<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
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[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
John Hancock Variable Series Trust I
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[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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JOHN HANCOCK VARIABLE SERIES TRUST I
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE MANAGED, SPECIAL OPPORTUNITIES,
SHORT-TERM U.S. GOVERNMENT, AND
INTERNATIONAL EQUITIES PORTFOLIOS
A special Meeting of Shareholders of the Managed, Special Opportunities,
Short-Term U.S. Government, and International Equities Portfolios of the John
Hancock Variable Series Trust I (the "Fund") will be held at the office of
John Hancock Variable Life Insurance Company, 197 Clarendon Street, Boston,
Massachusetts 02117 (telephone 1-800-732-5543), at 11:00 a.m., on Friday,
Apri1 24, 1998, for the following purposes:
1. To approve changes in certain investment policies and restrictions of
the Managed Portfolio that would allow it (a) to invest up to 30% of its
fixed income assets in securities denominated in other than U.S. dollars;
(b) to purchase forward currency exchange contracts, forward commitments
or securities and when-issued securities; and (c) to engage in certain
futures and options transactions for non-hedging as well as hedging
purposes. This Proposal 1 is fully described beginning on page 3 of the
attached proxy statement.
2. To approve a change in the Special Opportunities Portfolio's sub-
classification from a "non-diversified" portfolio to a "diversified"
portfolio and a change in its investment policies so that it will no
longer be required to maintain any specified portion of its assets in any
maximum number of industries or sectors of the economy. This Proposal 2 is
fully described beginning on page 6 of the attached proxy statement.
3. To rescind the Short-Term U.S. Government Portfolio's policy of
investing primarily in U.S. Government obligations with maturities of less
than 5 years, and to change its investment objective to allow it to invest
primarily in a more diversified portfolio of short- and intermediate-term
investment-grade debt obligations. This Proposal 3 is fully described
beginning on page 8 of the attached proxy statement.
4. To approve changes in the investment objective and policies of the
International Equities Portfolio and, as to related matters, to approve
(1) an amended Investment Management Agreement, and (2) a new Sub-
Investment Management Agreement with Independence International
Associates, Inc. These changes will permit the Portfolio to provide
investment results that correspond to the total return of the major
developed international equity markets as represented by the MSCI EAFE GDP
Index, a broad-based benchmark made up of more than 1000 companies in
Europe and the Pacific Rim. This Proposal 4 is fully described beginning
on page 10 of the attached proxy statement.
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5. To change the status of the investment objectives and policies of the
Managed, Special Opportunities, Short-Term U.S. Government, and
International Equities Portfolios so that a shareholder vote will
generally no longer be required to make future changes in such investment
objectives and policies. This Proposal 5 is fully described beginning on
page 17 of the attached proxy statement.
In addition, any other matters incident to the conduct of the meeting or any
adjournment thereof, may be transacted at this Special Meeting.
An owner of a variable life insurance policy or a variable annuity contract
("Owner") will be entitled to give voting instructions only if he/she was the
Owner of record as of the close of business on February 27, 1998. John Hancock
is soliciting votes from Owners invested in the following Portfolios with
respect to the indicated matters affecting those Portfolios:
<TABLE>
<CAPTION>
PROPOSALS
-------------------
PORTFOLIO 1. 2. 3. 4. 5.
--------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Managed.................................................... X X
Special Opportunities...................................... X X
Short-Term U.S. Government................................. X X
International Equities..................................... X X
</TABLE>
Henry D. Shaw
Chairman, Board of Trustees
Boston, Massachusetts
March 31, 1998
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE
AND RETURN THE ENCLOSED FORM(S) OF VOTING INSTRUCTIONS. ENCLOSED IS A
VOTING INSTRUCTIONS FORM FOR EACH PORTFOLIO YOU ARE USING. PLEASE
COMPLETE AND RETURN ALL FORMS. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND
THE MEETING.
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PROXY STATEMENT
GENERAL
This proxy statement is furnished in connection with the solicitation of
voting instructions by the management of John Hancock Variable Series Trust I
(the "Fund") for use at the Special Meeting of the Shareholders of the
Managed, Special Opportunities, Short-Term U.S. Government, and International
Equities Portfolios (the "Meeting"), to be held at the offices of John Hancock
Variable Life Insurance Company ("JHVLICO"), 197 Clarendon Street, Boston,
Massachusetts 02117, on Friday, April 24, 1998 at a 11:00 a.m. Boston time.
This solicitation is being made of all shares of each of the above-specified
series (the "Portfolios") of the Fund which are attributable to the Owners'
interests in John Hancock Variable Life Accounts U, V, and S; John Hancock
Variable Annuity Accounts U, V and I; and John Hancock Mutual Variable Life
Insurance Account UV (the "Accounts").
The cost of printing and mailing this notice and statement and the
accompanying voting instructions form and the cost of tabulating the votes
will be borne by the Portfolios. In addition to solicitations by mail, a
number of regular employees of JHVLICO and John Hancock Mutual Life Insurance
Company ("John Hancock") may solicit voting instructions in person or by
telephone; such employees will not be compensated for such services.
Solicitation materials were first made available to Owners on or about April
6, 1998.
Each Portfolio listed in the chart on the attached notice will vote on only
the proposals indicated in that chart.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR 1997
AND A COPY OF ITS CURRENT PROSPECTUS DATED MAY 1, 1997, TO ANY SHAREHOLDER
UPON REQUEST TO THE ADDRESS OR TOLL-FREE TELEPHONE NUMBER SHOWN IN THE NOTICE
ATTACHED AT THE FRONT OF THIS PROXY STATEMENT.
VOTING INSTRUCTIONS
Although JHVLICO and its parent, John Hancock, through the Accounts, legally
own all of the Fund's shares, they will vote all of such shares in accordance
with instructions given by Owners of variable life insurance policies
("policies") and variable annuity contracts ("contracts"), as discussed below.
For this purpose the Owner of a variable annuity contract during the period
after annuity payments have commenced is the annuitant.
Any authorized voting instructions will also be valid for any adjournment of
the Meeting and will be revocable only at the direction of the Owner executing
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them. If an insufficient number of affirmative votes are obtained to approve
any item, the Meeting may be adjourned to permit the solicitation of
additional votes. Shares will be voted for any such adjournment in the
discretion of those persons named in the voting instructions. Whether a
proposal is approved depends upon whether a sufficient number of votes are
cast for the proposal. Accordingly, an instruction to abstain from voting on
any proposal has the same practical effect as an instruction to vote against
that proposal.
Any person giving voting instructions may revoke them at any time prior to
their exercise by submitting a superseding voting instruction form or a notice
of revocation to the Fund. In addition, although mere attendance at the
Meeting will not revoke voting instructions, an Owner present at the Meeting
may withdraw his/her voting instruction form and vote in person. JHVLICO and
John Hancock will vote Fund shares in accordance with all properly executed
and unrevoked voting instructions received in time of the Meeting.
JHVLICO and John Hancock will vote the Fund shares of each Portfolio held in
their respective Accounts which are attributable to the policies and contracts
in accordance with the voting instructions received from the Owners
participating in that Portfolio. An Account's shares in any Portfolio which
are not attributable to policies or contracts or for which no timely voting
instructions are received will be represented and voted by JHVLICO or John
Hancock in the same proportion as the voting instructions which are received
from all Owners participating in the Portfolio through that Account. Fund
shares which are not attributable to policies and contracts include shares
purchased with contributions made as "seed money" to the Portfolios, by
JHVLICO or John Hancock.
Please refer to Appendix A to this proxy statement if you wish additional
information about the number of shares of each Portfolio that are outstanding
or that are attributable to John Hancock or JHVLICO (rather than to Owners).
MAJORITY VOTE
In order for the shareholders of any Portfolio to approve any of the
proposals in this statement, the proposal must receive the favorable vote of a
majority of the outstanding shares of that Portfolio. When used in this
statement, a "majority of the outstanding voting shares" means the affirmative
vote of more than 50% of the outstanding shares or, if it is less, 67% or more
of the shares present or represented at the Meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND
RETURN THE ENCLOSED FORM(S) OF VOTING INSTRUCTIONS. ENCLOSED IS A VOTING
INSTRUCTION FORM FOR EACH PORTFOLIO YOU ARE USING. PLEASE COMPLETE AND RETURN
ALL FORMS. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
2
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PROPOSAL 1
APPROVAL OF CHANGES IN CERTAIN INVESTMENT POLICIES AND RESTRICTIONS OF THE
MANAGED PORTFOLIO
At a meeting of the Fund's Board of Trustees held on February 18, 1998, the
Trustees unanimously approved the following changes in investment policies and
restrictions of the Managed Portfolio:
1. That the Portfolio no longer be entirely precluded from purchasing
fixed income securities denominated in currencies other than U.S.
dollars; and
2. That the Portfolio be permitted to rely on the exceptions provided by
paragraph 3(B), (C), and (E) as set out in Appendix B to this proxy
statement.
These changes would be effective May 1, 1998, assuming they receive Owner
approval. Accordingly, this Proposal 1 seeks such approval.
CURRENT INVESTMENT POLICY AND RESTRICTIONS
Until now, the Managed Portfolio's investment policies have effectively
precluded it from purchasing fixed income securities denominated in other than
U.S. dollars.
In addition, the fundamental investment restrictions of the Fund have
precluded the Managed Portfolio from using commodities contracts or put or
call options other than for certain hedging purposes as described in exception
(A) to the Fund's fundamental investment restriction 3. (The fundamental
investment restrictions of the Fund are included in full in Appendix B.)
PROPOSED CHANGES
Non-dollar debt. If Proposal 1 is adopted, the investment policy of the
Portfolio will be changed to clarify that the Portfolio may purchase fixed
income securities denominated in other than U.S. dollars. Specifically, the
Portfolio will be permitted to invest up to 30% of its total debt investment
(at the time of purchase) in securities denominated in currencies of developed
countries other than the United States. (For this purpose, debt securities
include convertible securities and preferred stock.)
The inclusion of non-dollar denominated foreign debt is expected to enhance
the Portfolio's returns and reduce its investment risks by diversifying
interest rate exposure across 16 developed countries. Such interest rate
exposure should result in lower volatility than that of a portfolio invested
in only U.S. bonds. Moreover, non-dollar denominated foreign bonds have a low
correlation with equity and
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U.S. bond securities and therefore would be expected to reduce portfolio
volatility by allowing for a higher allocation of assets to equity and U.S.
debt securities without increasing portfolio risk.
In addition, if Proposal 1 is adopted, the Fund's fundamental investment
restrictions will be changed to allow the Portfolio to engage in certain
options or commodities-type transactions for non-hedging as well as hedging
purposes as described in exceptions (B), (C), and (E) to the Fund's
fundamental investment restriction 3. These changes are primarily for the
purposes discussed below.
