SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. ___)
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6(E)(2)
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
John Hancock Variable Series Trust I
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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WE NEED YOUR VOTE!
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Dear Variable Contract Owner,
The enclosed proxy materials contain information on some
important changes that are being proposed for the Active
Bond Fund, which is part of the John Hancock Variable Series
Trust I ("VST"). You have allocated amounts to the Active
Bond Fund, as one of the investment options under your
variable life policy or variable annuity contract.
After careful consideration, the VST Board of Trustees
unanimously approved a recommendation by John Hancock Life
Insurance Company ("John Hancock") to do the following:
[X] Approve new sub-management agreements with two John Hancock
affiliates: Declaration Management & Research LLC
("Declaration Management") and John Hancock Advisers, LLC
("JH Advisers").
[X] Approve a new sub-management agreement with Pacific
Investment Management Company LLC ("PIMCO").
The VST Board of Trustees determined that all of the changes
are in the best interest of all shareholders and voted to
recommend these changes for the Active Bond Fund. Your
approval is needed to continue these changes for Declaration
Research and JH Advisers.
These changes do NOT increase the investment management fee
or other expenses that the Fund pays.
For complete information on the JH Advisers and Declaration
Management changes, please read the enclosed materials and
complete, sign and return your voting instruction (proxy)
card.
If you have any questions or need additional information,
please contact a John Hancock Representative at
1-800-576-2227, Monday through Friday, 8:00 A.M. - 7:00 P.M.
ET.
Sincerely,
Michele G. Van Leer
Chairman
John Hancock Variable Series Trust I
Active Bond Fund
a Separate Investment Fund of
John Hancock Variable Series Trust I
("Trust")
Notice of Special Meeting of Shareholders
A Special Meeting of Shareholders of the Active Bond Fund will be held at the
offices of John Hancock Life Insurance Company ("John Hancock"), 197 Clarendon
Street, Boston Massachusetts (telephone 1-800-732-5543), at 11:30 A.M., on
Friday, September 19, 2003, to consider and vote upon the following matters:
1. Proposals to approve, as to the Active Bond Fund:
A. a new Sub-Management Agreement among the Trust, John Hancock, and
Declaration Management & Research LLC ("Declaration Research"); and
B. a new Sub-Management Agreement among the Trust, John Hancock, and
John Hancock Advisers, LLC ("JH Advisers").
2. Any other business that may properly come before the meeting or any
adjournment thereof.
As an owner of a variable life insurance policy or a variable annuity contract
("owner") participating in the Active Bond Fund as of the close of business on
August 13, 2003, you can instruct how shares in the Active Bond Fund
attributable to you will be voted at the meeting.
Michele G. Van Leer
Chairman, Board of Trustees
Boston, Massachusetts
August xx, 2003
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING STAMPED ENVELOPE. IN
ORDER TO AVOID UNNECESSARY DELAY, WE ASK YOUR COOPERATION IN MAILING THE PROXY
PROMPTLY. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PROXY STATEMENT
GENERAL
This statement and enclosed form of proxy (voting instructions) are furnished by
the management of John Hancock Variable Series Trust I (the "Trust") to request
voting instructions for the Special Meeting of shareholders of the Active Bond
Fund to be held at the offices of John Hancock Life Insurance Company ("John
Hancock"), 197 Clarendon Street, Boston, Massachusetts 02117, on Friday,
September 19, 2003 at 11:30 A.M. Eastern time or at any adjournment(s) thereof
(the "Meeting"). Trust management is seeking voting instructions for all shares
of the Active Bond Fund (the "Fund") of the Trust that are attributable to
owners of variable life insurance and variable annuity contracts (together,
"Contracts").
THE TRUST WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR 2002 AND
THE FUND'S SEMI-ANNUAL REPORT FOR THE PERIOD ENDED JUNE 30, 2003 TO ANY OWNER
UPON REQUEST. SUCH REQUEST MAY BE MADE BY MAIL OR BY TELEPHONE, USING THE
ADDRESS OR TOLL-FREE TELEPHONE NUMBER SHOWN ON THE COVER OF THIS PROXY
STATEMENT.
This statement is first being mailed to Contract owners on approximately August
22, 2003.
1
PROPOSALS 1A and 1B - ACTIVE BOND FUND
APPROVAL OF NEW SUB-MANAGEMENT AGREEMENTS WITH JOHN HANCOCK AFFILIATES FOR THE
ACTIVE BOND FUND
At its May 2, 2003 meeting, the Trust's Board of Trustees ("Board") unanimously
approved John Hancock's proposal for the Active Bond Fund to retain two new
sub-managers, Declaration Management & Research LLC ("Declaration Management")
and Pacific Investment Management Company LLC ("PIMCO") in addition to the
Fund's then current sub-manager, John Hancock Advisers, LLC ("JH Advisers").
Each sub-manager employs its own investment approach and independently manages a
portion of the Fund.
These changes became effective June 2, 2003 under temporary sub-management
agreements with each sub-manager for a period generally limited to 150 days.
