-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Or41V+AF69KL0JLf5U2yu0xXi6h+s01e2hbPovI8ik49FIm6wGvLPLJlDZ8+AgV6 iq3yblLv4wzDKgQIkOSuPA== 0001010521-99-000134.txt : 19990217 0001010521-99-000134.hdr.sgml : 19990217 ACCESSION NUMBER: 0001010521-99-000134 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19990216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK JOHN DECLARATION TRUST CENTRAL INDEX KEY: 0001003457 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: SEC FILE NUMBER: 333-70197 FILM NUMBER: 99541858 BUSINESS ADDRESS: STREET 1: 101 HUNTINGTON AVE CITY: BOSTON STATE: MA ZIP: 02199-7603 BUSINESS PHONE: 6173751702 MAIL ADDRESS: STREET 1: 101 HUNTINGTON AVE CITY: BOSTON STATE: MA ZIP: 02199-7603 497 1 JOHN HANCOCK DECLARATION TRUST February 12, 1999 Dear Declaration Contract or Certificate Owner: I am writing to ask you to consider an important matter that will affect your annuity contract or certificate. Some or all of the value of your variable insurance contract or certificate issued by either John Hancock Mutual Life Insurance Company or John Hancock Variable Life Insurance Company (the "insurance companies") is invested in the John Hancock V.A. World Bond Fund (the "fund"). The insurance companies hold shares of the V.A. World Bond Fund in separate accounts for the purpose of funding your annuity payments. For this reason, you have the right to instruct your insurance company how to vote the fund shares attributable to your variable insurance contract or certificate. Since its inception in August 1996, the fund has invested heavily in foreign bonds as well as bonds issued by multinational organizations and the U.S. government. In recent years it has become difficult to post strong returns with this strategy because of increasing instability in the foreign markets coupled with the growing strength of the U.S. dollar. For this reason, the fund's trustees are recommending the merger of the fund into the John Hancock V.A. Strategic Income Fund, which invests in U.S. government bonds and high-yield U.S. corporate bonds as well as foreign bonds. Through its broader investment approach, the V.A. Strategic Income Fund allows investors to participate in foreign investments without being as vulnerable to potential downturns overseas. This proposed merger has been unanimously approved by the fund's Board of Trustees, who believe it will benefit the fund's shareholders and, indirectly, holders of variable contracts or certificates based on the fund. The merger is detailed in the enclosed proxy statement and summarized in the questions and answers on the following pages. I suggest you read both thoroughly before voting. No matter what size your investment may be, your instructions are important. I urge you to review the enclosed materials and to complete, sign and return the enclosed voting instruction card to the insurance company, which will vote its shares in the fund in accordance with your instructions. Your prompt response will help avoid the need for additional mailings at the fund's expense. For your convenience, we have provided a postage-paid envelope. If you have any questions or need additional information, please contact your investment professional or call a Declaration customer service representative at 1-800-824-0335, Monday through Friday between 8:00 a.m. and 6:00 p.m. Eastern Time. I thank you for your prompt attention to this matter. Sincerely, /s/Edward J. Boudreau, Jr. -------------------------- Edward J. Boudreau, Jr. Chairman and CEO John Hancock V.A. World Bond Fund The Declaration Variable Annuity is issued by John Hancock Mutual Life Insurance Company, or its subsidary John Hancock Variable Life Insurance Company+, Boston, MA 02117. +Not Licensed in New York VA09PXL 2/99 FORM JHFI 95 Q: What are the benefits of merging the V.A. World Bond Fund into the V.A. Strategic Income Fund? A: The V.A. Strategic Income Fund has a much wider investment scope than the V.A. World Bond Fund. As owner of a variable contract or certificate based on the V.A. Strategic Income Fund, you can continue to participate in the international sector while opening your portfolio to a broad range of opportunities in the U.S. government and corporate high-yield sectors. This diversification will also help to make your investment less dependent upon the success of international markets. In addition, the V.A. Strategic Income Fund's larger asset base after the merger may allow for lower operating expenses than the V.A. World Bond Fund has now. Following the merger, annual fees are projected to be 0.85%, down from 1.00%. These projected lower expenses should help bolster an investment's total return over time. Q: How does the V.A. Strategic Income Fund's strategy compare with that of the V.A. World Bond Fund? A: The V.A. Strategic Income Fund seeks a high level of current income, while the V.A. World Bond Fund seeks a high total investment return from current income and capital appreciation. Although both funds invest in foreign bonds as well as U.S. government and agency securities, the V.A. World Bond Fund has traditionally focused on international sectors and multinational organizations. The V.A. Strategic Income Fund invests in domestic corporate bonds as well as foreign and U.S. government bonds, providing greater diversification so investors are less vulnerable to weakness in any single sector. The U.S. corporate portion of the V.A. Strategic Income Fund's portfolio typically focuses on corporate high-yield bonds. These bonds entail some credit risk, which the fund's management team minimizes by applying a relatively conservative investment approach. This strategy also allows the V.A. Strategic Income Fund to seek higher current income than the V.A. World Bond Fund. Q: Who manages the V.A. Strategic Income Fund? A: The V.A. Strategic Income Fund is managed by a team of portfolio managers led by Frederick L. Cavanaugh, Jr., a senior vice president with more than 25 years of investment experience. His expertise includes the high yield bond market and international economies, and he has led the fund's management team since its inception on August 29, 1996. With the merger of the V.A. World Bond Fund into the V.A. Strategic Income Fund, Mr. Cavanaugh and his team will allocate the fund's assets among domestic and foreign bonds, emphasizing bond sectors where they see the strongest opportunities at any given time. Q: How has the V.A. Strategic Income Fund performed? A: Although past performance does not guarantee future results, the V.A. Strategic Income Fund has been a steady performer. The fund's shares have posted average annual total returns of 10.50% for the 12-month period ending June 30, 1998 and 12.65% since inception on August 29, 1996.