<PAGE> 1
John Hancock Global Resources Fund, March 1, 1995
John Hancock High Yield Bond Fund, March 1, 1995
John Hancock High Yield Tax-Free Fund, March 1, 1995
John Hancock Government Income Fund, March 1, 1995
John Hancock Emerging Growth Fund, March 1, 1995
John Hancock Growth and Income Fund, January 1, 1995
John Hancock Government Securities Trust, September 30, 1994
John Hancock Investment Quality Bond Fund, September 30, 1994
John Hancock U.S. Government Trust, September 30, 1994
John Hancock Intermediate Government Trust, September 30, 1994
John Hancock Adjustable U.S. Government Trust, September 30, 1994
John Hancock Capital Growth, April 29, 1994
John Hancock California Tax Free Income Fund, April 29, 1994
John Hancock Tax Free Bond Fund, April 15, 1994
Supplement to Class A and Class B Prospectus
The "Waiver of Initial Sales Charge" section under PURCHASE OF SHARES is
supplemented as follows:
Effective March 15, 1995, participant directed defined contribution
plans with at least 100 eligible employees at the inception of the Fund
account may purchase Class A shares of the Fund without an initial sales
charge but if the shares are redeemed within 12 months after the end of the
calendar year in which the purchase was made, a contingent deferred sales
charge will be imposed at the rate for Class A shares described in the
prospectus.
March 15, 1995
<PAGE> 2
JOHN HANCOCK
GROWTH AND INCOME FUND
A Series of John Hancock Investment Trust
101 Huntington Avenue Boston, Massachusetts
- --------------------------------------------------------------------------------
John Hancock Growth and Income Fund (the "Fund"), a series of John Hancock
Investment Trust, seeks as its investment objective, to obtain the highest total
return, a combination of capital appreciation and current income, consistent
with reasonable safety of capital. The Fund attempts to achieve this investment
objective by allocating its investments between common stocks, fixed-income
securities and money market instruments, depending upon economic conditions and
the general outlook for both interest rates and potential return on common stock
investments. The Fund may, in pursuit of its objective, enter into reverse
repurchase agreements and options transactions and invest significantly in
foreign securities including foreign forward currency contracts. These
investment policies and techniques, particularly those of a derivative nature
(i.e., options and forward contracts) may involve a greater degree of risk than
those in more conservative approaches. John Hancock Investment Trust (the
"Trust") is a registered investment company presently consisting of a single
portfolio of investments.
ALTERNATIVE PURCHASE PLAN. The Fund offers two classes of shares with
alternative purchase and distribution fee arrangements. These differences permit
an investor to choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor expects to
hold the shares and other circumstances. Shares of the Fund may be purchased at
the next determined net asset value per share, plus a sales charge which, at the
election of the investor, may be imposed either (i) at the time of purchase in
the case of the Class A Shares (the initial sales charge alternative) or (ii) on
a contingent deferred basis in the case of the Class B Shares (the deferred
sales charge alternative). See "Purchase of Shares -- Alternative Purchase Plan"
in this Prospectus for further details about the Alternative Purchase Plan.
This Prospectus provides investors with the basic information they should know
before investing in the Fund. INVESTORS SHOULD READ IT AND KEEP IT FOR FUTURE
REFERENCE. A Statement of Additional Information dated January 1, 1995,
containing further information about the Fund has been filed with the Securities
and Exchange Commission and is incorporated by reference into this Prospectus.
Copies may be obtained without charge by contacting the Fund at the address or
telephone number listed in the back of this Prospectus. The Fund's investment
adviser is John Hancock Advisers, Inc. (the "Investment Adviser"). John Hancock
Funds, Inc. acts as principal distributor of shares of the Fund. (See
"Summary -- Investment Adviser").
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR FINANCIAL INSTITUTION, NOR ARE SHARES OF THE
FUND FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
---------------------
PROSPECTUS DATED JANUARY 1, 1995
<PAGE> 3
SUMMARY
- --------------------------------------------------------------------------------
THE TRUST. The Trust, a Massachusetts business trust, is registered with the
Securities and Exchange Commission as an open-end, diversified, management
investment company.
INVESTMENT OBJECTIVE. The investment objective of the Fund is to obtain the
highest total investment return, a combination of capital appreciation and
current income, consistent with reasonable safety of capital, primarily through
investing in a managed portfolio of equity and fixed-income securities.
SPECIAL INVESTMENT TECHNIQUES. The Fund may, in pursuit of its investment
objective, engage in the purchase and sale of call and put options, including
options on debt securities indexes and stock indexes.
INVESTMENT ADVISER. John Hancock Advisers, Inc. (the "Investment Adviser")
serves as investment adviser and receives a monthly fee from the Fund at an
annual rate of 5/8 of 1% of the Fund's average daily net assets. The Investment
Adviser presently manages a broad range of mutual funds having total assets of
approximately $13 billion. (See "The Fund and its Management.")
DISTRIBUTION ARRANGEMENTS. The Fund offers two classes of shares, "Class A
Shares" and "Class B Shares," through the Fund's distributor, John Hancock
Funds, Inc. (the "Distributor"). Class A Shares are subject to an initial sales
charge of up to 5.75% at the time of purchase and bear the expense of an ongoing
Rule 12b-1 distribution service fee at an annual rate of up to .25% of the
average daily net assets of the Fund allocable to the Class A Shares. Class B
Shares do not incur a sales charge when they are purchased but (i) are generally
subject to a sales charge if they are redeemed within six years of purchase (a
"contingent deferred sales charge" or "CDSC") and (ii) are subject to an
aggregate distribution and service fees of up to 1% of the Fund's average daily
net assets allocable to the Class B Shares annually. The contingent deferred
sales charges for Class B Shares decline from 5% during the first year of
investment to zero after the sixth year (5%, 4%, 3%, 3%, 2%, 1%), (see
"Alternative Purchase Plan" on page 14). Shares of either class may be purchased
through selected financial services firms having dealer agreements with the
Distributor. The minimum initial purchase amount for either class of shares is
$1,000, with subsequent investments of $50 or more. (See "Purchase of Shares.")
Class B Shares automatically exchange for Class A Shares after the eight-year
period following the initial purchase of Class B Shares.
REDEMPTION OF SHARES. Shares of the Fund in any amount may be redeemed at any
time at the net asset value per share next determined after the redemption
request is received in proper form by The Shareholder Services Group (the
"Transfer Agent.") In certain cases, however, redemption proceeds from the Class
B Shares will be reduced by the amount of any applicable contingent deferred
sales charge (see "Redemption and Repurchase of Shares.")
RISK FACTORS. Certain investment techniques and policies of the Fund such as
Repurchase Agreements, Reverse Repurchase Agreements, Lending of Portfolio
Securities, Foreign Securities, Options Transactions and Purchases of Warrants
are associated with specific risks, of which the investor should be aware. The
distinctive characteristics of options on securities indexes create additional
risks that are not present with stock options or debt securities options. (See
"Investment Practices, Techniques and Restrictions.") The level of risk
associated with the foregoing may be greater than that of an investment company
with a more conservative approach.
The above is qualified in its entirety by the detailed information appearing
elsewhere in this prospectus and in the Statement of Additional Information.
2
<PAGE> 4
<TABLE>
FUND EXPENSES
- -------------------------------------------------------------------------------------------------------
The following table illustrates the various expenses and fees a shareholder of the Fund would bear
directly or indirectly. The expenses and fees set forth in the table are for the fiscal year ended
August 31, 1994.
<CAPTION>
CLASS A CLASS B
----------------- -----------------
(INITIAL SALES (DEFERRED SALES
CHARGE CHARGE
ALTERNATIVE) ALTERNATIVE)
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)........... 5.75% None
Sales Charge Imposed on Reinvested Dividends.... None None
Maximum Contingent Deferred Sales Charge
(as a percentage of offering price)........... None 5.00%
Redemption Fee.................................. None None
Exchange Fee.................................... None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees(2).............................. 0.63% 0.63%
12b-1 Fees(3)................................... 0.25% 1.00%
Other Expenses.................................. 0.43% 0.43%
---- ----
Total Fund Operating Expenses................... 1.31% 2.06%
==== ====
</TABLE>
<TABLE>
EXAMPLE A:(4)
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return and redemption
at the end of each time period.
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A.......................................... $70 $97 $125 $206
Class B.......................................... $71 $95 $131 $220*
</TABLE>
<TABLE>
EXAMPLE B:(4)
You would pay the following expenses on the same investment assuming no redemptions:
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A.......................................... $70 $97 $125 $206
Class B.......................................... $21 $65 $111 $220*
<FN>
- ---------------
(1) Class A Shares have reduced initial sales charges for purchases in excess of $50,000. Purchases
of $1 million or more are not subject to a sales charge; however, a contingent deferred sales
charge of 1% will be applied to redemptions within 12 months of such purchase (as described
under "Initial Sales Charge Alternative -- Class A Shares"). The deferred sales charge on
Class B Shares declines from 5% during the first year to 0% in the seventh year after date of
purchase in the following manner (5%, 4%, 3%, 3%, 2%, 1%). See "Information About Shares of
the Fund."
(2) See "The Fund and Its Management -- Investment Adviser."
(3) See "The Fund and Its Management -- Distributor and Distribution Plans."
(4) Expenses in Example above should not be considered a representation of past or future expenses.
Actual expenses may be greater or less than those shown above. Use of assumed annual return (5%)
is mandated by the Securities and Exchange Commission. LONG-TERM SHAREHOLDERS OF CLASS B SHARES
MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGE PERMITTED BY
APPLICABLE REGULATORY AUTHORITIES.
* Assumes tax-free automatic exchange of Class B Shares for Class A Shares
after the eight-year period following the initial purchase of Class B
Shares. If the exchange is declined, such Class B expenses would be $239.
</TABLE>
3
<PAGE> 5
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
The following financial highlights for the Class A Shares of John Hancock Growth and Income Fund (formerly, Transamerica Growth
and Income Fund) for each of the 10 years in the period ended August 31, 1994 have been audited by Ernst & Young LLP, independent
auditors for the Fund, whose unqualified report thereon and other financial statements of the Fund appear in the Statement of
Additional Information.