Subsequently, at its June 18, 2003 meeting, the Board (a) authorized a
shareholder vote to approve the new sub-investment management agreements with
Declaration Management and JH Advisers and (b) recommended that owners approve
these agreements. Declaration Management and JH Advisers are subsidiaries of
John Hancock.
The proposal that you approve these two Sub-Management Agreements is discussed
in detail on the following pages, and we request that you send us your proxy
(voting instructions) on these agreements. However, we are not asking for a
proxy or voting instructions with respect to the new PIMCO Sub-Management
Agreement. Instead, that agreement is discussed in a separate "Information
Statement," dated August 22, 2003, that we are also sending to you. The reason
we are not asking you to vote on the new PIMCO Sub-Management Agreement is that,
like many other mutual funds, the Trust has obtained an order from the
Securities and Exchange Commission that generally makes such votes unnecessary
for sub-managers that, like PIMCO, are not affiliated with John Hancock.
The Trust's Management Agreement with John Hancock
John Hancock Life Insurance Company ("John Hancock") serves as the overall
manager for the Active Bond Fund pursuant to a management agreement with the
Trust dated April 12, 1988, as amended ("Management Agreement"). For the
services it provides, John Hancock receives a management fee from the Active
Bond Fund at the rate stated in the Management Agreement./1/ This is the same
rate as the Active Bond Fund was paying when JH Advisers was the Fund's only
sub-manager.
As the Fund's manager, John Hancock may from time to time recommend the
retention (or termination) of firms to serve as sub-manager(s) to the Active
Bond Fund. The Management Agreement states that John Hancock is solely
responsible for the payment of all fees to sub-managers for the Active Bond
Fund. Accordingly, the change in the Active Bond Fund's sub-
______________
/1/ The Active Bond Fund pays John Hancock a management fee at the annual rate
of: 0.70% of the first $100 million of the Fund's average daily net assets,
0.65% of the next $150 million, 0.61% of the next $250 million, 0.58% of the
next $500 million plus 0.55% of all additional amounts.
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management arrangements that you are being asked to approve (as well as the
retention of PIMCO) has no effect on the charges and expense you pay either
directly or indirectly.
Proposed Sub-Management Agreements
At a meeting on May 2, 2003, the Trust's Board of Trustees ("Board"), upon John
Hancock's recommendation, decided that the Fund should change its then existing
sub-management arrangement with JH Advisers in order to permit the Fund to
retain two additional sub-managers, and that Declaration Management should be
appointed as one of the two new sub-managers. As recommended, Declaration
Management would initially manage approximately 25% of the Active Bond Fund,
PIMCO would manage approximately 37%, and JH Advisers would manage approximately
38%. Subsequent premium payments and transfers by owners into the Active Bond
Fund would be divided evenly among the three sub-managers, while redemptions
would be allocated on an asset-weighted basis among the three portions of the
Fund. (These allocation methodologies may change in the future).
The principal reasons for John Hancock's recommendation to add Declaration
Management as an additional sub-manager were the desire to seek better and more
consistent investment performance by (a) having three sub-managers, each with a
distinct investment program that complements that of the other sub-managers and
(b) adding two new sub-managers (Declaration Management and PIMCO) that each
have consistent performance records. JH Advisers expects to continue managing
its portion of the Fund in the same way that it previously managed the entire
Fund. However, Declaration Management and PIMCO expect to follow investment
programs that are somewhat different than JH Advisers.
For example, the overall credit quality of the assets managed by Declaration
Management is generally expected to be somewhat higher than that managed by JH
Advisers. Nevertheless, Declaration Management employs some investment
techniques that may be riskier than those generally used by JH Advisers. The
programs of Declaration Management and JH Advisers are expected to be
"complementary," in the sense that the portion of the Fund's assets managed by
Declaration Management may be expected to perform better during an adverse
market for fixed income securities and vice-versa.
PIMCO will follow an investment strategy that attempts to adapt to a wide range
of market environments and that, it is hoped, will perform best in most
environments. The strategies to be followed by PIMCO entail more risks that JH
Advisers traditionally has incurred. However, because the Active Bond Fund will
have three sub-managers under the new arrangements, its investments are expected
to be more diverse than in the past. Diversity of investments tends to reduce
risk, as a general matter. Nevertheless, because of the factors discussed above,
the overall risk exposure of the Fund is expected to be somewhat greater, with
the addition of the two new sub-managers, as compared to what it had been
historically. John Hancock and the Trustees believe that the potential benefits
of the new arrangements out-weigh the modest increase in risks. Also, the risk
level of this Fund will remain in the customary range for similar types of
funds.
For its portion of the Fund's assets, Declaration Management will identify
investment opportunities, in part, by using proprietary research and
quantitative tools to identify bonds and bond sectors with yields in excess of
U.S. Treasury securities. The investment program for all
3
three portions of the Fund (i.e., the portions of the Fund managed,
respectively, by Declaration Management, JH Advisers and PIMCO) will continue to
focus primarily on a diversified mix of intermediate term debt securities and
instruments of medium credit quality. The portion of the Fund managed by
Declaration Management, however, will be more likely to include government and
agency debt instruments and less likely to include investments in high yield
bonds than the portion of the Fund managed by JH Advisers.