* To review the V.A. Strategic Income Fund in more detail, please refer to the John Hancock Declaration Trust prospectus and the V.A. Strategic Income Fund's most recent annual and semiannual reports, all of which are enclosed. * Performance figures assume all distributions are reinvested. The return and principal value of any mutual fund investment will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Q: How do I provide my voting instructions? A: Complete, sign and return the enclosed voting instruction card using the postage-paid envelope provided. Q: How will the merger happen? A: If the merger is approved, the insurance companies' V.A. World Bond Fund shares will be exchanged for V.A. Strategic Income Fund shares, using the funds' net asset value share prices as of the close of trading on March 26, 1999. This exchange will not affect the total dollar value of the insurance companies' investment or your rights under your variable contract or certificate. Q: Will the merger affect my contract or certificate rights? A: The insurance companies have advised the V.A. World Bond Fund that as contract or certificate owners in an annuity, you will continue to receive income payments according to the payout option you have chosen under the contract or certificate prospectus. The merger will not affect your contract or certificate rights, except that your variable payments will depend on the performance of the V.A. Strategic Income Fund instead of the V.A. World Bond Fund. Q: Will the merger have tax consequences? A: The merger is intended to qualify as a tax-free reorganization for federal income tax purposes and therefore will not result in the recognition of gain or loss by the funds or the insurance companies, nor will it affect your taxes as owner of a variable contract or certificate. Q: Will the transfer of my units from the V.A. World Bond Fund to the V.A. Strategic Income Fund be a taxable event? A: No! One of the many advantages of investing in a variable annuity is the ability to transfer your assets to any of the investment options available tax-free (no Form 1099R will be generated). Q: Will the transfer due to the merger count towards the 12 free transfers allowed per contract or certificate year? A: No, the merger transfer will be free and it will not count toward your allowable 12 free transfers per contract or certificate year on your Declaration Variable Annuity. Q: What if I don't want to have my units of the V.A. World Bond Fund transferred to the V.A. Strategic Income Fund? A: Prior to the merger, you may contact a Declaration Customer Service Representative at 1-800-824-0335, Monday through Friday between 8:00 a.m. and 6:00 p.m. Eastern Time and request a transfer of your V.A. World Bond Fund units to any of the 13 other Declaration investment portfolios or Fixed Account options (if available in your state). Please consult with your investment professional prior to reallocating your assets. JOHN HANCOCK V.A. WORLD BOND FUND (a series of John Hancock Declaration Trust) 101 Huntington Avenue Boston, MA 02199 NOTICE OF MEETING OF SHAREHOLDERS SCHEDULED FOR MARCH 18, 1999 This is the formal agenda for the fund's shareholder meeting. It tells contract owners and the insurance companies what matters will be voted on and the time and place of the meeting. The insurance companies are owners of the fund's shares. The insurance companies will vote their V.A. World Bond Fund shares as instructed by their contract or certificate owners, who are also referred to in the proxy materials as "shareholders" for this limited purpose. To the shareholders of John Hancock V.A. World Bond Fund: A shareholder meeting for V.A. World Bond Fund will be held at 101 Huntington Avenue, Boston, Massachusetts on Thursday, March 18, 1999 at 9:00 a.m., Eastern time, to consider the following: 1. A proposal to approve an Agreement and Plan of Reorganization between John Hancock V.A. World Bond Fund and John Hancock V.A. Strategic Income Fund. Under this Agreement, V.A. World Bond Fund would transfer all of its assets to V.A. Strategic Income Fund in exchange for shares of V.A. Strategic Income Fund. These shares would be distributed proportionately to the shareholders of V.A. World Bond Fund. V.A. Strategic Income Fund would also assume V.A. World Bond Fund's liabilities. V.A. World Bond Fund's Board of Trustees recommends that shareholders vote FOR this proposal. 2. Any other business that may properly come before the meeting. Shareholders of record as of the close of business on January 22, 1999 are entitled to vote at the meeting and any related follow-up meetings. Whether or not you expect to attend the meeting, please complete and return the enclosed proxy card (voting instruction card). If shareholders do not return their proxies in sufficient numbers, the fund will incur the cost of extra solicitations, which is indirectly borne by shareholders. By order of the Board of Trustees, /s/Susan S. Newton ------------------ Susan S. Newton Secretary February 12, 1999 VA09PX 2/99 PROXY STATEMENT OF JOHN HANCOCK V.A. WORLD BOND FUND (a series of John Hancock Declaration Trust) PROSPECTUS FOR JOHN HANCOCK V.A. STRATEGIC INCOME FUND (a series of John Hancock Declaration Trust) This proxy statement and prospectus contains the information shareholders should know before voting on the proposed reorganization of John Hancock V.A. World Bond Fund into John Hancock V.A. Strategic Income Fund. Please read it carefully and retain it for future reference. How the Reorganization Will Work o V.A. World Bond Fund will transfer all of its assets to V.A. Strategic Income Fund. V.A. Strategic Income Fund will assume V.A. World Bond Fund's liabilities. o V.A. Strategic Income Fund will issue shares to V.A. World Bond Fund in an amount equal to the value of V.A. World Bond Fund's shares. These shares will be distributed to V.A. World Bond Fund's shareholders in proportion to their holdings on the reorganization date. o The reorganization will be tax-free. o V.A. World Bond Fund will be liquidated and fund shareholders will become shareholders of V.A. Strategic Income Fund. Shares of V.A. Strategic Income Fund are not deposits or obligations of, or guaranteed or endorsed by, any bank or other depository institution. These shares are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Shares of V.A. Strategic Income Fund have not been approved or disapproved by the Securities and Exchange Commission. The Securities and Exchange Commission has not passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Why V.A. World Bond Fund's Trustees are Recommending the Reorganization V.A. World Bond Fund's Trustees believe that reorganizing the fund into a larger fund with similar investment policies will enable the shareholders of the fund to benefit from increased diversification, the ability to achieve better net prices on securities trades and economies of scale that may contribute to a lower expense ratio. Therefore, the Trustees recommend that V.A. World Bond Fund's shareholders vote FOR the reorganization.
