HANCOCK JOHN VARIABLE SERIES TRUST I, 485APOS, 1999-08-09

HANCOCK JOHN VARIABLE SERIES TRUST I
485APOS, 1999-08-09

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1999

REGISTRATION NOS. 33-2081
811-04490

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
PRE-EFFECTIVE AMENDMENT NO. [_]

POST-EFFECTIVE AMENDMENT NO. 23 [X]

AND/OR

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
AMENDMENT NO. 23 [X]

JOHN HANCOCK VARIABLE SERIES TRUST I
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

JOHN HANCOCK PLACE
P.O. BOX 111
BOSTON, MASSACHUSETTS 02117
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(617) 572-5060
(REGISTRANT'S TELEPHONE NUMBER)

RONALD J. BOCAGE, ESQUIRE
JOHN HANCOCK PLACE
P.O. BOX 111
BOSTON, MASSACHUSETTS 02117
(NAME AND ADDRESS OF AGENT FOR SERVICE)

COPIES TO:

THOMAS C. LAUERMAN, ESQUIRE
FREEDMAN, LEVY, KROLL & SIMONDS
1050 CONNECTICUT AVENUE, N.W.
WASHINGTON, D.C. 20036

It is proposed that this filing will become effective (check appropriate box)

[_] Immediately upon filing pursuant to paragraph (b)

[_] On (Date) pursuant to paragraph (b)

[_] 60 days after filing pursuant to paragraph (a)(1)

[X] On August 9, 1999 pursuant to paragraph (a)(1)

[_] 75 days after filing pursuant to paragraph (a)(2)

[_] On (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate check the following box:

[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
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JOHN HANCOCK
VARIABLE SERIES TRUST I

PROSPECTUS

___________, 1999

As with all mutual funds, the AGGRESSIVE BALANCED FUND
Securities and Exchange EQUITY INDEX FUND
Commission has not judged LARGE CAP VALUE CORE FUND
whether these funds are good LARGE CAP AGGRESSIVE GROWTH FUND
investments or whether the LARGE/MID CAP VALUE FUND
information in this MID CAP BLEND FUND
prospectus is FUNDAMENTAL MID CAP GROWTH FUND
adequate and accurate. Anyone SMALL/MID CAP CORE FUND
who tells you otherwise is SMALL/MID CAP VALUE FUND
committing a federal crime. SMALL/MID CAP GROWTH FUND
SMALL CAP GROWTH FUND
INTERNATIONAL BALANCED FUND
INTERNATIONAL EQUITY FUND
SHORT-TERM BOND FUND
BOND INDEX FUND
HIGH YIELD BOND FUND

MANAGED BY JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE
BOSTON, MA 02117
<PAGE>

CONTENTS

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

John Hancock Variable Series OVERVIEW 2
Trust I ("Trust")
YOUR INVESTMENT CHOICES 3
A fund-by-fund summary of Aggressive Balanced Fund 6
goals, strategies and risks. Equity Index Fund 8
Large Cap Value CORE Fund 10
Large Cap Aggressive Growth Fund 12
Large/Mid Cap Value Fund 14
Mid Cap Blend Fund 16
Fundamental Mid Cap Growth Fund 18
Small/Mid Cap CORE Fund 20
Small/Mid Cap Value Fund 22
Small/Mid Cap Growth Fund 24
Small Cap Growth Fund 26
International Balanced Fund 28
International Equity Fund 30
Short-Term Bond Fund 32
Bond Index Fund 34
High Yield Bond Fund 36

Policies and instructions for YOUR ACCOUNT 38
opening, maintaining and Investments in shares of the funds 38
closing an account in any Share price 38
fund. Valuation 38
Conflicts 38

Further information on the FUNDS' EXPENSES, DIVIDENDS AND TAXES 39
Funds Expenses 39
Dividends 39
Taxes 39

Further information on the TRUST DETAILS 40
Trust. Business structure 40
Year 2000 Compliance 40

Additional performance APPENDIX 41
information

FOR MORE INFORMATION back cover
<PAGE>

OVERVIEW

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

FUND INFORMATION KEY
Concise fund-by-fund descriptions begin on page 6. Each description provides the
following information:

GOAL AND STRATEGY The fund's particular investment goals and the principal
strategies it intends to use in pursuing those goals.

SUBADVISER/MANAGER The firm and individual(s) providing investment management
services to the fund.

PAST PERFORMANCE The fund's total return, measured year-by-year and over time.

MAIN RISKS The major risk factors and other significant risk factors associated
with the fund.

FINANCIAL HIGHLIGHTS The fund's operating performance per share, measured
year-by-year.

THE FUNDS
The Trust offers investment choices, or funds, for the variable annuity and
variable life insurance contracts ("variable contracts") of:

. John Hancock Mutual Life Insurance Company ("John Hancock"),

. John Hancock Variable Life Insurance Company ("JHVLICO"), and

. Investors Partner Life Insurance Company and its subsidiaries ("IPL").

In some variable contract forms, the Trust is referred to as the "Fund" or
"Series Fund" and the investment choices are referred to as "Portfolios."

RISKS OF FUNDS
These funds, like all mutual funds, are not bank deposits. They are not insured
or guaranteed by the FDIC or any other government agency. You could lose money
by investing in these funds. So, be sure to read all risk disclosure carefully
before investing.

MANAGEMENT
John Hancock is the investment adviser of each fund. John Hancock, chartered in
1862, is a Massachusetts mutual life insurance company. It managed, at the end
of 1998, approximately $127 billion, of which John Hancock owned over $67
billion. All of the funds shown in this prospectus have subadvisers.

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YOUR INVESTMENT CHOICES

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

The Trust offers a number of investment choices, or funds, to suit a variety of
objectives under variable contracts. There are 16 of these funds available under
your variable contract. Each fund has its own strategy and its own risk/reward
profile. The funds can be broadly categorized as equity funds, balanced funds,
bond funds, and international/global funds. Within these broad categories, the
funds can be further categorized as follows:

EQUITY FUNDS
Equity funds can be categorized in two ways--by capitalization and by investment
style.

CAPITALIZATION Equity funds can be categorized by market
capitalization, which is defined as the market value of
all shares of a company's stock. The following
definitions for large, mid and small cap are based upon
statistics at year-end 1998, but are adjusted quarterly
with broad equity market movements as represented by
the Russell 3000 Index.

LARGE CAP FUNDS:
. Aggressive Balanced These funds invest in large, well-established companies
Fund that typically are very actively traded and provide
more stable investment returns over time. Large cap
. Equity Index Fund companies represent the 300 largest stocks in the
Russell 3000 Index. Each of those companies has a
. Large Cap Value CORE market capitalization greater than $6.6 billion as of
Fund the end of 1998. Large cap funds are appropriate for
investors who want the least volatile investment
. Large Cap Aggressive returns within the overall equity markets.
Growth Fund

LARGE / MID CAP FUNDS:
. Large/Mid Cap Value These funds invest in large cap and mid cap companies.
Fund The capitalization of these funds can shift over time
from primarily large cap to primarily mid cap or vice
versa depending on where the manager identifies
investment opportunities. These funds are generally
more volatile than pure large cap funds, but generally
less volatile than pure mid cap funds.

MID CAP FUNDS:
. Mid Cap Blend Fund These funds invest in medium-sized, less established
companies that are less actively traded and provide
. Fundamental Mid Cap more share price volatility over time than large cap
Growth Fund stocks. Mid cap companies represent the 250th to 1000th
largest stocks in the Russell 3000 Index. Each of those
companies has a market capitalization between $1.3
billion and $8.1 billion as of the end of 1998. Mid cap
funds are appropriate for investors who are willing to
accept more volatile investment returns within the
overall equity markets with the potential reward of
higher long-term returns.

SMALL / MID CAP FUNDS:
. Small/Mid Cap CORE These funds invest in mid cap and small cap companies.
Fund The capitalization of these funds can shift over time
from primarily mid cap to primarily small cap or vice
. Small/Mid Cap Value versa depending on where the manager identifies
Fund investment opportunities. These funds are generally
more volatile than pure mid cap funds, but generally
. Small/Mid Cap Growth less volatile than pure small cap funds.
Fund

SMALL CAP FUNDS:
. Small Cap Value Fund These funds invest in small newly established companies
that are less actively traded and have a high level of
share price volatility over time. Small cap companies
. Small Cap Growth Fund represent the 2000 smallest stocks in the Russell 3000
Index. Each of those companies has a market
capitalization of less than $1.3 billion as of the end
of 1998. Small cap funds are appropriate for investors
who are willing to accept the most volatile investment
returns within the overall equity markets for the
potential reward of higher long-term returns.

3
<PAGE>

INVESTMENT STYLE

VALUE FUNDS:
. Large Cap Value CORE Value funds invest in companies that are attractively
Fund priced, considering their asset and earnings history.
These stocks typically pay above average dividends and
. Large/Mid Cap Value have low stock prices relative to measures of earnings
Fund and book value. Value funds are appropriate for
investors who want some dividend income and the
. Small/Mid Cap Value potential for capital gains, but are less tolerant of
Fund share-price fluctuations.

GROWTH FUNDS:
. Large Cap Aggressive Growth funds invest in companies believed to have
Growth Fund above-average prospects for capital growth due to their
strong earnings and revenue potential. Growth stocks
. Fundamental Mid Cap typically have high stock prices relative to measures
Growth Fund of earnings and book value. Growth funds are
appropriate for investors who are willing to accept
. Small Mid/Cap Growth more share-price volatility for the potential reward of
Fund higher long-term returns.

. Small Cap Growth Fund
BLEND FUNDS:
. Equity Index Fund Blend funds invest in both value and growth companies.
Blend funds are appropriate for investors who seek both
. Mid Cap Blend Fund dividend and capital appreciation characteristics.

. Small/Mid Cap CORE
Fund

BALANCED FUNDS
Balanced funds invest in a combination of stocks and bonds and actively
manage the mix of stock and bonds within a target range. Domestic balanced
funds invest in U.S. stocks and bonds. International balanced funds invest in
foreign stocks and bonds.

. Aggressive Balanced Fund

. International Balanced Fund

BOND FUNDS
Bond funds can be categorized in two ways--by average maturity and by credit
quality:

AVERAGE MATURITY Bond maturity is a key measure of interest rate risk. A
bond's maturity measures the time remaining until the
bond matures, or until the repayment of the bond's
principal comes due. The longer a bond's maturity, the
more sensitive the bond's price is to changes in
interest rates.

SHORT:
. Short Term Bond Fund These funds invest primarily in bonds with short
maturities, typically less than four years. These funds
have less interest risk than intermediate-term bond
funds.

INTERMEDIATE:
. Bond Index Fund These funds invest in bonds of all maturities and
maintain an average maturity which is typically between
. High Yield Bond Fund four and ten years. These funds have more interest rate
risk than short-term bond funds.

4
<PAGE>

CREDIT QUALITY Credit quality is a measure of the ability of a bond
issuer to meet its financial obligations and repay
principal and interest. High quality bonds have less
credit risk than lower quality bonds. Investment grade
bonds typically have "high" or "medium" credit quality
ratings (as defined below), while high-yield bonds have
"low" credit quality ratings.

HIGH:
. Bond Index Fund These funds focus on the highest-rated, most
creditworthy bonds and typically maintain an average
credit quality rating of AAA/Aaa or AA/Aa.

MEDIUM:
. Short Term Bond Fund These funds invest in bonds of all credit quality
levels with a focus on high-rated investment grade
bonds. These funds typically maintain an average credit
quality rating of A or BBB/Baa.

LOW:
. High Yield Bond Fund These funds invest primarily in lower rated
bonds--known as high yield or "junk" bonds. These funds
typically maintain a below investment-grade average
credit quality rating of BB/Ba or B.

INTERNATIONAL/GLOBAL FUNDS
International funds invest primarily in securities markets outside the United
States. Global funds invest both in the United States and abroad. These funds
can be categorized by the types of markets they invest in.

DEVELOPED MARKETS:
.International These funds invest primarily in the larger,
Balanced Fund well-established developed or industralized markets
around the world. These funds have less foreign
.International Equity securities risk than emerging market funds.
Fund

EMERGING MARKETS:
These funds invest primarily in developing or emerging
markets and have more foreign securities risk than
funds that invest primarily in well-established,
developed markets.

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

In the following pages, any fund investment strategy that is stated as a
percentage of a fund's assets applies at all times, not just at the time the
fund buys or sells an investment security. The trustees of the Trust can change
the investment goals and strategy of any fund without shareholder (i.e.,
contractowner) approval.

The financial highlights tables on the following pages detail the historical
performance of each fund that was in operation prior to December 31, 1998,
including total return information showing the increase or decrease of an
investment in the fund each year (assuming reinvestment of all dividends and
distributions). The "total investment return" shown for each fund does not
reflect the expenses and charges of the applicable separate accounts and
variable contracts. Those expenses and charges vary considerably from contract
to contract and are described in the variable contract prospectus to which this
prospectus is attached. If the earliest period shown in the financial highlights
table is less than a full calendar year, the two "Ratios" shown for that period
have been annualized (i.e., projected as if the fund had been in effect for a
full year). However, the "total investment return" and "turnover rate" for that
period have not been annualized.

In this prospectus, the term "stock" is used as a shorthand reference for equity
investments generally and the term "bond" is used as a shorthand reference for
debt obligations generally.

<PAGE>

AGGRESSIVE BALANCED FUND

GOAL AND STRATEGY

This is a balanced stock and bond fund that seeks long-term growth in income and
capital.

The Fund invests primarily in a diversified mix of:

. common stocks of large established U.S. companies; and

. bonds with maturities generally greater than 12 months.

The manager makes ongoing decisions about the mix among stocks and bonds. The
manager has a target mix of 75% in equities and 25% in bonds, but actively
manages the mix within +/-10% of the target mix.

The manager selects stocks and bonds using a combination of proprietary research
and quantitative tools. Stocks are purchased that are undervalued relative to
the stock's history and have improving earnings growth prospects. Bonds are
purchased that are attractively priced and have cheap, predictable cash flows.
The Fund is managed using risk control techniques that maintain risk and
industry characteristics similar to the overall market.

The Fund normally invests its equity portion in 80 to 150 stocks, with at least
65% (usually higher) of its equity assets in large cap companies. The Fund may
invest up to 30% of its bond assets in developed foreign countries and up to 15%
of its bond assets in high yield bonds. The Fund normally has 5% or less of its
assets in cash and cash equivalents.

The Fund may purchase other types of securities, for example: American
Depository Receipts (ADRs) and certain derivatives (investments whose value is
based on indices or other securities).

In abnormal market conditions, the Fund may take temporary defensive measures -
such as holding unusually large amounts of cash and cash equivalents - that are
inconsistent with the Fund's primary investment strategy. In taking those
measures, the Fund may not achieve its investment goal.

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

SUBADVISER PAST PERFORMANCE

INDEPENDENCE This is a new Fund. It was not in operation prior to
INVESTMENT the date of this prospectus.
ASSOCIATES, INC.
53 State Street
Boston, Massachusetts
02109

Owned by John Hancock
Managing since 1982
Managed approximately
$31 billion in assets
at end of 1998

FUND MANAGERS
Management by investment
team overseen by:

JOHN C. FORELLI (EQUITY)
- ------------------------

Senior Vice President
of subadviser
Joined team in 1996
Joined subadviser in
1990

JEFFERY B. SAEF (FIXED
- ----------------------
INCOME)
- -------

Senior Vice President
of subadviser
Joined team in 1994
Joined subadviser in
1994

6
<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:
-----
Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up
and down in value more than bonds. If the Fund's investments are concentrated
in certain sectors, the Fund's performance could be worse than the overall
market.

Manager Risk: The manager and its strategy may fail to produce the intended
results. The Fund could underperform its peers or lose money if the manager's
investment strategy does not perform as expected.

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "large cap" approach carries the risk that is certain markets large cap
stocks will underperform mid cap and small cap stocks.

Interest Rate Risk: When interest rates rise, the Fund's bond yields will
generally rise and the Fund's bond prices will generally fall. When interest
rates fall, the reverse will generally occur. The longer the average remaining
maturity of bonds held by the Fund, the more sensitive the Fund is to interest
rate risk. This Fund has more interest rate risk than a short-term bond fund,
but less interest rate risk than a long-term bond fund.

Credit Risk: An issuer of a bond held by the Fund may default on its obligation
to pay interest and repay principal. Also, the credit rating of a bond held by
the fund may be downgraded. In either case, the value of the bond held by the
Trust would fall. All bonds have some credit risk, but in general lower-rated
bonds have higher credit risk.

Market Allocation Risk: The allocation of the Fund's assets among major asset
classes (i.e., stocks, bonds, and short-term debt securities) may (1) reduce the
Fund's holdings in a class whose value then increases unexpectedly, or (2)
increase the Fund's holdings in a class just prior to its experiencing a loss of
value.

-------

The following risks are considered significant because of the nature of the
investments involved. They are not considered a major factor in the Fund's
-----
performance because the Fund would not normally commit a large portion of its
assets to such investments. However, the risks are of such a nature that they
could significantly affect the Fund's performance, even if the investments
involved are held in relatively small amounts:

Derivatives Risk: Certain derivative instruments (such as options, futures and
swaps) can produce disproportionate gains or losses. They are generally
considered more risky than direct equity investments. Also, in a down market,
derivatives could become harder to value or sell at a fair price.

High Yield Bond Risk: Junk bonds, defined as bond securities rated below
BBB-/Baa3, may be subject to more volatile or erratic price movements due to
investor sentiment. In a down market, these high yield securities become harder
to value or to sell at a fair price.

Prepayment / Call Risk: The Fund's share price or yield could be hurt if
interest rate movements cause the Fund's mortgage-related and callable
securities to be paid off substantially earlier than expected.

-------

The following risk is considered significant because of its potential impact on
the Fund's performance:

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

FINANCIAL HIGHLIGHTS -- This is a new Fund. It was not in operation prior
to the date of this prospectus.

<PAGE>

EQUITY INDEX FUND

GOAL AND STRATEGY

This is a stock fund that seeks to track the performance of the S&P 500 Index,
which emphasizes the stocks of large U.S. companies.

The manager employs a passive management strategy by normally investing in all
500 stocks included in the Index. The manager invests in each stock in roughly
the same proportion as represented in the Index.

The manager seeks to replicate as closely as possible the aggregate risk
characteristics and industry diversification of the Index.

The Fund normally invests in all 500 stocks in the Index, but has no
predetermined number of stocks that it must hold. S&P may change the composition
of the Index from time to time. The manager will reflect those changes as soon
as practical.

The Fund is normally fully invested. The manager may buy and sell stock index
futures, and buy options on stock indexes and on stock index futures to maintain
market exposure and manage cash flow.

The Fund may purchase other types of securities, for example: Standard & Poor's
Depository Receipts (SPDRs), American Depository Receipts (ADRs), high quality
short-term debt securities, and certain derivatives (investments whose value is
based on indices or other securities).

Note: "S&P 500 Index" means the Standard & Poor's 500 Composite Stock Price
Index. "Standard & Poor's", "S&P" and "S&P 500" are trademarks of McGraw Hill,
Inc. and have been licensed for use by the Trust.

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

SUBADVISER PAST PERFORMANCE
<S> <C>

STATE STREET BANK AND TRUST COMPANY The graph shows how the fund's total return has varied from year to year, while the table
State Street Global Advisors Division shows performance over time (along with a broad-based market index for reference). This
Two International Place information may also help provide an indication of the fund's risks and potential rewards.
Boston, Massachusetts 02110 All figures assume dividend reinvestment. Past performance does not indicate future
results. The performance figures below do not reflect the deduction of fees and charges
Managing since 1978 payable under the variable contracts. Such fees and charges would cause the investment
Managed approximately $492 billion returns under the contracts to be less than that shown below.
of assets, at end of 1998

FUND MANAGERS

JOHN A. TUCKER
- --------------
Principal of subadviser
Joined subadviser in 1988

JAMES B. MAY
- ------------
Principal of subadviser
Joined subadviser in 1989

- --------------------------------------------------------------------------------
Year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1997 1998

INSERT CHART

- --------------------------------------------------------------------------------
</TABLE>

BEST QUARTER: up 21.27%, fourth quarter 1998 WORST QUARTER: down 9.99%, third
quarter 1998

- --------------------------------------------------------------------------------
Average annual total return -- for periods ending 12/31/98/(1)/
- --------------------------------------------------------------------------------

1997 1998
1 year FUND INDEX
Life of fund 28.45% 28.58%
28.40% 29.02%
INDEX: S&P 500 Index

(1) Began operations on May 1, 1996.

8
<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:

Index Management Risk: Certain factors such as the following may cause the Fund
to track the Index less closely:

. The securities selected by the manager may not be fully representative of the
Index.

. Transaction expenses of the Fund may result in the Fund's performance being
different than that of the Index.

. The size and timing of the Fund's cash flows may result in the Fund's
performance being different than that of the Index.

Also, index funds like this one will have more difficulty in taking defensive
positions in abnormal market conditions.

Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up and
down in value more than bonds. If the Fund's investments are concentrated in
certain sectors, the Fund's performance could be worse than the overall market.

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "large cap" approach carries the risk that in certain markets large cap
stocks will underperform mid cap and small cap stocks.

-------

The following risk is not considered a major factor in the Fund's performance
because the Fund would not normally commit a large portion of its assets to the
investments involved. However, the risk is of such a nature that it could
significantly affect the Fund's performance, even if the investments are held in
relatively small amounts:

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

FINANCIAL HIGHLIGHTS (Selected data for each share interest outstanding
throughout the period indicated)
The following financial highlights have been audited by Ernst & Young LLP.

- --------------------------------------------------------------------------------
Period ended December 31: 1996** 1997 1998
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 11.10 $ 14.21
Income from investment operations:
Net investment income (loss) .15 .24 0.25
Net realized and unrealized gain
(loss) on investments* 1.26 3.41 3.76
Total from investment operations 1.41 3.65 4.01
Less distributions:
Distributions from net investment
income and capital paid in (.15) (.24) (0.24)
Distributions from net realized gain
on investments sold (.10) (.25) (0.28)
Total distributions ($.31) ($.54) ($0.52)
Net asset value, end of period $ 11.10 $ 14.21 $ 17.70
Total investment return*** 14.23% 32.79% 28.45%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s
omitted)($) $14,650 $101,390 $232,578
Ratio of expenses to average net
assets (%)**** 0.00% 0.00% 0.00%
Ratio of net investment income (loss)
to average net assets (%) 2.74% 1.97% 1.59%
Turnover rate (%) 15.72% 64.56% 43.31%

* The amount shown may not accord with the change in the aggregate gains and
losses in the fund securities for the period because of the timing of
purchases and withdrawals of shares in relation to the fluctuation in
market values of the fund.
** Fund began operations on May 1, 1996.
*** Includes the effect of a voluntary capital contribution from John Hancock
of $0.06 per share for the period ended 1996 and $0.04 per share for year
ended 1997. The Total Investment Return without the capital contribution
would have been 13.59% for the year ended 1996 and 32.47% for the year
ended 1997.
**** Expense ratio is net of expense reimbursement. Had such reimbursement not
been made the expense ratio would have been 1.61%, .65% and .34% for the
years ended December 31, 1996, 1997, and 1998, respectively.

<PAGE>

LARGE CAP VALUE CORE FUND

GOAL AND STRATEGY

This is a large cap stock fund with a value emphasis that seeks long-term growth
in capital and dividend income.

The Fund invests primarily in a diversified mix of common stocks of large
established U.S. companies that are believed to offer favorable prospects for
increasing dividends and growth in capital.

The manager selects stocks using a combination of quantitative techniques and
fundamental equity research. The manager employs an investment process known as
CORE, "Computer Optimized, Research-Enhanced," that employs a proprietary
quantitative model. The manager identifies stocks that have strong expected
earnings growth and momentum and better valuation and risk characteristics than
the Russell 1000 Value Index.

Stocks are purchased that have:

. Low to modest valuation characteristics relative to general market
measures, such as price/earnings ratio, book

. value and other fundamental accounting measures; and

. favorable prospects for capital appreciation and/or dividend paying
ability.

The Fund is managed using risk control techniques to maintain risk, style,
capitalization and industry characteristics similar to the Russell 1000 Value
Index. The Fund is broadly diversified by industry.

The Fund normally invests in 100 to 250 stocks, with at least 65% (usually
higher) of the Fund's assets in large cap companies. The Fund normally has 10%
or less of its assets in cash and cash equivalents.

The Fund may purchase other types of securities, for example: American
Depository Receipts (ADRs), Standard & Poor's Depository Receipts (SPDRs), high
quality short-term debt securities, and certain derivatives (investments whose
value is based on indices or other securities).

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

SUBADVISER PAST PERFORMANCE
<S> <C>
GOLDMAN SACHS ASSET MANAGEMENT, This is a new Fund. It was not in operation prior to the date of this
prospectus.
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
One New York Plaza
New York, New York 10004

Managing since 1988
Managed over $195 billion of
assets at end of 1998

FUND MANAGERS

KENT A. CLARK
- -------------
Managing Director of subadviser
Joined subadviser in 1992

ROBERT C. JONES
- ---------------
Managing Director of subadviser
Joined subadviser in 1989

VICTOR H. PINTER
- ----------------
Vice President of subadviser
Joined subadviser in 1990
</TABLE>

10
<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:
-----

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "value" approach carries the risk that in certain markets "value" stocks
will underperform "growth" stocks. Also, the Fund's "large cap" approach carries
the risk that in certain markets large cap stocks will underperform small and
mid cap stocks.

-------

The following risk is considered significant because of the nature of the
investment involved. It is not considered a major factor in the Fund's
-----
performance because the Fund would not normally commit a large portion of its
assets to such investments. However, the risk is of such a nature that it could
significantly affect the Fund's performance, even if the investments are held in
relatively small amounts:

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

FINANCIAL HIGHLIGHTS -- This is a new Fund. It was not in operation prior
to the date of this prospectus.

<PAGE>

LARGE CAP AGGRESSIVE GROWTH FUND

GOAL AND STRATEGY

This is a non-diversified large cap stock fund with a growth emphasis that seeks
long-term growth in capital.

The Fund invests primarily in the common stocks of large established U.S.
companies that are believed to offer above-average potential for long-term
growth in revenues and earnings.

The manager selects stocks using proprietary company-specific research that
focuses on firms:

. Offering superior earnings growth that is not fully reflected in current
market valuations.

. Having prospective earnings growth rates substantially above that of the S&P
500.

. Exhibiting strong management and superior industry positions and excellent
balance sheets.

The Fund employs aggressive investment strategies and invests most of its asset
in a relatively small number of companies, the 25 most highly regarded stocks
representing at least 65% of the Fund's assets. The manager selects stocks
without regard to any predefined industry or sector selection criteria.

The manager actively trades and adjusts the Fund's holdings to capitalize on
market fluctuations. The manager typically:

. increases investment in favored securities and reduces the number of holdings
in declining markets, and

. decreases investment in favored securities and increases the number of
holdings in rising markets.

The Fund is a non-diversified fund, which means it can take larger positions in
a smaller number of issuers. The Fund normally invests in 35 to 55 stocks, with
at least 65% (usually higher) of its assets in large cap companies. The Fund
normally has 5% or less of its assets in cash and cash equivalents.

The Fund may purchase other types of securities, for example: American
Depository Receipts (ADRs), high quality short-term debt securities, and certain
derivatives (investments whose value is based on indices or other securities).

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

SUBADVISER PAST PERFORMANCE
<S> <C>
ALLIANCE CAPITAL MANAGEMENT L.P. This is a new Fund. It was not in operation prior to the date of
1345 Avenue of the Americas this prospectus.
New York, NY 10105

Managing since 1971
Managed approximately $X BILLION
in assets at end of 1998

FUND MANAGERS
Management by investment team
overseen by:

JOHN H. FOGARTY
- ---------------
Vice president of subadviser
Joined subadviser in 1988
Began career in 1988

ALFRED HARRISON
- ---------------
Vice chairman and Director of
subadviser
Joined subadviser in 1978
Began career in 1962
</TABLE>

12
<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:
-----

Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up
and down in value more than bonds. If the Fund's investments are concentrated
in certain sectors, the Fund's performance could be worse than the overall
market.

Non-Diversified Fund Risk: The Fund's larger position in individual issuers and
in a smaller number of issuers could produce more volatile performance relative
to more diversified funds. The less diversified a fund's holdings are, the more
likely it is that a specific security's poor performance will hurt the fund
significantly.

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "growth" approach carries the risk that in certain markets "growth"
stocks will underperform "value" stocks. Also, the Fund's "large cap" approach
carries the risk that large cap stocks will underperform small cap and mid cap
stocks.

Concentration Risk: The Fund's investment in securities of a smaller number of
issuers could produce more volatile performance relative to funds that invest in
a larger number of issuers. The more concentrated a fund's holdings are, the
more likely it is a specific security's poor performance will hurt the fund
significantly.

-------

The following risk is considered significant because of the nature of the
investment involved. It is not considered a major factor in the Fund's
-----
performance because the Fund would not normally commit a large portion of its
assets to such investments. However, the risk is of such a volatile nature that
it could significantly affect the Fund's performance, even if the investments
are held in relatively small amounts:

-------

The following risk is considered significant because of its potential impact on
the Fund's performance:

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

FINANCIAL HIGHLIGHTS -- This is a new Fund. It was not in operation prior
to the date of this prospectus.

<PAGE>

LARGE/MID CAP VALUE FUND

GOAL AND STRATEGY

This is a large/mid cap stock fund with a value emphasis that seeks long-term
growth in capital.

The Fund invests primarily in a diversified mix of common stocks of large- and
mid-sized U.S. companies that are believed to offer favorable prospects for
increasing dividends and growth in capital.

The manager employs a value approach in selecting stocks, using proprietary
equity research to identify stocks having distinct value characteristics based
on industry-specific valuation criteria.

The manager screens the investable universe for stocks with:

. dividend yields greater than the Russell 1000 Value Index, and

. price/book ratios lower than the Russell 1000 Value Index.

The Fund's assets are allocated to industry-specific sub-portfolios that are
managed by each industry analyst. The manager oversees the Fund to maintain
capitalization and industry weights similar to the Russell 1000 Value Index.

The Fund normally invests in 100 to 120 stocks, with at least 65% (usually
higher) of its assets in large and mid cap companies. The Fund normally has 5%
or less of its assets in cash and cash equivalents.

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

SUBADVISER PAST PERFORMANCE
<S> <C>
WELLINGTON MANAGEMENT COMPANY, LLP This is a new Fund. It was not in operation prior to the date of this
75 State Street prospectus.
Boston, Massachusetts 02109

Managing, with predecessors,
since 1928
Managed approximately $211 billion
of assets at the end of 1998

FUND MANAGERS

DORIS DWYER CHU
- ---------------
Vice President of subadviser
Managed fund since 1999
Joined subadviser in 1998
Partner and portfolio manager at
Grantham,
Mayo, Van Otterloo & Co. (1985 - 1998)

LAURIE A. GABRIEL
- -----------------
Managing Partner of subadviser
Managed fund since 1999
Joined subadviser in 1976
</TABLE>

14
<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:
-----

Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up
and down in value more than bonds. If the Fund's investments are concentrated
in certain sectors, the Fund's performance could be worse than the overall
market.

Small /Mid Cap Stock Risk: The Fund's investment in smaller or mid-sized
companies may be subject to more erratic price movements than investment in
large established companies.

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "value" approach carries the risk that in certain markets "value" stocks
will underperform "growth" stocks. Also, the Fund's "large /mid cap" approach
carries the risk that large /mid cap stocks will underperform small cap stocks.

-------

The following risk is considered significant because of the nature of the
investment involved. It is not considered a major factor in the Fund's
-----
performance because the Fund would not normally commit a large portion of its
assets to such investments. However, the risk is of such a volatile nature that
it could significantly affect the Fund's performance, even if the investments
are held in relatively small amounts:

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

FINANCIAL HIGHLIGHTS -- This is a new Fund. It was not in operation prior to the
date of this prospectus.

<PAGE>

MID CAP BLEND FUND

GOAL AND STRATEGY

This is a mid cap stock fund that seeks long-term growth in capital.

The Fund invests primarily in a diversified mix of common stocks of mid-sized
U.S. companies that are believed to offer:

. favorable prospects for increasing dividends and capital appreciation (i.e.,
"value" companies); and

. above-average potential for growth in revenues and earnings (i.e. "growth"
companies).

The manager selects stocks using a combination of proprietary equity research
and quantitative tools. Stocks are purchased that are undervalued relative to
the stock's history and have improving earnings growth prospects. The Fund is
managed using risk control techniques that maintain risk and industry
characteristics similar to the Russell Mid Cap Index.

The Fund normally invests in 100 to 150 stocks, with at least 65% (usually
higher) of its assets in mid cap companies. The Fund normally has 5% or less of
its assets in cash and cash equivalents.

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

<TABLE>
<CAPTION>
<S> <C>
SUBADVISER PAST PERFORMANCE

INDEPENDENCE INVESTMENT ASSOCIATES, INC. This is a new Fund. It was not in operation prior to the date of this prospectus.
53 State Street
Boston, Massachusetts 02109

Owned by John Hancock
Managing since 1982
Managed approximately $31 billion
in assets at end of 1998

FUND MANAGERS
Management by investment team overseen by:

COREEN S. KRAYSLER, CFA
- -----------------------
Senior Vice President of subadviser
Joined subadviser in 1985
</TABLE>

<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:
-----

Small /Mid Cap Stock Risk: The Fund's investment in smaller or mid-sized
companies may be subject to more erratic price movements than investment in
large established companies.

Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up
and down in value more than bonds. If the Fund's investments are concentrated
in certain sectors, the Fund's performance could be worse than the overall
market.

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "mid cap" approach carries the risk that in certain markets "mid cap"
stocks will underperform "large cap" and "small cap" stocks. Also, the Fund's
"blend" style carries the risk that in certain markets, "blend" styles will
underperform "growth" and "value" styles.

-------

The following risk is considered significant because of the nature of the
investment involved. It is not considered a major factor in the Fund's
-----
performance because the Fund would not normally commit a large portion of its
assets to such investments. However, the risk is of such a volatile nature that
it could significantly affect the Fund's performance, even if the investments
are held in relatively small amounts:

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- This is a new Fund. It was not in operation prior
to the date of this prospectus.

<PAGE>

FUNDAMENTAL MID CAP GROWTH FUND

GOAL AND STRATEGY

This is a mid cap stock fund with a growth emphasis that seeks long-term growth
in capital.

The Fund invests primarily in the common stocks of mid-sized U.S. companies that
are believed to offer above-average potential for growth in revenues and
earnings.

The manager selects stocks using both proprietary equity research and external
consensus earnings forecasts. Stocks are purchased that are believed to offer:

. High rate of sustainable earnings growth of 15% plus;

. revenue growth generated by operating results (unit volume); and

. sustainable revenue growth of 10% plus.

The manager looks for companies with:

. innovative management and strong leadership positions in unique market
niches;

. undiscovered and undervalued emerging growth companies; and,

. new products and services.

The Fund's industry exposures are a result of stock selection as opposed to
predetermined allocations.

The Fund normally invests in 60 to 80 stocks, with at least 65% (usually higher)
of its assets in mid cap companies. The Fund normally has 5% or less of its
assets in cash and cash equivalents.

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

<TABLE>
<CAPTION>
<S> <C>
SUBADVISER PAST PERFORMANCE

IOPPENHEIMER FUNDS, INC. This is a new Fund. It was not in operation prior to the date of this prospectus.
Two World Trade Center
New York, New York, 10048

Managing since 1959
Managed approximately $95 billion
of assets at end of 1998

FUND MANAGERS

BRUCE BARTLETT
- --------------
Senior Vice President of subadviser
Joined subadviser in 1995
Vice President of First of America
Investment Corp. (1986 - 1995)

JAMES FULLERTON TURNER II
- ----------------------
Assistant Vice President of subadviser
Joined subadviser in 1996
Equity Analyst at First of America
Investment Corp. (1994 - 1996)
</TABLE>

<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:
-----
Small /Mid Cap Stock Risk: The Fund's investment in smaller or mid-sized
companies may be subject to more erratic price movements than investment in
large established companies.

Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up
and down in value more than bonds. If the Fund's investments are concentrated
in certain sectors, the Fund's performance could be worse than the overall
market.

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "growth" approach carries the risk that in certain markets "growth"
stocks will underperform "value" stocks. Also, the Fund's "mid cap" approach
carries the risk that mid cap stocks will underperform large cap and small cap
stocks.

-------

The following risk is considered significant because of the nature of the
investment involved. It is not considered a major factor in the Fund's
-----
performance because the Fund would not normally commit a large portion of its
assets to such investments. However, the risk is of such a volatile nature that
it could significantly affect the Fund's performance, even if the investments
are held in relatively small amounts:

-------

The following risk is considered significant because of its potential impact on
the Fund's performance:

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

FINANCIAL HIGHLIGHTS -- This is a new Fund. It was not in operation prior
to the date of this prospectus.

<PAGE>

SMALL/MID CAP CORE FUND

GOAL AND STRATEGY

This is a small/mid cap stock fund that seeks long-term growth in capital.

The Fund invests primarily in a diversified mix of the common stocks of small
and mid-sized U.S. companies that are believed to offer:

. favorable prospects for increasing dividends and capital appreciation (i.e.,
"value" companies); and

. above-average potential for growth in revenues and earnings (i.e. "growth"
companies).

The manager selects stocks using a combination of quantitative techniques and
equity research.

The manager employs an investment process known as CORE, "Computer Optimized,
Research-Enhanced," that employs a proprietary quantitative model. Stocks are
purchased that have strong expected earnings growth and momentum and better
valuation and risk characteristics than the Russell 2500 Index. The Fund is
managed using risk control techniques to maintain risk, style, capitalization
and industry characteristics similar to the Russell 2500 Index.

The Fund normally invests in 200 to 600 stocks, with at least 65% (usually
higher) of the Fund's assets in small cap and mid cap companies. The Fund
normally has 10% or less of its assets in cash and cash equivalents.

In abnormal market conditions, the Fund may take temporary defensive
measures--such as holding unusually large amounts of cash and cash
equivalents--that are inconsistent with the Fund's primary investment strategy.
In taking those measures, the Fund may not achieve its investment goal.

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

<S> <C>
SUBADVISER PAST PERFORMANCE

GOLDMAN SACHS ASSET MANAGEMENT, Because this Fund did not have a full year of operations as of December
A SEPARATE OPERATING DIVISION OF 31, 1998, no year-by-year total returns or average annual total returns
GOLDMAN SACHS AND CO. can be shown for this Fund. However, the Appendix to this prospectus
One New York Plaza contains certain performance information that is relevant to this Fund.
New York, New York 10004 The Appendix starts on page 55.

Managing since 1988
Managed over $195 billion of
assets at end of 1998

FUND MANAGERS

KENT A. CLARK
Managing Director of subadviser
Joined subadviser in 1992

ROBERT C. JONES
Managing Director of subadviser
Joined subadviser in 1989

VICTOR H. PINTER
Vice President of subadviser
Joined subadviser in 1990
</TABLE>

<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:

Small /Mid Cap Stock Risk: The Fund's investment in smaller or mid-sized
companies may be subject to more erratic price movements than investment in
large established companies.

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "small/mid cap" approach carries the risk that in certain markets
small/mid cap stocks will underperform large cap stocks.
-------

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

FINANCIAL HIGHLIGHTS (Selected data for each share interest outstanding
throughout the period indicated)
The following financial highlights have been audited by Ernst & Young LLP.

- --------------------------------------------------------------------------------
Period ended December 31: 1998**
- --------------------------------------------------------------------------------
Net asset value, beginning of period $10.00

Income from investment operations:

Net investment income (loss) --

Net realized and unrealized gain (loss) on investments* (0.98)

Total from investment operations (0.98)

Less distributions:

Distributions from net investment income and capital paid in --

Distributions from net realized gain on investments sold --

Total distributions --

Net asset value, end of period $ 9.02

Total investment return (9.81)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000s omitted)($) $5,015

Ratio of expenses to average net assets (%)*** 1.05%

Ratio of net investment income (loss) to average net assets (%) (0.01)%

Turnover rate (%) 60.51%

<PAGE>

SMALL/MID CAP VALUE FUND

GOAL AND STRATEGY

This is a small/mid cap stock fund with a value emphasis that seeks long-term
growth in capital.

The Fund invests primarily in a diversified mix of the common stocks of small
and mid-sized U.S. companies that are believed to offer favorable prospects for
capital appreciation.

The manager selects stocks using a combination of proprietary quantitative
screening tools and fundamental equity research. The manager selects stocks
that have:

. attractive valuation characteristics, using measures such as low
price/earnings and price/book ratios;

. strong business health, as measured by overall efficiency and profitability
(return on assets and/or equity); and,

. business momentum, defined as a catalyst that the manager believes will
-------------------------
trigger a near-term price increase.

The Fund is broadly diversified by sector. The Fund normally invests in 70 to
150 stocks, with at least 65% (usually higher) of its assets in small and mid
cap companies. The Fund normally has 5% or less of its assets in cash and cash
equivalents.

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

SUBADVISER PAST PERFORMANCE
<S> <C>
THE BOSTON COMPANY ASSET MANAGEMENT, LLC This is a new Fund. It was not in operation prior to the date of this prospectus.
One Boston Place
Boston, Massachusetts 02108

Managing since 1970
Managed approximately $22 billion
of assets at end of 1998

FUND MANAGERS
Management by investment team overseen by:

PETER I. HIGGINS, CFA
- ---------------------
Senior Vice President of subadviser
Managed fund since 1999 (its inception)
Joined subadviser in 1988
</TABLE>

<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:
-----

Small /Mid Cap Stock Risk: The Fund's investment in smaller or mid-sized
companies may be subject to more erratic price movements than investment in
large established companies.

Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up
and down in value more than bonds. If the Fund's investments are concentrated
in certain sectors, the Fund's performance could be worse than the overall
market.

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "value" approach carries the risk that in certain markets "value" stocks
will underperform "growth" stocks. Also, the Fund's "small/mid cap" approach
carries the risk that in certain markets small/mid cap stocks will underperform
large cap stocks.

-------

The following risk is considered significant because of its potential impact on
the Fund's performance:

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

FINANCIAL HIGHLIGHTS -- This is a new Fund. It was not in operation prior
to the date of this prospectus.

<PAGE>

SMALL/MID CAP GROWTH FUND
(Formerly Diversified Mid Cap Growth Fund)

GOAL AND STRATEGY

This is a small/mid cap stock fund with a growth emphasis that seeks long-term
growth in capital.

The Fund invests primarily in the common stocks of small and mid-sized U.S.
companies that are believed to offer above-average potential for growth in
revenues and earnings.

The manager selects stocks using a combination of proprietary quantitative and
qualitative equity research. Quantitative screening seeks to identify a group of
companies with at least three years of operating history that have above-average
growth, financial quality and profitability relative to industry peers. Equity
research seeks to identify individual companies from that group with a higher
potential for long term earnings growth and capital appreciation.

The manager buys companies that seem attractive based on the following criteria,
among others:

. Superior historical earnings growth,

. Prospects for continued above-average growth,

. Attractive valuations,

. Strong market positions,

. Favorable new products, and

. Superior management.

The Fund is broadly diversified by industry sector. The Fund normally invests in
50 to 70 stocks, with at least 65% (usually higher) of its assets in small and
mid cap companies. The Fund normally has 5% or less of its assets in cash and
cash equivalents.

The Fund may purchase other types of securities, for example: American
Depository Receipts (ADRs), and high quality short-term debt securities.

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

<TABLE>
<CAPTION>
SUBADVISER PAST PERFORMANCE
<S> <C>
WELLINGTON MANAGEMENT COMPANY, LLP The graph shows how the fund's total return has varied from year to year, while the table
75 State Street shows performance over time (along with a broad-based market index for reference). This
Boston, Massachusetts 02109 information may help provide an indication of the fund's risks and potential rewards. All
figures assume dividend reinvestment. Past performance does not indicate future results. The
Managing with predecessors, since 1928 performance figures below do not reflect the deduction of fees and charges payable under
Managed approximately $211 billion of the variable contracts. Such fees and charges would cause the investment returns under the
assets at end of 1998 contracts to be less than that shown below.

FUND MANAGER

FRANK V. WISNESKI
Senior Vice President of subadviser
Joined subadviser in 1968

ASSOCIATE FUND MANAGER

JOHN J. HARRINGTON, CFA
Vice President of subadviser
Joined subadviser in 1995
Portfolio Manager at Munder Capital
Management (1991-1994)
</TABLE>

INSERT CHART

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

BEST QUARTER: up 21.59%, fourth quarter 1998 WORST QUARTER: down 21.48%, third
quarter 1998

- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98/(1)/
- --------------------------------------------------------------------------------
Fund Index

1 year 5.61% 17.86%

Life of fund 15.37% 19.55%

INDEX: Russell Midcap(TM) Growth Index

(1) Began operations on May 1, 1994.

NOTE: See the Appendix to this prospectus for further performance information
relevant to this Fund.

24
<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:

Small/Mid Cap Stock Risk: The Fund's investment in smaller or mid-sized
companies may be subject to more erratic price movements than investment in
large established companies.

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "growth" approach carries the risk that in certain markets "growth"
stocks will underperform "value" stocks. Also, the Fund's "small/mid cap"
approach carries the risk that in certain markets small/mid cap stocks will
underperform large cap stocks.

-------

The following risk is considered significant because of its potential impact on
the Fund's performance:

Turnover Risk: In general, the greater the volume of buying and selling by a
fund (i.e., the higher its "turnover rate"), the greater the impact that
brokerage commissions and other transaction costs will have on the fund's
performance. Any turnover rate in excess of 100% is considered relatively high.
The Fund had a high turnover rate in 1998. However, the Fund has undergone a
change in management as of May 1, 1999. The Fund expects to have an unusually
high turnover rate in 1999 because of the change in management and a change in
the Funds investment strategy. These changes will require a restructuring of the
Fund's investments in 1999. Normally, the Fund's turnover rate will be less than
100%.