Basis for the Trustees' Approval of Declaration Management and JH Advisers
Sub-Management Agreements
At its May 2, 2003 meeting, the Board, including all the Trustees who are not
associated with John Hancock (the "Independent Trustees"), unanimously approved
the new Sub-Management Agreements with Declaration Management and JH Advisers
The schedule of sub-management fees to be paid by John Hancock for Declaration
Management's portion of the Active Bond Fund is different from what have, and
will continue to apply for JH Advisers' portion of the Fund. The Active Bond
Fund's new Sub-Management Agreements permit John Hancock from time to time to
change the amount of Active Bond Fund assets that the respective sub-manager
will manage. No sub-manager for the Active Bond Fund will be responsible for the
actions of another sub-manager for the Fund.
In evaluating and approving these new agreements, the Board, with the assistance
of outside counsel to the Trust, requested and evaluated information from John
Hancock that was relevant to whether the agreement would be in the best
interests of the Active Bond Fund and the owners of its shares. In addition, the
Board's Trust Governance Committee, composed exclusively of the Board's
Independent Trustees, met with such counsel prior to the Board meeting and
considered what further information it would request of John Hancock.
In making its decision to approve these new agreements, the Board considered
factors bearing on the nature, scope and quality of the services provided or to
be provided, respectively, by Declaration Management and JH Advisers to the
Active Bond Fund, with a view toward making a business judgment as to whether
the proposals were, under all of the circumstances, in the best interest of the
Fund and owners of its shares.
The Trustees already had considerable familiarity with JH Advisers and its
capabilities and operational practices, because JH Advisers has served as the
sub-manager for the Active Bond Fund since May 1, 1995. Moreover, the Trustees
had recently reviewed JH Advisers' operations and performance at the Board's
February 5, 2003 meeting in the context of its regular annual review of all of
the Trust's Management and Sub-Management Agreements. Similarly, the Trustees
also were familiar with Declaration Management's investment personnel and their
operations because they are also employed by another John Hancock subsidiary,
Independence Investment LLC, to manage investments of two other Funds of the
Trust.
4
The factors that the Trustees considered in selecting Declaration Management as
an additional sub-manager for the Active Bond Fund and in retaining JH Advisers
as a sub-manager included, principally, the following:
.. Declaration Management and JH Advisers each have sufficient resources for
fundamental research and analysis on debt securities and economic trends to
support their respective investment management teams, and each team is led
by one or more experienced portfolio managers.
.. Declaration Management's investment strategy, which uses a combination of
proprietary research and quantitative tools, has weathered adverse market
conditions in recent years better than many other fixed income-type
managers.
.. Information supplied by John Hancock demonstrates that Declaration
Management has a strong and consistent performance record for higher credit
quality intermediate term bond fund portfolios.
.. JH Advisers' investment strategy, which focuses on investment opportunities
of somewhat lower credit quality bonds, complements both Declaration
Management's investment focus on relatively higher credit quality bonds and
PIMCO's more flexible focus.
Under the new Sub-Management Agreements, John Hancock will continue to pay JH
Advisers a sub-management fee at its current annual rate and will pay
Declaration Management a different rate, as follows:
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Sub-Management Fee Schedule* Sub-Management Fee Schedule*
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JH 0.25% of the first $100 million Declaration 0.15% of the first $100 million,
Advisers 0.20% of the next $150 million, Management 0.125% of the next $150 million,
0.16% of the next $250 million, 0.10% for any additional amounts
0.125% of the next $500 million,
0.10% for any additional amounts
--------------------------------------------------------------------------------------------------------
* as an annual % of the Fund's average net assets managed by the sub-manager
Had Declaration Management served as sub-manager to 25% of the Fund's assets
(which is the initial percentage of the Fund's assets allocated to Declaration
Management under the new arrangements) during all of 2002, John Hancock would
have paid $1,538,852 in sub-management fees. This is 1.3% more than the
$1,519,340 of sub-management fees that John Hancock actually paid with respect
to the Fund during 2002. Moreover, if both Declaration Management and PIMCO had
been serving as sub-managers under the new arrangements for all of 2002, the
aggregate sub-management fees payable by John Hancock would have been
significantly higher still.
Therefore, if the Declaration Management Sub-Management Agreement is approved,
the amount of Fund sub-management fees retained by John Hancock (rather than
being paid to one or more sub-managers) would be reduced. The Board, however,
concluded that Declaration Management's proposed sub-management fee for the
Active Bond Fund was reasonable, despite
5
the anticipated decreases in the amount of such "spreads" that would be retained
by John Hancock. The Board reached this conclusion in light of:
.. The fact that most of the decrease in the amount retained by John Hancock
would be attributable to the PIMCO Sub-Management Agreement,/3/ rather than
to the Declaration Management Sub-Management Agreement.
.. The amount of management fees retained by John Hancock with respect to the
assets managed by Declaration Management will still be adequate, in view of
(1) the overall pattern of management and sub-management fees for the
Active Bond Fund and the other Funds of the Trust and (2) John Hancock's
overall requirements and objectives in those regards.
.. The Board's favorable evaluation of the nature, quality and breadth of
investment management services that the Board expects Declaration Management
to provide to the Fund.
