[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm September 22, 1997
Dear Fellow Shareholder:
I am writing to ask for your vote on an important matter that will affect your
investment in the John Hancock Utilities Fund.
Since its inception in February 1994, your Fund has been managed to be a
relatively conservative stock mutual fund, seeking growth and income in
historically lower-risk, dividend-paying utilities stocks. Recent consolidation
and deregulation trends in the public utility industries, however, have
increased the volatility of this sector considerably. Often thought of as a
"safe haven" for conservative stock investors seeking income, utilities stocks
have become more appropriate for more aggressive investors.
Considering these recent fundamental changes to the public utilities sector and
your Fund's specialized investment focus, your Fund's Trustees are concerned
that the Fund's consistent returns and relatively low volatility will be hard to
maintain in the future. Accordingly, your Trustees are recommending the merger
of your Fund into the John Hancock Growth and Income Fund, another growth and
income fund with a broader investment approach. The Growth and Income Fund
offers you the opportunity to participate in a wide range of investment
opportunities, often including utilities stocks, while seeking the highest total
return that is consistent with reasonable safety of capital. The Growth and
Income Fund also offers you a larger asset base, which can help protect your
investment through greater diversification.
This proposed merger has been unanimously approved by your Fund's Board of
Trustees, who believe it will benefit you and your fellow shareholders. The
proposed merger is detailed in the enclosed proxy statement and summarized in
the questions and answers on the following page. I suggest you read both
thoroughly before voting.
Your Vote Makes a Difference!
No matter what the size of your investment may be, your vote is critical. I urge
you to review the enclosed materials and to complete, sign and return the
enclosed proxy ballot to us immediately. Your prompt response will help avoid
the need for additional mailings at your Fund's expense. For your convenience,
we have provided a postage-paid envelope.
If you have any questions or need additional information, please call your
investment professional or your Customer Service Representative at
1-800-225-5291, Monday through Friday between 8:00 A.M. and 8:00 P.M. Eastern
Time. I thank you for your prompt vote on this matter.
Sincerely,
/s/ Edward J. Boudreau, Jr.
Edward J. Boudreau, Jr.
Chairman and CEO
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Q: What has changed in the utilities industry?
A: Recent legislative changes have decreased the amount of regulation in the
utilities sector, making it more feasible for mergers and acquisitions to occur.
As utilities companies begin to respond to this deregulation, the performance of
utilities stocks is expected to change significantly. The utilities industry's
new landscape involves increased consolidation and competition, which could
create significant and uncharacteristic volatility for utilities stocks. This
volatility exceeds the risk parameters of your Fund. Historically, these stocks
have been considered "safe haven" investments for conservative investors, but we
can no longer assume these stocks will deliver their typical consistent income
and stable growth in the future.
Q: What are the benefits of merging the Utilities Fund into the Growth and
Income Fund?
A: As you know, your Fund is limited only to investments in the public utility
sector. The Growth and Income Fund, on the other hand, invests in stocks of
companies from a wide range of industries, including utilities stocks. As a
Growth and Income Fund shareholder, you can continue to participate in the
utilities sector while opening your portfolio to a broad range of opportunities
in other industries. This diversification will provide you with access to many
more investment opportunities, while making your investment less dependent upon
the success of one sector.
Q: How has the Growth and Income Fund performed?
A: Although past performance does not necessarily guarantee future results, the
Growth and Income Fund has been a steady performer over its more than 48-year
history. The Growth and Income Fund is ranked #24 our of 547 funds in Lipper
Analytical Services, Inc.'s Growth & Income funds category over the past year as
of June 30, 1997.* Its Class A shares have posted average annual total returns
of 29.48% over the past year, 16.06% over the past five years and 12.64% over
the past ten years at public offering price as of June 30, 1997. The Fund's
Class B shares have posted an average annual total
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return of 30.26% over the past year, 16.13% over the past five years and 15.34%
since the Fund's inception on August 22, 1991.** To review the Growth and Income
Fund in greater detail, please refer to the John Hancock Growth and Income Funds
prospectus and the Growth and Income Fund's most recent annual and semiannual
reports, all of which are enclosed.
Q: What is the Growth and Income Fund's strategy?
A: The Growth and Income Fund seeks the highest total return that is consistent
with reasonable safety of capital. The Fund will typically invest in a wide
array of industries including the utilities sector, seeking stocks that are
selling below what the management team estimates to be their actual value.
Q: How do I vote?
A: Most shareholders typically vote by completing, signing and returning the
enclosed proxy card using the postage-paid envelope provided. If you prefer to
vote in person, you are cordially invited to attend a meeting of shareholders of
your Fund, which will be held at 9:00 A.M. on November 12, 1997 at our 101
Huntington Avenue headquarters in Boston, Massachusetts. If you vote now, you
will help avoid further solicitations at your Fund's expense.
Q: How will the merger happen?
A: If the merger is approved, your Utilities Fund shares will be converted to
Growth and Income Fund shares, using the Funds' net asset value share prices
excluding sales charges, as of the close of trading on December 5, 1997. This
conversion will not affect the total dollar value of your investment.
Q: Will the merger have tax consequences?
A: Although taxable dividends and capital gains will be paid prior to the
merger, the merger itself is a non-taxable event and does not need to be
reported on your 1997 tax return.
*This ranking is based on the year-to-date total return for the period ending
June 30, 1997. Ranking applies to Class A shares only, and does not account for
sales charges. The Fund is ranked 117 out of 216 for the five-year period, and
48 out of 127 for the ten-year period.
**Performance figures assume all distributions are reinvested and reflect a
maximum sales charge on Class A shares of 5% and the applicable contingent
deferred sales charge on Class B shares. The CDSC declines annually between
years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1% . No sales
charge will be assessed after the sixth year. The return and principal value of
any mutual fund investment will fluctuate, so that shares, when redeemed, may be
worth more or less than their original cost.
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JOHN HANCOCK UTILITIES FUND
(a series of John Hancock Capital Series)
101 Huntington Avenue
Boston, MA 02199
NOTICE OF MEETING OF SHAREHOLDERS
SCHEDULED FOR NOVEMBER 12, 1997
This is the formal agenda for your fund's shareholder meeting. It tells you what
matters will be voted on and the time and place of the meeting, in case you want
to attend in person.
To the shareholders of John Hancock Utilities Fund:
A meeting of shareholders of your fund will be held at 101 Huntington Avenue,
Boston, Massachusetts on Wednesday, November 12, 1997 at 9:00 a.m., Eastern
Time, to consider the following:
1. A proposal to approve an Agreement and Plan of Reorganization between
your fund and John Hancock Growth and Income Fund. Under this
Agreement your fund would transfer all of its assets to Growth and
Income Fund in exchange for shares of Growth and Income Fund. These
shares would be distributed proportionately to you and the other
shareholders of your fund. Growth and Income Fund would also assume
your fund's liabilities. Your board of trustees recommends that you
vote FOR this proposal.
2. Any other business that may properly come before the meeting.
Shareholders of record as of the close of business on September 17, 1997 are
entitled to vote at the meeting and any related follow-up meetings.
Whether or not you expect to attend the meeting, please complete and return the
enclosed proxy card. If shareholders do not return their proxies in sufficient
numbers, your fund will incur the cost of extra solicitations, which is
indirectly borne by you and other shareholders.
By order of the board of trustees,
Susan S. Newton
Secretary
September 22, 1997
410PX 9/97
1
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PROXY STATEMENT OF
JOHN HANCOCK UTILITIES FUND
(a series of John Hancock Capital Series)
PROSPECTUS FOR
CLASS A AND CLASS B SHARES OF
JOHN HANCOCK GROWTH AND INCOME FUND
(a series of John Hancock Investment Trust)
This proxy statement and prospectus contains the information you should know
before voting on the proposed reorganization of your fund into John Hancock
Growth and Income Fund. Please read it carefully and retain it for future
reference.
How the Reorganization Will Work
o Your fund will transfer all of its assets to Growth and Income
Fund. Growth and Income Fund will assume your fund's
liabilities.
o Growth and Income Fund will issue to your fund Class A shares
in an amount equal to the value of your fund's Class A shares.
These shares will be distributed to your fund's Class A
shareholders in proportion to their holdings on the
reorganization date.
o Growth and Income Fund will issue to your fund Class B shares
in an amount equal to the value of your fund's Class B shares.
These shares will be distributed to your fund's Class B
shareholders in proportion to their holdings on the
reorganization date.
o The reorganization will be tax-free.
o Your fund will be liquidated and you will become a shareholder
of Growth and Income Fund.
Shares of Growth and Income Fund are not deposits or obligations of, or
guaranteed or endorsed by, any bank or other depository institution. These
shares are not federally insured by the Federal Deposit Insurance Corporation,
the Federal Reserve Board or any other government agency.
2
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Shares of Growth and Income Fund have not been approved or disapproved by the
Securities and Exchange Commission. The Securities and Exchange Commission
has not passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
Why Your Fund's Trustees are Recommending the Reorganization
The trustees of your fund believe that reorganizing your fund into a larger fund
with similar investment policies would enable the shareholders of your fund to
benefit from increased diversification, the ability to achieve better net prices
on securities trades and economies of scale that could contribute to a lower
expense ratio. Therefore, the trustees recommend that your fund's shareholders
vote FOR the reorganization.
- --------------------------------------------------------------------------------
Investment Objectives
- ------------------- ------------------------------ -----------------------------
Utilities Growth and Income
- ------------------- ------------------------------ -----------------------------
Investment Current income and, to the Highest total return
objective. extent consistent with this (capital appreciation plus
goal, growth of income and current income) that is
long-term growth of capital. consistent with reasonable
safety of capital.
- ------------------- ------------------------------ -----------------------------
- --------------------------------------------------------------------------------
Where to Get More Information
- ----------------------------------------- --------------------------------------
Prospectus of your fund and Growth and In the same envelope as this proxy
Income Fund dated 5/1/97. statement and prospectus.
Incorporated by reference into this
proxy statement and prospectus.
- -----------------------------------------
Growth and Income Fund's annual and
semi-annual reports to shareholders.
- ----------------------------------------- --------------------------------------
Your fund's annual and semi-annual On file with the Securities and
reports to shareholders. Exchange Commission ("SEC") and
available at no charge by calling
1-800-225-5291. Incorporated by
reference into this proxy statement
and prospectus.
- -----------------------------------------
A statement of additional information
dated 9/22/97. It contains additional
information about your fund and Growth
and Income Fund.
- ----------------------------------------- --------------------------------------
To ask questions about this proxy Call our toll-free telephone
statement and prospectus. number: 1-800-225-5291
- ----------------------------------------- --------------------------------------
The date of this proxy statement and prospectus is September 22, 1997.
3
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TABLE OF CONTENTS
Page
INTRODUCTION 5
SUMMARY 5
INVESTMENT RISKS 17
PROPOSAL TO APPROVE AGREEMENT
AND PLAN OF REORGANIZATION 18
CAPITALIZATION 26
ADDITIONAL INFORMATION ABOUT
THE FUNDS' BUSINESSES 27
BOARDS' EVALUATION AND RECOMMENDATION 27
VOTING RIGHTS AND REQUIRED VOTE 28
INFORMATION CONCERNING THE MEETING 29
OWNERSHIP OF SHARES OF THE FUNDS 31
EXPERTS 32
AVAILABLE INFORMATION 32
EXHIBITS
A - Agreement and Plan of Reorganization between John Hancock Utilities
Fund and John Hancock Growth and Income Fund (attached to this
document).
4
<PAGE>
INTRODUCTION
This proxy statement and prospectus is being used by the board of trustees of
your fund to solicit proxies to be voted at a special meeting of shareholders of
your fund. This meeting will be held at 101 Huntington Avenue, Boston,
Massachusetts on Wednesday, November 12, 1997 at 9:00 a.m., Eastern Time. The
purpose of the meeting is to consider a proposal to approve an Agreement and
Plan of Reorganization providing for the reorganization of your fund into John
Hancock Growth and Income Fund. This proxy statement and prospectus is being
mailed to your fund's shareholders on or about September 22, 1997.
Who is Eligible to Vote?
Shareholders of record on September 17, 1997 are entitled to attend and vote at
the meeting or any adjourned meeting. Each share is entitled to one vote. Shares
represented by properly executed proxies, unless revoked before or at the
meeting, will be voted according to shareholders' instructions. If you sign a
proxy, but do not fill in a vote, your shares will be voted to approve the
Agreement and Plan of Reorganization. If any other business comes before the
meeting, your shares will be voted at the discretion of the persons named as
proxies.
SUMMARY
The following is a summary of more complete information appearing later in this
proxy statement. You should read the entire proxy statement, Exhibit A and the
enclosed documents carefully because they contain details that are not in the
summary.
5
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Comparison of Utilities Fund to Growth and Income Fund
- ------------------- ------------------------------ -----------------------------
Utilities Growth and Income
- ------------------- ------------------------------ -----------------------------
Business: Your fund is a diversified Growth and Income Fund is a
series of John Hancock diversified series of John
Capital Series. The trust is Hancock Investment Trust.
an open-end investment The trust is an open-end
company organized as a investment company organized
Massachusetts business as a Massachusetts business
trust. trust.
- ------------------- ------------------------------ -----------------------------
Net assets as of $67.0 million. $427.2 million.
June 30, 1997:
- ------------------- ------------------------------ -----------------------------
Investment Your fund's investment Growth and Income Fund's
adviser and adviser is John Hancock investment adviser is John
portfolio Advisers, Inc. Gregory K. Hancock Advisers, Inc.
managers: Phelps, leader of your Timothy E. Keefe, CFA, has
fund's portfolio management been the leader of Growth
team since April 1996, is a and Income Fund's portfolio
vice president of the management team since
adviser. Mr. Phelps joined joining John Hancock Funds
John Hancock Funds in in July 1996. He is a
January 1995 and has been in senior vice president of the
the investment business adviser and has been in the
since 1981. investment business since
1987.
- ------------------- ------------------------------ -----------------------------
Investment Current income and, to the Highest total return
objective: extent consistent with this (capital appreciation plus
goal, growth of income and current income) that is
long-term growth of consistent with reasonable
capital. This objective can safety of capital. Growth
be changed without and Income Fund's objective
shareholder approval. can be changed without
shareholder approval.
- ------------------- ------------------------------ -----------------------------
6
<PAGE>
- ------------------- ------------------------------ -----------------------------
Utilities Growth and Income
- ------------------- ------------------------------ -----------------------------
Primary At least 65% of assets in Growth and Income Fund
investments: common stocks, warrants, invests primarily in common
preferred stocks and stocks, but may invest in
convertible securities of most types of securities,
U.S. and foreign public including common and
utility companies, such as preferred stocks, warrants
those whose principal and convertible securities;
business involves the U.S. Government and agency
generation, handling or sale debt securities including
of electricity, natural gas, mortgage- backed securities;
water, waste management corporate bonds, notes and
services or non-broadcast other debt obligations of
telecommunications any maturity.
services. Your fund may
invest in other industries
if fund management believes
it would help the fund
achieve its investment
objective.
- ------------------- ------------------------------ -----------------------------
Investments in Your fund may invest up to Growth and Income Fund may
debt securities: 25% of assets in invest, without limitation,
investment-grade debt in investment grade debt
securities. For temporary securities and may invest up
defensive purposes your fund to 15% of net assets in junk
may invest up to 100% of bonds.
assets in these securities.
Your fund may not invest in
junk bonds.
- ------------------- ------------------------------ -----------------------------
Foreign Your fund may invest up to Growth and Income Fund may
securities: 25% of assets in securities invest up to 25% of assets
issued by foreign companies in securities issued by
as well as American or foreign companies as well as
European depository receipts. American or European
depository receipts and up
to 35% of assets in these
securities during adverse
U.S. market conditions.
- ------------------- ------------------------------ -----------------------------
7
<PAGE>
- ------------------- ------------------------------ -----------------------------
Utilities Growth and Income
- ------------------- ------------------------------ -----------------------------
Illiquid Your fund may invest up to Growth and Income Fund may
securities: 15% of net assets in invest up to 10% of net
illiquid securities. This assets in illiquid
limitation does not apply to securities. This limitation
liquid Rule 144A securities, does not apply to liquid
but does apply to other Rule 144A securities, but
restricted securities. does apply to other
restricted securities.
- ------------------- ------------------------------ -----------------------------
Financial futures Your fund may, but typically Growth and Income Fund may
and related does not, use financial use financial futures,
options; options futures, options on futures options on futures and
on securities and and options on securities options on securities and
indices: and indices. There are no indices. Growth and Income
percentage limits on the Fund may not purchase
amounts of fund assets that additional call or put
the fund may invest in these options on securities or
instruments. indices if the premium paid
on all such options held by
the fund would exceed 10% of
net assets.
- ------------------- ------------------------------------------------------------
Currency Both funds may enter into currency contracts for hedging,
contracts: but not speculative, purposes.
- ------------------- ------------------------------ -----------------------------
Short sales: Your fund may, but typically Growth and Income Fund may
does not, engage in short not engage in short sales.
sales for hedging purposes
only.
- ------------------- ------------------------------------------------------------
When-issued and Both funds may purchase when-issued securities and purchase
forward or sell securities in forward commitment transactions.
commitment
transactions:
- ------------------- ------------------------------------------------------------
Short-term Neither fund is subject to any limitations on short- term
trading: trading.
- ------------------- ------------------------------------------------------------
Repurchase Both funds may invest without limitation in repurchase
agreements: agreements.
- ------------------- ------------------------------ -----------------------------
Securities Your fund may lend portfolio Growth and Income Fund may
lending: securities representing up lend portfolio securities
to 33.3% of assets. representing up to 33% of
assets.
- ------------------- ------------------------------------------------------------
Borrowing and Both funds may temporarily borrow from banks or through
reverse reverse repurchase agreements for extraordinary or
repurchase emergency purposes. These borrowings may not exceed 33.3%
agreements: of assets.
- ------------------- ------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
CLASSES OF SHARES
- ------------------- ------------------------------ -----------------------------
Utilities Growth and Income
- ------------------- ------------------------------------------------------------
Class A shares: The Class A shares of both funds have the same
characteristics and fee structure except for Class A 12b-1
fees.
o Class A shares are offered with front-end sales charges
ranging from 2% to 5% of each fund's offering price,
depending on the amount invested.
o There is no front-end sales charge for investments of
$1 million or more, but there is a contingent deferred
sales charge ranging from 0.25% to 1.00% on shares sold
within one year of purchase.
o Investors can combine multiple purchases of Class A
shares to take advantage of breakpoints in the sales
charge schedule.
o Sales charges are waived for the categories of
investors listed in the funds' prospectus.
------------------------------------------------------------
Class A shares are subject Class A shares are subject
to a 12b-1 distribution fee to a 12b-1 distribution fee
equal to 0.30% annually of equal to 0.25% annually of
average net assets. average net assets.
- ------------------- ------------------------------------------------------------
Class B shares: The Class B shares of both funds have the same
characteristics and fee structure.
o Class B shares are offered without a front-end sales
charge, but are subject to a contingent deferred sales
charge (CDSC) if sold within six years after purchase.
The CDSC ranges from 1.00% to 5.00% depending on how
long they are held. No CDSC is imposed on shares held
more than six years.
o CDSCs are waived for the categories of investors listed
in the funds' prospectus.
o Class B shares are subject to 12b-1 distribution and
service fees equal to 1.00% annually of average net
assets.
o Class B shares automatically convert to Class A shares
after eight years.
- ------------------- ------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGING SHARES
- ------------------- ------------------------------------------------------------
Both Utilities and Growth and Income Funds
- ------------------- ------------------------------------------------------------
Buying shares: The procedures for buying shares of both funds are
identical. Investors may buy shares at their public
offering price through a financial representative or the
funds' transfer agent, John Hancock Signature Services,
Inc. After September 17, 1997, investors will not be
allowed to open new accounts in your fund but can add to
existing accounts.
- ------------------- ------------------------------------------------------------
Minimum The funds have the same initial investment minimums, which
initial are $1,000 for non-retirement accounts and $250 for
investments: retirement accounts and group investments.
- ------------------- ------------------------------------------------------------
Exchanging shares: Shareholders of both funds may exchange their shares
at net asset value with no sales charge for shares of the
same class of any other John Hancock fund.
- ------------------- ------------------------------------------------------------
Selling shares: Shareholders of both funds may sell their shares by
submitting a proper written or telephone request to John
Hancock Signature Services, Inc.
- ------------------- ------------------------------------------------------------
Net asset All purchases, exchanges and sales of each fund's shares are
value: made at a price based on the next determined net asset value
per share (NAV) of the fund. Both funds' NAVs are determined
at the close of regular trading on the New York Stock
Exchange, which is normally 4:00 p.m. Eastern Time.
- ------------------- ------------------------------------------------------------
The Funds' Expenses
Shareholders of both funds pay various expenses, either directly or indirectly.
The first two expense tables appearing below show the expenses for the twelve
month period ended June 30, 1997, adjusted to reflect any changes. Future
expenses may be greater or less. The examples contained in each expense table
show what you would pay if you invested $1,000 over the various time periods
indicated. Each example assumes that you reinvested all dividends and that the
average annual return was 5%. The examples are for comparison purposes only and
are not a representation of either fund's actual expenses or returns, either
past or future.
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<PAGE>
Utilities Fund
Shareholder transaction expenses Class A Class B
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
Annual fund operating expenses
(as a % of average net assets) Class A Class B
Management fee (after expense limitation)(3) 0.27% 0.27%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.50% 0.50%
Total fund operating expenses (after expense
limitation)(3) 1.07% 1.77%
Example
Share class Year 1 Year 3 Year 5 Year 10
Class A shares $60 $82 $106 $174
Class B shares
Assuming redemption
at end of period $68 $86 $116 $190
Assuming no redemption $18 $56 $96 $190
Growth and Income Fund
Shareholder transaction expenses Class A Class B
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
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<PAGE>
Annual fund operating expenses
(as a % of average net assets) Class A Class B
Management fee 0.625% 0.625%
12b-1 fee(4) 0.250% 1.000%
Other expenses 0.245% 0.245%
Total fund operating expenses 1.12% 1.87%
Example
Share class Year 1 Year 3 Year 5 Year 10
Class A shares $61 $84 $109 $180
Class B shares
Assuming redemption
at end of period $69 $89 $121 $199
Assuming no redemption $19 $59 $101 $199
(1) Except for investments of $1 million or more.
