File Nos. 33-64465
811-07437
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 2 [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2 [ ]
(Check appropriate box or boxes.)
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John Hancock Declaration Trust
(Exact Name of Registrant as Specified in Charter)
101 Huntington Avenue
Boston, Massachusetts 02199-7603
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(617) 375-1760
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SUSAN S. NEWTON
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
( ) immediately upon filing pursuant to paragraph (b) of Rule 485
( ) on (date) pursuant to paragraph (b) of Rule 485
( ) 75 days after filing pursuant to paragraph (a) of Rule 485
(X) on May 1, 1997 pursuant to paragraph (a) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended, the
Registrant hereby elects to register an indefinite number of shares of the
Registrant and each series thereof.
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John Hancock Declaration Trust
CROSS REFERENCE SHEET
Item Number Statement of Additional
Form N-1A Part A Prospectus Caption Information Caption
- ---------------- ------------------ -------------------
1 Front Cover Page *
2 Expense Information; *
The Fund's Expenses;
Shares Price;
Additional Services and
Programs
3 The Fund's Financial *
History Performance
4 Investment Objectives and *
Policies; Organization and
Management of the Fund
5 Organization and Management *
of the Fund; The Fund's
Expenses
6 Organization and Management of *
Fund; Distribution and Taxes;
How to Redeem Shares;
Additional Services and Programs
7 Who Can Buy Shares; *
How to Buy Shares;
Shares Price; Additional
Services and Programs
8 How to Redeem Shares *
9 Not Applicable *
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Item Number Statement of Additional
Form N-1A Part A Prospectus Caption Information Caption
- ---------------- ------------------ -------------------
10 * Front Cover Page
11 * Table of Contents
12 * Organization of the Fund
13 * Investment Objective and
Policies; Investment
Restrictions
14 * Those Responsible for
Management
15 * Those Responsible for
Management
16 * Investment Advisory and
Other Services; Distribution
Contract; Transfer Agent
Services; Custody of Portfolio;
Independent Auditors
17 * Brokerage Allocation
18 * Description of the Fund's
Shares
19 * Net Asset Value; Additional
Services and Programs
20 * Tax Status
21 * Distribution Contract
22 * Calculation of Performance
23 * Financial Statements
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John Hancock
V.A. Financial
Industries Fund
Prospectus
May 1, 1997
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TABLE OF CONTENTS
Page
Investment Objective and Policies........................................ 2
Organization and Management of the Fund.................................. 7
The Fund's Expenses...................................................... 8
Dividends and Taxes...................................................... 8
Performance.............................................................. 9
Investments in Shares of the Fund........................................ 9
Share Price.............................................................. 10
Redeeming Shares......................................................... 10
This prospectus sets forth information about John Hancock V.A. Financial
Industries Fund (the "Fund"), a diversified series of John Hancock Declaration
Trust, that you should know before investing. Please read and retain it for
future reference.
Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC"). You can obtain a copy of the Fund's Statement
of Additional Information, dated May 1, 1997, free of charge by writing or
telephoning: John Hancock Signature Services, Inc. P.O. Box 9298, Boston
Massachusetts 02205-9298, 1-800-824-0335.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and the shares are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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INVESTMENT OBJECTIVE AND POLICIES
THE FUND SEEKS CAPITAL APPRECIATION PRIMARILY THROUGH INVESTMENTS IN EQUITY
SECURITIES OF FINANCIAL SERVICES COMPANIES THROUGHOUT THE WORLD
The Fund's investment objective is capital appreciation. The Fund seeks its
objective primarily through investments in financial services companies (defined
below) located in the U.S. and foreign countries. There is no assurance that the
Fund will achieve its investment objective.
Under ordinary circumstances, the Fund will invest at least 65% of its total
assets in equity securities of financial services companies. For this purpose,
equity securities include common and preferred stocks and their equivalents
(including warrants to purchase and securities convertible into such stocks).
FINANCIAL SERVICES COMPANIES INCLUDE VARIOUS TYPES OF FIRMS
A financial services company is a firm that in its most recent fiscal year
either (i) derived at least 50% of its revenues or earnings from financial
services activities, or (ii) devoted at least 50% of its assets to such
activities. Financial services companies provide financial services to consumers
and businesses and include the following types of U.S. and foreign firms:
commercial banks, thrift institutions and their holding companies; consumer and
industrial finance companies; diversified financial services companies;
investment banks; securities brokerage and investment advisory firms; financial
technology companies; real estate-related firms; leasing firms; insurance
brokerages; and various firms in all segments of the insurance industry such as
multi-line, property and casualty, and life insurance companies and insurance
holding companies.
The Fund currently uses a strategy of investing in financial services companies
that are, in the opinion of the Fund's management team currently underfollowed,
and/or underpriced, in consolidating or restructuring industries, or in a
position to benefit from regulatory changes. This strategy can be changed at any
time.
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THE FUND MAY ALSO INVEST IN DEBT SECURITIES OF FINANCIAL SERVICES COMPANIES AND
IN DEBT AND EQUITY SECURITIES OF CERTAIN OTHER COMPANIES
The Fund may also invest in debt securities of financial services companies and
in debt and equity securities of companies outside of the financial services
sector. The Fund may invest up to 5% of its net assets in below-investment grade
debt securities.
To avoid the need to sell equity securities in the Fund's portfolio to meet
redemption requests, and to provide flexibility to the Fund to take advantage of
investment opportunities, the Fund may invest up to 15% of its net assets in
short-term, investment grade debt securities. Short-term debt securities have a
maturity of less than one year. Investment grade securities are rated at the
time of purchase BBB or higher by Standard & Poor's Rating Group ("S&P") or Baa
or higher by Moody's Investors Service, Inc. ("Moody's"). Debt securities
include corporate obligations (such as commercial paper, notes, bonds or
debentures), certificates of deposit, deposit accounts, obligations of the U.S.
Government, its agencies and instrumentalities, and repurchase agreements. When
the Adviser believes that financial conditions warrant, it may for temporary
defensive purposes invest up to 80% of the Fund's assets in these securities
rated in the four highest categories of S&P or Moody's. Medium grade obligations
(i.e., those rated BBB or Baa) lack outstanding investment characteristics and
have speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments on these obligations. In the event a debt security is
subsequently down-graded below medium grade, the Adviser will consider this
event in determining whether the Fund should continue to hold the security. See
Appendix A to the Statement of Additional Information for a description of the
various ratings of investment grade debt securities.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Since the Fund's investments will be concentrated in the financial services
sector, it will be subject to risks in addition to those that apply to the
general equity and debt markets. Events may occur which significantly affect the
sector as a whole or a particular segment in which the Fund invests.
Accordingly, the Fund may be subject to greater market volatility than a fund
that does not concentrate in a particular economic sector or industry. Thus, it
is recommended that an investment in the Fund be only a portion of your overall
investment portfolio.
In addition, most financial services companies are subject to extensive
governmental regulation which limits their activities and may (as with insurance
rate regulation) affect the ability to earn a profit from a given line of
business. Certain financial services businesses are subject to intense
competitive pressures, including market share and price competition. The removal
of regulatory barriers to participation in certain segments of the financial
services sector may also increase competitive pressures on different types of
firms. For example, legislative proposals to remove traditional barriers between
banking and investment banking activities would allow large commercial banks to
compete for business that previously was the exclusive domain of securities
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firms. Similarly, the removal of regional barriers in the banking industry has
intensified competition within the industry.
The availability and cost of funds to financial services firms is crucial to
their profitability. Consequently, volatile interest rates and general economic
conditions can adversely affect their financial performance.
Financial services companies in foreign countries are subject to similar
regulatory and interest rate concerns. In particular, government regulation in
certain foreign countries may include controls on interest rates, credit
availability, prices and currency movements. In some cases, foreign governments
have taken steps to nationalize the operations of banks and other financial
services companies. See "Foreign Issuers."
The market value of debt securities in the Fund's portfolio will tend to vary in
an inverse relationship with changes in interest rates. For example, as interest
rates rise, the market value of debt securities tends to decline.
THE FUND MAY EMPLOY CERTAIN INVESTMENT STRATEGIES TO HELP ACHIEVE ITS INVESTMENT
OBJECTIVE
Options and Futures Transactions. The Fund may invest up to 5% of its assets in
purchased put and call options and may write (sell) covered call options on up
to 30% of its portfolio securities. The Fund may deal in exchange listed or
over-the-counter options.
The Fund's ability to use options to hedge or earn income successfully will
depend on the Adviser's ability accurately to predict market movements.
Successful hedging also depends on a strong correlation between the market for
the underlying security and the related options market. There is no assurance
that a liquid market for options will always exist. In addition, the Fund could
be prevented from opening or closing out an options position on favorable terms
because of exchange imposed limits on positions or on daily price fluctuations.
The Fund may buy and sell options contracts on securities and stock indices,
stock index futures contracts and options on such futures contracts. Options and
futures contracts are bought and sold to manage the Fund's exposure to changing
interest rates and security prices. Some options and futures strategies,
including selling futures, buying puts and writing calls, tend to hedge a Fund's
Investment against price fluctuations. Other strategies, including buying
futures, writing puts, and buying calls, tend to increase market exposure.
Options and futures may be combined with each other or with forward contracts in
order to adjust the risk and return characteristics of the overall portfolio.
Options and futures can be volatile investments and involve certain risks. If
the Adviser applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower the Fund's return. The
Fund could also experience losses if the prices of its options and futures
positions are poorly correlated with its other investments, or if it can not
close out its positions because of an illiquid secondary market.
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The Fund will not engage in a transaction in futures or options on futures if,
immediately thereafter, the sum of initial margin deposits and premiums required
to establish speculative positions in futures contracts and options on futures
would exceed 5% of the Fund's net assets. The loss incurred by the Fund from
transactions in futures contracts and writing options on futures is potentially
unlimited and may exceed the amount of any premium received. The Fund's
transactions in options and futures contracts may be limited by the requirements
of the Internal revenue Code of 1986, as amended (the "Code") for qualification
as a regulated investment company. See the Statement of Additional Information
for further discussion of options and futures transactions.
Restricted Securities. The Fund may purchase restricted securities eligible for
resale to "qualified institutional buyers" pursuant to Rule 144A under the
Securities Act of 1933 (the "Securities Act"). The Trustees will monitor the
Fund's investments in these securities, focusing on certain factors, including
valuation, liquidity and availability of information. Purchases of other
restricted securities are subject to an investment restriction limiting the
Fund's illiquid securities to not more than 15% of its net assets.
Lending of Securities. The Fund may lend portfolio securities to brokers,
dealers and financial institutions if the loan is collateralized by cash or U.S.
Government securities according to applicable regulatory requirements. The Fund
may reinvest any cash collateral in short-term securities and money market fund
shares. When the Fund lends portfolio securities, there is a risk that the
borrower may fail to return the loaned securities. As a result, the Fund may
incur a loss or, in the event of the borrower's bankruptcy, the Fund may be
delayed in or prevented from liquidating the collateral. It is a fundamental
policy of the Fund not to lend portfolio securities having a total value in
excess of 33 1/3% of its total assets.
Repurchase Agreements, Forward Commitments and When-Issued Securities. The Fund
may enter into repurchase agreements and may purchase securities on a forward
commitment or when-used basis. In a repurchase agreement, the Fund buys a
security subject to the right and obligation to sell it back to the seller at a
higher price. These transactions must be fully collateralized at all times, but
involve some credit risk to the Fund if the other party defaults on its
obligation and the Fund is delayed in or prevented from liquidating the
collateral. The Fund will segregate in a separate account cash or liquid, high
grade debt securities equal in value to its forward commitments and when-issued
securities. Purchasing securities for future delivery or on a when-issued basis
may increase the Fund's overall investment exposure and involves a risk of loss
if the value of the securities declines before the settlement date.
Short Sales. The Fund may engage in short sales "against the box," as well as
short sales to hedge against or to profit from an anticipated decline in the
value of a security. When the Fund engages in a short sale, it will place in a
segregated account and mark to market daily cash or U.S. government securities
according to applicable regulatory requirements. See the Statement of Additional
Information.
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Foreign Currencies. Due to its investments in foreign securities, the Fund may
hold a portion of its assets in foreign currencies. As a result, the Fund may
enter into forward foreign currency exchange contracts to protect against
changes in foreign currency exchange rates. A forward foreign currency exchange
contract involves an obligation to purchase a specific currency at a future date
at a price set at the time of the contract. Although these contracts could
reduce the risk of loss due to a decline in the value of the hedged foreign
currency, they could also limit any potential gain which might result from an
increase in the value of that currency.
THE FUND FOLLOWS CERTAIN POLICIES WHICH MAY HELP TO REDUCE INVESTMENT RISK
The Fund has adopted certain investment restrictions which are enumerated in
detail in the Statement of Additional Information, where they are classified as
fundamental or nonfundamental. Those investment restrictions designated as
fundamental may not be changed without shareholder approval. The Fund's
investment objective and its nonfundamental investment policies and
restrictions, however, may be changed by a vote of the Trustees without
shareholder approval. Under normal market conditions, the Fund's portfolio
turnover rate for the current fiscal year is expected to be no more than 100%.
Depository Receipts. The Fund may invest in securities of foreign issuers
including securities in the form of American Depository Receipts ("ADRs),
European Depository Receipts ("EDRs") or other securities convertible into
securities of corporations in which the Fund is permitted to invest. ADRs
(sponsored and unsponsored) are receipts typically issued by an American bank or
trust company which evidence ownership of underlying securities issued by a
foreign corporation, and are designed for trading in the United States
securities markets. Issuers of the shares underlying unsponsored ADRs are not
contractually obligated to disclose material information in the United States
and, therefore, there may not be a correlation between such information and the
market value of the unsponsored ADR.
Global Risks. Investments in foreign securities may involve risks not present in
domestic securities due to exchange controls, less publicly available
information, more volatile or less liquid securities markets, and the
possibility of expropriation, confiscatory taxation or political, economic or
social instability. There may be difficulty in enforcing legal rights outside
the United States. Some foreign companies are not subject to the same uniform
financial reporting requirements, accounting standards and government
supervision as domestic companies, and foreign exchange markets are regulated
differently from the U.S. stock market. Additionally, because foreign securities
may be denominated in currencies other than the U.S. dollar, changes in foreign
currency exchange rates will affect the Fund's net asset value, the value of
dividends and interest earned, gains and losses realized on the sale of
securities, and net investment income and gains, if any, that the Fund
distributes to shareholders. Securities transactions undertaken in some foreign
markets may not be settled promptly. Therefore, the Fund's investments on
foreign exchanges may be less liquid and subject to the risk of fluctuating
currency exchange rates pending settlement. The expense ratio of the Fund can be
expected to be higher than that of mutual funds investing only in domestic
securities since the expenses of the Fund, such as the cost of maintaining
custody of foreign securities and advisory fees, are higher.
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BROKERS ARE CHOSEN BASED ON BEST PRICE AND EXECUTION
In choosing brokerage firms to carry out the Fund's transactions the Adviser
gives primary consideration to execution at the most favorable price, taking
into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sales of Fund shares. Pursuant
to procedures established by the Trustees, the Adviser may place securities
transactions with brokers affiliated with the Adviser.
ORGANIZATION AND MANAGEMENT OF THE FUND
The Fund is a diversified series of John Hancock Declaration Trust, an open-end
management investment company organized as a Massachusetts business trust in
1996 (the "Trust"). The Fund currently has one class of shares with equal rights
as to voting, redemption, dividends and liquidation. The Trustees have the
authority, without further shareholder approval, to establish additional funds
within the Trust and to classify and reclassify the shares of the Fund, or any
new fund of the Trust, into one or more classes. The Trust is not required to
hold annual shareholder meetings, although special meetings may be called for
such purposes as electing or removing Trustees, changing fundamental
restrictions or approving a management contract. An insurance company issuing a
Variable Contract that participates in the Trust will vote shares of the Fund
held by the insurance company's separate accounts as required by law. In
accordance with current law and interpretations thereof, participating insurance
companies are required to request voting instructions from policy owners and
must vote shares of the Funds in proportion to the voting instructions received.
For a further discussion of voting rights, please refer to your insurance
company's separate account Prospectus.
JOHN HANCOCK ADVISERS, INC. ADVISES INVESTMENT COMPANIES HAVING A TOTAL ASSET
VALUE OF MORE THAN $20 BILLION.
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
John Hancock Mutual Life Insurance Company (the "Life Company"), a financial
services company. The Adviser provides the Fund, and other investment companies
in the John Hancock group of funds, with investment research and portfolio
management services. John Hancock Funds, Inc. ("John Hancock Funds") distributes
shares for all of the John Hancock funds directly and through selected
broker-dealers ("Selling Brokers"). Certain Trust officers are also officers of
the Adviser and John Hancock Funds. Pursuant to an order granted by the
Securities and Exchange Commission, the Trust has adopted a deferred
compensation plan for its independent Trustees, which allows Trustees' fees to
be invested by the Trust in other John Hancock funds.
James K. Schmidt and Thomas Finucane lead the Fund's portfolio management team.
Mr. Schmidt is executive vice president of the Adviser. He joined the Adviser in
1985. Mr. Finucane is second vice president of the Adviser and joined the
Adviser in 1990.
In order to avoid conflicts with portfolio trades for the Fund, the Adviser and
the Fund have adopted extensive restrictions on personal securities trading by
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personnel of the Adviser and its affiliates. Some of these restrictions are:
pre-clearance for all personal trades and a ban on the purchase of initial
public offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser which is based upon the average daily net asset value of the Fund at
the annual rate of 0.80%.
The investment management fee is higher than the fees paid to most mutual funds,
but comparable to fees paid by funds that invest in similar securities.
Each Fund pays fees to the Independent Trustees of the Trust, the expenses of
the continuing registration and qualification of its shares for sale, the
charges of custodians and transfer agents, and auditing and legal expenses. The
Adviser may, from time to time, agree that all or a portion of its fee will not
be imposed for specific periods or make other arrangements to limit the Funds'
expenses to not more than a specified percentage of average net assets
(currently 0.25% excluding advisory fees). The Adviser retains the right to
reimpose the fee and recover any other payments to the extent annual expenses
fall below the limit at the end of the fiscal year.
The Funds also compensate the adviser for performing tax and financial
management services. Compensation is not expected to exceed 0.02% of average net
assets on an annual basis.
DIVIDENDS AND TAXES
Dividends. Dividends from the Fund's net investment income and capital gains, if
any, are generally declared annually. Dividends are automatically reinvested in
additional shares of the Fund.
Taxation. For a discussion of the tax status of your Variable Contract,
including the tax consequences of withdrawals or other payments, refer to the
Prospectus of your insurance company's separate account. It is suggested you
keep all statements you receive to assist in your personal record keeping.
The Fund is treated as a separate entity for tax purposes and intends to elect
to be treated and qualify each year as a separate regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). To qualify as a regulated investment company, the Fund must satisfy
certain requirements in Subchapter M of the Code relating to the sources of its
imcome, the diversification of its assets, and the distribution of its income to
shareholders. As a regulated investment company, the Fund will not be subject to
Federal income taxes on any net realized capital gains that are distributed to
its shareholders in accordance with the timing requirements of the Code. The
Fund expects to distribute to the life insurance company separate accounts
owning its shares all or substantially all of its net investment income and net
realized capital gains, if any, for each taxable year.
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Distributions from the Fund's net investment income, certain net foreign
exchange gains, and any excess of net short-term capital gain over net long-term
capital loss will be treated as ordinary income, and distributions from any
excess of net long-term capital gain over net short-term capital loss so
designated by the Fund will be treated as long-term capital gain by the
investing insurance companies. Such companies should consult their own tax
advisers regarding whether such distributions are subject to federal income tax
if they are properly addded to reserves for the applicable variable contracts.
In addition to the above, Fund also follows certain portfolio diversification
requirements imposed under the Code on separate accounts of insurance companies
that are used to fund Variable Contracts. More specific information on these
diversification requirements is contained in the Trust's Statement of Additional
Information.
If the Fund does not both qualify as a regulated investment company and satisfy
the additional diversification requirements referred to above, the holders of
Variable Contracts based on a separate account that invested in that Fund might
become subject to taxation of all income on such contracts unless the failure is
permitted to be corrected by the Internal Revenue Service.
THE FUND MAY ADVERTISE ITS YIELD AND TOTAL RETURN.
PERFORMANCE
Total return is based on the overall change in value of a hypothetical
investment in the Fund. The Fund's total return shows the overall dollar or
percentage change in value, assuming the reinvestment of all dividends.
Cumulative total return shows the Fund's performance over a period of time.
Average annual total return shows the cumulative return divided over the number
of years included in the period. Because average annual total return tends to
smooth out variations in the Fund's performance, you should recognize that it is
not the same as actual year-to-year results.
Total return calculations are at net asset value because no sales charges are
incurred by Variable Contract separate accounts.
Yield reflects the Fund's rate of income on portfolio investments as a
percentage of its share price. Yield is computed by annualizing the result of
dividing the net investment income per share over a 30-day period by the net
asset value per share on the last day of that period.
Yield is calculated according to accounting methods that are standardized for
all mutual funds. Because yield accounting methods differ from the methods used
for other accounting purposes, the Fund's yield may not equal the income paid on
shares or the income reported in the Fund's financial statements.
The value of the Fund's shares when redeemed may be more or less than their
original cost. Total return and yield are historical calculations and are not
indications of future performance.
INVESTMENTS IN SHARES OF THE FUND
Each Fund sells its shares at net asset value ("NAV") directly to separate
accounts established and maintained by insurance companies for the purpose of
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funding Variable Contracts. Variable Contract separate accounts may or may not
make investments in the Fund. Investments in the Fund (other than certain
automatic investments described below under "Redeeming Shares") are credited to
an insurance company's separate account immediately upon acceptance of the
investment by the Fund. The offering of shares of any Fund may be suspended for
a period of time and each Fund reserves the right to reject any specific
purchase order. Purchase orders may be refused if, in the Adviser's opinion,
they are of a size that would disrupt the management of a Fund.
SHARE PRICE
The net asset value per share (the "NAV") is the value of one share. The NAV is
calculated by dividing the Fund's net assets by the number of its outstanding
shares. Securities in the Fund's portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services, or at fair
value as determined in good faith according to procedures approved by the
Trustees. Short-term debt investments maturing within 60 days are valued at
amortized cost, which approximates market value. Foreign securities are valued
on the basis of quotations from the primary market in which they are traded, and
are translated from the local currency into U.S. dollars using current exchange
rates. If quotations are not readily available, or the value has been materially
affected by events occurring after the closing of a foreign market, assets are
valued by a method that the Trustees believe accurately reflects fair value. The
NAV is calculated once daily as of the close of regular trading on the New York
Stock Exchange (generally at 4:00 p.m., New York time) on each day that the
Exchange is open.
REDEEMING SHARES
Shares of a Fund may be redeemed on any business day. Redemptions (other than
certain automatic redemptions described below) are effected at the per share NAV
next determined after receipt and acceptance of the redemption request by a
Fund. Redemption proceeds will normally be forwarded by bank wire to the
redeeming insurance company on the next business day after receipt of the
redemption instructions by a Fund. Under unusual circumstances, a Fund may
suspend redemptions or postpone payment for up to seven (7) business days or
longer, as permitted by Federal securities laws.
Purchases and redemptions arising out of an automatic transaction under an
insurance contract (such as investment of net premiums, death of insureds,
deduction of fees and charges, transfers, surrenders, loans, loan repayments,
deductions of interest on loans, lapses, reinstatements and similar automatic
transactions) are effected at the net asset value per share computed as of the
close of business on the day as of which the automatic transaction is effected,
even though the order for purchase or redemption of Fund shares is not received
until after close of business.
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JOHN HANCOCK JOHN HANCOCK
V.A. FINANCIAL INDUSTRIES FUND V.A. FINANCIAL
INDUSTRIES
Investment Adviser FUND
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603 Prospectus
May 1, 1997
Principal Distributor
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603 A mutual fund seeking capital
appreciation primarily through
Custodian investments in financial services
Investors Bank & Trust Company companies.
89 South Street
Boston, Massachusetts 02111
Transfer Agent
John Hancock Signature Services, Inc.
P.O. Box 9298
Boston, Massachusetts 02205-9298
Independent Auditors
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For: Service Information call 1-800-824-0335
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Telephone 1-800-824-0335
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JOHN HANCOCK DECLARATION TRUST
101 HUNTINGTON AVENUE
BOSTON, MA 02199-7603
JOHN HANCOCK V.A. FINANCIAL INDUSTRIES FUND
Statement of Additional Information
May 1, 1997
This Statement of Additional Information provides information about
John Hancock V.A. Financial Industries Fund (the "Fund") in addition to the
information that is contained in the Fund's Prospectus dated May 1, 1997 (the
"Prospectus"). The Fund is a diversified series of John Hancock Declaration
Trust (the "Trust").
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus, a copy of which can be obtained free
of charge by writing or telephoning:
John Hancock Signature Services, Inc.
P.O. Box 9298
Boston MA 02205-9298
1-800-225-5291
TABLE OF CONTENTS
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Organization of the Fund 2
Investment Objective and Policies 2
Investment Restrictions 15
Those Responsible for 18
Management 26
Investment Advisory and Other Services 28
Distribution Agreement 28
Net Asset Value
Special Redemptions 29
Description of the Fund's Shares 29
Tax Status 31
Calculation of Performance 35
Brokerage Allocation 36
Shareholder Servicing Agent 39
Custody of Porfolio 39
Independent Auditors 39
Financial Statements F-1
ORGANIZATION OF THE FUND
The Fund is a series of the Trust, an open-end investment management company
organized as a Massachusetts business trust under the laws of the Commonwealth
of Massachusetts. The Fund was created as a separate series of the Trust on May
1, 1997.
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John Hancock Advisers, Inc. (the "Adviser") is the Fund's investment adviser.
The Adviser is an indirect wholly-owned subsidiary of John Hancock Mutual Life
Insurance Company (the "Life Company"), a Massachusetts life insurance company
chartered in 1862, with national headquarters at John Hancock Place, Boston,
Massachusetts.
INVESTMENT OBJECTIVE AND POLICIES
The following information supplements the discussion of the Fund's investment
objective and policies discussed in the Prospectus.
Under ordinary circumstances, the Fund will invest at least 65% of its total
assets in equity securities of financial services companies. For this purpose,
equity securities include common and preferred stocks and their equivalents
(including warrants to purchase and securities convertible into such stocks).
A financial services company is a firm that in its most recent fiscal year
either (i) derived at least 50% of its revenues or earnings from financial
services activities, or (ii) devoted at least 50% of its assets to such
activities. Financial services companies provide financial services to consumers
and businesses and include the following types of U.S. and foreign firms:
commercial banks, thrift institutions and their holding companies; consumer and
industrial finance companies; diversified financial services companies;
investment banks; securities brokerage and investment advisory firms; financial
technology companies; real estate-related firms; leasing firms; insurance
brokerages; and various firms in all segments of the insurance industry such as
multi-line, property and casualty, and life insurance companies and insurance
holding companies.
The Fund currently uses a strategy of investing in financial services companies
that are, in the opinion of the Fund's management team, currently underfollowed
and/or underpriced, in consolidating or restructuring industries, or in a
position to benefit from regulatory changes. This strategy can be changed at any
time.
The Fund may invest in debt securities of financial services companies. The Fund
may also invest in equity and debt securities of companies outside of the
financial services sector if, in the Adviser's opinion, such nonfinancial
services companies will benefit from developments in the financial services
sector. The Fund may invest up to 5% of its net assets in a combination of
below-investment grade debt securities of banks and equities of non-financial
services companies.
To avoid the need to sell equity securities in the Fund's portfolio to meet
redemption requests, and to provide flexibility to the Fund to take advantage of
investment opportunities, the Fund may invest up to 15% of its net assets in
short-term, investment grade debt securities. Short-term debt securities have a
maturity of less than one year. Investment grade securities are rated at the
time of purchase BBB or higher by Standard & Poor's Rating Group ("S&P") or Baa
or higher by Moody's Investor Services, Inc. ("Moody's). Debt securities include
corporate obligations (such as commercial paper, notes, bonds or debentures),
certificates of deposit, deposit accounts, obligations of the U.S. Government,
its agencies and instrumentalities, and repurchase agreements. When the Adviser
believes that financial conditions warrant, it may for temporary defensive
purposes invest up to 80% of the Fund's assets in these securities rated in the
four highest categories of S&P or Moody's. Medium grade obligations (i.e., those
rated BBB or Baa) lack outstanding investment characteristics and have
speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments on these obligations. In the event a debt security is
subsequently down-graded below medium grade, the Adviser will consider this
event in determining whether the Fund should continue to hold the security. See
Appendix A to the Statement of Additional Information for a description of the
various ratings of investment grade debt securities.
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Since the Fund's investments will be concentrated in the financial services
sector, it will be subject to risks in addition to those that apply to the
general equity and debt markets. Events may occur which significantly affect the
sector as a whole or a particular segment in which the Fund invests.
Accordingly, the Fund may be subject to greater market volatility than a fund
that does not concentrate in a particular economic sector or industry. Thus, it
is recommended that an investment in the Fund be only a portion of your overall
investment portfolio.
In addition, most financial services companies are subject to extensive
governmental regulation which limits their activities and may (as with insurance
rate regulation) affect the ability to earn a profit from a given line of
business. Certain financial services businesses are subject to intense
competitive pressures, including market share and price competition. The removal
of regulatory barriers to participation in certain segments of the financial
services sector may also increase competitive pressures on different types of
firms. For example, legislative proposals to remove traditional barriers between
banking and investment banking activities would allow large commercial banks to
compete for business that previously was the exclusive domain of securities
firms. Similarly, the removal of regional barriers in the banking industry has
intensified competition within the industry. The availability and cost of funds
to financial services firms is crucial to their profitability. Consequently,
volatile interest rates and general economic conditions can adversely affect
their financial performance.
Financial services companies in foreign countries are subject to similar
regulatory and interest rate concerns. In particular, government regulation in
certain foreign countries may include controls on interest rates, credit
availability, prices and currency movements. In some cases, foreign governments
have taken steps to nationalize the operations of banks and other financial
services companies.
The Adviser believes that the ongoing deregulation of many segments of the
financial services sector continues to provide new opportunities for issuers in
this sector. As deregulation of various financial services businesses continues
and new segments of the financial services sector are opened to certain larger
financial services firms formerly prohibited from doing business in these
segments, (such as national and money center banks) certain established
companies in these market segments (such as regional banks or securities firms)
may become attractive acquisition candidates for the larger firm seeking
entrance into the segment. Typically, acquisitions accelerate the capital
appreciation of the shares of the company to be acquired.
In addition, financial services companies in growth segments (such as securities
firms during times of stock market expansion) or geographically linked to areas
experiencing strong economic growth (such as certain regional banks) are likely
to participate in and benefit from such growth through increased demand for
their products and services. Many financial services companies which are
actively and aggressively managed and are expanding services as deregulation
opens up new opportunities also show potential for capital appreciation,
particularly in expanding into areas where nonregulatory barriers to entry are
low.
The Adviser will seek to invest in those financial services companies that it
believes are well positioned to take advantage of the ongoing changes in the
financial services sector. A financial services company may be well positioned
for a number of reasons. It may be an attractive acquisition for another company
wishing to strengthen its presence in a line of business or a geographic region
or to expand into new lines of business or geographic regions, or it may be
planning a merger to strengthen its position in a line of business or a
geographic area. The financial services company may be engaged in a line or
lines of business experiencing or likely to experience strong economic growth;
it be linked to a geographic region experiencing or likely to experience strong
economic growth and be actively seeking to participate in such growth; or it may
be expanding into financial services or geographic regions previously
unavailable to it (due to an easing of regulatory constraints) in order to take
advantage of new market opportunities.
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INVESTMENTS IN FOREIGN SECURITIES
In addition to purchasing equity securities of foreign issuers in foreign
markets, the Fund may invest in American Depository Receipts ("ADRs"), European
Depository Receipts ("EDRs") or other securities convertible into securities of
corporations domiciled in foreign countries. These securities may not
necessarily be denominated in the same currency as the securities into which
they may be converted. Generally, ADRs, in registered form, are designed for use
in the U.S. securities markets and EDRs, in bearer form, are designed for use in
European securities markets. ADRs are receipts typically issued by a United
States bank or trust company evidencing ownership of the underlying securities.
EDRs are European receipts evidencing a similar arrangement.
Investments in foreign securities may involve a greater degree of risk than
those in domestic securities. There is generally less publicly available
information about foreign companies in the form of reports and ratings similar
to those that are published about issuers in the United States. Also, foreign
issuers are generally not subject to uniform accounting, auditing and financial
reporting requirements comparable to those applicable to United States issuers.
Because foreign securities may be denominated in currencies other than the U.S.
dollar, changes in foreign currency exchange rates will affect the Fund's net
asset value, the value of dividends and interest earned, gains and losses
realized on the sale of securities, and any net investment income and gains that
the Fund distributes to shareholders. Securities transactions undertaken in some
foreign markets may not be settled promptly so that the Fund's investments on
foreign exchanges may be less liquid and subject to the risk of fluctuating
currency exchange rates pending settlement.
Foreign securities will be purchased in the best available market, whether
through over-the-counter markets or exchanges located in the countries where
principal offices of the issuers are located. Foreign securities markets are
generally not as developed or efficient as those in the United States. While
growing in volume, they usually have substantially less volume than the New York
Stock Exchange, and securities of some foreign issuers are less liquid and more
volatile than securities of comparable United States issuers. Fixed commissions
on foreign exchanges are generally higher than negotiated commissions on United
States exchanges, although the Fund will endeavor to achieve the most favorable
net results on its portfolio transactions. There is generally less government
supervision and regulation of securities exchanges, brokers and listed issuers
than in the United States.
With respect to certain foreign countries, there is the possibility of adverse
changes in investment or exchange control regulations, expropriation,
nationalization or confiscatory taxation limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic
developments which could affect United States investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the United States' economy in terms of growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.
The dividends, in some cases capital gains and interest payable on certain of
the Fund's foreign portfolio securities, may be subject to foreign withholding
or other foreign taxes, thus reducing the net amount of income or gains
available for distribution to the Fund's shareholders.