Management of currency exposure. First, the Portfolio's sub-investment
manager desires to be better able to manage the Portfolio's exposure to
currencies of different countries. This is particularly appropriate assuming,
as discussed above, that the Portfolio will in future be investing in debt
securities denominated in foreign currencies. In order to manage its currency
exposure, the Managed Portfolio will, under this Proposal 1, be permitted to
use the following techniques that are not now available to it: currency
futures contracts, options on currency futures, forward currency contracts,
and currency option contracts.
Each of these types of instruments may have its own advantages and risks in
particular circumstances. The sub-investment manager may use these instruments
for the purpose of reducing or eliminating the risk of adverse changes in the
value of a foreign currency in which securities held by the Portfolio are
denominated or traded (or in any other currency that the sub-investment
manager believes to be overvalued) relative to the U.S. dollar (or relative to
any other currency that the sub-investment manager believes to be
undervalued).
There is no assurance, however, that such transactions will be advantageous
to the Portfolio. The risk of losses to the Portfolio may be greater to the
extent that, in implementing some of these currency management strategies, the
Portfolio may (a) take a short position in a currency that is not covered by
investments owned by the Portfolio that are denominated in or traded in that
currency and/or (b) take a long position in a foreign currency and in which no
investments intended to be acquired by the Portfolio will necessarily be
denominated or traded. The Portfolio will not, however, use any currency
management strategy that seeks to leverage the Portfolio's currency exposure.
Management of portfolio duration. Second, the changes in fundamental
investment restrictions will permit the Managed Portfolio to use interest rate
futures on dollar and non-dollar government bonds for the purpose of managing
the duration of its securities. Again, the use of these duration strategies
should allow the Portfolio to implement the inclusion of non-dollar
denominated foreign bonds into the Portfolio in a more prudent and risk-
reducing manner. These strategies are not without risk, however, and there can
be no assurance that they will benefit the Portfolio.
Other effects of this Proposal 1. The primary purpose of making exceptions
(B), (C) and (E) available to the Managed Portfolio under fundamental
investment
4
<PAGE>
restriction 3 are to enable the Portfolio to use the currency and duration
management strategies discussed above. Those exceptions, however, also would
permit the Portfolio to engage in the following other types of transactions
which are currently foreclosed to it: writing covered put options on
securities; purchasing for non-hedging purposes (as well as hedging purposes)
put and call options on securities in which the Managed Portfolio is permitted
to invest or on indexes comprised of such securities; writing covered put and
call options on indexes composed of securities in which the Portfolio is
permitted to invest; using options traded over-the-counter in the U.S. or on
foreign exchanges; using futures contracts on securities or on market indexes,
and options on such futures contracts, for non-hedging purposes (as well as
for hedging purposes); and purchasing securities on a delayed delivery,
forward commitment or when-issued basis.
Some of these techniques involve elements of leverage and significant risks,
depending on how they are used and how much of a Portfolio's assets are
committed to them. When the Managed Portfolio was established in 1986, it was
less common for mutual funds to have broad authority to engage in these types
of transactions. Since then, such authority has become more common, and indeed
has been given to most of the more recent Portfolios that the Fund has
established. Because the Managed Portfolio invests in a particularly broad
spectrum of securities, moreover, the range of possible uses for options,
futures and the like is quite broad. This Proposal 1 would bring the Managed
Portfolio's authority in this regard into line with that of the more recently-
created Portfolios so that the sub-investment manager may take advantage of
any of these techniques that it believes are in the Portfolio's interest
without the delay and expense to the Portfolio of any further vote of its
Owners.
TRUSTEES' RECOMMENDATION
The Board of Trustees has determined that the above-described changes to
fundamental investment policies and restrictions of the Portfolio are in the
best interests of the Fund and the Owners of the Managed Portfolio.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE OWNERS OF THE MANAGED PORTFOLIO
GIVE INSTRUCTIONS TO VOTE FOR THIS PROPOSAL 1.
5
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PROPOSAL 2
APPROVAL OF CHANGES IN THE INVESTMENT PROGRAM OF THE SPECIAL OPPORTUNITIES
PORTFOLIO
At a meeting of the Fund's Board of Trustees held on February 18, 1998, the
Trustees unanimously approved significant changes to the investment program of
the Special Opportunities Portfolio. These changes will become effective May
1, 1998, if the Owners of the Portfolio approve this Proposal 2.
Under this proposal, the Portfolio's name will be changed to "Diversified
Mid Cap Growth Portfolio." The principal changes to the investment program
will (a) make the Portfolio's investments more diversified among the
industries and individual companies in which the Portfolio invests and (b)
reduce the degree to which evaluations of the relative attractiveness of
various economic sectors influence the Portfolio's investment decisions.
In order to make these changes, however, the Owners of the Special
Opportunities Portfolio must approve:
1. A change in the Portfolio's subclassification under the Investment
Company Act of 1940 from "non-diversified" to "diversified"; and
2. A change in the Portfolio's fundamental investment policies so that it
will no longer be required to maintain any specified portion of its
assets in any maximum number of industries or sectors of the economy.
This Proposal 2, therefore, requests that the Owners approve these changes, as
discussed further below.
CURRENT INVESTMENT PROGRAM
The Special Opportunities Portfolio is currently classified as a "non-
diversified" portfolio. As such, it may invest more than 5% of its assets in
one issuer and purchase more than 10% of the voting securities of any one
issuer. The current investment policies of the Portfolio provide that, under
normal circumstances, at least 90% of the Portfolio's equity investments will
be in the equity securities of issuers in five or fewer economic sectors.
PROPOSED CHANGES
If this Proposal 2 is approved, the Portfolio will be reclassified as a
diversified portfolio and, as such, will be required, with respect to 75% of
the value of its total assets, to invest no more than 5% of its assets in any
one issuer and purchase no more than 10% of the voting securities of any one
issuer. This requirement is more fully spelled out in the Fund's fundamental
investment restriction 10 that is included in Appendix B to this proxy
statement.
6
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Also, the investment policies of the Portfolio will be changed to provide
that at least 65% of the Portfolio's assets will be invested, under normal
circumstances, in equity securities of medium capitalization ("mid cap")
companies.
The Portfolio has historically invested in mid cap growth companies. Thus,
the Fund has in fact been offering two non-diversified mid cap growth
portfolios: Special Opportunities and Mid Cap Growth. The proposed changes in
the Portfolio will add a new investment choice: a diversified mid cap growth
portfolio. Under the new diversified strategy, the Portfolio is expected
initially to consist of about 100 securities. During a down market
environment, diversified portfolios tend to be less volatile than non-
diversified portfolios. A diversified strategy does not, however, protect an
investor from the risk of loss from an overall decline in financial markets.
At times, a diversified strategy may underperform a non-diversified strategy
but, over the long run, the diversified strategy should provide investors with
a more conservative mid cap growth choice.
TRUSTEES' RECOMMENDATION
The Board of Trustees has determined that the above-described changes to the
classification and investment policies of the Portfolio are in the best
interests of the Fund and the Owners of the Special Opportunities Portfolio.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE OWNERS OF THE SPECIAL
OPPORTUNITIES PORTFOLIO GIVE INSTRUCTIONS TO VOTE FOR THIS PROPOSAL 2.
7
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PROPOSAL 3
APPROVAL OF CHANGES IN THE INVESTMENT PROGRAM OF THE SHORT-TERM U.S.
GOVERNMENT PORTFOLIO
At a meeting of the Fund's Board of Trustees held on February 18, 1998, the
Trustees unanimously approved significant changes to the investment program of
the Short-Term U.S. Government Portfolio. These changes will become effective
May 1, 1998, if the Owners of the Portfolio approve this Proposal 3.
Under the proposal, the Portfolio's name will be changed to "Short-Term Bond
Portfolio." The principal changes to the investment program will permit the
Portfolio to invest in debt securities other than U.S. Government securities,
including debt issued by U.S. corporate issuers, dollar-denominated debt
issued by foreign entities, and within limits, non-investment grade debt.
In order to make these changes, however, the Owners of the Short-Term U.S.
Government Portfolio must approve:
1. A change in the Portfolio's investment objective, which then will be:
"to provide a high level of current income consistent with a low degree
of share price fluctuation through investment primarily in a
diversified portfolio of short- and intermediate-term investment-grade
debt obligations"; and
2. The rescission of the Portfolio's policy of investing primarily in U.S.
Government obligations with maturities of five years or less.
This Proposal 2, therefore, requests that the Owners approve these changes, as
discussed further below.
CURRENT INVESTMENT POLICY AND RESTRICTIONS
The current investment objective of the Portfolio is to provide a high level
of current income consistent with the maintenance of principal, through
investment in a portfolio of short-term U.S. Treasury securities and U.S.
Government agency securities. To achieve this objective, the Portfolio invests
only in U.S. Government securities with maturities of five years or less.
PROPOSED CHANGES
If this Proposal 3 is approved, the investment objective of the Portfolio
will be changed to provide that the Portfolio will invest primarily in a
diversified portfolio of short- and intermediate-term investment-grade debt
obligations. Under normal market conditions, (a) at least 65% of the
Portfolio's total assets will be invested in debt obligations, such as
corporate and U.S. Government debt obligations, (b) the Portfolio's average
maturity will be between one and five years,
8
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and (c) securities that are below "investment grade" will not equal more than
20% of the Portfolio's net assets. Under normal conditions, the Portfolio will
be permitted to invest up to 25% of its net assets in foreign securities if
they are payable in U.S. dollars. The Portfolio will also be allowed to invest
in, among other things, convertible debt, preferred and convertible preferred
stock, and similar securities and in restricted securities eligible for resale
to institutional investors pursuant to Rule 144A under the Securities Act of
1933.
As currently positioned, the Portfolio is suitable for investors seeking to
enhance their income and returns above those available from money market
portfolios. In low interest rate environments, the higher returns are
attractive. In rising interest rate environments, a short-term portfolio
offers greater stability and defensive characteristics than a longer maturity
bond account. The Portfolio is currently very similar to the Money Market
Portfolio, given the short-term maturity and high-quality credit
characteristics of the two Portfolios.
If Proposal 3 is adopted, the Portfolio will provide investors with the
opportunity for enhanced income and return above those currently available
under the Portfolio, by investing primarily in higher yielding short-term
corporate debt securities. This results from the enhanced flexibility to
invest in securities with longer maturities and/or that are issued by non-U.S.
Government issuers. Some of these securities involve greater risk of loss and
volatility than those in which this Portfolio currently is permitted to
invest. Nevertheless, John Hancock expects any incremental yield to be
achieved without an unacceptable level of additional risk because, among other
things, a significant component of return for a short-term bond portfolio is
expected to be yield and not price fluctuation.
With its revised investment objective, the Portfolio will be considered
suitable for investors who are willing to accept some fluctuation in principal
to pursue a higher level of income than is generally available from money
market securities.