.. The current and estimated profits to John Hancock (both under JH Advisers'
sub-management fee schedule and under the new sub-management fee schedules
for Declaration Management and PIMCO) from providing management services to
the Trust and from the John Hancock insurance products which use the Trust as
a funding medium.
The Trustees, at their May 2, 2003 meeting, also were mindful that, apart from
the changes and differences discussed above, the new Sub-Management Agreements
for the Fund were essentially comparable to that which the Fund previously had
in effect with JH Advisers. Moreover, in the context of the Board's annual
review of the Trust's Management and Sub-Management Agreements at its February
5, 2003 meeting, the Trustees received and considered a wealth of information
about a wide range of issues. These included such matters as John Hancock's
profitability expectations and why the Fund's management and sub-management fee
rates (and the "spreads" between those rates) are different as among the various
Funds of the Trust. The Trustees, therefore, considered the new Sub-Management
Agreements for the Fund with Declaration Management and with JH Advisers in the
context of, and with due consideration for, such other information.
In connection with their deliberations, the Trustees and the Governance
Committee received legal advice from outside counsel to the Trust regarding the
standards and methodology of evaluation established by the Securities and
Exchange Commission, the courts and the industry for mutual funds selling shares
to the public and the applicability of those standards and methodology to mutual
funds - like the Trust - selling shares to life insurance company separate
accounts.
Based upon all of the information and advice available to them, the Trustees
considered the extent and quality of the services that John Hancock and the
sub-manager, directly or indirectly, provide to the Fund, the costs and expenses
to be borne by the Fund and John Hancock, and the
_______________
/2/ John Hancock's retention will decrease on the assets managed by PIMCO
because John Hancock will pay PIMCO sub-management fees at an annual rate of
0.25% on all of PIMCO's portion of the Active Bond.
6
benefits accruing to the Fund and John Hancock as a result of their
relationship. As a result of their consideration, the Trustees, in the exercise
of their business judgment, unanimously approved the new Sub-Management
Agreements with, respectively, Declaration Management and JH Advisers (as well
as the new Sub-Management Agreement with PIMCO) as being in the best interests
of the Active Bond Fund and of owners of its shares.
Other Information About the Declaration Management and JH Advisers
Sub-Management Agreements
The new Sub-Management Agreements with, respectively, Declaration Management and
JH Advisers, do not impose greater liability or obligations on the Active Bond
Fund or John Hancock in comparison to the provisions of the Sub-Management
Agreement of the Fund with JH Advisers. That agreement was dated as of May 1,
1995 and was last approved by shareholders of the Fund on October 20, 2000 in
connection with an amendment to reflect an increase in the sub-management fees
paid by John Hancock.
A summary of the new Sub-Management Agreements with Declaration Management and
with JH Advisers is included as Appendix A to this statement. These new
Sub-Management Agreements and the previous Sub-Management Agreement with JH
Advisers are substantially similar except as previously stated with respect to
John Hancock's ability to designate assets of the Fund to be managed by the
sub-managers and, with respect to the Sub-Management Agreement with Declaration
Management, the rate of sub-management fees.
The terms of the agreements for which approval is now being sought also are
substantially the same as those of the corresponding temporary agreements that
are currently in effect, except for the duration thereof.
Portfolio Transactions
Declaration Management and JH Advisers place orders for portfolio transactions
for their respective portions of the Fund through brokers and dealers that they
believe will offer best overall price and quality of execution for their
respective portion of the Fund. When it can be done consistently with that
policy, each sub-manager may (1) place such orders with broker-dealers who
supply research, market and statistical information to the Fund or to that
sub-manager and/or (2) cause the Fund to pay a brokerage commission in excess of
that which another broker might charge for executing the same transaction, in
consideration of research or research related products or services that benefit
the sub-manager's advisory clients, including the Fund.
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 and industry 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
7
interest to the sub-manager. 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-manager as part of the services. In any case in which such
items can be used for both research and non-research purposes, the sub-manager
makes an appropriate allocation of those uses and will permit brokers and
dealers to provide only the portion to be used for research purposes. Costs
which are allocable to non-research purposes will be paid directly by the
sub-manager.
Neither Declaration Management nor JH Advisers will at any time make a
commitment pursuant to an agreement with a broker because of research or
research related services provided. Whenever a sub-manager seeks to direct
certain amounts to broker-dealers that provide research or research-related
services, it will establish and maintain internal procedures. These internal
procedures do not mandate that any amount of business be directed to any
broker-dealer, and in no event will a broker-dealer be used unless the
sub-manager believes that the broker-dealer also will provide the best overall
price and execution for the Fund.
In selecting brokers and dealers with which to place portfolio transactions for
the Fund, neither Declaration Management nor JH Advisers will consider sales of
shares of funds advised by that sub-manager as a decision-making factor,
although each may place such transactions with brokers and dealers that sell
shares of funds advised by that sub-manager.
