00 29730.00
28409.00 29361.00
28025.00 30062.00
27573.00 30019.00
23267.00 26020.00
23925.00 26485.00
26160.00 28883.00
27189.00 30606.00
Dec-98 27943.00 32105.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
--------------------------------------------------- --------------------------
Since Since+ Since
Periods Ending December 31, 1998 1 Year 5 Year 10 Year Inception Oct. 1, 1996 5 Year 10 Year Inception
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MSCI World Index* 24.80% 16.19% 11.21% 11.46% 20.40% 193.83% 478.38% 221.05%
Global Equity Trust (at net asset value) 12.24% 10.84% 10.69% 10.00% 18.49% 67.27% 176.13% 179.43%
</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.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the Global Equity Trust returned 12.24%, lagging the
MSCI World Index return of 24.80%.
ENVIRONMENT: Stock selection in the US was the major cause of the Trust's
underperformance for the year, as the value discipline kept the Trust out of the
large growth stocks (particularly in the technology sector) which drove the
market. The overweight in continental Europe was a positive contributor as
Europe rallied strongly ahead because of the Euro conversion. The Trust's
Japanese stocks performed well, although Japanese and other Asian markets
underperformed the US and Europe.
OUTLOOK: The flight to growth and liquidity in 1998 has meant that the large
cap/mid cap valuation premium has reached historic proportions. We expect that
patient exploitation of this valuation anomaly will be rewarded over time. The
Trust is managed to reflect our bottom up value discipline. The price to cash
flow ratio of the Trust is less than 9 times, versus 14.2 times for the MSCI
World Index. This provides some comfort in what seems, after the fourth quarter
rally, once again an expensive equity world. Overall, the Trust is defensively
positioned for a continuation of volatile financial market conditions in 1999.
The slowdown in global growth occurring outside the US, particularly in Japan,
but increasingly in Europe, suggests caution is warranted. Indeed, despite
aggressive global easing in monetary policy, led by the Federal Reserve, it
seems a near certainty that earnings expectations for 1999 are far too
optimistic.
xii
<PAGE> 13
SMALL COMPANY VALUE TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve long-term growth of capital by investing the
POLICIES: Trust's assets in equity securities of smaller companies,
80% of which, under normal circumstances, will have market
values of less than $1 billion, and that are traded
principally in the US. The subadviser uses several computer
models to assist in the stock selection process
SUBADVISER: AXA Rosenberg Investment Management LLC
PORTFOLIO MANAGERS: Barr M. Rosenberg, Kenneth Reid, and Floyd Coleman
INCEPTION DATE: October 1, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
SMALL COMPANY VALUE TRUST RUSSELL 2000 INDEX
------------------------- ------------------
<S> <C> <C>
Sept-97 10000.00 10000.00
Oct-97 9512.00 9728.00
Nov-97 9496.00 9835.00
Dec-97 9552.00 9665.00
Jan-98 9368.00 9512.00
Feb-98 10032.00 10216.00
Mar-98 10448.00 10637.00
Apr-98 10622.00 10696.00
May-98 10141.00 10120.00
Jun-98 9965.00 10141.00
Jul-98 9213.00 9320.00
Aug-98 7652.00 7510.00
Sept-98 8140.00 8098.00
Oct-98 8164.00 8428.00
Nov-98 8677.00 8870.00
Dec-98 9101.00 9419.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
-------------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
Russell 2000 Index* -2.55% -4.68% -5.81%
Small Company Value Trust (at net asset value) -4.72% -7.28% -8.99%
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: During 1998, the Small Company Value Trust declined 4.72%, compared
to the 2.55% decline for the Russell 2000 Index.
ENVIRONMENT: Small capitalization stocks continued to trail large cap stocks
during 1998. The 31.2% spread between the returns of the S&P 500 and the Russell
2000 was the second largest large cap outperformance since 1926 (only 1929 was
wider). Within the small cap segment, a fourth quarter surge pushed small cap
growth stocks almost 8% above small cap value stocks by year end. Because of the
Trust's value characteristics, this growth environment hurt the relative
performance of the Trust, especially during the fourth quarter. The Trust's
higher average book-to-price profile and less actively traded holdings, compared
to the Russell 2000, hurt performance the most during 1998.
OUTLOOK: The strategy of the Small Company Value Trust remains unchanged as we
seek to outperform the benchmark Russell 2000 by identifying individual stocks
that are undervalued relative to similar stocks. We do not attempt to earn this
outperformance by predicting the direction and timing the market or by betting
on individual industries or sectors. Thus, the Trust will be fully invested at
all times and will maintain industry and sector weightings similar to the
Russell 2000 Index.
xiii
<PAGE> 14
EQUITY TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve growth of capital by investing the Trust's assets
POLICIES: primarily in common stocks of US issuers or securities
convertible into or that carry the right to buy common
stocks. Although current income is a secondary objective,
growth of income may accompany growth of capital.
SUBADVISER: Fidelity Management Trust Company
PORTFOLIO MANAGERS: Katherine Collins and Richard B. Fentin
INCEPTION DATE: June 18, 1985+
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
EQUITY TRUST S&P 500 INDEX BLENDED INDEX
------------ ------------- -------------
<S> <C> <C> <C>
10000 10000 10000
10034 10311 10311
10077 10284 10284
9952 10221 10221
9549 9893 9893
9916 10336 10336
10452 11076 11076
Dec. 1985 10889 11593 11593
11153 11644 11644
11718 12530 12530
12121 13224 13224
11735 13060 13060
12179 13777 13777
12544 14006 14006
12598 13209 13209
13486 14197 14197
12808 13030 13030
13095 13754 13754
13191 14107 14106
Dec. 1986 12904 13734 13734
14730 15579 15579
16069 16222 16222
16487 16663 16663
16711 16517 16517
16966 16687 16687
17583 17519 17519
18465 18392 18392
18988 19100 19100
18552 18680 18680
13390 14660 14660
12559 13459 13459
Dec. 1987 13791 14452 14452
13963 15070 15070
15039 15778 15778
15381 15301 15301
15770 15467 15467
15748 15587 15587
16615 16311 16310
16329 16245 16245
15792 15708 15708
16450 16374 16374
16735 16821 16820
16274 16582 16582
Dec. 1988 16648 16882 16882
17921 18102 18102
17515 17652 17652
17649 18068 18068
18626 19001 19000
19526 19764 19764
19204 19658 19658
20736 21423 21423
22158 21836 21836
22014 21751 21751
20903 21244 21244
21070 21686 21686
Dec. 1989 21258 22198 22198
19526 20709 20709
19892 20976 20976
20525 21527 21527
20010 20996 20996
21483 23043 23043
21119 22881 22881
20622 22808 22808
18305 20749 20749
17328 19728 19728
17080 19655 19655
18040 20921 20920
Dec. 1990 18752 21494 21494
19546 22444 22444
20721 24051 24051
21119 24623 24623
21341 24692 24692
22218 25749 25749
21324 24572 24572
22100 25722 25722
22572 26327 26327
22184 25895 25895
22555 26242 26242
21290 25182 25182
Dec. 1991 22116 28060 28060
22690 27538 27538
22858 27891 27891
21729 27344 27344
21170 28140 28140
21119 28292 28292
20504 27881 27881
21239 29005 29005
20743 28419 28419
21051 28746 28746
21922 28849 28849
23238 29822 29822
Dec. 1992 23870 30212 30212
24519 30433 30433
23784 30844 30844
24588 31507 31507
24109 30735 30735
25856 31565 31565
26052 31669 31669
25571 31520 31520
26641 32721 32721
27532 32479 32479
27818 33138 33138
27104 32827 32827
Dec. 1993 27764 33230 33230
28798 34344 34344
28584 33416 33416
27407 31963 31963
27748 32378 32378
27409 32906 32906
26166 32093 32093
26750 33156 33155
28087 34505 34505
27447 33673 33673
28407 34445 34444
27428 33180 33180
Dec. 1994 27616 33665 33665
27409 34540 34540
28501 35880 35880
29594 36942 36942
30955 38017 38017
32112 39519 39519
34672 40448 40448
37442 41795 41795
37840 41908 41907
38997 43664 43663
38864 43511 43510
39832 45425 45425
Dec. 1995 39433 46266 46265
40439 47857 47857
41387 48316 48316
41785 48780 48780
43248 49497 49497
44589 50774 50774
43751 50983 50982
41007 48714 48714
42515 49747 49746
44756 52542 52542
45175 53982 53982
47688 58079 58079
Dec. 1996 47374 56941 56941
50181 60477 60477
48233 60967 60967
45217 58431 58430
47164 61919 61919
50659 65721 65720
52261 68652 68652
56071 74103 74378
55125 69983 73571
57700 73818 77769
54258 71352 74744
55283 74656 76523
Dec. 1997 56492 75940 78631
56334 76699 77151
60827 82068 83182
63744 86172 87128
64122 87033 87346
62345 85293 84642
63106 88704 85814
60568 87817 81722
50003 75523 68651
51716 80054 73094
56348 86459 78078
58950 91646 81775
Dec. 1998 61806 97145 86571
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
---------------------------------------------------- -----------------------------
Since Since+ Since
Periods Ending December 31, 1998 1 Year 5 Year 10 Year Inception Dec 13, 1991 5 Year 10 Year Inception
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Blended Index*+ 10.10% 21.11% 17.76% 17.22% 19.05% 160.52% 412.81% 765.71%
S&P 500 Index 28.58% 24.06% 19.19% 18.22% 21.00% 193.83% 478.38% 871.45%
Equity Trust (at net asset value) 9.41% 17.36% 14.02% 14.40% 16.06% 122.61% 271.26% 518.06%
</TABLE>
+ Current subadviser assignment became effective December 13, 1991.
* 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.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the 1998 year, the Equity Trust returned 9.41% compared to
10.10% for the blended index.
ENVIRONMENT: The strongest contributor to performance for the Trust came from
capital goods holdings (including technology). This sector returned 49% for the
Trust, compared to 27% for the Russell MidCap Index. However, the Trust was
underweighted relative to the benchmark, which held back performance. Financial
services holdings were the second best contributor to the Trust, returning 19%
versus a 7% gain for the Russell MidCap Index. Our underweighting in consumer
durable positions detracted from performance. Consumer durable positions
returned 16% while the Russell MidCap Index consumer nondurable sector was up
18%. The largest detractor to performance was our overweighting position in
intermediate holdings. These stocks were down 9%, while intermediate stocks in
the Russell Midcap Index declined only 6%.
OUTLOOK: While we do not expect the stock market to match the performance of the
last few years, our outlook for 1999 remains cautiously optimistic. Although
growth rates will likely moderate, lower interest rates should drive economic
growth, leading to good corporate profit growth.
xiv
<PAGE> 15
GROWTH TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve long-term growth of capital by investing, under
POLICIES: normal market conditions, at least 65% of the Trust's total
assets in common stocks of well established, high-quality
growth companies that the subadviser believes have the
potential to increase earnings faster than the rest of the
market.
SUBADVISER: Founders Asset Management LLC
PORTFOLIO MANAGER: Scott Chapman and Thomas Arrington
INCEPTION DATE: July 15, 1996
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
RUSSELL 1000
GROWTH S&P 500
GROWTH TRUST INDEX INDEX
------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
June 1996 10000 10000 10000
9936 9830 10210
10304 10084 10426
September 1996 10808 10818 11012
10768 10883 11314
11400 11700 12173
December 1996 11053 11471 11934
11697 12275 12675
11432 12191 12778
March 1997 11077 11532 12247
11593 12297 12978
12293 13185 13774
June 1997 12937 13713 14389
14056 14925 15531
13412 14052 14668
September 1997 14081 14743 15472
13485 14198 14955
13598 14801 15647
December 1997 13855 14967 15916
14016 15414 16093
14894 16573 17253
March 1998 15658 17235 18137
15892 17473 18320
15657 16976 18005
June 1998 16503 18015 18736
16269 17896 18537
13621 15210 15857
September 1998 14442 16378 16873
15330 17695 18245
16009 19042 19351
December 1998 17173 20759 20465
<CAPTION>
<S> <C>
June 1996
September 1996
December 1996
March 1997
June 1997
September 1997
December 1997
March 1998
June 1998
September 1998
December 1998
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since
Period Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
S&P 500 Index 28.58% 33.17% 104.65%
Russell 1000 Growth Index* 38.82% 33.93% 107.59%
Growth Trust (at net asset value) 23.95% 24.59% 71.73%
</TABLE>
* The Russell 1000 Growth Index was added to more accurately reflect the
investment objective of the Growth Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Growth Trust produced a total return of 23.95% for the year,
while the Russell 1000 Growth Index returned 38.82%.
ENVIRONMENT: The Trust benefited from its holdings in certain telecommunications
and consumer holdings. It had a modest relative weight in the booming technology
sector and was underweighted in drugs, a sector that investors valued because of
its earnings predictability and stability. The Trust's financial securities were
somewhat hurt as investors fretted over Russia's effective loan default and the
near collapse of hedge fund Long Term Capital Management LP. Lastly, the Trust
held some mid cap companies that did not keep up with the giant cap names that
led the market higher in 1998.
OUTLOOK: We are identifying excellent growth companies at reasonable prices and
our long-term outlook is positive. We are bullish on growth stocks and the
overall economic environment for the following reasons:
- - The US economy, while slowing, is still healthy and is underpinned by buoyant
domestic consumption.
- - Corporate profits, while slowing, may still grow at a mid-single digit rate in
1999.
- - Consumer confidence is high with rising wages, plenty of jobs, and a robust
housing market.
- - Inflation is benign; the real rate of interest (net of inflation) is still
above the historical average and prospects are good for further federal
interest rate cuts.
- - The federal budget is generating a surplus for the first time in 30 years.
In this environment, we believe our research will help us find companies that
have durable franchises, that can be all-weather performers, that have global
industry leadership with financial strength, and may be worth more in the
future.
xv
<PAGE> 16
QUANTITATIVE EQUITY TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To achieve intermediate and long-term growth through capital
& POLICIES: appreciation and current income by investing the Trust's
assets in common stocks and other equity securities of well
established companies with promising prospects for providing
an above average rate of return.
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGERS: Mark Schmeer and Rhonda Chang
INCEPTION DATE: April 30, 1987
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
QUANTITATIVE EQUITY TRUST S&P 500 INDEX
------------------------- -------------
<S> <C> <C>
10000.00 10000.00
9935.00 10103.00
10285.00 10607.00
10570.00 11135.00
11328.00 11564.00
11144.00 11310.00
8317.00 8876.00
7796.00 8149.00
December 1987 8502.00 8750.00
8500.00 9124.00
8982.00 9553.00
8682.00 9264.00
8834.00 9364.00
8893.00 9437.00
9387.00 9875.00
9076.00 9836.00
8923.00 9510.00
9282.00 9913.00
9249.00 10184.00
9136.00 10039.00
December 1988 9340.00 10221.00
9854.00 10960.00
9775.00 10687.00
10154.00 10939.00
10671.00 11504.00
11150.00 11966.00
10875.00 11902.00
11772.00 12971.00
11836.00 13221.00
12001.00 13169.00
11629.00 12862.00
11963.00 13130.00
December 1989 12203.00 13440.00
11352.00 12538.00
11576.00 12700.00
11820.00 13034.00
11592.00 12712.00
12532.00 13951.00
12558.00 13854.00
12578.00 13809.00
11650.00 12562.00
11125.00 11944.00
10979.00 11900.00
11482.00 12666.00
December 1990 11707.00 13013.00
12333.00 13589.00
13047.00 14562.00
13207.00 14908.00
13172.00 14950.00
13927.00 15590.00
13102.00 14877.00
14004.00 15574.00
14391.00 15940.00
14074.00 15678.00
14361.00 15888.00
13567.00 15246.00
December 1991 15240.00 16989.00
15364.00 16673.00
15498.00 16886.00
14748.00 16555.00
14623.00 17037.00
14950.00 17129.00
14528.00 16881.00
15189.00 17561.00
14701.00 17206.00
15080.00 17404.00
15364.00 17467.00
16107.00 18056.00
December 1992 16165.00 18292.00
16578.00 18426.00
16737.00 18674.00
16997.00 19076.00
16827.00 18609.00
17355.00 19111.00
17364.00 19174.00
17426.00 19084.00
18084.00 19811.00
18031.00 19664.00
18235.00 20064.00
18100.00 19875.00
December 1993 18332.00 20119.00
19084.00 20793.00
18539.00 20232.00
17424.00 19352.00
17644.00 19604.00
17699.00 19923.00
17123.00 19431.00
17841.00 20074.00
18560.00 20891.00
18237.00 20388.00
18392.00 20855.00
17588.00 20089.00
December 1994 17560.00 20382.00
17662.00 20912.00
18271.00 21724.00
18625.00 22367.00
18639.00 23018.00
19083.00 23927.00
19603.00 24489.00
20289.00 25305.00
20294.00 25373.00
21309.00 26436.00
21190.00 26344.00
22190.00 27503.00
December 1995 22693.00 28012.00
23257.00 28975.00
23645.00 29253.00
23674.00 29534.00
24157.00 29968.00
24680.00 30741.00
24612.00 30868.00
23275.00 29494.00
24059.00 30119.00
25311.00 31812.00
26104.00 32684.00
27483.00 35164.00
December 1996 26762.00 34475.00
28291.00 36616.00
28446.00 36912.00
27334.00 35377.00
28677.00 37489.00
30299.00 39791.00
31611.00 41565.00
34437.00 44866.00
33032.00 42371.00
34901.00 44693.00
33295.00 43200.00
34067.00 45201.00
December 1997 34746.00 45978.00
34731.00 46488.00
37263.00 49840.00
39163.00 52392.00
39428.00 52921.00
38470.00 52011.00
39845.00 54123.00
38940.00 53549.00
33161.00 45806.00
35180.00 48742.00
37931.00 52705.00
40228.00 55898.00
December 1998 43901.00 59118.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
-------------------------------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year 5 Year 10 Year Inception 5 Year 10 Year Inception
<S> <C> <C> <C> <C> <C> <C> <C>
S&P 500 Index* 28.58% 24.06% 19.19% 16.45% 193.83% 478.38% 491.78%
Quantitative Equity Trust (at net asset value) 26.35% 19.08% 16.74% 13.52% 139.48% 370.05% 339.01%
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For 1998, the Quantitative Equity Trust returned 26.35%,
underperforming the S&P 500, which returned 28.58%.
ENVIRONMENT: Large caps significantly outperformed small and mid cap stocks. The
Trust's small investment in mid cap stocks contributed negatively to
performance. Growth and momentum outperformed value, with high growth technology
stocks leading the way. High yield energy stocks continued to underperform as
oil prices collapsed to 12-year lows.
OUTLOOK: The US economy appears healthy heading into 1999. Personal income is
growing faster than inflation, consumer sentiment is strong, inflation is under
control, and the strong stock market has greatly benefited consumer wealth. The
Euro should benefit Europe, allowing for greater exports. There are some areas
of concern, however, with the most obvious being Asia. However, that crisis
appears to be improving somewhat, and its impact on the US economy has been less
negative than some analysts had originally forecast. A sharp correction in the
stock market could negatively affect consumer confidence and spending. We expect
the economy to grow more slowly than it has in recent quarters, and for
inflation to remain low. At year-end, the equity valuations, while expensive,
were not at levels that would suggest a bear market is imminent. The sharp
decline in interest rates bodes well for equity markets. The economic forecast
of modest growth and low inflation has historically been favorable for equities.
The Trust continues to hold both high dividend and growth stocks. The high
dividend stocks offer protection in market downturns, while growth stocks do
well in rising markets. The Trust continues to invest in high quality leadership
companies that exhibit attractive growth, momentum and valuation
characteristics.
xvi
<PAGE> 17
EQUITY INDEX TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To approximate the aggregate total return of publicly traded
& POLICIES: common stocks included in the Standard & Poor's Composite
Stock Price Index (the S&P 500 Index). The Trust is designed
to provide an economical and convenient means of maintaining
a widely diversified investment in the United States equity
market as part of an overall investment strategy. The Trust
is not actively managed; rather, the subadviser tries to
match the S&P 500 Index's performance by investing the
portfolio's assets in common stocks included in the S&P 500
Index in their approximate respective market value
weightings.
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGERS: Les Grober and Brett Hryb
INCEPTION DATE: February 14, 1996
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
EQUITY INDEX TRUST S&P 500 INDEX
------------------ -------------
<S> <C> <C> <C> <C> <C>
January 1996 10000.00 10000.00
9740.00 9759.00
March 1996 9895.00 9853.00
10038.00 9998.00
10283.00 10255.00
June 1996 10369.00 10298.00
9888.00 9839.00
10069.00 10048.00
September 1996 10633.00 10613.00
10951.00 10903.00
11749.00 11731.00
December 1996 11486.00 11501.00
12206.00 12215.00
12303.00 12314.00
March 1997 11733.00 11802.00
12475.00 12506.00
13281.00 13274.00
June 1997 13807.00 13866.00
14946.00 14967.00
14130.00 14135.00
September 1997 14871.00 14910.00
14441.00 14412.00
15054.00 15079.00
December 1997 15337.00 15338.00
15533.00 15509.00
16627.00 16627.00
March 1998 17475.00 17478.00
17656.00 17655.00
17343.00 17351.00
June 1998 18032.00 18055.00
17831.00 17864.00
15264.00 15281.00
September 1998 16266.00 16260.00
17581.00 17582.00
18645.00 18648.00
December 1998 19718.00 19722.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
S&P 500 Index 28.58% 26.22% 97.22%
Equity Index Trust (at net asset value) 28.56% 26.59% 97.18%
</TABLE>
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For 1998, the Equity Index Trust returned 28.56%, compared to the
S&P 500 Index that returned 28.58%.
ENVIRONMENT: Throughout 1998 domestic stock markets were characterized by
extreme volatility, with most major stock indices repeatedly hitting record
highs. Despite the market weakness in the summer months that saw a decline in
the S&P 500 Index of over 16% from the high, stocks rose strongly at the end of
the third quarter and throughout the fourth quarter. Several key events impacted
the markets in 1998, including the impeachment proceedings in Washington,
international economic uncertainty, and record mergers across several sectors.
Technology was the strongest sector in 1998, outperforming the broader index.
OUTLOOK: Over the next year, the US economy is expected to grow modestly.
Inflation and interest rates should remain at low levels. Under this scenario,
stocks should continue to rise, but at a more moderate pace.
xvii
<PAGE> 18
BLUE CHIP GROWTH TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To provide long-term growth of capital by investing at least
POLICIES: 65% of the Trust's total assets in the common stocks of
large and medium blue chip companies as defined by the
subadviser. These are firms that the portfolio believes are
well established and have the potential for above-average
earnings growth. Current income is a secondary objective
SUBADVISER: T. Rowe Price Associates, Inc.
PORTFOLIO MANAGERS: Larry J. Puglia, Brian W.H. Berghuis, Thomas H. Broadus,
Jr., Robert W. Smith, Thomas J. Huber, and William J.
Stromberg
INCEPTION DATE: December 11, 1992*
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
BLUE CHIP GROWTH TRUST S&P 500 INDEX
---------------------- -------------
<S> <C> <C>
10000.00 10000.00
December 1992 9930.00 10064.00
9930.00 10137.00
9530.00 10274.00
9590.00 10495.00
8832.00 10238.00
9112.00 10515.00
9052.00 10549.00
8782.00 10500.00
9102.00 10900.00
9102.00 10819.00
9332.00 11039.00
9393.00 10935.00
December 1993 9553.00 11069.00
9663.00 11440.00
9473.00 11131.00
8962.00 10647.00
9114.00 10786.00
9064.00 10961.00
8702.00 10691.00
8933.00 11044.00
9476.00 11494.00
9275.00 11217.00
9365.00 11474.00
9164.00 11053.00
December 1994 9094.00 11214.00
9305.00 11506.00
9506.00 11952.00
9787.00 12306.00
9922.00 12664.00
10235.00 13164.00
10659.00 13474.00
11103.00 13922.00
11093.00 13960.00
11416.00 14545.00
11244.00 14494.00
11577.00 15132.00
December 1995 11507.00 15411.00
11890.00 15942.00
12173.00 16095.00
12264.00 16249.00
12756.00 16488.00
13252.00 16913.00
13120.00 16983.00
12260.00 16227.00
12725.00 16571.00
13728.00 17502.00
13677.00 17982.00
14689.00 19347.00
December 1996 14487.00 18968.00
15094.00 20145.00
15115.00 20309.00
14426.00 19464.00
15067.00 20626.00
15937.00 21892.00
16599.00 22869.00
17850.00 24684.00
17040.00 23312.00
17862.00 24589.00
17445.00 23768.00
17984.00 24869.00
December 1997 18389.00 25296.00
18597.00 25577.00
20007.00 27421.00
20914.00 28825.00
21131.00 29116.00
20606.00 28615.00
21543.00 29777.00
21306.00 29462.00
17871.00 25201.00
18933.00 26817.00
20569.00 28997.00
21830.00 30754.00
December 1998 23629.00 32526.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Cumulative Total
Return Return
----------------------------------------- -------------------
Since Since* Since
Periods Ending December 31, 1998 1 Year 5 Year Inception Oct. 1, 1996 10 Year Inception
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index 28.58% 24.06% 21.40% 31.71% 193.83% 225.26%
Blue Chip Growth Trust (at net asset value) 28.49% 19.86% 15.26% 27.59% 147.35% 136.29%
</TABLE>
* Current subadvisor assignment became effective October 1, 1996.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: In 1998, the Blue Chip Growth Trust return of 28.49% slightly
underperformed the 28.58% return of the S&P 500 Index.
ENVIRONMENT: The past 12 months were dramatic for equities, with a harsh third
quarter correction sandwiched between a solid first half expansion and a strong
rally at the end of the year. Although share prices were volatile during the
year, the Trust benefited from holdings in many sectors. The key was our stock
picking approach, which emphasized stable earnings, growth characteristics, and
strong management. These efforts fit well with the market's recent preference
for relatively reliable, high-quality investments. Exposure to holdings in
consumer services, and business and transportation sectors significantly
contributed to the Trust's performance. The technology sector as a whole also
outperformed, benefiting from a remarkable rally in Internet stocks. In
contrast, the consumer cyclical sector was the worst-performing sector during
the year. Our investment strategy continues to focus on maintaining positions in
core holdings, as long as the fundamentals remain strong and the valuations are
reasonable.
OUTLOOK: We believe the market faces several challenges, including the
persistent risk of a global economic slowdown. Nonetheless, the overall
environment for US equities continues to be positive. On balance, the primary
challenge for stock performance may be the fact that stocks have already
performed so well and appear expensive by all conventional measures. We believe
we can enhance returns and lower risk over time by buying, at reasonable
valuations, shares of companies with leading market positions, seasoned
management, strong financial fundamentals, and the ability to generate earnings
growth regardless of the environment.
xviii
<PAGE> 19
REAL ESTATE SECURITIES TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve a combination of long-term capital appreciation
POLICIES: and current income by investing in real estate-related
equity and debt securities. The Trust will invest
principally in real estate investment trusts (REITs) and
equity and fixed income securities issued by companies that
invest in real estate or related interests
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGERS: Mark Schmeer and Les Grober
INCEPTION DATE: April 30, 1987
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
MORGAN STANLEY REIT
REAL ESTATE SECURITIES TRUST INDEX NAREIT INDEX
---------------------------- ------------------- ------------
<S> <C> <C> <C>
10000.00 10000.00
December 1987 9158.00 8707.00
9694.00 9888.00
December 1988 10231.00 9695.00
10704.00 10055.00
December 1989 11176.00 9520.00
10923.00 8930.00
December 1990 10670.00 7868.00
12862.00 9864.00
December 1991 15054.00 10676.00
16657.00 11018.00
December 1992 18260.00 11976.00
20325.00 13865.00
December 1993 22389.00 14197.00
22079.00 14724.00
December 1994 21770.00 21770.00 14311.00
23418.00 22611.00 15424.00
December 1995 25066.00 24579.00 16931.00
26577.00 26145.00 18139.00
December 1996 33761.00 33402.00 22984.00
35514.00 35125.00 24357.00
December 1997 39975.00 39607.00 27322.00
38104.00 37595.00 25915.00
December 1998 33402.00 32912.00 22180.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
-------------------------------------- ---------------------------
Since Since
Periods Ending December 31, 1998 1 Year 5 Year 10 Year Inception 5 Year 10 Year Inception
<S> <C> <C> <C> <C> <C> <C> <C>
Morgan Stanley REIT Index *+++ -16.90% n/a n/a 10.89% n/a n/a 51.18%
NAREIT Index -18.82% 9.33% 8.63% 7.07% 56.23% 128.76% 121.80%
Real Estate Securities Trust (at net asset value) -16.44% 8.33% 12.56% 10.89% 49.19% 226.49% 234.02%
</TABLE>
++ The Morgan Stanley REIT Index commenced on December 30, 1994, therefore the 5
year return period is not applicable for this index.
+ The cumulative since inception return for the Morgan Stanley REIT Index is for
the period December 30, 1994 to December 31, 1998.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the Real Estate Securities Trust declined 16.44%,
outperforming the Morgan Stanley REIT Index which fell 16.90%.
ENVIRONMENT: After seven years of positive returns, the REIT bull market came to
a grinding halt in 1998 as prices fell by 16.90%, including dividends. Weighing
on investor sentiment were concerns over acquisition prices, as well as signs
that development activity had intensified. An overwhelming supply of secondary
offerings, in the form of both debt and equity, helped to keep a tight lid on
REIT prices. With prices below valuation, the management of several REITs tried
desperately to increase shareholder value. This brought on a wave of mergers and
acquisitions throughout the year in almost every property sector. Relative
outperformance during the year was aided by the Trust's underweighting in the
volatile hotel sector, where prices fell an average of 39%. Overweight positions
in the retail and residential sectors also aided relative performance.
OUTLOOK: Currently, REIT valuations are extremely attractive. REITs provide
investors with defensive characteristics and continue to be an excellent
diversification tool. The most attractive aspect of the Real Estate Securities
Trust is its exceptionally high dividend yield. Currently, the Trust's weighted
average yield is 7.5%, roughly five times that of the S&P 500 and nearly 1.5
times that of long Government bond yields. We expect the dividend payments for
the REITs in the Trust to grow at a rate of at least 6% in the coming year.
Accordingly, we feel the income generated by this fund presents an attractive
investment opportunity, one that should fare well versus bonds and versus stocks
in the event of a market correction.
xix
<PAGE> 20
VALUE TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE: To realize an above-average total return over a market cycle
of three to five years, consistent with reasonable risk by
investing the Trust's assets 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. The subadviser seeks equity
securities it believes to be undervalued relative to the
stock market in general, as measured by the S&P 500 Index,
based on value measures such as price/earnings and
price/book ratios, as well as fundamental research
SUBADVISER: Miller Anderson & Sherrerd, LLP
PORTFOLIO MANAGERS: Robert J. Marcin, Richard M. Behler, and Nicholas J. Kovich
INCEPTION DATE: January 1, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
VALUE TRUST S&P 500 INDEX RUSSELL MIDCAP VALUE
----------- ------------- --------------------
<S> <C> <C> <C>
'Dec-96' 10000.00 10000.00 10000.00
'Jan-97' 10328.00 10625.00 10314.00
'Feb-97' 10464.00 10708.00 10489.00
'Mar-97' 10144.00 10268.00 10170.00
'Apr-97' 10536.00 10881.00 10427.00
'May-97' 11168.00 11543.00 11041.00
'Jun-97' 11576.00 12061.00 11451.00
'Jul-97' 12232.00 13021.00 12302.00
'Aug-97' 12120.00 12291.00 12158.00
'Sept-97' 12480.00 12965.00 12912.00
'Oct-97' 11904.00 12532.00 12519.00
'Nov-97' 12120.00 13112.00 12942.00
'Dec-97' 12214.00 13338.00 13437.00
'Jan-98' 11991.00 13486.00 13176.00
'Feb-98' 12882.00 14459.00 14056.00
'Mar-98' 13328.00 15199.00 14780.00
'Apr-98' 13353.00 15352.00 14697.00
'May-98' 13155.00 15088.00 14354.00
'Jun-98' 12858.00 15701.00 14400.00
'Jul-98' 12330.00 15534.00 13670.00
'Aug-98' 10563.00 13288.00 11748.00
'Sept-98' 10613.00 14139.00 12433.00
'Oct-98' 11537.00 15289.00 13238.00
'Nov-98' 12065.00 16216.00 13703.00
'Dec-98' 12003.00 17150.00 14120.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
--------------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
S&P 500 Index* 28.58 % 30.95 % 71.50 %
Russell Mid Cap Value Index 5.08 % 18.83 % 41.20 %
Value Trust (at net asset value) -1.72 % 9.59 % 20.03 %
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Value Trust declined 1.72% during 1998, compared to an increase
of 5.08% for the Russell Mid Cap Value Index.
ENVIRONMENT: The past year was truly astounding for equity investors, dividing
itself into the haves (mega cap growth, Internet), and the have nots (small and
mid cap, economically sensitive). In this environment, the Trust's returns
reflected its dedication to a low P/E investment philosophy, and its cyclical
and financial sector concentration. Both stock selection and sector allocation
contributed to the Trust's underperformance compared to the index. The average
stock in this universe, the two lowest P/E quintiles with market capitalizations
greater than $1.5 billion, returned only 2.2% for calendar year 1998. The
Trust's discipline, combined with lack of attractive alternatives in other
market sectors, is forcing us to retain the portfolio's significant commitment
to these economically sensitive sectors. Last year's underperformance has
generated significant relative valuation imbalances. Many cyclical stocks would
have to double in price from current levels to simply achieve the same relative
valuations they reached in the last recession of 1990-1991.
OUTLOOK: We believe that the current valuation levels and the psychology towards
the cyclicals are both unsustainable. Price-to-earnings valuation discounts of
50 to 70% versus the S&P 500 Index are resolved either by the stocks
appreciating or the earnings receding. While we remain uncertain of the ultimate
catalysts that will encourage investors to purchase these cyclical companies
again, we remain committed to our low P/E valuation discipline.
xx
<PAGE> 21
INTERNATIONAL GROWTH AND INCOME TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To achieve long-term growth of capital and income by
& POLICIES: investing, under normal conditions, at least 65% of the
Trust's total assets in equity securities of foreign
issuers. The Trust invests primarily in common stocks and
other securities with equity characteristics of established
companies based in developed countries outside the US,
although it may invest up to 15% of its assets in emerging
market equity securities.
SUBADVISER: J.P. Morgan Investment Management Inc.
PORTFOLIO MANAGERS: Paul A. Quinsee and Andrew Cormie
INCEPTION DATE: January 9, 1995
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
[INTERNATIONAL GROWTH AND INCOME TRUST PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH CUSTOMIZED 85%/15% COMPOSITE MSCI ALL COUNTRY
AND INCOME TRUST BENCHMARK INDEX WORLD EX US INDEX
-------------------- ---------- ----------------- ----------------
<S> <C> <C> <C> <C>
Dec. 1994 10000.00 10000.00 10000.00 10000.00
9820.00 9638.00 9707.00 9546.00
9620.00 9630.00 9723.00 9494.00
Mar. 1995 10060.00 10172.00 10327.00 10031.00
10390.00 10534.00 10689.00 10422.00
10190.00 10539.00 10628.00 10376.00
Jun. 1995 10010.00 10412.00 10481.00 10232.00
10480.00 10927.00 11042.00 10813.00
10200.00 10532.00 10629.00 10438.00
Sep. 1995 10270.00 10718.00 10844.00 10617.00
10080.00 10473.00 10610.00 10333.00
10280.00 10692.00 10882.00 10576.00
Dec. 1995 10698.00 11079.00 11274.00 10994.00
10810.00 11172.00 11294.00 11145.00
10790.00 11175.00 11320.00 11145.00
Mar. 1996 10984.00 11359.00 11525.00 11353.00
11187.00 11643.00 11805.00 11697.00
11177.00 11476.00 11623.00 11521.00
Jun. 1996 11320.00 11545.00 11695.00 11580.00
11054.00 11246.00 11440.00 11195.00
11167.00 11300.00 11471.00 11261.00
Sep. 1996 11453.00 11543.00 11740.00 11540.00
11545.00 11458.00 11673.00 11425.00
11955.00 11843.00 12093.00 11865.00
Dec. 1996 12047.00 11721.00 11949.00 11728.00
11791.00 11448.00 11548.00 11513.00
11883.00 11625.00 11698.00 11724.00
Mar. 1997 11976.00 11612.00 11722.00 11699.00
11983.00 11644.00 11762.00 11798.00
12485.00 12292.00 12463.00 12526.00
Jun. 1997 12912.00 12888.00 13073.00 13218.00
13054.00 13048.00 13240.00 13485.00
12278.00 12151.00 12401.00 12424.00
Sep. 1997 12715.00 12734.00 13033.00 13096.00
11993.00 11831.00 12225.00 11981.00
11829.00 11671.00 12093.00 11831.00
Dec. 1997 12037.00 11769.00 12180.00 11968.00
12387.00 12099.00 12673.00 12326.00
13196.00 12824.00 13383.00 13148.00
Mar. 1998 13786.00 13154.00 13716.00 13602.00
14015.00 13249.00 13844.00 13700.00
13809.00 13022.00 13794.00 13451.00
Jun. 1998 13602.00 12963.00 13888.00 13401.00
13682.00 13103.00 14013.00 13528.00
11352.00 11556.00 12597.00 11620.00
Sep. 1998 10778.00 11455.00 12372.00 11375.00
12064.00 12522.00 13526.00 12566.00
12672.00 13082.00 14089.00 13242.00
Dec. 1998 13006.00 13488.00 14607.00 13698.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
--------------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
Customized Benchmark**+ 14.60 % 7.77 % 34.88 %
85%/15% Composite Index++ 19.93 % 9.94 % 46.07 %
MSCI All Country World ex-US Index* 14.46 % 8.18 % 36.98 %
International Growth and Income Trust (at net asset value) 8.04 % 6.83 % 30.06 %
</TABLE>
+ Comprised of 75% of the return of the MSCI EAFE Index, 15% of the return of
the Salomon Brothers Non-$ 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.
++ 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 Trust.
** All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the International Growth and Income Trust returned
8.04%, below the return of the MSCI All Country World ex-US Index return of
14.46%.
ENVIRONMENT: International equity markets achieved a very credible return over
the course of 1998 after global market turmoil turned to global market euphoria
in the last quarter of the year. As the turmoil spread, the near-term earnings
estimates in equity markets were questionable for developed and emerging markets
around the world. In the fourth quarter, stocks were helped by moves to ease
monetary policy in the US and Europe, with the Federal Reserve cutting the
overnight rate twice and the European Central Bank orchestrating a coordinated
rate cut. In contrast to Europe, the Japanese market fell over the year,
although the strength of the Yen in the final quarter resulted in a positive
return in US Dollars. Country allocation decisions were a positive influence
over the period. In particular, underweighting Japan and the UK proved to be a
positive decision, as did an overweight position in Continental Europe. The
primary reason for the Trust's underperformance was in stock selection,
particularly in the European countries. Within Europe, the markets have been
very focused, rewarding growth companies, emphasizing the very largest, but not
necessarily fundamentally better, value companies.
OUTLOOK: After a strong fourth quarter, international equity markets once again
appear overvalued. We maintain overweight positions in Europe and continue to
underweight Japan. We continue to favor Australia and New Zealand. We hold an
underweight position in Latin America, especially in Brazil, and a neutral
position in the Asian emerging markets.
xxi
<PAGE> 22
GROWTH AND INCOME TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To provide long-term growth of capital and income consistent
POLICIES: with prudent investment risk by investing the Trust's assets
primarily in common stocks of US issuers the subadviser
believes are of high quality. The portfolio may also invest
in securities convertible into or that carry the right to
buy common stocks. The Trust may also invest up to 20% of
its assets in foreign securities.
SUBADVISER: Wellington Management Company, LLP
PORTFOLIO MANAGER: Matthew E. Megargel
INCEPTION DATE: April 23, 1991
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
GROWTH AND INCOME TRUST S&P 500 INDEX
----------------------- -------------
<S> <C> <C>
March 1991 10000.00 10000.00
9940.00 10257.00
10270.00 10696.00
9950.00 10207.00
10330.00 10685.00
10570.00 10936.00
10380.00 10757.00
10530.00 10901.00
10040.00 10460.00
December 1991 11080.00 11656.00
10810.00 11439.00
10980.00 11586.00
10740.00 11359.00
10921.00 11689.00
10982.00 11752.00
10921.00 11582.00
11376.00 12049.00
11305.00 11805.00
11588.00 11941.00
11668.00 11984.00
11981.00 12388.00
December 1992 12213.00 12550.00
12375.00 12642.00
12435.00 12812.00
12829.00 13088.00
12567.00 12767.00
12814.00 13112.00
12844.00 13155.00
12793.00 13093.00
13204.00 13592.00
13162.00 13492.00
13388.00 13765.00
13121.00 13636.00
December 1993 13388.00 13804.00
13850.00 14266.00
13706.00 13881.00
13193.00 13277.00
13337.00 13450.00
13569.00 13669.00
13252.00 13331.00
13812.00 13773.00
14224.00 14333.00
13960.00 13988.00
14171.00 14308.00
13527.00 13783.00
December 1994 13770.00 13984.00
13780.00 14348.00
14340.00 14905.00
14678.00 15346.00
15150.00 15792.00
15639.00 16416.00
15965.00 16802.00
16421.00 17361.00
16562.00 17408.00
17073.00 18138.00
16812.00 18074.00
17497.00 18869.00
December 1995 17790.00 19218.00
18214.00 19880.00
18258.00 20070.00
18573.00 20263.00
18853.00 20561.00
19305.00 21091.00
19327.00 21178.00
18628.00 20235.00
19034.00 20664.00
20139.00 21826.00
20691.00 22424.00
22259.00 24126.00
December 1996 21853.00 23653.00
23037.00 25122.00
23296.00 25325.00
22394.00 24272.00
23669.00 25721.00
25042.00 27300.00
26476.00 28518.00
28529.00 30782.00
26998.00 29070.00
28407.00 30663.00
27423.00 29639.00
28669.00 31012.00
December 1997 29027.00 31545.00
29355.00 31895.00
31360.00 34195.00
32939.00 35946.00
33393.00 36309.00
32540.00 35684.00
33819.00 37133.00
33664.00 36739.00
28781.00 31427.00
30564.00 33441.00
33264.00 36160.00
35098.00 38351.00
December 1998 36726.00 40560.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
-------------------------------- -------------------------
Since Since
Periods Ending December 31, 1998 1 Year 5 Year Inception 5 Year Inception
<S> <C> <C> <C> <C> <C>
S&P 500 Index 28.58% 24.06% 19.80% 193.83% 305.60%
Growth and Income Trust (at net asset value) 26.52% 22.36% 18.44% 174.31% 267.26%
</TABLE>
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the Growth and Income Trust returned 26.52% versus
28.58% for the S&P 500 Index.
ENVIRONMENT: 1998 proved to be another strong year for the US equity market,
albeit more volatile than in the recent past. The year began with investors
focused more on low inflation trends and the health of the domestic economy
rather than on the continuing uncertainty of global economies. By August,
however, the ongoing crisis in Asia, Japanese economic turmoil, political woes
in Washington, and Russian devaluation finally burst investor optimism. Worries
about decelerating earnings growth turned to concern about earnings declines and
liquidity problems. Top performing sectors for the year included health care,
retail and technology. Conversely, materials, energy and the financials lagged.
Trust performance was helped by overweights in health care, entertainment and
technology, and an underweight in materials. Relative performance was limited by
holdings in financials and energy.
OUTLOOK: One of the major issues for 1999 will likely be the relative returns of
economically sensitive stocks which are depressed compared to more
growth-oriented issues which have better fundamentals but have performed well.
At this juncture, we are still of the view that steady growth stocks will
continue to lead the market despite their hefty valuations. Our analysis still
points to a weak first half of 1999 with Latin America and the Pacific Rim
generally in recession. Thus, earnings reductions for commodity and industrial
companies may not be complete. To date, the trend of Wall Street consensus
forecasts continue to fall and cyclical companies that miss earnings estimates
continue to decline. When these two factors subside, we will reconsider our
posture.
xxii
<PAGE> 23
EQUITY-INCOME TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To provide substantial dividend income and also long-term
POLICIES: capital appreciation by investing primarily in common stocks
of well-established companies paying above-average
dividends. The subadviser believes that income can
contribute significantly to total return over time and
manages the portfolio to produce a yield above that of the
S&P 500 Index. The Trust seeks equity 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.
SUBADVISER: T. Rowe Price Associates, Inc.
PORTFOLIO MANAGER: Brian C. Rogers, Stephen W. Boesel, Richard P. Howard, and
William J. Stromberg
INCEPTION DATE: February 19, 1993*
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
RUSSELL
EQUITY- 1000 S&P
INCOME VALUE 500
TRUST INDEX INDEX
------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10000.00 10000.00 10000.00
February 1993 10170.00 10458.00 10384.00
10520.00 10767.00 10607.00
10180.00 10629.00 10347.00
10470.00 10842.00 10627.00
10560.00 11082.00 10662.00
10720.00 11206.00 10612.00
10760.00 11611.00 11016.00
10820.00 11629.00 10935.00
10930.00 11621.00 11156.00
10970.00 11382.00 11052.00
December 1993 11310.00 11598.00 11188.00
11530.00 12036.00 11562.00
11710.00 11625.00 11250.00
11380.00 11192.00 10761.00
11399.00 11407.00 10901.00
11490.00 11538.00 11078.00
11329.00 11263.00 10805.00
11490.00 11613.00 11162.00
12003.00 11946.00 11617.00
11933.00 11549.00 11337.00
11721.00 11710.00 11596.00
11188.00 11237.00 11171.00
December 1994 11399.00 11366.00 11334.00
11329.00 11716.00 11628.00
12073.00 12179.00 12080.00
12335.00 12446.00 12437.00
12517.00 12839.00 12799.00
12875.00 13380.00 13305.00
13283.00 13560.00 13617.00
13681.00 14032.00 14071.00
13824.00 14230.00 14109.00
13855.00 14745.00 14700.00
13385.00 14599.00 14649.00
13926.00 15339.00 15293.00
December 1995 14100.00 15724.00 15576.00
14437.00 16215.00 16112.00
14723.00 16338.00 16266.00
14896.00 16616.00 16423.00
15255.00 16679.00 16664.00
15573.00 16887.00 17094.00
15233.00 16901.00 17164.00
14695.00 16262.00 16400.00
15145.00 16727.00 16748.00
15902.00 17393.00 17689.00
16066.00 18066.00 18174.00
17020.00 19376.00 19553.00
December 1996 18900.00 19128.00 19170.00
17382.00 20056.00 20360.00
17832.00 20350.00 20525.00
17437.00 19618.00 19672.00
17902.00 20442.00 20846.00
18766.00 21584.00 22126.00
19491.00 22510.00 23113.00
20648.00 24203.00 24948.00
20078.00 23341.00 23561.00
21055.00 24751.00 24852.00
20496.00 24061.00 24022.00
21284.00 25124.00 25134.00
December 1997 21920.00 25858.00 25566.00
21767.00 25493.00 25850.00
22835.00 27209.00 27714.00
23916.00 28874.00 29133.00
23777.00 29068.00 29427.00
23387.00 28637.00 28921.00
23320.00 29004.00 30095.00
22646.00 28494.00 29776.00
20411.00 24254.00 25470.00
21529.00 25646.00 27103.00
22848.00 27633.00 29307.00
23777.00 28921.00 31083.00
December 1998 23939.00 29904.00 32873.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
-----------------------------------------
Since Since* Since
Periods Ending December 31, 1998 1 Year 5 Year Inception Oct. 1, 1996 5 Year Inception
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index+ 28.58% 24.06% 22.28% 31.71% 193.83% 228.73%
Russell 1000 Value Index 15.63% 20.85% 20.34% 27.22% 157.82% 199.04%
Equity-Income Trust (at net asset value) 9.21% 16.18% 16.05% 19.85% 111.66% 139.39%
</TABLE>
* Current subadvisor assignment became effective October 1, 1996.
+ The Russell 1000 Value Index was added to more accurately reflect the
involvement objective of the Equity-Income Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the Equity-Income Trust produced a return of 9.21%,
lagging the 15.63% return of the Russell 1000 Value Index.
ENVIRONMENT: Positive economic growth, a favorable interest rate environment,
and substantial stock market volatility characterized last year. A solid first
half was undermined by a severe third quarter correction, which gave way to a
near euphoric rally in the final months. The S&P 500 Index advanced by more than
20% for a record fourth consecutive year. In times such as these, it is helpful
to keep in mind that the objective of this type of fund is not to generate
robust returns under all market conditions. Rather, the goal is to produce
attractive returns, including substantial dividend income, over time and to help
cushion shareholders' investment principal during market declines. Several
holdings, including stocks in utilities, consumer nondurables, and financial
sectors, contributed positively to the Trust's overall performance. The process
industries and basic materials sectors both hindered performance during the
year. Our investment strategy of buying out-of-favor stocks with good long-term
potential has served well in the past, and we believe it will in the future when
investors focus again on stocks with appealing market valuations.
OUTLOOK: We expect 1999 to be a more challenging year than the one just ended,
which could lead to more moderate returns than the robust, and unsustainable, in
our view, performance of the past four years. In this environment, our
investment approach will be steady and constant, as always. We will continue to
search for attractively valued stocks with solid long-term potential.
xxiii
<PAGE> 24
BALANCED TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve current income and capital appreciation by
POLICIES: investing in a balanced portfolio of common stocks, US and
foreign government obligations and a variety of corporate
fixed income securities.
SUBADVISER: Founders Asset Management LLC
PORTFOLIO MANAGER: Brian F. Kelly
INCEPTION DATE: January 1, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
[BALANCED TRUST PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
LEHMAN BROTHERS 50%/50% COMPOSITE
BALANCED TRUST S&P 500 INDEX AGGREGATE BOND INDEX INDEX
-------------- ------------- -------------------- -----------------
<S> <C> <C> <C> <C>
December 1996 10000.00 10000.00 10000.00 10000.00
10374.00 10625.00 10031.00 10328.00
10362.00 10708.00 10056.00 10381.00
March 1997 10196.00 10268.00 9944.00 10110.00
10515.00 10881.00 10094.00 10488.00
10901.00 11543.00 10190.00 10857.00
June 1997 11239.00 12081.00 10311.00 11165.00
11570.00 13021.00 10589.00 11760.00
11208.00 12291.00 10499.00 11381.00
September 1997 11655.00 12965.00 10655.00 11777.00
11563.00 12532.00 10809.00 11665.00
11704.00 13112.00 10859.00 11962.00
December 1997 11852.00 13338.00 10968.00 12126.00
12170.00 13486.00 11108.00 12271.00
12532.00 14459.00 11100.00 12708.00
March 1998 12777.00 15199.00 11137.00 13055.00
12891.00 15352.00 11195.00 13155.00
12821.00 15088.00 11302.00 13105.00
June 1998 12982.00 15701.00 11398.00 13426.00
12710.00 15534.00 11422.00 13369.00
12019.00 13288.00 11608.00 12511.00
September 1998 12654.00 14139.00 11879.00 13059.00
13066.00 15289.00 11816.00 13555.00
13345.00 16216.00 11884.00 14055.00
December 1998 13458.00 17150.00 11919.00 14429.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
S&P 500 Index* 28.58% 30.95% 71.50%
Lehman Brothers Aggregate Bond Index 8.67% 9.18% 19.19%
50%/50% Composite Index+ 18.99% 20.12% 44.29%
Balanced Trust (at net asset value) 14.25% 16.41% 34.58%
</TABLE>
+ Comprised of 50% of the return of the S&P Index and 50% of the return of the
Lehman Brothers Aggregate Bond Index.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Balanced Trust gained 14.25% for the year, while the
comparative index comprised of 50% S&P 500 Index and 50% Lehman Brothers
Aggregate Bond Index posted a return of 18.99%.
ENVIRONMENT: Based on our belief that market valuations were somewhat high, we
maintained a relatively conservative approach. Accordingly, at 1998 year end,
approximately 39% of the Trust was in US equities, 43.7% was in US government
securities and corporate bonds, and 11.7% was in foreign equities. We were able
to limit the Trust's losses and boost our performance during last summer's
market volatility by purchasing corporate bonds when the yield spread began
widening between Treasuries and corporates. The Trust has held up well in the
market's comeback. We are positioned for an uncertain market this coming year by
seeking portfolio stability through diversification in most major industries. As
we use our bottom up approach to seek growth stocks, we are identifying many
companies with earnings growth that meet our criteria, including pharmaceutical
stocks, whose earnings and dividends we believe will increase as the baby boom
population ages.
OUTLOOK: Corporate earnings estimates are being closely watched, and earnings
growth rates are actually declining. Given current market valuations, those
companies that fall short of earnings expectations may come under pressure. We
will continue to seek the best growth companies the market has to offer; when
such opportunities are limited, we will balance the Trust with more stable US
Treasuries.
xxiv
<PAGE> 25
AGGRESSIVE ASSET ALLOCATION TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To obtain the highest potential total return consistent with
POLICIES: an aggressive level of risk tolerance. Generally, the
Aggressive Asset Allocation Trust invests a greater portion
of its assets in equity and foreign securities. The Trust
attempts to limit declines in value in very adverse market
conditions to 15% during any three-year period.
SUBADVISER: Fidelity Management Trust Company
PORTFOLIO MANAGER: Scott D. Stewart
INCEPTION DATE: August 3, 1989+
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
AGGRESSIVE ASSET CUSTOMIZED
ALLOCATION TRUST WILSHIRE 5000 INDEX MSCI EAFE INDEX BENCHMARK
---------------- ------------------- --------------- ----------
<S> <C> <C> <C> <C>
July 1989 10000.00 10000.00 10000.00 10000.00
10340.00 10227.00 9552.00 10006.00
10180.00 10210.00 9989.00 10096.00
9760.00 9911.00 9589.00 9901.00
9810.00 10086.00 10074.00 10106.00
Dec. 1989 9880.00 10270.00 10448.00 10275.00
9210.00 9516.00 10061.00 9809.00
9370.00 9667.00 9361.00 9746.00
9530.00 9909.00 8388.00 9680.00
9313.00 9623.00 8323.00 9530.00
9916.00 10502.00 9276.00 10223.00
9837.00 10451.00 9196.00 10232.00
9686.00 10350.00 9328.00 10263.00
8908.00 9376.00 8425.00 9556.00
8538.00 8861.00 7253.00 9030.00
8455.00 8742.00 8386.00 9257.00
8839.00 9338.00 7894.00 9491.00
Dec. 1990 9181.00 9635.00 8025.00 9705.00
9525.00 10103.00 8286.00 10031.00
10029.00 10889.00 9177.00 10701.00
10201.00 11221.00 8628.00 10785.00
10319.00 11256.00 8715.00 10874.00
10571.00 11707.00 8809.00 11122.00
10288.00 11185.00 8164.00 10746.00
10592.00 11710.00 8567.00 11142.00
10887.00 12033.00 8395.00 11304.00
10813.00 11895.00 8871.00 11422.00
10981.00 12114.00 8999.00 11608.00
10498.00 11651.00 8581.00 11321.00
Dec. 1991 11265.00 12930.00 9027.00 12094.00
11107.00 12905.00 8837.00 12042.00
11244.00 13082.00 8523.00 12073.00
11034.00 12758.00 7963.00 11779.00
11326.00 12929.00 8002.00 11887.00
11446.00 13008.00 8541.00 12133.00
11381.00 12743.00 8139.00 11940.00
11835.00 13259.00 7933.00 12168.00
11684.00 12978.00 8433.00 12233.00
11835.00 13133.00 8269.00 12291.00
11803.00 13293.00 7838.00 12196.00
12095.00 13844.00 7914.00 12473.00
Dec. 1992 12193.00 14090.00 7957.00 12634.00
12290.00 14263.00 7959.00 12771.00
12442.00 14322.00 8201.00 12928.00
12637.00 14690.00 8919.00 13340.00
12498.00 14284.00 9768.00 13443.00
12689.00 14732.00 9976.00 13719.00
12833.00 14800.00 9823.00 13767.00
12822.00 14798.00 10169.00 13889.00
13213.00 15369.00 10720.00 14344.00
13180.00 15399.00 10481.00 14308.00
13348.00 15656.00 10807.00 14542.00
13269.00 15402.00 9864.00 14167.00
Dec. 1993 13448.00 15680.00 10579.00 14521.00
13884.00 16173.00 11475.00 15041.00
13571.00 15810.00 11446.00 14829.00
13068.00 15095.00 10955.00 14296.00
13200.00 15240.00 11423.00 14456.00
13356.00 15389.00 11360.00 14510.00
13081.00 14977.00 11523.00 14373.00
13451.00 15421.00 11636.00 14660.00
13782.00 16103.00 11914.00 15053.00
13475.00 15791.00 11541.00 14793.00
13654.00 16049.00 11928.00 15014.00
13248.00 15461.00 11358.00 14600.00
Dec. 1994 13385.00 15669.00 11432.00 14747.00
13320.00 16008.00 10995.00 14852.00
13619.00 16646.00 10966.00 15221.00
13965.00 17084.00 11653.00 15640.00
14304.00 17509.00 12095.00 16014.00
14649.00 18106.00 11954.00 16374.00
14879.00 18683.00 11747.00 16600.00
15415.00 19452.00 12482.00 17151.00
15453.00 19641.00 12009.00 17147.00
15785.00 20391.00 12246.00 17573.00
15619.00 20186.00 11920.00 17449.00
16078.00 21041.00 12255.00 17958.00
Dec. 1995 16397.00 21385.00 12752.00 18314.00
16691.00 21958.00 12807.00 18612.00
16780.00 22342.00 12854.00 18743.00
16557.00 22586.00 13130.00 18903.00
17027.00 23144.00 13515.00 19230.00
17208.00 23777.00 13270.00 19423.00
17281.00 23581.00 13348.00 19424.00
16778.00 22309.00 12961.00 18839.00
16955.00 23023.00 12993.00 19156.00
17647.00 24249.00 13341.00 19836.00
17909.00 24588.00 13208.00 20016.00
18680.00 26217.00 13737.00 20896.00
Dec. 1996 18528.00 25921.00 13563.00 20725.00
18914.00 27309.00 13092.00 21138.00
18955.00 27296.00 13309.00 21244.00
18501.00 26089.00 13360.00 20766.00
19024.00 27227.00 13435.00 21296.00
20053.00 29156.00 14312.00 22366.00
20745.00 30495.00 15105.00 23176.00
21597.00 32840.00 15352.00 24251.00
21037.00 31605.00 14209.00 23434.00
22189.00 33470.00 15008.00 24449.00
21487.00 32355.00 13858.00 23761.00
21959.00 33415.00 13719.00 24126.00
Dec. 1997 22066.00 34032.00 13842.00 24445.00
22358.00 34217.00 14479.00 24821.00
23710.00 36708.00 15411.00 26013.00
24724.00 38545.00 15889.00 26837.00
24976.00 39003.00 16018.00 27073.00
24597.00 37965.00 15944.00 26769.00
25131.00 39296.00 16069.00 27313.00
24994.00 38435.00 16235.00 27119.00
21566.00 32450.00 14227.00 24418.00
22617.00 34569.00 13795.00 25131.00
23822.00 37141.00 15237.00 26494.00
25063.00 39480.00 16021.00 27694.00
Dec. 1998 26286.00 42006.00 16657.00 28775.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
------------------------------------------ -----------------------
Since Since+ Since
Periods Ending December 31, 1998 1 Year 5 Year Inception Dec 13, 1991 5 Year Inception
<S> <C> <C> <C> <C> <C> <C>
Wilshire 5000 Index* 23.43% 21.79% 16.46% 19.85% 167.91% 320.06%
MSCI EAFE Index 20.33% 9.50% 5.57% 9.82% 57.46% 66.57%
Customized Benchmark** 17.71% 14.66% 11.88% 14.08% 98.16% 187.75%
Aggressive Asset Allocation Trust (at net asset value) 19.12% 14.34% 10.82% 13.67% 95.46% 162.86%
</TABLE>
+ Current subadviser assignment became effective December 13, 1991.
** Customized Benchmark is comprised of 47.5% of the return of the Wilshire 5000
Index, 20% of the MSCI 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.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Aggressive Asset Allocation Trust returned 19.12% for 1998
versus its customized benchmark return of 17.71%.
ENVIRONMENT: The US equity market and financial markets around the globe went
through a fire storm starting in late August. The Russian government defaulted
on their foreign debt payment in late August, triggering a wholesale, global
panic on a rather leveraged, overly optimistic market that has enjoyed three
years of fantastic returns. Emerging market debt and equities were wiped out in
the first wave of panic selling, with US corporate bonds, both high and low
grade, suffering as well. Small cap stocks were also hurt, with the Russell 2000
Index dropping 50% or more to its low. The very integrity and structure of the
global financial system was held hostage by the near collapse of the hedge fund,
Long Term Capital Management.
OUTLOOK: Most of the problems that caused global financial chaos in the third
quarter are still unresolved, such as economic depression and political
uncertainty in Asia, Russia and South America, and banking reform issues in
Japan. Despite high valuations in the US equity market and a robust economy, we
believe the global uncertainty will continue to produce high volatility in the
markets in 1999.
xxv
<PAGE> 26
MODERATE ASSET ALLOCATION TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To obtain the highest potential total return consistent with
POLICIES: a moderate level of risk tolerance. The Trust attempts to
limit declines in value in very adverse market conditions to
10% during any three-year period.
SUBADVISER: Fidelity Management Trust Company
PORTFOLIO MANAGER: Scott D. Stewart
INCEPTION DATE: August 3, 1989**
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
[MODERATE ASSET ALLOCATION TRUST PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
MODERATE ASSET LEHMAN BROTHERS CUSTOMIZED
ALLOCATION TRUST WILSHIRE 5000 INDEX AGGREGATE BOND INDEX BENCHMARK
---------------- ------------------- -------------------- ----------
<S> <C> <C> <C> <C>
July 1989 10000.00 10000.00 10000.00 10000.00
10210.00 10227.00 9852.00 9980.00
10120.00 10210.00 9902.00 10039.00
9910.00 9911.00 10146.00 9991.00
9970.00 10086.00 10242.00 10145.00
Dec. 1989 10030.00 10270.00 10270.00 10256.00
9450.00 9516.00 10148.00 9911.00
9570.00 9667.00 10180.00 9900.00
9570.00 9909.00 10187.00 9901.00
9365.00 9623.00 10094.00 9775.00
9561.00 10502.00 10392.00 10313.00
9851.00 10451.00 10560.00 10380.00
9770.00 10350.00 10705.00 10447.00
9142.00 9376.00 10562.00 9941.00
8839.00 8861.00 10650.00 9634.00
8758.00 8742.00 10785.00 9776.00
9112.00 9338.00 11017.00 10033.00
Dec. 1990 9405.00 9635.00 11189.00 10235.00
9719.00 10103.00 11327.00 10502.00
10155.00 10889.00 11424.00 10990.00
10286.00 11221.00 11502.00 11111.00
10392.00 11256.00 11627.00 11216.00
10551.00 11707.00 11694.00 11409.00
10317.00 11185.00 11688.00 11182.00
10594.00 11710.00 11851.00 11498.00
10871.00 12033.00 12107.00 11703.00
10871.00 11895.00 12352.00 11839.00
11051.00 12114.00 12490.00 12015.00
10828.00 11651.00 12604.00 11870.00
Dec. 1991 11402.00 12930.00 12979.00 12512.00
11276.00 12905.00 12802.00 12445.00
11392.00 13082.00 12885.00 12516.00
11222.00 12758.00 12813.00 12322.00
11439.00 12929.00 12906.00 12427.00
11595.00 13008.00 13149.00 12647.00
11617.00 12743.00 13331.00 12589.00
12027.00 13259.00 13603.00 12848.00
11950.00 12978.00 13740.00 12909.00
12104.00 13133.00 13904.00 13010.00
12038.00 13293.00 13719.00 12911.00
12237.00 13844.00 13722.00 13112.00
Dec. 1992 12348.00 14090.00 13940.00 13291.00
12492.00 14263.00 14207.00 13475.00
12670.00 14322.00 14456.00 13649.00
12825.00 14690.00 14517.00 13926.00
12746.00 14284.00 14618.00 13984.00
12855.00 14732.00 14637.00 14180.00
13047.00 14800.00 14902.00 14306.00
13070.00 14798.00 14987.00 14403.00
13417.00 15369.00 15250.00 14776.00
13408.00 15399.00 15291.00 14778.00
13544.00 15656.00 15347.00 14950.00
13440.00 15402.00 15217.00 14700.00
Dec. 1993 13590.00 15680.00 15299.00 14940.00
13937.00 16173.00 15506.00 15329.00
13648.00 15810.00 15236.00 15101.00
13209.00 15095.00 14859.00 14633.00
13248.00 15240.00 14741.00 14684.00
13347.00 15389.00 14739.00 14725.00
13149.00 14977.00 14707.00 14616.00
13483.00 15421.00 14999.00 14900.00
13681.00 16103.00 15017.00 15171.00
13421.00 15791.00 14797.00 14944.00
13658.00 16049.00 14783.00 15077.00
13273.00 15461.00 14751.00 14808.00
Dec. 1994 13372.00 15669.00 14853.00 14943.00
13421.00 16008.00 15147.00 15133.00
13694.00 16646.00 15507.00 15512.00
13967.00 17084.00 15602.00 15804.00
14261.00 17509.00 15820.00 16118.00
14639.00 18106.00 16432.00 16573.00
14834.00 18683.00 16552.00 16782.00
15147.00 19452.00 16516.00 17121.00
15238.00 19641.00 16716.00 17208.00
15499.00 20391.00 16878.00 17545.00
15473.00 20186.00 17097.00 17551.00
15837.00 21041.00 17354.00 17969.00
Dec. 1995 16137.00 21385.00 17597.00 18270.00
16397.00 21958.00 17713.00 18517.00
16371.00 22342.00 17405.00 18512.00
16354.00 22586.00 17283.00 18567.00
16438.00 23144.00 17186.00 18739.00
16551.00 23777.00 17152.00 18875.00
16651.00 23581.00 17381.00 18951.00
16381.00 22309.00 17428.00 18601.00
16523.00 23023.00 17399.00 18813.00
17034.00 24249.00 17702.00 19361.00
17318.00 24588.00 18094.00 19623.00
17901.00 26217.00 18404.00 20296.00
Dec. 1996 17745.00 25921.00 18233.00 20143.00
18029.00 27309.00 18289.00 20469.00
18071.00 27296.00 18335.00 20552.00
17702.00 26089.00 18131.00 20160.00
18148.00 27227.00 18403.00 20607.00
18862.00 29156.00 18578.00 21338.00
19386.00 30495.00 18799.00 21909.00
20243.00 32840.00 19307.00 22784.00
19658.00 31605.00 19143.00 22267.00
20486.00 33470.00 19426.00 22991.00
20101.00 32355.00 19708.00 22718.00
20418.00 33415.00 19798.00 23005.00
Dec. 1997 20561.00 34032.00 19998.00 23283.00
20815.00 34217.00 20254.00 23590.00
21704.00 36708.00 20238.00 24308.00
22371.00 38545.00 20307.00 24841.00
22565.00 39003.00 20413.00 25027.00
22387.00 37965.00 20607.00 24917.00
22742.00 39296.00 20782.00 25326.00
22653.00 38435.00 20825.00 25216.00
20507.00 32450.00 21165.00 23708.00
21287.00 34569.00 21660.00 24379.00
21961.00 37141.00 21545.00 25142.00
22831.00 39480.00 21668.00 25949.00
Dec. 1998 23700.00 42006.00 21733.00 26630.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since** Since
Periods Ending December 31, 1998 1 Year 5 Year Inception Dec 13, 1991 5 Year Inception
<S> <C> <C> <C> <C> <C> <C>
Wilshire 5000 Index* 23.43% 21.79% 16.46% 19.85% 167.91% 320.06%
Lehman Brothers Aggregate Bond Index 8.67% 7.27% 8.59% 7.99% 42.06% 117.33%
Customized Benchmark+ 14.37% 12.25% 10.96% 12.08% 78.24% 166.30%
Moderate Asset Allocation Trust (at net asset value) 15.27% 11.76% 9.60% 11.58% 74.39% 137.00%
</TABLE>
** Current subadvisor assignment became effective December 13, 1991.
+ Customized Benchmark is comprised of 32.5% of the return of the Wilshire 5000
Index, 10% of the return 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.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Moderate Asset Allocation Trust returned 15.27% for 1998 versus
its customized benchmark return of 14.37%.
ENVIRONMENT: The US equity market and financial markets around the globe went
through a fire storm starting in late August. The Russian government defaulted
on their foreign debt payment in late August, triggering a wholesale, global
panic on a rather leveraged, overly optimistic market that has enjoyed three
years of fantastic returns. Emerging market debt and equities were wiped out in
the first wave of panic selling, with US corporate bonds, both high and low
grade, suffering as well. Small cap stocks were also hurt, with the Russell 2000
Index dropping 50% or more to its low. The very integrity and structure of the
global financial system was held hostage by the near collapse of the hedge fund,
Long Term Capital Management.
OUTLOOK: Most of the problems that caused global financial chaos in the third
quarter are still unresolved, such as economic depression and political
uncertainty in Asia, Russia and South America, and banking reform issues in
Japan. Despite high valuations in the US equity market and a robust economy, we
believe the global uncertainty will continue to produce high volatility in the
markets in 1999.
xxvi
<PAGE> 27
CONSERVATIVE ASSET ALLOCATION TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To obtain the highest potential total return consistent with
POLICIES: a conservative level of risk tolerance. The Trust attempts
to limit declines in Trust value in very adverse market
conditions to 5% during any three-year period.
SUBADVISER: Fidelity Management Trust Company
PORTFOLIO MANAGER: Scott D. Stewart
INCEPTION DATE: August 3, 1989**
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
CONSERVATIVE ASSET LEHMAN BROTHERS CUSTOMIZED
ALLOCATION TRUST 90 DAY T-BILL AGGREGATE BOND INDEX BENCHMARK
------------------ ------------- -------------------- ----------
<S> <C> <C> <C> <C>
July 1989 10000.00 10000.00 10000.00 10000.00
10070.00 10066.00 9852.00 9966.00
10030.00 10131.00 9902.00 10026.00
10020.00 10203.00 10146.00 10089.00
10080.00 10274.00 10242.00 10215.00
Dec. 1989 10110.00 10337.00 10270.00 10301.00
8700.00 10406.00 10148.00 10087.00
9780.00 10469.00 10180.00 10115.00
9620.00 10539.00 10187.00 10133.00
9447.00 10606.00 10094.00 10041.00
9834.00 10684.00 10392.00 10449.00
9905.00 10755.00 10560.00 10535.00
9905.00 10831.00 10705.00 10614.00
9468.00 10903.00 10562.00 10309.00
8285.00 10975.00 10650.00 10184.00
9234.00 11041.00 10785.00 10316.00
9495.00 11108.00 11017.00 10553.00
Dec. 1990 9722.00 11187.00 11189.00 10730.00
9938.00 11254.00 11327.00 10934.00
10251.00 11310.00 11424.00 11223.00
10322.00 11378.00 11502.00 11314.00
10409.00 11437.00 11627.00 11402.00
10431.00 11492.00 11694.00 11547.00
10311.00 11545.00 11688.00 11412.00
10528.00 11600.00 11851.00 11640.00
10778.00 11658.00 12107.00 11833.00
10887.00 11714.00 12352.00 11974.00
11061.00 11772.00 12490.00 12107.00
11104.00 11829.00 12604.00 12057.00
Dec. 1991 11550.00 11882.00 12979.00 12546.00
11409.00 11922.00 12802.00 12453.00
11506.00 11958.00 12885.00 12515.00
11398.00 11996.00 12813.00 12387.00
11537.00 12044.00 12906.00 12480.00
11710.00 12083.00 13149.00 12665.00
11790.00 12122.00 13331.00 12682.00
12124.00 12168.00 13603.00 12909.00
12135.00 12201.00 13740.00 12969.00
12273.00 12243.00 13904.00 13076.00
12181.00 12232.00 13719.00 12984.00
12273.00 12224.00 13722.00 13097.00
Dec. 1992 12400.00 12230.00 13940.00 13253.00
12572.00 12266.00 14207.00 13423.00
12745.00 12293.00 14456.00 13579.00
12848.00 12327.00 14517.00 13746.00
12855.00 12357.00 14618.00 13792.00
12915.00 12387.00 14637.00 13911.00
13095.00 12419.00 14902.00 14048.00
13143.00 12452.00 14987.00 14122.00
13395.00 12485.00 15250.00 14402.00
13407.00 12519.00 15291.00 14420.00
13503.00 12551.00 15347.00 14527.00
13407.00 12583.00 15217.00 14364.00
Dec. 1993 13515.00 12622.00 15299.00 14517.00
13755.00 12658.00 15506.00 14779.00
13515.00 12680.00 15236.00 14589.00
13179.00 12717.00 14859.00 14256.00
13151.00 12750.00 14741.00 14266.00
13180.00 12791.00 14739.00 14300.00
13087.00 12843.00 14707.00 14233.00
13344.00 12892.00 14999.00 14480.00
13446.00 12938.00 15017.00 14646.00
13267.00 12987.00 14797.00 14473.00
13344.00 13042.00 14783.00 14553.00
13177.00 13091.00 14751.00 14410.00
Dec. 1994 13267.00 13159.00 14853.00 14522.00
13408.00 13225.00 15147.00 14719.00
13677.00 13289.00 15507.00 15027.00
13844.00 13357.00 15602.00 15218.00
14056.00 13423.00 15820.00 15448.00
14448.00 13493.00 16432.00 15863.00
14597.00 13563.00 16552.00 16029.00
14772.00 13628.00 16516.00 16213.00
14881.00 13695.00 16716.00 16332.00
15070.00 13756.00 16878.00 16570.00
15110.00 13820.00 17097.00 16642.00
15361.00 13882.00 17354.00 16949.00
Dec. 1995 15664.00 13961.00 17597.00 17182.00
15827.00 14024.00 17713.00 17354.00
15732.00 14080.00 17405.00 17284.00
15719.00 14136.00 17283.00 17297.00
15744.00 14197.00 17186.00 17378.00
16801.00 14260.00 17152.00 17459.00
15917.00 14322.00 17381.00 17572.00
16787.00 14385.00 17428.00 17400.00
16859.00 14452.00 17399.00 17519.00
16219.00 14520.00 17702.00 17902.00
16478.00 14585.00 18094.00 18162.00
16896.00 14648.00 18404.00 18613.00
Dec. 1996 16766.00 14713.00 18233.00 18494.00
16954.00 14780.00 18289.00 18709.00
16997.00 14838.00 18335.00 18765.00
16766.00 14900.00 18131.00 18518.00
17055.00 14973.00 18403.00 18846.00
17431.00 15053.00 18578.00 19289.00
17746.00 15107.00 18799.00 19652.00
18287.00 15187.00 19307.00 20262.00
18002.00 15257.00 19143.00 19971.00
18430.00 15327.00 19426.00 20434.00
18398.00 15393.00 19708.00 20389.00
18557.00 15459.00 19798.00 20582.00
Dec. 1997 18684.00 15525.00 19998.00 20793.00
18890.00 15600.00 20254.00 21021.00
19239.00 15658.00 20238.00 21406.00
19556.00 15731.00 20307.00 21715.00
19683.00 15802.00 20413.00 21856.00
19701.00 15873.00 20607.00 21863.00
19911.00 15941.00 20782.00 22142.00
19911.00 16012.00 20825.00 22104.00
19194.00 16085.00 21165.00 21484.00
19648.00 16170.00 21660.00 22012.00
19928.00 16233.00 21545.00 22418.00
20295.00 16289.00 21668.00 22841.00
Dec. 1998 20680.00 16352.00 21733.00 23235.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
---------------------------------------------------------------------------
Since Since** Since
Periods Ending December 31, 1998 1 Year 5 Year Inception Dec 13, 1991 5 Year Inception
<S> <C> <C> <C> <C> <C> <C>
90 Day T-Bill* 5.33% 5.32% 5.36% 4.68% 29.56% 63.52%
Lehman Brothers Aggregate Bond Index 8.67% 7.27% 8.59% 7.99% 42.06% 117.33%
Customized Benchmark+ 11.74% 9.86% 9.37% 9.70% 60.05% 132.35%
Conservative Asset Allocation Trust (at net asset
value) 10.68% 8.88% 8.03% 9.09% 53.01% 106.80%
</TABLE>
** Current subadvisor assignment became effective December 13, 1991.
+ Customized Benchmark is comprised of 20% of the return of the Wilshire 5000
Index, 5% of the MSCI EAFE Index, 50% of the return of the Lehman Brothers
Aggregate Bond Index, and 25% of the return of the 90 Day T-Bill.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Conservative Asset Allocation Trust returned 10.68% for 1998
versus its customized benchmark of 11.74%.
ENVIRONMENT: The US equity market and financial markets around the globe went
through a fire storm starting in late August. The Russian government defaulted
on their foreign debt payment in late August, triggering a wholesale, global
panic on a rather leveraged, overly optimistic market that has enjoyed three
years of fantastic returns. Emerging market debt and equities were wiped out in
the first wave of panic selling, with US corporate bonds, both high and low
grade, suffering as well. Small cap stocks were also hurt, with the Russell 2000
Index dropping 50% or more to its low. The very integrity and structure of the
global financial system was held hostage by the near collapse of the hedge fund,
Long Term Capital Management.
OUTLOOK: Most of the problems that caused global financial chaos in the third
quarter are still unresolved, such as economic depression and political
uncertainty in Asia, Russia and South America, and banking reform issues in
Japan. Despite high valuations in the US equity market and a robust economy, we
believe the global uncertainty will continue to produce high volatility in the
markets in 1999.
xxvii
<PAGE> 28
HIGH YIELD TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To realize an above average total return over a market cycle
POLICIES: of three to five years, consistent with reasonable risk by
investing the Trust's assets primarily in high yield debt
securities, including corporate bonds and other fixed income
securities. The Trust's average weighted maturity for the
securities that it purchases ordinarily will be greater than
five years. At times, more than 50% of the Trust's assets
may be invested in mortgage-backed securities. The Trust may
invest up to 100% of its assets in foreign securities,
including emerging market securities, and as a result be
subject to special risks.
SUBADVISER: Miller Anderson & Sherrerd, LLP
PORTFOLIO MANAGER: Robert E. Anevine, Thomas L. Bennett, and Stephen F. Esser
INCEPTION DATE: January 1, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
SALOMON BROTHERS HIGH YIELD
HIGH YIELD TRUST MARKET INDEX
---------------- ---------------------------
<S> <C> <C>
December 1996 10000.00 10000.00
10058.00 10075.00
10144.00 10246.00
March 1997 9904.00 10141.00
10144.00 10213.00
10392.00 10419.00
June 1997 10576.00 10595.00
10944.00 10856.00
10912.00 10888.00
September 1997 11136.00 11056.00
11032.00 11144.00
11138.00 11201.00
December 1997 11268.00 11319.00
11443.00 11575.00
11575.00 11653.00
March 1998 11725.00 11779.00
11780.00 11843.00
11722.00 11875.00
June 1998 11747.00 11901.00
11864.00 11997.00
10922.00 11192.00
September 1998 10981.00 11331.00
10831.00 11175.00
11589.00 11735.00
December 1998 11581.00 11727.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
Salomon Brothers High Yield Market Index* 3.60% 8.29% 17.27%
High Yield Trust (at net asset value) 2.78% 7.64% 15.81%
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The High Yield Trust returned 2.78% in 1998, compared to 3.60% for
the Salomon Brothers High Yield Market Index.
ENVIRONMENT: The high yield market significantly underperformed high quality
bonds in 1998, lagging by over 500 basis points. The global financial turmoil
and subsequent flight to quality had a pronounced negative impact on the
performance of high yield bonds. For the year, the weakness in the third quarter
outweighed strong returns for the asset class in the first and fourth quarters.
Technical factors and fear, as opposed to a fundamental deterioration in the
credit quality for high yield issuers, were primarily responsible for the
widening spread in the third quarter. Consistent with the other non-Treasury
sectors of the bond market, high yield bonds rebounded strongly in the fourth
quarter. Even after the rebound in the fourth quarter, yield spreads on high
yield bonds now exceed 500 basis points over Treasuries, levels not seen since
the early 1990s.
OUTLOOK: Looking ahead, we expect the economy to downshift to a much more
sustainable pace of growth during 1999. Risks of higher inflation are mitigated
by the continued global trend toward lower goods and commodity prices, and by a
less buoyant economy that should moderate wage pressures. On balance, we foresee
inflation holding near current levels, which implies a contraction of high yield
spreads. This should enable further easing of monetary policy. Consequently, we
believe that high yield bonds offer compelling value, and we continue to find
attractive bottom up investment opportunities.
xxviii
<PAGE> 29
STRATEGIC BOND TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve a high level of total return consistent with
POLICIES: preservation of capital by investing the portfolio's assets
among five segments of the fixed income market: (i) US
Government obligations, (ii) investment grade domestic
corporate fixed income securities, (iii) high yield, high
risk corporate fixed income securities, (iv) mortgage-backed
securities, and (v) investment grade and high yield
international fixed income securities.
SUBADVISER: Salomon Brothers Asset Management Inc.
PORTFOLIO MANAGERS: Peter J. Wilby, David J. Scott, and Roger Lavan
INCEPTION DATE: February 19, 1993
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
LEHMAN BROTHERS AGGREGATE BOND
STRATEGIC BOND TRUST INDEX
-------------------- ------------------------------
<S> <C> <C>
February 1993 10000.00 10000.00
10050.00 10042.00
10080.00 10112.00
10150.00 10125.00
10400.00 10309.00
10460.00 10367.00
10550.00 10549.00
10560.00 10577.00
10760.00 10617.00
10760.00 10526.00
December 1993 10880.00 10583.00
11050.00 10726.00
10820.00 10539.00
10440.00 10279.00
10372.00 10197.00
10393.00 10196.00
10383.00 10173.00
10403.00 10376.00
10414.00 10388.00
10445.00 10236.00
10424.00 10226.00
10383.00 10204.00
December 1994 10228.00 10274.00
10207.00 10478.00
10290.00 10727.00
10300.00 10792.00
10710.00 10944.00
11154.00 11387.00
11284.00 11450.00
11360.00 11425.00
11436.00 11563.00
11620.00 11675.00
11706.00 11827.00
11912.00 12004.00
December 1995 12194.00 12173.00
12651.00 12265.00
12464.00 12042.00
12475.00 11958.00
12640.00 11891.00
12745.00 11887.00
12886.00 12028.00
12979.00 12059.00
13155.00 12038.00
13576.00 12247.00
13893.00 12519.00
13939.00 12733.00
December 1996 13986.00 12615.00
14126.00 12654.00
14302.00 12686.00
14056.00 12545.00
14205.00 12733.00
14531.00 12854.00
14731.00 13007.00
15120.00 13358.00
15082.00 13245.00
15371.00 13441.00
15170.00 13635.00
15346.00 13698.00
December 1997 15521.00 13837.00
15684.00 14014.00
15797.00 14003.00
15910.00 14051.00
15952.00 14124.00
15952.00 14258.00
15926.00 14379.00
15979.00 14409.00
14946.00 14644.00
15402.00 14987.00
15362.00 14907.00
15738.00 14992.00
December 1998 15724.00 15037.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
------------------------------ -----------------------
Since Since
Periods Ending December 31, 1998 1 Year 5 Year Inception 5 Year Inception
<S> <C> <C> <C> <C> <C>
Lehman Brothers Aggregate Bond Index* 8.67% 7.27% 7.24% 42.06% 50.37%
Strategic Bond Trust (at net asset
value) 1.31% 7.64% 8.02% 44.53% 57.24%
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Strategic Bond Trust returned 1.31% for 1998, compared to the
8.67% return for the Lehman Brothers Aggregate Bond Index.
ENVIRONMENT: The Trust's underperformance in 1998 was largely due to its
exposure to high yield and emerging market debt during the unexpected credit
crisis in the summer of 1998. The good news for bonds in 1998 was that interest
rates fell approximately 1% across the yield curve. However, factors such as
equity market fears, default fears and expectations of spreading global economic
weakness sent panicked investors to the safety and liquidity of the Treasury
sector. The bad news came for any bond that was not a Treasury, as yield spreads
across the domestic bond universe widened toward unexplainable and unsustainable
levels. High yield bonds and emerging market debt suffered through their worst
performances in years largely due to the global spread rout.
OUTLOOK: US near-term job and economic growth probably will remain fairly
buoyant in 1999, given the boost from lower commodity prices, warm weather and
the rise in the equity market. Outside the US, where the main threat to domestic
stability first emerged, conditions have deteriorated since the Federal
Reserve's last rate cut. This backdrop leaves the Federal Reserve in a watchful
state, despite the complacency of today's marketplace and strong fourth quarter
GDP growth. We remain optimistic about the high yield market, as interest rates
are low and credit spreads have room to improve. The emerging debt markets have
recovered by some 20% since their lows in early September and while there will
be bumps along the way, we expect emerging debt to outperform the US investment
grade market in 1999.
xxix
<PAGE> 30
GLOBAL GOVERNMENT BOND TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To achieve a high level of total return by placing primary
& POLICIES: emphasis on high current income and the preservation of
capital by investing primarily in high quality, fixed income
securities of foreign and US governments and supranational
issuers. The subadviser selects the Trust's investments from
among countries and in currency denominations where it
expects opportunities for total return to be the most
attractive.
SUBADVISER: Oechsle International Advisors, LLC
PORTFOLIO MANAGER: Astrid Vogler
INCEPTION DATE: March 18, 1988
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
SALOMON BROTHERS WORLD
GLOBAL GOVERNMENT BOND TRUST GOVERNMENT BOND INDEX
---------------------------- ----------------------
<S> <C> <C>
February 1988 10000.00 10000.00
10100.00 10000.00
10130.00 9951.00
10040.00 9858.00
9840.00 9643.00
9761.00 9585.00
9651.00 9477.00
9761.00 9722.00
10150.00 10171.00
10130.00 10327.00
December 1988 10179.00 10222.00
10100.00 10072.00
10080.00 10079.00
9988.00 9939.00
10059.00 10071.00
9887.00 9859.00
10028.00 10057.00
10322.00 10515.00
10150.00 10161.00
10413.00 10354.00
10434.00 10441.00
10494.00 10536.00
December 1989 10838.00 10664.00
10656.00 10523.00
10616.00 10381.00
10585.00 10259.00
10602.00 10227.00
10842.00 10567.00
10998.00 10761.00
11258.00 11098.00
11373.00 11011.00
11425.00 11135.00
11842.00 11632.00
12008.00 11825.00
December 1990 12071.00 11942.00
12373.00 12240.00
12435.00 12244.00
12008.00 11799.00
12118.00 11981.00
12172.00 11956.00
11965.00 11841.00
12237.00 12094.00
12541.00 12328.00
13030.00 12810.00
13160.00 12944.00
13268.00 13146.00
December 1991 13985.00 13830.00
13703.00 13584.00
13703.00 13509.00
13572.00 13355.00
13615.00 13461.00
13982.00 13875.00
14315.00 14263.00
14590.00 14595.00
14519.00 15003.00
14567.00 15154.00
14383.00 14743.00
14074.00 14509.00
December 1992 14303.00 14595.00
14635.00 14850.00
15026.00 15142.00
15175.00 15374.00
15457.00 15699.00
15614.00 16857.00
15712.00 15823.00
16017.00 15868.00
16787.00 15345.00
16677.00 16539.00
16872.00 16511.00
16579.00 16393.00
December 1993 17019.00 16532.00
17398.00 16665.00
16775.00 16556.00
16384.00 16533.00
16259.00 16552.00
15822.00 16406.00
15822.00 16643.00
15041.00 16778.00
15925.00 16717.00
15963.00 16838.00
16452.00 17108.00
16028.00 16873.00
December 1994 16041.00 16920.00
16169.00 17275.00
16542.00 17717.00
16967.00 18769.00
17384.00 19117.00
17845.00 19855.00
17845.00 19770.00
18171.00 19517.00
18252.00 19136.00
18584.00 19563.00
18836.00 19709.00
19297.00 19932.00
December 1995 19759.00 20141.00
19813.00 19893.00
19636.00 19792.00
19664.00 19764.00
19884.00 19685.00
20018.00 19689.00
20287.00 19844.00
20480.00 20225.00
20764.00 20304.00
21226.00 20387.00
21853.00 20769.00
22390.00 21043.00
December 1996 22330.00 20872.00
21793.00 20315.00
21778.00 20163.00
21599.00 20009.00
21746.00 19833.00
21926.00 20373.00
22289.00 20615.00
22335.00 20455.00
22155.00 20442.00
22710.00 20878.00
22694.00 21312.00
22743.00 20986.00
December 1997 22988.00 20923.00
23298.00 21126.00
23396.00 21297.00
23445.00 21086.00
23584.00 21424.00
23602.00 21473.00
23278.00 21505.00
23278.00 21533.00
22917.00 22119.00
24107.00 23295.00
24413.00 23985.00
24161.00 23646.00
December 1998 24737.00 24123.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
-----------------------------------------------------------------------
Since Since
Periods Ending December 31, 1998 1 Year 5 Year 10 Year Inception 5 Year 10 Year Inception
<S> <C> <C> <C> <C> <C> <C> <C>
Salomon Brothers World Government Bond Index* 15.29% 7.85% 8.97% 8.54% 45.89% 136.02% 141.23%
Global Government Bond Trust (at net asset value) 7.61% 7.77% 9.29% 8.76% 45.35% 143.01% 147.37%
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the Global Government Bond Trust returned 7.61%,
compared to the 15.29% return for the Salomon Brothers World Government Bond
Index.
ENVIRONMENT: 1998 was an attractive year for global bond investors. However,
high volatility and the absence of established trends made it difficult to match
the index return. The first quarter was very positive for the US dollar (USD),
while the second quarter disappointed those with a bullish USD view. The main
driver of turmoil was renewed trouble in Russia, which forced highly leveraged
players, such as hedge funds, to cash in profits elsewhere. This massive selling
eventually led to the unwinding of short Yen positions, the primary reason for
the sudden Yen strengthening move. During the fourth quarter, investor
confidence slowly returned, but was overshadowed by the possibility of
additional instability, possibly in the form of Brazil or China. The USD
continued to weaken in the fourth quarter, and international bond markets
attracted flow of funds. Europe was especially of interest in the run-up to the
Euro. The easing by a number of Central banks offered positive European bond
returns.
OUTLOOK: There are arguments supporting a recessionary, deflationary scenario in
1999; others argue that commodity prices have bottomed, and there are positive
surprises in store. We believe that the first scenario is more likely; in the
meantime, we will await any proof of economic recovery. For this reason, we view
international bond markets as attractive. We will focus on European securities
as we expect more flows out of US assets into Asia and Europe. Our outlook for
the Euro is positive on a medium to long-term basis.
xxx
<PAGE> 31
CAPITAL GROWTH BOND TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To achieve growth of capital by investing in fixed income
& POLICIES: securities of medium grade or better, with income as a
secondary consideration. This Trust differs from most bond
funds in that its primary objective is capital appreciation,
not income. It is expected that at least 75% of the
portfolio's total investment in corporate fixed income
securities, excluding commercial paper, will be represented
by investment grade fixed income securities.
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGER: Cathy Addison
INCEPTION DATE: June 26, 1984
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
SALOMON BROTHERS BIG LEHMAN BROTHERS AGGREGATE
CAPITAL GROWTH BOND TRUST BOND INDEX-CORPORATE BOND INDEX
------------------------- -------------------- -------------------------
<S> <C> <C> <C>
Jun. 1984 10000.00 10000.00 10000.00
Dec. 1984 11373.00 11682.00 11711.00
Jun. 1985 12859.00 12998.00 12995.00
Dec. 1985 14345.00 14282.00 14301.00
Jun. 1986 15949.00 15574.00 15596.00
Dec. 1986 17554.00 16489.00 16488.00
Jun. 1987 17405.00 16443.00 16461.00
Dec. 1987 17257.00 16917.00 16941.00
Jun. 1988 17873.00 17783.00 17786.00
Dec. 1988 18489.00 18268.00 18278.00
Jun. 1989 19772.00 19956.00 19958.00
Dec. 1989 21055.00 20906.00 20933.00
Jun. 1990 21747.00 21497.00 21524.00
Dec. 1990 22440.00 22807.00 22806.00
Jun. 1991 24278.00 23827.00 23824.00
Dec. 1991 26117.00 26448.00 26455.00
Jun. 1992 28885.00 27201.00 27173.00
Dec. 1992 27665.00 28455.00 28414.00
Jun. 1993 29115.00 30459.00 30376.00
Dec. 1993 30575.00 31270.00 31184.00
Jun. 1994 29889.00 30099.00 29977.00
Dec. 1994 29202.00 30379.00 30274.00
Jun. 1995 32157.00 33875.00 33739.00
Dec. 1995 35112.00 36016.00 35868.00
Jun. 1996 34307.00 35561.00 35429.00
Dec. 1996 35989.00 37318.00 37164.00
Jun. 1997 36881.00 38459.00 38319.00
Dec. 1997 39126.00 40908.00 40763.00
Jun. 1998 40523.00 42532.00 42360.00
Dec. 1998 42233.00 44476.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
-----------------------------------------------------------------------
Since Since
Periods Ending December 31, 1996 1 Year 5 Year 10 Year Inception 5 Year 10 Year Inception
<S> <C> <C> <C> <C> <C> <C> <C>
Salomon Brothers BIG Bond Index (Corporate)+* 8.72% 7.30% 9.31% 10.84% 42.23% 145.47% 344.76%
Lehman Brothers Aggregate Bond Index 8.67% 7.27% 9.26% 10.81% 42.06% 142.37% 342.99%
Capital Growth Bond Trust (at net asset value) 7.95% 6.67% 8.61% 10.44% 38.08% 128.44% 322.33%
</TABLE>
+ Salomon Brothers Broad Investment Grade Index-Corporate Component.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For 1998, the Capital Growth Bond Trust returned 7.95% compared to
8.67% for the Lehman Brothers Aggregate Index.
ENVIRONMENT: The positive performance due to the Trust's long duration position
was offset by the overweight position in corporate bonds, as spreads widened due
to flight to quality trades and a deteriorating economic outlook. Crumbling
global markets and their expected adverse impact on the US economy accelerated
the downward trend in yields in the second half of the year. The "Asian Flu"
combined with the Russian default resulted in higher borrowing costs and
liquidity shortages for the emerging markets. The Federal Reserve cut interest
rates by 75 basis points to contain the global financial decline and to stave
off threats of an impending US recession. The last quarter saw the reversal of
the flight to quality trades as investors regained their appetite for risky
assets.
OUTLOOK: Buoyed by relentless consumer spending, the US continues its steady
economic growth and low inflation. The manufacturing sector is suffering due to
weak external economies, sustained wage pressure, and lack of pricing power.