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

FINANCIAL HIGHLIGHTS (Selected data for each share interest outstanding
throughout the period indicated)
The following financial highlights have been audited by Ernst & Young LLP.
<TABLE>
<CAPTION>

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

Small/Mid Cap Growth Fund (formerly Diversified Mid Cap Growth Portfolio)
Period ended December 31: 1994** 1995 1996 1997 1998
- ------------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 9.94 $ 13.18 $ 16.52 $ 5.39

Income from investment operations:

Net investment income (loss) 0.11 (0.01) 0.02 0.01 (0.02)

Net realized and unrealized gain (loss) on investments* (0.06) 3.58 3.99 0.56 0.88

Total from investment operations 0.05 3.57 4.01 0.57 0.86

Less distributions:

Distributions from net investment income and capital paid in -- (0.01) (0.02) (0.01) --

Distributions from net realized gain on investments sold (0.11) (0.32) (0.65) (1.69) (0.31)

Total distributions $ (0.11) $ (0.33) $ (0.67) $ (1.70) $ (0.31)

Net asset value, end of period $ 9.94 $ 13.18 $ 16.52 $ 15.39 $ 15.94

Total investment return 0.56% 35.96% 30.33% 3.44% 5.61%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000s omitted)($) $ 7,181 $54,486 $194,108 $213,612 $193,332

Ratio of expenses to average net assets (%)*** 1.00% 1.00% 0.84% 0.85% 0.89%

Ratio of net investment income (loss) to average net assets (%) 1.51% (0.11)% 0.18% 0.09% (0.11)%

Turnover rate (%) 26.54% 139.31% 217.84% 331.19% 162.21%

</TABLE>

<PAGE>

SMALL CAP GROWTH FUND

GOAL AND STRATEGY

This is a small cap stock fund with a growth emphasis that seeks long-term
growth in capital.

The Fund invests primarily in a diversified mix of the common stocks of small
U.S. companies that are believed to offer above-average potential for growth in
revenues and earnings.

The manager selects stocks using proprietary equity research. Stocks are
purchased that are expected to have rapid earnings growth that is not yet widely
recognized by the investment community.

The manager looks for companies with:

. demonstrated 20% annual earnings growth over 3 years and similar future growth
expectations;

. dominant market niche or poised to become market leaders; and

. high quality senior management with coherent business strategies.

The Fund is highly diversified by sector and number of individual stocks. The
Fund's sector weightings normally reflect those of the Russell 2000 Growth
Index. The Fund normally invests in 150 to 220 stocks, with at least 65%
(usually higher) of its assets in small cap companies. The Fund normally has 5%
or less of its assets in cash and cash equivalents.

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

SUBADVISER PAST PERFORMANCE
<S> <C>
JOHN HANCOCK ADVISERS, INC. The graph shows how the fund's total return has varied from year to year, while the table shows
101 Huntington Avenue performance over time (along with a broad-based market index for reference). This information may
Boston, Massachusetts 02199 help provide an indication of the fund's risks and potential rewards. All figures assume dividend
reinvestment. Past performance does not indicate future results. The performance figures below do not
Owned by John Hancock reflect the deduction of fees and charges payable under the variable contracts. Such fees and charges
Managing since 1968 would cause the investment returns under the contracts to be less than that shown below.
Managed approximately
$30 billion
of assets at end of 1998

FUND MANAGERS
Management by investment
team overseen by:

BERNICE S. BEHAR
Senior Vice President of
subadviser
Managed fund since 1996
(its inception)
Joined subadviser in 1991
Began career in 1986
</TABLE>

INSERT CHART

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

BEST QUARTER: up 34.18%, fourth quarter 1998 WORST QUARTER: down 21.55%, third
quarter 1998

FUND INDEX
1 year 14.49% 1.23%
Life of fund 10.39% 4.25%

INDEX: Russell 2000(R) Growth Index

(1) Began operations on May 1, 1996.

<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:

Small/Mid Cap Stock Risk: The Fund's investment in smaller or mid-sized
companies may be subject to more erratic price movements than investment in
large established companies.

Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "growth" approach carries the risk that in certain markets "growth"
stocks will underperform "value" stocks. Also, the Fund's "small cap" approach
carries the risk that in certain markets small cap stocks will underperform mid
cap and large cap stocks.

-------

The following risk is considered significant because of its potential impact on
the Fund's performance:

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

FINANCIAL HIGHLIGHTS (Selected data for each share interest outstanding
throughout the period indicated)
The following financial highlights have been audited by Ernst & Young LLP.

- --------------------------------------------------------------------------------
Period ended December 31: 1996** 1997 1998
- --------------------------------------------------------------------------------
Net asset value, beginning of
period $ 10.00 $ 9.93 $ 11.34
Income from investment
operations:
Net investment income (loss) .01 (.02) (0.05)
Net realized and unrealized
gain (loss) on investments* (.06) 1.44 1.70
Total from investment
operations (0.5) 1.42 1.65
Less distributions:
Distributions from net
investment income and capital
paid in (.02) (.01) --
Distributions from net realized
gain on investments sold -- -- --
Total distributions $ (.02) $ (.01) --
Net asset value, end of period $ 9.93 $ 11.34 $ 12.99
Total investment return (.50)% 14.26% 14.49%
Ratios and supplemental data
Net assets, end of period (000s
omitted)($) $20,633 $48,761 $74,849
Ratio of expenses to average
net assets (%)*** 1.00% 1.00% 1.00%
Ratio of net investment income
(loss) to average net assets (%) .12% (.28)% (0.65)%
Turnover rate (%) 50.93% 86.23% 101.16%

<PAGE>

INTERNATIONAL BALANCED FUND

GOAL AND STRATEGY

This is a non-diversified international balanced stock and bond fund that seeks
long-term growth in income and capital.

The Fund invests primarily in a mix of:

. common stocks of large foreign companies within developed markets; and

. foreign bonds with maturities generally greater than 12 months.

The manager makes ongoing decisions about the mix between stocks and bonds. The
Fund has a target mix of 65% stocks and 35% bonds.

The Fund normally invests at least 25% of its assets in bonds which are senior
securities.

The Fund invests in at least 3 different countries, but normally invests in 10
to 20 countries.

The Fund invests its assets primarily in developed countries other than the U.S.
and, to a lesser extent, in emerging markets countries.

The manager selects stocks and bonds using fundamental value analysis to
identify fairly priced investments with long-term sustainable future cash flows.
The manager determines fundamental value by focusing on:

. current market prices relative to fundamental values;

. broad-based indices for stocks, bonds, and markets; and

. economic variables such as productivity, inflation and global competitiveness.

The Fund is non-diversified, which means that it can take larger positions in a
smaller number of issuers. However, the Fund normally invests in 200 to 300
stocks within the stock portion. The Fund normally has 10% or less of its assets
in cash and cash equivalents.

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

SUBADVISER PAST PERFORMANCE
<S> <C>
Brinson Partners, Inc. The graph shows how the fund's total return has varied from year to year, while the table shows
209 South LaSalle Street performance over time (along with a broad-based market index for reference). This information may
Chicago, Illinois 60604 help provide an indication of the fund's risks and potential rewards. All figures assume dividend
reinvestment. Past performance does not indicate future results. The performance figures below do
Managing since 1974 not reflect the deduction of fees and charges payable under the variable contracts. Such fees and
Managed approximately charges would cause the investment returns under the contracts to be less than that shown below.
$163 billion
of assets at end of 1998

FUND MANAGERS
Management by investment team
overseen by:

RICHARD C. CARR, CFA
Managing Director,
Global Equities,
of subadviser
Joined subadviser in 1989
Began career in 1964

Denis S. Karnosky, Ph.D.
Managing Director, Asset
Allocation/Currency,
of subadviser
Joined subadviser in 1989
Began career in 1967

NORMAN D. CUMMING
Managing Director,
Global Fixed Income,
of subadviser's
affiliate UBS Brinson,
Limited
Joined subadviser in 1989
Began career in 1977
</TABLE>

INSERT CHART

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

BEST QUARTER: up 13.06%, fourth quarter 1998 WORST QUARTER: down 4.49%, fourth
quarter 1997

FUND INDEX
1 year 17.99% 18.98%
Life of fund 10.09% 7.87%

INDEX: 65% MSCI World Index (Ex US) (Net of Withholding Taxes from a U.S. Tax
Perspective)/35% Salomon Brothers Non-US Government Bond Index

(1) Began operations on May 1, 1996.

<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:

Foreign Risk: The Fund's foreign securities will pose special risks, due to
limited government regulation, lack of public information, economic, political
and social instability and foreign currency rate fluctuations. Factors such as
lack of liquidity, foreign ownership limits and restrictions on removing
currency also pose special risks. All foreign securities have some degree of
foreign risk. However, to the extent the Fund invests in emerging market
countries, it will have a significantly higher degree of foreign risk than if it
invested exclusively in developed or newly-industrialized countries.

Non-Diversified Fund Risk: The Fund's larger position in foreign government
securities could produce more volatile performance relative to funds with
smaller positions. The less diversified a fund's holdings are, the more likely
it is that a specific security's poor performance will hurt the fund
significantly.

Market Risk: The value of the securities in the Fund may go down in response to
over-all stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up and
down in value more than bonds. If the Fund's investments are concentrated in
certain sectors, the Fund's performance could be worse than the overall market.

Market Allocation Risk: The allocation of the Fund's assets between the major
asset classes (i.e., stocks and bonds) may (1) reduce the Fund's holdings in a
class whose value then increases unexpectedly, or (2) increase the Fund's
holdings in a class just prior to its experiencing a loss of value.

-------

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

FINANCIAL HIGHLIGHTS (Selected data for each share interest outstanding
throughout the period indicated)
The following financial highlights have been audited by Ernst & Young LLP.

- --------------------------------------------------------------------------------
Period ended December 31: 1996** 1997 1998
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 10.39 $ 10.11
Income from investment operations:
Net investment income (loss) .24 .33 0.34
Net realized and unrealized gain (loss)
on investments* .41 (.05) 1.44
Total from investment operations .65 .28 1.78
Less distributions:
Distributions from net investment
income and capital paid in (.24) (.34) (0.35)
Distributions from net realized gain on
investments sold (.02) (.22) (0.42)
Total distributions $ (.26) $ (.56) $ (0.77)
Net asset value, end of period $ 10.39 $ 10.11 $ 11.12
Total investment return 6.73% 2.65% 17.99%
Ratios and supplemental data
Net assets, end of period (000s
omitted)($) $24,098 $25,420 $30,416
Ratio of expenses to average net assets
(%)*** 1.10% 1.10% 1.10%
Ratio of net investment income (loss)
to average net assets (%) 3.59% 3.18% 3.20%
Turnover rate (%) 22.21% 81.04% 103.55%

29
<PAGE>

INTERNATIONAL EQUITY FUND

GOAL AND STRATEGY

This is an international stock fund that seeks long-term growth in capital.

The Fund primarily invests in a diversified mix of common stocks of large
established and medium-sized foreign companies located primarily in developed
countries outside of the U.S..

The manager selects stocks using proprietary equity research that identifies
companies having:

. strong market positions within their industry;

. management with a history of excellence focusing on core businesses;

. above average return on capital within their industry; and

. demonstrated ability to create long-term shareholder value.

The manager determines the allocation among regions and countries using a
combination of qualitative and quantitative inputs, including:

. quantitative models to rank the relative attractiveness of each country
region based on valuation, credit risk and momentum, and

. qualitative assessment of regional portfolio managers to adjust model
results.

The Fund's industry exposures are largely the result of stock selection,
although the Fund maintains broad industry representation. The Fund is managed
using risk control techniques that maintain overall regional diversification.
The Fund may engage in foreign currency transactions for hedging purposes and to
seek to protect against anticipated changes in foreign currency exchange rates.

The Fund invests in at least 3 different countries, but normally invests in 10
to 20 countries. The Fund will invest no more than 10% of its assets in
emerging market stocks.

The Fund normally invests in 120 to 180 stocks and normally has 10 % or less of
its assets in cash and cash equivalents.

The Fund also may purchase other types of securities, for example: American
Depository Receipts (ADRs), Global Depository Receipts (GDRs), European
Depository Receipts (EDRs), U.S. high quality short-term debt securities, and
certain derivatives (investments whose value is based on indices or other
securities).

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

SUBADVISER PAST PERFORMANCE
<S> <C>
GOLDMAN SACHS ASSET This is a new Fund. It was not in operation prior to the date of this
MANAGEMENT. prospectus.
A SEPARATE OPERATING
DIVISION OF GOLDMAN,
SACHS & CO.
One New York Plaza
New York, New York
10004

Managing since 1988
Managed over $195
billion of assets
at end of 1998

FUND MANAGERS
Management by
investment team
overseen by:

SHOGO MAEDA
- -----------
Managing Director of
subadviser
Joined subadviser in
1994
Senior Portfolio
Manager at Nomura
Investment
Management, Inc.
(1987 - 1994)

IVOR H. FARMAN
- --------------
Executive Director of
subadviser
Joined subadviser in
1996
Research Analyst at
Exane (1995-1996)
Research Analyst at
Banque Nationale
de Paris (1993-1995)

SUSAN NOBLE
- -----------
Executive Director of
subadviser
Joined subadviser in
1997
Portfolio Management
Director at
Fleming Investment
Management (1986-1997)
</TABLE>

30
<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:
-----

Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up
and down in value more than bonds. If the Fund's investments are concentrated
in certain sectors, the Fund's performance could be worse than the overall
market.

-------

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

FINANCIAL HIGHLIGHTS -- This is a new Fund. It was not in operation prior to the
date of this prospectus.

<PAGE>

SHORT-TERM BOND FUND

GOAL AND STRATEGY

This is a short-term bond fund that seeks high income consistent with low share
price fluctuation.

The Fund primarily invests in a diversified mix of short-term and
intermediate-term investment grade debt securities including:

. U.S. Treasury and Agency securities;

. U.S. corporate bonds;

. foreign corporate bonds of companies in developed countries (if
dollar-denominated);

. foreign government and agency securities of developed countries (if dollar
denominated);

. mortgage-and asset-backed securities; and

. commercial paper and other short-term debt obligations.

The manager selects bonds using a combination of proprietary research and
quantitative tools. Bonds are purchased that are attractively priced and that
provide cheap, predictable cash flows.

The Fund normally invests:

. mostly in corporate bonds;

. no more than 15% of its assets in bonds that are below investment grade; and

. no more than 25% of its assets in foreign debt securities.

The Fund normally has:

. an average maturity between one and three and a half years;

. an average credit quality rating of "A" or higher; and

. 10% or less of its assets in cash and cash equivalents.

The Fund only invests in securities that are rated at least BB- or Ba3 at time
of purchase.

The Fund may purchase other types of securities, for example: high-quality
short-term debt securities and certain derivatives (investments whose value is
based on indexes or other securities).

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

SUBADVISER PAST PERFORMANCE
<S> <C>
INDEPENDENCE The graph shows how the fund's total return has varied from year to year, while the table shows performance
INVESTMENT over time (along with a broad-based market index for reference). This information may help provide an
ASSOCIATES, INC. indication of the fund's risks and potential rewards. All figures assume dividend reinvestment. Past
53 State Street performance does not indicate future results. The performance figures below do not reflect the deduction of
Boston, Massachusetts fees and charges payable under the variable contracts. Such fees and charges would cause the investment
02109 returns under the contracts to be less than that shown below.

Owned by John Hancock
Managing since 1982
Managed approximately
$31 billion
in assets at end of
1998

FUND MANAGER

JEFFREY B. SAEF
- ---------------------
Senior Vice President
of subadviser
Joined subadviser in
1994

- ---------------------------------------------------------------------------------------------
Year-by-year total returns -- calendar years
- ---------------------------------------------------------------------------------------------
1995 1996 1997 1998

INSERT CHART

- ---------------------------------------------------------------------------------------------
</TABLE>

BEST QUARTER: up 3.87%, second quarter 1995 WORST QUARTER: down 0.39%, first
quarter 1996

INDEX: Merrill Lynch 1-5 Year U.S. Government Bond Index (for periods prior to
May 1, 1998) 65% Lehman Brothers 1-3 Year Corporate Bond Index/35%
Lehman Brothers 1-3 Year Government Bond Index (for periods after May 1,
1998)

/(1)/ Began operations on May 1, 1994.

32
<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:

Interest Rate Risk: When interest rates rise, the Fund's bond yields will
generally rise and the Fund's bond prices will generally fall. When interest
rates fall, the reverse will generally occur. The longer the average remaining
maturity of bonds held by the Fund, the more sensitive the Fund is to interest
rate risk. This Fund has less interest rate risk than an intermediate-term or
long-term bond fund.

-------

The following risks are not considered a major factor in the Fund's performance
because the Fund would not normally commit a large portion of its assets to the
investments involved. However, the risks are of such a nature that they could
significantly affect the Fund's performance, even if the investments are held in
relatively small amounts:

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

FINANCIAL HIGHLIGHTS (Selected data for each share interest outstanding
throughout the period indicated)
The following financial highlights have been audited by Ernst & Young LLP.

- ------------------------------------------------------------------------------------------------------------------
Period ended December 31: 1994** 1995 1996 1997 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $ 9.66 $ 10.23 $ 10.05 $ 10.08
Income from investment operations:
Net investment income (loss) .37 .50 .54 .59 0.61
Net realized and unrealized gain (loss) on investments* (.34) .59 (.16) .03 (0.03)
Total from investment operations .03 1.09 .36 .62 (0.58)
Less distributions:
Distributions from net investment income and
capital paid in (.37) (.50) (.54) (.59) (0.61)
Distributions from net realized gain on
investments sold -- (.02) (.00) -- --
Total distributions $ (.37) $ (.52) $ (.54) $ (.59) $ (0.61)
Net asset value, end of period $ 9.66 $ 10.23 $ 10.05 $ 10.08 $ 10.05
Total investment return .33% 11.49% 3.61% 6.41% 5.82%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted)($) $1,718 $17,911 $58,676 $51,120 $77,194
Ratio of expenses to average net assets (%)*** .75% .75% .75% .57% 0.53%
Ratio of net investment income (loss) to average
net assets (%) 5.82% 5.52% 5.66% 5.67% 6.17%
Turnover rate (%) 11.22% 109.77% 20.68% 108.29% 184.50%
</TABLE>

<PAGE>

BOND INDEX FUND

GOAL AND STRATEGY

This is a bond fund that seeks to track the performance of the Lehman Brothers
Government / Corporate Index.

The manager employs a passive management strategy using quantitative techniques
to select individual securities that provide a representative sample of the
securities in the Index.

If the Fund reaches approximately $50 million in total assets, the manager will
seek to match the performance of the Lehman Brothers Aggregate Bond Index, a
broader market index that also includes mortgage-backed and asset-backed
securities.

Both of these Indexes consist of investment grade securities with maturities
greater than one year and outstanding par values of at least $100 million issued
primarily by:

. the U.S. Treasury and U.S. government agencies and instrumentalities;

. foreign governments and agencies; and

. U.S. and foreign corporations.

The manager selects securities to match, as closely as practical, the Index's
duration, cash flow, sector, credit quality, callability, and other key
performance characteristics. The Fund is normally fully invested.

The Index composition may change from time to time. The manager may keep
securities that no longer meet the Index criteria as long as:

. such "ineligible" securities plus cash and money market instruments are less
than 20% of the Fund's assets; and

. high yield securities are less than 5% of the Fund's assets.

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

SUBADVISER PAST PERFORMANCE
<S> <C>
MELLON BOND ASSOCIATES, LLP Because this Fund did not have a full year of operations as of December 31, 1998,
Pittsburgh, Pennsylvania 15258 no year-by-year total returns or average annual total returns One Mellon Bank Center
can be shown for this Fund. However, the Appendix to this prospectus contains certain
Managing since 1986 performance information that is relevant to this Fund. The Appendix starts on page 55.
Managed approximately $49 billion
of assets at end of 1998

FUND MANAGERS

GREGORY D. CURRAN
- ----------------------------------
Senior Vice President of subadviser
Joined subadviser in 1995
Began career in 1986
Vice President of Salomon Brothers
(1986-1995)

D'ANN LOGANBILL
- --------------------------------
Vice President of subadviser
Joined subadviser in 1997
Began career in 1987
Vice President of Smith Barney
(1994-1997)
</TABLE>

<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:

Index Management Risk: Certain factors such as the following may cause the Fund
to track the Index less closely:

. The securities selected by the manager may not be fully representative of
the Index.

. Transaction expenses of the Fund may result in the Fund's performance being
different than that of the Index.

. The size and timing of the Fund's cash flows may result in the Fund's
performance being different than that of the Index.

Also, index funds like this one will have more difficulty in taking defensive
positions in abnormal market conditions.

-------

Foreign Risk: The Fund's foreign securities will pose special risks, due to
limited government regulation, lack of public information, and economic,
political and social instability. Factors such as lack of liquidity, foreign
ownership limits and restrictions on removing currency also pose special risks.
All foreign securities have some degree of foreign risk. However, to the extent
the Fund invests in emerging market countries, it will have a significantly
higher degree of foreign risk than if it invested exclusively in developed or
newly-industrialized countries.

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

FINANCIAL HIGHLIGHTS (Selected data for each share interest outstanding
throughout the period indicated)
The following financial highlights have been audited by Ernst & Young LLP.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Period ended December 31: 1998**
- --------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 10.00
Income from investment operations:
Net investment income (loss) 0.42
Net realized and unrealized gain
(loss) on investments* 0.29
Total from investment operations 0.71
Less distributions:
Distributions from net investment
income and capital paid in (0.42)
Distributions from net realized gain
on investments sold (0.10)
Total distributions $ (0.52)
Net asset value, end of period $ 10.19
Total investment return 7.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s
omitted)($) $28,001
Ratio of expenses to average net
assets (%)*** 0.40%
Ratio of net investment income
(loss) to average net assets (%) 6.17%
Turnover rate (%) 21.09%
</TABLE>

35
<PAGE>

HIGH YIELD BOND FUND

GOAL AND STRATEGY
This is a high yield bond fund that seeks high current income and growth in
capital.

The Fund invests primarily in a diversified mix of high yield debt securities,
commonly referred to as "junk bonds" (rated BB+/Ba1 or lower and their unrated
equivalents), including:

. corporate bonds, both U.S. and foreign (if dollar-denominated);

. foreign government and agency securities (if dollar-denominated);

. preferred stocks; and

. convertible securities (convertible into common stocks or other equity
interests).

The manager will invest no more than 20% of the Fund's assets in emerging market
countries (with below investment-grade sovereign debt). The Fund normally has 5%
or less of its assets in cash and cash equivalents.

The manager seeks to purchase bonds with stable or improving credit quality
before the market widely perceives the improvement. Purchase and sale decisions
are primarily based upon the investment merits of the particular security.

The manager selects bonds using proprietary research, including:

. quantitative analysis of historical financial data;

. qualitative analysis of a company's future prospects; and

. economic and industry analysis.

The Fund's average maturity depends on security selection decisions rather than
interest rate decisions.

The Fund may purchase other types of securities, for example: equity securities,
high quality debt securities (short-term and otherwise), certain derivatives
(investments whose value is based on indices or other securities), and debt
securities denominated in foreign currencies.

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

SUBADVISER PAST PERFORMANCE
<S> <C>
WELLINGTON MANAGEMENT Because this Fund did not have a full year of
COMPANY, LLP operations as of December 31, 1998, no year-by-
75 State Street year total returns or average annual total
Boston, Massachusetts 02109 returns can be shown for this Fund. However, the
Appendix to this prospectus contains certain
performance information that is relevant to this
Fund. The Appendix starts on page 55.

Managing, with predecessors,
since 1928
Managed approximately $211
billion of assets at end of 1998

FUND MANAGER

RICHARD T. CRAWFORD
- -------------------------------
Vice President of subadviser
Joined subadviser in 1994
Began career in 1991

Manager draws upon the other
members fo the High Yield team,
including:

EARL E. MCEVOY
- -------------------------------
Partner of subadviser
Joined subadviser in 1978
Began career in 1972

CATHERINE A. SMITH
- -------------------------------
Partner of subadviser
Joined subadviser in 1985
Began career in 1983
</TABLE>

36
<PAGE>

MAIN RISKS

The following risks are major factors in the Fund's performance:

High Yield Bond Risk: High yield or junk bonds, defined as bond securities rated
below BBB-/Baa3, may be subject to more volatile or erratic price movements due
to investor sentiment. In a down market, these high yield securities may become
harder to value or to sell at a fair price.

Credit Risk: An issuer of a bond held by the Fund may default on its obligation
to pay interest and repay principal. Also, the credit rating of a bond held by
the fund may be downgraded. In either case, the value of the bond held by the
Fund would fall. All bonds have some credit risk, but in general lower-rated
bonds have higher credit risk.

-------

Prepayment/Call Risk: The Fund's share price or yield could be hurt if interest
rate movements cause the Fund's mortgage-related and callable securities to be
paid off substantially earlier than expected.

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

FINANCIAL HIGHLIGHTS (Selected data for each share interest outstanding
throughout the period indicated)
The following financial highlights have been audited by Ernst & Young LLP.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Period ended December 31: 1998**
- --------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 10.00
Income from investment operations:
Net investment income (loss) 0.46
Net realized and unrealized gain (loss) on investments* (0.76)
Total from investment operations (0.30)
Less distributions:
Distributions from net investment income and capital paid in (0.46)
Distributions from net realized gain on investments sold (0.01)
Total distributions $ (0.47)
Net asset value, end of period $ 9.23
Total investment return (2.98)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted)($) $14,789
Ratio of expenses to average net assets (%)*** 0.90%
Ratio of net investment income (loss) to average net
assets (%) 7.43%
Turnover rate (%) 17.67%
</TABLE>

<PAGE>

YOUR ACCOUNT

INVESTMENTS IN SHARES OF THE FUNDS
Each fund sells its shares directly to separate accounts of John Hancock,
JHVLICO and IPL to fund variable contracts. Each fund also buys back its shares
on redemption by the separate accounts.

Under the variable contracts, a separate account buys or redeems a fund's shares
based on:

. instructions by you and other contractowners to invest or receive back
monies under a contract (such as making a premium payment or surrendering a
contract), and

. the operation of a contract (such as deduction of fees and charges).

The Trust, as law permits, may:

. refuse a buy order if the adviser believes it would disrupt management,

. suspend a fund's offer of shares, or

. suspend a fund's redemption obligation or postpone a fund's payment of
redemption proceeds for more than seven days.

SHARE PRICE
Each fund sells and buys back its shares at the net asset value per share
("NAV") next computed after receipt by a separate account of a contractowner's
instructions.

Each fund calculates its NAV:

. by dividing its net assets by the number of its outstanding shares,

. once daily as of the close of regular trading on the New York Stock
Exchange (generally at 4 p.m. New York time) on each day the Exchange is
open.

Certain funds may hold securities primarily listed on foreign exchanges that
trade on weekends or other days when the Trust does not calculate NAV.
Consequently, NAV may change on days when contractowners will not be able to
instruct a separate account to buy or redeem fund shares.

VALUATION
Each of the funds values securities based on:

. market quotations,

. amortized cost,

. valuations of independent pricing services, or

. fair value determined in accordance with procedures approved by the Trust's
trustees.

A fund may value securities at fair value where, for example:

. market quotations are not readily available, or

. the value of securities has been materially affected after the closing of a
foreign market.

CONFLICTS
The Trust's trustees monitor for possible material irreconcilable conflicts
among separate accounts buying shares of the funds. The Trust's net asset value
could decrease, if the Trust had to sell investment securities to pay redemption
proceeds to a separate account withdrawing because of a conflict.

<PAGE>

FUNDS' EXPENSES, DIVIDENDS AND TAXES

EXPENSES

The advisory fee paid by each of the following funds to the adviser last year
was:

- --------------------------------------------------------------------------------
Funds % of net assets
- --------------------------------------------------------------------------------
Equity Index 0.14%
Small/Mid Cap Growth* 0.75%
Small Cap Growth 0.75%
International Balanced 0.85%
Short-Term Bond 0.30%

* Formerly Diversified Mid Cap Growth

Funds that have not operated for a full year pay fees to the advisor (as a
percentage of net assets) as follows:

. Aggressive Balanced: .675% of first $250 million; .625% of next $250
million; .60% above $500 million.

. Large Cap Value CORE: .75% of first $50 million; .65% of next $150 million;
.60% above $200 million.

. Large Cap Aggressive Growth: 1.00% of first $10 million; .875% of next $10
million; .75% above $20 million.

. Large/Mid Cap Value: .95% of first $25 million; .85% of next $25 million;
.75% of next $50 million; .65% above $100 million.

. Mid Cap Blend: .75% of first $250 million; .70% of next $250 million; .65%
above $500 million.

. Fundamental Mid Cap Growth: .85% of first $50 million; .80% of next $50
million; .75% of next $50 million; .70% above $150 million.

. Small/Mid Cap CORE: .80% of first $50 million; .70% above $50 million.

. Small/Mid Cap Value: .95% of first $100 million; .90% of next $150 million;
.85% above $250 million.

. International Equity: 1.00% of first $50 million; .95% of next $150
million; .90% above $200 million.

. Bond Index: .15% of first $100 million; .13% on next $150 million; .11%
above $250 million.

. High Yield Bond: .65% of first $100 million; .60% on next $100 million;
.50% above $200 million.

The adviser pays subadvisory fees out of its own assets. No fund pays a fee to
its subadviser.The adviser has agreed to limit each fund's annual expenses
(excluding advisory fees and certain other expenses such as brokerage and taxes)
to not more than .10 percent of the fund's average daily net assets.

DIVIDENDS
Each fund automatically reinvests its dividends and distributions in additional
shares of the fund at NAV.

Each fund declares and pays dividends monthly.

Funds generally declare capital gains distributions annually.

TAXES
Each fund must meet investment diversification and other requirements under the
Internal Revenue Code, in order to:

. avoid federal income tax and excise tax, and

. assure the tax-deferred treatment of variable contracts under the Code.

You should read the prospectus for your variable contract for the federal income
tax consequences for contractowners, including the consequences of a fund's
failure to meet Code requirements.

39
<PAGE>

TRUST DETAILS

BUSINESS STRUCTURE The diagram below shows the basic business structure of the
Trust. The Trust's trustees oversee the Trust's investment and business
activities and hire various service providers to carry out the Trust's
operations.

YEAR 2000 COMPLIANCE The adviser and the funds' service providers are taking
steps to address any year 2000-related computer problems. However, there is some
risk that these problems could disrupt the funds' operations or financial
markets generally.

----------------------------------------------
VARIABLE
CONTRACTOWNERS
----------------------------------------------

----------------------------------------------
JOHN HANCOCK,
JHVLICO AND IPL
SEPARATE ACCOUNTS
----------------------------------------------

----------------------------------------------
THE TRUST
Trustees oversee the
Trust's investment and
business activities.
----------------------------------------------

- ------------------------------ ---------------------------------------------
INVESTMENT ADVISER CUSTODIAN
John Hancock Mutual Life State Street Bank and Trust
Insurance Company Company

Manages the Trust's Holds the Trust's assets, settles all Trust
investment and business trades and collects most of the valuation
activities. data required for calculating the Trust's
NAV.
- ------------------------------ ---------------------------------------------

- --------------------------------------------------------------------------------
SUBADVISERS

Alliance Capital Management, LLP John Hancock Advisers, Inc.
The Boston Company Asset Management, LLC Mellon Bond Associates, LLP
Brinson Partners, Inc. Oppenheimer Funds, Inc.
Goldman Sachs Asset Management. State Street Global Advisers
Independence Investment Associates, Inc. Wellington Management Company, LLP

Provide management to various funds.
- --------------------------------------------------------------------------------

<PAGE>

APPENDIX

ADDTIONAL PERFORMANCE INFORMATION
The ''Past Performance'' information shown earlier in this prospectus for
certain of the Funds may not be sufficient for you to make a complete assessment
of the risks and potential rewards of investing in those Funds. The Small/Mid
Cap CORE Fund, the Bond Index Fund, and the High Yield Bond Fund only began
operations on May 1, 1998, while the Small/Mid Cap Growth Fund implemented a
significant change in strategy as of May 1, 1999.

Since each of these Funds has at best a very limited period of relevant
performance history, we have set forth below information for certain similar
accounts that are managed by the Funds' respective subadvisers. Each grouping of
such accounts is referred to as a ''composite.'' In the case of each account
included in a composite, the total management fees and other operating expenses
of the Fund (based upon management fee schedules and allocation rules currently
in effect) have been substituted for the actual fees and expenses (other than
brokerage and other transaction expenses) of the account. Also, except as
specifically noted below, each composite includes all of the investment company
and other accounts of the subadviser that satisfy the following requirements:

. they have been managed with investment objectives, policies, and strategies
substantially similar to those used in managing the Fund, and

. they are of sufficient size that their performance would be considered
relevant to the owner of a variable contract investing in that Fund.

Some of the accounts in the composites were not registered investment companies
and, therefore, were not subject to federal income tax and other legal
requirements applicable to such companies. Had such accounts been subject to
such requirements, their performance could have been adversely affected. The
performance figures in this Appendix do not reflect the deduction of fees and
charges payable under the variable contracts. Such fees and charges would cause
the investment returns under the contacts to be less than that shown below.

The graphs below show how the composite's total return has varied from year to
year, while the tables show performance over time (along with a broad-based
index for reference). All figures assume dividend reinvestment. PAST PERFORMANCE
DOES NOT INDICATE FUTURE RESULTS.

SMALL/MID CAP GROWTH COMPOSITE (Corresponding to Small/Mid Cap Growth Fund)
The Small/Mid Cap Growth Composite is an asset-weighted composite of all
accounts managed using a substantially similar investment strategy. As of
December 31, 1998, the composite included 25 accounts with total assets of $1.4
billion.

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

BEST QUARTER: up 22.52%, fourth quarter 1998 WORST QUARTER: down 15.80%, third
quarter 1998

- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
FUND INDEX
1 year 14.01% 3.10%
3 years 19.94% 10.83%
5 years 18.66% 12.41%

INDEX: Russell 2500(TM) Growth Index

<PAGE>

SMALL/MID CAP CORE COMPOSITE (Corresponding to Small/Mid Cap CORE Fund)
The Small/Mid Cap CORE Composite is an asset-weighted composite of all accounts
managed using a substantially similar investment strategy. As of December 31,
1998, the composite included 3 accounts with total assets of $127 million.

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

* Composite inception April, 1996. 1996 total return is not annualized.

BEST QUARTER: up 15.63%, third quarter 1997 WORST QUARTER: down 20.68%, third
quarter 1998

INDEX: Russell 2500(TM) Index

<PAGE>

GOVERNMENT/CORPORATE BOND INDEX COMPOSITE (Corresponding to Bond Index Fund)
The Government/Corporate Bond Index Composite is an asset-weighted composite of
all fully discretionary accounts (excluding mutual funds) managed using a
substantially similar investment strategy. As of December 31, 1998, the
composite included 6 accounts with total assets of $1.3 billion.

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

BEST QUARTER: up 6.45%, second quarter 1995 WORST QUARTER: down 3.25%%, third
quarter 1994

- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
FUND INDEX
1 year 9.54% 9.47%
3 years 7.25% 7.33%
5 years 7.16% 7.30%

INDEX: Lehman Brothers Government/Corporate Bond Index

43
<PAGE>

HIGH YIELD BOND COMPOSITE (Corresponding to High Yield Bond Fund)
The High Yield Bond Composite is an asset-weighted composite of all fully
discretionary accounts managed using a substantially similar investment
strategy. As of December 31, 1998, the composite included 11 accounts with total
assets of $909 million.

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

BEST QUARTER: up 6.19%, second quarter 1995 WORST QUARTER: down -7.90%, third
quarter 1998

- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
FUND INDEX
1 year (0.09)% 1.87%
3 years 8.04% 8.55%
5 years 8.58% 8.58%

INDEX: Lehman Brothers High Yield Bond Index.

<PAGE>

FOR MORE INFORMATION

<TABLE>

- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
This prospectus should be used Two documents are available that offer To request a free copy of the current
only with a variable contract further information on John annual/semiannual report or
prospectus. Hancock Variable Series Trust I: the SAI, please contact:

ANNUAL/SEMIANNUAL BY MAIL:
REPORT TO SHAREHOLDERS
John Hancock Variable Series Trust I
Includes financial statements, a John Hancock Place
discussion of the market conditions Boston, MA 02117
and investment strategies that
significantly affected performance, and BY PHONE: 1-800-732-5543
the auditors' report (in the annual
report only). Or you may view or obtain these
documents from the SEC:
STATEMENT OF ADDITIONAL
INFORMATION (SAI) IN PERSON: at the SEC's Public
Reference Room in Washington, DC
The SAI contains more detailed
information on all aspects of the BY PHONE: 1-800-SEC-0330
funds.
John Hancock Variable BY MAIL: Public Reference Section
Series Trust I A current SAI has been filed with Securities and Exchange Commission
John Hancock Place the Securities and Exchange Com Washington, DC 20549-6009
Boston, Massachusetts mission and is incorporated by refer (duplicating fee required)
02117 ence into (i.e., is legally a part of)
this prospectus. ON THE INTERNET: www.sec.gov

SEC FILE NUMBER: 811-4490
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

JOHN HANCOCK

VARIABLE SERIES TRUST I

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information is not a prospectus. It is intended
that this Statement of Additional Information be read in conjunction with the
Prospectus of John Hancock Variable Series Trust I, dated ______, 1999. A copy
of the Prospectus may be obtained from John Hancock Variable Series Trust I,
John Hancock Place, P.O. Box 111, Boston, Massachusetts, 02117, telephone number
1-800-REAL LIFE.

This Statement of Additional Information relates to all thirty-one of the
Trust's current Funds.

This Statement of Additional Information is dated ______, 1999.

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S> <C>
RISK FACTORS ...................................................................
Debt Securities ..............................................................
Equity Securities ............................................................
Real Estate ..................................................................
Foreign Securities ...........................................................
Conservative Option and Futures Transactions .................................
More Aggressive Option, Futures, and Derivative Transactions
Risks of Reallocation ........................................................
Risks of Full Investment .....................................................
Non-Diversified Funds ........................................................
CHANGING INVESTMENT OBJECTIVES AND STRATEGIES ..................................
INVESTMENT TECHNIQUES ..........................................................
Temporary Defensive Strategies ...............................................
Use of Options on Securities by the Aggressive Balanced, Equity Index,
Large Cap Value, Large Cap Growth, Large Cap Aggressive Growth,
Large/Mid Cap Value, Mid Cap Value, Fundamental Mid Cap Growth, Mid
Cap Blend, Small Cap Value, and International Opportunities Funds ..........
Other Hedging-Type Strategies by the Aggressive Balanced, Equity
Index, Large Cap Value, Large Cap Growth, Large Cap Aggressive
Growth, Large/Mid Cap Value, Mid Cap Value, Fundamental Mid Cap
Growth, Mid Cap Blend, Small Cap Value, and International
Opportunities Funds ........................................................
Risks of Options and Futures Transactions ....................................
Use of Options and Futures by the Managed, Large Cap Value CORE, Mid
Cap Growth, Small/Mid Cap Growth, Small/MidCap CORE, Small Cap
Growth, Global Equity, International Balanced, International Equity
Index, International Equity, Emerging Markets Equity, Short-Term
Bond, Sovereign Bond, Global Bond, and High Yield Bond Funds ...............
Other Derivative Transactions ................................................
Further Considerations as to Options and Futures Contracts
Short-Term Trading ...........................................................
Foreign Currency Management Strategies .......................................
When Issued Securities and Forward Commitments ...............................
Repurchase Agreements ........................................................
Lending of Fund Securities ...................................................
Mortgage Dollar Rolls and Reverse Repurchase Agreements ......................
TYPES OF INVESTMENT INSTRUMENTS AND RATINGS ....................................
Foreign Securities ...........................................................
Debt Securities Generally ....................................................
High Yield Debt Securities ...................................................
U.S. Government Obligations ..................................................
Other Money Market Securities ................................................
Commercial Paper Ratings .....................................................
Corporate Bond Ratings .......................................................
Rule 144A Securities .........................................................
Standard and Poor's Depository Receipts ......................................
Financial Futures Contracts ..................................................
Options on Financial Futures Contracts .......................................
Interest Rate Options ........................................................
Margin Requirements for Futures and Options ..................................
Stock Index Options ..........................................................
Other Derivative Instruments .................................................
Investment Companies .........................................................
INVESTMENT INDEXES .............................................................
The S&P 500 ..................................................................
The Lehman Brothers Government/Corporate and Aggregate Bond Indexes...........
The MSCI EAFE GDP Index ......................................................
INVESTMENT RESTRICTIONS ........................................................
BOARD OF TRUSTEES AND OFFICERS OF THE TRUST ....................................
INVESTMENT ADVISORY AND OTHER SERVICES .........................................
Investment Management and Operating Expenses .................................
Underwriting and Indemnity Agreement .........................................
Custodian Agreement ..........................................................
Independent Auditors .........................................................
YEAR 2000 PROGRESS .............................................................
FUND TRANSACTIONS AND BROKERAGE ALLOCATION .....................................
THE TRUST'S ORGANIZATION AND SHARES ............................................
VOTING RIGHTS ..................................................................
PURCHASE AND REDEMPTION OF SHARES ..............................................
NET ASSET VALUE ................................................................
TAXES ..........................................................................
CALCULATION OF PERFORMANCE DATA ................................................
Yield and Total Return Information for all Funds Other than the Money
Market Fund ................................................................
Calculation of Yield Quotations of the Money Market Fund .....................
Charges Under Variable Life Insurance and Variable Annuity Policies
ADDITIONAL INFORMATION .........................................................
Legal Matters ................................................................
Reports ......................................................................
Financial Statements .........................................................
</TABLE>

<PAGE>

BUSINESS HISTORY

John Hancock Variable Series Trust I, (the "Trust") is an open-end management
investment company which was incorporated on September 23, 1985, under the laws
of the State of Maryland and was reorganized as a Massachusetts business trust
effective April 29, 1988. See the heading "The Trust's Organization and Shares"
below. The Trust has thirty-one separate Funds, each with a separate series of
shares. Shares of the Trust are currently sold to John Hancock Variable Life
Accounts U, V, and S to fund variable life insurance policies issued by John
Hancock Variable Life Insurance Company ("JHVLICO"); John Hancock Variable
Annuity Accounts U and V to fund variable annuity contracts issued by John
Hancock Mutual Life Insurance Company ("John Hancock"); John Hancock Variable
Annuity Account I to fund variable annuity contracts issued by JHVLICO and John
Hancock Mutual Variable Life Insurance Account UV to fund variable life
insurance policies issued by John Hancock. The Trust intends to sell shares to
IPL-1 to fund variable life insurance policies issued by Investors Partner Life
Insurance Company ("IPL"). It is anticipated that, in the future, Trust shares
may be sold to other separate investment accounts of JHVLICO, John Hancock and
IPL. Each of these separate accounts is hereinafter referred to as a "Separate
Account."

The Trust issues a separate series of shares of beneficial interest for each
Fund. Each share issued with respect to a Fund has a pro rata interest in the
net assets of that Fund. The assets of each Fund are charged with the
liabilities of that Fund and a proportionate share of the general liabilities of
the Trust. Because John Hancock Variable Annuity Accounts U, V, and I; John
Hancock Variable Life Accounts U, V, and S; John Hancock Mutual Variable Life
Insurance Account UV (and, as contemplated, Investors Partner Life Insurance
Company) currently hold all of Trust's shares, those Separate Accounts may be
deemed to control the Trust.

With the exception of the Large Cap Aggressive Growth, Mid Cap Growth and
International Balanced Funds, each of the Funds is a "diversified" Fund within
the meaning of the Investment Company Act of 1940.

The Trust is, in part, a successor to three separate investment accounts of
JHVLICO as well as the six separate accounts of John Hancock described below. On
March 28, 1986, all of the investment assets and related liabilities of the
Variable Life Stock, Bond, and Money Market Accounts were transferred to the
Stock, Bond, and Money Market Funds of the Trust, respectively, in exchange for
shares of these Funds. These transactions were effected simultaneously pursuant
to an Agreement and Plan of Reorganization dated November 5, 1985, entered into
by JHVLICO, the Variable Life Stock, Bond, and Money Market Accounts, and the
Trust.

On February 20, 1987, all of the investment assets and related liabilities of
six Variable Annuity Stock, Bond and Money Market Accounts were transferred to
the Stock, Bond and Money Market Funds of the Trust, respectively, in exchange
for shares of these Funds. These transactions were effected simultaneously
pursuant to an Agreement and Plan of Reorganization dated June 10, 1986, entered
into by John Hancock, the six Variable Annuity Stock, Bond and Money Market
Accounts, and the Trust.

In 1999, the Strategic Bond Fund was renamed the Global Bond Fund; and the
Diversified Mid-Cap Growth Fund was renamed the Small/Mid Cap Growth Fund. In
1998, the Special Opportunities Fund was renamed the Diversified Mid-Cap Growth
Fund; the International Equities Fund was renamed the International Equity Index
Fund; and the Short-Term U.S. Government Fund was renamed the Short-Term Bond
Fund. In 1996, the Stock Fund was renamed the Growth & Income Fund, and, in
1995, the Bond Fund was renamed the Sovereign Bond Fund; in 1995, the name of
the current International Equity Index Fund was changed from the "International
Fund" to the "International Equities Fund." In 1994, the name of that Fund had
been changed from the "Global Fund."

<PAGE>

RISK FACTORS

The difference in objectives, policies, and practices of the various Funds can
be expected to affect each Fund's investment return as well as the degree of
risk to which each Fund is subject. The greatest risks (but not all the risks)
to which one or more of the Funds of the Trust may be subject are disclosed
below.

DEBT SECURITIES

The Money Market Fund invests exclusively in money market instruments; all the
other Funds may invest in these instruments to some extent. Because of their
nature, money market instruments generally do not carry significant risks of
loss. The following Funds are primarily invested in non-money market debt
securities: the Short-Term Bond, Bond Index, Sovereign Bond, Global Bond, and
High Yield Bond. The Managed and International Balanced Funds can vary their
holdings of these securities within a broad range. All the other Funds (except
the Money Market Fund) may invest in these securities to some extent.

At the time the Money Market Fund acquires its investments, they will be rated
(or issued by an issuer that is rated with respect to a comparable class of
short-term debt obligations) in one of the two highest rating categories for
short-term debt obligations assigned by at least two nationally recognized
rating organizations (or one rating organization if the obligation was rated by
only one such organization). These high quality securities are divided into
"first tier" and "second tier" securities. First tier securities have received
the highest rating from at least two rating organizations while second tier
securities have received ratings within the two highest categories from at least
two rating agencies, but do not qualify as first tier securities. The Fund may
also purchase obligations that are not rated, but are determined by John
Hancock, based on procedures adopted by the Trust's Board of Trustees, to be of
comparable quality to rated first or second tier securities. The Fund may not
purchase any second tier security if, as a result of its purchase (a) more than
5% of its total assets would be invested in second tier securities or (b) more
than 1% of its total assets or $1 million (whichever is greater) would be
invested in the second tier securities of a single issuer.

