<PAGE> 1
File Nos. 2-75807 and 811-3392.
As filed with the Securities and Exchange Commission on May 3, 1995.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
_____
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /_X__/
Pre-Effective Amendment No. __ /____/
Post-Effective Amendment No. ___ /____/
(Check appropriate box or boxes)
JOHN HANCOCK TECHNOLOGY SERIES, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
101 Huntington Avenue, Boston, Massachusetts 02199-7603
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(Address of principal executive office) Zip Code
(617) 375-1700
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(Registrant's Telephone Number, including Area Code)
With a copy to:
---------------
Thomas H. Drohan Jeffrey N. Carp, Esq.
John Hancock Advisers, Inc. Hale and Dorr
101 Huntington Avenue 60 State Street
Boston, MA 02199 Boston, MA 02109
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(Name and address of agent for service)
Approximate Date of Proposed Public Offering: As soon as
practicable after the effectiveness of the registration statement.
No filing fee is required because an indefinite number of shares
have previously been registered pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended. This Registration
Statement relates to shares previously registered on Form N-1A
(File Nos. 2-75807 and 811-3392).
It is proposed that this filing will become effective on June 2,
1995 pursuant to Rule 488 under the Securities Act of 1933.
<PAGE> 2
<TABLE>
JOHN HANCOCK TECHNOLOGY SERIES, INC.
CROSS-REFERENCE SHEET
Items Required by Form N-14
---------------------------
PART A
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<CAPTION>
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
<S> <C> <C>
1. Beginning of Registration COVER PAGE OF REGISTRATION
Statement and Outside Front STATEMENT; FRONT COVER PAGE
Cover Page of Prospectus OF PROSPECTUS
2. Beginning and Outside Back TABLE OF CONTENTS
Cover Page of Prospectus
3. Synopsis Information and SUMMARY; RISK FACTORS AND
Risk Factors SPECIAL CONSIDERATIONS
4. Information About the INFORMATION CONCERNING THE
Transaction MEETING; PROPOSAL TO APPROVE THE
AGREEMENT AND PLAN OF
REORGANIZATION; CAPITALIZATION
5. Information About the PROSPECTUS COVER PAGE: INTRO-
Registrant DUCTION; SUMMARY; BUSINESS OF
AVIATION FUND; BUSINESS OF
GLOBAL TECHNOLOGY FUND
6. Information About the PROSPECTUS COVER PAGE: INTRO-
Company Being Acquired DUCTION; SUMMARY; BUSINESS OF
AVIATION FUND; BUSINESS OF
GLOBAL TECHNOLOGY FUND
7. Voting Information PROSPECTUS COVER PAGE; NOTICE
OF SPECIAL MEETING OF SHARE-
HOLDERS; SUMMARY; INFORMATION
CONCERNING THE MEETING
8. Interest of Certain Persons NONE
and Experts
9. Additional Information NOT APPLICABLE
Required for Reoffering by
Persons Deemed to be Under-
writers
</TABLE>
<PAGE> 3
<TABLE>
PART B
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<CAPTION>
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ -----------------------
<S> <C> <C>
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. Additional Information ADDITIONAL INFORMATION
About the Registrant ABOUT GLOBAL TECHNOLOGY FUND
13. Additional Information About ADDITIONAL INFORMATION
the Company Being Acquired ABOUT AVIATION FUND
14. Financial Statements ADDITIONAL INFORMATION ABOUT
GLOBAL TECHNOLOGY FUND;
ADDITIONAL INFORMATION ABOUT
AVIATION FUND; PRO FORMA
COMBINED FINANCIAL STATEMENTS
</TABLE>
<TABLE>
PART C
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<CAPTION>
Item No. Item Caption
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<S> <C> <C>
15. Indemnification INDEMNIFICATION
16. Exhibits EXHIBITS
17. Undertakings UNDERTAKINGS
</TABLE>
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<PAGE> 4
John Hancock Funds Letterhead
June 15, 1995
Dear Fellow National Aviation & Technology Fund
Shareholder:
In April I wrote to advise you that your Fund's Directors
propose a merger of the National Aviation & Technology Fund
into the John Hancock Global Technology Fund. As I
suggested then, the dynamic
and growing industry that presented itself to the Fund's
founders in 1928 is far different in the 1990s.
In recent years, the aviation industry has been subject to
massive consolidation, resulting in limited investment
opportunities and lackluster performance. To avoid the
volatility of this market segment, the portfolio managers
have already invested in technology stocks as much as the
Fund's investment policy has allowed.
We believe that this merger will benefit you in two ways:
1. INCREASED INVESTMENT FLEXIBILITY. The Global
Technology Fund was created to offer investors the
potential for long-term capital growth through investments
in equity securities of companies that rely extensively on
technology in their product development or operations.
This investment objective is similar to that of the
National Aviation & Technology Fund, yet it allows for more
diversification within the technology industry.
2. LOWER FUND EXPENSES. Your Directors firmly believe
that combining these two funds may benefit shareholders by
allowing the Fund to capitalize on expected economies of
scale in investment research, operations and other
important areas. By creating a larger combined fund, the
reorganization should lead to reduced expenses and,
ultimately, lower costs for you.
YOUR VOTE IS IMPORTANT!
At a special meeting of shareholders to be held on July
28, 1995 at 9:00 A.M., you will be asked to approve the
merger of the National Aviation & Technology Fund into the
Global Technology Fund. Your Board of Directors has unanimously
approved the merger.
We urge you to consider this proposal and to vote by
completing, signing and returning the enclosed proxy ballot
form to us immediately. Your prompt response will help
avoid the necessity for additional mailings at the Fund's
expense. For your convenience, we have provided a
postage-paid envelope.
If you have questions, please call your Customer Service
Representative at 1-800-225-5291, Monday through Friday
between 8:00 A.M. and 8:00 P.M. Eastern time.
Sincerely,
Edward J. Boudreau, Jr.
Chairman and CEO
Enclosure
<PAGE> 5
JOHN HANCOCK NATIONAL AVIATION & TECHNOLOGY FUND
a series of
JOHN HANCOCK TECHNOLOGY SERIES, INC.
101 Huntington Avenue
Boston, Massachusetts 02199
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 28, 1995
Notice is hereby given that a Special Meeting of Shareholders
(the "Meeting") of John Hancock National Aviation & Technology
Fund ("Aviation Fund"), a series of John Hancock Technology
Series, Inc., a Maryland corporation, will be held at 101
Huntington Avenue, Boston, Massachusetts 02116 on Friday, July 28,
1995 at 9:00 a.m., Boston time, and at any adjournment thereof,
for the following purposes:
1. To consider and act upon a proposal to approve an Agreement
and Plan of Reorganization (the "Reorganization Agreement")
between John Hancock Technology Series, Inc., on behalf of
Aviation Fund, and John Hancock Technology Series, Inc., on
behalf of John Hancock Global Technology Fund ("Global
Technology Fund"), providing for the acquisition by Global
Technology Fund of all of the assets of Aviation Fund in
exchange solely for the assumption of Aviation Fund's
liabilities by Global Technology Fund and the issuance of
Class A and Class B shares of Global Technology Fund to
Aviation Fund for distribution to its Class A and Class B
shareholders; and
2. To consider and act upon such other matters as may properly
come before the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on
June 5, 1995 as the record date for determination of shareholders
who are entitled to notice of and to vote at the Meeting and any
adjournment thereof.
If you cannot attend the Meeting in person, please complete,
date and sign the enclosed proxy and return it to John Hancock
Investor Services Corporation, 101 Huntington Avenue, Boston,
Massachusetts 02199 in the enclosed envelope. It is important
that you exercise your right to vote. THE ENCLOSED PROXY IS BEING
SOLICITED BY THE BOARD OF DIRECTORS OF JOHN HANCOCK TECHNOLOGY
SERIES, INC.
By order of the Board of Directors,
THOMAS H. DROHAN, Secretary
Boston, Massachusetts
June 14, 1995
<PAGE> 6
JOHN HANCOCK NATIONAL AVIATION & TECHNOLOGY FUND
a series of
JOHN HANCOCK TECHNOLOGY SERIES, INC.
PROXY STATEMENT
______________________
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
a series of
JOHN HANCOCK TECHNOLOGY SERIES, INC.
PROSPECTUS
______________________
This Proxy Statement and Prospectus sets forth the
information you should know before voting on the proposed
reorganization of John Hancock National Aviation & Technology Fund
("Aviation Fund") into John Hancock Global Technology Fund
("Global Technology Fund"). Aviation Fund and Global Technology
Fund are both series of John Hancock Technology Series, Inc.
("Technology Series"). This Proxy Statement and Prospectus
relates to Class A and Class B shares of Global Technology Fund's
common stock, $0.20 par value per share (collectively, the "Global
Technology Fund Shares"), which will be issued in exchange for all
of Aviation Fund's assets. In exchange for these assets, Global
Technology Fund will also assume all of the liabilities of
Aviation Fund. The Global Technology Fund Class A Shares issued
to Aviation Fund for distribution to Aviation Fund's Class A
shareholders will have an aggregate net asset value equal to the
aggregate value of the assets attributable to Aviation Fund's
Class A shares, less the liabilities attributable to Aviation
Fund's Class A shares. The Global Technology Fund Class B Shares
issued to Aviation Fund for distribution to Aviation Fund's
Class B shareholders will have an aggregate net asset value equal
to the aggregate value of the assets attributable to Aviation
Fund's Class B shares, less the liabilities attributable to
Aviation Fund's Class B shares. The asset values of Aviation Fund
and Global Technology Fund will be determined at the close of
business (4:00 p.m. Eastern Time) on the Closing Date (as defined
below) for purposes of the proposed reorganization. Following the
receipt of Global Technology Fund Shares (1) Aviation Fund will be
liquidated, (2) the Global Technology Fund Shares will be
distributed to Aviation Fund's shareholders pro rata in exchange
<PAGE> 7
for their shares of Aviation Fund and (3) Aviation Fund will be
terminated. Consequently, Class A Aviation Fund shareholders will
become Class A shareholders of Global Technology Fund, and Class B
Aviation Fund shareholders will become Class B shareholders of
Global Technology Fund. These transactions are collectively
referred to in this Proxy Statement and Prospectus as the
"Reorganization." The Reorganization transaction is being
structured as a tax-free reorganization so that, in the opinion of
tax counsel, for federal income tax purposes no gain or loss will
be recognized by Global Technology Fund, Aviation Fund or the
shareholders of Aviation Fund. The terms and conditions of this
transaction are more fully described in this Proxy Statement and
Prospectus, and in the Form of Agreement and Plan of
Reorganization that is attached as EXHIBIT A.
Global Technology Fund is a diversified series of Technology
Series, an open-end management investment company organized as a
Maryland corporation on January 5, 1990. Global Technology Fund
seeks long-term capital growth by investing principally in equity
securities of companies that rely extensively on technology in
their product development or operations. Income is Global
Technology Fund's secondary objective.
The principal place of business of Technology Series is at
101 Huntington Avenue, Boston, Massachusetts 02199. Its toll-free
telephone number is 1-800-225-5291.
Please read this Proxy Statement and Prospectus carefully and
retain it for future reference. This Proxy Statement and
Prospectus is accompanied by the Prospectus of Global Technology
Fund for Class A and Class B shares dated May 1, 1995 (EXHIBIT B),
and the Prospectus of Aviation Fund for Class A and Class B shares
dated May 1, 1995 (EXHIBIT C).
A Statement of Additional Information dated June 2, 1995
relating to this Proxy Statement and Prospectus, and containing
additional information about each of Global Technology Fund and
Aviation Fund, including historical financial statements, is on
file with the Securities and Exchange Commission ("SEC"). It is
available, upon oral or written request and at no charge, from
Technology Series. The Statement of Additional Information is
incorporated by reference into this Prospectus.
SHARES OF GLOBAL TECHNOLOGY FUND ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER
DEPOSITORY INSTITUTION, AND THE SHARES OF GLOBAL TECHNOLOGY FUND
ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY.
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<PAGE> 8
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.
The date of this Proxy Statement and Prospectus is June 2,
1995.
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<PAGE> 9
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
INTRODUCTION............................................. 1
SUMMARY.................................................. 2
RISK FACTORS AND SPECIAL CONSIDERATIONS ................. 19
INFORMATION CONCERNING THE MEETING....................... 20
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION 22
CAPITALIZATION........................................... 31
COMPARATIVE PERFORMANCE INFORMATION...................... 32
BUSINESS OF GLOBAL TECHNOLOGY FUND....................... 35
General............................................ 35
Investment Objective and Policies.................. 35
Portfolio Management............................... 35
Directors.......................................... 35
Investment Adviser and Distributor................. 35
Expenses........................................... 35
Custodian and Transfer Agent....................... 36
Global Technology Fund Shares...................... 36
Purchase of Global Technology Fund Shares.......... 36
Redemption of Global Technology Fund Shares........ 36
Dividends, Distributions and Taxes................. 36
BUSINESS OF AVIATION FUND................................ 36
General............................................ 36
Investment Objective and Policies.................. 37
Portfolio Management............................... 37
Directors.......................................... 37
Investment Adviser and Distributor................. 37
Expenses........................................... 37
Custodian and Transfer Agent....................... 37
Aviation Fund Shares............................... 37
Purchase of Aviation Fund Shares................... 38
Redemption of Aviation Fund Shares................. 38
Dividends, Distributions and Taxes................. 38
EXPERTS.................................................. 38
AVAILABLE INFORMATION.................................... 39
</TABLE>
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<PAGE> 10
EXHIBITS
A - Form of Agreement and Plan of Reorganization by and
between John Hancock Technology Series, Inc., on behalf
of John Hancock National Aviation & Technology Fund, and
John Hancock Technology Series, Inc., on behalf of John
Hancock Global Technology Fund (attached hereto).
B - Prospectus of John Hancock Global Technology Fund for
Class A and Class B shares, dated May 1, 1995 (included
herewith).
C - Prospectus of John Hancock National Aviation &
Technology Fund for Class A and Class B shares, dated
May 1, 1995 (included herewith).
-ii-
<PAGE> 11
PROXY STATEMENT AND PROSPECTUS
FOR SPECIAL MEETING OF SHAREHOLDERS OF
JOHN HANCOCK NATIONAL AVIATION & TECHNOLOGY FUND
TO BE HELD ON JULY 28, 1995
INTRODUCTION
This Proxy Statement and Prospectus is furnished in
connection with the solicitation of proxies by the Board of
Directors of Technology Series (the "Board of Directors"). The
proxies will be voted at the Special Meeting of Shareholders (the
"Meeting") of Aviation Fund to be held at 101 Huntington Avenue,
Boston, Massachusetts 02199 on Friday, July 28, 1995 at 9:00 a.m.,
Boston time, and at any adjournment or adjournments of the
Meeting. The purposes of the Meeting are set forth in the
accompanying Notice of Special Meeting of Shareholders.
This Proxy Statement and Prospectus includes and incorporates
by reference the prospectus of Aviation Fund for Class A and
Class B shares, dated May 1, 1995 (the "Aviation Fund
Prospectus"), and the prospectus of Global Technology Fund for
Class A and Class B shares, dated May 1, 1995 (the "Global
Technology Fund Prospectus"). These materials will be mailed to
shareholders of Aviation Fund on or after June 14, 1995. Aviation
Fund's Annual Report to Shareholders was previously sent to
shareholders on or about February 28, 1995.
As of June 5, 1995 (the "Record Date"), ______ shares of
common stock of Aviation Fund were outstanding.
All properly executed proxies received by management prior to
the Meeting, unless revoked, will be voted at the Meeting in
accordance with the instructions on the proxies. If no
instructions are given, shares of Aviation Fund represented by
proxies will be voted FOR the proposal (the "Proposal") to approve
the Agreement and Plan of Reorganization (the "Agreement") between
Technology Series, on behalf of Aviation Fund, and Technology
Series, on behalf of Global Technology Fund.
The Board of Directors knows of no business other than that
mentioned in the immediately preceding paragraph that will be
presented for consideration at the Meeting. If other business is
properly brought before the Meeting, proxies will be voted
according to the best judgment of the persons named as proxies.
In addition to the mailing of these proxy materials, proxies
may be personally solicited by Directors, officers and employees
of Aviation Fund, by personnel of Aviation Fund's investment
adviser and subadviser, John Hancock Advisers, Inc. and American
<PAGE> 12
Fund Advisors, Inc., respectively, Aviation Fund's transfer agent,
John Hancock Investor Services Corporation ("Investor Services"),
by broker-dealer firms or by a professional solicitation
organization in person or by telephone. Aviation Fund and Global
Technology Fund (each, a "Fund" and collectively, the "Funds")
will each bear its own fees and expenses in connection with the
Reorganization discussed in this Proxy Statement and Prospectus.
The information concerning Global Technology Fund in this
Proxy Statement and Prospectus has been supplied by Global
Technology Fund, and the information regarding Aviation Fund in
this Proxy Statement and Prospectus has been supplied by Aviation
Fund.
SUMMARY
The following is a summary of certain information contained
elsewhere in this Proxy Statement and Prospectus. The summary is
qualified by reference to the more complete information contained
in this Proxy Statement and Prospectus, and in the Exhibits
attached hereto and included with this document. Please read this
entire Proxy Statement and Prospectus carefully.
REASONS FOR THE The Board of Directors has
PROPOSED determined that the proposed
REORGANIZATION reorganization is in the best
interests of Aviation Fund and its
shareholders. In making this
determination, the Directors
considered several relevant factors,
including (1) the likelihood that
the reorganization will result in
improved economies of scale and a
corresponding decrease in the
expenses currently borne by Aviation
Fund's shareholders and (2) the fact
that combining the Funds' assets
into a single portfolio will enable
Global Technology Fund to achieve
greater diversification. The Board
of Directors believes that the
Global Technology Fund Shares
received in the Reorganization will
provide existing Aviation Fund
shareholders with substantially the
same investment advantages that they
currently enjoy at a comparable
level of risk. For a more detailed
discussion of the reasons for the
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<PAGE> 13
proposed reorganization, see
"Proposal to Approve the Agreement
and Plan of Reorganization--Reasons
For The Proposed Reorganization."
BUSINESS OF JOHN John Hancock Advisers, Inc. (the
HANCOCK NATIONAL "Adviser") acts as investment
AVIATION & TECHNOLOGY adviser to both Aviation Fund and
FUND Global Technology Fund. American
Fund Advisors, Inc. (the
"Subadviser") acts as investment
subadviser to both Aviation Fund and
Global Technology Fund.
Aviation Fund is a non-diversified
series of Technology Series, an
open-end management investment
company organized as a Maryland
corporation in 1990. Aviation
Fund's predecessor was formed in
1928. As of December 31, 1994,
Aviation Fund's net assets were
$55,324,635. Barry J. Gordon,
Chairman and President, and Marc H.
Klee, Senior Vice President, of the
Subadviser, are portfolio
co-managers for Aviation Fund and
will continue in this capacity until
the Reorganization. Messrs. Gordon
and Klee also are portfolio
co-managers for Global Technology
Fund and, after the Reorganization,
will continue in this capacity.
For a description of the business
experience of Messrs. Gordon and
Klee, see "Business of Global
Technology Fund."
BUSINESS OF JOHN Global Technology Fund is a
HANCOCK GLOBAL diversified series of Technology
TECHNOLOGY FUND Series. Global Technology Fund's
predecessor was formed in 1983. As
of December 31, 1994, Global
Technology Fund's net assets were
$61,517,302. As noted above,
Messrs. Gordon and Klee are Global
Technology Fund's portfolio
co-managers and will continue in
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<PAGE> 14
this capacity following the
Reorganization.
COMPARISON OF THE The primary investment objective of
INVESTMENT OBJECTIVES Aviation Fund is long-term growth of
AND POLICIES OF JOHN capital principally through
HANCOCK NATIONAL investments in companies in the
AVIATION & TECHNOLOGY aviation and related industries and
FUND AND JOHN HANCOCK companies that utilize technology
GLOBAL TECHNOLOGY extensively in their product
FUND development or operations.
The primary investment objective of
Global Technology Fund is long-term
capital growth through investments
principally in equity securities of
companies that rely extensively on
technology in their product
development or operations.
Income is a secondary objective of
both Funds.
Both Funds' investment objectives
are designated as fundamental
policies and therefore cannot be
changed without shareholder
approval.
In considering whether to approve
the Reorganization, you should
consider the differences between the
two Funds' investment objectives and
policies, as well as the relative
advantages and disadvantages of
Aviation Fund's focus on the
aviation and related industries.
Global Technology Fund, because it
is not required to be invested in
these industries, may not benefit if
economic and market developments
favorably affect the aviation and
related industries.
Under normal market conditions, at
least 80% of Aviation Fund's total
assets are invested in the aviation
and technology-oriented industries
noted above. It is also intended
that at least 25% of Aviation Fund's
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<PAGE> 15
total assets be concentrated in the
aviation industry and in industries
connected with, serving and/or
supplying the aviation industry.
Under normal market conditions, at
least 65% of Global Technology
Fund's total assets are invested in
the equity securities of companies
that rely extensively on technology
in their product development or
operations. In addition, Global
Technology Fund normally invests at
least 65% of its net assets in
securities of issuers in at least
three countries, which may include
the United States.
Both Funds' portfolios are
principally comprised of common
stocks and securities convertible
into common stocks, including
convertible bonds, convertible
preferred stocks and warrants.
Both Funds may invest in securities
of foreign issuers. Global
Technology Fund may invest without
limitation in securities of foreign
issuers, but no more than 25% of the
Fund's net assets may be invested in
any one foreign country. Aviation
Fund may only invest up to 25% of
its total assets in securities of
foreign issuers. Both Funds may
hold a portion of their respective
assets in foreign currencies and may
enter into forward foreign currency
exchange contracts to protect
against changes in foreign currency
exchange rates.
Consistent with their investment
objectives, both Funds may invest up
to 10% of their respective net
assets in fixed income securities of
public and private issuers. These
securities include convertible and
non-convertible bonds and
debentures, zero coupon bonds,
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<PAGE> 16
payment-in-kind securities,
increasing rate note securities,
participation interests, stripped
debt securities and other derivative
debt securities. Both Funds invest
only in fixed income securities
that, at the time of investment, are
rated CC or higher by Standard &
Poor's Ratings Group or Ca or higher
by Moody's Investors Service, Inc.
or their equivalent, and unrated
fixed income securities of
comparable quality as determined by
the Adviser.
Both Funds may sell (write) covered
call options with respect to their
portfolio securities. Aviation Fund
may sell such options only if they
are issued by the Options Clearing
Corporation, while Global Technology
Fund may sell these options only if
they are listed on a national
securities exchange. The aggregate
value (determined on date options
are sold) of the portfolio
securities underlying the call
options that Aviation Fund sells may
not exceed 25% of Aviation Fund's
net assets, while the aggregate
value (determined on date options
are sold) of the portfolio
securities underlying the call
options Global Technology Fund sells
may not exceed 5% of Global
Technology Fund's net assets.
Both Funds may enter into repurchase
agreements with selected dealers or
banks or other recognized financial
institutions with respect to bank
obligations, prime commercial paper
and securities issued or guaranteed
by the U.S. Government or its
agencies or instrumentalities.
Both Funds may invest in illiquid
and restricted securities to a
limited extent. Aviation Fund's
combined investments in illiquid
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<PAGE> 17
securities, restricted securities
and securities of foreign issuers
which are not listed on a recognized
domestic or foreign securities
exchange may not exceed 10% of its
net assets. Global Technology
Fund's combined investments in
illiquid securities and restricted
securities may not exceed 15% of its
net assets. In addition, Global
Technology Fund's investments in
restricted securities may not exceed
5% of its net assets.
When market conditions suggest a
need for a defensive investment
strategy, both Funds may temporarily
invest in short-term obligations of,
or securities guaranteed by, the
U.S. Government or its agencies or
instrumentalities, high quality bank
certificates of deposit and
commercial paper.
Form of Organization Aviation Fund and Global Technology
Fund are the only two series of
Technology Series, a Maryland
corporation. Each Fund has
authorized and outstanding two
classes of shares: Class A shares
and Class B shares.
Each share of a Fund represents an
equal proportionate interest in the
assets belonging to that Fund, and
liabilities attributable to one Fund
are not charged against the assets
of the other Fund. Shares of each
Fund are voted separately with
respect to matters pertaining to
that Fund, but all shares vote
together for the election of
Directors and the ratification of
independent accountants. The shares
of a Fund represent an interest in
the same portfolio of investments of
that Fund. Each class of each Fund
has equal rights as to voting,
redemption, dividends and
liquidation, but each class bears
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<PAGE> 18
different distribution and transfer
agent fees and may bear other
expenses properly attributable to
the particular class. Class A and
Class B shareholders of each Fund
have exclusive voting rights with
regard to the Rule 12b-1
distribution plan covering their
shares.
Class A shares of each Fund are
offered with a front-end sales
charge and a Rule 12b-1 fee of 0.30%
of the average daily net assets
attributable to these shares, of
which up to 0.25% of these average
daily net assets is for service
expenses and the remainder is for
distribution services. Class B
shares are offered with a contingent
deferred sales charge ("CDSC")
payable upon redemption of these
shares. The Rule 12b-1 fee for
Class B shares is 1.00% of the
average daily net assets
attributable to these shares, of
which up to 0.25% of these average
daily net assets is for service
expenses and the remainder is for
distribution services.
As part of the Reorganization,
Class A shares of Global Technology
Fund will be issued to Aviation Fund
and then distributed to Aviation
Fund's Class A shareholders.
Similarly, Class B shares of Global
Technology Fund will be issued to
Aviation Fund and then distributed
to Aviation Fund's Class B
shareholders.
Adviser and Advisory Each Fund employs John Hancock
Fees Advisers, Inc. (the "Adviser") as
its investment adviser. Each Fund
pays the Adviser a monthly advisory
fee in an amount equal, on an annual
basis, to a stated percentage of the
Fund's average daily net asset value
as follows:
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<PAGE> 19
Net Asset Value Annual Rate
--------------- -----------
First $100,000,000 1.00%
Amounts over $100,000,000 0.75%
Effective January 1, 1995, the
Adviser agreed not to impose a
portion of the advisory fee
amounting to 0.15% of the average
daily net asset value of the first
$100,000,000 of each Fund's net
assets.
The advisory fee paid by each Fund
is higher than the advisory fees
paid by most mutual funds; however,
the Adviser believes that these
advisory fees are comparable to
those paid by funds with similar
investment objectives.
Each Fund also pays a monthly
administration fee at the rate of
$100,000 per annum to the Adviser.
For the fiscal year ended
December 31, 1994, each Fund paid
the Adviser an advisory fee equal to
1.00% of the Fund's average daily
net asset value. The net asset
value of each Fund on December 31,
1994 was as follows: Aviation Fund,
$55,324,635; Global Technology Fund,
$61,517,302.
Subadviser and American Fund Advisors, Inc. (the
Subadvisory Fees "Subadviser") acts as investment
subadviser for both Funds. With
respect to each Fund, the Adviser
(not the Fund) pays the Subadviser a
monthly subadvisory fee in an amount
equal, on an annual basis, to a
stated percentage of the Fund's
average daily net asset value as
follows:
Net Asset Value Annual Rate
--------------- -----------
-9-
<PAGE> 20
First $100,000,000 0.40%
Amounts over
$100,000,000 40% of the
investment
advisory fee
received by
the Adviser
on amounts
over
$100,000,000
Currently, the Subadviser is
agreeing not to impose a portion of
the subadvisory fee amounting to
0.05% of the average daily net asset
value of the first $100,000,000 of
each Fund's net assets.
For the fiscal year ended
December 31, 1994, the Adviser paid
the Subadviser subadvisory fees
equal to 0.40% of each Fund's
average daily net asset value.
Other Significant Both Funds pay additional expenses
Fees in connection with their operations,
including printing, registration,
legal, accounting, transfer agent
and custodial fees. For Aviation
Fund's Class A and Class B shares,
the ratios of total expenses to
average net assets were 1.60% and
2.59%, respectively, for the period
ended December 31, 1994. For Global
Technology Fund's Class A and
Class B shares, the ratios of total
expenses to average net assets were
2.16% and 2.90%, respectively, for
the period ended December 31, 1994.
With respect to their Class A shares
only, both Funds impose an initial
sales charge at rates ranging from
5.00% to 0.00% of the amount
invested depending on the size of
the purchase, the size of the
purchaser's existing investment, if
any, at the time of the purchase,
-10-
<PAGE> 21
and the participation of the
shareholder in special purchase
plans or arrangements to purchase
additional shares. A CDSC of up to
1.00% is imposed on certain
redemptions within one year of
purchase of Class A shares purchased
without an initial sales charge. In
the case of both Funds, an initial
sales charge does not apply to
shares acquired through the
reinvestment of dividends from net
investment income or capital gain
distributions.
Class A shares of Global Technology
Fund acquired by Aviation Fund's
Class A shareholders pursuant to the
Reorganization will not be subject
to any initial sales charge or CDSC,
but the CDSC imposed upon certain
redemptions within one year of
purchase (referred to above) will
continue to apply to the Class A
shares of Global Technology Fund
issued in the Reorganization. The
holding period for determining the
application of this CDSC will be
calculated from the date the
Aviation Fund Class A shares were
issued.
With respect to their Class B shares
only, Global Technology Fund and
Aviation Fund do not impose an
initial sales charge. However,
Class B shares redeemed within six
years of purchase will be subject to
a CDSC at the rates set forth below.
This CDSC will be assessed on an
amount equal to the lesser of the
current market value or the original
purchase cost of the Class B shares
being redeemed. Accordingly,
Class B shareholders will not be
assessed a CDSC on increases in
account value above the initial
purchase price, including shares
derived from reinvested dividends.
The amount of the CDSC, if any, will
-11-
<PAGE> 22
vary depending on the number of
years from the time the Class B
shares were purchased until the time
they are redeemed, as follows:
<TABLE>
<CAPTION>
THE CONTINGENT
DEFERRED SALES
YEAR IN CHARGE AS A
WHICH CLASS B PERCENTAGE OF
SHARES REDEEMED DOLLAR AMOUNT
FOLLOWING PURCHASE SUBJECT TO CDSC
------------------ ---------------
<S> <C>
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and
thereafter None
</TABLE>
Class B shares of Global Technology
Fund acquired by Aviation Fund's
Class B shareholders pursuant to the
Reorganization will not be subject
to any CDSC at the time of the
exchange, but will remain subject to
any CDSC applicable upon redemption
of these shares. For purposes of
computing the CDSC payable upon
redemption of Class B shares of
Global Technology Fund acquired by
Aviation Fund's Class B shareholders
pursuant to the Reorganization and
the automatic conversion of Class B
shares into Class A shares, the
holding period of the Aviation Fund
Class B shares will be added to that
of the Global Technology Fund
Class B shares acquired in the
Reorganization.
Both Funds have adopted distribution
plans pursuant to Rule 12b-1 under
the Investment Company Act of 1940,
as amended (the "Investment Company
Act"). Under these plans, each Fund
may pay fees to John Hancock Funds,
Inc. ("John Hancock Funds") to
reimburse distribution and service
-12-
<PAGE> 23
expenses in connection with Class A
shares. These fees are payable at
an annual rate of up to 0.30% of a
Fund's average daily net assets
attributable to its Class A shares,
of which up to 0.25% may be for
service expenses and the remainder
will be for distribution services.
In addition, under the plans, each
Fund may pay fees to John Hancock
Funds to reimburse distribution and
service expenses in connection with
Class B shares. These fees are
payable at an annual rate of 1.00%
of the Fund's average daily net
assets attributable to its Class B
shares, of which up to 0.25% may be
for service expenses and the
remainder will be for distribution
services. With respect to Class B
shares only, if John Hancock Funds
is not fully reimbursed for payments
made or expenses incurred in any
fiscal year, it is entitled to carry
forward these expenses to subsequent
fiscal years for submission to the
applicable Fund for payment, subject
always to the maximum annual
distribution fee for Class B shares
described above.
The Board of Directors has
determined that, if the
Reorganization is consummated,
unreimbursed distribution and
shareholder service expenses
originally incurred in connection
with Aviation Fund's Class B shares
will be reimbursable under Global
Technology Fund's Class B Rule 12b-1
Plan. As of December 31, 1994, the
unreimbursed distribution and
shareholder service expenses of
Global Technology Fund and Aviation
Fund were $76,304 and $10,827,
respectively, attributable to Class
A shares and $219,160 and $8,784,
respectively, attributable to Class
B Shares. See "Unreimbursed
Distribution and Shareholder
-13-
<PAGE> 24
Expenses" below for a further
discussion of the treatment of these
expenses.
PURCHASES AND Shares of Global Technology Fund may
EXCHANGES be purchased through certain broker-
dealers and John Hancock Funds at
the public offering price, which is
based on the next determined net
asset value per share, plus any
applicable sales charge. The
minimum initial investment in Global
Technology Fund is $1,000 ($250 for
group investments and retirement
plans). In anticipation of the
Reorganization, Aviation Fund has
stopped offering its shares to the
public other than shares purchased
through the reinvestment of
dividends and distributions.
Shareholders of both Funds may
exchange their shares at net asset
value for shares of the same class,
if applicable, of certain other
funds managed by the Adviser.
Shares of any fund acquired in this
manner that are subject to a CDSC
will incur this charge, if still
applicable, upon redemption. The
exchange privilege is available only
in those states where exchanges can
be made legally.
DISTRIBUTION It is the policy of both Funds to
PROCEDURES pay dividends annually from net
investment income. Each Fund also
distributes annually all of its
other taxable income, including both
net realized short-term and long-
term capital gains, if any.
Aviation Fund will make, immediately
prior to the Closing Date (as
defined below), a distribution of
all of its net income and net
realized capital gains, if any, not
previously distributed.
REINVESTMENT OPTIONS Unless an election is made to
receive cash, the shareholders of
-14-
<PAGE> 25
both Funds automatically reinvest
all of their respective dividends
and capital gain distributions in
additional shares of the same class
of the same Fund. These
reinvestments are made at the net
asset value per share and are not
subject to any sales charge.
REDEMPTION PROCEDURES Shares of both Funds may be redeemed
on any business day at a price equal
to the net asset value of the shares
next determined after receipt of a
redemption request in good order,
less any applicable CDSC.
Alternatively, shareholders of both
Funds may sell their shares through
securities dealers, who may charge a
fee. Redemptions and repurchases of
certain Class A shares of Aviation
Fund and Global Technology Fund and
Class B shares of both Funds are
subject to the applicable CDSC, if
any. Class A and Class B shares of
Aviation Fund may be redeemed up to
and including the Closing Date (as
defined below).
REORGANIZATION Pursuant to the terms of the
Agreement, the proposed
EFFECT OF THE Reorganization will consist of the
REORGANIZATION acquisition by Global Technology
Fund of all the assets of Aviation
Fund in exchange solely for (i) the
assumption by Global Technology Fund
of all the liabilities of Aviation
Fund and (ii) the issuance of Global
Technology Fund shares equal to the
value of these assets, less the
amount of these liabilities (the
"Global Technology Fund Shares"), to
Aviation Fund. As part of the
liquidation process, Aviation Fund
will immediately distribute these
shares to its shareholders in
exchange for their shares of
Aviation Fund. Consequently,
Class A shareholders of Aviation
Fund will become Class A
shareholders of Global Technology
-15-
<PAGE> 26
Fund and Class B shareholders of
Aviation Fund will become Class B
shareholders of Global Technology
Fund. After completion of the
Reorganization, the existence of
Aviation Fund will be terminated.
The Reorganization will become
effective as of 5:00 p.m. on the
closing date, scheduled for July 28,
1995, or another date on or before
December 31, 1995 as authorized
representatives of the Funds may
agree (the "Closing Date"). The
Global Technology Fund Class A
Shares issued to Aviation Fund for
distribution to Aviation Fund's
Class A shareholders will have an
aggregate net asset value equal to
the aggregate value of the assets
attributable to Aviation Fund's
Class A shares, less the liabilities
attributable to Aviation Fund's
Class A shares. The Global
Technology Fund Class B Shares
issued to Aviation Fund for
distribution to Aviation Fund's
Class B shareholders will have an
aggregate net asset value equal to
the aggregate value of the assets
attributable to Aviation Fund's
Class B shares, less the liabilities
attributable to Aviation Fund's
Class B shares. For purposes of the
Reorganization, the Funds'
respective asset values will be
determined as of the close of
business (4:00 p.m. Eastern Time) on
the Closing Date.
The Board of Directors, including
the Directors not affiliated with
the Adviser or the Subadviser,
unanimously approved the
Reorganization, and determined that
it was in the best interests of
Aviation Fund and that the interests
of Aviation Fund's shareholders
would not be diluted as a result of
the Reorganization. For a
-16-
<PAGE> 27
discussion of the factors considered
by the Directors, see "Proposal to
Approve the Agreement and Plan of
Reorganization--Reasons for the
Proposed Reorganization."
TAX CONSIDERATIONS The consummation of the
Reorganization is subject to the
receipt on the Closing Date of an
opinion of Hale and Dorr, counsel to
the Funds, satisfactory to
Technology Series and substantially
to the effect that for federal
income tax purposes:
(a) the acquisition by Global
Technology Fund of all of Aviation
Fund's assets solely in exchange for
the issuance of Global Technology
Fund Shares to Aviation Fund and the
assumption of all of Aviation Fund's
liabilities by Global Technology
Fund, followed by the distribution
by Aviation Fund, in liquidation of
Aviation Fund, of Global Technology
Fund Shares to the shareholders of
Aviation Fund in exchange for their
shares of common stock of Aviation
Fund and the termination of Aviation
Fund, will constitute a
"reorganization" within the meaning
of Section 368(a) of the Internal
Revenue Code of 1986, as amended
(the "Code"), and Aviation Fund and
Global Technology Fund will each be
"a party to a reorganization" within
the meaning of Section 368(b) of the
Code;
(b) no gain or loss will be
recognized by Aviation Fund upon
(i) the transfer of all of its
assets to Global Technology Fund (as
described above) and (ii) the
distribution by Aviation Fund of
Global Technology Fund Shares to
Aviation Fund's shareholders;
(c) no gain or loss will be
recognized by Global Technology Fund
-17-
<PAGE> 28
upon the receipt of Aviation Fund's
assets (as described above);
(d) the basis of the assets of
Aviation Fund acquired by Global
Technology Fund will be, in each
instance, the same as the basis of
those assets in the hands of
Aviation Fund immediately prior to
the transfer;
(e) the tax holding period of the
assets of Aviation Fund in the hands
of Global Technology Fund will, in
each instance, include Aviation
Fund's tax holding period for those
assets;
(f) the shareholders of Aviation
Fund will not recognize gain or loss
upon the exchange of all of their
Aviation Fund shares for Global
Technology Fund Shares as part of
the transaction;
(g) the basis of the Global
Technology Fund Shares received by
Aviation Fund shareholders in the
Reorganization will be the same as
the basis of the Aviation Fund
shares surrendered in exchange
therefor; and
(h) the tax holding period of the
Global Technology Fund Shares
received by Aviation Fund
shareholders will include, for each
shareholder, the tax holding period
for the Aviation Fund shares
surrendered in exchange therefor,
provided the Aviation Fund shares
were held as capital assets on the
date of the exchange.
THE MEETING The Meeting will be held on Friday,
July 28, 1995, at 101 Huntington
TIME, PLACE AND DATE Avenue, Boston, Massachusetts 02199,
at 9:00 a.m. Boston time.
-18-
<PAGE> 29
The Record Date for determining
RECORD DATE shareholders entitled to notice of
and to vote at the Meeting is
June 5, 1995.
Approval of the Agreement by the
VOTE REQUIRED FOR shareholders of Aviation Fund
APPROVAL requires the affirmative vote of not
less than a "majority of the
outstanding voting securities" (as
defined in the Investment Company
Act) of Aviation Fund. The
Reorganization does not require the
approval of Global Technology Fund's
shareholders. See "Proposal to
Approve the Agreement and Plan of
Reorganization--Voting Rights and
Required Vote."
RISK FACTORS AND SPECIAL CONSIDERATIONS
INVESTMENT OBJECTIVES
The primary investment objective of Aviation Fund is long-
term growth of capital principally through investments in
securities of companies in the aviation and related industries and
companies that utilize technology extensively in their product
development or operations. Income is a secondary objective of
Aviation Fund.
The primary investment objective of Global Technology Fund
is long-term capital growth through investments principally in
equity securities of companies that rely extensively on technology
in their product development or operations. Income is a secondary
objective of Global Technology Fund.
INVESTMENT POLICIES AND RISK FACTORS
Please see the Global Technology Fund Prospectus and the
Aviation Fund Prospectus, enclosed with this Proxy Statement and
Prospectus and incorporated herein by reference, for a more
complete description of each Fund's investment objectives and
policies, as well as their risk factors.
In deciding whether to approve the Reorganization, you
should consider the similarities and differences between the
investment objectives and policies of the Funds. You should also
consider the relative advantages and disadvantages of Aviation
Fund's focus upon the aviation and related industries, technology-
related investments, aerospace/defense investments and other
-19-
<PAGE> 30
investments, as compared to Global Technology Fund's
technology-related investment focus. Global Technology Fund,
because it is not required to be invested in the aviation and
related industries, may not benefit if economic and market
developments favorably affect these industries.
Under normal circumstances, Aviation Fund invests at least
80% of its total assets in securities of companies in the aviation
and related industries, as described above, and in companies that
utilize technology extensively in their product development or
operations. Aviation Fund also invests at least 25% of its total
assets in the aviation industry and in industries connected with,
serving and/or supplying this industry. Aviation Fund's portfolio
is principally comprised of common stocks and securities
convertible into common stocks, including convertible bonds,
convertible preferred stocks and warrants.
Under normal market conditions, at least 65% of Global
Technology Fund's total assets are invested in the equity
securities of companies which rely extensively on technology in
their product development or operations. In addition, Global
Technology Fund normally invests at least 65% of its net assets in
securities of issuers in at least three countries, which may
include the United States. However, Global Technology Fund does
not invest more than 25% of its net assets in any one foreign
country. Global Technology Fund's portfolio is principally
comprised of common stocks and securities convertible into common
stocks, including convertible bonds, convertible preferred stocks
and warrants.
INFORMATION CONCERNING THE MEETING
SOLICITATION, REVOCATION AND USE OF PROXIES
A majority of Aviation Fund's shares that are represented
and entitled to vote at the Meeting will be a quorum for the
transaction of business. An Aviation Fund shareholder executing
and returning a proxy has the power to revoke it at any time
before it is exercised, by filing a written notice of revocation
with Aviation Fund's transfer agent, Investor Services,
P.O. Box 9116, Boston, Massachusetts 02205-9116, or by returning a
duly executed proxy with a later date before the time of the
Meeting. Any shareholder who has executed a proxy but is present
at the Meeting and wishes to vote in person may revoke his or her
proxy by notifying the Secretary of Technology Series (without
complying with any formalities) at any time before it is voted.
Presence at the Meeting alone will not serve to revoke a
previously executed and returned proxy.
-20-
<PAGE> 31
If a quorum is not present in person or by proxy at the time
any session of the Meeting is called to order, the persons named
as proxies may vote those proxies that have been received to
adjourn the Meeting to a later date. If a quorum is present but
there are not sufficient votes in favor of the Proposal, the
persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies with respect
to the Proposal. Any adjournment will require the affirmative
vote of a majority of the shares of Aviation Fund represented in
person or by proxy at the session of the Meeting to be adjourned.
If an adjournment of the Meeting is proposed because there are not
sufficient votes in favor of the Reorganization, even though a
quorum is present at the Meeting, the persons named as proxies
will vote those proxies in favor of the Reorganization in favor of
adjournment, and will vote those proxies against the
Reorganization against adjournment.
RECORD DATE AND OUTSTANDING SHARES
Only Aviation Fund shareholders of record at the close of
business on June 5, 1995 (the "Record Date") are entitled to
notice of and to vote at the Meeting and any adjournment of the
Meeting. At the close of business on the Record Date, _____
shares of common stock of Aviation Fund were outstanding and
entitled to vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF AVIATION FUND AND GLOBAL TECHNOLOGY FUND
To the knowledge of Technology Series, as of the Record
Date, no person owned of record or beneficially 5% or more of the
outstanding Class A or Class B shares of common stock of Aviation
Fund. To the knowledge of Technology Series, as of the Record
Date, no person owned of record or beneficially 5% or more of the
outstanding Class A or Class B shares of common stock of Global
Technology Fund.
As of the Record Date, the Directors and officers of
Technology Series, as a group, owned in the aggregate less than 1%
of the outstanding Class A and Class B shares of common stock of
Aviation Fund. As of the Record Date, the Directors and officers
of Technology Series, as a group, owned in the aggregate less than
1% of the outstanding Class A and Class B shares of common stock
of Global Technology Fund.
-21-
<PAGE> 32
PROPOSAL TO APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION
GENERAL
The shareholders of Aviation Fund are being asked to approve
the Agreement, a copy which is attached as EXHIBIT A. The
Reorganization will consist of: (A) the transfer of all of
Aviation Fund's assets to Global Technology Fund, in exchange
solely for the issuance of Global Technology Fund Shares to
Aviation Fund and the assumption of Aviation Fund's liabilities by
Global Technology Fund, (B) the subsequent distribution by
Aviation Fund, as part of its liquidation, of the Global
Technology Fund Shares to Aviation Fund's shareholders and (C) the
termination of Aviation Fund's existence. The Global Technology
Fund Class A Shares issued upon the consummation of the
Reorganization will have an aggregate net asset value equal to the
aggregate value of the assets attributable to Aviation Fund's
Class A shares, less liabilities attributable to Aviation Fund's
Class A shares. The Global Technology Fund Class B Shares issued
upon consummation of the Reorganization will have an aggregate net
asset value equal to the aggregate value of the assets
attributable to Aviation Fund's Class B shares, less the
liabilities attributable to Aviation Fund's Class B shares. As
noted above, the asset values of Aviation Fund and Global
Technology Fund will be determined at the close of business (4:00
p.m. Eastern Time) on the Closing Date for purposes of the
Reorganization. See "Description of Agreement" below.
Pursuant to the Agreement, Aviation Fund will liquidate and
distribute the Global Technology Fund Shares received, as
described above, PRO RATA to the shareholders of record determined
as of the close of regular trading on the New York Stock Exchange
on the Closing Date. The result of the transfer of assets will be
that Global Technology Fund will add to its portfolio the net
assets of Aviation Fund. Class A shareholders of Aviation Fund
will become Class A shareholders of Global Technology Fund, and
Class B shareholders of Aviation Fund will become Class B
shareholders of Global Technology Fund.
The Agreement and the Reorganization were unanimously
approved by the Board of Directors on behalf of Aviation Fund and
Global Technology Fund at a meeting held on March 14, 1995.
REASONS FOR THE PROPOSED REORGANIZATION
The Board of Directors believes that the proposed
Reorganization will be advantageous to the shareholders of
Aviation Fund in several respects. The Board of Directors
-22-
<PAGE> 33
considered the following matters, among others, in approving the
Proposal.
First, investor demand for a fund that invests a significant
portion of its assets in aviation companies has not met the
expectations of Aviation Fund's management. The net asset level
of the Fund has been relatively flat over the past ten years.
After achieving its largest asset base of approximately $84
million in 1989, Aviation Fund's net assets have declined and
redemptions exceeded new sales and reinvestment of dividends
during 1994. At December 31, 1994, the Fund's net assets were
$55,324,635. It is reasonable to expect that this declining asset
trend will continue. As a consequence, Aviation Fund has not been
able to achieve significant economies of scale. If the net assets
of Aviation Fund continue to decline, Aviation Fund's expense
ratio may increase.
The Board of Directors does not believe that the longer-term
performance outlook of the market for securities of aviation
companies is likely to offset the negative effects of Aviation
Fund's declining asset base. Due to fundamental industry changes,
the relative performance of Aviation Fund has been lower than that
of the broader market. The total return for the Class A shares of
Aviation Fund for the year ended December 31, 1994 was (14.169)%
and the average annual total return for the Class A shares of the
Fund for the five- and ten-year periods ended December 31, 1994
were 2.50% and 9.23%, compared to 1.31%, 8.68% and 14.36% average
annual total return of the Standard & Poor's 500 Stock Index for
the same respective periods.+
Second, given these fundamental industry changes,
shareholders may be better served by a fund offering greater
diversification. To the extent that the Funds' assets are
combined into a single portfolio and a larger asset base is
created as a result of the Reorganization, greater diversification
of Global Technology Fund's investment portfolio can be achieved
than is currently possible in either Fund. Greater
diversification is expected to be beneficial to shareholders of
both Funds, because it may reduce the negative effect which the
______________________
+ Class B shares of Aviation Fund commenced operations on
January 3, 1994. The total return for the Class B shares was
(14.39)% for the period ended December 31, 1994. The total return
figures for Class A and Class B shares assume initial investment
at net asset value at the beginning of the period, reinvestment of
all dividends and distributions, the complete redemption of the
investment at net asset value at the end of each period, and no
sales charges. Total return would be reduced if sales charges
were taken into account.
-23-
<PAGE> 34
adverse performance of any one security may have on the
performance of the entire portfolio.
Third, the Board of Directors believes that the Global
Technology Fund Shares received in the Reorganization will provide
existing Aviation Fund shareholders with substantially the same
investment advantages that they currently enjoy at a comparable
level of risk. The Board of Directors also considered the
performance history of each Fund.
Fourth, a combined fund offers economies of scale that
should have a positive effect on the expenses currently borne by
the shareholders of Aviation Fund. Both Funds incur substantial
overhead costs for accounting, legal, transfer agency services,
insurance, and custodial and administrative services.
For Aviation Fund's Class A and Class B shares, the ratios
of expenses to average net assets for the fiscal year ended
December 31, 1994 were 1.60% and 2.59%, respectively. Aviation
Fund's Class A Rule 12b-1 fees were capped temporarily during 1994
at an amount equal to 0.08% of the Fund's average daily net
assets. Absent such temporary cap, the ratio of expenses to
average net assets for Aviation Fund's Class A shares would have
been 1.82% of average daily net assets for such year.
<TABLE>
The following table sets forth for Aviation Fund the fees
and expenses, expressed as a percentage of average net assets,
incurred for the fiscal year ended December 31, 1994. The table
also sets forth the fees and expenses that would have been
incurred by Aviation Fund's Class A shares if the temporary cap on
12b-1 fees had not been in effect during such period.
<CAPTION>
Class A Class A Class B
Shares Shares* Shares
------- ------- -------
<S> <C> <C> <C>
Management Fees (not including fee reduction+)................. 1.00%+ 1.00%+ 1.00%+
Rule 12b-1 Fees................................................ 0.08% 0.30% 1.00%
Other Expenses**............................................... 0.52% 0.52% 0.59%
---- ---- ----
TOTAL FUND OPERATING EXPENSES.................................. 1.60% 1.82% 2.59%
==== ==== ====
<FN>
________________________
* Assumes temporary cap on Rule 12b-1 fees was not in effect.
** Other expenses include transfer agency, custodial, auditing,
trustees, printing, registration, administration and legal
fees, organizational expenses, taxes and miscellaneous
expenses.
+ Effective January 1, 1995, the Adviser agreed not to impose
a portion of Aviation Fund's advisory fee amounting to 0.15% of
the first $100,000,000 of the Fund's net assets. Because this fee
reduction was not in place during 1994, the management fee shown in
in the table is higher than the management fee currently being
charged by the Adviser.
</TABLE>
<PAGE> 35
Had the Reorganization occurred on December 31, 1993, the pro
forma combined expense ratios for Class A and Class B shares of
Global Technology Fund for the fiscal year ended December 31, 1994
would have been 1.76% and 2.59%, respectively (does not reflect
temporary cap on Aviation Fund's Class A Rule 12b-1 fees that was
in effect during 1994).
<TABLE>
The following table sets forth for Global Technology Fund the
pro forma fees and expenses, expressed as a percentage of average net
assets, that would have been incurred for the fiscal year ended
December 31, 1994 had the Reorganization occurred on December 31,
1993. The table does not reflect the temporary cap on Aviation
Fund's Class A Rule 12b-1 fees that was in effect during 1994.
<CAPTION>
Class A Class B
Shares Shares
------- -------
<S> <C> <C>
Management Fees (not including fee reduction+) ..... 0.96%+ 0.96%+
Rule 12b-1 Fees..................................... 0.30% 1.00%
Other Expenses*..................................... 0.50% 0.63%
---- ----
TOTAL FUND OPERATING EXPENSES....................... 1.76% 2.59%
==== ====
<FN>
_______________________
* Other expenses include transfer agency, custodial, auditing,
trustees, printing, registration, administration and legal
fees, organizational expenses, taxes and miscellaneous
expenses.
+ Effective January 1, 1995, the Adviser agreed not to impose
a portion of both Fund's advisory fees amounting to 0.15% of
the first $100,000,000 of the Fund's net assets. Because this fee
reduction was not in place during 1994, the management fee shown in
in the table is higher than the management fee currently being
charged by the Adviser.
</TABLE>
Based on the respective net assets of Aviation Fund and
Global Technology Fund as of December 31, 1994, the Reorganization
would result in an estimated annual savings in expenses of
$95,819, or $0.015 per Class A share and $0.015 per Class B share
outstanding on December 31, 1994. See the PRO FORMA financial
statements in the Statement of Additional Information. For Global
Technology Fund's Class A and Class B shares, the actual ratios of
expenses to average net assets for the fiscal year ended December
31, 1994 were 2.16% and 2.90%, respectively.
In determining that the Reorganization is in the best
interests of Aviation Fund and the interests of its shareholders,
the Board of Directors considered the fact that the Adviser and
the Subadviser will receive certain benefits from the
-25-
<PAGE> 36
Reorganization. The Reorganization will result in a consolidated
portfolio management effort, and may result in time savings to the
Adviser and Subadviser by reducing the number of reports and
regulatory filings that they need to prepare.
UNREIMBURSED DISTRIBUTION AND SHAREHOLDER SERVICE EXPENSES
The Board of Directors has determined that, if the
Reorganization is consummated, distribution and shareholder
service expenses incurred in connection with shares of Aviation
Fund, and not reimbursed under Aviation Fund's Rule 12b-1 Plans or
through CDSCs, will be reimbursable expenses under Global
Technology Fund's Rule 12b-1 Plans (the "assumption"). However,
the maximum aggregate amounts payable during any fiscal year under
Global Technology Fund's Rule 12b-1 Plan (0.30% of average daily
net assets attributable to Class A shares and 1.00% of average
daily net assets attributable to Class B shares) will not be
affected by the assumption.
With respect to both Global Technology Fund's Class A and
Class B shares, the percentage of net assets on a pro forma
combined basis that the unreimbursed expenses represent will
decrease as a result of the Reorganization and the assumption. As
of December 31, 1994, the unreimbursed distribution and
shareholder service expenses of Global Technology Fund
attributable to Class A and Class B shares were $76,304 (.146% of
Global Technology Fund's net assets attributable to Class A shares
as of such date) and $219,160 (2.53% of Global Technology Fund's
net assets attributable to Class B shares as of such date),
respectively. As of the same date, the unreimbursed distribution
and shareholder service expenses of Aviation Fund attributable to
Class A and Class B shares were $10,827 (.019% of Aviation Fund's
net assets attributable to Class A shares as of such date) and
$8,784 (1.81% of Aviation Fund's net assets attributable to Class
B shares as of such date), respectively.
After the Reorganization, on a pro forma combined basis, the
unreimbursed distribution and shareholder service expenses of
Global Technology Fund attributable to Class A and Class B shares
will be $87,131 (.081% of Global Technology Fund's pro forma net
assets attributable to Class A shares) and $227,944 (2.32% of
Global Technology Fund's pro forma net assets attributable to
Class B shares), respectively.
The assumption will have no immediate effect upon the
payments made under Global Technology Fund's Rule 12b-1 Plans.
While John Hancock Funds hopes to recover unreimbursed
distribution and shareholder service expenses over an extended
period of time, Global Technology Fund is not obligated to assure
that these amounts are recouped by John Hancock Funds.
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<PAGE> 37
Unreimbursed distribution and shareholder service expenses do not
currently appear as an expense or liability in the financial
statements of either Fund, nor will they appear in the financial
statements of Global Technology Fund after the Reorganization
until paid or accrued. Unreimbursed expenses do not enter into
the calculation of the Fund's net asset value or the formula for
calculating Rule 12b-1 payments. Even in the event of termination
or noncontinuance of Global Technology Fund's 12b-1 Plans, Global
Technology Fund is not legally committed, and is not required to
commit, to the payment of any unreimbursed distribution and
shareholder service expenses. The staff of the Securities and
Exchange Commission has not approved or disapproved the treatment
of the unreimbursed distribution and shareholder service expenses
described in this document.
BOARD'S EVALUATION AND RECOMMENDATION
On the basis of the factors described above and other
factors, the Board of Directors, including a majority of the
Directors who are not "interested persons" (as defined in the
Investment Company Act) of the Funds, determined that the
Reorganization was in the best interests of each Fund and that the
interests of each Fund's shareholders would not be diluted as a
result of the Reorganization.
THE DIRECTORS OF JOHN HANCOCK TECHNOLOGY SERIES, INC.
RECOMMEND THAT THE SHAREHOLDERS OF JOHN HANCOCK
NATIONAL AVIATION & TECHNOLOGY FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
DESCRIPTION OF AGREEMENT
The following description of the Agreement is a summary,
does not purport to be complete, and is subject in all respects to
the provisions of the Agreement, and is qualified in its entirety
by reference to the Agreement. A copy of the Agreement is
attached to this Proxy Statement and Prospectus as EXHIBIT A and
should be read in its entirety. Paragraph references are to
appropriate provisions of the Agreement.
Method of Carrying Out Reorganization. If Aviation Fund
shareholders approve the Agreement, the Reorganization will be
consummated promptly after the various conditions to the
obligations of each of the parties are satisfied (see Agreement,
paragraphs 6 through 8). The Reorganization will be completed on
the Closing Date (as defined above).
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<PAGE> 38
On the Closing Date, Aviation Fund will transfer all of its
assets to Global Technology Fund in exchange for Global Technology
Fund Shares with an aggregate net asset value equal to the value
of the assets delivered, less the liabilities of Aviation Fund
assumed, as of the close of business on the Closing Date (see
Agreement, paragraphs 1 and 2).
The value of Aviation Fund's assets and Global Technology
Fund's net asset values per Class A share and per Class B share
will be determined according to the valuation procedures set forth
in Technology Series' Articles of Amendment and Restatement and
By-laws and the Global Technology Fund Prospectus, respectively
(see "Share Price" in the Global Technology Fund Prospectus). No
initial sales charge or CDSC will be imposed upon delivery of the
Global Technology Fund Shares in exchange for the assets of
Aviation Fund.
Surrender of Share Certificates. Aviation Fund shareholders
whose Class A or Class B shares are represented by one or more
share certificates should, prior to the Closing Date, either
surrender their certificates to Aviation Fund or deliver to
Aviation Fund an affidavit with respect to lost certificates, in
such form and accompanied by such surety bonds as Aviation Fund
may require (collectively, an "Affidavit"). On the Closing Date,
all certificates which have not been surrendered will be deemed to
be cancelled, will no longer evidence ownership of Aviation Fund's
shares and will evidence ownership of Global Technology Fund
Shares. Shareholders may not redeem or transfer Global Technology
Fund Shares received in the Reorganization until they have
surrendered their Aviation Fund share certificates or delivered an
Affidavit relating to them. Unless a shareholder specifically
requests a share certificate, Global Technology Fund will not
issue share certificates in the Reorganization.
Conditions Precedent to Closing. The obligation of Aviation
Fund to consummate the Reorganization is subject to the
satisfaction of certain conditions precedent, including Technology
Series' and Global Technology Fund's performance of all acts and
undertakings required under the Agreement and the receipt of all
consents, orders and permits necessary to consummate the
Reorganization (see Agreement, paragraphs 6 through 8).
The obligation of Global Technology Fund to consummate the
Reorganization is subject to the satisfaction of certain
conditions precedent, including the performance by Technology
Series and Aviation Fund of all acts and undertakings to be
performed under the Agreement, the receipt of certain documents
and financial statements from Aviation Fund and the receipt of all
consents, orders and permits necessary to consummate the
Reorganization (see Agreement, paragraphs 6 through 8).
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<PAGE> 39
The obligations of both parties are subject to the receipt
of approval and authorization of the Agreement by the vote of no
less than a majority of the outstanding shares of Aviation Fund's
common stock entitled to vote (as described in the section
captioned "Voting Rights and Required Vote"), and the receipt of a
favorable opinion of Hale and Dorr as to the federal income tax
consequences of the Reorganization (see Agreement, paragraph 8.6).
Termination of Agreement. The Agreement may be terminated,
whether or not approval of Aviation Fund's shareholders has been
obtained, by mutual agreement of the parties. In addition, either
party may terminate its obligations under the Agreement at or
prior to the Closing Date, because of a material breach by the
other party of any representations, warranties or agreements
contained in the Agreement, or if a condition precedent in the
Agreement has not been met.
Expenses of the Reorganization. Global Technology Fund and
Aviation Fund will each be responsible for its own expenses
incurred in connection with entering into and carrying out the
provisions of the Reorganization Agreement, whether or not the
Reorganization is consummated.
TAX CONSIDERATIONS
The consummation of the Reorganization is subject to the
receipt on the Closing Date of a favorable opinion of Hale and
Dorr, counsel to the Funds, satisfactory to Technology Series and
substantially to the effect that for federal income tax purposes:
(i) The acquisition by Global Technology Fund of all
of the assets of Aviation Fund solely in exchange for the issuance
of Global Technology Fund Shares to Aviation Fund and the assumption
of all of Aviation Fund's liabilities by Global Technology Fund,
followed by the distribution by Aviation Fund, in liquidation of
Aviation Fund, of Global Technology Fund Shares to the shareholders
of Aviation Fund in exchange for their shares of stock of Aviation
Fund and the termination of Aviation Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code,
and Aviation Fund and Global Technology Fund will each be "a party
to a reorganization" within the meaning of Section 368(b) of the
Code;
(ii) no gain or loss will be recognized by Aviation
Fund upon (a) the transfer of all of its assets to Global Technology
Fund solely in exchange for the issuance of Global Technology Fund
Shares to Aviation Fund, and the assumption of all of Aviation
Fund's liabilities by Global Technology Fund; and (b) the
distribution by Aviation Fund of these Global Technology Fund Shares
to the shareholders of Aviation Fund;
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<PAGE> 40
(iii) no gain or loss will be recognized by Global
Technology Fund upon the receipt of Aviation Fund's assets solely in
exchange for the issuance of Global Technology Fund Shares to
Aviation Fund and the assumption of all of Aviation Fund's
liabilities by Global Technology Fund;
(iv) the basis of the assets of Aviation Fund
acquired by Global Technology Fund will be, in each instance, the
same as the basis of those assets in the hands of Aviation Fund
immediately prior to the transfer;
(v) the tax holding period of the assets of Aviation
Fund in the hands of Global Technology Fund will, in each instance,
include Aviation Fund's tax holding period for those assets;
(vi) the shareholders of Aviation Fund will not
recognize gain or loss upon the exchange of all their Aviation Fund
shares solely for Global Technology Fund Shares as part of the
transaction;
(vii) the basis of the Global Technology Fund Shares
that Aviation Fund shareholders receive in the transaction will be
the same as the basis of the Aviation Fund shares they surrendered
in exchange; and
(viii) the tax holding period of the Global Technology
Fund Shares that Aviation Fund shareholders receive will include,
for each shareholder, the tax holding period for the Aviation Fund
shares that shareholder surrendered in exchange, provided the
Aviation Fund shares were held as capital assets on the date of the
exchange.
VOTING RIGHTS AND REQUIRED VOTE
Each Aviation Fund share is entitled to one vote. Class A
and Class B shareholders of Aviation Fund vote together with respect
to the Proposal. Approval of the Proposal requires the affirmative
vote of a majority of the outstanding voting securities of Aviation
Fund. Under the Investment Company Act, this means that, to be
approved, the Proposal must receive the affirmative vote of the
lesser of (i) 67% or more of the outstanding shares of Aviation Fund
present at the Meeting and entitled to vote, if the holders of more
than 50% of the outstanding shares of Aviation Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding
shares of Aviation Fund.
Shares of common stock of Aviation Fund represented in
person or by proxy (including shares which abstain or do not vote
with respect to the Proposal) will be counted for purposes of
determining whether a quorum is present at the meeting.
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<PAGE> 41
Accordingly, an abstentation from voting has the same effect as a vote
against the Proposal. However, if a broker or nominee holding
shares in "street name" indicates on the proxy card that it does not
have discretionary authority to vote on the Proposal, those shares
will not be considered as present and entitled to vote with respect
to the Proposal. Accordingly, a "broker non-vote" has no effect on
the voting in determining whether the Proposal has been adopted
pursuant to item (i) above, provided that the holders of more than
50% of the outstanding shares (excluding the "broker non-votes") are
present or represented. However, with respect to determining
whether the Proposal has been adopted pursuant to item (ii) above,
because shares represented by a "broker non-vote" are considered
outstanding shares, a "broker non-vote" has the same effect as a
vote against the Proposal.
If the requisite approval of shareholders is not obtained,
Aviation Fund will continue to engage in business as a registered
open-end, management investment company and the Board of Directors
will consider what further action may be appropriate.
CAPITALIZATION
The following table sets forth the capitalization of each
Fund as of December 31, 1994, and the PRO FORMA combined
capitalization of both Funds as if the Reorganization had occurred
on that date. The table reflects PRO FORMA exchange ratios of
approximately .405540 Class A Global Technology Fund Shares being
issued for each Class A share of Aviation Fund and approximately
.404028 Class B Global Technology Fund Shares being issued for each
Class B share of Aviation Fund. If the Reorganization is
consummated, the actual exchange ratios on the Closing Date may vary
from the exchange ratios indicated due to changes in the market
value of the portfolio securities of both Global Technology Fund and
Aviation Fund between December 31, 1994 and the Closing Date,
changes in the amount of undistributed net investment income and net
realized capital gains of Global Technology Fund and Aviation Fund
during that period resulting from income and distributions, and
changes in the accrued liabilities of Global Technology Fund and
Aviation Fund during the same period.
DECEMBER 31, 1994
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<PAGE> 42
<TABLE>
<CAPTION>
Global
Aviation Technology Pro Forma
Fund Fund Combined
----------- ----------- ------------
<S> <C> <C> <C>
Net Assets ................. $55,324,635 $61,517,302 $116,841,937
Net Asset Value Per Share:
Class A................... $7.24 $17.84 $17.84
Class B................... $7.14 $17.68 $17.68
Shares Outstanding:
Class A................... 7,579,596 2,925,484 5,999,314(1)
Class B................... 67,821 527,263 554,664(1)
<FN>
-------------------
(1) If the Reorganization had taken place on December 31, 1994,
Aviation Fund would have received 3,073,995 Class A shares
and 27,407 Class B shares of Global Technology Fund which
would have been available for distribution to shareholders
of the applicable class of Aviation Fund. No assurance can
be given as to the number of Class A Shares or Class B
shares of Global Technology Fund that will be received by
Aviation Fund on the Closing Date. The foregoing is merely
an example of what Aviation Fund would have received and
distributed had the Reorganization been consummated on
December 31, 1994 and should not be relied upon to reflect
the amount that will actually be received on the Closing
Date.
</TABLE>
COMPARATIVE PERFORMANCE INFORMATION
TOTAL RETURN
The average annual total return at net asset value on
Aviation Fund's Class A shares for the one-year, five-year and ten-
year periods ended December 31, 1994 was (14.169)%, 2.50% and 9.23%,
respectively. The average annual total return at net asset value on
Aviation Fund's Class B shares for the period from January 3, 1994
(commencement of operations) through December 31, 1994 was (14.39)%.
The average annual total return at net asset value on Global
Technology Fund's Class A shares for the one-year, five-year and
ten-year periods ended December 31, 1994 was 9.62%, 10.67% and
10.26%, respectively. The average annual total return at net asset
value on Global Technology Fund's Class B shares for the period from
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<PAGE> 43
January 3, 1994 (commencement of operations) through December 31,
1994 was 10.02%.
The average annual total return of each class of the Funds
is determined by multiplying a hypothetical initial investment of
$1,000 in a class by the average annual compound rate of return
(including capital appreciation/depreciation, and dividends and
distributions paid and reinvested) attributable to that class for
the stated period and annualizing the result.
The table below indicates the total return (capital changes
plus reinvestment of all dividends and distributions) on a
hypothetical investment of $1,000 in each class of each Fund
covering the indicated periods ending December 31, 1994. The data
below represent historical performance which should not be
considered indicative of future performance of either Fund. Each
Fund's performance and net asset value will fluctuate such that
shares, when redeemed, may be worth more or less than their original
cost.
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<PAGE> 44
<TABLE>
VALUE OF A $1,000 INVESTMENT IN JOHN HANCOCK NATIONAL AVIATION & TECHNOLOGY FUND
(UNAUDITED)
<CAPTION>
Value of
Investment on Total Return Total Return
Dec. 31, 1994 Including Sales Charge Excluding Sales Charge
Investment Amount of Including ---------------------- ----------------------
Investment Period Date Investment Sales Charge Cumulative Annualized Cumulative Annualized
----------------- ---------- ---------- ------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
10 years ended
December 31, 1994.... 1/01/84 $1,000 $2,299 129.89% 8.68% 141.88% 9.23%
5 years ended
December 31, 1994.... 1/01/89 $1,000 $1,075 7.53% 1.46% 13.15% 2.50%
1 year ended
December 31, 1994.... 1/01/93 $1,000 $815 (18.48)% (18.48)% (14.16)% (14.16)%
CLASS B SHARES:
From Inception
(January 3, 1994) to
December 31, 1994.... 1/03/94 $1,000 $813 (18.67)% (18.67)% (14.39)% (14.39)%
</TABLE>
<TABLE>
VALUE OF A $1,000 INVESTMENT IN JOHN HANCOCK GLOBAL TECHNOLOGY FUND
(UNAUDITED)
<CAPTION>
Value of
Investment on Total Return Total Return
Dec. 31, 1994 Including Sales Charge Excluding Sales Charge
Investment Amount of Including ---------------------- ----------------------
Investment Period Date Investment Sales Charge Cumulative Annualized Cumulative Annualized
----------------- ---------- ---------- ------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
10 years ended
December 31, 1994.... 1/01/84 $1,000 $2,521 152.15% 9.69% 165.11% 10.26%
5 years ended
December 31, 1994.... 1/01/89 $1,000 $1,577 57.71% 9.54% 65.99% 10.67%
1 year ended
December 31, 1994.... 1/01/93 $1,000 $1,041 4.13% 4.13% 9.62% 9.62%
CLASS B SHARES:
From Inception
(January 3, 1994)
to December 31,
1994................. 1/03/94 $1,000 $1,050 5.02% 5.02% 10.02% 10.02%
</TABLE>
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<PAGE> 45
BUSINESS OF GLOBAL TECHNOLOGY FUND
GENERAL
For a discussion of the organization and operation of Global
Technology Fund, see "Investment Objectives and Policies" and
"Organization and Management of the Fund" in the Global Technology
Fund Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
For a discussion of Global Technology Fund's investment
objectives and policies, see "Investment Objectives and Policies" in
the Global Technology Fund Prospectus.
PORTFOLIO MANAGEMENT
Day-to-day management of Global Technology Fund is carried
out by Barry J. Gordon and Marc H. Klee. Messrs. Gordon and Klee
are portfolio co-managers of both Global Technology Fund and
Aviation Fund. Mr. Gordon is the Chairman and President of the
Subadviser and Mr. Klee is a Senior Vice President of the
Subadviser. Messrs. Gordon and Klee have been associated with both
Funds in a portfolio management capacity since prior to 1988.
Messrs. Gordon and Klee will continue to act as portfolio co-
managers of Global Technology Fund after the Reorganization.
DIRECTORS
For a discussion of the responsibilities of the Board of
Directors, see "Organization and Management of the Fund" in the
Global Technology Fund Prospectus.
INVESTMENT ADVISER, SUBADVISER AND DISTRIBUTOR
For a discussion regarding Global Technology Fund's
investment adviser, subadviser and distributor, see "Organization
and Management of the Fund," "How to Buy Shares" and "Share Price"
in the Global Technology Fund Prospectus.
EXPENSES
For a discussion of Global Technology Fund's expenses, see
"Expense Information" and "The Fund's Expenses" in the Global
Technology Fund Prospectus.
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<PAGE> 46
CUSTODIAN AND TRANSFER AGENT
Global Technology Fund's custodian is Investors Bank & Trust
Company. Global Technology Fund's transfer agent is John Hancock
Investor Services Corporation.
GLOBAL TECHNOLOGY FUND SHARES
For a discussion of the Global Technology Fund Shares, see
"Organization and Management of the Fund" in the Global Technology
Fund Prospectus.
PURCHASE OF GLOBAL TECHNOLOGY FUND SHARES
For a discussion of how Class A and Class B shares of Global
Technology Fund may be purchased or exchanged, see "How to Buy
Shares," "Alternative Purchase Arrangements" and "Additional
Services and Programs" in the Global Technology Fund Prospectus.
REDEMPTION OF GLOBAL TECHNOLOGY FUND SHARES
For a discussion of how Class A and Class B shares of Global
Technology Fund may be redeemed, see "How to Redeem Shares" in the
Global Technology Fund Prospectus. Former shareholders of Aviation
Fund whose shares are represented by share certificates will be
required to surrender their certificates for cancellation or deliver
an affidavit of loss accompanied by an adequate surety bond to
Investor Services in order to redeem Global Technology Fund Shares
received in the Reorganization.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For a discussion of Global Technology Fund's policy with
respect to dividends, distributions and taxes, see "Dividends and
Taxes" in the Global Technology Fund Prospectus.
BUSINESS OF AVIATION FUND
GENERAL
For a discussion of the organization and operation of
Aviation Fund, see "Investment Objective and Policies" and
"Organization and Management of the Fund" in the Aviation Fund
Prospectus.
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<PAGE> 47
INVESTMENT OBJECTIVE AND POLICIES
For a discussion of Aviation Fund's investment objectives
and policies, see "Investment Objective and Policies" in the
Aviation Fund Prospectus.
PORTFOLIO MANAGEMENT
Day-to-day management of Aviation Fund is carried out by
Barry J. Gordon and Marc H. Klee. As noted above, Messrs. Gordon
and Klee are portfolio co-managers of both Aviation Fund and Global
Technology Fund. As noted above, Messrs. Gordon and Klee will
continue to act as portfolio co-managers of Global Technology Fund
after the Reorganization.
DIRECTORS
For a discussion of the responsibilities of the Board of
Directors, see "Organization and Management of the Fund" in the
Aviation Fund Prospectus.
INVESTMENT ADVISER, SUBADVISER AND DISTRIBUTOR
For a discussion regarding Aviation Fund's investment
adviser, subadviser and distributor, see "Organization and
Management of the Fund," "How to Buy Shares" and "Share Price" in
the Aviation Fund Prospectus.
EXPENSES
For a discussion of the Aviation Fund's expenses, see
"Expense Information" and "The Fund's Expenses" in the Aviation Fund
Prospectus.
CUSTODIAN AND TRANSFER AGENT
Aviation Fund's custodian is Investors Bank & Trust Company.
Aviation Fund's transfer agent is John Hancock Investor Services
Corporation.
AVIATION FUND SHARES
For a discussion of Aviation Fund's shares of capital stock,
see "Organization and Management of the Fund" in the Aviation Fund
Prospectus.
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<PAGE> 48
PURCHASE OF AVIATION FUND SHARES
For a discussion of how shares of Aviation Fund may be
purchased or exchanged, see "How to Buy Shares," "Alternative
Purchase Arrangements" and "Additional Services and Programs" in the
Aviation Fund Prospectus. In anticipation of the Reorganization,
Aviation Fund has stopped offering its shares to the public other
than shares purchased through the reinvestment of dividends and
distributions.
REDEMPTION OF AVIATION FUND SHARES
For a discussion of how Class A and Class B shares of
Aviation Fund may be redeemed (other than in the Reorganization),
see "How to Redeem Shares" in the Aviation Fund Prospectus.
Aviation Fund shareholders whose shares are represented by share
certificates will be required to surrender their certificates for
cancellation or deliver an affidavit of loss accompanied by an
adequate surety bond to Investor Services in order to redeem Global
Technology Fund Shares received in the Reorganization.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For a discussion of the Aviation Fund's policy with respect
to dividends, distributions and taxes, see "Distributions and Taxes"
in the Aviation Fund Prospectus.
EXPERTS
The financial statements and the financial highlights of
Global Technology Fund and Aviation Fund for each of the three years
in the period ended December 31, 1994, incorporated by reference
into this Proxy Statement and Prospectus, have been audited by Price
Waterhouse LLP, independent auditors, as set forth in their report
thereon appearing in the Statement of Additional Information, and
are included in reliance upon the authority of such firm as experts
in accounting and auditing.
The financial highlights of Global Technology Fund and
Aviation Fund for the fiscal years ended December 31, 1991, 1990,
1989, 1988, 1987, 1986 and 1985, incorporated by reference into this
Proxy Statement and Prospectus, have been audited by KPMG Peat
Marwick LLP, independent auditors, and are included in reliance upon
the authority of such firm as experts in accounting and auditing.
-38-
<PAGE> 49
AVAILABLE INFORMATION
Technology Series is subject to the informational
requirements of the Securities Exchange Act of 1934 and the
Investment Company Act, and in accordance therewith files reports,
proxy statements and other information with the SEC. Such reports,
proxy statements and other information filed by Technology Series
can be inspected and copied (at prescribed rates) at the public
reference facilities of the SEC at 450 Fifth Street, N.W.,
Washington, D.C., and at the following regional offices: Chicago
(500 West Madison Street, Suite 1400, Chicago, Illinois); and
New York (7 World Trade Center, Suite 1300, New York, New York).
Copies of such material can also be obtained by mail from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
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<PAGE> 50
EXHIBIT A
---------
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made this _______ day of July, 1995, by and between John
Hancock Global Technology Fund (the "Acquiring Fund") and John
Hancock National Aviation & Technology Fund (the "Acquired Fund"),
each a series of John Hancock Technology Series, Inc. (the
"Company"), a Maryland corporation with its principal place of
business at 101 Huntington Avenue, Boston, Massachusetts 02199.
The Acquiring Fund and the Acquired Fund are sometimes referred to
collectively herein as the "Funds" and individually as a "Fund."
This Agreement is intended to be and is adopted as a plan of
"reorganization," as such term is used in Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization will consist of the transfer of all of the assets
of the Acquired Fund to the Acquiring Fund in exchange solely for
the issuance of Class A and Class B shares of common stock of the
Acquiring Fund (the "Acquiring Fund Shares") to the Acquired Fund
and the assumption by the Acquiring Fund of all of the liabilities
of the Acquired Fund, followed by the distribution by the Acquired
Fund, on or promptly after the Closing Date hereinafter referred
to, of the Acquiring Fund Shares to the shareholders of the
Acquired Fund in liquidation and termination of the Acquired Fund
as provided herein, all upon the terms and conditions set forth in
this Agreement.
In consideration of the premises of the covenants and
agreements hereinafter set forth, the parties hereto covenant and
agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR
ASSUMPTION OF LIABILITIES AND ISSUANCE OF ACQUIRING FUND
SHARES; LIQUIDATION OF THE ACQUIRED FUND
1.1 The Acquired Fund will transfer all of its assets
(consisting, without limitation, of portfolio securities and
instruments, dividends and interest receivables, cash and other
assets), as set forth in the statement of assets and liabilities
referred to in Paragraph 7.2 hereof (the "Statement of Assets and
Liabilities"), to the Acquiring Fund free and clear of all liens
and encumbrances, except as otherwise provided herein, in exchange
for (i) the assumption by the Acquiring Fund of the known and
unknown liabilities of the Acquired Fund, including the
liabilities set forth in the Statement of Assets and Liabilities
(the "Acquired Fund Liabilities"), which shall be assigned and
transferred to the Acquiring Fund by the Acquired Fund and assumed
by the Acquiring Fund, and (ii) delivery by the Acquiring Fund to
<PAGE> 51
the Acquired Fund, for distribution pro rata by the Acquired Fund
to its Class A and Class B shareholders in proportion to their
respective ownership of Class A and/or Class B shares of common
stock of the Acquired Fund, as of the close of business on the
closing date (the "Closing Date"), of a number of the Acquiring
Fund Shares having an aggregate net asset value equal to the value
of the assets, less such liabilities (herein referred to as the
"net value of the assets"), of the Acquired Fund so transferred,
assumed, assigned and delivered, all determined as provided in
Paragraph 2.1 hereof and as of a date and time as specified
therein. Such transactions shall take place at the closing
provided for in Paragraph 3.1 hereof (the "Closing"). All
computations shall be provided by Investors Bank & Trust Company
(the "Custodian"), as custodian and pricing agent for the
Acquiring Fund and the Acquired Fund, and shall be recomputed by
Price Waterhouse LLP, the independent accountants of the Acquiring
Fund. The determination of the Custodian, as recomputed by said
accountants, shall, absent manifest error, be conclusive and
binding on all parties in interest.
1.2 The Acquired Fund has provided the Acquiring Fund with a
list of the current securities holdings of the Acquired Fund as of
the date of execution of this Agreement. The Acquired Fund
reserves the right to sell any of these securities (except to the
extent sales may be limited by representations made in connection
with issuance of the tax opinion provided for in paragraph 8.6
hereof) but will not, without the prior approval of the Acquiring
Fund, acquire any additional securities other than securities of
the type in which the Acquiring Fund is permitted to invest.
1.3 The Acquiring Fund and the Acquired Fund shall each bear
its own expenses in connection with the transactions contemplated
by this Agreement.
1.4 On or as soon after the Closing Date as is conveniently
practicable (the "Liquidation Date"), the Acquired Fund will
liquidate and distribute PRO RATA to shareholders of record of the
applicable class (the "Acquired Fund shareholders"), determined as
of the close of regular trading on the New York Stock Exchange on
the Closing Date, the Acquiring Fund Shares received by the
Acquired Fund pursuant to Paragraph 1.1 hereof. Such liquidation
and distribution will be accomplished by the transfer of the
Acquiring Fund Shares then credited to the account of the Acquired
Fund on the books of the Acquiring Fund, to open accounts on the
share records of the Acquiring Fund in the names of the Acquired
Fund shareholders and representing the respective PRO RATA number
and class of Acquiring Fund Shares due such shareholders.
Acquired Fund shareholders who own Class A shares of the Acquired
Fund will receive Class A Acquiring Fund Shares, and Acquired Fund
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shareholders who own Class B shares of the Acquired Fund will
receive Class B Acquiring Fund Shares. The Acquiring Fund shall
not issue certificates representing Acquiring Fund Shares in
connection with such exchange.
1.5 The Acquired Fund shareholders holding certificates
representing their ownership of shares of common stock of the
Acquired Fund shall surrender such certificates or deliver an
affidavit with respect to lost certificates in such form and
accompanied by such surety bonds as the Acquired Fund may require
(collectively, an "Affidavit"), to John Hancock Investor Services
Corporation prior to the Closing Date. Any Acquired Fund share
certificate which remains outstanding on the Closing Date shall be
deemed to be cancelled, shall no longer evidence ownership of
shares of common stock of the Acquired Fund and shall evidence
ownership of Acquiring Fund Shares. Unless and until any such
certificate shall be so surrendered or an Affidavit relating
thereto shall be delivered, dividends and other distributions
payable by the Acquiring Fund subsequent to the Liquidation Date
with respect to Acquiring Fund Shares shall be paid to the holder
of such certificate(s), but such shareholders may not redeem or
transfer Acquiring Fund Shares received in the Reorganization.
The Acquiring Fund will not issue share certificates in the
Reorganization.
1.6 Any transfer taxes payable upon issuance of Acquiring
Fund Shares in a name other than the registered holder of the
Acquiring Fund Shares on the books of the Acquired Fund as of that
time shall, as a condition of such issuance and transfer, be paid
by the person to whom such Acquiring Fund Shares are to be issued
and transferred.
1.7 The existenc of the Acquired Fund shall be terminated as
promptly as practicable following the Liquidation Date.
1.8 Any reporting responsibility of the Company with respect
to the Acquired Fund, including, but not limited to, the
responsibility for filing of regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission (the
"Commission"), any state securities commissions, and any federal,
state or local tax authorities or any other relevant regulatory
authority, is and shall remain the responsibility of the Company.
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2. VALUATION
2.1 The net asset values of the Class A and Class B
Acquiring Fund Shares and the net values of the assets of the
Acquired Fund attributable to its Class A and Class B shares to be
transferred shall in each case be determined as of the close of
business (4:00 p.m. Boston time) on the Closing Date. The net
asset values of the Class A and Class B Acquiring Fund Shares
shall be computed by the Custodian in the manner set forth in the
Company's Articles of Incorporation, as amended and restated, or
By-laws and the Acquiring Fund's then-current prospectus and
statement of additional information and shall be computed in each
case to not fewer than four decimal places. The net values of the
assets of the Acquired Fund attributable to its Class A and Class
B shares to be transferred shall be computed by the Custodian by
calculating the value of the assets of each class transferred by
the Acquired Fund and by subtracting therefrom the amount of the
liabilities of each respective class assigned and transferred to
and assumed by the Acquiring Fund on the Closing Date, said assets
and liabilities to be valued in the manner set forth in the
Acquired Fund's then-current prospectus and statement of
additional information and shall be computed in each case to not
fewer than four decimal places.
2.2 The number of shares of each class of Acquiring Fund
Shares to be issued (including fractional shares, if any) in
exchange for the Acquired Fund's assets shall be determined by
dividing the value of the Acquired Fund's assets attributable to a
class, less the liabilities attributable to that class assumed by
the Acquiring Fund, by the Acquiring Fund's net asset value per
share of the same class, all as determined in accordance with
Paragraph 2.1 hereof.
2.3 All computations of value shall be made by the Custodian
in accordance with its regular practice as pricing agent for the
Funds.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be July 28, 1995 or such other
date on or before December 31, 1995, as the parties may agree in
writing. The Closing shall be held as of 5:00 p.m. at the offices
of the Company, 101 Huntington Avenue, Boston, Massachusetts
02199, or at such other time and/or place as the parties may agree
in writing.
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<PAGE> 54
3.2 Portfolio securities that are not held in book-entry
form in the name of the Custodian as record holder for the
Acquired Fund shall be presented by the Acquired Fund to the
Custodian for examination no later than five business days
preceding the Closing Date. Portfolio securities which are not
held in book-entry form shall be delivered by the Acquired Fund to
the Custodian for the account of the Acquiring Fund on the Closing
Date, duly endorsed in proper form for transfer, in such condition
as to constitute good delivery thereof in accordance with the
custom of brokers, and shall be accompanied by all necessary
federal and state stock transfer stamps or a check for the
appropriate purchase price thereof. Portfolio securities held of
record by the Custodian in book-entry form on behalf of the
Acquired Fund shall be delivered to the Acquiring Fund by the
Custodian by recording the transfer of beneficial ownership
thereof on its records. The cash delivered shall be in the form
of currency or by the Custodian crediting the Acquiring Fund's
account maintained with the Custodian with immediately available
funds.
3.3 In the event that on the Closing Date (a) the New York
Stock Exchange shall be closed to trading or trading thereon shall
be restricted or (b) trading or the reporting of trading on said
Exchange or elsewhere shall be disrupted so that accurate
appraisal of the value of the net assets of the Acquiring Fund or
the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been
restored; provided that if trading shall not be fully resumed and
reporting restored on or before December 31, 1995, this Agreement
may be terminated by the Acquiring Fund or by the Acquired Fund
upon the giving of written notice to the other party.
3.4 The Acquired Fund shall deliver at the Closing a list of
the names, addresses, federal taxpayer identification numbers and
backup withholding and nonresident alien withholding status of the
Acquired Fund shareholders and the number of outstanding shares of
each class of common stock of the Acquired Fund owned by each such
shareholder, all as of the close of business on the Closing Date,
certified by its Treasurer, Secretary or other authorized officer
(the "Shareholder List"). The Acquiring Fund shall issue and
deliver to the Acquired Fund a confirmation evidencing the
Acquiring Fund Shares to be credited on the Closing Date, or
provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired Fund's
account on the books of the Acquiring Fund. At the Closing, each
party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request.
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<PAGE> 55
4. REPRESENTATIONS AND WARRANTIES
4.1 The Company on behalf of the Acquired Fund represents,
warrants and covenants to the Acquiring Fund as follows:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Maryland and has the power to own all of its
properties and assets and, subject to approval by the
shareholders of the Acquired Fund, to carry out the
transactions contemplated by this Agreement. Neither the
Company nor the Acquired Fund is required to qualify to do
business in any jurisdiction in which it is not so qualified
or where failure to qualify would not subject it to any
material liability or disability. The Company has all
necessary federal, state and local authorizations to own all
of its properties and assets and to carry on its business as
now being conducted;
(b) The Company is a registered investment company
classified as a management company and its registration with
the Commission as an investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), is in full
force and effect. The Acquired Fund is a non-diversified
series of the Company;
(c) The Company and the Acquired Fund are not, and the
execution, delivery and performance of their obligations
under this Agreement will not result, in violation of any
provision of the Company's Articles of Incorporation, as
amended and restated, or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking
to which the Company or the Acquired Fund is a party or by
which it is bound;
(d) Except as otherwise disclosed in writing and
accepted by the Acquiring Fund, no material litigation or
administrative proceeding or investigation of or before any
court or governmental body is currently pending or threatened
against the Company or the Acquired Fund or any of the
Acquired Fund's properties or assets. The Company knows of
no facts which might form the basis for the institution of
such proceedings, and neither the Company nor the Acquired
Fund is a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which
materially and adversely affects the Acquired Fund's business
or its ability to consummate the transactions herein
contemplated;
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<PAGE> 56
(e) The Acquired Fund has no material contracts or
other commitments (other than this Agreement or agreements
for the purchase of securities entered into in the ordinary
course of business and consistent with its obligations under
this Agreement) which will not be terminated without
liability to the Acquired Fund at or prior to the Closing
Date;
(f) The statement of assets and liabilities, including
the schedule of investments, of the Acquired Fund as of
June 30, 1995 and the related statement of operations for the
six months then ended (unaudited), and the statement of
assets and liabilities, including the schedule of
investments, of the Acquired Fund as of December 31, 1994 and
the related statement of operations for the year then ended,
and the statement of changes in net assets for the years
ended December 31, 1994 and 1993 (audited by Price Waterhouse
LLP) (copies of which have been furnished to the Acquiring
Fund) present fairly in all material respects the financial
condition of the Acquired Fund as of June 30, 1995 and
December 31, 1994, respectively, and the results of its
operations and changes in net assets for the respective
stated periods in accordance with generally accepted
accounting principles consistently applied, and there were no
actual or contingent liabilities of the Acquired Fund as of
the respective dates thereof not disclosed therein;
(g) Since June 30, 1995, there has not been any
material adverse change in the Acquired Fund's financial
condition, assets, liabilities, or business other than
changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more
than one year from the date such indebtedness was incurred,
except as otherwise disclosed to and accepted by the
Acquiring Fund;
(h) At the date hereof and by the Closing Date, all
federal, state and other tax returns and reports, including
information returns and payee statements, of the Acquired
Fund required by law to have been filed or furnished by such
dates shall have been filed or furnished, and all federal,
state and other taxes, interest and penalties shall have been
paid so far as due, or provision shall have been made for the
payment thereof, and to the best of the Acquired Fund's
knowledge no such return is currently under audit and no
assessment has been asserted with respect to such returns or
reports;
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<PAGE> 57
(i) The Acquired Fund has elected to be treated as a
regulated investment company for federal income tax purposes,
has qualified as such for each taxable year of its operation
and will qualify as such as of the Closing Date with respect
to its final taxable year ending on the Closing Date;
(j) The authorized capital of the Company consists of
200,000,000 shares of common stock divided into two series,
the Acquiring Fund and the Acquired Fund. The Acquired Fund
consists of 80 million shares, $1.25 par value, which are
divided into two classes, Class A and Class B, each with 40
million shares. All issued and outstanding shares of common
stock of the Acquired Fund are, and at the Closing Date will
be, duly and validly issued and outstanding, fully paid and
nonassessable by the Company. All of the issued and
outstanding shares of common stock of the Acquired Fund will,
at the time of Closing, be held by the persons and in the
amounts and classes set forth in the Shareholder List
submitted to the Acquiring Fund pursuant to Paragraph 3.4
hereof. The Acquired Fund does not have outstanding any
options, warrants or other rights to subscribe for or
purchase any of its shares of common stock, nor is there
outstanding any security convertible into any of its shares
of common stock;
(k) At the Closing Date, the Acquired Fund will have
good and marketable title to the assets to be transferred to
the Acquiring Fund pursuant to Paragraph 1.1 hereof, and full
right, power and authority to sell, assign, transfer and
deliver such assets hereunder, and upon delivery and payment
for such assets, the Company on behalf of the Acquiring Fund
will acquire good and marketable title thereto subject to no
restrictions on the full transfer thereof, including such
restrictions as might arise under the Securities Act of 1933,
as amended (the "1933 Act");
(l) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action
on the part of the Company on behalf of the Acquired Fund,
and this Agreement constitutes a valid and binding obligation
of the Company and the Acquired Fund enforceable in
accordance with its terms, subject to the approval of the
Acquired Fund's shareholders;
(m) The information to be furnished by the Acquired
Fund to the Acquiring Fund for use in applications for
orders, registration statements, proxy materials and other
documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and
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<PAGE> 58
complete and shall comply in all material respects with
federal securities and other laws and regulations thereunder
applicable thereto;
(n) The proxy statement of the Acquired Fund
(the "Proxy Statement") to be included in the Registration
Statement referred to in Paragraph 5.7 hereof (other than
written information furnished by the Acquiring Fund for
inclusion therein, as covered by the Acquiring Fund's
warranty in Paragraph 4.2(m) hereof), on the effective date
of the Registration Statement, on the date of the meeting of
the Acquired Fund shareholders and on the Closing Date, shall
not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which such statements were made, not
misleading;
(o) No consent, approval, authorization or order of any
court or governmental authority is required for the
consummation by the Acquired Fund of the transactions
contemplated by this Agreement;
(p) All of the issued and outstanding shares of common
stock of the Acquired Fund have been offered for sale and
sold in conformity with all applicable federal and state
securities laws;
(q) The prospectus of the Acquired Fund, dated May 1,
1995 (the "Acquired Fund Prospectus"), previously furnished
to the Acquiring Fund, does not contain any untrue statements
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were
made, not misleading.
4.2 The Company on behalf of the Acquiring Fund represents,
warrants and covenants to the Acquired Fund as follows:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Maryland and has the power to own all of its
properties and assets and to carry out the Agreement.
Neither the Company nor the Acquiring Fund is required to
qualify to do business in any jurisdiction in which it is not
so qualified or where failure to qualify would not subject it
to any material liability or disability. The Company has all
necessary federal, state and local authorizations to own all
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<PAGE> 59
of its properties and assets and to carry on its business as
now being conducted;
(b) The Company is a registered investment company
classified as a management company and its registration with
the Commission as an investment company under the 1940 Act is
in full force and effect. The Acquiring Fund is a
diversified series of the Company;
(c) The prospectus (the "Acquiring Fund Prospectus")
and statement of additional information for Class A and
Class B shares of the Acquiring Fund, each dated May 1, 1995,
and any amendments or supplements thereto on or prior to the
Closing Date, and the Registration Statement on Form N-14 to
be filed in connection with this Agreement (the "Registration
Statement") (other than written information furnished by the
Acquired Fund for inclusion therein, as covered by the
Acquired Fund's warranty in Paragraph 4.1(m) hereof) will
conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules
and regulations of the Commission thereunder, the Acquiring
Fund Prospectus does not include any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading and the Registration Statement will not
include any untrue statement of material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(d) At the Closing Date, the Company on behalf of the
Acquiring Fund will have good and marketable title to the
assets of the Acquiring Fund;
(e) The Company and the Acquiring Fund are not, and the
execution, delivery and performance of their obligations
under this Agreement will not result, in violation of any
provisions of the Company's Articles of Amendment and
Restatement, as amended and restated, or By-laws or of any
agreement, indenture, instrument, contract, lease or other
undertaking to which the Company or the Acquiring Fund is a
party or by which the Company or the Acquiring Fund is bound;
(f) Except as otherwise disclosed in writing and
accepted by the Acquired Fund, no material litigation or
administrative proceeding or investigation of or before any
court or governmental body is currently pending or threatened
against the Company or the Acquiring Fund or any of the
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<PAGE> 60
Acquiring Fund's properties or assets. The Company knows of
no facts which might form the basis for the institution of
such proceedings, and neither the Company nor the Acquiring
Fund is a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which
materially and adversely affects the Acquiring Fund's
business or its ability to consummate the transactions herein
contemplated;
(g) The statement of assets and liabilities of the
Acquiring Fund, as of June 30, 1995, and the related
statement of operations for the period then ended and the
schedule of investments (unaudited) (copies of which have
been furnished to the Acquired Fund), present fairly in all
material respects the financial position of the Acquiring
Fund as of June 30, 1995 and the results of its operations
for the period then ended in accordance with generally
accepted accounting principles consistently applied and there
are no known actual or contingent liabilities of the
Acquiring Fund as of the respective dates thereof not
disclosed herein;
(h) Since June 30, 1995, there has not been any
material adverse change in the Acquiring Fund's financial
condition, assets, liabilities or business other than changes
occurring in the ordinary course of business, or any
incurrence by the Company on behalf of the Acquiring Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred;
(i) The Acquiring Fund has elected to be treated as a
regulated investment company for federal income tax purposes,
has qualified as such for each taxable year of its operation
and will qualify as such as of the Closing Date;
(j) The authorized capital of the Company consists of
200,000,000 shares of common stock divided into two series,
the Acquiring Fund and the Acquired Fund. The Acquiring Fund
consists of 100 million shares, $0.20 par value, which are
divided into two classes, Class A and Class B, each with 50
million shares. All issued and outstanding shares of common
stock of the Acquiring Fund are, and at the Closing Date will
be, duly and validly issued and outstanding, fully paid and
nonassessable by the Company. The Acquiring Fund does not
have outstanding any options, warrants or other rights to
subscribe for or purchase any of its shares of common stock,
nor is there outstanding any security convertible into any of
its shares of common stock;
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<PAGE> 61
(k) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action
on the part of the Company on behalf of the Acquiring Fund,
and this Agreement constitutes a valid and binding obligation
of the Acquiring Fund enforceable in accordance with its
terms;
(l) The Acquiring Fund Shares to be issued and
delivered to the Acquired Fund pursuant to the terms of this
Agreement, when so issued and delivered, will be duly and
validly issued shares of common stock of the Acquiring Fund
and will be fully paid and nonassessable by the Company;
(m) The information to be furnished by the Acquiring
Fund for use in applications for orders, registration
statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated
hereby shall be accurate and complete and shall comply in all
material respects with federal securities and other laws and
regulations applicable thereto; and
(n) No consent, approval, authorization or order of any
court or governmental authority is required for the
consummation by the Acquiring Fund of the transactions
contemplated by the Agreement, except for the registration of
the Acquiring Fund Shares under the 1933 Act, the 1940 Act
and under state securities laws.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 Except as expressly contemplated herein to the contrary,
the Company, on behalf of both the Acquiring Fund and the Acquired
Fund, will operate its respective businesses in the ordinary
course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include
customary dividends and distributions and any other distributions
necessary or desirable to avoid federal income or excise taxes.
5.2 The Company will call a meeting of the Acquired Fund
shareholders to consider and act upon this Agreement and to take
all other action necessary to obtain approval of the transactions
contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring Fund
Shares to be issued hereunder are not being acquired by the
Acquired Fund for the purpose of making any distribution thereof
other than in accordance with the terms of this Agreement.
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<PAGE> 62
5.4 The Company on behalf of the Acquired Fund will provide
such information within its possession or reasonably obtainable as
the Company on behalf of the Acquiring Fund requests concerning
the beneficial ownership of the Acquired Fund's shares of common
stock.
5.5 Subject to the provisions of this Agreement, the
Acquiring Fund and the Acquired Fund each shall take, or cause to
be taken, all action, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the
transactions contemplated by this Agreement.
5.6 The Company on behalf of the Acquired Fund shall furnish
to the Company on behalf of the Acquiring Fund on the Closing Date
the Statement of Assets and Liabilities of the Acquired Fund as of
the Closing Date, which statement shall be prepared in accordance
with generally accepted accounting principles consistently applied
and shall be certified by the Company's Treasurer or Assistant
Treasurer. As promptly as practicable but in any case within 60
days after the Closing Date, the Acquired Fund shall furnish to
the Acquiring Fund, in such form as is reasonably satisfactory to
the Company, a statement of the earnings and profits of the
Acquired Fund for federal income tax purposes and of any capital
loss carryovers and other items that will be carried over to the
Acquiring Fund as a result of Section 381 of the Code, and which
statement will be certified by the President of the Acquired Fund.
5.7 The Company on behalf of the Acquiring Fund will prepare
and file with the Commission the Registration Statement in
compliance with the 1933 Act and the 1940 Act in connection with
the issuance of the Acquiring Fund Shares as contemplated herein.
5.8 The Company on behalf of the Acquired Fund will prepare
a Proxy Statement, to be included in the Registration Statement in
compliance with the 1933 Act, the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the 1940 Act and the rules and
regulations thereunder (collectively, the "Acts") in connection
with the special meeting of shareholders of the Acquired Fund to
consider approval of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY ON BEHALF
OF THE ACQUIRED FUND
The obligations of the Company on behalf of the Acquired Fund
to complete the transactions provided for herein shall be, at its
election, subject to the performance by the Company on behalf of
the Acquiring Fund of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition thereto,
the following further conditions:
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6.1 All representations and warranties of the Company
on behalf of the Acquiring Fund contained in this Agreement
shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the
Closing Date with the same force and effect as if made on and
as of the Closing Date; and
6.2 The Company on behalf of the Acquiring Fund shall
have delivered to the Acquired Fund a certificate executed in
its name by the Company's President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquired Fund and dated as of the Closing
Date, to the effect that the representations and warranties
of the Company on behalf of the Acquiring Fund made in this
Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters
as the Company on behalf of the Acquired Fund shall
reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY ON BEHALF
OF THE ACQUIRING FUND
The obligations of the Company on behalf of the Acquiring
Fund to complete the transactions provided for herein shall be, at
its election, subject to the performance by the Company on behalf
of the Acquired Fund of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto,
the following conditions:
7.1 All representations and warranties of the Company
on behalf of the Acquired Fund contained in this Agreement
shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the
Closing Date with the same force and effect as if made on and
as of the Closing Date;
7.2 The Company on behalf of the Acquired Fund shall
have delivered to the Company on behalf of the Acquiring Fund
the Statement of Assets and Liabilities of the Acquired Fund,
together with a list of its portfolio securities showing the
federal income tax bases and holding periods of such
securities, as of the Closing Date, certified by the
Treasurer or Assistant Treasurer of the Company;
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<PAGE> 64
7.3 The Company on behalf of the Acquired Fund shall
have delivered to the Company on behalf of the Acquiring Fund
on the Closing Date a certificate executed in the name of the
Acquired Fund by a President or Vice President and a
Treasurer or Assistant Treasurer of the Company, in form and
substance satisfactory to the Acquiring Fund and dated as of
the Closing Date, to the effect that the representations and
warranties of the Company on behalf of the Acquired Fund in
this Agreement are true and correct at and as of the Closing
Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters
as the Company on behalf of the Acquiring Fund shall
reasonably request; and
7.4 At or prior to the Closing Date, the Acquired
Fund's investment adviser, or an affiliate thereof, shall
have made all payments, or applied all credits, to the
Acquired Fund required by any applicable contractual or
state-imposed expense limitation.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY,
THE ACQUIRING FUND AND THE ACQUIRED FUND
The obligations of the Company, the Acquiring Fund and the
Acquired Fund hereunder are each subject to the further conditions
that on or before the Closing Date:
8.1 The Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the holders of
the outstanding shares of common stock of the Acquired Fund in
accordance with the provisions of the Company's Articles of
Amendment and Restatement, as amended and restated, and By-Laws,
and certified copies of the resolutions evidencing such approval
by the Acquired Fund's shareholders shall have been delivered by
the Acquired Fund to the Company on behalf of the Acquiring Fund;
8.2 On the Closing Date no action, suit or other proceeding
shall be pending before any court or governmental agency in which
it is sought to restrain or prohibit, or obtain changes or other
relief in connection with, this Agreement or the transactions
contemplated herein;
8.3 All consents of other parties and all other consents,
orders and permits of federal, state and local regulatory
authorities (including those of the Commission and of state Blue
Sky and securities authorities, including "no-action" positions of
such federal or state authorities) deemed necessary by the Company
to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except
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<PAGE> 65
where failure to obtain any such consent, order or permit would
not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Fund or the Acquired Fund, provided
that either party hereto may waive any such conditions for itself;
8.4 The Registration Statement shall have become effective
under the 1933 Act and the 1940 Act and no stop orders suspending
the effectiveness thereof shall have been issued and, to the best
knowledge of the parties hereto, no investigation or proceeding
for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act or the 1940 Act;
8.5 The Acquired Fund shall have distributed to its
shareholders all of its investment company taxable income (as
defined in Section 852(b)(2) of the Code) for its taxable year
ending on the Closing Date and all of its net capital gain (as
such term is used in Section 852(b)(3)(C) of the Code), after
reduction by any available capital loss carryforward, for its
taxable year ending on the Closing Date; and
8.6 The parties shall have received an opinion of
Messrs. Hale and Dorr, satisfactory to the Company on behalf of
the Acquired Fund and the Company on behalf of the Acquiring Fund,
substantially to the effect that for federal income tax purposes:
(a) The acquisition by the Acquiring Fund of all of the
assets of the Acquired Fund solely in exchange for the
issuance of Acquiring Fund Shares to the Acquired Fund and
the assumption of all of the Acquired Fund Liabilities by the
Acquiring Fund, followed by the distribution by the Acquired
Fund, in liquidation of the Acquired Fund, of Acquiring Fund
Shares to the shareholders of the Acquired Fund in exchange
for their shares of common stock of the Acquired Fund and the
termination of the Acquired Fund, will constitute a
reorganization within the meaning of Section 368(a) of the
Code, and the Acquired Fund and the Acquiring Fund will each
be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired
Fund upon (i) the transfer of all of its assets to the
Acquiring Fund solely in exchange for the issuance of
Acquiring Fund Shares to the Acquired Fund and the assumption
of all of the Acquired Fund Liabilities by the Acquiring Fund
and (ii) the distribution by the Acquired Fund of such
Acquiring Fund Shares to the shareholders of the Acquired
Fund;
16
<PAGE> 66
(c) No gain or loss will be recognized by the Acquiring
Fund upon the receipt of the assets of the Acquired Fund
solely in exchange for the issuance of the Acquiring Fund
Shares to the Acquired Fund and the assumption of all of the
Acquired Fund Liabilities by the Acquiring Fund;
(d) The basis of the assets of the Acquired Fund
acquired by the Acquiring Fund will be, in each instance, the
same as the basis of those assets in the hands of the
Acquired Fund immediately prior to the transfer;
(e) The tax holding period of the assets of the
Acquired Fund in the hands of the Acquiring Fund will, in
each instance, include the Acquired Fund's tax holding period
for those assets;
(f) The shareholders of the Acquired Fund will not
recognize gain or loss upon the exchange of all of their
shares of common stock of the Acquired Fund solely for
Acquiring Fund Shares as part of the transaction;
(g) The basis of the Acquiring Fund Shares received by
the Acquired Fund shareholders in the transaction will be the
same as the basis of the shares of common stock of the
Acquired Fund surrendered in exchange therefor; and
(h) The tax holding period of the Acquiring Fund Shares
received by the Acquired Fund shareholders will include, for
each shareholder, the tax holding period for his shares of
common stock of the Acquired Fund surrendered in exchange
therefor, provided that such Acquired Fund shares were held
as capital assets on the date of the exchange.
The Company, on behalf of each of the Acquiring Fund the
Acquired Fund, agrees to make and provide representations with
respect to the Acquiring Fund and the Acquired Fund, respectively,
which are reasonably necessary to enable Hale and Dorr to deliver
an opinion substantially as set forth in this Paragraph 8.6.
Notwithstanding anything herein to the contrary, the Company may
not waive the conditions set forth in this Paragraph 8.6.
9. BROKERAGE FEES AND EXPENSES
9.1 The Company, on behalf of the Acquiring Fund and the
Acquired Fund, represents and warrants to the Acquired Fund and
the Acquiring Fund, respectively, that there are no brokers or
finders entitled to receive any payments in connection with the
transactions provided for herein.
17
<PAGE> 67
9.2 The Acquiring Fund and the Acquired Fund shall each be
liable solely for its own expenses incurred in connection with
entering into and carrying out the provisions of this Agreement
whether or not the transactions contemplated hereby are
consummated.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Company, on behalf of each of the Acquiring Fund
and the Acquired Fund, agrees that neither party has made any
representation, warranty or covenant not set forth herein or
referred to in Paragraph 4 hereof and that this Agreement
constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained
in this Agreement or in any document delivered pursuant hereto or
in connection herewith shall survive the consummation of the
transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual
agreement of the Company, on behalf of the Acquiring Fund, and the
Company, on behalf of the Acquired Fund. In addition, either
party may at its option terminate this Agreement at or prior to
the Closing Date:
(a) because of a material breach by the other of any
representation, warranty, covenant or agreement contained
herein to be performed at or prior to the Closing Date;
(b) because of a condition herein expressed to be
precedent to the obligations of the terminating party which
has not been met and which reasonably appears will not or
cannot be met; or
(c) by resolution of the Company's Board of Directors
if circumstances should develop that, in the good faith
opinion of such Board, make proceeding with the Agreement not
in the best interest of either party's shareholders.
11.2 In the event of any such termination, there shall be no
liability for damages on the part of the Company, the Acquiring
Fund or the Acquired Fund, or the Directors or officers of the
Company, but each party shall bear the expenses incurred by it
incidental to the preparation and carrying out of this Agreement.
18
<PAGE> 68
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in
such manner as may be mutually agreed upon in writing by the
authorized officers of the Company. However, following the
meeting of shareholders of the Acquired Fund held pursuant to
Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for
determining the number of Acquiring Fund Shares to be received by
the Acquired Fund shareholders under this Agreement to the
detriment of such shareholders without their further approval;
provided that nothing contained in this Article 12 shall be
construed to prohibit the parties from amending this Agreement to
change the Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted
by any provisions of this Agreement shall be in writing and shall
be given by prepaid telegraph, telecopy or certified mail
addressed to the Acquiring Fund or to the Acquired Fund, each at
101 Huntington Avenue, Boston, Massachusetts 02199, Attention:
President, and, in either case, with copies to Hale and Dorr,
60 State Street, Boston, Massachusetts 02109, Attention:
Pamela J. Wilson, Esq.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
14.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts.
14.4 This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns,
but no assignment or transfer hereof or of any rights or
obligations hereunder shall be made by any party without the prior
written consent of the other party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give
any person, firm or corporation, other than the parties hereto and
their respective successors and assigns, any rights or remedies
under or by reason of this Agreement.
19
<PAGE> 69
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President and attested by its
Secretary or Assistant Secretary and has caused its corporate seal to be
affixed hereto.
JOHN HANCOCK TECHNOLOGY SERIES, INC.
on behalf of JOHN HANCOCK GLOBAL
TECHNOLOGY FUND
By: ________________________________
Name: ______________________________
Title: _____________________________
JOHN HANCOCK TECHNOLOGY SERIES,
INC., on behalf of JOHN HANCOCK
NATIONAL AVIATION & TECHNOLOGY FUND
By: ________________________________
Name: ______________________________
Title: _____________________________
20
<PAGE> 70
EXHIBIT B
JOHN HANCOCK
GLOBAL TECHNOLOGY
FUND
CLASS A AND CLASS B SHARES
PROSPECTUS
MAY 1, 1995
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Expense Information................................................................... 2
The Fund's Financial Highlights....................................................... 3
Investment Objectives and Policies.................................................... 4
Organization and Management of the Fund............................................... 8
Alternative Purchase Arrangements..................................................... 9
The Fund's Expenses................................................................... 10
Dividends and Taxes................................................................... 12
Performance........................................................................... 12
How to Buy Shares..................................................................... 14
Share Price........................................................................... 15
How to Redeem Shares.................................................................. 22
Additional Services and Programs...................................................... 23
</TABLE>
This Prospectus sets forth information about John Hancock Global Technology
Fund (the "Fund"), a diversified series of John Hancock Technology Series, Inc.
(the "Company"), that you should know before investing. Please read and retain
it for future reference.
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, Post Office Box 9116, Boston, Massachusetts 02199-9116,
1-800-225-5291, (1-800-554-6713 TDD).
SHARES OF THE FUNDS 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 AGENCY.
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> 71
EXPENSE INFORMATION
The purpose of the following information is to help you understand the various
fees and expenses that 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 of the Fund's Class A and Class B
shares for the fiscal year ended December 31, 1994, adjusted to reflect current
fees and expenses. Actual fees and expenses in the future may be greater or less
than those indicated.
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES** SHARES**
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (as a percentage of offering price)............. 5.00%* None
Maximum sales charge imposed on reinvested dividends...................................... None None
Maximum deferred sales charge............................................................. None* 5.00%
Redemption fees+.......................................................................... None None
Exchange fee.............................................................................. None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fee** (net of waiver).......................................................... 0.85% 0.85%
12b-1 fee***.............................................................................. 0.30% 1.00%
Other expenses............................................................................ 1.05% 0.87%
Total Fund operating expenses............................................................. 2.20% 2.72%
<FN>
- ---------------
* No sales charge is payable at the time of purchase on investments of $1
million or more, but a contingent deferred sales charge may be imposed on
these investments, as described under the caption "Share Price," in the
event of certain redemption transactions within one year of purchase.
** In the absence of waiver by the Adviser, the annual fund operating expenses
for Class A and Class B shares, respectively, or estimate to be: Management
fee 1.00% and 1.00% and total expenses 2.35% and 2.87%.
*** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Fund's average daily net assets, and the remaining portion will
be used to cover distribution expenses; but the remaining portion for Class
B shares will never exceed 0.75% of average daily net assets.
+ 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:
Class A Shares...................................................................... $ 71 $ 115 $ 162 $291
Class B Shares
--Assuming complete redemption at end of period................................... $ 78 $ 114 $ 164 $293
--Assuming no redemption.......................................................... $ 31 $ 84 $ 144 $293
(This example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than
those shown.)
</TABLE>
The Fund's payment of a distribution fee may result in a long-term shareholder
indirectly paying more than the economic equivalent of the maximum initial
front-end sales charge permitted under the National Association of Securities
Dealers Rules of Fair Practice.
The management and 12b-1 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 captions "Investment Advisory and Other
Services" and "Distribution Contract."
2
<PAGE> 72
THE FUND'S FINANCIAL HIGHLIGHTS
The following table of Financial Highlights has been examined by the Fund's
independent accountants. Price Waterhouse LLP has been the Fund's independent
accountants since January 1, 1992. Their unqualified report is included in the
Fund's 1994 Annual Report and is included in the Statement of Additional
Information. The Fund's financial highlights were audited by KPMG Peat Marwick
LLP prior to January 1, 1992. Further information about the performance of the
Fund is contained in the Fund's Annual Report to shareholders, that 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 class of shares outstanding throughout each period
indicated is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of
Period............................... $17.45 $14.94 $15.60 $12.44 $16.93 $15.31 $13.98
------ ------- ------- ------- ------- ------- -------
Net Investment Income (Loss).......... (0.22)(a) (0.21) (0.15)(b) 0.05 (0.04) 0.10 0.15
Net Realized and Unrealized Gain
(Loss) on Investments, Options and
Foreign Currency Transactions........ 1.87 4.92 1.00 4.11 (3.09) 2.43 1.32
------ ------- ------- ------- ------- ------- -------
Total from Investment Operations... 1.65 4.71 0.85 4.16 (3.13) 2.53 1.47
------ ------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment
Income............................... -- -- -- (0.04) -- (0.13) (0.14)
Distributions from Net Realized Gain
on Investments, Options and Foreign
Currency Transactions................ (1.26) (2.20) (1.51) (0.96) (1.36) (0.78) --
------ ------- ------- ------- ------- ------- -------
Total Distributions................ (1.26) (2.20) (1.51) (1.00) (1.36) (0.91) (0.14)
------ ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period........ $17.84 $17.45 $14.94 $15.60 $12.44 $16.93 $15.31
====== ======= ======= ======= ======= ====== ======
Total Investment Return at Net Asset
Value................................ 9.62% 32.06% 5.70%(c) 33.05% (18.46)% 16.61% 10.48%
------ ------- ------- ------- ------- ------- -------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's
omitted)............................. $52,193 $41,749 $32,094 $31,580 $28,864 $40,341 $38,594
Ratio of Expenses to Average Net
Assets............................... 2.16% 2.10% 2.05%(b) 2.32% 2.36% 1.90% 1.75%
Ratio of Net Investment Income (Loss)
to Average Net Assets................ (1.25)% (1.49)% (0.88)%(b) 0.34% (0.28)% 0.60% 0.89%
Portfolio Turnover Rate............... 67% 86% 76% 67% 38% 30% 12%
<CAPTION>
1987 1986 1985
------ ------ ------
<S> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of
Period............................... $13.80 $13.57 $11.89
------ ------ ------
Net Investment Income (Loss).......... 0.15 0.14 0.22
Net Realized and Unrealized Gain
(Loss) on Investments, Options and
Foreign
Currency Transactions................ 0.26 0.25 1.80
------ ------ ------
Total from Investment Operations... 0.41 0.39 2.02
------ ------ ------
Less Distributions:
Dividends from Net Investment
Income............................... (0.23) (0.16) (0.34)
Distributions from Net Realized Gain
on Investments, Options and Foreign
Currency Transactions................ -- -- --
------ ------ ------
Total Distributions................ (0.23) (0.16) (0.34)
------ ------ ------
Net Asset Value, End of Period........ $13.98 $13.80 $13.57
====== ====== ======
Total Investment Return at Net Asset
Value................................ 2.84% 2.89% 17.34%
------ ------ ------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's
omitted)............................. $44,224 $56,927 $80,223
Ratio of Expenses to Average Net
Assets............................... 1.63% 1.75% 1.30%
Ratio of Net Investment Income (Loss)
to Average Net Assets................ 0.75% 0.77% 1.65%
Portfolio Turnover Rate............... 9% 6% 9%
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1994
-------------
<S> <C>
CLASS B(D)
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period....... $ 17.24(e)
Net Investment Loss........................ (0.35)(a)
Net Realized and Unrealized Gain on
Investments and Options................... (2.05)
-----
Total from Investment Operations........ 1.70
-----
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold and Options.............. (1.26)
-----
Net Asset Value, End of Period............. $ 17.68
=======
Total Investment Return at Net Asset
Value..................................... 10.02%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's
omitted).................................. $ 9,324
Ratio of Expenses to Average Net Assets.... 2.90%(f)
Ratio of Net Investment Loss to Average Net
Assets.................................... (1.98)%(f)
Portfolio Turnover Rate.................... 67%
</TABLE>
- ---------------
(a) On average month end shares outstanding.
(b) Reflects voluntary expense limitations in effect during the year
ended December 31, 1992. As a result of such limitations, expenses
of the Fund for 1992 reflect reductions of $0.03 per share. Absent
such limitations, for 1992, the ratio of expenses to average net assets
would have been 2.22% and the ratio of net investment income to average
net assets would have been (1.05%).
(c) Without the expense limitation, total investment return would have
been lower.
(d) Class B shares commenced operations on January 3, 1994.
(e) Initial price to commence operations.
(f) On an annualized basis.
3
<PAGE> 73
INVESTMENT OBJECTIVES AND POLICIES
The Fund's primary investment objective is long-term capital growth through
investments principally in equity securities of companies that rely extensively
on technology in their product development or operations. Income is a secondary
objective. The Fund believes that its shares are suitable for investment by
persons who are in search of above-average long-term returns. There is no
assurance that the Fund will achieve its investment objectives.
- -------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK
LONG-TERM CAPITAL GROWTH THROUGH
INVESTMENTS PRINCIPALLY IN COMPANIES THAT
RELY EXTENSIVELY ON TECHNOLOGY.
- -------------------------------------------------------------------------------
Under normal market conditions, at least 65% of the Fund's total assets are
invested in securities of the technology companies noted above. Management
strives to realize the Fund's primary investment objective through the careful
selection and continuous supervision of the Fund's portfolio of U.S. and foreign
securities. The Fund's portfolio is primarily comprised of common stocks and
securities convertible into common stocks, including convertible bonds,
convertible preferred stocks and warrants.
Investments in U.S. and foreign companies that rely extensively on technology in
product development or operations may be expected to benefit from scientific
developments and the application of technical advances resulting from improving
technology in many different fields, such as computer software and hardware,
semiconductors, telecommunications, defense and commercial electronics, data
storage and retrieval biotechnology and others. Generally, investments will be
made in securities of a company that relies extensively on technology in product
development or operations only if a significant part of its assets are invested
in, or a significant part of its total revenue or net income is derived from,
this technology.
When market conditions suggest a need for a defensive investment strategy, the
Fund may temporarily invest in short-term obligations of or securities
guaranteed by the U.S. government or its agencies or instrumentalities, high
quality bank certificates of deposit and commercial paper. This temporary
investment strategy is not designed to achieve the Fund's primary investment
objective.
COVERED CALL OPTIONS. The Fund may sell covered call options that are listed on
a national securities exchange against its portfolio securities. Portfolio
securities underlying these call options must have an aggregate value
(determined as of the sale date) not exceeding 5% of the net assets of the Fund.
A call option gives the purchaser of the option the right to buy, and obligates
the writer to sell, the underlying security at the exercise price at any time
during the option period, regardless of the security's market price upon
exercise of the option. If the price of the underlying security rises above the
exercise price and the option is exercised, the Fund loses the opportunity to
profit from that portion of the rise which exceeds the exercise price.
- -------------------------------------------------------------------------------
THE FUND MAY EMPLOY CERTAIN INVESTMENT
STRATEGIES TO HELP ACHIEVE ITS INVESTMENT
OBJECTIVE.
- -------------------------------------------------------------------------------
SECURITIES OF FOREIGN ISSUERS. The Fund may invest in securities of foreign
issuers. Normally the Fund will invest at least 65% of its net assets in
securities of issuers in at least three countries, that may include the United
States, but will not invest more than 25% of its net assets in any one foreign
country.
4
<PAGE> 74
FOREIGN CURRENCY. The Fund may hold a portion of its assets in foreign
currencies, and enter into forward foreign currency exchange contracts, to
protect against changes in foreign currency exchange rates. A forward foreign
currency exchange contract involves an obligation to purchase or sell a specific
currency at a future date, at a price set at the time of entering into the
contract. Although certain strategies could minimize the risk of loss due to a
decline in the value of the hedged foreign currency, they could also limit any
potential gain which might result from an increase in the value of that
currency.
LOWER RATED SECURITIES. Consistent with its investment objectives, the Fund may
invest up to 10% of its net assets in fixed income securities of public and
private issuers. These securities include convertible and non-convertible bonds
and debentures, zero coupon bonds, payment-in-kind securities, increasing rate
note securities, participation interests, stripped debt securities and other
derivative debt securities. The value of fixed income securities generally
varies inversely with interest rate changes. Convertible issues, while
influenced by the level of interest rates, are also subject to the changing
value of the underlying common stock into which they are convertible.
The Fund invests only in fixed income securities that, at the time of
investment, are rated CC or higher by Standard & Poor's Ratings Group ("Standard
& Poor's") or Ca or higher by Moody's Investors Service, Inc. ("Moody's") or
their equivalent, and unrated fixed income securities of comparable quality as
determined by John Hancock Advisers, Inc. (the "Adviser"). Bonds rated CC or Ca
are highly speculative and are often in default or have other marked
shortcomings. Lower rated securities are generally referred to as junk bonds.
Bonds that have a rating of BBB or lower from Standard & Poor's, Baa or lower
from Moody's or an equivalent rating, and unrated bonds of comparable quality
are considered speculative. While generally providing greater income than
investments in higher quality securities, these bonds involve greater risk of
loss of principal and income, including the possibility of default. The bonds
may have greater price volatility, especially during periods of economic
uncertainty or change. In addition, the market for bonds rated BBB, Baa or lower
may be less liquid than the market for higher rated securities. Therefore, the
Adviser's judgment may at times play a greater role in the performance and
valuation of the Fund's investments in these securities.
Maturity generally is not a significant factor in the Adviser's security
selection process. Accordingly, the Fund may invest in fixed income securities
of any maturity.
REPURCHASE AGREEMENTS. 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 at a higher price. These transactions must be fully
collateralized at all times, but involve some credit risk to the Fund if the
other party defaults on its obligation and the Fund is delayed in or prevented
from liquidating the collateral.
RESTRICTED SECURITIES. The Fund may purchase restricted securities including
those that can be offered and sold to "qualified institutional buyers" under
Rule 144A under the Securities Act of 1933 (the "Securities Act"). The Board of
5
<PAGE> 75
Directors will monitor the Fund's investments in these securities, focusing on
certain factors, including valuation, liquidity and availability of information.
Purchases of restricted securities are subject to restrictions, which prohibit
the Fund from investing more than 5% of its net assets in these securities and
limits all the Fund's illiquid and restricted securities to not more than 15% of
its net assets.
LENDING OF SECURITIES. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. Government securities according to applicable regulatory requirements. The
Fund may reinvest any cash collateral in short-term securities. When the Fund
lends portfolio securities, there is a risk that the borrower may fail to return
the loaned securities. As a result, the Fund may incur a loss or, in the event
of the borrower's bankruptcy, the Fund may be delayed in or prevented from
liquidating the collateral. It is a fundamental policy of the Fund not to lend
portfolio securities having a total value in excess of 25% of its total assets.
INVESTMENT RESTRICTIONS. The Fund has adopted certain investment restrictions
that are detailed in the Statement of Additional Information where they are
classified as fundamental or non-fundamental. The Fund's investment objective
and those investment restrictions designated as fundamental may not be changed
without shareholder approval. All other investment policies and restrictions are
non-fundamental and can be changed by a vote of the Board of Directors without
shareholder approval. The Fund's portfolio turnover rates for recent years are
shown in the section "The Fund's Financial Highlights."
- -------------------------------------------------------------------------------
THE FUND FOLLOWS CERTAIN POLICIES, WHICH
MAY HELP TO REDUCE INVESTMENT RISK.
- -------------------------------------------------------------------------------
TECHNOLOGY-INTENSIVE COMPANIES -- CONSIDERATIONS AND RISKS. Securities prices
of the companies in which the Fund invests have tended to be subject to greater
volatility than securities prices in many other industries, due to particular
factors affecting these industries. Competitive pressures may also have a
significant effect on the financial condition of technology-intensive companies.
For example, if the development of new technology continues to advance at an
accelerated rate, and the number of companies and product offerings continue to
expand, the companies could become increasingly sensitive to short product
cycles and aggressive pricing. Accordingly, the Fund's performance will be
particularly susceptible to factors affecting these companies as well as the
economy as a whole.
GLOBAL RISKS. Investments in foreign securities may involve risks that are not
present in domestic investments due to exchange controls, less publicly
available information, more volatile or less liquid securities markets, and the
possibility of expropriation, confiscatory taxation or political, economic or
social instability. There may be difficulty in enforcing legal rights outside
the United States. Some foreign companies are not subject to the same uniform
financial reporting requirements, accounting standards and government
supervision as domestic companies, and foreign exchange markets are regulated
differently from the U.S. stock market. Security trading practices abroad may
offer less protection to investors such as the Fund. In addition, foreign
securities may be denominated in the currency of the country in which the issuer
is located. Consequently, changes
- -------------------------------------------------------------------------------
INVESTMENTS IN FOREIGN SECURITIES MAY
INVOLVE RISKS AND CONSIDERATIONS THAT ARE
NOT PRESENT IN DOMESTIC INVESTMENTS.
- -------------------------------------------------------------------------------
6
<PAGE> 76
in the foreign exchange rate will affect the value of the Fund's shares and
dividends. Finally, the expense ratios of international funds generally are
higher than those of domestic funds. This is because there are greater costs
associated with maintaining custody of foreign securities, and the increased
research necessary for international investing.
These risks may be intensified in the case of investments in emerging markets
or countries with limited or developing capital markets. These countries are
located in the Asia-Pacific region, Eastern Europe, Latin and South America,
and Africa. Security prices in these markets can be significantly more volatile
than in more developed countries, reflecting the greater uncertainties of
investing in less established markets and economies. Political, legal and
economic structures in many of these emerging market countries may be
undergoing significant evolution and rapid development, and they may lack the
social, political, legal and economic stability characteristic of more
developed countries. Emerging market countries may have failed in the past to
recognize private property rights. They may have relatively unstable
governments, present the risk of nationalization of businesses, restrictions on
foreign ownership, or prohibitions on repatriation of assets, and may have less
protection of property rights than more developed countries. Their economies
may be predominantly based on only a few industries, may be highly vulnerable
to changes in local or global trade conditions, and may suffer from extreme and
volatile debt burdens or inflation rates. Local securities markets may trade a
small number of securities and may be unable to respond effectively to
increases in trading volume, potentially making prompt liquidation of
substantial holdings difficult or impossible at times. The Fund may be required
to establish special custodial or other arrangements before making certain
investments in these countries. Securities of issuers located in these
countries may have limited marketability and may be subject to more
abrupt or erratic price movements.
In choosing brokerage firms to carry out the Fund's transactions the Adviser
gives primary consideration to execution at the most favorable price, 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 established by the Directors, the Adviser may place securities
transactions with brokers affiliated with the Adviser. These brokers include
Tucker Anthony Incorporated, John Hancock Distributors, Inc., and Sutro &
Company, Inc. which are indirectly owned by John Hancock Mutual Life Insurance
Company, which in turn indirectly owns the Adviser.
- -------------------------------------------------------------------------------
BROKERS ARE CHOSEN BASED ON BEST PRICE AND
EXECUTION.
- -------------------------------------------------------------------------------
7
<PAGE> 77
ORGANIZATION AND MANAGEMENT OF THE FUND
The Fund is a diversified series of the Company, an open-end management
investment company organized as a Maryland corporation in 1990. The Company
currently has two series of shares. The Directors have authorized the issuance
of two classes of the Fund, designated Class A and Class B. The shares of each
class represent an interest in the same portfolio of investments of the Fund.
Each class has equal rights as to voting, redemption, dividends and liquidation,
except that each bears different distribution and transfer agent fees. Also,
Class A and Class B shareholders have exclusive voting rights with respect to
the Rule 12b-1 distribution plan, which has been adopted by holders of those
shares in connection with the shares' distribution. The authorized capital stock
of the Company consists of 200 million shares. The Fund consists of 100 million
shares, $0.20 par value, which are divided into Class A and Class B, each with
50 million shares. The Company is generally not required to hold annual
shareholder meetings, although special shareholder meetings may be called for
such purposes as electing or removing Directors, changing fundamental
restrictions and policies, or approving a management contract. Shareholders have
certain rights to remove Directors.
- -------------------------------------------------------------------------------
THE DIRECTORS ELECT OFFICERS AND RETAIN
THE INVESTMENT ADVISER AND SUBADVISER, WHO
ARE RESPONSIBLE FOR THE FUND'S DAY-TO-DAY
OPERATIONS SUBJECT TO THE DIRECTORS'
POLICIES AND SUPERVISION.
- -------------------------------------------------------------------------------
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the John Hancock Mutual Life Insurance Company, a financial services company. It
provides the Fund, and other investment companies in the John Hancock group of
funds, with investment research and portfolio management services. The Fund,
under certain circumstances, will assist in shareholder communications with
other shareholders.
- -------------------------------------------------------------------------------
JOHN HANCOCK ADVISERS, INC. ADVISES
INVESTMENT COMPANIES HAVING A TOTAL ASSET
VALUE OF MORE THAN $13 BILLION.
- -------------------------------------------------------------------------------
American Fund Advisors, Inc. (the "Sub-Adviser"), which served as the Fund's
investment adviser from the Fund's commencement of operations in 1983 to 1991,
is the Fund's sub-adviser. The Sub-Adviser was incorporated in 1978 and acts as
investment manager or adviser for other institutional and individual clients.
Barry J. Gordon, Chairman and President, and Marc H. Klee, Senior Vice
President, of the Sub-Adviser, each of whom owns more than 25% of the
Sub-Adviser's voting securities, are controlling persons of the Sub-Adviser.
Messrs. Gordon and Klee carry out day-to-day management of the Fund. Mr. Gordon
was instrumental in the formation of the Sub-Adviser. He has been co-manager of
the Fund along with Mr. Klee for the past five years. Both have been associated
with the Fund in a portfolio management capacity prior to 1988.
John Hancock Funds, Inc. ("John Hancock Funds") distributes shares for all of
the John Hancock funds directly and through selected broker-dealers ("Selling
Brokers"). Certain Fund officers are also officers of the Adviser and John
Hancock Funds. Pursuant to an order granted by the Securities and Exchange
Commission, the Fund has adopted a deferred compensation plan for its
independent Directors which allows Directors' fees to be invested by the Fund in
other John Hancock Funds.
In order to avoid any conflict with portfolio trades for the Fund, the Adviser,
the Sub-Adviser and the Fund have adopted extensive restrictions on personal
securities trading by personnel of the Adviser and its affiliates. Some of these
8
<PAGE> 78
restrictions are: pre-clearance 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.
ALTERNATIVE PURCHASE ARRANGEMENTS
You can purchase shares of the Fund at a price equal to their net asset value
per share, plus a sales charge. At your election, this charge may be imposed
either at the time of the purchase (See "Initial Sales Charge Alternative --
Class A shares) or on a contingent deferred basis (See "Contingent Deferred
Sales Charge Alternative -- Class B shares"). If you do not specify on your
account application the class of shares you are purchasing, it will be assumed
that you are investing in Class A shares.
- -------------------------------------------------------------------------------
AN ALTERNATIVE PURCHASE PLAN ALLOWS YOU TO
CHOOSE THE METHOD OF PURCHASE THAT IS BEST
FOR YOU.
- -------------------------------------------------------------------------------
CLASS A SHARES. If you elect to purchase Class A shares, you will incur an
initial sales charge unless the amount you purchase is $1 million or more. If
you purchase $1 million or more of Class A shares you will not be subject to an
initial sales charge, but you will incur a sales charge if you redeem your
shares within one year of purchase. Class A shares are subject to ongoing
distribution and service fees at a combined annual rate of up to 0.30% of the
Fund's average daily net assets attributable to the Class A shares. Certain
purchases of Class A shares qualify for reduced initial sales charges. See
"Share Price -- Qualifying for a Reduced Sales Charge."
- -------------------------------------------------------------------------------
INVESTMENTS IN CLASS A SHARES ARE SUBJECT
TO AN INITIAL SALES CHARGE.
- -------------------------------------------------------------------------------
CLASS B SHARES. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
six years of purchase (the "contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all of
your dollars to work from the time you make your investment, but the higher
ongoing distribution fee will cause these shares to have higher expenses than
that of Class A shares. To the extent that any dividends are paid by the Fund,
these higher expenses will result in lower dividends than those paid on Class A
shares.
- -------------------------------------------------------------------------------
INVESTMENTS IN CLASS B SHARES ARE SUBJECT
TO A CONTINGENT DEFERRED SALES CHARGE.
- -------------------------------------------------------------------------------
Class B shares are not available to full-service defined contribution plans
administered by Investor Services or John Hancock Mutual Life Insurance Company
that had more than 100 eligible employees at the inception of the Fund account.
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE
The alternative purchase agreement allows you to choose the most beneficial way
to buy shares given the amount of your purchase, the length of time that you
expect to hold your shares and other circumstances. You should consider whether,
during the anticipated life of your Fund investment, the CDSC and accumulated
fees on Class B shares would be less than the initial sales charge and
accumulated fees on Class A shares purchased at the same time; and to what
extent this differential would be offset by the Class A shares' lower expenses.
To help you make this determination, the table under the caption "Expense
Information" on
- -------------------------------------------------------------------------------
YOU SHOULD CONSIDER WHICH CLASS OF SHARES
WOULD BE MORE BENEFICIAL FOR YOU.
- -------------------------------------------------------------------------------
9
<PAGE> 79
page 2 of this Prospectus shows examples of the charges applicable to each
class of shares. Class A shares will normally be more beneficial if you qualify
for a reduced sales charge. See "Share Price--Qualifying for a Reduced Sales
Charge."
Class A shares are subject to lower distribution and service fees and,
accordingly, pay correspondingly higher dividends per share, to the extent that
any dividends are paid. However, because initial sales charges are deducted at
the time of purchase, you would not have all of your funds invested initially
and, therefore, would initially own fewer shares. If you do not qualify for
reduced initial sales charges and expect to maintain your investment for an
extended period of time, you might consider purchasing Class A shares. This is
because the accumulated distribution and service charges on Class B shares may
exceed the initial sales charge and accumulated distribution and service charges
on Class A shares during the life of your investment.
Alternatively, you might determine that it is more advantageous to purchase
Class B shares to have all of your funds invested initially. However, you will
be subject to higher distribution fees and, for a six-year period, a CDSC.
In the case of Class A shares, distribution expenses that John Hancock Funds
incurs in connection with the sale of the shares will be paid from the proceeds
of the initial sales charge and the ongoing distribution and service fees. In
the case of Class B shares, expenses will be paid from the proceeds of the
ongoing distribution and service fees, as well as from the CDSC incurred upon
redemption within six years of purchase. The purpose and function of Class B
shares' CDSC and ongoing distribution and service fees are the same as those of
Class A shares' initial sales charge and ongoing distribution and service fees.
Sales personnel distributing the Fund's shares may receive different
compensation for selling each class of shares.
Dividends, if any, on Class A and Class B shares will be calculated in the same
manner, at the same time and on the same day. They will also be in the same
amount except for differences resulting from each class bearing only its own
distribution and service fees, shareholder meeting expenses and any incremental
transfer agency costs. See "Dividends and Taxes."
THE FUND'S EXPENSES
For managing the Fund's investment and business affairs the Fund pays a fee to
the Adviser which for the 1994 fiscal year was 1.00% of the Fund's average daily
net asset value. This fee is equal on an annual basis to a stated percentage of
its average daily net assets, as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
--------------- -----------
<S> <C>
First $100,000,000 1.00%
Amounts over $100,000,000 0.75%
</TABLE>
In addition, the Fund pays a monthly administration fee at the rate of $100,000
per annum to the Adviser.
10
<PAGE> 80
Effective January 1, 1995, the Board of Directors approved a waiver of a portion
of the management fee payable by the Fund to the Adviser in an amount equal to
0.15% of the average of the daily net asset value of the first $100 million,
thereby reducing the fee payable on these assets to an annual rate of 0.85%.
The Adviser (not the Fund) pays a monthly fee to the Sub-Adviser for managing
the Fund's portfolio securities. This fee is equal on an annual basis to a
stated percentage of the Fund's average daily net assets, as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
--------------- -----------
<S> <C>
First $100,000,000 0.40%
Amounts over $100,000,000 40% of the investment
advisory fee received by
the Adviser on amounts
over $100,000,000.
</TABLE>
Currently, the Sub-Adviser has waived a portion of this fee resulting in a
decrease in its fee to 0.35%.
The investment management fee paid by the Fund is higher than the fee paid by
most mutual funds, but is believed to be comparable to the fee paid by funds
that invest in similar securities.
The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
these Plans, the Fund will pay distribution and service fees at an aggregate
annual rate of 0.30% of the Class A shares' average daily net assets and an
aggregate annual rate of 1.00% of the Class B shares' average daily net assets.
In each case, up to 0.25% is for service expenses and the remaining amount (not
to exceed 0.75% for Class B shares) is for distribution expenses. The
distribution fees will be used to reimburse John Hancock Funds for its
distribution expenses, including but not limited to: (i) initial and ongoing
sales compensation to Selling Brokers and others (including affiliates of John
Hancock Funds) engaged in the sale of Fund shares, (ii) marketing, promotional
and overhead expenses incurred in connection with the distribution of Fund
shares, and (iii) with respect to Class B shares only, interest expenses on
unreimbursed distribution expenses. The Plans provide that John Hancock Funds
will use the distribution fees to promote sales of shares, and will use the
service fees to compensate Selling Brokers for providing personal and account
maintenance services to shareholders. In the event John Hancock Funds is not
fully reimbursed for payments it makes or expenses it incurs under the Class A
Plan, these expenses will not be carried beyond twelve months from the date they
were incurred. Unreimbursed expenses under the Class B Plan will be carried
forward together with interest on the balance of the unreimbursed expenses. For
the fiscal year ended December 31, 1994 an aggregate of $239,098 of distribution
expenses, or 5.47% of the average net assets of the Class B shares of the Fund,
was not reimbursed or recovered by the John Hancock Funds through the receipt of
deferred sales charges or 12b-1 fees in prior periods.
- -------------------------------------------------------------------------------
THE FUND PAYS DISTRIBUTION AND SERVICE
FEES FOR MARKETING AND SALES-RELATED
SHAREHOLDER SERVICING.
- -------------------------------------------------------------------------------
Information on the Fund's total expenses is in the Fund's Financial Highlights
section of this Prospectus.
11
<PAGE> 81
DIVIDENDS AND TAXES
DIVIDENDS. The Fund generally pays dividends and capital gains annually that
represent substantially all net investment income. Dividends are reinvested in
additional shares of your class 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. The per
share dividends, if any, on Class B shares will be lower than those for Class A
shares because of the higher expenses attributable to the Class B shares. See
"Share Price."
TAXATION. Dividends from the Fund's net investment income, certain net foreign
currency gains, and net short-term capital gains are taxable to you as ordinary
income. Dividends from the Fund's net long-term capital gains are taxable as
long-term capital gain. These dividends are taxable whether received in cash or
reinvested in additional shares. Certain dividends paid in January of a given
year may be taxable as if you received them the previous December. Corporate
shareholders may be entitled to take a corporate dividends-received deduction
for dividends received by the Fund from U.S. domestic corporations, subject to
certain restrictions under the Internal Revenue Code. The Fund will send you a
statement by January 31 showing the 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 Code. As a regulated investment
company, the Fund will not be subject to Federal income taxes on any net
investment income and net realized capital gains that are distributed to its
shareholders at least annually. When you redeem (sell) or exchange shares, you
may realize a taxable gain or loss.
On the account application, you must certify that your social security or other
taxpayer identification number is correct, 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 backup withholding, the Fund may be required to
withhold 31% of your dividends, and the proceeds of redemptions and exchanges.
The Fund may be subject to foreign withholding taxes on certain of its foreign
investments, if any, which will reduce the yield on those investments.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes with respect to your investment in and distributions from the Fund. In
some states, a portion of the Fund's dividends which represents interest
received by the Fund on direct U.S. government obligations is exempt from tax.
Non-U.S. shareholders and tax-exempt shareholders are subject to different tax
treatment not described above. You should consult your tax adviser for specific
advice.
PERFORMANCE
The Fund's total return shows the overall change in value of a hypothetical
investment in the Fund, assuming the reinvestment of all dividends. Cumulative
total return shows the Fund's performance over a period of time. Average annual
- -------------------------------------------------------------------------------
THE FUND MAY ADVERTISE ITS TOTAL RETURN.
- -------------------------------------------------------------------------------
12
<PAGE> 82
total return shows the cumulative return of the Fund shares dividend over the
number of years included in the period. Because average annual total return
tends to smooth out variations in the Fund's performance, you should recognize
that is is not the same as actual year-to-year results.
Total return calculations for Class A shares generally include the effect of
paying the maximum sales charge (except as shown in "The Fund's Financial
Highlights"). Investments at a lower sales charge would result in higher
performance figures. Total return for the Class B shares reflects the deduction
of the applicable CDSC imposed on a redemption of shares held for the applicable
period. All calculations assume that all dividends are reinvested at net asset
value on the reinvestment dates during the periods. The total return of Class A
and Class B shares will be calculated separately and, because each class of
shares is subject to different expenses, the total return may differ with
respect to that class for the same period. The relative performance of the Class
A and Class B shares will be affected by a variety of factors, including the
higher operating expenses attributable to the Class B shares, whether the Fund's
investment performance is better in the earlier or later portions of the period
measured and the level of net assets of the classes during the period. The Fund
will include the total return of Class A and Class B shares in any advertisement
or promotional materials including Fund performance data. The value of Fund
shares, when redeemed, may be more or less than their original cost. Total
return is a historical calculation and is not an indication of future
performance. See "Factors to Consider in Choosing Alternatives."
13
<PAGE> 83
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
<TABLE>
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans). Complete the Account Application attached
to this Prospectus and indicate whether you are buying Class A or Class B shares.
If you do not specify which class of shares you are purchasing Investor Services
will assume you are investing in Class A shares.
- -------------------------------------------------------------------------------
OPENING AN ACCOUNT.
- -------------------------------------------------------------------------------
<S> <C>
- --------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation ("Investor Services").
2. Deliver the completed application and check to your registered
representative or 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 Global Technology Fund
(Class A or Class B shares)
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.
- -------------------------------------------------------------------------------
1. Complete the "Automatic Investing" and "Bank Information" sections on
MONTHLY the Account Privileges Application, designating a bank account from
AUTOMATIC which funds may be drawn.
ACCUMULATION
PROGRAM 2. The amount you elect to invest will be automatically withdrawn from
(MAAP) your bank or credit union account.
- -------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A
AND CLASS B SHARES.
- -------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
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, you 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 Class A and Class B shares by calling
Investor Services toll-free at 1-800-225-5291.
3. Give the Investor Services representative the name in which
your account is registered, the Fund name, the class of shares
you own, 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.
- ---------------------------------------------------------------------------------
BY CHECK 1. Either fill out the detachable stub included in your account
statement or include a note with your investment listing the
name of the Fund, the class of shares you own, your account
number and the name(s) in which the account is registered.
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.
- ---------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 84
- --------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A AND CLASS B
SHARES.
(CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 Freedom Global Technology Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered
- ---------------------------------------------------------------------------------
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. Shares of the Fund are priced at the offering price based
on the net asset value computed after John Hancock Funds receives notification of
the dollar equivalent from the Fund's custodian bank. 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. Share certificates are not issued
unless a request is made in writing to Investor Services.
- ---------------------------------------------------------------------------------
</TABLE>
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, WHICH 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 is
calculated by dividing the net assets of each class by the number of outstanding
shares of that class. The NAV of each class can differ. Securities in the Fund's
portfolio are valued on the basis of market quotations, valuations provided by
independent pricing services or fair value as determined in good faith according
to procedures approved by the Directors. Short-term debt investments maturing
within 60 days are valued at amortized cost, which approximates market value.
Foreign securities are valued on the basis of quotations from the primary market
in which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates. If quotations are not readily available or
the value has been materially affected by events occurring after the closing of
a foreign market, assets are valued by a method that the Directors believe
accurately reflects fair value. The NAV is calculated once daily as of the close
of regular trading on the New York Stock 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 PLUS A SALES CHARGE, IF
APPLICABLE, WHICH WILL VARY WITH THE
PURCHASE ALTERNATIVE YOU CHOOSE.
- -------------------------------------------------------------------------------
Shares of the Fund are sold at the offering price based on the NAV computed
after your investment request is received in good order by John Hancock Funds.
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 New York
Stock Exchange and transmit it to John Hancock Funds before its close of
business, to receive that day's offering price.
15
<PAGE> 85
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES. The offering price you pay
for Class A shares of the Fund equals the NAV next computed after your
investment is received in good order by John Hancock Funds plus a sales charge,
as follows:
<TABLE>
<CAPTION>
COMBINED REALLOWANCE
REALLOWANCE TO SELLING
AND SERVICE BROKERS AS A
FEE AS A PERCENTAGE
SALES CHARGE AS SALES CHARGE AS PERCENTAGE OF THE
AMOUNT INVESTED A PERCENTAGE OF A PERCENTAGE OF OF OFFERING OFFERING
(INCLUDING SALES CHARGE) OFFERING PRICE THE AMOUNT INVESTED PRICE(+) PRICE(*)
- ------------------------ --------------- ------------------- ----------- ------------
<S> <C> <C> <C> <C>
Less than $50,000 5.00% 5.26% 4.25% 4.01%
$50,000 to $99,999 4.50% 4.71% 3.75% 3.51%
$100,000 to $249,999 3.50% 3.63% 2.85% 2.61%
$250,000 to $499,999 2.50% 2.56% 2.10% 1.86%
$500,000 to $999,999 2.00% 2.04% 1.60% 1.36%
$1,000,000 and over 0.00%(**) 0.00%(**) 0.00%(***) 0.00%(***)
<FN>
- ---------------
(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales
charge. In addition to the reallowance allowed to all Selling Brokers,
John Hancock Funds will pay the following: round trip airfare to a resort
will be given to each registered representative of a Selling Broker (if
the Selling Broker has agreed to participate) who sells certain amounts of
shares of John Hancock funds. John Hancock Funds will make these incentive
payments out of its own resources. Other than distribution fees, the Fund
does not bear distribution expenses. A Selling Broker to whom
substantially the entire sales charge is reallowed or who receives these
incentives may be deemed to be an underwriter under the Securities Act of
1933.
(**) No sales charge is payable at the time of purchase of Class A Shares of $1
million or more, but a contingent deferred sales charge may be imposed in
the event of certain redemption transactions made within one year of
purchase.
(***) John Hancock Funds may pay a commission and first year's service fee (as
described in (+) below) to Selling Brokers who initiate and are
responsible for purchases of Class A shares of $1 million or more in
aggregate as follows: 1% on sales to $4,999,999, 0.50% on the next $5
million and 0.25% on $10 million and over.
(+) At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance, in an amount equal to 0.25% of the net
assets invested in the Fund. Thereafter, it pays the service fee
periodically in arrears in an amount up to 0.25% of the Fund's average
annual net assets. Selling Brokers receive the fee as compensation for
providing personal and account maintenance services to shareholders.
</TABLE>
Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
shares of the Fund.
John Hancock Funds will pay certain affiliated Selling Brokers at an annual rate
of up to 0.05% of the daily net assets of accounts attributable to these
brokers.
Under certain circumstances as described below, investors in Class A shares may
be entitled to pay reduced sales charges. See "Qualifying for a reduced Sales
Charge" below.
16
<PAGE> 86
CONTINGENT DEFERRED SALES CHARGE -- INVESTMENTS OF $1 MILLION OR MORE IN CLASS A
SHARES. Purchases of $1 million or more in Class A shares will be made at net
asset value with no initial sales charge, but if the shares are redeemed within
12 months after the end of the calendar month in which the purchase was made
(the contingent deferred sales charge period), a contingent deferred sales
charge will be imposed. The rate of the CDSC will depend on the amount invested
as follows:
<TABLE>
<CAPTION>
AMOUNT INVESTED CDSC RATE
- ------------------------------- ---------
<S> <C>
$1 Million to $4,999,999 1.00%
Next $5 Million to $9,999,999 0.50%
Amounts of $10 Million and over 0.25%
</TABLE>
Existing full service clients of John Hancock Mutual Life Insurance Company who
were group annuity contract holders as of September 1, 1994, and participant
directed defined contribution plans with at least 100 eligible employees at the
inception of the Fund account, may purchase Class A shares with no initial sales
charge. However if the shares are redeemed within 12 months after the end of the
calendar year in which the purchase was made, a contingent deferred sales charge
will be imposed at the above rate.
The charge will be assessed on an amount equal to the lesser of the current
market value or the original purchase cost of the redeemed Class A shares.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any dividends which have been reinvested in
additional shares.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
Therefore, it will be assumed that the redemption is first made from any shares
in your account that are not subject to the CDSC. The CDSC is waived on
redemption in certain circumstances. See the discussion under "Waiver of
Contingent Deferred Sales Charges".
QUALIFYING FOR A REDUCED SALES CHARGE. If you invest more than $50,000 in Class
A shares of the Fund or a combination of funds in the John Hancock funds (except
money market funds), you may qualify for a reduced sales charge on your
investments in Class A shares through a LETTER OF INTENTION. You may also be
able to use the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE to take
advantage of the value of your previous investments in Class A shares of the
John Hancock funds when meeting the breakpoints for a reduced sales charge. For
the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE, the applicable sales
charge will be based on the total of:
- -------------------------------------------------------------------------------
YOU MAY QUALIFY FOR A REDUCED SALES CHARGE
ON YOUR INVESTMENTS IN CLASS A SHARES.
- -------------------------------------------------------------------------------
1. Your current purchase of Class A shares of the Fund;
2. The net asset value (at the close of business on the previous day) of (a) all
Class A shares of the Fund you hold, and (b) all Class A shares of any other
John Hancock funds you hold; and
3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."
17
<PAGE> 87
EXAMPLE:
If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000, and subsequently invest $30,000 in Class A shares of the Fund, the
sales charge on this subsequent investment would be 4.50% and not 5.00%. This
rate is the rate that would otherwise be applicable to investments of less than
$50,000. See "Initial Sales Charge Alternative--Class A Shares."
- -------------------------------------------------------------------------------
SPECIAL TRANSACTIONS
- -------------------------------------------------------------------------------
CLASS A SHARES MAY BE AVAILABLE WITHOUT A
SALES CHARGE TO CERTAIN INDIVIDUALS AND
ORGANIZATIONS.
- -------------------------------------------------------------------------------
If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:
- - A Director or officer of the Company; a Director or officer of the Adviser and
its affiliates or Selling Brokers; employees or sales representatives of any
of the foregoing; retired officers employees or Directors of any of the
foregoing; a member of the immediate family of any of the foregoing; or any
Fund, pension, profit sharing or other benefit plan for the individuals
described above.
- - Any state, county, city or any instrumentality, department, authority or
agency of these entities that is prohibited by applicable investment laws from
paying a sales charge or commission when it purchases shares of any registered
investment management company.*
- - A bank, trust company, credit union, savings institution or other type of
depository institution, its trust departments or common trust funds (an
"eligible depository institution") if it is purchasing $1 million or more for
non-discretionary customers or accounts.*
- - A broker, dealer or registered investment adviser that has entered into an
agreement with John Hancock Funds providing specifically for the use of Fund
shares in fee-based investment products made available to their clients.
- - A client of the Sub-Adviser if the client's funds are transferred directly to
the Fund from accounts managed by the Sub-Adviser.
- - A former participant in an employee benefit plan with John Hancock funds, when
he/she withdraws from his/her plan and transfers any or all of his/her plan
distributions directly to the Fund.
- ---------------
* For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.
Class A shares of the Fund may also be purchased without an initial sales charge
in connection with certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding companies.
If you were a stockholder of record of Nova Fund on May 1, 1987, you are
permitted for an indefinite period to purchase additional Class A shares at net
asset value, without a sales charge, provided that you held Nova Fund shares
continuously from May 1, 1987 to the date of the purchase in question and you
represent that you are buying the additional shares for investment purposes, not
with a view to distribution.
- -------------------------------------------------------------------------------
FUND EMPLOYEES AND AFFILIATES.
- -------------------------------------------------------------------------------
18
<PAGE> 88
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE--CLASS B SHARES. Class B shares
are offered at net asset value per share without a sales charge, so that your
entire initial investment will go to work at the time of purchase. However,
Class B shares redeemed within six years of purchase will be subject to a CDSC
at the rates set forth below. This charge will be assessed on an amount equal to
the lesser of the current market value or the original purchase cost of the
shares being redeemed. Accordingly, you will not be assessed a CDSC on increases
in account value above the initial purchase price, including shares derived from
dividend reinvestment.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that your redemption comes first from shares you have held
beyond the six-year CDSC redemption period or those you acquired through
reinvestment of dividends or distributions, and next from the shares you have
held the longest during the six-year period. The CDSC is waived on redemptions
in certain circumstances. See the discussion "Waiver of Contingent Deferred
Sales Charges" below.
EXAMPLE:
You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and you have gained 10 additional shares through dividend reinvestment. If
you redeem 50 shares at this time, your CDSC will be calculated as follows:
<TABLE>
<S> <C>
- - Proceeds of 50 shares redeemed at $12 per share $600
- - Minus proceeds of 10 shares not subject to CDSC because they were -120
acquired through dividend reinvestment (10 X $12)
- - Minus appreciation on remaining shares, also not subject to CDSC -80
(40 X $2)
-----
- - Amount subject to CDSC $400
-----
</TABLE>
Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds uses
part of them to defray its expenses related to providing the Fund with
distribution services connected to the sale of the Class B shares, such as
compensating selected Selling Brokers for selling these shares. The combination
of the CDSC and the distribution and service fees makes it possible for the Fund
to sell the Class B shares without deducting a sales charge at the time of the
purchase.
19
<PAGE> 89
The amount of the CDSC, if any, will vary depending on the number of years from
the time you purchase your Class B shares until the time you redeem them. Solely
for purposes of determining this holding period, any payments you make during
the month will be aggregated and deemed to have been made on the last day of the
month.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE OF
YEAR IN WHICH CLASS B SHARES DOLLAR AMOUNT SUBJECT TO
REDEEMED FOLLOWING PURCHASE CDSC
- ---------------------------- ---------------------------
<S> <C>
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
</TABLE>
A commission equal to 3.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested, are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for personal and
account maintenance services provided to shareholders during the twelve months
following the sale, and thereafter the service fee is paid in arrears.
- -------------------------------------------------------------------------------
UNDER CERTRAN CIRCUMSTANCES, THE CDSC ON
CLASS B AND CERTAIN A SHARE
REDEMPTIONS WILL BE WAIVED.
- -------------------------------------------------------------------------------
WAIVER OF CONTINGENT SALES CHARGES. The CDSC will be waived on redemptions of
Class B shares and of Class A shares that are subject to a CDSC, unless
indicated otherwise, in the circumstances defined below:
- -------------------------------------------------------------------------------
- - Redemptions of Class B shares made under Systematic Withdrawal Plan (see "How
to Redeem Shares"), as long as your annual redemptions do not exceed 10% of
your account value at the time you established your Systematic Withdrawal Plan
and 10% of the value of your subsequent investments (less redemptions) in that
account at the time you notify Investor Services. This waiver does not apply
to Systematic Withdrawal Plan redemptions of Class A shares that are subject
to a CDSC.
- - Redemptions made to effect distributions from an Individual Retirement Account
either before or after age 59 1/2, as long as the distributions are based on
the life expectancy or the joint-and-last survivor life expectancy of you and
your beneficiary. These distributions must be free from penalty under the
Code.
- - Redemptions made to effect mandatory distributions under the Code after age
70 1/2 from a tax-deferred retirement plan.
- - Redemptions made to effect distributions to participants or beneficiaries from
certain employer-sponsored retirement plans, including those qualified under
Section 401(a) of the Code, custodial accounts under Section 403(b)(7) of the
Code and deferred compensation plans under Section 457 of the Code. The waiver
also applies to certain returns of excess contributions made to these plans.
In all cases, the distributions must be free from penalty under the Code.
20
<PAGE> 90
- - Redemptions due to death or disability.
- - Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of this Prospectus.
- - Redemptions made pursuant to the Fund's right to liquidate your account if you
own fewer than 50 shares.
- - Redemptions made in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.
- - Redemptions from certain IRA and retirement plans that purchased shares prior
to October 1, 1992.
If you qualify for a CDSC waiver under one of these situations, you must notify
Investor Services either directly or through your Selling Broker at the time you
make your redemption. The waiver will be granted once Investor Services has
confirmed that you are entitled to the waiver.
CONVERSION OF CLASS B SHARES. Your Class B shares, and an appropriate portion
of reinvested dividends on those shares, will be converted into Class A shares
automatically. This will occur at the end of the month eight years after the
shares were purchased, and will result in lower annual distribution fees. If you
exchanged Class B shares into this Fund from another John Hancock fund, the
calculation will be based on the time you purchased the shares in the original
fund. The Fund has been advised that the conversion of Class B shares into Class
A shares should not be taxable for Federal income tax purposes, nor should it
change your tax basis or tax holding period for the converted shares.
21
<PAGE> 91
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 less any applicable CDSC. 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).
Once your shares are redeemed, the Fund generally sends you payment on the next
business day. When you redeem your shares, you may realize a taxable gain or
loss depending usually on the difference between what you paid for them and what
you receive for them, subject to certain tax rules. Under unusual circumstances,
the Fund may suspend redemptions or postpone payment for up to seven days or
longer, as permitted by Federal securities laws.
- -------------------------------------------------------------------------------
TO ASSURE ACCEPTANCE OF YOUR REDEMPTION
REQUEST, PLEASE FOLLOW THESE PROCEDURES.
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
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. (Eastern Time), Monday through
Friday, excluding days on which the New York Stock Exchange
is closed. Investor Services employs the following proce-
dures 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 30 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, other
tax-qualified retirement plans or Fund shares 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
using 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 fund transfer to your assigned bank account and
the funds are usually collectible after two business days.
Your bank may or may not charge 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
that is included with this Prospectus.
- ---------------------------------------------------------------------------------
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, class of shares, your account
number, and the additional requirements listed below that
apply to your particular account.
- ---------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 92
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
TYPE OF REGISTRATION REQUIREMENTS
-------------------- ------------
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 signatures
guaranteed.
Trusts A letter of instruction signed by the
Trustee(s), with a signature guarantee. (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 any such 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
(iv) 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 instruction. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares. You may not
redeem certificated shares by telephone.
Due to the proportionately high cost of maintaining smaller accounts, the Fund
reserves the right to redeem at net asset value all shares in an account which
holds fewer than 100 shares (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. No CDSC will be imposed on involuntary redemption of
shares.
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 purchase and dividend reinvestments, if any, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
- -------------------------------------------------------------------------------
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 shares of the same class 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 SHARES OF THE SAME CLASS OF ANOTHER
JOHN HANCOCK FUND.
- -------------------------------------------------------------------------------
23
<PAGE> 93
Exchanges between funds that are not subject to a CDSC are based on their
respective net asset values. No sales charge or transaction charge is imposed.
Class B shares of the Fund that are subject to a CDSC may be exchanged for Class
B shares of another John Hancock fund without incurring the CDSC; however, these
shares will be subject to the CDSC schedule of the shares acquired (except for
exchanges into John Hancock Short-Term Strategic Income Fund, John Hancock
Adjustable U.S. Government Trust and John Hancock Limited Term-Government Fund
will be subject to the initial fund's CDSC). For purposes of computing the CDSC
payable upon redemption of shares acquired in an exchange, the holding period of
the original shares is added to the holding period of the shares acquired in an
exchange. However, if you exchange Class B shares purchased prior to January 1,
1994 for Class B shares of any other John Hancock fund, you will be subject to
the CDSC schedule that was in effect at your initial purchase date.
You may exchange Class B shares of any John Hancock fund into shares of a John
Hancock money market fund at net asset value. However, you will continue to be
subject to a CDSC upon redemption. The rate of the CDSC will be the rate in
effect on the original fund at the time of the exchange.
The Fund reserves the right to require that you 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.
An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares of another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.
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
24
<PAGE> 94
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.
BY TELEPHONE
1. When you fill out 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. 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 and class 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 the 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
REINVESTMENT PRIVILEGE
1. You will not be subject to a sales charge on Class A shares that you reinvest
in any John Hancock fund that is otherwise subject to a sales charge, as long
as you reinvest within 120 days from the redemption date. If you paid a CDSC
upon a redemption, you may reinvest at net asset value in the same class of
shares from which you redeemed within 120 days. Your account will be credited
with the amount of the CDSC previously charged, and the reinvested shares
will continue to be subject to a CDSC. For purposes of computing the CDSC
payable upon a subsequent redemption, the holding period of the shares
acquired through reinvestment will include the holding period of the redeemed
shares.
- -------------------------------------------------------------------------------
IF YOU REDEEM SHARES OF THE
FUND, YOU MAY BE ABLE TO
REINVEST THE PROCEEDS IN THE
FUND OR ANOTHER JOHN HANCOCK FUND WITHOUT
PAYING AN ADDITIONAL SALES CHARGE.
- -------------------------------------------------------------------------------
2. Any portion of your redemption may be reinvested in Fund shares or in shares
of any of the other John Hancock funds, subject to the minimum investment
limit of that fund.
3. To reinvest, you must notify Investor Services in writing. Include the
Fund(s) name, account number and class from which your shares were originally
redeemed.
25
<PAGE> 95
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 the 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. It is not advantageous to maintain a Systematic Withdrawal Plan concurrently
with purchases of additional Class A or Class B shares because you may be
subject to an initial sales charge on your purchases of Class A shares or to
a CDSC on your redemption of Class B shares. In addition, your redemptions
are taxable events.
6. 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 drawn automatically each month on your
bank for investment in Fund shares, under the "Automatic Investing" and "Bank
Information" section of the Account Privileges Application.
- -------------------------------------------------------------------------------
YOU CAN MAKE AUTOMATIC
INVESTMENTS AND SIMPLIFY
YOUR INVESTING.
- -------------------------------------------------------------------------------
2. You can also authorize automatic investing through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.
3. You can terminate your Monthly Automatic Accumulation Program 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.
GROUP INVESTMENT PROGRAM
1. An individual account will be established for each participant, but the
initial sales charge for Class A shares will be based on the aggregate dollar
amount of all participants' investments. To determine how to qualify for this
program, contact your registered representative or call 1-800-225-5291.
- -------------------------------------------------------------------------------
ORGANIZED GROUPS OF AT LEAST FOUR PERSONS
MAY ESTABLISH ACCOUNTS.
- -------------------------------------------------------------------------------
2. The initial aggregate payment of all participants in the group must be at
least $250.
3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at any
time.
26
<PAGE> 96
RETIREMENT PLANS
1. You may use the Fund to fund various types of 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 these plans is
$250. However, accounts being established as Group IRA, SEP, SARSEP, TSA and
401(k) and 457 plans will be accepted without an initial minimum investment.
APPENDIX
MOODY'S describes its lower ratings for corporate bonds as follows.
Bonds which are rated BAA are considered as medium grade obligations, i.e. they
are neither highly protected nor 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.
Bonds which are rated BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby are well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Bonds which are rated CAA are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated CA represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
S&P describes its lower ratings for corporate bonds as follows:
Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
Debt rated BB, B, CCC, OR C is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
27
<PAGE> 97
JOHN HANCOCK
JOHN HANCOCK GLOBAL GLOBAL
TECHNOLOGY FUND TECHNOLOGY
FUND
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
SUB-ADVISER
American Fund Advisors, Inc.
1415 Kellum Place, Suite 205
Garden City, New York 11530 CLASS A AND CLASS B SHARES
PROSPECTUS
PRINCIPAL DISTRIBUTOR MAY 1, 1995
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603 A MUTUAL FUND SEEKING LONG-TERM
CAPITAL GROWTH THROUGH INVESTMENT
CUSTODIAN PRINCIPALLY IN EQUITY SECURITIES OF
Investors Bank & Trust Company COMPANIES WHICH RELY EXTENSIVELY
24 Federal Street ON TECHNOLOGY IN THEIR PRODUCT
Boston, Massachusetts 02110 DEVELOPMENT OR OPERATIONS. INCOME
IS A SECONDARY OBJECTIVE.
TRANSFER AGENT
John Hancock Investor Services
Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
HOW TO OBTAIN INFORMATION
ABOUT THE FUND 101 HUNTINGTON AVENUE
For Service Information BOSTON, MASSACHUSETTS 02199-7603
For Telephone Exchange TELEPHONE 1-800-225-5291
For Investment-by-Phone call 1-800-225-5291
For Telephone Redemption
For TDD call 1-800-554-6713
JHD-8300P 5/95 (LOGO) Printed on recycled paper
<PAGE> 98
EXHIBIT C
JOHN HANCOCK
NATIONAL
AVIATION &
TECHNOLOGY
FUND
CLASS A AND CLASS B SHARES
PROSPECTUS
MAY 1, 1995
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Expense Information................................................................... 2
The Fund's Financial Highlights....................................................... 3
Investment Objectives and Policies.................................................... 4
Organization and Management of the Fund............................................... 7
Alternative Purchase Arrangements..................................................... 8
The Fund's Expenses................................................................... 10
Dividends and Taxes................................................................... 11
Performance........................................................................... 12
How to Buy Shares..................................................................... 13
Share Price........................................................................... 14
How to Redeem Shares.................................................................. 21
Additional Services and Programs...................................................... 22
</TABLE>
This Prospectus sets forth information about John Hancock National Aviation &
Technology Fund (the "Fund"), a non-diversified series of John Hancock
Technology Series, Inc. (the "Company"), that you should know before investing.
Please read and retain it for future reference.
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, May 1, 1995, and incorporated by reference into this
Prospectus, free of charge by writing to or by telephoning: John Hancock
Investor Services, Corporation, Post Office Box 9116, Boston, Massachusetts
02205-9116, 1-800-225-5291, (1-800-554-6713 TDD).
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 AGENCY.
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> 99
EXPENSE INFORMATION
The purpose of the following information is to help you understand the various
fees and expenses that 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 of the Fund's Class A and Class B
shares for the fiscal year ended December 31, 1994, adjusted to reflect current
expenses. Actual fees and expenses in the future may be greater or less than
those indicated.
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (as a percentage of offering price)............. 5.00%* None
Maximum sales charge imposed on reinvested dividends...................................... None None
Maximum deferred sales charge............................................................. None* 5.00%
Redemption fees+.......................................................................... None None
Exchange fee.............................................................................. None None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management fee** (net of waiver).......................................................... 0.85% 0.85%
12b-1 fee***.............................................................................. 0.30% 1.00%
Other expenses............................................................................ 0.78% 0.67%
Total Fund operating expenses............................................................. 1.93% 2.52%
</TABLE>
- ---------------
* No sales charge is payable at the time of purchase on investments of $1
million or more, but for such investments a contingent deferred sales charge
may be imposed on these investments, as described under the caption "Share
Price," in the event of certain redemption transactions within one year of
purchase.
** In the absence of waiver by the Adviser, the annual fund operating expenses
for Class A and Class B shares, respectively, or estimate to be: Management
fee, 1.00% and 1.00% and total expenses 2.08% and 2.67%.
*** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Fund's average daily net assets, and the remaining portion will
be used to cover distribution expenses; but in no event will such remaining
portion for Class B shares exceed 0.75% of its average daily net assets.
+ Redemption by wire fee (currently $4.00) not included.
<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 a 5% annual return:
Class A Shares...................................................................... $ 69 $ 108 $ 149 $264
Class B Shares
--Assuming complete redemption at end of period................................... $ 76 $ 108 $ 154 $272
--Assuming no redemption.......................................................... $ 26 $ 78 $ 134 $272
(This example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than
those shown.)
</TABLE>
The Fund's payment of a distribution fee may result in a long-term shareholder
indirectly paying more than the economic equivalent of the maximum front-end
initial sales charge permitted under the National Association of Securities
Dealers Rules of Fair Practice.
The management and 12b-1 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 captions "Investment Advisory and Other
Services" and "Distribution Contract."
2
<PAGE> 100
THE FUND'S FINANCIAL HIGHLIGHTS
The following table of Financial Highlights has been examined by the Fund's
independent accountants. Price Waterhouse LLP has been the Fund's independent
accountants since January 1, 1992. Their unqualified report is included in the
Fund's 1994 Annual Report and is included in the Statement of Additional
Information. The Fund's financial highlights were audited by KPMG Peat Marwick
LLP prior to January 1, 1992. Further information about the performance of the
Fund is contained in the Fund's Annual Report to shareholders, that 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 class of shares outstanding throughout each period
indicated is as follows:
<TABLE>
<CAPTION>
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>
CLASS A
PER SHARE OPERATING
PERFORMANCE
Net Asset Value,
Beginning of
Period.............. $11.32 $10.34 $10.91 $ 8.84 $11.67 $10.31 $ 8.85 $11.02 $10.63 $ 9.21
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Investment Income
(Loss).............. (0.03)(a) (0.07) (0.01)(a) 0.05 0.10 0.15 0.14 0.13 0.16 0.19
Net Realized and
Unrealized Gain
(Loss) on
Investments and
Options............. (1.58) 2.22 0.31 2.70 (2.33) 3.90 2.07 (1.39) 1.40 1.72
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from
Investment
Operations...... (1.61) 2.15 0.30 2.75 (2.23) 4.05 2.21 (1.26) 1.56 1.91
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net
Investment Income... -- -- -- (0.03) (0.10) (0.17) (0.14) (0.17) (0.18) (0.23)
Distributions from
Net Realized Gain on
Investments and
Options............. (2.47) (1.17) (0.87) (0.65) (0.50) (2.52) (0.61) (0.74) (0.99) (0.26)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total
Distributions....... (2.47) (1.17) (0.87) (0.68) (0.60) (2.69) (0.75) (0.91) (1.17) (0.49)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End
of Period........... $ 7.24 $11.32 $10.34 $10.91 $ 8.84 $11.67 $10.31 $ 8.85 $11.02 $10.63
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Investment
Return at Net Asset
Value............... (14.16)% 20.88% 3.02% 31.09% (19.26)% 39.54% 24.86% (12.31)% 15.23% 21.41%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
RATIOS AND
SUPPLEMENTAL DATA
Net Assets, End of
Period (000's
omitted)............ $54,840 $77,561 $71,107 $73,344 $62,882 $83,634 $70,292 $60,131 $80,039 $82,880
Ratio of Expenses to
Average Net
Assets.............. 1.60% 1.49% 1.53% 1.64% 1.67% 1.28% 1.38% 1.23% 1.23% 1.14%
Ratio of Net
Investment Income
(Loss) to Average
Net Assets.......... (0.28)% (0.66)% (0.07)% 0.42% 0.95% 1.21% 1.40% 1.06% 1.38% 1.92%
Portfolio Turnover
Rate................ 44% 23% 34% 28% 29% 21% 12% 14% 10% 5%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 3, 1994
TO DECEMBER 31, 1994
--------------------
<S> <C>
CLASS B**
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period.............. $11.23(b)
-----
Net Investment Loss............................... (0.09)(a)
Net Realized and Unrealized Loss on Investments
and Options...................................... (1.53)
-----
Total from Investment Operations............... (1.62)
-----
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold and Options..................... (2.47)
-----
Total Distributions............................ (2.47)
-----
Net Asset Value, End of Period.................... $ 7.14
======
Total Investment Return at Net Asset Value........ (14.39)%
-----
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)......... $485
Ratio of Expenses to Average Net Assets........... 2.59%*
Ratio of Net Investment Income (Loss) to Average
Net Assets....................................... (1.13)%*
Portfolio Turnover Rate........................... 44%
</TABLE>
- ---------------
* On an annualized basis.
** Class B shares commenced operations on January 3, 1994.
(a) On average month end shares outstanding.
(b) Initial price to commence operations.
+ Short-term capital gains previously classified as dividends from net
investment income have been reclassified to distributions from net realized
gain on investments and options.
3
<PAGE> 101
INVESTMENT OBJECTIVES AND POLICIES
The Fund's primary investment objective is long-term growth of capital
principally through investments in securities of companies in the aviation and
related industries and in companies which utilize technology extensively in
their product development or operations. Income is a secondary objective. The
Fund believes that its shares are suitable for investment by persons who are in
search of above average long-term rewards. There is no assurance that the Fund
will achieve its investment objectives.
- -------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK
LONG-TERM GROWTH OF CAPITAL PRINCIPALLY
THROUGH SECURITIES OF COMPANIES IN THE
AVIATION AND RELATED INDUSTRIES.
- -------------------------------------------------------------------------------
Under normal market conditions, at least 80% of the Fund's total assets are
invested in the aviation and technology-oriented industries noted above. It is
also intended that at least 25% of the Fund's total assets be concentrated in
the aviation industry and in industries connected with, serving and/or supplying
the aviation industry. Management strives to realize the Fund's primary
investment objective through the careful selection and continuous supervision of
the Fund's portfolio of securities, which is primarily comprised of common
stocks and securities convertible into common stocks, including convertible
bonds, convertible preferred stocks and warrants.
When John Hancock Advisers, Inc. (the "Adviser") determines that market
conditions warrant a defensive investment strategy, the Fund may temporarily
invest in short-term obligations of, or securities guaranteed by, the U.S.
Government or its agencies or instrumentalities, high quality bank certificates
of deposit and commercial paper. This temporary investment is not designed to
achieve the Fund's primary investment objective.
COVERED CALL OPTIONS. The Fund may sell covered call options issued by the
Options Clearing Corporation against its portfolio securities. The portfolio
securities underlying these call options must have an aggregate value
(determined as of the sale date) not exceeding 25% of the net assets of the Fund
and must be listed on a national securities exchange. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security at the exercise price upon exercise of the option at any
time during the option period, regardless of the market price of the security.
If the price of the underlying security rises above the exercise price and the
option is exercised, the Fund loses the opportunity to profit from that portion
of the rise which exceeds the exercise price.
- -------------------------------------------------------------------------------
THE FUND MAY EMPLOY CERTAIN INVESTMENT
STRATEGIES TO HELP ACHIEVE ITS INVESTMENT
OBJECTIVES.
- -------------------------------------------------------------------------------
FOREIGN ISSUERS. The Fund may invest up to 25% of its net assets in securities
of foreign issuers. An investment in foreign securities or the holding of
foreign currency may be affected by changes in currency rates and in exchange
control regulations (e.g., currency blockage). There may be a transaction charge
in connection with the exchange of currency. Foreign companies are not generally
subject to the same uniform accounting, auditing and general reporting standards
applicable to domestic companies, and there may be less publicly available
information concerning a foreign company. In addition, there is the possibility
of expropriation or nationalization of companies operating in certain foreign
countries. The volume of trading on foreign stock markets is generally less than
on U.S. stock exchanges; foreign securities are often more volatile and less
liquid
4
<PAGE> 102
than securities of comparable domestic companies, and transactions with foreign
brokers may involve the payment of higher commissions as a result of imposition
of fixed commissions. Finally, it may be more difficult to obtain and enforce a
legal judgment against a foreign issuer.
FOREIGN CURRENCIES TRANSACTIONS FOR HEDGING PURPOSES. The Fund has the ability
to enter into forward foreign currency exchange contracts to protect against
changes in foreign currency exchange rates. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, at a price set at the time of the contract. The Fund might purchase
a foreign currency or enter into a forward purchase contract for the currency to
preserve the U.S. dollar price of securities it has the authority to purchase or
has contracted to purchase. Alternatively, it might sell a foreign currency on
either a spot or forward basis to hedge against an anticipated decline in the
dollar value of securities in its portfolio or which it intends or has
contracted to sell. Although certain strategies could minimize the risk of loss
due to a decline in the value of the hedged foreign currency, they could also
limit any potential gain which might result from an increase in the value of
that currency.
FIXED INCOME SECURITIES. Consistent with the Fund's investment objectives, the
Fund may invest up to 10% of its net assets in fixed income securities of public
and private issuers. These securities include convertible and non-convertible
bonds and debentures, zero coupon bonds, payment-in-kind securities, increasing
rate note securities, participation interests, stripped debt securities and
other derivative debt securities. The value of fixed income securities generally
varies inversely with interest rate changes. Convertible issues, while
influenced by the level of interest rates, are also subject to the changing
value of the underlying common stock into which they are convertible.
The Fund invests only in fixed income securities that, at the time of
investment, are rated CC or higher by Standard & Poor's Ratings Group ("Standard
& Poor's") or Ca or higher by Moody's Investors Service, Inc. ("Moody's") or
their equivalent, and unrated fixed income securities of comparable quality as
determined by the Adviser. Bonds rated CC or Ca are highly speculative and are
often in default or have other marked shortcomings. Lower rated securities are
generally referred to as junk bonds. Bonds that have a rating of BBB or lower
from Standard & Poor's, Baa or lower from Moody's or an equivalent rating, and
unrated bonds of comparable quality are considered speculative. While generally
providing greater income than investments in higher quality securities, these
bonds involve greater risk of loss of principal and income, including the
possibility of default. These bonds may have greater price volatility,
especially during periods of economic uncertainty or change. In addition, the
market for bonds rated BBB, Baa or lower may be less liquid than the market for
higher rated securities. Therefore, the Adviser's judgment may at times play a
greater role in the performance and valuation of the Fund's investments in these
securities.
Maturity generally is not a significant factor in the Adviser's security
selection process. Accordingly, the Fund may invest in fixed income securities
of any maturity.
5
<PAGE> 103
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. These transactions must be fully collateralized at
all times, but they involve some credit risk to the Fund if the other party
defaults on its obligations and the Fund is delayed in or prevented from
liquidating the collateral.
RESTRICTED SECURITIES. The Fund may purchase restricted securities including
those that can be offered and sold to "qualified institutional buyers" under
Rule 144A under the Securities Act of 1933 (the "Securities Act"), the Board of
Directors will monitor the Fund's investments in these securities, focusing on
certain factors, including valuation, liquidity and availability of information.
Purchases of restricted securities are subject to restrictions which limit
purchases of illiquid securities.
INVESTMENT RESTRICTIONS. The Fund has adopted certain investment restrictions
that are detailed in the Statement of Additional Information, where they are
classified as fundamental or non-fundamental. The Fund's investment objective
and those investment restrictions designated as fundamental may not be changed
without shareholder approval. The Fund's non-fundamental investment policies and
restrictions, however, may be changed by a vote of the Board of Directors
without shareholder approval. Portfolio turnover rates for recent years are
shown in the section "The Fund's Financial Highlights."
- -------------------------------------------------------------------------------
THE FUND FOLLOWS CERTAIN POLICIES, SOME OF
WHICH MAY HELP TO REDUCE INVESTMENT RISK.
- -------------------------------------------------------------------------------
AVIATION AND TECHNOLOGY RELATED COMPANIES -- CONSIDERATION AND
RISKS. Securities prices in the industries in which the Fund concentrates its
investments have tended to be subject to greater volatility than those in many
other industries, due to particular factors affecting these industries.
Companies in the aviation and related industries are particularly sensitive to
government regulation, competition, fuel prices, pressures on government budgets
for defense or aerospace contracts, and labor relations problems. Competitive
pressures may also have a significant effect on the financial condition of
companies in technology intensive industries. For example, if the development of
new technology continues to advance at an accelerated rate, and the number of
companies and product offerings continue to expand, the companies could become
increasingly sensitive to short product cycles and aggressive pricing.
Accordingly, the Fund's performance will be particularly susceptible to factors
affecting these industries as well as the economy as a whole.
While the Fund in fact normally invests (and intends to continue to invest) in
the securities of many different companies, in theory the Fund could invest in
the securities of as few as 15 companies without violating the various
restrictions now imposed on the Fund's investments by its fundamental investment
policies. To the extent the Fund is non-diversified, it will be more susceptible
to adverse developments affecting any single issuer.
In choosing brokerage firms to carry out the Fund's transactions, the Adviser
gives primary consideration to execution at the most favorable price, 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 established by the Directors, the Adviser may place securities
transactions with brokers affiliated with the Adviser. These brokers include
Tucker Anthony Incorporated, John Hancock Distributors, Inc. and Sutro &
Company, Inc., which are indirectly owned by John Hancock Mutual Life Insurance
Company, which in turn indirectly owns the Adviser.
- -------------------------------------------------------------------------------
BROKERS ARE CHOSEN BASED ON BEST PRICE AND
EXECUTION.
- -------------------------------------------------------------------------------
6
<PAGE> 104
ORGANIZATION AND MANAGEMENT OF THE FUND
The Fund is a non-diversified series of the Company, an open-end management
investment company organized as a Maryland corporation in 1990. The Company
currently has two series of shares. The Directors have authorized the issuance
of two classes of the Fund, designated Class A and Class B. The shares of each
class represent an interest in the same portfolio of investments of the Fund.
Each class has equal rights as to voting, redemption, dividends and liquidation,
except that each bears different distribution and transfer agent fees. Also,
Class A and Class B shareholders have exclusive voting rights with respect to
the Rule 12b-1 distribution plan, which has been adopted by holders of those
shares in connection with the shares' distribution. The authorized capital stock
of the Company consists of 200 million shares. The Fund consists of 80 million
shares, $1.25 par value, which are divided into Class A and Class B, each with
40 million shares. The Company is generally not required to hold annual
shareholder meetings, although shareholder meetings may be called for such
purposes as electing or removing Directors, changing fundamental restrictions
and policies, or approving a management contract. Shareholders have certain
rights to remove Directors.
- -------------------------------------------------------------------------------
THE DIRECTORS ELECT OFFICERS AND RETAIN
THE INVESTMENT ADVISER AND SUBADVISER, WHO
ARE RESPONSIBLE FOR THE FUND'S DAY-TO-DAY
OPERATIONS SUBJECT TO THE DIRECTORS'
POLICIES AND SUPERVISION.
- -------------------------------------------------------------------------------
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the John Hancock Mutual Life Insurance Company, a financial services company. It
provides the Fund, and other investment companies in the John Hancock group of
funds, with investment research and portfolio management services. The Fund,
under certain circumstances, will assist in shareholder communications with
other shareholders.
- -------------------------------------------------------------------------------
JOHN HANCOCK ADVISERS, INC. ADVISES
INVESTMENT COMPANIES HAVING A TOTAL ASSET
VALUE OF MORE THAN $13 BILLION.
- -------------------------------------------------------------------------------
American Fund Advisors, Inc. (the "Sub-Adviser"), which served as the Fund's
investment adviser from 1979 to 1991, is the Fund's sub-adviser. The Sub-Adviser
was incorporated in 1978 and also acts as investment manager or adviser for
other institutional and individual clients. Barry J. Gordon, Chairman and
President, and Marc H. Klee, Senior Vice President, of the Sub-Adviser, each of
whom owns more than 25% of the Sub-Adviser's voting securities, are controlling
persons of the Sub-Adviser. Messrs. Gordon and Klee carry out day-to-day
management of the Fund. Mr. Gordon was instrumental in the formation of the
Sub-Adviser. He has been co-manager of the Fund along with Mr. Klee for the past
five years. Both have been associated with the fund in a portfolio management
capacity prior to 1988.
John Hancock Funds, Inc. ("John Hancock Funds") distributes shares for all of
the John Hancock funds directly and through selected broker-dealers ("Selling
Brokers"). Certain Fund officers are also officers of the Adviser and John
Hancock Funds. Pursuant to an order granted by the Securities and Exchange
Commission, the Fund has adopted a deferred compensation plan for its
independent Directors
7
<PAGE> 105
which allows Directors' fees to be invested by the Fund in other John Hancock
funds.
In order to avoid any conflict with portfolio trades for the Fund, the Adviser,
the Sub-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: pre-clearance 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.
ALTERNATIVE PURCHASE ARRANGEMENTS
You can purchase shares of the Fund at a price equal to their net asset value
per share, plus a sales charge. At your election, this charge may be imposed
either at the time of the purchase (See "Initial Sales Charge Alternative --
Class A shares) or on a contingent deferred basis (See "Contingent Deferred
Sales Charge Alternative -- Class B shares"). If you do not specify on your
account application that class of shares you are purchasing, it will be assumed
that you are investing in Class A shares.
- -------------------------------------------------------------------------------
AN ALTERNATIVE PURCHASE PLAN ALLOWS YOU TO
CHOOSE THE METHOD OF PAYMENT THAT IS BEST
FOR YOU.
- -------------------------------------------------------------------------------
CLASS A SHARES. If you elect to purchase Class A shares, you will incur an
initial sales charge unless the amount you purchase is $1 million or more. If
you purchase $1 million or more of Class A shares, you will not be subject to an
initial sales charge but you will incur a sales charge if you redeem your shares
within one year of purchase. Class A shares are subject to ongoing distribution
and service fees at a combined annual rate of up to 0.30% of the Fund's average
daily net assets attributable to the Class A shares. Certain purchases of Class
A shares qualify for reduced initial sales charges. See "Share
Price -- Qualifying for a Reduced Sales Charge."
- -------------------------------------------------------------------------------
INVESTMENTS IN CLASS A SHARES OF THE FUND
ARE SUBJECT TO AN INITIAL SALES CHARGE.
- -------------------------------------------------------------------------------
CLASS B SHARES. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
six years of purchase (the "contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all of
your dollars to work from the time you make your investment, but the higher
ongoing distribution fee will cause these shares to have higher expenses than
that of Class A shares. To the extent that any dividends are paid by the Fund,
these higher expenses will also result in lower dividends than those paid on
Class A shares.
- -------------------------------------------------------------------------------
INVESTMENTS IN CLASS B SHARES ARE SUBJECT
TO A CONTINGENT DEFERRED SALES CHARGE.
- -------------------------------------------------------------------------------
Class B shares are not available to full-service defined contribution plans
administered by Investor Services or John Hancock Mutual Life Insurance Company
that had more than 100 eligible employees at the inception of the Fund account.
8
<PAGE> 106
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE
The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares given the amount of your purchase, the length of time that you
expect to hold your shares and other circumstances. You should consider whether,
during the anticipated life of your Fund investment, the CDSC and accumulated
fees on Class B shares would be less than the initial sales charge and
accumulated fees on Class A shares purchased at the same time; and to what
extent this differential would be offset by Class A share's lower expenses. To
help you make this determination, the table under the caption "Expense
Information" on page 2 of this Prospectus shows examples of the charges
applicable to each class of shares. Class A shares will normally be more
beneficial if you qualify for a reduced sales charge. See "Share
Price -- Qualifying for a Reduced Sales Charge".
- -------------------------------------------------------------------------------
YOU SHOULD CONSIDER WHICH CLASS OF SHARES
WOULD BE MORE BENEFICIAL FOR YOU.
- -------------------------------------------------------------------------------
Class A shares are subject to lower distribution and service fees and,
accordingly, pay correspondingly higher dividends per share, to the extent that
any dividends are paid. However, because initial sales charges are deducted at
the time of purchase, you would not have all of your funds invested initially
and, therefore, would initially own fewer shares. If you do not qualify for
reduced initial sales charges and expect to maintain your investment for an
extended period of time, you might consider purchasing Class A shares. This is
because the accumulated distribution and service charges on Class B shares may
exceed the initial sales charge and accumulated distribution and service charges
on Class A shares during the life of your investment.
Alternatively, you might determine that it is more advantageous to purchase
Class B shares to have all of your funds invested initially. However, you will
be subject to higher distribution fees and, for a six-year period, a CDSC.
In the case of Class A shares, distribution expenses that John Hancock Funds
incurs in connection with the sale of the shares will be paid from the proceeds
of the initial sales charge and the ongoing distribution and service fees. In
the case of Class B shares, expenses will be paid from the proceeds of the
ongoing distribution and service fees, as well as from the CDSC incurred upon
redemption within six years of purchase. The purpose and function of Class B
shares' CDSC and ongoing distribution and service fees are the same as those of
Class A shares' initial sales charge and ongoing distribution and service fees.
Sales personnel distributing the Fund's shares may receive different
compensation for selling each class of shares.
Dividends, if any, on Class A and Class B shares will be calculated in the same
manner, at the same time and on the same day. They will also be in the same
amount except for differences resulting from each class bearing only its own
distribution and service fees, shareholder meeting expenses and any incremental
transfer agency costs. See "Dividends and Taxes."
9
<PAGE> 107
THE FUND'S EXPENSES
For managing the Fund's investment and business affairs the Fund pays a fee to
the Adviser which for the 1994 fiscal year was 1.00% of the Fund's average daily
net asset value. This fee is equal on an annual basis to a stated percentage of
its average daily net assets, as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
--------------- -----------
<S> <C>
First $100,000,000 1.00%
Amounts over $100,000,000 0.75%
</TABLE>
Effective January 1, 1995, the Board of Directors approved a waiver of a portion
of the management fee payable by the Fund to the Adviser in an amount equal to
0.15% of the average of the daily net asset value of the first $100 million,
thereby reducing the fee payable on these assets to an annual rate of 0.85%.
In addition, the Fund pays a monthly administrative fee at the rate of $100,000
per annum to the Adviser.
The Adviser (not the Fund) pays a monthly fee to the Sub-Adviser for managing
the Fund's portfolio securities. This fee is equal on an annual basis to a
stated percentage of the Fund's average daily net assets as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
--------------- -----------
<S> <C>
First $100,000,000 0.40%
Amounts over $100,000,000 40% of the investment
advisory fee received by the
Adviser on amounts over
$100,000,000.
</TABLE>
Currently the Sub-Adviser has waived a portion of this fee resulting in a
decrease in its fee to 0.35%.
The investment management fee paid by the Fund is higher than the fee paid by
most mutual funds, but is believed to be comparable to the fee paid by funds
that invest in similar securities.
The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
these Plans, the Fund will pay distribution and service fees at an aggregate
annual rate of 0.30% of the Class A shares' average daily net assets and an
aggregate annual rate of 1.00% of the Class B shares' average daily net assets.
In each case, up to 0.25% is for service expenses and the remaining amount (not
to exceed 0.75% for Class B shares) is for distribution expenses. The
distribution fees will be used to reimburse John Hancock Funds for its
distribution expenses, including but not limited to: (i) initial and ongoing
sales compensation to Selling Brokers and others (including affiliates of John
Hancock Funds) engaged in the sale of Fund shares, (ii) marketing, promotional
and overhead expenses it incurs in connection with the distribution of Fund
shares, and (iii) with respect to Class B shares only, interest expenses on
unreimbursed distribution expenses. The Plans provide that John Hancock Funds
will use the distribution fees to promote sales of shares, and will use the
service fees to compensate Selling Brokers for providing personal and account
maintenance services to shareholders. In the event John Hancock Funds is not
fully reimbursed for payments it makes or expenses it incurs by it under the
Class A Plan, these expenses will not be carried beyond twelve months from the
date they were incurred. Unreimbursed expenses under the Class B Plan will be
carried forward together with interest on the balance of unreimbursed expenses.
For the fiscal year ended December 31, 1994 an aggregate of $11,089 distribution
expenses or 10.16%, of the average net assets of the Class B shares of the Fund,
was not reimbursed or recovered by the John Hancock Funds through the receipt of
deferred sales charges or 12b-1 fees in prior periods.
- -------------------------------------------------------------------------------
THE FUND PAYS DISTRIBUTION AND SERVICE
FEES FOR MARKETING AND SALES-RELATED
SHAREHOLDER SERVICING.
- -------------------------------------------------------------------------------
10
<PAGE> 108
Information on the Fund's total expenses is in the Fund's Financial Highlights
section of the prospectus.
The Adviser may, from time to time, reduce its fee or make other arrangements to
limit the Fund's expenses to a specified percentage of average net assets. The
Adviser retains the right to impose such fee and recover any other payments to
the extent that annual expenses fall below the limit at the end of the fiscal
year.
If normal operating expenses of the Fund for any fiscal year, exclusive of
certain expenses prescribed by state law, exceed any limitation imposed by a
state where the shares of the Fund are registered for sale, the Adviser's fee
will be reduced to the extent required by that law and the Adviser will also
make any additional arrangements required by law.
- -------------------------------------------------------------------------------
THE FUND'S TOTAL EXPENSES ARE SUBJECT TO
CERTAIN EXPENSE LIMITATIONS.
- -------------------------------------------------------------------------------
DIVIDENDS AND TAXES
DIVIDENDS. Dividends from the Fund's net investment income and capital gains,
if any, are generally declared annually. Dividends are reinvested in additional
shares of your class 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. The per share
dividends, if any, on Class B shares will be lower than those for Class A shares
because of the higher expenses attributable to the Class B shares. See "Share
Price."
- -------------------------------------------------------------------------------
YOU SHOULD KEEP YOUR ACCOUNT STATEMENTS
RECEIVED FROM THE FUND FOR YOUR PERSONAL
TAX RECORDS.
- -------------------------------------------------------------------------------
TAXATION. Dividends from the Fund's net investment income, certain net foreign
currency gains, and net short-term capital gains are taxable to you as ordinary
income. Dividends from the Fund's net long-term capital gains are taxable as
long-term capital gains. These dividends are taxable whether received in cash or
reinvested in additional shares. Certain dividends paid in January of a given
year may be taxable as if you received them the previous December. Corporate
shareholders may be entitled to take a corporate dividends-received deduction
for dividends paid by the Fund attributable to the dividends it receives from
U.S. domestic corporations, subject to certain restrictions under the Internal
Revenue Code of 1986, as amended (the "Code"). The Fund will send you a
statement by January 31 showing the 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 Code. As a regulated investment
company, the Fund will not be subject to Federal income taxes on any net
investment income and net realized capital gains that are distributed to its
shareholders at least annually. When you redeem (sell) or exchange shares, you
may realize a taxable gain or loss.
11
<PAGE> 109
On the account application, you must certify that your social security or other
taxpayer identification number is correct, and that you are not subject to
backup withholding of Federal tax. If you do not provide this information or are
otherwise subject to backup withholding, the Fund may be required to withhold
31% of your dividends and the proceeds of redemptions and exchanges.
The Fund may be subject to foreign withholding taxes on certain of its foreign
investments, if any, which will reduce the yield on those investments.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes, depending on your residence. Non-U.S. shareholders and tax-exempt
shareholders are subject to different tax treatment not described above. You
should consult your tax adviser for specific advice.
PERFORMANCE
The Fund's total return shows the overall change in value, of a hypothetical
investment in the Fund assuming the reinvestment of all dividends. Cumulative
total return shows the Fund's performance over a period of time. Average annual
total return shows the cumulative return of the Fund shares divided over the
number of years included in the period. Because average annual total return
tends to smooth out variations in the Fund's performance, you should recognize
that it is not the same as actual year-to-year results.
- -------------------------------------------------------------------------------
THE FUND MAY ADVERTISE ITS TOTAL RETURN.
- -------------------------------------------------------------------------------
Total return calculations for Class A shares generally include the effect of
paying the maximum sales charge (except as shown in "The Fund's Financial
Highlights"). Investments at lower sales charges would result in higher
performance figures. Total return for the Class B shares reflects the deduction
of the applicable CDSC imposed on a redemption of shares held for the applicable
period. All calculations assume that all dividends are reinvested at net asset
value on the reinvestment dates during the periods. The total return of Class A
and Class B shares will be calculated separately and, because each class of
shares is subject to different expenses, the total return may differ with
respect to that class for the same period. The relative performance of the Class
A and Class B shares will be affected by a variety of factors, including the
higher operating expenses attributable to the Class B shares, whether the Fund's
investment performance is better in the earlier or later portions of the period
measured and the level of net assets of the classes during the period. The Fund
will include the total return of Class A and Class B shares in any advertisement
or promotional materials including the Fund performance data. The value of Fund
shares, when redeemed, may be more of less than their original cost. Total
return is a historical calculation and is not an indication of future
performance. See "Factors to Consider in Choosing an Alternative."
12
<PAGE> 110
<TABLE>
HOW TO BUY SHARES
- ------------------------------------------------------------------------------------------
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans). Complete the Account Application attached
to this Prospectus and indicate whether you are buying Class A or Class B shares.
If you do not specify which class of shares you are purchasing, Investor Services
will assume you are investing in Class A shares.
- -------------------------------------------------------------------------------
OPENING AN ACCOUNT.
- -------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor Services,
Corporation ("Fund Services").
2. Deliver the completed application and check to your registered
representative, or 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 and Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For Credit To: John Hancock National Aviation &
Technology Fund
(Class A or Class B shares)
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 CLASS A
AND CLASS B 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" section
on the Account Privileges Application, designating a bank
account from which your funds may be drawn. Note that in order
to invest by phone, you 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 Class A or Class B shares by calling
Investor Services toll-free at 1-800-225-5291.
3. Give the Investor Services representative the name in which the
account is registered, the Fund name, the class of shares you
own, 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.
- ------------------------------------------------------------------------------------------
BY CHECK 1. Either fill out the detachable stub included in your account
statement or include a note with your investment listing the
name of the Fund, the class of shares you own, your account
number and the name(s) in which the account is registered.
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.
- ------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 111
<TABLE>
- ---------------------------------------------------------------------------------------
<S> <C>
BY WIRE Instruct your bank to wire funds to:
- -------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A AND CLASS B
SHARES.
(CONTINUED)
- -------------------------------------------------------------------------------
First Signature Bank and Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock National Aviation & Technology Fund
(Class A or Class B Shares)
Your Account Number
Name(s) under which account is registered.
- ---------------------------------------------------------------------------------------
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. Shares of the Fund are priced at the offering price based
on the net asset value computed after John Hancock Funds Services receives
notification of the dollar equivalent from the Fund's custodian bank. 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 unless a request is made in writing to Investor
Services.
- --------------------------------------------------------------------------------
</TABLE>
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 WHICH
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 is
calculated by dividing the net assets of each class by the number of outstanding
shares of that class. The NAV of each class can differ. Securities in the Fund's
portfolio are valued on the basis of market quotations, valuations provided by
independent pricing services, or at fair value as determined in good faith
according to procedures approved by the Directors. Short-term debt investments
maturing within 60 days are valued at amortized cost, which approximates market
value. Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency into
U.S. dollars using current exchange rates. If quotations are not readily
available, or the value has been materially affected by events occurring after
the closing of a foreign market, assets are valued by a method that the
Directors believe accurately reflects fair value. The NAV is calculated once
daily as of the close of regular trading on the New York Stock 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 PLUS A SALES CHARGE, IF
APPLICABLE, WHICH WILL VARY WITH THE
PURCHASE ALTERNATIVE YOU CHOOSE.
- -------------------------------------------------------------------------------
Shares of the Fund are sold at the offering price based on the NAV computed
after your investment request is received in good order by John Hancock Funds.
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 New York
Stock Exchange, and transmit it to John Hancock Funds before its close of
business, to receive that day's offering price.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES. The offering price you pay
for Class A shares of the Fund equals the NAV next computed after your
14
<PAGE> 112
investment is received in good order by John Hancock Funds plus a sales charge,
as follows:
<TABLE>
<CAPTION>
COMBINED REALLOWANCE
REALLOWANCE TO SELLING
AND SERVICE BROKERS AS A
FEE AS A PERCENTAGE
SALES CHARGE AS SALES CHARGE AS PERCENTAGE OF THE
AMOUNT INVESTED A PERCENTAGE OF A PERCENTAGE OF OF OFFERING OFFERING
(INCLUDING SALES CHARGE) OFFERING PRICE THE AMOUNT INVESTED PRICE(+) PRICE(*)
- ----------------------------------------- ------------------- ----------- ------------
<S> <C> <C> <C> <C>
Less than $50,000 5.00% 5.26% 4.25% 4.01%
$50,000 to $99,999 4.50% 4.71% 3.75% 3.51%
$100,000 to $249,999 3.50% 3.63% 2.85% 2.61%
$250,000 to $499,999 2.50% 2.56% 2.10% 1.86%
$500,000 to $999,999 2.00% 2.04% 1.60% 1.36%
$1,000,000 and over 0.00%(**) 0.00%(**) 0.00%(***) 0.00%(***)
</TABLE>
- ---------------
(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales
charge. In addition to the reallowance allowed to all Selling Brokers,
John Hancock Funds will pay the following: round trip airfare to a resort
will be given to each registered representative of a Selling Broker (if
the Selling Broker has agreed to participate) who sells certain amounts of
shares of John Hancock funds. John Hancock Funds will make these incentive
payments out of its own resources. Other than distribution fees, the Fund
does not bear distribution expenses. A Selling Broker to whom
substantially the entire sales charge is reallowed or who receives these
incentives may be deemed to be an underwriter under the Securities Act of
1933.
(**) No sales charge is payable at the time of purchase in Class A shares of $1
million or more, but a contingent deferred sales charge may be imposed in
the event of certain redemption transactions within one year of purchase.
(***) John Hancock Funds may pay a commission and first year's service fee (as
described in (+) below) to Selling Brokers who initiate and are
responsible for purchases of $1 million or more in aggregate as follows:
1% on sales to $4,999,999, 0.50% on the next $5 million and 0.25% on $10
million and over.
(+) At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance, in an amount equal to 0.25% of the net
assets invested in the Fund at the time of sale, and thereafter pays the
service fee periodically in arrears in an amount up to 0.25% of the Fund's
average annual net assets. Selling Brokers receive the fee as compensation
for providing personal and account maintenance services to shareholders.
Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
shares of the Fund.
John Hancock Funds will pay certain affiliated Selling Brokers at an annual rate
of up to 0.05% of the daily net assets of accounts attributable to these
brokers.
Under certain circumstances as described below, investors in Class A shares may
be entitled to pay reduced sales charges. See "Qualifying For a Reduced Sales
Charge" below.
CONTINGENT DEFERRED SALES CHARGE -- INVESTMENTS OF $1 MILLION OR MORE IN CLASS A
SHARES. Purchases of $1 million or more in Class A shares will be made at net
asset value with no initial sales charge, but if the shares are redeemed within
15
<PAGE> 113
12 months after the end of the calendar month in which the purchase was made
(the contingent deferred sales charge period), a contingent deferred sales
charge will be imposed. The rate of the CDSC will depend on the amount invested
as follows:
<TABLE>
<CAPTION>
AMOUNT INVESTED CDSC RATE
- ---------------------------------------------------------------------- ---------
<S> <C>
$1 million to $4,999,999 1.00%
Next $5 million to $9,999,999 0.50%
Amounts of $10 million and over 0.25%
</TABLE>
Existing full service clients of John Hancock Mutual Life Insurance Company who
were group annuity contract holders as of September 1, 1994, and participant
directed defined contribution plans with at least 100 eligible employees at the
inception of the Fund account may purchase Class A shares with no initial sales
charge. However, if the shares are redeemed within 12 months after the end of
the calendar year in which the purchase was made, a contingent deferred sales
charge will be imposed at the above rate.
The charge will be assessed on an amount equal to the lesser of the current
market value or the original purchase cost of the redeemed Class A shares.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any dividends which have been reinvested in
additional Class A shares.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
Therefore, it will be assumed that the redemption is first made from any shares
in your account that are not subject to the CDSC. The CDSC is waived on
redemption in certain circumstances. See the discussion under "Waiver of
Contingent Deferred Sales Charges."
QUALIFYING FOR A REDUCED SALES CHARGE. If you invest more than $50,000 in Class
A shares of the Fund or a combination of funds in the John Hancock funds (except
money market funds), you may qualify for a reduced sales charge on your
investments through a LETTER OF INTENTION. You may also be able to use the
ACCUMULATED PRIVILEGE and COMBINATION PRIVILEGE to take advantage of the value
of your previous investments in Class A shares of the John Hancock funds when
meeting the breakpoints for a reduced sales charge. For the ACCUMULATION
PRIVILEGE and COMBINATION PRIVILEGE, the applicable sales charge will be based
on the total of:
- -------------------------------------------------------------------------------
YOU MAY QUALIFY FOR A REDUCED SALES CHARGE
ON YOUR INVESTMENTS IN CLASS A SHARES.
- -------------------------------------------------------------------------------
1. Your current purchase of Class A shares of the Fund;
2. The net asset value (at the close of business on the previous day) of (a)
all Class A shares of the Fund you hold, and (b) all Class A shares of any
other John Hancock funds you hold; and
3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."
16
<PAGE> 114
EXAMPLE
If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000 and, subsequently invest $30,000 in Class A shares of the Fund, the
sales charge on this subsequent investment would be 4.50% and not 5.00%. This
rate is the rate that would otherwise be applicable to investments of less than
$50,000. See "Initial Sales Charge Alternative -- Class A Shares."
If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:
- - A Trustee/Director or officer of the Trust/Company, a Director or officer of
the Adviser and its affiliates or Selling Brokers; employees or sales
representatives of any of the foregoing; retired officers employees or
Directors of any of the foregoing; a member of the immediate family of any of
the foregoing; or any Fund, pension, profit sharing or other benefit plan for
the individuals described above.
- -------------------------------------------------------------------------------
CLASS A SHARES MAY BE AVAILABLE WITHOUT A
SALES CHARGE TO CERTAIN INDIVIDUALS AND
ORGANIZATIONS.
- -------------------------------------------------------------------------------
- - Any state, county, city or any instrumentality, department, authority or
agency of these entities that is prohibited by applicable investment laws from
paying a sales charge or commission when it purchases shares of any registered
investment management company.*
- - A bank, trust company, credit union, savings institution or other type of
depository institution, its trust departments or common trust funds (an
"eligible depository institution") if it is purchasing $1 million or more for
non-discretionary customers or accounts.*
- - A broker, dealer or registered investment adviser that has entered into an
agreement with John Hancock Funds providing specifically for the use of Fund
shares in fee-based investment products made available to their clients.
- - A client of the Sub-Adviser if the client's funds are transferred directly to
the Fund from accounts managed by the Sub-Adviser.
- - A former participant in an employee benefit plan with John Hancock funds, when
he/she withdraws from his/her plan and transfers any or all of his/her plan
distributions directly to the Fund.
- ---------------
* For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.
Class A shares of the Fund may also be purchased without an initial sales charge
in connection with certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding companies.
Shareholders of the Fund who held shares of the Fund's predecessor prior to May
1, 1984 (the effective date of the imposition of a sales charge) are permitted
for an indefinite period to purchase additional shares at net asset value,
without a sales charge, provided that the purchasing shareholder (1) held Fund
shares and shares of its predecessor continuously from April 30, 1984 to the
date of the purchase in question and (2) provides at the time of purchase a
representation that the additional shares are being purchased for investment
purposes and not with a view to distribution.
- -------------------------------------------------------------------------------
SALES TO CERTAIN
SHAREHOLDERS
- -------------------------------------------------------------------------------
17
<PAGE> 115
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE--CLASS B SHARES. Class B shares
are offered at net asset value per share without a sales charge, so that your
entire initial investment will go to work at the time of purchase. However,
Class B shares redeemed within six years of purchase will be subject to a CDSC
at the rates set forth below. This charge will be assessed on an amount equal to
the lesser of the current market value or the original purchase cost of the
shares being redeemed. Accordingly, you will not be assessed a CDSC on increases
in account value above the initial purchase price, including shares derived from
dividend reinvestment.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that your redemption comes first from shares you have held
beyond the six-year CDSC redemption period or those you acquired through
reinvestment of dividends; and next from the shares you have held the longest
during the six-year period. The CDSC is waived on redemptions in certain
circumstances. See the discussion "Waiver of Contingent Deferred Sales Charges"
below.
EXAMPLE:
You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and you have gained 10 additional shares through dividend reinvestment. If
you redeem 50 shares at this time, your CDSC will be calculated as follows:
<TABLE>
<S> <C>
- - Proceeds of 50 shares redeemed at $12 per share $600
- - Minus proceeds of 10 shares not subject to CDSC because they were -120
acquired through dividend reinvestment (10 X $12)
- - Minus appreciation on remaining shares, also not subject to CDSC -80
(40 X $2)
-----
- - Amount subject to CDSC $400
-----
</TABLE>
Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds uses
all or part of them to defray its expenses related to providing the Fund with
distribution services connected to the sale of the Class B shares, such as
compensating selected Selling Brokers for selling these shares. The combination
of the CDSC and the distribution and service fees makes it possible for the Fund
to sell the Class B shares without deducting a sales charge at the time of the
purchase.
18
<PAGE> 116
The amount of the CDSC, if any, will vary depending on the number of years from
the time you purchase your Class B shares until the time you redeem them. Solely
for purposes of determining this holding period, any payments you make during
the month will be aggregated and deemed to have been made on the last day of the
month.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE OF
YEAR IN WHICH CLASS B SHARES DOLLAR AMOUNT SUBJECT TO
REDEEMED FOLLOWING PURCHASE CDSC
- ---------------------------- -------------------------
<S> <C>
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
</TABLE>
A commission equal to 3.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested, are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for personal and
account maintenance services provided to shareholders during the twelve months
following the sale, and thereafter the service fee is paid in arrears.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE. The CDSC will be waived on
redemptions of Class B shares and of Class A shares that are subject to a CDSC,
unless indicated otherwise, in the circumstances defined below:
- - Redemptions of Class B shares made under a Systematic Withdrawal Plan (see
"How to Redeem Shares"), as long as your annual redemptions do not exceed 10%
of your account value at the time you established your Systematic Withdrawal
Plan and 10% of the value of your subsequent investments (less redemptions) in
that account at the time you notify Investor Services. This waiver does not
apply to Systematic Withdrawal Plan redemptions of Class A shares that are
subject to a CDSC.
- -------------------------------------------------------------------------------
UNDER CERTAIN CIRCUMSTANCES,
THE CDSC ON CLASS B AND CERTAIN CLASS A
SHARE REDEMPTIONS WILL BE WAIVED.
- -------------------------------------------------------------------------------
- - Redemptions made to effect distributions from an Individual Retirement Account
either before or after age 59 1/2, as long as the distributions are based on
your life expectancy or the joint-and-last survivor life expectancy of you and
your beneficiary. These distributions must be free from penalty under the
Code.
- - Redemptions made to effect mandatory distributions under the Code after age
70 1/2 from a tax-deferred retirement plan.
- - Redemptions made to effect distributions to participants or beneficiaries from
certain employer-sponsored retirement plans, including those qualified under
Section 401(a) of the Code, custodial accounts under Section 403(b)(7) of the
Code and deferred compensation plans under Section 457 of the Code. The waiver
also applies to certain returns of excess contributions made to these plans.
In all cases, the distributions must be free from penalty under the Code.
- - Redemptions due to death or disability.
- - Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of this Prospectus.
19
<PAGE> 117
- - Redemptions made pursuant to the Fund's right to liquidate your account if you
own fewer than 50 shares.
- - Redemptions made in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.
- - Redemptions from certain IRA and retirement plans that purchased shares prior
to October 1, 1992.
If you qualify for a CDSC waiver under one of these situations, you must notify
Investor Services either directly or through your Selling Broker at the time you
make your redemption. The waiver will be granted once Investor Services has
confirmed that you are entitled to the waiver.
CONVERSION OF CLASS B SHARES. Your Class B shares and an appropriate portion of
reinvested dividends on those shares will be converted into Class A shares
automatically. This will occur at the end of the month eight years after the
shares were purchased and will result in lower annual distribution fees. If you
exchanged Class B shares into this Fund from another John Hancock fund, the
calculation will be based on the time you purchased the shares in the original
fund. The Fund has been advised that the conversion of Class B shares into Class
A shares should not be taxable for Federal income tax purposes, nor should it
change your tax basis or tax holding period for the converted shares.
20
<PAGE> 118
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 less any applicable CDSC. The Fund
may hold payment until it is reasonably satisfied that investments that were
recently made by check or Invest-by-Phone have been collected (which may take up
to 10 calendar days).
Once your shares are redeemed, the Fund generally sends you payment on the next
business day. When you redeem your shares, you may realize a taxable gain or
loss depending on the difference between what you paid for them and what you
receive for them, subject to certain tax rules. 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 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. (Eastern Time), Monday through
Friday, excluding days on which the New York Stock Exchange
is closed. Investor Services employs the following proce-
dures 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.
- -------------------------------------------------------------------------------
TO ASSURE ACCEPTANCE OF YOUR REDEMPTION
REQUEST, PLEASE FOLLOW THESE PROCEDURES.
- -------------------------------------------------------------------------------
You may redeem up to $100,000 by telephone, but the address
on the account must not have changed for the last 30 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 transactions procedures mentioned above.
Telephone redemption is not available for IRAs, other
tax-qualified retirement plans or Fund shares 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
using 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 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
that is included with this Prospectus.
- ---------------------------------------------------------------------------------
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, class of shares, your account
number, and the additional requirements listed below that
apply to your particular account.
- ---------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 119
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
TYPE OF REGISTRATION REQUIREMENTS
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, accompanied by signature
guarantee(s).
Corporation, Association A letter of instruction and a corporate
resolution, signed by person(s) authorized
to act on the account, accompanied by
signature guarantee(s).
Trusts A letter of instruction signed by the
Trustee(s) with a signature guarantee. (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.
- ---------------------------------------------------------------------------------
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 any such 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 instruction. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares or you may not
redeem certificated shares by telephone.
Due to the proportionately high cost of maintaining smaller accounts, the Funds
reserves the right to redeem at net asset value all shares in an account which
holds fewer than 100 shares (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 funds minimum initial
investment. No CDSC will be imposed on involuntary redemptions of shares.
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 purchase and dividend reinvestments, if any, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
- ---------------------------------------------------------------------------------
</TABLE>
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 shares of the same class 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 SHARES OF THE SAME CLASS OF ANOTHER
JOHN HANCOCK FUND.
- -------------------------------------------------------------------------------
22
<PAGE> 120
Exchanges between funds that are not subject to a CDSC are based on their
respective net asset values. No sales charge or transaction charge is imposed.
Class B shares of the Fund that are subject to a CDSC may be exchanged for Class
B shares of another John Hancock fund without incurring the CDSC; however, these
shares will be subject to the CDSC schedule of the shares acquired (except for
exchanges into John Hancock Short-Term Strategic Income Fund, John Hancock
Adjustable U.S. Government Trust and John Hancock Limited-Term Government Fund
will be subject to the initial Fund's CDSC). For purposes of computing the CDSC
payable upon redemption of shares acquired in an exchange, the holding period of
the original shares is added to the holding period of the shares acquired in an
exchange. However, if you exchange Class B shares purchased prior to January 1,
1994 for Class B shares of any other John Hancock fund, you will continue to be
subject to the CDSC schedule that was in effect at your initial purchase date.
You may exchange Class B shares of any John Hancock fund into shares of a John
Hancock money market fund at net asset value. However, you will continue to be
subject to a CDSC upon redemption. The rate of the CDSC will be the rate in
effect on the original fund at the time of the exchange.
The Fund reserves the right to require that you keep previously exchanged shares
(and reinvested dividends) in the Fund for 90 days before you are permitted a
new exchange. The Fund may also terminate or alter the terms of the exchange
privilege upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares of another for Federal income tax purposes. An exchange may
result in a gain or loss.
When you make an exchange, your account registration must be identical in both
the existing and new account. The exchange privilege is available only in states
where the exchange can be made legally.
Under exchange agreements with Broker Services, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and Broker Services' 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 Broker Services' 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
23
<PAGE> 121
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.
BY TELEPHONE
1. When you fill out 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 have the telephone exchange.
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. 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 and class 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 the 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.
REINVESTMENT PRIVILEGE
1. You will not be subject to a sales charge on Class A shares that you reinvest
in any John Hancock fund that is otherwise subject to a sales charge, as long
as you reinvest within 120 days from the redemption date. If you paid a CDSC
upon a redemption, you may reinvest at net asset value in the same class of
shares from which you redeemed within 120 days. Your account will be credited
with the amount of the CDSC previously charged, and the reinvested shares
will continue to be subject to a CDSC. For purposes of computing the CDSC
payable upon a subsequent redemption, the holding period of the shares
acquired through reinvestment will include the holding period of the redeemed
shares.
- -------------------------------------------------------------------------------
IF YOU REDEEM SHARES OF THE
FUND, YOU MAY BE ABLE TO
REINVEST THE PROCEEDS IN THIS
FUND OR ANOTHER JOHN
HANCOCK FUND WITHOUT
PAYING AN ADDITIONAL SALES
CHARGE.
- -------------------------------------------------------------------------------
2. Any portion of your redemption may be reinvested in Fund shares or in shares
of any of the other John Hancock funds, subject to the minimum investment
limit of that fund.
24
<PAGE> 122
3. To reinvest, you must notify Investor Services in writing. Include the
account number and class from which your shares were originally redeemed.
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 the Application from 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. It is not advantageous to maintain a Systematic Withdrawal Plan concurrently
with purchases of additional Class A or Class B shares because you may be
subject to an initial sales charge on your purchases of Class A shares and to
a CDSC on your redemption of Class B shares. In addition, your redemptions
are taxable events.
6. 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 drawn automatically each month on your
bank for investment in Fund shares, in an amount under the "Automatic
Investing" and "Bank Information" section of the Account Privileges
Application.
- -------------------------------------------------------------------------------
YOU CAN MAKE AUTOMATIC INVESTMENTS AND
SIMPLIFY YOUR INVESTING.
- -------------------------------------------------------------------------------
2. You can also authorize automatic investing through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.
3. You can terminate your Monthly Automatic Accumulation Program 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.
GROUP INVESTMENT PROGRAM
1. An individual account will be established for each participant, but the
initial sales charge for Class A shares will be based on the aggregate dollar
amount of all participants' investments. To determine how to qualify for this
program, contact your registered representative or call 1-800-225-5291.
- -------------------------------------------------------------------------------
ORGANIZED GROUPS OF AT LEAST FOUR PERSONS
MAY ESTABLISH ACCOUNTS.
- -------------------------------------------------------------------------------
2. The initial aggregate payment of all participants in the group must be at
least $250.
25
<PAGE> 123
3. There is no additional charge for this program. There is no obligation to
make payments beyond the minimum, and you may terminate the program at any
time.
RETIREMENT PLANS
1. You may use the Fund to fund 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 $250. However, accounts being established as Group IRA, SEP, SARSEP,
TSA, 401(k) and 457 Plans will be accepted without an initial minimum
investment.
APPENDIX
MOODY'S describes its lower ratings for corporate bonds as follows.
Bonds which are rated BAA are considered as medium grade obligations, i.e. they
are neither highly protected nor 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.
Bonds which are rated BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby are well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Bonds which are rated CAA are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated CA represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
S&P describes its lower ratings for corporate bonds as follows:
Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
26
<PAGE> 124
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
Debt rated BB, B, CCC, OR C is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
27
<PAGE> 125
JOHN HANCOCK
JOHN HANCOCK NATIONAL
AVIATION &
NATIONAL AVIATION & TECHNOLOGY
FUND
TECHNOLOGY FUND
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
SUB-ADVISER
American Fund Advisors, Inc.
1415 Kellum Place, Suite 205
Garden City, New York 11530
CLASS A AND CLASS B SHARES
PRINCIPAL DISTRIBUTOR PROSPECTUS
John Hancock Broker Distribution MAY 1, 1995
Services, Inc.
101 Huntington Avenue A MUTUAL FUND SEEKING LONG-TERM
Boston, Massachusetts 02199-7603 GROWTH OF CAPITAL THROUGH INVESTMENTS
IN SECURITIES OF COMPANIES IN THE
CUSTODIAN AVIATION AND RELATED INDUSTRIES AND
Investors Bank & Trust Company COMPANIES WHICH UTILIZE TECHNOLOGY
24 Federal Street EXTENSIVELY IN THEIR PRODUCT
Boston, Massachusetts 02110 DEVELOPMENT OR OPERATIONS. INCOME IS
A SECONDARY OBJECTIVE.
TRANSFER AGENT
John Hancock Investor Services
Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For Service Information
For Telephone Exchange
call 1-800-225-5291
For Investment-by-Phone 101 HUNTINGTON AVENUE
For Telephone Redemption BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291
For TDD call 1-800-554-6713
JHD-8500P 5-95 (LOGO)Printed on Recycled Paper
<PAGE> 126
SIDE 1
JOHN HANCOCK NATIONAL AVIATION &
TECHNOLOGY FUND
a series of
JOHN HANCOCK TECHNOLOGY SERIES, INC.
101 HUNTINGTON AVENUE, BOSTON, MASSACHUSETTS 02199
SPECIAL MEETING OF SHAREHOLDERS -- JULY 28, 1995
PROXY SOLICITATION BY THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby appoint(s)
Edward J. Boudreau, Jr., James B. Little and Thomas H. Drohan, with full power
of substitution in each, to vote all the shares of common stock of John
Hancock National Aviation & Technology Fund ("Aviation Fund"), a series of
John Hancock Technology Series, Inc., which the undersigned is (are) entitled
to vote at the Special Meeting of Shareholders (the "Meeting") of Aviation
Fund to be held at 101 Huntington Avenue, Boston, Massachusetts 02199, on
Friday, July 28, 1995 at 9:00 a.m., Boston time, and at any adjournment
thereof. All powers may be exercised by a majority of said proxy holders or
substitutes voting or acting, or, if only one votes and acts, then by that
one. Receipt of the Proxy Statement dated June ___, 1995 is hereby
acknowledged. If not revoked, this proxy shall be voted:
Date:____________________________________ , 1995
Signature(s): _________________________________
________________________________________________
NOTE: Signature(s) should agree with name(s)
printed hereon. When signing as attorney,
executor, administrator, trustee or guardian,
please give your full title as such. If a
corporation, please sign in full corporate name
by president or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
<PAGE> 127
SIDE 2
THIS PROXY SHALL BE VOTED IN FAVOR OF (FOR) PROPOSAL (1) IF NO
SPECIFICATION IS MADE BELOW. AS TO ANY OTHER MATTER, SAID PROXY OR PROXIES
SHALL VOTE IN ACCORDANCE WITH THEIR BEST JUDGMENT.
1. To approve an Agreement and Plan of Reorganization between John Hancock
National Aviation & Technology Fund ("Aviation Fund") and John Hancock Global
Technology Fund ("Global Technology Fund"), each a series of John Hancock
Technology Series, Inc., providing for the acquisition by Global Technology
Fund of all the assets of Aviation Fund, in exchange solely for the assumption
of all the liabilities of Aviation Fund by Global Technology Fund and the
issuance of shares of common stock of Global Technology Fund to Aviation Fund
for distribution to the shareholders of Aviation Fund in exchange for their
shares of Aviation Fund in liquidation of Aviation Fund.
FOR AGAINST ABSTAIN
/ / / / / /
2. In the discretion of said proxy or proxies, to act upon such other matters
as may properly come before the Meeting or any adjournment thereof.
<PAGE> 128
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
a series of
JOHN HANCOCK TECHNOLOGY SERIES, INC.
STATEMENT OF ADDITIONAL INFORMATION
June 2, 1995
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the related Prospectus (also dated June 2, 1995) which
covers Class A and Class B shares of common stock of John Hancock Global
Technology Fund ("Global Technology Fund") to be issued in exchange for all of
the net assets of John Hancock National Aviation & Technology Fund ("Aviation
Fund"). Please retain this Statement of Additional Information for future
reference.
A copy of the Prospectus can be obtained free of charge by calling Shareholder
Services at 1-800-225-5291 or by written request to the John Hancock Technology
Series, Inc. at 101 Huntington Avenue, Boston, Massachusetts 02199.
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Introduction................................................... 1
Additional Information about Aviation Fund..................... 3
General Information and History
Investment Objectives and Policies
Management of Aviation Fund
Investment Advisory and Other Services
Brokerage Allocation and Other Practices
Shares of Capital Stock
Purchase, Redemption and Pricing of
Aviation Fund Shares
Underwriters
Calculation of Performance Data
Financial Statements
Additional Information About Global Technology Fund............ 4
General Information and History
Investment Objective and Policies
Management of Global Technology Fund
Control Persons and Principal Holders of Shares
Investment Advisory and Other Services
Brokerage Allocation and Other Practices
Shares of Capital Stock
Purchase, Redemption and Pricing of Global Technology Fund Shares
Underwriters
Calculation of Performance Data
Financial Statements
</TABLE>
<PAGE> 129
EXHIBITS
A - Statement of Additional Information, dated May 1, 1995 of Global
Technology Fund.
B - Statement of Additional Information, dated May 1, 1995 of Aviation Fund.
C - Pro Forma Combined Financial Statements at December 31, 1994 and for the
period then ended of Global Technology Fund and Aviation Fund.
-2-
<PAGE> 130
INTRODUCTION
------------
This Statement of Additional Information is intended to supplement the
information provided in a Proxy Statement and Prospectus dated June 2, 1995
(the "Proxy Statement and Prospectus"). The Proxy Statement and Prospectus has
been sent to the shareholders of Aviation Fund in connection with the
solicitation by the management of John Hancock Technology Series, Inc. (the
"Company") of proxies to be voted at the Special Meeting of Shareholders of
Aviation Fund to be held on July 28, 1995. This Statement of Additional
includes the statements of additional information of Aviation Fund, dated
May 1, 1995 (the "Aviation Fund SAI"), and Global Technology Fund, dated May 1,
1995 (the "Global Technology Fund SAI"). The Aviation Fund SAI and the Global
Technology Fund SAI are included with this Statement of Additional Information
and incorporated herein by reference.
ADDITIONAL INFORMATION ABOUT AVIATION FUND
------------------------------------------
General Information and History
- -------------------------------
For additional information about Aviation Fund generally and its history,
see "Organization of the Fund" in the Aviation Fund SAI.
Investment Objectives and Policies
- ----------------------------------
For additional information about Aviation Fund's investment objectives
and policies, see "Investment Objectives and Policies" and "Investment
Restrictions" in the Aviation Fund SAI.
Management of Aviation Fund
- ---------------------------
For additional information about the Company's Board of Directors,
officers and management personnel, see "Those Responsible for Management" in
the Aviation Fund SAI.
Investment Advisory and Other Services
- --------------------------------------
For additional information about Aviation Fund's investment adviser,
subadviser, custodian and independent accountants, see "Investment Advisory and
Other Services," "Distribution Contract," "Transfer Agent Services," "Custody
of Portfolio" and "Independent Auditors."
Brokerage Allocation and Other Practices
- ----------------------------------------
For additional information about Aviation Fund's brokerage allocation
practices, see "Brokerage Allocation" in the Aviation Fund SAI.
Shares of Capital Stock
- -----------------------
For additional information about the voting rights and other
characteristics of Aviation Fund's capital stock, see "Description of the
Fund's Shares" in the Aviation Fund SAI.
-3-
<PAGE> 131
Purchase, Redemption and Pricing of Aviation Fund Shares
- --------------------------------------------------------
For additional information about the determination of net asset value,
see "Net Asset Value" in the Aviation Fund SAI.
Underwriters
- ------------
For additional information about Aviation Fund's principal underwriter
and the distribution contract between the principal underwriter and Aviation
Fund, see "Distribution Contract" in the Aviation Fund SAI.
Calculation of Performance Data
- -------------------------------
For additional information about the investment performance of Aviation
Fund, see "Calculation of Performance" in the Aviation Fund SAI.
Financial Statements
- --------------------
Audited financial statements of Aviation Fund as at December 31, 1994 are
set forth in the Aviation Fund SAI included herein as Exhibit B.
ADDITIONAL INFORMATION ABOUT GLOBAL TECHNOLOGY FUND
---------------------------------------------------
General Information and History
- -------------------------------
For additional information about Global Technology Fund generally and its
history, see "Organization of the Fund" in the Global Technology Fund SAI.
Investment Objectives and Policies
- ----------------------------------
For additional information about Global Technology Fund's investment
objectives, policies and restrictions see "Investment Objectives and Policies"
and "Investment Restrictions" in the Global Technology Fund SAI.
Management of Global Technology Fund
- ------------------------------------
For additional information about the Company's Board of Directors,
officers and management personnel, see "Those Responsible for Management" in
the Global Technology Fund SAI.
Control Persons and Principal Holders of Shares
- -----------------------------------------------
For additional information about control persons of Global Technology
Fund and principal holders of shares of Global Technology Fund see "Those
Responsible for Management" in the Global Technology Fund SAI.
-4-
<PAGE> 132
Investment Advisory and Other Services
- --------------------------------------
For additional information about Global Technology Fund's investment
adviser, custodian and independent accountants, see "Investment Advisory and
Other Services," "Distribution Contract," "Transfer Agent Services," "Custody
of Portfolio" and "Independent Auditors."
Brokerage Allocation and Other Practices
- ----------------------------------------
For additional information about Global Technology Fund's brokerage
allocation practices, see "Brokerage Allocation" in the Global Technology Fund
SAI.
Shares of Capital Stock
- -----------------------
For additional information about the voting rights and other
characteristics of shares of capital stock of Global Technology Fund, see
"Description of the Fund's Shares" in the Global Technology Fund SAI.
Purchase, Redemption and Pricing of Global Technology Fund Shares
- -----------------------------------------------------------------
For additional information about the determination of net asset value,
see "Net Asset Value" in the Global Technology Fund SAI.
Underwriters
- ------------
For additional information about Global Technology Fund's principal
underwriter and the distribution contract between the principal underwriter and
Global Technology Fund, see "Distribution Contract" in the Global Technology
Fund SAI.
Calculation of Performance Data
- -------------------------------
For additional information about the investment performance of Global
Technology Fund, see "Calculation of Performance" in the Global Technology Fund
SAI.
Financial Statements
- --------------------
Audited financial statements of Global Technology Fund as at December 31,
1994 are set forth in the Global Technology Fund SAI included herein as Exhibit
A. Pro Forma combined financial statements as at December 31, 1994 and for the
period then ended for Global Technology Fund as though the Reorganization had
occurred on December 31, 1994 are attached as Exhibit C.
-5-
<PAGE> 133
EXHIBIT A
JOHN HANCOCK
GLOBAL TECHNOLOGY FUND
CLASS A AND CLASS B SHARES
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1995
This Statement of Additional Information provides information about John
Hancock Global Technology Fund (the "Fund") in addition to the information that
is contained in the Fund's Class A and Class B Prospectus (the "Prospectus")
dated May 1, 1995.
The Fund is a series of John Hancock Technology Series, Inc. (the
"Company"). This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the Fund's Prospectus, a copy of which can
be obtained free of charge by writing or telephoning:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-(800)-225-5291
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Statement of
Additional
Information
Page
<S> <C>
ORGANIZATION OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
THOSE RESPONSIBLE FOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . 16
DISTRIBUTION CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
INITIAL SALES CHARGE ON CLASS A SHARES . . . . . . . . . . . . . . . . . . . . . . . . 21
DEFERRED SALES CHARGE ON CLASS B SHARES . . . . . . . . . . . . . . . . . . . . . . . . 22
SPECIAL REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ADDITIONAL SERVICES AND PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
TAX STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
DESCRIPTION OF THE FUND'S SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
CALCULATION OF PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
BROKERAGE ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
TRANSFER AGENT SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
CUSTODY OF PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
<PAGE> 134
<TABLE>
<S> <C>
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
ORGANIZATION OF THE FUND
The Fund is a diversified series of John Hancock Technology Series, Inc.
(the "Company"), an open-end management investment company organized as a
corporation under the laws of Maryland on January 5, 1990. On May 1, 1990, the
Fund succeeded to the assets and liabilities of the National Telecommunications
& Technology Fund, Inc. On December 6, 1991, the Company changed its name from
AFA Funds, Inc. and the Fund changed its name from National Telecommunications
& Technology Fund. Effective October 1, 1992, the Fund ceased doing business
as Global Technology Fund and commenced doing business under the name John
Hancock Freedom Global Technology Fund. The Fund is managed by John Hancock
Advisers, Inc. (the "Adviser") and American Fund Advisors, Inc. ("AFA" or the
"Sub-Adviser"). As of January 1, 1995, the Fund changed its name to John
Hancock Global Technology Fund.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives and policies are set forth in the
Fund's Prospectus dated May 1, 1995 which is incorporated herein by reference.
The following information augments the Prospectus.
The Fund's primary objective is to provide long-term capital growth
principally through investments in equity securities of companies which rely
extensively on technology in product development or operations. Income is a
secondary consideration of the Fund.
Forward Foreign Currency Transactions. The foreign currency exchange
transactions of the Fund may be conducted on a spot (i.e., cash) basis at the
spot rate for purchasing or selling currency prevailing in the foreign exchange
market. The Fund may also deal in forward foreign currency exchange contracts
involving currencies of the different countries in which it will invest as a
hedge against possible variations in the foreign exchange rate between these
currencies. This is accomplished through contractual agreements to purchase or
sell a specified currency at a specified future date and price set at the time
of the contract. The Fund's dealings in forward foreign currency exchange
contracts will be limited to hedging either specific transactions or portfolio
positions. The Fund will not attempt to hedge all of its foreign portfolio
positions. The Fund will not engage in speculative forward currency exchange
transactions.
If the Fund enters into a forward contract to purchase currency, its
custodian bank will segregate cash or liquid assets in a separate account of
the Fund in an amount equal to the value of the Fund's total high grade debt
securities committed to the consummation of such forward contract. Those
assets will be valued at market daily and if the value of the assets in the
separate account declines, additional cash or liquid assets will be placed in
the account so that the value of the account will equal the amount of the
Fund's commitment with respect to such contracts.
2
<PAGE> 135
Hedging against a decline in the value of currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise.
Moreover, it may not be possible for the Fund to hedge against a devaluation
that is so generally anticipated that the Fund is not able to contract to sell
the currency at a price above the devaluation level it anticipates.
The cost to the Fund of engaging in foreign currency exchange
transactions varies with such factors as the currency involved, the length of
the contract period and the market conditions then prevailing. Since
transactions in foreign currency are usually conducted on a principal basis, no
fees or commissions are involved.
Characteristics and Risks of Foreign Securities Markets. The securities
markets of many countries have in the past moved relatively independently of
one another, due to differing economic, financial, political and social
factors. When markets in fact move in different directions and offset each
other, there may be a corresponding reduction in risk for the Fund's portfolio
as a whole. This lack of correlation among the movements of the world's
securities markets may also affect unrealized gains the Fund has derived from
movements in any one market.
If the securities of markets moving in different directions are combined
into a single portfolio, such as that of the Fund, total portfolio volatility
is reduced. Since the Fund will invest in securities denominated in currencies
other than U.S. dollars, changes in foreign currency exchange rates will affect
the value of its portfolio securities. Currency exchange rates may not move in
the same direction as the securities markets in a particular country. As a
result, market gains may be offset by unfavorable exchange rate fluctuations.
Investments in foreign securities may involve risks and considerations
not present in domestic investments. Since foreign securities generally may be
denominated and pay interest or dividends in foreign currencies, the value of
the assets of the Fund as measured in U.S. dollars will be affected favorably
or unfavorably by changes in the relationship of the U.S. dollar and other
currency rates. The Fund may incur costs in connection with the conversion of
foreign currencies into U.S. dollars and may be adversely affected by
restrictions on the conversion or transfer of foreign currencies. In addition,
there may be less publicly available information about foreign companies than
U.S. companies. Foreign companies may not be subject to accounting, auditing,
and financial reporting standards, practices and requirements comparable to
those applicable to U.S. companies.
Foreign securities markets, while growing in volume, have for the most
part substantially less volume than U.S. securities markets and securities of
foreign companies are generally less liquid and at times their prices may be
more volatile than securities of comparable U.S. companies. Foreign stock
exchanges, brokers and listed companies are generally subject to less
government supervision and regulation than those in the U.S. The customary
settlement time for foreign securities may be longer than the five (5) day
customary settlement time for U.S. securities, or less frequent than in the
U.S., which could affect the liquidity of the Fund's investments. The Adviser
and the Sub-Adviser will monitor the settlement time for foreign
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<PAGE> 136
securities and take undue settlement delays into account in considering the
desirability of allocating investments among specific countries.
The Fund may invest in companies located in developing countries which,
compared to the U.S. and other developed countries, may have relatively
unstable governments, economies based on only a few industries and securities
markets which trade only a small number and volume of securities. Prices on
exchanges located in developing countries tend to be volatile and, in the past,
securities traded on those exchanges have offered a greater potential for gain
(and loss) than securities traded on exchanges in the U.S. and more developed
countries.
In some countries, there is the possibility of expropriation or
confiscatory taxation, seizure or nationalization of foreign bank deposits or
other assets, establishment of exchange controls, the adoption of foreign
government restrictions or other adverse political, social or diplomatic
developments that could affect investments in these countries.
High Yield "High Risk" Fixed Income Securities. As discussed in the
Fund's Prospectus, the Fund may invest up to 10% of its net assets in fixed
income securities that, at the time of investment, are rated CC or higher by
Standard & Poor's Ratings Group ("Standard & Poor's") or Ca or higher by
Moody's Investors Service, Inc. ("Moody's") or their equivalent, and unrated
fixed income securities of comparable quality as determined by the Adviser.
Ratings are based largely on the historical financial condition of the issuer.
Consequently, the rating assigned to any particular security is not necessarily
a reflection of the issuer's current financial condition, which may be better
or worse than the rating would indicate.
The values of lower-rated securities and unrated securities of
comparable quality generally fluctuate more than those of high-rated
securities. There is a greater possibility that an adverse change in the
financial condition of an issuer of lower-rated securities or unrated
securities of comparable quality will affect the issuer's ability to make
payments of interest and principal. To the extent the Fund invests in these
securities, the achievement of the Fund's investment objectives is more
dependent on the Sub-Adviser's ability than it would be if the Fund were
investing in higher quality securities.
As noted in the Fund's Prospectus, the Fund may invest in pay-in-kind
(PIK) securities, which pay interest in either cash or additional securities,
at the issuer's option, for a specified period. The Fund may also invest in
zero coupon bonds, which have a determined interest rate, but payment of the
interest is deferred until maturity of the bonds. Both types of bonds may be
more speculative and subject to greater fluctuation in value than securities
which pay interest periodically and in cash, due to changes in interest rates.
Preferred Stock. As stated in the Prospectus, the Fund may purchase
preferred stock. Preferred stocks are equity securities, but possess certain
attributes of fixed income securities. Holders of preferred stocks normally
have the right to receive dividends at a fixed rate when and as declared by the
issuer's board of directors, but do not participate in other amounts available
for distribution by the issuing corporation. Dividends on preferred stock may
be cumulative, and all cumulative dividends usually must be paid prior to
dividend payments to common stockholders. Because of this preference,
preferred stocks generally entail less risk than common stocks. Upon
liquidation, preferred stocks are entitled to a specified liquidation
preference, which is generally
4
<PAGE> 137
the same as the par or stated value, and are senior in right of payment to
common stocks. Preferred stocks are equity securities in that they do not
represent a liability of the issuer and therefore do not offer a great a degree
of protection of capital or assurance of continued income as investments in
corporate debt securities. In addition, preferred stocks are subordinated in
right of payment to all debt obligations and creditors of the issuer, and
convertible preferred stocks may be subordinated to other preferred stock of
the same issuer. See "Convertible Securities" below for a description of
certain characteristics of convertible preferred stock.
Convertible Securities. As stated in the Fund's Prospectus, the Fund
may purchase convertible fixed income securities and preferred stock.
Convertible securities are securities that may be converted at either a stated
price or stated rate into underlying shares of common stock of the same issuer.
Convertible securities have general characteristics similar to both fixed
income and equity securities. Although to a lesser extent than with straight
debt securities, the market value of convertible securities tends to decline as
interest rates increase and, conversely, tends to increase as interest rates
decline. In addition, because of the conversion feature, the market value of
convertible securities tends to vary with fluctuations in the market value of
the underlying common stocks and therefore will also react to variations in the
general market for equity securities. A unique feature of convertible
securities is that as the market price of the underlying common stock declines,
convertible securities tend to trade increasingly on a yield basis, and
consequently may not experience market value declines to the same extent as the
underlying common stock. When the market price of the underlying common stock
increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock increases, the prices
of the convertible securities tend to rise as a reflection of the value of the
underlying common stock. While no securities investments are without risk,
investments in convertible securities generally entail less risk than
investments in common stock of the same issuer. However, the issuers of
convertible securities may default on their obligations.
Restricted Securities. The Fund may invest up to 5% of its net assets
in securities which are subject to restrictions on resale because they have not
been registered under the Securities Act of 1933 (the "1933 Act"), or for which
market quotations are not readily available. Limitations on the resale of such
securities may have an adverse effect on their marketability, which may prevent
the Fund from disposing of them promptly at reasonable prices. If the Fund
purchases restricted securities, it may also have to pay the cost of
registering them with the Securities and Exchange Commission. At the time the
Fund acquires any such securities, it will ordinarily attempt to obtain the
right to have them registered within a specified period of time at the issuer's
expense. There is no assurance that such right can be obtained.
The fair value of restricted securities will be determined in good faith
by the Board of Directors, taking into account the market value of comparable
securities where applicable, the right to registration under the 1933 Act at
the issuer's expense, and other applicable considerations.
Repurchase Agreements. A repurchase agreement is a contract under which
the Fund would acquire a security for a relatively short period (usually not
more than 7 days) subject to the obligation of the seller to repurchase and the
Fund to resell such security at a fixed time and price (representing the Fund's
cost plus interest). The Fund will enter into repurchase agreements only with
member banks of the Federal Reserve System and with "primary dealers" in U.S.
5
<PAGE> 138
Government securities. The Advisers will continuously monitor the
creditworthiness of the parties with whom the Fund enters into repurchase
agreements.
The Fund may enter into repurchase agreements with respect to its
portfolio securities. The Fund has established a procedure providing that the
securities serving as collateral for each repurchase agreement must be
delivered to the Fund's custodian either physically or in book-entry form and
that the collateral must be marked to market daily to ensure that each
repurchase agreement is fully collateralized at all times. In the event of
bankruptcy or other default by a seller of a repurchase agreement, the Fund
could experience delays in liquidating the underlying securities and could
experience losses, including the possible decline in the value of the
underlying securities during the period which the Fund seeks to enforce its
rights thereto, possible subnormal levels of income and lack of access to
income during this period, and the expense of enforcing its rights.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The following investment restrictions (as well as the fund's investment
objective) will not be changed without approval of the holders of a majority of
outstanding voting securities of the Fund which, as used in the Prospectus and
this Statement of Additional Information, means approval of the lesser of (1)
the holders of 67% or more of the shares of the Fund represented at a meeting
if the holders of more than 50% of outstanding shares are present in person or
by proxy or (2) the holders of more than 50% of the outstanding shares. The
Fund observes the following fundamental restrictions; The Fund may not:
(1) Invest less than 65% of the value of its total assets (exclusive
of cash, U.S. Government securities and short-term commercial paper) in
securities of companies which rely extensively on technology in product
development or operation, except temporarily during periods when economic
conditions with respect to such companies in that industry are unfavorable.
(2) With respect to 75% of its total assets, purchase any security
(other than securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and repurchase agreements collateralized by such
securities) if, as a result: (a) more than 5% of its total assets would be
invested in the securities of any one issuer, or (b) the Fund would own more
than 10% of the voting securities of any one issuer.
(3) Issue senior securities, except as permitted by paragraphs (4)
and (8) below. For purposes of this restriction, the issuance of shares of
common stock in multiple classes, the purchase or sale of options, futures
contracts and options on futures contracts, forward commitments, and repurchase
agreements entered into in accordance with the Fund's investment policies, and
the pledge, mortgage or hypothecation of the Fund's assets are not deemed to be
senior securities
(4) Borrow money, except from banks as a temporary measure for
extraordinary or emergency purposes (including meeting redemptions without
immediately selling securities), but
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<PAGE> 139
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 as
long as such borrowings exceed 5% of the value of net assets, the Fund will not
make any investments. Under the Investment Company Act of 1940, as amended
(the "1940 Act"), asset coverage of 300% of any borrowing must be maintained.
(5) Act as an underwriter of securities of other issuers except to
the extent that in selling portfolio securities it may be deemed to be an
underwriter for purposes of the 1933 Act.
(6) Purchase real estate or any interest therein (except real estate
used exclusively in the current operation of the Fund's affairs), but this
restriction does not prevent the Fund from investing in debt securities secured
by real estate or interests therein.
(7) Purchase or sell commodities or commodity contracts, except that
the Fund may purchase and sell options on securities, securities indices,
currency and other financial instruments, futures contracts on securities,
securities indices, currency and other financial instruments and options on
such futures contracts, forward commitments, interest rate swaps, caps and
floors, securities index put or call warrants and repurchase agreements entered
into in accordance with the Fund's investment policies.
(8) Make loans to or guarantee the debts of other persons other than
portfolio security loans secured by cash or securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities as collateral in
amounts at all times equal at least to the market value of the securities
loaned, determined daily; provided that the aggregate of all such loans at any
time outstanding shall not exceed 25% of the value of the Fund's total assets.
The Fund's transactions in repurchase agreements are not subject to any of the
limitations described in the preceding sentence.
If the Fund adheres to a percentage restriction on investment or
utilization of assets as set forth above at the time an investment is made, it
will not be considered to have violated the restriction if a later percentage
change results from changes in the values or the total costs of the Fund's
assets.
Non-Fundamental Investment Restrictions
The following restrictions are designated as non-fundamental and may be
changed by the Board of Directors without shareholder approval. The Fund may
not:
(1) Purchase securities issued by any other investment company,
except in connection with a merger, acquisition or other reorganization or in
compliance with the provisions of Section 12 of the Investment Company Act.
(2) Purchase securities on margin, although it may obtain such
short-term credits as may be necessary for the clearance of securities
purchases.
(3) Make short sales of securities or maintain a short position.
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<PAGE> 140
(4) Purchase or sell puts, calls, straddles, spreads or any
combination thereof, except that (i) it may sell call options listed on a
national securities exchange against its portfolio securities if such call
options remain fully covered throughout the exercise period and where such
underlying securities have an aggregate value (determined as of the date the
calls are sold) not exceeding 5% of the total assets of the Fund, and (ii) the
Fund may purchase call options in related "closing purchase transactions,"
where not more than 5% of its total assets are invested in such options.
(5) Purchase securities of an issuer which, together with any
predecessor, has been in operation for less than three years (except
investments in obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities), if, as a result, more than 5% of the Fund's
total assets would be invested in such securities.
(6) Purchase or sell interests in real estate limited partnerships
or in oil, gas or other mineral leases or exploration or development programs
(although it may invest in companies which own or invest in such interests).
(7) Purchase or retain the securities of an issuer any of the
officers, directors, trustees or security holders of which (a) is an officer or
director of the Company or a member, officer, director or trustee of its
investment adviser and (b) owns beneficially more than 1/2 of 1% of the shares
or securities of both (taken at market value) of such issuer, unless all such
individuals owning more than 1/2 of 1% of such shares or securities together
own beneficially less than 5% of such shares or securities or both.
(8) Invest more than 5% of the value of its total assets in warrants
(other than those that have been acquired in units or attached to other
securities). No more than 2% of the Fund's total assets may be invested in
warrants which are not listed on the New York Stock Exchange or the American
Stock Exchange. In applying this limitation, warrants will be valued at the
lesser of cost or market value unless acquired by the Fund in units with, or
attached to, debt securities, in which case no value will be assigned.
(9) Invest in companies for the purpose of exercising control.
(10) Purchase any security, including any repurchase agreement
maturing in more than seven days, which is not readily marketable, if more than
15% of the net assets of the Fund, taken at market value, would be invested in
such securities. (The staff of the Securities and Exchange Commission
considers over-the-counter options to be illiquid securities subject to the 15%
limit.)
(11) Enter into repurchase agreements if, as a result thereof, more
than 10% of the value of the Fund's total assets would be invested in such
repurchase agreements.
(12) 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
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<PAGE> 141
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.
THOSE RESPONSIBLE FOR MANAGEMENT
The business of the Fund is managed by the Board of Directors who elects
officers who are responsible for the day-to-day operations of the Fund and who
execute policies formulated by the Board of Directors. Several of the officers
and Directors of the Company are also officers or directors of the Adviser or
Sub-Adviser, or officers or directors of the Fund's principal distributor, John
Hancock Funds, Inc. ("John Hancock Funds").
The following table sets forth the principal occupation or employment of
the Directors and principal officers of the Company during the past five years:
9
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<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE COMPANY DURING THE PAST FIVE YEARS
---------------- ---------------- --------------------------
<S> <C> <C>
Edward J. Boudreau, Jr.* Chairman (1,2) Chairman and Chief Executive Officer, the
101 Huntington Avenue Adviser and The Berkeley Financial Group
Boston, MA 02199 ("Berkeley Group"); Chairman, NM Capital
Management, Inc. ("NM Capital"); John Hancock
Advisers International Limited; ("Advisers
International"); John Hancock Funds, Inc.,
("John Hancock Funds"), John Hancock Investor
Services Corporation ("Investor Services") and
Sovereign Asset Management Corporation
("SAMCorp"); (herein after the Adviser, the
Berkeley Group, NM Capital, Advisers
International, John Hancock Funds, Investor
Services and SAMCorp collectively referred to as
the "Affiliated Companies"); Chairman, First
Signature Bank & Trust; Director, John Hancock
Freedom Securities Corp., John Hancock Capital
Corp., New England/Canada Business Council;
Member, Investment Company Institute Board of
Governors; Director, Asia Strategic Growth Fund,
Inc.; Trustee, Museum of Science; President, the
Adviser (until July 1992); Chairman, John
Hancock Distributors, Inc. ("Distributors")
(until April 1994).
Thomas W.L. Cameron Director Chairman and Director, Sovereign Advisers, Inc.;
Interstate/Johnson Lane Senior Vice President, Interstate/Johnson Lane
1892 Andell Bluff Blvd. Corp. (securities dealer).
Johns Island, SC 29455
Charles F. Fretz Director (3) Consultant, self employed; Vice President and
RD #5, Box 300B Director, Towers, Perrin, Forster & Crosby, Inc.
Clothier Springs Road (international management consultants) (until
Malvern, PA 19355 1985).
</TABLE>
___________________
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
(4) A Member of the Audit, Administration and Compensation Committees.
10
<PAGE> 143
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE COMPANY DURING THE PAST FIVE YEARS
---------------- ---------------- --------------------------
<S> <C> <C>
Jack P. Gould Director (1,3) Consultant and investor; Vice President,
25 Pecksland Road Secretary, Treasurer and Director of CAD Output
Greenwich, CT 06831 Inc. (laser photoplotting) (until 1993);
Director of Webb Distribution, Inc.
(distributor of electronic components) (until
1993).
Charles L. Ladner Director (3) Director, Energy North, Inc. (public utility
UGI Corporation holding company) (until 1992); Senior Vice
P.O. Box 858 President, Finance of UGI Corp. (gas
Valley Forge, PA 19482 distribution utility).
Patricia P. McCarter Director (3) Director and Secretary of the McCarter Corp.
Swedesford Road (machine manufacturer).
RD #3, Box 121
Malvern, PA 19355
Steven R. Pruchansky Director (1,3) Director and Treasurer, Mast Holdings, Inc.;
6920 Daniel Road Director, First Signature Bank & Trust Company
Naples, FL 33942 (until August 1991); General Partner, Mast
Realty Trust; President, Maxwell Building Corp.
(until 1991).
Norman H. Smith Director (3) Retired. Lieutenant General, United States
Rt. 1, Box 249 E Marine Corps; Deputy Chief of Staff for
Linden, VA 22642 Manpower and Reserve Affairs, Headquarters
Marine Corps; Commanding General, III Marine
Expeditionary Force/3rd Marine Division
(retired 1991).
</TABLE>
___________________
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
(4) A Member of the Audit, Administration and Compensation Committees.
11
<PAGE> 144
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE COMPANY DURING THE PAST FIVE YEARS
---------------- ---------------- --------------------------
<S> <C> <C>
John P. Toolan Director (3) Director, The Muni Bond Funds, National
13 Chadwell Place Liquid Reserves, Inc., The Tax Free Money
Morristown, NJ 07960 Fund, Inc. and Vantage Money Market Funds
(mutual funds), and The Inefficient-Market
Fund, Inc. (closed-end investment company;
Chairman, Smith Barney Trust Company (retired
December, 1991); Director, Smith Barney,
Inc., Mutual Management Company and Smith
Barney Advisers, Inc. (investment advisers)
(until December 1991).
James F. Carlin Director Chairman and Chief Executive Officer, Carlin
233 West Central Street Consolidated, Inc. (insurance); Director,
Natick, MA 01760 Arabella Mutual Insurance Company; Receiver,
City of Chelsea, Massachusetts (until August
1992).
Harold R. Hiser, Jr. Director Executive Vice President, Schering-Plough
Schering-Plough Corporation Corporation (pharmaceuticals); Director,
One Giralda Farms ReCapital Corporation (reinsurance).
Madison, NJ 07940-1000
Robert G. Freedman* Vice Chairman and Chief Vice Chairman and Chief Investment Officer,
101 Huntington Avenue Investment Officer (2) the Adviser; President, the Adviser (until
Boston, MA 02199 December 1994).
Anne C. Hodsdon* Executive Vice President President and Chief Operations Officer, the
101 Huntington Avenue (2) Adviser; Executive Vice President, the
Boston, MA 02199 Adviser (until December 1994).
Thomas H. Drohan* Senior Vice President and Senior Vice President and Secretary of the
101 Huntington Avenue Secretary Adviser.
Boston, MA 02199
</TABLE>
___________________
* An "interested person" of the Company as such term is defined in the
1940 Act.
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the
Board of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
(4) A Member of the Audit, administration and Compensation Committee.
12
<PAGE> 145
<TABLE>
<CAPTION>
POSITIONS HELD WITH THE PRINCIPAL OCCUPATION(S)
----
NAME AND ADDRESS COMPANY DURING THE PAST FIVE YEARS
---------------- ------- --------------------------
<S> <C> <C>
James K. Ho* Senior Vice Senior Vice President, the Adviser.
101 Huntington Avenue President (2)
Boston, MA 02199
James B. Little* Senior Vice President Senior Vice President, the Adviser.
101 Huntington Avenue and Chief Financial
Boston, MA 02199 Officer
Marc H. Klee* Senior Vice President Director and Senior Vice President of AFA;
1415 Kellum Place Senior Vice President of the Company and its
Suite 205 predecessors and NVF (until 1992); Director of
Garden City, NY 11530 Radyne Corp. (telecommunications equipment)
since 1990; Senior Vice President and
Treasurer (since 1990) of Baseball
Entrepreneurs, Inc. and (since 1991) of
Hamilton Baseball Associates, Inc. (baseball
club ownership); Vice President, Secretary and
Treasurer of Minor League Sports Enterprises,
Inc. (baseball club ownership) (since 1992).
Michael P. DiCarlo* Senior Vice President Senior Vice President, the Adviser.
101 Huntington Avenue (2)
Boston, MA 02199
</TABLE>
________________
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
(4) A Member of the Audit, Administration and Compensation Committees.
13
<PAGE> 146
<TABLE>
<CAPTION>
POSITIONS HELD WITH PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS THE COMPANY DURING THE PAST FIVE YEARS
---------------- ----------- --------------------------
<S> <C> <C>
Susan S. Newton* Vice President, Vice President and Assistant Secretary, the
101 Huntington Avenue Assistant Secretary and Adviser.
Boston, MA 02199 Compliance Officer
John A. Morin* Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, MA 02199
Barry J. Gordon President President and Chairman of the Board of AFA,
1415 Kellum Place Director and President of the company and its
Suite 205 predecessors (until 1993); Chairman of the
Garden City, NY 11530 Board and President of National Value Fund,
Inc. (""NVF")(until 1992); Chairman of the
Board and Chief Executive Office of Minor
League Sports Enterprises, Inc. (baseball
club ownership since 1992); Vice Chairman of
the Board and Director of Kineret Acquisition
Corporation (food products)(since 1993).
James J. Stokowski* Vice President and Vice President, the Adviser.
101 Huntington Avenue Treasurer
Boston, MA 02199
</TABLE>
________________
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
(4) A Member of the Audit, Administration and Compensation Committees.
14
<PAGE> 147
As of the date of this Statement of Additional Information, the officers
and directors of the Fund as a group owned less than 1% of the outstanding
shares of the fund and to the knowledge of the registrant, no persons owned of
record or beneficially 5% or more of any class of registrants outstanding
securities.
All of the officers listed are officers or employees of the Adviser or
the Affiliated Companies. Some of the directors and officers may also be
officers and/or directors and/or trustees of one or more other funds for which
the Adviser serves as investment adviser.
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 for their services for each Fund's 1994 fiscal
year. The two non-Independent Directors, Messrs. Boudreau and Cameron, and
each of the officers of the Funds are interested persons of the Adviser, are
compensated by the Adviser and receive no compensation from the Fund for their
services.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
PENSION OR FROM THE FUND AND
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL JOHN HANCOCK FUND
COMPENSATION ACCRUED AS PART OF BENEFITS UPON COMPLEX TO
INDEPENDENT DIRECTORS FROM THE FUND THE FUND'S EXPENSES RETIREMENT DIRECTORS(1)(2)
--------------------- ------------- ------------------- ---------------- ------------------
<S> <C> <C>
Charles F. Fretz $ 1,028 $ 60,350
Jack P. Gould 4,800 9,600
Charles L. Ladner 1,028 60,450
Patricia P. McCarter 1,028 60,200
Steven R. Pruchansky 1,061 62,450
Norman H. Smith 1,061 62,450
John P. Toolan 1,028 60,450
James F. Carlin 1,028 60,450
Harold R. Hiser, Jr. 957 56,000
Alonzo Horsey (deceased) 943 56,200
------- --------
$13,963 $548,600
</TABLE>
(1) The total compensation paid by the John Hancock Fund Complex to the
Independent Directors is as of the calendar year ended December 31, 1994.
(2) All Directors except Messrs. Gould, Fretz and Hiser are Directors of 39
funds in the John Hancock Complex. Messers. Fretz and Hiser are Directors
of 21 funds and Mr. Gould is a Director of two funds.
15
<PAGE> 148
INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Prospectus, the Fund receives its investment advice
from the Adviser and the Sub-Adviser. Investors should refer to the Prospectus
for a description of certain information concerning the investment management
contract.
Each of the Directors and principal officers affiliated with the Company
who is also an affiliated person of the Adviser or Sub-Adviser is named above,
together with the capacity in which such person is affiliated with the Company,
the Adviser or Sub-Adviser.
As described in the Fund's Prospectus under the caption "Organization
and Management of the Fund," the Company on behalf of the Fund has entered into
an investment management contract with the Adviser dated December 6, 1991, and
amended as of January 1, 1994, under which the Adviser in conjunction with the
Sub-Adviser provides the Fund with a continuous investment program, consistent
with the Fund's stated investment objectives and policies. The Adviser is
responsible for the day to day management of the Fund's portfolio assets. The
Adviser has entered into a sub-advisory contract with the Sub-Adviser dated
December 6, 1991, under which the Sub-Adviser, subject to the review of the
Board of Directors and the overall supervision of the Adviser, is responsible
for providing the Fund with investment advice.
Securities held by the Fund may also be held by other funds or
investment advisory clients for which the Adviser, the Sub-Adviser or their
respective 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 Adviser or the
Sub-Adviser for the Fund or for other funds or clients for which the Adviser or
Sub-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
Adviser, the Sub-Adviser or their 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.
No person other than the Adviser and Sub-Adviser and their directors and
employees regularly furnishes advice to the Fund with respect to the
desirability of the Fund's investing in, purchasing or selling securities. The
Adviser and Sub-Adviser may from time to time receive statistical or other
similar factual information, and information regarding general economic factors
and trends, from the John Hancock Mutual Life Insurance Company and its
affiliates.
Under the terms of the investment management contract with the Company,
the Adviser provides the Fund with office space, equipment, and the necessary
executive, clerical and secretarial personnel for the administration of the
affairs of the Fund. The Adviser pays the compensation and expenses of
officers and employees of the Fund, and directors of the Company affiliated
with the Adviser, the office expenses of the Fund, including those of the
Company's Treasurer's and Secretary's offices and other expenses incurred by
the Adviser in connection with the performance of its duties. All expenses
which are not specifically paid by the Adviser and which are incurred in the
operation of the Fund (including fees of Directors of the Company who
16
<PAGE> 149
are not "interested persons," as such term is defined in the Investment Company
Act but excluding certain distribution-related activities required to be paid
by the Adviser or John Hancock Funds) and the continuous public offering of the
shares of the Fund are borne by the Fund. Subject to conditions set forth in a
private letter ruling that the Fund has received from the Internal Revenue
Service relating to its multiple-class structure, class expenses properly
allocable to any of Class A or Class B shares will be borne exclusively by such
class of shares.
As discussed in the Prospectus and as provided by the investment
management contract, the Fund pays the Adviser a fee computed daily and payable
monthly, at an annual rate of 1% of the value of the net assets of the Fund up
to $100 million, and 3/4 of 1% of the value of the net assets over $100
million, as compensation for the services rendered by the Adviser. Effective
January 1, 1995, the Adviser began waiving a portion of the management fee
amounting to 0.15% of the average daily net asset value of the first
$100,000,000 of the Fund. In addition to the management fee, the Adviser
receives an annual administration fee of $100,000. The annual rate of
compensation is higher than the rate paid by most registered investment
companies, but is believed to be comparable to the fees paid by funds with
comparable objectives. The Adviser, not the Fund, pays the Sub-Adviser a
monthly fee as described in the Prospectus. For the years ended December 31,
1994, 1993 and 1992, the Adviser received management fees of $522,041, $361,474
and $253,876 ($307,838 less the $53,962 expense limitation), respectively and
administration fees of $100,000 from the Fund for each year. Subsequent to
becoming the Fund's investment adviser on December 6, 1991, the Adviser
received management and administration fees for 1991 of $21,251 and $6,849,
respectively. AFA, the Fund's investment adviser until December 6, 1991,
received management fees totaling $305,212 for 1991. Management fees paid to
AFA were calculated at the same rates, and in the same manner, as they are
currently calculated under the Adviser's investment management contract.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, for any fiscal year are in excess of any
limitation imposed by a state where the shares of the Fund are registered for
sale, the fee payable to the Adviser will be reduced to the extent required by
such law and the Adviser will make any additional arrangements that the Adviser
is required by law to make. Currently, the most restrictive limit applicable
to the Fund is 2.5% of the first $30,000,000 of the Fund's average daily net
asset value, 2% of the next $70,000,000 of such assets and 1.5% of the
remaining average daily net asset value. Pursuant to the investment management
contract and sub-advisory contract, the Adviser and Sub-Adviser are not 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 their respective contract relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Adviser or Sub-Adviser in the performance of their duties
or from their reckless disregard of the obligations and duties under the
applicable contract.
The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and currently has more than $13 billion in
assets under management in its capacity as investment adviser to the Fund and
other mutual funds and publicly traded investment companies in the John Hancock
group of funds, having a combined total of over 1,060,000 shareholders. The
Adviser is an affiliate of John Hancock Mutual Life Insurance Company (the
"Life Insurance Company"), one of the most recognized and respected financial
institutions in the nation. With total assets under management of $80 billion,
the Life Insurance Company is one of
17
<PAGE> 150
the 10 largest life insurance companies in the United States, and carries
Standard & Poor's and A.M. Best's highest ratings. Founded in 1862, John
Hancock has been serving clients for over 130 years.
The Sub-Adviser, AFA, 1415 Kellum Place, Suite 205, Garden City, New
York, 11530, was incorporated under the laws of New York in 1978. The
Sub-Adviser, subject to the supervision of the Adviser, manages the Fund's
investments. AFA also provides investment advisory and management services to
individual and institutional clients.
Pursuant to the sub-advisory contract, AFA provides day-to-day portfolio
management of the Fund. AFA furnishes the Adviser and the Fund with investment
advice and recommendations consistent with the investment policies, objectives
and restrictions of the Fund. AFA pays its own costs of maintaining staff and
personnel necessary for it to perform its obligations under the sub-advisory
contract, expenses of its office rent, telephone, telecommunications and other
facilities required by it to perform services and any other expenses, including
legal, audit and professional fees and expenses, incurred by it in connection
with the performance of its duties under the sub-advisory contract.
Each of the investment management and sub-advisory contracts has an
initial two-year term commencing upon the close of business on December 6,
1991, and thereafter continues in effect from year to year if approved annually
by a vote of a majority of the Directors who are not interested persons of one
of the parties to the contract ("Independent Directors"), cast in person at a
meeting called for the purpose of voting on such approval, and by either the
Board of Directors or the holders of a "majority" of the Fund's outstanding
voting securities as defined in the 1940 Act. Each of the contracts
automatically terminates upon assignment. Each contract may be terminated
without penalty on 60 days' notice at the option of either party to the
respective contract or by vote of a majority of the outstanding voting
securities of the Fund. The sub-advisory contract will terminate upon
termination of the Adviser's investment management contract.
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 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 next determined plus the applicable sales charge. In connection with the
sale of Class A and Class B shares, John Hancock Funds and Selling Brokers
receive compensation from a sales charge imposed, in the case of Class A
shares, at the time of sale or, in the case of Class B shares, on a deferred
basis in connection with the sale of shares of the Fund. The sales charges are
discussed further in the Fund's Class A and Class B Prospectus.
The Fund's Directors have adopted Distribution Plans with respect to
Class A and Class B shares (together, the "Plans") pursuant to Rule 12b-1 under
the Investment Company Act. Under the Class A and Class B Plans, the Fund will
pay distribution and service fees at an aggregate annual rate of up to 0.30%
and 1.00%, respectively, of the Fund's average daily net assets.
18
<PAGE> 151
However, the service fee will not exceed 0.25% of the Fund's average daily net
assets attributable to each class of shares. The distribution fees reimburse
John Hancock Funds for its distribution costs incurred in the promotion of
sales of Fund shares, and the service fees compensate Selling Brokers for
providing personal and account maintenance services to shareholders. In the
event that John Hancock Funds is not fully reimbursed for expenses incurred by
it under the Class B Plan in any fiscal year, John Hancock Funds may carry
these expenses forward, provided however, that the Directors may terminate the
Class B Plan and thus the Fund's obligation to make further payments at any
time. Accordingly, the Fund does not treat unreimbursed expenses relating to
the Class B shares as a liability of the Fund. Both Plans were approved by a
majority of the Directors, including a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plans (the "Independent Directors"), by votes
cast in person at meetings called for the purpose of voting on such Plans.
Pursuant to the Plans, at least quarterly, John Hancock Funds provides
the Fund with a written report of the amounts expended under the Plans and the
purpose for which such expenditures were made. The Directors review such
reports on a quarterly basis.
During the fiscal year ended December 31, 1994 the Funds paid Investor
Services the following amounts of expenses with respect to the Class A shares
and Class B shares of each of the Funds:
Expense Items
<TABLE>
<CAPTION>
Printing and
Mailing of
Prospectuses Compensation Interest,
to to Expenses of Carrying or
New Selling John Hancock Other Finance
Advertising Shareholders Brokers Funds Charges
----------- ------------ ------------ ------------ -------------
Global Technology Fund
----------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $24,105 $6,108 $69,411 $44,011 $0
Class B Shares $2,074 $91 $36,468 $4,041 $584
</TABLE>
Each of the Plans provides that it will continue in effect only so long
as its continuance is approved at least annually by a majority of both the
Directors and the Independent Directors. Each of the Plans provides that it
may be terminated without penalty (a) by vote of a majority of the Independent
Directors, (b) by a majority of the Fund's outstanding shares of the applicable
class upon 60 days' written notice to John Hancock Funds, and (c) automatically
in the event of assignment. Each of the Plans further provides that it may not
be amended to increase the maximum amount of the fees for the services
described therein without the approval of a majority of the outstanding shares
of the class of the Fund which has voting rights with respect to the Plan. And
finally, each of the Plans provides that no material amendment to the Plan
will, in any event, be effective unless it is approved by a vote of a majority
of both the Directors and the Independent Directors of the Fund. The holders
of Class A shares and Class B shares have
19
<PAGE> 152
exclusive voting rights with respect to the Plan applicable to their respective
class of shares. In adopting the Plans the Directors concluded that, in their
judgment, there is a reasonable likelihood that each Plan will benefit the
holders of the applicable class of shares of the Fund.
When the Fund seeks an Independent Director to fill a vacancy or as a
nominee for election by shareholders, the selection or nomination of the
Independent Director is, under resolutions adopted by the Directors
contemporaneously with their adoption of the Plans, committed to the discretion
of the Committee on Administration of the Directors. The members of the
Committee on Administration are all Independent Directors and are identified in
this Statement of Additional Information under the heading "Those Responsible
for Management."
The Fund's distribution contract, discussed above, continues in effect
from year to year if approved annually by the vote of a majority of the
Independent Directors, cast in person at a meeting called for the purpose of
voting on such approval, and by either the Directors or the holders of a
majority of the outstanding shares of each class of the Fund which has voting
rights with respect to the contract. The contract automatically terminates
upon assignment and may be terminated without penalty on 60 days' notice at the
option of either party to the contract or by vote of a majority of the
outstanding shares of each class of the Fund which has voting rights with
respect to the contract.
NET ASSET VALUE
For purposes of calculating the net asset value ("NAV") of a Fund's
shares, the following procedures are utilized wherever applicable.
Debt investment securities are valued on the basis of valuations
furnished by a principal market maker or a pricing service, both of which
generally utilize electronic data processing techniques to determine valuations
for normal institutional size trading units of debt securities without
exclusive reliance upon quoted prices.
Equity securities traded on a principal exchange or NASDAQ National
Market Issues are generally valued at last sale price on the day of valuation.
Securities in the aforementioned category for which no sales are reported and
other securities traded over-the-counter are generally valued at the last
available bid price.
Short-term debt investments which have a remaining maturity of 60 days
or less are generally valued at amortized cost which approximates market value.
If market quotations are not readily available or if in the opinion of the
Adviser any quotation or price is not representative of true market value, the
fair value of the security may be determined in good faith in accordance with
procedures approved by the Trustees.
Any assets or liabilities expressed in terms of foreign currencies are
translated into U.S. dollars by the custodian bank based on London currency
exchange quotations as of 5:00 p.m., London time (12:00 noon, New York time) on
the date of any determination of a Fund's NAV.
A Fund will not price its securities on the following national holidays:
New Year's Day; Presidents' Day; Good Friday; Memorial Day; Independence Day;
Labor Day; Thanksgiving Day;
20
<PAGE> 153
and Christmas Day. On any day an international market is closed and the New
York Stock Exchange is open, any foreign securities will be valued at the prior
day's close with the current day's exchange rate. Trading of foreign
securities may take place on Saturdays and U.S. business holidays on which a
Fund's NAV is not calculated. Consequently, a Fund's portfolio securities may
trade and the NAV of the Fund's redeemable securities may be significantly
affected on days when a shareholder has no access to the Fund.
INITIAL SALES CHARGE ON CLASS A SHARES
The sales charges applicable to purchases of Class A shares of the Fund
are described in the Fund's Class A and Class B Prospectus. Methods of
obtaining a reduced sales charge referred to generally in the Class A and Class
B Prospectus are described in detail below. In calculating the sales charge
applicable to current purchases of Class A shares, the investor is entitled to
cumulate current purchases with the greater of the current value (at offering
price) of the Class A shares of the Fund, or if Investor Services is notified
by the investor's dealer or the investor at the time of the purchase, the cost
of the Class A shares owned.
Combined Purchases. In calculating the sales charge applicable to
purchases of Class A shares made at one time, the purchases will be combined if
made by (a) an individual, his spouse and their children under the age of 21,
purchasing securities for his or their own account, (b) a trustee or other
fiduciary purchasing for a single trust, estate or fiduciary account, and (c)
certain groups of four or more individuals making use of salary deductions or
similar group methods of payment whose funds are combined for the purchase of
mutual fund shares. Further information about combined purchases, including
certain restrictions on combined group purchases, is available from a Investor
Services or Selling Broker's representative.
Without Sales Charges. As described in the Class A and Class B
Prospectus, Class A shares of the Fund may be sold without a sales charge to
persons described in the Prospectus.
Accumulation Privilege. Investors (including investors combining
purchases) who are already Class A shareholders may also obtain the benefit of
a reduced sales charge by taking into account not only the amount then being
invested but also the purchase price of the Class A shares already held by such
person.
Combination Privilege. Reduced sales charges (according to the schedule
set forth in the Class A and Class B Prospectus) also are available to an
investor based on the aggregate amount of his concurrent and prior investments
in Class A shares of the Fund and shares of all other John Hancock funds which
carry a sales charge.
Letter of Intention. The reduced sales charges are also applicable to
investments made over a specified period pursuant to a Letter of Intention
("LOI"), which should be read carefully prior to its execution by an investor.
The Fund offers two options regarding the specified period for making
investments under the LOI. All investors have the option of making their
investments over a specified period of (13) months. Investors who are using
the Fund as a funding medium for a qualified retirement plan, however, may opt
to make the necessary investments called for by the LOI over a (48) month
period. These qualified retirement plans include IRA's, SEP, SARSEP, TSA,
401(k), 403(b) and 457 plans. Such an investment (including accumulations and
21
<PAGE> 154
combinations) must aggregate $100,000 or more invested during the specified
period from the date of the LOI or from a date within (90) days prior thereto,
upon written request to Investor Services. The sales charge applicable to all
amounts invested under the LOI is computed as if the aggregate amount intended
to be invested had been invested immediately. If such aggregate amount is not
actually invested, the difference in the sales charge actually paid and the
sales load payable had the LOI not been in effect is due from the investor.
However, for the purchases actually made within the specified period, the sales
charge applicable will not be higher than that which would have applied
(including accumulations and combinations) had the LOI been for the amount
actually invested.
The LOI authorizes Investor Services to hold in escrow sufficient Class
A shares (approximately 5% of the aggregate) to make up any difference in sales
charges on the amount intended to be invested and the amount actually invested,
until such investment is completed within the specified period, at which time
the escrow shares will be released. If the total investment specified in the
LOI is not completed, the Class A shares held in escrow may be redeemed and the
proceeds used as required to pay such sales charge as may be due. By signing
the Letter of Intention, the investor authorizes Investor Services to act as
his attorney-in-fact to redeem any escrowed shares and adjust the sales charge,
if necessary. A LOI does not constitute a binding commitment by an investor to
purchase, or by the Fund to sell, any additional Class A shares and may be
terminated at any time.
DEFERRED SALES CHARGE ON CLASS B SHARES
Investments in Class B shares are purchased at net asset value per share
without the imposition of an initial sales charge so that the Fund will receive
the full amount of the purchase payment.
Contingent Deferred Sales Charge. Class B shares which are redeemed
within six years of purchase will be subject to a contingent deferred sales
charge ("CDSC") at the rates set forth in the Class A and Class B Prospectus as
a percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the current market value or the
original purchase cost of the Class B shares being redeemed. Accordingly, no
CDSC will be imposed on increases in account value above the initial purchase
prices, including Class B shares derived from reinvestment of dividends or
capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of
years from the time of payment for the purchase of Class B shares until the
time of redemption of such shares. Solely for purposes of determining the
number of years from the time of any payment for the purchases of shares, all
payments during a month will be aggregated and deemed to have been made on the
last day of the month.
Proceeds from the CDSC are paid to John Hancock Funds and are used in
whole or in part by John Hancock Funds to defray its expenses related to
providing distribution-related services to the Fund in connection with the sale
of the Class B shares, such as the payment of compensation to select Selling
Brokers for selling Class B shares. The combination of the CDSC and the
22
<PAGE> 155
distribution and service fees enables the Fund to sell the Class B shares
without a sales charge being deducted at the time of the purchase. See the
Class A and Class B Prospectus for additional information regarding the CDSC.
SPECIAL REDEMPTIONS
Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed by the Directors. When the shareholder were to sell
portfolio securities received in this fashion he would incur a brokerage
charge. Any such securities would be valued for the purposes of making such
payment at the same value as used in determining net asset value. The Fund
has, however, elected to be governed by Rule 18f-1 under the Investment Company
Act. Under that rule, the Fund must redeem its shares for cash except to the
extent that the redemption payments to any one shareholder during any 90-day
period would exceed the lesser of $250,000 or 1% of the Fund's net asset value
at the beginning of such period.
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege. As described more fully in the Class A and Class B
Prospectus, the Fund permits exchanges of shares of any class of the Fund for
shares of the same class in any other John Hancock fund offering that class.
Systematic Withdrawal Plan. As described briefly in the Class A and
Class B Prospectus, the Fund permits the establishment of a Systematic
Withdrawal Plan. Payments under this plan represent proceeds arising from the
redemption of Fund shares. Since the redemption price of the shares of the
Fund may be more or less than the shareholder's cost, depending upon the market
value of the securities owned by the Fund at the time of redemption, the
distribution of cash pursuant to this plan may result in realization of gain or
loss for purposes of Federal, state and local income taxes. The maintenance of
a Systematic Withdrawal Plan concurrently with purchases of additional Class A
or Class B shares of the Fund could be disadvantageous to a shareholder because
of the initial sales charge payable on such purchases of Class A shares and the
CDSC imposed on redemptions of Class B shares and because redemptions are
taxable events.
Therefore, a shareholder should not purchase Class A and Class B shares
at the same time as a Systematic Withdrawal Plan is in effect. The Fund
reserves the right to modify or discontinue the Systematic Withdrawal Plan of
any shareholder on 30 days' prior written notice to such shareholder, or to
discontinue the availability of such plan in the future. The shareholder may
terminate the plan at any time by giving proper notice to Investor Services.
Monthly Automatic Accumulation Program ("MAAP"). This program is
explained fully in the Fund's Class A and Class B Prospectus and Account
Privileges Application. The program, as it relates to automatic investing, is
subject to the following conditions:
The investments will be drawn on or about the day of the month indicated.
The privilege of making investments through the Automatic Investing
Program may be revoked by Investor Services without prior notice if any
investment is not honored by the
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Shareholder's bank. The bank shall be under no obligation to notify the
shareholder as to the non-payment of any check.
The Program may be discontinued by the shareholder either by calling
Investor Services or upon notice to Investor Services which is received at
least five (5) business days prior to the processing date of any investment.
Reinvestment Privilege. A shareholder who has redeemed Fund shares
may, within 120 days after the date of redemption, reinvest without payment of
a sales charge any part of the redemption proceeds in shares of the same class
of the Fund or in any of the other John Hancock mutual funds, subject to the
minimum investment limit in that fund. The proceeds from the redemption of
Class A shares may be reinvested at net asset value without paying a sales
charge in Class A shares of the Fund or in Class A shares of any of the other
John Hancock mutual funds. If a CDSC was paid upon a redemption, a shareholder
may reinvest the proceeds from such redemption at net asset value in additional
shares of the class from which the redemption was made. The shareholder's
account will be credited with the amount of any CDSC charged upon the prior
redemption and the new shares will continue to be subject to the CDSC. The
holding period of the shares acquired through reinvestment will, for purposes
of computing the CDSC payable upon a subsequent redemption, include the holding
period of the redeemed shares. The Fund may modify or terminate the
reinvestment privilege at any time.
A redemption or exchange of Fund shares is a taxable transaction for
Federal income tax purposes even if the reinvestment privilege is exercised,
and any gain or loss realized by a shareholder on the redemption or other
disposition of Fund shares will be treated as described under the heading "Tax
Status."
TAX STATUS
Each series of the Company, including the Fund, is treated as a separate
entity for accounting and tax purposes. The Fund has qualified and 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) 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 from the Fund's current or accumulated earnings and
profits ("E&P"), as computed for Federal income tax purposes, will be taxable
as described in the Fund's Prospectus, whether taken in shares or in cash.
Distributions, if any, in excess of E&P will constitute a return of capital,
which will first reduce an investor's tax basis in Fund shares and thereafter
(after such basis is reduced to zero) will generally give rise to capital
gains. Shareholders electing to receive
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distributions in the form of additional shares will have a cost basis for
Federal income tax purposes in each share so received equal to the amount of
cash that they would have received had they elected to receive the
distributions in cash divided by the number of shares received.
Options written by the Fund may cause the Fund to recognize gains or
losses from marking-to-market at the end of its taxable year even though such
options may not have lapsed, been closed out, or exercised and may affect the
characterization as long-term or short-term of some capital gains and losses
realized by the Fund. Losses on certain options and/or offsetting portfolio
positions may also be deferred rather than being taken into account currently
in calculating the Fund's taxable income under certain straddle rules, which
may also affect the characterization of capital gains or losses as long-term or
short-term. These transactions may therefore affect the amount, timing and
character of the Fund's distributions to shareholders. Additionally, written
covered call options on portfolio stocks could reduce the portion of the Fund's
dividend income that potentially qualifies for the dividends-received
deduction for corporate shareholders by suspending the Fund's holding period
for such stocks, unless these options satisfy the requirements for treatment as
"qualified covered call options." The Fund will take into account the special
tax rules applicable to options, including the straddle rules, in order to
minimize any potential adverse tax consequences.
Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency- denominated debt
securities, forward foreign currency contracts, foreign currencies, or payables
or receivables denominated in a foreign currency are subject to Section 988 of
the Code, which generally causes such gains and losses to be treated as
ordinary income and losses and may affect the amount, timing and character of
distributions to shareholders. Any such transactions that are not directly
related to the Fund's investments in stock or securities may increase the
amount of gain it is deemed to recognize from the sale of certain investments
held for less than 3 months, which gain is limited under the Code to less than
30% of its annual gross income, and may under future Treasury regulations
produce income not among the types of "qualifying income" from which the Fund
must derive at least 90% of its annual gross income. If the net foreign
exchange loss for a year were to exceed the Fund's investment company taxable
income, i.e., all of the Fund's net income other than any excess of net
long-term capital gain over net short-term capital loss, (computed without
regard to such loss, but after considering the post-October loss regulations)
the resulting overall ordinary loss for such year would not be deductible by
the Fund or its shareholders in future years.
If the Fund acquires stock in certain non-U.S. corporations that receive
at least 75% of their annual gross income from passive sources (such as
interest, dividends, rents, royalties or capital gain) or hold at least 50% of
their assets in investments producing such passive income ("passive foreign
investment companies"), the Fund could be subject to Federal income tax and
additional interest charges on "excess distributions" received from such
companies or gain from the sale of stock in such companies, even if all income
or gain actually received by the Fund is timely distributed to its
shareholders. The Fund would not be able to pass through to its shareholders
any credit or deduction for such a tax. Certain elections may, if available,
ameliorate these adverse tax consequences, but any such election could require
the Fund to recognize taxable income or gain without the concurrent receipt of
cash. The Fund may limit and/or manage its holdings in passive foreign
investment companies to minimize its tax liability or maximize its return from
these investments.
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The amount of net realized capital gains, if any, realized in any given
year will result from options transactions and sales of securities made with a
view to the maintenance of a portfolio believed by the Fund's management to be
most likely to attain the Fund's objective. Such sales, and any resulting
gains or losses, may therefore vary considerably from year to year. At the
time of an investor's purchase of Fund shares, a portion of the purchase price
often attributable to is realized or unrealized appreciation in the Fund's
portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions from such appreciation or income may be taxable to
such investor even if the net asset value of the investor's shares is, as a
result of the distributions, reduced below the investor's cost for such shares
and the distributions in reality represent a return of a portion of the
purchase price.
Upon a redemption of shares (including by exercise of the exchange
privilege) a shareholder will ordinarily realize a taxable gain or loss
depending upon his basis in his shares. Such gain or loss will be treated as
capital gain or loss if the shares are capital assets in the shareholder's
hands and will be long-term or short-term, depending upon the shareholder's tax
holding period for the shares. A sales charge paid in purchasing Class A
shares of the Fund cannot be taken into account for purposes of determining
gain or loss on the redemption or exchange of such shares within 90 days after
their purchase to the extent Class A shares of the Fund or another John Hancock
fund are subsequently acquired without payment of a sales charge pursuant to
the reinvestment or exchange privilege. Such disregarded charge will result in
an increase in the shareholder's tax basis in the shares subsequently acquired.
Also, any loss realized on a redemption or exchange may be disallowed to the
extent the shares disposed of are replaced with other shares of the Fund within
a period of 61 days beginning 30 days before and ending 30 days after the
shares are disposed of, such as pursuant to the Dividend Reinvestment Plan. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized upon the redemption of shares with a tax
holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.
Although the Fund's present intention is to distribute all net capital
gains, if any, the Fund reserves the right to retain and reinvest all or any
portion of the excess, as computed for Federal income tax purposes, of net
long-term capital gain over net short-term capital loss in any year. The Fund
will not in any event distribute net long-term capital gain realized in any
year to the extent that a capital loss is carried forward from prior years
against such gain. To the extent such excess was retained and not exhausted by
the carry forward of prior years' capital losses, it would be subject to
Federal income tax in the hands of the Fund. Each shareholder would be treated
for Federal income tax purposes as if the Fund had distributed to him on the
last day of its taxable year his pro rata share of such excess, and he had paid
his pro rata share of the taxes paid by the Fund and reinvested the remainder
in the Fund. Accordingly, each shareholder would (a) include his pro rata
share of such excess as long-term capital gain in his return for his taxable
year in which the last day of the Fund's taxable year falls, (b) be entitled
either to a tax credit on his return for, or to a refund of, his pro rata share
of the taxes paid by the Fund, and (c) be entitled to increase the adjusted tax
basis for his Fund shares by the difference between his pro rata share of this
excess and the pro rata share of these taxes.
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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 net
capital gains are offset by such losses, they would not result in Federal
income tax liability to the Fund and as noted above would not be distributed as
such to shareholders. Presently, there are no realized capital loss carry
forwards available to offset future net capital gains.
If the Fund invests in certain PIKs, zero coupon securities or certain
increasing rate securities (and, in general, any other securities with original
issue discount or with market discount if the Fund elects to include market
discount in income currently,), the Fund will be required to accrue income on
such investments prior to the receipt of the corresponding cash payments.
However, the Fund must distribute, at least annually, all or substantially all
of its net income, including such accrued income, to shareholders to qualify as
a regulated investment company under the Code and avoid Federal income and
excise taxes. Therefore, the Fund may have to dispose of its portfolio
securities under disadvantageous circumstances to generate cash, or may have to
leverage itself by borrowing the cash, to satisfy distribution requirements.
Investment in debt obligations that are at risk of or in default
presents special tax issues for the Fund. Tax rules are not entirely clear
about issues such as when the Fund may cease to accrue interest, original issue
discount, or market discount, when and to what extent deductions may be taken
for bad debts or worthless securities, how payments received on obligations in
default should be allocated between principal and income, and whether exchanges
of debt obligations in a workout context are taxable. These and other issues
will be addressed by the Fund, in the event it acquires or holds any such
obligations, in order to reduce the risk of distributing insufficient income to
preserve its status as a regulated investment company and seek to avoid
becoming subject to Federal income or excise tax.
For purposes of the dividends received deduction available to
corporations, dividends received by the Fund, if any, from U.S. domestic
corporations in respect of the stock of such corporations held by the Fund, for
U.S. Federal income tax purposes, for at least 46 days (91 days in the case of
certain preferred stock) and distributed and designated by the Fund may be
treated as qualifying dividends. Corporate shareholders must meet the minimum
holding period requirement stated above (46 or 91 days) with respect to their
shares of the Fund in order to qualify for the deduction and, if they borrow to
acquire such shares, may be denied a portion of the dividends received
deduction. The entire qualifying dividend, including the otherwise deductible
amount, will be included in determining the excess (if any) of a corporate
shareholder's adjusted current earnings over its alternative minimum taxable
income, which may increase its alternative minimum tax liability.
Additionally, any corporate shareholder should consult its tax adviser
regarding the possibility that its basis in its shares may be reduced, for
Federal income tax purposes, by reason of "extraordinary dividends" received
with respect to the shares, for the purpose of computing its gain or loss on
redemption or other disposition of the shares.
The Fund may be subject to withholding and other taxes imposed by
foreign countries with respect to the Fund's investments in certain foreign
securities. Tax conventions between certain countries and the U.S. may reduce
or eliminate such taxes. Investors may be entitled to claim U.S. foreign tax
credits or deductions with respect to such taxes, subject to certain provisions
and limitations contained in the Code. Specifically, if more than 50% of the
value of Fund's total
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assets at the close of any taxable year consists of stock or 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 by them, and (ii) treat such respective pro rata
portions as foreign income taxes paid by them.
If the Fund makes this election, shareholders 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 income 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 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.
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 foregoing discussion relates solely to U.S. Federal income tax law
as 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
this 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 distributions, and
ownership of or gains realized on the redemption (including an exchange) of
Fund shares may also be subject to state and local taxes. A state income (and
possibly local income and/or intangible property) tax exemption is generally
available to the extent, if any, 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. Shareholders should consult their own tax advisers
as to the Federal, state or local tax consequences of, and receipt of
distributions from, ownership of shares of the Fund in their particular
circumstances.
Non-U.S. investors not engaged in a 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 and, unless an effective IRS Form W-8 or
authorized substitute is on file, to 31% backup withholding on certain other
payments 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.
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DESCRIPTION OF THE FUND'S SHARES
The Company's Articles of Incorporation permit the Board of Directors to
issue 200 million shares of capital stock of the aggregate par value of $61
million. The Fund consists of 100 million shares, $0.20 par value which
consists of 50 million shares for each of Class A and Class B. Each share
represents an equal proportionate interest in the Fund with each other share.
Upon liquidation of the Fund, holders are entitled to share pro rata in the net
assets of the Fund available for distribution to such holders. Shares have no
preemptive or conversion rights. Shares are fully paid and non assessable by
the Fund and are freely transferable. The shareholders of the Company are
entitled to a full vote for each full share held and to a fractional vote for
fractional shares on all matters on which they are entitled to vote.
The Board of Directors currently have authorized the issuance of two
series of shares: John Hancock National Aviation & Technology Fund and the
Fund. The Board of Directors may authorize the creation of additional series
of shares with such preferences, privileges, limitations and voting and
dividend rights as the Board of Directors may determine. The proceeds of sales
of shares of any additional series would be invested in separate, independently
managed portfolios with distinct investment objectives, policies and
restrictions, and share purchase, redemption and net asset valuation
procedures. All consideration received by the Company for sales of shares of
any additional series, and all assets in which such consideration is invested,
would belong to that series (subject only to the rights of creditors of such
series) and would be subject to the liabilities related thereto. Pursuant to
the 1940 Act, shareholders of any additional series would normally have to
approve the adoption of any management contract relating to such series and of
any changes in the investment policies related thereto.
The shares of each class represent an equal proportionate interest in
the assets attributable to that class of the Fund. The holders of Class A and
Class B shares each have certain exclusive voting rights on matters relating to
their respective Rule 12b-1 distribution plans. The different classes of the
Fund may bear different expenses relating to the cost of holding shareholder
meetings necessitated by the exclusive voting rights of any class of shares.
Shares of the Fund may be exchanged only for shares of the same class in
another fund sponsored by the Adviser (and for the shares of John Hancock Cash
Management Fund, a money market fund.) Dividends paid by the Fund, if any,
with respect to each class of shares will be calculated in the same manner at
the same time on the same day and will be in the same amount, except that (i)
Class B shares will pay higher distribution and fees than Class A shares and
(ii) each of Class A and Class B shares will bear any other class expenses
properly allocable to such class of shares, subject to conditions set forth in
a private letter ruling that the Fund has received from the Internal Revenue
Service relating to its multiple-class structure. Similarly, the net asset
value per share may vary depending on the class of shares purchased.
The Board of Directors has the power to alter the number and the terms
of office of the Directors, to lengthen their own terms, or to make their terms
of unlimited duration, subject to certain removal procedures, and to appoint
their own successors; provided that at least a majority of Directors has been
elected by the shareholders. The voting rights of shareholders are not
cumulative so that holders of more than 50% of the shares voting can, if they
choose, elect all Directors being selected while the holders of the remaining
shares would be unable to elect any
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Directors. It is the intention of the Company not to hold annual meetings of
shareholders. The Directors may call special meetings of shareholders for
action by shareholder vote as may be required by either the Investment Company
Act or the Company's Charter. At any meeting called for the purpose of
removing from office any director, the shareholders may, by vote of the holders
of a majority of the outstanding shares entitled to vote, remove from office
any director and elect a successor, unless the number of directors constituting
the whole board is accordingly decreased.
CALCULATION OF PERFORMANCE
The average annual total return of the Class A shares of the Fund for
the 1 year, 5 year and 10 year periods ended December 31, 1994 was 4.13%,
9.54%, and 9.69%, respectively.
The Fund's total return is computed by finding the average annual
compounded rate of return over the 1 year, 5 year and 10 year periods that
would equate the initial amount invested to the ending redeemable value
according to the following formula:
n ____
T = V ERV / P - 1
Where:
P = a hypothetical initial investment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 investment made at the
beginning of the 1, 5 and 10 year periods.
This calculation assumes the maximum sales charge of 5.00% is included
in the initial investment or the CDSC is applied at the end of the period and
also assumes that all dividends and distributions are reinvested at net asset
value on the reinvestment dates during the period. In addition to average
annual total returns, the Fund may quote unaveraged or cumulative total returns
reflecting the change in value of an investment over a stated period. The
"distribution rate" is determined by annualizing the result of dividing the
declared dividends of the Fund during the period stated by the maximum offering
price or net asset value at the end of the period. In addition to average
annual total returns, the fund may quote unaveraged or cumulative total returns
reflecting the change in value of an investment over a stated period.
Cumulative total returns may be quoted as a percentage or as a dollar amount,
and may be calculated for a single investment, a series of investments, and/or
a series of redemptions, over any time period. Total returns may be quoted
with or without taking the Fund's 5.00% sales charge on Class A shares or the
CDSC on Class B shares into account. Excluding the Fund's sales charge on
Class A shares and the CDSC on Class B shares from a total return calculation
produces a higher return figure.
From time to time, in reports and promotional literature, the Fund's
total return will be ranked or compared to stock indices and indices of mutual
funds. Such indices may include
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Lipper Analytical Services, Inc.'s "Lipper-Mutual Performance Analysis,"
monthly publications which track net assets and total return on equity mutual
funds in the United States. Ibottson and Associates, CDA Weisenberger and F.C.
Towers are also used for comparison purposes, as well as the Russell and
Wilshire Indices.
Performance rankings and ratings reported periodically in national
financial publications such as Money magazine, Forbes, Business Week, The Wall
Street Journal, Micropal, Inc., Morning Star Inc., Stanger's and Barron's,
etc., will also be utilized.
The performance of the Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representations of performance of the
Fund for any period in the future. The performance of the Fund is a function
of many factors including its earnings, expenses and number of outstanding
shares. Fluctuating market conditions; purchases, sales and maturities of
portfolio securities; sales and redemptions of shares of capital stock; and
changes in operating expenses are all examples of items that can increase or
decrease the Fund's performance.
BROKERAGE ALLOCATION
Decisions concerning the purchase and sale of portfolio securities and
the allocation of brokerage commissions are made by Adviser pursuant to
recommendations made by its investment committee, which consists of officers
and directors of the Adviser and officers and Directors of the Company who are
interested persons of the Company, and by the Sub-Adviser. Orders for
purchases and sales of securities are placed in a manner, which, in the opinion
of the Adviser, 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 maker reflect a "spread." 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 National Association of
Securities Dealers, Inc. and other policies as the Directors may determine, the
Adviser and the Sub-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
Adviser and Sub-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 Adviser and Sub-Adviser. The
receipt of research information is not expected to reduce significantly the
expenses of the Adviser and Sub-Adviser. The research information and
statistical assistance furnished by brokers
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and dealers may benefit the John Hancock Mutual Life Insurance Company or other
advisory clients of the Adviser, and, conversely, brokerage commissions and
spreads paid by other advisory clients of the Adviser may result in research
information and statistical assistance beneficial to the Fund. Similarly,
research information and assistance provided to the Sub-Adviser by brokers and
dealers may benefit other advisory clients or affiliates of the Sub-Adviser.
The Fund will make no commitment to allocate portfolio transactions upon any
prescribed basis. While the Adviser, together with the Sub-Adviser, will be
primarily responsible for the allocation of the Fund's brokerage business, the
policies and practices of the Adviser in this regard must be consistent with
the foregoing and will at all times be subject to review by the Board of
Directors.
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 Board of Directors
that the price is reasonable in light of the services provided and policies
that the Board of Directors may adopt from time to time. During the fiscal
year ended December 31, 1994, the Fund directed commissions in the amount of
$10,277 to compensate brokers for research services such as industry, economic
and company reviews and evaluations of securities.
The Adviser's indirect parent, Life Insurance Company, is the indirect
sole shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, two of which, Tucker Anthony Incorporated, John Hancock
Distributors, Inc. and Sutro & Company, Inc. 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 Affiliated Brokers. During the year
ended December 31, 1994, the Fund did not execute any portfolio transactions
with Affiliated Brokers.
During 1992, 1993 and 1994, the Fund paid total brokerage commissions,
excluding spreads or commissions on principal transactions, of $37,280, $40,949
and $81,677, respectively. In 1991, the Fund paid $1,000 in brokerage
commissions to Noyes Partners Incorporated. Mr. Howard E. Buhse, a former
Director of the Company, was a stockholder of Noyes Partners Incorporated
during the relevant period.
TRANSFER AGENT SERVICES
John Hancock Investor Services Corporation, P.O. Box 9116, Boston, MA
02205-9116, a wholly-owned indirect subsidiary of the Life Insurance Company,
is the transfer and dividend paying agent for the Fund. Investor Services,
P.O. Box 9116, Boston, MA 02205- 9116, a wholly-owned indirect subsidiary of
the Life Insurance Company, is the transfer and dividend paying agent for the
Fund. The Fund pays Investor Services an annual fee for Class A of $16.00 per
shareholder account and for Class B shares of $18.50 plus out-of-pocket
expenses.
CUSTODY OF PORTFOLIO
Portfolio securities of the Fund are held by Investors Bank & Trust
Company, as custodian.
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INDEPENDENT AUDITORS
The independent auditors of the Fund are Price Waterhouse LLP, Boston,
Massachusetts 02110. Price Waterhouse audits and renders an opinion on the
Fund's annual financial statements and prepares the Fund's annual income tax
returns.
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APPENDIX A
DESCRIPTION OF BOND RATINGS*
Moody's Bond ratings
Bonds which are rated 'Aaa' are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
'gilt edge.' Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most likely to
impair the fundamentally strong position of such issues.
Bonds which are rated 'Aa' are judged to be of high quality by all
standards. Together with the 'Aaa' group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in 'Aaa' securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than in
'Aaa' securities .
Bonds which are rated 'A' possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Bonds which are rated 'Baa' are considered as medium grade obligations,
i.e., they are neither highly protected nor 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.
Bonds which are rated 'Ba' are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position, characterizes bonds in this class.
Bonds which are rated 'B' generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Bonds which are rated 'Caa' are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
_______________________
*As described by the rating companies themselves.
34
<PAGE> 167
Bonds which are rated 'Ca' represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
Standard & Poor's Bond ratings
AAA. This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA. Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A. Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB. Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB. Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B. Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.
CCC. Debt rated 'CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial, or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'CCC' rating.
CC. The rating 'CC' is typically applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
35
<PAGE> 168
Financial Statements
John Hancock Funds - Global Technology Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
- ---------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks (cost - $46,164,020)...................... $57,779,001
Rights and warrants (cost - $69,000).................... 71,250
Bonds (cost - $804,125)................................. 797,500
Joint repurchase agreement (cost - $2,951,000).......... 2,951,000
Corporate savings account............................... 7,899
-----------
61,606,650
Receivable for shares sold.............................. 41,962
Dividends receivable.................................... 17,200
Interest receivable..................................... 19,391
-----------
Total Assets........................ 61,685,203
---------------------------------------------------
LIABILITIES:
Payable for shares repurchased.......................... 48,915
Payable to John Hancock Advisers, Inc.
and affiliates - Note B............................... 66,496
Accounts payable and accrued expenses................... 52,490
-----------
Total Liabilities................... 167,901
---------------------------------------------------
NET ASSETS:
Capital paid-in......................................... 49,906,696
Net unrealized appreciation of investments.............. 11,610,606
-----------
Net Assets.......................... $61,517,302
===================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding _ 50 million shares authorized
with $0.20 per share par value, respectively)
Class A - $52,193,442/2,925,484......................... $ 17.84
=======================================================================
Class B - $9,323,860/527,263............................ $ 17.68
=======================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($17.84 x 105.26%)............................ $ 18.78
=======================================================================
</TABLE>
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
** Class B shares commenced operations on January 3, 1994.
THE STATEMENT OF ASSETS AND lIABILITIES IS THE FUND'S
BALANCE SHEET AND SHOWS THE VALUE OF WHAT THE FUND OWNS,
IS DUE AND OWES ON DECEMBER 31, 1994. YOU'LL ALSO FIND
THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER
SHARE AS OF THAT DATE.
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S
INVESTMENT INCOME EARNED AND EXPENSES INCURRED IN
OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES) FOR
THE PERIOD STATED.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended December 31, 1994
- --------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest.................................................. $ 283,388
Dividends (net of foreign withholding taxes of $20,500)... 193,642
----------
477,030
----------
Expenses:
Investment management fee - Note B...................... 522,041
Transfer agent fee - Note B
Class A............................................... 153,211
Class B**............................................. 14,708
Distribution/service fee - Note B
Class A............................................... 143,635
Class B**............................................. 43,258
Administration fee...................................... 100,000
Registration and filing fees............................ 53,452
Custodian fee........................................... 50,343
Auditing fee............................................ 27,000
Printing................................................ 25,537
Directors' fees......................................... 15,147
Miscellaneous........................................... 6,939
Legal fees.............................................. 4,612
----------
Total Expenses...................... 1,159,883
--------------------------------------------------
Net Investment Loss................. ( 682,853)
--------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments sold..................... 4,596,638
Net realized gain on options.............................. 139,495
Change in net unrealized appreciation/depreciation
of investments.......................................... ( 78,528)
----------
Net Realized and Unrealized
Gain on Investments................. 4,657,605
--------------------------------------------------
Net Increase in Net Assets
Resulting from Operations............ $3,974,752
==================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 169
Financial Statements
John Hancock Funds - Global Technology Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------
1994 1993
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss......................................... ($ 682,853) ($ 562,465)
Net realized gain on investments sold and options........... 4,736,133 5,253,292
Change in net unrealized appreciation/depreciation of
investments............................................... ( 78,528) 5,168,267
----------- -----------
Net Increase in Net Assets Resulting from Operations...... 3,974,752 9,859,094
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gain on investments and
options
Class A - ($1.2625 and $2.2029 per share, respectively)... ( 3,443,707) ( 4,686,441)
Class B** - ($1.2625 and none per share, respectively).... ( 614,018) ----
----------- -----------
Total Distributions to Shareholders..................... ( 4,057,725) ( 4,686,441)
----------- -----------
FROM FUND SHARE TRANSACTIONS - NET*........................... 19,850,814 4,482,712
----------- -----------
NET ASSETS:
Beginning of period......................................... 41,749,461 32,094,096
----------- -----------
End of period............................................... $61,517,302 $41,749,461
=========== ===========
*ANALYSIS OF FUND SHARE TRANSACTIONS:
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1993
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold.............................................. 1,628,280 $29,997,844 511,180 $ 8,883,674
Shares issued to shareholders in reinvestment of
distributions.......................................... 184,986 3,235,355 257,052 4,334,760
--------- ----------- ------- -----------
1,813,266 33,233,199 768,232 13,218,434
Less shares repurchased.................................. (1,279,970) ( 22,995,150) ( 524,177) ( 8,735,722)
--------- ----------- ------- -----------
Net increase 533,296 $10,238,049 244,055 $ 4,482,712
========= =========== ======= ===========
CLASS B**
Shares sold................................................ 563,553 $10,264,273
Shares issued to shareholders in reinvestment of
distributions............................................ 33,535 581,498
--------- -----------
597,088 10,845,771
Less shares repurchased.................................... ( 69,825) ( 1,233,006)
--------- -----------
Net increase............................................... 527,263 $ 9,612,765
========= ===========
</TABLE>
** Class B shares commenced operations on January 3, 1994.
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAVE CHANGED SINCE THE END OF THE PREVIOUS FISCAL PERIOD. THE
DIFFERENCE REFLECTS EARNINGS LESS EXPENSES, ANY INVESTMENT AND OPTION GAINS
AND LOSSES, DISTRIBUTIONS PAID TO SHAREHOLDERS, AND ANY INCREASE OR DECREASE
IN MONEY SHAREHOLDERS INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES THE
NUMBER OF FUND SHARES SOLD, REINVESTED AND REDEEMED, DURING THE LAST TWO
PERIODS, ALONG WITH THE CORRESPONDING DOLLAR VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 170
Financial Statements
John Hancock Funds - Global Technology Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
periods indicated, investment returns, key ratios and supplemental data are
as follows:
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
CLASS A 1994 1993 1992 +1991+ +1990+
--------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period.......................... $ 17.45 $ 14.94 $ 15.60 $ 12.44 $ 16.93
------- ------- ------- ------- -------
Net Investment Income (Loss).................................. ( 0.22)(a) ( 0.21) ( 0.15)(b) 0.05 ( 0.04)
Net Realized and Unrealized Gain (Loss) on Investments,
Options and Foreign Currency Transactions................. 1.87 4.92 1.00 4.11 ( 3.09)
------- ------ ------- ------- -------
Total from Investment Operations........................... 1.65 4.71 0.85 4.16 ( 3.13)
------- ------ ------- ------- -------
Less Distributions:
Dividends from Net Investment Income.......................... -- -- -- ( 0.04) --
Distributions from Net Realized Gain on Investments Sold,
Options and Foreign Currency Transactions................... ( 1.26) ( 2.20) ( 1.51) ( 0.96) ( 1.36)
------- ------ ------- ------- -------
Total Distributions...................................... ( 1.26) ( 2.20) ( 1.51) ( 1.00) ( 1.36)
------- ------ ------- ------- -------
Net Asset Value, End of Period................................ $ 17.84 $ 17.45 $ 14.94 $ 15.60 $ 12.44
======= ======= ======= ======= =======
Total Investment Return at Net Asset Value.................... 9.62% 32.06% 5.70%(c) 33.05% (18.46%)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)..................... $52,193 $41,749 $32,094 $31,580 $28,864
Ratio of Expenses to Average Net Assets....................... 2.16% 2.10% 2.05%(b) 2.32% 2.36%
Ratio of Net Investment Income (Loss) to Average Net Assets... ( 1.25%) ( 1.49%) ( 0.88%)(b) 0.34% ( 0.28%)
Portfolio Turnover Rate....................................... 67% 86% 76% 67% 38%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 171
Financial Statements
John Hancock Funds - Global Technology Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------------------
PERIOD ENDED
DECEMBER 31,
1994
------------
<S> <C>
Class B(d)
PER SHARE OPERATING PERFORMANCE
Net Assets Value, Beginning of Period ....................................... $ 17.24 (e)
--------
Net Investment Loss ......................................................... ( 0.35)(a)
Net Realized and Unrealized Gain on Investments and Options ................. 2.05
--------
Total from Investment Operations ............................................ 1.70
--------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold and Options ........ ( 1.26)
--------
Net Asset Value, End of Period .............................................. $ 17.68
========
Total Investment Return at Net Asset Value .................................. 10.02%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ................................... $ 9,324
Ratio of Expenses to Average Net Assets ..................................... 2.90%(f)
Ratio of Net Investment Loss to Average Net Assets .......................... ( 1.98%)(f)
Portfolio Turnover Rate ..................................................... 67%
</TABLE>
(a) On average month end shares outstanding.
(b) Reflects voluntary expense limitations in effect during the year ended
December 31, 1992 (see Note B to the Notes to the Financial Statements). As
a result of such limitations, expenses of the Fund for 1992 reflect
reductions of $0.03 per share. Absent such limitations, for 1992, the ratio
of expenses to average net assets would have been 2.22% and the ratio of
net investment income to average net assets would have been (1.05%).
(c) Without the reimbursement, total investment return would have been lower.
(d) Class B shares commenced operations on January 3, 1994.
(e) Initial price to commence operations.
(f) On an annualized basis.
+ These periods are covered by the report of other independent accountants
(not included herein).
THE FINANCIAL HIGHLIGHTS SUMMARIZE THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIODS INDICATED: THE NET INVESTMENT INCOME, GAINS
(LOSSES), DIVIDENDS, AND TOTAL INVESTMENT RETURN OF THE FUND. IT SHOWS HOW THE
FUND'S NET ASSET VALUE FOR A SHARE HAS CHANGED SINCE THE END OF THE PREVIOUS
PERIOD. ADDITIONALLY, IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN
THE FINANCIAL STATEMENTS ARE EXPRESSED IN RATIO FORM.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 172
Financial Statements
John Hancock Funds - Global Technology Fund
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
December 31, 1994
- --------------------------------------------------------------------------------------
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
COMMON STOCKS
BROADCASTING (5.74%)
Tele-Communications, Inc. (Class A)** ...... 50,000 $ 1,087,500
Telewest Communications PLC,
American Depositary
Receipt (ADR) (United Kingdom)** ......... 50,000* 1,325,000
Viacom, Inc. (Class A) ..................... 3,200 133,200
Viacom, Inc. (Class B) ..................... 24,246 984,994
-----------
3,530,694
-----------
COMPUTERS - PERIPHERAL (8.54%)
Adaptec, Inc.** .............................. 100,000 2,350,000
EMC Corp.** .................................. 80,000* 1,730,000
S3, Inc.** ................................... 75,000* 1,171,875
-----------
5,251,875
-----------
COMPUTERS - SOFTWARE (19.76%)
Applix, Inc.** ............................... 42,500* 531,250
BMC Software, Inc.** ......................... 25,000 1,418,750
Cheyenne Software, Inc.** .................... 75,000 993,750
Computer Associates International, Inc. ...... 50,000 2,425,000
Electro Brain International Corp.** .......... 165,000 46,398
FTP Software, Inc.** ......................... 50,000* 1,575,000
Oracle Systems Corp.** ....................... 50,000 2,206,250
Parametric Technology Co. .................... 40,000* 1,370,000
Pinnacle Systems, Inc.** ..................... 100,000* 1,450,000
Telebase Systems, Inc.** (r) ................. 217,360 141,284
-----------
12,157,682
-----------
COMPUTERS - MINI/MICRO (9.66%)
Compaq Computer Corp.** ...................... 50,000* 1,975,000
Silicon Graphics, Inc.** ..................... 50,000 1,543,750
Stratus Computer, Inc.** ..................... 30,000* 1,140,000
Tandem Computers, Inc.** ..................... 75,000* 1,284,375
-----------
5,943,125
-----------
ELECTRONICS (25.61%)
ADFlex Solutions, Inc.** ..................... 100,000* 1,675,000
Applied Materials, Inc.** .................... 50,000 2,087,500
GaSonics International Corp.** ............... 60,000* 945,000
Integrated Device Technology, Inc.** ......... 90,000* 2,655,000
Lam Research Corp.** ......................... 50,000* 1,862,500
Level One Communications, Inc.** ............. 75,000 1,125,000
LSI Logic Corp.** ............................ 50,000* 2,018,750
PRI Automation, Inc.** ....................... 50,000* 787,500
SGS-Thomson Microelectronics N.V.** .......... 10,000* 227,500
Teradyne, Inc.** ............................. 70,000 2,371,250
-----------
15,755,000
-----------
</TABLE>
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY
FREEDOM GLOBAL TECHNOLOGY FUND ON DECEMBER 31, 1994. IT'S DIVIDED INTO FOUR MAIN
CATEGORIES: COMMON STOCKS, RIGHTS, WARRANTS, BONDS AND SHORT-TERM INVESTMENTS.
THE STOCKS, RIGHTS, WARRANTS AND BONDS ARE FURTHER BROKEN DOWN BY INDUSTRY
GROUPS. UNDER EACH INDUSTRY GROUP IS A LIST OF THE SECURITIES OWNED BY THE FUND.
SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE LISTED
LAST.
<TABLE>
<CAPTION>
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
TELECOMMUNICATIONS (24.61%)
3Com Corp.** ................................. 40,000 $ 2,060,000
Allen Group, Inc. ............................ 70,000 1,671,250
cisco Systems, Inc.** ........................ 60,000 2,100,000
DSC Communications Corp.** ................... 60,000* 2,160,000
Empresas Telex-Chile,
S.A. (ADR) (Chile) ........................... 50,000* 531,250
General Instrument Corp.** ................... 75,000* 2,250,000
Hong Kong Telecommunications, Ltd.
(ADR) (Hong Kong) ............................ 25,000* 478,125
Nextel Communications, Inc. (Class A)** ...... 50,000* 718,750
Nokia Corp. (ADR) (Finland) .................. 10,000* 750,000
SSE Telecom, Inc.** .......................... 125,000 781,250
Telefonos de Mexico,
S.A. de C.V. (ADR) (Mexico) .................. 40,000 1,640,000
-----------
15,140,625
-----------
TOTAL COMMON STOCKS
(Cost $46,164,020) (93.92%) 57,779,001
------ -----------
<CAPTION>
NUMBER OF RIGHTS
OR WARRANTS
----------------
<S> <C> <C>
RIGHTS & WARRANTS
BROADCASTING (0.07%)
Viacom, Inc., Variable Common Rights.** ...... 40,000* 45,000
-----------
ELECTRONICS (0.04%)
Ibis Technology Corp., Warrants** ............ 70,000* 26,250
-----------
TOTAL RIGHTS & WARRANTS
(Cost $69,000) ( 0.11%) 71,250
------ -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 173
Financial Statements
John Hancock Funds - Global Technology Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING*** OMITTED) VALUE
- ------------------- -------- --------- --------- ----------
<S> <C> <C> <C> <C>
BONDS
ELECTRONICS (0.53%)
Kulicke & Soffa Industries, Inc.,
Conv Sub Deb, 03-01-08 ..................................................... 8.000% B- $ 300 $ 322,500
-----------
TELECOMMUNICATIONS (0.77%)
Tele 2000 Conv Note, 04-14-97 (Peru) (R) ..................................... 9.750 NR 500* 475,000
-----------
TOTAL BONDS
(Cost $804,125) ( 1.30%) 797,500
------- -----------
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (4.80%)
Investment in a joint repurchase agreement transaction with
Lehman Brothers,Inc., Dated 12-30-94, Due 01-03-95,
(secured by U.S. Treasury Bonds, 9.25% due 2-15-16,
8.125% due 8-15-21, and U.S. Treasury Notes, 7.875%
due 7-31-96, 4.625% due 8-15-95) Note A ................................... 5.850 -- 2,951 2,951,000
-----------
CORPORATE SAVINGS ACCOUNT (0.01%)
Investors Bank & Trust Company Daily Interest Savings Account Current Rate 3.00% 7,899
-----------
TOTAL SHORT-TERM INVESTMENTS ( 4.81%) 2,958,899
-------- -----------
TOTAL INVESTMENTS (100.14%) $61,606,650
======== ===========
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
(R) This security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold, normally to qualified
institutional buyers, in transactions exempt from registration. See Note A
of the Notes to Financial Statements for valuation policy. Rule 144A
securities amounted to $475,000, as of December 31, 1994.
(r) Direct placement securities are restricted to resale. They have been valued
at fair value by the Trustees after considerations of restrictions as to
resale, financial condition and prospects of the issuer, general market
conditions and pertinent information in accordance with the Fund's By-Laws
and the Investment Company Act of 1940, as amended. The Fund has limited
rights to registration under the Securities Act of 1933 with respect to
these restrictedes. Additional information on each restricted security is
as follows:
<TABLE>
<CAPTION>
MARKET
VALUE AS A
PERCENTAGE MARKET
ACQUISITION ACQUISITION OF FUND'S VALUE AT
SECURITY DATE COST NET ASSETS DECEMBER 31, 1994
- -------- ----------- ----------- ---------- -----------------
<S> <C> <C> <C> <C>
Telebase Systems, Inc. - Common Stock .................. 11-14-91 $ 304,304 0.23% $ 141,284
</TABLE>
*Securities, other than short-term investments, newly added to the portfolio
during the period ended December 31, 1994.
**Non-income producing security.
***Credit ratings are unaudited.
NR Not Rated by either Standard & Poor's or Moody's Investors Services.
Parenthetical disclosure of a foreign country in the security description
represents country of foreign issuer, however, security is U.S. dollar
denominated.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 174
Notes to Financial Statements
John Hancock Funds - Global Technology Fund
NOTE A -
ACCOUNTING POLICIES
John Hancock Technology Series, Inc. ( the "Company") is an open-end investment
company registered under the Investment Company Act of 1940. The Company
consists of two series: John Hancock Global Technology Fund (the "Fund"), a
diversified series, and John Hancock National Aviation & Technology Fund, a
non-diversified series. The Directors authorized the sale of Class B shares as
of January 3, 1994 and adoption of 12b-1 distribution plans as of January 1 and
3, 1994 for Class A and Class B shares of the Fund, respectively. The shares of
each class represent an interest in the same portfolio of investments of the
Fund and have equal rights to voting, redemption, dividends and liquidation
except that certain expenses, subject to the approval of the Directors, may be
applied differently to each class of shares in accordance with current
regulations of the Securities and Exchange Commission and the Internal
Revenue Service. Shareholders of a class which bears distribution/service
expenses under the terms of a distribution plan, have exclusive voting
rights to such distribution plan. Significant accounting policies of the Fund
are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60
days are valued at amortized cost which approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc., (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial
Group, may participate in a joint repurchase agreement transaction.
Aggregate cash balances are invested in one or more repurchase agreements,
whose underlying securities are obligations of the U.S. government and/or its
agencies. The Fund's custodian bank receives delivery of the underlying
securities for the joint account on the Fund's behalf. The Adviser is
responsible for ensuring that the agreement is fully collateralized at all
times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale, or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment
companies. It will not be subject to Federal income tax on taxable earnings
which are distributed to shareholders.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date. Interest income on investment securities
is recorded on the accrual basis. Foreign income may be subject to foreign
withholding taxes which are accrued as applicable.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions are
determined in conformity with income tax regulations, which may differ from
generally accepted accounting principles. Dividends paid by the Fund with
respect to each class of shares will be calculated in the same manner, at the
same time and will be in the same amount, except for the effect of expenses
that may be applied differently to each class as explained previously.
EXPENSES The majority of the expenses of the Company are directly
identifiable to an individual Fund. Expenses which are not readily
identifiable to a specific Fund are allocated in such a manner as deemed
equitable, taking into consideration, among other things, the nature and type
of expense and the relative size of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class
of shares based on the appropriate net assets of the respective
classes. Transfer agent expenses and distribution/service fees if any, are
calculated daily at the class level based on the appropriate net assets of
each class and the specific expense rate(s) applicable to each class.
13
<PAGE> 175
Notes to Financial Statements
John Hancock Funds - Global Technology Fund
OPTIONS Listed options are valued at the last quoted sales price on the
exchange on which they are primarily traded. Purchased put or call
over-the-counter options are valued at the average of the "bid" prices obtained
from two independent brokers. Written put or call over-the-counter options are
valued at the average of the "asked" prices obtained from two independent
brokers. Upon the writing of a call or put option, an amount equal to the
premium received by the Fund is included in the Statement of Assets and
Liabilities as an asset and corresponding liability. The amount of the
liability is subsequently marked-to-market to reflect the current market
value of the written option.
The Fund may use options contracts to manage its exposure to the
stock market. Writing puts and buying calls tend to increase the Fund's
exposure to the underlying instrument and buying puts and writing calls tend to
decrease the Fund's exposure to the underlying instrument, or hedge other Fund
investments.
The maximum exposure to loss for any purchased options is limited to
the premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value reflects the maximum exposure of
the Fund in these contracts, but the actual exposure is limited to the change
in value of the contract over the period the contract remains open.
Risks may also arise if counterparties do not perform under the
contracts' terms, or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk"). Exchange-traded options
have minimal credit risk as the exchanges act as counterparties to each
transaction, and only present liquidity risk in highly unusual market
conditions. To minimize credit and liquidity risks in over-the-counter
option contracts, the Fund continuously monitors the creditworthiness of all
its counterparties.
At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's
period-end Statement of Assets and Liabilities.
A summary of written call option transactions for the period ended
December 31, 1994 is as follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUMS
(000's OMITTED) RECEIVED
--------------- --------
<S> <C> <C>
Outstanding, beginning of period................ ---- ----
Options written................................. 1,000 $139,495
Options expired................................. (1,000) (139,495)
------ --------
Outstanding, end of period...................... ---- ----
====== ========
</TABLE>
DISCOUNT ON SECURITIES The Fund accretes discount from par value on investment
securities from either the date of issue or date of purchase over the life
of the security, as required by the Internal Revenue Code.
NOTE B -
MANAGEMENT FEE, ADMINISTRATIVE
SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS
The Adviser is responsible for managing the Fund's investment business
affairs and overseeing the investment activities of the sub-adviser. The
Adviser has a sub-investment management contract with American Fund Advisors,
Inc. (the "Sub-Adviser"), under which the Sub-Adviser, subject to the review
of the Directors and the overall supervision of the Adviser, provides the Fund
with investment services and advice with respect to investment transactions.
Under the present investment management contract, for the period ended
December 31, 1994, the Fund paid a monthly management fee to the Adviser,
equivalent on an annual basis, to the sum of (a) 1.00% of the first
$100,000,000 of the Fund's average daily net asset value and (b) 0.75% of the
Fund's average daily net asset value in excess of $100,000,000. Effective
January 1, 1995, the Adviser will waive a portion of the management fee
amounting to 0.15% of the average daily net asset value of the first
$100,000,000 of each series of the Fund. Therefore, the Fund will pay a monthly
management fee to the
14
<PAGE> 176
Notes to Financial Statements
John Hancock Funds - Global Technology Fund
Adviser, equivalent on an annual basis, to the sum of 0.85% of the first
$100,000,000 of the Fund's average daily net asset value. The Adviser pays the
Sub-Adviser a monthly management fee, equivalent on an annual basis, to the sum
of (a) 0.40% of the first $100,000,000 of the Fund's average daily net asset
value and (b) 40% of the investment advisory fee received by the Adviser on
amounts over $100,000,000. The Fund pays a monthly administrative fee at the
rate of $100,000 per annum to the Adviser for performance of administrative
services to the Fund. In the event normal operating expenses of the Fund,
exclusive of certain expenses prescribed by state law, are in excess of the most
restrictive state limit where the Fund is registered to sell shares, the fee
payable to the Adviser will be reduced to the extent of such excess, and the
Adviser will make additional arrangements necessary to eliminate any remaining
excess expenses. The current limits are 2.5% of the first $30,000,000 of the
Fund's average daily net asset value, 2.0% of the next $70,000,000, and 1.5% of
the remaining average daily net asset value.
In the event that the ratio for 1992, 1993, or 1994 of normal operating
expenses of the Fund, exclusive of extraordinary expenses including, but not
limited to litigation, to the Fund's average daily net assets for such year,
exceeds the average expense ratio for the Fund for the three years ended
December 31, 1990 (restated as if the current annual rates for calculating the
management fee and the current expense limitations had been in effect
throughout the three year period), the fees payable to the Adviser will be
reduced to the extent required to eliminate such excess and the Adviser will
make any additional arrangements necessary to eliminate any remaining such
excess. No such reduction in fees was necessary under such arrangement for the
period ended December 31, 1994. At a shareholder meeting on December 8, 1993 the
shareholders approved a proposal which excludes the amounts payable by the
Fund under the Rule 12b-1 distribution plans (effective in January 1994)
from the calculation of the expense limit described above.
The Fund has a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly-owned subsidiary of the Adviser. Prior to January 1,
1995, JH Funds was known as John Hancock Broker Distribution Services, Inc. For
the period ended December 31, 1994, JH Funds received net sales charges of
$231,773 with regard to sales of Class A shares. Out of this amount, $35,779
was retained and used for printing prospectuses, advertising, sales literature
and other purposes, and $89,166 was paid as sales commissions and first year
service fees to unrelated broker-dealers and $106,830 was paid as sales
commissions and first year service fees to sales personnel of John Hancock
Distributors, Inc. ("Distributors"), Tucker Anthony, Incorporated ("Tucker
Anthony") and Sutro & Co., Inc. ("Sutro"). The Adviser's indirect parent, John
Hancock Mutual Life Insurance Company, is the indirect sole shareholder of
Distributors and John Hancock Freedom Securities Corporation and its
subsidiaries which include Tucker Anthony and Sutro, all of which are
broker-dealers.
Class B shares which are redeemed within six years of purchase are
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds and are used in whole or in part to defray
its expenses related to providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended December 31,
1994 contingent deferred sales charges received by JH Funds amounted to $8,869.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan with
respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940 effective January 1 and 3, 1994, respectively. Accordingly,
the Fund makes payments to JH Funds, for distribution and service expenses at an
annual rate not to exceed 0.30% of Class A average daily net assets and 1.00%
of Class B average daily net assets to reimburse JH Funds for its
distribution/service costs. Up to a maximum of 0.25% of such payments may be
service fees as defined by the amended Rules of Fair Practice of the National
Association of Securities Dealers which became effective July 7, 1993. Under
the amended Rules of Fair Practice, curtail-
15
<PAGE> 177
ment of a portion of the Fund's 12b-1 payments could occur under
certain circumstances.
The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. Prior to January 1, 1995, JH Investor Services was
known as John Hancock Funds Services, Inc. For the period ended December 31,
1994, the Fund paid a monthly transfer agent fee, equivalent on an annual basis,
to 0.32% and 0.34% of the Fund's average daily net asset value, attributable to
Class A and Class B shares of the Fund, respectively, plus out of pocket
expenses incurred by Investor Services on behalf of the Fund for proxy
mailings. Effective January 1, 1995, the Fund will pay transfer agent fees
based on transaction volume and the number of shareholder accounts.
Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser,
and Mr. Barry J. Gordon is a director and officer of the Sub-Adviser. Mr.
Thomas W.L. Cameron is an affiliated Director of the Fund. The compensation of
unaffiliated Directors is borne by the Fund.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of
the U.S. government and its agencies and short-term securities, during the
period ended December 31, 1994, aggregated $47,249,821 and $31,950,402,
respectively. There were no purchases or sales of obligations of the U.S.
government and its agencies during the period ended December 31, 1994.
The cost of investments owned at December 31, 1994 for Federal income
tax purposes was $49,988,145. Gross unrealized appreciation and depreciation
of investments aggregated $14,913,919 and $3,303,313, respectively, resulting
in net unrealized appreciation of $11,610,606.
NOTE D -
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the year ended December 31, 1994, the Fund has reclassified amounts to
reflect a decrease in accumulated net investment loss of $682,853, a decrease
in accumulated net realized gain on investments of $682,794 and a decrease in
capital paid-in of $59. This represents the cumulative amount necessary to
report these balances on a tax basis, excluding certain temporary differences,
as of December 31, 1994. Additional adjustments may be needed in subsequent
reporting periods. These reclassifications, which have no impact on the net
asset value of the Fund, are primarily attributable to certain differences
in the computation of distributable income and capital gains under federal tax
rules versus generally accepted accounting principles.
16
<PAGE> 178
John Hancock Funds - Global Technology Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of
John Hancock Global Technology Fund and the
Directors of John Hancock Technology Series, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of John Hancock
Global Technology Fund (the "Fund") (a portfolio of John Hancock Technology
Series, Inc.) at December 31, 1994, the results of its operations for the year
then ended, the changes in its net assets and the financial highlights for the
periods indicated in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements
in accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1994 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable
basis for the opinion expressed above.
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is
furnished with respect to the distributions of the Fund for its fiscal year
ended December 31, 1994.
With respect to the Fund's ordinary taxable income for the fiscal year
ended December 31, 1994, none of the dividends qualify for the corporate
dividends received deduction.
The Fund designated distributions to shareholders of $2,745,000 as
long-term capital gain dividends. Shareholders were mailed a 1994 U.S.
Treasury Department Form 1099-DIV in January 1995 representing their
proportionate share.
United States Government Obligations: The Fund did not have any assets
invested in U.S. Treasury bonds, bills, and notes or other U.S. government
agencies at year end. The Fund did not derive any income from these
investments. For specific information on exemption provisions in your state,
consult your local state tax office or your tax adviser.
Price Waterhouse LLP
Boston, Massachusetts
February 16, 1995
17
<PAGE> 179
EXHIBIT B
JOHN HANCOCK
NATIONAL AVIATION & TECHNOLOGY FUND
CLASS A AND CLASS B SHARES
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1995
This Statement of Additional Information provides information about John
Hancock National Aviation & Technology Fund (the "Fund") in addition to the
information that is contained in the Fund's Class A and Class B Prospectus (the
"Prospectus") dated May 1, 1995.
The Fund is a series of John Hancock Technology Series, Inc. (the
"Company"). This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the Fund's Prospectus, a copy of which can
be obtained free of charge by writing or telephoning:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-(800)-225-5291
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Statement of
Additional
Information
Page
<S> <C>
ORGANIZATION OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
THOSE RESPONSIBLE FOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 14
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . 19
DISTRIBUTION CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
INITIAL SALES CHARGE ON CLASS A SHARES . . . . . . . . . . . . . . . . . . . . . . 25
DEFERRED SALES CHARGE ON CLASS B SHARES . . . . . . . . . . . . . . . . . . . . . . 26
SPECIAL REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ADDITIONAL SERVICES AND PROGRAMS FOR CLASS A AND B SHARES . . . . . . . . . . . . . 27
TAX STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
DESCRIPTION OF THE FUND'S SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 32
CALCULATION OF PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
BROKERAGE ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
TRANSFER AGENT SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
CUSTODY OF PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
<PAGE> 180
<TABLE>
<S> <C>
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
ORGANIZATION OF THE FUND
The Fund is a non-diversified series of John Hancock Technology Series,
Inc. (the "Company"), an open-end management investment company organized as a
corporation under the laws of Maryland on January 5, 1990. On May 1, 1990, the
Fund succeeded to the assets and liabilities of the National Aviation &
Technology Corporation. On December 6, 1991, the Company changed its name from
AFA Funds, Inc. Effective October 1, 1992, the Fund ceased doing business as
National Aviation & Technology Fund and commenced doing business under the name
John Hancock Freedom National Aviation & Technology Fund. As of January 1,
1995, the Fund changes its name to John Hancock National Aviation & Technology
Fund. The Fund is managed by John Hancock Advisers, Inc. (the "Adviser") and
American Fund Advisors, Inc. ("AFA" or the "Sub-Adviser").
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objectives and policies are set forth in the
Fund's Prospectus dated May 1, 1995 which is incorporated herein by reference.
The following information augments the Prospectus.
The primary investment objective of the Fund is to provide long-term
growth of capital principally through investments in companies in the aviation
and related industries and in companies which utilize technology extensively in
their product development or operations. Income is a secondary consideration
of the Fund.
Forward Foreign Currency Transactions. The foreign currency
transactions of the Fund may be conducted on a spot (i.e., cash) basis at the
spot rate for purchasing or selling currency prevailing in the foreign exchange
market. The Fund may also deal in forward foreign currency contracts involving
currencies of the different countries in which it will invest as a hedge
against possible variations in the foreign exchange rate between these
currencies. This is accomplished through contractual agreements to purchase or
sell a specified currency at a specified future date and price set at the time
of the contract. The Fund's dealings in forward foreign currency contracts
will be limited to hedging either specific transactions or portfolio positions.
The Fund will not attempt to hedge all of its foreign portfolio positions. The
Fund will not engage in speculative forward currency transactions.
If the Fund enters into a forward contract to purchase currency, its
custodian bank will segregate cash or liquid high grade debt securities in a
separate account of the Fund in an amount equal to the value of the Fund's
total assets committed to the consummation of such forward contract. Those
assets will be valued at market daily and if the value of the assets in the
separate account declines, additional cash or liquid assets will be placed in
the account so that the value of the account will equal the amount of the
Fund's commitment with respect to such contracts.
2
<PAGE> 181
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise.
Moreover, it may not be possible for the Fund to hedge against a devaluation
that is so generally anticipated that the Fund is not able to contract to sell
the currency at a price above the devaluation level it anticipates. The cost
to the Fund of engaging in foreign currency exchange transactions varies with
such factors as the currency involved, the length of the contract period and
the market conditions then prevailing. Since transactions in foreign currency
are usually conducted on a principal basis, no fees or commissions are
involved.
Characteristics and Risks of Foreign Securities Markets. The securities
markets of many countries have in the past moved relatively independently of
one another, due to differing economic, financial, political and social
factors. When markets in fact move in different directions and offset each
other, there may be a corresponding reduction in risk for the Fund's portfolio
as a whole. This lack of correlation among the movements of the world's
securities markets may also affect unrealized gains the Fund has derived from
movements in any one market.
If the securities of markets moving in different directions are combined
into a single portfolio, such as that of the Fund, total portfolio volatility
is reduced. Since the Fund will invest in securities denominated in currencies
other than U.S. dollars, changes in foreign currency exchange rates will affect
the value of its portfolio securities. Currency exchange rates may not move in
the same direction as the securities markets in a particular country. As a
result, market gains may be offset by unfavorable exchange rate fluctuations.
Investments in foreign securities may involve risks and considerations
not present in domestic investments. Since foreign securities generally may be
denominated and pay interest or dividends in foreign currencies, the value of
the assets of the Fund as measured in U.S. dollars will be affected favorably
or unfavorably by changes in the relationship of the U.S. dollar and other
currency rates. The Fund may incur costs in connection with the conversion of
foreign currencies into U.S. dollars and may be adversely affected by
restrictions on the conversion or transfer of foreign currencies. In addition,
there may be less publicly available information about foreign companies than
U.S. companies. Foreign companies may not be subject to accounting, auditing,
and financial reporting standards, practices and requirements comparable to
those applicable to U.S. companies.
Foreign securities markets, while growing in volume, have for the most
part substantially less volume than U.S. securities markets and securities of
foreign companies are generally less liquid and at times their prices may be
more volatile than securities of comparable U.S. companies. Foreign stock
exchanges, brokers and listed companies are generally subject to less
government supervision and regulation than those in the U.S. The customary
settlement time for foreign securities may be longer than the five (5) day
customary settlement time for U.S. securities, or less frequent than in the
U.S., which could affect the liquidity of the Fund's investments. The Adviser
and the Sub-Adviser will monitor the settlement time for foreign securities and
take undue settlement delays into account in considering the desirability of
allocating investments among specific countries.
3
<PAGE> 182
The Fund may invest in companies located in developing countries which,
compared to the U.S. and other developed countries, may have relatively
unstable governments, economies based on only a few industries and securities
markets which trade only a small number and volume of securities. Prices on
exchanges located in developing countries tend to be volatile and, in the past,
securities traded on those exchanges have offered a greater potential for gain
(and loss) than securities traded on exchanges in the U.S. and more developed
countries. In some countries, there is the possibility of expropriation or
confiscatory taxation, seizure or nationalization of foreign bank deposits or
other assets, establishment of exchange controls, the adoption of foreign
government restrictions or other adverse political, social or diplomatic
developments that could affect investments in these countries.
High Yield "High Risk" Fixed Income Securities. As discussed in the
Fund's Prospectus, the Fund may invest up to 10% of its net assets in fixed
income securities that, at the time of investment, are rated CC or higher by
Standard & Poor's Ratings Group ("Standard & Poor's") or Ca or higher by
Moody's Investors Service, Inc. ("Moody's") or their equivalent, and unrated
fixed income securities of comparable quality as determined by the Adviser.
Ratings are based largely on the historical financial condition of the issuer.
Consequently, the rating assigned to any particular security is not necessarily
a reflection of the issuer's current financial condition, which may be better
or worse than the rating would indicate.
The values of lower-rated securities and unrated securities of
comparable quality generally fluctuate more than those of high-rated
securities. There is a greater possibility that an adverse change in the
financial condition of an issuer of lower-rated securities or unrated
securities of comparable quality will affect the issuer's ability to make
payments of interest and principal. To the extent the Fund invests in these
securities, the achievement of the Fund's investment objectives is more
dependent on the Sub-Adviser's ability than it would be if the Fund were
investing in higher quality securities.
As noted in the Fund's Prospectus, the Fund may invest in pay-in-kind
(PIK) securities, which pay interest in either cash or additional securities,
at the issuer's option, for a specified period. The Fund may also invest in
zero coupon bonds, which have a determined interest rate, but payment of the
interest is deferred until maturity of the bonds. Both types of bonds may be
more speculative and subject to greater fluctuation in value than securities
which pay interest periodically and in cash, due to changes in interest rates.
Preferred Stock. As stated in the Prospectus, the Fund may purchase
preferred stock. Preferred stocks are equity securities, but possess certain
attributes of fixed income securities. Holders of preferred stocks normally
have the right to receive dividends at a fixed rate when and as declared by the
issuer's board of directors, but do not participate in other amounts available
for distribution by the issuing corporation. Dividends on preferred stock may
be cumulative, and all cumulative dividends usually must be paid prior to
dividend payments to common stockholders. Because of this preference,
preferred stocks generally entail less risk than common stocks. Upon
liquidation, preferred stocks are entitled to a specified liquidation
preference, which is generally the same as the par or stated value, and are
senior in right of payment to common stocks. Preferred stocks are equity
securities in that they do not represent a liability of the issuer and
therefore do not offer a great a degree of protection of capital or assurance
of continued income as investments in corporate debt securities. In addition,
preferred stocks are subordinated in right
4
<PAGE> 183
of payment to all debt obligations and creditors of the issuer, and convertible
preferred stocks may be subordinated to other preferred stock of the same
issuer. See "Convertible Securities" below for a description of certain
characteristics of convertible preferred stock.
Convertible Securities. As stated in the Fund's Prospectus. the Fund
may purchase convertible fixed income securities and preferred stock.
Convertible securities are securities that may be converted at either a stated
price or stated rate into underlying shares of common stock of the same issuer.
Convertible securities have general characteristics similar to both fixed
income and equity securities. Although to a lesser extent than with straight
debt securities, the market value of convertible securities tends to decline as
interest rates increase and, conversely, tends to increase as interest rates
decline. In addition, because of the conversion feature, the market value of
convertible securities tends to vary with fluctuations in the market value of
the underlying common stocks and therefore will also react to variations in the
general market for equity securities. A unique feature of convertible
securities is that as the market price of the underlying common stock declines,
convertible securities tend to trade increasingly on a yield basis, and
consequently may not experience market value declines to the same extent as the
underlying common stock. When the market price of the underlying common stock
increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock increases, the prices
of the convertible securities tend to rise as a reflection of the value of the
underlying common stock. While no securities investments are without risk,
investments in convertible securities generally entail less risk than
investments in common stock of the same issuer. However, the issuers of
convertible securities may default on their obligations.
Restricted Securities. In accordance with its investment policies, the
Fund may purchase securities the disposition of which is restricted under
federal securities laws. These investments are generally of a high-risk
nature, carrying with them the potential of commensurate, significantly higher
gains. When the Fund purchases restricted securities, it may not have the same
freedom to dispose of them at the time of its choosing that it would have in
the case of securities traded in the open market or offered in connection with
a public distribution. Such securities, if not registered, would probably be
sold for less than the market price of unrestricted securities of the same
class. Prior to sale, registration of such securities under the Securities Act
of 1933 may be required, and, if the issuer has not agreed to bear registration
expenses, the Fund may be required to pay such expenses. Where registration is
required, a considerable period may elapse between the time when the decision
is made to sell the securities and the time when the Fund may be permitted to
sell under an effective registration statement. If adverse market conditions
develop during such a period, the Fund may not be able to obtain as favorable a
price as that prevailing at the time the decision to sell was made. The value
of restricted securities will be determined in good faith by the Board of
Directors, taking into account the market value of comparable securities where
applicable, the right to registration under the Securities Act of 1933 at the
issuer's expense, and other applicable considerations.
Lending Portfolio Securities. The Fund also may lend portfolio
securities to brokers, dealers or other financial institutions who must put up
cash or securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities as collateral in an amount equal to the market value of
the loaned securities. Cash collateral will be invested only in readily
marketable short-term interest-bearing securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities so that the Fund can
promptly return it to the borrower when due. If the
5
<PAGE> 184
collateral drops below 100% of the value of the loaned securities and the
required additional collateral is not immediately deposited by the borrower,
the loan will immediately become due and the Fund, among other remedies, will
be entitled to replace the securities by purchase. There can be no assurance
that the borrower will deposit any required additional collateral and thus the
Fund could incur a loss on the loaned securities. The Fund will exercise its
right to replace the securities within such reasonable time as it deems
appropriate under the circumstances. The Fund may pay reasonable finder's,
administrative and custodian fees in connection with security loans and is
entitled to receive an amount equal to all interest or dividends paid on the
securities loaned. It also has the right to terminate any loan upon five days'
notice, and intends to do so if necessary to vote a proxy on any material
matter affecting the portfolio security. The aggregate amount of all such
loans at any one time outstanding shall not exceed 25% of the Fund's total
assets.
Repurchase Agreements. A repurchase agreement is a contract under which
the Fund would acquire a security for a relatively short period (usually not
more than 7 days) subject to the obligation of the seller to repurchase and the
Fund to resell such security at a fixed time and price (representing the Fund's
cost plus interest). The Fund will enter into repurchase agreements only with
member banks of the Federal Reserve System and with "primary dealers" in U.S.
Government securities. The Advisers will continuously monitor the
creditworthiness of the parties with whom the Fund enters into repurchase
agreements.
The Fund may enter into repurchase agreements with respect to its
portfolio securities. The Fund has established a procedure providing that the
securities serving as collateral for each repurchase agreement must be
delivered to the Fund's custodian either physically or in book-entry form and
that the collateral must be marked to market daily to ensure that each
repurchase agreement is fully collateralized at all times. In the event of
bankruptcy or other default by a seller of a repurchase agreement, the Fund
could experience delays in liquidating the underlying securities and could
experience losses, including the possible decline in the value of the
underlying securities during the period which the Fund seeks to enforce its
rights thereto, possible subnormal levels of income and lack of access to
income during this period, and the expense of enforcing its rights.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The following investment restrictions (as well as the Fund's investment
objective) will not be changed without approval of the holders of a majority of
outstanding voting securities of the Fund which, as used in the Prospectus and
this Statement of Additional Information, means approval of the lesser of (1)
the holders of 67% or more of the shares of the Fund represented at a meeting
if the holders of more than 50% of outstanding shares are present in person or
by proxy or (2) the holders of more than 50% of the outstanding shares. The
Fund observes the following fundamental restrictions: The Fund may not:
(1) Invest 25% or more of its total assets in the securities of
issuers in any one industry, except that under normal market
conditions, (i) at least 80% of the Fund's total assets
(exclusive of cash, U.S. Government securities and short-term
commercial paper) will be invested in securities of companies in
the aviation and related
6
<PAGE> 185
industries and companies which utilize technology extensively in
their product development or operations, and (ii) at least 25%
of the Fund's total assets will be concentrated in the aviation
industry and in industries connected with, serving and/or
supplying the aviation industry.
(2) Change its name.
(3) Issue senior securities, except as permitted by paragraphs (4)
and (8) below. For purposes of this restriction, the issuance
of shares of common stock in multiple classes, the purchase or
sale of options, futures contracts and options on futures
contracts, forward commitments, and repurchase agreements
entered into in accordance with the Fund's investment policies,
and the pledge, mortgage or hypothecation of the Fund's assets
are not deemed to be senior securities.
(4) Borrow money, except from banks as a temporary measure for such
purposes as financing specific investments, avoiding premature
or disorderly liquidation of investments, raising cash for
immediate investment pending the realization of the proceeds of
sale of securities in the process of or scheduled for sale, or
to maintain adequate cash balances pending changes in
investment, or for other general corporate purposes, but not for
leveraging. Under the Investment Company Act of 1940, as
amended (the "1940 Act"), asset coverage of 300% of any
borrowings must be maintained. Although not as a matter of
fundamental policy, the Fund has agreed with a state securities
administrator that, as long as the Fund's shares are being
offered in his state (or until such state has eliminated or
modified its regulations), the Fund will borrow only as a
temporary measure for extraordinary or emergency purposes, and,
not as a matter of fundamental policy, the Fund currently
intends that such borrowings not exceed 5% of the value of net
assets.
(5) Act as an underwriter of securities (except to the extent that
in selling restricted securities it may be deemed to be an
underwriter for purposes of the 1933 Act), if the aggregate
amount of its underwriting commitments at any one time would
exceed 25% of the value of its total assets.
(6) Purchase real estate or any interest therein (except real estate
used exclusively in the current operation of the Fund's
affairs), but this restriction does not prevent the Fund from
investing in debt securities secured by real estate or interests
therein.
(7) Purchase or sell commodities or commodity contracts, except that
the Fund may purchase and sell options on securities, securities
indices, currency and other financial instruments, futures
contracts on securities, securities indices, currency and other
financial instruments and options on such futures contracts,
forward commitments, interest rate swaps, caps and floors,
securities index put or call warrants and repurchase agreements
entered into in accordance with the Fund's investment policies.
(8) Make loans to or guarantee the debts of other persons, other
than (a) loans to or guarantees of the debts of (i)
subsidiaries, (ii) corporations or other entities in which
7
<PAGE> 186
the Fund has a substantial equity interest, and (iii)
corporations and other entities in the aviation industry, in
industries connected with, serving and/or supplying the aviation
industry, or in other industries or businesses; (b) loans as a
part of or incidental to other transactions in which the Fund
may engage; and (c) portfolio security loans secured
continuously by cash or securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities as
collateral in amounts equal at least to the market value of the
securities loaned, determined daily; provided that the aggregate
of all such loans at any time outstanding shall not exceed 25%
of the value of the Fund's total assets. The Fund does not, for
the purpose of its loan restrictions, consider the purchase of a
portion of an issue of publicly distributed bonds, debentures or
other debt securities, whether or not the purchase is made upon
the original issuance of such securities, to be the making of a
loan. The Fund's transactions in repurchase agreements are not
subject to any of the limitations described in the preceding
sentences. Although not as a matter of fundamental policy, the
Fund has agreed with certain state securities administrators
that, as long as the Fund's shares are being offered in their
respective states (or until such states have eliminated or
modified their regulations), the Fund will not make the kind of
loans described in clauses (a) and (b) above.
Non-Fundamental Investment Restrictions
The following restrictions are designated as non-fundamental and may be
changed by the Board of Directors without shareholder approval. The Fund may
not:
(1) Purchase securities issued by any other open-end investment
company.
(2) Purchase securities on margin, although the Fund may obtain such
short-term credits as may be necessary for the clearance of
securities purchases.
(3) Make short sales of securities or maintain a short position
unless, at all times when a short position is open, the Fund
owns, or has the right to obtain at no added cost, securities
identical to those sold. The Fund did not make any short sales
or maintain a short position in the past year and has no current
intention of doing so in the future.
(4) Purchase or sell puts, calls, straddles, spreads or any
combination thereof, except that (i) the Fund may sell call
options issued by The Options Clearing Corporation against its
portfolio securities where such call options remain fully
covered throughout the period when they may be exercised and
such underlying securities have an aggregate value (determined
as of the date the calls are sold) not exceeding 25% of the net
assets of the Fund and are listed on a national securities
exchange, and (ii) the Fund may purchase call options in related
"closing purchase transactions," where not more than 5% of the
total assets of the Fund are invested in such options.
8
<PAGE> 187
(5) Purchase securities of an issuer which, together with any
predecessor, has been in operation for less than three years
(except investments in obligations issued or guaranteed by the
U.S. Government or its agencies) and equity securities which are
not readily marketable if, as a result, more than 5% of the
value of the Fund's total assets would then be invested in such
securities.
(6) Purchase any security, including any repurchase agreement
maturing in more than seven days, which is not readily
marketable, if more than 10% of the net assets of the Fund,
taken at market value, would be invested in such securities.
(7) Purchase or sell interests in oil, gas or other mineral
exploration or development programs (although it may invest in
companies which own or invest in such interests).
(8) Purchase securities issued by any closed-end investment company,
unless such purchase is made in the open market, with a fee or
commission no greater than the customary broker's commission,
and would not result in more than 5% of the Fund's total assets
being invested in closed-end funds.
(9) Purchase or retain the securities of an issuer any of whose
officers, directors, trustees or security holders (a) is an
officer or director of the Fund or a member, officer, director
or trustee of its investment adviser and (b) owns beneficially
more than 1/2 of 1% of the shares or securities or both (taken
at market value) of such issuer unless all such individuals
owning more than 1/2 of 1% of such shares or securities together
own beneficially less than 5% of such shares or securities or
both.
(10) Invest more than 10% of the value of its total assets in the
securities of any one issuer (except securities of the U.S.
Government or its agencies or instrumentalities) or purchase
more than 10% of the voting securities of any issuer.
(11) In addition to the restrictions set forth in Paragraphs (5) and
(6) above, invest in any securities which would cause more than
10% of its net assets at the time of such investment to be
invested in restricted securities, securities that are not
readily marketable, securities for which market quotations are
not readily available, securities of foreign issuers which are
not listed on a recognized domestic or foreign securities
exchange, and any other assets for which a bona fide market does
not exist at the time of purchase or subsequent valuation.
(12) Invest more than 5% of the value of its total assets in
warrants, nor more than 2% in warrants which are not listed on
the New York or American Stock Exchanges. In applying this
limitation, warrants will be valued at the lesser of cost or
market value unless acquired by the Fund in units with, or
attached to, debt securities, in which case no value will be
assigned.
(13) Participate on a joint or joint and several basis in any
securities trading account.
9
<PAGE> 188
(14) 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.
Further, the Company has agreed with a state securities administrator
that the Fund will not purchase or sell interests in real estate limited
partnerships, oil, gas or other mineral leases.
RATINGS
Below are descriptions of the ratings of Moody's and Standard & Poor's
that may apply to the Fund's investments in fixed income securities.
Moody's describes its ratings for bonds as follows:
Bonds which are rated 'Aaa' are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as 'gilt edge.' Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most likely to impair the fundamentally strong position of such issues.
Bonds which are rated 'Aa' are judged to be of high quality by all
standards. Together with the 'Aaa' group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in 'Aaa' securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than in
'Aaa' securities.
Bonds which are rated 'A' possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Bonds which are rated 'Baa' are considered as medium grade
obligations, i.e., they are neither highly protected nor 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.
Bonds which are rated 'Ba' are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position, characterizes bonds in this class.
10
<PAGE> 189
Bonds which are rated 'B' generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Bonds which are rated 'Caa' are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Bonds which are rated 'Ca' represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
Standard & Poor's describes its bond ratings as follows:
AAA. This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to pay principal and
interest.
AA. Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A. Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB. Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this category than for bonds in the A category.
BB. Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B. Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.
CCC. Debt rated 'CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial, or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'CCC' rating.
11
<PAGE> 190
CC. The rating 'CC' is typically applied to debt subordinated to
senior debt that is assigned an actual or implied 'CCC' rating.
Diversification vs. Non-Diversification of Assets
The 1940 Act classifies investment companies as "diversified" or
"non-diversified." The Fund is registered under the 1940 Act as "non-
diversified," but the Company's registration statement expressly reserves to
the Fund "freedom of action to change from a non-diversified to a diversified
company." The distinction between the two classifications does not relate to
whether investments are concentrated in particular industries, but solely to
the magnitude of the investments in particular issuers. A Fund is
"diversified" if at least 75% of the value of its total assets are invested in
a combination of cash, cash equivalents, U.S. Government securities, securities
of other investment companies, and other securities which, as to any particular
issuer, represent neither (1) in value, more than 5% of the total assets of the
Fund nor (2) more than 10% of the outstanding voting securities of the
particular issuer.
Consistent with a position of the Securities and Exchange Commission, a
company may meet the test for a diversified company for up to three years and
still revert to non-diversified status without shareholder or Securities and
Exchange Commission approval. Although the Fund has from time to time been
"diversified" within the meaning of the 1940 Act and may at any time become
"diversified," the Fund was "non- diversified" on December 31, 1993.
THOSE RESPONSIBLE FOR MANAGEMENT
The business of the Fund is managed by the Board of Directors of the
Company which elects officers who are responsible for the day-to-day
operations of the Fund and who execute policies formulated by the Board of
Directors. Several of the officers and Directors of the Company are also
officers or directors of the Adviser or Sub-Adviser, or officers or directors
of the Fund's principal distributor, John Hancock Funds, Inc. ("John Hancock
Funds").
The following table sets forth the principal occupation or employment of
the Directors and principal officers of the Company during the past five years.
12
<PAGE> 191
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE COMPANY DURING THE PAST FIVE YEARS
---------------- ---------------- --------------------------
<S> <C> <C>
Edward J. Boudreau, Jr.* Chairman (1,2) Chairman and Chief Executive Officer, the
101 Huntington Avenue Adviser and The Berkeley Financial Group
Boston, MA 02199 ("Berkeley Group"); Chairman, NM Capital
Management, Inc. ("NM Capital"); John Hancock
Advisers International Limited; ("Advisers
International"); John Hancock Funds, Inc.,
("John Hancock Funds"), John Hancock Investor
Services Corporation ("Investor Services") and
Sovereign Asset Management Corporation
("SAMCorp"); (herein after the Adviser, the
Berkeley Group, NM Capital, Advisers
International, John Hancock Funds, Investor
Services and SAMCorp collectively referred to as
the "Affiliated Companies"); Chairman, First
Signature Bank & Trust; Director, John Hancock
Freedom Securities Corp., John Hancock Capital
Corp., New England/Canada Business Council;
Member, Investment Company Institute Board of
Governors; Director, Asia Strategic Growth Fund,
Inc.; Trustee, Museum of Science; President, the
Adviser (until July 1992); Chairman, John
Hancock Distributors, Inc. ("Distributors")
(until April 1994).
Thomas W.L. Cameron Director Chairman and Director, Sovereign Advisers, Inc.;
Interstate/Johnson Lane Senior Vice President, Interstate/Johnson Lane
1892 Andell Bluff Blvd. Corp. (securities dealer).
Johns Island, SC 29455
Charles F. Fretz Director (3) Consultant, self employed; Vice President and
RD #5, Box 300B Director, Towers, Perrin, Forster & Crosby, Inc.
Clothier Springs Road (international management consultants) (until
Malvern, PA 19355 1985).
</TABLE>
___________________
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company
Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the
Board of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
13
<PAGE> 192
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE COMPANY DURING THE PAST FIVE YEARS
---------------- ---------------- --------------------------
<S> <C> <C>
Jack P. Gould Director (1,3) Consultant and investor; Vice President,
25 Pecksland Road Secretary, Treasurer and Director of CAD Output
Greenwich, CT 06831 Inc. (laser photoplotting) (until 1993);
Director of Webb Distribution, Inc.
(distributor of electronic components) (until
1993).
Charles L. Ladner Director (3) Director, Energy North, Inc. (public utility
UGI Corporation holding company) (until 1992); Senior Vice
P.O. Box 858 President, Finance of UGI Corp. (gas
Valley Forge, PA 19482 distribution utility).
Patricia P. McCarter Director (3) Director and Secretary of the McCarter Corp.
Swedesford Road (machine manufacturer).
RD #3, Box 121
Malvern, PA 19355
Steven R. Pruchansky Director (1,3) Director and Treasurer, Mast Holdings, Inc.;
6920 Daniel Road Director, First Signature Bank & Trust Company
Naples, FL 33942 (until August 1991); General Partner, Mast
Realty Trust; President, Maxwell Building Corp.
(until 1991).
Norman H. Smith Director (3) Retired. Lieutenant General, United States
Rt. 1, Box 249 E Marine Corps; Deputy Chief of Staff for
Linden, VA 22642 Manpower and Reserve Affairs, Headquarters
Marine Corps; Commanding General, III Marine
Expeditionary Force/3rd Marine Division
(retired 1991).
</TABLE>
___________________
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company
Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the
Board of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
14
<PAGE> 193
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE COMPANY DURING THE PAST FIVE YEARS
---------------- ---------------- --------------------------
<S> <C> <C>
John P. Toolan Director (3) Director, The Muni Bond Funds, National
13 Chadwell Place Liquid Reserves, Inc., The Tax Free Money
Morristown, NJ 07960 Fund, Inc. and Vantage Money Market Funds
(mutual funds), and The Inefficient-Market
Fund, Inc. (closed-end investment company;
Chairman, Smith Barney Trust Company (retired
December, 1991); Director, Smith Barney,
Inc., Mutual Management Company and Smith
Barney Advisers, Inc. (investment advisers)
(until December 1991).
James F. Carlin Director Chairman and Chief Executive Officer, Carlin
233 West Central Street Consolidated, Inc. (insurance); Director,
Natick, MA 01760 Arabella Mutual Insurance Company; Receiver,
City of Chelsea, Massachusetts (until August
1992).
Harold R. Hiser, Jr. Director Executive Vice President, Schering-Plough
Schering-Plough Corporation Corporation (pharmaceuticals); Director,
One Giralda Farms ReCapital Corporation (reinsurance).
Madison, NJ 07940-1000
Robert G. Freedman* Vice Chairman and Chief Vice Chairman and Chief Investment Officer,
101 Huntington Avenue Investment Officer (2) the Adviser; President, the Adviser (until
Boston, MA 02199 December 1994).
Anne C. Hodsdon* Executive Vice President President and Chief Operations Officer, the
101 Huntington Avenue (2) Adviser; Executive Vice President, the
Boston, MA 02199 Adviser (until December 1994).
Thomas H. Drohan* Senior Vice President and Senior Vice President and Secretary of the
101 Huntington Avenue Secretary Adviser.
Boston, MA 02199
</TABLE>
___________________
* An "interested person" of the Company as such term is defined in the
1940 Act.
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the
Board of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
15
<PAGE> 194
<TABLE>
<CAPTION>
POSITIONS HELD WITH THE PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS COMPANY DURING THE PAST FIVE YEARS
---------------- ------- --------------------------
<S> <C> <C>
James K. Ho* Senior Vice Senior Vice President, the Adviser.
101 Huntington Avenue President (2)
Boston, MA 02199
James B. Little* Senior Vice President Senior Vice President, the Adviser.
101 Huntington Avenue and Chief Financial
Boston, MA 02199 Officer
Barry J. Gordon President President and Chairman of the Board of AFA,
1415 Kellum Place Director and President of the company and its
Suite 205 predecessors (until 1993); Chairman of the
Garden City, NY 11530 Board and President of National Value Fund,
Inc. ("NVF")(until 1992); Chairman of the
Board and Chief Executive Office (since 1990)
of Baseball Entrepreneurs, Inc. and (from 1991
until 1992) of Hamilton Baseball Associates,
Inc. (baseball club ownership); Co-Chairman of
the Board and Chief Executive Officer of Minor
League Sports Enterprises, Inc. (baseball club
ownership since 1992); vice Chairman of the
Board and Director of Kineret Acquisition
Corporation (food products) since 1993
Michael P. DiCarlo* Senior Vice President Senior Vice President, the Adviser
101 Huntington Avenue
Boston, MA 02199
</TABLE>
___________________
* An "interested person" of the Company as such term is defined in the
1940 Act.
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the
Board of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
16
<PAGE> 195
<TABLE>
<S> <C> <C>
Marc H. Klee* Senior Vice President Director and Senior Vice President of AFA;
1415 Kellum Place Senior Vice President of the Company and its
Suite 205 predecessors and NVF (until 1992); Director of
Garden City, NY 11530 Radyne Corp. (telecommunications equipment)
since 1990; Senior Vice President and
Treasurer (since 1990) of Baseball
Entrepreneurs, Inc. and (since 1991) of
Hamilton Baseball Associates, Inc. (baseball
club ownership); Vice President, Secretary and
Treasurer of Minor League Sports Enterprises,
Inc. (baseball club ownership) (since 1992).
Susan S. Newton* Vice President, Vice President and Assistant Secretary, the
101 Huntington Avenue Assistant Secretary and Adviser.
Boston, MA 02199 Compliance Officer
John A. Morin* Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, MA 02199
James J. Stokowski* Vice President and Vice President, the Adviser.
101 Huntington Avenue Treasurer
Boston, MA 02199
</TABLE>
________________
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company
Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the
Board of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
17
<PAGE> 196
The following table provides information regarding the compensation paid
b the Fund and the other investment companies in the John Hancock Fund Complex
to the Independent Directors for their services for each Fund's 1994 fiscal
year. The two non-Independent Directors, Messrs. Boudreau and Cameron, and
each of the officers of the Funds are interested persons of the Adviser, are
compensated by the Adviser and receive no compensation from the Fund for their
services.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE PENSION OR FROM THE FUND AND
COMPENSATION RETIREMENT BENEFITS ESTIMATED ANNUAL JOHN HANCOCK FUND
FROM ACCRUED AS PART OF BENEFITS UPON COMPLEX TO
INDEPENDENT DIRECTORS THE FUND THE FUND'S EXPENSES RETIREMENT DIRECTORS(1)(2)
- --------------------- ------------ ------------------- ---------------- ----------------
<S> <C> <C>
Charles F. Fretz $ 1,733 $ 60,350
Jack P. Gould 4,800 9,600
Charles L. Ladner 1,734 60,450
Patricia P. McCarter 1,734 60,200
Steven R. Pruchansky 1,794 62,450
Norman H. Smith 1,794 62,450
John P. Toolan 1,734 60,450
James F. Carlin 1,734 60,450
Harold R. Hiser, Jr. 1,640 56,000
Alonzo Horsey (deceased) 1,643 56,200
------- --------
$20,340 $548,600
</TABLE>
(1) The total compensation paid by the John Hancock Fund Complex to the
Independent Directors is as of the calendar year ended December 31, 1994.
(2) All Directors except Messers. Gould, Fretz and Hiser are Directors of 39
funds in the John Hancock Fund Complex. Messers. Fretz and Hiser are
Directors of 21 funds and Mr. Gould is a Director of two funds.
The nominees of the Funds may at times be the record holders of in
excess of 5% of shares of any one or more Funds by virtue of holding shares in
"street name." As of April 11, 1995 the officers and trustees of the Trusts as
a group owned less than 1% of the outstanding shares of each class of each of
the Funds.
As of April 11, 1995 the following shareholders beneficially owned 5% of
or more of the outstanding shares of the Funds listed below:
18
<PAGE> 197
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL
NUMBER OF SHARES OF OUTSTANDING SHARES OF
NAME AND ADDRESS OF SHAREHOLDER FUND AND CLASS OF SHARES BENEFICIAL INTEREST OWNED THE CLASS OF THE FUND
------------------------------- ------------------------ ------------------------- ---------------------
<S> <C> <C> <C>
REGISTRATION
NFSC FEBO #OC8-416983 Class B shares 8,645 15.59%
NFSC/FMTC IRA ROLLOVER
FBO Wlater S. Gilmore
140 Rounds Ave.
Riverside, RI 02915-1738
Tresco Construction Corp. Class B shares 6,695 12.07%
Domingo Cabrera #118
Urbanizacion Santa Rita
Rio Piedras, PR 00920
Smith Barney Inc. Class B shares 5,484 9.89%
00130113130
388 Greenwich Street
New York, NY 10013-2375
Patrick F. Fitzgerald Class B shares 3,445 6.21%
3660 East Cedar Lake Dr.
Greenbush, MI 48738-9702
NFSC FEBO #OC8-439428 Class B shares 3,259 5.88%
James P. Apostolou
Jean M. Apostoulou
Education
328 Brookline Dr.
Warwick, RI 02886-9511
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Prospectus, the Fund receives its investment advice
from the Adviser and the Sub-Adviser. Investors should refer to the Prospectus
for a description of certain information concerning the investment management
contract.
Each of the Directors and principal officers affiliated with the Company
who is also an affiliated person of the Adviser or Sub-Adviser is named above,
together with the capacity in which such person is affiliated with the Company,
the Adviser or Sub-Adviser.
As described in the Fund's Prospectus under the caption "Organization
and Management of the Fund," the Company on behalf of the Fund has entered into
an investment management contract with the Adviser dated December 6, 1991 and
amended as of January 1, 1994, under which the Adviser in conjunction with the
Sub-Adviser provides the Fund with a continuous investment program, consistent
with the Fund's stated investment objectives and policies. The Adviser is
responsible for the day to day management of the Fund's portfolio assets.
19
<PAGE> 198
The Adviser has entered into a sub-advisory contract with the
Sub-Adviser, dated December 6, 1991 under which the Sub-Adviser, subject to the
review of the Board of Directors and the overall supervision of the Adviser, is
responsible for providing the Fund with investment advice.
Securities held by the Fund may also be held by other funds or
investment advisory clients for which the Adviser, the Sub-Adviser or their
respective 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 Adviser or the
Sub-Adviser for the Fund or for other funds or clients for which the Adviser or
Sub-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
Adviser, the Sub-Adviser or their 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.
No person other than the Adviser and Sub-Adviser and their directors and
employees regularly furnish advice to the Fund with respect to the desirability
of the Fund's investing in, purchasing or selling securities. The Adviser and
Sub-Adviser may from time to time receive statistical or other similar factual
information, and information regarding general economic factors and trends,
from the John Hancock Mutual Life Insurance Company (the "Life Insurance
Company") and its affiliates.
Under the terms of the investment management contract with the Company,
the Adviser provides the Fund with office space, equipment, and the necessary
executive, clerical and secretarial personnel for the administration of the
affairs of the Fund. The Adviser pays the compensation and expenses of
officers and employees of the Fund and directors of the Company affiliated with
the Adviser, the office expenses of the Company, including those of the
Company's Treasurer's and Secretary's offices, and other expenses incurred by
the Adviser in connection with the performance of its duties.
All expenses which are not specifically paid by the Adviser and which
are incurred in the operation of the Fund (including fees of Directors of the
Company who are not "interested persons," as such term is defined in the
Investment Company Act but excluding certain distribution-related activities
required to be paid by the Adviser or John Hancock Funds) and the continuous
public offering of the shares of the Fund are borne by the Fund. Subject to
conditions set forth in a private letter ruling that the Fund has received from
the Internal Revenue Service relating to its multiple-class structure, class
expenses properly allocable to any of Class A and Class B shares will be borne
exclusively by such class of shares.
As discussed in the Prospectus and as provided by the investment
management contract, the Fund pays the Adviser a fee computed daily and payable
monthly, at an annual rate of 1% of the value of the net assets of the Fund up
to $100 million, and 3/4 of 1% of the value of the net assets over $100
million, as compensation for the services rendered by the Adviser. Effective
January 1, 1995, the Adviser began waiving a portion of the management fee
amounting to 0.15% of the
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average daily net asset value of the first $100,000,000 of the Fund. In
addition to the management fee, the Adviser receives an annual administration
fee of $100,000. The annual rate of compensation is higher than the rate paid
by most registered investment companies, but is believed to be comparable to
the fees paid by funds with comparable objectives. The Adviser, not the Fund,
pays the Sub-Adviser a monthly fee as described in the Prospectus. For the
years ended December 31, 1994, 1993 and 1992, the Adviser received management
fees of $690,068, $780,606 and $694,265 respectively, and an administration
fee of $100,000 from the Fund for each year. Subsequent to becoming the
Fund's investment adviser on December 6, 1991, the Adviser received management
and administration fees for 1991 of $48,147 and $6,849, respectively. AFA,
the Fund's investment adviser until December 6, 1991, received management fees
totaling $660,351 for 1991 and administration services in the amount of
$106,220. Management fees paid to AFA were calculated at the same rates, and
in the same manner, as they are currently calculated under the Adviser's
investment management contract.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, for any fiscal year are in excess of any
limitation imposed by a state where the Fund's shares are registered for sale,
the fee payable to the Adviser with respect to such Fund will be reduced to the
extent required by such law and the Adviser will make any additional
arrangements that the Adviser is required by law to make. Currently, the most
restrictive limit applicable to the Fund is 2.5% of the first $30,000,000 of
the Fund's average daily net asset value, 2% of the next $70,000,000 of such
assets and 1.5% of the remaining average daily net asset value.
Pursuant to the investment management contract and sub-advisory
contract, the Adviser and Sub-Adviser are not 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 their respective contract relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Adviser or Sub-Adviser in the performance of their duties or from reckless
disregard of its obligations and duties under the investment management
contract.
The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and currently has more than $13 billion in
assets under management in its capacity as investment adviser to the Fund and
other mutual funds and publicly traded investment companies in the John Hancock
group of funds, having a combined total of over 1,060,000 shareholders. The
Adviser is an affiliate of the John Hancock Mutual Life Insurance Company (the
"Life Insurance Co."), one of the most recognized and respected financial
institutions in the nation. With total assets under management of $80 billion,
the Life Insurance Company is one of the 10 largest life insurance companies in
the United States, and carries Standard & Poor's and A.M. Best's highest
ratings. Founded in 1862, John Hancock has been serving clients for over 130
years.
The Sub-Adviser, AFA, 1415 Kellum Place, Suite 205, Garden City, New
York 11530, was incorporated under the laws of New York in 1978. The
Sub-Adviser, subject to the supervision of the Adviser, manages the Fund's
investments. AFA also provides investment advisory and management services to
individual and institutional clients.
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<PAGE> 200
Pursuant to the sub-advisory contract, AFA provides day-to-day portfolio
management of the Fund. AFA furnishes the Adviser and the Company with advice
and recommendations, consistent with the investment policies, objectives and
restrictions of the Fund. AFA pays its own costs of maintaining staff and
personnel necessary for it to perform its obligations under the sub-advisory
contract, expenses of its office rent, telephone, telecommunications and other
facilities required by it to perform services and any other expenses, including
legal, audit and professional fees and expenses, incurred by it in connection
with the performance of its duties under the sub-advisory contract.
Each of the investment management and sub-advisory contracts has an
initial two-year term commencing upon the close of business on December 6,
1991, and thereafter continues in effect from year to year if approved annually
by a vote of a majority of the Directors who are not interested persons of one
of the parties to the contract ("Independent Directors"), cast in person at a
meeting called for the purpose of voting on such approval, and by either the
Board of Directors or the holders of a "majority" of the Fund's outstanding
voting securities as defined in the 1940 Act. Each of the contracts
automatically terminates upon assignment. Each contract may be terminated
without penalty on 60 days' notice at the option of either party to the
respective contract or by vote of a majority of the outstanding voting
securities of the Fund. The sub-advisory contract will terminate upon
termination of the Adviser's investment management contract.
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 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 next determined plus the applicable sales charge. In connection with the
sale of Class A and Class B shares, John Hancock Funds and Selling Brokers
receive compensation from a sales charge imposed, in the case of Class A
shares, at the time of sale or, in the case of Class B shares, on a deferred
basis. The sales charges are discussed further in the Fund's Class A and Class
B Prospectus.
To compensate John Hancock Funds for the services which it provides as
distributor of shares of the Fund, effective January 1, 1994, the Class A
shareholders of the Fund and the Board of Directors adopted a Distribution Plan
with respect to the Class A shares (the "Class A Plan"). For the same purpose,
effective January 1, 1994, the Board of Directors adopted a Distribution Plan
with respect to the Class B shares (individually, the "Class B Plan" and
together with the Class A Plan, the "Plans"). Each Plan was adopted pursuant
to Rule 12b-1 under the Investment Company Act. Under the Class A and Class B
Plans, the Fund will pay distribution and service fees at an aggregate annual
rate of 0.30% and 1.00% respectively, of the Fund's average daily net assets
attributable to the affected class, provided that the amount of the service fee
will not exceed 0.25% of such assets attributable to each class of shares. The
distribution fees reimburse John Hancock Funds for its distribution costs
incurred in the promotion of sales of shares of the Fund, and the service fees
compensate Selling Brokers for providing personal and account
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<PAGE> 201
maintenance services to shareholders. In the event that John Hancock Funds is
not fully reimbursed for expenses incurred by it under the Class B Plan in any
fiscal year, John Hancock Funds may carry these expenses forward, provided
however, that the Trustees may terminate the Class B Plan and thus the Fund's
obligation to make further payments at any time. Accordingly, the Fund does
not treat unreimbursed expenses relating to the Class B shares as a liability
of the Fund. The Class A Plan was approved by a majority of the voting
securities of the Fund and both Plans with all amendments were approved by a
majority of the Directors, including a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plans (the "Independent Directors"), by votes
cast in person at meetings called for the purpose of voting on such Plans.
Pursuant to the Plans, at least quarterly, John Hancock Funds provides
the Fund with a written report of the amounts expended under the Plans and the
purpose for which such expenditures were made. The Directors review such
reports on a quarterly basis. During the fiscal year ended December 31, 1994
the Funds paid Investor Services the following amounts of expenses with respect
to the Class A shares and Class B shares of each of the Funds:
<TABLE>
<CAPTION>
Printing and
Mailing of Compensation Interest,
Prospectuses to Expenses of Carrying or
to New Selling John Hancock Other Finance
Advertising Shareholders Brokers Funds Charges
----------- ------------ -------- ----- -------
National Aviation and
---------------------
Technology Fund
---------------
<S> <C> <C> <C> <C> <C>
Class A Shares $7,110 $6,995 $25,920 $15,980 $0
Class B Shares $0 $147 $681 $235 $16
</TABLE>
Each of the Plans provides that it will continue in effect only so long
as its continuance is approved at least annually by a majority of both the
Directors and the Independent Directors. Each of the Plans provides that it
may be terminated without penalty (a) by vote of a majority of the Independent
Directors, (b) by a majority of the Fund's outstanding shares of the applicable
class upon 60 days' written notice to John Hancock Funds, and (c) automatically
in the event of assignment. Each of the Plans further provides that it may not
be amended to increase the maximum amount of the fees for the services
described therein without the approval of a majority of the outstanding shares
of the class of the Fund which has voting rights with respect to the Plan. And
finally, each of the Plans provides that no material amendment to the Plan
will, in any event, be effective unless it is approved by a vote of a majority
of both the Directors and the Independent Directors of the Fund. The holders
of Class A shares and Class B shares have exclusive voting rights with respect
to the Plan applicable to their respective class of shares. In adopting the
Plans the Directors concluded that, in their judgment, there is a reasonable
likelihood that each Plan will benefit the holders of the applicable class of
shares of the Fund.
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When the Fund seeks an Independent Trustee to fill a vacancy or as a
nominee for election by shareholders, the selection or nomination of the
Independent Director is, under resolutions adopted by the Directors
contemporaneously with their adoption of the Plans, committed to the discretion
of the Committee on Administration are all Independent Directors and are
identified in this Statement of Additional Information under the heading "Those
Responsible for Management."
The Fund's distribution contract, discussed above, continues in effect
from year to year if approved annually by the vote of a majority of the
Independent Directors, cast in person at a meeting called for the purpose of
voting on such approval, and by either the Directors or the holders of a
majority of the outstanding shares of each class of the Fund which has voting
rights with respect to the contract. The contract automatically terminates
upon assignment and may be terminated without penalty on 60 days' notice at the
option of either party to the contract or by vote of a majority of the
outstanding shares of each class of the Fund which has voting rights with
respect to the contract.
NET ASSET VALUE
For purposes of calculating the net asset value ("NAV") of a Fund's
shares, the following procedures are utilized wherever applicable.
Debt investment securities are valued on the basis of valuations
furnished by a principal market maker or a pricing service, both of which
generally utilize electronic data processing techniques to determine valuations
for normal institutional size trading units of debt securities without
exclusive reliance upon quoted prices.
Equity securities traded on a principal exchange or NASDAQ National
Market Issues are generally valued at last sale price on the day of valuation.
Securities in the aforementioned category for which no sales are reported and
other securities traded over-the-counter are generally valued at the last
available bid price.
Short-term debt investments which have a remaining maturity of 60 days
or less are generally valued at amortized cost which approximates market value.
If market quotations are not readily available or if in the opinion of the
Adviser any quotation or price is not representative of true market value, the
fair value of the security may be determined in good faith in accordance with
procedures approved by the Trustees.
Any assets or liabilities expressed in terms of foreign currencies are
translated into U.S. dollars by the custodian bank based on London currency
exchange quotations as of 5:00 p.m., London time (12:00 noon, New York time) on
the date of any determination of a Fund's NAV.
A Fund will not price its securities on the following national holidays:
New Year's Day; Presidents' Day; Good Friday; Memorial Day; Independence Day;
Labor Day; Thanksgiving Day; and Christmas Day. On any day an international
market is closed and the New York Stock Exchange is open, any foreign
securities will be valued at the prior day's close with the current day's
exchange rate. Trading of foreign securities may take place on Saturdays and
U.S. business holidays on which a Fund's NAV is not calculated. Consequently,
a Fund's portfolio securities
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<PAGE> 203
may trade and the NAV of the Fund's redeemable securities may be significantly
affected on days when a shareholder has no access to the Fund.
INITIAL SALES CHARGE ON CLASS A SHARES
The sales charges applicable to purchases of Class A shares of the Fund
are described in the Fund's Class A and Class B Prospectus. Methods of
obtaining a reduced sales charge referred to generally in the Class A and Class
B Prospectus are described in detail below. In calculating the sales charge
applicable to current purchases of Class A shares, the investor is entitled to
accumulate current purchases with the greater of the current value (at offering
price) of the Class A shares of the Fund, or if Investor Services is notified
by the investor's dealer or the investor at the time of the purchase, the cost
of the Class A shares owned.
Combined Purchases. In calculating the sales charge applicable to
purchases of Class A shares made at one time, the purchases will be combined if
made by (a) an individual, his spouse and their children under the age of 21,
purchasing securities for his or their own account, (b) a trustee or other
fiduciary purchasing for a single trust, estate or fiduciary account, and (c)
certain groups of four or more individuals making use of salary deductions or
similar group methods of payment whose funds are combined for the purchase of
mutual fund shares. Further information about combined purchases, including
certain restrictions on combined group purchases, is available from a John
Hancock Funds' or Selling Broker's representative.
Without Sales Charge. As described in the Class A and Class B
Prospectus, Class A shares of the Fund may be sold without a sales charge to
persons described in the prospectus.
Accumulation Privilege. Investors (including investors combining
purchases) who are already Class A shareholders may also obtain the benefit of
a reduced sales charge by taking into account not only the amount then being
invested but also the purchase price or value of the Class A shares already
held by such person.
Combination Privilege. Reduced sales charges (according to the schedule
set forth in the Prospectus) also are available to an investor based on the
aggregate amount of his concurrent and prior investments in Class A shares of
the Fund and shares of all other John Hancock funds which carry a sales charge.
Letter of Intention. The reduced sales charges are also applicable to
investments made over a specified period pursuant to a Letter of Intention
("LOI"), which should be read carefully prior to its execution by an investor.
The Fund offers two options regarding the specified period for making
investments under the LOI. All investors have the option of making their
investment over a specified period of (13) months. Investors who are using the
Fund as a funding medium for a qualified retirement plan, however, may opt to
make the necessary investment called for by the LOI over a (48) month period.
These qualified retirement plans include IRA's, SEP, SARSEP, TSA, 401(k) and
457 plans. Such an investment (including accumulations and combinations) must
aggregate $100,000 or more invested during the specified period from the date
of the LOI or from a date within (90) days prior thereto, upon written request
to Investor Services. The sales charge applicable to all amounts invested
under the LOI is computed as if the aggregate amount intended to be invested
had been invested immediately. If such aggregate amount is not
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<PAGE> 204
actually invested, the difference in the sales charge actually paid and the
sales load payable had the LOI not been in effect is due from the investor.
However, for the purchases actually made within the specified period, the sales
charge applicable will not be higher than that which would have applied
(including accumulations and combinations) had the LOI been for the amount
actually invested.
The LOI authorizes Investor Services to hold in escrow sufficient Class
A shares (approximately 5% of the aggregate) to make up any difference in sales
charges on the amount intended to be invested and the amount actually invested,
until such investment is completed within the specified period, at which time
the escrow shares will be released. If the total investment specified in the
LOI is not completed, the Class A shares held in escrow may be redeemed and the
proceeds used as required to pay such sales charge as may be due. By signing
the LOI, the investor authorizes Investor Services to act as his
attorney-in-fact to redeem any escrowed shares and adjust the sales charge, if
necessary. An LOI does not constitute a binding commitment by an investor to
purchase, or by the Fund to sell, any additional Class A shares and may be
terminated at any time.
DEFERRED SALES CHARGE ON CLASS B SHARES
Investments in Class B shares are purchased at net asset value per share
without the imposition of an initial sales charge so that the Fund will receive
the full amount of the purchase payment.
Contingent Deferred Sales Charge. Class B shares which are redeemed
within six years of purchase will be subject to a contingent deferred sales
charge ("CDSC") at the rates set forth in the Class A and Class B Prospectus as
a percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the current market value or the
original purchase cost of the Class B shares being redeemed. Accordingly, no
CDSC will be imposed on increases in account value above the initial purchase
prices, including Class B shares derived from reinvestment of dividends or
capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of
years from the time of payment for the purchase of Class B shares until the
time of redemption of such shares. Solely for purposes of determining the
number of years from the time of any payment for the purchases of shares, all
payments during a month will be aggregated and deemed to have been made on the
last day of the month.
Proceeds from the CDSC are paid to John Hancock Funds and are used in
whole or in part by John Hancock Funds to defray its expenses related to
providing distribution-related services to the Fund in connection with the sale
of the Class B shares such as the payment of compensation to select selling
Brokers for selling Class B shares. The combination of the CDSC and the
distribution and service fees enables the Fund to sell the Class B shares
without a sales charge being deducted at the time of the purchase. See the
Class A and Class B Prospectus for additional information regarding the CDSC.
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<PAGE> 205
SPECIAL REDEMPTIONS
Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed by the Board of Directors. If the shareholder were to
sell portfolio securities received in this fashion he would incur a brokerage
charge. Any such securities would be valued for the purposes of making such
payment at the same value as used in determining net asset value. The Fund
has, however, elected to be governed by Rule 18f-1 under the Investment Company
Act. Under that rule, the Fund must redeem its shares for cash except to the
extent that the redemption payments to any one shareholder during any 90-day
period would exceed the lesser of $250,000 or 1% of the Fund's net asset value
at the beginning of such period.
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege. As described more fully in the Class A and Class B
Prospectus, the Fund permits exchanges of shares of any class of the Fund for
shares of the same class in any other John Hancock fund offering that class.
Systematic Withdrawal Plan
As described briefly in the Class A and Class B Prospectus, the Fund
permits the establishment of a Systematic Withdrawal Plan. Payments under this
plan represent proceeds arising from the redemption of Fund shares. Since the
redemption price of the shares of the Fund may be more or less than the
shareholder's cost, depending upon the market value of the securities owned by
the Fund at the time of redemption, the distribution of cash pursuant to this
plan may result in realization of gain or loss for purposes of Federal, state
and local income taxes. The maintenance of a Systematic Withdrawal Plan
concurrently with purchases of additional Class A or Class B shares of the Fund
could be disadvantageous to a shareholder because of the initial sales charge
payable on such purchases of Class A shares and the CDSC imposed on redemptions
of Class B shares and because redemptions are taxable events.
Therefore, a shareholder should not purchase Class A and Class B Fund
shares at the same time as a Systematic Withdrawal Plan is in effect. The Fund
reserves the right to modify or discontinue the Systematic Withdrawal Plan of
any shareholder on 30 days' prior written notice to such shareholder, or to
discontinue the availability of such plan in the future. The shareholder may
terminate the plan at any time by giving proper notice to Investor Services.
Monthly Automatic Accumulation Program ("MAAP")
This program is explained fully in the Fund's Class A and Class B
Prospectus and the Account Privileges Application. The program, as it relates
to automatic investing, is subject to the following conditions:
The investments will be drawn on or about the day of the month indicated.
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<PAGE> 206
The privilege of making investments through the Monthly Automatic
Accumulation Program may be revoked by Investor Services without prior notice
if any investment is not honored by the shareholder's bank. The bank shall be
under no obligation to notify the shareholder as to the non-payment of any
check.
The program may be discontinued by the shareholder either by calling
Fund Services or upon notice to Investor Services which is received at least
five (5) business days prior to the processing date of any investment.
Reinvestment Privilege. A shareholder who has redeemed Fund shares may,
within 120 days after the date of redemption, reinvest without payment of a
sales charge any part of the redemption proceeds in shares of the same class of
the Fund or in any of the other John Hancock funds, subject to the minimum
investment limit in that fund. The proceeds from the redemption of Class A
shares may be reinvested at net asset value without paying a sales charge in
Class A shares of the Fund or in Class A shares of another John Hancock mutual
fund. If a CDSC was paid upon a redemption, a shareholder may reinvest the
proceeds from that redemption at net asset value in additional shares of the
class from which the redemption was made. The shareholder's account will be
credited with the amount of any CDSC charged upon the prior redemption and the
new shares will continue to be subject to the CDSC. The holding period of the
shares acquired through reinvestment will, for purposes of computing the CDSC
payable upon a subsequent redemption, include the holding period of the
redeemed shares. The Fund may modify or terminate the reinvestment privilege
at any time.
A redemption or exchange of Fund shares is a taxable transaction for
Federal income tax purposes. Any gain realized is recognized for tax purposes
even if the reinvestment privilege is exercised, and any loss realized by a
shareholder on the redemption or other disposition of Fund shares will be
treated as described under the caption "Tax Status."
TAX STATUS
Each series of the Company, including the Fund, is treated as a separate
entity for accounting and tax purposes. The Fund has qualified and elected to
be treated as a "regulated investment company" under Subchapter M of the
Internal Revenue Code (the "Code") and intends 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) distributed to shareholders at
least annually.
Distributions of net investment income (which includes original issue
discount and certain market discount income) and any net realized capital
gains, as computed for Federal income tax purposes, will be taxable as
described in the Prospectus whether made in shares or in cash. Shareholders
electing to receive distributions in the form of additional shares will have a
cost basis for Federal income tax purposes in each share so received equal to
the amount of cash that they would have received had they elected to receive
the distributions in cash.
Options written by the Fund may cause the Fund to recognize gains or
losses from marking-to-market at the end of its taxable year even though such
options may not have lapsed, been
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<PAGE> 207
closed out, or exercised and may affect the characterization as long-term or
short-term of some capital gains and losses realized by the Fund. Losses on
certain options and/or offsetting positions may also be deferred under certain
straddle rules, which may also affect the characterization of capital gains or
losses as long-term or short-term. Additionally, written covered call options
on portfolio stocks could reduce the portion of the Fund's dividend income that
potentially qualifies for the dividends-received deduction for corporate
shareholders by suspending the Fund's holding period for such stocks, unless
these options satisfy the requirements for treatment as "qualified covered call
options." The Fund will take into account the special tax rules applicable to
options, including the straddle rules, in order to minimize any potential
adverse tax consequences.
Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, forward foreign currency contracts, foreign currencies, or payables
or receivables denominated in a foreign currency are subject to Section 988 of
the Code, which generally causes such gains and losses to be treated as
ordinary income and losses and may affect the amount, timing and character of
distributions to shareholders. Any such transactions that are not directly
related to the Fund's investments in stock or securities may increase the
amount of gain it is deemed to recognize from the sale of certain investments
held for less than 3 months, which gain is limited under the Code to less than
30% of its annual gross income, and may under future Treasury regulations
produce income not among the types of "qualifying income" from which the Fund
must derive at least 90% of its annual gross income. If the net foreign
exchange loss for a year were to exceed the Fund's net investment income
(computed without regard to such loss, but after considering the post-October
loss regulations) the resulting overall ordinary loss for such year would not
be deductible by the Fund or its shareholders in future years.
If the Fund acquires stock in certain non-U.S. corporations that receive
at least 75% of their annual gross income from passive sources (such as sources
that produce interest, dividend, rental, royalty or capital gain income) or
hold at least 50% of their assets in such passive sources ("passive foreign
investment companies"), the Fund could be subject to Federal income tax and
additional interest charges on "excess distributions" received from such
companies or gain from the sale of stock in such companies, even if all income
or gain actually received by the Fund is timely distributed to its
shareholders. The Fund would not be able to pass through to its shareholders
any credit or deduction for such a tax. In certain cases, an election may be
available that would ameliorate these adverse tax consequences. The Fund may
limit its investments in passive foreign investment companies and will
undertake appropriate actions, including the consideration of any available
elections, to limit its tax liability, if any, with respect to such investment.
The amount of net realized capital gains, if any, in any given year will
result from options transactions and sales of securities made with a view to
the maintenance of a portfolio believed by the Fund's management to be most
likely to attain the Fund's objective. Such sales, and any resulting gains or
losses, may therefore vary considerably from year to year. Since, at the time
of an investor's purchase of Fund shares, a portion of the per share net asset
value by which the purchase price is determined may be represented by realized
or unrealized appreciation in the Fund's portfolio or undistributed taxable
income of the Fund, subsequent distributions (or portions thereof) on such
shares may be taxable to such investor even if the net asset value of his
shares is,
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as a result of the distributions, reduced below his cost for such shares and
the distributions (or portions thereof) in reality represent a return of a
portion of the purchase price.
Upon a redemption of shares (including by exercise of the exchange
privilege) a shareholder will ordinarily realize a taxable gain or loss
depending upon his basis in his shares. This gain or loss will be treated as
capital gain or loss if the shares are capital assets in the shareholder's
hands and will be long-term or short-term, depending upon the shareholder's
holding period for the shares. A sales charge paid in purchasing Class A
shares of the Fund cannot be taken into account for purposes of determining
gain or loss on the redemption or exchange of these shares within (90) days
after their purchase to the extent Class A shares of the Fund or another John
Hancock fund are subsequently acquired without payment of a sales charge
pursuant to the reinvestment or exchange privilege. Such disregarded charge
will result in an increase in the shareholder's tax basis in the shares
subsequently acquired. Also, any loss realized on a redemption or exchange
will be disallowed to the extent the shares disposed of are replaced within a
period of (61) days beginning (30) days before and ending (30) days after the
shares are disposed of, such as pursuant to the Dividend Reinvestment Plan. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized upon the redemption of shares with a tax
holding period at the time of redemption of six months or less will be treated
as a long-term capital loss to the extent of any amounts treated as
distributions of long-term capital gain with respect to such shares.
Although the Fund's present intention is to distribute all net realized
capital gains, if any, the Fund reserves the right to retain and reinvest all
or any portion of the excess, as computed for Federal income tax purposes, of
net long-term capital gain over net short-term capital loss in any year. The
Fund will not in any event distribute net long-term capital gain realized in
any year to the extent that a capital loss is carried forward from prior years
against such gain. To the extent such excess was retained and not exhausted by
the carry-forward of prior years' capital losses, it would be subject to
Federal income tax in the hands of the Fund. Each shareholder would be treated
for Federal income tax purposes as if the Fund had distributed to him on the
last day of its taxable year his pro rata share of such excess, and he had paid
his pro rata share of the taxes paid by the Fund and reinvested the remainder
in the Fund. Accordingly, each shareholder would (a) include his pro rata
share of such excess as long-term capital gain income in his return for his
taxable year in which the last day of the Fund's taxable year falls, (b) be
entitled either to a tax credit on his return for, or to a refund of, his pro
rata share of the taxes paid by the Fund, and (c) be entitled to increase the
adjusted tax basis for his Fund shares by the difference between his pro rata
share of this excess and his pro rata share of these taxes.
For Federal income tax purposes, the Fund is permitted to carry forward
a net realized capital loss in any year to offset net realized capital gains,
if any, during the eight years following the year of the loss. To the extent
subsequent net realized capital gains are offset by such losses, they would not
result in Federal income tax liability to the Fund and as noted above would not
be distributed as such to shareholders. Presently, there are no realized
capital loss carry-forwards available to offset against future net realized
capital gains.
A portion of distributions representing dividend income is normally
eligible for the dividends-received deduction for corporations, to the extent
of qualifying dividends received by the Fund from U.S. domestic corporations.
Capital gain distributions do not qualify for the
30
<PAGE> 209
dividends-received deduction allowable to corporations. Corporate shareholders
which borrow to acquire or retain Fund shares may be denied a portion of the
dividends-received deduction and may not be eligible for any deduction if they
fail to meet applicable holding period requirements. The entire qualifying
dividend, including the otherwise-deductible amount, will be included in
determining the excess (if any) of a corporation's adjusted current earnings
over its alternative minimum taxable income, which may increase a corporate
shareholder's alternative minimum tax liability, if any. Such shareholder's
tax basis in its Fund shares may also be reduced to the extent of any
"extraordinary dividends," as determined under applicable Code provisions.
The Fund may be subject to withholding and other taxes imposed by
foreign countries with respect to the Fund's investments in the obligations of
foreign issuers located in such countries. Tax conventions between certain
countries and the U.S. may reduce or eliminate such taxes. Investors may be
entitled to claim U.S. foreign tax credits with respect to such taxes, subject
to certain provisions and limitations contained in the Code. Specifically, if
more than 50% of the Fund's total assets at the close of any taxable year
consists of stock or 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.
Shareholders 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.
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 separate category 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.
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 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.
The foregoing discussion relates solely to U.S. Federal income tax law
as 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
this law. The discussion does not address special tax rules applicable
31
<PAGE> 210
to certain classes of investors, such as Tax-Exempt entities, insurance
companies and financial institutions. Dividends, capital gain distributions,
and ownership of or gains realized on the exchange or redemption of shares 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 the Fund in particular circumstances.
Foreign investors not engaged in a 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, including a
possible 30% U.S. withholding tax (or lower treaty rate) on dividends
representing ordinary income, and should consult their tax advisers regarding
the treatment and the application of foreign taxes to an investment in the
Fund.
DESCRIPTION OF THE FUND'S SHARES
The Company's Articles of Incorporation permit the Board of Directors to
issue 200 million shares of capital stock of the aggregate par value of $61
million. The Fund consists of 80 million shares, $1.25 par value broken down
into two classes, A and B, of 40 million shares each. Each share represents an
equal proportionate interest in the Fund with each other share. Upon
liquidation of the Fund, holders are entitled to share pro rata in the net
assets of the Fund available for distribution to such holders. Shares have no
preemptive or conversion rights. Shares are fully paid and non assessable by
the Fund and are freely transferable. The shareholders of the Company are
entitled to a full vote for each full share held and to a fractional vote for
fractional shares on all matters in which they are entitled to vote.
The Board of Directors currently have authorized the issuance of two
series of shares: the John Hancock Freedom Global Technology Fund and the
Fund. The Board of Directors may authorize the creation of additional series
of shares with such preferences, privileges, limitations and voting and
dividend rights as the Board of Directors may determine. The proceeds of sales
of shares of any additional series would be invested in separate, independently
managed portfolios with distinct investment objectives, policies and
restrictions, and share purchase, redemption and net asset valuation
procedures. All consideration received by the Company for sales of shares of
any additional series, and all assets in which such consideration is invested,
would belong to that series (subject only to the rights of creditors of such
series) and would be subject to the liabilities related thereto. Pursuant to
the Investment Company Act, shareholders of any additional series would
normally have to approve the adoption of any management contract or
distribution plan relating to such series and of any changes in the investment
policies related thereto.
The shares of each class represent an equal proportionate interest in
the assets attributable to that class of the Fund. The holders of Class A and
Class B shares each have certain exclusive voting rights on matters relating to
their respective Rule 12b-1 distribution plans. The different classes of the
Fund may bear different expenses relating to the cost of holding shareholder
meetings necessitated by the exclusive voting rights of any class of shares.
Shares of the Fund may be exchanged only for shares of the same class in
another fund sponsored by the Adviser (and for the shares of John Hancock Cash
Management Fund, a money market fund.) Dividends paid by the Fund, if any,
with respect to each class of shares will be calculated in the same manner at
the same time on the same day and will be in the same amount,
32
<PAGE> 211
except that (i) Class B shares will pay higher distribution fees than Class A
shares and (ii) each of Class A and Class B shares will bear any other class
expenses properly allocable to such class of shares, subject to conditions set
forth in a private letter ruling that the Fund has received from the Internal
Revenue Service relating to its multiple-class structure. Similarly, the net
asset value per share may vary depending on the class of shares purchased.
The Board of Directors has the power to alter the number and the terms
of office of the Directors, to lengthen their own terms, or to make their terms
of unlimited duration, subject to certain removal procedures, and to appoint
their own successors; provided that at least a majority of Directors has been
elected by the shareholders. The voting rights of shareholders are not
cumulative so that holders of more than 50% of the shares voting can, if they
choose, elect all Directors being selected while the holders of the remaining
shares would be unable to elect any Directors. It is the intention of the
Company not to hold annual meetings of shareholders. The Directors may call
special meetings of shareholders for action by shareholder vote as may be
required by either the Investment Company Act or the Company's Charter. At any
meeting called for the purpose of removing from office any director, the
shareholders may, by vote of the holders of a majority of the outstanding
shares entitled to vote, remove from office any director and elect a successor,
unless the number of directors constituting the whole board is accordingly
decreased.
CALCULATION OF PERFORMANCE
The average annual total return for Class A shares of the Fund for the 1
year, 5 year and 10 year periods ended December 31, 1994 was (18.48)%, 1.46%
and 8.68%, respectively. The average annual total return for Class B shares of
the Fund for the one year period ended December 31, 1994 was (18.84)%.
The Fund's total return is computed by finding the average annual compounded
rate of return over the 1 year, 5 year and 10 year periods that would equate
the initial amount invested to the ending redeemable value according to the
following formula:
n ____
T = V ERV / P - 1
Where:
P = a hypothetical initial investment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 investment made
at the beginning of the 1 year, 5 year and 10 year periods.
33
<PAGE> 212
This calculation assumes the maximum sales charge of 5.00% is included
in the initial investment or the CDSC is applied at the end of the period.
This calculation assumes that all dividends and distributions are reinvested at
net asset value on the reinvestment dates during the period. The "distribution
rate" is determined by annualizing the result of dividing the declared
dividends of the Fund during the period stated by the maximum offering price or
net asset value at the end of the period.
In addition to average annual total returns, the Fund may quote
unaveraged or cumulative total returns reflecting the change in value of an
investment over a stated period. Cumulative total returns may be quoted as a
percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments, and/or a series of redemptions, over any
time period. Total returns may be quoted with or without taking the Fund's
5.00% sales charge on Class A shares or the CDSC on Class B shares into
account. Excluding the Fund's sales charge on Class A shares and the CDSC on
Class B shares from a total return calculation produces a higher total return
figure.
From time to time, in reports and promotional literature, the Fund's
total return will be ranked or compared to indices of mutual funds. Such
indices may include Lipper Analytical Services, Inc.'s "Lipper-Mutual
Performance Analysis" monthly publication which tracks net assets and total
return on equity mutual funds in the United States. Ibottson and Associates,
CDA Weisenberger and F.C. Towers are also used for comparison purposes, as well
as the Russell and Wilshire Indices.
Performance rankings and ratings reported periodically in national
financial publications such as Money magazine, Forbes, Business Week, Micropal,
Inc., Morningstar Inc., The Wall Street Journal, Stanger's and Barron's etc.,
may also be utilized.
The performance of the Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representations of performance of the
Fund for any period in the future. The performance of the Fund is a function
of many factors including its earnings, expenses and number of outstanding
shares. Fluctuating market conditions; purchases, sales and maturities of
portfolio securities; sales and redemptions of shares of capital stock; and
changes in operating expenses are all examples of items that can increase or
decrease the Fund's performance.
BROKERAGE ALLOCATION
Decisions concerning the purchase and sale of portfolio securities of
the Fund are made by the Adviser pursuant to recommendations made by its
investment committee, which consists of officers and directors of the Adviser
and officers and Directors of the Company who are interested persons of the
Company, and by the Sub-Adviser. Orders for purchases and sales of securities
are placed in a manner, which, in the opinion of the Adviser, 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
maker 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.
34
<PAGE> 213
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 National Association of
Securities Dealers, Inc. and other policies that the Directors other policies
as the Directors may determine, the Adviser and the Sub-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
Adviser and Sub-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 Adviser and Sub-Adviser. The
receipt of research information is not expected to reduce significantly the
expenses of the Adviser and Sub-Adviser. The research information and
statistical assistance furnished by brokers and dealers may benefit the Life
Insurance Company or other advisory clients of the Adviser, and, conversely,
brokerage commissions and spreads paid by other advisory clients of the Adviser
may result in research information and statistical assistance beneficial to the
Fund. Similarly, research information and assistance provided to the
Sub-Adviser by brokers and dealers may benefit other advisory clients or
affiliates of the Sub-Adviser. The Fund will make no commitment to allocate
portfolio transactions upon any prescribed basis. While the Adviser, together
with the Sub-Adviser, will be primarily responsible for the allocation of the
Fund's brokerage business, the policies and practices of the Adviser in this
regard must be consistent with the foregoing and will at all times be subject
to review by the Board of Directors.
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 Board of Directors
that the price is reasonable in light of the services provided and to policies
that the Board of Directors may adopt from time to time. During the fiscal
year ended December 31, 1994, the Fund directed commissions in the amount of
$12,600 to compensate brokers for research services such as industry, economic
and company reviews and evaluations of securities.
The Adviser's indirect parent, Life Insurance Company, is the indirect
sole shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, two of which, Tucker Anthony Incorporated, John Hancock
Distributors and Sutro & Company, Inc., are broker-dealers ("Affiliated
Brokers"). Pursuant to procedures determined by the Directors and consistent
with the policy of obtaining best net results, the Company 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 Affiliated Brokers.
35
<PAGE> 214
During 1992, 1993 and 1994, the Fund paid total brokerage commissions,
excluding spreads or commissions on principal transactions, of $68,478, $47,149
and $64,175, respectively. During 1994, the Fund did not pay any brokerage
commissions to any Affiliated Brokers.
TRANSFER AGENT SERVICES
John Hancock Investor Services Corporation P.O. Box 9116, Boston, MA
02205-9116, a wholly-owned indirect subsidiary of Life Insurance Co., is the
transfer and dividend paying agent for the Fund. The Fund pays Investor
Services an annual fee for Class A of $16.00 per shareholder account and for
Class B shares of $18.50 plus certain out-of-pocket expenses.
CUSTODY OF PORTFOLIO
Since July 1, 1992, the portfolio securities of the Fund have been held
by Investors Bank & Trust Company, as custodian. Prior to July 1, 1992,
portfolio securities of the Fund were held pursuant to an agreement between the
Company on behalf of the Fund and State Street Bank & Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, as custodian. The Custodian
performs custody, portfolio and Fund accounting services. The Board of
Directors has determined that, except as otherwise permitted under applicable
Securities and Exchange Commission "no- action" letters or exemptive orders, it
is in the best interest of the Fund to hold foreign assets of the Fund in
qualified foreign banks and depositories meeting the requirements of Rule 17f-5
under the Investment Company Act.
INDEPENDENT AUDITORS
The independent auditors of the Fund are Price Waterhouse LLP, Boston,
Massachusetts 02110. The independent auditors audit and render an opinion on
the Fund's annual financial statements and prepare the Fund's annual income tax
returns.
36
<PAGE> 215
FINANCIAL STATEMENTS
John Hancock Funds - National Aviation & Technology Fund
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON DECEMBER 31, 1994. YOU'LL
ALSO FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER SHARE AS OF
THAT DATE.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
- ---------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Common and preferred stocks and warrants
(cost - $33,988,700)............................... $52,431,531
Bonds (cost - $1,258,358)............................ 1,186,710
Joint repurchase agreement (cost - $284,000)......... 284,000
Corporate saving account............................. 750
----------
53,902,991
Receivable for investments sold........................ 1,524,500
Receivable for shares sold............................. 1,737
Dividends receivable................................... 15,000
Interest receivable.................................... 26,856
Miscellaneous receivable............................... 16,941
----------
Total Assets................... 55,488,025
--------------------------------------------------
LIABILITIES:
Payable for shares repurchased......................... 57,138
Payable to John Hancock Advisers, Inc. and affiliates -
Note B............................................... 54,623
Accounts payable and accrued expenses.................. 51,629
----------
Total Liabilities.............. 163,390
--------------------------------------------------
NET ASSETS:
Capital paid-in - Note D............................... 36,953,452
Net unrealized appreciation of investments............. 18,371,183
----------
Net Assets..................... $55,324,635
==================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding - 40 million shares authorized
with $1.25 per share par value, respectively)
Class A - $54,840,078 /7,579,596....................... $ 7.24
==========================================================================
Class B - $484,557/67,821.............................. $ 7.14
==========================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($7.24 x 105.26)%............................ $ 7.62
==========================================================================
<FN>
** On single retail sales of less than $50,000. On sales of $50,000 or more
and on group sales the offering price is reduced.
** Class B shares commenced operations on January 3, 1994.
</TABLE>
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED
AND EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES)
FOR THE PERIOD STATED.
<TABLE>
STATEMENT OF OPERATIONS
Year ended December 31, 1994
- ---------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends.................................................. $ 487,545
Interest................................................... 419,567
-----------
907,112
-----------
Expenses:
Investment management fee - Note B....................... 690,068
Administration fee....................................... 100,000
Transfer agent fee - Note B
Class A.............................................. 82,679
Class B**............................................ 151
Distribution/service fee - Note B
Class A.............................................. 56,005
Class B**............................................ 1,079
Registration and filing fees............................. 48,304
Custodian fee............................................ 45,694
Auditing fee............................................. 27,500
Directors' fees.......................................... 21,767
Printing................................................. 20,492
Miscellaneous............................................ 6,577
Legal fees............................................... 4,252
-----------
Total Expenses....................... 1,104,568
----------------------------------------------------
Net Investment Loss.................. (197,456)
----------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND OPTIONS:
Net realized gain on investments sold...................... 15,688,423
Net realized gain on options............................... 43,449
Change in net unrealized appreciation/depreciation
of investments........................................... (26,248,652)
-----------
Net Realized and Unrealized
Loss on Investments
and Options.......................... (10,516,780)
----------------------------------------------------
Net Decrease in Net Assets
Resulting from Operations............ $(10,714,236)
====================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 216
FINANCIAL STATEMENTS
John Hancock Funds - National Aviation & Technology Fund
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1993
------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss.............................................................. $ (197,456) $ (513,565)
Net realized gain on investments sold and options................................ 15,731,872 8,069,779
Change in net unrealized appreciation/depreciation of investments................ (26,248,652) 6,962,838
------------- ------------
Net Increase (Decrease) in Net Assets Resulting from Operations................ (10,714,236) 14,519,052
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gain on investments sold and options
Class A - ($2.4704 and $1.1714 per share, respectively)........................ (15,479,601) (7,555,479)
Class B ** - ($2.4704 and none per share, respectively)........................ (114,033) --
------------- ------------
Total Distributions to Shareholders.......................................... (15,593,634) (7,555,479)
------------- ------------
FROM FUND SHARE TRANSACTIONS -- NET*............................................... 4,071,478 (509,603)
------------- ------------
NET ASSETS:
Beginning of period.............................................................. 77,561,027 71,107,057
------------- ------------
End of period ................................................................... $ 55,324,635 $77,561,027
============= ============
<FN>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1994 1993
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................................. 73,479 $ 780,882 82,066 $ 991,562
Shares issued to shareholders in reinvestment of distributions.......... 1,341,271 9,684,264 413,466 4,651,425
---------- ------------ --------- ------------
1,414,750 10,465,146 495,532 5,642,987
Less shares repurchased................................................. (685,600) (7,002,388) (520,848) (6,152,590)
---------- ------------ --------- ------------
Net increase (decrease)............................................... 729,150 $ 3,462,758 (25,316) $ (509,603)
========== ============ ========= ============
CLASS B **
Shares sold............................................................. 58,006 $ 556,005
Shares issued to shareholders in reinvestment of distributions.......... 16,130 115,006
---------- ------------
74,136 671,011
Less shares repurchased............................................... (6,315) (62,291)
---------- ------------
Net increase........................................................ 67,821 $ 608,720
========== ============
<FN>
**Class B shares commenced operations on January 3, 1994.
</TABLE>
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S
NET ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE
REFLECTS EARNINGS LESS EXPENSES, ANY INVESTMENT AND OPTION GAINS AND LOSSES,
DISTRIBUTIONS PAID TO SHAREHOLDERS, AND ANY INCREASE OR DECREASE IN MONEY
SHAREHOLDERS INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND
SHARES SOLD, REINVESTED AND REDEEMED, DURING THE LAST TWO PERIODS, ALONG WITH
THE CORRESPONDING DOLLAR VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 217
FINANCIAL STATEMENTS
John Hancock Funds - National Aviation & Technology Fund
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated; investment returns, key ratios and supplemental data are as
follows:
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1994 1993 1992 1991(c) 1990(c)
------- ------- ------- ------- -------
CLASS A
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period...................................... $ 11.32 $ 10.34 $ 10.91 $ 8.84 $ 11.67
------- ------- ------- ------- -------
Net Investment Income (Loss).............................................. (0.03)(a) (0.07) (0.01)(a) 0.05 0.10
Net Realized and Unrealized Gain (Loss) on Investments and Options........ (1.58) 2.22 0.31 2.70 (2.33)
------- ------- ------- ------- -------
Total from Investment Operations....................................... (1.61) 2.15 0.30 2.75 (2.23)
------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income...................................... -- -- -- (0.03) (0.10)
Distributions from Net Realized Gain on Investments Sold and Options...... (2.47) (1.17) (0.87) (0.65) (0.50)
------- ------- ------- ------- -------
Total Distributions.................................................... (2.47) (1.17) (0.87) (0.68) (0.60)
------- ------- ------- ------- -------
Net Asset Value, End of Period............................................ $ 7.24 $ 11.32 $ 10.34 $ 10.91 $ 8.84
======= ======= ======= ======= =======
Total Investment Return at Net Asset Value................................ (14.16)% 20.88% 3.02% 31.09 (19.26)%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................................. $54,840 $77,561 $71,107 $73,344 $62,882
Ratio of Expenses to Average Net Assets................................... 1.60% 1.49% 1.53% 1.64% 1.67%
Ratio of Net Investment Income (Loss) to Average Net Assets............... (0.28)% (0.66)% (0.07)% 0.42% 0.95%
Portfolio Turnover Rate................................................... 44% 23% 34% 28% 29%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 218
FINANCIAL STATEMENTS
John Hancock Funds - National Aviation & Technology Fund
<TABLE>
FINANCIAL HIGHLIGHTS (continued)-
- ----------------------------------------------------------------------------------------------
<CAPTION>
FOR THE PERIOD
JANUARY 3, 1994
TO DECEMBER 31, 1994
--------------------
CLASS B**
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period..................................... $ 11.23(b)
-------
Net Investment Loss...................................................... (0.09)(a)
Net Realized and Unrealized Loss on Investments and options.............. (1.53)
-------
Total from Investment Operations................................... (1.62)
-------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold and Options..... (2.47)
-------
Total Distributions................................................ (2.47)
-------
Net Asset Value, End of Period........................................... $ 7.14
=======
Total Investment Return at Net Asset Value............................... (14.39)%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................................ $ 485
Ratio of Expenses to Average Net Assets.................................. 2.59%*
Ratio of Net Investment Income (Loss) to Average Net Assets.............. (1.13)%*
Portfolio Turnover Rate.................................................. 44%
<FN>
* On an annualized basis.
** Class B shares commenced operations on January 3, 1994.
(a) On average month end shares outstanding.
(b) Initial price to commence operations.
(c) These periods are covered by the report of other independent accountants (not included herein).
</TABLE>
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIODS INDICATED: THE NET INVESTMENT INCOME, GAINS
(LOSSES), DIVIDENDS, AND TOTAL INVESTMENT RETURN OF THE FUND. IT SHOWS HOW
THE FUND'S NET ASSET VALUE FOR A SHARE HAS CHANGED SINCE THE END OF THE
PREVIOUS PERIOD. ADDITIONALLY, IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS
PRESENTED IN THE FINANCIAL STATEMENTS ARE EXPRESSED IN RATIO FORM.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 219
FINANCIAL STATEMENTS
John Hancock Funds - National Aviation & Technology Fund
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY
FREEDOM NATIONAL AVIATION & TECHNOLOGY FUND ON DECEMBER 31, 1994. IT'S DIVIDED
INTO FIVE MAIN CATEGORIES: COMMON STOCKS, PREFERRED STOCK, WARRANTS, BONDS, AND
SHORT-TERM INVESTMENTS. THE INVESTMENTS ARE FURTHER BROKEN DOWN BY INDUSTRY
GROUPS. UNDER EACH INDUSTRY GROUP IS A LIST OF THE SECURITIES OWNED BY THE
FUND. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE
LISTED LAST.
<TABLE>
SCHEDULE OF INVESTMENTS
December 31, 1994
<CAPTION>
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
COMMON STOCKS
AEROSPACE (10.27)%
Boeing Co. (The)............................ 30,000 $ 1,402,500
Loral Corp.................................. 30,000* 1,136,250
United Technologies Corp. .................. 50,000 3,143,750
-----------
5,682,500
-----------
COMPUTERS (23.93)%
BMC Software, Inc.**........................ 20,000 1,135,000
Computer Associates International, Inc. .... 50,000 2,425,000
Oracle Systems Corp.**...................... 60,000 2,647,500
S3, Inc.**.................................. 50,000* 781,250
Silicon Graphics, Inc.**.................... 50,000* 1,543,750
Stratus Computer, Inc.**.................... 70,000* 2,660,000
Symantec Corp.**............................ 100,000* 1,750,000
Telebase Systems, Inc.** (r)................ 454,500 295,425
-----------
13,237,925
-----------
DIVERSIFIED OPERATIONS (10.18)%
General Motors Corp. (Class H).............. 70,000 2,441,250
Raytheon Co................................. 50,000 3,193,750
-----------
5,635,000
-----------
ELECTRONICS (11.63)%
Applied Materials, Inc.**................... 60,000* 2,505,000
FLIR Systems, Inc.**........................ 75,000 937,500
Integrated Device Technologies, Inc.**...... 35,000* 1,032,500
Ramtron International Corp. **.............. 55,556* 263,891
Teradyne, Inc.**............................ 50,000* 1,693,750
-----------
6,432,641
-----------
MACHINERY (8.25)%
Thermo Electron Corp.**..................... 75,000 3,365,625
Thermolase Corp.**.......................... 50,000* 387,500
ThermoTrex Corp.**.......................... 60,000 810,000
-----------
4,563,125
-----------
POLLUTION CONTROL (2.56)%
Browning-Ferris Industries, Inc. ........... 50,000 1,418,750
-----------
TELECOMMUNICATIONS (5.29)%
BroadBand Technologies, Inc.**.............. 50,000* 1,500,000
Qualcomm, Inc.**............................ 60,000* 1,425,000
-----------
2,925,000
-----------
TRANSPORTATION (22.05)%
AMR Corp. **................................ 60,000 $ 3,195,000
Mesa Airlines, Inc.**....................... 125,000 1,125,000
Northwest Airlines Corp. Class A**.......... 100,000* 1,575,000
Southwest Airlines Co....................... 100,000 1,675,000
UAL Corp.................................... 50,000 4,368,750
USAir Group, Inc. **........................ 60,000 262,500
-----------
12,201,250
-----------
TOTAL COMMON STOCKS
(Cost $33,787,032) (94.16)% 52,096,191
------ -----------
PREFERRED STOCK
ELECTRONICS (0.59)%
Ramtron International Corp. Ser C Conv **... 55,556 326,392
-----------
TOTAL PREFERRED STOCK
(Cost $166,668) (0.59)% 326,392
------ -----------
WARRANTS
BIOMEDICS/GENETICS (0.02)%
Scios-Nova Inc. ** (r)...................... 36,346 8,748
-----------
MEDICAL/DENTAL (0.00)%
Biosearch Medical Products, Inc. ** (r)..... 20,000 200
-----------
TOTAL WARRANTS
(Cost $35,000) (0.02)% 8,948
------ -----------
TOTAL COMMON AND PREFERRED STOCKS
AND WARRANTS
(Cost $33,988,700) (94.77)% 52,431,531
------ -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 220
FINANCIAL STATEMENTS
John Hancock Funds - National Aviation & Technology Fund
<TABLE>
<CAPTION>
INTEREST S&P PAR VALUE MARKET
ISSUER, DESCRIPTION RATE*** RATING*** (000'S OMITTED) VALUE
- ------------------- -------- --------- --------------- ------
<S> <C> <C> <C> <C>
BONDS
AEROSPACE (0.46)%
Aeronca, Inc., Conv Sub Deb, 01-31-96.............................................. 12.500% NR $ 400 $ 252,000
-----------
TRANSPORTATION (1.69)%
Northwest Airlines Inc., Bond, 11-30-00 (r)........................................ 12.092 CCC 485* 485,385
Piedmont Aviation Inc., Equip Tr Cert 1988 Ser F, 03-28-09......................... 10.350 BB 500 449,325
-----------
934,710
-----------
TOTAL BONDS
(Cost $1,258,358) (2.15)% 1,186,710
------- -----------
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (0.51)%
Investment in a joint repurchase agreement transaction with Lehman Brothers, Inc.
Dated 12-30-94, Due 01-03-95 (secured by U.S. Treasury Bonds, 9.25%
Due 02-15-16, and 8.125% Due 08-15-21, and U.S. Treasury Notes, 4.625%
Due 08-15-95, and 4.625% Due 08-15-95) Note A.................................... 5.850 - 284 284,000
-----------
CORPORATE SAVINGS ACCOUNT (0.00)%
Investors Bank & Trust Company Daily Interest Savings Account Current Rate 3.00%... 750
-----------
TOTAL SHORT-TERM INVESTMENTS (0.51)% 284,750
------- -----------
TOTAL INVESTMENTS (97.43)% $53,902,991
======= ===========
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
(r) Direct placement securities are restricted to resale. They have been
valued at fair value by the Trustees after considerations of restrictions
as to resale, financial condition and prospects of the issuer, general
market conditions and pertinent information in accordance with the Fund's
By-Laws and the Investment Company Act of 1940, as amended. The Fund has
limited rights to registration under the Securities Act of 1933 with
respect to these restricted securities.
<TABLE>
Additional information on each restricted security is as follows:
<CAPTION>
VALUE AS A
PERCENTAGE MARKET
ACQUISITION ACQUISITION OF FUND'S VALUE AT
SECURITY DATE COST NET ASSETS DECEMBER 31, 1994
-------- ---- ---- ---------- -----------------
<S> <C> <C> <C> <C>
Biosearch Medical Products, Inc. - Warrants.................. 10-24-90 $ 0 0.00% $ 200
Northwest Airlines, Inc. - Bond.............................. 06-17-94 450,000 0.88 485,385
Scios-Nova Inc. - Warrants................................... 06-28-91 35,000 0.02 8,748
Telebase Systems, Inc. - Common Stock........................ 11-14-91 636,300 0.53 295,425
<FN>
* Securities other than short-term investments, newly added to the portfolio during the period ended December 31, 1994.
** Non-income producing security.
*** Credit ratings are unaudited.
NR Not Rated by either Standard & Poor's or Moody's Investors Services.
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 221
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - National Aviation & Technology Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Technology Series, Inc. (the "Company") is an open-end investment
company registered under the Investment Company Act of 1940. The Company
consists of two series: John Hancock Global Technology Fund, a diversified
series, and John Hancock National Aviation & Technology Fund (the "Fund"), a
non-diversified series. The Directors authorized the sale of Class B shares as
of January 3, 1994 and adoption of 12b-1 distribution plans as of January 1 and
3, 1994 for Class A and Class B shares of the Fund, respectively. The shares of
each class represent an interest in the same portfolio of investments of the
Fund and have equal rights to voting, redemption, dividends and liquidation
except that certain expenses, subject to the approval of the Directors, may be
applied differently to each class of shares in accordance with current
regulations of the Securities and Exchange Commission and the Internal Revenue
Service. Shareholders of a class which bears distribution/service expenses
under the terms of a distribution plan, have exclusive voting rights to such
distribution plan. Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring that
the agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis. Included in Net
realized gains on investments sold in the Statement of Operations is $8,481,000
received as a special distribution resulting from the reorganization of UALCorp.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment companies.
It will not be subject to Federal income tax on taxable earnings which are
distributed to shareholders.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment
securities is recorded on the ex-dividend date. Interest income on investment
securities is recorded on the accrual basis.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions are
determined in conformity with income tax regulations which may differ from
generally accepted accounting principles. Dividends paid by the Fund, if any,
with respect to each class of shares will be calculated in the same manner, at
the same time and will be in the same amount, except for the effect of expenses
that may be applied differently to each class as explai ned previously.
EXPENSES The majority of the expenses of the Company are directly identifiable
to an individual Fund. Expenses which are not readily identifiable to a
specific Fund are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative size of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes. Trans fer
agent expenses and distribution/service fees
13
<PAGE> 222
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - National Aviation & Technology Fund
if any, are calculated daily at the class level based on the appropriate net
assets of each class and the specific expense rate(s) applicable to each
class.
OPTIONS Listed options are valued at the last quoted sales price on the
exchange on which they are primarily traded. Purchased put or call
over-the-counter options are valued at the average of the "bid" prices
obtained from two independent brokers. Written put or call over-the-counter
options are valued at the average of the "asked" prices obtained from two
independent brokers. Upon the writing of a call or put option, an amount
equal to the premium received by the Fund is included in the Statement of Asse
ts and Liabilities as an asset and corresponding liability. The amount of the
liability is subsequently marked-to-market to reflect the current market
value of the written option.
The Fund may use options contracts to manage its exposure to the
stock market. Writing puts and buying calls tend to increase the Fund's
exposure to the underlying instrument and buying puts and writing calls tend
to decrease the Fund's exposure to the underlying instrument, or hedge other
Fund investments.
The maximum exposure to loss for any purchased options is limited to
the premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value reflects the maximum exposure of
the Fund in these contracts, but the actual exposure is limited to the change
in value of the contract over the period the contract remains open.
Risks may also arise if counterparties do not perform under the
contracts' terms, or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk"). Exchange-traded options
have minimal credit risk as the exchanges act as counterparties to each
transaction, and only present liquidity risk in highly unusual market
conditions. To minimize credit and liquidity risks in over-the-counter option
contracts, the Fund continuously monitors the creditworthiness of all its
counterparties.
At any particular time, except for purchased options, market or
credit risk may involve amounts in excess of those reflected in the Fund's
period-end Statement of Assets and Liabilities.
A summary of written call option transactions for the period ended
December 31, 1994 is as follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUMS
(000'S OMITTED) RECEIVED
------------- --------
<S> <C> <C>
Outstanding, beginning of period.... - -
Options written..................... 100 $ 43,449
Options expired..................... (100) (43,449)
--- -------
Outstanding, end of period.......... - -
=== =======
</TABLE>
DISCOUNT ON SECURITIES The Fund accretes discount from par value on
investment securities from either the date of issue or date of purchase over
the life of the security, as required by the Internal Revenue Code.
NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE
SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS
The Adviser is responsible for managing the Fund's investment business
affairs and overseeing the investment activities of the sub-adviser. The
Adviser has a sub-investment management contract with American Fund Advisors,
Inc. (the "Sub-Adviser"), under which the Sub-Adviser, subject to the review
of the Directors and the overall supervision of the Adviser, provides the
Fund with investment services and advice with respect to investment
transactions.