(2) Does not include wire redemption fee (currently $4.00).
(3) Reflects the adviser's voluntary agreement to limit expenses (except
for 12b-1 and transfer agent expenses). Without this limitation,
management fees would be 0.70% for each class of your fund and total
fund operating expenses would be 1.50% for Class A and 2.20% for Class
B. The adviser may discontinue this limitation at any time.
(4) Because of the 12b-1 fee, long-term shareholders may pay more than the
equivalent of the maximum permitted front-end sales charge.
Pro Forma Expense Table
The next expense table shows the pro forma expenses of Growth and Income Fund
assuming that a reorganization with your fund occurred on June 30, 1997. The
expenses shown in the table are based on fees and expenses incurred during the
twelve months ended June 30, 1997, adjusted to reflect any changes. Growth and
Income Fund's actual expenses after the reorganization may be greater or less
than those shown. The example contained in the pro forma expense table shows
what you would pay on a $1,000 investment if the reorganization had occurred on
June 30, 1997. The example assumes that you reinvested all dividends and that
the average annual return was 5%. The pro forma example is for comparison
purposes only and is not a representation of Growth and Income Fund's actual
expenses or returns, either past or future.
12
<PAGE>
Growth and Income Fund (PRO FORMA)
(Assuming reorganization with Utilities Fund)
Shareholder transaction expenses Class A Class B
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
Annual fund operating expenses
(as a % of average net assets) Class A Class B
Management fee 0.625% 0.625%
12b-1 fee(3) 0.250% 1.000%
Other expenses 0.275% 0.275%
Total fund operating expenses 1.15% 1.90%
Pro Forma Example
Share class Year 1 Year 3 Year 5 Year 10
Class A shares $61 $85 $110 $183
Class B shares
Assuming redemption
at end of period $69 $90 $123 $202
Assuming no redemption $19 $60 $103 $202
(1) Except for investments of $1 million or more.
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may pay more than
the equivalent of the maximum permitted front-end sales charge.
The Reorganization
o The reorganization is scheduled to occur at 5:00 p.m., Eastern
time, on December 5, 1997, but may occur on any later date
before June 1, 1998. Your fund will transfer all of its assets
to Growth and Income Fund. Growth and Income Fund will assume
your fund's liabilities. The net asset value of both funds
will be computed as of 5:00 p.m., Eastern time, on the
reorganization date.
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<PAGE>
o Growth and Income Fund will issue to your fund Class A shares
in an amount equal to the aggregate net asset value of your
fund's Class A shares. These shares will immediately be
distributed to your fund's Class A shareholders in proportion
to their holdings on the reorganization date. As a result,
Class A shareholders of your fund will end up as Class A
shareholders of Growth and Income Fund.
o Growth and Income Fund will issue to your fund Class B shares
in an amount equal to the aggregate net asset value of your
fund's Class B shares. These shares will immediately be
distributed to your fund's Class B shareholders in proportion
to their holdings on the reorganization date. As a result,
Class B shareholders of your fund will end up as Class B
shareholders of Growth and Income Fund.
o After the reorganization is over, your fund will be
terminated.
o The reorganization will be tax-free and will not take place
unless both funds receive a satisfactory opinion concerning
the tax consequences of the reorganization from Hale and Dorr
LLP, counsel to the funds.
Other Consequences of the Reorganization. Each fund pays monthly advisory fees
equal to the following annual percentage of average daily net assets:
- ---------------------------------------------- ---------------- ----------------
Fund Asset
Breakpoints Growth and
Utilities Income
- ---------------------------------------------- ---------------- ----------------
First $250 million 0.70% 0.625%
- ---------------------------------------------- ---------------- ----------------
Over $250 million 0.65% 0.625%
- ---------------------------------------------- ---------------- ----------------
Thus, at all asset levels, the advisory fee rates paid by Growth and Income Fund
are lower than the rates paid by your fund. In addition, your fund's historical
growth pattern suggests that its asset size probably would not have increased
significantly in the near future to qualify for the 0.65% fee rate, which would
still be higher than the fee rate paid by Growth and Income Fund.
In addition to lower advisory fee rates, Growth and Income Fund's other expenses
of 0.245%, as well as its pro forma other expenses of 0.275%, are lower than
your fund's other expenses of 0.50%. Furthermore, Growth and Income Fund's 12b-1
fee rate of 0.25% for Class A shares is below your fund's Class A fee rate of
14
<PAGE>
0.30%. Both funds pay the same Class B 12b-1 fee rate of 1.00%. However, Growth
and Income Fund's current annual Class A and Class B expense ratios (equal to
1.12% and 1.87%, respectively, of average net assets) are higher than your
fund's current expense ratios (equal to 1.07% and 1.77%, respectively, of
average net assets). The Adviser has agreed to reduce its management fee for
Growth and Income Fund by $150,000 in total during the fiscal year of 1998 only.
The reason Growth and Income Fund's annual total expenses are higher than your
fund's (even though Growth and Income Fund's management fees, Class A 12b-1 fees
and other expenses are lower) is that the adviser has voluntarily agreed to
limit your fund's expenses. If the adviser had not limited your fund's expenses,
your fund's annual Class A and Class B expense ratios would have been equal to
1.50% and 2.20%, respectively, of average net assets and would have been
substantially higher than Growth and Income Fund's current expense ratios. In
light of your fund's inability to attract a significant amount of new assets,
the adviser does not plan to continue to subsidize a portion of your fund's
expenses indefinitely. When the adviser discontinues this voluntary limitation,
your fund's expense ratio will rise above Growth and Income Fund's current
expense ratio.
15
<PAGE>
The following diagram shows how the reorganization would be carried out:
Utilities Fund transfers Utilities Fund Growth and Income
assets & liabilities to assets and Fund receives assets &
Growth and Income liabilities assumes liabilities of
Fund Utilities Fund
Class A Class B Issues Class B Issues Class A
shareholders shareholders Shares Shares
Your fund receives Growth and Income Fund
Class B shares and
distributes them to your fund's Class B shareholders
Your fund receives Growth and Income Fund
Class A shares and
distributes them to your fund's Class A shareholders
[This diagram represents a graphical illustration of the reorganization]
16
<PAGE>
INVESTMENT RISKS
The funds are exposed to various risks that could cause shareholders to lose
money on their investments in the funds. The following table indicates that the
risk effecting each fund are similar.
- ------------------- ------------------------------ -----------------------------
Utilities Growth and Income
- ------------------- ------------------------------------------------------------
Stock As with any fund that invests primarily in stocks, the
market risk value of each fund's portfolio will change in response to
stock market movements.
- ------------------- ------------------------------------------------------------
Credit risk The debt securities held by each fund are subject to
the risk that the issuer of a security will default or
otherwise fail to meet its obligations.
- ------------------- ------------------------------------------------------------
Interest A rise in interest rates typically causes the value of debt
rate risk securities to fall. A fall in interest rates typically
causes the value of debt securities to rise.
- ------------------- ------------------------------------------------------------
Foreign Each fund's investments in foreign securities are subject
securities and to the risks of adverse foreign government actions,
currency risks political instability or a lack of adequate and accurate
information. Also, currency exchange rate movements could
reduce gains or create losses.
- ------------------- ------------------------------------------------------------
Risks of The funds' investments in restricted and illiquid
restricted and securities may be difficult or impossible to sell at a
illiquid desirable time or a fair price. Restricted and illiquid
securities securities also present a greater risk of inaccurate
valuation.
- ------------------- ------------------------------------------------------------
17
<PAGE>
- ------------------- ------------------------------ -----------------------------
Utilities Growth and Income
- ------------------- ------------------------------ -----------------------------
Risks of Most derivative instruments involve leverage, which
derivative increases market risks. Leverage magnifies gains and
instruments, losses on derivatives relative to changes in the value of
including underlying assets. If a derivative is used for hedging
financial purposes, changes in the value of the derivative may not
futures, match those of the hedged asset. Over the counter
options on derivatives may be illiquid or hard to value accurately.
futures, In addition, the other party may default on its
securities and obligations. If markets for underlying assets do not move
index options, in the right direction, a fund's performance may be worse
currency than if it had not used derivatives. Since both funds may
contracts and enter into currency contracts, they are exposed to the risk
short sales that fluctuations in exchange rates may adversely affect
the value of contracts held by the funds.
------------------------------ -----------------------------
Since your fund may, but Since Growth and Income Fund
typically does not, enter may not enter into short
into short sales, it could sales, it is not exposed to
be exposed to the risks of the risks of those
those transactions. transactions.
- ------------------- ------------------------------ -----------------------------
PROPOSAL TO APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION
Description of Reorganization
You are being asked to approve an Agreement and Plan of Reorganization, a copy
of which is attached as Exhibit A. The Agreement provides for a reorganization
on the following terms:
o The reorganization is scheduled to occur at 5:00 p.m., Eastern
time, on December 5, 1997, but may occur on any later date
before June 1, 1998. Your fund will transfer all of its assets
to Growth and Income Fund and Growth and Income Fund will
assume all of your fund's liabilities. This will result in the
addition of your fund's assets to Growth and Income Fund's
portfolio. The net asset value of both funds will be computed
as of 5:00 p.m., Eastern time, on the reorganization date.
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<PAGE>
o Growth and Income Fund will issue to your fund Class A shares
in an amount equal to the aggregate net asset value of your
fund's Class A shares. As part of the liquidation of your
fund, these shares will immediately be distributed to Class A
shareholders of record of your fund in proportion to their
holdings on the reorganization date. As a result, Class A
shareholders of your fund will end up as Class A shareholders
of Growth and Income Fund.
o Growth and Income Fund will issue to your fund Class B shares
in an amount equal to the aggregate net asset value of your
fund's Class B shares. As part of the liquidation of your
fund, these shares will immediately be distributed to Class B
shareholders of record of your fund in proportion to their
holdings on the reorganization date. As a result, Class B
shareholders of your fund will end up as Class B shareholders
of Growth and Income Fund.
o After the reorganization is over, the existence of your fund
will be terminated.
Reasons for the Proposed Reorganization
The board of trustees of your fund believes that the proposed reorganization
will be advantageous to the shareholders of your fund for several reasons. The
board of trustees considered the following matters, among others, in approving
the proposal.
First, that shareholders may be better served by a fund offering greater
diversification. Your fund has a policy of concentrating its investments in
public utilities industries. Over the last year, efforts to deregulate the
public utilities industries have intensified. These efforts have introduced a
degree of uncertainty to companies in those industries which have traditionally
been quite stable as a result of their protected monopoly status. Because of
your fund's concentration policy and small asset size, the trustees believe that
your fund may experience increased volatility as the fundamental structure of
those industries changes to accommodate competition.
Growth and Income Fund has a significantly larger asset size than your fund and
invests in a much broader range of industries. Combining the funds' assets into
a single investment portfolio will allow your fund's shareholders to diversify
their investments to a greater degree than is currently possible through your
fund alone. Greater diversification is expected to benefit the shareholders of
your fund because it may reduce the negative effect that the adverse performance
19
<PAGE>
of any one security or specific industry may have on the performance of the
entire portfolio.
Second, that Growth and Income Fund has performed significantly better than your
fund since its inception. While past performance cannot predict future results,
the trustees believe that Growth and Income Fund is better positioned than your
fund to continue to generate strong returns because of its superior
diversification and greater flexibility to choose from among a broader range of
investment opportunities. Relative to Growth and Income Fund, your fund may be
hampered by its focus on companies in public utilities industries, where
performance has trailed that of the stock market generally.
Third, that if, as expected, the voluntary limitation on your fund's expenses is
discontinued, Growth and Income Fund's pro forma total expenses would be lower
than your fund's total expenses. Shareholders of your fund would then pay
indirectly less in fees each month as shareholders of Growth and Income Fund
than they would if the reorganization did not occur and the voluntary expense
limitation on your fund's expenses were discontinued.
Fourth, that a combined fund offers economies of scale that are expected to lead
to better control over expenses than is possible for your fund. Both funds incur
substantial costs for accounting, legal, transfer agency services, insurance,
and custodial and administrative services.
Fifth, that Growth and Income Fund is more widely recognized in the broker
community as a John Hancock stock fund for investors seeking a combination of
capital appreciation and current income. By offering both funds simultaneously,
it has been increasingly difficult to attract assets to your fund.
Sixth, that the Growth and Income Fund shares received in the reorganization
will provide your fund's shareholders with substantially the same investment at
a comparable level of risk. The board of trustees also considered the
performance history of each fund.
The board of trustees of Growth and Income Fund considered that the
reorganization presents an excellent opportunity for Growth and Income Fund to
acquire investment assets without the obligation to pay commissions or other
transaction costs that are normally associated with the purchase of securities.
The trustees believe that Growth and Income Fund shareholders will also benefit
from improved diversification as a result of the reorganization. While
investments in securities of public utilities companies may become increasingly
volatile as deregulation occurs, the trustees believe that the increased
volatility will not affect Growth and Income Fund's portfolio in the same way as
20
<PAGE>
it would your fund's portfolio. Because Growth and Income Fund is a
significantly larger fund than your fund and because it does not concentrate its
investments in any one industry, the trustees feel that the addition of your
fund's assets will improve the diversification of Growth and Income Fund's
overall portfolio. This opportunity provides an economic benefit to Growth and
Income Fund and its shareholders.
The boards of trustees of both funds also considered that the adviser and the
funds' distributor will also benefit from the reorganization. For example, the
adviser might realize time savings from a consolidated portfolio management
effort and from the need to prepare fewer reports and regulatory filings as well
as prospectus disclosure for one fund instead of two. The trustees believe,
however, that these savings will not amount to a significant economic benefit.
Comparative Fees and Expense Ratios. As discussed above in the Summary, Growth
and Income Fund pays a lower advisory fee rate at all asset levels than does
your fund. In addition, your fund's historical growth pattern suggests that its
asset size probably would not have increased significantly in the near future to
qualify for the 0.65% fee rate, which would still be higher than the fee rate
paid by Growth and Income Fund.
In addition to lower advisory fee rates, Growth and Income Fund's other expenses
of 0.245%, as well as its pro forma other expenses of 0.275%, are lower than
your fund's other expenses of 0.50%. Furthermore, Growth and Income Fund's 12b-1
fee rate of 0.25% for Class A shares is below your fund's Class A fee rate of
0.30%. Both funds pay the same Class B 12b-1 fee rate of 1.00% of assets.
However, Growth and Income Fund's current annual Class A and Class B expense
ratios (equal to 1.12% and 1.87%, respectively, of average net assets) are
higher than your fund's current expense ratios (equal to 1.07% and 1.77%,
respectively, of average net assets). The Adviser has agreed to reduce its
management fee for Growth and Income Fund by $150,000 in total during the fiscal
year of 1998 only.
The reason Growth and Income Fund's annual total expenses are higher than your
fund's (even though Growth and Income Fund's management fees, Class A 12b-1 fees
and other expenses are lower) is that the adviser has voluntarily agreed to
limit your fund's expenses. If the adviser had not limited your fund's expenses,
your fund's annual Class A and Class B expense ratios would have been equal to
1.50% and 2.20%, respectively, of average net assets and would have been
substantially higher than Growth and Income Fund's current expense ratios. The
adviser had decided to voluntarily limit your fund's expenses in combination
with a concerted marketing effort by your fund's distributor, John Hancock
Funds, Inc., in order to promote asset growth in your fund.
21
<PAGE>
In spite of these efforts, your fund has not been able to significantly increase
its asset size. The trustees do not believe, given your fund's current size and
historical growth rate, that your fund will grow to an asset size that would
allow your fund to realize the benefits of economies of scale, including better
control over expenses. The trustees also do not believe that your fund will
reach an asset size which will allow your fund to significantly improve the
diversification of its investment portfolio. In light of your fund's inability
to attract a significant amount of new assets, the adviser does not plan to
continue to subsidize a portion of your fund's expenses indefinitely. When the
adviser discontinues this voluntary limitation, your fund's expense ratio will
rise above Growth and Income Fund's current expense ratio.
Comparative Performance. The trustees also took into consideration the relative
performance of your fund and Growth and Income Fund. As shown in the table
below, Growth and Income Fund has had substantially better performance than your
fund over all periods.
- -------------------------------- ------------------------ ----------------------
Average Annual
Total Return Utilities Growth and Income
(without including sales
charges)
----------- ---------- ------------ -----------
Class A Class B Class A Class B
- -------------------------------- ----------- ---------- ------------ -----------
1 year ended 6/30/97 13.43% 12.56% 36.29% 35.26%
- -------------------------------- ----------- ---------- ------------ -----------
3 years ended 6/30/97 13.71% 12.91% 27.12% 26.21%
- -------------------------------- ----------- ---------- ------------ -----------
5 years ended 6/30/97 10.08%(a) 9.32%(a) 17.25% 16.35%
- -------------------------------- ----------- ---------- ------------ -----------
10 years ended 6/30/97 N/A N/A 13.22% 15.42%(b)
- -------------------------------- ----------- ---------- ------------ -----------
(a) Since commencement of operations on February 1, 1994.
(b) Since commencement of operations on August 22, 1991.
Your fund's performance has lagged behind the performance of Growth and Income
Fund for all of the periods shown above. In addition, the gap between your
fund's performance and Growth and Income Fund's performance has widened over the
last three years. For the three year period, the difference between Growth and
Income Fund's total return and your fund's total return is 13.41% for Class A
shares. For the one year period, that difference has risen to 22.86% for Class A
shares. Your fund's specific objective of investing primarily in public
utilities companies does not give your fund the same degree of flexibility that
Growth and Income Fund has to pursue investment opportunities across a range of
different industries. As a result, the trustees believe that Growth and Income
Fund is better positioned than your fund to continue to generate strong returns
for its shareholders in the future.
22
<PAGE>
Unreimbursed Distribution and Shareholder Service Expenses
The boards of trustees of your fund and Growth and Income Fund have determined
that, if the reorganization occurs, unreimbursed distribution and shareholder
service expenses incurred under your fund's Rule 12b-1 Plans will be
reimbursable expenses under Growth and Income Fund's Rule 12b-1 Plans. However,
the maximum amounts payable annually under Growth and Income Fund's Rule 12b-1
Plans (0.25% and 1.00% of average daily net assets attributable to Class A
shares and Class B shares, respectively) will not increase.
The following table shows the actual and pro forma unreimbursed distribution and
shareholder service expenses of both classes of your fund and Growth and Income
Fund. The table shows both the dollar amount of these expenses and the
percentage of each class' average net assets that they represent.
- -------------------------------- ------------------------ ----------------------
Unreimbursed Distribution and Growth and Income
Shareholder Service Expenses Utilities
----------- ------------ ---------- -----------
Class A Class B Class A Class B
- -------------------------------- ----------- ------------ ---------- -----------
Actual expenses as of June 30, $36,850 $2,378,334 $234,827 $3,589,232
1997 0.16% 5.34% 0.11% 1.70%
- -------------------------------- ----------- ------------ ---------- -----------
Pro forma combined expenses as $271,677 $5,967,566
of June 30, 1997 0.11% 2.33%
- -------------------------------- ------------------------ ---------- -----------
Thus, if the reorganization had taken place on June 30, 1997, the pro forma
combined unreimbursed expenses of Growth and Income Fund's Class A and Class B
shares would have been higher than if no reorganization had occurred.
Nevertheless, Growth and Income Fund's assumption of your fund's unreimbursed
Rule 12b-1 expenses will have no immediate effect upon the payments made under
Growth and Income Fund's Rule 12b-1 Plans. There payments will continue to be
0.25% and 1.00% of average daily net assets attributable to Class A and Class B
shares, respectively.
John Hancock Funds, Inc. hopes to recover unreimbursed distribution and
shareholder service expenses for Class B shares over an extended period of time.
However, if Growth and Income Fund's board terminates either class' Rule 12b-1
Plan, that class will not be obligated to reimburse these distribution and
shareholder service expenses. Accordingly, until they are paid or accrued,
unreimbursed distribution and shareholder service expenses do not and will not
appear as an expense or liability in the financial statements of either fund. In
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<PAGE>
addition, unreimbursed expenses are not reflected in a fund's net asset value or
the formula for calculating Rule 12b-1 payments. The staff of the SEC has not
approved or disapproved the treatment of the unreimbursed distribution and
shareholder service expenses described in this proxy statement.
Tax Status of the Reorganization
The reorganization will be tax-free for federal income tax purposes and will not
take place unless both funds receive a satisfactory opinion from Hale and Dorr
LLP, counsel to the funds, substantially to the effect that:
o The reorganization described above will be a "reorganization"
within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986 (the "Code"), and each fund will be "a
party to a reorganization" within the meaning of Section 368
of the Code;
o No gain or loss will be recognized by your fund upon (1) the
transfer of all of its assets to Growth and Income Fund as
described above or (2) the distribution by your fund of Growth
and Income Fund shares to your fund's shareholders;
o No gain or loss will be recognized by Growth and Income Fund
upon the receipt of your fund's assets solely in exchange for
the issuance of Growth and Income Fund shares and the
assumption of all of your fund's liabilities by Growth and
Income Fund;
o The basis of the assets of your fund acquired by Growth and
Income Fund will be the same as the basis of those assets in
the hands of your fund immediately before the transfer;
o The tax holding period of the assets of your fund in the hands
of Growth and Income Fund will include your fund's tax holding
period for those assets;
o The shareholders of your fund will not recognize gain or loss
upon the exchange of all their shares of your fund solely for
Growth and Income Fund shares as part of the reorganization;
o The basis of Growth and Income Fund shares received by your
fund's shareholders in the reorganization will be the same as
the basis of the shares of your fund surrendered in
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<PAGE>
exchange; and
o The tax holding period of the Growth and Income Fund shares
received by you will include the tax holding period of the
shares of your fund surrendered in the exchange, provided that
shares of your fund were held as capital assets on the
reorganization date.