With steady domestic growth, low inflation and worldwide deflation in
commodities, the bond market seems poised for lower rates. Barring a major
crisis, we see the Federal Reserve moving rates lower toward the second half of
the year. Corporate spreads should tighten modestly given the continued economic
strength in a low inflationary environment. The Trust will continue to maintain
a long duration versus the index in anticipation of a further interest rate
drop, and an overweight position in corporate bonds in anticipation of their
better relative performance.
xxxi
<PAGE> 32
INVESTMENT QUALITY BOND TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To provide a high level of current income consistent with
& POLICIES: the maintenance of principal and liquidity by investing
primarily in a diversified investment grade corporate bonds
and US Government bonds with intermediate to long term
maturities.
SUBADVISER: Wellington Management Company, LLP
PORTFOLIO MANAGER: Thomas L. Pappas
INCEPTION DATE: June 18, 1985**
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND LEHMAN BROTHERS AGGREGATE
TRUST BOND INDEX CUSTOMIZED BENCHMARK
----------------------- ------------------------- --------------------
<S> <C> <C> <C>
May 85 10000 10000 10000
9978 10000 10000
10330 9965 9965
10458 10152 10165
10518 10213 10201
10664 10428 10421
10802 10678 10670
Dec. 85 10872 11005 11007
10906 11066 11077
11182 11502 11564
11386 11860 11931
11392 11923 11989
11251 11695 11785
11408 12002 12088
11810 12108 12158
11996 12410 12455
11921 12287 12340
12130 12465 12529
12341 12640 12691
Dec. 86 12313 12688 12760
12521 12867 12968
12635 12956 13051
12954 12897 12987
12568 12544 12613
12495 12495 12557
12679 12667 12722
12640 12657 12691
12565 12589 12620
12275 12321 12320
12720 12759 12765
12909 12861 12864
Dec. 87 12596 13036 13063
12992 13495 13532
13179 13656 13697
13086 13527 13568
13069 13454 13484
12999 13364 13399
13232 13686 13708
13162 13615 13645
13151 13651 13688
13419 13959 13985
13606 14221 14230
13454 14049 14078
Dec. 88 13489 14065 14124
13606 14267 14318
13583 14165 14220
13606 14226 14284
13788 14523 14581
14055 14905 14953
14480 15358 15424
14735 15685 15736
14492 15453 15519
14650 15532 15588
14990 15914 15969
15063 16065 16101
Dec. 89 15014 16108 16124
14638 15917 15909
14686 15968 15948
14104 15979 15953
13938 15832 15800
14291 16300 16276
14522 16563 16543
14645 16791 16743
14278 16566 16493
14128 16704 16610
14060 16916 16783
14346 17280 17142
Dec. 90 14604 17549 17396
14740 17767 17600
15039 17918 17800
15053 18042 17955
15006 18236 18171
15066 18342 18269
15036 18333 18255
15171 18588 18495
15605 18989 18919
16024 19375 19312
16173 19590 19489
16308 19770 19682
Dec-91 16951 20357 20339
16667 20080 20053
16802 20211 20189
16682 20098 20087
16761 20242 20200
17169 20625 20612
17404 20910 20920
17828 21336 21463
17985 21552 21647
18204 21808 21930
17906 21518 21577
17906 21522 21576
Dec. 92 18173 21865 21957
18581 22284 22447
18942 22674 22929
19067 22770 23007
19168 22929 23184
19168 22959 23186
19547 23374 23725
19630 23508 23882
20026 23919 24446
20108 23984 24522
20174 24072 24630
19894 23868 24343
Dec. 93 19993 23997 24462
20257 24321 24867
19762 23897 24310
19184 23307 23663
18978 23121 23456
18960 23118 23398
18926 23068 23341
19272 23527 23851
19307 23555 23867
19012 23209 23477
18960 23188 23442
18908 23137 23402
Dec. 94 19064 23296 23570
19410 23758 24039
19843 24323 24644
19982 24471 24822
20283 24814 25195
21115 25774 26296
21281 25962 26515
21207 25905 26408
21466 26219 26775
21688 26473 27062
22058 26817 27443
22409 27219 27919
Dec. 95 22779 27601 28348
22890 27783 28526
22428 27299 27896
22243 27108 27662
22051 26956 27458
21992 26902 27410
22267 27263 27789
22326 27337 27850
22286 27290 27776
22699 27765 28301
23151 28381 28998
23603 28867 29561
Dec. 96 23367 28598 29206
23426 28687 29243
23485 28759 29325
23190 28439 28941
23574 28866 29369
23785 29140 29661
24102 29487 30038
24864 30283 31014
24568 30026 30631
24969 30470 31129
25265 30912 31596
25392 31054 31765
Dec. 97 25646 31368 32100
26090 31769 32532
26048 31744 32483
26132 31852 32588
26251 32017 32764
26519 32321 33128
26721 32596 33439
26788 32665 33449
27021 33197 33963
27795 33974 34972
27571 33794 34643
27772 33986 34974
Dec. 98 27884 34088 35063
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since** Since
Periods Ending December 31, 1998 1 Year 5 Year 10 Year Inception Inception 5 Year 10 Year Inception
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Customized Benchmark+* 9.23% 7.47% 9.52% 9.74% 8.95% 43.34% 148.26% 250.63%
Lehman Brothers Aggregate Bond Index 8.67% 7.27% 9.26% 9.51% 8.50% 42.06% 142.37% 240.88%
Investment Quality Bond Trust (at net asset
value) 8.73% 6.88% 7.88% 8.12% 8.49% 39.47% 113.52% 178.84%
</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.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: For the year, the Investment Quality Bond Trust returned 8.73%
versus 9.23% for the customized benchmark of 50% Lehman Brothers Government Bond
Index and 50% Lehman Brothers Corporate Bond Index.
ENVIRONMENT: Low inflation and growth prospects helped Treasury yields pierce
below 6.0%, but from there Treasuries left other sectors behind rallying another
1.0% or so. Investors searched for safety in a volatile world environment as
hedge funds collapsed and some foreign issuers threatened defaults. This all
triggered a massive flight to quality never seen before. Corporate bonds lagged
Treasuries as credit fundamentals weakened in investors' eyes and with lower
rates came increased prepayment risk to the detriment of mortgage prices.
OUTLOOK: Looking forward, we believe the panic buying of Treasuries since July,
driven by fears of a worldwide recession, will reverse itself over time,
especially as we cycle into a new year. Corporates, including high yield, and
mortgages -- two areas which have lagged against Treasuries -- are set up to
deliver much better performance. In fact, high quality corporates and mortgages
offer attractive yields over 1% higher than comparable Treasuries, and many
decent high yield issues yield upwards of 10% on a nominal basis. Though
maintaining relative high quality in the Trust, we will continue to search for
attractively priced alternatives to Treasuries.
xxxii
<PAGE> 33
US GOVERNMENT SECURITIES TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To provide a high level of current income consistent with
& POLICIES: the preservation of capital and maintenance of liquidity by
investing primarily in debt obligations and mortgage backed
securities issued or guaranteed by the US Government, its
agencies, or instrumentalities, and derivative securities
such as collateralized mortgage obligations backed by such
securities.
SUBADVISER: Salomon Brothers Asset Management Inc.
PORTFOLIO MANAGER: Roger Lavan
INCEPTION DATE: March 18, 1988**
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES MERRILL LYNCH 1-10 YEAR SALOMON BROTHERS 1-10
TRUST GOVERNMENT INDEX YEAR GOVERNMENT INDEX
-------------------------- ----------------------- ---------------------
<S> <C> <C> <C>
Feb. 1988 10000.00 10000.00 10000.00
9741.00 10000.00 10000.00
9801.00 9987.00 9986.00
9571.00 9932.00 9941.00
Jun. 1988 9751.00 10093.00 10104.00
9621.00 10069.00 10083.00
9631.00 10076.00 10102.00
9791.00 10251.00 10267.00
9811.00 10390.00 10410.00
9711.00 10300.00 10332.00
Dec. 1988 9781.00 10309.00 10348.00
9930.00 10411.00 10456.00
9970.00 10368.00 10425.00
9960.00 10419.00 10453.00
10219.00 10611.00 10632.00
10279.00 10835.00 10870.00
Jun. 1989 10429.00 11111.00 11137.00
10588.00 11338.00 11344.00
10459.00 11180.00 11207.00
10538.00 11236.00 11271.00
10808.00 11467.00 11496.00
10907.00 11580.00 11616.00
Dec. 1989 10947.00 11609.00 11654.00
10847.00 11543.00 11594.00
10887.00 11572.00 11640.00
10907.00 11595.00 11663.00
10847.00 11554.00 11631.00
11098.00 11799.00 11876.00
Jun. 1990 11239.00 11952.00 12043.00
11409.00 12124.00 12228.00
11369.00 12071.00 12177.00
11460.00 12181.00 12301.00
11570.00 12351.00 12458.00
11741.00 12535.00 12659.00
Dec. 1990 11892.00 12713.00 12836.00
12023.00 12842.00 12972.00
12073.00 12909.00 13059.00
12123.00 12979.00 13144.00
12228.00 13113.00 13294.00
12302.00 13188.00 13375.00
Jun. 1991 12302.00 13202.00 13398.00
12460.00 13344.00 13550.00
12724.00 13593.00 13810.00
12925.00 13824.00 14057.00
13072.00 13981.00 14195.00
13231.00 14145.00 14367.00
Dec. 1991 13558.00 14490.00 14682.00
13336.00 14344.00 14570.00
13389.00 14398.00 14611.00
13283.00 14340.00 14561.00
13437.00 14471.00 14700.00
13647.00 14677.00 14916.00
Jun. 1992 13879.00 14890.00 15130.00
14166.00 15166.00 15402.00
14320.00 15341.00 15558.00
14519.00 15553.00 15760.00
14298.00 15362.00 15568.00
14221.00 15294.00 15511.00
Dec. 1992 14397.00 15496.00 15696.00
14640.00 15785.00 15991.00
14850.00 16022.00 16216.00
14916.00 16082.00 16283.00
15015.00 16209.00 16415.00
14969.00 16160.00 16377.00
Jun. 1993 15210.00 16392.00 16604.00
15233.00 16426.00 16642.00
15429.00 16677.00 16879.00
15486.00 16749.00 16959.00
15509.00 16778.00 16988.00
15429.00 16698.00 16917.00
Dec. 1993 15498.00 16763.00 16991.00
15647.00 16930.00 17157.00
15440.00 16689.00 16955.00
15256.00 16455.00 16690.00
15232.00 16344.00 16579.00
15256.00 16361.00 16591.00
Jun. 1994 15219.00 16372.00 16599.00
15389.00 16576.00 16827.00
15462.00 16628.00 16873.00
15280.00 16494.00 16735.00
15244.00 16498.00 16725.00
15207.00 16415.00 16671.00
Dec. 1994 15304.00 16477.00 16729.00
15571.00 16751.00 17016.00
15898.00 17071.00 17358.00
15994.00 17165.00 17456.00
16172.00 17362.00 17662.00
16755.00 17858.00 18173.00
Jun. 1995 16859.00 17975.00 18271.00
16820.00 17987.00 18298.00
16975.00 18134.00 18467.00
17092.00 18257.00 18586.00
17286.00 18461.00 18777.00
17493.00 18692.00 19009.00
Dec. 1995 17688.00 18882.00 19172.00
17804.00 19044.00 19330.00
17519.00 18831.00 19159.00
17416.00 18740.00 19079.00
17352.00 18681.00 18990.00
17283.00 18671.00 18982.00
Jun. 1996 17475.00 18853.00 19197.00
17530.00 18912.00 19260.00
17544.00 18932.00 19270.00
17818.00 19173.00 19547.00
18148.00 19485.00 19899.00
18422.00 19724.00 20131.00
Dec. 1996 18285.00 19617.00 20038.00
18381.00 19691.00 20147.00
18450.00 19713.00 20182.00
18313.00 19611.00 20102.00
18557.00 19831.00 20325.00
18689.00 19983.00 20487.00
Jun. 1997 18865.00 20156.00 20673.00
19232.00 20534.00 21048.00
19144.00 20447.00 20974.00
19379.00 20673.00 21204.00
19600.00 20913.00 21424.00
19644.00 20960.00 21463.00
Dec. 1997 19835.00 21139.00 21660.00
20070.00 21423.00 21934.00
20085.00 21395.00 21917.00
20143.00 21466.00 22036.00
20256.00 21562.00 22121.00
20395.00 21708.00 22293.00
Jun. 1998 20503.00 21859.00 22428.00
20580.00 21945.00 22518.00
20858.00 22383.00 22821.00
21274.00 22911.00 23252.00
21166.00 22963.00 23279.00
21197.00 22878.00 23285.00
Dec. 1998 21321.00 22963.00 23381.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since** Since
Periods Ending December 31, 1998 1 Year 5 Years 10 Years Inception Dec. 13, 1991 5 Years 10 Years Inception
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch 1-10yr Government Index* 8.63% 6.50% 8.34% 8.04% 7.08% 36.95% 122.74% 129.63%
Salomon Brothers 1-10yr Government Index+ 7.95% 6.59% 8.49% 8.22% 7.12% 37.61% 125.96% 133.81%
U.S. Gov't Securities Trust (at net asset
value) 7.49% 6.59% 8.10% 7.27% 6.84% 37.57% 117.99% 113.21%
</TABLE>
** Current subadviser assignment became effective December 13, 1991.
+ The Salomon Brothers 1-10yr Government Index was added to more accurately
reflect the investment objective of the U.S. Gov't Securities Trust.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The US Government Securities Trust returned 7.49% for the year,
compared to the Salomon Brothers 1-10 yr Government Index, which returned 7.95%.
ENVIRONMENT: The Trust managed to post solid performance for the year. In
January, we believed Asia's economic woes would slow economic growth in the US
and push inflation lower. To take advantage of our expectations, we moved the
Trust at year-end 1997 into a slightly long duration barbelled position while
overweighting discount mortgage securities. We held this position until
mid-August when it became apparent that the Federal Reserve would ease monetary
policy. We strategically reduced the Trust's barbell position by swapping long
maturity Treasuries and mortgages into 5-year Treasuries. To maintain duration,
we sold mortgage securities trading above par and bought discount pass-throughs.
By the fourth quarter, it became apparent to investors that the global market
crisis had stabilized. The main strategy change in the Trust was a reallocation
to mortgage pass-throughs from Treasuries. Presently, 69% of the Trust consists
of mortgages, up 14% from the end of the third quarter.
OUTLOOK: After seven years of uninterrupted growth, the US economy faces a
period of slowing expansion and threatened instability. Although key areas of
economic activity remain buoyant, gradual slowing remains a likely scenario for
1999. We expect interest rates to generally move lower in the first few months
of the year, followed by a gradual rise through the end of 1999. With the
expectation of further Federal Reserve interest rate easing, we look for the
yield curve to steepen. As such, long-term bonds may stabilize in a range
centered on 5% as long-term inflation expectations fall.
xxxiii
<PAGE> 34
LIFESTYLE AGGRESSIVE 1000 TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve long-term growth of capital by investing 100% of
POLICIES: the portfolio's assets in other Trust's of the Trust
("underlying portfolios") that invest primarily in equity
securities. Current income is not a consideration.
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGERS: Management Team
INCEPTION DATE: January 7, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
LIFESTYLE AGGRESSIVE 1000 TRUST RUSSELL 2000 INDEX
------------------------------- ------------------
<S> <C> <C>
December|1996 10000 10000
10112 10200
9920 9952
March|1997 9568 9483
9637 9509
10302 10567
June|1997 10738 11020
11321 11533
10886 11797
September|1997 11543 12660
10968 12104
10960 12026
December|1997 11089 12236
10990 12043
11690 12933
March|1998 12209 13465
12286 13540
11852 12810
June|1998 12034 12837
11402 11798
9522 9507
September|1998 9894 12051
10345 10670
10925 11229
December|1998 11628 11924
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
Russell 2000 Index* -2.55% 9.20% 19.24%
Lifestyle Aggressive 1000 Trust (at net asset value) 4.86% 7.91% 16.28%
</TABLE>
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Lifestyle Aggressive 1000 Trust rose 4.86% during 1998,
outperforming the -2.55% return of the Russell 2000 index.
ENVIRONMENT: Small and mid cap stocks, which comprise approximately 75% of this
Trust (international and domestic) dramatically underperformed large company
stocks during the year. The Trust managed to outperform the small company
dominated Russell 2000 Index due to its minor allocation to large company
stocks, as well as its allocation to international stocks, both large and small.
This diversification, which hurt the performance of some of the other Lifestyle
portfolios, truly added value for this offering.
OUTLOOK: With such a high degree of exposure to small and mid cap stocks, the
Lifestyle Aggressive 1000 Trust should show stronger relative performance if
these asset classes return to favor after a prolonged period of underperformance
relative to large company stocks. Although the valuation level of these asset
classes appears to be quite attractive, market momentum continues to favor the
larger, more liquid securities. This trend began to reverse during the final
months of 1998. Whether or not the good performance turned in by small and mid
cap stocks over this recent time period is sustainable is still a matter of
great debate. However, it is unlikely that the degree of underperformance
experienced by these asset classes during the full year of 1998 will be repeated
in 1999.
xxxiv
<PAGE> 35
LIFESTYLE GROWTH 820 TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To achieve long-term growth of capital by investing
POLICIES: approximately 20% of the Trust's assets in underlying
portfolios that invest primarily in fixed income securities
and approximately 80% of its assets in underlying portfolios
that invest primarily in equity securities. Current income
is also a consideration.
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGERS: Management Team
INCEPTION DATE: January 7, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
LIFESTYLE GROWTH LEHMAN BROTHERS BLENDED CUSTOM
820 TRUST S&P 500 INDEX GOV'T/CORP INDEX BENCHMARK BENCHAMRK
---------------- ------------- ---------------- --------- ---------
<S> <C> <C> <C> <C> <C>
December 1996 10000.00 10000.00 10000.00 10000.00 10000.00
10144.00 10621.00 10012.00 10499.00 10226.00
10104.00 10707.00 10033.00 10572.00 10180.00
March 1997 9824.00 10262.00 9914.00 10195.00 9846.00
9967.00 10874.00 10058.00 10711.00 10044.00
10517.00 11542.00 10152.00 11257.00 10717.00
June 1997 10894.00 12057.00 10274.00 11686.00 11105.00
11420.00 13014.00 10588.00 12500.00 11683.00
11132.00 12290.00 10470.00 11916.00 11550.00
September 1997 11641.00 12964.00 10634.00 12475.00 12150.00
11173.00 12531.00 10804.00 12182.00 11737.00
11247.00 13111.00 10861.00 12646.00 11865.00
December 1997 11384.00 13336.00 10975.00 12847.00 12057.00
11367.00 13484.00 11130.00 12997.00 12066.00
11971.00 14457.00 11107.00 13742.00 12753.00
March 1998 12401.00 15197.00 11142.00 14313.00 13210.00
12467.00 15350.00 11198.00 14443.00 13285.00
12188.00 15086.00 11317.00 14275.00 12937.00
June 1998 12293.00 15699.00 11433.00 14768.00 13073.00
11901.00 15532.00 11442.00 14645.00 12610.00
10302.00 13286.00 11665.00 13008.00 10928.00
September 1998 10615.00 14137.00 11999.00 13749.00 11480.00
11102.00 15287.00 11914.00 14624.00 12085.00
11641.00 16214.00 11985.00 15351.00 12608.00
December 1998 12090.00 17148.00 12014.00 16066.00 13208.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
S&P 500 Index* 28.58% 30.95% 71.48%
Lehman Brothers Government/Corporate Bond Index 9.47% 9.61% 20.14%
Blended Benchmark+ 25.06% 26.73% 60.66%
Customized Benchmark**++ 9.54% 14.92% 32.08%
Lifestyle Growth 820 Trust (at net asset value) 6.20% 10.05% 20.90%
</TABLE>
+ 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 820 Trust.
++ Customized Benchmark is comprised of 20% of the return of the Russell 1000
Index, 50% of the Russell 2500 Index, 10% of the MSCI EAFE Index, 15% of the
Lehman Brothers Government/Corporate Bond Index, 5% of the US 30-day T-Bill.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Lifestyle Growth 820 Trust rose 6.20% versus the 9.54% gain of
the customized benchmark.
ENVIRONMENT: During 1998, relative performance of the Lifestyle Growth 820 Trust
was hurt by allocations on both the fixed income and equity portions of the
Trust. In the fixed income allocations, the Trust held positions in lower
quality, higher yielding securities. These securities dramatically
underperformed straight Treasury securities and high quality corporate bonds.
During the year, a massive flight-to-quality caused the interest rate spreads
between high quality and low quality fixed income securities to widen
dramatically, driving the price of the lower-quality issues down. On the equity
front, the Trust was underweight in large company stocks, which was indeed a
negative for performance. Additionally, performance from the actual large
company portfolios within the Lifestyle Growth 820 Trust also contributed to the
overall underperformance of the Trust as they were unable to match the gains of
the large company benchmark.
OUTLOOK: Given the favorable economic and interest rate outlook, it is not
unreasonable to expect good returns from this product in 1999. The biggest
question lies with the future performance of equities other than large company
stocks. During 1998, large company stocks, specifically large company growth
stocks, enjoyed returns which significantly outpaced all other major equity
styles. This has led to valuation levels which appear to be unprecedented. If
this environment continues, the returns of this Trust will once again fall
behind the return of the popular averages. However, if other equity styles such
as small and mid cap stocks return to their historical levels of outperformance,
this Trust should benefit nicely.
xxxv
<PAGE> 36
LIFESTYLE BALANCED 640 TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To provide a balance between a high level of current income
POLICIES: and growth of capital with a greater emphasis on growth of
capital by investing approximately 40% of the Trust's assets
in underlying portfolios that invest primarily in fixed
income securities and approximately 60% of its assets in
underlying portfolios that invest primarily in equity
securities
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGERS: Management Team
INCEPTION DATE: January 7, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
LIFESTYLE BALANCED LEHMAN BROTHERS BLENDED CUSTOM
640 TRUST S&P 500 INDEX GOV'T/CORP INDEX BENCHMARK BENCHMARK
------------------ ------------- ---------------- --------- ---------
<S> <C> <C> <C> <C> <C>
December 1996 10000 10000 10000 10000 10000
10147 10621 10012 10377 10222
10151 10707 10033 10437 10206
March 1997 9907 10262 9914 10126 9922
10099 10874 10058 10548 10144
10528 11542 10152 10976 10653
June 1997 10842 12057 10274 11322 10967
11330 13014 10588 12000 11499
11127 12290 10470 11546 11334
September 1997 11541 12964 10634 11998 11802
11176 12531 10804 11835 11564
11261 13111 10861 12189 11722
December 1997 11411 13336 10975 12366 11896
11397 13484 11130 12518 11946
11887 14457 11107 13049 12455
March 1998 12235 15197 11142 13466 12811
12282 15350 11198 13575 12888
12069 15086 11317 13493 12681
June 1998 12149 15699 11433 13877 12853
11803 15532 11442 13792 12563
10526 13286 11665 12703 11384
September 1998 10890 14137 11999 13337 11904
11271 15287 11914 13950 12375
11723 16214 11985 14491 12808
December 1998 12064 17148 12014 15006 13285
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
S&P 500 Index* 28.58% 30.95% 71.48%
Lehman Brothers Government/Corporate Bond Index 9.47% 9.61% 20.14%
Blended Benchmark+ 21.35% 22.50% 50.06%
Customized Benchmark**++ 11.70% 15.26% 32.85%
Lifestyle Balanced 640 Trust (at net asset value) 5.72% 9.93% 20.64%
</TABLE>
+ 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.
** The Customized Benchmark was added to more accurately reflect the investment
objective of the Lifestyle Balanced 640 Trust.
++ Customized Benchmark is comprised of 25% of the return of the Russell 1000
Index, 30% of the Russell 2500 Index, 5% of the MSCI EAFE Index, 30% of the
Lehman Brothers Government/Corporate Bond Index, 10% of the US 30-day
T-Bill.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Lifestyle Balanced 640 Trust gained 5.72% in 1998,
underperforming its customized benchmark which returned 11.70%.
ENVIRONMENT: 1998 was a very difficult year for the Lifestyle Balanced 640 Trust
on a relative basis. Performance was affected by the underlying allocations on
both the fixed income and the equity portions of the Trust. The fixed income
portion was held back by the allocations to the Strategic Bond and High Yield
Trusts. These two Trusts were hurt by the flight-to-quality which occurred
during the year as investors shunned riskier sectors of the fixed income
markets. On the equity front, the Trust was underweight versus the benchmark in
large company stocks and overweight in small and mid cap stocks. This hurt both
absolute and relative performance as large company stocks enjoyed a substantial
performance advantage over small and mid cap stocks during the year. The Trust
was also overweight in international stocks which did help absolute performance.
OUTLOOK: Historically, lower quality bonds have provided significant added value
to diversified portfolios such as the Lifestyle Balanced 640 Trust.
Unfortunately, this was not the case in 1998. However, the high degree of
underperformance by these securities has led to attractive valuations which
should provide a positive backdrop for improved relative performance in 1999.
The small and mid cap portions of the equity portfolio were truly disappointing
in 1998 relative to large caps. But like lower quality fixed income securities,
these equities are trading at near historically low relative valuation levels.
If this valuation gap can close to some degree in 1999, stronger relative
performance should occur. Some of this was seen in the 4th quarter as relative
performance improved substantially for that short time period.
xxxvi
<PAGE> 37
LIFESTYLE MODERATE 460 TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To provide a balance between a high level of current income
POLICIES: and growth of capital with a greater emphasis on income by
investing approximately 60% of the Trust's assets in
underlying portfolios that invest primarily in fixed income
securities and approximately 40% of its assets in underlying
portfolios that invest primarily in equity securities.
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGERS: Management Team
INCEPTION DATE: January 7, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
LIFESTYLE MODERATE LEHMAN BROTHERS BLENDED CUSTOM
460 TRUST S&P 500 INDEX GOV'T/CORP INDEX BENCHMARK BENCHMARK
------------------ ------------- ---------------- --------- ---------
<S> <C> <C> <C> <C> <C>
December|1996 10000.00 10000.00 10000.00 10000.00 10000.00
10134.00 10621.00 10012.00 10256.00 10174.00
10206.00 10707.00 10033.00 10302.00 10194.00
March|1997 10046.00 10262.00 9914.00 10057.00 10004.00
10253.00 10874.00 10058.00 10385.00 10217.00
10548.00 11542.00 10152.00 10698.00 10554.00
June|1997 10785.00 12057.00 10274.00 10966.00 10789.00
11182.00 13014.00 10588.00 11516.00 11209.00
10998.00 12290.00 10470.00 11182.00 11018.00
September|1997 11285.00 12964.00 10634.00 11532.00 11346.00
11082.00 12531.00 10804.00 11489.00 11235.00
11232.00 13111.00 10861.00 11738.00 11387.00
December|1997 11370.00 13336.00 10975.00 11893.00 11527.00
11463.00 13484.00 11130.00 12046.00 11626.00
11819.00 14457.00 11107.00 12379.00 11959.00
March|1998 12066.00 15197.00 11142.00 12656.00 12205.00
12123.00 15350.00 11198.00 12745.00 12281.00
12066.00 15086.00 11317.00 12739.00 12214.00
June|1998 12142.00 15699.00 11433.00 13024.00 12389.00
12076.00 15532.00 11442.00 12975.00 12289.00
11246.00 13286.00 11665.00 12376.00 11619.00
September|1998 11517.00 14137.00 11999.00 12906.00 12010.00
11913.00 15287.00 11914.00 13271.00 12356.00
12264.00 16214.00 11985.00 13640.00 12676.00
December|1998 12480.00 17148.00 12014.00 13974.00 13001.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
S&P 500 Index* 28.58% 30.95% 71.48%
Lehman Brothers Government/Corporate Bond Index 9.47% 9.61% 20.14%
Blended Benchmark+ 17.50% 18.21% 39.74%
Customized Benchmark**++ 12.78% 14.02% 30.01%
Lifestyle Moderate 460 Trust (at net asset
value) 9.76% 11.83% 24.80%
</TABLE>
+ 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 Moderate 460 Trust.
++ Customized Benchmark is comprised of 25% of the return of the Russell 1000
Index, 10% of the Russell 2500 Index, 5% of the MSCI EAFE Index, 35% of the
Lehman Brothers Government/Corporate Bond Index, 25% of the US 30-day
T-Bill.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Lifestyle Moderate 460 Trust rose 9.76% during 1998 versus the
customized benchmark return of 12.78%.
ENVIRONMENT: The Lifestyle Moderate 460 Trust underperformed its benchmark for
the year due to several factors. First, the Trust had exposure to high yield and
emerging market debt, both of which underperformed the more liquid, higher
quality, corporate and government securities by a wide margin. In terms of the
equity allocation, the Trust was adversely affected by positions in
value-oriented portfolios like the Value Trust and the Equity Income Trust. In
general, value stocks were dramatic underperformers during the year across all
market capitalization ranges. Absolute performance was aided by the position in
the International Stock Trust, although relative to the international benchmark,
this offering underperformed, dragging down the overall relative performance of
the Lifestyle Moderate 460 Trust.
OUTLOOK: This Trust has a good opportunity to perform better on a relative basis
in 1999. Those sectors of the equity and fixed income markets which led to the
majority of the underperformance in 1998 are currently quite attractive from a
valuation standpoint. For these sectors to underperform to the same degree as
they did last year would be a difficult scenario to imagine.
xxxvii
<PAGE> 38
LIFESTYLE CONSERVATIVE 280 TRUST
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE & To provide a high level of current income with some
POLICIES: consideration given to growth of capital by investing
approximately 80% of the Trust's assets in underlying
portfolios that invest primarily in fixed income securities
and approximately 20% of its assets in underlying portfolios
that invest primarily in equity securities.
SUBADVISER: Manufacturers Adviser Corporation
PORTFOLIO MANAGERS: Management Team
INCEPTION DATE: January 7, 1997
</TABLE>
CHANGE IN VALUE OF $10,000 INVESTMENT AND COMPARATIVE INDICES
<TABLE>
<CAPTION>
LIFESTYLE CONSERVATIVE LEHMAN BROTHERS
280 TRUST S&P 500 INDEX GOV'T/CORP INDEX BLENDED BENCHMARK
---------------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C>
December 1996 10000.00 10000.00 10000.00 10000.00
10115.00 10621.00 10012.00 10134.00
10176.00 10707.00 10033.00 10167.00
March 1997 10071.00 10262.00 9914.00 9986.00
10236.00 10874.00 10058.00 10222.00
10422.00 11542.00 10152.00 10423.00
June 1997 10591.00 12057.00 10274.00 10616.00
10890.00 13014.00 10588.00 11045.00
10787.00 12290.00 10470.00 10823.00
September 1997 10991.00 12964.00 10634.00 11078.00
10983.00 12531.00 10804.00 11145.00
11089.00 13111.00 10861.00 11296.00
December 1997 11215.00 13336.00 10975.00 11430.00
11299.00 13484.00 11130.00 11584.00
11494.00 14457.00 11107.00 11732.00
March 1998 11665.00 15197.00 11142.00 11882.00
11717.00 15350.00 11198.00 11953.00
11718.00 15086.00 11317.00 12014.00
June 1998 11828.00 15699.00 11433.00 12210.00
11793.00 15532.00 11442.00 12192.00
11429.00 13286.00 11665.00 12029.00
September 1998 11766.00 14137.00 11999.00 12459.00
11948.00 15287.00 11914.00 12591.00
12158.00 16214.00 11985.00 12804.00
December 1998 12359.00 17148.00 12014.00 12976.00
</TABLE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Total Return
Since Since
Periods Ending December 31, 1998 1 Year Inception Inception
<S> <C> <C> <C>
S&P 500 Index* 28.58% 30.95% 71.48%
Lehman Brothers Government/Corporate Bond Index 9.47% 9.61% 20.14%
Blended Benchmark+ 13.53% 13.91% 29.76%
Lifestyle Conservative 280 Trust (at net asset
value) 10.20% 11.28% 23.59%
</TABLE>
+ 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.
* All since inception returns for the indices begin on the month-end closest to
the actual inception date of the Trust.
PORTFOLIO MANAGER'S COMMENTARY
PERFORMANCE: The Lifestyle Conservative 280 Trust increased 10.20% during 1998,
compared to the Lehman Brothers Government/ Corporate Bond Index which increased
9.47%.
ENVIRONMENT: 1998 was a good year for the Lifestyle Conservative 280 Trust.
Overall relative and absolute performance were helped materially by the
allocation to equities. It should be noted, however, that on the fixed income
side both absolute and relative performance were held back due to the allocation
to the Strategic Bond Trust. The Strategic Bond Trust suffered due to the
dramatic underperformance of both high yield and emerging-market debt securities
during the year as investors flocked to more liquid, high quality securities.
The allocation to the longer-duration Investment Quality Bond Trust helped
relative performance as long-term interest rates fell during the year.
OUTLOOK: 1999 could quite possibly be another strong year for the Lifestyle
Conservative 280 Trust. On the equity front, the backdrop for higher stock
prices is good. The economy continues to show strength while inflation and
interest rates have concurrently remained low. Although the gains recorded by
the equity market in 1998 will be difficult to duplicate, solid returns are
certainly possible. On the fixed income front, it is doubtful that the dramatic
flight-to-quality which occurred in 1998, hurting all spread products, will
continue to the same degree in 1999. This should bode well for the Trust and its
exposure to fixed income securities other than straight Treasury notes and
bonds.
xxxviii
<PAGE> 39
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
Manufacturers Investment Trust:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets present fairly, in all material
respects, the financial position of Manufacturers Investment Trust
(comprising, the Pacific Rim Emerging Markets, Science & Technology,
International Small Cap, Emerging Small Company, Pilgrim Baxter Growth,
Small/Mid Cap, International Stock, Worldwide Growth, Global Equity, Small
Company Value, Equity, Growth, Quantitative Equity, Equity Index, Blue Chip
Growth, Real Estate Securities, Value, International Growth and Income,
Growth and Income, Equity-Income, Balanced, Aggressive Asset Allocation,
Moderate Asset Allocation, Conservative Asset Allocation, High Yield,
Strategic Bond, Global Government Bond, Capital Growth Bond, Investment
Quality Bond, U.S. Government Securities, Money Market, Lifestyle
Aggressive 1000, Lifestyle Growth 820, Lifestyle Balanced 640, Lifestyle
Moderate 460 and Lifestyle Conservative 280 Trusts) at December 31, 1998,
the results of their operations and the changes in their net assets for the
periods indicated, in conformity with generally accepted accounting
principles. Also, in our opinion, the accompanying financial highlights
present fairly, in all material respects, the financial highlights of
Science & Technology, International Small Cap, Emerging Small Company,
Pilgrim Baxter Growth, Small/Mid Cap, International Stock, Worldwide
Growth, Global Equity, Small Company Value, Equity, Growth, Equity Index,
Blue Chip Growth, Value, International Growth and Income, Growth and
Income, Equity-Income, Balanced, Aggressive Asset Allocation, Moderate
Asset Allocation, Conservative Asset Allocation, High Yield, Strategic
Bond, Global Government Bond, Investment Quality Bond, U.S. Government
Securities, Money Market, Lifestyle Aggressive 1000, Lifestyle Growth 820,
Lifestyle Balanced 640, Lifestyle Moderate 460 and Lifestyle Conservative
280 Trusts for each of the periods presented and the financial highlights
of Pacific Rim Emerging Markets, Quantitative Equity, Real Estate
Securities, and Capital Growth Bond Trusts for the periods ended December
31, 1998, 1997 and 1996, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
Manufacturers Investment Trust's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1998 by correspondence
with the custodian and brokers, provide a reasonable basis for the opinion
expressed above. The financial highlights for the periods ended December
31, 1989 through December 31, 1995, presented therein, for Pacific Rim
Emerging Markets, Quantitative Equity, Real Estate Securities and Capital
Growth Bond Trusts were audited by other independent accountants whose
report dated February 2, 1996 expressed an unqualified opinion on those
financial highlights.
Boston, Massachusetts
February 22, 1999 PRICEWATERHOUSECOOPERS, LLP
1
<PAGE> 40
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1998
<TABLE>
<CAPTION>
Pacific Rim Pilgrim
Emerging Science & International Emerging Baxter
Markets Technology Small Cap Small Company Growth
ASSETS Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investments in securities, at value (Includes a
repurchase agreement of $20,874,000 in the
International Small Cap Trust)
(See accompanying portfolio of investments) ......... $28,734,610 $223,681,796 $162,909,997 $352,665,470 $182,572,336
Cash .................................................. 29,227 956 62 331 87
Foreign currency (Cost: $2,326,819, $1,806 and
$573,815 in the Pacific Rim Emerging Markets,
Science & Technology and International Small Cap
Trusts, respectively) (Note 2) ...................... 2,345,992 1,966 571,679 ---- ----
Receivables:
Investments sold .................................. ---- 1,287,231 ---- ---- 263,778
Fund shares sold ............................... 25,641 ---- 87,547 ---- ----
Dividends and interest. ........................... 48,540 29,479 36,080 4,281 2,262
Foreign tax withholding reclaims.. ................ 2,501 568 45,696 ---- ----
Other assets. ......................................... 123 468 714 1,415 2,074
----------- ------------ ------------ ------------ ------------
Total assets ............................... 31,186,634 225,002,464 163,651,775 352,671,497 182,840,537
----------- ------------ ------------ ------------ ------------
LIABILITIES
Payables:
Investments purchased ......................... 29,330 1,089,128 ---- 2,237 1,367,579
Fund shares redeemed. .......................... ---- 917,526 ---- 1,129,408 1,677,500
Dividend and interest withholding tax. ............ 853 923 1,063 ---- ----
Custodian fee. .................................... 7,043 8,510 15,626 7,023 9,765
Securities lending. ............................... 3,151,581 43,691,511 15,724,712 50,873,151 36,762,793
Other accrued expenses. ........................... 2,369 10,303 12,165 22,860 13,296
----------- ------------ ------------ ------------ ------------
Total liabilities. ......................... 3,191,176 45,717,901 15,753,566 52,034,679 39,830,933
----------- ------------ ------------ ------------ ------------
NET ASSETS. ........................................... $27,995,458 $179,284,563 $147,898,209 $300,636,818 $143,009,604
=========== ============ ============ ============ ============
Net assets consist of:
Undistributed net investment income
(Note 2) ........................................ $13,097 ---- $500,048 ---- ----
Accumulated undistributed net realized
gain (loss) on investments, foreign currency
and forward foreign currency contracts. ......... (7,513,217) ($2,796,692) (4,226,024) $3,838,537 ($21,465,259)
Unrealized appreciation (depreciation) on:
Investments. .................................... (3,108,521) 47,415,136 23,303,833 41,384,180 33,536,553
Foreign currency and forward foreign currency
contracts. .................................... 19,442 198 (715) ---- ----
Capital shares at par value of $.01 (Note 4). ..... 41,005 91,859 96,779 126,229 109,633
Additional paid-in capital.. ...................... 38,543,652 134,574,062 128,224,288 255,287,872 130,828,677
----------- ------------ ------------ ------------ ------------
Net assets.. ............................. $27,995,458 $179,284,563 $147,898,209 $300,636,818 $143,009,604
=========== ============ ============ ============ ============
Capital shares outstanding (Note 4) ................... 4,100,531 9,185,871 9,677,870 12,622,863 10,963,332
----------- ------------ ------------ ------------ ------------
Net asset value, offering price and redemption price
per share. .......................................... $6.83 $19.52 $15.28 $23.82 $13.04
=========== ============ ============ ============ ============
Investments in securities, at identified cost (Note 2). $31,843,131 $176,266,660 $139,606,164 $311,281,290 $149,035,783
=========== ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 41
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1998
<TABLE>
<CAPTION>
Small
Small/Mid International Worldwide Global Company
Cap Stock Growth Equity Value
ASSETS Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investments in securities, at value
(See accompanying portfolio of investments). ....... $489,689,898 $252,247,541 $48,389,017 $942,141,714 $179,894,549
Forward foreign currency contracts to buy, at value
(Notes 2 and 8) .................................... ---- ---- 65,316 ---- ----
Cash ................................................. ---- 423 19 338 791
Foreign currency (Cost: $126,589, $23,773 and
$11,265 in the International Stock, Worldwide
Growth and Global Equity Trusts, respectively)
(Note 2). .......................................... ---- 126,297 23,643 11,422 ----
Receivables:
Investments sold ................................. 28,391,397 164,575 ---- ---- 478,421
Fund shares sold .............................. ---- 1,170,006 19,616 ---- 639,785
Dividends and interest. .......................... 132,025 148,102 24,898 1,657,779 181,536
Foreign tax withholding reclaims.. ............... ---- 84,906 9,733 406,143 ----
Other assets. ........................................ 1,498 897 154 4,649 534
------------ ------------ ----------- ------------ ------------
Total assets .............................. 518,214,818 253,942,747 48,532,396 944,222,045 181,195,616
------------ ------------ ----------- ------------ ------------
LIABILITIES
Payables:
Forward foreign currency contracts to buy
(Notes 2 and 8) ................................ ---- ---- 65,202 ---- ----
Investments purchased.. .......................... 28,260,210 1,179 1,483,489 ---- 1,874,851
Fund shares redeemed ......................... 564,629 ---- ---- 444,801 ----
Dividend and interest withholding tax ............ ---- 9,132 656 90,472 ----
Custodian fee. ................................... 5,633 36,763 6,633 63,534 17,834
Securities lending. .............................. 94,244,827 19,771,574 6,267,232 14,978,491 16,954,600
Other accrued expenses. .......................... 30,366 21,328 3,282 81,126 13,599
------------ ------------ ----------- ------------ ------------
Total liabilities. ........................ 123,105,665 19,839,976 7,826,494 15,658,424 18,860,884
------------ ------------ ----------- ------------ ------------
NET ASSETS. .......................................... $395,109,153 $234,102,771 $40,705,902 $928,563,621 $162,334,732
============ ============ =========== ============ ============
Net assets consist of:
Undistributed net investment income
(loss) (Note 2) ................................ ---- ($77,076) ($43,324) $5,423,428 $122,775
Accumulated undistributed net realized
gain (loss) on investments, foreign currency
and forward foreign currency contracts. ........ $53,862,128 (1,001,210) (1,906,812) 88,388,781 (17,204,755)
Unrealized appreciation (depreciation) on:
Investments. ................................... 58,959,396 21,625,551 4,856,599 143,353,253 8,372,539
Foreign currency and forward foreign currency
contracts. ................................... ---- 4,608 189 21,713 ----
Capital shares at par value of $.01 (Note 4). .... 199,876 180,310 26,873 455,703 142,743
Additional paid-in capital.. ..................... 282,087,753 213,370,588 37,772,377 690,920,743 170,901,430
------------ ------------ ----------- ------------ ------------
Net assets.. ............................ $395,109,153 $234,102,771 $40,705,902 $928,563,621 $162,334,732
============ ============ =========== ============ ============
Capital shares outstanding (Note 4) .................. 19,987,550 18,031,034 2,687,308 45,570,323 14,274,275
------------ ------------ ----------- ------------ ------------
Net asset value, offering price and redemption price
per share. ......................................... $19.77 $12.98 $15.15 $20.38 $11.37
============ ============ =========== ============ ============
Investments in securities, at identified cost (Note 2). $430,730,502 $230,621,990 $43,532,418 $798,788,461 $171,522,010
============ ============ =========== ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 42
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1998
<TABLE>
<CAPTION>
Quantitative Equity Blue Chip
Equity Growth Equity Index Growth
ASSETS Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investments in securities, at value (Includes a
repurchase agreement of $7,167,000 in the
Equity Index Trust) (See accompanying
portfolio of investments). .......................... $1,754,864,861 $307,865,577 $260,275,964 $67,866,052 $1,193,925,534
Receivable for forward foreign currency contracts
to sell (Notes 2 and 8) ......................... ---- 2,097,370 ---- ---- 4,962
Cash .................................................. 715 994 894 1,327 25
Foreign currency (Cost: $44, $4,453 and $4,892
in the Equity, Growth and Blue Chip Growth
Trusts, respectively) (Note 2) ...................... 45 4,484 ---- ---- 4,898
Receivables:
Investments sold. ................................. 16,815,368 16,798,147 ---- ---- ----
Fund shares sold ................................ ---- 440,066 667,543 ---- ----
Variation margin for open futures contracts ....... ---- ---- ---- 5,950 ----
Dividends and interest ......................... 1,299,486 154,369 226,986 60,978 780,499
Foreign tax withholding reclaims.. ................ 139,107 298 ---- 194 265
Other assets. ......................................... 7,978 1,043 4,566 1,771 4,016
-------------- ------------ ------------ ----------- --------------
Total assets ............................... 1,773,127,560 327,362,348 261,175,953 67,936,272 1,194,720,199
-------------- ------------ ------------ ----------- --------------
LIABILITIES
Forward foreign currency contracts to sell, at value
(Notes 2 and 8) ...................................... ---- 2,114,641 ---- ---- 4,898
Payables:
Investments purchased.. ........................... 18,248,591 17,811,168 177,274 ---- 1,733,254
Fund shares redeemed. .......................... 1,080,711 ---- ---- 444 56,171
Dividend and interest withholding tax ............. ---- ---- ---- 43 6,815
Custodian fee. .................................... 30,739 5,533 7,394 12,934 16,819
Securities lending. ............................... 197,468,560 7,412,748 6,493,439 4,625,878 51,656,316
Other accrued expenses. ........................... 130,356 23,782 22,986 4,788 84,403
-------------- ------------ ------------ ----------- --------------
Total liabilities. .......................... 216,958,957 27,367,872 6,701,093 4,644,087 53,558,676
-------------- ------------ ------------ ----------- --------------
NET ASSETS. ........................................... $1,556,168,603 $299,994,476 $254,474,860 $63,292,185 $1,141,161,523
============== ============ ============ =========== ==============
Net assets consist of:
Undistributed net investment income (Note 2) ...... $6,563,301 $956,654 $2,089,131 $841 $3,087,681
Accumulated undistributed net realized
gain on investments, futures, foreign currency
and forward foreign currency contracts. ......... 162,788,319 17,078,088 25,558,601 305,419 50,519,173
Unrealized appreciation (depreciation) on:
Investments. .................................... 31,049,758 44,883,156 40,888,400 9,764,539 328,310,054
Futures contracts ---- ---- ---- 38,744 ----
Foreign currency and forward foreign currency
contracts. .................................... 9,396 (9,028) ---- ---- 64
Capital shares at par value of $.01 (Note 4). ..... 798,764 146,362 100,918 41,018 603,201
Additional paid-in capital.. ...................... 1,354,959,065 236,939,244 185,837,810 53,141,624 758,641,350
-------------- ------------ ------------ ----------- --------------
Net assets.. ............................. $1,556,168,603 $299,994,476 $254,474,860 $63,292,185 $1,141,161,523
============== ============ ============ =========== ==============
Capital shares outstanding (Note 4) ................... 79,876,398 14,636,163 10,091,805 4,101,821 60,320,107
-------------- ------------ ------------ ----------- --------------
Net asset value, offering price and redemption price
per share. .......................................... $19.48 $20.50 $25.22 $15.43 $18.92
============== ============ ============ =========== ==============
Investments in securities, at identified cost (Note 2). $1,723,815,103 $262,982,421 $219,387,564 $58,101,513 $865,615,480
============== ============ ============ =========== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 43
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1998
<TABLE>
<CAPTION>
International
Real Estate Growth and Growth and Equity-
Securities Value Income Income Income
ASSETS Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investments in securities, at value (Includes a
repurchase agreement of $32,437,000 in the Value
Trust) (See accompanying portfolio of investments) . $190,126,859 $260,704,513 $244,930,492 $2,353,162,989 $1,149,866,637
Receivable for forward foreign currency contracts
to sell (Notes 2 and 8).. .......................... ---- ---- 19,252,211 ---- ----
Forward foreign currency contracts to buy, at value
(Notes 2 and 8) .................................... ---- ---- 1,965,886 ---- ----
Cash. ................................................ 139 163 553 100 840
Foreign currency (Cost: $1,125,396, $12,125 and
and $144,406 in the International Growth and
Income, Growth and Income and Equity-Income
Trusts, respectively) (Note 2). .................... ---- ---- 1,128,548 11,364 145,735
Receivables:
Investments sold. ................................ 10,937,850 ---- ---- ---- ----
Fund shares sold ................................ 26,038 891,078 ---- ---- 1,344,580
Dividends and interest. .......................... 1,219,934 302,942 206,758 2,396,808 2,185,625
Foreign tax withholding reclaims.. ............... ---- 1,197 263,202 ---- 10,604
Deferred organization expenses (Note 2). ............. ---- ---- 9,960 ---- ----
Other assets. ........................................ 1,974 1,015 1,069 9,083 4,982
------------ ------------ ------------ -------------- --------------
Total assets .............................. 202,312,794 261,900,908 267,758,679 2,355,580,344 1,153,559,003
------------ ------------ ------------ -------------- --------------
LIABILITIES
Forward foreign currency contracts to sell, at value
(Notes 2 and 8). ................................... ---- ---- 19,095,206 ---- ----
Payables:
Forward foreign currency contracts to buy
(Notes 2 and 8) ................................ ---- ---- 1,963,126 ---- ----
Investments purchased............................. 12,502,810 353,892 49,772 ---- 3,367,010
Fund shares redeemed.............................. ---- ---- 307,458 1,089,054 ----
Dividend and interest withholding tax ............ ---- ---- 7,138 1,383,729 11,258
Custodian fee..................................... 6,620 6,481 31,777 22,367 16,465
Securities lending................................ 27,952,797 5,963,102 27,734,510 62,779,970 61,723,534
Other accrued expenses............................ 18,396 22,947 18,981 187,617 98,672
------------ ------------ ------------ -------------- --------------
Total liabilities.......................... 40,480,623 6,346,422 49,207,968 65,462,737 65,216,939
------------ ------------ ------------ -------------- --------------
NET ASSETS. .......................................... $161,832,171 $255,554,486 $218,550,711 $2,290,117,607 $1,088,342,064
============ ============ ============ ============== ==============
Net assets consist of:
Undistributed net investment income
(loss)(Note 2).................................... $7,502,774 $981 ($159,968) $16,252,305 $21,363,276
Accumulated undistributed net realized
gain (loss) on investments, foreign currency
and forward foreign currency contracts. ........ (9,778,071) (2,130,798) (871,637) 73,217,857 55,199,183
Unrealized appreciation (depreciation) on:
Investments. ................................... (15,052,199) (8,695,955) 12,998,272 827,679,701 178,636,530
Foreign currency and forward foreign currency
contracts. ................................... ---- ---- 178,592 (761) 1,636
Capital shares at par value of $.01 (Note 4). .... 109,655 181,730 192,818 805,546 611,950
Additional paid-in capital.. ..................... 179,050,012 266,198,528 206,212,634 1,372,162,959 832,529,489
------------ ------------ ------------ -------------- --------------
Net assets.. ............................ $161,832,171 $255,554,486 $218,550,711 $2,290,117,607 $1,088,342,064
============ ============ ============ ============== ==============
Capital shares outstanding (Note 4) .................. 10,965,526 18,172,964 19,281,824 80,554,624 61,194,993
------------ ------------ ------------ -------------- --------------
Net asset value, offering price and redemption price
per share. ......................................... $14.76 $14.06 $11.33 $28.43 $17.78
============ ============ ============ ============== ==============
Investments in securities, at identified cost (Note 2) $205,179,058 $269,400,468 $231,932,220 $1,525,483,288 $971,230,107
============ ============ ============ ============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 44
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1998
<TABLE>
<CAPTION>
Aggressive Moderate Conservative
Asset Asset Asset High
Balanced Allocation Allocation Allocation Yield
ASSETS Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investments in securities, at value (Includes
repurchase agreements of $47,701,000 in the
Conservative Asset Allocation Trust)
(See accompanying portfolio of investments) .......... $261,577,703 $287,711,708 $669,935,871 $213,338,307 $206,488,426
Receivable for forward foreign currency contracts
to sell (Notes 2 and 8).. ............................ ---- 164,210 248,030 50,450 9,903,301
Forward foreign currency contracts to buy, at value
(Notes 2 and 8).. .................................. ---- 900 1,650 300 ----
Cash ................................................... 937 693 337 937 8
Foreign currency (Cost: $81,416, $321,573, $578,914,
$88,370 and $36,088 in the Balanced, Aggressive,
Moderate, Conservative Asset Allocation and
High Yield Trusts, respectively) (Note 2) ............ 81,635 322,301 580,036 87,897 36,247
Receivables:
Investments sold. .................................. 1,637,219 165,335 838,426 28,976 357,761
Fund shares sold ................................ 418,369 ---- ---- ---- 714,518
Dividends and interest. ............................ 1,536,536 792,073 2,976,549 1,095,388 3,232,256
Foreign tax withholding reclaims.. ................. 11,266 22,496 41,356 8,744 ----
Other assets. .......................................... 979 6,359 3,012 936 672
------------ ------------ ------------ ------------ ------------
Total assets ................................ 265,264,644 289,186,075 674,625,267 214,611,935 220,733,189
------------ ------------ ------------ ------------ ------------
LIABILITIES
Forward foreign currency contracts to sell, at value
(Notes 2 and 8). ..................................... ---- 162,599 245,057 49,842 9,950,205
Payables:
Forward foreign currency contracts to buy
(Notes 2 and 8)................................... ---- 895 1,640 298 ----
Investments purchased............................... 4,948,112 1,374,253 20,908,462 11,155,888 450,000
Fund shares redeemed............................... ---- 149,627 236,355 695,626 ----
Variation margin for open futures contracts.. ...... ---- 553 ---- ---- 3,284
Dividend and interest withholding tax .............. 2,666 4,035 10,072 1,274 16,298
Custodian fee.. .................................... 9,787 24,816 37,451 21,750 6,213
Securities lending.. ............................... 5,827,967 24,560,067 35,119,053 5,868,418 17,935,954
Other accrued expenses. . .......................... 22,282 27,506 56,296 18,868 16,984
------------ ------------ ------------ ------------ ------------
Total liabilities. ........................... 10,810,814 26,304,351 56,614,386 17,811,964 28,378,938
------------ ------------ ------------ ------------ ------------
NET ASSETS. ............................................ $254,453,830 $262,881,724 $618,010,881 $196,799,971 $192,354,251
============ ============ ============ ============ ============
Net assets consist of:
Undistributed net investment income (Note 2) ....... $5,554,804 $3,977,606 $17,849,145 $7,979,316 $46,904
Accumulated undistributed net realized gain
(loss) on investments, futures, foreign currency
and forward foreign currency contracts. .......... 13,030,307 23,991,737 51,115,611 9,986,111 (766,078)
Unrealized appreciation (depreciation) on:
Investments. .................................... 19,981,782 57,217,394 97,850,040 16,837,648 (8,255,927)
Futures contracts.. ............................. ---- 133,291 ---- ---- (109,711)
Foreign currency and forward foreign currency
contracts. .................................... 1,513 2,423 3,801 241 (46,701)
Capital shares at par value of $.01 (Note 4). ...... 131,161 172,266 462,628 166,295 148,928
Additional paid-in capital.. ....................... 215,754,263 177,387,007 450,729,656 161,830,360 201,336,836
------------ ------------ ------------ ------------ ------------
Net assets.. .............................. $254,453,830 $262,881,724 $618,010,881 $196,799,971 $192,354,251
============ ============ ============ ============ ============
Capital shares outstanding (Note 4) .................... 13,116,139 17,226,649 46,262,770 16,629,497 14,892,838
============ ============ ============ ============ ============
Net asset value, offering price and redemption price
per share. ........................................... $19.40 $15.26 $13.36 $11.83 $12.92
============ ============ ============ ============ ============
Investments in securities, at identified cost (Note 2).. $241,595,921 $230,494,314 $572,085,831 $196,500,659 $214,744,353
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 45
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1998
<TABLE>
<CAPTION>
Global Capital Investment U.S.
Strategic Government Growth Quality Government
Bond Bond Bond Bond Securities
ASSETS Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investments in securities, at value (Includes
repurchase agreements of $91,558,000 in the
U.S. Government Securities Trust)
(See accompanying portfolio of investments).. ....... $542,661,385 $206,291,742 $65,199,949 $371,158,253 $461,605,988
Receivable for forward foreign currency contracts
to sell (Notes 2 and 8).. ........................... 15,140,755 130,690,467 ---- ---- ----
Forward foreign currency contracts to buy, at value
(Notes 2 and 8) ..................................... ---- 40,131,715 ---- ---- ----
Cash .................................................. 887 163 60 998 884
Foreign currency (Cost: $2 and $4,023,005
in the Strategic Bond and Global Government
Bond Trusts, respectively) (Note 2) ................. 2 4,090,355 ---- ---- ----
Receivables:
Investments sold .................................. ---- 2,087,364 ---- ---- ----
Fund shares sold . ............................... 1,689,117 262,856 92,685 689,154 1,001,089
Dividends and interest. ........................... 8,306,868 3,875,867 1,068,524 5,412,268 2,626,439
Foreign tax withholding reclaims.. ................ ---- ---- ---- ---- ----
Other assets. ......................................... 1,939 961 272 1,068 1,311
------------ ------------ ----------- ------------ ------------
Total assets ............................... 567,800,953 387,431,490 66,361,490 377,261,741 465,235,711
------------ ------------ ----------- ------------ ------------
LIABILITIES
Forward foreign currency contracts to sell, at
value (Notes 2 and 8) ............................... 15,167,985 131,162,982 ---- ---- ----
Payables:
Forward foreign currency contracts to buy
(Notes 2 and 8) ................................. ---- 40,693,300 ---- ---- ----
Investments purchased.. ........................... 46,530,217 1,844,124 ---- 74,665 101,552,964
Fund shares redeemed .............................. ---- ---- ---- ---- ----
Dividend and interest withholding tax ............. 59,621 19,322 2,251 583 ----
Custodian fee. .................................... 23,942 22,533 2,542 10,859 12,762
Securities lending. ............................... 62,552,583 16,679,123 1,238,220 65,034,495 ----
Other accrued expenses. ........................... 42,832 19,978 6,531 30,395 36,907
Deferred mortgage dollar roll income .................. 9,278 ---- ---- ---- 17,605
------------ ------------ ----------- ------------ ------------
Total liabilities. .......................... 124,386,458 190,441,362 1,249,544 65,150,997 101,620,238
------------ ------------ ----------- ------------ ------------
NET ASSETS. ........................................... $443,414,495 $196,990,128 $65,111,946 $312,110,744 $363,615,473
============ ============ =========== ============ ============
Net assets consist of:
Undistributed net investment income (Note 2). ..... $30,661,851 $18,056,312 $3,404,123 $17,104,902 $18,004,465
Accumulated undistributed net realized
gain (loss) on investments, foreign currency
and forward foreign currency contracts. ......... (12,398,155) (7,555,642) (952,030) (1,905,310) (1,128,397)
Unrealized appreciation (depreciation) on:
Investments. .................................... (5,510,098) 5,045,376 2,930,856 6,062,763 4,631,085
Foreign currency and forward foreign currency
contracts. .................................... 9,740 (946,797) ---- ---- ----
Capital shares at par value of $.01 (Note 4). ..... 378,243 143,497 53,863 250,491 263,195
Additional paid-in capital.. ...................... 430,272,914 182,247,382 59,675,134 290,597,898 341,845,125
------------ ------------ ----------- ------------ ------------
Net assets.. ............................. $443,414,495 $196,990,128 $65,111,946 $312,110,744 $363,615,473
============ ============ =========== ============ ============
Capital shares outstanding (Note 4) ................... 37,824,324 14,349,764 5,386,315 25,049,137 26,319,483
------------ ------------ ----------- ------------ ------------
Net asset value, offering price and redemption price
per share. .......................................... $11.72 $13.73 $12.09 $12.46 $13.82
============ ============ =========== ============ ============
Investments in securities, at identified cost (Note 2). $548,171,483 $201,246,366 $62,269,093 $365,095,490 $456,974,903
============ ============ =========== ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 46
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1998
<TABLE>
<CAPTION>
Lifestyle Lifestyle Lifestyle Lifestyle Lifestyle
Money Aggressive Growth Balanced Moderate Conservative
Market 1000 820 640 460 280
ASSETS Trust Trust Trust Trust Trust Trust
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Investments in securities, at value
(Includes a repurchase agreement
of $113,112,000 in the Money Market
Trust) (See accompanying
portfolio of investments).. .............. $607,101,829 $80,522,359 $380,308,296 $377,529,630 $138,127,751 $78,403,466
Cash. ...................................... 528 2,428 707 1,823 ---- 56
Receivables:
Investments sold.. .................. ---- 543,982 1,963,575 1,944,828 47,643 7,987
Fund shares sold.. .................. 554,879 ---- ---- ---- 340,739 378,088
Dividends and interest.. ............ 2,263,475 ---- ---- ---- 1,718 1,948
From adviser. ....................... ---- 8,668 30,555 38,747 9,830 7,868
Other assets.. ............................. 2,388 302 1,403 1,316 395 176
------------ ----------- ------------ ------------ ------------ -----------
Total assets.. .................. 609,923,099 81,077,739 382,304,536 379,516,344 138,528,076 78,799,589
------------ ----------- ------------ ------------ ------------ -----------
LIABILITIES
Payables:
Investments purchased. .............. ---- 324,673 1,828,186 1,432,799 390,099 388,023
Fund shares redeemed. ............... ---- 219,309 135,389 512,029 ---- ----
Custodian fee. ...................... 11,522 ---- ---- ---- ---- ----
Other accrued expenses. ............. 74,422 8,752 31,958 40,063 10,225 8,028
------------ ----------- ------------ ------------ ------------ -----------
Total liabilities.. .............. 85,944 552,734 1,995,533 1,984,891 400,324 396,051
------------ ----------- ------------ ------------ ------------ -----------
NET ASSETS.. ............................... $609,837,155 $80,525,005 $380,309,003 $377,531,453 $138,127,752 $78,403,538
============ =========== ============ ============ ============ ===========
Net assets consist of:
Accumulated undistributed net
realized gain (loss) on investments ---- ($1,015,057) ($2,890,154) ($3,151,380) $1,637,129 $292,493
Unrealized appreciation
on investments. ................... ---- 2,494,897 10,158,142 7,456,506 4,423,326 3,176,917
Capital shares at par value
of $.01 (Note 4). ................. $609,837 60,156 275,943 279,775 99,283 57,930
Additional paid-in capital.. ........ 609,227,318 78,985,009 372,765,072 372,946,552 131,968,014 74,876,198
------------ ----------- ------------ ------------ ------------ -----------
Net assets. ................... $609,837,155 $80,525,005 $380,309,003 $377,531,453 $138,127,752 $78,403,538
============ =========== ============ ============ ============ ===========
Capital shares outstanding (Note 4) ........ 60,983,716 6,015,574 27,594,335 27,977,460 9,928,301 5,793,024
------------ ----------- ------------ ------------ ------------ -----------
Net asset value, offering price and
redemption price per share ............... $10.00 $13.39 $13.78 $13.49 $13.91 $13.53
============ =========== ============ ============ ============ ===========
Investments in securities,
at identified cost (Note 2) .............. $607,101,829 $78,027,462 $370,150,154 $370,073,124 $133,704,425 $75,226,549
============ =========== ============ ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 47
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Pacific Rim Pilgrim
Emerging Science & International Emerging Baxter
Markets Technology Small Cap Small Company Growth
Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest (Net of $414 withholding tax in the
Pacific Rim Emerging Markets Trust) ..................... $193,446 $357,897 $1,445,861 $1,185,567 $556,246
Dividends (Net of $47,422, $3,329, $125,574 and
$73 withholding tax in the Pacific Rim Emerging
Markets, Science & Technology, International Small
Cap and Pilgrim Baxter Growth Trusts, respectively).. .... 416,434 149,214 958,698 376,692 23,405
--------- ---------- ---------- ---------- ----------
Total income .................................. 609,880 507,111 2,404,559 1,562,259 579,651
--------- ---------- ---------- ---------- ----------
Expenses:
Investment adviser fee (Note 6). .......................... 214,432 1,171,088 1,567,227 2,937,353 1,216,141
Custodian fee.. ........................................... 83,723 94,388 171,308 80,948 90,526
Audit and legal fees ...................................... 2,262 11,440 18,235 16,777 3,610
Printing and postage fees.. ............................... 2,373 5,654 12,439 23,859 8,820
Registration and filing fees.. ............................ 401 956 2,103 4,034 1,491
Trustees fees and expenses (Note 7).. ..................... 797 3,283 3,492 8,128 2,292
Miscellaneous.. ........................................... 536 1,728 2,074 4,127 1,818
--------- ---------- ---------- ---------- ----------
Total expenses.. .............................. 304,524 1,288,537 1,776,878 3,075,226 1,324,698
--------- ---------- ---------- ---------- ----------
Net investment income (loss). ................. 305,356 (781,426) 627,681 (1,512,967) (745,047)
--------- ---------- ---------- ---------- ----------
Realized and unrealized gain (loss) on investments,
foreign currency and forward foreign currency contracts:
Net realized gain (loss) on:
Investment transactions. ................................ (6,979,917) (1,741,037) 277,904 3,917,918 17,375,070)
Foreign currency and forward foreign
currency contracts .................................... (238,982) (10,264) (134,334) ---- ----
Change in unrealized appreciation (depreciation) on:
Investments. ............................................ 5,942,247 49,026,105 14,673,325 (1,704,887) 26,770,878
Translation of foreign currency and
forward foreign currency contracts .................... 110,460 198 36,507 ---- ----
--------- ---------- ---------- ---------- ----------
Net gain (loss) on investments, foreign currency
and forward foreign currency contracts. ........ (1,166,192) 47,275,002 14,853,402 2,213,031 9,395,808
--------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets resulting
from operations. ........................................... ($860,836) $46,493,576 $15,481,083 $700,064 $8,650,761
========= =========== =========== ======== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 48
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Small
Small/Mid International Worldwide Global Company
Cap Stock Growth Equity Value
Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest ................................................. $1,358,380 $479,626 $330,845 $889,878 $155,121
Dividends (Net of $393,982, $35,123, $1,339,528 and
$3,017 withholding tax in the International Stock,
Worldwide Growth, Global Equity and Small
Company Value Trusts, respectively) .................... 1,080,302 3,504,223 308,680 16,064,908 1,463,524
----------- ----------- ---------- ------------ -----------
Total income ......................................... 2,438,682 3,983,849 639,525 16,954,786 1,618,645
----------- ----------- ---------- ------------ -----------
Expenses:
Investment adviser fee (Note 6). ......................... 3,144,346 2,019,937 325,977 8,256,515 1,218,609
Custodian fee.. .......................................... 74,698 344,244 61,218 769,222 191,462
Audit and legal fees ..................................... 33,008 7,697 2,269 75,046 10,893
Printing and postage fees.. .............................. 16,147 15,651 3,139 83,926 4,644
Registration and filing fees.. ........................... 2,730 2,646 531 14,192 785
Trustees fees and expenses (Note 7).. .................... 9,977 4,099 838 24,481 2,416
Miscellaneous.. .......................................... 4,624 3,100 408 29,852 1374
----------- ----------- ---------- ------------ -----------
Total expenses.. ..................................... 3,285,530 2,397,374 394,380 9,253,234 1,430,183
----------- ----------- ---------- ------------ -----------
Net investment income (loss). ..................... (846,848) 1,586,475 245,145 7,701,552 188,462
----------- ----------- ---------- ------------ -----------
Realized and unrealized gain (loss) on investments, foreign
currency and forward foreign currency contracts:
Net realized gain (loss) on:
Investment transactions. ............................... 55,888,821 1,821,899 (1,819,275) 88,388,784 (16,508,567)
Foreign currency and forward foreign
currency contracts ................................... ---- (40,590) (74,381) (1,775,815) ----
Change in unrealized appreciation on:
Investments. ........................................... 26,206,105 22,818,165 4,084,752 6,402,579 9,615,252
Translation of foreign currency and
forward foreign currency contracts ................... ---- 13,799 617 141,285 ----
----------- ----------- ---------- ------------ -----------
Net gain (loss) on investments, foreign currency
and forward foreign currency contracts. ............. 82,094,926 24,613,273 2,191,713 93,156,833 (6,893,315)
----------- ----------- ---------- ------------ -----------
Net increase (decrease) in net assets resulting
from operations. .......................................... $81,248,078 $26,199,748 $2,436,858 $100,858,385 ($6,704,853)
=========== =========== ========== ============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 49
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Quantitative Equity Blue Chip
Equity Growth Equity Index Growth
Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest ............................................... $2,346,747 $1,363,734 $615,150 $363,199 $2,793,349
Dividends (Net of $85,401, $10,847, $473, $3,116 and
$43,511 withholding tax in the Equity, Growth,
Quantitative Equity, Equity Index and Blue
Chip Growth Trusts, respectively) .................... 16,458,990 1,643,176 3,105,391 538,155 8,750,119
------------ ----------- ----------- ----------- ------------
Total income ................................... 18,805,737 3,006,910 3,720,541 901,354 11,543,468
------------ ----------- ----------- ----------- ------------
Expenses:
Investment adviser fee (Note 6). ....................... 11,504,927 1,930,442 1,431,591 106,755 7,964,796
Custodian fee.. ........................................ 432,620 70,918 74,450 114,597 198,883
Audit and legal fees ................................... 122,631 14,333 21,714 3,267 92,487
Printing and postage fees.. ............................ 135,838 20,689 11,372 4,345 55,499
Registration and filing fees.. ......................... 22,970 3,499 1,923 735 9,385
Trustees fees and expenses (Note 7).. .................. 48,917 6,560 6,015 1,384 26,875
Miscellaneous.. ........................................ 24,849 3,534 6,040 4,625 11,311
------------ ----------- ----------- ----------- ------------
Expenses before reimbursement by
investment adviser .................................. 12,292,752 2,049,975 1,553,105 235,708 8,359,236
Reimbursement of expenses by
investment adviser (Note 6).. ....................... ---- ---- ---- 60,770 ----
------------ ----------- ----------- ----------- ------------
Net expenses. .................................. 12,292,752 2,049,975 1,553,105 174,938 8,359,236
------------ ----------- ----------- ----------- ------------
Net investment income.. ........................ 6,512,985 956,935 2,167,436 726,416 3,184,232
------------ ----------- ----------- ----------- ------------
Realized and unrealized gain on investments, futures,
foreign currency and forward foreign currency contracts:
Net realized gain (loss) on:
Investment transactions. ............................. 164,915,719 17,266,771 25,556,516 50,182 50,695,303
Futures contracts.. .................................. ---- ---- ---- 871,822 ----
Foreign currency and forward foreign
currency contracts ................................. 58,525 (281) ---- 20 (8,634)
Change in unrealized appreciation (depreciation) on:
Investments. ......................................... (36,897,292) 31,040,331 21,957,322 9,449,307 174,851,600
Futures contracts .................................... ---- ---- ---- (26,890) ----
Translation of foreign currency and
forward foreign currency contracts ................. 9,372 (9,207) ---- ---- 63
------------ ----------- ----------- ----------- ------------
Net gain on investments, futures, foreign currency
and forward foreign currency contracts. .......... 128,086,324 48,297,614 47,513,838 10,344,441 225,538,332
------------ ----------- ----------- ----------- ------------
Net increase in net assets resulting
from operations. ........................................ $134,599,309 $49,254,549 $49,681,274 $11,070,857 $228,722,564
============ =========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 50
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
International
Real Estate Growth and Growth and Equity-
Securities Value Income Income Income
Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest (Net of $331 withholding tax in the
International Growth and Income Trust) ..............$ 85,069 $ 1,410,276 $ 474,190 $ 2,321,710 $ 3,443,950
Dividends (Net of $9,607, $382,115, $178,167
and $144,080 withholding tax in the Value,
International Growth and Income, Growth
and Income and Equity-Income Trusts,
respectively) ........................................ 10,375,777 3,587,520 3,420,961 29,071,911 26,767,253
----------- ------------ ------------ ------------ ------------
Total income ................................... 10,460,846 4,997,796 3,895,151 31,393,621 30,211,203
----------- ------------ ------------ ------------ ------------
Expenses:
Investment adviser fee (Note 6) ........................ 1,157,366 1,695,347 2,086,991 14,353,269 8,121,714
Custodian fee .......................................... 59,147 74,318 387,150 318,206 221,899
Audit and legal fees ................................... 11,576 21,444 23,211 151,510 110,372
Printing and postage fees .............................. 13,992 8,920 15,420 180,711 67,409
Registration and filing fees ........................... 2,366 1,508 2,607 30,558 11,399
Amortization of deferred organization
expenses (Note 2) .................................... -- -- 9,720 -- 275
Trustees fees and expenses (Note 7) ................... 4,436 5,128 7,053 62,005 32,574
Miscellaneous .......................................... 9,465 2,815 13,855 26,570 14,178
----------- ------------ ------------ ------------ ------------
Total expenses ................................. 1,258,348 1,809,480 2,546,007 15,122,829 8,579,820
----------- ------------ ------------ ------------ ------------
Net investment income .......................... 9,202,498 3,188,316 1,349,144 16,270,792 21,631,383
----------- ------------ ------------ ------------ ------------
Realized and unrealized gain (loss) on investments,
foreign currency and forward foreign currency contracts:
Net realized gain (loss) on:
Investment transactions ............................... (11,066,977) 3,711,085 431,540 73,188,872 55,707,234
Foreign currency and forward foreign
currency contracts .................................. -- -- (2,299,214) -- 5,469
Change in unrealized appreciation (depreciation) on:
Investments ........................................... (28,378,705) (14,016,429) 16,672,663 360,559,727 10,010,997
Translation of foreign currency and
forward foreign currency contracts .................. -- -- (904,425) 1,520 1,576
------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments, foreign currency
and forward foreign currency contracts ....... (39,445,682) (10,305,344) 13,900,564 433,750,119 65,725,276
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from operations .........................................($30,243,184) ($ 7,117,028) $ 15,249,708 $450,020,911 $ 87,356,659
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 51
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Aggressive Moderate Conservative
Asset Asset Asset High
Balanced Allocation Allocation Allocation Yield
Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest ............................................. 5,402,006 $ 3,414,827 $ 18,057,871 $ 8,960,772 $ 13,548,623
Dividends (Net of $69,372, $101,979, $183,403
and $31,968 withholding tax in the Balanced,
Aggressive, Moderate and Conservative Asset
Allocation Trusts, respectively) .................. 2,186,714 2,732,093 4,739,336 701,087 212,017
----------- ------------ ------------ ------------ ------------
Total income .................................... 7,588,720 6,146,920 22,797,207 9,661,859 13,760,640
----------- ------------ ------------ ------------ ------------
Expenses:
Investment adviser fee (Note 6) ........................ 1,699,575 1,874,673 4,585,154 1,473,082 1,160,631
Custodian fee .......................................... 90,203 255,678 422,006 223,145 72,077
Audit and legal fees ................................... 17,930 21,145 53,923 17,591 16,121
Printing and postage fees .............................. 20,760 22,806 56,695 18,484 7,296
Registration and filing fees ........................... 3,510 3,856 9,587 3,126 1,234
Trustees fees and expenses (Note 7) ................... 6,998 8,130 20,042 6,471 4,097
Miscellaneous .......................................... 2,871 1,827 9,091 2,787 3,761
----------- ------------ ------------ ------------ ------------
Total expenses ................................... 1,841,847 2,188,115 5,156,498 1,744,686 1,265,217
----------- ------------ ------------ ------------ ------------
Net investment income ............................ 5,746,873 3,958,805 17,640,709 7,917,173 12,495,423
----------- ------------ ------------ ------------ ------------
Realized and unrealized gain (loss) on investments, futures,
foreign currency and forward foreign currency contracts:
Net realized gain (loss) on:
Investment transactions .............................. 13,096,202 24,484,460 51,848,087 10,151,359 685,329
Futures contracts .................................... -- 168,829 459,020 34,810 (158,006)
Foreign currency and forward foreign
currency contracts ................................. (192,069) (3,049) (29,982) (1,455) (338,289)
Change in unrealized appreciation (depreciation) on:
Investments .......................................... 9,091,108 14,927,862 16,988,917 2,097,641 (9,230,531)
Futures contracts .................................... -- 240,570 24,906 (1,773) (109,711)
Translation of foreign currency and
forward foreign currency contracts ................. 1,674 8,462 16,705 2,506 (89,864)
------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments, futures, foreign
currency and forward foreign currency contracts 21,996,915 39,827,134 69,307,653 12,283,088 (9,241,072)
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations ......................................... $ 27,743,788 $ 43,785,939 $ 86,948,362 $ 20,200,261 $ 3,254,351
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 52
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Global Capital Investment U.S.
Strategic Government Growth Quality Government
Bond Bond Bond Bond Securities
Trust Trust Trust Trust Trust
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest (Net of $55,573 $10,186 and $2,250
withholding tax in the Strategic Bond, Global
Government Bond and Capital Growth
Bond Trusts, respectively) .......................... $ 34,069,851 $ 13,060,373 $ 3,831,261 $ 18,819,640 $ 19,211,329
Mortgage dollar rolls ................................. 577,975 -- -- -- 727,545
Dividends ............................................. 941 -- -- 37,714 --
------------ ------------ ------------ ------------ ------------
Total income ..................................... 34,648,767 13,060,373 3,831,261 18,857,354 19,938,874
------------ ------------ ------------ ------------ ------------
Expenses:
Investment adviser fee (Note 6) ...................... 3,178,026 1,632,065 384,100 1,610,817 1,952,935
Custodian fee ......................................... 236,945 230,584 26,138 123,974 132,200
Audit and legal fees .................................. 28,544 19,431 5,187 19,340 22,712
Printing and postage fees ............................. 37,340 19,516 5,986 24,721 29,207
Registration and filing fees .......................... 6,314 3,300 1,012 4,180 4,939
Trustees fees and expenses (Note 7) ................... 11,864 6,749 1,988 7,437 8,460
Amortization of deferred organization expenses (Note 2) 413 -- -- -- --
Miscellaneous ......................................... 5,574 3,604 762 4,566 3,677
------------ ------------ ------------ ------------ ------------
Net expenses ..................................... 3,505,020 1,915,249 425,173 1,795,035 2,154,130
------------ ------------ ------------ ------------ ------------
Net investment income ............................ 31,143,747 11,145,124 3,406,088 17,062,319 17,784,744
------------ ------------ ------------ ------------ ------------
Realized and unrealized gain (loss) on investments,
foreign currency and forward foreign currency contracts:
Net realized gain (loss) on:
Investment transactions ............................. (11,765,900) 10,492,768 (94,997) 1,251,275 2,537,744
Foreign currency and forward foreign
currency contracts ................................ (474,432) (9,668,870) -- -- --
Change in unrealized appreciation (depreciation) on:
Investments ......................................... (13,688,101) 6,083,115 1,239,956 2,352,727 1,073,117
Translation of foreign currency and
forward foreign currency contracts ................ (348,502) (3,265,913) -- -- --
------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments, foreign currency
and forward foreign currency contracts ......... (26,276,935) 3,641,100 1,144,959 3,604,002 3,610,861
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations ........................................ $ 4,866,812 $ 14,786,224 $ 4,551,047 $ 20,666,321 $ 21,395,605
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 53
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Lifestyle Lifestyle Lifestyle Lifestyle Lifestyle
Money Aggressive Growth Balanced Moderate Conservative
Market 1000 820 640 460 280
Trust Trust Trust Trust Trust Trust
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest .............................. $ 30,423,945 -- -- -- -- --
Income distributions received ......... -- $ 311,250 $ 5,257,312 $ 6,372,564 $ 2,862,066 $ 1,356,487
------------ ------------ ------------ ------------ ------------ ------------
Total income ..................... 30,423,945 311,250 5,257,312 6,372,564 2,862,066 1,356,487
------------ ------------ ------------ ------------ ------------ ------------
Expenses:
Investment adviser fee (Note 6) ....... 2,771,825 -- -- -- -- --
Custodian fee ......................... 108,168 -- -- -- -- --
Audit and legal fees .................. 52,215 4,160 19,866 19,910 6,894 3,531
Printing and postage fees ............. 62,396 6,201 29,432 28,956 10,167 5,141
Registration and filing fees .......... 10,551 1,048 4,977 4,896 1,719 869
Trustee fees and expenses (Note 7) .... 18,547 2,172 10,124 9,696 3,114 1,457
Miscellaneous ......................... 8,503 812 3,678 3,378 997 426
------------ ------------ ------------ ------------ ------------ ------------
Expenses before reimbursement
by investment adviser ............... 3,032,205 14,393 68,077 66,836 22,891 11,424
Reimbursement of expenses by
investment adviser (Note 6) ......... -- 14,393 68,077 66,836 22,891 11,424
------------ ------------ ------------ ------------ ------------ ------------
Net expenses ..................... 3,032,205 -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Net investment income ............ 27,391,740 311,250 5,257,312 6,372,564 2,862,066 1,356,487
------------ ------------ ------------ ------------ ------------ ------------
Realized and unrealized
gain on investments:
Net realized gain (loss) on investments -- (966,235) (2,798,969) (3,086,187) 1,667,664 312,471
Capital gain distributions received ... -- 1,458,191 6,975,778 7,454,039 1,336,619 510,860
Change in unrealized appreciation
on investments ...................... -- 2,264,970 7,959,295 3,981,875 3,159,452 2,705,774
------------ ------------ ------------ ------------ ------------ ------------
Net gain on investments .......... -- 2,756,926 12,136,104 8,349,727 6,163,735 3,529,105
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations ........................ $ 27,391,740 $ 3,068,176 $ 17,393,416 $ 14,722,291 $ 9,025,801 $ 4,885,592
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE> 54
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Pacific Rim Science & International
Emerging Markets Technology Small Cap
Trust Trust Trust
------------------------- ----------------------- -----------------------
Year Year Year 1/01/1997* Year Year
Ended Ended Ended to Ended Ended
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income (loss) . $ 305,356 $ 174,510 ($ 781,426) ($ 182,355) $ 627,681 $ 767,426
Net realized gain (loss) on:
Investment transactions .... (6,979,917) (338,181) (1,741,037) 187,775 277,904 (3,601,942)
Foreign currency and
forward foreign
currency contracts ....... (238,982) (386,822) (10,264) -- (134,334) (318,266)
Change in unrealized
appreciation
(depreciation) on:
Investments ................ 5,942,247 (10,316,270) 49,026,105 (1,610,969) 14,673,325 3,451,228
Foreign currency and
forward foreign
currency contracts ....... 110,460 (85,137) 198 -- 36,507 (37,787)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) in
net assets resulting
from operations ............ (860,836) (10,951,900) 46,493,576 (1,605,549) 15,481,083 260,659
Distribution to
shareholders from:
Net investment income ..... -- -- -- -- (437,568) (56,628)
Net realized gains on
investments and foreign
currency transactions .. -- -- -- (187,775) -- --
Distribution to shareholders:
In excess of net realized
gains on investments
and foreign currency
transactions ............ -- (72,382) -- (873,300) -- --
Increase in net assets
from capital share
transactions (Note 4) ..... 5,005,970 11,633,402 65,443,411 70,014,200 4,278,984 31,153,786
------------- ------------- ------------- ------------- ------------- -------------
Increase in net assets ....... 4,145,134 609,120 111,936,987 67,347,576 19,322,499 31,357,817
Net assets at beginning
of period ................... 23,850,324 23,241,204 67,347,576 -- 128,575,710 97,217,893
------------- ------------- ------------- ------------- ------------- -------------
Net assets at end
of period ................... $ 27,995,458 $ 23,850,324 $ 179,284,563 $ 67,347,576 $ 147,898,209 $ 128,575,710
============= ============= ============= ============= ============= =============
Undistributed net
investment income .......... $ 13,097 ($ 92,260) -- -- $ 500,048 $ 444,269
============= ============= ============= ============ ============= =============
</TABLE>
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 55
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Emerging Pilgrim
Small Company Baxter Growth Small/Mid Cap
Trust Trust Trust
---------------------------------- ------------------------------- -------------------------------
Year 1/01/1997* Year 1/01/1997* Year Year
Ended to Ended to Ended Ended
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
----------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment loss ($1,512,967) ($279,938) ($745,047) ($221,842) ($846,848) ($710,421)
Net realized gain (loss) on:
Investment transactions 3,917,918 4,042,230 (17,375,070) (4,090,189) 55,888,821 5,771,995
Change in unrealized
appreciation
(depreciation) on
investments (1,704,887) 32,648,479 26,770,878 6,765,675 26,206,105 22,179,663
------------ ------------ ------------ ----------- ------------ ------------
Net increase in net assets
resulting from operations 700,064 36,410,771 8,650,761 2,453,644 81,248,078 27,241,237
Distribution to
shareholders from:
Net realized gains on
investments and foreign
currency transactions (4,130,364) ----- ----- ----- ----- -----
Increase in net assets
from capital share
transactions (Note 4) 28,293,037 239,363,310 41,023,697 90,881,502 45,484,563 65,073,710
------------ ------------ ------------ ----------- ------------ ------------
Increase in net assets 24,862,737 275,774,081 49,674,458 93,335,146 126,732,641 92,314,947
Net assets at beginning
of period 275,774,081 ----- 93,335,146 ----- 268,376,512 176,061,565
------------ ------------ ------------ ----------- ------------ ------------
Net assets at end
of period $300,636,818 $275,774,081 $143,009,604 $93,335,146 $395,109,153 $268,376,512
============ ============ ============ =========== ============ ============
Undistributed net
investment loss ----- ----- ----- ($221,842) ----- ----
============ ============ ============ =========== ============ ============
</TABLE>
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 56
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
International Woldwide Global
Stock Growth Equity
Trust Trust Trust
-------------------------------- ----------------------------- ------------------------------
Year 1/01/1997* Year 1/01/1997* Year Year
Ended to Ended to Ended Ended
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
-------------- --------------- ------------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ....... $ 1,586,475 $ 456,533 $ 245,145 $ 75,736 $ 7,701,552 $ 8,211,359
Net realized gain (loss) on:
Investment transactions ... 1,821,899 798,600 (1,819,275) 63,299 88,388,784 48,944,044
Foreign currency and
forward foreign
currency contracts ...... (40,590) (160,401) (74,381) (26,045) (1,775,815) 7,211,837
Change in unrealized
appreciation
(depreciation) on:
Investments ............... 22,818,165 (4,119,284) 4,084,752 771,847 6,402,579 85,480,417
Foreign currency and
forward foreign
currency contracts ...... 13,799 (5,560) 617 (428) 141,285 703,851
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) in
net assets resulting
from operations ........... 26,199,748 (3,030,112) 2,436,858 884,409 100,858,385 150,551,508
Distribution to
shareholders from:
Net investment income .... (1,596,410) (355,257) (206,728) (57,051) (16,146,783) (10,702,845)
Net realized gains on
investments and foreign
currency transactions .. (1,781,309) (638,199) -- (37,254) (48,191,144) (62,223,834)
Distribution to shareholders:
In excess of net
investment income ...... (42,466) -- -- (809) -- --
In excess of net realized
gains on investments
and foreign currency
transactions ........... (140,607) (993,554) -- (113,582) -- --
Increase in net assets
from capital share
transactions (Note 4) ..... 66,210,918 150,270,019 14,213,737 23,586,322 23,630,416 63,945,517
------------- ------------- ------------- ------------- ------------- -------------
Increase in net assets ...... 88,849,874 145,252,897 16,443,867 24,262,035 60,150,874 141,570,346
Net assets at beginning
of period ................. 145,252,897 -- 24,262,035 -- 868,412,747 726,842,401
------------- ------------- ------------- ------------- ------------- -------------
Net assets at end
of period ................. $ 234,102,771 $ 145,252,897 $ 40,705,902 $ 24,262,035 $ 928,563,621 $ 868,412,747
============= ============= ============= ============= ============= =============
Undistributed net
investment income (loss) .. ($ 77,076) $ 9,928 ($ 43,324) ($ 7,360) $ 5,423,428 $ 15,666,642
============= ============= ============= ============= ============= =============
</TABLE>
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 57
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Small
Company
Value Equity Growth
Trust Trust Trust
---------------------------- ------------------------------ -------------------------------
Year 10/01/1997* Year Year Year Year
Ended to Ended Ended Ended Ended
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
------------ ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ...... $ 188,462 $ 69,004 $ 6,512,985 $ 4,967,526 $ 956,935 $ 818,315
Net realized gain (loss) on:
Investment transactions .. (16,508,567) (762,160) 164,915,719 288,434,853 17,266,771 8,261,706
Foreign currency and
forward foreign
currency contracts .... -- -- 58,525 (79,750) (281) (32,648)
Change in unrealized
appreciation
(depreciation) on:
Investments .............. 9,615,252 (1,242,712) (36,897,292) (49,085,206) 31,040,331 11,548,165
Foreign currency and
forward foreign
currency contracts .... -- -- 9,372 2 (9,207) 188
------------- ------------ --------------- --------------- --------------- ---------------
Net increase(decrease)
in net assets resulting
from operations .......... (6,704,853) (1,935,868) 134,599,309 244,237,425 49,254,549 20,595,726
Distribution to
shareholders from:
Net investment income .... (56,196) -- (4,882,009) (8,208,495) (785,667) (2,288)
Net realized gains on
investments and foreign
currency transactions . -- -- (288,587,683) (250,024,832) (7,656,124) --
Increase in net assets
from capital share
transactions (Note 4) .... 102,004,697 69,026,952 193,656,886 189,916,612 91,793,552 89,987,989
------------- ------------ --------------- --------------- --------------- ---------------
Increase in net assets ..... 95,243,648 67,091,084 34,786,503 175,920,710 132,606,310 110,581,427
Net assets at beginning
of period ................ 67,091,084 -- 1,521,382,100 1,345,461,390 167,388,166 56,806,739
------------- ------------ --------------- --------------- --------------- ---------------
Net assets at end
of period ................ $ 162,334,732 $ 67,091,084 $ 1,556,168,603 $ 1,521,382,100 $ 299,994,476 $ 167,388,166
============= ============ =============== =============== =============== ===============
Undistributed net
investment income ........ $ 122,775 $ 56,115 $ 6,563,301 $ 4,882,008 $ 956,654 $ 785,667
============= ============ =============== =============== =============== ===============
</TABLE>
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
19
<PAGE> 58
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Quantitative Blue Chip
Equity Equity Index Growth
Trust Trust Trust
---------------------------------- ------------------------------- -------------------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
----------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ..... $ 2,167,436 $ 1,960,998 $ 726,416 $ 614,519 $ 3,184,232 $ 4,123,096
Net realized gain(loss) on:
Investment transactions . 25,556,516 21,256,016 50,182 111,548 50,695,303 11,907,336
Futures contracts ....... -- -- 871,822 3,580,341 -- --
Foreign currency and
forward foreign
currency contracts ... -- -- 20 -- (8,634) (94)
Change in unrealized
appreciation
(depreciation) on:
Investments ............. 21,957,322 9,038,807 9,449,307 292,487 174,851,600 112,919,340
Futures contracts ....... -- -- (26,890) (201,241) -- --
Foreign currency and
forward foreign
currency contracts ... -- -- -- -- 63 --
-------------- -------------- -------------- -------------- --------------- --------------
Net increase in net
assets resulting from
operations .............. 49,681,274 32,255,821 11,070,857 4,397,654 228,722,564 128,949,678
Distribution to
shareholders from:
Net investment income .. (1,960,998) -- (725,595) (614,519) (4,121,547) (898,962)
Net realized gains on
investments, futures
and foreign currency
transactions ......... (21,211,052) -- (1,258,052) (2,783,548) (11,715,254) (76,558,164)
Increase in net assets
from capital share
transactions (Note 4) ... 60,435,931 43,374,187 27,130,373 18,257,484 219,468,302 234,744,078
-------------- -------------- -------------- -------------- --------------- --------------
Increase in net assets .... 86,945,155 75,630,008 36,217,583 19,257,071 432,354,065 286,236,630
Net assets at beginning
of period ............... 167,529,705 91,899,697 27,074,602 7,817,531 708,807,458 422,570,828
-------------- -------------- -------------- -------------- --------------- --------------
Net assets at end
of period ............... $ 254,474,860 $ 167,529,705 $ 63,292,185 $ 27,074,602 $ 1,141,161,523 $ 708,807,458
============== ============== ============== ============== =============== ==============
Undistributed net
investment income ....... $ 2,089,131 $ 1,960,998 $ 841 -- $ 3,087,681 $ 4,121,547
============== ============== ============== ============== =============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE> 59
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Real Estate International
Securities Value Growth and Income
Trust Trust Trust
----------------------------- ------------------------------ -------------------------------
Year Year Year 1/01/1997* Year Year
Ended Ended Ended to Ended Ended
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
------------- ------------ -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ....... $ 9,202,498 $ 6,435,099 $ 3,188,316 $ 979,426 $ 1,349,144 $ 4,301,075
Net realized gain (loss) on:
Investment transactions ... (11,066,977) 15,106,323 3,711,085 2,848,645 431,540 6,819,325
Foreign currency and
forward foreign
currency contracts ..... -- -- -- -- (2,299,214) (7,637)
Change in unrealized
appreciation
(depreciation) on:
Investments ............... (28,378,705) 1,710,688 (14,016,429) 5,320,474 16,672,663 (11,806,866)
Foreign currency and
forward foreign
currency contracts ..... -- -- -- -- (904,425) 594,255
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease)
in net assets resulting
from operations ............ (30,243,184) 23,252,110 (7,117,028) 9,148,545 15,249,708 (99,848)
Distribution to
shareholders from:
Net investment income ..... (4,711,304) -- (3,187,336) (979,426) (5,087,750) (3,640,170)
Net realized gains on
investments and foreign
currency transactions .. (16,427,838) -- (3,711,085) (2,848,645) (6,913,043) (8,342,784)
Distribution to shareholders:
In excess of net realized
gains on investments
and foreign currency
transactions ........... -- -- (1,531,744) (599,054) -- --
Increase in net assets
from capital share
transactions (Note 4) ..... 51,455,304 62,287,429 126,430,055 139,950,204 11,525,342 26,849,179
------------- ------------- ------------- ------------- ------------- -------------
Increase in net assets ...... 72,978 85,539,539 110,882,862 144,671,624 14,774,257 14,766,377
Net assets at beginning
of period ................. 161,759,193 76,219,654 144,671,624 -- 203,776,454 189,010,077
------------- ------------- ------------- ------------- ------------- -------------
Net assets at end
of period ................. $ 161,832,171 $ 161,759,193 $ 255,554,486 $ 144,671,624 $ 218,550,711 $ 203,776,454
============= ============= ============= ============= ============= =============
Undistributed net
investment income (loss) .. $ 7,502,774 $ 4,808,797 $ 981 -- ($ 159,968) $ 4,240,740
============= ============= ============= ============= ============= =============
</TABLE>
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
21
<PAGE> 60
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH AND INCOME EQUITY-INCOME BALANCED
TRUST TRUST TRUST
-------------------------------- ------------------------------ --------------------------------
YEAR YEAR YEAR YEAR YEAR 1/01/1997*
ENDED ENDED ENDED ENDED ENDED TO
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
--------------- -------------- -------------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ...... $ 16,270,792 $ 15,322,986 $ 21,631,383 $ 18,962,919 $ 5,746,873 $ 4,677,007
Net realized gain (loss) on:
Investment transactions .. 73,188,872 99,563,470 55,707,234 40,834,683 13,096,202 20,430,952
Foreign currency and
forward foreign
currency contracts .... -- 1,285 5,469 (76,448) (192,069) (95,635)
Change in unrealized
appreciation
(depreciation) on:
Investments .............. 360,559,727 247,910,751 10,010,997 138,364,867 9,091,108 400,364
Foreign currency and
forward foreign
currency contracts .... 1,520 (1,256) 1,576 245 1,674 (161)
--------------- --------------- --------------- ------------- ------------- -------------
Net increase in net
assets resulting from
operations ................ 450,020,911 362,797,236 87,356,659 198,086,266 27,743,788 25,412,527
Distribution to
shareholders from:
Net investment income .... (15,313,773) (13,165,084) (18,698,833) (8,655,530) (4,637,642) --
Net realized gains on
investments, futures
and foreign currency
transactions .......... (99,563,470) (66,257,481) (40,844,225) (80,825,124) (20,360,461) --
Increase in net assets
from capital share
transactions (Note 4) .... 349,586,661 288,274,613 118,823,876 233,613,354 74,663,502 151,632,116
--------------- --------------- --------------- ------------- ------------- -------------
Increase in net assets ..... 684,730,329 571,649,284 146,637,477 342,218,966 77,409,187 177,044,643
Net assets at beginning
of period ................ 1,605,387,278 1,033,737,994 941,704,587 599,485,621 177,044,643 --
--------------- --------------- --------------- ------------- ------------- -------------
Net assets at end
of period ................ $ 2,290,117,607 $ 1,605,387,278 $ 1,088,342,064 $ 941,704,587 $ 254,453,830 $ 177,044,643
=============== =============== =============== ============= ============= =============
Undistributed net
investment income ........ $ 16,252,305 $ 15,315,008 $ 21,363,276 $ 18,699,879 $ 5,554,804 $ 4,637,642
=============== =============== =============== ============= ============= =============
</TABLE>
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
22
<PAGE> 61
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
ASSET ALLOCATION ASSET ALLOCATION ASSET ALLOCATION
TRUST TRUST TRUST
---------------------------------- ------------------------------- -------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets:
Operations:
Net investment income ...... $ 3,958,805 $ 4,678,266 $ 17,640,709 $ 20,624,457 $ 7,917,173 $ 8,909,268
Net realized gain (loss) on:
Investment transaction ... 24,484,460 21,787,441 51,848,087 44,169,728 10,151,359 9,545,017
Futures contracts ........ 168,829 2,190,877 459,020 2,745,819 34,810 38,629
Foreign currency and
forward foreign
currency contracts .... (3,049) (128,171) (29,982) (177,501) (1,455) (36,148)
Change in unrealized
appreciation
(depreciation) on:
Investments .............. 14,927,862 12,435,747 16,988,917 22,649,867 2,097,641 3,370,336
Futures contracts ........ 240,570 (63,205) 24,906 92,982 (1,773) 20,122
Foreign currency and
forward foreign
currency contracts .... 8,462 (10,440) 16,705 (16,641) 2,506 (2,821)
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations 43,785,939 40,890,515 86,948,362 90,088,711 20,200,261 21,844,403
Distribution to
shareholders from:
Net investment income .... (4,765,263) (6,081,059) (20,941,772) (26,584,959) (8,864,663) (10,062,867)
Net realized gains on
investments, futures
and foreign currency
transactions .......... (24,329,301) (16,445,138) (47,173,913) (34,563,767) (9,705,964) (8,097,771)
Increase (decrease) in net
assets from capital share
transactions (Note 4) .... 4,657,120 (1,530,327) (9,963,436) (44,619,393) (9,177,785) (7,801,297)
------------- ------------- ------------- ------------- ------------- -------------
Increase (decrease)
in net assets ............ 19,348,495 16,833,991 8,869,241 (15,679,408) (7,548,151) (4,117,532)
Net assets at beginning
of period ................ 243,533,229 226,699,238 609,141,640 624,821,048 204,348,122 208,465,654
------------- ------------- ------------- ------------- ------------- -------------
Net assets at end
of period ................ $ 262,881,724 $ 243,533,229 $ 618,010,881 $ 609,141,640 $ 196,799,971 $ 204,348,122
============= ============= ============= ============= ============= =============
Undistributed net
investment income ........ $ 3,977,606 $ 4,765,263 $ 17,849,145 $ 20,941,772 $ 7,979,316 $ 8,844,386
============= ============= ============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE> 62
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GLOBAL
HIGH YIELD STRATEGIC BOND GOVERNMENT BOND
TRUST TRUST TRUST
----------------------------- ------------------------------- -------------------------------
YEAR 1/01/1997* YEAR YEAR YEAR YEAR
ENDED TO ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets:
Operations:
Net investment income ...... $ 12,495,423 $ 3,000,344 $ 31,143,747 $ 21,794,258 $ 11,145,124 $ 13,484,526
Net realized gain (loss) on:
Investment
transactions ........... 685,329 731,169 (11,765,900) 4,357,008 10,492,768 13,533,542
Futures contracts ........ (158,006) -- -- -- -- --
Foreign currency and
forward foreign
currency contracts .... (338,289) 20,337 (474,432) 474,566 (9,668,870) (8,569,143)
Change in unrealized
appreciation
(depreciation) on:
Investments .............. (9,230,531) 974,604 (13,688,101) 2,884,064 6,083,115 (14,618,789)
Futures contracts ........ (109,711) -- -- -- -- --
Foreign currency and
forward foreign
currency contracts .... (89,864) 43,163 (348,502) 556,273 (3,265,913) 2,134,019
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net
assets resulting from
operations ............... 3,254,351 4,769,617 4,866,812 30,066,169 14,786,224 5,964,155
Distribution to
shareholders from:
Net investment income .... (12,153,316) (2,994,422) (22,915,842) (14,436,515) (14,017,074) (19,668,247)
Net realized gains on
investments, futures and
foreign currency
transactions ......... (463,039) (457,712) (3,897,165) (1,809,273) (5,897,775) (512,991)
Distribution to shareholders
in excess of net realized
gains on investments ..... (1,115,256) -- -- -- -- --
Increase (decrease) in net
assets from capital share
transactions (Note 4) .... 110,083,856 91,430,172 99,770,482 130,492,346 (13,998,370) (19,459,104)
------------- ------------- ------------- ------------- ------------- -------------
Increase (decrease)
in net assets ............ 99,606,596 92,747,655 77,824,287 144,312,727 (19,126,995) (33,676,187)
Net assets at beginning
of period ................ 92,747,655 -- 365,590,208 221,277,481 216,117,123 249,793,310
------------- ------------- ------------- ------------- ------------- -------------
Net assets at end
of period ................ $ 192,354,251 $ 92,747,655 $ 443,414,495 $ 365,590,208 $ 196,990,128 $ 216,117,123
============= ============= ============= ============= ============= =============
Undistributed net
investment income ........ $ 46,904 $ 26,259 $ 30,812,687 $ 22,584,781 $ 18,056,312 $ 12,595,749
============= ============= ============= ============= ============= =============
</TABLE>
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
24
<PAGE> 63
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAPITAL INVESTMENT U.S. GOVERNMENT
GROWTH BOND QUALITY BOND SECURITIES
TRUST TRUST TRUST
---------------------------- ----------------------------- -----------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
------------ ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ..... $ 3,406,088 $ 3,061,428 $ 17,062,319 $ 11,518,010 $ 17,784,744 $ 13,511,297
Net realized gain (loss) on
investment transactions . (94,997) 48,206 1,251,275 560,958 2,537,744 (1,285,791)
Change in unrealized
appreciation
(depreciation) on
investments ............. 1,239,956 1,026,927 2,352,727 3,072,046 1,073,117 5,453,837
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net
assets resulting from
operations .............. 4,551,047 4,136,561 20,666,321 15,151,014 21,395,605 17,679,343
Distribution to
shareholders from:
Net investment income .. (3,103,100) -- (11,620,376) (10,368,425) (13,043,750) (13,118,502)
Increase in net assets
from capital share
transactions (Note 4) .. 9,674,054 4,459,955 114,519,856 30,801,522 103,986,283 42,663,878
------------- ------------- ------------- ------------- ------------- -------------
Increase in net assets .... 11,122,001 8,596,516 123,565,801 35,584,111 112,338,138 47,224,719
Net assets at beginning
of period ............... 53,989,945 45,393,429 188,544,943 152,960,832 251,277,335 204,052,616
------------- ------------- ------------- ------------- ------------- -------------
Net assets at end
of period ............... $ 65,111,946 $ 53,989,945 $ 312,110,744 $ 188,544,943 $ 363,615,473 $ 251,277,335
============= ============= ============= ============= ============= =============
Undistributed net
investment income ....... $ 3,404,123 $ 3,103,100 $ 17,104,902 $ 11,620,376 $ 18,004,465 $ 13,028,158
============= ============= ============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE> 64
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LIFESTYLE LIFESTYLE
MONEY MARKET AGGRESSIVE 1000 GROWTH 820
TRUST TRUST TRUST
---------------------------- ---------------------------- ----------------------------
YEAR YEAR YEAR 1/07/1997* YEAR 1/07/1997*
ENDED ENDED ENDED TO ENDED TO
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
------------ ------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ....... $ 27,391,740 $ 21,497,529 $ 311,250 $ 40,644 $ 5,257,312 $ 1,638,443
Capital gain
distributions received .... -- -- 1,458,191 234,940 6,975,778 623,851
Net realized gain (loss) on
investment transactions ... -- -- (966,235) 1,526,530 (2,798,969) 5,455,773
Change in unrealized
appreciation on
investments ............... -- -- 2,264,970 229,927 7,959,295 2,198,847
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations . 27,391,740 21,497,529 3,068,176 2,032,041 17,393,416 9,916,914
Distribution to
shareholders from:
Net investment income ..... (27,391,740) (21,497,529) (311,250) (40,644) (5,257,312) (1,638,443)
Capital gain
distributions received .. -- -- (1,458,191) (234,940) (6,975,778) (623,851)
Net realized gains on
investments ............. -- -- (609,117) -- (2,747,990) --
Distributions to shareholders
in excess of net realized
gains on investments ...... -- -- (966,235) -- (2,798,969) --
Increase in net assets
from capital share
transactions (Note 4) ..... 170,123,617 76,147,741 31,697,095 47,348,070 163,537,979 209,503,037
------------- ------------- ------------- ------------- ------------- -------------
Increase in net assets ...... 170,123,617 76,147,741 31,420,478 49,104,527 163,151,346 217,157,657
Net assets at beginning
of period ................. 439,713,538 363,565,797 49,104,527 -- 217,157,657 --
------------- ------------- ------------- ------------- ------------- -------------
Net assets at end
of period ................. $ 609,837,155 $ 439,713,538 $ 80,525,005 $ 49,104,527 $ 380,309,003 $ 217,157,657
============= ============= ============= ============= ============= =============
Undistributed net
investment income ......... -- -- -- -- -- --
============= ============= ============= ============= ============= =============
</TABLE>
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
26
<PAGE> 65
MANUFACTURERS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LIFESTYLE LIFESTYLE LIFESTYLE
BALANCED 640 MODERATE 460 CONSERVATIVE 280
TRUST TRUST TRUST
----------------------------- --------------------------- -----------------------------
YEAR 1/07/1997* YEAR 1/07/1997* YEAR 1/07/1997*
ENDED TO ENDED TO ENDED TO
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
------------- ------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ...... $ 6,372,564 $ 1,923,233 $ 2,862,066 $ 692,090 $ 1,356,487 $ 255,536
Capital gain
distributions received ... 7,454,039 519,499 1,336,619 141,843 510,860 52,417
Net realized gain on
investment transactions .. (3,086,187) 2,682,201 1,667,664 341,434 312,471 115,432
Change in unrealized
appreciation
(depreciation) on:
Investments .............. 3,981,875 3,474,631 3,159,452 1,263,874 2,705,774 471,143
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations 14,722,291 8,599,564 9,025,801 2,439,241 4,885,592 894,528
Distribution to
shareholders from:
Net investment income .... (6,372,564) (1,923,233) (2,862,066) (692,090) (1,356,416) (255,536)
Capital gain
distributions received . (4,367,852) (519,499) (1,336,619) (141,843) (510,860) (52,417)
Net realized gains on
investments ............ (2,747,394) -- (371,970) -- (135,411) --
Distribution to shareholders
in excess of capital gain
distributions received .. (3,086,187) -- -- -- -- --
Increase in net assets
from capital share
transactions (Note 4) .... 192,729,857 180,496,470 80,926,976 51,140,322 55,770,613 19,163,445
------------- ------------- ------------- ------------- ------------- -------------
Increase in net assets ..... 190,878,151 186,653,302 85,382,122 52,745,630 58,653,518 19,750,020
Net assets at beginning
of period ................ 186,653,302 -- 52,745,630 -- 19,750,020 --
------------- ------------- ------------- ------------- ------------- -------------
Net assets at end
of period ................ $ 377,531,453 $ 186,653,302 $ 138,127,752 $ 52,745,630 $ 78,403,538 $ 19,750,020
============= ============= ============= ============= ============= =============
Undistributed net
investment income ........ -- -- -- -- -- --
============= ============= ============= ============= ============= =============
</TABLE>
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
27
<PAGE> 66
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
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
The accompanying notes are an integral part of the financial statements.
