[Federal Register Volume 68, Number 72 (Tuesday, April 15, 2003)]
[Notices]
[Pages 18308-18313]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-9261]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-26003; File No. 812-12906]


John Hancock Life Insurance Company, et al.

April 10, 2003.
AGENCY: The Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order of approval pursuant to 
section 26(c) of the Investment Company Act of 1940 (the ``Act'').

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Applicants: John Hancock Life Insurance Company (``John Hancock''), 
John Hancock Variable Life Insurance Company (``JHVLICO''), John 
Hancock Variable Life Account S (``Account S''), John Hancock Variable 
Life Account UV (``Account UV''), John Hancock Variable Life Account U 
(``Account U''), John Hancock Variable Annuity Account JF (``Account 
JF''), John Hancock Variable Annuity Account I (``Account I''), and 
John Hancock Variable Annuity Account H (``Account H'') (collectively, 
``Applicants'').

Filing Date: The application was filed on December 2, 2002 and amended 
and restated on April 10, 2003.

Summary of Application:  Applicants request an order permitting (1) 
Account S, Account UV, Account U, Account JF, and Account H (together 
with Account I, the ``Separate Accounts'') to substitute shares of the 
International Equity Index Fund (the ``Hancock International Fund'') 
for their shares of the Templeton Foreign Securities Fund (the 
``Templeton Foreign Fund''); (2) Account JF and Account H to substitute 
shares of the International Opportunities Fund (the ``Hancock 
International Opportunities Fund'') for their shares of the Templeton 
Developing Markets Securities Fund (the ``Templeton Developing Fund'');

[[Page 18309]]

and (3) all of the Separate Accounts to substitute shares of the AIM 
V.I. Premier Equity Fund (together with the Hancock International Fund 
and the Hancock International Opportunities Fund, the ``Replacing 
Funds'') for their shares of the AIM V.I. Growth Fund (together with 
the Templeton Foreign Fund and the Templeton Developing Fund, the 
``Replaced Funds'').

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Secretary of the 
Commission and serving Applicants with a copy of the request, 
personally or by mail. Hearing requests must be received by the 
Commission by 5:30 p.m. on April 30, 2003 and should be accompanied by 
proof of service on Applicants in the form of an affidavit or, for 
lawyers, a certificate of service. Hearing requests should state the 
nature of the writer's interest, the reason for the request, and the 
issues contested. Persons who wish to be notified of a hearing may 
request notification by writing to the Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549-0609; Applicants, c/o Arnold R. 
Bergman, Esq., John Hancock Life Insurance Company, John Hancock Place, 
PO Box 111, Boston MA 02117. Copy to Foley & Lardner, 3000 K Street, 
NW., Washington, DC, 20007, for the attention of Thomas C. Lauerman, 
Esq.

FOR FURTHER INFORMATION CONTACT: Harry Eisenstein, Senior Counsel, at 
(202) 942-0552 or Zandra Bailes, Branch Chief, Office of Insurance 
Products, Division of Investment Management at (202) 942-0670.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application is available for a fee from the 
Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549 (Phone: (202) 942-8090).

