ANNUAL REPORT
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[GRAPHIC OMITTED]
Investors
Trust
DECEMBER 31, 1998
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
--------------------------------
TRUSTEES
EDWARD J. BOUDREAU, JR.
DENNIS S. ARONOWITZ*
RICHARD P. CHAPMAN, JR.*
WILLIAM J. COSGROVE
DOUGLAS M. COSTLE
LELAND O. ERDAHL
RICHARD A. FARRELL
GAIL D. FOSLER
WILLIAM F. GLAVIN
ANNE C. HODSDON
DR. JOHN A. MOORE
PATTI MCGILL PETERSON
JOHN W. PRATT*
RICHARD S. SCIPIONE
*Members of the Audit Committee
OFFICERS
EDWARD J. BOUDREAU, JR.
Chairman and Chief Executive Officer
ANNE C. HODSDON
President, Chief Operating Officer
and Chief Investment Officer
OSBERT M. HOOD
Senior Vice President and
Chief Financial Officer
SUSAN S. NEWTON
Vice President and Secretary
JAMES J. STOKOWSKI
Vice President and Treasurer
THOMAS H. CONNORS
Vice President and Compliance Officer
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
TRANSFER AGENT AND REGISTRAR
STATE STREET BANK & 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 LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109-1803
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116-5072
LISTED NEW YORK STOCK EXCHANGE SYMBOL: JHI
FOR SHAREHOLDER ASSISTANCE
REFER TO PAGE 26
--------------------------------
===============================CHAIRMAN'S MESSAGE===============================
DEAR FELLOW SHAREHOLDERS:
Nineteen ninety-eight was a year that gave even veteran financial market
investors pause -- and not a little heartburn. The stock market produced a
record fourth straight year of double-digit returns, but volatility was
breathtaking along the way. With the exception of the U.S. Treasury market, even
bonds -- considered a safer alternative to stocks -- went on a roller coaster
ride.
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[A 1 1/4" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to second paragraph.]
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One lesson came through loud and clear this year: sticking out the tough
times paid off. After reaching new highs in mid-July, stocks plunged in August
in one of their worst sell-offs in years. The average U.S. diversified-equity
mutual fund fell 16.8% in the month of August alone. For many mutual fund
investors, it was the largest one-month loss they had ever experienced, since
the average equity fund had only had three such double-digit monthly losses in
the previous 20 years, most recently in October 1987. This year, in a dramatic
reversal of fortune, the market staged a stunning rebound in the fourth quarter.
The average U.S. diversified-equity fund made up all its August lost ground and
then some, returning 18.8% between October and December. The result for the
year: an average 14.52% return, as calculated by Lipper Analytical Services,
Inc.
Given the dramatic swings, investors who tried to time the market's ups and
downs encountered a sharp whipsaw. We are very encouraged to report that an
overwhelming majority of mutual fund investors sat tight during this summer of
discontent; some even used the market's drop to pick up bargains. It was a clear
sign that long-term investors are willing to accept the reality of shorter-term
volatility.
As we begin 1999, volatility remains on many investors' minds. But at this
time of year, many investors' thoughts also turn to more taxing matters. In our
view, now is a perfect time to focus on how much of your hard-earned money you
are able to keep. Part of a good tax-planning strategy should involve a review
of your portfolio to ensure that you are taking advantage of all available ways
to minimize and defer your tax payments -- in an effort to maximize investment
returns.
We encourage you to work with your investment professional to consider the
various options. These include focusing on tax-exempt funds, contributing the
maximum to retirement plans, establishing or adding to IRAs and funding a
variable annuity. After all, while it's every American's responsibility to pay
taxes, there's no reason to pay more than your fair share. Sincerely,
/s/ Edward J. Boudreau Jr.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
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BY JAMES K. HO, CFA, PORTFOLIO MANAGER
John Hancock
Investors Trust
Markets gyrated wildly, but Fund still posted respectable gains
Over the course of 1998, stock and bond markets worldwide experienced firsthand
the power of the people. The Fund's fiscal year began last January on the heels
of Asia's currency debacle, which served to put investors on edge for the
remainder of the period and in the driver's seat when it came to global market
performance. With each new wave of political unrest and financial upheaval,
investors sent stock and bond prices reeling. This proved to be most frustrating
for many money managers, as the underlying fundamentals of the U.S. economy and
corporate America were strong.
Some of the year's more notable catalysts of investor concern included the
rioting in Indonesia, Japan's ongoing banking crisis, Brazil's deepening fiscal
woes and the once-unthinkable default of a nation --Russia--on its sovereign
debt. The widely publicized bailout of several large, highly leveraged hedge
funds served to further heighten the panic. By the final quarter of 1998,
however, relative stability seemed to have returned to the markets. Investors
responded favorably to the Federal Reserve Board's three successive interest
rate cuts, reassured once again that the Fed was committed to maintaining
liquidity in the global marketplace.
Throughout the turbulent year, we held steady in our pursuit of high monthly
income in a prudent manner, balancing defensive strategies with timely maneuvers
among fixed-income sectors. Our efforts proved fruitful. For the 12 months ended
December 31, 1998, John Hancock Investors Trust produced a total return of 7.67%
at net asset value. This compared with the 7.47% return of the average open-end
corporate debt A-rated fund, according to Lipper Analytical Services, Inc.
"...we held steady in our pursuit of high monthly income..."
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[A 3 1/2" x 2" photo at bottom right side of page of John Hancock Investors
Trust. Caption below reads "Fund management team members (l-r): "Ben Matthews,
Lee Crockett, Jim Ho, Tony Goodchild and Beverly Cleathero."]
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Fund management team members (l - r): Ben Matthews, Lee Crockett, Jim Ho, Tony
Goodchild and Beverly Cleathero
3
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John Hancock Funds - Investors Trust
"...we became more defensive..."
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[Table at top left hand column entitled "Top Five Bond Sectors." The first
listing is U.S. Government & Agencies 30%, the second is Banks & Financials 23%,
the third Utilities 12%, the fourth Media 6% and the fifth Transportation 6%. A
note below the table reads "As a percentage of net assets on December 31,
1998."]
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U.S. Treasury market was king
One major beneficiary of the year's volatility was the U.S. Treasury market.
Long regarded by investors worldwide as the safest investment haven,
government-guaranteed U.S. Treasury securities experienced an impressive rally
as investors became increasingly risk-averse. The yield on the bellwether
30-year bond ended the period at 5.09% -- the lowest it has been in roughly
three decades. High-quality corporate bonds, high-yield debt and emerging-market
issues experienced severe routs during the summer months as investors stampeded
out of these markets on fears of a global recession and slowing U.S. economy.
Emerging-market bonds suffered the brunt of the volatility, while high-yield and
investment-grade corporate bond prices retreated to levels last experienced in
the 1989-90 recession. The supply of new corporate issues ground to a halt and
demand for existing bonds vanished, creating an illiquid environment. Other
sectors that also came under pressure included mortgage-backed and asset-backed
securities.
Strategies that worked
The Fund entered fiscal 1998 with a duration stance that was relatively neutral
compared to its benchmark, the Lehman Brothers Government/Corporate Bond Index.
