================================================================================
John Hancock Funds
- --------------------------------------------------------------------------------
Investors
Trust
FIRST QUARTER REPORT
March 31, 1996
<PAGE>
================================================================================
TRUSTEES
EDWARD J. BOUDREAU, JR.
Chairman
DENNIS S. ARONOWITZ*
RICHARD P. CHAPMAN, JR.*
WILLIAM J. COSGROVE*
GAIL D. FOSLER*
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
ANNE C. HODSDON
President
THOMAS H. DROHAN
Senior Vice President and Secretary
JAMES B. LITTLE
Senior Vice President and
Chief Financial Officer
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
LISTED NEW YORK STOCK EXCHANGE SYMBOL JHI
JOHN HANCOCK CLOSED-END FUNDS 1-800-843-0090
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
The bond market has brought investors back down to earth so far in 1996. It
was almost to be expected, coming on the heels of one of its best years on
record in 1995. This year began with the same level of confidence that prevailed
last year, and for the same reasons. Inflation remained low, economic growth was
slow and there were real hopes for a budget deal in Washington.
[A 1 1/4" X 1" Photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
But that optimism soured early into the new year, when it began to look
like there wouldn't be a budget accord any time soon, and bond prices took the
first of several tumbles. A surge in gold prices and signs that employee
compensation might be rising re-ignited inflation fears. Any rise in inflation
is bad for bonds because it tends to raise interest rates, hurt bond prices and
erode the value of a bond investor's fixed-income stream. Another interest-rate
cut by the Fed in January helped bond prices recover somewhat, but investors
remained concerned. It wasn't surprising that the release of
stronger-than-expected economic data in February and early March sent bond
prices tumbling again. Prices did come back some, but not to their previous
levels.
Our near-term outlook for the bond market is cautious. We may see more
strong economic news, which could dampen the bond market. However, looking
further out, we expect economic growth to remain moderate and inflation to stay
low, and that bodes well for interest rates and bond prices. That said, after
the spectacular year that bonds enjoyed in 1995, we believe investors should
expect more modest results this year.
Sincerely,
/s/ Edward J. Boudreau, Jr.
EDWARD J. BOUDREAU, JR., Chairman and CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
Financial Statements
John Hancock Funds - Investors Trust
Statement of Assets and Liabilities
March 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Publicly traded bonds and direct placement security
(cost - $151,752,013) .................................. $ 154,964,699
Joint repurchase agreement (cost - $710,000) ............. 710,000
Corporate savings account ................................ 535
-------------
155,675,234
Receivable for investments sold ............................ 2,987,562
Interest receivable ........................................ 3,616,445
Other assets ............................................... 5,784
-------------
Total Assets ............... 162,285,025
---------------------------------------------
Liabilities:
Payable for variation margin ............................... 22,750
Payable for investments purchased .......................... 1,600,588
Payable to John Hancock Advisers, Inc. and
affiliates - Note B ...................................... 283,526
Accounts payable and accrued expenses ...................... 62,241
-------------
Total Liabilities .......... 1,969,105
---------------------------------------------
Net Assets:
Capital paid-in ............................................ 158,405,848
Accumulated net realized loss on investments and
financial futures contracts .............................. (1,317,752)
Net unrealized appreciation of investments and
financial futures contracts .............................. 3,231,289
Distributions in excess of net investment income ........... (3,465)
-------------
Net Assets ................. $ 160,315,920
==============================================
Net Asset Value Per Share:
(based on 7,579,727 shares of beneficial interest
outstanding - 20 million shares authorized with
no par value) .............................................. $ 21.15
==============================================================================
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 March 31, 1996. You'll also
find the net asset value per share as of that date.
The Statement Of Operations summarizes the Fund's investment income earned and
expenses incurred in operating the Fund. It also shows net gains (losses) for
the period stated.