TRUSTEES' RECOMMENDATION
The Board of Trustees has determined that the above-described changes to the
investment program of the Portfolio are in the best interests of the Fund and
the Owners of the Short-Term U.S. Government Portfolio.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE OWNERS OF THE SHORT-
TERM U.S. GOVERNMENT PORTFOLIO GIVE INSTRUCTIONS TO VOTE FOR APPROVAL OF THIS
PROPOSAL 3.
9
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PROPOSAL 4
APPROVAL OF CHANGES IN THE INVESTMENT PROGRAM OF THE INTERNATIONAL EQUITIES
PORTFOLIO
At a meeting of the Fund's Board of Trustees held on February 18, 1998, the
Trustees unanimously approved a proposal by John Hancock to create an
International Equity Index Portfolio for the Fund. At that meeting, the Board
also unanimously approved the terms of the investment management and sub-
investment management arrangements for such a Portfolio. These are discussed
below under "Approval of New Investment Advisory Arrangements." By unanimous
resolution dated as of March , 1998, the Trustees also approved a proposal by
John Hancock that the new Portfolio be created by converting the International
Equities Portfolio to an index-based Portfolio.
Making such a conversion, however, requires that this Portfolio's Owners
approve the new investment advisory arrangements, as well as certain changes
in the Portfolio's investment objectives, policies, and restrictions (as
discussed below under "Approval of Conforming Changes to the Portfolio's
Investment Policies and Restrictions"). Accordingly, this Proposal 4 seeks
those approvals.
DESCRIPTION OF PROPOSED CHANGES IN THE INTERNATIONAL EQUITY PORTFOLIO'S
INVESTMENT PROGRAM
If this proposal is approved, the Portfolio's name will be changed to the
"International Equity Index Portfolio." As such, its investment objective
would be to provide investment results that correspond to the total return of
the major developed international (non-U.S.) equity markets, as represented by
the MSCI EAFE GDP Index. This is the Gross Domestic Product Weighted Morgan
Stanley Capital International Europe, Australasia and Far East (Free) Index,
which is a broad-based benchmark made up of more than 1,000 companies in
Europe and the Pacific Rim. The MSCI EAFE GDP Index is constructed by Morgan
Stanley Capital International, which chooses countries commonly known as
"developed" markets and weights them in the index based on their respective
gross domestic products (GDP). Within each country, stocks are weighted by
their market capitalization. Most of the largest companies listed on each
country's stock exchange, by market value, are included in the MSCI EAFE GDP
Index for diversification purposes.
The Portfolio would attempt to track the capital appreciation and dividend
income of the Index by investing in a representative portion of the stocks
which matches as closely as possible the characteristics of the stocks which
comprise the Index. The Portfolio would also invest in stock index futures.
The Portfolio's ability to track the performance of the Index would depend to
some extent on the size and timing of cash flows into and out of the
Portfolio, as well as on the level of the Portfolio's expenses, and the
capability of the sub-investment manager to select a representative sample of
the securities included in the Index.
10
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The Portfolio would expect to invest substantially all of its assets in
equity securities within its investment objectives and policies at all times.
Accordingly, the Portfolio might carry more risk in times of declining markets
than Portfolios that are more likely to adopt a defensive investment posture
in such circumstances by reallocating their assets in a manner different from
that contemplated by their primary investment objective and policies.
The Portfolio could invest up to 20% of its net assets at time of purchase
in securities of emerging international markets, such as Mexico, Chile and
Brazil. This may entail greater risk of loss than investing in more developed
markets.
MSCI EAFE GDP Index is the exclusive property of Morgan Stanley & Co.,
Incorporated and is a registered service mark of Morgan Stanley Capital
International. Those organizations do not sponsor and are not in any way
affiliated with the Fund.
REASONS FOR THE PROPOSAL
Since its inception, the International Equities Portfolio has sought to
achieve its investment objectives by actively managing a portfolio normally
invested in equity securities of issuers around the world. The expenses of
operating an actively managed portfolio, however, are substantially greater
than the expenses of operating a passively managed portfolio (such as one
designed to correspond, to the extent feasible, to the investment results of a
recognized securities index). This disparity in expenses is even greater in
the case of a portfolio comprised largely of securities of foreign companies,
principally due to increased complexity of foreign investment management.
Thus, for example, the Portfolio's estimated operating expenses under its
current investment program would be approximately 0.79% of average net assets,
while similar expenses for the Portfolio as it would be operated if this
Proposal 4 is approved, would be approximately 0.42%. Lower costs plus an
index-based strategy should provide a substantial measure of protection
against performance less favorable than that of the general market as
represented by the MSCI EAFE GDP.
In addition, the performance of the Portfolio has not been sufficiently
strong, in the Trustees' view, to justify the additional expense of an
actively-managed portfolio. Thus, for the five-year period ending December 31,
1997, the Portfolio's average annual total return was 7.63%, compared to the
13.19% average annual total return reflected in the MSCI EAFE GDP Index over
that same period.
APPROVAL OF NEW INVESTMENT ADVISORY ARRANGEMENTS
In order to implement the changes discussed above, the Board of Trustees
determined that it would be in the best interests of Owners to (1) reduce the
investment advisory fees to be paid to John Hancock for its services in
managing the Portfolio, and (2) to replace the Portfolio's current sub-
investment manager. Accordingly, Owners are asked in this Proposal 4 to
approve the current Management
11
<PAGE>
Agreement between John Hancock and the Fund that relates to the Portfolio, as
amended to reflect such fee reduction, and to approve a new Sub-Investment
Management Agreement with Independence International Associates, Inc.
Information about John Hancock and Independence International Associates,
Inc. John Hancock, a registered investment adviser under the Investment
Advisers Act of 1940, began providing investment advice to investment
companies in 1972 when it organized a management-type separate account that
invested primarily in common stocks. Total assets under management by John
Hancock and its subsidiaries as of December 31, 1997, amounted to over $116
billion, of which over $62.4 billion was owned by John Hancock. Although John
Hancock performs investment advisory services for other separate accounts and
advisory clients, none of these are a registered investment company. John
Hancock does provide investment advisory services to other Portfolios of the
Fund; however, none of these Portfolios has an investment objective similar to
that of the International Equities Portfolio as it is proposed to be amended
by this Proposal 4.
Independence International Associates, Inc. ("International"), a Delaware
Corporation, is a registered investment adviser and an indirect wholly-owned
subsidiary of John Hancock. International manages approximately $2 billion of
international stocks for various clients. International's address is 53 State
Street, Boston, Massachusetts 02109. The International Equity Index Portfolio
will be managed using a team approach for the day-to-day management of the
Portfolio. Norman H. Meltz and David P. Nolan lead the portfolio management
team. Both joined International in October, 1996, when a subsidiary of John
Hancock purchased International, formerly Boston International Advisers, Inc.
Mr. Meltz is a Senior Vice President and senior portfolio manager for a number
of institutional portfolios. He has analyzed and managed equity portfolios
since 1981. Mr. Nolan, Vice President, has analyzed and managed international
portfolios since 1994.
International currently provides sub-investment advice to another registered
investment company with an investment objective substantially similar to that
contemplated by this Proposal 4. The following information is provided with
respect to that investment advisory arrangement:
<TABLE>
<CAPTION>
NET ASSETS AS OF
NAME OF FUND DECEMBER 31, 1997 SUB-ADVISORY FEE LEVEL
- ------------ ----------------- ---------------------------------
(AS A PERCENTAGE OF NET ASSETS)
<S> <C> <C>
Banc One International $473,752,552 0.275% of the first $ 10,000,000
Equity Fund 0.225% of the next $ 15,000,000
0.195% of the next $ 25,000,000
0.125% of the next $ 50,000,000
0.06% of assets over $100,000,000
</TABLE>
12
<PAGE>
The names of the directors and the principal executive officers of John
Hancock, and of International, together with their addresses and principal
occupations, are given in Appendix C to this proxy statement. Appendix C also
contains additional information about International's direct and indirect
parents.
Current Investment Advisory Arrangements. John Hancock serves as the
investment adviser for the International Equities Portfolio pursuant to a
Management Agreement between the Fund and John Hancock dated April 12, 1988.
That Agreement was last approved by Owners on April 14, 1997, to implement an
amendment thereto reallocating certain expenses between the Fund and John
Hancock. The terms of the Management Agreement, as currently in effect, are
summarized in Appendix D to this proxy statement. For the fiscal year ended
December 31, 1997, the International Equities Portfolio paid advisory fees to
John Hancock pursuant to the Management Agreement of $ . Day-to-day
portfolio management and certain recordkeeping services are currently provided
under contracts dated April 12, 1988, with John Hancock Advisers, Inc.
("Advisers") and John Hancock Advisers International Limited ("International
Advisers"), as sub-investment managers. Advisers and International Advisers
are indirect wholly-owned subsidiaries of John Hancock.
Proposed Changes. If this Proposal 4 is approved, the current Management
Agreement will be amended to reduce the advisory fees paid to John Hancock to
the following levels, expressed as a percentage of the Portfolio's average
daily net assets: .18% of the first $100 million; .15% of the next $100
million; and .11% of any excess.
In addition, if this Proposal 4 is approved, (1) the current Sub-Investment
Management Agreements with Advisers and International Advisers will be
terminated effective April 30, 1998, and (2) the Fund, John Hancock, and
International will, effective May 1, 1998, enter into a new Sub-Investment
Management Agreement the form of which is reproduced in Appendix E to this
proxy statement. The principal difference between the substance of the current
Sub-Investment Management Agreements with Advisers and International Advisers
and the proposed new Sub-Investment Management Agreement with International is
that the fee that John Hancock will pay for sub-investment management services
is lower. (The new sub-investment management fee will be .125% of the
Portfolio's first $100 million of average daily net assets, .10% of the next
$100 million, and .06% on any excess.) These amounts are paid solely by John
Hancock, however, and are not the responsibility of the Fund or this
Portfolio.
Basis of Trustees' Recommendation. In connection with the Trustees' meeting
on February 18, 1998, John Hancock communicated to the Trustees the above-
discussed reasons why it believes the amended Management Agreement and the new
Sub-Investment Management Agreement with International should be approved.
Also, prior to the meeting, the Trustees requested information from John
13
<PAGE>
Hancock that might bear on the fairness or reasonableness of the terms of
these Agreements. John Hancock and/or the sub-investment manager provided a
considerable amount of such information to the Trustees in advance of the
meeting; and additional information was provided at the meeting.
In connection with their deliberations and gathering of information, the
Trustees were represented and advised by a law firm that the Fund has retained
as special counsel. Such counsel advised the Trustees that, in addition to the
information discussed above, the Trustees could take account of any other
information provided to the Trustees in the course of their services as such
(notwithstanding that such other information was not repeated at the February
18, 1998 meeting).
Having been presented with all of the foregoing reasons and information, the
Trustees judged the proposed changes in the investment advisory arrangements
for the International Equities Portfolio to be in the best interest of the
Fund and the Owners of the Portfolio under all the circumstances.