Interest Rate Risk: In general, debt securities having longer maturities than
money market instruments have exposure to interest rate risk. Changes in
generally prevailing market interest rates alter a debt security's market value
and introduce volatility into the rate of return of a Fund that invests in such
securities. When prevailing interest rates go up, the market value of debt
securities tends to go down and vice versa. This sensitivity of the market value
of a debt security to changes in interest rates is generally related to the
duration of the instrument. The market value of a shorter-term fixed income
security is generally less sensitive to interest rate moves than that of a
longer-term security. For example, the interest rate risk of the Short-Term Bond
Fund, although moderate, is below that of traditional intermediate or long-term
bond portfolios.

Credit Risk: The value of a fixed income security may also change as a result
of market perceptions regarding its default or credit risk, defined as the
ability of the borrower to repay its debts. The market value of a fixed income
security can fall when the market perceives the borrower to be less credit
worthy. Conversely, the market value of a fixed income security can increase due
to its borrower being perceived as financially stronger. All Funds that invest
in non-money market debt securities may have some exposure to credit risk.

Risk of Lower-Quality Instruments: High-yield/high-risk bonds (or "junk"
bonds) are debt securities rated below investment grade as defined below under
"Sovereign Bond Fund Securities." The value of lower rated securities generally
is more subject to credit risk than is the case for higher rated securities, and
their values tend to respond more to changes in generally prevailing interest
rates. Issuers of high yield/high risk securities are typically in weak
financial health and their ability to pay back principal and interest on the
bonds they issue is uncertain. Some of these issuers may be in default or
bankruptcy. Compared with issuers of investment-grade bonds, they are more
likely to encounter financial difficulties and to be materially affected by
these difficulties when they do encounter them. Junk bond markets may react
strongly to adverse news about an issuer or the

<PAGE>

economy, or to the perception or expectations of adverse news. These debt
securities may also have less liquid markets than higher rated securities.

Investments in companies issuing high-yield securities are considered to be
more speculative than higher quality instruments. As such, these securities
typically pay a higher interest rate than investment grade securities. The High
Yield Bond Fund intends to invest primarily in these securities. The other Funds
most likely to invest a significant portion of their assets in high-yield
securities are the Managed, Aggressive Balanced, Short-Term Bond, Sovereign
Bond, and Global Bond Funds. In contrast, the Bond Index Fund will not invest in
debt securities that are not at least investment grade at the time of purchase.
However, all Funds (other than the Money Market Fund) that invest in debt
securities may at times have some exposure to high yield securities.

Although not customarily referred to as "high yield" securities or "junk
bonds," debt securities that fall in the lowest rating within the investment
grade category are considered medium grade securities that have some speculative
characteristics. Accordingly, to a lesser degree, they may present the same
risks discussed above with respect to high yield securities.

Prepayment Risk: Prepayment risk is the risk that a borrower of a debt
security repays the debt before it is due. Such prepayment is most likely to
occur when interest rates have declined and a borrower can refinance the debt at
a lower interest rate level. Most mortgage backed, asset backed, other public
bond debt securities and 144A securities are exposed to this risk. U.S.
Government securities have minimal exposure to this risk. Issuers of public debt
securities may be required to pay a penalty in order to exercise this prepayment
right. Generally, a Fund reinvests the proceeds resulting from prepayments in a
lower yielding instrument. This results in a decrease in the Fund's current
yield. The values of securities that are subject to prepayment risk also tend to
increase less in response to declining interest rates and decrease more in
response to increasing interest rates than would the value of otherwise similar
securities that do not have prepayment features. The Funds most likely to invest
a significant position of their assets in debt securities with prepayment
features are Managed, Aggressive Balanced, Real Estate Equity, International
Balanced, Short-Term Bond, Bond Index, Sovereign Bond, Global Bond, and
High-Yield Bond Funds. However, all Funds that invest in debt securities (other
than the Money Market Fund) may at times have some exposure to prepayment risk.

Risks of "Zero Coupon" Instruments: All of the Funds may, in varying degrees,
invest in debt instruments that provide for payment of interest at the maturity
date of the instrument (or pay interest in the form of additional securities),
rather than paying interest in cash periodically over the life of the
instrument. The values of such instruments tend to respond more to changes in
interest rates than do otherwise comparable debt obligations that provide for
periodic interest payments. The Funds most likely to invest a significant amount
of their assets in instruments that are subject to this volatility risk are the
Managed, Aggressive Balanced, Real Estate Equity, International Balanced,
Short-Term Bond, Bond Index, Sovereign Bond, Global Bond, and High-Yield Bond
Funds. However, all Funds that invest in debt securities may at times have some
exposure to this risk.

EQUITY SECURITIES

All of the Funds intend to invest to some degree in common stock or other
equity securities, except for the Short-Term Bond, Bond Index, Sovereign Bond,
Strategic Bond, and Money Market Funds. All of the Funds that invest in equity
securities expect to make such securities their primary investment (except for
the Managed and International Balanced Funds), which may nevertheless do so in
the discretion of its sub-investment manager). The Managed Fund, Aggressive
Balanced and International Balanced Fund, though investing in equity securities,
expect under normal conditions also to have a substantial amount of their assets
invested in debt obligations.

Equity Risk: Investments in common stock or other equity securities may offer
a higher rate of return than those in money market instruments and longer term
debt securities. However, the risks associated with investments in equity
securities may also be higher, because the investment performance of equity
securities depends upon

6
<PAGE>

factors which are difficult to predict. Such factors include overall market
price trends for securities and operating results of particular issuers. The
fundamental risk associated with any equity portfolio is the risk that the value
of the investments it holds might decrease in value. Equity security values may
fluctuate in response to the activities of an individual company or in response
to general market, interest rate, and/or economic conditions. Historically,
equity securities have provided greater long-term returns and have entailed
greater short-term risks than other investment choices.

Market Capitalization Risk: Another indication of the relative risk of a
common stock investment is defined by the size of the company, which is
typically referred to as its market capitalization. Market capitalization is
computed by multiplying current market price of a share of the company's stock
by the total number of its shares outstanding. Investing in larger
capitalization companies generally involves a lesser degree of risk than
investing in smaller capitalization companies.

Three capitalization levels will be used by the Trust: large, medium ("mid"),
and small. Each of these capitalization levels will be defined by reference to
the Russell 3000 Index. The Russell 3000 Index is a broad market index and is
representative of the U.S. stock markets with a total capitalization of $11.2
trillion at the end of 1998. The Russell 3000 Index is a service mark of Frank
Russell Company, which does not sponsor and is not in any way affiliated with
the Trust. Inclusion in the index in no way implies an opinion as to its
attractiveness or appropriateness as an investment.

. Large Cap: Companies having a capitalization within the range of the 300
largest companies in the Russell 3000 Index will be considered to be large
capitalization ("large cap") companies. At the end of 1998, each of the
largest 300 companies in the Russell 3000 Index had a capitalization greater
than $6.6 billion.

. Mid Cap: Companies having a capitalization within the range of the 250 to 1000
largest companies in the Russell 3000 Index will be considered to be "mid
cap." At the end of 1998, such mid cap companies had capitalizations ranging
from $1.3 billion to $8.1 billion.

. Small Cap: Companies having a capitalization within the range of the remaining
companies in the Russell 3000 Index will be considered to be small
capitalization ("small cap") companies. At the end of 1998, none of these
smallest companies in the Russell 3000 Index had a market capitalization of
more than $1.3 billion.

The above definitions for large cap, mid cap and small cap are adjusted at the
end of each calendar quarter to reflect changes in the market capitalization of
the Russell 3000 Index.

The equity securities of the Managed, Growth & Income, Aggressive Balanced,
Equity Index, Large Cap Value, Large Cap CORE, Large Cap Growth, Large Cap
Aggressive Growth, Global Equity, International Balanced, International Equity
Index, and International Opportunities Funds are generally expected to represent
primarily companies that qualify as large cap issuers. These Funds also may
invest in the equity securities of companies that qualify as small and mid cap
issuers.

The equity securities of the Large/Mid Cap value and International Equity
Funds are generally expected to represent primarily large and mid cap issuers.
These Funds also may invest in the equity securities of companies that qualify
as small cap issuers.

The equity securities of the Mid Cap Value, Mid Cap Growth, Fundamental Mid
Cap Growth, and Mid Cap Blend Funds are generally expected to represent
primarily companies that qualify as mid cap issuers. These Funds also may invest
in the equity securities of companies that qualify as small or large cap
issuers.

The equity securities of the Small/Mid Cap Value, Small/Mid Cap Growth, and
Small/Mid Cap CORE Funds are generally expected to represent companies that are
small cap and mid cap issuers. These Funds also may invest in the equity
securities of companies that qualify as large cap issuers.

7
<PAGE>

Small Cap Risk: The very nature of investing in the equity securities of
smaller companies involves greater risks and potential rewards than investing in
larger, more established companies. Emerging growth companies, in particular,
often have limited product lines, markets or financial resources, and they may
depend upon a small group of inexperienced managers. Investments in such
companies can be both more volatile and more speculative. These securities may
have limited marketability and are subject to more abrupt or erratic market
movements than securities of larger companies or the market in general.

The Small Cap Value and Small Cap Growth Funds are generally expected to
invest primarily in equity securities of companies that qualify as small cap
issuers. Although these Funds also may invest significant amounts in the equity
securities of companies that qualify as mid cap issuers, it is expected that
they would only rarely invest in the equity securities of companies that qualify
only as large cap issuers.

The Emerging Markets Equity Fund has broad latitude to invest in companies of
any size.

The Real Estate Equity Fund invests in real estate equity securities that have
historically been primarily mid cap, but may invest in small cap or large cap
equity securities.

REAL ESTATE

The Real Estate Equity Fund may invest in companies with activities related to
the real estate industry, such as mortgage real estate investment trusts which
make construction, development and long-term mortgage loans; financial
institutions, including thrift institutions and mortgage banking companies,
which originate or service mortgage loans; manufacturers and distributors of
building supplies, manufactured housing and mobile homes; and hotel companies,
entertainment companies, retailers, railroads and other companies engaged in
non-real estate businesses but whose real estate holdings are significant in
relation to the market value of their common stock.

The securities purchased will be principally common stocks (and securities
convertible into or with rights to purchase common stocks) but a portion of the
Fund may be invested in preferred stock, in commercial mortgage securities (debt
obligations secured by commercial property) and in collateralized mortgage
obligations (mortgage pass-through securities secured by commercial mortgage
pools) which will primarily be of investment grade quality as defined below
under "Types of Investment Instruments and Ratings". The Fund may also invest in
master limited partnerships from time to time.

Investments in the Real Estate Equity Fund will be affected by risks related
to the direct ownership of real estate, as well as by market risks due to
changes in interest rates and by the overall volatility of the equities markets.
The market value of shares in equity real estate investment trusts and
commercial property companies in particular is heavily dependent upon the value
of their underlying properties. Overbuilding, declines in local or regional
economic conditions, financial difficulties on the part of major tenants and
increases in real estate taxes and operating expenses all could decrease the
value of the real estate investments. In addition to the Real Estate Fund, all
of the other Funds (except for the Money Market Fund) may have some exposure to
real estate risks through investments in companies engaged in real estate
related businesses or investments in debt instruments secured by real estate.

FOREIGN SECURITIES

The following Funds invest primarily in foreign securities: the International
Balanced, International Equity Index, International Equity, International
Opportunities, Global Equity, Emerging Markets Equity, and Global Bond Funds.
The Managed, Short-Term Bond, Bond Index, Sovereign Bond, and High-Yield Bond
Funds can vary their holdings of these securities within a broad range. All the
other Funds can invest in these securities to some extent. The Emerging Markets
Equity Fund invests primarily in developing countries commonly known as
"emerging markets." To a lesser extent, the Global Equity, International
Balanced, International Equity Index,

<PAGE>

International Equity, International Opportunities, Bond Index, Global Bond,
Sovereign Bond, and High-Yield Bond Funds may also invest in developing
countries commonly known as "emerging markets".

Currency Risk: Funds that invest in foreign securities typically buy the local
currency when they acquire foreign securities and sell the local currency when
they dispose of these securities. As long as Funds hold a security denominated
or quoted in a foreign currency, the security's value will be affected by the
value of the local currency relative to that of the U.S. dollar. In other words,
when Funds sell a foreign security, the security's value may be worth more or
less in U.S. dollars. Currency risk may be greater in emerging markets.
Strategies that some Funds may use to manage their currency exposure also
present certain risks.

Currency Management Risk: These strategies include use of forward currency
contracts, currency futures contracts and options thereon, options on
currencies, and currency derivative contracts known in the trade as "swaps,"
"caps," "floors" or "collars." These instruments may be used to facilitate
settlement of transactions in foreign securities and also to adjust a Trust's
exposure to various currencies. Even where intended simply to reduce a Fund's
risks of exposure to currencies other than U.S. dollars, there is no guarantee
that a Fund will not suffer losses on or otherwise be disadvantaged by these
transactions.

In general, the more foreign securities a given Fund invests in, the greater
its currency management activities are likely to be. Also, the Managed,
Aggressive Balanced, Mid Cap Growth, Global Equity, International Balanced,
International Equity Index, International Equity, International Opportunities,
Emerging Markets Equity, Global Bond, International Opportunities, Emerging
Markets Equity, and Global Bond Funds may use certain of these same types of
instruments in currency management strategies that expose those Funds to
currencies other than the U.S. dollar. Although this would not be done for the
purpose of "leveraging" the Fund's overall exposure to fluctuations in currency
values, such strategies could expose those Funds to greater risks of loss and
greater volatility than they otherwise would experience.

Political and Economic Risk: Foreign securities are subject to heightened
political and economic risks, particularly in underdeveloped or developing
countries, which may have relatively unstable governments and economies based on
only a few industries. Foreign governments may take over the assets or
operations of a company, may impose additional taxes, or may place limits on the
removal of the Fund's assets from that country. However, investments in foreign
securities also offer the opportunity to diversify equity holdings and to invest
in economies whose growth may outpace that of the United States.

Regulatory Risk: Generally, there is less government supervision of foreign
markets. Foreign issuers generally are not subject to uniform accounting,
auditing, and financial reporting standards and practices applicable to domestic
issuers. There may be less publicly available information about foreign issuers
than domestic issuers. These risks may be greater in emerging markets.

Market Risk: Foreign securities markets, particularly those of underdeveloped
or developing countries, may be less liquid and more volatile than domestic
markets. Certain markets may require payments for securities before delivery and
delays may be encountered in settling securities transactions. In some foreign
markets, there may not be protection against failures by other parties to
complete transactions. There may be limited legal recourse against an issuer in
the event of a default on a debt instrument. Administrative problems and delays
may result from international action such as the creation of a unified "Euro"
currency for several European nations.

Transaction Costs: Transaction costs of buying and selling foreign securities,
including brokerage, tax, and custody costs, are generally higher than those
involved in domestic transactions.

CONSERVATIVE OPTION AND FUTURES TRANSACTIONS

All of the Funds, except Growth & Income, Real Estate Equity, Bond Index and
Money Market, can engage in certain relatively conservative strategies involving
financial futures contracts, options on such futures contracts,

<PAGE>

and options on securities. However, if the Fund manager's judgments prove
incorrect, even such relatively conservative transactions can negatively affect
the Fund's performance.

MORE AGGRESSIVE OPTION, FUTURES, AND DERIVATIVE TRANSACTIONS

Certain Funds can enter into options and futures transactions that are more
speculative than, are not subject to the same limits as, or are otherwise more
risky than the transactions mentioned in the immediately preceding paragraph.
These are the Managed, Large Cap Value CORE, Mid Cap Growth, Small/Mid Cap CORE,
Small Cap Growth, Global Equity, International Balanced, International Equity
Index, International Equity, Emerging Markets Equity, Short-Term Bond, Sovereign
Bond, Global Bond, and High Yield Bond Funds. Also, the Global Equity,
International Balanced, International Equity Index, International Equity,
Emerging Markets Equity, Global Bond, and High Yield Bond Funds may enter into
transactions involving so-called "swaps," "caps," "floors" and "collars" based
on interest rates, currencies, or financial indexes. Again, these "derivative"
transactions expose these Funds to risks that the other Funds are not subject
to.

RISKS OF REALLOCATION

The continual reallocation of assets among the major asset classes (e.g.,
stocks, bonds, and cash) involves the risk that the investment manager may
reduce the Fund's holdings in an asset class whose value increases unexpectedly,
or may increase the Fund's holdings in an asset class just prior to it
experiencing a loss of value. The Managed, Aggressive Balanced and International
Balanced Funds tend to exercise broad discretion in reallocating assets across
asset classes.

The Global Bond and Global Equity Funds intend to exercise discretion to
reallocate assets across domestic and international asset classes. All of the
other Funds, with the exception of the Money Market Fund, generally allow the
sub-investment manager some latitude to allocate across asset classes.
Nevertheless, this latitude is expected to be exercised to a lesser degree than
in the case of the Managed, Aggressive Balanced, and International Balanced
Funds.

RISKS OF FULL INVESTMENT

The Equity Index, International Equity Index, and Bond Index Funds expect to
invest substantially all of their assets in equity or debt securities within
their investment objectives and policies at all times. Accordingly, these Funds
may carry more risk in times of declining markets than Funds 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 strategies. Except for the Money Market Fund,
all of the Funds have authority to assume such a defensive position, and they
may or may not do so, in the discretion of the sub-investment managers. However,
the Equity Index, International Equity Index, and Bond Index Funds are less
likely to assume such a defensive position than any of such other Funds. In any
event, there can be no assurance that the transaction costs and lost investment
opportunities will not outweigh any benefits to a Fund that attempts to adopt a
defensive strategy.

NON-DIVERSIFIED FUNDS

The Large Cap Aggressive Growth, Mid Cap Growth and International Balanced
Funds are non-diversified Funds. A "non-diversified" Fund has the ability to
take larger positions in a smaller number of issuers than "diversified" Funds.
Because the appreciation or depreciation of a single security may have a greater
impact on the net asset value of a non-diversified Fund, its share price can be
expected to fluctuate more than a comparable diversified Fund. Non-diversified
Funds are less restricted in the extent to which they may invest more than 5% of
their assets in any issuer or purchase more than 10% of the voting securities of
any issuer. Because a relatively high percentage of a non-diversified Fund's
assets may be invested in the obligations of a limited number of issuers, the
value of that Fund's shares may be more susceptible to any single economic,
political, or regulatory

<PAGE>

event, and to credit and market risks associated with a single issuer, than
would the shares of a diversified Fund. Non-diversified Funds, like the other
Funds, are subject to certain federal income tax law requirements that limit the
amounts invested in a single issuer or in a small group of issuers. See "Taxes"
below.

CHANGING INVESTMENT OBJECTIVES AND STRATEGIES

The Funds' investment objectives and strategies may in general be changed
without the approval of shareholders.

<PAGE>

INVESTMENT TECHNIQUES

TEMPORARY DEFENSIVE STRATEGIES

All of the Funds, except the Money Market, may (but are not required to) adopt
a defensive investment posture by reallocating some or all of their assets in a
manner different from that contemplated by their primary investment objective
and strategies.

Most of the Funds are not limited as to the types of investments they could
use temporarily for defensive purposes. Thus, for example, a small cap equity
Fund might temporarily invest in stocks of larger cap companies or in high
quality, short-term debt securities. A bond Fund might shorten maturities or
tighten its investment quality parameters. An international Fund might, for
example, limit the countries it would invest in or temporarily invest only in
high quality, short-term debt securities in the United States. Several Funds are
subject to more specific requirements, however.

USE OF OPTIONS ON SECURITIES BY THE AGGRESSIVE BALANCED, EQUITY INDEX, LARGE
CAP VALUE, LARGE CAP GROWTH, LARGE CAP AGGRESSIVE GROWTH, LARGE/MID CAP VALUE,
MID CAP VALUE, FUNDAMENTAL MID CAP GROWTH, MID CAP BLEND, SMALL CAP VALUE, AND
INTERNATIONAL OPPORTUNITIES FUNDS

Writing Exchange-Traded Covered Call Options. These Funds may write "covered"
call options on national securities exchanges. In such transactions the Fund
receives an option "premium" in return for which it agrees to sell specific
securities held in its portfolio for a specified "exercise" price at any time
prior to the expiration period of the option. Although the premium represents
income to the Fund, the Fund in effect foregoes the benefit of any appreciation
in the price of the security in excess of the exercise price during the option
period.

Purchasing Exchange-Traded Protective Put Options. These Funds also may
purchase "protective" put options on national securities exchanges. In such
transactions, the Fund pays a "premium" for the right to sell particular
securities held by it for a specified "exercise" price at any time prior to the
expiration of the option period. If, over such period, the market value of such
underlying securities remains above the exercise price, the Fund will, in
effect, lose the premium it has paid. The Fund, however, avoids the risk of loss
on the underlying securities, to the extent that the market value of the
underlying security falls below the exercise price of the put option.

Liquidity Risk. These Funds intend to write and purchase options only if
adequate liquidity exists. If for any reason a Fund cannot, however, close out
its open option position when deemed advisable, the Fund's investment
performance could be adversely affected.

OTHER HEDGING-TYPE STRATEGIES BY THE AGGRESSIVE BALANCED, EQUITY INDEX, LARGE
CAP VALUE, LARGE CAP GROWTH, LARGE CAP AGGRESSIVE GROWTH, LARGE/MID CAP VALUE,
MID CAP VALUE, FUNDAMENTAL MID CAP GROWTH, MID CAP BLEND, SMALL CAP VALUE, AND
INTERNATIONAL OPPORTUNITIES FUNDS

These Funds may use exchange-traded financial futures contracts thereon, and
they also may purchase exchange-traded put or call options on stock indexes. All
of these Funds (except the Equity Index Fund) may use these instruments as a
hedge to protect against possible changes in interest rates and stock prices.
For example, during a market decline, the selling of the appropriate futures
contract or the purchase of the appropriate put option could enable a Fund to
retain securities held in its portfolio, while avoiding part or all of any loss
resulting from a decline in their value. Outright sales of such securities may
not be advantageous at that time, for example, because (in the case of debt
instruments) the proceeds would have to be invested in lower-yielding,
shorter-term instruments. Also, with respect to both debt and equity securities
held by a Fund, it may be difficult to

<PAGE>

liquidate positions quickly when a market decline is anticipated. Similarly, it
may be difficult to re-establish such positions quickly when the decline is over
or if the decline fails to materialize. These difficulties can be reduced by,
for example, selling the appropriate futures contracts when a decline is
anticipated and closing out the futures position when such anticipations
changes.

Similarly, purchasing futures contracts and call options would enable a Fund
to take the approximate economic equivalent of a substantial position in bonds
or equity securities more quickly or economically than may be possible through
direct purchases of debt or equity instruments. Thus, the following Funds may
purchase and sell stock index futures and may purchase options on such futures
contracts or on stock indexes to maintain market exposure and manage cash flows:
Aggressive Balanced, Equity Index, Large Cap Aggressive Growth, Large/Mid Cap
Value, Fundamental Mid Cap Growth, and Mid Cap Blend.

Financial Futures Contracts. Financial futures contracts consist of interest
rate futures contracts, stock index futures contracts, and currency futures
contracts. An interest rate futures contract is a contract to buy or sell
specified debt securities at a future time for a fixed price. A stock index
futures contract is similar in economic effect, except that rather than being
based on specified debt securities, it is based on a specified index of stocks.
A currency futures contract is a contract to buy or sell a specified currency at
a future time for a fixed price.

To hedge against the possibility that increases in interest rates may
adversely affect the market values of debt securities held by them, these Funds
(other than the Equity Index Fund) may enter into interest rate futures sale
contracts. Similarly, to hedge against the possibility that interest rates or
other factors may result in a general decline in prices of equity securities of
a type owned by them, these Funds may sell stock index futures contracts.
Assuming that any decline in the securities being hedged is accompanied by a
decline in the stock index or debt instrument chosen, the futures sale contracts
on that index or instrument may generate gains which can wholly or partially
offset any decline in the value of the Fund securities which have been hedged.

If they wish to hedge against the possibility of lower interest rates or
increases in equity prices, these Funds (other than the Equity Index Fund) may
purchase financial futures contracts. These Funds may purchase futures contracts
only when (a) they intend to purchase securities or (in the case of the
Aggressive Balanced, Equity Index, Large Cap Aggressive Growth, Large/Mid Cap
Value, Fundamental Mid Cap Growth, and Mid Cap Blend Funds) wish to establish or
maintain market exposure to securities that the Fund would be authorized to
purchase and (b) the values of such securities are expected to change by
approximately the same amount as the value of the futures contracts used to
hedge them. When an increase in the price of the securities is matched by a
similar increase in the value of the financial futures contracts, then the gains
so generated will achieve the Fund's objective for the hedge transaction.

Certain of these Funds may use foreign currency futures contracts to manage
their exposure to foreign currencies. Foreign currency futures contracts could
be used by a Fund for this purpose in any manner and to the extent that such
Fund is authorized to use forward currency contracts as described under "Foreign
Currency Management Strategies" below.

Options on Futures Contracts and on Stock Indexes. These Funds also may
purchase options on appropriate financial futures contracts and stock indexes
for any purpose and to the extent that it is authorized to use the financial
futures contracts described above. An option on a financial futures contract
gives the purchaser the right to assume a position in the underlying futures
contract, and therefore can serve the same hedging function as owning the
futures contract directly. Purchase of an option on a stock index has a very
similar economic effect.

The purchase of a put or call option entails the payment by a Fund of a
non-refundable option premium. The use of options for hedging purposes is in
this sense more costly to the Fund than the purchase of futures contracts
directly. Nevertheless, if a Fund purchases an option, the maximum loss it can
suffer is the option premium plus commission costs. The potential loss on a
futures contract transaction is not so limited, because the Fund would be

<PAGE>

obligated, as the case may be, to purchase or sell the full amount of the
securities or index amount on which the futures contract is based.

Limitations. None of the Equity Index, Large Cap Value, Large Cap Growth, Mid
Cap Value, Small Cap Value, or International Opportunities Funds will enter into
any financial futures contract or purchase any option thereon, if, immediately
thereafter, the total amount of its assets required by commodities exchanges to
be on deposit as margin to secure its obligations under futures contracts, plus
the amount of premiums paid by the Fund for outstanding options to purchase
futures contracts, exceeds 5% of the market value of the Fund's total assets.
For more information about margin deposits, see "Financial Futures Contracts"
below.

None of the Aggressive Balanced, Large Cap Aggressive Growth, Large/Mid Cap
Value, Fundamental Mid Cap Growth, Mid Cap Blend, or Small/Mid Cap Value Funds
may purchase, sell or write futures contracts or options other than for
"bonafide" hedging purposes (as defined by the U.S. Commodity Futures Trading
Commission) if immediately thereafter the Fund's initial margin deposits on such
outstanding non-hedging futures and options positions and the amount of premiums
paid by the Fund for such outstanding non-hedging options on futures contracts
exceeds 5% of the market value of the Fund's net assets. For the purpose of this
calculation, any amount by which an option is "in the money" at the time of its
purchase is excluded from the premium paid therefor.

Nor will any of the Large Cap Value, Large Cap Growth, Mid Cap Value, or Small
Cap Value Funds enter into any transaction in interest rate, stock index or
currency futures, or options thereon, or stock index options, if the value of
the securities being hedged by all of such instruments would immediately
thereafter be more than one-third of the value of the Fund's total assets. Nor
will any Fund consider as "hedging" any transaction that is intended to leverage
the Fund's investment exposure to the type of security being hedged or to
leverage the Fund's currency exposure. Additional limitations may occur as a
result of the tax treatment of these hedging strategies.

RISKS OF OPTIONS AND FUTURES TRANSACTIONS

Risks of Hedging. If, after a Fund establishes a hedge position, the value of
the securities or currencies being hedged moves in the opposite direction from
that anticipated, the Fund as a whole will perform less well than it would have
had it not entered into the futures or options positions.

The success of the Funds in using hedging techniques depends, among other
things, on the sub-investment manager's ability to predict the direction and
volatility of price movements in the futures or options markets, as well as the
securities markets and, in some cases, currency markets, and on the sub-
investment manager's ability to select the proper type, time and duration of
hedges. Certain of the sub-investment managers have limited experience in
utilizing these hedging techniques and there can be no assurance that these
techniques will produce their intended result. Also, use of these techniques may
complicate management of the Funds and make compliance with the Funds' tax and
other restrictions more difficult.

The prices of the futures and options contracts used for hedging may not vary
as contemplated in relation to changes in the price of the securities or
currencies being hedged. Accordingly, there is a risk that transactions in these
instruments, if used by a Fund, may not in fact offset the impact of adverse
market developments in the manner or to the extent contemplated or that such
transactions may result in losses to the Fund which would not be offset by gains
with respect to corresponding portfolio securities owned or to be purchased by
that Fund. Although the Funds intend to establish appropriate positions in these
instruments only when there appears to be an active market, there is no
assurance that a liquid market will exist at a time when the Fund seeks to close
a particular futures or option position. Hedging transactions also may be more,
rather than less, favorable to a Fund than originally anticipated.

Other Risks for the Managed, Large Cap Value CORE, Mid Cap Growth, Small/Mid
Cap Growth, Small/Mid Cap CORE, Small Cap Growth, Global Equity, International
Balanced, International Equity Index, International

<PAGE>

Equity, Emerging Markets Equity, Short-Term Bond, Sovereign Bond, Global Bond,
and High Yield Bond Funds. These Funds may engage in types of options and
futures transactions not permitted to the other Funds, including
over-the-counter options, writing covered put options, and more types of
transactions that are not solely for hedging purposes or that otherwise are more
speculative. Also, even as to options and futures transactions of a type that
are permitted to other Funds, these Funds are, in certain cases, not as limited
regarding the amount of their assets that may be so employed. To the extent that
these Funds exercise their broader authority to enter into options and futures
transactions, they may incur greater risks than the other Funds.

USE OF OPTIONS AND FUTURES BY THE MANAGED, LARGE CAP VALUE CORE, MID CAP
GROWTH, SMALL/MID CAP GROWTH, SMALL/MIDCAP CORE, SMALL CAP GROWTH, GLOBAL
EQUITY, INTERNATIONAL BALANCED, INTERNATIONAL EQUITY INDEX, INTERNATIONAL
EQUITY, EMERGING MARKETS EQUITY, SHORT-TERM BOND, SOVEREIGN BOND, GLOBAL BOND,
AND HIGH YIELD BOND FUNDS

Writing Exchange-Traded Covered Call Options and Purchasing Exchange-Traded
Protective Put Options. These Funds (other than the Sovereign Bond Fund) may
engage in the same transactions described above under "Writing Exchange-Traded
Covered Call Options" and "Purchasing Exchange-Traded Protective Put Options."

Writing Covered Put Options. These Funds (other than the Sovereign Bond Fund)
may also write "covered" put options on securities. A put option written by a
Fund will be deemed to be "covered" if the Fund maintains in a segregated
account with its custodian cash, U.S. Government securities or other high-grade
liquid debt securities with a value at all times at least equal to the exercise
price of the put. Put and call options written by Funds will also be considered
to be "covered" to the extent that the Fund's liabilities under these options
are fully offset by its rights under put or call options purchased by the Fund.
Although a Fund receives a "premium" for writing a covered put option, it incurs
the risk that the put will be exercised and the Fund will be required to
purchase the securities subject to the put for a price that is higher than the
then-current market value of such securities.

Purchasing Other Put and Call Options on Securities and Securities Indexes.
These Funds (which for this purpose include the Sovereign Bond Fund) may also
purchase put and call options in the same types of transactions described above
under "Other Hedging-type Strategies by the Aggressive Balanced, Equity Index,
Large Cap Value, Large Cap Growth, Large Cap Aggressive Growth, Large/Mid Cap
Value, Mid Cap Value, Fundamental Mid Cap Growth, Mid Cap Blend, Small Cap
Value, and International Opportunities Funds."

The Managed, Large Cap Value CORE, Mid Cap Growth, Small/Mid Cap Growth,
Small/Mid Cap CORE, Small Cap Growth, Global Equity, International Balanced,
International Equity Index, International Equity, Emerging Markets Equity,
Short-Term Bond, Global Bond, and High Yield Bond Funds also may, for other
purposes, purchase put and call options on indexes composed of securities in
which those Funds may invest.

The Managed, Large Cap Value CORE, Mid Cap Growth, Small/Mid Cap CORE, Small
Cap Growth, Global Equity, International Balanced, International Equity Index,
International Equity, Emerging Markets Equity, Global Bond, and High Yield Bond
Funds may also purchase put and call options (in addition to those described
above under "Purchasing Exchange-Traded Protective Put Options") on securities
in which they may invest.

In purchasing a put or call option, a Fund may lose up to the entire amount of
the premium that it pays for the option, if the price of the securities or index
subject to the option moves adversely to the Fund's position so that the option
cannot be profitably exercised prior to its expiration. None of these Funds may
invest more than 5% of its total assets, taken at market value at the time of
investment, in call and put options on domestic and foreign securities and
indexes (excluding protective put options purchased on securities and index
options purchased as part of hedging strategies).

Covered Put and Call Options Written on Securities Indexes by the Managed,
Large Cap Value CORE, Mid Cap Growth, Small/Mid Cap Growth, Small/Mid Cap CORE,
Small Cap Growth, Global Equity, International

<PAGE>

Balanced, International Equity Index, International Equity, Short-Term Bond,
Global Bond, and High Yield Bond Funds. These Funds (but not the Emerging
Markets Equity or Sovereign Bond Funds) may also write covered put or call
options on indexes composed of securities in which the Fund may invest, in any
manner that such Fund would be permitted to write such options on specific
securities.

Using Options Traded Over-the-Counter or on Foreign Exchanges. These Funds
(which for this purpose include the Emerging Markets Equity Fund but not the
Sovereign Bond Fund) may also use options on securities and options on indexes
that are traded "over-the-counter" and on foreign exchanges in any manner that
they are otherwise permitted to use such options. These Funds will engage in
over-the-counter options only with member banks of the Federal Reserve System
and primary dealers in U.S. Government securities. These Funds will treat
purchased over-the-counter options and assets used to cover written
over-the-counter options as illiquid securities. However, with respect to
options written with primary dealers in U.S. Government securities pursuant to
an agreement requiring a closing purchase transaction at a formula price, the
amount of illiquid securities may be calculated with reference to the formula
price.

Using Futures Contracts and Options on Futures Contracts. These Funds (which
for this purpose include the Emerging Markets Equity and Sovereign Bond Funds)
may use futures contracts on securities or on market indexes, and options on
such futures contracts, to hedge against changes in securities prices, interest
rates, and currency exchange rates (including the techniques described above
under "Other Hedging-type Strategies by the Aggressive Balanced, Equity Index,
Large Cap Value, Large Cap Growth, Large Cap Aggressive Growth, Large/ Mid Cap
Value, Mid Cap Value, Fundamental Mid Cap Growth, Mid Cap Blend, Small Cap
Value, and International Opportunities Funds") or for other purposes that may be
more speculative. Such futures and options contracts will in all cases be traded
on U.S. commodity exchanges, boards of trade, or other recognized exchanges and
may be based upon various securities, financial instruments or indexes thereof
(except that the Large Cap Value CORE Fund will use only those futures contracts
that are based on a representative index, and options thereon). None of these
Funds may purchase, sell or write futures contracts or options other than for
"bona-fide" hedging purposes (as defined by the U.S. Commodity Futures Trading
Commission) if immediately thereafter the Fund's initial margin deposits on such
outstanding non-hedging futures and options positions and the amount of premiums
paid by the Fund for such outstanding non-hedging options on futures contracts
exceeds 5% of the market value of the Fund's net assets. For the purpose of this
calculation, any amount by which an option is "in the money" at the time of its
purchase is excluded from the premium paid therefor.

There is no specific overall limit on the amount of the assets of these Funds
that may be exposed to the risks of financial futures contracts and options
thereon that are used for non-hedging purposes. Nevertheless (except through the
purchase of options, as discussed below) the Funds will not use these techniques
for purpose of "leveraging" the Fund's exposure to the securities underlying any
futures contract or option thereon or its exposure to foreign currencies.
Although this limitation does not apply to options on futures contracts that are
purchased by a Fund, the total amount of premiums paid by a Fund for such
options that are not used for bona fide hedging is, as discussed above, limited
to 5% of the Fund's net assets, and the Fund will have no liability in
connection with such options beyond payment of the option premium and related
commissions.

OTHER DERIVATIVE TRANSACTIONS

The International Balanced, International Equity Index, Global Bond, and High
Yield Bond Funds may engage in swap transactions, specifically interest rate,
currency and index swaps and in the purchase or sale of related caps, floors and
collars. The Emerging Markets Equity Fund may also engage in those transactions
and, in addition, may engage in equity swap transactions. The International
Equity Fund may invest up to 10% of its total assets (at the time the swap is
entered into) in currency and equity swaps. In a typical interest rate swap
agreement, one party agrees to make payments equal to a floating interest rate
on a specified amount (the "notional amount") in return for payments equal to a
fixed interest rate on the same amount for a specified period. If a swap
agreement provides for payments in different currencies, the parties might agree
to exchange the notional amount as well. The purchaser of an interest rate cap
or floor, upon payment of a fee, has the right to receive payments (and the
seller of

<PAGE>

the cap is obligated to make payments) to the extent a specified interest rate
exceeds (in the case of a cap) or is less than (in the case of a floor) a
specified level over a specified period of time or at specified dates. The
purchaser of an interest rate collar, upon payment of a fee, has the right to
receive payments (and the seller of the collar is obligated to make payments) to
the extent that a specified interest rate falls outside an agreed upon range
over a specified period of time or at specified dates.

Currency, index, and equity swaps, caps, floors, and collars are similar to
those described in the preceding paragraph, except that, rather than being
determined by variations in specified interest rates, the obligations of the
parties are determined by variations in a specified currency, interest rate
index, or equity index.

The amount of a Fund's potential gain or loss on any swap transaction is not
subject to any fixed limit. Nor is there any fixed limit on the Fund's potential
loss if it sells a cap, floor or collar. If a Fund buys a cap, floor or collar,
however, the Fund's potential loss is limited to the amount of the fee that it
has paid. Swaps, caps, floors and collars tend to be more volatile than many
other types of investments. Nevertheless, a Fund will use these techniques only
as a risk management tool and not for purposes of leveraging the Fund's market
exposure or its exposure to changing interest rates, security values or currency
values. Rather, a portfolio will use these transactions only to preserve a
return or spread on a particular investment or portion of its investments, to
protect against currency fluctuations, as a duration management technique, to
protect against any increase in the price of securities the Fund anticipates
purchasing at a later date, or to gain exposure to certain markets in the most
economical way possible. Nor will a Fund sell interest rate caps, floors or
collars if it does not own securities providing the interest that the Fund may
be required to pay.

The use of swaps, caps, floors and collars involves investment techniques and
risks different from those associated with other portfolio security
transactions. If the sub-investment manager is incorrect in its forecasts of
market values, interest rates, currency rates and other applicable factors, the
investment performance of a Fund will be less favorable than if these techniques
had not been used. These instruments are typically not traded on exchanges.
Accordingly, there is a risk that the other party to certain of these
instruments will not perform its obligations to the Fund or that a Fund may be
unable to enter into offsetting positions to terminate its exposure or liquidate
its investment under certain of these instruments when it wishes to do so. Such
occurrences could result in losses to the Fund. The sub-investment manager,
however, will consider such risks and will enter into swap, cap, floor, and
collar transactions only when it believes that the risks are not unreasonable.

FURTHER CONSIDERATIONS AS TO OPTIONS AND FUTURES CONTRACTS

Restrictions. A Fund will maintain at all times in a segregated account with
its custodian cash or high-grade liquid debt at least equal to the sum of the
purchase prices of all of the Fund's open futures purchase positions, plus the
current value of the securities underlying all of the Fund's open futures sales
positions that are maintained for purposes other than bona fide hedgings, plus
the exercise price of all outstanding put options on futures contracts written
by the Fund, minus the amount of margin deposits with respect thereto as marked
to market each day. Regarding such margin deposits, see "Margin Requirements for
Futures and Options."

Certain Risks. Financial futures, options thereon, and stock index options, if
used by a Fund, will in most cases be based on securities or stock indexes the
components of which are not identical to the portfolio securities owned or
intended to be acquired by the Fund and in connection with which such
instruments are used. Furthermore, due to supply and demand imbalances and other
market factors, the price movements of financial futures, options thereon, and
stock index options do not necessarily correspond exactly to the price movements
of the securities, currencies, or stock index on which such instruments are
based. These factors increase the difficulty of implementing a successful
strategy using futures and options contracts.

The Funds generally will not take delivery of debt instruments pursuant to
purchasing an interest rate futures contract, nor make a delivery of debt
instruments pursuant to selling an interest rate futures contract. Nor will the

<PAGE>

Funds necessarily take delivery of or deliver currencies in connection with
currency futures contracts. Instead, a Fund may close out such futures positions
by entering into closing futures contract transactions. Trading in futures or
options could be interrupted, for example, because of supply and demand
imbalances arising from a lack of either buyers or sellers. The futures and
options exchanges also may suspend trading after the price has risen or fallen
more than the maximum amount specified by the exchange. Exercise of options
could also be restricted or delayed because of regulatory restrictions or other
factors. Although the sub-investment managers will seek to avoid situations
where these factors would be likely to cause a problem for the Trust, in some
cases they could adversely affect particular Trust transactions in these
instruments.

Custodial Aspects. In certain circumstances, brokers may have access to Fund
assets posted as margin in connection with futures and options transactions.

In such circumstances, the Trust will use only brokers in whose reliability
and financial soundness it has full confidence, and the Trust will adopt certain
other procedures and limitations to reduce the risk of loss to any Trust assets
which brokers hold or to which they may have access. Nevertheless, in the event
of a broker's insolvency or bankruptcy, it is possible that a Fund may
experience a delay or incur costs in recovering such assets or might recover
less than the full amount due. Also the value of such assets could decline by
the time the Trust could effect such recovery.

If on any day a Fund experiences net realized or unrealized gains with respect
to financial futures contracts held through a given broker, it will be entitled
immediately to receive from the broker the net amount of such gains. The Trust
will request payment of such amounts promptly after notification by the broker
that such amounts are due. Thereupon, these assets will be deposited in the
Trust's general or segregated account with the custodian, as appropriate.

SHORT-TERM TRADING

All Funds can use short-term trading of securities as a means of managing
their portfolios to achieve their investment objectives. As used herein,
"short-term trading" means the purchase and subsequent sale of a security after
it has been held for a relatively brief period of time, in some instances for
less than three months. A Fund may engage in short-term trading in such
instances as the following if the investment manager, or sub-investment manager,
believes the transactions, net of costs (including commissions, if any), will
benefit the Fund:

(a) To avoid potential depreciation in the value of a security held in the
Fund where the Fund anticipates that it may decline in market value as a
result of unfavorable earnings trends and/or an unfavorable investment
environment.

(b) To increase the return by taking advantage of yield disparities between
various fixed-income securities in order to realize capital gains or improved
income on the Fund.

(c) To take advantage of movements in the price of a security that the
sub-investment manager expects to be of relatively short duration.

The investment manager, or sub-investment manager, in reaching a decision to
sell one security and purchase another security at approximately the same time,
will take into account a number of factors, including the quality ratings,
interest rates, yields, maturity dates, call prices, and refunding and sinking
trust provisions of the securities under consideration, as well as historical
yield spreads and current economic information. The success of short-term
trading will depend upon the ability of the investment manager, or
sub-investment manager, to evaluate particular securities, to anticipate
relevant market factors, including trends of interest rates and earnings and
variations from such trends, to obtain relevant information, to evaluate it
promptly, and to take advantage of its evaluations by completing transactions on
a favorable basis. It is expected that the expenses involved in short-term
trading, which would not be incurred by an investment company which does not use
this Fund technique, will be taken into account.

<PAGE>

FOREIGN CURRENCY MANAGEMENT STRATEGIES

The extent to which the several Funds may invest in foreign securities is
summarized above under "Risk Factors--Foreign Securities." Ways in which some of
these Funds may use forward currency contracts, and some may use currency option
contracts, to manage their currency exposure are discussed in the paragraphs
that follow. Certain Funds also may use currency futures contracts and options
thereon for these purposes, as discussed above under "Other Hedging-Type
Strategies by Aggressive Balanced, Equity Index, Large Cap Value, Large Cap
Growth, Large Cap Aggressive Growth, Large/Mid Cap Value, Mid Cap Value,
Fundamental Mid Cap Growth, Mid Cap Blend, Small Cap Value, and International
Opportunities Funds." In addition to the Funds listed there, the Managed, Mid
Cap Growth, Global Equity International Balanced, International Equity Index,
and Global Bond Funds may use those same currency management techniques.
Finally, currency swaps, caps, floors or collars may also be used for these
purposes by the Global Equity, International Balanced, International Equity
Index, International Equity, Emerging Markets Equity, Global Bond, and High
Yield Bond Funds to the extent discussed above under "Other Derivative
Transactions" (although the Global Equity Fund will not use these techniques for
the other purposes described there).

Transaction Hedging. When any Fund enters into a contract for purchase or sale
of a security denominated in a foreign currency, it may be required to settle a
purchase transaction in the relevant foreign currency or receive the proceeds of
a sale in that currency. In either event, the Trust may be obliged to acquire or
dispose of such foreign currency as is presented by the transaction by selling
or buying an equivalent amount of United States dollars. Furthermore, the Fund
may wish to "lock in" the United States dollar value of the transaction at or
near the time of a purchase or sale of securities at the exchange rate or rates
then prevailing between the United States dollar and the currency in which the
foreign security is denominated. Therefore, certain of the Funds may, for a
fixed amount of United States dollars, enter into a forward foreign exchange
contract to implement a strategy known as "transaction hedging." The Funds that
may enter into forward exchange contracts are the Managed, Aggressive Balanced,
Large Cap Value, Mid Cap Growth, Global Equity, International Balanced,
International Equity Index, International Equity, International Opportunities,
Emerging Markets Equity, Global Bond, and High Yield Bond Funds. To effect the
translation of the amount of foreign currencies involved in the purchase and
sale of foreign securities and to effect the "transaction hedging" described
above, the Fund may purchase or sell such foreign currencies on a "spot" (i.e.,
cash) basis. Alternatively, the Funds listed in the preceding paragraph may
enter into forward exchange purchase or sale contracts, whereby the Fund
purchases or sells a specific amount of foreign currency, at a price set at the
time of the contract, for receipt or delivery at a specified date which may be
any fixed number of days in the future. Such spot and forward foreign exchange
transactions may also be utilized to reduce the risk inherent in fluctuations in
the exchange rate between the United States dollar and the relevant foreign
currency when foreign securities are purchased or sold for settlement beyond
customary settlement time. Neither type of foreign currency transaction will
eliminate fluctuations in the prices of the Fund's securities or prevent loss if
the price of such securities should decline.

