<PAGE> 1
JOHN HANCOCK FUNDS
- --------------------------------------------------------------------------------
INVESTORS
TRUST
ANNUAL REPORT
DECEMBER 31, 1994
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
Chairman
Dennis S. Aronowitz*
Richard P. Chapman, Jr.*
Francis C. Cleary, Jr.
William J. Cosgrove*
Gail D. Fosler*
Bayard Henry*
Richard S. Scipione
Edward J. Spellman*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Andrew St. Pierre
President
Anne C. Hodsdon
Executive Vice President
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Michael P. DiCarlo
Senior Vice President
James K. Ho
Senior Vice President
Barry H. Evans
Vice President
John A. Morin
Vice President
Susan S. Newton
Vice President, Assistant Secretary and
Compliance Officer
James J. Stokowski
Vice President and Treasurer
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
TRANSFER AGENT AND REGISTRAR
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
INDEPENDENT AUDITORS
Ernst & Young llp
200 Clarendon Street
Boston, Massachusetts 02116
LISTED: NEW YORK STOCK EXCHANGE SYMBOL JHI
JOHN HANCOCK CLOSED END FUNDS: 1-800-843-0090
[A 1-1/4" x 1" phote of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
With 1995 upon us, New Year's resolutions abound. Dieting and saving money --
Americans' long-time favorites -- are sure to top the list once again. And
once again, they'll probably be the most difficult to keep. This year,
however, Congress may give savers an additional incentive to stick to their
guns.
Both the Republicans and Democrats want to revive Individual
Retirement Accounts (IRAs). In an effort to encourage savings, IRAs were made
available to all working Americans in 1981. Anyone with earned income could
contribute up to $2,000 annually. The contributions were fully
tax-deductible, and the earnings weren't taxed until withdrawal. IRAs became
the most successful savings program in the U.S., drawing in more than $250
billion and 13 million new participants by 1985.
Sweeping tax reforms in 1986, however, changed all that. As it stands
now, the full deduction only applies to individuals who earn less than
$25,000, married couples who earn less than $40,000 and people without
employer-sponsored retirement plans. The result of this congressional
tinkering: the number of IRA contributors declined dramatically, from 16.2
million in 1985 to 4.2 million in 1992.
Legislators are now taking a closer look at expanding the
accessibility of IRAs once again. Several proposals are on the table: (1) the
Republicans' "Contract with America" includes the American Dream Savings
Account, a type of IRA; (2) President Clinton has proposed expanding
eligibility by raising income limits; and (3) several congressional
representatives have introduced legislation to restore the universal
availability of a fully tax-deductible IRA.
We enthusiastically support restoring IRAs to their original luster.
Not only will it provide a tax break to middle-income Americans, but it will go
a long way toward raising the nation's dangerously low personal savings rate,
which is the lowest of any major industrialized country. There's an increasing
awareness that Social Security and pension plans will no longer provide for the
retirement needs of middle-income Americans. Increasing IRA accessibility for
more working individuals and families is one of the most sensible ways to help
Americans take responsibility for their future financial needs. We urge you to
support the expanded IRA by contacting your congressional representative or
senator.
Sincerely,
/s/ Edward J. Boudreau, Jr.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE> 3
BY BARRY H. EVANS, VICE PRESIDENT AND PORTFOLIO MANAGER
JOHN HANCOCK
INVESTORS TRUST
INFLATION FEARS, RISING INTEREST RATES TAKE THEIR TOLL
ON BONDS; HIGH-YIELD EXPOSURE CUSHIONS BLOW
[A 2-1/2" x 3-1/2" photo of Barry H. Evans at bottom right. Caption reads:
"Barry H. Evans, Portfolio Manager."]
1994 was an extremely challenging year for bond investors. The key factor
was the Federal Reserve's ongoing attempt to slow the pace of economic growth
- -- and lessen the threat of future inflation -- by raising short-term interest
rates. Rates began rising in February, when the Fed nudged the federal funds
rate -- what banks charge each other for overnight loans -- up one-quarter
point to 3.25%. The timing of the Fed's move caught many investors by surprise.
Afterwards, though, it was obvious there would be more rate increases in the
months ahead, and that's exactly what happened. They followed in rapid
succession: two more 1/4-point increases in March and April, two 1/2-point
increases in May and August, and a 3/4-quarter-point jump in November, bringing
the federal funds rate up to 5.50%.
Because interest rates and bond prices move in opposite directions,
most bond funds lost value in 1994. John Hancock Investors Trust was no
exception. During the year ended December 31, 1994, the Fund's total return
was -- 2.67% at net asset value. Fortunately,
[CAPTION]
"1994 was an extremely challenging year for bond investors."
3
<PAGE> 4
John Hancock Funds - Investors Trust
[Pie chart with the heading "Portfolio Diversification" at top of left hand
column. The chart is divided into eight sections. Going from left to right:
Utilities 12%; U.S. Government/Agencies 33%; Foreign Government 2%; Financials
18%; Supermarkets/Food 4%; Cyclical/Industrials 23%; Cash 2%; and Other 6%. A
footnote below states "As a percentage of net assets on December 31, 1994."]
though, the Fund fared somewhat better than the average open-end corporate
debt A-rated fund, which had a total return of -4.64%, according to Lipper
Analytical Services.(1)
TWO-PART STRATEGY: MORE CREDIT RISK...
We were able to outperform competing funds by following a two-pronged
strategy. The first part involved taking on above-average credit risk. Credit
risk is the risk that a bond issuer will be unable to meet its interest and
principal obligations. The lower a bond's credit rating, the higher the risk --
and usually the more interest the bond pays to compensate for that risk. When
the economy is expanding and interest rates are rising -- as was the case in
1994 -- it often makes sense to assume more credit risk by investing in
lower-rated bonds.That's because as corporate cash flows improve, companies
find themselves better able to pay down debt, thereby diminishing the risk of
default. A good analogy is what happens when you refinance your mortgage at a
lower rate: your cash flow improves and so does your personal balance sheet.
Among the biggest beneficiaries of improved cash flows last year were companies
issuing high-yield bonds or so-called junk bonds -- those with credit ratings
of BB or lower.
Junk bonds averaged about 20% of the Fund's assets during the year and
were the primary engine driving performance. About half of the junk bonds we
owned were in non-cyclical industries such as supermarkets and cable television
providers. We had the most success, though, in cyclical sectors of the economy
such as steel, paper and transportation that are more sensitive than others to
economic upturns (and downturns). Those included Stone Container, a paper
company; Northwest Airlines, whose fortunes improved dramatically after it was
able to sign a new collective-bargaining agreement with its pilots; and Weirton
Steel.
