SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. ___)
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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!
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:
.. Approve new sub-management agreements with two John Hancock affiliates:
Declaration Management & Research LLC ("Declaration Management") and John
Hancock Advisers, LLC ("JH Advisers").
.. 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 in the Active Bond Fund and voted to recommend
these changes. These changes were implemented on June 2, 2003. Your approval is
needed, however, 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,
/s/ Michele G. Van Leer
Michele G. Van Leer
Chairman
John Hancock Variable Series Trust I
[LOGO] John Hancock
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 Management"); 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 22, 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.
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.
1
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-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).
- --------
/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.
2
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 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.
3
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.
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
4
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:
Sub-Management Fee Schedule* Sub-Management Fee Schedule*
-------------------------------- --------------------------------
JH Advisers 0.25% of the first $100 million Declaration 0.15% of the first $100 million,
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
During 2002, the Active Bond Fund's net assets increased from approximately
$947.5 million at the beginning of the year to approximately $987.5 million at
the end of the year. 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 a higher sub-management fee to Declaration
Management than the sub-management fee it actually paid to JH Advisers on those
assets. (As shown in the table above, the annual rate for the sub-management
fee paid by John Hancock on the first $100 million of assets that would have
been managed by Declaration Management in 2002 is 0.15%. This is higher than
the annual rate for the sub-management fee that John Hancock actually paid to
JH Advisers in 2002 on those assets, which was 0.125%.) Overall, if 25% of the
Fund's assets were managed by Declaration Management in 2002, with JH Advisers
continuing to serve as sub-manager for all the rest of the Fund's assets, John
Hancock would have paid $1,538,852 in sub-management fees for the Fund during
that year. 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
5
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 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,/2/ 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 increase in the sub-management fees will be borne by John Hancock,
rather than by 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
- --------
/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 Fund.
6
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 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.
7
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 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.
8
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.
The principal business address of John Hancock Financial Services, Inc. is
located at John Hancock Place, Post Office Box 111, Boston, Massachusetts 02117.
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
and investment sub-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, Virginia 22102. Declaration Management is a wholly
owned subsidiary of Independence Management Holdings, LLC ("Independence
Management"), which is a wholly owned subsidiary of John Hancock Subsidiaries,
LLC ("JH Subsidiaries"), which is a wholly owned subsidiary of John Hancock.
Independence Management and JH Subsidiaries have the same principal business
address as John Hancock Financial Services, Inc.
William P. Callan, Jr. is the President 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 1650 Tysons Boulevard, McLean, Virginia 22102.
A list of Declaration Management's directors is contained in Appendix C.
9
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 a wholly owned subsidiary of the Berkeley Financial Group, LLC
("Berkeley"), which is a wholly owned subsidiary of JH Subsidiaries, which is a
wholly owned subsidiary of John Hancock. The principal business offices of JH
Advisers and Berkeley 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
10
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
11
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 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.
12
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,
A-1
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 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 Agreement 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/3/ 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-
- --------
3 Each new Sub-Management Agreement will become effective following shareholder
approval for that agreement.
A-2
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.
A-3
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 22, 2003.
Comparable Funds
Management Fee Schedule (as an Net Assets at 12/31/02
Name 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
Grade Bond Fund...... 0.40% $ 227.0
B-1
Appendix C
Directors of Declaration Management
Name/Title Principal Occupation Address
---------- -------------------- -------
John M. DeCiccio...... Executive Vice President and John Hancock Place
Director Chief Investment Officer, John P.O. Box 111
Hancock Financial Services, Boston, MA 02117
Inc.; Director, Executive Vice
President and Chief
Investment Officer, John
Hancock; Chairman of the
Committee of Finance of John
Hancock; Director, JH
Subsidiaries, Hancock Natural
Resource Group,
Independence Investment
LLC, Declaration
Management, JH Advisers,
Berkeley, John Hancock
Funds, LLC, Massachusetts
Business Development
Corporation.