Applicants' Representations

    1. John Hancock is a stock life insurance company organized under 
the laws of Massachusetts. John Hancock is a publicly-held financial 
services company whose primary business is life insurance and 
annuities.
    2. JHVLICO is a wholly-owned subsidiary of John Hancock organized 
under the laws of Massachusetts. JHVLICO is a stock life insurance 
company whose primary business is life insurance and annuities.
    3. Account S is a separate investment account established by 
JHVLICO under Massachusetts law to fund variable life insurance 
policies issued by JHVLICO. Account S is registered under the Act as a 
unit investment trust (File No. 811-7782).
    4. The variable life insurance policies Funded by Account S that 
are affected by this application are as follows: Medallion Executive 
Variable Life (``MEVL''), MEVL II, and MEVL III, interests under all of 
which are also registered under the Securities Act of 1933 (the ``1933 
Act'') (File No. 333-425); Majestic Variable Universal Life (``MVUL''), 
and MVUL 98, interests under both of which are also registered under 
the 1933 Act (File No. 333-15075); Variable Master Plan Plus 
(``VCOLI''), interests under which are also registered under the 1933 
Act (File No. 33-79108); Majestic VCOLI (``MVCOLI''), interests under 
which are also registered under the 1933 Act (File No. 333-60274); and 
Variable Estate Protection (``VEP''), Majestic Variable Estate 
Protection (``MVEP''), MVEP98, and VEP Plus, interests under all of 
which also are registered under the 1933 Act (File No. 33-64366); and 
VEP Edge, interests under which are also registered under the 1933 Act 
(File No. 33-55172).
    5. Account UV is a separate investment account established by John 
Hancock under Massachusetts law to fund variable life insurance 
policies issued by John Hancock. Account UV is registered under the Act 
as a unit investment trust (File No. 811-7766).
    6. The variable life insurance policies funded by Account UV that 
are affected by this application are as follows: VEP (NY), interests 
under which are also registered under the 1933 Act (File No. 33-64364); 
VEP Plus--NY, interests under which are also registered under the 1933 
Act (File No. 333-73082); VEP Edge--NY, interests under which are also 
registered under the 1933 Act (File No. 333-73072); MVUL98-NY, 
interests under which are also registered under the 1933 Act (File No. 
333-42378); MVEP98-NY, interests under which are also registered under 
the 1933 Act (File No. 333-73444); MEVL III-NY, interests under which 
are also registered under the 1933 Act (File No. 333-63654); MVL Plus--
NY, interests under which are also registered under the 1933 Act (File 
No. 70734); MVL Edge--NY, interests under which are also registered 
under the 1933 Act (File No. 333-70746); and VCOLI-NY, interests under 
which are also registered under the 1933 Act (File No. 333-67744).
    7. Account U is a separate investment account established by 
JHVLICO under Massachusetts law to fund variable life insurance 
policies issued by JHVLICO. Account U is registered under the Act as a 
unit investment trust (File No. 811-3068).
    8. The Account U variable life insurance policies affected by this 
application are as follows: MVL Plus, and MVL Edge, interests under 
both of which are also registered under the 1933 Act (File Nos. 33-
76660 and 333-52128, respectively); and eVariable Life, interests under 
which are also registered under the 1933 Act (File No. 333-50312).
    9. Account JF is a separate investment account established by 
JHVLICO under Massachusetts law to fund variable annuity contracts 
issued by JHVLICO. Account JF is registered under the Act as a unit 
investment trust (File No. 811-07451).
    10. The Account JF variable annuity contracts affected by this 
application are as follows: Revolution Access, Revolution Extra, 
Revolution Standard, and Revolution Value, interests under all of which 
are also registered under the 1933 Act (File Nos. 333-84769, 333-84767, 
333-84763, and 333-81127, respectively).
    11. Account I is a separate investment account established by 
JHVLICO under Massachusetts law to fund variable annuity contracts 
issued by JHVLICO. Account I is registered under the Act as a unit 
investment trust (File No. 811-8696).
    12. The only Account I variable life insurance policy affected by 
this application is eVariable Annuity, interests under which are also 
registered under the 1933 Act (File No. 333-16949).
    13. Account H is a separate investment account established by John 
Hancock under Massachusetts law to fund variable annuity contracts 
issued by John Hancock. Account H is registered under the Act as a unit 
investment trust (File No. 811-07711).
    14. The Account H contracts affected by this application are as 
follows: Revolution Access, Revolution Extra, Revolution Standard, and 
Revolution Value, interests under all of which are also registered 
under the 1933 Act (File Nos. 333-84771, 333-84783, 333-84765 and 333-
81103, respectively).
    15. Purchase payments under the variable life insurance policies 
and variable annuity contracts identified above (collectively, the 
``Contracts'') are allocated to one or more subaccounts 
(``Subaccounts'') of the Separate Accounts.
    16. Income, gains and losses, whether or not realized, from assets 
allocated to a Separate Account are, as provided in the Contracts, 
credited to or charged