CLASS A SHARES
--------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
--------------------------------------------------------------------------------------------------
1994(1) 1993(1) 1992(1) 1991 1990 1989 1988 1987 1986 1985
-------- ------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share income and capital
changes for a Class A Share
outstanding during each
year:
Net asset value, beginning of
year........................ $ 12.08 $ 12.43 $ 11.77 $ 9.87 $ 10.19 $ 8.83 $ 12.04 $ 11.11 $ 10.42 $ 9.11
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income....... 0.32 0.40 0.32 0.20 0.20 0.55 0.50 0.42 0.35 0.50
Net realized and unrealized
gain (loss) on
investments............... (0.61) 1.12 0.89 2.07 (0.18) 1.42 (1.73) 1.77 1.48 1.45
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations.......... (0.29) 1.52 1.21 2.27 0.02 1.97 (1.23) 2.19 1.83 1.95
LESS DISTRIBUTIONS:
Dividends from net
investment income......... (0.37) (0.42) (0.25) (0.19) (0.27) (0.61) (0.49) (0.38) (0.36) (0.57)
Distributions from realized
gains..................... -- (1.45) (0.30) (0.18) (0.07) -- (1.49) (0.88) (0.78) (0.07)
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions... (0.37) (1.87) (0.55) (0.37) (0.34) (0.61) (1.98) (1.26) (1.14) (0.64)
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
year........................ $ 11.42 $ 12.08 $ 12.43 $ 11.77 $ 9.87 $ 10.19 $ 8.83 $ 12.04 $ 11.11 $ 10.42
======== ======== ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN(2)............... (2.39)% 13.64% 10.47% 23.80% 0.18% 23.47% (9.86)% 22.58% 19.90% 22.43%
======== ======== ======= ======= ======= ======= ======= ======= ======= =======
Ratios and Supplemental Data:
Ratio of expenses to average
net assets.................. 1.31% 1.29% 1.34% 1.38% 1.29% 1.12% 1.29% 1.21% 1.12% 1.16%
Ratio of net investment income
to average net assets....... 2.82% 3.43% 2.75% 1.90% 1.96% 6.07% 5.45% 3.86% 3.53% 5.14%
Portfolio turnover............ 195% 107% 119% 70% 69% 214% 120% 138% 150% 168%
Net Assets, end of year (in
thousands).................. $121,160 $115,780 $89,682 $77,461 $63,150 $70,513 $69,555 $90,974 $69,516 $56,386
<FN>
- ---------------
(1) Per share information has been calculated using the average number of shares outstanding.
(2) Total return does not include the effect of the initial sales charge.
</TABLE>
4
<PAGE> 6
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
The following financial highlights for the Class B Shares of John Hancock Growth
and Income Fund (formerly, Transamerica Growth and Income Fund) for each of the
three years in the period ended August 31, 1994 and the period August 22, 1991
through August 31, 1991 have been audited by Ernst & Young LLP, independent
auditors for the Fund, whose unqualified report thereon and other financial
statements of the Fund appear in the Statement of Additional Information.
<TABLE>
<CAPTION>
CLASS B SHARES
-------------------------------------------------
PERIOD FROM
AUGUST 22,
YEAR ENDED AUGUST 31, 1991 TO
-------------------------------- AUGUST 31,
1994 1993 1992 1991(2)
-------- ------- ------- -----------
<S> <C> <C> <C> <C>
Per share income and capital changes for a Class B Share
outstanding during each period:(1)
Net asset value, beginning of period........................ $ 12.10 $ 12.44 $ 11.77 $ 11.52
INCOME FROM INVESTMENT OPERATIONS:
Net investment income....................................... 0.24 0.30 0.23 0.00
Net realized and unrealized gain (loss) on investments...... (0.61) 1.12 0.89 0.25
-------- ------- ------- -------
Total from Investment Operations..................... (0.37) 1.42 1.12 0.25
LESS DISTRIBUTIONS:
Dividends from net investment income........................ (0.29) (0.31) (0.15) --
Distributions from realized gains........................... -- (1.45) (0.30) --
-------- ------- ------- ---------
Total Distributions.................................. (0.29) (1.76) (0.45) 0.00
-------- ------- ------- ---------
Net asset value, end of period................................ $ 11.44 $ 12.10 $ 12.44 $ 11.77
======== ======= ======= =======
TOTAL RETURN(3)............................................... (3.11)% 12.64% 9.67% 2.17%
======== ======= ======= =======
RATIOS AND SUPPLEMENTAL DATA:
Ratio of expenses to average net assets....................... 2.06% 2.19% 2.07% 0.06%
Ratio of net investment income to average net assets.......... 2.07% 2.53% 2.02% 0.04%
Portfolio turnover............................................ 195% 107% 119% 70%
Net Assets, end of period (in thousands)...................... $114,025 $65,010 $29,826 $ 7,690
<FN>
- ---------------
(1) Per share information has been calculated using the average number of shares outstanding.
(2) Financial highlights, including total return, have not been annualized. Portfolio turnover is for the year
ended August 31, 1991.
(3) Total return does not include the effect of the contingent deferred sales charge.
</TABLE>
5
<PAGE> 7
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The objective of the Fund is to obtain the highest total return, a combination
of capital appreciation and current income, consistent with reasonable safety of
capital. The Fund seeks to achieve its objective by allocating its assets
between equity and fixed-income securities, including money market instruments.
The Fund is viewed by the Investment Adviser as being designed primarily, but
not exclusively, for the long-term investor who wants foremost among his or her
holdings a base or central investment which may be termed a "core portfolio."
While there is no limitation as to the proportion of the Fund's portfolio which
may be invested in any type of security (unless otherwise stated below), the
Fund does not intend to concentrate its investments in any particular industry.
Depending upon the judgment of the Investment Adviser as to general market and
economic conditions and other factors, the Fund may emphasize growth-oriented or
income-oriented investments at different times and in varying degrees in pursuit
of its objective.
EQUITY INVESTMENTS. Under normal circumstances, the Fund's equity investments
will consist of common and preferred stocks which have yielded their holders a
dividend return within the preceding 12 months and have the potential to
increase dividends in the future; however, non-income-producing securities may
be held for anticipated increase in value. (See "Fund Investment
Characteristics.")
FIXED-INCOME INVESTMENTS. The Fund may invest in fixed-income securities
consisting of (1) debt securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities and (2) corporate bonds, notes and debentures
and other debt securities (which may have common stock or other equity
conversion privileges,) determined to be appropriate investments in view of its
investment objective. In addition, the Fund may also invest in depository type
obligations of banks and savings and loan associations, as well as other high
quality money market instruments consisting of short-term obligations of the
U.S. government or its agencies, banker's acceptances (each being of investment
grade) and commercial paper rated at least P-1 by Moody's Investors Service,
Inc. ("Moody's") or A-1 by Standard and Poor's Ratings Group ("S&P"). (See
"Fund Investment Characteristics.")
Although the Fund, invests primarily in securities traded in U.S. financial
markets, it may invest up to 25% of its assets (and up to 35% during times of
adverse U.S. market conditions as determined by the Investment Adviser) in
equity and fixed income securities principally traded in foreign markets.
Although the Fund's flexible asset allocation investment policy allows its
portfolio to be invested substantially in stocks, bonds, or money market
securities at any given time, the Investment Adviser expects that over longer
periods (barring long-term adverse market conditions), the largest portion of
the Fund's portfolio will consist of equity securities. The Fund strives to
accomplish its investment objective with reasonable safety of capital through
continual reassessment of the Fund's asset allocation as well as through
constant supervision, careful selection and broad diversification of its
investments. Inasmuch as the Fund seeks to provide for its shareholders an
"all-weather" investment program that is responsive to all market conditions,
there can be no assurance that it will achieve its investment objectives.
Because the values of the securities in which the Fund invests will fluctuate,
the Fund's net asset value per share at the time shares are redeemed may be more
or less than the net asset value per share at the time of purchase.
In pursuing its investment objective, the Fund may invest in "restricted
securities," purchase warrants, invest in instruments subject to repurchase
agreements, lend its portfolio securities and write (sell) covered options and
purchase options, including
6
<PAGE> 8
options on debt securities indexes and stock indexes. These investment
techniques may involve a greater degree of risk than those inherent in more
conservative investment approaches. (See "Investment Practices and
Restrictions.")
The extent to which the Fund will be able to achieve its investment objective
will depend upon the Investment Adviser's ability to evaluate and develop the
information it receives into a successful investment program.
FUND INVESTMENT CHARACTERISTICS. The Fund generally invests in equity and debt
securities including convertible securities that are listed on U.S. securities
exchanges or traded in the over-the-counter market. Foreign securities in which
the Fund may invest may be listed on foreign securities exchanges or traded in
the over-the-counter market.
The Fund considers its investment objective (consistent with safety of capital)
to place limitation on its investments in corporate fixed-income securities as
to quality of such portfolio holdings. Thus, in general, the portion of the
Fund's investments in corporate fixed-income securities will be those of
investment grade quality, that is, rated at least Baa by Moody's and BBB by S&P.
The Fund may, however, purchase securities rated lower than BBB or Baa only
where, in the opinion of the Investment Adviser, the rating does not accurately
reflect the true quality of the credit of the issuer and that these securities
are determined to be of comparable investment grade quality; and provided that
no more than 5% of the Fund's total assets are invested in these securities. The
Fund will not invest in any securities rated lower than B by either Moody's or
S&P. The Fund may invest in unrated corporate fixed-income securities only if,
in the opinion of the Investment Adviser, these securities are determined to be
of comparable investment grade quality. Of these securities eligible for
investment by the Fund, bonds rated BBB or Baa or lower and unrated securities
can pose more risks than higher quality securities and are considered, to
varying degrees, speculative in that changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than in the case of higher quality securities. See the
Appendix in the Statement of Additional Information for a description of
ratings.
Transactions in options may be entered into on U.S. exchanges and in the
over-the-counter market. Over-the-counter transactions involve certain risks
which may not be present in an exchange environment. The Fund intends to limit
its investment in over-the-counter options, together with other illiquid
securities, to 10% of the Fund's assets.
The Investment Adviser intends to fully manage the Fund's portfolio by employing
investment flexibility in response to ever-changing market conditions while
maintaining relatively low volatility in the value of portfolio assets, in view
of the Fund's investment objective regarding reasonable safety of capital. The
Fund's portfolio turnover (i.e., change in securities held by the Fund) will not
ordinarily be a limiting factor in selecting securities. As a result of this
investment strategy, portfolio turnover rate of the Fund may vary considerably
from year to year. It is not possible to predict accurately future rates of
portfolio turnover. However, the Fund's portfolio turnover rate may exceed 150%,
which would result in increased brokerage commissions and expenses to the Fund
(as well as the possible realization of taxable short-term capital gains) that
would not normally be incurred by other investment companies with lower
portfolio turnover rates.
Because either growth-oriented or income-oriented investments of the Fund may be
emphasized more than (or to the temporary exclusion of) the other during any
given period of time, total return of the Fund will consequently reflect the
degree of growth or income produced by such investments. Investors should
consider their investment needs, e.g., steady income or tax considerations
making ordinary income more or less desirable than capital gains, before
purchasing shares of the Fund.