28
<PAGE> 67
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
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)
----------- -----------
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
The accompanying notes are an integral part of the financial statements.
29
<PAGE> 68
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
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
The accompanying notes are an integral part of the financial statements.
30
<PAGE> 69
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
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
The accompanying notes are an integral part of the financial statements.
31
<PAGE> 70
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
PILGRIM BAXTER
GROWTH TRUST
----------------------------
<TABLE>
<CAPTION>
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
The accompanying notes are an integral part of the financial statements.
32
<PAGE> 71
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
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
The accompanying notes are an integral part of the financial statements.
33
<PAGE> 72
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
INTERNATIONAL STOCK
TRUST
----------------------------
YEAR ENDED 01/01/1997*
DECEMBER 31, TO
1998 12/31/97
----------- -------------
<S> <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
The accompanying notes are an integral part of the financial statements.
34
<PAGE> 73
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
WORLDWIDE GROWTH
TRUST
----------------------------
YEAR ENDED 01/01/1997 *
DECEMBER 31, TO
1998 12/31/97
---------- ------------
<S> <C> <C>
Net asset value, beginning
of period .................................... $ 14.04 $ 12.50
Income from investment operations:
Net investment income ..................... 0.09 0.04
Net realized and unrealized gain
on investments and foreign currency
transactions ............................ 1.09 1.62
---------- ------------
Total from investment
operations ................. 1.18 1.66
Less distributions:
Dividends from net investment income (0.07) (0.03)
Distributions from capital gains .......... -- (0.09)
---------- ------------
Total distributions ............. (0.07) (0.12)
---------- ------------
Net asset value, end of period ................. $ 15.15 $ 14.04
========== ============
Total return .................... 8.46% 13.29%
Net assets, end of period (000's) .............. $ 40,706 $ 24,262
Ratio of operating expenses to
average net assets ........................... 1.21% 1.32%
Ratio of net investment income to
average net assets ........................... 0.75% 0.61%
Portfolio turnover rate ........................ 93% 84%
</TABLE>
- ----------------------------------------
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
35
<PAGE> 74
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
GLOBAL EQUITY TRUST
----------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ...................... $ 19.38 $ 17.84 $ 16.10 $ 15.74 $ 15.73 $ 12.00
Income from investment operations:
Net investment
income ...................... 0.17 0.19 0.12 0.29 0.05 0.12
Net realized and unrealized
gain(loss) on investments
and foreign currency
transactions ................ 2.27 3.16 1.89 0.84 0.22 3.79
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations ........... 2.44 3.35 2.01 1.13 0.27 3.91
Less distributions:
Dividends from net
investment income ........... (0.36) (0.27) (0.27) (0.08) (0.02) (0.18)
Distributions from
capital gains ............... (1.08) (1.54) -- (0.69) (0.24) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ....... (1.44) (1.81) (0.27) (0.77) (0.26) (0.18)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ... $ 20.38 $ 19.38 $ 17.84 $ 16.10 $ 15.74 $ 15.73
=========== =========== =========== =========== =========== ===========
Total return ...... 12.24% 20.80% 12.62% 7.68% 1.74% 32.89%
Net assets, end of period (000's) $ 928,564 $ 868,413 $ 726,842 $ 648,183 $ 616,138 $ 377,871
Ratio of operating expenses to
average net assets ............. 1.01% 1.01% 1.01% 1.05% 1.08% 1.16%
Ratio of net investment income
to average net assets .......... 0.84% 1.02% 0.78% 0.61% 0.44% 0.77%
Portfolio turnover rate .......... 32% 33% 169% 63% 52% 52%
</TABLE>
<TABLE>
<CAPTION>
GLOBAL EQUITY TRUST
--------------------------------------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1992 1991 1990 1989
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period ...................... $ 12.24 $ 11.00 $ 12.57 $ 10.15
Income from investment operations:
Net investment
income ...................... 0.10 0.16 0.12 0.10
Net realized and unrealized
gain(loss) on investments
and foreign currency
transactions ................ (0.19) 1.23 (1.41) 2.32
----------- ----------- ----------- ---------
Total from investment
operations ........... (0.09) 1.39 (1.29) 2.42
Less distributions:
Dividends from net
investment income ........... (0.15) (0.15) (0.04) --
Distributions from
capital gains ............... -- -- (0.24) --
----------- ----------- ----------- ---------
Total distributions ....... (0.15) (0.15) (0.28) --
----------- ----------- ----------- ---------
Net asset value, end of period ... $ 12.00 $ 12.24 $ 11.00 $ 12.57
=========== =========== =========== ==========
Total return ...... (0.72%) 12.80% (10.43%) 23.84%
Net assets, end of period (000's) $ 116,731 $ 89,003 $ 63,028 $ 26,223
Ratio of operating expenses to
average net assets ............. 1.16% 1.23% 1.28% 1.62%
Ratio of net investment income
to average net assets .......... 1.12% 1.47% 1.97% 1.82%
Portfolio turnover rate .......... 69% 74% 67% 109%
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
<PAGE> 75
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
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 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
The accompanying notes are an integral part of the financial statements.
37
<PAGE> 76
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
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .......................... $ 21.50 $ 22.62 $ 20.79 $ 14.66 $ 15.57
Income from investment operations:
Net investment income ........... 0.08 0.08 0.13 0.10 0.11
Net realized and unrealized
gain(loss) on investments
and foreign currency
transactions .................. 2.13 3.31 3.77 6.14 (0.18)
------------- ------------- ------------- ------------- -------------
Total from investment
operations ....... 2.21 3.39 3.90 6.24 (0.07)
Less distributions:
Dividends from net
investment income ............ (0.07) (0.14) (0.09) (0.11) (0.05)
Distributions from
capital gains ................ (4.16) (4.37) (1.98) -- (0.79)
------------- ------------- ------------- ------------- -------------
Total distributions ... (4.23) (4.51) (2.07) (0.11) (0.84)
------------- ------------- ------------- ------------- -------------
Net asset value, end of period ....... $ 19.48 $ 21.50 $ 22.62 $ 20.79 $ 14.66
============= ============= ============= ============= =============
Total return .......... 9.41% 19.25% 20.14% 42.79% (0.53%)
Net assets, end of period (000's) .... $ 1,556,169 $ 1,521,382 $ 1,345,461 $ 988,800 $ 534,562
Ratio of operating expenses to
average net assets ................. 0.80% 0.80% 0.80% 0.80% 0.84%
Ratio of net investment
income to average net assets ....... 0.42% 0.35% 0.71% 0.63% 0.88%
Portfolio turnover rate .............. 93% 224% 223% 88% 132%
</TABLE>
<TABLE>
<CAPTION>
EQUITY TRUST
-------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1993## 1992 1991 1990 1989
------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .......................... $ 13.97 $ 13.12 $ 11.33 $ 19.14 $ 15.17
Income from investment operations:
Net investment income ........... 0.07 0.64 0.14 0.24 0.29
Net realized and unrealized
gain(loss) on investments
and foreign currency
transactions .................. 2.11 0.38 1.88 (1.95) 3.87
------------- ------------- ------------- ------------- --------------
Total from investment
operations ....... 2.18 1.02 2.02 (1.71) 4.16
Less distributions:
Dividends from net
investment income ............ (0.58) (0.17) (0.23) (0.29) (0.12)
Distributions from
capital gains ................ -- -- -- (5.81) (0.07)
------------- ------------- ------------- ------------- --------------
Total distributions ... (0.58) (0.17) (0.23) (6.10) (0.19)
------------- ------------- ------------- ------------- --------------
Net asset value, end of period ....... $ 15.57 $ 13.97 $ 13.12 $ 11.33 $ 19.14
============= ============= ============= ============= ==============
Total return .......... 16.31% 7.93% 17.94% (11.79%) 27.70%
Net assets, end of period (000's) .... $ 387,842 $ 192,626 $ 88,235 $ 36,564 $ 32,108
Ratio of operating expenses to
average net assets ................. 0.88% 0.95% 0.89% 0.97% 1.02%
Ratio of net investment
income to average net assets ....... 0.50% 7.31% 2.23% 2.74% 1.90%
Portfolio turnover rate .............. 173% 782% 172% 95% 111%
</TABLE>
- --------------------------------------
## Net investment income per share was calculated using the average shares
method for fiscal year 1993.
The accompanying notes are an integral part of the financial statements.
38
<PAGE> 77
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
The accompanying notes are an integral part of the financial statements.
39
<PAGE> 78
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
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .......................... $ 22.50 $ 17.33 $ 17.27 $ 13.36 $ 14.68 $ 13.73
Income from investment operations:
Net investment income (A) ....... 0.20 0.26 0.26 0.24 0.20 0.19
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions .................. 5.42 4.91 2.83 3.67 (0.81) 1.64
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations ....... 5.62 5.17 3.09 3.91 (0.61) 1.83
Less distributions:
Dividends from net
investment income ............. (0.25) -- (0.50) -- (0.20) (0.19)
Distributions from
capital gains ................ (2.65) -- (2.53) -- (0.51) (0.69)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ... (2.90) -- (3.03) -- (0.71) (0.88)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ....... $ 25.22 $ 22.50 $ 17.33 $ 17.27 $ 13.36 $ 14.68
=========== =========== =========== =========== =========== ===========
Total return .......... 26.35% 29.83% 17.92% 29.23% (4.19%) 13.39%
Net assets, end of period (000's) ... $ 254,475 $ 167,530 $ 91,900 $ 60,996 $ 34,829 $ 21,651
Ratio of operating expenses to
average net assets (B) ............ 0.76% 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%
Portfolio turnover rate .............. 225% 114% 105% 109% 85% 88%
</TABLE>
<TABLE>
<CAPTION>
QUANTITATIVE EQUITY TRUST
-----------------------------------------------------
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1992 1991 1990 1989
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period .......................... $ 13.33 $ 10.48 $ 11.25 $ 8.91
Income from investment operations:
Net investment income (A) ....... 0.18 0.21 0.32 0.36
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions .................. 0.61 2.94 (0.77) 2.34
----------- ----------- ----------- -----------
Total from investment
operations ....... 0.79 3.15 (0.45) 2.70
Less distributions:
Dividends from net
investment income ............. (0.18) (0.21) (0.32) (0.36)
Distributions from
capital gains ................ (0.21) (0.09) -- --
----------- ----------- ----------- -----------
Total distributions ... (0.39) (0.30) (0.32) (0.36)
----------- ----------- ----------- -----------
Net asset value, end of period ....... $ 13.73 $ 13.33 $ 10.48 $ 11.25
=========== =========== =========== ===========
Total return .......... 6.07% 30.18% (4.06%) 30.66%
Net assets, end of period (000's) ... $ 9,708 $ 5,480 $ 2,872 $ 2,138
Ratio of operating expenses to
average net assets (B) ............ 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets ................. 1.51% 1.78% 3.06% 3.48%
Portfolio turnover rate .............. 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.
The accompanying notes are an integral part of the financial statements.
40
<PAGE> 79
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
EQUITY INDEX TRUST
-----------------------------------------
YEARS ENDED
DECEMBER 31, 02/14/1996*
------------------------- 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.
The accompanying notes are an integral part of the financial statements.
41
<PAGE> 80
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
BLUE CHIP GROWTH TRUST
-------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 15.00 $ 14.31 $ 11.40 $ 9.05
Income from investment operations:
Net investment income (B) 0.05 0.09 0.03 0.03
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 4.19 3.13 2.92 2.36
------------- ------------- ------------- -------------
Total from investment
operations 4.24 3.22 2.95 2.39
Less distributions:
Dividends from net investment income (0.08) (0.03) (0.04) (0.04)
Distributions from capital gains (0.24) (2.50) -- --
------------- ------------- ------------- -------------
Total distributions (0.32) (2.53) (0.04) (0.04)
------------- ------------- ------------- -------------
Net asset value, end of period $ 18.92 $ 15.00 $ 14.31 $ 11.40
------------- ------------- ------------- -------------
Total return 28.49% 26.94% 25.90% 26.53%
Net assets, end of period (000's) $ 1,141,162 $ 708,807 $ 422,571 $ 277,674
Ratio of operating expenses to
average net assets (C) 0.97% 0.975% 0.975% 0.975%
Ratio of net investment income to
average net asset 0.37% 0.74% 0.26% 0.42%
Portfolio turnover rate 42% 37% 159% 57%
</TABLE>
<TABLE>
<CAPTION>
BLUE CHIP GROWTH TRUST
---------------------------------------------------------
YEARS ENDED DECEMBER 31, 12/11/1992*
----------------------------------- TO
1994 1993 12/31/1992
------------- ------------- --------------
<S> <C> <C> <C>
Net asset value, beginning
of period $ 9.55 $ 9.93 $ 10.00
Income from investment operations:
Net investment income (B) 0.04 0.05 --
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (0.50) (0.42) (0.07)
------------- ------------- --------------
Total from investment
operations (0.46) (0.37) (0.07)
Less distributions:
Dividends from net investment income (0.04) (0.01) --
Distributions from capital gains -- -- --
------------- ------------- --------------
Total distributions (0.04) (0.01) --
------------- ------------- --------------
Net asset value, end of period $ 9.05 $ 9.55 $ 9.93
------------- ------------- --------------
Total return (4.80%) (3.80%) (0.70%)+
Net assets, end of period (000's) $ 151,727 $ 104,966 $ 31,118
Ratio of operating expenses to
average net assets (C) 0.975% 0.975% 1.06% (A)
Ratio of net investment income to
average net asset 0.65% 0.75% 1.04% (A)
Portfolio turnover rate 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.
The accompanying notes are an integral part of the financial statements.
42
<PAGE> 81
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
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 20.07 $ 16.95 $ 15.10 $ 13.34
Income from investment operations:
Net investment income (A) 0.78 0.80 0.74 0.67
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (3.72) 2.32 4.31 1.35
----------- ----------- ----------- -----------
Total from investment
operations (2.94) 3.12 5.05 2.02
Less distributions:
Dividends from net investment income (0.53) -- (1.39) (0.26)
Distributions from capital gain (1.84) -- (1.81) --
----------- ----------- ----------- -----------
Total distributions (2.37) -- (3.20) (0.26)
----------- ----------- ----------- -----------
Net asset value, end of period $ 14.76 $ 20.07 $ 16.95 $ 15.10
----------- ----------- ----------- -----------
Total return (16.44%) 18.41% 34.69% 15.14%
Net assets, end of period (000's) $ 161,832 $ 161,759 $ 76,220 $ 52,440
Ratio of operating expenses to
average net assets (B) 0.76% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets 5.57% 5.42% 5.22% 5.06%
Portfolio turnover rate 122% 148% 231% 136%
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE SECURITIES TRUST
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
1994 1993 1992 1991
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 14.07 $ 12.75 $ 10.92 $ 8.16
Income from investment operations:
Net investment income (A) 0.55 0.47 0.45 0.53
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (0.93) 2.38 1.83 2.76
----------- ----------- ----------- -----------
Total from investment
operations (0.38) 2.85 2.28 3.29
Less distributions:
Dividends from net investment income (0.27) (0.47) (0.45) (0.53)
Distributions from capital gain (0.08) (1.06) -- --
----------- ----------- ----------- -----------
Total distributions (0.35) (1.53) (0.45) (0.53)
----------- ----------- ----------- -----------
Net asset value, end of period $ 13.34 $ 14.07 $ 12.75 $ 10.92
----------- ----------- ----------- -----------
Total return (2.76%) 22.61% 21.29% 41.10%
Net assets, end of period (000's) $ 42,571 $ 24,106 $ 7,273 $ 4,120
Ratio of operating expenses to
average net assets (B) 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets 4.26% 3.93% 4.13% 5.40%
Portfolio turnover rate 36% 143% 71% 40%
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE SECURITIES TRUST
YEARS ENDED DECEMBER 31,
------------------------------
1990 1989
----------- ------------
<S> <C> <C> <C>
Net asset value, beginning
of period $ 9.24 $ 9.12
Income from investment operations:
Net investment income (A) 0.67 0.68
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (1.09) 0.15
----------- ------------
Total from investment
operations (0.42) 0.83
Less distributions:
Dividends from net investment income (0.66) (0.71)
Distributions from capital gain -- --
----------- ------------
Total distributions (0.66) (0.71)
----------- ------------
Net asset value, end of period $ 8.16 $ 9.24
----------- ------------
Total return (4.53%) 9.23%
Net assets, end of period (000's) $ 2,774 $ 2,874
Ratio of operating expenses to
average net assets (B) 0.50% 0.50%
Ratio of net investment income to
average net assets 7.74% 7.29%
Portfolio turnover rate 24% 15%
</TABLE>
- ---------------------------------------
(A) After investment adviser and subadviser expense reimbursement per share of
$0.04 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.
The accompanying notes are an integral part of the financial statements.
43
<PAGE> 82
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
The accompanying notes are an integral part of the financial statements.
44
<PAGE> 83
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
The accompanying notes are an integral part of the financial statements.
45
<PAGE> 84
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
GROWTH AND INCOME TRUST
---------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------
1998 1997 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 23.89 $ 19.38 $ 16.37 $ 13.04
Income from investment operations:
Net investment income 0.19 0.22 0.22 0.27
Net realized and unrealized gain
on investments and foreign currency
transactions 5.98 5.73 3.41 3.45
------------- ------------- ------------- -------------
Total from investment
operations 6.17 5.95 3.63 3.72
Less distributions:
Dividends from net investment income (0.22) (0.24) (0.26) (0.26)
Distributions from capital gains (1.41) (1.20) (0.36) (0.13)
------------- ------------- ------------- -------------
Total distributions (1.63) (1.44) (0.62) (0.39)
------------- ------------- ------------- -------------
Net asset value, end of period $ 28.43 $ 23.89 $ 19.38 $ 16.37
============= ============= ============= =============
Total return 26.52% 32.83% 22.84% 29.20%
Net assets, end of period (000's) $ 2,290,118 $ 1,605,387 $ 1,033,738 $ 669,387
Ratio of operating expenses to
average net assets 0.79% 0.79% 0.80% 0.80%
Ratio of net investment income to
average net assets 0.85% 1.14% 1.56% 2.23%
Portfolio turnover rate 16% 34% 49% 39%
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME TRUST
---------------------------------------------
YEARS ENDED DECEMBER 31, 04/23/1991*
----------------------------- TO
1993 1992 12/31/1991
------------- ------------- -------------
<S> <C> <C> <C>
Net asset value, beginning
of period $ 12.10 $ 11.08 $ 10.00
Income from investment operations:
Net investment income 0.17 0.20 0.13
Net realized and unrealized gain
on investments and foreign currency
transactions 0.98 0.92 0.95
------------- ------------- -------------
Total from investment
operations 1.15 1.12 1.08
Less distributions:
Dividends from net investment income(0.22) (0.10) --
Distributions from capital gains (0.02) -- --
------------- ------------- -------------
Total distributions (0.20) (0.10) --
------------- ------------- -------------
Net asset value, end of period $ 13.05 $ 12.10 $ 11.08
============= ============= =============
Total return 9.62% 10.23% 10.80%+
Net assets, end of period (000's) $ 288,765 $ 130,984 $ 57,404
Ratio of operating expenses to
average net assets 0.85% 0.85% 0.98% (A)
Ratio of net investment income to
average net assets 2.29% 2.78% 2.92% (A)
Portfolio turnover rate 39% 44% 62% (A)
</TABLE>
- -----------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
The accompanying notes are an integral part of the financial statements.
46
<PAGE> 85
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
EQUITY-INCOME TRUST
---------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994##
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 17.24 $ 15.41 $ 13.81 $ 11.33 $ 11.31
Income from investment operations:
Net investment income 0.34 0.34 0.21 0.17 0.12
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.26 3.68 2.39 2.49 (0.03)
------------- ------------- ------------- ------------- -------------
Total from investment
operations 1.60 4.02 2.60 2.66 0.09
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
============= ============= ============= ============= =============
Total return 9.21% 29.71% 19.85% 23.69% 0.79%
Net assets, end of period (000's) $ 1,088,342 $ 941,705 $ 599,486 $ 396,827 $ 221,835
Ratio of operating expenses to
average net assets 0.85% 0.85% 0.85% 0.85% 0.87%
Ratio of net investment income to
average net assets 2.13% 2.47% 1.78% 1.63% 1.08%
Portfolio turnover rate 21% 25% 158% 52% 26%
</TABLE>
<TABLE>
<CAPTION>
EQUITY-INCOME TRUST
-------------------
02/19/1993*
TO
12/31/1993
-------------------
<S> <C>
Net asset value, beginning
of period $ 10.00
Income from investment operations:
Net investment income 0.07
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.24
-------------
Total from investment
operations 1.31
Less distributions:
Dividends from net investment income --
Distributions from capital gains --
-------------
Total distributions --
-------------
Net asset value, end of period $ 11.31
=============
Total return 13.10%+
Net assets, end of period (000's) $ 86,472
Ratio of operating expenses to
average net assets 0.94% (A)
Ratio of net investment income to
average net assets 1.30% (A)
Portfolio turnover rate 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
The accompanying notes are an integral part of the financial statements.
47
<PAGE> 86
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
The accompanying notes are an integral part of the financial statements.
48
<PAGE> 87
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
AGGRESSIVE ASSET ALLOCATION TRUST
--------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 14.36 $ 13.45 $ 12.85 $ 11.17 $ 12.03
Income from investment operations:
Net investment income 0.24 0.29 0.36 0.35 0.31
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 2.43 2.01 1.21 2.07 (0.41)
----------- ----------- ----------- ----------- -----------
Total from investment
operations 2.67 2.30 1.57 2.42 (0.10)
Less distributions:
Dividends from net investment income (0.29) (0.38) (0.33) (0.33) (0.31)
Distributions from capital gains (1.48) (1.01) (0.64) (0.41) (0.45)
----------- ----------- ----------- ----------- -----------
Total distributions (1.77) (1.39) (0.97) (0.74) (0.76)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 15.26 $ 14.36 $ 13.45 $ 12.85 $ 11.17
=========== =========== =========== =========== ===========
Total return 19.12% 19.09% 13.00% 22.77% (0.69%)
Net assets, end of period (000's) $ 262,882 $ 243,533 $ 226,699 $ 211,757 $ 184,662
Ratio of operating expenses to
average net assets 0.88% 0.90% 0.90% 0.91% 0.89%
Ratio of net investment income to
average net assets 1.58% 1.99% 2.73% 2.76% 2.90%
Portfolio turnover rate 64% 91% 75% 111% 136%
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE ASSET ALLOCATION TRUST
---------------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 08/03/1989*
----------------------------------------------------------- TO
1993 1992 1991 1990 12/31/89
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 11.25 $ 10.72 $ 9.08 $ 9.88 $ 10.00
Income from investment operations:
Net investment income 0.34 0.30 0.36 0.36 0.08
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 0.79 0.55 1.69 (1.07) (0.20)
----------- ----------- ----------- ----------- ----------
Total from investment
operations 1.13 0.85 2.05 (0.71) (0.12)
Less distributions:
Dividends from net investment income (0.30) (0.32) (0.41) (0.07) --
Distributions from capital gains (0.05) -- -- (0.02) --
Total distributions (0.35) (0.32) (0.41) (0.09) --
----------- ----------- ----------- ----------- ----------
Net asset value, end of period $ 12.03 $ 11.25 $ 10.72 $ 9.08 $ 9.88
=========== =========== =========== =========== ==========
Total return 10.30% 8.24% 22.96% (7.27%) (1.20%)+
Net assets, end of period (000's) $ 174,448 $ 151,627 $ 124,632 $ 91,581 $ 87,301
Ratio of operating expenses to
average net assets 0.86% 0.89% 0.88% 0.78% 0.89% (A)
Ratio of net investment income to
average net assets 2.96% 3.08% 3.63% 4.08% 3.32% (A)
Portfolio turnover rate 92% 123% 172% 82% 22% (A)
</TABLE>
- ------------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
The accompanying notes are an integral part of the financial statements.
49
<PAGE> 88
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
MODERATE ASSET ALLOCATION TRUST
-------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 12.95 $ 12.49 $ 12.39 $ 10.79 $ 11.76
Income from investment operations:
Net investment income 0.40 0.48 0.54 0.50 0.45
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.51 1.29 0.60 1.65 (0.65)
----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.91 1.77 1.14 2.15 (0.20)
Less distributions:
Dividends from net investment income (0.46) (0.57) (0.52) (0.45) (0.40)
Distributions from capital gains (1.04) (0.74) (0.52) (0.10) (0.37)
----------- ----------- ----------- ----------- -----------
Total distributions (1.50) (1.31) (1.04) (0.55) (0.77)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 13.36 $ 12.95 $ 12.49 $ 12.39 $ 10.79
=========== =========== =========== =========== ===========
Total return 15.27% 15.87% 9.96% 20.68% (1.61%)
Net assets, end of period (000's) $ 618,011 $ 609,142 $ 624,821 $ 650,136 $ 604,491
Ratio of operating expenses to
average net assets 0.84% 0.85% 0.84% 0.84% 0.85%
Ratio of net investment income to
average net assets 2.89% 3.37% 4.17% 4.09% 4.01%
Portfolio turnover rate 85% 78% 78% 129% 180%
</TABLE>
<TABLE>
<CAPTION>
MODERATE ASSET ALLOCATION TRUST
-----------------------------------------------------------------------------
08/03/1989*
---------------------------------------------------------- TO
1993 1992 1991 1990 12/31/89
----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 11.14 $ 10.72 $ 9.29 $ 10.03 $ 10.00
Income from investment operations:
Net investment income 0.41 0.41 0.42 0.48 0.11
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 0.67 0.43 1.50 (1.10) (0.08)
----------- ----------- ----------- ----------- --------------
Total from investment
operations 1.08 0.84 1.92 (0.62) 0.03
Less distributions:
Dividends from net investment income (0.39) (0.42) (0.49) (0.10) --
Distributions from capital gains (0.07) -- -- (0.02) --
----------- ----------- ----------- ----------- --------------
Total distributions (0.46) (0.42) (0.49) (0.12) --
----------- ----------- ----------- ----------- --------------
Net asset value, end of period $ 11.76 $ 11.14 $ 10.72 $ 9.29 $ 10.03
=========== =========== =========== =========== ==============
Total return 10.06% 8.30% 21.23% (6.23%) 0.30%+
Net assets, end of period (000's) $ 644,257 $ 505,967 $ 420,074 $ 327,328 $ 318,439
Ratio of operating expenses to
average net assets 0.84% 0.87% 0.86% 0.73% 0.79% (A)
Ratio of net investment income to
average net assets 4.02% 4.21% 4.38% 5.10% 4.51% (A)
Portfolio turnover rate 135% 169% 168% 76% 41% (A)
</TABLE>
- -----------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
The accompanying notes are an integral part of the financial statements.
50
<PAGE> 89
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
CONSERVATIVE ASSET ALLOCATION TRUST
-------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 11.78 $ 11.64 $ 11.59 $ 10.34 $ 11.26
Income from investment operations:
Net investment income 0.51 0.54 0.57 0.54 0.55
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 0.69 0.67 0.20 1.26 (0.76)
----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.20 1.21 0.77 1.80 (0.21)
Less distributions:
Dividends from net investment income (0.55) (0.59) (0.56) (0.55) (0.46)
Distributions from capital gains (0.60) (0.48) (0.16) -- (0.25)
----------- ----------- ----------- ----------- -----------
Total distributions (1.15) (1.07) (0.72) (0.55) (0.71)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 11.83 $ 11.78 $ 11.64 $ 11.59 $ 10.34
=========== =========== =========== =========== ===========
Total return 10.68% 11.44% 7.03% 18.07% (1.84%)
Net assets, end of period (000's) $ 196,800 $ 204,348 $ 208,466 $ 224,390 $ 216,716
Ratio of operating expenses to
average net assets 0.89% 0.89% 0.87% 0.87% 0.87%
Ratio of net investment income to
average net assets 4.03% 4.39% 4.59% 4.68% 4.86%
Portfolio turnover rate 125% 86% 73% 110% 220%
</TABLE>
<TABLE>
<CAPTION>
CONSERVATIVE ASSET ALLOCATION TRUST
-------------------------------------------------------------------------------
08/03/1989*
------------------------------------------------------------ TO
1993 1992 1991 1990 12/31/1989
----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 10.78 $ 10.63 $ 9.56 $ 10.11 $ 10.00
Income from investment operations:
Net investment income 0.50 0.47 0.58 0.62 0.15
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 0.44 0.26 1.15 (1.01) (0.04)
----------- ----------- ----------- ----------- --------------
Total from investment
operations 0.94 0.73 1.73 (0.39) 0.11
Less distributions:
Dividends from net investment income (0.46) (0.58) (0.66) (0.13) --
Distributions from capital gains -- -- -- (0.03) --
----------- ----------- ----------- ----------- --------------
Total distributions (0.46) (0.58) (0.66) (0.16) --
----------- ----------- ----------- ----------- --------------
Net asset value, end of period $ 11.26 $ 10.78 $ 10.63 $ 9.56 $ 10.11
=========== =========== =========== =========== ==============
Total return 8.99% 7.36% 18.80% (3.84%) 1.10%+
Net assets, end of period (000's) $ 250,117 $ 201,787 $ 165,167 $ 149,901 $ 141,191
Ratio of operating expenses to
average net assets 0.86% 0.89% 0.88% 0.76% 0.82% (A)
Ratio of net investment income to
average net assets 4.78% 4.99% 5.65% 6.68% 6.00% (A)
Portfolio turnover rate 170% 252% 211% 78% 85% (A)
</TABLE>
* Commencement of operations
+ Non-annualized
(A) Annualized
The accompanying notes are an integral part of the financial statements.
51
<PAGE> 90
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
The accompanying notes are an integral part of the financial statements.
52
<PAGE> 91
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
STRATEGIC BOND TRUST
----------------------------------------------------------------
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 12.38 $ 11.94 $ 11.26 $ 9.91
Income from investment operations:
Net investment income 0.76 0.67 0.62 0.78
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (0.59) 0.57 0.92 1.04
----------- ----------- ----------- -----------
Total from investment
operations 0.17 1.24 1.54 1.82
Less distributions:
Dividends from net investment income (0.71) (0.71) (0.86) (0.47)
Distributions from capital gains . (0.12) (0.09) -- --
----------- ----------- ----------- -----------
Total distributions (0.83) (0.80) (0.86) (0.47)
----------- ----------- ----------- -----------
Net asset value, end of period $ 11.72 $ 12.38 $ 11.94 $ 11.26
=========== =========== =========== ===========
Total return 1.31% 10.98% 14.70% 19.22%
Net assets, end of period (000's) $ 443,414 $ 365,590 $ 221,277 $ 122,704
Ratio of operating expenses to
average net assets 0.85% 0.87% 0.86% 0.92%
Ratio of net investment income to
average net assets 7.59% 7.54% 8.20% 8.76%
Portfolio turnover rate 209% 131% 165% 181%
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC BOND TRUST
-------------------------
Year Ended
December 31, 2/19/1993*
------------ TO
1994 12/31/93
------------ -----------
<S> <C> <C>
Net asset value, beginning
of period $ 10.88 $ 10.00
Income from investment operations:
Net investment income 0.57 0.33
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (1.22) 0.55
----------- -----------
Total from investment
operations (0.65) 0.88
Less distributions:
Dividends from net investment income (0.28) --
Distributions from capital gains . (0.04) --
----------- -----------
Total distributions (0.32) --
----------- -----------
Net asset value, end of period $ 9.91 $ 10.88
=========== ===========
Total return (5.99%) 8.8% +
Net assets, end of period (000's) $ 84,433 $ 53,640
Ratio of operating expenses to
average net assets 0.91% 1.00% (A)
Ratio of net investment income to
average net assets 7.49% 6.56% (A)
Portfolio turnover rate 197% 356% (A)
</TABLE>
- ----------------------------------------------
* Commencement of operations
+ Non-annualized
(A) Annualized
The accompanying notes are an integral part of the financial statements.
53
<PAGE> 92
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
GLOBAL GOVERNMENT BOND TRUST
--------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 14.07 $ 14.97 $ 14.56 $ 12.47 $ 13.93
Income from investment operations:
Net investment income 0.81 0.93 0.93 1.16 0.74
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 0.20 (0.57) 0.79 1.62 (1.54)
----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.01 0.36 1.72 2.78 (0.80)
Less distributions:
Dividends from net
investment income (0.95) (1.23) (1.31) (0.69) (0.30)
Distributions from capital gains (0.40) (0.03) -- -- (0.36)
Total distributions (1.35) (1.26) (1.31) (0.69) (0.66)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 13.73 $ 14.07 $ 14.97 $ 14.56 $ 12.47
=========== =========== =========== =========== ===========
Total return 7.61% 2.95% 13.01% 23.18% (5.75%)
Net assets, end of period (000's) $ 196,990 $ 216,117 $ 249,793 $ 235,243 $ 208,513
Ratio of operating expenses to
average net assets 0.94% 0.93% 0.90% 0.93% 0.96%
Ratio of net investment income to
average net assets 5.46% 5.87% 6.38% 6.83% 6.10%
Portfolio turnover rate 140% 160% 167% 171% 157%
</TABLE>
<TABLE>
<CAPTION>
GLOBAL GOVERNMENT BOND TRUST
--------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 12.47 $ 12.88 $ 11.59 $ 10.50 $ 10.21
Income from investment operations:
Net investment income 0.59 0.42 0.55 0.25 0.45
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 1.67 (0.16) 1.21 1.13 --
----------- ----------- ----------- ----------- ---------
Total from investment
operations 2.26 0.26 1.76 1.38 0.45
Less distributions:
Dividends from net
investment income (0.70) (0.43) (0.46) (0.24) (0.09)
Distributions from capital gains (0.10) (0.24) (0.01) (0.05) (0.07)
Total distributions (0.80) (0.67) (0.47) (0.29) (0.16)
----------- ----------- ----------- ----------- ---------
Net asset value, end of period $ 13.93 $ 12.47 $ 12.88 $ 11.59 $ 10.50
=========== =========== =========== =========== =========
Total return 18.99% 2.27% 15.86% 13.49% 4.49%
Net assets, end of period (000's) $ 196,817 $ 67,859 $ 28,251 $ 11,582 $ 4,065
Ratio of operating expenses to
average net assets 1.06% 1.05% 1.14% 1.21% 1.50%
Ratio of net investment income to
average net assets 5.61% 6.71% 17.28% 6.62% 7.15%
Portfolio turnover rate 154% 132% 164% 142% 50%
</TABLE>
- ----------------------------
The accompanying notes are an integral part of the financial statements.
54
<PAGE> 93
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
CAPITAL GROWTH BOND TRUST
----------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 11.85 $ 10.90 $ 11.30 $ 10.10 $ 11.33 $ 11.12
Income from investment operations:
Net investment income (A) 0.61 0.67 0.68 0.72 0.72 0.65
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 0.29 0.28 (0.40) 1.32 (1.22) 0.51
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations 0.90 0.95 0.28 2.04 (0.50) 1.16
Less distributions:
Dividends from net
investment income (0.66) -- (0.68) (0.72) (0.72) (0.65)
Distributions from capital gains -- -- -- (0.12) (0.01) (0.30)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.66) -- (0.68) (0.84) (0.73) (0.95)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 12.09 $ 11.85 $ 10.90 $ 11.30 $ 10.10 $ 11.33
========== ========== ========== ========== ========== ==========
Total return 7.95% 8.72% 2.48% 20.24% (4.49%) 10.56%
Net assets, end of period (000's) $ 65,112 $ 53,990 $ 45,393 $ 42,694 $ 33,618 $ 41,183
Ratio of operating expenses to
average net assets (B) 0.72% 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets 5.76% 6.30% 6.15% 6.36% 6.29% 5.69%
Portfolio turnover rate 17% 73% 58% 85% 79% 95%
</TABLE>
<TABLE>
<CAPTION>
CAPITAL GROWTH BOND TRUST
-----------------------------------------------------------
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1992 1991 1990 1989
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 11.47 $ 10.62 $ 10.82 $ 10.32
Income from investment operations:
Net investment income (A) 0.77 0.83 0.88 0.90
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions (0.11) 0.85 (0.21) 0.50
---------- ---------- ---------- -------------
Total from investment
operations 0.66 1.68 0.67 1.40
Less distributions:
Dividends from net
investment income (0.78) (0.83) (0.87) (0.90)
Distributions from capital gains (0.23) -- -- --
---------- ---------- ---------- -------------
Total distributions (1.01) (0.83) (0.87) (0.90)
---------- ---------- ---------- -------------
Net asset value, end of period $ 11.12 $ 11.47 $ 10.62 $ 10.82
========== ========== ========== =============
Total return 5.89% 16.38% 6.58% 13.88%
Net assets, end of period (000's) $ 30,695 $ 29,326 $ 24,808 $ 22,768
Ratio of operating expenses to
average net assets (B) 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets 6.76% 7.54% 8.25% 8.34%
Portfolio turnover rate 153% 20% 41% 69%
</TABLE>
- ----------------------------------
(A) After investment adviser expense reimbursement per share of $0.02 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.
The accompanying notes are an integral part of the financial statements.
55
<PAGE> 94
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND TRUST
--------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 12.13 $ 11.89 $ 12.32 $ 11.01 $ 12.12
Income from investment operations:
Net investment income 0.62 0.77 0.77 0.77 0.66
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 0.40 0.30 (0.50) 1.28 (1.23)
----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.02 1.07 0.27 2.05 (0.57)
Less distributions:
Dividends from net
investment income (0.69) (0.83) (0.70) (0.74) (0.54)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 12.46 $ 12.13 $ 11.89 $ 12.32 $ 11.01
=========== =========== =========== =========== ===========
Total return 8.73% 9.75% 2.58% 19.49% (4.64%)
Net assets, end of period (000's) $ 312,111 $ 188,545 $ 152,961 $ 143,103 $ 111,423
Ratio of operating expenses to
average net assets 0.72% 0.74% 0.73% 0.74% 0.76%
Ratio of net investment income to
average net assets 6.89% 7.15% 6.95% 6.91% 6.49%
Portfolio turnover rate 41% 47% 68% 137% 140%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND TRUST
--------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------
1993 1992 1991 * 1990 1989
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 11.58 $ 11.33 $ 10.74 $ 12.37 $ 11.55
Income from investment operations:
Net investment income 0.60 0.63 0.76 1.12 0.75
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 0.53 0.15 0.85 (1.50) 0.51
----------- ----------- ----------- ----------- ----------
Total from investment
operations 1.13 0.78 1.61 (0.38) 1.26
Less distributions:
Dividends from net
investment income (0.59) (0.53) (1.02) (1.25) (0.44)
----------- ----------- ----------- ----------- ----------
Net asset value, end of period $ 12.12 $ 11.58 $ 11.33 $ 10.74 $ 12.37
=========== =========== =========== =========== ==========
Total return 10.01% 7.21% 16.07% (2.73%) 11.34%
Net assets, end of period (000's) $ 99,474 $ 60,185 $ 38,896 $ 20,472 $ 26,965
Ratio of operating expenses to
average net assets 0.77% 0.80% 0.85% 0.70% 0.83%
Ratio of net investment income to
average net assets 6.03% 6.96% 7.47% 8.41% 8.77%
Portfolio turnover rate 33% 59% 115% 120% 351%
</TABLE>
- ------------------------------------
* The Investment Quality Bond Trust is the successor to the Bond Trust
effective April 23, 1991.
The accompanying notes are an integral part of the financial statements.
56
<PAGE> 95
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES TRUST
------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------
1998## 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 13.50 $ 13.32 $ 13.65 $ 12.64 $ 13.48
Income from investment operations:
Net investment income (A) 0.79 0.75 0.83 0.89 0.77
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 0.18 0.31 (0.41) 0.99 (0.95)
----------- ----------- ----------- ----------- -----------
Total from investment
operations 0.97 1.06 0.42 1.88 (0.18)
Less distributions:
Dividends from net
investment income (0.65) (0.88) (0.75) (0.87) (0.51)
Distributions from capital gains -- -- -- -- (0.15)
----------- ----------- ----------- ----------- -----------
Total distributions (0.65) (0.88) (0.75) (0.87) (0.66)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 13.82 $ 13.50 $ 13.32 $ 13.65 $ 12.64
=========== =========== =========== =========== ===========
Total return 7.49% 8.47% 3.38% 15.57% (1.25%)
Net assets, end of period (000's) $ 363,615 $ 251,277 $ 204,053 $ 216,788 $ 188,813
Ratio of operating expenses to
average net assets (B) 0.72% 0.72% 0.71% 0.71% 0.73%
Ratio of net investment income to
average net assets 5.92% 6.27% 6.36% 6.46% 5.68%
Portfolio turnover rate 287% 110% 178% 212% 387%
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES TRUST
---------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------
1993 1992 1991 1990 1989*
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 13.05 $ 12.85 $ 11.83 $ 10.98 $ 9.81
Income from investment operations:
Net investment income (A) 0.48 0.10 0.19 1.07 0.20
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 0.49 0.65 1.40 (0.13) 1.08
----------- ----------- ----------- ----------- ------
Total from investment
operations 0.97 0.75 1.59 0.94 1.28
Less distributions:
Dividends from net
investment income (0.46) (0.38) (0.53) (0.08) (0.11)
Distributions from capital gains (0.08) (0.17) (0.04) (0.01) --
----------- ----------- ----------- ----------- ------
Total distributions (0.54) (0.55) (0.57) (0.09) --
----------- ----------- ----------- ----------- ------
Net asset value, end of period $ 13.48 $ 13.05 $ 12.85 $ 11.83 $10.98
=========== =========== =========== =========== ======
Total return 7.64% 6.19% 14.01% 8.63% 13.16%
Net assets, end of period (000's) $ 222,072 $ 125,945 $ 29,246 $ 10,469 $5,905
Ratio of operating expenses to
average net assets (B) 0.75% 0.76% 0.87% 1.04% 0.90%
Ratio of net investment income to
average net assets 5.05% 6.12% 7.09% 7.70% 6.66%
Portfolio turnover rate 213% 141% 233% 284% 330%
</TABLE>
- -----------------------------------
* 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.
## Net investment income per share was calculated using the average shares
method for fiscal year 1998.
The accompanying notes are an integral part of the financial statements.
57
<PAGE> 96
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
MONEY MARKET TRUST
----------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 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
Less distributions:
Dividends from net
investment income (0.50) (0.50) (0.49) (0.55) (0.38) (0.27)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 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%
Net assets, end of period (000's) $ 609,837 $ 439,714 $ 363,566 $ 258,117 $ 276,674 $ 132,274
Ratio of operating expenses to
average net assets 0.55% 0.54% 0.55% 0.54% 0.57% 0.59%
Ratio of net investment income to
average net assets 4.94% 5.03% 4.97% 5.48% 3.93% 2.66%
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET TRUST
------------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1992 1991 1990 1989
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 10.00 $ 10.00 $ 10.00 $ 10.00
Income from investment operations:
Net investment income 0.33 0.56 0.75 0.72
Less distributions:
Dividends from net
investment income (0.33) (0.56) (0.75) (0.72)
----------- ----------- ----------- ----------
Net asset value, end of period $ 10.00 $ 10.00 $ 10.00 $ 10.00
=========== =========== =========== ==========
Total return 3.36% 5.71% 7.76% 8.56%
Net assets, end of period (000's) $ 89,535 $ 79,069 $ 85,040 $ 19,403
Ratio of operating expenses to
average net assets 0.60% 0.60% 0.57% 0.79%
Ratio of net investment income to
average net assets 3.28% 5.65% 7.27% 8.26%
</TABLE>
- ------------------------------
The accompanying notes are an integral part of the financial statements.
58
<PAGE> 97
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
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
The accompanying notes are an integral part of the financial statements.
59
<PAGE> 98
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
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.
The accompanying notes are an integral part of the financial statements.
60
<PAGE> 99
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
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.
The accompanying notes are an integral part of the financial statements.
61
<PAGE> 100
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
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.
The accompanying notes are an integral part of the financial statements.
62
<PAGE> 101
MANUFACTURERS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
LIFESTYLE
CONSERVATIVE 280 TRUST
-------------------------
YEAR ENDED 01/07/1997*
DECEMBER 31, TO
1998 12/31/1997
---------- ----------
<S> <C> <C>
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)
</TABLE>
- ----------------------------------------------
* 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.
The accompanying notes are an integral part of the financial statements.
63
<PAGE> 102
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
PACIFIC RIM EMERGING MARKETS TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 75.21%
AGRICULTURAL OPERATIONS - 0.44%
Austral Enterprises Berhad * 67,700 $64,434
United Plantation Berhad 70,900 61,571
----------
126,005
AIR TRAVEL - 0.61%
Singapore Airlines, Ltd. 23,800 174,428
----------
APPAREL & TEXTILES - 2.73%
Esprit Holdings, Ltd. * 116,000 50,158
Glorious Sun Enterprises 205,000 36,515
Mitsubishi Rayon Company, Ltd. 60,000 163,998
Onward Kashiyama Company, Ltd. *
15,000 201,415
Reliance Industries, Ltd. 59,200 331,520
----------
783,606
AUTOMOBILES - 0.05%
Qingling Motors Company 90,000 15,799
----------
BANKING - 9.16%
Australia & New Zealand Bank Group
43,000 281,414
Bangkok Bank * 38,800 80,055
Dao Heng Bank Group, Ltd. 35,000 108,195
Hang Seng Bank, Ltd. * 22,000 196,642
HSBC Holdings 17,600 438,433
Malayan Bank Berhad 97,220 164,165
National Australia Bank, Ltd. 24,150 364,048
Overseas Chinese Bank * 33,000 223,864
Sakura Bank 25,000 57,276
Thai Farmers Bank * 34,000 59,862
The Industrial Bank of Japan, Ltd.
36,000 165,909
The Joyo Bank, Ltd. 9,000 35,188
The Mitsui Trust & Banking
Company, Ltd. 9,000 10,270
United Overseas Bank * 33,000 211,872
Westpac Banking Corporation, Ltd.
35,250 235,878
----------
2,633,071
BROADCASTING - 0.25%
BEC World Public Company, Ltd. 13,100 72,077
----------
BUILDING MATERIALS & CONSTRUCTION - 0.27%
Gujarat Ambuja Cement 12,150 77,760
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BUSINESS SERVICES - 1.52%
Benesse Corporation 3,000 $162,141
Brambles Industries, Ltd. 11,300 275,246
----------
437,387
CHEMICALS - 1.71%
Dainippon Ink & Chemical,
Incorporated 45,000 122,999
Nippon Sanso Corporation 29,000 82,087
Toray Industries, Incorporated 55,000 287,041
----------
492,127
COMPUTERS & BUSINESS EQUIPMENT - 1.09%
Ricoh Company, Ltd. 26,000 239,646
Shinawatra C. Communications * 21,500 73,934
----------
313,580
CONGLOMERATES - 4.46%
Boustead Holdings Berhad 76,600 50,059
CSR, Ltd. 117,100 286,310
Hutchison Whampoa, Ltd. 87,000 614,803
Japan Airport Terminal Company,
Ltd. 5,000 30,739
Sime Darby Berhad 123,000 117,605
Singapore Technologies
Engineering, Ltd. * 100,000 93,277
Swire Pacific, Ltd. 20,000 89,576
----------
1,282,369
CONSTRUCTION MATERIALS - 0.11%
Cahya Mata Sarawak Berhad 50,000 27,412
Nikko Company 1,000 2,742
----------
30,154
CONTAINERS & GLASS - 0.37%
Rengo Company 43,000 106,121
----------
CRUDE PETROLEUM & NATURAL GAS - 0.21%
Petronas Gas Berhad 32,000 60,351
----------
DRUGS & HEALTH CARE - 2.53%
Fujisawa Pharmaceutical Company,
Ltd. 20,000 283,061
Takeda Chemical Industries, Ltd. 11,542 444,119
----------
727,180
ELECTRICAL EQUIPMENT - 0.69%
NEC Corporation 21,000 193,189
Sumitomo Densetsu Company, Ltd.
1,000 3,883
-----------
197,072
</TABLE>
The accompanying notes are an integral part of the financial statements.
64
<PAGE> 103
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
ELECTRIC UTILITIES - 1.85%
Alsons Consolidated Resources,
Incorporated * 2,742,000 $55,686
China Light & Power Company, Ltd.
25,000 124,555
Hong Kong & China Gas Company,
Ltd.* 38,500 48,947
Hongkong Electric Holdings, Ltd. 35,000 106,162
Manila Electric Company 61,000 196,015
---------
531,365
ELECTRONICS - 4.64%
Hosiden Corporation 18,000 313,985
LG Information & Communication,
Ltd. 5,444 146,169
Taiyo Yuden Company 12,000 142,025
TDK Corporation 4,000 365,502
Tokyo Electron, Ltd. 6,000 227,687
Tokyo Seimitsu Company, Ltd. 3,500 139,319
---------
1,334,687
FINANCIAL SERVICES - 4.08%
China Resources Enterprises, Ltd.
28,000 43,730
Daiwa Securities Company, Ltd. 32,000 109,262
Lend Lease Corporation * 22,700 306,024
New World Infrastructure, Ltd. * 60,045 87,964
Nomura Securities Company, Ltd.
22,000 191,685
Promise Company, Ltd. 3,400 176,842
Shohkoh Fund & Company, Ltd. 800 257,585
---------
1,173,092
FOOD & BEVERAGES - 1.49%
Fraser & Neave, Ltd. 48,600 141,885
Goodman Fielder, Ltd. 126,800 128,206
KFC Holdings 40,000 27,018
Tokuyama Corporation 30,000 94,737
Vitasoy International Holdings,
Ltd. 100,000 36,463
---------
428,309
FOREST PRODUCTS - 1.42%
Amcor, Ltd. * 65,500 279,877
Carter Holt Harvey 141,600 126,668
---------
406,545
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
GAS & PIPELINE UTILITIES - 0.35%
PTT Exploration & Production
Public Company, Ltd. * 14,400 $101,414
---------
GOLD - 0.66%
Normandy Mining, Ltd. 205,000 189,687
---------
HOTELS & RESTAURANTS - 0.62%
CDL Hotels International, Ltd. 130,000 33,391
Royal Company 11,000 144,980
---------
178,371
HOUSEHOLD APPLIANCES - 0.47%
Guangdong Kelon Electrical
Holdings Company, Ltd. 95,000 84,607
Laox Company 7,000 51,393
---------
136,000
INDUSTRIAL MACHINERY - 4.00%
Amada Company, Ltd. 75,000 362,893
Hindalco Industries, Ltd. 6,600 79,597
Keppel Corporation 66,125 177,028
Mitsubishi Heavy Industries, Ltd. 64,000 249,093
Mori Seiki Company 13,000 147,191
THK Company, Ltd 12,000 134,808
---------
1,150,610
INSURANCE - 1.65%
Mitsui Marine and Fire Insurance
Company, Ltd. 70,000 368,421
Reinsurance Australia
Corporation, Ltd. 67,400 103,295
---------
471,716
INVESTMENT COMPANIES - 3.22%
Korea 1990 Trust * 105 409,500
Korea Europe Fund 125 190,625
Taiwan Fund, Incorporated 26,000 325,000
---------
925,125
LEISURE TIME - 1.13%
Berjaya Sports Toto Berhad 26,000 27,026
Guangdong Investment, Ltd. * 110,000 22,007
TABCORP Holdings, Ltd. 35,600 218,151
Tanjong PLC 49,000 58,026
---------
325,210
METAL & METAL PRODUCTS - 0.23%
Kitagawa Industries Companies,
Ltd. 3,400 24,060
PT Tambang Timah Persero 6,000 40,567
---------
64,627
</TABLE>
The accompanying notes are an integral part of the financial statements.
65
<PAGE> 104
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
MINING - 0.35%
Lanna Lignite Public Company,
Ltd. * 51,500 $63,401
PT Tambang Timah 56,800 38,163
----------
101,564
NON-FERROUS METALS - 1.22%
North, Ltd. 103,000 167,890
WMC, Ltd. 60,300 181,798
----------
349,688
OFFICE FURNISHINGS & SUPPLIES - 0.04%
Catena Corporation 3,000 10,509
----------
PAPER - 0.36%
Oji Paper Company 20,000 103,848
----------
PETROLEUM SERVICES - 1.12%
Broken Hill Proprietary Company 35,100 258,513
Novus Petroleum PLC 80,500 64,127
----------
322,640
PUBLISHING - 1.58%
Fairfax John 58,500 120,090
Singapore Press Holdings, Ltd. * 30,600 333,616
----------
453,706
REAL ESTATE - 6.71%
Amoy Properties, Ltd. 68,000 50,467
Cheung Kong Holdings, Ltd. 48,000 345,397
China Resources Beijing Land 35,000 8,719
City Developments 48,600 210,472
Great Eagle Holdings, Ltd. 15,000 18,393
Henderson Investment, Ltd. 50,000 29,364
Henderson Land Development 40,000 207,032
Hongkong Land Holdings, Ltd. 35,000 41,300
Hysan Development Company, Ltd.*
40,000 59,631
Mitsubishi Estate Company, Ltd. 16,000 143,370
Mitsui Fudosan Company 20,000 151,261
New World Development Company
59,000 148,498
Singapore Land, Ltd. 83,800 185,771
Sun Hung Kai Properties, Ltd. 45,000 328,166
----------
1,927,841
RETAIL GROCERY - 1.18%
Faulding (F.H.) & Company, Ltd 21,300 100,503
Uny Company, Ltd. 13,000 237,461
----------
337,964
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
RETAIL TRADE - 2.63%
Circle K Japan Company 80 $3,517
Hankyu Department Stores 20,000 131,092
Marui Company, Ltd. * 8,000 153,914
Mitsubishi Corporation 43,000 247,236
Sa Sa International Holdings, Ltd.
69,000 4,898
Woolworths, Ltd. 40,600 138,228
-----------
678,885
SANITARY SERVICES - 0.17%
Puncak Niaga Holdings Berhad * 78,400 48,140
-----------
TELECOMMUNICATIONS SERVICES - 8.11%
China Telecom, Ltd. * 60,000 103,774
Hong Kong Telecommunications, Ltd.
160,000 279,829
Nippon Telegraph & Telephone
Corporation 52 401,097
NTT Data Corporation 70 347,368
NTT Mobile Communication Network,
Incorporated * 8 329,058
Philippine Long Distance
Telephone Company, ADR 5,300 137,469
PT Telekomunikasi Indonesia,
Series B 175,000 59,062
Singapore Telecommunications, Ltd.
230,000 351,060
Smartone Telecommunications 30,000 83,252
Telecom Corporation Of New
Zealand * 55,050 238,982
-----------
2,330,951
TOTAL COMMON STOCKS
(Cost: $24,581,221) $21,611,581
-----------
PREFERRED STOCK - 1.56%
FINANCIAL SERVICES - 1.56%
Ab International Cayman Trust 16,000,000 116,055
Sanwa International Finance 48,000,000 332,242
-----------
TOTAL PREFERRED STOCK
(Cost: $418,547) $448,297
-----------
WARRANTS - 0.11%
BANKING - 0.00%
Siam Commercial Bank (Expiration
date 12/31/2003; strike price THB
118)* 5,333 0
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
66
<PAGE> 105
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMPUTERS & BUSINESS EQUIPMENT - 0.10%
Nippon Comsys Corporation
(Expiration date 08/31/1999;
strike price JPY 1,353) * 275 $28,627
-------------
ELECTRIC UTILITIES - 0.00%
Hong Kong & China Gas Company,
Ltd. (Expiration date
09/30/1999; strike price HKD
8.20) * 1,750 115
-------------
LEISURE TIME - 0.00%
Guangdong Investment, Ltd.
(Expiration date 07/30/1999;
strike price HKD 8.00) * 11,000 45
-------------
REAL ESTATE - 0.00%
Hysan Development Company, Ltd.
(Expiration date 04/30/1999;
strike price HKD 16.00) *
4,000 84
-------------
RETAIL TRADE - 0.01%
Elpis, Ltd. (Expiration date
07/01/1999; strike price JPY
2,367) * 10 1,875
Takashimaya Cayman (Expiration
date 01/18/2000; strike price
JPY 1,569) * 7 88
-------------
1,963
TOTAL WARRANTS
(Cost: $43,623) $30,834
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
CONVERTIBLE BONDS - 2.59%
AUTOMOBILES - 0.02%
Qingling Motors Company
3.50% due 01/22/2002 $20,000 $6,100
-------------
COMPUTERS & BUSINESS EQUIPMENT - 0.17 %
Ricoh Company, Ltd.
00.35% due 03/31/2003 JPY 5,000,000 $47,501
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
ELECTRONICS - 1.63%
Hosiden Corporation
1.90% due 09/29/2000 JPY 12,000,000 111,455
Sony Corporation
1.40% due 03/31/2005 20,000,000 209,819
Tokyo Electron, Ltd.
00.90% due 09/30/2003 12,000,000 145,953
----------
467,227
FINANCIAL SERVICES - 0.78%
Guangnan Holdings
1.75% due 06/30/2000 $ 40,000 35,350
MTI Capital, Ltd.
00.50% due 10/01/2007 22,000,000 73,950
New World Infrastructure, Ltd.,
1.00% due 04/15/2003 50,000 42,000
Shangai Industrial Investment
Treasury Company, 1.00% due
02/24/2003 25,000 21,000
STB Cayman Capital
00.50% due 10/01/2007 JPY 10,000,000 52,189
----------
224,489
TOTAL CONVERTIBLE BONDS
(Cost: $901,159) $745,317
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 10.97%
$3,151,581 Navigator Securities Lending
Trust, 5.17% $3,151,581
----------
REPURCHASE AGREEMENTS - 9.56%
$2,747,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.00%, to be
repurchased at $2,748,221 on
01/04/1999, collateralized by
$1,720,000 U.S. Treasury Bonds,
10.625% due 08/15/2015 (valued
at $2,804,407, including $2,747,000
interest) ----------
TOTAL INVESTMENTS (PACIFIC RIM EMERGING
MARKETS TRUST) (Cost: $31,843,131)
$28,734,610
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
67
<PAGE> 106
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
SCIENCE & TECHNOLOGY TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 79.37%
BUSINESS SERVICES - 6.57%
Automatic Data Processing, Incorporated
33,000 $2,646,188
BISYS Group, Incorporated * 8,000 413,000
First Data Corporation 115,000 3,644,062
Gartner Group, Incorporated, Class A 115,000 2,443,750
National Data Corporation 32,700 1,592,081
Nokia Corporaton, ADR * 30,000 3,613,125
Preview Travel, Incorporated 18,500 341,094
14,693,300
CHEMICALS - 0.95%
Sterling Commerce, Incorporated * 47,000 2,115,000
-----------
COMPUTERS & BUSINESS EQUIPMENT - 20.57%
Adobe Systems, Incorporated 89,000 4,160,750
Affiliated Computer Services,
Incorporated 15,000 675,000
America Online, Incorporated * 38,500 6,160,000
Avant Corporation * 46,000 736,000
CBT Group PLC, ADR * 19,500 290,063
Cisco Systems, Incorporated * 67,000 6,218,437
Dell Computer Corporation * 25,000 1,829,687
E*Trade Group, Incorporated 87,000 4,069,969
EMC Corporation * 61,500 5,227,500
Hewlett-Packard Company 51,500 3,518,094
National Instruments Corporation * 18,000 614,250
Netscape Communications Corporation * 47,500 2,885,625
PSINet, Incorporated 79,000 1,649,125
Security Dynamics Technologies 29,000 667,000
Sun Microsystems, Incorporated * 53,000 4,538,125
Tech Data Corporation 69,000 2,777,250
-----------
46,016,875
ELECTRICAL EQUIPMENT - 2.21%
Anixter International, Incorporated * 76,500 1,553,906
Sanmina Corporation * 52,000 3,250,000
Sawtek, Incorporated 7,500 131,250
-----------
4,935,156
ELECTRONICS - 21.24%
Altera Corporation 61,000 3,713,375
Analog Devices, Incorporated * 192,000 6,024,000
Applied Micro Circuits Corporation * 17,500 594,453
Brightpoint, Incorporated * 39,500 543,125
Burr-Brown Corporation 34,500 808,594
Checkfree Holdings Corporation * 38,500 899,937
Electronics For Imaging, Incorporated* 46,000 1,848,625
Galileo Technology, Ltd. 22,500 607,500
Intel Corporation 44,000 5,216,750
Lattice Semiconductor Corporation 6,000 275,437
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
ELECTRONICS-CONTINUED
Maxim Integrated Products, Incorporated* 126,500 $5,526,469
Micrel, Incorporated * 11,500 632,500
SCI Systems, Incorporated 62,000 3,580,500
Solectron Corporation * 38,500 3,578,094
Synopsys, Incorporated 96,000 5,208,000
Tekelec, Incorporated 10,000 165,625
Texas Instruments, Incorporated 30,000 2,566,875
Xilinx, Incorporated * 88,000 5,731,000
----------
47,520,859
INDUSTRIAL MACHINERY - 0.17%
Cognex Corporation 19,500 390,000
----------
SOFTWARE - 17.68%
BMC Software, Incorporated * 105,000 4,679,062
Computer Associates International,
Incorporated 107,000 4,560,875
Electronic Arts * 19,000 1,066,375
Filenet Corporation 8,000 91,750
Great Plains Software, Incorporated * 6,000 289,500
Intuit, Incorporated * 30,000 2,175,000
Learning Company, Incorporated 96,000 2,490,000
Microsoft Corporation * 46,000 6,379,625
Networks Associates, Incorporated * 127,000 8,413,750
Parametric Technology Corporation * 384,000 6,288,000
Platinum Technology, Incorporated * 92,000 1,759,500
VeriSign, Incorporated 9,500 561,688
Visio Corporation 21,500 786,094
----------
39,541,219
TELECOMMUNICATIONS SERVICES - 6.51%
Ascend Communications, Incorporated * 96,000 6,312,000
ICG Communications, Incorporated 47,000 1,010,500
MCI Worldcom, Incorporated * 76,500 5,488,875
PanAmSat Corporation 38,000 1,479,625
Premisys Communications, Incorporated 30,000 275,625
----------
14,566,625
TELEPHONE - 3.47%
Airtouch Communications, Incorporated * 54,000 3,894,750
Intermedia Communications, Incorporated
59,000 1,017,750
Sprint Corporation * 51,500 1,190,938
Vodafone Group PLC * 101,500 1,649,227
----------
7,752,665
TOTAL COMMON STOCKS
(Cost: $130,116,563) $177,531,699
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
68
<PAGE> 107
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 0.27%
U.S. TREASURY BILLS - 0.27%
4.41% due 01/21/1999 $613,000 $611,498
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $611,498) $611,498
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 20.36%
$43,691,511 Navigator Securities Lending Trust,
5.17% $43,691,511
237,000 Federal Home Loan Bank
4.50% due 01/04/1999 236,911
1,615,000 Federal Home Loan Mortgage
Corporation, 5.12% due 01/22/1999 1,610,177
-----------
$45,538,599
TOTAL INVESTMENTS (SCIENCE & TECHNOLOGY TRUST)
(Cost: $176,266,660) $223,681,796
============
</TABLE>
INTERNATIONAL SMALL CAP TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 77.54%
AIR TRAVEL - 1.84%
Ryanair Holdgs PLC * 79,350 $2,995,463
AUTO PARTS - 0.38%
Haldex AB * 60,915 614,788
-----------
AUTOMOBILES - 3.44%
KTM Motorradholding AG * 13,875 933,718
Porsche AG 2,050 4,674,187
-----------
5,607,905
BUSINESS SERVICES - 3.95%
Brunel International * 44,250 895,034
Kobenhavn Lufthavne 19,700 2,445,359
Select Appointments Holdings PLC
219,925 2,265,385
Semcon AB * 101,125 833,913
-----------
6,439,691
COMPUTERS & BUSINESS EQUIPMENT - 8.78%
BTG PLC 118,025 686,306
Bulgari Spa 466,900 2,781,436
Dassault Systemes 67,400 3,166,872
Fuji S Ware ABC 48,500 2,466,829
Misys 199,605 1,465,782
Psion 386,250 3,734,798
-----------
14,302,0223
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
CONGLOMERATES - 1.12%
Hunter Douglas 55,250 $1,829,217
----------
DRUGS & HEALTH CARE - 1.48%
Schwarz Pharmaceuticals AG* 41,925 2,415,228
----------
ELECTRICAL EQUIPMENT - 1.30%
Logitech International 5,000 604,208
Vesta Wind Systems * 28,400 1,521,675
----------
2,125,883
ELECTRIC UTILITIES - 1.45%
Flextech 232,500 2,356,288
----------
ELECTRONICS - 6.49%
Altran Technologies 23,225 5,599,589
Gold Peak Industries, Ltd. * 250,000 14,521
Kudelski SA * 465 1,286,307
Natsteel Electronics 355,000 903,089
VTech Holdings, Ltd. 632,800 2,760,679
----------
10,564,185
FINANCIAL SERVICES - 5.08%
Icon Public, Ltd. * 54,500 1,825,750
JBA Holdings 288,225 909,831
Marschollek Lautenschlaeger und
Partner AG 9,730 5,546,322
----------
8,281,903
FOOD & BEVERAGES - 13.33%
Baron De Ley * 27,600 902,069
Chipita * 22,675 737,253
Doutor Coffee Company 60,000 1,990,270
Nutreco Holding NV 69,625 2,742,455
Orvitus * 56,125 407,564
Pizza Express 365,025 4,863,766
Raision Yhtyma Oyj 249,000 2,734,654
Royal Canin 6,300 394,384
Telepizza * 731,475 6,948,292
----------
21,720,707
HOTELS & RESTAURANTS - 0.53%
Grupo Posadas SA * 2,023,450 857,827
----------
HOUSEHOLD APPLIANCES - 2.05%
Dorel Industry, Incorporated * 84,275 1,367,367
Industrie Natuzzi SPA, ADR 78,975 1,964,503
----------
3,331,870
INDUSTRIAL MACHINERY - 3.32%
IHC Caland 45,025 1,869,351
Konecranes International 33,075 1,491,910
Tomra Systems AS 62,075 2,042,344
----------
5,403,605
</TABLE>
The accompanying notes are an integral part of the financial statements.
69
<PAGE> 108
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
LEISURE TIME - 3.67%
Capital Radio 154,925 $1,505,751
Cinar Films, Incorporated,
Class B * 176,325 4,474,247
----------
5,979,998
NEWSPAPERS - 0.65%
Gruppo Editoriale L'Espresso 120,000 1,052,345
----------
OFFICE FURNISHINGS & SUPPLIES - 0.25%
Turbon International AG * 48,850 410,356
----------
PAPER - 1.38%
Aracruz Celulose SA * 62,000 496,000
Schmalbach Lubeca 12,825 1,754,530
----------
2,250,530
PETROLEUM SERVICES - 0.46%
British Borneo Oil & Gas 452,325 743,980
----------
RETAIL TRADE - 6.11%
Better Bed Holding NV 27,975 975,335
Douglas Holding AG * 40,375 2,446,823
Narvesen ASA 16,000 416,925
Ryohin Keikaku Company 12,000 1,597,523
Sixt AG 40,125 3,153,951
Wetherspoon (JD) 460,815 1,370,425
----------
9,960,982
SOFTWARE - 2.77%
Eidos PLC, ADR * 56,875 913,555
Ixos Software AG * 6,737 1,491,631
Nippon System Development 68,000 2,105,263
----------
4,510,449
TELECOMMUNICATIONS SERVICES - 5.35%
Energis PLC * 223,275 4,970,734
Filtronic 68,275 686,266
Global Telesystems Group,
Incorporated * 54,775 3,053,706
----------
8,710,706
TELEPHONE - 2.36%
Netcom Systems AB * 94,675 3,845,356
----------
TOTAL COMMON STOCKS
(Cost: $103,007,452) $126,311,285
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 9.65%
$15,724,712 Navigator Securities Lending
Trust, 5.17% $15,724,712
-----------
REPURCHASE AGREEMENTS - 12.81%
$20,874,000 Repurchase Agreement with State
Street Bank & Trust Company dated
12/31/1998 at 4.00%, to be
repurchased at $20,883,277 on
01/04/1999, collateralized by
$15,625,000 U.S. Treasury Bonds,
11.625% due 11/15/2004 (valued at
$21,287,938, including interest) $20,874,000
-----------
TOTAL INVESTMENTS (INTERNATIONAL SMALL
CAP TRUST) (Cost: $139,606,164) $162,909,997
============
</TABLE>
EMERGING SMALL COMPANY TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 80.77%
AEROSPACE - 1.55%
Gulfstream Aerospace
Corporation * 70,900 $3,775,425
Tristar Aerospace Company * 240,900 1,686,300
----------
5,461,725
APPAREL & TEXTILES - 1.00%
Interface, Incorporated 222,400 2,064,150
Stage Stores, Incorporated 157,100 1,472,813
----------
3,536,963
BANKING - 2.25%
Bank United Corporation 54,600 2,143,050
City National Corporation 73,700 3,067,762
Cullen Frost Bankers,
Incorporated 49,500 2,716,313
----------
7,927,125
BROADCASTING - 2.45%
Central European Media
Enterprises, Ltd., Class A * 120,700 792,094
Heftel Broadcasting
Corporation, Class A * 87,900 4,329,075
Metro Networks, Incorporated * 82,400 3,512,300
----------
8,633,469
BUSINESS SERVICES - 16.18%
Acxiom Corporation * 108,000 3,348,000
Assisted Living Concepts,
Incorporated * 159,800 2,097,375
</TABLE>
The accompanying notes are an integral part of the financial statements.
70
<PAGE> 109
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
BUSINESS SERVICES-CONTINUED
<S> <C> <C>
BISYS Group, Incorporated * 76,900 $3,969,962
Central Garden & Pet Company *
196,300 2,821,813
DeVRY, Incorporated * 197,500 6,048,437
Infoseek Corporation * 36,600 1,807,125
ITT Educational Services,
Incorporated * 110,300 3,750,200
Kroll O'Gara Company * 129,700 5,115,044
Lason Holdings, Incorporated
* 47,000 2,734,813
Legato Systems, Incorporated
* 28,700 1,892,406
Lycos, Incorporated 73,500 4,083,844
Metzler Group, Incorporated * 51,900 2,526,881
Outdoor Systems, Incorporated
163,312 4,899,360
Protection One, Incorporated * 269,200 2,305,025
Robert Half International,
Incorporated * 66,699 2,980,612
SunGard Data Systems,
Incorporated * 97,600 3,873,500
Strayer Education, Incorporated 79,800 2,812,950
------------
57,067,347
CHEMICALS - 2.56%
Nova Corporation Georgia * 81,438 2,824,881
Sterling Commerce,
Incorporated * 96,900 4,360,500
VWR Scientific Products
Corporation * 106,000 1,841,750
------------
9,027,131
COMPUTERS & BUSINESS EQUIPMENT - 3.46%
Avant Corporation * 156,000 2,496,000
Hypercom Corporation * 214,100 2,114,237
National Instruments
Corporation * 96,000 3,276,000
QRS Corporation * 89,900 4,315,200
------------
12,201,437
CRUDE PETROLEUM & NATURAL GAS - 0.54%
Chieftain International,
Incorporated * 133,500 1,919,063
------------
DRUGS & HEALTH CARE - 9.92%
Alternative Living Services,
Incorporated * 107,200 3,671,600
Anesta Corporation * 92,600 2,465,475
Chirex, Incorporated * 125,000 2,671,875
Hanger Orthopedic Group * 140,000 3,150,000
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
DRUGS & HEALTH CARE-CONTINUED
<S> <C> <C>
IDX Systems Corporation * 56,600 $2,490,400
Jones Pharma, Incorporated 77,400 2,825,100
Minimed, Incorporated * 53,900 5,646,025
Pharmerica, Incorporated * 253,000 1,518,000
Renal Care Group,
Incorporated * 124,950 3,600,122
Sepracor, Incorporated * 52,300 4,608,937
Sunrise Assisted Living,
Incorporated * 45,300 2,349,938
-----------
34,997,472
ELECTRONICS - 7.74%
Aavid Thermal Technologies,
Incorporated * 104,300 1,760,063
Atmi, Incorporated * 72,900 1,840,725
Burr-Brown Corporation 149,000 3,492,187
Dii Group, Incorporated * 121,200 2,787,600
Maxim Integrated Products,
Incorporated * 71,200 3,110,550
Novellus Systems,
Incorporated * 28,200 1,395,900
Photronics, Incorporated * 34,200 819,731
Radiant Systems, Incorporated
* 160,400 1,182,950
Technology Solutions Company
179,775 1,926,963
Uniphase Corporation * 82,400 5,716,500
Vitesse Semiconductor
Corporation * 71,500 3,262,188
-----------
27,295,357
FINANCIAL SERVICES - 1.89%
Allmerica Financial
Corporation 70,190 4,062,246
Enhance Financial Services
Group, Incorporated 86,500 2,595,000
-----------
6,657,246
FOOD & BEVERAGES - 3.26%
Ben & Jerrys Homemade,
Incorporated * 161,700 3,618,037
Bob Evans Farms, Incorporated
143,700 3,745,181
Suiza Foods Corporation * 80,900 4,120,844
-----------
11,484,062
HOMEBUILDERS - 0.81%
Fairfield Communities,
Incorporated 258,700 2,861,869
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
71
<PAGE> 110
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
HOUSEHOLD APPLIANCES - 0.46%
United States Home and
Garden, Incorporated * 324,000 $1,620,000
-----------
INSURANCE - 3.17%
Advance Paradigm,
Incorporated * 110,000 3,850,000
Amerin Corporation * 91,700 2,166,412
Inspire Insurance Solutions,
Incorporated 126,800 2,329,950
Protective Life Corporation 71,600 2,850,575
-----------
11,196,937
LEISURE TIME - 4.43%
Ambassadors International,
Incorporated * 95,800 1,413,050
Family Golf Centers,
Incorporated * 122,800 2,425,300
Loews Cineplex Entertainment
Corporation * 221,800 2,245,725
Premier Parks, Incorporated * 152,600 4,616,150
Sunterra Corporation * 145,100 2,176,500
Vistana, Incorporated * 196,900 2,756,600
-----------
15,633,325
METAL & METAL PRODUCTS - 0.50%
Metals USA, Incorporated * 180,000 1,755,000
-----------
PETROLEUM SERVICES - 0.64%
Petroleum Geological
Services AS, ADR 144,200 2,271,150
-----------
RAILROADS & EQUIPMENT - 0.87%
Swift Transportation,
Incorporated 108,900 3,052,603
-----------
REAL ESTATE - 1.92%
CB Richard Ellis Services,
Incorporated * 90,400 1,638,500
Lasalle Partners,
Incorporated * 79,700 2,346,169
Trammell Crow Company * 100,000 2,800,000
-----------
6,784,669
RETAIL GROCERY - 1.56%
Heartland Express,
Incorporated * 115,600 2,023,000
Whole Foods Market,
Incorporated * 72,200 3,492,675
-----------
5,515,675
RETAIL TRADE - 2.57%
99 Cents Only Stores 60,875 2,990,484
Staples, Incorporated * 69,900 3,053,756
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
RETAIL TRADE-CONTINUED
Wilmar Industry, Incorporated * 147,800 $3,002,188
-----------
9,046,428
SANITARY SERVICES - 2.30%
Allied Waste Industries,
Incorporated * 144,350 3,410,269
Casella Waste Systems,
Incorporated * 126,300 4,688,887
-----------
8,099,156
SOFTWARE - 5.96%
Boole & Babbage, Incorporated
94,500 2,781,843
Business Objects SA * 109,000 3,542,500
Documentum, Incorporated * 47,700 2,548,969
Hyperion Solutions Corporation
111,700 2,010,600
Mercury Computer Systems,
Incorporated * 6,600 185,625
Mercury Interactive
Corporation * 56,100 3,548,325
Transaction Systems
Architects, Incorporated * 127,900 6,395,000
-----------
21,012,862
TELECOMMUNICATIONS SERVICES - 1.59%
JDS Fitel, Incorporated 117,800 2,928,623
McLeodUSA, Incorporated * 85,400 2,668,750
-----------
5,597,373
TRANSPORTATION - 1.19%
Coach USA, Incorporated * 121,200 4,204,125
-----------
TOTAL COMMON STOCKS
(Cost: $243,825,321) $284,859,569
-----------
PREFERRED STOCK - 0.63%
DOMESTIC OIL - 0.63%
Stone Energy Corporation 77,800 2,236,750
-----------
TOTAL PREFERRED STOCK
(Cost: $1,886,818) $2,236,750
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 14.43%
$50,873,151 Navigator Securities Lending
Trust, 5.17% $50,873,151
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
72
<PAGE> 111
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
REPURCHASE AGREEMENTS - 4.17%
$14,696,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.80%, to be
repurchased at $14,703,838 on
01/04/1999, collateralized by
$9,870,000 U.S. Treasury Bonds
at, 9.875% due 11/15/2015
(valued at $14,992,086,
including interest) $14,696,000
-----------
TOTAL INVESTMENTS (EMERGING SMALL
COMPANY TRUST) (Cost: $311,281,290)
$352,665,470
============
</TABLE>
PILGRIM BAXTER GROWTH TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 71.97%
APPAREL & TEXTILES - 0.64%
American Eagle Outfitters * 17,500 $1,165,938
-----------
AUTO PARTS - 0.58%
Gentex Corporation * 53,300 1,066,000
-----------
AUTO SERVICES - 1.10%
United Rentals, Incorporated * 61,000 2,020,625
-----------
BUSINESS SERVICES - 12.87%
Apollo Group, Incorporated * 69,650 2,359,394
Computer Horizons
Corporation * 24,300 646,988
Computer Task Group,
Incorporated 6,000 162,750
DeVRY, Incorporated * 61,800 1,892,625
Express Scripts, Incorporated * 70,900 4,759,162
Lamar Advertising Company,
Class A * 66,500 2,477,125
Legato Systems, Incorporated
* 30,000 1,978,125
Medquist, Incorporated * 21,200 837,400
Metamor Worldwide,
Incorporated * 9,900 247,500
Metzler Group, Incorporated * 35,250 1,716,234
Mindspring Enterprises,
Incorporated * 19,400 1,184,612
Pre- Paid Legal Services,
Incorporated * 38,900 1,283,700
Profit Recovery Group
International, Incorporated 9,200 344,425
*
Quadramed Corporation * 9,600 196,800
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BUSINESS SERVICES-CONTINUED
Sylvan Learning Systems,
Incorporated * 14,400 $439,200
Systems & Computer Technology
Corporation * 89,000 1,223,750
Whittman Hart, Incorporated * 43,400 1,198,925
World Access, Incorporated * 25,500 545,063
----------
23,493,778
CHEMICALS - 1.82%
Waters Corporation * 38,100 3,324,225
----------
COMPUTERS & BUSINESS EQUIPMENT - 10.17%
Citrix Systems, Incorporated * 45,500 4,416,344
Complete Busines Solutions,
Incorporated * 30,300 1,026,413
CSG Systems International,
Incorporated * 13,300 1,050,700
Engineering Animation,
Incorporated * 27,200 1,468,800
FVC Common, Incorporated * 20,500 322,875
Gilat Satellite Networks 28,900 1,593,112
Ltd. *
National Computer Systems,
Incorporated * 13,200 488,400
Network Solutions,
Incorporated * 22,300 2,918,512
Veritas Software Corporation * 58,500 3,506,344
Xeikon NV * 21,400 502,900
Xylan Corporation * 73,000 1,282,062
----------
18,576,462
DRUGS & HEALTH CARE - 8.76%
Alternative Living Services,
Incorporated * 37,800 1,294,650
IDX Systems Corporation * 21,000 924,000
International Network
Services * 28,900 1,921,850
Medicis Pharmaceutical
Corporation * 22,600 1,347,525
Minimed, Incorporated * 13,700 1,435,075
Pathogensis Corporation * 20,900 1,212,200
Pediatrix Med Group * 22,600 1,354,587
Province Healthcare Company *
20,700 742,613
Renal Care Group,
Incorporated * 53,550 1,542,909
Resmed, Incorporated * 6,500 294,938
Resources Care, Incorporated
* 56,000 1,382,500
Sunrise Assisted Living,
Incorporated * 6,800 352,750
Theragenics Corporation * 52,600 884,337
</TABLE>
The accompanying notes are an integral part of the financial statements.
73
<PAGE> 112
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
DRUGS & HEALTH CARE-CONTINUED
Total Renal Care Holdings,
<S> <C> <C>
Incorporated * 43,966 $1,299,745
----------
15,989,679
ELECTRICAL EQUIPMENT - 0.74%
Artisan Components,
Incorporated * 36,900 196,031
Level One Communications,
Incorporated * 32,750 1,162,625
----------
1,358,656
ELECTRONICS - 7.21%
Applied Micro Circuits
Corporation * 30,900 1,049,634
Concord Communications,
Incorporated * 10,900 618,575
Electronics For Imaging,
Incorporated * 20,400 819,825
Flextronics International * 24,900 2,132,062
Insight Enterprises,
Incorporated * 15,300 778,388
Maxwell Technologies,
Incorporated * 7,600 305,900
Micrel, Incorporated * 22,800 1,254,000
Qlogic Corporation * 5,400 706,725
Sipex Corporation * 11,400 400,425
Transwitch Corporation * 14,600 568,488
Uniphase Corporation * 19,400 1,345,875
Vitesse Semiconductor
Corporation * 69,700 3,180,062
----------
13,159,959
FINANCIAL SERVICES - 2.17%
Concord EFS, Incorporated * 65,450 2,773,444
Icon Public, Ltd. * 18,000 603,000
NCO Group, Incorporated * 13,000 585,000
----------
3,961,444
FOOD & BEVERAGES - 0.48%
American Italian Pasta
Company, Class A * 33,300 878,288
----------
INDUSTRIAL MACHINERY - .84%
Applied Power, Incorporated 40,700 1,536,425
----------
INSURANCE - 1.04%
CenturyBusiness Services,
Incorporated * 37,700 541,937
Mutual Risk Management, Ltd.* 34,600 1,353,725
----------
1,895,662
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
LEISURE TIME - 0.63%
Family Golf Centers,
Incorporated * 29,150 $575,713
Party City Corporation * 39,600 571,725
----------
1,147,438
NEWSPAPERS - 1.08%
Gemstar Group Ltd. * 34,300 1,963,675
----------
POLLUTION CONTROL - 0.34%
US Liquids, Incorporated * 27,400 616,500
----------
PUBLISHING - 0.18%
Consolidated Graphics,
Incorporated * 4,800 324,300
----------
RETAIL GROCERY - 0.60%
Whole Foods Market,
Incorporated * 22,500 1,088,438
----------
RETAIL TRADE - 1.95%
Dollar Tree Stores,
Incorporated * 32,174 1,405,602
Linens'n Things, Incorporated * 36,300 1,438,387
MSC Industrial Direct,
Incorporated * 31,600 714,950
----------
3,558,939
SOFTWARE - 16.13%
Advantage Learning Systems,
Incorporated * 5,900 387,925
Aspect Development,
Incorporated * 51,300 2,273,231
Avt Corporation * 15,500 449,500
Axent Technologies,
Incorporated * 22,600 690,713
Best Software, Incorporated * 10,000 237,500
Bindview Development
Corporation * 17,000 467,500
Broadvision, Incorporated * 11,000 352,000
Business Objects SA * 8,300 269,750
Cerner Corporation * 16,800 449,400
Check Point Software Tech,
Ltd. * 44,500 2,038,656
Dendrite International,
Incorporated * 13,400 334,581
Documentum, Incorporated * 10,500 561,094
Genesys Telecommunications
Laboratory * 38,600 858,850
Geotel Communications
Corporation * 46,500 1,732,125
Great Plains Software,
Incorporated * 10,300 496,975
</TABLE>
The accompanying notes are an integal part of the financial statements.