We kept it that way throughout the period. Duration is a measure of a fund's
sensitivity to interest rate fluctuations. The longer the duration, the more
dramatic the price swings when interest rates change. We achieved this by
"bulleting," or clustering, the Fund's assets in intermediate-term government
securities in the middle part of the yield curve. This type of structure
historically works well when the difference between short- and long-term
Treasury securities widens, an occurrence known as a steepening yield curve.
Throughout the first half of the year, however, this approach may have seemed a
bit premature as the yield curve continued to flatten. But we held steady,
confident that our positioning would be rewarded, and, indeed, it was. As the
summer progressed, concerns arose about corporate profitability and the extent
of the economic fallout from international turmoil. The market then began to
anticipate intervention by the Fed via interest rate cuts and the yield curve
steepened a bit.
Shortly into the fiscal period, we became more defensive in managing the
Fund. We upgraded our credit exposure within the corporate sector and stayed
away from cyclical issues such as paper, steel, oil, gas and capital goods. We
also steered clear of most emerging-market debt.
Early in the summer months, we cut back the Fund's exposure to high-yield and
investment-grade corporate bonds, redeploying assets into Treasury securities.
The Fund's timely increase in
- --------------------------------------------------------------------------------
[Table at bottom of left hand column entitled "Scorecard". The header for the
left column is "Investment" and the header for the right column is "Recent
Performance...and What's Behind the Numbers". The first listing is Niagara
Mohawk Power Corp. followed by an up arrow with the phrase "Restructuring story;
credit upgrade potential." The second listing is Tenet Healthcare followed by an
up arrow with the phrase "Solid fundamentals." The third listing is CE Casecnan
Water & Energy followed by a down arrow with the phrase "Hurt by emerging-market
rout." A note below the table reads "See `Schedule of Investments.' Investment
holdings are subject to change."]
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See "Schedule of Investments." Investment holdings are subject to change.
4
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John Hancock Funds - Investors Trust
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[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the year ended December 31, 1998." The chart
is scaled in increments of 2% with 0% at the bottom and 8% at the top. The first
bar represents the 7.67% Total return for John Hancock Investors Trust. The
second bar represents the 7.47% total return for Average open-end corporate debt
A-rated fund. A note below the chart reads "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, Inc.]
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these issues helped the portfolio weather one of the most difficult periods for
fixed-income securities in a long time, when valuations in the corporate arena
became historically attractive. By mid-fall, markets calmed down and liquidity
had begun to return, so bonds began to recover some lost ground. Higher-quality
companies were able to bring new issues to the market at extraordinarily cheap
prices. We started to trim back the Fund's Treasury exposure and take advantage
of the opportunity to add several high-grade names to the Fund, including
Associates Corp. of North America, IBM, Merrill Lynch Mortgage Investors and
Seagram & Sons. We continued to do so, quite aggressively, through December.
Throughout the period, we favored industries that either exhibit strong
growth characteristics for any environment, such as telecommunications and
media, or those that enjoy steady demand through all market cycles, such as
utilities and health care. Several holdings that are positioned to perform well
include Tenet Healthcare, Niagara Mohawk Power Corp., Time Warner and News
America Holdings.
As the year progressed, we also chose to increase the Fund's mortgage-backed
and asset-backed allocations. This, however, proved to hinder, rather than help,
the portfolio's performance as these securities experienced downward pressure
along with corporate issues in the summer and fall. The portfolio continues to
hold these securities going into fiscal 1999 because their yield levels are
attractive and we believe they remain worthwhile to own.
What we see ahead
As we enter fiscal 1999, we are cautiously optimistic about the prospects for
corporate issues. All of the fundamental factors that tend to contribute to
solid performance are still in place: inflation is dormant, interest rates are
low, the economy is healthy and corporate profitability is still solid. We are,
however, on our guard about the international situation, monitoring events
closely to determine if there are any signs pointing toward further worldwide
economic slowing. We are selectively looking at opportunities to shorten the
Fund's duration slightly, aware of the possibility that further volatility may
exist. We are confident the Fund is well positioned for any surprises that may
lie ahead.
"We are, however,on our guard about the international situation..."
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This commentary reflects the views of the portfolio manager through the end of
the Fund's period discussed in this report. Of course, the manager's views are
subject to change as market and other conditions warrant.
5
<PAGE>
==============================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, 1998. You'll
also find the net asset value per share as of that date.
Statement of Assets and Liabilities
December 31, 1998
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Assets:
Investments at value - Note C:
Publicly traded bonds and direct placement
security (cost - $155,060,936) ......................... $162,957,895
Preferred stocks and warrants (cost - $1,254,779) ........ 1,237,812
Joint repurchase agreement (cost - $802,000) ............. 802,000
Corporate savings account ................................ 854
-------------
164,998,561
Receivable for investments sold ........................... 3,119,946
Interest receivable ....................................... 2,698,486
Dividend receivable ....................................... 14,409
Other assets .............................................. 9,897
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Total Assets ............................ 170,841,299
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Liabilities:
Payable for investments purchased ......................... 975,872
Payable for futures variation margin - Note A ............. 125
Payable to John Hancock Advisers, Inc. ....................
and affiliates - Note B .................................. 274,264
Accounts payable and accrued expenses ..................... 95,563
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Total Liabilities ....................... 1,345,824
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Net Assets:
Capital paid-in .......................................... 162,581,679
Accumulated net realized loss on investments
and financial futures contracts ........................ (1,017,463)
Net unrealized appreciation of investments and