Additional Terms of Agreement and Plan of Reorganization
Surrender of Share Certificates. If your shares are represented by one or more
share certificates before the reorganization date, either surrender the
certificates to your fund or deliver to your fund a lost certificate affidavit,
in the form and accompanied by the surety bonds that your fund may require
(collectively, an "Affidavit"). On the reorganization date, all certificates
that have not been surrendered will be canceled, will no longer evidence
ownership of your fund's shares and will evidence ownership of Growth and Income
Fund shares. Shareholders may not redeem or transfer Growth and Income Fund
shares received in the reorganization until they have surrendered their fund
share certificates or delivered an Affidavit. Growth and Income Fund will not
issue share certificates in the reorganization.
Conditions to Closing the Reorganization. The obligation of your fund to
consummate the reorganization is subject to the satisfaction of certain
conditions, including the performance by Growth and Income Fund of all its
obligations under the Agreement and the receipt of all consents, orders and
permits necessary to consummate the reorganization (see Agreement, paragraph 6).
The obligation of Growth and Income Fund to consummate the reorganization is
subject to the satisfaction of certain conditions, including your fund's
performance of all of its obligations under the Agreement, the receipt of
certain documents and financial statements from your fund and the receipt of all
consents, orders and permits necessary to consummate the reorganization (see
Agreement, paragraph 7).
The obligations of both funds are subject to the approval of the Agreement by
the necessary vote of the outstanding shares of your fund, in accordance with
the provisions of your fund's declaration of trust and by-laws. The funds'
obligations are also subject to the receipt of a favorable opinion of Hale and
Dorr LLP as to the federal income tax consequences of the reorganization. (see
Agreement, paragraph 8).
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<PAGE>
Termination of Agreement. The board of trustees of either your fund or Growth
and Income Fund may terminate the Agreement (even if the shareholders of your
fund have already approved it) at any time before the reorganization date, if
that board believes that proceeding with the reorganization would no longer be
advisable.
Expenses of the Reorganization. Growth and Income Fund and your fund will each
be responsible for its own expenses incurred in connection with entering into
and carrying out the provisions of the Agreement, whether or not the
reorganization occurs. These expenses are estimated to be approximately $103,895
in total.
CAPITALIZATION
The following table sets forth the capitalization of each fund as of
June 30, 1997, and the pro forma combined capitalization of both funds as if the
reorganization had occurred on such date. The table reflects pro forma exchange
ratios of approximately 0.487767 Class A Growth and Income Fund shares being
issued for each Class A share of your fund and approximately 0.484809 Class B
Growth and Income Fund shares being issued for each Class B share of your fund.
If the reorganization is consummated, the actual exchange ratios on the
reorganization date may vary from the exchange ratios indicated due to changes
in the market value of the portfolio securities of both Growth and Income Fund
and your fund between June 30, 1997 and the reorganization date, changes in the
amount of undistributed net investment income and net realized capital gains of
Growth and Income Fund and your fund during that period resulting from income
and distributions, and changes in the accrued liabilities of Growth and Income
Fund and your fund during the same period.
JUNE 30, 1997
Growth and
Utilities Income Pro Forma(1)
Net Assets $66,972,839 $427,200,271 $494,158,464
Net Asset Value Per Share
Class A $9.32 $19.10 $19.10
Class B $9.32 $19.16 $19.16
Shares Outstanding
Class A 2,411,722 11,293,531 12,469,712
Class B 4,790,787 11,037,162 13,359,351
(1) The deferred organization expense of John Hancock Utilities Fund was
written off as the Fund would no longer be in existence. As a result,
the net assets of the surviving fund after the reorganization will be
less than the combined net assets of the surviving fund and the
acquired fund prior to the reorganization.
26
<PAGE>
It is impossible to predict how many Class A shares and Class B shares of Growth
and Income Fund will actually be received and distributed by your fund on the
reorganization date. The table should not be relied upon to determine the amount
of Growth and Income Fund shares that will actually be received and distributed.
ADDITIONAL INFORMATION ABOUT THE FUNDS' BUSINESSES
The following table shows where in the funds' combined prospectus you can find
additional information about the business of each fund.
- ---------------------------- ---------------------------------------------------
Type of Information Headings in Combined Prospectus
-------------------------- ------------------------
Utilities Growth and Income
- ---------------------------- ---------------------------------------------------
Organization Fund Details: Business Structure: How the Funds
and operation are Organized
- ---------------------------- ---------------------------------------------------
Investment objective and Goal and Strategy, Portfolio Securities, Risk
policies Factors; Fund Details: Business Structure:
Portfolio Trades, Investment Goals,
Diversification; More About Risk
- ---------------------------- ---------------------------------------------------
Portfolio Portfolio Management
management
- ---------------------------- ---------------------------------------------------
Investment adviser and Overview: The Management Firm; Fund Details:
distributor Business Structure How and Funds are Organized,
Sales Compensation
- ---------------------------- ---------------------------------------------------
Expenses Investor Expenses
- ---------------------------- ---------------------------------------------------
Custodian and Fund Details: Business Structure: How the Funds
transfer agent are Organized
- ---------------------------- ---------------------------------------------------
Shares of beneficial Your Account: Choosing a Share Class
interest
- ---------------------------- ---------------------------------------------------
Purchase of shares Your Account: Choosing a Share Class, Sales
Charge Reductions and Waivers, Opening an
Account, Buying Shares; Transaction Policies;
Additional Investor Services
- ---------------------------- ---------------------------------------------------
Redemption Your Account: Selling Shares, How Sales Charges
or sale of shares are Calculated; Transaction Policies; Additional
Investor Services; Systematic Withdrawal Plan
- ---------------------------- ---------------------------------------------------
Dividends, distributions Dividends and Account Policies
and taxes
- ---------------------------- ---------------------------------------------------
27
<PAGE>
BOARDS' EVALUATION AND RECOMMENDATION
For the reasons described above, the board of trustees of your fund, including
the trustees who are not "interested persons" of either fund or the adviser
("independent trustees"), approved the reorganization. In particular, the
trustees determined that the reorganization was in the best interests of your
fund and that the interests of your fund's shareholders would not be diluted as
a result of the reorganization. Similarly, the board of trustees of Growth and
Income Fund, including the independent trustees, approved the reorganization.
They also determined that the reorganization was in the best interests of Growth
and Income Fund and that the interests of Growth and Income Fund's shareholders
would not be diluted as a result of the reorganization.
- --------------------------------------------------------------------------------
The trustees of your fund recommend that the
shareholders of your fund vote for the proposal to
approve the agreement and plan of reorganization.
- --------------------------------------------------------------------------------
VOTING RIGHTS AND REQUIRED VOTE
Each share of your fund is entitled to one vote. Approval of the above proposal
requires the affirmative vote of a majority of the shares of your fund
outstanding and entitled to vote. For this purpose, a majority of the
outstanding shares of your fund means the vote of the lesser of
(1) 67% or more of the shares present at the meeting, if the holders of more
than 50% of the shares of the fund are present or represented by proxy, or
(2) more than 50% of the outstanding shares of the fund.
Shares of your fund represented in person or by proxy, including shares which
abstain or do not vote with respect to the proposal, will be counted for
purposes of determining whether there is a quorum at the meeting. Accordingly,
an abstention from voting has the same effect as a vote against the proposal.
However, if a broker or nominee holding shares in "street name" indicates on the
proxy card that it does not have discretionary authority to vote on the
proposal, those shares will not be considered present and entitled to vote on
the proposal. Thus, a "broker non-vote" has no effect on the voting in
determining whether the proposal has been adopted in accordance with clause (1)
above, if more than 50% of the outstanding shares (excluding the "broker
non-votes") are present or represented. However, for purposes of determining
whether the proposal has been adopted in accordance with clause (2) above, a
"broker non-vote" has the same effect as a vote against the proposal because
28
<PAGE>
shares represented by a "broker non-vote" are considered to be outstanding
shares.
If the required approval of shareholders is not obtained, your fund will
continue to engage in business as a separate mutual fund and the board of
trustees will consider what further action may be appropriate.
INFORMATION CONCERNING THE MEETING
Solicitation of Proxies
In addition to the mailing of these proxy materials, proxies may be solicited by
telephone, by fax or in person by the trustees, officers and employees of your
fund; by personnel of your fund's investment adviser, John Hancock Advisers,
Inc. and its transfer agent, John Hancock Signature Services, Inc.; or by
broker-dealer firms. Signature Services, together with a third party
solicitation firm, has agreed to provide proxy solicitation services to your
fund at a cost of approximately $3,000.
Revoking Proxies
A Utilities Fund shareholder signing and returning a proxy has the power to
revoke it at any time before it is exercised:
o By filing a written notice of revocation with your fund's
transfer agent, John Hancock Signature Services, Inc., 1 John
Hancock Way, Suite 1000, Boston, Massachusetts 02217- 1000, or
o By returning a duly executed proxy with a later date before
the time of the meeting, or
o If a shareholder has executed a proxy but is present at the
meeting and wishes to vote in person, by notifying the
secretary of your fund (without complying with any
formalities) at any time before it is voted.
Being present at the meeting alone does not revoke a previously executed and
returned proxy.
Outstanding Shares and Quorum
As of September 17, 1997, 2,228,202 Class A shares and 4,513,779 Class B shares
of beneficial interest of your fund were outstanding. Only shareholders of
record on September 17, 1997 (the "record date") are entitled to notice of and
29
<PAGE>
to vote at the meeting. A majority of the outstanding shares of your fund that
are entitled to vote will be considered a quorum for the transaction of
business.
Other Business
Your fund's board of trustees knows of no business to be presented for
consideration at the meeting other than the proposal. If other business is
properly brought before the meeting, proxies will be voted according to the best
judgment of the persons named as proxies.
Adjournments
If a quorum is not present in person or by proxy at the time any session of the
meeting is called to order, the persons named as proxies may vote those proxies
that have been received to adjourn the meeting to a later date. If a quorum is
present but there are not sufficient votes in favor of the proposal, the persons
named as proxies may propose one or more adjournments of the meeting to permit
further solicitation of proxies concerning the proposal. Any adjournment will
require the affirmative vote of a majority of your fund's shares at the session
of the meeting to be adjourned. If an adjournment of the meeting is proposed
because there are not sufficient votes in favor of the proposal, the persons
named as proxies will vote those proxies favoring the proposal in favor of
adjournment, and will vote those proxies against the reorganization against
adjournment.
Telephone Voting
In addition to soliciting proxies by mail, by fax or in person, your fund may
also arrange to have votes recorded by telephone by officers and employees of
your fund or by personnel of the adviser or transfer agent. The telephone voting
procedure is designed to verify a shareholder's identity, to allow a shareholder
to authorize the voting of shares in accordance with the shareholder's
instructions and to confirm that the voting instructions have been properly
recorded. If these procedures were subject to a successful legal challenge,
these telephone votes would not be counted at the meeting. Your fund has not
obtained an opinion of counsel about telephone voting, but is currently not
aware of any challenge.
o A shareholder will be called on a recorded line at the
telephone number in the fund's account records and will be
asked to provide the shareholder's social security number or
other identifying information.
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o The shareholder will then be given an opportunity to authorize
proxies to vote his or her shares at the meeting in accordance
with the shareholder's instructions.
o To ensure that the shareholder's instructions have been
recorded correctly, the shareholder will also receive a
confirmation of the voting instructions by mail.
o A toll-free number will be available in case the voting
information contained in the confirmation is incorrect.
o If the shareholder decides after voting by telephone to attend
the meeting, the shareholder can revoke the proxy at that time
and vote the shares at the meeting.
OWNERSHIP OF SHARES OF THE FUNDS
To the knowledge of the fund, as of August 29, 1997, the following persons owned
of record or beneficially 5% or more of the outstanding Class A and Class B
shares of your fund and Growth and Income Fund:
- -------------------------------- ----------------------
Names and Addresses of Owners Utilities Fund
of More Than 5% of Shares
- -------------------------------- ----------------------
IBT & Co. 6.77% of Class A
C/O Isabella Bank and Trust
P.O. Box 100
Mt. Pleasant, MI 48804
- -------------------------------- ----------------------
MLPF & S for the Sole Benefit of 6.36% of Class B
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246
- -------------------------------- ----------------------
Growth and Income Fund
- -------------------------------- ----------------------
MLPF & S for the Sole Benefit of 5.95% of Class B
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246
- -------------------------------- ----------------------
As of August 29, 1997, the trustees and officers of your fund and Growth and
31
<PAGE>
Income Fund, each as a group, owned in the aggregate less than 1% of the
outstanding shares of their respective funds.
EXPERTS
The financial statements and the financial highlights of Utilities Fund and
Growth and Income Fund, each as of December 31, 1996 and for the periods then
ended are incorporated by reference into this proxy statement and prospectus.
These financial statements and financial highlights have been independently
audited by Price Waterhouse LLP and Ernst & Young LLP, respectively, as stated
in their reports appearing in the statement of additional information. These
financial statements and financial highlights have been included in reliance on
their reports given on their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
Each fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 and files reports,
proxy statements and other information with the SEC. These reports, proxy
statements and other information filed by the funds can be inspected and copied
(at prescribed rates) at the public reference facilities of the SEC at 450 Fifth
Street, N.W., Washington, D.C., and at the following regional offices: Chicago
(500 West Madison Street, Suite 1400, Chicago, Illinois); and New York (7 World
Trade Center, Suite 1300, New York, New York). Copies of such material can also
be obtained by mail from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, copies
of these documents may be viewed on-screen or downloaded from the SEC's Internet
site at http://www.sec.gov.
32
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this 22nd
day of September, 1997, by and between John Hancock Growth and Income Fund (the
"Acquiring Fund"), a series of John Hancock Investment Trust, a Massachusetts
business trust (the "Trust II"), and John Hancock Utilities Fund (the "Acquired
Fund"), a series of John Hancock Capital Series, a Massachusetts business trust
(the "Trust") each with their principal place of business at 101 Huntington
Avenue, Boston, Massachusetts 02199. The Acquiring Fund and the Acquired Fund
are sometimes referred to collectively herein as the "Funds" and individually as
a "Fund."
This Agreement is intended to be and is adopted as a plan of "reorganization,"
as such term is used in Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). The reorganization will consist of the transfer of all of
the assets of the Acquired Fund to the Acquiring Fund in exchange solely for the
issuance of Class A and Class B shares of beneficial interest of the Acquiring
Fund (the "Acquiring Fund Shares") to the Acquired Fund and the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund, followed by
the distribution by the Acquired Fund, on or promptly after the Closing Date
hereinafter referred to, of the Acquiring Fund Shares to the shareholders of the
Acquired Fund in liquidation and termination of the Acquired Fund as provided
herein, all upon the terms and conditions set forth in this Agreement.
In consideration of the premises of the covenants and agreements hereinafter set
forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF ACQUIRING FUND SHARES; LIQUIDATION OF THE
ACQUIRED FUND
1.1 The Acquired Fund will transfer all of its assets (consisting, without
limitation, of portfolio securities and instruments, dividends and
interest receivables, cash and other assets), as set forth in the
statement of assets and liabilities referred to in Paragraph 7.2 hereof
(the "Statement of Assets and Liabilities"), to the Acquiring Fund free
and clear of all liens and encumbrances, except as otherwise provided
herein, in exchange for (i) the assumption by the Acquiring Fund of the
known and unknown liabilities of the Acquired Fund, including the
liabilities set forth in the Statement of Assets and Liabilities (the
"Acquired Fund Liabilities"), which shall be assigned and transferred
to the Acquiring Fund by the Acquired Fund and
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assumed by the Acquiring Fund, and (ii) delivery by the Acquiring Fund
to the Acquired Fund, for distribution pro rata by the Acquired Fund to
its shareholders in proportion to their respective ownership of Class A
and/or Class B shares of beneficial interest of the Acquired Fund, as
of the close of business on December 5, 1997 (the "Closing Date"), of a
number of the Acquiring Fund Shares having an aggregate net asset value
equal, in the case of each class of Acquiring Fund Shares, to the value
of the assets, less such liabilities (herein referred to as the "net
value of the assets") attributable to the applicable class, assumed,
assigned and delivered, all determined as provided in Paragraph 2.1
hereof and as of a date and time as specified therein. Such
transactions shall take place at the closing provided for in Paragraph
3.1 hereof (the "Closing"). All computations shall be provided by
Investors Bank & Trust Company (the "Custodian"), as custodian and
pricing agent for the Acquiring Fund and the Acquired Fund.
1.2 The Acquired Fund has provided the Acquiring Fund with a list of the
current securities holdings of the Acquired Fund as of the date of
execution of this Agreement. The Acquired Fund reserves the right to
sell any of these securities (except to the extent sales may be limited
by representations made in connection with issuance of the tax opinion
provided for in paragraph 8.6 hereof) but will not, without the prior
approval of the Acquiring Fund, acquire any additional securities other
than securities of the type in which the Acquiring Fund is permitted to
invest.
1.3 The Acquiring Fund and the Acquired Fund shall each bear its own
expenses in connection with the transactions contemplated by this
Agreement.
1.4 On or as soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Acquired Fund will liquidate and
distribute pro rata to shareholders of record (the "Acquired Fund
shareholders"), determined as of the close of regular trading on the
New York Stock Exchange on the Closing Date, the Acquiring Fund Shares
received by the Acquired Fund pursuant to Paragraph 1.1 hereof. Such
liquidation and distribution will be accomplished by the transfer of
the Acquiring Fund Shares then credited to the account of the Acquired
Fund on the books of the Acquiring Fund, to open accounts on the share
records of the Acquiring Fund in the names of the Acquired Fund
shareholders and representing the respective pro rata number and class
of Acquiring Fund Shares due such shareholders. Acquired Fund
shareholders who own Class A shares of the Acquired Fund will receive
Class A Acquiring Fund Shares and Acquired Fund shareholders who own
Class B shares of the Acquired Fund will receive Class B Acquiring Fund
Shares. The Acquiring Fund shall not issue
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certificates representing Acquiring Fund Shares in connection with such
exchange.
1.5 The Acquired Fund shareholders holding certificates representing their
ownership of shares of beneficial interest of the Acquired Fund shall
surrender such certificates or deliver an affidavit with respect to
lost certificates in such form and accompanied by such surety bonds as
the Acquired Fund may require (collectively, an "Affidavit"), to John
Hancock Signature Services, Inc. prior to the Closing Date. Any
Acquired Fund share certificate which remains outstanding on the
Closing Date shall be deemed to be canceled, shall no longer evidence
ownership of shares of beneficial interest of the Acquired Fund and
shall evidence ownership of Acquiring Fund Shares. Unless and until any
such certificate shall be so surrendered or an Affidavit relating
thereto shall be delivered, dividends and other distributions payable
by the Acquiring Fund subsequent to the Liquidation Date with respect
to Acquiring Fund Shares shall be paid to the holder of such
certificate(s), but such shareholders may not redeem or transfer
Acquiring Fund Shares received in the Reorganization. The Acquiring
Fund will not issue share certificates in the Reorganization.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than the registered holder of the Acquired Fund Shares on
the books of the Acquired Fund as of that time shall, as a condition of
such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 The existence of the Acquired Fund shall be terminated as promptly as
practicable following the Liquidation Date.
1.8 Any reporting responsibility of the Trust, including, but not limited
to, the responsibility for filing of regulatory reports, tax returns,
or other documents with the Securities and Exchange Commission (the
"Commission"), any state securities commissions, and any federal, state
or local tax authorities or any other relevant regulatory authority, is
and shall remain the responsibility of the Trust.
2. VALUATION
2.1 The net asset values of the Class A and Class B Acquiring Fund Shares
and the net values of the assets and liabilities of the Acquired Fund
attributable to its Class A and Class B shares to be transferred shall,
in each case, be determined as of the close of business (4:00 p.m.
Boston time) on the Closing Date. The net asset values of the Class A
and Class B Acquiring Fund Shares shall be computed by the Custodian in
the manner set forth in
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<PAGE>
the Acquiring Fund's Declaration of Trust as amended and restated (the
"Declaration"), or By-Laws and the Acquiring Fund's then-current
prospectus and statement of additional information and shall be
computed in each case to not fewer than four decimal places. The net
values of the assets of the Acquired Fund attributable to its Class A
and Class B shares to be transferred shall be computed by the Custodian
by calculating the value of the assets of each class transferred by the
Acquired Fund and by subtracting therefrom the amount of the
liabilities of each class assigned and transferred to and assumed by
the Acquiring Fund on the Closing Date, said assets and liabilities to
be valued in the manner set forth in the Acquired Fund's then current
prospectus and statement of additional information and shall be
computed in each case to not fewer than four decimal places.
2.2 The number of shares of each class of Acquiring Fund Shares to be
issued (including fractional shares, if any) in exchange for the
Acquired Fund's assets shall be determined by dividing the value of the
Acquired Fund's assets attributable to a class, less the liabilities
attributable to that class assumed by the Acquiring Fund, by the
Acquiring Fund's net asset value per share of the same class, all as
determined in accordance with Paragraph 2.1 hereof.
2.3 All computations of value shall be made by the Custodian in accordance
with its regular practice as pricing agent for the Funds.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be December 5, 1997 or such other date on or
before June 30, 1998 as the parties may agree. The Closing shall be
held as of 5:00 p.m. at the offices of the Trust II and the Trust, 101
Huntington Avenue, Boston, Massachusetts 02199, or at such other time
and/or place as the parties may agree.
3.2 Portfolio securities that are not held in book-entry form in the name
of the Custodian as record holder for the Acquired Fund shall be
presented by the Acquired Fund to the Custodian for examination no
later than three business days preceding the Closing Date. Portfolio
securities which are not held in book-entry form shall be delivered by
the Acquired Fund to the Custodian for the account of the Acquiring
Fund on the Closing Date, duly endorsed in proper form for transfer, in
such condition as to constitute good delivery thereof in accordance
with the custom of brokers, and shall be accompanied by all necessary
federal and state stock transfer stamps or a check for the appropriate
purchase price thereof. Portfolio securities held of record by the
Custodian in book-entry form on behalf of the Acquired Fund shall be
delivered to the Acquiring Fund by the Custodian by recording the
transfer
A-4
<PAGE>
of beneficial ownership thereof on its records. The cash delivered
shall be in the form of currency or by the Custodian crediting the
Acquiring Fund's account maintained with the Custodian with immediately
available funds.