7
<PAGE> 9
INVESTMENT PRACTICES, TECHNIQUES AND RESTRICTIONS
- --------------------------------------------------------------------------------
The Fund's investments are subject to the following practices, techniques and
restrictions and may involve certain risks. The Statement of Additional
Information contains more detailed information about these practices, including
limitations designed to reduce these risks. Each of the investment practices
described in this section, unless otherwise specified, is deemed to be a
fundamental policy and may not be changed without shareholder approval.
PURCHASES OF WARRANTS. The Fund's investment policies permit the purchase of
rights and warrants, which represent rights to purchase the common stock of
companies at designated prices. No such purchase will be made by the Fund,
however, if the Fund's holdings of warrants (valued at lower of cost or market)
would exceed 5% of the value of the Fund's total net assets as a result of the
purchase. In addition, the Fund will not purchase a warrant or right which is
not listed on the New York or American Stock Exchanges if the purchase would
result in the Fund's owning unlisted warrants in an amount exceeding 2% of its
net assets.
REPURCHASE AGREEMENTS AND RESTRICTED SECURITIES. When participating in
repurchase agreements, the Fund buys securities from a seller (usually a bank or
brokerage firm) with the agreement that the seller will repurchase the
securities at a higher price at a later date. Transactions involving repurchase
agreements must be fully collateralized at all times, however, the Fund may be
subject to various delays and risks of loss if the seller is unable to meet its
obligation to repurchase. The Fund may also invest in securities which are
restricted as to resale. The registration of such "restricted securities" under
the Securities Act of 1933 (the "Securities Act") may be required prior to sale
with attendant time delays, and the Fund may have to bear all or a part of the
expense of such registration. No more than 10% of the Fund's net assets may be
invested in restricted securities (including other securities not readily
marketable) and in repurchase agreements that mature in more than seven days
(collectively, "illiquid securities"). Although the Fund may purchase restricted
securities which can be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act, its present investment policy limits such
investments to the foregoing 10% limitation.
LENDING OF PORTFOLIO SECURITIES. In order to earn additional income, the Fund
may lend its portfolio securities amounting to not more than 33% of the value of
its portfolio securities to approved borrowers (principally broker/dealers)
provided such loans are callable at any time and are continuously secured by
collateral (cash or government securities) equal to no less than the market
value, determined daily, of the securities loaned. During the period of the
loan, the Fund receives income on both the loaned securities and the collateral.
Although these transactions must be fully collateralized at all times, they are
subject to specific risks, the most significant of which is that should a
borrower default on its obligations, the Fund may be delayed in or prevented
from recovering its collateral.
REVERSE REPURCHASE AGREEMENTS. A reverse repurchase agreement involves the sale
of a security by the Fund and its agreement to repurchase the instrument at a
specified time and price. The Fund will maintain a segregated account consisting
of highly liquid, marketable securities to cover its obligations under reverse
repurchase agreements with selected firms approved in advance by the Board of
Trustees. The Fund will use the proceeds to purchase other investments. Reverse
repurchase agreements are considered to be borrowings by the Fund and as an
investment practice may be considered speculative. The Fund will limit its
investments
8
<PAGE> 10
in reverse repurchase agreements and other borrowings to no more than 33 1/3% of
its total net assets.
FOREIGN SECURITIES. The Fund may invest up to 25% of its assets (up to 35%
during times when the Investment Adviser determines that adverse U.S. market
conditions make it more favorable to invest in foreign markets) in equity and
fixed-income securities principally traded in foreign markets (excluding
underdeveloped countries). Investments in securities of foreign companies
involve certain additional risks not associated with investments in domestic
companies, including the risk of fluctuation in exchange rates, political or
economic instability of the issuer or of the country of issue, the possible
difficulty in obtaining and enforcing judgments against a foreign issuer, or the
possibility of imposition of exchange controls, expropriation or confiscatory
taxation or other foreign governmental laws or restrictions. In addition,
issuers of foreign securities are subject to different, often less
comprehensive, accounting, reporting and disclosure requirements than are
domestic issuers which, in contrast, are regulated under the Securities Act of
1933. These risks are further described in the Statement of Additional
Information. The Fund may buy or sell foreign currencies and foreign currency
forward contracts for hedging purposes in connection with its foreign
investments. (See "Appendix -- Description of Options Transactions" and
Statement of Additional Information -- "Investments in Foreign Securities" for
further details.) The Fund intends to invest in foreign securities only when the
potential benefits are deemed to outweigh those risks. This is not a fundamental
policy of the Fund.
OPTIONS TRANSACTIONS.
OPTIONS ON SECURITIES. The Fund may write (sell) covered call and cash secured
put options and purchase call and put options on equity and/or debt securities.
The Fund will write options on its portfolio securities for the purpose of
increasing its return on the securities or to protect the value of its
portfolio. If the price of the underlying security moves adversely to the Fund's
position, the option may be exercised and the Fund will be required to purchase
or sell the underlying security at a disadvantageous price, which may only be
partially offset by the amount of the premium if at all. The Fund may also write
straddles, which are combinations of put and call options on the same security.
These transactions can generate additional premium income but also present an
increased risk. The Fund may also purchase put or call options in anticipation
of changes in interest rates, which may adversely affect the value of its
portfolio securities or the prices of securities the Fund wants to purchase at a
later date. The premium paid for a put or call option plus any transaction costs
will reduce the benefit, if any, realized by the Fund upon exercise or
liquidation of the option. Unless the price of the underlying security changes
sufficiently, the option may expire without value to the Fund.
OPTIONS ON SECURITIES INDEXES. The Fund may write (sell) covered call and put
options and purchase call and put options on debt securities indexes e.g., U.S.
Treasury securities and/or stock indexes. The Fund may write options on
securities indexes in order to increase its gross income, and attempt to protect
its portfolio against declines in the value of securities it owns, or increases
in the value of securities to be acquired.
When the Fund writes an option on a securities index and the value of the index
moves adversely to the Fund's position, the option will not be exercised. The
Fund will either close out the option at a profit or allow it to expire
unexercised. The Fund will thereby retain the amount of the premium, less
related transaction costs, which will increase its gross income and offset part
of the reduced value of the portfolio securities or the increased cost of
securities to be acquired. Such transactions, however, will constitute only
partial hedges against adverse price fluctuations. This is because any of these
fluctuations will be offset only to the extent of the premium received by the
Fund for the writing of
9
<PAGE> 11
the option. In addition, if the value of an underlying index moves adversely to
the Fund's option position, the option may be exercised and the Fund will
experience a loss that may only be partially offset, if at all, by the amount of
the premium received.
The Fund may also purchase put or call options on securities indexes in order to
hedge its investments against a decline in value or to attempt to reduce the
risk of missing a market or industry segment advance. The Fund's possible loss
in either case will be limited to the premium paid for the option, plus related
transaction costs.
RISKS OF OPTIONS TRANSACTIONS. The Fund's transactions in certain options
involve certain risks. For example, a lack of correlation between the value of
an instrument underlying an option and the assets being hedged or unexpected
adverse price movements, could render the Fund's hedging strategy unsuccessful,
thus resulting in losses.
The Fund also may enter into transactions in options on securities and options
on securities indexes for other than hedging purposes. This involves greater
risk. In addition, there can be no assurance that a liquid secondary market will
exist for a contract purchased or sold. Therefore, the Fund may be required to
maintain a position until exercise or expiration, which could result in losses.
Over-the-counter transactions in options on securities also involve risks
arising from the lack of an organized exchange trading environment.
The Fund will not purchase a call or put option if as a result the premium paid
for the option together with premiums paid for all other stock options and
options on stock indexes then held by the Fund, exceed 10% of the Fund's total
net assets.
The Fund's risks in entering into transactions in options and forward contracts
are set forth in greater detail in the Statement of Additional Information.
INVESTMENT RESTRICTIONS. The Fund has adopted certain fundamental investment
restrictions which are described in detail in the Statement of Additional
Information and may not be changed without shareholder approval.
Among the restrictions are provided that the Fund (1) will not purchase
securities which will result in the Fund's holdings of the issuer thereof to be
more than 5% of the value of the Fund's total assets (exclusive of U.S.
government securities) (2) shall not purchase more than 10% of the voting
securities of any class of securities of any one issuer, and (3) may not invest
more than 25% of its total assets in any one industry.
If a percentage restriction, except a restriction regarding borrowing, on
investments or utilization of assets is adhered to at the time an investment is
made or assets are utilized, a later change in percentage resulting from changes
in the value of the Fund's portfolio securities will not be considered a
violation of policy.
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------
GENERAL. The Trust, a Massachusetts business trust, is registered with the
Securities and Exchange Commission as an open-end, diversified, management
investment company, commonly called a mutual fund. The management and affairs of
the Trust and the Fund are supervised by the Trust's Board of Trustees. The
officers of the Fund are responsible for the Fund's daily business operations
under the direction of the Trustees. Information about each of the Trustees and
officers is set forth in the Statement of Additional Information. Investment
decisions are made by the portfolio manager, Brian Grove. Mr. Grove has served
as the Fund's portfolio manager since June, 1994. For the past five years, he
was portfolio manager at Daniel Breen and Company, Houston, Texas (1989-1994)
and assistant vice president and investment analyst of Texas
10
<PAGE> 12
Commerce Investment Management, Houston, Texas (1988-1989).
INVESTMENT ADVISER. John Hancock Advisers, Inc. is the Investment Adviser of the
Fund and is compensated for its advisory services at an annual rate of 5/8 of 1%
of the Fund's average daily net assets. The Investment Adviser manages the
Fund's assets, provides administrative services and supervises the Fund's daily
business affairs. The Investment Adviser was organized in 1968 and is an
indirect wholly owned subsidiary of John Hancock Mutual Life Insurance Company,
a financial services company. The Investment Adviser provides the Fund and other
investment companies in the John Hancock group of funds, with investment
research and portfolio management services. The Distributor distributes shares
for all of the John Hancock mutual funds through selected Broker/Dealers
("Selling Brokers"). Certain Fund officers are also officers of the Investment
Adviser and the Distributor.
For the fiscal year ended August 31, 1994, the Fund paid an advisory fee of
.625% of the Fund's average net assets to the Fund's previous investment
adviser.
In addition, during the fiscal year ended August 31, 1994, the Fund reimbursed
Transamerica Fund Management Company (the Fund's investment adviser until
December 1994) ("TFMC"), pursuant to a separate Administrative Services
Agreement, for actual expenses incurred in providing certain administrative
services such as accounting and bookkeeping services, communications in response
to shareholders inquiries and certain printing services for reports of the Fund.