Portfolio Hedging. Some portion of those Funds that can invest in foreign
securities will be denominated or quoted in foreign currencies. As a result, the
value of each Fund in United States dollars is subject to fluctuations in the
exchange rate between such foreign currencies and the United States dollar. A
sub-investment manager may believe that it is desirable to limit or reduce
exposure in a foreign currency in order to moderate potential changes in the
value, expressed in U.S. dollars, of a Fund's assets. In that case, certain
Funds may enter into forward foreign currency contracts to exchange a fixed
number of U.S. dollars for an amount of foreign currency equal to the Fund's
carrying value for all or part of the underlying foreign portfolio securities.
This technique is known as "portfolio hedging" and moderates or reduces the risk
of change in the United States dollar value of the Fund's securities only during
the period before the maturity of the forward contract (which will not be in
excess of one year). The Funds that can engage in this technique are those
listed above that are authorized to engage in "Transaction Hedging". Hedging
against a decline in the value of currency does not eliminate fluctuations in
the prices of the Fund's securities or prevent losses if the prices of such
securities decline.

<PAGE>

Except as described below as to the Managed, Aggressive Balanced, Mid Cap
Growth, Global Equity, International Balanced, International Equity Index,
International Equity, International Opportunities, and Global Bond Funds, the
Funds may not engage in portfolio hedging with respect to the currency of a
particular country to an extent greater than the aggregate market value (at the
time of establishing the hedge) of the securities which the Fund holds
denominated or quoted in that particular foreign country. The Funds may or may
not attempt to hedge all of their foreign portfolio positions and will enter
into such transactions only to the extent, if any, deemed appropriate by the
sub-investment managers. The Funds will not use forward foreign currency
exchange contracts for the purpose of leveraging the Fund's currency exposure.

Proxy Currencies. In implementing the above-described currency hedging
techniques, the Managed, Aggressive Balanced, Mid Cap Growth, Global Equity,
International Balanced, International Equity Index and International Equity
Funds may use a forward contract on a "proxy" currency, instead of the currency
being hedged. A proxy currency is one that the sub-investment manager believes
will bear a close relationship to the currency being hedged and believes will
approximately equal the performance of such currency relative to the U.S.
dollar.

Nevertheless, changes in the value of the currency being hedged may not
correspond to changes in the value of the proxy currency as expected, which
could result in the currency hedge being more favorable or less favorable to the
Fund.

Other Techniques for Managing Currency Exposure. The Managed, Aggressive
Balanced, Mid Cap Growth, Global Equity, International Balanced, International
Equity Index, International Equity, International Opportunities, Emerging
Markets Equity, and Global Bond Funds may use additional techniques when the
sub-investment manager for one of these Funds believes that the currency of a
particular country may suffer a significant decline against the U.S. dollar or
against another currency. In that case, the Fund may enter into a currency
contract to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximating the value of some or all
of the Fund's securities denominated in such foreign currency. The currency
contract may call for the Fund to receive a currency other than U.S. dollars,
for example, if such other currency is believed to be undervalued or necessary
to bring the Fund's overall exposure to various currencies into a more desirable
balance. For similar purposes, the Managed, Aggressive Balanced, International
Balanced, International Opportunities, International Equity, and Strategic Bond
Funds may also enter into contracts to purchase, for a fixed amount of U.S.
dollars, or other appropriate currency, an amount of foreign currency
corresponding to the value of some of the Fund's securities.

If a Fund is to receive a currency other than U.S. dollars pursuant to a
forward currency sales contract, or if the Fund enters into a forward currency
purchase contract, a risk exists that the value of the currency to be received
by the Fund could vary differently in relation to the U.S. dollar than does the
currency in which the related securities are denominated. This could result in
gains or losses to the Fund.

Other Information About Foreign Currencies Exchange Transactions. If a Fund
enters into a portfolio hedging transaction, the Fund may cover outstanding
forward currency sale contracts by maintaining portfolio securities denominated
in the currency of such contracts or of an appropriate proxy currency. To the
extent a Fund does not thus cover all of its forward currency sales positions
with its portfolio securities, or if it has outstanding any forward currency
purchase contracts, its custodian bank will segregate cash or liquid assets in a
separate account of the Fund in an amount at all times at least equal to the
value of the Fund's net obligation with respect to forward contracts in a
particular currency or, in the case of the International Balanced Fund only, the
Fund's net "out of the money" obligation (if any) with respect to all of the
Fund's outstanding forward currency contracts. If the value of the portfolio
securities used to cover a position or the value of the assets in the separate
account declines, the Fund will find additional cover or additional cash or
liquid assets will be placed in the account so that the value of the account
will equal the amount of the Fund's net obligation with respect to such
contracts as described in the preceding sentence.

<PAGE>

At the maturity of a forward currency sale contract, a Fund may either sell a
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency. Similarly, at
the maturity of a foreign currency purchase contract, a Fund may take delivery
of the currency, if needed to purchase a portfolio security, or may enter into
an offsetting transaction to close out its position. The Fund may realize a gain
or loss from currency transactions.

Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for the Funds to hedge against a devaluation that is so
generally anticipated that the Funds are not able to contract to sell the
currency at a price above the devaluation level it anticipates. The cost to the
Funds of engaging in foreign currency exchange transactions varies with such
factors as the currency involved, the length of the contract period and the
market conditions then prevailing. Since transactions in foreign currency
exchange are usually conducted on a principal basis, no fees or commissions are
involved.

Options on Currencies. The Managed, Mid Cap Growth, Global Equity,
International Balanced, International Equity Index, International Equity,
International Opportunities, Emerging Markets Equity, Global Bond, and High
Yield Bond Funds may also purchase and write put and call options on foreign
currencies (traded on U.S. and foreign exchanges or over-the-counter markets) to
manage the Funds' exposure to changes in currency exchange rates or currency
exchange volatility. Call options on foreign currencies written by a Fund will
be "covered," which means that the Fund will own at all times an equal amount
of, or an offsetting position in, the underlying foreign currency. With respect
to put options on foreign currencies written by a Fund, the Fund will establish
a segregated account with its custodian bank consisting of cash, U.S. Government
securities or other high grade liquid debt securities in an amount equal at all
times to the amount the Fund would be required to deliver upon exercise of the
put. The characteristics and risks of these currency option transactions are
similar to those with respect to put and call options on securities. See
"Writing Exchange-Traded Covered Call Options," "Purchasing Exchange-Traded
Protective Put Options," "Risks of Options and Futures Transactions," and "Use
of Options and Futures by the Managed, Large Cap Value CORE, Mid Cap Growth,
Small/Mid Cap Growth, Small/ Mid Cap CORE, Small Cap Growth, Global Equity,
International Balanced, International Equity Index, International Equity,
Emerging Markets Equity, Short-Term Bond, Sovereign Bond, Global Bond, and High
Yield Bond Funds" above.

WHEN ISSUED SECURITIES AND FORWARD COMMITMENTS

All Funds (other than the Growth & Income and Money Market Funds) may purchase
securities on a when-issued or delayed delivery basis. When such transactions
are negotiated, the price of such securities is fixed at the time of commitment,
but delivery and payment for the securities may take place a month or more after
the date of the commitment to purchase. The securities so purchased are subject
to market fluctuations, and no interest rate accrues to the purchaser during
this period.

In addition, these Funds may make contracts to purchase securities for a fixed
price at a future date beyond customary settlement time ("forward commitments")
because new issues of securities are typically offered to investors on that
basis. Forward commitments involve a risk of loss if the value of the security
to be purchased declines prior to the settlement date. This risk is in addition
to the risk of decline in value of the Fund's other assets. Although the Fund
will enter into such contracts with the intention of acquiring the securities,
the Fund may dispose of a commitment prior to settlement if the sub-investment
managers deem it appropriate to do so. The Fund may realize short-term profits
or losses upon the sale of forward commitments.

Each Fund will maintain in a segregated account with its custodian cash or
liquid high grade debt securities that at all times equal the amount of its
when-issued and forward commitments.

<PAGE>

REPURCHASE AGREEMENTS

A repurchase agreement is a contract under which a Fund would acquire a
security for a relatively short period, e.g. 7 days, subject to the seller's
obligation to repurchase the security at a fixed time and price (representing
the Fund's cost plus interest). Repurchase agreements will be entered into only
with member banks of the Federal Reserve System and with "primary dealers" in
United States government securities. The Managed, Growth & Income, Large Cap
Growth, Real Estate Equity, Sovereign Bond and Money Market Funds may not invest
in repurchase agreements maturing in more than 7 days. No more than 15% of the
net assets of any other Fund will be invested in repurchase agreements maturing
in more than 7 days. All of the Funds may enter into repurchase agreements.

The Small/Mid Cap Growth, Sovereign Bond, and Small Cap Growth Funds, along
with other registered investment companies having a management contract with
John Hancock Advisers, Inc. ("Advisers"), an indirect wholly-owned subsidiary of
John Hancock and sub-investment manager of the Small/Mid Cap Growth and Small
Cap Growth Funds, may participate in a joint repurchase agreement pursuant to an
exemptive order issued by the Securities and Exchange Commission ("SEC").
Aggregate cash balances are invested in one or more repurchase agreements, whose
underlying securities are obligations of the U.S. Government and/or its
agencies. Advisers is responsible for ensuring that the agreement is fully
collateralized at all times.

In addition, the Managed, Growth & Income, Large Cap Growth, Real Estate
Equity, Small Cap Value, International Equity Index, and Money Market Funds have
entered into a joint trading account pursuant to an SEC exemptive order. Under
this arrangement, John Hancock is responsible for investing the aggregate cash
balances into one or more repurchase agreements, as described above, or in other
money market instruments. In the case of repurchase agreements acquired pursuant
to this arrangement, John Hancock is responsible for ensuring that the agreement
is fully collateralized at all times. The other Funds also may participate in
this joint trading account advised by John Hancock or any similar joint trading
account established pursuant to an SEC exemptive order for investment companies
advised by their respective sub-investment managers.

Furthermore, Goldman Sachs Asset Management ("GSAM") has also received a
similar SEC exemptive order which permits GSAM to invest the aggregate cash
balances of the Large Cap Value CORE, Small/Mid Cap CORE, and International
Equity Funds in one or more repurchase agreements with other GSAM-advised mutual
funds. Janus Capital Corporation ("Janus") has also received a similar SEC
exemptive order which permits Janus to invest the aggregate cash balances of the
Mid Cap Growth Fund in one or more repurchase agreements with other
Janus-advised mutual funds.

Each such Fund has established a procedure providing that the securities
serving as collateral for each repurchase agreement must be delivered to the
Fund's custodian or sub-custodian either physically or in book-entry form and
that the collateral must be marked-to-market daily to ensure that each
repurchase agreement is fully collateralized at all times. In the event of a
bankruptcy or other default by a seller of a repurchase agreement, the Fund
could experience delays in liquidating the underlying securities and could
experience losses, including the possible decline in the value of the underlying
securities during the period while the Fund seeks to enforce its rights thereto,
possible subnormal levels of income and lack of access to income during this
period, and expenses of enforcing its rights.

LENDING OF FUND SECURITIES

In order to generate additional income, all Funds may from time to time lend
securities from their portfolios to brokers, dealers and financial institutions
such as banks and trust companies. Such loans will be secured by collateral
consisting of cash or U.S. Government securities, which will be maintained in an
amount equal to at least 100% of the current market value of the loaned
securities. During the period of the loan, the Fund receives the income on the
loaned securities and the compensation for making the loan and thereby increases
its return. Cash collateral may be invested in short-term securities, which will
increase the current income of the Fund. Such loans

<PAGE>

will not be for more than 60 days and will be terminable by the Fund at any
time. The Fund will have the right to regain record ownership of loaned
securities in order to exercise rights of a holder thereof including receiving
interest or other distributions or exercising voting rights. The Fund may pay
reasonable fees to persons unaffiliated with the Fund for services in arranging
such loans. Lending of portfolio securities involves a risk of failure by the
borrower to return the loaned securities, in which event the Fund may incur a
loss. It is a fundamental restriction of the Fund not to lend portfolio
securities having a total value in excess of33 1/3% of the total assets of the
Fund from which the securities have been lent.

MORTGAGE DOLLAR ROLLS AND REVERSE REPURCHASE AGREEMENTS

The Short-Term Bond and Money Market Funds may engage in reverse repurchase
agreements to facilitate portfolio liquidity, a practice common in the mutual
fund industry, or for arbitrage transactions (discussed below). In a reverse
repurchase agreement, the Fund sells a security and enters into an agreement to
repurchase the security at a specified future date and price. The Fund generally
retains the right to interest and principal payments on the security. Since the
Fund receives cash upon entering into a reverse repurchase agreement, it could
be considered a borrowing. For this reason, the Fund will set aside permissible
liquid assets in a segregated account to secure its obligation to repurchase the
security.

The Managed, Short-Term Bond, Bond Index, Sovereign Bond, and Global Bond
Funds may also enter into mortgage dollar rolls, in which the Fund sells
mortgage-backed securities for delivery in the current month and simultaneously
contracts to purchase substantially similar securities on a specified future
date. While the Fund foregoes principal and interest paid on the mortgage-backed
securities during the roll period, the Fund is compensated by the difference
between the current sale price and the lower price for the future purchase as
well as by any interest earned on the proceeds of the initial sale. The Fund
also could be compensated through the receipt of fee income equivalent to a
lower forward price. Mortgage dollar roll transactions could also be considered
a borrowing by the Fund. Therefore, the Fund will set aside permissible liquid
assets in a segregated account to secure its obligation for the forward
commitment to buy mortgage-backed securities.

The mortgage dollar rolls and reverse repurchase agreements entered into by a
Fund may be used as arbitrage transactions in which the Fund will maintain an
offsetting position in investment-grade debt obligations or repurchase
agreements that mature on or before the settlement date of the related mortgage
dollar roll or reverse repurchase agreement. Since the Fund will receive
interest on the securities or repurchase agreements in which it invests the
transaction proceeds, such transactions may involve leverage. However, since
such securities or repurchase agreements will be high quality and will mature on
or before the settlement date of the mortgage dollar roll or reverse repurchase
agreement, the sub-investment manager believes that such arbitrage transactions
do not present the risks to the Fund that are associated with other types of
leverage.

TYPES OF INVESTMENT INSTRUMENTS AND RATINGS

FOREIGN SECURITIES

As discussed above under "Risks Factors--Foreign Securities," all of the
Funds may invest at least some of their assets in foreign securities. The
purchase of foreign securities could involve risks not associated with domestic
securities. Among others, there may be risks of political and economic
instability, foreign taxes, liquidity, predictability of international trade
patterns, and fluctuations in rates of currency exchange. Less information with
respect to a foreign issuer may be publicly available, the accounting, auditing,
and financial standards may be lower, the issuer may be subjected to less
regulation or to a greater risk of expropriation or confiscatory taxation and,
in the event of default, a judgment against the issuer may be difficult to
obtain or enforce.

<PAGE>

The securities markets of many countries have in the past moved relatively
independent of one another, due to differing economic, financial, political and
social factors. When markets move in different directions, there may be a
corresponding reduction in risk for those Funds that can invest in foreign
securities as a whole. This lack of correlation among the movements in the
world's securities markets may also affect unrealized gains these Funds may
derive from movements in any one market. If the securities of markets moving in
different directions are combined in any of these Funds, total volatility of the
Fund is reduced.

Because the Funds may invest in securities denominated or quoted in currencies
other than United States dollars, changes in foreign currency exchange rates
will affect the value of the securities. Exchange rates may not move in the same
direction as the securities markets in a particular country. As a result, the
gain realized on a foreign investment may be offset by an unfavorable exchange
rate.

The Global Equity, International Balanced, International Equity Index,
International Equity, International Opportunities, Emerging Markets Equity,
Sovereign Bond, and High Yield Bond Funds may invest in companies located in
emerging countries which, compared to the U.S. and other developed countries,
may have relatively unstable governments, economies and currencies, based on
only a few industries, and securities markets which trade only a small number of
securities. Prices on exchanges located in developing countries tend to be
volatile and, in the past, securities traded on those exchanges have offered a
greater potential for gain (and loss) than securities traded on exchanges in the
U.S. and more developed countries.

The Funds that are authorized to purchase foreign securities may also do so in
the form of American Depositary Receipts (ADRs), European Depositary Receipts
(EDRs) or other securities representing underlying shares of foreign issuers.
These securities may not necessarily be denominated in the same currency as the
securities into which they may be converted but rather in the currency of the
market in which they are traded. ADRs are receipts typically issued by an
American bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs are receipts issued in Europe by banks or
depositories which evidence a similar ownership arrangement. Generally, ADRs, in
registered form, are designed for use in U.S. securities markets and EDRs, in
bearer form, are designed for use in European securities markets.

The Funds that are authorized to purchase foreign securities may invest in
U.S. dollar denominated debt securities issued by foreign corporations and
publicly traded in the United States (Yankees) or Europe (Euros). Because
Yankees and Euros are U.S. dollar denominated, the risks associated with foreign
currency conversions are not present.

DEBT SECURITIES GENERALLY

The value of the debt securities in any Fund can be expected to vary inversely
to changes in prevailing interest rates, with the amount of such variation
depending primarily on the remaining duration of the security. Long-term
obligations usually fluctuate more in value than short-term obligations. If
interest rates increase after a security is purchased, the security, if sold,
could be sold for a loss. On the other hand, if interest rates decline after a
purchase, the security, if sold, could be sold at a profit. If, however, the
security is held to maturity, no gain or loss will be realized as a result of
interest rate fluctuations, although the day-to-day valuation of the Fund could
fluctuate. As in the case of any other security, substantial redemptions could
require a Fund to sell debt securities at a time when a sale might not be
favorable. The value of a portfolio security may also be affected by other
factors, including factors bearing on the creditworthiness of its issuer.
Generally, lower-rated securities are subject to greater price fluctuations.

Securities having one of the four highest rating categories for debt
securities as defined by Moody's Investors Services, Inc. (Aaa, Aa, A, or Baa)
or Standard and Poor's Corporation (AAA, AA, A, or BBB) or, if unrated,
determined to be of comparable quality by the sub-investment manager, are
referred to as investment grade. The meanings of such ratings are discussed
further under "Corporate Bond Ratings," below.

<PAGE>

HIGH YIELD DEBT SECURITIES

High yield/high risk securities are considered speculative and involve greater
risk of default or price changes due to changes in the issuer's creditworthiness
than higher-rated securities, and are more sensitive to changes in the issuer's
capacity to pay. Investing in high yield/high risk securities is an aggressive
approach to income investing. The 1980s saw a dramatic increase in the use of
high yield/high risk securities to finance highly leveraged corporate
acquisitions and restructurings. Past experience may not provide an accurate
indication of future performance of high yield/high risk securities, especially
during periods of economic recession. In fact, from 1989 to 1991, the percentage
of high yield/high risk securities that defaulted rose significantly above prior
levels.

High yield/high risk securities may be thinly traded, which can adversely
affect the prices at which they can be sold and can result in high transaction
costs. If market quotations are not available, these securities will be valued
in accordance with standards set by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing high
yield/high risk securities than in the case of other securities for which more
extensive quotations and last-sale information are available. Adverse publicity
and changing investor perceptions may affect the ability of outside pricing
services used by a Fund to value its portfolio securities, and a Fund's ability
to dispose of the lower-rated bonds. The market prices of high yield/high risk
securities may decline significantly in periods of general economic difficulty,
which may follow periods of rising interest rates. During an economic downturn
or a prolonged period of rising interest rates, the ability of issuers of
lower-rated debt to service their payment obligations, meet projected goals, or
obtain additional financing may be impaired. A Fund may choose, at its own
expense or in conjunction with others, to pursue litigation or otherwise
exercise its rights as a security holder to seek to protect the interests of
security holders, if it determines this to be in the interest of Fund investors.

The considerations discussed above for lower-rated debt securities also are
applicable to lower quality unrated debt instruments of all types, including
loans and other direct indebtedness of businesses with poor credit standing.
Unrated debt instruments are not necessarily of lower quality than rated
securities but they may not be attractive to as many buyers.

U.S. GOVERNMENT OBLIGATIONS

U.S. Government obligations are bills, certificates of indebtedness, notes and
bonds issued or guaranteed as to principal or interest by the United States or
by agencies or authorities controlled or supervised by and acting as
instrumentalities of the U.S. Government established under the authority granted
by Congress, including, but not limited to, the Tennessee Valley Authority,
Federal Home Loan Banks, Federal Land Banks, Farm Credit System, the Federal
National Mortgage Association, World Bank, Inter-American Development Bank,
Student Loan Marketing Association, Financing Corporation, Asian Development
Bank, Federal Housing Administration, Agency for International Development,
Federal Home Loan Mortgage Corporation, Government Trust Certificates, Private
Export Funding Corporation, and Small Business Administration. Some obligations
of U.S. Government agencies, authorities, and other instrumentalities are
supported by the full faith and credit of the U.S. Treasury; others by the right
of the issuer to borrow from the Treasury; and others only by the credit of the
issuing agency, authority, or other instrumentality. U.S. Government obligations
are primarily used in the Money Market and the Short-Term Bond Funds. All of the
other Funds may also invest in U.S. Government obligations to some extent.

OTHER MONEY MARKET SECURITIES

Certificates of Deposit--are certificates issued against funds deposited in a
bank, are for a definite period of time, earn a specified rate of return, and
are normally negotiable.

<PAGE>

Bankers' Acceptances--are short-term credit instruments issued by corporations
to finance the import, export, transfer or storage of goods. They are termed
"accepted" when a bank guarantees their payment at maturity. These instruments
reflect the obligation of both the bank and the drawer to pay the face amount of
the instrument at maturity.

Commercial Paper--refers to promissory notes issued by corporations to finance
their short-term credit needs. See "Commercial Paper Ratings," below.

Corporate Obligations--include bonds, debentures, and notes issued by
corporations in order to finance longer term credit needs. See "Corporate Bond
Ratings," below. These instruments may be considered money market securities
when they have a relatively short remaining maturity.

The foregoing types of money market instruments are used primarily by the
Money Market Fund, but may also be used by each of the other Funds to some
extent.

COMMERCIAL PAPER RATINGS

The rating A-1 is the highest rating assigned by Standard & Poor's Corporation
("S&P") to commercial paper which is considered by S&P to have the following
characteristics: liquidity ratios of the issuer are adequate to meet cash
requirements; long-term senior debt is rated "A" or better; the issuer has
access to at least two additional channels of borrowing; basic earnings and cash
flow have an upward trend with allowance made for unusual circumstances;
typically, the issuer's industry is well established and the issuer has a strong
position within the industry.

The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Services, Inc. (Moody's). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.

The rating F-1 is the highest rating assigned by Fitch Investors Service.

CORPORATE BOND RATINGS

Moody's Investors Service, Inc., describes its ratings for corporate bonds as
follows:

Bonds which are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.

<PAGE>

Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment some time in the future.

Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Bonds which are rated Ba have speculative elements and their future cannot be
considered as well assured. The protection of interest and principal payments
may be very moderate and thereby not well safeguarded during both good and bad
times over the future. Bonds in this class are characterized by uncertainty of
position.

Bonds which are rated B generally lack characteristics of a desirable
investment; assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Bonds which are rated Caa are of poor standing. Issues may be in default or
there may be present elements of danger with respect to principal or interest.

Bonds which are rated Ca are speculative in a high degree. They are often in
default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds. They can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.

Standard & Poor's Corporation describes its ratings for corporate bonds as
follows:

AAA-This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.

AA-Bonds rated AA also qualify as high-quality obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances, they
differ from AAA issues only in small degree.

A-Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.

BBB-Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the A category.

BB, B, CCC, CC, C-Bonds rated in these categories are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While
this debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

C1-This rating is reserved for income bonds on which no interest in being
paid.

D-Bonds rated D are in default and payment of interest and/or repayment of
principal is in arrears.

RULE 144A SECURITIES

All Funds, other than the Growth & Income, Large Cap Growth and Real Estate
Equity Funds, may purchase unregistered securities that are eligible for resale
to "qualified institutional buyers" pursuant to Rule 144A under the Securities
Act of 1933. The Trustees have directed the sub-investment manager of each of
the eligible Funds to determine on a case-by-case basis whether each issue of
Rule 144A securities owned by the Fund is an illiquid

<PAGE>

security. If illiquid, a Rule 144A security may not be purchased by the Money
Market Fund, but may be purchased by any other eligible Fund, subject to such
Fund's 15% limit on the amount of its assets that can be invested in any
illiquid securities. Purchasing this type of unregistered security could have
the effect of increasing the level of illiquidity and volatility in the Fund.

STANDARD AND POOR'S DEPOSITORY RECEIPTS

The Equity Index, Large Cap Value CORE, and Small/Mid Cap CORE Funds may,
consistent with their objectives, purchase Standard & Poor's Depository Receipts
("SPDRs"). SPDRs are American Stock Exchange-traded securities that represent
ownership in the SPDR Trust, a trust which has been established to accumulate
and hold a portfolio of common stocks that is intended to track the price
performance and dividend yield of the S&P 500. This trust is sponsored by a
subsidiary of the American Stock Exchange. SPDRs may be used for several
reasons, including but not limited to: facilitating the handling of cash flows
or trading, or reducing transaction costs. The use of SPDRs would introduce
additional risk to the Fund as the price movement of the instrument does not
perfectly correlate with the price action of the underlying index.

FINANCIAL FUTURES CONTRACTS

A public market currently exists for interest rate futures contracts on United
States Treasury Bills, United States Treasury Notes, bank certificates of
deposit, and various other domestic or foreign instruments and indexes. A public
market currently exists for stock index futures contracts based on the Standard
& Poor's 500 Stock Index, the Standard & Poor's Midcap Index, the New York Stock
Exchange Composite Index, the Value Line Stock Index, and various other domestic
or foreign indexes. Stock index futures contracts bind purchaser and seller to
delivery at a future date specified in the contract of a cash amount equal to a
multiple of the difference between the value of a specified stock index on that
date and settlement price specified by the contract. That is, the seller of the
futures contract must pay and the purchaser would receive a multiple of any
excess of the value of the index over the settlement price, and the purchaser
must pay and the seller would receive a multiple of any excess of the settlement
price over the value of the index. Multiples reflect the denominations in which
the contracts are traded.

All of the Funds (except for the Growth & Income, Real Estate Equity,
Diversified Bond Index, and Money Market Funds) may use the above-described and
other available exchange traded financial futures contracts, and options
thereon, subject to the limitations set forth herein and in the Trust's
prospectus.

OPTIONS ON FINANCIAL FUTURES CONTRACTS

The writer of an option on a financial futures contract agrees to assume a
position in such financial futures contract if the purchaser exercises the
option and thereby assumes the opposite position in the financial futures
contract. A party that writes an option receives a premium for doing so, and the
party that purchases an option pays a premium therefor. The option writer incurs
the risk that the option will be exercised and the writer will suffer a loss on
the futures contract position it is thus required to assume that exceeds the
premium the writer received.

If the price of the debt instrument or stock index on which the futures
contract is based increases (in the case of a put option written by the Fund) or
decreases (in the case of a call option written by the Fund), the Fund may incur
losses that exceed the amount of the premium received by the Fund for writing
the option. Such losses may arise because an option written by the Fund on a
futures contract requires the Fund to pay any amount by which the fluctuating
price of the underlying debt instrument or index exceeds (in the case of a put
option) or is less than (in the case of a call option) the price specified in
the futures contract to which the option relates.

INTEREST RATE OPTIONS

After payment of a specified premium at the time an interest rate option is
entered into, the purchaser of a call interest rate option obtains the right to
receive specified debt securities upon exercise of the option in exchange for

<PAGE>

payment of a specified exercise price. The purchaser of a put option obtains the
right to sell the specified debt securities upon exercise of the option and to
receive the exercise price therefor. The writer of the interest rate option
receives a premium but has the obligation, upon exercise of the option, to
deliver the subject securities in exchange for the exercise price (in the case
of a call option) or to purchase the subject securities at the exercise price
(in the case of a put option). Securities for which interest rate options are
currently traded include United States Treasury Bonds and United States Treasury
Notes.

MARGIN REQUIREMENTS FOR FUTURES AND OPTIONS

When futures contracts are traded, both buyer and seller are required to post
an initial margin of cash or United States Treasury Bills equaling as much as 5
to 10 percent or more of the contract settlement price. The nature of the margin
requirements in futures transactions differs from traditional margin payments
made in securities transactions in that margins for futures contracts do not
involve the borrowing of funds by the customer to finance the transaction.
Instead, a customer's margin on a futures contract represents a good faith
deposit securing the customer's contractual obligations under the futures
contract. If the market moves against the Trust, so that a Fund has a net loss
on its outstanding futures contracts for a given day, the Fund generally will be
required to post additional margin to that extent. The margin deposit is
returned, assuming the Trust's obligations have been met, when the futures
contract is terminated.

Similar margin requirements will apply in connection with any transactions in
which a Fund writes options on futures contracts, options on securities indexes,
or interest rate options.

STOCK INDEX OPTIONS

After payment of a specified premium at the time a stock index option is
entered into, the purchaser of a stock index call option obtains the right to
receive a sum of money upon exercise of the option equal to a multiple of the
excess of a specified stock index on the exercise date over the exercise or
"strike" price specified by the option. The purchaser of a put option obtains
the right to receive a sum of money upon exercise of the option equal to a
multiple of any excess of the strike price over the stock index. The writer of a
call or put stock index option receives a premium, but has the obligation, upon
exercise of the option, to pay a multiple of the difference between the index
and the strike price. Stock indexes for which options are currently traded
include the Standard & Poor's 100 and Standard & Poor's 500 Indexes.

OTHER DERIVATIVE INSTRUMENTS

Subject to the conditions set forth elsewhere in this Statement of Additional
Information, the Global Equity, International Balanced, International Equity
Index, International Equity, Emerging Markets Equity, Global Bond, and High
Yield Bond Funds may use swaps, caps, floors and collars. Provided the contract
so permits, a Fund will usually enter into swaps on a net basis; that is, the
two payment streams are netted out in a cash settlement on the payment date or
dates specified in the instrument, with the Fund receiving or paying, as the
case may be, only the net amount of the two payments.

Each Fund will maintain cash or liquid high grade debt securities in a
segregated account with its custodian in an amount sufficient at all times to
cover its current obligations under swaps, caps, floors and collars. If a Fund
enters into a swap agreement on a net basis, it will segregate assets with a
daily value at least equal to the excess, if any, of the Fund's accrued
obligations under the swap agreement over the accrued amount the Fund is
entitled to receive under the agreement. If a Fund enters into a swap agreement
on other than a net basis, or sells a cap, floor or collar, it will segregate
assets with a daily value at least equal to the full amount of the Fund's
accrued obligations under the agreement.

None of these Funds will enter into any swap, cap, floor, or collar, unless
the other party to the transaction (the "Counterparty") is deemed creditworthy
by the sub-investment manager. If a Counterparty defaults, the Fund

<PAGE>

may have contractual remedies pursuant to the agreements related to the
transaction. The swap market has grown substantially in recent years, with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Caps, floors and collars are more recent
innovations for which standardized documentation has not yet been fully
developed and, for that reason, they are less liquid than swaps.

The liquidity of swaps, caps, floors and collars will be determined by the
sub-investment manager based on various factors, including (1) the frequency of
trades and quotations, (2) the number of dealers and prospective purchasers in
the marketplace, (3) dealer undertakings to make a market, (4) the nature of the
instrument (including any demand or tender features) and (5) the nature of the
marketplace for trades (including the ability to assign or offset a Fund's
rights and obligations relating to the investment). Such determination will
govern whether the instrument will be deemed within the 15% restriction on
investments in securities that are not readily marketable.

The federal income tax treatment with respect to swaps, caps, floors, and
collars may impose limitations on the extent to which a Fund may engage in such
transactions.

INVESTMENT COMPANIES

Each Fund may invest up to 10% of its total assets in shares of other
investment companies investing exclusively in securities in which it may
otherwise invest. Because of restrictions on direct investment by U.S. entities
in certain countries, other investment companies may provide the most practical
or only way for a Fund to invest in certain markets. Such investments may
involve the payment of substantial premiums above the net asset value of those
investment companies' portfolio securities and are subject to limitations under
the Investment Company Act. A Fund also may incur tax liability to the extent it
invests in the stock of a foreign issuer that is a "passive foreign investment
company" regardless of whether such "passive foreign investment company" makes
distributions to the Fund. The Funds do not intend to invest in other investment
companies unless the potential benefits are judged to exceed the associated
costs. As a shareholder in an investment company, a Fund would bear its ratable
share of that investment company's expenses, including advisory and
administration fees. The Emerging Markets Equity Fund is the most likely to
invest in other investment companies; and John Hancock and the sub-investment
manager have agreed to waive their own management fees with respect to the
portion of that Fund's assets invested in other open-end (but not closed-end)
investment companies. The International Equity Index Fund is likely to invest in
closed-end investment companies known as "country funds" or passive foreign
investment companies. The International Equity Fund may also purchase shares of
investment companies investing primarily in foreign securities, including
country funds. The Large Cap Value CORE and International Equity Funds may,
subject to the limitations stated above, invest in World Equity Benchmark Shares
("WEBS") and similar securities that represent an interest in securities
included in a foreign securities index.

The Mid Cap Growth Fund may also invest in money market funds managed by Janus
Capital, pursuant to an exemptive order received from the SEC. Janus Capital
will remit to the Mid Cap Growth Fund the fees it receives from the Janus money
market fund to the extent such fees are based on the Mid Cap Growth Fund's
assets. Janus Capital is seeking an amended and restated exemptive order that
would permit funds managed by Janus Capital to invest in the Janus money market
funds in excess of the limitations of Section 12(d)(1) of the 1940 Act. There is
no assurance that such amendment will be granted.

INVESTMENT INDEXES

Investments in the Equity Index, International Equity Index, and Bond Index
Funds each involve the risk that the Fund will be unable to match the
performance of its corresponding target index. Each Fund's ability to match the
performance of its corresponding target index is affected by (a) the size and
timing of cash flows into and out of that Fund, (b) the level of the Fund's
expenses, including commissions and spreads, portfolio management

<PAGE>

expenses, and other operating expenses, and (c) the degree of success of the
techniques employed by the Fund's sub-investment manager. Further, if the size
of a Fund limits the number of issues that the Fund can purchase, or that size
is relatively small in relation to cash flows, the greater the potential that
the Fund may be unable to match the performance of the corresponding target
index.

THE S&P 500

The Equity Index Fund seeks to provide investment results that correspond to
the total return of the U.S. market as represented by the S&P 500. As changes
are made to the S&P 500 during the year, they will be reflected in the Fund as
soon as deemed advisable. The Fund will, to the extent feasible, remain fully
invested. The S&P 500 is an index that is constructed by the Standard & Poor's
Corporation ("Standard & Poor's" or "S&P"), which chooses stocks on the basis of
market values and industry diversification. Most of the largest 500 companies
listed on the U.S. stock exchanges are included in the index. Additional stocks
that are not among the 500 largest stocks, by market value, may be included in
the S&P 500 for diversification purposes. The index is capitalization
weighted--that is, stocks with a larger capitalization (shares outstanding times
current price) have a greater weight in the index. Selection of a stock for
inclusion in the S&P 500 Index in no way implies an opinion by S&P as to its
attractiveness as an investment.

The Trust and the insurance products supported by the Trust are not sponsored,
endorsed, sold or promoted by Standard & Poor's. Standard & Poor's makes no
representation or warranty, express or implied, to the owners of the insurance
products supported by the Trust or any member of the public regarding the
advisability of investing in the Trust or such insurance products. Standard &
Poor's only relationship to the Trust is the licensing of Standard & Poor's
marks and the S&P 500 Index, which is determined, composed and calculated by
Standard & Poor's without regard to the Fund or the Trust. "Standard &
Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and "500" are
trademarks of McGraw-Hill, Inc. and have been licensed for use by the Trust. In
determining, composing, or calculating the S&P 500 Index, S&P has no obligation
to take into consideration the needs of the Trust or those of the owners of the
insurance products supported by the Trust. S&P is not responsible for and has
not participated in the determination of the prices and amount of the insurance
products supported by the Trust or the timing of the issuance or sale of such
products or in the determination or calculation of the equation by which such
products are to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing, or trading of such products.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE TRUST, OWNERS OF THE PRODUCTS
SUPPORTED BY THE TRUST, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P
500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

THE LEHMAN BROTHERS GOVERNMENT/CORPORATE AND AGGREGATE BOND INDEXES

The Lehman Brothers Government/Corporate Index (the "Government/Corporate
Index") is intended to measure the performance of the domestic, fixed-rate
investment grade debt market. The Government/Corporate Index is composed of (1)
all public obligations of the U.S. Government, its agencies and
instrumentalities (excluding "flower" bonds and pass-through issues such as GNMA
certificates) and (2) all publicly issued, fixed--

<PAGE>

rate nonconvertible, investment grade, dollar-denominated, SEC-registered
obligations of domestic corporations, foreign governments and supranational
organizations.

The Lehman Brothers Aggregate Bond Index (the "Aggregate Bond Index") covers
the U.S. investment grade fixed-rate bond market, including government and
corporate securities, agency mortgage pass-through securities, and asset-backed
securities. The Aggregate Bond Index covers those securities in the
Government/Corporate Bond Index, plus those covered by the Lehman
Mortgage-Backed Securities Index ("MBS Index") and the Lehman Asset-Backed
Securities Index ("ABS Index"). The MBS Index covers fixed-rate securities
backed by mortgage pools of the Government National Mortgage Association
("GNMA"), Freddie Mac and Fannie Mae. The ABS Index covers several
subsectors--including credit and charge cards, auto, utilities and home equity
loans--and includes pass-through, bullet, and controlled amortization
structures.

All non-U.S. Government issues in the Government/Corporate Index and the
Aggregate Bond Index are rated at least Baa by Moody's Investors Service, Inc.
("Moody's") or, if unrated by Moody's, BBB by Standard & Poor's Ratings Group
("Standard & Poor's").

Lehman Brothers, Inc. is neither a sponsor of nor in any other way affiliated
with the Trust or the insurance products supported by the Trust. Inclusion of a
security in the Government/Corporate or Aggregate Bond Indexes in no way implies
an opinion of Lehman Brothers, Inc. as to its attractiveness or appropriateness
as an investment.

THE MSCI EAFE GDP INDEX

The MSCI EAFE GDP Index weights countries such that a country with a larger
GDP will have a greater weight in the index. Stocks within those countries are
capitalization weighted; that is stocks with a larger capitalization have a
greater weight in the index.

The Trust and the insurance products supported by the Trust are not sponsored,
endorsed, sold or promoted by MSCI. MSCI makes no representation or warranty,
express or implied, to the owners of the Trust, or any member of the public
regarding the advisability of investing in funds generally or in the Trust or
any Fund particularly or the ability of the MSCI EAFE GDP Index to track general
stock market performance. MSCI is the licensor of certain trademarks, service
marks and trade names of MSCI and of the MSCI EAFE GDP Index which is
determined, composed and calculated by MSCI without regard to the Trust. "Morgan
tanley Capital International" is a service mark of Morgan Stanley & Co.,
Incorporated, that has been licensed for use by the Trust. MSCI has no
obligation to take the needs of the Trust or the owners of insurance products
supported by the Trust into consideration in determining, composing or
calculating the MSCI EAFE GDP Index. MSCI is not responsible for and has not
participated in the determination of the prices or amounts of insurance products
supported by the Trust or the timing of the issuance and sale of such products,
or in the determination or calculation of the equation by which such products
are convertible into cash. MSCI has no obligation or liability to owners of the
Trust or of the insurance products supported by the Trust in connection with the
administration, marketing or trading of any Fund of the Trust.

ALTHOUGH MSCI OBTAINS INFORMATION FOR INCLUSION IN OR FOR USE IN THE
CALCULATION OF THE INDEX FROM SOURCES WHICH MSCI CONSIDERS RELIABLE, NEITHER
MSCI NOR ANY OTHER PARTY GUARANTEES THE ACCURACY AND/OR THE COMPLETENESS OF THE
INDEX OR ANY DATA INCLUDED THEREIN. NEITHER MSCI NOR ANY OTHER PARTY MAKES ANY
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY OWNERS OF THE
TRUST, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA
INCLUDED THEREIN. NEITHER MSCI NOR ANY OTHER PARTY MAKES ANY EXPRESS OR IMPLIED
WARRANTIES, AND MSCI HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX OR
ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT
SHALL MSCI OR ANY OTHER PARTY HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT,
SPECIAL,

<PAGE>

PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

INVESTMENT RESTRICTIONS

The Trust has adopted the following restrictions relating to the investment of
each Fund's assets. These restrictions are fundamental policies and may not be
changed for any Fund without the approval of a majority of the outstanding
voting shares of each affected Fund. (As used in the Prospectus and this
Statement of Additional Information, the term "majority of the outstanding
voting shares" means the lesser of (1) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are represented or (2)
more than 50% of the outstanding shares.) A change in policy affecting only one
Fund may be effected with the approval of the majority of the outstanding voting
shares of that Fund, without the approval of a majority of the outstanding
voting shares of any other Fund or of the entire Fund. To the extent the
provisions of this Statement of Additional Information indicate investment
restrictions more restrictive than the fundamental restrictions described below,
the more restrictive limitation controls, but any such limitation may be changed
without the approval of a majority of the outstanding voting shares of each
affected Fund, subject to the below fundamental restrictions.

No Fund 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.
Investments of the type permitted in the Real Estate Equity Fund are not deemed
interests in real estate for the purposes of this restriction.

(2) Make loans, other than through the acquisition of obligations in which the
Fund may invest consistent with its objective and investment policies, except
that each Fund may lend portfolio securities not having a value in excess of33
1/3% of the Fund'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, Aggressive Balanced, Equity Index, Large Cap Value,
Large Cap Growth, Large Cap Value CORE, Large Cap Aggressive Growth, Large/Mid
Cap Value, Mid Cap Value, Mid Cap Growth, Fundamental Mid Cap Growth, Mid Cap
Blend, Small/Mid Cap Value, Small/Mid Cap Growth, Small/Mid Cap CORE, Small
Cap Value, Small Cap Growth, Global Equity, International Balanced,
International Equity Index, International Equity, International Opportunities,
Emerging Markets Equity, Short-Term Bond, Bond Index, Global Bond, and High
Yield Bond Funds 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 Fund if more
than one-third of the Fund'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, Large
Cap Growth, Mid Cap Value, and Small Cap Value Funds, no position in
financial futures, options 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 Fund which are hedged by such
instruments exceeds one-third of the value of its total assets and (b) as
to such Funds and as to the Equity Index and International Opportunities
Funds, no futures position or position in options on futures will be

<PAGE>

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 Fund's total assets;

(B) with respect to the Managed, Aggressive Balanced, Equity Index, Large
Cap Value, Large Cap Value CORE, Large Cap Aggressive Growth, Large/Mid Cap
Value, Mid Cap Value, Mid Cap Growth, Fundamental Mid Cap Growth, Mid Cap
Blend, Small/Mid Cap Value, Small/Mid Cap Growth, Small/Mid Cap CORE, Small
Cap Value, Small Cap Growth, Global Equity, International Balanced,
International Equity Index, International Equity, International Opportunities,
Emerging Markets Equity, Short-Term Bond, Bond Index, Sovereign Bond, Global
Bond, and High Yield Bond Funds, 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, Aggressive Balanced, Mid Cap Growth, Large Cap Value CORE,
Large Cap Aggressive Growth, Large/Mid Cap Value, Small/Mid Cap Growth,
Small/Mid Cap CORE, Small Cap Growth, Global Equity, International Balanced,
International Equity Index, International Equity, Emerging Markets Equity,
Short-Term Bond, Bond Index, Global Bond, and High Yield Bond Funds 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 Funds may purchase, sell or write such futures or options
other than for bona fide hedging purposes if immediately thereafter the
Fund'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 Fund's net assets;

(D) the Sovereign Bond Fund 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 Funds listed therein; and

(E) the Managed, Aggressive Balanced, Equity Index, Large Cap Value, Large
Cap Value CORE, Large Cap Aggressive Growth, Large/Mid Cap Value, Mid Cap
Value, Mid Cap Growth, Fundamental Growth, Mid Cap Blend, Small/Mid Cap Value,
Small/Mid Cap CORE, Global Equity, International Balanced, International
Equity Index, International Equity, International Opportunities, Emerging
Markets Equity, Global Bond, and High Yield Bond Funds 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 Fund 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 Fund
as of the time each such borrowing is made, or 10% as to the Aggressive
Balanced, Large Cap Value CORE, Large Cap Aggressive Growth, Large/Mid Cap
Value, Fundamental Growth, Mid Cap Blend, Small/Mid Cap Value, Small/ Mid Cap
CORE, Global Equity, International Equity Index, International Equity, Emerging
Markets Equity, Bond Index and High Yield Bond Funds, subject to a
non-fundamental policy that none of these Funds will make additional investments
at any time when such

<PAGE>

borrowings plus any amounts payable by the Fund under reverse repurchase
agreements exceed 5% of that Fund's total assets.

(6) Except as set forth herein as to the Managed and Sovereign Bond Funds,
neither such Funds, nor the Growth & Income, Large Cap Growth, Real Estate
Equity, or Money Market Funds may purchase securities which are subject to legal
or contractual delays in or restrictions on resale. The Managed and Sovereign
Bond Funds 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 non fundamental restriction
limiting all illiquid securities held by each Fund to not more than 15% of the
Trust'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 Fund would immediately thereafter own (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 Fund's total
assets, (c) securities of investment companies having an aggregate value in
excess of 10% of the Fund's total assets, or (d) together with investment
companies having the same investment adviser as the Fund (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 Aggressive Balanced, Equity Index, Large Cap
Value, Large Cap Value CORE, Large Cap Aggressive Growth, Large/Mid Cap Value,
Mid Cap Value, Mid Cap Growth, Fundamental Growth, Mid Cap Blend, Small/Mid Cap
Value, Small/Mid Cap CORE, Small Cap Value, Small Cap Growth, Global Equity,
International Equity, International Balanced, International Opportunities,
Emerging Markets Equity, Bond Index, Global Bond, or High Yield Bond Funds.

(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 Fund'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 Fund. This
restriction shall not apply to the Large Cap Aggressive Growth, Mid Cap Growth,
or International Balanced Funds.