3.3 In the event that on the Closing Date (a) the New York Stock Exchange
shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on said Exchange or elsewhere
shall be disrupted so that accurate appraisal of the value of the net
assets of the Acquiring Fund or the Acquired Fund is impracticable, the
Closing Date shall be postponed until the first business day after the
day when trading shall have been fully resumed and reporting shall have
been restored; provided that if trading shall not be fully resumed and
reporting restored on or before June 30, 1998, this Agreement may be
terminated by the Acquiring Fund or by the Acquired Fund upon the
giving of written notice to the other party.
3.4 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup
withholding and nonresident alien withholding status of the Acquired
Fund shareholders and the number of outstanding shares of each class of
beneficial interest of the Acquired Fund owned by each such
shareholder, all as of the close of business on the Closing Date,
certified by its Treasurer, Secretary or other authorized officer (the
"Shareholder List"). The Acquiring Fund shall issue and deliver to the
Acquired Fund a confirmation evidencing the Acquiring Fund Shares to be
credited on the Closing Date, or provide evidence satisfactory to the
Acquired Fund that such Acquiring Fund Shares have been credited to the
Acquired Fund's account on the books of the Acquiring Fund. At the
Closing, each party shall deliver to the other such bills of sale,
checks, assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Trust on behalf of the Acquired Fund represents, warrants and
covenants to the Acquiring Fund as follows:
(a) The Trust is a business trust, duly organized, validly
existing and in good standing under the laws of The
Commonwealth of Massachusetts and has the power to own all of
its properties and assets and, subject to approval by the
shareholders of the Acquired Fund, to carry out the
transactions contemplated by this Agreement. Neither the Trust
nor the Acquired Fund is required to qualify to do business in
any jurisdiction in which it is not so qualified or where
failure to qualify would subject it to any material liability
or disability. The Trust has all necessary federal, state and
local
A-5
<PAGE>
authorizations to own all of its properties and assets and to
carry on its business as now being conducted;
(b) The Trust is a registered investment company classified as a
management company and its registration with the Commission as
an investment company under the Investment Company Act of
1940, as amended (the "1940 Act"), is in full force and
effect. The Acquired Fund is a diversified series of the
Trust;
(c) The Trust and the Acquired Fund are not, and the execution,
delivery and performance of their obligations under this
Agreement will not result, in violation of any provision of
the Trust's Declaration of Trust, as amended and restated (the
"Trust's Declaration") or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to
which the Trust or the Acquired Fund is a party or by which it
is bound;
(d) Except as otherwise disclosed in writing and accepted by the
Acquiring Fund, no material litigation or administrative
proceeding or investigation of or before any court or
governmental body is currently pending or threatened against
the Trust or the Acquired Fund or any of the Acquired Fund's
properties or assets. The Trust knows of no facts which might
form the basis for the institution of such proceedings, and
neither the Trust nor the Acquired Fund is a party to or
subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely
affects the Acquired Fund's business or its ability to
consummate the transactions herein contemplated;
(e) The Acquired Fund has no material contracts or other
commitments (other than this Agreement or agreements for the
purchase of securities entered into in the ordinary course of
business and consistent with its obligations under this
Agreement) which will not be terminated without liability to
the Acquired Fund at or prior to the Closing Date;
(f) The unaudited statement of assets and liabilities, including
the schedule of investments, of the Acquired Fund as of June
30, 1997 and the related statement of operations for the six
months then ended, and the statement of changes in net assets
for the year ended May 31, 1996, and the period from June 1,
1996 to December 31, 1996, and the six months ended June 30,
1997 (copies of which have been furnished to the Acquiring
Fund) present fairly in all material respects the financial
condition of the Acquired Fund as of June 30, 1997 and the
results of its operations for the period then ended in
accordance with generally accepted accounting principles
consistently applied, and there were no known actual or
contingent
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<PAGE>
liabilities of the Acquired Fund as of the respective dates
thereof not disclosed therein;
(g) Since June 30, 1997, there has not been any material adverse
change in the Acquired Fund's financial condition, assets,
liabilities, or business other than changes occurring in the
ordinary course of business, or any incurrence by the Acquired
Fund of indebtedness maturing more than one year from the date
such indebtedness was incurred, except as otherwise disclosed
to and accepted by the Acquiring Fund;
(h) At the date hereof and by the Closing Date, all federal, state
and other tax returns and reports, including information
returns and payee statements, of the Acquired Fund required by
law to have been filed or furnished by such dates shall have
been filed or furnished, and all federal, state and other
taxes, interest and penalties shall have been paid so far as
due, or provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge no
such return is currently under audit and no assessment has
been asserted with respect to such returns or reports;
(i) Each of the Acquired Fund and its predecessors has qualified
as a regulated investment company for each taxable year of its
operation and the Acquired Fund will qualify as such as of the
Closing Date with respect to its taxable year ending on the
Closing Date;
(j) The authorized capital of the Acquired Fund consists of an
unlimited number of shares of beneficial interest, no par
value. All issued and outstanding shares of beneficial
interest of the Acquired Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid
and nonassessable by the Trust. All of the issued and
outstanding shares of beneficial interest of the Acquired Fund
will, at the time of Closing, be held by the persons and in
the amounts and classes set forth in the Shareholder List
submitted to the Acquiring Fund pursuant to Paragraph 3.4
hereof. The Acquired Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase
any of its shares of beneficial interest, nor is there
outstanding any security convertible into any of its shares of
beneficial interest;
(k) At the Closing Date, the Acquired Fund will have good and
marketable title to the assets to be transferred to the
Acquiring Fund pursuant to Paragraph 1.1 hereof, and full
right, power and authority to sell, assign, transfer and
deliver such assets hereunder, and upon delivery and payment
for such assets, the Acquiring Fund will acquire good and
marketable title thereto subject to no restrictions on the
full transfer thereof, including such
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<PAGE>
restrictions as might arise under the Securities Act of 1933,
as amended (the "1933 Act");
(l) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of
the Trust on behalf of the Acquired Fund, and this Agreement
constitutes a valid and binding obligation of the Trust and
the Acquired Fund enforceable in accordance with its terms,
subject to the approval of the Acquired Fund's shareholders;
(m) The information to be furnished by the Acquired Fund to the
Acquiring Fund for use in applications for orders,
registration statements, proxy materials and other documents
which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall
comply in all material respects with federal securities and
other laws and regulations thereunder applicable thereto;
(n) The proxy statement of the Acquired Fund (the "Proxy
Statement") to be included in the Registration Statement
referred to in Paragraph 5.7 hereof (other than written
information furnished by the Acquiring Fund for inclusion
therein, as covered by the Acquiring Fund's warranty in
Paragraph 4.2(m) hereof), on the effective date of the
Registration Statement, on the date of the meeting of the
Acquired Fund shareholders and on the Closing Date, shall not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which such statements were made, not
misleading;
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquired Fund of the transactions contemplated by this
Agreement;
(p) All of the issued and outstanding shares of beneficial
interest of the Acquired Fund have been offered for sale and
sold in conformity with all applicable federal and state
securities laws;
(q) The prospectus of the Acquired Fund, dated May 1, 1997 (the
"Acquired Fund Prospectus"), previously furnished to the
Acquiring Fund, does not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not
misleading.
4.2 The Trust II on behalf of the Acquiring Fund represents, warrants and
covenants to the Acquired Fund as follows:
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<PAGE>
(a) The Trust II is a business trust duly organized, validly
existing and in good standing under the laws of The
Commonwealth of Massachusetts and has the power to own all of
its properties and assets and to carry out the Agreement.
Neither the Trust II nor the Acquiring Fund is required to
qualify to do business in any jurisdiction in which it is not
so qualified or where failure to qualify would subject it to
any material liability or disability. The Trust II has all
necessary federal, state and local authorizations to own all
of its properties and assets and to carry on its business as
now being conducted;
(b) The Trust II is a registered investment company classified as
a management company and its registration with the Commission
as an investment company under the 1940 Act is in full force
and effect. The Acquiring Fund is a diversified series of the
Trust II;
(c) The prospectus (the "Acquiring Fund Prospectus") and statement
of additional information for Class A and Class B shares of
the Acquiring Fund, each dated May 1, 1997, and any amendments
or supplements thereto on or prior to the Closing Date, and
the Registration Statement on Form N-14 to be filed in
connection with this Agreement (the "Registration Statement")
(other than written information furnished by the Acquired Fund
for inclusion therein, as covered by the Acquired Fund's
warranty in Paragraph 4.1(m) hereof) will conform in all
material respects to the applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations of the
Commission thereunder, the Acquiring Fund Prospectus does not
include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and
the Registration Statement will not include any untrue
statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading;
(d) At the Closing Date, the Trust II on behalf of the Acquiring
Fund will have good and marketable title to the assets of the
Acquiring Fund;
(e) The Trust II and the Acquiring Fund are not, and the
execution, delivery and performance of their obligations under
this Agreement will not result, in violation of any provisions
of the Trust II's Declaration, or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to
which the Trust II or the Acquiring Fund is a party or by
which the Trust II or the Acquiring Fund is bound;
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<PAGE>
(f) Except as otherwise disclosed in writing and accepted by the
Acquired Fund, no material litigation or administrative
proceeding or investigation of or before any court or
governmental body is currently pending or threatened against
the Trust II or the Acquiring Fund or any of the Acquiring
Fund's properties or assets. The Trust II knows of no facts
which might form the basis for the institution of such
proceedings, and neither the Trust II nor the Acquiring Fund
is a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which
materially and adversely affects the Acquiring Fund's business
or its ability to consummate the transactions herein
contemplated;
(g) The unaudited statement of assets and liabilities, including
the schedule of investments, of the Acquiring Fund as of June
30, 1997 and the related statement of operations for the six
months then ended, and the statement of changes in net assets
for the year ended August 31, 1996, and the period from
September 1, 1996 to December 31, 1996, and the six months
ended June 30, 1997 (copies of which have been furnished to
the Acquired Fund) present fairly in all material respects the
financial condition of the Acquiring Fund as of June 30, 1997
and the results of its operations for the period then ended in
accordance with generally accepted accounting principles
consistently applied, and there were no known actual or
contingent liabilities of the Acquiring Fund as of the
respective dates thereof not disclosed therein;
(h) Since June 30, 1997, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets,
liabilities or business other than changes occurring in the
ordinary course of business, or any incurrence by the Trust II
on behalf of the Acquiring Fund of indebtedness maturing more
than one year from the date such indebtedness was incurred,
except as disclosed to and accepted by the Acquired Fund;
(i) Each of the Acquiring Fund and its predecessors has qualified
as a regulated investment company for each taxable year of its
operation and the Acquiring Fund will qualify as such as of
the Closing Date;
(j) The authorized capital of the Trust II consists of an
unlimited number of shares of beneficial interest, no par
value per share. All issued and outstanding shares of
beneficial interest of the Acquiring Fund are, and at the
Closing Date will be, duly and validly issued and outstanding,
fully paid and nonassessable by the Trust II. The Acquiring
Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of its shares of
beneficial interest, nor is there outstanding any security
convertible into any of its shares of beneficial interest;
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<PAGE>
(k) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of
the Trust II on behalf of the Acquiring Fund, and this
Agreement constitutes a valid and binding obligation of the
Acquiring Fund enforceable in accordance with its terms;
(l) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement, when so
issued and delivered, will be duly and validly issued shares
of beneficial interest of the Acquiring Fund and will be fully
paid and nonassessable by the Trust II;
(m) The information to be furnished by the Acquiring Fund for use
in applications for orders, registration statements, proxy
materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be
accurate and complete and shall comply in all material
respects with federal securities and other laws and
regulations applicable thereto; and
(n) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquiring Fund of the transactions contemplated by the
Agreement, except for the registration of the Acquiring Fund
Shares under the 1933 Act and the 1940 Act.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 Except as expressly contemplated herein to the contrary, the Trust on
behalf of the Acquired Fund and the Trust II on behalf of Acquiring
Fund, will operate their respective businesses in the ordinary course
between the date hereof and the Closing Date, it being understood that
such ordinary course of business will include customary dividends and
distributions and any other distributions necessary or desirable to
avoid federal income or excise taxes.
5.2 The Trust will call a meeting of the Acquired Fund shareholders to
consider and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring Fund Shares to be issued
hereunder are not being acquired by the Acquired Fund for the purpose
of making any distribution thereof other than in accordance with the
terms of this Agreement.
5.4 The Trust on behalf of the Acquired Fund will provide such information
within its possession or reasonably obtainable as the Trust II on
behalf of
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the Acquiring Fund requests concerning the beneficial ownership of the
Acquired Fund's shares of beneficial interest.
5.5 Subject to the provisions of this Agreement, the Acquiring Fund and the
Acquired Fund each shall take, or cause to be taken, all action, and do
or cause to be done, all things reasonably necessary, proper or
advisable to consummate the transactions contemplated by this
Agreement.
5.6 The Trust on behalf of the Acquired Fund shall furnish to the Trust II
on behalf of the Acquiring Fund on the Closing Date the Statement of
Assets and Liabilities of the Acquired Fund as of the Closing Date,
which statement shall be prepared in accordance with generally accepted
accounting principles consistently applied and shall be certified by
the Acquired Fund's Treasurer or Assistant Treasurer. As promptly as
practicable but in any case within 60 days after the Closing Date, the
Acquired Fund shall furnish to the Acquiring Fund, in such form as is
reasonably satisfactory to the Trust II, a statement of the earnings
and profits of the Acquired Fund for federal income tax purposes and of
any capital loss carryovers and other items that will be carried over
to the Acquiring Fund as a result of Section 381 of the Code, and which
statement will be certified by the President of the Acquired Fund.
5.7 The Trust II on behalf of the Acquiring Fund will prepare and file with
the Commission the Registration Statement in compliance with the 1933
Act and the 1940 Act in connection with the issuance of the Acquiring
Fund Shares as contemplated herein.
5.8 The Trust on behalf of the Acquired Fund will prepare a Proxy
Statement, to be included in the Registration Statement in compliance
with the 1933 Act, the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and the 1940 Act and the rules and regulations thereunder
(collectively, the "Acts") in connection with the special meeting of
shareholders of the Acquired Fund to consider approval of this
Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST ON BEHALF OF THE
ACQUIRED FUND
The obligations of the Trust on behalf of the Acquired Fund to complete the
transactions provided for herein shall be, at its election, subject to the
performance by the Trust II on behalf of the Acquiring Fund of all the
obligations to be performed by it hereunder on or before the Closing Date, and,
in addition thereto, the following further conditions:
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6.1 All representations and warranties of the Trust II on behalf of the
Acquiring Fund contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement, as of the
Closing Date with the same force and effect as if made on and as of the
Closing Date; and
6.2 The Trust II on behalf of the Acquiring Fund shall have delivered to
the Acquired Fund a certificate executed in its name by the Trust II's
President or Vice President and its Treasurer or Assistant Treasurer,
in form and substance satisfactory to the Acquired Fund and dated as of
the Closing Date, to the effect that the representations and warranties
of the Trust II on behalf of the Acquiring Fund made in this Agreement
are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement, and as
to such other matters as the Trust on behalf of the Acquired Fund shall
reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST II ON BEHALF OF THE
ACQUIRING FUND
The obligations of the Trust II on behalf of the Acquiring Fund to complete the
transactions provided for herein shall be, at its election, subject to the
performance by the Acquired Fund of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions:
7.1 All representations and warranties of the Acquired Fund contained in
this Agreement shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same
force and effect as if made on and as of the Closing Date;
7.2 The Trust on behalf of the Acquired Fund shall have delivered to the
Trust II on behalf of the Acquiring Fund the Statement of Assets and
Liabilities of the Acquired Fund, together with a list of its portfolio
securities showing the federal income tax bases and holding periods of
such securities, as of the Closing Date, certified by the Treasurer or
Assistant Treasurer of the Trust;
7.3 The Trust on behalf of the Acquired Fund shall have delivered to the
Trust II on behalf of the Acquiring Fund on the Closing Date a
certificate executed in the name of the Acquired Fund by a President or
Vice President and a Treasurer or Assistant Treasurer of the Trust, in
form and substance satisfactory to the Trust II on behalf of the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired Fund in this Agreement
are true and correct at and as of the Closing Date, except as they may
be affected by the transactions
A-13
<PAGE>
contemplated by this Agreement, and as to such other matters as the
Trust II on behalf of the Acquiring Fund shall reasonably request; and
7.4 At or prior to the Closing Date, the Acquired Fund's investment
adviser, or an affiliate thereof, shall have made all payments, or
applied all credits, to the Acquired Fund required by any applicable
contractual expense limitation.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST AND THE TRUST
II
The obligations hereunder of the Trust II on behalf of the Acquiring Fund and
the Trust on behalf of the Acquired Fund are each subject to the further
conditions that on or before the Closing Date:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares
of beneficial interest of the Acquired Fund in accordance with the
provisions of the Trust's Declaration and By-Laws, and certified copies
of the resolutions evidencing such approval by the Acquired Fund's
shareholders shall have been delivered by the Acquired Fund to the
Trust II on behalf of the Acquiring Fund;
8.2 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought
to restrain or prohibit, or obtain changes or other relief in
connection with, this Agreement or the transactions contemplated
herein;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including
those of the Commission and their "no-action" positions) deemed
necessary by the Trust or the Trust II to permit consummation, in all
material respects, of the transactions contemplated hereby shall have
been obtained, except where failure to obtain any such consent, order
or permit would not involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired Fund,
provided that either party hereto may waive any such conditions for
itself;
8.4 The Registration Statement shall have become effective under the 1933
Act and the 1940 Act and no stop orders suspending the effectiveness
thereof shall have been issued and, to the best knowledge of the
parties hereto, no investigation or proceeding for that purpose shall
have been instituted or be pending, threatened or contemplated under
the 1933 Act or the 1940 Act;
A-14
<PAGE>
8.5 The Acquired Fund shall have distributed to its shareholders, in a
distribution or distributions qualifying for the deduction for
dividends paid under Section 561 of the Code, all of its investment
company taxable income (as defined in Section 852(b)(2) of the Code
determined without regard to Section 852(b)(2)(D) of the Code) for its
taxable year ending on the Closing Date, all of the excess of (i) its
interest income excludable from gross income under Section 103(a) of
the Code over (ii) its deductions disallowed under Sections 265 and
171(a)(2) of the Code for its taxable year ending on the Closing Date,
and all of its net capital gain (as such term is used in Sections
852(b)(3)(A) and (C) of the Code), after reduction by any available
capital loss carryforward, for its taxable year ending on the Closing
Date; and
8.6 The parties shall have received an opinion of Hale and Dorr LLP,
satisfactory to the Trust on behalf of the Acquired Fund and the Trust
II on behalf of the Acquiring Fund, substantially to the effect that
for federal income tax purposes:
(a) The acquisition by the Acquiring Fund of all of the assets of
the Acquired Fund solely in exchange for the issuance of
Acquiring Fund Shares to the Acquired Fund and the assumption
of all of the Acquired Fund Liabilities by the Acquiring Fund,
followed by the distribution by the Acquired Fund, in
liquidation of the Acquired Fund, of Acquiring Fund Shares to
the shareholders of the Acquired Fund in exchange for their
shares of beneficial interest of the Acquired Fund and the
termination of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the
Code, and the Acquired Fund and the Acquiring Fund will each
be "a party to a reorganization" within the meaning of Section
368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired Fund upon
(i) the transfer of all of its assets to the Acquiring Fund
solely in exchange for the issuance of Acquiring Fund Shares
to the Acquired Fund and the assumption of all of the Acquired
Fund Liabilities by the Acquiring Fund; and (ii) the
distribution by the Acquired Fund of such Acquiring Fund
Shares to the shareholders of the Acquired Fund;
(c) No gain or loss will be recognized by the Acquiring Fund upon
the receipt of the assets of the Acquired Fund solely in
exchange for the issuance of the Acquiring Fund Shares to the
Acquired Fund and the assumption of all of the Acquired Fund
Liabilities by the Acquiring Fund;
A-15
<PAGE>
(d) The basis of the assets of the Acquired Fund acquired by the
Acquiring Fund will be, in each instance, the same as the
basis of those assets in the hands of the Acquired Fund
immediately prior to the transfer;
(e) The tax holding period of the assets of the Acquired Fund in
the hands of the Acquiring Fund will, in each instance,
include the Acquired Fund's tax holding period for those
assets;
(f) The shareholders of the Acquired Fund will not recognize gain
or loss upon the exchange of all of their shares of beneficial
interest of the Acquired Fund solely for Acquiring Fund Shares
as part of the transaction;
(g) The basis of the Acquiring Fund Shares received by the
Acquired Fund shareholders in the transaction will be the same
as the basis of the shares of beneficial interest of the
Acquired Fund surrendered in exchange therefor; and
(h) The tax holding period of the Acquiring Fund Shares received
by the Acquired Fund shareholders will include, for each
shareholder, the tax holding period for the shares of the
Acquired Fund surrendered in exchange therefor, provided that
the Acquired Fund shares were held as capital assets on the
date of the exchange.
The Trust II and the Trust agree to make and provide representations with
respect to the Acquiring Fund and the Acquired Fund, respectively, which are
reasonably necessary to enable Hale and Dorr LLP to deliver an opinion
substantially as set forth in this Paragraph 8.6. Notwithstanding anything
herein to the contrary, neither the Trust nor the Trust II may waive the
conditions set forth in this Paragraph 8.6.