Statement of Operations
Three months ended March 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Interest ...................................................... $ 3,392,041
-----------
Expenses:
Investment management fee - Note B .......................... 251,297
Transfer agent fee .......................................... 23,548
Printing .................................................... 16,466
Custodian fee ............................................... 13,098
Auditing fee ................................................ 9,422
New York Stock Exchange fee ................................. 3,962
Trustees' fees .............................................. 3,551
Miscellaneous ............................................... 1,607
Legal fees .................................................. 1,079
-----------
Total Expenses .............. 324,030
---------------------------------------------
Net Investment Income ....... 3,068,011
---------------------------------------------
Realized and Unrealized Gain (Loss) on Investments and
Financial Futures Contracts:
Net realized gain on investments sold ....................... 144,392
Net realized loss on financial futures contracts ............ (43,204)
Change in net unrealized appreciation/depreciation
of investments ............................................ (6,159,627)
Change in net unrealized appreciation/depreciation
of financial futures contracts ............................ 18,031
-----------
Net Realized and Unrealized
Loss on Investments and
Financial Futures Contracts . (6,040,408)
---------------------------------------------
Net Decrease in Net Assets
Resulting from Operations ... $(2,972,397)
==============================================
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
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Financial Statements
John Hancock Funds - Investors Trust
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, 1996 DECEMBER 31,
(UNAUDITED) 1995
------------------ ------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ..................................... $ 3,068,011 $ 12,624,305
Net realized gain on investments sold and financial
futures contracts ....................................... 101,188 525,924
Change in net unrealized appreciation/depreciation of
investments and financial futures contracts ............. (6,141,596) 15,825,348
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from
Operations ............................................ (2,972,397) 28,975,577
------------- -------------
Distributions to Shareholders:
Dividends from net investment income ($0.4100 and $1.6800
per share, respectively) ................................ (3,099,668) (12,614,831)
------------- -------------
From Fund Share Transactions --*
(Market value of shares issued to shareholders in
reinvestment of distributions) .......................... 413,754 1,697,329
------------- -------------
Net Assets:
Beginning of period ....................................... 165,974,231 147,916,156
------------- -------------
End of period (including distributions in excess of net
investment income and undistributed net investment income
of ($3,465) and $28,192, respectively) .................. $ 160,315,920 $ 165,974,231
============= =============
* Analysis of Fund Share Transactions:
Shares outstanding, beginning of period ................... 7,560,164 7,477,780
Shares issued to shareholders in reinvestment of
distributions ........................................... 19,563 82,384
------------- -------------
Shares outstanding, end of period ......................... 7,579,727 7,560,164
============= =============
</TABLE>
The Statement of Changes in Net Assets shows how the value of the Fund's net
assets has changed since the end of the previous period. The difference reflects
earnings less expenses, any investment 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.4 See notes to financial statements.
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
================================================================================
Financial Statements
John Hancock Funds - Investors Trust
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:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .... $ 21.95 $ 19.78 $ 19.78 $ 22.15 $ 21.62 $ 21.61 $ 20.08
--------- --------- --------- --------- --------- --------- ---------
Net Investment Income ................... 0.41 0.42 1.68 1.68 1.76 1.85 1.92
Net Realized and Unrealized Gain (Loss)
on Investments and Financial Futures
Contracts ........................... (0.80) 0.67 2.17 (2.34) 1.07 0.03 1.54
--------- --------- --------- --------- --------- --------- ---------
Total from Investment Operations ...... (0.39) 1.09 3.85 (0.66) 2.83 1.88 3.46
--------- --------- --------- --------- --------- --------- ---------
Less Distributions:
Dividends from Net Investment Income .... (0.41) (0.42) (1.68) (1.68) (1.76) (1.87) (1.93)
Distributions from Net Realized Gain
on Investments Sold and Financial
Futures Contracts ..................... -- -- -- (0.03) (0.49) -- --
Temporary Overdistribution .............. -- -- -- -- (0.05) -- --
--------- --------- --------- --------- --------- --------- ---------
Total Distributions ................... (0.41) (0.42) (1.68) (1.71) (2.30) (1.87) (1.93)
--------- --------- --------- --------- --------- --------- ---------
Net Asset Value, End of Period .......... $ 21.15 $ 20.45 $ 21.95 $ 19.78 $ 22.15 $ 21.62 $ 21.61
========= ========= ========= ========= ========= ========= =========
Per Share Market Value, End of Period ... $ 21.13 $ 19.75 $ 20.50 $ 17.88 $ 22.375 $ 23.500 $ 24.000
Total Investment Return at Market Value . 5.05%(a) 14.42%(a) 24.33% (12.92%) 5.35% 6.54% 33.06%
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $ 160,316 $ 153,350 $ 165,974 $ 147,916 $ 163,709 $ 157,757 $ 156,026
Ratio of Expenses to Average Net Assets . 0.79%* 0.88%* 0.85% 0.88% 0.85% 0.82% 0.74%
Ratio of Net Investment Income to Average
Net Assets ............................ 7.51%* 8.38%* 7.93% 8.11% 7.78% 8.58% 9.33%
Portfolio Turnover Rate ................. 27% 20% 102% 82% 99% 104% 81%
</TABLE>
* On an annualized basis.