financial futures contracts ............................ 7,881,324
Undistributed net investment income ...................... 49,935
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Net Assets .............................. $169,495,475
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Net Asset Value Per Share:
(Based on 7,782,963 shares of beneficial
interest outstanding - 20 million shares
authorized with no par value) ............................ $21.78
============================================================================
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
Year ended December 31, 1998
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Investment Income:
Interest .................................................. $12,981,321
Dividends ................................................. 130,134
------------
13,111,455
------------
Expenses:
Investment management fee - Note B ....................... 1,047,718
Transfer agent fee - Note B .............................. 118,474
Custodian fee ............................................ 74,761
Printing ................................................. 47,780
Auditing fee ............................................. 34,346
Financial services fee - Note B .......................... 27,165
New York Stock Exchange fee .............................. 16,507
Trustees' fees ........................................... 10,408
Miscellaneous ............................................ 7,804
Legal fees ............................................... 1,307
------------
Total Expenses .......................... 1,386,270
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Net Investment Income ................... 11,725,185
-----------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Financial Futures Contracts:
Net realized gain on investments sold ..................... 10,225
Net realized gain on financial futures contracts .......... 9,687
Change in net unrealized appreciation/depreciation
of investments ........................................... 632,986
Change in net unrealized appreciation/depreciation
of financial futures contracts ........................... (1,500)
------------
Net Realized and Unrealized
Gain on Investments and
Financial Futures Contracts ............. 651,398
-----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ............... $12,376,583
===========================================================
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
Statement of Changes in Net Assets
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<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998
------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ........................................................................ $12,239,004 $11,725,185
Net realized gain on investments sold and financial futures contracts ........................ 550,081 19,912
Change in net unrealized appreciation/depreciation of investments and financial
futures contracts .......................................................................... 3,078,641 631,486
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Net Increase in Net Assets Resulting from Operations ....................................... 15,867,726 12,376,583
------------- -------------
Distributions to Shareholders:
Dividends from net investment income ($1.5900 and $1.5150 per share, respectively) ........... (12,196,800) (11,728,676)
------------- -------------
From Fund Share Transactions - Net: *
Market value of shares issued in reinvestment of distributions ............................... 1,164,073 1,789,588
------------- -------------
Net Assets:
Beginning of period .......................................................................... 162,222,981 167,057,980
------------- -------------
End of period (including undistributed net investment income
of $53,322 and $49,935, respectively) ..................................................... $167,057,980 $169,495,475
============= =============
* Analysis of Fund Share Transactions:
Shares outstanding, beginning of period ...................................................... 7,642,129 7,699,521
Shares issued to shareholders in reinvestment of distributions ............................... 57,392 83,442
------------- -------------
Shares outstanding, end of period ............................................................ 7,699,521 7,782,963
============= =============
</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 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.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
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<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ................... $22.15 $19.78 $21.95 $21.23 $21.70
--------- --------- --------- --------- ---------
Net Investment Income .................................. 1.68 1.68 1.63 1.59 1.52
Net Realized and Unrealized Gain (Loss)
on Investments and Financial Futures Contracts ....... (2.34) 2.17 (0.72) 0.47 0.08
--------- --------- --------- --------- ---------
Total from Investment Operations ..................... (0.66) 3.85 0.91 2.06 1.60
--------- --------- --------- --------- ---------
Less Distributions:
Dividends from Net Investment Income ................... (1.68) (1.68) (1.63) (1.59) (1.52)
Distributions from Net Realized Gain on Investments Sold
and Financial Futures Contracts ...................... (0.03) -- -- -- --
--------- --------- --------- --------- ---------
Total Distributions .................................. (1.71) (1.68) (1.63) (1.59) (1.52)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ......................... $19.78 $21.95 $21.23 $21.70 $21.78
========= ========= ========= ========= =========
Per Share Market Value, End of Period .................. $17.875 $20.500 $19.500 $22.063 $21.938
Total Investment Return at Market Value(1) ............. (12.92%) 24.33% 3.13% 22.12% 6.66%
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ............... $147,916 $165,974 $162,223 $167,058 $169,495
Ratio of Expenses to Average Net Assets ................ 0.88% 0.85% 0.85% 0.84% 0.82%
Ratio of Net Investment Income to Average Net Assets ... 8.11% 7.93% 7.65% 7.44% 6.92%
Portfolio Turnover Rate ................................ 82% 102% 118% 141% 239%
</TABLE>
(1) Assumes dividend reinvestment.
The Financial Highlights summarizes the impact of the following factors on a
single share for each period indicated: net investment income, gains (losses),
distributions 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.
8
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
Schedule of Investments
December 31, 1998
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The Schedule of Investments is a complete list of all securities owned by
Investors Trust on December 31, 1998. It's divided into three main categories:
publicly traded bonds and direct placement security, preferred stocks and
warrants, 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.
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
PUBLICLY TRADED BONDS AND DIRECT PLACEMENT SECURITY
Aerospace (0.41%)
Jet Equipment Trust,
Equipment Trust Cert Ser 95B2 08-15-14 (R) ................... 10.910% BBB- $550 $686,565
-----------
Automobile/Trucks (0.69%)
Chrysler Financial Co. LLC,
Medium Term Note Ser S 11-15-01 ............................. 5.690 A+ 495 497,327
ERAC USA Finance Co.,