--------------------------------------------------------------------------------------------- Where to Get More Information ------------------------------------------------ -------------------------------------------- Prospectus of V.A. World Bond Fund and V.A. In the same envelope as this proxy Strategic Income Fund dated May 1, 1998. statement and prospectus. Incorporated by reference into this proxy statement and prospectus. ------------------------------------------------ V.A. Strategic Income Fund's annual and semiannual reports to shareholders. ------------------------------------------------ V.A. World Bond Fund's annual and semiannual reports to shareholders. -------------------------------------------- ------------------------------------------------ A statement of additional information dated On file with the Securities and Exchange February 12, 1999. It contains additional Commission ("SEC") and available at no information about V.A. World Bond Fund and charge by calling 1-800-824-0335. V.A. Strategic Income Fund. Incorporated by reference into this proxy statement and prospectus. -------------------------------------------- ------------------------------------------------ To ask questions about this proxy statement Call our toll-free telephone and prospectus. number: 1-800-824-0335. ------------------------------------------------ --------------------------------------------
The date of this proxy statement and prospectus is February 12, 1999. TABLE OF CONTENTS Page ---- INTRODUCTION 4 SUMMARY 4 INVESTMENT RISKS 11 PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION 12 CAPITALIZATION 15 ADDITIONAL INFORMATION ABOUT THE FUNDS' BUSINESSES 16 BOARDS' EVALUATION AND RECOMMENDATION 16 VOTING RIGHTS AND REQUIRED VOTE 17 INFORMATION CONCERNING THE MEETING 17 OWNERSHIP OF SHARES OF THE FUNDS 19 EXPERTS 19 AVAILABLE INFORMATION 20 EXHIBITS A. Agreement and Plan of Reorganization between John Hancock V.A. World Bond Fund and John Hancock V.A. Strategic Income Fund (attached to this document). INTRODUCTION This proxy statement and prospectus is being used by V.A. World Bond Fund's Board of Trustees to solicit proxies to be voted at a special meeting of V.A. World Bond Fund's shareholders. This meeting will be held at 101 Huntington Avenue, Boston, Massachusetts on Thursday, March 18, 1999 at 9:00 a.m., Eastern time. The purpose of the meeting is to consider a proposal to approve an Agreement and Plan of Reorganization providing for the reorganization of V.A. World Bond Fund into V.A. Strategic Income Fund. Who is Eligible to Vote? Shareholders of record on January 22, 1999 (record date) are entitled to attend and vote at the meeting or any adjourned meeting. Each share is entitled to one vote. As of the record date, the insurance companies, on behalf of the separate accounts, were shareholders of record of V.A. World Bond Fund. The insurance companies will vote shares of V.A. World Bond Fund held by them in accordance with voting instructions received from contract owners for whose accounts the shares are held. The enclosed voting instruction card will be used by the insurance companies to receive voting instructions from contract owners. The notice of meeting, the proxy card (voting instruction card), the proxy statement and prospectus are being mailed to the insurance companies and contract owners on or about February 12, 1999. SUMMARY The following is a summary of more complete information appearing later in this proxy statement. Shareholders should read the entire proxy statement, Exhibit A and the enclosed documents carefully, because they contain details that are not in the summary. Information about rights of a holder of a variable contract can be obtained from the John Hancock Declaration Annuity Prospectus.
Comparison of V.A. World Bond Fund to V.A. Strategic Income Fund - ----------------------------- -------------------------------------- ---------------------------------------------- V.A. World Bond V.A. Strategic Income - ----------------------------- -------------------------------------- ---------------------------------------------- Business: A non-diversified series of John A diversified series of John Hancock Hancock Declaration Trust. The trust Declaration Trust. The trust is an open-end is an open-end investment company investment company organized as a organized as a Massachusetts Massachusetts business trust. business trust. - ----------------------------- -------------------------------------- ---------------------------------------------- Net assets as of June 30, $2.4 million. $10.8 million. 1998: - ----------------------------- -------------------------------------- ---------------------------------------------- Investment adviser and John Hancock Advisers, Inc. John Hancock Advisers, Inc. portfolio managers: In September, 1998, Mr. Cavanaugh Fredrick L. Cavanaugh, Jr. and Mr. Ho joined your fund's -Senior V.P. of adviser portfolio management team: -Joined team in 1996 -Joined adviser in 1986 Fredrick L. Cavanaugh, Jr. -Began career in 1975 -Senior V.P. of adviser -Joined team in 1998 Arthur N. Calavritinos, CFA -Joined adviser in 1986 -V.P. of adviser -Began career in 1975 -Joined team in 1996 -Joined adviser in 1988 James K. Ho, CFA -Began career in 1986 -Exec. V.P. of adviser -Joined team in 1998 -Joined adviser in 1985 -Began career in 1977 Anthony A. Goodchild -Senior V.P. of adviser -Joined team in 1994 -Joined adviser in 1994 -Began career in 1968 - ----------------------------- -------------------------------------- ---------------------------------------------- - ----------------------- ------------------------------------------------- -------------------------------------- V.A. World Bond Fund V.A. Strategic Income Fund - ----------------------- ------------------------------------------------- -------------------------------------- Investment objective/ The fund seeks a high total investment return, The fund seeks a high level of Primary investments: a combination of current income and capital current income. This objective can appreciation. This objective can be changed be changed without shareholder without shareholder approval. approval. The fund invests primarily (at least 65% of The fund invests primarily in: assets) in: o Foreign government and o Debt securities issued or guaranteed by corporate debt securities from foreign governments and companies, including developed and emerging markets; those in emerging markets; o U.S. Government and agency o U.S. Government and agency securities and securities; and municipal securities; and o U.S. junk bonds rated as low o Multinational organizations such as the as CC/Ca and their unrated World Bank. equivalents. The fund normally invests in securities denominated in at least three currencies, including the U.S. dollar. - ----------------------- ---------------------------------------------------------------------------------------- Foreign debt Each fund may invest in foreign debt securities without any percentage limit. Each securities: fund limits its investment in government securities of any one country to 25% of total assets. - ----------------------- ------------------------------------------------- -------------------------------------- Junk bonds: The fund may invest up to 35% of total assets The fund may invest without limit in in junk bonds rated as low as CCC/Caa and their junk bonds rated as low as CC/Ca and unrated equivalents. their unrated equivalents. - ----------------------- ------------------------------------------------- -------------------------------------- Equity securities: The fund does not invest in equity securities. The fund may invest up to 10% of net However, the fund may invest in preferred assets in U.S. or foreign equity stock, convertible securities and other debt securities. securities that have rights (warrants) to acquire equity securities. - ----------------------- ------------------------------------------------- -------------------------------------- Diversification: The fund is non-diversified and can invest more The fund is diversified and, with than 5% of total assets in securities of a respect to 75% of total assets, single issuer. cannot invest more than 5% of total assets in securities of a single issuer. - ----------------------- ------------------------------------------------- -------------------------------------- Pay-in-kind, delayed The fund may not invest in pay-in-kind, delayed The fund may invest in pay-in-kind, and zero coupon debt and zero coupon debt securities. delayed and zero coupon debt securities: securities. - ----------------------- ------------------------------------------------- -------------------------------------- - ---------------------- --------------------------------------------------- ------------------------------------ V.A. World Bond Fund V.A. Strategic Income Fund - ---------------------- ---------------------------------------------------------------------------------------- Illiquid securities: Each fund may invest up to 15% of net assets in illiquid