[[Page 18310]]

against that Separate Account without regard to other income, gains or 
losses of John Hancock or JHVLICO. The assets maintained in the 
Separate Accounts will not be charged with any liabilities arising out 
of any other business conducted by John Hancock or JHVLICO. 
Nevertheless, all of the obligations of each of those companies arising 
under the Contracts, including its commitment to make cash value 
payments, annuity payments or death benefit payments, are general 
corporate obligations of that company. Accordingly, all of the assets 
of John Hancock or JHVLICO, as the case may be, are available to meet 
its obligations under its Contracts.
    17. Each Separate Account meets the definition of ``separate 
account'' contained in section 37 of the Act.
    18. Each of the Contracts permits its owner to allocate the 
Contract's accumulated value among numerous available Subaccounts, each 
of which invests in a different investment portfolio (``Fund'') of an 
underlying mutual fund. Each of the Contracts has at least 32 different 
Subaccounts that, together with their corresponding Funds (including 
the applicable Replaced Funds), are currently available for this 
purpose.
    19. Each Contract permits its owner to transfer the Contract's 
accumulated value from one Subaccount to another Subaccount of the 
issuing Separate Account at any time, subject to certain potential 
restrictions and charges described below. No sales charge applies to 
such a transfer of accumulated value among Subaccounts.
    20. The only other charges on such transfers are, under certain 
Contracts, flat dollar amounts that may be assessed to help defray the 
administrative costs of effecting the transfers. In some cases, the 
Contracts permit up to a specified number of free transfers in a 
Contract year, before any such transfer charge may be imposed. Also, 
under certain Contracts, no transfer is permitted if it would result in 
the Contract being invested in more than 18 investment options over the 
life of the Contract (``Lifetime Cap'') or, after the annuity payment 
commencement date, in more than four investment options at any one 
time.
    21. John Hancock or JHVLICO, as applicable, has reserved the right 
to make certain changes, including to substitute, for the shares held 
in any Subaccount, the shares of another Fund or the shares of another 
underlying mutual fund, as stated in each prospectus for the Contracts 
contained in its applicable registration statement under the 1933 Act.

The Funds

    22. The Templeton Foreign Fund and the Templeton Developing Fund 
are separate Portfolios of the Franklin Templeton Variable Insurance 
Products Trust (the ``Templeton Trust''). The Templeton Trust is 
registered as a management investment company under the Act (File No. 
811-5583), and the shares in each of its portfolios (including the 
Templeton Foreign Fund and the Templeton Developing Fund) are also 
registered under the 1933 Act (File No. 33-23493).
    23. Both the Templeton Foreign Fund and the Templeton Developing 
Fund issue more than one ``class'' of shares, which differ only as to 
charges they impose for sales and administrative services. In each 
case, the Contracts use only the ``Class 2'' shares, which impose an 
asset-based sales charge pursuant to rule 12b-1 under the Act (``Rule 
12b-1 fee'') equal to .25% per annum of the Fund's average daily net 
assets. Apart from the investment management fees and other Fund 
operating expenses, which also affect the net asset values of their 
shares, these Funds impose no other charges or deductions on their 
shares.
    24. The AIM V.I. Growth Fund and the AIM V.I. Premier Equity Fund 
are separate portfolios of the AIM Variable Insurance Funds (``AIM V.I. 
Funds''). The AIM Variable Insurance Funds is registered as a 
management investment company under the Act (File Nos. 811-07452), and 
the shares in each of its Portfolios (including the AIM V.I. Growth 
Fund and AIM V.I. Premier Equity Fund) are also registered under the 
1933 Act (File No. 33-57340).
    25. Each of the AIM V.I. Growth Fund and the AIM Premier Equity 
Fund issues more than one ``class'' of shares, which differ only as to 
charges that they impose for sales and administrative services. In each 
case, the Contracts use only the ``Series I'' shares of the AIM V.I. 
Growth Fund and the AIM V.I. Premier Equity Fund, which do not impose 
any Rule 12b-1 fees or any other fees or charges, other than investment 
management fees and other operating expenses that affect the net asset 
value of their shares.
    26. The Hancock International Fund and the Hancock International 
Opportunities Fund are portfolios of the John Hancock Variable Series 
Trust I (the ``Hancock Trust''). The Hancock Trust is registered as a 
management investment company under the Act (File No. 811-04990), and 
the shares in each of its portfolios (including the Hancock 
International Fund and the Hancock International Opportunities Fund) 
are also registered under the 1933 Act (File No. 33-2081).
    27. Both the Hancock International Fund and the Hancock 
International Opportunities Fund offer only one class of shares, and 
that class does not impose any Rule 12b-1 fee or any other fees or 
charges, other than investment management fees and other operating 
expenses that affect the net asset value of their shares.