Under the present investment management contract, for the year ended
December 31, 1994, the Fund paid an monthly management fee to the Adviser
equivalent, on an annual basis, to the sum of (a) 1.00% of the first
$100,000,000 of the Fund's average daily net asset value and (b) 0.75% of the
Fund's average daily net asset value in excess of $100,000,000. Effective
January 1, 1995, the Adviser will waive a portion of the management fee
amounting to 0.15% of the average daily net asset value of the first
$100,000,000 of each series of the Company. Therefore, the Fund will pay a
monthly management fee to the Adviser, equivalent on an annual basis, to the
sum of
14
<PAGE> 223
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - National Aviation & Technology Fund
0.85% of the first $100,000,000 of the Fund's average daily net asset value.
The Adviser pays the Sub-Adviser a monthly management fee, equivalent on
an annual basis, to the sum of (a) 0.40% of the first $100,000,000 of the
Fund's average daily net asset value and (b) 40% of the investment advisory fee
received by the Adviser on amounts over $100,000,000. The Fund pays a monthly
administrative fee at the rate of $100,000 per annum to the Adviser for
performance of administrative services to the Fund.
In the event normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of the most
restrictive state limit where the Fund is registered to sell shares, the fee
payable to the Adviser will be reduced to the extent of such excess, and the
Adviser will make additional arrangements necessary to eliminate any
remaining excess expenses. The current limits are 2.5% of the first
$30,000,000 of the Fund's average daily net asset value, 2.0% of the next
$70,000,000, and 1.5% of the remaining average daily net asset value.
In the event that the ratio for 1992, 1993, or 1994 of normal operating
expenses of the Fund, exclusive of extraordinary expenses including, but not
limited to litigation, to the Fund's average daily net assets for such year,
exceeds the average expense ratio for the Fund for the three years ended
December 31, 1990 (restated as if the current annual rates for calculating the
management fee and the current expense limitations had been in effect
throughout the three year period), the fees payable to the Advi ser will be
reduced to the extent required to eliminate such excess and the Adviser will
make any additional arrangements necessary to eliminate any remaining such
excess. No reduction in fees was necessary for the period ended December 31,
1994. At a shareholder meeting on December 8, 1993 the shareholders appr a
proposal which excludes the amounts payable by the Fund under the Rule 12b-1
distribution plans (effective in January 1994) from the calculation of the
expense limit described above.
The Fund has a distribution agreement with John Hancock Funds Inc.
("JH Funds"), a wholly-owned subsidiary of the Adviser. Prior to January 1,
1995, JH Funds was known as John Hancock Broker Distribution Services, Inc.
For the period ended December 31, 1994, JH Funds received net sales charges
of $9,741 with regard to sales of Class A shares. Out of this amount, $1,443
was retained and used for printing prospectuses, advertising, sales
literature and other purposes, and $3,254 was paid as sales commissions and
first year service fees to unrelated broker-dealers and $5,044 was paid as
sales commissions and first year service fees to sales personnel of John
Hancock Distributors, Inc. ("Distributors"), Tucker Anthony, Incorporated
("Tucker Anthony") and Sutro & Co., Inc. ("Sutro"). The Adviser's indirect
parent, John Hancock Mutual Life Insurance Company, is the indirect sole
shareholder of Distributors and John Hancock Freedom Securities Corporation
and its subsidiaries which include Tucker Anthony and Sutro, all of which are
broker-dealers.
Class B shares which are redeemed within six years of purchase are
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed.
Proceeds from the CDSC are paid to JH Funds and are used in whole or in part
to defray its expenses related to providing distribution related services to
the Fund in connection with the sale of Class B shares. For the period ended
December 31, 1994 contingent deferred sales charges received by JH Funds
amounted to $664.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan
with respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940, effective January 1 and 3, 1994, respectively.
Accordingly, the Fund makes payments to JH Funds for distribution and service
expenses at an annual rate not to exceed 0.30% of Class A average daily net
assets and 1.00% of Class B average daily net assets to reimburse JH Funds for
its distribution/service costs. Up to a maximum of 0.25% of such payments may
be service fees as defined by the amended Rules of Fair Practice of the
National Association of Securities Dealers which became effective July 7, 1993.
Under the amended Rules of Fair
15
<PAGE> 224
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - National Aviation & Technology Fund
Practice, curtailment of a portion of the Fund's 12b-1 payments could
occur under certain circumstances. In order to comply with this rule, the
12b-1 fee was decreased on Class A shares to 0.05% effective May 1, 1994 and
decreased to 0.00% effective June 1, 1994.
The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. Prior to January 1, 1995, Investor Services was
known as John Hancock Fund Services, Inc. The Fund pays a monthly transfer
agent fee, equivalent on an annual basis, to 0.12% and 0.14% of the Fund's
average daily net asset value, attributable to Class A and Class B shares of
the Fund, respectively, plus out of pocket expenses incurred by Fund Services
on behalf of the Fund for proxy mailings. Effective January 1, 1995, the Fund
will pay transfer agent fees based on transaction volume and the number of
shareholder accounts outstanding.
Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser,
and Mr. Barry J. Gordon is a director and officer of the Sub-Adviser. Mr.
Thomas W. L. Cameron is an affiliated Director of the Fund. The compensation
of unaffiliated Directors is borne by the Fund.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of
the U.S. government and its agencies and short-term securities, during the
period ended December 31, 1994, aggregated $27,466,649 and $29,858,522,
respectively. There were no purchases or sales of obligations of the U.S.
government and its agencies during the period ended December 31, 1994.
The cost of investments owned at December 31, 1994 (including the
joint repurchase agreement) for Federal income tax purposes was $35,531,058.
Gross unrealized appreciation and depreciation of investments aggregated
$20,335,831 and $1,964,648, respectively, resulting in net unrealized
appreciation of $18,371,183.
NOTE D --RECLASSIFICATION OF CAPITAL ACCOUNTS
During the year ended December 31, 1994, the Fund has reclassified amounts to
reflect a decrease in accumulated net investment loss of $197,456, a decrease
in accumulated net realized gain on investments of $138,238 and a decrease in
capital paid-in of $59,218. This represents the cumulative amount necessary
to report these balances on a tax basis, excluding certain temporary
differences, as of December 31, 1994. Additional adjustments may be needed in
subsequent reporting periods. These reclassifications, which have no impact
on the net asset value of the Fund, are primarily attributable to certain
differences in the computation of distributable income and capital gains
under federal tax rules versus generally accepted accounting principles.
16
<PAGE> 225
John Hancock Funds - National Aviation & Technology Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of John Hancock
National Aviation and Technology Fund and the
Directors of John Hancock Technology Series, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of John Hancock
National Aviation & Technology Fund (the "Fund") (a portfolio of John Hancock
Technology Series, Inc.) at December 31, 1994, the results of its operations
for the year then ended, the changes in its net assets and the financial
highlights for the periods indicated in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of
the Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31, 1994 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
February 16, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the distributions of the Fund for its fiscal year ended December
31, 1994.
The Fund designated distributions to shareholders of $15,577,000 as
long-term capital gain dividends. Shareholders were mailed a 1994 U.S.
Treasury Department Form 1099-DIV in January 1995 representing their
proportionate share.
None of the Fund's distributions qualify for the dividends received
deduction available to corporations.
United States Government Obligations: The Fund did not invest in U.S.
Treasury bonds, bills, and notes or other U.S. government agencies at year
end. The Fund did not derive any income from these investments. For specific
information on exemption provisions in your state, consult your local state
tax office or your tax adviser.
17
<PAGE> 226
EXHIBIT C
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
Pro forma information is intended to provide shareholders of the John Hancock
Global Technology Fund (JHGT) and John Hancock National Aviation & Technology
Fund (JHNAT) with information about the impact of the proposed merger by
indicating how the merger might have affected information had the merger been
consummated as of December 31, 1993.
The pro forma combined statements of assets and liabilities and results of
operations as of December 31, 1994, have been prepared to reflect the merger of
JHGT and JHNAT after giving effect to pro forma adjustments described in the
notes listed below.
(a) Issuance of JHGT Class A and Class B shares in exchange for all of the
outstanding Class A and Class B shares, respectively of JHNAT.
(b) Administrative fee for surviving fund will remain unchanged at
$100,000.
(c) The investment advisory fee was adjusted to reflect the application of
the fee structure in effect for JHGT.
(d) Custodian fees were adjusted to reflect the application of the fee
structure in effect for JHGT during the year.
(e) The actual expenses incurred by JHGT and JHNAT for various expenses
included on a pro forma basis were reduced to reflect the estimated
savings arising from the merger.
(f) The transfer agent fee for the Class A and Class B shares is the
total of the respective individual fund's transfer agent fees. The
main criteria in determining the transfer agent fees for a specific
class is the number of shareholder accounts.
(g) It was assumed that pursuant to the Plan of Distribution under rule
12b-1 of the Investment Company Act of 1940, JHGT is to pay a
distribution/service fee at 0.30% and 1.00% of the combined average
net assets of the Class A and Class B shares, respectively.
<PAGE> 227
<TABLE>
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
DECEMBER 31, 1994
<CAPTION>
JOHN HANCOCK JOHN HANCOCK
NATIONAL AVIATION GLOBAL PRO
& TECHNOLOGY TECHNOLOGY FORMA
FUND FUND ADJUSTMENTS COMBINED
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments at value $53,902,991 $61,606,650 $ - $115,509,641
Receivable for shares sold 1,737 41,962 - 43,699
Interest receivable 26,856 19,391 - 46,247
Dividends receivable 15,000 17,200 - 32,200
Receivable for investments sold 1,524,500 - - 1,524,500
Other Assets 16,941 - - 16,941
----------- ----------- ------------ ------------
Total assets 55,488,025 61,685,203 - 117,173,228
----------- ----------- ------------ ------------
LIABILITIES
Payable for shares repurchased 57,138 48,915 - 106,053
Payable to John Hancock Advisers
and affiliates 54,623 66,496 - 121,119
Accounts payable and accrued expenses 51,629 52,490 - 104,119
----------- ----------- ------------ ------------
Total liabilities 163,390 167,901 - 331,291
----------- ----------- ------------ ------------
CAPITAL PAID-IN $36,953,452 $49,906,696 - $86,860,148
Net unrealized appreciation
of investments 18,371,183 11,610,606 - 29,981,789
----------- ----------- ------------ ------------
Net assets $55,324,635 $61,517,302 - $116,841,937
=========== =========== ============ ============
NET ASSETS:
National Aviation & Technology
Class A $54,840,078 $ - ($54,840,078) a $ 0
Class B 484,557 - (484,557) a 0
Global Technology
Class A - 52,193,442 54,840,078 a 107,033,520
Class B - 9,323,860 484,557 a 9,808,417
----------- ----------- ------------ ------------
$55,324,635 $61,517,302 $ 0 $116,841,937
=========== =========== ============ ============
SHARES OUTSTANDING:
National Aviation & Technology
Class A 7,579,596 - (7,579,596) a 0
Class B 67,821 - (67,821) a 0
Global Technology
Class A - 2,925,484 3,073,830 a 5,999,314
Class B - 527,263 27,401 a 554,664
----------- ----------- ------------ ------------
NET ASSET VALUE PER SHARE:
National Aviation & Technology
Class A $7.24 - ($7.24) -
Class B $7.14 - ($7.14) -
Global Technology
Class A - $17.84 - $17.84
Class B - $17.68 - $17.68
=========== =========== ============ ============
</TABLE>
SEE NOTES TO PRO-FORMA COMBINED FINANCIAL STATEMENTS
<PAGE> 228
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
PRO-FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
JOHN HANCOCK JOHN HANCOCK
NATIONAL AVIATION GLOBAL
& TECHNOLOGY TECHNOLOGY
FUND FUND PRO
YEAR ENDED YEAR ENDED FORMA
DECEMBER 31, 1994 DECEMBER 31, 1994 ADJUSTMENTS COMBINED
----------------- ----------------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 419,567 $ 283,388 $ - $ 702,955
Dividends 487,545 193,642 - 681,187
------------ ---------- --------- -----------
Total 907,112 477,030 - 1,384,142
------------ ---------- --------- -----------
EXPENSES
Investment managment fee 690,068 522,041 (53,027) c 1,159,082
Distribution fee-
Class A 56,005 143,635 150,691 g 350,331
Class B ** 1,079 43,258 44,337
Transfer agent fee-
Class A 82,679 153,211 235,890
Class B 151 14,708 14,859
Custodian fee 45,694 50,343 (40,037) d 56,000
Registration and filing fees 48,304 53,452 (25,439) e 76,317
Administration fee 100,000 100,000 (100,000) b 100,000
Auditing fee 27,500 27,000 (16,500) e 38,000
Legal fees 4,252 4,612 8,864
Printing 20,492 25,537 (11,507) e 34,522
Directors' fee 21,767 15,147 36,914
Miscellaneous 6,577 6,939 13,516
------------ ---------- --------- -----------
Total expenses 1,104,568 1,159,883 (95,819) 2,168,632
Reimbursement of expenses - - 0
------------ ---------- --------- -----------
Net Expenses 1,104,568 1,159,883 (95,819) 2,168,632
------------ ---------- --------- -----------
Net investment loss (197,456) (682,853) 95,819 (784,490)
------------ ---------- --------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND OPTIONS
Net realized gain on
investments sold 15,688,423 4,596,638 - 20,285,061
Net realized gain on options 43,449 139,495 182,944
Change in net unrealized appreciation/
depreciation of investments (26,248,652) (78,528) - (26,327,180)
------------ ---------- --------- -----------
Net Realized and Unrealized
Gain (Loss) on Investments and
Options (10,516,780) 4,657,605 - (5,859,175)
------------ ---------- --------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations ($10,714,236) $3,974,752 $ 95,819 ($6,643,665)
============ ========== ========= ===========
<FN>
** Class B Shares commenced operations on January 3, 1994.
</TABLE>
SEE NOTES TO PRO-FORMA COMBINED FINANCIAL STATEMENTS
<PAGE> 229
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (UNAUDITED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
JOHN HANCOCK JOHN HANCOCK
FREEDOM NATIONAL AVIATION & GLOBAL TECHNOLOGY
SCHEDULE OF INVESTMENTS TECHNOLOGY FUND FUND
DECEMBER 31, 1994
NUMBER OF NUMBER OF
ISSUER, DESCRIPTION SHARES MARKET VALUE SHARES MARKET VALUE
- ------------------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C>
COMMON STOCKS
AEROSPACE (4.86%)
Boeing Co. (The) 30,000 1,402,500
Loral Corp. 30,000 * 1,136,250
United Technologies Corp. 50,000 3,143,750
---------
5,682,500
---------
BROADCASTING (3.02%)
Tele-Communications, Inc. (Class A)** 50,000 $1,087,500
Telewest Communications PLC,
American Depositary Receipt (ADR) (United Kingdom)** 50,000 * 1,325,000
Viacom, Inc. (Class A) 3,200 133,200
Viacom, Inc. (Class B) 24,246 984,994
----------
3,530,694
----------
COMPUTER (31.32%)
Adaptec, Inc. ** 100,000 2,350,000
Applix, Inc. ** 42,500 * 531,250
BMC Software, Inc. ** 20,000 1,135,000 25,000 1,418,750
Cheyenne Software, Inc. ** 75,000 993,750
Compaq Computer Corp.** 50,000 * 1,975,000
Computer Associates International, Inc. 50,000 2,425,000 50,000 2,425,000
EMC Corp. ** 80,000 * 1,730,000
Electro Brain International Corp.** 165,000 46,398
FTP Software, Inc.** 50,000 * 1,575,000
Oracle Systems Corp. ** 60,000 2,647,500 50,000 2,206,250
Parametric Technology Co. 40,000 * 1,370,000
Pinnacle Systems, Inc. ** 100,000 * 1,450,000
S3, Inc.** 50,000 * 781,250 75,000 * 1,171,875
Silicon Graphics, Inc. ** 50,000 * 1,543,750 50,000 1,543,750
Stratus Computer, Inc. ** 70,000 * 2,660,000 30,000 * 1,140,000
Symantec Corp. ** 100,000 * 1,750,000
Tandem Computers, Inc.** 75,000 * 1,284,375
Telebase Systems, Inc.** (r) 454,500 295,425 217,360 141,284
---------- -----------
13,237,925 23,352,682
---------- -----------
DIVERSIFIED OPERATIONS (4.82%)
General Motors Corp. (Class H) 70,000 2,441,250
Raytheon Co. 50,000 3,193,750
---------
5,635,000
---------
ELECTRONICS (18.99%)
ADFlex Solutions, Inc. ** 100,000 * 1,675,000
Applied Materials, Inc.** 60,000 * 2,505,000 50,000 2,087,500
FLIR Systems, Inc.** 75,000 937,500
GaSonics International Corp.** 60,000 * 945,000
Integrated Device Technologies, Inc.** 35,000 * 1,032,500 90,000 * 2,655,000
Lam Research Corp. ** 50,000 * 1,862,500
Level One Communications, Inc. ** 75,000 1,125,000
LSI Logic Corp. ** 50,000 * 2,018,750
PRI Automation, Inc. ** 50,000 * 787,500
Ramtron International Corp.** 55,556 * 263,891
SGS-Thomson Microelectronics N.V. ** 10,000 * 227,500
Teradyne, Inc. ** 50,000 * 1,693,750 70,000 2,371,250
--------- -----------
6,432,641 15,755,000
--------- -----------
MACHINERY (3.91%)
Thermo Electron Corp.** 75,000 3,365,825
Thermolase Corp.** 50,000 * 387,500
ThermoTrex Corp.** 60,000 810,000
---------
4,563,125
POLLUTION CONTROL (1.22%)
Browning-Ferris Industries, Inc. 50,000 1,418,750
---------
TELECOMMUNICATIONS (15.46%)
<CAPTION>
COMBINED
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1994
NUMBER OF
ISSUER, DESCRIPTION SHARES MARKET VALUE
- ------------------- --------- ------------
<S> <C> <C>
COMMON STOCKS
AEROSPACE (4.86%)
Boeing Co. (The) 30,000 $ 1,402,500
Loral Corp. 30,000 * 1,136,250
United Technologies Corp. 50,000 3,143,750
-----------
5,682,500
-----------
BROADCASTING (3.02%)
Tele-Communications, Inc. (Class A)** 50,000 1,087,500
Telewest Communications PLC,
American Depositary Receipt (ADR) (United Kingdom)** 50,000 * 1,325,000
Viacom, Inc. (Class A) 3,200 133,200
Viacom, Inc. (Class B) 24,246 984,994
----------
3,530,694
----------
COMPUTER (31.32%)
Adaptec, Inc. ** 100,000 2,350,000
Applix, Inc. ** 42,500 * 531,250
BMC Software, Inc. ** 45,000 2,553,750
Cheyenne Software, Inc. ** 75,000 993,750
Compaq Computer Corp.** 50,000 * 1,975,000
Computer Associates International, Inc. 100,000 4,850,000
EMC Corp. ** 80,000 * 1,730,000
Electro Brain International Corp.** 165,000 46,398
FTP Software, Inc.** 50,000 * 1,575,000
Oracle Systems Corp. ** 110,000 4,853,750
Parametric Technology Co. 40,000 * 1,370,000
Pinnacle Systems, Inc. ** 100,000 * 1,450,000
S3, Inc.** 125,000 * 1,953,125
Silicon Graphics, Inc. ** 100,000 3,087,500
Stratus Computer, Inc. ** 100,000 3,800,000
Symantec Corp. ** 100,000 * 1,750,000
Tandem Computers, Inc.** 75,000 * 1,284,375
Telebase Systems, Inc.** (r) 671,860 436,709
-----------
36,590,607
-----------
DIVERSIFIED OPERATIONS (4.82%)
General Motors Corp. (Class H) 70,000 2,441,250
Raytheon Co. 50,000 3,193,750
-----------
5,635,000
-----------
ELECTRONICS (18.99%)
ADFlex Solutions, Inc. ** 100,000 * 1,675,000
Applied Materials, Inc.** 110,000 4,592,500
FLIR Systems, Inc.** 75,000 937,500
GaSonics International Corp.** 60,000 * 945,000
Integrated Device Technologies, Inc.** 125,000 * 3,687,500
Lam Research Corp. ** 50,000 * 1,862,500
Level One Communications, Inc. ** 75,000 1,125,000
LSI Logic Corp. ** 50,000 * 2,018,750
PRI Automation, Inc. ** 50,000 * 787,500
Ramtron International Corp.** 55,556 * 263,891
SGS-Thomson Microelectronics N.V. ** 10,000 * 227,500
Teradyne, Inc. ** 120,000 4,065,000
-----------
22,187,641
-----------
MACHINERY (3.91%)
Thermo Electron Corp.** 75,000 3,365,625
Thermolase Corp.** 50,000 * 387,500
ThermoTrex Corp.** 60,000 810,000
-----------
4,563,125
-----------
POLLUTION CONTROL (1.22%)
Browning-Ferris Industries, Inc. 50,000 1,418,750
-----------
TELECOMMUNICATIONS (15.46%)
</TABLE>
SEE NOTES TO PRO-FORMA COMBINED FINANCIAL STATEMENTS
<PAGE> 230
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (UNAUDITED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
JOHN HANCOCK JOHN HANCOCK
FREEDOM NATIONAL AVIATION & GLOBAL TECHNOLOGY
SCHEDULE OF INVESTMENTS (UNAUDITED) TECHNOLOGY FUND FUND
DECEMBER 31, 1994
NUMBER OF NUMBER OF
ISSUER, DESCRIPTION SHARES MARKET VALUE SHARES MARKET VALUE
- ------------------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C>
3Com Corp.** 40,000 2,060,000
Allen Group, Inc. 70,000 1,671,250
BroadBand Technologies, Inc.** 50,000 * 1,500,000
cisco Systems, Inc.** 60,000 2,100,000
DSC Communications Corp. ** 60,000 * 2,160,000
Empresas Telex-Chile, S.A. (ADR) (Chile) 50,000 * 531,250
General Instrument Corp. ** 75,000 * 2,250,000
Hong Kong Telecommunications, Ltd. (ADR) (Hong Kong) 25,000 * 478,125
Nextel Communications, Inc.(Class A) ** 50,000 * 718,750
Nokia Corp. (ADR) (Finland) 10,000 * 750,000
SSE Telecom, Inc. ** 125,000 781,250
Qualcomm, Inc.** 60,000 * 1,425,000
Telefonos de Mexico, S.A. de C.V. (ADR) (Mexico) 40,000 1,640,000
----------- ----------
2,925,000 15,140,625
----------- ----------
Transportation (10.44%)
AMR Corp.** 60,000 3,195,000
Mesa Airlines, Inc. ** 125,000 1,125,000
Northwest Airlines Corp. Class A** 100,000 * 1,575,000
Southwest Airlines Co. 100,000 1,675,000
UAL Corp. 50,000 4,368,750
USAir Group, Inc. ** 60,000 262,500
-----------
12,201,250
-----------
TOTAL COMMON STOCKS (94.04%) $52,096,191 57,779,001
-----------
PREFERRED STOCK
Electronics (0.28%)
Ramtron International Corp. Ser C Conv** 55,556 326,392
-----------
TOTAL PREFFERED STOCK (0.28%) 326,392
-----------
OTHER INVESTMENTS
Biomedics/Genetics (0.01%)
Scios-Nova Inc. - Warrants**(r) 36,346 8,748
-----------
Broadcasting (0.04%)
Viacom, Inc., - Variable Common Rights** 40,000 * 45,000
----------
Electronics (0.02%)
Ibis Technology Corp., - Warrants ** 70,000 * 26,250
----------
Medical/Dental (0.00%)
Biosearch Medical Products, Inc. - Warrants** (r) 20,000 200
-----------
TOTAL OTHER INVESTMENTS (0.07%) 8,948 71,250
----------- ----------
TOTAL COMMON AND PREFFERED STOCKS
AND OTHER INVESTMENTS (94.39%) 52,431,531 57,850,251
----------- ----------
<CAPTION>
COMBINED
SCHEDULE OF INVESTMENTS (UNAUDITED)
DECEMBER 31, 1994
NUMBER OF
ISSUER, DESCRIPTION SHARES MARKET VALUE
- ------------------- --------- ------------
<S> <C> <C>
3Com Corp.** 40,000 2,060,000
Allen Group, Inc. 70,000 1,671,250
BroadBand Technologies, Inc.** 50,000 * 1,500,000
cisco Systems, Inc.** 60,000 2,100,000
DSC Communications Corp. ** 60,000 * 2,160,000
Empresas Telex-Chile, S.A. (ADR) (Chile) 50,000 * 531,250
General Instrument Corp. ** 75,000 * 2,250,000
Hong Kong Telecommunications, Ltd. (ADR) (Hong Kong) 25,000 478,125
Nextel Communications, Inc.(Class A) ** 50,000 * 718,750
Nokia Corp. (ADR) (Finland) 10,000 * 750,000
SSE Telecom, Inc. ** 125,000 781,250
Qualcomm, Inc.** 60,000 * 1,425,000
Telefonos de Mexico, S.A. de C.V. (ADR) (Mexico) 40,000 1,640,000
------------
18,065,625
------------
Transportation (10.44%)
AMR Corp.** 60,000 3,195,000
Mesa Airlines, Inc. ** 125,000 1,125,000
Northwest Airlines Corp. Class A** 100,000 * 1,575,000
Southwest Airlines Co. 100,000 1,675,000
UAL Corp. 50,000 4,368,750
USAir Group, Inc. ** 60,000 262,500
------------
12,201,250
------------
TOTAL COMMON STOCKS (94.04%) $109,875,192
------------
PREFERRED STOCK
Electronics (0.28%)
Ramtron International Corp. Ser C Conv** 55,556 326,392
------------
TOTAL PREFFERED STOCK (0.28%) 326,392
------------
OTHER INVESTMENTS
Biomedics/Genetics (0.01%)
Scios-Nova Inc. - Warrants**(r) 36,346 8,748
------------
Broadcasting (0.04%)
Viacom, Inc., - Variable Common Rights** 40,000 * 45,000
------------
Electronics (0.02%)
Ibis Technology Corp., - Warrants ** 70,000 * 26,250
------------
Medical/Dental (0.00%)
Biosearch Medical Products, Inc. - Warrants** (r) 20,000 200
------------
TOTAL OTHER INVESTMENTS (0.07%) 80,198
------------
TOTAL COMMON AND PREFFERED STOCKS
AND OTHER INVESTMENTS (94.39%) 110,281,782
------------
</TABLE>
<TABLE>
<CAPTION>
Par Value Par Value
BONDS (000's Omitted) (000's Omitted)
--------------- ---------------
<S> <C> <C> <C> <C>
Aerospace (0.21%)
Aeronica, Inc., Conv Sub Deb 01-31-96 $400 252,000 $
---------
Electronics (0.27%)
Kulicke & Soffa Industries, Inc.,, Conv Sub Deb 03-01-08 300 322,500
Telecommunications (0.41%) ---------
Tele 2000, Conv Note 04-14-97 (Peru) (R) 500 * 475,000
Transportation (0.80%) ---------
Northwest Airlines Inc., Bond 11-30-00 (r) 485 * 485,385
Piedmont Aviation Inc., Equip Tr Cert 1988 Ser F 03-28-09 500 449,325
---------
934,710
---------
TOTAL BOND (1.69%) 1,186,710 797,500
--------- --------
<CAPTION>
Par Value
BONDS (000's Omitted)
---------------
Aerospace (0.21%)
Aeronica, Inc., Conv Sub Deb 01-31-96 $400 252,000
Electronics (0.27%) ---------
Kulicke & Soffa Industries, Inc.,, Conv Sub Deb 03-01-08 300 322,500
Telecommunications (0.41%) ---------
Tele 2000, Conv Note 04-14-97 (Peru) (R) 500 * 475,000
Transportation (0.80%) ---------
Northwest Airlines Inc., Bond 11-30-00 (r) 485 485,385
Piedmont Aviation Inc., Equip Tr Cert 1988 Ser F 03-28-09 500 449,325
---------
934,710
---------
TOTAL BONDS (1.69%) 1,984,210
---------
Short-Term Investments
Joint Repurchase Agreement (2.77%)
Investment in joint repurchase agreement with Lehman Brothers, Inc.
</TABLE>
SEE NOTES TO PRO-FORMA COMBINED FINANCIAL STATEMENTS
<PAGE> 231
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (UNAUDITED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
JOHN HANCOCK JOHN HANCOCK
FREEDOM NATIONAL AVIATION & GLOBAL TECHNOLOGY
TECHNOLOGY FUND FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
DECEMBER 31, 11994
NUMBER OF NUMBER OF
ISSUER DESCRIPTION SHARES MARKET VALUE SHARES MARKET VALUE
- ------------------ -------- ------------ -------- ------------
<S> <C> <C>
Dated 12-30-94, Due 01-03-95 (Secured by US Treasury
Obligation ) $ 284,000 $ 2,951,000
CORPORATE SAVINGS ACCOUNT (0.01%)
Investors Bank & Trust Company Daily Interest Savings
Account Current Rate 750 7,899
----------- -----------
TOTAL SHORT-TERM INVESTMENTS (2.78%) 284,750 2,958,899
----------- -----------
TOTAL INVESTMENTS (98.86%) $53,902,991 $61,606,650
=========== ===========
COMBINED
NUMBER OF
ISSUER DESCRIPTION SHARES MARKET VALUE
- ------------------ --------- ------------
Dated 12-30-94, Due 01-03-95 (Secured by US Treasury
Obligation ) $ 3,235,000
CORPORATE SAVINGS ACCOUNT (0.01%)
Investors Bank & Trust Company Daily Interest Savings
Account Current Rate 8,649
------------
TOTAL SHORT-TERM INVESTMENTS (2.78%) 3,243,649
------------
TOTAL INVESTMENTS $115,509,641
============
<FN>
* Securities, other than short-term investments, newly added to the
portfolio during the period ended December 31, 1994.
** Non-income producing security.
The percentage shown for each investment category is the total value of
that category as a percentage of the total net assets of the combined
funds.
(R) This security is exempt from registration under Rule 144A of the
Securities Act of 1933. Such securities may be resold, normally to
qualified institutional buyers, in transactions exempt from
registration.
(r) Direct placement securities are restricted to resale. They have been
valued at fair value by the Directors after consideration of
restrictions as to resale, financial condition and prospects of the
issuer, general market conditions and pertinent information in
accordance with the Funds' By-Laws and the Investment Company Act of
1940, as amended. The Funds have limited rights to registration under
the Securities Act of 1933 with respect to these restricted securities.
</TABLE>
See Notes to Pro-forma Combined Financial Statements
<PAGE> 232
NET ASSETS, ADVISORY FEES, SALES LOADS, 12B-1 FEES
<TABLE>
<CAPTION>
GLOBAL TECHNOLOGY NATIONAL AVIATION
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Assets 12/31/94 $52,193,442 $9,323,860 $54,840,078 $484,557
Advisory Fees
Avg. Net Assets:
* First $100,000,000 1.00% 1.00% 1.00% 1.00%
Amounts over $100,000,000 0.75% 0.75% 0.75% 0.75%
Sales Load 5% Redemptions within six 5% Redemptions within six
years at declining years at declining
rates beginning at 5% rates beginning at 5%
12b-1 Fees 0.30% 1.00% 0.30%** 1.00%
<FN>
* Effective January 1, 1995, a portion of the management fee is being
waived, amounting to 0.15% of the first $100,000,000.
** Class A Rule 12b-1 fee was reduced from 0.30% to 0.00% effective May
1, 1994, to comply with the NASD sales charge rules applicable to
service fees.
</TABLE>
<PAGE> 233
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 27 of the
Registration Statement of John Hancock Technology Series, Inc.
(the "Registrant") on Form N-1A under the Securities Act of 1933
and the Investment Company Act of 1940 (File Nos. 2-75807 and 811-
3392), which information is incorporated herein by reference.
<TABLE>
ITEM 16. EXHIBITS:
<S> <C> <C>
1. Articles of Amendment and Filed as Exhibit 1.1 to
and Restatement of Registrant Registrant's Registration
dated December 8, 1993. Statement on Form N-1A and
incorporated herein by
reference.
1.1 Articles Supplementary of Filed as Exhibit 1.1 to
Registrant dated December 8, Registrant's Registration
1993. Statement on Form N-1A and
incorporated herein by
reference.
1.2 Articles Supplementary of Filed as Exhibit 1.2 to
Registrant dated December 4, Registrant's Registration
1994. Statement on Form N-1A and
incorporated herein by
reference.
2. Amended By-Laws of Registrant Filed as Exhibit 2 to the
dated as of November 30, 1993. Registrant's Registration
Statement on Form N-1A and
incorporated herein by
reference.
3. Not applicable.
4. Form of Agreement and Plan of Filed herewith as Exhibit
Reorganization between the A to the Proxy Statement
Registrant, on behalf of John and Prospectus included as
Hancock National Aviation Part A of this
& Technology Fund, and Registration Statement on
the Registrant, on behalf of Form N-14.
John Hancock Global Technology
Fund.
</TABLE>
<PAGE> 234
<TABLE>
5. Not applicable.
<S> <C>
6.1 Investment Management Contract Filed as Exhibit 5.1 to
between the Registrant and John Registrant's Registration
Hancock Advisers, Inc. Statement on Form N-1A and
incorporated herein by
reference.
6.2 Subadvisory Contract between Filed as Exhibit 5.2 to
John Hancock Advisers, Inc. and Registrant's Registration
American Fund Advisers, Inc. Statement on Form N-1A and
incorporated herein by
reference.
7.1 Distribution Agreement between Filed as Exhibit 6 to
the Registrant and John Hancock Registrant's Registration
Funds, Inc. (formerly named John Statement on Form N-1A and
Hancock Broker Distribution incorporated herein by
Services, Inc.). reference.
7.2 Form of Soliciting Dealer Filed as Exhibit 6.2 to
Agreement between John Hancock Registrant's Registration
Funds, Inc. and Selected Dealers Statement on Form N-1A and
incorporated herein by
reference.
7.3 Form of Financial Institution Filed as Exhibit 6.3 to
Sales and Service Agreement Registrant's Registration
between John Hancock Funds, Inc. Statement on Form N-1A and
and Selected Financial incorporated herein by
Institutions. reference.
8. Not applicable.
9. Master Custodian Agreement Filed as Exhibit 8 to
between John Hancock Mutual Registrant's Registration
Funds (including Registrant) and Statement on Form N-1A and
Investors Bank & Trust Company. incorporated herein by
reference.
10.1 Class A Distribution Plan between Filed as Exhibit 15.1 to
John Hancock Global Technology Registrant's Registration
Technology Fund and John Hancock Statement on Form N-1A and
Funds, Inc. incorporated herein by
reference.
</TABLE>
- 2 -
<PAGE> 235
<TABLE>
<S> <C>
10.2 Class B Distribution Plan between Filed as Exhibit 15.2 to
John Hancock Global Technology Registrant's Registration
Fund and John Hancock Funds, Inc. Statement on Form N-1A and
incorporated herein by
reference.
10.3 Class A Distribution Plan between Filed as Exhibit 15.3 to
John Hancock National Aviation Registrant's Registration
& Technology Fund and John Statement on Form N-1A
Hancock Funds, Inc. and incorporated herein by
reference.
10.4 Class B Distribution Plan between Filed as Exhibit 15.4 to
John Hancock National Aviation Registrant's Registration
& Technology Fund and John Statement on Form N-1A and
Hancock Funds, Inc. incorporated herein by
reference.
11. Opinion as to legality of Filed herewith as Exhibit
shares, and consent. 11.
12. Opinion as to tax matters, Filed herewith as Exhibit
and consent. 12.
13. Not applicable.
14.1 Consent of Price Waterhouse LLP Filed herewith as Exhibit
regarding the financial 14.1.
highlights of John Hancock
National Aviation & Technology
Fund and John Hancock Global
Technology Fund.
14.2 Consent of KPMG Peat Marwick LLP Filed herewith as Exhibit
regarding the financial highlights 14.2.
of John Hancock National Aviation
& Technology Fund and John
Hancock Global Technology Fund.
15. Not applicable.
16. Powers of Attorney dated Filed as Exhibt 17 to
March 31, 1992, April 2, 1993, Registrant's Registrtion
April 3, 1992, April 4, 1995, Statement on Form N-1A
April 14, 1992, April 28, 1992, and incorporated herein
April 30, 1992, December 8, 1992 by reference.
and August 31, 1993.
</TABLE>
- 3 -
<PAGE> 236
<TABLE>
<S> <C>
17.1 Declaration of the Registrant Filed herewith as Exhibit
pursuant to Rule 24f-2 under 17.1.
the Investment Company Act of
1940.
17.2 Form of Proxy for Shareholders of Filed herewith as an Appendix
John Hancock National Aviation to the Proxy Statement and
& Technology Fund. Prospectus included as Part A
of this Registration Statement
on Form N-14.
</TABLE>
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered through the use of
a prospectus which is a part of this Registration Statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) under the Securities Act of 1933, as
amended (the "1933 Act"), the reoffering prospectus will contain
the information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed as a part of
an amendment to the Registration Statement and will not be used
until the amendment is effective, and that, in determining any
liability under the 1933 Act, each post-effective amendment shall
be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees that it will furnish
to each person to whom a Prospectus of the Registrant is delivered
a copy of the latest annual report to shareholders of the
Registrant, upon request and without charge.
- 4 -
<PAGE> 237
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Boston and The Commonwealth of Massachusetts, on the
28th day of April, 1995.
JOHN HANCOCK TECHNOLOGY SERIES, INC.
By: /s/Edward J. Boudreau, Jr.
-------------------------------
Edward J. Boudreau, Jr.
Chairman and Director
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
/s/Edward J. Boudreau, Jr. Chairman and Director )
- -------------------------- (Principal Executive )
Edward J. Boudreau, Jr. Officer) )
)
) April 28, 1995
/s/James B. Little Senior Vice President )
- -------------------------- and Chief Financial )
James B. Little Officer (Principal )
Financial and )
Accounting Officer) )
)
Directors:
Thomas W.L. Cameron* Director )
- -------------------------- )
Thomas W.L. Cameron )
)
Charles F. Fretz* Director )
- -------------------------- )
Charles F. Fretz )
</TABLE>
- 5 -
<PAGE> 238
<TABLE>
<S> <C> <C>
)
)
Jack P. Gould* Director )
- ------------------------ )
Jack P. Gould )
)
)
Charles L. Ladner* Director )
- ------------------------ )
Charles L. Ladner )
)
)
Patricia P. McCarter* Director )
- ------------------------ )
Patricia P. McCarter )
)
)
Steven R. Pruchansky* Director )
- ------------------------ )
Steven R. Pruchansky )
)
)
Norman H. Smith* Director )
- ------------------------ )
Norman H. Smith )
)
)
John P. Toolan* Director )
- ------------------------ )
John P. Toolan )
)
)
James F. Carlin* Director )
- ------------------------ )
James F. Carlin )
)
)
Harold R. Hiser, Jr.* Director )
- ------------------------ )
Harold R. Hiser, Jr. )
______________
<FN>
*By:/s/Thomas H. Drohan
-------------------
Thomas H. Drohan, Attorney-in-fact Dated: April 28, 1995
</TABLE>
- 6 -
<PAGE> 239
<TABLE>
EXHIBIT INDEX
The following exhibits are filed as part of this Registration Statement.
<CAPTION>
Exhibit No. Description
- ------------------------------------------------------------------
<S> <C>
4. Form of Agreement and Plan of
Reorganization Between the
Registrant, on behalf of John
Hancock National Aviation &
Technology Fund, and the Registrant,
on behalf of John Hancock Global
Technology Fund.
11. Opinion as to legality of shares, and
consent.
12. Opinion as to tax matters, and consent.
14.1 Consent of Price Waterhouse LLP
regarding the financial statements
and highlights of John Hancock National
Aviation & Technology Fund and John
Hancock Global Technology Fund.
14.2 Consent of KPMG Peat Marwick LLP
regarding the financial highlights
of John Hancock National Aviation
& Technology Fund and John Hancock
Global Technology Fund.
17.1 Declaration of the Registrant pursuant
to Rule 24f-2 under the Investment
Company Act of 1940.
17.2 Form of Proxy for Shareholders of John
Hancock National Aviation & Technology
Fund.
</TABLE>
- 7 -
<PAGE> 1
EXHIBIT 99.11
May 1, 1995
John Hancock Technology Series, Inc.
101 Huntington Avenue
Boston, MA 02199
Ladies and Gentlemen:
In connection with the filing of a registration statement under the Securities
Act of 1993, as amended (the "Act"), on Form N-14, with respect to the shares
of capital stock of John Hancock Technology Series, Inc., a Maryland
Corporation (the "Corporation"), it is the opinion of the undersigned that such
shares of capital stock of the Corporation when issued will be legally issued,
fully paid and nonassessable, assuming that the Corporation receives proper
consideration therefore in accordance with the provisions of the Corporation's
Articles of Amendment and Restatement and subject to compliance with the
Act, the Investment Company Act of 1940, as amended, and the applicable state
laws regarding the offer and sale of securities.
The undersigned hereby consents to the filing of a copy of this opinion, as an
exhibit to the Corporation's registration statement on Form N-14, with the
Securities and Exchange Commission and with the various state securities
administrators.
Sincerely,
JOHN HANCOCK ADVISERS, INC.
Thomas H. Connors
Assistant Secretary
Member of Massachusetts Bar
letters/opns
<PAGE> 1
Exhibit 99.12
May 1, 1995
Board of Directors
John Hancock Technology Series, Inc.
on behalf of John Hancock National
Aviation & Technology Fund and
John Hancock Global Technology Fund
101 Huntington Avenue
Boston, MA 02199
Dear Members of the Board of Directors:
This opinion is being delivered to you in connection with the filing of
a Registration Statement (the "Registration Statement") on Form N-14 which
includes the proxy statement/prospectus (the "Proxy Statement") relating to the
proposed acquisition by John Hancock Freedom Global Technology Fund ("Acquiring
Fund"), a series of John Hancock Technology Series, Inc. (the "Company"), of
all of the assets of John Hancock Freedom National Aviation & Technology Fund
("Acquired Fund"), a separate series of the Company, in exchange solely for (i)
the assumption by Acquiring Fund of all of the liabilities of Acquired Fund and
(ii) the issuance of Class A and Class B shares of voting common stock of
Acquiring Fund (the "Acquiring Fund Shares") to Acquired Fund, followed by the
distribution by Acquired Fund, in liquidation of Acquired Fund, of the
Acquiring Fund Shares to the shareholders of Acquired Fund and the termination
of Acquired Fund (the foregoing together constituting the "reorganization" or
the "transaction").
In rendering this opinion, we have examined and relied upon (i) the
prospectus of Acquired Fund, dated May 1, 1995, (ii) the statement of
additional information of Acquired Fund, dated May 1, 1995, (iii) the
prospectus of Acquiring Fund, dated May 1, 1995, (iv) the statement of
additional information of Acquiring Fund, dated May 1, 1995, (v) the
Registration Statement to be filed with the Securities and Exchange Commission
(the "SEC") on or about May 2, 1995, (vi) the form of Proxy Statement included
in the Registration Statement, (vii) the form of the Agreement and Plan of
Reorganization to be entered into between the Company on behalf of Acquiring
Fund and the Company on behalf of Acquired Fund (the "Agreement") included in
the
<PAGE> 2
Board of Directors
John Hancock Technology Series, Inc.
May 1, 1995
Page 2
Registration Statement, (viii) the representation letters on
behalf of Acquiring Fund and Acquired Fund referred to below and
(ix) such other documents as we deemed appropriate. We have
assumed that the definitive Proxy Statement and Agreement and Plan
of Reorganization will be identical in all material respects to
the Proxy Statement and the Agreement and that all parties to the
Agreement and all parties to other documents relating to the
proposed transaction will act in accordance with the terms of the
Agreement and such other documents.
The conclusions expressed herein represent our judgment
regarding the proper treatment of Acquiring Fund, Acquired Fund
and the shareholders of Acquired Fund on the basis of our analysis
of the Internal Revenue Code of 1986, as amended (the "Code"),
case law, Treasury regulations and the rulings and other
pronouncements of the Internal Revenue Service (the "Service")
which exist at the time this opinion is rendered, all of which are
subject to prospective or retroactive change. Our opinion
represents our best judgment regarding the issues presented and is
not binding upon the Service or any court. Moreover, our opinion
does not provide any assurance that a position taken in reliance
on such opinion will not be challenged by the Service and does not
constitute any representation or warranty that such position, if
so challenged, will not be rejected by a court.
Acquiring Fund is a series of the Company, a corporation
established under the laws of Maryland and registered as an open-
end investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"). The Company has two separate series,
Acquired Fund and Acquiring Fund. Each series of the Company has
separate assets and liabilities from those of the other series.
Each of Acquiring Fund and Acquired Fund is treated as a separate
corporation and regulated investment company pursuant to
Section 851(h) of the Code.
Acquiring Fund commenced operations on May 1, 1990,
succeeding to the assets and liabilities of a predecessor mutual
fund that was organized in the early 1980's. The primary investment
objective of Acquiring Fund is to seek long-term capital growth
through investments principally in equity securities of companies
which rely extensively on technology in their product development
or operations ("Technology Companies"). Income is a secondary
objective of Acquiring Fund. Under normal market conditions, at
least 65% of Acquiring Fund's total assets are invested in
securities of Technology Companies. Acquiring Fund's portfolio
may include both U.S. and foreign securities and is primarily
comprised of common stocks and securities convertible into common
stocks.
<PAGE> 3
Board of Directors
John Hancock Technology Series, Inc.
May 1, 1995
Page 3
Acquired Fund commenced operations on May 1, 1990, succeeding
to the assets and liabilities of a predecessor mutual fund that
was organized in 1928. The primary investment objective of
Acquired Fund is to seek long-term growth of capital principally
through investments in securities of (i) companies in the aviation
and related industries and (ii) Technology Companies. Income is a
secondary objective of Acquired Fund. Under normal market
conditions, Acquired Fund will have at least 80% of its total
assets invested in these aviation and related industries and
Technology Companies, and it is intended that at least 25% of its
total assets be concentrated in the aviation industry and
industries connected with, serving and/or supplying that industry.
Acquired Fund's portfolio is primarily comprised of common stocks
and securities convertible into common stocks.
The steps to be taken in the proposed reorganization, as set
forth in the Agreement, will be as follows:
(i) Acquired Fund will transfer to Acquiring Fund all
of its assets (consisting, without limitation, of portfolio
securities and instruments, dividend and interest receivables,
cash and other assets). In exchange for the assets transferred to
it, Acquiring Fund will (A) assume all of the liabilities of
Acquired Fund (comprising all of its known and unknown liabilities
and referred to hereinafter as the "Acquired Fund Liabilities")
and (B) issue Acquiring Fund Shares to Acquired Fund that have an
aggregate net asset value equal to the value of the assets
transferred to Acquiring Fund by Acquired Fund, less the value of
the Acquired Fund Liabilities assumed by Acquiring Fund.
(ii) Promptly after the transfer of its assets to
Acquiring Fund, Acquired Fund will distribute in liquidation the
Acquiring Fund Shares it receives in the exchange to Acquired Fund
shareholders pro rata in exchange for their surrender of their
shares of common stock of Acquired Fund ("Acquired Fund Shares").
In these exchanges, holders of Acquired Fund Shares designated as
Class A ("Class A Acquired Fund Shares") will receive Acquiring
Fund Shares designated as Class A ("Class A Acquiring Fund
Shares"), and holders of Acquired Fund Shares designated as Class
B ("Class B Acquired Fund Shares") will receive Acquiring Fund
Shares designated as Class B ("Class B Acquiring Fund Shares").
(iii) After such exchanges, liquidation and distribution,
the existence of Acquired Fund will be promptly terminated in
accordance with Maryland law.
<PAGE> 4
Board of Directors
John Hancock Technology Series, Inc.
May 1, 1995
Page 4
The Agreement and the transactions contemplated thereby were
approved by the Board of Directors of the Company at a meeting
held on March 14, 1995, subject to the approval of the
shareholders of Acquired Fund. Acquired Fund shareholders will
vote on the proposed transaction at a meeting that is presently
expected to be held on July 28, 1995.
It is the position of the Division of Investment Management
of the SEC that appraisal rights, in contexts such as the
reorganization, are inconsistent with Rule 22c-1 under the 1940
Act and are therefore preempted and invalidated by such rule.
Consequently, dissenting Acquired Fund shareholders, if any, will
not have appraisal rights in the transaction.
Due to the fact that the respective net asset values of
Acquiring Fund and Acquired Fund are relatively close and may
change prior to the date the proposed transaction is contemplated,
it is presently uncertain whether Acquired Fund shareholders will
be in control (within the meaning of Sections 368(a)(2)(H) and
304(c) of the Code) of Acquiring Fund after the transaction.
Hence, our opinions set forth below do not address whether the
transaction will be described in Section 368(a)(1)(C) of the Code
(which will apply if such control is not obtained) or Section
368(a)(1)(D) of the Code (which will apply if such control is
obtained).
Our opinions set forth below are subject to the following
factual assumptions being true on the date the proposed
transaction is consummated. Authorized representatives of
Acquiring Fund and Acquired Fund have represented to us by letters
of even date herewith that they currently believe that the
following assumptions will be true on such date:
(a) Acquiring Fund has no plan or intention to redeem or
otherwise reacquire any of the Acquiring Fund Shares to be
received by shareholders of Acquired Fund in the transaction
except in connection with its legal obligation under Section 22(e)
of the 1940 Act as a registered open-end investment company to
redeem its own shares.
(b) After the transaction, Acquiring Fund will continue the
historic business or at least one significant line of business of
Acquired Fund and will use a significant portion of the historic
assets of Acquired Fund in the ordinary course of a business.
(c) Acquiring Fund has no plan or intention to sell or
otherwise dispose of any assets of Acquired Fund to be acquired in
the transaction, except for dispositions made in the ordinary
<PAGE> 5
Board of Directors
John Hancock Technology Series, Inc.
May 1, 1995
Page 5
course of its business or to maintain its qualification as a
regulated investment company under Subchapter M of the Code.
(d) The shareholders of Acquiring Fund and the shareholders
of Acquired Fund will bear their respective expenses, if any, in
connection with the transaction.
(e) Acquiring Fund and Acquired Fund will each bear its own
expenses incurred in connection with the transaction. If any
liabilities of Acquired Fund attributable to such expenses remain
unpaid on the Closing Date and are assumed by Acquiring Fund in
the transaction, the amount assumed will be attributable to
Acquired Fund's expenses that are solely and directly related to
the transaction in accordance with the guidelines established in
Rev. Rul. 73-54, 1973-1 C.B. 187.
(f) There is no indebtedness between Acquiring Fund and
Acquired Fund.
(g) Acquired Fund has elected to be treated as a regulated
investment company under Subchapter M of the Code, has qualified
as a regulated investment company for each taxable year since its
inception, and will qualify as such for its final taxable year
ending on the closing date of the transaction.
(h) Acquiring Fund has elected to be treated as a regulated
investment company under Subchapter M of the Code, has qualified
as a regulated investment company for each taxable year since its
inception, and will qualify as such as of the date of the
transaction.
(i) Neither Acquiring Fund nor Acquired Fund is under the
jurisdiction of a court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
(j) Acquiring Fund does not own and since its inception has
not owned, directly or indirectly, any shares of Acquired Fund.
(k) Acquiring Fund will not pay cash in lieu of fractional
shares in connection with the transaction.
(l) As of the date of the transaction, the fair market value
of the Acquiring Fund Shares to be issued to Acquired Fund in
exchange for the assets of Acquired Fund will be approximately
equal to the fair market value of the assets of Acquired Fund to
be received by Acquiring Fund, minus the value of the Acquired
Fund Liabilities to be assumed by Acquiring Fund.
<PAGE> 6
Board of Directors
John Hancock Technology Series, Inc.
May 1, 1995
Page 6
(m) The principal business purposes of the transaction are
to combine the assets of Acquiring Fund and Acquired Fund in order
to capitalize on economies of scale in expenses such as the costs
of accounting, legal, transfer agency, insurance, custodial and
administrative services and to increase diversification.
(n) As of the date of the transaction, the fair market value
of the Class A Acquiring Fund Shares to be received by each holder
of Class A Acquired Fund Shares will be approximately equal to the
fair market value of the Class A Acquired Fund Shares to be
surrendered by such shareholder, and the fair market value of the
Class B Acquiring Fund Shares to be received by each holder of
Class B Acquired Fund Shares will be approximately equal to the
fair market value of the Class B Acquired Fund Shares to be
surrendered by such shareholder.
(o) To the best knowledge of management of Acquired Fund,
there is no plan or intention on the part of any shareholder of
Acquired Fund to sell, redeem, exchange or otherwise dispose of a
number of Acquiring Fund Shares to be received in the transaction
that would reduce the aggregate ownership of the Acquiring Fund
Shares by former Acquired Fund shareholders to a number of shares
having a value, as of the date of the transaction, of less than
fifty percent (50%) of the value of all of the formerly
outstanding Acquired Fund Shares as of the same date. Shares of
Acquired Fund and Acquiring Fund held by Acquired Fund
shareholders and surrendered by dissenters or otherwise sold,
redeemed, exchanged or disposed of prior or subsequent to the
transaction as part of the plan of reorganization are taken into
account for purposes of this representation.
(p) Acquired Fund assets transferred to Acquiring Fund will
comprise at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair
market value of the gross assets held by Acquired Fund immediately
prior to the transaction. For purposes of this representation,
amounts used by Acquired Fund to pay its outstanding liabilities,
including reorganization expenses, payments to dissenters, and all
redemptions and distributions (except for redemptions in the
ordinary course of business upon demand of a shareholder that
Acquired Fund is required to make as an open-end investment
company pursuant to Section 22(e) of the 1940 Act and regular,
normal dividends, which dividends include any final distribution
of previously undistributed investment company taxable income and
net capital gain for Acquired Fund's final taxable year ending on
the closing date of the transaction) made by Acquired Fund
immediately preceding the transaction are taken into account as
assets of Acquired Fund held immediately prior to the transaction.
<PAGE> 7
Board of Directors
John Hancock Technology Series, Inc.
May 1, 1995
Page 7
(q) The Acquired Fund Liabilities to be assumed by Acquiring
Fund plus the liabilities, if any, to which the transferred assets
are subject were incurred by Acquired Fund in the ordinary course
of its business or are expenses of the transaction.
(r) The fair market value of the Acquired Fund assets to be
transferred to Acquiring Fund will equal or exceed the sum of the
Acquired Fund Liabilities to be assumed by Acquiring Fund and the
amount of liabilities, if any, to which the transferred assets
will be subject.
(s) The total adjusted basis of the Acquired Fund assets to
be transferred to Acquiring Fund will equal or exceed the sum of
the Acquired Fund Liabilities to be assumed by Acquiring Fund and
the amount of liabilities, if any, to which the transferred assets
will be subject.
(t) Acquired Fund does not pay compensation to any
shareholder-employee.
(u) Acquired Fund has no outstanding warrants, options,
convertible securities or any other type of right pursuant to
which any person could acquire Acquired Fund Shares.
On the basis of and subject to the foregoing and in reliance
upon the representations described above, we are of the opinion
that:
(a) The proposed acquisition by Acquiring Fund of all
of the assets of Acquired Fund solely in exchange for the issuance
of Acquiring Fund Shares to Acquired Fund and the assumption of all
of the Acquired Fund Liabilities by Acquiring Fund, followed by the
distribution by Acquired Fund, in liquidation of Acquired Fund, of
Acquiring Fund Shares to Acquired Fund shareholders in exchange for
their Acquired Fund Shares and the termination of Acquired Fund,
will constitute a "reorganization" within the meaning of Section
368(a) of the Code. Acquiring Fund and Acquired Fund will each
be "a party to a reorganization" within the meaning of Section 368(b)
of the Code).
(b) No gain or loss will be recognized by Acquired Fund upon
(i) the transfer of all of its assets to Acquiring Fund solely in
exchange for the issuance of Acquiring Fund Shares to Acquired Fund
and the assumption of all of the Acquired Fund Liabilities by
Acquiring Fund and (ii) the distribution by Acquired Fund of such
Acquiring Fund Shares to the shareholders of Acquired Fund
(Sections 361(a) and 361(c) of the Code).
<PAGE> 8
Board of Directors
John Hancock Technology Series, Inc.
May 1, 1995
Page 8
(c) No gain or loss will be recognized by Acquiring Fund
upon the receipt of the assets of Acquired Fund solely in exchange
for the issuance of Acquiring Fund Shares to Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by Acquiring
Fund (Section 1032(a) of the Code).
(d) The basis of the assets of Acquired Fund acquired by
Acquiring Fund will be, in each instance, the same as the basis of
such assets in the hands of Acquired Fund immediately prior to the
transfer (Section 362(b) of the Code).
(e) The tax holding period of the assets of Acquired Fund in
the hands of Acquiring Fund will, in each instance, include
Acquired Fund's tax holding period for those assets (Section
1223(2) of the Code).
(f) The shareholders of Acquired Fund will not recognize
gain or loss upon the exchange of all of their Acquired Fund
Shares solely for Acquiring Fund Shares as part of the transaction
(Section 354(a)(l) of the Code).
(g) The basis of the Acquiring Fund Shares received by the
Acquired Fund shareholders in the transaction will be the same as
the basis of the Acquired Fund Shares surrendered in exchange
therefor (Section 358(a)(1) of the Code).
(h) The tax holding period of the Acquiring Fund Shares
received by Acquired Fund shareholders will include, for each
shareholder, the tax holding period for the Acquired Fund Shares
surrendered in exchange therefor, provided the Acquired Fund
Shares were held as capital assets on the date of the exchange
(Section 1223(1) of the Code).
No opinion is expressed or implied regarding the federal
income tax consequences to Acquiring Fund, Acquired Fund or
Acquired Fund shareholders of any conditions existing at the time
of, effects resulting from, or other aspects of the proposed
transaction except as expressly set forth above.
This opinion is intended solely for the purpose of including
this opinion as an exhibit to the Registration Statement. It may
not be relied upon for any other purpose or by any other person without
prior written consent. We hereby consent to the filing of this opinion
as an exhibit to the Registration Statement and further consent to the
use of our name wherever appearing in the Registration Statement.
Very truly yours,
/s/Hale and Dorr
----------------
<PAGE> 1
EXHIBIT 99.14.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this registration statement on Form N-14 (the
"Registration Statement") of John Hancock Technology Series, Inc. (the
"Company") of our reports dated February 16, 1995, relating to the financial
statements and financial highlights (the "Financial Statements") appearing in
the December 31, 1994 Annual Reports to Shareholders of John Hancock Global
Technology Fund and John Hancock National Aviation & Technology Fund (the
"Funds", each a series of the Company) which appear in Exhibits A and B,
respectively, to the Statement of Additional Information, and which Financial
Statements are incorporated by reference into the Proxy Statement and
Prospectus (the "Proxy/Prospectus"), which constitutes part of this
Registration Statement. We further consent to the reference to us under the
heading "Experts" in such Proxy/Prospectus, to the references to us under the
headings "The Fund's Financial Highlights" in the Prospectuses of the Funds
dated May 1, 1995, which are included as Exhibits B and C to the
Proxy/Prospectus and the references to us under the headings "Independent
Auditors" in the Statements of Additional Information of the Funds dated May 1,
1995, which are included as Exhibits A and B to the Statement of Additional
Information.
PRICE WATERHOUSE LLP
Boston, Massachusetts
May 2, 1995
<PAGE> 1
EXHIBIT 99.14.2
INDEPENDENT AUDITORS' CONSENT
To the Shareholders and Board of Directors
John Hancock Technology Series, Inc.:
We consent to the references to our Firm under the headings "Experts" in the
Proxy Statement and Prospectus and included in this Registration Statement on
Form N-14 with respect to the Funds listed below of John Hancock Technology
Series, Inc.
Funds
John Hancock Global Technology Fund
John Hancock National Aviation & Technology Fund
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
New York, New York
April 26, 1995
<PAGE> 1
EXHIBIT 99.17.1
Registration No. 2
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM N-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No.
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 X
AMENDMENT NO.
(Check appropriate box or boxes)
___________________________
NATIONAL TELECOMMUNICATIONS & TECHNOLOGY FUND, INC.
(Exact name of registrant as specified in charter)
50 Broad Street
New York, New York 10004
(Address of principal executive offices)
Registrant's Telephone Number -- (212) 402-8100
Laurence E. Erera
National Telecommunications & Technology Fund, Inc.
50 Broad Street
New York, New York 10004
(Name and Address of Agent for Service)
Copies to:
Russell J. Guglielmino
Reavis & McGrath
345 Park Avenue
New York, New York 10154
<PAGE> 2
Approximate date of commencement of proposed public offering: as soon
as practicable after the effective date of this Registration Statement.
______________________________
Pursuant to Rule 24f-2(a)(1) under the Investment Company Act of 1940,
an indefinite number of shares of Registrant's Common Stock is being
registered hereunder.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