securities. - ---------------------- ---------------------------------------------------------------------------------------- Financial futures Each fund may invest without limit in financial futures, options on futures and and related options; options on securities and indices. options on securities and indices: - ---------------------- ---------------------------------------------------------------------------------------- Currency contracts: Each fund may enter into currency contracts for hedging or speculative purposes. - ---------------------- ---------------------------------------------------------------------------------------- Structured Each fund may invest without limit in structured securities, which include indexed securities: and/or leveraged mortgage-backed and other debt securities. - ---------------------- ---------------------------------------------------------------------------------------- When-issued and Both funds may purchase when-issued securities and purchase or forward commitment sell securities in forward commitment transactions. transactions: - ---------------------- ---------------------------------------------------------------------------------------- Short-term trading: Neither fund is subject to any limitations on short-term trading. - ---------------------- ---------------------------------------------------------------------------------------- Repurchase Both funds may invest without limitation in repurchase agreements. agreements: - ---------------------- ---------------------------------------------------------------------------------------- Securities lending: Each fund may lend portfolio securities up to 33 1/3% of total assets. - ---------------------- ---------------------------------------------------------------------------------------- Short-term Each fund may invest without limit in cash and cash equivalents for temporary securities: defensive purposes. - ---------------------- ---------------------------------------------------------------------------------------- Borrowing and The funds are not permitted to borrow except from banks for temporary or short-term reverse repurchase purposes and only if after the borrowing there is asset coverage of at least 300%. agreements: Each fund is permitted to enter into reverse repurchase agreements in amounts not to exceed 33 1/3% of the value of the fund's total assets (including the amount borrowed). - ---------------------- ---------------------------------------------------------------------------------------- Mortgage-backed and Each fund may invest without limitation in mortgage-backed securities. V.A. Strategic asset-backed Income Fund may also invest without limit in asset-backed securities. securities: - ---------------------- ----------------------------------------------------------------------------------------
The Funds' Expenses Both funds pay various expenses. The first two expense tables appearing below show the expenses for the twelve-month period ended June 30, 1998, adjusted to reflect any changes. Future expenses may be greater or less. The examples contained in each expense table show what you would pay if you invested $10,000 over the various time periods indicated. Each example assumes that you reinvested all dividends and that the average annual return was 5%. The examples are for comparison purposes only and are not a representation of either fund's actual expenses or returns, either past or future. V.A. World Bond Fund Shareholder transaction expenses Maximum sales charge imposed on purchases (as a percentage of offering price) 0.00% Maximum sales charge imposed on reinvested dividends none Maximum deferred sales charge none Redemption fee none Exchange fee none Annual fund operating expenses (as a % of average net assets) Management fee 0.75% Other expenses 1.56% Total fund operating expenses 2.31% Expense reimbursement (at least until 12/31/99) (1) 1.31% Actual operating expenses 1.00% Example Year 1 Year 3 Year 5 Year 10 At end of period $102 $595 $1,116 $2,544 (1) The fund's adviser has agreed to limit other expenses to 0.25% for at least one year. V.A. Strategic Income Fund Shareholder transaction expenses Maximum sales charge imposed on purchases (as a percentage of offering price) 0.00% Maximum sales charge imposed on reinvested dividends none Maximum deferred sales charge none Redemption fee none Exchange fee none Annual fund operating expenses (as a % of average net assets) Management fee 0.60% Other expenses 0.53% Total fund operating expenses 1.13% Expense reimbursement (at least until 12/31/99) (1) 0.28% Actual operating expenses 0.85% Example Year 1 Year 3 Year 5 Year 10 At end of period $87 $331 $595 $1,350 (1) The fund's adviser has agreed to limit other expenses to 0.25% for at least one year. Pro Forma Expense Table The following expense table shows the pro forma expenses of V.A. Strategic Income Fund assuming that a reorganization with V.A. World Bond Fund occurred on June 30, 1997. The expenses shown in the table are based on fees and expenses incurred during the twelve months ended June 30, 1998, adjusted to reflect any changes. V.A. Strategic Income Fund's actual expenses after the reorganization may be greater or less than those shown. The example contained in the pro forma expense table shows what you would pay on a $10,000 investment if the reorganization had occurred on June 30, 1997. The example assumes that you reinvested all dividends and that the average annual return was 5%. The pro forma example is for comparison purposes only and is not a representation of V.A. Strategic Income Fund's actual expenses or returns, either past or future. V.A. Strategic Income Fund (PRO FORMA) (Assuming reorganization with V.A. World Bond Fund) Shareholder transaction expenses Maximum sales charge imposed on purchases (as a percentage of offering price) 0.00% Maximum sales charge imposed on reinvested dividends none Maximum deferred sales charge none Redemption fee none Exchange fee none Annual fund operating expenses (as a % of average net assets) Management fee 0.60% Other expenses 0.57% Total fund operating expenses 1.17% Expense reimbursement (at least until 12/31/99) (1) 0.32% Actual operating expenses 0.85% Pro Forma Example Year 1 Year 3 Year 5 Year 10 At end of period $87 $366 $665 $1,518 (1) The fund's adviser has agreed to limit other expenses to 0.25% for at least one year. The Reorganization o The reorganization is scheduled to occur at 5:00 p.m., Eastern time, on March 26, 1999, but may occur on any later date before October 31, 1999. V.A. World Bond Fund will transfer all of its assets to V.A. Strategic Income Fund. V.A. Strategic Income Fund will assume V.A. World Bond Fund's liabilities. The net asset value of both funds will be computed as of 5:00 p.m., Eastern time, on the reorganization date. o V.A. Strategic Income Fund will issue to V.A. World Bond Fund shares in an amount equal to the aggregate net asset value of V.A. World Bond Fund's shares. These shares will be distributed immediately to V.A. World Bond Fund's shareholders in proportion to their holdings on the reorganization date. As a result, shareholders of V.A. World Bond Fund will end up as shareholders of V.A. Strategic Income Fund. o After the reorganization is over, V.A. World Bond Fund will be terminated. o The reorganization will be tax-free and will not take place unless both funds receive a satisfactory opinion concerning the tax consequences of the reorganization from Hale and Dorr LLP, counsel to the funds. The following diagram shows how the reorganization would be carried out. V. A. World Bond V. A. World Bond Fund V.A. Strategic Income Fund transfers assets assets and liabilities Fund receives assets & liabilities to V.A. --------------->--------------- & assumes liabilities Strategic Income of V.A. World Bond Fund Fund Shareholders ---------------<--------------- Issues Shares V.A. World Bond Fund receives V.A. Strategic Income Fund shares and distributes them to its shareholders. Other Consequences of the Reorganization. Each fund pays monthly advisory fees equal to the following annual percentage of its average daily net assets: V.A. World Bond Fund--0.75% and V.A. Strategic Income Fund--0.60%. V.A. Strategic Income Fund's management fee rate of 0.60% and its pro forma management fee rate of 0.60% are lower than V.A. World Bond Fund's management fee rate of 0.75%. V.A. World Bond Fund's gross total annual operating expenses of 2.31% are substantially higher that those of V.A. Strategic Income Fund which are 1.13%. Even after the reduction of each fund's other expenses as a result of the adviser's voluntary agreement to limit the funds' other expenses, V.A. World Bond Fund's total annual operating expenses (1.00%) are higher than those of V.A. Strategic Income Fund (0.85%). After the reorganization, V.A. Strategic Income Fund's pro forma total annual operating expenses (0.85%) are less than those of V.A. World Bond Fund's gross total annual operating expenses (2.31%) and net total annual operating expenses (1.00%).