9. BROKERAGE FEES AND EXPENSES
9.1 The Trust II on behalf of the Acquiring Fund, and the Trust on behalf
of the Acquired Fund each represent and warrant to the other that there
are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
9.2 The Acquiring Fund and the Acquired Fund shall each be liable solely
for its own expenses incurred in connection with entering into and
carrying out the provisions of this Agreement whether or not the
transactions contemplated hereby are consummated.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
A-16
<PAGE>
10.1 The Trust II on behalf of the Acquiring Fund, and the Trust on behalf
of the Acquired Fund agree that neither party has made any
representation, warranty or covenant not set forth herein or referred
to in Paragraph 4 hereof and that this Agreement constitutes the entire
agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection
herewith shall survive the consummation of the transactions
contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Trust
II, on behalf of the Acquiring Fund, and the Trust on behalf of the
Acquired Fund. In addition, either party may at its option terminate
this Agreement at or prior to the Closing Date:
(a) because of a material breach by the other of any
representation, warranty, covenant or agreement contained
herein to be performed at or prior to the Closing Date;
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met
and which reasonably appears will not or cannot be met;
(c) by resolution of the Trust II's Board of Trustees if
circumstances should develop that, in the good faith opinion
of such Board, make proceeding with the Agreement not in the
best interests of the Acquiring Fund's shareholders; or
(d) by resolution of the Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion
of such Board, make proceeding with the Agreement not in the
best interests of the Acquired Fund's shareholders.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Trust II, the Acquiring Fund, the Trust, or
the Acquired Fund, or the Trustees or officers of the Trust II or the
Trust, but each party shall bear the expenses incurred by it incidental
to the preparation and carrying out of this Agreement.
12. AMENDMENTS
A-17
<PAGE>
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon by the authorized officers of the Trust and the Trust II.
However, following the meeting of shareholders of the Acquired Fund held
pursuant to Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for determining the
number of Acquiring Fund Shares to be received by the Acquired Fund shareholders
under this Agreement to the detriment of such shareholders without their further
approval; provided that nothing contained in this Article 12 shall be construed
to prohibit the parties from amending this Agreement to change the Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any provisions
of this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy or certified mail addressed to the Acquiring Fund or to the Acquired
Fund, each at 101 Huntington Avenue, Boston, Massachusetts 02199, Attention:
President, and, in either case, with copies to Hale and Dorr LLP, 60 State
Street, Boston, Massachusetts 02109, Attention: Pamela J.
Wilson, Esq.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment
or transfer hereof or of any rights or obligations hereunder shall be
made by any party without the prior written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed
to confer upon or give any person, firm or corporation, other than the
parties hereto and their respective successors and assigns, any rights
or remedies under or by reason of this Agreement.
14.5 All persons dealing with the Trust or the Trust II must look solely to
the property of the Trust or the Trust II, respectively, for the
enforcement of any claims against the Trust or the Trust II as the
Trustees, officers, agents and shareholders of the Trust or the Trust
II assume no personal liability for
A-18
<PAGE>
obligations entered into on behalf of the Trust or the Trust II,
respectively. None of the other series of the Trust or the Trust II
shall be responsible for any obligations assumed by on or behalf of the
Acquired Fund or the Acquiring Fund, respectively, under this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first set forth above by its President or Vice President
and has caused its corporate seal to be affixed hereto.
JOHN HANCOCK INVESTMENT TRUST on behalf of
JOHN HANCOCK GROWTH AND INCOME FUND
By: /s/ Anne C. Hodsdon
-----------------------------------------
Anne C. Hodsdon
President
JOHN HANCOCK CAPITAL SERIES on behalf of
JOHN HANCOCK UTILITIES FUND
By: /s/ Susan S. Newton
-----------------------------------------
Susan S. Newton
Vice President and Secretary
A-19
<PAGE>
Thank
You
for mailing
your Proxy Card
promptly!
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
John Hancock Funds, Inc.
101 Huntington Avenue, Boston, MA 02199-7603
1-800-225-5291 1-800-554-6713 (TDD)
John Hancock 410PX 9/97
Financial Services
<PAGE>
JOHN HANCOCK
GROWTH AND
INCOME FUNDS
[LOGO]
- --------------------------------------------------------------------------------
PROSPECTUS
MAY 1, 1997
This prospectus gives vital information about these funds. For your own benefit
and protection, please read it before you invest, and keep it on hand for future
reference.
Please note that these funds:
- - are not bank deposits
- - are not federally insured
- - are not endorsed by any bank or government agency
- - are not guaranteed to achieve their goal(s)
Like all mutual fund shares, 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 or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
GROWTH AND INCOME FUND
INDEPENDENCE EQUITY FUND
SOVEREIGN BALANCED FUND
SOVEREIGN INVESTORS FUND
SPECIAL VALUE FUND
UTILITIES FUND
[LOGO]
JOHN HANCOCK FUNDS
A GLOBAL INVESTMENT MANAGEMENT FIRM
101 Huntington Avenue, Boston, Massachusetts 02199-7603
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
A fund-by-fund look at goals, strategies, risks, expenses and financial history.
GROWTH AND INCOME FUND 4
INDEPENDENCE EQUITY FUND 6
SOVEREIGN BALANCED FUND 8
SOVEREIGN INVESTORS FUND 10
SPECIAL VALUE FUND 12
UTILITIES FUND 14
Policies and instructions for opening, maintaining and closing an account in any
growth and income fund.
YOUR ACCOUNT
CHOOSING A SHARE CLASS 16
HOW SALES CHARGES ARE CALCULATED 16
SALES CHARGE REDUCTIONS AND WAIVERS 17
OPENING AN ACCOUNT 17
BUYING SHARES 18
SELLING SHARES 19
TRANSACTION POLICIES 21
DIVIDENDS AND ACCOUNT POLICIES 21
ADDITIONAL INVESTOR SERVICES 22
Details that apply to the growth and income funds as a group.
FUND DETAILS
BUSINESS STRUCTURE 23
SALES COMPENSATION 24
MORE ABOUT RISK 26
FOR MORE INFORMATION back cover
<PAGE>
OVERVIEW
- --------------------------------------------------------------------------------
GOAL OF THE GROWTH AND INCOME FUNDS
John Hancock growth and income funds invest for varying combinations of income
and capital appreciation. Each fund has its own emphasis with regard to income,
growth and total return, and has its own strategy and risk/reward profile.
Because you could lose money by investing in these funds, be sure to read all
risk disclosure carefully before investing.
WHO MAY WANT TO INVEST
These funds may be appropriate for investors who:
- - are looking for a more conservative alternative to exclusively
growth-oriented funds
- - need an investment to form the core of a portfolio
- - seek above-average total return over the long term
- - are retired or nearing retirement
Growth and income funds may NOT be appropriate if you:
- - are investing for maximum return over a long time horizon
- - require a high degree of stability of your principal
THE MANAGEMENT FIRM
All John Hancock growth and income funds are managed by John Hancock Advisers,
Inc. Founded in 1968, John Hancock Advisers is a wholly owned subsidiary of John
Hancock Mutual Life Insurance Company and manages more than $20 billion in
assets.
FUND INFORMATION KEY
Concise fund-by-fund descriptions begin on the next page. Each description
provides the following information:
[BULLSEYE]
Goal and strategy The fund's particular investment goals and the strategies it
intends to use in pursuing those goals.
[OPEN FOLDER]
Portfolio securities The primary types of securities in which the fund invests.
Secondary investments are described in "More about risk" at the end of the
prospectus.
[GRAPH]
Risk factors The major risk factors associated with the fund.
[PERSON]
Portfolio management The individual or group (including subadvisers, if any)
designated by the investment adviser to handle the fund's day-to-day management.
[PERCENT SIGN]
Expenses The overall costs borne by an investor in the fund, including sales
charges and annual expenses.
[DOLLAR SIGN]
Financial highlights A table showing the fund's financial performance for up to
ten years, by share class. A bar chart showing total return allows you to
compare the fund's historical risk level to those of other funds.
<PAGE>
GROWTH AND INCOME FUND
REGISTRANT NAME: JOHN HANCOCK INVESTMENT TRUST
TICKER SYMBOL CLASS A: TAGRX CLASS B: TSGWX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[BULLSEYE]
The fund seeks the highest total return (capital appreciation plus current
income) that is consistent with reasonable safety of capital. To pursue this
goal, the fund invests in a diversified portfolio of stocks, bonds and money
market instruments. Although the fund may concentrate in any of these
securities, under normal circumstances it invests primarily in stocks. The fund
may not invest more than 25% of assets in any one industry.
PORTFOLIO SECURITIES
[OPEN FOLDER]
The fund may invest in most types of securities, including:
- - common and preferred stocks, warrants and convertible securities
- - U.S. Government and agency debt securities, including mortgage-backed
securities
- - corporate bonds, notes and other debt securities of any maturity
The fund may invest up to 15% of net assets in junk bonds, including convertible
securities, that may be rated as low as CC/Ca and their unrated equivalents.
The fund may invest up to 25% of assets in foreign securities (35% during
adverse U.S. market conditions); however, foreign securities typically have not
exceeded 5% of assets. To a limited extent, the fund also may invest in certain
higher-risk securities, and may engage in other investment practices.
For temporary defensive purposes, the fund may invest some or all of its assets
in investment-grade short-term securities.
RISK FACTORS
[GRAPH]
As with any growth and income fund, the value of your investment will fluctuate
in response to stock and bond market movements.
To the extent that it invests in certain securities, the fund may be affected by
additional risks:
- - foreign securities: currency, information, natural event and political risks
- - mortgage-backed securities: extension and prepayment risks
These risks are defined in "More about risk" starting on page 26. This section
also details other higher-risk securities and practices that the fund may
utilize. Before you invest, please read "More about risk" carefully.
PORTFOLIO MANAGEMENT
[PERSON]
Timothy E. Keefe, CFA, has been the leader of the fund's portfolio management
team since joining John Hancock Funds in July 1996. He is a senior vice
president of the adviser and has been in the investment business since 1987.
INVESTOR EXPENSES
[PERCENT SIGN]
Fund investors pay various expenses, either directly or indirectly. The figures
below show the expenses for the past year, adjusted to reflect any changes.
Future expenses may be greater or less.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
- -------------------------------- ------- -------
<S> <C> <C>
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET ASSETS)
- -------------------------------------------------------------
<S> <C> <C>
Management fee 0.625% 0.625%
12b-1 fee(3) 0.250% 1.00%
Other expenses 0.355% 0.355%
Total fund operating expenses 1.230% 1.980%
</TABLE>
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
<TABLE>
<CAPTION>
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
- ----------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
Class A shares $62 $87 $114 $191
Class B shares
Assuming redemption
at end of period $70 $92 $127 $211
Assuming no redemption $20 $62 $107 $211
</TABLE>
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
4 GROWTH AND INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[DOLLAR SIGN]
The figures below have been audited
by the fund's independent auditors,
Ernst & Young LLP.
<TABLE>
<CAPTION>
FOUR
MONTHS
--------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VOLATILITY, AS INDICATED BY CLASS A
YEAR-BY-YEAR TOTAL INVESTMENT RETURN (%) 22.58 (9.86) 23.47 0.18 23.80 10.47 13.64 (2.39) 19.22 15.33 14.53(4)
(scale varies from fund to fund)
</TABLE>
<TABLE>
<CAPTION>
CLASS A - PERIOD ENDED: 8/87 8/88 8/89 8/90 8/91 8/92 8/93 8/94
- ----------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 11.11 $ 12.04 $ 8.83 $ 10.19 $ 9.87 $ 11.77 $ 12.43 $ 12.08
Net investment income (loss) 0.42 0.50 0.55 0.20 0.20 0.32(2) 0.40(2) 0.32(2)
Net realized and unrealized gain (loss)
on investments 1.77 (1.73) 1.42 (0.18) 2.07 0.89 1.12 (0.61)
Total from investment operations 2.19 (1.23) 1.97 0.02 2.27 1.21 1.52 (0.29)
Less distributions
Dividends from net investment income (0.38) (0.49) (0.61) (0.27) (0.19) (0.25) (0.42) (0.37)
Distributions from net realized gain
on investments sold (0.88) (1.49) -- (0.07) (0.18) (0.30) (1.45) --
Total distributions (1.26) (1.98) (0.61) (0.34) (0.37) (0.55) (1.87) (0.37)
Net asset value, end of period $ 12.04 $ 8.83 $ 10.19 $ 9.87 $ 11.77 $ 12.43 $ 12.08 $ 11.42
TOTAL INVESTMENT RETURN AT NET ASSET
VALUE(3) (%) 22.58 (9.86) 23.47 0.18 23.80 10.47 13.64 (2.39)
Ratios and supplemental data
Net assets, end of period
(000s omitted) ($) 90,974 69,555 70,513 63,150 77,461 89,682 115,780 121,160
Ratio of expenses to average net
assets (%) 1.21 1.29 1.12 1.29 1.38 1.34 1.29 1.31
Ratio of net investment income (loss)
to average net assets (%) 3.86 5.45 6.07 1.96 1.90 2.75 3.43 2.82
Portfolio turnover rate (%) 138 120 214 69 70 119 107 195
Average brokerage commission rate(6) ($) N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
CLASS A - PERIOD ENDED: 8/95 8/96 12/96(1)
- ----------------------- ---- ---- --------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 11.42 $ 13.38 $ 15.07
Net investment income (loss) 0.21(2) 0.19(2) 0.05(2)
Net realized and unrealized gain (loss)
on investments 1.95 1.84 2.15
Total from investment operations 2.16 2.03 2.20
Less distributions
Dividends from net investment income (0.20) (0.19) (0.08)
Distributions from net realized gain
on investments sold -- (0.15) (1.57)
Total distributions (0.20) (0.34) (1.65)
Net asset value, end of period $ 13.38 $ 15.07 $ 15.62
TOTAL INVESTMENT RETURN AT NET ASSET
VALUE(3) (%) 19.22 15.33 14.53(4)
Ratios and supplemental data
Net assets, end of period
(000s omitted) ($) 130,183 139,548 163,154
Ratio of expenses to average net
assets (%) 1.30 1.17 1.22(5)
Ratio of net investment income (loss)
to average net assets (%) 1.82 1.28 0.85(5)
Portfolio turnover rate (%) 99 74 26
Average brokerage commission rate(6) ($) N/A 0.0665 0.0692
</TABLE>
<TABLE>
<CAPTION>
CLASS B - PERIOD ENDED: 8/91(7) 8/92 8/93 8/94 8/95 8/96 12/96(1)
- ----------------------- ------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $11.52 $ 11.77 $ 12.44 $ 12.10 $ 11.44 $ 13.41 $ 15.10
Net investment income (loss)(2) -- 0.23 0.30 0.24 0.13 0.08 0.01
Net realized and unrealized gain (loss) on investments 0.25 0.89 1.12 (0.61) 1.96 1.85 2.14
Total from investment operations 0.25 1.12 1.42 (0.37) 2.09 1.93 2.15
Less distributions:
Dividends from net investment income -- (0.15) (0.31) (0.29) (0.12) (0.09) (0.02)
Distributions from net realized gain on
investments sold -- (0.30) (1.45) -- -- (0.15) (1.57)
Total distributions -- (0.45) (1.76) (0.29) (0.12) (0.24) (1.59)
Net asset value, end of period $11.77 $ 12.44 $ 12.10 $ 11.44 $ 13.41 $ 15.10 $ 15.66
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3) (%) 2.17(4) 9.67 12.64 (3.11) 18.41 14.49 14.15(4)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 7,690 29,826 65,010 114,025 114,723 125,781 146,399
Ratio of expenses to average net assets (%) 2.19(5) 2.07 2.19 2.06 2.03 1.90 1.98(5)
Ratio of net investment income (loss) to average
net assets (%) 1.46(5) 2.02 2.53 2.07 1.09 0.55 0.10(5)
Portfolio turnover rate (%) 70 119 107 195 99 74 26
Average brokerage commission rate(6) ($) N/A N/A N/A N/A N/A 0.0665 0.0692
</TABLE>
(1) Effective December 31, 1996, the fiscal year end changed from August 31 to
December 31.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) Annualized.
(6) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
(7) Class B shares commenced operations on August 22, 1991.
GROWTH AND INCOME FUND 5
<PAGE>
INDEPENDENCE EQUITY FUND
REGISTRANT NAME: JOHN HANCOCK CAPITAL SERIES
TICKER SYMBOL CLASS A: JHDCX CLASS B: JHIDX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[BULLSEYE]
The fund seeks above-average total return (capital appreciation plus current
income). To pursue this goal, the fund invests primarily in a diversified stock
portfolio whose risk profile is similar to that of the S&P 500 index. The fund
does not invest exclusively in S&P 500 stocks.
In choosing stocks, the fund uses a proprietary computer model (NIXDEX) to
identify stocks that appear to be undervalued. The fund favors those undervalued
stocks that are selected by its model and that are believed to have improving
fundamentals. The fund may not invest more than 25% of assets in any one
industry.
PORTFOLIO SECURITIES
[OPEN FOLDER]
Under normal circumstances, the fund invests at least 65% of assets in common
stocks. It may also invest in warrants, preferred stocks and investment-grade
convertible debt securities.
The fund may invest in foreign securities in the form of American Depository
Receipts (ADRs) and U.S. dollar-denominated securities of foreign issuers traded
on U.S. exchanges. To a limited extent the fund also may invest in certain
higher-risk securities, and may engage in other investment practices.
For temporary defensive purposes, the fund may invest some or all of its assets
in investment-grade short-term securities.
RISK FACTORS
[GRAPH]
As with any growth and income fund, the value of your investment will fluctuate
in response to stock and bond market movements. Because the fund follows an
index-tracking strategy, it is likely to remain fully invested even if the
fund's managers anticipate a market downturn.
To the extent that it invests in foreign securities, the fund may be affected by
additional risks, such as information, natural event and political risks. These
risks are defined in "More about risk" starting on page 26. This section also
details other higher-risk securities and practices that the fund may utilize.
Please read "More about risk" carefully before you invest.
MANAGEMENT/SUBADVISER
[PERSON]
The fund's investment decisions are made by a portfolio management team, and no
individual is primarily responsible for making them. Team members are employees
of Independence Investment Associates, Inc., the fund's subadviser and a
subsidiary of John Hancock Mutual Life Insurance Company.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[PERCENT SIGN]
Fund investors pay various expenses, either directly or indirectly. The figures
below show the expenses for the past year, adjusted to reflect any changes.
Future expenses may be greater or less.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
- -------------------------------- ------- -------
<S> <C> <C>
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET ASSETS)
- -------------------------------------------------------------
<S> <C> <C>
Management fee(3) 0.75% 0.75%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.68% 0.68%
Total fund operating expenses 1.73% 2.43%
</TABLE>
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
<TABLE>
<CAPTION>
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
- ----------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
Class A shares $67 $102 $139 $244
Class B shares
Assuming redemption
at end of period $75 $106 $150 $259
Assuming no redemption $25 $ 76 $130 $259
</TABLE>
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Management fee includes a subadviser fee equal to 55% of the management fee.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
6 INDEPENDENCE EQUITY FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[DOLLAR SIGN]
The figures below have been audited by the fund's independent auditors, Price
Waterhouse LLP.
<TABLE>
<CAPTION>
VOLATILITY, AS INDICATED BY CLASS A
YEAR-BY-YEAR TOTAL INVESTMENT RETURN (%)
<S> <C> <C> <C> <C> <C> <C>
(scale varies from fund to fund) 10.95(5) 13.58 6.60 16.98 29.12 10.33(5)
seven
months
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A - PERIOD ENDED: 5/92(1) 5/93 5/94 5/95 5/96 12/96(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.00 $10.98 $12.16 $12.68 $14.41 $ 17.98
Net investment income (loss) 0.15 0.22 0.28(3) 0.32(3) 0.20(3) 0.13(3)
Net realized and unrealized gain (loss) on investments 0.94 1.25 0.52 1.77 3.88 1.72
Total from investment operations 1.09 1.47 0.80 2.09 4.08 1.85
Less distributions:
Dividends from net investment income (0.11) (0.23) (0.23) (0.28) (0.22) (0.14)
Distributions from net realized gain on investments sold -- (0.06) (0.05) (0.08) (0.29) (0.27)
Total distributions (0.11) (0.29) (0.28) (0.36) (0.51) (0.41)
Net asset value, end of period $10.98 $12.16 $12.68 $14.41 $17.98 $ 19.42
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(4) (%) 10.95(5) 13.58 6.60 16.98 29.12 10.33(5)
Total adjusted investment return at net asset value(4,6) (%) 9.28(5) 11.40 6.15 16.94 28.47 10.08(5)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 2,622 12,488 66,612 101,418 14,878 31,013
Ratio of expenses to average net assets (%) 1.66(7) 0.76 0.70 0.70 0.94 1.30(7)
Ratio of adjusted expenses to average net assets(8) (%) 3.38(7) 2.94 1.15 0.74 1.59 1.73(7)
Ratio of net investment income (loss) to average net assets (%) 1.77(7) 2.36 2.20 2.43 1.55 1.16(7)
Ratio of adjusted net investment income (loss) to average
net assets(8) (%) 0.05(7) 0.18 1.75 2.39 0.90 0.73(7)
Portfolio turnover rate (%) 53 53 43 71 157 35
Fee reduction per share ($) 0.15 0.20 0.06(3) 0.005(3) 0.08(3) 0.05(3)
Average brokerage commission rate(9) ($) N/A N/A N/A N/A N/A 0.0326
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS B - PERIOD ENDED: 5/96(1) 12/96(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $15.25 $17.96
Net investment income (loss)(3) 0.09 0.05
Net realized and unrealized gain (loss) on investments 2.71 1.72
Total from investment operations 2.80 1.77
Less distributions:
Dividends from net investment income (0.09) (0.05)
Distributions from net realized gain on investments sold -- (0.27)
Total distributions (0.09) (0.32)
Net asset value, end of period $17.96 $19.41
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(4) (%) 18.46(5) 9.83(5)
Total adjusted investment return at net asset value(4,6) (%) 17.59(5) 9.58(5)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 15,125 42,461
Ratio of expenses to average net assets (%) 2.00(7) 2.00(7)
Ratio of adjusted expenses to average net assets(8) (%) 3.21(7) 2.43(7)
Ratio of net investment income (loss) to average net assets (%) 0.78(7) 0.45(7)
Ratio of adjusted net investment income (loss) to average
net assets(8) (%) (0.43)(7) 0.02(7)
Portfolio turnover rate (%) 157 35
Fee reduction per share(3) ($) 0.13 0.05
Average brokerage commission rate(9) ($) N/A 0.0326
</TABLE>
(1) Class A and Class B shares commenced operations on June 10, 1991 and
September 7, 1995, respectively.
(2) Effective December 31, 1996, the fiscal year end changed from May 31 to
December 31.
(3) Based on the average of the shares outstanding at the end of each
month.
(4) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(5) Not annualized.