The Funds' Investment Program

    28. The Templeton Foreign Fund is managed by Templeton Investment 
Counsel, LLC, which has no affiliation with John Hancock.
    29. The investment objective of the Templeton Foreign Fund is long-
term capital growth. The Fund is an international fund that seeks to 
achieve its objective by investing primarily in equity securities of 
large to medium size companies outside the U.S. The Fund's current 
policy is, under normal circumstances, to invest at least 80% of its 
assets in non-U.S. companies. The Fund's investment philosophy is 
``bottom-up,'' long-term, and value oriented.
    30. The Hancock International Fund is managed by John Hancock and 
sub-advised by Independence Investment LLC, which is indirectly wholly-
owned by John Hancock. The investment objective of the Hancock 
International Fund is to track the performance of a broad-based equity 
index of foreign companies in developed and emerging markets. This 
Portfolio follows a ``passive'' investment strategy of owning a 
representative number of stocks in the index it seeks to track. The 
Fund is normally fully invested at all times.
    31. The index used by the Hancock International Fund is a composite 
that is weighted 90% to the Morgan Stanley Capital International 
(``MSCI'') Europe, Australia and Far East (``EAFE'') Gross Domestic 
Product (``GDP'') Index. The MSCI EAFE GDP Index is an index of non-
U.S. equities in developed countries, within which each country's 
representation is weighted in proportion to its gross-domestic product, 
while companies within each country are weighted by market 
capitalization. The remaining 10% of the composite consists of the MSCI 
Emerging Markets Free (``EMF'') Index. The MSCI EMF Index is a market 
capitalization-weighted index of emerging market stocks.
    32. The Templeton Developing Fund is managed by Templeton Asset 
Management Ltd., which has no affiliation with John Hancock. The 
investment objective of the Templeton Developing Fund is long-term 
capital

[[Page 18311]]

appreciation. The Fund seeks to attain this objective by investing 
primarily in stocks of ``emerging markets'' companies, and, under 
normal circumstances, it invests at least 80% of its assets in such 
companies. The Fund's investment philosophy is ``bottom-up,'' value 
oriented, and long-term.
    33. The Hancock International Opportunities Fund is managed by John 
Hancock and is sub-advised by T. Rowe Price International, Inc. The 
investment objective of this Fund is long-term capital appreciation. 
The Fund seeks to achieve this objective by investing primarily in the 
stocks of large established and medium sized companies located outside 
the U.S., primarily in developed countries and, to a lesser extent, in 
emerging markets. The Fund's investment philosophy entails fundamental 
research on individual companies, combined with stock selection of 
companies with certain growth characteristics. In addition, the Hancock 
International Opportunities Fund broadly diversifies, whereas the 
Templeton Developing Fund may, at times, have significant investments 
in one or more countries and or sectors.
    34. The AIM V.I. Growth Fund is managed by AIM Advisors, Inc., 
which has no affiliation with John Hancock. The investment objective of 
the AIM V.I. Growth Fund is capital growth. The Fund seeks to meet its 
objective by investing principally in seasoned and better capitalized 
companies considered to have strong earnings momentum. The portfolio 
managers focus on companies that have experienced above-average growth 
in earnings and have excellent prospects for future growth.
    35. The AIM V.I. Premier Equity Fund also is managed by AIM 
Advisors, Inc. The investment objective of the AIM V.I. Premier Equity 
Fund is long-term capital growth. Income is a secondary investment 
objective. The Fund seeks to meet its objective by investing, normally, 
at least 80% of its net assets in equity securities, including 
convertible securities. The portfolio managers focus on undervalued 
equity securities.