INVESTMENT RISKS The funds are exposed to various risks that could cause shareholders to lose money on their investments in the funds. The following table shows that the risks affecting each fund are similar and compares the risks affecting each fund. - ------------------------------- ---------------------------------------------- ------------------------------------- V.A. World Bond Fund V.A. Strategic Income Fund - ------------------------------- ------------------------------------------------------------------------------------ Risks of debt securities The value of the funds' portfolios will change in response to movements of the bond market. As with any fund that invests primarily in debt securities, a rise in interest rates typically causes the value of debt securities and hence the value of the fund to fall. A fall in interest rates typically causes the value of debt securities to rise. Debt securities held by the funds are also subject to the risk that the issuer of a security will have its credit rating downgraded, will default or will otherwise fail to meet its obligations. - ------------------------------- ------------------------------------------------------------------------------------ Risks of lower-rated below The value of below investment grade debt securities, also called junk bonds, investment grade debt fluctuates more than higher rated debt securities and there is a greater securities risk of loss of principal and income. Lower ratings reflect a greater possibility of an adverse change in the financial condition of the issuer. The market price and liquidity of below investment grade securities generally respond more to short-term developments affecting the issuer of below investment grade debt securities than of higher rated securities because these developments are perceived to have a closer relationship to the ability of an issuer to meet its obligations. ---------------------------------------------- ------------------------------------- V.A. World Bond Fund may invest up to 35% of V.A. Strategic Income Fund may its assets in these securities, has invested invest without limit in these in these securities in the past, and has securities. To the extent that been subject to these risks. the fund invests in these securities, it is exposed to these risks. - ------------------------------- ------------------------------------------------------------------------------------ Risks of equity securities The market value of equity securities may move up and down, sometimes rapidly and unpredictably. These fluctuations may cause the stock to be worth less than the price originally paid for it, or less than it was worth at an earlier time. ---------------------------------------------- ------------------------------------- V.A. World Bond Fund does not invest V.A. Strategic Income Fund may directly in equity securities. However, the invest up to 10% of its assets in fund may acquire equity securities as a equity securities. To the extent result of investing in convertible that the fund invests in these securities, preferred stock and other debt securities, it is exposed to these instruments with rights to acquire equity risks. securities attached. If the fund acquired equity securities, it would be exposed to these risks. - ------------------------------- ---------------------------------------------- ------------------------------------- Diversification risks The fund is non-diversified, which means The fund is diversified and not that it can invest more of its assets subject to the risk of in a single issuer than a fund that is non-diversification. diversified. To the extent the fund invests more of its assets in a single issuer, the fund's share price may be adversely affected by events affecting that issuer. - ------------------------------- ---------------------------------------------- ------------------------------------- - ------------------------------- ---------------------------------------------- ------------------------------------- V.A. World Bond Fund V.A. Strategic Income Fund - ------------------------------- ------------------------------------------------------------------------------------ Foreign securities and Each fund's investments in foreign securities are subject to the risks of adverse currency risks foreign government actions, political instability or a lack of adequate and accurate information. Also, currency exchange rate movements could reduce gains or create losses. The risks of international investing are higher in emerging markets such as those of Latin America and Southeast Asia. - ------------------------------- ------------------------------------------------------------------------------------ Risks of restricted and Each fund's investments in restricted and illiquid securities may be difficult or illiquid securities impossible to sell at a desirable time or a fair price. Restricted and illiquid securities also present a greater risk of inaccurate valuation. - ------------------------------- ------------------------------------------------------------------------------------ Risks of unleveraged Unleveraged derivative instruments involve the risk that a rise in interest rates derivative instruments will cause the value of the instrument to fall. A fall in interest rates will including asset-backed and typically cause the value of these instruments to rise. These instruments are mortgage-backed securities also subject to the risk that the issuer will default or otherwise fail to meet its obligations. In addition, mortgage-backed securities are subject to the risk that the life of the security will be extended beyond its expected repayment time. This typically occurs during periods of rising interest rates and often reduces the security's value. During periods of falling interest rates, unanticipated prepayments may occur which also reduces the security's value. - ------------------------------- ------------------------------------------------------------------------------------ Risks of derivative Many derivative instruments involve leverage, which increases market risks. instruments, including Leverage magnifies gains and losses on derivatives relative to changes in the financial futures, value of underlying assets. If a derivative is used for hedging purposes, changes options on futures, in the value of the derivative may not match those of the hedged asset. Over the securities and index options, counter derivatives may be illiquid or hard to value accurately. the swaps, caps, floors, In addition, other party may default on its obligations. If markets for collars and structured underlying assets do not move in the right direction, a fund's performance may securities be worse than if it had not used derivatives. - ------------------------------- ------------------------------------------------------------------------------------
PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION Description of Reorganization Shareholders are being asked to approve an Agreement and Plan of Reorganization, a copy of which is attached as Exhibit A. The Agreement provides for a reorganization on the following terms: o The reorganization is scheduled to occur at 5:00 p.m., Eastern time, on March 26, 1999, but may occur on any later date before October 31, 1999. V.A. World Bond Fund will transfer all of its assets to V.A. Strategic Income Fund and V.A. Strategic Income Fund will assume all of V.A. World Bond Fund's liabilities. This will result in the addition of V.A. World Bond Fund's assets to V.A. Strategic Income Fund's portfolio. The net asset value of both funds will be computed as of 5:00 p.m., Eastern time, on the reorganization date. o V.A. Strategic Income Fund will issue to V.A. World Bond Fund shares in an amount equal to the aggregate net asset value of V.A. World Bond Fund's shares. As part of the liquidation of V.A. World Bond Fund, these shares will be distributed immediately to shareholders of record of V.A. World Bond Fund in proportion to their holdings on the reorganization date. As a result, shareholders of V.A. World Bond Fund will end up as shareholders of V.A. Strategic Income Fund. o After the reorganization is over, the existence of V.A. World Bond Fund will be terminated. Reasons for the Proposed Reorganization The Board of Trustees of V.A. World Bond Fund believes that the proposed reorganization will be advantageous to the shareholders of V.A. World Bond Fund for several reasons. The Board of Trustees considered the following matters, among others, in approving the proposal. First, shareholders may be better served by a fund offering more diversification. V.A. Strategic Income Fund has a larger asset size than V.A. World Bond Fund and may invest in a broader range of securities including domestic high yield bonds and government bonds as well as foreign bonds and government bonds. Combining the funds' assets into a single investment portfolio may broaden diversification, making investors less vulnerable to weakness in any single sector of the bond market. Second, V.A. Strategic Income Fund shares have performed better than V.A. World Bond Fund over the past year and since inception on August 29, 1996. While past performance cannot predict future results, the Trustees believe that V.A. Strategic Income Fund is better positioned than V.A. World Bond Fund to continue to generate strong returns because of its greater flexibility to choose from among a broader range of investment opportunities. Third, a combined fund may offer economies of scale that can lead to better control over expenses