(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 Aggressive Balanced, Equity Index, Large Cap Value, Large Cap Value CORE,
Large Cap Aggressive Growth, Large/Mid Cap Value, Mid Cap Value, Mid Cap Growth,
Fundamental Mid Cap Growth, Mid Cap Blend, Small/Mid Cap Value, Small/Mid Cap
Growth, Small/Mid Cap CORE, Small Cap Value, Small Cap Growth, Global Equity,
International Balanced, International Equity Index, International Equity,
International Opportunities, Emerging Markets Equity, Short-Term Bond, Bond
Index, Sovereign Bond, Global Bond, and High Yield Bond Funds 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 Trust'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

<PAGE>

their parent. In conformity with its understanding of current interpretations of
the 1940 Act by the staff of the Securities and Exchange Commission, the Trust,
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 Trust may modify its practices to conform to such changes.

For purposes of any restrictions or limitation to which the Trust is subject,
no Fund, 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 Fund does
not hold directly in its portfolio.

<PAGE>

BOARD OF TRUSTEES AND OFFICERS OF THE TRUST

The Board of Trustees of the Trust is responsible for the administration of
the affairs of the Trust. The Board may exercise all powers of the Trust except
those powers which are conferred upon or reserved to the shareholders. The
following is a list of the current members of the Board of Trustees and officers
of the Trust, together with their principal occupations during the past five
years:

POSITION HELD
NAME, ADDRESS AND AGE WITH TRUST PRINCIPAL OCCUPATION
- --------------------- ------------- --------------------
<S> <C> <C>
Michele G. Van Leer* Senior Vice President, Individual
(age 41) ............ Chairman and Retail Products,
John Hancock Mutual Life Insurance
John Hancock Place Trustee Company;
Boston, Massachusetts Director, John Hancock Variable Life
02117 Insurance
Company

Thomas J. Lee* (age Vice President, Life and Annuity
44).................. Vice Chairman, Services, John
John Hancock Place President Hancock Mutual Life Insurance Company;
Boston, Massachusetts Director, John Hancock Variable Life
02117 and Trustee Insurance
Company

William H. Dykstra
(age 70) ............ Trustee Director, Reed & Barton Corporation
Reed & Barton (silversmiths); Certified Public
Corporation Accountant; Trust
Taunton, Massachusetts
02780 Fund Commissioner, Town of Braintree.

Diane C. Kessler (age Executive Director, Massachusetts
52).................. Trustee Council of
325 Parker Street Churches
Newton Centre,
Massachusetts 02159

Robert Verdonck (age President and Chief Executive Officer,
53).................. Trustee East
One Bennington Street Boston Savings Bank
East Boston,
Massachusetts 02128

Elizabeth G. Cook (age Executive Director, The Advertising
61).................. Trustee Club of
85 East India Row Greater Boston
Boston, Massachusetts
02110

Laura L. Mangan (age Assistant Regulatory and Compliance
35).................. Secretary Officer,
John Hancock Mutual Life Insurance
John Hancock Place Company.
Boston, Massachusetts
02117

Raymond F. Skiba (age Director, Fund Operations, John Hancock
53).................. Treasurer Mutual
John Hancock Place Life Insurance Company.
Boston, Massachusetts
02117
</TABLE>

- ---------

* Ms. Van Leer and Mr. Lee are the only Trustees who are "interested persons" as
defined in the 1940 Act, as amended, and are members of the Trust's Executive
Committee. Although Ms. Mangan and Mr. Skiba are officers of the Trust, they
are not Trustees of the Trust.

Certain members of the Trust's Board of Trustees own either variable annuity
contracts or variable life insurance policies funded by one of the Accounts and,
in that sense, have an interest in shares of the Trust.

<PAGE>

INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT MANAGEMENT AND OPERATING EXPENSES

John Hancock, the Trust's investment manager, is a Massachusetts corporation.
The Trust will pay John Hancock an investment advisory fee at the following
rates:

<TABLE>
<CAPTION>
INVESTMENT ADVISORY FEE AS AN ANNUAL
PERCENTAGE OF EACH PORTION OF THE
FUND FUND'S AVERAGE DAILY NET ASSETS
---- ------------------------------------
<S> <C> <C>
Managed .............. .40% of first $500 million; .35% of next $500
Large Cap Growth ..... million; .30% above $1 billion
Growth & Income ...... }
Aggressive Balanced .. .675% of first $250 million; .625% of next $250
million; .60% above $500 million
Large Cap Value CORE . .75% of first $50 million; .65% of next $150
million; and .60% above $200 million
Large Cap Aggressive 1.00% of first $10 million; .875% of next $10
Growth............... million; .75% above $20 million
Sovereign Bond ....... .25%
Money Market ......... }
Small Cap Growth ..... .75%
Large Cap Value ...... .75% of first $100 million; .70% of next $150
million; .65% above $250 million
Equity Index ......... .15% of first $75 million; .14% of next $50
million; .13% above $125 million
Large/Mid Cap Value .. .95% of first $25 million; .85% of next $25
million; .75% of next $50 million; .65% above $100
million
Small Cap Value ...... .80% of first $100 million; .75% of next $100
million; .65% above $200 million
Mid Cap Value ........ .80% of first $100 million; .775% of next $150
million; .75% of next $250 million; .725% of next
$250 million; .70% above $750 million
Mid Cap Growth ....... .85% of first $100 million; .80% above $100
million
Fundamental Mid Cap .85% of first $50 million; .80% of next $50
Growth............... million; .75% of next $50 million; .70% above $150
million
Real Estate Equity ... .60% of first $300 million; .50% of next $500
} million; .40% above $800 million
Mid Cap Blend ........
Small/Mid Cap Growth . .75% of first $250 million; .70% of next $250
million; .65% above $500 million
Small/Mid Cap Value .. .95% of first $100 million; .90% of next $150
million; .85% over $250 million
Small/Mid Cap CORE ... .80% of first $50 million; .70% above $50 million
Global Equity ........ .90% of first $50 million; .80% of next $100
million; .70% above $150 million
International Balanced .85% of first $100 million; .70% above $100
million
International Equity .18% of first $100 million; .15% of next $100
Index................ million; .11% above $200 million
International Equity . 1% of first $50 million; .95% next of $150
million; .90% above $200 million
International 1% of first $20 million; .85% of next $30 million;
Opportunities........ .75% above $50 million
Emerging Markets 1.30% of first $10 million; 1.20% of next $140
Equity............... million; 1.10% above $150 million
Short-Term Bond ...... .30%
Bond Index ........... .15% of first $100 million; .13% on next $150
million; .11% above $250 million
Global Bond .......... .75% of first $25 million; .65% of next $50
million; .55% of next $75 million; .50% above $150
million
High Yield Bond ...... .65% of first $100 million; .60% on next $100
million; .50% above $200 million
</TABLE>

<PAGE>

John Hancock's indirect wholly-owned subsidiary, Independence Investment
Associates, Inc. ("IIA"), serves as a sub-investment manager to the Managed,
Growth & Income, and Large Cap Growth Funds. For this, John Hancock pays IIA a
fee for the Large Cap Growth and Managed Funds at an annual rate of .30% of the
first $500,000,000 of the Fund's average daily net assets, .2625% of the next
$500,000,000, and .225% of all additional amounts. The advisory fee payable to
IIA by John Hancock for the Growth & Income Fund is at an annual rate of .1875%
of that Fund's average daily net assets.

IIA also serves as sub-investment manager to the Real Estate Equity Fund. For
this John Hancock pays IIA a fee at an annual rate of .30% of the first
$300,000,000 of the Fund's average daily net assets, .25% of the next
$500,000,000 and .20% of all additional amounts. Prior to May 1, 1993, John
Hancock's indirect subsidiary Hancock Realty Investors Incorporated ("HRII")
also served as a sub-investment manager to the Fund and was paid a fee by John
Hancock which fee is now shared by John Hancock and IIA. As of that date,
however, the personnel of HRII primarily responsible for its services to the
Fund became employees of John Hancock and will continue in that capacity to
provide the services formerly furnished by HRII.

IIA also serves as sub-investment manager to the Short-Term Bond Fund. For
this, John Hancock pays IIA a fee at an annual rate of .19% of the first
$250,000,000 of the Fund's average daily net assets, .17% of the next
$250,000,000, and .15% of all additional amounts.

IIA also serves as sub-investment manager to the Aggressive Balanced Fund. For
this, John Hancock pays IIA a fee at an annual rate of .325% of the first
$250,000,000 of the Fund's average daily net assets, .275% of the next
$250,000,000, and .25% on all additional amounts.

IIA also serves as sub-investment manager to the Mid Cap Blend Fund. For this
John Hancock pays IIA a fee at an annual rate of .40% of the first $250,000,000
of the Fund's average daily net assets, .35% on the next $250,000,000, and .30%
on all additional amounts.

John Hancock's indirect wholly-owned subsidiary, John Hancock Advisers, Inc.
("Advisers"), serves as sub-investment manager to the Small Cap Growth Fund. For
this, John Hancock pays Advisers a fee at an annual rate of .50% of the Fund's
average daily net assets.

Advisers also serves as sub-investment manager to the Sovereign Bond Fund. For
this, John Hancock pays Advisers a fee at an annual rate of .1875% or the Fund's
average daily net assets.

<PAGE>

State Street Global Bank & Trust, N.A. ("State Street") serves as
sub-investment manager to the Equity Index Fund. For this John Hancock pays
State Street a fee at an annual rate of .07% of the first $75,000,000 of the
Fund's average daily net assets; .06% of the next $50,000,000; and .05% of the
next $275 million; and .03% on all additional amounts.

T. Rowe Price Associates, Inc. ("T. Rowe Price") serves as sub-investment
manager to the Large Cap Value Fund. For this John Hancock pays T. Rowe Price a
fee at an annual rate of .50% of the first $100 million of the Fund's average
daily net assets, .45% of the next $150 million, and .40% on all additional
amounts.

Neuberger Berman, LLC ("Neuberger & Berman") serves as sub-investment manager
to the Mid Cap Value Fund. For this John Hancock pays Neuberger & Berman a fee
at an annual rate of .50% of the first $100,000,000 of the Fund's average daily
net assets; .475% of the next $150,000,000; .45% of the next $250,000,000; .425%
of the next $250,000,000; and .40% of all additional amounts.

Janus Capital Corporation ("Janus") serves as sub-investment manager to the
Mid Cap Growth Fund. For this John Hancock pays Janus a fee at an annual rate of
.60% of the first $100,000,000 of the Fund's average daily net assets and .55%
on all additional amounts.

Goldman Sachs Asset Management ("Goldman Sachs"), a separate operating
division of Goldman, Sachs & Co., serves as sub-investment manager to the
Small/Mid Cap CORE Fund. For this John Hancock pays Goldman Sachs a fee at an
annual rate of .60% of the first $50 million of the Fund's average daily net
assets and .50% on all additional amounts.

Goldman Sachs also serves as sub-investment manager to the Large Cap Value
CORE Portfolio. For this, John Hancock pays Goldman Sachs a fee at an annual
rate of .40% of the first $50,000,000 of the Fund's average daily net assets,
.30% of the next $150,000,000, and .25% on all additional amounts.

Goldman Sachs also serves as sub-investment manager to the International
Equity Fund. For this, John Hancock pays Goldman Sachs a fee at an annual rate
of .60% of the first $50,000,000 of the Fund's average daily net assets, .55% of
the next $150,000,000, and .50% on all additional amounts.

INVESCO Management & Research, Inc. ("INVESCO") serves as sub-investment
manager to the Small Cap Value Fund. For this John Hancock pays INVESCO a fee at
an annual rate of .55% of the average daily net assets of the first
$100,000,000; .50% of the next $100,000,000; and .40% of all additional amounts.

Scudder Kemper Investments Inc. ("Scudder") serves as sub-investment manager
to the Global Equity Fund. For this John Hancock pays Scudder a fee at an annual
rate of .70% of the first $50 million of the Fund's average daily net assets,
.60% of the next $100 million, and .50% on all additional amounts.

Brinson Partners, Inc., ("Brinson") serves as sub-investment manager to the
International Balanced Fund. For this John Hancock pays Brinson a fee at an
annual rate of .50% of the first $100,000,000s of the Fund's average daily net
assets and .35% on all additional amounts.

Independence International Associates, Inc. ("International") serves as
sub-investment manager to the International Equity Index Fund. For this John
Hancock pays International a fee at an annual rate of .125% of the first $100
million of the Fund's average daily net assets, .10% of the next $100 million
and .06% on all additional amounts.

Rowe Price-Fleming International, Inc., ("Rowe Price-Fleming") serves as
sub-investment manager to the International Opportunities Fund. For this John
Hancock pays Rowe Price-Fleming a fee at an annual rate of .75% of the first
$20,000,000 of the Fund's average daily net assets, .60% of the next
$30,000,000, .50% of the next $150,000,000, and .50% of all the Fund's assets
once the Fund's average daily net assets reaches $200,000,000.

<PAGE>

Montgomery Asset Management, LLC ("Montgomery"), a wholly-owned subsidiary
of Commerzbank AG, serves as sub-investment manager to the Emerging Markets
Equity Fund. For this John Hancock pays Montgomery a fee at an annual rate of
1.10% of the first $10 million of the Fund's average daily net assets, .90% of
the next $140 million, and .80% on all additional amounts.

Mellon Bond Associates, LLP ("Mellon"), which is an indirect wholly-owned
subsidiary of Mellon Bank Corporation, serves as sub-investment manager to the
Bond Index Fund. For this John Hancock pays Mellon a fee at an annual rate of
.08% of the first $100 million of the Fund's average daily net assets, .06% of
the next $150 million, and .04% on all additional amounts.

J.P. Morgan Investment Management Inc. ("JPMIM") serves as sub-investment
manager to the Strategic Bond Fund. For this John Hancock pays JPMIM a fee at an
annual rate of .50% of the first $25,000,000 of the Fund's average daily net
assets, .40% of the next $50,000,000, .30% of the next $75,000,000, and .25% on
all additional amounts.

Wellington Management Company, LLP ("Wellington") serves as sub-investment
manager to the High Yield Bond Fund. For this John Hancock pays Wellington a fee
at an annual rate of .50% of the first $100 million of the Fund's average daily
net assets, .45% of the next $100 million, and .35% on all additional amounts.

Wellington also serves as sub-investment manager to the Small/Mid Cap Growth
Fund. For this John Hancock pays Wellington a fee at an annual rate of .55% of
the first $100 million of the Fund's average daily net assets, .45% of the next
$100 million, and .40% on all additional amounts.

Wellington also serves as sub-investment manager to the Large/Mid Cap Value
Fund. For this John Hancock pays Wellington a fee at an annual rate of .60% of
the first $25,000,000 of the Fund's average daily net assets, .50% of the next
$25,000,000, .40% of the next $50,000,000, and .30% on all additional amounts.

Alliance Capital Management, LLP ("Alliance") serves as sub-investment manager
to the Large Cap Aggressive Growth Fund. For this John Hancock pays Alliance a
fee at an annual rate of .75% of the first $10,000,000 of the Fund's average
daily net assets, .625% of the next $10,000,000, and .50% on all additional
amounts.

The Boston Company Asset Management, LLC ("Boston") serves as sub-investment
manager to the Small/ Mid Cap Value Fund. For this, John Hancock pays Boston a
fee at an annual rate of .65% of the first $100,000,000 of the Fund's average
daily net assets, .60% of the next $150,000,000, and .55% on all additional
amounts.

Oppenheimer Funds, Inc. ("Oppenheimer") serves as sub-investment manager to
the Fundamental Mid Cap Growth Fund. For this, John Hancock pays Oppenheimer a
fee at an annual rate of .50% of the first $50,000,000 of the Fund's average
daily net assets, .45% of the next $50,000,000, .40% of the next $50,000,000,
and .35% of all additional amounts.

Set out below are the amounts that the Trust paid to the investment manager
and that the investment manager paid to the sub-investment managers for the past
three years:

<PAGE>

INVESTMENT MANAGER SUB-INVESTMENT MANAGER
------------------------------- --------------------------------
FUND 1998 1997 1996 1998 1997 1996
- ---- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Managed .............. 9,825,708 8,515,377 7,419,499 7,369,096 6,386,533 5,564,624
Growth & Income ...... 7,959,851 6,125,461 4,525,131 5,970,179 4,532,841 3,348,597
Equity Index ......... 270,965 95,900 -- 134,418 33,565 --
Large Cap Value ...... 746,229 328,969 54,224 497,498 219,423 36,166
Large Cap Growth ..... 3,445,963 2,520,205 1,785,423 2,584,378 1,890,154 1,339,067
Mid Cap Value ........ 708,164 251,970 39,557 486,843 173,229 27,195
Mid Cap Growth ....... 506,917 230,304 43,322 357,811 162,595 30,586
Real Estate Equity ... 1,071,226 1,052,761 711,894 535,611 526,381 355,947
Small/Mid Cap Growth . 1,490,558 1,564,61 900,820 993,730 1,043,601 600,847
Small/Mid Cap CORE ... 24,490 -- -- 18,367 -- --
Small Cap Value ...... 444,992 187,062 43,973 305,920 128,605 30,231
Small Cap Growth ..... 420,449 251,331 69,162 280,306 167,638 46,131
Global Equity ........ 87,055 -- -- 67,708 -- --
International Balanced 235,511 214,682 124,297 138,538 126,233 73,086
International Equity
Index................ 503,992 968,010 860,980 339,357 645,663 574,274
International
Opportunities........ 440,905 234,405 96,538 821,925 175,804 72,404
Emerging Markets
Equity............... 67,915 -- -- 57,466 -- --
Short-Term Bond ...... 192,680 220,493 146,224 122,022 83,787 55,565
Bond Index ........... 26,490 -- -- 14,128 -- --
Sovereign Bond ....... 2,127,466 4,243,027 1,748,529 1,595,666 1,410,726 1,311,396
Global Bond .......... 328,177 142,441 65,593 211,575 95,008 43,750
High Yield Bond ...... 49,428 -- -- 38,023 -- --
Money Market ......... 748,405 564,173 499,044 -- -- --
</TABLE>

The fees of the sub-investment managers are solely the responsibility of John
Hancock and not the Trust.

Pursuant to its Investment Management Agreements, as amended, with the Trust,
John Hancock has reserved the right to its name and "logo," which the Trust must
cease using upon termination of the Agreement.

Under the Investment Management Agreements, John Hancock, a registered
investment adviser under the Investment Advisers Act of 1940, advises the Trust
in connection with policy decisions; provides administration of day-to-day
operations; serves as the Trust's transfer agent and dividend disbursing agent;
maintains records required by the Investment Company Act of 1940; computes
income and yield of each Fund; and supervises activities of the sub-investment
managers referred to above and of other service providers to the Trust. John
Hancock also provides the Trust with office space, supplies and other facilities
required for the business of the Trust. It pays the compensation of Trust
officers and employees and the expenses of clerical services relating to the
administration of the Trust. Expenses not expressly assumed by John Hancock
under the Investment Management Agreement are paid by the Trust. These include,
but are not limited to, taxes, custodian and auditing fees, brokerage
commissions, advisory fees, the compensation of unaffiliated trustees, the
Trust's fidelity bond coverage, the costs of printing and distributing to
contract holders annual and semi-annual reports and voting materials, tabulating
votes, compensation for certain accounting, valuation, and compliance services,
legal, auditing, and custodian fees, registration costs, proxy costs,
organizational costs, association dues, and other expenses related to the
Trust's operations.

Under the Investment Management Agreements, for any fiscal year in which the
normal operating costs and expenses of any Fund of the Trust, exclusive of the
investment advisory fee, interest, brokerage commissions, taxes and
extraordinary expenses outside the control of John Hancock exceed 0.10% (.25%
prior to April 23, 1999) of that Fund's average daily net assets, John Hancock
will reimburse that Fund promptly after the end of the fiscal

<PAGE>

year in an amount equal to such excess. These reimbursements have been as
follows for the past three years (rounded to the nearest $1,000):

FUND 1998 1997 1996
- ---- -------- -------- ----------
<S> <C> <C> <C>
Equity Index............................ $543,000 $217,000 $102,000
Large Cap Value......................... -- 25,000 65,000
Mid Cap Value........................... -- 29,000 55,000
Mid Cap Growth.......................... 15,000 86,000 64,000
Small Cap Value......................... 17,000 57,000 56,000
Small Cap Growth........................ 27,000 38,000 51,000
International Balanced.................. 199,000 116,000 50,000
International Equity Index.............. 124,000 -- 38,000
International Opportunities............. 145,000 86,000 145,000
Short-Term Bond......................... -- -- 11,000
Global Bond............................. 31,000 61,000 50,000
Small/Mid Cap CORE...................... 107,000 -- --
Global Equity........................... 126,000 -- --
Emerging Markets Equity................. 111,000 -- --
Bond Index.............................. 56,000 -- --
High Yield Bond......................... 85,000 -- --
</TABLE>

UNDERWRITING AND INDEMNITY AGREEMENT

The offering of the Trust's shares is continuous. Pursuant to an Underwriting
and Indemnity Agreement, as amended May 1, 1997, Signator Investors, Inc.
("Signator") serves as the Trust's principal underwriter on a "best efforts"
basis. Neither Signator nor John Hancock receives any additional compensation
from the Trust for the services it performs pursuant to the Underwriting
Agreement. Signator is a wholly-owned subsidiary of John Hancock located at 197
Clarendon Street, Boston, MA 02117.

CUSTODIAN AGREEMENT

State Street Bank and Trust Company of Boston, Massachusetts, is the custodian
of the assets of all Funds pursuant to a Custodian Agreement dated as of January
30, 1995, and amended as of March 18, 1996, April 14, 1998, and May 1, 1999. The
custodian's duties include safeguarding and controlling the Trust's cash and
investments, handling the receipt and delivery of securities, and collecting
interest and dividends on the Trust's investments. Fund securities purchased in
the United States are maintained in the custody of State Street Bank, although
such securities may be deposited in the Book-entry system of the Federal Reserve
System or with Depository Trust Company. The Trustees of the Trust have
determined that, except as otherwise permitted under applicable Securities and
Exchange Commission "no-action" letters or exemptive orders, it is in the
Trust's best interest to hold foreign assets in qualified foreign banks and
depositories meeting the requirements of Rule 17f-5 under the Investment Company
Act of 1940, as amended.

INDEPENDENT AUDITORS

Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts, are the
independent auditors of the Trust.

YEAR 2000 PROGRESS

The computer systems used to administer the Trust's operations must be
adjusted to continue to perform this function after the calendar changes to a
year beginning with the numeral "2" (i.e., beginning in the year 2000).

<PAGE>

Because the Trust has no employees and does not own or lease any computer
systems, the Trust contracts with other entities to provide the services
essential to its operation. John Hancock has assured the Trust that John
Hancock's computer systems are expected to be compliant with the year 2000 on
time and in a way that will result in no disruption to the Trust or
contractholders. John Hancock has further advised the Trust that it is seeking
assurances from service providers to John Hancock and the Trust, including
sub-investment managers to the Trust, that the computer systems of the service
providers and sub-investment managers will be compliant with the year 2000.
However, risks and uncertainties exist, and nonperformance by any of these
entities, or other unforeseen circumstances, could have a material adverse
impact on the operation of the Trust.

FUND TRANSACTIONS AND BROKERAGE ALLOCATION

The Funds are charged with securities brokers' commissions, transfer taxes,
and other fees relating to their portfolio transactions. Expenses identifiable
to a particular Fund are charged to that Fund; otherwise, expenses are prorated
according to the size of the Fund. Investments in debt securities are, however,
generally traded on a net basis through issuers or dealers acting for their own
account as principals and not as brokers; therefore, no brokerage commissions
are payable on such transactions, although the price to the Trust usually
reflects a dealer "spread" or "mark-up."

Brokerage commissions paid by the Fund were as follows for the past three
years:

FUND 1998 1997 1996
- ---- ---- ---- ----
<S> <C> <C> <C>
Managed ...................... $1,843,929 $1,626,154 $ 411,250
Growth & Income .............. 2,673,170 1,646,997 2,669,585
Equity Index ................. 33,797 31,076 6,843
Large Cap Value .............. 63,944 45,619 14,960
Large Cap Growth ............. 815,587 680,933 1,008,291
Mid Cap Value ................ 495,154 122,108 22,485
Mid Cap Growth ............... 146,033 71,998 24,888
Small/Mid Cap Growth ......... 893,945 1,876,203 849,200
Real Estate Equity ........... 177,186 122,897 118,195
Small/Mid Cap CORE ........... 7,225 - -
Small Cap Value .............. 176,549 138,114 40,337
Small Cap Growth ............. 103,248 67,492 19,090
Global Equity ................ 37,426 - -
International Balanced ....... 51,205 27,745 41,380
International Equity Index ... 730,529 750,416 913,461
International Opportunities .. 117,083 63,138 46,838
Emerging Markets Equity ...... 10,018 - -
</TABLE>

Orders for the purchase and sale of Fund investments are placed by John
Hancock with respect to the Money Market Fund and by the respective
sub-investment managers to the other Funds. These Investment Managers place
orders in such manner as, in their opinion, will offer the best price and market
for the execution of each transaction. In seeking the best price and execution
for equity securities traded only in the over-the-counter market, they normally
deal directly with the principal market-makers.

The Investment Managers are governed in the selection of brokers and dealers
and the negotiation of brokerage commission rates (or the payment of net prices
in the case of debt securities) by the reliability and quality of the broker or
dealer's services. Some weight is given the availability and value of research
and statistical assistance furnished by the broker or dealer to the Investment
Manager but it is not always possible to place a dollar value on such
information and services. Because it is only supplementary to the Investment
Managers' own research efforts, the receipt of research information and
statistical assistance is not expected to reduce their

<PAGE>

expenses measurably. Research and statistical assistance typically furnished by
brokers or dealers includes analysts' reports on companies and industries,
market forecasts, and economic analyses. Brokers or dealers may also provide
reports on pertinent federal and state legislative developments and changes in
accounting practices; direct access by telephone or meetings with leading
research analysts throughout the financial community, corporate management
personnel, industry experts, leading economists and government officials;
comparative performance and evaluation and technical performance measurement
services; portfolio optimization software; availability of economic advice;
quotation services; and services from recognized experts on investment matters
of particular interest to the sub-investment manager. In addition, the foregoing
services may comprise the use of or be delivered by computer systems whose
software and hardware components may be provided to the sub-investment manager
as part of the services. In any case in which the foregoing systems can be used
for both research and non-research purposes, the Investment Manager makes an
appropriate allocation of those uses and will permit brokers to provide only the
portion of the systems to be used for research services. Research and
statistical services furnished by brokers handling the Funds' transactions may
be used by the Investment Managers for the benefit of all of the accounts
managed by them and not all of such research and statistical services may be
used by the Investment Managers in connection with the Funds.

Except as described below with respect to the International Balanced Fund,
the Investment Managers or the Funds will not at any time make a commitment
pursuant to an agreement or understanding with a broker because of research
services provided. Nor, except as set forth below, will the Investment Managers
otherwise, through an internal allocation procedure, direct brokerage upon any
prescribed basis to a broker because of research services provided. The
sub-investment manager for each of the Small Cap Value, Mid Cap Growth, and Mid
Cap Value Funds may have an internal procedure for allocating transactions in a
manner consistent with its execution policy to brokers that it has identified as
providing superior executions, research, or research related products or
services which benefit its advisory clients, including the Fund. In certain
cases, the sub-investment manager of the International Balanced Fund directs
securities transactions for that Fund to particular brokers, in recognition of
research services the broker has provided, pursuant to an understanding or
agreement with the broker or pursuant to the sub-investment manager's own
internal allocation procedures.

Evaluations of the overall reasonableness of any broker's commissions are made
by the Investment Managers' traders for the Funds on the basis of their
experience and judgment. To the extent permitted by Section 28(e) of the
Securities Exchange Act of 1934, such traders are authorized to pay a brokerage
commission on a particular transaction in excess of what another broker might
have charged in recognition of the value of the broker's brokerage or research
services, although such authority is generally expected to be used very
infrequently. The Mid Cap Growth, Mid Cap Value, and International Balanced
Funds, however, may be more likely to use such authority.

Although the Investment Managers will be responsible for the allocation of the
Funds' brokerage, their policies and practices in this regard must be consistent
with the foregoing and will at all times be subject to review by the Board of
Trustees of the Trust.

The brokerage transactions for those Funds that can invest in securities of
companies domiciled in countries other than the United States are anticipated to
be normally conducted on the stock exchanges or other markets of those countries
in which the particular security is traded. Fixed commissions on foreign stock
exchange transactions are generally higher than negotiated commissions available
in the United States. Moreover, there is generally less government supervision
and regulation of foreign stock exchanges and broker-dealers than in the United
States. Settlement periods in non-U.S. markets may differ from the normal
settlement period in the United States.

John Hancock also performs investment advisory services for a number of other
accounts and clients, none of which is given preference over the Trust in
allocating investment opportunities. When opportunities occur which are
consistent with the investment objective of more than one account, it is the
policy of each not to favor any one account over another, and investment
opportunities are allocated in a manner deemed equitable to the particular

45
<PAGE>

accounts involved based on such factors as their respective investment
objectives and then current investment and cash positions. Subject to these
requirements, Trust orders may be combined with orders of other accounts or
clients advised by John Hancock or any of the sub-investment managers at prices
which are averaged.

Registered broker/dealers affiliated with any one of the sub-investment
managers may be used to execute a transaction on behalf of the Funds but only if
the price and execution is as favorable as that which would be available from an
unaffiliated broker/dealer and no less favorable than the affiliated
broker/dealer's contemporaneous charges to its other most favored, but
unaffiliated, customers. The Trust may not engage in any transactions in which
John Hancock, any of the sub-investment managers, or any of their affiliates
acts as principal.

THE TRUST'S ORGANIZATION AND SHARES

On April 12, 1988, pursuant to an Agreement and Plan or Reorganization dated
February 2, 1988, a majority of the outstanding shares of each Fund of John
Hancock Variable Series Fund I, Inc., a Maryland corporation, voted its
reorganization as a Massachusetts business trust effective April 29, 1988. On
that date, all of the existing assets of John Hancock Variable Series Fund I,
Inc., and all of its obligations were transferred to John Hancock Variable
Series Trust I, a trust organized on February 25, 1988, for a number of full and
fractional shares of beneficial interest of the Trust equal to the number of
full and fractional shares of John Hancock Variable Series Fund I, Inc., then
outstanding.

The shares of beneficial interest of the Trust as reorganized are divided into
31 series, each corresponding to one of the Trust's 31 Funds. The Trust has the
right to establish additional series and issue additional shares without the
consent of the shareholders.

The assets received by the Trust for the issuance or sale of shares of each
Fund and all income, earnings, profits, and proceeds thereof are specifically
allocated to that Fund. They constitute the underlying assets of each Fund, are
segregated on the books of the Trust, and are to be charged with the expenses of
such Fund. Any assets which are not clearly allocable to a particular Fund or
Funds are allocated in a manner determined by the Board of Trustees. Accrued
liabilities which are not clearly allocable to one or more Funds would generally
be allocated among the Funds in proportion to their relative net assets before
adjustment for such unallocated liabilities. Each issued and outstanding share
in a Fund is entitled to participate equally in dividends and distributions
declared with respect to such Fund and in the net assets of such Fund upon
liquidation or dissolution remaining after satisfaction of outstanding
liabilities.

The shares of each Fund, when issued, will be fully paid and non-assessable,
and will have no preference, preemptive, exchange or similar rights. Shares do
not have cumulative voting rights.

Under the Trust's Declaration of Trust, the Trust is not required to hold an
Annual Meeting. Normally there will be no shareholder meetings for the purpose
of electing Trustees unless and until fewer than a majority of the Trustees then
in office have been elected by the shareholders. Trustees elected at the Annual
Meeting of shareholders on April 26, 1995, will continue in office until the
next Annual Meeting unless they die, resign or are removed, either for cause or
without cause, at any meeting of shareholders by an affirmative vote of a
majority of the outstanding shares entitled to vote for the election of
Trustees. The Trustees may elect their own successors and appoint Trustees to
fill any vacancy only if, after filling the vacancy, at least two-thirds of the
Trustees then in office have been elected by the shareholders. If at any time
less than a majority of Trustees in office have been elected by the
shareholders, the Trustees must call a special shareholders' meeting promptly
for the purpose of electing the Board of Trustees.

The Trustees shall promptly call a meeting of shareholders for the purpose of
voting upon the question of removal of any Trustee or all of the Trustees when
requested in writing to do so by holders of 10% or more of the

46
<PAGE>

outstanding shares. Whenever ten or more shareholders who have been such for at
least six months and who hold in the aggregate either shares having a net asset
value of at least $25,000 or at least 1% of the outstanding shares, whichever is
less, apply to the Trustees in writing stating that they wish to communicate
with other shareholders with a view to obtaining signatures to a request for a
shareholders' meeting, for consideration of the removal of any or all of the
Trustees and accompanied by the material which they wish to transmit, the
Trustees will within five business days after receipt either afford to such
applicants access to the Trust's shareholder list or inform such applicants as
to the approximate number of shareholders of record, and the approximate cost of
mailing the material. If the Trustees elect the latter, the Trustees, upon
written request of such applicants, accompanied by the material to be mailed and
the reasonable expenses of mailing, shall promptly mail such material to all
shareholders of record, unless within five business days the Trustees shall mail
to such applicants and file with the Securities and Exchange Commission,
together with a copy of the material to be mailed, a written statement signed by
at least a majority of the Trustees to the effect that in their opinion either
such material is misleading or in violation of applicable law and specifying the
basis of such opinion.

In addition to transferring assets to the Trust through Variable Life Account
U and Variable Annuity Account U, JHVLICO also provided additional capital for
the Fund by purchasing through Variable Life Account U $350,000 worth of shares
each of the Managed and Large Cap Growth Funds and through Variable Life Account
V $500,000 worth of shares each of the Small/Mid Cap Growth, Real Estate Equity,
International Equity Index, and Short-Term Bond Funds. John Hancock also
provided additional capital for the Trust by purchasing the following amounts of
shares on May 1, 1998: $5 million for the Small/Mid Cap CORE Fund; $15 million
for the Income Equity Fund; $10 million for the Emerging Markets Equity Fund;
$25 million for the Bond Index Fund, and $10 million for the High Yield Bond
Fund. JHVLICO or John Hancock may withdraw such additional investment at some
time. However, before withdrawing any part of their interests in any Fund, John
Hancock or JHVLICO will consider any possible adverse impact the withdrawal
might have on that Fund.

If the contractholders show minimal interest in any Fund, the Trust's Board of
Trustees, by majority vote, may eliminate the Fund or substitute shares of
another investment company. Any such action by the Board would be subject to
compliance with any requirements for governmental approvals or exemptions or for
shareholder approval. The contractholders of such Funds will be notified in
writing of the Trust's intention to eliminate the Fund and given 30 days to
transfer amounts from such Fund to other Funds without incurring a transaction
fee. Amounts not transferred or withdrawn will automatically be transferred, at
the discretion of the Fund's management.

A dividend from the net investment income of the Money Market Fund will be
declared and distributed daily. Dividends from net investment income of the
other Funds will be declared and distributed monthly. The Trust will distribute
all of its net realized capital gains annually. Dividends and capital gains
distributions will normally be reinvested in additional full or fractional
shares of the Fund to which they relate and will be appropriately credited to
investment performance under John Hancock and JHVLICO variable life insurance
and annuity contracts.

VOTING RIGHTS

All shares of the Trust of whatever class are entitled to one vote, and the
votes of all classes are cast on an aggregate basis, except on matters where the
interests of the Funds differ. Where the interests of the Funds differ, the
voting is on a Fund-by-Fund basis. Approval or disapproval by the shareholders
in one Fund on such a matter would not generally be a prerequisite of approval
or disapproval by shareholders in another Fund; and shareholders in a Fund not
affected by a matter generally would not be entitled to vote on that matter.
Examples of matters which would require a Fund-by-Fund vote are changes in the
fundamental investment policy of a particular Fund and approval of investment
management or sub-investment management agreements.

<PAGE>

PURCHASE AND REDEMPTION OF SHARES

Shares of beneficial interest of each Fund of the Trust are offered only to
the corresponding subaccount of a Separate Account to which premiums have been
allocated by the owner of an insurance policy or an annuity contract. Shares are
sold at their net asset value as next determined after receipt of a net premium
by the Separate Account, without the addition of any selling commission or sales
load.

Shares are redeemed at their net asset value as next determined after receipt
of a surrender request by the Separate Account. No fee is charged on redemption.
Redemption payments will usually be paid within seven days after receipt of the
redemption request, except that the right of redemption may be suspended or
payments postponed whenever permitted by applicable law and regulations. Trust
shares are also purchased and redeemed as a result of transfer requests, loans,
loan repayments, and similar Separate Account transactions, in each case without
any sales load or commission and at the net asset value per share computed for
the day as of which such Separate Account transactions are effected.

Redemptions are normally made in cash, but the Trust reserves the right, at
its discretion, to make full or partial payment by assignment to the appropriate
Separate Account of portfolio securities at their value used in determining the
redemption price. In such cases, the Separate Account would incur brokerage
costs should it wish to liquidate these portfolio securities. The right to
redeem shares or to receive payment with respect to any redemption of shares of
any Fund may only be suspended (a) for any period during which trading on the
New York Stock Exchange is restricted or such Exchange is closed (other than
customary weekend and holiday closings), (b) for any period during which an
emergency exists as a result of which disposal of portfolio securities or
determination of the net asset value of that Fund is not reasonably practicable,
or (c) for such other periods as the Securities and Exchange Commission may by
order permit for the protection of shareholders of the Fund.

NET ASSET VALUE

The net asset value per share of each Fund is determined once daily, after the
declaration of dividends, if any, as of 4:00 p.m., New York City time, on each
business day the New York Stock Exchange ("Exchange") is open for regular
trading. For this purpose, however, certain derivative instruments may be
valued using prices as late as 4:15.

The net asset value per share of each Fund is determined by adding the value
of all portfolio securities and other assets, deducting all portfolio
liabilities, and dividing by the number of outstanding shares. All Trust
expenses will be accrued daily for this purpose.

Short-term investments with a remaining maturity of 60 days or less, and all
investments of the Money Market Fund, are valued at amortized cost which
approximates market value. This involves valuing a security at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates. While this
method provides certainty in valuation, it may result in periods during which
the value of an instrument, as determined by amortized cost, is higher or lower
than the price the Fund would receive upon the sale of the instrument.

The valuation of the Money Market Fund's securities based upon their amortized
cost is subject to the Fund's adherence to certain procedures and conditions.
The portfolio manager will purchase U.S. dollar-denominated securities with
remaining maturities of 397 days or less and will maintain a dollar-weighted
average portfolio maturity of no more than 90 days. The portfolio manager will
invest only in securities that are judged to present minimal credit risk and
that satisfy the quality and diversification requirements of applicable rules
and regulations of the SEC.

<PAGE>

The Board of Trustees has established procedures designed to stabilize the
Money Market Fund's price per share, as computed for the purpose of sales and
redemptions, at $10. There can be no assurance, however, that the Fund will at
all times be able to maintain a constant $10 net asset value per share. Such
procedures include review of the Fund's holdings at such intervals as is deemed
appropriate to determine whether the Fund's net asset value, calculated by using
available market quotations, deviates from $10 per share and, if so, whether
such deviation may result in material dilution, or is otherwise unfair to
existing shareholders. In the event that it is determined that such a deviation
exists, the Board of Trustees will take such corrective action as it regards as
necessary and appropriate. Such action may include selling portfolio instruments
prior to maturity to realize capital gains or losses or to shorten average
portfolio maturity, withholding dividends, or establishing a net asset value per
share by using available market quotations.

Securities and covered call and put options that are listed on a stock
exchange are normally valued at the closing sales price. If there were no sales
during the day, they are normally valued at the last previous sale or bid price
reported, as are equity securities that are traded in the over-the-counter
market.

Non-exchange traded debt securities (other than certain short-term
investments) are valued on the basis of valuations furnished by a pricing
service which uses electronic data processing techniques, without exclusive
reliance upon quoted prices.

Any other security for which market quotations are not readily available and
any other property for which valuation is not otherwise available is valued at
fair value as determined in good faith by, or under the direction of, the Board
of Trustees.

Financial futures contracts, options thereon and options on stock indexes are
valued at the last trade price of the day. In the absence of a trade on a given
day, the value is used which is established by the exchange on which the
instrument is traded.

Trading in the Funds that may purchase securities on European and Far Eastern
securities exchanges and over-the-counter markets is normally completed at
various times before the close of business on each day on which the New York
Stock Exchange is open. The values of such securities used in computing net
asset value per share are normally determined as of such times. Trading of these
securities may not take place on every New York Stock Exchange business day and
may take place on days which are not business days in New York. The Trust
calculates net asset value per share as of the close of regular trading on the
New York Stock Exchange on each day on which that Exchange is open. Therefore,
such calculation does not take place contemporaneously with the determination of
the prices of many of the Funds' securities used in such calculation. If events
affecting the value of such securities occur between the time when their price
is determined and the time as of which the Fund's net asset value is calculated,
such securities may be valued at fair value under procedures approved by the
Board of Trustees in good faith.

TAXES

The Trust intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code ("Code"). It is the Trust's policy to
comply with the provisions of the Code regarding distribution of investment
income and capital gains so that the Trust will not be subject to Federal income
tax on amounts distributed.

In order for the Trust to qualify for Federal income tax treatment as a
regulated investment company, at least 90 percent of each Fund's gross income
for each taxable year must be derived from qualifying income, i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities.

49
<PAGE>

To avoid taxation of capital gains, the Trust will distribute to the Separate
Accounts each Fund's net capital gains at least annually and net investment
income at least monthly. A Fund's net investment income from the time of the
immediately preceding dividend declaration consists of interest accrued or
discount earned during such period (including both original issue and market
discount) on that Fund's securities, less amortization of premium and the actual
or estimated expenses of the Fund applicable to that dividend period.

Each Fund must also be adequately diversified in its investments and maintain
its status as a regulated investment company ("RIC") in order that the variable
life insurance policies and annuity contracts funded through the Separate
Accounts retain their character as life insurance or an annuity and the related
tax benefits for annuity and insurance contract holders. John Hancock will
monitor continued compliance with the adequate diversification requirements set
forth in regulations issued by the Treasury Department. The diversification
requirements are briefly summarized below.

For a Fund to qualify as a regulated investment company ("RIC"), at the end of
each fiscal quarter of the Fund's taxable year, (i) at least 50% of the market
value of the Fund's assets must be represented by cash and cash items, U.S.
Government securities, securities of other RICs, and other securities, with such
other securities limited, in respect of any one issuer, to an amount that does
not exceed 10% of the voting securities of such issuer of 5% of the value of the
Fund's total assets; and (ii) not more than 25% of the value of its assets may
be invested in the securities (other than U.S. Government securities and
securities of other RICs) of any one issuer or two or more issuers which the
Fund controls and which are engaged in the same, similar or related trades or
businesses. Should a Fund, for any reason, fail to qualify for tax treatment as
a RIC, investment company, or otherwise incur any tax liability, the investment
performance of the Separate Accounts could be adversely affected, to the
detriment of the contractholders.

In addition, Treasury Department regulations require that no more than 55% of
the total value of the assets of each Fund be represented by any one investment,
no more than 70% by any two investments, no more than 80% by three investments
and no more than 90% by four investments. Generally, for purposes of the
regulations, all securities of the same issuer are treated as one investment. In
the context of U.S. Government securities (including any security that is
issued, guaranteed or insured by the United States or an instrumentality of the
United States), each U.S. Government agency or instrumentality is treated as a
separate issuer.

A variable life insurance policy or annuity contract investing in a Fund that
failed to meet these diversification requirements would, unless and until the
failure can be corrected in a procedure afforded by the Internal Revenue
Service, subject contractholders to taxation of income in the contract or policy
for that or any subsequent period. For a discussion of the tax implications of
owning a variable annuity contract or a variable life insurance policy for which
the Fund serves as the investment medium, please refer to the Prospectus for
such contract or policy attached at the front of this Prospectus.

Those Funds that invest substantial amounts of their assets in foreign
securities may make an election to pass through John Hancock or JHVLICO any
taxes withheld by foreign taxing jurisdictions on foreign source income. Such an
election will result in additional taxable income and income tax to John
Hancock. The amount of additional income tax, however, may be more than offset
by credits for the foreign taxes withheld, which are also passed through. These
credits may provide a benefit to John Hancock or JHVLICO.

CALCULATION OF PERFORMANCE DATA

The Money Market Fund may advertise investment performance figures including
its current yield and its effective yield. (See the following section on
"Calculation of Yield Quotation of the Money Market Fund" for a complete
description.)

50
<PAGE>

YIELD AND TOTAL RETURN INFORMATION FOR ALL FUNDS OTHER THAN THE MONEY MARKET
FUND

The non-money market Funds of the Trust may also advertise investment
performance figures, including yield. Each such Fund's yield is based upon a
stated 30-day period and is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:

YIELD = 2[([(a-b)/(cd)] + 1)/6/ -1]

Where: a = dividends and interest earned during the period
expenses accrued for the period (net of reimbursements, if
b = any)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price (which is the net asset value)
per share on the last day of the period.

The following table shows the current yield for each of the then-existing
Funds for the 30-day period ended December 31, 1998:

FUND CURRENT YIELD
- ---- -------------

Managed ........................................... 4.60%
Growth & Income ................................... 7.48%
Equity Index ...................................... 5.78%
Large Cap Value ................................... 0.72%
Large Cap Growth .................................. 10.09%
Mid Cap Value ..................................... 2.15%
Mid Cap Growth .................................... 16.55%
Real Estate Equity ................................ (0.99)%
Small/Mid Cap Growth .............................. 10.59%
Small/Mid Cap CORE ................................ 7.08%
Small Cap Value ................................... 5.82%
Small Cap Growth .................................. 13.95%
Global Equity ..................................... 3.13%
International Balanced ............................ 3.88%
International Equity Index ........................ 4.06%
International Opportunities ....................... 3.38%
Emerging Markets .................................. (7.23)%
Short-Term Bond ................................... 0.24%
Bond Index ........................................ 0.16%
Sovereign Bond .................................... 0.30%
Global Bond ....................................... 0.50%
High Yield Bond ................................... (1.02)%

Each of the Funds may advertise its total return. Total return quotations will
be based upon a stated period and will be computed by finding the average annual
compounded rate of return over the stated period that would equate an initial
amount invested to the ending redeemable value of the investment (assuming
reinvestment of all distributions), according to the following formula:

P (1 + T)/n/ = ERV

<PAGE>

Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the stated period
of a hypothetical $1,000 payment made at the beginning of
the stated period

The average annual total return for each of the Funds for the periods ending
December 31, 1998 is set forth in the Trust's Annual Report to contractholders.
No performance information is available for the eight Funds that commenced
operations on ___, 1999.