Additional Information
John Hancock. John Hancock began providing investment advice to investment
companies in 1972 when it organized a "management" separate account, invested
primarily in common stocks, for the purpose of funding individual variable
annuity contracts. Both before and after that date, John Hancock established a
number of separate accounts investing in common stocks, public bonds, or other
securities in connection with the funding of variable annuities and variable
life insurance. John Hancock is a wholly owned subsidiary of John Hancock
Financial Services, Inc., a Delaware corporation organized in February, 2000.
Signator Investors, Inc. ("Signator"), a company affiliated with John Hancock,
acts as "principal underwriter" of the Trust's shares pursuant to an
Underwriting and Indemnity Agreement, dated May 1, 1997, to which John Hancock
and the Trust are parties. Under that agreement, Signator collects no additional
charges or commissions in connection with its duties as principal underwriter.
Signator's address is 197 Clarendon Street, Boston, Massachusetts 02116.
Declaration Management. Declaration Management, a limited liability company
organized under the laws of the state of Delaware, serves as investment adviser
to a number of institutional clients. The Active Bond Fund, however, is the only
mutual fund (or series thereof) for which Declaration Management serves as an
investment adviser, investment sub-adviser or sub-manager. As of December 31,
2002, Declaration Management had approximately $6.2 billion of assets under
management.
The principal business office of Declaration Management is located at 1650
Tysons Boulevard, McLean, VA 22102. Declaration Management is an affiliate of
John Hancock, owned by [to be supplied], and its principal business office is
located at [to be supplied].
8
[To be supplied] is the Chief Executive Officer of Declaration Management.
Declaration Management manages its portion of the Active Bond Fund with an
investment team that is overseen by James E. Shallcross, Senior Vice President
of Declaration Management. They are located at [to be supplied].
A list of Declaration Management's directors/general partners/members [To be
supplied] is contained in Appendix C.
JH Advisers. JH Advisers, a limited liability company organized under the laws
of the state of Delaware, serves as investment adviser and investment
sub-adviser to a number of investment companies. Information concerning the fees
and average net assets of funds with investment objectives similar to the Active
Bond Fund which are managed by JH Advisers is contained in Appendix B. As of
December 31, 2002, JH Advisers had approximately $24 billion of assets under
management.
JH Advisers is owned by a wholly owned subsidiary of the Berkeley Financial
Group, LLC ("Berkeley"), which is a wholly owned subsidiary of John Hancock
Subsidiaries, LLC ("JH Subsidiaries"), which is a wholly owned subsidiary of
John Hancock The principal business offices of JH Advisers, Berkeley and JH
Subsidiaries are located at 101 Huntington Avenue, Boston, Massachusetts 02199.
Maureen R. Ford is the Chief Executive Officer of JH Advisers. The general
investment advice provided by JH Advisers with respect to its portion of the
Fund is determined by Howard C. Greene, CFA, and Benjamin A. Matthews, CFA who
are, respectively, a Senior Vice President and a Vice President of JH Advisers.
They are located at 101 Huntington Avenue, Boston, Massachusetts 02199.
A list of JH Advisers' directors is contained in Appendix C.
Trustees' Recommendation
The Board believes that both the Sub-Management Agreement with Declaration
Management and the Sub-Management Agreement with JH Advisers are in the best
interests of the Active Bond Fund and the owners of its shares.
THE BOARD UNANIMOUSLY RECOMMENDS THAT OWNERS OF THE ACTIVE BOND FUND GIVE
INSTRUCTIONS TO VOTE FOR THE APPROVAL OF BOTH:
PROPOSAL 1A - THE SUB-MANAGEMENT AGREEMENT WITH DECLARATION MANAGEMENT
PROPOSAL 1B - THE SUB-MANAGEMENT AGREEMENT WITH JH ADVISERS
9
GENERAL SOLICITATION AND VOTING INFORMATION
Information about the Solicitation
This solicitation is being made of all shares of the Active Bond Fund that are
attributable to interests in John Hancock Variable Life Accounts U, UV, V and S;
and John Hancock Variable Annuity Accounts U, V, JF, H and I (collectively, the
"Accounts"). The cost of preparing, printing and mailing this notice and proxy
statement and the accompanying voting instructions form will be borne by the
Fund. Any other expenses will be reimbursed by John Hancock to the Fund. In
addition to solicitations by mail, certain John Hancock employees may solicit
voting instructions in person or by telephone; such employees will not be
compensated for such services.
Voting Instructions
Although John Hancock and its subsidiary, John Hancock Variable Life Insurance
Company (together, the "Insurers"), through the Accounts, legally own all of the
Trust's shares, they will vote all of such shares in accordance with
instructions given by owners of variable life insurance policies and variable
annuity contracts, as discussed below. For this purpose, the owner of a variable
annuity contract during the period after annuity payments have commenced is the
annuitant.
Any authorized voting instructions will also be valid for any adjournment of the
Meeting and will be revocable only at the direction of the owner executing them.
If an insufficient number of affirmative votes are obtained to approve any item,
the Meeting may be adjourned to permit the solicitation of additional votes.
Shares will be voted for any such adjournment in the discretion of the Insurer
in whose Account the shares are held. Whether a proposal is approved depends
upon whether a sufficient number of votes are cast for the proposal.