(6) An estimated total return calculation that does not take into
consideration fee reductions by the adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
(9) Per portfolio share traded. Required for fiscal years that began
September 1, 1995 or later.
INDEPENDENCE EQUITY FUND 7
<PAGE>
SOVEREIGN BALANCED FUND
REGISTRANT NAME: JOHN HANCOCK INVESTMENT TRUST
TICKER SYMBOL CLASS A: SVBAX CLASS B: SVBBX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[BULLSEYE]
The fund seeks current income, long-term growth of capital and income, and
preservation of capital. To pursue these goals, the fund allocates its assets
among a diversified mix of debt and equity securities. While the relative
weightings of debt and equity securities will shift over time, at least 25% of
assets will be invested in senior debt securities. The fund may not invest more
than 25% of assets in any one industry.
PORTFOLIO SECURITIES
[OPEN FOLDER]
The fund may invest in any type or class of security, including (but not limited
to) stocks, warrants, U.S. Government and agency securities, corporate debt
securities, investment-grade short-term securities, foreign currencies and
options and futures contracts.
The fund's stock investments are exclusively in companies that have increased
their dividend payout in each of the last ten years. Up to 25% of the fund's
bond investments may be rated from BB/Ba to C (junk bonds).
The fund may invest up to 35% of assets in foreign securities; however, these
typically have not exceeded 5% of assets. To a limited extent, the fund also may
invest in certain higher-risk securities, and may engage in other investment
practices.
For temporary defensive purposes, the fund may invest some or all of its assets
in investment-grade short-term securities.
RISK FACTORS
[GRAPH]
As with any growth and income fund, the value of your investment will fluctuate
in response to stock and bond market movements. To the extent that it invests in
certain securities, the fund may be affected by additional risks:
o junk bonds: above-average credit, market and other risks
o foreign securities: currency, information, natural event and political risks
o mortgage-backed securities: extension and prepayment risks
These risks are listed and defined in "More about risk" starting on page 26.
This section also details other higher-risk securities and practices that the
fund may utilize. Please read "More about risk" carefully before you invest.
MANAGEMENT/SUBADVISER
[PERSON]
John F. Snyder III and Barry H. Evans, CFA, lead the fund's portfolio management
team. Mr. Snyder, an investment manager since 1971, is an executive vice
president of Sovereign Asset Management Corporation, the fund's subadviser and a
subsidiary of John Hancock Funds. Mr. Evans, a senior vice president of the
adviser, has been in the investment business since joining John Hancock Funds in
1986.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[PERCENT SIGN]
Fund investors pay various expenses, either directly or indirectly. The figures
below show the expenses for the past year, adjusted to reflect any changes.
Future expenses may be greater or less.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
-------------------------------- ------- -------
<S> <C> <C>
Maximum sales charge imposed on
purchases (as a percentage of
offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
- ------------------------------
Management fee(3) 0.60% 0.60%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.39% 0.39%
Total fund operating expenses 1.29% 1.99%
</TABLE>
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
<TABLE>
<CAPTION>
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $62 $89 $117 $198
Class B shares
Assuming redemption
at end of period $70 $92 $127 $214
Assuming no redemption $20 $62 $107 $214
</TABLE>
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Management fee includes a subadviser fee equal to 40% of the stock portion
of the management fee.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
8 SOVEREIGN BALANCED FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[DOLLAR SIGN]
The figures below have been audited by the fund's independent auditors, Ernst &
Young LLP.
<TABLE>
<CAPTION>
Volatility, as indicated by Class A year-by-year total investment return (%)
(scale varies from fund to fund)
<S> <C> <C> <C> <C> <C>
2.37(4) 11.38 (3.51) 24.23 12.13
</TABLE>
<TABLE>
<CAPTION>
CLASS A - PERIOD ENDED: 12/92(1) 12/93 12/94 12/95 12/96
----------------------- -------- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.00 $10.19 $10.74 $9.84 $11.75
Net investment income (loss) 0.04(2) 0.46 0.50 0.44(2) 0.41(2)
Net realized and unrealized gain (loss) on investments 0.20 0.68 (0.88) 1.91 0.99
Total from investment operations 0.24 1.14 (0.38) 2.35 1.40
Less distributions:
Dividends from net investment income (0.05) (0.45) (0.50) (0.44) (0.41)
Distributions from net realized gain on investments sold -- (0.14) (0.02) -- (0.47)
Total distributions (0.05) (0.59) (0.52) (0.44) (0.88)
Net asset value, end of period $10.19 $10.74 $9.84 $11.75 $12.27
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3) (%) 2.37(4) 11.38 (3.51) 24.23 12.13
Total adjusted investment return at net asset value(3,5) (%) 2.34(4) -- -- -- --
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 5,796 62,218 61,952 69,811 71,242
Ratio of expenses to average net assets (%) 2.79(6) 1.45 1.23 1.27 1.29
Ratio of adjusted expenses to average net assets(7) (%) 2.94(6) -- -- -- --
Ratio of net investment income (loss) to average net assets (%) 3.93(6) 4.44 4.89 3.99 3.33
Ratio of adjusted net investment income (loss) to average
net assets(7) (%) 3.78(6) -- -- -- --
Portfolio turnover rate (%) 0 85 78 45 80
Fee reduction per share ($) 0.0016(2) -- -- -- --
Average brokerage commission rate(8) ($) N/A N/A N/A N/A 0.0700
</TABLE>
<TABLE>
<CAPTION>
CLASS B - PERIOD ENDED: 12/92(1) 12/93 12/94 12/95 12/96
----------------------- -------- ------ ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.00 $10.20 $10.75 $9.84 $11.74
Net investment income (loss) 0.03(2) 0.37 0.43 0.36(2) 0.32(2)
Net realized and unrealized gain (loss) on investments 0.20 0.70 (0.89) 1.90 1.01
Total from investment operations 0.23 1.07 (0.46) 2.26 1.33
Less distributions:
Dividends from net investment income (0.03) (0.38) (0.43) (0.36) (0.33)
Distributions from net realized gain on investments sold -- (0.14) (0.02) -- (0.47)
Total distributions (0.03) (0.52) (0.45) (0.36) (0.80)
Net asset value, end of period $10.20 $10.75 $9.84 $11.74 $12.27
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3) (%) 2.29(4) 10.63 (4.22) 23.30 11.46
Total adjusted investment return at net asset value(3,5) (%) 2.26(4) -- -- -- --
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 14,311 78,775 79,176 87,827 90,855
Ratio of expenses to average net assets (%) 3.51(6) 2.10 1.87 1.96 1.99
Ratio of adjusted expenses to average net assets(7) (%) 3.66(6) -- -- -- --
Ratio of net investment income (loss) to average net assets (%) 3.21(6) 4.01 4.25 3.31 2.63
Ratio of adjusted net investment income (loss) to average
net assets(7) (%) 3.06(6) -- -- -- --
Portfolio turnover rate (%) 0 85 78 45 80
Fee reduction per share ($) 0.0012(2) -- -- -- --
Average brokerage commission rate(8) ($) N/A N/A N/A N/A 0.0700
</TABLE>
(1) Class A and Class B shares commenced operations on October 5, 1992. This
period is covered by the report of other independent auditors (not included
herein).
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) An estimated total return calculation that does not take into consideration
fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
SOVEREIGN BALANCED FUND 9
<PAGE>
SOVEREIGN INVESTORS FUND
REGISTRANT NAME: JOHN HANCOCK INVESTMENT TRUST
TICKER SYMBOL CLASS A: SOVIX CLASS B: SOVBX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[BULLS EYE]
The fund seeks long-term growth of capital and of income without assuming undue
market risks. Under normal circumstances, the fund invests most of its assets in
a diversified selection of stocks, although it may respond to market conditions
by investing in other types of securities such as bonds or short-term
securities. The fund may not invest more than 25% of assets in any one industry.
Currently, the fund utilizes a "dividend performers" strategy in selecting
common stocks, investing exclusively in companies that have increased their
dividend payout in each of the last ten years.
PORTFOLIO SECURITIES
[OPEN FOLDER]
The fund may invest in most types of securities, including:
- - common and preferred stocks, warrants and convertible securities
- - U.S. Government and agency debt securities, including mortgage-backed
securities
- - corporate bonds, notes and other debt securities of any maturity
The fund's bond investments are primarily investment-grade, although up to 5% of
assets may be invested in junk bonds rated as low as C and their unrated
equivalents. To a limited extent, the fund may invest in certain higher-risk
securities, and may engage in other investment practices.
For temporary defensive purposes, the fund may invest some or all of its assets
in investment-grade short-term securities.
RISK FACTORS
[GRAPH]
As with any growth and income fund, the value of your investment will fluctuate
in response to stock and bond market movements. To the extent that the fund
invests in higher-risk securities, it takes on additional risks that could
adversely affect its performance. Before you invest, please read "More about
risk" starting on page 26.
MANAGEMENT/SUBADVISER
[PERSON]
John F. Snyder III and Barry H. Evans, CFA, lead the fund's portfolio management
team. Mr. Snyder, an investment manager since 1971, is an executive vice
president of Sovereign Asset Management Corporation, the fund's subadviser and a
subsidiary of John Hancock Funds. Mr. Evans, a senior vice president of the
adviser, has been in the investment business since joining John Hancock Funds in
1986.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[PERCENT]
Fund investors pay various expenses, either directly or indirectly. The figures
below show the expenses for the past year, adjusted to reflect any changes.
Future expenses may be greater or less.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
-------------------------------- ------- -------
<S> <C> <C>
Maximum sales charge imposed on
purchases (as a percentage of
offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee(3) 0.57% 0.57%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.26% 0.34%
Total fund operating expenses 1.13% 1.91%
</TABLE>
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
<TABLE>
<CAPTION>
Share class Year 1 Year 3 Year 5 Year 10
----------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
Class A shares $61 $84 $109 $181
Class B shares
Assuming redemption
at end of period $69 $90 $123 $203
Assuming no redemption $19 $60 $103 $203
</TABLE>
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Management fee includes a subadviser fee equal to 40% of the management fee.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
10 SOVEREIGN INVESTORS FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[DOLLAR SIGN]
The figures below have been audited by the fund's independent auditors, Ernst &
Young LLP.
<TABLE>
<CAPTION>
VOLATILITY, AS INDICATED BY CLASS A
YEAR-BY-YEAR TOTAL INVESTMENT RETURN (%)
(scale varies from fund to fund)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.28 11.23 23.76 4.38 30.48 7.23 5.71 (1.85) 29.15 17.57
</TABLE>
<TABLE>
<CAPTION>
CLASS A - PERIOD ENDED: 12/87(1,2) 12/88(1) 12/89(1) 12/90(1) 12/91(1,3)
----------------------- ---------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 12.36 $ 10.96 $ 11.19 $ 12.60 $ 11.94
Net investment income (loss) 0.53 0.57 0.59 0.58 0.54
Net realized and unrealized gain (loss) on investments (0.45) 0.65 2.01 (0.05) 3.03
Total from investment operations 0.08 1.22 2.60 0.53) 3.57
Less distributions:
Dividends from net investment income (0.58) (0.61) (0.61) (0.59) (0.53)
Distributions from net realized gain on investments sold 0.90 (0.38) (0.58) (0.60) (0.67)
Total distributions (1.48) (0.99) (1.19) (1.19) (1.20)
Net asset value, end of period $ 10.96 $ 11.19 $ 12.60 $ 11.94 $ 14.31
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(5) (%) 0.28 11.23 23.76 4.38 30.48
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 40,564 45,861 66,466 83,470 194,055
Ratio of expenses to average net assets (%) 0.85 0.86 1.07 1.14 1.18
Ratio of net investment income (loss) to average
net assets (%) 3.96 4.97 4.80 4.77 4.01
Portfolio turnover rate (%) 59 35 40 55 67
Average brokerage commission rate(6) ($) N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
CLASS A - PERIOD ENDED: 12/92(1) 12/93 12/94 12/95 12/96
----------------------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 14.31 $ 14.78 $ 15.10 $ 14.24 $ 17.87
Net investment income (loss) 0.47 0.44 0.46 0.40 0.36(4)
Net realized and unrealized gain (loss) on investments 0.54 0.39 (0.75) 3.71 2.77
Total from investment operations 1.01 0.83 (0.29) 4.11 3.13
Less distributions:
Dividends from net investment income (0.45) (0.42) (0.46 (0.40) (0.36)
Distributions from net realized gain on investments sold (0.09 (0.09) (0.11 (0.08) (1.16)
Total distributions (0.54) (0.51) (0.57 (0.48) (1.52)
Net asset value, end of period $ 14.78 $ 15.10 $ 14.24 $ 17.87 $ 19.48
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(5) (%) 7.23 5.71 (1.85) 29.15 17.57
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 872,932 1,258,575 1,090,231 1,280,321 1,429,523
Ratio of expenses to average net assets (%) 1.13 1.10 1.16 1.14 1.13
Ratio of net investment income (loss) to average
net assets (%) 3.32 2.94 3.13 2.45 1.86
Portfolio turnover rate (%) 30 46 45 46 59
Average brokerage commission rate(6) ($) N/A N/A N/A N/A 0.0696
</TABLE>
<TABLE>
<CAPTION>
CLASS B - PERIOD ENDED: 12/94(7) 12/95 12/96
----------------------- -------- ------ ------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $15.02 $14.24 $17.86
Net investment income (loss)(4) 0.38 0.27 0.21
Net realized and unrealized gain (loss) on investment (0.69) 3.71 2.77
Total from investment operations (0.31) 3.98 2.98
Less distributions:
Dividends from net investment income (0.36) (0.28) (0.22)
Distributions from net realized gain on investments sold (0.11) (0.08) (1.16)
Total distributions (0.47) (0.36) (1.38)
Net asset value, end of period $14.24 $17.86 $19.46
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(5) (%) (2.04)(8) 28.16 16.67
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 128,069 257,781 406,523
Ratio of expenses to average net assets (%) 1.86(9) 1.90 1.91
Ratio of net investment income (loss) to average net assets (%) 2.57(9) 1.65 1.10
Portfolio turnover rate (%) 45 46 59
Average brokerage commission rate(6) ($) N/A N/A 0.0696
</TABLE>
(1) These periods are covered by the report of other independent auditors (not
included herein).
(2) Restated for 2-for-1 stock split effective April 29, 1987.
(3) On October 23, 1991, John Hancock Advisers, Inc. became the investment
adviser of the fund.
(4) Based on the average of the shares outstanding at the end of each month.
(5) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(6) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
(7) Class B shares commenced operations on January 3, 1994.
(8) Not annualized.
(9) Annualized.
SOVEREIGN INVESTORS FUND 11
<PAGE>
SPECIAL VALUE FUND
REGISTRANT NAME: JOHN HANCOCK CAPITAL SERIES
TICKER SYMBOL CLASS A: SPVAX CLASS B: SPVBX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[BULLSEYE]
The fund seeks capital appreciation, with income as a secondary consideration.
To pursue this goal, the fund invests primarily in stocks that appear
comparatively undervalued and are out of favor. The fund looks for companies of
any size whose earnings power or asset value does not appear to be reflected in
the current stock price, and whose stocks thus have potential for appreciation.
The fund also takes a "margin of safety" approach, seeking those stocks that are
believed to have limited downside risk. The fund may not invest more than 25% of
assets in any one industry.
PORTFOLIO SECURITIES
[OPEN FOLDER]
The fund invests primarily in the common stocks of U.S. companies. It may also
invest in warrants, preferred stocks and convertible securities.
The fund may invest up to 50% of assets in foreign securities, including
American Depository Receipts. The fund may invest up to 15% of net assets in
junk bonds, including convertible securities, that may be rated as low as CC/Ca
and their unrated equivalents. To a limited extent, the fund also may invest in
certain higher-risk securities and may engage in other investment practices.
For temporary defensive purposes, the fund may invest some or all of its assets
in investment-grade short-term securities.
RISK FACTORS
[GRAPH]
As with any growth and income fund, the value of your investment will fluctuate.
Even comparatively undervalued stocks typically fall in price during broad
market declines. Small- and medium-sized company stocks, which may comprise a
portion of the fund's portfolio, tend to be more volatile than the market as a
whole.
To the extent that it invests in foreign securities, the fund may be affected by
additional risks, such as currency, information, natural event and political
risks. These risks are defined in "More about risk" starting on page 26. This
section also details other higher-risk securities and practices that the fund
may utilize. Please read "More about risk" carefully before you invest.
PORTFOLIO MANAGEMENT
[PERSON]
Timothy E. Keefe, CFA, has been the leader of the fund's portfolio management
team since August 1996. He is a senior vice president of the adviser. He joined
John Hancock Funds in July 1996 and has been in the investment business since
1987.
INVESTOR EXPENSES
[PERCENT]
Fund investors pay various expenses, either directly or indirectly. The figures
below show the expenses for the past year, adjusted to reflect any changes.
Future expenses may be greater or less.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
-------------------------------- ------- -------
<S> <C> <C>
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
- ------------------------------
<S> <C> <C>
Management fee (after expense limitation)(3) 0.00% 0.00%
12b-1 fee(4) 0.30% 1.00%
Other expenses (after limitation)(3) 0.69% 0.69%
Total fund operating expenses (after limitation)(3) 0.99% 1.69%
</TABLE>
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
<TABLE>
<CAPTION>
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
----------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
Class A shares $60 $80 $102 $165
Class B shares
Assuming redemption
at end of period $67 $83 $112 $181
Assuming no redemption $17 $53 $ 92 $181
</TABLE>
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Reflects the adviser's agreement to limit expenses (except for 12b-1 and
transfer agent expenses). Without this limitation, management fees would be
0.70% for each class, other expenses would be 0.70% for each class, and
total fund operating expenses would be 1.70% for Class A and 2.40% for Class
B. The adviser may terminate this limitation in the future.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
12 SPECIAL VALUE FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[DOLLAR SIGN]
The figures below have been audited by the fund's independent auditors, Ernst &
Young LLP.
<TABLE>
<CAPTION>
VOLATILITY, AS INDICATED BY CLASS A
YEAR-BY-YEAR TOTAL INVESTMENT RETURN (%)
<S> <C> <C> <C>
(scale varies from fund to fund) 7.81(4) 20.26 12.91
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
CLASS A - PERIOD ENDED: 12/94(1) 12/95 12/96
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $8.50 $8.99 $10.39
Net investment income (loss)(2) 0.18 0.21 0.14
Net realized and unrealized gain (loss) on investments 0.48 1.60 1.17
Total from investment operations 0.66 1.81 1.31
Less distributions:
Dividends from net investment income (0.17) (0.20) (0.14)
Distributions from net realized gain on investments sold -- (0.21) (1.24)
Total distributions (0.17) (0.41) (1.38)
Net asset value, end of period $8.99 $10.39 $10.32
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3) (%) 7.81(4) 20.26 12.91
Total adjusted investment return at net asset value(3,5) (%) 7.30(4) 19.39 12.20
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 4,420 12,845 15,853
Ratio of expenses to average net assets (%) 0.99(6) 0.98 0.99
Ratio of adjusted expenses to average net assets(7) (%) 4.98(6) 1.85 1.70
Ratio of net investment income (loss) to average net assets (%) 2.10(6) 2.04 1.31
Ratio of adjusted net investment income (loss) to average net assets(7) (%) (1.89)(6) 1.17 0.60
Portfolio turnover rate (%) 0.3 9 72
Fee reduction per share (2) ($) 0.34 0.09 0.08
Average brokerage commission rate(8) ($) N/A N/A 0.0658
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
CLASS B - PERIOD ENDED: 12/94(1) 12/95 12/96
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $8.50 $9.00 $10.38
Net investment income (loss)(2) 0.13 0.12 0.07
Net realized and unrealized gain (loss) on investments 0.48 1.59 1.17
Total from investment operations 0.61 1.71 1.24
Less distributions:
Dividends from net investment income (0.11) (0.12) (0.07)
Distributions from net realized gain on investments sold -- (0.21) (1.24)
Total distributions (0.11) (0.33) (1.31)
Net asset value, end of period $9.00 $10.38 $10.31
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3) (%) 7.15(4) 19.11 12.14
Total adjusted investment return at net asset value(3,5) (%) 6.64(4) 18.24 11.43
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 3,296 16,994 22,097
Ratio of expenses to average net assets (%) 1.72(6) 1.73 1.69
Ratio of adjusted expenses to average net assets(7) (%) 5.71(6) 2.60 2.40
Ratio of net investment income (loss) to average net assets (%) 1.53(6) 1.21 0.62
Ratio of adjusted net investment income (loss) to average net assets(7) (%) (2.46)(6) 0.34 (0.09)
Portfolio turnover rate (%) 0.3 9 72
Fee reduction per share (2)($) 0.34 0.09 0.08
Average brokerage commission rate(8) ($) N/A N/A 0.0658
</TABLE>
(1) Class A and Class B shares commenced operations on January 3, 1994.
(2) Based on the average of the shares outstanding at the end of each
month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) An estimated total return calculation that does not take into
consideration fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Per portfolio share traded. Required for fiscal years that began
September 1, 1995 or later.
SPECIAL VALUE FUND 13
<PAGE>
UTILITIES FUND
REGISTRANT NAME: JOHN HANCOCK CAPITAL SERIES
TICKER SYMBOL CLASS A: JHUAX CLASS B: JHUBX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[BULLSEYE]
The fund seeks current income and, to the extent consistent with this goal,
growth of income and long-term growth of capital. To pursue this goal, the fund
invests primarily in public utilities companies, such as those whose principal
business involves the generation, handling or sale of electricity, natural gas,
water, waste management services or non-broadcast telecommunications services.
Under normal circumstances, the fund will invest at least 65% of assets in these
companies. The fund may invest in other industries if fund management believes
it would help the fund meet its goal.
PORTFOLIO SECURITIES
[OPEN FOLDER]
The fund invests primarily in the common stocks of U.S. and foreign companies.
It may also invest in warrants, preferred stocks and convertible securities.
Foreign securities (including American Depository Receipts) and investment-grade
debt securities may each comprise up to 25% of portfolio investments. To a
limited extent, the fund also may invest in certain higher-risk securities, and
may engage in other investment practices.
For temporary defensive purposes, the fund may invest some or all of its assets
in investment-grade short-term securities.