74
<PAGE> 113
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
SOFTWARE-CONTINUED
<S> <C> <C>
Henry Jack & Associates,
Incorporated 18,000 $895,500
IMR Global Corporation * 20,000 588,750
Iona Technologies PLC * 2,300 87,400
Medical Manager Corporation * 43,300 1,358,537
Mercury Interactive
Corporation * 29,700 1,878,525
Microchip Technology,
Incorporated * 44,600 1,650,200
Micromuse, Incorporated * 30,200 588,900
Microstrategy, Incorporated * 19,500 614,250
New Dimension Software Ltd * 19,700 948,063
Peregrine Systems,
Incorporated * 27,100 1,256,762
Progress Software
Corporation * 40,650 1,371,937
Sapient Corporation * 23,400 1,310,400
Siebel Systems, Incorporated * 13,200 447,975
Software AG Systems,
Incorporated * 45,000 815,625
Transaction Systems
Architects, Incorporated * 29,300 1,465,000
Tsi International Software
Limited * 23,200 1,110,700
US Web Corporation * 23,100 609,263
Visual Networks,
Incorporated * 7,700 288,750
Wind River Systems,
Incorporated * 11,800 554,600
-----------
29,440,937
TELECOMMUNICATIONS SERVICES - 2.01%
E Tek Dynamics,
Incorporated * 13,700 366,475
Excel Switching Corporation * 50,700 1,926,600
Polycom, Incorporated * 29,400 654,150
RF Micro Devices,
Incorporated * 15,600 723,450
-----------
3,670,675
TELEPHONE - 0.63%
Pacific Gateway Exchange,
Incorporated * 24,000 1,153,500
-----------
TOTAL COMMON STOCKS
(Cost: $97,854,990) $131,391,543
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 20.13%
$36,762,793 Navigator Securities Lending
Trust, 5.17% $36,762,793
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
REPURCHASE AGREEMENTS - 7.90%
$14,418,000 Repurchase Agreement with State
Street Bank & Trust Company dated
12/31/1998 at 4.00%, to be
repurchased at $14,424,408 on
01/04/1999, collateralized by
$10,790,000 U.S. Treasury Bonds,
8.125% due 08/15/2019 (valued at
$14,709,802, including interest $14,418,000
-----------
TOTAL INVESTMENTS (PILGRIM BAXTER GROWTH
TRUST) (Cost: $149,035,783) $182,572,336
============
</TABLE>
SMALL/MID CAP TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
COMMON STOCKS - 75.91%
AIR TRAVEL - 1.84%
<S> <C> <C>
ASA Holdings, Incorporated 87,000 $2,653,500
Continental Airlines,
Incorporated, Class B * 93,600 3,135,600
Skywest, Incorporated 98,000 3,203,375
----------
8,992,475
AUTOMOBILE PARTS- 0.56%
Wabash National Corporation 134,300 2,727,969
----------
BANKING - 2.72%
Dime Bancorp, Incorporated 314,300 8,309,306
Sovereign Bancorp,
Incorporated 351,960 5,015,430
----------
13,324,736
BROADCASTING - 1.22%
Jacor Communications,
Incorporated, Class A * 57,100 3,675,812
Jones Intercable,
Incorporated * 64,300 2,290,688
----------
5,966,500
BUSINESS SERVICES - 2.29%
At Home Corporation * 48,700 3,615,975
IMS Health, Incorporated 54,400 4,103,800
Young & Rubicam,
Incorporated * 108,400 3,509,450
----------
11,229,225
</TABLE>
The accompanying notes are an integral part of the financial statements.
75
<PAGE> 114
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMPUTERS & BUSINESS EQUIPMENT - 6.50%
America Online, Incorporated * 50,300 $8,048,000
Ceridian Corporation * 140,300 9,794,694
Citrix Systems, Incorporated * 60,900 5,911,106
Quantum Corporation * 378,800 8,049,500
----------
31,803,300
DRUGS & HEALTH CARE - 16.90%
Allegiance Corporation 200,000 9,325,000
Alza Corporation * 193,000 10,084,250
Bergen Brunswig Corporation,
Class A 70,400 2,455,200
Biogen, Incorporated * 73,000 6,059,000
Biomatrix, Incorporated * 43,000 2,504,750
Biomet, Incorporated * 92,700 3,731,175
Centocor, Incorporated * 252,400 11,389,550
Elan PLC, ADR * 55,400 3,853,763
Forest Labs, Incorporated * 153,000 8,137,687
Health Management
Association, Class A * 267,600 5,786,850
McKesson Corporation * 158,600 12,539,312
Omnicare, Incorporated 198,000 6,880,500
----------
82,747,037
ELECTRICAL EQUIPMENT - 2.43%
Sanmina Corporation * 190,200 11,887,500
----------
ELECTRONICS - 1.15%
Linear Technology Corporation
24,000 2,149,500
Newbridge Networks Corp * 114,700 3,484,013
----------
5,633,513
FINANCIAL SERVICES - 2.15%
Finova Group, Incorporated 131,800 7,108,962
Paine Webber Group,
Incorporated 88,200 3,406,725
----------
10,515,687
FOOD & BEVERAGES - 3.60%
Aurora Foods, Incorporated * 157,600 3,122,450
Suiza Foods Corporation * 163,000 8,302,812
United States Foodservice * 127,000 6,223,000
----------
17,648,262
FOREST PRODUCTS - .96%
Sealed Air Corporation * 92,200 4,707,963
----------
HOMEBUILDERS - 1.12%
Champion Enterprises,
Incorporated * 200,500 5,488,688
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
HOTELS & RESTAURANTS - 2.60%
Outback Steakhouse,
Incorporated * 260,100 $10,371,487
Papa Johns International,
Incorporated * 53,000 2,338,625
12,710,112
-----------
HOUSEHOLD APPLIANCES - 2.49%
Furniture Brands International,
Incorporated * 186,200 5,073,950
Leggett & Platt, Incorporated * 324,200 7,132,400
-----------
12,206,350
HOUSEHOLD PRODUCTS - 3.58%
Black & Decker Corporation 37,900 2,124,769
Corning, Incorporated 86,500 3,892,500
Dial Corporation 164,800 4,758,600
Williams Sonoma,
Incorporated * 167,800 6,764,437
-----------
17,540,306
INSURANCE - 0.75%
Fremont General Corporation 147,600 3,653,100
-----------
LEISURE TIME - 1.86%
International Game Technology
375,600 9,131,775
-----------
RAILROADS & EQUIPMENT - 2.65%
Kansas City Southern
Industries, Incorporated 264,000 12,985,500
-----------
RETAIL GROCERY - 1.92%
Food Lion, Incorporated,
Class A 290,000 3,081,250
Starbucks Corporation * 112,800 6,330,900
-----------
9,412,150
RETAIL TRADE - 7.65%
Bed Bath & Beyond,
Incorporated * 322,700 11,012,137
Best Buy Company,
Incorporated * 33,300 2,043,788
BJ's Wholesale Club,
Incorporated * 133,000 6,159,562
Borders Group, Incorporated * 140,100 3,493,744
Family Dollar Stores,
Incorporated 191,200 4,206,400
Office Depot, Incorporated * 285,700 10,553,044
-----------
37,468,675
SOFTWARE - 6.85%
Compuware Corporation * 83,300 6,507,812
Intuit, Incorporated * 150,300 10,896,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
76
<PAGE> 115
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
SOFTWARE-CONTINUED
Microchip Technology,
<S> <C> <C>
Incorporated * 292,000 $10,804,000
Siebel Systems, Incorporated * 157,700 5,351,944
-----------
33,560,506
TELECOMMUNICATIONS SERVICES - 1.23%
Ascend Communications,
Incorporated * 55,600 3,655,700
Cox Communications,
Incorporated, Class A * 34,500 2,384,814
-----------
6,040,514
TRANSPORTATION - .89%
Coach USA, Incorporated * 125,400 4,349,813
-----------
TOTAL COMMON STOCKS
(Cost: $312,772,259) $371,731,656
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 24.09%
$94,244,827 Navigator Securities Lending
Trust, 5.17% $94,244,827
5,000,000 Bayerische Vereinsbank AG
5.80% due 01/05/1999 4,996,778
5,000,000 Eagle Funding Capital
Corporation, 5.70% due 01/19/1999 4,985,750
4,000,000 Ford Motor Credit Company
Discount, 5.69% due 01/08/1999 3,995,574
5,000,000 Hertz Corporation
5.69% due 01/05/1999 4,996,839
4,738,474 Seven Seas Money Market Fund
4.87% 4,738,474
--------------
$117,958,242
TOTAL INVESTMENTS (SMALL/MID CAP TRUST)
(Cost: $430,730,502) $489,689,898
=============
</TABLE>
INTERNATIONAL STOCK TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 86.19%
AEROSPACE - 0.07%
Soc Europ Des Satellites SA *
1,200 $183,975
--------
ALUMINUM - 0.01%
Granges AB 1,695 24,409
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
APPAREL & TEXTILES - 0.12%
Gucci Group NV 6,347 $308,623
--------
AUTO PARTS - 0.58%
Denso Corporation 79,000 1,460,504
----------
AUTOMOBILES - 0.35%
Buderus AG 250 91,054
Honda Motor Company 5,000 164,087
Rolls Royce 62,000 257,518
Volkswagen AG 4,660 371,883
----------
884,542
BANKING - 11.38%
ABN AMRO Holdings 48,200 1,013,414
Argentaria Corporation BC 24,830 642,065
Banca Commerciale Italiana 41,000 282,682
Banco di Roma * 411,000 695,999
Banco Bilbao Vizcaya SA 24,420 382,314
Banco Bradesco SA 30,169,740 160,633
Banco De Galiciay Buenos
Aires SA, ADR 5,775 101,784
Banco Frances Del Rio De La
Plata, ADR 7,870 163,302
Banco Itau SA 344,000 167,969
Banco Santander SA * 55,756 1,106,332
BayerischeHypo Vereinsbank AG 24,013 1,880,293
Commonwealth Bank of Australia 39,077 554,654
Credit Commercial de France 8,551 793,770
Credit Suisse Group 5,756 900,881
Den Danske Bank 3,115 418,479
Deutsche Bank AG 17,408 1,024,154
Dexia France 975 150,148
Dresdner Bank AG* 34,462 1,240,908
Hang Seng Bank, Ltd. * 23,000 205,580
HSBC Holdings 14,000 348,753
Kredietbank NV KBC Bankverzekerin 31,670 2,491,825
National Australia Bank, Ltd. 18 271
National Westminster 315,000 6,096,943
Nordbanken AB Holding 199,031 1,273,830
Royal Bank Canada 2,970 148,743
San Paolo IMI SPA * 70,015 1,236,468
Societe Generale 4,599 744,428
UBS AG * 7,128 2,189,718
Unibanco Uniao De Barncos
Bras, GDR * 8,000 115,500
Unicredito Italiano 234,538 1,389,398
Unidanmark 1,915 173,016
Westpac Banking Corporation,
Ltd. 91,061 609,343
----------
28,703,597
</TABLE>
The accompanying notes are an integral part of the financial statements.
77
<PAGE> 116
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
BROADCASTING - 0.75%
<S> <C> <C>
Grupo Televisa SA, ADR 10,800 $266,625
News Corporation 65,021 429,516
Publishing & Broadcasting, Ltd.* 70,000 305,840
Sangetsu Company 3,000 44,847
TV Azteca, SA, ADR * 10,200 68,213
TF1 TV Francaise 4,420 786,603
---------
1,901,644
BUSINESS SERVICES - 2.63%
Adecco SA 3,090 1,410,373
Brambles Industries, Ltd. 15,000 365,372
Esselte AB 2,690 44,034
Kokuyo Company 22,000 295,993
Toppan Printing Company 52,000 634,763
Vivendi 14,965 3,881,104
---------
6,631,639
CHEMICALS - 1.62%
Akzo Nobel NV, ADS 3,880 176,580
Bayer AG 19,161 799,620
Hoechst AG 6,467 268,133
Kuraray Company 63,000 694,923
Sekisui Chemical Company, Ltd. 87,000 584,874
Shin-Etsu Chemical Company,
Ltd. 50,000 1,203,007
UCB SA 60 367,949
---------
4,095,086
COMPUTERS & BUSINESS EQUIPMENT - 0.09%
Fujitsu, Ltd. 17,000 226,316
---------
CONGLOMERATES - 1.16%
Hutchison Whampoa, Ltd. 187,000 1,321,474
Tomkins 332,500 1,579,914
---------
2,901,388
CONSTRUCTION MATERIALS - 0.83%
Caradon 156,300 267,468
Cemex SA - B Shares 20,000 50,167
Cemex SA 600 1,293
Cemex SA, ADR 34,000 148,519
Cie de Staint Gobain 5,815 820,611
Heywood Williams 5,000 17,860
Hornbach Holding AG * 2,250 133,655
Hornback Baumarket 570 20,521
Lafarge 3,833 364,036
Lapeyre 3,930 280,463
---------
2,104,593
CONSTRUCTION & MINING EQUIPMENT - 0.20%
Atlas Copco AB 23,770 514,907
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
CONTAINERS & GLASS - 0.02%
Compania Cervecerias Unidas
SA, ADR 2,094 $40,310
---------
CRUDE PETROLEUM & NATURAL GAS - 1.18%
Elf Aquitaine SA 6,541 755,766
ENI SPA 223,873 1,462,293
Gas Natural Sdg 6,966 757,280
---------
2,975,339
DOMESTIC OIL - 0.19%
Petrol Brasileiros 3,507,000 397,632
Primagaz 870 82,472
---------
480,104
DRUGS & HEALTH CARE - 9.86%
Astra AB 107,466 2,182,440
Daiichi Pharmaceutical Company
42,000 709,226
Fresenius AG 1,270 267,473
Gehe AG 28,170 1,943,808
Glaxo Wellcome PLC 114,000 3,924,373
L'Oreal 815 588,911
Novartis AG * 1,740 3,419,961
Rhon Klinikum AG 3,960 393,244
Roche Holdings AG * 213 2,598,733
Sankyo Company 63,000 1,376,470
Sanofi Company SA 10,352 1,703,423
Shiseido Company 35,000 449,535
SmithKline Beecham PLC 383,100 5,309,490
---------
24,867,087
ELECTRICAL EQUIPMENT - 2.80%
ABB AB 38,010 404,670
ABB AG 720 843,853
Alcatel Alsthom Cie Generale
D'Electric 7,585 927,945
Hitachi, Ltd. * 105,000 650,155
Legrand 1,780 471,504
Makita Corporation 35,000 389,783
NEC Corporation 132,000 1,214,330
Samsung Electronics Company 1,689 113,302
Siemens AG 7,820 504,410
Sumitomo Electric Industries, Ltd. 134,000 1,506,537
---------
7,026,489
ELECTRIC UTILITIES - 1.84%
Australia Gas and Light 40,988 295,222
Cemig Cia Energetica 6,867,000 130,713
Centrica * 77,000 157,991
Chilectra SA, ADR 4,004 88,670
China Light & Power Company,
Ltd. 68,000 338,789
</TABLE>
The accompanying notes are an integral part of the financial statements.
78
<PAGE> 117
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ELECTRICAL UTILITIES-CONTINUED Shares Value
- ----------------------------- ------ -----
<S> <C> <C>
Companhia Energeticade Minas
Gerais, ADR 16,027 $305,100
Endesa SA 33,754 893,013
Huaneng Power International,
Incorporated, ADR * 23,000 333,500
Iberdrola SA 40,386 754,467
VEBA AG 22,400 1,340,022
---------
4,637,487
ELECTRONICS - 3.62%
Advantest * 2,580 163,404
Alps Electric Company 17,000 312,030
Electrocomponents 47,000 310,002
Fanuc, Ltd. 11,700 400,522
Kyocera Corporation 22,000 1,161,787
Murata Manufacturing Company, Ltd. 28,000 1,161,610
Nokia AB OY, Series A 13,398 1,629,096
Schneider SA 20,692 1,254,621
SGS Thomson Microelectronics,
Incorporated * 6,070 477,696
TDK Corporation 20,000 1,827,510
Tokyo Electron, Ltd. 11,200 425,015
---------
9,123,293
FINANCIAL SERVICES - 3.00%
Colonial, Ltd. * 135,082 463,545
Dexia (Credit Company B) * 2,008 333,989
Fomento Econ Mexico * 78,000 212,577
Fortis Amev NV NL 22,190 1,837,847
International Nederlanded Groep NV 61,249 3,732,906
Lend Lease Corporation * 18,464 248,917
Nomura Securities Company, Ltd. 86,000 749,314
---------
7,579,095
FOOD & BEVERAGES - 5.57%
Cadbury Schweppes 110,000 1,882,373
CSM NV 18,310 1,056,477
Danone 2,950 844,214
Goodman Fielder, Ltd. 207,000 209,296
Gruma SA de CV * 30,907 77,993
Gruma SA de CV, ADR * 7,163 71,182
Hillsdown Holdings 18,500 23,052
Kao Corporation 46,000 1,037,594
Nestle SA * 1,968 4,283,555
Numico (Kon) NV 17,680 842,263
Orkla SA 90,720 1,355,099
Panamerican Beverages,
Incorporated, Class A 13,000 283,563
Sodexho Alliance SA 9,290 2,076,999
---------
14,043,660
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
FOREST PRODUCTS - 0.10%
Sumitomo Forestry 34,000 $243,609
---------
GAS & PIPELINE UTILITIES - 0.14%
Italgas 55,000 297,544
Rao Gazprom, ADR 6,547 54,995
---------
352,539
HOMEBUILDERS - 0.51%
Daiwa House Industry Company, Ltd. 53,000 563,989
Groupe Grands Travaux de Marseille 1,620 168,056
Sekisui House 53,000 560,239
---------
1,292,284
HOTELS & RESTAURANTS - 0.18%
Ladbroke Group 112,000 450,307
---------
HOUSEHOLD APPLIANCES - 2.28%
Electrolux AB 66,280 1,138,005
Industrie Natuzzi SPA, ADR 5,000 124,375
Matsushita Electric
Industrial Company, Ltd. 87,000 1,538,372
Philips Electronics NV 15,750 1,056,316
Pioneer Electronic 15,000 251,437
Sony Corporation * 22,700 1,652,552
---------
5,761,057
HOUSEHOLD PRODUCTS - 1.24%
Kimberly-Clark de Mexico, SA de CV 65,000 207,328
Laing (John) 20,000 83,070
Unilever NV 27,436 2,343,896
Unilever PLC 45,000 506,147
---------
3,140,441
INDUSTRIAL MACHINERY - 1.67%
Amada Company, Ltd. 34,000 164,511
GKN 23,000 305,699
Grupo Industrial Maseca 83,000 67,023
Komatsu 55,000 288,501
Komori Corporation 20,000 421,053
Mannesmann AG * 17,000 1,948,278
Mitsubishi Heavy Industries, Ltd. 263,000 1,023,618
---------
4,218,683
INSURANCE - 3.50%
Abbey National 65,000 1,383,369
Allianz AG Holding 3,600 1,319,813
Assicurazioni Generali 24,360 1,016,565
AXA/UAP 12,701 1,840,066
Fortis AG 3,542 1,275,612
Istituto Nazionale delle Assicurazioni 305,000 805,180
Mediolanum 110,370 817,704
</TABLE>
The accompanying notes are an integral part of the financial statements.
79
<PAGE> 118
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
INSURANCE-CONTINUED
Tokio Marine & Fire Insurance
Company 28,000 $334,365
---------
8,792,674
INTERNATIONAL OIL - 2.81%
Oil Company Lukoil, ADR 550 8,526
Royal Dutch Petroleum Company
40,898 2,035,430
The British Petroleum Company
PLC 65,000 967,603
The Shell Transport and
Trading Company PLC 542,500 3,334,856
YPF Sociedad Anonima, ADR 26,754 747,440
---------
7,093,855
LEISURE TIME - 0.84%
Compass Group PLC 104,000 1,187,041
Pathe SA 880 245,537
Rank Group PLC 54,500 208,312
Star City Holdings * 196,600 173,843
TABCORP Holdings, Ltd. 51,000 312,519
---------
2,127,252
LIQUOR - 1.36%
Diageo 290,240 3,218,728
Grupo Modelo SA, Series C 104,000 220,450
---------
3,439,178
NEWSPAPERS - 0.37%
United News & Media PLC 108,000 938,428
---------
NON-FERROUS METALS - 0.62%
Alcan Aluminum, Ltd. 9,300 252,502
Rio Tinto, Ltd. * 78,150 908,872
Sandvik AB, A Shares 1,440 24,990
Sandvik AB, B Shares 22,050 379,948
---------
1,566,312
PAPER - 0.06%
David S. Smith Holdings 83,000 146,170
---------
PETROLEUM SERVICES - 1.59%
BG PLC ADS 82,764 532,143
Norsk Hydro AS 33,433 1,130,786
Repsol SA 8,249 439,382
Saga Petroleum 2,590 23,689
TOTAL SA, B Shares * 18,519 1,874,755
---------
4,000,755
PHOTOGRAPHY - 0.70%
Canon, Incorporated 83,000 1,773,065
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PUBLISHING - 4.14%
ASM Lithography Holdings NV * 25,430 $776,964
CBT Group Public PLC, ADR * 18,886 280,929
Elsevier NV 119,332 1,670,534
Fairfax (John) 57,000 117,011
Reed International PLC 281,300 2,233,949
Singapore Press Holdings, Ltd. * 19,710 214,888
Wolters Kluwer NV 24,099 5,154,084
----------
10,448,359
RAILROADS & EQUIPMENT - 0.26%
East Japan Railway 118 658,629
----------
REAL ESTATE - 0.68%
Cheung Kong Holdings 21,000 151,111
Henderson Land Development 78,000 403,712
Mitsui Fudosan Company 134,000 1,013,445
Sun Hung Kai Properties 20,000 145,852
----------
1,714,120
RETAIL GROCERY - 2.66%
Ahold (Kon) NV 44,681 1,650,536
ASDA Group 249,000 668,109
Jeronimo Martins SGPS,SA 22,800 1,247,851
Koninklijke Ahold NV 5,710 285,698
Safeway 140,000 702,442
Seven Eleven Japan Company,
Ltd. 7,000 563,468
Tesco 367,500 1,068,491
Uny Company, Ltd. 28,000 511,455
----------
6,698,050
RETAIL TRADE - 5.02%
Carrefour SA 1,622 1,223,970
Citizen Watch Company 24,000 144,361
Fielmann AG 930 44,642
Hennes & Mauritz AB 22,660 1,846,313
Ito-Yokado Company, Ltd. 18,000 1,257,850
Kingfisher 336,000 3,639,674
Marui Company, Ltd. * 62,000 1,192,835
Mitsubishi Corporation 55,000 316,232
Pin Printemps Redo 11,935 2,279,839
Rinascente (La) 17,000 174,735
Sumitomo Corporation 109,000 530,296
----------
12,650,747
SOFTWARE - 0.53%
SAP AG 3,100 1,339,254
----------
STEEL - 0.04%
Tokyo Steel Manufacturing 18,200 91,121
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
80
<PAGE> 119
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
TELECOMMUNICATIONS SERVICES - 2.85%
Cable & Wireless ADS 157,500 $1,925,901
China Telecom, Ltd. * 110,000 190,252
Hong Kong Telecommunications, Ltd. 154,800 270,734
Mahanagar Telephone Nigam, Ltd. 13,000 156,000
Nippon Telegraph & Telephone
Corporation 116 894,755
NTT Mobile Communication
Network, Incorporated * 16 658,116
Telecom Corporation Of New
Zealand * 128,000 454,273
Telecomunicacoes Brasileiras, ADR 26,000 1,889,875
Telesp Celular SA * 2,085,000 91,627
Telstra Corporation * 141,060 659,531
----------
7,191,064
TELEPHONE - 4.10%
DDI Corporation 113 419,814
Deutsche Telekom AG 30,477 1,002,124
Swisscom AG * 952 398,486
Tele Danmark 1,265 170,739
Telecom Italia Mobile 266,162 1,963,880
Telecom Italia SPA * 336,177 2,866,791
Telefonica de Argentina SA, ADR 13,420 374,921
Telefonica SA* 81,076 1,836,076
Telefonos de Mexico SA, ADR 21,000 1,022,436
Telesp Tel Sao Paulo 2,208,000 300,966
----------
10,356,233
TRANSPORTATION - 0.07%
TNT Post Groep NV 5,710 183,880
----------
TRUCKING & FREIGHT - 0.01%
Bergesen ASA 1,640 19,641
----------
TOTAL COMMON STOCKS
(Cost: $195,757,295) $217,401,794
------------
PREFERRED STOCK - 0.44%
BROADCASTING - 0.14%
News Corporation 56,617 344,510
----------
CONGLOMERATES - 0.02%
Companhia Brasileira de
Destribuicao Grupo Pao de
Acucar, ADR 4,000 62,000
----------
SOFTWARE - 0.28%
SAP AG 1,502 716,663
----------
TOTAL PREFERRED STOCK
(Cost: $1,142,121) $1,123,173
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 7.84%
$19,771,574 Navigator Securities Lending
Trust, 5.17% $19,771,574
------------
REPURCHASE AGREEMENTS - 5.53%
$13,951,000 Repurchase Agreement with State
Street Bank & Trust Company dated
12/31/1998 at 4.00%, to be
repurchased at $13,957,200 on
01/04/1999, collateralized by
$13,345,000 U.S. Treasury Notes,
5.75% due 08/15/2003 (valued at
$14,231,188, including interest) $13,951,000
------------
TOTAL INVESTMENTS (INTERNATIONAL STOCK
TRUST) (Cost: $230,621,990) $252,247,541
------------
</TABLE>
WORLDWIDE GROWTH TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 78.11%
AIR FREIGHT - 1.10%
FDX Corporation * 6,000 $534,000
---------
AIR TRAVEL - 1.29%
Deutsche Lufthansa AG 28,350 625,993
---------
APPAREL & TEXTILES - 0.75%
Jones Apparel Group,
Incorporated * 16,525 364,583
---------
AUTOMOBILES - 1.85%
Daimler Chrysler AG Stuttgart * 3,741 359,370
Volkswagen AG * 10,750 535,371
---------
894,741
BANKING - 4.93%
Allied Irish Banks * 26,000 463,067
Banco di Roma * 284,325 481,484
Dresdner Bank AG 10,000 420,017
Merita PLC * 125,000 789,370
Unicredito Italiano 39,425 233,553
---------
2,387,491
BROADCASTING - 4.73%
Arn Mondadori Edit 15,000 198,222
Jacor Communications,
Incorporated, Class A * 13,875 893,203
Pearson PLC 41,875 832,672
Prosieben Media AG 7,900 364,994
---------
2,289,091
</TABLE>
The accompanying notes are an integral part of the financial statements.
81
<PAGE> 120
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BUILDING MATERIALS & CONSTRUCTION - 2.24%
Brisa-Auto Estrada de Portugal, SA * 18,450 $1,086,534
----------
BUSINESS SERVICES - 3.24%
Cap Gemini SA * 3,500 561,527
Konami Company 22,000 636,356
Manpower, Incorporated 14,450 363,959
----------
1,561,842
COMPUTERS & BUSINESS EQUIPMENT - 1.73%
Oce-Van Der Grinten * 23,300 837,148
----------
CONSTRUCTION MATERIALS - 0.69%
Hornbach Holding AG * 5,600 332,653
----------
DRUGS & HEALTH CARE - 7.57%
Biogen, Incorporated * 4,800 398,400
Columbia/HCA Healthcare
Corporation * 16,000 396,000
Elan PLC, ADR * 18,400 1,279,950
HEALTHSOUTH Corporation * 24,000 370,500
Novartis AG * 295 579,821
Pfizer, Incorporated * 2,000 250,875
Schwarz Pharmaceuticals AG * 5,300 305,324
Teva Pharmaceutical Industries, Ltd. 2,000 81,375
----------
3,662,245
ELECTRICAL EQUIPMENT - 1.35%
Emerson Electric Company 10,800 653,400
----------
ELECTRIC UTILITIES - 1.25%
Union Elec Fenosa * 35,000 604,595
----------
ELECTRONICS - 2.67%
Checkfree Holdings Corporation * 12,000 280,500
Intel Corporation 4,000 474,250
Motorola, Incorporated * 6,275 383,167
Taiwan Semiconductor
Manufacturing Company, Ltd. * 11,000 156,063
----------
1,293,980
FINANCIAL SERVICES - 6.77%
Citigroup, Incorporated * 8,000 396,000
International Nederlanded Groep NV 13,500 822,776
Marschollek Lautenschlaeger
und Partner AG 2,000 1,140,046
Takefuji Corporation 12,600 919,505
----------
3,278,327
FOOD & BEVERAGES - 5.43%
Danone 2,725 779,825
Kao Corporation 31,000 699,248
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
FOOD & BEVERAGES-CONTINUED
PepsiCo, Incorporated 18,950 $775,766
Superdiplo SA * 13,250 372,458
----------
2,627,297
HOTELS & RESTAURANTS - 1.54%
Ladbroke Group 185,675 746,525
----------
HOUSEHOLD APPLIANCES - 0.91%
Industrie Natuzzi SPA, ADR 4,600 114,425
Sony Corporation * 4,500 327,598
----------
442,023
HOUSEHOLD PRODUCTS - 1.46%
Benckiser NV 10,775 705,448
----------
INDUSTRIAL MACHINERY - 1.54%
Mannesmann AG * 6,500 744,930
----------
INSURANCE - 1.99%
Royal & Sun Alliance
Insurance Group PLC 60,675 493,949
WPP Group PLC 77,675 471,031
----------
964,980
INTERNATIONAL OIL - 1.72%
YPF Sociedad Anonima, ADR 29,750 831,141
----------
LEISURE TIME - 1.56%
Compass Group PLC 66,325 757,024
----------
NEWSPAPERS - 2.01%
Ver Ned Uitgevers * 25,750 970,405
----------
PUBLISHING - 1.05%
Time Warner, Incorporated 8,200 508,912
----------
RETAIL TRADE - 2.87%
Dixons Group 47,350 665,528
Guitar Center, Incorporated * 29,450 725,206
----------
1,390,734
SOFTWARE - 2.15%
Business Objects SA * 4,000 130,000
JD Edwards & Company * 12,700 360,363
Parametric Technology Corporation * 33,500 548,562
----------
1,038,925
TELECOMMUNICATIONS SERVICES - 6.45%
MCI Worldcom, Incorporated * 20,500 1,470,875
Metronet Communications
Corporation * 10,175 340,862
NTT Mobile Communication
Network, Incorporated * 25 1,028,306
</TABLE>
The accompanying notes are an integral part of the financial statements.
82
<PAGE> 121
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
TELECOMMUNICATIONS SERVICES-CONTINUED
Portugal Telecom SA * 6,000 $275,222
----------
3,115,265
TELEPHONE - 3.20%
British Telecommunication * 26,000 393,521
Swisscom AG * 1,600 669,724
Telecom Italia SPA * 57,000 486,075
----------
1,549,320
TIRES & RUBBER - 0.40%
Continental AG 7,000 193,208
----------
TOBACCO - 0.80%
Austria Tabak 5,000 383,385
----------
TRANSPORTATION - 0.87%
TNT Post Groep NV 13,000 418,641
----------
TOTAL COMMON STOCKS
(Cost: $32,938,186) $37,794,785
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 12.95%
$6,267,232 Navigator Securities Lending
Trust, 5.17% $6,267,232
----------
REPURCHASE AGREEMENTS - 8.94%
$4,327,000 Repurchase Agreement with State
Street Bank & Trust Company dated
12/31/1998 at 4.00%, to be
repurchased at $4,328,923 on
01/04/1999, collateralized by
$2,640,000 U.S. Treasury Bonds,
13.25% due 05/15/2014 (valued at
$4,416,126, including interest) $4,327,000
----------
TOTAL INVESTMENTS (WORLDWIDE GROWTH
TRUST) (Cost: $43,532,418) $48,389,017
===========
</TABLE>
GLOBAL EQUITY TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 94.85%
AGRICULTURAL OPERATIONS - 0.21%
Cadiz, Incorporated * 259,850 $1,981,356
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
ALUMINUM - 0.88%
Aluminum Company of America 111,700 $8,328,631
----------
AUTO PARTS - 1.44%
Borg-Warner Automotive,
Incorporated 243,550 13,593,134
----------
AUTOMOBILES - 0.97%
Volkswagen AG 114,610 9,146,244
----------
BANKING - 6.32%
ABN AMRO Holdings NV 446,373 9,385,071
Bank Of Ireland 657,777 14,392,632
Chase Manhattan Corporation 209,500 14,259,094
Mellon Bank Corporation 164,650 11,319,687
Nordbanken Holding 1,587,800 10,162,170
----------
59,518,654
BROADCASTING - 1.03%
Mediaset SPA 1,201,979 9,741,159
----------
BUSINESS SERVICES - 0.42%
Intelidata Technologies Corporation * 963,600 1,264,725
NCR Corporation * 55,826 2,330,735
----------
3,595,460
CHEMICALS - 3.67%
B.F. Goodrich Company 213,700 7,666,488
BASF AG 379,610 14,486,497
Bayer AG 174,600 7,286,349
Rhone Poulenc SA 100,000 5,143,981
----------
34,583,315
COMPUTERS & BUSINESS EQUIPMENT - 1.58%
Data General Corporation * 908,450 14,932,647
----------
CONGLOMERATES - 0.72%
CSR, Ltd. 2,757,000 6,740,873
----------
CONSTRUCTION MATERIALS - 3.07%
Blue Circle Industries 379,900 1,988,179
Cimpor-Cimentos de Portugual SA 225,710 7,208,224
Holderbank Financiere Glarus, Ltd. 9,100 10,771,347
Wolseley PLC 1,418,900 8,910,852
----------
28,878,602
CONTAINERS & GLASS - 0.00%
Toyo Seikan Kaisha 100 1,697
----------
CRUDE PETROLEUM & NATURAL GAS - 1.36%
Elf Aquitaine SA 111,230 12,851,830
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
83
<PAGE> 122
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
DOMESTIC OIL - 0.79%
Tenneco, Incorporated 219,200 $7,466,500
----------
DRUGS & HEALTH CARE - 4.27%
Fujisawa Pharmaceutical
Company, Ltd. 569,000 8,053,074
Pharmacia & Upjohn,
Incorporated 265,500 15,033,937
Reckitt & Colman 1,295,117 17,138,407
----------
40,225,418
ELECTRICAL EQUIPMENT - 0.81%
ABB AG 2,390 2,801,121
Hitachi, Ltd. * 776,000 4,804,954
----------
7,606,075
ELECTRIC UTILITIES - 4.60%
Iberdrola SA 806,000 15,057,205
Unicom Corporation 348,300 13,431,319
VEBA AG 248,100 14,841,936
----------
43,330,460
ELECTRONICS - 2.53%
Ascom Holding AG * 2,420 3,787,581
GenRad, Incorporated * 501,400 7,897,050
Premier Farnell PLC, ADS 930,200 2,472,703
TDK Corporation 106,000 9,685,803
----------
23,843,137
FINANCIAL SERVICES - 4.73%
Enhance Financial Services
Group, Incorporated 252,600 7,578,000
Finova Group, Incorporated 247,840 13,367,870
International Nederlanded Groep NV 237,602 14,480,986
PennCorp Financial Group,
Incorporated 534,200 534,200
UST Corporation 366,400 8,633,300
----------
44,594,356
FOOD & BEVERAGES - 9.21%
Allied Domecq PLC 115,500 1,067,881
Bongrain SA 12,268 5,485,602
Danisco A/S 5,585 302,755
Danone 63,720 18,235,021
IBP, Incorporated 97,000 2,825,125
Japan Tobacco, Incorporated 1,080 10,795,223
Kao Corporation 695,000 15,676,692
Lion Nathan, Ltd. 2,090,250 5,312,517
Nestle SA * 12,000 26,119,240
Salvesen Christian 650,122 982,906
----------
86,802,962
</TABLE>
SHARES VALUE
------ -----
[S] [C] [C]
FOREST PRODUCTS - 0.74%
Georgia-Pacific Corporation 118,450 $6,936,728
----------
GAS & PIPELINE UTILITIES - 0.39%
Ocean Energy, Incorporated * 583,345 3,682,365
----------
HOMEBUILDERS - 0.77%
Green Property Company 1,243,540 7,212,680
----------
HOUSEHOLD APPLIANCES - 1.55%
Matsushita Electric
Industrial Company, Ltd. 404,000 7,143,706
Philips Electronics NV 111,700 7,491,457
----------
14,635,163
HOUSEHOLD PRODUCTS - 1.61%
Benckiser NV 147,200 9,637,302
Tupperware Corporation 338,500 5,564,094
----------
15,201,396
INDUSTRIAL MACHINERY - 1.12%
Bobst AG 2,500 3,093,834
Tecumseh Products Company 133,700 6,233,762
Valmet Corporation 91,570 1,221,173
----------
10,548,769
INSURANCE - 6.66%
MBIA, Incorporated 282,350 18,511,572
Pohjola Insurance Group,
Series B 6,000 327,123
Royal Sun Alliance Insurance Group
PLC 1,117,307 9,095,870
SCOR 186,750 12,342,000
Sumitomo Marine & Fire 836,000 5,294,790
Terra Nova Bermuda Holdings, Ltd. 153,900 3,885,975
WPP Group PLC 2,197,400 13,325,320
----------
62,782,650
MINING - 1.33%
English China Clay 731,260 1,980,319
Potash Corporation of
Saskatchewan, Incorporated 12,205 779,594
Potash Corporation of Saskatchewan,
Incorporated 151,795 9,782,013
----------
12,541,926
PAPER - 1.59%
Boise Cascade Corporation 376,200 11,662,200
Clondalkin Group 513,400 3,326,566
----------
14,988,766
PETROLEUM SERVICES - 1.37%
Burma Castrol PLC 596,810 8,527,274
Noble Drilling Corporation * 339,590 4,393,446
----------
12,920,720
The accompanying notes are an integral part of the financial statements.
84
<PAGE> 123
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PHOTOGRAPHY - 1.23%
Fuji Photo Film Company 312,000 $11,591,331
----------
PUBLISHING - 2.75%
Houghton Mifflin Company 548,950 25,937,888
----------
RAILROADS & EQUIPMENT - 0.79%
BTR 3,621,468 7,430,658
----------
RETAIL GROCERY - 3.10%
Albertsons, Incorporated * 240,100 15,291,369
American Stores Company 375,900 13,884,806
----------
29,176,175
RETAIL TRADE - 4.95%
BJ's Wholesale Club, Incorporated * 288,550 13,363,472
Delhaize-Le Lion SA 118,900 10,455,771
G.I.B. Holdings, Ltd. 185,000 9,632,629
Homebase, Incorporated * 566,700 3,612,713
Karstadt AG 18,300 9,552,982
----------
46,617,567
TELECOMMUNICATIONS SERVICES - 3.00%
Comsat Corporation 529,000 19,044,000
Nippon Telegraph & Telephone
Corporation 1,194 9,209,801
----------
28,253,801
TELEPHONE - 5.94%
Swisscom AG * 28,290 11,841,559
Telecom Italia SPA RISP 2,998,200 18,858,314
Telefonica SA 589,736 13,355,371
Telus Corporation 566,153 12,037,928
----------
56,093,172
TIRES & RUBBER - 0.37%
Michelin 86,830 3,471,026
----------
TOBACCO - 6.98%
Compagnie Financiere
Richemont AG 18,693 26,426,298
Imperial Tobacco 797,000 8,342,084
Philip Morris Companies,
Incorporated 581,300 31,099,550
----------
65,867,932
TOTAL COMMON STOCKS
(Cost: $750,299,970) $893,653,224
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 1.59%
$14,978,491 Navigator Securities Lending
Trust, 5.17% $14,978,491
-----------
REPURCHASE AGREEMENTS - 3.56%
$33,510,000 Repurchase Agreement with State
Street Bank & Trust Company dated
12/31/1998 at 4.00%, to be
repurchased at $33,524,893 on
01/04/1999, collateralized by
$24,860,000 U.S. Treasury Bonds,
10.75% due 08/15/2005 (valued at
$34,182,500, including interest $33,510,000
-----------
TOTAL INVESTMENTS (GLOBAL EQUITY TRUST)
(Cost: $798,788,461) $942,141,714
============
</TABLE>
SMALL COMPANY VALUE TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 89.12%
AEROSPACE - 0.51%
Applied Signal Technology,
Incorporated * 10,600 $113,950
Curtiss Wright Corporation 11,300 430,813
Primex Technologies,
Incorporated 5,400 229,500
Spacehab, Incorporated * 13,900 145,950
-----------
920,213
AGRICULTURAL MACHINERY - 0.05%
Gehl Company * 5,500 84,563
-----------
AIR TRAVEL - 1.03%
Alaska Air Group * 11,400 504,450
Amtran, Incorporated * 12,100 328,212
Petroleum Helicopters,
Incorporated 11,800 212,400
Skywest, Incorporated 24,900 813,919
-----------
1,858,981
APPAREL & TEXTILES - 2.49%
Alba Waldensian, Incorporated 2,850 72,319
American Eagle Outfitters * 22,700 1,512,387
Angelica Corporation 12,500 232,812
Concord Fabrics, Incorporated * 3,800 23,750
Dixie Group, Incorporated 13,300 108,063
G III Apparel Group, Ltd. * 1,900 7,125
Guilford Mills, Incorporated 2,000 33,375
Haggar Corporation 24,000 274,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
85
<PAGE> 124
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
APPAREL & TEXTILES-CONTINUED
Jos A Bank Clothiers,
Incorporated * 21,100 $168,800
Kellwood Company 14,400 360,000
Oshkosh B'Gosh, Incorporated 17,400 351,262
Premiumwear, Incorporated * 1,000 7,188
Springs Industries, Incorporated 12,700 526,256
Supreme International Corporation * 2,000 24,000
Tarrant Apparel Group * 7,100 282,225
Timberland Company * 10,700 487,519
-----------
4,471,581
AUTO PARTS - 1.49%
Arvin Industries, Incorporated 11,500 479,406
Borg-Warner Automotive,
Incorporated 13,902 775,905
Danaher Corporation 10,585 574,898
Excel Industries, Incorporated 7,600 133,000
Raytech Corporation * 6,300 18,113
Standard Products Company 34,600 704,975
-----------
2,686,297
AUTO SERVICES - 0.61%
Avis Rent A Car, Incorporated * 15,700 379,744
Dollar Thrifty Automotive Group * 48,700 627,012
Sonic Automatic, Incorporated * 2,400 82,650
-----------
1,089,406
AUTOMOBILES - 0.01%
Dura Automotive Systems,
Incorporated * 300 10,238
-----------
BANKING - 2.57%
Ambanc Holding Company,
Incorporated 10,500 186,375
Bancwest Corporation 14,500 696,000
Banknorth Group, Incorporated 20,500 771,312
BNCCORP, Incorporated * 3,100 33,325
California Independent Bancorp 600 12,000
Central Co-Operative Bank 6,000 114,000
Citizens Banking Corporation
of Michigan 6,000 202,500
Commercial Bank of New York 14,900 219,775
Corus Bankshares, Incorporated 17,100 551,475
Financial Bancorp, Incorporated 2,400 91,200
First Citizens Bancshares,
Incorporated 11,500 1,035,000
First Oak Brook Bancshares,
Incorporated 5,600 103,600
Flagstar Bancorp, Incorporated 2,400 62,700
FNB Rochester Corporation 2,100 69,300
Franklin Bank N A Southfield 1,100 11,963
GBC Bancorp 2,600 66,950
Hancock Holding Company 900 40,950
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BANKING-CONTINUED
Hubco, Incorporated 1,236 $37,235
Iroquois Bancorp, Incorporated 400 8,400
MAF Bancorp, Incorporated 600 15,900
New Century Financial
Corporation * 8,900 119,037
North City Bancorp * 525 6,956
Professional Bancorp 1,900 33,250
Quaker City Bancorp, Incorporated * 5,700 91,200
Republic Security Financial
Corporation 1,258 15,253
Skaneateles Bancorp, Incorporated 1,200 18,825
Wainwright Bank & Trust
Company, Boston 500 3,719
Washington Savings Bank FSB 200 900
-----------
4,619,100
BROADCASTING - 0.03%
Andersen Group, Incorporated * 2,600 7,800
Datron Systems, Incorporated * 7,400 40,238
-----------
48,038
BUILDING MATERIALS & CONSTRUCTION - 1.74%
Abrams Industries, Incorporated 4,200 21,000
American Residential
Services, Incorporated * 7,000 22,750
Hughes Supply, Incorporated 32,500 950,625
Hussmann International,
Incorporated 41,500 804,062
Meadow Valley Corporation * 2,300 11,069
Morrison Knudsen Corporation * 49,500 482,625
NCI Building Systems, Incorporated * 26,000 731,250
Nortek, Incorporated * 1,400 38,675
Perini Corporation * 14,200 72,775
-----------
3,134,831
BUSINESS SERVICES - 11.21%
Abacus Direct Corporation * 13,500 614,250
AC Nielson Corporation * 51,900 1,466,175
Acxiom Corporation * 28,900 895,900
Advanced Marketing Services,
Incorporated 6,400 123,200
Allied Research Corporation * 3,900 32,175
Amerco * 13,100 365,981
Analysis & Technology,
Incorporated 2,100 42,000
BakerMichael Corporation * 5,100 49,725
Banta Corporation 11,300 309,338
Bowne & Company, Incorporated 54,800 979,550
Cadmus Communications Corporation 3,100 58,513
Caribiner International,
Incorporated * 57,500 524,687
Choicepoint, Incorporated * 200 12,900
</TABLE>
The accompanying notes are an integral part of the financial statements.
86
<PAGE> 125
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BUSINESS SERVICES-CONTINUED
Complete Management, Incorporated * 16,300 $7,131
Electro Rental * 24,400 393,450
Exponent, Incorporated * 5,600 33,600
Express Scripts, Incorporated * 20,200 1,355,925
Franklin Covey Company * 43,600 730,300
Grey Advertising, Incorporated 1,800 655,200
GTECH Holdings Corporation * 65,700 1,683,562
GZA Geoenvironmental * 10,900 47,688
Headway Corporate Resources,
Incorporated * 11,600 71,050
Hospitality Worldwide
Services, Incorporated * 8,100 40,500
Ikos Systems, Incorporated * 18,100 65,613
International Telecomm
Systems, Incorporated * 6,200 91,450
Intervoice, Incorporated * 17,800 614,100
ITEX Corporation * 9,900 7,425
Jacobs Engineering Group,
Incorporated * 24,000 978,000
Kelly Services, Incorporated 13,300 422,275
Lason Holdings, Incorporated * 10,700 622,606
Legato Systems, Incorporated * 5,700 375,844
Lycos, Incorporated * 400 22,225
Marlton Technologies, Incorporated * 3,600 14,850
Maxco, Incorporated * 4,300 29,025
Merrill Corporation 16,100 310,931
Metzler Group, Incorporated * 17,000 827,687
Mindspring Enterprises,
Incorporated * 12,600 769,387
National Technical Systems,
Incorporated * 14,800 73,075
Norrell Corporation 2,000 29,500
Olsten Corporation 12,900 95,138
Opinion Research Corporation * 12,800 70,400
Personal Group Of America,
Incorporated * 41,000 717,500
Porta Systems Corporation * 9,700 20,006
Probusiness Services, Incorporated * 3,000 136,500
Promedco Management Company * 15,800 94,800
Protection One, Incorporated * 37,800 323,663
REFAC Technology Development
Corporation * 6,600 46,200
Sei Investments Company 17,100 1,699,312
Stone & Webster, Incorporated 14,300 475,475
Sunrise Resources, Incorporated * 9,600 31,200
Systems & Computer Technology
Corporation * 5,000 68,750
T & W Financial Corporation * 4,500 50,625
TMP Worldwide, Incorporated * 1,200 50,400
Total Research Corporation * 1,500 3,563
Trio-Tech International * 2,600 7,800
TRM Copy Centers Corporation * 19,200 145,200
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BUSINESS SERVICES-CONTINUED
URS Corporation * 15,100 $352,962
Warrantech Corporation * 8,200 31,775
-----------
20,168,062
CHEMICALS - 1.65%
American Vanguard Corporation 3,000 17,625
Cambrex Corporation 40,800 979,200
Dtrex Corporation * 1,800 11,250
Dexter Corporation 12,000 377,250
Farrel Corporation 8,400 17,325
Ferro Corporation 54,900 1,427,400
NCH Corporation 2,300 136,850
-----------
2,966,900
COAL - 0.19%
Arch Coal, Incorporated 20,300 347,638
-----------
COMPUTERS & BUSINESS EQUIPMENT - 4.35%
Align Rite International,
Incorporated * 2,500 29,063
AMX Corporation * 15,800 126,400
Autologic Information
International, Incorporated * 4,700 19,975
Avant Corporation * 16,400 262,400
Boundless Corporation * 14,700 73,500
Casino Data Systems * 14,000 28,000
Dataram Corporation * 8,200 77,900
Digi International, Incorporated * 24,600 273,675
Equinox Systems, Incorporated * 950 11,400
Essef Industries, Incorporated * 6,700 128,975
General Binding Corporation 16,600 618,350
Gerber Scientific, Incorporated 24,800 590,550
Gradco Systems, Incorporated * 6,525 17,128
Hutchinson Technology, Incorporated * 700 24,938
InfoUSA, Incorporated * 82,000 430,500
Interphase Corporation * 1,900 13,300
MacNeal Schwendler Corporation * 700 4,900
Mastech Corporation * 31,300 895,962
Microage, Incorporated * 11,200 172,200
National Computer Systems,
Incorporated 44,500 1,646,500
Network Appliance,
Incorporated * 33,200 1,494,000
New Horizons Worldwide,
Incorporated * 1,500 34,687
Printronix Corporation * 9,200 132,250
Programmers Paradise,
Incorporated * 3,000 37,875
Prophet 21, Incorporated * 1,000 10,688
QMS, Incorporated * 3,300 10,519
Rainbow Technologies, Incorporated * 24,800 466,550
Savoir Technology Group,
Incorporated * 9,900 86,006
</TABLE>
The accompanying notes are an integral part of the financial statements.
87
<PAGE> 126
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMPUTERS & BUSINESS EQUIPMENT-CONTINUED
Telxon Corporation * 1,200 $16,650
Xircom, Incorporated * 2,900 98,600
-----------
7,833,441
CONGLOMERATES - 0.43%
ACX Technologies, Incorporated * 15,500 205,375
Cooper Life Sciences, Incorporated * 2,500 87,500
Griffon Corporation * 25,100 266,688
Katy Industries, Incorporated 12,400 217,775
-----------
777,338
CONSTRUCTION MATERIALS - 1.73%
Ameron International Corporation 10,600 392,200
Centex Construction
Products, Incorporated 14,100 572,813
Continental Metals Corporation * 2,700 98,550
Dayton Superior Corporation, Class A * 14,200 273,350
Florida Rock Industries,
Incorporated 28,000 868,000
Forest City Enterprises,
Incorporated 30,500 800,625
Granite Construction, Incorporated 900 30,206
Patrick Industries, Incorporated 5,400 83,025
-----------
3,118,769
CONSTRUCTION & MINING EQUIPMENT - .99%
Astec Industries, Incorporated * 15,500 862,187
CDI Corporation * 21,600 436,050
Gencor Industries, Incorporated 11,500 106,375
Kaman Corporation 23,100 371,044
-----------
1,775,656
CONTAINERS & GLASS - 0.29%
Carmel Container Systems, Ltd. * 1,000 5,750
Enesco Group, Incorporated 22,000 511,500
-----------
517,250
COSMETICS & TOILETRIES - 0.33%
Block Drug, Incorporated 13,850 600,762
-----------
DOMESTIC OIL - 0.28%
Castle Energy Corporation 7,300 127,750
Houston Exploration Company * 18,600 369,675
Huntway Refining Company * 500 844
Maynard Oil Company * 1,300 9,750
-----------
508,019
DRUGS & HEALTH CARE - 7.35%
Acuson Corporation * 16,400 243,950
ALPHARMA, Incorporated 1,600 56,500
Bio Logic Systems Corporation * 1,800 5,063
Biosite Diagnostics, Incorporated * 2,500 30,469
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
DRUGS & HEALTH CARE-CONTINUED
Biospecifics Technologies
Corporation * 200 $800
Carter Wallace, Incorporated 4,900 96,162
Centennial Healthcare Corporation * 17,800 275,900
Chrysalis International Corporation * 12,900 7,256
Conmed Corporation * 28,200 930,600
Covance, Incorporated * 41,700 1,214,512
Datascope Corporation * 8,600 197,800
Diagnostic Products Corporation 24,000 747,000
Drug Emporium, Incorporated * 17,900 91,738
Duane Reade, Incorporated * 27,600 1,062,600
Hanger Orthopedic Group * 10,700 240,750
Healthplan Services Corporation 23,300 267,950
Horizon Health Corporation* 16,400 129,150
Invacare Corporation 40,300 967,200
Maxxim Med, Incorporated * 14,800 440,300
Medical Action Industries,
Incorporated * 5,100 13,388
Medicis Pharmaceutical
Corporation * 11,700 697,612
Meridian Medical Technologies,
Incorporated * 4,800 22,200
Mine Safety Appliances Company 7,300 518,300
Omega Healthcare Investors 3,000 90,563
Omega Protein Corporation * 1,200 12,150
Pharmaceutical Product
Development, Incorporated * 6,300 189,394
Phymatrix Corporation * 39,600 86,625
Polymedica Corporation * 2,300 21,275
Prime Hospitality Corporation * 43,800 462,637
Quest Diagnostics, Incorporated * 47,600 847,875
Quidel Corporation * 1,100 2,681
Resmed, Incorporated * 2,200 99,825
Roberts Pharmaceutical Corporation * 28,700 624,225
Sonosite, Incorporated * 4,000 41,500
Spacelabs, Incorporated * 12,300 282,900
Syncor International Corporation * 8,300 226,175
Veterinary Centers of
America, Incorporated * 10,500 209,344
VISX, Incorporated * 20,200 1,766,237
-----------
13,220,606
ELECTRICAL EQUIPMENT - .94%
Acme Electric Corporation * 10,400 49,400
All American Semiconductor,
Incorporated * 500 406
Amistar Corporation * 2,800 5,600
Audiovox Corporation, Class A * 15,000 89,062
Barnes Group, Incorporated 16,900 496,437
CMC Industries, Incorporated * 10,500 61,688
ESCO Electronics Corporation * 31,100 281,844
Genlyte Group, Incorporated * 4,200 78,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
88
<PAGE> 127
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
ELECTRICAL EQUIPMENT-CONTINUED
Kewaunee Scientific Corporation 4,700 $52,288
Merrimac Industries, Incorporated * 1,500 10,313
Relm Wireless Corporation * 10,600 16,231
SI Industry, Incorporated 5,000 63,750
Thermo Optek Corporation * 7,200 62,550
Thomas Industries, Incorporated 13,000 255,125
Twin Disc, Incorporated 7,900 162,937
-----------
1,686,381
ELECTRIC UTILITIES - 2.43%
Cilcorp, Incorporated 13,000 795,438
Commonwealth Energy Systems 1,800 72,900
Public Service Company 59,400 1,213,987
Rochester Gas & Electric Corporation 4,000 125,000
TNP Enterprises, Incorporated 16,700 633,556
United Illuminating Company 24,900 1,282,350
Washington Water & Power Company 12,900 248,325
-----------
4,371,556
ELECTRONICS - 4.35%
American Technical Ceramics * 3,100 20,537
Amplicon, Incorporated 800 12,050
Bairnco Corporation 4,200 29,925
Baldwin Technology, Incorporated * 13,000 73,125
Bell & Howell Company * 17,300 654,156
Bell Microproducts, Incorporated * 7,700 71,225
CHS Electronics, Incorporated * 2,800 47,425
CMP Group, Incorporated 55,200 1,041,900
Cobra Electronics Corporation * 8,100 37,969
Cognitronics Corporation * 3,400 31,025
Cree Research, Incorporated * 5,400 258,525
CTS Corporation 22,200 965,700
Edison Control Corporation * 5,200 33,800
General Microwave Corporation * 1,000 19,250
Genicom Corporation * 3,800 8,431
Haemonetics Corporation * 29,400 668,850
Intermediate Telephone, Incorporated 9,600 224,400
PMC-Sierra, Incorporated * 32,775 2,068,922
Polk Audio, Incorporated * 200 3,150
Sequa Corporation, Class A * 9,700 580,787
Tech-Sym Corporation * 4,400 97,900
Transpro, Incorporated 300 1,463
Transwitch Corporation * 19,700 767,069
Vicon Industries, Incorporated * 2,300 16,963
Video Display Corporation * 4,700 27,612
Videonics, Incorporated * 2,300 1,438
WPI Group, Incorporated * 15,100 66,062
-----------
7,829,659
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
FINANCIAL SERVICES - 4.50%
American Business Financial Services 6,500 $68,656
Atalanta/ Sosnoff Capital Corporation * 2,000 16,500
Bok Financial Corporation * 6,798 320,356
Capital Associates, Incorporated * 4,800 18,900
Capital Re Corporation 32,400 650,025
Carver Bancorp, Incorporated 4,800 42,000
CFI Proservices, Incorporated * 4,800 55,800
Commercial Assets, Incorporated 1,500 9,094
Community Bank Systems, Incorporated 4,900 143,631
Community Financial Corporation 6,600 74,250
Community Financial Group,
Incorporated 5,100 64,388
Downey Financial Corporation 29,400 747,862
Echelon International Corporation * 2,300 51,319
EVEREN Capital Corporation 13,100 298,025
Fidelity National Corporation 1,300 13,975
First Bancshares, Incorporated 3,900 49,725
First Republic Bank, San
Francisco * 1,600 40,100
First Street Bancorporation 1,200 24,900
Fund American Enterprises Holding 1,800 252,112
Hawthorne Financial Corporation * 5,900 94,400
HPSC, Incorporated * 11,900 108,588
Impac Mortgage Holdings,
Incorporated 42,050 191,853
ITLA Capital Corporation * 1,700 25,713
Jefferies Group, Incorporated 2,900 143,912
JSB Financial, Incorporated 13,800 750,375
JW Genesis Financial Corporation * 5,000 29,688
Lakeview Financial Corporation 1,800 40,500
LandAmerica Financial Group,
Incorporated 10,300 574,869
Litchfield Financial Corporation 3,100 58,900
North Central Bancshares,
Incorporated 2,500 42,188
Pacific Crest Capital, Incorporated 2,400 35,400
PennFed Financial Services,
Incorporated 5,500 71,500
Redwood Empire Bancorp 2,800 47,775
Resource Bancshares Mortgage
Group 27,000 447,187
Seacoast Financial Services
Corporation * 11,493 117,803
Southwest Securities Group,
Incorporated 5,345 107,568
Student Loan Corporation 9,900 444,262
TF Financial Corporation 2,100 36,225
UMB Financial Corporation 23,000 1,055,125
</TABLE>
The accompanying notes are an integral part of the financial statements.
89
<PAGE> 128
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
FINANCIAL SERVICES-CONTINUED
UST Corporation 30,900 $728,081
WFS Financial, Incorporated * 1,000 6,250
-----------
8,099,780
FOOD & BEVERAGES - 1.92%
Chiquita Brands
International, Incorporated 35,800 342,338
Chock Full O'Nuts Corporation
* 11,700 73,125
Corn Products International,
Incorporated 33,900 1,029,712
Earthgrains Company 45,500 1,407,656
Farmer Brothers Company 1,800 385,200
Fresh America Corporation * 1,800 30,150
Scope Industries 2,200 145,200
Seabord Corporation 100 42,200
-----------
3,455,581
FOREST PRODUCTS - 0.73%
American Woodmark Corporation 15,800 541,150
Baltek Corporation * 7,900 78,012
Universal Fast Products,
Incorporated 34,300 688,144
-----------
1,307,306
GAS & PIPELINE UTILITIES - 1.68%
Eastern Enterprises 32,700 1,430,625
Equitable Resources, Incorporated 13,600 396,100
Laclede Gas Company 2,600 69,550
Louis Dreyfus Natural Gas
Corporation * 21,000 299,250
Peoples Energy Corporation 300 11,962
Southwest Gas Corporation 30,400 817,000
-----------
3,024,487
HOMEBUILDERS - 1.80%
Beazer Homes USA, Incorporated * 14,300 357,500
Castle & Cooke, Incorporated * 33,600 495,600
Champion Enterprises, Incorporated * 32,300 884,212
DeWolfe Company, Incorporated * 1,100 8,388
Dominion Homes, Incorporated * 14,100 155,100
Kaufman & Broad Home Corporation 8,300 238,625
Pulte Corporation 8,500 236,406
Toll Brothers, Incorporated * 5,700 128,606
Walter Industries, Incorporated * 47,400 725,813
-----------
3,230,250
HOTELS & RESTAURANTS - 1.14%
Ark Restaurants Corporation * 5,000 50,625
Back Bay Restaurant Group * 9,400 89,300
Bridgestreet Accomodations,
Incorporated * 8,700 27,731
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
HOTELS & RESTAURANTS-CONTINUED
Casa Ole Restaurants, Incorporated * 2,000 $8,500
Denamerica Corporation * 6,200 7,363
Friendly Ice Cream Corporation * 6,000 36,750
Garden Fresh Restaurant Corporation *
5,900 84,813
IHOP Corporation * 2,500 99,844
Landrys Seafood Restaurant,
Incorporated * 32,900 246,750
Luby's Cafeterias, Incorporated 19,800 305,663
Nathans Famous, Incorporated * 12,100 51,803
NPC International, Incorporated * 6,500 78,406
Piccadilly Cafeterias, Incorporated 13,000 136,500
Roadhouse Grill, Incorporated * 3,100 16,759
Rock Bottom Restaurants,
Incorporated * 7,900 42,956
Ryan's Family Steak Houses,
Incorporated * 50,200 621,225
Silverleaf Resorts, Incorporated * 13,700 127,581
Sonesta International Hotels
Corporation 1,800 23,400
-----------
2,055,969
HOUSEHOLD APPLIANCES - 0.52%
American Biltrite, Incorporated 8,100 166,050
American Homestar Corporation * 700 10,500
Bassett Furniture Industries,
Incorporated 12,500 301,563
Catalina Lighting, Incorporated * 19,800 44,550
Fedders USA, Incorporated 29,600 172,050
Graham Corporation * 3,300 25,575
Ladd Furniture, Incorporated * 700 11,331
Metatec Corporation * 7,000 52,500
Shelby Williams Industries,
Incorporated 12,000 144,000
-----------
928,119
HOUSEHOLD PRODUCTS - 0.64%
Alpine Group, Incorporated * 28,500 427,500
Bel Fuse, Incorporated, Class A * 3,150 126,000
Bel Fuse, Incorporated, Class B * 3,150 108,281
Home Products International,
Incorporated * 23,454 233,074
Winsloew Furniture, Incorporated * 9,600 254,400
-----------
1,149,255
INDUSTRIAL MACHINERY - 1.86%
Ampco Pittsburgh Corporation 16,600 180,525
Briggs & Stratton Corporation 11,100 553,612
Brown & Sharpe Manufacturing
Company, Class A * 28,500 228,000
Cameron Ashley Building Product * 11,900 155,444
Chicago Rivet Machine Company
600 15,150
</TABLE>
The accompanying notes are an integral part of the financial statements.
90
<PAGE> 129
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
INDUSTRIAL MACHINERY-CONTINUED
Manitowoc, Incorporated 300 $13,313
Moore Products Company * 2,700 66,150
NACCO Industries,
Incorporated, Class A 3,720 342,240
Peerless Manufacturing Company 5,000 55,625
Quipp, Incorporated * 2,600 49,400
Sparton Corporation * 9,900 58,781
Speizman Industries, Incorporated * 4,400 19,250
Stewart & Stevenson
Services, Incorporated 4,200 40,950
Summa Industries * 1,200 10,875
Tecumseh Products Company 200 9,050
Tennant Company 9,900 397,238
UNOVA, Incorporated * 63,900 1,158,187
-----------
3,353,790
INDUSTRIALS - 0.53%
Federal Screw Works 2,900 142,100
Meridan Industrial Trust, Incorporated 22,500 528,750
MotivePower Industries, Incorporated * 9,000 289,687
-----------
960,537
INSURANCE - 3.78%
Acceptance Insurance Company * 4,900 99,225
ARM Financial, Incorporated 37,200 825,375
Chartwell Re Corporation 3,000 71,250
Fidelity National Financial,
Incorporated 12,650 385,825
First American Financial Corporation 58,600 1,882,525
Highlands Insurance Group,
Incorporated * 9,100 118,869
Inspire Insurance Solutions,
Incorporated * 13,400 246,225
Intercontinental Life Corporation * 5,100 102,000
Kansas City Life Insurance Company
6,300 515,025
Liberty Corporation 3,100 152,675
Midland Company 1,700 41,013
Mobile America Corporation 5,100 20,081
National Western Life Insurance
Company, Class A * 4,600 540,500
Presidential Life Corporation 3,800 75,525
PXRE Corporation 8,800 220,550
SCPIE Holdings, Incorporated 3,500 106,094
Standard Management Corporation * 1,900 13,300
Stewart Information Services
Corporation 11,300 655,400
TIG Holdings, Incorporated 45,000 700,312
Zenith National Insurance Corporation
1,200 27,750
-----------
6,799,519
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
INVESTMENT COMPANIES - 1.65%
Eaton Vance Corporation 43,200 $901,800
Investment Technology Group,
Incorporated * 9,900 614,419
John Nuveen Company 14,800 549,450
Pilgrim America Capital Corporation * 7,600 190,000
Raymond James Financial, Incorporated
19,200 405,600
Stifel Financial Corporation 7,245 75,620
Value Line, Incorporated 5,700 224,437
-----------
2,961,326
LEASE RENTAL OBLIGATIONS - 0.06%
Linc Capital, Incorporated * 14,100 116,325
-----------
LEISURE TIME - 0.73%
4Kids Entertainment, Incorporated * 8,600 94,600
Championship Auto Racing Team * 8,100 239,962
Dover Downs Entertainment,
Incorporated 1,100 13,269
Escalade, Incorporated * 3,400 62,900
Grand Casinos, Incorporated * 8,200 66,113
IlX, Incorporated * 8,000 16,500
Inland Entertainment Corporation * 6,500 22,750
Loews Cineplex Entertainment
Corporation * 26,200 265,275
Movie Gallery, Incorporated * 6,400 45,600
Quintel Communications, Incorporated* 11,200 21,000
SFX Entertainment, Incorporated * 8,400 460,950
-----------
1,308,919
LIQUOR - 1.26%
Adolph Coors Company, Class B 40,200 2,268,787
-----------
MINING - 1.32%
Calmat Company 6,100 188,337
Cleveland-Cliffs, Incorporated 16,000 645,000
Lincoln Electric Holdings,
Incorporated 12,000 267,000
Penn Virginia Corporation 3,100 56,963
Stillwater Mining Company * 29,900 1,225,900
-----------
2,383,200
MOBILE HOMES - 0.39%
Liberty Homes, Incorporated 6,500 69,063
Skyline Corporation 19,400 630,500
-----------
699,563
NEWSPAPERS - 0.17%
Media General, Incorporated 5,700 302,100
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
91
<PAGE> 130
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
NON-FERROUS METALS - 0.13%
Commercial Metals Company 5,100 $141,525
Lindberg Corporation 9,400 85,481
-----------
227,006
OFFICE FURNISHINGS & SUPPLIES - 1.02%
Kimball International, Incorporated 42,300 803,700
Knoll, Incorporated * 7,100 210,337
Standard Register 25,300 782,719
United Stationers, Incorporated * 1,400 36,400
-----------
1,833,156
PAPER - 0.78%
Badger Paper Mills, Incorporated * 1,300 10,400
FiberMark, Incorporated * 21,000 286,125
P.H. GlatfelterCompany 38,600 477,675
Rock-Tenn Company 36,900 624,994
-----------
1,399,194
PETROLEUM SERVICES - 0.50%
American Resources Offshore,
Incorporated * 34,400 10,750
Dawson Geophysical Company * 6,600 47,437
Eagle Geophysical, Incorporated * 4,000 15,500
Kaneb Services, Incorporated * 2,300 9,344
Lufkin Industries, Incorporated 5,800 107,300
Oceaneering International,
Incorporated * 12,900 193,500
Petroleum Development Corporation * 7,000 21,438
PS Group Holding, Incorporated * 6,500 76,375
Saba Petroleum Company * 8,700 5,981
Seitel, Incorporated * 4,000 49,750
Tesoro Petroleum Corporation * 29,200 354,050
-----------
891,425
PHOTOGRAPHY - 0.08%
CPI Corporation 5,600 148,400
-----------
PLASTICS - 0.00%
China Resources Development * 4,800 3,150
-----------
POLLUTION CONTROL - 0.04%
Emcon * 6,700 21,356
Harding Lawson Associates Group * 5,300 32,463
MFRI, Incorporated * 3,300 16,500
-----------
70,319
PUBLISHING - 0.31%
Courier Corporation 6,950 168,538
Houghton Mifflin Company 8,400 396,900
-----------
565,438
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
RAILROADS & EQUIPMENT - 0.14%
Greenbrier Companies,
Incorporated 15,600 $220,350
Johnstown America Industry,
Incorporated * 2,200 28,875
-----------
249,225
REAL ESTATE - 2.77%
AMREP Corporation * 11,500 73,313
Archstone Communities Trust SBI 6,000 121,500
Bluegreen Corporation * 22,700 171,669
Cornerstone Realty Income
Trust, Incorporated 12,200 128,100
Excel Legacy Corporation * 16,600 66,400
Glenborough Realty Trust,
Incorporated 20,500 417,687
Healthcare Realty Trust 18,902 421,751
Insignia Property Trust 6,822 86,981
Konover Property Trust,
Incorporated * 2,100 14,831
LNR Property Corporation 47,700 951,019
New Plan Excel Realty Trust,
Incorporated 46,200 1,025,062
Price Enterprises, Incorporated 26,100 138,656
Regency Realty Corporation 19,200 427,200
Seibels Bruce Group, Incorporated * 7,800 26,325
Torch Energy Realty Trust 4,800 21,300
Westfield America, Incorporated 51,400 886,650
-----------
4,978,444
RETAIL GROCERY - 0.52%
Andersons, Incorporated 1,100 12,719
Arden Group, Incorporated * 8,200 328,000
Foodarama Supermarkets * 2,100 67,200
The Great Atlantic & Pacific
Tea Company, Incorporated 14,000 414,750
Village Super Market, Incorporated * 8,200 116,337
-----------
939,006
RETAIL TRADE - 3.18%
Ames Department Stores, Incorporated
* 15,700 423,900
Bacou USA, Incorporated * 1,300 27,950
BJ's Wholesale Club, Incorporated * 47,200 2,185,950
Brauns Fashions Corporation * 8,800 83,600
Brookstone, Incorporated * 4,100 70,212
Catherines Stores Corporation * 8,300 90,262
Cole National Corporation, Class A * 9,700 166,112
Gart Spotrs Company * 5,800 37,700
IPI, Incorporated * 3,800 13,063
Longs Drug Stores Corporation 7,900 296,250
J.W. Mays, Incorporated * 3,800 27,194
Pamida Holdings Corporation * 5,700 23,869
Sharper Image Corporation * 7,900 93,812
</TABLE>
The accompanying notes are an integral part of the financial statements.
92
<PAGE> 131
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
RETAIL TRADE-CONTINUED
Sport Chalet, Incorporated * 4,600 $ 32,200
Todays Manitoba, Incorporated * 11,000 23,375
Unifirst Corporation 13,900 317,094
United Retail Group, Incorporated * 26,400 283,800
Value City Department Stores,
Incorporated * 33,700 469,694
Video Update, Incorporated, Class A * 22,800 44,175
Zale Corporation * 31,400 1,012,650
------------
5,722,862
SANITARY SERVICES - 0.17%
Allied Waste Industries, Incorporated * 12,800 302,400
------------
SHIPBUILDING - 0.32%
Avondale Industries,
Incorporated * 16,500 478,500
Todd Shipyards Corporation * 19,600 93,100
------------
571,600
SOFTWARE - 3.89%
Advantage Learning Systems,
Incorporated * 3,100 203,825
Boole & Babbage, Incorporated * 24,850 731,522
Broadvision, Incorporated * 20,400 652,800
CSP, Incorporated * 8,910 70,723
Elcom International, Incorporated * 8,300 16,081
Expert Software, Incorporated * 7,300 14,828
Geotel Communications Corporation * 12,200 454,450
Group 1 Software, Incorporated * 300 2,400
GT Interactive Software Corporation * 11,900 59,500
Infinium Software, Incorporated * 2,500 15,625
ISS Group, Incorporated * 7,300 401,500
Mentor Graphics Corporation * 116,900 993,650
Mercury Interactive Corporation * 24,300 1,536,975
Micro Focus Group, Incorporated
PLC, ADR * 9,130 86,164
Microtest, Incorporated * 1,000 2,750
Progress Software Corporation * 1,350 45,563
Quality Systems * 14,100 58,163
Real Networks, Incorporated * 11,300 405,387
Software AG Systems, Incorporated * 23,600 427,750
Software Spectrum, Incorporated * 8,900 141,288
Symix Systems, Incorporated * 14,400 302,400
US Web Corporation * 7,500 197,812
Visual Networks, Incorporated * 4,700 176,250
------------
6,997,406
STEEL - 0.32%
Insteel Industries, Incorporated 300 1,462
Paul Mueller Company 1,000 40,375
Pitt DesMoines, Incorporated 8,700 208,800
Varlen Corporation 14,062 324,305
------------
574,942
TELECOMMUNICATIONS SERVICES - 1.42%
American Tower Corporation * 24,300 $ 718,369
Atlantic Tele Network, Incorporated 9,160 83,012
Firstcom Corporation * 10,900 25,888
Mosaix Incorporated * 1,500 11,625
Plantronics, Incorporated * 4,100 352,600
Polycom, Incorporated * 25,600 569,600
Price Communications Corporation * 51,400 664,987
Teltrend, Incorporated * 4,000 76,500
Transaction Network Services,
Incorporated * 3,000 60,188
------------
2,562,769
TELEPHONE - 0.29%
Conestoga Enterprises,
Incorporated 11,000 387,750
Hector Communications Corporation * 7,500 62,344
Hickory Tech Corporation 1,800 23,400
RMH Teleservices, Incorporated * 18,600 39,525
------------
513,019
TIRES & RUBBER - 0.28%
Myers Industries, Incorporated 16,900 483,762
O'Sullivan Corporation 1,300 12,838
------------
496,600
TOYS, AMUSEMENTS & SPORTING GOODS - 0.23%
Russ Berrie & Company, Incorporated 17,000 399,500
------------
TRANSPORTATION - 0.07%
International Aircraft Investors * 11,100 67,987
Transcoastal Marine Services,
Incorporated * 19,600 58,188
------------
126,175
TRUCKING & FREIGHT - .94%
Consolidated Freightways
Corporation * 26,400 419,100
Fritz Companies, Incorporated * 9,900 107,044
Landstar Systems, Incorporated * 16,700 680,525
Motor Cargo Inds, Incorporated * 3,000 24,000
Travel Ports America, Incorporated * 2,376 6,534
U.S. Freightways Corporation 15,300 445,612
------------
1,682,815
TOTAL COMMON STOCKS
(Cost: $151,932,410) $160,304,949
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
93
<PAGE> 132
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 9.42%
$16,954,600 Navigator Securities Lending
Trust, 5.17% $ 16,954,600
------------
REPURCHASE AGREEMENTS - 1.46%
$2,635,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.00%, to be
repurchased at $2,636,171 on
01/04/1999, collateralized by
$1,950,000 U.S. Treasury Bonds,
8.125% due 08/15/2021 (valued at
$2,689,477, including interest) $ 2,635,000
------------
TOTAL INVESTMENTS (SMALL COMPANY VALUE
TRUST) (Cost: $171,522,010)
$179,894,549
------------
</TABLE>
EQUITY TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 84.46%
AEROSPACE - 0.89%
GenCorp, Incorporated 380,600 $ 9,491,212
General Dynamics Corporation 78,100 4,578,613
Gulfstream Aerospace Corporation * 28,100 1,496,325
-----------
15,566,150
ALUMINUM - 1.23%
ALCOA 290,450 21,656,678
-----------
APPAREL & TEXTILES - 1.68%
Albany International Corporation,
Class A * 190,776 3,612,821
Kellwood Company 14,500 362,500
Liz Claiborne, Incorporated 68,800 2,171,500
Mohawk Industries, Incorporated * 124,100 5,219,956
Nike, Incorporated, Class B 115,700 4,693,081
Reebok International, Ltd. * 281,800 4,191,775
Shaw Industries, Incorporated * 62,300 1,510,775
Stage Stores, Incorporated 12,000 112,500
Stride Rite Corporation 97,400 852,250
Unifi, Incorporated * 343,050 6,710,916
-----------
29,438,074
AUTO PARTS - 0.88%
Danaher Corporation * 163,400 8,874,662
Eaton Corporation 92,500 6,538,594
-----------
15,413,256
AUTOMOBILES - 0.62%
Harley Davidson, Incorporated 208,200 $ 9,863,475
Schawk, Incorporated, Class A 77,700 1,078,087
-----------
10,941,562
BANKING - 1.92%
AmSouth Bancorporation 135,900 6,200,437
Banco Santander * 5,400 118,463
Centura Banks, Incorporated 12,200 907,375
Comerica, Incorporated 86,200 5,877,762
Marshall & Ilsley Corporation 69,400 4,055,562
North Fork Bancorporation, Incorporated 61,777 1,478,787
Providian Financial Corporation 70,400 5,280,000
U.S. Bancorp 103,775 3,684,013
Westamerica Bancorporation 89,800 3,300,150
Zions BanCorporation 45,600 2,844,300
-----------
33,746,849
BROADCASTING - 1.58%
CBS Corporation * 133,900 4,385,225
Clear Channel Communications * 84,900 4,627,050
Fox Entertainment Group, Incorporated,
Class A * 149,900 3,775,606
Heftel Broadcasting Corporation, Class A * 115,500 5,688,375
Jacor Communications, Incorporated,
Class A * 91,300 5,877,437
MediaOne Group, Incorporated * 40,900 1,922,300
Tele-Communications, Incorporated, Series A 61,800 1,456,163
-----------
27,732,156
BUILDING MATERIALS & CONSTRUCTION - .93%
Fluor Corporation 276,900 11,785,556
Harsco Corporation 151,000 4,596,063
-----------
16,381,619
BUSINESS SERVICES - 5.21%
Administaff, Incorporated 60,600 1,515,000
ADVO, Incorporated * 112,700 2,972,463
Banta Corporation 225,500 6,173,062
Deluxe Corporation 439,200 16,058,250
GTECH Holdings Corporation 98,700 2,529,188
International Telecomm
Systems, Incorporated 34,400 507,400
Interpublic Group
Companies, Incorporated 32,900 2,623,775
Jacobs Engineering Group,
Incorporated * 98,500 4,013,875
Laidlaw, Incorporated 90,000 909,715
Lamar Advertising Company, Class A * 93,700 3,490,325
Legato Systems, Incorporated * 84,600 5,578,313
</TABLE>
The accompanying notes are an integral part of the financial statements.
94
<PAGE> 133
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BUSINESS SERVICES-CONTINUED
Nielsen Media Research,
Incorporated * 128,100 $ 2,305,800
OmniCom Group, Incorporated 99,100 5,747,800
Outdoor Systems, Incorporated 97,000 2,910,000
R.R. Donnelley & Sons Company 296,900 13,007,931
SABRE Group Holdings, Incorporated,
Class A * 31,100 1,383,950
Service Corporation International 272,500 10,372,031
Stone & Webster, Incorporated 279,300 9,286,725
-----------
91,385,603
CHEMICALS - 6.54%
Cabot Corporation 632,000 17,656,500
Crompton & Knowles Corporation * 165,600 3,425,850
Cytec Industries, Incorporated * 140,000 2,975,000
Dow Chemical Company * 40,000 3,637,500
Ferro Corporation 461,650 12,002,900
Geon Company * 169,300 3,893,900
Hercules, Incorporated 482,900 13,219,387
IMC Global, Incorporated 224,200 4,792,275
Lawter International, Incorporated 264,000 3,069,000
M.A. Hanna Company 132,000 1,625,250
Nalco Chemical Company 748,600 23,206,600
Olin Corporation 145,500 4,119,469
Union Carbide Corporation 39,300 1,670,250
VWR Scientific Products Corporation * 240,600 4,180,425
W. R. Grace & Company * 426,300 6,687,581
Waters Corporation * 27,800 2,425,550
Witco Corporation 386,500 6,159,844
-----------
114,747,281
COMPUTERS & BUSINESS EQUIPMENT - 1.97%
America Online, Incorporated * 66,900 10,704,000
Ingram Micro, Incorporated, Class A * 43,000 1,499,625
Netscape Communications
Corporation * 31,000 1,883,250
Pixar * 103,200 3,612,000
Quantum Corporation * 220,000 4,675,000
Unisys Corporation * 302,500 10,417,344
Wang Global, Incorporated 62,300 1,728,825
-----------
34,520,044
CONSTRUCTION MATERIALS - 0.88%
Armstrong World Industries, Incorporated 56,800 3,425,750
Dayton Superior Corporation, Class A 100,800 1,940,400
Lone Star Industries, Incorporated 104,800 3,857,950
Owens-Corning 34,400 1,219,050
Sherwin Williams Company 157,300 4,620,687
Southdown, Incorporated 6,864 406,263
-----------
15,470,100
CONTAINERS & GLASS - 0.22%
Mark IV Industries, Incorporated 51,550 $ 670,150
Owens-Illinois, Incorporated * 61,450 1,881,906
Silgan Holdings, Incorporated * 45,500 1,264,758
-----------
3,816,814
CRUDE PETROLEUM & NATURAL GAS - 2.00%
Burlington Resources, Incorporated 178,497 6,392,424
Elf Aquitaine SA 70,000 8,087,999
Enron Oil & Gas Company 84,700 1,461,075
Nuevo Energy Company * 130,650 1,502,475
Occidental Petroleum Corporation 696,900 11,760,187
Valero Energy Corporation 146,000 3,102,500
Vastar Resources, Incorporated * 64,500 2,785,594
----------
35,092,254
DOMESTIC OIL - 1.76%
Amerada Hess Corporation * 333,200 16,576,700
Oryx Energy Company * 110,000 1,478,125
Seagull Energy Corporation * 198,300 1,251,769
Ultramar Diamond Shamrock 137,100 3,324,675
USX-Marathon Group 273,400 8,236,175
----------
30,867,444
DRUGS & HEALTH CARE - 3.47%
Arterial Vascular Engineering, Incorporated * 88,500 4,646,250
Bausch & Lomb, Incorporated 9,700 582,000
Becton Dickinson & Company * 126,600 5,404,237
Biomet, Incorporated * 46,800 1,883,700
Cardinal Health, Incorporated 122,300 9,279,512
Cyberonics, Incorporated 89,900 1,213,650
Cytyc Corporation * 48,400 1,246,300
Gilead Sciences, Incorporated 32,400 1,330,425
Guidant Corporation * 18,300 2,017,575
Health Management Association, Class A * 253,125 5,473,828
McKesson Corporation * 6,700 529,719
Medtronic, Incorporated 205,800 15,280,650
Novoste Corporation * 46,500 1,319,438
Quest Diagnostics, Incorporated * 35,500 632,344
Sofamor/Danek Group, Incorporated * 27,000 3,287,250
Sybron International Corporation * 251,350 6,833,578
----------
60,960,456
ELECTRICAL EQUIPMENT - 2.44%
American Power Conversion Corporation * 81,400 3,942,812
AMETEK Areospace Products,
Incorporated 133,970 2,989,206
Anixter International, Incorporated * 6,700 136,094
ASM Lithography Holding NV * 90,600 2,763,300
AVX Corporation * 102,200 1,731,012
Emerson Electric Company 60,900 3,684,450
</TABLE>
The accompanying notes are an integral part of the financial statements.
95
<PAGE> 134
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
ELECTRICAL EQUIPMENT-CONTINUED
General Electric Company * 28,400 $ 2,898,575
Kuhlman Corporation 82,400 3,120,900
Millipore Corporation 326,100 9,273,469
Philips Electronics NV, ADR * 90,000 6,091,875
Raychem Corporation 190,000 6,139,375
-----------
42,771,068
ELECTRIC UTILITIES - 0.83%
AES Corporation * 60,200 2,851,975
CMS Energy Corporation * 34,500 1,671,094
Duke Energy Company 47,500 3,042,969
Entergy Corporation 54,400 1,693,200
IPALCO Enterprises 50,200 2,782,962
PG&E Corporation * 82,700 2,605,050
-----------
14,647,250
ELECTRONICS - 5.95%
Andrew Corporation * 90,900 1,499,850
Applied Materials, Incorporated * 166,700 7,116,006
Comverse Technology, Incorporated * 56,195 3,989,845
EG & G, Incorporated 377,800 10,507,562
Electronic Data Systems Corporation 270,300 13,582,575
Electronics For Imaging, Incorporated * 88,200 3,544,538
International Rectifier Corporation * 109,100 1,063,725
KLA-Tencor Corporation * 129,700 5,625,737
Lexmark International Group, Incorporated,
Class A * 44,500 4,472,250
Linear Technology Corporation 126,300 11,311,744
Micron Technology, Incorporated * 365,600 18,485,650
Motorola, Incorporated * 20,000 1,221,250
Novellus Systems, Incorporated * 37,700 1,866,150
TekTronix, Incorporated 166,500 5,005,406
Teradyne, Incorporated * 277,800 11,771,775
Varian Associates, Incorporated * 87,900 3,329,213
-----------
104,393,276
FINANCIAL SERVICES - 1.52%
Allmerica Financial Corporation 117,281 6,787,638
Amcore Financial, Incorporated 20,200 462,391
Associates First Capital Corporation, Class 161,800 6,856,275
A
Borg-Warner Security Corporation * 290,700 5,450,625
Household International, Incorporated 58,400 2,314,100
ReliaStar Financial Corporation 59,400 2,739,825
Richmond County Financial Corporation 47,700 766,181
Webster Financial Corporation 49,400 1,355,412
-----------
26,732,447
FOOD & BEVERAGES - 3.20%
American Italian Pasta
Company, Class A * 46,900 $ 1,236,988
Coca-Cola Bottling Company 16,800 966,000
Dean Foods Company 149,100 6,085,144
Dole Food, Incorporated 591,100 17,733,000
Earthgrains Company 75,000 2,320,312
Flowers Industries, Incorporated 94,200 2,254,912
Interstate Bakeries Corporation 135,700 3,587,569
Keebler Foods Company * 19,200 722,400
Michael Foods, Incorporated * 88,200 2,646,000
Suiza Foods Corporation * 54,900 2,796,469
Tootsie Roll Industries, Incorporated * 61,900 2,421,837
United States Foodservice * 125,262 6,137,838
Whitman Corporation 173,600 4,405,100
Wm. Wrigley Jr. Company 31,600 2,830,175
----------
56,143,744
FOREST PRODUCTS - 0.21%
Georgia-Pacific Corporation 62,100 3,636,731
----------
GAS & PIPELINE UTILITIES - 0.30%
Coastal Corporation * 67,100 2,344,306
Enron Corporation 50,600 2,887,363
----------
5,231,669
GOLD - 0.08%
Newmont Mining Corporation 80,000 1,445,000
----------
HOMEBUILDERS - 0.64%
Centex Corporation * 80,000 3,605,000
Elcor Chemical Corporation * 148,800 4,808,100
Lennar Corporation * 52,200 1,318,050
Pulte Corporation * 54,100 1,504,656
----------
11,235,806
HOTELS & RESTAURANTS - 0.74%
CKE Restaurants, Incorporated 169,417 4,987,198
CBRL Group * 26,900 627,106
Mirage Resorts, Incorporated * 300,000 4,481,250
Papa Johns International, Incorporated * 65,300 2,881,363
----------
12,976,917
HOUSEHOLD APPLIANCES - 2.62%
Bassett Furniture Industries,
Incorporated 49,900 1,203,838
Leggett & Platt, Incorporated * 653,500 14,377,000
Maxim Group, Incorporated * 79,000 1,896,000
Newell Company 92,900 3,832,125
OSF, Incorporated * 130,000 935,558
Westpoint Stevens, Incorporated * 190,600 6,015,812
</TABLE>
The accompanying notes are an integral part of the financial statements.
96
<PAGE> 135
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
HOUSEHOLD APPLIANCES-CONTINUED
Whirlpool Corporation 320,000 $17,720,000
-----------
45,980,333
HOUSEHOLD PRODUCTS - 1.50%
Black & Decker Corporation 116,000 6,503,250
Clorox Company * 30,600 3,574,463
Rubbermaid, Incorporated 58,700 1,845,381
Snap-On, Incorporated * 278,400 9,691,800
The Stanley Works 65,800 1,825,950
Tupperware Corporation 179,100 2,943,956
-----------
26,384,800
INDUSTRIAL MACHINERY - 3.01%
American Standard Companies,
Incorporated * 572,000 20,592,000
Gorman Rupp Company 73,700 1,234,475
Harnischfeger Industries, Incorporated 144,200 1,469,038
Kaydon Corporation * 64,800 2,596,050
Manitowoc, Incorporated * 31,300 1,388,938
Pall Corporation 179,400 4,541,062
PRI Automation, Incorporated * 188,800 4,908,800
SPX Corporation 56,613 3,793,071
Thermo Electron Corporation * 212,600 3,600,912
Unova, Incorporated * 403,100 7,306,187
York International Corporation 34,300 1,399,869
-----------
52,830,402
INSURANCE - 1.31%
Aetna, Incorporated 33,500 2,633,937
AFLAC, Incorporated 108,700 4,782,800
Ambac Financial Group, Incorporated 49,800 2,997,337
American Bankers Insurance Group,
Incorporated * 60,900 2,946,037
Hartford Life, Incorporated, Class A 15,600 908,700
HCC Insurance Holdings, Incorporated 46,600 821,325
MBIA, Incorporated 16,000 1,049,000
PAULA Financial 65,700 615,938
Progressive Corporation 12,800 2,168,000
Protective Life Corporation 75,900 3,021,769
UNUM Corporation 18,100 1,056,588
-----------
23,001,431
INTERNATIONAL OIL - 1.04%
Amoco Corporation * 111,200 6,713,700
Halliburton Company 388,900 11,521,162
-----------
18,234,862
LEISURE TIME - 2.22%
Action Performance
Companies, Incorporated * 103,900 3,675,463
LEISURE TIME-CONTINUED
Brunswick Corporation 405,000 $10,023,750
Cinar Films, Incorporated, Class B, ADR 42,200 1,021,524
Cinar Films, Incorporated, Class B * 78,200 1,984,325
CNET, Incorporated 36,400 1,995,175
Harrahs Entertainment, Incorporated * 10,000 156,875
Premier Parks, Incorporated * 240,500 7,275,125
Westwood One, Incorporated * 422,600 12,889,300
----------
39,021,537
LIQUOR - 0.11%
Adolph Coors Company, Class B 34,400 1,941,450
----------
OFFICE FURNISHINGS & SUPPLIES - .93%
Knoll, Incorporated * 140,500 4,162,313
Miller Herman, Incorporated 189,200 5,084,750
Reynolds & Reynolds
Company, Class A * 306,300 7,025,756
----------
16,272,819
PAPER - 1.82%
Bowater, Incorporated 130,000 5,386,875
Champion International Corporation 87,600 3,547,800
Chesapeake Corporation 102,800 3,790,750
Fort James Corporation 395,800 15,832,000
Ivex Packaging Corporation * 148,300 3,447,975
----------
32,005,400
PETROLEUM SERVICES - 1.91%
Apache Corporation * 100,700 2,548,969
Conoco, Incorporated, Class A * 51,300 1,070,888
ENSCO International, Incorporated 211,000 2,255,062
Helmerich & Payne, Incorporated 256,000 4,960,000
Schlumberger, Ltd. * 59,200 2,724,195
Smith International, Incorporated * 73,400 1,848,762
Tosco Corporation 391,100 10,119,712
Total SA, B Shares * 60,000 6,074,048
Transocean Offshore, Incorporated * 70,000 1,876,875
----------
33,478,511
PHOTOGRAPHY - 0.45%
Polaroid Corporation 418,000 7,811,375
----------
PLASTICS - 0.37%
First Brands Corporation 53,000 2,090,188
Illinois Tool Works, Incorporated * 77,300 4,483,400
----------
6,573,588
POLLUTION CONTROL - 1.62%
Browning Ferris Industries,
Incorporated 786,600 22,368,938
Eastern Environmental
Services, Incorporated 104,300 3,096,406
</TABLE>
The accompanying notes are an integral part of the financial statements.