CALCULATION OF YIELD QUOTATIONS OF THE MONEY MARKET FUND

The Money Market Fund's yield is its current investment income expressed in
annualized terms. The current yield is based on a specified seven-calendar-day
period. It is computed by (1) determining the net change (exclusive of capital
changes) in the value of a hypothetical pre-existing account having a balance of
one share at the beginning of the period, (2) dividing the net change in account
value by the value of the account at the beginning of the base period to get the
base period return, then (3) multiplying the base period return by 52.15 (365
divided by 7). The resulting yield figure is carried to the nearest hundredth of
one percent.

The calculations include the value of additional shares purchased with any
dividends paid on the original share and the value of dividends declared on both
the original share and any such additional shares. The capital changes excluded
from the calculation are realized capital gains and losses from the sale of
securities and unrealized appreciation and depreciation.

Compound (effective) yield for the Fund will be computed by dividing the
seven-day annualized yield as defined above by 365, adding 1 to the quotient,
raising the sum to the 365th power, and subtracting 1 from the result.

For the seven-day period ending December 31, 1998, the Money Market Fund's
current yield was 5.07%; its effective yield was 5.20%.

The Fund's yield will fluctuate depending upon market conditions, the type,
quality, and maturity of the instruments in the Fund, and its expenses. Current
yield information should not be deemed comparable to bank deposits or other
investments which pay a fixed return or which calculate yields on a different
basis.

<PAGE>

CHARGES UNDER VARIABLE LIFE INSURANCE AND VARIABLE ANNUITY POLICIES

Yield and total return quotations do not reflect any charges imposed on any
Separate Account or otherwise imposed pursuant to JHVLICO's and John Hancock's
variable life insurance and variable annuity policies. Therefore, the yield or
total return of any Fund is not comparable to that of a publicly available fund.
Yield or total return quotations should not be considered representative of the
Fund's yield or total return in any future period.

ADDITIONAL INFORMATION

LEGAL MATTERS

Freedman, Levy, Kroll & Simonds of Washington, D.C., advises the Trust on
certain legal matters relating to the Federal securities laws.

REPORTS

Annual and semi-annual reports containing financial statements of the Trust,
as well as voting instructions soliciting material for the Trust, will be sent
to variable life insurance and annuity contractholders having an interest in the
Trust.

FINANCIAL STATEMENTS

The Trust's financial statements appearing in its Annual Report to
contractholders and the report of Ernst & Young, LLP, independent auditors of
the Trust, which appears therein, are incorporated by reference into the
Statement of Additional Information. No other part of such Annual Report is
incorporated by reference. A free copy of the Annual Report to contract holders
may be obtained by writing to the address or calling the number which appears on
page 1 of this Statement of Additional Information.

<PAGE>

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS

(a) Declaration of Trust of John Hancock Variable Series Trust I, dated
February 21, 1988, included in Post-Effective Amendment No. 3 to this File
No. 33-2081, filed in April, 1988.

(b) By-Laws of John Hancock Variable Series Trust I, adopted April 12, 1988,
included in Post-Effective Amendment No. 3 to this File No. 33-2081, filed in
April, 1988.

(d) (1) Investment Management Agreement by and between John Hancock
Variable Series Trust I, and John Hancock Mutual Life Insurance Company dated
April 12, 1988 relating to the Initial Funds, included in Post- Effective
Amendment No. 4 to this File No. 33-2081, filed in April, 1989.

(2) Sub-Investment Management Agreement among John Hancock Variable Series
Trust I, Independence Investment Associates, Inc., and John Hancock
Mutual Life Insurance Company dated April 29, 1988, relating to the
Growth & Income, Large Cap Growth, and Managed Funds, included in Post-
Effective Amendment No. 4 to this File No. 33-2081, filed in April,
1989.

(3) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Independence Investment Associates, and John Hancock Mutual
Life Insurance Company, pertaining to the Real Estate Equity Fund,
included in Post-Effective Amendment No. 9 to this File No. 33-2081,
filed on March 1, 1994.

(4) Investment Management Agreement by and between John Hancock Variable
Series Trust I and John Hancock Mutual Life Insurance Company dated as
of April 12, 1988, relating to the Real Estate Equity and International
Equity Index Funds, included in Post-Effective Amendment No. 3 to this
File No. 33-2081, filed in April, 1988.

(5) Amendment dated as of May 1, 1998 to the Investment Management Agreement
dated as of April 12, 1998 relating to the Real Estate Equity and
International Equity Index Funds, included in Post-Effective Amendment
No. 19 to this File No. 33-2081, filed on May 1, 1998.

(6) Investment Management Agreement By and Between John Hancock Variable
Series Trust I and John Hancock Mutual Life Insurance Company relating
to the Short-Term Bond and Small/Mid Cap Growth Funds, included in Post-
Effective Amendment No. 9 to this File No. 33-2081, filed on March 1,
1994.

(7) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Independence Investment Associates, Inc. and John Hancock
Mutual Life Insurance Company relating to the Short-Term Bond Fund,
included in Post- Effective Amendment No. 9 to this File No. 33-2081,
filed on March 1, 1994.

(8) Form of Sub-Investment Management Agreement Among John Hancock Variable
Series Trust I, Wellington Management Company, LLC and John Hancock
Mutual Life Insurance Company relating to the Small/Mid Cap Growth Fund,
included in Post-Effective Amendment No. 21 to this File No. 33-2081,
filed on May 3, 1999.

(9) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, John Hancock Advisers, Inc., and John Hancock Mutual Life
Insurance Company, relating to the Sovereign Bond Fund, included in
Post-Effective Amendment No. 11 to this File No. 33-2081, filed on April
29, 1995.

(10) Investment Management Agreement By and Between John Hancock Variable
Series Trust I and John Hancock Mutual Life Insurance Company relating
to the Equity Index, Large Cap Value, Mid Cap Growth, Mid Cap Value,
Small Cap Growth, Small Cap Value, Global Bond, International
Opportunities, and International Balanced Funds, included in Post-
Effective Amendment No. 13 to this File No. 33-2081, filed on April 30,
1996.

(11) Amendment, dated May 1, 1997, to the Investment Management Agreements
dated April 12, 1988, April 15, 1994, and March 14, 1996, to reallocate
Fund expenses and to reduce the advisory fee of the Short-Term Bond Fund
and the Equity Index Fund, included in Post-Effective Amendment No. 16
to this File No. 33-2081, filed on May 1, 1997.

(12) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, T. Rowe Price Associates, Inc., and John Hancock Mutual Life
Insurance Company, relating to the Large Cap Value Fund, included in
Post-Effective Amendment No. 13 to this File No. 33-2081, filed on April
30, 1996.

(13) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Janus Capital Corporation, and John Hancock Mutual Life
Insurance Company, relating to the Mid Cap Growth Fund, included in
Post-Effective Amendment No. 13 to this File No. 33-2081, filed on April
30, 1996.

(14) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Neuberger & Berman Management, L.P., and John Hancock Mutual
Life Insurance Company, relating to the Mid Cap Value Fund, included in
Post-Effective Amendment No. 13 to this File No. 33-2081, filed on April
30, 1996.
<PAGE>

(15) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, John Hancock Advisers, Inc., and John Hancock Mutual Life
Insurance Company, relating to the Small Cap Growth Fund, included in Post-
Effective Amendment No. 13 to this File No. 33-2081, filed on April 30,
1996.

(16) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, INVESCO Management & Research, and John Hancock Mutual Life
Insurance Company, relating to the Small Cap Value Fund, included in Post-
Effective Amendment No. 13 to this File No. 33-2081, filed on April 30,
1996.

(17) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, J.P. Morgan Investment Management, Inc., and John Hancock Mutual
Life Insurance Company, relating to the Global Bond Fund, included in Post-
Effective Amendment No. 13 to this File No. 33-2081, filed on April 30,
1996.

(18) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Rowe Price-Fleming International, Inc., and John Hancock Mutual
Life Insurance Company, relating to the International Opportunities Fund,
included in Post-Effective Amendment No. 13 to this File No. 33-2081, filed
on April 30, 1996.

(19) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Brinson Partners, Inc., and John Hancock Mutual Life Insurance
Company, relating to the International Balanced Fund, included in Post-
Effective Amendment No. 13 to this File No. 33-2081, filed on April 30,
1996.

(20) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, State Street Bank & Trust Company, and John Hancock Mutual Life
Insurance Company, relating to the Equity Index Fund, included in Post-
Effective Amendment No. 16 to this File No. 33-2081, filed on May 1, 1997.

(21) Amendment to Sub-Investment Management Agreement among John Hancock
Variable Series Trust I, State Street Bank and Trust Company, and John
Hancock Mutual Life Insurance Company, included in Post-Effective Amendment
No. 19 to this File No. 33-2081, filed on May 1, 1998.

(22) Investment Management Agreement dated as of April 14, 1998 By and Between
John Hancock Variable Series Trust I and John Hancock Mutual Life Insurance
Company relating to the Small/Mid Cap CORE, Global Equity, International
Equity Index, Emerging Markets Equity, Bond Index, and High Yield Bond
Fund, included in Post-Effective Amendment No. 19 to this File No. 33-2081,
filed on May 1, 1998.

(23) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Goldman Sachs Asset Management, and John Hancock Mutual Life
Insurance Company, relating to the Small/Mid Cap CORE Fund, included in
Post-Effective Amendment No. 21 to this File No. 33-2081, filed on May 3,
1999.

(24) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Scudder Kemper Investments, Inc., and John Hancock Mutual Life
Insurance Company, relating to the Global Equity Fund, included in Post-
Effective Amendment No. 21 to this File No. 33-2081, filed on May 3, 1999.

(25) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Independence International Associates, Inc., and John Hancock
Mutual Life Insurance Company, relating to the International Equity Index
Fund, included in Post-Effective Amendment No. 21 to this File No. 33-
02081, filed on May 3, 1999.

(26) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Mellon Bond Associates, and John Hancock Mutual Life Insurance
Company, relating to the Bond Index Fund, included in Post-Effective
Amendment No. 19 to this File No. 33-2081, filed on May 1, 1998.

(27) Sub-Investment Management Agreement Among John Hancock Variable Series
Trust I, Wellington Management Company, LLP, and John Hancock Mutual Life
Insurance Company, relating to the High Yield Bond Fund, included in Post-
Effective Amendment No. 19 to this File No. 33-2081, filed on May 1, 1998.

(28) Amendment No. 2 to the Investment Management Agreement dated as of March
14, 1996 By and Between John Hancock Variable Series Trust I and John
Hancock Mutual Life Insurance Company included in Post-Effective Amendment
No. 21 to this File No. 33-2081 filed on May 3, 1999.

(29) Amendment No. 3 to the Investment Management Agreement dated as of March
14, 1996 By and Between John Hancock Variable Series Trust I and John
Hancock Mutual Life Insurance Company included in Post-Effective Amendment
No. 21 to this File No. 33-2081 filed on May 3, 1999.

(30) Form of Sub-Investment Management Agreement Among John Hancock Variable
Series Trust I, Morgan Stanley Dean Witter Advisors, Inc., and John Hancock
Mutual Life Insurance Company, relating to the Emerging Markets Equity
Fund, filed herewith.

(31) Investment Management Agreement By and Between John Hancock Variable Series
Trust I and John Hancock Mutual Life Insurance Company relating to the
Large Cap Aggressive Growth, Fundamental Mid Cap Growth, International
Equity, Aggressive Balanced, Large Cap Value CORE, Large/Mid Cap Value, Mid
Cap Blend, and Small/Mid Cap Value Funds filed herewith.
<PAGE>

(32) Form of Sub-Investment Management Agreement Among John Hancock Variable
Series Trust I, Alliance Capital Management L.P., and John Hancock Mutual
Life Insurance Company relating to the Large Cap Aggressive Growth Fund,
filed herewith.

(33) Form of Sub-Investment Management Agreement Among John Hancock Variable
Series Trust I, OppenheimerFunds, Inc., and John Hancock Mutual Life
Insurance Company relating to the Fundamental Mid Cap Growth Fund, filed
herewith.

(34) Form of Sub-Investment Management Agreement Among John Hancock Variable
Series Trust I, Golman Sachs Asset Management, and John Hancock Mutual Life
Insurance Company relating to the International Equity Fund, filed
herewith.

(35) Form of Sub-Investment Management Agreement Among John Hancock Variable
Series Trust I, Golman Sachs Asset Management, and John Hancock Mutual Life
Insurance Company relating to the Large Cap Value CORE Fund, filed
herewith.

(36) Form of Sub-Investment Management Agreement Among John Hancock Variable
Series Trust I, Independence Investment Associates, Inc., and John Hancock
Mutual Life Insurance Company relating to the Aggressive Balanced Fund,
filed herewith.

(37) Form of Sub-Investment Management Agreement Among John Hancock Variable
Series Trust I, Independence Investment Associates, Inc., and John Hancock
Mutual Life Insurance Company relating to the Mid Cap Blend Fund, filed
herewith.

(38) Form of Sub-Investment Management Agreement Among John Hancock Variable
Series Trust I, Wellington Management Company, LLP, and John Hancock Mutual
Life Insurance Company relating to the Large/Mid Cap Value Fund, filed
herewith.

(39) Form of Sub-Investment Management Agreement Among John Hancock Variable
Series Trust I, The Boston Company Asset Management Company, LLC, and John
Hancock Mutual Life Insurance Company relating to the Small/Mid Cap Value
Fund, filed herewith.

(e) (1) Underwriting and Administrative Services Agreement by and between John
Hancock Variable Series Trust I and John Hancock Mutual Life Insurance
Company, dated April 29, 1988, included in Post-Effective Amendment No. 4
to this File No. 33-2081, filed in April, 1989.

(2) Underwriting and Indemnity Agreement among John Hancock Variable Series
Trust I, John Hancock Distributors, Inc., and John Hancock Mutual Life
Insurance Company, previously filed electronically on February 28, 1997.

(f) Not Applicable.

(g) (1) Custodian Agreement Between John Hancock Variable Series Trust I and
State Street Bank and Trust Company, dated January 30, 1995, relating to
the International Equity Index and Small/Mid Cap CORE Fund, included in
Post-Effective Amendment No. 10 to this File No. 33-2081, filed on March
2, 1995.

(2) Amendment dated as of March 18, 1996 to Custodian Agreement dated
January 30, 1995, between John Hancock Variable Series Trust I and State
Street Bank and Trust Company, expanding the Agreement to cover additional
Funds, included in Post-Effective Amendment No. 13 to this File No. 33-
2081, filed on April 30, 1996.

(3) Amendment dated as of April 14, 1998 to Custodian Agreement dated
January 30, 1995, between John Hancock Variable Series Trust I and State
Street Bank and Trust Company, expanding this agreement to cover additional
Funds, included in Post-Effective Amendment No. 19 to this File No. 33-
2081, filed on May 1, 1998.

(4) Form of Amendment to Custodian Agreement dated January 30, 1995,
between John Hancock Variable Series Trust I and State Street Bank and
Trust Company, expanding this agreement to cover additional Funds, filed
herewith.

(h) Amendment dated April 29, 1988 to Transfer Agency Agreement by and between
John Hancock Variable Series Fund I, Inc., and John Hancock Mutual Life
Insurance Company, January 27, 1986, which was priorly included in Exhibit
9 to Pre-Effective Amendment No. 1 to this File No. 33-2081, filed March
13, 1986, included in Post-Effective Amendment No. 4 to this File
No. 33-2081, filed in April, 1989.

(i) Opinion and Consent of Counsel regarding the legality of the securities
being registered incorporated by reference to Post-Effective Amendment No.
22 to this File No. 33-2081 filed on July 15, 1999.

(j) (1) Consent of Ernst & Young LLP, independent auditors (filed herewith).

(j) (2) Not Applicable.

(k) Not Applicable.

(l) Not Applicable.

(m) Not Applicable.

(n) Financial Data Schedules, included in Post-Effective Amendment No. 21 to
this File No. 33-2081, filed on May 3, 1999.

(o) Not Applicable.
<PAGE>

(p) Diagram of Subsidiaries of John Hancock Mutual Life Insurance Company
(incorporated by reference from Exhibit 13 to Post-Effective Amendment
No. 5 to Form N-4 Registration Statement of John Hancock Variable Annuity
Account H (File No. 333-08345) filed April 29, 1999).

(q) Powers of Attorney for Ms. Cook and Mr. Lee included in Post- Effective
Amendment No. 9 to this Form N-1A Registration Statement (File No. 33-2081),
filed March 1, 1994. Powers of Attorney of Mr. Dykstra, included in Post-
Effective Amendment No. 3 to this Form N-1A Registration Statement (File No.
33-2081), filed in April, 1988. Power of Attorney for Ms. Van Leer included
in Post-Effective Amendment No. 21 to this Form N-1A Registration Statement
(File No. 33-2081), filed in May, 1999. Powers of Attorney for Ms. Kessler
and Mr. Verdonck, filed herewith.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Currently, shares of the Registrant are sold only to (1) John Hancock Variable
Life Accounts U, V and S, separate investment accounts created pursuant to
Massachusetts law, to fund variable life insurance policies issued by John
Hancock Variable Life Insurance Company ("JHVLICO"), a stock life insurance
company organized under the laws of Massachusetts; (2) John Hancock Variable
Annuity Accounts U and V, separate investment accounts created pursuant to
Massachusetts law to fund variable annuity contracts issued by John Hancock
Mutual Life Insurance Company, ("John Hancock"), a life insurance company
organized under the laws of Massachusetts; (3) John Hancock Mutual Variable Life
Insurance Account UV, a separate investment account created pursuant to
Massachusetts law to fund variable life insurance policies issued by John
Hancock; and (4) John Hancock Variable Annuity Account I, a separate investment
account created pursuant to created pursuant to Massachusetts law to fund
variable annuity contracts issued by JHVLICO. (The seven variable accounts are
hereinafter referred to as "Separate Accounts.") The purchasers of variable life
insurance policies and variable annuity contracts issued in connection with such
Separate Accounts will have the opportunity to instruct JHVLICO and John
Hancock, respectively, with regard to the voting of the Registrant's shares held
by the Separate Account as to certain matters. Subject to such voting
instructions, John Hancock and JHVLICO directly control the Registrant, and the
Separate Accounts currently are its sole shareholders.

Subsequently, shares of the Registrant may be sold to other separate investment
accounts of John Hancock and JHVLICO. A diagram of the subsidiaries of John
Hancock is attached as Exhibit (p) to this Form N-1A Registration Statement.

ITEM 25. INDEMNIFICATION

Reference is made to Article VI of the Registrant's By-Laws (Exhibit 2 to Post-
Effective Amendment No. 3 to this Registration Statement filed in April, 1988),
which provides that the Trust shall indemnify or advance any expenses to the
trustees, shareholders, officers, or employees of the Trust to the extent set
forth in the Declaration of Trust.

Sections 6.3 through 6.17 of the Declaration of Trust (Exhibit 1 to Post-
Effective Amendment No. 3 to this Registration Statement filed in April, 1988),
relate to the indemnification of trustees, shareholders, officers and employees
and are hereby incorporated by reference. It is provided that the Registrant
shall indemnify any Trustee made a party to any proceeding by reason of service
in that capacity if the Trustee (a) acted in good faith and (b) reasonably
believed, (1) in the case of conduct in the Trustee's official capacity with the
Trust, that the conduct was in the best interest of the Trust and (2) in all
other cases, that the conduct was at least not opposed to the best interests of
the Trust, and (c) in the case of any criminal proceeding, the Trust shall
indemnify the Trustee if the Trustee acted in good faith and had no reasonable
cause to believe that the conduct was unlawful. Indemnification may not be made
by the Trust unless authorized in each case by a determination by the Board of
Trustees or by special legal counsel or by the shareholders. Neither
indemnification nor advancement of expenses may be made if the Trustee or
officer has incurred liability by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of duties involved in the conduct of his
office ("Disabling Conduct"). The means for determining whether indemnification
shall be made shall be (1) a final decision on the merits by a court or other
body before whom the proceeding was brought that the person to be indemnified
was not liable by reason of Disabling Conduct or (2) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that
such person was not liable by reason of Disabling Conduct. Such latter
determination may be made either (a) by the vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Trust (as defined in the
1940 Act, as amended) nor parties to the proceeding or (b) by an independent
legal counsel in a written opinion. The advancement of legal expenses may not
occur unless the Trustee or officer agrees to repay the advance (unless it is
ultimately determined that he is entitled to indemnification) and at least one
of three conditions is satisfied: (1) he provides security for his agreement to
repay, (2) the Registrant is insured against loss by reason of lawful advances,
or (3) a majority of a quorum the Trustees who are not interested persons and
are not parties to the proceedings, or independent counsel in a written opinion,
determine that there is reason to believe that the Trustee or officer will be
found entitled to indemnification.

Similar types of provisions dealing with the indemnification of the Registrant's
officers and directors is included in several exhibits attached to the original
filing and subsequent amendments to this Registration Statement: specifically,
Section 14 of the Investment Management Agreement by and between John Hancock
Variable Series Trust I and John Hancock Mutual Life Insurance Company (Exhibit
5(k) to Post-Effective Amendment No. 13 to this Registration Statement filed
April 30, 1996), Section 14 of the Investment Management Agreement by and
between John Hancock Variable Series Trust I and John Hancock Mutual Life
Insurance Company (Exhibit 5(g) to Post-Effective Amendment No. 9 to this
Registration Statement filed March 1, 1994), Section 14 of the Investment
Management Agreement by and between John Hancock Variable Series Fund I, Inc.,
and John Hancock Mutual Life Insurance Company (Exhibit 5 Post-Effective
Amendment No. 4 to this Registration Statement, filed in April, 1989), Section
14 of the Investment Management Agreement by and between John Hancock Variable
Series Trust I and John Hancock Mutual Life Insurance Company (Exhibit 5(v) to
Post-Effective Amendment No. 19 to this Registration Statement filed in 1998),
Section 7 of the Underwriting and Administrative Services Agreement by and
between John Hancock Variable Series Trust I, and John Hancock Mutual Life
Insurance Company (Exhibit 6 to Post-Effective Amendment No. 4 to this
Registration Statement filed in April, 1989), and Section 15 of the Transfer
Agency Agreement by and between John Hancock Variable Series Fund I, Inc., and
John Hancock Mutual Life Insurance Company (Exhibit 9 to Pre-Effective Amendment
No. 1 to this Registration Statement filed March 13, 1986), and Section 6 of the
Underwriting and Indemnity Agreement By and Among John Hancock Series Trust,
John Hancock Distributors, Inc., and John Hancock Mutual Life Insurance Company
(Exhibit 6.b to Post-Effective Amendment No. 14 to this Registration Statement
filed February 28, 1997).
<PAGE>

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers, and controlling persons of the
Registrant pursuant to the Registrant's By-Laws or otherwise, the Registrant has
been advised that, in the opinion of the Securities and Exchange Commission (the
"Commission"), such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, then the Registrant will,
unless in the opinion of its counsel the matter has been settled by a
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Information pertaining to any business and other connections of Registrant's
investment adviser, John Hancock, is hereby incorporated by reference from the
section of Part A of this Form N-1A (the "Prospectus") captioned "Management of
the Fund," Item 7 of Part II of John Hancock's Form ADV [filed separately with
the Commission (File No. 801-8352)], and Item 10 of John Hancock's Form BD
[filed separately with the Commission (File No. 8-15661)]. Information
pertaining to any business and other connections of Registrant's sub-investment
advisers, Independence Investment Associates, Inc. ("IIA"), John Hancock
Advisers Inc. ("Advisers"), John Hancock International Advisers, Limited
("International Advisers"), T. Rowe Price Associates, Inc. ("T. Rowe Price"),
Janus Capital Corporation ("Janus"), Neuberger Berman, LLC ("Neuberger Berman"),
INVESCO Management & Research ("INVESCO"), J.P. Morgan Investment Management
Inc. ("JPMIM"), Rowe Price-Fleming International, Inc. ("Rowe Price-Fleming"),
Brinson Partners, Inc. ("Brinson"), Goldman Sachs Asset Management ("Goldman
Sachs"), Scudder Kemper Investments, Inc.("Scudder Kemper"), Independence
International Associates, Inc. ("Independence International"), Morgan Stanley
Dean Witter Advisors, Inc. ("Morgan Stanley"), Mellon Bond Associates
("Mellon"), Alliance Capital Management L.P. ("Alliance"), OppenheimerFunds,
Inc. ("Oppenheimer"), The Boston Company Asset Management, LLC ("Boston"), and
Wellington Management Company, LLP ("Wellington") is incorporated by reference
from the section of the Prospectus captioned "Management of the Fund" and Item 7
of Part II of the Forms ADV of IIA (File No. 801-18048), Advisers (File No. 801-
8124), Advisers International (File No. 801-29498), T. Rowe Price (File No. 801-
856), Janus (File No. 801-13991), Neuberger & Berman (File No. 801-3908),
INVESCO (File No. 801-1596), JPMIM (File No. 801-21011), Rowe Price-Fleming
(File No. 801-14713), Brinson (File No. 801-34910) Goldman Sachs (File No. 801-
3111), Scudder Kemper (File No. 801-252), Independence International (File No.
801-28785), Morgan Stanley (File No. 801-42061), Mellon (File No. 801-50865),
Alliance (File No. 801-32361), Oppenheimer (File No. 801-8253), Boston (File No.
801-6829), Wellington (File No. 801-41552) filed separately with the Commission.
The other businesses, professions, vocations, and employment of a substantial
nature, during the past two years, of the directors and officers of John
Hancock, IIA, Advisers, Advisers International, T. Rowe Price, Janus, Neuberger
& Berman, INVESCO, JPMIM, Rowe Price-Fleming, Brinson Goldman Sachs, Scudder
Kemper, Independence International, Morgan Stanley, Mellon, Alliance,
Oppenheimer, Boston, and Wellington are hereby incorporated by reference,
respectively, from Schedules A and D of John Hancock's Form ADV and from
Schedules A and D of the Forms ADV of the sub- investment advisers.

ITEM 27. PRINCIPAL UNDERWRITERS

(a) Signator Investors, Inc. ("Signator") acts as principal underwriter and
distributor of the Registrant's shares on a best-efforts basis and receives no
fee or commission for its underwriting and distribution services. Signator does
not act as a principal underwriter, distributor, or investment advisor for any
other investment company, except that Signator serves as the principal
underwriter for the separate accounts referred to in the response to Item 24
above.

(b) The name and principal business address of each officer, director, or
partner of Signator as well as their positions and offices with Signator are
hereby incorporated by reference from Schedules A and D of Signator's Form BD
[filed separately with the Commission (Firm CRD No. 468)]. None of the
directors or partners of Signator hold positions with the Registrant.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

The following entities prepare, maintain, and preserve the records required by
Section 31(a) of the Act for the Registrant through written agreements between
the parties to the effect that such services will be provided to the Registrant
for such periods prescribed by the Rules and Regulations of the Commission under
the Act and such records will be surrendered promptly on request:

State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110 serves as custodian for the Registrant and in such capacity keeps records
regarding securities in transfer, bank statements and cancelled checks.

John Hancock, John Hancock Place, P.O. Box 111, Boston, Massachusetts 02117,
will serve as Registrant's transfer agent, investment adviser, principal
underwriter, and distributor and, in such capacities, will keep records
regarding shareholders' account records, cancelled stock certificates, and all
other records required by Section 31(a) of the Act. John Hancock, as Investment
Adviser will keep records related to transactions in the Bond and Money Market
Funds.

IIA, 53 State Street, Boston, Massachusetts 02109, will serve as Registrant's
sub-investment manager and, in such capacity, will keep records related to
transactions in portfolio securities of the Growth & Income, Large Cap Growth,
Managed, Real Estate Equity, Aggressive Balanced, Mid Cap Blend, and Short-Term
Bond Funds.

Advisers, 101 Huntington Avenue, Boston, Massachusetts 02199, and International
Advisers, 37 Park Street, London W1Y3H6, England, will serve as Registrant's
sub-investment manager and, in such capacity, will keep records related to
transactions in portfolio securities of the International Equities Fund.
<PAGE>

Alliance, 1345 Avenue of the Americas, New York, New York 10105, will serve as
Registrant's sub-investment manager and, in such capacity, will keep records
related to transactions in portfolio securities of the Large Cap Aggressive
Growth Fund.

Advisers, 101 Huntington Avenue, Boston, Massachusetts 02199, will serve as
Registrant's sub-investment manager and, in such capacity, will keep records
related to transactions in portfolio securities of the Special Opportunities,
Sovereign Bond, and Small Cap Growth Funds.

State Street, Two International Place, Boston, Massachusetts 02110, will serve
as Registrant's sub-investment manager and, in such capacity, will keep records
related to transactions in portfolio securities of the Equity Index Fund.

T. Rowe Price, 100 East Pratt Street, Baltimore, Maryland 21202, will serve as
Registrant's sub-investment manager and, in such capacity, will keep records
related to transactions in portfolio securities of the Large Cap Value Fund.

Janus, 100 Fillmore Street, Denver, Colorado 80206, will serve as Registrant's
sub-investment manager and, in such capacity, will keep records related to
transactions in portfolio securities of the Mid Cap Growth Fund.

Neuberger Berman, 605 Third Avenue, New York, New York 10158, will serve as
Registrant's sub-investment manager and, in such capacity, will keep records
related to transactions in portfolio securities of the Mid Cap Value Fund.

INVESCO, 101 Federal Street, Boston, Massachusetts 02110, will serve as
Registrant's sub-investment manager and, in such capacity, will keep records
related to transactions in portfolio securities of the Small Cap Value Fund.

JPMIM, 522 Fifth Avenue, New York, New York, 10036, will serve as Registrant's
sub-investment manager and, in such capacity, will keep records related to
transactions in portfolio securities of the Global Bond Fund.

Rowe Price-Fleming, 100 East Pratt Street, Baltimore, Maryland 21202, will serve
as Registrant's sub-investment manager and, in such capacity, will keep records
related to transactions in portfolio securities of the International
Opportunities Fund.

Brinson, 209 South LaSalle Street, Chicago, Illinois 60604, will serve as
Registrant's sub-investment manager and, in such capacity, will keep records
related to transactions in portfolio securities of the International Balanced
Fund.

Goldman Sachs, One New York Plaza, New York, New York 10004, will serve as
Registrant's sub-investment manager and, in such capacity, will keep the records
related to transactions in the portfolio securities of the Small/Mid Cap CORE
Equity, International Equity, and Large Cap Value CORE Funds.

Scudder Kemper, 345 Park Avenue, New York, New York 10154, will serve as
Registrant's sub-investment manager and, in such capacity, will keep the records
related to transactions in the portfolio securities of the Global Equity Fund.

Independence International, 53 State Street, Boston, Massachusetts 02109, will
serve as Registrant's sub-investment manager and, in such capacity, will keep
the records related to transactions in the portfolio securities of the
International Equity Index Fund.

Morgan Stanley, 1221 Avenue of the Americas, New York, New York 10020, will
serve as Registrant's sub-investment manager and, in such capacity, will keep
the records related to transactions in the portfolio securities of the Emerging
Markets Equity Fund.

Mellon, One Mellon Bank Center, Suite 4135, Pittsburgh, Pennsylvania 15258, will
serve as Registrant's sub-investment manager and, in such capacity, will keep
the records related to transactions in the portfolio securities of the
Diversified Bond Index Fund.

Oppenheimer, Two World Trade Center, New York, New York, 10048, will serve as
Registrant's sub-investment manager and, in such capacity, will keep records
related to transactions in portfolio securities of the Fundamental Mid Cap
Growth Fund.

Boston, One Boston Place, Boston, Massachusetts 02108, will serve as
Registrant's sub-investment manager and, in such capacity, will keep records
related to transactions in portfolio securities of the Small/Mid Cap Value Fund.

Wellington, 75 State Street, Boston, Massachusetts 02109, will serve as
Registrant's sub-investment manager and, in such capacity, will keep the records
related to transactions in the portfolio securities of the Small/Mid Cap Growth,
High Yield Bond, and Large/Mid Cap Value Funds.

ITEM 29. MANAGEMENT SERVICES

Not applicable.

ITEM 30. UNDERTAKINGS

Registrant undertakes to furnish to each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders, upon
request and without charge.
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BOSTON, AND THE
COMMONWEALTH OF MASSACHUSETTS, ON THE 6TH DAY OF AUGUST, 1999.

John Hancock Variable Series Trust I

By: /s/ Thomas J. Lee
-----------------

Thomas J. Lee, Vice Chairman

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST- EFFECTIVE
AMENDMENT TO ITS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE DATE

By: /s/ Raymond F. Skiba August 6, 1999
--------------------

Raymond F. Skiba
Treasurer (Principal Financial and
Accounting Officer)

By: /s/ Thomas J. Lee August 6, 1999
-----------------

Thomas J. Lee
Vice Chairman (Acting Principal Executive Officer)

For himself and as attorney-in-fact for:

Michele G. Van Leer, Chairman

William H. Dykstra, Trustee

Elizabeth G. Cook, Trustee

Diane C. Kessler, Trustee

Robert Verdonck, Trustee

<PAGE>

Exhibit d(8)

SUB-INVESTMENT MANAGEMENT AGREEMENT

AMONG

JOHN HANCOCK VARIABLE SERIES TRUST I

WELLINGTON MANAGEMENT COMPANY, LLP

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

SUB-INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the 30th day of April, 1999 by and among John Hancock
Variable Series Trust I, a Massachusetts business trust (the "Series"),
Wellington Management Company, LLP, a Massachusetts limited liability
partnership ("Wellington Management"), 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, as amended (the "1940 Act"); and

WHEREAS, JHMLICO and Wellington Management are each engaged in the business
of rendering investment advice under the Investment Advisers Act of 1940, as
amended; and

WHEREAS, the Series is authorized to issue its shares 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 Small/Mid Cap Growth Portfolio (together with all other
classes established by the Series, collectively referred to as 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 April 15, 1994, as amended (the "Investment Management Agreement"), pursuant
to which it may contract with Wellington Management as a sub-investment manager
as provided for herein.

NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:

1. APPOINTMENT OF SUB-INVESTMENT MANAGER

(a) Subject Portfolio. Wellington Management is hereby appointed and
-----------------
Wellington Management hereby accepts the appointment to act as investment
adviser and manager to the Small/Mid Cap Growth Portfolio (the "Subject
Portfolio") effective May 1, 1999 for the period and on the terms herein set
forth, and for the compensation herein provided.

(b) Additional Subject Portfolios. In the event that the Series and JHMLICO
-----------------------------
desire to retain Wellington Management to render investment advisory services
hereunder for any other Portfolio, they shall so notify Wellington Management in
writing. If it is willing to render such services, Wellington Management shall
notify the Series in writing, whereupon such Portfolio shall become a Subject
Portfolio hereunder.

(c) Incumbency Certificates. Wellington Management shall furnish to
-----------------------
JHMLICO, immediately upon execution of this Agreement, a certificate of a senior
officer of Wellington

-2-
<PAGE>

Management setting forth (by name and title, and including specimen signatures)
those officers of Wellington Management who are authorized to give instructions
for the Subject Portfolio pursuant to the provisions of this Agreement.
Wellington Management shall promptly provide supplemental certificates in
connection with each additional Subject Portfolio (if any) and further
supplemental certificates, as needed, to reflect all changes with respect to
such authorized officers for any Subject Portfolio. On behalf of the Series,
JHMLICO shall instruct the custodian for the Subject Portfolio to accept
instructions with respect to the Subject Portfolio from the officers of
Wellington Management so named.

(d) Independent Contractor. Wellington Management 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.

(e) Wellington Management's Representations. Wellington Management
---------------------------------------
represents, warrants and agrees (i) that it is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended, and that it will
remain so registered and will comply with the requirements of said Act, and the
rules and regulations thereunder, at all times while this Agreement remains in
effect, (ii) that it will promptly notify JHMLICO if the foregoing
representation and agreement shall cease to be true in any material respect at
any time during the term of this Agreement, (iii) that it will promptly notify
JHMLICO of any material change in the ownership of Wellington Management, or of
any change in the identity of the personnel who manage the Subject Portfolio,
(iv) that it has adopted a code of ethics complying with the requirements of
Section 17(j) and Rule 17j-1 under the 1940 Act and has provided true and
complete copies of such code to the Series and to JHMLICO, and has adopted
procedures designed to prevent violations of such code, and (v) that it has
furnished the Series and JHMLICO each with a copy of Wellington Management's
Form ADV, as most recently filed with the Securities and Exchange Commission
("SEC"), and will promptly furnish copies of each future amendment thereto.

2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.

Wellington Management will provide for the Subject Portfolio a continuing and
suitable investment program consistent with the investment objectives, policies,
guidelines and restrictions of said Portfolio, as established by the Series and
JHMLICO. From time to time, JHMLICO or the Series may provide Wellington
Management with additional or amended investment policies, guidelines and
restrictions. Wellington Management, as sub-investment manager, will manage the
investment and reinvestment of the assets in the Subject Portfolio, and perform
the functions set forth below, (i) subject to the overall supervision,
direction, control and review of JHMLICO and the Board of Trustees of the
Series, and (ii) consistent with the applicable investment objectives, policies,
guidelines and restrictions, the provisions of the Series' Declaration of Trust,
By-laws, prospectus, statement of additional information (each as in effect 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 other directions or instructions delivered to
Wellington Management in writing by JHMLICO or the Series from time to time). By
its signature below, Wellington Management acknowledges receipt of a copy of the
Series' Declaration of Trust, By-laws, prospectus, and statement of

-3-
<PAGE>

additional information, each as in effect on the date of this Agreement.

Wellington Management will, at its own expense:

(a) advise the Series in connection with investment policy decisions to be
made by its Board of Trustees or any committee thereof regarding the Subject
Portfolio and, upon request, furnish the Series with research, economic and
statistical data in connection with said Portfolio's investments and investment
policies;

(b) submit such reports and information as JHMLICO or the Series' Board of
Trustees may reasonably request, to assist the custodian in its determination of
the market value of securities held in the Subject Portfolio;

(d) give instructions to the Subject Portfolio's custodian concerning the
delivery of securities and transfer of cash for the Subject Portfolio;

(e) maintain and preserve the records relating to its activities hereunder
required by the 1940 Act to be maintained and preserved by the Series, to the
extent not maintained by the custodian, transfer agent or JHMLICO;

(f) at or prior to the close of business each day, provide JHMLICO and the
custodian with trade information for each transaction effected for the Subject
Portfolio, and promptly provide to the custodian information on all brokerage or
dealer confirmations;

(g) as soon as practicable following the end of each calendar month, provide
JHMLICO with information on all transactions effected for the Subject Portfolio
during the month, a summary listing all investments held in such Portfolio as of
the last day of the month, and such other information as JHMLICO may reasonably
request in connection with the accounting services that JHMLICO provides for the
Subject Portfolio; and

(h) absent specific instructions to the contrary provided to it by JHMLICO
and subject to its receipt of all necessary voting materials, vote all proxies
with respect to investments of the Subject Portfolio in accordance with
Wellington Management's proxy voting policy as most recently provided to
JHMLICO.

On its own initiative, Wellington Management will apprise JHMLICO and the
Series of important political and economic developments materially affecting the
marketplace or 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. Wellington Management will also make its personnel available in
Boston, Massachusetts or other reasonable locations as often as quarterly to
discuss the Subject Portfolio and Wellington Management's management thereof, to
educate JHMLICO sales personnel with respect thereto, and for such other
purposes as the Series or JHMLICO may reasonably request.

-4-
<PAGE>

The Series and JHMLICO will provide timely information to Wellington
Management 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 Subject Portfolio. JHMLICO will timely provide Wellington
Management with monthly accounting statements for the Subject Portfolio, and
such other information (including, without limitation, reports concerning the
classification of Subject Portfolio securities for purposes of Subchapter M of
the Internal Revenue Code and Treasury Regulations Section 1.817) as may be
reasonably necessary or appropriate in order for Wellington Management to
perform its responsibilities hereunder.

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:

(a) 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;

(b) custodian fees and expenses;

(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental agencies;
and

(d) 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 with respect to the Subject Portfolio as
herein provided, JHMLICO shall pay to Wellington Management a fee (for the
payment of which the Series shall have no obligation or liability), based on the
Current Net Assets of the Subject Portfolio, as set forth in Schedule I attached
hereto and made a part hereof. Such 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 but
excluding the date of termination shall be paid promptly following such
termination. For purposes of computing the amount of advisory fee accrued for
any day, "Current Net Assets" shall mean the Subject Portfolio's net assets as
of the most recent preceding day for which the Subject Portfolio's net assets
were computed.

Notwithstanding the foregoing provisions of this Paragraph 4 and of said
Schedule I, Wellington Management's compensation hereunder for the period prior
to approval of this Agreement by the appropriate shareholders of the Series
shall not exceed the compensation that would have been paid for such period
under the Sub-Investment Management Agreement dated

-5-
<PAGE>

April 15, 1994 by and among the Series, JHMLICO and John Hancock Advisers Inc.
had such Sub-Investment Management Agreement not been terminated.

5. PORTFOLIO TRANSACTIONS.

In connection with the investment and reinvestment of the assets of the
Subject Portfolio, Wellington Management 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. Wellington Management 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, Wellington Management 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 Wellington Management, 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. Wellington Management
shall determine in good faith that such higher cost was reasonable in relation
to the value of the brokerage and research services provided.

Wellington Management will not receive any tender offer solicitation fees or
similar payments in connection with the tender of investments of any Portfolio.

6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.

The Series shall own and control all records maintained hereunder by
Wellington Management on the Series' behalf and, in the event of termination of
this Agreement with respect to any Portfolio for any reason, all records
relating to that Portfolio shall be promptly returned to the Series, free from
any claim or retention of rights by Wellington Management, provided that
(subject to the last paragraph of this Section 6) Wellington Management may
retain copies of such records. Wellington Management also agrees, upon request
of the Series, promptly to surrender such books and records or, at its expense,
copies thereof, to the Series or to make such books and records available for
audit or inspection by representatives of regulatory authorities, or other
persons reasonably designated by the Series. Wellington Management 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 Section 31
and Rules 31a-1 and 31a-2, to the extent such records are not maintained by the
custodian, transfer agent or JHMLICO, and to supply all information requested by
any securities and insurance regulatory authorities to determine whether all
securities and insurance laws and regulations are being complied with.
Wellington Management 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 Wellington
Management.

-6-
<PAGE>

Series has authorized such disclosure, or if such disclosure is expressly
required by applicable federal or state regulatory authorities.

7. LIABILITY; STANDARD OF CARE.

No provision of this Agreement shall be deemed to protect Wellington
Management 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. Nor shall any provision hereof be deemed to protect any trustee or
officer of the Series against any such liability to which he or she might
otherwise be subject by reason of any willful misfeasance, bad faith or
negligence in the performance of his or her duties or the reckless disregard of
his or her obligations and duties. Adviser shall employ only qualified
personnel to manage the Subject Portfolio; shall comply with all applicable laws
and regulations in the discharge of its duties under this Agreement; shall (as
provided in Section 2 above) comply with the investment objectives, policies,
guidelines and restrictions of the Subject Portfolio and with the provisions of
the Series' Declaration of Trust, By-laws, prospectus and statement of
additional information or any supplements thereto; shall manage the Subject
Portfolio (subject to the receipt of, and based upon the information contained
in, periodic reports from JHMLICO or the custodian concerning the classification
of Portfolio securities for such purposes) as a regulated investment company in
accordance with subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), and Treasury Regulations Section 1.817-5(b); shall act at all
times in the best interests of the Series; and shall discharge its duties with
the care, skill, prudence and diligence under the circumstances then prevailing
that a prudent person acting in a like capacity and familiar with such matters
would use in the conduct of a similar enterprise. However, Wellington
Management shall not be obligated to perform any service not described in this
Agreement, and shall not be deemed by virtue of this Agreement to have made any
representation or warranty that any level of investment performance or level of
investment results will be achieved.

8. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to the
--------
Subject Portfolio on May 1, 1999 and, with respect to any additional Subject
Portfolio, on the date of receipt by the Series of notice from Wellington
Management 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 only so long
as such continuance with respect to any such Portfolio is specifically 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 Board of 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.

-7-
<PAGE>

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
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.

(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; USE OF WELLINGTON MANAGEMENT'S NAME AND LOGO.

The services of Wellington Management 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 partners, officers and employees of Wellington Management 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.

During the term of this Agreement, subject to Wellington Management's consent
(which consent shall not be unreasonably withheld and which may be presumed
unless an objection is made to a proposed use as hereinafter provided), JHMLICO
and the Series shall have the non-exclusive and non-transferrable right to use
Wellington Management's name and logo in all materials relating to the Subject
Portfolio, including all prospectuses, proxy statements, reports to
shareholders, sales literature and other written materials prepared for
distribution to shareholders of the Series or the public. However, prior to
printing or distributing of any materials which refer to Wellington Management,
JHMLICO shall consult with Wellington Management and shall furnish to Wellington
Management a copy of such materials. Wellington Management agrees to cooperate
with JHMLICO and to review such materials promptly. JHMLICO shall not print or
distribute such materials if Wellington Management reasonably objects in
writing, within five (5) business days of its receipt of such copy (or such
other time as may be mutually agreed), to the manner in which its name and logo
are to be used.

-8-
<PAGE>

10. AVOIDANCE OF INCONSISTENT POSITION.

In connection with the purchase and sale of portfolio securities of the
Subject Portfolio, Wellington Management and its partners, 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 Wellington Management or its affiliates, if orders are
allocated in a manner deemed equitable by Wellington Management 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. 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 the Series personally, but only bind the trust property of the
Series, as provided in the Series' Declaration of Trust.

13. NOTICES

SUB-INVESTMENT MANAGER: Wellington Management Company, LLP
75 State Street
Boston, MA 02109
Attention: Regulatory Affairs
Fax #: 617-790-7760

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

-9-
<PAGE>

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

14. 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.

15. ASSIGNMENT.

This Agreement may not be assigned by any party, either in whole or in
part.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.