The Fund may directly bear the costs of certain data and pricing information
services used in providing accounting services. For the fiscal year ended August
31, 1994 administrative services fees paid by the Fund amounted to 0.07% of its
average daily net assets. The Administrative Services Agreement will be
terminated during January, 1995.
DISTRIBUTION PLANS. The Class A and Class B shareholders have adopted
distribution plans (the "Plans") pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under these Plans, the Fund will pay distribution and
service fees at an aggregate annual rate of 0.25% of the Class A Share's average
daily net assets and an aggregate annual rate of 1.00% of the Class B Shares
average daily net assets. In each case, up to 0.25% is for service expenses and
the remaining amount is for distribution expenses. The distribution fees will be
used to reimburse the Distributor for its distribution expenses, including but
not limited to: (i) initial and ongoing sales compensation to Selling Brokers
and others (including affiliates of the Distributor) engaged in the sale of Fund
shares, (ii) marketing, promotional and overhead expenses incurred in connection
with the distribution of shares of the Fund, (iii) unreimbursed distribution
expenses under the Fund's prior distribution plans, (iv) distribution expenses
incurred by other investment companies which sell all or substantially all of
its assets to, merge or otherwise engage in a re-organization transaction with
the Fund and (v) with respect to Class B Shares only, interest expenses on
unreimbursed distribution expenses. The service fees will be used to compensate
Selling Brokers for providing personal and account maintenance services to
shareholders. In the event the Distributor is not fully reimbursed for payments
made or expenses it incurs under the Class A Plan, these expenses will not be
carried beyond twelve months from the date they were incurred. These
unreimbursed expenses under the Class B Plan will be carried forward together
with interest on the balance of these unreimbursed expenses. Under the Class B
Plan, unpaid commission charges (net of contingent deferred sales charges
received by the former Distributor) and carrying charges were as of August 31,
1994 $4,187,781 (3.67% of the fund's Class B net assets at that date).
To limit the higher ongoing costs associated with an investment in Class B
Shares, the Fund implements arrangements under which Class B Shares are
automatically exchanged, on a tax-free basis, for Class A
11
<PAGE> 13
Shares at the end of the eight-year period following the initial purchase of
Class B Shares. (See "Shareholder Services -- Class B Shares Automatic
Exchange".)
For the fiscal year ended August 31, 1994, payments made by the Fund under the
Class A Plan amounted to .25% of the average daily net assets attributable to
Class A Shares. For the fiscal year ended August 31, 1994, total payments made
by the Fund under the Class B Plan amounted to 1.00% of its Class B average
daily net assets. In addition, for the fiscal year ended August 31, 1994, the
former Distributor received contingent deferred sales charges from redemptions
of shares of the Fund in an amount equal (on an annual basis) to 0.20% of the
Fund's Class B average daily net assets.
EXPENSES OF THE FUND. The Fund's expenses, which are accrued daily, are deducted
from total income before dividends are paid. These expenses include, but are not
limited to: fees paid to the Investment Adviser; trustees fees; taxes;
distribution, brokerage and legal fees; custodian and auditing fees;
administrative services fees; and other expenses. For the fiscal year ended
August 31, 1994, total expenses were 1.31% of the Class A average net assets and
2.06% of the Class B average net assets.
PORTFOLIO TRANSACTIONS. The primary consideration in choosing brokerage firms
to carry out the Fund's transactions is execution at the most favorable
prices, taking into account the broker's professional ability and quality of
service. Consideration may also be given to the broker's sale of shares of the
Fund. Pursuant to procedures determined by the Board of Trustees, the
Investment Adviser may place securities transactions with brokers affiliated
with the Investment Adviser. These brokers include Tucker Anthony Incorporated,
and Sutro & Company, Inc. Tucker Anthony Incorporated and Sutro & Company, Inc.
are indirectly owned by John Hancock Mutual Life Insurance Company, which in
turn indirectly owns the Investment Adviser. (For a further discussion, see the
Statement of Additional Information -- "Portfolio Transactions").
INFORMATION ABOUT SHARES OF THE FUND
- --------------------------------------------------------------------------------
NET ASSET VALUE
The net asset value of the Fund is computed once daily on each day that the New
York Stock Exchange is open for business as of the close of trading (presently
4:00 p.m. New York time). The Fund will also compute its net asset value on
other days if a purchase or redemption request is received on that day and there
is a sufficient degree of trading in securities held by the Fund. Net asset
value per share is calculated by dividing the market or fair value of all of the
Fund's portfolio securities plus the value of its other assets (including
dividends and interest received or accrued), less all liabilities (including
accrued expenses but excluding capital) by the number of shares of the Fund
outstanding. The Board of Trustees has established procedures for the valuation
of the Fund's securities, based in general on market or estimated value (see
"Net Asset Value" in the Statement of Additional Information).
Although the legal rights of Class A and Class B Shares are identical, the
different expenses borne by each class will result in different net asset values
and dividends. The net asset value of Class B Shares will generally be lower
than the net asset value of Class A Shares as a result of the larger
distribution fee accrual with respect to Class B Shares. (However, Class B
shareholders will generally receive more shares at the time of purchase.) It is
expected, however, that the net asset value per share of the two classes will
tend to converge immediately after the recording of dividends which will differ
by
12
<PAGE> 14
approximately the amount of the distribution expense accrual differential
between the classes.
PURCHASE OF SHARES
GENERAL. Shares of the Fund will be offered at a price equal to their net asset
value (next determined following receipt of an order by The Shareholder Services
Group, Inc. (the "Transfer Agent") or the investor's dealer) plus a sales charge
which, at the option of the purchaser, may be imposed either at the time of
purchase (the "initial sales charge alternative") or on a contingent deferred
basis (the "deferred sales charge alternative"), as described below. Shares of
the Fund are continuously offered for sale by the Distributor and are available
for purchase through eligible financial service firms such as securities
broker/dealer firms and banks which have entered into selected dealer agreements
with the Distributor. Dealers are responsible for transmitting orders promptly
(orders transmitted to and received by the Transfer Agent prior to 4:00 p.m. New
York time will receive that day's purchase price). The Distributor, at its
expense, may provide additional promotional incentives or payments to dealers
that sell shares of the Fund. In some instances, these incentives or payments
may be offered only to certain dealers who have sold or may sell significant
amounts of shares of the Fund or other John Hancock mutual funds.
Shares may be purchased by mailing a check, made payable to the Fund (noting
shareholder account number), and if opening a new account a completed
application form, to the Transfer Agent either at the post office address shown
on the back page of this Prospectus or, if delivered by express mail, the street
address: One American Express Plaza, Providence, Rhode Island 02903.
The initial purchase must be at least $1000 with subsequent investments of no
less than $50. The minimum amounts are reduced for tax-advantaged retirement
plans and accounts of participants in certain labor unions and other membership
organizations to $250, initial and $25, subsequent. The minimum investment
amounts are waived for tax-deferred retirement programs involving the submission
of additional investments by means of group remittal statements. Minimum initial
and subsequent purchase amounts will be reduced to $25.00 for programs providing
for regular periodic investments (i.e., payroll deduction plans and/or
investment by bank draft). See "Shareholder Services -- Automatic Investment
Plan" and "Payroll Deduction Plans" under Shareholder Services. Certificates for
shares will not be issued unless requested by the shareholder in writing and
then only for full shares.
The Fund's Board of Trustees reserves the right to change or waive the minimum
investment requirements and to reject any order for purchase of shares
(including FedWire purchases described below) when in its judgement such
rejection is in the Fund's best interest.
FEDWIRE PURCHASES. Investors may make payment for initial and subsequent
investments by federal funds wire. Investors should first notify Investor
Services (1-800-343-6840) of the new account request (if applicable) and the
intended wire purchase. To assure proper credit, banks wiring federal funds
should be instructed to include:
(1) name of the Fund,
(2) name of the shareholder (as registered exactly in the account), or if
opening an account, the name and address in which the account is being
registered and the taxpayer identification number of the investor (a
completed application must be mailed to the Transfer Agent after completing
the wire arrangements), and;
(3) the shareholder account number.
Federal funds may be wired to:*
Boston Safe Deposit and Trust Company
ABA Routing Number: 011001234
Account Number: 159565
13
<PAGE> 15
* Except during such times or holidays when BSDT is not open for business.
ALTERNATIVE PURCHASE PLAN
The Fund issues two classes of shares, each of which represent an interest in
the same portfolio of investments. The alternative purchase plan of the Fund
permits investors to choose the method of purchasing shares that is most
beneficial, given the amount of the purchase, the length of time the investor
expects to hold the shares and other relevant circumstances. Investors should
determine which method of purchase best suits their individual circumstances,
i.e., whether it is more advantageous to incur an initial sales charge (Class A
Shares) or to have the entire purchase price invested in the Fund with the
investment thereafter being subject to a contingent deferred sales charge (Class
B Shares). The Distributor intends to reject any order for a purchase of $1
million or more of Class B Shares (as noted below a purchase of Class A Shares
in an amount of $1 million or more is not subject to a sales charge.)
The two classes of shares have the same rights, except that each class bears
separate 12b-1 fees of the Class A Plan or Class B Plan, respectively, and has
exclusive voting rights with respect to such plan. The expenses of distribution
and servicing of Class A and Class B Shares are paid, in the case of Class A
Shares, from the proceeds of the initial sales charge and the ongoing 12b-1
service fees under the Class A Plan and, in the case of Class B Shares, from the
proceeds of the 12b-1 fees under the Class B Plan and the contingent deferred
sales charge incurred upon redemption within six years of purchase. The net
income attributable to each class and the dividends payable on the shares of
each class will be reduced by the amount of the 12b-1 fees of each class (see
"The Fund and Its Management -- Distributor and Distribution Plans"). Class B
Shares bear the expenses of higher 12b-1 fees which will cause the Class B
Shares to have a higher expense ratio and to pay lower dividends than the Class
A Shares (See "Dividends, Distribution and Tax Status"). The two classes also
have separate exchange privileges (See "Shareholder Services -- Exchange
Privilege"). Financial representatives will receive different compensation for
selling Class A and Class B Shares. Except for those differences (and related
voting rights) each share of the Fund, whether Class A or Class B, represents a
proportional interest in the investment portfolio of the Fund. On an ongoing
basis, the Trustees will review and seek to assure that no conflict of interest
arises between the Class A and Class B Shares.