97
<PAGE> 136
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
POLLUTION CONTROL-CONTINUED
Republic Services,
Incorporated, Class A 160,000 $ 2,950,000
-----------
28,415,344
PUBLISHING - 0.18%
John H. Harland Company 195,000 3,083,438
-----------
RAILROADS & EQUIPMENT - 0.09%
CSX Corporation 36,300 1,506,450
-----------
REAL ESTATE - 0.52%
Apartment Investment & Management
Company, Class A * 49,300 1,833,343
Arden Realty, Incorporated * 19,700 456,794
Avalon Bay Communities, Incorporated * 28,100 962,425
BRE Properties, Incorporated * 29,900 740,025
Duke Realty Investments, Incorporated 54,100 1,257,825
First Industrial Realty Trust, Incorporated * 14,800 396,825
Kimco Realty Corporation * 31,200 1,238,250
Mack-California Realty Corporation * 14,000 432,250
Public Storage, Incorporated * 22,400 606,200
Simon Property Group, Incorporated * 16,400 467,400
TrizecHahn Corporation * 32,400 664,200
-----------
9,055,537
RETAIL GROCERY - 1.03%
Caseys General Stores, Incorporated 163,700 2,133,216
Safeway, Incorporated * 179,500 10,938,281
Starbucks Corporation * 88,600 4,972,675
-----------
18,044,172
RETAIL TRADE - 6.50%
Abercrombie & Fitch Company, Class A * 33,000 2,334,750
Ann Taylor Stores Corporation * 9,600 378,600
Bed Bath & Beyond, Incorporated * 46,000 1,569,750
Bon-Ton Stores, Incorporated 216,500 1,650,813
Consolidated Stores Corporation * 708,029 14,293,335
CVS Corporation 176,758 9,721,690
Dayton Hudson Corporation * 19,200 1,041,600
Dollar Tree Stores, Incorporated * 123,250 5,384,484
Federated Department Stores, Incorporated * 610,000 26,573,125
Fred Meyers, Incorporated * 99,000 5,964,750
Heilig-Meyers Company 474,900 3,175,894
Nordstrom, Incorporated 84,400 2,927,625
Pep Boys (Manny, Moe & Jack) * 327,200 5,132,950
Restoration Hardware, Incorporated * 31,300 841,188
Saks, Incorporated * 214,282 6,763,276
RETAIL TRADE-CONTINUED
Sportsline USA, Incorporated * 57,700 $ 897,956
Staples, Incorporated * 26,000 1,135,875
The Limited, Incorporated 457,600 13,327,600
TJX Companies, Incorporated 234,800 6,809,200
Walgreen Company * 56,500 3,308,781
Zale Corporation * 23,400 754,650
-----------
113,987,892
SANITARY SERVICES - 2.06%
Allied Waste Industries, Incorporated * 65,905 1,557,006
Republic Industries, Incorporated * 530,300 7,821,925
Waste Management, Incorporated 573,792 26,753,052
-----------
36,131,983
SHIPBUILDING - 0.18%
Avondale Industries, Incorporated * 106,022 3,074,638
-----------
SOFTWARE - 2.49%
BMC Software, Incorporated * 28,700 1,278,944
Cadence Design Systems,
Incorporated * 181,100 5,387,725
Compuware Corporation * 29,500 2,304,688
Intuit, Incorporated * 44,100 3,197,250
Keane, Incorporated * 175,800 7,021,012
Networks Associates, Incorporated * 51,400 3,405,250
Siebel Systems, Incorporated * 193,550 6,568,603
USA Networks, Incorporated * 321,700 10,656,312
Veritas Software Corporation * 65,000 3,895,938
-----------
43,715,722
STEEL - 0.81%
Nucor Corporation 300,300 12,987,975
Steel Dynamics, Incorporated * 97,300 1,143,275
-----------
14,131,250
TELECOMMUNICATIONS SERVICES - 1.76%
Ascend Communications,
Incorporated * 134,200 8,823,650
Comsat Corporation 109,900 3,956,400
Cox Communications, Incorporated, Class
A * 38,700 2,675,137
MCI Worldcom, Incorporated * 22,700 1,628,725
Nextel Communications, Incorporated,
Class A * 38,200 902,475
RCN Corporation * 3,600 63,675
Skytel Communications, Incorporated * 371,300 8,215,012
Univision Communications, Incorporated,
Class A * 124,900 4,519,819
US LEC Corporation, Class A 12,600 186,638
-----------
30,971,531
</TABLE>
The accompanying notes are an integral part of the financial statements.
98
<PAGE> 137
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
TELEPHONE - 0.14%
E Spire Communications, Incorporated * 28,300 $ 180,413
Winstar Communications, Incorporated * 61,200 2,386,800
--------------
2,567,213
TIRES & RUBBER - 0.41%
Carlisle Companies, Incorporated 132,300 6,829,988
Cooper Tire & Rubber Company * 20,000 408,750
--------------
7,238,738
TOBACCO - 0.11%
RJR Nabisco Holdings Corporation 65,700 1,950,469
--------------
TOYS, AMUSEMENTS & SPORTING GOODS - 0.30%
Mattel, Incorporated 227,800 5,196,688
--------------
TRUCKING & FREIGHT - 1.28%
CNF Transportation, Incorporated 555,700 20,873,481
Pittston Brinks Group 52,400 1,670,250
--------------
22,543,731
TOTAL COMMON STOCKS
(Cost: $1,451,302,366) $1,482,101,552
--------------
PREFERRED STOCK - 0.28%
CONTAINERS & GLASS - 0.22%
Owens-Illinois, Incorporated
(Convertible) 88,800 3,774,000
--------------
DOMESTIC OIL - 0.06%
Stone Energy Corporation 38,600 1,109,750
--------------
TOTAL PREFERRED STOCK
(Cost: $4,633,177) $ 4,883,750
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 11.25%
$197,468,560 Navigator Securities
Lending Trust, 5.17% $ 197,468,560
---------------
REPURCHASE AGREEMENTS - 4.01%
$70,411,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.25%, to be
repurchased at $70,444,250 on
01/04/1999, collateralized by
$48,815,000 U.S. Treasury Bonds,
9.25% due 02/15/2016 (valued at
$71,826,684, including interest $ 70,411,000
---------------
TOTAL INVESTMENTS (EQUITY TRUST)
(Cost: $1,723,815,103) $ 1,754,864,861
===============
</TABLE>
GROWTH TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 89.87%
AEROSPACE - 0.71%
Computer Sciences Corporation * 34,150 $ 2,200,541
-----------
APPAREL & TEXTILES - 0.52%
Cintas Corporation 22,525 1,586,605
-----------
AUTO PARTS - 0.49%
Danaher Corporation * 27,825 1,511,245
-----------
AUTOMOBILES - 0.26%
Harley Davidson, Incorporated 17,100 810,113
-----------
BANKING - 1.92%
Firstar Corporation 17,400 1,622,550
Northern Trust Corporation 16,700 1,458,119
State Street Boston Corporation 20,125 1,399,945
U.S. Bancorp 39,975 1,419,113
-----------
5,899,727
BROADCASTING - 3.45%
Comcast Corporation, Class A 79,850 4,686,197
MediaOne Group, Incorporated * 31,400 1,475,800
Tele-Communications, Incorporated, Series A * 80,525 4,454,039
-----------
10,616,036
BUSINESS SERVICES - 5.49%
Automatic Data Processing,
Incorporated 13,500 1,082,531
DeVRY, Incorporated * 56,625 1,734,141
Fiserv, Incorporated * 58,662 3,017,426
IMS Health, Incorporated 59,275 4,471,558
</TABLE>
The accompanying notes are an integral part of the financial statements.
99
<PAGE> 138
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BUSINESS SERVICES-CONTINUED
Interpublic Group
Companies, Incorporated 9,600 $ 765,600
Nokia Corporation, ADR * 24,700 2,974,806
Robert Half International,
Incorporated * 29,325 1,310,461
Tyco International, Ltd. 20,575 1,552,127
-----------
16,908,650
CHEMICALS - 0.25%
Monsanto Company 16,475 782,563
-----------
COMPUTERS & BUSINESS EQUIPMENT - 8.63%
America Online, Incorporated * 35,825 5,732,000
Cisco Systems, Incorporated * 59,525 5,524,664
Compaq Computer Corporation 35,400 1,484,588
Dell Computer Corporation * 49,975 3,657,545
EMC Corporation * 33,700 2,864,500
International Business Machines Corporation 31,525 5,824,244
Sun Microsystems, Incorporated * 17,650 1,511,281
-----------
26,598,822
DRUGS & HEALTH CARE - 14.80%
Alza Corporation * 30,750 1,606,688
Amgen, Incorporated * 43,400 4,538,012
Bristol-Myers Squibb Company 36,250 4,850,703
Eli Lilly & Company 52,600 4,674,825
Glaxo Wellcome PLC, ADR 10,675 741,913
Johnson & Johnson 17,325 1,453,134
Medtronic, Incorporated 43,050 3,196,463
Merck & Company, Incorporated 18,300 2,702,681
Pfizer, Incorporated * 81,600 10,235,700
Schering-Plough Corporation 100,975 5,578,869
Warner-Lambert Company 79,675 5,990,564
-----------
45,569,552
ELECTRICAL EQUIPMENT - 4.30%
General Electric Company * 129,600 13,227,300
-----------
ELECTRONICS - 6.34%
Intel Corporation 80,700 9,567,994
Lucent Technologies, Incorporated 67,850 7,463,500
Motorola, Incorporated * 19,000 1,160,187
Texas Instruments, Incorporated 11,125 951,883
The Perkin-Elmer Corporation 3,750 365,859
-----------
19,509,423
FINANCIAL SERVICES - 4.16%
American Express Company 29,225 $ 2,988,256
Associates First Capital Corporation, Class A 37,366 1,583,384
Citigroup, Incorporated * 58,725 2,906,888
Federal National Mortgage Association 58,450 4,325,300
Hartford Financial Services Group,
Incorporated 18,525 1,016,559
-----------
12,820,387
FOOD & BEVERAGES - 2.78%
Coca-Cola Company 83,950 5,614,156
Hershey's Foods Corporation 11,600 721,375
Pepsico, Incorporated 35,600 1,457,375
Tootsie Roll Industries, Incorporated * 1,275 49,885
Wm. Wrigley Jr. Company 8,075 723,217
-----------
8,566,008
HOTELS & RESTAURANTS - 1.63%
McDonalds Corporation * 50,750 3,888,719
Outback Steakhouse, Incorporated * 28,150 1,122,481
-----------
5,011,200
HOUSEHOLD PRODUCTS - 3.74%
Clorox Company * 6,375 744,680
Colgate Palmolive Company 22,500 2,089,687
Dial Corporation 50,950 1,471,181
Gillette Company 91,775 4,433,880
Procter & Gamble Company * 30,250 2,762,203
-----------
11,501,631
INSURANCE - 4.50%
American International Group, Incorporated 44,500 4,299,813
Berkshire Hathaway, Incorporated * 3,000 7,050,000
Marsh & Mclennan Companies, Incorporated 42,700 2,495,281
-----------
13,845,094
INVESTMENT COMPANIES - 0.42%
Charles Schwab Corporation 13,650 766,959
Franklin Resources, Incorporated 16,450 526,400
-----------
1,293,359
LEISURE TIME - 1.32%
Carnival Corporation, Class A 17,100 820,800
The Walt Disney Company 107,675 3,230,250
-----------
4,051,050
NEWSPAPERS - 0.46%
Gannett, Incorporated 21,850 1,409,325
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
100
<PAGE> 139
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PLASTICS - 0.45%
Illinois Tool Works, Incorporated * 23,950 $ 1,389,100
------------
PUBLISHING - 0.71%
McGraw-Hill Companies, Incorporated 4,875 496,641
Time Warner, Incorporated 27,000 1,675,687
------------
2,172,328
RETAIL GROCERY - 0.75%
Safeway, Incorporated * 37,650 2,294,297
------------
RETAIL TRADE - 7.55%
Bed Bath & Beyond, Incorporated * 23,350 796,819
Best Buy Company, Incorporated * 12,325 756,447
Costco Companies, Incorporated * 44,350 3,201,515
GAP, Incorporated 41,850 2,354,062
Home Depot, Incorporated 78,325 4,792,511
Kohls Corporation * 28,100 1,726,394
Staples, Incorporated * 16,625 726,305
Wal-Mart Stores, Incorporated 82,475 6,716,558
Walgreen Company * 37,075 2,171,205
------------
23,241,816
SOFTWARE - 6.34%
Intuit, Incorporated * 21,325 1,546,062
Microsoft Corporation * 91,200 12,648,300
Oracle Systems Corporation * 33,500 1,444,688
PeopleSoft, Incorporated * 8,850 167,597
Solectron Corporation * 40,025 3,719,823
------------
19,526,470
TELECOMMUNICATIONS SERVICES - 3.37%
MCI Worldcom, Incorporated * 123,894 8,889,394
Qwest Communications
International, Incorporated * 29,950 1,497,500
------------
10,386,894
TELEPHONE - 3.04%
Airtouch Communications, Incorporated * 57,150 4,121,944
BellSouth Corporation 46,500 2,319,187
SBC Communications, Incorporated 54,400 2,917,200
------------
9,358,331
TOBACCO - 1.37%
Philip Morris Companies, Incorporated 79,025 4,227,837
------------
TOYS, AMUSEMENTS & SPORTING GOODS - 0.12%
Mattel, Incorporated 16,400 374,125
------------
TOTAL COMMON STOCKS
(Cost: $231,806,673) $276,689,829
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 2.41%
$7,412,748 Navigator Securities Lending Trust, 5.17% $ 7,412,748
------------
REPURCHASE AGREEMENTS - 7.72%
$23,763,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.00%, to be
repurchased at $23,773,561 on
01/04/1999, collateralized by
$19,020,000 U.S. Treasury Bonds,
7.25% due 08/15/2022 (valued at
$24,238,613, including interest) $23,763,000
------------
TOTAL INVESTMENTS (GROWTH TRUST)
(Cost: $262,982,421) $307,865,577
============
</TABLE>
QUANTITATIVE EQUITY TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 92.95%
AEROSPACE - 0.56%
Gulfstream Aerospace
Corporation * 27,500 $ 1,464,375
-----------
AIR TRAVEL - 1.68%
Southwest Airlines Company * 195,000 4,375,313
-----------
ALUMINUM - 1.39%
Reynolds Metals Company 68,700 3,619,631
-----------
AUTOMOBILES - 3.50%
Ford Motor Company 76,400 4,483,725
General Motors Corporation 64,700 4,630,094
-----------
9,113,819
BANKING - 9.38%
AmSouth Bancorporation 16,200 739,125
Bank One Corporation * 81,820 4,177,934
Dime Bancorp, Incorporated 34,300 906,806
First Tennessee National
Corporation 6,000 228,375
First Union Corporation 68,500 4,165,656
Firstar Corporation 10,400 969,800
Fleet Financial Group, Incorporated 99,600 4,450,875
Mellon Bank Corporation 65,700 4,516,875
Washington Mutual, Incorporated 111,300 4,250,269
-----------
24,405,715
</TABLE>
The accompanying notes are an integral part of the financial statements.
101
<PAGE> 140
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BROADCASTING - 0.32%
Cablevision Systems
Corporation, Class A * 16,800 $ 843,150
-----------
BUSINESS SERVICES - 2.91%
Outsource International, Incorporated * 75,000 356,250
Paychex, Incorporated 25,050 1,288,509
Snyder Communications, Incorporated * 34,200 1,154,250
Tyco International, Ltd. 63,300 4,775,194
-----------
7,574,203
CHEMICALS - 3.48%
E.I. Du Pont De Nemours & Company 69,800 3,703,762
Monsanto Company 81,200 3,857,000
Waters Corporation * 17,100 1,491,975
-----------
9,052,737
COMPUTERS & BUSINESS EQUIPMENT - 4.32%
Cisco Systems, Incorporated * 63,400 5,884,313
Dell Computer Corporation * 61,200 4,479,075
Network Appliance, Incorporated * 9,600 432,000
Symbol Technologies, Incorporated 7,100 453,956
-----------
11,249,344
CONSTRUCTION & MINING EQUIPMENT - 1.59%
Caterpillar, Incorporated 90,100 4,144,600
-----------
CRUDE PETROLEUM & NATURAL GAS - 1.64%
Sunoco, Incorporated 118,400 4,269,800
-----------
DOMESTIC OIL - 2.34%
Unocal Corporation 82,350 2,403,591
USX-Marathon Group 122,500 3,690,312
-----------
6,093,903
DRUGS & HEALTH CARE - 5.21%
Allegiance Corporation 30,600 1,426,725
Amgen, Incorporated * 50,000 5,228,125
Biogen, Incorporated * 21,900 1,817,700
Lincare Holdings, Incorporated * 21,400 868,038
Pacificare Health Systems, Class B * 4,700 373,650
Warner-Lambert Company 51,100 3,842,081
-----------
13,556,319
ELECTRIC UTILITIES - 5.69%
Carolina Power & Light Company 14,700 691,819
CMS Energy Corporation * 11,200 542,500
Dominion Resources, Incorporated 42,900 2,005,575
Duke Energy Company 57,800 3,702,812
Florida Progress Corporation 33,100 1,483,294
FPI Group, Incorporated 54,200 3,340,075
Montana Power Company 28,100 1,589,406
PECO Energy Company 34,600 1,440,225
-----------
14,795,706
ELECTRONICS - 2.87%
Apple Computer, Incorporated * 16,800 $ 687,750
Lexmark International Group,
Incorporated, Class A * 12,700 1,276,350
Lucent Technologies, Incorporated 50,100 5,511,000
----------
7,475,100
FINANCIAL SERVICES - 2.88%
Capital One Financial Corporation 11,700 1,345,500
Charles Schwab Corporation 109,650 6,160,959
----------
7,506,459
HOMEBUILDERS - 0.50%
Centex Corporation * 28,800 1,297,800
----------
HOTELS & RESTAURANTS - 0.49%
Darden Restaurants, Incorporated 70,400 1,267,200
----------
HOUSEHOLD APPLIANCES - 1.66%
Whirlpool Corporation 78,000 4,319,250
----------
HOUSEHOLD PRODUCTS - 0.54%
Clorox Company * 12,000 1,401,750
----------
INSURANCE - 2.01%
First American Financial Corporation 33,600 1,079,400
Marsh & McLennan Companies,
Incorporated 71,250 4,163,672
----------
5,243,072
LEISURE TIME - 0.83%
Royal Caribbean Cruises, Ltd. 58,700 2,171,900
----------
PAPER - 1.88%
Union Camp Corporation 72,500 4,893,750
----------
PETROLEUM SERVICES - 1.13%
Conoco, Incorporated, Class A * 140,600 2,935,025
----------
POLLUTION CONTROL - 0.94%
Browning Ferris Industries,
Incorporated 86,400 2,457,000
----------
PUBLISHING - 2.04%
Time Warner, Incorporated 85,400 5,300,138
----------
REAL ESTATE - 1.90%
Equity Residential Properties
Trust SBI 33,200 1,342,525
Simon Property Group,
Incorporated * 126,200 3,596,700
----------
4,939,225
</TABLE>
The accompanying notes are an integral part of the financial statements.
102
<PAGE> 141
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
RETAIL TRADE - 11.94%
Abercrombie & Fitch Company,
Class A * 18,800 $ 1,330,100
Best Buy Company, Incorporated * 16,900 1,037,238
Dollar Tree Stores, Incorporated * 18,100 790,744
GAP, Incorporated 93,750 5,273,437
Home Depot Incorporated 90,800 5,555,825
Lowe's Companies, Incorporated 113,900 5,830,256
Staples, Incorporated * 124,600 5,443,462
TJX Companies, Incorporated 34,700 1,006,300
Wal-Mart Stores, Incorporated 58,900 4,796,669
------------
31,064,031
SOFTWARE - 5.66%
Electronic Arts * 28,200 1,582,725
Intuit, Incorporated * 17,900 1,297,750
Microsoft Corporation * 37,300 5,173,044
Oracle Systems Corporation * 128,300 5,532,937
Siebel Systems, Incorporated * 34,000 1,153,875
------------
14,740,331
TELECOMMUNICATIONS SERVICES - 2.05%
MCI Worldcom, Incorporated * 74,270 5,328,873
------------
TELEPHONE - 6.24%
Airtouch Communications,
Incorporated * 65,200 4,702,550
Alltel Corporation 87,200 5,215,650
Bell Atlantic Corporation * 75,700 4,012,100
Century Telephone Enterprises
Incorporated 16,100 1,086,750
Qwest Communications
International, Incorporated * 24,300 1,215,000
------------
16,232,050
TOBACCO - 3.38%
Philip Morris Companies,
Incorporated 86,300 4,617,050
RJR Nabisco Holdings Corporation 141,100 4,188,906
------------
8,805,956
TOTAL COMMON STOCKS
(Cost: $201,049,125) $241,937,525
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 2.50%
$6,493,439 Navigator Securities Lending
Trust, 5.17% $ 6,493,439
------------
REPURCHASE AGREEMENTS - 4.55%
$11,845,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.80%, to be
repurchase at $11,851,317 on
01/04/1999, collateralized by
$11,535,000 U.S. Treasury Notes,
5.75% due 10/31/2002 (valued at
$12,082,913, including interest) $ 11,845,000
------------
TOTAL INVESTMENTS (QUANTITATIVE
EQUITY TRUST) (Cost: $219,387,564) $260,275,964
============
</TABLE>
EQUITY INDEX TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 90.04%
AEROSPACE - 1.26%
Aeroquip-Vickers, Incorporated 116 $ 3,473
AlliedSignal, Incorporated 3,448 152,789
Boeing Company 6,165 201,133
Computer Sciences Corporation * 944 60,829
General Dynamics Corporation 820 48,072
Lockheed Martin Corporation 1,108 93,903
Northrop Grumman Corporation 366 26,764
Rockwell International Corporation 1,252 60,800
TRW, Incorporated 814 45,737
United Technologies Corporation 1,473 160,189
--------
853,689
AGRICULTURAL MACHINERY - 0.08%
John Deere & Company 1,544 51,145
--------
AGRICULTURAL OPERATIONS - 0.00%
Agribrands International,
Incorporated * 40 1,200
--------
AIR FREIGHT - 0.12%
FDX Corporation * 909 80,901
--------
AIR TRAVEL - 0.27%
AMR Corporation * 1,060 62,937
Delta Air Lines, Incorporated 918 47,736
Southwest Airlines Company * 2,024 45,414
US Airways Group,
Incorporated * 562 29,224
--------
185,311
</TABLE>
The accompanying notes are an integral part of the financial statements.
103
<PAGE> 142
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
ALUMINUM - 0.21%
Alcan Aluminum, Ltd. 1,445 $ 39,105
Aluminum Company of America 1,040 77,545
Reynolds Metals Company 504 26,555
--------
143,205
APPAREL & TEXTILES - 0.21%
Fruit of The Loom, Incorporated,
Class A * 509 7,031
Liz Claiborne, Incorporated 387 12,215
Nike, Incorporated, Class B 1,800 73,012
Reebok International, Ltd. * 334 4,968
Russell Corporation 152 3,088
Springs Industries, Incorporated 82 3,398
V. F. Corporation 822 38,531
--------
142,243
AUTO PARTS - 0.17%
Dana Corporation 970 39,649
Danaher Corporation * 100 5,431
Eaton Corporation 513 36,263
Genuine Parts Company 1,047 35,009
--------
116,352
AUTO SERVICES - 0.01%
Pennzoil-Quaker State Company * 297 4,381
--------
AUTOMOBILES - 1.13%
Ford Motor Company 7,384 433,348
General Motors Corporation 4,335 310,223
PACCAR, Incorporated 524 21,550
--------
765,121
BANKING - 5.86%
Bank of New York, Incorporated 4,666 187,806
Bank One Corporation * 7,001 357,489
BankAmerica Corporation * 10,697 643,157
BankBoston Corporation 1,819 70,827
Bankers Trust New York Corporation 574 49,041
BB&T Corporation 1,310 52,809
Chase Manhattan Corporation 5,162 351,339
Comerica, Incorporated 904 61,641
Fifth Third Bancorp 1,521 108,466
First Union Corporation 5,900 358,794
Firstar Corporation 1,300 121,225
Fleet Financial Group, Incorporated 3,208 143,357
Huntington Bancshares,
Incorporated 955 28,710
J. P. Morgan & Company, Incorporated 1,050 110,316
Keycorp 2,736 87,552
MBNA Corporation 4,527 112,892
Mellon Bank Corporation 1,571 108,006
Mercantile Bancorporation,
Incorporated 500 23,063
BANKING-CONTINUED
National City Corporation 1,554 $ 112,665
Northern Trust Corporation 746 65,135
PNC Bank Corporation 1,893 102,459
Providian Financial Corporation 838 62,850
Republic New York Corporation 752 34,263
State Street Boston Corporation 708 49,250
Summit Bancorp 528 23,067
SunTrust Banks, Incorporated 1,294 98,991
Synovus Financial Corporation 1,167 28,446
U.S. Bancorp 4,464 158,472
Union Planters Corporation 800 36,250
Wachovia Corporation 1,140 99,679
Washington Mutual, Incorporated 3,339 127,508
----------
3,975,525
BROADCASTING - 1.25%
CBS Corporation * 4,236 138,729
Clear Channel
Communications * 966 52,647
Comcast Corporation, Class A 2,180 127,939
MediaOne Group, Incorporated * 3,727 175,169
Tele-Communications, Incorporated,
Series A * 3,385 187,233
Viacom, Incorporated, Class B * 2,274 168,276
----------
849,993
BUILDING MATERIALS & CONSTRUCTION - 0.03%
Fluor Corporation 544 23,154
----------
BUSINESS SERVICES - 1.59%
Automatic Data Processing,
Incorporated 1,829 146,663
Cendant Corporation * 4,975 94,836
De Luxe Corporation 540 19,744
Dun & Bradstreet Corporation 1,011 31,910
Ecolab, Incorporated * 838 30,325
First Data Corporation 2,657 84,194
H & R Block, Incorporated 636 28,620
Humana, Incorporated * 984 17,527
IMS Health, Incorporated 991 74,759
Interpublic Group Companies,
Incorporated 831 66,272
Laidlaw, Incorporated 1,945 19,572
Nielsen Media Research,
Incorporated * 224 4,032
OmniCom Group, Incorporated 523 30,334
Paychex, Incorporated 1,000 51,437
R.H. Donnelley Corporation 137 1,995
R.R. Donnelley & Sons Company 900 39,431
Service Corporation International 1,534 58,388
Tyco International, Ltd. 3,724 280,929
----------
1,080,968
</TABLE>
The accompanying notes are an integral part of the financial statements.
104
<PAGE> 143
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
CHEMICALS - 1.53%
Air Products & Chemicals,
Incorporated 1,528 $ 61,120
B.F. Goodrich Company 451 16,180
Dow Chemical Company * 1,453 132,132
E.I. Du Pont De Nemours &
Company 6,902 366,237
Eastman Chemical Company 527 23,583
FMC Corporation * 150 8,400
Great Lakes Chemical Corporation 348 13,920
Hercules, Incorporated 608 16,644
Monsanto Company 3,671 174,372
Morton International Industries,
Incorporated 861 21,095
Nalco Chemical Company 377 11,687
Octel Corporation * 67 930
PPG Industries, Incorporated 1,045 60,871
Praxair, Incorporated 957 33,734
Rohm & Haas Company 1,162 35,005
Sigma-Aldrich Corporation 618 18,154
Union Carbide Corporation 834 35,445
W. R. Grace & Company * 507 7,954
----------
1,037,463
COMPUTERS & BUSINESS EQUIPMENT - 6.76%
3Com Corporation * 2,232 100,021
Cabletron Systems,
Incorporated * 962 8,057
Ceridian Corporation * 518 36,163
Cisco Systems, Incorporated * 9,356 868,354
Compaq Computer Corporation 10,170 426,504
Data General Corporation * 289 4,750
Dell Computer Corporation * 7,956 582,280
EMC Corporation * 3,059 260,015
Gateway 2000, Incorporated * 1,005 51,443
HBO & Company 1,950 55,941
Hewlett-Packard Company 6,287 429,481
International Business Machines
Corporation 5,939 1,097,230
Pitney Bowes, Incorporated 1,787 118,054
Seagate Technology, Incorporated * 1,516 45,859
Sun Microsystems, Incorporated * 2,348 201,047
Tandy Corporation 638 26,278
Unisys Corporation * 1,332 45,871
Xerox Corporation 1,954 230,572
----------
4,587,920
CONGLOMERATES - 0.24%
Fortune Brands, Incorporated 1,015 32,099
Harcourt General, Incorporated 494 26,275
ITT Industries, Incorporated 793 31,522
Textron, Incorporated 985 74,798
----------
164,694
CONSTRUCTION MATERIALS - 0.17%
Armstrong World Industries,
Incorporated 269 $ 16,224
Masco Corporation 1,975 56,781
Owens Corning 322 11,411
Sherwin Williams Company 1,018 29,904
--------
114,320
CONSTRUCTION & MINING EQUIPMENT - 0.24%
Caterpillar, Incorporated 2,352 108,192
Dover Corporation 1,429 52,337
Foster Wheeler Corporation 270 3,561
--------
164,090
CONTAINERS & GLASS - 0.12%
Ball Corporation 126 5,765
Bemis, Incorporated 321 12,178
Crown Cork & Seal, Incorporated 830 25,574
Owens-Illinois, Incorporated * 676 20,702
Temple-Inland, Incorporated 333 19,751
--------
83,970
COSMETICS & TOILETRIES - 0.17%
Alberto Culver Company, Class B 332 8,860
Avon Products, Incorporated 1,698 75,137
International Flavours &
Fragrances, Incorporated 652 28,810
--------
112,807
CRUDE PETROLEUM & NATURAL GAS - 0.18%
Anadarko Petroleum Corporation 604 18,648
Burlington Resources, Incorporated 1,036 37,102
Occidental Petroleum Corporation 2,104 35,505
Sunoco, Incorporated 531 19,149
Union Pacific Resources Group,
Incorporated 1,552 14,065
--------
124,469
DOMESTIC OIL - 0.60%
Amerada Hess Corporation * 583 29,004
Ashland, Incorporated 513 24,816
Atlantic Richfield Company 1,937 126,389
Kerr-McGee Corporation 299 11,437
Oryx Energy Company * 640 8,600
Pennzoil Company 297 4,381
Phillips Petroleum Company 1,590 67,774
Tenneco, Incorporated 1,009 34,369
Unocal Corporation 1,524 44,482
USX-Marathon Group 1,801 54,255
--------
405,507
DRUGS & HEALTH CARE - 10.73%
Abbott Laboratories 9,518 466,382
</TABLE>
The accompanying notes are an integral part of the financial statements.
105
<PAGE> 144
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
DRUGS & HEALTH CARE-CONTINUED
Allergan Specialty Therapeutics,
Incorporated, Class A * 9 $ 84
Allergan, Incorporated 371 24,022
Alza Corporation * 556 29,051
American Home Products
Corporation 7,905 445,150
Amgen, Incorporated * 1,588 166,045
Bausch & Lomb, Incorporated 331 19,860
Baxter International, Incorporated 1,768 113,704
Becton Dickinson & Company * 1,619 69,111
Biomet, Incorporated * 664 26,726
Bristol-Myers Squibb Company 6,148 822,679
C.R. Bard, Incorporated 337 16,682
Cardinal Health, Incorporated 976 74,054
Columbia/HCA Healthcare
Corporation * 4,031 99,767
Eli Lilly & Company 6,811 605,328
Guidant Corporation * 919 101,320
HCR Manor Care Incorporated * 524 15,393
HEALTHSOUTH Corporation * 2,386 36,834
Johnson & Johnson 8,257 692,556
Mallinckrodt, Incorporated 505 15,560
Medtronic, Incorporated 2,863 212,578
Merck & Company, Incorporated 7,301 1,078,266
Pfizer, Incorporated * 7,993 1,002,622
Pharmacia & Upjohn, Incorporated 3,113 176,274
Schering-Plough Corporation 8,898 491,614
St. Jude Medical, Incorporated * 571 15,810
Tenet Healthcare Corporation * 1,864 48,930
United Healthcare Corporation * 1,088 46,852
Warner-Lambert Company 4,898 368,268
----------
7,281,522
ELECTRICAL EQUIPMENT - 3.49%
Cooper Industries, Incorporated 794 37,864
Emerson Electric Company 2,744 166,012
General Electric Company * 20,104 2,051,864
Johnson Controls, Incorporated 549 32,391
Millipore Corporation 282 8,019
National Service Industries,
Incorporated 282 10,716
Raychem Corporation 559 18,063
Sonat, Incorporated 590 15,967
W.W. Grainger, Incorporated 718 29,887
----------
2,370,783
ELECTRIC UTILITIES - 2.21%
AES Corporation * 1,000 47,375
Ameren Corporation 771 32,912
American Electric Power, Incorporated
1,088 51,204
ELECTRIC UTILITIES-CONTINUED
Baltimore Gas & Electric Company 915 $ 28,251
Carolina Power & Light Company 929 43,721
Central & South West Corporation 1,383 37,946
Cinergy Corporation 957 32,897
Consolidated Edison, Incorporated 1,476 78,043
Dominion Resources, Incorporated 1,084 50,677
DTE Energy Company 904 38,759
Duke Energy Company 2,298 147,216
Edison International 2,416 67,346
Entergy Corporation 1,505 46,843
FirstEnergy Corporation 1,341 43,666
FPL Group, Incorporated 1,057 65,138
GPU, Incorporated 812 35,880
Houston Industries, Incorporated 1,885 60,556
New Century Energies, Incorporated 700 34,125
Niagara Mohawk Power Corporation * 957 15,432
Northern States Power Company,
Minnesota 903 25,058
PacifiCorp 1,833 38,608
PECO Energy Company 1,426 59,357
PG&E Corporation * 2,602 81,963
PP&L Resources, Incorporated 968 26,983
Public Service Enterprise Group,
Incorporated 1,466 58,640
Southern Company 4,261 123,835
Texas Utilities Company 1,551 72,412
Unicom Corporation 1,400 53,988
----------
1,498,831
ELECTRONICS - 5.05%
Advanced Micro Devices,
Incorporated * 889 25,725
AMP, Incorporated 1,257 65,443
Andrew Corporation * 571 9,421
Apple Computer, Incorporated * 838 34,306
Applied Materials, Incorporated * 2,315 98,822
Boston Scientific Corporation * 2,320 62,205
EG & G, Incorporated 291 8,093
Electronic Data Systems
Corporation 3,047 153,112
General Instrument Corporation * 916 31,087
Harris Corporation 532 19,484
Honeywell, Incorporated 828 62,359
Intel Corporation 10,163 1,204,951
KLA-Tencor Corporation * 416 18,044
LSI Logic Corporation * 888 14,319
Lucent Technologies, Incorporated 7,874 866,140
Micron Technology,
Incorporated * 1,379 69,726
Motorola, Incorporated * 3,679 224,649
National Semiconductor
Corporation * 942 12,717
Raytheon Company, Class B 1,718 91,483
</TABLE>
The accompanying notes are an integral part of the financial statements.
106
<PAGE> 145
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
ELECTRONICS-CONTINUED
Scientific-Atlanta, Incorporated 525 $ 11,977
Silicon Graphics, Incorporated * 1,051 13,532
TekTronix, Incorporated 308 9,259
Tellabs, Incorporated * 1,069 73,293
Texas Instruments, Incorporated 2,402 205,521
The Perkin-Elmer Corporation 290 28,293
Thomas & Betts Corporation 330 14,293
----------
3,428,254
FINANCIAL SERVICES - 4.93%
American Express Company 2,841 290,492
Associates First Capital
Corporation, 3,874 164,161
Class A
Bear Stearns Companies,
Incorporated 700 26,163
Capital One Financial Corporation 337 38,755
Charles Schwab Corporation 2,400 134,850
Citigroup, Incorporated * 14,243 705,028
Countrywide Credit Industries,
Incorporated 647 32,471
Federal Home Loan Mortgage
Corporation 4,270 275,148
Federal National Mortgage
Association 6,483 479,742
Franklin Resources, Incorporated 1,733 55,456
Golden West Financial Corporation 338 30,990
Hartford Financial Services Group,
Incorporated 1,577 86,538
Household International,
Incorporated 3,031 120,103
Lehman Brothers Holdings,
Incorporated 355 15,642
Merrill Lynch & Company,
Incorporated 2,001 133,567
Morgan Stanley Dean Witter &
Company 3,617 256,807
Regions Financial Corporation 1,381 55,672
SLM Holding Corporation 1,020 48,960
Wells Fargo & Company 9,976 398,417
----------
3,348,962
FOOD & BEVERAGES - 4.46%
Archer-Daniels-Midland Company 3,595 61,789
Bestfoods 1,796 95,637
Campbell Soup Company 2,807 154,385
Coca-Cola Enterprises, Incorporated 2,500 89,375
ConAgra, Incorporated 2,895 91,193
General Mills, Incorporated 960 74,640
H.J. Heinz Company 2,324 131,597
Hershey Foods Corporation 911 56,653
Kellogg Company 2,513 85,756
PepsiCo, Incorporated 9,195 376,420
FOOD & BEVERAGES-CONTINUED
Pioneer Hawaii Bred International,
Incorporated * 1,457 $ 39,339
Quaker Oats Company 868 51,646
Ralston Purina Company 1,819 58,890
Sara Lee Corporation 5,762 162,416
Supervalu, Incorporated 801 22,428
Sysco Corporation 2,036 55,863
The Coca-Cola Company 15,297 1,022,987
Unilever NV 3,963 328,681
Vlasic Foods International,
Incorporated * 191 4,548
Wm. Wrigley Jr. Company 684 61,261
----------
3,025,504
FOREST PRODUCTS - 0.19%
Georgia-Pacific Corporation 584 34,200
Louisiana Pacific Corporation 655 11,995
Sealed Air Corporation * 373 19,046
Weyerhaeuser Company 1,228 62,398
----------
127,639
GAS & PIPELINE UTILITIES - 0.50%
Coastal Corporation * 1,283 44,825
Columbia Energy Group 597 34,477
Consolidated Natural Gas Company 597 32,238
Eastern Enterprises 85 3,719
Enron Corporation 1,903 108,590
NICOR, Incorporated 301 12,717
ONEOK Incorporated 124 4,479
Peoples Energy Corporation 147 5,862
Sempra Energy 1,022 25,933
Williams Companies, Incorporated 2,160 67,365
----------
340,205
GOLD - 0.16%
Barrick Gold Corporation 2,351 45,844
Battle Mountain Gold
Company 1,456 6,006
Freeport McMoran Copper & Gold,
Incorporated, Class B * 1,104 11,523
Homestake Mining Company * 1,096 10,070
Newmont Mining Corporation 950 17,159
Placer Dome, Incorporated 1,511 17,377
----------
107,979
HOMEBUILDERS - 0.04%
Centex Corporation * 342 15,411
Kaufman & Broad Home
Corporation 162 4,658
Pulte Corporation * 177 4,923
----------
24,992
</TABLE>
The accompanying notes are an integral part of the financial statements.
107
<PAGE> 146
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ ----------
<S> <C> <C>
HOTELS & RESTAURANTS - 0.73%
Darden Restaurants, Incorporated 918 $ 16,524
Hilton Hotels Corporation 1,536 29,376
Marriott International,
Incorporated, 1,653 47,937
Class A
McDonalds Corporation * 4,261 326,499
Mirage Resorts, Incorporated * 755 11,278
Tricon Global Restaurants,
Incorporated * 900 45,113
Wendys International, Incorporated
841 18,344
----------
495,071
HOUSEHOLD APPLIANCES - 0.16%
Maytag Corporation 599 37,288
Newell Company 966 39,847
Whirlpool Corporation 512 28,352
----------
105,487
HOUSEHOLD PRODUCTS - 2.20%
Black & Decker Corporation 590 33,077
Clorox Company * 631 73,709
Colgate-Palmolive Company 1,830 169,961
Corning, Incorporated 1,459 65,655
Gillette Company 6,854 331,134
Procter & Gamble Company * 8,313 759,081
Rubbermaid, Incorporated 923 29,017
Snap-On, Incorporated * 352 12,254
The Stanley Works 570 15,817
Tupperware Corporation 351 5,769
----------
1,495,474
INDUSTRIAL MACHINERY - 0.22%
Briggs & Stratton Corporation 104 5,187
Case Corporation 510 11,124
Crane Company 435 13,132
Cummins Engine, Incorporated 160 5,680
Harnischfeger Industries,
Incorporated 303 3,087
Ingersoll-Rand Company 984 46,186
NACCO Industries, Incorporated,
Class A 34 3,128
Pall Corporation 824 20,858
Parker-Hannifin Corporation 663 21,713
Thermo Electron Corporation * 946 16,023
Timken Company 360 6,795
----------
152,913
INSURANCE - 3.25%
Aetna, Incorporated 918 72,178
Allstate Corporation 5,185 200,271
American General Corporation 1,528 119,184
American International
Group, Incorporated 6,430 621,299
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ ----------
<S> <C> <C>
INSURANCE-CONTINUED
Aon Corporation 996 $ 55,153
Berkshire Hathaway, Incorporated * 55 130,037
Chubb Corporation 1,013 65,718
CIGNA Corporation * 1,409 108,933
Cincinnati Financial Corporation 620 22,708
Conseco, Incorporated 1,875 57,305
Equifax, Incorporated 923 31,555
Jefferson-Pilot Corporation 692 51,900
Lincoln National Corporation 625 51,133
Loews Corporation 679 66,712
Marsh & Mclennan Companies,
Incorporated 1,548 90,461
MBIA, Incorporated 579 37,961
MGIC Investment Corporation 680 27,072
Progressive Corporation 383 64,871
Provident Companies , Incorporated 778 32,287
SAFECO Corporation 861 36,969
St. Paul Companies, Incorporated 1,422 49,414
SunAmerica, Incorporated * 1,113 90,292
Torchmark, Incorporated * 879 31,040
Transamerica Corporation 367 42,388
UNUM Corporation 880 51,370
----------
2,208,211
INTERNATIONAL OIL - 3.95%
Amoco Corporation * 5,958 359,714
Chevron Corporation 4,021 333,492
Exxon Corporation 15,161 1,108,648
Halliburton Company 2,598 76,966
Royal Dutch Petroleum Company 13,120 628,120
Texaco, Incorporated 3,330 176,074
----------
2,683,014
INVESTMENT COMPANIES - 0.72%
SPDR Trust, Series 1 3,990 490,770
----------
LEISURE TIME - 0.88%
B Corporation 612 15,147
Carnival Corporation, Class A 3,700 177,600
Harrahs Entertainment, Incorporated * 623 9,774
King World Productions,
Incorporated * 508 14,954
The Walt Disney Company 12,656 379,680
----------
597,155
LIQUOR - 0.47%
Adolph Coors Company, Class B 154 8,691
Anheuser-Busch Companies,
Incorporated * 2,940 192,938
Brown Forman Corporation, Class B 386 29,215
Seagram, Ltd. 2,310 87,780
----------
318,624
</TABLE>
The accompanying notes are an integral part of the financial statements.
108
<PAGE> 147
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
MINING - 0.03%
Cyprus Amax Minerals Company
589 $ 5,890
Phelps Dodge Corporation 352 17,908
--------
23,798
MOBILE HOMES - 0.01%
Fleetwood Enterprises,
Incorporated 147 5,108
--------
NEWSPAPERS - 0.39%
Dow Jones & Company,
Incorporated 595 28,634
Gannett, Incorporated 1,780 114,810
Knight-Ridder, Incorporated 559 28,579
New York Times Company, Class A 1,093 37,914
Tribune Company 809 53,394
--------
263,331
NON-FERROUS METALS - 0.05%
ASARCO, Incorporated 273 4,112
Engelhard Corporation 900 17,550
Inco, Ltd. 992 10,478
--------
32,140
OFFICE FURNISHINGS & SUPPLIES - 0.06%
Avery Dennison Corporation 648 29,200
Ikon Office Solutions,
Incorporated * 855 7,321
Moore Corporation, Ltd. 567 6,237
--------
42,758
PAPER - 0.91%
Boise Cascade Corporation 321 9,951
Champion International Corporation 598 24,219
Fort James Corporation 1,161 46,440
International Paper Company 1,862 83,441
Kimberly-Clark Corporation 3,408 185,736
Mead Corporation 634 18,584
Minnesota Mining & Manufacturing
Company 2,515 178,879
Potlatch Corporation 120 4,425
Union Camp Corporation 388 26,190
Westvaco Corporation 624 16,731
Willamette Industries,
Incorporated 662 22,177
--------
616,773
PETROLEUM SERVICES - 0.93%
Apache Corporation * 440 11,137
Baker Hughes, Incorporated 1,975 34,933
Helmerich & Payne, Incorporated 308 5,968
McDermott International,
Incorporated 335 8,270
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PETROLEUM SERVICES-CONTINUED
Mobil Corporation * 4,865 $423,863
Rowan Companies, Incorporated * 557 5,570
Schlumberger, Ltd. * 3,122 144,002
--------
633,743
PHOTOGRAPHY - 0.22%
Eastman Kodak Company 1,956 140,832
Polaroid Corporation 287 5,363
--------
146,195
PLASTICS - 0.14%
Illinois Tool Works, Incorporated * 1,539 89,262
Milacron, Incorporated 266 5,120
--------
94,382
POLLUTION CONTROL - 0.04%
Browning Ferris Industries,
Incorporated 898 25,537
--------
PUBLISHING - 0.83%
American Greetings Corporation,
Class A 407 16,713
Jostens, Incorporated 159 4,164
McGraw-Hill Companies,
Incorporated 614 62,551
Meredith Corporation 321 12,158
Time Warner, Incorporated 7,060 438,161
Times Mirror Company, Series A * 586 32,816
--------
566,563
RAILROADS & EQUIPMENT - 0.44%
Burlington Northern Santa Fe
Corporation * 2,842 95,917
CSX Corporation 1,406 58,349
Norfolk Southern Corporation 2,371 75,131
Union Pacific Corporation * 1,528 68,856
--------
298,253
RETAIL GROCERY - 0.70%
Albertsons, Incorporated * 1,530 97,442
American Stores Company 1,736 64,124
Kroger Company * 1,560 94,380
Safeway, Incorporated * 2,800 170,625
The Great Atlantic & Pacific
Tea Company, Incorporated 159 4,710
Winn-Dixie Stores, Incorporated 919 41,240
--------
472,521
RETAIL TRADE - 5.10%
Abercrombie & Fitch Company,
Class A * 14 991
AutoZone, Incorporated * 931 30,665
</TABLE>
The accompanying notes are an integral part of the financial statements.
109
<PAGE> 148
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
RETAIL TRADE-CONTINUED
Circuit City Stores, Incorporated 610 $ 30,462
Consolidated Stores Corporation * 344 6,945
Costco Companies, Incorporated * 1,388 100,196
CVS Corporation 2,174 119,570
Dayton Hudson Corporation * 2,713 147,180
Dillards, Incorporated, Class A 667 18,926
Dollar General Corporation 1,093 25,822
Federated Department Stores,
Incorporated * 1,371 59,724
Fred Meyer, Incorporated * 902 54,345
GAP, Incorporated 3,661 205,931
Home Depot, Incorporated 8,881 543,406
J. C. Penney, Incorporated 1,538 72,094
Kmart Corporation * 3,029 46,382
Kohls Corporation * 908 55,785
Longs Drug Stores Corporation 162 6,075
Lowe's Companies, Incorporated 2,150 110,053
May Department Stores,
Incorporated 1,473 88,932
Nordstrom, Incorporated 942 32,676
Pep Boys-Manny, Moe & Jack * 360 5,648
Rite Aid Corporation 1,538 76,227
Sears Roebuck & Company 2,431 103,317
Staples, Incorporated * 1,700 74,269
The Limited, Incorporated 1,571 45,755
TJX Companies, Incorporated 1,921 55,709
Toys R Us, Incorporated * 1,775 29,953
Venator Group, Incorporated * 861 5,543
Wal-Mart Stores, Incorporated 13,884 1,130,678
Walgreen Company * 3,056 178,967
----------
3,462,226
SANITARY SERVICES - 0.23%
Waste Management,
Incorporated 3,420 159,457
----------
SOFTWARE - 4.02%
Adobe Systems, Incorporated 393 18,373
Autodesk, Incorporated 299 12,764
BMC Software, Incorporated * 1,100 49,019
Computer Associates
International, Incorporated 3,390 144,499
Compuware Corporation * 900 70,312
Microsoft Corporation * 14,960 2,074,765
Novell, Incorporated * 2,155 39,059
Oracle Systems Corporation * 6,068 261,682
Parametric Technology
Corporation * 1,584 25,938
PeopleSoft, Incorporated * 1,500 28,406
Shared Medical Systems
Corporation 105 5,237
----------
2,730,054
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
STEEL - 0.11%
Allegheny Teldyne, Incorporated 1,060 $ 21,664
Armco, Incorporated * 274 1,199
Bethleham Steel Corporation * 690 5,779
Nucor Corporation 566 24,479
USX-United States Steel Group 560 12,880
Worthington Industries, Incorporated 602 7,525
----------
73,526
TELECOMMUNICATIONS SERVICES - 1.65%
Ascend Communications,
Incorporated * 1,260 82,845
MCI Worldcom, Incorporated * 11,045 792,479
Nextel Communications,
Incorporated, Class A * 1,575 37,209
Northern Telecom, Ltd. 4,069 203,959
----------
1,116,492
TELEPHONE - 6.14%
Airtouch Communications,
Incorporated * 3,187 229,862
Alltel Corporation 1,291 77,218
American Telephone &
Telegraph Corporation 10,998 827,600
Ameritech Corporation 6,775 429,366
Bell Atlantic Corporation * 9,560 506,680
BellSouth Corporation 12,232 610,071
Frontier Corporation 992 33,728
GTE Corporation 5,886 382,590
SBC Communications,
Incorporated 11,311 606,552
Sprint Corporation 4,185 260,868
U. S. West, Incorporated 3,091 199,756
----------
4,164,291
TIRES & RUBBER - 0.09%
Cooper Tire & Rubber Company * 526 10,750
Goodyear Tire & Rubber Company 950 47,916
----------
58,666
TOBACCO - 1.26%
Philip Morris Companies,
Incorporated 14,901 797,203
RJR Nabisco Holdings
Corporation 627 18,614
UST, Incorporated 1,067 37,212
----------
853,029
TOYS, AMUSEMENTS & SPORTING GOODS - 0.11%
Hasbro, Incorporated 836 30,201
Mattel, Incorporated 1,813 41,359
----------
71,560
</TABLE>
The accompanying notes are an integral part of the financial statements.
110
<PAGE> 149
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
TRUCKING & FREIGHT - 0.04%
Navistar International
Corporation, Incorporated * 396 $ 11,286
Ryder Systems, Incorporated 515 13,390
-----------
24,676
TOTAL COMMON STOCKS
(Cost: $51,340,081) $61,104,897
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PREFERRED STOCK - 0.01%
AIR TRAVEL - 0.01%
Sealed Air Corporation,
Series A 145 7,522
------
TOTAL PREFERRED STOCK
(Cost: $7,816) $7,522
------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- ----------
SHORT TERM INVESTMENTS - 7.99%
<S> <C> <C>
$4,625,878 Navigator Securities Lending
Trust, 5.17% $4,625,878
800,000 United States Treasury Bills,
zero coupon due 02/04/1999-
02/25/1999 **** 796,755
-----------
$5,422,633
REPURCHASE AGREEMENTS - 1.96%
1,331,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.80%, to be
repurchased at $1,331,710 on
01/04/1999, collateralized by
$895,000 U.S. Treasury Bonds,
9.875% due 11/15/2015 (valued at
$1,359,465, including interest) **** $ 1,331,000
-----------
TOTAL INVESTMENTS (EQUITY INDEX TRUST)
(Cost: $58,101,513) $67,866,052
===========
</TABLE>
BLUE CHIP GROWTH TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
COMMON STOCKS - 92.72%
AEROSPACE - 1.17%
AlliedSignal, Incorporated 316,400 $14,020,475
-----------
AIR TRAVEL - 0.49%
Galileo International,
Incorporated 135,300 5,885,550
-----------
APPAREL & TEXTILES - 0.39%
Warnaco Group,
Incorporated, Class A 184,600 $ 4,661,150
-----------
AUTO PARTS - 1.91%
Danaher Corporation * 313,800 17,043,262
Federal-Mogul Corporation 96,000 5,712,000
-----------
22,755,262
BANKING - 5.18%
Bank of New York, Incorporated 287,500 11,571,875
Bank One Corporation * 78,400 4,003,300
BankAmerica Corporation * 171,300 10,299,412
Chase Manhattan Corporation 112,500 7,657,031
First Union Corporation 202,100 12,290,206
Mellon Bank Corporation 145,000 9,968,750
National City Corporation 13,100 949,750
Providian Financial Corporation 30,150 2,261,250
State Street Boston Corporation 18,600 1,293,863
U.S. Bancorp 45,000 1,597,500
-----------
61,892,937
BROADCASTING - 3.60%
CBS Corporation * 335,800 10,997,450
Chancellor Media Corporation * 45,000 2,154,375
Clear Channel Communications * 84,000 4,578,000
Fox Entertainment Group,
Incorporated, Class A * 227,300 5,725,119
Infinity Broadcasting Corporation,
Class A * 388,900 10,646,137
Jacor Communications,
Incorporated, Class A * 66,000 4,248,750
MediaOne Group, Incorporated * 98,600 4,634,200
-----------
42,984,031
BUSINESS SERVICES - 6.82%
Automatic Data Processing,
Incorporated 110,900 8,892,794
Cendant Corporation * 197,700 3,768,656
First Data Corporation 224,700 7,120,181
H & R Block, Incorporated 119,500 5,377,500
Nokia Corporaton, ADR * 83,500 10,056,531
OmniCom Group, Incorporated 152,800 8,862,400
Service Corporation International 93,900 3,574,069
SunGard Data Systems,
Incorporated * 98,400 3,905,250
Tyco International, Ltd. 358,448 27,040,421
Valassis Communications,
Incorporated 54,900 2,834,213
-----------
81,432,015
CHEMICALS - 0.67%
Great Lakes Chemical
Corporation 76,800 3,072,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
111
<PAGE> 150
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
CHEMICALS-CONTINUED
<S> <C> <C>
Sterling Commerce,
Incorporated * 110,400 $ 4,968,000
------------
8,040,000
COMPUTERS & BUSINESS EQUIPMENT - 5.44%
America Online, Incorporated * 85,700 13,712,000
Ceridian Corporation * 68,700 4,796,119
Cisco Systems, Incorporated * 124,975 11,599,242
Compaq Computer Corporation 82,400 3,455,650
Dell Computer Corporation * 66,600 4,874,288
EMC Corporation * 104,800 8,908,000
Hewlett-Packard Company 97,500 6,660,469
International Business Machines
Corporation 32,200 5,948,950
Sun Microsystems, Incorporated *
58,100 4,974,812
------------
64,929,530
CONSTRUCTION MATERIALS - 0.59%
Masco Corporation 243,200 6,992,000
------------
DOMESTIC OIL - 0.23%
USX-Marathon Group 89,700 2,702,213
------------
DRUGS & HEALTH CARE - 11.96%
American Home Products
Corporation 180,200 10,147,513
Arterial Vascular Engineering,
Incorporated * 42,200 2,215,500
Biogen, Incorporated * 78,300 6,498,900
Bristol-Myers Squibb Company 143,800 19,242,237
Cardinal Health, Incorporated 37,897 2,875,435
Eli Lilly & Company 91,800 8,158,725
Guidant Corporation * 50,500 5,567,625
HEALTHSOUTH Corporation * 252,900 3,904,144
Johnson & Johnson 103,700 8,697,838
McKesson Corporation * 49,700 3,929,406
Medtronic, Incorporated 25,700 1,908,225
Merck & Company, Incorporated 98,200 14,502,912
Pfizer, Incorporated * 124,200 15,579,337
Pharmacia & Upjohn, Incorporated 38,600 2,185,725
Schering-Plough Corporation 197,800 10,928,450
STERIS Corporation * 53,400 1,518,563
United Healthcare Corporation * 218,800 9,422,075
Warner-Lambert Company 207,300 15,586,369
------------
142,868,979
ELECTRICAL EQUIPMENT - 2.25%
EXEL, Ltd., Class A 144,842 10,863,150
General Electric Company * 139,100 14,196,894
Rentokil Initial 237,000 1,791,576
------------
26,851,620
ELECTRONICS - 3.75%
Intel Corporation 123,800 $14,678.037
Linear Technology Corporation 42,000 3,761,625
Lucent Technologies Incorporated 9,100 1,001,000
Maxim Integrated Products, Incorporated* 129,200 5,644,425
Raytheon Company, Class B 50,200 2,673,150
Teleflex Incorporated 103,300 4,713,063
Tellabs, Incorporated* 26,400 1,810,050
Texas Instruments, Incorporated 61,000 5,219,312
XiLinx, Incorporated* 81,000 5,275,125
------------
44,775,787
FINANCIAL SERVICES - 9.99%
American Express Company 75,000 7,668,750
Associates First Capital Corporation, Class A 212,600 9,008,925
Capital One Financial Corporation 52,500 6,037,500
Citigroup, Incorporated* 469,550 23,242,725
Fairfax Financial Holdings* 16,100 5,687,929
Federal Home Loan Mortgage Corporation 376,900 24,286,494
Federal National Mortgage Association 224,000 16,576,000
Household International, Incorporated 34,000 1,347,250
Morgan Stanley Dean Witter & Company 57,900 4,110,900
Wells Fargo & Company 534,100 21,330,619
------------
119,297,092
FOODS & BEVERAGES - 2.74%
Campbell Soup Company 62,000 3,410,000
General Mills, Incorporated 13,100 1,018,525
H.J. Heinz Company 61,000 3,454,125
PepsiCo, Incorporated 205,000 8,392,187
Ralston Purina Company 77,500 2,509,062
Sara Lee Corporation 275,200 7,757,200
The Coca-Cola Company 25,700 1,718,888
United States Foodservice* 90,247 4,422,103
------------
32,681,890
HOTELS & RESTAURANTS - 0.70%
McDonalds Corporation* 108,400 8,306,150
------------
HOUSEHOLD APPLIANCES - 0.70%
Newell Company 109,500 4,516,875
------------
HOUSEHOLD PRODUCTS - 1.32%
Colgate-Palmolive Company 66,700 6,194,763
Gillette Company 76,500 3,695,906
Procter & Gamble Company* 64,000 5,844,000
------------
15,734,669
</TABLE>
The accompanying notes are an integral part of the financial statements.
112
<PAGE> 151
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<S> <C> <C>
INDUSTRIAL MACHINERY - 0.19%
SPX Corporation 34,100 $ 2,284,700
-----------
INSURANCE - 2.68%
ACE, Ltd. 263,900 9,088,056
Allstate Corporation 74,200 2,865,975
American International
Group, Incorporated 18,975 1,833,459
Berkshire Hathaway,
Incorporated, Class A 76 5,292,000
Equifax, Incorporated 85,600 2,926,450
Travelers Property Casualty
Corporation, Class A 143,400 4,445,400
UNUM Corporation 95,900 5,598,163
-----------
32,049,503
INTERNATIONAL OIL - 1.24%
Chevron Corporation 58,200 4,826,962
Halliburton Company 148,000 4,384,500
The BP Amoco Petroleum
Company, PLC, ADR 58,800 5,586,000
-----------
14,797,462
LEISURE TIME - 0.88%
Carnival Corporation, Class A 153,700 7,377,600
The Walt Disney Company 105,800 3,174,000
-----------
10,551,600
NEWSPAPERS - 0.70%
Tribune Company 127,200 8,395,200
-----------
PAPER - 1.05%
Fort James Corporation 123,300 4,932,000
Kimberly-Clark Corporation 138,700 7,559,150
-----------
12,491,150
PETROLEUM SERVICES - 1.12%
Mobil Corporation * 138,700 12,084,238
Schlumberger, Ltd. * 26,600 1,226,925
-----------
13,311,163
PHOTOGRAPHY - 0.22%
Eastman Kodak Company 36,800 2,649,600
-----------
PUBLISHING - 1.33%
Time Warner, Incorporated 255,200 15,838,350
-----------
RAILROADS & EQUIPMENT - 0.69%
Burlington Northern Santa Fe
Corporation * 96,500 3,256,875
Norfolk Southern Corporation 155,300 4,921,069
-----------
8,177,944
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<S> <C> <C>
REAL ESTATE - 0.86%
Crescent Real Estate Equities 171,500 $ 3,944,500
Starwood Hotels & Resorts Trust SBI 277,600 6,298,050
-----------
10,242,550
RETAIL GROCERY - 1.72%
Kroger Company * 59,100 3,575,550
Safeway, Incorporated * 278,600 16,977,187
-----------
20,552,737
RETAIL TRADE - 5.12%
CVS Corporation 213,066 11,718,630
Dayton Hudson Corporation * 45,600 2,473,800
Fred Meyer, Incorporated * 198,200 11,941,550
Home Depot, Incorporated 159,100 9,734,931
Rite Aid Corporation 152,000 7,533,500
Saks, Incorporated * 215,800 6,811,188
Wal-Mart Stores, Incorporated 133,600 10,880,050
-----------
61,093,649
SANITARY SERVICES - 1.12%
Waste Management, Incorporated 287,700 13,414,013
-----------
SOFTWARE - 6.32%
Adobe Systems, Incorporated 32,500 1,519,375
BMC Software, Incorporated * 199,700 8,899,131
Computer Associates
International, Incorporated 40,300 1,717,788
Compuware Corporation * 67,300 5,257,813
HBO & Company 342,400 9,822,600
Microsoft Corporation * 163,900 22,730,881
Networks Associates, Incorporated * 185,900 12,315,875
Oracle Systems Corporation * 148,600 6,408,375
Parametric Technology Corporation * 417,900 6,843,112
-----------
75,514,950
TELECOMMUNICATIONS SERVICES - 2.51%
Ascend Communications,
Incorporated * 48,700 3,202,025
MCI Worldcom, Incorporated * 373,943 26,830,410
-----------
30,032,4353
TELEPHONE - 3.67%
Airtouch Communications,
Incorporated * 120,500 8,691,063
Alltel Corporation 155,800 9,318,787
American Telephone &
Telegraph Corporation 100,300 7,547,575
GTE Corporation 61,900 4,023,500
SBC Communications, Incorporated 265,200 14,221,350
-----------
43,802,275
TOBACCO-1.17%
Philip Morris Companies,
Incorporated 260,600 13,942,100
</TABLE>
The accompanying notes are an integral part of the financial statements.
113
<PAGE> 152
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<S> <C> <C>
TOYS, AMUSEMENTS & SPORTING GOODS - 0.54%
Hasbro, Incorporated 179,800 6,495,275
--------------
TOTAL COMMON STOCKS
(Cost: $777,900,871) $1,106,964,881
--------------
PREFERRED STOCKS - 0.14%
TELECOMMUNICATIONS SERVICES - 0.14%
Telecomunicacoes Brasilerias, ADR 22,600 1,642,738
--------------
TOTAL PREFERRED STOCKS
(Cost: $2,396,695) $ 1,642,738
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 7.09%
$51,656,316 Navigator Securities Lending
Trust, $ 51,656,316
5.17%
750,000 Federal Home Loan Mortgage
Corporation, 5.03% due
02/12/1999 745,599
1,675,000 Aluminum Company America
5.25% due 02/04/1999 1,666,695
3,800,000 CIESCO LP,
5.17% due 01/26/1999 3,784,720
8,499,000 CIESCO LP,
5.20% due 01/13/1999-02/05/1999 8,469,309
13,300,000 Diageo Capital PLC, ADS,
5.11% due 02/08/1999 13,228,261
3,870,000 E.I. Dupont De Nemours &
Company, 5.14% due 02/05/1999 3,850,661
1,250,000 General Electric Capital
Services,
Incorporated, 5.25% due
01/21/1999 1,246,354
--------------
$ 84,647,915
REPURCHASE AGREEMENTS - 0.06%
$ 670,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.00%, to be
repurchased at $670,298 on
01/04/1999, collateralized by
$655,000 U.S. Treasury Notes,
6.625% due 06/30/2001 (valued at
$684,475, including interest) $ 670,000
--------------
TOTAL INVESTMENTS (BLUE CHIP GROWTH
TRUST) (Cost: $865,615,480) $1,193,925,534
==============
</TABLE>
REAL ESTATE SECURITIES TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 83.93%
REAL ESTATE - 83.93%
AMB Property Corporation 111,700 $2,457,400
Apartment Investment &
Management Company,
Class A * 144,300 $5,366,156
Archstone Communities Trust SBI 381,350 7,722,337
Arden Realty, Incorporated * 80,497 1,866,524
Avalon Bay Communities,
Incorporated * 194,727 6,669,400
Boston Properties, Incorporated 100,800 3,074,400
Brandywine Realty Trust SBI 153,800 2,749,175
BRE Properties, Incorporated * 51,791 1,281,827
Camden Property Trust 114,600 2,979,600
CarrAmerica Realty Corporation 184,200 4,420,800
CBL & Associates Properties,
Incorporated 90,100 2,325,706
CCA Prison Realty Trust 103,150 2,114,575
Chelsea GCA Realty, Incorporated 72,700 2,589,937
Colonial Properties Trust SBI 98,050 2,610,581
Cornerstone Properties,
Incorporated 104,900 1,639,063
Cousins Properties, Incorporated 38,450 1,240,013
Crescent Real Estate Equities 116,870 2,688,010
Developers Diversified Realty 184,200 3,269,550
Duke Realty Investments,
Incorporated 103,150 2,398,238
Equity Office Properties Trust 299,080 7,177,920
Equity Residential Properties Trust
SBI 169,412 6,850,598
Essex Property Trust 53,000 1,576,750
Federal Realty Investment Trust SBI 47,800 1,129,275
Felcor Lodging Trust, Incorporated 66,445 1,532,388
First Industrial Realty Trust,
Incorporated * 103,600 2,777,775
Franchise Finance Corporation of
America 92,640 2,223,360
Gables Residential Trust SBI 30,385 704,552
General Growth Properties,
Incorporated 116,100 4,397,287
Glenborough Realty Trust,
Incorporated 115,350 2,350,256
Highwoods Properties, Incorporated 105,200 2,708,900
Hospitality Properties Trust SBI 57,000 1,375,125
JDN Realty Corporation 37,050 798,891
Kimco Realty Corporation * 172,700 6,854,031
Liberty Property Trust SBI 59,000 1,452,875
Mack-California Realty Corporation * 59,150 1,826,256
Manufactured Home
Communities, Incorporated 100,000 2,506,250
Meristar Hospitality
Corporation 148,131 2,749,682
Mills Corporation 78,779 1,565,733
New Plan Excel Realty Trust,
Incorporated 149,000 3,305,937
</TABLE>
The accompanying notes are an integral part of the financial statements.
114
<PAGE> 153
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
REAL ESTATE-CONTINUED
Patriot American Hospitality,
Incorporated * 105,000 $ 630,000
Post Properties, Incorporated 36,400 1,399,125
Prentiss Properties Trust SBI 93,300 2,081,756
Prologis Trust SBI 199,000 4,129,250
Public Storage, Incorporated * 232,077 6,280,584
Reckson Associates Realty
Corporation 50,400 1,118,250
Regency Realty Corporation 29,700 660,825
Rouse Company 68,325 1,878,938
Shurgard Storage Centers,
Incorporated, Class A 33,400 862,138
Simon Property Group, Incorporated * 227,860 6,494,010
Spieker Properties, Incorporated 63,000 2,181,375
Starwood Hotels & Resorts Trust
SBI 172,360 3,910,417
Storage USA, Incorporated 37,938 1,225,872
Summit Properties, Incorporated 105,600 1,821,600
Sun Communities, Incorporated 23,100 804,169
The Macerich Company, REIT 25,600 656,000
TriNet Corporate Realty Trust,
Incorporated 30,649 819,861
Vornado Realty Trust 123,850 4,179,937
Weeks Corporation 23,850 672,272
Weingarten Realty Investors SBI 26,600 1,187,025
Westfield America, Incorporated 72,900 1,257,525
------------
159,578,062
TOTAL COMMON STOCKS
(Cost: $174,630,261) $159,578,062
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 14.70%
$27,952,797 Navigator Securities Lending
Trust,
5.17% $ 27,952,797
------------
REPURCHASE AGREEMENTS - 1.37%
$ 2,596,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.80%, to be
repurchased at $2,597,385 on
01/04/1999, collateralized by
$2,540,000 U.S. Treasury Notes,
5.75% due 11/30/2002 (valued at
$2,647,950, including interest) $ 2,596,000
------------
TOTAL INVESTMENTS (REAL ESTATE
SECURITIES TRUST) (Cost: $205,179,058) $190,126,859
============
</TABLE>
VALUE TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 85.27%
AEROSPACE - 2.13%
Aeroquip-Vickers, Incorporated 94,800 $ 2,838,075
TRW, Incorporated 48,300 2,713,856
-----------
5,551,931
AIR TRAVEL - 2.41%
AMR Corporation * 52,500 3,117,188
Delta Air Lines, Incorporated 61,000 3,172,000
-----------
6,289,188
APPAREL & TEXTILES - 4.13%
Liz Claiborne, Incorporated 138,800 4,380,875
Springs Industries, Incorporated 43,400 1,798,388
V. F. Corporation 97,900 4,589,062
-----------
10,768,325
AUTO PARTS - 1.70%
Dana Corporation 78,500 3,208,687
Eaton Corporation 17,400 1,229,963
-----------
4,438,650
AUTOMOBILES - 6.34%
Ford Motor Company 118,700 6,966,206
General Motors Corporation 133,700 9,567,906
-----------
16,534,112
BANKING - 12.99%
Bank One Corporation * 72,600 3,707,138
BankAmerica Corporation * 65,400 3,932,175
BankBoston Corporation 40,400 1,573,075
Chase Manhattan Corporation 98,300 6,690,544
First Union Corporation 96,820 5,887,866
PNC Bank Corporation 85,400 4,622,275
Republic New York Corporation 41,700 1,899,956
Washington Mutual, Incorporated 145,500 5,556,281
-----------
33,869,310
BUSINESS SERVICES - 2.19%
First Data Corporation 143,000 4,531,312
Olsten Corporation 158,100 1,165,988
-----------
5,697,300
CHEMICALS - 4.88%
Air Products & Chemicals, 58,000 2,320,000
Incorporated
FMC Corporation * 27,900 1,562,400
IMC Global, Incorporated 65,900 1,408,613
Lubrizol Corporation 82,900 2,129,494
Morton International Industries,
Incorporated 37,400 916,300
Rohm & Haas Company 83,800 2,524,475
</TABLE>
The accompanying notes are an integral part of the financial statements.
115
<PAGE> 154
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
CHEMICALS-CONTINUED
W. R. Grace & Company * 119,400 $ 1,873,087
-----------
12,734,369
COMPUTERS & BUSINESS EQUIPMENT - 2.85%
International Business
Machines Corporation 40,200 7,426,950
-----------
CONSTRUCTION MATERIALS - 1.19%
Owens-Corning 87,400 3,097,238
-----------
DOMESTIC OIL - 1.45%
Phillips Petroleum Company 28,000 1,193,500
Ultramar Diamond Shamrock 107,200 2,599,600
-----------
3,793,100
DRUGS & HEALTH CARE - 6.88%
Beckman Coulter,
Incorporated 61,300 3,325,525
Columbia/HCA Healthcare
Corporation * 100,700 2,492,325
HEALTHSOUTH Corporation * 272,100 4,200,544
Mallinckrodt, Incorporated 29,000 893,562
Tenet Healthcare Corporation * 138,800 3,643,500
United Healthcare Corporation * 78,500 3,380,406
-----------
17,935,862
ELECTRIC UTILITIES - 3.67%
Cinergy Corporation 29,400 1,010,625
DTE Energy Company 47,700 2,045,137
Duke Energy Company 24,339 1,559,217
Entergy Corporation 49,500 1,540,688
GPU, Incorporated 38,100 1,683,544
Southern Company 59,600 1,732,125
-----------
9,571,336
ELECTRONICS - 3.09%
Arrow Electronics, Incorporated * 112,400 2,999,675
Avnet, Incorporated 38,700 2,341,350
Raytheon Company, Class A 22 1,137
TekTronix, Incorporated 90,500 2,720,656
-----------
8,062,818
FINANCIAL SERVICES - 2.28%
Hartford Financial Services
Group, Incorporated 62,300 3,418,712
ReliaStar Financial Corporation 54,500 2,513,813
-----------
5,932,525
FOOD & BEVERAGES - 2.19%
Dole Food, Incorporated 8,300 249,000
IBP, Incorporated 70,100 2,041,663
Universal Foods Corporation 124,600 3,418,712
-----------
5,709,375
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
INDUSTRIAL MACHINERY - 5.66%
Case Corporation 196,200 $ 4,279,612
Cummins Engine, Incorporated 79,300 2,815,150
Harnischfeger Industries,
Incorporated 127,000 1,293,813
Kennametal, Incorporated 58,200 1,236,750
Parker-Hannifin Corporation 93,450 3,060,487
Tecumseh Products Company,
Class A 44,500 2,074,813
-----------
14,760,625
INSURANCE - 7.38%
Allstate Corporation 101,900 3,935,887
American General Corporation 26,000 2,028,000
CIGNA Corporation * 62,300 4,816,569
Everest Reinsurance Holdings 67,300 2,620,494
Foundation Health System,
Incorporated * 121,240 1,447,303
Old Republic International
Corporation 96,250 2,165,625
Transatlantic Holdings, Incorporated 29,400 2,221,537
-----------
19,235,415
INTERNATIONAL OIL - 0.58%
Amoco Corporation * 900 54,337
Nabors Industries, Incorporated * 107,100 1,452,544
-----------
1,506,881
OFFICE FURNISHINGS & SUPPLIES - 0.35%
Standard Register 29,400 909,563
-----------
PAPER - 0.39%
Westvaco Corporation 37,600 1,008,150
-----------
RAILROADS & EQUIPMENT - 0.20%
Burlington Northern Santa Fe
Corporation * 15,100 509,625
-----------
RETAIL TRADE - 2.97%
Dillards, Incorporated, Class A 83,200 2,360,800
Sears Roebuck & Company 65,700 2,792,250
Toys R Us, Incorporated * 153,300 2,586,937
-----------
7,739,987
STEEL - 0.51%
Inland Steel Industries,
Incorporated 79,800 1,346,625
-----------
TELEPHONE - 1.48%
Bell Atlantic Corporation * 72,600 3,847,800
-----------
TIRES & RUBBER - 1.67%
Goodyear Tire & Rubber Company 86,200 4,347,713
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
116
<PAGE> 155
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
TOBACCO - 3.42%
Philip Morris Companies,
Incorporated 91,500 $ 4,895,250
RJR Nabisco Holdings Corporation 135,600 4,025,625
------------
8,920,875
TRUCKING & FREIGHT - 0.29%
CNF Transportation, Incorporated 20,200 758,763
------------
TOTAL COMMON STOCKS
(Cost: $231,000,366) $222,304,411
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 2.29%
$ 5,963,102 Navigator Securities Lending
Trust,
5.17% $ 5,963,102
------------
REPURCHASE AGREEMENTS - 12.44%
$32,437,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.00%, to be
repurchased at $32,451,416 on
01/04/1999, collateralized by
$33,255,000 U.S. Treasury Notes,
4.00% due 10/31/2000 (valued at
$33,088,725, including interest) $ 32,437,000
------------
TOTAL INVESTMENTS (VALUE TRUST)
(Cost: $269,400,468) $260,704,513
============
</TABLE>
INTERNATIONAL GROWTH AND INCOME TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 80.66%
AEROSPACE - 0.59%
Lucas Varity PLC, ADS 433,200 $ 1,446,639
-----------
APPAREL & TEXTILES - 0.79%
Christian Dior SA 17,500 1,934,359
-----------
AUTO PARTS - 2.09%
Autoliv, Incorporated, ADR 143,100 5,125,308
-----------
AUTOMOBILES - 0.37%
Volkswagen AG 16,360 897,564
-----------
BANKING - 11.12%
Banco Pinto & Sotto Mayor 81,118 1,538,654
Bank Austria AG 34,100 1,734,012
Banque Paribas 41,189 3,578,161
Dao Heng Bank Group, Ltd. 811,500 2,508,573
Lloyds TSB Group PLC 275,700 $ 3,925,484
Royal Bank Canada 71,300 3,570,831
Societe Generale 18,460 2,988,070
Sparebanken Nor 70,380 1,370,828
The Mitsui Trust & Banking
Company, Ltd. 442,000 504,361
UBS AG * 11,150 3,425,275
Westpac Banking Corporation, Ltd. 268,600 1,797,360
Yapi Kredi Bankasi 25,257,868 292,244
-----------
27,233,853
BROADCASTING - 1.40%
Canal Plus 4,100 1,118,315
Central European Media
Enterprises, Ltd., Class A * 1,900 12,469
Grupo Televisa SA, ADR 92,800 2,291,000
-----------
3,421,784
BUILDING MATERIALS & CONSTRUCTION - 0.74%
ACS, Actividades de Construccion y
Servicios SA 46,000 1,812,553
-----------
BUSINESS SERVICES - 3.07%
Vivendi 29,019 7,525,944
-----------
CHEMICALS - 2.34%
BASF AG 60,900 2,324,037
Mitsubishi Chemical 689,000 1,450,526
Rhodia SA * 128,401 1,952,081
-----------
5,726,644
COMPUTERS & BUSINESS EQUIPMENT - 0.98%
Fujitsu, Ltd. 181,000 2,409,598
-----------
CONGLOMERATES - 0.41%
ABSA Group, Ltd. 134,300 637,265
First Phil Holdings 701,000 378,432
-----------
1,015,697
CONSTRUCTION MATERIALS - 1.98%
Taiheiyo Cement 620,000 1,552,056
Cie de Staint Gobain 6,500 917,278
Tostem Corporation 120,000 2,377,709
-----------
4,847,043
CRUDE PETROLEUM & NATURAL GAS - 1.01%
Elf Aquitaine SA 21,453 2,478,741
-----------
DRUGS & HEALTH CARE - 8.44%
Merck 26,000 1,170,047
Roche Holdings AG * 304 3,708,990
Sanofi Company SA 16,080 2,645,967
</TABLE>
The accompanying notes are an integral part of the financial statements.
117
<PAGE> 156
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
DRUGS & HEALTH CARE - CONTINUED
Schering AG 20,680 $ 2,596,478
SmithKline Beecham PLC 199,500 2,764,926
Takeda Chemical Industries, Ltd. 65,000 2,501,106
Yamanouchi Pharmaceutical
Company, Ltd. 89,000 2,865,634
Zeneca Group, PLC 55,600 2,422,050
-----------
20,675,198
ELECTRICAL EQUIPMENT - 0.58%
ABB AB 133,500 1,421,297
-----------
ELECTRIC UTILITIES - 3.69%
Iberdrola SA 222,900 4,164,083
National Power 116,000 1,000,233
VEBA AG 64,600 3,864,526
-----------
9,028,842
ELECTRONICS - 2.70%
Fanuc, Ltd. 56,000 1,917,028
Rohm Company 22,000 2,002,477
Samsung Electronics, Ltd., GDR 2,910 112,035
SGS Thomson Microelectronics,
Incorporated * 32,700 2,573,421
-----------
6,604,961
FINANCIAL SERVICES - 0.32%
WBK STRYPES Trust 24,900 785,906
-----------
FOOD & BEVERAGES - 4.62%
Danisco A/S 37,800 2,049,086
Laurus NV 107,980 2,724,358
Nestle SA * 2,000 4,353,207
Pic International 456,768 576,747
Tate & Lyle PLC 301,000 1,620,269
-----------
11,323,667
GOLD - 0.67%
Anglogold, Ltd. 42,088 1,637,704
-----------
HOUSEHOLD APPLIANCES - 2.42%
Philips Electronics NV 61,711 4,138,812
Sony Corporation * 24,500 1,783,591
-----------
5,922,403
HOUSEHOLD PRODUCTS - 1.12%
Unilever PLC 243,000 2,733,195
-----------
INDUSTRIAL DEVELOPMENT - 0.71%
Gea AG 72,100 1,730,469
-----------
INDUSTRIAL MACHINERY - 0.53%
Tadano, Ltd. 451,000 1,304,529
-----------
INSURANCE - 6.52%
Allied Zurich PLC * 160,000 $ 2,404,386
Bayerische Vita 76,000 484,925
QBE Insurance Group, Ltd. 541,000 2,237,729
Royal & Sun Alliance
Insurance Group PLC 217,000 1,766,573
Schweizererische Ruckversicher 1,950 5,083,315
Zurich Allied AG 5,400 3,997,816
-----------
15,974,744
INTERNATIONAL OIL - 3.96%
Pakistan State Oil Company, Ltd. 17,060 26,747
Petrofina SA 2,500 1,138,993
RWE AG 68,400 3,745,050
Surgutneftegaz 247,400 834,975
The Shell Transport and
Trading Company PLC 462,000 2,840,007
YPF Sociedad Anonima, ADR 39,570 1,105,487
-----------
9,691,259
LIQUOR - 0.46%
South Africa Brews 67,104 1,130,115
-----------
PAPER - 1.28%
Fletcher Challenge Paper 978,800 654,113
Stora Enso Oyj - A Shares 99,421 858,950
Stora Enso Oyj - R Shares 184,476 1,616,553
-----------
3,129,616
PETROLEUM SERVICES - 1.05%
TOTAL SA, B Shares * 25,373 2,568,614
-----------
PUBLISHING - 1.26%
Lagardere S.C.A 39,100 1,660,928
Wolters Kluwer NV 6,700 1,432,938
-----------
3,093,866
RETAIL TRADE - 2.93%
Carrefour SA 2,719 2,051,773
Ito-Yokado Company, Ltd. 16,000 1,118,089
Mitsubishi Corporation 447,000 2,570,102
Vendex NV 58,900 1,429,627
-----------
7,169,591
STEEL - 1.45%
Acerinox SA 45,700 1,062,753
Rautaruukki Oy 357,200 2,304,742
Tokyo Steel Manufacturing 37,000 185,246
-----------
3,552,741
TELECOMMUNICATIONS SERVICES - 2.68%
Cable & Wireless ADS 152,400 1,863,539
Great Nordic Store Nord A/S 84,000 2,969,690
Pak Telecom Corporation 603,200 230,974
Smartone Telecommunications 350,000 971,269
</TABLE>
The accompanying notes are an integral part of the financial statements.
118
<PAGE> 157
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
TELECOMMUNICATIONS SERVICES-CONTINUED
Telstra Corporation * 114,700 $ 536,283
------------
6,571,755
TELEPHONE -5.13%
DDI Corporation 1,005 3,733,746
Swisscom AG * 9,600 4,018,345
Tele Norte Leste Participacoes * 145,379 1,808,151
Telecom Italia SPA RISP 478,200 3,007,820
------------
12,568,062
TOBACCO - 0.58%
British American Tobacco PLC 160,000 1,408,872
------------
TRANSPORTATION - 0.67%
Stolt-Nielsen SA, ADR 68,500 702,125
TNT Post Group NV 29,300 943,551
------------
1,645,676
TOTAL COMMON STOCKS
(Cost: $186,356,071) $197,548,809
------------
PREFERRED STOCK - 2.97%
BROADCASTING - 1.33%
News Corporation 535,400 3,257,873
------------
INSURANCE - 1.64%
Munchener Ruckversicherungs-
Gesellschaft AG 8,301 4,019,505
------------
TOTAL PREFERRED STOCK
(Cost: $5,579,157) $ 7,277,378
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
CORPORATE BONDS - 0.85%
FOOD & BEVERAGES - 0.85%
Compass Group,
5.75% due 10/05/2007 GBP 725,000 2,077,795
-----------
TOTAL CORPORATE BONDS
(Cost: $1,970,482) $ 2,077,795
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 11.32%
$ 27,734,510 Navigator Securities Lending Trust, $27,734,510
5.17% -----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
REPURCHASE AGREEMENTS - 4.20%
$10,292,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.00%, to be
repurchased at $10,296,574 on
01/04/1999, collateralized by
$8,325,000 U.S. Treasury Bonds,
7.125% due 02/15/2023 (valued at
$10,498,608, including interest) $10,292,000
-----------
TOTAL INVESTMENTS (INTERNATIONAL GROWTH
AND INCOME TRUST) (Cost: $231,932,220)
$244,930,492
============
</TABLE>
GROWTH AND INCOME TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 95.59%
AEROSPACE - 2.07%
Boeing Company 400,000 $13,050,000
Computer Sciences Corporation * 310,000 19,975,625
United Technologies Corporation 145,000 15,768,750
-----------
48,794,375
AGRICULTURAL MACHINERY - 0.52%
John Deere & Company 371,200 12,296,000
-----------
AGRICULTURAL OPERATIONS - 0.52%
Monsanto Company 247,300 12,117,700
-----------
AIR TRAVEL - 1.01%
Southwest Airlines Company * 1,058,100 23,741,119
-----------
ALUMINUM - 0.49%
Aluminum Company of America 155,000 11,557,188
-----------
AUTO SERVICES - 0.39%
General Motors Corporation * 230,000 9,128,125
-----------
BANKING - 4.91%
Chase Manhattan Corporation 225,600 15,354,900
First Union Corporation 606,600 36,888,862
U.S. Bancorp 867,000 30,778,500
Wachovia Corporation 370,800 32,421,825
-----------
115,444,087
BUSINESS SERVICES - 3.45%
Automatic Data Processing,
Incorporated 290,000 23,254,375
First Data Corporation 721,300 22,856,194
Service Corporation International 390,300 14,855,794
</TABLE>
The accompanying notes are an integral part of the financial statements.
119
<PAGE> 158
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BUSINESS SERVICES-CONTINUED
Tyco International, Ltd. 266,700 $ 20,119,181
------------
81,085,544
CHEMICALS - 2.17%
Dow Chemical Company * 140,400 12,767,625
E.I. Du Pont De Nemours & Company 381,800 20,259,262
Zeneca Group PLC, ADR 399,900 17,945,513
------------
50,972,400
COMPUTERS & BUSINESS EQUIPMENT - 7.25%
Cisco Systems, Incorporated * 427,500 39,677,344
EMC Corporation * 228,600 19,431,000
Hewlett-Packard Company 359,800 24,578,837
International Business
Machines Corporation 317,100 58,584,225
Xerox Corporation 240,500 28,379,000
------------
170,650,406
DOMESTIC OIL - 0.46%
Unocal Corporation 370,000 10,799,375
------------
DRUGS & HEALTH CARE - 13.23%
Abbott Laboratories 640,000 31,360,000
American Home Products
Corporation 767,400 43,214,212
Baxter International, Incorporated 430,100 27,660,806
Bristol-Myers Squibb Company 180,000 24,086,250
Columbia/HCA Healthcare
Corporation * 1,007,600 24,938,100
Johnson & Johnson 319,400 26,789,675
Merck & Company, Incorporated 223,600 33,022,925
Pfizer, Incorporated * 260,000 32,613,750
Pharmacia & Upjohn, Incorporated 714,500 40,458,563
Warner-Lambert Company 360,000 27,067,500
------------
311,211,781
ELECTRICAL EQUIPMENT - 3.39%
General Electric Company * 782,700 79,884,319
------------
ELECTRIC UTILITIES - 2.12%
DPL, Incorporated 667,500 14,434,687
GPU, Incorporated 295,400 13,052,988
Pinnacle West Capital Corporation 254,900 10,801,388
Texas Utilities Company 250,000 11,671,875
------------
49,960,938
ELECTRONICS - 4.43%
Analog Devices, Incorporated * 355,300 11,147,538
Intel Corporation 360,000 42,682,500
Lucent Technologies, Incorporated 190,900 20,999,000
Motorola, Incorporated * 269,500 16,456,344
Texas Instruments, Incorporated 151,000 12,919,937
------------
104,205,319
FINANCIAL SERVICES - 7.33%
American Express Company 330,000 $33,742,500
Citigroup, Incorporated * 1,414,250 70,005,375
Federal National Mortgage
Association 521,000 38,554,000
Merrill Lynch & Company,
Incorporated 451,600 30,144,300
------------
172,446,175
FOOD & BEVERAGES - 3.16%
General Mills, Incorporated 127,200 9,889,800
H.J. Heinz Company 160,000 9,060,000
PepsiCo, Incorporated 423,500 17,337,031
Sara Lee Corporation 820,000 23,113,750
The Coca-Cola Company 225,000 15,046,875
------------
74,447,456
GAS & PIPELINE UTILITIES - 0.95%
Enron Corporation 190,100 10,847,581
National Fuel Gas Company 145,000 6,552,187
Peoples Energy Corporation 123,700 4,932,538
------------
22,332,306
HOTELS & RESTAURANTS - 1.45%
McDonalds Corporation * 445,000 34,098,125
------------
HOUSEHOLD PRODUCTS - 2.55%
Colgate-Palmolive Company 150,000 13,931,250
Gillette Company 274,500 13,261,781
Procter & Gamble Company * 360,000 32,872,500
------------
60,065,531
INSURANCE - 3.51%
ACE, Ltd. 600,000 20,662,500
American International
Group, Incorporated 328,100 31,702,662
Marsh & McLennan
Companies, Incorporated 518,200 30,282,313
------------
82,647,475
INTERNATIONAL OIL - 5.22%
Amoco Corporation * 400,000 24,150,000
Chevron Corporation 330,000 27,369,375
Exxon Corporation 494,000 36,123,750
Royal Dutch Petroleum Company 732,700 35,078,012
------------
122,721,137
LEISURE TIME - 1.07%
The Walt Disney Company 839,900 25,197,000
------------
LIQUOR - 1.13%
Anheuser-Busch Companies,
Incorporated * 406,300 26,663,438
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
120
<PAGE> 159
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
NEWSPAPERS - 1.39%
Gannett, Incorporated 506,500 $ 32,669,250
--------------
PAPER - 1.78%
International Paper Company 182,800 8,191,725
Kimberly-Clark Corporation 385,000 20,982,500
Minnesota Mining &
Manufacturing Company 180,000 12,802,500
--------------
41,976,725
PETROLEUM SERVICES - 0.94%
Diamond Offshore Drilling,
Incorporated 170,000 4,026,875
Schlumberger, Ltd. * 392,800 18,117,900
--------------
22,144,775
PHOTOGRAPHY - 0.56%
Eastman Kodak Company 182,500 13,140,000
--------------
RAILROADS & EQUIPMENT - 0.65%
Union Pacific Corporation * 340,100 15,325,756
--------------
RETAIL TRADE - 5.67%
Dayton Hudson Corporation * 728,300 39,510,275
GAP, Incorporated 450,000 25,312,500
May Department Stores,
Incorporated 284,900 17,200,837
Wal-Mart Stores, Incorporated 630,000 51,305,625
--------------
133,329,237
SOFTWARE - 3.09%
Microsoft Corporation * 525,000 72,810,938
--------------
TELECOMMUNICATIONS SERVICES - 1.97%
Cox Communications,
Incorporated, Class A * 147,000 10,161,375
MCI Worldcom, Incorporated * 504,200 36,176,350
--------------
46,337,725
TELEPHONE - 5.09%
Bell Atlantic Corporation * 638,798 33,856,294
BellSouth Corporation 430,000 21,446,250
SBC Communications, Incorporated 780,000 41,827,500
U. S. West, Incorporated 350,000 22,618,750
--------------
119,748,794
TOBACCO - 1.67%
Philip Morris Companies,
Incorporated 735,000 39,322,500
--------------
TOTAL COMMON STOCKS
(Cost: $1,421,593,318) $2,249,273,019
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 2.67%
$62,779,970 Navigator Securities Lending
Trust,
5.17% $62,779,970
---------------
REPURCHASE AGREEMENTS - 1.75%
$41,110,000 Repurchase Agreement with
Paribas Corporation dated
12/31/1998 at 4.80%, to be
repurchased at $41,131,925 on
01/04/1999, collateralized by
$40,302,000 U.S. Treasury Notes
at, 6.125% due 12/31/2001 (valued
at $41,914,080, including
interest) $41,110,000
---------------
TOTAL INVESTMENTS (GROWTH AND INCOME
TRUST) (Cost: $1,525,483,288) $2,353,162,989
==============
</TABLE>
EQUITY-INCOME TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 90.48%
AEROSPACE - 1.72%
AlliedSignal, Incorporated 146,300 $ 6,482,919
Boeing Company 157,000 5,122,125
TRW, Incorporated 144,800 8,135,950
-----------
19,740,994
AGRICULTURAL MACHINERY - 0.17%
John Deere & Company 59,800 1,980,875
-----------
ALUMINUM - 0.35%
Reynolds Metals Company 76,500 4,030,594
-----------
AUTO PARTS - 0.77%
Eaton Corporation 15,000 1,060,313
Genuine Parts Company 234,350 7,836,078
-----------
8,896,391
AUTOMOBILES - 0.81%
General Motors Corporation 129,800 9,288,812
-----------
BANKING - 7.64%
Bank One Corporation * 164,800 8,415,100
BankAmerica Corporation * 80,100 4,816,013
BankBoston Corporation 119,800 4,664,713
Chase Manhattan Corporation 118,100 8,038,181
First Union Corporation 141,210 8,587,333
Fleet Financial Group, Incorporated 199,000 8,892,812
J. P. Morgan & Company,
Incorporated 95,500 10,033,469
Mellon Bank Corporation 284,700 19,573,125
Mercantile Bankshares Corporation 134,250 5,168,625
National City Corporation 80,000 5,800,000
PNC Bank Corporation 72,400 3,918,650
-----------
87,908,021
</TABLE>
The accompanying notes are an integral part of the financial statements.