Foreign Currency Transactions. The Fund's foreign currency exchange transactions
may be conducted on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market. The Fund may also
enter into forward foreign currency exchange contracts to enhance return, to
hedge against fluctuations in currency exchange rates affecting a particular
transaction or portfolio position, or as a substitute for the purchase or sale
of a currency or assets denominated in that currency. Forward contracts are
agreements to purchase or sell a specified currency at a specified future date
and price set at the time of the contract. Transaction hedging is the purchase
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or sale of forward foreign currency contracts with respect to specific
receivables or payables of the Fund accruing in connection with the purchase and
sale of its portfolio securities quoted or denominated in the same or related
foreign currencies. Portfolio hedging is the use of forward foreign currency
contracts to offset portfolio security positions denominated or quoted in the
same or related foreign currencies.
If the Fund enters into a forward contract to purchase foreign currency, its
custodian will segregate cash or liquid securities, of any type or maturity, in
a separate account of the Fund in an amount necessary to complete the forward
contract. These assets will be marked to market daily and if the value of the
assets in the separate account declines, additional cash or liquid assets will
be added so that the value of the account will equal the amount of the Fund's
commitments in purchased forward contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. These transactions also preclude the
opportunity for gain if the value of the hedged currency rises. Moreover, it may
not be possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
The cost to the Fund of engaging in foreign currency transactions varies with
such factors as the currency involved, the length of the contract period and the
market conditions then prevailing. Since transactions in foreign currency are
usually conducted on a principal basis, no fees or commissions are involved.
Risks of Foreign Securities. Investments in foreign securities may involve a
greater degree of risk than those in domestic securities. There is generally
less publicly available information about foreign companies in the form of
reports and ratings similar to those that are published about issuers in the
United States. Also, foreign issuers are generally not subject to uniform
accounting, auditing and financial reporting requirements comparable to those
applicable to United States issuers.
Because foreign securities may be denominated in currencies other than the U.S.
dollar, changes in foreign currency exchange rates will affect the Fund's net
asset value, the value of dividends and interest earned, gains and losses
realized on the sale of securities, and any net investment income and gains that
the Fund distributes to shareholders. Securities transactions undertaken in some
foreign markets may not be settled promptly so that the Fund's investments on
foreign exchanges may be less liquid and subject to the risk of fluctuating
currency exchange rates pending settlement.
Foreign securities will be purchased in the best available market, whether
through over-the-counter markets or exchanges located in the countries where
principal offices of the issuers are located. Foreign securities markets are
generally not as developed or efficient as those in the United States. While
growing in volume, they usually have substantially less volume than the New York
Stock Exchange, and securities of some foreign issuers are less liquid and more
volatile than securities of comparable United States issuers. Fixed commissions
on foreign exchanges are generally higher than negotiated commissions on United
States exchanges, although the Fund will endeavor to achieve the most favorable
net results on its portfolio transactions. There is generally less government
supervision and regulation of securities exchanges, brokers and listed issuers
than in the United States.
With respect to certain foreign countries, there is the possibility of adverse
changes in investment or exchange control regulations, expropriation,
nationalization or confiscatory taxation limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic
developments which could affect United States investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
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the United States' economy in terms of growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.
The dividends, in some cases capital gains and interest payable on certain of
the Fund's foreign portfolio securities, may be subject to foreign withholding
or other foreign taxes, thus reducing the net amount of income or gains
available for distribution to the Fund's shareholders.
Repurchase Agreements. In a repurchase agreement the Fund buys a security for a
relatively short period (usually not more than 7 days) subject to the obligation
to sell it back to the issuer at a fixed time and price plus accrued interest.
The Fund will enter into repurchase agreements only with member banks of the
Federal Reserve System and with "primary dealers" in U.S. Government securities.
The Adviser will continuously monitor the creditworthiness of the parties with
whom it enters into repurchase agreements.
The Fund has established a procedure providing that the securities serving as
collateral for each repurchase agreement must be delivered to the Fund's
custodian either physically or in book-entry form and that the collateral must
be marked to market daily to ensure that each repurchase agreement is fully
collateralized at all times. In the event of bankruptcy or other default by a
seller of a repurchase agreement, the Fund could experience delays in
liquidating the underlying securities during the period while the Fund seeks to
enforce its rights thereto, possible subnormal levels of income, decline in
value of the underlying securities or lack of access to income during this
period as well as the expense of enforcing its rights.
Reverse Repurchase Agreements. The Fund may also enter into reverse repurchase
agreements which involve the sale of U.S. Government securities held in its
portfolio to a bank with an agreement that the Fund will buy back the securities
at a fixed future date at a fixed price plus an agreed amount of "interest"
which may be reflected in the repurchase price. Reverse repurchase agreements
are considered to be borrowings by the Fund. Reverse repurchase agreements
involve the risk that the market value of securities purchased by the Fund with
proceeds of the transaction may decline below the repurchase price of the
securities sold by the Fund which it is obligated to repurchase. The Fund will
also continue to be subject to the risk of a decline in the market value of the
securities sold under the agreements because it will reacquire those securities
upon effecting their repurchase. To minimize various risks associated with
reverse repurchase agreements, the Fund will establish and maintain with the
Fund's custodian a separate account consisting of highly liquid, marketable
securities in an amount at least equal to the repurchase prices of the
securities (plus any accrued interest thereon) under such agreements. The Fund
will not enter into reverse repurchase agreements and other borrowings exceeding
in the aggregate 33 1/3% of the market value of its total assets. The Fund will
enter into reverse repurchase agreements only with federally insured banks or
savings and loan associations which are approved in advance as being
creditworthy by the Trustees. Under procedures established by the Trustees, the
Adviser will monitor the creditworthiness of the banks involved.
RESTRICTED SECURITIES
The Fund may purchase securities that are not registered ("restricted
securities") under the Securities Act of 1933 ("1933 Act"), including commercial
paper issued in reliance on Section 4(2) of the 1933 Act and securities offered
and sold to "qualified institutional buyers" under Rule 144A under the 1933 Act.
The Fund will not invest more than 15% of its net assets in illiquid
investments, which includes repurchase agreements maturing in more than seven
days, OTC options, securities that are not readily marketable and restricted
securities. If the Trustees determine, based upon a continuing review of the
trading markets for specific Section 4 (2) paper or Rule 144A securities, that
they are liquid, they will not be subject to the 15% limit on illiquid
investments. The Trustees may adopt guidelines and delegate to the Adviser the
daily function of determining and monitoring the liquidity of restricted
securities. The Trustees, however, will retain sufficient oversight and be
ultimately responsible for the determinations. The Trustees will carefully
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monitor the Fund's investments in these securities, focusing on such important
factors, among others, as valuation, liquidity and availability of information.
This investment practice could have the effect of increasing the level of
illiquidity in the Fund to the extent that qualified institutional buyers become
for a time uninterested in purchasing these restricted securities.
Options on Securities, Securities Indices and Currency. The Fund may purchase
and write (sell) call and put options on any securities in which it may invest,
on any securities index based on securities in which it may invest or on any
currency in which Fund investments may be denominated. These options may be
listed on national domestic securities exchanges or foreign securities exchanges
or traded in the over-the-counter market. The Fund may write covered put and
call options and purchase put and call options to enhance total return, as a
substitute for the purchase or sale of securities or currency, or to protect
against declines in the value of portfolio securities and against increases in
the cost of securities to be acquired.
Writing Covered Options. A call option on securities or currency written by the
Fund obligates the Fund to sell specified securities or currency to the holder
of the option at a specified price if the option is exercised at any time before
the expiration date. A put option on securities or currency written by the Fund
obligates the Fund to purchase specified securities or currency from the option
holder at a specified price if the option is exercised at any time before the
expiration date. Options on securities indices are similar to options on
securities, except that the exercise of securities index options requires cash
settlement payments and does not involve the actual purchase or sale of
securities. In addition, securities index options are designed to reflect price
fluctuations in a group of securities or segment of the securities market rather
than price fluctuations in a single security. Writing covered call options may
deprive the Fund of the opportunity to profit from an increase in the market
price of the securities or foreign currency assets in its portfolio. Writing
covered put options may deprive the Fund of the opportunity to profit from a
decrease in the market price of the securities or foreign currency assets to be
acquired for its portfolio.
All call and put options written by the Fund are covered. A written call option
or put option may be covered by (i) maintaining cash or liquid securities,
either of which may be quoted or denominated in any currency, in a segregated
account maintained by the Fund's custodian with a value at least equal to the
Fund's obligation under the option, (ii) entering into an offsetting forward
commitment and/or (iii) purchasing an offsetting option or any other option
which, by virtue of its exercise price or otherwise, reduces the Fund's net
exposure on its written option position. A written call option on securities is
typically covered by maintaining the securities that are subject to the option
in a segregated account. The Fund may cover call options on a securities index
by owning securities whose price changes are expected to be similar to those of
the underlying index.
The Fund may terminate its obligations under an exchange traded call or put
option by purchasing an option identical to the one it has written. Obligations
under over-the-counter options may be terminated only by entering into an
offsetting transaction with the counterparty to such option. Such purchases are
referred to as "closing purchase transactions."
Purchasing Options. The Fund would normally purchase call options in
anticipation of an increase, or put options in anticipation of a decrease
("protective puts"), in the market value of securities or currencies of the type
in which it may invest. The Fund may also sell call and put options to close out
its purchased options.
The purchase of a call option would entitle the Fund, in return for the premium
paid, to purchase specified securities or currency at a specified price during
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the option period. The Fund would ordinarily realize a gain on the purchase of a
call option if, during the option period, the value of such securities or
currency exceeded the sum of the exercise price, the premium paid and
transaction costs; otherwise the Fund would realize either no gain or a loss on
the purchase of the call option.
The purchase of a put option would entitle the Fund, in exchange for the premium
paid, to sell specified securities or currency at a specified price during the
option period. The purchase of protective puts is designed to offset or hedge
against a decline in the market value of the Fund's portfolio securities or the
currencies in which they are denominated. Put options may also be purchased by
the Fund for the purpose of affirmatively benefiting from a decline in the price
of securities or currencies which it does not own. The Fund would ordinarily
realize a gain if, during the option period, the value of the underlying
securities or currency decreased below the exercise price sufficiently to cover
the premium and transaction costs; otherwise the Fund would realize either no
gain or a loss on the purchase of the put option. Gains and losses on the
purchase of put options may be offset by countervailing changes in the value of
the Fund's portfolio securities.
The Fund's options transactions will be subject to limitations established by
each of the exchanges, boards of trade or other trading facilities on which such
options are traded. These limitations govern the maximum number of options in
each class which may be written or purchased by a single investor or group of
investors acting in concert, regardless of whether the options are written or
purchased on the same or different exchanges, boards of trade or other trading
facilities or are held or written in one or more accounts or through one or more
brokers. Thus, the number of options which the Fund may write or purchase may be
affected by options written or purchased by other investment advisory clients of
the Adviser. An exchange, board of trade or other trading facility may order the
liquidation of positions found to be in excess of these limits, and it may
impose certain other sanctions.
Risks Associated with Options Transactions. There is no assurance that a liquid
secondary market on a domestic or foreign options exchange will exist for any
particular exchange-traded option or at any particular time. If the Fund is
unable to effect a closing purchase transaction with respect to covered options
it has written, the Fund will not be able to sell the underlying securities or
currencies or dispose of assets held in a segregated account until the options
expire or are exercised. Similarly, if the Fund is unable to effect a closing
sale transaction with respect to options it has purchased, it would have to
exercise the options in order to realize any profit and will incur transaction
costs upon the purchase or sale of underlying securities or currencies.
Reasons for the absence of a liquid secondary market on an exchange include the
following: (i) there may be insufficient trading interest in certain options;
(ii) restrictions may be imposed by an exchange on opening transactions or
closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or the Options
Clearing Corporation may not at all times be adequate to handle current trading
volume; or (vi) one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options). If trading were discontinued, the
secondary market on that exchange (or in that class or series of options) would
cease to exist. However, outstanding options on that exchange that had been
issued by the Options Clearing Corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms.
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The Fund's ability to terminate over-the-counter options is more limited than
with exchange-traded options and may involve the risk that broker-dealers
participating in such transactions will not fulfill their obligations. The
Adviser will determine the liquidity of each over-the-counter option in
accordance with guidelines adopted by the Trustees.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The successful use of options
depends in part on the Adviser's ability to predict future price fluctuations
and, for hedging transactions, the degree of correlation between the options and
securities or currency markets.
Futures Contracts and Options on Futures Contracts. To seek to increase total
return or hedge against changes in interest rates, securities prices or currency
exchange rates, the Fund may purchase and sell various kinds of futures
contracts, and purchase and write call and put options on these futures
contracts. The Fund may also enter into closing purchase and sale transactions
with respect to any of these contracts and options. The futures contracts may be
based on various securities (such as U.S. Government securities), securities
indices, foreign currencies and any other financial instruments and indices. All
futures contracts entered into by the Fund are traded on U.S. or foreign
exchanges or boards of trade that are licensed, regulated or approved by the
Commodity Futures Trading Commission ("CFTC").
Futures Contracts. A futures contract may generally be described as an agreement
between two parties to buy and sell particular financial instruments or
currencies for an agreed price during a designated month (or to deliver the
final cash settlement price, in the case of a contract relating to an index or
otherwise not calling for physical delivery at the end of trading in the
contract).
Positions taken in the futures markets are not normally held to maturity but are
instead liquidated through offsetting transactions which may result in a profit
or a loss. While futures contracts on securities or currency will usually be
liquidated in this manner, the Fund may instead make, or take, delivery of the
underlying securities or currency whenever it appears economically advantageous
to do so. A clearing corporation associated with the exchange on which futures
contracts are traded guarantees that, if still open, the sale or purchase will
be performed on the settlement date.
Hedging and Other Strategies. Hedging is an attempt to establish with more
certainty than would otherwise be possible the effective price or rate of return
on portfolio securities or securities that the Fund proposes to acquire or the
exchange rate of currencies in which portfolio securities are quoted or
denominated. When interest rates are rising or securities prices are falling,
the Fund can seek to offset a decline in the value of its current portfolio
securities through the sale of futures contracts. When interest rates are
falling or securities prices are rising, the Fund, through the purchase of
futures contracts, can attempt to secure better rates or prices than might later
be available in the market when it effects anticipated purchases. The Fund may
seek to offset anticipated changes in the value of a currency in which its
portfolio securities, or securities that it intends to purchase, are quoted or
denominated by purchasing and selling futures contracts on such currencies.
The Fund may, for example, take a "short" position in the futures market by
selling futures contracts in an attempt to hedge against an anticipated rise in
interest rates or a decline in market prices or foreign currency rates that
would adversely affect the dollar value of the Fund's portfolio securities. Such
futures contracts may include contracts for the future delivery of securities
held by the Fund or securities with characteristics similar to those of the
Fund's portfolio securities. Similarly, the Fund may sell futures contracts on
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any currencies in which its portfolio securities are quoted or denominated or in
one currency to hedge against fluctuations in the value of securities
denominated in a different currency if there is an established historical
pattern of correlation between the two currencies.
If, in the opinion of the Adviser, there is a sufficient degree of correlation
between price trends for the Fund's portfolio securities and futures contracts
based on other financial instruments, securities indices or other indices, the
Fund may also enter into such futures contracts as part of its hedging strategy.
Although under some circumstances prices of securities in the Fund's portfolio
may be more or less volatile than prices of such futures contracts, the Adviser
will attempt to estimate the extent of this volatility difference based on
historical patterns and compensate for any differential by having the Fund enter
into a greater or lesser number of futures contracts or by attempting to achieve
only a partial hedge against price changes affecting the Fund's portfolio
securities.
When a short hedging position is successful, any depreciation in the value of
portfolio securities will be substantially offset by appreciation in the value
of the futures position. On the other hand, any unanticipated appreciation in
the value of the Fund's portfolio securities would be substantially offset by a
decline in the value of the futures position.
On other occasions, the Fund may take a "long" position by purchasing futures
contracts. This would be done, for example, when the Fund anticipates the
subsequent purchase of particular securities when it has the necessary cash, but
expects the prices or currency exchange rates then available in the applicable
market to be less favorable than prices that are currently available. The Fund
may also purchase futures contracts as a substitute for transactions in
securities or foreign currency, to alter the investment characteristics of or
currency exposure associated with portfolio securities or to gain or increase
its exposure to a particular securities market or currency.
Options on Futures Contracts. The Fund may purchase and write options on futures
for the same purposes as its transactions in futures contracts. The purchase of
put and call options on futures contracts will give the Fund the right (but not
the obligation) for a specified price to sell or to purchase, respectively, the
underlying futures contract at any time during the option period. As the
purchaser of an option on a futures contract, the Fund obtains the benefit of
the futures position if prices move in a favorable direction but limits its risk
of loss in the event of an unfavorable price movement to the loss of the premium
and transaction costs.
The writing of a call option on a futures contract generates a premium which may
partially offset a decline in the value of the Fund's assets. By writing a call
option, the Fund becomes obligated, in exchange for the premium (upon exercise
of the option) to sell a futures contract if the option is exercised, which may
have a value higher than the exercise price. Conversely, the writing of a put
option on a futures contract generates a premium which may partially offset an
increase in the price of securities that the Fund intends to purchase. However,
the Fund becomes obligated (upon exercise of the option) to purchase a futures
contract if the option is exercised, which may have a value lower than the
exercise price. The loss incurred by the Fund in writing options on futures is
potentially unlimited and may exceed the amount of the premium received.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option of the same series. There
is no guarantee that such closing transactions can be effected. The Fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
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Other Considerations. The Fund will engage in futures and related options
transactions either for bona fide hedging purposes or to seek to increase total
return as permitted by the CFTC. To the extent that the Fund is using futures
and related options for hedging purposes, futures contracts will be sold to
protect against a decline in the price of securities (or the currency in which
they are quoted or denominated) that the Fund owns or futures contracts will be
purchased to protect the Fund against an increase in the price of securities (or
the currency in which they are quoted or denominated) it intends to purchase.
The Fund will determine that the price fluctuations in the futures contracts and
options on futures used for hedging purposes are substantially related to price
fluctuations in securities held by the Fund or securities or instruments which
it expects to purchase. As evidence of its hedging intent, the Fund expects that
on 75% or more of the occasions on which it takes a long futures or option
position (involving the purchase of futures contracts), the Fund will have
purchased, or will be in the process of purchasing, equivalent amounts of
related securities (or assets denominated in the related currency) in the cash
market at the time when the futures or option position is closed out. However,
in particular cases, when it is economically advantageous for the Fund to do so,
a long futures position may be terminated or an option may expire without the
corresponding purchase of securities or other assets.
To the extent that the Fund engages in nonhedging transactions in futures
contracts and options on futures, the aggregate initial margin and premiums
required to establish these nonhedging positions will not exceed 5% of the net
asset value of the Fund's portfolio, after taking into account unrealized
profits and losses on any such positions and excluding the amount by which such
options were in-the-money at the time of purchase. The Fund will engage in
transactions in futures contracts and related options only to the extent such
transactions are consistent with the requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), for maintaining its qualification as a
regulated investment company for federal income tax purposes.
Transactions in futures contracts and options on futures involve brokerage
costs, require margin deposits and, in the case of contracts and options
obligating the Fund to purchase securities or currencies, require the Fund to
establish with the custodian a segregated account consisting of cash or liquid
securities in an amount equal to the underlying value of such contracts and
options.
While transactions in futures contracts and options on futures may reduce
certain risks, these transactions themselves entail certain other risks. For
example, unanticipated changes in interest rates, securities prices or currency
exchange rates may result in a poorer overall performance for the Fund than if
it had not entered into any futures contracts or options transactions.
Perfect correlation between the Fund's futures positions and portfolio positions
will be impossible to achieve. There are no futures contracts based upon
individual securities, except certain U.S. Government securities. The only
futures contracts available to hedge the Fund's portfolio are various futures on
U.S. Government securities, securities indices and foreign currencies. In the
event of an imperfect correlation between a futures position and a portfolio
position which is intended to be protected, the desired protection may not be
obtained and the Fund may be exposed to risk of loss. In addition, it is not
possible to hedge fully or protect against currency fluctuations affecting the
value of securities denominated in foreign currencies because the value of such
securities is likely to fluctuate as a result of independent factors not related
to currency fluctuations.
11
<PAGE>
Some futures contracts or options on futures may become illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit trading in a futures contract or related option,
which may make the instrument temporarily illiquid and difficult to price.
Commodity exchanges may also establish daily limits on the amount that the price
of a futures contract or related option can vary from the previous day's
settlement price. Once the daily limit is reached, no trades may be made that
day at a price beyond the limit. This may prevent the Fund from closing out
positions and limiting its losses.
LENDING SECURITIES
The Fund may lend portfolio securities to brokers, dealers, and financial
institutions if the loan is collateralized by cash or U.S. Government securities
according to applicable regulatory requirements. The Fund may reinvest any cash
collateral in short-term securities and money market funds. When the Fund lends
portfolio securities, there is a risk that the borrower may fail to return the
securities involved in the transaction. As a result, the Fund may incur a loss
or, in the event of the borrower's bankruptcy, the Fund may be delayed in or
prevented from liquidating the collateral. It is a fundamental policy of the
Fund not to lend portfolio securities having a total value exceeding 33 1/3% of
its total assets.
RIGHTS AND WARRANTS
The Fund may purchase warrants and rights which are securities permitting, but
not obligating, their holder to purchase the underlying securities at a
predetermined price, subject to the Fund's Investment Restrictions. Generally,
warrants and stock purchase rights do not carry with them the right to receive
dividends or exercise voting rights with respect to the underlying securities,
and they do not represent any rights in the assets of the issuer. As a result,
an investment in warrants and rights may be considered to entail greater
investment risk than certain other types of investments. In addition, the value
of warrants and rights does not necessarily change with the value of the
underlying securities, and they cease to have value if they are not exercised on
or prior to their expiration date. Investment in warrants and rights increases
the potential profit or loss to be realized from the investment of a given
amount of the Fund's assets as compared with investing the same amount in the
underlying stock.
SHORT SALES
The Fund may engage in short sales in order to profit from an anticipated
decline in the value of a security. The Fund may also engage in short sales to
attempt to limit its exposure to a possible market decline in the value of its
portfolio securities through short sales of securities which the Adviser
believes possess volatility characteristics similar to those being hedged. To
effect such a transaction, the Fund must borrow the security sold short to make
delivery to the buyer. The Fund then is obligated to replace the security
borrowed by purchasing it at the market price at the time of replacement. Until
the security is replaced, the Fund is required to pay to the lender any accrued
interest or dividends and may be required to pay a premium. The Fund may only
make short sales "against the box," meaning that the Fund, by virtue of its
ownership of other securities, has the right to obtain securities equivalent in
kind and amount to the securities sold and, if the right is conditional, the
sale is made upon the same conditions.
The Fund will realize a gain if the security declines in price between the date
of the short sale and the date on which the Fund replaces the borrowed security.
On the other hand, the Fund will incur a loss as a result of the short sale if
the price of the security increases between those dates. The amount of any gain
will be decreased, and the amount of any loss increased, by the amount of any
premium or interest or dividends the Fund may be required to pay in connection
with a short sale. The successful use of short selling as a hedging device may
12
<PAGE>
be adversely affected by imperfect correlation between movements in the price of
the security sold short and the securities being hedged.
Under applicable guidelines of the staff of the SEC, if the Fund engages in
short sales, it must put in a segregated account (not with the broker) an amount
of cash or liquid securities, of any type or maturity, equal to the difference
between (a) the market value of the securities sold short at the time they were
sold short and (b) any cash or U.S. Government Securities required to be
deposited as collateral with the broker in connection with the short sale (not
including the proceeds from the short sale). In addition, until the Fund
replaces the borrowed security, it must daily maintain the segregated account at
such a level that the amount deposited in it plus the amount deposited with the
broker as collateral will equal the current market value of the securities sold
short.
Short selling may produce higher than normal portfolio turnover which may result
in increased transaction costs to the Fund and may result in gains from the sale
of securities deemed to have been held for less than three months, which gains
must be less than 30% of the Fund's gross income for a taxable year in order for
the Fund to qualify as a regulated investment company under the Code for that
year.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES
The Fund may purchase and sell securities on a forward commitment or when-issued
basis. Forward commitments or when-issued transactions arise when securities are
purchased or sold by the Fund with payment and delivery taking place in the
future in order to secure what is considered to be an advantageous price. When
the Fund engages in these transactions, it relies on the seller or buyer, as the
case may be, to consummate the sale. Failure to do so may result in the Fund
missing the opportunity of obtaining a price considered to be advantageous. No
payment or delivery is made by the Fund until it receives delivery or payment
from the other party to the transaction.
To the extent that the Fund remains substantially fully invested at the same
time that it has purchased when-issued securities, as it would normally expect
to do, there may be greater fluctuations in its net asset value per share than
if the Fund set aside cash to satisfy its purchase commitment. When the Fund
purchases securities on a when-issued basis, it will maintain in a segregated
account with its Custodian cash or liquid securities, of any type or maturity,
with an aggregate value equal to the amount of such purchase commitments until
payment is made. If necessary, additional assets will be placed in the account
daily so that the value of the account will equal or exceed the amount of the
Fund's purchase commitment.
Short-Term Trading and Portfolio Turnover. Short-term trading means the purchase
and subsequent sale of a security after it has been held for a relatively brief
period of time. The Fund may engage in short-term trading in response to stock
market conditions, changes in interest rates or other economic trends and
developments, or to take advantage of yield disparities between various fixed
income securities in order to realize capital gains or improve income.
Short-term trading may have the effect of increasing portfolio turnover rate. A
high rate of portfolio turnover (100% or greater) involves correspondingly
greater brokerage expenses and may make it more difficult for the Fund to
qualify as a regulated investment company for federal income tax purposes. The
Fund's portfolio turnover rate is set forth in the table under the caption
"Financial Highlights" in the Prospectus.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
13
<PAGE>
The following investment restrictions will not be changed without approval of a
majority of the Fund's outstanding voting securities which, as used in the
Prospectus and this Statement of Additional Information, means approval of the
lesser of (1) the holders of 67% or more of the Fund's shares represented at a
meeting if the holders of more than 50% of the Fund's outstanding shares are
present in person or by proxy at that meeting or (2) more than 50% of the Fund's
outstanding shares.
The Fund may not:
1. Issue senior securities, except as permitted by paragraphs 3,6 and 7
below. For purposes of this restriction, the issuance of shares of beneficial
interest in multiple classes or series, the deferral of the Trustees' fees, and
the purchase or sale of options, futures contracts, forward commitments, swaps
and repurchase agreements entered into in accordance with the Fund's investment
policies or within the meaning of paragraph 6 below, are not deemed to be senior
securities.
2. Borrow money, except for the following extraordinary or emergency
purposes: (i) from banks for temporary or short-term purposes or for the
clearance of transactions; (ii) in connection with the redemption of Fund shares
or to finance failed settlements of portfolio trades without immediately
liquidating portfolio securities or other assets; and (iii) in order to fulfill
commitments or plans to purchase additional securities pending the anticipated
sale of other portfolio securities or assets, but only if after each such
borrowing there is asset coverage of at least 300% as defined in the 1940 Act.
For purposes of this investment restriction, the deferral of Trustees' fees and
short sales, transactions in futures contracts, and options on futures
contracts, securities or indices and forward commitment transactions shall not
constitute borrowing. This restriction does not apply to transactions in reverse
repurchase agreements in amounts not to exceed 33 1/3% of the value of the
Fund's total assets (including the amount borrowed) taken at market value.
3. Act as an underwriter, except to the extent that in connection with the
disposition of portfolio securities, the Fund may be deemed to be an underwriter
for purposes of the 1933 Act.
4. Purchase or sell real estate except that the Fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interest therein, (iii) invest in securities that are
secured by real estate or interests therein, (iv) purchase and sell
mortgage-related securities and (v) hold and sell real estate acquired by the
Fund as a result of the ownership of securities.
5. Invest in commodities, except the Fund may purchase and sell options on
securities, securities indices and currency, futures contracts on securities,
securities indices and currency and options on such futures, forward foreign
currency exchange contracts, forward commitments, securities index put or call
warrants, interest rate and currency swaps, interest rate caps, floors and
collars and repurchase agreements entered into in accordance with the Fund's
investment policies.
6. Make loans, except that the Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Fund's total
assets taken at market value, (2) enter into repurchase agreements, and (3)
purchase all or a portion of an issue of debt securities, bank loan
participation interests, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is made upon the
original issuance of the securities.
7. Purchase the securities of issuers conducting their principal activity
in the same industry if, immediately after such purchase, the value of its
investments in such industry would exceed 25% of its total assets taken at
market value at the time of such investment; except that the Fund intends to
invest more than 25% of its total assets in the banking industry and will
ordinarily invest more than 25% of its assets in the financial services sector,
14
<PAGE>
which includes the banking industry. This limitation does not apply to
investments in obligations of the U.S. Government or any of its agencies,
instrumentalities or authorities.
8. With respect to 75% of total assets, purchase securities of an issuer
(other than the U.S. Government, its agencies, instrumentalities or
authorities), if:
a. such purchase would cause more than 5% of the Fund's total
assets taken at market value to be invested in the securities of such issuer; or
b. such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.
15
<PAGE>
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
The following restrictions are designated as non-fundamental and may be changed
by the Board of Trustees without shareholder approval.
The Fund may not:
10. Participate on a joint-and-several basis in any securities trading
account. The "bunching" of orders for the sale or purchase of marketable
portfolio securities with other accounts under the management of the Adviser to
save commissions or to average prices among them is not deemed to result in a
joint securities trading account.
11. Purchase a security if, as a result, (i) more than 10% of the Fund's
assets would be invested in securities of other investment companies, (ii) such
purchase would result in more than 3% of the total outstanding voting securities
of any one such investment company being held by the Fund or (iii) more than 5%
of the Fund's assets would be invested in any one such investment company. These
limitations do not apply to (a) the investment of cash collateral, received by
the Fund in connection with lending the Fund's portfolio securities in the
securities of open-end investment companies; or (b) the purchase of shares of
any investment company in connection with a merger, consolidation,
reorganization or purchase of substantially all of the assets of any other
investment company. Notwithstanding the foregoing, the Fund may, in connection
with the John Hancock Group of Funds Deferred Compensation Plan for Independent
Trustees/Directors, purchase securities of other investment companies within the
John Hancock Group of Funds provided that, as a result, (i) no more than 10% of
the Fund's assets would be invested in securities of all other investment
companies; (ii) such purchase would not result in more than 3% of the total
outstanding voting securities of any one such investment company being held by
the Fund and (iii) no more than 5% of the Fund's assets would be invested in any
one such investment company.
12. Invest in securities which are illiquid if, as a result, more than 15%
of its net assets would consist of such securities, including repurchase
agreements maturing in more than seven days, securities that are not readily
marketable, restricted securities not eligible for resale pursuant to Rule 144A
under the 1933 Act, purchased OTC options, certain assets under to cover written
OTC options, and privately issued stripped mortgage-backed securities.
13. Purchase securities while outstanding borrowings (other than revere
repurchase agreements) exceed 5% of the Fund's total assets.
14. Write covered call or put options with respect to more than 25% of the
value of its total assets, invest more than 25% of its total assets in
protective put options or invest more than 5% of its total assets in puts,
calls, spreads or straddles, or any combination thereof, other than protective
put options. The aggregate value of premiums paid on all options, other than
protective put options, held by the Fund at any time will not exceed 20% of the
Fund's total assets.
15. Invest for the purpose of exercising control over or management of any
company.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage resulting from a change in values of
portfolio securities or amounts of net assets will not be considered a violation
of any of the foregoing restrictions.
THOSE RESPONSIBLE FOR MANAGEMENT
The business of the Fund is managed by the Trustees, who elect officers who are
responsible for the day-to-day operations of the Fund and who execute policies
16
<PAGE>
formulated by the Trustees. Several of the officers and Trustees of the Trust
are also officers and Directors of the Adviser or officers and Directors of the
Fund's principal distributor, John Hancock Funds, Inc. ("John Hancock Funds").
17
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations(s)
Name and Address With the Company During the Past Five Years
- ---------------- ---------------- --------------------------
<S> <C> <C>
Edward J. Boudreau, Jr. * Trustee, Chairman and Chief Chairman and Chief Executive
101 Huntington Avenue Executive Officer (1, 2) Officer, the Adviser and The
Boston, MA 02199 Berkeley Financial Group ("Berkeley
October 1944 Group"); Chairman, NM Capital
Management, Inc. ("NM Capital") and
John Hancock Advisers International
Limited ("Advisers International");
Chairman, Chief Executive Officer
and President, John Hancock Funds,
Inc. ("John Hancock Funds"), First
Signature Bank and Trust Company
and Sovereign Asset Management
Corporation ("SAMCorp."); Director,
John Hancock Insurance Agency, Inc.
("Insurance Agency, Inc."), John
Hancock Capital Corporation and New
England/Canada Business Council;
Member, Investment Company
Institute Board of Governors;
Director, Asia Strategic Growth
Fund, Inc.; Trustee, Museum of
Science; Vice Chairman and
President, the Adviser (until July
1992); Chairman, John Hancock
Distributors, Inc. (until April
1994); Director, John Hancock
Freedom Securities Corporation
(until September 1996); Director,
John Hancock Signature Services,
Inc. ("Signature Services") (until
January 1997).
- -------------------
* Trustee may be deemed to be an "interested person" of the Fund as defined
in the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Administration Committee.
18
<PAGE>
Positions Held Principal Occupations(s)
Name and Address With the Company During the Past Five Years
- ---------------- ---------------- --------------------------
Dennis S. Aronowitz Trustee (3) Professor of Law, Emeritus, Boston
Boston University University School of Law; Trustee,
Boston, Massachusetts Brookline Savings Bank.
June 1931
Richard P. Chapman, Jr. Trustee (1, 3) President, Brookline Savings Bank;
160 Washington Street Director, Federal Home Loan Bank of
Brookline, MA 02147 Boston (lending); Director, Lumber
February 1935 Insurance Companies (fire and
casualty insurance); Trustee,
Northeastern University (education);
Director, Depositors Insurance Fund,
Inc. (insurance).
William J. Cosgrove Trustee (3) Vice President, Senior Banker and
20 Buttonwood Place Senior Credit Officer, Citibank,
Saddle River, NJ 07458 N.A. (retired September 1991);
January 1933 Executive Vice President, Citadel
Group Representatives, Inc.; EVP
Resource Evaluation, Inc.
(consulting) (until October 1993);
Trustee, the Hudson City Savings
Bank (since 1995).
- -------------------
* Trustee may be deemed to be an "interested person" of the Fund as defined
in the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Administration Committee.