than is possible for V.A. World Bond Fund alone. Both funds incur substantial costs for accounting, legal, transfer agency services, insurance, and custodial and administrative services. Fourth, investor interest in multi-sector income funds has been larger than that of funds focused on foreign bonds. Diminished investor demand could hinder V.A. World Bond Fund's prospects for asset growth and expense reduction in the future. Conversely, existing and anticipated demand for multi-sector bond funds should increase the potential for asset growth and expense reduction for V.A. Strategic Income Fund. The Trustees believe that V.A. Strategic Income Fund shareholders will also benefit from improved diversification as a result of the reorganization. Because V.A. Strategic Income Fund is a larger fund than V.A. World Bond Fund, the Trustees feel that the addition of V.A. World Bond Fund's assets may add to the diversification of V.A. Strategic Income Fund's overall portfolio. This opportunity provides an economic benefit to V.A. Strategic Income Fund and its shareholders. The Boards of Trustees of both funds also considered that the adviser will also benefit from the reorganization. For example, the adviser might realize time savings from a consolidated portfolio management effort and from the need to prepare fewer reports and regulatory filings as well as prospectus disclosure for one fund instead of two. The Trustees believe, however, that these savings will not amount to a significant economic benefit to the adviser. Comparative Fees and Expense Ratios. As discussed above in the Summary, the advisory fee rate paid by V.A. World Bond Fund is higher than the rate paid by V.A. Strategic Income Fund. V.A. Strategic Income Fund's management fee rate of 0.60% and its pro forma management fee rate of 0.60% are lower than V.A. World Bond Fund's management fee rate of 0.75%. World Bond Fund's gross total annual operating expenses of 2.31% are substantially higher that those of Strategic Income Fund which are 1.13%. Even after the reduction of each fund's other expenses as a result of the adviser's voluntary agreement to limit the funds' other expenses, World Bond Fund's total annual operating expenses (1.00%) are higher than those of Strategic Income Fund (0.85%). After the reorganization, Strategic Income Fund's pro forma total annual operating expenses (0.85%) are less than those of World Bond Fund's gross total annual operating expenses (2.31%) and net total annual operating expenses (1.00%). 13 V.A. World Bond Fund has not increased its asset size. The Trustees do not believe, given V.A. World Bond Fund's current size and historical growth rate, that V.A. World Bond Fund will grow to an asset size that would allow V.A. World Bond Fund to realize the benefits of economies of scale, including better control over expenses. The Trustees also do not believe that V.A. World Bond Fund will reach an asset size which will allow V.A. World Bond Fund to significantly broaden the diversification of its investment portfolio. Comparative Performance. The trustees also took into consideration the relative performance of V.A. World Bond Fund and V.A. Strategic Income Fund.
---------------------------------------- ----------------------------- --------------------------------- Average Annual Total Return V.A. World Bond Fund V.A. Strategic Income Fund ---------------------------------------- ----------------------------- --------------------------------- 1 year ended 6/30/98 3.35% 10.50% ---------------------------------------- ----------------------------- --------------------------------- Since inception on 8/29/96 3.90% 12.65% ---------------------------------------- ----------------------------- --------------------------------- V.A. World Bond Fund's performance has lagged behind the performance of V.A. Strategic Income Fund for the periods shown above.
Tax Status of the Reorganization The reorganization will be tax-free for federal income tax purposes and will not take place unless both funds receive a satisfactory opinion from Hale and Dorr LLP, counsel to the funds, substantially to the effect that: o The reorganization described above will be a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986 (the "Code"), and each fund will be "a party to a reorganization" within the meaning of Section 368 of the Code; o No gain or loss will be recognized by V.A. World Bond Fund upon (1) the transfer of all of its assets to V.A. Strategic Income Fund as described above or (2) the distribution by V.A. World Bond Fund of V.A. Strategic Income Fund shares to V.A. World Bond Fund's shareholders; o No gain or loss will be recognized by V.A. Strategic Income Fund upon the receipt of V.A. World Bond Fund's assets solely in exchange for the issuance of V.A. Strategic Income Fund shares and the assumption of all of V.A. World Bond Fund's liabilities by V.A. Strategic Income Fund; o The basis of the assets of V.A. World Bond Fund acquired by V.A. Strategic Income Fund will be the same as the basis of those assets in the hands of V.A. World Bond Fund immediately before the transfer; o The tax holding period of the assets of V.A. World Bond Fund in the hands of V.A. Strategic Income Fund will include V.A. World Bond Fund's tax holding period for those assets; o The shareholders of V.A. World Bond Fund will not recognize gain or loss upon the exchange of all their shares of V.A. World Bond Fund solely for V.A. Strategic Income Fund shares as part of the reorganization; 14 o The basis of V.A. Strategic Income Fund shares received by V.A. World Bond Fund's shareholders in the reorganization will be the same as the basis of the shares of V.A. World Bond Fund surrendered in exchange; and o The tax holding period of the V.A. Strategic Income Fund shares that V.A. World Bond Fund shareholders receive will include the tax holding period of the shares of V.A. World Bond Fund surrendered in the exchange, provided that the shares of V.A. World Bond Fund were held as capital assets on the reorganization date. Additional Terms of Agreement and Plan of Reorganization Conditions to Closing the Reorganization. The obligation of V.A. World Bond Fund to consummate the reorganization is subject to the satisfaction of certain conditions, including the performance by V.A. Strategic Income Fund of all its obligations under the Agreement and the receipt of all consents, orders and permits necessary to consummate the reorganization (see Agreement, paragraph 6). The obligation of V.A. Strategic Income Fund to consummate the reorganization is subject to the satisfaction of certain conditions, including V.A. World Bond Fund's performance of all of its obligations under the Agreement, the receipt of certain documents and financial statements from V.A. World Bond Fund and the receipt of all consents, orders and permits necessary to consummate the reorganization (see Agreement, paragraph 7). The obligations of both funds are subject to approval of the Agreement by the necessary vote of the outstanding shares of V.A. World Bond Fund, in accordance with the provisions of V.A. World Bond Fund's declaration of trust and by-laws. The funds' obligations are also subject to the receipt of a favorable opinion of Hale and Dorr LLP as to the federal income tax consequences of the reorganization (see Agreement, paragraph 8). Termination of Agreement. The Board of Trustees of either V.A. World Bond Fund or V.A. Strategic Income Fund may terminate the Agreement (even if the shareholders of V.A. World Bond Fund have already approved it) at any time before the reorganization date, if that board believes that proceeding with the reorganization would no longer be advisable. Expenses of the Reorganization. The funds' adviser will be responsible for the expenses incurred in connection with entering into and carrying out the provisions of the Agreement, whether or not the reorganization occurs. These expenses are estimated to be approximately $45,400 in total. CAPITALIZATION The following table sets forth the capitalization of each fund as of June 30, 1998, and the pro forma combined capitalization of both funds as if the reorganization had occurred on that date. The table reflects pro forma exchange ratios of approximately 0.9176 V.A. Strategic Income Fund shares being issued for each share of V.A. World Bond Fund. If the reorganization is consummated, the actual exchange ratios on the reorganization date may vary from the exchange ratios indicated. This is due to changes in the market value of the portfolio securities of both funds between June 30, 1998 and the reorganization date, changes in the amount of undistributed net investment income and net realized capital gains of both funds during that period resulting from income and distributions, and changes in the accrued liabilities of both funds during the same period. June 30, 1998 V.A. V.A. Strategic World Bond Income Pro Forma ---------- ------ --------- Net Assets $2,457,606 $10,844,333 $13,301,939 Net Asset Value Per Share $9.64 $10.51 $10.51 Shares Outstanding 254,904 1,032,151 1,266,051 It is impossible to predict how many shares of V.A. Strategic Income Fund will actually be received and distributed by V.A. World Bond Fund on the reorganization date. The table should not be relied upon to determine the amount of V.A. Strategic Income Fund shares that will actually be received and distributed. ADDITIONAL INFORMATION ABOUT THE FUNDS' BUSINESSES The following table shows where in each fund's prospectus you can find additional information about the business of each fund.