In determining which class of shares to purchase, investors should consider
whether, during the anticipated life of their investment in the Fund, the
accumulated 12b-1 fees under the Class B Plan and deferred sales charges on
Class B Shares would be less than the initial sales charge and accumulated 12b-1
service fees under the Class A Plan if such shares were purchased at the same
time taking into account the Class B Automatic Exchange of Class B Shares for
Class A Shares after eight years, as discussed below. Investors who qualify for
significantly reduced sales charges, or who expect to maintain their investment
for an extended period of time, might elect the initial sales charge
alternative. Because an initial sales charge is deducted at the time of
purchase, investors should consider the extent to which any return would
otherwise be realized on the additional funds initially invested under the
deferred sales charge alternative and weigh such consideration against the
higher per share return of the Class A Shares afforded by the lower 12b-1 fees
of these shares. Certain other investors might determine it to be more
advantageous to have all their funds invested initially, although remaining
subject to 12b-1 fees of up to 1.00% of the average daily net assets allocable
to Class B Shares for the eight years following initial purchase and, for a
six-year period, a contingent deferred sales charge. IN THIS REGARD, INVESTORS
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<PAGE> 16
SHOULD UNDERSTAND THAT UNDER CERTAIN MARKET CONDITIONS OR DURING THE TIME THE
INVESTMENT IS HELD, THE ACCUMULATED ONGOING 12B-1 FEES OF CLASS B SHARES MAY
EXCEED THE MAXIMUM INITIAL SALES CHARGES AND ONGOING 12B-1 FEES OF CLASS A
SHARES. SEE "INFORMATION ABOUT SHARES OF THE FUND -- PURCHASE OF SHARES." The
Fund provides each holder of Class B Shares an automatic exchange of their Class
B Shares for Class A Shares at the end of the eight-year period following the
initial purchase of their Class B Shares. This exchange occurs unless expressly
waived by the shareholder. The exchange is not subject to federal taxes as in
accordance with a private letter ruling received by the Fund from the Internal
Revenue Service. See "Information About Shares of the Fund -- Purchase of
Shares" and "Shareholder Services -- Class B Automatic Exchange."
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES. The public offering price of
Class A Shares of the Fund is the current net asset value per share (next
computed after receipt of an order by the Fund's Transfer Agent), plus a sales
charge (a percentage of the offering price as set forth in the table below).
<TABLE>
<CAPTION>
COMBINED REALLOWANCE
REALLOWANCE TO SELLING
SALES CHARGE SALES CHARGE AND SERVICE FEE BROKERS
AS A PERCENTAGE AS A PERCENTAGE AS A PERCENTAGE AS A PERCENTAGE
AMOUNT INVESTED AT OFFERING OF THE AMOUNT OF OFFERING OF OFFERING
(INCLUDING SALES CHARGE) PRICE INVESTED PRICE(+) PRICE(*)
- --------------------- ------ ------- ------- -------
<S> <C> <C> <C> <C>
Less than $50,000...................... 5.75% 6.10% 5.25% 5.01%
$50,000 to $99,999..................... 4.75% 4.99% 4.25% 4.01%
$100,000 to $249,999................... 3.75% 3.90% 3.25% 3.01%
$250,000 to $499,999................... 2.75% 2.83% 2.35% 2.11%
$500,000 to $999,999................... 2.00% 2.04% 1.75% 1.51%
$1,000,000 and over.................... 0.00%(**) 0.00%(**) (***) 0.00%(***)
<FN>
- ---------------
(*) Upon notice to broker-dealers with whom it has sales agreements ("Selling Brokers"), the Distributor
may reallow an amount up to the full applicable sales charge. A Selling Broker to whom substantially
the entire sales charge is reallowed or who receives these incentives may be deemed to be an
underwriter under the securities Act of 1933.
(**) No sales charge is payable at the time of purchase in Class A Shares of $1 million or more, but a
contingent deferred sales charge may be imposed in the event of certain redemption transactions within
one year of purchase. See "Purchase of $1 Million or More."
(***) The Distributor may pay a commission and first year's service fee (as described in (+) below) to
Selling Brokers who initiate and are responsible for purchases of $1 million or more in aggregate. See
"Purchases of $1 Million or More" below.
(+) At the time of sale, the Distributor pays to Selling Brokers the first year's service fee in advance, in
an amount equal to 0.25% of the next assets invested in the Fund and thereafter pays the service fee
periodically in arrears in an amount up to 0.25% of the Fund's average annual net assets. Selling Brokers
receive the fee as compensation for providing personal and account maintenance services to shareholders.
</TABLE>
15
<PAGE> 17
Until March 31, 1995, the Distributor is continuing a sales incentive program in
which non-cash concessions in the form of an all-expense-paid trip to a North
American resort location will be awarded to participating broker/dealers and
financial institutions achieving certain specified sales levels in shares of
certain funds managed by Investment Adviser upon which (1) an initial sales
charge has been paid or (2) a charge may be applicable upon redemption and who
had sales agreements with the Fund's former distributor. Participation in the
incentive program is entirely optional on the part of the broker/dealers and
financial institutions. Copies of the incentive program which contain more
complete information about the terms and conditions of the program, including
qualifying levels and specific awards and eligible funds, may be obtained by
investment representatives by contacting the Distributor. The Distributor will
make these incentive payments out of its own resources. Other than distribution
fees, the Funds do not bear distribution expenses.
The Distributor will pay certain affiliated Selling Brokers at an annual rate of
up to 0.05% of the daily net assets of accounts attributable to these brokers.
* PURCHASES OF $1 MILLION OR MORE
On purchases by a single purchaser aggregating $1 million or more, the
Distributor will pay securities dealers an amount on a cumulative basis equal to
1% of the first $3 million, plus .5 of 1% of the next $2 million, plus .25 of 1%
on amounts over $5 million. With respect to shares purchased at the $1 million
plus breakpoint, a contingent deferred sales charge ("CDSC") will be imposed on
the proceeds of the redemption of certain shares so purchased if they are
redeemed within 12 months of the end of the calendar month of their purchase, in
an amount equal to 1% of the lesser of (a) the net asset value of the shares at
the time of purchase or (b) the net asset value of the shares at the time of
redemption ("CDSC Shares"). The CDSC would be deducted from the redemption
proceeds otherwise payable to the shareholder and would be retained by the
Distributor. In addition, no CDSC will be imposed when a shareholder redeems (a)
CDSC shares acquired through reinvestment of income dividends or capital gains
distributions; and (b) shares acquired by exchange from any mutual fund sold
with an initial sales charge and distributed by the Distributor. The CDSC does
not apply to purchases at net asset value described under "Waiver of Initial
Sales Charge" and will be waived in the case of redemptions of shares in
connection with (i) distributions to participants or beneficiaries of certain
qualified retirement plans, and returns of excess contributions made to these
plans, and (ii) involuntary redemption of shares of the aggregate net asset
value of shares held in the account is less than the required minimum. In
determining whether a CDSC is payable on any redemption, the Fund will first
redeem shares not subject to any charge. Although any CDSC shares being
exchanged are not subject to any charge, they will be subject to the applicable
CDSC when the acquired shares are eventually redeemed. For purposes of
calculating the CDSC on these redemptions, the original purchase date of the
initial Fund investment will be used in lieu of the date of the redeemed shares
were acquired by exchange.
To the extent that the dealer discount may be deemed to constitute substantially
the entire sales charge, selling dealers may be deemed to be underwriters as
that term is defined in the Securities Act of 1933.
Reduced Initial Sales Charges. Investors choosing the initial sales charge
alternative are entitled to pay reduced sales charges shown in the above table
through several available purchase plans: Concurrent Purchases, Rights of
Accumulation, Statement of Intention and Group Purchases. An investor and his
immediate family may combine Concurrent Purchases of Class A Shares of the Fund
and Class A Shares (and shares subject to front-end sales charges) of certain
other mutual funds which are managed by the Investment Adviser ("other John
Hancock funds" as defined under "Share-
16
<PAGE> 18
holder Services -- Exchange Privilege"), for purposes of qualifying for, and
determining, a reduced sales charge provided that the purchases are made through
a single dealer and any purchase amounts satisfy the minimum investment amount
of the respective Fund. Further information about these purchase plans is set
forth under "Purchase of Shares" in the Statement of Additional Information (see
also Statement of Intention and Rights of Accumulation in the Account
Application and its Terms and Conditions in the back of the Prospectus).
Waiver of Initial Sales Charge. Class A Shares of the Funds may be purchased
without paying an initial sales charge by the following:
- - A Trustee or Officer of the Trust; a director or officer of the Investment
Adviser and its affiliates or Selling Brokers; employees or sales
representatives of any of the foregoing; retired officers, employees or
directors of any of the foregoing; a member of the immediate family of any of
the foregoing; or any Fund, pension, profit sharing or other benefit plan for
the individuals described above.
- - Any state, county, city or any instrumentality, department, authority or
agency of these entities (an "eligible governmental authority") which is
prohibited by applicable investment laws from paying a sales charge or
commission when it purchases shares of any registered investment management
company.
- - A broker, dealer or registered investment adviser that has entered into an
agreement with the Distributor providing specifically for the use of Fund
shares in fee-based investment products made available to their clients.
- - A former participant in an employee benefit plan with John Hancock Mutual
Funds, when she/he withdraws from his/her plan distributions directly to the
Funds.
- - Class A Shares of the Funds may also be purchased without an initial sales
charge in connection with certain liquidation, merger acquisition transactions
involving other investment companies or personal holding companies.
- - Existing full service clients of John Hancock Mutual Life Insurance Company
group annuity contract holders as of September 1, 1994, may purchase Class A
shares with no initial sales charge, but if the shares are redeemed within 12
months after the end of the calendar year in which the purchase was made, a
contingent deferred sales charge will be imposed at the rate for Class A
shares described above in the section "Purchases of $1 Million or More."
See the Statement of Additional Information, "Purchase of Shares -- Purchase at
Net Asset Value" for a more complete description of investors eligible to
purchase shares at net asset value.
DEFERRED SALES CHARGE ALTERNATIVE -- CLASS B SHARES. The offering price of Class
B Shares for investors choosing the deferred sales charge alternative is the net
asset value per share next determined following receipt of an order by the
Transfer Agent. There is no sales charge imposed at the time of purchase, so
that the Fund will receive for investment the full amount of the investor's
purchase payment. See "Redemption and Repurchase of Shares -- Class B Shares:
Contingent Deferred Sales Charge" below.
Proceeds from the contingent deferred sales charge are paid to the Distributor
and are used in whole or in part by the Distributor related to providing
distribution-related services to the Fund in connection with the sale of Class B
Shares, such as the payment of compensation to securities dealers for selling
Class B Shares. The combination of the contingent deferred sales charge, the
distribution fee and service fee facilitates the ability of the Fund to sell
Class B Shares without a sales charge being deducted at the time of purchase
(see "Distributor and Distribution Plans").