19
<PAGE>
Positions Held Principal Occupations(s)
Name and Address With the Company During the Past Five Years
- ---------------- ---------------- --------------------------
Douglas M. Costle Trustee (1, 3) Director, Chairman of the Board and
RR2 Box 480 Distinguished Senior Fellow,
Woodstock, VT 05091 Institute for Sustainable
July 1939 Communities, Montpelier, Vermont
(since 1991); Dean Vermont Law
School (until 1991); Director, Air
and Water Technologies Corporation
(environmental services and
equipment), Niagara Mohawk Power
Company (electric services) and
Mitretek Systems (governmental
consulting services).
Leland O. Erdahl Trustee (3) Director, Santa Fe Ingredients
8046 Mackenzie Court Company of California, Inc. and
Las Vegas, NV 89129 Santa Fe Ingredients Company, Inc.
December 1928 (private food processing companies),
Uranium Resources, Inc.; President,
Stolar, Inc. (1987-1991); President,
Albuquerque Uranium Corporation
(1985-1992); Director,
Freeport-McMoRan Copper & Gold
Company, Inc., Hecla Mining Company,
Canyon Resources Corporation and
Original Sixteen to One Mines, Inc.
(1984-1987 and 1991-1995)
(management consultant).
- -------------------
* Trustee may be deemed to be an "interested person" of the Fund as defined
in the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Administration Committee.
20
<PAGE>
Positions Held Principal Occupations(s)
Name and Address With the Company During the Past Five Years
- ---------------- ---------------- --------------------------
Richard A. Farrell Trustee(3) President of Farrell, Healer & Co.,
Venture Capital Partners (venture capital management firm)
160 Federal Street (since 1980); Prior to 1980, headed
23rd Floor the venture capital group at Bank of
Boston, MA 02110 Boston Corporation.
November 1932
Gail D. Fosler Trustee (3) Vice President and Chief Economist,
4104 Woodbine Street The Conference Board (non-profit
Chevy Chase, MD 20815 economic and business research);
December 1947 Director, Unisys Corp.; and H.B.
Fuller Company.
William F. Glavin Trustee (3) President, Babson College; Vice
Babson College Chairman, Xerox Corporation (until
Horn Library June 1989); Director, Caldor Inc.,
Babson Park, MA 02157 Reebok, Ltd. (since 1994) and Inco
March 1931 Ltd.
Anne C. Hodsdon * Trustee and President (1,2) President, Chief Operating Officer
101 Huntington Avenue and Director, the Adviser; Director,
Boston, MA 02199 The Berkeley Group, John Hancock
April 1953 Funds; Director, Advisers
International; Executive Vice
President, the Adviser (until
December 1994); Senior Vice
President, the Adviser (until
December 1993); Director, Signature
Services (until January 1997).
- -------------------
* Trustee may be deemed to be an "interested person" of the Fund as defined
in the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Administration Committee.
21
<PAGE>
Positions Held Principal Occupations(s)
Name and Address With the Company During the Past Five Years
- ---------------- ---------------- --------------------------
Dr. John A. Moore Trustee (3) President and Chief Executive
Institute for Evaluating Health Risks Officer, Institute for Evaluating
1629 K Street NW Health Risks, (nonprofit
Suite 402 institution) (since September 1989).
Washington, DC 20006-1602
February 1939
Patti McGill Peterson Trustee (3) Cornell Institute of Public Affairs,
Cornell University Cornell University (since August
Institute of Public Affairs 1996); President Emeritus of Wells
364 Upson Hall College and St. Lawrence University;
Ithica, NY 14853 Director, Niagara Mohawk Power
May 1943 Corporation (electric utility) and
Security Mutual Life (insurance).
John W. Pratt Trustee (3) Professor of Business Administration
2 Gray Gardens East at Harvard University Graduate
Cambridge, MA 02138 School of Business Administration
September 1931 (since 1961).
- -------------------
* Trustee may be deemed to be an "interested person" of the Fund as defined
in the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Administration Committee.
22
<PAGE>
Positions Held Principal Occupations(s)
Name and Address With the Company During the Past Five Years
- ---------------- ---------------- --------------------------
Richard S. Scipione * Trustee (1) General Counsel, John Hancock Life
John Hancock Place Company; Director, the Adviser,
P.O. Box 111 Advisers International, John Hancock
Boston, MA 02117 Funds, John Hancock Distributors,
August 1937 Inc., Insurance Agency, Inc., John
Hancock Subsidiaries, Inc.,
SAMCorp. and NM Capital; Trustee,
The Berkeley Group; Director, JH
Networking Insurance Agency, Inc.;
Director, John Hancock Property and
Casualty Insurance and its
affiliates (until November 1993);
Director, Signature Services (until
January 1997).
Edward J. Spellman, CPA Trustee (3) Partner, KPMG Peat Marwick LLP
259C Commercial Bld. (retired June 1990).
Lauderdale, FL 33308
November 1932
Robert G. Freedman Vice Chairman and Chief Investment Vice Chairman and Chief Investment
101 Huntington Avenue Officer (2) Officer, the Adviser; Director, the
Boston, MA 02199 Adviser, Advisers International,
July 1938 John Hancock Funds, SAMCorp.,
Insurance Agency, Inc.,
Southeastern Thrift & Bank Fund and
NM Capital; Senior Vice President,
The Berkeley Group; President, the
Adviser (until December 1994);
Director, Signature Services (until
January 1997).
- -------------------
* Trustee may be deemed to be an "interested person" of the Fund as defined
in the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Administration Committee.
23
<PAGE>
Positions Held Principal Occupations(s)
Name and Address With the Company During the Past Five Years
- ---------------- ---------------- --------------------------
James B. Little Senior Vice President and Chief Senior Vice President, the Adviser,
101 Huntington Avenue Financial Officer The Berkeley Group, John Hancock
Boston, MA 02199 Funds.
February 1935
John A. Morin Vice President Vice President and Secretary, the
101 Huntington Avenue Adviser, The Berkeley Group,
Boston, MA 02199 Signature Services and John Hancock
July 1950 Funds; Secretary, SAMCorp.,
Insurance Agency, Inc. and NM
Capital; Counsel, John Hancock
Mutual Life Insurance Company (until
January 1996).
Susan S. Newton Vice President and Secretary Vice President, the Adviser, John
101 Huntington Avenue Hancock Funds, Signature Services
Boston, MA 02199 and The Berkeley Group; Vice
March 1950 President, John Hancock
Distributors, Inc. (until 1994.
James J. Stokowski Vice President and Treasurer Vice President, the Adviser.
101 Huntington Avenue
Boston, MA 02199
November 1946
- -------------------
* Trustee may be deemed to be an "interested person" of the Fund as defined
in the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Administration Committee.
</TABLE>
24
<PAGE>
All of the officers listed are officers or employees of the Adviser or
affiliated companies. Some of the Trustees and officers may also be officers
and/or directors and/or Trustees of one or more of the other funds for which the
Adviser serves as investment adviser.
The following table provides information regarding the compensation paid by the
Fund and other investment companies in the John Hancock Fund Complex to the
Independent Trustees for their services. Messrs. Boudreau, Scipione and Ms.
Hodsdon, each a non-Independent Trustee, and each of the officers of the Fund
are interested persons of the Adviser, and/or affiliates are compensated by the
Adviser and receive no compensation from the Fund for their services. The Fund
paid no compensation to the Trustees during 1996, since it did not yet exist.
Aggregate Compensation
Aggregate Total Compensation From
Compensation From All Funds in John Hancock
Independent Trustees Fund Complex to Trustees*
- -------------------- ---- --------------------
Dennis S. Aronowitz $ 0 $ 72,450
Richard P. Chapman, Jr.+ 0 75,200
William J. Cosgrove+ 0 72,450
Douglas M. Costle 0 75,350
Leland O. Erdahl 0 72,350
Richard A. Farrell 0 75,350
Gail D. Fosler 0 68,450
William F. Glavin + 0 72,250
John A. Moore 0 68,350
Patti McGill Peterson 0 72,100
John W. Pratt 0 72,350
Edward J. Spellman 0 73,950
----- --------
Totals $ 0 $870,600
*Total compensation paid by the John Hancock Fund Complex to the Independent
Trustees is for the calendar year ended December 31, 1996. As of this date,
there were sixty-seven funds in the John Hancock Funds Complex of which each of
these Independent Trustees served on thirty-five.
+On December 31, 1996, the value of the aggregate deferred compensation from all
funds in the John Hancock Fund Complex for Mr. Chapman was $63,164, for Mr.
Cosgrove was $131,317 and for Mr. Glavin was $109,059.
INVESTMENT ADVISORY AND OTHER SERVICES
The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts 02199-7603,
was organized in 1968 and presently has over $19 billion in assets under
management in its capacity as investment adviser to the Fund and the other
mutual funds and publicly traded investment companies in the John Hancock group
of funds having a combined total of over 1,080,000 shareholders. The Adviser is
an affiliate of the Life Company, one of the most recognized and respected
financial institutions in the nation. With total assets under management of more
than $80 billion, the Life Company is one of the 10 largest life insurance
companies in the United States, and carries high ratings from Standard & Poor's
and A.M. Best's. Founded in 1862, the Life Company has been serving clients for
over 130 years.
The Fund has entered into an investment management contract (the "Advisory
Agreement") dated as of May 1, 1997 with the Adviser. As the Fund's manager and
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investment adviser, the Adviser will: (a) furnish continuously an investment
program for the Fund and determine, subject to the overall supervision and
review of the Trustees, which investments should be purchased, held, sold or
exchanged, and (b) provide supervision over all aspects of the Fund's operations
except those which are delegated to a custodian, transfer agent or other agent.
Securities held by a Fund may also be held by other funds or investment advisory
clients for which the Adviser or its affiliates provide investment advice.
Because of different investment objectives or other factors, a particular
security may be bought for one or more funds or clients when one or more are
selling the same security. If opportunities for purchase or sale of securities
by the Adviser for the Funds or for other funds or clients for which the Adviser
renders investment advice arise for consideration at or about the same time,
transactions in such securities will be made, insofar as feasible, for the
respective funds or clients in a manner deemed equitable to all of them. To the
extent that transactions on behalf of more than one client of the Adviser or its
affiliates may increase the demand for securities being purchased or the supply
of securities being sold, there may be an adverse effect on price.
The Fund bears all costs of its organization and operation, including expenses
of preparing, printing and mailing all shareholders' reports, notices,
prospectuses, proxy statements and reports to regulatory agencies; expenses
relating to the issuance, registration and qualification of shares; government
fees; interest charges; expenses of furnishing to shareholders their account
statements; taxes; expenses of redeeming shares; brokerage and other expenses
connected with the execution of portfolio securities transactions; expenses
pursuant to the Fund's plan of distribution; fees and expenses of custodians
including those for keeping books and accounts and calculating the net asset
value of shares; fees and expenses of transfer agents and dividend disbursing
agents; legal, accounting, financial, management, tax and auditing fees and
expenses of the Fund (including an allocable portion of the cost of the
Adviser's employees rendering such services to the Fund; the compensation and
expenses of Trustees who are not otherwise affiliated with the Trust, the
Adviser or any of their affiliates; expenses of Trustees' and shareholders'
meetings; trade association membership; insurance premiums; and any
extraordinary expenses.
As provided by the investment management contract, the Fund pays the adviser
monthly an advisory fee of 0.80%, which is based on a stated percentage of the
Fund's average daily net asset value as follows:
The Advisory Agreement was approved on March 11, 1997 by all of the Trustees,
including all of the Trustees who are not parties to the Advisory Agreement or
"interested persons" of any party thereto. The sole initial shareholder of the
Fund also approved the Advisory Agreement on May 1, 1997. The investment
management contract and the distribution agreement discussed below continue in
effect from year to year if approved annually by vote of a majority of the
Trustees who are not interested persons of one of the parties to the contract,
cast in person at a meeting called for the purpose of voting on such approval,
and by either the Trustees or the holders of a majority of the Fund's
outstanding voting securities. Both agreements automatically terminate upon
assignment and may be terminated on 60 days' written notice by either party to
the respective contract or by vote of a majority of the outstanding voting
securities of the Fund.
Pursuant to the investment management contract, the Adviser is not liable to the
Fund or its shareholders for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which the investment
management contract relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the performance of
its duties or from reckless disregard by the Adviser of its obligations and
duties under the investment management contract.
Under the investment management contract, the Fund may use the name "John
Hancock" or any name derived from or similar to it only for so long as the
contract or any extension, renewal or amendment thereof remains in effect. If
the contract is no longer in effect, the Fund (to the extent that it lawfully
can) will cease to use such a name or any other name indicating that it is
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advised by or otherwise connected with the Adviser. In addition, the Adviser or
the Life Company may grant the nonexclusive right to use the name "John Hancock"
or any similar name to any other corporation or entity, including but not
limited to any investment company of which the Life Company or any subsidiary or
affiliate thereof or any successor to the business of any subsidiary or
affiliate thereof shall be the investment adviser.
Accounting and Legal Services Agreement. The Trust, on behalf of the Fund, is a
party to an Accounting and Legal Services Agreement with the Adviser. Pursuant
to this agreement, the Adviser provides the Fund with certain tax, accounting
and legal services.
In order to avoid conflicts with portfolio trades for the Fund, the Adviser and
the Fund have adopted extensive restrictions on personal securities trading by
personnel of the Adviser and its affiliates. Some of these restrictions are:
pre-clearance for all personal trades and a ban on the purchase of initial
public offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.
DISTRIBUTION AGREEMENT
The Fund has a Distribution Agreement with John Hancock Funds. Under the
agreement John Hancock Funds is obligated to use its best efforts to sell shares
of each class of the Fund. Shares of the Fund are also sold by selected
broker-dealers (the "Selling Brokers") which have entered into selling agency
agreements with John Hancock Funds. John Hancock Funds accepts orders for the
purchase of the shares of the Fund which are continually offered at net asset
value next determined.
NET ASSET VALUE
For purposes of calculating the net asset value ("NAV") of the Fund's shares,
the following procedures are utilized wherever applicable.
Debt securities are valued on the basis of valuations furnished by a principal
market maker or a pricing service, both of which generally utilize electronic
data processing techniques to determine valuations for normal institutional size
trading units of debt securities without exclusive reliance upon quoted prices.
Equity securities traded on a principal exchange or NASDAQ National Market
issues are generally valued at last sale price on the day of valuation.
Securities in the aforementioned category for which no sales are reported and
other securities traded over-the-counter are generally valued at the last
available bid price.
Short-term debt investments which have a remaining maturity of 60 days or less
are generally valued at amortized cost which approximates market value. If
market quotations are not readily available or if in the opinion of the Adviser
any quotation or price is not representative of market value, the fair value of
the security may be determined in good faith in accordance with procedures
approved by the Trustees.
Foreign securities are valued on the basis of quotations from the primary market
in which they are traded. Any assets or liabilities expressed in terms of
foreign currencies are translated into U.S. dollars by the custodian bank based
on London currency exchange quotations as of 5:00 p.m., London time (12:00 noon,
New York time) on the date of any determination of the Fund's NAV. If quotations
are not readily available, or the value has been materially affected by events
occurring after the closing of a foreign market, assets are valued by a method
that the Trustees believe accurately reflects fair value.
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The NAV for each fund and class is determined each business day at the close of
regular trading on the New York Stock Exchange (typically 4:00 p.m. Eastern
Time) by dividing a class's net assets by the number of its shares outstanding.
On any day an international market is closed and the New York Stock Exchange is
open, any foreign securities will be valued at the prior day's close with the
current day's exchange rate. Trading of foreign securities may take place on
Saturdays and U.S. business holidays on which the Fund's NAV is not calculated.
Consequently, the Fund's portfolio securities may trade and the NAV of the
Fund's shares may be significantly affected on days when a shareholder has no
access to the Fund.
SPECIAL REDEMPTIONS
Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed by the Trustees. When the shareholder sells portfolio
securities received in this fashion, he will incur a brokerage charge. Any such
securities would be valued for the purposes of making such payment at the same
value as used in determining net asset value. The Fund has, however, elected to
be governed by Rule 18f-1 under the Investment Company Act. Under that rule, the
Fund must redeem its shares for cash except to the extent that the redemption
payments to any shareholder during any 90-day period would exceed the lesser of
$250,000 or 1% of the Fund's net asset value at the beginning of such period.
DESCRIPTION OF THE FUND'S SHARES
The Trustees of the Trust are responsible for the management and supervision of
the Fund. The Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest of the Fund, without
par value. Under the Declaration of Trust, the Trustees have the authority to
create and classify shares of beneficial interest in separate series, without
further action by shareholders. As of the date of this Statement of Additional
Information, the Trustees have only authorized shares of the Funds. Additional
series may be added in the future. The Declaration of Trust also authorizes the
Trustees to classify and reclassify the shares of the Funds, or any other series
of the Trust, into one or more classes. As of the date of this SAI, the Trustees
have not authorized the issuance of additional classes of shares of the Funds.
Each share of a Fund represents an equal proportionate interest in the assets
belonging to that Fund. When issued, shares are fully paid and nonassessable
except as provided in the Prospectus under the caption "Organization and
Management of the Funds." In the event of liquidation of a Fund, shareholders
are entitled to share pro rata in the net assets of the Fund available for
distribution to such shareholders. Shares of the Trust are freely transferable
and have no preemptive, subscription or conversion rights.
In accordance with the provisions of the Declaration of Trust, the Trustees have
initially determined that shares entitle their holders to one vote per share on
any matter on which such shares are entitled to vote. The Trustees may determine
in the future, without the vote or consent of shareholders, that each dollar of
net asset value (number of shares owned times net asset value per share) will be
entitled to one vote on any matter on which such shares are entitled to vote.
The rights, if any, of Variable Contract holders to vote the shares of a Fund
are governed by the relevant Variable Contract. For information on these voting
rights, see the Prospectus describing the Variable Contract.
Unless otherwise required by the Investment Company Act or the Declaration of
Trust, the Fund has no intention of holding annual meetings of shareholders.
Fund shareholders may remove a Trustee by the affirmative vote of at least
two-thirds of the Trust's outstanding shares, and the Trustees shall promptly
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call a meeting for such purpose when requested to do so in writing by the record
holders of not less than 10% of the outstanding shares of the Trust.
Shareholders may, under certain circumstances, communicate with other
shareholders in connection with requesting a special meeting of shareholders.
However, at any time that less than a majority of the Trustees holding office
were elected by the shareholders, the Trustees will call a special meeting of
shareholders for the purpose of electing Trustees.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for acts or obligations
of the Trust. However, the Fund's Declaration of Trust contains an express
disclaimer of shareholder liability for acts, obligations or affairs of the
Fund. The Declaration of Trust also provides for indemnification out of the
Fund's assets for all losses and expenses of any shareholder held personally
liable by reason of being or having been a shareholder. The Declaration of Trust
also provides that no series of the Trust shall be liable for the liabilities of
any other series. Furthermore, no fund included in this Fund's prospectus shall
be liable for the liabilities of any other John Hancock fund. Liability is
therefor limited to circumstances in which the Fund itself would be unable to
meet its obligations, and the possibility of this occurrence is remote.
A shareholder's account is governed by the laws of The Commonwealth of
Massachusetts.
TAX STATUS
The Fund is treated as a separate entity for accounting and tax purposes. The
Fund intends to elect to be treated, and to qualify for each taxable year, as a
separate "regulated investment company" under Subchapter M of the Code. As such
and by complying with the applicable provisions of the Code regarding the
sources of its income, the timing of its distributions, and the diversification
of its assets, the Fund will not be subject to Federal income tax on taxable
income (including net realized capital gains) which is distributed to
shareholders in accordance with the timing requirements of the Code.
Qualification of the Fund for treatment as a regulated investment company under
the Code requires, among other things, that (a) at least 90% of the Fund's
annual gross income, without being offset for losses from the sale or other
disposition of stock or securities or other transactions, be derived from
interest, payments with respect to securities loans, dividends and gains from
the sale or other disposition of stock or 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 such
stock, securities or currencies; (b) the Fund derive less than 30% of its annual
gross income from gains (without deduction for losses) from the sale or other
disposition of any of the following held (for tax purposes) for less than three
months: (i) stock or securities; (ii) options, futures or forward contracts (not
on foreign currencies) or (iii) foreign currencies (or options, futures or
forward contracts on foreign currencies) not directly related to the Fund's
principal business of investing in stock or securities and related options or
futures; (c) the Fund distribute at least annually to its shareholders as
dividends at least 90% of the sum of its taxable and tax-exempt net investment
income, the excess of net short-term capital gain over net long-term capital
loss earned in each year and any other net income (except for the excess, if
any, of net long-term capital gain over net short-term capital loss, which need
not be distributed in order for the Fund to qualify as a regulated investment
company but is taxed to the Fund if it is not distributed); and (d) the Fund
diversify its assets so that, at the close of each quarter of its taxable year,
(i) at least 50% of the fair market value of its total (gross) assets is
comprised of cash, cash items, U.S. Government securities, securities of other
regulated investment companies and other securities limited in respect of any
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one issuer to no more than 5% of the fair market value of the Fund's total
assets and 10% of the outstanding voting securities of such issuer and (ii) no
more than 25% of the fair market value of its total assets is invested in the
securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies) or of two or more issuers
controlled by the Fund and engaged in the same, similar, or related trades or
businesses.
The Fund also must, and intends to, comply with the diversification requirements
imposed by Section 817(h) of the Code and the regulations thereunder. These
requirements, which are in addition to the diversification requirements imposed
on the Fund by the 1940 Act and Subchapter M of the Code, place certain
limitations on assets of each insurance company separate account used to fund
variable contracts and, because Section 817(h) and those regulations treat the
assets of the Fund as assets of the related separate account, the assets of the
Fund that may be invested in securities of any one, two, three and four issuers.
Specifically, the regulations provide that, except as permitted by the "safe
harbor" described below, as of the end of each calendar quarter or within 30
days thereafter no more than 55% of the total assets of the Fund 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 this purpose, all securities of the same issuer are considered
a single investment, and each U.S. Government agency and instrumentality is
considered a separate issuer. Section 817(h) provides, as a safe harbor, that a
separate account will be treated as being adequately diversified if the
diversification requirements under Subchapter M are satisfied and no more than
55% of the value of the account's total assets is attributable to cash and cash
items (including receivables), U.S. Government securities and securities of
other regulated investment companies. Failure by the Fund to both qualify as a
regulated investment company and satisfy the Section 817(h) requirements would
generally result in treatment of the variable contract holders other than as
described in the applicable variable contract prospectus, including possible
current inclusion in ordinary income of income accrued under the contracts for
the current and all prior taxable years. Under certain circumstances described
in the applicable Treasury regulations, inadvertent failure to satisfy the
applicable diversification requirements may be corrected, but such a correction
would require a payment to the Internal Revenue Service (the "I.R.S.") based on
the tax contractholders would have incurred if they were treated as receiving
the income on the contract for the period during which the diversification
requirements were not satisfied. Any such failure may also result in adverse tax
consequences for the insurance company issuing the contracts. Failure by the
Fund to qualify as a regulated investment company would also subject the Fund to
Federal and state income taxation of all of its taxable income and gain, whether
or not distributed to shareholders.
If the Fund acquires stock in certain non-U.S. corporations that receive at
least 75% of their annual gross income from passive sources (such as interest,
dividends, rents, royalties or capital gain) or hold at least 50% of their
assets in investments producing such passive income ("passive foreign investment
companies"), that Fund could be subject to Federal income tax and additional
interest charges on "excess distributions" received from such companies or gain
from the sale of stock in such companies, even if all income or gain actually
received by the Fund is timely distributed to its shareholders. The Fund would
not be able to pass through to its shareholders any credit or deduction for such
a tax. Certain elections may, if available, ameliorate these adverse tax
consequences, but any such election would require the applicable Fund to
recognize taxable income or gain without the concurrent receipt of cash. The
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Fund is permitted to acquire stock in foreign corporations may limit and/or
manage its holdings in passive foreign investment companies to minimize its tax
liability or maximize its return from these investments.
Foreign exchange gains and losses realized by the Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain foreign currency futures and options, foreign currency forward
contracts, foreign currencies, or payables or receivables denominated in a
foreign currency are subject to Section 988 of the Code, which generally causes
such gains and losses to be treated as ordinary income and losses and may affect
the amount, timing and character of distributions to shareholders. Any such
transactions that are not directly related to the Fund's investment in stock or
securities, possibly including speculative currency positions or currency
derivatives not used for hedging purposes, may increase the amount of gain it is
deemed to recognize from the sale of certain investments held for less than
three months, which gain is limited under the Code to less than 30% of its
annual gross income, and could under future Treasury regulations produce income
not among the types of "qualifying income" from which the Fund must derive at
least 90% of its annual gross income. Income from investments in commodities,
such as gold and certain related derivative instruments, is also not treated as
qualifying income under this test. If the net foreign exchange loss for a year
treated as ordinary loss under Section 988 were to exceed the Fund's investment
company taxable income computed without regard to such loss but after
considering the post-October loss regulations (i.e., all of the Fund's net
income other than any excess of net long-term capital gain over net short-term
capital loss) the resulting overall ordinary loss for such year would not be
deductible by the Fund or its shareholders in future years.
The Fund may be subject to withholding and other taxes imposed by foreign
countries with respect to its investments in foreign securities. Tax conventions
between certain countries and the U.S. may reduce or eliminate such taxes in
some cases.
For Federal income tax purposes, each Fund is generally permitted to carry
forward a net capital loss in any year to offset its own net capital gains, if
any, during the eight years following the year of the loss. To the extent
subsequent net capital gains are offset by such losses, they would not result in
Federal income tax liability to the applicable Fund and would not be distributed
as such to shareholders.
Limitations imposed by the Code on regulated investment companies may restrict
the Fund's ability to enter into futures, options and currency forward
transactions.
Certain options, futures and forward foreign currency transactions undertaken by
the Fund may cause the Fund to recognize gains or losses from marking to market
even though its positions have not been sold or terminated and affect the
character as long-term or short-term (or, in the case of certain currency
forwards, options and futures, as ordinary income or loss) and timing of some
capital gains and losses realized by the Fund. Also, certain of the Fund's
losses on its transactions involving options, futures and forward foreign
currency contracts and/or offsetting or successor portfolio positions may be
deferred rather than being taken into account currently in calculating the
Fund's taxable income or gains. These transactions may therefore affect the
amount, timing and character of the Fund's distributions to shareholders.
Certain of the applicable tax rules may be modified if the Fund is eligible and
chooses to make one or more of certain tax elections that may be available. The
Fund will take into account the special tax rules (including consideration of
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available elections) applicable to options, futures or forward contracts in
order to minimize any potential adverse tax consequences.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to the Fund and certain aspects of its distributions. The discussion
does not address special tax rules applicable to insurance companies.
Shareholders should consult their own tax advisers as to the Federal, state or
local tax consequences of ownership or redemption of shares of, and receipt of
distributions from, the Fund in their particular circumstances.
The Fund is not subject to Massachusetts corporate excise or franchise taxes.
Provided that the Fund qualifies as a regulated investment company under the
Code, it will also not be required to pay any Massachusetts income tax.
CALCULATION OF PERFORMANCE
Yield. The yield of the Fund is computed by dividing net investment income per
share determined for a 30-day period by the net asset value per share on the
last day of the period, according to the following standard formula:
Yield = ([(a - b) + 1] 6 - 1)
---
cd
Where:
a = dividends and interest earned during the period.
b = net expenses accrued during the period.
c = the average daily number of fund shares outstanding during the period
that would be entitled to receive dividends.
d = the net asset value per share on the last day of the period.
Total Return. Total return is computed by finding the average annual compounded
rates of return over the designated periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
n _____
T = \ /ERV/P - 1
Where:
P = a hypothetical initial investment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 investment
made at the beginning of the 1 year and life-of-fund periods.
The calculation of total return assumes that all dividends and distributions are
reinvested at net asset value on the reinvestment dates during the period. The
"distribution rate" is determined by annualizing the result of dividing the
declared dividends of the Fund during the period stated by the net asset value
at the end of the period.
In addition to average annual total returns, the Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
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over a stated period. Cumulative total returns may be quoted as a percentage or
as a dollar amount, and may be calculated for a single investment, a series of
investments, and/or a series of redemptions, over any time period.
From time to time, in reports and promotional literature, the Fund's yield and
total return will be compared to indices of mutual funds and bank deposit
vehicles such as Lipper Analytical Services, Inc.'s "Lipper Fixed Income
Performance Analysis," a monthly publication which tracks net assets, total
return, and yield on approximately 1,700 fixed income mutual funds in the United
States. Ibottson and Associates, CDA Weisenberger and F.C. Towers are also used
for comparison purposes, as well as the Russell and Wilshire Indices.
Performance rankings and ratings reported periodically in national financial
publications such as MONEY MAGAZINE, FORBES, BUSINESS WEEK, THE WALL STREET
JOURNAL, MORNINGSTAR, STANGER'S and BARRON'S, etc. may also be utilized. The
Fund's promotional and sales literature may make reference to the Fund's "beta".
Beta is a reflection of the market related risk of the Fund by showing how
responsive the Fund is to the market.
The performance of the Fund is not fixed or guaranteed. Performance quotations
should not be considered to be representations of performance of the Fund for
any period in the future. The performance of the Fund is a function of many
factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales, and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest; and changes
in operating expenses are all examples of items that can increase or decrease
the Fund's performances.
BROKERAGE ALLOCATION
Decisions concerning the purchase and sale of portfolio securities and the
allocation of brokerage commissions are made by the Adviser pursuant to
recommendations made by an investment committee of the Adviser, which consists
of officers and directors of the Adviser and affiliates and officers and
Trustees who are interested persons of the Trust. Orders for purchases and sales
of securities are placed in a manner which, in the opinion of the officers of
the Adviser, will offer the best price and market for the execution of each such
transaction. Purchases from underwriters of portfolio securities may include a
commission or commissions paid by the issuer and transactions with dealers
serving as market makers reflect a "spread". Debt securities are generally
traded on a net basis through dealers acting for their own account as principals
and not as brokers; no brokerages commissions are payable on these transactions.
In the U.S. and in some other countries, debt securities are traded principally
in the over-the-counter market on a net basis through dealers acting for their
own account and not as brokers. In other countries, both debt and equity
securities are traded on exchanges at fixed commission rates. Commissions on
foreign transactions are generally higher than the negotiated commission rates
available in the U.S. There is generally less government supervision and
regulation of foreign stock exchanges and broker-dealers than in the U.S.
The Fund's primary policy is to execute all purchases and sales of portfolio
instruments at the most favorable prices consistent with best execution,
considering all of the costs of the transaction including brokerage commissions.
This policy governs the selection of brokers and dealers and the market in which
a transaction is executed. Consistent with the foregoing primary policy, the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
and other policies that the Trustees may determine, the Adviser may consider
sales of shares of the Fund as a factor in the selection of broker-dealers to
execute the Fund's portfolio transactions.
To the extent consistent with the foregoing, the Fund will be governed in the
selection of brokers and dealers, and the negotiation of brokerage commission
rates and dealer spreads, by the reliability and quality of services, including
primarily the availability and value of research information and to a lesser
extent statistical assistance furnished to the Adviser of the Fund, and their
value and expected contribution to the performance of the Fund. It is not
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possible to place a dollar value on information and services to be received from
brokers and dealers, since it is only supplementary to the research efforts of
the Adviser. The receipt of research information is not expected to reduce
significantly the expenses of the Adviser. The research information and
statistical assistance furnished by brokers and dealers may benefit the Life
Company or other advisory clients of the Adviser, and, conversely, brokerage
commissions and spreads paid by other advisory clients of the Adviser may result
in research information and statistical assistance beneficial to the Fund. The
Fund will not make commitments to allocate portfolio transactions on any
prescribed basis. While the Adviser will be primarily responsible for the
allocation of the Fund's brokerage business, its policies and practices in this
regard must be consistent with the foregoing and at all times be subject to
review by the Trustees.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, the Fund
may pay to a broker-dealer which provides brokerage and research services to the
Fund an amount of disclosed commission in excess of the commission which another
broker-dealer would have charged for effecting that transaction. This practice
is subject to a good faith determination by the Trustees that such price is
reasonable in light of the services provided and to such policies as the
Trustees may adopt from time to time. During the fiscal year ended October 31,
1996, the Fund did not pay commissions as compensation to any brokers for
research services such as industry, economic and company reviews and evaluations
of securities.
The Adviser's indirect parent, the Life Company, is the indirect sole
shareholder of John Hancock Distributors, Inc., a broker-dealer ("Distributors"
or "Affiliated Broker"). Pursuant to procedures determined by the Trustees and
consistent with the above policy of obtaining best net results, the Fund may
execute portfolio transactions with or through Affiliated Brokers.
Distributors may act as broker for the Fund on exchange transactions, subject,
however, to the general policy of the Fund set forth above and the procedures
adopted by the Trustees pursuant to the Investment Company Act. Commissions paid
to an Affiliated Broker must be at least as favorable as those which the
Trustees believe to be contemporaneously charged by other brokers in connection
with comparable transactions involving similar securities being purchased or
sold. A transaction would not be placed with an Affiliated Broker if the Fund
would have to pay a commission rate less favorable than the Affiliated Broker's
contemporaneous charges for comparable transactions for its other most favored,
but unaffiliated, customers except for accounts for which the Affiliated Broker
acts as clearing broker for another brokerage firm, and any customers of the
Affiliated Broker not comparable to the Fund as determined by the majority of
the Trustees who are not "interested persons" (as defined in the Investment
Company Act) of the Fund, the Adviser or the Affiliated Broker. Because the
Adviser, which is affiliated with the Affiliated Broker, has, as an investment
adviser to the Fund, the obligation to provide investment management services,
which include elements of research and related investment skills, such research
and related skills will not be used by the Affiliated Broker as a basis for
negotiating commissions at a rate higher than that determined in accordance with
the above criteria.
Other investment advisory clients advised by the Adviser may also invest in the
same securities as the Fund. When these clients buy or sell the same securities
at substantially the same time, the Adviser may average the transactions as to
price and allocate the amount of available investments in a manner which the
Adviser believes to be equitable to each client, including the Fund. In some
instances, this investment procedure may adversely affect the price paid or
received by the Fund or the size of the position obtainable for it. On the other
hand, to the extent permitted by law, the Adviser may aggregate securities to be
sold or purchased for the Fund with those to be sold or purchased for other
clients managed by it in order to obtain best execution.