ATTEST: JOHN HANCOCK VARIABLE SERIES
TRUST I

/s/ Sandra M. DaDalt By: /s/ Michele G. Van Leer
- -------------------- -----------------------
Sandra M. DaDalt Name: Michele G. Van Leer
Assistant Secretary Title: Chairman

ATTEST: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY

/s/ Corrine L. Weber By: /s/ Robert R. Reitano
- -------------------- ---------------------
Corrine L. Weber Name: Robert R. Reitano
Assistant Secretary Title: Vice President

ATTEST: WELLINGTON MANAGEMENT
COMPANY, LLP

By: /s/ Robert W. Doran
-------------------
Name: Robert W. Doran
Title: Chairman

-10-
<PAGE>

-11-
<PAGE>

SCHEDULE I

FEES
----

Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------

On the first $100,000,000 55 basis points (0.55%) per annum

On the next $100,000,000 45 basis points (0.45%) per annum

On amounts over $200,000,000 40 basis points (0.40%) per annum

<PAGE>

Exhibit d(30)

SUB-INVESTMENT MANAGEMENT AGREEMENT

AMONG

JOHN HANCOCK VARIABLE SERIES TRUST I

MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

SUB-INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the 1st day of August, 1999 by and among John Hancock
Variable Series Trust I, a Massachusetts business trust (the "Series"), Morgan
Stanley Dean Witter Investment Management Inc., a Delaware corporation ("Morgan
Stanley"), 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 Morgan Stanley are each 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 Emerging Markets Equity Portfolio (together with all other
classes established by the Series, collectively referred to as 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 April 14, 1998 (the "Investment Management Agreement"), pursuant to which it
may contract with Morgan Stanley as a 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. Morgan Stanley is hereby appointed and Morgan
-----------------
Stanley hereby accepts the appointment to act as investment adviser and manager
to the Emerging Markets Equity 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 Morgan Stanley to render investment advisory services hereunder
for any other Portfolio, they shall so notify Morgan Stanley in writing. If it
is willing to render such services, Morgan Stanley shall notify the Series in
writing, whereupon such Portfolio shall become a Subject Portfolio hereunder.

(c) Incumbency Certificates. Morgan Stanley shall furnish to JHMLICO,
-----------------------
immediately upon execution of this Agreement, a certificate of a senior officer
of Morgan Stanley setting forth (by name and title, and including specimen
signatures) those officers of Morgan Stanley who are authorized to
<PAGE>

make investment decisions for the Subject Portfolio pursuant to the provisions
of this Agreement. Morgan Stanley shall promptly provide supplemental
certificates in connection with each additional Subject Portfolio (if any) and
further supplemental certificates, as needed, to reflect all changes with
respect to such authorized officers for any Subject Portfolio. On behalf of the
Series, JHMLICO shall instruct the custodian for the Subject Portfolio to accept
instructions with respect to the Subject Portfolio from the officers of Morgan
Stanley so named.

(d) Independent Contractor. Morgan Stanley 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.

(e) Morgan Stanley's Representations. Morgan Stanley represents, warrants
--------------------------------
and agrees (i) that it is registered as an investment adviser under the
Investment Advisers Act of 1940, and that it will remain so registered and will
comply with the requirements of said Act, and the rules and regulations
thereunder, at all times while this Agreement remains in effect, (ii) that it
will promptly notify JHMLICO if the foregoing representation and agreement shall
cease to be true (in any material respect) at any time during the term of this
Agreement, (iii) that it will promptly notify JHMLICO of any material change in
the senior management or ownership of Morgan Stanley, or of any change in the
identity of the senior personnel who manage the Subject Portfolio, (iv) that it
has adopted a code of ethics complying with the requirements of Rule 17j-1 of
the Securities and Exchange Commission (the "SEC") under the 1940 Act and has
provided true and complete copies of such code to the Series and to JHMLICO, and
has adopted procedures designed to prevent violations of such code, and (v) that
it has furnished the Series and JHMLICO each with a copy of Morgan Stanley's
Form ADV, as most recently filed with the SEC, and will promptly furnish updated
copies at least annually.

2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.

Morgan Stanley will provide for the Subject Portfolio a continuing and
suitable investment program consistent with the investment policies, objectives
and restrictions of said Portfolio, as established by the Series and JHMLICO.
From time to time, JHMLICO or the Series may provide Morgan Stanley with
additional or amended investment policies, guidelines and restrictions. Morgan
Stanley, as 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 JHMLICO and
the Board of Trustees of the Series, consistent with the applicable investment
policies, guidelines and restrictions, the provisions of the Series' Declaration
of Trust, Bylaws, prospectus, statement of additional information (each as in
effect 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 delivered to
Morgan Stanley in writing by JHMLICO or the Series from time to time). By its
signature below, Morgan Stanley acknowledges receipt of a copy of the Series'
Declaration of Trust, Bylaws, prospectus, and statement of additional
information, each as in effect on the date of this Agreement.

Morgan Stanley will, at its own expense:

(a) advise the Series in connection with investment policy decisions to be
made by its Board of Trustees or any committee thereof regarding the Subject
Portfolio and, upon request, furnish the

2
<PAGE>

Series with research, economic and statistical data in connection with said
Portfolio's investments and investment policies;

(d) give instructions to the Subject Portfolio's custodian concerning the
delivery of securities and transfer of cash for the Subject Portfolio;

(f) at the close of business each day, provide JHMLICO and the custodian
with copies of trade tickets, and a daily summary sufficient to verify trade
data received by the custodian from third parties for each transaction effected
for the Subject Portfolio;

(g) as soon as practicable following the end of each calendar month, provide
JHMLICO with written statements showing all transactions effected for the
Subject Portfolio during the month, a summary listing all investments held in
such Portfolio as of the last day of the month, and such other information as
JHMLICO may reasonably request in connection with the accounting services that
JHMLICO provides for the Subject Portfolio; and

(h) absent specific instructions to the contrary provided to it by JHMLICO
and subject to its receipt of all necessary voting materials, vote all proxies
with respect to investments of the Subject Portfolio in accordance with Morgan
Stanley's proxy voting policy as most recently provided to JHMLICO.

On its own initiative, Morgan Stanley will apprise JHMLICO and the Series of
important political and economic developments materially affecting the
marketplace or 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. Morgan Stanley will also make its personnel available in Boston or
other reasonable locations as often as annually to discuss the Subject Portfolio
and Morgan Stanley's management thereof, to educate JHMLICO sales personnel with
respect thereto, and for such other purposes as the Series or JHMLICO may
reasonably request.

The Series and JHMLICO will provide timely information to Morgan Stanley
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. JHMLICO will timely provide Morgan Stanley with copies of
monthly accounting statements for the Subject Portfolio, and such other
information (including, without limitation, reports concerning the
classification of Portfolio securities for purposes of Subchapter M of the
Internal Revenue Code and Treasury Regulations Section 1.817) as may be
reasonably necessary or appropriate in order for Morgan Stanley to perform its
responsibilities hereunder.

3
<PAGE>

Morgan Stanley may perform its services through its affiliates, employees,
officers or agents, and neither JHMLICO nor the Series shall be entitled to the
advice, recommendation or judgment of any specific person; provided, however,
that the persons identified in the prospectus relating to the Subject Portfolio
shall perform the portfolio management duties described therein until Morgan
Stanley notifies JHMLICO or and the Series that one or more other affiliates,
employees, officers or agents identified in such notice shall assume such duties
as of a specific date.

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:

(b) custodian fees and expenses;

(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental agencies;

(d) interest payable on the Series' borrowings; and

(e) obtaining licenses and/or other forms of authorization to invest in
various countries.

4. SUB-ADVISORY FEES.

For all of the services rendered with respect to the Subject Portfolio as
herein provided, JHMLICO shall pay to Morgan Stanley a fee (for the payment of
which the Series shall have no obligation or liability), based on the Current
Net Assets of the Subject Portfolio, as set forth in Schedule I attached hereto
and made a part hereof. Such 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 but excluding
the date of termination shall be paid promptly following such termination. For
purposes of computing the amount of advisory fee accrued for any day, "Current
Net Assets" shall mean the Subject Portfolio's net assets as of the most recent
preceding day for which the Subject Portfolio's net assets were computed.

5. PORTFOLIO TRANSACTIONS.

In connection with the investment and reinvestment of the assets of the
Subject Portfolio, Morgan Stanley 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

4
<PAGE>

Portfolio. Such brokers or dealers may be affiliates of Morgan Stanley,
provided such transactions comply with Rule 17e-1 under the 1940 Act and the
procedures approved by the Series' Board of Trustees. Morgan Stanley 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, Morgan Stanley 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 Morgan Stanley, 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. Morgan Stanley shall
determine in good faith that such higher cost was reasonable in relation to the
value of the brokerage and research services provided.

Morgan Stanley will not retain, but shall pay over or credit to the Subject
Portfolio, any tender offer solicitation fees or similar payments received in
connection with the tender of investments of the Subject Portfolio. The
foregoing sentence, however, shall not prevent affiliates of Morgan Stanley from
receiving fees or payments in connection with transactions in which such
affiliates have been retained to act as financial adviser, dealer, manager or
other capacity.

6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.

The Series shall own and control all records maintained hereunder by Morgan
Stanley on the Series' behalf and, in the event of termination of this Agreement
with respect to any Portfolio for any reason, all records relating to that
Portfolio shall be promptly returned to the Series, free from any claim or
retention of rights by Morgan Stanley, provided that (subject to the last
paragraph of this Section 6) Morgan Stanley may retain copies of such records.
Morgan Stanley 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 audit or inspection, during normal
business hours, by representatives of regulatory authorities or other persons
reasonably designated by the Series. Morgan Stanley 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 requested by any insurance regulatory authorities to
determine whether all insurance laws and regulations are being complied with.
Morgan Stanley 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 Morgan Stanley.

Morgan Stanley 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
disclose such information only if the Series has authorized such disclosure, or
if such disclosure is expressly required by applicable federal or state
regulatory authorities.

7. LIABILITY; STANDARD OF CARE.

No provision of this Agreement shall be deemed to protect Morgan Stanley 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. Nor

5
<PAGE>

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.
Adviser shall employ only qualified personnel to manage the Subject Portfolio;
shall comply with all applicable laws and regulations in the discharge of its
duties under this Agreement; shall (as provided in Section 2 above) comply with
the investment policies, guidelines and restrictions of the Subject Portfolio
and with the provisions of the Series' Declaration of Trust, Bylaws, prospectus
and statement of additional information; shall manage the Subject Portfolio
(subject to the receipt of, and based upon the information contained in,
periodic reports from JHMLICO or the custodian concerning the classification of
Portfolio securities for such purposes) as a regulated investment company in
accordance with subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), and Treasury Regulations Section 1.817-5(b); shall act at all
times in the best interests of the Series; and shall discharge its duties with
the care, skill, prudence and diligence under the circumstances then prevailing
that a prudent person acting in a like capacity and familiar with such matters
would use in the conduct of a similar enterprise. However, Morgan Stanley shall
not be obligated to perform any service not described in this Agreement, and
shall not be deemed by virtue of this Agreement to have made any representation
or warranty that any level of investment performance or level of investment
results will be achieved.

8. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to the
--------
Subject Portfolio on the date hereof and, with respect to any additional Subject
Portfolio, on the date of receipt by the Series of notice from Morgan Stanley 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.

6
<PAGE>

JHMLICO, and may be terminated by JHMLICO on at least ninety days' prior written
notice to the Series and Morgan Stanley.

(c) Automatic Termination. This Agreement shall automatically and
---------------------
immediately terminate in the event of its assignment (other than as permitted
pursuant to Section 15 below) or if the Investment Management Agreement is
terminated.

9. SERVICES NOT EXCLUSIVE; USE OF MORGAN STANLEY'S NAME AND LOGO.

The services of Morgan Stanley 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 Morgan Stanley 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.

During the term of this Agreement, JHMLICO and the Series shall have the non-
exclusive and non-transferable right to use Morgan Stanley's name and logo in
all materials relating to the Subject Portfolio, including all prospectuses,
proxy statements, reports to shareholders, sales literature and other written
materials prepared for distribution to shareholders of the Series or the public.
However, prior to distribution of any materials which refer to Morgan Stanley,
JHMLICO shall consult with Morgan Stanley and shall furnish to Morgan Stanley a
copy of such materials. Morgan Stanley agrees to cooperate with JHMLICO and to
review such materials promptly. JHMLICO shall not distribute such materials if
Morgan Stanley reasonably objects in writing, within five (5) business days of
its receipt of such copy (or such other time as may be mutually agreed), to the
manner in which its name and logo are used.

10. AVOIDANCE OF INCONSISTENT POSITION.

Except as permitted by the 1940 Act, the rules promulgated thereunder, and
the procedures adopted by the Series' Board of Trustees, Morgan Stanley and its
directors, officers and employees will not act as principal or agent or receive
any commission in connection with the purchase and sale of portfolio securities
of the Subject Portfolio. 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 registered investment companies and
portfolios or accounts of other advisory clients managed by Morgan Stanley or
its affiliates, if orders are allocated in a manner deemed equitable by Morgan
Stanley among the accounts and at a price approximately averaged.

11. AMENDMENT.

7
<PAGE>

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. NOTICES

SUB-MANAGER: Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, NY 10021
Attn: Harold J. Schaaff, Esq.
Fax #: 212-762-7377

JHMLICO: John Hancock Mutual Life Insurance Company
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

SERIES: John Hancock Variable Series Trust I
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

14. 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.

8
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.

ATTEST: JOHN HANCOCK VARIABLE SERIES
TRUST I

By:
--------------------------
Title: Chairman

ATTEST: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY

By:
--------------------------
Title: Vice President

ATTEST: MORGAN STANLEY DEAN WITTER
INVESTMENT MANAGEMENT INC.

By:
---------------------------
Title:

9
<PAGE>

SCHEDULE I

FEES
----

Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------

On the first $10,000,000 110 basis points (1.10%) per annum

On the next $140,000,000 90 basis points (0.90%) per annum

On amounts over $150,000,000 80 basis points (0.80%) per annum

<PAGE>

Exhibit d(31)

INVESTMENT MANAGEMENT AGREEMENT

BY AND BETWEEN

JOHN HANCOCK VARIABLE SERIES TRUST I

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

MANAGEMENT AGREEMENT

AGREEMENT made as of the 28th day of July, 1999 by and between John Hancock
Variable Series Trust I, a Massachusetts business trust having a place of
business at John Hancock Place, Boston, Massachusetts 02117 (hereinafter called
the "Series") and John Hancock Mutual Life Insurance Company, a Massachusetts
corporation having its principal place of business at John Hancock Place,
Boston, Massachusetts 02117 (hereinafter called "JHMLICO").

WHEREAS, the Series is organized and 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 is engaged in the business of rendering investment management
services and is registered as an investment adviser under the Investment
Advisers Act of 1940; and

WHEREAS, the Series is authorized to issue shares of beneficial interest in
separate classes with each such class representing interests in a separate
portfolio of securities and other assets; and

WHEREAS, the Series currently offers shares of beneficial interest in twenty-
three classes which are subject to separate management agreements with JHMLICO
that do not apply to the Portfolios referred to below, and

WHEREAS, the Series intends to offer shares of beneficial interest in eight
additional classes (the "Initial Portfolios" under this Agreement) designated as
Aggressive Balanced Portfolio, Mid Cap Blend Portfolio, Large Cap Aggressive
Growth Portfolio, Small/Mid Cap Value Portfolio, Large Cap Value CORE Portfolio,
International Equity Portfolio, Fundamental Mid Cap Growth Portfolio, and
Large/Mid Cap Value Portfolio (together with other classes subsequently
established by the Series, the "Portfolios) and the Series desires to retain
JHMLICO to render investment advisory services under this Agreement, and JHMLICO
is willing to do so.

NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:

1. APPOINTMENT OF JHMLICO AS MANAGER.

(a) Initial Portfolios. The Series hereby appoints JHMLICO and JHMLICO
------------------
hereby accepts the appointment, to act as investment adviser and manager to each
of the Initial Portfolios for the period and on the terms herein set forth, for
the compensation herein provided.

(b) Additional Portfolios. In the event that the Series establishes one or
---------------------
more classes of shares other than the Initial Portfolios with respect to which
it desires to retain JHMLICO to render investment advisory and management
services hereunder, it shall so notify JHMLICO in writing. If it is willing to
render such services JHMLICO shall notify the Series in writing, whereupon such
class of shares shall become a Portfolio hereunder.

(c) Independent Contractor. JHMLICO 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.
<PAGE>

2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.

JHMLICO will provide to the Portfolios a continuing and suitable investment
program consistent with the investment policies, objectives and restrictions of
the Series. JHMLICO will manage the investment and reinvestment of the assets
in the Portfolios, and perform the other functions set forth below, subject to
the overall supervision, direction, control and review of the Board of Trustees
of the Series and, as in effect from time to time, the provisions of the Series'
Declaration of Trust, Bylaws, prospectus, statement of additional information,
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 delivered to JHMLICO in writing
by the Series from time to time.

Except to the extent that the Board of Trustees approves performance of any of
the following functions by any custodian, transfer agent, independent counsel,
or other independent agent, JHMLICO will, with respect to the Portfolios:

(a) advise the Series in connection with policy decisions to be made by its
Board of Trustees or any committee thereof and, upon request, furnish the
Series with research, economic and statistical data in connection with the
Series' investments and investment policies;

(b) provide administration of the day to day operations of the Series;

(c) submit such reports relating to the valuation of the Series' securities
as its Board of Trustees may reasonably request;

(d) assist the Series in any negotiations relating to its investments with
issuers, investment banking firms, securities brokers or dealers and other
institutions or investors and place orders for purchases and sales of
portfolio investments;

(e) provide office space and office equipment and supplies (including
telephone and other utility services), accounting and data processing
equipment and necessary executive, legal, accounting, clerical and secretarial
personnel for the administration of the affairs of the Series;

(f) maintain and preserve the records required by the 1940 Act to be
maintained and preserved by the Series, to the extent not maintained by the
Series' custodian, distributor, transfer agent or any Sub-Investment Manager;

(g) oversee, and use its best efforts to assure the performance of all the
activities and services of any custodian, distributor, transfer agent or other
similar agent retained by the Series;

(h) value the assets and liabilities of the Series, compute the daily income,
net asset value and yield of each Portfolio; and

(i) supervise the activities of each Sub-Investment Manager.

The Series will provide timely information to JHMLICO regarding such matters
as purchases and redemptions of shares in each Portfolio and the cash
requirements of, and cash available for investment in, each Portfolio, and all
other information as may be reasonably necessary or appropriate in order for
JHMLICO to perform its responsibilities hereunder.
<PAGE>

3. ALLOCATION OF EXPENSES.

Except as set forth below, each party to this Agreement shall bear the costs
and expenses of performing its obligations hereunder.

(a) The Series agrees to assume the Portfolios' share of 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) the advisory fees called for in this Agreement;
(iii) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental
agencies, and the expenses and costs associated with the preparation and
filing of all tax returns;
(iv) interest payable on the Series' borrowings;
(v) extraordinary or non-recurring expenses, such as legal claims and
liabilities and litigation costs and indemnification payments by the Series
in connection therewith;
(vi) the charges and expenses of any custodian or depository appointed
by the Series for the safekeeping of its cash, portfolio securities and
other property, for providing accounting and valuation services, and for
monitoring compliance with federal laws and regulations, subject to the
Board of Trustees' approval as to the scope of such accounting, valuation,
and monitoring functions;
(vii) the charges and expenses of its independent auditors;
(viii) the cost of the fidelity bond required by 1940 Act Rule 17g-l;
(ix) the compensation and travel expenses of trustees who are not
"interested persons" within the meaning of the 1940 Act;
(x) the expenses in preparing, printing and distributing voting
instruction information statements to persons entitled to give voting
instructions in tabulating proxy votes and in printing and distributing to
policyowners and contractowners annual and semi-annual reports;
(xi) fees and costs for legal services provided to or on behalf of the
Series (including fees and costs of independent counsel and an allocable
portion of the cost of JHMLICO's Law Department rendering such services)
(for this purpose, "legal services" includes (but is not limited to) the
services of such independent counsel or Law Department employees in the
course of administering the business and affairs of the Series);
(xii) charges of any independent agents (other than independent counsel)
approved by the Board of Trustees;
(xiii) the fees and expenses involved in registering and maintaining
registrations of the Series and its shares with the Securities and Exchange
Commission and various states and other jurisdictions; and
(xiv) membership or association dues for the Investment Company
Institute, the National Association of Variable Annuities, or similar trade
association or for any self-regularly organization.

(b) To the extent not assumed by the Series pursuant to (a) above, JHMLICO
agrees to assume the Portfolios' share of the expense of:

(i) the charges and expenses of any registrar, stock transfer or
dividend disbursing agent;
(ii) the cost of any stock certificates representing shares of the
Series;
(iii) the expenses of shareholders' meetings; trustees' meetings;
printing and distributing Prospectuses and statements of additional
information to prospective and existing policyowners and contractowners;
preparing, printing, and distributing any advertising or sales literature
to
<PAGE>

prospective and existing policyowners and contractowners; and any other
activity and related legal services primarily intended to result in the
sale of the Series' shares;
(iv) the expense of furnishing each shareholder statements of account;
(v) the cost of and any errors and omissions insurance or other
liability insurance covering the Series and/or its officers,
directors and employees; and
(vi) the fees and costs of independent counsel to Series not incurred in
the actual conduct of the Series' affairs.

4. SUB-INVESTMENT MANAGERS.

Notwithstanding any other provision hereof, JHMLICO, with the approval of the
Series, may contract with one or more Sub-Investment Managers to perform any of
the investment management services required of JHMLICO under this Agreement;
provided, however, that the compensation of any such Sub-Investment Manager will
be the sole responsibility of JHMLICO and the duties and responsibilities of any
such Sub-Investment Manager shall be as set forth in an agreement between the
Series, JHMLICO and such Sub-Investment Manager. It is anticipated that JHMLICO
and the Series will agree to contract initially with Independence Investment
Associates, Inc. to be Sub-Investment Manager for the Aggressive Balanced
Portfolio and the Mid Cap Blend Portfolio, with Alliance Capital Management L.P.
to be Sub-Investment Manager for the Large Cap Aggressive Growth Portfolio, with
The Boston Company Asset Management LLC to be Sub-Investment Manager for the
Small/Mid Cap Value Portfolio, with Goldman Sachs Asset Management (a division
of Goldman, Sachs & Co.) to be Sub-Investment Manager for the Large Cap Value
CORE Portfolio and the International Equity Portfolio, with OppenheimerFunds,
Inc. to be Sub-Investment Manager for the Fundamental Mid Cap Growth Portfolio,
and with Wellington Management Company, LLP to be Sub-Investment Manager for the
Large/Mid Cap Value Portfolio.

JHMLICO shall exercise reasonable care in selecting, for approval by the
Series, any Sub-Investment Manager and in monitoring and supervising the
performance of any Sub-Investment Manager but, except as provided in Section 14
hereof, shall not otherwise be legally responsible or liable for any action of
any Sub-Investment Manager. It shall be a particular responsibility of JHMLICO
to evaluate the investment performance of Sub-Investment Managers and that of
potential Sub-Investment Managers and to supervise and monitor the practices of
Sub-Investment Managers in selecting brokers and dealers to effect portfolio
transactions, including the negotiation of commissions and the evaluation of
services provided by such brokers and dealers.

5. INVESTMENT ADVISORY FEE AND EXPENSE LIMITATION.

For all of the services rendered, facilities furnished and expenses paid or
assumed as herein provided,the Series shall pay to JHMLICO a fee, which fee
shall, with respect to each Portfolio, be at an effective rate of:

(a) For the Aggressive Balanced Portfolio:
-------------------------------------
(i) 0.775 % on an annual basis of the first $250,000,000 of the Current
Net Assets of such Portfolio; and
(ii) 0.725 % on an annual basis of that portion of the Current Net Assets
in excess of $250,000,000 and not over $500,000,000 of such Portfolio;
and
(iii) 0.70 % on an annual basis of that portion of the Current Net
Assets in excess of $500,000,000 of such Portfolio.

(b) For the Mid Cap Blend Portfolio:
-------------------------------

<PAGE>

(i) 0.85 % on an annual basis of the first $250,000,000 of the
Current Net Assets of such Portfolio; and
(ii) 0.80 % on an annual basis of that portion of the Current Net Assets
in excess of $250,000,000 and not over $500,000,000 of such Portfolio;
and
(iii) 0.75 % on an annual basis of that portion of the Current Net
Assets in excess of $500,000,000 of such Portfolio.

(c) For the Large Cap Aggressive Growth Portfolio:
---------------------------------------------
(i) 1.10 % on an annual basis of the first $10,000,000 of the Current
Net Assets of such Portfolio; and
(ii) 0.975 % on an annual basis of that portion of the Current Net
Assets in excess of $10,000,000 and not over $20,000,000 of such
Portfolio; and
(iii) 0.85 % on an annual basis for that portion of the Current Net
Assets in excess of $20,000,000 of such Portfolio.

(d) For the Small/Mid Cap Value Portfolio:
-------------------------------------
(i) 1.05 % on an annual basis of the first $100,000,000 of the Current
Net Assets of such Portfolio; and
(ii) 1.00 % on an annual basis of that portion of the Current Net
Assets in excess of $100,000,000 and not over $250,000,000 of such
Portfolio; and
(iii) 0.95 % on an annual basis for that portion of the Current Net
Assets in excess of $250,000,000 of such Portfolio.

(e) For the Large Cap Value CORE Portfolio:
--------------------------------------
(i) 0.85 % on an annual basis of the first $50,000,000 of the Current
Net Assets of such Portfolio; and
(ii) 0.75 % on an annual basis of that portion of the Current Net Assets
in excess of $50,000,000 but not over $200,000,000; and
(iii) 0.70 % on an annual basis of that portion of the Current Net
Assets in excess of $200,000,000 of such Portfolio.

(f) For the International Equity Portfolio:
--------------------------------------
(i) 1.10 % on an annual basis of the first $50,000,000 of the Current
Net Assets of such Portfolio; and
(ii) 1.05 % on an annual basis of that portion of the Current Net Assets
in excess of $50,000,000 but not over $200,000,000; and
(iii) 1.00 % on an annual basis of that portion of the Current Net
Assets in excess of $200,000,000 of such Portfolio.

(g) For the Fundamental Mid Cap Growth Portfolio:
--------------------------------------------
(i) 0.95 % on an annual basis of the first $50,000,000 of the Current
Net Assets of such Portfolio; and
(ii) 0.90 % on an annual basis of that portion of the Current Net Assets
in excess of $50,000,000 but not over $100,000,000; and
(iii) 0.85 % on an annual basis of that portion of the Current Net
Assets in excess of $100,000,000 but not over $150,000,000; and
(iv) 0.80 % on an annual basis of that portion of the Current Net Assets
in excess of $150,000,000 of such Portfolio.

(h) For the Large/Mid Cap Value Portfolio:
-------------------------------------

<PAGE>

(i) 1.05 % on an annual basis of the first $25,000,000 of the Current Net
Assets of such Portfolio; and
(ii) 0.95 % on an annual basis of that portion of the Current Net Assets
in excess of $25,000,000 but not over $50,000,000; and
(iii) 0.85 % on an annual basis of that portion of the Current Net Assets
in excess of $50,000,000 but not over $100,000,000; and
(iv) 0.75 % on an annual basis of that portion of the Current Net Assets
in excess of $100,000,000 of such Portfolio.

The fee shall be accrued daily and payable monthly as soon as possible after
the last day of each calendar month. In the case of termination of this
Agreement with respect to any Portfolio during any calendar month, the amount of
the fee accrued to the date of termination shall be paid.

"Current Net Assets" of any Portfolio for purposes of computing the amount of
advisory fee accrued for any day shall mean that Portfolio's net assets for the
most recent preceding day for which that Portfolio's net assets were computed.

For any fiscal year in which the normal operating costs and expenses of any
Portfolio of the Series, exclusive of the investment advisory fee, interest,
brokerage commissions, taxes and extraordinary expenses outside the control of
JHMLICO exceed 0.25% of that Portfolio's average daily net assets, JHMLICO will
reimburse that Portfolio promptly after the end of the fiscal year in an amount
equal to such excess. In the event of termination of this Agreement as of a
date other than the last day of Series' fiscal year, JHMLICO shall pay any
Portfolio of Series the amount by which such expenses incurred by that Portfolio
prior to the date of termination exceeds a pro rata portion of the expense
limitation.

6. PORTFOLIO TRANSACTIONS.

In connection with the investment and reinvestment of the assets of the
Portfolios, JHMLICO is authorized to select the brokers or dealers that will
execute purchase and sale transactions for the Series 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 the Series.
JHMLICO 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 Series and its shareholders, JHMLICO shall
have the right, subject to the control of the Board of Trustees, and to the
extent authorized by the Securities and Exchange Act of 1934, to follow a policy
of selecting brokers who furnish brokerage and research services to the Series
or to JHMLICO, who charge a higher commission rate to the Series than may result
when allocating brokerage solely on the basis of seeking the most favorable
price and execution. JHMLICO 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 JHMLICO by the Series hereunder shall be reduced by any
tender solicitation fees or similar payments received by JHMLICO, or any
affiliated person of JHMLICO, in connection with the tender of investments of
any Portfolio (less any direct expenses incurred by JHMLICO, or any affiliated
person of JHMLICO, in connection with obtaining such fees or payments). JHMLICO
shall use its best efforts to recapture all available tender offer solicitation
fees and similar payments in connection with tenders of the securities of any
Portfolio, provided, however, that neither JHMLICO nor any affiliated person
shall be required to register as a broker-dealer for this purpose. JHMLICO
shall advise the Board of Trustees of any fees or payments of whatever type
which it may be possible for JHMLICO or an affiliate of JHMLICO to receive in
connection with the purchase or sale of investment securities for any Portfolio.
<PAGE>

7. INFORMATION, RECORDS, AND CONFIDENTIALITY.

The Series shall own and control all records maintained hereunder by JHMLICO
on the Series' behalf and, in the event of termination of this Agreement with
respect to any Portfolio for any reason, all records relating to that Portfolio
shall promptly be returned to the Series, free from any claim or retention of
rights by JHMLICO. JHMLICO also agrees, upon request of the Series, promptly to
surrender such books and records or, at JHMLICO's 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. JHMLICO 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. JHMLICO shall supply all
information requested by any insurance regulatory authorities to determine
whether all insurance laws and regulations are being complied with.

JHMLICO 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 disclose such
information only if the Series has authorized such disclosure, or if such
disclosure is expressly required by applicable Federal or state regulatory
authorities.

JHMLICO shall supply the Board of Trustees and officers of the Series with all
statistical information regarding investments of the Portfolios which is
reasonably required by them and reasonably available to JHMLICO.

8. LIABILITY.

No provision of this Agreement shall be deemed to protect 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. 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 of his duties or the reckless disregard of his
obligations and duties.

9. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to each
--------
Initial Portfolio on the date hereof and, with respect to any additional
Portfolio, on the date of receipt by the Series of notice from JHMLICO in
accordance with Paragraph 1(b) hereof that JHMLICO 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 Portfolios and, with respect to each additional Portfolio
until two years following the date on which such Portfolio becomes a Portfolio
hereunder, and shall continue in full force and effect thereafter with respect
to each Portfolio so long as such continuance with respect to any such Portfolio
is approved at least annually (i) by either the Board of Trustees of the Series
or by vote of a majority of the outstanding voting shares of such Portfolio, and
(ii) in either event by the vote of a majority of the Board of 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.
<PAGE>

Any approval of this Agreement by the holders of a majority of the outstanding
shares of any 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 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
-----------
Portfolio at any time, without payment of any penalty, by vote of the Board of
Trustees of the Series, by vote of a majority of the outstanding shares of such
Portfolio, or by JHMLICO on at least sixty (60) days written notice to the
Series.

(c) Automatic Termination. This Agreement shall automatically and
---------------------
immediately terminate in the event of its assignment.

10. NAME OF JOHN HANCOCK.

It is understood that the name "John Hancock", or any name derived from or
similar to that name, and any logo associated with that name, is the valuable
property of JHMLICO, and that the Series has the right to include "John Hancock"
as a part of its name only so long as this Agreement shall continue. Upon
termination of this Agreement the Series shall forthwith cease to use the John
Hancock name and logos and shall submit to its shareholders, if necessary, an
amendment to its Declaration of Trust to change the Series' name.

11. SERVICES NOT EXCLUSIVE.

The services of JHMLICO to the Series with respect to the Portfolios are not
to be deemed exclusive and JHMLICO 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 JHMLICO 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.

12. AVOIDANCE OF INCONSISTENT POSITION.

In connection with the purchase and sale of portfolio securities of the
Portfolios, JHMLICO 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 Series with those for other registered investment
companies managed by JHMLICO or its affiliates, if orders are allocated in a
manner deemed equitable by JHMLICO among the accounts and at a price
approximately averaged.

13. AMENDMENT.

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.

14. INDEMNIFICATION

Except to the extent that a member of the Board of Trustees would thereby be
protected against any liability to the Series or its shareholders to which he or
she would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance of the member's duties, or by reason of the
member's reckless disregard either of the member's obligations and duties under
this Agreement or of the duties involved in the conduct of the member's office,
JHMLICO hereby indemnifies each person who is or has been a member of the Board
of Trustees and will hold each harmless against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
the member may become subject under the 1940 Act or any other statute or at
common law or otherwise, by reason of his or her failure or alleged failure to
take any action relating to the investment or reinvestment of assets in the
Portfolios, regardless of whether a Sub-Investment Manager has been retained in
connection with the Portfolio concerned, including any failure or alleged
failure to seek or retain investment advice or management in addition to or in
place of that provided by JHMLICO and its Sub-Investment Managers, if any. With
respect to any losses, claims, damages, liabilities or litigation arising out of
events occurring prior to the termination of this Agreement, this indemnity
shall survive said termination.

15. 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 bind only the trust property of the Series, as
provided in the Series' Declaration of Trust.

16. 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.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first set forth above.

JOHN HANCOCK VARIABLE SERIES TRUST I
ATTEST:

/s/ Laura Mangan By: /s/ Michele G. Van Leer
- ---------------- -----------------------
Assistant Secretary Title: Chairman and CEO

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
ATTEST:

/s/ Antoniette Ricci By: /s/ Eric A. Simonson
- -------------------- --------------------
Assistant Secretary Title: Sr. Vice President

<PAGE>

Exhibit d(32)

SUB-INVESTMENT MANAGEMENT AGREEMENT

AMONG

JOHN HANCOCK VARIABLE SERIES TRUST I

ALLIANCE CAPITAL MANAGEMENT L.P.

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

SUB-INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the day of August, 1999 by and among John Hancock
---
Variable Series Trust I, a Massachusetts business trust (the "Series"), Alliance
Capital Management L.P., a Delaware limited partnership ("Advisers"), 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 Advisers are each 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 Large Cap Aggressive Growth Portfolio (together with all other
classes established by the Series, collectively referred to as 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 July 28, 1999 (the "Investment Management Agreement"), pursuant to which it
may contract with Advisers as a 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. Advisers is hereby appointed and Advisers hereby
-----------------
accepts the appointment to act as investment adviser and manager to the Large
Cap Aggressive Growth Portfolio (the "Subject Portfolio"), effective August __,
1999, 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 Advisers to render investment advisory services hereunder for
any other Portfolio, they shall so notify Advisers in writing. If it is willing
to render such services, Advisers shall notify the Series in writing, whereupon
such Portfolio shall become a Subject Portfolio hereunder.
<PAGE>

(c) Incumbency Certificates. Advisers shall furnish to JHMLICO, immediately
-----------------------
upon execution of this Agreement, a certificate of a senior officer of Advisers
setting forth (by name and title, and including specimen signatures) those
officers of Advisers who are authorized to make investment decisions for the
Subject Portfolio pursuant to the provisions of this Agreement. Advisers shall
promptly provide supplemental certificates in connection with each additional
Subject Portfolio (if any) and further supplemental certificates, as needed, to
reflect all changes with respect to such authorized officers for any Subject
Portfolio. On behalf of the Series, JHMLICO shall instruct the custodian for
the Subject Portfolio to accept instructions with respect to the Subject
Portfolio from the officers of Advisers so named.

(d) Independent Contractor. Advisers 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.

(e) Advisers' Representations. Advisers represents, warrants and agrees (i)
-------------------------
that it is registered as an investment adviser under the Investment Advisers Act
of 1940, and that it will remain so registered and will comply with the
requirements of said Act, and the rules and regulations thereunder, at all times
while this Agreement remains in effect, (ii) that it will promptly notify
JHMLICO if the foregoing representation and agreement shall cease to be true (in
any material respect) at any time during the term of this Agreement, (iii) that
it will promptly notify JHMLICO of any material change in the senior management
or ownership of Advisers, or of any change in the identity of the personnel who
manage the Subject Portfolio, (iv) that it has adopted a code of ethics
complying with the requirements of Rule 17j-1 of the Securities and Exchange
Commission (the "SEC") under the 1940 Act and has provided true and complete
copies of such code to the Series and to JHMLICO, and has adopted procedures
designed to prevent violations of such code, and (v) that it has furnished the
Series and JHMLICO each with a copy of Advisers' Form ADV, as most recently
filed with the SEC, and will promptly furnish copies of each future amendment
thereto.

2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.

Advisers will provide for the Subject Portfolio a continuing and suitable
investment program consistent with the investment policies, objectives and
restrictions of said Portfolio, as established by the Series and JHMLICO. From
time to time, JHMLICO or the Series may provide Advisers with additional or
amended investment policies, guidelines and restrictions. Advisers, as 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 JHMLICO and the Board of
Trustees of the Series, consistent with the applicable investment policies,
guidelines and restrictions, the provisions of the Series' Declaration of Trust,
Bylaws, prospectus, statement of additional information (each as in effect 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 delivered to Advisers in
writing by JHMLICO or the Series from time to time). By its signature below,
Advisers acknowledges receipt of a copy of the Series' Declaration of Trust,
Bylaws, prospectus, and statement of additional information, each as in effect
on the date of this Agreement.
<PAGE>

Advisers will, at its own expense:

(d) give instructions to the Subject Portfolio's custodian concerning the
delivery of securities and transfer of cash for the Subject Portfolio;

(f) at the close of business each day, provide JHMLICO and the custodian
with copies of trade tickets for each transaction effected for the Subject
Portfolio, and promptly forward to the custodian copies of all brokerage or
dealer confirmations;

(h) absent specific instructions to the contrary provided to it by JHMLICO
and subject to its receipt of all necessary voting materials, vote all proxies
with respect to investments of the Subject Portfolio in accordance with
Advisers' proxy voting policy as most recently provided to JHMLICO.

On its own initiative, Advisers will apprise JHMLICO and the Series of
important political and economic developments materially affecting the
marketplace or 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. Advisers will also make its personnel available in Boston or other
reasonable locations as often as quarterly to discuss the Subject Portfolio and
Advisers' management thereof, to educate JHMLICO sales personnel with respect
thereto, and for such other purposes as the Series or JHMLICO may reasonably
request.

such other information (including, without limitation, reports concerning the
classification of Portfolio securities for purposes of Subchapter M of the
Internal Revenue Code and Treasury Regulations Section 1.817) as may be
reasonably necessary or appropriate in order for Advisers to perform its
responsibilities hereunder.

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:

(b) custodian fees and expenses;

(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental agencies;
and

(d) interest payable on the Series' borrowings.

4. SUB-ADVISORY FEES.

For all of the services rendered with respect to the Subject Portfolio as
herein provided, JHMLICO shall pay to Advisers a fee (for the payment of which
the Series shall have no obligation or liability), based on the Current Net
Assets of the Subject Portfolio, as set forth in Schedule I attached hereto and
made a part hereof. Such 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 but excluding
the date of termination shall be paid promptly following such termination. For
purposes of computing the amount of advisory fee accrued for any day, "Current
Net Assets" shall mean the Subject Portfolio's net assets as of the most recent
preceding day for which the Subject Portfolio's net assets were computed.

5. PORTFOLIO TRANSACTIONS.

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 Advisers, 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. Advisers shall determine in good faith that such higher cost was
reasonable in relation to the value of the brokerage and research services
provided.

Advisers will not receive any tender offer solicitation fees or similar
payments in connection with the tender of investments of any Portfolio.

6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.

The Series shall own and control all records maintained hereunder by Advisers
on the Series' behalf and, in the event of termination of this Agreement with
respect to any Portfolio for any reason, all records relating to that Portfolio
shall be promptly returned to the Series, free from any claim or retention of
rights by Advisers, provided that (subject to the last paragraph of this Section
6) Advisers may retain copies of such records. Advisers 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 audit or inspection by representatives of regulatory authorities or other
persons reasonably designated by the Series. Advisers 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 requested by any insurance regulatory
authorities to determine whether all insurance laws and regulations are being
complied with. Advisers 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 Advisers.

7. LIABILITY; STANDARD OF CARE.

Series' Declaration of Trust, Bylaws, prospectus and statement of additional
information; shall manage the Subject Portfolio (subject to the receipt of, and
based upon the information contained in, periodic reports from JHMLICO or the
custodian concerning the classification of Portfolio securities for such
purposes) as a regulated investment company in accordance with subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), and Treasury
Regulations Section 1.817-5(b); shall act at all times in the best interests of
the Series; and shall discharge its duties with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use in the conduct of a
similar enterprise. However, Advisers shall not be obligated to perform any
service not described in this Agreement, and shall not be deemed by virtue of
this Agreement to have made any representation or warranty that any level of
investment performance or level of investment results will be achieved.

8. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to the
--------
Subject Portfolio on the date hereof and, with respect to any additional Subject
Portfolio, on the date of receipt by the Series of notice from Advisers 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.

(c) Automatic Termination. This Agreement shall automatically and
---------------------
immediately terminate in the event of its assignment (as that term is defined in
the Investment Advisers Act of 1940) or if the Investment Management Agreement
is terminated.

9. SERVICES NOT EXCLUSIVE; USE OF ADVISERS' NAME AND LOGO.

The services of Advisers 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 Advisers 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.

During the term of this Agreement, JHMLICO and the Series shall have the non-
exclusive and non-transferable right to use Advisers' name and logo in all
materials relating to the Subject Portfolio, including all prospectuses, proxy
statements, reports to shareholders, sales literature and other written
materials prepared for distribution to shareholders of the Series or the public.
However, prior to distribution of any materials which refer to Advisers, JHMLICO
shall consult with Advisers and shall furnish to Advisers a copy of such
materials. Advisers agrees to cooperate with JHMLICO and to review such
materials promptly. JHMLICO shall not distribute such materials if Advisers
reasonably objects in writing, within five (5) business days of its receipt of
such copy (or such other time as may be mutually agreed), to the manner in which
its name and logo are used. Such authorization to use Adviser's name and logo
will immediately cease upon termination of this Agreement.

10. AVOIDANCE OF INCONSISTENT POSITION.

In connection with the purchase and sale of portfolio securities of the
Subject Portfolio, Advisers and its directors, officers and employees will not
act as principal or agent or receive any commission, except that JHMLICO and the
Series agree that when Advisers, in its sole discretion, is seeking to obtain
the best available price and most favorable execution (as provided in Section 5
above) for transactions on behalf of the Subject Portfolio, it may place
transactions with Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC"),
an affiliate of Advisers, or with any other broker-dealer deemed to be an
affiliate of Advisers so long as such transactions are effected in conformity
with the requirements of (i) Section 11(a) of the Securities Exchange Act of
1934 and Rule 11a2-2(T) thereunder (including any applicable exemptions and
administrative interpretations set forth in Part II of Advisers' Form ADV
Registration Statement on file with the SEC), and (ii) Sections 17(a) and 17(e)
of the 1940 Act and the rules and procedures adopted by the Series with respect
thereto. Furthermore, JHMLICO and the Series understand that Advisers is an
affiliate of DLJSC and that by executing this Agreement they duly authorize
Advisers to implement arrangements governing the use or selection of DLJSC or
any other of Advisers' affiliated broker-dealers or correspondents thereof to
effect transactions for the Subject Portfolio in conformity with this Section
10. 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 client accounts managed by Advisers or its affiliates, if
orders are allocated in a manner deemed equitable by Advisers among the accounts
and at a price approximately averaged.
<PAGE>

11. AMENDMENT.

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 the Series personally, but only bind the trust property of the Series, as
provided in the Series' Declaration of Trust.

13. NOTICES

ADVISERS: Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, NY 10105
Attention: Robert G. Absey
Fax #: 212-969-6592
Attention: Mark R. Manley
Fax #: 212-969-2293

JHMLICO: John Hancock Mutual Life Insurance Company
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

SERIES: John Hancock Variable Series Trust I
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

14. 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.
<PAGE>

15. ASSIGNMENT.

This Agreement may not be assigned (as that term is defined in the Investment
Advisers Act of 1940) by any party, either in whole or in part.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.

ATTEST: JOHN HANCOCK VARIABLE SERIES
TRUST I

By:
---------------------------
Title: Chairman

ATTEST: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY

By:
---------------------------
Title: Vice President

ATTEST: ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation,
General Partner

By:
---------------------------
Title: Assistant Secretary

JEE0384
<PAGE>

SCHEDULE I

FEES
----

Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------

On the first $10,000,000 75 basis points (0.75%) per annum

On the next $10,000,000 62.5 basis points (0.625%) per annum

On amounts over $20,000,000 50 basis points (0.50%) per annum

<PAGE>

Exhibit d(33)

SUB-INVESTMENT MANAGEMENT AGREEMENT

AMONG

JOHN HANCOCK VARIABLE SERIES TRUST I

OPPENHEIMER FUNDS, INC.

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

SUB-INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the ___ day of __________, 1999, by and among John
Hancock Variable Series Trust I, a Massachusetts business trust (the "Series"),
Oppenheimer Funds, Inc., a Colorado corporation ("Advisers"), and John Hancock
Mutual Life Insurance Company, a Massachusetts corporation ("JHMLICO").

WHEREAS, JHMLICO and Advisers are each registered as investment advisers and
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 Fundamental Mid Cap Growth Portfolio (together with all other
classes established by the Series, collectively referred to as 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_____, 1999 (the "Investment Management Agreement"), pursuant to which it may
contract with Advisers as a 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. Advisers is hereby appointed and Advisers hereby
-----------------
accepts the appointment to act as investment adviser and sub-manager to the
Fundamental Mid Cap Growth Portfolio (the "Subject Portfolio"), effective___,
1999, for the period and on the terms herein set forth, for the compensation
herein provided.

(d) Independent Contractor. Advisers 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.