17
<PAGE> 19
REDEMPTION AND REPURCHASE OF SHARES
GENERAL. Shares of the Fund in any amount may be redeemed at any time at the net
asset value per share next determined after the redemption request is received
in proper form by the Transfer Agent. See "Net Asset Value." In certain cases,
however, redemption proceeds from the Class B Shares will be reduced by the
amount of any applicable contingent deferred sales charge (see "Class B
Shares -- Contingent Deferred Sale Charge").
If a shareholder holds both Class A and Class B Shares of the Fund, any request
for redemptions must specify whether Class A or Class B Shares are to be
redeemed. Failure to specify which class or insufficient shares of the class
specified will result in the redemption request being delayed until the Transfer
Agent receives further written instructions from the shareholder.
Payment proceeds will be mailed within seven (7) days following receipt of all
required documents. However, in the case of redemptions of shares which were
recently purchased by check, the payment of proceeds of such redemption may be
delayed for a period of up to 15 days or more only until the check used to
purchase the shares has been cleared for payment by the shareholder's bank. The
Fund will not forward proceeds by FedWire Redemption (described below), and such
redemption will not be effective, for a period of 15 days after receipt of the
purchase check. This delay in payment of redemption proceeds can be avoided if
shares are purchased by means of a certified check or federal funds wire. Under
unusual circumstances, the Fund may suspend redemptions or postpone payment for
up to seven days or more, as permitted by securities laws.
REDEMPTION BY WRITTEN REQUEST. To redeem shares, send a written request or
"letter of instruction" specifying the name of the Fund, the dollar amount or
number of shares to be redeemed, and shareholder's name and account number to:
The Shareholder Services Group, P.O. Box 9656, Providence, Rhode Island
02940-9656. A request for redemption will be processed after receipt by the
Transfer Agent of all required documents in proper order including any issued
share certificates and the letter of instruction signed by each account owner
exactly as the account is registered. If a redemption of $50,000 or more is to
be made (or if the shareholder's address or bank account to which proceeds are
to be mailed has changed in the prior 30 days) signatures must be guaranteed
subject to the provisions under Rule 17Ad-15 of the Securities Exchange Act of
1934 ("SEA Rule") without restriction, condition or qualification by an
authorized signatory of a commercial bank, trust company, savings bank, savings
and loan association, federal credit union, or a member firm of the National
Association of Securities Dealers, Inc. or of a domestic stock exchange, or any
other "eligible guarantor institution," as defined under the SEA Rule. If shares
are held in the name of a corporation, trust, estate, custodianship,
guardianship, partnership or pension and profit sharing plan, additional
documentation may be necessary.
TELEPHONE REDEMPTION. Shares of the Fund for which no share certificates have
been issued may be redeemed in amounts of $50,000 or less by telephone request
provided that selection has been made in the Account Application or a telephone
authorization form is on file with the Transfer Agent. Proceeds from such
telephone redemptions will be mailed to the shareholder's address of record. The
Fund and/or the Transfer Agent reserve the right to refuse telephone redemption
requests at any time. Telephone authorization forms are available from the Fund
upon request. See "Shareholder Services -- Exchange Privilege" for further
information concerning authenticity of instructions received by telephone.
Information concerning redemptions can be obtained by contacting the Fund at
1-800-343-6840.
FEDWIRE REDEMPTION. Shareholders may redeem shares for which no certificates
have been issued and have redemption proceeds of at least $50,000
18
<PAGE> 20
wired by federal funds transfer. Requests for FedWire redemption may be made by
wire communication, telephone or letter provided that the shareholder has
selected this option in the Account Application. Proceeds of shares redeemed at
the net asset value next determined after receipt of request are transmitted the
following business day by wire to the shareholder's bank account designated in
the Account Application form (bank must be a member of the Federal Reserve
System). Delivery of the proceeds of a wire redemption request of $250,000 or
more may be delayed by the Fund for up to seven days if the Investment Adviser
deems it appropriate under the then current market conditions. The Fund cannot
be responsible for the efficiency of the federal wire system or the
shareholder's dealer or bank. Redemption of shares purchased by check are
subject to certain limitations and restrictions described below. The Fund may
modify this Privilege at any time or charge a service fee upon notice to
shareholders; no such fee currently is contemplated.
REPURCHASE. The Distributor is authorized to repurchase any shares presented by
telephone or telegraph to the Distributor by certain securities dealers selected
by the Distributor in its sole discretion. The offer to repurchase may be
suspended by the Distributor at any time. Repurchase orders received by dealers
prior to the closing of the NYSE (4:00 p.m. New York time) on any business day
will be priced at the net asset value per share that is based on that day's
close provided that they are time-stamped by the dealer no later than 4:00 p.m.
New York time on such day. Dealers may charge for their services in connection
with repurchases, but neither the Fund nor the Distributor makes any charge.
INVOLUNTARY REDEMPTION. The Fund reserves the right to redeem a shareholder's
account at any time the total net asset value of the account falls below $100 as
a result of a redemption. Shareholders will be notified in writing that the
value of their account is less than $100 as a result of a redemption and will be
allowed 60 days to make additional investments before the redemption is
processed. No contingent deferred sales charge will be imposed on an involuntary
redemption of Class B Shares.
REDEMPTION IN KIND. Although it is the Fund's present policy to make payment of
redemption proceeds in cash, if the Fund's Board of Trustees determines that a
material adverse effect would otherwise be experienced by remaining investors,
redemption proceeds may be paid in whole or in part by a distribution in kind of
securities from the portfolio of the Fund subject to the limitation that
pursuant to an election under Rule 18f-1 under the Investment Company Act of
1940, the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Fund during any 90-day period for
such one account. In such circumstances, a shareholder might be required to bear
transaction costs to dispose of such securities distributed in kind.
REINSTATEMENT PRIVILEGE. A shareholder who has redeemed shares of the Fund, or
has had shares repurchased by the Fund, may, within 60 days after the date such
shares were redeemed or repurchased, reinvest (reinstate) all or a portion of
the proceeds of such redemption or repurchase in shares of the Fund or in shares
of "other John Hancock funds" (as defined under "Shareholder
Services -- Exchange Privilege") at the next determined net asset value of the
shares being acquired so long as the Transfer Agent is in receipt of a written
request for reinstatement and the appropriate payment. Shares being acquired
pursuant to the reinstatement privilege must be of the identical Class as those
which were redeemed within the previous sixty days.
The CDSC will not be applicable to Class B Shares acquired in a reinstatement,
although it will be assessed in connection with the initial redemption or
repurchase. Exercise of the Reinstatement Privilege does not alter the federal
income tax treatment of any capital gains realized on the redemption of shares
of the Fund. If a loss was realized on the redemption and if reinstatement is
made in shares of the Fund within 30 days, it would be not recognized as a loss
for federal income tax purposes.
19
<PAGE> 21
Investors are advised to consult their tax advisers as to all possible tax
consequences related to the exercise of the reinstatement privilege. This
privilege may be exercised only once as to any specific shares of a Fund and may
be modified or terminated at any time.
CLASS B SHARES -- CONTINGENT DEFERRED SALES CHARGE. Class B Shares redeemed
within six years of purchase will be subject to a CDSC at the rates set forth
below. This charge will be assessed on an amount equal to the lesser of the
current market value or the original purchase cost of the shares being redeemed.
Accordingly, the CDSC will not be assessed on increases in account value above
the initial purchase price, including shares derived from dividend reinvestment.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that the redemption comes first from shares which have been
held beyond the six-year CDSC redemption period or those that were acquired
through dividend reinvestment, and next from the shares that have been held the
longest during the six-year period.
Proceeds from the CDSC are paid to the Distributor. The Distributor uses all or
part of them to defray its expenses related to providing the Fund with
distribution services in connection with the sale of Class B Shares, such as
compensating Selling Brokers for selling these shares. The combination of the
CDSC and the distribution and service fees makes it possible for the Fund to
sell Class B Shares without deducting a sales charge at the time of the
purchase.
The amount of the CDSC, if any, will vary depending on the number of years from
the time the Class B Shares were purchased until the time they were redeemed.
Solely for purposes of determining the holding period, any payments you make
during the month will be aggregated and deemed to have been made on the last day
of the month.
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED
SALES CHARGE AS A
YEAR IN WHICH PERCENTAGE OF
CLASS B SHARES DOLLAR AMOUNT
REDEEMED FOLLOWING PURCHASE SUBJECT TO CDSC
- ---------------------- ---------------
<S> <C>
First................................. 5.0%
Second................................ 4.0%
Third................................. 3.0%
Fourth................................ 3.0%
Fifth................................. 2.0%
Sixth................................. 1.0%
Seventh and thereafter................ None
</TABLE>
A commission equal to 3.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for the provision of
personal and account maintenance services to shareholders during the twelve
months following the sale, and thereafter the service fee is paid in arrears.
If a partial redemption (or exchange) by a shareholder results in a remaining
account balance of less than the amount of the contingent deferred sales charge
owed by the shareholder at the time of the redemption (or exchange) on the
shares remaining in the account, the Fund reserves the right to require the
shareholder to redeem (or exchange) all of the shares in the account. The Fund
does not believe that this constitutes an involuntary redemption.
The contingent deferred sales charge will be paid to the Distributor or to the
Fund. (See "Distribution Plans.")
Waiver of CDSC. The contingent deferred sales charge will be waived (a) in the
event of the death or total disability (as evidenced by a determination by the
Federal Social Security Administration) of the shareholder (including a
registered joint owner) and (b) for certain redemptions of shares held in
retirement plans. In addition, no contingent deferred sales charge will be
imposed where shares are redeemed in connection with a merger or reorganization
of the Fund into another investment com-
20
<PAGE> 22
pany which imposes a contingent deferred sales charge and the investor receives
shares of the other investment company in the transaction. In such cases, any
applicable contingent deferred sales charge will be imposed when an investor
redeems shares acquired in such a transaction. (See the Statement of Additional
Information, "Redemption and Repurchase of Shares" for a more complete
description of the Fund's shareholders on whose shares a contingent deferred
sales charge will not be imposed.)
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
The Fund offers shareholders the following services and privileges: (1)
Reinvestment of Dividends and Distributions at net asset value; (2) Retirement
Plans; (3) Automatic Investment Plan; (4) Systematic Withdrawal Plan; (5)
Exchange Privilege; (6) Systematic Exchange; (7) Payroll Deduction Plans; (8)
Class B Automatic Exchange; and (9) Cross -- Reinvestment Service.
