JOHN HANCOCK CAPITAL GROWTH FUND
101 Huntington Avenue
Boston, Massachusetts 02199
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 8, 1995
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of John Hancock Capital Growth Fund ("Capital Growth Fund"), a
Massachusetts business trust, will be held at 101 Huntington Avenue, Boston,
Massachusetts 02199 on Friday, September 8, 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 Capital Growth
Fund and John Hancock Capital Series, on behalf of John Hancock Growth
Fund ("Growth Fund"), providing for Growth Fund's acquisition of all
Capital Growth Fund's assets in exchange solely for: (a) Growth Fund's
assumption of Capital Growth Fund's liabilities and (b) the issuance of
Growth Fund Class A and Class B shares to Capital Growth Fund for
distribution to its shareholders; and
2. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment of the Meeting.
The Board of Trustees has fixed the close of business on July 14, 1995 as
the record date for determination of shareholders who are entitled to notice
of and to vote at the Meeting and any adjournment of the Meeting.
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 TRUSTEES OF JOHN HANCOCK
CAPITAL GROWTH FUND.
By order of the Board of Trustees,
THOMAS H. DROHAN, Secretary
Boston, Massachusetts
July 21, 1995
480PX 7/95
<PAGE>
JOHN HANCOCK CAPITAL GROWTH FUND
PROXY STATEMENT
JOHN HANCOCK GROWTH FUND
PROSPECTUS
This Proxy Statement and Prospectus sets forth the information you should
know before voting on the proposed reorganization of John Hancock Capital
Growth Fund ("Capital Growth Fund") into John Hancock Growth Fund ("Growth
Fund"). Capital Growth Fund is a Massachusetts business trust. Growth Fund is
a series of John Hancock Capital Series, a Massachusetts business trust (the
"Trust").
This Proxy Statement and Prospectus relates to Class A and Class B shares
of beneficial interest, no par value per share (collectively, the "Growth
Fund Shares"), of Growth Fund which will be issued in exchange for all of
Capital Growth Fund's assets. In exchange for these assets, Growth Fund will
also assume all of the liabilities of Capital Growth Fund.
The Growth Fund Class A Shares issued to Capital Growth Fund for
distribution to Capital Growth Fund's Class A shareholders will have an
aggregate net asset value equal to the aggregate net asset value of Capital
Growth Fund's Class A shares. The Growth Fund Class B Shares issued to
Capital Growth Fund for distribution to Capital Growth Fund's Class B
shareholders will have an aggregate net asset value equal to the aggregate
net asset value of Capital Growth Fund's Class B shares. The asset values of
Capital Growth Fund and Growth 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 Growth Fund Shares (1) Capital Growth Fund will
be liquidated, (2) the Growth Fund Shares will be distributed to Capital
Growth Fund's shareholders pro rata in exchange for their shares of Capital
Growth Fund and (3) Capital Growth Fund will be terminated. Consequently,
Class A Capital Growth Fund shareholders will become Class A shareholders of
Growth Fund, and Class B Capital Growth Fund shareholders will become Class B
shareholders of Growth Fund. These transactions are collectively referred to
in this Proxy Statement and Prospectus as the "Reorganization."
The Reorganization is being structured as a tax-free reorganization so
that, in the opinion of tax counsel, no gain or loss will be recognized by
Growth Fund, Capital Growth Fund or the shareholders of Capital Growth Fund.
The terms and conditions of this transaction are more fully described in this
Proxy Statement and Prospectus, and in the Agreement and Plan of
Reorganization that is attached as Exhibit A.
Growth Fund is a diversified open-end management investment company
organized as a Massachusetts business trust in 1984. Growth Fund seeks to
achieve
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long-term appreciation of capital. Growth Fund seeks this objective by
investing principally in common stocks (and in securities convertible into or
with rights to purchase common stocks) of companies which the Fund's
management believes offer outstanding growth potential over both the
intermediate and long term.
The principal place of business of both the Trust and Capital Growth Fund
is 101 Huntington Avenue, Boston, Massachusetts 02199. Their 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, which is
accompanied by the Prospectus of Growth Fund for Class A and Class B shares,
dated May 1, 1995, as supplemented July 1, 1995 (Exhibit B), sets forth
information that you should know before approving the Reorganization. The
Prospectus of Capital Growth Fund for Class A and Class B shares, dated May
1, 1995, is incorporated herein by reference and is available upon oral or
written request and at no charge from Capital Growth Fund.
A Statement of Additional Information dated July 21, 1995 relating to this
Proxy Statement and Prospectus, and containing additional information about
each of Growth Fund and Capital Growth 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 the
Trust. The Statement of Additional Information is incorporated by reference
into this Prospectus.
Shares of Growth Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other depository institution, and the shares of
Growth Fund are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government 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.
The date of this Proxy Statement and Prospectus is July 21, 1995.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
------
INTRODUCTION 1
SUMMARY 2
RISK FACTORS AND SPECIAL CONSIDERATIONS 12
INFORMATION CONCERNING THE MEETING 13
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF
REORGANIZATION 15
CAPITALIZATION 21
COMPARATIVE PERFORMANCE INFORMATION 22
BUSINESS OF GROWTH FUND 25
General 25
Investment Objective and Policies 25
Portfolio Management 25
Trustees 25
Investment Adviser and Distributor 25
Expenses 25
Custodian and Transfer Agent 25
Growth Fund Shares 25
Purchase of Growth Fund Shares 25
Redemption of Growth Fund Shares 25
Dividends, Distributions and Taxes 26
BUSINESS OF CAPITAL GROWTH FUND 26
General 26
Investment Objective and Policies 26
Portfolio Management 26
Trustees 26
Investment Adviser and Distributor 26
Expenses 26
Custodian and Transfer Agent 26
Capital Growth Fund Shares 26
Purchase of Capital Growth Fund Shares 26
Redemption of Capital Growth Fund Shares 27
Dividends, Distributions and Taxes 27
EXPERTS 27
AVAILABLE INFORMATION 27
</TABLE>
i
<PAGE>
EXHIBITS
A--Agreement and Plan of Reorganization by and between John Hancock Capital
Growth Fund and John Hancock Capital Series, on behalf of John Hancock
Growth Fund (attached hereto).
B--Prospectus of John Hancock Growth Fund for Class A and Class B shares,
dated May 1, 1995, as supplemented July 1, 1995 (attached hereto).
C--Annual Report to Shareholders of John Hancock Growth Fund, dated December
31, 1994 (included herewith).
ii
<PAGE>
PROXY STATEMENT AND PROSPECTUS
FOR SPECIAL MEETING OF SHAREHOLDERS OF
JOHN HANCOCK CAPITAL GROWTH FUND
TO BE HELD ON SEPTEMBER 8, 1995
INTRODUCTION
This Proxy Statement and Prospectus is furnished in connection with the
solicitation of proxies by the Board of Trustees of Capital Growth Fund (the
"Board of Trustees"). The proxies will be voted at the Special Meeting of
Shareholders (the "Meeting") of Capital Growth Fund to be held at 101
Huntington Avenue, Boston, Massachusetts 02199 on Friday, September 8, 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 incorporates by reference the
prospectus of Capital Growth Fund for Class A and Class B shares, dated May
1, 1995 (the "Capital Growth Fund Prospectus"), and includes the prospectus
of Growth Fund for Class A and Class B shares, dated May 1, 1995, as
supplemented July 1, 1995 (the "Growth Fund Prospectus"). The Annual Report
to Shareholders of Growth Fund, dated December 31, 1994, is included with
this Proxy Statement and Prospectus. These materials will be mailed to
shareholders of Capital Growth Fund on or after July 21, 1995. Capital Growth
Fund's Annual Report to Shareholders was previously sent to shareholders on
or about February 28, 1995.
As of June 30, 1995, 5,959,343.024 Class A and 978,140.221 Class B shares
of beneficial interest of Capital Growth Fund were outstanding.
All properly executed proxies received by management prior to the Meeting,
unless revoked, will be voted at the Meeting according to the instructions on
the proxies. If no instructions are given, shares of Capital Growth Fund
represented by proxies will be voted FOR the proposal (the "Proposal") to
approve the Agreement and Plan of Reorganization (the "Agreement") between
Capital Growth Fund and the Trust, on behalf of Growth Fund.
The Board of Trustees knows of no business that will be presented for
consideration at the Meeting other than that mentioned in the immediately
preceding paragraph. 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 Trustees, officers and employees of Capital Growth
Fund; by personnel of Capital Growth Fund's investment adviser, John Hancock
Advisers, Inc., Capital Growth 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. Capital
Growth Fund and Growth Fund
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(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 Growth Fund in this Proxy Statement and
Prospectus has been supplied by the Trust. The information regarding Capital
Growth Fund in this Proxy Statement and Prospectus has been supplied by
Capital Growth 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 and included with this document.
Please read this entire Proxy Statement and Prospectus carefully.
Reasons for the Proposed Reorganization
Capital Growth Fund's Board of Trustees has determined that the proposed
Reorganization is in the best interests of Capital Growth Fund and its
shareholders. In making this determination, the Trustees considered several
relevant factors, including the comparative performance of each Fund, the
fact that the investment objectives and policies of Capital Growth Fund and
Growth Fund are generally similar, and the fact that combining the Funds'
assets into a single portfolio will enable Growth Fund to achieve greater
diversification than either Fund is now able to achieve. The Board of
Trustees believes that the Growth Fund Shares received in the Reorganization
will provide existing Capital Growth 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 proposed
Reorganization, see "Proposal to Approve the Agreement and Plan of
Reorganization--Reasons For The Proposed Reorganization."
The Funds' Expenses
Both Funds and their shareholders are subject to various fees and
expenses. The two tables set forth below show the shareholder transaction and
operating expenses of Class A and Class B shares of the Funds. These expenses
are based on fees and expenses incurred during the Funds' most recently
completed fiscal years, adjusted to reflect current fees and expenses.
Capital Growth Fund
<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
2
<PAGE>
Class A Class B
Shares Shares
--------- ----------
Maximum deferred sales charge None* 5.00%
Redemption fee+ None None
Exchange Fee None None
Annual Fund Operating Expenses
(as a percentage of net assets)
Management fee 0.63% 0.63%
12b-1 fee(**) 0.25% 1.00%
Other expenses(***) 0.71% 0.71%
-------- --------
Total Fund Operating Expenses 1.59% 2.34%
</TABLE>
* No sales charge is payable at the time of purchase on investments in
Class A shares of $1 million or more, but for these investments a
contingent deferred sales charge may be imposed in the event of certain
redemption transactions within one year of purchase.
** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Fund's average net assets, and the remaining portion will be
used to cover distribution expenses.
*** Other expenses include transfer agent, legal, audit, custody and other
expenses.
+ Redemption by wire fee (currently $4.00) not included.
Growth Fund
<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 fee+ None None
Exchange fee None None
Annual Fund Operating Expenses
(as a percentage of net assets)
Management fee 0.80% 0.80%
12b-1 fee(**) 0.30% 1.00%
Other expenses(***) 0.51% 0.74%
-------- --------
Total Fund Operating Expenses 1.61% 2.54%
</TABLE>
* No sales charge is payable at the time of purchase on investments in
Class A shares of $1 million or more, but a contingent deferred sales
charge may be imposed on these investments in the event of certain
redemption transactions within one year of purchase.
3
<PAGE>
** The amount of the 12b-1 fee used to cover service expenses will be up
to 0.25% of the Fund's average net assets, and the remaining portion
will be used to cover distribution expenses.
*** Other expenses include transfer agent, legal, audit, custody and
other expenses.
+ Redemption by wire fee (currently $4.00) not included.
The table set forth below shows the pro forma operating expenses of Class
A and Class B shares of Growth Fund, which assume that the proposed
Reorganization took place on December 31, 1994. These expenses are based on
fees and expenses incurred during the Funds' most recently completed fiscal
years, adjusted to reflect current fees and expenses.