APPROVAL OF CONFORMING CHANGES TO THE PORTFOLIO'S INVESTMENT POLICIES AND
RESTRICTIONS
In addition to changing the Portfolio's investment objective, as discussed
above, a vote to approve this Proposal 4 will also constitute a vote to
approve certain related changes in the Portfolio's current investment
restrictions. These changes would conform the Portfolio's investment
restrictions to those that in general apply to most of the Fund's more
recently-created Portfolios (including both of its other index-based
portfolios). In particular, the Portfolio would be permitted to use certain
investment techniques that are currently prohibited to it in the absence of
Owner approval.
John Hancock and International believe that engaging in certain of these
techniques may permit a material reduction in any divergence between the
Portfolio's performance and that of the MSCI EAFE GDP Index. Although engaging
in these transactions involves certain risks, the Portfolio would do so only
when the sub-investment manager believes that more (rather than less) precise
tracking of the Index is likely to result.
It is not possible to forecast precisely which of these activities the
Portfolio may find most useful. This is because of the wide variety of markets
and market conditions in which the Portfolio will invest and the evolving
nature of accepted portfolio management strategies generally, as well as
possible variations over time in the approaches followed by particular
portfolio managers. Also, a transaction that has a relatively small impact on
the Portfolio's overall investment results may, nevertheless, materially
impact how closely the Portfolio tracks the MSCI EAFE GDP Index. For this
reason, certain investment techniques that may have been of relatively little
importance up to now, may become more important as a result of
14
<PAGE>
this Portfolio's change to an index-based Portfolio. Specifically, this
Proposal No. 4 would permit the following techniques:
Lending of Portfolio securities. Under this Proposal 4, the Portfolio would
be permitted to lend some of its portfolio securities for the purpose of
earning additional income for the Portfolio. This is a common portfolio
management practice; and any such loans will be collateralized in a way that
satisfies the sub-investment manager that any risk to the Portfolio is
minimal. This change is reflected in revised fundamental investment
restriction 2 that is set forth in Appendix B of this proxy statement.
Management of currency exposure. This Proposal 4 will permit this Portfolio
to use the same currency management techniques as described under "Management
of currency exposure" in Proposal 1 above for the Managed Portfolio. John
Hancock believes that this authority may be even more important for this
Portfolio than for the Managed Portfolio, because this Portfolio can be
expected to have greater exposure to foreign securities and to a larger number
of foreign currencies than will the Managed Portfolio. The changes that
broaden this Portfolio's currency management strategies are reflected in
exceptions (A)(iii), (B), (C)(ii), and (E) to fundamental investment
restriction 3 as set forth in Appendix B to this proxy statement.
Other option and commodity-type transactions. This Proposal 4 also will
permit this Portfolio to engage in the following other types of transactions
that are currently foreclosed to it: writing covered put and call options on
securities that the Portfolio owns or on indexes composed of securities in
which the Portfolio is permitted to invest; purchasing put and call options
for either hedging or non-hedging purposes on securities in which the
Portfolio is permitted to invest or on indexes composed of such securities;
using futures contracts on securities or on market indexes, or options on such
futures contracts, for both hedging or non-hedging purposes; and purchasing
securities on a delayed delivery, forward commitment or when-issued basis. The
changes that permit these types of transactions are reflected in exceptions
(A), (B), (C) and (E) to fundamental investment restriction 3 as set forth in
Appendix B to this proxy statement. In order to achieve its goal of tracking
the performance of the MSCI EAFE GDP Index as closely as possible, it will be
important for the Portfolio, under normal market conditions, to remain
relatively fully-invested and to minimize its transaction costs in adjusting
its investment exposure based on actual or anticipated cash flows. Certain of
the techniques referred to in this paragraph may be of particular use to the
Portfolio for those purposes.
Borrowing from banks. As reflected in fundamental investment restriction 5,
as set forth in Appendix B to this proxy statement, this Proposal 4 would
increase the amount that the Portfolio could borrow from banks. The increased
maximum would be 10% of the Portfolio's total assets (rather than the current
5%). This
15
<PAGE>
additional borrowing authority could be particularly useful to the Portfolio
in maintaining a relatively fully-invested position as mentioned above. For
example, this enhanced borrowing authority may permit the Portfolio to
minimize any cash reserves that might otherwise be needed to meet share
redemption requests. Any bank borrowings would be only for temporary purposes,
however, and the Portfolio would not make any new investments at any time when
such borrowings exceed 5% of its total assets.
Illiquid securities. This Proposal 4 would also eliminate a current
restriction that prohibits this Portfolio, absent Owner approval, from
investing in repurchase agreements maturing in more than seven days, other
restricted securities, or other securities that are not directly marketable if
the total of all such securities owned by the Portfolio would exceed 10% of
its assets. This restriction was put in place at a time when the SEC imposed a
maximum of 10% on fund ownership of illiquid securities. Now the SEC-imposed
limit is 15%. In order to be able to adjust more easily to such administrative
changes, and to provide enhanced flexibility, relatively few mutual funds now
make their policy on illiquid securities "fundamental." If this Proposal 4 is
approved, this Portfolio, similarly, would have no "fundamental" policy about
illiquid investments and therefore could change its practices in this regard
from time to time without a vote of Owners (or any expense or delay that such
a vote might involve).
Nevertheless, in conformity with the current SEC position mentioned above,
the Portfolio intends for the foreseeable future to observe a 15% limit on its
illiquid securities, as a non-fundamental policy. Given the relative stability
of Owners' allocations to the Fund's Portfolios, John Hancock does not believe
that increasing the maximum amount of illiquid securities from 10% to 15% is
likely to have any adverse impact on the Portfolio's ability to meet
redemption requests on a timely basis. Moreover, increasing the limit could in
at least some, perhaps unlikely, circumstances materially enhance the
Portfolio's ability to be invested in ways that match the MSCI EAFE GDP index
or reduce transaction costs that otherwise might arise from the need to
dispose of illiquid securities.
TRUSTEES' RECOMMENDATION
The Board of Trustees has determined that the proposed changes to the
investment objective, investment policies, and investment restrictions, the
proposed amendment to the Fund's Management Agreement with John Hancock, and
the proposed Sub-Investment Management Agreement with International are in the
best interests of the Fund and the Owners of the International Equities
Portfolio.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE OWNERS OF THE INTERNATIONAL
EQUITIES PORTFOLIO GIVE INSTRUCTIONS TO VOTE FOR APPROVAL OF THIS PROPOSAL 4.
16
<PAGE>
PROPOSAL 5
APPROVAL TO MAKE NON-FUNDAMENTAL THE INVESTMENT OBJECTIVES AND POLICIES OF THE
MANAGED, SPECIAL OPPORTUNTIES, SHORT-TERM U.S. GOVERNMENT, AND INTERNATIONAL
EQUITIES PORTFOLIOS
The Trustees have unanimously approved a proposal to make "non-fundamental"
the investment objectives and certain investment policies of the Managed,
Special Opportunities, Short-Term U.S. Government, and International Equities
Portfolios. This means that future changes in these objectives and policies
could be made without the approval of Owners who participate in these
Portfolios. However, John Hancock has advised the Trust that neither it nor
the sub-investment manager of any of these Portfolios is currently planning
any such change, except the changes proposed in Proposals 1 through 4 of this
proxy statement.
For a complete description of the current investment objective and policies
of each of the Portfolios that are the subject of this Proposal 5, please
consult the Fund's prospectus under the caption "Investment Objectives and
Policies." (If you wish to obtain a copy of the Fund's current prospectus,
free of charge, please direct your request to the address or telephone number
given in the Notice of Special Meeting to which this proxy statement is
attached.)
However, if such a change were to occur, shareholders would not have a legal
right to approve or disapprove such change.
REASONS FOR PROPOSED CHANGES
The investment objectives and policies for these Portfolios, as described in
the Fund's prospectus under the caption cited-above are currently classified
as "fundamental." A fundamental investment objective or policy may be changed
only by a vote of the Portfolio's Owners. Under the Investment Company Act of
1940, however, a Portfolio's investment objective and such policies are not
required to be classified as fundamental.
The Trustees of the Fund have approved the reclassification from fundamental
to non-fundamental of each Portfolio's investment objective and policies in
order to provide the sub-investment managers with enhanced investment
flexibility to respond to market, industry, or regulatory changes. A
Portfolio's non-fundamental investment objective or policy may be changed at
any time without approval of the Portfolio's Owners.
In former years, it was common practice for many of a mutual fund's
investment objectives and policies to be made "fundamental" even though they
are not required to be. This has grown increasingly inconvenient, however, as
the pace of innovation in the investment markets has accelerated. Accordingly,
the
17
<PAGE>
practice in the mutual fund industry has increasingly been to keep to a
minimum the number of investment objectives and policies that are designated
as fundamental. Indeed, that is the approach that has been followed with the
Fund's own more recently created Portfolios.
Furthermore, as new Portfolios have been added to the Fund in recent years,
it has been desirable to adjust the investment objectives and policies of some
of the older Portfolios in an effort to preserve the best overall "mix" of
investment options. Moreover, when a change is made that requires Owner
approval, the Fund normally pays the cost of seeking such approval. Therefore,
to the extent that this Proposal 5 obviates the need for some such future
approvals, Owners will reap the benefit of the cost savings.
TRUSTEES' RECOMMENDATION
The Board of Trustees has determined that the proposal to make non-
fundamental the investment objectives and policies of the Managed, Special
Opportunities, Short-Term U.S. Government, and International Equities
Portfolios is in the best interests of the Fund and the Owners of those
Portfolios.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE OWNERS OF THE MANAGED, SPECIAL
OPPORTUNITIES, SHORT-TERM U.S. GOVERNMENT AND INTERNATIONAL EQUITIES
PORTFOLIOS GIVE INSTRUCTIONS TO VOTE FOR APPROVAL OF THIS PROPOSAL 5.
18
<PAGE>
APPENDIX A
RECORD DATE AND VOTING SHARES
As of the close of business on February 27, 1998 ("the record date"), the
following shares were outstanding:
<TABLE>
<CAPTION>
NAME OF NUMBER OF
PORTFOLIO SHARES
- --------- ---------
<S> <C>
Managed...............................................................
Special Opportunities.................................................
Short-Term U.S. Government............................................
International Equities................................................
</TABLE>
Each Fund share is entitled to one vote, and fractional votes will be
counted.
The number of Fund shares attributable to each Owner of a variable life
insurance policy ("policy") is determined by dividing, as of the record date
of the Meeting, a policy's cash (or account) value (less any outstanding
indebtedness) in the corresponding subaccount of the applicable Account by the
net asset value of one share in the corresponding Fund Portfolio which the
assets of the subaccount are invested.