Fund Financial Information

    36. The net assets of each Fund as of December 31, 2003 were as 
follows:

------------------------------------------------------------------------
                          Fund                              Net assets
------------------------------------------------------------------------
Templeton Foreign......................................     $697,780,000
Hancock International..................................       98,917,000
Templeton Developing...................................      306,406,000
Hancock International Opportunities....................       87,288,000
AIM V.I. Growth........................................      363,992,000
AIM V.I. Premier Equity................................    1,530,359,000
------------------------------------------------------------------------

    37. Of the net assets shown above for each Replaced Fund, the 
following amounts were attributable to Contracts, and thus would have 
been transferred pursuant to the Substitutions described herein: 
Templeton Foreign $7,830,000; Templeton Developing, $3,823,000; and AIM 
V.I., Growth $27,559,000.
    38. The total fees and expenses of the Funds for the twelve months 
ended December 31, 2003, expressed as an annual percentage of average 
daily net assets, were as follows:

------------------------------------------------------------------------
                                                                Total
                                                              expenses
                                                             (including
                           Fund                               advisory
                                                              fees and
                                                             12b-1 fees)
                                                              (Percent)
------------------------------------------------------------------------
Templeton Foreign.........................................          1.13
Hancock International.....................................          *.28
Templeton Developing......................................          1.83
Hancock International Opportunities.......................         *1.24
AIM V.I. Growth...........................................           .91
AIM Premier Equity........................................          .85
------------------------------------------------------------------------
* Includes expense reimbursement. This percentage would otherwise have
  been .46% for the Hancock International Fund and 1.25% for the Hancock
  International Opportunities Fund. No expenses or fees for the other
  funds were waived or reimbursed.

The expense reimbursement arrangements referred to above are provided 
for in each affected Fund's Investment Management Agreement.
    39. The Fund's investment advisory and Rule 12b-1 fee rates (as an 
annual percentage of average daily net assets) are as follows:

------------------------------------------------------------------------
                                                         Rule 12b-1 fee
             Fund                 Advisory fees rate          rate
------------------------------------------------------------------------
Templeton Foreign.............  .75% of first $200     .25%.
                                 million, .675% of
                                 next $1.1 billion,
                                 and .60% of
                                 additional amounts.
Hancock International.........  .18% of the first      None.
                                 $100 million, 15% of
                                 the next $100
                                 million, and .11% of
                                 additional amounts.
Templeton Developing..........  1.25%................  .25%.
Hancock International           1.30% of first $20     None.
 Opportunities.                  million, 1.15% of
                                 next $30 million,
                                 and 1.05% of
                                 additional amounts.
AIM V.I. Growth and AIM V.I.    .65% of the first      None.
 Premier Equity.                 $250 million and
                                 .60% of additional
                                 amounts.
------------------------------------------------------------------------

    40. Neither the Templeton Foreign Fund nor the Hancock 
International Fund has achieved performance that is clearly superior or 
inferior to that of the other.
    41. The overall performance record of the Hancock International 
Opportunities Fund has been superior to that of the Templeton 
Developing Fund.
    42. The overall performance record of the AIM V.I. Premier Equity 
Fund has been superior to that of the AIM V.I. Growth Fund.