- ------------------------------------------- ----------------------------------------------------------------------- Type of Information Headings in Combined Prospectus for V.A. World Bond Fund and V.A. Strategic Income Fund - ------------------------------------------- ----------------------------------------------------------------------- Organization and operation Organization and Management of the Fund - ------------------------------------------- ----------------------------------------------------------------------- Investment objective and policies Investment Policies and Strategies - ------------------------------------------- ----------------------------------------------------------------------- Portfolio Management Organization and Management of the Fund - ------------------------------------------- ----------------------------------------------------------------------- Investment adviser and distributor Organization and Management of the Fund - ------------------------------------------- ----------------------------------------------------------------------- Expenses The Fund's Expenses - ------------------------------------------- ----------------------------------------------------------------------- Custodian and transfer agent Organization and Management of the Fund - ------------------------------------------- ----------------------------------------------------------------------- Dividends, distributions and taxes Dividends and Taxes - ------------------------------------------- -----------------------------------------------------------------------
BOARDS' EVALUATION AND RECOMMENDATION For the reasons described above, the Board of Trustees of V.A. World Bond Fund, including the Trustees who are not "interested persons" of either fund or the adviser ("independent trustees"), approved the reorganization. In particular, the Trustees determined that the reorganization was in the best interests of V.A. World Bond Fund and that the interests of V.A. World Bond Fund's shareholders would not be diluted as a result of the reorganization. Similarly, the Board of Trustees of V.A. Strategic Income Fund, including the independent trustees, approved the reorganization. They also determined that the reorganization was in the best interests of V.A. Strategic Income Fund and that the interests of V.A. Strategic Income Fund's shareholders would not be diluted as a result of the reorganization. - -------------------------------------------------------------------------------- The trustees of V.A. World Bond Fund recommend that the shareholders vote for the proposal to approve the agreement and plan of reorganization. - -------------------------------------------------------------------------------- VOTING RIGHTS AND REQUIRED VOTE Each share of V.A. World Bond Fund is entitled to one vote. Approval of the above proposal requires the affirmative vote of a majority of the shares of V.A. World Bond Fund outstanding and entitled to vote. For this purpose, a majority of the outstanding shares of V.A. World Bond Fund means the vote of the lesser of (1) 67% or more of the shares present at the meeting, if the holders of more than 50% of the shares of the fund are present or represented by proxy, or (2) more than 50% of the outstanding shares of the fund. Shares of V.A. World Bond Fund represented in person or by proxy, including shares that abstain or do not vote with respect to the proposal, will be counted for purposes of determining whether there is a quorum at the meeting. Accordingly, an abstention from voting has the same effect as a vote against the proposal. If the required approval of shareholders is not obtained, V.A. World Bond Fund will continue to engage in business as a separate mutual fund and the Board of Trustees will consider what further action may be appropriate. INFORMATION CONCERNING THE MEETING Voting at the Meeting Contract owners use the voting instruction card as a ballot to give the insurance company voting instructions for those shares attributable to the variable contract as of the record date. When the contract owner completes the voting instruction card and sends it to the insurance company, the insurance company votes its proxy in accordance with the contract owner's instructions. If the contract owner completes and signs the voting instruction card, the shares attributable to the variable contract will be voted as instructed. If the contract owner merely signs and returns the card, the life insurance company will vote those shares in favor of the proposal. If the contract owner does not return the card, the life insurance company will vote those shares in the same proportion as shares for which instructions were received from other contract owners. Shares of V.A. World Bond Fund which are not attributable to variable contracts will be represented and voted by one of the insurance companies in the same proportion as the voting instructions received from contract owners. These shares include shares purchased with contributions made as seed capital to the fund by the adviser. Solicitation of Proxies In addition to the mailing of these proxy materials, proxies may be solicited by telephone, by fax or in person by the trustees, officers and employees of V.A. World Bond Fund and by personnel of V.A. World Bond Fund's investment adviser, John Hancock Advisers, Inc. and its transfer agent, John Hancock Servicing Center. The Servicing Center, together with a third party solicitation firm, has agreed to provide proxy solicitation services to V.A. World Bond Fund at a cost of approximately $1,000. Revoking Proxies Each V.A. World Bond Fund shareholder signing and returning a proxy has the power to revoke it at any time before it is exercised: o By filing a written notice of revocation with V.A. World Bond Fund's transfer agent, John Hancock Servicing Center, P.O. Box 9298, Boston, Massachusetts 02210, or o By returning a duly executed proxy with a later date before the time of the meeting, or o If a shareholder has executed a proxy but is present at the meeting and wishes to vote in person, by notifying the secretary of V.A. World Bond Fund (without complying with any formalities) at any time before it is voted. Being present at the meeting alone does not revoke a previously executed and returned proxy. Contract owners may revoke their voting instructions at any time before the proxy is voted by the life insurance company by following the procedure outlined above for revoking proxies. Outstanding Shares and Quorum As of January 22, 1999, 271,444.479 shares of beneficial interest of V.A. World Bond Fund were outstanding. Only shareholders of record on January 22, 1999 (the "record date") are entitled to notice of and to vote at the meeting. A majority of the outstanding shares of V.A. World Bond Fund that are entitled to vote will be considered a quorum for the transaction of business. Other Business V.A. World Bond Fund's Board of Trustees knows of no business to be presented for consideration at the meeting other than the proposal. If other business is properly brought before the meeting, proxies will be voted according to the best judgment of the persons named as proxies. Adjournments If a quorum is not present in person or by proxy at the time any session of the meeting is called to order, the persons named as proxies may vote those proxies that have been received to adjourn the meeting to a later date. If a quorum is present but there are not sufficient votes in favor of the proposal, the persons named as proxies may propose one or more adjournments of the meeting to permit further solicitation of proxies concerning the proposal. Any adjournment will require the affirmative vote of a majority of V.A. World Bond Fund's shares at the session of the meeting to be adjourned. If an adjournment of the meeting is proposed because there are not sufficient votes in favor of the proposal, the persons named as proxies will vote those proxies favoring the proposal in favor of adjournment, and will vote those proxies against the reorganization against adjournment. OWNERSHIP OF SHARES OF THE FUNDS As of January 22, 1999, the following companies owned, on behalf of certain separate accounts, more than 5% of the funds' outstanding shares:
Name and Address Number of Shares Percentage of Fund ---------------- ---------------- ------------------ V.A. World Bond Fund - ------------------------------------------- -------------------------------------- -------------------------------------- John Hancock Mutual Life Insurance 21,514.996 7.90% Company (JHMLICO) 200 Clarendon Street Boston, Massachusetts 02117 - ------------------------------------------- -------------------------------------- -------------------------------------- John Hancock Variable Life Insurance 21,617.975 8.00% Company (JHVLICO) 197 Clarendon Street Boston, Massachusetts 02117 - ------------------------------------------- -------------------------------------- -------------------------------------- John Hancock Advisers, Inc. (JHA) 228,311.508 84.10% 101 Huntington Avenue Boston, Massachusetts 02199 - ------------------------------------------- -------------------------------------- -------------------------------------- V.A. Strategic Income Fund - ------------------------------------------- -------------------------------------- -------------------------------------- John Hancock Mutual Life Insurance 532,202.394 34.70% Company (JHMLICO) 200 Clarendon Street Boston, Massachusetts 02117 - ------------------------------------------- -------------------------------------- -------------------------------------- John Hancock Variable Life Insurance 775,373.422 49.30% Company (JHVLICO) 197 Clarendon Street Boston, Massachusetts 02117 - ------------------------------------------- -------------------------------------- -------------------------------------- John Hancock Advisers, Inc. (JHA) 245,698.693 16.00% 101 Huntington Avenue Boston, Massachusetts 02199 - ------------------------------------------- -------------------------------------- --------------------------------------
However, these companies, on behalf of the separate accounts, will vote their V.A. World Bond Fund shares only in accordance with voting instructions received from the contract or certificate owners. For this reason, the companies do not exercise control over the funds by virtue of their record ownership of fund shares. EXPERTS The financial statements and the financial highlights of each fund as of December 31, 1997 and for the periods then ended and the unaudited financial statements and financial highlights of each fund as of June 30, 1998 are incorporated by reference into this proxy statement and prospectus. The financial statements and financial highlights as of December 31, 1997 have been independently audited by Ernst & Young LLP as stated in their reports appearing in the statement of additional information. These financial statements and financial highlights have been included in reliance on their report given on their authority as experts in accounting and auditing. AVAILABLE INFORMATION Each fund is subject to the informational requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 and files reports, proxy statements and other information with the SEC. These reports, proxy statements and other information filed by the funds can be inspected and copied (at prescribed rates) at the public reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C., and at the following regional offices: Chicago (500 West Madison Street, Suite 1400, Chicago, Illinois); and New York (7 World Trade Center, Suite 1300, New York, New York). Copies of this material can also be obtained by mail from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, copies of these documents may be viewed on-screen or downloaded from the SEC's Internet site at (http://www.sec.gov). [LOGO] JOHN HANCOCK FUNDS A Global Investment Management Firm JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY VOTE THIS CARD TODAY! A PROMPT RESPONSE WILL SAVE THE FUND THE EXPENSE OF ADDITIONAL MAILINGS John Hancock V.A. World Bond Fund Special Meeting of Shareholders to Be Held on March 18, 1999 Indicate your voting instructions below by filling in the appropriate boxes using blue or black ink or dark pencil. This voting instruction card, if properly executed, will be voted in the manner directed by the contract owner. If this voting instruction is executed and no direction is made, this voting instruction will be voted for all proposals and in the discretion of the insurance company upon such other business as may properly come before the meeting. Proposal 1. To approve an Agreement and Plan of Reorganization between John Hancock V.A. World Bond Fund and John Hancock V.A. Strategic Income Fund ("V.A. Strategic Income Fund"). Under this Agreement, V.A. World Bond Fund would transfer all of its assets to V.A. Strategic Income Fund in exchange for shares of V.A. Strategic Income Fund. These shares would be distributed proportionately to the shareholders of V.A. World Bond Fund. V.A. Strategic Income Fund would also assume V.A. World Bond Fund's liabilities. FOR [ ] AGAINST [ ] ABSTAIN [ ] PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THIS CARD. [LOGO] JOHN HANCOCK FUNDS A Global Investment Management Firm JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY VOTE THIS CARD TODAY! A PROMPT RESPONSE WILL SAVE THE FUND THE EXPENSE OF ADDITIONAL MAILINGS JOHN HANCOCK V.A. WORLD BOND FUND A series of John Hancock Declaration Trust These voting instructions will be used by the insurance companies in connection with a solicitation of proxies by the trustees of the Fund. The undersigned, revoking previous instructions, hereby instructs the above-referenced insurance companies to vote all the shares of beneficial interest of John Hancock V.A. World Bond Fund ("V.A. World Bond Fund") attributable to the undersigned's variable annuity contract at the Special Meeting of Shareholders (the "Meeting") of V.A. World Bond Fund to be held at 101 Huntington Avenue, Boston, Massachusetts, on Thursday, March 18, 1999 at 9:00 a.m., Eastern time, and at any adjournment(s) of the Meeting. Receipt of the Proxy Statement dated February 12, 1999 is hereby acknowledged. If not revoked, this card shall be voted for the proposal. Thomas J. Lee and Michele G. Van Leer, and each of them, with power of substitution in each, are hereby instructed to vote the shares held in the fund portfolio attributable to the undersigned at the special meeting of shareholders and at any adjornment thereof, as specified on the reverse side. PLEASE SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE Date , 1999 NOTE: Signature(s) should agree with the name(s) printed herein. 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. -------------------------------------------- -------------------------------------------- Signature(s) S:/corpsec/proxy/v.a.votcard -----END PRIVACY-ENHANCED MESSAGE-----