121
<PAGE> 160
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
BUSINESS SERVICES - 2.02%
Dun & Bradstreet Corporation 151,700 $ 4,788,031
H & R Block, Incorporated 152,000 6,840,000
R.R. Donnelley & Sons Company 136,300 5,971,644
Tyco International, Ltd. 74,158 5,594,294
-----------
23,193,969
CHEMICALS - 5.48%
Dow Chemical Company * 143,500 13,049,531
E.I. Du Pont De Nemours &
Company 175,200 9,296,550
Great Lakes Chemical Corporation 177,300 7,092,000
Hercules, Incorporated 274,100 7,503,487
Imperial Chemical Industries PLC,
ADR 94,100 3,287,619
Lubrizol Corporation 96,900 2,489,119
Nalco Chemical Company 159,200 4,935,200
Olin Corporation 171,800 4,864,088
PPG Industries, Incorporated 121,200 7,059,900
Witco Corporation 212,700 3,389,906
-----------
62,967,400
COMPUTERS & BUSINESS EQUIPMENT - 0.69%
Hewlett-Packard Company 116,700 7,972,069
-----------
CONGLOMERATES - 1.11%
Fortune Brands, Incorporated 194,100 6,138,412
Tomkins 1,386,500 6,588,121
-----------
12,726,533
CONSTRUCTION MATERIALS - 0.75%
Armstrong World Industries,
Incorporated 142,900 8,618,656
-----------
COSMETICS & TOILETRIES - 0.96%
International Flavours &
Fragrances, Incorporated 249,300 11,015,944
-----------
CRUDE PETROLEUM & NATURAL GAS - 0.23%
Occidental Petroleum Corporation 155,700 2,627,438
-----------
DOMESTIC OIL - 3.27%
Amerada Hess Corporation * 165,200 8,218,700
Atlantic Richfield Company 181,600 11,849,400
Phillips Petroleum Company 100,100 4,266,763
Unocal Corporation 286,500 8,362,219
USX-Marathon Group 162,500 4,895,312
-----------
37,592,394
DRUGS & HEALTH CARE - 4.19%
Abbott Laboratories 91,300 4,473,700
American Home Products Corporation 318,500 17,935,531
Bausch & Lomb, Incorporated 104,300 6,258,000
Pharmacia & Upjohn, Incorporated 276,500 15,656,812
Smith & Nephew PLC 1,267,200 3,852,760
-----------
48,176,803
ELECTRICAL EQUIPMENT - 2.45%
Cooper Industries, Incorporated 92,500 $ 4,411,094
EXEL, Ltd., Class A 97,300 7,297,500
General Electric Company * 125,100 12,768,018
Hubbell, Incorporated 99,000 3,762,000
-----------
28,238,612
ELECTRIC UTILITIES - 6.15%
Baltimore Gas & Electric Company 77,500 2,392,813
Central & South West Corporation 77,500 2,126,406
Dominion Resources, Incorporated 83,800 3,917,650
DQE, Incorporated 140,200 6,160,038
Duke Energy Company 118,500 7,591,406
Entergy Corporation 117,000 3,641,625
FirstEnergy Corporation 258,775 8,426,361
GPU, Incorporated 63,200 2,792,650
Houston Industries, Incorporated 199,400 6,405,725
PacifiCorp 240,500 5,065,531
PECO Energy Company 71,600 2,980,350
Southern Company 289,300 8,407,781
TECO Energy, Incorporated 124,000 3,495,250
Unicom Corporation 189,600 7,311,450
-----------
70,715,036
ELECTRONICS - 0.84%
AMP, Incorporated 185,353 9,649,941
-----------
FINANCIAL SERVICES - 2.65%
Citigroup, Incorporated * 217,749 10,778,575
Federal National Mortgage
Association 170,500 12,617,000
Wells Fargo & Company 177,000 7,068,938
-----------
30,464,513
FOOD & BEVERAGES - 4.13%
General Mills, Incorporated 197,900 15,386,725
H.J. Heinz Company 143,900 8,148,337
Kellogg Company 197,800 6,749,925
McCormick & Company,
Incorporated 237,500 8,030,469
Quaker Oats Company 154,700 9,204,650
-----------
47,520,106
FOREST PRODUCTS - 0.42%
Georgia-Pacific Corporation 82,400 4,825,550
-----------
GOLD - 0.37%
Newmont Mining Corporation 234,800 4,241,075
-----------
HOTELS & RESTAURANTS - 0.32%
Hilton Hotels Corporation 194,900 3,727,463
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
122
<PAGE> 161
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
HOUSEHOLD APPLIANCES - 0.61%
Whirlpool Corporation 126,100 $ 6,982,787
-----------
HOUSEHOLD PRODUCTS - 0.75%
Corning, Incorporated 104,700 4,711,500
The Stanley Works 62,000 1,720,500
Tupperware Corporation 132,400 2,176,325
-----------
8,608,325
INDUSTRIAL MACHINERY - 0.61%
Pall Corporation 277,800 7,031,812
-----------
INSURANCE - 3.88%
American General Corporation 147,800 11,528,400
Chubb Corporation 19,800 1,284,525
Lincoln National Corporation 65,100 5,325,994
SAFECO Corporation 215,300 9,244,443
St. Paul Companies, Incorporated 311,948 10,840,193
Transamerica Corporation 55,300 6,387,150
-----------
44,610,705
INTERNATIONAL OIL - 6.37%
Amoco Corporation * 279,900 16,898,962
Chevron Corporation 151,200 12,540,150
Exxon Corporation 233,000 17,038,125
Royal Dutch Petroleum Company 190,800 9,134,550
Texaco, Incorporated 228,700 12,092,513
The British Petroleum
Company PLC, ADR 58,400 5,548,000
-----------
73,252,300
LIQUOR - 2.00%
Anheuser-Busch Companies,
Incorporated * 233,800 15,343,125
Brown Forman Corporation, Class B 102,100 7,727,694
-----------
23,070,819
MINING - 0.45%
Phelps Dodge Corporation 102,500 5,214,688
-----------
NEWSPAPERS - 1.17%
Dow Jones & Company,
Incorporated 101,000 4,860,625
Knight-Ridder, Incorporated 167,200 8,548,100
-----------
13,408,725
NON-FERROUS METALS - 0.22%
Inco, Ltd. 242,300 2,559,294
-----------
PAPER - 3.81%
Consolidated Papers, Incorporated 212,000 5,830,000
International Paper Company 114,200 5,117,587
Kimberly-Clark Corporation 213,800 11,652,100
Minnesota Mining &
Manufacturing Company 141,600 $10,071,300
Union Camp Corporation 165,200 11,151,000
-----------
43,821,987
PETROLEUM SERVICES - 1.62%
Baker Hughes, Incorporated 307,400 5,437,137
Mobil Corporation * 151,600 13,208,150
----------
18,645,287
PHOTOGRAPHY - 0.87%
Eastman Kodak Company 139,700 10,058,400
----------
POLLUTION CONTROL - 0.57%
Browning Ferris Industries,
Incorporated 230,400 6,552,000
----------
PUBLISHING - 0.37%
Readers Digest Association,
Incorporated, Class A 171,000 4,307,063
----------
RAILROADS & EQUIPMENT - 2.90%
Burlington Northern Santa Fe
Corporation * 174,900 5,902,875
GATX Corporation 75,000 2,840,625
Norfolk Southern Corporation 421,600 13,359,450
Union Pacific Corporation * 250,800 11,301,675
----------
33,404,625
REAL ESTATE - 2.24%
Archstone Communities Trust SBI 105,400 2,134,350
Crescent Real Estate Equities 187,300 4,307,900
Rouse Company 53,900 1,482,250
Simon Property Group, Incorporated * 280,600 7,997,100
Starwood Hotels & Resorts
Trust SBI 319,171 7,241,192
Weingarten Realty Investors SBI 57,700 2,574,863
----------
25,737,655
RETAIL TRADE - 1.33%
J. C. Penney, Incorporated 140,400 6,581,250
May Department Stores,
Incorporated 77,700 4,691,137
Toys R Us, Incorporated * 239,000 4,033,125
----------
15,305,512
SANITARY SERVICES - 0.64%
Waste Management, Incorporated 157,532 7,344,929
----------
STEEL - 0.25%
USX-United States Steel Group 126,000 2,898,000
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
123
<PAGE> 162
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
TELECOMMUNICATIONS SERVICES - 0.42%
Telecomunicacoes Brasileiras, ADR 66,900 $ 4,862,794
--------------
TELEPHONE - 8.71%
Alltel Corporation 340,500 20,366,156
American Telephone &
Telegraph Corporation 153,600 11,558,400
BCE, Incorporated 150,600 5,713,388
Bell Atlantic Corporation * 196,000 10,388,000
BellSouth Corporation 103,200 5,147,100
Frontier Corporation 31,900 1,084,600
GTE Corporation 220,300 14,319,500
SBC Communications, Incorporated 464,664 24,917,607
U. S. West, Incorporated 103,200 6,669,300
--------------
100,164,051
TOBACCO - 3.02%
Philip Morris Companies, Incorporated 302,800 16,199,800
RJR Nabisco Holdings Corporation 238,200 7,071,563
UST, Incorporated 328,100 11,442,487
--------------
34,713,850
TRUCKING & FREIGHT - 0.15%
Alexander & Baldwin, Incorporated 76,400 1,776,300
--------------
TOTAL COMMON STOCKS
(Cost: $861,814,566) $1,040,451,097
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 9.48%
$61,723,534 Navigator Securities Lending
Trust, $61,723,534
5.17%
750,000 Federal Home Loan Bank,
5.06% due 01/05/1999 749,579
600,000 Abb Treasury Centre USA,
Incorporated, 4.90% due 02/18/1999 596,080
390,000 CIESCO LP,
5.20% due 01/13/1999 389,324
12,300,000 CIESCO LP,
5.25% due 02/03/1999 12,240,806
1,700,000 Diageo Capital PLC, ADS,
5.11% due 02/08/1999 1,690,830
3,000,000 General Electric Capital
Services,
Incorporated, 5.22% due 2,991,300
01/21/1999
12,500,000 Motorola, Incorporated,
5.12% due 01/26/1999 12,455,556
5,800,000 Reseau Ferre De France,
5.30% due 01/20/1999 5,783,776
10,360,000 Kellogg Company,
5.17% due 01/22/1999 10,328,756
-------------
$108,949,541
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
REPURCHASE AGREEMENTS - 0.04%
$466,000 Repurchase Agreement with State
Street Bank & Trust Company
dated 12/31/1998 at 4.00%, to be
repurchased at $466,207 on
01/04/1999, collateralized by
$455,000 U.S. Treasury Notes,
6.625% due 06/30/2001 (valued at
$475,475, including interest) $466,000
--------------
TOTAL INVESTMENTS (EQUITY-INCOME TRUST)
(Cost: $971,230,107) $1,149,866,637
==============
</TABLE>
BALANCED TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 48.97%
BANKING - 2.60%
Chase Manhattan Corporation 46,500 $3,164,906
Comerica, Incorporated 11,200 763,700
First Union Corporation 15,000 912,187
PNC Bank Corporation 12,500 676,563
Summit Bancorp 16,400 716,475
Union Planters Corporation 12,800 580,000
----------
6,813,831
BROADCASTING - 1.07%
MediaOne Group, Incorporated * 34,775 1,634,425
Tele-Communications,
Incorporated, Series A * 21,000 1,161,563
----------
2,795,988
BUSINESS SERVICES - 1.94%
Humana, Incorporated * 103,500 1,843,594
Service Corporation International 85,100 3,239,118
----------
5,082,712
CHEMICALS - 2.62%
Bayer AG 34,600 1,443,916
E.I. Du Pont De Nemours &
Company 22,500 1,193,906
Rhone Poulenc SA 78,050 4,014,877
Rhone Poulnec SA, ADR 4,250 213,563
----------
6,866,262
COMPUTERS & BUSINESS EQUIPMENT - 1.90%
America Online, Incorporated * 2,600 416,000
International Business Machines
Corporation 18,100 3,343,975
Sun Microsystems, Incorporated * 14,000 1,198,750
----------
4,958,725
DOMESTIC OIL - 2.85%
Atlantic Richfield Company 47,800 3,118,950
Phillips Petroleum Company 43,500 1,854,188
</TABLE>
The accompanying notes are an integral part of the financial statements.
124
<PAGE> 163
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
DOMESTIC OIL - CONTINUED
USX-Marathon Group 82,450 $ 2,483,806
-----------
7,456,944
DRUGS & HEALTH CARE - 17.24%
Abbott Laboratories 51,500 2,523,500
American Home Products
Corporation 29,600 1,666,850
Baxter International, Incorporated 31,300 2,012,981
Becton Dickinson & Company * 47,100 2,010,581
Biomet, Incorporated * 35,400 1,424,850
Bristol-Myers Squibb Company 20,350 2,723,084
Eli Lilly & Company 22,350 1,986,356
Glaxo Wellcome PLC, ADR 45,200 3,141,400
Johnson & Johnson 18,200 1,526,525
Merck & Company, Incorporated 18,500 2,732,219
Merck KGaA 67,700 3,046,622
Novartis AG * 900 1,768,945
Pfizer, Incorporated * 20,400 2,558,925
Pharmacia & Upjohn, Incorporated 32,600 1,845,975
Sankyo Company 60,800 1,328,403
Schering AG 17,925 2,250,574
SmithKline Beecham PLC 59,325 822,202
SmithKline Beecham PLC, ADR 17,975 1,249,263
Synthelabo 11,200 2,369,809
Tenant Healthcare Corporation * 74,000 1,942,500
Warner-Lambert Company 16,500 1,240,594
Zeneca Group, PLC 67,300 2,931,726
-----------
45,103,884
ELECTRICAL EQUIPMENT - 1.84%
General Electric Company * 29,800 3,041,462
Sonat, Incorporated 65,050 1,760,416
-----------
4,801,878
ELECTRIC UTILITIES - 0.31%
Cinergy Corporation 23,550 809,531
-----------
FINANCIAL SERVICES - 1.24%
American Express Company 7,300 746,425
Citigroup, Incorporated * 50,300 2,489,850
-----------
3,236,275
FOOD & BEVERAGES - 1.81%
Hershey's Food Corporation 16,000 995,000
Nestle SA * 1,100 2,394,264
The Coca-Cola Company 20,000 1,337,500
-----------
4,726,764
FUNERAL SERVICES - 0.11%
Stewart Enterprises, Incorporated 13,175 293,144
-----------
GOLD - 0.70%
Barrick Gold Corporation 94,400 1,840,800
-----------
HOUSEHOLD PRODUCTS - 1.39%
Colgate-Palmolive Company 7,700 715,138
Dial Corporation 64,175 $1,853,053
Procter & Gamble Company * 11,600 1,059,225
----------
3,627,416
INSURANCE - 2.08%
Allstate Corporation 57,000 2,201,625
American International
Group, Incorporated 7,950 768,168
Berkley W R Corporation 15,950 543,297
Chubb Corporation 23,625 1,532,672
Travelers Property Casualty
Corporation, Class A 12,600 390,600
----------
5,436,362
LEISURE TIME - 0.31%
Granada Group 45,600 799,269
----------
NEWSPAPERS - 0.90%
Tribune Company 20,800 1,372,800
Washington Post Company 1,700 982,494
----------
2,355,294
PAPER - 0.76%
Kimberly-Clark Corporation 13,900 757,550
Minnesota Mining &
Manufacturing Company 17,100 1,216,238
----------
1,973,788
PETROLEUM SERVICES - 1.57%
Conoco, Incorporated, Class A * 69,600 1,452,900
Mobil Corporation * 30,500 2,657,312
----------
4,110,212
PUBLISHING - 0.29%
Time Warner, Incorporated 12,200 757,163
----------
RAILROADS & EQUIPMENT - 0.59%
Canadian National Railway
Company 29,800 1,545,875
----------
RETAIL GROCERY - 0.59%
Hannaford Brothers Company 29,100 1,542,300
----------
SOFTWARE - 1.29%
Computer Associates
International, Incorporated 33,000 1,406,625
Oracle Systems Corporation * 23,900 1,030,687
Platinum Technology, Incorporated * 49,600 948,600
----------
3,385,912
TELEPHONE - 1.25%
Bell Atlantic Corporation * 23,300 1,234,900
GTE Corporation 31,100 2,021,500
----------
3,256,400
</TABLE>
The accompanying notes are an integral part of the financial statements.
125
<PAGE> 164
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
TOBACCO - 1.72%
Philip Morris Companies,
Incorporated 58,575 $ 3,133,762
RJR Nabisco Holdings Corporation 46,400 1,377,500
------------
4,511,262
TOTAL COMMON STOCKS
(Cost: $110,085,748) $128,087,991
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 39.94%
U.S. TREASURY BILLS - 1.17%
zero coupon due 12/09/1999 $ 3,200,000 $ 3,067,680
------------
U.S. TREASURY BONDS - 10.06%
6.00% due 02/15/2026 2,570,000 2,803,305
6.125% due 11/15/2027 6,450,000 7,219,936
6.25% due 08/15/2023 4,400,000 4,917,704
6.375% due 08/15/2027 1,600,000 1,838,992
6.50% due 11/15/2026 3,640,000 4,232,628
6.625% due 02/15/2027 2,260,000 2,673,151
6.75% due 08/15/2026 1,290,000 1,545,381
6.875% due 08/15/2025 895,000 1,084,767
------------
26,315,864
U.S. TREASURY NOTES - 28.70%
4.25% due 11/15/2003 9,100,000 8,983,429
4.625% due 11/30/2000 5,800,000 5,803,596
4.75% due 11/15/2008 5,800,000 5,845,298
5.375% due 06/30/2003 2,100,000 2,161,026
5.50% due 05/31/2000 -
02/15/2008 13,460,000 14,058,950
5.625% due 05/15/2008 1,050,000 1,120,382
5.75% due 10/31/2000 -
04/30/2003 9,600,000 9,919,159
5.875% due 02/15/2000 -
11/15/2005 9,550,000 9,977,551
6.125% due 12/31/2001 1,600,000 1,664,992
6.25% due 02/15/2007 4,635,000 5,083,992
6.625% due 03/31/2002 5,300,000 5,602,259
6.875% due 05/15/2006 4,300,000 4,861,666
------------
75,082,300
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $102,932,483) $104,465,844
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.04%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.04%
6.00% due 05/15/2008 $100,000 $105,562
--------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost: $101,023) $105,562
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
FOREIGN BOND OBLIGATIONS - 1.66%
FOREIGN BONDS - 1.66%
Province of Ontario, Canada
6.125% due 09/12/2007 CAD 3,006,000 2,096,432
6.50% due 03/08/2029 3,091,000 2,255,813
----------
4,352,245
TOTAL FOREIGN BOND OBLIGATIONS
(Cost: $4,198,981) $4,352,245
----------
CORPORATE BONDS - 2.19%
ELECTRICAL EQUIPMENT - 0.82%
Sonat, Incorporated,
6.625% due 02/01/2008 $ 482,000 $ 496,031
7.00% due 02/01/2018 1,605,000 1,640,278
----------
2,136,309
TELECOMMUNICATIONS SERVICES - 1.37%
New Jersey Bell Telephone Company,
5.875% due
12/01/2006 500,000 502,685
New York Telephone Company,
5.875% due 09/01/2003 2,000,000 2,040,720
7.00% due 12/01/2033 1,000,000 1,051,380
----------
3,594,785
TOTAL CORPORATE BONDS
(Cost: $5,442,719) $5,731,094
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 2.23%
$5,827,967 Navigator Securities Lending
Trust, 5.17% $5,827,967
------------
REPURCHASE AGREEMENTS - 4.97%
$13,007,000 Repurchase Agreement with State
Street Bank & Trust Company dated
12/31/1998 at 4.00%, to be
repurchased at $13,012,781 on
01/04/1999, collateralized by
$12,355,000 U.S. Treasury Notes
at, 6.625% due 03/31/2002 (valued
at $13,272,297, including
interest) $ 13,007,000
--------------
TOTAL INVESTMENTS (BALANCED TRUST)
(Cost: $241,595,921) $261,577,703
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
126
<PAGE> 165
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION TRUSTS
COMMON STOCKS 73.81% 53.57% 24.94%
AEROSPACE 0.80% 0.62% 0.35%
Avteam, Incorporated * 8,500 $ 32,938 -- -- -- --
BE Aerospace, Incorporated 400 8,400 600 $ 12,600 -- --
British Aerospace PLC * 40,865 348,293 73,874 629,629 13,055 $ 111,268
Cordant Technologies, Incorporated 12,200 457,500 20,000 750,000 2,900 108,750
General Dynamics Corporation 1,100 64,487 3,500 205,188 1,500 87,937
Gulfstream Aerospace Corporation * -- -- -- -- 1,300 69,225
Kellstrom Industry, Incorporated 5,500 158,125 6,100 175,375 900 25,875
Lockheed Martin Corporation 2,700 228,825 4,500 381,375 700 59,325
TRW, Incorporated 14,500 814,719 33,500 1,882,281 4,500 252,844
United Technologies Corporation 1,800 195,750 1,200 130,500 300 32,625
---------- ---------- ----------
2,309,037 4,166,948 747,849
AIR TRAVEL 0.51% 0.29% 0.15%
AMR Corporation * 2,200 130,625 4,400 261,250 700 41,563
ASA Holdings, Incorporated 8,600 262,300 17,400 530,700 1,500 45,750
Comair Holdings, Incorporated * 16,500 556,875 16,400 553,500 -- --
Continental Airlines, Incorporated,
Class B* 500 16,750 1,500 50,250 -- --
Southwest Airlines Company * 6,150 137,991 -- -- 5,550 124,528
US Airways Group, Incorporated * 6,900 358,800 11,100 577,200 2,200 114,400
---------- ---------- ----------
1,463,341 1,972,900 326,241
ALUMINUM 0.25% 0.05% 0.04%
Aluminum Company of America 9,800 730,712 4,900 365,356 1,200 89,475
---------- ---------- ----------
APPAREL & TEXTILES 0.15% 0.10% 0.02%
Hugo Boss AG 100 168,007 150 252,010 -- --
Onward Kashiyama Company, Ltd.* -- -- 5,000 67,138 -- --
Shaw Industries, Incorporated * 11,500 278,875 15,200 368,600 1,900 46,075
---------- ---------- ----------
446,882 687,748 46,075
AUTO PARTS 0.68% 0.27% 0.17%
Borg-Warner Automotive, Incorporated -- -- 7,500 418,594 500 27,906
Dana Corporation -- -- 1,486 60,740 -- --
Danaher Corporation * 9,900 537,694 9,300 505,106 800 43,450
Eaton Corporation 1,000 70,687 1,700 120,169 -- --
Federal-Mogul Corporation 15,600 928,200 8,800 523,600 3,000 178,500
Fuji Heavy Industries 16,000 79,965 30,000 149,934 5,000 24,989
Modine Manufacturing Company 9,700 351,625 -- -- 2,600 94,250
---------- ---------- ----------
1,968,171 1,778,143 369,095
AUTO SERVICES 0.09% 0.12% 0.05%
Sonic Automatic, Incorporated * 7,400 254,837 23,100 795,506 3,200 110,200
---------- ---------- ----------
AUTOMOBILES 1.21% 0.89% 0.45%
Daimler Chrysler AG Stuttgart 1,995 191,645 4,676 449,188 935 89,818
</TABLE>
The accompanying notes are an integral part of the financial statements.
127
<PAGE> 166
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
AUTOMOBILES - CONTINUED
Daimler Chrysler AG 5,100 $ 503,390 8,000 $ 789,632 1,400 $ 138,186
Ford Motor Company 23,600 1,385,025 40,200 2,359,237 5,800 340,387
Honda Motor Company 8,000 262,539 15,000 492,260 2,000 65,635
Schawk, Incorporated, Class A 3,200 44,400 -- -- -- --
Tower Automotive, Incorporated 14,800 369,075 23,400 583,537 4,200 104,738
Toyota Motor Corporation 21,000 570,278 37,000 1,004,777 6,000 162,937
Volkswagen AG 3,350 166,837 6,000 298,812 1,050 52,292
---------- ---------- ----------
3,493,189 5,977,443 953,993
BANKING 6.61% 4.95% 2.40%
Akita Bank, Ltd. 15,000 64,087 26,000 111,084 4,000 17,090
Asahi Bank * 6,000 21,973 11,000 40,283 2,000 7,324
Astoria Financial Corporation 16,250 743,437 27,400 1,253,550 6,345 290,284
Banco di Roma * 122,100 206,768 214,100 362,563 38,400 65,028
Banco Santander SA * 2,652 52,622 7,000 138,897 1,224 24,287
Bank Of Ireland 20,198 441,957 34,888 763,381 6,325 138,390
Bank of New York, Incorporated 78,900 3,175,725 136,300 5,486,075 18,300 736,575
Bank Of Scotland * 2,600 31,101 4,600 55,026 -- --
Bank of Tokyo-Mitsubishi, Ltd. 33,000 341,530 60,000 620,964 11,000 113,843
Bank One Corporation * 31,090 1,587,533 56,708 2,895,652 8,374 427,597
Bank United Corporation 2,100 82,425 -- -- -- --
BankAmerica Corporation * 29,107 1,750,058 46,834 2,815,894 7,417 445,947
Banque Nationale de Paris 3,000 246,933 5,500 452,710 1,000 82,311
Barclays 5,000 108,407 7,500 162,610 2,500 54,203
Bayer Hypo Vereins 3,000 234,909 5,449 426,674 974 76,267
BHF-Bank AG 6,300 253,270 11,350 456,288 2,400 96,484
Charter One Financial, Incorporated 21,840 606,060 60,138 1,668,830 4,861 134,893
Comerica, Incorporated 4,800 327,300 7,650 521,634 1,950 132,966
Commercial Federal Corporation 11,925 276,511 21,825 506,067 4,725 109,561
Credit Suisse Group 710 111,123 1,355 212,073 225 35,215
Fleet Financial Group, Incorporated 7,796 348,384 14,690 656,459 2,718 121,461
Fuji Bank 8,000 29,438 14,000 51,517 4,000 14,719
Hang Seng Bank, Ltd. * 4,000 35,753 7,000 62,568 2,000 17,876
HSBC Holdings - GBP * 4,300 108,947 7,800 197,624 1,400 35,471
HSBC Holdings - HKD 1,200 29,893 2,000 49,822 -- --
Lloyds TSB Group PLC 43,639 621,343 78,823 1,122,301 12,792 182,136
Mitsubishi Trust & Banking 14,000 90,031 29,000 186,493 4,000 25,723
National Australia Bank, Ltd. 8,008 120,716 13,018 196,239 2,702 40,731
National City Corporation 9,200 667,000 15,300 1,109,250 1,200 87,000
National Westminster 9,500 183,876 17,100 330,977 3,000 58,066
North Fork Bancorporation,
Incorporated 17,271 413,425 20,538 491,628 4,834 115,714
Overseas Chinese Bank * 6,000 40,703 11,000 74,621 -- --
Providian Financial Corporation 5,900 442,500 10,750 806,250 2,100 157,500
Royal Bank Scot Group 15,800 258,302 28,500 465,925 5,000 81,741
Societe Generale 2,092 338,626 4,027 651,840 713 115,411
Sumitomo Bank, Ltd. * 6,000 61,566 11,000 112,870 2,000 20,522
</TABLE>
The accompanying notes are an integral part of the financial statements.
128
<PAGE> 167
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
------------------------ ------------------------ ------------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
BANKING - CONTINUED
Svenska Handelbanken,
Series A* 6,700 $ 282,025 11,900 $ 500,911 2,200 $ 92,605
The 77th Bank, Ltd. 4,000 39,982 6,000 59,973 -- --
The Industrial Bank of Japan, Ltd. 5,000 23,043 8,000 36,869 1,000 4,609
The Joyo Bank, Ltd. 6,000 23,459 11,000 43,008 2,000 7,820
U.S. Bancorp 41,200 1,462,600 64,800 2,300,400 8,700 308,850
UBS AG * 2,075 637,439 3,740 1,148,926 650 199,680
United Overseas Bank * 14,800 95,021 27,600 177,202 6,200 39,806
Washington Federal, Incorporated 17,380 463,829 19,910 531,348 -- --
Washington Mutual, Incorporated 40,650 1,552,322 68,300 2,608,206 10,500 400,969
Westpac Banking Corporation, Ltd. 6,607 44,211 11,912 79,710 2,102 14,066
Zions BanCorporation -- -- 2,000 124,750 -- --
----------- ----------- ----------
19,078,163 33,127,942 5,130,741
BROADCASTING 0.82% 0.60% 0.27%
Arn Mondadori Edit 5,900 77,967 10,600 140,077 1,800 23,787
CBS Corporation 29,607 969,629 43,634 1,429,013 8,098 265,210
Clear Channel Communications 1,552 84,584 6,298 343,241 536 29,212
Medialink Worldwide, Incorporated* 6,600 112,200 11,300 192,100 -- --
MediaOne Group, Incorporated 14,100 662,700 27,200 1,278,400 2,500 117,500
News Corporation 122 806 139 918 7 46
Publishing & Broadcasting, Ltd. * 9,600 41,944 17,400 76,023 3,000 13,107
Tele Communications,
Incorporated -- -- 4,400 243,375 -- --
Viacom, Incorporated, Class B * 3,000 222,000 -- -- 1,000 74,000
Wolters Kluwer NV 850 181,791 1,500 320,807 250 53,468
----------- ----------- ----------
2,353,621 4,023,954 576,330
BUILDING MATERIALS & CONSTRUCTION 0.18% 0.13% 0.07%
Fluor Corporation 4,700 200,044 15,300 651,206 1,600 68,100
Harsco Corporation 10,400 316,550 7,800 237,413 2,400 73,050
----------- ----------- ----------
516,594 888,619 141,150
BUSINESS SERVICES 3.20% 2.76% 1.09%
ADVO, Incorporated 4,400 116,050 5,000 131,875 2,200 58,025
Automatic Data Processing,
Incorporated 2,500 200,469 4,300 344,806 700 56,131
Baa PLC * 8,900 104,541 16,100 189,113 2,800 32,889
Barra, Incorporated 4,200 99,225 9,450 223,256 1,950 46,069
Cap Gemini SA 3,211 515,161 5,666 909,033 1,022 163,966
Ecolab, Incorporated * 8,500 307,594 10,000 361,875 -- --
FactSet Research Systems,
Incorporated 2,200 135,850 4,000 247,000 900 55,575
First Data Corporation 14,100 446,794 6,700 212,306 1,500 47,531
Fiserv, Incorporated * 1,202 61,828 1,948 100,200 318 16,357
IMS Health, Incorporated 10,100 761,919 364 27,459 2,164 163,247
ISS International 3,825 248,818 6,925 450,474 1,200 78,061
Konami Company 2,600 75,206 4,600 133,056 1,200 34,710
</TABLE>
The accompanying notes are an integral part of the financial statements.
129
<PAGE> 168
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BUSINESS SERVICES - CONTINUED
Market Facts, Incorporated -- -- -- -- 2,400 $ 62,400
Nielsen Media Research, Incorporated * 11,800 $ 212,400 121 $ 2,178 721 12,978
Nokia Corporaton, ADR * 10,000 1,204,375 16,400 1,975,175 2,200 264,963
Ogden Corporation 36,900 924,806 66,700 1,671,669 11,700 293,231
OmniCom Group, Incorporated 30,300 1,757,400 50,600 2,934,800 6,300 365,400
SABRE Group Holdings, Incorporated,
Class A* 12,500 556,250 24,200 1,076,900 2,800 124,600
Secom Company, Ltd. 1,000 82,795 2,000 165,590 1,000 82,795
SunGard Data Systems, Incorporated * 1,400 55,562 2,500 99,219 400 15,875
Tyco International, Ltd. 17,200 1,297,525 30,000 2,263,125 4,300 324,381
Vivendi 300 77,803 630 163,388 110 28,528
---------- ---------- ----------
9,242,371 13,682,497 2,327,712
CHEMICALS 1.35% 0.89% 0.44%
Akzo Nobel NV, ADS 4,500 204,796 7,100 323,122 800 36,408
BASF AG 3,500 133,565 6,250 238,510 1,100 41,978
Cytec Industries, Incorporated * 16,700 354,875 28,500 605,625 4,100 87,125
E.I. Du Pont De Nemours & Company 24,500 1,300,031 25,900 1,374,319 3,700 196,331
Ferro Corporation 37,800 982,800 59,000 1,534,000 9,200 239,200
Hoechst AG 2,000 82,923 4,300 178,285 750 31,096
Kaneka Corp 7,000 52,446 13,000 97,399 2,000 14,985
Kuraray Company -- -- 5,000 55,153 -- --
Macdermid, Incorporated -- -- 4,700 183,887 1,600 62,600
Olin Corporation -- -- 1,200 33,975 -- --
Om Group, Incorporated -- -- 550 20,075 -- --
Praxair, Incorporated 2,600 91,650 4,100 144,525 700 24,675
Rhone Poulenc SA 2,750 141,459 5,450 280,347 1,000 51,440
Solutia, Incorporated 5,360 119,930 5,560 124,405 1,880 42,065
Teijin 24,000 88,315 44,000 161,911 8,000 29,438
W. R. Grace & Company 800 12,550 1,800 28,238 -- --
Wesfarmers, Ltd. 5,483 44,687 10,006 81,549 3,150 25,673
Witco Corporation 17,800 283,688 33,100 527,531 3,500 55,781
---------- ---------- ----------
3,893,715 5,992,856 938,795
COMPUTERS & BUSINESS EQUIPMENT 3.79% 5.57% 1.29%
America Online, Incorporated * 2,100 336,000 9,500 1,520,000 600 96,000
Cisco Systems, Incorporated * 20,025 1,858,570 30,525 2,833,102 4,575 424,617
Citrix Systems, Incorporated 1,600 155,300 -- -- -- --
Compaq Computer Corporation 6,500 272,594 31,700 1,329,419 3,700 155,169
Dell Computer Corporation * 18,000 1,317,375 32,100 2,349,319 5,300 387,894
DST Systems Incorporated, Delaware * 11,000 627,687 11,000 627,687 1,200 68,475
EMC Corporation Mass * 22,000 1,870,000 28,300 2,405,500 4,400 374,000
Equant NV 700 48,691 1,950 135,639 700 48,691
Fujitsu, Ltd. 12,000 159,752 22,000 292,879 4,000 53,251
HBO & Company 5,100 146,306 10,200 292,612 1,200 34,425
International Business Machines
Corporation 5,300 979,175 8,700 1,607,325 1,000 184,750
Pitney Bowes, Incorporated 23,200 1,532,650 36,400 2,404,675 7,400 488,862
</TABLE>
The accompanying notes are an integral part of the financial statements.
130
<PAGE> 169
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
COMPUTERS & BUSINESS EQUIPMENT -
CONTINUED
Quantum Corporation 12,900 $ 274,125 5,400 $ 114,750 -- --
Sage Group PLC * 7,000 184,914 14,500 383,037 2,500 $ 66,041
Sun Microsystems, Incorporated 900 77,063 3,400 291,125 500 42,812
Sundstrand Corporation 1,900 98,563 3,900 202,312 1,200 62,250
Tech Data Corporation -- -- -- -- 500 20,125
Xerox Corporation 8,400 991,200 14,100 1,663,800 2,100 247,800
---------- ---------- ----------
10,929,965 18,453,181 2,755,162
CONGLOMERATES 0.18% 0.13% 0.07%
Corporation Financiera Reunida SA 9,500 138,035 17,200 249,916 3,000 43,590
Harcourt General, Incorporated 1,000 53,188 1,700 90,419 -- --
Hutchison Whampoa, Ltd. 24,000 169,601 44,000 310,935 8,000 56,534
Ratin A/S 300 63,636 550 116,666 100 21,212
Smith Howard 12,700 84,018 15,700 103,865 4,000 26,462
---------- ---------- ----------
508,478 871,801 147,798
CONSTRUCTION MATERIALS 0.53% 0.45% 0.17%
Dyckerhoff AG 450 124,745 850 235,629 150 41,582
Lafarge Corporation 1,100 44,550 -- -- -- --
Masco Corporation 20,200 580,750 43,000 1,236,250 7,000 201,250
Owens-Corning 11,600 411,075 24,000 850,500 3,000 106,312
Rmc Group PLC * 4,900 67,000 8,800 120,326 1,500 20,510
Sherwin Williams Company 10,300 302,562 16,300 478,813 -- --
Vulcan Materials Company -- -- 800 105,250 -- --
---------- ---------- ----------
1,530,682 3,026,768 369,654
CONSTRUCTION & MINING EQUIPMENT 0.04% 0.03% 0.01%
Foster Wheeler Corporation 600 7,913 1,000 13,188 -- --
Toda Corporation 17,000 82,256 30,000 145,157 5,000 24,193
Varitronix International * 8,000 14,972 13,000 24,330 3,000 5,615
---------- ---------- ----------
105,141 182,675 29,808
CONTAINERS & GLASS 0.06% 0.06% 0.01%
Owens-Illinois, Incorporated 900 27,562 -- -- -- --
Silgan Holdings, Incorporated * 5,200 144,544 13,300 369,698 900 25,017
---------- ---------- ----------
172,106 369,698 25,017
COSMETICS & TOILETRIES 0.07% 0.05% 0.02%
Avon Products, Incorporated 4,400 194,700 7,800 345,150 1,000 44,250
---------- ---------- ----------
CRUDE PETROLEUM & NATURAL GAS 0.57% 0.37% 0.15%
Anadarko Petroleum Corporation 10,800 333,450 9,900 305,663 1,400 43,225
Burlington Resources, Incorporated 5,500 196,969 6,300 225,619 1,200 42,975
Elf Aquitaine SA 3,200 369,737 6,000 693,257 900 103,989
ENI SPA 45,800 299,156 82,600 539,526 14,400 94,058
Monument Oil & Gas 136,500 79,374 246,375 143,265 41,875 24,350
Occidental Petroleum Corporation -- -- 7,000 118,125 1,300 21,937
</TABLE>
The accompanying notes are an integral part of the financial statements.
131
<PAGE> 170
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CRUDE PETROLEUM & NATURAL GAS -
CONTINUED
Santa Fe Energy Resources,
Incorporated -- -- 14,400 $ 106,200 -- --
Vastar Resources, Incorporated 8,600 $ 371,412 8,300 358,456 -- --
---------- ---------- ----------
1,650,098 2,490,111 $ 330,534
DOMESTIC OIL 0.75% 0.41% 0.21%
Amerada Hess Corporation 4,000 199,000 5,900 293,525 1,100 54,725
Kerr-McGee Corporation 1,400 53,550 -- -- 600 22,950
USX-Marathon Group 63,800 1,921,975 82,000 2,470,250 12,600 379,575
---------- ---------- ----------
2,174,525 2,763,775 457,250
DRUGS & HEALTH CARE 7.56% 5.56% 2.34%
Alkermes, Incorporated * 8,900 197,469 19,200 426,000 2,100 46,594
American Home Products Corporation 4,500 253,406 -- -- -- --
Amgen, Incorporated * 2,900 303,231 21,600 2,258,550 1,400 146,387
Anesta Corporation * 16,300 433,988 20,000 532,500 3,800 101,175
Arterial Vascular Engineering,
Incorporated* 6,400 336,000 7,100 372,750 1,000 52,500
AxyS Pharmaceuticals, Incorporated 18,900 111,038 -- -- -- --
Banyu Pharmaceuticals 5,000 92,879 8,000 148,607 1,000 18,576
Baxter International, Incorporated 3,700 237,956 7,100 456,619 600 38,587
Biogen, Incorporated * 3,200 265,600 -- -- 400 33,200
Columbia/HCA Healthcare Corporation* 8,700 215,325 15,150 374,962 2,150 53,212
CV Therapeutics, Incorporated * -- -- 300 1,425 -- --
Cytyc Corporation * -- -- 8,700 224,025 -- --
Eli Lilly & Company 25,200 2,239,650 43,100 3,830,512 6,900 613,237
Geltex Pharmaceuticals, Incorporated 2,600 58,825 -- -- 1,100 24,887
Genentech, Incorporated 30,600 2,438,438 56,900 4,534,219 7,200 573,750
Genzyme Corporation * -- -- 2,216 100,202 -- --
Glaxo Wellcome PLC 20,469 704,631 37,051 1,275,456 6,730 231,676
Health Management Association,
Class A 20,080 434,230 37,575 812,559 6,693 144,736
HEALTHSOUTH Corporation 34,800 537,225 53,100 819,731 4,800 74,100
Hoya Corporation 2,000 97,302 3,000 145,953 -- --
Johnson & Johnson 10,200 855,525 19,200 1,610,400 2,400 201,300
Lincare Holdings, Incorporated * 12,900 523,256 28,500 1,156,031 3,600 146,025
McKesson Corporation * 600 47,438 -- -- -- --
Medimmune, Incorporated -- -- 1,200 119,325 -- --
Medtronic, Incorporated 7,300 542,025 19,500 1,447,875 3,100 230,175
Merck & Company, Incorporated 22,600 3,337,737 33,800 4,991,837 3,600 531,675
Novartis AG 298 585,717 533 1,047,609 92 180,826
Renal Care Group, Incorporated * 2,000 57,625 3,300 95,081 -- --
Roche Holdings AG * 24 292,815 42 512,426 8 97,605
Sankyo Company 2,000 43,697 5,000 109,244 1,000 21,849
Sanofi Company SA 2,250 370,238 4,100 674,656 700 115,185
Schering AG 1,000 125,555 1,800 225,999 300 37,667
Schering-Plough Corporation 32,400 1,790,100 54,200 2,994,550 7,600 419,900
</TABLE>
The accompanying notes are an integral part of the financial statements.
132
<PAGE> 171
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
------------------------ ------------------------ ------------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
DRUGS & HEALTH CARE - CONTINUED
SmithKline Beecham PLC 35,734 $ 495,247 64,695 $ 896,626 11,273 $ 156,236
Sofamor/Danek Group, Incorporated * 4,700 572,225 -- -- -- --
St. Jude Medical, Incorporated * 1,150 31,841 1,900 52,606 -- --
Takeda Chemical Industries, Ltd. 9,000 346,307 16,000 615,657 3,000 115,436
Tenet Healthcare Corporation * 4,200 110,250 7,100 186,375 1,100 28,875
Thermedics, Incorporated 5,900 63,794 9,600 103,800 2,200 23,787
Total Renal Care Holdings,
Incorporated* 1,177 34,795 1,960 57,943 -- --
United Healthcare Corporation 2,700 116,269 4,600 198,088 700 30,144
Universal Health Services,
Incorporated, Class B 4,900 254,188 10,600 549,875 1,200 62,250
ViroPharma, Incorporated 2,800 26,075 11,900 110,819 1,500 13,969
Warner-Lambert Company 23,500 1,766,906 29,600 2,225,550 3,900 293,231
Wellpoint Health Networks,
Incorporated* 4,600 400,200 10,000 870,000 1,500 130,500
Yamanouchi Pharmaceutical Company,
Ltd 2,000 64,396 3,000 96,594 -- --
----------- ----------- -----------
21,811,414 37,263,036 4,989,252
ELECTRICAL EQUIPMENT 1.86% 1.50% 0.65%
Alcatel Alsthom Cie Generale D'Electric 2,227 272,450 3,779 462,321 704 86,127
AVX Corporation * 9,100 154,131 13,600 230,350 -- --
Baldor Electric Company 28,666 580,486 48,800 988,200 -- --
Emerson Electric Company 8,500 514,250 13,700 828,850 1,500 90,750
FLIR Systems, Incorporated 4,500 104,625 16,200 376,650 3,800 88,350
Furukawa Electric Company, Ltd. * 19,000 64,706 17,000 57,895 6,000 20,433
General Electric Company 26,600 2,714,862 52,400 5,348,075 8,200 836,913
Hitachi, Ltd. * 9,000 55,728 16,000 99,071 3,000 18,576
IFR Systems, Incorporated 13,000 60,125 21,950 101,519 -- --
Johnson Controls, Incorporated 1,200 70,800 2,000 118,000 300 17,700
Johnson Electric Holdings * 20,000 51,371 36,000 92,467 6,000 15,411
Matsushita Electric Works Company * 5,000 51,084 9,000 91,950 2,000 20,433
Mitsubishi Electric Corporation 80,000 251,216 144,000 452,189 19,000 59,664
NEC Corporation 11,000 101,194 14,000 128,793 2,000 18,399
NGK Insulators, Ltd. 5,000 64,441 8,000 103,105 2,000 25,776
Omron Corp 3,000 41,079 5,000 68,465 1,000 13,693
Raychem Corporation 1,300 42,006 1,900 61,394 300 9,694
Rentokil Initial 23,200 175,378 42,100 318,251 7,300 55,184
Sanmina Corporation -- -- 2,600 162,500 -- --
----------- ----------- -----------
5,369,932 10,090,045 1,377,103
ELECTRIC UTILITIES 1.68% 1.25% 0.63%
AES Corporation * -- -- -- -- -- --
Avista -- -- 6,700 128,975 800 15,400
DPL, Incorporated 10,500 227,063 8,850 191,381 1,200 25,950
DQE, Incorporated -- -- 2,600 114,238 500 21,969
Duke Energy Company 12,400 794,375 20,100 1,287,656 2,300 147,344
Electrabel 650 283,917 1,250 545,994 230 100,463
</TABLE>
The accompanying notes are an integral part of the financial statements.
133
<PAGE> 172
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ELECTRIC UTILITIES - CONTINUED
Electric De Portugal 7,900 $ 174,012 14,650 $ 322,694 2,550 $ 56,168
Endesa SA 6,750 178,581 12,000 317,478 2,100 55,559
Energy East Corporation 1,000 56,500 1,600 90,400 -- --
Entergy Corporation 16,200 504,225 19,000 591,375 7,500 233,437
Hokuriku Electric Power 3,000 50,818 5,000 84,697 1,000 16,939
Hong Kong & China Gas Company, Ltd. 48,400 61,534 86,900 110,481 11,000 13,985
Iberdrola SA 8,400 156,924 15,150 283,023 2,650 49,506
Illinova Corporation * 5,300 132,500 23,200 580,000 3,900 97,500
IPALCO Enterprises 5,000 277,188 15,300 848,194 1,500 83,156
Kansai Electric Power Company * 2,800 61,300 5,000 109,465 900 19,704
Kyushu Electric Power 3,000 57,054 5,000 95,091 1,000 19,018
National Grid Group 31,090 247,935 56,135 447,662 9,745 77,714
PG&E Corporation * 24,300 765,450 35,600 1,121,400 4,000 126,000
Scot & Southern 7,000 78,908 12,000 135,272 2,200 24,800
Tenaga Nasional 11,000 18,816 26,000 44,474 3,500 5,987
Tohoku Electric Power 3,000 53,074 5,500 97,302 1,000 17,691
Tokyo Electric Power Company * 5,000 123,397 10,000 246,793 2,000 49,359
VEBA AG 2,750 164,512 5,550 332,014 800 47,858
Yorkshire Water PLC * 16,112 147,227 29,142 266,292 5,090 46,511
---------- ---------- ----------
4,615,310 8,392,351 1,352,018
ELECTRONICS 3.74% 2.74% 1.29%
Advantest * 1,000 63,335 2,000 126,670 1,000 63,335
AMP, Incorporated 2,093 108,967 4,797 249,744 698 36,340
Applied Materials, Incorporated 3,600 153,675 2,900 123,794 800 34,150
Boston Scientific Corporation * 5,200 139,425 10,400 278,850 3,200 85,800
Breed Technologies, Incorporated * 25,700 210,419 26,500 216,969 1,900 15,556
Brightpoint, Incorporated * 7,400 101,750 10,500 144,375 2,600 35,750
Cellstar Corporation -- -- 11,900 81,069 -- --
Electronic Data Systems Corporation 5,300 266,325 11,600 582,900 1,700 85,425
Electronics For Imaging, Incorporated* 6,900 277,294 13,200 530,475 900 36,169
Honeywell, Incorporated 2,700 203,344 4,800 361,500 -- --
Intel Corporation 39,000 4,623,937 65,800 7,801,412 9,300 1,102,631
Linear Technology Corporation 3,900 349,294 7,800 698,587 1,500 134,344
Lucent Technologies, Incorporated 5,462 600,820 9,584 1,054,240 848 93,280
Maxim Integrated Products,
Incorporated* -- -- 8,400 366,975 1,200 52,425
Maxwell Technologies, Incorporated * -- -- 6,100 245,525 800 32,200
Micron Technology, Incorporated * 9,300 470,231 10,500 530,906 2,100 106,181
Motorola, Incorporated 3,800 232,037 6,700 409,119 1,800 109,912
Nokia AB OY, Series A 6,300 766,033 11,400 1,386,154 2,000 243,185
Raytheon Company, Class B 1,500 79,875 1,300 69,225 -- --
REMEC, Incorporated 2,800 50,400 9,400 169,200 -- --
Sampo Corporation 750 28,461 1,350 51,231 450 17,077
Singapore Technologies Engineering,
Ltd.* 23,000 21,454 42,000 39,176 -- --
Teleglobe Incorporated 1,681 60,516 -- -- 442 15,912
Texas Instruments, Incorporated 17,900 1,531,569 24,300 2,079,169 4,100 350,806
</TABLE>
The accompanying notes are an integral part of the financial statements.
134
<PAGE> 173
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ------------------------ -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ELECTRONICS - CONTINUED
Thermoquest Corporation 7,800 $ 100,912 5,700 $ 73,744 -- --
Tokyo Electron, Ltd. 2,000 75,896 6,000 227,687 1,000 $ 37,948
Viag AG 150 87,933 250 146,556 50 29,311
Vitesse Semiconductor Corporation * 3,900 177,937 4,100 187,062 1,000 45,625
Xilinx, Incorporated -- -- 900 58,612 -- --
----------- ----------- -----------
10,781,839 18,290,926 2,763,362
FINANCIAL SERVICES 3.80% 2.60% 1.14%
A.G. Edwards, Incorporated * 2,800 104,300 6,800 253,300 600 22,350
Acom Company 1,700 109,173 3,000 192,658 400 25,688
American Express Company 9,200 940,700 14,000 1,431,500 2,600 265,850
Association First Capital Corporation,
Class A 18,868 799,531 23,468 994,457 2,590 109,751
Bear Stearns Companies, Incorporated 1,900 71,013 -- -- -- --
Citigroup, Incorporated 33,497 1,658,101 61,697 3,054,001 8,047 398,326
Dain Rauscher Corporation -- -- 8,100 238,950 1,450 42,775
Enhance Financial Services Group,
Incorporated 24,400 732,000 -- -- -- --
Federal Home Loan Mortgage
Corporation 7,200 463,950 14,000 902,125 2,900 186,869
Federal National Mortgage Association 18,500 1,369,000 33,500 2,479,000 3,500 259,000
Greenpoint Financial Corporation -- -- 3,000 105,375 -- --
Hartford Financial Services Group,
Incorporated 15,200 834,100 18,600 1,020,675 2,600 142,675
Household International, Incorporated 20,886 827,608 39,732 1,574,380 6,646 263,348
Internationale Nederlanden Groep 6,003 365,861 10,896 664,072 1,918 116,895
Jafco Company, Ltd. 1,000 27,068 3,000 81,203 1,000 27,068
Julius Baer Holdings * 40 132,926 65 216,004 10 33,231
Lehman Brothers Holdings,
Incorporated 5,700 251,156 13,400 590,438 -- --
Lend Lease Corporation * 2,900 39,096 5,200 70,102 900 12,133
Morgan Stanley Dean Witter &
Company 1,980 140,580 -- -- -- --
Nomura Securities Company, Ltd. 13,000 113,268 23,000 200,398 4,000 34,852
Orix Corporation 2,000 149,314 3,000 223,972 -- --
Peoples Heritage Financial Group 12,800 256,000 24,400 488,000 4,800 96,000
SLM Holding Corporation 1,000 48,000 2,450 117,600 -- --
Takefuji Corporation 2,000 145,953 3,000 218,930 1,000 72,976
TCF Financial Corporation 6,600 159,638 24,200 585,338 -- --
Waddell & Reed Financial,
Incorporated 807 19,116 210 4,974 295 6,988
Wells Fargo & Company 30,500 1,218,094 43,800 1,749,262 7,730 308,717
----------- ----------- -----------
10,975,546 17,456,714 2,425,492
FOOD & BEVERAGES 2.66% 1.85% 0.92%
Archer-Daniels-Midland Company 4,648 79,888 15,066 258,947 2,795 48,039
Asahi Breweries * 9,000 132,552 15,000 220,920 3,000 44,184
Cadbury Schweppes 6,000 102,675 11,000 188,237 2,000 34,225
</TABLE>
The accompanying notes are an integral part of the financial statements.
135
<PAGE> 174
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FOOD & BEVERAGES - CONTINUED
Campbell Soup Company 6,900 $ 379,500 11,400 $ 627,000 1,100 $ 60,500
Dole Food, Incorporated 800 24,000 1,500 45,000 -- --
Goodman Fielder, Ltd. -- -- 32,900 33,265 -- --
H.J. Heinz Company 12,700 719,137 24,400 1,381,650 2,800 158,550
Hershey Foods Corporation 2,100 130,594 3,600 223,875 -- --
ITO EN, Ltd. * 2,000 103,140 3,000 154,710 1,000 51,570
Kao Corporation 6,000 135,338 11,000 248,120 2,000 45,113
Kirin Brewery Company, Ltd. * 11,000 140,115 19,000 242,017 3,000 38,213
Nestle SA * 268 583,330 483 1,051,299 84 182,835
PepsiCo, Incorporated 48,300 1,977,281 74,200 3,037,562 11,700 478,969
Pioneer Hawaii Bred International,
Incorporated* 1,000 27,000 1,700 45,900 -- --
Quaker Oats Company 700 41,650 -- -- -- --
Ralston Purina Company 18,900 611,888 32,400 1,048,950 5,400 174,825
Sara Lee Corporation 25,600 721,600 35,800 1,009,113 5,400 152,212
Scottish & Newcastle PLC * 16,900 196,544 30,500 354,710 5,300 61,638
The Coca-Cola Company 21,500 1,437,812 30,500 2,039,688 5,800 387,875
Tyson Foods, Incorporated,
Class A 3,150 66,938 5,500 116,875 850 18,063
Viscofan Envoltura * 75 2,422 125 4,037 25 807
Yakult Honsha Company 9,000 56,126 15,000 93,543 3,000 18,709
---------- ---------- ----------
7,669,530 12,425,418 1,956,327
FOREST PRODUCTS 0.42% 0.29% 0.16%
Amcor, Ltd. * 8,200 35,038 14,700 62,812 2,600 11,109
Georgia-Pacific Corporation
(Timber Group) 7,200 171,450 13,200 314,325 2,400 57,150
Louisiana Pacific Corporation 1,500 27,469 2,600 47,613 -- --
Sealed Air Corporation * 17,117 874,037 25,832 1,319,046 4,447 227,075
Sumitomo Forestry 16,000 114,639 28,000 200,619 5,000 35,825
---------- ---------- ----------
1,222,633 1,944,415 331,159
GAS & PIPELINE UTILITIES 0.62% 0.76% 0.27%
Atmos Energy Corporation -- -- 19,000 612,750 -- --
Coastal Corporation 24,800 866,450 53,100 1,855,181 7,400 258,537
Enron Corporation 9,400 536,387 34,300 1,957,244 3,400 194,012
Ocean Energy, Incorporated 1,402 8,850 2,378 15,011 408 2,576
Osaka Gas Company 20,000 68,819 35,000 120,434 6,000 20,646
Piedmont Natural Gas, Incorporated 7,900 285,388 14,200 512,975 2,900 104,763
UGI Corporation 500 11,875 800 19,000 -- --
---------- ---------- ----------
1,777,769 5,092,595 580,534
GOLD 0.00% 0.00% 0.00%
Homestake Mining Company * -- -- 2,738 25,155 -- --
---------- ---------- ----------
HOMEBUILDERS 0.37% 0.27% 0.14%
Barratt Developments 8,600 33,006 15,500 59,487 2,700 10,362
Beazer Group 46,700 118,709 84,400 214,540 14,700 37,367
</TABLE>
The accompanying notes are an integral part of the financial statements.
136
<PAGE> 175
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
HOMEBUILDERS - CONTINUED
Daiwa House Industry Company, Ltd. 14,000 $ 148,978 25,000 $ 266,033 3,000 $ 31,924
Eiffage 1,210 95,895 2,200 174,355 330 26,153
Elcor Chemical Corporation * 12,500 403,906 18,700 604,244 2,700 87,244
George Wimpey PLC 52,000 94,385 98,000 177,878 18,000 32,672
Societe Generale d'Enterprises SA 3,750 175,729 6,800 318,655 1,500 70,291
---------- ---------- ----------
1,070,608 1,815,192 296,013
HOTELS & RESTAURANTS 1.20% 0.89% 0.30%
McDonalds Corporation 43,200 3,310,200 73,500 5,631,938 7,500 574,688
Mirage Resorts, Incorporated 2,800 41,825 5,100 76,181 800 11,950
Promus Hotel Corporation -- -- 1,433 46,393 323 10,457
Yoshinoya D&C Company, Ltd. 10 108,801 18 195,843 3 32,640
---------- ---------- ----------
3,460,826 5,950,355 629,735
HOUSEHOLD APPLIANCES 0.19% 0.15% 0.08%
Fedders USA, Incorporated -- -- 1,100 6,394 -- --
Matsushita Electric Industrial Company,
Ltd 11,000 194,507 21,000 371,331 3,000 53,047
Sharp Corporation 21,000 189,288 34,000 306,466 7,000 63,096
Sony Corporation 2,300 167,439 4,500 327,599 700 50,960
---------- ---------- ----------
551,234 1,011,790 167,103
HOUSEHOLD PRODUCTS 0.49% 0.42% 0.36%
Black & Decker Corporation 700 39,244 14,200 796,087 3,000 168,187
Gillette Company 6,600 318,862 6,400 309,200 2,800 135,275
Procter & Gamble Company * 1,000 91,312 -- -- 1,400 127,838
Uni Charm Corporation 1,000 46,882 2,000 93,764 1,000 46,882
Unilever NV 7,150 610,835 12,850 1,097,794 2,200 187,949
Unilever PLC 27,100 304,813 49,000 551,138 8,500 95,606
---------- ---------- ----------
1,411,948 2,847,983 761,737
INDUSTRIAL MACHINERY 0.62% 0.61% 0.29%
AES Corporation * -- -- 2,300 108,963 -- --
American Standard Companies,
Incorporated* -- -- -- -- 500 18,000
Finmeccanica Spa 260,000 266,219 535,300 548,104 81,400 83,347
Ingersoll-Rand Company 8,400 394,275 18,100 849,569 1,650 77,447
Mannesmann AG 7,150 819,423 12,900 1,478,399 2,250 257,860
Minebea Company 9,000 103,016 17,000 194,586 3,000 34,339
PRI Automation, Incorporated * -- -- 14,700 382,200 2,000 52,000
SPX Corporation -- -- 2,500 167,500 400 26,800
Thermo Electron Corporation 3,825 64,786 6,075 102,895 1,950 33,028
THK Company, Ltd. 11,900 133,684 21,700 243,777 3,400 38,196
TSI, Incorporated -- -- 300 2,625 -- --
---------- ---------- ----------
1,781,403 4,078,618 621,017
INSURANCE 2.26% 1.76% 0.87%
Aegon NV 1,500 184,117 2,800 343,684 500 61,372
</TABLE>
The accompanying notes are an integral part of the financial statements.
137
<PAGE> 176
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INSURANCE - CONTINUED
AFLAC, Incorporated 3,400 $ 149,600 17,900 $ 787,600 3,600 $ 158,400
Allianz AG Holding 300 109,984 550 201,638 100 36,661
Allied Zurich PLC 16,571 249,019 29,937 449,876 5,233 78,638
Allstate Corporation 14,184 547,857 7,488 289,224 2,524 97,490
American Bankers Insurance Group,
Incorporated* 11,200 541,800 8,000 387,000 600 29,025
AMP, Ltd. * 4,900 62,079 13,000 164,701 1,700 21,538
Arm Financial, Incorporated -- -- 14,200 315,062 -- --
Assicurazioni Generali 2,900 121,020 5,200 217,001 900 37,558
AXA-UAP 800 115,901 1,500 217,314 300 43,463
CGU PLC 19,022 299,915 34,355 541,666 5,966 94,064
CIGNA Corporation * 2,100 162,356 -- -- -- --
Equifax, Incorporated 1,000 34,188 -- -- -- --
Hartford Life, Incorporated,
Class A 2,500 145,625 14,500 844,625 1,600 93,200
Irish Life PLC * 17,758 167,578 32,086 302,789 5,650 53,318
Marsh & McLennan Companies,
Incorporated 11,000 642,812 18,000 1,051,875 2,600 151,937
MBIA, Incorporated -- -- 2,500 163,906 400 26,225
MedPartners, Incorporated 2,800 14,700 4,800 25,200 700 3,675
Mercury General Corporation 800 35,050 -- -- -- --
Mitsui Marine and Fire Insurance
Company, Ltd. 8,000 42,105 14,000 73,684 -- --
Munchener Ruckversicherungs-
Gesellschaft AG 300 145,266 550 266,321 100 48,422
National Mutual Asia 42,000 31,442 76,000 56,895 14,000 10,481
PMI Group, Incorporated 10,200 503,625 24,400 1,204,750 2,500 123,438
Protective Life Corporation 4,200 167,213 8,800 350,350 -- --
Prudential Corporation 11,500 175,427 20,700 315,769 3,600 54,916
Schweizerische Ruckversicher 120 312,819 215 560,468 40 104,273
Selective Insurance Group,
Incorporated -- -- 700 14,087 -- --
Skandia Forsakring AB * 30,000 457,857 53,200 811,934 9,500 144,988
SunAmerica, Incorporated * 1,400 113,575 -- -- -- --
Torchmark, Incorporated * 14,200 501,438 3,700 130,656 5,200 183,625
Transamerica Corporation 900 103,950 1,600 184,800 -- --
Union Assurance, Ltd. 800 106,171 1,500 199,070 300 39,814
UNUM Corporation -- -- 15,600 910,650 1,400 81,725
Zurich Allied AG 360 266,521 530 392,378 95 70,332
---------- ---------- ----------
6,511,010 11,774,973 1,848,578
INTERNATIONAL OIL 2.15% 1.56% 0.81%
Amoco Corporation 31,200 1,883,700 43,100 2,602,163 7,000 422,625
Chevron Corporation 2,200 182,463 13,100 1,086,481 2,900 240,519
Halliburton Company 27,600 817,650 33,900 1,004,288 5,700 168,862
Texaco, Incorporated 43,800 2,315,925 75,400 3,986,775 11,000 581,625
BP Amoco 23,829 354,723 41,701 620,769 7,471 111,215
</TABLE>
The accompanying notes are an integral part of the financial statements.
138
<PAGE> 177
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
------------------------ ----------------------- ------------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL OIL - CONTINUED
The Shell Transport and Trading
Company PLC 105,000 $ 645,456 189,600 $1,165,509 33,100 $ 203,472
---------- ---------- ----------
6,199,917 10,465,985 1,728,318
LEISURE TIME 0.50% 0.32% 0.14%
Accor SA 400 86,568 700 151,494 100 21,642
Aruze Corporation -- -- 3,000 64,219 -- --
Berjaya Sports Toto Berhad 9,000 9,355 17,000 17,671 3,000 3,118
Capital Radio 10,000 97,192 18,000 174,946 3,200 31,102
First Choice Holidays* 25,000 51,504 40,000 82,406 10,100 20,807
King World Productions, Incorporated * 21,600 635,850 22,800 671,175 3,800 111,863
Shimano, Incorporated 2,000 51,570 3,000 77,355 -- --
Tanjong PLC 35,000 41,444 63,000 74,605 11,000 13,026
The Walt Disney Company 15,257 457,710 27,502 825,060 3,227 96,810
West Marine, Incorporated * 2,600 25,675 -- -- -- --
---------- ---------- ----------
1,456,868 2,138,931 298,368
LIQUOR 0.39% 0.31% 0.13%
Anheuser-Busch Companies,
Incorporated* 10,200 669,375 19,400 1,273,125 2,200 144,375
Carlsberg Brewery 6,500 15,537 11,000 26,294 4,500 10,756
Diageo 35,600 394,800 64,300 713,079 11,200 124,207
Fosters Brewing Group 12,200 33,044 22,100 59,858 -- --
---------- ---------- ----------
1,112,756 2,072,356 279,338
MINING 0.67% 0.48% 0.22%
Crown Resources Corporation 20,700 42,047 -- -- 5,100 10,359
Getchell Gold Corporation * 35,300 961,925 58,000 1,580,500 8,300 226,175
Mitsui Mining Company 9,000 44,343 17,000 83,759 3,000 14,781
Stillwater Mining Company * 21,800 893,800 37,300 1,529,300 5,400 221,400
---------- ---------- ----------
1,942,115 3,193,559 472,715
MOBILE HOMES 0.04% 0.00% 0.01%
Coachmen Industries, Incorporated 4,900 128,625 -- -- 800 21,000
---------- ---------- ----------
NON-FERROUS METALS 0.06% 0.05% 0.02%
Rio Tinto, Ltd.* 1,700 20,163 3,100 36,767 -- --
Rio Tinto, Ltd. PLC* 13,100 152,351 23,000 267,487 4,200 48,845
---------- ---------- ----------
172,514 304,254 48,845
OFFICE FURNISHINGS & SUPPLIES 0.01% 0.00% 0.00%
Ikon Office Solutions,
Incorporated * 1,800 15,412 3,100 26,544 -- --
---------- ---------- ----------
PAPER 0.87% 0.59% 0.27%
Boise Cascade Corporation 800 24,800 1,300 40,300 -- --
Bowater, Incorporated 9,600 397,800 17,000 704,438 2,400 99,450
</TABLE>
The accompanying notes are an integral part of the financial statements.
139
<PAGE> 178
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
PAPER - CONTINUED
Chesapeake Corporation 12,000 $ 442,500 21,000 $ 774,375 3,200 $ 118,000
Fort James Corporation 3,112 124,480 5,162 206,480 775 31,000
Kimberly-Clark Corporation 15,200 828,400 26,300 1,433,350 3,900 212,550
Minnesota Mining & Manufacturing Company 4,400 312,950 1,000 71,125 -- --
Oji Paper Company 12,000 62,309 21,000 109,040 4,000 20,769
UPM-Kymmene Oyj 9,700 270,131 17,700 492,920 3,000 83,546
Willamette Industries, Incorporated 1,500 50,250 2,800 93,800 400 13,400
---------- ---------- ----------
2,513,620 3,925,828 578,715
PETROLEUM SERVICES 1.23% 0.93% 0.39%
Baker Hughes, Incorporated 16,200 286,537 33,019 584,024 4,650 82,247
BG PLC ADS 25,500 163,956 47,100 302,836 8,100 52,080
British Borneo Oil & Gas 20,500 33,718 37,000 60,857 6,500 10,691
Broken Hill Proprietary Company 8,121 59,811 14,370 105,836 3,208 23,627
Elf Aquitaine 1,400 79,275 21,300 1,206,112 600 33,975
Fortum Oyj 3,200 19,455 4,100 24,926 3,200 19,455
Mobil Corporation * 7,800 679,575 5,400 470,475 600 52,275
Noble Drilling Corporation * 5,400 69,863 -- -- 1,300 16,819
Schlumberger, Ltd. * 4,100 189,113 15,500 714,938 2,000 92,250
Total SA, ADR * 30,346 1,509,713 40,628 2,021,243 6,089 302,928
Total SA, B Shares * 3,822 386,917 6,916 700,135 1,183 119,760
Transocean Offshore, Incorporated * 1,400 37,538 -- -- -- --
Woodside Petroleum, Ltd. 9,500 42,496 16,200 72,468 4,300 19,235
---------- ---------- ----------
3,557,967 6,263,850 825,342
PHOTOGRAPHY 0.14% 0.11% 0.05%
Canon, Incorporated 6,000 128,173 11,000 234,985 2,000 42,724
Fuji Photo Film Company 5,000 185,759 8,000 297,214 1,000 37,152
Nikon Corporation * 4,000 38,921 7,000 68,111 -- --
Noritsu Koki Company, Ltd. 3,000 65,015 6,000 130,031 1,000 21,672
---------- ---------- ----------
417,868 730,341 101,548
POLLUTION CONTROL 0.07% 0.00% 0.00%
Stericycle, Incorporated 12,300 198,337 -- -- -- --
---------- ---------- ----------
PUBLISHING 0.81% 0.58% 0.20%
Meredith Corporation 900 34,088 -- -- --
Playboy Enterprises,
Incorporated, Class B 14,800 309,875 15,600 326,625 -- --
Reuters Group PLC * 16,000 168,799 28,000 295,398 5,000 52,750
Time Warner, Incorporated 28,200 1,750,162 50,400 3,127,950 6,000 372,375
Times Mirror Company, Series A* 1,200 67,200 2,100 117,600 -- --
---------- ---------- ----------
2,330,124 3,867,573 425,125
RAILROADS & EQUIPMENT 0.64% 0.52% 0.19%
Burlington Northern Santa Fe 36,500 1,231,875 74,300 2,507,625 5,800 195,750
Corporation *
Canadian National Railway
Company 4,900 254,188 12,900 669,187 1,900 98,562
</TABLE>
The accompanying notes are an integral part of the financial statements.
140
<PAGE> 179
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
RAILROADS & EQUIPMENT - CONTINUED
East Japan Railway 20 $ 111,632 28 $ 156,285 3 $ 16,745
Kansas City Southern Industries,
Incorporated 1,100 54,106 2,500 122,969 -- --
Union Pacific Corporation * 4,100 184,756 -- -- 1,900 85,619
---------- ---------- ----------
1,836,557 3,456,066 396,676
REAL ESTATE 0.19% 0.16% 0.07%
British Land Company PLC * -- -- 8,800 65,207 -- --
Cheung Kong Holdings, Ltd. 18,000 129,524 32,000 230,265 7,000 50,370
Mitsubishi Estate Company, Ltd. 8,000 71,685 15,000 134,410 2,000 17,921
New World Development Company 16,609 41,803 28,584 71,943 6,361 16,010
Premier Parks, Incorporated * 1,800 106,650 3,700 219,225 -- --
Sun Hung Kai Properties, Ltd. 20,362 148,492 36,652 267,288 7,096 51,748
Westfield Holdings * 9,200 46,736 16,700 84,835 2,900 14,732
---------- ---------- ----------
544,890 1,073,173 150,781
RETAIL GROCERY 0.82% 0.44% 0.23%
Ahold Kon NV 6,900 254,889 12,500 461,755 2,000 73,881
Albertsons, Incorporated * 5,600 356,650 8,200 522,238 2,100 133,744
Koninklijke Ahold NV 1,000 50,035 2,000 100,069 400 20,014
Safeway, Incorporated * 26,600 1,620,937 28,300 1,724,531 4,400 268,125
Starbucks Corporation * 1,300 72,963 2,100 117,863 -- --
---------- ---------- ----------
2,355,474 2,926,456 495,764
RETAIL TRADE 3.60% 2.80% 1.15%
Boots Company 14,300 244,471 25,800 441,073 4,500 76,931
Colruyt SA 100 83,309 150 124,964 -- --
Consolidated Stores Corporation 1,512 30,524 2,631 53,113 456 9,206
CVS Corporation 13,800 759,000 23,100 1,270,500 3,100 170,500
Dayton Hudson Corporation 10,800 585,900 24,000 1,302,000 1,800 97,650
Delhaize-Le Lion SA 450 39,572 900 79,144 -- --
Federated Department Stores,
Incorporated* 2,400 104,550 5,100 222,169 600 26,138
Fred Meyer, Incorporated * 2,000 120,500 17,400 1,048,350 -- --
Galeries Lafayette 100 107,315 100 107,315 -- --
GAP, Incorporated 7,500 421,875 13,950 784,688 600 33,750
Harvey Norman Holdings, Ltd. 6,700 50,499 12,200 91,954 2,100 15,828
Home Depot, Incorporated 28,200 1,725,488 48,000 2,937,000 6,600 403,837
Ito-Yokado Company, Ltd. 4,000 279,522 8,000 559,045 1,000 69,881
Kingfisher 28,378 307,401 51,382 556,589 8,898 96,386
Lowe's Companies, Incorporated 18,000 921,375 31,600 1,617,525 5,000 255,937
Marui Company, Ltd. * 3,000 57,718 5,000 96,196 1,000 19,239
Metro AG 1,440 114,917 2,400 191,528 420 33,517
Mitsubishi Corporation 11,000 63,246 20,000 114,993 3,000 17,249
Mitsui & Company, Ltd. * 9,000 50,234 15,000 83,724 3,000 16,745
Moebel Walther AG 2,000 72,003 3,300 118,805 600 21,601
New Look Group 23,000 60,376 42,700 112,088 7,000 18,375
Pep Boys-(Manny, Moe & Jack) -- -- -- -- 2,600 40,788
</TABLE>
The accompanying notes are an integral part of the financial statements.
141
<PAGE> 180
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
------------------------ ----------------------- --------------------------
Shares Value Shares Value Shares Value
---------- ----------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
RETAIL TRADE
Saks, Incorporated 10,452 $ 329,891 17,480 $ 551,713 980 $ 30,931
The Limited, Incorporated -- -- -- -- 400 11,650
TJX Companies, Incorporated 19,600 568,400 22,800 661,200 4,800 139,200
Wal-Mart Stores, Incorporated 35,900 2,923,606 61,100 4,975,831 8,800 716,650
Walgreen Company * 5,300 310,381 9,600 562,200 2,000 117,125
Woolworths, Ltd. 19,116 65,082 24,330 82,834 6,005 20,445
----------- ----------- -----------
10,397,155 18,746,541 2,459,559
SANITARY SERVICES 0.29% 0.35% 0.16%
Allied Waste Industries,
Incorporated* 7,000 165,375 19,900 470,137 2,400 56,700
Republic Industries, Incorporated* 2,700 39,825 10,800 159,300 1,000 14,750
Waste Industries, Incorporated * 4,500 77,625 14,400 248,400 2,000 34,500
Waste Management, Incorporated 11,990 559,034 30,870 1,439,314 5,175 241,284
----------- ----------- -----------
841,859 2,317,151 347,234
SHIPBUILDING 0.16% 0.12% 0.04%
Avondale Industries,
Incorporated * 15,700 455,300 28,700 832,300 3,100 89,900
----------- ----------- -----------
SOFTWARE 3.33% 2.37% 1.08%
BMC Software, Incorporated -- -- 3,600 160,425 -- --
Concentric Network Corporation 160 90,895 128 109,760 -- --
Keane, Incorporated -- -- -- -- 600 23,963
Micro Focus Group, Incorporated, PLC,
ADR 1,500 14,156 -- -- -- --
Microsoft Corporation * 56,700 7,863,581 93,100 12,911,806 13,400 1,858,412
Oracle Corporation 15,000 646,875 25,350 1,093,219 3,687 159,002
PeopleSoft, Incorporated 3,200 60,600 5,300 100,369 800 15,150
Rythms Netconnections,
Incorporated* 1,140 8,550 2,400 18,000 -- --
SAP AG 1,250 540,022 2,200 950,438 400 172,807
Solectron Corporation * 4,300 399,631 6,000 557,625 800 74,350
----------- ----------- -----------
9,624,310 15,901,642 2,303,684
STEEL 0.04% 0.03% 0.02%
Nippon Steel Corporation 38,000 68,908 70,000 126,935 12,000 21,760
Sumitomo Metal Industry 37,000 42,220 76,000 86,723 12,000 13,693
----------- ----------- -----------
111,128 213,658 35,453
TELECOMMUNICATIONS SERVICES 3.12% 2.14% 1.11%
ADC Telecommunications, Incorporated 1,900 66,025 3,500 121,625 400 13,900
Ascend Communications,
Incorporated * 3,100 203,825 4,900 322,175 1,300 85,475
Benedek Communications Corporation 100 83,250 398 331,335 -- --
Comsat Corporation 39,100 1,407,600 51,500 1,854,000 7,500 270,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
142
<PAGE> 181
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
------------------------ ------------------------ -----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
TELECOMMUNICATION SERVICES - CONTINUED
Cox Communications, Incorporated,
Class A* -- -- 2,400 $ 165,900 2,500 $ 172,813
France Telecom, ADS 3,900 $ 309,712 -- -- 1,200 95,296
Hong Kong Telecommunications, Ltd. 54,656 95,589 101,886 178,191 10,313 18,037
IXC Communications, Incorporated 7,100 235,187 15,000 496,875 -- --
L.M. Ericsson Telefonaktiebolaget * 6,200 147,277 12,200 289,804 1,900 45,133
MCI Worldcom, Incorporated 70,427 5,053,137 111,307 7,986,277 17,382 1,247,159
McLeodUSA, Incorporated 7,600 237,500 13,500 421,875 1,700 53,125
Mobistar * 1,600 80,301 2,800 140,527 500 25,094
Nippon Telegraph & Telephone Corporation 62 478,231 111 856,188 20 154,268
NTT Mobile Communication Network,
Incorporated* 5 205,661 9 370,190 2 82,264
PanAmSat Corporation 4,100 159,644 8,800 342,650 -- --
Pathnet, Incorporated * 190 1,924 425 4,303 -- --
Sonera Group PLC 2,450 43,244 4,400 77,662 2,300 40,596
Telecom Corporation Of New Zealand * 14,000 60,777 25,000 108,530 4,000 17,365
Telstra Corporation 29,400 137,461 57,300 267,908 9,200 43,015
----------- ----------- -----------
9,006,345 14,336,015 2,363,540
TELEPHONE 4.02% 2.61% 1.21%
American Telephone & Telegraph
Corporation 59,506 4,477,826 81,344 6,121,136 10,825 814,581
Ameritech Corporation 8,500 538,688 -- -- 900 57,038
Bell Atlantic Corporation * 20,600 1,091,800 47,800 2,533,400 6,800 360,400
BellSouth Corporation 800 39,900 4,000 199,500 -- --
British Telecommunication * 24,835 375,888 42,607 644,874 7,805 118,132
Cable & Wireless* 24,300 51,075 43,800 92,061 7,300 15,343
Cellular Communications International 1,000 68,000 -- -- -- --
Cincinnati Bell, Incorporated -- -- -- -- 1,000 37,813
DDI Corporation 30 111,455 54 200,619 13 48,297
Deutsche Telekom AG 3,300 108,508 5,900 194,000 1,050 34,525
France Telecom, ADS -- -- 7,050 559,864 -- --
GTE Corporation 10,700 695,500 16,000 1,040,000 2,100 136,500
Qwest Communications International,
Incorporated* 13,992 699,600 17,600 880,000 2,900 145,000
SBC Communications, Incorporated 11,345 608,376 3,553 190,530 586 31,424
Singapore Telecommunications, Ltd. 46,000 70,212 83,000 126,687 14,000 21,369
Sprint Corporation 1,200 76,550 900 57,413 -- --
Swisscom AG * 400 167,431 700 293,004 125 52,322
Telecom Italia Mobile 13,500 99,610 22,800 168,230 7,000 51,650
Telecom Italia Mobile 102,100 480,412 186,400 877,070 27,800 130,808
Telefonica SA 32,700 740,536 59,000 1,336,135 10,300 233,257
Telephone Holdings, Incorporated 26,300 440,525 38,700 648,225 7,300 122,275
Viatel, Incorporated -- -- 2,900 66,338 -- --
Vodafone Group PLC * 35,736 580,658 64,572 1,049,201 11,264 183,024
Winstar Communications, Incorporated 100 80,250 275 220,687 -- --
----------- ----------- -----------
11,602,800 17,498,974 2,593,758
</TABLE>
The accompanying notes are an integral part of the financial statements.
143
<PAGE> 182
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
------------------------- -------------------------- ------------------------
Shares Value Shares Value Shares Value
---------- ------------ ---------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
TIRES & RUBBER 0.03% 0.02% 0.01%
Bridgestone Corporation 4,000 $ 90,756 7,000 $ 158,824 1,000 $ 22,689
------------ ------------ -----------
TOBACCO 1.18% 0.89% 0.41%
Philip Morris Companies, Incorporated 59,100 3,161,850 103,500 5,537,250 15,300 818,550
RJR Nabisco Holdings Corporation 4,500 133,594 7,600 225,625 1,100 32,656
Rothmans Pall Mall 3,000 14,737 6,000 29,474 1,000 4,912
Swedish Match Company 24,500 88,956 43,800 159,031 7,700 27,958
------------ ------------ -----------
3,399,137 5,951,380 884,076
TRUCKING & FREIGHT 0.25% 0.31% 0.12%
Air Express International -- -- 850 $ 18,488 -- --
Expeditores International of
Washington, Incorporated 6,600 277,200 29,400 1,234,800 2,000 84,000
Malaysia International Shipping
Berhad 28,000 30,702 51,000 55,921 12,000 13,158
Midwest Express Holdings,
Incorporated* -- -- 1,800 47,362 1,800 47,363
NCL Holdings AS 52,355 124,023 84,111 199,250 14,666 34,742
Peninsular & Oriental Steam Navigation 18,240 217,894 35,386 418,588 6,666 78,853
Company *
U.S. Freightways Corporation 2,000 58,250 3,000 87,375 -- --
------------ ------------ -----------
708,069 2,061,784 258,116
TOTAL COMMON STOCKS
(Cost: $156,868,423, $265,774,157
and $38,688,351, respectively) $213,047,234 $358,885,822 $53,197,104
------------ ------------ -----------
PREFERRED STOCK 1.44% 1.24% 0.09%
APPAREL & TEXTILES 0.10% 0.07% 0.05%
Hugo Boss AG 150 $ 288,012 250 $ 480,019 50 $ 96,004
------------ ------------ -----------
BROADCASTING 0.19% 0.17% 0.01%
Citadel Broadcasting Company
Series B 2,058 235,110 4,299 491,175 -- --
EchoStar Communications
Corporation 230 267,096 483 561,739 -- --
News Corporation 9,603 58,434 17,407 105,920 3,000 18,255
------------ ------------ -----------
560,640 1,158,834 18,255
COSMETICS & TOILETRIES 0.07% 0.07% 0.04%
Wella AG 250 208,508 550 458,718 100 83,403
------------ ------------ -----------
INDUSTRIALS 0.33% 0.30% 0.30%
CSC Holdings, Incorporated 8,027 897,041 17,435 1,948,336 -- --
CSC Holdings, Incorporated,
Series H 357 $ 41,166 730 $ 84,113 -- --
------------ ------------ -----------
938,207 2,032,449 --
PUBLISHING 0.04% 0.04% 0.00%
PRIMEDIA, Incorporated,
Series D 390 40,755 1,100 114,950 -- --
</TABLE>
The accompanying notes are an integral part of the financial statements.
144
<PAGE> 183
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------- ----------------------- ----------------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
PUBLISHING - CONTINUED
PRIMEDIA, Incorporated,
Series F 800 $ 78,800 1,600 $ 157,600 -- --
---------- ---------- ---------
119,555 272,550 --
TELECOMMUNICATIONS SERVICES 0.48% 0.41% 0.00%
Intermedia Communications,
Incorporated, Series B 429 425,310 942 935,203 -- --
IXC Communications,
Incorporated 505 517,625 608 623,200 -- --
NEXTLINK Communications 8,447 449,803 21,946 1,168,624 -- --
---------- ---------- ---------
1,392,738 2,727,027 --
TELEPHONE 0.22% 0.18% 0.00%
Adelphia Communications
Corporation 904 103,282 2,048 233,984 -- --
NEXTEL Communications,
Incorporated, Series D 544 539,920 974 966,695 -- --
---------- ---------- ---------
643,202 1,200,679 --
TOTAL PREFERRED STOCK
(Cost: $3,554,308, $7,152,332
and $172,378, respectively) $4,150,862 $8,330,276 $ 197,662
---------- ---------- ---------
WARRANTS 0.02% 0.02% 0.00%
BUSINESS SERVICES 0.00% 0.00% 0.00%
Protection One, Incorporated,
(Expiration date
06/30/2005;strike price $6.60)* 960 $ 10,560 3,200 $ 35,200 -- --
---------- ---------- ---------
INDUSTRIALS 0.00% 0.00% 0.00%
McCaw International, Ltd.,
(Expiration date 04/15/2007;
strike price $36.45)* 250 1,281 250 1,281 -- --
---------- ---------- ---------
LEISURE TIME
V2 Music Holdings PLC
(Expiration date 04/15/08;
strike price $0.01)* 160 -- 340 -- -- --
---------- ---------- ---------
TELECOMMUNICATIONS SERVICES 0.02% 0.02% 0.00%
Microcell Telecommunications,
Incorporated, (Expiration date
06/15/2006; strike price $0.01)* 1,280 23,200 3,760 68,150 -- --
Orbital Imaging Corporation,
(Expiration date 03/01/2005;
strike price $1.00)* 270 10,834 570 22,871 -- --
Powertel, Incorporated,
(Expiration date 02/01/2006;
strike price $18.15)* 1,312 $ 10,496 3,488 $ 27,904 -- --
---------- ---------- ---------
44,530 118,925 --
TOTAL WARRANTS
(Cost: $10,700, $28,409 and
$0, respectively) $ 56,371 $ 155,406 --
---------- ---------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
145
<PAGE> 184
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS:
4.19% 2.99% 5.58%
U.S. TREASURY BILLS: 0.16% 0.04% 0.05%
zero coupon due 01/07/1999**** $450,000 $449,870 $250,000 $249,927 $100,000 $99,971
-------- -------- -------
U.S. TREASURY BONDS: 1.60% 2.16% 3.70%
6.50% due 11/15/2026 360,000 418,612 ---- ---- ---- ----
6.875% due 08/15/2025 310,000 375,729 1,090,000 1,321,113 430,000 521,173
7.125% due 02/15/2023 770,000 948,902 350,000 431,319 60,000 73,940
7.625% due 02/15/2025 275,000 361,540 410,000 539,023 375,000 493,009
8.125% due 08/15/2019**** ---- ---- ---- ---- 401,000 535,524
8.875% due 08/15/2017 -
02/15/2019**** 759,000 1,080,123 6,470,000 9,190,633 3,456,000 4,921,401
9.00% due 11/15/2018 ---- ---- 1,845,000 2,651,025 320,000 459,798
10.75% due 05/15/2003 -
08/15/2005 617,000 775,372 250,000 333,438 105,000 129,576
12.75% due 11/15/2010 373,000 541,782 ---- ---- 517,000 750,943
13.875% due 05/15/2011 30,000 46,420 ---- ---- ---- ----
----------- ----------- -----------
4,548,480 14,466,551 7,885,364
U.S. TREASURY NOTES: 1.58% 0.79% 1.83%
5.375% due 02/15/2001 ---- ---- 3,700,000 3,756,647 2,050,000 2,081,385
5.75% due 10/31/2000 3,150,000 3,210,039 ---- ---- ---- ----
6.375% due 08/15/2002 ---- ---- 1,000,000 1,054,840 600,000 632,904
6.875% due 03/31/2000 1,365,000 1,400,613 ---- ---- ---- ----
7.00% due 07/15/2006 1,575,000 1,793,279 440,000 500,980 1,050,000 1,195,519
7.875% due 08/15/2001 600,000 646,872 ---- ---- ---- ----
----------- ----------- -----------
7,050,803 5,312,467 3,909,808
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $11,422,106, $18,874,597,
and $11,109,373, respectively) $12,049,153 $20,028,945 $11,895,144
----------- ----------- -----------
U.S. GOVERNMENT
AGENCY OBLIGATIONS: 0.00% 8.42% 14.12%
FEDERAL AGRICULTURAL MORTGAGE
CORPORATION: 0.13% 0.15%
7.04% due 08/10/2005 ---- ---- $800,000 $878,000 $300,000 $329,250
----------- -----------
FEDERAL HOME LOAN BANK: 0.05% 0.06%
7.59% due 03/10/2005 ---- ---- 280,000 313,732 120,000 134,456
----------- -----------
FEDERAL HOME LOAN MORTGAGE
CORPORATION: 0.63% 1.28%
6.50% due 07/01/2006 ---- ---- ---- ---- 8,558 8,676
8.00% due 04/01/2023 - 07/01/2024 ---- ---- 1,325,651 1,372,905 956,294 991,831
9.50% due 09/01/2016 - 12/01/2022 ---- ---- 2,623,106 2,825,413 1,600,606 1,722,566
----------- -----------
---- 4,198,318 2,723,073
</TABLE>
The accompanying notes are an integral part of the financial statements.
146
<PAGE> 185
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION: 7.10% 11.65%
6.00% due 12/01/2008 - 11/01/2028 ---- ---- $7,449,838 $7,456,916 $2,943,211 $2,939,565
6.50% TBA** ---- ---- 8,900,000 8,958,384 5,800,000 5,838,048
6.50% due 09/01/2007 - 10/01/2028 ---- ---- 9,553,333 9,635,838 5,303,057 5,353,867
7.00% TBA** ---- ---- 10,000,000 10,000,000 5,000,000 5,100,000
7.00% due 05/01/2024 -03/01/2028 ---- ---- 4,496,102 4,586,851 1,167,902 1,191,622
7.49% due 03/02/2005 470,000 524,271 200,000 223,094
7.50% due 11/01/2006 - 03/01/2028 ---- ---- 5,824,872 5,984,777 3,582,621 3,680,454
8.50% due 05/01/2017 - 06/01/2021 ---- ---- 382,725 402,816 502,346 527,908
----------- -----------
47,549,853 24,854,558
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION: 0.51% 0.97%
7.50% due 12/15/2022 - 01/15/2023 ---- ---- 2,457,272 2,535,585 1,600,453 1,651,459
9.00% due 07/15/2017 - 12/15/2019 ---- ---- 889,234 955,748 386,112 415,653
----------- -----------
3,491,333 2,067,112
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost: $0, $45,339,038,
and $29,605,773, respectively) ---- $54,431,236 $30,108,450
----------- -----------
FOREIGN BOND OBLIGATIONS:
0.00% 0.53% 0.45%
Deutsche Mortgage Asset Receiving
Corporation, Series 1998-C1,
Class D, 7.231% due 06/15/2031 ---- ---- $700,000 $694,078 $360,000 $356,955
Government Backed Trust, Series
T-3, 9.625% due 05/15/2002 ---- ---- 123,543 130,735 51,476 54,473
Government Loan Trusts, Series
1-B, 8.50% due 04/01/2006 ---- ---- 1,080,252 1,214,895 ---- ----
Government Trust Certificates,
Class 1C, 9.25% due 11/15/2001 ---- ---- 327,499 348,838 384,797 409,870
Class 2E, 9.40% due 05/15/2002 ---- ---- 797,428 843,783 ---- ----
Israel Export Trust,
6.88% due 01/26/2003 ---- ---- 296,471 305,981 127,059 131,135
----------- -----------
3,538,310 952,433
TOTAL FOREIGN BOND OBLIGATIONS
(Cost: $0, $3,539,560, and
$963,979, respectively) ---- $3,538,310 $952,433
----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
147
<PAGE> 186
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CORPORATE BONDS: 6.97% 15.84% 16.87%
APPAREL & TEXTILES: 0.00% 0.08% 0.14%
Unifi, Incorporated,
6.50% due 02/01/2008 ---- ---- $500,000 $528,431 $280,000 $295,922
----------- -----------
BANKING: 0.00% 2.02% 3.44%
Associates Corporation of
North America, 6.95% due
11/01/2018 ---- ---- 540,000 575,413 300,000 319,674
Bank of Boston Corporation,
6.625% due 02/01/2004 ---- ---- 260,000 265,486 130,000 132,743
BankAmerica Capital II,
8.00% due 12/15/2026 ---- ---- 480,000 529,512 270,000 297,851
BankBoston N A,
6.375% due 03/25/2008 ---- ---- 250,000 250,805 250,000 250,805
6.375% due 04/15/2008 ---- ---- 250,000 252,150 ---- ----
Banponce Corporation,
5.75% due 03/01/1999 ---- ---- 490,000 490,324 270,000 270,178
6.378% due 04/08/1999 ---- ---- 590,000 591,051 330,000 330,588
6.665% due 03/05/2001 ---- ---- 820,000 827,167 430,000 433,758
Capital One Bank,
6.375% due 02/15/2003 ---- ---- 600,000 588,018 340,000 333,210
6.42% due 11/12/1999 ---- ---- 3,380,000 3,371,347 1,600,000 1,595,904
Den Danske Bank Aktieselskab,
6.375% VR due 06/15/2008 ---- ---- 920,000 934,614 480,000 487,625
First Tennessee National
Corporation, 6.75% due
11/15/2005 ---- ---- 350,000 370,048 190,000 200,883
Fleet Financial Group,
Incorporated, 7.625% due
12/01/1999 ---- ---- 150,000 152,961 80,000 81,579
Kansallis Osake Pankki New
York, 10.00% due
05/01/2002 ---- ---- 360,000 404,712 150,000 168,630
Long Island Savings Bank,
6.20% due 04/02/2001 ---- ---- 600,000 600,186 250,000 250,078
7.00% due 06/13/2002 ---- ---- 600,000 609,894 350,000 355,771
Mellon Capital I, Series A,
7.72% due 12/01/2026 ---- ---- 320,000 346,307 180,000 194,798
Provident Bank,
6.125% due 12/15/2000 ---- ---- 1,040,000 1,047,415 520,000 523,708
Providian National Bank,
6.70% due 03/15/2003 ---- ---- 500,000 505,685 260,000 262,956
Shawmut National Corporation,
8.625% due 12/15/1999 ---- --- ---- ---- 360,000 371,070
Union Planters Corporation,
6.75% due 11/01/2005 ---- ---- 850,000 888,701 450,000 470,488
----------- -----------
13,601,796 7,332,297
</TABLE>
The accompanying notes are an integral part of the financial statements.
148
<PAGE> 187
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
BROADCASTING: 0.92% 1.29% 0.70%
Ackerly Group, Incorporated,
9.00% due 01/15/2009 $60,000 $60,900 $140,000 $142,100 ---- ----
Capstar Broadcasting
Partners, 12.75% due
02/01/2009 450,000 369,000 660,000 541,200 ---- ----
Chancellor Media Corporation,
8.00% due 11/01/2008 130,000 132,925 370,000 378,325 ---- ----
8.125% due 12/15/2007 160,000 160,000 340,000 340,000 ---- ----
8.75% due 06/15/2007 160,000 164,000 340,000 348,500 ---- ----
Citadel Broadcasting
Company, Series B,
10.25% due 07/01/2007 390,000 424,125 810,000 880,875 ---- ----
Clear Channel Commerce,
Incorporated, 7.25% due
10/15/2027 ---- ---- 300,000 300,240 $170,000 $170,136
CSC Holdings, Incorporated,
7.625% due 07/15/2018 160,000 158,920 340,000 337,705 ---- ----
EchoStar Communications
Corporation, Step up to 12.875%
due 06/01/2004 160,000 164,000 370,000 379,250 ---- ----
EchoStar DBS Corporation
12.50% due 07/01/2002 150,000 172,500 350,000 402,500 ---- ----
Echostar Satellite
Broadcast Corporation,
Step up to 13.125% due
03/15/2004 840,000 837,900 2,080,000 2,074,800 ---- ----
Hearst-Argyle Television,
Incorporated, 7.50% due
11/15/2027 ---- ---- 560,000 584,287 290,000 302,577
Satelites Mexicanos SA De
C V, 9.06% due 06/30/2004 10,000 8,500 40,000 34,000 ---- ----
Viacom, Incorporated,
7.75% due 06/01/2005 ---- ---- 1,720,000 1,865,908 940,000 1,019,740
----------- ----------- ------------
2,652,770 8,609,690 1,492,453
BUILDING MATERIALS & CONSTRUCTION: 0.01% 0.01% 0.00%
Omega Cabinets, Ltd.,
10.50% due 06/15/2007 40,000 39,200 80,000 78,400 ---- ----
----------- -----------
BUSINESS SERVICES: 0.08% 0.36% 0.46%
Comdisco, Incorporated,
5.75% due 02/15/2001 ---- ---- 1,700,000 1,685,652 1,000,000 991,560
Protection One Alarm,
Incorporated, Step up to
13.625% due 06/30/2005 195,000 221,325 650,000 737,750 ---- ----
----------- ----------- ------------
221,325 2,423,402 991,560
</TABLE>
The accompanying notes are an integral part of the financial statements.