RISK FACTORS
[GRAPH]
As with any growth and income fund, the value of your investment will fluctuate
in response to stock and bond market movements. Because the fund concentrates on
a narrow segment of the economy, its performance is largely dependent on that
segment's performance. Utilities stocks may be adversely affected by numerous
factors, including government regulation and deregulation, environmental issues,
competition and rising interest rates.
To the extent that it invests in foreign securities, the fund may be affected by
additional risks such as currency, information, natural event and political
risks. These risks are defined in "More about risk" starting on page 26. This
section also details other higher-risk securities and practices that the fund
may utilize. Please read "More about risk" carefully before you invest.
PORTFOLIO MANAGEMENT
[PERSON]
Gregory K. Phelps, leader of the fund's portfolio management team since April
1996, is a vice president of the adviser. He joined John Hancock Funds in
January 1995 and has been in the investment business since 1981.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[PERCENT]
Fund investors pay various expenses, either directly or indirectly. The figures
below show the expenses for the past year, adjusted to reflect any changes.
Future expenses may be greater or less.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
- ---------------------------------------------------------------
<S> <C> <C>
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none
Maximum sales charge imposed on
reinvested dividends none none
Maximum deferred sales charge none(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET ASSETS)
- -------------------------------------------------------------------------------
<S> <C> <C>
Management fee (after expense limitation)(3) 0.25% 0.25%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.51% 0.51%
Total fund operating expenses (after limitation)(3) 1.06% 1.76%
</TABLE>
EXAMPLE The table below shows what you would pay
if you invested $1,000 over the various time frames indicated. The example
assumes you reinvested all dividends and that the average annual return was 5%.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $60 $82 $106 $173
Class B shares
Assuming redemption
at end of period $68 $85 $115 $189
Assuming no redemption $18 $55 $ 95 $189
</TABLE>
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges
are calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Reflects the adviser's agreement to limit expenses (except for 12b-1
and transfer agent expenses). Without this limitation, management fees
would be 0.70% for each class and total fund operating expenses would
be 1.51% for Class A and 2.21% for Class B. The adviser may terminate
this limitation in the future.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay
more than the equivalent of the maximum permitted front-end sales
charge.
14 UTILITIES FUND
<PAGE>
FINANCIAL HIGHLIGHTS
The figures below have been audited
[DOLLAR SIGN] by the fund's independent auditors,
Price Waterhouse LLP.
<TABLE>
<S> <C> <C> <C> <C>
VOLATILITY, AS INDICATED BY CLASS A
YEAR-BY-YEAR TOTAL INVESTMENT RETURN (%) (2.82)(4) 7.10 14.44 11.05(4)
(scale varies from fund to fund) seven
months
</TABLE>
<TABLE>
<CAPTION>
CLASS A - PERIOD ENDED: 5/94(1) 5/95 5/96 12/96(2)
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 8.50 $ 8.26 $ 8.48 $ 9.17
Net investment income (loss)(3) 0.12 0.44 0.41 0.30
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.36) 0.12 0.79 0.68
Total from investment operations (0.24) 0.56 1.20 0.98
Less distributions:
Dividends from net investment income -- (0.34) (0.41) (0.35)
Distributions from net realized gains on investments sold -- -- (0.10) (0.73)
Total distributions -- (0.34) (0.51) (1.08)
Net asset value, end of period $ 8.26 $ 8.48 $ 9.17 $ 9.07
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(4) (%) (2.82)(5) 7.10 14.44 11.05(5)
Total adjusted investment return at net asset value(4,6) (%) (6.46)(5) 6.44 14.01 (10.78)(5)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 781 19,229 22,574 23,781
Ratio of expenses to average net assets (%) 1.00(7) 1.04 1.04 1.06(7)
Ratio of adjusted expenses to average net assets(8) (%) 12.07(7) 1.70 1.47 1.51(7)
Ratio of net investment income (loss) to average net assets (%) 4.53(7) 5.39 4.49 5.44(7)
Ratio of adjusted net investment income (loss) to average net assets(8) (%) (6.54)(7) 4.73 4.06 4.99(7)
Portfolio turnover rate (%) 6 98 124 48
Fee reduction per share (3)($) 0.27 0.05 0.04 0.02
Average brokerage commission rate(9) ($) N/A N/A N/A 0.0700
</TABLE>
<TABLE>
<CAPTION>
CLASS B - PERIOD ENDED: 5/94(1) 5/95 5/96 12/96(2)
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 8.50 $ 8.25 $ 8.45 $ 9.14
Net investment income (loss)(3) 0.08 0.38 0.34 0.26
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.33) 0.12 0.79 0.68
Total from investment operations (0.25) 0.50 1.13 0.94
Less distributions:
Dividends from net investment income -- (0.30) (0.34) (0.31)
Distributions from net realized gains on investments sold -- -- (0.10) (0.73)
Total distributions -- (0.30) (0.44) (1.04)
Net asset value, end of period $ 8.25 $ 8.45 $ 9.14 $ 9.04
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(4) (%) (2.94)(5) 6.31 13.68 10.50(5)
Total adjusted investment return at net asset value(4,6) (%) (6.58)(5) 5.65 13.25 10.23(5)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 445 38,344 47,759 51,043
Ratio of expenses to average net assets (%) 1.72(7) 1.71 1.77 1.75(7)
Ratio of adjusted expenses to average net assets(8) (%) 12.79(7) 2.37 2.20 2.20(7)
Ratio of net investment income (loss) to average net assets (%) 4.20(7) 4.64 3.77 4.74(7)
Ratio of adjusted net investment income (loss) to average net assets(8) (%) (6.87)(7) 3.98 3.34 4.29(7)
Portfolio turnover rate (%) 6 98 124 48
Fee reduction per share (3)($) 0.27 0.05 0.04 0.02
Average brokerage commission rate(9) ($) N/A N/A N/A 0.0700
</TABLE>
- ----------
(1) Class A and Class B shares commenced operations on February 1, 1994.
(2) Effective December 31, 1996, the fiscal year end changed from May 31 to
December 31.
(3) Based on the average of the shares outstanding at the end of each month.
(4) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(5) Not annualized.
(6) An estimated total return calculation that does not take into consideration
fee reductions by the adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
(9) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
UTILITIES FUND 15
<PAGE>
YOUR ACCOUNT
- --------------------------------------------------------------------------------
CHOOSING A SHARE CLASS
All John Hancock growth and income funds offer two classes of shares, Class A
and Class B. Each class has its own cost structure, allowing you to choose the
one that best meets your requirements. Your financial representative can help
you decide.
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C>
- - Front-end sales charges, as - No front-end sales charge; all
described below. There are your money goes to work for
several ways to reduce these you right away.
charges, also described below.
- Higher annual expenses than
- - Lower annual expenses than Class A shares.
Class B shares.
- A deferred sales charge on
shares you sell within six
years of purchase, as
described below.
- Automatic conversion to Class
A shares after eight years,
thus reducing future annual
expenses.
</TABLE>
For actual past expenses of Class A and B shares, see the fund-by-fund
information earlier in this prospectus.
Sovereign Investors Fund offers Class C shares, which have their own expense
structure and are available to financial institutions only. Call Signature
Services for more information (see the back cover of this prospectus).
- --------------------------------------------------------------------------------
HOW SALES CHARGES ARE CALCULATED
Class A Sales charges are as follows:
CLASS A SALES CHARGES
<TABLE>
<CAPTION>
As a % of As a % of your
Your investment offering price investment
<S> <C> <C>
Up to $49,999 5.00% 5.26%
$50,000 - $99,999 4.50% 4.71%
$100,000 - $249,999 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 and over See below
</TABLE>
Investments of $1 million or more Class A shares are available with no front-end
sales charge. However, there is a contingent deferred sales charge (CDSC) on any
shares sold within one year of purchase, as follows:
CDSC ON $1 MILLION+ INVESTMENTS
<TABLE>
<CAPTION>
Your investment CDSC on shares being sold
<S> <C>
First $1M - $4,999,999 1.00%
Next $1 - $5M above that 0.50%
Next $1 or more above that 0.25%
</TABLE>
For purposes of this CDSC, all purchases made during a calendar month are
counted as having been made on the LAST day of that month.
The CDSC is based on the lesser of the original purchase cost or the current
market value of the shares being sold, and is not charged on shares you acquired
by reinvesting your dividends. To keep your CDSC as low as possible, each time
you place a request to sell shares we will first sell any shares in your account
that are not subject to a CDSC.
Class B Shares are offered at their net asset value per share, without any
initial sales charge. However, there is a contingent deferred sales charge
(CDSC) on shares you sell within six years of buying them. There is no CDSC on
shares acquired through reinvestment of dividends. The CDSC is based on the
original purchase cost or the current market value of the shares being sold,
whichever is less. The longer the time between the purchase and the sale of
shares, the lower the rate of the CDSC:
CLASS B DEFERRED CHARGES
<TABLE>
<CAPTION>
Years after purchase CDSC on shares being sold
<S> <C>
1st year 5.00%
2nd year 4.00%
3rd or 4th year 3.00%
5th year 2.00%
6th year 1.00%
After 6 years None
</TABLE>
For purposes of this CDSC, all purchases made during a calendar month are
counted as having been made on the FIRST day of that month.
CDSC calculations are based on the number of shares involved, not on the value
of your account. To keep your CDSC as low as possible, each time you place a
request to sell shares we will first sell any shares in your account that carry
no CDSC. If there are not enough of these to meet your request, we will sell
those shares that have the lowest CDSC.
16 YOUR ACCOUNT
<PAGE>
- --------------------------------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING YOUR CLASS A SALES CHARGES There are several ways you can combine
multiple purchases of Class A shares of John Hancock funds to take advantage of
the breakpoints in the sales charge schedule. The first three ways can be
combined in any manner.
- - Accumulation Privilege -- lets you add the value of any Class A shares you
already own to the amount of your next Class A investment for purposes of
calculating the sales charge.
- - Letter of Intention -- lets you purchase Class A shares of a fund over a
13-month period and receive the same sales charge as if all shares had been
purchased at once.
- - Combination Privilege -- lets you combine Class A shares of multiple funds
for purposes of calculating the sales charge.
To utilize: complete the appropriate section of your application, or contact
your financial representative or Signature Services to add these options.
GROUP INVESTMENT PROGRAM A group may be treated as a single purchaser under the
accumulation and combination privileges. Each investor has an individual
account, but for sales charge purposes the group's investments are lumped
together, making the investors potentially eligible for reduced sales charges.
There is no charge, no obligation to invest (although initial aggregate
investments must be at least $250) and individual investors may terminate their
accounts at any time.
To utilize: contact your financial representative or Signature Services to find
out how to qualify, or consult the SAI (see the back cover of the prospectus).
CDSC waivers As long as Signature Services is notified at the time you sell, the
CDSC for either share class will generally be waived in the following cases:
- - to make payments through certain systematic withdrawal plans
- - to make certain distributions from a retirement plan
- - because of shareholder death or disability
To utilize: If you think you may be eligible for a CDSC waiver, contact your
financial representative or Signature Services, or consult the SAI.
REINSTATEMENT PRIVILEGE If you sell shares of a John Hancock fund, you may
reinvest some or all of the proceeds in the same share class of any John Hancock
fund within 120 days without a sales charge, as long as Signature Services is
notified before you reinvest. If you paid a CDSC when you sold your shares, you
will be credited with the amount of the CDSC. All accounts involved must have
the same registration.
To utilize: contact your financial representative or Signature Services.
WAIVERS FOR CERTAIN INVESTORS Class A shares may be offered without front-end
sales charges or CDSCs to various individuals and institutions, including:
- - government entities that are prohibited from paying mutual fund sales charges
- - financial institutions or common trust funds investing $1 million or more for
non-discretionary accounts
- - selling brokers and their employees and sales representatives
- - financial representatives utilizing fund shares in fee-based investment
products under agreement with John Hancock Funds
- - fund trustees and other individuals who are affiliated with these or other
John Hancock funds
- - individuals transferring assets to a John Hancock fund from an employee
benefit plan that has John Hancock funds
- - members of an approved affinity group financial services program
- - certain insurance company contract holders (one-year CDSC usually applies)
- - participants in certain retirement plans with at least 100 members (one-year
CDSC applies)
To utilize: if you think you may be eligible for a sales charge waiver, contact
your financial representative or Signature Services, or consult the SAI.
- --------------------------------------------------------------------------------
OPENING AN ACCOUNT
1 Read this prospectus carefully.
2 Determine how much you want to invest. The minimum initial investments for
the John Hancock funds are as follows:
- non-retirement account: $1,000
- retirement account: $250
- group investments: $250
- Monthly Automatic Accumulation Plan (MAAP): $25 to open; you must invest at
least $25 a month
3 Complete the appropriate parts of the account application, carefully
following the instructions. If you have questions, please contact your
financial representative or call Signature Services at 1-800-225-5291.
4 Complete the appropriate parts of the account privileges section of the
application. By applying for privileges now, you can avoid the delay and
inconvenience of having to file an additional application if you want to add
privileges later.
5 Make your initial investment using the table on the next page. You and your
financial representative can initiate any purchase, exchange or sale of
shares.
YOUR ACCOUNT 17
<PAGE>
BUYING SHARES
<TABLE>
<CAPTION>
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
<S> <C> <C>
BY CHECK
[CHECK] - Make out a check for the - Make out a check for the
investment amount, payable to investment amount payable to
"John Hancock Signature "John Hancock Signature
Services, Inc." Services, Inc."
- Deliver the check and your - Fill out the detachable
completed application to your investment slip from an account
financial representative, or statement. If no slip is
mail them to Signature Services available, include a note
(address on next page). specifying the fund name, your
share class, your account number
and the name(s) in which the
account is registered.
- Deliver the check and your
investment slip or note to your
financial representative, or
mail them to Signature Services
(address on next page).
BY EXCHANGE
[RIGHT/LEFT ARROWS] - Call your financial - Call your financial
representative or Signature representative or Signature
Services to request an exchange. Services to request an exchange.
BY WIRE
[JAGGED ARROW] - Deliver your completed - Instruct your bank to wire the
application to your financial amount of your investment to:
representative, or mail it to First Signature Bank & Trust
Signature Services. Account # 900000260
Routing # 211475000
- Obtain your account number by Specify the fund name, your
calling your financial share class, your account number
representative or Signature and the name(s) in which the
Services. account is registered. Your bank
may charge a fee to wire funds.
- Instruct your bank to wire the
amount of your investment to:
First Signature Bank & Trust
Account # 900000260
Routing # 211475000
Specify the fund name, your
choice of share class, the new
account number and the name(s)
in which the account is
registered. Your bank may charge
a fee to wire funds.
BY PHONE
[PHONE] See "By wire" and "By exchange." - Verify that your bank or credit
union is a member of the
Automated Clearing House (ACH)
system.
- Complete the "Invest-By-Phone"
and "Bank Information" sections
on your account application.
- Call Signature Services to
verify that these features are
in place on your account.
- Tell the Signature Services
representative the fund name,
your share class, your account
number, the name(s) in which the
account is registered and the
amount of your investment.
</TABLE>
To open or add to an account using the Monthly Automatic Accumulation Program,
see "Additional investor services."
18 YOUR ACCOUNT
<PAGE>
SELLING SHARES
<TABLE>
<CAPTION>
DESIGNED FOR TO SELL SOME OR ALL OF YOUR SHARES
<S> <C> <C>
BY LETTER
[LETTER] - Accounts of any type. - Write a letter of instruction or
complete a stock power
- Sales of any amount. indicating the fund name, your
share class, your account
number, the name(s) in which the
account is registered and the
dollar value or number of shares
you wish to sell.
- Include all signatures and any
additional documents that may be
required (see next page).
- Mail the materials to Signature
Services.
- A check will be mailed to the
name(s) and address in which the
account is registered, or
otherwise according to your
letter of instruction.
BY PHONE
[PHONE] - Most accounts. - For automated service 24 hours a
day using your touch-tone phone,
- Sales of up to $100,000. call the EASI-Line at
1-800-338-8080.
- To place your order with a
representative at John Hancock
Funds, call Signature Services
between 8 A.M. and 4 P.M.
Eastern Time on most business
days.
BY WIRE OR ELECTRONIC
FUNDS TRANSFER (EFT)
[JAGGED ARROW] - Requests by letter to sell any - Fill out the "Telephone
amount (accounts of any type). Redemption" section of your new
account application.
- Requests by phone to sell up to
$100,000 (accounts with - To verify that the telephone
telephone redemption redemption privilege is in place
privileges). on an account, or to request the
forms to add it to an existing
account, call Signature
Services.
- Amounts of $1,000 or more will
be wired on the next business
day. A $4 fee will be deducted
from your account.
- Amounts of less than $1,000 may
be sent by EFT or by check.
Funds from EFT transactions are
generally available by the
second business day. Your bank
may charge a fee for this
service.
BY EXCHANGE
[RIGHT/LEFT ARROWS] - Accounts of any type. - Obtain a current prospectus for
the fund into which you are
- Sales of any amount. exchanging by calling your
financial representative or
Signature Services.
- Call your financial
representative or Signature
Services to request an exchange.
</TABLE>
ADDRESS
JOHN HANCOCK SIGNATURE SERVICES, INC.
1 JOHN HANCOCK WAY, SUITE 1000
BOSTON, MA 02217-1000
PHONE
1-800-225-5291
OR CONTACT YOUR FINANCIAL REPRESENTATIVE
FOR INSTRUCTIONS AND ASSISTANCE.
To sell shares through a systematic withdrawal plan, see "Additional investor
services."
YOUR ACCOUNT 19
<PAGE>
SELLING SHARES IN WRITING In certain circumstances, you will need to make your
request to sell shares in writing. You may need to include additional items with
your request, as shown in the table below. You may also need to include a
signature guarantee, which protects you against fraudulent orders. You will need
a signature guarantee if:
- - your address of record has changed within the past 30 days
- - you are selling more than $100,000 worth of shares
- - you are requesting payment other than by a check mailed to the address of
record and payable to the registered owner(s)
You can generally obtain a signature guarantee from the following sources:
- - a broker or securities dealer
- - a federal savings, cooperative or other type of bank
- - a savings and loan or other thrift institution
- - a credit union
- - a securities exchange or clearing agency
A notary public CANNOT provide a signature guarantee.
<TABLE>
<CAPTION>
SELLER REQUIREMENTS FOR WRITTEN REQUESTS [LETTER]
<S> <C>
Owners of individual, joint, sole - Letter of instruction.
proprietorship, UGMA/UTMA
(custodial accounts for minors) or - On the letter, the signatures
general partner accounts. and titles of all persons
authorized to sign for the
account, exactly as the account
is registered.
- Signature guarantee if
applicable (see above).
Owners of corporate or association - Letter of instruction.
accounts.
- Corporate resolution, certified
within the past two years.
- On the letter and the
resolution, the signature of the
person(s) authorized to sign for
the account.
- Signature guarantee if
applicable (see above).
Owners or trustees of trust - Letter of instruction.
accounts.
- On the letter, the signature(s)
of the trustee(s).
- If the names of all trustees are
not registered on the account,
please also provide a copy of
the trust document certified
within the past six months.
- Signature guarantee if
applicable (see above).
Joint tenancy shareholders whose - Letter of instruction signed by
co-tenants are deceased. surviving tenant.
- Copy of death certificate.
- Signature guarantee if
applicable (see above).
Executors of shareholder estates. - Letter of instruction signed by
executor.
- Copy of order appointing
executor.
- Signature guarantee if
applicable (see above).
Administrators, conservators, - Call 1-800-225-5291 for
guardians and other sellers or instructions.
account types not listed above.
</TABLE>
20 YOUR ACCOUNT
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION POLICIES
VALUATION OF SHARES The net asset value per share (NAV) for each fund and class
is determined each business day at the close of regular trading on the New York
Stock Exchange (typically 4 P.M. Eastern Time) by dividing a class's net assets
by the number of its shares outstanding.
BUY AND SELL PRICES When you buy shares, you pay the NAV plus any applicable
sales charges, as described earlier. When you sell shares, you receive the NAV
minus any applicable deferred sales charges.
EXECUTION OF REQUESTS Each fund is open on those days when the New York Stock
Exchange is open, typically Monday through Friday. Buy and sell requests are
executed at the next NAV to be calculated after your request is accepted by
Signature Services.
At times of peak activity, it may be difficult to place requests by phone.
During these times, consider using EASI-Line or sending your request in writing.
In unusual circumstances, any fund may temporarily suspend the processing of
sell requests, or may postpone payment of proceeds for up to three business days
or longer, as allowed by federal securities laws.
TELEPHONE TRANSACTIONS For your protection, telephone requests may be recorded
in order to verify their accuracy. In addition, Signature Services will take
measures to verify the identity of the caller, such as asking for name, account
number, Social Security or other taxpayer ID number and other relevant
information. If appropriate measures are taken, Signature Services is not
responsible for any losses that may occur to any account due to an unauthorized
telephone call. Also for your protection, telephone transactions are not
permitted on accounts whose names or addresses have changed within the past 30
days. Proceeds from telephone transactions can only be mailed to the address of
record.
EXCHANGES You may exchange shares of one John Hancock fund for shares of the
same class of any other, generally without paying any additional sales charges.
The registration for both accounts involved must be identical. Class B shares
will continue to age from the original date and will retain the same CDSC rate
as they had before the exchange, except that the rate will change to the new
fund's rate if that rate is higher. A CDSC rate that has increased will drop
again with a future exchange into a fund with a lower rate.
To protect the interests of other investors in the fund, a fund may cancel the
exchange privileges of any parties that, in the opinion of the fund, are using
market timing strategies or making more than seven exchanges per owner or
controlling party per calendar year. A fund may also refuse any exchange order.
A fund may change or cancel its exchange policies at any time, upon 60 days'
notice to its shareholders.
CERTIFICATED SHARES Most shares are electronically recorded. If you wish to have
certificates for your shares, please write to Signature Services. Certificated
shares can only be sold by returning the certificates to Signature Services,
along with a letter of instruction or a stock power and a signature guarantee.
SALES IN ADVANCE OF PURCHASE PAYMENTS When you place a request to sell shares
for which the purchase money has not yet been collected, the request will be
executed in a timely fashion, but the fund will not release the proceeds to you
until your purchase payment clears. This may take up to ten business days after
the purchase.