(a) Not annualized.
The Financial Highlights summarizes the impact of the following factors on a
single share for the period indicated: net investment income, gains (losses),
dividends and total investment return of the Fund. It shows how the Fund's net
asset value for a share has changed since the end of the previous period. 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.
5
<PAGE>
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Financial Statements
John Hancock Funds - Investors Trust
Schedule of Investments
March 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule Of Investments is a complete list of all securities owned by
Investors Trust on March 31, 1996. It's divided into two main categories:
publicly traded bonds and direct placement security, and short-term investments.
The securities are further broken down by industry gro ups. Short-term
investments, which represent the Fund's "cash" position, are listed last.
<TABLE>
<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
Aerospace (0.36%)
Jet Equipment Trust Ser 1995-B
Cert 08-15-14, (R) ..................................................... 10.910% BB+ $ 550 $ 579,150
-----------
Banks (14.58%)
Abbey National First Capital B.V.,
Sub Note 10-15-04 ...................................................... 8.200 AA- 1,000 1,079,650
ABN Amro Bank N.V. - Chicago Branch,
Global Bond 05-31-05 ................................................... 7.250 AA- 1,000 1,022,520
African Development Bank,
Sub Note 12-15-03 ...................................................... 9.750 AA 1,000 1,175,360
Bangkok Bank Public Company Ltd.
Note 09-15-05, (R) ..................................................... 7.250 BBB+ 500 493,130
Barclays North American Capital Corp.,
Gtd Cap Note 05-15-21 .................................................. 9.750 AA- 900 1,046,250
Den Danske Bank Aktieselskab,
Sub Note 06-15-05, (R) ................................................. 7.250 BBB+ 1,100 1,108,151
International Bank For Reconstruction and Development,
30 Yr Bond 10-15-16 .................................................... 8.625 AAA 3,800 4,382,844
30 Yr Bond 07-15-17 .................................................... 9.250 AAA 1,000 1,222,020
Landeskreditbank Baden - Wurttemberg,
Sub Note 02-01-23 ...................................................... 7.625 AAA 1,300 1,349,842
Midland American Capital Corp.,
Gtd Note 11-15-03 ...................................................... 12.750 A 1,650 1,894,134
National Westminster Bank PLC - New York Branch,
Sub Note 05-01-01 ...................................................... 9.450 AA- 1,200 1,346,952
Scotland International Finance No. 2 B.V.,
Sub Gtd Note 01-27-04, (R) ............................................. 8.800 A+ 2,000 2,212,760
Sub Gtd Note 11-01-06, (R) ............................................. 8.850 A+ 750 850,816
Security Pacific Corp.,
Medium Term Sub Note 05-09-01 .......................................... 10.360 A- 1,750 2,030,280
Sub Note 11-15-00 ...................................................... 11.500 A- 1,000 1,187,320
Toronto Dominion Bank - New York Branch,
Sub Note 01-15-09 ...................................................... 6.450 AA- 500 473,550
Westdeutsche Landesbank Girozentrale - New York Branch,
Sub Note 06-15-05 ...................................................... 6.750 AA+ 500 497,015
-----------
23,372,594
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
================================================================================
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 (7.91%)
Cablevision Systems Corp.,
Sr Sub Deb 04-01-04 .................................................... 10.750% B $1,000 $ 1,055,000
Century Communications Corp.,
Sr Sub Deb 10-15-03 .................................................... 11.875 B+ 1,250 1,337,500
Chancellor Broadcasting Co.,
Sr Sub Note 10-01-04 ................................................... 9.375 B- 450 432,000
Comcast Corp.,
Sr Sub Deb 05-15-05 .................................................... 9.375 B+ 250 252,500
Continental Cablevision, Inc.,
Sr Note 05-15-06, (R) .................................................. 8.300 BB+ 625 645,311