(e) Advisers' Representations. Advisers represents, warrants and agrees (i)
-------------------------
that it is registered as an investment adviser under the Investment Advisers Act
of 1940, and that it will use its best efforts to remain so registered and will
comply with the requirements of said Act, and the rules and regulations
thereunder, at all times while this Agreement remains in effect, (ii) that it
will promptly notify JHMLICO if the foregoing representation and agreement shall
cease to be true (in any material respect) at any time during the term of this
Agreement, (iii) that it will promptly notify JHMLICO of any material change in
the senior management or ownership of Advisers, or of any change in the identity
of the personnel who manage the Subject Portfolio, (iv) that it has adopted a
code of ethics complying with the requirements of Rule 17j-1 of the Securities
and Exchange Commission (the "SEC") under the 1940 Act and has provided true and
complete copies of such code to the Series and to JHMLICO, and has adopted
procedures designed to prevent violations of such code, (v) that it has
furnished the Series and JHMLICO each with a copy of Advisers' Form ADV, as most
recently filed with the SEC, and will promptly furnish copies of each future
amendment thereto, and (vi) that it is duly authorized to enter into this
Agreement and to perform its obligations hereunder.

(f) JHMLICO's Representations. JHMLICO represents, warrants and agrees (i)
-------------------------
that it is registered as an investment adviser under the Investment Advisers Act
of 1940, and that it will use its best efforts to remain so registered and will
comply with the requirements of said Act, and the rules and regulations
thereunder, at all times while this Agreement remains in effect, (ii) that it
will promptly notify Advisers and the Series if the foregoing representation and
agreement shall cease to be true (in any material respect) at any time during
the term of this Agreement, (iii) that its appointment of Advisers has been duly
authorized, and (iv) that it is duly authorized to enter into this Agreement and
to perform its obligations hereunder.

(g) Delivery of Documents to Advisers. JHMLICO has furnished, or promptly
---------------------------------
following execution of this Agreement will furnish, Advisers with true and
complete copies of the following, each as in effect on the effective date of
this Agreement: (i) the Declaration of Trust of the Series, (ii) the Bylaws of
the Series, (iii) the resolutions of the Board of Trustees of the Series
approving the appointment of Advisers and the form of Sub-Investment Management
Agreement, (iv) the resolutions of the Board of Trustees of the Series approving
the appointment of JHMLICO and the form of Investment Management Agreement, (v)
the Investment Management Agreement between the Series and JHMLICO, (vi) the
Series' prospectus and statement of additional information, and (vii) the Code
of Ethics of the Series and JHMLICO. In addition, JHMLICO will furnish Advisers

2
<PAGE>

from time to time with copies of all amendments or supplements to the foregoing,
promptly after such materials are available to JHMLICO for distribution. Any
such amendments or supplements shall not be effective with respect to Advisers
until Advisers' receipt thereof. JHMLICO will provide such additional
information as Advisers may reasonably request in connection with the
performance of its duties under this Agreement.

2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.

Advisers will, at its own expense:

(d) give instructions to the Subject Portfolio's custodian concerning the
delivery of securities and transfer of cash for the Subject Portfolio;

3
<PAGE>

(h) absent specific instructions to the contrary provided to it by JHMLICO
and subject to its receipt of all necessary voting materials, vote all proxies
with respect to investments of the Subject Portfolio in accordance with
Advisers' proxy voting policy as most recently provided to JHMLICO.

The Series and JHMLICO will provide timely information to Advisers 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.
JHMLICO will timely provide Advisers with copies of monthly accounting
statements for the Subject Portfolio, and such other information (including,
without limitation, reports concerning the classification of Portfolio
securities for purposes of Subchapter M of the Internal Revenue Code and
Treasury Regulations Section 1.817) as may be reasonably necessary or
appropriate in order for Advisers to perform its responsibilities hereunder.

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:

(b) custodian fees and expenses;

(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental agencies;
and

(d) interest payable on the Series' borrowings.

4. SUB-ADVISORY FEES.

4
<PAGE>

5. PORTFOLIO TRANSACTIONS.

In connection with the investment and reinvestment of the assets of the
Subject Portfolio, Advisers 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. Advisers 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, Advisers 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 Advisers, 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.
Advisers shall determine in good faith that such higher cost was reasonable in
relation to the value of the brokerage and research services provided. In
reaching such determination, however, Advisers shall not be required to place or
attempt to place a specific dollar value on the brokerage and/or research
services provided.

Advisers will not receive any tender offer solicitation fees or similar
payments in connection with the tender of investments of any Portfolio.

6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.

5
<PAGE>

7. LIABILITY; STANDARD OF CARE.

In the absence of willful misfeasance, bad faith, negligence or reckless
disregard for its obligations under this Agreement, Advisers shall not be liable
to the Series, its shareholders, or JHMLICO for any act or omission in
connection with its services under this Agreement. No provision of this
Agreement shall be deemed to protect any trustee or officer of the Series
against any 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. Adviser shall employ only
qualified personnel to manage the Subject Portfolio; shall comply with all
applicable laws and regulations in the discharge of its duties under this
Agreement; shall (as provided in Section 2 above) comply with the investment
policies, guidelines and restrictions of the Subject Portfolio and with the
provisions of the Series' Declaration of Trust, Bylaws, prospectus and statement
of additional information; shall manage the Subject Portfolio (subject to the
receipt of, and based upon the information contained in, periodic reports from
JHMLICO or the custodian concerning the classification of Portfolio securities
for such purposes) as a regulated investment company in accordance with
subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
Treasury Regulations Section 1.817-5(b); shall act at all times in the best
interests of the Series; and shall discharge its duties with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the
conduct of a similar enterprise. However, Advisers shall not be obligated to
perform any service not described in this Agreement, and shall not be deemed by
virtue of this Agreement to have made any representation or warranty that any
level of investment performance or level of investment results will be achieved.

8. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to the
--------
Subject Portfolio on the date hereof and, with respect to any additional Subject
Portfolio, on the date of receipt by the Series of notice from Advisers 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

6
<PAGE>

notwithstanding (A) that this Agreement has not been approved by the holders of
a majority of the outstanding 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.

(c) Automatic Termination. This Agreement shall automatically and
---------------------
immediately terminatein the event of its assignment or if the Investment
Management Agreement is terminated.

9. SERVICES NOT EXCLUSIVE; USE OF ADVISERS' NAME AND LOGO.

During the term of this Agreement, JHMLICO and the Series shall have the non-
exclusive and non-transferable right to use Advisers' name and logo, for the
sole purpose of identifying Advisers as the sub-manager of the Subject
Portfolio, in all materials relating to the Subject Portfolio, including all
prospectuses, proxy statements, reports to shareholders, sales literature and
other written materials prepared for distribution to shareholders of the Series
or the public. However, prior to distribution of any materials which refer to
Advisers, JHMLICO shall consult with Advisers and shall furnish to Advisers a
copy of such materials. Advisers agrees to cooperate with JHMLICO and to review
such materials promptly. JHMLICO shall not distribute such materials if
Advisers reasonably objects in writing, within five (5) business days of its
receipt of such copy (or such other time as may be mutually agreed), to the
manner in which its name and logo are used.

10. AVOIDANCE OF INCONSISTENT POSITION.

In connection with the purchase and sale of portfolio securities of the
Subject Portfolio, Advisers 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 registered
investment companies managed by Advisers or its affiliates, if orders are
allocated in a manner deemed equitable by Advisers among the accounts and at a
price approximately averaged.

11. AMENDMENT.

7
<PAGE>

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 the Series personally, but only bind the trust property of the Series, as
provided in the Series' Declaration of Trust.

13. NOTICES

ADVISERS: Oppenheimer Funds, Inc.
Two World Trade Center, 34th Floor
New York, NY 10048-0203
Attention: Andrew J. Donohue, Esq.
Fax # 212-321-1159

JHMLICO: John Hancock Mutual Life Insurance Company
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax # 617-375-4835

SERIES: John Hancock Variable Series Trust I
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax # 617-375-4835

8
<PAGE>

14. 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.

15. ASSIGNMENT.

This Agreement may not be assigned by any party, either in whole or in
part.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.

ATTEST: JOHN HANCOCK VARIABLE SERIES
TRUST I

By:_________________________
Title: Chairman

ATTEST: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY

By:_________________________
Title: Vice President

ATTEST: OPPENHEIMER FUNDS, INC.

By:_________________________
Title: Executive Vice President

9
<PAGE>

SCHEDULE I

FEES
----

Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------

On the first $50,000,000 50 basis points (0.50%)
per annum

On the next $50,000,000 45 basis points (0.45%)
per annum

On the next $50,000,000 40 basis points (0.40%)
per annum

On amounts over $150,000,000 35 basis points (0.35%)
per annum

<PAGE>

Exhibit d(34)

SUB-INVESTMENT MANAGEMENT AGREEMENT

AMONG

JOHN HANCOCK VARIABLE SERIES TRUST I

GOLDMAN SACHS ASSET MANAGEMENT

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

SUB-INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the _______day of August, 1999 by and among John Hancock
Variable Series Trust I, a Massachusetts business trust (the "Series"),Goldman
Sachs Asset Management, a separate operating division of Goldman, Sachs & Co., a
New York limited partnership ("Advisers"), 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 Advisers are each 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 Portfolio (together with all other
classes established by the Series, collectively referred to as the
"Portfolios"), each of which pursues its investment objectives through separate
investment policies; and

NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:

1. APPOINTMENT OF SUB-MANAGER

(a) Subject Portfolio. Advisers is hereby appointed and Advisers hereby
-----------------
accepts the appointment to act as investment adviser and manager to the
International Equity Portfolio (the "Subject Portfolio"), effective August __,
1999, for the period and on the terms herein set forth, for the compensation
herein provided.

2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.

-2-
<PAGE>

Advisers will, at its own expense:

(a) advise the Series in connection with investment policy decisions to be
made by its Board of Trustees or any committee thereof regarding the Subject
Portfolio and, upon reasonable request, furnish the Series with research,
economic and statistical data in connection with said Portfolio's investments
and investment policies;

(d) give instructions to the Subject Portfolio's custodian concerning the
delivery of securities and transfer of cash for the Subject Portfolio;

(f) at the close of business each day, provide JHMLICO and the custodian
with copies of trade tickets, electronic access to trade records, or other means
to verify trade data received by the custodian from third parties for each
transaction effected for the Subject Portfolio;

(h) absent specific instructions to the contrary provided to it by JHMLICO
and subject to its receipt of all necessary voting materials, vote all proxies
with respect to investments of the Subject Portfolio in accordance with
Advisers' proxy voting policy as most recently provided to JHMLICO.

The Series and JHMLICO will provide timely information to Advisers regarding
such matters as purchases and redemptions of shares in the Subject Portfolio and
the cash requirements of, and cash

-3-
<PAGE>

available for investment in, the Portfolio. JHMLICO will timely provide
Advisers with copies of monthly accounting statements for the Subject Portfolio,
and such other information (including, without limitation, reports concerning
the classification of Portfolio securities for purposes of Subchapter M of the
Internal Revenue Code and Treasury Regulations Section 1.817) as may be
reasonably necessary or appropriate in order for Advisers to perform its
responsibilities hereunder. Without limiting the foregoing, JHMLICO will
perform quarterly and annual tax compliance tests to measure whether the Subject
Portfolio is in compliance with Subchapter M and Section 817(h) of the Internal
Revenue Code. JHMLICO will apprise Advisers promptly after each tax quarter end
of any non-compliance with the diversification requirements in such provisions
of the Internal Revenue Code. If so apprised, Advisers will take prompt action
to remedy any such non-compliance identified by JHMLICO and bring the Subject
Portfolio back into compliance with such diversification provisions of the
Internal Revenue Code.

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:

(b) custodian fees and expenses;

(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental agencies;
and

(d) interest payable on the Series' borrowings.

4. SUB-ADVISORY FEES.

-4-
<PAGE>

5. PORTFOLIO TRANSACTIONS.

In connection with the investment and reinvestment of the assets of the
Subject Portfolio, Advisers is authorized to select the brokers or dealers
(including affiliated broker-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. Advisers 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, Advisers 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 Advisers, 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. Advisers shall determine in
good faith that such higher cost was reasonable in relation to the value of the
brokerage and research services provided.

Advisers will not receive any tender offer solicitation fees or similar
payments in connection with the tender of investments of any Portfolio.

6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.

Advisers 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
disclose such information only if the Series has authorized such disclosure, or
if such disclosure is expressly required by applicable federal or state
regulatory authorities, is required by applicable law, legal process or in
connection with any litigation arising out of the subject matter of this
Agreement, or is otherwise publicly disclosed and such public disclosure is not
in breach of any confidentiality restriction.

-5-
<PAGE>

7. LIABILITY; STANDARD OF CARE.

No provision of this Agreement shall be deemed to protect Advisers 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 gross
negligence in the performance of its duties or the reckless disregard of its
obligations and duties under this Agreement or the Investment Management
Agreement. 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.
Advisers shall employ only qualified personnel to manage the Subject Portfolio;
shall comply with all applicable laws and regulations in the discharge of its
duties under this Agreement; shall (as provided in Section 2 above) comply with
the investment policies, guidelines and restrictions of the Subject Portfolio
and with the provisions of the Series' Declaration of Trust, Bylaws, prospectus
and statement of additional information; shall manage the Subject Portfolio
(subject to the receipt of, and based upon the information contained in,
periodic reports from JHMLICO or the custodian concerning the classification of
Portfolio securities for such purposes) as a regulated investment company in
accordance with Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), and Treasury Regulations Section 1.817-5(b); shall act at all
times in the best interests of the Series; and shall discharge its duties with
the care, skill, prudence and diligence under the circumstances then prevailing
that a prudent person acting in a like capacity and familiar with such matters
would use in the conduct of a similar enterprise. However, Advisers shall not
be obligated to perform any service not described in this Agreement, shall not
be deemed by virtue of this Agreement to have made any representation or
warranty that any level of investment performance or level of investment results
will be achieved, and shall not be obligated to comply with any applicable
insurance laws and regulations unless previously notified thereof in writing by
JHMLICO or the Series.

8. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to the
--------
Subject Portfolio on the date hereof and, with respect to any additional Subject
Portfolio, on the date of receipt by the Series of notice from Advisers 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.

-6-
<PAGE>

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 the Series
pursuant to a vote of the trustees of the Series or a vote of a majority of the
outstanding shares of such Portfolio, which termination shall be effective
immediately upon delivery of notice thereof to Advisers and JHMLICO (unless a
later effective date is specified in such notice). This Agreement may be
terminated by Advisers on at least ninety days' prior written notice to the
Series and JHMLICO, and may be terminated by JHMLICO on at least ninety days'
prior written notice to the Series and Advisers. In the event of any
termination of this Agreement with respect to a Subject Portfolio, the parties
agree to cooperate and to use reasonable efforts to effect the transition of
daily management services for such Subject Portfolio from Advisers to JHMLICO
(or to another sub-investment manager identified by JHMLICO); it being
understood and agreed that Advisers shall not be liable for any loss, cost or
expense (including without limitation any loss, cost or expense arising out of
any termination pursuant to the first sentence of this Section 8(b) which is
effective upon less than 30 days' prior written notice) incurred by the Series
or by the Subject Portfolio arising out of any such termination and transition
of daily management services, except as may be caused by Advisers' willful
misfeasance, bad faith, gross negligence or reckless disregard of its duties
under this Agreement. On the effective date of any termination, Advisers shall
cease its activities under this Agreement with respect to, and shall cease to be
responsible for, the continuing management of any terminated Subject Portfolio.

9. SERVICES NOT EXCLUSIVE; USE OF ADVISERS' NAME AND LOGO.

-7-
<PAGE>

10. AVOIDANCE OF INCONSISTENT POSITION.

In connection with the purchase and sale of portfolio securities of the
Subject Portfolio, Advisers and its directors, officers and employees will not
act as principal or agent or receive any commission, except as may be permitted
under the 1940 Act, including but not limited to securities or futures
transactions complying with Rule 17e-1 under the 1940 Act and joint repurchase
transactions complying with the conditions of any exemptive order obtained by
Advisers. 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 registered investment companies or other clients managed by
Advisers or its affiliates, if orders are allocated in a manner deemed equitable
by Advisers among the accounts and at a price approximately averaged.

11. AMENDMENT.

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 the Series personally, but only bind the trust property of the Series, as
provided in the Series' Declaration of Trust.

13. NOTICES

ADVISERS: Goldman Sachs Asset Management
One New York Plaza, 42nd Floor
New York, NY 10004
[Attention: Daniel Dumont
Fax #: 212-902-2561]

JHMLICO: John Hancock Mutual Life Insurance Company
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

-8-
<PAGE>

SERIES: John Hancock Variable Series Trust I
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

14. 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.

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.

ATTEST: JOHN HANCOCK VARIABLE SERIES
TRUST I

By:
- --------------------- -----------------
Assistant Secretary Title: Chairman and CEO

ATTEST: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY

By:
- --------------------- -----------------
Assistant Secretary Title: Vice President

ATTEST: GOLDMAN SACHS ASSET MANAGEMENT,
a separate operating division of Goldman,
Sachs & Co.

By:
- --------------------- -----------------
Title:

jee0354
<PAGE>

SCHEDULE I

FEES
----

Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------

On the first $50,000,000 60 basis points (0.60%)
per annum

On the next $150,000,000 55 basis points (0.55%)
per annum

On amounts over $200,000,000 50 basis points (0.50%)
per annum

<PAGE>

Exhibit d(35)

SUB-INVESTMENT MANAGEMENT AGREEMENT

AMONG

JOHN HANCOCK VARIABLE SERIES TRUST I

GOLDMAN SACHS ASSET MANAGEMENT

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

SUB-INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the___day of August, 1999 by and among John Hancock
Variable Series Trust I, a Massachusetts business trust (the "Series"),Goldman
Sachs Asset Management, a separate operating division of Goldman, Sachs & Co., a
New York limited partnership ("Advisers"), 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 Advisers are each 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 Large Cap Value CORE Portfolio (together with all other
classes established by the Series, collectively referred to as the
"Portfolios"), each of which pursues its investment objectives through separate
investment policies; and

NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:

1. APPOINTMENT OF SUB-MANAGER

(a) Subject Portfolio. Advisers is hereby appointed and Advisers hereby
-----------------
accepts the appointment to act as investment adviser and manager to the Large
Cap Value CORE Portfolio (the "Subject Portfolio"), effective August __, 1999,
for the period and on the terms herein set forth, for the compensation herein
provided.

2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.

-2-
<PAGE>

Advisers will, at its own expense:

(d) give instructions to the Subject Portfolio's custodian concerning the
delivery of securities and transfer of cash for the Subject Portfolio;

(f) at the close of business each day, provide JHMLICO and the custodian with
copies of trade tickets, electronic access to trade records, or other means to
verify trade data received by the custodian from third parties for each
transaction effected for the Subject Portfolio;

(h) absent specific instructions to the contrary provided to it by JHMLICO
and subject to its receipt of all necessary voting materials, vote all proxies
with respect to investments of the Subject Portfolio in accordance with
Advisers' proxy voting policy as most recently provided to JHMLICO.

The Series and JHMLICO will provide timely information to Advisers regarding
such matters as purchases and redemptions of shares in the Subject Portfolio and
the cash requirements of, and cash

-3-
<PAGE>

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:

(b) custodian fees and expenses;

(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental agencies;
and

(d) interest payable on the Series' borrowings.

4. SUB-ADVISORY FEES.

-4-
<PAGE>

5. PORTFOLIO TRANSACTIONS.

Advisers will not receive any tender offer solicitation fees or similar
payments in connection with the tender of investments of any Portfolio.

6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.

-5-
<PAGE>

7. LIABILITY; STANDARD OF CARE.

8. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to the
--------
Subject Portfolio on the date hereof and, with respect to any additional Subject
Portfolio, on the date of receipt by the Series of notice from Advisers 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.

-6-
<PAGE>

9. SERVICES NOT EXCLUSIVE; USE OF ADVISERS' NAME AND LOGO.

-7-
<PAGE>

10. AVOIDANCE OF INCONSISTENT POSITION.

In connection with the purchase and sale of portfolio securities of the
Subject Portfolio, Advisers and its directors, officers and employees will not
act as principal or agent or receive any commission, except as may be permitted
under the 1940 Act, including but not limited to securities or futures
transactions complying with Rule 17e-1 under the 1940 Act and joint repurchase
transactions complying with the conditions of any exemptive order obtained by
Advisers. 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 registered investment companies or other clients managed by
Advisers or its affiliates, if orders are allocated in a manner deemed equitable
by Advisers among the accounts and at a price approximately averaged.

11. AMENDMENT.

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 the Series personally, but only bind the trust property of the Series, as
provided in the Series' Declaration of Trust.

13. NOTICES

ADVISERS: Goldman Sachs Asset Management
One New York Plaza, 42nd Floor
New York, NY 10004
Attention: [Daniel Dumont
Fax #: 212-902-2561]

JHMLICO: John Hancock Mutual Life Insurance Company
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

-8-
<PAGE>

SERIES: John Hancock Variable Series Trust I
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

14. 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.

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.

ATTEST: JOHN HANCOCK VARIABLE SERIES
TRUST I

By:
- -------------------- --------------------
Assistant Secretary Title: Chairman and CEO

ATTEST: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY

By:
- -------------------- ------------------
Assistant Secretary Title: Vice President

ATTEST: GOLDMAN SACHS ASSET MANAGEMENT,
a separate operating division of Goldman,
Sachs & Co.

By:
- -------------------- -----------------------
Title: [Managing Director]

JEE0384
<PAGE>

SCHEDULE I

FEES
----

Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------

On the first $50,000,000 40 basis points (0.40%) per annum

On the next $150,000,000 30 basis points (0.30%) per annum

On amounts over $200,000,000 25 basis points (0.25%) per annum

<PAGE>

Exhibit d(36)

SUB-INVESTMENT MANAGEMENT AGREEMENT

AMONG

JOHN HANCOCK VARIABLE SERIES TRUST I

INDEPENDENCE INVESTMENT ASSOCIATES, INC.

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

SUB-INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the ___ day of August, 1999, by and among John Hancock
Variable Series Trust I, a Massachusetts business trust (the "Series"),
Independence Investment Associates, Inc., a Delaware 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 Aggressive Balanced Portfolio, (together with all other
classes established by the Series, the "Portfolios"), each of which pursues its
investment objectives through separate investment policies; and

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
Aggressive Balanced Portfolio (the "Subject Portfolio"), effective August ___ ,
1999, 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 render such services, Sub-Manager shall notify the Series in writing,
whereupon such Portfolio shall become a Subject Portfolio hereunder.
<PAGE>

(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;

(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 accordance with Sub-Manager's proxy voting policy as most recently
provided to JHMLICO.

2
<PAGE>

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 (including, without limitation, reports
concerning the classification of Portfolio securities for purposes of Subchapter
M of the Internal Revenue Code and Treasury Regulations Section 1.817) 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,
without limitation, to assume the expense of:

(i) brokerage commissions for transactions in the portfolio investments of
the Series and similar fees, charges and expenses incurred in connection with
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.

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) based on the Current Net Assets of the Subject Portfolio, as set
forth in Schedule I attached hereto and made a part hereof. 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 promptly following such
termination.

3
<PAGE>

"Current Net Assets" of the Subject 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 Subject Portfolio's net assets
were computed.

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 best execution with respect to all such
purchases and sales of portfolio securities for said Portfolio. The Sub-Manager
shall maintain records reasonably 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), to the extent not otherwise paid or credited to the
Portfolio.

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

4
<PAGE>

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
disclose such information only (i) to John Hancock Mutual Life Insurance
Company, or to any other person or entity that directly or indirectly owns all
or substantially all of the Sub-Manager's capital stock; (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; STANDARD OF CARE.

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. Sub-Manager shall employ only qualified personnel to
manage the Subject Portfolio; shall comply with all applicable laws and
regulations in the discharge of its duties under this Agreement (provided that
copies of any applicable investment restrictions imposed by state insurance laws
and regulations shall be furnished to Sub-Manager by JHMLICO); shall (as
provided in Section 2 above) comply with the investment policies, guidelines and
restrictions of the Subject Portfolio and with the provisions of the Series'
Declaration of Trust, Bylaws, prospectus and statement of additional
information, all as furnished to Sub-Manager by JHMLICO in writing from time to
time; shall manage the Subject Portfolio (subject to the receipt of, and based
upon the information contained in, periodic reports from JHMLICO or the
custodian concerning the classification of Portfolio

5
<PAGE>

securities for such purposes) as a regulated investment company in accordance
with subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
and Treasury Regulations Section 1.817-5(b); shall act in its management of the
Subject Portfolio in the best interests of the Series, subject however to its
duties to other clients as described in Section 9 below; and shall discharge its
duties with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with
such matters would use in the conduct of a similar enterprise. However, Sub-
Manager shall not be obligated to perform any service not described in this
Agreement, and shall not be deemed by virtue of this Agreement to have made any
representation or warranty that any level of investment performance or level of
investment results will be achieved.

8. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to the
--------
Aggressive Balanced Portfolio on the date set forth in Section 1(a) 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.

6
<PAGE>

(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.

7
<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, except as may be
permitted under applicable laws and regulations and the policies and procedures
of the Series in effect from time to time. 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 the 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.

8
<PAGE>

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 (provided that any notice delivered by
facsimile shall be followed promptly by a duplicate notice delivered by another
permitted method of delivery), by hand or by commercial overnight delivery
service, addressed as follows:

SUB-MANAGER: Independence Investment Associates, Inc.
53 State Street
Boston, MA 02109
Attention: President
Fax #: 617-228-8895

JHMLICO: John Hancock Mutual Life Insurance Company
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

SERIES: John Hancock Variable Series Trust I
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

15. ASSIGNMENT.

This Agreement may not be assigned by any party, either in whole or in part.

9
<PAGE>

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

By:
-----------------------------
Title: Chairman and CEO

JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY

By:
-----------------------------
Title: Vice President

INDEPENDENCE INVESTMENT
ASSOCIATES, INC.

By:
-----------------------------
Title:

10
<PAGE>

SCHEDULE I

FEES
----

Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------

On the first $250,000,000 32.5 basis points (0.325 %) per
annum

On the next $250,000,000 27.5 basis points (0.275 %) per
annum

On amounts over $500,000,000 25 basis points (0.25 %) per
annum

<PAGE>

Exhibit d(37)

SUB-INVESTMENT MANAGEMENT AGREEMENT

AMONG

JOHN HANCOCK VARIABLE SERIES TRUST I

INDEPENDENCE INVESTMENT ASSOCIATES, INC.

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

SUB-INVESTMENT MANAGEMENT AGREEMENT

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 Mid Cap Blend Portfolio, (together with all other classes
established by the Series, the "Portfolios"), each of which pursues its
investment objectives through separate investment policies; and

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
Mid Cap Blend Portfolio (the "Subject Portfolio"), effective August ___, 1999,
for the period and on the terms herein set forth, for the compensation herein
provided.

2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.

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 accordance with Sub-Manager's proxy voting policy as most recently
provided to JHMLICO.

2
<PAGE>

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,
without limitation, to assume the expense of:

(i) brokerage commissions for transactions in the portfolio investments
of the Series and similar fees, charges and expenses incurred in connection with
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.

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), based on the Current Net Assets of the Subject Portfolio, as set
forth in Schedule I attached hereto and made a part hereof. 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 promptly following such
termination.

3
<PAGE>

5. PORTFOLIO TRANSACTIONS.

6. INFORMATION, RECORDS, AND CONFIDENTIALITY.

4
<PAGE>

7. LIABILITY; STANDARD OF CARE.

5
<PAGE>

8. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to the Mid
--------
Cap Blend Portfolio on the date set forth in Section 1(a) 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.

6
<PAGE>

(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.

7
<PAGE>

10. AVOIDANCE OF INCONSISTENT POSITION.

11. AMENDMENT.

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 the 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.

8
<PAGE>

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 (provided that any notice delivered by facsimile shall be
followed promptly by a duplicate notice delivered by another permitted method of
delivery), by hand or by commercial overnight delivery service, addressed as
follows:

SUB-MANAGER: Independence Investment Associates, Inc.
53 State Street
Boston, MA 02109
Attention: President
Fax #: 617-228-8895

JHMLICO: John Hancock Mutual Life Insurance Company
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

SERIES: John Hancock Variable Series Trust I
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

15. ASSIGNMENT.

This Agreement may not be assigned by any party, either in whole or in part.

9
<PAGE>

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

By:
--------------------------
Title: Chairman and CEO

JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY

By:
---------------------------
Title: Vice President

INDEPENDENCE INVESTMENT
ASSOCIATES, INC.

By:
---------------------------
Title:

10
<PAGE>

SCHEDULE I

FEES
----

Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------

On the first $250,000,000 40 basis points (0.40 %) per annum

On the next $250,000,000 35 basis points (0.35 %) per annum

On amounts over $500,000,000 30 basis points (0.30 %) per annum

-11-

<PAGE>

Exhibit d(38)

SUB-INVESTMENT MANAGEMENT AGREEMENT

AMONG

JOHN HANCOCK VARIABLE SERIES TRUST I

WELLINGTON MANAGEMENT COMPANY, LLP

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

SUB-INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the ___ day of August 1999 by and among John Hancock
Variable Series Trust I, a Massachusetts business trust (the "Series"),
Wellington Management Company, LLP, a Massachusetts limited liability
partnership ("Wellington Management"), and John Hancock Mutual Life Insurance
Company, a Massachusetts corporation ("JHMLICO").

WHEREAS, JHMLICO and Wellington Management are each engaged in the business
of rendering investment advice under the Investment Advisers Act of 1940, as
amended; and

WHEREAS, the Series is authorized to issue its shares 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 Large/Mid Cap Value Portfolio (together with all other classes
established by the Series, collectively referred to as 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 July 28, 1999, as amended (the "Investment Management Agreement"), pursuant
to which it may contract with Wellington Management as a sub-investment manager
as provided for herein.

NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:

1. APPOINTMENT OF SUB-INVESTMENT MANAGER

(a) Subject Portfolio. Wellington Management is hereby appointed and
-----------------
Wellington Management hereby accepts the appointment to act as investment
adviser and manager to the Large/Mid Cap Value Portfolio (the "Subject
Portfolio") effective August ___, 1999 for the period and on the terms herein
set forth, and for the compensation herein provided.

(c) Incumbency Certificates. Wellington Management shall furnish to
-----------------------
JHMLICO, immediately upon execution of this Agreement, a certificate of a senior
officer of Wellington Management setting forth (by name and title, and including
specimen signatures) those officers of Wellington Management who are authorized
to give instructions for the Subject Portfolio pursuant to the provisions of
this Agreement. Wellington Management shall promptly provide supplemental
certificates in connection with each additional Subject Portfolio (if any) and
further supplemental certificates, as needed, to reflect all changes with
respect to such authorized officers for any Subject Portfolio. On behalf of the
Series, JHMLICO shall instruct the custodian for the Subject Portfolio to accept
instructions with respect to the Subject Portfolio from the officers of
Wellington Management so named.

2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.

-2-
<PAGE>

the Series from time to time). By its signature below, Wellington Management
acknowledges receipt of a copy of the Series' Declaration of Trust, By-laws,
prospectus, and statement of additional information, each as in effect on the
date of this Agreement.

Wellington Management will, at its own expense:

(d) give instructions to the Subject Portfolio's custodian concerning the
delivery of securities and transfer of cash for the Subject Portfolio;

-3-
<PAGE>

JHMLICO sales personnel with respect thereto, and for such other purposes as the
Series or JHMLICO may reasonably request.

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:

(b) custodian fees and expenses;

(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental agencies;
and

(d) interest payable on the Series' borrowings.

4. SUB-ADVISORY FEES.

-4-
<PAGE>

5. PORTFOLIO TRANSACTIONS.

Wellington Management will not receive any tender offer solicitation fees or
similar payments in connection with the tender of investments of any Portfolio.

6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.

Wellington Management 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
disclose such information only if the Series has authorized such disclosure, or
if such disclosure is expressly required by applicable federal or state
regulatory authorities.

-5-
<PAGE>

7. LIABILITY; STANDARD OF CARE.

8. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to the
--------
Subject Portfolio on August 1, 1999 and, with respect to any additional Subject
Portfolio, on the date of receipt by the Series of notice from Wellington
Management 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 only so long
as such continuance with respect to any such Portfolio is specifically 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 Board of 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.

-6-
<PAGE>

majority of the outstanding 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.

(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; USE OF WELLINGTON MANAGEMENT'S NAME AND LOGO.

-7-
<PAGE>

10. AVOIDANCE OF INCONSISTENT POSITION.

11. AMENDMENT.

12. LIMITATION OF LIABILITY.

13. NOTICES

SUB-INVESTMENT MANAGER: Wellington Management Company, LLP
75 State Street
Boston, MA 02109
Attention: Regulatory Affairs
Fax #: 617-790-7760

JHMLICO: John Hancock Mutual Life Insurance Company
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

-8-
<PAGE>

SERIES: John Hancock Variable Series Trust I
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835
14. 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.

15. ASSIGNMENT.

This Agreement may not be assigned by any party, either in whole or in
part.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.

ATTEST: JOHN HANCOCK VARIABLE SERIES
TRUST I

By:
-------------------------
Name: Michele G. Van Leer
Title: Chairman

ATTEST: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY

By:
-------------------------
Name: Robert R. Reitano
Title: Vice President

ATTEST: WELLINGTON MANAGEMENT
COMPANY, LLP

By:
-------------------------
Name:
Title:

-9-
<PAGE>

SCHEDULE I

FEES
----

Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------

On the first $25,000,000 60 basis points (0.60%)
per annum

On the next $25,000,000 50 basis points (0.50%)
per annum

On the next $50,000,000 40 basis points (0.40%)
per annum

On amounts over $100,000,000 30 basis points (0.30%)
per annum

-10-

<PAGE>

Exhibit d(39)

SUB-INVESTMENT MANAGEMENT AGREEMENT

AMONG

JOHN HANCOCK VARIABLE SERIES TRUST I

THE BOSTON COMPANY ASSET MANAGEMENT, LLC

AND

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<PAGE>

SUB-INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the ___ day of August, 1999 by and among John Hancock
Variable Series Trust I, a Massachusetts business trust (the "Series"), The
Boston Company Asset Management, LLC, a Massachusetts limited liability company
("Advisers"), 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 Advisers are each 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 Small/Mid Cap Value Portfolio (together with all other classes
established by the Series, collectively referred to as the "Portfolios"), each
of which pursues its investment objectives through separate investment policies;
and

NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:

1. APPOINTMENT OF SUB-MANAGER

(a) Subject Portfolio. Advisers is hereby appointed and Advisers hereby
-----------------
accepts the appointment to act as investment adviser and manager to the
Small/Mid Cap Value Portfolio (the "Subject Portfolio"), effective August __,
1999, for the period and on the terms herein set forth, for the compensation
herein provided.

make investment decisions for the Subject Portfolio pursuant to the provisions
of this Agreement. Advisers shall promptly provide supplemental certificates in
connection with each additional Subject Portfolio (if any) and further
supplemental certificates, as needed, to reflect all changes with respect to
such authorized officers for any Subject Portfolio. On behalf of the Series,
JHMLICO shall instruct the custodian for the Subject Portfolio to accept
instructions with respect to the Subject Portfolio from the officers of Advisers
so named.

2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.

Advisers will provide for the Subject Portfolio a continuing and suitable
investment program consistent with the investment policies, objectives and
restrictions of said Portfolio, as established by the Series and JHMLICO. From
time to time, JHMLICO or the Series may provide Advisers, in writing, with
additional or amended investment policies, guidelines and restrictions; provided
that no such additional or amended investment policies, guidelines or
restrictions shall be binding on Advisers until actually received by Advisers.
Advisers, as 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 JHMLICO and
the Board of Trustees of the Series, consistent with the applicable investment
policies, guidelines and restrictions, the provisions of the Series' Declaration
of Trust, Bylaws, prospectus, statement of additional information (each as in
effect from time to time and as provided in writing to Advisers by JHMLICO or
the Series), 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 delivered to Advisers in
writing by JHMLICO or the Series from time to time). By its signature below,
Advisers acknowledges receipt of a copy of the Series' Declaration of Trust,
Bylaws, prospectus, and statement of additional information, each as in effect
on the date of this Agreement.

Advisers will, at its own expense:
<PAGE>

(a) upon request, furnish the Series with research, economic and
statistical data in connection with the Subject Portfolio's investments and
investment policies;

(d) give instructions to the Subject Portfolio's custodian concerning the
delivery of securities and transfer of cash for the Subject Portfolio;

(h) absent specific instructions to the contrary provided to it by JHMLICO
and subject to its receipt of all necessary voting materials, vote all proxies
with respect to investments of the Subject Portfolio in accordance with
Advisers' proxy voting policy as most recently provided to JHMLICO.

Upon request and as mutually agreed, Advisers will apprise JHMLICO and the
Series of important political and economic developments materially affecting the
marketplace or 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. Advisers will also make its personnel available in Boston or other
reasonable locations as often as quarterly to discuss the Subject Portfolio and
Advisers' management thereof, to educate JHMLICO sales personnel with respect
thereto, and for such other purposes as the Series or JHMLICO may reasonably
request.

Regulations Section 1.817) as may be reasonably necessary or appropriate in
order for Advisers to perform its responsibilities hereunder.

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:

(b) custodian fees and expenses;

(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental agencies;
and

(d) interest payable on the Series' borrowings.

4. SUB-ADVISORY FEES.

5. PORTFOLIO TRANSACTIONS.

Subject Portfolio or to Advisers, 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. Advisers shall determine in
good faith that such higher cost was reasonable in relation to the value of the
brokerage and research services provided.

Advisers will not receive any tender offer solicitation fees or similar
payments in connection with the tender of investments of any Portfolio.

6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.

7. LIABILITY; STANDARD OF CARE.

securities for such purposes) as a regulated investment company in accordance
with subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
and Treasury Regulations Section 1.817-5(b); shall act at all times in the best
interests of the Series; and shall discharge its duties with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the
conduct of a similar enterprise. However, Advisers shall not be obligated to
perform any service not described in this Agreement, and shall not be deemed by
virtue of this Agreement to have made any representation or warranty that any
level of investment performance or level of investment results will be achieved.

8. DURATION AND TERMINATION OF THIS AGREEMENT.

(a) Duration. This Agreement shall become effective with respect to the
--------
Subject Portfolio on the date hereof and, with respect to any additional Subject
Portfolio, on the date of receipt by the Series of notice from Advisers 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.

(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; USE OF ADVISERS' NAME AND LOGO.

10. AVOIDANCE OF INCONSISTENT POSITION.

In connection with the purchase and sale of portfolio securities of the
Subject Portfolio, Advisers 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 registered
investment companies managed by Advisers or its affiliates, if orders are
allocated in a manner deemed equitable by Advisers among the accounts and at a
price approximately averaged.

11. AMENDMENT.

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 the Series personally, but only bind the trust property of the Series, as
provided in the Series' Declaration of Trust.

13. NOTICES
<PAGE>

ADVISERS: The Boston Company Asset Management, LLC
One Boston Place, 14th Floor
Boston, MA 02108
Attention: Equity Group
Fax #: 617-722-3191

JHMLICO: John Hancock Mutual Life Insurance Company
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

SERIES: John Hancock Variable Series Trust I
200 Clarendon Street
P.O. Box 111
Boston, MA 02117
Attention: Raymond F. Skiba
Fax #: 617-375-4835

14. 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.

15. ASSIGNMENT.

This Agreement may not be assigned by any party, either in whole or in part.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.

ATTEST: JOHN HANCOCK VARIABLE SERIES
TRUST I

By:_________________________
Title: Chairman

ATTEST: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY

By:_________________________
Title: Vice President

ATTEST: THE BOSTON COMPANY ASSET
MANAGEMENT, LLC

By:_________________________
Title:

<PAGE>

SCHEDULE I

FEES
----

Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------

On the first $100,000,000 65 basis points (0.65%) per annum

On the next $150,000,000 60 basis points (0.60%) per annum

On amounts over $250,000,000 55 basis points (0.55%) per annum

<PAGE>

EXHIBIT g(4)
John Hancock Variable Series Trust I

Michele G. Van Leer
Chairman and Chief Executive Officer

[JOHN HANCOCK LOGO APPEARS HERE]

July 28, 1999

State Street Bank and Trust Company
P.O. Box 9111
Boston, MA 02209-9111
Attention: William Marvin

Re: Amended and Restated Custodian Agreement
dated as of January 30, 1995, as amended
----------------------------------------

Gentlemen:

This letter will memorialize our mutual agreement to add to the above-
referenced Custodian Agreement, effective as of August 1, 1999, the following
eight portfolios of the John Hancock Variable Series Trust I: Large Cap
Aggressive Growth Portfolio, Small/Mid Cap Value Portfolio, Large Cap Value CORE
Portfolio, International Equity Portfolio, Aggressive Balanced Portfolio, Mid
Cap Blend Portfolio, Fundamental Mid Cap Growth Portfolio, and Large/Mid Cap
Value Portfolio. In addition, effective August 1, 1999, Morgan Stanley Dean
Witter Investment Management Inc. will become the Sub-Investment Manager of the
Emerging Markets Equity Portfolio.

Attached is a revised copy of Appendix A to the Custodian Agreement which
reflects all of the Portfolios that are now subject to the Custodian Agreement,
including the eight portfolios named above. Please substitute copies of the
attached Appendix A for the old copies of Appendix A in your files.

Kindly acknowledge receipt of this letter and the attachment, and your
agreement with the terms hereof, by signing and returning the duplicate of this
letter. Thank you.

Sincerely,
JOHN HANCOCK VARIABLE
SERIES TRUST I

Michele G. Van Leer
Chairman and CEO
<PAGE>

Received and agreed to:
STATE STREET BANK AND TRUST COMPANY

By:
-----------------------
Name:
-----------------------
Title:
-----------------------
<PAGE>

APPENDIX A
<TABLE>
<CAPTION>

Name of Portfolio Portfolio Sub-Manager
----------------- ---------------------

<C> <S> <C>
1. International Equity Index
Portfolio Independence International Associates, Inc.
2. Diversified Mid Cap Growth
Portfolio John Hancock Advisers, Inc.
3. Small Cap Growth Portfolio John Hancock Advisers, Inc.
4. Small Cap Value Portfolio INVESCO Management & Research, Inc.
5. Mid Cap Growth Portfolio Janus Capital Corporation
6. Mid Cap Value Portfolio Neuberger & Berman L.P.
7. International Balanced
Portfolio Brinson Partners, Inc.
8. International Opportunities
Portfolio Rowe Price-Fleming International, Inc.
9. Large Cap Value Portfolio T. Rowe Price Associates, Inc.
10. Strategic Bond Portfolio J.P. Morgan Investment Management Inc.
11. Equity Index Portfolio State Street Bank and Trust Company
12. Managed Portfolio Independence Investment Associates, Inc.
13. Money Market Portfolio John Hancock Mutual Life Insurance Company
14. Large Cap Growth Portfolio Independence Investment Associates, Inc.
15. Growth and Income Portfolio Independence Investment Associates, Inc.
16. Real Estate Equity Portfolio Independence Investment Associates, Inc.
17. Short Term Bond Portfolio Independence Investment Associates, Inc.
18. Sovereign Bond Portfolio John Hancock Advisers, Inc.
19. Small/Mid Cap CORE Portfolio Goldman Sachs Asset Management (a division of
Goldman, Sachs & Co.)
20. High Yield Bond Portfolio Wellington Management Company, LLP
21. Bond Index Portfolio Mellon Bond Associates, LLP
22. Global Equity Portfolio Scudder Kemper Investments, Inc.
23. Emerging Markets Equity
Portfolio Morgan Stanley Dean Witter Investment
Management Inc.
24. Large Cap Aggressive Growth
Portfolio Alliance Capital Management L.P.
25. Small/Mid Cap Value
Portfolio The Boston Company Asset Management LLC
26. Large Cap Value CORE
Portfolio Goldman Sachs Asset Management (a division of
Goldman, Sachs & Co.)
27. International Equity
Portfolio Goldman Sachs Asset Management (a division of
Goldman, Sachs & Co.)
28. Aggressive Balanced
Portfolio Independence Investment Associates, Inc.
29. Mid Cap Blend Portfolio Independence Investment Associates, Inc.
30. Fundamental Mid Cap Growth
Portfolio OppenheimerFunds, Inc.
31. Large/Mid Cap Value
Portfolio Wellington Management Company, LLP
</TABLE>

<PAGE>

EXHIBIT J(1)

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and under the captions "Independent Auditors" and
"Financial Statements" in the Statement of Additional Information in Post-
Effective Amendment Number 23 to the Registration Statement (Form N-1A, No. 33-
2081) of John Hancock Variable Series Trust I.

We also consent to the incorporation by reference into the Statement of
Additional Information of our report dated February 10, 1999 on the financial
statements included in the Annual Report of the John Hancock Variable Series
Trust I for the year ended December 31, 1998.

/s/ ERNST & YOUNG, LLP
ERNST & YOUNG, LLP

Boston, Massachusetts
July 26, 1999

<PAGE>

EXHIBIT q

JOHN HANCOCK VARIABLE SERIES TRUST I

POWER OF ATTORNEY

The undersigned member of the board of Trustees of John Hancock Variable
Series Trust I does hereby constitute and appoint Michele G. Van Leer, Ronald J.
Bocage, Thomas J. Lee, Laura L. Mangan and Sandra M. DaDalt, and each of them,
with full power of substitution, his or her true and lawful attorneys and agents
to execute, in the name of, and on behalf of, the undersigned as a member of
said Board of Trustees, the Registration Statements under the Securities Act of
1933 and the Investment Company Act of 1940, and each amendment to the
Registration Statements, to be filed for John Hancock Variable Series Trust I
with the Securities and Exchange Commission and to take any and all action and
to execute in the name of, and on behalf of, the undersigned as a member of said
Board of Trustees or otherwise any and all other instruments, including
applications for exemptions from such Acts, which said attorneys and agents deem
necessary or advisable to enable John Hancock Variable Series Trust to comply
with the Securities Act of 1933, as amended, the Investment Company Act of 1940,
as amended, and the rules, regulations and requirements of the Securities and
Exchange Commission in respect thereof; and the undersigned hereby ratifies and
confirms as his or her own act and deed all that each of said attorneys and
agents shall do or cause to be done by virtue hereof. Each of said attorneys
and agents shall have, and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand on the
date shown.

July 14, 1999 /s/ Diane C. Kessler
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Date Diane C. Kessler
<PAGE>

JOHN HANCOCK VARIABLE SERIES TRUST I

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand on the
date shown.

July 14, 1999 /s/ Robert F. Verdonck
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Date Robert F. Verdonck