The number of Fund shares attributable to each Owner of a variable annuity
contract ("contract") is determined by dividing, as of the record date of the
Meeting, the value of the Accumulation Shares under a contract (or for each
contract under which annuity payments have commenced, the contract reserves)
in the corresponding subaccount of the applicable Account by the net asset
value of one share in the corresponding Fund Portfolio in which the assets of
the subaccount are invested.
As of the close of business on February 27, 1998, JHVLICO and John Hancock
had in the aggregate the following numbers of shares representing their
contributions and other amounts in the Accounts that are in excess of the
amounts attributable to policies and contracts:
<TABLE>
<CAPTION>
NAME OF NUMBER OF PERCENTAGE OF TOTAL
PORTFOLIO SHARES SHARES OUTSTANDING
- --------- --------- -------------------
<S> <C> <C>
Managed...........................................
Special Opportunities.............................
Short-Term U.S. Government........................
International Equities............................
</TABLE>
A-1
<PAGE>
APPENDIX B
FUNDAMENTAL INVESTMENT RESTRICTIONS
Underscored text is new; bracketed text has been deleted.
No Portfolio will:
(1) Purchase real estate or any interest therein, except through the
purchase of corporate or certain government securities (including
securities secured by a mortgage or a leasehold interest or other interest
in real estate). A security issued by a real estate or mortgage investment
trust or an interest in a pool of real estate mortgage loans is not
treated as an interest in real estate.
(2) Make loans, other than through the acquisition of obligations in
which the Portfolio may invest consistent with its objective and
investment policies, except that the Equity Index, Large Cap Value, Mid
Cap Value, Mid Cap Growth, [Special Opportunities] Diversified Mid Cap
-------------------
Growth, Small Cap Value, Small Cap Growth, International Balanced,
------
International Equity Index, International Opportunities, Short-Term [U.S.
--------------------------
Government] Bond, and Strategic Bond Portfolios may lend portfolio
----
securities not having a value in excess of 33 1/3% of the Portfolio's
total assets.
(3) Invest in commodities or in commodity contracts or in puts, calls or
a combination of both, except that
(A) the Managed, Equity Index, Large Cap Value, Large Cap Growth,
Mid Cap Value, Mid Cap Growth, [Special Opportunities] Diversified
-----------
Mid Cap Growth, Small Cap Value, Small Cap Growth, International
--------------
Balanced, International Equity Index, International Opportunities,
--------------------------
Short-Term [U.S. Government] Bond, and Strategic Bond Portfolios may
----
(i) write call options on, and purchase put options covered
by, securities held by them and purchase and sell options to
close out positions thus established, provided that no such
covered call or put option position will be established in the
Large Cap Growth [and
Managed] Portfolio if more than one-third of the Portfolio's
total assets would immediately thereafter be subject to such
call and put options,
(ii) purchase options on stock indexes and write such options
to close out positions previously established, and
(iii) enter into financial futures contracts or purchase
options on such contracts, and effect offsetting transactions to
close out such positions previously established; provided that,
(a) as to the Large Cap Value, [Managed,] Large Cap Growth, Mid
Cap Value, and Small Cap Value Portfolios, no position in
financial futures, options
B-1
<PAGE>
thereon or options on securities indexes will be established if,
immediately thereafter, the then-current aggregate value of all
securities owned or to be acquired by the Portfolio which are
hedged by such instruments exceeds one-third of the value of its
total assets and (b) as to such Portfolios and as to the Equity
Index and International Opportunities Portfolios, no futures
position or position in options on futures will be established
if, immediately thereafter, the total of the initial margin
deposits required by commodities exchanges with respect to all
open futures positions at the time such positions were
established, plus the sum of the premiums paid for all unexpired
options on futures contracts would exceed 5% of the Portfolio's
total assets;
(B) with respect to the Managed, Equity Index, Large Cap Value, Mid
-------
Cap Value, Mid Cap Growth, [Special Opportunities], Diversified Mid
---------------
Cap Growth, Small Cap Value, Small Cap Growth, International
----------
Balanced, [International Equities,] International Equity Index,
--------------------------
International Opportunities, Short-Term [U.S. Government] Bond,
----
Sovereign Bond, and Strategic Bond Portfolios, forward foreign
exchange contracts, forward commitments, and when-issued securities
are not deemed to be commodities or commodity contracts or puts or
calls for the purposes of this restriction;
(C) the Managed, Mid Cap Growth, [International Equities,]
-------
Diversified Mid Cap Growth, Small Cap Growth, International Balanced,
--------------------------
International Equity Index, Short-Term [U.S. Government] Bond, and
----
Strategic Bond, and High Yield Bond Portfolios may, in addition to
the activities permitted in (A) and (B) above,
(i) write put and call options on securities and market
indexes, if such positions are covered by other securities or
outstanding put and call positions of the Fund and purchase put
and call options to close out any positions thus established,
and
(ii) enter into futures contracts on securities or market
indexes, or purchase or write put or call options on such
futures contracts, for hedging or speculative (non-hedging)
purposes, and enter into offsetting transactions to close out
any positions thus established; provided that none of these
Portfolios may purchase, sell or write such futures or options
other than for bona fide hedging purposes if immediately
thereafter the Portfolio's margin deposits on such non-hedging
positions, plus the amount of premiums paid for outstanding
options on futures contracts, that are not for bona fide hedging
purposes, less any amount by which any such option is "in the
money" at the time of purchase, exceeds 5% of the market value
of the Portfolio's net assets;
B-2
<PAGE>
(D) the Sovereign Bond Portfolio may enter into futures contracts
and purchase or write options thereon to the same extent as is
permitted in (C), above, with respect to the Portfolios listed
therein; and
(E) the Managed, Equity Index, Large Cap Value, Mid Cap Value, Mid
-------
Cap Growth, International Balanced, International Equity Index,
--------------------------
International Opportunities, and Strategic Bond Portfolios may
purchase or write put or call options on foreign currencies, may
purchase put or call options on securities, and may enter into
closing transactions with respect to any of such options.
(4) Engage in the underwriting of securities of other issuers, except to
the extent the Portfolio may be deemed an underwriter in selling as part
of an offering registered under the Securities Act of 1933 securities
which it has acquired.
(5) Borrow money, except from banks as a temporary measure where such
borrowings would not exceed 5% of the market value of total assets of the
Portfolio as of the time each such borrowing is made, or 10% as to the
----------------
International Equity Index Portfolio, subject to a non-fundamental policy
-------------------------------------------------------------------------
that the Portfolio will not make additional investments at any time when
------------------------------------------------------------------------
such borrowings plus any amounts payable by the Portfolio under reverse
-----------------------------------------------------------------------
repurchase agreements exceed 5% of that Portfolio's total assets.
-----------------------------------------------------------------
(6) Except as set forth herein as to the Managed, [Special
Opportunities,] Diversified Mid Cap Growth, [International Equities,]
--------------------------
Short-Term [U.S. Government] Bond, and Sovereign Bond Portfolios, neither
----
such portfolios, nor the Growth & Income, Large Cap Growth, Real Estate
Equity, or Money Market Portfolios may purchase securities which are
subject to legal or contractual delays in or restrictions on resale. The
Managed and Sovereign Bond Portfolios may, however, purchase restricted
securities, including those eligible for resale to "qualified
institutional buyers" pursuant to Rule 144A under the securities Act of
1933, subject to a nonfundamental restriction limiting all illiquid
securities held by each Portfolio to not more than 15% of the Portfolio's
net assets.
(7) Purchase securities on margin, except for short-term credits as may
be necessary for the clearance of purchases or sales of securities, or
effect a short sale of any security. Neither the use of futures contracts
as permitted by restriction (3), above nor the use of option contracts as
permitted by restriction (3) above, shall be deemed to be the purchase of
a security on margin.
(8) Invest for the purpose of exercising control over or management of
any company.
(9) Unless received as a dividend or as a result of an offer of exchange
approved by the Securities and Exchange Commission or of a plan of
reorganization, purchase or otherwise acquire any security issued by an
investment company if the Portfolio would immediately thereafter own
B-3
<PAGE>
(a) more than 3% of the outstanding voting stock of the investment
company, (b) securities of the investment company having an aggregate
value in excess of 5% of the Portfolio's total assets, (c) securities of
investment companies having an aggregate value in excess of 10% of the
Portfolio's total assets, or (d) together with investment companies having
the same investment adviser as the Portfolio (and companies controlled by
such investment companies), more than 10% of the outstanding voting stock
of any registered closed-end investment company. A real estate or mortgage
investment trust is not considered an investment company. This restriction
does not apply to the Equity Index, Large Cap Value, Mid Cap Value, Mid
Cap Growth, Small Cap Growth, Small Cap Value, Small Cap Growth
International Balanced, International Opportunities, or Strategic Bond
Portfolios.
(10) Purchase securities of any issuer, if (a) with respect to 75% of
the market value of its total assets, more than 5% of the Portfolio's
total assets taken at market value would at the time be invested in the
securities of such issuer, unless such issuer is the United States
Government or its agency or instrumentality, 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 Portfolio. This restriction shall not apply
to the [Special Opportunities,] Mid Cap Growth or International Balanced
Portfolios.
(11) Issue senior securities. For the purposes of this restriction, the
following shall not be deemed to be the issuance of a senior security: the
use of futures contracts as permitted by restriction 3, above; the use of
option contracts as permitted by restriction 3, above; and the use of
foreign currency contracts.
The Equity Index, Large Cap Value, Mid Cap Value, Mid Cap Growth, [Special
Opportunities,] Diversified Mid Cap Growth, Small Cap Value, Small Cap Growth,
--------------------------
International Balanced, [International Equities,] International Equity Index,
--------------------------
International Opportunities, Short-Term [U.S. Government] Bond, Sovereign Bond
----
and Strategic Bond Portfolios will not purchase the securities of issuers
conducting their principal business activity in the same industry if,
immediately after such purchase, the value of the Portfolio's investments in
such industry would exceed 25% of its total assets taken at market value. For
the purpose of this restriction, telephone, water, gas and electric public
utilities are each regarded as separate industries, and wholly-owned finance
companies are considered to be in the industry of their parents if their
activities are primarily related to financing the activities of their parent.
In conformity with its understanding of current interpretations of the 1940
Act by the staff of the Securities and Exchange Commission, the Fund, as a
non-fundamental policy, interprets this limitation not to apply to securities
issued by the Federal government, or state and local governments within the
U.S., or political subdivisions thereof; but this exception does not apply to
securities of foreign governmental entities. If these interpretations change,
however, the Fund may modify its practices to conform to such changes.
B-4
<PAGE>
The [Special Opportunities,] Diversified Mid Cap Growth and Short-Term [U.S.
--------------------------
Government] Bond Portfolios will not purchase any security, including any
----
repurchase agreement maturing in more than seven days, which is subject to
legal or contractual delays in or restrictions on resale, or which is not
directly marketable, if more than 10% of the assets of the Portfolio, taken at
market value, would be invested in such securities.