Sr Sub Deb 06-01-07 .................................................... 11.000 BB- 1,210 1,379,400
Jones Intercable, Inc.,
Sr Note 03-15-02 ....................................................... 9.625 BB 300 310,500
Sr Sub Deb 07-15-04 .................................................... 11.500 B+ 1,000 1,107,500
Le Groupe Videotron Ltee,
Sr Note 02-15-05 ....................................................... 10.625 BB+ 250 262,500
Rogers Cablesystems Ltd.,
Sr Sec Second Priority Note 03-15-05 ................................... 10.000 BB+ 750 780,000
Sr Sub Deb 12-01-15 .................................................... 11.000 BB- 250 267,500
TeleWest PLC,
Sr Deb 10-01-06 ........................................................ 9.625 BB 450 448,875
TKR Cable I, Inc.,
Sr Deb 10-30-07 ........................................................ 10.500 BBB- 2,000 2,265,840
Turner Broadcasting Systems, Inc.,
Sr Note 07-01-13 ....................................................... 8.375 BB+ 350 349,300
Viacom Inc.,
Sr Deb 01-15-16 ........................................................ 7.625 BB+ 650 599,547
Sub Deb 07-07-06 ....................................................... 8.000 BB+ 1,000 947,500
Young Broadcasting, Corp.,
Sr Sub Note 01-15-06, (R) .............................................. 9.000 B 250 233,750
-----------
12,674,523
-----------
Containers (0.50%)
Riverwood International Corp.,
Sr Sub Note 04-01-08 ................................................... 10.875 B 800 798,000
-----------
Cosmetics & Toiletries (0.45%)
Johnson & Johnson,
Deb 11-15-23 ........................................................... 6.730 AAA 750 713,152
-----------
Finance (7.03%)
Banc One Credit Card Master Trust,
Class A Asset Backed Ctf Ser 1994-B 12-15-99 ........................... 7.550 AAA 1,000 1,024,370
CIT Group Holdings, Inc. (The),
Medium Term Sr Sub Cap Note 03-15-01 ................................... 9.250 A 1,000 1,108,720
Goldman Sachs Group, L.P. (The),
Note 02-15-06, (R) ..................................................... 6.750 A+ 500 491,875
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
================================================================================
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>
Finance (continued)
Great Western Financial Corp.,
Note 02-01-02 .......................................................... 8.600% BBB+ $1,250 $ 1,348,413
Greentree Financial Corp.,
Ctf Home Improv Ln Ser 1995-D CI M-2 09-15-25 .......................... 6.950 AAA 650 647,764
MBNA Master Credit Card Trust,
Ser 1995-D Asset Backed Ctf 06-15-00 ................................... 6.050 AAA 1,585 1,568,643
Merrill Lynch Mortgage Investors, Inc.,
Sr/Sub Pass Thru Ctf Ser 1992, Class B (Sub) 04-15-12 .................. 8.500 AA 442 451,694
Santander Financial Issuances Ltd.,
Sub Gtd Note 04-15-05 .................................................. 7.875 A+ 1,000 1,055,320
Standard Credit Card Master Trust I,
Class A Credit Card Part Ctf Ser 1993-2 10-07-04 ....................... 5.950 AAA 1,335 1,271,160
Class A Credit Card Part Ctf Ser 1994-2 04-07-08 ....................... 7.250 AAA 1,000 1,022,810
Class A Credit Card Part Ctf Ser 1995-2 01-07-00 ....................... 8.625 AAA 1,250 1,275,000
-----------
11,265,769
-----------
Glass Products (0.51%)
Owens-Illinois, Inc.,
Sr Deb 12-01-03 ........................................................ 11.000 BB 750 822,188
-----------
Gold Mining & Processing (1.19%)
Magma Copper Co.,
Sr Sub Note 12-15-01 ................................................... 12.000 BB+ 1,755 1,915,302
-----------
Governmental - Foreign (2.13%)
Brazil, Republic of,
Disc Bond Z-L 04-15-24 ................................................. 4.250 B+ 250 127,187
Nova Scotia, Province of,
Deb 04-01-22 ........................................................... 8.750 A- 750 840,593
Ontario, Province of,
Bond 06-04-02 .......................................................... 7.750 AA- 500 527,335
Deb 05-01-11 ........................................................... 15.125 AA- 325 345,862
Deb 08-31-12 ........................................................... 15.250 AA- 350 411,260
Quebec, Province of,
Deb 10-01-13 ........................................................... 13.000 A+ 500 592,335
Saskatchewan, Province of,
Deb 12-15-20 ........................................................... 9.375 BBB+ 480 573,701
-----------
3,418,273
-----------
Governmental - U.S. (16.95%)
United States Treasury,
Bond 08-15-17 .......................................................... 8.875 AAA 3,930 4,811,185
Bond 05-15-18 .......................................................... 9.125 AAA 3,250 4,078,230
Bond 02-15-23 .......................................................... 7.125 AAA 4,065 4,191,381
Note 04-15-98 .......................................................... 7.875 AAA 1,000 1,039,060
Note 05-15-98 .......................................................... 9.000 AAA 5,560 5,906,610
Note 11-30-99 .......................................................... 7.750 AAA 4,650 4,908,633
Note 05-15-01 .......................................................... 8.000 AAA 1,940 2,096,713
Note 11-15-04 .......................................................... 7.875 AAA 130 142,614
-----------
27,174,426
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
================================================================================
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>
Governmental - U.S. Agencies (12.25%)
Federal National Mortgage Association,
15 Yr SF Pass thru Ctf 02-01-08 ........................................ 7.500% AAA $ 677 $ 687,255
15 Yr SF Pass thru Ctf 01-25-05 ........................................ 8.000 AAA 1,000 1,038,750
30 Yr SF Pass thru Ctf 10-01-23 ........................................ 7.000 AAA 874 851,649
Financing Corp.,
Bond Ser B 04-06-18 .................................................... 9.800 AAA 1,900 2,448,625
Government National Mortgage Association,
30 Yr SF Pass thru Ctf 11-15-23 ........................................ 7.000 AAA 710 692,468
30 Yr SF Pass thru Ctf 02-15-24 To 02-15-26 ............................ 7.500 AAA 1,620 1,616,118
30 Yr SF Pass thru Ctf 11-15-22 To 05-15-23 ............................ 8.000 AAA 1,328 1,360,783
30 Yr SF Pass thru Ctf 01-15-23 To 12-15-24 ............................ 8.500 AAA 4,972 5,193,469
30 Yr SF Pass thru Ctf 04-15-21 ........................................ 9.000 AAA 728 776,844
30 Yr SF Pass thru Ctf 11-15-19 To 02-15-25 ............................ 9.500 AAA 1,688 1,816,548
30 Yr SF Pass thru Ctf 11-15-20 ........................................ 10.000 AAA 468 515,687
Tennessee Valley Authority,
Power Bonds 1989 Ser G 11-15-29 ........................................ 8.625 AAA 2,500 2,642,200
-----------
19,640,396
-----------
Healthcare (0.20%)
Dynacare Inc.,
Sr Note 01-15-06 ....................................................... 10.750 B+ 325 327,844
-----------
Insurance (2.67%)
Equitable Life Assurance Society of The United States (The),
Surplus Note 12-01-05, (R) ............................................. 6.950 A 550 540,375
Liberty Mutual Insurance Co.,
Surplus Note 05-04-07, (R) ............................................. 8.200 A2 1,000 1,066,210
Massachusetts Mutual Life Insurance Co.,
Surplus Note 11-15-23, (R) ............................................. 7.625 AA- 1,050 1,028,591
New York Life Insurance Co.,
Surplus Note 12-15-23, (R) ............................................. 7.500 AA 1,000 947,140
Sun Canada Financial Co.,
Sub Note 12-15-07, (R) ................................................. 6.625 AA 725 694,717
-----------
4,277,033
-----------
Leisure & Recreation (0.11%)
Mohegan Tribal Gaming Authority,
Sr Sec Note 11-15-02, (R) .............................................. 13.500 NR 150 178,500
-----------
Medical/Dental (0.45%)
Fisher Scientific International Inc.,
Note 12-15-05 .......................................................... 7.125 BBB 750 724,042
-----------
Oil & Gas (2.68%)
Ashland Oil, Inc.,
SF Deb 10-15-17 ........................................................ 11.125 BBB 1,000 1,113,130
Coastal Corp. (The),
Sr Deb 06-15-06 ........................................................ 11.750 BB+ 1,000 1,050,500
Maxus Energy Corp.,
Deb 05-01-13 ........................................................... 11.250 BB- 125 129,375
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
================================================================================
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>
Oil & Gas (continued)
Norsk Hydro, A.S.,
Deb 06-15-23 ........................................................... 7.750% A- $1,000 $ 1,024,570
TransTexas Gas Corp.,
Sr Sec Note 06-15-02 ................................................... 11.500 BB- 1,000 985,000
-----------
4,302,575
-----------
Paper (1.25%)
APP International Finance Co. B.V.,
Gtd Sec Note 10-01-05 .................................................. 11.750 BB 150 145,687
Georgia-Pacific Corp.,
Deb 02-15-18 ........................................................... 9.500 BBB- 450 470,799
Repap New Brunswick,
Sr Note 04-15-05 ....................................................... 10.625 B+ 175 168,875
S.D. Warren Co.,
Sr Sub Note 12-15-04 ................................................... 12.000 B+ 650 685,750
Stone Consolidated, Corp.,
Sr Note 12-15-00 ....................................................... 10.250 B+ 500 525,000
-----------
1,996,111
-----------
Publishing (2.74%)
News America Holdings Inc.,
Deb 08-10-18 ........................................................... 8.250 BBB 1,400 1,412,488
Sr Note 10-15-99 ....................................................... 9.125 BBB 1,000 1,079,560
Sr Note 12-15-01 ....................................................... 12.000 BBB 750 824,063
Time Warner Inc.,
Deb 01-15-13 ........................................................... 9.125 BBB- 1,000 1,080,930
-----------
4,397,041
-----------
Retail (2.08%)
Kroger Co. (The),
Lease Ctf 02-01-09 ..................................................... 12.950 BB 1,910 2,101,000
May Department Stores Co.(The),
Deb 06-15-18 ........................................................... 10.750 A 126 134,336
Safeway Stores, Inc.,
Lease Ctf 01-15-09 ..................................................... 13.500 BBB- 474 521,767
Thrifty Payless Inc.,
Sr Note 04-15-03 ....................................................... 11.750 B 500 575,000
-----------
3,332,103
-----------
Steel (0.92%)
UCAR Global Enterprises Inc.,
Sr Sub Note 01-15-05 .................................................... 12.000 B+ 405 465,750
Weirton Steel Corp.,
Sr Note 03-01-98 ........................................................ 11.500 B 300 310,500
Sr Note 10-15-99 ........................................................ 10.875 B 310 316,975
Sr Note 06-01-05 ........................................................ 10.750 B 400 380,000
-----------
1,473,225
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
================================================================================
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>
Telecommunications (0.34%)
360 Degree Communications Co.,
Sr Note 03-01-03 ....................................................... 7.125% BBB- $ 550 $ 538,312
-----------
Tobacco (0.64%)
RJR Nabisco, Inc.,
Note 12-01-02 .......................................................... 8.625 BBB- 900 894,240
Note 09-15-03 .......................................................... 7.625 BBB- 150 139,387
-----------
1,033,627
-----------
Transportation (5.03%)
Delta Air Lines, Inc.,
Equip TR Ctf Ser A, 06-01-08 ........................................... 10.000 BB+ 2,000 2,356,660
NWA Inc.,
Note 08-01-96 .......................................................... 8.625 B 2,285 2,285,000
Rail Car Trust No. 1992-1,
Trust Note 06-01-04 .................................................... 7.750 AAA 1,677 1,759,705
Scandinavian Airlines System,
Bond 07-20-99 .......................................................... 9.125 A3 700 754,250
USAir 1990-A Pass Through Trusts,
Pass Thru Ctf Ser 1990-A1 03-19-05 ..................................... 11.200 B+ 903 907,107
-----------
8,062,722
-----------
Utilities (13.69%)
BVPS II Funding Corp.,
Collateralized Lease Bond 12-01-07 ..................................... 8.330 BB+ 850 821,874
CE Casecnan Water & Energy Co., Inc.,
Sr Sec Note Ser A 11-15-05, (R) ........................................ 11.450 BB 500 496,250
Cleveland Electric Illuminating Co.,
1st Mtg Ser 2005-B 05-15-05 ............................................ 9.500 BB 1,250 1,259,125
CTC Mansfield Funding Corp.,
Sec Lease Oblig 09-30-16 ............................................... 11.125 B+ 1,900 1,979,762
E.I.P. Refunding Corp.,
Sec Fac Bond 10-01-12 .................................................. 10.250 B+ 738 782,487
First PV Funding Corp.,
Lease Oblig Ser 1986 A 01-15-14 ........................................ 10.300 B+ 300 315,000
Lease Oblig Ser 1986 B 01-15-16 ........................................ 10.150 B+ 1,500 1,567,500
Fitchburg Holding Corp.,
Sec Note 01-31-03, (r) ................................................. 15.750 BBB 2,225 2,408,372
GG1B Funding Corp.,
Sec Lease Oblig 01-15-11 ............................................... 7.430 BBB- 887 839,819
GTE Corp.,
Deb 11-15-17 ........................................................... 10.300 BBB+ 500 553,395
Deb 11-01-20 ........................................................... 10.250 BBB+ 1,500 1,731,465
Hydro-Quebec (Gtd by Province of Quebec),
Deb 02-01-03 ........................................................... 7.375 A+ 750 767,708
Deb Ser HS 02-01-21 .................................................... 9.400 A+ 750 879,323
Iberdrola International B.V.,
Gtd Note 10-01-02 ...................................................... 7.500 AA- 1,000 1,045,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
================================================================================
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)
Long Island Lighting Co.,
Deb 03-15-03 ........................................................... 7.050% BB+ $ 750 $ 708,098
Gen Ref Mtg 05-01-21 ................................................... 9.750 BBB- 250 256,760
Gen Ref Mtg 07-01-24 ................................................... 9.625 BBB- 750 764,558
Louisiana Power & Light Co.,
Sec Lease Oblig Bond Ser B 01-02-17 .................................... 10.670 BBB- 1,350 1,451,952
Midland Funding Corp. I,
Sr Sec Lease Oblig Ser C 07-23-02 ...................................... 10.330 BB- 1,281 1,349,543
Midland Funding Corp. II,
Deb 07-23-05 ........................................................... 11.750 B- 175 184,693
Phillipine Long Distance Telephone Co.,
Note 08-01-05 .......................................................... 9.875 BB 255 263,925
System Energy Resources, Inc.,
Sec Lease Oblig 01-15-14 ............................................... 8.200 BBB- 500 468,502
Tenaga Nasional Berhad,
Note 06-15-04, (R) ..................................................... 7.875 A+ 1,000 1,052,680
-----------
21,947,791
-----------
TOTAL PUBLICLY TRADED BONDS AND DIRECT PLACEMENT SECURITY
(Cost $151,752,013) (96.66%) 154,964,699
----- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
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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 (0.45%)
Investment in a joint repurchase agreement transaction
with Lehman Brothers, Inc., Dated 03-29-96, due 04-01-96
(secured by U.S. Treasury Bonds, 7.250% thru 8.875%,
due 05-15-16 thru 08-15-19, and U.S. Treasury Note, 6.500%
due 05-15-97) - Note A ........................................ 5.450% $ 710 $ 710,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.75% ............................................ 4.75 535
------------
TOTAL SHORT-TERM INVESTMENTS (0.45%) 710,535
------ ------------
TOTAL INVESTMENTS (97.11%) $155,675,234
====== ============
</TABLE>
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 registration 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>
<CAPTION>
MARKET MARKET
VALUE AS A VALUE
PERCENTAGE AS OF
ACQUISITION ACQUISITION OF FUND'S MARCH 31,
DATE COST NET ASSETS 1996
---- ---- ---------- ----
<S> <C> <C> <C> <C>
Fitchburg Holdings Corp., Sec. Note, 15.75%, 01-31-03........... 02-10-81 $2,293,925 1.51% $2,408,372
</TABLE>
(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.