Growth Fund (Pro Forma)
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
--------- ---------
<S> <C> <C>
Annual Fund Operating Expenses
(as a percentage of net assets)
Management fee 0.80% 0.80%
12b-1 fee(*) 0.30% 1.00%
Other expenses(**) 0.51% 0.59%
------- --------
Total Fund Operating Expenses 1.61% 2.39%
</TABLE>
* The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Fund's average net assets, and the remaining portion will be
used to cover distribution expenses.
** Other expenses include transfer agent, legal, audit, custody and other
expenses.
If the proposed Reorganization is consummated, the actual total operating
expenses of Class A and Class B shares of Growth Fund may vary from the pro
forma operating expenses indicated above.
The Funds' Investment Adviser
John Hancock Advisers, Inc. (the "Adviser") acts as investment adviser to
both Funds.
Business of John Hancock Capital Growth Fund
Capital Growth Fund is a diversified, open-end management investment
company organized as a Massachusetts business trust in 1984. As of December
31, 1994, Capital Growth Fund's net assets were approximately $86,741,611.
Investment decisions for Capital Growth Fund are made primarily by Ben Hock,
the Fund's portfolio manager. Mr. Hock will continue to serve as Capital
Growth Fund's portfolio manager until the Reorganization.
Business of John Hancock Growth Fund
Growth Fund is a diversified series of the Trust, an open-end management
investment company organized as a Massachusetts business trust in 1984. The
Trust's predecessor was organized in 1968. As of December 31, 1994, Growth
4
<PAGE>
Fund's net assets were approximately $151,847,464. All investment decisions
for Growth Fund are made by the Adviser's growth equities team. No single
person is primarily responsible for making recommendations to the team.
Comparison of the Investment Objectives and Policies of John Hancock Capital
Growth Fund and John Hancock Growth Fund
Capital Growth Fund. The investment objective of Capital Growth Fund is
capital appreciation. Under normal circumstances, at least 65% of Capital
Growth Fund's total assets are invested in common stocks (including warrants
and other securities which are convertible into or exchangeable for common
stocks). The remaining portion of Capital Growth Fund's assets (up to 35%
under normal circumstances) may be invested in investment grade debt
securities and preferred stocks. Capital Growth Fund may invest in certain
derivative instruments, including forward foreign currency contracts, stock
options, stock index options, stock index futures and related options.
Capital Growth Fund may also purchase foreign securities, lend portfolio
securities and enter into repurchase agreements and reverse repurchase
agreements.
Growth Fund. The investment objective of Growth Fund is long-term capital
appreciation. Growth Fund invests principally in common stocks (and in
securities convertible into or with rights to purchase common stocks) of
companies which the Adviser believes offer outstanding growth potential over
both the intermediate and long term. Growth Fund may also purchase foreign
securities, lend portfolio securities and enter into repurchase agreements.
Growth Fund does not engage in derivatives transactions.
Growth Fund's investment objective is fundamental and may not be changed
without the approval of Growth Fund's shareholders. Capital Growth Fund's
investment objective is nonfundamental and may be changed by the Fund's Board
of Trustees without shareholder approval.
In considering whether to approve the Reorganization, you should consider
the differences between the two Funds' investment objectives and policies.
For a discussion of the risks associated with an investment in the Funds, see
"Risk Factors and Special Considerations."
<TABLE>
<CAPTION>
<S> <C> <C>
Capital Growth Fund Growth Fund
Investment Objective is to achieve capital Objective is to achieve long-term
Objective appreciation. capital appreciation.
5
<PAGE>
Primary At least 65% of Capital Growth Principally in common stocks (and
Investments Fund's assets in domestic or foreign securities convertible into common
equity securities (including common stocks) of companies believed to
stocks and securities convertible offer outstanding intermediate and
into common stocks). The issuers of long-term growth potential. The
these securities may include emphasis is on common stocks of
smaller, less well established those companies whose 5-year average
companies as well as larger or operating earnings and revenue
better established companies. growth are at least 2 times the
Capital Growth Fund may not invest growth of the U.S. Gross Domestic
more than 25% of its assets in the Product. However, Growth Fund may
securities of issuers located in a invest in companies that do not meet
single foreign country. this test.
Other Investments Capital Growth Fund may invest in Growth Fund may invest in restricted
restricted securities, subject to a and Rule 144A securities, subject to
10% limit on illiquid investments. a 15% limit on illiquid investments.
Up to 35% of Capital Growth Fund's Growth Fund may invest up to 15% of
assets may be invested in investment its assets in American Depositary
grade debt securities and preferred Receipts. For defensive purposes,
stocks that are believed to offer Growth Fund may temporarily hold
opportunities for long-term capital cash or invest in preferred stock,
appreciation. For defensive nonconvertible bonds and other fixed
purposes, Capital Growth Fund may income securities. Fixed income
temporarily hold cash and invest securities are rated at least BBB by
without limit in investment grade Standard & Poor's Ratings Group or
debt securities, repurchase Baa by Moody's Investors Service,
agreements and preferred stocks. Inc., except that Growth Fund may
Capital Growth Fund may borrow money invest up to 5% of its net assets in
and enter into reverse repurchase lower rated fixed income securities.
agreements for leverage purposes.
Capital Growth Fund may also lend
portfolio securities.
6
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Permitted Forward currency contracts (subject None.
Transactions in to a 15% limit on the amount
Derivative committed), options on stock and
Instruments stock indices, stock index futures
contracts and options on such
futures contracts.
Diversification Capital Growth Fund is diversified Growth Fund is diversified and does
and Industry and does not concentrate more than not concentrate more than 25% of its
Concentration 25% of its assets in any one assets in any one industry.
(No Change) industry.
</TABLE>
Form of Organization
Capital Growth Fund is a Massachusetts business trust. Growth Fund is one
of two separate series of the Trust, a Massachusetts business trust. Both
Funds have authorized and outstanding Class A and Class B shares.
Each share of a Fund represents an equal proportionate interest in the
assets belonging to that Fund. The liabilities attributable to Growth Fund
are not charged against the assets of the other series of the Trust. Shares
of Growth Fund and the other series of the Trust are voted separately with
respect to matters pertaining to the Fund or the other series, but all shares
vote together for the election of the Trust's Trustees and the ratification
of the Trust's independent accountants.
The shares of each class of Capital Growth Fund and Growth Fund represent
an interest in the same portfolio of investments of that Fund. Except as
stated below, each class of each Fund has equal rights as to voting,
redemption, dividends and liquidation. Each class bears 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 class of shares.
Class A shares of each Fund are offered with a front-end sales charge.
Class A shares of Capital Growth Fund are subject to a Rule 12b-1 fee of
0.25% of the average daily net assets attributable to Class A shares, of
which up to 0.25% of these average daily net assets is for service expenses
and the remainder is for distribution expenses. Class A shares of Growth Fund
are subject to a Rule 12b-1 fee of 0.30% of the Fund's average daily net
assets, of which up to 0.25% of these average daily net assets is for service
expenses and the remainder is for distribution expenses.
Class B shares of each Fund 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
Class B shares, of which up to 0.25% of these average daily net assets is for
service expenses and up to 0.75% is for distribution expenses.
7
<PAGE>
As part of the Reorganization, Class A shares of Growth Fund will be
issued to Capital Growth Fund and then distributed by it to Capital Growth
Fund's Class A shareholders. Similarly, Class B shares of Growth Fund will be
issued to Capital Growth Fund and then distributed by it to Capital Growth
Fund's Class B shareholders.
Sales Charges and Distribution and Service Fees
Class A Shares. Both Funds impose an initial sales charge on Class A
shares as described above in the table under the caption "The Funds'
Expenses". An initial sales charge does not apply to Class A shares acquired
through the reinvestment of dividends from net investment income or capital
gain distributions.
Class A shares of Growth Fund acquired by Capital Growth Fund's Class A
shareholders pursuant to the Reorganization will not be subject to any
initial sales charge or CDSC. However, the CDSC imposed upon certain
redemptions within one year of purchase (referred to above) will continue to
apply to the Class A shares of Growth Fund issued in the Reorganization. The
holding period for determining the application of this CDSC will be
calculated from the date the Capital Growth Fund Class A shares were issued.
Class B Shares. Capital Growth Fund and Growth Fund do not impose an
initial sales charge on Class B shares. 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 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 Growth Fund acquired by Capital Growth Fund's Class B
shareholders pursuant to the Reorganization will not be subject to any CDSC
at the time of the Reorganization, but will remain subject to any CDSC
applicable
8
<PAGE>
upon redemption of these shares. For purposes of computing the CDSC payable
upon redemption of Class B shares of Growth Fund acquired pursuant to the
Reorganization and the automatic conversion of Class B shares into Class A
shares, the holding period of the Capital Growth Fund Class B shares will be
added to that of the Growth Fund Class B shares acquired in the
Reorganization.
Distribution and Service Fees. 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 expenses in connection with Class A shares. These fees are payable at
an annual rate of up to 0.25% and 0.30%, respectively, of the average daily
net assets attributable to the Class A shares of Capital Growth Fund and
Growth Fund. Of this fee, up to 0.25% may be for service expenses and the
remainder will be for distribution expenses.
In addition, under the plans, each Fund may pay fees to John Hancock Funds
to reimburse it for 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 this
fee, up to 0.25% may be for service expenses and up to 0.75% will be for
distribution expenses. 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 Trustees of the Trust, on behalf of Growth Fund, has
determined that, if the Reorganization is consummated, unreimbursed
distribution and shareholder service expenses originally incurred in
connection with Capital Growth Fund's shares will be reimbursable under
Growth Fund's Rule 12b-1 Plans. As of December 31, 1994, the unreimbursed
distribution and shareholder service expenses for Class A shares of Growth
Fund and Capital Growth Fund were $148,982 and $0, respectively. The
unreimbursed distribution and shareholder service expenses for Class B shares
of Growth Fund and Capital Growth Fund were $152,358 and $12,865,
respectively. See "Unreimbursed Distribution and Shareholder Expenses" below.
Purchases and Exchanges
Shares of Growth Fund may be purchased through certain broker-dealers and
through 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 Growth Fund is $1,000 ($250 for
group investments and retirement plans). In anticipation of the
Reorganization, after the Record Date, no new accounts may be opened in
Capital Growth Fund. Existing shareholders of Capital Growth Fund may
continue to purchase shares of the Fund after the Record Date.
9
<PAGE>
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 the CDSC, if still applicable, upon redemption. The
exchange privilege is available only in those states where exchanges can be
made legally.
Distribution Procedures
It is the policy of both Funds to 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. Capital Growth 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 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 Class B shares and
certain Class A shares of Capital Growth Fund and Growth Fund are subject to
the applicable CDSC, if any. Class A and Class B shares of Capital Growth
Fund may be redeemed up to and including the Closing Date (as defined below).
Reorganization
Effect of the Reorganization. Pursuant to the terms of the Agreement, the
proposed Reorganization will consist of the acquisition by Growth Fund of all
the assets of Capital Growth Fund in exchange solely for (i) the assumption
by Growth Fund of all the liabilities of Capital Growth Fund and (ii) the
issuance of Growth Fund shares equal to the value of these assets, less the
amount of these liabilities (the "Growth Fund Shares"), to Capital Growth
Fund. As part of the liquidation process, Capital Growth Fund will
immediately distribute to its shareholders these Growth Fund Shares in
exchange for their shares of Capital Growth Fund. Consequently, Class A
shareholders of Capital Growth Fund will become Class A shareholders of
Growth Fund and Class B shareholders of Capital Growth Fund will become Class
B shareholders of Growth Fund. After completion of the Reorganization, the
existence of Capital Growth Fund will be terminated.
The Reorganization will become effective as of 5:00 p.m. on the closing
date, scheduled for September 15, 1995, or another date on or before December
31, 1995
10
<PAGE>
as authorized representatives of the Funds may agree (the "Closing Date").
The Growth Fund Class A Shares issued to Capital Growth Fund for distribution
to Capital Growth Fund's Class A shareholders will have an aggregate net
asset value equal to the aggregate net asset value of Capital Growth Fund's
Class A shares. Similarly, the Growth Fund Class B shares issued to Capital
Growth Fund for distribution to Capital Growth Fund's Class B shareholders
will have an aggregate net asset value equal to the aggregate net asset value
of Capital Growth 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.
Capital Growth Fund's Board of Trustees, including the Trustees not
affiliated with either Fund, unanimously approved the Reorganization, and
determined that it is in the best interests of Capital Growth Fund and that
the interests of Capital Growth Fund's shareholders will not be materially
diluted as a result of the Reorganization. Similarly, the Trust's Board of
Trustees, including the Trustees not affiliated with either Fund, unanimously
approved the Reorganization and determined that it is in the best interests
of Growth Fund and that the interests of Growth Fund's shareholders will not
be materially diluted as a result of the Reorganization. For a discussion of
the factors considered by Capital Growth Fund's Board of Trustees, 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 of an
opinion of Hale and Dorr, counsel to the Funds, satisfactory to the Trust and
Capital Growth Fund and substantially to the effect that:
(a) the acquisition by Growth Fund of all of Capital Growth Fund's assets
solely in exchange for the issuance of Growth Fund Shares to Capital Growth
Fund and the assumption of all of Capital Growth Fund's liabilities by Growth
Fund, followed by the distribution by Capital Growth Fund, in liquidation of
Capital Growth Fund, of Growth Fund Shares to the shareholders of Capital
Growth Fund in exchange for their shares of beneficial interest of Capital
Growth Fund and the termination of Capital Growth Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and Capital Growth Fund and Growth
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 Capital Growth Fund upon (i) the
transfer of all of its assets to Growth Fund (in the exchange described
above) and (ii) the distribution by Capital Growth Fund of Growth Fund Shares
to Capital Growth Fund's shareholders;
(c) no gain or loss will be recognized by Growth Fund upon the receipt of
Capital Growth Fund's assets in the exchange described above;
11
<PAGE>
(d) the basis of the assets of Capital Growth Fund acquired by Growth Fund
will be, in each instance, the same as the basis of those assets in the hands
of Capital Growth Fund immediately prior to the transfer;
(e) the tax holding period of the assets of Capital Growth Fund in the
hands of Growth Fund will, in each instance, include Capital Growth Fund's
tax holding period for those assets;
(f) the shareholders of Capital Growth Fund will not recognize gain or
loss upon the exchange of all of their Capital Growth Fund shares for Growth
Fund Shares as part of the Reorganization;
(g) the basis of the Growth Fund Shares received by Capital Growth Fund
shareholders in the Reorganization will be the same as the basis of the
Capital Growth Fund shares surrendered in exchange therefor; and
(h) the tax holding period of the Growth Fund Shares received by Capital
Growth Fund shareholders will include, for each shareholder, the tax holding
period for the Capital Growth Fund shares surrendered in exchange therefor,
provided the Capital Growth Fund shares were held as capital assets on the
date of the exchange.
The Meeting
Time, Place and Date. The Meeting will be held on Friday, September 8,
1995, at 101 Huntington Avenue, Boston, Massachusetts 02199, at 9:00 a.m.
Boston time.
Record Date. The Record Date for determining shareholders entitled to
notice of and to vote at the Meeting is July 14, 1995.
Vote Required for Approval. Approval of the Agreement by the shareholders
of Capital Growth Fund requires the affirmative vote of not less than a
majority of the outstanding shares of Capital Growth Fund represented in
person or by proxy and entitled to vote at a meeting of shareholders at which
a quorum is present. The Reorganization does not require the approval of
Growth Fund's shareholders. See "Proposal to Approve the Agreement and Plan
of Reorganization--Voting Rights and Required Vote."
RISK FACTORS AND SPECIAL CONSIDERATIONS
Please see the Growth Fund Prospectus, enclosed with this Proxy Statement
and Prospectus, and the Capital Growth Fund Prospectus, 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
and risk factors of the Funds.
12
<PAGE>
Given the similarity of these investment objectives, the Funds are subject
to substantially identical investment risks. However, because of differences
in certain investment policies, the Funds are subject to different risks in
certain areas. Growth Fund's ability to invest up to 15% of its net assets in
illiquid securities may subject it to the risks of such securities to a
greater extent than Capital Growth Fund, which is permitted to invest up to
10% of its net assets in such securities. The sale of illiquid securities, if
they can be sold at all, generally requires more time and results in higher
brokerage charges and other selling expenses than does the sale of liquid
securities.
Because it may invest in foreign securities without limit, Capital Growth
Fund may be subject to the risks of foreign investment to a greater extent
than Growth Fund. Investment in foreign securities may involve a greater
degree of risk than investment in domestic securities 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. Similarly, Capital
Growth Fund's ability to enter into derivatives transactions subjects it to
certain risks that do not apply to Growth Fund.
INFORMATION CONCERNING THE MEETING
Solicitation, Revocation And Use Of Proxies
The presence (in person or by proxy) of a majority of Capital Growth
Fund's outstanding shares that are entitled to vote at the Meeting will be a
quorum for the transaction of business. A Capital Growth 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 Capital Growth
Fund's transfer agent, John Hancock Investor Services Corporation, 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 Capital Growth Fund
(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.
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 Capital Growth 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,
13
<PAGE>
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.
In addition to the solicitation of proxies by mail or in person, Capital
Growth Fund may also arrange to have votes recorded by telephone by officers
and employees of Capital Growth Fund or by personnel of the Adviser or
Investor Services. The telephone voting procedure is designed to authenticate
a shareholder's identity, to allow a shareholder to authorize the voting of
shares in accordance with the shareholder's instructions and to confirm that
the voting instructions have been properly recorded. If these procedures were
subject to a successful legal challenge, such vote would not be counted at
the Meeting. Capital Growth Fund has not sought to obtain an opinion of
counsel on this matter and is unaware of any such challenge at this time. A
shareholder would be called on a recorded line at the telephone number
Capital Growth Fund has in its records for the account and would be asked the
shareholder's Social Security number or other identifying information. The
shareholder would then be given an opportunity to authorize proxies to vote
his shares at the Meeting in accordance with the shareholder's instructions.
To ensure that the shareholder's instructions have been recorded correctly,
the shareholder will also receive a confirmation of the voting instructions
in the mail. A special toll-free number will be available in case the voting
information contained in the confirmation is incorrect. If the shareholder
decides after voting by telephone to attend the Meeting, the shareholder can
revoke the proxy at that time and vote the shares at the Meeting.
Record Date And Outstanding Shares
Only Capital Growth Fund shareholders of record at the close of business
on July 14, 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
June 30, 1995, 5,959,343.024 Class A and 978,140.221 Class B shares of
beneficial interest of Capital Growth Fund were outstanding, and 8,821,600.56
Class A and 296,764.734 Class B shares of beneficial interest of Growth Fund
were outstanding.
Security Ownership of Certain Beneficial Owners
and Management of Capital Growth Fund and Growth Fund
To the knowledge of Capital Growth Fund, as of June 30, 1995, no person
owned of record or beneficially 5% or more of the outstanding Class A shares
of beneficial interest of Capital Growth Fund, and only the following person
owned of record or beneficially 5% or more of the outstanding Class B shares
of beneficial interest of Capital Growth Fund: Continental Trust Co. Cust.
C/F County Employee's Annuity & Ben. Fund of Cook County IL, Chicago, IL
(71.18%). On the basis of its present holdings, Continental Trust Co. Cust.
C/F County Employee's Annuity & Ben. Fund of Cook County IL will own
approximately 55% of Growth Fund's Class B shares immediately after the
Reorganization (if the Reorganization is consummated). To the knowledge of
the Trust, as of June 30, 1995, no person owned of record or beneficially 5%
or more of Growth Fund's outstanding Class A or Class B shares of beneficial
interest.
14
<PAGE>
As of June 30, 1995, the Trustees and officers of Capital Growth Fund, as
a group, owned in the aggregate less than 1% of the outstanding Class A and
Class B shares of beneficial interest of Capital Growth Fund. As of June 30,
1995, the Trustees and officers of the Trust, as a group, owned in the
aggregate less than 1% of the outstanding Class A and Class B shares of
beneficial interest of Growth Fund.
PROPOSAL TO APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION
General
The shareholders of Capital Growth 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 Capital Growth Fund's assets to Growth
Fund, in exchange solely for the issuance of Growth Fund Shares to Capital
Growth Fund and the assumption of Capital Growth Fund's liabilities by Growth
Fund, (B) the subsequent distribution by Capital Growth Fund, as part of its
liquidation, of the Growth Fund Shares to Capital Growth Fund's shareholders
and (C) the termination of Capital Growth Fund's existence. The Growth Fund
Class A Shares issued upon the consummation of the Reorganization will have
an aggregate net asset value equal to the aggregate net asset value of
Capital Growth Fund's Class A shares. Similarly, the Growth Fund Class B
Shares issued upon consummation of the Reorganization will have an aggregate
net asset value equal to the aggregate net asset value of Capital Growth
Fund's Class B shares. As noted above, the asset values of Capital Growth
Fund and Growth 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, Capital Growth Fund will liquidate and
distribute the Growth Fund Shares received, as described above, pro rata to
the shareholders of record of each class 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 Growth Fund will add to its
portfolio the net assets of Capital Growth Fund. Class A shareholders of
Capital Growth Fund will become Class A shareholders of Growth Fund, and
Class B shareholders of Capital Growth Fund will become Class B shareholders
of Growth Fund.
The Agreement and the Reorganization were unanimously approved by the
Board of Trustees of Capital Growth Fund at a meeting held on May 16, 1995.
The Agreement and the Reorganization were unanimously approved by the Board
of Trustees of the Trust on behalf of Growth Fund at a meeting held on May 1,
1995.
Reasons For The Proposed Reorganization
Capital Growth Fund's Board of Trustees believes that the proposed
Reorganization will be advantageous to the shareholders of Capital Growth
Fund in several respects. The Board of Trustees considered the following
matters, among others, in approving the Proposal.
15
<PAGE>
First, the Board of Trustees believes that it is not advantageous to
operate and market Capital Growth Fund separately from Growth Fund because
their investment objectives and policies are substantially identical. For a
complete description of Growth Fund's investment objective and policies, see
the Growth Fund Prospectus attached as Exhibit B.
Second, the Board of Trustees considered the fact that Capital Growth Fund
is significantly smaller than Growth Fund. The Board of Trustees determined
that the existence of a larger competing fund within the same fund complex
and with substantially identical investment characteristics is likely to
impede the marketing and asset growth of Capital Growth Fund.
Third, the Board of Trustees considered that 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 Growth
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 adverse performance of any one security may have on the performance of
the entire portfolio.
Fourth, the Board of Trustees believes that the Growth Fund Shares
received in the Reorganization will provide existing Capital Growth Fund
shareholders with substantially the same investment advantages that they
currently enjoy at a comparable level of risk.
Fifth, a combined fund offers economies of scale that should have a
positive effect on certain expenses currently borne by the shareholders of
Capital Growth Fund. Both Funds incur substantial costs for accounting,
legal, transfer agency services, insurance, and custodial and administrative
services. Although the Reorganization is expected to result in an increase in
total operating expenses currently borne by Capital Growth Fund's
shareholders, the Board of Trustees expects that many expenses (excluding the
management fee and Class A Rule 12b-1 fee) will decrease as a result of the
Reorganization.
Sixth, the Board of Trustees considered the performance history of each
Fund, including the fact that Growth Fund has achieved a better return for
investors over the five-year and one-year periods ended December 31, 1994.
The Board of Trustees believes that this fact, among others, supports the
increased management fee that will result (for Capital Growth Fund
shareholders) from the Reorganization. See performance information, including
table, in "Comparative Performance Information" below.
In determining that the Reorganization is in the best interests of Capital
Growth Fund and the interests of its shareholders, the Board of Trustees
considered the fact that the Adviser will receive certain benefits from the
Reorganization, including a higher management fee. The Reorganization will
result in a
16
<PAGE>
consolidated portfolio management effort, and may result in time savings to the
Adviser by reducing the number of reports and regulatory filings that it
needs to prepare.
Unreimbursed Distribution and Shareholder Service Expenses
The Trust's Board of Trustees has determined that, if the Reorganization
is consummated, distribution and shareholder service expenses incurred in
connection with shares of Capital Growth Fund, and not reimbursed under
Capital Growth Fund's Rule 12b-1 Plans or through CDSCs, will be reimbursable
expenses under Growth Fund's Rule 12b-1 Plans (the "assumption"). However,
the maximum aggregate amounts payable during any fiscal year under Growth
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 Growth 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 Growth Fund attributable to Class A and Class B shares
were $148,982 (0.10% of Growth Fund's net assets attributable to Class A
shares) and $152,358 (4.00% of Growth Fund's net assets attributable to Class
B shares), respectively. As of the same date, the unreimbursed distribution
and shareholder service expenses of Capital Growth Fund attributable to Class
A and Class B shares were $0 and $12,865 (0.08% of Capital Growth Fund's net
assets attributable to Class B shares), respectively.
After the Reorganization, on a pro forma combined basis, the unreimbursed
distribution and shareholder service expenses of Growth Fund attributable to
Class A and Class B shares will be $148,982 (0.07% of Growth Fund's pro forma
net assets attributable to Class A shares) and $165,223 (0.81% of Growth
Fund's pro forma net assets attributable to Class B shares), respectively.
The assumption will have no immediate effect upon the payments made under
Growth 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, Growth Fund is not obligated to assure that these amounts are
recouped by John Hancock Funds.
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 Growth Fund
after the Reorganization until paid or accrued. Even in the event of
termination or noncontinuance of Growth Fund's 12b-1 Plans, Growth Fund is
not legally committed, and is not required to commit, to the payment of any
unreimbursed distribution and shareholder service expenses. For this reason,
unreimbursed expenses do not enter into the calculation of a Fund's net asset
value or the formula for calculating Rule 12b-1
17
<PAGE>
payments. The staff of the SEC has not approved or disapproved the treatment
of the unreimbursed distribution and shareholder service expenses described
in this Proxy Statement.
Board's Evaluation and Recommendation
On the basis of the factors described above and other factors, Capital
Growth Fund's Board of Trustees, including a majority of the Trustees who are
not "interested persons" (as defined in the Investment Company Act) of the
Funds, determined that the Reorganization is in the best interests of Capital
Growth Fund and that the interests of Capital Growth Fund's shareholders will
not be materially diluted as a result of the Reorganization. On the same
basis, the Board of Trustees of the Trust, including a majority of the
Trustees who are not "interested persons" (as defined in the Investment
Company Act) of the Funds, determined that the Reorganization is in the best
interests of Growth Fund and the interests of Growth Fund's shareholders will
not be materially diluted as a result of the Reorganization.
THE TRUSTEES OF JOHN HANCOCK CAPITAL GROWTH FUND RECOMMEND THAT
SHAREHOLDERS 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 Capital Growth 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).
On the Closing Date, Capital Growth Fund will transfer all of its assets
to Growth Fund in exchange for Growth Fund Shares with an aggregate net asset
value equal to the value of the assets delivered, less the liabilities of
Capital Growth Fund assumed, as of the close of business on the Closing Date
(see Agreement, paragraphs 1 and 2).
The value of Capital Growth Fund's assets and Growth 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 the Trust's Declaration of Trust and
By-laws and the Growth Fund Prospectus, respectively (see "Share Price" in
the Growth Fund Prospectus). No initial sales charge or CDSC will be imposed
upon delivery of the Growth Fund Shares in exchange for the assets of Capital
Growth Fund.
Surrender of Share Certificates. Capital Growth Fund shareholders whose
Class A or Class B shares are represented by one or more share certificates
should,
18
<PAGE>
prior to the Closing Date, either surrender their certificates to Capital
Growth Fund or deliver to Capital Growth Fund an affidavit with respect to
lost certificates, in such form and accompanied by such surety bonds as
Capital Growth 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 Capital Growth Fund's
shares and will evidence ownership of Growth Fund Shares. Shareholders may
not redeem or transfer Growth Fund Shares received in the Reorganization
until they have surrendered their Capital Growth Fund share certificates or
delivered an Affidavit relating to them. Unless a shareholder specifically
requests a share certificate, Growth Fund will not issue share certificates
in the Reorganization.
Conditions Precedent to Closing. The obligation of Capital Growth Fund to
consummate the Reorganization is subject to the satisfaction of certain
conditions precedent, including the Trust's and Growth 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 Growth Fund to consummate the Reorganization is subject
to the satisfaction of certain conditions precedent, including the
performance by Capital Growth Fund of all acts and undertakings to be
performed under the Agreement, the receipt of certain documents and financial
statements from Capital Growth Fund and the receipt of all consents, orders
and permits necessary to consummate the Reorganization (see Agreement,
paragraphs 6 through 8).
The obligations of both parties are subject to the receipt of approval and
authorization of the Agreement by the vote of not less than a majority of the
outstanding shares of beneficial interest of Capital Growth Fund represented
in person or by proxy and 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 Capital Growth 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. Growth Fund and Capital Growth 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 of a
favorable opinion of Hale and Dorr, counsel to the Funds, satisfactory to
Capital Growth Fund and the Trust and substantially to the effect that:
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<PAGE>
(i) The acquisition by Growth Fund of all of the assets of Capital Growth
Fund solely in exchange for the issuance of Growth Fund Shares to Capital
Growth Fund and the assumption of all of Capital Growth Fund's liabilities by
Growth Fund, followed by the distribution by Capital Growth Fund, in
liquidation of Capital Growth Fund, of Growth Fund Shares to the shareholders
of Capital Growth Fund in exchange for their shares of beneficial interest of
Capital Growth Fund and the termination of Capital Growth Fund, will
constitute a "reorganization" within the meaning of Section 368(a) of the
Code, and Capital Growth Fund and Growth 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 Capital Growth Fund upon (a)
the transfer of all of its assets to Growth Fund solely in exchange for the
issuance of Growth Fund Shares to Capital Growth Fund, and the assumption of
all of Capital Growth Fund's liabilities by Growth Fund; and (b) the
distribution by Capital Growth Fund of these Growth Fund Shares to the
shareholders of Capital Growth Fund;
(iii) no gain or loss will be recognized by Growth Fund upon the receipt
of Capital Growth Fund's assets solely in exchange for the issuance of Growth
Fund Shares to Capital Growth Fund and the assumption of all of Capital
Growth Fund's liabilities by Growth Fund;
(iv) the basis of the assets of Capital Growth Fund acquired by Growth
Fund will be, in each instance, the same as the basis of those assets in the
hands of Capital Growth Fund immediately prior to the transfer;
(v) the tax holding period of the assets of Capital Growth Fund in the
hands of Growth Fund will, in each instance, include Capital Growth Fund's
tax holding period for those assets;
(vi) the shareholders of Capital Growth Fund will not recognize gain or
loss upon the exchange of all their Capital Growth Fund shares solely for
Growth Fund Shares as part of the Reorganization;
(vii) the basis of the Growth Fund Shares received by the Capital Growth
Fund shareholders in the transaction will be the same as the basis of the
Capital Growth Fund shares surrendered in exchange therefor; and
(viii) the tax holding period of the Growth Fund Shares received by the
Capital Growth Fund shareholders will include, for each shareholder, the tax
holding period for the Capital Growth Fund shares surrendered in exchange
therefor, provided the Capital Growth Fund shares were held as capital assets
on the date of the exchange.
Voting Rights And Required Vote
Each Capital Growth Fund share is entitled to one vote. Class A and Class
B shareholders of Capital Growth Fund vote together with respect to the
Proposal. Approval of the Proposal requires the affirmative vote of a
majority of the
20
<PAGE>
shares of Capital Growth Fund represented in person or by proxy and entitled
to vote at a meeting at which a quorum is present.
Shares of beneficial interest of Capital Growth 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. Accordingly, an abstention from voting has the same
effect as a vote against the Proposal. However, if a broker or nominee
holding shares in "street name" indicates on the proxy card that it does not
have discretionary authority to vote on the Proposal, those shares will not
be considered 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, provided that the holders of that
number of shares constituting a quorum (excluding the "broker non-votes") are
present or represented.
If the requisite approval of shareholders is not obtained, Capital Growth
Fund will continue to engage in business as a registered open-end, management
investment company and Capital Growth Fund's Board of Trustees 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 0.68805 Class A Growth Fund Shares being
issued for each Class A share of Capital Growth Fund and approximately
0.68178 Class B Growth Fund Shares being issued for each Class B share of
Capital Growth 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 Growth Fund and Capital Growth Fund between December 31, 1994 and the
Closing Date, changes in the amount of undistributed net investment income
and net realized capital gains of Growth Fund and Capital Growth Fund during
that period resulting from income and distributions, and changes in the
accrued liabilities of Growth Fund and Capital Growth Fund during the same
period.
21
<PAGE>
December 31, 1994
<TABLE>
<CAPTION>
Capital
Growth Growth Pro Forma
Fund Fund Combined
------------ -------------- ---------------
<S> <C> <C> <C>
Net Assets $86,741,611 $150,273,859* $237,015,470
Net Asset Value Per Share:
Class A $10.93 $15.89 $15.89
Class B $10.80 $15.83 $15.83
Shares Outstanding:
Class A 6,411,229 9,218,162 13,629,435(1)
Class B 1,542,392 240,447 1,292,026(1)
</TABLE>
(1) If the Reorganization had taken place on December 31, 1994, Capital
Growth Fund would have received 4,411,273 Class A shares and 1,051,579
Class B shares of Growth Fund which would have been available for
distribution to shareholders of the applicable class of Capital Growth
Fund. No assurance can be given as to the number of Class A Shares or
Class B shares of Growth Fund that will be received by Capital Growth
Fund on the Closing Date. The foregoing is merely an example of what
Capital Growth 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.
*Excludes net assets for Class C shares of Growth Fund, which were
outstanding on December 31, 1994.
COMPARATIVE PERFORMANCE INFORMATION
Total Return
The average annual total return at public offering price on Capital Growth
Fund's Class A shares for the one-year and five-year periods ended December
31, 1994 was (16.42)% and 3.91%, respectively. The average annual total
return at public offering price on Capital Growth Fund's Class A shares for
the period from September 26, 1985 (commencement of operations) through
December 31, 1994 was 13.76%. The average annual total return on Capital
Growth Fund's Class B shares for the one-year period ended December 31, 1994
was (16.88)%. The average annual total return on Capital Growth Fund's Class
B shares for the period from June 30, 1993 (commencement of operations)
through December 31, 1994 was (3.80)%. Total returns on Class B shares
reflect the applicable contingent deferred sales charge.
The average annual total return at public offering price on Growth Fund's
Class A shares for the one-year, five-year and ten-year periods ended
December
22
<PAGE>
31, 1994 was (12.14)%, 6.47% and 11.90%, respectively. The average annual
total return on Growth Fund's Class B shares for the period from January 3,
1994 (commencement of operations) through December 31, 1994 was (11.33)%.
Total return on Class B shares reflects the applicable contingent deferred
sales charge.
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.
23
<PAGE>
VALUE OF A $1,000 INVESTMENT IN JOHN HANCOCK CAPITAL GROWTH FUND
(UNAUDITED)
<TABLE>
<CAPTION>
Value of Total Return Total Return
Investment on Including Sales Excluding Sales
Dec. 31, 1994 Charge 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:
From Inception (September 26,
1985) to December 31, 1994 9/26/85 $1,000 $3,303 230.31% 13.76% 250.34% 14.49%
5 years ended December 31,
1994 12/31/89 $1,000 $1,211 21.14% 3.91% 28.54% 5.15%
1 year ended December 31, 1994 12/31/93 $1,000 $ 836 (16.42%) (16.42%) (11.34%) (11.34%)
Class B Shares:
From Inception: (June 30,
1993) to December 31, 1994 6/30/93 $1,000 $ 944 (5.64%) (3.80%) (1.64%) (1.10%)
1 year ended December 31, 1994 12/31/93 $1,000 $ 831 (16.88%) (16.88%) (11.88%) (11.88%)
</TABLE>
VALUE OF A $1,000 INVESTMENT IN JOHN HANCOCK GROWTH FUND
(UNAUDITED)
<TABLE>
<CAPTION>
Value of Total Return Total Return
Investment on Including Sales Excluding Sales
Dec. 31, 1994 Charge 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 12/31/84 $1,000 $3,079 207.90% 11.90% 224.15% 12.48%
5 years ended December 31,
1994 12/31/89 $1,000 $1,368 36.79% 6.47% 44.00% 7.56%
1 year ended December 31, 1994 12/31/93 $1,000 $ 879 (12.14%) (12.14%) (7.50%) (7.50%)
Class B Shares:
From Inception: (January 3,
1994) to December 31, 1994 1/3/94 $1,000 $ 888 (11.23%) (11.33%) (6.56%) (6.62%)
</TABLE>
24
<PAGE>
BUSINESS OF GROWTH FUND
General
For a discussion of the organization and operation of Growth Fund, see
"Investment Objectives and Policies" and "Organization and Management of the
Fund" in the Growth Fund Prospectus.
Investment Objective And Policies
For a discussion of Growth Fund's investment objectives and policies, see
"Investment Objectives and Policies" in the Growth Fund Prospectus.
Portfolio Management
All investment decisions for Growth Fund are made by the Adviser's growth
equities team. No single person is primarily responsible for making
recommendations to the team.
Trustees
For a discussion of the responsibilities of Growth Fund's Board of
Trustees, see "Organization and Management of the Fund" in the Growth Fund
Prospectus.
Investment Adviser And Distributor
For a discussion regarding Growth Fund's investment adviser and
distributor, see "Organization and Management of the Fund," "How to Buy
Shares" and "Share Price" in the Growth Fund Prospectus.
Expenses
For a discussion of Growth Fund's expenses, see "Expense Information" and
"The Fund's Expenses" in the Growth Fund Prospectus.
Custodian And Transfer Agent
Growth Fund's custodian is Investors Bank & Trust Company. Growth Fund's
transfer agent is John Hancock Investor Services Corporation.
Growth Fund Shares
For a discussion of the Growth Fund Shares, see "Organization and
Management of the Fund" in the Growth Fund Prospectus.
Purchase Of Growth Fund Shares
For a discussion of how Class A and Class B shares of Growth Fund may be
purchased or exchanged, see "How to Buy Shares," "Alternative Purchase
Arrangements" and "Additional Services and Programs" in the Growth Fund
Prospectus.
Redemption Of Growth Fund Shares
For a discussion of how Class A and Class B shares of Growth Fund may be
redeemed, see "How to Redeem Shares" in the Growth Fund Prospectus. Former
shareholders of Capital Growth 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 Growth Fund Shares
received in the Reorganization.
25
<PAGE>
Dividends, Distributions And Taxes
For a discussion of Growth Fund's policy with respect to dividends,
distributions and taxes, see "Dividends and Taxes" in the Growth Fund
Prospectus.
BUSINESS OF CAPITAL GROWTH FUND
General
For a discussion of the organization and operation of Capital Growth Fund,
see "Investment Objective and Policies" and "Organization and Management of
the Fund" in the Capital Growth Fund Prospectus.
Investment Objective And Policies
For a discussion of Capital Growth Fund's investment objectives and
policies, see "Investment Objective and Policies" in the Capital Growth Fund
Prospectus.
Portfolio Management
Investment decisions for Capital Growth Fund are made primarily by Ben
Hock, the Fund's Portfolio Manager.
Trustees
For a discussion of the responsibilities of the Board of Trustees, see
"Organization and Management of the Fund" in the Capital Growth Fund
Prospectus.
Investment Adviser And Distributor
For a discussion regarding Capital Growth Fund's investment adviser and
distributor, see "Organization and Management of the Fund," "How to Buy
Shares" and "Share Price" in the Capital Growth Fund Prospectus.
Expenses
For a discussion of Capital Growth Fund's expenses, see "Expense
Information" and "The Fund's Expenses" in the Capital Growth Fund Prospectus.
Custodian And Transfer Agent
Capital Growth Fund's custodian is Investors Bank & Trust Company. Capital
Growth Fund's transfer agent is John Hancock Investor Services Corporation.
Capital Growth Fund Shares
For a discussion of Capital Growth Fund's shares of beneficial interest,
see "Organization and Management of the Fund" in the Capital Growth Fund
Prospectus.
Purchase Of Capital Growth Fund Shares
For a discussion of how shares of Capital Growth Fund may be purchased or
exchanged, see "How to Buy Shares," "Alternative Purchase Arrangements" and
"Additional Services and Programs" in the Capital Growth Fund Prospectus. In
anticipation of the Reorganization, Capital Growth Fund has stopped offering
its shares to all investors other than existing shareholders.
26
<PAGE>
Redemption Of Capital Growth Fund Shares
For a discussion of how Class A and Class B shares of Capital Growth Fund
may be redeemed (other than in the Reorganization), see "How to Redeem
Shares" in the Capital Growth Fund Prospectus. Capital Growth 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 Growth Fund Shares received in the Reorganization.
Dividends, Distributions And Taxes
For a discussion of Capital Growth Fund's policy with respect to
dividends, distributions and taxes, see "Distributions and Taxes" in the
Capital Growth Fund Prospectus.
EXPERTS
The respective financial statements and the financial highlights of Growth
Fund and Capital Growth Fund as of December 31, 1994 and for the year then
ended, incorporated by reference into this Proxy Statement and Prospectus,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing in the Statement of Additional Information,
and are included in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
Each Fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the Investment Company Act, and in accordance
therewith files reports, proxy statements and other information with the SEC.
Such reports, proxy statements and other information filed by Capital Growth
Fund and the Trust, on behalf of Growth Fund, 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.
27
<PAGE>
EXHIBIT A
AGREEMENT AND
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this
14th day of July, 1995, by and between John Hancock Growth Fund (the
"Acquiring Fund"), a series of John Hancock Capital Series (the "Trust"), a
Massachusetts business trust, and John Hancock Capital Growth Fund (the
"Acquired Fund"), a Massachusetts business trust. The principal place of
business of the Trust and the Acquired Fund is 101 Huntington Avenue, Boston,
Massachusetts 02199. The Acquiring Fund and the Acquired Fund are sometimes
referred to collectively herein as the "Funds" and individually as a "Fund."
This Agreement is intended to be and is adopted as a plan of
"reorganization," as such term is used in Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). The reorganization will
consist of the transfer of all of the assets of the Acquired Fund to the
Acquiring Fund in exchange solely for the issuance of Class A and Class B
shares of beneficial interest of the Acquiring Fund (the "Acquiring Fund
Shares") to the Acquired Fund and the assumption by the Acquiring Fund of all
of the liabilities of the Acquired Fund, followed by the distribution by the
Acquired Fund, on or promptly after the Closing Date hereinafter referred to,
of the Acquiring Fund Shares to the shareholders of the Acquired Fund in
liquidation and termination of the Acquired Fund as provided herein, all upon
the terms and conditions set forth in this Agreement.
In consideration of the premises of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF ACQUIRING FUND SHARES; LIQUIDATION OF THE
ACQUIRED FUND
1.1 The Acquired Fund will transfer all of its assets (consisting, without
limitation, of portfolio securities and instruments, dividends and interest
receivables, cash and other assets), as set forth in the statement of assets and
liabilities referred to in Paragraph 7.2 hereof (the "Statement of Assets and
Liabilities"), to the Acquiring Fund free and clear of all liens and
encumbrances, except as otherwise provided herein, in exchange for (i) the
assumption by the Acquiring Fund of the known and unknown liabilities of the
Acquired Fund, including the liabilities set forth in the Statement of Assets
and Liabilities (the "Acquired Fund Liabilities"), which shall be assigned and
transferred to the Acquiring Fund by the Acquired Fund and assumed by the
Acquiring Fund, and (ii) delivery by the Acquiring Fund to the Acquired Fund,
for distribution pro rata by the Acquired Fund to its Class A and Class B
shareholders in proportion to their respective ownership of Class A and/or Class
B shares of beneficial interest of the Acquired Fund, as of the close
A-1
<PAGE>
of business on the closing date (the "Closing Date"), of a number of the
Acquiring Fund Shares having an aggregate net asset value, in the case of
each class of Acquiring Fund Shares, equal to the value of the assets, less
such liabilities (herein referred to as the "net value of the assets"),
attributable to the corresponding class 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 Ernst & Young 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
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 beneficial interest of the Acquired Fund shall
surrender such certificates or deliver an affidavit with respect to lost
certificates in such form and accompanied by such surety bonds as the
Acquired Fund may require (collectively, an "Affidavit"), to John Hancock
Investor Services Corporation prior to
A-2
<PAGE>
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 beneficial interest of the Acquired
Fund and shall evidence ownership of Acquiring Fund Shares. Unless and until
any such certificate shall be so surrendered or an Affidavit relating thereto
shall be delivered, dividends and other distributions payable by the
Acquiring Fund subsequent to the Liquidation Date with respect to Acquiring
Fund Shares shall be paid to the holder of such certificate(s), but such
shareholders may not redeem or transfer Acquiring Fund Shares received in the
Reorganization. The Acquiring Fund will not issue share certificates in the
Reorganization.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than the registered holder of the Acquired Fund shares on the
books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.7 The existence of the Acquired Fund shall be terminated as promptly as
practicable following the Liquidation Date.
1.8 Any reporting responsibility of the 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 Acquired Fund.
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 Trust's Declaration
of Trust, 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
A-3
<PAGE>
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 September 15, 1995 or such other date on or
before December 31, 1995, as the parties may agree. The Closing shall be held
as of 5:00 p.m. at the offices of the Trust and the Acquired Fund, 101
Huntington Avenue, Boston, Massachusetts 02199, or at such other time and/or
place as the parties may agree.
3.2 Portfolio securities that are not held in book-entry form in the name
of the Custodian as record holder for the Acquired Fund shall be presented by
the Acquired Fund to the Custodian for examination no later than 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 beneficial interest of the
Acquired Fund owned by each such shareholder, all as of the close of business
on the Closing Date, certified by its Treasurer, Secretary or other
authorized officer (the "Share holder
A-4
<PAGE>
List"). The Acquiring Fund shall issue and deliver to the Acquired
Fund a confirmation evidencing the Acquiring Fund Shares to be credited on
the Closing Date, or provide evidence satisfactory to the Acquired Fund that
such Acquiring Fund Shares have been credited to the Acquired Fund's account
on the books of the Acquiring Fund. At the Closing, each party shall deliver
to the other such bills of sale, checks, assignments, stock certificates,
receipts or other documents as such other party or its counsel may reasonably
request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Acquired Fund represents, warrants and covenants to the Acquiring
Fund as follows:
(a) The Acquired Fund is a business trust duly organized, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts and has the power to own all of its properties and assets
and, subject to approval by its shareholders, to carry out the
transactions contemplated by this Agreement. The Acquired Fund is not
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 Acquired Fund 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 Acquired Fund is a registered investment company classified as a
management company and its registration with the Commission as an
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), is in full force and effect. The Acquired Fund is a
diversified investment company under the 1940 Act;
(c) The Acquired Fund is not, and the execution, delivery and
performance of its obligations under this Agreement will not result, in
violation of any provision of the Acquired Fund's Declaration of Trust, as
amended and restated, or By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking to which 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 Acquired Fund or any of the Acquired
Fund's properties or assets. The Acquired Fund knows of no facts which
might form the basis for the institution of such proceedings, and the
Acquired Fund is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which materially and
adversely affects the Acquired Fund's business or its ability to
consummate the transactions herein contemplated;
(e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement or agreements for the purchase of securities
entered into in the ordinary course of business and consistent with its
A-5
<PAGE>
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 Ernst & Young 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;
(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 Acquired Fund consists of an unlimited
number of shares of beneficial interest, $0.01 par value per share. All
issued and outstanding shares of beneficial interest of the Acquired Fund
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and nonassessable by the Acquired Fund. All of the
issued and outstanding shares of beneficial interest of the Acquired Fund
will, at the time of Closing, be held by the persons and in the amounts
and classes set forth in the Shareholder List submitted to the Acquiring
Fund pursuant to Paragraph 3.4 hereof. The Acquired Fund does
A-6
<PAGE>
not have outstanding any options, warrants or other rights to subscribe
for or purchase any of its shares of beneficial interest, nor is there
outstanding any security convertible into any of its shares of beneficial
interest;
(k) At the Closing Date, the Acquired Fund will have good and marketable
title to the assets to be transferred to the Acquiring Fund pursuant to
Paragraph 1.1 hereof, and full right, power and authority to sell, assign,
transfer and deliver such assets hereunder, and upon delivery and payment
for such assets, the Trust 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 Acquired Fund,
and this Agreement constitutes a valid and binding obligation of the
Acquired Fund enforceable in accordance with its terms, subject to the
approval of the Acquired Fund's shareholders;
(m) The information to be furnished by the Acquired Fund to the
Acquiring Fund for use in applications for orders, registration
statements, proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate and
complete and shall comply in all material respects with federal securities
and other laws and regulations thereunder applicable thereto;
(n) The proxy statement of the Acquired Fund (the "Proxy Statement") to
be included in the Registration Statement referred to in Paragraph 5.7
hereof (other than written information furnished by the Acquiring Fund for
inclusion therein, as covered by the Acquiring Fund's warranty in
Paragraph 4.2(m) hereof), on the effective date of the Registration
Statement, on the date of the meeting of the Acquired Fund shareholders
and on the Closing Date, shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading;
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquired
Fund of the transactions contemplated by this Agreement;
(p) All of the issued and outstanding shares of beneficial interest of
the Acquired Fund have been offered for sale and sold in conformity with
all applicable federal and state securities laws;
(q) The prospectus of the Acquired Fund, dated May 1, 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
A-7
<PAGE>
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading.
4.2 The Trust on behalf of the Acquiring Fund represents, warrants and
covenants to the Acquired Fund as follows:
(a) The Trust is a business trust duly organized, validly existing and
in good standing under the laws of The Commonwealth of Massachusetts and
has the power to own all of its properties and assets and to carry out the
Agreement. Neither the Trust 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 Trust has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted;
(b) The Trust is a registered investment company classified as a
management company and its registration with the Commission as an
investment company under the 1940 Act is in full force and effect. The
Acquiring Fund is a diversified series of the Trust;
(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 Trust on behalf of the Acquiring Fund will
have good and marketable title to the assets of the Acquiring Fund;
(e) The Trust 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 Trust's Declaration of
Trust, as amended and restated, or By-laws or of any agreement, indenture,
instrument, contract, lease or other undertaking to which the Trust or the
Acquiring Fund is a party or by which the Trust 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
A-8
<PAGE>
before any court or governmental body is currently pending or threatened
against the Trust or the Acquiring Fund or any of the Acquiring Fund's
properties or assets. The Trust knows of no facts which might form the
basis for the institution of such proceedings, and neither the Trust nor
the 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 Trust 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 Trust consists of an unlimited number
of shares of beneficial interest, no par value per share. All issued and
outstanding shares of beneficial interest of the Acquiring Fund are, and
at the Closing Date will be, duly and validly issued and outstanding,
fully paid and nonassessable by the Trust. The Acquiring Fund does not
have outstanding any options, warrants or other rights to subscribe for or
purchase any of its shares of beneficial interest, nor is there
outstanding any security convertible into any of its shares of beneficial
interest;
(k) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Trust on behalf
of the Acquiring Fund, and this Agreement constitutes a valid and binding
obligation of the Acquiring Fund enforceable in accordance with its terms;
(l) The Acquiring Fund Shares to be issued and delivered to the Acquired
Fund pursuant to the terms of this Agreement, when so issued and
delivered, will be duly and validly issued shares of beneficial interest
of the Acquiring Fund and will be fully paid and nonassessable by the
Trust;
(m) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements, proxy materials and
other
A-9
<PAGE>
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 Acquired
Fund and the Trust, on behalf of the Acquiring Fund, will operate their
respective businesses in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of business will
include customary dividends and distributions and any other distributions
necessary or desirable to avoid federal income or excise taxes.
5.2 The Acquired Fund will call a meeting of its shareholders to consider
and act upon this Agreement and to take all other action necessary to obtain
approval of the transactions contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired by the Acquired Fund for the purpose
of making any distribution thereof other than in accordance with the terms of
this Agreement.
5.4 The Acquired Fund will provide such information within its possession
or reasonably obtainable as the Trust on behalf of the Acquiring Fund
requests concerning the beneficial ownership of the Acquired Fund's shares of
beneficial interest.
5.5 Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund each shall take, or cause to be taken, all action, and do
or cause to be done, all things reasonably necessary, proper or advisable to
consummate the transactions contemplated by this Agreement.
5.6 The Acquired Fund shall furnish to the Trust on behalf of the
Acquiring Fund on the Closing Date the Statement of Assets and Liabilities of
the Acquired Fund as of the Closing Date, which statement shall be prepared
in accordance with generally accepted accounting principles consistently
applied and shall be certified by the Acquired Fund's Treasurer or Assistant
Treasurer. As promptly as practicable but in any case within 60 days after
the Closing Date, the Acquired Fund shall furnish to the Acquiring Fund, in
such form as is reasonably satisfactory to the Trust, 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
A-10
<PAGE>
be carried over to the Acquiring Fund as a result of Section 381 of the Code,
and which statement will be certified by the President of the Acquired Fund.
5.7 The Trust 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 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 ACQUIRED FUND
The obligations of the Acquired Fund to complete the transactions provided
for herein shall be, at its election, subject to the performance by the Trust
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:
6.1 All representations and warranties of the Trust on behalf of the
Acquiring Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date
with the same force and effect as if made on and as of the Closing Date; and
6.2 The Trust on behalf of the Acquiring Fund shall have delivered to the
Acquired Fund a certificate executed in its name by the Trust's President or
Vice President and its Treasurer or Assistant Treasurer, in form and
substance satisfactory to the Acquired Fund and dated as of the Closing Date,
to the effect that the representations and warranties of the Trust 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 Acquired
Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
TRUST ON BEHALF OF THE ACQUIRING FUND
The obligations of the Trust on behalf of the Acquiring Fund to complete
the transactions provided for herein shall be, at its election, subject to
the performance by the Acquired Fund of all the obligations to be performed
by it hereunder on or before the Closing Date and, in addition thereto, the
following conditions:
7.1 All representations and warranties of the Acquired Fund contained in
this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force
and effect as if made on and as of the Closing Date;
A-11
<PAGE>
7.2 The Acquired Fund shall have delivered to the Trust 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 Acquired Fund;
7.3 The Acquired Fund shall have delivered to the Trust 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 Acquired Fund, 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 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 Trust 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 TRUST, THE ACQUIRING
FUND AND THE ACQUIRED FUND
The obligations of the Trust, 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
beneficial interest of the Acquired Fund in accordance with the provisions of
the Acquired Fund's Declaration of Trust, 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 Trust 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 Trust or the Acquiring Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse
A-12
<PAGE>
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 Acquired Fund and the Trust on behalf of the Acquiring
Fund, substantially to the effect that for federal income tax purposes:
(a) The acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund Shares
to the Acquired Fund and the assumption of all of the Acquired Fund
Liabilities by the Acquiring Fund, followed by the distribution by the
Acquired Fund, in liquidation of the Acquired Fund, of Acquiring Fund
Shares to the shareholders of the Acquired Fund in exchange for their
shares of beneficial interest of the Acquired Fund and the termination of
the Acquired Fund, will constitute a "reorganization" within the meaning
of Section 368(a) of the Code, and the Acquired Fund and the Acquiring
Fund will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired Fund upon (i) the
transfer of all of its assets to the Acquiring Fund solely in exchange for
the issuance of Acquiring Fund Shares to the Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by the Acquiring Fund
and (ii) the distribution by the Acquired Fund of such Acquiring Fund
Shares to the shareholders of the Acquired Fund;
(c) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for the
issuance of the Acquiring Fund Shares to the Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by the Acquiring Fund;
(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;
A-13
<PAGE>
(f) The shareholders of the Acquired Fund will not recognize gain or
loss upon the exchange of all of their shares of beneficial interest of
the Acquired Fund solely for Acquiring Fund Shares as part of the
transaction;
(g) The basis of the Acquiring Fund Shares received by the Acquired Fund
shareholders in the transaction will be the same as the basis of the
shares of beneficial interest of the Acquired Fund surrendered in exchange
therefor; and
(h) The tax holding period of the Acquiring Fund Shares received by the
Acquired Fund shareholders will include, for each shareholder, the tax
holding period for his shares of beneficial interest 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 Trust, on behalf of the Acquiring Fund, and the Acquired Fund agree to
make and provide representations 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, neither the
Acquired Fund nor the Trust may waive the conditions set forth in this
Paragraph 8.6.
9. BROKERAGE FEES AND EXPENSES
9.1 The Acquired Fund and the Trust on behalf of the Acquiring Fund
represent and warrant to the other that there are no brokers or finders
entitled to receive any payments in connection with the transactions provided
for herein.
9.2 The Acquiring Fund and the Acquired Fund shall each be liable solely
for its own expenses incurred in connection with entering into and carrying
out the provisions of this Agreement whether or not the transactions
contemplated hereby are consummated.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquired Fund and the Trust, on behalf of the Acquiring Fund,
agree that neither party has made any representation, warranty or covenant
not set forth herein or referred to in Paragraph 4 hereof and that this
Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection
herewith shall survive the consummation of the transactions contemplated
hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquired Fund and the Trust. 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;
A-14
<PAGE>
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which
reasonably appears will not or cannot be met;
(c) by resolution of the Trust's Board of Trustees if circumstances
should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interest of the Acquiring
Fund's shareholders; or
(d) by resolution of the Acquired Fund's Board of Trustees if
circumstances should develop that, in the good faith opinion of such
Board, make proceeding with the Agreement not in the best interest of the
Acquired Fund's shareholders.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Trust, the Acquiring Fund or the Acquired Fund, or
the Trustees or officers of the Trust or the Acquired Fund, but each party
shall bear the expenses incurred by it incidental to the preparation and
carrying out of this Agreement.
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
Trust and the Acquired Fund. 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 Trust 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.
A-15
<PAGE>
14.3 This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by
any party without the prior written consent of the other party. Nothing
herein expressed or implied is intended or shall be construed to confer upon
or give any person, firm or corporation, other than the parties hereto and
their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
14.5 All persons dealing with the Trust or the Acquired Fund must look
solely to the property of the Trust or the Acquired Fund, respectively, for
the enforcement of any claims against the Trust or the Acquired Fund as
neither the Trustees, officers, agents or shareholders of the Trust or the
Acquired Fund assume any personal liability for obligations entered into on
behalf of the Trust or the Acquired Fund, respectively. No other series of
the Trust shall be responsible for any obligations assumed by or on behalf of
the Acquiring Fund under this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its President or Vice President and has caused its
corporate seal to be affixed hereto.