Accordingly, an instruction to abstain from voting on any proposal has the same
practical effect as an instruction to vote against that proposal.
Any person giving voting instructions may revoke them at any time prior to their
exercise by submitting a superseding voting instruction form or a notice of
revocation to the Trust. In addition, although mere attendance at the Meeting
will not revoke voting instructions, an owner present at the Meeting may
withdraw his/her voting instruction form and give voting instructions in person.
The Insurers will vote Trust shares in accordance with all properly executed and
unrevoked voting instructions received in time for the Meeting or properly given
at the Meeting.
The Insurers will vote the Trust shares of the Fund held in their respective
Accounts which are attributable to the variable life insurance policies and
variable annuity contracts (collectively, the "Contracts") in accordance with
the voting instructions received from owners participating in that Fund. An
Account's shares in the Fund which are not attributable to Contracts or for
which no timely voting instructions are received will be represented and voted
by the Insurers in the same proportion as the voting instructions which are
received from all owners participating in the
10
Fund through that Account. Fund shares which are not attributable to Contracts
include shares purchased with contributions made as "seed money" to the Fund by
the Insurers.
Please refer to Appendix D to this statement if you wish additional information
about the number of shares of the Fund that are outstanding.
Required Voting
In order for the shareholders of the Fund to approve either of proposals 1A or
1B in this proxy statement, the proposal must receive the favorable vote of a
majority of the outstanding shares of the Fund. When used in this proxy
statement, a "majority vote of the outstanding voting shares" means the
affirmative vote of more than 50% of the outstanding shares or, if it is less,
67% or more of the shares present or represented at the Meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING STAMPED ENVELOPE. IN
ORDER TO AVOID UNNECESSARY DELAY, WE ASK YOUR COOPERATION IN MAILING THE PROXY
PROMPTLY. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
11
Appendix A
SUMMARY OF NEW SUB-MANAGEMENT AGREEMENTS
WITH DECLARATION MANAGEMENT AND JH ADVISERS
Each new Sub-Management Agreement contains the agreement of a particular firm,
either Declaration Management or JH Advisers, to act as a sub-manager for a
portion of the Active Bond Fund. Each agreement also permits John Hancock from
time to time to designate the amount of Active Bond Fund assets that the
particular sub-manager will manage, and specifies that the sub-manager will not
be responsible for the actions of another sub-manager to the Fund.
Pursuant to each agreement, the sub-manager is required to adhere to the
investment policies, guidelines and restrictions of the Active Bond Fund, as
established by the Trust and John Hancock from time to time when managing the
investment and reinvestment of the Fund's assets. At its own expense, the
sub-manager agrees to provide specific services, including: (a) advising the
Trust in connection with investment policy decisions to be made by its Board of
Trustees or by any committee thereof regarding the Fund assets that the
sub-manager manages and, upon request, furnishing the Trust with research,
economic and statistical data in connection with the investments and investment
policies of such assets; (b) submitting reports and information as John Hancock
or the Trust's Board of Trustees may reasonably request, to assist the custodian
in its determination of the market value of securities held in the Fund (to the
extent such securities are not otherwise priceable using an approved pricing
service); (c) placing orders for purchases and sales of portfolio investments
for the Fund assets that it manages; (d) maintaining and preserving the records
relating to its activities required by the 1940 Act to be maintained and
preserved by the Trust, to the extent not maintained by the custodian, transfer
agent or John Hancock; and (e) absent specific instructions to the contrary
provided to it by John Hancock and subject to its receipt of all necessary
voting materials, voting all proxies with respect to investments for the Fund
assets that it manages in accordance with the sub-manager's proxy voting policy
as most recently provided to John Hancock.
The services provided by each sub-manager are subject to the overall
supervision, direction, control and review of John Hancock and the Board of
Trustees of the Trust.
Each party to a Sub-Management Agreement bears the costs and expenses of
performing its obligations thereunder. In this regard, the Active Bond Fund
specifically agrees to assume the expense of: (a) brokerage commissions for
transactions in the portfolio investments of the Trust 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 Fund to federal, state
or other governmental agencies; and (d) interest payable on the Fund's
borrowings.
For its services, the sub-manager is paid a fee by John Hancock at the rate
specified in the respective Sub-Management Agreement.
In connection with the investment and reinvestment of the Fund assets that it
manages, each sub-manager is authorized to select the brokers or dealers that
will execute purchase and sale
A-1
transactions for the Fund. Each sub-manager is obligated to seek to obtain the
best available price and most favorable execution with respect to all such
purchases and sales of such assets. Subject to that obligation, each sub-manager
has the right, 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 Fund or to that sub-manager, and who charge a higher commission
rate to the Fund than may result when allocating brokerage solely on the basis
of seeking the most favorable price and execution. In that case, the sub-manager
is required to determine in good faith that its higher cost was reasonable in
relation to the value (to the Fund or to that sub-manager's advisory customers
generally) of the brokerage and research services provided. A sub-manager may
combine orders for the sale or purchase of portfolio securities of the Fund with
those for other registered investment companies managed by the sub-manager or
its affiliates, if orders are allocated in a manner deemed equitable by the
sub-manager among the accounts and at a price approximately averaged.