Joanne P. Acford...... Senior Vice President and John Hancock Place
Director Deputy General Counsel, John P.O. Box 111
Hancock Boston, MA 02117
William P. Callan, Jr. President and Director, 1650 Tysons Boulevard,
Director Declaration Management McLean, VA 22102
Deborah H. McAneny.... Executive Vice President of John Hancock Place
Director John Hancock Financial P.O. Box 111
Services, Inc. and John Boston, MA 02117
Hancock; Director and Chief
Executive Officer of the
Hancock Natural Resource
Group; Director of JH
Subsidiaries
Ronald J. McHugh...... Senior Vice President and John Hancock Place
Director Treasurer, John Hancock P.O. Box 111
Financial Services, Inc. and Boston, MA 02117
John Hancock
Klaus O. Shigley...... Vice President, John Hancock John Hancock Place
Director Financial Services, Inc. and P.O. Box 111
John Hancock Boston, MA 02117
C-1
Directors of JH Advisers
Name/Title Principal Occupation Address
---------- -------------------- -------
David F. D'Alessandro Chairman and Chief Executive John Hancock Place
Director Officer and Director of John P.O. Box 111
Hancock Financial Services, Boston, MA 02117
Inc. and John Hancock;
Chairman, JH Subsidiaries;
Director, Berkeley, JH
Advisers, and John Hancock
Funds, LLC
John M. DeCiccio..... Executive Vice President and John Hancock Place
Director Chief Investment Officer, John P.O. Box 111
Hancock Financial Services, Boston, MA 02117
Inc.; Director, Executive Vice
President and Chief
Investment Officer, John
Hancock; Chairman of the
Committee of Finance of John
Hancock;
Maureen Ford......... Executive Vice President, John 101 Huntington Avenue
Chairman, Director, Hancock Financial Services, Boston, MA 02199
President, and Chief Inc. and John Hancock;
Executive Officer Chairman, Director, President
and Chief Executive Officer,
JH Advisers and Berkeley;
Chairman, Director, President
and Chief Executive Officer,
John Hancock Funds, LLC;
Chairman, Director and Chief
Executive Officer, Sovereign
Asset Management
Corporation; Director, JH
Subsidiaries; Independence
Investment LLC and John
Hancock Signature Services,
Inc
Mark C. Lapman....... Chairman, President and 53 State Street
Director Chief Executive Officer of Boston, MA 02109
Independence Investment
LLC; Director of Berkeley, JH
Advisers and John Hancock
Funds, LLC.
C-2
Name/Title Principal Occupation Address
---------- -------------------- -------
Jeanne M. Livermore Senior Vice President of John John Hancock Place
Director Hancock; Director of Berkeley, P.O. Box 111
JH Advisers, and John Boston, MA 02117
Hancock Funds, LLC.
Thomas E. Moloney.. Senior Executive Vice John Hancock Place
Director President and Chief Financial P.O. Box 111
Officer of John Hancock Boston, MA 02117
Financial Services, Inc. and
John Hancock; Director of
Berkeley, JH Advisers, 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 JH
Subsidiaries; Director of
Signature Services, Inc.
Robert H. Watts.... Senior Vice President of John John Hancock Place
Director Hancock Financial Services, P.O. Box 111
Inc and John Hancock; Boston, MA 02117
Executive Vice President of
Signator Investors, Inc.;
Director of Berkeley, JH
Advisers, John Hancock
Funds, LLC and John
Hancock Signature Services,
Inc.
C-3
Appendix D
RECORD DATE AND VOTING SHARES
As of the close of business on August 13, 2003 (the "record date"), there were
109,408,363.370 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
VSTABPX 8/03
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
ACTIVE BOND 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 proposals.
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").
[_] 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 Hancock Advisers, LLC
("JH Advisers").
[_] FOR [_] AGAINST [_] ABSTAIN
PLEASE DO NOT FORGET TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD