<PAGE> 1
Registration No. 2-66461
ICA No. 811-2995
AS FILED ON APRIL 24, 1995
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 17 /x/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 20 /x/
JOHN HANCOCK CASH RESERVE, INC.
(Formerly Transamerica Cash Reserve, Inc.)
(Exact Name of Registrant as Specified in Articles of Incorporation)
101 Huntington Avenue, Boston, Massachusetts 02199-7603
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (617) 375-1700
Thomas H. Drohan, Esq.
John Hancock Advisers, Inc.
101 Huntington Avenue, Boston, Massachusetts 02199-7603
(Name and Address of Agent for Service)
__________________________
Copies to:
Jeffrey N. Carp, Esq. Thomas J. Press, Esq.
Hale and Dorr John Hancock Advisers, Inc. (Houston)
60 State Street 1000 Louisiana Street
Boston, Massachusetts, 02109 Houston, Texas 77002-5098
It is proposed that this filing will become effective:
- --- immediately upon filing pursuant to paragraph (b)
X on May 1, 1995 pursuant to paragraph (b)
- ---
- --- 60 days after filing pursuant to paragraph (a)
- --- on [date] pursuant to paragraph (a) of rule 485
Registrant has previously elected, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, to register an indefinite number of its shares
of beneficial interest for sale under the Securities Act of 1933 and filed its
Rule 24f-2 Notice on or about February 23, 1995. <PAGE> JOHN HANCOCK CASH
RESERVE, INC. (formerly Transamerica Cash Reserve, Inc.
<PAGE> 2
JOHN HANCOCK CASH RESERVE INC.
(formerly Transamerica Cash Reserve, Inc.
-------------
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
Form N-1A
Item
- ---------
Part A Caption Prospectus
- ------ ------- ----------
<S> <C> <C>
1... Cover Page Cover Page
2... Synopsis/Summary of Fund Expense Information; The Fund's Expenses;
Expenses Share Price
3... Condensed Financial The Fund's Financial Highlights
Information
4... General Description Investment Objective and Policies;
of Registrant Organization and Management of the Fund
5... Management of the Fund Organization and Management of the Fund;
The Fund's Expenses; Back Cover Page
6... Capital Stock and Organization and Management of the Fund;
Other Securities Dividends and Taxes; How to Buy Shares; How to
Redeem Shares; Additional Services and
Programs
7... Purchase of Securities How To Buy Shares; Share Price; Additional
Being Offered Services and Programs; Alternative Purchase
Arrangements; The Fund's Expenses; Back
Cover Page
8... Redemption or Repurchase How To Redeem Shares
9... Pending Legal Proceedings Not applicable
<CAPTION>
Part B Caption Statement of Additional Information
- ------ ------- -----------------------------------
<S> <C> <C>
10... Cover Page Cover Page
11... Table of Contents Table of Contents
12... General Information Those Responsible For Management
and History
13... Investment Objectives Investment Objective and Policies;
and Policies Special Investment Techniques
14... Management of the Fund Those Responsible For Management
15... Control Persons and Those Responsible For Management
Principal Holders of
Securities
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C> <C>
16... Investment Advisory and Investment Advisory and Other Services
Other Services
17... Brokerage Allocation Brokerage Allocation
18... Capital Stock and Additional Information
Other Securities
19... Purchase, Redemption and Purchase of Shares; Net Asst Value
Pricing of Securities
Being Offered
20... Tax Status Tax Status
21... Underwriters Distribution Contact
22... Calculation of Calculation of Performance
Performance Data
23... Financial Statements Financial Statements
</TABLE>
Part C Other Information
- ------ -----------------
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
iii
<PAGE> 4
JOHN HANCOCK
CASH RESERVE, INC.
PROSPECTUS
MAY 1, 1995
<TABLE>
- ---------------------------------------------------------------------------------------------
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Expense Information................................................................... 2
The Fund's Financial Highlights....................................................... 3
Investment Objective and Policies..................................................... 4
Organization and Management of the Fund............................................... 6
The Fund's Expenses................................................................... 6
Dividends and Taxes................................................................... 6
How to Buy Shares..................................................................... 8
Share Price........................................................................... 9
How to Redeem Shares.................................................................. 10
Additional Services and Programs...................................................... 12
Investments, Techniques and Risk Factors.............................................. 16
</TABLE>
This Prospectus sets forth the information about John Hancock Cash Reserve,
Inc. (the "Fund"), a diversified Fund, that you should know before investing.
Please read and retain it for future reference.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC"). You can obtain a copy of the Fund's Statement
of Additional Information, dated May 1, 1995, and incorporated by reference into
this Prospectus, free of charge by writing or telephoning: John Hancock Investor
Services Corporation, P.O. Box 9116, Boston, Massachusetts 02205-9116,
1-800-225-5291 (1-800-554-6713 TDD).
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.
<PAGE> 5
<TABLE>
EXPENSE INFORMATION
The purpose of the following information is to help you to understand the various fees and expenses you will bear, directly
or indirectly, when you purchase Fund shares. The operating expenses included in the table and hypothetical example below are based
on fees and expenses for the Fund's fiscal year ended December 31, 1994 adjusted to reflect certain current fees and expenses.
Actual fees and expenses may be greater or less than those shown.
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (as a percentage of offering price)...................................... None
Maximum sales charge imposed on reinvested dividends............................................................... None
Maximum deferred sales charge...................................................................................... None
Redemption fee+.................................................................................................... None
Exchange fee....................................................................................................... None
ANNUAL FUND OPERATING EXPENSES (As a percentage of average net assets)
Management fee..................................................................................................... 0.35%
12b-1 fee.......................................................................................................... 0.00%
Other expenses*.................................................................................................... 0.27%
Total Fund operating expenses...................................................................................... 0.62%
<FN>
* Other Expenses include transfer agent, legal, audit, custody and other expenses.
+ Redemption by wire fee (currently $4.00) not included.
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated period of years on a
hypothetical
$1,000 investment, assuming 5% annual return............................... $7.46 $23.34 $40.60 $103.76
</TABLE>
(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.)
The management fees referred to above are more fully explained in this
Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the caption "Investment Advisory and Other
Services."
2
<PAGE> 6
<TABLE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following selected data have been audited by Ernst & Young LLP, the Fund's independent auditors. Further financial data
and Ernst & Young's report on the Fund's financial statements and Financial Highlights are available in the Annual Report to
Shareholders, which is included in the Statement of Additional Information. Additional information about the performance of the Fund
is contained in the Fund's Annual Report to shareholders which may be obtained free of charge by writing or telephoning John Hancock
Investor Services Corporation ("Investor Services"), at the address or telephone number listed on the front page of this Prospectus.
Selected data for each share outstanding throughout each period is as follows:
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE
INCOME AND
CAPITAL
CHANGES
FOR A
SHARE
OUTSTANDING
DURING
EACH YEAR:
Net asset
value,
beginning
of year.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM
INVESTMENT
OPERATIONS
Net
investment
income..... 0.037 0.026 0.033 0.056 0.078 0.088 0.072 0.063 0.064 0.079
LESS
DISTRIBUTIONS
Dividends
from net
investment
income..... (0.037) (0.026) (0.033) (0.056) (0.078) (0.088) (0.072) (0.063) (0.064) (0.079)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset
value, end
of year.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL
RETURN..... 3.74% 2.60% 3.33% 5.79% 8.05% 9.20% 7.40% 6.43% 6.61% 8.19%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
RATIOS AND
SUPPLEMENTAL
DATA
Ratio of
expenses to
average net
assets..... 0.62% 0.66% 0.63% 0.57% 0.46% 0.45% 0.45% 0.49% 0.54% 0.55%
Ratio of net
investment
income to
average net
assets..... 3.72% 2.58% 3.34% 5.66% 7.78% 8.85% 7.21% 6.36% 6.55% 8.10%
Net Assets,
end of
year (in
thousands)... $142,301 $130,405 $266,349 $416,198 $556,860 $444,299 $429,700 $416,066 $324,612 $301,044
</TABLE>
YIELD INFORMATION
For the seven days ended December 31, 1994, the Fund's annualized yield and
effective yield were 5.13% and 5.25%, respectively. On December 31, 1994, the
Fund's average portfolio maturity was 31 days.
Current information on the Fund's annualized yield during a recent seven-day
period may be obtained by calling the Easi-Line at 1-800-338-8080 or a customer
service representative, 1-800-225-5291.
For information on how the Fund calculates its annualized yield see the
Statement of Additional Information.
3
<PAGE> 7
INVESTMENT OBJECTIVE AND POLICIES
The Fund invests in a variety of high quality money market instruments maturing
within one year from the date of purchase with an average portfolio maturity of
90 days or less. The Fund seeks to obtain maximum current income from a
diversified portfolio of short-term investments to the extent consistent with
the preservation of capital and maintenance of liquidity.
- -------------------------------------------------------------------------------
THE FUND SEEKS TO OBTAIN MAXIMUM CURRENT
INCOME CONSISTENT WITH THE PRESERVATION OF
CAPITAL AND MAINTENANCE OF LIQUIDITY.
- -------------------------------------------------------------------------------
- -- high quality, short-term corporate obligations including commercial paper,
notes and bonds.
- -- obligations of financial institutions including U.S. and Canadian banks
(including their foreign branches) and U.S. savings loan associations.
- -- obligations of U.S. and Canadian governments and their agencies or
instrumentalities.
- -- other short-term debt obligations with remaining maturities of 365 days or
less.
Securities in which the Fund invests may not earn as high a level of current
income as long-term or lower quality securities which generally have less
liquidity, greater market risk and more fluctuation in market value. The return
on an investment in the Fund will depend on the interest earned by the Fund's
investments after expenses of the Fund are deducted. The return is paid to
shareholders in the form of dividends.
The Fund seeks to maintain a net asset value of $1.00 per share at all times.
There can be no assurance that the Fund will be able to maintain a constant
$1.00 share price. However, because the Fund purchases high quality U.S.
government securities with short maturities, this policy helps to minimize any
price decreases or increases that could result from changes in interest rates or
an issuer's creditworthiness.
- -------------------------------------------------------------------------------
THE FUND SEEKS TO MAINTAIN A CONSTANT
$1.00 SHARE PRICE.
- -------------------------------------------------------------------------------
The Fund will invest only in U.S. dollar denominated securities determined by
the Directors to present minimal credit risk and which are rated high quality by
any major rating service or, if unrated, determined to be of comparable quality
by the Directors. These include commercial paper and similar short-term
obligations of U.S. issuers which generally meet the highest quality standards
at the time of investment, in conformity with securities regulations governing
money market mutual funds. The Fund may also purchase other marketable,
non-convertible corporate debt securities of U.S. issuers. These investments
include bonds, debentures, floating rate obligations, and issues with optional
maturities which in each case must have remaining maturities of one year or less
and be rated at least AA by Standard and Poor's Ratings Group ("S&P") or Aa by
Moody's Investor Services, Inc. ("Moody's") at the time of investment. See the
"Statement of Additional Information" for a description of S&P and Moody's
ratings.
Investments will also include bank obligations such as certificates of deposit,
time or demand deposits and bankers acceptances. Bank obligations are limited to
U.S. or Canadian banks having total assets over $1 billion. Investments in
savings association obligations are limited to U.S. savings and loan
associations with total
4
<PAGE> 8
assets over $1 billion. Investments in bank obligations may include instruments
issued by foreign branches of U.S. or Canadian banks. The Fund may invest in
U.S. Government securities, U.S. dollar denominated securities issued or
guaranteed by the Government of Canada, a Province of Canada, or their
instrumentalities in an amount not to exceed 10% of its total assets at the time
of purchase of such government securities. The Fund may enter into repurchase
agreements, invest in restricted securities and is authorized to invest in
participation interests and to purchase securities on a delayed delivery basis.
In addition, the Fund is authorized, but presently does not intend, to engage in
reverse repurchase agreements and invest in variable amount master notes. See
Statement of Additional Information for discussion of these instruments.
The Fund has adopted certain investment restrictions which are enumerated in
detail in the Statement of Additional Information where they are classified as
fundamental or nonfundamental. Those restrictions designated as fundamental may
not be changed without shareholder approval. The Fund's investment objective,
policies and restrictions, except as noted, are fundamental and may not be
changed without the approval of the Fund's shareholders. Notwithstanding the
Fund's investment restriction prohibiting investments in other investment
companies, the Fund may, pursuant to an order granted by the SEC, invest in
other investment companies in connection with a deferred compensation plan for
the non-interested trustees of the John Hancock of Funds. There can be no
assurance that the Fund will achieve its investment objective.
- -------------------------------------------------------------------------------
THE FUND FOLLOWS CERTAIN POLICIES WHICH
MAY HELP TO REDUCE INVESTMENT RISK.
- -------------------------------------------------------------------------------
RISK FACTORS. It is important to note that unlike the government securities in
which the Fund may invest, shares of the Fund are neither insured nor
guaranteed. Because interest rates on money market instruments fluctuate in
response to economic factors, the rates on short-term investments made by the
Fund and the daily dividend paid to investors will vary rising or falling with
short-term rates generally. Many obligations in which the Fund invests are not
guaranteed by any governmental agency. For additional information about risks
associated with an investment in the Fund, see "Investments, Techniques and Risk
Factors."
The primary consideration in choosing brokerage firms to carry out the Fund's
transactions is execution at the most favorable prices, taking into account the
broker's professional ability and quality of service. Consideration may also be
given to the broker's sales of Fund shares. Pursuant to procedures determined by
the Directors, the John Hancock Advisers, Inc. (the "Adviser") may place
securities transactions with brokers affiliated with the Fund's investment
adviser. The brokers include Tucker Anthony Incorporated, Sutro and Company,
Inc. and John Hancock Distributors, Inc., which are indirectly owned by the John
Hancock Mutual Life Insurance Company (the "Life Company"), which in turn
indirectly owns the Adviser.
- -------------------------------------------------------------------------------
BROKERS ARE CHOSEN ON BEST PRICE AND
EXECUTION.
- -------------------------------------------------------------------------------
5
<PAGE> 9
ORGANIZATION AND MANAGEMENT OF THE FUND
The Fund is a diversified open-end management investment company organized as a
Maryland Corporation in 1980. The Fund reserves the right to create and issue a
number of series of shares which are separately managed and have different
investment objectives. The Fund is not required to and does not intend to hold
annual meetings of shareholders, although special meetings may be held for such
purposes as electing or removing Directors, changing fundamental policies or
approving a management contract. The Fund, under certain circumstances, will
assist in shareholder communications with other shareholders.
- -------------------------------------------------------------------------------
THE DIRECTORS ELECT OFFICERS AND RETAIN
THE INVESTMENT ADVISER WHO IS RESPONSIBLE
FOR THE DAY-TO-DAY OPERATIONS OF THE FUND,
SUBJECT TO THE DIRECTORS' POLICIES AND
SUPERVISION.
- -------------------------------------------------------------------------------
The Adviser was organized in 1968 and is a wholly owned indirect subsidiary of
the Life Company, a financial services company. The Adviser provides the Fund,
and other investment companies in the John Hancock group of funds, with
investment research and portfolio management services. John Hancock Funds, Inc.
("John Hancock Funds") distributes shares for all of the John Hancock mutual
funds through brokers with agreements with John Hancock Funds ("Selling
Brokers"). Certain Fund officers are also officers of the Adviser and John
Hancock Funds.
- -------------------------------------------------------------------------------
JOHN HANCOCK ADVISERS, INC. ADVISES
INVESTMENT COMPANIES HAVING A TOTAL ASSET
VALUE OF MORE THAN $13 BILLION.
- -------------------------------------------------------------------------------
In order to avoid any conflict with portfolio trades for the Fund, the Adviser
and the Fund have adopted extensive restrictions on personal securities trading
by personnel of the Adviser and its affiliates. Some of these restrictions are:
preclearance for all personal trades and a ban on the purchase of initial public
offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser. During the Fund's most recent fiscal year, the advisory fee was
0.35% of the Fund's average daily net assets. Information on the Fund's total
expenses is in the Financial Highlights section of the Prospectus.
DIVIDENDS AND TAXES
DIVIDENDS. Dividends from the Fund's net investment income are declared daily
and paid monthly. You will begin earning income on the day following receipt in
good order by Investors Bank and Trust Company of payment for Fund shares.
Dividends are reinvested in additional shares of the Fund unless you elect the
option to receive them in cash. If you elect the cash option and the U.S. Postal
Service cannot deliver your checks, your election will be converted to the
reinvestment option.
TAXATION. Dividends from the Fund's net investment income and net short-term
capital gains are taxable to you as ordinary income. Dividends from the Fund's
net long-term capital gains, if any, are taxable as long-term capital gain. The
Fund does not anticipate that it will generally realize any long-term capital
gains. Dividends are taxable, whether received in cash or reinvested in
additional shares. Certain dividends may be paid by the Fund in January of a
given year but may be
6
<PAGE> 10
treated as if you received them the previous December. The Fund will send you a
statement by January 31 showing the federal tax status of the dividends you
received for the prior year.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, the Fund will not be
subject to Federal income tax on any net investment income or net realized
capital gains distributed to its shareholders within the time period prescribed
by the Code. On the account application, you must certify that the social
security or other taxpayer identification number you provide is your correct
number and that you are not subject to backup withholding of Federal income tax.
If you do not provide this information or are otherwise subject to this
withholding, the Fund may be required to withhold 31% of your dividends.
In addition to Federal taxes, you may be subject to state and local or foreign
taxes with respect to your investment in and distributions from the Fund. A
state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent the Fund's distributions are
derived from interest on (or, in the case of intangibles taxes, the value of its
assets is attributable to) certain U.S. Government obligations, provided in some
states that certain thresholds for holdings of such obligations and/or reporting
requirements are satisfied. Non-U.S. shareholders and tax-exempt shareholders
are subject to different tax rules not described herein. You should consult your
tax adviser for specific advice.
7
<PAGE> 11
<TABLE>
HOW TO BUY SHARES
- ---------------------------------------------------------------------------------------
<S> <C> <C>
The minimum initial investment is $2,500 ($250 for retirement plans). Complete the
Account Application attached to this Prospectus.
- ---------------------------------------------------------------------------------------
OPENING AN ACCOUNT
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation ("Investor Services"), P.O. Box 9115, Boston, MA
02205-9115.
2. Deliver the completed application and check to your registered
representative or a Selling Broker or mail it directly to
Investor Services.
- ---------------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your registered
representative or Selling Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Cash Reserve, Inc.
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- ---------------------------------------------------------------------------------------
MONTHLY 1. Complete the "Automatic Investing" and "Bank Information"
AUTOMATIC sections on the Account Privileges Application designating a
ACCUMULATION bank account from which funds may be drawn.
- ---------------------------------------------------------------------------------------
BUYING ADDITIONAL SHARES
- ---------------------------------------------------------------------------------------
PROGRAM 2. The amount you elect to invest will be automatically withdrawn
(MAAP) from your bank or credit union account.
- ---------------------------------------------------------------------------------------
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank Information" sections
on the Account Privileges Application designating a bank
account from which your funds may be drawn. Note that in order
to invest by phone, your account must be in a bank or credit
union that is a member of the Automated Clearing House system
(ACH).
2. After your authorization form has been processed, you may
purchase additional shares by calling Investor Services
toll-free 1-800-225-5291.
3. Give the Investor Services representative the name(s) in which
your account is registered, the Fund name, your account number,
and the amount you wish to invest.
4. Your investment normally will be credited to your account the
business day following your phone request.
- ---------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 12
<TABLE>
- ----------------------------------------------------------------------------------------
<S> <C> <C>
BY CHECK 1. Either complete the detachable stub included on your account
statement or include a note with your investment listing the
name of the Fund, your account number and the name(s) in which
the account is registered.
- ----------------------------------------------------------------------------------------
BUYING ADDITIONAL
SHARES (CONTINUED)
- ----------------------------------------------------------------------------------------
2. Make your check payable to John Hancock Investor Services
Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling
Broker.
- ----------------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Cash Reserve Inc.
Your Account Number
Name(s) under which account is registered
</TABLE>
- -------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks
written on foreign banks will delay purchases until U.S. funds are
received, and a collection charge may be imposed. Wire purchases normally
take two or more hours to complete and, to be accepted the same day, must
be received by 4:00 P.M., New York time. Your bank may charge a fee to wire
funds. Telephone transactions are recorded to verify information.
Certificates are not issued.
- --------------------------------------------------------------------------------
You will receive a statement of your account after any transaction that affects
your share balance or registration (statements related to reinvestment of
dividends and automatic investment/withdrawal plans will be sent to you
quarterly). A tax information statement will be mailed to you by January 31 of
each year.
- -------------------------------------------------------------------------------
YOU WILL RECEIVE ACCOUNT STATEMENTS THAT
YOU SHOULD KEEP TO HELP WITH YOUR PERSONAL
RECORDKEEPING.
- -------------------------------------------------------------------------------
SHARE PRICE
The net asset value per share ("NAV") is the value of one share. The NAV per
share is calculated by dividing the net assets of the Fund by the number of
outstanding shares. The NAV is calculated twice daily at 12:00 noon and as of
the close of regular trading on the New York Stock Exchange (the "Exchange")
(generally at 4:00 P.M., New York time) on each day that the Exchange is open.
- -------------------------------------------------------------------------------
THE OFFERING PRICE OF YOUR SHARES IS THEIR
NET ASSET VALUE WHICH WILL NORMALLY BE
CONSTANT AT $1.00.
- -------------------------------------------------------------------------------
The Fund uses the amortized cost method of valuing portfolio instruments. Under
amortized cost valuation, assets are valued by amortizing daily over the
remaining life of an instrument the difference between the principal amount due
at maturity and the cost of the instrument to the Fund. There is no assurance
that the Fund can maintain the $1.00 per share net asset value.
The price you pay for shares of the Fund equals the NAV computed after your
investment request is received in good order by John Hancock Funds, which will
normally be constant at $1.00 per share. There is no sales charge. If you buy
shares of the Fund through a Selling Broker, the Selling Broker must receive
your investment before the close of regular trading on the Exchange and transmit
it to John Hancock Funds before its close of business to receive that day's
price.
9
<PAGE> 13
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next NAV calculated after your redemption request is
received in good order by Investor Services. The Fund may hold payment until it
is reasonably satisfied that investments recently made by check or
Invest-by-Phone have been collected (which may take up to 10 calendar days).
- -------------------------------------------------------------------------------
TO ASSURE ACCEPTANCE OF YOUR REDEMPTION
REQUEST, PLEASE FOLLOW THESE PROCEDURES.
- -------------------------------------------------------------------------------
Once your shares are redeemed, the Fund generally sends you payment on the next
business day. Under unusual circumstances, the Fund may suspend redemptions or
postpone payment for up to seven days or longer, as permitted by Federal
securities laws.
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------
BY CHECK You may elect the checkwriting privilege which allows you
to write checks in amounts from a minimum of $100. Checks
may not be written against shares in your account which
have been purchased within the last 10 days, except for
shares purchased by wire transfer (which are immediately
available).
- ----------------------------------------------------------------------------------
BY TELEPHONE All Fund shareholders are automatically eligible for the
telephone redemption privilege. Call 1-800-225-5291, from
8:00 A.M. to 4:00 P.M. (New York time), Monday through
Friday, excluding days on which the Exchange is closed.
Investor Services employs the following procedures to
confirm that instructions received by telephone are
genuine. Your name, the account number, taxpayer
identification number applicable to the account and other
relevant information may be requested. In addition,
telephone instructions are recorded.
You may redeem up to $100,000 by telephone, but the address
on the account must not have changed for the last thirty
days. A check will be mailed to the exact name(s) and
address shown on the account.
If reasonable procedures, such as those described above,
are not followed, the Fund may be liable for any loss due
to unauthorized or fraudulent telephone instructions. In
all other cases, neither the Fund nor Investor Services
will be liable for any loss or expense for acting upon
telephone instructions made in accordance with the
telephone transaction procedures mentioned above.
Telephone redemption is not available for IRAs or other
tax-qualified retirement plans or shares of the Fund that
are in certificated form.
During periods of extreme economic conditions or market
changes, telephone requests may be difficult to implement
due to a large volume of calls. During these times, you
should consider placing redemption requests in writing or
use EASI-Line. EASI-Line's telephone number is
1-800-338-8080.
- ----------------------------------------------------------------------------------
BY WIRE If you have a telephone redemption form on file with the
Fund, redemption proceeds of $1,000 or more can be wired on
the next business day to your designated bank account, and
a fee (currently $4.00) will be deducted. You may also use
electronic funds transfer to your assigned bank account,
and the funds are usually collectible after two business
days. Your bank may or may not charge a fee for this
service. Redemptions of less than $1,000 will be sent by
check or electronic funds transfer.
This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
included with this Prospectus.
- ----------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 14
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------
IN WRITING Send a stock power or "letter of instruction" specifying
the name of the Fund, the dollar amount or the number of
shares to be redeemed, your name, your account number and
the additional requirements listed below that apply to your
particular account.
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TYPE OF REGISTRATION REQUIREMENTS
--------------------------------- --------------------------------------------
<S> <C>
Individual, Joint Tenants, Sole A letter of instruction signed (with titles
Proprietorship, Custodial where applicable) by all persons authorized
(Uniform Gifts or Transfer to to sign for the account, exactly as it is
Minors Act), General Partners registered with the signature(s) guaran-
teed.
Corporation, Association A letter of instruction and a corporate
resolution, signed by person(s) authorized
to act on the account with the signature(s)
guaranteed.
Trusts A letter of instruction signed by the
trustee(s) with the signature(s) guaranteed.
(If the trustee's name is not registered on
your account, also provide a copy of the
trust document, certified within the last 60
days.)
If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
</TABLE>
- --------------------------------------------------------------------------------
A signature guarantee is a widely accepted way to protect you and the
Fund by verifying the signature on your request. It may not be provided by
a notary public. If the net asset value of the shares redeemed is $100,000
or less, John Hancock Funds may guarantee the signature. The following
institutions may provide you with a signature guarantee, provided that the
institution meets credit standards established by Investor Services: (i) a
bank; (ii) a securities broker or dealer, including a government or
municipal securities broker or dealer, that is a member of a clearing
corporation or meets certain net capital requirements; (iii) a credit union
having authority to issue signature guarantees; (iv) a savings and loan
association, a building and loan association, a cooperative bank, a federal
savings bank or association; or (v) a national securities exchange, a
registered securities exchange or a clearing agency.
- -------------------------------------------------------------------------------
WHO MAY GUARANTEE YOUR SIGNATURE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THROUGH YOUR BROKER. Your broker may be able to initiate the redemption. Contact
your broker for instructions.
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
- -------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your stock
power or a letter of instructions. You may not redeem certificated shares by
telephone.
Due to the proportionately high cost of maintaining small accounts, the Fund
reserves the right to redeem at net asset value all shares in an account which
holds less than $500 (except accounts under retirement plans) and to mail the
proceeds to the shareholder, or the transfer agent may impose an annual fee of
$10.00. No account will be involuntarily redeemed or additional fee imposed, if
the value of the account is in excess of the Fund's minimum initial investment
or if the account falls below the required minimum as a result of market action.
Shareholders will be notified before these redemptions are to be made or this
fee is imposed, and will have 30 days to purchase additional shares to bring
their account balance up to the required minimum. Unless the number of shares
acquired by further purchases and dividend reinvestments, if any, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
- -------------------------------------------------------------------------------
11
<PAGE> 15
ADDITIONAL SERVICES AND PROGRAMS
EXCHANGE PRIVILEGE
If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of investment
goals. Contact your registered representative or Selling Broker and request a
prospectus for the John Hancock funds that interest you. Read the prospectus
carefully before exchanging your shares. You can exchange shares of each class
of the Fund only for Class A shares of another John Hancock fund. For this
purpose, John Hancock funds with only one class of shares will be treated as
Class A, whether or not they have been so designated.
- -------------------------------------------------------------------------------
YOU MAY EXCHANGE SHARES OF THE FUND ONLY
FOR CLASS A SHARES OF ANOTHER JOHN HANCOCK
FUND.
- -------------------------------------------------------------------------------
Exchanges between funds that carry a front end sales charge will be subject to
the sales charge described in the other fund's prospectus (generally, 4.5% or
5.0%). Shares of the Fund acquired by exchange of shares of another fund on
which a front end sales charge was previously paid or which are subject to a
contingent deferred sales charge ("Class B Shares") are exchanged at net asset
value. However, shares of the Fund acquired through an exchange of Class B
shares will continue to be subject to a contingent deferred sales charge upon
redemption. The rate of this charge will be the rate in effect for the Class B
shares at the time of exchange. Shares purchased through the reinvestment of
dividends in the Fund are exchanged at public offering price.
An exchange of shares is treated as a redemption of one fund and the purchase of
another for Federal income tax purposes. An exchange will not ordinarily result
in a gain or loss is the Fund has maintained a constant net asset value.
When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.
Under exchange agreements with John Hancock Funds, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and John Hancock Funds' right to reject or suspend
those exchanges at any time. Because of the restrictions and procedures under
those agreements, the exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders directly,
as described above.
Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely. The
Fund may also temporarily or permanently terminate the exchange privilege for
any person who makes seven or more exchanges out of the Fund per calendar year.
Accounts under common control or ownership will be aggregated for this purpose.
Although the Fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time.
12
<PAGE> 16
The Fund reserves the right to require you to keep previously exchanged shares
(and reinvested dividends) in the Fund for 90 days before you are permitted to
execute a new exchange. The Fund may also terminate or alter the terms of the
exchange privilege, upon 60 days' notice to shareholders.
BY TELEPHONE
1. When you complete the application for your initial purchase of Fund shares,
you automatically authorize exchanges by telephone unless you check the box
indicating that you do not wish to authorize telephone exchanges.
2. Call 1-800-225-5291. Have the account number of your current Fund and the
exact name in which it is registered available to give to the telephone
representative.
3. Investor Services employs the following procedures to confirm that
instructions received by telephone are genuine. Your name, the account
number, taxpayer identification number applicable to the account and other
relevant information may be requested. In addition, telephone instructions
are recorded.
IN WRITING
1. In a letter, request an exchange and list the following:
-- the name of the Fund whose shares you currently own
-- your account number
-- the name(s) in which the account is registered
-- the name of the fund in which you wish your exchange to be invested
-- the number of shares, all shares or dollar amount you wish to exchange
Sign your request exactly as the account is registered.
2. Mail the request and information to:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
13
<PAGE> 17
SYSTEMATIC WITHDRAWAL PLAN
1. You can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You can
also obtain this application by calling your registered representative or by
calling 1-800-225-5291.
2. To be eligible, you must have at least $5,000 in your account.
3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis to yourself or any other designated
payee.
- -------------------------------------------------------------------------------
YOU CAN PAY ROUTINE BILLS FROM YOUR
ACCOUNT, OR MAKE PERIODIC DISBURSEMENTS OF
FUNDS FROM YOUR RETIREMENT ACCOUNT TO
COMPLY WITH IRS REGULATIONS.
- -------------------------------------------------------------------------------
4. There is no limit on the number of payees you may authorize, but all payments
must be made at the same time or intervals.
5. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks or if deposits to a bank account are returned for any reason.
MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)
1. You can authorize an investment to be automatically withdrawn each month from
your bank, for investment in Fund shares under the "Automatic Investing" and
"Bank Information" sections of the Account Privileges Application.
- -------------------------------------------------------------------------------
YOU CAN MAKE AUTOMATIC INVESTMENTS AND
SIMPLIFY YOUR INVESTING.
- -------------------------------------------------------------------------------
2. You can also authorize automatic investment through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.
3. You can terminate your Monthly Automatic Accumulation Program plan at any
time.
4. There is no charge to you for this program, and there is no cost to the Fund.
5. If you have payments being withdrawn from a bank account and we are notified
that the account has been closed, your withdrawals will be discontinued.
RETIREMENT PLANS
1. You may use the Fund as a funding medium for various types of qualified
retirement plans, including Individual Retirement Accounts, Keogh Plans
(H.R.10), Pension and Profit Sharing Plans (including 401(k) Plans), Tax
Sheltered Annuity Retirement Plans (403(b) or TSA Plans) and 457 Plans.
2. The initial investment minimum or aggregate minimum for any of the above
plans is $500. However, accounts being established as Group IRA, SEP, SARSEP,
TSA, 401(k) and 457 Plans will be accepted without an initial minimum
investment.
14
<PAGE> 18
INVESTMENTS, TECHNIQUES AND RISK FACTORS
The Fund will purchase only, with regard to its investments in both rated (all
ratings are at time of investment) and unrated (excluding U.S. government
securities) obligations, a short-term obligation (including a long-term
obligation having one year or less remaining to maturity and whose issuer has
high quality rated short-term debt obligations, hereinafter referred to as a
"corporate bond"), which, in the following order or priority, is:
(a) rated in the highest category by both Standard & Poor's Ratings Group, Inc.
("S&P") and Moody's Investors Services ("Moody's"); or
(b) rated in the highest category by only one of the rating services described
in (a) and also rated in the highest category by any other nationally
recognized statistical rating organization (hereinafter together with S&P
and Moody's, collectively referred to as "rating services"); or
(c) rated by only one rating service which rating is in its highest category,
and the purchase of such obligation is approved or ratified by the
Directors; or
(d) unrated and whose issuer has short-term securities rated as described in
(a), (b) and (c);
(e) unrated, other than those described in (d), and which is determined by the
Investment Adviser to be of comparable quality to obligations rated in (a),
(b) or (c) and such determination is approved or ratified by the Directors
(hereinafter, obligations described under (a), (b), (c), (d) and (e) are
collectively referred to a "premium obligations"); and
In addition, the Fund will purchase only, with regard to its rated and unrated
investments, apart from premium obligations referenced above, any of the
following obligations (collectively "other eligible obligations") so long as the
purchase would not cause this category (i.e. the Fund's total investments in
other eligible obligations) to exceed 5% of the fund's total assets and further
provided that investment in all other obligations of a single issuer, at the
time of purchase, is limited to the greater of 1% of the fund's total net assets
or $1 million:
(a) an obligation rated in the highest category by only one rating service and
also rated in the second highest category by another rating service;
(b) a corporate bond, other than a premium obligation, rated by only one rating
service, which rating is in its second highest category and the purchase of
such obligation is approved or ratified by the Directors; and
(c) an unrated obligation, other than a premium obligation, which is determined
by the Adviser to be of comparable quality to the rating of any other
eligible obligation so long as such determination is approved or ratified by
the Directors.
DESCRIPTION OF PORTFOLIO SECURITIES
U.S. Government Securities: include obligations issued or guaranteed as to
principal and interest, including detached interest coupons, by the U.S. Govern-
15
<PAGE> 19
ment or one of its agencies or instrumentalities, including certificates or
receipts evidencing ownership of interest or principal payments of the
foregoing.
Commercial Paper: is a short-term promissory note issued to finance short-term
credit needs.
Bankers' Acceptances: are negotiable obligations of a bank to pay a draft which
has been drawn on it by a customer.
Time Deposits: non-negotiable deposits maintained in a banking institution
earning a specified interest rate over a given period of time (no longer than 7
days).
Corporate Obligations (other than commercial paper): include bonds and notes
issued by corporations and other business organizations in order to finance
long-term credit needs.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 10% of its net
assets in illiquid investments, which include repurchase agreements maturing in
more than seven days, restricted securities and securities not readily
marketable.
REPURCHASE AGREEMENTS. For the purpose of realizing additional (taxable)
income, the Fund may enter into repurchase agreements. In a repurchase
agreement, the Fund buys a security subject to the right and obligation to sell
it back to the issuer at the same price plus accrued interest. The transaction
must be fully collateralized at all times. The Fund may reinvest any cash
collateral in short-term highly liquid debt securities. However, reverse
repurchase agreements may involve some credit risk to the Fund if the other
party should default on its obligation and the Fund is delayed in or prevented
from recovering the collateral.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase securities
on a forward or "when-issued" basis and may purchase or sell securities on a
forward commitment basis to hedge against anticipated changes in interest rates
and prices. When the Fund engages in such transactions, it relies on the seller
or the buyer, as the case may be, to consummate the transaction. Failure to
consummate the transaction may result in the Fund's losing the opportunity to
obtain an advantageous price and yield. If the Fund chooses to dispose of the
right to acquire a when-issued security prior to its acquisition or dispose of
its right to deliver or receive against a forward commitment, it can incur a
taxable gain or a loss.
SHORT-TERM TRADING AND PORTFOLIO TURNOVER. Short-term trading means the
purchase and subsequent sale of a security after it has been held for a
relatively brief period of time. Short-term trading may have the effect of
increasing portfolio turnover and may increase net short-term capital gains,
distributions from which would be taxable to shareholders as ordinary income.
The Fund does not intend to invest for the purpose of seeking short-term
profits. The Fund's portfolio securities may be changed, however, without regard
to the holding period of these securities (subject to certain tax restrictions),
when the Adviser deems that this action will help achieve the Fund's objective
given a change in an issuer's operations or changes in general market
conditions.
16
<PAGE> 20
RISK FACTORS. The Fund's ownership of obligations issued by banks may involve
special considerations. Normally, large domestic banks are members of the
Federal Reserve System and the Federal Deposit Insurance Corporation, but these
are not investment requirements. The purchase of obligations issued by foreign
branches of domestic banks and by Canadian banks or their foreign branches
involves special investment considerations, including the possible imposition of
withholding taxes on interest income, expropriation, confiscatory taxation, the
possible adoption of foreign governmental restrictions which might adversely
affect the payment of principal and interest on such obligations, limitations on
the removal of funds, or other adverse political or economic developments. In
addition, it may be more difficult to obtain and enforce a judgment against a
Canadian bank or foreign branch of a domestic or Canadian bank. The Fund will
not invest more than 25% of its assets in Canadian banks, including their
foreign branches. Some investments in foreign branches of domestic banks may be
considered to have the same investment risk as investing in instruments of the
domestic bank when the parent is unconditionally liable for the obligations of
its foreign branch; in all other cases the Fund will not invest more than 25% of
its assets in the instruments of foreign branches of domestic banks.
17
<PAGE> 21
JOHN HANCOCK
CASH RESERVE, INC.
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
Investors Bank
& Trust Company
24 Federal Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For Service Information
For Telephone Exchange call 1-800-225-5291
For Investment-by-Phone
For Telephone Redemption
For TDD call 1-800-554-6713
(LOGO) Printed on Recycled Paper
JOHN HANCOCK
CASH RESERVE, INC.
PROSPECTUS
MAY 1, 1995
A MUTUAL FUND SEEKING TO OBTAIN MAXIMUM CURRENT INCOME
CONSISTENT WITH PRESERVATION OF CAPITAL AND MAINTENANCE OF
LIQUIDITY.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291
<PAGE> 22
JOHN HANCOCK CASH RESERVE, INC.
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1995
This Statement of Additional Information is not a Prospectus, but is
intended to provide additional information regarding the activities and
operations of John Hancock Cash Reserve, Inc. (the "Fund"), and should be read
in conjunction with the Prospectus.
A Prospectus for the Fund, dated May 1, 1995, which provides the basic
information an investor should know before investing may be obtained without
charge from:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-5291
1-800-225-5291
TABLE OF CONTENTS
<TABLE>
<S> <C>
Investment Objective and Policies . . . . . . . . . . . 2
Investment Restrictions . . . . . . . . . . . . . . . . 4
Those Responsible for Management . . . . . . . . . . . 6
Investment Advisory and Other Services . . . . . . . . 10
Distribution Contract . . . . . . . . . . . . . . . . . 13
Amortized Cost Method of Portfolio Valuation . . . . . 14
Tax Status . . . . . . . . . . . . . . . . . . . . . . 15
Brokerage Allocation . . . . . . . . . . . . . . . . . 17
Transfer Agent Services . . . . . . . . . . . . . . . . 19
Additional Information . . . . . . . . . . . . . . . . 19
Calculation of Performance . . . . . . . . . . . . . . 20
Financial Statements . . . . . . . . . . . . . . . . . F-1
Appendix . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
1
<PAGE> 23
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE. As discussed under "Investment Objective and
Policies" in the Prospectus, the investment objective of the Fund is to obtain
maximum current income consistent with the preservation of capital and
maintenance of liquidity. The Fund seeks to achieve its objective by
investing in high quality money market instruments maturing within one year
from the date of purchase with an average portfolio maturity of 90 days or
less. Securities in which the Fund may invest may not earn as high a level of
current income as long-term or lower quality securities which generally have
less liquidity, greater market risk and more fluctuation in market value.
U.S. GOVERNMENT SECURITIES. U.S. Government obligations are issued or
guaranteed as to principal and interest by the U.S. Government or one of its
agencies or instrumentalities. Treasury bills, bonds and notes and certain
obligations of Government agencies and instrumentalities, such as Government
National Mortgage Association pass through certificates are supported by the
full faith and credit of the Treasury. Other obligations such as securities
of the Federal Home Loan Bank are supported by the right of the issuer to
borrow from the Treasury; while others such as bonds issued by the Federal
National Mortgage Association, which is a private corporation, are supported
only by the credit of the issuing instrumentality. Obligations not backed by
the full faith and credit of the United States may be secured, in whole or
part, by a line of credit with the U.S. Treasury or collateral consisting of
cash or other securities which are backed by the full faith and credit of the
United States. In the case of other obligations, the agency issuing or
guaranteeing the obligation must be looked to for ultimate repayment.
CORPORATE OBLIGATIONS. For a description of the ratings of securities
which are eligible for investment by the Fund, see Appendix A.
Short-term corporate obligations may also include variable amount master
demand notes. Variable amount master notes are obligations that permit the
investment of fluctuating amounts by the Fund at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and the borrower.
These notes permit daily changes in the amounts borrowed. The Fund has the
right to increase the amount under the note at any time up to the full amount
provided by the note agreement, or to decrease the amount, and the borrower
may repay up to the full amount of the note without penalty. The borrower is
typically a large industrial or finance company which also issues commercial
paper. Typically these notes provide that the interest rate is set daily by
the borrower; the rate is usually the same as or similar to the interest rate
on commercial paper being issued by the borrower. Because variable amount
master notes are direct lending arrangements between the lender and borrower,
it is not generally contemplated that such instruments will be traded, and
there is no secondary market for these notes, although they are redeemable
(and thus immediately repayable by the borrower) at the face value, plus
accrued interest, at any time. Accordingly, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. In connection with master demand note arrangements, the Fund
considers earning power, cash flow, and other liquidity ratios of the issuer.
The Fund will only invest in master demand notes of U.S. issuers. While
master demand notes, as such, are not typically rated by credit rating
agencies, if not so rated the Fund may invest in them only if at the time of
an investment the issuer meets the criteria set forth in the Prospectus for
all other commercial paper issuers. The Fund will not invest more than 25% of
its assets in master demand notes. Although the Fund has previously invested
in one master demand note and might again own this type of note, it has no
current intention of doing so in the foreseeable future.
2
<PAGE> 24
OTHER INVESTMENT PRACTICES. The Fund may invest in participations issued
by an intermediary, usually a bank, which evidence ownership of a fractional
interest in a large, underlying money market instrument of a type in which the
Fund is otherwise permitted to invest. The Fund's ability to exercise its
rights as a lender and to trade these participations and any fractional notes
from the underlying issuer in the secondary market is normally less than if
the Fund owned the entire investment directly.
The Fund may enter into reverse repurchase agreements which involve the
sale of any of the money market securities held by the Fund and an agreement
to repurchase those securities at an agreed upon price, date, and interest
payment. The Fund would then use the proceeds of reverse repurchase
agreements to make other investments which either mature or are under an
agreement to resell at a date simultaneous with or prior to the expiration of
the reverse repurchase agreement. The Fund may utilize reverse repurchase
agreements only if the interest income to be earned from the investment of
proceeds of the transaction is greater than the interest expense of the
reverse repurchase transaction. In the view of the staff of the Securities
and Exchange Commission (a) reverse repurchase arrangements are borrowings
under the Investment Company Act of 1940 and (b) if entered into with other
than banks, the Fund must maintain, in a segregated account, marketable
short-term securities equal to the aggregate amount of its reverse repurchase
obligations. If the Fund enters into reverse repurchase arrangements with
other than banks, it will maintain such a segregated account. In addition,
the Fund would not enter into reverse repurchase agreements exceeding in the
aggregate (provided that overall borrowings do not exceed 1/3 of the Fund's
total assets) more than 20% of the value of its total net assets. To avoid
the potential leveraging effects of the Fund's borrowings, additional
investments will not be made while borrowings (including reverse repurchase
agreements) are in excess of 5% of the Fund's total assets. In addition, the
Fund would enter into reverse repurchase agreements only with financial
institutions which are approved in advance as being creditworthy by the Board
of Directors. Under procedures established by the Board of Directors, the
Investment Adviser will monitor the creditworthiness of the firms involved.
The Fund has not invested in reverse repurchase agreements in the past and has
no current intention of doing so.
Although it is not typically the practice with respect to money market
securities, some new issues of the securities in which the Fund may invest
could be offered on a delayed delivery (including a when-issued) basis, that
is, delivery and payment for the securities would be scheduled to take place
after a typical settlement date with the price, interest rate, and settlement
date being fixed at the time of commitment. The Fund will not effect delayed
delivery transactions with scheduled delivery dates of more than one year
after the date of its commitment. The Fund would only make such commitments
to purchase securities with the intention of actually acquiring them, and no
new commitment will be made if, as a result, more than 20% of the Fund's net
assets would be so committed. The Fund will at all times maintain in a
segregated account cash or liquid, high-grade money market instruments in an
amount equal to these commitments. However, the Fund could meet its
obligations to pay for delayed delivery securities from sale of the delayed
delivery securities themselves, which may have a value greater or less than
the Fund's payment obligation and thus produce a realized gain or loss.
The Fund's investment restrictions permit it to invest more than 25% of
its assets in all
3
<PAGE> 25
finance companies as a group and all domestic banks as a group when, in the
opinion of the Investment Adviser or Sub-Adviser, yield differentials and
money market conditions suggest and when cash is available for such investment
and instruments are available for purchase which fulfill the Fund's objectives
in terms of quality and marketability.
INVESTMENT RESTRICTIONS
The following investment restrictions cannot be changed without approval
of the holders of a majority (as defined in the Investment Company Act of
1940) of the outstanding shares of the Fund ("1940 Act Majority"). The Fund
may not:
1. Borrow money except from banks for temporary or emergency purposes
(including meeting redemptions without immediately selling
securities, but not to purchase ivnestment securities) in an amount
not to exceed 1/3 of the value (including the proceeds of the loan)
of the Fund's total assets;
2. Mortgage, pledge, or hypothecate assets, except to an extent not
greater than 10% of total assets to secure borrowings made in
accordance with restriction 1 above;
3. Invest more than 5% of its total assets in the securities of any one
issuer, except for: securities issued or guaranteed by the United
States government or by one of its agencies or instrumentalities;
and, with repsect to 25% of its total assets, obligations of
domestic commercial banks (although under current regulations, an
investment in the obligations of any one commercial bank may not
exceed 5% of the Fund's total assets, subject to an exception
permitting investment in certain obligation of any one such bank at
any one time for a period of up to three business days);
4. Invest more than 25% of the Fund's total assets in the securities of
issuers (other than domestic banks and the U.S. Government, its
agencies, and instrumentalities) in the same industry. Electric,
natural gas distribution, natural gas pipeline, combined electric
and natural gas, and telephone utilities are considered separate
industries for purposes of this restriction, and finance companies
as a group shall not be considered a single industry;
5. Make loans to others, except through the purchase of various kinds
of publicly distributed debt obligations, investments in variable
amount master demand notes, participations, and repurchase agreement
transactions;
6. Purchase or sell real estate; however, the Fund may purchase
marketable securities issued by companies which invest in real
estate or interest therein;
7. Purchase securities on margin or sell short;
8. Purchase or sell commodities or commodity futures contracts, or oil,
gas, or mineral exploration or development programs;
4
<PAGE> 26
9. Underwrite securities of other issuers;
10. Acquire more than 10% of any class of securities of an issuer. For
this purpose, all outstanding bonds and other evidences of
indebtedness shall be deemed within a single class regardless of
maturities, priorities, coupon rates, series, designations,
conversion rights, security, or other differences;
11. Purchase securities (other than under repurchase agreements of not
more than one week's duration - considering only the remaining days
to maturity of each existing repurchase agreement) for which there
exists no readily available market, or for which there are legal or
contractual restrictions on resale (excepting from this restriction
securities which are subject to such resale restrictions but which,
in the judgment of the Fund's investment adviser, are readily
redeemable on demand), if as a result of any such purchase, more
than 10% of the Fund's net assets would be invested in such
securities;
12. Purchase warrants, or write, purchase or sell puts, calls,
straddles, spreads, or combinations thereof; and
13. Enter into reverse repurchase agreements, if as a result, the Fund's
obligations with respect to all reverse repurchase agreements would
be greater than 20% of net assets.
The following investment restrictions may be changed by the Fund's Board
of Directors without the approval of shareholders.
The Fund may not:
14. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition, or
reorganization;
15. Purchase securities of any issuer for the purpose of exercising
control or management;
16. Invest more than 5% of total assets in securities of any issuer
which, together with predecessors, has been in continuous operation
less than three years; and
17. Purchase or retain the securities of an issuer if those officers or
directors of the Fund or the Investment Adviser, who are also
officers or directors of the issuer and who each own beneficially
more than 1/2 of 1% of the securities of that issuer, together own
more than 5% of the securities of such issuer.
With respect to investment restrictions #1 and #2, to avoid the potential
leveraging effects of the Fund's borrowings, additional investments will
not be made while borrowings (including reverse repurchase agreements)
are in excess of 5% of the Fund's
5
<PAGE> 27
total assets.
The Fund's Board of Trustees has approved the following non-fundamental
investment policy pursuant to an order of the SEC: Notwithstanding any
investment restriction to the contrary, the Fund may, in connection with the
John Hancock Group of Funds Deferred Compensation Plan for Independent
Trustees/Directors, purchase securities of other investment companies within
the John Hancock Group of Funds provided that, as a result, (i) no more than
10% of the Fund's assets would be invested in securities of all other
investment companies, (ii) such purchase would not result in more than 3% of
the total outstanding voting securities of any one such investment company
being held by the Fund and (iii) no more than 5% of the Fund's assets would be
invested in any one such investment company.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of net assets will not be considered a
violation of any of the foregoing restrictions or those appearing in the
Prospectus.
A 1940 Act majority means: (i) more than 50% of the outstanding shares
entitled to vote or (ii) 67% or more of the shares represented at the meeting
and entitled to vote on the matter, where more than 50% of the outstanding
shares are represented, whichever is less.
THOSE RESPONSIBLE FOR MANAGEMENT
The overall direction and supervision of the Fund is the responsibility
of the Board of Directors which has the primary duty of seeing that the Fund's
general investment policies and programs are carried out and properly
administered. The officers of the Fund are responsible for the day-to-day
administration of the Fund. Several of the officers and Directors of the Fund
are also officers and directors of the Investment Adviser or officers and
directors of the Fund's Distributor.
Set forth below is information with respect to each of the Fund's
officers and Trustees. The officers and Directors may be contacted at 101
Huntington Avenue, Boston, MA 02199-7603. Their affiliations represent their
principal occupations during the past five years. An asterisk indicates those
Trustees who are interested persons within the meaning of the 1940 Act.
*EDWARD J. BOUDREAU, JR., Director, Chairman and Chief Executive Officer.
Chairman and Chief Executive Officer, the Investment Adviser and The
Berkeley Financial Group ("The Berkeley Group"); Chairman, NM Capital
Management, Inc. ("NM Capital"); John Hancock Advisers International
Limited ("Advisers International"); John Hancock Funds, Inc.; John Hancock
Investor Services Corporation ("Investor Services"); and Sovereign Asset
Management Corporation ("SAMCorp"); (hereinafter the Investment Adviser,
the Berkeley Group, NM Capital, Advisers International, John Hancock Funds,
Inc., Investor Services and SAMCorp are collectively referred to as the
"Affiliated Companies"); Chairman, First Signature Bank & Trust; Director,
John Hancock Freedom Securities Corporation, John Hancock Capital
Corporation, New England/Canada Business
* An "interested person" of the Fund, as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company
Act").
6
<PAGE> 28
Council; Member, Investment Company Institute Board of Governors;
Trustee, Museum of Science; President, the Investment Adviser (until July
1992); Trustee or Director of other investment companies managed by the
Investment Adviser; and Chairman, John Hancock Distributors, Inc. (until
April, 1994).
JAMES F. CARLIN, Director. Chairman and CEO, Carlin Consolidated, Inc.
insurance); Director, Arbella Mutual Insurance Company (insurance),
Consolidated Group Trust (group health plan), Carlin Insurance Agency, Inc.
and West Insurance Agency, Inc.; Receiver, the City of Chelsea (until
August 1992); and Trustee or Director of other investment companiesmanaged
by the Investment Adviser.
WILLIAM H. CUNNINGHAM, Director. Chancellor, University of Texas System and
former President of the University of Texas, Austin, Texas; Regents Chair
in Higher Education Leadership; James L. Bayless Chair for Free Enterprise;
Professor of Marketing and Dean College of Business Administration/Graduate
School of Business (1983-1985); Centennial Chair in Business Education
Leadership, 1983-1985; Director, LaQuinta Motor Inns, Inc. (hotel
management company); Director, Jefferson-Pilot Corporation (diversified
life insurance company); Director, Freeport-McMoran Inc. (oil and gas
company); Director, Barton Creek Properties, Inc. (1988-1990) (real estate
development) and LBJ Foundation Board (education foundation); and Advisory
Director, Texas Commerce Bank - Austin.
CHARLES L. LADNER, Director. Director, Energy North, Inc. (public utility
holding company); Senior Vice President, Finance UGI Corp (public utility
holding company) (until 1992); =and Trustee or Director of other investment
companies managed by the Investment Adviser.
LEO E. LINBECK, JR., Director. Chairman, President, Chief Executive Officer and
Director, Linbeck Corporation (a holding company engaged in various phases
of the construction industry and warehousing interests); Director and
Chairman, Federal Reserve Bank of Dallas; Chairman of the Board and Chief
Executive Officer, Linbeck Construction Corporation; Director, Panhandle
Eastern Corporation (a diversified energy company); Director, Daniel
Industries, Inc. (manufacturer of gas measuring products and energy related
equipment); Director, GeoQuest International, Inc. (a geophysical
consulting firm); and Director, Greater Houston Partnership.
PATRICIA P. MCCARTER, Director. Director and Secretary, the McCarter Corp.
(machine manufacturer); and Trustee or Director of other investment
companies managed by the Investment Adviser.
STEVEN R. PRUCHANSKY, Director. Director and Treasurer, Mast Holdings, Inc.;
Director, First Signature Bank & Trust Company (until August 1991); General
Partner, Mast Realty Trust; President, Maxwell Building Corp. (until 1991);
and Trustee or Director of other investment companies managed by the
Investment Adviser.
* An "interested person" of the Fund, as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company
Act").
7
<PAGE> 29
NORMAN H. SMITH, Director. Lieutenant General, USMC, Deputy Chief of Staff for
Manpower and Reserve Affairs, Headquarters Marine Corps; Commanding General
III Marine Expeditionary Force/3rd Marine Division (retired 1991); and
Trustee or Director of other investment companies managed by the Investment
Adviser.
JOHN P. TOOLAN, Director. Director, The Smith Barney Muni Bond Funds, The Smith
Barney Tax-Free Money Fund, Inc., Vantage Money Market Funds (mutual
funds), The Inefficient-Market Fund, Inc. (closed-end investment company)
and Smith Barney Trust Company of Florida; Chairman, Smith Barney Trust
Company (retired December, 1991); Director, Smith Barney, Inc., Mutual
Management Company and Smith, Barney Advisers, Inc. (investment advisers)
(retired 1991); and Senior Executive Vice President, Director and member
of the Executive Committee, Smith Barney, Harris Upham & Co, Incorporated
(investment bankers) (until 1991); and Trustee or Director of other
investment companies managed by the Investment Adviser.
*ROBERT G. FREEDMAN, Vice Chairman and Chief Investment Officer. President and
Chief Investment Officer, the Investment Adviser.
*ANNE C. HODSDON, President. President and Chief Operations Officer, the
Investment Adviser.
*JAMES B. LITTLE, Senior Vice President and Chief Financial Officer. Senior
Vice President, the Investment Adviser.
*THOMAS H. DROHAN, Senior Vice President and Secretary. Senior Vice President
and Secretary, the Investment Adviser.
*MICHAEL P. DICARLO, Senior Vice President. Senior Vice President, the
Investment Adviser.
*EDGAR LARSEN, Senior Vice President. Senior Vice President, the Investment
Adviser.
*B.J. WILLINGHAM, Senior Vice President. Senior Vice President, the Investment
Adviser. Formerly, Director and Chief Investment Officer of Transamerica
Fund Management Company.
*JAMES J. STOKOWSKI, Vice President and Treasurer. Vice President, the
Investment Adviser.
*SUSAN S. NEWTON, Vice President and Compliance Officer. Vice President and
Assistant Secretary, the Investment Adviser.
*JOHN A. MORIN, Vice President. Vice President, the Investment Adviser.
*THOMAS J. PRESS, Vice President and Assistant Secretary. Vice President and
Assistant Secretary, the Investment Adviser. Formerly, General Counsel and
Secretary, Transamerica Management Company; Secretary and Treasurer,
Transamerica Asset Management Group, Inc.; and Secretary, Transamerica
Funds Distributors, Inc.
* An "interested person" of the Fund, as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company
Act").
8
<PAGE> 30
As of April 6, 1995, there were 119,650,419 shares of the Fund
outstanding and officers and trustees of the Fund as a group beneficially
owned less than 1% of these outstanding shares.
As of December 22, 1994, the Directors have established an Advisory Board
which acts to facilitate a smooth transition of management over a two-year
period (between Transamerica Fund Management Company ("TFMC"), the prior
investment adviser, and the Investment Adviser). The members of the Advisory
Board are distinct from the Board of Directors, do not serve the Fund in any
other capacity and are persons who have no power to determine what securities
are purchased or sold on behalf of the Fund. Each member of the Advisory
Board may be contacted at 101 Huntington Avenue, Boston, Massachusetts 02199.
Members of the Advisory Board and their respective principal occupations
during the past five years are as follows:
R. Trent Campbell, President, FMS, Inc. (financial and management services);
former Chairman of the Board, Mosher Steel Company.
Mrs. Lloyd Bentsen, Formerly National Democratic Committeewoman from Texas;
co-founder, Houston Parents' League; former board member of various civic
and cultural organizations in Houston, including the Houston Symphony,
Museum of Fine Arts and YWCA. Mrs. Bentsen is presently active in
various civic and cultural activities in the Washington, D.C. area,
including membership on the Area Board for The March of Dimes and is a
National Trustee for the Botanic Gardens of Washington, D. C.
Thomas R. Powers, Formerly Chairman of the Board, President and Chief Executive
Officer, TFMC; Director, West Central Advisory Board, Texas Commerce Bank;
Trustee, Memorial Hospital System; Chairman of the Board of Regents of
Baylor University; Member, Board of Governors, National Association of
Securities Dealers, Inc.; Formerly, Chairman, Investment Company Institute;
formerly, President, Houston Chapter of Financial Executive Institute.
Thomas B. McDade, Chairman and Director, TransTexas Gas Company; Director,
Houston Industries and Houston Lighting and Power Company; Director,
TransAmerican Companies (natural gas producer and transportation); Member,
Board of Managers, Harris County Hospital District; Advisory Director,
Commercial State Bank, El Campo; Advisory Director, First National Bank of
Bryan; Advisory Director, Sterling Bancshares; Former Director and Vice
Chairman, Texas Commerce Bancshares; and Vice Chairman, Texas Commerce
Bank.
COMPENSATION OF THE BOARD OF DIRECTORS AND ADVISORY BOARD. The following
table provides information regarding the compensation paid by the Fund and the
other investment companies in the John Hancock Fund Complex to the Independent
Directors and the Advisory Board members for their services. Mr. Boudreau, a
non-Independent Director, and each of the officers of the Funds are interested
persons of the Investment Adviser, are compensated by the Investment Adviser
and received no compensation from the Funds for their services.
9
<PAGE> 31
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
RETIREMENT FROM ALL FUNDS IN
AGGREGATE BENEFITS ACCRUED JOHN HANCOCK
COMPENSATION AS PART OF THE FUND COMPLEX TO
DIRECTORS FROM THE FUND FUND'S EXPENSES DIRECTORS**
- --------- ------------- --------------- ------------------
<S> <C> <C> <C>
James F. Carlin $ 0 $0 $60,450
William H. Cunningham $ 5,000 * $0 $ 0
Charles L. Ladner $ 0 $0 $60,450
Leo E. Linbeck, Jr. $ 4,250 * $0 $ 0
Patricia P. McCarter $ 0 $0 $60,200
Steven R. Pruchansky $ 0 $0 $62,450
Norman H. Smith $ 0 $0 $62,450
John P. Toolan $ 0 $0 $60,450
</TABLE>
* Compensation made pursuant to different compensation arrangements then in
effect.
** The total compensation paid by the John Hancock Fund Complex to the
Independent Directors was as of the calendar year ended December 31,
1994. (The Fund was not part of the John Hancock Fund Complex until
December 22, 1994 and Messrs. Cunningham and Linbeck were not trustees or
directors of any funds in the John Hancock Fund Complex prior to
December 22, 1994.)
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
RETIREMENT FROM ALL FUNDS IN
AGGREGATE BENEFITS ACCRUED JOHN HANCOCK
COMPENSATION AS PART OF THE FUND COMPLEX TO
ADVISORY BOARD*** FROM THE FUND FUND'S EXPENSES ADVISORY BOARD***
- ----------------- ------------- ---------------- ------------------
<S> <C> <C> <C>
R. Trent Campbell $ 3,176 $0 $ 54,000
Mrs. Lloyd Bentsen $ 3,176 $0 $ 54,000
Thomas R. Powers $ 3,176 $0 $ 54,000
Thomas B. McDade $ 3,176 $0 $ 54,000
TOTAL $12,704 $0 $216,000
</TABLE>
*** Estimated for the Fund's current fiscal year ending December 31, 1995.
INVESTMENT ADVISORY AND OTHER SERVICES
Each of the Directors and principal officers affiliated with the Fund who
is also an affiliated person of the Investment Adviser is named above,
together with the capacity in which such person is affiliated with the Fund,
the Investment Adviser or TFMC (the Fund's prior investment adviser).
The Investment Adviser, located at 101 Huntington Avenue, Boston,
Massachusetts
10
<PAGE> 32
02199-7603, was organized in 1968 and has over $13 billion in assets under
management in its capacity as investment adviser to the Fund and the other
mutual funds and publicly traded investment companies in the John Hancock
group of funds having a combined total of over 1,000,000 shareholders. The
Investment Adviser is a wholly-owned subsidiary of The Berkeley Financial
Group, which is in turn a wholly-owned subsidiary of John Hancock
Subsidiaries, Inc., which is in turn a wholly-owned subsidiary of John Hancock
Mutual Life Insurance Company (the "Life Company"), one of the nation's oldest
and largest financial services companies. With total assets under management
of over $80 billion, the Life Company is one of the ten largestlife insurance
companies in the United States, and carries Standard & Poor's and A.M. Best's
highest ratings. Founded in 1862, the Life Company has been serving clients
for over 130 years.
The Fund has entered into an investment management contract with the
Investment Adviser. Under the investment management contract, the Investment
Adviser provides the Fund with (i) a continuous investment program, consistent
with the Fund's stated investment objective and policies, (ii) supervision of
all aspects of the Fund's operations except those that are delegated to a
custodian, transfer agent or other agent and (iii) such executive,
administrative and clerical personnel, officers and equipment as are necessary
for the conduct of its business. See "Organization and Management of the
Fund" and "The Fund's Expenses" in the Prospectus for a description of certain
information concerning the Fund's investment management contract.
No person other than the Investment Adviser and its directors and
employees regularly furnishes advice to the Fund with respect to the
desirability of the Fund investing in, purchasing or selling securities. The
Investment Adviser may from time to time receive statistical or other similar
factual information, and information regarding general economic factors and
trends, from the Life Company and its affiliates.
Under the terms of the investment management contract with the Fund, the
Investment Adviser provides the Fund with office space, equipment and supplies
and other facilities and personnel required for the business of the Fund. The
Investment Adviser pays the compensation of all officers and employees of the
Fund and Directors of the Fund affiliated with the Investment Adviser, the
office expenses of the Fund, including those of the Fund's Treasurer and
Secretary, and other expenses incurred by the Investment Adviser in connection
with the performance of its duties. All expenses which are not specifically
paid by the Investment Adviser and which are incurred in the operation of the
Fund including, but not limited to, (i) the fees of the Directors of the Fund
who are not "interested persons," as such term is defined in the 1940 Act (the
"Independent Directors"), (ii) the fees of the members of the Fund's Advisory
Board (described above) and (iii) the continuous public offering of the shares
of the Fund are borne by the Fund.
For the services rendered by the Investment Adviser, the Advisory
Agreement requires the Fund to pay monthly fees to the Investment Adviser
computed at the annual percentage rate of 0.35% of the Fund's average daily
net assets. Fees are calculated and accrued daily and, at the end of each
month, the Investment Adviser is entitled to a portion
11
<PAGE> 33
of the annual fee, based on the average daily net assets of the Fund through
the last day of the month for which payment is made, less any previous
payments made to the Investment Adviser for the fiscal year.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of any state limit where the
Fund is registered to sell shares of beneficial interest, the fee payable to
the Investment Adviser will be reduced to the extent required by law. At this
time, the most restrictive limit on expenses imposed by a state requires that
expenses charged to the Fund in any fiscal year not exceed 2.5% of the first
$30,000,000 of the Fund's average daily net asset value, 2% of the next
$70,000,000 and 1.5% of the remaining average daily net asset value. When
calculating the limit above, the Fund may exclude interest, brokerage
commissions and extraordinary expenses.
Pursuant to the investment management contract, the Investment Adviser is
not liable to the Fund or its shareholders for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which the contract relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Investment
Adviser in the performance of its duties or from its reckless disregard of the
obligations and duties under the applicable contract.
The investment management contract initially expires on December 22, 1996
and will continue in effect from year to year thereafter if approved annually
by a vote of a majority of the Directors of the Fund who are not interested
persons of one of the parties to the contract, cast in person at a meeting
called for the purpose of voting on such approval, and by either a majority of
the Directors or the holders of a majority of the Fund's outstanding voting
securities. The management contract may, on 60 days' written notice, be
terminated at any time without the payment of any penalty to the Fund by vote
of a majority of the outstanding voting securities of the Fund, by the
Directors or by the Investment Adviser. The management contract terminates
automatically in the event of its assignment.
Securities held by the Fund may also be held by other funds or investment
advisory clients for which the Investment Adviser or its affiliates provide
investment advice. Because of different investment objectives or other
factors, a particular security may be bought for one or more funds or clients
when one or more are selling the same security. If opportunities for purchase
or sale of securities by the Investment Adviser or for other funds or clients
for which the Investment Adviser renders investment advice arise for
consideration at or about the same time, transactions in such securities will
be made, insofar as feasible, for the respective funds or clients in a manner
deemed equitable to all of them. To the extent that transactions on behalf of
more than one client of the Investment Adviser or its respective affiliates
may increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price.
Under the investment management contract, the Fund may use the name "John
Hancock" or any name derived from or similar to it only for so long as the
investment management contract or any extension, renewal or amendment thereof
remains in effect. If the Fund's investment management contract is no longer
in effect, the Fund (to the extent that it lawfully can) will cease to use
such name or any other name indicating that it is advised by or otherwise
connected with the Investment Adviser. In addition, the Investment Adviser or
the Life Company may grant the non-exclusive right to use the name "John
Hancock" or any similar name to any other corporation or entity, including but
not limited
12
<PAGE> 34
to any investment company of which the Life Company or any subsidiary or
affiliate thereof or any successor to the business of any subsidiary or
affiliate thereof shall be the investment adviser.
For the fiscal years ended December 31, 1992, 1993 and 1994 advisory fee
payable by the Fund to TFMC, the Fund's former investment adviser, amounted to
$1,008,567, $585,243 and $630,730, respectively.
ADMINISTRATIVE SERVICES AGREEMENT. The Fund was a party to an
administrative services agreement with TFMC (the "Services Agreement"),
pursuant to which TFMC performed bookkeeping and accounting services and
functions, including preparing and maintaining various accounting books,
records and other documents and keeping such general ledgers and portfolio
accounts as are reasonably necessary for the operation of the Fund. Other
administrative services included communications in response to shareholder
inquiries and certain printing expenses of various financial reports. In
addition, such staff and office space, facilities and equipment was provided
as necessary to provide administrative services to the Fund. The Services
Agreement was amended in connection with the appointment of the Investment
Adviser as adviser to the Fund to permit services under the Agreement to be
provided to the Fund by the Investment Adviser and its affiliates. The
Services Agreement was terminated during the current fiscal year.
For the fiscal years ended December 31, 1992, 1993 and 1994, the Fund
paid to TFMC (pursuant to the Services Agreement) $90,756, $76,114 and
$80,795, respectively, of which $70,866, $60,553 and $65,979, respectively,
was paid to TFMC and $19,890, $15,561 and $14,816, respectively, were paid for
certain data processing and pricing information services.
DISTRIBUTION CONTRACT
The Fund has a distribution contract with John Hancock Funds. Under the
contract, John Hancock Funds is obligated to use its best efforts to sell
shares on behalf of the Fund. Shares of the Fund are also sold by selected
broker-dealers (the "Selling Brokers") which have entered into selling agency
agreements with John Hancock Funds. John Hancock Funds accepts orders for the
purchase of the shares of the fund which are continually offered at net asset
value (normally $1.00 per share). The Fund is a no-load Fund and John Hancock
Funds and Selling Brokers' representatives do not receive any sales
commissions in connection with the sales of shares of the Fund.
The Distribution Agreement was initially adopted by the affirmative vote
of the Fund's Board of Directors including the vote of a majority of Directors
who are not parties
13
<PAGE> 35
to the agreement or interested persons of any such party, cast in person at a
meeting called for such purpose. The Distribution Agreement shall continue in
effect until December 22, 1996 and from year to year if approved by either the
vote of the Fund's shareholders or the Board of Directors including the vote
of a majority of Directors who are not parties to the agreement or interested
persons of any such party, cast in person at a meeting called for such
purpose. The Distribution Agreement may be terminated at any time, without
penalty, by either party upon sixty (60) days' written notice or by a vote of
a majority of the outstanding voting securities of the Fund and terminates
automatically in the case of an assignment by the Distributor.
AMORTIZED COST METHOD OF PORTFOLIO VALUATION
The Fund utilizes the amortized cost valuation method of valuing
portfolio instruments in the absence of extraordinary or unusual
circumstances. Under the amortized cost method, assets are valued by
constantly amortizing over the remaining life of an instrument the difference
between the principal amount due at maturity and the cost of the instrument to
the Fund. The Directors will from time to time review the extent of any
deviation of the net asset value, as determined on the basis of the amortized
cost method, from net asset value as it would be determined on the basis of
available market quotations. If any deviation occurs which may result in
unfairness either to new investors or existing shareholders, the Directors
will take such actions as they deem appropriate to eliminate or reduce such
unfairness to the extent reasonably practicable. These actions may include
selling portfolio instruments prior to maturity to realize gains or losses or
to shorten the Fund's average portfolio maturity, withholding dividends,
splitting, combining or otherwise recapitalizing outstanding shares or
utilizing available market quotations to determine net asset value per share.
Since a dividend is declared to shareholders each time net asset value is
determined, the net asset value per share of the Fund will normally remain
constant at $1.00 per share. There is no assurance that the Fund can maintain
the $1.00 per share value. Monthly, any increase in the value of a
shareholder's investment from dividends is reflected as an increase in the
number of shares in the shareholder's account or is distributed as cash if a
shareholder has so elected.
It is expected that the Fund's net income will be positive each time it
is determined. However, if because of a sudden rise in interest rates or for
any other reason the net income of the Fund determined at any time is a
negative amount, the Fund will offset the negative amount against income
accrued during the month for each shareholder account. If at the time of
payment of a distribution such negative amount exceeds a shareholder's portion
of accrued income, the Fund may reduce the number of its outstanding shares by
treating the shareholder as having contributed to the capital of the Fund that
number of full or fractional shares which represent the amount of excess. By
investing in the Fund, shareholders are deemed to have agreed to make such a
contribution. This procedure permits the Fund to maintain its net asset value
at $1.00 per share.
If in the view of the Directors it is inadvisable to continue the
practice of maintaining net asset value at $1.00 per share, the Directors
reserve the right to alter the procedures for determining net asset value.
The Fund will notify shareholders of any such alteration.
14
<PAGE> 36
The Fund is permitted to redeem shares in kind. Nevertheless, the Fund
has filed with the Securities and Exchange Commission a notification of
election committing itself to pay in cash on redemption by a shareholder of
record, limited during any 90-day period to the lesser of $250,000 or 1% of
the net asset value of the Fund at the beginning of such period.
The Fund will not price its securities on the following national
holidays: New Year's Day; President's Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving Day and Christmas Day.
TAX STATUS
The Fund has qualified and has elected to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"), and intends to continue to so qualify in the future.
As such and by complying with the applicable provisions of the Code regarding
the sources of its income, the timing of its distributions, and the
diversification of its assets, the Fund will not be subject to Federal income
tax on taxable income (including net realized capital gains, if any) which is
distributed to shareholders at least annually in accordance with the timing
requirements of the Code.
The Fund will be subject to a four percent nondeductible federal excise
tax on certain amounts not distributed (and not treated as having been
distributed) on a timely basis in accordance with annual minimum distribution
requirements. The Fund intends under normal circumstances to avoid liability
for such tax by satisfying such distribution requirements.
Distributions of net investment income (which include original issue
discount and accrued, recognized market discount) and any net realized short-
term capital gains, as computed for Federal income tax purposes, will be
taxable as described in the Prospectus whether taken in shares or in cash.
Although the Fund does not expect to realize any net long-term capital gains,
distributions from such gains, if any, would be taxable as long-term capital
gains. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for Federal income tax purposes in
shares so received equal to the amount of cash they would have received had
they taken the distribution in cash.
Upon a redemption of shares (including by exercise of the exchange
privilege) a shareholder ordinarily will not realize a taxable gain or loss
if, as anticipated, the Fund maintains a constant net asset value per share.
If the Fund is not successful in maintaining a constant net asset value per
share, a redemption may produce a taxable gain or loss.
Distributions from the Fund will not qualify for the dividends-received
deduction for corporate shareholders.
15
<PAGE> 37
For Federal income tax purposes, the Fund is permitted to carry forward a
net capital loss in any year to offset net capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in Federal income tax
liability to the Fund and would not be distributed as such to shareholders.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post retirement
distributions and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their
tax advisers for more information.
The Fund may be subject to withholding and other taxes imposed by foreign
countries with respect to its investments, if any, in foreign securities. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes.
If more than 50% of the value of the total assets of the Fund at the
close of any taxable year consists of securities of foreign corporations, the
Fund may file an election with the Internal Revenue Service pursuant to which
shareholders of the Fund will be required to (i) include in ordinary gross
income (in addition to taxable dividends actually received) their pro rata
shares of foreign income taxes paid by the Fund even though not actually
received, and (ii) treat such respective pro rata portions as foreign income
taxes paid by them.
If the election is made, shareholders of the Fund may then deduct such
pro rata portions of foreign income taxes in computing their taxable incomes,
or, alternatively, use them as foreign tax credits, subject to applicable
limitations, against their U.S. federal income taxes. Shareholders who do not
itemize deductions for Federal income tax purposes will not, however, be able
to deduct their pro rata portion of foreign taxes paid by the Fund, although
such shareholders will be required to include their shares of such taxes in
gross income. Shareholders who claim a foreign tax credit for such foreign
taxes may be required to treat a portion of dividends received from the Fund
as a separate category of income for purposes of computing the limitations on
the foreign tax credit. Tax-exempt shareholders will ordinarily not benefit
from this election. Each year that the Fund files the election described
above, its shareholders will be notified of the amount of (i) each
shareholder's pro rata share of foreign income taxes paid by the Fund and
(ii) the portion of Fund dividends which represents income from each foreign
country.
Provided that the Fund qualifies as a regulated investment company under
the Code, the Fund will not be required to pay any Massachusetts income,
corporate excise or franchise taxes.
The foregoing discussion relates solely to U.S. federal income tax laws
applicable to U.S. persons (i.e., U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts or estates) subject to tax under such law.
The discussion does not address special tax rules applicable to certain
classes of investors, such as tax-exempt entities, insurance companies and
financial institutions. Dividends, capital gain distribution (if any), and
ownership of or gains realized (if any) on the exchange or redemption of
shares of the Fund may also be subject to state and local taxes. Shareholders
should consult their own tax advisers as to the federal, state or local tax
consequences of ownership of shares of and
16
<PAGE> 38
receipt of distribution from the Fund in their particular circumstances.
Non-U.S. investors not engaged in U.S. trade or business with which their
Fund investment is effectively connected will be subject to U.S. federal
income tax treatment that is different from that described above. These
investors may be subject to non-resident alien withholding tax at the rate of
30% (or a lower rate under an applicable tax treaty) on amounts treated as
ordinary dividends from the Fund. Non-U.S. investors should consult their tax
advisers regarding such treatment and the application of foreign taxes to an
investment in the Fund.
BROKERAGE ALLOCATION
Decisions concerning the purchase and sale of portfolio securities are
made by the Investment Adviser and officers of the Fund pursuant to
recommendations made by an investment committee of the Investment Adviser,
which consists of officers and directors of the Investment Adviser and
affiliates and officers and Directors who are interested persons of the Fund.
Orders for purchases and sales of securities are placed in a manner which, in
the opinion of the officers of the Fund, will offer the best price and market
for the execution of each such transaction. Purchases from underwriters of
portfolio securities may include a commission or commissions paid by the
issuer and transactions with dealers serving as market makers reflect a
"spread." Investments in debt securities are generally traded on a net basis
through dealers acting for their own account as principals and not as brokers;
no brokerage commissions are payable on such transactions.
The Fund's primary policy is to execute all purchases and sales of
portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the transaction including brokerage
commissions. This policy governs the selection of brokers and dealers and the
market in which a transaction is executed. Consistent with the foregoing
primary policy, the Rules of Fair Practice of the NASD and other policies that
the Directors may determine, the Investment Adviser may consider sales of
shares of the Fund as a factor in the selection of broker-dealers to execute
the Fund's portfolio transactions.
To the extent consistent with the foregoing, the Fund will be governed in
the selection of brokers and dealers, and the negotiation of brokerage
commission rates and dealer spreads, by the reliability and quality of the
services, including primarily the availability and value of research
information and to a lesser extent statistical assistance furnished to the
Investment Adviser of the Fund, and their value and expected contribution to
the performance of the Fund. It is not possible to place a dollar value on
information and services to be received from brokers and dealers, since it is
only supplementary to the research efforts of the Investment Adviser. The
receipt of research information is not expected to reduce significantly the
expenses of the Investment Adviser. The research information and statistical
assistance furnished by brokers and dealers may benefit the Life Company or
other advisory clients of the Investment Adviser, and conversely, brokerage
17
<PAGE> 39
commissions and spreads paid by other advisory clients of the Investment
Adviser may result in research information and statistical assistance
beneficial to the Fund. The Fund will make no commitments to allocate
portfolio transactions upon any prescribed basis. While the Fund's officers
will be primarily responsible for the allocation of the Fund's brokerage
business, their policies and practices in this regard must be consistent with
the foregoing and will at all times be subject to review by the Directors.
For the fiscal years ended December 31, 1994, 1993 and 1992, no negotiated
brokerage commissions were paid on portfolio transactions.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, the
Fund may pay to a broker which provides brokerage and research services to the
Fund an amount of disclosed commission in excess of the commission which
another broker would have charged for effecting that transaction. This
practice is subject to a good faith determination by the Directors that the
price is reasonable in light of the services provided and to policies that the
Directors may adopt from time to time. During the fiscal year ended
December 31, 1994, the Fund did not pay commissions as compensation to any
brokers for research services such as industry, economic and company reviews
and evaluations of securities.
The Investment Adviser's indirect parent, the Life Company, is the
indirect sole shareholder of John Hancock Freedom Securities Corporation and
its subsidiaries, three of which, Tucker Anthony Incorporated ("Tucker
Anthony"), John Hancock Distributors, Inc. ("John Hancock Distributors"), and
Sutro & Company, Inc. ("Sutro"), are broker-dealers ("Affiliated Brokers").
Pursuant to procedures determined by the Directors and consistent with the
above policy of obtaining best net results, the Fund may execute portfolio
transactions with or through Tucker Anthony or Sutro. During the year ended
December 31, 1994, the Fund did not execute any portfolio transactions with
then affiliated brokers.
Any of the Affiliated Brokers may act as broker for the Fund on exchange
transactions, subject, however, to the general policy of the Fund set forth
above and the procedures adopted by the Directors pursuant to the 1940 Act.
Commissions paid to an Affiliated Broker must be at least as favorable as
those which the Directors believe to be contemporaneously charged by other
brokers in connection with comparable transactions involving similar
securities being purchased or sold. A transaction would not be placed with an
Affiliated Broker if the Fund would have to pay a commission rate less
favorable than the Affiliated Broker's contemporaneous charges for comparable
transactions for its other most favored, but unaffiliated, customers, except
for accounts for which the Affiliated Broker acts as a clearing broker for
another brokerage firm, and any customers of the Affiliated Broker not
comparable to the Fund as determined by a majority of the Directors who are
not interested persons (as defined in the 1940 Act) of the Fund, the
Investment Adviser or the Affiliated Brokers. Because the Investment Adviser,
which is affiliated with the Affiliated Brokers, has, as an investment adviser
to the Fund, the obligation to provide investment management services, which
includes elements of research and related investment skills, such research and
related skills will not be used by the Affiliated Brokers as a basis for
negotiating commissions at a rate higher than that determined in accordance
with the above criteria. The Fund will not effect principal transactions with
Affiliated Brokers.
18
<PAGE> 40
TRANSFER AGENT SERVICES
John Hancock Investor Services Corporation, P.O. Box 9116, Boston, MA
02205-9116, a wholly owned indirect subsidiary of the Life Company, is the
transfer and dividend paying agent for the Fund. The Fund pays Investor
Services a monthly transfer agent fee of approximately $3.00 per account.
ADDITIONAL INFORMATION
CAPITALIZATION AND VOTING RIGHTS. The Fund was incorporated under the
laws of the State of Maryland on January 17, 1980. Its total authorized
capital stock is 4,000,000,000 common shares of the par value of one cent
($.01) per share. The Board of Directors has the authority to designate
additional series of Common Stock without seeking the approval of
shareholders.
All shares have equal rights as to voting, dividends and liquidation.
The voting rights of shares of the Fund are noncumulative. Consequently,
holders of more than 50% of the shares voting for the election of directors
can elect all of the directors of the Fund if they choose to do so, and in
such event, the holders of the remaining less than 50% of the shares voting
will not be able to elect any person or persons to the Board of Directors. In
addition, shareholders may request in writing that the Fund call a special
meeting of shareholders for various purposes, including removal of a director
provided that such request represents at least 10% of all the votes entitled
to be cast at the meeting. The Fund will assist shareholders with any
communications, including shareholder proposals, in accordance with provisions
of Section 16 of the Investment Company Act of 1940. All shares of the Fund
issued and outstanding are, and all shares offered by the Prospectus, when
issued, will be fully paid and nonassessable. Shares have no conversion,
preemptive or other subscription rights and are freely transferable on the
books of the Fund.
INDEPENDENT AUDITORS. Ernst & Young LLP, 200 Clarendon Street, Boston,
Massachusetts 02116, has been selected as the independent auditors of the
Fund. The financial statements of the Fund included in the Prospectus and
this Statement of Additional Information have been audited by Ernst & Young
LLP for the periods indicated in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
CUSTODIAN. Investor Bank and Trust ("IBT") 24 Federal Street, Boston,
Massachusetts, serves as custodian of the cash and investment securities of
the Fund. IBT is also responsible for, among other things, receipt and
delivery of the Fund's investment securities in accordance with procedures and
conditions specified in the custody agreement.
REPORTS TO SHAREHOLDERS. Shareholders of the Fund will receive annual
and semiannual reports showing diversification of investments, securities
owned and other
19
<PAGE> 41
information regarding the Fund's activities. The financial statements of the
Fund are audited at least once a year by the Fund's independent auditors.
REGISTRATION STATEMENT. This Statement of Additional Information and the
Prospectus do not contain all of the information set forth in the Fund's
Registration Statement filed with the Securities and Exchange Commission. The
complete Registration Statement may be obtained from the Securities and
Exchange Commission upon payment of the fee prescribed by the rules and
regulations of the Commission.
CALCULATION OF PERFORMANCE
For the purposes of calculating yield, daily income per share consists of
interest and discount earned on the Fund's investments less provision for
amortization of premiums and applicable expenses, divided by the number of
shares outstanding, but does not include realized or unrealized appreciation
or depreciation.
In any case in which the Fund reports its annualized yield, it will also
furnish information as to the average portfolio maturities of the Fund. It
will also report any material effect of realized gains or losses or unrealized
appreciation on dividends which have been excluded from the computation of
yield.
Yield calculations are based on the value of a hypothetical preexisting
account with exactly one share at the beginning of the seven day period.
Yield is computed by determining the net change in the value of the account
during the base period and dividing the net change by the value of the account
at the beginning of the base period to obtain the base period return. Base
period is multiplied by 365/7 and the resulting figure is carried to the
nearest 100th of a percent. Net change in account value during the base
period includes dividends declared on the original share, dividends declared
on any shares purchased with dividends of that share and any account or sales
charges that would affect an account of average size, but excludes any capital
changes.
Effective yield is computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical preexisting account having a
balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing the difference by the value of the account at the beginning of the
base period to obtain the base period return, and then compounding the base
period return by adding 1, raising the sum to a power equal to 365 divided by
7, and subtracting 1 from the result, according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)365/7]-1
The yield of the Fund is not fixed or guaranteed. Yield quotations
should not be considered to be representations of yield of the Fund for any
period in the future. The yield of the Fund is a function of available
interest rates on money market instruments, which can be expected to
fluctuate, as well as of the quality, maturity and types of portfolio
instruments held by the Fund and of changes in operating expenses. The Fund's
yield may be affected if, through net sales of its shares, there is a net
investment of new money in the
20
<PAGE> 42
Fund which the Fund invests at interest rates different from that being earned
on current portfolio instruments. Yield could also vary if the Fund
experiences net redemptions, which may require the disposition of some of the
Fund's current portfolio instruments.
From time to time, in reports and promotional literature, the Fund's
yield and total return will be ranked or compared to indices of mutual funds
and bank deposit vehicles such as Lipper Analytical Services, Inc. "Lipper-
Fixed Income Fund Performance Analysis," a monthly publication which tracks
net assets, total return, and yield on approximately 1,000 fixed income mutual
funds in the United States or "IBC/Donahue's Money Fund Report," a similar
publication. Comparisons may also be made to bank Certificates of Deposit,
which differ from mutual funds like the Fund, in several ways. The interest
rate established by the sponsoring bank is fixed for the term of a CD, there
are penalties for early withdrawal from CD's and the principal on a CD is
insured. Unlike CD's, which are insured as to principal, an investment in the
Fund is not insured or guaranteed.
Performance rankings and ratings, reported periodically in national
financial publications such as MONEY MAGAZINE, FORBES, BUSINESS WEEK, THE WALL
STREET JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRONS, will also
be utilized.
21
<PAGE> 43
John Hancock Cash Reserve, Inc.
STATEMENT OF NET ASSETS
December 31, 1994
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
ISSUER AMOUNT VALUE
- ------ ----------- -----------
<S> <C> <C>
COMMERCIAL
PAPER--83.98%
BANKING
INSTITUTIONS--16.70%
Banc One Corp.
5.700% due 01/03/95........................ $ 1,600,000 $ 1,599,493
Bankers Trust
New York Corp.
4.950% to 5.400% due
01/03/95 to 01/27/95.................... 8,900,000 8,883,415
Canadian Imperial
Holdings Inc.
6.030% due 02/28/95...................... 7,000,000 6,931,995
Toronto-Dominion
Holdings Inc.
4.960% to 5.150% due
01/23/95 to 03/01/95.................... 6,400,000 6,353,555
-----------
23,768,458
BUSINESS CREDIT
INSTITUTIONS--13.78%
Daimler Benz
North America Corp.
5.480% to 5.520% due
01/13/95 to 03/21/95.................... 6,900,000 6,856,747
General Electric Capital Corp.
5.770% to 5.880% due
02/15/95 to 03/23/95.................... 7,900,000 7,814,739
Toyota Motor Credit Corp.
5.800% due 03/21/95...................... 5,000,000 4,936,361
-----------
19,607,847
</TABLE>
<TABLE>
<CAPTION>
FACE
ISSUER AMOUNT VALUE
- ------ ----------- -----------
<S> <C> <C>
CANADIAN GOVERNMENT &
AGENCY OBLIGATIONS--9.40%
Canadian Wheat Board
6.030% due 02/03/95...................... 3,750,000 3,729,272
Ontario Hydro
5.410% due 01/06/95...................... 8,000,000 7,993,989
Province of Alberta
5.570% due 01/09/95 ..................... 1,650,000 1,647,958
-----------
13,371,219
CONSUMER GOODS &
SERVICES--12.39%
Cargill Inc.
5.800% due 02/01/95 ..................... 4,800,000 4,776,027
Procter & Gamble Co.
5.600% to 5.720% due
01/05/95 to 02/06/95.................... 7,900,000 7,870,615
Sara Lee Corp.
5.950% due 01/12/95...................... 5,000,000 4,990,910
-----------
17,637,552
FINANCE & INSURANCE
INSTITUTIONS--17.14%
Associates Corp. of
North America
5.700% to 5.820% due
01/18/95 to 01/30/95.................... 7,900,000 7,874,144
Corporate Asset
Funding Co., Inc.
5.500% to 5.700% due
01/17/95 to 01/23/95.................... 6,700,000 6,681,619
Prudential Funding Corp.
5.760% due 02/15/95 ..................... 7,900,000 7,843,120
U.S.A.A. Capital Corp.
5.730% due 01/12/95 ..................... 2,000,000 1,996,498
-----------
24,395,381
</TABLE>
22
<PAGE> 44
John Hancock Cash Reserve, Inc.
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
FACE
ISSUER AMOUNT VALUE
- ------ --------- ------------
<S> <C> <C>
INDUSTRIAL--3.51%
E.I. duPont deNemours & Co.
5.700% due 01/05/95 . . . . . . . . . . . . 5,000,000 4,996,833
TELEPHONE & TELEGRAPH--11.06%
American Telephone & Telegraph Co.
5.750% to 6.000% due
02/02/95 to 02/07/95 . . . . . . . . . 8,100,000 8,053,918
Bellsouth
Telecommunications Inc.
5.680% due 01/18/95 . . . . . . . . . . . 7,700,000 7,679,347
------------
15,733,265
------------
TOTAL COMMERCIAL PAPER
(Cost $119,510,555) . . . . . . . . . . . . . 119,510,555
REPURCHASE AGREEMENTS--7.66%
Goldman Sachs 5.800% due 01/03/95
(dated 12/30/94). Collateralized by
$7,041,444 value, Federal National
Mortgage Association 6.500% due
04/01/09. (Repurchase proceeds
$6,904,447) . . . . . . . . . . . . . . . . 6,900,000 6,902,224
Merrill Lynch 5.500% due 01/03/95
(dated 12/30/94). Collateralized by
$4,081,820 value, Federal National
Mortgage Association 6.500% due
03/01/09. (Repurchase proceeds
$4,002,444) . . . . . . . . . . . . . . . . 4,000,000 4,001,222
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $10,903,446) . . . . . . . . . . . . . 10,903,446
TIME DEPOSIT--5.73%
National Bank of Detroit, Nassau Branch(1)
5.500% due 01/03/95 . . . . . . . . . . . . 8,149,635 8,152,126
MEDIUM-TERM NOTE--2.48%
Wachovia Bank of North Carolina, N.A.
5.650% due 01/17/95 . . . . . . . . . . . . 3,500,000 3,525,739
------------
TOTAL INVESTMENTS--99.85%
(Cost $142,091,866) . . . . . . . . . . . . . 142,091,866
CASH AND OTHER ASSETS,
LESS LIABILITIES--0.15% . . . . . . . . . . . 209,158
------------
NET ASSETS, at value, equivalent to
$1.00 per share for 142,301,024
shares ($.01 par value) of capital
stock outstanding--100.00% . . . . . . . . $142,301,024
============
</TABLE>
(1) Full branch of a U.S. bank.
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE> 45
John Hancock Cash Reserve, Inc.
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended December 31, 1994
Investment Income
Interest............................................ $7,822,316
Expenses
Management fees..................................... $630,730
Transfer agent fees................................. 192,365
Administrative service fees......................... 80,795
Custodian fees...................................... 63,184
Registration fees................................... 37,987
Directors' fees and expenses........................ 34,390
Audit and legal fees................................ 27,842
Insurance expense................................... 19,437
Shareholder reports................................. 14,522
Miscellaneous....................................... 9,903 1,111,155
-------- ----------
Net Investment Income............................. $6,711,161
==========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1993
------------ -------------
<S> <C> <C>
Operations
Net investment income........................... $ 6,711,161 $ 4,327,530
Distributions to Shareholders From
Net investment income........................... (6,711,161) (4,327,530)
Capital Share Transactions
Increase (decrease) in capital
shares outstanding............................ 11,895,566 (135,943,904)
------------ -------------
Increase (decrease) in net assets............... 11,895,566 (135,943,904)
Net Assets
Beginning of year............................... 130,405,458 266,349,362
------------ -------------
End of year..................................... $142,301,024 $ 130,405,458
============ =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE> 46
NOTES TO FINANCIAL STATEMENTS
John Hancock Cash Reserve, Inc.
NOTE A --
SIGNIFICANT ACCOUNTING POLICIES
John Hancock Cash Reserve, Inc. (the "Fund"), formerly Transamerica
Cash Reserve, Inc., is a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended. On December
16, 1994, the shareholders of each of the mutual funds managed by Transamerica
Fund Management Company (TFMC) voted to approve new Investment Advisory
contracts with John Hancock Advisers, Inc. Each such approval was subject to
the acquisition of TFMC by The Berkeley Financial Group (known beginning
January 1, 1995 as John Hancock Funds), the parent company of John Hancock
Advisers, Inc. The acquisition became effective December 22, 1994. The Fund's
name change was also effective on this date.
The following is a summary of significant accounting policies
consistently followed by the Fund.
(1) The Fund values its investment securities at amortized cost
(original cost plus amortized discount or accrued interest).
(2) The Fund may invest in repurchase agreements which are
collateralized by underlying debt securities. The Fund will make payment for
such securities only upon physical delivery or evidence of book entry transfer
to the account of the custodian bank. The seller is required to maintain the
value of the underlying security at not less than the repurchase proceeds due
the Fund.
(3) Security transactions are accounted for on the trade date. Interest
income is accrued daily. The identified cost of securities at December 31, 1994
is the same for both financial reporting and federal income tax purposes.
(4) Distributions of the Fund are declared daily and reinvested in Fund
shares or paid to shareholders monthly. Income distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Distributions payable to shareholders at December 31,
1994 were $60,137.
(5) No provision for federal income taxes has been made since it is the
Fund's intention to distribute all of its taxable income and profits to its
shareholders and to comply with the requirements applicable to regulated
investment companies and the minimum distribution requirements of the Internal
Revenue Code.
(6) The Fund reports custodian fees net of credits and charges
resulting from cash positions in the custodial accounts greater than or less
than the amounts required to settle fund transactions. For the year ended
December 31, 1994, these amounts were $28,089 and $28,148, respectively.
NOTE B --
MANAGEMENT FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
From January 1, 1994 through December 21, 1994, TFMC acted as the
Investment Adviser to the Fund. On December 22, 1994, John Hancock Advisers,
Inc., a wholly-owned subsidiary of John Hancock Funds, became Investment
Adviser following the approval of the Fund's shareholders. Throughout these
financial statement notes, TFMC and John Hancock Advisers, Inc. are referred to
collectively as the "Investment Adviser", as each acted in this capacity
during the time periods noted above. The Investment Adviser has a sub-advisory
agreement with, and pays a fee to, Transamerica Investment Services, Inc. (the
"Sub-Adviser"). TFMC was, prior to December 22, 1994, and the Sub-Adviser is
presently a subsidiary of Transamerica Corporation.
The Fund's management fee is payable monthly and is calculated based on
the monthly average daily net assets of the Fund at an annual rate of 0.35%. At
December 31, 1994, the management fee payable to the Investment Adviser was
$44,174.
The Investment Adviser also provided administrative services to the
Fund pursuant to an administrative service agreement. During the year ended
December 31, 1994, the Fund paid or accrued $65,979 to the Investment Adviser
for these services, of which $8,090 was payable at December 31, 1994.
The Fund paid no compensation directly to any officer. Certain officers
of the Fund are affiliated with the Investment Adviser.
During the year ended December 31, 1994, the Fund paid legal fees of
$6,000 to Baker & Botts. A partner with Baker & Botts was an officer of the
Fund until December 22, 1994.
At December 31, 1994, John Hancock Advisers, Inc. and the Sub-Adviser
owned a total of 13.70% of the outstanding shares of the Fund.
25
<PAGE> 47
NOTES TO FINANCIAL STATEMENTS
NOTE C -- CAPITAL AND RELATED TRANSACTIONS
A summary of capital stock transactions follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1994 1993
-------------------------------- -------------------------------
Shares Dollars Shares Dollars
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold .......................................... 898,557,224 $ 898,557,224 533,208,016 $ 533,208,016
Shares issued in reinvestment of distributions ....... 5,942,196 5,942,196 3,687,847 3,687,847
Shares redeemed ...................................... (892,603,854) (892,603,854) (672,839,767) (672,839,767)
------------ ------------- ------------ -------------
Net increase (decrease) in capital shares outstanding 11,895,566 $ 11,895,566 (135,943,904) $(135,943,904)
============ ============= ============ =============
</TABLE>
At December 31, 1994, net assets were comprised of $142,301,024 in
capital paid-in, representing 142,301,024 shares of Common Stock outstanding
(4,000,000,000 shares authorized).
26
<PAGE> 48
John Hancock Cash Reserve, Inc.
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
John Hancock Cash Reserve, Inc.
We have audited the accompanying statement of net assets of John Hancock
Cash Reserve, Inc., formerly Transamerica Cash Reserve, Inc., as of
December 31, 1994, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of John Hancock Cash Reserve, Inc. at December 31, 1994, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated periods, in conformity with generally accepted
accounting principles.
Houston, Texas
February 3, 1995
27
<PAGE> 49
APPENDIX A
CORPORATE AND TAX-EXEMPT BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
Aaa, Aa, A AND Baa - Tax-exempt bonds rated Aaa are judged to be of the "best
quality." The rating of Aa is assigned to bonds that are of "high quality by
all standards," but long-term risks appear somewhat larger than Aaa rated
bonds. The Aaa and Aa rated bonds are generally known as "high grade bonds."
The foregoing ratings for tax-exempt bonds are sometimes presented in
parentheses preceded with a "con" indicating that the bonds are rated
conditionally. Bonds for which the security depends upon the completion of
some act or upon the fulfillment of some condition are rated conditionally.
These are bonds secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operation experience, (c) rentals that
begin when facilities are completed, or (d) payments to which some other
limiting condition attaches. Such parenthetical ratings denotes the probable
credit stature upon completion of construction or elimination of the basis of
the condition. Bonds rated A are considered as upper medium grade
obligations. Principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. Bonds rated Baa are considered as medium grade obligations; i.e.,
they are neither highly protected or poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact, have speculative characteristics as well.
STANDARD & POOR'S CORPORATION ("S&P")
AAA, AA, A AND BBB - Bonds rated AAA bear the highest rating assigned to debt
obligations and indicates an extremely strong capacity to pay principal and
interest. Bonds rated AA are considered "high grade," are only slightly less
marked than those of AAA ratings and have the second strongest capacity for
payment of debt service. Bonds rated A have a strong capacity to pay
principal and interest, although they are somewhat susceptible to the adverse
effects or changes in circumstances and economic conditions. The foregoing
ratings are sometimes followed by a "p" indicating that the rating is
provisional. A provisional rating assumes the successful completion of the
project financed by the bonds being rated and indicates that payment of debt
service requirements is largely or entirely dependent upon the successful and
timely completion of the project. Although a provisional rating addresses
credit quality subsequent of completion of the project, it makes no comment on
the likelihood of, or the risk of default upon failure of, such completion.
Bonds rated BBB are regarded as having an adequate capacity to repay principal
and pay interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to repay principal and pay interest for bonds in this
category than for bonds in the A category.
A-1
<PAGE> 50
FITCH INVESTORS SERVICE ("FITCH")
AAA, AA, A, BBB - Bonds rated AAA are considered to be investment grade and of
the highest quality. The obligor has an extraordinary ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA are considered to be investment grade and
of high quality. The obligor's ability to pay interest and repay principal,
while very strong, is somewhat less than for AAA rated securities or more
subject to possible change over the term of the issue. Bonds rated A are
considered to be investment grade and of good quality. The obligor's ability
to pay interest and repay principal is considered to be strong, but may be
more vulnerable to adverse changes in economic conditions and circumstances
than bonds with higher ratings. Bonds rated BBB are considered to be
investment grade and of satisfactory quality. The obligor's ability to pay
interest and repay principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to weaken this
ability than bonds with higher ratings.
TAX-EXEMPT NOTE RATINGS
MOODY'S - MIG-1 AND MIG-2. Notes rated MIG-1 are judged to be of the best
quality, enjoying strong protection from established cash flow of funds for
their services or from established and broad-based access to the market for
refinancing or both. Notes rated MIG-2 are judged to be of high quality with
ample margins of protection, through not as large as MIG-1.
S&P - SP-1 AND SP-2. SP-1 denotes a very strong or strong capacity to pay
principal and interest. Issues determined to possess overwhelming safety
characteristics are given a plus (+) designation (SP-1+). SP-2 denotes a
satisfactory capacity to pay principal interest.
FITCH - FIN-1 AND FIN-2. Notes assigned FIN-1 are regarded as having the
strongest degree of assurance for timely payment. A plus symbol may be used
to indicate relative standing. Notes assigned FIN-2 reflect a degree of
assurance for timely payment only slightly less in degree than the highest
category.
CORPORATE AND TAX-EXEMPT
COMMERCIAL PAPER RATINGS
MOODY'S--Commercial Paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Prime-1, indicates highest quality repayment capacity
of rated issue and Prime-2 indicates higher quality.
S&P--Commercial Paper ratings are a current assessment of the likelihood of
timely payment of debts having an original maturity of no more than 365 days.
Issues rated A have the greatest capacity for a timely payment and the
designation 1, 2 and 3 indicates the relative degree of safety. Issues rated
"A-1+" are those with an "overwhelming degree of credit protection."
A-2
<PAGE> 51
FITCH--Commercial Paper ratings reflect current appraisal of the degree of
assurance of timely payment. F-1 issues are regarded as having the strongest
degree of assurance for timely payment. (+) is used to designate the relative
position of an issuer within the rating category. F-2 issues reflect an
assurance of timely payment only slightly less in degree than the strongest
issues. The symbol (LOC) may follow either category and indicates that a
letter of credit issued by a commercial bank is attached to the commercial
paper note.
OTHER CONSIDERATIONS--The ratings of S&P, Moody's, and Fitch represent their
respective opinions of the quality of the municipal securities they undertake
to rate. It should be emphasized, however, that ratings are general and are
not absolute standards of quality. Consequently, municipal securities with
the same maturity, coupon and rating may have different yields and municipal
securities of the same maturity and coupon with different ratings may have the
same yield.
A-3
<PAGE> 52
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in the Prospectus:
Financial Highlights
Included in Part B are as follows:
Schedule of Investments as of December 31, 1994.
Statement of Assets and Liabilities as of December 31,
1994.
Statements of Operations for the year ended December
31, 1994.
Statements of Changes in Net Assets for each of the
two years in the period ended December 31, 1994.
Notes to Financial Statements
Financial Highlights for the year ended December 31,
1994.
Included in Part C:
None
(b) Exhibits:
(1) Articles of Incorporation.*
(2) Amended Bylaws of Registrant
(3) Not Applicable
(4) Specimen Stock Certificate.
To be filed by Post-Effective Amendment.
(5)(a) Investment Advisory Agreement between John
Hancock Advisers, Inc. and the Registrant.
(b) Administrative Services Agreement between
John Hancock Advisers, Inc. and the Registrant.
(6)(a) Distribution Agreement between John Hancock
Funds, Inc. and the Registrant.
(b) Soliciting Dealer Agreement between John
Hancock Funds, Inc and the John Hancock funds.
(c) Financial Institution Sales and Service
Agreement between John Hancock Funds, Inc. and
the John Hancock funds.
(7) Not Applicable
__________________
* Previously filed with Pre-Effective Amendment #1 and incorporated
herein by reference.
C-1
<PAGE> 53
(8) Master Custodian Agreement between the John Hancock funds
and State Street Bank.
(9) Transfer Agency Agreement*
(10) Opinion and consent of counsel was filed with the
Securities and Exchange Commission on or about February
23, 1995, pursuant to Rule 24f-2 and incorporated herein
by reference.
(11) Consent of Independent Auditors.
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Schedule for computation of each performance quotation
provided in the Registration Statement in response to
Item 22.*
_______________
* Previously filed with Pre-effective Amendment #1 and incorporated
herein by reference.
Item 25. Persons Controlled by or Under Common Control with Registrant
No person is presently controlled by or under common control with
the Registrant.
<TABLE>
<CAPTION>
Item 26. Number of Holders of Securities
------------------------------- Number of Record Holders
Shares of Common Stock As of April 1, 1995
---------------------- ------------------------
<S> <C>
John Hancock Cash Reserve, Inc. 5,023
</TABLE>
Item 27. Indemnification
(a) The Registrant's Bylaws at Section 7.09 provide for
indemnification of Registrant's officers, directors, agents
and employees as permitted by Maryland and Federal law.
The Registrant, its officers and directors and the
Investment Adviser are insured under an investment trust
errors and omissions liability insurance policy which,
generally, covers claims based on negligent acts by the
insureds, negligent failure to discover dishonest acts and
the costs and expenses of defending those claims. The
Registrant's Bylaws are incorporated by reference under
Item 24(b)(2).
(b) Under the Distribution Agreement. Under Section 12 of the
Distribution Agreement, John Hancock Funds, Inc. ("John
Hancock Funds") has agreed to indemnify the Registrant and
its Trustees, officers and controlling persons against
claims arising out of certain acts and statements of John
Hancock Funds.
C-2
<PAGE> 54
Section 9(a) of the By-Laws of the Insurance Company provides, in effect,
that the Insurance Company will, subject to limitations of law, indemnify
each present and former director, officer and employee of the Insurance
Company who serves as a Trustee or officer of the Registrant at the
direction or request of the Insurance Company against laitigation expenses
and liabilities incurred while acting as such, except that such
indemnification does not cover any expense or liability incurred or imposed
in connection with any matter as to which such person shall be finally
adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interests of the Insurance Company. In addition,
no such person will be indemnified by the Insurance Company in respect of
any liability or expense incurred in connection with any matter settled
without final adjudication unless such settlement shall have been approved
as in the best interests of the Incurance Company either by vote of the
Board of Directors at a metting composed of directors who have no interest
in the outcome of such vote, or by vote of the policyholders. The Insurance
Company may pay expenses incurred in defending an action or claim in advance
of its final disposition, but only upon receipt of an undertaking by the
person indemnified torepay such payment if he should be determined to be
entitled to indemnification.
Article IX of the respective By-Laws of John Hancock Funds and the Adviser
provide as follows:
"Section 9.01. Indemnity: Any person made or threatened to be made a party
to any action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was at any time since
the inception of the Corporation a serving at the request of the Corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall be indemnified
by the Corporation against expenses (including attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in good faith
and the liability was not incurred by reason of gross negligence or reckless
disregard of the duties involved in the conduct of his office, and expenses
in connection therewith may be advanced by the Corporation, all of the full
extent authorized by the law."
"Section 9.02. Not Exclusive; Survival of Rights: The indemnification
provided by Section 9.01 shall not be deemed exclusive of any ohter right to
which those indemnified may be entitled, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of such as
person."
Insofar as indemnification for liabilities under the Securities Act of 1933
(the "Act") may be permitted to Trustees, officers and controlling persons
of Registrant pursuant to the Registrant's Amended and Restated Articles of
Incorporation, Article 10.1 of the Registrant's By-Laws, The Underwriting
Agreement, the By-Laws of John Hancock Funds, the Adviser, or the Insurance
Company or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person in
connection with the securities being registered, Registrant will unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
C-3
<PAGE> 55
Item 28. Business and Other Connections of Investment Adviser
For information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and
Directors of the Investment Adviser, reference is made to Forms ADV
(File No. 801-8124 filed under the Investment Advisers Act of 1940,
herein incorporated by reference.
Item 29. Principal Underwriter
(a) John Hancock Funds, Inc. acts as principal underwriter
for the Registrant and also serves as principal
underwriter or distributor of shares for John Hancock
Cash Reserve, Inc., John Hancock Bond Fund, John Hancock
Capital Growth Fund, John Hancock Current Interest, John
Hancock Series, Inc., John Hancock Tax-Free Bond Fund,
John Hancock California Tax-Free Income Fund, John
Hancock Capital Series, John Hancock Limited-Term
Government Fund, John Hancock Tax-Exempt Income Fund,
John Hancock Sovereign Investors Fund,Inc., John Hancock
Cash Management Fund, John Hancock Special Equities Fund,
John Hancock Soverign Bond Fund, John Hancock Tax-Exempt
Series Fund, John Hancock Strategic Series, John Hancock
Technology Series, Inc. and World Fund, Freedom
Investment Trust, Freedom Investment Trust II and Freedom
Investment Trust III and John Hancock Institutional
Series Trust.
(b) The following table lists, for each director and officer
of John Hancock Funds, Inc., the information undicated.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------ -------------------- -----------------
<S> <C> <C>
Edward J. Boudreau, Jr. Chairman Chairman
101 Huntington Avenue
Boston, Massachusetts
Robert H. Watts Director and Sr. Vice President None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
C. Troy Shaver, Jr. President, Chief Executive None
101 Huntington Avenue Officer and Director
Boston, Massachusetts
Robert G. Freedman Director Chief Investment
101 Huntington Avenue Officer
Boston, Massachusetts
</TABLE>
C-4
<PAGE> 56
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------ -------------------- ---------------------
<S> <C> <C>
James W. McLaughlin Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
William S. Nichols Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
Stephen M. Blair Senior Vice President - Sales None
101 Huntington Avenue
Boston, Massachusetts
Thomas H. Drohan Senior Vice President Senior Vice President
101 Huntington Avenue and Secretary
Boston, Massachusetts
David A. King Senior Vice President None
101 Huntington Avenue Operations
Boston, Massachusetts
James B. Little Senior Vice President Senior vice president
101 Huntington Avenue and Chief Financial
Boston, Massachusetts Officer
John A. Morin Vice President Vice President
101 Huntington Avenue
Boston, Massachusetts
Susan S. Newton Vice President Vice President,
101 Huntington Avenue and Secretary Compliance Officer and
Boston, Massachusetts Assistant Secretary
Christopher M. Meyer Treasurer None
101 Huntington Avenue
Boston, Massachusetts
Stephen L. Brown Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Foster L. Aborn Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
</TABLE>
C-5
<PAGE> 57
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------ -------------------- ---------------------
<S> <C> <C>
Thomas E. Moloney Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Jeanne M. Livermore Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Richard S. Scipione Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John Goldsmith Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Richard O. Hansen Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John M. DeCiccio Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Hugh A. Dunlap, Jr. Director None
101 Huntington Avenue
Boston, Massachusetts
William C. Fletcher Director None
53 State Street
Boston, Massachusetts
James V. Bowhers Executive Vice President None
101 Huntington Avenue
Boston, Massachusetts
</TABLE>
C-6
<PAGE> 58
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant maintains the records required to be maintained by it under Rules
31a-1 (a), 31a-a(b), and 31a-2(a) under the Investment Company Act of 1940 as
its principal executive offices at 101 Huntington Avenue, Boston, Massachusetts
02199-7603. Certain records, including records relating to Registrant's
shareholders and the physical possession of its securities, may be maintained
pursuant to Rule 31a-3 at the main office of Registrant's Transfer Agent and
Custodian.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Registrant hereby undertakes to assist shareholders with any
communication by them in accordance with the provision of
Section 16 of the Investment Company Act of 1940.
(b) Registrant hereby undertakes to furnish each person to whom
a prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders upon request and
without charge.
C-7
<PAGE> 59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 to be signed
on its behalf by the undersigned, thereto duly authorized, in the City of
Boston, and the Commonwealth of Massachusetts on the 21ST day of April 1995.
JOHN HANCOCK CASH RESERVE, INC.
By: *
_______________________________
Edward J. Boudreau, Jr.
Chairman
Pursuant to the requirements of the Securities Act of 1933, the
Registration has been signed below by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman
______________________ (Principal Executive Officer)
Edward J. Boudreau, Jr. Senior Vice President and Chief April 21, 1995
Financial Officer (Principal
Financial and Accounting Officer)
______________________
James B. Little
*
______________________ Director
James F. Carlin
*
______________________ Director
William H. Cunningham
*
______________________ Director
Charles L. Ladner
*
______________________ Director
Leo E. Linbeck, Jr.
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
*
______________________ Director
Patricia P. McCarter
*
______________________ Director
Steven R. Pruchansky
*
______________________ Director
Norman H. Smith
*
______________________ Director
John P. Toolan
*By: April 21, 1995
______________________
Thomas H. Drohan
(Attorney-in-Fact)
</TABLE>
<PAGE> 61
POWER OF ATTORNEY
The undersigned Trustee of John Hancock Current Interest, John Hancock
Capital Growth Fund, John Hancock Investment Trust, John Hancock California
Tax-Free Income Fund, John Hancock Tax-Free Bond Fund and John Hancock Bond
Fund, (each a "Trust"), and Director of John Hancock Series, Inc. and John
Hancock Cash Reserve, Inc. (each a "Corporation"), does hereby severally
constitute and appoint Edward J. Boudreau, Jr., Thomas H. Drohan, Robert G.
Freedman and James B. Little, and each acting singly, to be my true, sufficient
and lawful attorneys, with full power to each of them, and each acting singly,
to sign for me, in my name and in the capacity indicated below, any
Registration Statement on Form N-1A and any Registration Statement on Form N-14
to be filed by the Trust or the Corporation under the Investment Company Act of
1940, as amended (the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of its shares of beneficial interest
and any and all other documents and papers relating thereto, and generally to
do all such things in my name and on my behalf in the capacity indicated to
enable the Trust or the Corporation to comply with the 1940 Act and the 1933
Act, and all requirements of the Securities and Exchange Commission thereunder,
hereby ratifying and confirming my signature as it may be signed by said
attorneys or each of them to any such Registration Statements and any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument
the 13th day of December, 1994.
/s/William H. Cunningham
___________________________________
William H. Cunningham
<PAGE> 62
POWER OF ATTORNEY
The undersigned Trustee of John Hancock Current Interest, John Hancock
Capital Growth Fund, John Hancock Investment Trust, John Hancock California
Tax-Free Income Fund, John Hancock Tax-Free Bond Fund and John Hancock Bond
Fund, (each a "Trust"), and Director of John Hancock Series, Inc. and John
Hancock Cash Reserve, Inc. (each a "Corporation"), does hereby severally
constitute and appoint Edward J. Boudreau, Jr., Thomas H. Drohan, Robert G.
Freedman and James B. Little, and each acting singly, to be my true, sufficient
and lawful attorneys, with full power to each of them, and each acting singly,
to sign for me, in my name and in the capacity indicated below, any
Registration Statement on Form N-1A and any Registration Statement on Form N-14
to be filed by the Trust or the Corporation under the Investment Company Act of
1940, as amended (the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of its shares of beneficial interest
and any and all other documents and papers relating thereto, and generally to
do all such things in my name and on my behalf in the capacity indicated to
enable the Trust or the Corporation to comply with the 1940 Act and the 1933
Act, and all requirements of the Securities and Exchange Commission thereunder,
hereby ratifying and confirming my signature as it may be signed by said
attorneys or each of them to any such Registration Statements and any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument
the 22nd day of December, 1994.
/s/Norman H. Smith
_____________________________
Norman H. Smith
<PAGE> 63
POWER OF ATTORNEY
The undersigned Trustee of John Hancock Current Interest, John Hancock
Capital Growth Fund, John Hancock Investment Trust, John Hancock California
Tax-Free Income Fund, John Hancock Tax-Free Bond Fund and John Hancock Bond
Fund, (each a "Trust"), and Director of John Hancock Series, Inc. and John
Hancock Cash Reserve, Inc. (each a "Corporation"), does hereby severally
constitute and appoint Edward J. Boudreau, Jr., Thomas H. Drohan, Robert G.
Freedman and James B. Little, and each acting singly, to be my true, sufficient
and lawful attorneys, with full power to each of them, and each acting singly,
to sign for me, in my name and in the capacity indicated below, any
Registration Statement on Form N-1A and any Registration Statement on Form N-14
to be filed by the Trust or the Corporation under the Investment Company Act of
1940, as amended (the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of its shares of beneficial interest
and any and all other documents and papers relating thereto, and generally to
do all such things in my name and on my behalf in the capacity indicated to
enable the Trust or the Corporation to comply with the 1940 Act and the 1933
Act, and all requirements of the Securities and Exchange Commission thereunder,
hereby ratifying and confirming my signature as it may be signed by said
attorneys or each of them to any such Registration Statements and any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument
the 22nd day of December, 1994.
/s/James F. Carlin
________________________________
James F. Carlin
<PAGE> 64
POWER OF ATTORNEY
The undersigned Trustee of John Hancock Current Interest, John Hancock
Capital Growth Fund, John Hancock Investment Trust, John Hancock California
Tax-Free Income Fund, John Hancock Tax-Free Bond Fund and John Hancock Bond
Fund, (each a "Trust"), and Director of John Hancock Series, Inc. and John
Hancock Cash Reserve, Inc. (each a "Corporation"), does hereby severally
constitute and appoint Edward J. Boudreau, Jr., Thomas H. Drohan, Robert G.
Freedman and James B. Little, and each acting singly, to be my true, sufficient
and lawful attorneys, with full power to each of them, and each acting singly,
to sign for me, in my name and in the capacity indicated below, any
Registration Statement on Form N-1A and any Registration Statement on Form N-14
to be filed by the Trust or the Corporation under the Investment Company Act of
1940, as amended (the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of its shares of beneficial interest
and any and all other documents and papers relating thereto, and generally to
do all such things in my name and on my behalf in the capacity indicated to
enable the Trust or the Corporation to comply with the 1940 Act and the 1933
Act, and all requirements of the Securities and Exchange Commission thereunder,
hereby ratifying and confirming my signature as it may be signed by said
attorneys or each of them to any such Registration Statements and any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument
the 22nd day of December, 1994.
/s/Charles L. Ladner
_________________________________
Charles L. Ladner
<PAGE> 65
POWER OF ATTORNEY
The undersigned Trustee of John Hancock Current Interest, John Hancock
Capital Growth Fund, John Hancock Investment Trust, John Hancock California
Tax-Free Income Fund, John Hancock Tax-Free Bond Fund and John Hancock Bond
Fund, (each a "Trust"), and Director of John Hancock Series, Inc. and John
Hancock Cash Reserve, Inc. (each a "Corporation"), does hereby severally
constitute and appoint Edward J. Boudreau, Jr., Thomas H. Drohan, Robert G.
Freedman and James B. Little, and each acting singly, to be my true, sufficient
and lawful attorneys, with full power to each of them, and each acting singly,
to sign for me, in my name and in the capacity indicated below, any
Registration Statement on Form N-1A and any Registration Statement on Form N-14
to be filed by the Trust or the Corporation under the Investment Company Act of
1940, as amended (the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of its shares of beneficial interest
and any and all other documents and papers relating thereto, and generally to
do all such things in my name and on my behalf in the capacity indicated to
enable the Trust or the Corporation to comply with the 1940 Act and the 1933
Act, and all requirements of the Securities and Exchange Commission thereunder,
hereby ratifying and confirming my signature as it may be signed by said
attorneys or each of them to any such Registration Statements and any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument
the 22nd day of December, 1994.
/s/John P. Toolan
________________________________
John P. Toolan
<PAGE> 66
POWER OF ATTORNEY
The undersigned Trustee of John Hancock Current Interest, John Hancock
Capital Growth Fund, John Hancock Investment Trust, John Hancock California
Tax-Free Income Fund, John Hancock Tax-Free Bond Fund and John Hancock Bond
Fund, (each a "Trust"), and Director of John Hancock Series, Inc. and John
Hancock Cash Reserve, Inc. (each a "Corporation"), does hereby severally
constitute and appoint Edward J. Boudreau, Jr., Thomas H. Drohan, Robert G.
Freedman and James B. Little, and each acting singly, to be my true, sufficient
and lawful attorneys, with full power to each of them, and each acting singly,
to sign for me, in my name and in the capacity indicated below, any
Registration Statement on Form N-1A and any Registration Statement on Form N-14
to be filed by the Trust or the Corporation under the Investment Company Act of
1940, as amended (the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of its shares of beneficial interest
and any and all other documents and papers relating thereto, and generally to
do all such things in my name and on my behalf in the capacity indicated to
enable the Trust or the Corporation to comply with the 1940 Act and the 1933
Act, and all requirements of the Securities and Exchange Commission thereunder,
hereby ratifying and confirming my signature as it may be signed by said
attorneys or each of them to any such Registration Statements and any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument
the 22nd day of December, 1994.
/s/Steven R. Pruchansky
________________________________
Steven R. Pruchansky
<PAGE> 67
INDEX
Exhibits:
(1) Articles of Incorporation.*
(2) Amended Bylaws of Registrant
(3) Not Applicable
(4) Specimen Stock Certificate.
To be filed by Post-Effective Amendment.
(5) (a) Investment Advisory Agreement between John Hancock Advisers,
Inc. and the Registrant.
(b) Administrative Services Agreement between John Hancock
Advisers, Inc. and the Registrant.
(c) Sub-Advisory Agreement
(6) (a) Distribution Agreement between John Hancock Funds, Inc. and the
Registrant.
(b) Soliciting Dealer Agreement between John Hancock Funds, Inc and
the John Hancock funds.
(c) Financial Institution Sales and Service Agreement between John
Hancock Funds, Inc. and the John Hancock funds.
(7) Not Applicable
(8) Master Custodian Agreement between the John Hancock funds and
State Street Bank.
(9) Transfer Agency Agreement*
(10) Opinion and consent of counsel was filed with the Securities
and Exchange Commission on or about February 23, 1995, pursuant
to Rule 24f-2 and incorporated herein by reference.
(11) Consent of Independent Auditors.
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Schedule for computation of each performance quotation provided
in the Registration Statement in response to Item 22.*
- -----------------
* Previously filed with Pre-Effectime Amendment #1 and incorporated
herein by reference.
<PAGE> 1
Exhibit 1
TRANSAMERICA CASH RESERVE, INC.
ARTICLES OF AMENDMENT
Transamerica Cash Reserve, Inc., a Maryland Corporation, having its
principal office in Baltimore City, Maryland (which is hereinafter called the
"Corporation") hereby certifies to the State Department of Assessment and
Taxation of Maryland that:
FIRST: THE CHARTER OF THE CORPORATION is hereby amended by deleting
Article Second in its entirety and inserting in lieu thereof the following for
the purpose of changing the name of the Corporation:
"SECOND: The name of the Corporation is John Hancock Cash Reserve,
Inc."
SECOND: These ARTICLES OF AMENDMENT do not increase the authorized
stock of the Corporation.
THIRD: The foregoing amendments to the Charter of the Corporation have
been declared advisable by a majority of the entire Board of Directors and
approved by the affirmative vote of the holders of a majority of the outstanding
Shares of the Corporation.
IN WITNESS WHEREOF, Transamerica Cash Reserve, Inc. has caused these
present to be signed in its name and on its behalf by its Vice President and
witnessed by its Assistant Secretary this 16th day of December, 1994.
TRANSAMERICA CASH RESERVE, INC.
(Seal) By:
-----------------------------
Thomas J. Press
Witness: Vice President
- --------------------
Assistant Secretary
<PAGE> 2
THE UNDERSIGNED, Vice President of Transamerica Cash Reserve, Inc., who
executed on behalf of the Corporation the foregoing ARTICLES OF AMENDMENT of
which this Certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing ARTICLES OF AMENDMENT to be the
corporate act of said Corporation and hereby certifies that to the best of his
knowledge, information, and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalty of perjury.
------------------------------
Thomas J. Press
<PAGE> 1
Exhibit 2
AMENDED AND RESTATED
BY-LAWS
DATED DECEMBER 22, 1994
OF
JOHN HANCOCK CASH RESERVES, INC.
(A MARYLAND CORPORATION)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE OFFICES .................................................................. 1
Section 01 Principal Office........................................................... 1
Section 02 Principal Executive Office................................................. 1
Section 03 Other Offices.............................................................. 1
ARTICLE MEETINGS OF STOCKHOLDERS................................................... 1
Section 04 Place of Holding Meetings.................................................. 1
Section 05 Special Meetings........................................................... 1
Section 06 Notice of Meetings; Waiver of Notice....................................... 2
Section 07 Quorum..................................................................... 2
Section 08 Conduct of Stockholders' Meetings.......................................... 2
Section 09 Order of Business.......................................................... 3
Section 010 Voting..................................................................... 3
Section 011 Fixing of Record Date...................................................... 4
Section 012 Inspectors................................................................. 4
Section 013 Consent of Stockholders in Lieu of Meeting................................. 5
Section 014 List of Stockholders Entitled to Vote...................................... 5
ARTICLE BOARD OF DIRECTORS......................................................... 5
Section 015 General Powers............................................................. 5
Section 016 Number of Directors........................................................ 6
Section 017 Election and Term of Directors............................................. 6
Section 018 Resignation................................................................ 6
Section 019 Removal of Directors....................................................... 6
Section 020 Vacancies.................................................................. 6
Section 021 Place of Meetings.......................................................... 7
Section 022 Regular Meetings........................................................... 7
Section 023 Special Meetings........................................................... 7
Section 024 Quorum and Voting.......................................................... 8
Section 025 Organization............................................................... 8
Section 026 Compensation............................................................... 8
Section 027 Executive Committee........................................................ 9
Section 028 Other Committees........................................................... 9
Section 029 Meetings by Conference Telephone........................................... 9
Section 030 Written Consent of Directors in Lieu of
a Meeting.................................................................. 10
ARTICLE OFFICERS, AGENTS AND EMPLOYEES............................................. 10
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 031 Number, Election, Qualifications........................................... 10
Section 032 Resignations............................................................... 10
Section 033 Removal of Officer, Agent or Employee...................................... 11
Section 034 Vacancies.................................................................. 11
Section 035 Compensation............................................................... 11
Section 036 Bonds or Other Security.................................................... 11
Section 037 Chairman of the Board...................................................... 11
Section 8 Vice Chairman ............................................................. 11
Section 9 President.................................................................. 12
Section 10 Vice President............................................................. 12
Section 11 Treasurer and Assistant Treasurers......................................... 12
Section 12 Secretary and Assistant Secretaries........................................ 13
Section 13 Delegation of Duties....................................................... 14
ARTICLE INDEMNIFICATION AND INSURANCE.............................................. 14
Section 038 Indemnification............................................................ 14
Section 039 Exemption from Liability................................................... 15
Section 040 Insurance.................................................................. 15
ARTICLE STOCK...................................................................... 16
Section 041 Certificate for Stock...................................................... 16
Section 042 Transfers.................................................................. 16
Section 043 Stock Ledger............................................................... 16
Section 044 Certificate of Beneficial Owners........................................... 17
Section 045 Lost Stock Certificates.................................................... 17
Section 046 Fractional Shares.......................................................... 17
Section 047 Repurchase and Redemption of Shares........................................ 17
ARTICLE FUNDAMENTAL RESTRICTIONS................................................... 18
ARTICLE SEAL....................................................................... 20
ARTICLE FISCAL YEAR................................................................ 20
ARTICLE AMENDMENTS................................................................. 21
Section 048 General.................................................................... 21
</TABLE>
<PAGE> 4
ARTICLE I
Offices
Section 1. Principal Office. The principal office of the Corporation
shall be in the City of Baltimore, State of Maryland.
Section 2. Principal Executive Office. The principal executive office
of the Corporation shall be at 101 Huntington Avenue, Boston Massachusetts.
Section 3. Other Offices. The Corporation may have such other offices
in such places within and without the State of Maryland as the Board of
Directors may from time to time determine.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Holding Meetings. Meetings of stockholders of the
Corporation shall be held at such place within or without the State of Maryland
as shall be fixed by the Board of Directors from time to time and stated in the
notice of such meeting.
Section 2. Special Meetings. The Corporation shall not be required to
hold annual meetings of stockholders. Special meetings of the stockholders,
unless otherwise provided by law or by the Articles of Incorporation, for any
purpose or purposes may be called by the Chairman of the Board of Directors, the
President or a majority of the Board of Directors, and shall be called by the
Secretary upon the written request of the holders of shares entitled to not less
than 25 percent of all the votes entitled to be cast at such meeting. Such
request shall state the purpose or purposes of such meeting and the matters
proposed to be acted on thereat. The Secretary shall inform such stockholders of
the reasonably estimated cost of preparing and mailing such notice of the
meeting, and upon payment to the Corporation of such costs the Secretary shall
give notice stating the purpose or purposes of the meeting to all stockholders
entitled to notice of such meeting. No special meeting need be called to
consider any matter which is substantially the same as a matter voted on at any
special meeting of the stockholders held during the preceding twelve months,
unless requested by stockholders entitled to cast a majority of all the votes
entitled to be cast at such meeting.
Section 3. Notice of Meetings; Waiver of Notice. Written or printed
notice of the place, date and time of the holding of each meeting of the
stockholders and, in the case of a special meeting or if otherwise required by
law, the purpose or purposes of such meeting, shall be given to each stockholder
entitled to vote thereat or to notice of such meeting by leaving the same with
such stockholder or at such stockholder's
<PAGE> 5
residence or usual place of business or by mailing such notice, postage prepaid,
not less than ten nor more than ninety days before the date of the meeting.
Notice by mail shall be deemed to be duly given when deposited in the United
States mail addressed to the stockholder at his address as it appears on the
records of the Corporation, with postage thereon prepaid.
No notice of the time, place or purpose of any meeting of stockholders
need be given to any stockholder who attends such meeting in person or by proxy,
or who, either before or after the meeting, submits a signed waiver of notice
which is filed with the records of the meeting. Any meeting of stockholders may
adjourn from time to time to reconvene at the same or some other place, and
notice of adjournment of a stockholders' meeting to another time and place need
not be given if such time and place are announced at the meeting, unless the
Board of Directors, after the adjournment, shall fix a new record date for the
adjourned meeting, or the adjournment is for more than 120 days after the
original record date.
Section 4. Quorum. The presence in person or by proxy of the holders
of record of a majority of the shares of Common Stock issued and outstanding and
entitled to vote thereat shall constitute a quorum for the transaction of any
business at all meetings of the stockholders except (i) when shareholder
approval is a prerequisite to the listing of any additional or new securities
the presence in person or by proxy of more than 50% of the shares of common
stock issued and outstanding and entitled to vote shall constitute a quorum or
(ii) as otherwise provided by law or in the Articles of Incorporation or in
these By-Laws. In the absence of the required quorum no business may be
transacted, except that the holders of a majority of the shares of stock present
in person or by proxy and entitled to vote may adjourn the meeting from time to
time, without notice other than announcement thereat except as otherwise
required by these By-Laws, until the holders of the requisite amount of shares
of stock shall be so present. At any such adjournment meeting at which the
required quorum may be present, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 5. Conduct of Stockholders' Meetings. At each meeting of the
stockholders, the Chairman of the Board of Directors (if one has been designated
by the Board of Directors), or if the Chairman of the Board of Directors is
absent or unable to act, the President, or if the President is absent or unable
to act, a Vice President, or if none of them are present or able to act a
chairman to be elected at the meeting, shall act as chairman of the meeting. The
Secretary of the Corporation, or if the Secretary is absent or unable to act, an
Assistant Secretary, or if none are present or able to act, any person appointed
by the chairman of the meeting, shall act as secretary of the meeting and keep
the minutes thereof.
Section 6. Order of Business. The order of business at all meetings
of the stockholders shall be as determined by the chairman of the meeting.
Section 7. Voting. Except as otherwise required by law (including the
Maryland General Corporation Law, as currently in effect or as the same may
hereafter be amended (the "Maryland General Corporation Law"), and the 1940
Act), the Articles of Incorporation or these By-Laws, at all meetings, each
stockholder of record entitled to vote thereat shall have one vote for each
share (and proportionate voting rights for each fraction of a share) on each
matter as to which such stockholder is entitled to vote for every share of such
stock, or fraction thereof, as the case may be, validly issued and outstanding
and standing in such stockholder's name on the record of stockholders of the
Corporation as of the record date determined pursuant to Section 9 of this
Article, or, if such record date shall not have been so fixed, then at the later
of (i) the close of
<PAGE> 6
business on the day on which notice of the meeting is mailed or (ii) the
thirtieth day before the meeting.
A majority of the votes cast at a meeting of stockholders, duly called
and at which a quorum is present, shall be sufficient to take or authorize
action upon any matter which may properly come before the meeting, except as
otherwise required by law (including the Maryland General Corporation Law and
the 1940 Act), the Articles of Incorporation or these By-Laws.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a written proxy signed by
such stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy states that it is
irrevocable and where an irrevocable proxy is permitted by law.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless otherwise required by
law (including the Maryland General Corporation Law and the 1940 Act), the
Articles of Incorporation or these By-Laws, or determined by the chairman of the
meeting to be advisable, any such vote need not be by ballot. On a vote by
ballot, each ballot shall be signed by the stockholder voting, or by his proxy,
if there be such proxy, and shall state the number of shares voted.
All proxies shall be received and taken in charge of and all ballots
shall be received and canvassed by the secretary of the meeting, who shall
decide all questions touching the qualification of voters, the validity of the
proxies and the acceptance or rejection of votes, unless inspectors of election
shall have been appointed by the chairman of the meeting, in which event such
inspectors of election shall decide all such questions.
Section 8. Fixing of Record Date. The Board of Directors may set a
record date for the purpose of determining stockholders entitled to vote at or
notice of any meeting of the stockholders or to receive a dividend or be
allotted rights or for the purpose of any other proper determination with
respect to stockholders and only stockholders of record on such date shall be
entitled to vote at or receive notice of such meeting, to receive such dividends
or rights or otherwise, as the case may be. The record date, which may not be
prior to the close of business on the day the record date is fixed, shall be not
more than 90 days before the date of the meeting of stockholders, payment of
dividend, allotment of rights or other action requiring determination of a
record date, nor, in the case of a stockholders' meeting, less than ten days
before the date of such meeting. All persons who were holders of record of
shares as of the record date, and not others, shall be entitled to vote at such
meeting and any adjournment thereof.
Section 9. Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment
<PAGE> 7
thereof. If the inspector shall not be so appointed or if any of them shall fail
to appear or act, the chairman of the meeting may, and on the request of the
holders of at least 10 percent of the stock entitled to vote thereat shall,
appoint inspectors. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath to execute faithfully the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability. The inspectors shall determine the number of shares outstanding and
the voting powers of each, the number of shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the chairman of the meeting or the holders of at least 10 percent of the stock
entitled to vote thereat, the inspectors shall make a report in writing of any
challenge, request or matter determined by them and shall execute a certificate
of any fact found by them. No director or candidate for the office of director
shall act as inspector of an election of directors. Inspectors need not be
stockholders.
Section 10. Consent of Stockholders in Lieu of Meeting. Except as
otherwise required by law (including the Maryland General Corporation Law and
the 1940 Act), the Articles of Incorporation or these By-Laws, any action
required or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if the following are filed with the records of stockholders' meetings: (i)
a unanimous written consent which sets forth the action and is signed by each
stockholder entitled to vote on the matter and (ii) if applicable, a written
waiver of any right to dissent signed by each stockholder entitled to notice of
the meeting but not entitled to vote thereat. Such consent shall be treated for
all purposes as a vote at the meeting.
Section 11. List of Stockholders Entitled to Vote. The Secretary of
the Corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof and may be inspected by any stockholder who is
present.
ARTICLE III
Board of Directors
Section 1. General Powers. The property, affairs and business of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all the powers of the Corporation and do all such
lawful acts as are not conferred upon or reserved to the stockholders of the
Corporation by law (including the Maryland General Corporation Law and the 1940
Act), the Articles of Incorporation or these By-Laws.
Section 2. Number of Directors. The number of directors shall be fixed
from
<PAGE> 8
time to time by resolution of the Board of Directors adopted by a majority of
the directors then in office No reduction in the number of directors shall have
the effect of removing any director from office prior to the expiration of his
term. Directors need not be stockholders of the Corporation or citizens or
residents of the United States.
Section 3. Election and Term of Directors. Directors shall be elected
by written ballot at a meeting of stockholders, held for that purpose unless
otherwise provided by law (including the Maryland General Corporation Law and
the 1940 Act), the Articles of Incorporation or these By-Laws. The term of
office of each director shall be from the time of his election and qualification
until (a) death, resignation, retirement, removal or reelection, or (b) his
successor is elected in the election of directors of his class next succeeding
his election, as provided in the Articles of Incorporation, and until such
successor shall have qualified, or (c) as otherwise provided by law (including
the Maryland General Corporation Law and the 1940 Act) or the Articles of
Incorporation.
Section 4. Resignation. A director of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors,
the Chairman of the Board, the President or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time when it shall
become effective shall not be specified therein, immediately upon its receipt;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 5. Removal of Directors. At any stockholders' meeting,
provided a quorum is present, any director of the Corporation may be removed
(with or without cause) by a vote of a majority of the shares entitled to be
cast for the election of directors. At the same meeting a duly qualified
person may be elected in his stead by a majority of the votes validly cast.
Section 6. Vacancies. To the extent permitted by law (including the
Maryland General Corporation Law and the 1940 Act), the Articles of
Incorporation or these By-Laws, any vacancies in the Board of Directors, whether
arising from death, resignation, removal or any other cause, shall be filled by
a vote of the majority of the Board of Directors then in office even though that
majority is less than a quorum, provided that no vacancy or vacancies shall be
filled by action of the remaining directors if, after the filling of the vacancy
or vacancies, fewer than two-thirds of the directors then holding office shall
have been elected by the stockholders of the Corporation. In the event that at
any time a vacancy exists in any office of a director that may not be filled by
the remaining directors, a special meeting of the stockholders shall be held as
promptly as possible and in any event within 60 days, for the purpose of filling
the vacancy or vacancies. A director elected by the Board of Directors to fill
any vacancy in the Board of Directors shall serve until the next meeting of
stockholders and until his successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office. At any meeting of stockholders, stockholders shall be
entitled to elect directors to fill any vacancies in the Board of Directors that
have arisen since the preceding meeting of stockholders (whether or not any such
vacancy has been filled by election of a new director by the Board of Directors)
and any director so elected by the stockholders shall hold office for the
balance of the
<PAGE> 9
term of the director whose death, resignation, retirement, disqualification or
removal created the vacancy or until death, resignation, retirement or until a
successor is elected and qualified.
Section 7. Place of Meetings. Meetings of the Board of Directors may
be held at such place, within or outside the State of Maryland, as the Board of
Directors may from time to time determine or as shall be specified in the notice
of such meeting.
Section 8. Regular Meetings. The Board of Directors from time to time
may provide by resolution for the holding of regular meetings and fix their time
and place. Notice of regular meetings of the Board of Directors need not be
given, provided that notice of any change in the time or place of such meetings
shall be sent promptly to each director not present at the meeting at which such
change was made, in the manner provided for notice of special meetings.
The annual meeting of the Board of Directors shall be held as soon as
practicable after the annual meeting of stockholders at which directors are
elected. No notice of such meeting shall be necessary if held immediately after
the adjournment, and at the site, of the meeting of stockholders. If not so
held, notice shall be given as provided in Section 9 of this Article III for
special meetings of the Board of Directors.
Section 9. Special Meetings. Special meetings of the Board of
Directors may be called by two or more directors of the Corporation or by the
Chairman of the Board of Directors (if one has been designated by the Board of
Directors) or the President. Oral or written notice of the time and place of
any special meeting shall be given, delivered or telegraphed to each director
not less than one day before the meeting or mailed to each director not less
than three days before the meeting. Such notice need not include a statement of
the business to be transacted at, or the purpose of, such special meeting. A
written waiver of notice, signed, either before or after the meeting, by the
director entitled to such notice and filed with the records of the meeting, or
actual attendance at the meeting, shall be deemed equivalent to the giving of
notice to such director. Except as otherwise specifically required by these
By-Laws, a notice or waiver of notice of any regular or special meeting of the
Board of Directors need not state the purpose of such meeting.
Section 10. Quorum and Voting. One-third, but not less than two, of
the members of the entire Board of Directors shall be present in person at any
meeting of the Board of Directors in order to constitute a quorum for the
transaction of business at such meeting, and, except as otherwise expressly
required by law (including the Maryland General Corporation Law and the 1940
Act), the Articles of Incorporation or these By-Laws, the act of a majority of
the directors present at any meeting at which a quorum is present shall be the
act of the Board of Directors. In the absence of a quorum at any meeting of the
Board of Directors, a majority of the directors present thereat may adjourn such
meeting to another time and place until a quorum shall be present thereat.
Notice of the time and place of any such adjourned meeting shall be given to the
directors who were not present at the time of the adjournment and, unless such
time and place were announced at the meeting at which the adjournment was taken,
to the other directors. At any adjourned meeting at which a quorum is present,
any business may be transacted which might have been transacted at the meeting
as originally called.
Section 11. Organization. The Board of Directors may, by resolution
adopted by a majority of the entire Board of Directors, designate a Chairman of
the Board, who shall preside at each meeting of the Board of Directors. If the
Chairman of the Board of Directors is absent or unable to act, the President (if
he is also a director) or, if he is
<PAGE> 10
not a director or is absent or unable to act, another director chosen by a
majority of the directors present, shall act as chairman of the meeting and
preside thereat. The Secretary (or, if he is absent or unable to act, any person
appointed by the chairman) shall act as secretary of the meeting and keep the
minutes thereof.
Section 12. Compensation. No director shall receive any stated salary
or fees from the Corporation for his services as such if such director is,
otherwise than by reason of being such director, an interested person (as such
term is defined by the 1940 Act) of the Corporation or of its investment
adviser, administrator or principal underwriter. Except as provided in the
preceding sentence, directors shall be entitled to receive such compensation
from the Corporation for their services, and reimbursement for reasonable
expenses incurred by them in connection with such services, as may from time to
time be voted by the Board of Directors.
Section 13. Executive Committee. The Board of Directors may, by
resolution passed by a majority of the whole Board, appoint from the directors
an Executive Committee to consist of two or more of such number of directors as
the Board may from time to time determine. The Chairman of the Committee shall
be elected by the Board of Directors. The Board of Directors by such affirmative
vote shall have power at any time to change the members of such Committee and
may fill vacancies in the Committee by election from the directors. When the
Board of Directors is not in session, to the extent permitted by law, the
Executive Committee shall have and may exercise any or all of the powers of the
Board of Directors in the management of the business and affairs of the
Corporation. The Executive Committee may fix its own rules of procedure, and may
meet when and as provided by such rules or by resolution of the Board of
Directors, but in every case the presence of a majority shall be necessary to
constitute a quorum. During the absence of a member of the Executive Committee,
the remaining members may appoint a member of the Board of Directors to act in
his place.
Section 14. Other Committees. The Board of Directors may appoint from
the directors or otherwise other committees which shall have and may exercise
such powers as may be provided in their resolutions and which the Board of
Directors may lawfully delegate. A majority of all the members of any such
committee may determine its action and fix the time and place of its meetings,
unless the Board of Directors shall otherwise provide. The Board of Directors
shall have power at any time to change the members and powers of any such
committee, to fill vacancies and to discharge any such committee.
Section 15. Meetings by Conference Telephone. The members of the Board
of Directors or any committee thereof may participate in a meeting of the Board
of Directors or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and such participation shall
constitute presence in person at such meeting; provided, however, that such
participation shall not constitute presence in person with respect to matters
which pursuant to the 1940 Act or the rules and regulations thereunder require
the approval of directors by vote cast in person at a meeting.
<PAGE> 11
Section 16. Written Consent of Directors in Lieu of a Meeting. Subject
to the provisions of the 1940 Act and the rules and regulations thereunder, any
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if all
members of the Board of Directors or committee, as the case may be, consent
thereto in writing, and the writings or writing are filed with the minutes of
the proceedings of the Board of Directors or committee.
ARTICLE IV
Officers, Agents and Employees
Section 1. Number, Election, Qualifications. The officers of the
Corporation shall be a Chairman, President, such number of Vice Presidents as
the Board of Directors may deem necessary or proper, a Secretary and a
Treasurer, each of whom shall be elected by the Board of Directors. The Board of
Directors or the Executive Committee (if any) may also from time to time in its
discretion appoint such officers (including one or more Assistant Vice
Presidents, one or more Assistant Treasurers and one or more Assistant
Secretaries), and may itself appoint or delegate to the President the power to
appoint such agents and employees, as may be necessary or desirable for the
business of the Corporation. Such officers and agents shall have such duties and
shall hold their offices for such terms as may be prescribed by the Board of
Directors or the Executive Committee. Any two or more offices may be held by the
same person, except the offices of President and Vice President, but no officer
shall execute, acknowledge or verify any instrument as an officer in more than
one capacity if such instrument is required by law or these By-Laws to be
executed, acknowledged or verified by two or more officers. Those officers who
are elected by the Board of Directors shall be elected by the Board of Directors
annually, each to hold office until his successor shall have been duly elected
and shall have qualified, or until his death, or until he shall have resigned,
or have been removed, as hereinafter provided in these By-Laws. The Board of
Directors may designate a Chairman of the Board of Directors.
Section 2. Resignations. Any officer of the Corporation may resign at
any time by giving written notice of resignation to the Board of Directors, the
Chairman of the Board of Directors, the President or the Secretary. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon its
receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 3. Removal of Officer, Agent or Employee. Any officer, agent
or employee of the Corporation may be removed by the Board of Directors or the
Executive Committee (if any) with or without cause at any time, and the Board of
Directors or the Executive Committee may delegate such power of removal as to
agents and employees not elected by the Board of Directors. Such removal shall
be without prejudice to such person's contract rights, if any, but the
appointment of any person as an officer, agent or employee of the Corporation
shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office, either arising from
death, resignation, removal or any other cause, may be filled for the unexpired
portion of the term of the office which shall be vacant, in the manner
prescribed in this Article IV for the regular election or appointment to such
office.
Section 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors or the Executive Committee
(if any), but this
<PAGE> 12
power may be delegated to the President or any other officer in respect of
officers under his control.
Section 6. Bonds or Other Security. The Board of Directors or the
Executive Committee (if any) may require any officer, employee or agent of the
Corporation to execute a bond (including, without limitation, any bond required
by the 1940 Act or the rules and regulations thereunder) or other security to
the Corporation in such sum and with such surety or sureties as the Board of
Directors may determine, conditioned upon the faithful performance of his duties
to the Corporation, including responsibility for negligence and for the
accounting of any of the Corporation's property, funds or securities that may
come into his hands.
Section 7. Chairman of the Board. The Chairman of the Board and Chief
Executive Officer, if there be such an officer, shall be the senior officer of
the Corporation, preside at all stockholders' meetings and at all meetings of
the Board of Directors and shall be ex officio a member of all committees of the
Board of Directors. He shall have the power to appoint officers of the Company
and such other powers and perform such other duties as may be assigned to him
from time to time by the Board of Directors.
Section 8. Vice Chairman. The Board of Directors may, but need not,
appoint a Vice Chairman of the Corporation. The Vice Chairman may, but need not,
be a member of the Board of Directors. The Vice Chairman shall have such powers
and duties as the Board of Directors shall determine from time to time and in
the absence of any such designation shall have the same powers as a vice
president of the Corporation.
Section 9. President. The Corporation shall have a President. In the
absence of the Chairman of the Board of Directors (or if there be none), he
shall preside at all meetings of the stockholders and of the Board of Directors
(if he is also a director). Subject to the control of the Board of Directors, he
shall have general charge of the business and affairs of the Corporation and
general supervision over its officers, employees and agents. He may employ and
discharge employees and agents of the Corporation, except such as shall be
appointed by the Board of Directors, and he may delegate these powers. Except as
the Board of Directors may otherwise order, he may sign in the name and on
behalf of the Corporation all deeds, bonds, contracts or agreements.
Section 10. Vice President. The Board of Directors or the Executive
Committee (if any) may from time to time elect one or more vice presidents who
shall have such powers and perform such duties as from time to time may be
assigned to them by the Board of Directors or the Executive Committee. At the
request or in the absence or disability of the President, the Vice President
(or, if there are two or more Vice Presidents, the senior of the Vice Presidents
present and able to act) may perform all the duties of the President and, when
so acting, shall have all the powers of and be subject to all the restrictions
upon the President.
<PAGE> 13
Section 11. Treasurer and Assistant Treasurers. The Treasurer shall:
(a) have general charge and custody of, and be generally
responsible for, all the funds and securities of the Corporation, except those
which the Corporation has placed in the custody of a bank, trust company or
member of a national securities exchange (as that term is defined in the
Securities Exchange Act of 1934, as amended) pursuant to a written agreement
designating such bank, trust company or member of a national securities exchange
as a custodian or subcustodian of the property of the Corporation (in which case
the Treasurer shall have general supervision of the performance by the custodian
or subcustodian of its duties pursuant thereto);
(b) render to the Board of Directors, whenever directed
by the Board of Directors, an account of the financial condition of the
Corporation and of all transactions as Treasurer;
(c) cause to be prepared annually a full and correct statement
of the affairs of the Corporation, including a balance sheet and a financial
statement of operations for the preceding fiscal year, which shall be submitted
at the annual meeting of stockholders and filed within twenty days thereafter at
the principal office of the Corporation in the State of Maryland;
(d) cause to be kept full and accurate accounts of
receipts and disbursements in books belonging to the Corporation;
(e) cause all moneys and other valuables to be deposited
to the credit of the Corporation;
(f) provide assistance to any committee of the Board of
Directors and report to such committee as necessary; and
(g) in general, perform all the duties incident to the office
of the chief financial and accounting officer of the corporation and such other
duties as from time to time may be assigned to him by the Board of Directors or
the President.
Any Assistant Treasurer may perform such duties of the Treasurer as the
Treasurer, the Board of Directors or the Executive Committee (if any) may
assign, and, in the absence of the Treasurer, may perform all the duties of the
Treasurer.
Section 12. Secretary and Assistant Secretaries. The Secretary shall:
(a) keep or cause to be kept in one or more books
provided for the purpose, the minutes of all meetings of the Board of
Directors, the committees of the Board of Directors and the stockholders;
(b) see that all notices are duly given in accordance
with the provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock certificates of the
Corporation (unless the seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest the seal to all other
documents to be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates
and other
<PAGE> 14
documents and records required by law to be kept and filed are properly kept and
filed; and
(e) in general, perform all the duties incident to the
office of Secretary and such other duties as from time to time may be assigned
to him by the Board of Directors, the Executive Committee (if any) or the
President.
Any Assistant Secretary may perform such duties of the Secretary as the
Secretary, the Board of Directors or the Executive Committee may assign, and, in
the absence of the Secretary, may perform all the duties of the Secretary.
Section 13. Delegation of Duties. In case of the absence of any officer
of the Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors may confer for the time being the powers or
duties, or any of them, of such officer upon any other officer or upon any
director.
ARTICLE V
Indemnification and Insurance
Section 1. Indemnification. The Corporation shall indemnify to the
fullest extent permitted by law (including the Maryland General Corporation Law
and the 1940 Act), any person made or threatened to be made a party to any
action, suit or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that such person or such person's testator
or intestate is or was a director or officer of the Corporation or serves or
served at the request of the Corporation any other enterprise as a director or
officer. To the fullest extent permitted by law (including the Maryland General
Corporation Law and the 1940 Act), expenses incurred by any such person in
defending any such action, suit or proceeding shall be paid or reimbursed by the
Corporation promptly upon receipt by it of an undertaking of such person to
repay such expenses if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation. The rights provided to any person
by this Section 1 shall be enforceable against the Corporation by such person
who shall be presumed to have relied upon it in serving or continuing to serve
as a director or officer as provided above. No amendment of this Section 1 shall
impair the rights of any person arising at any time with respect to events
occurring prior to such amendment. For purposes of this Section 1, the term
"Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation merger; the term "other enterprise" shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service "at the request of the Corporation" shall include service as a
director or officer of the Corporation which imposes duties on, or involves
services by, such director or officer with respect to an employee benefit plan,
its participants or beneficiaries; any excise taxes assessed on a person with
respect to an employee benefit plan shall be deemed to be indemnifiable
expenses; and action by a person with respect to any employee benefit plan which
such person reasonably believes to be in the interest of the participants and
<PAGE> 15
beneficiaries of such plan shall be deemed to be action not opposed to the best
interests of the Corporation. The provisions of this Section 1 shall be in
addition to the other provisions of this Article.
Present or former employees and agents of the Corporation who are not
or were not officers or directors of the Corporation may be indemnified by the
Corporation, and reasonable expenses incurred by such persons may be paid or
reimbursed by the Corporation, in accordance with the procedures and to the
fullest extent permitted by law (including the Maryland General Corporation Law
and the 1940 Act), and to such further extent, consistent with the foregoing, as
may be provided by action of the Board of Directors or by written agreement.
Nothing in this Section 1 protects or purports to protect any director,
officer, employee or agent of the Corporation against any liability to the
Corporation or its stockholders to which he or she would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office.
Section 2. Exemption From Liability. To the fullest extent permitted
by law (including the Maryland General Corporation Law and the 1940 Act), no
director or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages; provided, however, that
nothing in this Section 2 protects or purports to protect any director or
officer of the Corporation against any liability to which such director or
officer would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. No amendment, modification or repeal of this Section 2 shall
adversely affect any right or protection of a director or officer that exists at
the time of such amendment, modification or repeal.
Section 3. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation or who, while serving in such a capacity is or was also
serving at the request of the Corporation as a director, officer, employee or
agent of any other enterprise, protecting such person, to the fullest extent
permitted by law (including the Maryland General Corporation Law and the 1940
Act), from liability arising from his activities or position as director,
officer, employee, or agent of the Corporation or such other enterprise, whether
or not the Corporation would have the power to indemnify such person against
such liability. The Corporation, however, may not purchase insurance on behalf
of any officer or director of the Corporation that protects or purports to
protect such person from liability to the Corporation or to its stockholders to
which such officer or director would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. The Corporation may purchase insurance to
the extent provided in this Section 3 on behalf of an employee or agent who is
not an officer or director of the Corporation.
ARTICLE V
Stock
Section 1. Certification for Stock. Each stockholder is entitled, upon
written request, to certificates which represent and certify the shares of stock
he holds in the Corporation. Each stock certificate shall include on its face
the name of the corporation that issues it, the name of the stockholder or other
person to whom it is issued, and the
<PAGE> 16
class of stock and number of shares it represents. It shall be in such form, not
inconsistent with law or with the Charter, as shall be approved by the Board of
Directors or any officer or officers designated for such purpose by resolution
of the Board of Directors. Each stock certificate shall be signed by the
Chairman of the Board, the President, or a Vice-President, and countersigned by
the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer.
Each certificate may be sealed with the actual corporate seal or a facsimile of
it or in any other form and the signatures may be either manual or facsimile
signatures. A certificate is valid and may be issued whether or not an officer
who signed it is still an officer when it is issued.
Section 2. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issuance, transfer and registration of certificates of stock; and may
appoint transfer agents and registrars thereof. The duties of transfer agent and
registrar may be combined.
Section 3. Stock Ledger. The Corporation shall maintain a stock ledger
which contains the name and address of each Stockholder and the number of shares
of stock of each class which the stockholder holds. The stock ledger may be in
written form or in any other form which can be converted within a reasonable
time into written form for visual inspection. The original or a duplicate of the
stock ledger shall be kept at the offices of a transfer agent for the particular
class of stock, within or without the State of Maryland, or, if none, at the
principal office or the principal executive offices of the Corporation in the
State of Maryland.
Section 4. Certification of Beneficial Owners. The Board of Directors
may adopt by resolution a procedure by which a stockholder of the Corporation
may certify in writing to the Corporation that any shares of stock registered in
the name of the stockholder are held for the account of a specified person other
than the stockholder. The resolution shall set forth the class of stockholders
who may certify; the purpose for which the certification may be made; the form
of certification and the information to be contained in it; if the certification
is with respect to a record date or closing of the stock transfer books, the
time after the record date or closing of the stock transfer books within which
the certification must be received by the Corporation; and any other provisions
with respect to the procedure which the Board considers necessary or desirable.
On receipt of a certification which complies with the procedure adopted
by the Board of Director in accordance with this Section, the person specified
in the certification is, for the purpose set forth in the certification, the
holder of record of the specified stock in place of the stockholder who makes
the certification.
Section 5. Lost Stock Certificates. The Board of Directors of the
Corporation may determine the conditions for issuing a new stock certificate in
place of one which is alleged to have been lost, stolen, or destroyed, or the
Board of Directors may delegate such power to any officer or officers of the
Corporation. In their discretion, the Board of Directors or such officer or
officers may refuse to issue such new certificate save upon the order of some
court having jurisdiction in the premises.
<PAGE> 17
Section 6. Fractional Shares. The Board of Directors may authorize the
issue from time to time of shares of the capital stock of the Corporation in
fractional denominations, provided that the transactions in which and the terms
upon which shares in fractional denominations may be issued may from time to
time be limited or determined by or under authority of the Board of Directors.
Section 7. Repurchase and Redemption of Shares. All shares of the
capital stock of the Corporation now or hereafter authorized shall be subject to
redemption at the option of the Corporation's stockholders, and may be redeemed
in the sense used in the laws of the State of Maryland governing corporations,
at their net asset value determined in the manner set forth in these Bylaws.
The Corporation will redeem from any stockholder all or any portion of
the shares of capital stock owned by him provided that the stockholder delivers
to the Corporation or its designated agent notice of such redemption, in the
form and accompanied by such transfer documents as the Board of Directors of the
Corporation shall require. The stockholder shall be entitled to payment in cash
of the net asset value next computed after such delivery.
The right to redeem may be suspended and the payment of the redemption
price deferred during any period when the New York Stock Exchange is closed,
other than customary weekend and holiday closings during periods when trading on
the Exchange is restricted as determined by the Securities and Exchange
Commission, or during any emergency as determined by the Commission, which makes
it impracticable for the Corporation to dispose of its securities or value its
assets, or during any other period permitted by order of the Commission for the
protection of investors.
The Corporation may at any time repurchase shares of its capital stock
in the open market, or at private sale, or otherwise, in cash out of funds
legally available therefor at a price not exceeding the net asset value at the
time of purchase as determined in the manner set forth in these Bylaws, as
authorized by the Board of Directors consistent with any applicable rules
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended.
The right of the holder of shares of capital stock redeemed or
repurchased by the Corporation as provided in this Section 5.08 to receive
dividends thereon and all other rights of such holder with respect to such
shares shall forthwith cease and terminate from and after the time as of which
the redemption or repurchase price of such shares has been determined (except
the right of such holder to receive (a) the redemption or repurchase price of
such shares from the Corporation or its designated agent, and (b) any unpaid
dividend or distribution to which such holder had previously become entitled as
the record holder of such shares on the record date for such dividend or
distribution).
ARTICLE VII
Fundamental Restriction
1. Borrow money, except from a bank as a temporary measure for
extraordinary or emergency purposes (including meeting redemptions without
immediately selling securities), but not for leveraging or investment, in an
amount not to exceed 10% of the value of net assets at the time the borrowing is
made, provided however, that so long as such borrowings exceed 5% of the value
of net assets, the
<PAGE> 18
Corporation will not make any new investments (the limitations contained in this
paragraph do not apply to reverse repurchase which are governed by paragraph 10
below);
2. Mortgage, pledge, or hypothecate assets, except to an extent
not grater than 10% of its total assets to secure borrowings made in accordance
with paragraph 1 above (the limitations contained in this paragraph do not apply
to reverse repurchase agreements, which are governed by paragraph 10 below);
3. Invest more than 5% of its total assets (excluding cash and
cash items) in the securities of any one issuer, except the United States
Government, its agencies and instrumentalities. Investments in one or more
domestic commercial banks are excluded from this 5% limitation with respect to
25% of the Corporation's total assets;
4. Invest more than 25% of the Corporation's total assets in the
securities of issuers (other than domestic banks and the U.S. Government, its
agencies, and instrumentalities) in the same industry. Electric, natural gas
distribution, natural gas pipeline, combined electric and natural gas, and
telephone utilities are considered separate industries for purposes of this
restriction, and finance companies as a group shall not be considered within a
single industry;
5. Make loans to others, except through the purchase of those
various kinds of publicly distributed debt obligations, investments in variable
amount master demand notes, and repurchase agreement transactions in which the
Corporation is permitted to invest;
6. Purchase or sell real estate; however, the Corporation may
purchase marketable securities issued by companies which invest in real estate
or interests therein;
7. Purchase securities on margins or sell short;
8. Purchase or sell commodities or commodity futures contracts, or
oil, gas, or mineral exploration or development programs;
9. Underwrite securities of other issuers;
10. Enter into reverse repurchase agreements, if, as a result, the
Corporation's obligations with respect to all reverse repurchase agreements
would be greater than 20% of net assets;
11. Acquire more than 10% of any class of securities of an issuer.
For this purpose, all outstanding bonds and other evidences of indebtedness
shall be deemed within a single class regardless of maturities, priorities,
coupon rates, series, designations, conversion rights, security, or other
differences;
12. Purchase securities (other than under repurchase agreements of
not more than one week's duration -- considering only the remaining days to
maturity of each
<PAGE> 19
existing repurchase agreement) for which there exists no readily available
market, or for which there are legal or contractual restrictions on resale
(excepting from this restriction securities which are subject to such resale
restrictions but which, in the judgment of the Company's investment adviser, are
readily redeemable on demand), if as a result of any such purchase, more than
10% of the Company's net assets would be invested in such securities; and
13. Purchase warrants, or write, purchase or sell puts, calls,
straddles, spread, or combinations thereof.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting fro a change in values of
portfolio securities or amount of net assets will not be considered a violation
of any of the foregoing restrictions.
ARTICLE VIII
Seal
The seal of the Corporation shall be circular in form and shall bear,
in addition to any other emblem or device approved by the Board of Directors,
the name of the Corporation and the year of its incorporation. Said seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
ARTICLE IX
Fiscal Year
Unless otherwise determined by the Board of Directors, the fiscal year
of the Corporation shall end on the 31st day of December.
ARTICLE X
Amendments
Section 1. General. Except as provided in Section 2 of this Article
XIII, all By-Laws of the Corporation, whether adopted by the Board of Directors
or the stockholders, shall be subject to amendment, alteration or repeal, and
new By-Laws may be adopted, by the affirmative vote of a majority of either:
(a) the holders of record of the outstanding shares of stock
of the Corporation entitled to vote, at any annual or special meeting, the
notice or waiver of notice of which shall have specified or summarized the
proposed amendment, alteration, repeal or new By-Law; or
(b) the directors, at any regular or special meeting for which
the notice or waiver of notice of which shall have specified or summarized the
proposed amendment, alteration, repeal or new By-Law.
<PAGE> 1
EXHIBIT 5(a)
JOHN HANCOCK CASH RESERVE, INC.
Investment Management Contract
Dated: December __, 1994
<PAGE> 2
JOHN HANCOCK CASH RESERVE, INC.
Boston, Massachusetts
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Cash Reserve, Inc. (the "Fund") has been organized as a
corporation under the laws of the State of Maryland to engage in the business
of an investment company. The Fund's shares of common stock may be classified
in the future into series representing the entire undivided interest in
separate portfolios operated as separate investment companies.
The Directors of the Fund (the "Directors") have selected John Hancock
Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and you are willing to provide such advice, management and
services under the terms and conditions hereinafter set forth. Accordingly,
the Fund agrees with you as follows:
1. Delivery of Documents. The Fund has furnished you with copies,
properly certified or otherwise authenticated, of each of the following:
(a) The Articles of Incorporation, dated January 16, 1979, as
revived and amended (the "Articles");
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Directors selecting the Adviser as
investment adviser for the Fund and approving the form of this
Agreement; and
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states. The
Fund will furnish to you from time to time with copies,
properly certified or otherwise authenticated, of all
<PAGE> 3
amendments of or supplements to the foregoing, if any.
2. Investment and Management Services. You will use your best efforts to
provide to the Fund continuing and suitable investment programs with respect to
investments, consistent with the investment policies, objectives and
restrictions of the Fund. In the performance of the Adviser's duties
hereunder, subject always (x) to the provisions contained in the documents
delivered to the Adviser pursuant to Section 1, as each of the same may from
time to time be amended or supplemented, and (y) to the limitations set forth
in the registration statement of the Fund as in effect from time to time under
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended (the "1940 Act"), the Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment policies, objectives and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities;
(b) advise the Fund in connection with policy decisions to be made
by the Directors or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations
of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Directors may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(f) consistent with the provisions of Section 6 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by you, provided
that in connection with the placing of such orders and the
selection of such brokers or dealers you shall seek to obtain
execution and pricing within the policy guidelines determined
by the Directors and set forth in the Prospectus and Statement
of Additional Information of the Fund as in effect from time
to time;
(g) provide office space and office equipment and supplies, the
use of accounting equipment when required, and necessary
executive, clerical and secretarial personnel for the
administration of the affairs of the Fund;
(h) from time to time or at any time requested by the Directors,
make reports to the Fund of your performance of the foregoing
services and furnish advice and recommendations with respect
to other aspects of the business and affairs of the Fund;
<PAGE> 4
(i) maintain and preserve the records required by the Investment
Company Act of 1940, as amended (the "1940 Act"), to be
maintained and preserved by the Fund (you agree that such
records are the property of the Fund and will be surrendered
to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
you may deem necessary or useful in the discharge of your
duties hereunder;
(k) oversee, and use your best efforts to assure the performance
of the activities and services of the custodian, transfer
agent or other similar agents retained by the Fund; and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment
of cash for the account of the Fund.
The Adviser may engage one or more investment advisers which are
either registered as such or specifically exempt from registration under the
Investment Advisers Act of 1940, as amended, to act as subadvisers to provide
with respect to the Fund certain services set forth in Section 2 of this
Agreement, all as shall be set forth in a written contract, which contract
shall be subject to approval by the vote of a majority of the Directors of the
Fund who are not interested persons of the Adviser, the subadviser or the Fund,
cast in person at a meeting called for the purpose of voting on such approval
and by the vote of a majority of the outstanding voting securities of the Fund
and otherwise consistent with the terms of the 1940 Act. Any fee, compensation
or expense to be paid to any subadviser shall be paid by the Adviser, and no
obligation to the subadviser shall be incurred on the Fund's behalf, except as
agreed upon by the Directors of the Fund and otherwise consistent with the
terms of the 1940 Act.
3. Expenses of the Fund. You will pay:
(a) the compensation and expenses of all officers and employees of
the Fund;
(b) the expenses of office rent, telephone and other utilities,
office furniture, equipment, supplies and other office
expenses of the Fund;
(c) any other expenses incurred by you in connection with the
performance of your duties hereunder; and
(d) premiums for such insurance as may be agreed upon by you and
the Directors.
4. Expenses of the Fund Not Paid by You. You will not be required to pay
any expenses which this Agreement does not expressly make payable by you. In
particular,
<PAGE> 5
and without limiting the generality of the foregoing but subject to the
provisions of Section 3, you will not be required to pay:
(a) any and all expenses, taxes and governmental fees incurred by
the Fund prior to the effective date of this Agreement;
(b) without limiting the generality of the foregoing clause (a),
the expenses of organizing the Fund (including without
limitation, legal, accounting and auditing fees and expenses
incurred in connection with the matters referred to in this
clause (b)), of initially registering the shares of the Fund
under the Securities Act of 1933, as amended, and of
qualifying the shares for sale under state securities laws for
the initial offering and sale of shares;
(c) the compensation and expenses of Directors who are not
interested persons (as used in this Agreement, such term shall
have the meaning specified in the 1940 Act) of you, and of
independent advisers, independent contractors, consultants,
managers and other unaffiliated agents employed by the Fund
other than through you;
(d) legal, accounting and auditing fees and expenses of the Fund;
(e) the fees or disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(f) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(g) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(h) brokers' commissions and underwriting fees; and
(i) the expense of periodic calculations of the net asset value of
the shares of the Fund.
5. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by you as herein provided,
the Fund will pay you monthly, a fee at the annual rate of 0.35% of the average
daily net assets of the Fund.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any limitation
imposed by a state where the Fund is registered to sell shares of common stock,
the fee payable to the Adviser will be reduced to the extent of such excess and
the Adviser will make any arrangements necessary to eliminate any remaining
excess expenses.
6. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither your nor any
investment management subsidiary of yours, nor any of your or their directors,
officers or employees
<PAGE> 6
will act as principal or agent or receive any commission. If any occasion
shall arise in which you advise persons concerning the shares of the Fund, you
will act solely on your own behalf and not in any way on behalf of the Fund.
7. No Partnership or Joint Venture. The Fund and you are not partners of
or joint venturers with each other and nothing herein shall be construed so as
to make them such partners or joint venturers or impose any liability as such
on any of them.
8. Name of the Fund. The Fund may use the name "John Hancock" or any
name derived from or similar to the name "John Hancock Advisers, Inc." or "John
Hancock Mutual Life Insurance Company" only for so long as this Agreement
remains in effect. At such time as this Agreement shall no longer be in
effect, the Fund will (to the extent that it lawfully can) cease to use such a
name or any other name indicating that the Fund is advised by or otherwise
connected with you. The Fund acknowledges that it has adopted the name "John
Hancock Cash Reserve, Inc." through permission of John Hancock Mutual Life
Insurance Company, a Massachusetts insurance company, and agrees that John
Hancock Mutual Life Insurance Company reserves to itself and any successor to
its business the right to grant the non-exclusive right to use the name "John
Hancock" or any similar name to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
9. Limitation of Liability of the Adviser. You shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his employment by the Fund, to be
acting in such employment solely for the Fund and not as your employee or
agent.
10. Duration and Termination of this Agreement. This Agreement shall
remain in force until the second anniversary of the date upon which this
Agreement was executed by the parties hereto, and from year to year thereafter,
but only so long as such continuance is specifically approved at least annually
by (a) a majority of the Directors who are not interested persons of you or
(other than as directors) of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Directors or
(ii) a majority of the outstanding voting securities of the Fund. This
Agreement may, on 60 days' written notice, be terminated at any time without
the payment of any penalty by the Fund by vote of a majority of the outstanding
voting securities of the Fund, by the Directors or by you. Termination of this
Agreement with respect to the Fund shall not be deemed to terminate or
otherwise invalidate any provisions of any contract between you and any other
series of the Fund. This Agreement shall automatically terminate in the event
of its assignment. In interpreting
<PAGE> 7
the provisions of this Section 10, the definitions contained in Section 2(a) of
the 1940 Act (particularly the definitions of "assignment," "interested person"
and "voting security"), shall be applied.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment, transfer, assignment,
sale, hypothecation or pledge of this Agreement shall be effective until
approved by (a) the Directors, including a majority of the Directors who are
not interested persons of you or (other than as Directors) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
a majority of the outstanding voting securities of the Fund, as defined in the
1940 Act.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. The name John Hancock Cash Reserve, Inc. is the
designation of the Directors under the Articles of Incorporation, dated January
17, 1980, as amended and revived. The Articles of Incorporation and all
amendments thereto have been filed with the Secretary of State of the State of
Maryland. The obligations of the Fund are not personally binding upon, nor
shall resort be had to the private property of, any of the Directors,
shareholders, officers, employees or agents of the Fund, but only the Fund's
property shall be bound. The Fund shall not be liable for the obligations of
any other future series, if any, of the Fund.
Very truly yours,
JOHN HANCOCK CASH RESERVE, INC.
By:
-------------------------------
Thomas M. Simmons
President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By:
-----------------------
Anne C. Hodsdon
Executive Vice President
<PAGE> 1
EXHIBIT 5(b)
AMENDED AND RESTATED ADMINISTRATIVE SERVICES AGREEMENT
AMENDED AND RESTATED AGREEMENT made as of the 22nd day of December,
1994 by and between John Hancock Cash Reserve, Inc. a Maryland corporation (the
"Corporation"), and Transamerica Fund Management Company, a Delaware
corporation (the "Investment Adviser"), and Transamerica Fund Distributors,
Inc., a Maryland corporation (the "Distributor"):
WHEREAS, the Corporation is engaged in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, each of the Investment Adviser and the Distributor are
registered as an investment adviser under the Investment Advisers Act of 1940,
and engages in the business of acting as Investment Adviser or Distributor and
providing certain other services to certain investment companies, including the
Corporation; and
WHEREAS, each of the Investment Adviser and the Distributor are
registered as broker dealers under the Securities Exchange Act of 1934, as
amended, and serves as the principal underwriter of the shares of each of the
investment companies for which the Investment Adviser and the Distributor serve
as investment advisers; and
WHEREAS, the Corporation desires to retain the Investment Adviser and
the Distributor to render certain additional services to the Corporation
regarding certain bookkeeping, accounting and administrative services (the
"Services") in the manner and on the terms and conditions hereinafter set
forth; and
WHEREAS, each of the Investment Adviser and the Distributor desires to
be retained to perform such services on said terms and conditions;
Now, Therefore, this agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Corporation and each of the Investment Adviser and the
Distributor agree as follows:
1. The Corporation hereby retains each of the Investment Adviser
and the Distributor, as the case may be, to provide to the Corporation:
A) such accounting and bookkeeping services and
functions as are reasonably necessary for the operation of the
Corporation. Such services shall include, but shall not be limited
to, preparation and maintenance of the following books, records and
other documents: (1) journals containing daily itemized records of
all purchases and sales, and receipts and deliveries of securities and
all receipts and disbursements of cash and all other debits and
credits, in the form required by Rule 31a-1(b)(1) under the Act; (2)
general and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, in the form required by
<PAGE> 2
Rules 31a-1(b)(2)(i)-(iii) under the Act; (3) a securities record or
ledger reflecting separately for each portfolio security as of trade
date all "long" and "short" positions carried by the Corporation for
the account of the Corporation, if any, and showing the location of
all securities long and the off-setting position to all securities
short, in the form required by Rule 31a-1(b)(3) under the Act; (4) a
record of all portfolio purchases or sales, in the form required by
Rule 31a-1(b)(6) under the Act; (5) a record of all puts, calls,
spreads, straddles and all other options, if any, in which the
Corporation has any direct or indirect interest or which the
Corporation has granted or guaranteed, in the form required by Rule
31a-1(b)(7) under the Act; (6) a record of the proof of money balances
in all ledger accounts maintained pursuant to this Agreement, in the
form required by Rule 31a-1(b)(8) under the Act; and (7) price make-up
sheets and such records as are necessary to reflect the determination
of the Corporation's net asset value. The foregoing books and records
shall be maintained by the Investment Adviser in accordance with and
for the time periods specified by applicable rules and regulations,
including Rule 31a-2 under the Act. All such books and records shall
be the property of the Corporation and upon request therefor, the
Investment Adviser shall surrender to the Corporation such of the
books and records so requested; and B) certain administrative services
including, but not limited to, administrative services to shareholders
of the Corporation to respond to inquiries related to shareholder
accounts, processing confirmed purchase and redemption transactions,
processing certain shareholder transactions, and maintaining dealer
information related to shareholder accounts and typesetting and other
financial printing services for the Corporation.
2. Each of the Investment Adviser and the Distributor shall, at
its own expense, maintain such staff and employ or retain such personnel and
consult with such other persons as it shall from time to time determine to be
necessary or useful to the performance of its obligations under this Agreement.
Without limiting the generality of the foregoing, such staff and personnel
shall be deemed to include officers of the Investment Adviser, the Distributor
and persons employed or otherwise retained by the Investment Adviser and the
Distributor to provide or assist in providing of the services to the
Corporation.
3. Each of the Investment Adviser and the Distributor, as the
case may be, shall provide such office space, facilities and equipment
(including, but not limited to, telecommunication equipment and general office
supplies) and such clerical help and other services as shall be necessary to
provide the services to the Corporation. In addition, each of the Investment
Adviser and the Distributor, as the case may be, may arrange on behalf of the
Corporation to obtain: (1) data processing or other services, subject to
approval by a majority of the Corporation's Board of Directors, as necessary to
assist it in providing the Services to the Corporation, (2) pricing information
regarding the Corporation's investment securities from such company or
companies as are approved by a majority of the Corporation's Board of Directors
and (3) computer and telecommunication lines and equipment used to provide the
aforementioned services to the Corporation, subject to approval by a majority
of the Corporation's Board of Directors and the Corporation shall be
financially responsible to such company or companies as aforesaid, for the
reasonable cost of such services.
<PAGE> 3
4. The Corporation will, from time to time, furnish or otherwise
make available to each of the Investment Adviser and the Distributor, as the
case may be, such information relating to the business and affairs of the
Corporation as the Investment Adviser and the Distributor, as the case may be,
may each reasonably require in order to discharge its duties and obligations
hereunder.
5. The Corporation shall reimburse the Investment Adviser and the
Distributor, as the case may be, for: (1) a portion of the compensation,
including all benefits, of officers and employees of the Investment Adviser and
the Distributor, as the case may be, based upon the amount of time that such
persons actually spend in providing or assisting in providing the Services to
the Corporation (including necessary supervision and review); and (2) such
other direct expenses, including, but not limited to, those listed in paragraph
3 above, incurred on behalf of the Corporation that are associated with the
providing of the Services. In addition, the Corporation will pay the
Investment Adviser and the Distributor a per account Administrative Fee based
on the shareholder service and recordkeeping duties performed. Such fees will
be approved by a majority of the Corporation's Board of Directors (See Schedule
A). In no event, however, shall such reimbursement exceed levels that are fair
and reasonable in light of the usual and customary charges made by others for
services of the same nature and quality. Compensation under this Agreement
shall be calculated and paid monthly.
6. The Investment Adviser and the Distributor will each permit
representatives of the Corporation, including the Corporation's independent
auditors, to have reasonable access to the personnel and records of the
Investment Adviser and the Distributor in order to enable such representatives
to monitor the quality of services being provided and the determination of
reimbursements due the Investment Adviser and the Distributor pursuant to this
Agreement. In addition, the Investment Adviser and the Distributor shall
promptly deliver to the Board of Directors of the Corporation such information
as may reasonably be requested from time to time to permit the Board of
Directors to make an informed determination regarding continuation of this
Agreement and the payments contemplated to be made hereunder.
7. The Investment Adviser and the Distributor each will use its
best efforts in providing the Services, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, neither the Investment Adviser nor the Distributor shall
be liable to the Corporation or any of the Corporation investors for any error
or judgment or mistake of law or any act of omission either by the Investment
Adviser or the Distributor or for any losses sustained by the Corporation or
the Corporation investors.
8. The Investment Adviser and the Distributor each may assign all
or any part of their respective obligations under this Agreement, and any such
assignment will not cause this Agreement to terminate. Notwithstanding any
such assignment, the Investment Adviser and the Distributor shall remain
responsible for the performance of their respective obligations hereunder.
9. This Agreement shall remain in effect until no later than
December 20, 1996 and from year to year thereafter provided such continuance is
approved at least annually by the vote of a majority of the Directors of the
Corporation who are not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party, which vote must be cast in person
<PAGE> 4
at a meeting called for the purpose of voting on such approval; and further
provided, however, that (a) the Corporation may, at any time and without the
payment of any penalty, terminate this Agreement upon thirty days' written
notice to the Investment Adviser or the Distributor and (b) either the
Investment Adviser or the Distributor may terminate this Agreement without
payment of penalty on sixty days' written notice to the Corporation. Any
notice under this Agreement shall be given in writing, addressed and delivered,
or mailed post-paid, to the other party at the principal office of such party.
10. This Agreement shall be construed in accordance with the laws
of The Commonwealth of Massachusetts and the applicable provisions of the Act.
To the extent the applicable law of The Commonwealth of Massachusetts or any of
the provisions herein conflict with the applicable provisions of the Act, the
latter shall control.
11. The Directors have authorized the execution of this Agreement
in their capacity as Directors and not individually and the Investment Adviser
and the Distributor agree that neither the shareholders of the Corporation nor
the Directors nor any officer, employee, representative or agent of the
Corporation shall be personally liable upon, nor shall resort be had to their
private property for the satisfaction of, obligations given, executed or
delivered on behalf of or by the Corporation; that the shareholders, Directors,
officers, employees, representatives and agents of the Corporation shall not be
personally liable hereunder; and that they shall look solely to the property of
the Corporation for the satisfaction of any claim hereunder.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.
TRANSAMERICA FUND MANAGEMENT JOHN HANCOCK CASH RESERVE, INC.
COMPANY
By: By:
------------------------- ---------------------------
Anne C. Hodsdon Thomas M. Simmons
President President
TRANSAMERICA FUND DISTRIBUTORS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 5
Schedule A
Reimbursement for shareholder and other activities under Section 1.B of the
Administrative Services Agreements.
<TABLE>
<CAPTION>
Reimbursement
Amount per
Fund Account per Year
- ---- ----------------
<S> <C>
John Hancock Capital Growth Fund $4
John Hancock California Tax-Free Income Fund,
Class A & Class B $4
John Hancock Cash Reserve, Inc. $3
John Hancock Tax-Free Bond Fund, Class A &
Class B $4
John Hancock Bond Fund
John Hancock Investment Quality Bond Fund $4
John Hancock Government Securities Trust $4
John Hancock U.S. Government Trust $4
John Hancock Intermediate Government Trust $4
John Hancock Adjustable U.S. Government Fund $4
John Hancock Adjustable U.S. Government Trust,
Class A & Class B $4
John Hancock Investment Trust
John Hancock Growth and Income Fund,
Class A & Class B $4
John Hancock Series. Inc.
John Hancock Money Market Fund B $4
John Hancock Government Income Fund $4
John Hancock High Yield Tax-Free Fund $4
John Hancock High Yield Bond Fund $4
John Hancock Emerging Growth Fund,
Class A & Class B $4
John Hancock Global Resources Fund $4
John Hancock Current Interest
John Hancock U.S. Government Cash Reserve $3
</TABLE>
Additional Duties to be Performed Under Section 1.B of the Administrative
Services Agreement:
In addition to responding to inquiries related to shareholder accounts,
Transamerica Fund Management Co. ("TFMC") or Transamerica Fund Distributors,
Inc. ("TFD"), as the case may be, will also process shareholder telephone
requests for exchanges, Fed wire purchases and telephone redemptions. TFMC and
TFD, as the case may be, will also process shareholder wire order purchases and
redemption requests placed through dealers. In addition, TFMC and TFD, as the
case may be, will maintain dealer, branch, and representative data on the
transfer agency system for all shareholder accounts.
<PAGE> 1
EXHIBIT 5(c)
JOHN HANCOCK CASH RESERVE, INC.
SUB-ADVISORY AGREEMENT
Agreement made as of December __, 1994 between John Hancock Advisers,
Inc., (the "Investment Manager"), and Transamerica Investment Services, Inc., a
Delaware corporation (the "Sub-adviser").
WHEREAS, the Investment Manager has entered into an Investment
Management Agreement dated December __, 1994 (the "Investment Management
Agreement"), with John Hancock Cash Reserve, Inc. (the "Fund"), pursuant to
which the Investment Manager will act as Investment Manager of the Fund.
WHEREAS, the Investment Manager desires to retain the Sub-adviser to
provide investment advisory services to the Fund in connection with the
management of the Fund and the Sub-adviser is willing to render such investment
advisory services.
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Investment Manager
and of the Directors of the Fund, the Sub-adviser shall manage the investment
operations of the Fund and the composition of the Fund's portfolio, including
the purchase, retention and disposition thereof, in accordance with the Fund's
investment objectives, policies and restrictions as stated in the Prospectus
(such Prospectus and Statement of Additional Information as currently in effect
and as amended or supplemented from time to time, being herein called the
"Prospectus"), and subject to the following understandings:
(i) The Sub-adviser shall provide supervision of
the Fund's investments and shall determine from time to time what
investments and securities will be purchased, retained, sold or loaned
by the Fund, and what portion of the assets will be invested or held
uninvested as cash.
(ii) In the performance of its duties and
obligations under this Agreement, the Sub-adviser shall act in
conformity with the Charter, By-Laws and Prospectus of the Fund and
with the instructions and directions of the Investment Manager and of
the Directors of the Fund and will conform to and comply with the
requirements of the Investment Company Act of 1940 (the "1940 Act"),
the Internal Revenue Code, as amended, and all other applicable
federal and state laws and regulations.
(iii) The Sub-adviser shall determine the
securities to be purchased or sold by the Fund and will place orders
with or through such persons, brokers or dealers in the manner as set
forth in the Fund's Registration Statement and Prospectus or as the
Directors may direct from time to time.
<PAGE> 2
(iv) The Sub-adviser shall provide both the Fund's
Custodian and the Investment Manager on each business day with
information relating to all transactions concerning the Fund's assets.
(v) The investment management services provided
by the Sub-adviser hereunder are not to be deemed exclusive, and the
Sub-adviser shall be free to render similar services to others.
(b) The Sub-adviser shall authorize and permit any of its
directors, officers and employees who may be elected as Directors or officers
of the Fund to serve in the capacities in which they are elected. Services to
be furnished by the Sub-adviser under this Agreement may be furnished through
the medium of any of such directors, officers or employees.
(c) The Sub-adviser shall keep the Fund's books and
records required to be maintained by the Sub-adviser pursuant to Paragraph
1(a) hereof and as required by Rule 31a-1 (pursuant to subsections (b)(5),
(b)(9), (b)(10), (b)(11) and (f)) and shall timely furnish to the Investment
Manager all information relating to the Sub-adviser's services hereunder
needed by the Investment Manager to keep the other books and records of the
Fund required by Rule 31a-1 under the 1940 Act. The Sub-adviser agrees that
all records which it maintains for the Fund are the property of the Fund and
the Sub-adviser will surrender promptly to the Fund any of such records upon
the Fund's request, provided however that the Sub-adviser may retain a copy of
such records. The Sub-adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 of the Securities and Exchange Commission under the
1940 Act any such records as are required to be maintained by it pursuant to
paragraph 1(a) hereof.
2. The Investment Manager shall continue to have responsibility
for all services to be provided to the Fund pursuant to the Investment
Management Agreement and shall oversee and review the Sub-adviser's performance
of its duties under this Agreement.
3. In consideration of the services rendered hereunder, the
Investment Manager shall pay to the Sub-adviser a monthly fee computed by
aggregating the amounts which result from applying the following percentages to
the average daily net assets of the Fund (or, in the case of category (c)(i),
to the fees received by the Investment Manager) attributable to each of four
categories of shareholder accounts as follows:
(a) With respect to accounts of Transamerica Corporation and
its affiliated operating companies (other than Transamerica Asset Management
Group, Inc. ("TAMG Group") and its subsidiaries), an amount computed at the
annual rate of .30% of average daily net assets;
(b) With respect to accounts of all shareholders which are
institutional investors (including TAMG Group and its subsidiaries), an amount
computed at an annual rate of .05% of average daily net assets;
<PAGE> 3
(c) With respect to all other shareholder accounts:
(i) on assets up to $270,000,000, an amount equal to
67% of the fees paid by the Fund to the Investment Manager; and
(ii) on assets in excess of $270,000,000, an amount
computed at the annual rate of .05% of average daily net assets.
The monthly fee shall be payable on or before the 15th day of the
month succeeding the month with respect to which the fee is due.
In the event the fee payable by the Fund to the Investment Manager is
reduced as a result of state imposed expense limitations, the Investment
Manager and the Sub-adviser agree that the fee payable hereunder will be
subject to reduction to the extent necessary to cause the portion of the fee
payable to the Sub-adviser attributable to each category noted above not to
exceed the effective rate of the fee received by the Investment Manager from
the Fund pursuant to the terms of the Investment Management Agreement.
4. The Sub-adviser shall not be liable for any error of judgment
or for any loss suffered by the Fund or the Investment Manager in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the Sub-adviser's part in
the performance of its duties or from its reckless disregard of its obligations
and duties under this Agreement.
5. This Agreement shall continue in effect for a period of more
than one year from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
1940 Act; provided, however, that this Agreement may be terminated by the Fund
at any time, without the payment of any penalty, by the Directors of the Fund
or by vote of a majority of the outstanding voting securities (as defined in
the 1940 Act) of the Fund, or by the Investment Manager or the Sub-adviser at
any time, without the payment of any penalty, on not less than 60 days' written
notice to the other party and the Fund (in the case of termination by a party),
or to each party (in the case of termination by the Fund). This Agreement
shall terminate automatically in the event of its assignment (as defined in the
1940 Act and the rules thereunder).
6. Nothing in this Agreement shall limit or restrict the right of
any of the Sub-adviser's directors, officers or employees who may also be a
Director, officer or employee of the Fund to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any business, whether of a similar or a dissimilar nature, nor limit nor
restrict the Sub-adviser's right to engage in any other business or to render
services of any kind to any other corporation, firm, individual or association.
7. This Agreement may be amended by mutual consent, but the
consent of
<PAGE> 4
the Fund must be obtained in conformity with the requirements of the 1940 Act.
8. This Agreement shall be construed in accordance with the laws
of the Commonwealth of Massachusetts and the applicable provisions of the 1940
Act. To the extent the applicable laws of the Commonwealth of Massachusetts or
any of the provisions herein conflict with the applicable provisions of the
1940 Act, the latter shall control
9. The obligations of the Fund are not personally binding upon,
nor shall resort be had to the private property of, any of the Directors,
shareholders, officers, employees or agents of the Fund, but only the Fund's
property shall be bound.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
JOHN HANCOCK ADVISERS, INC.
By:
---------------------------------
Anne C. Hodsdon
Executive Vice President
TRANSAMERICA INVESTMENT SERVICES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 1
EXHIBIT 6(a)
December __, 1994
John Hancock Broker Distribution Services, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Distribution Agreement
Dear Sir:
JOHN HANCOCK CASH RESERVE, INC. (the "Corporation") has been organized as a
corporation under the laws of the State of Maryland to engage in the business
of an investment company. The Corporation's Board of Directors has selected
you to act as principal underwriter (as such term is defined in Section
2(a)(29) of the Investment Company Act of 1940, as amended) of the shares of
common stock ("shares") of the Corporation and you are willing, as agent for
the Corporation, to sell the shares to the public, to broker-dealers or to
both, in the manner and on the conditions hereinafter set forth. Accordingly,
the Corporation hereby agrees with you as follows:
1. Delivery of Documents. The Corporation will furnish you promptly with
copies, properly certified or otherwise authenticated, of any registration
statements filed by it with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, or the Investment Company Act of 1940, as
amended, together with any financial statements and exhibits included therein,
and all amendments or supplements thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Corporation will from
time to time use its best efforts to register under the Securities Act of 1933,
as amended, such shares not already so registered as you may reasonably be
expected to sell as agent on behalf of the Corporation. This Agreement relates
to the issue and sale of shares that are duly authorized and registered and
available for sale by the Corporation if, but only if, the Corporation sees fit
to sell them. You and the Corporation will cooperate in taking such action as
may be necessary from time to time to qualify shares for sale in Massachusetts
and in any other states mutually agreeable to you and the Corporation, and to
maintain such qualification if and so long as such shares are duly registered
under the Securities Act of 1933, as amended.
3. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors unconditional
orders for shares authorized for issue by the Corporation and registered under
the Securities Act of 1933, as amended, provided that you may in your
discretion refuse to accept orders for such shares from any particular
applicant.
4. Sale of Shares. Subject to the provisions of Sections 5 and 6 hereof
and to such minimum purchase requirements as may from time to time be currently
indicated in the Corporation's prospectus, you are authorized to sell as agent
on behalf of the Corporation authorized and issued shares registered under the
Securities Act of 1933, as amended. Such sales may be made by you on behalf of
the Corporation by accepting unconditional orders to purchase such shares
placed with your investors. The sales price to the public of such shares
<PAGE> 2
shall be the public offering price as defined in Section 6 hereof.
5. Sale of Shares to Investors by the Corporation. Any right granted to
you to accept orders for shares or make sales on behalf of the Corporation will
not apply to shares issued in connection with the merger or consolidation of
any other investment company with the Corporation or the Corporation's
acquisition, by purchase or otherwise, of all or substantially all the assets
of any investment company or substantially all the outstanding shares of any
such company, and such right shall not apply to shares that may be offered or
otherwise issued by the Corporation to shareholders by virtue of their being
shareholders of the Corporation.
6. Public Offering Price. All shares sold by you as agent for the
Corporation will be sold at the public offering price, which will be determined
in the manner provided in the Corporation's prospectus or statement of
additional information, as now in effect or as it may be amended.
7. No Sales Discount. The Corporation shall receive the applicable net
asset value on all sales of shares by you as agent of the Corporation.
8. Delivery of Payments. You will deliver to the Corporation's transfer
agent all payments made pursuant to orders accepted by you, and accompanied by
proper applications for the purchase of shares, no later than the first
business day following the receipt by you in your home office of such payments
and applications.
9. Suspension of Sales. If and whenever a suspension of the right of
redemption or a postponement of the date of payment or redemption has been
declared pursuant to the Corporation's Charter and has become effective, then,
until such suspension or postponement is terminated, no further orders for
shares shall be accepted by you except such unconditional orders placed with
you before you have knowledge of the suspension. The Corporation reserves the
right to suspend the sale of shares and your authority to accept orders for
shares on behalf of the Corporation if in the judgment of a majority of the
Corporation's Board of Directors, it is in the best interests of the
Corporation to do so, such suspension to continue for such period as may be
determined by such majority; and in that event, no shares will be sold by the
Corporation or by you on behalf of the Corporation while such suspension
remains in effect except for shares necessary to cover unconditional orders
accepted by you before you had knowledge of the suspension.
10. Expenses. The Corporation will pay (or will enter into arrangements
providing that persons other than you will pay) all fees and expenses in
connection with the preparation and filing of any registration statement and
prospectus or amendments thereto under the Securities Act of 1933, as amended,
covering the issue and sale of shares and in connection with the qualification
of shares for sale in the various states in which the Corporation shall
determine it advisable to qualify such shares for sale. It will also pay the
issue taxes or (in the case of shares redeemed) any initial transfer taxes
thereon. You will pay all expenses of printing prospectuses and other sales
literature, all fees and expenses in connection with your qualification as a
dealer in various states, and all other expenses in connection with the sale
and offering for sale of the shares of the Corporation which have not been
herein specifically allocated to the Corporation.
11. Conformity with Law. You agree that in selling the shares you will
duly conform in
<PAGE> 3
all respects with the laws of the United States and any state in which such
shares may be offered for sale by you pursuant to this Agreement.
12. Indemnification. You agree to indemnify and hold harmless the
Corporation and each of its directors and officers and each person, if any, who
controls the Corporation within the meaning of Section 15 of the Securities Act
of 1933, as amended, against any and all losses, claims, damages, liabilities
or litigation (including legal and other expenses) to which the Corporation or
such directors, officers or controlling person may become subject under such
Act, under any other statute, at common law or otherwise, arising out of the
acquisition of any shares by any person which (a) may be based upon any
wrongful act by you or any of your employees or representatives or (b) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement, prospectus or statement of additional
information covering shares of the Corporation or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished or confirmed in writing to the Corporation by you, or (c)
may be incurred or arise by reason of your acting as the director's agent
instead of purchasing and reselling shares as principal in distributing shares
to the public, provided that in no case is your indemnity in favor of a
director or officer of the Corporation or any other person deemed to protect
such director or officer of the Corporation or other person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement.
You are not authorized to give any information or to make any
representations on behalf of the Corporation or in connection with the sale of
shares other than the information and representations contained in a
registration statement, prospectus, or statement of additional information
covering shares, as such registration statement, prospectus and statement of
additional information may be amended or supplemented from time to time. No
person other than you is authorized to act as principal underwriter for the
Corporation.
13. Duration and Termination of this Agreement. This Agreement shall
remain in force until two years from the date hereof and from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually by (a) a majority of the Board of Directors of the Corporation
who are not interested persons of you (other than as directors) or of the
Corporation, cast in person at a meeting called for the purpose of voting on
such approval, and (b) either (i) the Board of Directors of the Corporation, or
(ii) a majority of the outstanding voting securities of the Corporation. This
Agreement may, on 60 days' written notice, be terminated at any time, without
the payment of any penalty, by the Board of Directors of the Corporation, by a
vote of a majority of the outstanding voting securities of the Corporation, or
by you. This Agreement will automatically terminate in the event of its
assignment by you. In interpreting the provisions of this Section 13, the
definitions contained in Section 2(a) of the Investment Company Act of 1940, as
amended (particularly the definitions of "interested person," "assignment" and
"voting security"), shall be applied.
14. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party
<PAGE> 4
against which enforcement of the change, waiver, discharge or termination is
sought. If the Corporation should at any time deem it necessary or advisable
in the best interests of the Corporation that any amendment of this agreement
be made in order to comply with the recommendations or requirements of the
Securities and Exchange Commission or other governmental authority or to obtain
any advantage under state or federal tax laws and should notify you of the form
of such amendment, and the reasons therefor, and if you should decline to
assent to such amendment, the Corporation may terminate this Agreement
forthwith. If you should at any time request that a change be made in the
Corporation's Charter or By-Laws, or in its methods of doing business, in order
to comply with any requirements of federal law or regulations of the Securities
and Exchange Commission or of a national securities association of which you
are or may be a member, relating to the sale of shares, and the Corporation
should not make such necessary change within a reasonable time, you may
terminate this Agreement forthwith.
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Very truly yours,
JOHN HANCOCK CASH RESERVE, INC.
By:
-----------------------------------
Thomas M. Simmons
President
The foregoing Agreement is hereby
accepted as of the date hereof
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
By:
-------------------------------------
C. Troy Shaver, Jr.
President and Chief Executive Officer
<PAGE> 1
EXHIBIT 6(b)
SOLICITING DEALER AGREEMENT
[LOGO]
JOHN HANCOCK FUNDS, INC.
Boston -- Massachusetts -- 02199-7603
<PAGE> 2
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MA 02199-7603
SOLICITING DEALER AGREEMENT
Date
------------------------------
John Hancock Funds, Inc. ("the Distributor" or "Distributor") is the
principal distributor of the shares of beneficial interest (the "securities")
of each of the John Hancock Funds, ("We" or "us"), (the "Funds"). Such Funds
are those listed on Schedule A hereto which may be amended or supplemented from
time to time by the Distributor to include additional Funds for which the
Distributor is the principal distributor. You represent that you are a member
of the National Association of Securities Dealers, Inc., (the "NASD") and,
accordingly, we invite you to become a non-exclusive soliciting dealer to
distribute the securities of the Funds and you agree to solicit orders for the
purchase of the securities on the following terms. Securities are offered
pursuant to each Fund's prospectus and statement of additional information, as
such prospectus and statement of additional information may be amended from
time to time. To the extent that the prospectus or statement of additional
information contains provisions that are inconsistent with the terms of this
Agreement, the terms of the prospectus or statement of additional information
shall be controlling.
OFFERINGS
1. You agree to abide by the Rules of Fair Practice of the NASD and to all
other rules and regulations that are now or may become applicable to
transactions hereunder.
2. As principal distributor of the Funds, we shall have full authority to
take such action as we deem advisable in respect of all matters pertaining to
the distribution. This offer of shares of the Funds to you is made only in
such jurisdictions in which we may lawfully sell such shares of the Funds.
3. You shall not make any representation concerning the Funds or their
securities except those contained in the then- current prospectus or
statement of additional information for each Fund.
4. With the exception of listings of product offerings, you agree not to
furnish or cause to be furnished to any person or display, or publish any
information or materials relating to any Fund (including, without limitation,
promotional materials, sales literature, advertisements, press releases,
announcements, posters, signs and other similar materials), except such
information and materials as may be furnished to you by the Distributor or the
Fund. All other materials must receive written approval by the Distributor
before distribution or display to the public. Use of all approved advertising
and sales literature materials is restricted to appropriate distribution
channels.
5. You are not authorized to act as our agent. Nothing shall constitute you
as a syndicate, association, joint venture, partnership, unincorporated
business, or other separate entity or otherwise partners with us, but you shall
be liable for your proportionate share of any tax, liability or expense based
on any claim arising from the sale of shares of the Funds under this Agreement.
We shall not be under any liability to you, except for obligations expressly
assumed by us in this Agreement and liabilities under Section 11(f) of the
Securities Act of 1933, and no obligations on our part shall be implied or
inferred herefrom.
-2-
<PAGE> 3
6. DEALER COMPLIANCE/SUITABILITY STANDARDS (CLASS A AND CLASS B SHARES) -
Certain mutual funds distributed by the Distributor are being offered with two
or more classes of shares of the same investment portfolio ("Fund") - refer to
each Fund prospectus for availability and details. It is essential that the
following minimum compliance/suitability standards be adhered to in offering
and selling shares of these Funds to investors. All dealers offering shares of
the Funds and their associated persons agree to comply with these general
suitability and compliance standards.
SUITABILITY
With two classes of shares of certain funds available to individual
investors, (Class A and Class B), it is important that each investor purchases
not only the fund that best suits his or her investment objective but also the
class of shares that offers the most beneficial distribution financing method
for the investor based upon his or her particular situation and preferences.
Fund share recommendations and orders must be carefully reviewed by you and
your registered representatives in light of all the facts and circumstances, to
ascertain that the class of shares to be purchased by each investor is
appropriate and suitable. These recommendations should be based on several
factors, including but not limited to:
(A) the amount of money to be invested initially and over a period of
time;
(B) the current level of front-end sales load or back-end sales load
imposed by the Fund;
(C) the period of time over which the client expects to retain the
investment;
(D) the anticipated level of yield from fixed income funds' Class A and
Class B shares;
(E) any other relevant circumstances such as the availability of
reduced sales charges under letters of intent and/or rights of
accumulation.
There are instances when one distribution financing method may be more
appropriate than another. For example, shares subject to a front-end sales
charge may be more appropriate than shares subject to a contingent deferred
sales charge for large investors who qualify for a significant quantity
discount on the front-end sales charge. In addition, shares subject to a
contingent deferred sales charge may be more appropriate for investors whose
orders would not qualify for quantity discounts and who, therefore, may prefer
to defer sales charges and also for investors who determine it to be
advantageous to have all of their funds invested without deduction of a
front-end sales commission. However, if it is anticipated that an investor may
redeem his or her shares within a short period of time, the investor may,
depending on the amount of his or her purchase, bear higher distribution
expenses by purchasing contingent deferred sales charge shares than if he or
she had purchased shares subject to a front-end sales charge.
COMPLIANCE
Your supervisory procedures should be adequate to assure that an
appropriate person reviews and approves transactions entered into pursuant to
this Soliciting Dealer Agreement for compliance with the foregoing standards.
In certain instances, it may be appropriate to discuss the purchase with the
registered representatives involved or to review the advantages and
disadvantages of selecting one class of shares over another with the client.
The Distributor will not accept orders for Class B Shares in any Fund from you
for accounts maintained in street name. Trades for Class B Shares will only be
accepted in the name of the shareholder.
7. CLASS C SHARES - Certain mutual funds distributed by the Distributor may be
offered with Class C shares. Refer to each Fund prospectus for availability
and details. Class C shares are designed for institutional investors and
qualified benefit plans, including pension funds, and are sold without a sales
charge or 12b-1 fee. If a commission is paid to you for transactions in Class
C shares, it will be paid by the Distributor out of its own resources.
SALES
8. Orders for securities received by you from investors will be for the sale
of the securities at the public offering price, which will be the net asset
value per share as determined in the manner provided in the relevant Fund's
prospectus, as now in effect or as amended from time to time, next after
receipt by us (or the relevant Fund's transfer agent) of the purchase
application and payment for the securities, plus the relevant sales charges set
forth in the relevant Fund's then- current prospectus (the "Public Offering
Price"). The procedures relating to the handling of orders shall be subject to
our instructions which we will forward from time to time to you. All orders
are subject to acceptance by us, and we reserve the right in our sole
discretion to reject any order.
-3-
<PAGE> 4
In addition to the foregoing, you acknowledge and agree to the initial
and subsequent investment minimums, which may vary from year to year, as
described in the then-current prospectus for each Fund.
9. You agree to sell the securities only (a) to your customers at the public
offering price then in effect, or (b) back to the Funds at the currently quoted
net asset value.
10. The amount of sales charge to be reallowed to you (the "Reallowance") as a
percentage of the offering price is set forth in the then-current prospectus of
each Fund.
If a sales charge on the purchase is reduced in accordance with the
provisions of the relevant Fund's then-current prospectus pertaining to
"Methods of Obtaining Reduced Sales Charges," the Reallowance shall be reduced
pro rata.
11. We shall pay a Reallowance subject to the provisions of this agreement as
set forth in Schedule B hereto on all purchases made by your customers pursuant
to orders accepted by us (a) where an order for the purchase of securities is
obtained by a registered representative in your employ and remitted to us
promptly by you, (b) where a subsequent investment is made to an account
established by a registered representative in your employ or (c) where a
subsequent investment is made to an account established by a broker/dealer
other than you and is accompanied by a signed request from the account
shareholder that your registered representative receive the Reallowance for
that investment and/or for subsequent investments made in such account. If for
any reason, a purchase transaction is reversed, you shall not be entitled to
receive or retain any part of the Reallowance on such purchase and shall pay to
us on demand in full the amount of the Reallowance received by you in
connection with any such purchase. We may withhold and retain from the amount
of the Reallowance due you a sum sufficient to discharge any amount due and
payable by you to us.
12. Certain of the Funds have adopted a plan under Investment Company Act
Rule 12b-1 ("Distribution Plan" as described in the the prospectus). To the
extent you provide distribution and marketing services in the promotion of the
sale of shares of these Funds, including furnishing services and assistance to
your customers who invest in and own shares of such Funds and including, but
not limited to, answering routine inquiries regarding such Funds and assisting
in changing distribution options, account designations and addresses, you may
be entitled to receive compensation from us as set forth in Schedule C hereto.
All compensation, including 12b-1 fees, shall be payable to you only to the
extent that funds are received and in the possession of the Distributor.
13. We will advise you as to the jurisdictions in which we believe the shares
have been qualified for sale under the respective securities or "blue sky" laws
of such jurisdictions, but we assume no responsibility or obligations as to
your right to sell the shares of the Funds in any state or jurisdiction.
14. Orders may be placed through:
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
1-800-338-4265
SETTLEMENT
15. Settlements for wire orders shall be made within five business days after
our acceptance of your order to purchase shares of the Funds. Certificates,
when requested, will be delivered to you upon payment in full of the sum due
for the sale of the shares of the Funds. If payment is not so received or
made, we reserve the right forthwith to cancel the sale, or, at our option, to
liquidate the shares of the Fund subject to such sale at the then prevailing
net asset value, in which latter case you will agree to be responsible for any
loss resulting to the Funds or to us from your failure to make payments as
aforesaid.
-4-
<PAGE> 5
INDEMNIFICATION
16. The parties to this agreement hereby agree to indemnify and hold harmless
each other, their officers and directors, and any person who is or may be
deemed to be a controlling person of each other, from and against any losses,
claims, damages, liabilities or expenses (including reasonable fees of
counsel), whether joint or several, to which any such person or entity may
become subject insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon, (a) any untrue
statement or alleged untrue statement of material fact, or any omission or
alleged omission to state a material fact made or omitted by it herein, or, (b)
any willful misfeasance or gross misconduct by it in the performance of its
duties and obligations hereunder.
17. NSCC INDEMNITY - SHAREHOLDER AND HOUSE ACCOUNTS - In consideration of the
Distributor and John Hancock Investor Services Corporation ("Investor
Services") liquidating, exchanging, and/or transferring unissued shares of the
Funds for your customers without the use of original or underlying
documentation supporting such instructions (e.g., a signed stock power or
signature guarantee), you hereby agree to indemnify the Distributor, Investor
Services and each respective Fund against any losses, including reasonable
attorney's fees, that may arise from such liquidation exchange, and/or
transfer of unissued shares upon your direction. This indemnification shall
apply only to the liquidation, exchange and/or transfer of unissued shares in
shareholder and house accounts executed as wire orders transmitted via NSCC's
Fund/SERVsystem. You represent and warrant to the Funds, the Distributor and
Investor Services that all such transactions shall be properly authorized by
your customers.
The indemnification in this Section 16 shall not apply to any losses
(including attorney's fees) caused by a failure of the Distributor, Investor
Services or a Fund to comply with any of your instructions governing any of the
above transactions, or any negligent act or omission of the Distributor,
Investor Services or a Fund, or any of their directors, officers, employees or
agents. All transactions shall be settled upon your confirmation through NSCC
transmission to Investor Services.
The Distributor, Investor Services or you may revoke the indemnity
contained in this Section 16 upon prior written notice to each of the other
parties hereto, and in the case of such revocation, this indemnity agreement
shall remain effective as to trades made prior to such revocation.
MISCELLANEOUS
18. We will supply to you at our expense additional copies of the prospectus
and statement of additional information for each of the Funds and any printed
information supplemental to such material in reasonable quantities upon
request.
19. Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
20. Miscellaneous provisions, if any, are attached hereto and incorporated
herein by reference.
21. This agreement, which shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, may be terminated by any party hereto at any
time upon written notice.
-5-
<PAGE> 6
SOLICITING DEALER
-------------------------------------------------
Name of Organization
By:-------------------------------------------------
Authorized Signature of Soliciting Dealer
-------------------------------------------------
Please Print or Type Name
-------------------------------------------------
Title
-------------------------------------------------
Print or Type Address
-------------------------------------------------
Telephone Number
Date:
-------------------------------------------------
In order to service you efficiently, please provide the following
information on your Mutual Funds Operations Department:
OPERATIONS MANAGER:
---------------------------------------------
ORDER ROOM MANAGER:
---------------------------------------------
OPERATIONS ADDRESS:
---------------------------------------------
---------------------------------------------
TELEPHONE: FAX:
-------------------------------- ------------------------------
<TABLE>
<S> <C>
TO BE COMPLETED BY: TO BE COMPLETED BY:
JOHN HANCOCK FUNDS, INC. JOHN HANCOCK INVESTOR
SERVICES CORPORATION
BY: BY:
------------------------------------------- -------------------------------------------
- ---------------------------------------------- ----------------------------------------------
TITLE TITLE
</TABLE>
DEALER NUMBER:
------------------------------------
-6-
<PAGE> 7
JOHN HANCOCK
MUTUAL FUNDS
John Hancock Broker Distrubution Services, Inc.
101 Huntington Avenue Boston, MA 02199-7608 1-800-225-5291
/s/ John Hancock
<PAGE> 8
JOHN HANCOCK FUNDS, INC.
SCHEDULE A
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
<TABLE>
<S> <C>
John Hancock Sovereign Achievers Fund John Hancock National Aviation & Technology Fund
John Hancock Sovereign Investors Fund John Hancock Regional Bank Fund
John Hancock Sovereign Balanced Fund John Hancock Gold and Government Fund
John Hancock Sovereign Bond Fund John Hancock Global Rx Fund
John Hancock Sovereign U.S. Government Income Fund John Hancock Global Technology Fund
John Hancock Special Equities Fund* John Hancock Global Fund
John Hancock Special Opportunities Fund John Hancock Pacific Basin Equities Fund
John Hancock Discovery Fund John Hancock Global Income Fund
John Hancock Growth Fund John Hancock International Fund
John Hancock Strategic Income Fund John Hancock Global Resources Fund
John Hancock Limited-Term Government Fund John Hancock Emerging Growth Fund
John Hancock Cash Management Fund John Hancock Capital Growth Fund
John Hancock Managed Tax-Exempt Fund John Hancock Growth & Income Fund
John Hancock Tax-Exempt Income Fund John Hancock High Yield Bond Fund
John Hancock Tax-Exempt Series Fund John Hancock Investment Quality Bond Fund
John Hancock Special Value Fund John Hancock Government Securities Fund
John Hancock Strategic Short-Term Income Fund John Hancock U.S. Government Fund
John Hancock CA Tax-Free Fund John Hancock Government Income Fund
John Hancock High Yield Tax-Free Fund John Hancock Intermediate Government Fund
John Hancock Tax-Free Bond Fund John Hancock Adjustable U.S. Government Fund
John Hancock U.S. Government Cash Reserve Fund John Hancock Cash Reserve Money Market B Fund
</TABLE>
From time to time John Hancock Funds, Inc., as principal distributor of the
John Hancock funds, will offer additional funds for sale. These funds will
automatically become part of this Agreement and will be subject to all its
provisions unless otherwise directed by John Hancock Funds, Inc.
*Closed to new investors as of 9/30/94
<PAGE> 9
JOHN HANCOCK FUNDS, INC.
SCHEDULE B
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
I. REALLOWANCE
The Reallowance paid to the selling Brokers for sales of John Hancock
Funds is set forth in each Fund's then- current prospectus. No Commission will
be paid on sales of John Hancock Cash Management Fund or any John Hancock Fund
that is without a sales charge. Purchases of Class A shares of $1 million or
more, or purchases into an account or accounts whose aggregate value of fund
shares is $1 million or more will be made at net asset value with no initial
sales charge. On purchases of this type, John Hancock Funds, Inc. will pay a
commission as set forth in each Fund's then-current prospectus. John Hancock
Funds, Inc. will pay Brokers for sales of Class B shares of the Funds a
marketing fee as set forth in each Fund's then-current prospectus.
<PAGE> 10
JOHN HANCOCK FUNDS, INC.
SCHEDULE C
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
FIRST YEAR SERVICE FEES
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, John Hancock Funds, Inc. will advance to you a First Year
Service Fee related to the purchase of Class A shares (only if subject to sales
charge) or Class B shares of any of the Funds, as the case may be, sold by your
firm. This Service Fee will be compensation for your personal service and/or
the maintenance of shareholder accounts ("Customer Servicing") during the
twelve-month period immediately following the purchase of such shares, in the
amount not to exceed .25 of 1% of net assets invested in Class A shares or
Class B shares of the Fund, as the case may be, purchased by your customers.
SERVICE FEE SUBSEQUENT TO THE FIRST YEAR
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will pay you quarterly, in arrears, a
Service Fee commencing at the end of the twelve month period immediately
following the purchase of Class A shares (only if subject to sales charge) or
Class B shares, as the case may be, sold by your firm, for Customer Servicing,
in an amount not to exceed .25 of 1% of the average daily net assets
attributable to the Class A shares or Class B shares of the Fund, as the case
may be, purchased by your customers, provided your firm has under management
with the Funds combined average daily net assets for the preceding quarter of
no less than $1 million, or an individual representative of your firm has under
management with the Funds combined average daily net assets for the preceding
quarter of no less than $250,000 (an "Eligible Firm").
<PAGE> 11
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
SCHEDULE D
DATED JULY 1, 1992 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK MUTUAL FUNDS
No broker/dealer shall represent the FUnds or Distribution Services in any
written communications without prior receipt of written approval from John
Hancock Broker Distribution Services, Inc. This includes but is not limited to
all advertising, public relations, marketing and sales literature, and media
contacts.
Further, subsequent to the creation of such materialsbefore written
approval from JHBDS will be given, a copy of the NASD review document
applicable to such materials must be furnished to John Hancock Broker
Distribution Services, Inc. for its review and files.
FOR PURPOSES OF THIS SCHEDULE D, THE FOLLOWING TERMS ARE DEFINED:
Advertising:
materials designed for the mass market, e.g. print ads, radio and tv
commercials, billboards, etc.
Sales literature:
materials designed for a directed market, e.g. prospecting letters,
brochures, mailers, stuffers, etc.
Coop Advertising:
advertising materials (as defined above) used by selling group members
for which John Hancock pays some or all of the costs of publication
whether the materials were developed by JHBDS Marketing or not.
John Hancock Broker Distribution Services, Inc. Approval of Advertising:
Approval has four meanings:approval of the material itself from a
marketing perspective (JHBDS product managers), proactive compliance
officer), parent company corporate advertising approval (John Hancock
Mutual Life Insurance Company Advertising Dept. personnel) and
approval for use and related cost-sharing arrangements (national sales
coordinators).
NASD Filing:
Materials created by JHBDS will be filed with the NASD by the JHBDS
Compliance Department. Materials not created by JHBDS but to be
included in the coop program will be filed with the NASD by the
broker-dealer creating the materials. However, prior to use of the
materials in our coop program, we will need a copy of the final
version of the material as well as the NASD comment letter. When this
is received, the above approvals can be obtained.
<PAGE> 1
EXHIBIT 6(c)
FINANCIAL INSTITUTION
SALES AND SERVICE AGREEMENT
[LOGO]
JOHN HANCOCK FUNDS, INC.
Boston - Massachusetts - 02199-7603
<PAGE> 2
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MA 02199-7603
FINANCIAL INSTITUTION
SALES AND SERVICE AGREEMENT
Date
--------------------------------
John Hancock Funds, Inc. ("The Distributor", or "Distributor"), ("We" or
"us"), is the principal distributor of the shares of beneficial interest (the
"securities") of each of the John Hancock Funds (the "Funds"). Such Funds are
those listed on Schedule A hereto which may be amended or supplemented from
time to time by the Distributor to include additional Funds for which the
Distributor is the principal distributor. You hereby represent that you are a
"bank" as defined in Section 3(a)(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and at the time of each transaction in shares of
the Funds, are not required to register as a broker/dealer under the Exchange
Act or regulations thereunder. We invite you to become a non-exclusive
soliciting financial institution ("Financial Institution") to distribute the
securities of the Funds and you agree to solicit orders for the purchase of the
securities on the following terms. Securities are offered pursuant to each
Fund's prospectus and statement of additional information, as such prospectus
and statement of additional information may be amended from time to time. To
the extent that the prospectus or statement of additional information contains
provisions that are inconsistent with the terms of this Agreement, the terms of
the prospectus or statement of additional information shall be controlling.
OFFERINGS
1. You represent and warrant that you will use your best efforts to ensure
that any purchase of shares of the Funds by your customers constitutes a
suitable investment for such customers. You acknowledge that you will base
such a decision of suitability on all the facts you have gathered about your
customer's financial situation, investment objectives, risk tolerance and
sophistication.
2. You represent and warrant that a copy of the then-current prospectus of a
Fund will be delivered to your customer before any purchase of shares of that
Fund are effected for that customer. You shall not effect any transaction in,
or induce any purchase or sale of, any shares of the Funds by means of any
manipulative, deceptive or other fraudulent device or contrivance, and shall
otherwise deal equitably and fairly with your customers with respect to
transactions in shares of a Fund.
3. You represent and warrant that you will not make shares of any Fund
available to your customers, including your fiduciary customers, except in
compliance with all Federal and state laws and rules and regulations of
regulatory agencies or authorities applicable to you, or any of your affiliates
engaging in such activity, which may affect your business practices. You
confirm that you are not in violation of any banking law or regulations as to
which you are subject. You agree that you will comply with the requirements of
Banking Circular 274 issued by the Office of the Comptroller of the Currency in
offering shares of the Funds to your customers. We agree that we will comply
with all Federal and state laws and rules and regulations of regulatory
agencies or authorities applicable to us. We and you acknowledge and agree
that the offering of shares of the Funds pursuant to this agreement is subject
to the oversight of your management and the regulatory authorities by which you
are subject to review, and that appropriate records and materials relating to
any activity by you or us undertaken pursuant to this agreement may be accessed
by bank examiners in the due course of any regulatory review to which you may
be subject.
4. As principal distributor of the Funds, we shall have full authority to take
such action as we deem advisable in respect of all matters pertaining to the
distribution. This offer of shares of the Funds to you is made only in such
jurisdictions in which we may lawfully sell such shares of the Funds.
-2-
<PAGE> 3
5. You shall not make any representation concerning the Funds or their
securities except those contained in the then-current prospectus or statement
of additional information for each Fund.
6. We will supply to you at our expense additional copies of the then-current
prospectus and statement of additional information for each of the Funds and
any printed information supplemental to such material in reasonable quantities
upon request. It shall be your obligation to ensure that all such information
and materials are distributed to your customers who own or seek to own shares
of the Funds in accordance with securities and/or banking law and regulations
and any other applicable regulations.
7. With the exception of listings of product offerings, you agree not to
furnish or cause to be furnished to any person or display, or publish any
information or materials relating to any Fund (including, without limitation,
promotional materials, sales literature, advertisements, press releases,
announcements, posters, signs and other similar materials), except such
information and materials as may be furnished to you by us the Distributor or
the Fund. All other materials must receive written approval by the Distributor
before distribution or display to the public. Use of all approved advertising
and sales literature materials is restricted to appropriate distribution
channels.
8. You are not authorized to act as our agent. In making available shares of
the Funds under this Financial Institution Sales and Service Agreement, nothing
herein shall be construed to constitute you or any of your agents, employees or
representatives as our agent or employee, or as an agent or employee of the
Funds, and you shall not make any representations to the contrary. Nothing
shall constitute you as a syndicate, association, unincorporated business, or
other separate entity or partners with us, but you shall be liable for your
proportionate share of any tax, liability or expense based on any claim arising
from the sale of shares of the Funds under this Agreement. We shall not be
under any liability to you, except for obligations expressly assumed by us in
this Agreement and liabilities under Section 11(f) of the Securities Act of
1933, and no obligations on our part shall be implied or inferred herefrom.
9. DEALER COMPLIANCE/SUITABILITY STANDARDS (CLASS A AND CLASS B SHARES) -
Certain mutual funds distributed by the Distributor are being offered with two
or more classes of shares of the same investment portfolio ("Fund") - refer to
each Fund prospectus for availability and details. It is essential that the
following minimum compliance/suitability standards be adhered to in offering
and selling shares of these Funds to investors. All soliciting financial
institutions offering shares of the Funds and their agents, employees and
representatives agree to comply with these general suitability and compliance
standards.
SUITABILITY
With two classes of shares of certain funds available to individual
investors, (Class A and Class B), it is important that each investor purchases
not only the fund that best suits his or her investment objective but also the
class of shares that offers the most beneficial distribution financing method
for the investor based upon his or her particular situation and preferences.
Fund share recommendations and orders must be carefully reviewed by you and
your agents, employees and representatives in light of all the facts and
circumstances, to ascertain that the class of shares to be purchased by each
investor is appropriate and suitable. These recommendations should be based on
several factors, including but not limited to:
(A) the amount of money to be invested initially and over
a period of time;
(B) the current level of front-end sales load or back-end
sales load imposed by the Fund;
(C) the period of time over which the customer expects to
retain the investment;
(D) the anticipated level of yield from fixed income
funds' Class A and Class B shares;
(E) any other relevant circumstances such as the
availability of reduced sales charges under letters
of intent and/or rights of accumulation.
There are instances when one distribution financing method may be more
appropriate than another. For example, shares subject to a front-end sales
charge may be more appropriate than shares subject to a contingent deferred
sales charge for large investors who qualify for a significant quantity
discount on the front-end sales charge. In addition, shares subject to a
contingent deferred sales charge may be more appropriate for investors whose
orders would not qualify for quantity discounts and who, therefore, may prefer
to defer sales charges and also for investors who determine it to be
advantageous to have all of their funds invested without deduction of a
front-end sales commission. However, if it is anticipated that an investor may
redeem his or her shares within a short period of time, the investor may,
depending on the amount of his or her purchase, bear higher distribution
expenses by purchasing contingent deferred sales charge shares than if he or
she had purchased shares subject to a front-end sales charge.
-3-
<PAGE> 4
COMPLIANCE
Your supervisory procedures should be adequate to assure that an
appropriate person reviews and approves transactions entered into pursuant to
this Financial Institution Sales and Service Agreement for compliance with the
foregoing standards. In certain instances, it may be appropriate to discuss
the purchase with the agents, employees and representatives involved or to
review the advantages and disadvantages of selecting one class of shares over
another with the client. The Distributor will not accept orders for Class B
Shares in any Fund from you for accounts maintained in your name or in the name
of your nominee for the benefit of certain of your customers. Trades for Class
B Shares will only be accepted in the name of the shareholder.
10. CLASS C SHARES - Certain mutual funds distributed by the Distributor may
be offered with Class C shares. Refer to each Fund prospectus for availability
and details. Class C shares are designed for institutional investors and
qualified benefit plans, including pension funds, and are sold without a sales
charge or 12b-1 fee. If a commission is paid to you for transactions in Class
C shares, it will be paid by the Distributor out of its own resources.
SALES
11. With respect to any and all transactions in the shares of any Fund
pursuant to this Financial Institution Sales and Service Agreement it is
understood and agreed in each case that: (a) you shall be acting solely as
agent for the account of your customer; (b) each transaction shall be initiated
solely upon the order of your customer; (c) we shall execute transactions only
upon receiving instructions from you acting as agent for your customer or upon
receiving instructions directly from your customer; (d) as between you and your
customer, your customer will have full beneficial ownership of all shares; (c)
each transaction shall be for the account of your customer and not for your
account; and (f) unless otherwise agreed in writing we will serve as a clearing
broker for you on a fully disclosed basis, and you shall serve as the
introducing agent for your customers' accounts. Subject to the foregoing,
however, and except for Class B shares, as described in Section 8 above, you
may maintain record ownership of such customers' shares in an account
registered in your name or the name of your nominee, for the benefit of such
customers. Each transaction shall be without recourse to you provided that you
act in accordance with the terms of this Financial Institution Sales and
Service Agreement. You represent and warrant to us that you will have full
right, power and authority to effect transactions (including, without
limitation, any purchases and redemptions) in shares of the Funds on behalf of
all customer accounts provided by you.
12. Orders for securities received by you from your customers will be for the
sale of the securities at the public offering price, which will be the net
asset value per share as determined in the manner provided in the relevant
Fund's prospectus, as now in effect or as amended from time to time, next after
receipt by us (or the relevant Fund's transfer agent) of the purchase
application and payment for the securities, plus the relevant sales charges set
forth in the relevant Fund's then-current prospectus (the "Public Offering
Price"). The procedures relating to the handling of orders shall be subject to
our instructions which we will forward from time to time to you. All orders
are subject to acceptance by us, and we reserve the right in our sole
discretion to reject any order.
In addition to the foregoing, you acknowledge and agree to the initial and
subsequent investment minimums, which may vary from year to year, as described
in the then-current prospectus for each Fund.
13. You agree to sell the securities only (a) to your customers at the public
offering price then in effect, or (b) back to the Funds at the currently quoted
net asset value.
14. The amount of sales charge to be reallowed to you (the "Reallowance") as a
percentage of the offering price is set forth in the then-current prospectus of
each Fund.
If a sales charge on the purchase is reduced in accordance with the
provisions of the relevant Fund's then- current prospectus pertaining to
"Methods of Obtaining Reduced Sales Charges," the Reallowance shall be reduced
pro rata.
15. We shall pay a Reallowance subject to the provisions of this agreement as
set forth in Schedule B hereto on all purchases made by your customers pursuant
to orders accepted by us (a) where an order for the purchase of securities is
obtained by you and remitted to us promptly by you, (b) where a subsequent
investment is made to an account established by you or (c) where a subsequent
investment is made to an account established by a financial institution or
-4-
<PAGE> 5
registered broker/dealer other than you and is accompanied by a signed request
from the account shareholder that you receive the Reallowance for that
investment and/or for subsequent investments made in such account. If for any
reason, a purchase transaction is reversed, you shall not be entitled to
receive or retain any part of the Reallowance on such purchase and shall pay to
us on demand in full the amount of the Reallowance received by you in
connection with any such purchase. We may withhold and retain from the amount
of the Reallowance due you a sum sufficient to discharge any amount due and
payable by you to us.
16. Certain of the Funds have adopted a plan under Investment Company Act
Rule 12b-1 ("Distribution Plan" as described in the prospectus). To the extent
you provide distribution and marketing services in the promotion of the sale of
shares of these Funds, including furnishing services and assistance to your
customers who invest in and own shares of such Funds and including, but not
limited to, answering routine inquiries regarding such Funds and assisting in
changing distribution options, account designations and addresses, you may be
entitled to receive compensation from us as set forth in Schedule C hereto.
All compensation, including 12b-1 fees, shall be payable to you only to the
extent that funds are received and in the possession of the Distributor.
17. We will advise you as to the jurisdictions in which we believe the shares
have been qualified for sale under the respective securities or "blue sky" laws
of such jurisdictions, but we assume no responsibility or obligations as to
your right to sell the shares of the Funds in any state or jurisdiction.
18. Orders may be placed through:
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
1-800-338-4265
SETTLEMENT
19. Settlements for wire orders shall be made within five business days after
our acceptance of your order to purchase shares of the Funds. Certificates,
when requested, will be delivered to you upon payment in full of the sum due
for the sale of the shares of the Funds. If payment is not so received or
made, we reserve the right forthwith to cancel the sale, or, at our option, to
liquidate the shares of the Fund subject to such sale at the then prevailing
net asset value, in which latter case you will agree to be responsible for any
loss resulting to the Funds or to us from your failure to make payments as
aforesaid.
INDEMNIFICATION
20. The parties to this agreement hereby agree to indemnify and hold harmless
each other, their officers and directors, and any person who is or may be
deemed to be a controlling person of each other, from and against any losses,
claims, damages, liabilities or expenses (including reasonable fees of
counsel), whether joint or several, to which any such person or entity may
become subject insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon, (a) any untrue
statement or alleged untrue statement of material fact, or any omission or
alleged omission to state a material fact made or omitted by it herein, or, (b)
any willful misfeasance or gross misconduct by it in the performance of its
duties and obligations hereunder.
MISCELLANEOUS
21. Any notice to you shall be duly given if mailed or telegraphed to you at
your address as most recently furnished to us by you.
22. Miscellaneous provisions, if any, are attached hereto and incorporated
herein by reference.
23. This agreement, which shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, may be terminated by any party hereto at any
time upon written notice.
-5-
<PAGE> 6
FINANCIAL INSTITUTION
-------------------------------------------------
Financial Institution
By:
-------------------------------------------------
Authorized Signature of Financial Institution
-------------------------------------------------
Please Print or Type Name
-------------------------------------------------
Title
-------------------------------------------------
Print or Type Address
-------------------------------------------------
Telephone Number
Date:
-------------------------------------------------
In order to service you efficiently, please provide the
following information on your Mutual Funds Operations Department:
OPERATIONS MANAGER:
---------------------------------------------
ORDER ROOM MANAGER:
---------------------------------------------
OPERATIONS ADDRESS:
---------------------------------------------
---------------------------------------------
TELEPHONE: FAX:
--------------------- ----------------------------
TO BE COMPLETED BY: JOHN HANCOCK INVESTOR
JOHN HANCOCK FUNDS, INC. SERVICES CORPORATION
By: By:
--------------------------------- ------------------------------------
- ------------------------------------ ------------------------------------
Title Title
TO BE COMPLETED BY:
FINANCIAL INSTITUTION NUMBER:
----------------------------------------------
-6-
<PAGE> 7
JOHN HANCOCK FUNDS, INC.
SCHEDULE A
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
<TABLE>
<S> <C>
John Hancock Sovereign Achievers Fund John Hancock National Aviation & Technology Fund
John Hancock Sovereign Investors Fund John Hancock Regional Bank Fund
John Hancock Sovereign Balanced Fund John Hancock Gold and Government Fund
John Hancock Sovereign Bond Fund John Hancock Global Rx Fund
John Hancock Sovereign U.S. Government Income Fund John Hancock Global Technology Fund
John Hancock Special Equities Fund* John Hancock Global Fund
John Hancock Special Opportunities Fund John Hancock Pacific Basin Equities Fund
John Hancock Discovery Fund John Hancock Global Income Fund
John Hancock Growth Fund John Hancock International Fund
John Hancock Strategic Income Fund John Hancock Global Rescources Fund
John Hancock Limited Term Government Fund John Hancock Emerging Growth Fund
John Hancock Cash Management Fund John Hancock Capital Growth Fund
John Hancock Managed Tax-Exempt Fund John Hancock Growth & Income Fund
John Hancock Tax-Exempt Income Fund John Hancock High Yield Bond Fund
John Hancock Tax-Exempt Series Fund John Hancock Investment Quality Bond Fund
John Hancock Special Value Fund John Hancock Government Securities Fund
John Hancock Strategic Short-Term Income Fund John Hancock U.S. Government Fund
John Hancock CA Tax-Free Fund John Hancock Governtment Income Fund
John Hancock High Yield Tax-Free Fund John Hancock Intermediate Government Fund
John Hancock Tax-Free Bond Fund John Hancock Adjustable U.S. Government Fund
John Hancock U.S. Government Cash Reserve Fund John Hancock Cash Reserve Money Market B Fund
</TABLE>
From time to time John Hancock Funds, as principal distributor of the
John Hancock Funds, will offer additional funds for sale. These funds will
automatically become part of this Agreement and will be subject to all its
provisions unless otherwise directed by John Hancock Funds, Inc.
* Closed to new invstors as of 9/30/94.
<PAGE> 8
JOHN HANCOCK FUNDS, INC.
SCHEDULE B
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
I. REALLOWANCE
The Reallowance paid to Financial Institutions for sales of John Hancock
Funds is the same as that paid to Selling Brokers described and set forth
in each Fund's then-current prospectus. No Commission will be paid on
sales of John Hancock Cash Management Fund or any John Hancock Fund that is
without a sales charge. Purchases of Class A shares of $1 million or more,
or purchases into an account or accounts whose aggregate value of fund
shares is $1 million or more will be made at net asset value with no
initial sales charge. On purchases of this type, the Distributor will pay a
commission as set forth in each Fund's then-current prospectus. John
Hancock Funds, Inc. will pay Financial Institutions for sales of Class B
shares of the Funds a marketing fee as set forth in each Fund's then-
current prospectus for Selling Brokers.
<PAGE> 9
JOHN HANCOCK FUNDS, INC.
SCHEDULE C
DISTRIBUTION PLAN SCHEDULE OF COMPENSATION
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
FIRST YEAR SERVICE FEE
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will advance to you a First Year Service
Fee related to the purchase of Class A shares (only if subject to sales charge)
or Class B shares of any of the Funds, as the case maybe, sold by your firm on
or after July 1, 1993. This Service Fee will be compensation for your personal
service and/or the maintenance of shareholder accounts ("Customer Servicing")
during the twelve-month period immediately following the purchase of such
shares, in an amount not to exceed .25 of 1% of the average daily net assets
attributable to Class A shares or Class B shares of the Fund, as the case may
be, purchased by your customers.
SERVICE FEE SUBSEQUENT TO THE FIRST YEAR
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will pay you quarterly, in arrears, a
Service Fee commencing at the end of the twelve-month period immediately
following the purchase of Class A shares (only if subject to sales charge) or
Class B shares, as the case may be, sold by your firm, for Customer Servicing,
in an amount not to exceed .25 of 1% of the average daily net assets
attributable to the Class A shares or Class B shares of the Fund, as the case
may be, purchased by your customers, provided your Financial Institution has
under management with the Funds combined average daily net assets for the
preceding quarter of no less than $1 million, or an individual representative
of your Financial Institution has under management with the Funds combined
average daily net assets for the preceding quarter of no less than $250,000 (an
"Eligible Financial Institution").
<PAGE> 1
EXHIBIT 8
MASTER CUSTODIAN AGREEMENT
between
JOHN HANCOCK MUTUAL FUNDS
and
INVESTORS BANK & TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
2. Employment of Custodian and Property to be held by it . . . . . . . . . . . . . . . 3-4
3. Duties of the Custodian with Respect toProperty of the Fund . . . . . . . . . . . . . 4
A. Safekeeping and Holding of Property . . . . . . . . . . . . . . . . . . . . . . 4
B. Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-8
C. Registration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
D. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-9
E. Payments for Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . . . 9
F. Investment and Availability of Federal Funds . . . . . . . . . . . . . . . . . . 9
G. Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-10
H. Payment of Fund Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-12
I. Liability for Payment in Advance of Receipt of Securities Purchased . . . . 12-13
J. Payments for Repurchases of Redemptions of Shares of the Fund . . . . . . . . 13
K. Appointment of Agents by the Custodian . . . . . . . . . . . . . . . . . . . . 13
L. Deposit of Fund Portfolio Securities in Securities Systems . . . . . . . . . 13-16
M. Deposit of Fund Commercial Paper in an Approved
Book-Entry System for Commercial Paper . . . . . . . . . . . . . . . . . 16-18
N. Segregated Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-19
O. Ownership Certificates for Tax Purposes . . . . . . . . . . . . . . . . . . . 19
P. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Q. Communications Relating to Fund Portfolio Securities . . . . . . . . . . . . 19-20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
R. Exercise of Rights; Tender Offers . . . . . . . . . . . . . . . . . . . . . . 20
S. Depository Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-21
T. Interest Bearing Call or Time Deposits . . . . . . . . . . . . . . . . . . . . 21
U. Options, Futures Contracts and Foreign Currency Transactions . . . . . . . . 21-23
V. Actions Permitted Without Express Authority . . . . . . . . . . . . . . . . 23-24
4. Duties of Bank with Respect to Books of Account and
Calculations of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5. Records and Miscellaneous Duties . . . . . . . . . . . . . . . . . . . . . . . . . 24-25
6. Opinion of Fund`s Independent Public Accountants . . . . . . . . . . . . . . . . . . 25
7. Compensation and Expenses of Bank . . . . . . . . . . . . . . . . . . . . . . . . 25-26
8. Responsibility of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-27
9. Persons Having Access to Assets of the Fund . . . . . . . . . . . . . . . . . . . . 27
10. Effective Period, Termination and Amendment; Successor Custodian . . . . . . . . . 27-28
11. Interpretive and Additional Provisions . . . . . . . . . . . . . . . . . . . . . . 28-29
12. Certification as to Authorized Officers . . . . . . . . . . . . . . . . . . . . . . 29
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
14. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15. Adoption of the Agreement by the Fund . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
<PAGE> 4
MASTER CUSTODIAN AGREEMENT
This Agreement is made as of December 15, 1992 between each investment
company advised by John Hancock Advisers, Inc. which has adopted this Agreement
in the manner provided herein and Investors Bank & Trust Company (hereinafter
called "Bank", "Custodian" and "Agent"), a trust company established under the
laws of Massachusetts with a principal place of business in Boston,
Massachusetts.
Whereas, each such investment company is registered under the Investment
Company Act of 1940 and has appointed the Bank to act as Custodian of its
property and to perform certain duties as its Agent, as more fully hereinafter
set forth; and
Whereas, the Bank is willing and able to act as each such investment
company's Custodian and Agent, subject to and in accordance with the provisions
hereof;
Now, therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, each such investment company and the
Bank agree as follows:
1. Definitions
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
(a) "Fund" shall mean the investment company which has adopted this
Agreement and is listed on Appendix A hereto. If the Fund is a Massachusetts
business trust or Maryland corporation, it may in the future establish and
designate other separate and distinct series of shares, each of which may be
called a "portfolio"; in such case, the term "Fund" shall also refer to each
such separate series or portfolio.
(b) "Board" shall mean the board of directors/trustees/managing general
partners/director general partners of the Fund, as the case may be.
(c) "The Depository Trust Company", a clearing agency registered with
the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
(d) "Authorized Officer", shall mean any of the following officers of
the Trust: The Chairman of the Board of Trustees, the President, a Vice
President, the Secretary, the Treasurer or Assistant Secretary or Assistant
Treasurer, or any other officer of the Trust duly authorized to sign by
appropriate resolution of the Board of Trustees of the Trust.
(e) "Participants Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
<PAGE> 5
(f) "Approved Clearing Agency" shall mean any other domestic clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934 which acts as a securities depository
but only if the Custodian has received a certified copy of a vote of the Board
approving such clearing agency as a securities depository for the Fund.
(g) "Federal Book-Entry System" shall mean the book-entry system
referred to in Rule 17f-4(b) under the Investment Company Act of 1940 for
United States and federal agency securities (i.e., as provided in Subpart O of
Treasury Circular No. 300, 31 CFR 306, Subpart B of 31 CFR Part 350, and the
book-entry regulations of federal agencies substantially in the form of Subpart
O).
(h) "Approved Foreign Securities Depository" shall mean a foreign
securities depository or clearing agency referred to in rule 17f-4 under the
Investment Company Act of 1940 for foreign securities but only if the Custodian
has received a certified copy of a vote of the Board approving such depository
or clearing agency as a foreign securities depository for the Fund.
(i) "Approved Book-Entry System for Commercial Paper" shall mean a
system maintained by the Custodian or by a subcustodian employed pursuant to
Section 2 hereof for the holding of commercial paper in book-entry form but
only if the Custodian has received a certified copy of a vote of the Board
approving the participation by the Fund in such system.
(j) The Custodian shall be deemed to have received "proper
instructions" in respect of any of the matters referred to in this Agreement
upon receipt of written or facsimile instructions signed by such one or more
person or persons as the Board shall have from time to time authorized to give
the particular class of instructions in question. Electronic instructions for
the purchase and sale of securities which are transmitted by John Hancock
Advisers, Inc. to the Custodian through the John Hancock equity trading system
and the John Hancock fixed income trading system shall be deemed to be proper
instructions; the Fund shall cause all such instructions to be confirmed in
writing. Different persons may be authorized to give instructions for
different purposes. A certified copy of a vote of the Board may be received
and accepted by the Custodian as conclusive evidence of the authority of any
such person to act and may be considered as in full force and effect until
receipt of written notice to the contrary. Such instructions may be general or
specific in terms and, where appropriate, may be standing instructions. Unless
the vote delegating authority to any person or persons to give a particular
class of instructions specifically requires that the approval of any person,
persons or committee shall first have been obtained before the Custodian may
act on instructions of that class, the Custodian shall be under no obligation
to question the right of the person or persons giving such instructions in so
doing. Oral instructions will be considered proper instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund
shall cause all oral
<PAGE> 6
instructions to be confirmed in writing. The Fund authorizes the Custodian to
tape record any and all telephonic or other oral instructions given to the
Custodian. Upon receipt of a certificate signed by two officers of the Fund as
to the authorization by the President and the Treasurer of the Fund accompanied
by a detailed description of the communication procedures approved by the
President and the Treasurer of the Fund, "proper instructions" may also include
communications effected directly between electromechanical or electronic
devices provided that the President and Treasurer of the Fund and the Custodian
are satisfied that such procedures afford adequate safeguards for the Fund's
assets. In performing its duties generally, and more particularly in
connection with the purchase, sale and exchange of securities made by or for
the Fund, the Custodian may take cognizance of the provisions of the governing
documents and registration statement of the Fund as the same may from time to
time be in effect (and votes, resolutions or proceedings of the shareholders or
the Board), but, nevertheless, except as otherwise expressly provided herein,
the Custodian may assume unless and until notified in writing to the contrary
that so-called proper instructions received by it are not in conflict with or
in any way contrary to any provisions of such governing documents and
registration statement, or votes, resolutions or proceedings of the
shareholders or the Board.
2. Employment of Custodian and Property to be Held by It
The Fund hereby appoints and employs the Bank as its Custodian and Agent
in accordance with and subject to the provisions hereof, and the Bank hereby
accepts such appointment and employment. The Fund agrees to deliver to the
Custodian all securities, participation interests, cash and other assets owned
by it, and all payments of income, payments of principal and capital
distributions and adjustments received by it with respect to all securities and
participation interests owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares ("Shares") of the
Fund as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Fund held by the Fund and not delivered by
the Fund to the Custodian. The Fund will also deliver to the Bank from time to
time copies of its currently effective charter (or declaration of trust or
partnership agreement, as the case may be), by-laws, prospectus, statement of
additional information and distribution agreement with its principal
underwriter, together with such resolutions, votes and other proceedings of the
Fund as may be necessary for or convenient to the Bank in the performance of
its duties hereunder.
The Custodian may from time to time employ one or more subcustodians to
perform such acts and services upon such terms and conditions as shall be
approved from time to time by the Board. Any such subcustodian so employed by
the Custodian shall be deemed to be the agent of the Custodian, and the
Custodian shall remain primarily responsible for the securities, participation
interests, moneys and other property of the Fund held by such subcustodian.
Any foreign subcustodian shall be a bank or trust company which is an eligible
foreign custodian within the meaning of Rule 17f-5 under the Investment Company
Act of 1940, and the foreign custody arrangements shall be approved by the
Board and shall be in accordance with and subject to the provisions of said
Rule. For the
<PAGE> 7
purposes of this Agreement, any property of the Fund held by any such
subcustodian (domestic or foreign) shall be deemed to be held by the Custodian
under the terms of this Agreement.
3. Duties of the Custodian with Respect to Property of the Fund
A. Safekeeping and Holding of Property The Custodian shall keep
safely all property of the Fund and on behalf of the Fund shall
from time to time receive delivery of Fund property for
safekeeping. The Custodian shall hold, earmark and segregate on
its books and records for the account of the Fund all property of
the Fund, including all securities, participation interests and
other assets of the Fund (1) physically held by the Custodian, (2)
held by any subcustodian referred to in Section 2 hereof or by any
agent referred to in Paragraph K hereof, (3) held by or maintained
in The Depository Trust Company or in Participants Trust Company
or in an Approved Clearing Agency or in the Federal Book-Entry
System or in an Approved Foreign Securities Depository, each of
which from time to time is referred to herein as a "Securities
System", and (4) held by the Custodian or by any subcustodian
referred to in Section 2 hereof and maintained in any Approved
Book-Entry System for Commercial Paper.
B. Delivery of Securities The Custodian shall release and deliver
securities or participation interests owned by the Fund held (or
deemed to be held) by the Custodian or maintained in a Securities
System account or in an Approved Book-Entry System for Commercial
Paper account only upon receipt of proper instructions, which may
be continuing instructions when deemed appropriate by the parties,
and only in the following cases:
1) Upon sale of such securities or participation interests
for the account of the Fund, but only against receipt of
payment therefor; if delivery is made in Boston or New
York City, payment therefor shall be made in accordance
with generally accepted clearing house procedures or by
use of Federal Reserve Wire System procedures; if delivery
is made elsewhere payment therefor shall be in accordance
with the then current "street delivery" custom or in
accordance with such procedures agreed to in writing from
time to time by the parties hereto; if the sale is
effected through a Securities System, delivery and payment
therefor shall be made in accordance with the provisions
of Paragraph L hereof; if the sale of commercial paper is
to be effected through an Approved Book-Entry System for
Commercial Paper, delivery and payment therefor shall be
made in accordance with the provisions of Paragraph M
hereof; if the securities are to be sold outside the
United States, delivery may be made in accordance with
procedures agreed to in writing from time to time by the
parties hereto; for the purposes of this subparagraph, the
term "sale" shall include the disposition of a portfolio
<PAGE> 8
security (i) upon the exercise of an option written by the
Fund and (ii) upon the failure by the Fund to make a
successful bid with respect to a portfolio security, the
continued holding of which is contingent upon the making
of such a bid;
2) Upon the receipt of payment in connection with any
repurchase agreement or reverse repurchase agreement
relating to such securities and entered into by the Fund;
3) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
4) To the issuer thereof or its agent when such securities or
participation interests are called, redeemed, retired or
otherwise become payable; provided that, in any such case,
the cash or other consideration is to be delivered to the
Custodian or any subcustodian employed pursuant to Section
2 hereof;
5) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee of the
Custodian or into the name or nominee name of any agent
appointed pursuant to Paragraph K hereof or into the name
or nominee name of any subcustodian employed pursuant to
Section 2 hereof; or for exchange for a different number
of bonds, certificates or other evidence representing the
same aggregate face amount or number of units; provided
that, in any such case, the new securities or
participation interests are to be delivered to the
Custodian or any subcustodian employed pursuant to Section
2 hereof;
6) To the broker selling the same for examination in
accordance with the "street delivery" custom; provided
that the Custodian shall adopt such procedures as the Fund
from time to time shall approve to ensure their prompt
return to the Custodian by the broker in the event the
broker elects not to accept them;
7) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion of
such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian or any
subcustodian employed pursuant to Section 2 hereof;
<PAGE> 9
8) In the case of warrants, rights or similar securities, the
surrender thereof in connection with the exercise of such
warrants, rights or similar securities, or the surrender
of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian or any subcustodian employed pursuant to Section
2 hereof;
9) For delivery in connection with any loans of securities
made by the Fund (such loans to be made pursuant to the
terms of the Fund's current registration statement), but
only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund, which may
be in the form of cash or obligations issued by the United
States government, its agencies or instrumentalities.
10) For delivery as security in connection with any borrowings
by the Fund requiring a pledge or hypothecation of assets
by the Fund (if then permitted under circumstances
described in the current registration statement of the
Fund), provided, that the securities shall be released
only upon payment to the Custodian of the monies borrowed,
except that in cases where additional collateral is
required to secure a borrowing already made, further
securities may be released for that purpose; upon receipt
of proper instructions, the Custodian may pay any such
loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or
notes evidencing the loan;
11) When required for delivery in connection with any
redemption or repurchase of Shares of the Fund in
accordance with the provisions of Paragraph J hereof;
12) For delivery in accordance with the provisions of any
agreement between the Custodian (or a subcustodian
employed pursuant to Section 2 hereof) and a broker-dealer
registered under the Securities Exchange Act of 1934 and,
if necessary, the Fund, relating to compliance with the
rules of The Options Clearing Corporation or of any
registered national securities exchange, or of any similar
organization or organizations, regarding deposit or escrow
or other arrangements in connection with options
transactions by the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian (or a subcustodian
employed pursuant to Section 2 hereof), and a futures
commission merchant, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or
of any
<PAGE> 10
contract market or commodities exchange or similar
organization, regarding futures margin account deposits or
payments in connection with futures transactions by the
Fund;
14) For any other proper corporate purpose, but only upon
receipt of, in addition to proper instructions, a
certified copy of a vote of the Board specifying the
securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose
to be proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be made.
C. Registration of Securities Securities held by the Custodian
(other than bearer securities) for the account of the Fund shall
be registered in the name of the Fund or in the name of any
nominee of the Fund or of any nominee of the Custodian, or in the
name or nominee name of any agent appointed pursuant to Paragraph
K hereof, or in the name or nominee name of any subcustodian
employed pursuant to Section 2 hereof, or in the name or nominee
name of The Depository Trust Company or Participants Trust Company
or Approved Clearing Agency or Federal Book-Entry System or
Approved Book-Entry System for Commercial Paper; provided, that
securities are held in an account of the Custodian or of such
agent or of such subcustodian containing only assets of the Fund
or only assets held by the Custodian or such agent or such
subcustodian as a custodian or subcustodian or in a fiduciary
capacity for customers. All certificates for securities accepted
by the Custodian or any such agent or subcustodian on behalf of
the Fund shall be in "street" or other good delivery form or shall
be returned to the selling broker or dealer who shall be advised
of the reason thereof.
D. Bank Accounts The Custodian shall open and maintain a separate
bank account or accounts in the name of the Fund, subject only to
draft or order by the Custodian acting in pursuant to the terms of
this Agreement, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or
for the account of the Fund other than cash maintained by the Fund
in a bank account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as the Custodian may in its
discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each
such bank or trust company and the funds to be deposited with each
such bank or trust company shall be approved in writing by two
officers of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be subject to
withdrawal only by the Custodian in that capacity.
<PAGE> 11
E. Payment for Shares of the Fund The Custodian shall make
appropriate arrangements with the Transfer Agent and the principal
underwriter of the Fund to enable the Custodian to make certain it
promptly receives the cash or other consideration due to the Fund
for such new or treasury Shares as may be issued or sold from time
to time by the Fund, in accordance with the governing documents
and offering prospectus and statement of additional information of
the Fund. The Custodian will provide prompt notification to the
Fund of any receipt by it of payments for Shares of the Fund.
F. Investment and Availability of Federal Funds Upon agreement
between the Fund and the Custodian, the Custodian shall, upon the
receipt of proper instructions, which may be continuing
instructions when deemed appropriate by the parties, invest in
such securities and instruments as may be set forth in such
instructions on the same day as received all federal funds
received after a time agreed upon between the Custodian and the
Fund.
G. Collections The Custodian shall promptly collect all income and
other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall promptly
collect all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such
securities are held by the Custodian or agent thereof and shall
credit such income, as collected, to the Fund's custodian account.
The Custodian shall do all things necessary and proper in connection with such
prompt collections and, without limiting the generality of the foregoing, the
Custodian shall
1) Present for payment all coupons and other income items
requiring presentations;
2) Present for payment all securities which may mature or be
called, redeemed, retired or otherwise become payable;
3) Endorse and deposit for collection, in the name of the
Fund, checks, drafts or other negotiable instruments;
4) Credit income from securities maintained in a Securities
System or in an Approved Book-Entry System for Commercial
Paper at the time funds become available to the Custodian;
in the case of securities maintained in The Depository
Trust Company funds shall be deemed available to the Fund
not later than the opening of business on the first
business day after receipt of such funds by the Custodian.
<PAGE> 12
The Custodian shall notify the Fund as soon as reasonably practicable whenever
income due on any security is not promptly collected. In any case in which the
Custodian does not receive any due and unpaid income after it has made demand
for the same, it shall immediately so notify the Fund in writing, enclosing
copies of any demand letter, any written response thereto, and memoranda of all
oral responses thereto and to telephonic demands, and await instructions from
the Fund; the Custodian shall in no case have any liability for any nonpayment
of such income provided the Custodian meets the standard of care set forth in
Section 8 hereof. The Custodian shall not be obligated to take legal action
for collection unless and until reasonably indemnified to its satisfaction.
The Custodian shall also receive and collect all stock dividends, rights and
other items of like nature, and deal with the same pursuant to proper
instructions relative thereto.
H. Payment of Fund Moneys Upon receipt of proper instructions, which
may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of the Fund in the
following cases only:
1) Upon the purchase of securities, participation interests,
options, futures contracts, forward contracts and options
on futures contracts purchased for the account of the Fund
but only (a) against the receipt of
(i) such securities registered as provided in
Paragraph C hereof or in proper form for
transfer or
(ii) detailed instructions signed by an officer of the
Fund regarding the participation interests to be
purchased or
(iii) written confirmation of the purchase by the Fund
of the options, futures contracts, forward
contracts or options on futures contracts
by the Custodian (or by a subcustodian employed pursuant
to Section 2 hereof or by a clearing corporation of a
national securities exchange of which the Custodian is a
member or by any bank, banking institution or trust
company doing business in the United States or abroad
which is qualified under the Investment Company Act of
1940 to act as a custodian and which has been designated
by the Custodian as its agent for this purpose or by the
agent specifically designated in such instructions as
representing the purchasers of a new issue of privately
placed securities); (b) in the case of a purchase effected
through a Securities System, upon receipt of the
securities by the Securities System in accordance with the
conditions set forth in Paragraph L hereof; (c) in the
case of a purchase of commercial paper effected through an
Approved Book-Entry System for Commercial Paper, upon
<PAGE> 13
receipt of the paper by the Custodian or subcustodian in
accordance with the conditions set forth in Paragraph M
hereof; (d) in the case of repurchase agreements entered
into between the Fund and another bank or a broker-
dealer, against receipt by the Custodian of the securities
underlying the repurchase agreement either in certificate
form or through an entry crediting the Custodian's
segregated, non-proprietary account at the Federal Reserve
Bank of Boston with such securities along with written
evidence of the agreement by the bank or broker-dealer to
repurchase such securities from the Fund; or (e) with
respect to securities purchased outside of the United
States, in accordance with written procedures agreed to
from time to time in writing by the parties hereto;
2) When required in connection with the conversion, exchange
or surrender of securities owned by the Fund as set forth
in Paragraph B hereof;
3) When required for the redemption or repurchase of Shares
of the Fund in accordance with the provisions of Paragraph
J hereof;
4) For the payment of any expense or liability incurred by
the Fund, including but not limited to the following
payments for the account of the Fund: advisory fees,
distribution plan payments, interest, taxes, management
compensation and expenses, accounting, transfer agent and
legal fees, and other operating expenses of the Fund
whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends or other distributions to
holders of Shares declared or authorized by the Board; and
6) For any other proper corporate purpose, but only upon
receipt of, in addition to proper instructions, a
certified copy of a vote of the Board, specifying the
amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose
to be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made.
I. Liability for Payment in Advance of Receipt of Securities
Purchased In any and every case where payment for purchase of
securities for the account of the Fund is made by the Custodian in
advance of receipt of the securities purchased in the absence of
specific written instructions signed by two officers of the Fund
to so pay in advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if the
securities had been received by the Custodian; except that in the
case of a repurchase agreement
<PAGE> 14
entered into by the Fund with a bank which is a member of the
Federal Reserve System, the Custodian may transfer funds to the
account of such bank prior to the receipt of (i) the securities in
certificate form subject to such repurchase agreement or (ii)
written evidence that the securities subject to such repurchase
agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the
Federal Reserve Bank of Boston or (iii) the safekeeping receipt,
provided that such securities have in fact been so transferred by
book-entry and the written repurchase agreement is received by the
Custodian in due course; and except that if the securities are to
be purchased outside the United States, payment may be made in
accordance with procedures agreed to from time to time by the
parties hereto.
J. Payments for Repurchases or Redemptions of Shares of the Fund
From such funds as may be available for the purpose, but subject
to any applicable votes of the Board and the current redemption
and repurchase procedures of the Fund, the Custodian shall, upon
receipt of written instructions from the Fund or from the Fund's
transfer agent or from the principal underwriter, make funds
and/or portfolio securities available for payment to holders of
Shares who have caused their Shares to be redeemed or repurchased
by the Fund or for the Fund's account by its transfer agent or
principal underwriter.
The Custodian may maintain a special checking account upon which
special checks may be drawn by shareholders of the Fund holding
Shares for which certificates have not been issued. Such checking
account and such special checks shall be subject to such rules and
regulations as the Custodian and the Fund may from time to time
adopt. The Custodian or the Fund may suspend or terminate use of
such checking account or such special checks (either generally or
for one or more shareholders) at any time. The Custodian and the
Fund shall notify the other immediately of any such suspension or
termination.
K. Appointment of Agents by the Custodian The Custodian may at any
time or times in its discretion appoint (and may at any time
remove) any other bank or trust company (provided such bank or
trust company is itself qualified under the Investment Company Act
of 1940 to act as a custodian or is itself an eligible foreign
custodian within the meaning of Rule 17f-5 under said Act) as the
agent of the Custodian to carry out such of the duties and
functions of the Custodian described in this Section 3 as the
Custodian may from time to time direct; provided, however, that
the appointment of any such agent shall not relieve the Custodian
of any of its responsibilities or liabilities hereunder, and as
between the Fund and the Custodian the Custodian shall be fully
responsible for the acts and omissions of any such agent. For the
purposes of this Agreement, any property of the Fund held by any
such agent shall be deemed to be held by the Custodian hereunder.
<PAGE> 15
L. Deposit of Fund Portfolio Securities in Securities Systems The
Custodian may deposit and/or maintain securities owned by the Fund
(1) in The Depository Trust Company;
(2) in Participants Trust Company;
(3) in any other Approved Clearing Agency;
(4) in the Federal Book-Entry System; or
(5) in an Approved Foreign Securities Depository
in each case only in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and
regulations, and at all times subject to the following
provisions:
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2) keep securities of
the Fund in a Securities System provided that such securities are
maintained in a non-proprietary account ("Account") of the
Custodian or such subcustodian in the Securities System which
shall not include any assets of the Custodian or such subcustodian
or any other person other than assets held by the Custodian or
such subcustodian as a fiduciary, custodian, or otherwise for its
customers.
(b) The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund, and the
Custodian shall be fully and completely responsible for
maintaining a recordkeeping system capable of accurately and
currently stating the Fund's holdings maintained in each such
Securities System.
(c) The Custodian shall pay for securities purchased in book-entry
form for the account of the Fund only upon (i) receipt of notice
or advice from the Securities System that such securities have
been transferred to the Account, and (ii) the making of any entry
on the records of the Custodian to reflect such payment and
transfer for the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund only upon (i)
receipt of notice or advice from the Securities System that
payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Fund.
Copies of all notices or advises from the Securities System of
transfers of securities for the account of the Fund shall identify
the Fund, be maintained for the Fund by the Custodian and be
promptly provided to the Fund at its request.
<PAGE> 16
The Custodian shall promptly send to the Fund confirmation of each
transfer to or from the account of the Fund in the form of a
written advice or notice of each such transaction, and shall
furnish to the Fund copies of daily transaction sheets reflecting
each day's transactions in the Securities System for the account
of the Fund on the next busines day.
(d) The Custodian shall promptly send to the Fund any report or other
communication received or obtained by the Custodian relating to
the Securities System's accounting system, system of internal
accounting controls or procedures for safeguarding securities
deposited in the Securities System; the Custodian shall promptly
send to the Fund any report or other communication relating to the
Custodian's internal accounting controls and procedures for
safeguarding securities deposited in any Securities System; and
the Custodian shall ensure that any agent appointed pursuant to
Paragraph K hereof or any subcustodian employed pursuant to
Section 2 hereof shall promptly send to the Fund and to the
Custodian any report or other communication relating to such
agent's or subcustodian's internal accounting controls and
procedures for safeguarding securities deposited in any Securities
System. The Custodian's books and records relating to the Fund's
participation in each Securities System will at all times during
regular business hours be open to the inspection of the Fund's
authorized officers, employees or agents.
(e) The Custodian shall not act under this Paragraph L in the absence
of receipt of a certificate of an officer of the Fund that the
Board has approved the use of a particular Securities System; the
Custodian shall also obtain appropriate assurance from the
officers of the Fund that the Board has annually reviewed and
approved the continued use by the Fund of each Securities System,
so long as such review and approval is required by Rule 17f-4
under the Investment Company Act of 1940, and the Fund shall
promptly notify the Custodian if the use of a Securities System is
to be discontinued; at the request of the Fund, the Custodian will
terminate the use of any such Securities System as promptly as
practicable.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any
of its agents or subcustodians or of any of its or their employees
or from any failure of the Custodian or any such agent or
subcustodian to enforce effectively such rights as it may have
against the Securities System or any other person; at the election
of the Fund, it shall be entitled to be
<PAGE> 17
subrogated to the rights of the Custodian with respect to any
claim against the Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage if
and to the extent that the Fund has not been made whole for any
such loss or damage.
M. Deposit of Fund Commercial Paper in an Approved Book-Entry System for
Commercial Paper Upon receipt of proper instructions with respect to
each issue of direct issue commercial paper purchased by the Fund, the
Custodian may deposit and/or maintain direct issue commercial paper
owned by the Fund in any Approved Book-Entry System for Commercial
Paper, in each case only in accordance with applicable Securities and
Exchange Commission rules, regulations, and no-action correspondence,
and at all times subject to the following provisions:
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2) keep
commercial paper of the Fund in an Approved Book-Entry
System for Commercial Paper, provided that such paper is
issued in book entry form by the Custodian or subcustodian
on behalf of an issuer with which the Custodian or
subcustodian has entered into a book-entry agreement and
provided further that such paper is maintained in a
non-proprietary account ("Account") of the Custodian or
such subcustodian in an Approved Book-Entry System for
Commercial Paper which shall not include any assets of the
Custodian or such subcustodian or any other person other
than assets held by the Custodian or such subcustodian as
a fiduciary, custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to commercial
paper of the Fund which is maintained in an Approved
Book-Entry System for Commercial Paper shall identify by
book-entry each specific issue of commercial paper
purchased by the Fund which is included in the System and
shall at all times during regular business hours be open
for inspection by authorized officers, employees or agents
of the Fund. The Custodian shall be fully and completely
responsible for maintaining a recordkeeping system capable
of accurately and currently stating the Fund's holdings of
commercial paper maintained in each such System.
(c) The Custodian shall pay for commercial paper purchased in
book-entry form for the account of the Fund only upon
contemporaneous (i) receipt of notice or advice from the
issuer that such paper has been issued, sold and
transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
purchase, payment and transfer for the account of the
Fund. The Custodian shall transfer such commercial
<PAGE> 18
paper which is sold or cancel such commercial paper which
is redeemed for the account of the Fund only upon
contemporaneous (i) receipt of notice or advice that
payment for such paper has been transferred to the
Account, and (ii) the making of an entry on the records of
the Custodian to reflect such transfer or redemption and
payment for the account of the Fund. Copies of all
notices, advises and confirmations of transfers of
commercial paper for the account of the Fund shall
identify the Fund, be maintained for the Fund by the
Custodian and be promptly provided to the Fund at its
request. The Custodian shall promptly send to the Fund
confirmation of each transfer to or from the account of
the Fund in the form of a written advice or notice of each
such transaction, and shall furnish to the Fund copies of
daily transaction sheets reflecting each day's
transactions in the System for the account of the Fund on
the next business day.
(d) The Custodian shall promptly send to the Fund any report
or other communication received or obtained by the
Custodian relating to each System's accounting system,
system of internal accounting controls or procedures for
safeguarding commercial paper deposited in the System; the
Custodian shall promptly send to the Fund any report or
other communication relating to the Custodian's internal
accounting controls and procedures for safeguarding
commercial paper deposited in any Approved Book-Entry
System for Commercial Paper; and the Custodian shall
ensure that any agent appointed pursuant to Paragraph K
hereof or any subcustodian employed pursuant to Section 2
hereof shall promptly send to the Fund and to the
Custodian any report or other communication relating to
such agent's or subcustodian's internal accounting
controls and procedures for safeguarding securities
deposited in any Approved Book-Entry System for Commercial
Paper.
(e) The Custodian shall not act under this Paragraph M in the
absence of receipt of a certificate of an officer of the
Fund that the Board has approved the use of a particular
Approved Book-Entry System for Commercial Paper; the
Custodian shall also obtain appropriate assurance from the
officers of the Fund that the Board has annually reviewed
and approved the continued use by the Fund of each
Approved Book-Entry System for Commercial Paper, so long
as such review and approval is required by Rule 17f-4
under the Investment Company Act of 1940, and the Fund
shall promptly notify the Custodian if the use of an
Approved Book-Entry System for Commercial Paper is to
be discontinued; at the request of the Fund, the Custodian
will terminate the use of any such System as promptly as
practicable.
<PAGE> 19
(f) The Custodian (or subcustodian, if the Approved Book-Entry
System for Commercial Paper is maintained by the
subcustodian) shall issue physical commercial paper or
promissory notes whenever requested to do so by the Fund
or in the event of an electronic system failure which
impedes issuance, transfer or custody of direct issue
commercial paper by book-entry.
(g) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to the Fund
for any loss or damage to the Fund resulting from use of
any Approved Book-Entry System for Commercial Paper by
reason of any negligence, misfeasance or misconduct of the
Custodian or any of its agents or subcustodians or of any
of its or their employees or from any failure of the
Custodian or any such agent or subcustodian to enforce
effectively such rights as it may have against the System,
the issuer of the commercial paper or any other person; at
the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to
any claim against the System, the issuer of the commercial
paper or any other person which the Custodian may have as
a consequence of any such loss or damage if and to the
extent that the Fund has not been made whole for any such
loss or damage.
N. Segregated Account The Custodian shall upon receipt of proper
instructions establish and maintain a segregated account or
accounts for and on behalf of the Fund, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to
Paragraph L hereof, (i) in accordance with the provisions of any
agreement among the Fund, the Custodian and any registered
broker-dealer (or any futures commission merchant), relating to
compliance with the rules of the Options Clearing Corporation and
of any registered national securities exchange (or of the
Commodity Futures Trading Commission or of any contract market or
commodities exchange), or of any similar organization or
organizations, regarding escrow or deposit or other arrangements
in connection with transactions by the Fund (ii) for purposes
of segregating cash or U.S. Government securities in connection
with options purchased, sold or written by the Fund or futures
contracts or options thereon purchased or sold by the Fund,
(iii) for the purposes of compliance by the Fund with
the procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated
accounts by registered investment companies and (iv) for other
proper purposes, but only, in the case of clause (iv), upon
receipt of, in addition to proper instructions, a certificate
signed by two officers of the Fund, setting forth the purpose such
segregated account and declaring such purpose to be a proper
purpose.
<PAGE> 20
O. Ownership Certificates for Tax Purposes The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of
income or other payments with respect to securities of the Fund
held by it and in connection with transfers of securities.
P. Proxies The Custodian shall, with respect to the securities held
by it hereunder, cause to be promptly delivered to the Fund all
forms of proxies and all notices of meetings and any other notices
or announcements or other written information affecting or
relating to the securities, and upon receipt of proper
instructions shall execute and deliver or cause its nominee to
execute and deliver such proxies or other authorizations as may be
required. Neither the Custodian nor its nominee shall vote upon
any of the securities or execute any proxy to vote thereon or give
any consent or take any other action with respect thereto (except
as otherwise herein provided) unless ordered to do so by proper
instructions.
Q. Communications Relating to Fund Portfolio Securities The
Custodian shall deliver promptly to the Fund all written
information (including, without limitation, pendency of call and
maturities of securities and participation interests and
expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund and the
maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers and other persons relating
to the securities and participation interests being held for the
Fund. With respect to tender or exchange offers, the Custodian
shall deliver promptly to the Fund all written information
received by the Custodian from issuers and other persons relating
to the securities and participation interests whose tender or
exchange is sought and from the party (or his agents) making the
tender or exchange offer.
R. Exercise of Rights; Tender Offers In the case of tender offers,
similar offers to purchase or exercise rights (including, without
limitation, pendency of calls and maturities of securities and
participation interests and expirations of rights in connection
therewith and notices of exercise of call and put options and the
maturity of futures contracts) affecting or relating to securities
and participation interests held by the Custodian under this
Agreement, the Custodian shall have responsibility for promptly
notifying the Fund of all such offers in accordance with the
standard of reasonable care set forth in Section 8 hereof. For
all such offers for which the Custodian is responsible as provided
in this Paragraph R, the Fund shall have responsibility for
providing the Custodian with all necessary instructions in timely
fashion. Upon receipt of proper instructions, the Custodian shall
timely deliver to the issuer or trustee thereof, or to the agent
of either, warrants, puts, calls, rights or similar
<PAGE> 21
securities for the purpose of being exercised or sold upon proper
receipt therefor and upon receipt of assurances satisfactory to
the Custodian that the new securities and cash, if any, acquired
by such action are to be delivered to the Custodian or any
subcustodian employed pursuant to Section 2 hereof. Upon receipt
of proper instructions, the Custodian shall timely deposit
securities upon invitations for tenders of securities upon proper
receipt therefor and upon receipt of assurances satisfactory to
the Custodian that the consideration to be paid or delivered or
the tendered securities are to be returned to the Custodian or
subcustodian employed pursuant to Section 2 hereof.
Notwithstanding any provision of this Agreement to the contrary,
the Custodian shall take all necessary action, unless otherwise
directed to the contrary by proper instructions, to comply with
the terms of all mandatory or compulsory exchanges, calls,
tenders, redemptions, or similar rights of security ownership, and
shall thereafter promptly notify the Fund in writing of such
action.
S. Depository Receipts The Custodian shall, upon receipt of proper
instructions, surrender or cause to be surrendered foreign
securities to the depository used by an issuer of American
Depository Receipts, European Depository Receipts or International
Depository Receipts (hereinafter collectively referred to as
"ADRs") for such securities,
against a written receipt therefor adequately describing such
securities and written evidence satisfactory to the Custodian that
the depository has acknowledged receipt of instructions to issue
with respect to such securities ADRs in the name of a nominee of
the Custodian or in the name or nominee name of any subcustodian
employed pursuant to Section 2 hereof, for delivery to the
Custodian or such subcustodian at such place as the Custodian or
such subcustodian may from time to time designate. The Custodian
shall, upon receipt of proper instructions, surrender ADRs to the
issuer thereof against a written receipt therefor adequately
describing the ADRs surrendered and written evidence satisfactory
to the Custodian that the issuer of the ADRs has acknowledged
receipt of instructions to cause its depository to deliver the
securities underlying such ADRs to the Custodian or to a
subcustodian employed pursuant to Section 2 hereof.
T. Interest Bearing Call or Time Deposits The Custodian shall, upon
receipt of proper instructions, place interest bearing fixed term
and call deposits with the banking department of such banking
institution (other than the Custodian) and in such amounts as the
Fund may designate. Deposits may be denominated in U.S. Dollars
or other currencies. The Custodian shall include in its records
with respect to the assets of the Fund appropriate notation as to
the amount and currency of each such deposit, the accepting
banking institution and other appropriate details and shall retain
such forms of advice or receipt evidencing the deposit, if any, as
may be forwarded to the Custodian by the banking
<PAGE> 22
institution. Such deposits shall be deemed portfolio securities
of the applicable Fund for the purposes of this Agreement, and the
Custodian shall be responsible for the collection of income from
such accounts and the transmission of cash to and from such
accounts.
U. Options, Futures Contracts and Foreign Currency Transactions
1. Options. The Custodians shall, upon receipt of proper
instructions and in accordance with the provisions of any
agreement between the Custodian, any registered
broker-dealer and, if necessary, the Fund, relating to
compliance with the rules of the Options Clearing
Corporation or of any registered national securities
exchange or similar organization or organizations, receive
and retain confirmations or other documents, if any,
evidencing the purchase or writing of an option on a
security, securities index, currency or other financial
instrument or index by the Fund; deposit and maintain in
a segregated account for each Fund separately, either
physically or by book-entry in a Securities System,
securities subject to a covered call option written by
the Fund; and release and/or transfer such securities or
other assets only in accordance with a notice or other
communication evidencing the expiration, termination or
exercise of such covered option furnished by the Options
Clearing Corporation, the securities or options exchange
on which such covered option is traded or such other
organization as may be responsible for handling such o
ptions transactions. The Custodian and the broker-dealer
shall be responsible for the sufficiency of assets held
in each Fund's segregated account in compliance with
applicable margin maintenance requirements.
2. Futures Contracts The Custodian shall, upon receipt of
proper instructions, receive and retain confirmations and
other documents, if any, evidencing the purchase or sale
of a futures contract or an option on a futures contract
by the Fund; deposit and maintain in a segregated account,
for the benefit of any futures commission merchant, assets
designated by the Fund as initial, maintenance or
variation "margin" deposits (including mark-to-market
payments) intended to secure the Fund's performance of its
obligations under any futures contracts purchased or sold
or any options on futures contracts written by Fund, in
accordance with the provisions of any agreement or
agreements among the Fund, the Custodian and such futures
commission merchant, designed to comply with the rules of
the Commodity Futures Trading Commission and/or of any
contract market or commodities exchange or similar
organization regarding such margin deposits or payments;
and release and/or transfer assets in such margin accounts
only in
<PAGE> 23
accordance with any such agreements or rules. The
Custodian and the futures commission merchant shall be
responsible for the sufficiency of assets held in the
segregated account in compliance with the applicable
margin maintenance and mark-to-market payment
requirements.
3. Foreign Exchange Transactions The Custodian shall,
pursuant to proper instructions, enter into or cause a
subcustodian to enter into foreign exchange contracts,
currency swaps or options to purchase and sell foreign
currencies for spot and future delivery on behalf and for
the account of the Fund. Such transactions may be
undertaken by the Custodian or subcustodian with such
banking or financial institutions or other currency
brokers, as set forth in proper instructions. Foreign
exchange contracts, swaps and options shall be deemed to
be portfolio securities of the Fund; and accordingly, the
responsibility of the Custodian therefor shall be the same
as and no greater than the Custodian's responsibility in
respect of other portfolio securities of the Fund. The
Custodian shall be responsible for the transmittal to and
receipt of cash from the currency broker or banking or
financial institution with which the contract or option is
made, the maintenance of proper records with respect to
the transaction and the maintenance of any segregated
account required in connection with the transaction. The
Custodian shall have no duty with respect to the selection
of the currency brokers or banking or financial
institutions with which the Fund deals or for their
failure to comply with the terms of any contract or
option. Without limiting the foregoing, it is agreed that
upon receipt of proper instructions and insofar as funds
are made available to the Custodian for the purpose, the
Custodian may (if determined necessary by the Custodian to
consummate a particular transaction on behalf and for the
account of the Fund) make free outgoing payments of cash
in the form of U.S. dollars or foreign currency before
receiving confirmation of a foreign exchange contract or
swap or confirmation that the countervalue currency
completing the foreign exchange contract or swap has been
delivered or received. The Custodian shall not be
responsible for any costs and interest charges which may
be incurred by the Fund or the Custodian as a result of
the failure or delay of third parties to deliver foreign
exchange; provided that the Custodian shall nevertheless
be held to the standard of care set forth in, and shall be
liable to the Fund in accordance with, the provisions of
Section 8.
V. Actions Permitted Without Express Authority The Custodian may in its
discretion, without express authority from the Fund:
<PAGE> 24
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Agreement, provided, that all such
payments shall be accounted for by the Custodian to the
Treasurer of the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
4) in general, attend to all nondiscretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the securities
and property of the Fund except as otherwise directed by
the Fund.
4. Duties of Bank with Respect to Books of Account and Calculations of Net
Asset Value
The Bank shall as Agent (or as Custodian, as the case may be) keep such books
of account and render as at the close of business on each day a detailed
statement of the amounts received or paid out and of securities received or
delivered for the account of the Fund during said day and such other
statements, including a daily trial balance and inventory of the Fund's
portfolio securities; and shall furnish such other financial information and
data as from time to time requested by the Treasurer or any authorized officer
of the Fund; and shall compute and determine, as of the close of regular
trading on the New York Stock Exchange, or at such other time or times as the
Board may determine, the net asset value of a Share in the Fund, such
computation and determination to be made in accordance with the governing
documents of the Fund and the votes and instructions of the Board at the time
in force and applicable, and promptly notify the Fund and its investment
adviser and such other persons as the Fund may request of the result of such
computation and determination. In computing the net asset value the Custodian
may rely upon security quotations received by telephone or otherwise from
sources or pricing services designated by the Fund by proper instructions, and
may further rely upon information furnished to it by any authorized officer of
the Fund relative (a) to liabilities of the Fund not appearing on its books of
account, (b) to the existence, status and proper treatment of any reserve or
reserves, (c) to any procedures established by the Board regarding the
valuation of portfolio securities, and (d) to the value to be assigned to any
bond, note, debenture, Treasury bill, repurchase agreement, subscription right,
security, participation interest or other asset or property for which market
quotations are not readily available.
5. Records and Miscellaneous Duties
The Bank shall create, maintain and preserve all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund
<PAGE> 25
under the Investment Company Act of 1940, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable federal and state
tax laws and any other law or administrative rules or procedures which may be
applicable to the Fund. All books of account and records maintained by the
Bank in connection with the performance of its duties under this Agreement
shall be the property of the Fund, shall at all times during the regular
business hours of the Bank be open for inspection by authorized officers,
employees or agents of the Fund, and in the event of termination of this
Agreement shall be delivered to the Fund or to such other person or persons as
shall be designated by the Fund. Disposition of any account or record after
any required period of preservation shall be only in accordance with specific
instructions received from the Fund. The Bank shall assist generally in the
preparation of reports to shareholders, audits of accounts, and other
ministerial matters of like nature; and, upon request, shall furnish the Fund's
auditors with an attested inventory of securities held with appropriate
information as to securities in transit or in the process of purchase or sale
and with such other information as said auditors may from time to time request.
The Custodian shall also maintain records of all receipts, deliveries and
locations of such securities, together with a current inventory thereof, and
shall conduct periodic verifications (including sampling counts at the
Custodian) of certificates representing bonds and other securities for which it
is responsible under this Agreement in such manner as the Custodian shall
determine from time to time to be advisable in order to verify the accuracy of
such inventory. The Bank shall not disclose or use any books or records it has
prepared or maintained by reason of this Agreement in any manner except as
expressly authorized herein or directed by the Fund, and the Bank shall keep
confidential any information obtained by reason of this Agreement.
6. Opinion of Fund's Independent Public Accountants
The Custodian shall take all reasonable action, as the Fund may from time to
time request, to enable the Fund to obtain from year to year favorable opinions
from the Fund's independent public accountants with respect to its activities
hereunder in connection with the preparation of the Fund's registration
statement and Form N-SAR or other periodic reports to the Securities and
Exchange Commission and with respect to any other requirements of such
Commission.
7. Compensation and Expenses of Bank
The Bank shall be entitled to reasonable compensation for its services as
Custodian and Agent, as agreed upon from time to time between the Fund and the
Bank. The Bank shall entitled to receive from the Fund on demand reimbursement
for its cash disbursements, expenses and charges, including counsel fees, in
connection with its duties as Custodian and Agent hereunder, but excluding
salaries and usual overhead expenses.
<PAGE> 26
8. Responsibility of Bank
So long as and to the extent that it is in the exercise of reasonable care, the
Bank as Custodian and Agent shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties.
The Bank as Custodian and Agent shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to
such advice.
The Bank as Custodian and Agent shall be held to the exercise of reasonable
care in carrying out the provisions of this Agreement but shall be liable only
for its own negligent or bad faith acts or failures to act. Notwithstanding
the foregoing, nothing contained in this paragraph is intended to nor shall it
be construed to modify the standards of care and responsibility set forth in
Section 2 hereof with respect to subcustodians and in subparagraph f of
Paragraph L of Section 3 hereof with respect to Securities Systems and in
subparagraph g of Paragraph M of Section 3 hereof with respect to an Approved
Book-Entry System for Commercial Paper.
The Custodian shall be liable for the acts or omissions of a foreign banking
institution to the same extent as set forth with respect to subcustodians
generally in Section 2 hereof, provided that, regardless of whether assets are
maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank, the Custodian shall not be
liable for any loss, damage, cost, expense, liability or claim resulting from,
or caused by, the direction of or authorization by the Fund to maintain custody
of any securities or cash of the Fund in a foreign county including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, revolution,
military or usurped powers, nuclear fission, fusion or radiation, earthquake,
storm or other disturbance of nature or acts of God.
If the Fund requires the Bank in any capacity to take any action with respect
to securities, which action involves the payment of money or which action may,
in the opinion of the Bank, result in the Bank or its nominee assigned to the
Fund being liable for the payment of money or incurring liability of some other
form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
9. Persons Having Access to Assets of the Fund
(i) No trustee, director, general partner, officer, employee
or agent of the Fund shall have physical access to the
assets of the Fund held by the Custodian or be authorized
or permitted to withdraw any investments of the Fund, nor
shall the Custodian deliver any assets of the Fund to any
such person. No officer or director, employee or agent of
the Custodian who holds any similar position with the Fund
or the
<PAGE> 27
investment adviser of the Fund shall have access to the
assets of the Fund.
(ii) Access to assets of the Fund held hereunder shall only be
available to duly authorized officers, employees,
representatives or agents of the Custodian or other
persons or entities for whose actions the Custodian shall
be responsible to the extent permitted hereunder, or to
the Fund's independent public accountants in connection
with their auditing duties performed on behalf of the
Fund.
(iii) Nothing in this Section 9 shall prohibit any officer,
employee or agent of the Fund or of the investment adviser
of the Fund from giving instructions to the Custodian or
executing a certificate so long as it does not result in
delivery of or access to assets of the Fund prohibited by
paragraph (i) of this Section 9.
10. Effective Period, Termination and Amendment; Successor Custodian
This Agreement shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid
to the other party, such termination to take effect not sooner than sixty (60)
days after the date of such delivery or mailing; provided, that the Fund may at
any time by action of its Board, (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Federal Deposit Insurance
Corporation or by the Banking Commissioner of The Commonwealth of Massachusetts
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction. Upon termination of the
Agreement, the Fund shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
Unless the holders of a majority of the outstanding Shares of the Fund vote to
have the securities, funds and other properties held hereunder delivered and
paid over to some other bank or trust company, specified in the vote, having
not less than $2,000,000 of aggregate capital, surplus and undivided profits,
as shown by its last published report, and meeting such other qualifications
for custodians set forth in the Investment Company Act of 1940, the Board
shall, forthwith, upon giving or receiving notice of termination of this
Agreement, appoint as successor custodian, a bank or trust company having such
qualifications. The Bank, as Custodian, Agent or otherwise, shall, upon
termination of the Agreement, deliver to such successor custodian, all
securities then held hereunder and all funds or other properties of the Fund
deposited with or held by the Bank hereunder and all books of account and
records kept by the Bank pursuant to this Agreement, and all documents held by
the Bank relative thereto. In the event that no such vote has been
<PAGE> 28
adopted by the shareholders and that no written order designating a successor
custodian shall have been delivered to the Bank on or before the date when such
termination shall become effective, then the Bank shall not deliver the
securities, funds and other properties of the Fund to the Fund but shall have
the right to deliver to a bank or trust company doing business in Boston,
Massachusetts of its own selection, having an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than
$2,000,000, all funds, securities and properties of the Fund held by or
deposited with the Bank, and all books of account and records kept by the Bank
pursuant to this Agreement, and all documents held by the Bank relative
thereto. Thereafter such bank or trust company shall be the successor of the
Custodian under this Agreement.
11. Interpretive and Additional Provisions
In connection with the operation of this Agreement, the Custodian and the Fund
may from time to time agree on such provisions interpretive of or in addition
to the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of the
governing instruments of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment
of this Agreement.
12. Certification as to Authorized Officers
The Secretary of the Fund shall at all times maintain on file with the Bank his
certification to the Bank, in such form as may be acceptable to the Bank, of
the names and signatures of the authorized officers of each fund, it being
understood that upon the occurence of any change in the information set forth
in the most recent certification on file (including without limitation any
person named in the most recent certification who has ceased to hold the office
designated therein), the Secretary of the Fund shall sign a new or amended
certification setting forth the change and the new, additional or ommitted
names or signatures. The Bank shall be entitled to rely and act upon any
officers named in the most recent certification.
13. Notices
Notices and other writings delivered or mailed postage prepaid to the Fund
addressed to Thomas H. Drohan, John Hancock Advisers, Inc., 101 Huntington
Avenue, Boston, Massachusetts 02199, or to such other address as the Fund may
have designated to the Bank, in writing, or to Investors Bank & Trust Company,
24 Federal Street, Boston, Massachusetts 02110, shall be deemed to have been
properly delivered or given hereunder to the respective addressees.
<PAGE> 29
14. Massachusetts Law to Apply; Limitations on Liability
This Agreement shall be construed and the provisions thereof interpreted under
and in accordance with the laws of The Commonwealth of Massachusetts.
If the Fund is a Massachusetts business trust, the Custodian expressly
acknowledges the provision in the Fund's declaration of trust limiting the
personal liability of the trustees and shareholders of the Fund; and the
Custodian agrees that it shall have recourse only to the assets of the Fund for
the payment of claims or obligations as between the Custodian and the Fund
arising out of this Agreement, and the Custodian shall not seek satisfaction of
any such claim or obligation from the trustees or shareholders of the Fund.
Each Fund, and each series or portfolio of a Fund, shall be liable only for its
own obligations to the Custodian under this Agreement and shall not be jointly
or severally liable for the obligations of any other Fund, series or portfolio
hereunder.
<PAGE> 30
15. Adoption of the Agreement by the Fund
The Fund represents that its Board has approved this Agreement and has duly
authorized the Fund to adopt this Agreement. This Agreement shall be deemed to
supersede and terminate, as of the date first written above, all prior
agreements between the Fund and the Bank relating to the custody of the Fund's
assets.
* * * *
<PAGE> 31
In Witness Whereof, the parties hereto have caused this agreement to be
executed in duplicate as of the date first written above by their respective
officers thereunto duly authorized.
John Hancock Mutual Funds
by: /s/ Robert G. Freedman
---------------------------
Attest:
/s/Avery P. Maher
- -------------------
Investors Bank & Trust Company
by: /s/ Henry M. Joyce
---------------------------
Attest:
/s/ JM Keenan
- -------------------
<PAGE> 32
Page 1 of 2
INVESTORS BANK & TRUST COMPANY
APPENDIX A
[EFFECTIVE JANUARY 30, 1995]
John Hancock Limited Term Government Fund
John Hancock Capital Series
John Hancock Special Value Fund
John Hancock Growth Fund
John Hancock Income Securities Trust
John Hancock Investors Trust
John Hancock Sovereign Bond Fund
John Hancock Sovereign Investors Fund, Inc.
John Hancock Sovereign Investors Fund
John Hancock Sovereign Balanced Fund
John Hancock Special Equities Fund
John Hancock Strategic Series
John Hancock Independence Diversified Core Equity Fund
John Hancock Strategic Income Fund
John Hancock Utilities Fund
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Exempt Series Fund
California Portfolio
Massachusetts Portfolio
New York Portfolio
John Hancock Technology Series, Inc.
John Hancock National Aviation & Technology Fund
John Hancock Global Technology Fund
Freedom Investment Trust
John Hancock Gold & Government Fund
John Hancock Regional Bank Fund
John Hancock Sovereign U.S. Government Income Fund
John Hancock Managed Tax-Exempt Fund
John Hancock Sovereign Achievers Fund
Freedom Investment Trust II
John Hancock Special Opportunities Fund
Freedom Investment Trust III
John Hancock Discovery Fund
<PAGE> 33
Page 2 of 2
INVESTORS BANK & TRUST COMPANY
APPENDIX A
[EFFECTIVE JANUARY 30, 1995]
John Hancock Series, Inc.
John Hancock Emerging Growth Fund
John Hancock Global Resources Fund
John Hancock Government Income Fund
John Hancock High Yield Bond Fund
John Hancock High Yield Tax-Free Fund
John Hancock Money Market Fund B
John Hancock Cash Reserve, Inc.
John Hancock Current Interest
John Hancock U.S. Government Cash Reserve
John Hancock Capital Growth Fund
John Hancock Investment Trust
John Hancock Growth and Income Fund
John Hancock California Tax-Free Income Fund
John Hancock Tax-Free Bond Fund
John Hancock Bond Fund
John Hancock Investment Quality Bond Fund
John Hancock Government Securities Trust
John Hancock U.S. Government Trust
John Hancock Adjustable U.S. Government Trust
John Hancock Adjustable U.S. Government Fund
John Hancock Intermediate Government Trust
John Hancock Institutional Series Trust
John Hancock Berkeley Dividend Performers Fund
John Hancock Berkeley Bond Fund
John Hancock Berkeley Fundamental Value Fund
John Hancock Berkeley Sector Opportunity Fund
John Hancock Independence Diversified Core Equity Fund II
John Hancock Independence Value Fund
John Hancock Independence Growth Fund
John Hancock Independence Medium Capitalization Fund
John Hancock Independence Balanced Fund
<PAGE> 1
EXHIBIT 11
(ERNST & YOUNG LLP LOGO) - One Houston Center - Phone: 713 750 1500
Suite 2400 Fax: 713 750 1501
1221 McKinney Street
Houston, Texas 77010-2007
CONSENT OF INDEPENDENT AUDITORS
We consent to the references made to our firm under the captions "Financial
Highlights" and "Independent Auditors" and to the use of our report dated
February 3, 1995 in Post-Effective Amendment No. 17 to the Registration
Statement (Form N-1A NO. 2-66461) of John Hancock Cash Reserve, Inc.
ERNST & YOUNG LLP
April 19, 1995
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<NAME> JOHN HANCOCK CASH RESERVE, INC.
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