...AND LESS INTEREST-RATE RISK
Our strategy with the rest of the Fund -- the 45% invested in high-grade
corporate bonds and the 35% in government securities -- was to look for ways to
lower interest-rate risk. That's the risk that bond prices will fall as
interest rates rise. One measure of interest-rate risk is duration, a
calculation that takes into account when a bond matures as well as the
frequency and amount of interest payments. When rates are rising, it makes
sense to lower the Fund's average duration. That's what we did -- lowering it
from 5.6 years in the months before the period began to 5.1 years throughout
most of 1994.
[Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investment"; the header for the right column is "Recent
performance ... and what's behind the numbers. The first listing is RJR
Nabisco followed by an up arrow and the phrase "Bonds tendered." The second
listing is E.I.P. Refunding followed by an up arrow and the phrase "Improving
credit quality." The third listing is Flagstar followed by a down arrow and
the phrase "Weak earnings." Footnote below reads: "See "Schedule of
Investments." Investment holdings are subject to change."]
[CAPTION]
"Our strategy... was to look for ways to lower interest-rate risk."
4
<PAGE> 5
John Hancock Funds - Investors Trust
[Bar chart with heading "Fund Performance" at top of left hand column. Under
the heading is the footnote: "For the year ended December 31, 1994." The chart
is scaled in increments of 1% from bottom to top, with 0% at the top and -5% at
the bottom. Within the chart, there are two solid bars. The first represents
the -2.67% total return for John Hancock Investors Trust. The second
represents the -4.64% total return for the average open-end corporate debt
A-rated fund. The footnote below states: "The total return for John Hancock
Investors Trust is at net asset value with all distributions reinvested. The
average open-end corporate debt A-rated fund is tracked by Lipper Analytical
Services."]
We achieved that lower average duration by balancing long-term bonds
with short-term bonds and avoiding owning too many bonds with intermediate
maturity dates. That's known as a barbell strategy. It works best when the
yield curve is flattening -- that is, when interest rates from one end of the
maturity scale to the other are leveling off -- as was the case throughout
1994. The few intermediate securities we did own were mainly mortgages, which
rose steadily from 8% of the Fund's assets to 12% during the course of the
year. Mortgages marginally outperformed comparable corporate bonds as the
volume of mortgage refinancings diminished.
OUTLOOK: BETTER TIMES AHEAD
One reason we are more hopeful about 1995 is that 1994 was so bad. Interest
rates are much higher now than they were a year ago, meaning we've got a better
cushion against the possibility of rates continuing to rise in the months
ahead. Also, with inflation holding ste ady at 3% and 30-year Treasuries paying
8%, we're looking at a real rate of return of around 5%. That's near the top of
the historical range, making bonds seem more attractive now than they have been
for some time. We've already extended the Fund's average duration slightly to
5.5 years as of the end of the period.
The key variable, of course, is inflation. During the fourth quarter of
1994, many companies continued the practice begun several years ago of
announcing price increases that weren't slated to take effect until January.
Between the extra year-end demand spurred by this practice and the higher
prices themselves once they kick in, we may see another inflation scare or two
before we hit the peak in interest rates. On the other hand, we think that peak
may not be far off. Sooner or later -- perhaps by the middle of 1995 -- it's
likely that Fed policy will have its intended effect and the economy will begin
to slow down. That tells us that the current bond market assumption of a 4%
future inflation rate is probably excessive.
As the recovery begins to lose steam and rates level off, we'll want to
make a couple of strategic changes. Junk bonds will likely become less
attractive going forward, while high-quality corporate bonds and Treasuries
will become more attractive. Then as the yield curve begins to steepen again,
we'll probably take off the barbell and add more intermediate securities.
Mortgage-backed securities -- because they're high-quality government
securities of mainly intermediate maturity -- could help us achieve both goals
and will likely become an increasingly important part of the Fund.
- --------------------------------------------------------------------------------
(1) Figures from Lipper Analytical Services include reinvested distributions
and do not take into account sales charges. Actual load-adjusted performance
would be lower.
[CAPTION]
"....WE ARE MORE HOPEFUL ABOUT 1995..."
5
<PAGE> 6
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON DECEMBER 31, 1994. YOU'LL
ALSO FIND THE NET ASSET VALUE PER SHARE AS OF THOSE DATES.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
<CAPTION>
DECEMBER 31,
----------------------------------
1994 1994
--------------- --------------
<S> <C> <C>
ASSETS:
Investments at value - Note C:
Publicly traded bonds and direct placement security (cost 1994 - $148,775,722;
1993 - $153,213,616).......................................................... $142,451,739 $162,501,534
Common stock (cost 1994 - $106,667; 1993 - none)................................ 76,000 .....
Joint repurchase agreement (cost 1994 - $2,369,000; 1993 - $291,026)............ 2,369,000 291,026
Corporate savings account....................................................... 4,661 160
------------ ------------
144,901,400 162,792,720
Receivable for investments sold................................................... ..... 315,098
Interest receivable............................................................... 3,161,299 3,276,084
Receivable for variation margin - Note A.......................................... 9,688 1,250
------------ ------------
Total Assets.................................... 148,072,387 166,385,152
-------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased................................................. ..... 2,330,287
Payable to John Hancock Advisers, Inc. - Note B................................... 101,543 288,114
Accounts payable and accrued expenses............................................. 54,688 58,159
------------ ------------
Total Liabilities............................... 156,231 2,676,560
-------------------------------------------------------------------------------------------
NET ASSETS:
Capital paid-in................................................................... 156,294,765 154,571,105
Accumulated net realized gain (loss) on investments and financial futures contracts (1,943,295) 240,991
Temporary overdistribution of accumulated net realized gain on investments and
financial futures contracts..................................................... ..... (392,360)
Net unrealized appreciation/depreciation of investments and financial
futures contracts (6,452,463) 9,288,856
Undistributed net investment income............................................... 17,149 .....