JOHN HANCOCK CAPITAL SERIES,
on behalf of JOHN HANCOCK
GROWTH FUND
By: /s/ Anne C. Hodsdon
Anne C. Hodsdon
President
JOHN HANCOCK CAPITAL
GROWTH FUND
By: /s/ Thomas H. Drohan
Thomas H. Drohan
Senior Vice President
and Secretary
A-16
<PAGE>
EXHIBIT B
John Hancock Growth Fund
Class A and Class B Shares
Supplement to Prospectus dated May 1, 1995
ORGANIZATION AND MANAGEMENT OF THE FUND
The fourth paragraph under this heading (on p. 7) is deleted in its entirety
and replaced by:
The Fund is managed by the Adviser's growth equities team, and no single
person is primarily responsible for making recommendations to the team.
July 1, 1995
<PAGE>
John Hancock
Growth Fund
Class A and Class B Shares
Prospectus
May 1, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Expense Information B-2
The Fund's Financial Highlights B-3
Investment Objective and Policies B-5
Organization and Management of the Fund B-7
Alternative Purchase Arrangements B-8
The Fund's Expenses B-10
Dividends and Taxes B-11
Performance B-12
How to Buy Shares B-14
Share Price B-15
How to Redeem Shares B-22
Additional Services and Programs B-24
</TABLE>
This Prospectus sets forth information about John Hancock Growth Fund (the
"Fund"), a diversified series of John Hancock Capital Series (the "Trust"),
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 in this Prospectus, free of charge by writing or telephoning: John
Hancock Investor Services Corporation, P.O. Box 9116, Boston, Massachusetts
02205-9116, 1-800-225-5291, (1-800-554-6713 TDD).
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.
B-1
<PAGE>
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>
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 fee+ None None
Exchange fee None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fee 0.80% 0.80%
12b-1 fee** 0.30% 1.00%
Other expenses 0.51% 0.74%
Total Fund operating expenses 1.61% 2.54%
*No sales charge is payable at the time of purchase on investments
in Class A shares of $1 million or more, but a contingent deferred
sales charge may be imposed on these investments, as described below
under the caption "Share Price," in the event of certain redemption
transactions within one year of purchase.
**The amount of the 12b-1 fee used to cover service expenses will be
up to 0.25% of the Fund's average net assets, and the remaining
portion will be used to cover distribution expenses. See "The
Fund's Expenses."
+Redemption by wire fee (currently $4.00) not included.
</TABLE>
<TABLE>
<CAPTION>
Example: 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
You would pay the following expenses for the
indicated period of years on a hypothetical
$1,000 investment, assuming a 5% annual
return:
Class A shares $66 $ 98 $133 $231
Class B shares
--Assuming complete redemption at end of
period $75 $109 $155 $264
--Assuming no redemption $26 $ 79 $135 $264
</TABLE>
(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.)
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 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."
B-2
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following table of Financial Highlights has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose unqualified report is
included in the Fund's 1994 Annual Report and is included in the Statement of
Additional Information. 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
------- ------- ------- ------- ------- ------- ------- ------ ------ -------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance
Net Asset Value, Beginning
of Period $17.40 $17.32 $17.48 $12.93 $15.18 $13.33 $12.34 $14.03 $14.50 $12.13
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net Investment
Income/(Loss) (0.10) (0.11) (0.06) 0.04 0.16 0.28 0.23 0.22 0.11 0.18
Net Realized and Unrealized
Gain/(Loss) on Investments (1.21) 2.33 1.10 5.36 (1.47) 3.81 1.16 0.64 1.79 3.11
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from Investment
Operations (1.31) 2.22 1.04 5.40 (1.31) 4.09 1.39 0.86 1.90 3.29
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from Net
Investment Income -- -- -- (0.04) (0.16) (0.29) (0.23) (0.28) (0.17) (0.21)
Distributions from Net
Realized Gain on
Investments Sold (0.20) (2.14) (1.20) (0.81) (0.78) (1.95) (0.17) (2.27) (2.20) (0.71)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Distributions (0.20) (2.14) (1.20) (0.85) (0.94) (2.24) (0.40) (2.55) (2.37) (0.92)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of
Period $15.89 $17.40 $17.32 $17.48 $12.93 $15.18 $13.33 $12.34 $14.03 $14.50
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Total Investment Return at
Net Asset Value (7.50%) 13.03% 6.06% 41.68% (8.34)% 30.96% 11.23% 6.03% 13.83% 28.04%
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Ratios and Supplemental
Data
Net Assets, End of Period
(000's omitted) $146,466 $162,937 $153,057 $145.287 $102.416 $105,014 $101,497 $86,426 $87,468 $72,049
Ratio of Expenses to
Average Net Assets 1.65% 1.56% 1.60% 1.44% 1.46% 0.96% 1.06% 1.00% 1.03% 1.09%
Ratio of Net Investment
Income/(Loss) to Average
Net Assets (0.64%) (0.67%) (0.36%) 0.27% 1.12% 1.73% 1.76% 1.41% 0.77% 1.40%
Portfolio Turnover Rate 52% 68% 71% 82% 102% 61% 47% 68% 62% 67%
</TABLE>
B-3
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS -- Continued
<TABLE>
<CAPTION>
1994
------------
<S> <C>
CLASS B (a)
Per Share Operating Performance
Net Asset Value, Beginning of Period $17.16(b)
----------
Net Investment Loss (0.20)(c)
Net Realized and Unrealized Loss on Investments (0.93)
----------
Total from Investment Operations (1.13)
----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold (0.20)
----------
Net Asset Value, End of Period $15.83
==========
Total Investment Return at Net Asset Value (6.56%)
----------
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $3,807
Ratio of Expenses to Average Net Assets 2.38%(d)
Ratio of Net Investment Loss to Average Net Assets (1.25%)(d)
Portfolio Turnover Rate 52%
</TABLE>
<TABLE>
<CAPTION>
Year Ended December
31,
---------------------
1994 1993(e)
-------- -----------
<S> <C> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period $17.46 $17.05(b)
------- ---------
Net Investment Income/(Loss) (0.01) (0.02)
Net Realized and Unrealized Gain/(Loss) on Investments (1.23) 2.57
------- ---------
Total from Investment Operations (1.24) 2.55
------- ---------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold (0.20) (2.14)
Net Asset Value, End of Period $16.02 $ 17.46
======= =========
Total Investment Return at Net Asset Value (7.07%) 15.18%
------- ---------
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $1,574 $ 1,285
Ratio of Expenses to Average Net Assets 1.12% 1.05%(d)
Ratio of Net Investment Income to Average Net Assets (0.08%) 0.17%(d)
Portfolio Turnover Rate 52% 68%
</TABLE>
(a) Class B shares commenced operations on January 3, 1994.
(b) Initial price at commencement of operations.
(c) On average month end shares outstanding.
(d) On an annualized basis.
(e) Class C shares commenced operations on May 7, 1993.
(f) Class C shares were no longer offered for sale after March 31, 1995.
B-4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek long-term capital appreciation.
The Fund's investment objective is to achieve long-term appreciation of
capital. The Fund will diversify its investments among a number of industry
groups without concentration in any particular industry. There is no
assurance that the Fund will achieve its investment objective. The Fund
believes its shares are suitable for investment by those who are in search of
above-average long-term reward and can invest without concern for current
income.
The Fund invests principally in common stocks (and in securities
convertible into or with rights to purchase common stocks) of companies which
the Fund's management believes to offer outstanding growth potential over
both the intermediate and long term. John Hancock Advisers, Inc. (the
"Adviser") will pursue a strategy of investing in common stocks of those
companies whose five-year average operating earnings and revenue growth are
at least two times that of the economy, as measured by the Gross Domestic
Product. Companies selected will generally have positive operating earnings
growth for five consecutive years, although companies without a five-year
record of positive earnings growth may also be selected if, in the opinion of
the Adviser, they have significant growth potential. The Fund may invest up
to 15% of its net assets in securities having a limited or restricted market.
The Adviser expects that the median market capitalization of the portfolio
will be over three billion dollars.
Restricted Securities. The Fund may purchase restricted securities
including those eligible for resale to "qualified institutional buyers"
pursuant to Rule 144A under the Securities Act of 1933 (the "Securities
Act"). The Trustees 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 an
investment restriction limiting all the Fund's illiquid 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 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 exceeding 33-1/3% of its
total assets.
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
B-5
<PAGE>
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.
Foreign Issuers. The Fund may invest up to 15% of its assets in securities
of foreign issuers in the form of American Depositary Receipts (ADRs). ADRs
(sponsored or unsponsored) are receipts typically issued by an American bank
or trust company. They evidence ownership of underlying securities issued by
a foreign corporation and are designated for trading in United States
securities markets. Issuers of the shares underlying unsponsored ADRs are not
contractually obligated to disclose material information in the United States
and, therefore, there may not be a correlation between this information and
the market value of an unsponsored ADR.
When management believes that current market or economic conditions
warrant, the Fund temporarily may retain cash or invest in preferred stock,
nonconvertible bonds or other fixed-income securities. Fixed income
securities in the Fund's portfolio will generally be rated at least BBB by
Standard & Poor's Ratings Group ("S&P") or Baa by Moody's Investor's Service,
Inc. ("Moody's"), or if unrated, determined by the Adviser to be of
comparable quality. The Fund may, however, invest up to 5% of its net assets
in lower rated securities, commonly known as "junk bonds."
Investments in foreign securities may involve risks that are not present
in domestic investments.
Global Risks. Investments in foreign securities may involve risks 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 American stock market.
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
B-6
<PAGE>
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, unstable currencies or inflation rates. Securities of
issuers located in these countries may have limited marketability and may be
subject to more abrupt or erratic price movements.
The Fund follows certain policies, which may help to reduce investment
risk.
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 nonfundamental. 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, however, are nonfundamental and can be
changed by a vote of the Trustees without shareholder approval. The Fund's
portfolio turnover rates for recent years are shown in the section "The
Fund's Financial Highlights."
Brokers are chosen based on best price and execution.
When 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 Trustees, 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.
ORGANIZATION AND MANAGEMENT OF THE FUND
The Trustees elect officers and retain the investment adviser who is
responsible for the day-to-day operations of the Fund, subject to the
Trustees' policies and supervision.
The Fund is a separate, diversified portfolio of the Trust, an open-end
management investment company organized as a Delaware corporation in 1968 and
reorganized as a Massachusetts business trust in 1984. The Fund has an
unlimited number of authorized shares of beneficial interest. The Trust's
Declaration of Trust permits the Trustees to create and classify shares of
beneficial interest into separate series of the Trust without shareholder
approval. As of the date of this Prospectus, the Trustees have authorized the
Fund and one other series. Although additional series may be added in the
future, the Trustees have no current intention of creating additional series
of the Trust. The Trust's Declaration of Trust also permits the Trustees to
classify and reclassify any series or portfolio of shares of the Fund into
one or more classes. Accordingly, the Trustees have authorized the issuance
of two
B-7
<PAGE>
classes of the Fund, designated Class A and Class B. The Trustees terminated
Class C on May 1, 1995. 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. However, each class bears
different distribution and transfer agent fees and other expenses. Also,
Class A and Class B shareholders have exclusive voting rights with respect to
their distribution plans.
Shareholders have certain rights to remove Trustees. The Fund is not
required and does not intend to hold annual shareholder meetings, although
special meetings may be held for such purposes as electing or removing
Trustees, changing fundamental investment restrictions and policies or
approving a management contract. 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.
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. 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 Trustees which allows Trustees' fees to
be invested by the Fund in other John Hancock funds.
Benjamin J. Williams, Jr. manages this Fund as well as John Hancock Global
Rx Fund and works in various analytical capabilities for other John Hancock
equity funds. Prior to joining John Hancock Funds in 1990, Mr. Williams spent
four years with Robertson Stephens & Company and Eagle Investment Associates,
an investment subsidiary of Bank of Boston.