149
<PAGE> 188
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CHEMICALS: 0.22% 0.22% 0.00%
Corning Consumer Products
Company, 9.625% due
05/01/2008 $480,000 $336,000 $1,020,000 $714,000 ---- ----
Huntsman Corporation,
144 A, 9.50% due 07/01/2007 210,000 209,475 540,000 538,650 ---- ----
9.50% due 07/01/2007 100,000 99,500 200,000 199,000 ---- ----
----------- -----------
644,975 1,451,650
COMPUTERS & BUSINESS EQUIPMENT: 0.31% 0.29% 0.00%
Amazon.com, Incorporated,
Step up to 10.00% due
08/01/2008 1,355,000 873,975 2,910,000 1,876,950 ---- ----
Decisionone Corporation,
9.75% due 08/01/2007 40,000 18,400 90,000 41,400 ---- ----
----------- -----------
892,375 1,918,350
CONGLOMERATES: 0.00% 0.13% 0.20%
Raytheon Company,
5.95% due 03/15/2001 --- ---- 860,000 867,551 $430,000 $433,775
----------- -----------
DRUGS & HEALTH CARE: 0.13% 0.25% 0.24%
Global Health Sciences,
Incorporated, 11.00% due
05/01/2008 575,000 379,500 1,200,000 792,000 ---- ----
Rite Aid Corporation,
6.00% due 12/15/2005 ---- ---- 900,000 902,757 500,000 501,532
----------- ----------- -----------
379,500 1,694,757 501,532
ELECTRICAL EQUIPMENT: 0.25% 0.22% 0.00%
Cymer, Incorporated,
3.50% due 08/06/2004 110,000 71,500 220,000 143,000 ---- ----
Fairchild Semiconductor
Corporation, 10.125% due
03/15/2007 650,000 650,000 1,350,000 1,350,000 ---- ----
----------- -----------
721,500 1,493,000
ELECTRIC UTILITIES: 0.30% 0.79% 0.89%
Aescorp,
8.375% due 08/15/2007 160,000 161,200 340,000 342,550 ---- ----
Avon Energy Partners Holdings,
6.46% due 03/04/2008 ---- ---- 650,000 659,360 360,000 365,184
6.73% due 12/11/2002 ---- ---- 930,000 960,513 520,000 537,061
British Columbia Hydro &
Power, 12.50% due
01/15/2014 ---- ---- 460,000 481,063 260,000 271,905
Calenery Company,
Incorporated, 7.52% due
09/15/2008 160,000 167,485 340,000 355,905 ---- ----
8.48% due 09/15/2028 160,000 177,662 340,000 377,533 ---- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
150
<PAGE> 189
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ELECTRIC UTILITIES - CONTINUED
Israel Electric
Corporation,
7.75% due 12/17/2007 ---- ---- $880,000 $875,706 $500,000 $497,560
Niagara Mohawk Power
Corporation, Series G,
7.75% due 10/01/2008 $30,000 $32,784 60,000 65,567 ---- ----
Series H, Step up to
8.50% due 07/01/2010 500,000 385,000 1,050,000 808,500 ---- ----
Texas Utilities Company,
6.375% due 01/01/2008 ---- ---- 370,000 378,491 220,000 225,049
----------- ------------ ------------
924,131 5,305,188 1,896,759
FINANCIAL SERVICES: 0.16% 2.02% 3.39%
Ahmanson Capital Trust 1,
Series A, 8.36% due
12/01/2026 ---- ---- 1,080,000 1,209,589 720,000 806,393
American Telephone &
Telegraph Capital
Corporation, 6.25% due
05/15/2001 ---- ---- 900,000 887,751 360,000 355,100
Medium Term Note 7.50%
due 11/15/2000 ---- ---- 810,000 819,914 450,000 455,508
Amvescap PLC,
6.375% due 05/15/2003 ---- ---- 350,000 355,831 200,000 203,332
6.60% due 05/15/2005 ---- ---- 250,000 256,130 150,000 153,678
APP Finance II,
12.00% due 12/29/2049 300,000 180,000 ---- ---- ---- ----
BankBoston Capital Trust
II, Series B, 7.75% due
12/15/2026 ---- ---- 1,610,000 1,639,205 910,000 926,508
Banponce Financial
Corporation, 6.34% due
03/29/1999 ---- ---- 350,000 350,531 200,000 200,303
Beal Financial Corporation,
12.75% due 08/15/2000 120,000 122,400 380,000 387,600 ---- ----
Countrywide Funding
Corporation, 6.45% due
02/27/2003 ---- ---- 600,000 610,032 400,000 406,688
EOP Operating, Ltd.,
6.375% due 02/15/2003 ---- ---- 590,000 582,472 330,000 325,789
6.75% due 02/15/2008 ---- ---- 210,000 206,493 120,000 117,996
ERP Operating, Ltd.,
6.55% due 11/15/2001 ---- ---- 200,000 200,202 100,000 100,101
FBS Capital I,
8.09% due 11/15/2026 ---- ---- 480,000 526,536 270,000 296,177
Great Western Financial Trust
II, Series A, 8.206% due
02/01/2027 ---- ---- 730,000 823,513 410,000 462,521
GST Equipment Funding,
Incorporated, 13.25% due
05/01/2007 150,000 147,750 300,000 295,500 ---- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
151
<PAGE> 190
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL SERVICES - CONTINUED
Heller Financial, Incorporated,
6.25% due 03/01/2001 ---- ---- $800,000 $808,576 $450,000 $454,824
7.875% due 11/01/1999 ---- ---- 1,000,000 1,017,620 540,000 549,515
Home Savings of America,
6.50% due 08/15/2004 ---- ---- 510,000 518,726 290,000 294,962
Hydro Quebec Enterprises,
7.40% due 03/28/2025 ---- ---- 630,000 782,485 360,000 447,134
MCN Investment Corporation,
5.84% due 02/01/1999 ---- ---- 800,000 799,888 440,000 439,938
Weeks Realty LP,
6.875% due 03/15/2005 ---- ---- 450,000 425,376 250,000 236,320
----------- ------------ ------------
$450,150 13,503,970 7,232,787
FOOD & BEVERAGES: 0.08% 0.21% 0.23%
Dominos, Incorporated,
10.375% due 01/15/2009 $230,000 230,575 530,000 531,325 ---- ----
Seagram, Joseph E & Sons,
Incorporated, 6.625% due
12/15/2005 ---- ---- 450,000 447,471 250,000 248,595
7.60% due 12/15/2028 ---- ---- 450,000 453,051 250,000 251,695
----------- ------------ ------------
230,575 1,431,847 500,290
GAS & PIPELINE UTILITIES: 0.00% 0.05% 0.09%
Southwest Gas Corporation,
9.75% due 06/15/2002 ---- ---- 290,000 323,762 170,000 189,791
------------ ------------
HOTELS & RESTAURANTS: 0.04% 0.11% 0.25%
Darden Restaurants,
Incorporated, 7.125% due
02/01/2016 ---- ---- 490,000 463,800 570,000 539,522
HMH Properties,
Incorporated, Series B,
7.875% due 08/01/2008 130,000 126,425 280,000 272,300 ---- ----
----------- ------------ ------------
126,425 736,100 539,522
INDUSTRIALS: 1.52% 2.23% 1.46%
APP FIN II Mauritius,
Ltd., Series B, Step up
to 12.00% due 02/15/2004 290,000 174,000 710,000 426,000 ---- ----
Arco Tech Corporation,
8.625% due 10/01/2007 320,000 302,400 680,000 642,600 ---- ----
Bally's Health and Tennis
Corporation, 9.875% due
10/15/2007 220,000 215,600 458,000 448,840 ---- ----
Carson, Incorporated,
Series B, 10.375% due
11/01/2007 160,000 124,000 340,000 263,500 ---- ----
Cinemark USA,
Incorporated, Series B,
8.50% due 08/01/2008 80,000 79,500 160,000 159,000 ---- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
152
<PAGE> 191
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIALS - CONTINUED
Conagra, Incorporated,
7.125% due 10/01/2026 ---- ---- $1,000,000 $1,060,650 $575,000 $609,874
CSC Holdings, Incorporated,
7.875% due 02/15/2018 $140,000 $142,524 300,000 305,409 ---- ----
Falcon Holding Group LP,
Series B, Step up to
9.285% due 04/15/2010 195,000 134,062 400,000 275,000 ---- ----
Series B, 8.375% due
04/15/2010 140,000 140,700 285,000 286,425 ---- ----
Flores And Rucks,
Incorporated, 9.75% due
10/01/2006 160,000 164,800 340,000 350,200 ---- ----
Frontiervision Holdings LP,
Step up to 11.875% due
09/15/2007 160,000 133,600 340,000 283,900 ---- ---
Frontiervision LP/Capital,
Step up to 11.875% due
09/15/2007 110,000 91,988 230,000 192,337 ---- ----
Geo Specialty Chemicals,
Incorporated, 10.125%
due 08/01/2008 30,000 28,800 60,000 57,600 ---- ----
Hadco Corporation,
9.50% due 06/15/2008 505,000 502,475 1,060,000 1,054,700 ---- ----
Internorth, Incorporated,
9.625% due 03/15/2006 ---- ---- 590,000 697,215 330,000 389,968
Lin Holdings Corporation,
Step up to 10.00% due
03/01/2008 320,000 220,800 680,000 469,200 ---- ----
Livent, Incorporated,
9.375% due 10/15/2004 170,000 68,000 350,000 140,000 ---- ----
Millar Western Forest
Products, Ltd, 9.875%
due 05/15/2008 110,000 82,500 230,000 172,500 ---- ----
Monsanto Company,
5.75% due 12/01/2005 ---- ---- 1,220,000 1,217,204 670,000 668,464
Motors & Gears,
Incorporated, Series B,
10.75% due 11/15/2006 260,000 264,550 740,000 752,950 ---- ----
Ne Restaurant, Incorporated,
10.75% due 07/15/2008 220,000 221,100 490,000 492,450 ---- ----
Pathmark Stores,
Incorporated, 9.625% due
05/01/2003 230,000 223,100 400,000 388,000 ---- ----
Petro-Canada,
7.00% due 11/15/2028 ---- ---- 440,000 433,893 250,000 246,530
Petroleum Geological
Services AS, 7.125% due
03/30/2028 ---- ---- 900,000 840,951 470,000 439,163
Rhythms Netconnections,
Incorporated, Step up to
13.50% due 05/15/2008 285,000 139,650 600,000 294,000 ---- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
153
<PAGE> 192
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIALS - CONTINUED
Roller Bearing Company of
America, Incorporated,
Step up to 13.00% due
06/15/2009 $240,000 $136,800 $510,000 $290,700 ---- ----
Samsonite Corporation,
10.75% due 06/15/2008 160,000 137,600 340,000 292,400 ---- ----
Seagram Company, Ltd.,
6.875% due 09/01/2023 ---- ---- 90,000 83,785 $50,000 $46,547
8.35% due 01/15/2022 ---- ---- 60,000 65,816 30,000 32,908
Silicon Graphics, Incorporated,
5.25% due 09/01/2004 200,000 163,500 425,000 347,437 ---- ----
Special Devices, Incorporated,
11.375% due 12/15/2008 190,000 192,850 270,000 274,050 ---- ----
Town Sports International,
Incorporated, Series B,
9.75% due 10/15/2004 190,000 190,000 410,000 410,000 ---- ----
Transdigm, Incorporated,
10.375% due 12/01/2008 40,000 40,200 70,000 70,350 ---- ----
Unisys Corporation,
7.875% due 04/01/2008 ---- ---- 50,000 53,000 ---- ----
WMX Technologies, Incorporated,
6.25% due 10/15/2000 ---- ---- 345,000 347,625 190,000 191,446
7.10% due 08/01/2026 ---- ---- 830,000 883,618 470,000 500,362
Young America Corporation,
11.625% due 02/15/2006 160,000 70,400 340,000 149,600 ---- ----
----------- ------------ -----------
4,385,499 14,972,905 3,125,262
INSURANCE: 0.00% 0.91% 1.59%
Equitable Life Assurance
Society, 7.24% due 05/15/2006
---- ---- 800,000 869,992 500,000 543,745
Metropolitan Life Insurance
Company, 6.30% due
11/03/2003 ---- ---- 2,350,000 2,385,767 1,155,000 1,172,579
Nationwide Life Insurance
Company, 6.50% due
02/15/2004 ---- ---- 2,760,000 2,840,095 1,630,000 1,677,303
------------ -----------
6,095,854 3,393,627
LEISURE TIME: 0.49% 0.44% 0.00%
AMC Entertainment,
Incorporated, 9.50% due
03/15/2009 250,000 255,000 450,000 459,000 ---- ----
Premier Parks, Incorporated,
9.25% due 04/01/2006 10,000 10,425 20,000 20,850 ---- ---
Step up to 10.00% due 04/01/2008 710,000 482,800 1,520,000 1,033,600 ---- ----
Signature Resorts,
Incorporated, 9.25% due
05/15/2006 $320,000 $294,400 $680,000 $625,600 ---- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
154
<PAGE> 193
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
LEISURE TIME - CONTINUED
United Artists Theatre
Company, 9.75% due
04/15/2008 $310,000 $297,600 $650,000 $624,000 ---- ----
V2 Music Holdings PLC,
Step up to 14.00% due
04/15/2008 160,000 73,600 340,000 156,400 ---- ----
----------- ------------
1,413,825 2,919,450
-----------
PAPER: 0.12% 0.11% 0.00%
Advance Agro Public
Company, Ltd., 13.00%
due 11/15/2007 430,000 344,000 900,000 720,000 ---- ----
----------- ------------
PUBLISHING: 0.21% 0.56% 0.67%
Sullivan Graphics,
Incorporated, 12.75% due
08/01/2005 600,000 609,000 1,190,000 1,207,850 ---- ----
Time Warner, Incorporated,
6.625% due 05/15/2029 ---- ---- 1,750,000 1,780,555 $970,000 $986,936
6.875% due 06/15/2018 ---- ---- 760,000 796,146 420,000 439,975
----------- ------------ ------------
609,000 3,784,551 1,426,911
RAILROADS & EQUIPMENT: 0.00% 0.10% 0.17%
CSX Corporation,
6.46% due 06/22/2005 ---- ---- 680,000 689,833 350,000 355,061
------------ ------------
REAL ESTATE: 0.00% 0.04% 0.06%
CenterPoint Properties Trust,
6.75% due 04/01/2005 ---- ---- 260,000 246,964 130,000 123,482
------------ ------------
RETAIL GROCERY: 0.00% 0.11% 0.19%
Kroger Company,
6.00% VR due 07/01/2000 ---- ---- 750,000 754,920 400,000 402,624
------------ ------------
RETAIL TRADE: 0.00% 0.31% 0.56%
Federated Department Stores,
Incorporated, 6.79% due
07/15/2027 ---- ---- 550,000 566,703 350,000 360,630
Levi Strauss & Company,
7.00% due 11/01/2006 ---- ---- 1,540,000 1,539,615 840,000 839,790
------------ ------------
2,106,318 1,200,420
SANITARY SERVICES: 0.12% 0.09% 0.00%
Allied Waste North America,
7.625% due 01/01/2006 140,000 141,050 290,000 292,175 ---- ----
7.875% due 01/01/2009 200,000 202,500 300,000 303,750 ---- ----
----------- ------------
343,550 595,925
</TABLE>
The accompanying notes are an integral part of the financial statements.
155
<PAGE> 194
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
STEEL: 0.05% 0.04% 0.00%
Schuff Steel Company,
10.50% due 06/01/2008 $160,000 $139,200 $340,000 $295,800 ---- ----
----------- ------------
TELECOMMUNICATIONS SERVICES: 1.14% 1.06% 0.22%
Adelphia Communications
Corporation, 8.375% due
02/01/2008 160,000 164,000 290,000 297,250 ---- ----
Series B, 9.875% due
03/01/2007 490,000 542,063 930,000 1,028,813 ---- ----
Cable & Wireless
Communication, 6.375%
due 03/06/2003 ---- ---- 830,000 830,365 $460,000 $460,202
Dobson Wireline Company,
12.25% due 06/15/2008 140,000 129,500 295,000 272,875 ---- ----
GST Telecommunications,
Incorporated, 12.75% due
11/15/2007 50,000 46,500 110,000 102,300 ---- ----
Step up to 13.875% due
12/15/2005 10,000 7,888 10,000 7,888 ---- ----
MCMS, Incorporated,
9.75% due 03/01/2008 650,000 549,250 950,000 802,750 ---- ----
Metromedia Fiber Network,
Incorporated, 10.00% due
11/15/2008 150,000 153,750 350,000 358,750 ---- ----
Nextel Communication,
Incorporated, 12.00% due
11/01/2008 325,000 359,125 670,000 740,350 ---- ----
NTL, Incorporated,
11.50% due 10/01/2008 325,000 354,250 480,000 523,200 ---- ----
Step up to 9.75% due 04/01/2008 280,000 173,600 620,000 384,400 ---- ----
Orbital Imaging Corporation,
11.625% due 03/01/2005 270,000 280,800 570,000 592,800 ---- ----
Pathnet, Incorporated,
12.25% due 04/15/2008 190,000 133,000 425,000 297,500 ---- ----
Satelites Mexicanos SA De CV,
10.125% due 11/01/2004 485,000 388,000 1,080,000 864,000 ---- ----
---------- ------------ -----------
3,281,726 7,103,241 460,202
TELEPHONE: 0.42% 0.55% 0.24%
Adelphia Communications
Corporation, 9.25% due
10/01/2002 100,000 105,500 200,000 211,000 ---- ----
GST Network Funding,
Incorporated, Step up to
10.50% due 05/01/2008 160,000 70,400 840,000 369,600 ---- ----
L 3 Communications
Corporation, 8.00% due
08/01/2008 70,000 70,175 140,000 140,350 ---- ----
Level 3 Communications,
Incorporated, 9.125% due
05/01/2008 160,000 158,600 340,000 337,025 ---- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
156
<PAGE> 195
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
TELEPHONE - CONTINUED
McLeodUSA, Incorporated,
Step up to 10.50% due
03/01/2007 $250,000 $191,250 $530,000 $405,450 ---- ----
Millicom International
Cellular SA, Step up to
13.50% due 06/01/2006 40,000 28,000 80,000 56,000 ---- ----
Nextlink Communications,
Incorporated, 10.75% due
11/15/2008 160,000 163,600 340,000 347,650 ---- ----
Pegasus Communications
Corporation, 9.75% due
12/01/2006 90,000 90,225 210,000 210,525 ---- ----
TCI Communications,
Incorporated, 8.75% due
08/01/2015 ---- ---- 760,000 944,141 $410,000 $509,339
Telecommunications
Techniques, 9.75% due
05/15/2008 10,000 9,850 10,000 9,850 ---- ----
Telewest Communications PLC,
9.625% due 10/01/2006 30,000 30,600 40,000 40,800 ---- ----
11.25% due 11/01/2008 40,000 44,500 80,000 89,000 ---- ----
Winstar Communications,
Incorporated, Step up to
14.00% due 10/15/2005 320,000 231,600 680,000 492,150 ---- ----
----------- ------------ -----------
1,194,300 3,653,541 509,339
TOBACCO: 0.00% 0.41% 0.77%
Philip Morris Companies,
Incorporated, 6.95% due
06/01/2006 ---- ---- 1,400,000 1,490,986 850,000 905,242
7.00% due 07/15/2005 ---- ---- 670,000 712,471 380,000 404,088
7.25% due 09/15/2001 ---- ---- 500,000 521,945 310,000 323,606
------------ -----------
2,725,402 1,632,936
TRANSPORTATION: 0.36% 0.81% 0.91%
Burlington Northern Santa Fe,
7.29% due 06/01/2036 ---- ---- 1,070,000 1,192,461 610,000 679,814
Canadian National Railway
Company, 6.90% due
07/15/2028 ---- ---- 500,000 519,900 250,000 259,950
Greyhound Lines, Incorporated,
Series B, 11.50% due
04/15/2007 500,000 572,500 600,000 687,000 ---- ----
Norfolk Southern Corporation,
7.05% due 05/01/2037 ---- ---- 1,220,000 1,319,833 690,000 746,463
Transtar Holdings LP,
Series B, Step up to
13.375% due 12/15/2003 270,000 259,200 730,000 700,800 ---- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
157
<PAGE> 196
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
TRANSPORTATION - CONTINUED
US Air, Incorporated,
9.625% due 02/01/2001 $190,000 $197,296 $490,000 $508,816 ---- ----
Wisconsin Central Transportation
Corporation, 6.625% due
04/15/2008 ---- ---- 500,000 507,725 $250,000 $253,863
----------- ------------ -----------
$1,028,996 5,436,535 1,940,090
TOTAL CORPORATE BONDS
(Cost: $20,253,058, $115,184,865,
and $35111,528, respectively) $20,023,022 $106,069,133 $35,976,642
----------- ------------ -----------
COLLATERALIZED MORTGAGE
OBLIGATIONS: 0.00% 2.50% 4.44%
American Housing Trust, Series IV,
9.552% due 09/25/2020 ---- ---- $1,389,925 $1,427,181 $685,265 $703,633
BankAmerica Manufactured Housing
Contract, Series 1998-2, Class
A5, 6.20% due 04/10/2009
---- ---- 470,000 474,582 250,000 252,437
CBM Funding Corporation,
Certificates 96 1B, Class A1,
7.55% due 07/01/2004 ---- ---- 23,876 23,994 13,644 13,711
Certificates 96 1B, Class A2,
6.88% due 02/01/2007 ---- ---- 700,000 716,457 390,000 399,169
Certificates 96 1B, Class A3,
7.08% due 02/01/2013 ---- ---- 480,000 507,950 270,000 285,722
Certificates 96 1B, Class B,
7.48% due 02/02/2013 ---- ---- 380,000 404,111 210,000 223,324
Contimortage Home Equity Loan
Trust, Series 1997-4, Class A3,
6.26% due 07/15/2012 ---- ---- 880,000 880,546 490,000 490,304
Credit Suisse First Boston
Mortgage Securities Corporation,
Series 1997-C2, Class D, 7.27%
due 04/18/2011 ---- ---- 990,000 998,177 560,000 564,626
Series 1998-C1, Class D, 7.17%
due 01/17/2012 ---- ---- 650,000 628,266 340,000 328,631
Series 1998-FL1A, Class E,
6.397% due 01/10/2013 ---- ---- 710,000 690,031 370,000 359,594
Edison Mission Energy Funding
Corporation, Series A 144A,
6.77% due 09/15/2003 ---- ---- $810,251 $831,877 $583,864 $599,448
General Growth Property, Series 1,
Class A2, 6.602% due 11/15/2007 ---- ---- 710,000 741,574 400,000 417,788
Series 1, Class D2, 6.992% due
11/15/2007 ---- ---- 760,000 748,837 430,000 423,684
Series 1, Class E2, 7.224% due
11/15/2007 ---- ---- 450,000 416,250 260,000 240,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
158
<PAGE> 197
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS - CONTINUED
Green Tree Financial Corporation,
97 6 Series, 6.68% due 01/15/2029 ---- ---- $1,230,000 $1,248,831 $690,000 $700,564
GS Mortgage Securities Corporation
II, Series 97-GL, Class A2B,
6.86% due 07/13/2030 ---- ---- 850,000 894,166 470,000 494,421
Series 98-GL II, Class D, 7.19%
due 04/13/2031 ---- ---- 270,000 262,744 150,000 145,969
Series 98-GL II, Class E, 7.19%
due 04/13/2031 ---- ---- 570,000 582,291 320,000 326,900
LTC Commercial Mortgage
Certificates, Series 1998-1,
Class A, 6.029% due 05/28/2030 ---- ---- 524,168 521,711 266,590 265,341
Morgan Stanley Capital I,
Incorporated, Series 1998-HF1,
Class D, 7.10% due 02/15/2008 ---- ---- 870,000 869,983 450,000 449,991
NationsLink Funding Corporation,
Certificates 96 1, Class A1,
7.533% due 09/20/2002 ---- ---- 965,002 1,010,772 579,001 606,463
Series 1994-MD2, Class A6,
6.485% due 07/07/2003 ---- ---- 780,648 781,241 ---- ----
Series 1994-MD2, Class A6,
6.609% due 07/07/2003 ---- ---- ---- ---- 501,845 502,227
Series 1998-D6, Class A4,
7.349% due 03/15/2030 ---- ---- 700,000 674,667 360,000 347,065
Overseas Private Investment
Corporation, Series 1995, 6.08%
due 08/15/2004 ---- ---- 382,163 394,667 319,950 330,419
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (Cost: $0, $16,662,034,
and $9,427,890, respectively) ---- $16,731,088 $9,471,931
----------- ----------
ASSET BACKED SECURITIES: 0.00% 1.30% 2.34%
Chevy Chase Auto Receivables
Trust, Series 1998-2, Class A,
5.91% due 06/17/2002 ---- ---- $298,490 $300,794 $153,509 $154,694
CPS Auto Grantor Trust, Series
1996 2 Certificates, Class A,
6.70% due 02/15/2002 ---- ---- 208,802 211,454 117,688 119,183
Series 1997 1 Certificates,
Class A, 6.55% due 07/15/2002 ---- ---- 414,006 419,666 245,337 248,691
Series 1998 1 Certificates,
Class A, 6.00% due 08/15/2003 ---- ---- 811,802 819,571 455,603 459,963
Series 1998 2 Certificates,
Class A, 6.09% due 11/15/2003 ---- ---- 488,403 493,878 248,642 251,429
</TABLE>
The accompanying notes are an integral part of the financial statements.
159
<PAGE> 198
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ASSET BACKED SECURITIES - CONTINUED
Dayton Hudson Credit Card Master
Certificates, Series 95 1, Class
A, 6.25% due 08/25/2005 ---- ---- $869,139 $887,878 $490,000 $500,565
Ford Credit Grantor Trust, 1995 B
Certificates, Class A, 5.90% due
10/15/2000 ---- ---- 400,259 400,507 174,659 174,767
Guaranteed Export Trust, Series
1993 C, 5.20% due 10/15/2004 ---- ---- 169,600 169,956 75,200 75,358
Series 1993 D, 5.23% due
05/15/2005 ---- ---- 298,723 297,370 132,766 132,164
Series 1994 C, 6.61% due
09/15/1999 ---- ---- 30,245 30,378 12,373 12,427
JCP Master Credit Card Trust,
5.50% due 06/15/2007 ---- ---- 1,350,000 1,341,562 750,000 745,313
MBNA Master Credit Card Trust II,
Series 97 Certificates, Class A,
6.55% due 01/15/2007 ---- ---- 1,720,000 1,796,316 970,000 1,013,039
Olympic Automobile Receivable,
1997 A, 6.40% due 09/15/2001 ---- ---- 974,718 979,767 397,107 399,164
Railcar Trust, 1992 1,
7.75% due 06/01/2004 ---- ---- 540,901 570,434 674,839 711,685
---------- ----------
TOTAL ASSET BACKED SECURITIES
(Cost: $0, $8,565,015, and $4,906,660,
respectively) ---- $8,719,531 $4,998,442
---------- ----------
SUPRANATIONAL OBLIGATIONS: 0.00% 0.13% 0.24%
Inter-American Development
Bank, 6.29% due
07/16/2027 ---- ---- $800,000 $838,016 $480,000 $502,810
---------- ----------
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost: $0, $795,055, and $477,033,
respectively) ---- $838,016 $502,810
---------- ----------
SHORT TERM INVESTMENTS: 8.54% 8.22% 8.60%
Navigator Securities Lending
Trust, 5.17% $24,560,067 $24,560,067 $35,119,053 $35,119,053 $5,868,418 $5,868,418
Conagra Holdings Australia,
6.00% due 01/13/1999 ---- ---- ---- ---- 1,000,000 998,000
Conagra, Incorporated,
6.00% due 01/13/1999 ---- ---- 1,000,000 998,000 ---- ----
Lehman Brothers Holdings,
Incorporated, 6.50% due
01/27/1999 ---- ---- 3,000,000 2,985,917 2,500,000 2,488,264
</TABLE>
The accompanying notes are an integral part of the financial statements.
160
<PAGE> 199
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
<TABLE>
<CAPTION>
AGGRESSIVE MODERATE CONSERVATIVE
----------------------------- ------------------------------ ------------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
------------ --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENTS - CONTINUED
Norfolk Southern Corporation,
6.05% due 01/11/1999 ---- ---- $2,000,000 $1,996,639 $1,000,000 $998,319
Phh Corporation,
5.57% due 01/13/1999 ---- ---- 6,000,000 5,988,000 3,500,000 3,493,000
Texas Utilities Company,
6.12% due 01/13/1999 ---- ---- 4,000,000 3,991,840 1,500,000 1,496,940
6.25% due 01/13/1999 ---- ---- 4,000,000 3,991,666 3,000,000 2,993,750
------------ ------------ ------------
$24,560,067 $55,071,115 $18,336,691
REPURCHASE AGREEMENTS: 4.91% 5.24% 22.36%
Repurchase Agreement with State Street
Bank & Trust Company dated
12/31/1998 at 4.25%, to be
repurchased at $13,831,528 on
01/04/1999, collateralized by
$13,210,000 U.S. Treasury
Notes, 6.50% due 08/31/2001
(valued at $14,101,675,
including interest) $13,825,000 $13,825,000
------------
Repurchase Agreement with State Street
Bank & Trust Company dated
12/31/1998 at 4.25%, to be
repurchased at $35,153,592 on
01/04/1999, collateralized by
$34,095,000 U.S. Treasury
Notes, 7.125% due 02/29/2000
(valued at $35,842,369,
including interest)*** $35,137,000 $35,137,000
------------
Repurchase Agreement with State Street
Bank & Trust Company dated
12/31/1998 at 4.25%, to be
repurchased at $47,723,525 on
01/04/1999, collateralized by
$39,800,000 U.S. Treasury
Bonds, 7.25% due 05/15/2016
(valued at $48,655,261,
including interest)*** $47,701,000 $47,701,000
------------
TOTAL INVESTMENTS (AGGRESSIVE,
MODERATE, AND CONSERVATIVE ASSET
ALLOCATION TRUSTS) (Cost: $230,494,314,
$572,085,831, and $196,500,659,
respectively)
$287,711,708 $669,935,871 $213,338,307
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
161
<PAGE> 200
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD TRUST
SHARES VALUE
------ -----
COMMON STOCKS - 0.70%
BROADCASTING - 0.34%
<S> <C> <C>
Paxon Communications Corporation 82 $ 694,839
----------
COMPUTERS & BUSINESS EQUIPMENT - 0.00%
Wam ! Net, Incorporated 3,600 2,880
----------
SOFTWARE - 0.32%
Concentric Network
Corporation Delaware 665 570,238
Rhythms Netconnections,
Incorporated * 11,600 87,000
----------
657,238
TELECOMMUNICATIONS SERVICES - 0.02%
American Mobile Satellite
Corporation 1,415 46,398
----------
TELEPHONE - 0.02%
Onepoint Communications
Corporation 1,200 121
Viatel, Incorporated 425 46,856
----------
46,977
TOTAL COMMON STOCKS
(Cost: $1,392,993) $1,448,332
----------
PREFERRED STOCK - 0.55%
BROADCASTING - 0.29%
Paxson Communications
Corporation 26 254,800
Sinclair Capital 3,125 341,406
----------
596,206
TELECOMMUNICATIONS SERVICES - 0.26%
IXC Communications,
Incorporated 523 536,075
----------
TOTAL PREFERRED STOCK
(Cost: $1,025,673) $1,132,281
----------
WARRANTS - 0.08%
BROADCASTING - 0.00%
Paxson Communications
Corporation, (Expiration
date 06/30/2003; strike
price $16.00) * 832 8
----------
INDUSTRIALS - 0.00%
Nokornthai Strip Ml Public, Ltd.,
(Expiration date 02/01/2008;
strike price $1.00) * 462,157 $ 4,622
----------
SOFTWARE - 0.03%
Concentric Network
Corporation, (Expiration
date 12/15/2007; strike
price $10.86) * 520 62,465
----------
TELECOMMUNICATIONS SERVICES - 0.04%
Globalstar
Telecommunications,
(Expiration date
02/15/2004; strike price
$17.39) * 750 45,000
Iridium World Communications,
Ltd., (Expiration date
07/15/2005; strike price
$20.90) *
240 30,030
----------
75,030
TELEPHONE - 0.01%
Occidente y Caribe Celular
SA, (Expiration date
03/15/2004; strike price
$1.00) * 3,600 27,450
----------
TOTAL WARRANTS
(Cost: $4,621) $ 169,575
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
U.S. TREASURY OBLIGATIONS - 0.95%
U.S. TREASURY NOTES - 0.95%
<S> <C> <C>
6.50% due 10/15/2006 $1,775,000 $1,968,866
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $1,773,363) $1,968,866
----------
FOREIGN GOVERNMENT OBLIGATIONS - 1.91%
REPUBLIC OF ARGENTINA - 1.56%
Series L, 6.1875%, FRN due
03/31/2005 $3,811,700 3,222,411
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
162
<PAGE> 201
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
GOVERNMENT OF MEXICO - 0.35%
6.25%, Series W-B due
<S> <C> <C>
12/31/2019 $ 920,000 $ 718,796
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost: $3,922,343) $ 3,941,207
-----------
CORPORATE BONDS - 78.86%
AUTO PARTS - 0.73%
Hayes Lemmerz International,
Incorporated, 8.25% due
12/15/2008 $ 1,505,000 $ 1,505,000
-----------
BANKING - 0.05%
Korea Development Bank,
6.625% due 11/21/2003 120,000 107,268
-----------
BROADCASTING - 8.92%
Chancellor Media Corporation,
8.125% due 12/15/2007 2,670,000 2,670,000
9.00% due 10/01/2008 1,300,000 1,368,250
CSC Holdings, Incorporated,
7.25% due 07/15/2008 2,285,000 2,316,304
7.875% due 12/15/2007 1,955,000 2,060,570
Globo Communicacoes,
10.50% due 12/20/2006 880,000 572,000
10.625% due 12/05/2008 100,000 64,250
HMV Media Group PLC,
10.875% due 05/15/2008 1,390,000 2,147,699
Lenfest Communications,
Incorporated, 8.375% due
11/01/2005 1,900,000 2,052,000
Multicanal SA,
10.50% due 02/01/2007 1,195,000 1,075,500
RBS Participacoes SA,
11.00% due 04/01/2007 855,000 540,788
Rogers Cablesystems, Ltd.,
10.00% due 03/15/2005 365,000 408,800
10.125% due 09/01/2012 650,000 718,250
TV Azteca SA DE CV, Series B,
10.50% due 02/15/2007 3,035,000 2,428,000
-----------
18,422,411
BUSINESS SERVICES - 0.35%
CB Richards Ellis Services,
Incorporated, 8.875% due
06/01/2006 730,000 715,400
-----------
COMPUTERS & BUSINESS EQUIPMENT - 0.32%
Wam ! Net, Incorporated,
Step up to 13.25% due
03/01/2005 $ 1,200,000 $ 660,000
-----------
DRUGS & HEALTH CARE - 5.27%
Columbia/HCA Healthcare Corporation,
6.91% due 06/15/2005 3,650,000 3,536,521
7.00% due 07/01/2007 1,205,000 1,149,558
7.25% due 05/20/2008 750,000 720,450
Fresenius Medical Care
Capital Trust, 7.875% due
02/01/2008 1,295,000 1,288,525
Tenet Healthcare Corporation,
8.125% due 12/01/2008 1,925,000 1,973,125
8.625% due 01/15/2007 2,125,000 2,220,625
-----------
10,888,804
ELECTRIC UTILITIES - 2.51%
AES Corporation,
8.50% due 11/01/2007 1,630,000 1,650,375
Companhia Energetica de Sao
Paulo, Step up to 9.125%
due 06/26/2007 1,000,000 792,500
Korea Electric Power
Corporation, 7.75% due
04/01/2013 305,000 248,468
Niagara Mohawk Power
Corporation, Series G,
7.75% due 10/01/2008 430,000 469,900
Niagara Mohawk Power
Corporation, Series H, Step
up to 8.50% due 07/01/2010
1,559,000 1,200,430
Quezon Power Philippines
Company, 8.86% due
06/15/2017 1,220,000 829,600
-----------
5,191,273
ELECTRONICS - 1.04%
Hyundai Semiconductor
American, Incorporated,
8.625% due 05/15/2007 830,000 594,986
Samsung Electronics America,
Incorporated, 9.75% due
05/01/2003 310,000 297,600
Samsung Electronics, Ltd.,
7.45% due 10/01/2002 1,425,000 1,259,146
-----------
2,151,732
</TABLE>
The accompanying notes are an integral part of the financial statements.
163
<PAGE> 202
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
FINANCIAL SERVICES - 1.18%
Fugi JGB Investment, LLC,
<S> <C> <C>
9.87% VR due 12/31/2049 $1,005,000 $ 718,847
SB Treasury Company LLC,
9.40% VR due 06/30/2008 990,000 974,833
Western Financial Savings,
8.875% due 08/01/2007 980,000 735,000
----------
2,428,680
HOTELS & RESTAURANTS - 3.45%
Hilton Hotels Corporation,
7.95% due 04/15/2007 2,250,000 2,359,417
HMH Properties, Incorporated,
7.875% due 08/01/2005 3,200,000 3,136,000
Host Marriott Travel Plazas,
Incorporated, Series B,
9.50% due 05/15/2005 1,560,000 1,634,100
----------
7,129,517
INDUSTRIALS - 14.12%
American Commercial Lines
LLC/ACL, 10.25% due
06/30/2008 840,000 852,600
American Standard,
Incorporated, 7.375% due
02/01/2008 1,615,000 1,615,000
AMSC Acquisition Company,
Incorporated, Series B,
12.25% due 04/01/2008 1,415,000 856,075
APP FIN II Mauritius, Ltd.,
Series B, Step up to 12.00%
due 02/15/2004 860,000 516,000
AST Research, Incorporated,
7.45% due 10/01/2002 1,440,000 1,267,639
Axia, Incorporated,
10.75% due 07/15/2008 705,000 715,575
Building Materialls
Corporation of America,
8.00% due 12/01/2008 1,395,000 1,391,513
Cathay International, Ltd.,
13.00% due 04/15/2008 1,250,000 475,000
Cex Holdings, Incorporated,
9.625% due 06/01/2008 1,750,000 1,557,500
EES Coke Battery Company,
Incorporated, 9.382% due
04/15/2007 525,000 508,688
Entex Information Services,
12.50% due 08/01/2006 860,000 567,600
Geberit International SA,
5.63% due 04/15/2007 250,000 168,757
Glencore Nickel Property,
Ltd., 9.00% due 12/01/2014 $1,725,000 $1,380,000
Indah Kiat Finance Mauritius,
Ltd., 10.00% due 07/01/2007
1,500,000 795,000
ISP Holdings, Incorporated,
Series B, 9.00% due
10/15/2003 1,970,000 2,078,350
Mosaic Re, Ltd.,
10.10% due 07/09/1999 900,000 905,625
Norampac, Incorporated,
9.50% due 02/01/2008 1,555,000 1,570,550
Nortek, Incorporated,
8.875% due 08/01/2008 1,900,000 1,938,000
Pindo Deli Finance Mauritius,
Ltd., 10.75% due 10/01/2007
2,845,000 1,546,969
Ras Laffan Liquefied Natural
Gas, 8.294% due 03/15/2014
1,150,000 947,899
Reliance Industry, Ltd.,
9.375% due 06/24/2026 500,000 460,000
RG Receivables, Ltd.,
9.60% due 02/10/2005 312,502 250,001
Rhythms Netconnections,
Incorporated, Step up to
13.50%, due 05/15/2008 2,900,000 1,421,000
S D Warren Company,
12.00% due 12/15/2004 935,000 1,014,475
Sirona Dental Systems,
9.125% due 07/15/2008 1,550,000 924,224
Smithfield Foods,
Incorporated, 7.625% due
02/15/2008 1,385,000 1,391,925
Vencor Operating,
Incorporated, 9.875% due
05/01/2005 2,375,000 2,042,500
----------
29,158,465
LEISURE TIME - 3.73%
Grand Casino, Incorporated,
10.125% due 12/01/2003 1,555,000 1,694,950
Harrahs Operating,
Incorporated, 7.875% due
12/15/2005 820,000 820,000
Park Place Entertainment
Corporation, 7.875% due
12/15/2005 1,475,000 1,476,844
Station Casinos, Incorporated,
8.875% due 12/01/2008 1,070,000 1,086,050
9.625% due 06/01/2003 775,000 803,055
9.75% due 04/15/2007 710,000 734,850
</TABLE>
The accompanying notes are an integral part of the financial statements.
164
<PAGE> 203
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
LEISURE TIME - CONTINUED
Station Casinos, Incorporated,
<S> <C> <C>
10.125% due 03/15/2006 $1,035,000 $1,084,162
----------
7,699,911
METAL & METAL PRODUCTS - 0.58%
Impress Metal Packaging
Holdings,
5.888% due 05/29/2007 600,000 396,016
9.875% due 05/29/2007 DEM 1,200,000 802,382
----------
1,198,398
MINING - 0.83%
Groupo Minero Mexico SA De
CV, Series A, 8.25% due
04/01/2008 $ 640,000 $ 537,600
Murrin Murrin Holdings
Property, 9.375% due
08/31/2007 1,340,000 1,179,200
----------
1,716,800
PETROLEUM SERVICES - 1.78%
Husky Oil, Ltd.,
8.90% due 08/15/2028 965,000 996,242
R & B Falcon Corporation,
9.50% due 12/15/2008 725,000 725,000
Synder Oil Corporation,
8.75% due 06/15/2007 2,045,000 1,963,200
----------
3,684,442
POLLUTION CONTROL - 0.76%
Norcal Waste Systems,
Incorporated, Series B,
Step up to 13.50% due
11/15/2005 1,415,000 1,570,650
----------
PUBLISHING - 1.00%
Outdoor Systems,
Incorporated, 8.875% due
06/15/2007 1,935,000 2,065,613
----------
RETAIL GROCERY - 0.71%
Southland Corporation,
5.00% due 12/15/2003 1,679,000 1,477,520
----------
RETAIL TRADE - 2.77%
K Mart Funding Corporation,
Series F, 8.80% due
07/01/2010 3,025,000 3,192,888
Musicland Group, Incorporated,
9.00% due 06/15/2003 $ 865,000 $ 826,075
9.875% due 03/15/2008 1,745,000 1,710,100
----------
5,729,063
SANITARY SERVICES - 0.23%
Allied Waste North America,
7.875% due 01/01/2009 470,000 475,875
----------
SOFTWARE - 0.39%
Psinet, Incorporated,
10.00% due 02/15/2005 825,000 808,500
----------
STEEL - 0.18%
Algoma Steel, Incorporated,
12.375% due 07/15/2005 385,000 288,750
NSM Steel, Incorporated,
12.25% due 02/01/2008 730,000 87,600
----------
376,350
TELECOMMUNICATIONS SERVICES - 10.09%
Adelphia Communications
Corporation,
8.375% due 02/01/2008 1,315,000 1,348,975
Series B, 9.875% due
03/01/2007 275,000 304,219
Americian Cellular
Corporation, 10.50% due
05/15/2008 1,340,000 1,299,800
Centennial Cellular Operating
Company, 10.75% due
12/15/2008 865,000 871,487
Comcast Cellular Holdings,
Incorporated, Series B,
9.50% due 05/01/2007**** 310,000 329,375
Esprit Telecom Group, PLC,
11.50% due 12/15/2007 1,200,000 748,830
Global Crossings Holdings,
Ltd., 9.625% due 05/15/2008
2,260,000 2,373,000
Globalstar LP,
11.375% due 02/15/2004 1,115,000 836,250
Iridium Capital Corporation,
Series A, 13.00% due
07/15/2005 1,740,000 1,592,100
Metromedia Fiber Network,
Incorporated, 10.00% due
11/15/2008 990,000 1,014,750
Multicanal SA,
10.50% due 04/15/2018 635,000 506,412
</TABLE>
The accompanying notes are an integral part of the financial statements.
165
<PAGE> 204
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
TELECOMMUNICATIONS SERVICES - CONTINUED
NTL, Incorporated,
<S> <C> <C>
10.75% due 04/01/2008 $ 2,275,000 $ 2,116,631
RCN Corporation,
Step up to 9.80% due
02/15/2008 1,125,000 613,125
Step up to 11.125% due
10/15/2007 2,565,000 1,487,700
Rogers Cantel, Incorporated,
8.30% due 10/01/2007 1,820,000 1,829,100
Rogers Communications,
Incorporated,
8.875% due 07/15/2007 1,600,000 1,648,000
9.125% due 01/15/2006 460,000 477,250
Satelites Mexicanos SA De CV,
10.125% due 11/01/2004 1,825,000 1,460,000
-----------
20,857,004
TELEPHONE - 17.82%
CTI Holdings SA,
Step up to 11.50% due
04/15/2008 1,325,000 596,250
Dial Call Communications,
Incorporated, Series B,
Step up to 10.25% due
12/15/2005 250,000 246,250
Dobson Communications
Corporation, 11.75% due
04/15/2007 985,000 980,075
Dolphin Telecom PLC,
Step up to 11.625% due
06/01/2008 ECU 2,070,000 789,335
Espirit Telecom Group, PLC,
11.00% due 06/15/2008 $ 1,850,000 $ 1,118,370
Flag, Ltd.,
8.25% due 01/30/2008 950,000 931,000
Hermes Europe Railtel BV,
10.375% due 01/15/2009 450,000 454,500
11.50% due 08/15/2007 1,025,000 1,076,250
Intermedia Communications,
Incorporated, Series B,
Step up to 11.25% due
07/15/2007 3,600,000 2,448,000
IXC Communications,
Incorporated, 9.00% due
04/15/2008 2,600,000 2,619,500
Lenfest Communications,
Incorporated, 7.625% due
02/15/2008 2,150,000 2,214,500
Level 3 Communications,
Incorporated, 9.125% due
05/01/2008 1,570,000 1,556,262
Nextel Communications,
Incorporated, Step up to
10.65% due 09/15/2007 $ 6,550,000 $ 4,208,375
NEXTEL Communications,
Incorporated, Step up to
9.75% due 08/15/2004 2,725,000 2,643,250
Nextlink Communications,
Incorporated,
9.45% due 04/15/2008 2,755,000 1,584,125
10.75% due 11/15/2008 350,000 357,875
Occidente y Caribe Celular,
Series B, Step up to 14.00%
due 03/15/2004 900,000 666,000
Onepoint Communications
Corporation, 14.50% due
06/01/2008 1,200,000 636,000
Philippine Long Distance
Telephone Company, 7.85%
due 03/06/2007 1,585,000 1,339,325
9.25% due 06/30/2006 200,000 185,000
Primus Telecommunication
Group, Incorporated, 9.875%
due 05/15/2008 1,695,000 1,614,487
PTC International Financial
BV, Step up to 10.75% due
07/01/2007 2,480,000 1,686,400
Qwest Communications
International, Incorporated,
Step up to 8.29% due
02/01/2008 1,900,000 1,425,000
Step up to 9.47% due
10/15/2007 1,130,000 878,575
10.875% due 04/01/2007 146,000 165,710
RSL Communications PLC,
9.125% due 03/01/2008 1,470,000 1,337,700
10.00% due 03/15/2008 DEM 3,400,000 1,124,595
Step up to 10.125% due
03/01/2008 $ 1,750,000 $ 997,500
12.00% due 11/01/2008 400,000 412,000
12.25% due 11/15/2006 46,000 48,300
Viatel, Incorporated,
Step up to 12.50% due
04/15/2008 825,000 486,750
------------
36,827,259
TOTAL CORPORATE BONDS
(Cost: $171,511,520) $162,845,935
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
166
<PAGE> 205
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
CONVERTIBLE BONDS - 0.15%
TELECOMMUNICATIONS SERVICES - 0.15%
Total Access Communication
Public Company, Ltd., 2.00%
due 05/15/2006 $ 400,000 $ 300,000
------------
TOTAL CONVERTIBLE BONDS
(Cost: $402,000) $ 300,000
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.10%
CA FM Lease Trust,
8.50% due 07/15/2017 $ 1,659,003 $ 1,805,775
DLJ Mortgage Acceptance
Corporation, Series
1997-CF2, Class S, IO,
0.3571% due 10/15/2015 20,759,185 467,055
------------
2,272,830
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost: $2,268,908) $ 2,272,830
------------
ASSET BACKED SECURITIES - 2.31%
Aircraft Lease Portfolio
Securitization, Ltd.,
Series 1996-1, Class DX,
12.75% due 06/15/2006 $ 942,865 $ 942,840
DR Structured Finance, Series
A-1, 6.66% due 08/15/2010 616,797 582,293
Series A-2, 7.43% due
08/15/2018 375,000 338,065
Series A-2, 8.375% due
08/15/2015 550,000 541,042
Series 94K2, 9.35% due
08/15/2019 400,000 416,844
Jet Equipment Trust, Series
C1, 11.79% due 06/15/2013 300,000 393,864
Long Beach Acceptance Auto
Business, 14.22% due
10/25/2003 730,873 726,618
OHA Auto Grantor Trust,
Series 1997-1, Class A,
11.00% due 01/15/2004 399,503 387,928
Securitized Multiple Asset
Rated Trust, Series 1997,
Class 5, 7.72% due
04/15/2005 545,294 436,952
------------
4,766,446
TOTAL ASSET BACKED SECURITIES
(Cost: $4,799,978) $ 4,766,446
------------
PRINCIPAL AMOUNT
SHORT TERM INVESTMENTS - 8.69%
$17,935,954 Navigator Securities
Lending Trust, 5.17% $ 17,935,954
------------
REPURCHASE AGREEMENTS - 4.70%
$9,707,000 Repurchase Agreement with State
Street Bank & Trust Company dated
12/31/1998 at 4.00%, to be repurchased
at $9,711,314 on 01/04/1999,
collateralized by $8,470,000 U.S.
Treasury Notes, 7.875% due 11/15/2004
(valued at $9,905,987, including interest) $ 9,707,000
------------
TOTAL INVESTMENTS (HIGH YIELD TRUST)
(Cost: $214,744,353) $206,488,426
============
</TABLE>
STRATEGIC BOND TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
PREFERRED STOCK - 0.00%
ELECTRIC UTILITIES - 0.00%
<S> <C> <C>
TCR Holdings 18,019 $ 1,071
--------
1,071
TOTAL PREFERRED STOCKS
(Cost: $1,071) $ 1,071
--------
WARRANTS - 0.03%
FINANCIAL SERVICES - 0.00%
BPC Holdings Corporation,
(Expiration date
04/15/2004; strike price
$18.797) * 1,000 $ 0
--------
TELEPHONE - 0.00%
In Flight Phone Corporation,
(Expiration date 2002) 1,500 0
Wireless One, Incorporated,
(Expiration date
10/19/2000; strike price
$11.50) * 2,250 23
--------
23
REPUBLIC OF ARGENTINA - 0.03%
Republic of Argentina,
(Expiration date
12/03/1999; strike price
$1.00) * 4,000 180,000
--------
TOTAL WARRANTS
(Cost: $0) $180,023
--------
</TABLE>
The accompanying notes are an integral part of the financial statements.
167
<PAGE> 206
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
RIGHTS - 0.01%
GOVERNMENT OF MEXICO - 0.00%
Goverment of Mexico,
<S> <C> <C>
(Expiration date 2003) 13,861,000 $ 0
-----------
TRUCKING & FREIGHT - 0.01%
Terex Corporation, (Expiration date
05/15/2002; strike price $20)* 4,000 56,500
-----------
TOTAL RIGHTS
(Cost: $0) $ 56,500
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
U.S. TREASURY OBLIGATIONS - 8.62%
U.S. TREASURY BONDS - 1.86%
<S> <C> <C>
3.625% due 04/15/2028 $ 460,000 $ 446,200
5.25% due 11/15/2028*** 5,000,000 5,118,750
5.50% due 08/15/2028 3,000,000 3,140,160
6.125% due 11/15/2027 920,000 1,029,820
6.375% due 08/15/2027 300,000 344,811
-----------
10,079,741
U.S. TREASURY NOTES - 6.76%
4.75% due 11/15/2008*** 6,065,000 6,112,368
5.25% due 08/15/2003 800,000 820,376
5.50% due 02/15/2008 650,000 688,798
5.625% due 12/31/2002 -
05/15/2008*** 3,300,000 3,453,699
5.875% due 09/30/2002 5,000,000 5,196,850
6.125% due 08/15/2007*** 12,425,000 13,570,461
6.375% due 03/31/2001 1,000,000 1,036,560
6.625% due 03/31/2002 5,500,000 5,813,665
-----------
36,692,777
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $45,345,069) $46,772,518
-----------
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 11.73%
FEDERAL HOME LOAN BANK - 0.32%
5.89% due 07/24/2000 1,200,000 1,216,128
5.94% due 06/13/2000 500,000 506,560
-----------
1,722,688
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 0.73%
6.50% TBA** 1,250,000 1,258,975
8.00% due 05/01/2010 689,949 710,247
8.50% due 05/01/2008 405,332 423,689
10.00% due 05/15/2020 1,323,038 1,436,726
REMIC, IO,759.50% due
07/15/2006 10,413 106,736
-----------
3,936,373
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 9.88%
6.00% TBA** $34,750,000 $34,293,732
6.50% TBA** 10,900,000 10,971,504
13.00% due 11/15/2015 208,915 249,131
IO, 0.571% due 10/17/2036 50,895,443 1,414,893
REMIC, IO, 0.639% due
03/17/2020 22,269,654 572,330
REMIC, IO, 0.945% due
02/17/2002 60,977,467 1,478,539
IO, 1.641% due 02/25/2035 26,863,458 2,108,781
8.80% due 01/25/2019 1,743,878 1,849,592
REMIC, 10.40% due 04/25/2019
614,519 677,121
-----------
53,615,623
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 0.57%
7.50% due 04/15/2022 -
02/15/2028 3,015,008 3,108,795
-----------
3,108,795
STUDENT LOAN MARKETING
ASSOCIATION - 0.23%
7.20% due 11/09/2000 1,200,000 1,245,744
-----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost: $63,864,386) $63,629,223
-----------
FOREIGN GOVERNMENT OBLIGATIONS - 20.19%
REPUBLIC OF ARGENTINA - 2.95%
5.75% due 03/31/2023 $ 7,900,000 5,658,770
Series L, 6.187% due
03/31/2005 7,520,000 6,357,408
11.00% due 12/04/2005 4,000,000 4,003,800
-----------
16,019,978
COMMONWEALTH OF AUSTRALIA - 0.06%
7.375% due 02/21/2007 AUD 450,000 309,394
-----------
FEDERAL REPUBLIC OF BRAZIL - 2.53%
9.375% due 04/07/2008 $15,540,000 10,644,900
10.125% due 05/15/2027 4,600,000 3,059,000
-----------
13,703,900
NATIONAL REPUBLIC OF BULGARIA - 0.86%
6.687% due 07/28/2011 7,000,000 4,690,000
-----------
GOVERNMENT OF COSTA RICA - 0.11%
Series B, 6.25% due 05/21/2015
700,000 577,500
KINGDOM OF DENMARK -1.00%
8.00% due 05/15/2003 DKK 29,760,000 5,424,725
</TABLE>
The accompanying notes are an integral part of the financial statements.
168
<PAGE> 207
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED
REPUBLIC OF ECUADOR - 0.87%
<S> <C> <C>
3.25% due 02/27/2015 $ 4,356,872 $ 1,753,641
3.50% due 02/28/2025 6,500,000 2,941,250
--------------
4,694,891
GOVERNMENT OF FINLAND - 0.21%
6.00% due 04/25/2008 FIM 5,000,000 1,127,378
--------------
FEDERAL REPUBLIC OF GERMANY - 0.89%
4.125% due 07/04/2008 DEM 1,900,000 1,162,846
4.75% due 07/04/2008 1,720,000 1,102,530
5.625% due 01/04/2028 3,770,000 2,549,376
--------------
4,814,752
REPUBLIC OF GREECE - 1.51%
8.60% due 03/26/2008 GRD 370,000,000 1,467,414
8.70% due 04/08/2005 134,000,000 515,882
8.90% due 04/01/2003 1,277,500,000 4,788,115
11.00% due 02/25/2000 408,800,000 1,416,077
--------------
8,187,488
REPUBLIC OF KOREA - 0.28%
8.75% due 04/15/2003 $ 1,500,000 1,527,150
--------------
GOVERNMENT OF MEXICO - 2.89%
11.50% due 05/15/2026 2,500,000 2,706,250
Series W-B, 6.25% due
12/31/2019 4,400,000 3,437,720
Series W-A, 6.25% due
12/31/2019 6,500,000 5,078,450
Series D, 6.097% due
12/31/2019 5,500,000 4,468,750
--------------
15,691,170
GOVERNMENT OF MOROCCO - 1.15%
6.062% due 01/01/2009 8,000,000 6,240,000
--------------
REPUBLIC OF PANAMA - 0.76%
4.00% due 07/17/2014 5,500,000 4,097,500
--------------
REPUBLIC OF PERU - 0.95%
4.00% due 03/07/2017 8,200,000 5,145,500
--------------
GOVERNMENT OF RUSSIA - 0.00%
FRN 5.96875% due 12/15/2015, Series
144 A 109,451 11,835
FRN 5.96875% due 12/15/2015 75,773 7,956
--------------
19,791
REPUBLIC OF SLOVENIA - 0.37%
5.375% due 05/27/2005 ECU 1,700,000 2,027,015
KINGDOM OF SWEDEN - 0.69%
11.00% due 01/21/1999 SEK 19,000,000 $ 2,346,049
6.50% due 05/05/2008 9,800,000 1,413,876
--------------
3,759,925
REPUBLIC OF VENEZUELA - 2.12%
5.937% due 12/18/2007 $ 14,142,838 8,602,381
6.125% due 03/31/2007 4,654,742 2,891,991
--------------
11,494,372
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost: $108,550,370) $ 109,552,429
--------------
CORPORATE BONDS - 31.47%
AEROSPACE - 0.22%
B E Aerospace,
8.00% due 03/01/2008 $ 1,225,000 $ 1,200,500
--------------
AGRICULTURAL OPERATIONS - 0.17%
Hines Horticulture,
11.75% due 10/15/2005 839,000 895,632
--------------
APPAREL & TEXTILES - 0.33%
Collins & Aikman
Floorcovering, 10.00% due
01/15/2007 1,250,000 1,293,750
Synthetic Industries,
Incorporated, 9.25% due
02/15/2007 500,000 515,000
--------------
1,808,750
AUTO PARTS - 0.23%
Hayes Lemmerz International,
Incorporated, 8.25% due
12/15/2008 1,250,000 1,250,000
--------------
BANKING - 1.71%
Euro Investment Bank,
7.45% due 02/04/1999 ITL 6,200,000,000 3,770,828
Korea Development Bank,
9.60% due 12/01/2000 $ 3,000,000 3,013,350
US Bank National Association,
5.70% due 12/15/2008 2,500,000 2,482,295
--------------
9,266,473
BROADCASTING - 1.39%
Capstar Broadcasting
Partners, 9.25% due
07/01/2007 1,250,000 1,300,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
169
<PAGE> 208
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
BROADCASTING - CONTINUED
Century Communications
Corporation, zero coupon
due 01/15/2008 $ 3,000,000 $ 1,537,500
Chancellor Media Corporation,
9.375% due 10/01/2004 500,000 525,000
CSC Holdings, Incorporated,
7.625% due 07/15/2018 375,000 372,469
10.50% due 05/15/2016 1,000,000 1,175,000
Granite Broadcasting
Corporation, 8.875% due
05/15/2008 1,000,000 950,000
Marcus Cable Company,
Step up to 14.25% due
12/15/2005 1,000,000 955,000
SFX Broadcasting,
Incorporated, 10.75% due
05/15/2006 658,000 730,380
-----------
7,545,349
BUSINESS SERVICES - 2.20%
CB Richards Ellis Services,
Incorporated, 8.875% due
06/01/2006 1,250,000 1,225,000
First Data Corporation,
6.375% due 12/15/2007*** 2,575,000 2,668,035
Jordan Industries,
Incorporated, Series B,
Step up to 11.75% due
04/01/2009 2,412,580 1,544,051
Jordan Telecommunication
Products, Series B, 9.875%
due 08/01/2007 1,000,000 990,000
Pierce Leahy Corporation,
11.125% due 07/15/2006 1,250,000 1,368,750
Primark Corporation,
9.25% due 12/15/2008 1,500,000 1,507,500
Protection One Alarm,
8.125% due 01/15/2009 1,500,000 1,500,000
Williams Scotsman,
Incorporated, 9.875% due
06/01/2007 1,100,000 1,122,000
-----------
11,925,336
CHEMICALS - 0.92%
Huntsman Corporation,
9.50% due 07/01/2007 1,000,000 995,000
Huntsman Packaging
Corporation, 9.125% due
10/01/2007 1,200,000 1,194,000
Norsk Hydro A S,
6.70% due 01/15/2018 2,050,000 2,037,085
PCI Chemicals Canada,
Incorporated, 9.25% due
10/15/2007 $1,000,000 $ 780,000
----------
5,006,085
COMPUTERS & BUSINESS EQUIPMENT - 0.33%
Decisionone Corporation,
9.75% due 08/01/2007 1,030,000 473,800
Unisys Corporation,
7.875% due 04/01/2008 1,250,000 1,325,000
----------
1,798,800
COSMETICS & TOILETRIES - 0.35%
American Safety Razor
Company, Series B, 9.875%
due 08/01/2005 1,000,000 1,030,000
Revlon Worldwide Corporation,
Series B, 10.75% due
03/15/2001 1,500,000 862,500
----------
1,892,500
CRUDE PETROLEUM & NATURAL GAS - 0.22%
Frontier Oil Corporation,
Series A, 9.125% due
02/15/2006 1,250,000 1,171,875
----------
DRUGS & HEALTH CARE - 1.48%
Cole National Group,
Incorporated, 8.625% due
08/15/2007 1,275,000 1,249,500
Dade International,
Incorporated, 11.125% due
05/01/2006 1,000,000 1,100,000
Dailey International,
Incorporated, 9.50% due
02/15/2008 1,000,000 460,000
Fisher Scientific
International,
Incorporated, 9.00% due 750,000 742,500
02/01/2008
Fresenius Medical Care,
Capital Trust, 9.00% due
12/01/2006 750,000 780,000
Maxxim Medical, Incorporated,
10.50% due 08/01/2006 1,000,000 1,065,000
Packard BioScience,
Incorporated, 9.375% due
03/01/2007 900,000 855,000
Prime Medical Services,
Incorporated, 8.75% due
04/01/2008 1,000,000 940,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
170
<PAGE> 209
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
DRUGS & HEALTH CARE - CONTINUED
Universal Hospital Services,
Incorporated, 10.25% due
03/01/2008 $1,000,000 $ 852,500
----------
8,044,500
EDUCATIONAL SERVICES - 0.23%
Kindercare Learning Centre,
Incorporated, 9.50% due
02/15/2009 1,250,000 1,243,750
----------
ELECTRICAL EQUIPMENT - 0.18%
SC International Services,
Incorporated, Series B,
9.25% due 09/01/2007 1,000,000 1,000,000
----------
ELECTRIC UTILITIES - 0.09%
Transamerican Energy Corporation,
11.50% due 06/15/2002 750,000 217,500
Series B, Step up to
13.00% due 06/15/2002 1,050,000 294,000
----------
511,500
ELECTRONICS - 0.21%
Amphenol Corporation,
9.875% due 05/15/2007 1,100,000 1,122,000
-----------
FINANCIAL SERVICES - 2.70%
Contifinancial Corporation,
8.125% due 04/01/2008 1,000,000 700,000
DVI, Incorporated,
9.875% due 02/01/2004 1,500,000 1,455,000
Foamex Capital Corporation,
9.875% due 06/15/2007 750,000 810,000
Forest City Enterprises,
Incorporated, 8.50% due
03/15/2008 1,000,000 1,000,000
Intertek Finance PLC, Series
B, 10.25% due 11/01/2006 1,250,000 1,125,000
Mediacom LLC/Capital
Corporation, Series B,
8.50% due 04/15/2008 1,000,000 1,025,000
Merrill Lynch & Company,
Incorporated, 6.00% due
11/15/2004 1,020,000 1,023,601
Nordiska Investeringsbanken,
17.75% due 04/15/2002 PLZ 3,160,000 1,024,074
Paine Webber Group,
Incorporated, 7.00% due
03/01/2000*** $ 1,700,000 $ 1,715,912
Sudwestdeutsche LBank
Capital, 17.50% due
05/05/2003 PLZ $ 2,470,000 $ 827,556
TPSA Finance,
7.75% due 12/10/2008 2,300,000 2,270,792
United States Leasing
International, 8.45% due
01/25/2005 1,500,000 1,701,885
-----------
14,678,820
FOOD & BEVERAGES - 0.81%
CFP Holdings, Incorporated,
Series B, 11.625% due
01/15/2004 1,100,000 836,000
Delta Beverage Group,
Incorporated, 9.75% due
12/15/2003 1,000,000 1,040,000
Dole Foods, Incorporated,
6.75% due 07/15/2000 1,500,000 1,502,460
Imperial Holly Corporation,
9.75% due 12/15/2007 1,000,000 990,000
-----------
4,368,460
FOREST PRODUCTS - 0.09%
Doman Industries, Ltd.,
8.75% due 03/15/2004 650,000 513,500
-----------
FUNERAL SERVICES - 0.37%
Service Corporation
International, 6.00% due
12/15/2005 2,000,000 1,980,960
-----------
FURNITURE & FIXTURES - 0.18%
Sealy Mattress Company,
9.875% due 12/15/2007 1,000,000 950,000
-----------
GAS & PIPELINE UTILITIES - 0.42%
Praxair, Incorporated,
6.15% due 04/15/2003 2,300,000 2,294,595
-----------
HOTELS & RESTAURANTS - 0.45%
HMH Properties, Incorporated,
Series B, 7.875% due 08/01/2008
1,000,000 972,500
Series C, 8.45% due
12/01/2008 250,000 250,000
Prime Hospitality
Corporation, 9.75% due
04/01/2007 1,200,000 1,206,000
-----------
2,428,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
171
<PAGE> 210
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
HOUSEHOLD PRODUCTS - 0.28%
Ekco Group, Incorporated,
Series B, 9.25% due
04/01/2006 $1,500,000 $1,500,000
----------
INDUSTRIALS - 3.90%
Advance Stores, Incorporated,
10.25% due 04/15/2008 1,000,000 1,010,000
APP FIN II Mauritius, Ltd.,
Series B, Step up to 12.00%
due 02/15/2004 1,000,000 600,000
Breed Technologies,
Incorporated, 9.25% due
04/15/2008 1,000,000 880,000
Comdisco, Incorporated,
6.13% due 08/01/2007*** 2,500,000 2,480,800
Empress Entertainment,
Incorporated, 8.125% due
07/01/2006 1,000,000 1,005,000
Falcon Holding Group LP,
Series B, 8.375% due
04/15/2010 1,000,000 1,005,000
Furon Company,
8.125% due 03/01/2008 750,000 742,500
High Voltage Engineering
Corporation, 10.50% due
08/15/2004 1,000,000 945,000
Holt Group, Incorporated,
9.75% due 01/15/2006 1,000,000 690,000
Indesco International,
Incorporated, 9.75% due
04/15/2008 750,000 705,000
International Utility
Structures, 10.75% due
02/01/2008 1,075,000 1,010,500
ISP Holdings, Incorporated,
Series B, 9.00% due
10/15/2003 750,000 791,250
Lin Holdings Corporation,
Step up to 10.00% due
03/01/2008 1,750,000 1,207,500
Mastec, Incorporated,
7.75% due 02/01/2008 750,000 723,750
NBTY, Incorporated, Series B,
8.625% due 09/15/2007 1,000,000 975,000
Nebco Evans Holding Company,
Step up to 12.375% due
07/15/2007 1,500,000 720,000
P&L Coal Holdings
Corporation, Series B,
8.875% due 05/15/2008 250,000 255,000
9.625% due 05/15/2008 500,000 505,000
Polymer Group, Incorporated,
8.75% due 03/01/2008 $ 875,000 $ 859,687
9.00% due 07/01/2007 275,000 272,250
Raytheon Company,
6.15% due 11/01/2008 1,200,000 1,222,044
RG Receivables, Ltd.,
9.60% due 02/10/2005 1,339,286 1,071,429
Stellex Industries,
Incorporated, 9.50% due
11/01/2007 1,000,000 862,500
Vencor Operating,
Incorporated, 9.875% due
05/01/2005 750,000 645,000
-----------
21,184,210
INSURANCE - 0.32%
Aetna Services, Incorporated,
7.625% due 08/15/2026 1,700,000 1,727,591
-----------
LEISURE TIME - 0.93%
Grand Casinos, Incorporated,
Series B, 9.00% due
10/15/2004 1,000,000 1,125,000
Harrahs Operating,
Incorporated, 7.875% due
12/15/2005 1,250,000 1,250,000
Park Place Entertainment
Corporation, 7.875% due
12/15/2005 1,500,000 1,501,875
Sun International Hotels,
Ltd., 8.625% due 12/15/2007 1,125,000 1,153,125
-----------
5,030,000
LIQUOR - 0.14%
Stroh Brewery Company,
11.10% due 07/01/2006 1,000,000 750,000
-----------
METAL & METAL PRODUCTS - 0.51%
Envirosource, Incorporated,
9.75% due 06/15/2003 735,000 683,550
International Knife & Saw,
Incorporated, 11.375% due
11/15/2006 1,000,000 1,025,000
Renco Metals, Incorporated,
11.50% due 07/01/2003 1,000,000 1,040,000
-----------
2,748,550
MINING - 0.16%
Murrin Murrin Holdings
Property, 9.375% due
08/31/2007 1,000,000 880,000
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
172
<PAGE> 211
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
NEWSPAPERS - 0.18%
Garden State Newspapers,
Incorporated, 8.75% due
10/01/2009 $1,000,000 $1,000,000
----------
OFFICE FURNISHINGS & SUPPLIES - 0.36%
Staples, Incorporated,
7.125% due 08/15/2007*** 1,950,000 1,977,963
----------
PAPER - 0.18%
Mail-WelI Corporation,
8.75% due 12/15/2008 1,000,000 1,000,000
----------
PETROLEUM SERVICES - 0.93%
Bellwether Exploration
Company, 10.875% due
04/01/2007 1,000,000 1,010,000
Benton Oil & Gas Company,
11.625% due 05/01/2003 1,000,000 580,000
Costilla Energy,
Incorporated, 10.25% due 750,000 570,000
10/01/2006
Occidental Petroleum
Corporation, 9.25% due
08/01/2019*** 2,225,000 2,554,656
United Refining Company,
Series B, Step up to 10.75%
due 06/15/2007 500,000 345,000
----------
5,059,656
PLASTICS - 0.45%
Berry Plastics,
12.25% due 04/15/2004 1,150,000 1,198,875
Key Plastics, Incorporated,
10.25% due 03/15/2007 500,000 467,500
Plastic Containers,
Incorporated, Series B,
10.00% due 12/15/2006 750,000 780,000
----------
2,446,375
POLLUTION CONTROL - 0.36%
Loomis Fargo & Company,
10.00% due 01/15/2004 1,000,000 920,000
Safety-Kleen Services,
Incorporated, 9.25% due
06/01/2008 1,000,000 1,030,000
----------
1,950,000
PUBLISHING - 0.74%
American Media Operations,
Incorporated, 11.625% due
11/15/2004 1,150,000 1,178,750
Big Flowers Press Holdings,
Incorporated, 8.625% due
12/01/2008 $1,250,000 $1,262,500
Hollinger International
Publishing, Incorporated,
9.25% due 03/15/2007 1,500,000 1,575,000
----------
4,016,250
REAL ESTATE - 0.23%
Radnor Holdings Corporation,
10.00% due 12/01/2003 1,250,000 1,256,250
----------
RETAIL GROCERY - 0.47%
Carr Gottstein Foods Company,
12.00% due 11/15/2005 1,000,000 1,140,000
Jitney-Jungle Stores of
America, Incorporated,
12.00% due 03/01/2006 1,250,000 1,387,500
----------
2,527,500
RETAIL TRADE - 0.73%
Finlay Enterprises,
Incorporated, 9.00% due
05/01/2008 500,000 430,000
Finlay Fine Jewelry
Corporation, 8.375% due
05/01/2008 1,000,000 880,000
French Fragrances,
Incorporated, Series B,
10.375% due 05/15/2007 840,000 829,500
Hills Stores Company, Series
B, 12.50% due 07/01/2003 500,000 350,000
Maxim Group, Incorporated,
9.25% due 10/15/2007 500,000 490,000
Musicland Group,
Incorporated, 9.875% due
03/15/2008 1,000,000 980,000
---------
3,959,500
SANITARY SERVICES - 0.28%
Allied Waste North America,
7.875% due 01/01/2009 1,500,000 1,518,750
---------
SOFTWARE - 0.19%
Alvey Systems, Incorporated,
11.375% due 01/31/2003 1,000,000 1,010,000
---------
TELECOMMUNICATIONS SERVICES - 1.59%
Adelphia Communications
Corporation, Series B,
9.875% due 03/01/2007 525,000 580,781
10.50% due 07/15/2004 475,000 520,125
</TABLE>
The accompanying notes are an integral part of the financial statements.
173
<PAGE> 212
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
TELECOMMUNICATIONS SERVICES - CONTINUED
Centennial Cellular Operating
Company, 10.75% due
12/15/2008 $ 1,250,000 $ 1,259,375
Comcast Cellular Holdings,
Incorporated, Series B,
9.50% due 05/01/2007 1,000,000 1,062,500
Diamond Cable Communications
PLC, Step up to 11.75% due
12/15/2005
750,000 616,875
ICG Holdings, Incorporated,
Step up to 13.50% due
09/15/2005 1,250,000 1,037,500
International Cabletel,
Incorporated, Series B,
Step up to 11.50% due
02/01/2006 1,500,000 1,260,000
Telewest Communication PLC,
Step up to 11.00% due
10/01/2007 1,500,000 1,248,750
United International
Holdings, Incorporated,
Step up to 2,000,000 1,060,000
10.75% due 02/15/2008
------------
8,645,906
TELEPHONE - 2.01%
British Telecom PLC,
7.00% due 05/23/2007 5,080,000 5,584,825
GST Network Funding,
Incorporated, Step up to
10.50% due 05/01/2008 1,000,000 440,000
GTE Corporation,
6.94% due 04/15/2028 880,000 955,724
Intermedia Communications,
Incorporated, Series B,
Step up to 11.25% due
07/15/2007 1,000,000 680,000
L 3 Communications
Corporation, 8.00% due
08/01/2008 750,000 751,875
Nextel Communications,
Incorporated, Step up to
9.95% due 02/15/2008 1,000,000 600,000
NEXTEL Communications,
Incorporated, Step up to
9.75% due 08/15/2004 1,000,000 970,000
Nextlink Communications,
Incorporated, 9.00% due
03/15/2008 1,000,000 935,000
------------
10,917,424
TRANSPORTATION - 1.25%
Atlantic Express
Transportation Corporation,
10.75% due 02/01/2004 $ 1,250,000 $ 1,262,500
Axiohm Transaction Solutions,
9.75% due 10/01/2007 1,000,000 945,000
Iron, Incorporated,
10.125% due 10/01/2006 1,000,000 1,085,000
Navistar International Corporation,
8.00% due 02/01/2008 1,000,000 1,017,500
Stena AB,
10.50% due 12/15/2005 1,000,000 1,042,500
Teekay Shipping Corporation,
8.32% due 02/01/2008 750,000 742,500
TFM SA De C V,
Step up to 11.75% due
06/15/2009 1,500,000 697,500
------------
6,792,500
TOTAL CORPORATE BONDS
(Cost: $178,412,349) $170,796,310
------------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 5.43%
DLJ Commercial Mortgage
Corporation, IO, 0.8514%
due 11/12/2031 41,689,000 2,357,930
DLJ Commercial Mortgage
Corporation, Series
1998-CG1, Class S, IO,
0.707% due 05/10/2023 47,119,533 2,223,100
First Boston Mortgage
Securities Corporation
Strip, Series D, Class I-O,
IO,10.965% due 05/25/2017
645,857 156,620
First Union Residential
Securitization Trust,
Series 1998-A, Class B2,
REMIC, 7.00% due 08/25/2028 1,115,472 1,078,450
</TABLE>
The accompanying notes are an integral part of the financial statements.
174
<PAGE> 213
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -
CONTINUED
GE Capital Mortgage Services,
Incorporated, Series
1998-14, Class B1, 6.75%
due 10/25/2028 $ 3,798,279 $ 3,552,492
Green Tree Financial
Corporation, Series 1997-6,
Class A8, 7.07% due
09/15/2007*** 8,130,980 8,301,161
PNC Mortgage Securities
Corporation, Series
1998-10, Class 1B, 6.50%
due 12/25/2028 4,464,042 4,085,804
PNC Mortgage Securities
Corporation, Series
1998-12, Class IB2, 6.25%
due 11/28/2028 2,222,957 2,089,580
PNC Mortgage Securities
Corporation, Series 1998-4,
Class 3B3, 6.75% due
05/25/2028 1,568,992 1,474,853
PNC Mortgage Securities
Corporation, Series 1998-4,
Class CB3, 6.838% due
05/25/2028 2,290,426 2,182,409
PNC Mortgage Securities
Corporation, Series 1998-5,
Class CB3, 6.7346% due
07/25/2028 2,110,586 1,984,605
-----------
29,487,004
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost: $29,945,214) $29,487,004
-----------
ASSET BACKED SECURITIES - 1.44%
Mid State Trust VI,
7.34% due 07/01/2035*** $ 7,580,983 $ 7,803,636
-----------
TOTAL ASSET BACKED SECURITIES
(Cost: $7,670,353) $ 7,803,636
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 21.08%
$62,552,583 Navigator Securities Lending
Trust, 5.17% $62,552,583
14,000,000 Aeroquip Vickers, Incorporated,
5.25% due 01/04/1999 13,993,875
$4,690,000 Boston Scientific Corporation,
6.10% due 01/06/1999 $4,686,027
15,000,000 Centex Corporation,
6.75% due 01/07/1999 14,983,125
15,000,000 Consolidation Coal Company,
6.02% due 01/08/1999 14,982,442
3,186,000 J.B. Hunt Transport Services,
Incorporated, 5.20% due
01/04/1999 3,184,619
------------
$114,382,671
TOTAL INVESTMENTS (STRATEGIC BOND
Trust) (Cost: $548,171,483) $542,661,385
============
</TABLE>
GLOBAL GOVERNMENT BOND TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 5.92%
U.S. TREASURY NOTES - 5.92%
5.25% due 08/15/2003 $ 5,000,000 $ 5,127,350
5.375% due 07/31/2000 7,000,000 7,076,580
-----------
12,203,930
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $12,058,251) $12,203,930
-----------
FOREIGN GOVERNMENT OBLIGATIONS - 37.63%
FOREIGN BONDS - 6.49%
Federal National Mortgage Association
6.375% due 08/15/2007 AUD 6,400,000 $ 4,149,274
Province of Ontario
6.00% due 02/21/2006 $ 4,000,000 4,182,000
Sachsen-Anhalt
5.00% due 01/08/2009 DEM 8,000,000 5,049,202
-----------
13,380,476
COMMONWEALTH OF AUSTRALIA - 2.00%
Queensland Treasury
6.50% due 06/14/2005 AUD 6,300,000 4,124,977
-----------
GOVERNMENT OF CANADA - 7.93%
5.25% due 11/05/2008 $ 9,000,000 9,144,000
6.625% due 10/03/2007 NZD 13,500,000 7,219,204
-----------
16,363,204
</TABLE>
The accompanying notes are an integral part of the financial statements.
175
<PAGE> 214
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED
GOVERNMENT OF FRANCE - 4.00%
<S> <C> <C>
zero coupon due 10/25/2025 FRF 95,000,000 4,455,196
4.00% due 04/25/2009 21,000,000 3,786,085
--------------
8,241,281
FEDERAL REPUBLIC OF GERMANY - 4.16%
zero coupon due 01/04/2028 DEM 24,000,000 3,398,536
4.75% due 07/04/2028 8,700,000 5,187,843
--------------
8,586,379
REPUBLIC OF GREECE - 2.03%
7.50% due 05/20/2013 GRD 560,000,000 2,113,906
8.90% due 03/21/2004 545,000,000 2,078,703
--------------
4,192,609
REPUBLIC OF ITALY - 6.86%
4.75% due 05/01/2003 ITL 8,000,000,000 5,109,317
zero coupon due 01/10/2001 $ 10,000,000 9,037,500
--------------
14,146,817
KINGDOM OF SWEDEN - 4.16%
5.00% due 01/28/2009 ECU 3,900,000 4,897,536
zero coupon due 07/31/2000 $ 4,000,000 3,690,000
--------------
8,587,536
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost: $76,262,894) $ 77,623,279
--------------
CORPORATE BONDS - 27.71%
BANKING - 7.94%
Barclays Bank PLC,
6.50% due 02/16/2004 GBP 3,000,000 5,220,967
Depfa Pfandebriefbank,
4.75% due 01/28/2002 DEM 10,000,000 6,222,249
Frankfurter Hypo Centboden,
4.75% due 04/12/2002 DEM 7,000,000 4,359,774
Osterreichische Kontrollbank,
10.25% due 04/10/2000 CZK 17,000,000 573,643
--------------
16,376,633
FINANCIAL SERVICES - 19.77%
Abbey National Treasury
Services, 4.875% due
02/24/2003 ECU 5,500,000 6,769,330
Baden Wurttemberg L Finance,
5.375% due 02/05/2010 DEM 3,800,000 2,452,523
Baden-Wuerttemberg L Finance,
5.125% due 03/05/2004 ECU 5,500,000 6,864,514
Bremer LB Cap Markets PLC,
10.375% due 04/14/2000 CZK 26,000,000 876,729
Deutsche Bank Finance BV,
zero coupon due
10/15/2026 ITL23,600,000,000 3,033,052
Deutsche Finance Netherlands,
zero coupon due
10/28/2026 DEM 25,400,000 3,457,713
Ford Credit Canada, Ltd.,
14.00% due 11/13/2002 ZAR 15,000,000 2,311,003
Helaba International Finance PLC,
7.375% due 12/30/2002 GBP 3,000,000 5,265,825
KFW International Finance,
5.75% due 01/15/2008 $ 4,500,000 4,640,625
Suedwestt LB Capital Markets,
4.625% due 02/17/2003 ECU 3,650,000 4,464,537
West LB Finance Curacao NV,
15.25% due 02/07/2000 ZAR 4,000,000 667,199
---------------
40,803,050
TOTAL CORPORATE BONDS
(Cost: $54,609,845) $ 57,179,683
---------------
SUPRANATIONAL OBLIGATIONS - 19.97%
Asian Development Bank, zero
coupon due 08/31/2004 $ 5,000,000 $ 3,693,750
Eurofima, 15.50% due
02/07/2002 ZAR 6,000,000 991,121
European Investment Bank
zero coupon due
02/25/2013 CZK 140,000,000 1,469,290
0.478% due 05/30/2008 JPY 1,100,000,000 9,731,667
6.00% due 12/07/2028 GBP 1,500,000 2,881,500
11.00% due 10/10/2001 CZK 22,500,000 791,805
11.50% due 07/30/2001 CZK 32,000,000 1,134,119
0.07031 due 05/29/2008 JPY 385,000,000 3,392,972
International Bank for
Reconstruction and Development
( World Bank)
5.375% due 11/06/2003 NZD 11,250,000 5,786,611
13.00% due 04/07/2003 ZAR 7,000,000 1,091,094
16.00% due 08/14/2001 ZAR 14,000,000 2,379,760
zero coupon due 09/20/1999 JPY 265,000,000 2,341,165
zero coupon due 07/14/2027 ZAR 600,000,000 2,610,224
zero coupon due 08/20/2007 NZD 7,500,000 2,293,925
zero coupon due 12/29/2028 ZAR 150,000,000 620,724
---------------
41,209,727
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost: $40,240,253) $ 41,209,727
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
176
<PAGE> 215
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
SHORT TERM INVESTMENTS - 8.09%
$16,679,123 Navigator Securities Lending
Trust, 5.17% $ 16,679,123
------------
REPURCHASE AGREEMENTS - 0.68%
$1,396,000 Repurchase Agreement with State
Street Bank & Trust Company dated
12/31/1998 at 4.00%, to be
repurchased at $1,396,620 on
01/04/1999, collateralized by
$1,260,000 U.S. Treasury Notes,
7.25% due 05/15/2004 (valued at
$1,424,383, including interest) $ 1,396,000
------------
TOTAL INVESTMENTS (GLOBAL GOVERNMENT
BOND TRUST) (Cost: $201,246,366)
$206,291,742
============
</TABLE>
CAPITAL GROWTH BOND TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
U.S. TREASURY OBLIGATIONS - 39.96%
U.S. TREASURY BONDS - 7.64%
<S> <C> <C>
6.375% due 08/15/2027 $ 2,995,000 $ 3,442,363
6.625% due 02/15/2027 1,065,000 1,259,693
6.75% due 08/15/2026 235,000 281,523
-----------
4,983,579
U.S. TREASURY NOTES - 32.32%
4.625% due 11/30/2000 1,000,000 1,000,620
5.875% due 02/28/1999 3,000,000 3,005,610
6.125% due 08/15/2007 6,100,000 6,662,359
6.375% due 05/15/1999 1,000,000 1,006,250
6.50% due 08/31/2001 5,600,000 5,856,368
7.25% due 05/15/2004 800,000 896,624
7.50% due 02/15/2005 1,500,000 1,717,500
7.875% due 11/15/2004 800,000 926,872
-----------
21,072,203
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $25,311,005) $26,055,782
-----------
FOREIGN GOVERNMENT OBLIGATIONS - 1.72%
FOREIGN BONDS - 1.72%
Province of Quebec,
8.80% due 04/15/2003 $1,000,000 $1,122,130
----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost: $1,089,042) $1,122,130
----------
CORPORATE BONDS - 42.61%
AUTOMOBILES - 5.04%
Chrysler Corporation,
7.45% due 02/01/2097 $2,000,000 $2,274,480
Ford Motor Credit Company,
6.375% due 04/15/2000 1,000,000 1,013,220
----------
3,287,700
BANKING - 6.80%
Bank New York, Incorporated,
6.625% due 06/15/2003 1,000,000 1,043,800
Bank Nova Scotia Halifax,
9.00% due 10/01/1999 1,000,000 1,026,725
Citicorp,
7.125% due 06/01/2003 1,000,000 1,057,390
Republic New York
Corporation, 9.50% due
04/15/2014 1,000,000 1,305,890
----------
4,433,805
ELECTRIC UTILITIES - 4.75%
Baltimore Gas & Electric
Company, 6.125% due
07/01/2003 1,000,000 1,027,870
Northern States Power Company
Minnesota, 6.375% due
04/01/2003 1,000,000 1,031,300
Pacific Gas & Electric
Company, 6.25% due
08/01/2003 1,000,000 1,034,710
----------
3,093,880
FINANCIAL SERVICES - 9.70%
Bear Stearns Capital Trust I,
Incorporated, 7.00% due
01/15/2027 1,000,000 1,003,199
Commercial Credit Group,
Incorporated, 7.375% due
04/15/2005 1,000,000 1,087,650
Donaldson Lufkin & Jenrette,
5.625% due 02/15/2016 1,000,000 988,160
Fifth Third Capital Trust I,
Incorporated, Series A,
8.136% due 03/15/2027 1,000,000 1,130,050
</TABLE>
The accompanying notes are an integral part of the financial statements.
177
<PAGE> 216
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
FINANCIAL SERVICES - CONTINUED
Household Finance
Corporation, 7.75% due
06/01/1999 $ 1,000,000 $ 1,009,340
Southern Company Capital
Trust I, 8.19% due
02/01/2037 1,000,000 1,105,770
-----------
6,324,169
FUNERAL SERVICES - 1.57%
Service Corporation
International, 6.75% due
06/01/2001 1,000,000 1,023,510
-----------
GAS & PIPELINE UTILITIES - 1.60%
Columbia Gas Systems,
Incorporated, 7.05% due
11/28/2007 1,000,000 1,042,660
-----------
HOUSEHOLD PRODUCTS - 2.04%
Procter & Gamble-ESOP, Series
A, 9.36% due 01/01/2021
1,000,000 1,330,400
-----------
INSURANCE - 1.67%
Zurich Reinsurance Centre
Holdings, Incorporated,
7.125% due 10/15/2023 1,000,000 1,090,400
-----------
NEWSPAPERS - 1.72%
News America Holdings,
Incorporated, 8.50% due
02/15/2005 1,000,000 1,122,270
-----------
PETROLEUM SERVICES - 1.66%
Ultramar Corporation,
8.00% due 03/15/2005 1,000,000 1,084,490
-----------
REAL ESTATE - 1.63%
MEPCO Finance, Incorporated
7.50% due 05/01/2003 1,000,000 1,065,210
-----------
TELEPHONE - 2.98%
Bellsouth Savings, ESOT,
9.19% due 07/01/2003 591,974 652,035
GTE Corporation,
8.75% due 11/01/2021 1,000,000 1,288,180
-----------
1,940,215
TOYS, AMUSEMENTS & SPORTING GOODS - 1.45%
Brunswick Corporation,
7.125% due 08/01/2027 $ 1,000,000 $ 945,720
-----------
TOTAL CORPORATE BONDS
(Cost: $25,711,593) $27,784,429
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 3.10%
Residential Funding Mortgage
Security I, Incorporated,
Series 1996-S1, Class A12,
7.25% due 01/25/2026
$ 1,000,000 $ 1,024,961
Residential Funding Mortgage
Security I, Incorporated,
Series 1996-S3, Class A5,
7.25% due 01/25/2026
971,317 995,454
----------
2,020,415
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost: $1,974,241) $2,020,415
----------
ASSET BACKED SECURITIES - 4.65%
Carco Auto Loan Master Trust,
Series 1997 1, Class A,
6.689% due 08/15/2004 $1,000,000 $1,004,280
Discover Card Master Trust 1,
Series 97 2, Class A,
6.792% due 04/16/2010 1,000,000 1,008,990
Mortgage Index Amortizing
Trust, 1997 1, Class A1,
6.682% due 08/25/2004 1,000,000 1,020,703
----------
3,033,973
TOTAL ASSET BACKED SECURITIES
(Cost: $2,999,992) $3,033,973
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
SHORT TERM INVESTMENTS - 1.91%
<S> <C>
$1,238,220 Navigator Securities Lending
Trust, 5.17% $1,238,220
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
178
<PAGE> 217
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C>
REPURCHASE AGREEMENTS - 6.05%
$3,945,000 Repurchase Agreement with State
Street Bank & Trust Company dated
12/31/1998 at 4.80%, to be
repurchased at $3,947,104 on
01/04/1999, collateralized by
$3,840,000 U.S. Treasury Notes,
5.50% due 02/28/2003 (valued at
$4,027,200, including interest) $ 3,945,000
-----------
TOTAL INVESTMENTS (CAPITAL GROWTH BOND
TRUST) (Cost: $62,269,093) $65,199,949
===========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND TRUST
SHARES VALUE
COMMON STOCKS - 0.04%
INDUSTRIALS - 0.00%
<S> <C> <C>
SF Holding Group 629 $ 1,258
--------
PUBLISHING - 0.04%
Primedia, Incorporated 1,380 133,170
--------
TELECOMMUNICATIONS SERVICES - 0.00%
American Mobile Satellite
Corporation 35 1,148
KMC Telecom Holdings,
Incorporated 425 1,115
--------
2,263
TELEPHONE - 0.00%
Viatel, Incorporated 63 6,946
--------
TOTAL COMMON STOCKS
(Cost: $137,172) $143,637
--------
PREFERRED STOCK - 0.09%
INDUSTRIALS - 0.02%
SF Holding Group 17 $ 73,525
--------
MINING - 0.07%
Fairfield Manufacturing,
Incorporated 270 259,875
--------
TOTAL PREFERRED STOCK
(Cost: $432,450) $333,400
--------
WARRANTS - 0.00%
SOFTWARE - 0.00%
Concentric Network
Corporation, (Expiration
date 12/15/2007; strike
price $10.86) * 40 $ 4,805
--------
TOTAL WARRANTS
(Cost: $0) $ 4,805
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 30.09%
U.S. TREASURY BONDS - 30.09%
7.50% due 11/15/2016 $ 9,000,000 $ 11,179,710
11.875% due 11/15/2003 11,500,000 15,009,340
12.00% due 08/15/2013 56,000,000 85,496,320
------------
111,685,370
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $107,689,374) $111,685,370
------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 14.31%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 3.19%
6.00% due 02/01/2003 -
11/01/2013 $ 6,509,100 $ 6,533,152
7.50% due 06/01/2010 -
05/01/2028 3,579,597 3,677,202
6.30% due 03/15/2023 400,000 408,124
6.50% due 08/17/2011 -
06/25/2019 1,221,845 1,231,682
------------
11,850,160
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 4.47%
5.90% due 10/25/2019 1,000,000 999,060
6.00% due 02/01/2028 -
12/01/2028 13,486,567 13,309,489
6.447% due 01/01/2008 1,496,241 1,570,742
7.085% due 08/01/2003 685,704 700,275
------------
16,579,566
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 6.65%
6.00% due 08/15/2008 -
12/15/2013 4,852,510 4,901,263
6.50% due 07/15/2008 -
05/15/2009 155,105 157,931
7.00% due 04/15/2023 -
04/15/2026 9,347,495 9,565,612
7.50% due 04/15/2002 -
07/15/2028 6,878,939 7,097,637
8.00% due 06/15/2023 -
10/15/2023 1,632,069 1,702,444
</TABLE>
The accompanying notes are an integral part of the financial statements.
179
<PAGE> 218
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - CONTINUED
8.50% due 09/15/2016 -
04/15/2022 $ 1,166,636 $ 1,243,998
9.50% due 10/15/2009 778 836
-----------
24,669,721
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost: $52,439,238) $53,099,447
-----------
FOREIGN GOVERNMENT OBLIGATIONS - 0.62%
FOREIGN BONDS - 0.62%
Province of Quebec,
8.625% due 01/19/2005 2,000,000 2,286,780
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost: $2,262,500) $ 2,286,780
-----------
CORPORATE BONDS - 31.83%
AIR TRAVEL - 1.06%
Argo-Tech Corporation,
8.625% due 10/01/2007 $ 150,000 $ 142,500
Continental Airlines,
6.648% due 03/15/2019 915,000 900,470
6.90% due 01/02/2018 1,300,000 1,305,174
SCL Term Aereo Santiago SA,
6.95% due 07/01/2012 1,600,000 1,600,000
-----------
3,948,144
APPAREL & TEXTILES - 0.01%
Collins & Aikman Products
Company, 11.50% due
04/15/2006 25,000 26,000
-----------
AUTO PARTS - 0.08%
Accuride Corporation,
9.25% due 02/01/2008 95,000 95,000
LDM Technologies,
Incorporated, 10.75% due
01/15/2007 210,000 205,800
-----------
300,800
BANKING - 3.68%
BankAmerica Corporation,
9.625% due 02/13/2001 1,475,000 1,596,275
Credit National,
7.00% due 11/14/2005 1,300,000 1,326,000
Export-Import Bank of Korea,
6.375% due 02/15/2006 1,550,000 1,319,453
First Financial Caribbean
Corporation, 7.84% due
10/10/2006 $ 530,000 $ 556,166
First Republic Bank San
Francisco, 7.75% due
09/15/2012 825,000 807,209
Grove Worldwide LLC/Cap
Incorporated, 9.25% due
05/01/2008 120,000 108,000
Korea Development Bank,
7.125% due 09/17/2001 715,000 677,591
Liberty Financial Companies,
Incorporated, 6.75% due
11/15/2008 965,000 996,440
National Westminster Bank
PLC, 9.45% due 05/01/2001
1,000,000 1,088,650
NBD Bancorp,
8.25% due 11/01/2024 2,000,000 2,451,800
Norwest Corporation,
6.00% due 03/15/2000 900,000 906,120
Sprint Capital Corporation,
6.875% due 11/15/2028 1,745,000 1,813,578
----------
13,647,282
BROADCASTING - 0.43%
Adelphia Communications
Corporation, 8.375% due
02/01/2008 250,000 256,250
Century Communications
Corporation,
zero coupon due 600,000 307,500
01/15/2008
8.875% due 01/15/2007 20,000 22,100
EchoStar DBS Corporation
12.50% due 07/01/2002 60,000 69,000
Echostar Satellite Broadcast
Corporation, Step up to
13.125% due 03/15/2004 180,000 179,550
Falcon Holding Group LP,
Series B, 8.375% due
04/15/2010 75,000 75,375
Series B, Step up to 9.285%
due 04/15/2010 150,000 103,125
Frontiervision Holdings LP,
Step up to 11.875% due
09/15/2007 125,000 104,375
Frontiervision LP/Capital,
Step up to 11.875% due
09/15/2007 125,000 104,531
</TABLE>
The accompanying notes are an integral part of the financial statements.