------------ -----------
Net Assets...................................... $147,916,156 $163,708,592
===========================================================================================
NET ASSET VALUE PER SHARE:
(based on 7,477,780 and 7,391,349 shares of beneficial interest outstanding -
20 million shares authorized with no par value)..................................... $ 19.78 $ 22.15
===================================================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 7
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
<TABLE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1994 1993
---------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Interest....................................................................... $13,892,721 $14,352,017
----------- -----------
Expenses:
Investment management fee - Note B........................................... 992,104 1,036,212
Transfer agent fee........................................................... 154,239 155,558
Printing..................................................................... 84,406 41,292
Custodian fee................................................................ 49,320 59,770
Auditing fee................................................................. 34,000 37,500
Administration fee - Note B.................................................. .... 30,979
New York Stock Exchange fee.................................................. 16,424 15,970
Trustees' fees............................................................... 16,129 14,420
Miscellaneous................................................................ 12,503 8,968
Legal fees................................................................... 3,993 7,908
----------- -----------
Total Expenses............................... 1,363,118 1,408,577
---------------------------------------------------------------------------------------
Net Investment Income........................ 12,529,603 12,943,440
---------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FINANCIAL FUTURES CONTRACTS
Net realized gain (loss) on investments sold................................... (2,415,699) 4,613,192
Net realized gain (loss) on financial futures contracts........................ 863,193 (463,574)
Change in net unrealized appreciation/depreciation of investments.............. (15,642,568) 3,635,625
Change in net unrealized appreciation/depreciation of financial futures contracts (98,751) 938
----------- -----------
Net Realized and Unrealized Gain (Loss) on
Investments and Financial Futures Contracts.... (17,293,825) 7,786,181
---------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations................................ $ (4,764,222) $20,729,621
=======================================================================================
</TABLE>
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED
AND EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES)
FOR THE PERIOD STATED.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 8
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, DISTRIBUTIONS PAID TO
SHAREHOLDERS, AND ANY INCREASE DUE TO REINVESTMENT OF DISTRIBUTIONS IN THE FUND.
THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES OUTSTANDING AT THE BEGINNING
OF THE PERIOD, REINVESTED AND OUTSTANDING AT THE END OF THE PERIOD, FOR THE LAST
TWO PERIODS.
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1994 1993
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.............................................................................. $ 12,529,603 $ 12,943,440
Net realized gain (loss) on investments sold and financial futures contracts....................... (1,552,506) 4,149,618
Change in net unrealized appreciation/depreciation of investments and financial futures contracts.. (15,741,319) 3,636,563
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations................................. (4,764,222) 20,729,621
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($1.6825 and $1.76 per share, respectively)................... (12,512,454) (12,951,172)
Distributions from net realized gain on investments sold and financial futures contracts
($0.0326 and $0.4914 per share, respectively)................................................... (239,420) (3,613,268)
Distributions in excess of GAAP basis realized gain on investments and financial futures contracts
(none and $0.0533 per share, respectively)...................................................... --- (392,360)
------------ ------------
Total Distributions to Shareholders............................................................. (12,751,874) (16,956,800)
FROM FUND SHARE TRANSACTIONS
(Market value of shares issued to shareholders in reinvestment of distributions)................ 1,723,660 2,178,463
------------ ------------
NET ASSETS:
Beginning of period................................................................................ 163,708,592 157,757,308
End of period (including undistributed net investment income of $17,149 and none, respectively).... $147,916,156 $163,708,592
============ ============
* ANALYSIS OF FUND SHARE TRANSACTIONS:
Shares outstanding beginning of period............................................................. 7,391,349 7,297,037
Shares issued to shareholders in reinvestment of distributions..................................... 86,431 94,312
------------ ------------
Shares outstanding end of period................................................................... 7,477,780 7,391,349
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are as
follows:
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period...................... $ 22.15 $ 21.62 $ 21.61 $ 20.08 $ 20.87
-------- -------- -------- -------- --------
Net Investment Income..................................... 1.68 1.76 1.85 1.92 1.96
Net Realized and Unrealized Gain (Loss)
on Investments and Financial Futures Contracts.......... (2.34) 1.07 0.03 1.54 (0.77)
-------- -------- -------- -------- --------
Total from Investment Operations.................... (0.66) 2.83 1.88 3.46 1.19
-------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income...................... (1.68) (1.76) (1.87) (1.93) (1.98)
Distributions from Net Realized Gain on Investments Sold
and Financial Futures Contracts........................... (0.03) (0.49) --- --- ---
Temporary Overdistribution................................ --- (0.05) --- --- ---
-------- -------- -------- -------- --------
Total Distributions................................. (1.71) (2.30) (1.87) (1.93) (1.98)
-------- -------- -------- -------- --------
Net Asset Value, End of Period............................ $ 19.78 $ 22.15 $ 21.62 $ 21.61 $ 20.08
======== ======== ======== ======== ========
Per Share Market Value, End of Period..................... $ 17.63 $ 22.375 $ 23.50 $ 24.00 $ 19.50
Total Investment Return at Market Value................... (14.14%) 5.35% 6.54% 33.06% 0.43%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................. $147,916 $163,709 $157,757 $156,026 $143,334
Ratio of Expenses to Average Net Assets................... 0.88% 0.85% 0.82% 0.74% 0.71%
Ratio of Net Investment Income to Average Net Assets...... 8.11% 7.78% 8.58% 9.33% 9.70%
Portfolio Turnover Rate................................... 82% 99% 104% 81% 95%
</TABLE>
THE FINANCIAL HIGHLIGHTS SUMMARIZE THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: THE NET INVESTMENT INCOME, GAINS (LOSSES)
AND DISTRIBUTIONS OF THE FUND. IT SHOWS HOW THE FUND'S NET ASSET VALUE FOR A
SHARE HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. IT ALSO SHOWS THE TOTAL
INVESTMENT RETURN FOR EACH PERIOD BASED ON THE MARKET VALUE OF FUND SHARES.
ADDITIONALLY, IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN THE
FINANCIAL STATEMENTS ARE EXPRESSED IN RATIO FORM.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY INVESTORS TRUST ON DECEMBER 31, 1994. IT'S DIVIDED
INTO THREE MAIN CATEGORIES: PUBLICLY TRADED BONDS AND DIRECT PLACEMENT SECURITY, COMMON STOCK AND SHORT-TERM INVESTMENTS. THE
SECURITIES ARE FURTHER BROKEN DOWN BY INDUSTRY GROUPS. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE
LISTED LAST.
SCHEDULE OF INVESTMENTS
December 31, 1994
<CAPTION>
PAR VALUE
INTEREST S+P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- -------- -----
<S> <C> <C> <C> <C>
PUBLICLY TRADED BONDS AND DIRECT PLACEMENT SECURITY
BANKS (14.19%)
Abbey National First Capital B.V.,
*Sub Note 10-15-04............................................. 8.200% AA- $ 750 $ 729,795
African Development Bank,
Sub Note 12-15-03............................................. 9.750 AA 1,000 1,085,210
Bank of Montreal - Chicago Branch,
Sub Note 11-01-00............................................. 9.800 A+ 1,000 1,014,100
Banque Paribas - New York Branch,
*Sub Note 03-01-09............................................. 6.875 A- 1,000 826,540
Barclays North American Capital Corp.,
Gtd Cap Note 05-15-21......................................... 9.750 AA- 500 531,740
International Bank for Reconstruction and Development,
30 Yr Bond 10-15-16........................................... 8.625 AAA 3,800 3,876,950
30 Yr Bond 07-15-17........................................... 9.250 AAA 1,000 1,089,770
Landeskreditbank Baden - Wurttemberg,
*Sub Note 02-01-23............................................. 7.625 AAA 1,300 1,183,052
Midland American Capital Corp.,
Gtd Note 11-15-03............................................. 12.750 A- 1,650 1,876,298
National Westminster Bank PLC - New York Branch,
Sub Note 05-01-01............................................. 9.450 AA- 1,200 1,262,292
Scotland International Finance No. 2 B.V.,
Sub Gtd Note 01-27-04 (R)..................................... 8.800 A+ 2,000 2,015,360
*Sub Gtd Note 11-01-06 (R)..................................... 8.850 A+ 750 747,660
Security Pacific Corp.,
Medium Term Sub Note 05-09-01................................. 10.360 A- 1,750 1,918,665
Sub Note 11-15-00............................................. 11.500 A- 1,000 1,129,180
Toronto Dominion Bank - New York Branch,
*Sub Note 01-15-09............................................. 6.450 AA- 1,000 818,040
Westdeutsche Landesbank Girozentrale - New York Branch,
Sub Note 06-15-05............................................. 6.750 AA+ 1,000 885,470
-----------
20,990,122
-----------
BROADCASTING (4.03%)
Cablevision Systems Corp.,
Sr Sub Deb 04-01-04.......................................... 10.750 B 1,000 1,000,000
Century Communications Corp.,
Sr Sub Deb 10-15-03.......................................... 11.875 B+ 1,000 1,042,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S+P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- -------- ------
<S> <C> <C> <C> <C>
BROADCASTING (CONTINUED)
Continental Cablevision, Inc.,
Sr Sub Deb 06-01-07.......................................... 11.000% BB- $1,000 $ 1,015,000
TKR Cable I, Inc.,
Sr Deb 10-30-07.............................................. 10.500 BBB- 2,000 2,045,420
Viacom International,
*Sub Deb 07-07-06.............................................. 8.000 B+ 1,000 857,500
-----------
5,960,420
-----------
CHEMICALS (0.33%)
UCC Investors Holding, Inc.,
Sr Sub Note 05-01-03......................................... 11.000 B- 500 492,500
-----------
COMPUTERS (1.45%)
Unisys Corp.,
Credit Sensitive Note 07-01-97............................... 13.500 BB- 2,000 2,140,000
-----------
CONTAINERS (0.83%)
Stone Container Corp.,
*Sr Note 02-01-01.............................................. 9.875 B 500 470,000
*Sr Sub Note 10-01-04.......................................... 11.500 B 750 753,750
-----------
1,223,750
-----------
COSMETICS & TOILETRIES (0.42%)
Johnson & Johnson,
Deb 11-15-23................................................. 6.730 AAA 750 616,875
-----------
FINANCE (3.71%)
Banc One Credit Card Master Trust,
*Class A Asset Backed Ctf, Ser 1994-B 12-15-99................. 7.550 AAA 1,000 985,312
CIT Group Holdings, Inc. (The),
Medium Term Sr Sub Cap Note 03-15-01......................... 9.250 A 1,000 1,037,580
DR Structured Finance Corp.,
*Sec Pass thru Ctf Ser 1993K-1 08-15-18........................ 7.430 A 1,000 783,120
Great Western Financial Corp.,
Note 02-01-02................................................ 8.600 BBB+ 1,250 1,241,150
Merrill Lynch Mortgage Investors, Inc.,
Sr/Sub Pass thru Ctf Ser 1992B, Class B (Sub) 04-15-12....... 8.500 AA 552 535,392
Standard Credit Card Master Trust I,
*Class A Credit Card Part Ctf Ser 1994-2 04-07-08.............. 7.250 AAA 1,000 911,250
-----------
5,493,804
-----------
FOODS (0.83%)
Beatrice Foods, Inc.,
Sr Sub Note Ser B 12-01-01................................... 12.000 B 750 738,750
Flagstar Corp.,
Sr Sub Deb 11-01-04.......................................... 11.250 CCC+ 600 495,000
-----------
1,233,750
-----------
GLASS PRODUCTS (0.60%)
Owens-Illinois, Inc.,
Sr Deb 12-01-03.............................................. 11.000 BB 850 881,875
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S+P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- -------- ------
<S> <C> <C> <C> <C>
GOLD MINING & PROCESSING (1.28%)
Magma Copper Co.,
*Sr Sub Note 12-15-01........................................ 12.000% BB+ $1,755 $ 1,895,400
------------
GOVERNMENTAL - FOREIGN (1.92%)
Nova Scotia, Province of,
Deb 04-01-22................................................. 8.750 A- 1,000 979,640
Ontario, Province of,
Bond 06-04-02................................................ 7.750 AA- 500 482,965
*Deb 05-01-11.................................................. 15.125 AA- 325 370,107
*Deb 08-31-12.................................................. 15.250 AA- 350 423,059
Quebec, Province of,
Deb 10-01-13................................................. 13.000 A+ 500 588,675
------------
2,844,446
------------
GOVERNMENTAL - U.S. (19.22%)
United States Treasury,
Bond 08-15-03................................................ 11.125 AAA 2,185 2,622,677
Bond 08-15-05................................................ 10.750 AAA 3,910 4,696,888
Bond 08-15-17................................................ 8.875 AAA 6,460 7,037,330
Bond 05-15-18................................................ 9.125 AAA 3,250 3,630,868
Bond 02-15-23................................................ 7.125 AAA 750 682,500
*Note 11-15-96................................................ 7.250 AAA 3,000 2,976,570
*Note 04-15-98................................................ 7.875 AAA 1,000 1,000,940
*Note 05-15-98................................................ 9.000 AAA 2,500 2,583,975
*Note 11-30-99................................................ 7.750 AAA 2,000 1,992,500
*Note 05-15-01................................................ 8.000 AAA 1,195 1,204,333
------------
28,428,581
------------
GOVERNMENTAL - U.S. AGENCIES (13.27%)
Federal National Mortgage Association,
*15 Yr SF Pass thru Ctf 01-25-05.............................. 8.000 AAA 1,000 960,313
15 Yr SF Pass thru Ctf 02-01-08.............................. 7.500 AAA 810 775,126
Financing Corp.,
Bond Ser B 04-06-18.......................................... 9.800 AAA 1,900 2,172,650
Government National Mortgage Association,
30 Yr SF Pass thru Ctf 10-15-23.............................. 7.000 AAA 1,894 1,699,446
*30 Yr SF Pass thru Ctf 02-15-24.............................. 7.500 AAA 1,788 1,658,529
30 Yr SF Pass thru Ctf 12-15-22 to 05-15-23.................. 8.000 AAA 1,201 1,148,056
*30 Yr SF Pass thru Ctf 01-15-23 to 10-15-24.................. 8.500 AAA 6,498 6,383,967
*30 Yr SF Pass thru Ctf 04-15-21.............................. 9.000 AAA 925 933,475
30 Yr SF Pass thru Ctf 11-15-19 to 01-15-21.................. 9.500 AAA 705 726,937
30 Yr SF Pass thru Ctf 11-15-20.............................. 10.000 AAA 652 684,826
Tennessee Valley Authority,
Power Bonds 1989 Ser G 11-15-29.............................. 8.625 AAA 2,500 2,480,675
------------
19,624,000
------------
INSURANCE (2.06%)
Massachusetts Mutual Life Insurance Co.,
*Surplus Note 11-15-23 (R).................................... 7.625 AA- 1,250 1,064,013
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
<TABLE>
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
<CAPTION>
PAR VALUE
INTEREST S+P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- -------- -----
<S> <C> <C> <C> <C>
INSURANCE (CONTINUED)
Metropolitan Life Insurance Co.,
*Surplus Note 11-01-03 (R)..................................... 6.300% AA $1,000 $ 838,750
New York Life Insurance Co.,
Surplus Note 12-15-23 (R)..................................... 7.500 AA 1,375 1,137,262
----------
3,040,025
----------
OIL & GAS (3.58%)
Ashland Oil, Inc.,
SF Deb 10-15-17............................................... 11.125 BBB 1,000 1,098,700
Coastal Corp. (The),
Sr Deb 06-15-06............................................... 11.750 BB+ 1,000 1,093,750
Maxus Energy Corp.,
Deb 05-01-13.................................................. 11.250 BB- 125 115,000
Norsk Hydro a.s.,
*Deb 06-15-23.................................................. 7.750 A- 1,000 876,180
Oryx Energy Co.,
Note 09-15-98................................................. 9.750 BB 1,000 972,110
TransTexas Gas Corp.,
*Sr Sec Note 09-01-00.......................................... 10.500 BB- 1,200 1,146,000
----------
5,301,740
----------
PAPER (0.31%)
Georgia-Pacific Corp.,
Deb 02-15-18.................................................. 9.500 BBB- 450 450,409
----------
PUBLISHING (2.72%)
News America Holdings Inc.,
Sr Note 10-15-99.............................................. 9.125 BBB- 1,000 1,007,950
Sr Note 12-15-01.............................................. 12.000 BBB- 750 833,295
Sr Note 02-15-05.............................................. 8.500 BBB- 700 670,558
Time Warner Entertainment Co.,
Note 05-01-12................................................. 10.150 BBB- 400 402,536
Time Warner Inc.,
Deb 01-15-13.................................................. 9.125 BBB- 1,225 1,103,651
----------
4,017,990
----------
RETAIL (4.31%)
Kroger Co. (The),
Lease Ctf 02-01-09........................................... 12.950 BB 1,910 2,158,300
May Department Stores Co. (The),
Deb 06-15-18................................................. 10.750 A 126 129,396
Pathmark Stores, Inc.,
Sub Note 06-15-02............................................ 11.625 B 1,500 1,440,000
Safeway Stores, Inc.,
Lease Ctf 01-15-09........................................... 13.500 BB+ 500 552,500
S.D. Warren Co.,
*Sr Sub Note 12-15-04 (R)...................................... 12.000 B+ 250 253,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 14
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S+P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- -------- -----
<S> <C> <C> <C> <C>
RETAIL (CONTINUED)
Specialty Retailers, Inc,
*Note 08-15-00................................................. 10.000% B+ $1,000 $ 900,000
Thrifty Payless Inc.,
*Sr Sub Note 04-15-04.......................................... 12.250 B- 1,000 945,000
-----------
6,378,946
-----------
STEEL (0.84%)
Weirton Steel Corp.,
Sr Note 10-15-99............................................. 10.875 B 1,250 1,234,375
-----------
TOBACCO (0.62%)
RJR Nabisco Capital Corp.,
*Note 04-15-04............................................... 8.750 BBB- 1,000 921,140
-----------
TRANSPORTATION (8.31%)
American Airlines, Inc.,
1991-A Pass thru Trust 01-02-07.............................. 9.710 BBB- 807 776,146
Sec Equip Ctf Ser B 01-06-05................................. 14.375 BBB- 1,000 1,063,400
Delta Air Lines, Inc.,
Equip Tr Ctf Ser A 06-01-08.................................. 10.000 BB+ 2,000 1,882,300
NWA Inc.,
Note 08-01-96................................................ 8.625 B- 2,285 2,193,600
Rail Car Trust No. 1992-1
*Trust Note Ser 92-1 06-01-04................................ 7.750 AAA 1,821 1,774,575
Scandinavian Airlines System,
Bond 07-20-99................................................ 9.125 A3 1,000 1,004,880
Swire Pacific Ltd.,
*Note 09-29-04 (R)........................................... 8.500 A 500 481,100
United Air Lines, Inc.,
Deb 07-15-21................................................. 10.250 BB 500 471,200
*Deb Ser B 05-01-14.......................................... 11.210 BB 1,000 1,024,420
USAir 1990-A Pass Through Trusts,
Pass thru Ctf Ser 1990-A1 03-19-05........................... 11.200 BB 1,890 1,625,611
-----------
12,297,232
-----------
UTILITIES (11.48%)
ALLTEL Corp.,
*Deb 04-01-09................................................ 10.375 A+ 500 532,920
CTC Mansfield Funding Corp.,
Sec Lease Oblig 09-30-16..................................... 11.125 B+ 4,000 3,706,280
E.I.P. Refunding Corp.,
Sec Fac Bond 10-01-12........................................ 10.250 B+ 750 667,500
First PV Funding Corp.,
*Lease Oblig Ser 1986 A 01-15-14............................. 10.300 B 750 712,500
Fitchburg Holding Corp.,
Sec Note 01-31-03 (r)........................................ 15.750 BBB 2,427 2,655,298
GTE Corp.,
*Deb 11-15-17................................................ 10.300 BBB+ 500 543,465
Deb 11-01-20................................................. 10.250 BBB+ 1,500 1,577,715
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S+P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- --------- -----
<S> <C> <C> <C> <C>
UTILITIES (CONTINUED)
Hydro-Quebec (Gtd by Province of Quebec),
*Deb Ser HS 02-01-21........................................... 9.400% A+ $2,000 $ 2,073,860
Iberdrola International B.V.,
Gtd Note 10-01-02 (R)........................................ 7.500 AA- 1,000 936,480
Midland Funding Corp. I,
Sr Sec Lease Oblig Ser C 07-23-02............................ 10.330 BB- 888 839,126
System Energy Resources, Inc.,
*Sec Lease Oblig 01-15-14...................................... 8.200 BBB- 500 431,555
Tenaga Nasional Berhad,
*Note 06-15-04 (R)............................................. 7.875 A 750 712,035
Transco Energy Co.,
Note 07-01-99................................................ 11.250 B+ 1,500 1,595,625
------------
16,984,359
------------
TOTAL PUBLICLY TRADED BONDS AND DIRECT PLACEMENT SECURITY
(Cost $148,775,722) (96.31%) 142,451,739
------- ------------
NUMBER OF
SHARES
-------
COMMON STOCK
RETAIL (0.05%)
Thrifty Payless Holdings
*Class C..................................................... 19,000 76,000
------------
TOTAL COMMON STOCK
(Cost $106,667) (0.05%) 76,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE> 16
FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST (000's MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- ---- ------- ------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (1.60%)
Investment in a joint repurchase agreement
transaction with Lehman Bros., Inc.,
Dated 12-30-94, Due 01-03-95 (secured by
U.S. Treasury Bonds, 9.25%, due 02-15-16, and
8.125%, due 08-15-21, U.S. Treasury Notes,
5.500%, due 02-15-95, and 4.625%, due 08-15-95)
Note A................................................................ 5.85% $2,369 $ 2,369,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00%...................................................... 4,661
------------
SHORT-TERM INVESTMENTS (1.60%) 2,373,661
------ ------------
TOTAL INVESTMENTS (97.96%) $144,901,400
====== ============
<FN>
NOTES TO THE SCHEDULE OF INVESTMENTS
(r) The security listed below is a direct placement security and is restricted as to
resale. The Fund has limited rights to registation under the Securities Act
of 1933 with respect to restricted securities (not including Rule 144A securities).
In certain circumstances the Fund may bear a portion of the cost of such registrations;
otherwise, such costs would be borne by the issuer. See Note A of the Notes To
Financial Statements for valuation policy. Additional information on this restricted
security is as follows:
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE AS A
PERCENTAGE
ACQUISITION ACQUISITION OF FUND'S MARKET VALUE AS OF
DATE COST NET ASSETS DECEMBER 31, 1994
---- ---- ---------- -----------------
<S> <C> <C> <C> <C>
Fitchburg Holding Corp., Sec. Note, 15.75%, 01-31-03......... 02-10-81 $2,454,506 1.80% $2,655,298
<FN>
(R) These securities are exempt from registration under Rule 144A of the Securities Act of
1933. Such securities may be resold, normally to qualified institutional buyers,
in transactions exempt from registration. Rule 144A securities amounted to $8,183,410
as of December 31, 1994. See Note A of the Notes To Financial Statements for valuation policy.
* Securities, other than short term investments, newly added to the portfolio during the year
ended December 31, 1994.
** Credit ratings are unaudited and are rated by Moody's Investor Services or John Hancock Advisers,
Inc. where Standard and Poors ratings are not available.
The percentage shown for each investment category is the total value of that category as a percentage
of the net assets of the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
NOTE A --
ACCOUNTING POLICIES
John Hancock Investors Trust (the "Fund") is a closed-end investment
management company registered under the Investment Company Act of 1940.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing
services or, at fair value as determined in good faith in accordance with
procedures approved by the Trustees. Short-term debt investments maturing
within 60 days are valued at amortized cost which approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial
Group, may participate in a joint repurchase agreement transaction. Aggregate
cash balances are invested in one or more repurchase agreements, whose
underlying securities are obligations of the U.S. government and/or its
agencies. The Fund's custodian bank receives delivery of the underlying
securities for the joint account on the Fund's behalf. The Adviser is
responsible for ensuring that the agreement is fully collateralized at all
times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date
of purchase, sale or maturity. Net realized gains and losses
on sales of investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment companies
and to distribute all of its taxable income, including any net realized gain on
investment, to its shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, the Fund has $1,050,989 of
capital loss carryforward available, to the extent provided by regulations, to
offset future net realized capital gains. If such carryforward is used by the
Fund, no capital gain distributions will be made. The carryforward expires
December 31, 2002. Additionally, net capital losses of $233,511 attributable to
security transactions occurring after October 31, 1994 are treated as arising
on the first day (January 1, 1995) of the Fund's next taxable year.
DIVIDENDS,DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date. Interest income on investment securities
is recorded on the accrual basis. The Fund records all dividends and
distributions to shareholders from net investment income and realized gains on
the ex-dividend date. Such distributions are determined in conformity with
federal income tax regulations, which may differ from generally accepted
accounting principles.
DISCOUNT ON SECURITIES The Fund accretes original issue discount from par value
on securities purchased from either the date of issue or the date of purchase
over the life of the security, as required by the Internal Revenue Code.
FINANCIAL FUTURES CONTRACTS At the time the Fund enters into a financial
futures contract, it is required to deposit with its custodian a specified
amount of cash or U.S. government securities, known as "initial margin", equal
to a certain percentage of the value of the financial futures contracr being
traded. Each day, the futures contract is valued at the official settlement
price of the board of trade or U.S. commodity exchange. Subsequent payments,
known as "variation margin", to and from the broker are made on a daily basis
as the market price of the financial futures contract fluctuates. Daily
variation margin adjustments, arising from this "mark to market", are recorded
by the Fund as unrealized gains or losses. When the contracts are closed, the
Fund recognizes a gain or loss. Risks of entering into futures contracts
include the possibility that there may be an illiquid market and/or that a
change in the value of the contract may not correlate with changes in the value
of the underlying securities. For Federal income tax purposes, the amount,
character and timing of the Fund's gains and/or losses can be affected as a
result of futures transactions.