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SHAREHOLDER SERVICING AGENT
John Hancock Signature Services, Inc., John Hancock Way STE 1000, Boston, MA
02217-1000, a wholly-owned indirect subsidiary of the Life Company, is the
shareholder servicing agent for the Fund. The Fund pays an annual fee per
shareholder account, plus certain out-of-pocket expenses.
CUSTODY OF PORTFOLIO
Portfolio securities of the Fund are held pursuant to a custodian agreement
between the Trust and Investors Bank & Trust Company, 89 South Street, Boston,
Massachusetts 02111. Under the custodian agreement, Investors Bank & Trust
Company performs custody, portfolio and fund accounting services.
INDEPENDENT AUDITORS
The independent auditors of the Fund are __________________, _______________
______, Boston, Massachusetts 02116. The independent auditors audit and render
an opinion on the Fund's annual financial statements and review the Fund's
annual income tax return.
35
<PAGE>
FINANCIAL STATEMENTS
F-1
<PAGE>
PART C.
JOHN HANCOCK DECLARATION TRUST
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in the Registration Statement:
John Hancock Declaration Trust
Not applicable
______________________
*To be filed by amendment.
(b) Exhibits:
The exhibits to this Registration Statement are listed in the
Exhibit Index hereto and are incorporated herein by reference.
Item 25. Persons Controlled by or under Common Control with Registrant
Separate Account Variable Annuity JF of John Hancock Variable Life
Insurance Company, (the "Life Company") owns 100 % of the outstanding
shares of beneficial interest of the Registrant.
Item 26. Number of Holders of Securities
As of January 27, 1997, the Life Company owned 100% of the outstanding
shares of beneficial interest of the Registrant.
Item 27. Indemnification
(a) Under Registrant's Declaration of Trust. Article IV, Section 4.3
of the Registrant's Declaration of Trust contains provisions
indemnifying each trustee and each officer of Registrant from
liability to the full extent permitted by law, subject to the
provisions of the Investment Company Act of 1940, as amended.
(b) Under the Underwriting Agreement. Under Section 11 of the
Distribution Agreement, the principal underwriter has agreed to
indemnify the Registrant and its Trustees,
officers and controlling persons against claims arising out of
certain acts and statements of the underwriter.
(c) Under The By-Laws of the John Hancock Mutual Life Insurance
Company ("the Company"), John Hancock Funds, Inc. ("JH Funds,
Inc.") and John Hancock Advisers, Inc. (the "Adviser"). Section
9a of the By-Laws of the Company provides, in effect, that the
Company will, subject to limitations of law, indemnify each
present and former director, officer and employee of the Company
who serves as a director or officer of the Registrant at the
direction or request of the Company against litigation expenses
and liabilities incurred while acting as such, except that such
indemnification does not cover any expense or liability incurred
or imposed in connection with any matter as to which such person
shall be finally adjudicated not to have acted in good faith in
the reasonable belief that his action was in the best interests
of the Company. In addition, no such person will be indemnified
by the Company in respect of any liability or expense incurred in
connection with any matter settled without final adjudication
unless such settlement shall have been approved as in the best
interests of the Company either by vote of the Board of Directors
at a meeting composed of directors who have no interest in the
outcome of such vote or by vote of the policyholders. The Company
may pay expenses incurred in defending an action or claim in
advance of its final disposition, but only upon receipt of an
undertaking by the person indemnified to repay such payment if he
should be determined to be entitled to indemnification.
C-1
<PAGE>
Article IX of the respective By-Laws of JH Funds, Inc. and the Adviser
provides as follows:
Section 9.01. Indemnity: Any person made or threatened to be made a party
to any action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was at any time
since the inception of the Corporation a director, officer, employee or
agent of the Corporation, or is or was at any time since the inception of
the Corporation serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the Corporation
against expenses (including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and the
liability was not incurred by reason of gross negligence or reckless
disregard of the duties involved in the conduct of his office, and expenses
in connection therewith may be advanced by the Corporation, all to the full
extent authorized by law.
Section 9.02. Not Exclusive; Survival of Rights: The indemnification
provided by Section 9.01 shall not be deemed exclusive of any other right
to which those indemnified may be entitled, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of
such a person.
(d) Under the Investment Management Contracts of Registrant on behalf
of each Fund. Each of the Registrant's Investment Management
Contracts (the "Contracts") provides that the Adviser shall not
be liable for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with matters to which the
Contract relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the
Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under the contract.
Any person, even though also employed by the Adviser, who may be
or become an employee of and paid by the Trust a Fund shall be
deemed, when acting within the scope of his employment by the
Fund, to be acting in such employment solely for the Fund and not
as the Adviser's employee or agent.
(e) Under the Sub-Investment Management Contracts. Each of the
Sub-Investment Management Contracts (the "Sub-Investment
Contracts") provides that the Sub-Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered
by the Trust, the Fund or the Adviser in connection with matters
to which the Sub-Investment Contract relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence
on the Sub-Adviser's part in the performance of its duties or
from reckless disregard by it of its obligations and duties under
the contract. Any person, even though also employed by the
Sub-Adviser, who may be or become an employee of and paid by the
Trust or the Fund shall be deemed, when acting within the scope
of his employment by the Trust or the Fund, to be acting in such
employment solely for the Trust or the Fund and not as the
Sub-Adviser's employee or agent.
(f) Insofar as indemnification for liabilities under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to
Trustees, officers and controlling persons of Registrant pursuant
to the foregoing provisions, Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against policy as expressed in the 1933 Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant in the successful defense of any action, suit
or proceeding) is asserted by such Trustee, officer or
controlling person in connection with the securities being
registered, 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
indemnification by it is against public policy as expressed in
the 1933 Act and will be governed by the final adjudication of
such issue.
C-2
<PAGE>
Item 28. Business and other Connections of Investment Adviser
For all of the information required by this item reference is made to the
Forms ADV, as amended, filed under the Investment Advisers Act of 1940 of
the Registrant's Adviser, John Hancock Advisers, Inc. (File No. 801-8124),
and the Registrant's Sub-Advisers; Independence Investment Associates, Inc.
(File No. 801-18048), John Hancock Advisers International, Ltd. (File No.
801-294981), and Sovereign Asset Management Corporation (File No.
801-420231) incorporated herein by reference.
Item 29. Principal Underwriters
(a) The Registrant's sole principal underwriter is JH Funds, Inc.,
which also acts as principal underwriter for the following
investment companies: John Hancock Institutional Series Trust,
John Hancock Capital Series, John Hancock Sovereign Bond Fund,
John Hancock Special Equities Fund, John Hancock Strategic
Series, John Hancock Tax-Exempt Series, John Hancock Limited Term
Government Fund, John Hancock World Fund, John Hancock Investment
Trust II, John Hancock Investment Trust III, John Hancock
Investment Trust IV, John Hancock Bond Fund, John Hancock
California Tax-Free Income Fund, John Hancock Current Interest,
John Hancock Investment Trust, John Hancock Series Trust, and
John Hancock Tax-Free Bond Fund.
(b) The following table lists, for each director and officer of JH
Funds, Inc., the information indicated.
C-3
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ -------------- -------------
Edward J. Boudreau, Jr. Director, Chairman Chairman and
101 Huntington Avenue of the Board Chief Executive
Boston, Massachusetts Officer
Foster L. Aborn Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
William C. Fletcher Director None
53 State Street
Boston, Massachusetts
Anne C. Hodsdon Director and President
101 Huntington Avenue Executive Vice
Boston, Massachusetts President
Robert H. Watts Director, Executive None
101 Huntington Avenue Vice President and Chief
Boston, Massachusetts Compliance Officer
Stephen W. Blair Executive Vice None
101 Huntington Avenue President
Boston, Massachusetts
James V. Bowhers Executive Vice None
101 Huntington Avenue President
Boston, Massachusetts
James W. McLaughlin Senior Vice President None
101 Huntington Avenue and Chief Financial
Boston, Massachusetts Officer
David A. King Director None
101 Huntington Avenue
Boston, Massachusetts
Keith Harstein Senior Vice None
101 Huntington Avenue President
Boston, Massachusetts
James B. Little Senior Vice Senior Vice
101 Huntington Avenue President President and Chief
Boston, Massachusetts Financial Officer
C-4
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ -------------- -------------
Anthony Petrucci Senior Vice None
101 Huntington Avenue President
Boston, Massachusetts
Charles H. Womack Senior Vice None
6501 Americas Parkway President
Suite 950
Alberquerque, New Mexico
Griselda Lyman Vice President None
101 Huntington Avenue
Boston, Massachusetts
Karen F. Walsh Vice President None
101 Huntington Avenue
Boston, Massachusetts
William S. Nichols Senior Vice None
101 Huntington Avenue President
Boston, Massachusetts
John A. Morin Vice President Vice President
101 Huntington Avenue and Secretary
Boston, Massachusetts
Susan S. Newton Vice President Vice President and
101 Huntington Avenue Secretary
Boston, Massachusetts
Officer
Christopher M. Meyer Second Vice President None
101 Huntington Avenue and Treasurer
Boston, Massachusetts
Robert G. Freedman Director Vice Chairman
101 Huntington Avenue and Chief Investment
Boston, Massachusetts Officer
Stephen L. Brown Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
C-5
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ -------------- -------------
Thomas E. Moloney Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Jeanne M. Livermore Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Richard S. Scipione Director Trustee
John Hancock Place
P.O. Box 111
Boston, Massachusetts
David F. D'Alessandro Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Richard O. Hansen Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John M. DeCiccio Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
(c) None.
Item 30. Location of Accounts and Records
Registrant maintains the records required to be maintained by it under
Rules 31a-1(a), 31a-1(b) and 31a-2(a) under the Investment Company Act
of 1940 at its principal executive offices at 101 Huntington Avenue,
Boston, Massachusetts 02199-7603. Certain records, including records
relating to Registrant's shareholders and the physical possession
of its securities, may be maintained pursuant to Rule 31a-3 at the
main office of Registrant's Transfer Agent or Custodian.
C-6
<PAGE>
Item 31. Management Services
The Registrant is not a party to any management-related service
contract, except as described in this Registration Statement.
Item 32. Undertakings
The Registrant undertakes:
(a) to file a post-effective amendment, using financial statements
which need not be certified, within four to six months from the
later of the effective date of this Registration Statement or
commencement of operations; and
(b) to furnish each person to whom a prospectus is delivered with a
copy of the Registrant's latest annual report to shareholders
upon request and without charge.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston, and the Commonwealth of Massachusetts on the
14th day of February, 1997.
JOHN HANCOCK DECLARATION TRUST
By:
---------------------------
Edward J. Boudreau, Jr.*
Chairman
Pursuant to the requirements of the Securities Act of 1933, the
Registration has been signed below by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
- ------------------------ Chairman
Edward J. Boudreau, Jr.* (Principal Executive Officer)
/s/James B. Little
- ------------------------ Senior Vice President and Chief
James B. Little Financial Officer (Principal February 14, 1997
Financial and Accounting Officer)
- ------------------------ Trustee
Dennis S. Aronowitz*
- ------------------------ Trustee
Richard P. Chapman, Jr.*
- ------------------------ Trustee
William J. Cosgrove*
- ------------------------ Trustee
Douglas M. Costle*
- ------------------------ Trustee
Leland O. Erdahl*
- ------------------------ Trustee
Richard A. Farrell*
- ------------------------ Trustee
Gail D. Fosler*
- ------------------------ Trustee
William F. Glavin*
- ------------------------ Trustee
Anne C. Hodsdon*
C-8
<PAGE>
- ------------------------ Trustee
John A. Moore*
- ------------------------ Trustee
Patti McGill Peterson*
- ------------------------ Trustee
John W. Pratt*
- ------------------------ Trustee
Richard S. Scipione*
- ------------------------ Trustee
Edward J. Spellman*
*By: /s/Susan S. Newton February 14, 1997
------------------
Susan S. Newton
Attorney-in-Fact under
Powers of Attorney dated
May 21, 1996 and
August 27, 1996, filed herewith.
</TABLE>
C-9
<PAGE>
<TABLE>
<S> <C>
John Hancock Capital Series John Hancock Strategic Series
John Hancock Income Securities Trust John Hancock Tax-Exempt Series Fund
John Hancock Investors Trust John Hancock World Fund
John Hancock Limited Term Government Fund Freedom Investment Trust
John Hancock Sovereign Bond Fund Freedom Investment Trust II
John Hancock Special Equities Fund Freedom Investment Trust III
</TABLE>
POWER OF ATTORNEY
The undersigned Trustee of each of the above listed Trusts, each a
Massachusetts business trust, does hereby severally constitute and appoint
EDWARD J. BOUDREAU, JR., SUSAN S. NEWTON, AND JAMES B. LITTLE, and each acting
singly, to be my true, sufficient and lawful attorneys, with full power to each
of them, and each acting singly, to sign for me, in my name and in the capacity
indicated below, any Registration Statement on Form N-1A and any Registration
Statement on Form N-14 to be filed by the Trust under the Investment Company Act
of 1940, as amended (the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of shares and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in the capacity indicated to enable the Trust to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any such Registration
Statements and any and all amendments thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as of
the 21st day of May, 1996.
/s/Dennis S. Aronowitz /s/William F. Glavin
- ----------------------------- -----------------------------
Dennis S. Aronowitz William F. Glavin
/s/Edward J. Boudreau, Jr. /s/Anne C. Hodsdon
- ----------------------------- -----------------------------
Edward J. Boudreau, Jr. Anne C. Hodsdon
/s/Richard P. Chapman, Jr. /s/Patti McGill Peterson
- ----------------------------- -----------------------------
Richard P. Chapman, Jr. Patti McGill Peterson
/s/William J. Cosgrove
- ----------------------------- -----------------------------
William J. Cosgrove John A. Moore
/s/Douglas M. Costle /s/John W. Pratt
- ----------------------------- -----------------------------
Douglas M. Costle John W. Pratt
/s/Leland O. Erdahl /s/Richard S. Scipione
- ----------------------------- -----------------------------
Leland O. Erdahl Richard S. Scipione
/s/Richard A. Farrell /s/Edward J. Spellman
- ----------------------------- -----------------------------
Richard A. Farrell Edward J. Spellman
/s/Gail D. Fosler
- -----------------------------
Gail D. Fosler
C-10
<PAGE>
<TABLE>
<S> <C>
John Hancock Capital Series John Hancock Strategic Series
John Hancock Declaration Trust John Hancock Tax-Exempt Series Fund
John Hancock Income Securities Trust John Hancock World Fund
John Hancock Investors Trust Freedom Investment Trust
John Hancock Limited Term Government Fund Freedom Investment Trust II
John Hancock Sovereign Bond Fund Freedom Investment Trust III
John Hancock Special Equities Fund
</TABLE>
POWER OF ATTORNEY
The undersigned Trustee of each of the above listed Trusts, each a
Massachusetts business trust, does hereby severally constitute and appoint
EDWARD J. BOUDREAU, JR., SUSAN S. NEWTON, AND JAMES B. LITTLE, and each acting
singly, to be my true, sufficient and lawful attorneys, with full power to each
of them, and each acting singly, to sign for me, in my name and in the capacity
indicated below, any Registration Statement on Form N-1A and any Registration
Statement on Form N-14 to be filed by the Trust under the Investment Company Act
of 1940, as amended (the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of shares and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in the capacity indicated to enable the Trust to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any such Registration
Statements and any and all amendments thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as of
the 27th day of August, 1996.
/s/ John A. Moore
----------------------
John A. Moore
C-11
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Description
- ----------- -------------------
99.B1 Declaration of Trust dated November 15, 1995.*
99.B2 Amended and Restated By-Laws dated December 3, 1996.+
99.B3 None
99.B4 None
99.B5 Investment Management Contracts between the Registrant on behalf
of John Hancock V.A Internation Fund, John Hancock V.A. Emerging
Growth Fund, John Hancock V.A. Discovery Fund, John Hancock V.A.
Independence Equity Fund, John Hancock V.A. Sovereign Investors
Fund, John Hancock V.A. 500 Index Fund, John Hancock V.A.
Sovereign Bond Fund, John Hancock V.A. Strategic Income Fund,
John Hancock V.A. World Bond Fund and John Hancock V.A. Money
Market Fund.+
99.B5.1 Sub-Investment Management Contracts among the Registrant on
behalf of John Hancock V.A.Independence Equity Fund, John Hancock
Advisers, Inc. and Independence Investment Associates, Inc.+
99.B5.2 Sub-Investment Management Contract among the Registrant on behalf
of John Hancock V. A. Sovereign Investors Fund, John Hancock
Advisers, Inc., and Sovereign Asset Management Corporation.+
99.B5.3 Sub-Investment Management Contact among the Registrant on behalf
of John Hancock V. A. International Fund, John Hancock Advisers,
Inc., and John Hancock Advisers International, Ltd.+
99.B6 Distribution Agreement between the Registrant and John Hancock
Funds, Inc. dated July 22, 1996+.
99.B7 None
99.B8 Master Custodian Agreement between John Hancock Mutual Funds and
Investors Bank and Trust Company.*
99.B8.1 Master Custodian Agreement between John Hancock Mutual Funds and
State Street Bank and Trust Company.*
99.B9 Transfer Agency and Service Agreement between the Registrant and
John Hancock Investors Services Corporation dated July 22, 1996.+
<PAGE>
Exhibit No. Exhibit Description
- ----------- -------------------
99.B10 None
99.B11 None
99.B12 None
99.B13 None
99.B14 None
99.B15 None
27.1
27.2
+ Filed herewith.
* Previously filed electronically with post-effective amendment number 1
(file numbers 07437 and33-64465 on November 20, 1995, accession number
000950146-95-000740.
AMENDED AND RESTATED
BY-LAWS
OF
JOHN HANCOCK DECLARATION TRUST
DECEMBER 3, 1996
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Page
<S> <C> <C>
ARTICLE I -- Definitions .........................................................................1
ARTICLE II -- Offices .........................................................................1
Section 2.1 Principal Office.........................................................1
Section 2.2 Other Offices............................................................1
ARTICLE III -- Shareholders .........................................................................1
Section 3.1 Meetings.................................................................1
Section 3.2 Notice of Meetings.......................................................1
Section 3.3 Record Date for Meetings and Other Purposes..............................1
Section 3.4 Proxies..................................................................2
Section 3.5 Abstentions and Broker Non-Votes.........................................2
Section 3.6 Inspection of Records....................................................2
Section 3.7 Action without Meeting...................................................3
ARTICLE IV -- Trustees .........................................................................3
Section 4.1 Meetings of the Trustees.................................................3
Section 4.2 Quorum and Manner of Acting..............................................3
ARTICLE V -- Committees .........................................................................4
Section 5.1 Executive and Other Committees...........................................4
Section 5.2 Meetings, Quorum and Manner of Acting....................................4
ARTICLE VI -- Officers .........................................................................4
Section 6.1 General Provisions.......................................................4
Section 6.2 Election, Term of Office and Qualifications..............................5
Section 6.3 Removal..................................................................5
Section 6.4 Powers and Duties of the Chairman........................................5
Section 6.5 Powers and Duties of the Vice Chairman...................................5
Section 6.6 Powers and Duties of the President.......................................5
Section 6.7 Powers and Duties of Vice Presidents.....................................5
Section 6.8 Powers and Duties of the Treasurer.......................................6
Section 6.9 Powers and Duties of the Secretary.......................................6
i
<PAGE>
Section 6.10 Powers and Duties of Assistant Officers..................................6
Section 6.11 Powers and Duties of Assistant Secretaries...............................6
Section 6.12 Compensation of Officers and Trustees and
Members of the Advisory Board........................................6
ARTICLE VII -- Fiscal Year .........................................................................7
ARTICLE VIII -- Seal .........................................................................7
ARTICLE IX -- Sufficiency and Waivers of Notice.............................................................7
ARTICLE X -- Amendments .........................................................................7
</TABLE>
ii
<PAGE>
ARTICLE I
DEFINITIONS
All capitalized terms have the respective meanings given them in the Declaration
of Trust of John Hancock Declaration Trust dated November 15, 1995, as amended
or restated from time to time.
ARTICLE II
OFFICES
Section 2.1. Principal Office. Until changed by the Trustees, the principal
office of the Trust shall be in Boston, Massachusetts.
Section 2.2. Other Offices. The Trust may have offices in such other places
without as well as within The Commonwealth of Massachusetts as the Trustees may
from time to time determine.
ARTICLE III
SHAREHOLDERS
Section 3.1. Meetings. Meetings of the Shareholders of the Trust or a Series or
Class thereof shall be held as provided in the Declaration of Trust at such
place within or without The Commonwealth of Massachusetts as the Trustees shall
designate. The holders of a majority the Outstanding Shares of the Trust or a
Series or Class thereof present in person or by proxy and entitled to vote shall
constitute a quorum at any meeting of the Shareholders of the Trust or a Series
or Class thereof.
Section 3.2. Notice of Meetings. Notice of all meetings of the Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail or telegraphic means to each Shareholder at his address as
recorded on the register of the Trust mailed at least seven (7) days before the
meeting, provided, however, that notice of a meeting need not be given to a
Shareholder to whom such notice need not be given under the proxy rules of the
Commission under the 1940 Act and the Securities Exchange Act of 1934, as
amended. Any adjourned meeting may be held as adjourned without further notice.
No notice need be given to any Shareholder who shall have failed to inform the
Trust of his current address or if a written waiver of notice, executed before
or after the meeting by the Shareholder or his attorney thereunto authorized, is
filed with the records of the meeting.
Section 3.3. Record Date for Meetings and Other Purposes. For the purpose of
determining the Shareholders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for such
period, not exceeding sixty (60) days, as the Trustees may determine; or without
1
<PAGE>
closing the transfer books the Trustees may fix a date not more than ninety (90)
days prior to the date of any meeting of Shareholders or distribution or other
action as a record date for the determination of the persons to be treated as
Shareholders of record for such purposes, except for dividend payments which
shall be governed by the Declaration of Trust.
Section 3.4. Proxies. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken. A
proxy shall be deemed signed if the shareholder's name is placed on the proxy
(whether by manual signature, typewriting or telegraphic transmission) by the
shareholder or the shareholder's attorney-in-fact. Proxies may be solicited in
the name of one or more Trustees or one or more of the officers of the Trust.
Only Shareholders of record shall be entitled to vote. Each whole share shall be
entitled to one vote as to any matter on which it is entitled by the Declaration
of Trust to vote and fractional shares shall be entitled to a proportionate
fractional vote. When any Share is held jointly by several persons, any one of
them may vote at any meeting in person or by proxy in respect of such Share, but
if more than one of them shall be present at such meeting in person or by proxy,
and such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A proxy,
including a photographic or similar reproduction thereof and a telegram,
cablegram, wireless or similar transmission thereof, purporting to be executed
by or on behalf of a Shareholder shall be deemed valid unless challenged at or
prior to its exercise, and the burden of proving invalidity shall rest on the
challenger. If the holder of any such Share is a minor or a person of unsound
mind, and subject to guardianship or the legal control of any other person as
regards the charge or management of such Share, he may vote by his guardian or
such other person appointed or having such control, and such vote may be given
in person or by proxy. The placing of a Shareholder's name on a proxy pursuant
to telephonic or electronically transmitted instructions obtained pursuant to
procedures reasonably designed to verify that such instructions have been
authorized by such Shareholder shall constitute execution of such proxy by or on
behalf of such Shareholder.
Section 3.5. Abstentions and Broker Non-Votes. Outstanding Shares represented in
person or by proxy (including Shares which abstain or do not vote with respect
to one or more of any proposals presented for Shareholder approval) will be
counted for purposes of determining whether a quorum is present at a meeting.
Abstentions will be treated as Shares that are present and entitled to vote for
purposes of determining the number of Shares that are present and entitled to
vote with respect to any particular proposal, but will not be counted as a vote
in favor of such proposal. If a broker or nominee holding Shares in "street
name" indicates on the proxy that it does not have discretionary authority to
vote as to a particular proposal, those Shares will not be considered as present
and entitled to vote with respect to such proposal.
Section 3.6. Inspection of Records. The records of the Trust shall be open to
inspection by Shareholders to the same extent as is permitted shareholders of a
Massachusetts business corporation.
2
<PAGE>
Section 3.7. Action without Meeting. For as long as there are under one hundred
fifty (150) shareholders, any action which may be taken by Shareholders may be
taken without a meeting if a majority of Outstanding Shares entitled to vote on
the matter (or such larger proportion thereof as shall be required by law, the
Declaration of Trust, or the By-laws) consent to the action in writing and the
written consents are filed with the records of the meetings of Shareholders.
Such consents shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
ARTICLE IV
TRUSTEES
Section 4.1. Meetings of the Trustees. The Trustees may in their discretion
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given. Meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the President, the Chairman
or by any one of the Trustees, at the time being in office. Notice of the time
and place of each meeting other than regular or stated meetings shall be given
by the Secretary or an Assistant Secretary or by the officer or Trustee calling
the meeting and shall be mailed to each Trustee at least two days before the
meeting, or shall be given by telephone, cable, wireless, facsimilie or
electronic means to each Trustee at his business address, or personally
delivered to him at least one day before the meeting. Such notice may, however,
be waived by any Trustee. Notice of a meeting need not be given to any Trustee
if a written waiver of notice, executed by him before or after the meeting, is
filed with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him. A notice or waiver of notice need not specify the purpose of any meeting.
The Trustees may meet by means of a telephone conference circuit or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall be deemed to have been held at a place designated by the Trustees at the
meeting. Participation in a telephone conference meeting shall constitute
presence in person at such meeting. Any action required or permitted to be taken
at any meeting of the Trustees may be taken by the Trustees without a meeting if
a majority of the Trustees consent to the action in writing and the written
consents are filed with the records of the Trustees' meetings. Such consents
shall be treated as a vote for all purposes.
Section 4.2. Quorum and Manner of Acting. A majority of the Trustees shall be
present in person at any regular or special meeting of the Trustees in order to
constitute a quorum for the transaction of business at such meeting and (except
as otherwise required by law, the Declaration of Trust or these By-laws) the act
of a majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.
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ARTICLE V
COMMITTEES
Section 5.1. Executive and Other Committees. The Trustees by vote of a majority
of all the Trustees may elect from their own number an Executive Committee to
consist of not less than two (2) members to hold office at the pleasure of the
Trustees, which shall have the power to conduct the current and ordinary
business of the Trust while the Trustees are not in session, including the
purchase and sale of securities and the designation of securities to be
delivered upon redemption of Shares of the Trust or a Series thereof, and such
other powers of the Trustees as the Trustees may, from time to time, delegate to
them except those powers which by law, the Declaration of Trust or these By-laws
they are prohibited from delegating. The Trustees may also elect from their own
number other Committees from time to time; the number composing such Committees,
the powers conferred upon the same (subject to the same limitations as with
respect to the Executive Committee) and the term of membership on such
Committees to be determined by the Trustees. The Trustees may designate a
chairman of any such Committee. In the absence of such designation the Committee
may elect its own Chairman.
Section 5.2. Meetings, Quorum and Manner of Acting. The Trustees may (1) provide
for stated meetings of any Committee, (2) specify the manner of calling and
notice required for special meetings of any Committee, (3) specify the number of
members of a Committee required to constitute a quorum and the number of members
of a Committee required to exercise specified powers delegated to such
Committee, (4) authorize the making of decisions to exercise specified powers by
written assent of the requisite number of members of a Committee without a
meeting, and (5) authorize the members of a Committee to meet by means of a
telephone conference circuit.
The Executive Committee shall keep regular minutes of its meetings and records
of decisions taken without a meeting and cause them to be recorded in a book
designated for that purpose and kept in the office of the Trust.
ARTICLE VI
OFFICERS
Section 6.1. General Provisions. The officers of the Trust shall be a Chairman,
a President, a Treasurer and a Secretary, who shall be elected by the Trustees.
The Trustees may elect or appoint such other officers or agents as the business
of the Trust may require, including one or more Vice Presidents, one or more
Assistant Secretaries, and one or more Assistant Treasurers. The Trustees may
delegate to any officer or committee the power to appoint any subordinate
officers or agents.
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Section 6.2. Election, Term of Office and Qualifications. The officers of the
Trust and any Series thereof (except those appointed pursuant to Section 6.10)
shall be elected by the Trustees. Except as provided in Sections 6.3 and 6.4 of
this Article VI, each officer elected by the Trustees shall hold office at the
pleasure of the Trustees. Any two or more offices may be held by the same
person. The Chairman of the Board shall be selected from among the Trustees and
may hold such office only so long as he/she continue to be a Trustee. Any
Trustee or officer may be but need not be a Shareholder of the Trust.
Section 6.3. Removal. The Trustees, at any regular or special meeting of the
Trustees, may remove any officer with or without cause, by a vote of a majority
of the Trustees then in office. Any officer or agent appointed by an officer or
committee may be removed with or without cause by such appointing officer or
committee.
Section 6.4. Powers and Duties of the Chairman. The Chairman shall preside at
the meetings of the Shareholders and of the Trustees. He may call meetings of
the Trustees and of any committee thereof whenever he deems it necessary. He
shall be the Chief Executive Officer of the Trust and shall have, with the
President, general supervision over the business and policies of the Trust.
Section 6.5. Powers and Duties of the Vice Chairman. The Trustees may, but need
not, appoint one or more Vice Chairman of the Trust. A Vice Chairman shall be an
executive officer of the Trust and shall have the powers and duties of a Vice
President of the Trust as provided in Section 7 of this Article VI. The Vice
Chairman shall perform such duties as may be assigned to him or her from time to
time by the Trustees or the Chairman.
Section 6.6. Powers and Duties of the President. The President shall preside at
all meetings of the Shareholders in the absence of the Chairman. Subject to the
control of the Trustees and to the control of any Committees of the Trustees,
within their respective spheres as provided by the Trustees, he shall at all
times exercise general supervision over the business and policies of the Trust.
He shall have the power to employ attorneys and counsel for the Trust or any
Series or Class thereof and to employ such subordinate officers, agents, clerks
and employees as he may find necessary to transact the business of the Trust or
any Series or Class thereof. He shall also have the power to grant, issue,
execute or sign such powers of attorney, proxies or other documents as may be
deemed advisable or necessary in furtherance of the interests of the Trust or
any Series thereof. The President shall have such other powers and duties, as
from time to time may be conferred upon or assigned to him by the Trustees.
Section 6.7. Powers and Duties of Vice Presidents. In the absence or disability
of the President, the Vice President or, if there be more than one Vice
President, any Vice President designated by the Trustees, shall perform all the
duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees and the President.
5
<PAGE>
Section 6.8. Powers and Duties of the Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Trust. He shall deliver all
funds of the Trust or any Series or Class thereof which may come into his hands
to such Custodian as the Trustees may employ. He shall render a statement of
condition of the finances of the Trust or any Series or Class thereof to the
Trustees as often as they shall require the same and he shall in general perform
all the duties incident to the office of a Treasurer and such other duties as
from time to time may be assigned to him by the Trustees. The Treasurer shall
give a bond for the faithful discharge of his duties, if required so to do by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
Section 6.9. Powers and Duties of the Secretary. The Secretary shall keep the
minutes of all meetings of the Trustees and of the Shareholders in proper books
provided for that purpose; he shall have custody of the seal of the Trust; he
shall have charge of the Share transfer books, lists and records unless the same
are in the charge of a transfer agent. He shall attend to the giving and serving
of all notices by the Trust in accordance with the provisions of these By-laws
and as required by law; and subject to these By-laws, he shall in general
perform all duties incident to the office of Secretary and such other duties as
from time to time may be assigned to him by the Trustees.
Section 6.10. Powers and Duties of Assistant Officers. In the absence or
disability of the Treasurer, any officer designated by the Trustees shall
perform all the duties, and may exercise any of the powers, of the Treasurer.
Each officer shall perform such other duties as from time to time may be
assigned to him by the Trustees. Each officer performing the duties and
exercising the powers of the Treasurer, if any, and any Assistant Treasurer,
shall give a bond for the faithful discharge of his duties, if required so to do
by the Trustees, in such sum and with such surety or sureties as the Trustees
shall require.
Section 6.11. Powers and Duties of Assistant Secretaries. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees.
Section 6.12. Compensation of Officers and Trustees and Members of the Advisory
Board. Subject to any applicable provisions of the Declaration of Trust, the
compensation of the officers and Trustees and members of an advisory board shall
be fixed from time to time by the Trustees or, in the case of officers, by any
Committee or officer upon whom such power may be conferred by the Trustees. No
officer shall be prevented from receiving such compensation as such officer by
reason of the fact that he is also a Trustee.
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ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust and any Series thereof shall be established by
resolution of the Trustees.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall have such
inscription thereon as the Trustees may from time to time prescribe but the
absence of a seal shall not impair the validity or execution of any document.
ARTICLE IX
SUFFICIENCY AND WAIVERS OF NOTICE
Whenever any notice whatever is required to be given by law, the Declaration of
Trust or these By-laws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. A notice shall be deemed to have
been sent by mail, telegraph, cable, wireless, facsimilie or electronic means
for the purposes of these By-laws when it has been delivered to a representative
of any entity holding itself out as capable of sending notice by such means with
instructions that it be so sent.
ARTICLE X
AMENDMENTS
These By-laws, or any of them, may be altered, amended or repealed, or new
By-laws may be adopted by a vote of a majority of the Trustees, provided,
however, that no By-law may be amended, adopted or repealed by the Trustees if
such amendment, adoption or repeal requires, pursuant to federal or state law,
the Declaration of Trust or these By-laws, a vote of the Shareholders.
END OF BY-LAWS
7
JOHN HANCOCK V.A. INTERNATIONAL FUND
(a series of John Hancock Declaration Trust)
101 Huntington Avenue
Boston, Massachusetts
August 29, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Declaration Trust (the "Trust") of which John Hancock V.A.
International Fund (the "Fund") is a series, has been organized as a business
trust under the laws of the Commonwealth of Massachusetts to engage in the
business of an investment company. The Trust's shares of beneficial interest are
currently divided into ten series (including the Fund), each series representing
the entire undivided interest in a separate portfolio of assets. Series may be
established or terminated from time to time by action of the Board of Trustees
of the Trust. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. Delivery of Documents. The Trust has furnished the Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995,
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as the
investment adviser for the Fund and approving the form of this
Agreement and the resolution of the Fund's sole shareholder
approving this Agreement.