For purposes of any restrictions or limitation to which the Fund is subject,
no Portfolio, by entering into any futures contract or acquiring or writing
any option thereon or on any security or market index, shall be deemed
(1) to have acquired or invested in any securities of any exchange or
clearing corporation for any such instrument or
(2) to have acquired or invested in any debt obligations or in any
stocks comprising indexes on which such instrument is based, but which the
Portfolio does not hold directly in its portfolio.
B-5
<PAGE>
APPENDIX C
JHVLICO AND JOHN HANCOCK AND
INDEPENDENCE INTERNATIONAL ASSOCIATES, INC.
JHVLICO AND JOHN HANCOCK
JHVLICO, John Hancock Place, Boston, Massachusetts 02117, is a stock life
insurance company chartered in 1979 under Massachusetts law. It is a wholly-
owned subsidiary of John Hancock, authorized to transact a life insurance and
annuities business in 49 states. JHVLICO began selling variable life insurance
policies in 1980 and its Accounts owned Fund shares representing % of the
total net assets of the Fund on December 31, 1997.
John Hancock, John Hancock Place, Boston, Massachusetts 02117, is a mutual
life insurance company chartered in Massachusetts in 1862. It is authorized to
transact a life insurance and annuity business in all fifty states. John
Hancock began selling variable annuity contracts in 1971 and variable life
insurance policies in 1993. Its Accounts owned Fund shares representing % of
the total net assets of the Fund on December 31, 1997. John Hancock acts as
"principal underwriter" of the Fund's shares pursuant to an Underwriting and
Administrative Services Agreement, dated January 17, 1986, to which John
Hancock and the Fund are parties. Under the Agreement, John Hancock collects
no additional charges or commissions in connection with its duties as
principal underwriter.
John Hancock is managed by its Board of Directors, the members of which are
elected by its policyholders. All of the Directors must be policyholders of
John Hancock. The business address of all Directors and Executive Officers of
John Hancock is John Hancock Place, Boston, Massachusetts 02117.
The following are the Directors and Chief Executive Officer of John Hancock:
Directors and Chief Executive Officer of John Hancock
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
---- --------------------
<S> <C>
JOHN F. MAGEE Chairman, Arthur D. Little, Inc.
(industrial research and consulting)
NELSON F. GIFFORD Principal, Fleetwing Capital Management
(financial services).
STEPHEN L. BROWN Chairman of the Board and Chief
Executive
Officer, John Hancock
WILLIAM L. BOYAN, JR. Vice Chairman of the Board, John Hancock
E. JAMES MORTON Director, formerly Chairman, John
Hancock
C. VINCENT VAPPI Former President and Chief Executive
Officer, Vappi & Company, Inc.
(construction).
DAVID F. D'ALESSANDRO President and Chief Operating
Officer, John Hancock
FOSTER L. ABORN Vice Chairman of the Board, John Hancock
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
---- --------------------
<S> <C>
JOAN T. BOK Chairman of the Board, New England
Electric System (electric utility)
ROBERT E. FAST Senior Partner, Hale and Dorr (law firm)
JOHN M. CONNORS, JR. Chief Executive Officer and Director,
Hill, Holiday, Connors Cosmopulos
(advertising agent)
I. MACALLISTER BOOTH Retired Chairman of the Board and Chief
Executive Officer, Polaroid
Corporation
(photographic products)
SAMUEL W. BODMAN Chairman of the Board and Chief
Executive Officer, Cabot Corporation
(chemicals)
LAWRENCE FISH Chairman, President, and Chief Executive
Officer, Citizens Financial Group,
Inc. (banking)
KATHLEEN L. FELDSTEIN President, Economic Studies, Inc.
(economic consulting)
RICHARD F. SYRON Chairman and Chief Executive Officer,
American Stock Exchange
MICHAEL C. HAWLEY President & Chief Operating Officer, The
Gillette Company (razors, etc.)
ROBERT J. TARR, JR. Former President, Chief Executive
Officer, Chief Operations Officer,
Harcourt General, Inc. (publishers)
WAYNE A. BUDD Group President, Bell Atlantic--New
England (telecommunications)
</TABLE>
INDEPENDENCE INTERNATIONAL ASSOCIATES, INC.
International is a wholly-owned subsidiary of Independence Investment
Associates, Inc., which is, in turn, a wholly-owned subsidiary of John Hancock
Subsidiaries, Inc., of which John Hancock is direct parent. International's
Board of Directors as follows:
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
---- --------------------
<S> <C>
WILLIAM C. FLETCHER President, Independence Investment
Associates, Inc.
JOSEPH A. TOMLINSON Vice President, Annuity and Special
Products Profit Center, John Hancock
FOSTER L. ABORN Vice Chairman of the Board, John Hancock
HENRY D. SHAW Vice President, Retail Product
Management, John Hancock
MARK C. LAPMAN Executive Vice President, IIA
JOHN T. FARADY Senior Vice President and Treasurer,
John Hancock
</TABLE>
The business address for Messrs. Fletcher and Lapman is 53 State Street,
Boston, Massachusetts 02109. IIA's address and the business address of its
other directors is John Hancock Mutual Life Insurance Company, John Hancock
Place, Boston, Massachusetts 02117.
C-2
<PAGE>
APPENDIX D
SUMMARY OF CURRENT MANAGEMENT AGREEMENT
(INTERNATIONAL EQUITIES PORTFOLIO)
The current Management Agreement between the Fund and John Hancock relating
to the International Equities Portfolio, dated April 12, 1988, as most
recently amended effective July 1, 1997, is summarized below. The Management
Agreement also relates to the Real Estate Equity Portfolio. For purposes of
this summary, these two Portfolios are referred to as the "Subject
Portfolios."
Pursuant to the Management Agreement, John Hancock advises the Subject
Portfolios in connection with policy decisions; provides administration of
day-to-day operations; provides personnel, office space, equipment and
supplies for the Subject Portfolios; maintains records required by the
Investment Company Act of 1940; and supervises activities of the Subject
Portfolios' sub-investment managers.
For its investment management and advisory services, John Hancock is paid a
fee by the International Equities Portfolio at the following rates, on an
annual basis as a percentage of that Portfolio's average daily net assets:
0.60% of the first $250,000,000; 0.55% of the next $250,000,000; and 0.50% of
all additional amounts.
The Management Agreement also provides that for any fiscal year in which the
normal operating costs and expenses of either Subject Portfolio, exclusive of
its investment advisory fees, interest, brokerage commissions, taxes and
extraordinary expenses outside the control of John Hancock, exceed 0.25% of
the Portfolio's average daily net assets, John Hancock will reimburse that
Portfolio promptly after the end of the fiscal year in an amount equal to such
excess.
Under the Management Agreement, John Hancock also pays the compensation of
Fund officers and employees and the expenses of clerical services relating to
the administration of the Fund. The Fund bears all of its expenses not
specifically assumed by John Hancock. These include, but are not limited to,
taxes, custodian and auditing fees, brokerage commissions, advisory fees, the
compensation of unaffiliated Trustees, the cost of the Fund's fidelity bond,
the cost of printing and distributing to Owners the Fund's annual and semi-
annual reports, the cost of printing, distributing to Owners, and tabulating
proxy materials, compensation paid for certain accounting, valuation and
compliance services, legal fees, securities registration expenses,
organizational expenses, association dues and other expenses related to the
Fund's operations.
John Hancock also indemnifies each member of the Board of Trustees against
losses by reason of failure (other than through willful misfeasance, bad
faith, gross negligence or reckless disregard of duties) to take any action
relating to the
D-1
<PAGE>
investment or reinvestment of assets in the Fund, including failure to seek or
retain investment advice or management in addition to or in place of that
provided by John Hancock or the sub-investment managers.
Unless modified or terminated, the Management Agreement will continue with
respect to the Portfolio from year to year 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 JHVLICO, John Hancock,
or the Fund, cast in person at a meeting called for the purpose of voting on
such approval, and (b) either a vote of the Board of Trustees or a majority of
the outstanding voting shares of the Portfolio. The Management Agreement also
provides that it may, on 60 days' notice, be terminated at any time without
penalty by the Board of Trustees, by majority vote of the outstanding voting
shares of the Portfolio, or by John Hancock. The Management Agreement
automatically terminates in the event of its assignment.
D-2
<PAGE>
APPENDIX E
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the day of , 1998, by and among John Hancock
Variable Series Trust I, a Massachusetts business trust (the "Series"),
Independence International Associates, Inc., a Massachusetts corporation
("Sub-Manager"), and John Hancock Mutual Life Insurance Company, a
Massachusetts corporation ("JHMLICO").
WHEREAS, the Series is organized and is engaged in business as an open-end
management investment company and is so registered under the Investment
Company Act of 1940 (the "1940 Act"); and
WHEREAS, JHMLICO and Sub-Manager are engaged in the business of rendering
investment advice under the Investment Advisers Act of 1940; and
WHEREAS, the Series is authorized to issue shares of capital stock in
separate classes with each such class representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Series offers shares in several classes, one of which is
designated as the International Equity Index Portfolio, (together with all
other classes established by the Series, the "Portfolios"), each of which
pursues its investment objectives through separate investment policies; and
WHEREAS, the Series has retained JHMLICO to render investment management
services to the Series pursuant to an Investment Management Agreement dated as
of , 1998 (the "Investment Management Agreement"), pursuant to which it
may contract with Sub-Manager as provided for herein;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-MANAGER
(a) Subject Portfolio. Sub-Manager is hereby appointed and Sub-Manager
hereby accepts the appointment to act as investment adviser and manager to the
International Equity Index Portfolio (the "Subject Portfolio") for the period
and on the terms herein set forth, for the compensation herein provided.
(b) Additional Subject Portfolios. In the event that the Series and JHMLICO
desire to retain Sub-Manager to render investment advisory services hereunder
for any other Portfolio, they shall so notify Sub-Manager in writing. If it is
willing to
E-1
<PAGE>
render such services, Sub-Manager shall notify the Series in writing,
whereupon such Portfolio shall become a Subject Portfolio hereunder.
(c) Independent Contractor. Sub-Manager shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or be deemed an agent of
the Series.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
Sub-Manager will provide for the Subject Portfolio a continuing and suitable
investment program consistent with the investment policies, objectives and
restrictions of said Portfolio, as furnished to Sub-Manager by JHMLICO in
writing from time to time. Sub-Manager will manage the investment and
reinvestment of the assets in the Subject Portfolio, and perform the functions
set forth below, subject to the overall supervision, direction, control and
review of the Board of Trustees of the Series, JHMLICO and, as in effect from
time to time, the provisions of the Series' Declaration of Trust, Bylaws,
prospectus, statement of additional information (all as furnished to Sub-
Manager by JHMLICO in writing from time to time), the 1940 Act and all other
applicable laws and regulations (including any applicable investment
restrictions imposed by state insurance laws and regulations or any directions
or instructions, all as delivered to Sub-Manager in writing by JHMLICO or the
Series from time to time).