Rule144A securities amounted to $12,619,406 as of March 31, 1996. See Note
A of the Notes to Financial Statements for valuation policy.
* Credit ratings 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.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
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Notes to Financial Statements
John Hancock Funds - Investors Trust
(UNAUDITED)
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 $744,673 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 $158,569 attributable to security
transactions occurring after October 31, 1995 are treated as arising on the
first day (January 1, 1996) of the Fund's next taxable year.
DIVIDENDS, INTEREST AND DISTRIBUTIONS 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.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporates estimates made by
management in determining the reported amounts of assets, liabilities, revenues,
and expenses of the Fund.
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 contract being traded.
Each day, the futures contract is valued at the official settlement price of the
board of trade or U.S. commodities 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
14
<PAGE>
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Notes to Financial Statements
John Hancock Funds - Investors Trust
timing of the Fund's gains and/or losses can be affected as a result of futures
transactions.
At March 31, 1996, open positions in financial futures contracts were as
follows:
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
- ---------- -------------- -------- ------------
JUNE, 1996 38 U.S. TREASURY NOTE SHORT $18,031
=======
At March 31, 1996, the Fund has deposited in a segregated account $30,000
par value of U.S. Treasury Bond, 9.125%, 05-15-18 and $25,000 par value of U.S.
Treasury Bond, 10.75%, 08-15-05, to cover margin requirements on open financial
futures contracts.
NOTE B --
MANAGEMENT FEE AND
ADMINISTRATIVE SERVICES
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.
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. 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. Effective
with the fees paid for 1995, the unaffiliated Trustees may elect to defer for
tax purposes their receipt of this compensation under the John Hancock Group of
Funds Deferred Compensation Plan. The Fund will make investments in other John
Hancock Funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation liability
will be recorded on the Fund's books as an other asset. The deferred
compensation liability and the investment to cover the liability are marked to
market on a periodic basis to reflect income earned by the investment and income
earned by the investment is recorded on the Fund's books. At March 31, 1996, the
Fund's deferred compensation had an unrealized appreciation of $572.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligation of the
U.S. government and its agencies and short-term securities, during the period
ended March 31, 1996 aggregated $12,319,457 and $13,979,948, respectively.
Purchases and proceeds from sales of obligations of the U.S. government and its
agencies aggregated $31,469,234 and $27,987,241, respectively.
The cost of investments owned at March 31, 1996 (excluding the corporate
savings account) for Federal income tax purposes was $152,687,227. Gross
unrealized appreciation and depreciation of investments at March 31, 1996
aggregated $5,073,726 and $2,086,254, respectively, resulting in net unrealized
appreciation of $2,987,472.
15
<PAGE>
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Notes to Financial Statements
John Hancock Funds - Investors Trust
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 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
16
<PAGE>
================================================================================
Notes to Financial Statements
John Hancock Funds - Investors Trust
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 prices 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.
17
<PAGE>
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Notes
John Hancock Funds -- Investors Trust
18
<PAGE>
================================================================================
Notes
John Hancock Funds -- Investors Trust
19
<PAGE>
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[A 1/2" by 1/2" John Hancock Funds logo in upper right 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."]
John Hancock Funds
A Global Investment Management Firm
101 Huntington Avenue, Boston MA 02199-7603
Bulk Rate
U.S. Postage
PAID
S. Hackensack NJ
Permit No. 750
A recycled logo in lower left hand corner with the caption "Printed on Recycled
Paper."
P50Q1 3/96
5/96