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
<PAGE>
The Trust will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. The Adviser will use its
best efforts to provide to the Fund continuing and suitable investment
programs with respect to investments, consistent with the investment
objectives, policies and restrictions of the Fund. In the performance
of the Adviser's duties hereunder, subject always (x) to the provisions
contained in the documents delivered to the Adviser pursuant to Section
1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from
time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objectives, policies and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and
sale of options, alone or in consultation with any sub-adviser
or sub-advisers appointed pursuant to this Agreement and
subject to the provisions of any sub-investment management
contract respecting the responsibilities of such sub-adviser
or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
provided that in connection with the placing of such orders
and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund
as in effect from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees,
make reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
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<PAGE>
(i) maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, including
sub-paragraphs (b)(5), (6), (9) and (10) and paragraph (f) of
Rule 31a-1 thereunder (other than those records being
maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
the Adviser may deem necessary or useful in the discharge of
the Adviser's duties hereunder;
(k) oversee and use the Adviser's best efforts to assure the
performance of the activities and services of the custodian,
transfer agent or other similar agents retained by the Fund;
and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
3. Sub-advisers. The Adviser may engage one or more investment
advisers which are either registered as such or specifically exempt
from registration under the 1940 Act to act as sub-advisers to provide,
with respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written sub-advisory
contract to which the Trust and the Adviser shall be parties. The
sub-advisory contract shall be subject to approval by the vote of a
majority of the Trustees of the Trust who are not interested persons of
the Adviser, the sub-adviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by the
vote of a majority of the outstanding voting securities of the Fund and
otherwise consistent with the terms of the 1940 Act. Any fee,
compensation or expense to be paid to any sub-adviser shall be paid by
the Adviser, and no obligation to the sub-adviser shall be incurred on
the Fund's or Trust's behalf, except as agreed upon by the Trustees of
the Trust and otherwise consistent with the terms of the 1940 Act.
4. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other expenses of
the Fund;
(c) any other expenses incurred by the Adviser in connection with
the performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon between the
Adviser and the Trustees.
5. Expenses of the Fund Not Paid by the Adviser. The Adviser will
not be required to pay any expenses which this Agreement does not
expressly make payable by it. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 4,
the Adviser will not be required to pay under this Agreement:
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<PAGE>
(a) the expenses of organizing the Trust and the Fund (including
without limitation legal, accounting and auditing fees and
expenses incurred in connection with the matters referred to
in this clause (a)), of initially registering the shares of
the Trust under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(b) the compensation and expenses of Trustees who are not
interested persons (as used in this Agreement such term shall
have the meaning specified in the 1940 Act) of the Adviser,
and of independent advisers, independent contractors,
consultants, managers and other unaffiliated agents employed
by the Fund other than through the Adviser;
(c) legal (including an allocable portion of the cost of its
employees rendering legal services to the Fund), accounting
and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of
the shares of the Fund.
6. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser as
herein provided, the Adviser shall be entitled to a fee, paid monthly
in arrears, equal to 0.90% of the average daily net assets of the Fund
for the preceding month.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with
the 1940 Act and the regulations promulgated thereunder. The Adviser
will receive a pro-rata portion of such monthly fee for any periods in
which the Adviser serves as investment adviser to the Fund for less
than a full month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset value
for purposes of calculating the advisory fee shall be calculated as of
the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any
limitation imposed by the law of a state where the Fund is registered
to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent required by law, and the Adviser will
make any arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit
the fund's expenses to any level the Adviser may specify. Any fee
reduction or undertaking shall constitute a binding modification of
this agreement while it is in effect but may be discontinued or
modified prospectively by the adviser at any time.
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<PAGE>
7. Other Activities of the Adviser and Its Affiliates. Nothing
herein contained shall prevent the Adviser or any affiliate or
associate of the Adviser from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or portfolios
similar to the Fund's; and it is specifically understood that officers,
directors and employees of the Adviser and those of its parent company,
John Hancock Mutual Life Insurance Company, or other affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to
other investment advisory clients of the Adviser or of its affiliates
and to said affiliates themselves.
8. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Adviser nor any of its investment management subsidiaries,
nor any of the Adviser's or such investment management subsidiaries'
directors, officers or employees will act as principal or agent or
receive any commission except as may be permitted by the 1940 Act and
rules and regulations promulgated thereunder. If any occasions shall
arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way
on behalf of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of
its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts. The Fund
acknowledges that the Adviser and its officers, affiliates, and
employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. The Adviser
shall have no obligation to acquire with respect to the Fund a position
in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account
of another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Adviser
from purchasing or recommending the purchase of a particular security
for one or more funds or clients while other funds or clients may be
selling the same security.
9. No Partnership or Joint Venture. Neither the Trust, the Fund,
nor the Adviser are partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on any of them.
10. Name of the Trust and Fund. The Trust and the Fund may use the
name "John Hancock" or any name or names derived from or similar to the
names "John Hancock Advisers, Inc." or "John Hancock Mutual Life
Insurance Company" only for so long as this Agreement (or similar
agreement with John Hancock Mutual Life Insurance Company or any of its
affiliates or subsidiaries) remains in effect. At such time as this
Agreement or such other agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted
the name "John Hancock V.A. International Fund" through permission of
John Hancock Mutual Life Insurance Company, a Massachusetts
5
<PAGE>
insurance company, and agrees that John Hancock Mutual Life Insurance
Company reserves to itself and any successor to its business the right
to grant the non-exclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
11. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though
also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the
Fund and not as the Adviser's employee or agent.
12. Duration and Termination of this Agreement. This Agreement
shall remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Trustees who are not interested persons of the Adviser or (other than
as Board Members) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees
or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of
the outstanding voting securities of the Fund, by the Trustees or by
the Adviser. Termination of this Agreement shall not be deemed to
terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "assignment," "interested person" and "voting security"), shall be
applied.
13. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser or (other than as Board Members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Severability. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
6
<PAGE>
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The name
John Hancock V.A. International Fund is a series designation of the
Trustees under the Trust's Declaration of Trust, dated Nov. 15, 1995,
as amended from time to time. The Declaration of Trust has been filed
with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Fund shall not be liable for the
obligations of any other series of the Trust and no other series shall
be liable for the Fund's obligations hereunder.
Yours very truly,
JOHN HANCOCK DECLARATION TRUST
--on behalf of John Hancock V.A. International Fund
By: /s/Anne C. Hodsdon
--------------------------
Anne C. Hodsdon
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
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<PAGE>
JOHN HANCOCK V.A. EMERGING GROWTH FUND
(a series of John Hancock Declaration Trust)
101 Huntington Avenue
Boston, Massachusetts
August 29, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Declaration Trust (the "Trust") of which John Hancock V.A.
Emerging Growth Fund (the "Fund") is a series, has been organized as a business
trust under the laws of the Commonwealth of Massachusetts to engage in the
business of an investment company. The Trust's shares of beneficial interest are
currently divided into ten series (including the Fund), each series representing
the entire undivided interest in a separate portfolio of assets. Series may be
established or terminated from time to time by action of the Board of Trustees
of the Trust. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. Delivery of Documents. The Trust has furnished the Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995,
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as the
investment adviser for the Fund and approving the form of this
Agreement and the resolution of the Fund's sole shareholder
approving this Agreement.
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
<PAGE>
The Trust will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. The Adviser will use its
best efforts to provide to the Fund continuing and suitable investment
programs with respect to investments, consistent with the investment
objectives, policies and restrictions of the Fund. In the performance
of the Adviser's duties hereunder, subject always (x) to the provisions
contained in the documents delivered to the Adviser pursuant to Section
1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from
time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objectives, policies and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and
sale of options, alone or in consultation with any sub-adviser
or sub-advisers appointed pursuant to this Agreement and
subject to the provisions of any sub-investment management
contract respecting the responsibilities of such sub-adviser
or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
provided that in connection with the placing of such orders
and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund
as in effect from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees,
make reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
2
<PAGE>
(i) maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, including
sub-paragraphs (b)(5), (6), (9) and (10) and paragraph (f) of
Rule 31a-1 thereunder (other than those records being
maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
the Adviser may deem necessary or useful in the discharge of
the Adviser's duties hereunder;
(k) oversee and use the Adviser's best efforts to assure the
performance of the activities and services of the custodian,
transfer agent or other similar agents retained by the Fund;
and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
3. Sub-advisers. The Adviser may engage one or more investment
advisers which are either registered as such or specifically exempt
from registration under the 1940 Act to act as sub-advisers to provide,
with respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written sub-advisory
contract to which the Trust and the Adviser shall be parties. The
sub-advisory contract shall be subject to approval by the vote of a
majority of the Trustees of the Trust who are not interested persons of
the Adviser, the sub-adviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by the
vote of a majority of the outstanding voting securities of the Fund and
otherwise consistent with the terms of the 1940 Act. Any fee,
compensation or expense to be paid to any sub-adviser shall be paid by
the Adviser, and no obligation to the sub-adviser shall be incurred on
the Fund's or Trust's behalf, except as agreed upon by the Trustees of
the Trust and otherwise consistent with the terms of the 1940 Act.
4. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other expenses of
the Fund;
(c) any other expenses incurred by the Adviser in connection with
the performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon between the
Adviser and the Trustees.
5. Expenses of the Fund Not Paid by the Adviser. The Adviser will
not be required to pay any expenses which this Agreement does not
expressly make payable by it. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 4,
the Adviser will not be required to pay under this Agreement:
3
<PAGE>
(a) the expenses of organizing the Trust and the Fund (including
without limitation legal, accounting and auditing fees and
expenses incurred in connection with the matters referred to
in this clause (a)), of initially registering the shares of
the Trust under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(b) the compensation and expenses of Trustees who are not
interested persons (as used in this Agreement such term shall
have the meaning specified in the 1940 Act) of the Adviser,
and of independent advisers, independent contractors,
consultants, managers and other unaffiliated agents employed
by the Fund other than through the Adviser;
(c) legal (including an allocable portion of the cost of its
employees rendering legal services to the Fund), accounting
and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of
the shares of the Fund.
6. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser as
herein provided, the Adviser shall be entitled to a fee, paid monthly
in arrears, equal to 0.75% of the average daily net assets of the Fund
for the preceding month.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with
the 1940 Act and the regulations promulgated thereunder. The Adviser
will receive a pro-rata portion of such monthly fee for any periods in
which the Adviser serves as investment adviser to the Fund for less
than a full month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset value
for purposes of calculating the advisory fee shall be calculated as of
the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any
limitation imposed by the law of a state where the Fund is registered
to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent required by law, and the Adviser will
make any arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit
the fund's expenses to any level the Adviser may specify. Any fee
reduction or undertaking shall constitute a binding modification of
this agreement while it is in effect but may be discontinued or
modified prospectively by the adviser at any time.
4
<PAGE>
7. Other Activities of the Adviser and Its Affiliates. Nothing
herein contained shall prevent the Adviser or any affiliate or
associate of the Adviser from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or portfolios
similar to the Fund's; and it is specifically understood that officers,
directors and employees of the Adviser and those of its parent company,
John Hancock Mutual Life Insurance Company, or other affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to
other investment advisory clients of the Adviser or of its affiliates
and to said affiliates themselves.
8. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Adviser nor any of its investment management subsidiaries,
nor any of the Adviser's or such investment management subsidiaries'
directors, officers or employees will act as principal or agent or
receive any commission except as may be permitted by the 1940 Act and
rules and regulations promulgated thereunder. If any occasions shall
arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way
on behalf of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of
its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts. The Fund
acknowledges that the Adviser and its officers, affiliates, and
employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. The Adviser
shall have no obligation to acquire with respect to the Fund a position
in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account
of another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Adviser
from purchasing or recommending the purchase of a particular security
for one or more funds or clients while other funds or clients may be
selling the same security.
9. No Partnership or Joint Venture. Neither the Trust, the Fund,
nor the Adviser are partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on any of them.
10. Name of the Trust and Fund. The Trust and the Fund may use the
name "John Hancock" or any name or names derived from or similar to the
names "John Hancock Advisers, Inc." or "John Hancock Mutual Life
Insurance Company" only for so long as this Agreement (or similar
agreement with John Hancock Mutual Life Insurance Company or any of its
affiliates or subsidiaries) remains in effect. At such time as this
Agreement or such other agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted
the name "John Hancock V.A. Emerging Growth Fund" through permission of
John Hancock Mutual Life Insurance Company, a Massachusetts
5
<PAGE>
insurance company, and agrees that John Hancock Mutual Life Insurance
Company reserves to itself and any successor to its business the right
to grant the non-exclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
11. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though
also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the
Fund and not as the Adviser's employee or agent.
12. Duration and Termination of this Agreement. This Agreement
shall remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Trustees who are not interested persons of the Adviser or (other than
as Board Members) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees
or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of
the outstanding voting securities of the Fund, by the Trustees or by
the Adviser. Termination of this Agreement shall not be deemed to
terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "assignment," "interested person" and "voting security"), shall be
applied.
13. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser or (other than as Board Members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Severability. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
6
<PAGE>
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The name
John Hancock V.A. Emerging Growth Fund is a series designation of the
Trustees under the Trust's Declaration of Trust, dated Nov. 15, 1995,
as amended from time to time. The Declaration of Trust has been filed
with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Fund shall not be liable for the
obligations of any other series of the Trust and no other series shall
be liable for the Fund's obligations hereunder.
Yours very truly,
JOHN HANCOCK DECLARATION TRUST
--on behalf of John Hancock V.A. Emerging Growth Fund
By: /s/Anne C. Hodsdon
------------------------
Anne C. Hodsdon
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
<PAGE>
JOHN HANCOCK V.A. DISCOVERY FUND
(a series of John Hancock Declaration Trust)
101 Huntington Avenue
Boston, Massachusetts
August 29, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Declaration Trust (the "Trust") of which John Hancock V.A.
Discovery Fund (the "Fund") is a series, has been organized as a business trust
under the laws of the Commonwealth of Massachusetts to engage in the business of
an investment company. The Trust's shares of beneficial interest are currently
divided into ten series (including the Fund), each series representing the
entire undivided interest in a separate portfolio of assets. Series may be
established or terminated from time to time by action of the Board of Trustees
of the Trust. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. Delivery of Documents. The Trust has furnished the Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995,
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as the
investment adviser for the Fund and approving the form of this
Agreement and the resolution of the Fund's sole shareholder
approving this Agreement.
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
<PAGE>
The Trust will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. The Adviser will use its
best efforts to provide to the Fund continuing and suitable investment
programs with respect to investments, consistent with the investment
objectives, policies and restrictions of the Fund. In the performance
of the Adviser's duties hereunder, subject always (x) to the provisions
contained in the documents delivered to the Adviser pursuant to Section
1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from
time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objectives, policies and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and
sale of options, alone or in consultation with any sub-adviser
or sub-advisers appointed pursuant to this Agreement and
subject to the provisions of any sub-investment management
contract respecting the responsibilities of such sub-adviser
or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
provided that in connection with the placing of such orders
and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund
as in effect from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees,
make reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
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<PAGE>
(i) maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, including
sub-paragraphs (b)(5), (6), (9) and (10) and paragraph (f) of
Rule 31a-1 thereunder (other than those records being
maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
the Adviser may deem necessary or useful in the discharge of
the Adviser's duties hereunder;
(k) oversee and use the Adviser's best efforts to assure the
performance of the activities and services of the custodian,
transfer agent or other similar agents retained by the Fund;
and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
3. Sub-advisers. The Adviser may engage one or more investment
advisers which are either registered as such or specifically exempt
from registration under the 1940 Act to act as sub-advisers to provide,
with respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written sub-advisory
contract to which the Trust and the Adviser shall be parties. The
sub-advisory contract shall be subject to approval by the vote of a
majority of the Trustees of the Trust who are not interested persons of
the Adviser, the sub-adviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by the
vote of a majority of the outstanding voting securities of the Fund and
otherwise consistent with the terms of the 1940 Act. Any fee,
compensation or expense to be paid to any sub-adviser shall be paid by
the Adviser, and no obligation to the sub-adviser shall be incurred on
the Fund's or Trust's behalf, except as agreed upon by the Trustees of
the Trust and otherwise consistent with the terms of the 1940 Act.
4. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other expenses of
the Fund;
(c) any other expenses incurred by the Adviser in connection with
the performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon between the
Adviser and the Trustees.
5. Expenses of the Fund Not Paid by the Adviser. The Adviser will
not be required to pay any expenses which this Agreement does not
expressly make payable by it. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 4,
the Adviser will not be required to pay under this Agreement:
3
<PAGE>
(a) the expenses of organizing the Trust and the Fund (including
without limitation legal, accounting and auditing fees and
expenses incurred in connection with the matters referred to
in this clause (a)), of initially registering the shares of
the Trust under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(b) the compensation and expenses of Trustees who are not
interested persons (as used in this Agreement such term shall
have the meaning specified in the 1940 Act) of the Adviser,
and of independent advisers, independent contractors,
consultants, managers and other unaffiliated agents employed
by the Fund other than through the Adviser;
(c) legal (including an allocable portion of the cost of its
employees rendering legal services to the Fund), accounting
and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of
the shares of the Fund.
6. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser as
herein provided, the Adviser shall be entitled to a fee, paid monthly
in arrears, equal to 0.75% of the average daily net assets of the Fund
for the preceding month.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with
the 1940 Act and the regulations promulgated thereunder. The Adviser
will receive a pro-rata portion of such monthly fee for any periods in
which the Adviser serves as investment adviser to the Fund for less
than a full month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset value
for purposes of calculating the advisory fee shall be calculated as of
the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any
limitation imposed by the law of a state where the Fund is registered
to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent required by law, and the Adviser will
make any arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit
the fund's expenses to any level the Adviser may specify. Any fee
reduction or undertaking shall constitute a binding modification of
this agreement while it is in effect but may be discontinued or
modified prospectively by the adviser at any time.
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<PAGE>
7. Other Activities of the Adviser and Its Affiliates. Nothing
herein contained shall prevent the Adviser or any affiliate or
associate of the Adviser from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or portfolios
similar to the Fund's; and it is specifically understood that officers,
directors and employees of the Adviser and those of its parent company,
John Hancock Mutual Life Insurance Company, or other affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to
other investment advisory clients of the Adviser or of its affiliates
and to said affiliates themselves.
8. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Adviser nor any of its investment management subsidiaries,
nor any of the Adviser's or such investment management subsidiaries'
directors, officers or employees will act as principal or agent or
receive any commission except as may be permitted by the 1940 Act and
rules and regulations promulgated thereunder. If any occasions shall
arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way
on behalf of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of
its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts. The Fund
acknowledges that the Adviser and its officers, affiliates, and
employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. The Adviser
shall have no obligation to acquire with respect to the Fund a position
in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account
of another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Adviser
from purchasing or recommending the purchase of a particular security
for one or more funds or clients while other funds or clients may be
selling the same security.
9. No Partnership or Joint Venture. Neither the Trust, the Fund,
nor the Adviser are partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on any of them.
10. Name of the Trust and Fund. The Trust and the Fund may use the
name "John Hancock" or any name or names derived from or similar to the
names "John Hancock Advisers, Inc." or "John Hancock Mutual Life
Insurance Company" only for so long as this Agreement (or similar
agreement with John Hancock Mutual Life Insurance Company or any of its
affiliates or subsidiaries) remains in effect. At such time as this
Agreement or such other agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted
the name "John Hancock V.A. Discovery Fund" through permission of John
Hancock Mutual Life Insurance Company, a Massachusetts
5
<PAGE>
insurance company, and agrees that John Hancock Mutual Life Insurance
Company reserves to itself and any successor to its business the right
to grant the non-exclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
11. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though
also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the
Fund and not as the Adviser's employee or agent.
12. Duration and Termination of this Agreement. This Agreement
shall remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Trustees who are not interested persons of the Adviser or (other than
as Board Members) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees
or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of
the outstanding voting securities of the Fund, by the Trustees or by
the Adviser. Termination of this Agreement shall not be deemed to
terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "assignment," "interested person" and "voting security"), shall be
applied.
13. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser or (other than as Board Members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Severability. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
6
<PAGE>
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The name
John Hancock V.A. Discovery Fund is a series designation of the
Trustees under the Trust's Declaration of Trust, dated Nov. 15, 1995,
as amended from time to time. The Declaration of Trust has been filed
with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Fund shall not be liable for the
obligations of any other series of the Trust and no other series shall
be liable for the Fund's obligations hereunder.
Yours very truly,
JOHN HANCOCK DECLARATION TRUST
--on behalf of John Hancock V.A. Discovery Fund
By: /s/Anne C. Hodsdon
----------------------------
Anne C. Hodsdon
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
7
<PAGE>
JOHN HANCOCK V.A. INDEPENDENCE EQUITY FUND
(a series of John Hancock Declaration Trust)
101 Huntington Avenue
Boston, Massachusetts
August 29, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Declaration Trust (the "Trust") of which John Hancock V.A.
Independence Equity Fund (the "Fund") is a series, has been organized as a
business trust under the laws of the Commonwealth of Massachusetts to engage in
the business of an investment company. The Trust's shares of beneficial interest
are currently divided into ten series (including the Fund), each series
representing the entire undivided interest in a separate portfolio of assets.
Series may be established or terminated from time to time by action of the Board
of Trustees of the Trust. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. Delivery of Documents. The Trust has furnished the Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995,
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as the
investment adviser for the Fund and approving the form of this
Agreement and the resolution of the Fund's sole shareholder
approving this Agreement.
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
<PAGE>
The Trust will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. The Adviser will use its
best efforts to provide to the Fund continuing and suitable investment
programs with respect to investments, consistent with the investment
objectives, policies and restrictions of the Fund. In the performance
of the Adviser's duties hereunder, subject always (x) to the provisions
contained in the documents delivered to the Adviser pursuant to Section
1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from
time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objectives, policies and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and
sale of options, alone or in consultation with any sub-adviser
or sub-advisers appointed pursuant to this Agreement and
subject to the provisions of any sub-investment management
contract respecting the responsibilities of such sub-adviser
or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
provided that in connection with the placing of such orders
and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund
as in effect from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees,
make reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
2
<PAGE>
(i) maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, including
sub-paragraphs (b)(5), (6), (9) and (10) and paragraph (f) of
Rule 31a-1 thereunder (other than those records being
maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
the Adviser may deem necessary or useful in the discharge of
the Adviser's duties hereunder;
(k) oversee and use the Adviser's best efforts to assure the
performance of the activities and services of the custodian,
transfer agent or other similar agents retained by the Fund;
and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
3. Sub-advisers. The Adviser may engage one or more investment
advisers which are either registered as such or specifically exempt
from registration under the 1940 Act to act as sub-advisers to provide,
with respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written sub-advisory
contract to which the Trust and the Adviser shall be parties. The
sub-advisory contract shall be subject to approval by the vote of a
majority of the Trustees of the Trust who are not interested persons of
the Adviser, the sub-adviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by the
vote of a majority of the outstanding voting securities of the Fund and
otherwise consistent with the terms of the 1940 Act. Any fee,
compensation or expense to be paid to any sub-adviser shall be paid by
the Adviser, and no obligation to the sub-adviser shall be incurred on
the Fund's or Trust's behalf, except as agreed upon by the Trustees of
the Trust and otherwise consistent with the terms of the 1940 Act.
4. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other expenses of
the Fund;
(c) any other expenses incurred by the Adviser in connection with
the performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon between the
Adviser and the Trustees.
5. Expenses of the Fund Not Paid by the Adviser. The Adviser will
not be required to pay any expenses which this Agreement does not
expressly make payable by it. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 4,
the Adviser will not be required to pay under this Agreement:
3
<PAGE>
(a) the expenses of organizing the Trust and the Fund (including
without limitation legal, accounting and auditing fees and
expenses incurred in connection with the matters referred to
in this clause (a)), of initially registering the shares of
the Trust under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(b) the compensation and expenses of Trustees who are not
interested persons (as used in this Agreement such term shall
have the meaning specified in the 1940 Act) of the Adviser,
and of independent advisers, independent contractors,
consultants, managers and other unaffiliated agents employed
by the Fund other than through the Adviser;
(c) legal (including an allocable portion of the cost of its
employees rendering legal services to the Fund), accounting
and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of
the shares of the Fund.
6. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser as
herein provided, the Adviser shall be entitled to a fee, paid monthly
in arrears, equal to 0.70% of the average daily net assets of the Fund
for the preceding month.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with
the 1940 Act and the regulations promulgated thereunder. The Adviser
will receive a pro-rata portion of such monthly fee for any periods in
which the Adviser serves as investment adviser to the Fund for less
than a full month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset value
for purposes of calculating the advisory fee shall be calculated as of
the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any
limitation imposed by the law of a state where the Fund is registered
to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent required by law, and the Adviser will
make any arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit
the fund's expenses to any level the Adviser may specify. Any fee
reduction or undertaking shall constitute a binding modification of
this agreement while it is in effect but may be discontinued or
modified prospectively by the adviser at any time.
4
<PAGE>
7. Other Activities of the Adviser and Its Affiliates. Nothing
herein contained shall prevent the Adviser or any affiliate or
associate of the Adviser from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or portfolios
similar to the Fund's; and it is specifically understood that officers,
directors and employees of the Adviser and those of its parent company,
John Hancock Mutual Life Insurance Company, or other affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to
other investment advisory clients of the Adviser or of its affiliates
and to said affiliates themselves.
8. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Adviser nor any of its investment management subsidiaries,
nor any of the Adviser's or such investment management subsidiaries'
directors, officers or employees will act as principal or agent or
receive any commission except as may be permitted by the 1940 Act and
rules and regulations promulgated thereunder. If any occasions shall
arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way
on behalf of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of
its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts. The Fund
acknowledges that the Adviser and its officers, affiliates, and
employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. The Adviser
shall have no obligation to acquire with respect to the Fund a position
in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account
of another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Adviser
from purchasing or recommending the purchase of a particular security
for one or more funds or clients while other funds or clients may be
selling the same security.
9. No Partnership or Joint Venture. Neither the Trust, the Fund,
nor the Adviser are partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on any of them.
10. Name of the Trust and Fund. The Trust and the Fund may use the
name "John Hancock" or any name or names derived from or similar to the
names "John Hancock Advisers, Inc." or "John Hancock Mutual Life
Insurance Company" only for so long as this Agreement (or similar
agreement with John Hancock Mutual Life Insurance Company or any of its
affiliates or subsidiaries) remains in effect. At such time as this
Agreement or such other agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted
the name "John Hancock V.A. Independence Equity Fund" through
permission of John Hancock Mutual Life Insurance Company, a
Massachusetts
5
<PAGE>
insurance company, and agrees that John Hancock Mutual Life Insurance
Company reserves to itself and any successor to its business the right
to grant the non-exclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
11. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though
also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the
Fund and not as the Adviser's employee or agent.
12. Duration and Termination of this Agreement. This Agreement
shall remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Trustees who are not interested persons of the Adviser or (other than
as Board Members) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees
or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of
the outstanding voting securities of the Fund, by the Trustees or by
the Adviser. Termination of this Agreement shall not be deemed to
terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "assignment," "interested person" and "voting security"), shall be
applied.
13. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser or (other than as Board Members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Severability. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
6
<PAGE>
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The name
John Hancock V.A. Independence Equity Fund is a series designation of
the Trustees under the Trust's Declaration of Trust, dated Nov. 15,
1995, as amended from time to time. The Declaration of Trust has been
filed with the Secretary of State of the Commonwealth of Massachusetts.
The obligations of the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Fund shall not be liable for the
obligations of any other series of the Trust and no other series shall
be liable for the Fund's obligations hereunder.
Yours very truly,
JOHN HANCOCK DECLARATION TRUST
--on behalf of John Hancock V.A. Independence Equity Fund
By: /s/Anne C. Hodsdon
--------------------------
Anne C. Hodsdon
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
7
<PAGE>
JOHN HANCOCK V.A. SOVEREIGN INVESTORS FUND
(a series of John Hancock Declaration Trust)
101 Huntington Avenue
Boston, Massachusetts
August 29, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Declaration Trust (the "Trust") of which John Hancock V.A.
Sovereign Investors Fund (the "Fund") is a series, has been organized as a
business trust under the laws of the Commonwealth of Massachusetts to engage in
the business of an investment company. The Trust's shares of beneficial interest
are currently divided into ten series (including the Fund), each series
representing the entire undivided interest in a separate portfolio of assets.
Series may be established or terminated from time to time by action of the Board
of Trustees of the Trust. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. Delivery of Documents. The Trust has furnished the Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995,
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as the
investment adviser for the Fund and approving the form of this
Agreement and the resolution of the Fund's sole shareholder
approving this Agreement.
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
<PAGE>
The Trust will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. The Adviser will use its
best efforts to provide to the Fund continuing and suitable investment
programs with respect to investments, consistent with the investment
objectives, policies and restrictions of the Fund. In the performance
of the Adviser's duties hereunder, subject always (x) to the provisions
contained in the documents delivered to the Adviser pursuant to Section
1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from
time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objectives, policies and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and
sale of options, alone or in consultation with any sub-adviser
or sub-advisers appointed pursuant to this Agreement and
subject to the provisions of any sub-investment management
contract respecting the responsibilities of such sub-adviser
or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
provided that in connection with the placing of such orders
and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund
as in effect from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees,
make reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
2
<PAGE>
(i) maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, including
sub-paragraphs (b)(5), (6), (9) and (10) and paragraph (f) of
Rule 31a-1 thereunder (other than those records being
maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
the Adviser may deem necessary or useful in the discharge of
the Adviser's duties hereunder;
(k) oversee and use the Adviser's best efforts to assure the
performance of the activities and services of the custodian,
transfer agent or other similar agents retained by the Fund;
and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
3. Sub-advisers. The Adviser may engage one or more investment
advisers which are either registered as such or specifically exempt
from registration under the 1940 Act to act as sub-advisers to provide,
with respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written sub-advisory
contract to which the Trust and the Adviser shall be parties. The
sub-advisory contract shall be subject to approval by the vote of a
majority of the Trustees of the Trust who are not interested persons of
the Adviser, the sub-adviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by the
vote of a majority of the outstanding voting securities of the Fund and
otherwise consistent with the terms of the 1940 Act. Any fee,
compensation or expense to be paid to any sub-adviser shall be paid by
the Adviser, and no obligation to the sub-adviser shall be incurred on
the Fund's or Trust's behalf, except as agreed upon by the Trustees of
the Trust and otherwise consistent with the terms of the 1940 Act.
4. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other expenses of
the Fund;
(c) any other expenses incurred by the Adviser in connection with
the performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon between the
Adviser and the Trustees.
5. Expenses of the Fund Not Paid by the Adviser. The Adviser will
not be required to pay any expenses which this Agreement does not
expressly make payable by it. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 4,
the Adviser will not be required to pay under this Agreement:
3
<PAGE>
(a) the expenses of organizing the Trust and the Fund (including
without limitation legal, accounting and auditing fees and
expenses incurred in connection with the matters referred to
in this clause (a)), of initially registering the shares of
the Trust under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(b) the compensation and expenses of Trustees who are not
interested persons (as used in this Agreement such term shall
have the meaning specified in the 1940 Act) of the Adviser,
and of independent advisers, independent contractors,
consultants, managers and other unaffiliated agents employed
by the Fund other than through the Adviser;
(c) legal (including an allocable portion of the cost of its
employees rendering legal services to the Fund), accounting
and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of
the shares of the Fund.
6. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser as
herein provided, the Adviser shall be entitled to a fee, paid monthly
in arrears, equal to 0.60% of the average daily net assets of the Fund
for the preceding month.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with
the 1940 Act and the regulations promulgated thereunder. The Adviser
will receive a pro-rata portion of such monthly fee for any periods in
which the Adviser serves as investment adviser to the Fund for less
than a full month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset value
for purposes of calculating the advisory fee shall be calculated as of
the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any
limitation imposed by the law of a state where the Fund is registered
to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent required by law, and the Adviser will
make any arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit
the fund's expenses to any level the Adviser may specify. Any fee
reduction or undertaking shall constitute a binding modification of
this agreement while it is in effect but may be discontinued or
modified prospectively by the adviser at any time.
4
<PAGE>
7. Other Activities of the Adviser and Its Affiliates. Nothing herein
contained shall prevent the Adviser or any affiliate or associate of
the Adviser from engaging in any other business or from acting as
investment adviser or investment manager for any other person or
entity, whether or not having investment policies or portfolios similar
to the Fund's; and it is specifically understood that officers,
directors and employees of the Adviser and those of its parent company,
John Hancock Mutual Life Insurance Company, or other affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to
other investment advisory clients of the Adviser or of its affiliates
and to said affiliates themselves.
8. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither the
Adviser nor any of its investment management subsidiaries, nor any of
the Adviser's or such investment management subsidiaries' directors,
officers or employees will act as principal or agent or receive any
commission except as may be permitted by the 1940 Act and rules and
regulations promulgated thereunder. If any occasions shall arise in
which the Adviser advises persons concerning the shares of the Fund,
the Adviser will act solely on its own behalf and not in any way on
behalf of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of
its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts. The Fund
acknowledges that the Adviser and its officers, affiliates, and
employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. The Adviser
shall have no obligation to acquire with respect to the Fund a position
in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account
of another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Adviser
from purchasing or recommending the purchase of a particular security
for one or more funds or clients while other funds or clients may be
selling the same security.
9. No Partnership or Joint Venture. Neither the Trust, the Fund,
nor the Adviser are partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on any of them.
10. Name of the Trust and Fund. The Trust and the Fund may use the
name "John Hancock" or any name or names derived from or similar to the
names "John Hancock Advisers, Inc." or "John Hancock Mutual Life
Insurance Company" only for so long as this Agreement (or similar
agreement with John Hancock Mutual Life Insurance Company or any of its
affiliates or subsidiaries) remains in effect. At such time as this
Agreement or such other agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted
the name "John Hancock V.A. Sovereign Investors Fund" through
permission of John Hancock Mutual Life Insurance Company, a
Massachusetts
5
<PAGE>
insurance company, and agrees that John Hancock Mutual Life Insurance
Company reserves to itself and any successor to its business the right
to grant the non-exclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
11. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though
also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the
Fund and not as the Adviser's employee or agent.
12. Duration and Termination of this Agreement. This Agreement
shall remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Trustees who are not interested persons of the Adviser or (other than
as Board Members) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees
or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of
the outstanding voting securities of the Fund, by the Trustees or by
the Adviser. Termination of this Agreement shall not be deemed to
terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "assignment," "interested person" and "voting security"), shall be
applied.
13. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser or (other than as Board Members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Severability. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
6
<PAGE>
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The name
John Hancock V.A. Sovereign Investors Fund is a series designation of
the Trustees under the Trust's Declaration of Trust, dated Nov. 15,
1995, as amended from time to time. The Declaration of Trust has been
filed with the Secretary of State of the Commonwealth of Massachusetts.
The obligations of the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Fund shall not be liable for the
obligations of any other series of the Trust and no other series shall
be liable for the Fund's obligations hereunder.
Yours very truly,
JOHN HANCOCK DECLARATION TRUST
--on behalf of John Hancock V.A. Sovereign Investors Fund
By: /s/Anne C. Hodsdon
---------------------------
Anne C. Hodsdon
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
7
<PAGE>
JOHN HANCOCK V.A. 500 INDEX FUND
(a series of John Hancock Declaration Trust)
101 Huntington Avenue
Boston, Massachusetts
August 29, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Declaration Trust (the "Trust") of which John Hancock V.A.
500 Index Fund (the "Fund") is a series, has been organized as a business trust
under the laws of the Commonwealth of Massachusetts to engage in the business of
an investment company. The Trust's shares of beneficial interest are currently
divided into ten series (including the Fund), each series representing the
entire undivided interest in a separate portfolio of assets. Series may be
established or terminated from time to time by action of the Board of Trustees
of the Trust. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. Delivery of Documents. The Trust has furnished the Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995,
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as the
investment adviser for the Fund and approving the form of this
Agreement and the resolution of the Fund's sole shareholder
approving this Agreement.
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
<PAGE>
The Trust will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. The Adviser will use its
best efforts to provide to the Fund continuing and suitable investment
programs with respect to investments, consistent with the investment
objectives, policies and restrictions of the Fund. In the performance
of the Adviser's duties hereunder, subject always (x) to the provisions
contained in the documents delivered to the Adviser pursuant to Section
1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from
time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objectives, policies and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and
sale of options, alone or in consultation with any sub-adviser
or sub-advisers appointed pursuant to this Agreement and
subject to the provisions of any sub-investment management
contract respecting the responsibilities of such sub-adviser
or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
provided that in connection with the placing of such orders
and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund
as in effect from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees,
make reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
2
<PAGE>
(i) maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, including
sub-paragraphs (b)(5), (6), (9) and (10) and paragraph (f) of
Rule 31a-1 thereunder (other than those records being
maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
the Adviser may deem necessary or useful in the discharge of
the Adviser's duties hereunder;
(k) oversee and use the Adviser's best efforts to assure the
performance of the activities and services of the custodian,
transfer agent or other similar agents retained by the Fund;
and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
3. Sub-advisers. The Adviser may engage one or more investment
advisers which are either registered as such or specifically exempt
from registration under the 1940 Act to act as sub-advisers to provide,
with respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written sub-advisory
contract to which the Trust and the Adviser shall be parties. The
sub-advisory contract shall be subject to approval by the vote of a
majority of the Trustees of the Trust who are not interested persons of
the Adviser, the sub-adviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by the
vote of a majority of the outstanding voting securities of the Fund and
otherwise consistent with the terms of the 1940 Act. Any fee,
compensation or expense to be paid to any sub-adviser shall be paid by
the Adviser, and no obligation to the sub-adviser shall be incurred on
the Fund's or Trust's behalf, except as agreed upon by the Trustees of
the Trust and otherwise consistent with the terms of the 1940 Act.
4. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other expenses of
the Fund;
(c) any other expenses incurred by the Adviser in connection with
the performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon between the
Adviser and the Trustees.
5. Expenses of the Fund Not Paid by the Adviser. The Adviser will
not be required to pay any expenses which this Agreement does not
expressly make payable by it. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 4,
the Adviser will not be required to pay under this Agreement:
3
<PAGE>
(a) the expenses of organizing the Trust and the Fund (including
without limitation legal, accounting and auditing fees and
expenses incurred in connection with the matters referred to
in this clause (a)), of initially registering the shares of
the Trust under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(b) the compensation and expenses of Trustees who are not
interested persons (as used in this Agreement such term shall
have the meaning specified in the 1940 Act) of the Adviser,
and of independent advisers, independent contractors,
consultants, managers and other unaffiliated agents employed
by the Fund other than through the Adviser;
(c) legal (including an allocable portion of the cost of its
employees rendering legal services to the Fund), accounting
and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of
the shares of the Fund.
6. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser as
herein provided, the Adviser shall be entitled to a fee, paid monthly
in arrears, equal to .035% of the average daily net assets of the Fund
for the preceding month.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with
the 1940 Act and the regulations promulgated thereunder. The Adviser
will receive a pro-rata portion of such monthly fee for any periods in
which the Adviser serves as investment adviser to the Fund for less
than a full month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset value
for purposes of calculating the advisory fee shall be calculated as of
the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any
limitation imposed by the law of a state where the Fund is registered
to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent required by law, and the Adviser will
make any arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit
the fund's expenses to any level the Adviser may specify. Any fee
reduction or undertaking shall constitute a binding modification of
this agreement while it is in effect but may be discontinued or
modified prospectively by the adviser at any time.
4
<PAGE>
7. Other Activities of the Adviser and Its Affiliates. Nothing
herein contained shall prevent the Adviser or any affiliate or
associate of the Adviser from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or portfolios
similar to the Fund's; and it is specifically understood that officers,
directors and employees of the Adviser and those of its parent company,
John Hancock Mutual Life Insurance Company, or other affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to
other investment advisory clients of the Adviser or of its affiliates
and to said affiliates themselves.
8. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Adviser nor any of its investment management subsidiaries,
nor any of the Adviser's or such investment management subsidiaries'
directors, officers or employees will act as principal or agent or
receive any commission except as may be permitted by the 1940 Act and
rules and regulations promulgated thereunder. If any occasions shall
arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way
on behalf of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of
its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts. The Fund
acknowledges that the Adviser and its officers, affiliates, and
employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. The Adviser
shall have no obligation to acquire with respect to the Fund a position
in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account
of another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Adviser
from purchasing or recommending the purchase of a particular security
for one or more funds or clients while other funds or clients may be
selling the same security.
9. No Partnership or Joint Venture. Neither the Trust, the Fund,
nor the Adviser are partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on any of them.
10. Name of the Trust and Fund. The Trust and the Fund may use the
name "John Hancock" or any name or names derived from or similar to the
names "John Hancock Advisers, Inc." or "John Hancock Mutual Life
Insurance Company" only for so long as this Agreement (or similar
agreement with John Hancock Mutual Life Insurance Company or any of its
affiliates or subsidiaries) remains in effect. At such time as this
Agreement or such other agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted
the name "John Hancock V.A. 500 Index Fund" through permission of John
Hancock Mutual Life Insurance Company, a Massachusetts
5
<PAGE>
insurance company, and agrees that John Hancock Mutual Life Insurance
Company reserves to itself and any successor to its business the right
to grant the non-exclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
11. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though
also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the
Fund and not as the Adviser's employee or agent.
12. Duration and Termination of this Agreement. This Agreement
shall remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Trustees who are not interested persons of the Adviser or (other than
as Board Members) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees
or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of
the outstanding voting securities of the Fund, by the Trustees or by
the Adviser. Termination of this Agreement shall not be deemed to
terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "assignment," "interested person" and "voting security"), shall be
applied.
13. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser or (other than as Board Members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Severability. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
6
<PAGE>
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The name
John Hancock V.A. 500 Index Fund is a series designation of the
Trustees under the Trust's Declaration of Trust, dated Nov. 15, 1995,
as amended from time to time. The Declaration of Trust has been filed
with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Fund shall not be liable for the
obligations of any other series of the Trust and no other series shall
be liable for the Fund's obligations hereunder.
Yours very truly,
JOHN HANCOCK DECLARATION TRUST
--on behalf of John Hancock V.A. 500 Index Fund
By: /s/Anne C. Hodsdon
---------------------------
Anne C. Hodsdon
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
7
<PAGE>
JOHN HANCOCK V.A. SOVEREIGN BOND FUND
(a series of John Hancock Declaration Trust)
101 Huntington Avenue
Boston, Massachusetts
August 29, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Declaration Trust (the "Trust") of which John Hancock V.A.
Sovereign Bond Fund (the "Fund") is a series, has been organized as a business
trust under the laws of the Commonwealth of Massachusetts to engage in the
business of an investment company. The Trust's shares of beneficial interest are
currently divided into ten series (including the Fund), each series representing
the entire undivided interest in a separate portfolio of assets. Series may be
established or terminated from time to time by action of the Board of Trustees
of the Trust. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. Delivery of Documents. The Trust has furnished the Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995,
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as the
investment adviser for the Fund and approving the form of this
Agreement and the resolution of the Fund's sole shareholder
approving this Agreement.
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
<PAGE>
The Trust will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. The Adviser will use its
best efforts to provide to the Fund continuing and suitable investment
programs with respect to investments, consistent with the investment
objectives, policies and restrictions of the Fund. In the performance
of the Adviser's duties hereunder, subject always (x) to the provisions
contained in the documents delivered to the Adviser pursuant to Section
1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from
time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objectives, policies and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and
sale of options, alone or in consultation with any sub-adviser
or sub-advisers appointed pursuant to this Agreement and
subject to the provisions of any sub-investment management
contract respecting the responsibilities of such sub-adviser
or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
provided that in connection with the placing of such orders
and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund
as in effect from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees,
make reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
2
<PAGE>
(i) maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, including
sub-paragraphs (b)(5), (6), (9) and (10) and paragraph (f) of
Rule 31a-1 thereunder (other than those records being
maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
the Adviser may deem necessary or useful in the discharge of
the Adviser's duties hereunder;
(k) oversee and use the Adviser's best efforts to assure the
performance of the activities and services of the custodian,
transfer agent or other similar agents retained by the Fund;
and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
3. Sub-advisers. The Adviser may engage one or more investment
advisers which are either registered as such or specifically exempt
from registration under the 1940 Act to act as sub-advisers to provide,
with respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written sub-advisory
contract to which the Trust and the Adviser shall be parties. The
sub-advisory contract shall be subject to approval by the vote of a
majority of the Trustees of the Trust who are not interested persons of
the Adviser, the sub-adviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by the
vote of a majority of the outstanding voting securities of the Fund and
otherwise consistent with the terms of the 1940 Act. Any fee,
compensation or expense to be paid to any sub-adviser shall be paid by
the Adviser, and no obligation to the sub-adviser shall be incurred on
the Fund's or Trust's behalf, except as agreed upon by the Trustees of
the Trust and otherwise consistent with the terms of the 1940 Act.
4. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other expenses of
the Fund;
(c) any other expenses incurred by the Adviser in connection with
the performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon between the
Adviser and the Trustees.
5. Expenses of the Fund Not Paid by the Adviser. The Adviser will
not be required to pay any expenses which this Agreement does not
expressly make payable by it. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 4,
the Adviser will not be required to pay under this Agreement:
3
<PAGE>
(a) the expenses of organizing the Trust and the Fund (including
without limitation legal, accounting and auditing fees and
expenses incurred in connection with the matters referred to
in this clause (a)), of initially registering the shares of
the Trust under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(b) the compensation and expenses of Trustees who are not
interested persons (as used in this Agreement such term shall
have the meaning specified in the 1940 Act) of the Adviser,
and of independent advisers, independent contractors,
consultants, managers and other unaffiliated agents employed
by the Fund other than through the Adviser;
(c) legal (including an allocable portion of the cost of its
employees rendering legal services to the Fund), accounting
and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of
the shares of the Fund.
6. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser as
herein provided, the Adviser shall be entitled to a fee, paid monthly
in arrears, equal to 0.50% of the average daily net assets of the Fund
for the preceding month.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with
the 1940 Act and the regulations promulgated thereunder. The Adviser
will receive a pro-rata portion of such monthly fee for any periods in
which the Adviser serves as investment adviser to the Fund for less
than a full month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset value
for purposes of calculating the advisory fee shall be calculated as of
the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any
limitation imposed by the law of a state where the Fund is registered
to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent required by law, and the Adviser will
make any arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit
the fund's expenses to any level the Adviser may specify. Any fee
reduction or undertaking shall constitute a binding modification of
this agreement while it is in effect but may be discontinued or
modified prospectively by the adviser at any time.
4
<PAGE>
7. Other Activities of the Adviser and Its Affiliates. Nothing
herein contained shall prevent the Adviser or any affiliate or
associate of the Adviser from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or portfolios
similar to the Fund's; and it is specifically understood that officers,
directors and employees of the Adviser and those of its parent company,
John Hancock Mutual Life Insurance Company, or other affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to
other investment advisory clients of the Adviser or of its affiliates
and to said affiliates themselves.
8. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Adviser nor any of its investment management subsidiaries,
nor any of the Adviser's or such investment management subsidiaries'
directors, officers or employees will act as principal or agent or
receive any commission except as may be permitted by the 1940 Act and
rules and regulations promulgated thereunder. If any occasions shall
arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way
on behalf of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of
its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts. The Fund
acknowledges that the Adviser and its officers, affiliates, and
employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. The Adviser
shall have no obligation to acquire with respect to the Fund a position
in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account
of another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Adviser
from purchasing or recommending the purchase of a particular security
for one or more funds or clients while other funds or clients may be
selling the same security.
9. No Partnership or Joint Venture. Neither the Trust, the Fund,
nor the Adviser are partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on any of them.
10. Name of the Trust and Fund. The Trust and the Fund may use the
name "John Hancock" or any name or names derived from or similar to the
names "John Hancock Advisers, Inc." or "John Hancock Mutual Life
Insurance Company" only for so long as this Agreement (or similar
agreement with John Hancock Mutual Life Insurance Company or any of its
affiliates or subsidiaries) remains in effect. At such time as this
Agreement or such other agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted
the name "John Hancock V.A. Sovereign Bond Fund" through permission of
John Hancock Mutual Life Insurance Company, a Massachusetts
5
<PAGE>
insurance company, and agrees that John Hancock Mutual Life Insurance
Company reserves to itself and any successor to its business the right
to grant the non-exclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
11. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though
also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the
Fund and not as the Adviser's employee or agent.
12. Duration and Termination of this Agreement. This Agreement
shall remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Trustees who are not interested persons of the Adviser or (other than
as Board Members) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees
or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of
the outstanding voting securities of the Fund, by the Trustees or by
the Adviser. Termination of this Agreement shall not be deemed to
terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "assignment," "interested person" and "voting security"), shall be
applied.
13. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser or (other than as Board Members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Severability. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
6
<PAGE>
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The name
John Hancock V.A. Sovereign Bond Fund is a series designation of the
Trustees under the Trust's Declaration of Trust, dated Nov. 15, 1995,
as amended from time to time. The Declaration of Trust has been filed
with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Fund shall not be liable for the
obligations of any other series of the Trust and no other series shall
be liable for the Fund's obligations hereunder.
Yours very truly,
JOHN HANCOCK DECLARATION TRUST
--on behalf of John Hancock V.A. Sovereign Bond Fund
By: /s/Anne C. Hodsdon
---------------------------
Anne C. Hodsdon
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
-----------------------------
John A. Morin
Vice President and Secretary
7
<PAGE>
JOHN HANCOCK V.A. STRATEGIC INCOME FUND
(a series of John Hancock Declaration Trust)
101 Huntington Avenue
Boston, Massachusetts
August 29, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Declaration Trust (the "Trust") of which John Hancock V.A.
Strategic Income Fund (the "Fund") is a series, has been organized as a business
trust under the laws of the Commonwealth of Massachusetts to engage in the
business of an investment company. The Trust's shares of beneficial interest are
currently divided into ten series (including the Fund), each series representing
the entire undivided interest in a separate portfolio of assets. Series may be
established or terminated from time to time by action of the Board of Trustees
of the Trust. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. Delivery of Documents. The Trust has furnished the Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995,
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as the
investment adviser for the Fund and approving the form of this
Agreement and the resolution of the Fund's sole shareholder
approving this Agreement.
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
<PAGE>
The Trust will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. The Adviser will use its
best efforts to provide to the Fund continuing and suitable investment
programs with respect to investments, consistent with the investment
objectives, policies and restrictions of the Fund. In the performance
of the Adviser's duties hereunder, subject always (x) to the provisions
contained in the documents delivered to the Adviser pursuant to Section
1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from
time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objectives, policies and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and
sale of options, alone or in consultation with any sub-adviser
or sub-advisers appointed pursuant to this Agreement and
subject to the provisions of any sub-investment management
contract respecting the responsibilities of such sub-adviser
or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
provided that in connection with the placing of such orders
and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund
as in effect from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees,
make reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
2
<PAGE>
(i) maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, including
sub-paragraphs (b)(5), (6), (9) and (10) and paragraph (f) of
Rule 31a-1 thereunder (other than those records being
maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
the Adviser may deem necessary or useful in the discharge of
the Adviser's duties hereunder;
(k) oversee and use the Adviser's best efforts to assure the
performance of the activities and services of the custodian,
transfer agent or other similar agents retained by the Fund;
and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
3. Sub-advisers. The Adviser may engage one or more investment
advisers which are either registered as such or specifically exempt
from registration under the 1940 Act to act as sub-advisers to provide,
with respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written sub-advisory
contract to which the Trust and the Adviser shall be parties. The
sub-advisory contract shall be subject to approval by the vote of a
majority of the Trustees of the Trust who are not interested persons of
the Adviser, the sub-adviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by the
vote of a majority of the outstanding voting securities of the Fund and
otherwise consistent with the terms of the 1940 Act. Any fee,
compensation or expense to be paid to any sub-adviser shall be paid by
the Adviser, and no obligation to the sub-adviser shall be incurred on
the Fund's or Trust's behalf, except as agreed upon by the Trustees of
the Trust and otherwise consistent with the terms of the 1940 Act.
4. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other expenses of
the Fund;
(c) any other expenses incurred by the Adviser in connection with
the performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon between the
Adviser and the Trustees.
5. Expenses of the Fund Not Paid by the Adviser. The Adviser will
not be required to pay any expenses which this Agreement does not
expressly make payable by it. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 4,
the Adviser will not be required to pay under this Agreement:
3
<PAGE>
(a) the expenses of organizing the Trust and the Fund (including
without limitation legal, accounting and auditing fees and
expenses incurred in connection with the matters referred to
in this clause (a)), of initially registering the shares of
the Trust under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(b) the compensation and expenses of Trustees who are not
interested persons (as used in this Agreement such term shall
have the meaning specified in the 1940 Act) of the Adviser,
and of independent advisers, independent contractors,
consultants, managers and other unaffiliated agents employed
by the Fund other than through the Adviser;
(c) legal (including an allocable portion of the cost of its
employees rendering legal services to the Fund), accounting
and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of
the shares of the Fund.
6. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser as
herein provided, the Adviser shall be entitled to a fee, paid monthly
in arrears, equal to 0.60% of the average daily net assets of the Fund
for the preceding month.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with
the 1940 Act and the regulations promulgated thereunder. The Adviser
will receive a pro-rata portion of such monthly fee for any periods in
which the Adviser serves as investment adviser to the Fund for less
than a full month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset value
for purposes of calculating the advisory fee shall be calculated as of
the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any
limitation imposed by the law of a state where the Fund is registered
to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent required by law, and the Adviser will
make any arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit
the fund's expenses to any level the Adviser may specify. Any fee
reduction or undertaking shall constitute a binding modification of
this agreement while it is in effect but may be discontinued or
modified prospectively by the adviser at any time.
4
<PAGE>
7. Other Activities of the Adviser and Its Affiliates. Nothing
herein contained shall prevent the Adviser or any affiliate or
associate of the Adviser from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or portfolios
similar to the Fund's; and it is specifically understood that officers,
directors and employees of the Adviser and those of its parent company,
John Hancock Mutual Life Insurance Company, or other affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to
other investment advisory clients of the Adviser or of its affiliates
and to said affiliates themselves.
8. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Adviser nor any of its investment management subsidiaries,
nor any of the Adviser's or such investment management subsidiaries'
directors, officers or employees will act as principal or agent or
receive any commission except as may be permitted by the 1940 Act and
rules and regulations promulgated thereunder. If any occasions shall
arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way
on behalf of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of
its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts. The Fund
acknowledges that the Adviser and its officers, affiliates, and
employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. The Adviser
shall have no obligation to acquire with respect to the Fund a position
in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account
of another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Adviser
from purchasing or recommending the purchase of a particular security
for one or more funds or clients while other funds or clients may be
selling the same security.
9. No Partnership or Joint Venture. Neither the Trust, the Fund,
nor the Adviser are partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on any of them.
10. Name of the Trust and Fund. The Trust and the Fund may use the
name "John Hancock" or any name or names derived from or similar to the
names "John Hancock Advisers, Inc." or "John Hancock Mutual Life
Insurance Company" only for so long as this Agreement (or similar
agreement with John Hancock Mutual Life Insurance Company or any of its
affiliates or subsidiaries) remains in effect. At such time as this
Agreement or such other agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted
the name "John Hancock V.A. Strategic Income Fund" through permission
of John Hancock Mutual Life Insurance Company, a Massachusetts
5
<PAGE>
insurance company, and agrees that John Hancock Mutual Life Insurance
Company reserves to itself and any successor to its business the right
to grant the non-exclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
11. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though
also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the
Fund and not as the Adviser's employee or agent.
12. Duration and Termination of this Agreement. This Agreement
shall remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Trustees who are not interested persons of the Adviser or (other than
as Board Members) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees
or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of
the outstanding voting securities of the Fund, by the Trustees or by
the Adviser. Termination of this Agreement shall not be deemed to
terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "assignment," "interested person" and "voting security"), shall be
applied.
13. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser or (other than as Board Members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Severability. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
6
<PAGE>
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The name
John Hancock V.A. Strategic Income Fund is a series designation of the
Trustees under the Trust's Declaration of Trust, dated Nov. 15, 1995,
as amended from time to time. The Declaration of Trust has been filed
with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Fund shall not be liable for the
obligations of any other series of the Trust and no other series shall
be liable for the Fund's obligations hereunder.
Yours very truly,
JOHN HANCOCK DECLARATION TRUST
--on behalf of John Hancock V.A. Strategic Income Fund
By: /s/Anne C. Hodsdon
--------------------------
Anne C. Hodsdon
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
7
<PAGE>
HANCOCK V.A. WORLD BOND FUND
(a series of John Hancock Declaration Trust)
101 Huntington Avenue
Boston, Massachusetts
August 29, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Declaration Trust (the "Trust") of which John Hancock V.A.
World Bond Fund (the "Fund") is a series, has been organized as a business trust
under the laws of the Commonwealth of Massachusetts to engage in the business of
an investment company. The Trust's shares of beneficial interest are currently
divided into ten series (including the Fund), each series representing the
entire undivided interest in a separate portfolio of assets. Series may be
established or terminated from time to time by action of the Board of Trustees
of the Trust. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. Delivery of Documents. The Trust has furnished the Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995,
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as the
investment adviser for the Fund and approving the form of this
Agreement and the resolution of the Fund's sole shareholder
approving this Agreement.
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
<PAGE>
The Trust will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. The Adviser will use its
best efforts to provide to the Fund continuing and suitable investment
programs with respect to investments, consistent with the investment
objectives, policies and restrictions of the Fund. In the performance
of the Adviser's duties hereunder, subject always (x) to the provisions
contained in the documents delivered to the Adviser pursuant to Section
1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from
time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objectives, policies and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and
sale of options, alone or in consultation with any sub-adviser
or sub-advisers appointed pursuant to this Agreement and
subject to the provisions of any sub-investment management
contract respecting the responsibilities of such sub-adviser
or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
provided that in connection with the placing of such orders
and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund
as in effect from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees,
make reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
2
<PAGE>
(i) maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, including
sub-paragraphs (b)(5), (6), (9) and (10) and paragraph (f) of
Rule 31a-1 thereunder (other than those records being
maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
the Adviser may deem necessary or useful in the discharge of
the Adviser's duties hereunder;
(k) oversee and use the Adviser's best efforts to assure the
performance of the activities and services of the custodian,
transfer agent or other similar agents retained by the Fund;
and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
3. Sub-advisers. The Adviser may engage one or more investment
advisers which are either registered as such or specifically exempt
from registration under the 1940 Act to act as sub-advisers to provide,
with respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written sub-advisory
contract to which the Trust and the Adviser shall be parties. The
sub-advisory contract shall be subject to approval by the vote of a
majority of the Trustees of the Trust who are not interested persons of
the Adviser, the sub-adviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by the
vote of a majority of the outstanding voting securities of the Fund and
otherwise consistent with the terms of the 1940 Act. Any fee,
compensation or expense to be paid to any sub-adviser shall be paid by
the Adviser, and no obligation to the sub-adviser shall be incurred on
the Fund's or Trust's behalf, except as agreed upon by the Trustees of
the Trust and otherwise consistent with the terms of the 1940 Act.
4. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other expenses of
the Fund;
(c) any other expenses incurred by the Adviser in connection with
the performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon between the
Adviser and the Trustees.
5. Expenses of the Fund Not Paid by the Adviser. The Adviser will
not be required to pay any expenses which this Agreement does not
expressly make payable by it. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 4,
the Adviser will not be required to pay under this Agreement:
3
<PAGE>
(a) the expenses of organizing the Trust and the Fund (including
without limitation legal, accounting and auditing fees and
expenses incurred in connection with the matters referred to
in this clause (a)), of initially registering the shares of
the Trust under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(b) the compensation and expenses of Trustees who are not
interested persons (as used in this Agreement such term shall
have the meaning specified in the 1940 Act) of the Adviser,
and of independent advisers, independent contractors,
consultants, managers and other unaffiliated agents employed
by the Fund other than through the Adviser;
(c) legal (including an allocable portion of the cost of its
employees rendering legal services to the Fund), accounting
and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of
the shares of the Fund.
6. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser as
herein provided, the Adviser shall be entitled to a fee, paid monthly
in arrears, equal to 0.75% of the average daily net assets of the Fund
for the preceding month.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with
the 1940 Act and the regulations promulgated thereunder. The Adviser
will receive a pro-rata portion of such monthly fee for any periods in
which the Adviser serves as investment adviser to the Fund for less
than a full month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset value
for purposes of calculating the advisory fee shall be calculated as of
the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any
limitation imposed by the law of a state where the Fund is registered
to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent required by law, and the Adviser will
make any arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit
the fund's expenses to any level the Adviser may specify. Any fee
reduction or undertaking shall constitute a binding modification of
this agreement while it is in effect but may be discontinued or
modified prospectively by the adviser at any time.
4
<PAGE>
7. Other Activities of the Adviser and Its Affiliates. Nothing
herein contained shall prevent the Adviser or any affiliate or
associate of the Adviser from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or portfolios
similar to the Fund's; and it is specifically understood that officers,
directors and employees of the Adviser and those of its parent company,
John Hancock Mutual Life Insurance Company, or other affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to
other investment advisory clients of the Adviser or of its affiliates
and to said affiliates themselves.
8. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Adviser nor any of its investment management subsidiaries,
nor any of the Adviser's or such investment management subsidiaries'
directors, officers or employees will act as principal or agent or
receive any commission except as may be permitted by the 1940 Act and
rules and regulations promulgated thereunder. If any occasions shall
arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way
on behalf of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of
its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts. The Fund
acknowledges that the Adviser and its officers, affiliates, and
employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. The Adviser
shall have no obligation to acquire with respect to the Fund a position
in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account
of another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Adviser
from purchasing or recommending the purchase of a particular security
for one or more funds or clients while other funds or clients may be
selling the same security.
9. No Partnership or Joint Venture. Neither the Trust, the Fund,
nor the Adviser are partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on any of them.
10. Name of the Trust and Fund. The Trust and the Fund may use the
name "John Hancock" or any name or names derived from or similar to the
names "John Hancock Advisers, Inc." or "John Hancock Mutual Life
Insurance Company" only for so long as this Agreement (or similar
agreement with John Hancock Mutual Life Insurance Company or any of its
affiliates or subsidiaries) remains in effect. At such time as this
Agreement or such other agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted
the name "John Hancock V.A. World Bond Fund" through permission of John
Hancock Mutual Life Insurance Company, a Massachusetts
5
<PAGE>
insurance company, and agrees that John Hancock Mutual Life Insurance
Company reserves to itself and any successor to its business the right
to grant the non-exclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
11. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though
also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the
Fund and not as the Adviser's employee or agent.
12. Duration and Termination of this Agreement. This Agreement
shall remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Trustees who are not interested persons of the Adviser or (other than
as Board Members) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees
or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of
the outstanding voting securities of the Fund, by the Trustees or by
the Adviser. Termination of this Agreement shall not be deemed to
terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "assignment," "interested person" and "voting security"), shall be
applied.
13. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser or (other than as Board Members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Severability. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
6
<PAGE>
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The name
John Hancock V.A. World Bond Fund is a series designation of the
Trustees under the Trust's Declaration of Trust, dated Nov. 15, 1995,
as amended from time to time. The Declaration of Trust has been filed
with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Fund shall not be liable for the
obligations of any other series of the Trust and no other series shall
be liable for the Fund's obligations hereunder.
Yours very truly,
JOHN HANCOCK DECLARATION TRUST
--on behalf of John Hancock V.A. World Bond Fund
By: /s/Anne C. Hodsdon
---------------------------
Anne C. Hodsdon
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
7
<PAGE>
JOHN HANCOCK V.A. MONEY MARKET FUND
(a series of John Hancock Declaration Trust)
101 Huntington Avenue
Boston, Massachusetts
July 22, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Declaration Trust (the "Trust") of which John Hancock V.A.
Money Market Fund (the "Fund") is a series, has been organized as a business
trust under the laws of the Commonwealth of Massachusetts to engage in the
business of an investment company. The Trust's shares of beneficial interest are
currently divided into ten series (including the Fund), each series representing
the entire undivided interest in a separate portfolio of assets. Series may be
established or terminated from time to time by action of the Board of Trustees
of the Trust. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. Delivery of Documents. The Trust has furnished the Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995,
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as the
investment adviser for the Fund and approving the form of this
Agreement and the resolution of the Fund's sole shareholder
approving this Agreement.
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
<PAGE>
The Trust will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. The Adviser will use its
best efforts to provide to the Fund continuing and suitable investment
programs with respect to investments, consistent with the investment
objectives, policies and restrictions of the Fund. In the performance
of the Adviser's duties hereunder, subject always (x) to the provisions
contained in the documents delivered to the Adviser pursuant to Section
1, as each of the same may from time to time be amended or
supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from
time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objectives, policies and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and
sale of options, alone or in consultation with any sub-adviser
or sub-advisers appointed pursuant to this Agreement and
subject to the provisions of any sub-investment management
contract respecting the responsibilities of such sub-adviser
or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
provided that in connection with the placing of such orders
and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund
as in effect from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees,
make reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
2
<PAGE>
(i) maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, including
sub-paragraphs (b)(5), (6), (9) and (10) and paragraph (f) of
Rule 31a-1 thereunder (other than those records being
maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
the Adviser may deem necessary or useful in the discharge of
the Adviser's duties hereunder;
(k) oversee and use the Adviser's best efforts to assure the
performance of the activities and services of the custodian,
transfer agent or other similar agents retained by the Fund;
and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
3. Sub-advisers. The Adviser may engage one or more investment
advisers which are either registered as such or specifically exempt
from registration under the 1940 Act to act as sub-advisers to provide,
with respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written sub-advisory
contract to which the Trust and the Adviser shall be parties. The
sub-advisory contract shall be subject to approval by the vote of a
majority of the Trustees of the Trust who are not interested persons of
the Adviser, the sub-adviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by the
vote of a majority of the outstanding voting securities of the Fund and
otherwise consistent with the terms of the 1940 Act. Any fee,
compensation or expense to be paid to any sub-adviser shall be paid by
the Adviser, and no obligation to the sub-adviser shall be incurred on
the Fund's or Trust's behalf, except as agreed upon by the Trustees of
the Trust and otherwise consistent with the terms of the 1940 Act.
4. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other expenses of
the Fund;
(c) any other expenses incurred by the Adviser in connection with
the performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon between the
Adviser and the Trustees.
5. Expenses of the Fund Not Paid by the Adviser. The Adviser will
not be required to pay any expenses which this Agreement does not
expressly make payable by it. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 4,
the Adviser will not be required to pay under this Agreement:
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<PAGE>
(a) the expenses of organizing the Trust and the Fund (including
without limitation legal, accounting and auditing fees and
expenses incurred in connection with the matters referred to
in this clause (a)), of initially registering the shares of
the Trust under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(b) the compensation and expenses of Trustees who are not
interested persons (as used in this Agreement such term shall
have the meaning specified in the 1940 Act) of the Adviser,
and of independent advisers, independent contractors,
consultants, managers and other unaffiliated agents employed
by the Fund other than through the Adviser;
(c) legal (including an allocable portion of the cost of its
employees rendering legal services to the Fund), accounting
and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of
the shares of the Fund.
6. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser as
herein provided, the Adviser shall be entitled to a fee, paid monthly
in arrears, equal to 0.50% of the average daily net assets of the Fund
for the preceding month.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with
the 1940 Act and the regulations promulgated thereunder. The Adviser
will receive a pro-rata portion of such monthly fee for any periods in
which the Adviser serves as investment adviser to the Fund for less
than a full month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset value
for purposes of calculating the advisory fee shall be calculated as of
the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any
limitation imposed by the law of a state where the Fund is registered
to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent required by law, and the Adviser will
make any arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit
the fund's expenses to any level the Adviser may specify. Any fee
reduction or undertaking shall constitute a binding modification of
this agreement while it is in effect but may be discontinued or
modified prospectively by the adviser at any time.
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<PAGE>
7. Other Activities of the Adviser and Its Affiliates. Nothing
herein contained shall prevent the Adviser or any affiliate or
associate of the Adviser from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or portfolios
similar to the Fund's; and it is specifically understood that officers,
directors and employees of the Adviser and those of its parent company,
John Hancock Mutual Life Insurance Company, or other affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to
other investment advisory clients of the Adviser or of its affiliates
and to said affiliates themselves.
8. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Adviser nor any of its investment management subsidiaries,
nor any of the Adviser's or such investment management subsidiaries'
directors, officers or employees will act as principal or agent or
receive any commission except as may be permitted by the 1940 Act and
rules and regulations promulgated thereunder. If any occasions shall
arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way
on behalf of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of
its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts. The Fund
acknowledges that the Adviser and its officers, affiliates, and
employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. The Adviser
shall have no obligation to acquire with respect to the Fund a position
in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account
of another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Adviser
from purchasing or recommending the purchase of a particular security
for one or more funds or clients while other funds or clients may be
selling the same security.