Sub-Manager will have investment discretion with respect to the Subject
Portfolio and will, at its own expense:
(a) upon request, advise the Series in connection with investment
decisions to be made by its Board of Trustees or any committee thereof
regarding the Subject Portfolio and furnish the Series with research,
economic and statistical data in connection with said Portfolio's
investments and investment policies;
(b) submit such reports relating to the valuation of the Subject
Portfolio's securities as the Series' Board of Trustees may reasonably
request;
(c) place orders for purchases and sales of portfolio investments for
the Subject Portfolio;
(d) maintain and preserve the records relating to its activities
hereunder, including those records required by the 1940 Act to be
maintained by it and preserved by the Series, to the extent not maintained
by the Series' custodian, transfer agent or JHMLICO; and
(e) subject to its receipt of all necessary voting materials, in its
discretion, as it deems advisable in the best interests of the Subject
Portfolio, vote any or all proxies with respect to investments of the
Subject Portfolio in
E-2
<PAGE>
accordance with Sub-Manager's proxy voting policy as most recently
provided to JHMLICO.
The Series and JHMLICO will provide timely information to the Sub-Manager
regarding such matters as purchases and redemptions of shares in the Subject
Portfolio and the cash requirements of, and cash available for investment in,
the Portfolio, and all information as may be reasonably necessary or
appropriate in order for the Sub-Manager to perform its responsibilities
hereunder. On its own initiative, the Sub-Manager will apprise JHMLICO and the
Series of important developments materially affecting the Subject Portfolio
and will furnish JHMLICO and the Series' Board of Trustees from time to time
such information as is appropriate for this purpose.
3. ALLOCATION OF EXPENSES.
Each party to this Agreement shall bear the costs and expenses of performing
its obligations hereunder. In this regard, the Series specifically agrees to
assume the expense of:
(i) brokerage commissions for transactions in the portfolio investments
of the Series and similar fees and charges for the acquisition,
disposition, lending or borrowing of such portfolio investments;
(ii) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental
agencies; and
(iii) interest payable on the Series' borrowings.
Nothing in this Agreement shall alter the allocation of expenses and costs
agreed upon between the Series and JHMLICO in the Investment Management
Agreement or any other agreement to which they are parties.
4. SUB-ADVISORY FEES.
For all of the services rendered as herein provided, JHMLICO shall pay to
the Sub-Manager a fee (for payment of which the Series shall have no
obligation or liability), with respect to the Subject Portfolio, at an
effective annual rate of 0.125% on the first $100 million of the Current Net
Assets of such Portfolio, 0.10% on the next $100 million of the Current Net
Assets of such Portfolio, and 0.06% on all Current Net Assets in excess of
$200 million. The fee shall be accrued daily and payable monthly, as soon as
practicable after the last day of each calendar month. In the case of
termination of this Agreement with respect to the Subject Portfolio during any
calendar month, the fee with respect to such Portfolio accrued to termination
shall be paid.
"Current Net Assets" of the Portfolio for purposes of computing the amount
of advisory fee accrued for any day shall mean the Portfolio's net assets as
of the most recent preceding day for which the Portfolio's net assets were
computed.
E-3
<PAGE>
5. PORTFOLIO TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Subject Portfolio, the Sub-Manager is authorized to select the brokers or
dealers that will execute purchase and sale transactions for the Portfolio and
to use its best efforts to obtain the best available price and most favorable
execution with respect to all such purchases and sales of portfolio securities
for said Portfolio. The Sub-Manager shall maintain records adequate to
demonstrate compliance with this requirement. Subject to this primary
requirement, and maintaining as its first consideration the benefits to the
Subject Portfolio and its shareholders, the Sub-Manager shall have the right
subject to the control of the Board of Trustees, and to the extent authorized
by the Securities Exchange Act of 1934, to follow a policy of selecting
brokers who furnish brokerage and research services to the Subject Portfolio
or to the Sub Manager, and who charge a higher commission rate to the Subject
Portfolio than may result when allocating brokerage solely on the basis of
seeking the most favorable price and execution. The Sub-Manager shall
determine in good faith that such higher cost was reasonable in relation to
the value of the brokerage and research services provided.
The fees payable to the Sub-Manager by JHMLICO hereunder shall be reduced by
any tender offer solicitation fees or similar payments received by the Sub-
Manager, in connection with the tender of investments of any Portfolio (less
direct expenses incurred by the Sub-Manager in connection with obtaining such
fees or payments).
6. INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Series shall own and control all records maintained hereunder by the
Sub-Manager on the Series' behalf and, in the event of termination of this
Agreement with respect to any Portfolio for any reason, all records (or true
and complete copies thereof) relating to that Portfolio shall be promptly
returned to the Series, free from any claim or retention of rights by the Sub-
Manager. The Sub-Manager also agrees, upon request of the Series, promptly to
surrender such books and records or, at its expense, copies thereof, to the
Series or make such books and records available for inspection by
representatives of regulatory authorities or other persons reasonably
designated by the Series. The Sub-Manager further agrees to maintain, prepare
and preserve such books and records in accordance with the 1940 Act and rules
thereunder, including but not limited to, Rules 31a-1 and 31a-2 and to supply
all information in its possession or reasonably available to it, requested by
any insurance regulatory authorities to determine whether all insurance laws
and regulations are being complied with.
The Sub-Manager shall not disclose or use any records or information
obtained pursuant hereto in any manner whatsoever except as expressly
authorized herein, and will keep confidential any information obtained
pursuant hereto, and
E-4
<PAGE>
disclose such information only (i) to Independence Investment Associates,
Inc., John Hancock Assets Management, Inc. and John Hancock Subsidiaries,
Inc., (ii) if the Series or JHMLICO has authorized such disclosure, or (iii)
if such disclosure is expressly required by applicable federal or state
regulatory authorities or court proceedings.
The Sub-Manager shall supply the Board of Trustees and officers of the
Series and JHMLICO with all statistical information regarding investments
which is reasonably required by them and reasonably available to it.
7. LIABILITY.
No provision of this Agreement shall be deemed to protect the Sub-Manager or
JHMLICO against any liability to the Series or its shareholders to which it
might otherwise be subject by reason of any willful misfeasance, bad faith or
negligence in the performance of its duties or the reckless disregard of its
obligations and duties under this Agreement or the Investment Management
Agreement, as applicable. Nor shall any provision hereof be deemed to protect
any trustee or officer of the Series against any such liability to which he
might otherwise be subject by reason of any willful misfeasance, bad faith or
negligence in the performance his duties or the reckless disregard of his
obligations and duties.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
International Equity Index Portfolio on the date hereof and, with respect to
any additional Subject Portfolio, on the date of receipt by the Series of
notice from the Sub-Manager in accordance with Paragraph 1(b) hereof that it
is willing to serve with respect to such Portfolio. Unless terminated as
herein provided, this Agreement shall remain in full force and effect for two
years from the date hereof with respect to the initial Subject Portfolio and,
with respect to each additional Subject Portfolio, until two years following
the date on which such Portfolio becomes a Subject Portfolio hereunder, and
shall continue in full force and effect thereafter with respect to each
Subject Portfolio so long as such continuance with respect to any such
Portfolio is approved at least annually (a) by either the Board of Trustees of
the Series or by vote of a majority of the outstanding voting shares of such
Portfolio, and (b) in either event by the vote of a majority of the trustees
of the Series who are not parties to this Agreement or "interested persons" of
any such party, cast in person at a meeting called for the purpose of voting
on such approval.
Any approval of this Agreement by the holders of a majority of the
outstanding shares of any Subject Portfolio shall be effective to continue
this Agreement with respect to any such Portfolio notwithstanding (A) that
this Agreement has not been approved by the holders of a majority of the
outstanding
E-5
<PAGE>
shares of any other Portfolio affected hereby, and (B) that this Agreement has
not been approved by the vote of a majority of the outstanding shares of the
Series, unless such approval shall be required by any other applicable law or
otherwise. The terms "assignment," "vote of a majority of the outstanding
shares" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the 1940 Act and rules thereunder.
(b) Termination. This Agreement may be terminated with respect to any
Subject Portfolio at any time, without payment of any penalty, by vote of the
trustees of the Series, by vote of a majority of the outstanding shares of
such Portfolio, by the Sub-Manager on at least sixty days' written notice to
the Series and JHMLICO, or by JHMLICO on at least sixty days' written notice
to the Series and the Sub-Manager. Transactions already entered into by the
Sub-Manager but not yet settled at the time of any such termination shall
settle for the account of the Series.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment or if the Investment
Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE.
The services of the Sub-Manager to the Series are not to be deemed exclusive
and it shall be free to render similar services to others so long as its
services hereunder are not impaired thereby. It is specifically understood
that directors, officers and employees of the Sub-Manager and of its
subsidiaries and affiliates may continue to engage in providing portfolio
management services and advice to other investment companies, whether or not
registered, and other investment advisory clients.
Nothing in this Agreement shall limit or restrict the Sub-Manager or any of
its officers, affiliates or employees from buying, selling or trading in any
securities for its or their own accounts; provided, however, that no such
person shall purchase securities from or sell securities to the Subject
Portfolio except as permitted under applicable laws and regulations, including
without limitation the 1940 Act and the Investment Advisers Act of 1940, and
the rules and regulations thereunder. The Series acknowledges that the Sub-
Manager and its officers, affiliates and employees, and its and their 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 under this Agreement. The Sub-Manager shall have no obligation to acquire
for the Subject Portfolio a position in any investment which the Sub-Manager,
its officers, affiliates or employees may acquire for their own accounts or
for the accounts of another client, if in the sole discretion of the Sub-
Manager it is not feasible or desirable to do so.
E-6
<PAGE>
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Subject Portfolio, the Sub-Manager and its directors, officers and employees
will not act as principal or agent or receive any commission. Nothing in this
Agreement, however, shall preclude the combination of orders for the sale or
purchase of portfolio securities of the Subject Portfolio with those for other
accounts managed by the Sub-Manager or its affiliates, if orders are allocated
in a manner deemed equitable by Sub-Manager among the accounts and at a price
approximately averaged.
11. AMENDMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by a duly
authorized officer of the party or parties intending to be bound thereby. No
amendment of this Agreement shall be effective with respect to any Portfolio
until approved specifically by (a) the Board of Trustees of the Series, or by
vote of a majority of the outstanding shares of that Portfolio, and (b) by
vote of a majority of those Trustees of the Series who are not interested
persons of any party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval.
12. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Series hereunder shall
not be binding upon any of the trustees, shareholders, officers, agents or
employees of Series personally, but only bind the trust property of the
Series, as provided in the Series' Declaration of Trust.
13. GOVERNING LAW.
This agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act
and rules thereunder.