In order to avoid any conflict with portfolio trades for the Fund, the
Adviser and the Fund have adopted extensive restrictions on personal
securities trading by personnel of the Adviser and its affiliates. Some of
these restrictions are: 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
An alternative purchase plan allows you to choose the method of purchase
that is best for you.
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
B-8
<PAGE>
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.
Investments in Class A shares are subject to an initial sales charge.
Class A Shares. If you elect to purchase Class A shares, you will incur an
initial sales charge unless your 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 B shares are subject to a contingent deferred 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 your investment is made,
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.
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
You should consider which class of shares would be more beneficial for
you.
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 the shares and other circumstances. You
should consider whether, during the anticipated life of your Fund investment
the accumulated CDSC and 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 page B-2 of this Prospectus
B-9
<PAGE>
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, the distribution expenses that John Hancock
Funds incurs in connection with the sale of 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, the 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 the Class B shares' CDSC and ongoing distribution and service
fees are the same as those of the 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 its investment and business affairs, the Fund pays a fee,
effective January 1, 1994, to the Adviser which is based on a stated
percentage of the Fund's average daily net asset value, as follows:
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
----------------------------------- -------------
<S> <C>
First $250,000,000 0.80%
Next $250,000,000 0.75%
Amount over $500,000,000 0.70%
</TABLE>
B-10
<PAGE>
The investment management fee for the 1994 fiscal year was 0.80% of the
Fund's average daily net asset value.
The investment management fee is higher than the fees paid to most mutual
funds, but comparable to fees paid by funds that invest in similar
securities.
From time to time, the Adviser may reduce its fee or make other
arrangements to limit the Fund's expenses to not more than a specified
percentage of average daily net assets. The Adviser retains the right to
re-impose a fee and recover any other payments to the extent that, at the end
of any fiscal year, the Fund's annual expenses fall below the limit.
The Fund pays distribution and service fees for marketing and sales-
related shareholder servicing.
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 up to 0.30% of the Class A shares' average daily net
assets and an aggregate annual rate of up to 1.00% of the Class B shares'
average daily net assets. In each case, up to 0.25% is for service expenses
and the remaining amount is for distribution expenses. The distribution fees
are 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 service fees will be used 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 one year from the date they were
incurred. These unreimbursed expenses under the Class B Plan will be carried
forward together with interest on the balance of these unreimbursed expenses.
For the fiscal year ended December 31, 1994 an aggregate of $152,358 of
distribution expenses or 7.0% 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.
Information on the Fund's total expenses is in the Fund's Financial
Highlights section of the prospectus.
DIVIDENDS AND TAXES
Dividends. Dividends from the Fund's net investment income and capital
gains are generally declared and paid 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
B-11
<PAGE>
will be converted to the reinvestment option. Because of the higher expenses
associated with Class B shares, any dividend on Class B shares will be lower
than that on Class A 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 tax on any net
investment income and net realized capital gains that are distributed to its
shareholders within the time period prescribed by the Code. 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.
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. 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 may advertise its total return.
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.
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
B-12
<PAGE>
figures. Total return for the Class B shares reflect 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 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 an Alternative."
B-13
<PAGE>
HOW TO BUY SHARES
Opening an account
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. Indicate
whether you are purchasing 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.
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 Growth 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.
Buying additional Class A and Class B shares
Monthly Automatic
Accumulation
Program (MAAP)
1. Complete the "Automatic Investing" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which your
funds may be drawn.
2. The amount you elect to invest will be automatically withdrawn from your
bank or credit union account.
By Telephone
1. Complete the "Invest-By-Phone" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which your
funds may be drawn. Note that in order to invest by phone, your account
must be in a bank or credit union that is a member of the Automated
Clearing House system (ACH).
2. After your authorization form has been processed, you may purchase
additional 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(s) 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.
B-14
<PAGE>
By Check
1. Either fill out the detachable stub included on 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.
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 Growth 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 to Investor Services.
You will receive account statements, which you should keep to help with
your personal recordkeeping.
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.
SHARE PRICE
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.
The net asset value per share ("NAV") is the value of one share. The NAV
is calculated by dividing the net asset value 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
Trustees. 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
B-15
<PAGE>
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 Trustees 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.
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 plus a sales charge as
follows:
<TABLE>
<CAPTION>
Sales Sales Combined Reallowance
Charge Charge Reallowance to Selling
as a as a and Service Brokers as a
Percentage Percentage Fee as a Percentage
Amount Invested of the of the Percentage of the
(Including Sales Offering Amount of Offering Offering
Charge) Price 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%(***)
</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 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 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. 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.
B-16
<PAGE>
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 the accounts
attributable to these brokers.
Under certain circumstances 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 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 ("CDSC") 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."
You may qualify for a reduced sales charge on your investments in Class A
shares.
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
B-17
<PAGE>
(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
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:
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."
Example:
Class A shares may be available without a sales charge to certain individuals
and organizations.
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:
(bullet) A Trustee or officer of the Trust; 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
and 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.
(bullet) 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.*
(bullet) 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.*
(bullet) 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 make
available to their clients.
B-18
<PAGE>
(bullet) 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.
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 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 or capital gains distributions.
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>
<CAPTION>
<S> <C> <C>
(bullet) Proceeds of 50 shares redeemed at $12 per share $600
(bullet) Minus proceeds of 10 shares not subject to CDSC because they
were acquired through dividend reinvestment (10 X $12) -120
(bullet) Minus appreciation on remaining shares, also not subject to
CDSC (40 X $2) - 80
----
(bullet) Amount subject to CDSC $400
</TABLE>
Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds
uses all or in part of them to defray its expenses related to providing the
Fund with distribution services connected to the sale of Class B shares, such
as compensating
B-19
<PAGE>
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 Class B shares without deducting a sales charge at the time of
the purchase.
The amount of the CDSC, if any, will vary depending on the number of years
from the time 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
Year in Which Class B Shares Charge As a Percentage of
Redeemed Following Purchase Dollar Amount Subject to CDSC
- ------------------------------- ---------------------------------
<S> <C>
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
</TABLE>
A commission equal to 3.75% of the amount invested and a first year's
service fee equal to 0.25% of the amount invested are paid to Selling
Brokers. The initial service fee is paid in advance at the time of sale for
personal and account maintenance services provided to shareholders during the
twelve months following the sale. Thereafter the service fee is paid in
arrears.
Under certain circumstances, the CDSC on Class B and certain Class A share
redemptions will be waived.
Waiver of Contingent Sales Charges. The CDSC will be waived on redemptions
of Class B shares and Class A shares that are subject to a CDSC, unless
indicated otherwise, in the circumstances defined below:
(bullet) 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.
(bullet) 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.
(bullet) Redemptions made to effect mandatory distributions under the Code
after age 70-1/2 from a tax-deferred retirement plan.
B-20
<PAGE>
(bullet) 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.
(bullet) Redemptions due to death or disability.
(bullet) Redemptions made under the Reinvestment Privilege, as described
in "Additional Services and Programs" of this Prospectus.
(bullet) Redemptions made pursuant to the Fund's right to liquidate your
account if you own fewer than 50 shares.
(bullet) Redemptions made in connection with certain liquidation, merger
or acquisition transactions involving other investment companies
or personal holding companies.
(bullet) 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 to Class A shares should not be taxable for Federal income tax
purposes, nor should it not change your tax basis or tax holding period for
the converted shares.
B-21
<PAGE>
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.
By Telephone
All Fund shareholders are automatically eligible for the telephone
redemption privilege. Call 1-800-225-5291, from 8:00 A.M. to 4:00 P.M. (New
York time), Monday through Friday, excluding days on which the New York Stock
Exchange is closed. Investor Services employs the following procedures to
confirm that instructions received by telephone are genuine. Your name, the
account number, taxpayer identification number applicable to the account and
other relevant information may be requested. In addition, telephone
instructions are recorded.
You may redeem up to $100,000 by telephone, but the address on the account
must not have changed for the last 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 or other tax-qualified
retirement plans or shares of the Fund that are in certificate 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 1-800-538-8080.
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 collectable 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.
B-22
<PAGE>
<TABLE>
<CAPTION>
Type of Registration Requirements
- ----------------------------------- --------------------------------------------------------------
<S> <C>
Individual, Joint Tenants, Sole A letter of instruction signed (with titles where
Proprietorship, Custodial applicable) by all persons authorized to sign for the
(Uniform Gifts or Transfer to account, exactly as it is registered with the signature(s)
Minors Act), General Partners. guaranteed.
Corporation, Association A letter of instruction and a corporate resolution, signed
by person(s) authorized to act on the account, with the
signature(s) guaranteed.
Trusts A letter of instruction signed by the Trustee(s) with the
signature(s) guaranteed. (If the Trustee's name is not
registered on your account, also provide a copy of the trust
document, certified within the last 60 days.)
</TABLE>
If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
Who may guarantee your signature
A signature guarantee is a widely accepted way to protect you and the Fund
by verifying the signature on your request. It may not be provided by a
notary public. If the net asset value of the shares redeemed is $100,000 or
less, John Hancock Funds may guarantee the signature. The following
institutions may provide you with a signature guarantee, provided that the
institution meets credit standards established by Investors 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.
Additional information about redemptions
Through Your Broker. Your broker may be able to initiate the redemption.
Contact him or her for instructions.
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 50 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. 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 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 purchases and dividend reinvestments, if any,
exceeds the number of shares redeemed, repeated redemptions from a smaller
account may eventually trigger this policy.
B-23
<PAGE>
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege
You may exchange shares of the Fund only for shares of the same class of
another John Hancock fund.
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.
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 that 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 the Fund into a John Hancock money market
fund at net asset value. However, you will continue to be subject to a CDSC
upon redemption.
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 in another fund 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
B-24
<PAGE>
of those agreements and John Hancock Funds' right to reject or suspend those
exchanges at any time. Because of the restrictions and procedures under those
agreements, the exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders
directly, as described above.
Because Fund performance and shareholders can be hurt by excessive trading,
the Fund reserves the right to terminate the exchange privilege for any
person or group that, in John Hancock Funds' judgment, is involved in a
pattern of exchanges that coincide with a "market timing" strategy that may
disrupt the Fund's ability to invest effectively according to its investment
objective and policies, or might otherwise affect the Fund and its
shareholders adversely. The Fund may also temporarily or permanently
terminate the exchange privilege for any person who makes seven or more
exchanges out of the Fund per calendar year. Accounts under common control or
ownership will be aggregated for this purpose. Although the Fund will attempt
to give you prior notice whenever it is reasonably able to do so, it may
impose these restrictions at any time.
By Telephone
1. When you fill out the application for your 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
service 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
If you redeem shares of the Fund, you may be able to reinvest the proceeds in
shares of the Fund or another John Hancock fund without paying an additional
sales charge.
B-25
<PAGE>
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. The
holding period of the shares acquired through reinvestment, for purposes
of computing the CDSC payable upon a subsequent redemption, will include
the holding period of the redeemed shares.
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.
Systematic Withdrawal Plan
You can pay routine bills from your account, or make periodic disbursements
from your retirement account to comply with IRS regulations.
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.
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 a CDSC on your redemptions 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)
You can make automatic investments and simplify your investing.
B-26
<PAGE>
1. You can authorize an investment to be drawn automatically each month from
your bank for investment in Fund shares, under the "Automatic Investing"
and "Bank Information" sections of the Account Privileges Application.
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
Organized groups of at least four persons may establish accounts.
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.
2. The initial aggregate investment 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.
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 these 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.
B-27
<PAGE>
John Hancock
Growth Fund
Investment Adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Custodian
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110
Transfer Agent
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
Independent Auditors
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For: Service Information
Telephone Exchange call 1-800-225-5291
Investment-by-Phone
Telephone Redemption
For: TDD call 1-800-554-6713
JH2000P 5/95
JOHN HANCOCK
GROWTH FUND
Class A and Class B Shares
Prospectus
May 1, 1995
A mutual fund seeking to achieve long-term capital appreciation.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Telephone 1-800-225-5291
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