9. No Partnership or Joint Venture. Neither the Trust, the Fund,
nor the Adviser are partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on any of them.
10. Name of the Trust and Fund. The Trust and the Fund may use the
name "John Hancock" or any name or names derived from or similar to the
names "John Hancock Advisers, Inc." or "John Hancock Mutual Life
Insurance Company" only for so long as this Agreement (or similar
agreement with John Hancock Mutual Life Insurance Company or any of its
affiliates or subsidiaries) remains in effect. At such time as this
Agreement or such other agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted
the name "John Hancock V.A. Money Market Fund" through permission of
John Hancock Mutual Life Insurance Company, a Massachusetts
5
<PAGE>
insurance company, and agrees that John Hancock Mutual Life Insurance
Company reserves to itself and any successor to its business the right
to grant the non-exclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
11. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though
also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the
Fund and not as the Adviser's employee or agent.
12. Duration and Termination of this Agreement. This Agreement
shall remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Trustees who are not interested persons of the Adviser or (other than
as Board Members) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees
or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of
the outstanding voting securities of the Fund, by the Trustees or by
the Adviser. Termination of this Agreement shall not be deemed to
terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "assignment," "interested person" and "voting security"), shall be
applied.
13. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser or (other than as Board Members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Severability. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
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<PAGE>
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The name
John Hancock V.A. Money Market Fund is a series designation of the
Trustees under the Trust's Declaration of Trust, dated Nov. 15, 1995,
as amended from time to time. The Declaration of Trust has been filed
with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Fund are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Fund shall not be liable for the
obligations of any other series of the Trust and no other series shall
be liable for the Fund's obligations hereunder.
Yours very truly,
JOHN HANCOCK DECLARATION TRUST
--on behalf of John Hancock V.A. Money Market Fund
By: /s/Anne C. Hodsdon
-------------------------
Anne C. Hodsdon
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
7
JOHN HANCOCK ADVISERS, INC.
101 Huntington Avenue
Boston, Massachusetts 02199
August 29, 1996
JOHN HANCOCK DECLARATION TRUST
on behalf of John Hancock V.A. Independence Equity Fund
101 Huntington Avenue
Boston, Massachusetts 02199
INDEPENDENCE INVESTMENT ASSOCIATES, INC.
53 State Street
Boston, MA 02109
Sub-Investment Management Contract
Dear Sirs:
John Hancock Declaration Trust (the "Trust"), of which John Hancock
V.A. Independence Equity Fund (the "Fund") is a series, has been organized as a
business trust under the laws of The Commonwealth of Massachusetts to engage in
the business of an investment company. The Trust's shares of beneficial interest
are currently divided into 10 series (including the Fund), each series
representing the entire undivided interest in a separate portfolio of assets.
This contract relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund and to provide certain other services under the terms
and conditions provided in the investment management contract, dated as of the
date hereof, between the Trust, on behalf of the Fund, and the Adviser (the
"Investment Management Contract").
The Adviser and the Trustees have selected Independence Investment
Associates, Inc. (the "Sub-Adviser") to provide the Adviser and the Fund with
the advice and services set forth below, and the Sub-Adviser is willing to
provide such advice and services, subject to the review of the Trustees and
overall supervision of the Adviser, under the terms and conditions hereinafter
set forth. The Sub-Adviser hereby represents and warrants that it is registered
as an investment adviser under the Investment Advisers Act of 1940, as amended
(the "1940 Act"). Accordingly, the Trust, on behalf of the Fund, and the Adviser
agree with the Sub-Adviser as follows:
<PAGE>
1. Delivery of Documents. The Trust has furnished the Sub-Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Sub-Adviser as
the investment sub-adviser to the Fund and approving the form
of this Sub-Investment Management Contract (the "Contract")
and the resolution approving the Contract, adopted by the
initial sole shareholder of the Fund;
(d) Resolutions of the Trustees selecting the Adviser as
investment adviser to the Fund and approving the form of the
Investment Management Contract and resolutions adopted by the
initial shareholder of the Fund approving the form of the
Investment Management Contract;
(e) The Adviser's Investment Management Contract;
(f) Commitments, limitations and undertakings made by the
Trust to state "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states;
(g) The Fund's prospectus and statement of additional
information; and
The Adviser will furnish the Sub-Adviser from time to time
with copies, properly certified or otherwise authenticated, of all
amendments of or supplements to the foregoing, if any.
The Sub-Adviser has furnished the Adviser with a copy of the
Sub-Adviser's Code of Ethics, and will furnish the Adviser from time to
time with copies of any amendments to the code. The restrictions of the
Sub-Adviser may differ from those of the Trust where appropriate as
long as they maintain the same intent consistent with the sub adviser's
own procedures for recommending and purchasing securities.
2. Investment Services. The Sub-Adviser will use its best efforts
to provide to the Fund continuing and suitable investment advice with
respect to investments, in conformity with the investment policies,
objectives and restrictions of the Fund as set forth in the Fund's
Prospectus and Statement of Additional Information. In the performance
of the Sub-Adviser's duties hereunder, subject always to the provisions
contained in the documents delivered to the Sub-Adviser pursuant to
Section 1 above, as each of the same may from time to time be amended
or supplemented, the Sub-Adviser will have investment discretion with
respect to the Fund and will, at its own expense:
2
<PAGE>
(a) furnish the Adviser and the Fund with advice and
recommendations, consistent with the investment policies,
objectives and restrictions of the Fund as set forth in the
Fund's prospectus and statement of additional information,
with respect to the purchase, holding and disposition of
portfolio securities and other permitted investments;
(b) furnish the Adviser and the Fund with advice as to the
manner in which voting rights, subscription rights, rights to
consent to corporate action and any other rights pertaining to
the Fund's assets shall be exercised, the Fund having the
responsibility to exercise such voting and other rights; and,
as requested, furnish the Fund with research, economic and
statistical data in connection with the Fund's investments and
investment policies;
(c) submit such reports relating to the valuation of the
Fund's securities as the Adviser may reasonably request;
(d) subject to prior consultation with the Adviser, engage in
negotiations relating to the Fund's investments with issuers,
investment banking firms, securities brokers or dealers and
other institutions or investors;
(e) consistent with the provisions of Section 7 of this
Contract, place orders for the purchase, sale or exchange of
portfolio securities for the Fund's account with brokers or
dealers selected by the Adviser or the Sub-Adviser, provided
that in connection with the placing of such orders and the
selection of such brokers or dealers the Sub-Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
prospectus and statement of additional information of the Fund
as in effect and furnished to the Sub-Adviser from time to
time;
(f) from time to time or at any time requested by the Adviser
or the Trustees, make reports to the Adviser or the Trust, as
requested, of the Sub-Adviser's performance of the foregoing
services;
(g) subject to the supervision of the Adviser, maintain and
preserve the records required by the 1940 Act to be maintained
by the Sub-Adviser (the Sub-Adviser agrees that such records
are the property of the Trust and copies will be surrendered
to the Trust promptly upon request therefor);
(h) give instructions to the custodian (including any
subcustodian) of the Fund as to deliveries of securities to
and from such custodian and payments of cash for the account
of the Fund, and advise the Adviser on the same day such
instructions are given;
(i) cooperate generally with the Fund and the Adviser to
provide information necessary for the preparation of
registration statements and periodic reports to be filed with
the Securities and Exchange Commission, including Form N-1A,
semi-annual reports on
3
<PAGE>
Form N-SAR, shareholder reports, periodic statements,
shareholder communications and proxy materials furnished to
holders of shares of the Fund, filings with state "blue sky"
authorities and with United States agencies responsible for
tax matters, and other reports and filings of like nature; and
(j) in the performance of its duties hereunder, the
sub-adviser is and shall be an independent contractor and
unless otherwise expressly provided or authorized shall have
no authority to act for or represent the Fund or Trust in any
way or otherwise be deemed to be an agent of the Fund, The
Trust or the Adviser.
3. Expenses Paid by the Sub-Adviser. The Sub-Adviser will pay the
cost of maintaining the staff and personnel necessary for it to perform
its obligations under this Contract, the expenses of office rent,
telephone, telecommunications and other facilities it is obligated to
provide in order to perform the services specified in Section 2, and
any other expenses incurred by it in connection with the performance of
its duties hereunder.
4. Expenses of the Fund Not Paid by the Sub-Adviser. The
Sub-Adviser will not be required to pay any expenses which this
Contract does not expressly state shall be payable by the Sub-Adviser.
In particular, and without limiting the generality of the foregoing but
subject to the provisions of Section 3, the Sub-Adviser will not be
required to pay under this contract:
(a) the compensation and expenses of Trustees and of
independent advisers, independent contractors, consultants,
managers and other agents employed by the Trust or the Fund
other than through the Sub-Adviser;
(b) legal, accounting and auditing fees and expenses of the
Trust or the Fund;
(c) the fees and disbursements of custodians and depositories
of the Trust or the Fund's assets, transfer agents, disbursing
agents, plan agents and registrars;
(d) taxes and governmental fees assessed against the Trust or
the Fund's assets and payable by the Trust or the Fund;
(e) the cost of preparing and mailing dividends,
distributions, reports, notices and proxy materials to
shareholders of the Trust or the Fund except that the
Sub-Adviser shall bear the costs of providing the information
referred to in Section 2(i) to the Adviser;
(f) brokers' commissions and underwriting fees; and;
(g) the expense of periodic calculations of the net asset
value of the shares of the Fund.
5. Compensation of the Sub-Adviser. For all services to be
rendered, facilities furnished and expenses paid or assumed by the
Sub-Adviser as herein provided for the Fund, the Adviser will pay the
Sub-Adviser quarterly, based on the "average daily net asset" value of
the Fund for each of the preceding 3 months, in arrears a fee at the
annual rate of 55% of the investment advisory fee payable to the
Adviser. The "average daily net assets" of the Fund shall be determined
on the basis set forth in the Fund's prospectus or otherwise consistent
with the 1940 Act and the
4
<PAGE>
regulations promulgated thereunder. The Sub-Adviser will receive a pro
rata portion of such quarterly fee for any periods in which the
Sub-Adviser advises the Fund less than a full quarter. The Sub-Adviser
understands and agrees that neither the Trust nor the Fund has any
liability for the Sub-Adviser's fee hereunder. Calculations of the
Sub-Adviser's fee will be based on average net asset values as provided
by the Adviser.
In addition, the Sub-Adviser may agree not to impose all or a
portion of its fee (in advance of the time its fee would otherwise
accrue) and/or undertake to make any other payments or arrangements
necessary to limit the fund's expenses to any level the Sub-Adviser may
specify. Any fee reduction or undertaking shall constitute a binding
modification of this agreement while it is in effect but may be
discontinued or modified prospectively by the Sub-Adviser at any time.
6. Other Activities of the Sub-Adviser and Its Affiliates.
Nothing herein contained shall prevent the Sub-Adviser or any of its
affiliates or associates from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or a portfolio
similar to the Fund. It is specifically understood that officers,
directors and employees of the Sub-Adviser and those of its affiliates
may engage in providing portfolio management services and advice to
other investment advisory clients of the Sub-Adviser or of its
affiliates.
7. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Sub-Adviser nor any of its directors, officers or employees
will act as principal or agent or receive any commission , except as
permitted by the 1940 Act and the rules and regulations promulgated
thereunder,. The Sub-Adviser shall not knowingly recommend that the
Fund purchase, sell or retain securities of any issuer in which the
Sub-Adviser has a financial interest without obtaining prior approval
of the Adviser prior to the execution of any such transaction.
Nothing herein contained shall limit or restrict the
Sub-Adviser or any of its officers, affiliates or employees from
buying, selling or trading in any securities for its or their own
account or accounts. The Trust and Fund acknowledge the Sub-Adviser and
its officers, affiliates and employees, and its other clients may at
any time have, acquire, increase, decrease or dispose of positions in
investments which are at the same time being acquired or disposed of by
the Fund. The Sub-Adviser shall have no obligation to acquire with
respect to the Fund, a position in any investment which the
Sub-Adviser, its officers, affiliates or employees may acquire for its
or their own accounts or for the account of another client if, in the
sole discretion of the Sub-Adviser, it is not feasible or desirable to
acquire a position in such investment on behalf of the Fund. Nothing
herein contained shall prevent the Sub-Adviser from purchasing or
recommending the purchase of a particular security for one or more
funds or clients while other funds or clients may be selling the same
security.
8. No Partnership or Joint Venture. The Trust, the Fund, the
Adviser and the Sub-Adviser are not partners of or joint venturers with
each other and nothing herein shall be construed so as to make them
such partners or joint venturers or impose any liability as such on any
of them.
5
<PAGE>
9. Limitation of Liability of the Sub-Adviser. The Sub-Adviser
shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Trust, the Fund or the Adviser in connection
with the matters to which this Contract relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on
the Sub-Adviser's part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Contract. Any person, even though also employed by the Sub-Adviser, who
may be or become an employee of and paid by the Trust or the Fund shall
be deemed, when acting within the scope of his employment by the Trust
or the Fund, to be acting in such employment solely for the Trust or
the Fund and not as the Sub-Adviser's employee or agent.
10. Duration and Termination of this Contract. This Contract shall
remain in force until the second anniversary of the date upon which
this Contract was executed by the parties hereto, and from year to year
thereafter, but only so long as such continuance is specifically
approved at least annually by (a) a majority of the Trustees who are
not interested persons of the Adviser, of the Sub-Adviser or (other
than as Board members) of the Trust or the Fund, cast in person at a
meeting called for the purpose of voting on such approval, and (b)
either (i) the Trustees or (ii) a majority of the outstanding voting
securities of the Fund. This Contract may, on 60 days' written notice,
be terminated at any time without the payment of any penalty by the
Trust on behalf of the Fund by vote of a majority of the outstanding
voting securities of the Fund or by the Board of Trustees or by the
Adviser or by the Sub-Adviser. Termination of this Contract with
respect to the Fund shall not be deemed to terminate or otherwise
invalidate any provisions of any contract between you and any other
series of the Trust. This Contract shall automatically terminate in the
event of its assignment or upon the termination of the Adviser's
Investment Management Contract. In interpreting the provisions of this
Section 10, the definitions contained in Section 2(a) of the 1940 Act
(including the definitions of "assignment," "interested person" and
"voting security") shall be applied.
11. Amendment of This Contract. No provision of this Contract may
be changed, discharged, terminated or waived orally, but only by an
instrument in writing signed by the party against which enforcement of
the change discharge, termination or waiver is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Contract shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser, the Sub-Adviser or (other than as Board members) the Trust
or the Fund, cast in person at a meeting called for the purpose of
voting on such approval, and (b) a majority of the outstanding voting
securities of the Fund, as defined in the 1940 Act.
12. Miscellaneous.
(a) The captions in this Contract are included for convenience
of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect. This Contract may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument. The name John Hancock Declaration Trust is the
designation of the Trustees under the Declaration of Trust,
dated November 15, 1995 as amended from time to time. The
Declaration of Trust has been filed with the Secretary of
State of The Commonwealth of Massachusetts. The obligations of
the Trust and the Fund are
6
<PAGE>
not personally binding upon, nor shall resort be had to the
private property of, any of the Trustees, shareholders,
officers, employees or agents of the Trust or the Fund, but
only the Fund's property shall be bound. The Trust or the Fund
shall not be liable for the obligations of any other series of
the Trust.
(b) Any information supplied by the Sub-Adviser, which is not
otherwise in the public domain, in connection with the
performance of its duties hereunder is to be regarded as
confidential and for use only by the Fund and/or its agents,
and only in connection with the Fund and its investments.
(c) The Trust and the Fund may use the name "Independence" or
"NIXDEX" or any name similar to "Independence Investment
Associates, Inc." or "NIXDEX" only for so long as this
Agreement remains in effect. At such time as this Agreement
shall no longer be in effect, the Fund will (to the extent
that it lawfully can) cease to use such names or any other
names indicating that the Fund is advised by or otherwise
connected with the Sub-Adviser. The Fund agrees that the
Sub-Adviser reserves to itself and any successor to its
business the right to grant the non-exclusive right to use the
name "Independence" or "NIXDEX" or any similar name to any
other corporation or entity, including but not limited to any
investment company of which it or any of its subsidiaries or
affiliates shall be the investment adviser.
13. Governing Law. This Contract shall be construed in accordance
with the laws of The Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act.
14. Severability. The provisions of this contract are independent
of and separable from each other and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
7
<PAGE>
Yours very truly,
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
The foregoing Contract is hereby agreed to as of the date thereof.
JOHN HANCOCK DECLARATION TRUST
on behalf of John Hancock V.A. Independence Equity Fund
By: /s/Anne C. Hodsdon
----------------------------
Anne C. Hodsdon
President
INDEPENDENCE INVESTMENT ASSOCIATES, INC.
By: /s/Mark C. Lapman
----------------------------
Name: Mark C. Lapman
Title: Executive Vice President
8
<PAGE>
JOHN HANCOCK ADVISERS, INC.
101 Huntington Avenue
Boston, Massachusetts 02199
August 29, 1996
JOHN HANCOCK DECLARATION TRUST
- -- John Hancock V.A. Sovereign Investors Fund
101 Huntington Avenue
Boston, Massachusetts 02199
SOVEREIGN ASSET MANAGEMENT CORPORATION
101 Huntington Avenue
Boston, Massachusetts 02199
Sub-Investment Management Contract
Dear Sirs:
John Hancock Declaration Trust (the "Trust"), of which John Hancock
V.A. Sovereign Investors Fund (the "Fund") is a series, has been organized as a
business trust under the laws of The Commonwealth of Massachusetts to engage in
the business of an investment company. The Trust's shares of beneficial interest
are currently divided into ten series (including the Fund), each series
representing the entire undivided interest in a separate portfolio of assets.
This contract relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund and to provide certain other services, under the terms
and conditions provided in the investment management contract, dated as of the
date hereof, between the Trust, on behalf of the Fund, and the Adviser (the
"Investment Management Contract").
The Adviser and the Trustees have selected Sovereign Asset Management
Corporation (the "Sub-Adviser") to provide the Adviser and the Fund with the
advice and services set forth below, and the Sub-Adviser is willing to provide
such advice and services, subject to the review of the Trustees and overall
supervision of the Adviser, under the terms and conditions hereinafter set
forth. The Sub-Adviser hereby represents and warrants that it is registered as
an investment adviser under the Investment Advisers Act of 1940, as amended (the
"1940 Act"). Accordingly, the Trust, on behalf of the Fund, and the Adviser
agree with the Sub-Adviser as follows:
<PAGE>
1. Delivery of Documents. The Trust has furnished the Sub-Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Sub-Adviser as
the investment sub-adviser to the Fund and approving the form
of this Sub-Investment Management Contract (the "Contract")
and the resolution approving the Contract, adopted by the
initial sole shareholder of the Fund;
(d) Resolutions of the Trustees selecting the Adviser as
investment adviser to the Fund and approving the form of the
Investment Management Contract and resolutions adopted by the
initial shareholder of the Fund approving the form of the
Investment Management Contract;
(e) The Adviser's Investment Management Contract;
(f) Commitments, limitations and undertakings made by the
Trust to state "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states;
(g) The Fund's prospectus and statement of additional
information; and
(h) The Trust's Code of Ethics.
The Adviser will furnish the Sub-Adviser from time to time
with copies, properly certified or otherwise authenticated, of all
amendments of or supplements to the foregoing, if any.
2. Investment Services. The Sub-Adviser will use its best efforts
to provide to the Fund continuing and suitable investment advice with
respect to investments, in conformity with the investment policies,
objectives and restrictions of the Fund as set forth in the Fund's
Prospectus and Statement of Additional Information. The Sub-Adviser
will perform its duties in compliance with the Investment Compant Act,
the Internal Revenue Code and all other applicable federal and state
law. In the performance of the Sub-Adviser's duties hereunder, subject
always to the provisions contained in the documents delivered to the
Sub-Adviser pursuant to Section 1 above, as each of the same may from
time to time be amended or supplemented, the Sub-Adviser will have
investment discretion with respect to the Fund and will, at its own
expense:
(a) furnish the Adviser and the Fund with advice and
recommendations, consistent with the investment policies,
objectives and restrictions of the Fund as set forth in the
Fund's prospectus and statement of additional information,
with respect to the purchase, holding and disposition of
portfolio securities and other permitted investments;
2
<PAGE>
(b) furnish the Adviser and the Fund with advice as to the
manner in which voting rights, subscription rights, rights to
consent to corporate action and any other rights pertaining to
the Fund's assets shall be exercised, the Fund having the
responsibility to exercise such voting and other rights; and,
as requested, furnish the Fund with research, economic and
statistical data in connection with the Fund's investments and
investment policies;
(c) submit such reports relating to the valuation of the
Fund's securities as the Adviser may reasonably request;
(d) subject to prior consultation with the Adviser, engage in
negotiations relating to the Fund's investments with issuers,
investment banking firms, securities brokers or dealers and
other institutions or investors;
(e) consistent with the provisions of Section 7 of this
Contract, place orders for the purchase, sale or exchange of
portfolio securities for the Fund's account with brokers or
dealers selected by the Adviser or the Sub-Adviser, provided
that in connection with the placing of such orders and the
selection of such brokers or dealers the Sub-Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
prospectus and statement of additional information of the Fund
as in effect and furnished to the Sub-Adviser from time to
time;
(f) from time to time or at any time requested by the Adviser
or the Trustees, make reports to the Adviser or the Trust, as
requested, of the Sub-Adviser's performance of the foregoing
services;
(g) subject to the supervision of the Adviser, maintain and
preserve the records required by the 1940 Act to be maintained
by the Sub-Adviser (the Sub-Adviser agrees that such records
are the property of the Trust and copies will be surrendered
to the Trust promptly upon request therefor);
(h) give instructions to the custodian (including any
subcustodian) of the Fund as to deliveries of securities to
and from such custodian and payments of cash for the account
of the Fund, and advise the Adviser on the same day such
instructions are given;
(i) cooperate generally with the Fund and the Adviser to
provide information necessary for the preparation of
registration statements and periodic reports to be filed with
the Securities and Exchange Commission, including Form N-1A,
semi-annual reports on Form N-SAR, shareholder reports,
periodic statements, shareholder communications and proxy
materials furnished to holders of shares of the Fund, filings
with state "blue sky" authorities and with United States
agencies responsible for tax matters, and other reports and
filings of like nature; and
3
<PAGE>
3. Expenses Paid by the Sub-Adviser. The Sub-Adviser will pay the
cost of maintaining the staff and personnel necessary for it to perform
its obligations under this Contract, the expenses of office rent,
telephone, telecommunications and other facilities it is obligated to
provide in order to perform the services specified in Section 2, and
any other expenses incurred by it in connection with the performance of
its duties hereunder.
4. Expenses of the Fund Not Paid by the Sub-Adviser. The
Sub-Adviser will not be required to pay any expenses which this
Contract does not expressly state shall be payable by the Sub-Adviser.
In particular, and without limiting the generality of the foregoing but
subject to the provisions of Section 3, the Sub-Adviser will not be
required to pay under this contract:
(a) the compensation and expenses of Trustees and of
independent advisers, independent contractors, consultants,
managers and other agents employed by the Trust or the Fund
other than through the Sub-Adviser;
(b) legal, accounting and auditing fees and expenses of the
Trust or the Fund;
(c) the fees and disbursements of custodians and depositories
of the Trust or the Fund's assets, transfer agents, disbursing
agents, plan agents and registrars;
(d) taxes and governmental fees assessed against the Trust or
the Fund's assets and payable by the Trust or the Fund;
(e) the cost of preparing and mailing dividends,
distributions, reports, notices and proxy materials to
shareholders of the Trust or the Fund except that the
Sub-Adviser shall bear the costs of providing the information
referred to in Section 2(i) to the Adviser;
(f) brokers' commissions and underwriting fees; and;
(g) the expense of periodic calculations of the net asset
value of the shares of the Fund.
5. Compensation of the Sub-Adviser. For all services to be
rendered, facilities furnished and expenses paid or assumed by the
Sub-Adviser as herein provided for the Fund, the Adviser will pay the
Sub-Adviser quarterly, for each of the preceding 3 months, in arrears a
fee at the annual rate of 40% of the investment advisory fee payable to
the Adviser. The "average daily net assets" of the Fund shall be
determined on the basis set forth in the Fund's prospectus or otherwise
consistent with the 1940 Act and the regulations promulgated
thereunder. The Sub-Adviser will receive a pro rata portion of such
monthly fee for any periods in which the Sub-Adviser advises the Fund
less than a full month. The Sub-Adviser understands and agrees that
neither the Trust nor the Fund has any liability for the Sub-Adviser's
fee hereunder. Calculations of the Sub-Adviser's fee will be based on
average net asset values as provided by the Adviser.
In addition, the Sub-Adviser may agree not to impose all or a
portion of its fee (in advance of the time its fee would otherwise
accrue) and/or undertake to make any other payments or arrangements
necessary to limit the fund's expenses to any level the Sub-Adviser
4
<PAGE>
may specify. Any fee reduction or undertaking shall constitute a
binding modification of this agreement while it is in effect but may be
discontinued or modified prospectively by the Sub-Adviser at any time.
6. Other Activities of the Sub-Adviser and Its Affiliates.
Nothing herein contained shall prevent the Sub-Adviser or any of its
affiliates or associates from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or a portfolio
similar to the Fund. It is specifically understood that officers,
directors and employees of the Sub-Adviser and those of its affiliates
may engage in providing portfolio management services and advice to
other investment advisory clients of the Sub-Adviser or of its
affiliates.
7. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Sub-Adviser nor any of its directors, officers or employees
will act as principal or agent or receive any commission , except as
permitted by the 1940 Act and the rules and regulations promulgated
thereunder. The Sub-Adviser shall not knowingly recommend that the Fund
purchase, sell or retain securities of any issuer in which the
Sub-Adviser has a financial interest without obtaining prior approval
of the Adviser prior to the execution of any such transaction.
Nothing herein contained shall limit or restrict the
Sub-Adviser or any of its officers, affiliates or employees from
buying, selling or trading in any securities for its or their own
account or accounts. The Trust and Fund acknowledge the Sub-Adviser and
its officers, affiliates and employees, and its other clients may at
any time have, acquire, increase, decrease or dispose of positions in
investments which are at the same time being acquired or disposed of by
the Fund. The Sub-Adviser shall have no obligation to acquire with
respect to the Fund, a position in any investment which the
Sub-Adviser, its officers, affiliates or employees may acquire for its
or their own accounts or for the account of another client if, in the
sole discretion of the Sub-Adviser, it is not feasible or desirable to
acquire a position in such investment on behalf of the Fund. Nothing
herein contained shall prevent the Sub-Adviser from purchasing or
recommending the purchase of a particular security for one or more
funds or clients while other funds or clients may be selling the same
security.
8. No Partnership or Joint Venture. The Trust, the Fund, the
Adviser and the Sub-Adviser are not partners of or joint venturers with
each other and nothing herein shall be construed so as to make them
such partners or joint venturers or impose any liability as such on any
of them.
9. Limitation of Liability of the Sub-Adviser. The Sub-Adviser
shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Trust, the Fund or the Adviser in connection
with the matters to which this Contract relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on
the Sub-Adviser's part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Contract. Any person, even though also employed by the Sub-Adviser, who
may be or become an employee of and paid by the Trust or the Fund shall
be deemed, when acting within the scope of his employment by the Trust
or the Fund, to be acting in such employment solely for the Trust or
the Fund and not as the Sub-Adviser's employee or agent.
5
<PAGE>
10. Duration and Termination of this Contract. This Contract shall
remain in force until the second anniversary of the date upon which
this Contract was executed by the parties hereto, and from year to year
thereafter, but only so long as such continuance is specifically
approved at least annually by (a) a majority of the Trustees who are
not interested persons of the Adviser, of the Sub-Adviser or (other
than as Board members) of the Trust or the Fund, cast in person at a
meeting called for the purpose of voting on such approval, and (b)
either (i) the Trustees or (ii) a majority of the outstanding voting
securities of the Fund. This Contract may, on 60 days' written notice,
be terminated at any time without the payment of any penalty by the
Trust on behalf of the Fund by vote of a majority of the outstanding
voting securities of the Fund or by the Board of Trustees or by the
Adviser or by the Sub-Adviser. Termination of this Contract with
respect to the Fund shall not be deemed to terminate or otherwise
invalidate any provisions of any contract between you and any other
series of the Trust. This Contract shall automatically terminate in the
event of its assignment or upon the termination of the Adviser's
Investment Management Contract. In interpreting the provisions of this
Section 10, the definitions contained in Section 2(a) of the 1940 Act
(including the definitions of "assignment," "interested person" and
"voting security") shall be applied.
11. Amendment of This Contract. No provision of this Contract may
be changed, discharged, terminated or waived orally, but only by an
instrument in writing signed by the party against which enforcement of
the change discharge, termination or waiver is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Contract shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser, the Sub-Adviser or (other than as Board members) the Trust
or the Fund, cast in person at a meeting called for the purpose of
voting on such approval, and (b) a majority of the outstanding voting
securities of the Fund, as defined in the 1940 Act.
12. Miscellaneous.
(a) The captions in this Contract are included for convenience
of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect. This Contract may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument. The name John Hancock Declaration Trust is the
designation of the Trustees under the Declaration of Trust,
dated November 15, 1995 as amended from time to time. The
Declaration of Trust has been filed with the Secretary of
State of The Commonwealth of Massachusetts. The obligations of
the Trust and the Fund are not personally binding upon, nor
shall resort be had to the private property of, any of the
Trustees, shareholders, officers, employees or agents of the
Trust or the Fund, but only the Fund's property shall be
bound. The Trust or the Fund shall not be liable for the
obligations of any other series of the Trust.
(b) Any information supplied by the Sub-Adviser, which is not
otherwise in the public domain, in connection with the
performance of its duties hereunder is to be regarded as
confidential and for use only by the Fund and/or its agents,
and only in connection with the Fund and its investments.
6
<PAGE>
13. Governing Law. This Contract shall be construed in accordance
with the laws of The Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act.
14. Severability. The provisions of this contract are independent
of and separable from each other and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
Yours very truly,
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
The foregoing Contract is hereby agreed to as of the date thereof.
JOHN HANCOCK DECLARATION TRUST
on behalf of John Hancock V.A. Sovereign Investors Fund
By: /s/Anne C. Hodsdon
----------------------------
Anne C. Hodsdon
President
SOVEREIGN ASSET MANAGEMENT CORPORATION
By: /s/Anthony P. Petrucci
----------------------------
Name: Anthony P. Petrucci
Title: President
7
<PAGE>
JOHN HANCOCK ADVISERS, INC.
101 Huntington Avenue
Boston, Massachusetts 02199
August 29, 1996
JOHN HANCOCK DECLARATION TRUST
- -- John Hancock V.A. International Fund
101 Huntington Avenue
Boston, Massachusetts 02199
JOHN HANCOCK ADVISERS INTERNATIONAL LTD.
34 Dover Street
London, UK W1X 3RA
Sub-Investment Management Contract
Dear Sirs:
John Hancock Declaration Trust (the "Trust"), of which John Hancock
V.A. International Fund (the "Fund") is a series, has been organized as a
business trust under the laws of The Commonwealth of Massachusetts to engage in
the business of an investment company. The Trust's shares of beneficial interest
are currently divided into ten series (including the Fund), each series
representing the entire undivided interest in a separate portfolio of assets.
This contract relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund and to provide certain other services, under the terms
and conditions provided in the investment management contract, dated as of the
date hereof, between the Trust, on behalf of the Fund, and the Adviser (the
"Investment Management Contract").
The Adviser and the Trustees have selected John Hancock Advisers
International Ltd. (the "Sub-Adviser") to provide the Adviser and the Fund with
the advice and services set forth below, and the Sub-Adviser is willing to
provide such advice and services, subject to the review of the Trustees and
overall supervision of the Adviser, under the terms and conditions hereinafter
set forth. The Sub-Adviser hereby represents and warrants that it is registered
as an investment adviser under the Investment Advisers Act of 1940, as amended
(the "1940 Act"). Accordingly, the Trust, on behalf of the Fund, and the Adviser
agree with the Sub-Adviser as follows:
1. Delivery of Documents. The Trust has furnished the Sub-Adviser
with copies, properly certified or otherwise authenticated, of each of
the following:
<PAGE>
(a) Declaration of Trust of the Trust, dated November 15, 1995
(the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Sub-Adviser as
the investment sub-adviser to the Fund and approving the form
of this Sub-Investment Management Contract (the "Contract")
and the resolution approving the Contract, adopted by the
initial sole shareholder of the Fund;
(d) Resolutions of the Trustees selecting the Adviser as
investment adviser to the Fund and approving the form of the
Investment Management Contract and resolutions adopted by the
initial shareholder of the Fund approving the form of the
Investment Management Contract;
(e) The Adviser's Investment Management Contract;
(f) Commitments, limitations and undertakings made by the
Trust to state "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states;
(g) The Fund's prospectus and statement of additional
information; and
(h) The Trust's Code of Ethics.
The Adviser will furnish the Sub-Adviser from time to time
with copies, properly certified or otherwise authenticated, of all
amendments of or supplements to the foregoing, if any.