14. NOTICES.
Notices and other communications required or permitted under this Agreement
shall be in writing, shall be deemed to be effectively delivered when actually
received, and may be delivered by US mail (first class, postage prepaid), by
facsimile transmission, by hand or by commercial overnight delivery service,
addressed as follows:
Sub-Manager:
Independence International Associates, Inc.
53 State Street
Boston, MA 02109
Attention:
Fax #: 617-
E-7
<PAGE>
JHMLICO:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-572-4953
Series: John Hancock Variable Series Trust I
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-572-4953
15. ASSIGNMENT.
This Agreement may not be assigned by any party, either in whole or in part,
without the prior written consent of each other party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day first set forth above.
John Hancock Variable Series Trust I
Attest:
_____________________________________ By: _________________________________
Title:
John Hancock Mutual Life Insurance
Company
Attest:
_____________________________________ By: _________________________________
Title:
Independence International
Associates, Inc.
Attest:
_____________________________________ By: _________________________________
Title:
E-8
<PAGE>
BY SIGNING AND DATING THE LOWER PORTION OF THIS FORM, YOU INSTRUCT THE PERSONS
NAMED BELOW TO, AND THEY WILL, VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED,
TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR DISCRETION TO VOTE ANY OTHER
MATTER INCIDENT TO THE CONDUCT OF THE SPECIAL MEETING. IF YOU DO NOT INTEND
PERSONALLY TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DETACH AND MAIL THE
LOWER PORTION OF THIS FORM AT ONCE IN THE ENCLOSED ENVELOPE.
THESE VOTING INSTRUCTIONS ARE SOLICITED BY THE TRUSTEES OF
JOHN HANCOCK VARIABLE SERIES TRUST I
MANAGED PORTFOLIO
SPECIAL MEETING OF SHAREHOLDERS APRIL 24, 1998
THOMAS J. LEE AND HENRY D. SHAW, AND EACH OF THEM, WITH POWER OF SUBSTITUTION
IN EACH, ARE HEREBY INSTRUCTED TO VOTE THE SHARES HELD IN THE FUND PORTFOLIO
ATTRIBUTABLE TO THE UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD APRIL 24, 1998, AND AT ANY ADJOURNMENT THEREOF, AS SPECIFIED BELOW.
TO VOTE MARK AN [X] IN BLUE OR BLACK INK ON THE PROXY CARD BELOW. KEEP THIS
PORTION FOR YOUR RECORDS.
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
(DETACH HERE AND RETURN THIS PORTION ONLY)
JOHN HANCOCK VARIABLE SERIES TRUST I A Special Meeting of the Shareholders
of the John Hancock Variable Series
Managed Portfolio Trust I (the "Fund") will be held at
the offices of John Hancock Variable
Life Insurance Company, 197 Clarendon
Street, Boston, Massachusetts
(telephone 1-800-732-5543), at 11:00
VOTE ON PROPOSALS a.m., on Friday, April 24, 1998, for
the following purposes:
FOR AGAINST ABSTAIN
[_] [_] [_] 1. APPROVAL OF CHANGES IN CERTAIN
INVESTMENT POLICIES AND
RESTRICTIONS OF THE PORTFOLIO.
[_] [_] [_] 5. APPROVAL TO MAKE-NON-FUNDAMENTAL
THE INVESTMENT OBJECTIVES AND
POLICIES OF THE PORTFOLIO.
_____________________________________
Signature
_____________________________________
Signature (Joint Owners)
_____________________________________
Date
<PAGE>
BY SIGNING AND DATING THE LOWER PORTION OF THIS FORM, YOU INSTRUCT THE PERSONS
NAMED BELOW TO, AND THEY WILL, VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED,
TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR DISCRETION TO VOTE ANY OTHER
MATTER INCIDENT TO THE CONDUCT OF THE SPECIAL MEETING. IF YOU DO NOT INTEND
PERSONALLY TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DETACH AND MAIL THE
LOWER PORTION OF THIS FORM AT ONCE IN THE ENCLOSED ENVELOPE.
THESE VOTING INSTRUCTIONS ARE SOLICITED BY THE TRUSTEES OF
JOHN HANCOCK VARIABLE SERIES TRUST I
SPECIAL OPPORTUNITIES PORTFOLIO
SPECIAL MEETING OF SHAREHOLDERS APRIL 24, 1998
THOMAS J. LEE AND HENRY D. SHAW, AND EACH OF THEM, WITH POWER OF SUBSTITUTION
IN EACH, ARE HEREBY INSTRUCTED TO VOTE THE SHARES HELD IN THE FUND PORTFOLIO
ATTRIBUTABLE TO THE UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD APRIL 24, 1998, AND AT ANY ADJOURNMENT THEREOF, AS SPECIFIED BELOW.
TO VOTE MARK AN [X] IN BLUE OR BLACK INK ON THE PROXY CARD BELOW. KEEP THIS
PORTION FOR YOUR RECORDS.
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
(DETACH HERE AND RETURN THIS PORTION ONLY)
JOHN HANCOCK VARIABLE SERIES TRUST I A Special Meeting of the Shareholders
of the John Hancock Variable Series
Special Opportunities Portfolio Trust I (the "Fund") will be held at
the offices of John Hancock Variable
Life Insurance Company, 197 Clarendon
Street, Boston, Massachusetts
(telephone 1-800-732-5543), at 11:00
VOTE ON PROPOSALS a.m., on Friday, April 24, 1998, for
the following purposes:
FOR AGAINST ABSTAIN
[_] [_] [_] 1. APPROVAL OF CHANGES IN THE
INVESTMENT PROGRAM OF THE
PORTFOLIO.
[_] [_] [_] 5. APPROVAL TO MAKE-NON-FUNDAMENTAL
THE INVESTMENT OBJECTIVES AND
POLICIES OF THE PORTFOLIO.
_____________________________________
Signature
_____________________________________
Signature (Joint Owners)
_____________________________________
Date
<PAGE>
BY SIGNING AND DATING THE LOWER PORTION OF THIS FORM, YOU INSTRUCT THE PERSONS
NAMED BELOW TO, AND THEY WILL, VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED,
TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR DISCRETION TO VOTE ANY OTHER
MATTER INCIDENT TO THE CONDUCT OF THE SPECIAL MEETING. IF YOU DO NOT INTEND
PERSONALLY TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DETACH AND MAIL THE
LOWER PORTION OF THIS FORM AT ONCE IN THE ENCLOSED ENVELOPE.
THESE VOTING INSTRUCTIONS ARE SOLICITED BY THE TRUSTEES OF
JOHN HANCOCK VARIABLE SERIES TRUST I
SHORT-TERM U.S. GOVERNMENT PORTFOLIO
SPECIAL MEETING OF SHAREHOLDERS APRIL 24, 1998
THOMAS J. LEE AND HENRY D. SHAW, AND EACH OF THEM, WITH POWER OF SUBSTITUTION
IN EACH, ARE HEREBY INSTRUCTED TO VOTE THE SHARES HELD IN THE FUND PORTFOLIO
ATTRIBUTABLE TO THE UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD APRIL 24, 1998, AND AT ANY ADJOURNMENT THEREOF, AS SPECIFIED BELOW.
TO VOTE MARK AN [X] IN BLUE OR BLACK INK ON THE PROXY CARD BELOW. KEEP THIS
PORTION FOR YOUR RECORDS.
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
(DETACH HERE AND RETURN THIS PORTION ONLY)
JOHN HANCOCK VARIABLE SERIES TRUST I A Special Meeting of the Shareholders
of the John Hancock Variable Series
Short-Term U.S. Government Portfolio Trust I (the "Fund") will be held at
the offices of John Hancock Variable
Life Insurance Company, 197 Clarendon
Street, Boston, Massachusetts
(telephone 1-800-732-5543), at 11:00
VOTE ON PROPOSALS a.m., on Friday, April 24, 1998, for
the following purposes:
FOR AGAINST ABSTAIN
[_] [_] [_] 3. APPROVAL OF CHANGES IN THE
INVESTMENT PROGRAM OF THE
PORTFOLIO.
[_] [_] [_] 5. APPROVAL TO MAKE-NON-FUNDAMENTAL
THE INVESTMENT OBJECTIVES AND
POLICIES OF THE PORTFOLIO.
_____________________________________
Signature
_____________________________________
Signature (Joint Owners)
_____________________________________
Date
<PAGE>
BY SIGNING AND DATING THE LOWER PORTION OF THIS FORM, YOU INSTRUCT THE PERSONS
NAMED BELOW TO, AND THEY WILL, VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED,
TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR DISCRETION TO VOTE ANY OTHER
MATTER INCIDENT TO THE CONDUCT OF THE SPECIAL MEETING. IF YOU DO NOT INTEND
PERSONALLY TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DETACH AND MAIL THE
LOWER PORTION OF THIS FORM AT ONCE IN THE ENCLOSED ENVELOPE.
THESE VOTING INSTRUCTIONS ARE SOLICITED BY THE TRUSTEES OF
JOHN HANCOCK VARIABLE SERIES TRUST I
INTERNATIONAL EQUITIES PORTFOLIO
SPECIAL MEETING OF SHAREHOLDERS APRIL 24, 1998
THOMAS J. LEE AND HENRY D. SHAW, AND EACH OF THEM, WITH POWER OF SUBSTITUTION
IN EACH, ARE HEREBY INSTRUCTED TO VOTE THE SHARES HELD IN THE FUND PORTFOLIO
ATTRIBUTABLE TO THE UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD APRIL 24, 1998, AND AT ANY ADJOURNMENT THEREOF, AS SPECIFIED BELOW.
TO VOTE MARK AN [X] IN BLUE OR BLACK INK ON THE PROXY CARD BELOW. KEEP THIS
PORTION FOR YOUR RECORDS.
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
(DETACH HERE AND RETURN THIS PORTION ONLY)
JOHN HANCOCK VARIABLE SERIES TRUST I A Special Meeting of the Shareholders
of the John Hancock Variable Series
International Equities Portfolio Trust I (the "Fund") will be held at
the offices of John Hancock Variable
Life Insurance Company, 197 Clarendon
Street, Boston, Massachusetts
(telephone 1-800-732-5543), at 11:00
VOTE ON PROPOSALS a.m., on Friday, April 24, 1998, for
the following purposes:
FOR AGAINST ABSTAIN
[_] [_] [_] 4. APPROVAL OF CHANGES IN THE
INVESTMENT PROGRAM OF THE
PORTFOLIO, AND OF RELATED CHANGES
TO THE PORTFOLIO'S INVESTMENT
MANAGEMENT AND SUB-INVESTMENT
MANAGEMENT AGREEMENTS.
[_] [_] [_] 5. APPROVAL TO MAKE-NON-FUNDAMENTAL
THE INVESTMENT OBJECTIVES AND
POLICIES OF THE PORTFOLIO.
_____________________________________
Signature
_____________________________________
Signature (Joint Owners)
_____________________________________
Date