Note 02-15-05 (R) ............................................ 6.625 BBB 690 672,750
-----------
1,170,077
-----------
Banks (10.50%)
Abbey National First Capital, B.V.,
Sub Note (United Kingdom) 10-15-04 (Y) ....................... 8.200 AA- 1,000 1,121,900
African Development Bank,
Sub Note (SupraNational) 12-15-03 (Y) ........................ 9.750 AA- 1,000 1,185,720
Banc One Corp.,
Sub Deb 10-15-26 ............................................. 7.625 A 490 560,937
Bank of New York,
Cap Security 12-01-26 (R) .................................... 7.780 A- 570 621,009
Barclays North American Capital Corp.,
Gtd Cap Note 05-15-21 ........................................ 9.750 AA- 900 1,014,957
International Bank For Reconstruction and Development,
30 Yr Bond (SupraNational) 10-15-16 (Y) ...................... 8.625 Aaa 3,800 4,943,990
National Westminster Bank PLC - New York Branch,
Sub Note 05-01-01 ............................................ 9.450 AA- 1,200 1,306,380
NationsBank Corp.,
Sub Note 02-15-08 ............................................ 6.375 A 460 477,600
NB Capital Trust IV,
Gtd Cap Security 04-15-27 .................................... 8.250 A- 320 356,931
Scotland International Finance No. 2 B.V.,
Gtd Sub Note (United Kingdom) 01-27-04 (R) (Y) ............... 8.800 A 2,000 2,275,320
Gtd Sub Note (United Kingdom) 11-01-06 (R) (Y) ............... 8.850 A+ 750 887,400
Security Pacific Corp.,
Medium Term Sub Note 05-09-01 .............................. 10.360 A 1,750 1,941,747
Sub Note 11-15-00 .......................................... 11.500 A 1,000 1,106,720
-----------
17,800,611
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
Beverages (0.29%)
Seagram (Joseph E.) & Sons, Inc.,
Sr Deb 12-15-28 .............................................. 7.600% BBB- $495 $499,950
-----------
Chemicals (0.48%)
Akzo Nobel, Inc.,
Note 11-15-03 (R) ............................................ 6.000 A 310 311,519
Monsanto Co.,
Deb 12-01-28 (R) ............................................. 6.600 A 495 496,238
-----------
807,757
-----------
Computers (0.83%)
International Business Machines Corp.,
Deb 01-15-28 ................................................. 6.500 A+ 660 692,729
PSINet, Inc.,
Sr Note 11-01-08 (R) ......................................... 11.500 B- 345 359,662
Verio, Inc.,
Sr Note 12-01-08 (R) ......................................... 11.250 B- 355 358,550
-----------
1,410,941
-----------
Cosmetics & Personal Care (0.70%)
Johnson & Johnson,
Deb 11-15-23 ................................................. 6.730 AAA 750 828,262
Revlon Consumer Products Corp.,
Sr Note 11-01-06 (R) ......................................... 9.000 B 370 366,300
-----------
1,194,562
-----------
Electronics (0.30%)
Motorola, Inc.,
Deb 11-15-28 ................................................. 6.500 AA- 495 500,445
-----------
Energy (0.90%)
CalEnergy Co., Inc.,
Sr Bond 09-15-28 ............................................. 8.480 BB+ 765 850,604
Sr Note 09-15-06 ............................................. 9.500 BB+ 435 483,998
P & L Coal Holdings Corp.,
Sr Sub Note Ser B 05-15-08 ................................... 9.625 B 180 183,150
-----------
1,517,752
-----------
Fertilizers (0.36%)
IMC Global, Inc.,
Deb 11-01-02 ................................................. 7.400 BBB 605 612,562
-----------
Finance (3.31%)
Associates Corp. of North America,
Sr Note 11-01-08 ............................................. 6.250 AA- 195 202,509
CIT Group Holdings, Inc.,
Note 10-15-01 ................................................ 5.500 A+ 600 601,626
Constitution Capital Trust I,
Gtd Cap Security 04-15-27 (R) ................................ 9.150 BBB 400 517,780
DR Investments,
Sr Note (United Kingdom) 05-15-07 (R) (Y) .................... 7.450 A 450 490,820
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
Finance (continued)
Finova Capital Corp.,
Note 11-01-02 ................................................ 6.250% A- $450 $455,625
Ford Motor Credit Co.,
Note 04-28-03 ................................................ 6.125 A 605 617,880
General Motors Acceptance Corp.,
Note 12-01-01 ................................................ 6.375 A 600 614,640
Household Finance Corp.,
Note 11-01-02 ................................................ 5.875 A 750 751,800
Marlin Water Trust & Marlin Water Capital Corp.,
Sr Sec Note 12-15-01 (R) ..................................... 7.090 BBB 600 601,800
Merrill Lynch Mortgage Investors, Inc.,
Sub Bond Ser 1992-B Class B 04-15-12 ......................... 8.500 Aaa 305 309,457
Yanacocha Receivables Master Trust,
Pass Thru Cert Ser 1997-A (Peru) 06-15-04 (R) (Y) ............ 8.400 BBB- 456 452,481
-----------
5,616,418
-----------
Food (0.11%)
Agrilink Foods, Inc.,
Sr Sub Note 11-01-08 (R) ..................................... 11.875 B 175 178,500
-----------
Government - Foreign (1.29%)
Nova Scotia, Province of,
Deb (Canada) 04-01-22 (Y) .................................... 8.750 A- 750 983,078
Ontario, Province of,
Bond (Canada) 06-04-02 (Y) ................................... 7.750 AA- 500 539,005
Saskatchewan, Province of,
Bond (Canada) 12-15-20 (Y) ................................... 9.375 A 480 662,472
-----------
2,184,555
-----------
Government - U.S. (18.47%)
United States Treasury,
Bond 08-15-17 ................................................ 8.875 Aaa 5,886 8,290,961
Bond 05-15-18 ................................................ 9.125 Aaa 3,250 4,701,320
Bond 02-15-23 ................................................ 7.125 Aaa 6,871 8,467,408
Note 05-15-01 ................................................ 8.000 Aaa 840 902,084
Note 05-15-02 ................................................ 7.500 Aaa 1,419 1,540,722
Note 08-15-03 ................................................ 5.750 Aaa 663 692,318
Note 02-15-05 ................................................ 7.500 Aaa 2,349 2,689,605
Note 07-15-06 ................................................ 7.000 Aaa 3,537 4,027,193
-----------
31,311,611
-----------
Government - U.S. Agencies (11.99%)
Federal Home Loan Mortgage Corp.,
20 Yr Pass Thru Ctf 01-01-16 ................................. 11.250 AAA 320 354,148
Federal National Mortgage Assn.,
15 Yr SF Pass Thru Ctf 01-25-05 .............................. 8.000 AAA 1,000 1,018,120
15 Yr SF Pass Thru Ctf 02-01-08 .............................. 7.500 AAA 288 295,676
15 Yr SF Pass Thru Ctf 09-01-10 .............................. 7.000 AAA 664 678,252
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
Government - U.S. Agencies (continued)
Federal National Mortgage Assn. (continued),
15 Yr SF Pass Thru Ctf 10-01-12 .............................. 7.000% AAA $167 $170,578
15 Yr SF Pass Thru Ctf 12-01-12 .............................. 6.500 AAA 1,221 1,238,288
30 Yr Pass Thru Ctf 03-01-27 ................................. 6.500 AAA 1,700 1,720,796
30 Yr Pass Thru Ctf 11-01-28 ................................. 6.500 AAA 285 286,642
30 Yr SF Pass Thru Ctf 10-01-23 .............................. 7.000 AAA 598 610,413
Pass Thru Ctf Ser 1997-M8 Class A-1 01-25-22 ................. 6.940 AAA 358 379,223
Government National Mortgage Assn.,
30 Yr SF Pass Thru Ctf 11-15-19 to 02-15-25 .................. 9.500 AAA 557 597,034
30 Yr SF Pass Thru Ctf 11-15-20 .............................. 10.000 AAA 154 167,553
30 Yr SF Pass Thru Ctf 04-15-21 .............................. 9.000 AAA 315 338,261
30 Yr SF Pass Thru Ctf 01-15-27 to 08-15-27 .................. 8.000 AAA 242 251,829
30 Yr SF Pass Thru Ctf 03-15-24 to 08-15-26 .................. 7.500 AAA 2,973 3,065,595
30 Yr SF Pass Thru Ctf 01-15-26 to 11-15-28 .................. 7.000 AAA 3,851 3,940,022
30 Yr SF Pass Thru Ctf 07-15-28 to 12-15-28 .................. 6.500 AAA 2,469 2,493,177
Tennessee Valley Authority,
Power Bonds 1989 Ser G 11-15-29 .............................. 8.625 AAA 2,500 2,718,925
-----------
20,324,532
-----------
Household (0.25%)
WestPoint Stevens, Inc.,
Sr Note 06-15-05 ............................................. 7.875 BB 410 416,150
-----------
Insurance (4.73%)
Conseco, Inc.,
Note 06-15-05 ................................................ 6.800 BBB 485 453,184
Equitable Life Assurance Society of the United States,
Surplus Note 12-01-05 (R) .................................... 6.950 A 550 583,060
Fairfax Financial Holdings, Ltd.,
Note (Canada) 04-15-26 (Y) ................................... 8.300 BBB+ 670 700,304
Liberty Mutual Insurance Co.,
Surplus Note 05-04-07 (R) .................................... 8.200 A+ 1,050 1,203,279
Surplus Note 10-15-26 (R) .................................... 7.875 A+ 415 456,836
Massachusetts Mutual Life Insurance Co.,
Surplus Note 11-15-23 (R) .................................... 7.625 AA 1,100 1,245,750
NAC Re Corp.,
Note 06-15-99 ................................................ 8.000 A- 355 358,671
New York Life Insurance Co.,
Surplus Note 12-15-23 (R) .................................... 7.500 AA- 1,500 1,593,315
Sun Canada Financial Co.,
Gtd Sub Note 12-15-07 (R) .................................... 6.625 AA 725 755,813
URC Holdings Corp.,
Sr Note 06-30-06 (R) ......................................... 7.875 A- 615 668,517
-----------
8,018,729
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
Leisure (2.17%)
Circus Circus Enterprises, Inc.,
Deb 11-15-36 ................................................. 7.000% BBB- $220 $200,972
Sr Sub Note 12-01-05.......................................... 9.250 BB+ 135 137,700
Harrah's Operating Co., Inc.,
Sr Sub Note 12-15-05 ......................................... 7.875 BB+ 240 241,200
HMH Properties, Inc.,
Sr Note Ser A 08-01-05 ....................................... 7.875 BB 495 483,862
Sr Note Ser C 12-01-08........................................ 8.450 BB 320 320,000
Mohegan Tribal Gaming Authority,
Sr Sec Note Ser B 11-15-02 ................................... 13.500 BB+ 150 180,750
SFX Entertainment, Inc.,
Sr Sub Notes 12-01-08 (R) .................................... 9.125 B- 490 487,550
Showboat Marina Casino Partnership/Finance Corp.,
1st Mtg Note Ser B 03-15-03 .................................. 13.500 BB- 500 565,000
Sun International Hotels Ltd.,
Gtd Sr Sub Note (Bahamas) 03-15-07 ........................... 9.000 B+ 225 234,000
Gtd Sr Sub Note (Bahamas) 12-15-07 (Y)........................ 8.625 B+ 250 256,250
Trump Hotels & Casino Resorts Funding, Inc./Holdings, L.P.,
Sr Note 06-15-05 ............................................. 15.500 B- 550 572,000
-----------
3,679,284
-----------
Manufacturing (0.13%)
Globe Manufacturing Corp.,
Sr Sub Note 08-01-08 (R) ..................................... 10.000 B- 245 221,725
-----------
Media (6.02%)
Adelphia Communications Corp.,
Sr Note Ser B 10-01-02 ....................................... 9.250 B+ 525 553,875
Sr Note Ser B 07-15-03 ....................................... 8.125 B 252 257,670
Century Communications Corp.,
Sr Note 08-15-00 ............................................. 9.500 BB- 275 288,062
Continental Cablevision, Inc.,
Sr Note 05-15-06 ............................................. 8.300 BBB 415 460,488
Sr Sub Deb 06-01-07 .......................................... 11.000 BBB- 1,210 1,299,661
CSC Holdings, Inc.,
Sr Note 07-15-08 ............................................. 7.250 BB+ 475 481,507
Garden State Newspapers, Inc.,
Sr Sub Note Ser B 10-01-09 ................................... 8.750 B+ 265 265,000
Le Groupe Videotron Ltee,
Sr Note (Canada) 02-15-05 (Y) ................................ 10.625 BBB- 820 887,863
News America Holdings, Inc.,
Gtd Sr Deb 08-10-18 .......................................... 8.250 BBB- 527 597,091
Rogers Cablesystems Ltd.,
Sr Note Ser B (Canada) 03-15-05 (Y) .......................... 10.000 BB+ 800 896,000
Sr Sec 2nd Priority Note (Canada) 08-01-02 (Y) ............... 9.625 BB+ 290 311,750
SFX Broadcasting, Inc.,
Sr Sub Note Ser B 05-15-06 ................................... 10.750 B- 310 344,100
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
Media (continued)
Sprint Capital Corp.,
Note 11-15-28 ................................................ 6.875% A- $490 $507,101
Time Warner, Inc.,
Deb 01-15-13 ................................................. 9.125 BBB 520 658,299
Note 06-15-05 ................................................ 7.750 BBB 325 359,463
TKR Cable I, Inc.,
Sr Deb 10-30-07 .............................................. 10.500 BBB- 1,875 2,044,031
-----------
10,211,961
-----------
Medical (1.67%)
Dynacare, Inc.,
Sr Note (Canada) 01-15-06 (Y) ................................ 10.750 B+ 260 258,700
Fresenius Medical Care Capital Trust II,
Gtd Trust Preferred Security 02-01-08 ........................ 7.875 B+ 390 386,100
Genesis Health Ventures, Inc.,
Sr Sub Note 01-15-09 (R) ..................................... 9.875 B- 220 212,300
Integrated Health Services, Inc.,
Sr Sub Deb 01-01-01 .......................................... 5.750 B- 385 338,800
Sr Sub Note 01-15-08 ......................................... 9.250 B- 208 195,520
Quest Diagnostics, Inc.,
Sr Sub Note 12-15-06 ......................................... 10.750 B+ 340 377,400
Sola International, Inc.,
Note 03-15-08 ................................................ 6.875 BBB- 410 387,954
Tenet Healthcare Corp.,
Sr Note 12-01-03 ............................................. 8.625 BB+ 315 329,963
Sr Sub Note 01-15-07 ......................................... 8.625 BB- 160 167,200
Watson Pharmaceuticals, Inc.,
Sr Note 05-15-08 ............................................. 7.125 BBB- 180 179,775
-----------
2,833,712
-----------
Metal (0.16%)
Golden Northwest Aluminum, Inc.,
1st Mtg Note 12-15-06 (R) .................................... 12.000 BB- 270 273,375
-----------
Mortgage Banking (3.69%)
ContiMortgage Home Equity Loan Trust,
Pass Thru Ctf Ser 1995-2 Class A-5 08-15-25 .................. 8.100 AAA 480 503,550
Countywide Home Loans, Inc.,
Mortgage Pass Thru Ctf Ser 1997-7 Cl A8 12-25-27 ............. 7.250 Aaa 910 927,306
Credit Suisse First Boston Mortgage Securities Corp.,
Commercial Mtg Pass Thru Ctf Ser 1998-C1 Class A
1A 12-17-07 ................................................. 6.260 AAA 624 636,225
Deutsche Mortgage & Asset Receiving Corp.,
Commercial Mtg Pass-Through Ctf Ser 1998-C1 Class C
03-15-08 .................................................... 6.861 A2 400 395,875
FirstPlus Home Loan Trust,
Pass Thru Ctf Ser 1998-4 Class A-5 01-01-01 .................. 6.380 AAA 700 690,375
GMAC Commercial Mortgage Securities, Inc.,
Pass Thru Ctf Ser 1997-C2 Class A-3 11-15-07 ................. 6.566 Aaa 680 704,650
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
Mortgage Banking (continued)
IMC Home Equity Loan Trust,
Pass Thru Ctf Ser 1996-1 Class A-5 12-25-13 .................. 6.290% AAA $720 $719,888
Nomura Asset Securities Corp.,
Pass Thru Ctf Ser 1998-D6 Class A-1A 03-17-28 ................ 6.280 AAA 470 472,390
Salomon Brothers Mortgage Securities VII, Inc.,
Mtg Pass Thru Ctf Ser 1997-HUD2 Class A-2 07-25-24 ........... 6.750 Aaa 437 441,632
UCFC Home Equity Loan Trust,
Pass Thru Ctf Ser 1996-D1 Class A6 02-15-25 .................. 7.180 AAA 730 760,341
-----------
6,252,232
-----------
Municipals (0.92%)
Atlanta, City of,
GO Ref Ser 1998 12-01-20 ..................................... 5.000 AAA 280 277,780
Harris County-Houston Sports Auth,
Sr Lien Special Rev Ser 1998A 11-15-28 ....................... 5.000 AAA 285 278,499
Massachusetts Water Resource Authority,
Gen Rev Ref Ser 1997D 08-01-24 ............................... 5.000 AAA 325 319,459
New York City Municipal Water Finance Auth,
Wtr & Swr Sys Rev Ref Ser 1997A 06-15-21 ..................... 5.125 AAA 200 200,068
San Jose Redevelopment Agency,
Tax Alloc Merged Area Redevel Proj 08-01-26 .................. 5.000 AAA 495 491,317
-----------
1,567,123
-----------
Oil & Gas (0.97%)
Camuzzi Gas Pampeana S.A.,
Bond (Argentina) 12-15-01 (Y) ................................ 9.250 BBB- 390 374,400
Occidental Petroleum Corp.,
Sr Note 11-15-08 ............................................. 7.375 BBB 325 330,850
Petroleos Mexicanos,
Gtd Sr Note (Mexico) 12-02-08 (R) (Y) ........................ 9.375 BB 200 197,000
Petroleum Geo-Services,
Sr Note (Norway) 03-30-08 (Y) ................................ 6.625 BBB 455 444,176
R&B Falcon Corp.,
Sr Note 12-15-08 (R) ......................................... 9.500 BB+ 290 289,637
-----------
1,636,063
-----------
Paper & Paper Products (0.71%)
Fort James Corp.,
Sr Note 09-15-02 ............................................. 6.500 BBB- 455 461,739
S.D. Warren Co.,
Sr Sub Note Ser B 12-15-04 ................................... 12.000 B+ 685 743,225
-----------
1,204,964
-----------
Real Estate Operations (0.18%)
Security Capital Group, Inc.,
Med Term Note Ser A 11-15-03 ................................. 7.750 BBB 310 309,969
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
Real Estate Investment Trusts (0.71%)
American Health Properties, Inc.,
Note 01-15-07 ................................................ 7.500% BBB- $390 $366,600
Liberty Property L.P.,
Med Term Note 06-05-02 ....................................... 6.600 BBB- 340 328,100
TriNet Corporate Realty Trust, Inc.,
Note 05-15-01 ................................................ 7.300 BBB- 500 502,295
-----------
1,196,995
-----------
Retail (1.34%)
Great Atlantic & Pacific Tea Co., Inc. (The),
Note 04-15-07 ................................................ 7.750 BBB- 505 507,762
Kroger Co. (The),
Sr Note 07-15-06 ............................................. 8.150 BBB- 260 290,503
May Department Stores Co. (The),
Deb 06-15-18 ................................................. 10.750 A 126 133,216
Meyer (Fred), Inc.,
Note 03-01-08 ................................................ 7.450 BB+ 525 566,464
Safeway, Inc.,
Deb 01-15-09 ................................................. 13.500 BBB 474 505,165
Note 11-15-01 ................................................ 5.875 BBB 270 270,311
-----------
2,273,421
-----------
Steel (0.06%)
Bayou Steel Corp.,
1st Mtg Note 05-15-08 ........................................ 9.500 B 105 98,700
-----------
Telecommunications (3.41%)
AXIA, Inc.,
Sr Sub Note 07-15-08 ......................................... 10.750 B- 183 185,288
Call-Net Enterprises, Inc.,
Sr Note (Canada) 08-15-08 (Y) ................................ 8.000 BB- 290 276,950
Global Crossing Holdings Ltd.,
Sr Note 05-15-08 ............................................. 9.625 B 315 333,900
GTE North, Inc.,
Deb Ser H 11-15-08 ........................................... 5.650 AA- 300 303,300
Hermes Europe Railtel BV,
Sr Note (Belgium) 01-15-09 (R) (Y) ++ ........................ 10.375 B 220 224,400
Intermedia Communications, Inc.,
Sr Note Ser B 01-15-08 ....................................... 8.500 B 60 57,000
Sr Note Ser B 06-01-08 ....................................... 8.600 B 205 195,775
IXC Communications, Inc.,
Sr Sub Note 04-15-08 ......................................... 9.000 CCC+ 280 282,100
McLeodUSA, Inc.,
Sr Note 11-01-08 (R) ......................................... 9.500 B+ 335 355,100
Metromedia Fiber Network, Inc.,
Sr Note 11-15-08 (R) ......................................... 10.000 B 360 370,800
MetroNet Communications Corp.,
Sr Note (Canada) 08-15-07 (Y) ................................ 12.000 B 260 288,600
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
Telecommunications (continued)
Nextel Communications, Inc.,
Sr Disc Note, Step Coupon (9.75%, 02-15-99) 08-15-04 ......... Zero CCC+ $615 $596,550
NEXTLINK Communications, Inc.,
Sr Note 11-15-08 (R) ......................................... 10.750% B 335 343,375
NTL, Inc.,
Sr Note 10-01-08 (R) ......................................... 11.500 B- 535 593,850
Qwest Communications International, Inc.,
Sr Note 11-01-08 (R) ......................................... 7.250 BB+ 200 204,500
WorldCom, Inc.,
Note 08-15-01 ................................................ 6.125 BBB+ 685 695,946
Worldwide Fiber, Inc.,
Sr Note (Canada) 12-15-05 (R) (Y) ............................ 12.500 B- 465 467,325
-----------
5,774,759
-----------
Textile (0.51%)
Tropical Sportswear International Corp.,
Sr Sub Note Ser A 06-15-08 ................................... 11.000 B- 330 347,325
Unifi, Inc.,
Note Ser B 02-01-08 .......................................... 6.500 A- 525 520,013
-----------
867,338
-----------
Tobacco (0.48%)
RJR Nabisco, Inc.,
Note 12-01-02 ................................................ 8.625 BBB- 445 452,102
Note 09-15-03 ................................................ 7.625 BBB- 365 355,685
-----------
807,787
-----------
Transportation (5.98%)
America West Airlines,
Pass Thru Ctf Ser B 01-02-08 ................................. 6.930 A- 470 466,478
Continental Airlines,
Pass Thru Ctf Ser 96-C 10-15-13 .............................. 9.500 BBB+ 477 529,868
Continental Airlines, Inc.,
Sr Note 12-15-05 ............................................. 8.000 BB- 430 430,000
Delta Air Lines, Inc.,
Equip Tr Ctf Ser A 06-01-08 .................................. 10.000 BBB 2,000 2,439,080
Fine Air Services, Inc.,
Sr Note 06-01-08 ............................................. 9.875 B 425 382,500
Humpuss Funding Corp.,
Gtd Note (Indonesia) 12-15-09 (R) (Y) ........................ 7.720 B3 478 318,423
Northwest Airlines, Inc.,
Note 03-15-04 ................................................ 8.375 BB 505 494,400
Northwest Airlines 1996-1 Pass Through Trusts,
Pass Thru Ctf Ser 1996-1C 01-02-05 ........................... 10.150 BBB- 294 305,296
Pass Thru Ctf Ser 1996-1D 01-02-15 ........................... 8.970 BBB- 389 419,349
NWA Trust,
Sr Note Ser A 12-21-12 ....................................... 9.250 AA 556 676,034
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
Transportation (continued)
Primark Corp.,
Sr Sub Note 12-15-08 (R) ..................................... 9.250% B+ $350 $351,750
Railcar Trust No. 1992-1,
Pass Thru Ser 1992-1 Class A 06-01-04 ........................ 7.750 AAA 1,286 1,356,140
Scandinavian Airlines System,
Deb (Sweden) 07-20-99 (Y) .................................... 9.125 A3 700 713,125
U.S. Airways, Inc.,
Pass Thru Ctf Ser 1990-A1 03-19-05 ........................... 11.200 BB 885 961,420
Wisconsin Central Transportation Corp.,
Note 04-15-08 ................................................ 6.625 BBB- 280 284,200
-----------
10,128,063
-----------
Utilities (11.42%)
AES Corp.,
Sr Sub Note 07-15-06 ......................................... 10.250 B+ 670 723,600
Sr Sub Note 08-15-07 ......................................... 8.375 B+ 390 393,900
Avon Energy Partners Holdings,
Note (United Kingdom) 03-04-08 (R) (Y) ....................... 6.460 A- 305 309,392
Beaver Valley Funding Corp.,
Sec Lease Oblig Bond 06-01-17 ................................ 9.000 BB- 565 635,625
British Telecom Finance, Inc.,
Gtd Deb (United Kingdom) 02-15-19 (Y) ........................ 9.625 AAA 1,075 1,130,696
BVPS II Funding Corp.,
Collateralized Lease Bond 06-01-17 ........................... 8.890 BB- 700 801,500
Calpine Corp.,
Sr Note 05-15-06 ............................................. 10.500 BB- 465 502,200
CE Casecnan Water & Energy Co., Inc.,
Sr Note Ser A (Philippine Islands) 11-15-05 (Y) .............. 11.450 BB+ 400 352,000
Cleveland Electric Illuminating Co.,
1st Mtg Ser B 05-15-05 ....................................... 9.500 BB+ 1,150 1,259,250
Connecticut Light & Power Co.,
1st Ref Mtg Ser C 06-01-02 ................................... 7.750 BB+ 210 217,837
Note 06-05-03 (R) ............................................ 8.590 NR 265 273,944
EIP Funding-PNM,
Sec Fac Bond 10-01-12 ........................................ 10.250 Ba2 702 855,373
Fitchburg Holding Corp.,
Sec Note 01-31-03 (r) ........................................ 15.750 BBB 1,612 1,696,146
GTE Corp.,
Deb 11-01-20 ................................................. 10.250 A 1,500 1,686,315
Hydro-Quebec,
Gtd Bond (Canada) 02-01-21 (Y) ............................... 9.400 A+ 515 701,209
Gtd Bond (Canada) 01-15-22 (Y) ............................... 8.400 A+ 330 410,507
Gtd Deb (Canada) 02-01-03 (Y) ................................ 7.375 A+ 750 798,510
Iberdrola International B.V.,
Note (Spain) 10-01-02 (Y) .................................... 7.500 AA- 1,000 1,066,840
Long Island Lighting Co.,
Deb 03-15-23 ................................................. 8.200 A- 615 682,650
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST CREDIT (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- -------- ------ --------- ------
<S> <C> <C> <C> <C>
Utilities (continued)
Midland Cogeneration Venture L.P.,
Sec Deb Ser C-91 07-23-02 .................................... 10.330% BB- $862 $913,833
Midland Funding Corp. II,
Deb Ser A 07-23-05 ........................................... 11.750 B 300 349,500
Deb Ser B 07-23-06 ........................................... 13.250 B 225 288,232
Monterrey Power S.A. de C.V.,
Sr Sec Bond (Mexico) 11-15-09 (R) (Y) ........................ 9.625 BB 145 111,650
Niagara Mohawk Power Corp.,
Sr Note Ser G 10-01-08 ....................................... 7.750 BB+ 295 315,650
North Atlantic Energy Corp.,
1st Mtg Bond 06-01-02 ........................................ 9.050 B+ 545 566,250
Northeast Utilities,
Note Ser A 12-01-06 .......................................... 8.580 B+ 110 117,045
Puget Sound Energy Capital Trust I,
Gtd Cap Security Ser B 06-01-27 .............................. 8.231 Baa2 355 377,006
System Energy Resources, Inc.,
1st Mtg 08-01-01 ............................................. 7.710 BBB- 590 614,987
U.S. West Capital Funding, Inc.,
Co Gtd 07-15-28 .............................................. 6.875 A- 495 528,625
Waterford 3 Funding Corp.,
Sec Lease Obligation Bond 01-02-17 ........................... 8.090 BBB- 635 688,435
-----------
19,368,707
-----------
TOTAL PUBLICLY TRADED BONDS AND DIRECT PLACEMENT SECURITY
(Cost $155,060,936) (96.14%) 162,957,895
------- -----------
<CAPTION>
NUMBER OF
SHARES OR
WARRANTS
-----------
<S> <C> <C>
PREFERRED STOCKS AND WARRANTS
CSC Holdings, Inc., 11.125%, Ser M, Preferred Stock............... 6,951 775,047
Global Crossing Ltd., 10.50%, Payment-in-Kind, Preferred Stock (R) 4,500 436,500
MetroNet Communications Corp., Warrant (Canada) (R) (Y)........... 510 26,265
-----------
1,237,812
-----------
TOTAL PREFERRED STOCKS AND WARRANTS
(Cost $1,254,779) (0.73%) 1,237,812
------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Investors Trust
<TABLE>
<CAPTION>
PAR VALUE
INTEREST (000s MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- -------- --------- ------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (0.48%)
Investment in a joint repurchase agreement transaction with
SBC Warburg, Inc. - Dated 12-31-98, due 01-04-99
(Secured by U.S. Treasury Bonds, 6.250% thru 9.125%
due 05-15-18 thru 08-15-23) - Note A..................................... 4.750% $802 $802,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.00%....................................................... 854
------------
TOTAL SHORT-TERM INVESTMENTS (0.48%) 802,854
-------- ------------
TOTAL INVESTMENTS (97.35%) 164,998,561
-------- ------------
OTHER ASSETS AND LIABILITIES, NET (2.65%) 4,496,914
-------- ------------
TOTAL NET ASSETS (100.00%) $169,495,475
======== ============
</TABLE>
(r) Direct placement security is restricted as to resale. The security has
been valued in accordance with procedures approved by the Trustees after
consideration of restrictions as to resale, financial condition and
prospects of the issuer, general market conditions and pertinent
information in accordance with the Fund's By-Laws and the Investment
Company Act of 1940, as amended. The Fund has limited rights to
registration under the Securities Act of 1933 with respect to the
restricted security. Additional information on the security is as follows:
<TABLE>
<CAPTION>
MARKET MARKET
VALUE AS A VALUE
PERCENTAGE AS OF
ACQUISITION ACQUISITION OF FUND'S DECEMBER 31,
ISSUER, DESCRIPTION DATE COST NET ASSETS 1998
------------------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Fitchburg Holding Corp., Sec. Note, 15.75%, 01-31-03............. 02-10-81 $1,629,778 1.00% $1,696,146
</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.
Rule 144A securities amounted to $21,852,125 or 12.89% of net assets as of
December 31, 1998.
(Y) Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer; however, security is U.S. dollar
denominated.
++ This security having an aggregate value of $224,400 or 0.13% of the Fund's
net assets, has been purchased as a forward commitment; that is, the Fund
has agreed on trade date to take delivery of and make payment for such
security on a delayed basis subsequent to the date of this schedule. The
purchase price and interest rate of such security are fixed at trade date,
although the Fund does not earn any interest on such security until
settlement date. The Fund has instructed its Custodian Bank to segregate
assets with a current value at least equal to the amount of the forward
commitment. Accordingly, the market value of $225,374 of United States
Treasury Bond, 8.875%, 08-15-17, has been segregated to cover the forward
commitment.
* Credit ratings are unaudited and rated by Standard & Poor's where
available, or Moody's Investors Service or John Hancock Advisers, Inc.
where Standard & Poor's ratings are not available.
NR = Not rated.
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.
20
<PAGE>
==========================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.
Effective June 1,1998, the Fund determines the net asset value of the shares
each business day at the close of regular trading.