2. Investment Services. The Sub-Adviser will use its best efforts
to provide to the Fund continuing and suitable investment advice with
respect to investments, in conformity with the investment policies,
objectives and restrictions of the Fund as set forth in the Fund's
Prospectus and Statement of Additional Information. The Sub-Adviser
will perform its duties in compliance with the Investment Compant Act,
the Internal Revenue Code and all other applicable federal and state
law. In the performance of the Sub-Adviser's duties hereunder, subject
always to the provisions contained in the documents delivered to the
Sub-Adviser pursuant to Section 1 above, as each of the same may from
time to time be amended or supplemented, the Sub-Adviser will have
investment discretion with respect to the Fund and will, at its own
expense:
(a) furnish the Adviser and the Fund with advice and
recommendations, consistent with the investment policies,
objectives and restrictions of the Fund as set forth in the
Fund's prospectus and statement of additional information,
with respect to the purchase, holding and disposition of
portfolio securities and other permitted investments;
(b) furnish the Adviser and the Fund with advice as to the
manner in which voting rights, subscription rights, rights to
consent to corporate action and any other rights
2
<PAGE>
pertaining to the Fund's assets shall be exercised, the Fund
having the responsibility to exercise such voting and other
rights; and, as requested, furnish the Fund with research,
economic and statistical data in connection with the Fund's
investments and investment policies;
(c) submit such reports relating to the valuation of the
Fund's securities as the Adviser may reasonably request;
(d) subject to prior consultation with the Adviser, engage in
negotiations relating to the Fund's investments with issuers,
investment banking firms, securities brokers or dealers and
other institutions or investors;
(e) consistent with the provisions of Section 7 of this
Contract, place orders for the purchase, sale or exchange of
portfolio securities for the Fund's account with brokers or
dealers selected by the Adviser or the Sub-Adviser, provided
that in connection with the placing of such orders and the
selection of such brokers or dealers the Sub-Adviser shall
seek to obtain execution and pricing within the policy
guidelines determined by the Trustees and set forth in the
prospectus and statement of additional information of the Fund
as in effect and furnished to the Sub-Adviser from time to
time;
(f) from time to time or at any time requested by the Adviser
or the Trustees, make reports to the Adviser or the Trust, as
requested, of the Sub-Adviser's performance of the foregoing
services;
(g) subject to the supervision of the Adviser, maintain and
preserve the records required by the 1940 Act to be maintained
by the Sub-Adviser (the Sub-Adviser agrees that such records
are the property of the Trust and copies will be surrendered
to the Trust promptly upon request therefor);
(h) give instructions to the custodian (including any
subcustodian) of the Fund as to deliveries of securities to
and from such custodian and payments of cash for the account
of the Fund, and advise the Adviser on the same day such
instructions are given;
(i) cooperate generally with the Fund and the Adviser to
provide information necessary for the preparation of
registration statements and periodic reports to be filed with
the Securities and Exchange Commission, including Form N-1A,
semi-annual reports on Form N-SAR, shareholder reports,
periodic statements, shareholder communications and proxy
materials furnished to holders of shares of the Fund, filings
with state "blue sky" authorities and with United States
agencies responsible for tax matters, and other reports and
filings of like nature; and
3. Expenses Paid by the Sub-Adviser. The Sub-Adviser will pay the
cost of maintaining the staff and personnel necessary for it to perform
its obligations under this Contract, the expenses of office rent,
telephone, telecommunications and other facilities it is obligated to
provide in order to perform the services specified in Section 2, and
any other expenses incurred by it in connection with the performance of
its duties hereunder.
3
<PAGE>
4. Expenses of the Fund Not Paid by the Sub-Adviser. The
Sub-Adviser will not be required to pay any expenses which this
Contract does not expressly state shall be payable by the Sub-Adviser.
In particular, and without limiting the generality of the foregoing but
subject to the provisions of Section 3, the Sub-Adviser will not be
required to pay under this contract:
(a) the compensation and expenses of Trustees and of
independent advisers, independent contractors, consultants,
managers and other agents employed by the Trust or the Fund
other than through the Sub-Adviser;
(b) legal, accounting and auditing fees and expenses of the
Trust or the Fund;
(c) the fees and disbursements of custodians and depositories
of the Trust or the Fund's assets, transfer agents, disbursing
agents, plan agents and registrars;
(d) taxes and governmental fees assessed against the Trust or
the Fund's assets and payable by the Trust or the Fund;
(e) the cost of preparing and mailing dividends,
distributions, reports, notices and proxy materials to
shareholders of the Trust or the Fund except that the
Sub-Adviser shall bear the costs of providing the information
referred to in Section 2(i) to the Adviser;
(f) brokers' commissions and underwriting fees; and;
(g) the expense of periodic calculations of the net asset
value of the shares of the Fund.
5. Compensation of the Sub-Adviser. For all services to be
rendered, facilities furnished and expenses paid or assumed by the
Sub-Adviser as herein provided for the Fund, the Adviser will pay the
Sub-Adviser quarterly, for each of the preceding 3 months, in arrears a
fee at the annual rate of 70% of the investment advisory fee payable to
the Adviser. The "average daily net assets" of the Fund shall be
determined on the basis set forth in the Fund's prospectus or otherwise
consistent with the 1940 Act and the regulations promulgated
thereunder. The Sub-Adviser will receive a pro rata portion of such
monthly fee for any periods in which the Sub-Adviser advises the Fund
less than a full month. The Sub-Adviser understands and agrees that
neither the Trust nor the Fund has any liability for the Sub-Adviser's
fee hereunder. Calculations of the Sub-Adviser's fee will be based on
average net asset values as provided by the Adviser.
In addition, the Sub-Adviser may agree not to impose all or a
portion of its fee (in advance of the time its fee would otherwise
accrue) and/or undertake to make any other payments or arrangements
necessary to limit the fund's expenses to any level the Sub-Adviser may
specify. Any fee reduction or undertaking shall constitute a binding
modification of this agreement while it is in effect but may be
discontinued or modified prospectively by the Sub-Adviser at any time.
4
<PAGE>
6. Other Activities of the Sub-Adviser and Its Affiliates.
Nothing herein contained shall prevent the Sub-Adviser or any of its
affiliates or associates from engaging in any other business or from
acting as investment adviser or investment manager for any other person
or entity, whether or not having investment policies or a portfolio
similar to the Fund. It is specifically understood that officers,
directors and employees of the Sub-Adviser and those of its affiliates
may engage in providing portfolio management services and advice to
other investment advisory clients of the Sub-Adviser or of its
affiliates.
7. Avoidance of Inconsistent Position. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Sub-Adviser nor any of its directors, officers or employees
will act as principal or agent or receive any commission , except as
permitted by the 1940 Act and the rules and regulations promulgated
thereunder. The Sub-Adviser shall not knowingly recommend that the Fund
purchase, sell or retain securities of any issuer in which the
Sub-Adviser has a financial interest without obtaining prior approval
of the Adviser prior to the execution of any such transaction.
Nothing herein contained shall limit or restrict the
Sub-Adviser or any of its officers, affiliates or employees from
buying, selling or trading in any securities for its or their own
account or accounts. The Trust and Fund acknowledge the Sub-Adviser and
its officers, affiliates and employees, and its other clients may at
any time have, acquire, increase, decrease or dispose of positions in
investments which are at the same time being acquired or disposed of by
the Fund. The Sub-Adviser shall have no obligation to acquire with
respect to the Fund, a position in any investment which the
Sub-Adviser, its officers, affiliates or employees may acquire for its
or their own accounts or for the account of another client if, in the
sole discretion of the Sub-Adviser, it is not feasible or desirable to
acquire a position in such investment on behalf of the Fund. Nothing
herein contained shall prevent the Sub-Adviser from purchasing or
recommending the purchase of a particular security for one or more
funds or clients while other funds or clients may be selling the same
security.
8. No Partnership or Joint Venture. The Trust, the Fund, the
Adviser and the Sub-Adviser are not partners of or joint venturers with
each other and nothing herein shall be construed so as to make them
such partners or joint venturers or impose any liability as such on any
of them.
9. Limitation of Liability of the Sub-Adviser. The Sub-Adviser
shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Trust, the Fund or the Adviser in connection
with the matters to which this Contract relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on
the Sub-Adviser's part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Contract. Any person, even though also employed by the Sub-Adviser, who
may be or become an employee of and paid by the Trust or the Fund shall
be deemed, when acting within the scope of his employment by the Trust
or the Fund, to be acting in such employment solely for the Trust or
the Fund and not as the Sub-Adviser's employee or agent.
5
<PAGE>
10. Duration and Termination of this Contract. This Contract shall
remain in force until the second anniversary of the date upon which
this Contract was executed by the parties hereto, and from year to year
thereafter, but only so long as such continuance is specifically
approved at least annually by (a) a majority of the Trustees who are
not interested persons of the Adviser, of the Sub-Adviser or (other
than as Board members) of the Trust or the Fund, cast in person at a
meeting called for the purpose of voting on such approval, and (b)
either (i) the Trustees or (ii) a majority of the outstanding voting
securities of the Fund. This Contract may, on 60 days' written notice,
be terminated at any time without the payment of any penalty by the
Trust on behalf of the Fund by vote of a majority of the outstanding
voting securities of the Fund or by the Board of Trustees or by the
Adviser or by the Sub-Adviser. Termination of this Contract with
respect to the Fund shall not be deemed to terminate or otherwise
invalidate any provisions of any contract between you and any other
series of the Trust. This Contract shall automatically terminate in the
event of its assignment or upon the termination of the Adviser's
Investment Management Contract. In interpreting the provisions of this
Section 10, the definitions contained in Section 2(a) of the 1940 Act
(including the definitions of "assignment," "interested person" and
"voting security") shall be applied.
11. Amendment of This Contract. No provision of this Contract may
be changed, discharged, terminated or waived orally, but only by an
instrument in writing signed by the party against which enforcement of
the change discharge, termination or waiver is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Contract shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of
the Adviser, the Sub-Adviser or (other than as Board members) the Trust
or the Fund, cast in person at a meeting called for the purpose of
voting on such approval, and (b) a majority of the outstanding voting
securities of the Fund, as defined in the 1940 Act.
12. Miscellaneous.
(a) The captions in this Contract are included for convenience
of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect. This Contract may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument. The name John Hancock Declaration Trust is the
designation of the Trustees under the Declaration of Trust,
dated November 15, 1995 as amended from time to time. The
Declaration of Trust has been filed with the Secretary of
State of The Commonwealth of Massachusetts. The obligations of
the Trust and the Fund are not personally binding upon, nor
shall resort be had to the private property of, any of the
Trustees, shareholders, officers, employees or agents of the
Trust or the Fund, but only the Fund's property shall be
bound. The Trust or the Fund shall not be liable for the
obligations of any other series of the Trust.
(b) Any information supplied by the Sub-Adviser, which is not
otherwise in the public domain, in connection with the
performance of its duties hereunder is to be regarded as
confidential and for use only by the Fund and/or its agents,
and only in connection with the Fund and its investments.
6
<PAGE>
13. Governing Law. This Contract shall be construed in accordance
with the laws of The Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act.
14. Severability. The provisions of this contract are independent
of and separable from each other and no provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be deemed invalid or
unenforceable in whole or in part.
Yours very truly,
JOHN HANCOCK ADVISERS, INC.
By: /s/John A. Morin
----------------------------
John A. Morin
Vice President and Secretary
The foregoing Contract is hereby agreed to as of the date thereof.
JOHN HANCOCK DECLARATION TRUST
on behalf of John Hancock V.A. International Fund
By: /s/Anne C. Hodsdon
----------------------------
Anne C. Hodsdon
President
JOHN HANCOCK ADVISERS INTERNATIONAL LTD.
By: /s/Edward J. Beaudreau
----------------------------
Name: Edward J. Beaudreau
Title: Chairman, President and CEO
7
JOHN HANCOCK DECLARATION TRUST
101 Huntington Avenue
Boston, Massachusetts 02199
July 22, 1996
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Distribution Agreement
Dear Sir:
John Hancock Declaration Trust (the "Trust") has been organized as a business
trust under the laws of the Commonwealth of Massachusetts to engage in the
business of an investment company. The Trust's Board of Trustees has selected
you to act as principal underwriter (as such term is defined in Section 2(a)(29)
of the Investment Company Act of 1940, as amended) of the shares of beneficial
interest ("shares") of each series of the Trust, to offer the shares for sale to
John Hancock Variable Annuity Account J (a separate account of John Hancock
Variable Life Insurance Company), to other insurance company separate accounts
and certain other qualified investors (collectively, the "Eligible Purchasers")
at net asset value in accordance with the prospectus and statement of additional
information then in effect.
The Trust intends to offer shares in ten series designated as: John Hancock V.A.
Emerging Growth Fund, John Hancock V.A. Discovery Fund, John Hancock V.A.
International Fund, John Hancock V.A. 500 Index Fund, John Hancock V.A.
Independence Equity Fund, John Hancock V.A. Sovereign Investors Fund, John
Hancock V.A. Sovereign Bond Fund, John Hancock V.A. Strategic Income Fund, John
Hancock V.A. World Bond Fund and John Hancock V.A. Money Market Fund, together
with all other series subsequently established by the Trust and made subject to
this Agreement (each, a "Fund" and collectively, the "Funds"). You are willing,
as agent for the Trust, to sell the shares to Eligible Purchasers, in the manner
and on the conditions hereinafter set forth. Accordingly, the Trust hereby
agrees with you as follows:
1. Delivery of Documents. The Trust will furnish you promptly with copies,
properly certified or otherwise authenticated, of any registration statements
filed by it with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, (the "1933 Act") or the Investment Company Act of 1940, as
amended, (the "1940 Act") together with any financial statements and exhibits
included therein, and all amendments or supplements thereto hereafter filed.
<PAGE>
2. Registration and Sale of Additional Shares. The Trust will use its best
efforts to register from time to time under the 1933 Act, if necessary, such
shares not already so registered as you may reasonably be expected to sell as
agent on behalf of the Trust. If necessary, you will cooperate with the Trust in
taking such action as may be required from time to time to effect and maintain
the registration of the Trust's shares under the 1933 Act, to qualify shares of
the Trust for sale in the Commonwealth of Massachusetts and in any other states
mutually agreeable to you and the Trust, and to maintain such qualification if
and so long as such shares are duly registered under the 1933 Act.
3. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from Eligible Purchasers
unconditional orders for shares authorized for issuance by the Trust and
registered under the 1933 Act provided that you may in your discretion refuse to
accept orders for such shares from any particular applicant.
4. Sale of Shares. Subject to the provisions of this Agreement, you are
authorized to sell as agent on behalf of the Trust, authorized and issued shares
registered under the 1933 Act. Such sales may be made by you on behalf of the
Trust by accepting unconditional orders to purchase such shares placed with
Eligible Purchasers. The sales price to Eligible Purchasers of such shares shall
be the net asset value as provided in Section 5 hereof.
Any right granted to you to accept orders for shares or make sales on behalf of
the Funds will not apply to shares issued in connection with the merger or
consolidation of any other investment company with any Fund or its acquisition,
by purchase or otherwise, of all or substantially all the assets of any
investment company or substantially all the outstanding shares of any such
company, and such right shall not apply to shares that may be offered or
otherwise issued by a Fund to shareholders by virtue of their being shareholders
of the Fund.
5. Share Price. All shares sold by you as agent for the Funds will be sold
at their net asset value, which will be determined in the manner provided in the
Funds' prospectuses or statement of additional information, as now in effect or
as they may be amended.
6. No Sales Discount. The respective Fund shall receive the applicable net
asset value on all sales of shares by you as agent of the Trust.
7. Transmission of Orders. No orders for the sale, redemption or
repurchase of the Funds' shares (nor payment for shares, in the case of a
purchase) shall be transmitted to you. Sales, redemptions and repurchases shall
be effected directly by the Funds' transfer agent according to the terms of the
Trust's transfer agency agreement. Also, payment for shares shall be transmitted
by the transfer agent directly to the Funds' custodian according to the terms of
the Trust's transfer agency agreement.
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<PAGE>
8. Suspension of Sales. If and whenever a suspension of the right of
redemption or a postponement of the date of payment or redemption has been
declared pursuant to the Trust's Declaration of Trust and has become effective,
then, until such suspension or postponement is terminated, no further orders for
shares shall be accepted by you except such unconditional orders placed with you
before you have knowledge of the suspension. Each Fund reserves the right to
suspend the sale of its shares and your authority to accept orders for shares on
behalf of the Fund if, in the judgment of a majority of the Trust's Board of
Trustees, it is in the best interests of the Fund to do so, such suspension to
continue for such period as may be determined by such majority; and in that
event, no shares will be sold by the Fund or by you on behalf of the Fund while
such suspension remains in effect except for shares necessary to cover
unconditional orders accepted by you before you had knowledge of the suspension.
9. Expenses. The Trust will pay (or will enter into arrangements providing
that persons other than you will pay) all fees and expenses in connection with
the preparation and filing of any registration statement, prospectus and
Statement of Additional Information or any amendments thereto under the 1933 Act
covering the issue and sale of shares and in connection with the qualification
of shares for sale in the various states in which the Funds shall determine
advisable to qualify such shares for sale. The Trust, or applicable Fund, will
also pay the issue taxes or (in the case of shares redeemed) any initial
transfer taxes thereon.
10. Conformity with Law. You agree that in selling the shares you will duly
conform in all respects with the laws of the United States and, if necessary,
any state in which such shares may be offered for sale by you pursuant to this
Agreement.
11. Indemnification. You agree to indemnify and hold harmless the Trust and
each of its Board members and officers and each person, if any, who controls the
Trust or any Fund within the meaning of Section 15 of the Securities Act of
1933, as amended, against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses) to which the Trust, Fund or such
Board members, officers or controlling person may become subject under such Act,
under any other statute, at common law or otherwise, arising out of the
acquisition of any shares by any person which (a) may be based upon any wrongful
act by you or any of your employees or representatives or (b) may be based upon
any untrue statement or alleged untrue statement of a material fact contained in
a registration statement, prospectus or statement of additional information
covering shares of the Trust or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made if such statement or omission
was made in reliance upon information furnished or confirmed in writing to the
Trust by you, or (c) may be incurred or arise by reason of your acting as the
Trust's agent instead of purchasing and reselling shares as principal in
distributing shares to Eligible Purchasers, provided that in no case is your
indemnity in favor of a Board member or officer of the Trust or any other person
deemed to protect such Board member or officer of the Trust or other person
against any liability to which any such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties or by reason of his reckless disregard of obligations and duties
under this Agreement.
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<PAGE>
You are not authorized to give any information or to make any
representations on behalf of the Trust or in connection with the sale of shares
other than the information and representations contained in a registration
statement, prospectus, or statement of additional information covering shares,
as such registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time. No person other
than you is authorized to act as principal underwriter for the Trust.
12. Duration and Termination of this Agreement. This Agreement shall remain
in effect until the second anniversary of the date upon which this Agreement was
executed by the parties hereto, and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually by (a) a
majority of the Board of Trustees who are not interested persons of you (other
than as Board members) or of the Trust, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Board of Trustees
of the Trust, or (ii) a majority of the outstanding voting securities of the
Trust. This Agreement may, on 60 days' written notice, be terminated at any
time, without the payment of any penalty, by the Board of Trustees of the Trust,
by a vote of a majority of the outstanding voting securities of the Trust, or by
you. This Agreement will automatically terminate in the event of its assignment
by you. In interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the Investment Company Act of 1940 (particularly
the definitions of "interested person", "assignment" and "voting security")
shall be applied.
13. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. If the Trust should at any time deem it
necessary or advisable in the best interests of the Trust that any amendment of
this agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under state or federal tax laws and should
notify you of the form of such amendment, and the reasons therefor, and if you
should decline to assent to such amendment, the Trust may terminate this
agreement forthwith. If you should at any time request that a change be made in
the Trust's Declaration of Trust or By-Laws, or in its methods of doing
business, in order to comply with any requirements of federal law or regulations
of the Securities and Exchange Commission or of a national securities
association of which you are or may be a member, relating to the sale of shares,
and the Trust should not make such necessary change within a reasonable time,
you may terminate this Agreement forthwith.
14. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
4
<PAGE>
Very truly yours,
JOHN HANCOCK DECLARATION TRUST
By: /s/Anne C. Hodsdon
--------------------------
Anne C. Hodsdon
President
The foregoing Agreement is hereby
accepted as of the date hereof.
JOHN HANCOCK FUNDS, INC.
By: /s/Edward J. Boudreau, Jr.
-----------------------------
Edward J. Boudreau, Jr.
Chairman, President and CEO
5
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 22nd day of July, 1996 by and between JOHN HANCOCK
DECLARATION TRUST, a Massachusetts business trust, having its principal office
and place of business at 101 Huntington Avenue, Boston, Massachusetts, 02199
(the "Trust"), and John Hancock Investor Services Corporation, a Delaware
corporation having its principal office and place of business at 101 Huntington
Avenue, Boston, Massachusetts 02199 ("JHISC").
WITNESSETH:
WHEREAS, the Trust desires to appoint JHISC as its transfer agent, dividend
disbursing agent and agent in connection with certain other activities, and
JHISC desires to accept such appointment;
WHEREAS, the Trust is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Trust intends to initially offer shares in ten series designated
as: John Hancock V.A. Emerging Growth Fund, John Hancock V.A. Discovery Fund,
John Hancock V.A. International Fund, John Hancock V.A. 500 Index Fund, John
Hancock V.A. Independence Equity Fund, John Hancock V.A. Sovereign Investors
Fund, John Hancock V.A. Sovereign Bond Fund, John Hancock V.A. Strategic Income
Fund, John Hancock V.A. World Bond Fund and John Hancock V.A. Money Market Fund,
together with all other series subsequently established by the Trust and made
subject to this Agreement (each, a "Fund" and collectively, the "Funds");
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of JHISC
1.01 Subject to the terms and conditions set forth in this
Agreement, the Trust hereby employs and appoints JHISC to act, and JHISC agrees
to act, as transfer agent and dividend dispursing agent with respect to the
authorized and issued shares of beneficial interest ("Shares") of each series of
the Trust subject to this Agreement and to provide to the shareholders of the
Trust ("Shareholders") such services in connection therewith as may be set out
in the prospectuses of the Trust from time to time.
1.02 JHISC agrees that it will perform the following services:
(a) In accordance with procedures established from time to time
by agreement between the Trust and JHISC, JHISC shall:
(i) Receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate documentation
therefor to each Fund's Custodian authorized pursuant to the Trust's
Declaration of Trust (the "Custodian");
1
<PAGE>
(ii) Pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance, redemption requests and
redemption directions and deliver the appropriate documentation therefor
to the Custodian;
(iv) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and
distributions declared by the Funds, processing the reinvestment of
distributions on each Fund at the net asset value per share for that
Fund next computed after the payment (in accordance with the Fund's
then-current prospectus);
(vii) Maintain records of account for and advise the Trust
and its Shareholders as to the foregoing; and
(viii) Record the issuance of Shares of each Fund and
maintain pursuant to Rule 17Ad-10(e) of the rules and regulations of the
Securities Exchange Act of 1934 a record of the total number of Shares
of each Fund which are authorized, based upon data provided to it by
each Fund, and issued and outstanding. JHISC shall also provide each
Fund on a regular basis with the total number of Shares which are
authorized and issued and outstanding and shall have no obligation, when
recording the issuance of Shares, to monitor the issuance of these
Shares or to take cognizance of any laws relating to the issue or sale
of these Shares, which functions shall be the sole responsibility of
each Fund.
(b) In calculating the number of Shares to be issued on purchase
or reinvestment, or redeemed or repurchased, or the amount of the purchase
payment or redemption or repurchase payments owed, JHISC shall use the net asset
value per share (as described in each fund's then-current prospectus) computed
by it or such other person as may be designated by the Trust's board of
trustees. It is understood that, unless the Trust directs otherwise, the
issuance, redemption or repurchase of the Funds' shares arising out of an
automatic transaction under an insurance contract (such as investment of net
premiums, death of insureds, deduction of fees and charges, transfers,
surrenders, loans, loan repayments, deductions of interest on loans, lapses,
reinstatements and similar automatic transactions) shall be effected at the net
asset value per share computed as of the close of business on the day as of
which said automatic transaction is effected, even though the "order" for
purchase, sale or redemption of the Funds' shares is not received until after
said close of business. All other issuances, redemptions or repurchases of the
Funds' shares shall be effected at net asset values per share next computed
after receipt of the orders therefore and said orders shall become irrevocable
at the time as of which said value is next computed.
2
<PAGE>
(c) In addition to and not in lieu of the services set forth in
the above paragraph (a), JHISC shall: (i) perform all of the customary services
of a transfer agent and dividend disbursing agent including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, receiving and tabulating proxies, mailing Shareholder reports
and prospectuses to current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing appropriate forms required
with respect to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements of account
to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information and
(ii) provide a system which will enable the Trust to monitor the total number of
each Fund's Shares sold in each State.
(d) In addition, the Trust shall (i) identify to JHISC in writing
those transactions and assets to be treated as exempt from the blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of JHISC for the Trust's blue sky
State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Trust and the reporting of
these transactions to the Trust as provided above.
(e) Additionally, JHISC shall:
(i) Utilize a system to identify all share transactions which
involve purchase and redemption orders that are processed at a time other than
the time of the computation of net asset value per share next computed after
receipt of such orders, and shall compute the net effect upon each Fund of the
transactions so identified on a daily and cumulative basis.
(ii) If upon any day the cumulative net effect of such
transactions upon a Fund is negative and exceeds a dollar amount equivalent to
1/2 of 1 cent per share, JHISC shall promptly make a payment to the Fund in cash
or through the use of a credit in the manner described in paragraph (iv) below,
in such amount as may be necessary to reduce the negative cumulative net effect
to less than 1/2 of 1 cent per share.
(iii) If on the last business day of any month the cumulative net
effect upon a Fund of such transactions (adjusted by the amount of all prior
payments and credits by JHISC and the Fund) is negative, the Fund shall be
entitled to a reduction in the fee next payable under the Agreement by an
equivalent amount, except as provided in paragraph (iv) below. If on the last
business day in any month the cumulative net effect upon a Fund of such
transactions (adjusted by the amount of all prior payments and credits by JHISC
and the Fund) is positive, JHISC shall be entitled to recover certain past
payments and reductions in fees, and to a credit against all future payments and
fee reductions that may be required under the Agreement as herein described in
paragraph (iv) below.
(iv) At the end of each month, any positive cumulative net effect
upon a Fund of such transactions shall be deemed to be a credit to JHISC which
shall first be applied to permit JHISC to recover any prior cash payments and
fee reductions made by it to the Fund under paragraphs (ii) and (iii) above
during the calendar year, by increasing the amount of the monthly fee under the
Agreement next payable in an amount equal to prior payments and fee reductions
3
<PAGE>
made by JHISC during such calendar year, but not exceeding the sum of that
month's credit and credits arising in prior months during such calendar year to
the extent such prior credits have not previously been utilized as contemplated
by this paragraph. Any portion of a credit to JHISC not so used by it shall
remain as a credit to be used as payment against the amount of any future
negative cumulative net effects that would otherwise require a cash payment or
fee reduction to be made to a Fund pursuant to paragraphs (ii) or (iii) above
(regardless of whether or not the credit or any portion thereof arose in the
same calendar year as that in which the negative cumulative net effects or any
portion thereof arose).
(v) JHISC shall supply to each Fund from time to time, as
mutually agreed upon, reports summarizing the transactions identified pursuant
to paragraph (I) above, and the daily and cumulative net effects of such
transactions, and shall advise a Fund at the end of each month of the net
cumulative effect at such time. JHISC shall promptly advise a Fund if at any
time the cumulative net effects exceeds a dollar amount equivalent to 1/2 of 1
cent per share.
(vi) In the event that this Agreement is terminated for whatever
cause, or this provision 1.02 (d) is terminated pursuant to paragraph (vii)
below, a Fund shall promptly pay to JHISC an amount in cash equal to the amount
by which the cumulative net effect upon the Fund is positive or, if the
cumulative net effect upon the Fund is negative, JHISC shall promptly pay to the
Fund an amount in cash equal to the amount of such cumulative net effect.
(vii) This provision 1.02 (e) of the Agreement may be terminated
by JHISC at any time without cause, effective as of the close of business on the
date written notice (which may be by telex) is received by the Trust.
Procedures applicable to certain of these services may be
established from time to time by agreement between the Trust and JHISC.
Article 2 Fees and Expenses
2.01 For performance by JHISC pursuant to this Agreement, the
Trust on behalf of each Fund agrees to pay JHISC an annual maintenance fee for
each Shareholder account as set out in the initial fee schedule attached hereto.
Such fees and out-of-pocket expenses and advances identified under Section 2.02
below may be changed from time to time subject to mutual written agreement
between the Fund and JHISC.
2.02 In addition to the fee paid under Section 2.01 above, the
Trust on behalf of each Fund agrees to reimburse JHISC for out-of-pocket
expenses or advances incurred by JHISC for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by JHISC at the
request or with the consent of a Fund, will be reimbursed by the Trust on behalf
of such Fund.
2.03 The Trust on behalf of each Fund agrees to pay all fees and
reimbursable expenses promptly following the mailing of the respective billing
notice. Postage for mailing of proxies to all shareholder accounts shall be
advanced to JHISC by the Trust on behalf of the Funds at least seven (7) days
prior to the mailing date of such materials.
4
<PAGE>
Article 3 Representations and Warranties of JHISC
JHISC represents and warrants to the Trust that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware, and is duly qualified and in
good standing as a foreign corporation under the Laws of The Commonwealth of
Massachusetts.
3.02 It has corporate power and authority to enter into and
perform its obligations under this Agreement.
3.03 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.04 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
Article 4 Representations and Warranties of the Trust
The Trust represents and warrants to JHISC that:
4.01 It is a business trust duly organized and existing and in
good standing under the laws of The Commonwealth of Massachusetts.
4.02 It has power and authority to enter into and perform this
Agreement.
4.03 All trust proceedings required by the Declaration of Trust
and By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act").
4.05 A registration statement under the Securities Act of 1933,
as amended, with respect to the shares of each series of the Trust subject to
this Agreement has become effective, and appropriate state securities law
filings have been made and will continue to be made.
Article 5 Indemnification
5.01 JHISC shall not be responsible for, and the Trust shall
indemnify and hold JHISC harmless from and against, any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liabilities arising out of
or attributable to:
(a) All actions of JHISC or its agents or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misfeasance.
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(b) The Trust's refusal or failure to comply with the terms of
this Agreement, or which arise out of the Trust's bad faith, gross negligence or
willful misfeasance or which arise out of the reckless disregard of any
representation or warranty of the Trust hereunder.
(c) The reliance on or use by JHISC or its agents or
subcontractors of information, records and documents which (i) are received by
JHISC or its agents or subcontractors and furnished to it by or on behalf of the
Trust, and (ii) have been prepared and/or maintained by the Trust or any other
person or firm on behalf of the Trust.
(d) The reliance on, or the carrying out by JHISC or its agents
or subcontractors of, any instructions or requests of the Trust.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that Fund Shares be registered in that state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of Shares in that state.
(f) It is understood and agreed that the assets of each Fund may
be used to satisfy the indemnity under this Article 5 only to the extent that
the loss, damage, cost, charge, counsel fee, payment, expense and liability
arises out of or is attributable to services hereunder with respect to the
Shares of such Fund.
5.02 JHISC shall indemnify and hold harmless the Trust on behalf
of each Fund from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities arising out of or attributed to
any action or failure or omission to act by JHISC as a result of JHISC's lack of
good faith, negligence or willful misfeasance.
5.03 At any time JHISC may apply to any officer of the Trust for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by JHISC under this
Agreement, and JHISC and its agents or subcontractors shall not be liable and
shall be indemnified by the Trust for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. JHISC, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Trust, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided JHISC or its
agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Trust, and shall not be held to have
notice of any change of authority of any person, until receipt of written notice
thereof from the Trust. JHISC, its agents and subcontractors shall also be
protected and indemnified in recognizing share certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officer of the
Trust, and the proper countersignature of any former transfer agent or
registrar, or of a co- transfer agent or co-registrar.
5.04 In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform or
otherwise from such causes.
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5.05 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in
this Article 5 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Trust and JHISC
6.01 The Trust shall promptly furnish to JHISC the following:
(a) A certified copy of the resolution(s) of the Trustees of the
Trust authorizing the appointment of JHISC and the execution and delivery of
this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Trust
and all amendments thereto.
6.02 JHISC hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Trust for safekeeping of share
certificates and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates and devices.
6.03 JHISC shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940 and the
rules and regulations of the Securities and Exchange Commission thereunder,
JHISC agrees that all such records prepared or maintained by JHISC relating to
the services to be performed by JHISC hereunder are the property of the Trust
and will be preserved, maintained and made unavailable in accordance with such
Act and rules, and will be surrendered to the Trust on and in accordance with
its request.
6.04 JHISC and the Trust agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Trust, JHISC will endeavor to notify the Trust and to
secure instructions from an authorized officer of the Trust as to such
inspection. JHISC reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
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Article 7 Termination of Agreement
7.01 This Agreement may be terminated by either party upon one
hundred twenty (120) days' written notice to the other.
7.02 Should the Trust exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Trust. Additionally, JHISC reserves the right to charge for any
other reasonable expenses associated with such termination.
Article 8 Assignment
8.01 Except as provided in Section 8.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
8.03 JHISC may, without further consent on the part of the Trust,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934 ("Section 17A(c)(1)") or any other entity registered as a transfer agent
under Section 17A(c)(1) JHISC deems appropriate in order to comply with the
terms and conditions of this Agreement; provided, however, that JHISC shall be
as fully responsible to the Trust for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
Article 9 Amendment
9.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Trustees of the Trust.
Article 10 Massachusetts Law to Apply
10.01 This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the internal substantive laws
of The Commonwealth of Massachusetts.
Article 11 Merger of Agreement
11.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
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Article 12 Limitation on Liability
12.01 The name "John Hancock Declaration Trust" is the
designation of the Trustees under the Declaration of Trust dated November 15,
1995. The obligations of such Trust are not personally binding upon, nor shall
resort be had to the property of, any of the Trustees, shareholders, officers,
employees or agents of such Trust, but the Trust's property only shall be bound.
Each Fund shall be liable only for its own obligations under this Agreement and
shall not be jointly or severally liable to the obligations of any other Fund
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
JOHN HANCOCK DECLARATION TRUST
By: /s/Anne C. Hodsdon
--------------------------
Anne C. Hodsdon
President
JOHN HANCOCK INVESTOR SERVICES
CORPORATION
By: /s/Charles J. McKenney, Jr.
---------------------------
Charles J. McKenney, Jr.
Vice President
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TRANSFER AGENCY FEE SCHEDULE
Effective July 22, 1996, the transfer agent fees payable monthly under the
transfer agency agreement between each Fund listed below and John Hancock
Investor Services Corporation shall be the following rates plus certain
out-of-pocket expenses as described to the Board:
Fund Annual Rate Per Account
---- -----------------------
John Hancock V.A. Emerging Growth Fund $16.00
John Hancock V.A. Discovery Fund $16.00
John Hancock V.A. International Fund $16.00
John Hancock V.A. 500 Index Fund $16.00
John Hancock V.A. Independence Equity Fund $16.00
John Hancock V.A. Sovereign Investors Fund $16.00
John Hancock V.A. Sovereign Bond Fund $20.00
John Hancock V.A. Strategic Income Fund $20.00
John Hancock V.A. World Bond Fund $20.00
John Hancock V.A. Money Market Fund $25.00