A sub-manager is not permitted to receive any tender offer solicitation fees or
similar payments in connection with the tender of investments of the Fund.
No provision of a Sub-Management Agreements protects the sub-manager or John
Hancock against any liability to the Trust 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. However, a sub-manager is obligated to perform only the
services described in the Sub-Management Agreement, and the sub-manager makes no
representation nor any warranty that any level of investment performance or
level of investment results will be achieved.
Unless modified or terminated, each Sub-Management Agreement will continue with
respect to the Active Bond Fund for an initial 2 year period/4/ and from year to
year after that, but only so long as such continuance is specifically approved
at least annually by (a) a majority of the Independent Trustees, cast in person
at a meeting called for the purpose of voting on such approval, and (b) either a
vote of the Board of Trustees or a majority of the outstanding voting shares of
the Fund. Each Sub-Management Agreement also provides that it may be terminated
at any time without penalty by the Trust's Board of Trustees, by majority vote
of the outstanding voting shares of the Active Bond Fund or, on 60 days' notice,
by John Hancock or the sub-manager. Each Sub-Management Agreement automatically
terminates in the event of its assignment or if the Management Agreement between
the Trust and John Hancock for the Active Bond Fund is terminated.
__________________________
/3/ Each new Sub-Management Agreement will become effective following
shareholder approval for that agreement.
A-2
Appendix B
Funds with Investment Objectives Similar to the Active Bond Fund and Advised by
JH Advisers
The funds listed in the following table rely on JH Advisers to provide primary
investment advisory services. This differs from the circumstances of the Active
Bond Fund, therefore, where JH Advisers only provides day-to-day sub-management
services. Accordingly, the fees shown in the table below for each fund cover a
broader scope of services than the fees paid by John Hancock to JH Advisers
under the new Sub-Management Agreement for which approval is being sought in
this proxy statement. JH Advisers has not waived, reduced or otherwise agreed to
reduce its compensation under any applicable contract for the funds shown in the
table as of August __, 2003.
- -------------------------------------------------------------------------------------------------------------
Comparable Funds
- -------------------------------------------------------------------------------------------------------------
Name Management Fee Schedule (as an Net Assets at 12/31/02
annual % of Average Net Assets) (millions)
- -------------------------------------------------------------------------------------------------------------
John Hancock Bond Fund 0.50% to $1.5 Billion $1,446.7
0.45% $1.5-$2.0 Billion
0.40% $2.0-$2.5 Billion
0.35% above $2.5 Billion
- -------------------------------------------------------------------------------------------------------------
John Hancock Investment 0.40% $ 227.0
Grade Bond Fund
- -------------------------------------------------------------------------------------------------------------
B-1
Appendix C
Directors/Partners/Managers of Declaration Management
[to be supplied]
Name/Title Principal Occupation Address
Directors of JH Advisers
Name/Title Principal Occupation Address
David F. D'Alessandro Chairman and Chief Executive Officer and John Hancock Place
Director Director of John Hancock Financial P.O. Box 111
Services, Inc. and John Hancock Life Boston, MA 02117
Insurance Company; Chairman, John Hancock
Subsidiaries, LLC; Director, The Berkeley
Financial Group, LLC, John Hancock
Advisers, LLC, and John Hancock Funds, LLC.
John M. DeCiccio Executive Vice President and Chief John Hancock Place
Director Investment Officer, John Hancock Financial P.O. Box 111
Services, Inc.; Director, Executive Vice Boston, MA 02117
President and Chief Investment Officer,
John Hancock Life Insurance Company;
Chairman of the Committee of Finance of
John Hancock Life Insurance Company;
Director, John Hancock Subsidiaries, LLC,
Hancock Natural Resource Group,
Independence Investment LLC, Declaration
Management & Research LLC, John Hancock
Advisers, LLC, The Berkeley Financial
Group, LLC, John Hancock Funds, LLC,
Massachusetts Business Development
Corporation.
Maureen Ford Executive Vice President, John Hancock 101 Huntington Avenue
Chairman, Director, President, and Chief Financial Services, Inc., John Hancock Life Boston, MA 02199
Executive Officer Insurance Company; Chairman, Director,
President and Chief Executive Officer, John
Hancock Advisers, LLC and The Berkeley
Financial Group, LLC; Chairman, Director,
President and Chief Executive Officer, John
Hancock Funds, LLC; Chairman, Director and
Chief Executive Officer, Sovereign Asset
Management Corporation; Director, John
Hancock Subsidiaries, LLC; Independence
Investment LLC and John Hancock Signature
Services, Inc.,
C-1
Mark C. Lapman Chairman, President and Chief Executive 53 State Street
Director Officer of Independence Investment LLC; Boston, MA 02109
Director of The Berkeley Financial Group,
LLC, John Hancock Advisers, LLC and John
Hancock Funds, LLC.
Jeanne M. Livermore Senior Vice President of John Hancock Life John Hancock Place
Director Insurance Company; Director of The Berkeley P.O. Box 111
Financial Group, LLC, John Hancock Boston,
MA 02117 Advisers, LLC, and John Hancock
Funds, LLC.