180
<PAGE> 219
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
BROADCASTING - CONTINUED
Granite Broadcasting
Corporation, 8.875% due
05/15/2008 $ 175,000 $ 166,250
Jacor Communications Company,
8.75% due 06/15/2007 55,000 59,675
Revlon Consumer Products
Corporation, 8.625% due
02/01/2008 125,000 113,750
Young Broadcasting,
Incorporated, 8.75% due
06/15/2007 50,000 50,250
----------
1,611,731
BUSINESS SERVICES - 0.34%
Federal Express Corporation
Trust, 6.72% due
01/15/2022 1,000,000 1,047,760
Silgan Holdings,
Incorporated, 9.00% due
06/01/2009 65,000 65,812
World Color Press,
Incorporated, 8.375% due
11/15/2008 150,000 150,000
----------
1,263,572
CHEMICALS - 0.10%
Huntsman Corporation,
9.50% due 07/01/2007 95,000 94,763
Pioneer Americas Acquisition
Corporation, 9.25% due
06/15/2007 100,000 80,000
Sovereign Speciality
Chemicals, 9.50% due
08/01/2007 75,000 74,625
Texas Petro-Chemical
Corporation, 11.125% due
07/01/2006 120,000 117,600
----------
366,988
COAL - 0.11%
PL Coal Holdings Corporation,
Series B, 9.625% due
05/15/2008 400,000 404,000
----------
COMPUTERS & BUSINESS EQUIPMENT - 0.05%
Concentric Network
Corporation, 12.75% due
12/15/2007 125,000 127,500
Decisionone Corporation,
9.75% due 08/01/2007 100,000 46,000
----------
173,500
COSMETICS & TOILETRIES - 0.02%
Revlon Worldwide Corporation,
Series B, zero coupon due
03/15/2001 $ 160,000 $ 92,000
----------
DRUGS & HEALTH CARE - 1.74%
Allegiance Corporation,
7.00% due 10/15/2026 2,830,000 2,994,565
Columbia/HCA Healthcare
Corporation
7.00% due 07/01/2007 5,000 4,770
7.25% due 05/20/2008 195,000 187,317
Dailey International,
Incorporated, 9.50% due
02/15/2008 300,000 138,000
Healthsouth Corporation,
6.875% due 06/15/2005 2,000,000 1,914,700
Owens & Minor, Incorporated,
10.875% due 06/01/2006 225,000 241,031
Tenet Healthcare Corporation,
7.875% due 01/15/2003 850,000 867,000
Universal Hospital Services,
Incorporated, 10.25% due
03/01/2008 120,000 102,300
---------
6,449,683
ELECTRICAL EQUIPMENT - 0.23%
Classic Cable, Incorporated,
9.875% due 08/01/2008 130,000 135,850
Costilla Energy, Incorporated,
10.25% due 10/01/2006 225,000 157,500
Energy Corporation of
America, Incorporated,
9.50% due 05/15/2007 325,000 303,875
Fairchild Semiconductor
Corporation, 10.125% due
03/15/2007 120,000 120,000
Wesco Distribution,
Incorporated, 9.125% due
06/01/2008 150,000 150,000
---------
867,225
ELECTRIC UTILITIES - 0.75%
Calpine Corporation,
8.75% due 07/15/2007 150,000 158,751
Cleveland Electric
Illuminating Company, 7.19%
due 07/01/2000 1,010,000 1,024,928
Duke Energy Company,
7.50% due 04/01/1999 700,000 703,780
</TABLE>
The accompanying notes are an integral part of the financial statements.
181
<PAGE> 220
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
ELECTRIC UTILITIES - CONTINUED
Empresa Nacional De Electric,
7.325% due 02/01/2037 $1,000,000 $ 881,490
----------
2,768,949
FINANCIAL SERVICES - 10.30%
Ahmanson H F & Company,
7.875% due 09/01/2004 425,000 459,867
Allstate Financing,
7.83% due 12/01/2045 565,000 625,698
American General Finance
Corporation,
6.54% due 08/12/2002 1,000,000 1,025,370
8.00% due 02/15/2000 1,270,000 1,303,376
Amerus Capital,
8.85% due 02/01/2027 1,000,000 1,029,310
Amresco Commerce Mortgage,
9.875% due 06/17/2029 100,000 70,000
Amvescap PLC,
6.60% due 05/15/2005 2,000,000 2,049,040
Associates Corporation North
America,
5.75% due 11/01/2003 610,000 615,472
9.125% due 04/01/2000 300,000 313,335
BanPonce Financial
Corpration,
6.75% due 08/09/2001 2,150,000 2,171,220
6.80% due 12/21/2005 260,000 262,137
Beneficial Corporation,
8.40% due 05/15/2008 350,000 409,455
Cigna Corporation,
7.875% due 05/15/2027 790,000 845,371
Contifinancial Corporation,
8.125% due 04/01/2008 200,000 140,000
Dime Capital Trust,
9.33% due 05/06/2027 1,200,000 1,296,096
Equitable Companies,
Incorporated, 7.00% due
04/01/2028 770,000 800,153
Equitable Life Assured
Society, 7.70% due
12/01/2015 680,000 756,038
Ford Credit Auto Owner Trust,
5.81% due 03/15/2002 600,000 604,122
General Electric Capital
Corporation, 8.88% due
06/18/2003 600,000 684,012
Globalstar LP/Globalstar
Capital, 10.75% due
11/01/2004 250,000 180,000
International Lease Finance
Corporation, 6.00% due
06/15/2003 $ 300,000 $ 303,441
Iridium Operating LLC/Iridium
Capital, 11.25% due
07/15/2005 225,000 192,375
Japan Finance Corporation,
8.70% due 07/30/2001 1,500,000 1,618,695
9.125% due 10/11/2000 500,000 531,980
KFW International Finance,
Incorporated, 9.125% due
05/15/2001 1,000,000 1,086,890
Liberty Mutual Insurance Company,
8.20% due 05/04/2007 550,000 630,289
8.50% due 05/15/2025 700,000 821,436
Lumbermans Mutual Casualty
Company, 9.15% due
07/01/2026 675,000 788,656
Olympic Financial, Ltd.,
11.50% due 03/15/2007 100,000 76,000
Private Export Funding Corporation,
6.49% due 07/15/2007 1,175,000 1,265,792
6.62% due 10/01/2005 2,000,000 2,133,040
6.90% due 01/31/2003 3,650,000 3,880,388
7.30% due 01/31/2002 200,000 212,718
Rifkin Acquisitions
Participation LP, 11.125%
due 01/15/2006 80,000 88,000
Sun Canada Financial Company,
7.25% due 12/15/2015 1,500,000 1,658,265
Tembec Finance Corporation,
9.875% due 09/30/2005 80,000 83,600
Toyota Motor Credit
Corporation, 5.625% due
11/13/2003 1,600,000 1,616,208
United States Bancorp,
7.50% due 06/01/2026 2,774,000 3,168,823
United States West Capital
Funding, Incorporated,
6.25% due 07/15/2005 2,165,000 2,239,195
Western Financial Savings,
8.875% due 08/01/2007 275,000 206,250
----------
38,242,113
FOOD & BEVERAGES - 0.74%
Aurora Foods, Incorporated,
8.75% due 07/01/2008 50,000 52,000
9.875% due 02/15/2007 50,000 54,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
182
<PAGE> 221
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
FOOD & BEVERAGES - CONTINUED
Del Monte Foods
Company, Step up to
12.50% due 12/15/2007 $ 290,000 $ 198,650
Joseph E. Seagram & Sons,
Incorporated,
6.625% due 12/15/2005 1,000,000 994,380
7.50% due 12/15/2018 1,350,000 1,357,979
Tricon Global Restaurants,
Incorporated, 7.65% due
05/15/2008 75,000 78,560
----------
2,736,069
GAS & PIPELINE UTILITIES - 0.56%
Sonat, Incorporated,
6.875% due 06/01/2005 2,000,000 2,083,500
----------
HOMEBUILDERS - 0.06%
Engle Homes, Incorporated,
9.25% due 02/01/2008 90,000 90,000
Standard Pacific Corporation,
8.50% due 06/15/2007 115,000 116,725
----------
206,725
INDUSTRIAL MACHINERY - 0.07%
Beckman Instruments,
Incorporated, 7.10% due
03/04/2003 240,000 241,394
Numatics, Incorporated,
9.625% due 04/01/2008 25,000 23,375
----------
264,769
INDUSTRIALS - 2.22%
Advanced Micro Devices,
Incorporated, 11.00% due
08/01/2003 270,000 286,200
American Standard,
Incorporated, 7.625% due
02/15/2010 70,000 70,700
AMSC Acquisition Company,
Incorporated, Series B,
12.25% due 04/01/2008 75,000 45,375
Arco Chemical Company,
9.80% due 02/01/2020 80,000 80,044
Armco, Incorporated,
8.875% due 12/01/2008 150,000 148,500
9.00% due 09/15/2007 50,000 50,500
Bayou Steel Corporation,
9.50% due 05/15/2008 150,000 141,000
Cincinnati Milacron,
Incorporated, 7.875% due
05/15/2000 870,000 880,755
Consumers International
Incorporated, 10.25% due
04/01/2005 20,000 21,400
Container Corporation
America, 10.75% due
05/01/2002 70,000 72,800
Falcon Building Products,
Incorporated,
9.50% due 06/15/2007 165,000 144,375
Series B, Step up to
10.50% due 06/15/2007 100,000 57,500
Fisher Scientific
International,
Incorporated, 9.00% due
02/01/2008 190,000 188,100
Galey & Lord, Incorporated,
9.125% due 03/01/2008 75,000 65,250
Gaylord Container
Corporation, 9.375% due
06/15/2007 150,000 127,500
ITC Delaware Tacom,
Incorporated, 9.75% due
11/15/2008 55,000 56,925
Laroche Industry,
Incorporated, 9.50% due
09/15/2007 85,000 68,000
Lin Holdings Corporation,
Step up to10.00% due
03/01/2008 400,000 276,000
Mark IV Industries,
Incorporated, 7.75% due
04/01/2006 100,000 99,020
Moog, Incorporated,
10.00% due 05/01/2006 150,000 153,750
Neenah Corporation,
11.125% due 05/01/2007 180,000 184,950
News America Holdings,
Incorporated, 9.25% due
02/01/2013 2,645,000 3,276,441
Nortek, Incorporated,
8.875% due 08/01/2008 55,000 56,100
9.25% due 03/15/2007 75,000 76,875
Pindo Deli Finance Mauritius,
Ltd., 10.75% due 10/01/2007 100,000 54,375
Purina Mills, Incorporated,
9.00% due 03/15/2010 45,000 45,900
USA Waste Services,
Incorporated, 6.125% due
07/15/2001 1,500,000 1,509,300
---------
8,237,635
</TABLE>
The accompanying notes are an integral part of the financial statements.
183
<PAGE> 222
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
INSURANCE - 1.66%
Amerus Life Holdings,
Incorporated, 6.95% due
06/15/2005 $ 715,000 $ 719,561
Cigna Corporation,
7.40% due 05/15/2007 1,300,000 1,381,744
Conseco, Incorporated,
6.80% due 06/15/2005 300,000 280,320
Jackson National Life
Insurance Company, 8.15%
due 03/15/2027 1,000,000 1,148,430
Ohio National Life Insurance
Company, 8.50% due
05/15/2026 1,150,000 1,355,206
Security Benefit Life
Company, 8.75% due
05/15/2016 1,150,000 1,290,491
----------
6,175,752
LEISURE TIME - 0.27%
AMC Entertainment,
Incorporated, 9.50% due
03/15/2009 200,000 204,000
Argosy Gaming Company,
13.25% due 06/01/2004 195,000 218,644
Fitzgeralds Gaming
Corporation, 12.25% due
12/15/2004 55,000 29,700
Loews Ciniplex Entertainment
Corporation, 8.875% due
08/01/2008 110,000 113,025
Station Casinos,
Incorporated, 8.875% due
12/01/2008 175,000 177,625
Time Warner Telecom LLC,
9.75% due 07/15/2008 150,000 156,750
True Temper Sports,
Incorporated, 10.875% due
12/01/2008 120,000 119,400
----------
1,019,144
PAPER - 1.13%
American Pad & Paper Company,
13.00% due 11/15/2005 185,000 106,375
Boise Cascade Corporation,
9.90% due 10/01/2001 1,000,000 1,062,720
Boise Cascade Office Products
Company, 7.05% due
05/15/2005 2,850,000 2,675,438
Domtar, Incorporated,
9.50% due 08/01/2016 75,000 75,359
Grupo Industrial Durango
GIDUSA, 12.625% due
08/01/2003 120,000 105,000
Repap New Brunswick,
Incorporated, 10.625% due
04/15/2005 275,000 184,250
---------
4,209,142
PETROLEUM SERVICES - 0.81%
Abraxas Petro/CN Abraxas,
Series D, 11.50% due
11/01/2004 100,000 76,000
Cross Timbers Oil Company,
9.25% due 04/01/2007 125,000 115,625
Newfield Exploration Company,
7.45% due 10/15/2007 1,000,000 974,390
Petroleos Mexicanos,
8.85% due 09/15/2007 250,000 222,500
Plains Resources,
Incorporated, 10.25% due
03/15/2006 170,000 170,000
YPF Sociedad Anonima,
10.00% due 11/02/2028 1,400,000 1,436,750
---------
2,995,265
PUBLISHING - 0.49%
Big Flowers Press Holdings,
Incorporated, 8.625% due
12/01/2008 115,000 116,150
Scholastic Corporation,
7.00% due 12/15/2003 300,000 312,207
Sullivan Graphics,
Incorporated, 12.75% due
08/01/2005 270,000 274,050
Viacom, Incorporated
7.75% due 06/01/2005 1,035,000 1,122,799
---------
1,825,206
RETAIL GROCERY - 0.04%
Disco SA,
9.875% due 05/15/2008 90,000 76,725
Stater Brothers Holdings,
Incorporated, 9.00% due
07/01/2004 65,000 63,050
---------
139,775
RETAIL TRADE - 0.85%
Duane Reade, Incorporated,
9.25% due 02/15/2008 300,000 309,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
184
<PAGE> 223
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
RETAIL TRADE - CONTINUED
Guitar Center Management
Company, Incorporated,
11.00% due 07/01/2006 $ 120,000 $ 126,000
JC Penney, Incorporated,
7.40% due 04/01/2037 2,500,000 2,717,900
----------
3,152,900
SANITARY SERVICES - 0.03%
Allied Waste North America,
7.625% due 01/01/2006 105,000 105,788
----------
SOFTWARE - 0.16%
Psinet, Incorporated,
10.00% due 02/15/2005 250,000 245,000
11.50% due 11/01/2008 75,000 78,562
Verio, Incorporated
10.375% due 04/01/2005 190,000 185,250
11.25% due 12/01/2008 100,000 100,500
----------
609,312
STEEL - 0.15%
Acindar Industria, Argentina,
11.25% due 02/15/2004 75,000 60,000
Alaska Steel Corporation,
9.125% due 12/15/2006 225,000 235,688
Amersteel Corporation,
8.75% due 04/15/2008 75,000 72,000
CSN Iron SA,
9.125% due 06/01/2007 140,000 85,400
Weirton Steel Corporation,
11.375% due 07/01/2004 115,000 102,350
----------
555,438
TELECOMMUNICATIONS SERVICES - 1.41%
BTI Telecom Corporation,
10.50% due 09/15/2007 205,000 154,775
GCI, Incorporated,
9.75% due 08/01/2007 320,000 316,800
GST Telecommunications,
Incorporated, 12.75% due
11/15/2007 210,000 195,300
Innova S De R L,
12.875% due 04/01/2007 200,000 130,000
ITC Deltacom, Incorporated,
8.875% due 03/01/2008 105,000 105,525
KMC Telecom Holdings,
Incorporated, Step up to
12.50% due 02/15/2008 425,000 204,000
NTL, Incorporated,
Step up to 12.38% due
10/01/2008 425,000 263,500
Qwest Communications
International,
Incorporated, 7.50% due 105,000 109,069
11/01/2008
Rogers Cantel, Incorporated,
8.30% due 10/01/2007 100,000 100,500
9.375% due 06/01/2008 100,000 105,500
Tele-Communications,
Incorporated,
9.25% due 04/15/2002 1,500,000 1,667,925
9.65% due 10/01/2003 533,000 588,256
USA Networks, Incorporated,
6.75% due 11/15/2005 1,270,000 1,274,751
----------
5,215,901
TELEPHONE - 1.95%
Allbritton Communications
Company, 8.875% due
02/01/2008 275,000 277,062
Comcast Cable Communications
8.50% due 05/01/2027 1,100,000 1,350,932
Compania De
Telocomunicaciones, 7.625%
due 07/15/2006 1,000,000 953,280
E Spire Communications
Incorporated, Step up to
10.625% due 07/01/2008 175,000 70,000
E Spire Communications
Insurance, Step up to
12.75% due 04/01/2006 200,000 120,000
Hyperion Telecommunications,
Incorporated, Series B,
12.25% due 09/01/2004
75,000 75,750
Intermedia Communications,
Incorporated,
8.60% due 06/01/2008 80,000 76,400
8.875% due 11/01/2007 250,000 241,250
IXC Communications,
Incorporated, 9.00% due
04/15/2008 200,000 201,500
Jacor Communications Company,
9.75% due 12/15/2006 50,000 55,250
L 3 Communications,
Corporation, 8.00% due
08/01/2008 160,000 160,400
Level 3 Communications,
Incorporated, 9.125% due
05/01/2008 245,000 242,856
</TABLE>
The accompanying notes are an integral part of the financial statements.
185
<PAGE> 224
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
TELEPHONE - CONTINUED
MGC Communications,
Incorporated, 13.00% due
10/01/2004 $ 50,000 $ 32,500
MJD Communications,
Incorporated, 9.50% due
05/01/2008 150,000 147,750
MobileMedia Communications,
Incorporated, 9.375% due
11/01/2007 250,000 25,000
NEXTEL Communications,
Incorporated, Step up to
9.75% due 10/31/2007 775,000 472,750
Nextlink Communications,
Incorporated, Step up to
9.45% due 04/15/2008 400,000 230,000
Paging Network, Incorporated,
10.125% due 08/01/2007 200,000 192,000
Price Communications
Wireless, 9.125% due
12/15/2006 150,000 150,750
RSL Communications PLC,
12.00% due 11/01/2008 160,000 164,800
Telecommunications
Techniques, 9.75% due
05/15/2008 160,000 157,600
Viatel, Incorporated,
11.25% due 04/15/2008 125,000 127,813
World Common, Incorporated,
7.55% due 04/01/2004 1,575,000 1,717,506
------------
7,243,149
TRANSPORTATION - 0.33%
Iron Mountain, Incorporated,
8.75% due 09/30/2009 205,000 211,150
Johnstown America Industry,
Incorporated, 11.75% due
08/15/2005 195,000 205,725
K & F Industry, Incorporated,
9.25% due 10/15/2007 175,000 176,750
MTL, Incorporated,
10.00% due 06/15/2006 100,000 97,000
Southern Railway Company,
8.75% due 10/15/2003 470,000 527,598
------------
1,218,223
TOTAL CORPORATE BONDS
(Cost: $116,989,787) $118,155,680
------------
MUNICIPAL BONDS - 1.75%
ALABAMA - 0.27%
Huntsville, Alabama Solid
Waste Disposal, 5.95% due
10/01/2003 $ 1,000,000 $ 1,012,240
------------
CALIFORNIA - 0.60%
Orange County, California
Pension Obligation, 7.36%
due 09/01/2010 2,000,000 2,231,000
------------
FLORIDA - 0.31%
Miami Beach, Florida,
Redevelopment Agency, 8.95%
due 12/01/2022 1,000,000 1,152,800
------------
MARYLAND - 0.20%
Baltimore, Maryland, Series B,
6.375% due 10/15/2002 705,000 727,031
------------
MICHIGAN - 0.37%
Detroit, Michigan Downtown
Development Authority,
6.20% due 07/01/2008 1,335,000 1,386,397
------------
TOTAL MUNICIPAL BONDS
(Cost: $6,468,739) $ 6,509,468
------------
ASSET BACKED SECURITIES - 2.69%
AESOP Funding II LLC, Series
1998-1, Class A, 6.14% due
05/20/2006 $ 600,000 $ 599,922
American Express Master
Trust, 6.60% due 05/15/2000 1,500,000 1,508,895
Asset Securitization
Corporation, 6.66% due
02/14/2041 2,110,000 2,218,918
Chase Commercial Mortgage
Secs Corporation, 6.39% due
11/18/2008 2,500,000 2,582,725
Credit Suisse First Boston,
6.52% due 07/17/2007 530,000 552,822
First Union-Lehman Brothers
Commercial, 6.60% due
05/18/2007 1,950,000 2,026,694
</TABLE>
The accompanying notes are an integral part of the financial statements.
186
<PAGE> 225
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
ASSET BACKED SECURITIES - CONTINUED
Green Tree Financial
Corporation, 5.98% due
08/01/2008 $ 500,000 $ 501,195
TOTAL ASSET BACKED SECURITIES
(Cost: $9,727,735) $ 9,991,171
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
<S> <C> <C>
SHORT TERM INVESTMENTS - 17.52%
$65,034,495 Navigator Securities Lending
Trust, 5.17% $ 65,034,495
------------
REPURCHASE AGREEMENTS - 1.05%
$3,914,000 Repurchase Agreement with Paribas
Corporation dated 12/31/1998 at
4.80%, to be repurchased at
$3,916,087 on 01/04/1999,
collateralized by $3,658,000 U.S.
Treasury Notes, 7.75% due
02/15/2001 (valued at $3,990,277,
including interest) $ 3,914,000
------------
TOTAL INVESTMENTS (INVESTMENT QUALITY
BOND TRUST)(Cost: $365,095,490) $371,158,253
============
</TABLE>
U.S. GOVERNMENT SECURITIES TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
U.S. TREASURY OBLIGATIONS - 12.10%
U.S. TREASURY BONDS - 0.98%
<S> <C> <C>
5.25% due 11/15/2028 $ 1,500,000 $ 1,535,625
6.375% due 08/15/2027*** 2,100,000 2,413,677
6.625% due 02/15/2027 500,000 591,405
------------
4,540,707
U.S. TREASURY NOTES - 11.12%
4.75% due 11/15/2008 1,000,000 1,007,810
5.375% due 06/30/2003 7,000,000 7,203,420
5.50% due 02/15/2008*** 2,500,000 2,649,225
5.625% due 12/31/2002 -
05/15/2008 12,300,000 13,009,719
5.75% due 04/30/2003*** 4,400,000 4,580,136
5.875% due 09/30/2002 3,000,000 3,118,110
6.125% due 08/15/2007 14,650,000 16,000,583
6.25% due 08/31/2002 2,750,000 2,890,498
6.625% due 05/15/2007*** 750,000 843,398
------------
51,302,899
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $53,473,938) $ 55,843,606
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 63.77%
FEDERAL HOME LOAN BANK - 2.60%
5.80% due 09/02/2008 $ 8,350,000 $ 8,642,250
5.94% due 06/13/2000 3,300,000 3,343,296
------------
11,985,546
FEDERAL HOME LOAN MORTGAGE CORPORATION - 26.08%
6.00% TBA Gold** 25,000,000 24,695,250
6.00% due 10/01/2010 -
12/01/2028 26,040,269 25,737,186
6.247% due 03/25/2021 11,000,000 11,313,940
6.50% due 07/01/2006 -
12/01/2010 3,109,233 3,157,885
7.00% due 12/01/2004 -
04/15/2021 30,020,456 30,581,781
7.50% due 05/01/2007 2,545,334 2,621,694
8.25% due 07/01/2006 101,062 104,445
9.00% due 10/01/2017 -
11/01/2020 5,921,249 6,271,027
9.50% due 08/01/2020 1,671,914 1,787,895
10.00% due 03/01/2016 8,894,560 9,607,119
10.50% due 06/01/2020 3,449,555 3,821,797
11.75% due 07/01/2006 -
12/01/2013 126,065 141,509
12.00% due 07/01/2020 464,072 528,606
------------
120,370,134
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 28.69%
6.00% TBA** 16,000,000 15,789,920
6.50% TBA** 29,261,256 29,603,936
6.50% due 12/01/2003 -
04/01/2026 27,344,374 27,379,498
6.527% due 04/25/2008 9,500,000 9,856,725
6.784% due 01/17/2003 1,812,302 1,865,203
6.911% due 12/28/2028 10,409,785 10,579,474
7.00% TBA** 23,100,000 23,562,000
8.00% due 08/01/2004 -
10/01/2024 14,517 14,858
8.25% due 09/01/2008 178,603 187,226
8.50% due 02/01/2009 37,276 39,264
8.75% due 08/01/2009 -
10/01/2011 1,504,699 1,579,926
9.00% due 05/01/2021 -
05/01/2027 754,456 802,607
10.00% due 04/01/2016 3,331 3,587
10.50% due 03/01/2016 5,642 5,749
11.50% due 09/15/2013 -
09/01/2019 1,383,276 1,550,194
11.75% due 09/01/2011 -
12/01/2015 61,365 69,348
12.00% due 01/01/2013 -
04/20/2016 3,706,465 4,202,992
</TABLE>
The accompanying notes are an integral part of the financial statements.
187
<PAGE> 226
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION - CONTINUED
12.50% due 01/01/2013 -
09/20/2015 $ 2,068,797 $ 2,382,711
13.00% due 11/15/2015 1,398,781 1,668,046
13.50% due 11/15/2014 576,257 688,627
14.50% due 11/15/2014 491,393 594,279
------------
132,426,170
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 5.45%
7.50% due 02/15/2007 -
12/15/2027 19,528,444 20,133,274
8.00% due 10/15/2005 8,852 9,170
9.00% due 02/20/2016 -
10/20/2017 4,470,428 4,767,750
9.50% due 09/15/2020 215,963 231,809
11.00% due 09/15/2015 13,877 15,432
------------
25,157,435
STUDENT LOAN MARKETING ASSOCIATION - 0.96%
7.50% due 03/08/2000 4,300,000 4,422,292
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost: $292,064,807) $294,361,577
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.86%
Vendee Mortgage Trust, Series
1995-3, Class 1B, REMIC,
7.25% due 10/15/2010
$ 3,967,272 $ 3,969,731
------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost: $4,005,085) $ 3,969,731
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------ -----
SHORT TERM INVESTMENTS - 3.44%
<S> <C>
$10,883,000 Indiana Michigan Power Company,
6.35% due 01/04/1999 $ 10,877,241
5,000,000 Safeway, Incorporated,
6.00% due 01/06/1999 4,995,833
------------
$ 15,873,074
REPURCHASE AGREEMENTS - 19.83%
$45,500,000 Repurchase Agreement with Dillon
Read dated 12/31/1998 at 4.75%,
to be repurchased at $45,524,013
on 01/04/1999, collateralized by
$36,117,000 U.S. Treasury Bonds,
10.375% due 11/15/2009 (valued at
$46,410,345, including
interest)*** $ 45,500,000
$558,000 Repurchase Agreement with J.P
Morgan dated 12/31/1998 at 4.68%,
to be repurchased at $558,290
on 01/04/1999, collateralized by
$468,000 U.S. Treasury Bonds,
6.75% due 08/15/2026 (valued at
$570,375, including interest)*** $ 558,000
$45,500,000 Repurchase Agreement with State
Street Bank & Trust Company dated
12/31/1998 at 4.85%, to be
repurchase at $45,524,519 on
01/04/1999, collateralized by
$42,925,000 U.S. Treasury Notes,
6.25% due 02/15/2003 (valued at
$46,412,656, including
interest)*** $ 45,500,000
------------
$ 91,558,000
TOTAL INVESTMENTS (U.S. GOVERNMENT
SECURITIES TRUST)(Cost: $456,974,903)
$461,605,988
============
</TABLE>
MONEY MARKET TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
U.S. TREASURY OBLIGATIONS - 14.00%
U.S. TREASURY BILLS - 14.00%
<S> <C> <C>
4.375% due 06/10/1999 $15,000,000 $14,708,333
4.45% due 04/01/1999 15,000,000 14,833,125
4.63% due 03/25/1999 37,000,000 36,605,036
4.69% due 01/21/1999 14,000,000 13,963,522
5.152% due 05/27/1999 5,000,000 4,895,519
-----------
85,005,535
TOTAL U.S. TREASURY OBLIGATIONS
(Cost: $85,005,535) $85,005,535
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 39.10%
FEDERAL HOME LOAN BANK - 10.80%
4.73% due 01/20/1999 15,600,000 15,561,056
4.986% due 04/01/1999 50,000,000 49,994,452
-----------
65,555,508
FEDERAL HOME LOAN MORTGAGE CORPORATION - 11.18%
5.01% due 01/14/1999 20,000,000 19,963,817
5.04% due 01/28/1999 13,000,000 12,950,860
5.05% due 01/04/1999 35,000,000 34,985,271
-----------
67,899,948
</TABLE>
The accompanying notes are an integral part of the financial statements.
188
<PAGE> 227
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 13.18%
5.008% due 02/04/1999 $ 30,000,000 $ 29,998,882
5.038% due 03/16/1999 50,000,000 49,994,918
------------
79,993,800
STUDENT LOAN MARKETING ASSOCIATION - 3.94%
4.838% due 02/28/1999 7,900,000 7,900,036
5.588% due 04/15/1999 16,000,000 16,000,000
------------
23,900,036
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost: $237,349,292) $237,349,292
------------
CORPORATE BONDS - 5.77%
FINANCIAL SERVICES - 5.77%
J.P. Morgan & Company,
Incorporated, 5.212% due
04/08/1999 $ 15,000,000 $ 14,998,866
Merrill Lynch Company,
Incorporated, 5.493% due
04/14/1999 20,000,000 20,000,000
------------
34,998,866
TOTAL CORPORATE BONDS
(Cost: $34,998,866) $ 34,998,866
------------
FOREIGN BONDS - 3.29%
Government of Canada
4.97% due 01/27/1999 10,000,000 9,964,105
5.13% due 01/13/1999 10,000,000 9,982,900
------------
19,947,005
TOTAL FOREIGN BONDS
(Cost: $19,947,005) $ 19,947,005
------------
COMMERCIAL PAPER - 19.21%
AUTO SERVICES - 1.68%
General Motors Acceptance
Corporation, 8.375% due
02/03/1999 $ 9,960,000 $ 10,227,725
BANKING - 1.05%
Royal Bank Canada New York
Branch, 5.45% due 01/15/1999
$ 6,400,000 $ 6,386,435
------------
FINANCIAL SERVICES - 4.74%
Abbey National Treasury
Services PLC, 5.50% due
02/05/1999 10,000,000 9,999,529
Goldman Sachs Group LP,
5.18% due 03/15/1999 19,000,000 18,800,426
------------
28,799,955
FOOD & BEVERAGES - 4.11%
PepsiCo, Incorporated,
5.30% due 01/21/1999 25,000,000 24,926,389
------------
INSURANCE - 1.65%
Monumental Life Insurance
Company, 5.32% due
08/20/1999 10,000,000 10,000,000
------------
TELECOMMUNICATIONS SERVICES - 2.69%
Lucent Technologies,
Incorporated, 5.37% due
01/22/1999 16,400,000 16,348,627
------------
TOTAL COMMERCIAL PAPER
(Cost: $96,689,131) $ 96,689,131
------------
INVESTMENT COMPANIES - 3.29%
Strategic Money Market Trust,
5.239% 20,000,000 $ 20,000,000
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- -----
<S> <C>
REPURCHASE AGREEMENTS - 18.63%
$113,112,000 Repurchase Agreement with
State Street Bank & Trust
Company dated 12/31/1998 at
4.80%, to be repurchased at
$13,172,327 on 01/04/1999,
collateralized by $13,030,000
U.S. Treasury Notes, 5.75% due
11/15/2000 (valued at
$13,377,666, including
interest), $48,535,000 U.S.
Treasury Notes, 7.125% due
02/29/2000 (valued at
$51,004,801, including
interest) and $48,740,000 U.S. Treasury
Notes, 6.375% due 01/15/2000
(valued at $51,004,655,
including interest ) $113,112,000
------------
TOTAL INVESTMENTS (MONEY MARKET TRUST)
(Cost: $607,101,829) $607,101,829
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
189
<PAGE> 228
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------------------------------------------------------------------------------
LIFESTYLE AGGRESSIVE 1000 TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
INVESTMENT COMPANIES - 100.00%
Manufacturers Investment Trust
Blue Chip Growth Trust 212,811 $ 4,026,390
Emerging Small Company Trust 338,068 8,052,781
Equity Trust 206,694 4,026,391
Growth Trust 196,409 4,026,391
International Small Cap Trust 527,014 8,052,781
International Stock Trust 930,599 12,079,172
Pilgrim Baxter Growth Trust 1,235,089 16,105,562
Real Estate Securities Trust 545,212 8,047,329
Small Company Value Trust 1,416,496 16,105,562
-----------
TOTAL INVESTMENTS (LIFESTYLE AGGRESSIVE
1000 TRUST) (Cost: $78,027,462) $80,522,359
===========
</TABLE>
LIFESTYLE GROWTH 820 TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
INVESTMENT COMPANIES - 100.00%
Manufacturers Investment Trust
Blue Chip Growth Trust 1,005,077 $ 19,016,059
Emerging Small Company Trust 798,323 19,016,059
Equity Trust 976,184 19,016,059
Equity-Income Trust 1,069,520 19,016,058
Growth Trust 927,613 19,016,058
High Yield Trust 1,471,831 19,016,058
International Small Cap Trust 1,244,506 19,016,058
International Stock Trust 4,395,083 57,048,175
Pilgrim Baxter Growth Trust 2,916,573 38,032,117
Real Estate Securities Trust 1,287,479 19,003,190
Small Company Value Trust 3,344,953 38,032,117
Strategic Bond Trust 3,245,061 38,032,117
U.S. Government Securities
Trust 1,375,981 19,016,054
Value Trust 2,704,987 38,032,117
------------
TOTAL INVESTMENTS (LIFESTYLE GROWTH 820
TRUST) (Cost: $370,150,154) $380,308,296
============
</TABLE>
LIFESTYLE BALANCED 640 TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
INVESTMENT COMPANIES - 100.00%
Manufacturers Investment Trust
Emerging Small Company Trust 792,490 $ 18,877,120
Equity Trust 969,051 18,877,121
Equity-Income Trust 1,061,705 18,877,120
Growth Trust 920,835 18,877,120
High Yield Trust 1,461,077 18,877,120
International Stock Trust 2,908,647 37,754,241
Investment Quality Bond Trust 3,030,035 37,754,241
Pilgrim Baxter Growth Trust 1,447,632 18,877,120
Quantitative Equity Trust 748,498 18,877,120
Real Estate Securities Trust 1,278,072 18,864,343
Small Company Value Trust 3,320,514 37,754,241
Strategic Bond Trust 3,221,352 37,754,241
U.S. Government Securities
Trust 2,731,855 37,754,241
Value Trust 2,685,223 37,754,241
------------
TOTAL INVESTMENTS (LIFESTYLE BALANCED
640 TRUST) (Cost: $370,073,124)
$377,529,630
============
</TABLE>
LIFESTYLE MODERATE 460 TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
INVESTMENT COMPANIES - 100.00%
Manufacturers Investment Trust
Blue Chip Growth Trust 730,062 $ 13,812,775
Equity-Income Trust 776,871 13,812,775
High Yield Trust 534,550 6,906,388
International Stock Trust 1,064,158 13,812,775
Investment Quality Bond Trust 1,662,854 20,719,163
Money Market Trust 1,381,277 13,812,775
Quantitative Equity Trust 273,846 6,906,387
Strategic Bond Trust 1,178,564 13,812,775
U.S. Government Securities
Trust 1,499,216 20,719,163
Value Trust 982,416 13,812,775
------------
TOTAL INVESTMENTS (LIFESTYLE MODERATE 460
TRUST) (Cost: $133,704,425) $138,127,751
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
190
<PAGE> 229
MANUFACTURERS INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1998 - CONTINUED
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- -------------------------------------------------------------------------------
LIFESTYLE CONSERVATIVE 280 TRUST
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
INVESTMENT COMPANIES - 100.00%
Manufacturers Investment Trust
Blue Chip Growth Trust 207,197 $ 3,920,173
Equity-Income Trust 440,964 7,840,345
Investment Quality Bond Trust 1,573,103 19,600,863
Money Market Trust 1,568,070 15,680,704
Quantitative Equity Trust 310,878 7,840,345
Strategic Bond Trust 334,486 3,920,173
U.S. Government Securities
Trust 1,418,297 19,600,863
-----------
TOTAL INVESTMENTS (LIFESTYLE
CONSERVATIVE 280 TRUST) (Cost:
$75,226,549) $78,403,466
===========
</TABLE>
Key to Currency Abbreviations
- -----------------------------
AUD - Australian Dollar
CAD - Canadian Dollar
CZK - Czech Koruna
ECU - European Currency Unit
FIM - Finnish Markka
FRF - French Franc
DEM - German Deustche Mark
GBP - Great British Pound
GRD - Greek Drachma
HKD - Hong Kong Dollar
ITL - Italian Lira
JPY - Japanese Yen
NLG - Netherland Guilder
NZD - New Zealand Dollar
PLZ - Polish Zloty
ZAR - South African Rand
SEK - Swedish Krona
THB - Thailand Baht
Key to Security Abbreviations and Legend
- ----------------------------------------
ADR - American Depositary Receipts
ADS - American Depositary Shares
FRN - Floating Rate Note (Rate effective as of December 31, 1998).
GDR - Global Depositary Receipts
GTD - Guaranteed
IO - Interest Only (Carries notional principal amount)
REIT - Real Estate Investment Trust
REMIC - Real Estate Mortgage Investment Conduit
SBI - Shares Beneficial Interest
SPDR - Standard & Poor's Depositary Receipts
TBA - To Be Announced
VR - Variable Rate Demand Note (Rate effective as of December 31, 1998)
# - Non-Income producing, issuer is in bankruptcy and is in default of
interest payments.
* - Non-Income producing
** - Purchased on a forward commitment (Note 2)
*** - At December 31, 1998 a portion of this security
was pledged to cover forward commitments
purchased.
**** - At December 31, 1998 a portion of this security was pledged to
cover margin requirements for open futures contracts.
The accompanying notes are an integral part of the financial statements.
191
<PAGE> 230
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION OF THE TRUST. The Manufacturers Investment Trust (the "Trust")
is a no-load, open-end management investment company organized as a
Massachusetts business trust. It is a series company, which means that it has
several portfolios, each with a stated investment objective which it pursues
through separate investment policies. The Trust currently offers the following
thirty six Portfolios: The Pacific Rim Emerging Markets Trust ("Pacific Rim
Emerging Markets"), the Science & Technology Trust ("Science & Technology"), the
International Small Cap Trust ("International Small Cap"), the Emerging Small
Company Trust ("Emerging Small Company"), the Pilgrim Baxter Growth Trust
("Pilgrim Baxter Growth"), the Small/Mid Cap Trust ("Small/Mid Cap"), the
International Stock Trust ("International Stock"), the Worldwide Growth Trust
("Worldwide Growth"), the Global Equity Trust ("Global Equity"), the Small
Company Value Trust ("Small Company Value"), the Equity Trust ("Equity"), the
Growth Trust ("Growth"), the Quantitative Equity Trust ("Quantitative Equity"),
the Equity Index Trust ("Equity Index"), the Blue Chip Growth Trust ("Blue Chip
Growth"), the Real Estate Securities Trust ("Real Estate Securities"), the Value
Trust ("Value"), the International Growth and Income Trust ("International
Growth and Income"), the Growth and Income Trust ("Growth and Income"), the
Equity-Income Trust ("Equity-Income"), the Balanced Trust ("Balanced"), the
Aggressive Asset Allocation Trust ("Aggressive Asset Allocation"), the Moderate
Asset Allocation Trust ("Moderate Asset Allocation"), the Conservative Asset
Allocation Trust ("Conservative Asset Allocation"), the High Yield Trust ("High
Yield"), the Strategic Bond Trust ("Strategic Bond"), the Global Government Bond
Trust ("Global Government Bond"), the Capital Growth Bond Trust ("Capital Growth
Bond"), the Investment Quality Bond Trust ("Investment Quality Bond"), the U.S.
Government Securities Trust ("U.S. Government Securities"), the Money Market
Trust ("Money Market"), the Lifestyle Aggressive 1000 Trust ("Lifestyle
Aggressive 1000"), the Lifestyle Growth 820 Trust ("Lifestyle Growth 820"), the
Lifestyle Balanced 640 Trust ("Lifestyle Balanced 640"), the Lifestyle Moderate
460 Trust ("Lifestyle Moderate 460") and the Lifestyle Conservative 280 Trust
("Lifestyle Conservative 280"). Each of the Portfolios with the exception of
Emerging Small Company, Global Government Bond, Lifestyle Aggressive 1000,
Lifestyle Growth 820, Lifestyle Balanced 640, Lifestyle Moderate 460 and
Lifestyle Conservative 280 is diversified for purposes of the Investment Company
Act of 1940, as amended.
Shares of the Portfolios are presently offered only to Separate Accounts A, B
and C, separate accounts of The Manufacturers Life Insurance Company of North
America ("MNA"); to Separate Accounts A, B, D and E, separate accounts of The
Manufacturers Life Insurance Company of New York ("MNY"); to Separate Accounts
One, Two, Three, and Four, separate accounts of The Manufacturers Life Insurance
Company of America ("Manulife America"); and in the case of certain Portfolios,
to unregistered separate accounts issued by The Manufacturers Life Insurance
Company (U.S.A.) ("Manulife USA"). MNA is controlled by The Manufacturers Life
Insurance Company ("Manulife"), a mutual life insurance company based in
Toronto, Canada. MNY is a wholly-owned subsidiary of MNA. Manulife America and
Manulife USA are wholly-owned subsidiaries of Manulife.
At December 31, 1998, Manulife America owned seed money shares in Pacific Rim
Emerging Markets, International Stock, and Equity Index. Manulife USA owned seed
money shares in Science & Technology, Pilgrim Baxter Growth, Worldwide Growth,
Value and High Yield.
Manufacturers Securities Services, LLC ("MSS"), a wholly-owned subsidiary of
MNA, serves as investment adviser for the Trust (See Note 6). MSS is also the
principal underwriter of the variable contracts issued by MNA and MNY.
NAME CHANGE. Effective November 2, 1998, the name of the Emerging Growth Trust
was changed to the Emerging Small Company Trust.
2. SIGNIFICANT ACCOUNTING POLICIES. The policies described below are followed by
the Trust in the preparation of the financial statements.
SECURITY VALUATION. Securities held by Money Market and short term instruments
with remaining maturities of 60 days or less held by the other Portfolios of the
Trust are valued at amortized cost basis, which approximates market value. All
other securities held by the Portfolios are valued at the last sale price as of
the close of business on a principal securities exchange (domestic or foreign)
or, lacking any sales, at the closing bid price. Securities traded only in the
over-the-counter market are valued at the last bid price quoted by brokers
making markets in the securities at the close of trading.
Portfolio securities for which there are no such quotations, principally debt
securities, are valued on the basis of the valuation provided by a pricing
service which utilizes both dealer-supplied and electronic data processing
techniques. Other assets and securities for which no such quotations are readily
available are valued at their fair value as determined in good faith under
consistently applied procedures established by and under the general supervision
of the Board of Trustees.
FOREIGN CURRENCY TRANSLATIONS. The accounting records of the Trust are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of securities, other assets and other liabilities
at the current rate of exchange of such currencies against
U.S. dollars; and
192
<PAGE> 231
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(ii) purchases and sales of securities, income and expenses at the
rate of exchange quoted on the respective dates of such
transactions.
Gains and losses that arise from changes in foreign exchange rates have been
segregated from gains and losses that arise from changes in the market prices of
investments. These gains and losses are included with gains and losses on
foreign currency and forward foreign currency contracts in the Statements of
Operations.
FORWARD FOREIGN CURRENCY CONTRACTS. All portfolios with the exception of Equity
Index, Real Estate Securities, Investment Quality Bond, U.S. Government
Securities, Money Market, Lifestyle Aggressive 1000, Lifestyle Growth 820,
Lifestyle Balanced 640, Lifestyle Moderate 460 and Lifestyle Conservative 280
may purchase and sell forward foreign currency contracts in order to hedge a
specific transaction or portfolio position. Forward foreign currency contracts
are valued at forward foreign currency exchange rates and marked to market
daily.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held at the end of the period, the resulting net unrealized
appreciation (depreciation) and related net receivable or payable amount are
determined using forward foreign currency exchange rates supplied by a quotation
service. The Portfolios could be exposed to risks if the counterparties to the
contracts are unable to meet the terms of their contracts or if the value of the
forward foreign currency contract changes unfavorably.
Net realized gains (losses) on foreign currency and forward foreign currency
contracts shown in the Statements of Operations, include net gains or losses
realized by a Portfolio on contracts which have matured.
FUTURES. All Portfolios with the exception of Real Estate Securities, Investment
Quality Bond, Money Market, Lifestyle Aggressive 1000, Lifestyle Growth 820,
Lifestyle Balanced 640, Lifestyle Moderate 460 and Lifestyle Conservative 280
may purchase and sell financial futures contracts and options on those
contracts. The Portfolios invest in contracts based on financial instruments
such as U.S. Treasury Bonds or Notes or on securities indices such as the S&P
500 Index, in order to hedge against a decline in the value of securities owned
by the Portfolios.
When a Portfolio sells a futures contract based on a financial instrument, the
Portfolio becomes obligated to deliver that kind of instrument at an agreed upon
date for a specified price. The Portfolio realizes a gain or loss depending on
whether the price of an offsetting purchase is less or more than the price of
the initial sale or on whether the price of an offsetting sale is more or less
than the price of the initial purchase . The Portfolios could be exposed to
risks if it could not close out futures positions because of an illiquid
secondary market or the inability of counterparties to meet the terms of their
contracts. Upon entering into futures contracts, the Portfolio is required to
deposit with a broker an amount, initial margin, which typically represents 5%
of the purchase price indicated in the futures contract.
Payments to and from the broker, known as variation margin, are required to be
made on a daily basis as the price of the futures contract fluctuates, making
the long or short positions in the contract more or less valuable. If the
position is closed out by taking an opposite position prior to the settlement
date of the futures contract, a final determination of variation margin is made,
cash is required to be paid to or released by the broker, and the Portfolio
realizes a gain or loss.
The following is a summary of open futures contracts at December 31, 1998:
<TABLE>
<CAPTION>
SALES OF FUTURES CONTRACTS PURCHASES OF FUTURES CONTRACTS
----------------------------------------- ---------------------------------------
NUMBER OF AGGREGATE NUMBER AGGREGATE
EXPIRATION OPEN MARKET VALUE UNREALIZED OF OPEN MARKET VALUE UNREALIZED
DATE CONTRACTS OF CONTRACTS LOSS CONTRACTS OF CONTRACTS GAIN/LOSS
---------- --------- ------------ ---------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY INDEX:
S&P 500 Futures.............. March 1999 ---- ---- 7 $ 2,179,625 $ 38,744
AGGRESSIVE ASSET ALLOCATION:
CAC 40 Futures............... March 1999 ---- ---- 32 FRF 6,309,600 64,740
DAX 30 Futures............... March 1999 ---- ---- 5 DEM 2,532,000 63,941
FTSE 100 Futures............. March 1999 ---- ---- 12 GBP 704,160 51,977
NIKKEI 300 Futures........... March 1999 ---- ---- 39 JPY 83,694,000 (47,367)
HIGH YIELD
FTSE 100 Futures............. March 1999 21 GBP 2,500,680 ($109,711) ---- ---- ----
</TABLE>
193
<PAGE> 232
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FORWARD COMMITMENTS. All Portfolios with the exception of Lifestyle Aggressive
1000, Lifestyle Growth 820, Lifestyle Balanced 640, Lifestyle Moderate 460 and
Lifestyle Conservative 280 may purchase debt securities on a when issued or
forward delivery basis, which means that the obligations will be delivered to
the Portfolios of the Trust at a future date, which may be a month or more after
the date of commitment. The price of the underlying securities and the date when
the securities will be delivered and paid for are fixed at the time the
transaction is negotiated. The value of the securities underlying a forward
commitment to purchase securities, and the subsequent fluctuations in their
value, are taken into account when determining the Portfolio's net asset value
starting on the day the Portfolio agrees to purchase the securities. The market
values of the securities purchased on a forward delivery basis are identified in
the portfolio of investments.
SECURITIES LENDING. All Portfolios with the exception of Lifestyle Aggressive
1000, Lifestyle Growth 820, Lifestyle Balanced 640, Lifestyle Moderate 460 and
Lifestyle Conservative 280 may lend securities in amounts up to 33 1/3% of its
total non-cash assets to brokers, dealers and other financial institutions,
provided such loans are callable at any time and are at all times fully secured
by cash, cash equivalents or securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities, marked to market to the value
of the loaned securities on a daily basis. The Portfolios may bear the risk of
delay in recovery of, or even of rights in, the securities loaned should the
borrower of the securities fail financially. Consequently, loans of Portfolio
securities will only be made to firms deemed by the subadvisers to be
creditworthy. The Portfolios receive compensation for lending their securities
either in the form of fees or by retaining a portion of interest on the
investment of any cash received as collateral. Income generated from the
investment of cash collateral is included as interest income in the Statement of
Operations. All collateral received will be in an amount equal to at least 100%
of the market value of the loaned securities and is intended to be maintained at
that level during the period of the loan. During the loan period, the Portfolio
continues to retain rights of ownership, including dividends and interest of the
loaned securities.
At December 31, 1998, the value of the securities loaned amounted to $3,189,704,
$43,443,331, $15,220,505, $50,896,009, $37,012,087, $94,400,795, $19,682,817,
$6,091,866, $21,945,485, $16,666,070, $194,110,312, $7,418,853, $6,515,847,
$4,517,998, $52,393,847, $27,134,577, $5,961,435, $26,534,395, $61,101,128,
$60,446,383, $5,715,592, $24,664,006, $34,772,250, $5,803,593, $17,704,188,
$60,572,924, $16,397,325, $1,211,867, and $63,715,173 in Pacific Rim Emerging
Markets, Science & Technology, International Small Cap, Emerging Small Company,
Pilgrim Baxter Growth, Small/Mid Cap, International Stock, Worldwide Growth,
Global Equity, Small Company Value, Equity, Growth, Quantitative Equity, Equity
Index, Blue Chip Growth, Real Estate Securities, Value, International Growth and
Income, Growth and Income, Equity-Income, Balanced, Aggressive Asset Allocation,
Moderate Asset Allocation, Conservative Asset Allocation, High Yield, Strategic
Bond, Global Government Bond, Capital Growth Bond, and Investment Quality Bond,
respectively.
At December 31, 1998, the value of cash collateral amounted to $3,151,581,
$43,691,511, $15,724,712, $50,873,151, $36,762,793, $94,244,827, $19,771,574,
$6,267,232, $14,978,491, $16,954,600, $197,468,560, $7,412,748, $6,493,439,
$4,625,878, $51,656,316, $27,952,797, $5,963,102, $27,734,510, $62,779,970,
$61,723,534, $5,827,967, $24,560,067, $35,119,053, $5,868,418, $17,935,954,
$62,552,583, $16,679,123, $1,238,220, and $65,034,495 in Pacific Rim Emerging
Markets, Science & Technology, International Small Cap, Emerging Small Company,
Pilgrim Baxter Growth, Small/Mid Cap, International Stock, Worldwide Growth,
Global Equity, Small Company Value, Equity, Growth, Quantitative Equity, Equity
Index, Blue Chip Growth, Real Estate Securities, Value, International Growth and
Income, Growth and Income, Equity-Income, Balanced, Aggressive Asset Allocation,
Moderate Asset Allocation, Conservative Asset Allocation, High Yield, Strategic
Bond, Global Government Bond, Capital Growth Bond, and Investment Quality Bond,
respectively. At December 31, 1998, the value of U.S. Government securities
collateral amounted to $211,546, $20,562, $784,106, $8,070,121, $569,331,
$358,880, and $59,795 in Pacific Rim Emerging Markets, International Small Cap,
International Stock, Global Equity, Aggressive Asset Allocation, Moderate Asset
Allocation, and Conservative Asset Allocation, respectively.
MORTGAGE DOLLAR ROLLS. Strategic Bond and U.S. Government Securities may enter
into mortgage dollar rolls in which they sell mortgage securities for delivery
currently and simultaneously contract to repurchase similar, but not identical,
securities at the same price on an agreed upon date. The Portfolios receive
compensation as consideration for entering into the commitment to repurchase.
The compensation is recorded as deferred income and amortized to income over the
roll period. As the holder, the counterparty receives all principal and interest
payments, including prepayments, made with respect to the similar security.
Mortgage dollar rolls may be renewed with a new sale and repurchase price with a
cash settlement made at renewal without physical delivery of the securities
subject to the contract.
ORGANIZATION COSTS. Costs incurred by a Portfolio in connection with its
organization, initial registration and public offering of shares are being
amortized on a straight-line basis for International Growth and Income, over a
five-year period beginning with the commencement of operations.
FEDERAL INCOME TAXES. The Portfolios' policy is to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code, as amended,
and to distribute substantially all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required. Each Portfolio of the
Trust is treated as a separate taxpayer for federal income tax purposes.
194
<PAGE> 233
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTION OF INCOME AND GAINS. Substantially all of the net investment income
of Money Market, Lifestyle Balanced 640, Lifestyle Moderate 460 and Lifestyle
Conservative 280 is declared as a dividend to shareholders of record as of the
close of business each day and is reinvested daily. During any particular year,
net realized gains from investment transactions of each Portfolio, in excess of
available capital loss carryforwards of each Portfolio would be taxable to such
Portfolio if not distributed. Therefore, each Portfolio of the Trust intends to
distribute substantially all of its investment company taxable income and any
net realized capital gains in order to avoid federal income tax. The Portfolios'
distributions are based on income amounts determined in accordance with federal
income tax regulations. The character of distributions made during the year from
net investment income and net realized gains may differ for tax purposes due to
various differences in recording net investment income and realized gains for
financial statement and tax purposes.
EXPENSE ALLOCATION. Expenses not directly attributable to a particular Portfolio
are allocated based on the relative share of net assets of each Portfolio at the
time the expense was incurred, except as discussed in footnote 6.
REPURCHASE AGREEMENTS. Each Portfolio of the Trust may enter into repurchase
agreements. When a Portfolio enters into a repurchase agreement through its
custodian, it receives delivery of securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value is generally at least 102% of the repurchase
amount. Each Portfolio will take constructive receipt of all securities
underlying the repurchase agreements it has entered into until such agreements
expire. If the seller defaults, a Portfolio would suffer a loss to the extent
that proceeds from the sale of underlying securities were less than the
repurchase amount.
CAPITAL ACCOUNTS. The Portfolios report the undistributed net investment income
and accumulated undistributed net realized gain (loss) accounts on a basis
approximating amounts available for future tax distributions (or to offset
future taxable realized gains when a capital loss carryforward is available).
Accordingly, each Portfolio of the Trust may periodically make reclassifications
among certain capital accounts without impacting its net asset value.
OTHER. Investment security transactions are accounted for on a trade date basis.
Interest income is accrued as earned. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Foreign dividends are
recorded on the ex-date or as soon after the ex-date that the Portfolio is aware
of such dividends, net of all taxes. All original issue discounts are accreted
for financial and tax reporting purposes. The Portfolios use the First In, First
Out method for determining realized gain or loss on investments for both
financial and federal income tax reporting purposes. The preparation of
financial statements in conformity with Generally Accepted Accounting Principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results may differ from these estimates.
3. CAPITAL LOSS CARRYFORWARDS. At December 31, 1998, capital loss carryforwards
available to offset future realized gains were approximately:
<TABLE>
<CAPTION>
CAPITAL LOSS CARRYFORWARD
EXPIRATION YEAR
--------------------------------------------------------------------------------------
PORTFOLIO 2002 2003 2004 2005 2006
- -------------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Pacific Rim Emerging Markets..... ---- ---- ---- ---- $ 7,430,000
International Small Cap.......... ---- ---- $185,000 $3,982,000 ----
Pilgrim Baxter Growth............ ---- ---- ---- 4,038,000 16,505,000
Worldwide Growth................. ---- ---- ---- ---- 1,907,000
Small Company Value.............. ---- ---- ---- 732,000 15,987,000
Real Estate Securities........... ---- ---- ---- ---- 7,456,000
International Growth and Income.. ---- ---- ---- ---- 279,000
Strategic Bond................... ---- ---- ---- ---- 10,173,000
Global Government Bond........... ---- ---- ---- ---- 6,824,000
Capital Growth Bond.............. $ 644,000 ---- 213,000 ---- 95,000
Investment Quality Bond.......... 1,891,000 ---- ---- ---- ----
U.S. Government Securities....... 156,000 ---- ---- 872,000 ----
</TABLE>
195
<PAGE> 234
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
4. CAPITAL SHARES. Share activity for the Trust for the year ended December 31,
1998 was as follows:
<TABLE>
<CAPTION>
SHARES CAPITAL
------------- -------------
<S> <C> <C>
PACIFIC RIM EMERGING MARKETS
Sold ............................. 6,770,616 $ 43,082,198
Redeemed ......................... (6,000,038) (38,076,228)
------------- -------------
Net increase ................... 770,578 $ 5,005,970
============= =============
SCIENCE & TECHNOLOGY
Sold ............................. 6,255,104 $ 95,650,833
Redeemed ......................... (2,013,379) (30,207,422)
------------- -------------
Net increase ................... 4,241,725 $ 65,443,411
============= =============
INTERNATIONAL SMALL CAP
Sold ............................. 7,587,840 $ 112,981,718
Reinvestment of distributions .... 27,503 437,568
Redeemed ......................... (7,319,705) (109,140,302)
------------- -------------
Net increase ................... 295,639 $ 4,278,984
============= =============
EMERGING SMALL COMPANY
Sold ............................. 3,113,895 $ 71,622,128
Reinvestment of distributions .... 158,191 4,130,364
Redeemed ......................... (2,076,031) (47,459,455)
------------- -------------
Net increase ................... 1,196,055 $ 28,293,037
============= =============
PILGRIM BAXTER GROWTH
Sold ............................. 8,155,418 $ 93,414,114
Redeemed ......................... (4,658,791) (52,390,417)
------------- -------------
Net increase ................... 3,496,627 $ 41,023,697
============= =============
SMALL/MID CAP
Sold ............................. 6,614,995 $ 112,499,416
Redeemed ......................... (4,045,412) (67,014,853)
------------- -------------
Net increase ................... 2,569,583 $ 45,484,563
============= =============
INTERNATIONAL STOCK
Sold ............................. 20,278,906 $ 252,715,252
Reinvestment of distributions .... 273,672 3,560,791
Redeemed ......................... (15,182,565) (190,065,125)
------------- -------------
Net increase .................... 5,370,013 $ 66,210,918
============= =============
WORLDWIDE GROWTH
Sold ............................. 1,300,707 $ 19,102,800
Reinvestment of distributions .... 13,682 206,728
Redeemed ......................... (959,530) (5,095,791)
------------- -------------
Net increase ................... 354,859 $ 14,213,737
============= =============
GLOBAL EQUITY
Sold ............................. 4,136,030 $ 83,076,554
Reinvestment of distributions .... 3,005,041 64,337,927
Redeemed ......................... (6,383,984) (123,784,064)
------------- -------------
Net increase ................... 757,088 $ 23,630,416
============= =============
SMALL COMPANY VALUE
Sold ............................. 9,982,319 $ 117,110,620
Reinvestment of distributions .... 4,241 56,195
Redeemed ......................... (1,330,303) (15,162,118)
------------- -------------
Net increase ................... 8,656,257 $ 102,004,697
============= =============
</TABLE>
196
<PAGE> 235
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
CAPITAL SHARES, CONTINUED
<TABLE>
<CAPTION>
SHARES CAPITAL
------------- -------------
<S> <C> <C>
EQUITY
Sold ............................. 8,508,634 $ 161,890,771
Reinvestment of distributions .... 14,385,769 293,469,692
Redeemed ......................... (13,775,537) (261,703,577)
------------- -------------
Net increase ................... 9,118,866 $ 193,656,886
============= =============
GROWTH
Sold ............................. 5,117,245 $ 95,321,751
Reinvestment of distributions .... 443,371 8,441,791
Redeemed ......................... (652,129) (11,969,990)
------------- -------------
Net increase ................... 4,908,487 $ 91,793,552
============= =============
QUANTITATIVE EQUITY
Sold ............................. 2,525,086 $ 56,864,359
Reinvestment of distributions .... 1,017,210 23,172,050
Redeemed ......................... (897,490) (19,600,478)
------------- -------------
Net increase ................... 2,644,806 $ 60,435,931
============= =============
EQUITY INDEX
Sold ............................. 2,175,437 $ 30,132,341
Reinvestment of distributions .... 131,978 1,983,647
Redeemed ......................... (374,434) (4,985,616)
------------- -------------
Net increase ................... 1,932,981 $ 27,130,373
============= =============
BLUE CHIP GROWTH
Sold ............................. 19,497,392 $ 322,061,761
Reinvestment of distributions .... 932,125 15,836,800
Redeemed ......................... (7,377,854) (118,430,259)
------------- -------------
Net increase ................... 13,051,663 $ 219,468,302
============= =============
REAL ESTATE SECURITIES
Sold ............................. 3,414,938 $ 57,940,371
Reinvestment of distributions .... 1,208,641 21,139,142
Redeemed ......................... (1,717,232) (27,624,209)
------------- -------------
Net increase ................... 2,906,348 $ 51,455,304
============= =============
VALUE
Sold ............................. 8,926,276 $ 133,950,075
Reinvestment of distributions .... 603,016 8,430,164
Redeemed ......................... (1,126,616) (15,950,184)
------------- -------------
Net increase ................... 8,402,676 $ 126,430,055
============= =============
INTERNATIONAL GROWTH AND INCOME
Sold ............................. 23,788,371 $ 269,693,810
Reinvestment of distributions .... 961,602 12,000,793
Redeemed ......................... (23,984,496) (270,169,261)
------------- -------------
Net increase ................... 765,477 $ 11,525,342
============= =============
GROWTH AND INCOME
Sold ............................. 14,731,896 $ 379,844,294
Reinvestment of distributions .... 4,443,994 114,877,243
Redeemed ......................... (5,821,777) (145,134,876)
------------- -------------
Net increase ................... 13,354,113 $ 349,586,661
============= =============
EQUITY-INCOME
Sold ............................. 10,021,748 $ 173,662,705
Reinvestment of distributions .... 3,319,011 59,543,058
Redeemed ......................... (6,770,818) (114,381,887)
------------- -------------
Net increase ................... 6,569,941 $ 118,823,876
============= =============
</TABLE>
197
<PAGE> 236
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
CAPITAL SHARES, CONTINUED
<TABLE>
<CAPTION>
SHARES CAPITAL
------------- -------------
<S> <C> <C>
BALANCED
Sold ............................. 3,060,496 $ 58,207,534
Reinvestment of distributions .... 1,349,790 24,998,103
Redeemed ......................... (453,357) (8,542,136)
------------- -------------
Net increase ................... 3,956,929 $ 74,663,502
============= =============
AGGRESSIVE ASSET ALLOCATION
Sold ............................. 1,272,177 $ 18,613,080
Reinvestment of distributions .... 1,988,692 29,094,564
Redeemed ......................... (2,991,236) (43,050,524)
------------- -------------
Net increase ................... 269,633 $ 4,657,120
============= =============
MODERATE ASSET ALLOCATION
Sold ............................. 616,674 $ 7,798,355
Reinvestment of distributions .... 5,317,384 68,115,685
Redeemed ......................... (6,707,081) (86,963,822)
------------- -------------
Net decrease ................... (773,023) ($ 11,049,782)
============= =============
CONSERVATIVE ASSET ALLOCATION
Sold ............................. 1,037,883 $ 11,909,984
Reinvestment of distributions .... 1,646,332 18,570,627
Redeemed ......................... (3,396,362) (39,658,396)
------------- -------------
Net decrease ................... (712,147) ($ 9,177,785)
============= =============
HIGH YIELD
Sold ............................. 9,574,213 $ 131,241,993
Reinvestment of distributions .... 1,062,130 13,731,611
Redeemed ......................... (2,584,913) (34,889,748)
------------- -------------
Net increase ................... 8,051,430 $ 110,083,856
============= =============
STRATEGIC BOND
Sold ............................. 10,586,115 $ 126,618,386
Reinvestment of distributions .... 2,251,302 26,813,006
Redeemed ......................... (4,550,160) (53,660,911)
------------- -------------
Net increase ................... 8,287,257 $ 99,770,482
============= =============
GLOBAL GOVERNMENT BOND
Sold ............................. 889,721 $ 12,101,805
Reinvestment of distributions .... 1,512,137 19,914,849
Redeemed ......................... (3,414,282) (46,015,024)
------------- -------------
Net decrease ................... (1,012,424) ($ 13,998,370)
============= =============
CAPITAL GROWTH BOND
Sold ............................. 1,205,016 $ 14,235,548
Reinvestment of distributions .... 272,441 3,103,100
Redeemed ......................... (649,082) (7,664,594)
------------- -------------
Net increase ................... 828,375 $ 9,674,054
============= =============
INVESTMENT QUALITY BOND
Sold ............................. 11,528,927 $ 139,662,289
Reinvestment of distributions .... 990,654 11,620,375
Redeemed ......................... (3,019,631) (36,762,808)
------------- -------------
Net increase ................... 9,499,950 $ 114,519,856
============= =============
U.S. GOVERNMENT SECURITIES
Sold ............................. 11,633,765 $ 157,556,444
Reinvestment of distributions .... 996,467 13,043,750
Redeemed ......................... (4,927,141) (66,613,911)
------------- -------------
Net increase ................... 7,703,091 $ 103,986,283
============= =============
</TABLE>
198
<PAGE> 237
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
CAPITAL SHARES, CONTINUED
<TABLE>
<CAPTION>
SHARES CAPITAL
--------------- ---------------
<S> <C> <C>
MONEY MARKET
Sold ............................. 122,669,097 $ 1,226,690,969
Reinvestment of distributions .... 2,739,174 27,391,741
Redeemed ......................... (108,395,909) (1,083,959,093)
--------------- ---------------
Net increase ................... 17,012,362 $ 170,123,617
=============== ===============
LIFESTYLE AGGRESSIVE 1000
Sold ............................. 2,940,289 $ 39,235,345
Reinvestment of distributions .... 235,336 3,344,794
Redeemed ......................... (804,663) (10,883,044)
--------------- ---------------
Net increase ................... 2,370,962 $ 31,697,095
=============== ===============
LIFESTYLE GROWTH 820
Sold ............................. 11,372,979 $ 156,491,064
Reinvestment of distributions .... 1,244,102 17,780,049
Redeemed ......................... (790,640) (10,733,134)
--------------- ---------------
Net increase ................... 11,826,441 $ 163,537,979
=============== ===============
LIFESTYLE BALANCED 640
Sold ............................. 13,995,601 $ 188,784,151
Reinvestment of distributions .... 1,197,810 16,573,997
Redeemed ......................... (983,046) (12,628,291)
--------------- ---------------
Net increase ................... 14,210,365 $ 192,729,857
=============== ===============
LIFESTYLE MODERATE 460
Sold ............................. 6,252,966 $ 84,594,300
Reinvestment of distributions .... 332,059 4,570,654
Redeemed ......................... (608,000) (8,237,978)
--------------- ---------------
Net increase ................... 5,977,025 $ 80,926,976
=============== ===============
LIFESTYLE CONSERVATIVE 280
Sold ............................. 4,305,187 $ 56,164,191
Reinvestment of distributions .... 154,440 2,002,757
Redeemed ......................... (184,127) (2,396,336)
--------------- ---------------
Net increase ................... 4,275,500 $ 55,770,613
=============== ===============
</TABLE>
5. PURCHASES AND SALES OF SECURITIES. The following summarizes the securities
transactions (except for short-term investments) for the Portfolios (with the
exception of Money Market) for the year ended December 31, 1998:
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------------- -------------------------------
U.S. U.S.
PORTFOLIO GOVERNMENT OTHER ISSUES GOVERNMENT OTHER ISSUES
------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets ..... ----- $ 18,222,908 ----- $ 11,621,513
Science & Technology ............. ----- 175,737,803 ----- 106,693,209
International Small Cap .......... ----- 67,002,358 ----- 49,808,432
Emerging Small Company ........... ----- 226,393,708 ----- 202,050,181
Pilgrim Baxter Growth ............ ----- 231,245,241 ----- 200,720,354
Small/Mid Cap .................... ----- 495,516,130 ----- 440,656,231
International Stock .............. ----- 110,428,292 ----- 49,547,957
Worldwide Growth ................. ----- 40,538,043 ----- 24,016,548
Global Equity .................... ----- 287,955,404 ----- 342,993,149
Small Company Value .............. ----- 250,030,834 ----- 149,088,114
Equity ........................... ----- 1,380,243,295 ----- 1,492,560,818
Growth ........................... ----- 364,470,016 ----- 270,682,582
Quantitative Equity .............. ----- 477,173,088 ----- 434,082,897
Equity Index ..................... ----- 31,919,220 ----- 1,015,911
Blue Chip Growth ................. ----- 566,829,810 ----- 341,447,734
</TABLE>
199
<PAGE> 238
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
PURCHASES AND SALES OF SECURITIES, CONTINUED
<TABLE>
<CAPTION>
PURCHASES SALES
--------------------------------------- ---------------------------------------
U.S. U.S.
PORTFOLIO GOVERNMENT OTHER ISSUES GOVERNMENT OTHER ISSUES
------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Real Estate Securities ........... ----- $ 238,910,919 ----- $ 200,566,853
Value ............................ ----- 187,967,490 ----- 81,731,139
International Growth and Income .. ----- 312,390,277 ----- 315,499,690
Growth and Income ................ ----- 558,207,114 ----- 294,415,500
Equity-Income .................... ----- 309,374,740 ----- 202,891,517
Balanced ......................... $ 6,039,887 433,561,842 $ 10,173,902 376,515,497
Aggressive Asset Allocation ...... 10,159,038 143,537,255 4,579,051 169,074,266
Moderate Asset Allocation ........ 181,888,332 311,254,182 166,993,523 393,399,701
Conservative Asset Allocation .... 159,041,046 52,894,114 84,717,681 177,441,549
High Yield ....................... ----- 231,469,037 ----- 129,318,225
Strategic Bond ................... 794,713,550 372,292,709 755,902,834 279,274,196
Global Government Bond ........... 31,284,184 239,442,645 38,307,503 257,639,719
Capital Growth Bond .............. 21,671,341 1,080,851 676,313 8,075,811
Investment Quality Bond .......... 8,244,816 206,815,159 2,057,109 95,870,266
U.S. Government Securities ....... 1,206,556,714 ---- 1,077,325,446 ----
Lifestyle Aggressive 1000 ........ ----- 68,137,510 ----- 38,015,766
Lifestyle Growth 820 ............. ----- 304,663,669 ----- 146,672,647
Lifestyle Balanced 640 ........... ----- 338,226,919 ----- 148,244,456
Lifestyle Moderate 460 ........... ----- 122,849,337 ----- 42,294,332
Lifestyle Conservative 280 ....... ----- 70,197,802 ----- 14,562,601
</TABLE>
At December 31, 1998, tax basis net unrealized appreciation (depreciation) was
equal to the aggregate gross unrealized appreciation for all securities in which
there was an excess of market value over tax cost and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value as follows:
<TABLE>
<CAPTION>
TAX BASIS NET
UNREALIZED TAX BASIS TAX BASIS
TAX BASIS APPRECIATION UNREALIZED UNREALIZED
PORTFOLIO COST (DEPRECIATION) APPRECIATION DEPRECIATION
- ------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets ..... $ 32,238,588 $ (3,503,978) $ 1,530,324 $ 5,034,302
Science & Technology ............. 179,485,240 44,196,556 47,676,332 3,479,776
International Small Cap .......... 139,665,127 23,244,870 32,830,631 9,585,761
Emerging Small Company ........... 311,504,721 41,160,749 70,683,457 29,522,708
Pilgrim Baxter Growth ............ 149,957,946 32,614,390 34,453,298 2,838,908
Small/Mid Cap .................... 432,036,295 57,653,603 63,505,239 5,851,636
International Stock .............. 231,298,427 20,949,114 35,931,241 14,982,127
Worldwide Growth ................. 43,759,564 4,629,453 5,511,925 882,472
Global Equity .................... 798,886,217 143,255,497 209,648,696 66,393,199
Small Company Value .............. 171,995,681 7,898,868 19,112,005 11,213,137
Equity ........................... 1,731,828,830 23,036,031 176,908,566 153,872,535
Growth ........................... 262,990,292 44,875,285 46,642,373 1,767,088
Quantitative Equity .............. 219,841,044 40,434,920 44,699,646 4,264,726
Equity Index ..................... 58,103,056 9,762,996 11,443,792 1,680,796
Blue Chip Growth ................. 868,519,950 325,405,584 341,713,592 16,308,008
Real Estate Securities ........... 206,677,963 (16,551,104) 1,160,278 17,711,382
Value ............................ 269,922,402 (9,217,889) 19,295,784 28,513,673
International Growth and Income .. 232,524,566 12,405,926 27,572,649 15,166,723
Growth and Income ................ 1,525,483,288 827,679,701 856,911,189 29,231,488
Equity-Income .................... 970,720,540 179,146,097 227,027,600 47,881,503
Balanced ......................... 242,034,313 19,543,390 22,319,681 2,776,291
Aggressive Asset Allocation ...... 230,740,303 56,971,405 66,668,168 9,696,763
Moderate Asset Allocation ........ 572,514,321 97,421,550 111,369,276 13,947,726
</TABLE>
200
<PAGE> 239
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
PURCHASES AND SALES OF SECURITIES, CONTINUED
<TABLE>
<CAPTION>
TAX BASIS NET
UNREALIZED TAX BASIS TAX BASIS
TAX BASIS APPRECIATION UNREALIZED UNREALIZED
PORTFOLIO COST (DEPRECIATION) APPRECIATION DEPRECIATION
- ------------- ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
Conservative Asset Allocation $196,613,363 $ 16,724,944 $ 18,619,248 $ 1,894,304
High Yield .................. 214,745,134 (8,256,708) 3,053,872 11,310,580
Strategic Bond .............. 550,397,065 (7,735,680) 8,753,433 16,489,113
Global Government Bond ...... 201,978,157 4,313,585 7,490,696 3,177,111
Capital Growth Bond ......... 62,269,093 2,930,856 3,041,236 110,380
Investment Quality Bond ..... 365,109,938 6,048,315 8,992,165 2,943,850
U.S. Government Securities .. 457,075,153 4,530,835 5,585,203 1,054,368
Lifestyle Aggressive 1000 ... 80,997,590 (475,231) 2,511,782 2,987,013
Lifestyle Growth 820 ........ 379,998,200 310,096 12,575,215 12,265,119
Lifestyle Balanced 640 ...... 378,487,580 (957,950) 10,294,013 11,251,963
Lifestyle Moderate 460 ...... 134,246,310 3,881,441 5,284,665 1,403,224
Lifestyle Conservative 280 .. 75,406,014 2,997,452 3,047,698 50,246
</TABLE>
6. INVESTMENT ADVISORY AGREEMENTS. The Trust has entered into an Investment
Advisory Agreement with MSS (the "Adviser"), a wholly-owned subsidiary of MNA
and the principal underwriter of the variable annuity contracts issued by MNA
and MNY. The Adviser is responsible for managing the corporate and business
affairs of the Trust and for selecting and compensating subadvisers to handle
the investment and reinvestment of the assets of each Portfolio of the Trust,
subject to the supervision of the Trust's Board of Trustees. As compensation for
its services, the Adviser receives an advisory fee from the Trust based on the
average daily net assets of each Portfolio, except for the Lifestyle Trusts for
which the Adviser makes no charge. Advisory fees charged to each Portfolio were
as follows:
<TABLE>
<CAPTION>
PORTFOLIO FEE
- ------------- ------------
<S> <C>
Pacific Rim Emerging Markets...................... .850%
Science & Technology.............................. 1.100%
International Small Cap........................... 1.100%
Emerging Small Company............................ 1.050%
Pilgrim Baxter Growth............................. 1.050%
Small/Mid Cap..................................... 1.000%
International Stock............................... 1.050%
Worldwide Growth.................................. 1.000%
Global Equity..................................... .900%
Small Company Value............................... 1.050%
Equity............................................ .750%
Growth............................................ .850%
Quantitative Equity............................... .700%
Equity Index...................................... .250%
Blue Chip Growth.................................. .925%
Real Estate Securities............................ .700%
Value............................................. .800%
International Growth and Income................... .950%
Growth and Income................................. .750%
Equity-Income..................................... .800%
Balanced.......................................... .800%
Aggressive Asset Allocation....................... .750%
Moderate Asset Allocation......................... .750%
Conservative Asset Allocation..................... .750%
High Yield........................................ .775%
Strategic Bond.................................... .775%
Global Government Bond............................ .800%
Capital Growth Bond............................... .650%
Investment Quality Bond........................... .650%
U.S. Government Securities........................ .650%
Money Market...................................... .500%
</TABLE>
201
<PAGE> 240
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY AGREEMENTS, CONTINUED
For the year ended December 31, 1998, the Adviser paid aggregate subadvisory
fees of $34,729,206 and retained net investment advisory fees after payment of
subadvisory fees of $60,018,500, allocated among the portfolios as follows:
<TABLE>
<CAPTION>
FEE AS A % OF FEE AS A % OF
AVERAGE AVERAGE
FEE ANNUAL NET ASSETS FEE ANNUAL NET
PAID TO PAID TO RETAINED ASSETS RETAINED
PORTFOLIO SUBADVISER SUBADVISER BY ADVISER BY ADVISER
- ------------- ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets ..... $ 100,909 .400% $ 113,523 .450%
Science & Technology ............. 638,775 .600% 532,313 .500%
International Small Cap .......... 880,024 .618% 687,203 .482%
Emerging Small Company ........... 1,538,613 .550% 1,398,740 .500%
Pilgrim Baxter Growth ............ 694,939 .600% 521,202 .450%
Small/Mid Cap .................... 1,556,064 .495% 1,588,282 .505%
International Stock .............. 1,041,875 .542% 978,062 .508%
Worldwide Growth ................. 195,586 .600% 130,391 .400%
Global Equity .................... 3,406,519 .371% 4,849,996 .529%
Small Company Value .............. 679,834 .586% 538,775 .464%
Equity ........................... 3,567,981 .233% 7,936,946 .517%
Growth ........................... 991,056 .436% 939,386 .414%
Quantitative Equity .............. 480,575 .235% 951,016 .465%
Equity Index ..................... 42,702 .100% 64,053 .150%
Blue Chip Growth ................. 3,298,442 .383% 4,666,354 .542%
Real Estate Securities ........... 397,010 .240% 760,356 .460%
Value ............................ 666,493 .315% 1,028,854 .485%
International Growth and Income .. 1,003,054 .457% 1,083,937 .493%
Growth and Income ................ 3,370,654 .176% 10,982,615 .574%
Equity-Income .................... 2,280,428 .225% 5,841,286 .575%
Balanced ......................... 707,971 .333% 991,604 .467%
Aggressive Asset Allocation ...... 874,869 .350% 999,804 .400%
Moderate Asset Allocation ........ 1,722,708 .282% 2,862,446 .468%
Conservative Asset Allocation .... 613,727 .313% 859,355 .437%
High Yield ....................... 474,278 .317% 686,353 .458%
Strategic Bond ................... 1,150,170 .281% 2,027,856 .494%
Global Government Bond ........... 723,763 .355% 908,302 .445%
Capital Growth Bond .............. 132,958 .225% 251,142 .425%
Investment Quality Bond .......... 521,489 .210% 1,089,328 .440%
U.S. Government Securities ....... 600,677 .200% 1,352,258 .450%
Money Market ..................... 375,063 .068% 2,396,762 .432%
</TABLE>
Of the total retained by the Adviser, $3,725,037 was paid to Manulife America
and $246,766 was paid to Manulife USA.
EXPENSE REIMBURSEMENT. Pursuant to the Advisory Agreement, the Adviser
reimburses the Trust for expenses (excluding advisory fees, taxes, portfolio
brokerage commissions and interest) incurred in excess, on an annualized basis,
of 0.15% of the average daily net assets of Equity Index, 0.50% of the average
daily net assets of Science & Technology, Emerging Small Company, Pilgrim Baxter
Growth, Small/Mid Cap, Small Company Value, Growth, Equity, Quantitative Equity,
Blue Chip Growth, Real Estate Securities, Value, Growth and Income,
Equity-Income, Balanced, Aggressive Asset Allocation, Moderate Asset Allocation,
Conservative Asset Allocation, High Yield, Strategic Bond, Capital Growth Bond,
Investment Quality Bond, U.S. Government Securities, Money Market, Lifestyle
Aggressive 1000, Lifestyle Growth 820, Lifestyle Balanced 640, Lifestyle
Moderate 460 and Lifestyle Conservative 280 and 0.75% of the average daily net
assets of Pacific Rim Emerging Markets, International Small Cap, International
Stock, Worldwide Growth, Global Equity, International Growth and Income and
Global Government Bond. In the case of the Lifestyle Trusts, the Adviser has
agreed to pay the expenses of the Lifestyle Trusts (other than the expenses of
the underlying Portfolios). This expense reimbursement may be terminated at any
time. For the year ended December 31, 1998, the Adviser reimbursed Equity Index,
Lifestyle Aggressive 1000, Lifestyle Growth 820, Lifestyle Balanced 640,
Lifestyle Moderate 460 and Lifestyle Conservative 280 the amounts of $60,770,
$14,393, $68,077, $66,836, $22,891 and $11,424, respectively, for expenses
incurred in excess of the applicable limitations.
202
<PAGE> 241
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
7. TRUSTEES' FEES. The Trust pays each Trustee who is not an employee or
director of the Adviser or its affiliates a fee of $7,500 plus travel expenses
for each Board of Trustees meeting attended. The Trust also pays each Trustee
who is not an employee of the Adviser or its affiliates an annual retainer of
$30,000.
8. COMMITMENTS. At December 31, 1998, Worldwide Growth, Growth, Blue Chip
Growth, International Growth and Income, Aggressive Asset Allocation, Moderate
Asset Allocation, Conservative Asset Allocation, High Yield, Strategic Bond and
Global Government Bond had entered into forward foreign currency contracts which
contractually obligate the Portfolio to deliver currencies at future dates. Open
sale and purchase contracts at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
CONTRACTS IN EXCHANGE SETTLEMENT APPRECIATION
TO DELIVER FOR DATE VALUE (DEPRECIATION)
----------- ----------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
WORLDWIDE GROWTH:
PURCHASES $ 65,202 ATS 765,800 01/04/1999 $ 65,316 $ 114
=========== =========== ==========
GROWTH:
SALES
Netherland Guilder 11,298 $ 5,969 01/04/1999 $ 6,014 $ (45)
Swiss Franc 2,845,255 2,054,336 01/05/1999 2,071,235 (16,899)
Netherland Guilder 70,249 37,065 01/05/1999 37,392 (327)
----------- ----------- ----------
$ 2,097,370 $ 2,114,641 $ (17,271)
=========== =========== ==========
BLUE CHIP GROWTH:
SALES
Great British Pound 2,948 $ 4,962 01/04/1999 $ 4,898 $ 64
=========== =========== ==========
INTERNATIONAL GROWTH AND
INCOME:
PURCHASES $ 25,132 DEM 42,000 01/05/1999 $ 25,201 $ 69
----------
1,937,994 HKD 15,040,000 02/19/1999 1,940,685 2,691
----------- ----------- ----------
$ 1,963,126 $ 1,965,886 $ 2,760
=========== =========== ==========
SALES
Australian Dollar 3,949,421 $ 2,522,495 02/19/1999 $ 2,421,194 101,301
Swiss Franc 9,485,251 6,976,296 02/19/1999 6,940,146 36,150
German Deutsche Mark 11,734,113 7,065,296 02/19/1999 7,057,710 7,586
Hong Kong Dollar 15,040,000 1,937,720 02/19/1999 1,940,685 (2,965)
South African Rand 4,400,000 750,405 02/19/1999 735,472 14,933
----------- ----------- ----------
$19,252,211 $19,095,206 $ 157,005
=========== =========== ==========
$ 159,765
==========
AGGRESSIVE ASSET ALLOCATION:
PURCHASES $ 895 DEM 1,500 01/04/1999 $ 900 $ 5
=========== =========== ==========
SALES
Hong Kong Dollars 230,000 $ 29,685 01/05/1999 $ 29,687 $ (2)
Great British Pounds 80,000 134,525 01/06/1999 132,912 1,613
----------- ----------- ----------
$ 164,210 $ 162,599 1,611
=========== =========== ==========
$ 1,616
==========
</TABLE>
203
<PAGE> 242
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
COMMITMENTS, CONTINUED
<TABLE>
<CAPTION>
NET UNREALIZED
CONTRACTS IN EXCHANGE SETTLEMENT APPRECIATION
TO DELIVER FOR DATE VALUE (DEPRECIATION)
-------------- -------------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
MODERATE ASSET
ALLOCATION:
PURCHASES $ 1,640 DEM 2,750 01/04/1999 $ 1,650 $ 10
============== ============== -------------
SALES
Great British Pounds 147,500 $ 248,030 01/06/1999 $ 245,057 $ 2,973
============== ============== -------------
$ 2,983
=============
CONSERVATIVE ASSET
ALLOCATION:
PURCHASES $ 298 DEM 500 01/04/1999 $ 300 $ 2
============== ============== -------------
SALES
Great British Pounds 30,000 $ 50,450 01/04/1999 $ 49,842 $ 608
============== ============== -------------
$ 610
=============
HIGH YIELD :
SALES
European Currency Unit 580,000 $ 676,686 01/25/1999 $ 681,397 ($ 4,711)
German Deutsche Marks 4,825,000 2,907,822 01/27/1999 2,899,007 8,815
German Deutsche Marks 1,805,000 1,061,764 01/29/1999 1,084,606 (22,842)
German Deutsche Marks 450,000 270,433 02/08/1999 270,518 (85)
German Deutsche Marks 2,465,000 1,484,940 02/22/1999 1,482,836 2,104
Great British Pounds . 2,130,000 3,501,656 03/03/1999 3,531,841 (30,185)
-------------- -------------- --------------
$ 9,903,301 $ 9,950,205 ($ 46,904)
============== ============== ==============
STRATEGIC BOND :
SALES
Italian Lira ......... 5,893,705,250 $ 3,563,304 02/04/1999 $ 3,570,478 ($ 7,174)
German Deutsche Mark . 5,326,819 3,170,647 02/16/1999 3,203,456 (32,809)
Finnish Mark ......... 5,668,633 1,116,972 02/16/1999 1,114,303 2,669
European Currency Unit 815,707 963,350 02/16/1999 959,297 4,053
-------------- -------------- --------------
$ 8,814,273 $ 8,847,534 ($ 33,261)
============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
CROSS CURRENCY: NET
UNREALIZED
PAYABLE CONTRACTS RECEIVABLE IN EXCHANGE SETTLEMENT APPRECIATION
CURRENCY TO DELIVER VALUE CURRENCY FOR VALUE DATE (DEPRECIATION)
- -------- ---------- ---------- ---------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
DEM 1,896,684 $1,137,851 ECU 964,743 $1,140,633 02/16/1999 $ 2,782
DEM 3,380,000 2,015,325 SEK 16,482,232 2,032,674 02/16/1999 17,349
SEK 16,482,232 2,032,707 DEM 3,380,000 2,015,324 02/16/1999 (17,383)
ECU 964,743 1,134,568 DEM 1,896,684 1,137,851 02/16/1999 3,283
---------- ---------- --------
$6,320,451 $6,326,482 $ 6,031
=========== =========== ========
</TABLE>
204
<PAGE> 243
MANUFACTURERS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
COMMITMENTS, CONTINUED
<TABLE>
<CAPTION>
NET
UNREALIZED
CONTRACTS IN EXCHANGE SETTLEMENT APPRECIATION
TO DELIVER FOR DATE VALUE (DEPRECIATION)
----------- ----------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
GLOBAL GOVERNMENT BOND :
PURCHASES $ 1,838,623 FRF 10,311,000 01/05/1999 $ 1,844,214 $ 5,591
7,967,539 AUD 12,915,700 03/25/1999 7,920,409 (47,130)
25,766,120 NZD 48,403,959 03/25/1999 25,491,787 (274,333)
5,121,017 AUD 7,946,599 05/12/1999 4,875,304 (245,713)
--------- ----------- -----------
$40,693,299 $40,131,714 ($ 561,585)
=========== =========== -----------
SALES
Deutsche Mark 3,110,000 $ 1,859,714 01/05/1999 $ 1,866,075 ($ 6,361)
South African Rand 54,045,452 9,064,000 01/06/1999 9,155,901 (91,901)
Australian Dollar 12,915,700 7,478,000 03/25/1999 7,920,409 (345,866)
New Zealand Dollar 55,539,455 28,938,000 03/25/1999 29,249,672 (311,672)
Australian Dollar 7,946,599 5,000,000 05/12/1999 4,875,304 124,696
----------- ----------- -----------
$52,339,714 $53,067,361 ($ 727,647)
=========== =========== -----------
($1,289,232)
</TABLE>
<TABLE>
NET
CROSS CURRENCY: UNREALIZED
PAYABLE CONTRACTS RECEIVABLE IN EXCHANGE SETTLEMENT APPRECIATION
CURRENCY TO DELIVER VALUE CURRENCY FOR VALUE DATE (DEPRECIATION)
- --------------- ---------- ----------- ---------- ----------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
GBP 14,259,546 $23,577,181 DEM 39,340,000 $23,545,114 01/11/1999 ($ 32,066)
NZD 37,633,526 19,602,333 JPY 2,290,000 19,852,352 01/19/1999 250,019
AUD 38,192,876 23,737,472 DEM 39,600,000 23,925,317 01/20/1999 187,845
DEM 18,747,620 11,178,636 AUD 17,880,000 11,027,971 01/20/1999 (150,666)
---------- ----------- ---------
$78,095,622 $78,350,754 $ 255,132
=========== =========== =========
</TABLE>
205
<PAGE> 244
MANUFACTURERS
INVESTMENT TRUST
ANNUAL REPORT
December 31, 1998
VENTURE
VARIABLE PRODUCTS
[PHOTO OF TWO PEOPLE BIKE RIDING]
Audited Financial Statements
[LOGO]
MANULIFE FINANCIAL
Venture Annuities: Issuer and Administrator
The Manufacturers Life Insurance Company of North America
Venture VUL, SVUL and COLI VUL:
The Manufacturers Life Insurance Company of America
<PAGE> 245
MANAGEMENT OF THE TRUST
TRUSTEES
John D. Richardson, Chairman of the Board
Don B. Allen
Charles L. Bardelis
Samuel Hoar
F. David Rolwing
OFFICERS
John D. DesPrez, III, President
James R. Boyle, Treasurer
John G. Vrysen, Vice President
James D. Gallagher, Secretary
INVESTMENT ADVISER
Manufacturers Securities Services, LLC
Boston, Massachusetts
ISSUER OF VENTURE ANNUITIES, VARIABLE
LIFE INSURANCE AND ARA GROUP
ANNUITY IN NEW YORK
The Manufacturers Life Insurance
Company of New York
555 Theodore Fremd Avenue/Suite C-209
Rye, New York 10580
800-551-2078
PRINCIPAL UNDERWRITER OF
VENTURE ANNUITY AND VARIABLE
UNIVERSAL LIFE INSURANCE
Manufacturers Securities Services, LLC
Boston Massachusetts
SALES AND MARKETING SUPPORT FOR
VENTURE ANNUITIES
Wood Logan Associates, Inc.
Old Greenwich, Connecticut
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries.
<PAGE> 246
MANUFACTURERS
INVESTMENT TRUST
ANNUAL REPORT
December 31, 1998
VENTURE(R)
VARIABLE INSURANCE PRODUCTS
[PHOTO OF TWO PEOPLE BIKE RIDING THROUGH IDYLLIC RURAL SETTING]
Audited Financial Statements
[MANULIFE FINANCIAL LOGO]
MANULIFE FINANCIAL
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK
Venture Combination Fixed and Variable Annuities, Venture VUL:
Issuer and Administrator
The Manufacturers Life Insurance Company of New York
<PAGE> 247
<TABLE>
<S> <C>
MANAGEMENT OF THE TRUST ISSUER OF VENTURE ANNUITIES
The Manufacturers Life Insurance
Company of North America
TRUSTEES 116 Huntington Avenue
John D. Richardson, Chairman of the Board Boston, Massachusetts 02116-5743
Don B. Allen 800-344-1029
Charles L. Bardelis
Samuel Hoar ISSUER OF VENTURE VUL, SVUL AND
F. David Rolwing COLI VUL VARIABLE LIFE
The Manufacturers Life Insurance
OFFICERS Company of America
John D. DesPrez, III, President 200 Bloor Street East
James R. Boyle, Treasurer Toronto, Ontario, Canada M4W1E5
John G. Vrysen, Vice President 800-827-4546
James D. Gallagher, Secretary
PRINCIPAL UNDERWRITER OF
INVESTMENT ADVISER VENTURE ANNUITIES
Manufacturers Securities Services, LLC Manufacturers Securities Services, LLC
Boston, Massachusetts Boston, Massachusetts
PROMOTIONAL AGENT OF
VENTURE ANNUITIES
Wood Logan Associates, Inc.
Manulife Financial and the block design are Old Greenwich, Connecticut
registered service marks of The Manufacturers
Life Insurance Company and are used by it PRINCIPAL UNDERWRITER OF VENTURE
and its subsidiaries. VUL, SVUL AND COLI VUL
ManEquity, Inc.
Toronto, Ontario, Canada
</TABLE>