AUTOMATIC INVESTMENT PLAN (AIP) permits shareholders to purchase additional
shares on a monthly basis with funds transferred from their bank account subject
to an initial and subsequent investment minimum amount of $25. For further
information, see the AIP form in the back of the Account Application.
EXCHANGE PRIVILEGE permits Class A and Class B shareholders of the Fund to
exchange their shares for shares of other John Hancock funds which formerly had
investment advisory contracts with TFMC ("other John Hancock funds") on the
basis of the relative net asset value subject to the applicable minimum
investment requirements of these funds. Class A Shares may be exchanged for
Class A Shares or shares of other funds sold with an initial sales charge (Class
A Shares). These other Class A Shares may also be exchanged for Class A Shares
of the Fund, provided that any sales charge differential (not previously paid)
is paid. Class B Shares may be exchanged without imposition of the Fund's CDSC
for Class B Shares or shares of other John Hancock funds that are subject to a
CDSC ("CDSC Funds"). Exchanges between CDSC Funds having different CDSC
schedules will retain their respective original CDSC schedules. Any applicable
contingent deferred sales charge payable upon the redemption of Class B Shares
exchanged will be calculated from the date of the initial purchase. Class B
Shares may not be exchanged into money market funds other than John Hancock
Money Market Fund B. See "Shareholder Services -- Exchange Privilege" in the
Statement of Additional Information.
Exchanges may be accomplished by telephone request (see below) or by a written
request from the account owner(s). Forms for both written and telephone
exchanges are available from the Fund upon request. Share certificates, if
issued, must be returned to the Fund prior to any exchange of such shares. There
is currently no service fee for an exchange; however, dealers or other firms may
charge for their services in expediting exchange transactions. In addition, the
Fund reserves the right to impose a service fee. Exchanges are, in effect, a
redemption and purchase of shares in the respective funds and are treated as
such for tax purposes. As such, the limitations and restrictions applicable
generally to purchases and redemptions apply, and any exchange constitutes a
sale upon which a gain or loss will be realized for federal income tax purposes.
THIS EXCHANGE PRIVILEGE IS NOT AVAILABLE IN ANY JURISDICTION WHERE SHARES OF THE
OTHER FUND BEING ACQUIRED ARE NOT QUALIFIED FOR SALE. EACH FUND RESERVES THE
RIGHT TO REJECT ANY ORDER TO ACQUIRE ITS SHARES THROUGH EXCHANGE, OR OTHERWISE
TO MODIFY, RESTRICT OR TERMINATE THE EXCHANGE PRIVILEGE, AT ANY TIME AFTER 60
DAYS' NOTICE TO SHAREHOLDERS. Because certain other John Hancock funds have
investment objectives and policies which may differ from those of the Fund,
shareholders should carefully review the prospectus of the other John Hancock
fund before effecting an exchange.
21
<PAGE> 23
Shares of the Fund in any amount for which no share certificates have been
issued may be exchanged by telephone request, provided the shareholder has
selected this option in the Account Application or has a telephone authorization
form on file. See "Telephone Privileges" for important information about
transactions by telephone. Telephone requests may be made by contacting the Fund
at 1-800-343-6840.
SYSTEMATIC EXCHANGE PROGRAM allows shareholders to exchange a specified dollar
amount from an existing account in a certain John Hancock Fund (including the
Fund) into certain other John Hancock Funds (including the Fund) subject to the
requirements and limitations of the Exchange Privilege as noted above. At the
time this option is selected, the shareholder must have a minimum balance of
$5,000 in the account from which the exchange is to be made and must designate a
monthly exchange amount of no less than $25.00 for a specific Fund. The minimum
initial investment amount (established by the Fund being exchanged into) will be
waived for shareholders utilizing this Program.
Note that the systematic exchange methods do not assure a profit and do not
protect against loss in declining markets. You should consult your broker or
financial adviser to determine whether this Program is suitable for your
investment needs. In particular, consideration should be given to the type of
John Hancock Fund from which such exchanges will be made (i.e., its investment
objective, policies and risks, including the potential for fluctuation in its
net asset value). The Fund currently imposes no service fee for participation in
the Program but reserves the right to do so. Shareholders may change the
exchange amounts or the selection of Funds or terminate their participation in
the Program at any time by directing the Transfer Agent in writing.
PAYROLL DEDUCTION PLANS are available for employer sponsored plans, where
regular, periodic purchases are made into the employees' accounts through the
submission of the John Hancock Group Investment List. The minimum initial and
subsequent purchase amounts are $250 for the Plan and $25 per fund-account in
the Plan. For further information on how to establish a John Hancock Group
Investment List, call Account Services at 1-800-343-6840.
CLASS B AUTOMATIC EXCHANGE is a tax-free exchange of Class B Shares for Class A
Shares of the same fund that occurs at the end of the calendar quarter eight
years after the original purchase date of the Class B Shares, the "Automatic
Exchange Date." At the Automatic Exchange Date the Class B Shares will be
exchanged for an equal dollar value of Class A Shares (which may or may not be
the same number of shares). The Class A Shares have lower expenses than Class B
Shares but are otherwise substantially identical. Class A Shares, therefore,
will have a slightly higher total return than Class B Shares and may have a
slightly higher dividend as a result. Shareholders who have made more than one
purchase may hold both Class B Shares and Class A Shares at the same time. The
Class B Automatic Exchange is available to all Class B Shareholders and requires
no action whatsoever on a shareholder's part. If a shareholder wants to decline
taking advantage of this privilege, however, the Fund must be notified in
writing within three months prior to the Automatic Exchange Date.
CROSS-REINVESTMENT SERVICE. Shares of a particular class of the Fund may be sold
without imposition of any applicable sales charge through the automatic
reinvestment of dividend and capital gain distributions from the same class of
any other John Hancock fund. Such proceeds from other John Hancock funds will be
invested at the next determined net asset value following receipt of such
proceeds (i.e., reinvestment date which is normally the payable date of such
other John Hancock fund) by the Fund's Transfer Agent. In addition,
distributions made by the Fund may be automatically invested without imposition
of a sales charge in shares of the
22
<PAGE> 24
same class of another John Hancock fund as selected in the Account Application.
RETIREMENT PLANS. The Fund offers a variety of tax-sheltered retirement plans.
Shares of the Fund are available for purchase by qualified plans which have been
approved by the Internal Revenue Service and include Individual Retirement
Accounts (including SEP/IRAs), Profit Sharing and Money Purchase Plans, 403(b)
Plans and 401(k) Plans. Plan support services are available. For details, please
contact the Retirement Plans Department in the offices of the Distributor by
calling 1-800-472-3868.
Further information regarding the above services and privileges is set forth in
the Statement of Additional Information.
TELEPHONE PRIVILEGES
- --------------------------------------------------------------------------------
Neither the Fund, Transfer Agent or the Investment Adviser will be responsible
for the authenticity of telephone instructions. Shareholders should be aware
that transactions authorized by telephone instructions believed to be authentic
by the Fund can subject the shareholder to the risk of loss if such telephone
instructions are subsequently found to be unauthentic.
Privileges associated with telephone exchange, telephone redemption, and FedWire
redemption may be selected in the Fund's Account Application. The privileges
associated with FedWire redemption will not be established unless specifically
instructed. The privileges associated with telephone exchange and/or telephone
redemption will automatically be accorded to the shareholder's account unless
the shareholder specifically declines such privilege in the Account Application.
If establishing a new account through a confirmed trade, the shareholder's
securities dealer should provide a completed new account application or submit
specific written instructions requesting specific account privileges at the time
of trade settlement. The Fund will employ reasonable procedures to confirm that
the instructions as to either exchange, redemption or FedWire redemptions
communicated by telephone are genuine, and that absent such procedures, the Fund
or its agents may be liable for any losses due to unauthorized or fraudulent
instructions. Such procedures include:
1. Recording all calls for telephone transactions (each transaction is thereby
indexed by the time of the call placed);
2. Requesting the caller's name and phone number as verification of the origin
of the telephone call;
3. Requesting the name of the Fund and the shareholder's account number, the
name(s) in which the account is registered and the tax identification number
listed on the account;
4. Mailing written confirmation (statements) of each transaction on the
following business day to the registration address and the broker/dealer of
record.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
- --------------------------------------------------------------------------------
DIVIDENDS AND CAPITAL GAINS. It is the Fund's policy to distribute substantially
all of its net investment income (i.e., non-capital gains income from its
investments less expenses) to shareholders in the form of dividends, on a
quarterly basis. The excess of net long-term capital gains over net short-term
capital losses, including losses carried forward from prior years, represents
net realized capital gains. The Fund distributes net realized capital gains, if
any, to shareholders at least annually.
When a dividend or capital gains distribution is paid, the net asset value per
share is reduced by the amount of the payment. The capital gains distribution
will be equal for both Class A and Class B
23
<PAGE> 25
Shares. The per share dividends on Class B Shares will be lower than the per
share dividends on Class A Shares as a result of the higher distribution
services and incremental transfer agency fees applicable to the Class B Shares.
All dividends and any capital gains distributions will be reinvested in shares
of the same class of the Fund on the reinvestment date unless shareholders
indicate in writing to the Transfer Agent or select in the Account Application
to receive proceeds in cash or have them reinvested in shares of the same class
of another John Hancock fund (without imposition of a sales charge) at the next
determined net asset value following receipt of such proceeds (i.e., the
reinvestment date (see "Shareholders Services -- Cross Reinvestment Service").
TAXES. Because the Fund intends to distribute its net investment income and net
realized capital gains to shareholders, and to adhere to other applicable
requirements, it is not expected that the Fund will be required to pay any
federal income taxes on amounts it pays as dividends and distributions. However,
shareholders normally will have to pay federal income taxes and any applicable
state income taxes on the dividends and capital gains distributions they receive
(either as cash or reinvested shares) from the Fund (unless they are exempt from
taxation or entitled to tax deferral.) After the end of each calendar year,
shareholders will receive a statement indicating the amount and federal tax
status of all distributions received during such year. This includes information
on the portion taxable as ordinary income and the portion taxable as long-term
capital gains. It should be noted that the distributions of any net realized
short-term capital gains are taxable as ordinary income.