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
<TABLE>
At December 31, 1994, open positions in financial futures
transactions were as follows:
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION DEPRECIATION
- ---------- -------------- -------- ------------
<S> <C> <C> <C>
MARCH, 1995 15 U.S. TREASURY BOND SHORT ($44,063)
MARCH, 1995 40 U.S. TREASURY NOTE SHORT ( 53,750)
--------
($97,813)
========
</TABLE>
At December 31, 1994, the Fund has deposited in a segregated account
$26,250 par value of U.S. Treasury Bond, 10.75%, 08-15-05 and $94,500 par
value of U.S. Treasury Bond, 8.875%, 08-15-17. to cover margin requirements
on open financial futures contracts.
NOTE B --
MANAGEMENT FEE AND
TRANSACTIONS AND AFFILIATIONS
Under the present investment management contract, the Fund pays a quarterly
management fee to the Adviser, for a continuous investment program, equivalent
on an annual basis, to the sum of (a) 0.650% of the first $150,000,000 of
the Fund's average weekly net asset value, (b) 0.375% of the next $50,000,000,
(c) 0.350% of the next $100,000,000 and (d) 0.300% of the Fund's average weekly
net asset value in excess of $300,000,000.
Effective January 1, 1994, the former administration fee was
eliminated.
In the event normal operating expenses of the Fund, exclusive of
taxes, interest, brokerage commissions and extraordinary expenses, exceeds
1.5% of the first $30,000,000 of the Fund's average weekly net asset value
and 1.0% of the Fund's average weekly net asset value in excess of
$30,000,000, the fee payable to the Adviser will be reduced to the extent of
such excess and the Adviser will make additional arrangements necessary to
eliminate any remaining excess expenses.
Messrs. Edward J. Boudreau, Jr., Francis C. Cleary, Jr. (until
December 14, 1994), and Richard S. Scipione are directors and/or officers of
the Adviser and/or its affiliates, as well as Trustees of the Fund. The
compensation of unaffiliated Trustees is borne by the Fund.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases of securities, other than obligations of the U.S. government and its
agencies and short-term securities, during the years ended December 31, 1994,
and 1993 aggregated $70,675,035 and $83,459,444, respectively. Proceeds from
sales of securities, other than obligations of the U.S. government and its
agencies and short term securities, during the years ended December 31, 1994,
and 1993 aggregated $79,431,886 and $91,757,780, respectively. Purchases and
proceeds from sales of obligations of the U.S. government and its agencies
aggregated $59,823,904 and $49,825,271, respectively, in 1994 Purchases and
proceeds from sales of obligations of the U.S. government and its agencies
aggregated $77,905,577 and $70,806,330, respectively, in 1993.
The cost of investments owned at December 31, 1994 and 1993
(including the short-term investments) for Federal income tax purposes was
$151,911,753 and $153,566,875, respectively. Gross unrealized appreciation
and depreciation of investments aggregated $1,553,928 and $8,568,942,
respectively, resulting in net unrealized depreciation of $7,015,014 at
December 31, 1994 and $9,780,297 and $554,612, respectively, resulting in net
unrealized appreciation of $9,225,685 at December 31, 1993.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Investors Trust
NOTE D --
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Unaudited quarterly results of operations for each of the two years in
the period ended December 31, 1994 are as follows:
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
1994
----
THREE MONTHS ENDED
------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
(OOO'S OMITTED EXCEPT PER SHARE DATA)
-------------------------------------
<S> <C> <C> <C> <C>
Net investment income.................................... $3,107 $3,147 $3,129 $3,147
Dividends from net investment income..................... 3,091 3,113 3,122 3,186
Net realized and unrealized gain (loss) on investments
and financial futures contracts........................ (7,880) (5,266) (2,045) (2,103)
Per share of beneficial interest:
Net investment income.................................. 0.42 0.43 0.42 0.41
Dividends.............................................. 0.42 0.42 0.42 0.42
Net asset value at end of quarter........................ $21.06 $20.35 $20.07 $19.78
</TABLE>
<TABLE>
<CAPTION>
1993
----
THREE MONTHS ENDED
------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
(OOO'S OMITTED EXCEPT PER SHARE DATA)
-------------------------------------
<S> <C> <C> <C> <C>
Net investment income.................................... $3,279 $3,251 $3,215 $3,198
Dividends from net investment income..................... 3,265 3,274 3,244 3,170
Net realized and unrealized gain (loss) on investments
and financial futures contracts........................ 4,686 2,841 2,526 (857)
Per share of beneficial interest:
Net investment income.................................. 0.450 0.440 0.44 0.43
Dividends.............................................. 0.445 0.445 0.44 0.43
Net asset value at end of quarter........................ $22.28 $22.67 $23.01 $22.15
</TABLE>
19
<PAGE> 20
John Hancock Funds - Investors Trust
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
John Hancock Investors Trust
We have audited the accompanying statement of assets and liabilities of John
Hancock Investors Trust (the "Fund"), as of December 31, 1994 and 1993,
including the schedule of investments as of December 31, 1994, and the
related statements of operations and changes in net assets for the years then
ended, and financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1994 and 1993, by correspondence with the
custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of John Hancock Income Securities Trust at December 31, 1994 and
1993, the results of its operations and changes in its net assets for the
years then ended and financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
Boston, Massachusetts
February 13, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the distributions of the Fund during its fiscal year ended
December 31, 1994.
Corporate Dividends Received Deduction: None of the 1994 dividends
qualify for the corporate dividends received deduction.
U.S. Government Obligations: Income from these investments may be
exempt from certain state and local taxes. The percentage of assets invested
in U.S. Treasury bonds, bills and notes was 19.20% at the end of the year.
The percentage of annual income derived form U.S. Treasury bonds, bills and
notes was 13.54%. The percentage of assets invested in obligations of other
U.S. government agencies (excluding securities issued by Federal National
Mortgage Association and Government National Mortgage Association) at year
end was 3.14%. The percentage of income derived from these investments was
2.98%. For specific information on exemption provisions in your state,
consult your local state tax office or your tax adviser.