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,
Inc., 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 qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is distributed to
shareholders. Therefore, no federal income tax provision is required. For
federal income tax purposes, the Fund has $279,478 of capital loss carryforward
available, to the extent provided by regulations, to offset future net realized
capital gains. To the extent such carryforward is used by the Fund, no capital
gain distributions will be made. The carryforward expires as follows: December
31, 2003 -- $275,104 and December 31, 2004 -- $4,374. Additionally, net capital
losses of $70,621 attributable to security transactions incurred after October
31, 1998 are treated as rising on the first day (January 1, 1999) of the Fund's
next taxable year.
DIVIDENDS, INTEREST AND DISTRIBUTIONS 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. Actual results could differ from these estimates.
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 The Fund may buy and sell financial futures
contracts to hedge against the effects of fluctuations in interest rates and
other market conditions. Buying futures tends to increase the Fund's exposure to
the underlying instrument. Selling futures tends to decrease the Fund's exposure
to the underlying instrument or hedge other Fund instruments. At the time the
Fund enters into a financial futures contract, it will be 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 future 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 on which it trades. 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.
21
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Investors Trust
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. In addition,
the Fund could be prevented from opening or realizing the benefits of closing
out futures positions because of position limits or limits on daily price
fluctuations imposed by an exchange.
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.
At December 31, 1998, open positions in financial futures contracts were as
follows:
UNREALIZED
EXPIRATION OPEN CONTRACT POSITION APPRECIATION
- ---------- ------------- -------- ------------
MAR 99 1 U.S. TREASURY NOTE LONG $156
====
At December 31, 1998, the Fund has deposited in a segregated account $30,000
par value of U.S. Treasury Bond, 7.125% due 02-15-23, to cover margin
requirements on open financial futures contracts.
OPTIONS Listed options are valued at the last quoted sales price on the exchange
on which they are primarily traded. Over-the-counter options are valued at the
mean between the last bid and asked prices. Upon the writing of a call or put
option, an amount equal to the premium received by the Fund is included in the
Statement of Assets and Liabilities as an asset and corresponding liability. The
amount of the liability is subsequently marked to market to reflect the current
market value of the written option.
The Fund may use options contracts to manage its exposure to the stock
market. Writing puts and buying calls tend to increase the Fund's exposure to
the underlying instrument and buying puts and writing calls tend to decrease the
Fund's exposure to the underlying instrument, or hedge other Fund investments.
The maximum exposure to loss for any purchased options will be limited to the
premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value reflects the maximum exposure of
the Fund in these contracts, but the actual exposure will be limited to the
change in value of the contract over the period the contract remains open.
Risks may also arise if counterparties do not perform under the contracts'
terms ("credit risk"), or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk"). Exchange-traded options have
minimal credit risk as the exchanges act as counterparties to each transaction
and only present liquidity risk in highly unusual market conditions. To minimize
credit risk and liquidity risks in over the counter option contracts, the Fund
will continuously monitor the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit risk
may involve amounts in excess of those reflected in the Fund's period-end
Statement of Assets and Liabilities.
There were no written option transactions for the year ended December 31,
1998.
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, exceed 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.
The Fund has an agreement with the Adviser to perform necessary tax and
financial management services for the Funds. The compensation for the year was
estimated to be at an annual rate of less than 0.02% of the average net assets
of each Fund.
22
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Investors Trust
Mr. Edward J. Boudreau, Jr., Ms. Anne C. Hodsdon and Mr. Richard S. Scipione
are trustees 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. 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 makes investments into other John Hancock funds, as
applicable, to cover its liability for the deferred compensation. Investments to
cover the Fund's deferred compensation liability are recorded on the Fund's
books as an other asset. The deferred compensation liability and the related
other asset are always equal and are marked to market on a periodic basis to
reflect any income earned by the investment as well as any unrealized gains or
losses. At December 31, 1998, the Fund's investment to cover the deferred
compensation liability had unrealized appreciation of $1,176.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies and short-term securities, during the year
ended December 31, 1998, aggregated $142,744,580 and $138,090,176, respectively.
Purchases and proceeds from sales of obligations of the U.S. government and its
agencies aggregated $248,584,138 and $253,598,223, respectively.
The cost of investments owned at December 31, 1998 (excluding the corporate
savings account) for federal income tax purposes was $157,546,336. Gross
unrealized appreciation and depreciation of investments at December 31, 1998
aggregated $8,877,219 and $1,425,848, respectively, resulting in net unrealized
appreciation of $7,451,371.
NOTE D -
RECLASSIFICATION OF ACCOUNTS
During the year ended December 31, 1998, the Fund has reclassified amounts to
reflect a decrease in accumulated net realized loss on investments of $418, an
increase in undistributed net investment income of $104 and a decrease in
capital paid-in of $522. This represents the amount necessary to report these
balances on a tax basis, excluding certain temporary differences, as of December
31, 1998. Additional adjustments may be needed in subsequent reporting periods.
These reclassifications, which have no impact on the net asset value of the
Fund, are primarily attributable to the certain differences in the computation
of distributable income and capital gains under federal tax rules versus
generally accepted accounting principles. The calculation of net investment
income per share in the financial highlights excludes these adjustments.
23
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Investors Trust
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
John Hancock Investors Trust
We have audited the accompanying statement of assets and liabilities of the John
Hancock Investors Trust (the "Fund"), including the schedule of investments, as
of December 31, 1998, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the 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, 1998, by correspondence with the custodian and brokers, or other
appropriate auditing procedures where replies from brokers were not received. 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 the
John Hancock Investors Trust at December 31, 1998, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young, LLP
Boston, Massachusetts
February 8, 1999
TAX INFORMATION NOTICE (UNAUDITED)
For federal income tax purposes, the following information is furnished with
respect to the taxable distributions of the Fund during its fiscal year ended
December 31, 1998.
1.11% of the distributions qualify for the dividends received deduction
available to corporations.
Shareholders will be mailed a 1998 U.S. Treasury Department Form 1099-DIV in
January of 1999. This will reflect the tax character of all distributions for
calendar year 1998.
24
<PAGE>
================================================================================
John Hancock Funds - Investors Trust
DIVIDENDS AND DISTRIBUTIONS
During 1998, dividends from net investment income totaling $1.5150 per share
were paid to shareholders. The dates of payment and the amounts per share are as
follows:
INCOME
PAYMENT DATE DIVIDEND
- ------------ --------
March 31, 1998 $0.3975
June 30, 1998 0.3800
September 30, 1998 0.3775
December 31, 1998 0.3600
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 33 1/3% 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.
25
<PAGE>
================================================================================
John Hancock Funds - Investors Trust
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 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.
All correspondence or additional information concerning the Plan should be
directed to the Plan Agent, State Street Bank and Trust Company, at P.O. Box
8209, Boston, Massachusetts 02266-8209 (telephone 1-800-426-5523).
YEAR 2000 COMPLIANCE
The Adviser and the Fund's service providers are taking steps to address any
year 2000-related computer problems. However, there is some risk that these
problems could disrupt the Fund's operations or financial markets generally.
SHAREHOLDER COMMUNICATION AND ASSISTANCE
If you have any questions concerning the John Hancock Investors Trust, we will
be pleased to assist you. If you hold shares in your own name and not with a
brokerage firm, please address all notices, correspondence, questions or other
communications regarding the Fund to the transfer agent at:
State Street Bank and Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200
Telephone: (800) 426-5523
If your shares are held with a brokerage firm, you should contact that firm,
bank or other nominee for assistance
26
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Investors Trust
27
<PAGE>
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