Terms of Substitutions

    43. Each Substitution will take place at the applicable Funds' 
relative per share net asset values determined on the date of the 
Substitution in accordance with section 22 of the Act and rule 22c-1 
thereunder. Each Substitution will be effected by having each 
Subaccount that invests in a Replaced Fund redeem its shares of the 
Replaced Fund at the net asset value calculated on the date of the 
Substitution and purchase shares of the appropriate Replacing Fund at 
the net asset value calculated on the same date.
    44. John Hancock and JHVLICO will pay all expenses and transaction 
costs of the Substitutions, including all legal, accounting, and 
brokerage expenses relating to the Substitutions, the below-described 
disclosure documents, and this application. No costs will be borne 
directly or indirectly by Contract owners.
    45. Affected Contract owners will not incur any fees or charges as 
a result of the Substitutions, and the Substitutions will result in no 
change in their accumulated values under their Contracts. Nor will the 
rights or the obligations of John Hancock or JHVLICO under the 
Contracts, or the insurance benefits to Contract owners, be altered in 
any way. The Substitutions will not cause the fees and charges under 
the Contracts currently being paid by Contract owners to be greater 
after the Substitutions than before the Substitutions.

[[Page 18312]]

    46. The Substitutions requested in this application will be 
described in supplements to the applicable prospectuses for the 
Contracts filed with the Commission or in other supplemental disclosure 
documents, (collectively, ``Supplements'') and mailed to all affected 
Contract owners. Each Supplement will give the relevant Contract owners 
notice of each Substitution that would affect their respective 
Contracts and will describe the reasons for engaging in that 
Substitution. The Supplements will also inform existing Contract owners 
with values allocated to a Subaccount investing in a Replaced Fund that 
no additional amounts may be allocated to the Subaccounts that invest 
in that Fund on or after the date of Substitution.
    47. In addition, the affected Contract owners will have (and the 
Supplements will inform them that they have) an opportunity to 
reallocate their accumulated value:
    [sbull] Prior to a Substitution, from the Subaccount investing in 
the Replaced Fund in that Substitution, or
    [sbull] For 30 days after a Substitution, from a Subaccount 
investing in the Replacing Fund in that Substitution

to one or more Subaccounts investing in other Funds available under the 
applicable Contract without the reallocation resulting in any transfer 
charge or limitation, counting toward the Lifetime Cap, or diminishing 
the number of free transfers that otherwise may be made in a given 
Contract year.
    48. Each affected Contract owner will also be provided with a 
prospectus for each relevant Replacing Fund, which will accompany or 
precede the Supplement discussed above.
    49. Within five days after a Substitution, John Hancock and JHVLICO 
each will send to its affected Contract owners written confirmation 
that the Substitutions have occurred. The confirmations will also 
identify the shares of the Replaced Portfolios that have been 
eliminated and the shares of the Replacing Portfolios that have been 
substituted. That confirmation will reiterate the free transfer rights 
disclosed in the Supplements that such owners will have previously 
received.
    50. The Substitutions will in no way alter the tax treatment of 
owners in connection with their Contracts, and no tax liability will 
arise for Contract owners as a result of the Substitutions.

Applicants' Legal Analysis

    1. According to Applicants, the legislative history makes it clear 
that the purpose of section 26(c) is to protect the expectation of 
investors in a unit investment trust that the unit investment trust 
will accumulate shares of a particular issuer. Applicants state that 
section 26(c) does this by preventing unscrutinized substitutions, 
which might, in effect, force shareholders dissatisfied with the 
replacing security to redeem their shares, thereby possibly incurring 
either a loss of any sales load deducted from their original 
investment, an additional sales load upon reinvestment of the 
redemption proceeds, or both.
    2. Applicants submit that all of the Substitutions will benefit 
Contract owners by moving them to Funds with lower overall expenses and 
equal or better performance record and prospects.
    3. Applicants also contend that the investment characteristics of 
each Replacing Fund are very similar to those of the corresponding 
Replaced Fund. In this connection, Applicants point out that the 
Hancock International Opportunities Fund is somewhat more conservative 
than the Templeton Developing Fund, and that the AIM V.I. Premier 
Equity Fund is somewhat more conservative than the AIM V.I. Growth 
Fund. However, Applicants assert that the Hancock International Fund 
should not be considered to be either more or less conservative than 
the Templeton Foreign Fund.
    4. Applicants assert that the Substitutions will be effected in a 
manner that has no adverse economic consequences for Contract owners. 
In this regard, Applicants will afford affected Contract owners 
protection against increased expenses and changes, under terms 
described in Applicants' Condition 1, below.
    5. Applicants note that Contract owners who do not wish to 
participate in a Replacing Fund will have an opportunity to reallocate 
their accumulated value among other available Subaccounts without the 
imposition of any charge or limitation.
    6. The Substitution from AIM V.I. Growth Fund is to the much larger 
AIM V.I. Premier Equity Fund, which, according to Applicants, has 
potential advantages to Contract owners in terms of economies of scale 
and diversification of portfolio investments. Applicants acknowledge 
that The Templeton Developing Fund is larger than the Hancock 
International Opportunities Fund and that the Templeton Foreign Fund is 
larger than the Hancock International Fund, which would replace it. 
Nevertheless, Applicants point out that, even without any reimbursement 
arrangement, the expense ratio of each Replaced Fund is higher than 
that of the corresponding Replacing Fund.
    7. To summarize, Applicants submit (a) that the Substitutions will 
benefit the affected Contract owners and will not entail any of the 
abuses against which section 26(c) is addressed, and (b) that the 
approvals Applicants request under section 26(c) are consistent with 
the protection of investors and the purposes fairly intended by the 
policy and provisions of the Act.