20
<PAGE> 21
John Hancock Funds - Investors Trust
DIVIDENDS AND DISTRIBUTIONS
During 1994 dividends from net investment income totalling $1.6825 per share
were paid to shareholders. A capital gains distribution of $0.0326 was paid
in 1994. The dates of payment and amounts per share were as follows:
<TABLE>
<CAPTION>
INCOME
PAYMENT DATE DIVIDEND
- ------------ --------
<S> <C>
March 31, 1994 $0.4150
June 30, 1994 0.4200
September 30, 1994 0.4200
December 30, 1994 0.4275
CAPITAL GAINS
DISTRIBUTION
------------
December 30, 1994 $0.0326
</TABLE>
INVESTMENT OBJECTIVE AND POLICY
John Hancock Investors Trust is a closed-end diversified management
investment company, shares of which were initially offered to the public on
January 29, 1971 and are publicly traded on the New York Stock Exchange. Its
primary investment objective is to generate income for distribution to its
shareholders, with capital appreciation as a secondary objective. The
preponderance of the Fund's assets are invested in a diversified portfolio of
debt securities, some of which may carry equity features. Up to 50% of the
value of the Fund's assets may be invested in restricted securities acquired
through direct placement. The Fund may issue a single class of senior
securities not to exceed 331\3% of the market or fair value of its net assets
and may borrow from banks as a temporary measure for emergency purposes in
amounts not to exceed 5% of its total assets taken at cost. Substantially all
of the Fund's net investment income per year will be distributed to
shareholders in quarterly payments. Net realized short-term capital gains, if
any, will be distributed annually; however, net realized long-term capital
gains may be retained and reinvested. All distributions are paid in cash
unless the shareholder elects to participate in the Automatic Dividend
Reinvestment Plan.
FINANCIAL FUTURES CONTRACTS
The Fund may buy and sell financial futures contracts and options on futures
contracts to hedge against the effects of fluctuations in interest rates and
other market conditions. The Fund's ability to hedge successfully will depend
on the Adviser's ability to predict accurately the future direction of
interest rate changes and other market factors. There is no assurance that a
liquid market for futures and options will always exist. In addition, the
Fund could be prevented from opening, or realizing the benefits of closing
out, a futures or options position because of position limits or limits on
daily price fluctuations imposed by an exchange.
The Fund will not engage in transactions in futures contracts and
options on futures for speculation, but only for hedging or other permissible
risk management purposes. All of the Fund's futures contracts and options on
futures will be traded on a U.S. commodity exchange or board of trade. The
Fund will not engage in a transaction in futures or options on futures if,
immediately thereafter, the sum of initial margin deposits on existing
positions and premiums paid for options on futures would exceed 5% of the
Fund's total assets.
DIVIDEND REINVESTMENT PLAN
John Hancock Investors Trust offers shareholders the opportunity to elect to
receive shares of the Fund's Common Shares in lieu of cash dividends. The
Plan is available to all shareholders without charge.
Any shareholder of record of John Hancock Investors Trust
("Investors") may elect to participate in the Automatic Dividend Reinvestment
Plan (the "Plan") and receive shares of Investors' Common Shares in lieu of
all or a portion of the cash dividends.
Shareholders may join the Plan by filling out and mailing an
authorization card showing an election to reinvest all or a portion of
dividend payments. If received in proper form by State Street Bank and Trust
Company, P.O. Box 8209, Boston, Massachusetts 02266-8209 (the "Agent Bank")
not later than seven business days before the record date for a dividend, the
election will be effective with respect to all dividends paid after such
record date. Shareholders whose
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John Hancock Funds - Investors Trust
shares are held in the name of a broker or nominee should contact the
broker, bank, or nominee to participate in the Plan.
Participation in the Plan may be terminated at any time by written
notice to the Agent Bank and such termination will be effective immediately.
However, notice of termination must be received seven days prior to the
record date of any distribution to be effective for that distribution. Upon
termination, certificates will be issued representing the number of full
shares of Common Shares held by the Agent Bank. A shareholder will receive a
cash payment for any fractional share held.
The Agent Bank will act as agent for participating shareholders. The Board
of Trustees of Investors will declare dividends from net investment income
payable in cash or, in the case of shareholders participating in the Plan,
partially or entirely in Investors' Common Shares. The number of shares to be
issued for the benefit of each shareholder will be determined by dividing the
amount of the cash dividend otherwise payable to such shareholder on shares
included under the Plan by the per share net asset value of the Common Shares
on the date for payment of the dividend, unless the net asset value per share
on the payment date is less than 95% of the market price per share on that
date, in which event the number of shares to be issued to a shareholder will
be determined by dividing the amount of the cash dividend payable to such
shareholder by 95% of the market price per share of the Common Shares on the
payment date. The market price of the Common Shares on a particular date shall
be the mean between the highest and lowest sales price on the New York Stock
Exchange on that date. Net asset value will be determined in accordance with
the established procedures of Investors. However, if as of such payment date
the market price of the Common Shares is lower than such net asset value per
share, the number of shares to be issued will be determined on the basis of
such market price. Fractional shares, carried out to three decimal places, will
be credited to your account. Such fractional shares will be entitled to future
dividends.
The shares issued to participating shareholders, including fractional
shares, will be held by the Agent bank in the name of the participant. A
confirmation will be sent to each shareholder promptly, normally within seven
days, after the payment date of the dividend. The confirmation will show the
total number of shares held by such shareholder before and after the
dividend, the amount of the most recent cash dividend which the shareholder
has elected to reinvest and the number of shares acquired with such dividend.
The reinvestment of dividends does not in any way relieve
participating shareholders of any Federal, state or local income tax which
may be due with respect to such dividend. Dividends reinvested in shares will
be treated on your Federal income tax return as though you had received a
dividend in cash in an amount equal to the fair market value of the shares
received, as determined by the price for shares of the Fund on the New York
Stock Exchange as of the dividend payment date. Distributions from the Fund's
long-term capital gains will be processed as noted above for those electing
to reinvest in shares and will be taxable to you as long-term capital gains.
The confirmation referred to above will contain all the information you will
require for determining the cost basis of shares acquired and should be
retained for that purpose. At year end, each account will be supplied with
detailed information necessary to determine total tax liability for the
calendar year.
Additional information may be obtained from the Customer Service
Department, John Hancock Investors Trust, 101 Huntington Avenue, Boston,
Massachusetts 02199-7603, 1 (800) 843-0090.
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NOTES
John Hancock Funds - Investors Trust
23
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[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGEMENT FUND U.S. Postage
101 Huntington Avenue Boston, MA 02199-7603 PAID
Brockton, MA
Permit No. 582
[A 1/2" by 1/2" John Hancock Funds Logo in upper left hand corner of the page.
A box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below
reads: "A Global Investment Management Firm."]
[A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."]
JH00A 12/94