ELIGIBILITY BY STATE You may only invest in, or exchange into, fund shares
legally available in your state.
- --------------------------------------------------------------------------------
DIVIDENDS AND ACCOUNT POLICIES
Account statements In general, you will receive account statements as follows:
- - after every transaction (except a dividend reinvestment) that affects your
account balance
- - after any changes of name or address of the registered owner(s)
- - in all other circumstances, every quarter
Every year you should also receive, if applicable, a Form 1099 tax information
statement, mailed by January 31.
DIVIDENDS The funds generally distribute most or all of their net earnings in
the form of dividends. Income dividends are typically paid quarterly, and
capital gains dividends, if any, are typically paid annually.
YOUR ACCOUNT 21
<PAGE>
DIVIDEND REINVESTMENTS Most investors have their dividends reinvested in
additional shares of the same fund and class. If you choose this option, or if
you do not indicate any choice, your dividends will be reinvested on the
dividend record date. Alternatively, you can choose to have a check for your
dividends mailed to you. However, if the check is not deliverable, your
dividends will be reinvested.
TAXABILITY OF DIVIDENDS As long as a fund meets the requirements for being a
tax-qualified regulated investment company, which each fund has in the past and
intends to in the future, it pays no federal income tax on the earnings it
distributes to shareholders.
Consequently, dividends you receive from a fund, whether reinvested or taken as
cash, are generally considered taxable. Dividends from a fund's long-term
capital gains are taxable as capital gains; dividends from other sources are
generally taxable as ordinary income.
Some dividends paid in January may be taxable as if they had been paid the
previous December. Corporations may be entitled to take a dividends-received
deduction for a portion of certain dividends they receive.
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category, although you should verify your tax liability with
your tax professional.
TAXABILITY OF TRANSACTIONS Any time you sell or exchange shares, it is
considered a taxable event for you. Depending on the purchase price and the sale
price of the shares you sell or exchange, you may have a gain or a loss on the
transaction. You are responsible for any tax liabilities generated by your
transactions.
SMALL ACCOUNTS (NON-RETIREMENT ONLY) If you draw down a non-retirement account
so that its total value is less than $1,000, you may be asked to purchase more
shares within 30 days. If you do not take action, your fund may close out your
account and mail you the proceeds. Alternatively, Signature Services may charge
you $10 a year to maintain your account. You will not be charged a CDSC if your
account is closed for this reason, and your account will not be closed if its
drop in value is due to fund performance or the effects of sales charges.
- --------------------------------------------------------------------------------
ADDITIONAL INVESTOR SERVICES
MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP) MAAP lets you set up regular
investments from your paycheck or bank account to the John Hancock fund(s) of
your choice. You determine the frequency and amount of your investments, and you
can terminate your program at any time. To establish:
- - Complete the appropriate parts of your account application.
- - If you are using MAAP to open an account, make out a check ($25 minimum) for
your first investment amount payable to "John Hancock Signature Services,
Inc." Deliver your check and application to your financial representative or
Signature Services.
SYSTEMATIC WITHDRAWAL PLAN This plan may be used for routine bill payments or
periodic withdrawals from your account. To establish:
- - Make sure you have at least $5,000 worth of shares in your account.
- - Make sure you are not planning to invest more money in this account (buying
shares during a period when you are also selling shares of the same fund is
not advantageous to you, because of sales charges).
- - Specify the payee(s). The payee may be yourself or any other party, and there
is no limit to the number of payees you may have, as long as they are all on
the same payment schedule.
- - Determine the schedule: monthly, quarterly, semi-annually, annually or in
certain selected months.
- - Fill out the relevant part of the account application. To add a systematic
withdrawal plan to an existing account, contact your financial representative
or Signature Services.
RETIREMENT PLANS John Hancock Funds offers a range of qualified retirement
plans, including IRAs, SEPs, 401(k) plans, 403(b) plans (including TSAs) and
other pension and profit-sharing plans. Using these plans, you can invest in any
John Hancock fund (except tax-free income funds) with a low minimum investment
of $250 or, for some group plans, no minimum investment at all. To find out
more, call Signature Services at 1-800-225-5291.
22 YOUR ACCOUNT
<PAGE>
- --------------------------------------------------------------------------------
BUSINESS STRUCTURE
HOW THE FUNDS ARE ORGANIZED Each John Hancock growth and income fund is an
open-end management investment company or a series of such a company.
Each fund is supervised by a board of trustees, an independent body that has
ultimate responsibility for the fund's activities. The board retains various
companies to carry out the fund's operations, including the investment adviser,
custodian, transfer agent and others (see diagram). The board has the right, and
the obligation, to terminate the fund's relationship with any of these companies
and to retain a different company if the board believes it is in the
shareholders' best interests.
At a mutual fund's inception, the initial shareholder (typically the adviser)
appoints the fund's board. Thereafter, the board and the shareholders determine
the board's membership. The boards of the John Hancock growth and income funds
may include individuals who are affiliated with the investment adviser. However,
the majority of board members must be independent.
The funds do not hold annual shareholder meetings, but may hold special meetings
for such purposes as electing or removing board members, changing fundamental
policies, approving a management contract or approving a 12b-1 plan (12b-1 fees
are explained in "Sales compensation").
<TABLE>
<S><C><C>
------------------
Shareholders
-------------------
----------------------------------
Financial services firms and
their representatives
Distribution Advise current and prospective
and shareholder shareholders on their fund
services invesments, often in the context
of an overall financial plan.
------------------------------------
--------------------------------- -------------------------------------
Principal distributor Transfer agent
John Hancock Funds, Inc. John Hancock Signature Services, Inc.
101 Huntington Avenue 1 John Hancock Way, Suite 1000
Boston, MA 02199-7603 Boston, MA 02217-1000
Markets the funds and distributes Handles shareholder services, includ-
shares through selling brokers, ing record-keeping and statements,
financial planners and other distribution of dividends and pro-
financial representatives. cessing of buy and sell requests.
--------------------------------- -------------------------------------
- ---------------------------- --------------------------- -----------------------------------
Subadvisers Investment adviser Custodian
Independence Investment John Hancock Advisers, Inc. Investors Bank & Trust Co.
Associates, Inc. 101 Huntington Avenue 89 South Street
53 State Street Boston, MA 02199-7603 Boston, MA 02111 Asset
Boston, MA 02109 Management
Manages the funds' Holds the funds' assets, settles
Sovereign Asset business and invest- all portfolio trades and collects
Management Corporation ment activites. most of the valuation data required
One Westlakes --------------------------- for calculating each fund's NAV.
1235 Westlakes Drive -----------------------------------
Berwyn, PA 19312
--------------------------------
Provide portfolio management Trustees
services to certain funds.
- ---------------------------- Supervise the funds' activities.
--------------------------------
</TABLE>
FUND DETAILS 23
<PAGE>
ACCOUNTING COMPENSATION The funds compensate the adviser for performing tax and
financial management services. Annual compensation is not expected to exceed
0.02% of each fund's average net assets.
PORTFOLIO TRADES In placing portfolio trades, the adviser may use brokerage
firms that market the fund's shares or are affiliated with John Hancock Mutual
Life Insurance Company, but only when the adviser believes no other firm offers
a better combination of quality execution (i.e., timeliness and completeness)
and favorable price.
INVESTMENT GOALS Except for Growth and Income Fund, Sovereign Balanced Fund and
Utilities Fund, each fund's investment goal is fundamental and may only be
changed with shareholder approval.
DIVERSIFICATION All of the growth and income funds are diversified.
- --------------------------------------------------------------------------------
SALES COMPENSATION
As part of their business strategies, the funds, along with John Hancock Funds,
pay compensation to financial services firms that sell the funds' shares. These
firms typically pass along a portion of this compensation to your financial
representative.
Compensation payments originate from two sources: from sales charges and from
12b-1 fees that are paid out of the funds' assets ("12b-1" refers to the federal
securities regulation authorizing annual fees of this type). The 12b-1 fee rates
vary by fund and by share class, according to Rule 12b-1 plans adopted by the
funds. The sales charges and 12b-1 fees paid by investors are detailed in the
fund-by-fund information. The portions of these expenses that are reallowed to
financial services firms are shown on the next page.
Distribution fees may be used to pay for sales compensation to financial
services firms, marketing and overhead expenses and, for Class B shares,
interest expenses.
CLASS B UNREIMBURSED DISTRIBUTION EXPENSES(1)
<TABLE>
<CAPTION>
Unreimbursed As a % of
Fund expenses net assets
<S> <C> <C>
Growth and Income $ 3,586,396 2.57%
Independence Equity $ 345,426 1.30%
Sovereign Balanced $ 3,393,763 3.88%
Sovereign Investors $ 10,068,331 3.00%
Special Value $ 964,684 4.81%
Utilities $ 2,350,903 4.73%
</TABLE>
(1) As of the most recent fiscal year end covered by each fund's financial
highlights. These expenses may be carried forward indefinitely.
INITIAL COMPENSATION Whenever you make an investment in a fund or funds, the
financial services firm receives either a reallowance from the initial sales
charge or a commission, as described below. The firm also receives the first
year's service fee at this time.
ANNUAL COMPENSATION Beginning with the second year after an investment is made,
the financial services firm receives an annual service fee of 0.25% of its total
eligible net assets. This fee is paid quarterly in arrears.
Financial services firms selling large amounts of fund shares may receive extra
compensation. This compensation, which John Hancock Funds pays out of its own
resources, may include asset retention fees as well as reimbursement for
marketing expenses.
24 FUND DETAILS
<PAGE>
- --------------------------------------------------------------------------------
CLASS A INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAXIMUM
SALES CHARGE REALLOWANCE FIRST YEAR MAXIMUM
PAID BY INVESTORS OR COMMISSION SERVICE FEE TOTAL COMPENSATION(1)
(% of offering price) (% of offering price) (% of net investment) (% of offering price)
<S> <C> <C> <C> <C>
Up to $49,999 5.00% 4.01% 0.25% 4.25%
$50,000 - $99,999 4.50% 3.51% 0.25% 3.75%
$100,000 - $249,999 3.50% 2.61% 0.25% 2.85%
$250,000 - $499,999 2.50% 1.86% 0.25% 2.10%
$500,000 - $999,999 2.00% 1.36% 0.25% 1.60%
REGULAR INVESTMENTS OF
$1 MILLION OR MORE
First $1M - $4,999,999 -- 0.75% 0.25% 1.00%
Next $1 - $5M above that -- 0.25% 0.25% 0.50%
Next $1 or more above that -- 0.00% 0.25% 0.25%
Waiver investments(2) -- 0.00% 0.25% 0.25%
</TABLE>
- --------------------------------------------------------------------------------
CLASS B INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAXIMUM
REALLOWANCE FIRST YEAR MAXIMUM
OR COMMISSION SERVICE FEE TOTAL COMPENSATION
(% of offering price) (% of net investment) (% of offering price)
<S> <C> <C> <C>
All amounts 3.75% 0.25% 4.00%
</TABLE>
(1) Reallowance/commission percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition.
(2) Refers to any investments made by municipalities, financial institutions,
trusts and affinity group members that take advantage of the sales charge
waivers described earlier in this prospectus.
CDSC revenues collected by John Hancock Funds may be used to pay commissions
when there is no initial sales charge.
FUND DETAILS 25
<PAGE>
- --------------------------------------------------------------------------------
MORE ABOUT RISK
A fund's risk profile is largely defined by the fund's primary securities and
investment practices. You may find the most concise description of each fund's
risk profile in the fund-by-fund information.
The funds are permitted to utilize -- within limits established by the trustees
- -- certain other securities and investment practices that have higher risks and
opportunities associated with them. On the following page are brief descriptions
of these securities and practices, along with the risks associated with them.
The funds follow certain policies that may reduce these risks.
As with any mutual fund, there is no guarantee that the performance of a John
Hancock growth and income fund will be positive over any period of time.
- --------------------------------------------------------------------------------
TYPES OF INVESTMENT RISK
CORRELATION RISK The risk that changes in the value of a hedging instrument will
not match those of the asset being hedged (hedging is the use of one investment
to offset the effects of another investment).
CREDIT RISK The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation.
CURRENCY RISK The risk that fluctuations in the exchange rates between the U.S.
dollar and foreign currencies may negatively affect an investment.
EXTENSION RISK The risk that an unexpected rise in interest rates will extend
the life of a mortgage-backed security beyond the expected prepayment time,
typically reducing the security's value.
INFORMATION RISK The risk that key information about a security or market is
inaccurate or unavailable.
INTEREST RATE RISK The risk of market losses attributable to changes in interest
rates. With fixed-rate securities, a rise in interest rates typically causes a
fall in values, while a fall in rates typically causes a rise in values.
LEVERAGE RISK Associated with securities or practices (such as borrowing) that
multiply small index or market movements into large changes in value.
- - HEDGED When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that
the fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains.
- - SPECULATIVE To the extent that a derivative is not used as a hedge, the
fund is directly exposed to the risks of that derivative. Gains or
losses from speculative positions in a derivative may be substantially
greater than the derivative's original cost.
LIQUIDITY RISK The risk that certain securities may be difficult or impossible
to sell at the time and the price that the seller would like.
MANAGEMENT RISK The risk that a strategy used by a fund's management may fail to
produce the intended result. Common to all mutual funds.
MARKET RISK The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. Common to all stocks and bonds and the
mutual funds that invest in them.
NATURAL EVENT RISK The risk of losses attributable to natural disasters, crop
failures and similar events.
OPPORTUNITY RISK The risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are tied up in less advantageous
investments.
POLITICAL RISK The risk of losses directly attributable to government or
political actions of any sort.
PREPAYMENT RISK The risk that unanticipated prepayments may occur, reducing the
value of mortgage-backed securities.
VALUATION RISK The risk that a fund has valued certain of its securities at a
higher price than it can sell them for.
- --------------------------------------------------------------------------------
ANALYSIS OF FUNDS WITH 5% OR MORE IN JUNK BONDS(1)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUALITY RATING
(S&P/MOODY'S)(2) SOVEREIGN BALANCED FUND
<S> <C> <C>
AAA/Aaa 17.7%
INVESTMENT- AA/Aa 2.0%
GRADE BONDS A/A 5.1%
BBB/Baa 4.2%
- -----------------------------------------------------------------------
BB/Ba 2.6%
B/B 2.1%
JUNK BONDS CCC/Caa 0.0%
CC/Ca 0.0%
C/C 0.0%
% of portfolio in bonds 33.7%
</TABLE>
- - Rated by Standard & Poor's or Moody's
(1) Average weighted quality distribution for the most recent fiscal year.
(2) In cases where the S&P and Moody's ratings for a given bond issue do not
agree, the issue has been counted in the higher category.
26 FUND DETAILS
<PAGE>
- --------------------------------------------------------------------------------
HIGHER-RISK SECURITIES AND PRACTICES
- --------------------------------------------------------------------------------
This table shows each fund's investment limitations as a percentage of portfolio
assets. In each case the principal types of risk are listed (see previous page
for definitions). Numbers in this table show allowable usage only; for actual
usage, consult the fund's annual/semi-annual reports.
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
/x/ No policy limitation on usage; fund may be using currently
/ / Permitted, but has not typically been used
- -- Not permitted
<TABLE>
<CAPTION>
Growth
and Independence Sovereign Sovereign Special
Income Equity Balanced Investors Value Utilities
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT PRACTICES
BORROWING; REVERSE REPURCHASE AGREEMENTS The borrowing of
money from banks or through reverse repurchase agreements.
Leverage, credit risks. 33.3 33.3 33 -- 33.3 33.3
REPURCHASE AGREEMENTS The purchase of a security that must
later be sold back to the issuer at the same price plus
interest. Credit risk. /X/ /X/ /X/ /X/ /X/ /X/
SECURITIES LENDING The lending of securities to financial
institutions, which provide cash or government securities as
collateral. Credit risk. 33 33.3 33.3 33.3 33.3 33.3
SHORT SALES The selling of securities that have been borrowed
on the expectation that the market price will drop.
- - Hedged. Hedged leverage, market, correlation, liquidity,
opportunity risks. -- / / / / / / / / / /
- - Speculative. Speculative leverage, market, liquidity risks. -- / / -- -- / / --
SHORT-TERM TRADING Selling a security soon after purchase. A
portfolio engaging in short-term trading will have higher
turnover and transaction expenses. Market risk. /X/ /X/ /X/ /X/ /X/ /X/
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS The purchase or
sale of securities for delivery at a future date; market value
may change before delivery. Market, opportunity, leverage
risks. /X/ /X/ /X/ /X/ /X/ /X/
- ------------------------------------------------------------------------------------------------------------------------------------
CONVENTIONAL SECURITIES
NON-INVESTMENT-GRADE DEBT SECURITIES Debt securities rated
below BBB/Baa are considered junk bonds. Credit, market,
interest rate, liquidity, valuation and information risks. 15 -- 25 5 15 --
FOREIGN SECURITIES Securities issued by foreign companies, as
well as American or European depository receipts, which are
dollar-denominated securities typically issued by American or
European banks and are based on ownership of securities issued
by foreign companies. Market, currency, information, natural
event, political risks. 35 /X/ 35 / / 50 25
RESTRICTED AND ILLIQUID SECURITIES Securities not traded on
the open market. May include illiquid Rule 144A securities.
Liquidity, valuation, market risks. 10 15 15 15 15 15
- ------------------------------------------------------------------------------------------------------------------------------------
LEVERAGED DERIVATIVE SECURITIES
FINANCIAL FUTURES AND OPTIONS; SECURITIES AND INDEX OPTIONS
Contracts involving the right or obligation to deliver or
receive assets or money depending on the performance of one or
more assets or an economic index.
- - Futures and related options. Interest rate, currency,
market, hedged or speculative leverage, correlation,
liquidity, opportunity risks. /X/ / / / / -- /X/ / /
- - Options on securities and indices. Interest rate, currency,
market, hedged or speculative leverage, correlation,
liquidity, credit, opportunity risks. 10(1) / / 5(1) 5(1) 5(1) / /
CURRENCY CONTRACTS Contracts involving the right or obligation
to buy or sell a given amount of foreign currency at a
specified price and future date.
- - Hedged. Currency, hedged leverage, correlation, liquidity,
opportunity risks. /X/ -- /X/ -- /X/ /X/
- - Speculative. Currency, speculative leverage, liquidity
risks. -- -- -- -- -- --
</TABLE>
(1) Applies to purchased options only.
FUND DETAILS 27
<PAGE>
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
Two documents are available that offer further information on John Hancock
growth and income funds:
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
Includes financial statements, detailed performance information, portfolio
holdings, a statement from portfolio management and the auditor's report.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains more detailed information on all aspects of the funds. The
current annual/ semi-annual report is included in the SAI.
A current SAI has been filed with the Securities and Exchange Commission and is
incorporated by reference (is legally a part of this prospectus).
To request a free copy of the current annual/semi-annual report or SAI, please
write or call:
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
Telephone: 1-800-225-5291
EASI-Line: 1-800-338-8080
TDD: 1-800-544-6713
Internet: www.jhancock.com/funds
[LOGO]
JOHN HANCOCK FUNDS
A Global Investment Management Firm
101 Huntington Avenue
Boston, Massachusetts 02199-7603
JOHN HANCOCK(R)
Financial Services
<PAGE>
JOHN HANCOCK FUNDS
A GLOBAL INVESTMENT MANAGEMENT FIRM
VOTE THIS PROXY CARD TODAY! YOUR PROMPT RESPONSE WILL
SAVE YOUR FUND THE EXPENSE OF ADDITIONAL MAILINGS
JOHN HANCOCK UTILITIES FUND
101 HUNTINGTON AVENUE, BOSTON, MASSACHUSETTS 02199
SPECIAL MEETING OF SHAREHOLDERS - NOVEMBER 12, 1997
PROXY SOLICITATION BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward J.
Boudreau, Jr., Susan S. Newton and James B. Little, with full power of
substitution in each, to vote all the shares of beneficial interest of John
Hancock Utilities Fund ("Utilities Fund") which the undersigned is (are)
entitled to vote at the Special Meeting of Shareholders (the "Meeting") of
Utilities Fund to be held at 101 Huntington Avenue, Boston, Massachusetts, on
November 12, 1997 at 9:00 a.m., Boston time, and at any adjournment(s) of the
Meeting. All powers may be exercised by a majority of all proxy holders or
substitutes voting or acting, or, if only one votes and acts, then by that one.
Receipt of the Proxy Statement dated September 22, 1997 is hereby acknowledged.
If not revoked, this proxy shall be voted for the proposal:
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
Date __________________, 1997
NOTE: Signature(s) should agree
with name(s) printed herein. When
signing as attorney, executor,
administrator, trustee or guardian,
please give your full title as
such. If a corporation, please sign
in full corporate name by president
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
-----------------------------------
Signature(s)
<PAGE>
JOHN HANCOCK FUNDS
A GLOBAL INVESTMENT MANAGEMENT FIRM
VOTE THIS PROXY CARD TODAY! YOUR PROMPT RESPONSE WILL SAVE YOUR FUND THE EXPENSE
OF ADDITIONAL MAILINGS.
THIS PROXY SHALL BE VOTED IN FAVOR OF (FOR) PROPOSAL 1 IF NO SPECIFICATION IS
MADE BELOW. AS TO ANY OTHER MATTER, THE PROXY OR PROXIES SHALL VOTE IN
ACCORDANCE WITH THEIR BEST JUDGEMENT. PLEASE VOTE BY FILLING IN THE APPROPRIATE
BOX BELOW, AS SHOWN, USING BLUE OR BLACK INK OR DARK PENCIL. DO NOT USE RED INK.
(1) To approve an Agreement and Plan of Reorganization between Utilities
Fund and John Hancock Growth and Income Fund. Under this Agreement,
Utilities Fund would transfer all of its assets to Growth and Income Fund.
These shares will be distributed proportionately to you and the other
shareholders of Utilities Fund. Growth and Income Fund will also assume
Utilities Fund's liabilities.
---- ---- ----
FOR |____| AGAINST |____| ABSTAIN |____|
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THIS CARD.