Applicants' Conditions

    As conditions to the approvals that Applicants seek,
    1. For each fiscal period (not to exceed a fiscal quarter) during 
the 24 months following the date of Substitution into the Hancock 
International Fund and the Hancock International Opportunities Fund, 
each of John Hancock and JHVLICO will adjust the Contract values 
invested in either of such Funds as a result of the Substitutions, to 
the extent necessary to effectively reimburse the affected owners for 
their proportionate share of any amount by which the annual rate of the 
Replacing Fund's total operating expenses (after any expense waivers or 
reimbursements) for that fiscal period, as a percentage of the Fund's 
average daily net assets, plus the annual rate of any asset-based 
charges (excluding any such charges that are for premium taxes) 
deducted under the terms of the owner's Contract for that fiscal 
period, exceed the sum of:
    [sbull] The annualized rate of the corresponding Replaced Fund's 
total operating expenses, as a percentage of such replaced Fund's 
average daily net assets, for the twelve months ended December 31, 
2002; plus
    [sbull] The annual rate of any asset-based charges (excluding any 
such charges that are for premium taxes) deducted under that Contract 
for such twelve months.
    2. For a period of three years following the date of the 
Substitution of the AIM V.I. Premier Equity Fund for the AIM V.I. 
Growth Fund, neither John Hancock nor JHVLICO will receive any direct 
or indirect benefits from AIM V.I. Premier Equity Fund, any investment 
adviser or underwriter to that Fund, or any ``affiliated person'' (as 
that term is in section 2(a)(3) of the Act) of any of them, that exceed 
the rate of any benefits that such insurance company directly or 
indirectly has been receiving from AIM V.I. Growth Fund, any investment 
adviser or underwriter to that Fund, or any affiliated person of any of 
them. For this purpose, ``benefits'' shall be construed to include any 
investment advisory fees, payments pursuant to rule 12b-1 plans, 
shareholder or other service fees,

[[Page 18313]]

administrative fees, revenue sharing payments, or other similar 
payments in connection with assets subject to the Substitution (whether 
such benefits are with respect to the AIM V.I. Premier Equity Fund or 
part of an overall relationship with AIM V.I. Funds, any investment 
adviser or underwriter to any of such Fund, or any affiliated person of 
any of them). In this connection, Applicants also represent that 
neither such Substitution nor the selection of AIM V.I. Premier Equity 
Fund as a Replacing Fund have been motivated by the receipt or promised 
receipt by John Hancock, JHVLICO or any of their affiliated persons of 
any benefit or other thing of value from AIM V.I. Premier Equity Fund, 
any investment adviser or underwriter to such Fund, or any affiliated 
person of any of them.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-9261 Filed 4-14-03; 8:45 am]
BILLING CODE 8010-01-P