The Fund is required to withhold 31% of taxable dividends, distributions and
redemptions paid to shareholders who have not complied with IRS taxpayer
identification requirements. To avoid this "back-up" withholding requirement, a
shareholder may furnish the Transfer Agent with his or her taxpayer
identification number and required certifications by completing the Account
Application or IRS Form W-9. (See "Backup Withholding" in the back of the
Prospectus.) Investors should consult their own tax advisers concerning tax
consequences of an investment in the Fund.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION
The Fund operates as one series of the Trust. The Trust was organized as a
Massachusetts business trust in 1984. In December, 1994, in connection with the
acquisition of the Fund's previous investment adviser by the Investment Adviser,
the Trust's name was changed from Transamerica Investment Trust to John Hancock
Investment Trust and the Fund's name was changed from Transamerica Growth and
Income Fund to John Hancock Growth and Income Fund. All shares of beneficial
interest of the Trust, $0.01 par value per share, have equal voting rights and
have no pre-emptive or conversion rights. Both Class A and Class B Shares
represent an interest in the same assets of the Fund and are identical in all
respects except that each class bears different distribution expenses and has
exclusive voting rights with respect to its respective distribution plan. Shares
issued are fully paid, non-assessable, fully transferable and redeemable at the
option of the holder. The Fund is generally not required to hold annual meetings
of shareholders; however, the Board of Trustees may call special meetings of
shareholders for action by shareholder vote if so requested in writing by the
holders of 10% or more of the outstanding shares of the Trust, or as otherwise
as may be required by applicable laws or the Declaration of Trust. The Trust
will assist shareholders with any communications regarding such meetings
including shareholder proposals. Under Massachusetts law, shareholders of such a
trust may in certain circumstances be held personally liable as partners for the
obligations of the Trust. However, the Declaration of Trust, pursuant to which
the
24
<PAGE> 26
Fund was organized, contains an express disclaimer of shareholder liability for
acts or obligations of the Fund and requires that notice of such disclaimer be
given in each instrument entered into or executed by the Fund. The Declaration
of Trust also provides for indemnification out of the Fund's property for any
shareholder held personally liable for any Fund obligation. Thus, the risk of a
shareholder being personally liable as a partner for obligations of the Fund is
limited to the unlikely circumstances in which the Fund itself would be unable
to meet its obligations.
SHAREHOLDER INQUIRIES. All inquiries regarding the Fund including questions
concerning share ownership, dividends, transfer of ownership or share
redemption, should be directed to the Fund at the telephone number or address on
the cover page of this Prospectus. Each month, the Fund prepares a list of its
portfolio securities holdings which is available without charge by contacting
the Fund.
TRANSFER AGENT. Transfer and dividend disbursing agent functions are performed
by The Shareholder Services Group: One American Express Plaza, Providence, Rhode
Island 02903.
CUSTODIAN. Effective in January, 1995 Investors Bank and Trust Company, 34
Federal Street, Boston, Massachusetts 02110, has been appointed the Custodian
for the Fund.
INDEPENDENT AUDITORS. Ernst & Young LLP, 200 Clarendon Street, Boston
Massachusetts 02116, has been selected as the independent auditors of the Fund.
PERFORMANCE INFORMATION. The Fund's annual report contains a discussion of the
Fund's performance and is made available upon request without charge. From time
to time the Fund may advertise its yield and total return which are computed
separately for Class A and Class B Shares and in accordance with applicable
regulatory requirements. Yield is computed by annualizing the result of dividing
the net investment income per share over a 30-day period by the maximum offering
price per share on the last day of the period. The Fund may also advertise in
supplemental sales literature a distribution rate which is computed in the same
manner as yield except that actual income dividends declared per share during
the applicable period are substituted for net investment income per share. The
distribution rate is computed separately for Class A and Class B Shares. Yield
and distribution rate quotations for Class B Shares do not reflect any
contingent deferred sales charge which, if included, would be reflected in a
lower rate quotation.
The cumulative total return shows the dollar or percentage change in value over
a specified period of time (i.e., one, five or ten years or since the Fund's
inception), assuming reinvestment of all dividends and distributions on the
reinvestment dates and payment of the maximum sales charges applicable to
purchases and redemptions. Average annual total return shows the Fund's
cumulative return dividend over the number of years included in the given period
("standardized performance"). Total returns may, in conjunction with
standardized performance, be calculated for other specified periods and/or
excluding the effect of sales charges (which if included, would reduce the
performance quoted). Both the yield and total return are based on historical
earnings and are not indicative of future performance. The Fund will include
performance data for both Class A and Class B Shares in any advertisement or
information including performance data of the Fund. The Statement of Additional
Information contains more detailed information about the calculation of
performance. The Fund also may advertise its performance relative to certain
performance rankings, ratings and indexes compiled by independent organizations
(such as Lipper Analytical Services, Value Line and Morningstar, Inc.). In
addition, the Fund may use comparative performance information from certain
industry in various periodicals. The Statement of Additional Information sets
forth under "Performance Information" a list of periodicals, indexes, etc.,
which the Fund may use in its advertisements.
25
<PAGE> 27
APPENDIX
DESCRIPTION OF OPTIONS TRANSACTIONS
OPTIONS ON SECURITIES
An option on a security provides the purchaser, or "holder," with the right, but
not the obligation, to purchase, in the case of a "call" option, or sell, in the
case of a "put" option, the security or securities underlying the option, for a
fixed exercise price up to a stated expiration date or, in the case of certain
options, on such date. The holder pays a non-refundable purchase price for the
option, known as the "premium." The maximum amount of risk the purchaser of the
option assumes is equal to the premium plus related transaction costs, although
the entire amount may be lost. The risk of the seller, or "writer," however, is
potentially unlimited, unless the option is "covered," which is generally
accomplished through the writer's ownership of the underlying security, in the
case of a call option, or the writer's segregation of an amount of cash or
liquid, high grade debt securities equal to the exercise price at all times
during the option period in the case of a put option. If the writer's obligation
is not so covered, it is subject to the risk of the full change in value of the
underlying security from the time the option is written until exercise.
Upon exercise of the option, the holder is required to pay the purchase price of
the underlying security, in the case of a call option, or to deliver the
security in return for the purchase price in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise of expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities and options on indexes of securities, discussed below, are
traded on national securities exchanges, such as the Chicago Board Options
Exchange and the New York Stock Exchange, which are regulated by the Securities
and Exchange Commission. The Options Clearing Corporation guarantees the
performance of each party to an exchange-traded option, by in effect taking the
opposite side of each such option. A holder or writer may engage in transactions
in exchange-traded options on securities and options on indexes of securities
only through a registered broker/dealer which is a member of the exchange on
which the option is traded.
In addition, options on securities and options or indexes of securities
(discussed below) may be traded on exchanges located outside of the U.S. and
over-the-counter through financial institutions dealing in such options as well
as the underlying instruments. Discussion of general risks of transactions on
foreign exchanges and over-the-counter transactions is set forth more in the
Statement of Additional Information. The Investment Adviser does not currently
anticipate investments in options through exchanges other than domestic
securities exchanges.
OPTIONS ON SECURITIES INDEXES
In contrast to an option on a security, an option on a securities index provides
the holder with the right to make or receive a cash settlement upon exercise of
the option, rather than the right to purchase or sell a security. The amount of
this settlement is equal to (i) the amount, if any, by which the fixed exercise
price of the option exceeds (in the case of a call) or is below (in the case of
a put) the closing value of the underlying index on the date of exercise,
multiplied by (ii) a fixed "index multiplier." The purchaser of the option
receives this cash settlement amount if the closing level of the securities
index on the day of exercise is greater than, in the case of a call, or less
than, in the case of a put, the exercise
26
<PAGE> 28
price of the option. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount if the option is exercised. As
in the case of options on securities, the writer or holder may liquidate
positions in securities index options prior to exercise or expiration by
entering into closing transactions on the exchange on which such positions were
established, subject to the availability of a liquid-secondary market.
The index underlying a stock index option may be a "broad-based" index, such as
the Standard & Poor's 500 Index or the New York Stock Exchange Composite Index,
the changes in value of which ordinarily will reflect movements in the stock
market, in general. In contrast, certain options may be based on narrower market
indexes, such as the Standard & Poor's 100 Index, or on indexes of securities of
particular industry groups, such as those of oil and gas or technology
companies. A stock index assigns relative values to the stock included in the
index and the index fluctuates with changes in the market values of the stocks
so included.
OPTIONS ON FOREIGN CURRENCIES
Options on foreign currencies are traded in a manner substantially similar to
options on securities. In particular, an option on foreign currency provides the
holder with the right to purchase, in the case of a call option, or to sell, in
the case of a put option, a stated quantity of a particular currency for a fixed
price up to a stated expiration date. The writer of the option undertakes the
obligation to deliver, in the case of a call option, or to purchase, in the case
of a put option, the quantity of the currency called for in the option, upon
exercise of the option by the holder.
As in the case of other types of options, the holder of an option on foreign
currency is required to pay a one-time, non-refundable premium, which represents
the cost of purchasing the option. The holder can lose the entire amount of this
premium, as well as related transaction costs, but not more than this amount.
The writer of the option, in contrast, generally is required to make initial and
variation margin payments, similar to margin deposits required in the trading of
Futures Contracts and the writing of other types of options. The writer is
therefore subject to risk of loss beyond the amount originally invested and
above the value of the option at the time it is entered into.
Certain options on foreign currencies like Forward Contracts are traded
over-the-counter through financial institutions acting as market-makers in such
options and the underlying currencies. Such transactions therefore involve risks
not generally associated with exchange-traded instruments, which are discussed
in the Statement of Additional Information. Options on foreign currencies may
also be traded on national securities exchanges regulated by the Securities and
Exchange Commission or commodities exchanges regulated by the Commodity Futures
Trading Commission.
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TABLE OF CONTENTS
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PAGE
<S> <C>
Summary.................................... 2
Fund Expenses............................ 3
Financial Highlights....................... 4
Investment Objective and Policies.......... 6
Investment Practices, Techniques and
Restrictions............................. 8
The Fund and Its Management................ 10
Information About Shares of the Fund....... 12
Net Asset Value.......................... 12
Purchase of Shares....................... 13
Alternative Purchase Plan................ 14
Redemption and Repurchase of Shares...... 18
Shareholder Services....................... 21
Telephone Privileges....................... 23
Dividends, Distributions and Tax Status.... 23
Additional Information..................... 24
Appendix................................... 26
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INVESTMENT ADVISER
- -----------------------
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, MA 02119-7603
DISTRIBUTOR
- --------------
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02119-7603
SHAREHOLDER INQUIRY
- ------------------------
1-800-343-6840
P.O. Box 9116
Providence, Rhode Island 02940-9656
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than those contained in
this Prospectus or in official sales literature distributed by the Fund's
Distributor in connection with the offer of the Fund's shares, and if
given or made, such other information or representations must not be
relied upon as having been authorized by the Fund or its Distributor.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
JOHN HANCOCK GROWTH AND INCOME
FUND
A Series of John Hancock Investment Trust
[VELOX]
PROSPECTUS
January 1, 1995