Thomas E. Moloney Senior Executive Vice President and Chief John Hancock Place
Director Financial Officer of John Hancock Financial P.O. Box 111
Services, Inc. and John Hancock Life Boston, MA 02117
Insurance Company; Director of The Berkeley
Financial Group, LLC, John Hancock
Advisers, LLC, John Hancock Funds, LLC,
John Hancock Realty Services, John Hancock
Canadian Holdings Limited, John Hancock
Reassurance Co., Ltd., and The Maritime
Life Assurance Company; Director and Chief
Financial Officer of John Hancock
Subsidiaries, LLC; Director of Signature
Services, Inc.
Robert H. Watts Senior Vice President of John Hancock Life John Hancock Place
Director Insurance Company; Executive Vice President P.O. Box 111
of Signator Investors, Inc.; Director of Boston, MA 02117
The Berkeley Financial Group, LLC, John
Hancock Advisers, LLC, John Hancock Funds,
LLC and John Hancock Signature Services,
Inc.
C-2
Appendix D
RECORD DATE AND VOTING SHARES
As of the close of business on August 13, 2003 (the "record date"), there were
____________ shares outstanding of the Active Bond Fund.
Each Fund share is entitled to one vote, and fractional votes will be counted.
The number of Fund shares attributable to each owner of a variable life
insurance policy ("policy") is determined by dividing, as of the record date of
the Meeting, a policy's cash (or account) value (less any outstanding
indebtedness) in the designated subaccount of the applicable Account by the net
asset value of one Fund share. The number of Fund shares attributable to each
owner of a variable annuity contract is determined by dividing, as of the record
date of the Meeting, the value of the Accumulation Shares under a contract (or
for each contract under which annuity payments have commenced, the equivalent
determined by dividing the contract reserves by the value of one Accumulation
Share) in the designated subaccount of the applicable Account by the net asset
value of one Fund share.
As a group, the officers and Trustees own less than 1% of the outstanding shares
of the Fund.
D-1
VOTING INSTRUCTION FORM
PLEASE SIGN, DATE AND RETURN ALL VOTING INSTRUCTION FORMS RECEIVED IN THE
ENCLOSED POSTAGE-PAID ENVELOPE THESE VOTING INSTRUCTIONS ARE SOLICITED BY THE
TRUSTEES FOR THE SPECIAL MEETING OF SHAREHOLDERS ON FRIDAY, SEPTEMBER 19, 2003 -
11:30 A.M. EASTERN TIME, 197 CLARENDON STREET, BOSTON, MASSACHUSETTS
EARNINGS GROWTH FUND
JOHN HANCOCK VARIABLE SERIES TRUST I
Special Meeting of Shareholders To Be Held on September 19, 2003
A Special Meeting of Shareholders of the John Hancock Variable Series Trust I
(the "Trust") for the Fund shown above will be held at the office of John
Hancock Life Insurance Company ("John Hancock"), 197 Clarendon Street, Boston,
Massachusetts, (telephone 1-800-732-5543) at 11:30 a.m. Eastern Time, on
Friday, September 19, 2003. By signing and dating below, you instruct the record
holder to, and such record holder will, vote the shares attributable to your
variable life insurance or variable annuity contract as marked or, if not
marked, to vote "FOR" the proposals on the reverse side of this form, and to use
its discretion to vote any other matter incident to the conduct of the Special
Meeting. If you do not intend to personally attend the Special Meeting, please
complete, detach and mail this form in the enclosed envelope at once.
The record owner is hereby instructed to vote the shares of the above named Fund
that are attributable to the undersigned's contract at the Special Meeting of
Shareholders and at any adjournment thereof.
Date ___________, 2003
PLEASE BE SURE TO SIGN AND DATE THIS PROXY
______________________________ [Sign in the box]
Signature(s) of Shareholder(s)
NOTE: Signature(s) should agree with the name(s) printed hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
name as such. If a corporation, please sign in full corporate name by president
or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
VOTING INSTRUCTION FORM
PLEASE SIGN, DATE AND RETURN ALL VOTING INSTRUCTION FORMS RECEIVED IN THE
ENCLOSED POSTAGE-PAID ENVELOPE THESE VOTING INSTRUCTIONS ARE SOLICITED BY THE
TRUSTEES FOR THE SPECIAL MEETING OF SHAREHOLDERS ON FRIDAY, SEPTEMBER 19, 2003 -
11:30 A.M. EASTERN TIME, 197 CLARENDON STREET, BOSTON, MASSACHUSETTS
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
If this card is executed, but you give no direction, the shares will be voted
"FOR" the proposal.
Proposal 1A: To approve, as to the Active Bond Fund, a new Sub-Management
Agreement among the Trust, John Hancock, and Declaration Management & Research
LLC ("Declaration Research"); and
[_] FOR [_] AGAINST [_] ABSTAIN
Proposal 1B: To approve, as to the Active Bond Fund, a new Sub-Management
Agreement among the Trust, John Hancock, and John Hanckcock Advisers, LLC
("JH Advisers").
[_] FOR [_] AGAINST [_] ABSTAIN
PLEASE DO NOT FORGET TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD