<PAGE> 1
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
- --------------------------------------------------------------------------------
101 Huntington Avenue
Boston, Massachusetts 02199-7603
October 9, 1995
Dear Fellow Cash Management Fund Shareholder:
As you may know, recent acquisitions have created some overlaps in the John
Hancock family of funds. This is the case with the money market funds we now
offer. To address this situation and to better support our money market fund
shareholders, your Fund's Trustees propose merging the John Hancock Cash
Management Fund into the John Hancock Money Market Fund, a fund with an
identical investment objective.
We believe this merger is important for you and John Hancock Cash Management
Fund for the following reasons:
- JOHN HANCOCK MONEY MARKET FUND HAS A MORE MODERN STRUCTURE AND IS
BETTER POSITIONED FOR GROWTH OF ASSETS OVER TIME than is John Hancock
Cash Management Fund. This means there is more opportunity for
economies of scale in the consolidated fund after the merger than in
John Hancock Cash Management Fund if the merger does not occur.
To further lower costs by raising assets in as broad a market as
possible, many mutual funds charge a 12b-1 distribution fee to
compensate their selling broker/dealers. Like many of its
counterparts, the John Hancock Money Market Fund pays selling
broker/dealers a 12b-1 fee of 0.15% from Class A assets.
- GREATER PORTFOLIO DIVERSIFICATION. Because the John Hancock Money
Market Fund will have a larger asset base as a result of the merger,
greater diversification of the investment portfolio can be achieved
than is currently possible for either Fund.
You may be aware that your Fund has a management fee of 0.40%, which has not
changed since the Fund's inception in 1979. The John Hancock Money Market Fund
has a management fee of 0.50% to reflect the increasing costs of research and
administrative support needed in today's complex financial markets. However,
please be advised that the management company has agreed to an indefinite fee
reduction of 0.10% to keep the Money Market Fund's management fee the same as
that of the Cash Management Fund.
You will note as you read the enclosed proxy statement that the total annual
operating expenses of the Money Market Fund are currently higher than those for
John Hancock Cash Management Fund. We believe that the total annual operating
expenses of the Money Market Fund are comparable to those paid by other similar
money market funds, and that over time, these expenses will be comparable to or
lower than the expenses paid by Cash Management Fund.
YOUR VOTE IS IMPORTANT!
At a special meeting of shareholders to be held on November 15, 1995 at 9:15
A.M., you will be asked to approve the merger of the John Hancock Cash
Management Fund into the John Hancock Money Market Fund.
Your Board of Trustees has approved the proposed merger and recommends that
shareholders approve it as well.
We urge you to consider this proposal and to vote by completing, signing and
returning the enclosed proxy ballot form to us immediately. Your prompt
response will help avoid additional mailings at the Fund's expense. For your
convenience, we have provided a postage-paid envelope.
If you have questions, please call your financial advisor or your John Hancock
Funds Customer Service Representative at 1-800-225-5291, Monday through Friday
between 8:00 A.M. and 8:00 P.M. Eastern time.
Sincerely,
/s/ Edward J. Boudreau, Jr.
Edward J. Boudreau, Jr.
Chairman and CEO
24PXL 10/95
- ---------------------------------------------------------------------- [LOGO]
John Hancock Advisers, Inc. John Hancock Funds, Inc.* John Hancock Investor
Services Corporation The Patriot Group, Inc. John Hancock Advisers
International, Ltd. NM Capital Management, Inc. Sovereign Asset Management
Corporation
*Member of National Association of Securities Dealers, Inc.
<PAGE> 2
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
- --------------------------------------------------------------------------------
101 Huntington Avenue
Boston, Massachusetts 02199-7603
October 9, 1995
Dear Fellow Cash Management Fund Shareholder:
As you may know, recent acquisitions have created some overlaps in the John
Hancock family of funds. This is the case with the money market funds we now
offer. To address this situation and to better support our money market fund
shareholders, your Fund's Trustees propose merging the John Hancock Cash
Management Fund into the John Hancock Money Market Fund, a fund with an
identical investment objective.
We believe this merger is important for you and John Hancock Cash Management
Fund for the following reasons:
JOHN HANCOCK MONEY MARKET FUND HAS A MORE MODERN STRUCTURE AND IS BETTER
POSITIONED FOR GROWTH OF ASSETS OVER TIME than is John Hancock Cash
Management Fund. This means there is more opportunity for
economies of scale in the consolidated fund after the merger than in John
Hancock Cash Management Fund if the merger does not occur. To further lower
costs by raising assets in as broad a market as possible, many mutual funds
charge a 12b-1 distribution fee to compensate their selling broker/dealers.
Like many of its conterparts, the John Hancock Money Market Fund pays
selling broker/dealers a 12b-1 fee of 0.15% from Class A assets.
GREATER PORTFOLIO DIVERSIFICATION. Because the John Hancock Money Market
Fund will have a larger asset base as a result of the merger, greater
diversification of the investment portfolio can be achieved than is
currently possible for either Fund.
You may be aware that your Fund has a management fee of 0.40%, which has not
changed since the Fund's inception in 1979. The John Hancock Money Market Fund
has a management fee of 0.50% to reflect the increasing costs of research and
administrative support needed in today's complex financial markets. However,
please be advised that the management company has agreed to an indefinite fee
reduction of 0.10% to keep the Money Market Fund's management fee the same as
that of the Cash Management Fund.
You will note as you read the enclosed proxy statement that the total annual
operating expenses of the Money Market Fund are currently higher than those for
John Hancock Cash Management Fund. We believe that the total annual operating
expenses of the Money Market Fund are comparable to those paid by other similar
money market funds, and that over time, these expenses will be comparable to or
lower than the expenses paid by Cash Management Fund.
In order to accommodate your investment needs, we permitted Class B shares from
other John Hancock funds to exchange into our Cash Management Fund. If this
merger is approved, we will have a true Class B money market fund, available
for your future investment needs. Your existing assets will be allowed to stay
in their current environment; however, any new purchases or exchanges after the
merger will be directed to the John Hancock Money Market Fund Class B.
YOUR VOTE IS IMPORTANT!
At a special meeting of shareholders to be held on November 15, 1995 at 9:15
A.M., you will be asked to approve the merger of the John Hancock Cash
Management Fund into the John Hancock Money Market Fund.
Your Board of Trustees has approved the proposed merger and recommends that
shareholders approve it as well.
We urge you to consider this proposal and to vote by completing, signing and
returning the enclosed proxy ballot form to us immediately. Your prompt
response will help avoid additional mailings at the Fund's expense. For your
convenience, we have provided a postage-paid envelope.
If you have questions, please call your financial advisor or your John Hancock
Funds Customer Service Representative at 1-800-225-5291, Monday through Friday
between 8:00 A.M. and 8:00 P.M. Eastern time.
Sincerely,
/s/ Edward J. Boudreau, Jr.
----------------------------------
Edward J. Boudreau, Jr.
Chairman and CEO
124pxl 10/95
- --------------------------------------------------------------------- [LOGO]
John Hancock Advisers, Inc. John Hancock Funds, Inc* John Hancock Investor
Services Corporation The Patriot Group, Inc. John Hancock Advisers
International, Ltd. NM Capital Management, Inc. Sovereiogn Asset Management
Corporation
*Member of National Association of Securities Dealers, Inc.
<PAGE> 3
JOHN HANCOCK CASH MANAGEMENT FUND
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 15, 1995
Notice is hereby given that a Special Meeting of Shareholders (the "Meeting") of
John Hancock Cash Management Fund ("Cash Management Fund"), a Massachusetts
business trust, will be held at 101 Huntington Avenue, Boston, Massachusetts
02199 on Wednesday, November 15, 1995 at 9:15 a.m., Boston time, and at any
adjournment thereof, for the following purposes:
1. To consider and act upon a proposal to approve an Agreement and Plan of
Reorganization between Cash Management Fund and John Hancock Series, Inc.
(the "Company"), a Maryland corporation, on behalf of John Hancock Money
Market Fund ("Money Market Fund"), providing for Money Market Fund's
acquisition of all of Cash Management Fund's assets in exchange solely for
assumption of Cash Management Fund's liabilities, and the issuance of Class
A shares of Money Market Fund to Cash Management Fund for distribution to
its shareholders.
2. To consider and act upon any other matters that may properly come before
the Meeting or any adjournment of the Meeting.
The Board of Trustees has fixed the close of business on September 29, 1995 as
the record date to determine the shareholders who are entitled to receive this
notice and to vote at the Meeting and any adjournment of the Meeting.
If you cannot attend the Meeting in person, please complete, date and sign the
enclosed proxy and return it to John Hancock Investor Services Corporation, 101
Huntington Avenue, Boston, Massachusetts 02199 in the enclosed envelope. It is
important that you exercise your right to vote. THE ENCLOSED PROXY IS BEING
SOLICITED BY THE BOARD OF TRUSTEES OF JOHN HANCOCK CASH MANAGEMENT FUND.
By order of the Board of
Trustees,
THOMAS H. DROHAN, Secretary
Boston, Massachusetts
October 9, 1995
JHD 240PX 10/95
<PAGE> 4
JOHN HANCOCK CASH MANAGEMENT FUND
PROXY STATEMENT
------------------------
JOHN HANCOCK MONEY MARKET FUND
PROSPECTUS
------------------------
This Proxy Statement and Prospectus sets forth the information you should know
before voting on the proposed reorganization of John Hancock Cash Management
Fund ("Cash Management Fund") into John Hancock Money Market Fund ("Money Market
Fund"). Please read it carefully and retain it for future reference. Money
Market Fund is a series of John Hancock Series, Inc., a Maryland corporation
(the "Company").
This Proxy Statement and Prospectus is accompanied by the Prospectus of Money
Market Fund for Class A and Class B shares, dated September 12, 1995.
Information about Cash Management Fund's shares is incorporated by reference
from the Cash Management Fund Prospectus which is available at no charge upon
request to Cash Management Fund at 1-800-225-5291.
A Statement of Additional Information, dated October 9, 1995, relating to this
Proxy Statement and Prospectus, and containing additional information about each
of Money Market Fund and Cash Management Fund, including historical financial
statements, is on file with the Securities and Exchange Commission ("SEC"). It
is available from Money Market Fund upon telephone request and at no charge at
the toll-free number stated above. The Statement of Additional Information is
incorporated by reference into this Prospectus.
- ---------------------------
(continued on next page)
SHARES OF MONEY MARKET FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES OF MONEY MARKET FUND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN MONEY MARKET FUND IS NEITHER
INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. THERE IS NO ASSURANCE THAT MONEY
MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 5
(continued)
- ---------------------------
This Proxy Statement and Prospectus relates to Class A shares of common stock,
par value of $0.01 per share (the "Money Market Fund Class A Shares"), of Money
Market Fund which will be issued in exchange for all of Cash Management Fund's
assets. In exchange for these assets, Money Market Fund will also assume all of
the liabilities of Cash Management Fund.
The Money Market Fund Class A Shares issued to Cash Management Fund for
distribution to Cash Management Fund's shareholders will have an aggregate net
asset value equal to that of Cash Management Fund's shares. The asset values of
Cash Management Fund and Money Market Fund will be determined at the close of
business (4:00 p.m. Eastern Time) on the Closing Date (as defined below) for
purposes of the proposed reorganization.
Following the receipt of Money Market Fund Class A Shares (1) Cash Management
Fund will be liquidated, (2) Cash Management Fund will distribute these Money
Market Fund Class A Shares to Cash Management Fund's shareholders pro rata in
exchange for their shares of Cash Management Fund and (3) Cash Management Fund
will be terminated. Consequently, Cash Management Fund shareholders will become
Class A shareholders of Money Market Fund. These transactions are collectively
referred to in this Proxy Statement and Prospectus as the "Reorganization." The
Reorganization is being structured as a tax-free reorganization so that, in the
opinion of tax counsel, no gain or loss will be recognized by Money Market Fund,
Cash Management Fund or the shareholders of Cash Management Fund. The terms and
conditions of the Reorganization are more fully described in this Proxy
Statement and Prospectus, and in the Agreement and Plan of Reorganization that
is attached as EXHIBIT A.
Money Market Fund is a diversified series of the Company, an open-end management
investment company organized as a Maryland corporation in 1987. Money Market
Fund seeks to provide maximum current income consistent with capital
preservation and liquidity. Money Market Fund seeks to obtain this objective by
investing in money market instruments including, but not limited to, U.S.
Government, municipal and foreign governmental securities; obligations of
supranational organizations (e.g., the World Bank and the International Monetary
Fund); obligations of U.S. and foreign banks and other lending institutions;
corporate obligations; and repurchase and reverse repurchase agreements.
The principal place of business of both Money Market Fund and Cash Management
Fund is at 101 Huntington Avenue, Boston, Massachusetts 02199. Their toll-free
telephone number is 1-800-225-5291.
The date of this Proxy Statement and Prospectus is October 9, 1995.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION..................................................... 1
SUMMARY.......................................................... 2
RISK FACTORS AND SPECIAL CONSIDERATIONS.......................... 17
INFORMATION CONCERNING THE MEETING............................... 18
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION......... 20
CAPITALIZATION................................................... 23
BUSINESS OF CASH MANAGEMENT FUND................................. 24
General........................................................ 24
Investment Objective and Policies.............................. 24
Trustees....................................................... 24
Investment Adviser and Distributor............................. 24
Expenses....................................................... 24
Custodian and Transfer Agent................................... 24
Cash Management Fund Shares.................................... 24
Purchase of Cash Management Fund Shares........................ 24
Redemption of Cash Management Fund Shares...................... 25
Dividends, Distributions and Taxes............................. 25
BUSINESS OF MONEY MARKET FUND.................................... 25
Investment Objective and Policies.............................. 25
Directors...................................................... 25
Investment Adviser and Distributor............................. 25
Expenses....................................................... 25
Custodian and Transfer Agent................................... 25
Money Market Fund Shares....................................... 25
Purchase of Money Market Fund Shares........................... 25
Redemption of Money Market Fund Shares......................... 26
Dividends, Distributions and Taxes............................. 26
EXPERTS.......................................................... 26
AVAILABLE INFORMATION............................................ 26
EXHIBIT A........................................................ A-1
</TABLE>
-i-
<PAGE> 7
EXHIBITS
<TABLE>
<S> <C>
A -- Agreement and Plan of Reorganization by and between John Hancock
Cash Management Fund and John Hancock Series, Inc., on behalf of
John Hancock Money Market Fund (attached to this document).
</TABLE>
-ii-
<PAGE> 8
PROXY STATEMENT AND PROSPECTUS
FOR SPECIAL MEETING OF SHAREHOLDERS OF
JOHN HANCOCK CASH MANAGEMENT FUND
TO BE HELD ON NOVEMBER 15, 1995
INTRODUCTION
This Proxy Statement and Prospectus is furnished in connection with the
solicitation of proxies by the Board of Trustees of Cash Management Fund (the
"Board of Trustees"). The proxies will be voted at the Special Meeting of
Shareholders (the "Meeting") of Cash Management Fund to be held at 101
Huntington Avenue, Boston, Massachusetts 02199 on Wednesday, November 15, 1995
at 9:15 a.m., Boston time, and at any adjournment or adjournments of the
Meeting. The purposes of the Meeting are set forth in the accompanying Notice of
Special Meeting of Shareholders.
This Proxy Statement and Prospectus incorporates by reference the Prospectus of
Cash Management Fund, dated February 1, 1995 (the "Cash Management Fund
Prospectus"), and is accompanied by the prospectus of Money Market Fund for
Class A and Class B shares, dated September 12, 1995 (the "Money Market Fund
Prospectus"). The Cash Management Fund Prospectus is available upon request.
Money Market Fund's Annual Report to Shareholders and Semi-Annual Report to
Shareholders were previously sent to shareholders of Money Market Fund on or
about December 31, 1994 and June 30, 1995, respectively. Cash Management Fund's
Annual Report to Shareholders and Semi-Annual Report to Shareholders were
previously sent to shareholders of Cash Management Fund on or about November 30,
1994 and May 31, 1995, respectively.
As of August 31, 1995, 249,936,674 shares of beneficial interest of Cash
Management Fund were outstanding. Shareholders of record on September 29, 1995
(the "Record Date") are entitled to notice of and to vote at the Meeting.
All properly executed proxies received by management prior to the Meeting,
unless revoked, will be voted at the Meeting according to the instructions on
the proxies. If no instructions are given, shares of Cash Management Fund
represented by proxies will be voted FOR the proposal (the "Proposal") to
approve the Agreement and Plan of Reorganization (the "Agreement") between Cash
Management Fund and the Company, on behalf of Money Market Fund.
The Board of Trustees knows of no business to be presented for consideration at
the Meeting other than that mentioned in the immediately preceding paragraph. If
other business is properly brought before the Meeting, proxies will be voted
according to the best judgment of the persons named as proxies.
In addition to the mailing of these proxy materials, proxies may be solicited in
person or by telephone by Trustees, officers and employees of Cash Management
Fund; by personnel of Cash Management Fund's investment adviser, John Hancock
Advisers, Inc. (the "Adviser"), and its transfer agent, John Hancock Investor
Services Corporation ("Investor Services"); or by broker-dealer firms. Investor
Services has agreed to provide proxy solicitation services to Cash Management
Fund at a cost of approximately $5,000. Investor Services is providing this
proxy solicitation service to Cash Management Fund at a lower cost than would be
charged by a third party solicitation firm.
1
<PAGE> 9
Cash Management Fund and Money Market Fund (each, a "Fund" and collectively, the
"Funds") will each bear its own fees and expenses in connection with the
Reorganization discussed in this Proxy Statement and Prospectus.
The information concerning Cash Management Fund in this Proxy Statement and
Prospectus has been supplied by Cash Management Fund. The information concerning
Money Market Fund in this Proxy Statement and Prospectus has been supplied by
the Company.
SUMMARY
The following is a summary of certain information contained elsewhere in this
Proxy Statement and Prospectus. The summary is qualified by reference to the
more complete information contained in this Proxy Statement and Prospectus, and
in EXHIBIT A and the Money Market Fund Prospectus. Please read this entire Proxy
Statement and Prospectus carefully.
REASONS FOR THE PROPOSED REORGANIZATION
Cash Management Fund's Board of Trustees has determined that the proposed
Reorganization is in the long-term best interests of Cash Management Fund and
its shareholders. In making this determination, the Trustees considered several
relevant factors.
Based on information provided by the Adviser, the Board of Trustees has
concluded that it will not be advantageous to Cash Management Fund's
shareholders to continue to operate and market Cash Management Fund separately
from Money Market Fund because Money Market Fund is better positioned for
sustained growth of assets than is Cash Management Fund. Although the investment
objectives of the two Funds are identical and the investment policies are
substantially similar, Money Market Fund has a more modern distribution
structure than Cash Management Fund. As a result, it is expected that there will
be an increased marketing effort by selling brokers with respect to Money Market
Fund shares and a reduced marketing effort by selling brokers with respect to
Cash Management Fund shares.
Money Market Fund's Board of Directors has authorized the Fund's adoption of a
multiple class distribution system featuring three classes of shares targeting
three separate distribution channels. Each class of shares of Money Market Fund,
including the Money Market Fund Class A Shares that will be issued to Cash
Management Fund for distribution to its shareholders in the Reorganization, pays
a Rule 12b-1 distribution fee pursuant to a plan of distribution adopted in
accordance with Rule 12b-1 under the Investment Company Act of 1940 (the
"Investment Company Act"). Unlike Money Market Fund, Cash Management Fund is
authorized by the Fund's organizational documents to issue only a single class
of shares. Cash Management Fund's single class of shares is comparable to the
Money Market Fund Class A Shares and is also subject to a Rule 12b-1 plan and
fee. However, pursuant to a voluntary agreement between Cash Management Fund and
its distributor, the Rule 12b-1 fee has never been imposed on the Cash
Management Fund shares.
Rule 12b-1 fees are used by a mutual fund's distributor to compensate selling
brokers who provide distribution services to the mutual fund and account
2
<PAGE> 10
maintenance services to the fund's shareholders. Accordingly, payment of Rule
12b-1 fees by each class of shares of Money Market Fund makes it possible for
Money Market Fund to attract assets in as broad a market as possible.
The Adviser has apprised the Cash Management Fund Board of Trustees that, for
these reasons, Money Market Fund will be the preferred choice of selling brokers
who distribute shares of John Hancock mutual funds. Money Market Fund will also
be the preferred exchange vehicle for John Hancock mutual fund shareholders. The
Adviser believes that, because of Money Market Fund's more favorable
distribution system, the assets of Money Market Fund will grow significantly
over time. At the same time, the Adviser believes that the assets of Cash
Management Fund will decline to the extent that new sales do not completely
offset redemptions. New sales of Cash Management Fund are likely to suffer
because Money Market Fund with its modern distribution system and its payment of
Rule 12b-1 fees to selling brokers is better positioned for growth of assets and
will, therefore, compete more successfully than Cash Management Fund for limited
investor dollars.
The Adviser believes that the decrease in the asset size of Cash Management Fund
will result over time in the Fund's shareholders paying higher fees and expenses
because there will be a loss of economies of scale. For example, the management
fee of Cash Management Fund has several breakpoints that cause a reduction in
the fee when the Fund's assets reach a certain size. A reduction in the Fund's
assets will deny the benefit of these breakpoints to the Fund and its
shareholders. Similarly, custody, legal and accounting fees paid by the Fund
that might have been proportionately reduced on a per share basis as the Fund's
assets continued to increase will not be so reduced and may increase
proportionately as the Fund's assets decline.
The Board of Trustees also considered that shareholders of both Funds may be
better served by a fund offering greater diversification. To the extent that the
Funds' assets are combined into a single portfolio and a larger asset base is
created as a result of the Reorganization, greater diversification of Money
Market Fund's investment portfolio can be achieved than is currently possible in
either Fund. Greater diversification is expected to be beneficial to
shareholders of both Funds, because it may reduce the negative effect which the
adverse performance of any one security may have on the performance of the
entire portfolio.
Finally, the Board of Trustees believes that the Money Market Fund Class A
Shares received in the Reorganization will provide existing Cash Management Fund
shareholders with substantially the same investment advantages that they
currently enjoy at a comparable level of risk.
In connection with its evaluation of the reasons for the Reorganization, the
Board of Trustees also considered the fact that the management fee of Money
Market Fund is higher than the management fee of Cash Management Fund. However,
if the shareholders of Cash Management Fund approve the Reorganization, the
Adviser has agreed to limit the Money Market management fee to an annual rate of
0.40% of the Fund's average daily net assets. This rate is the same as that paid
by Cash Management Fund during its most recently completed fiscal year. For a
discussion of the effects of the Reorganization on the payment of management
fees and Rule 12b-1 fees on the assets of Cash Management Fund acquired by
3
<PAGE> 11
Money Market Fund, See "Summary -- Reorganization -- Effect of The
Reorganization -- Rule 12b-1 Fees and Management Fees" below.
THE FUNDS' EXPENSES
Both Funds and their shareholders are subject to various fees and expenses. The
two tables set forth below show the shareholder transaction and operating
expenses of shares of Cash Management Fund and Class A and Class B shares of
Money Market Fund and the effect of applicable expense limitations. With respect
to Cash Management Fund, these expenses are based on fees and expenses incurred
during the Fund's fiscal year ended September 30, 1994. With respect to Money
Market Fund, these expenses are based on fees and expenses incurred with respect
to the Fund's Class B shares for the Fund's fiscal year ended October 31, 1994.
No Class A shares of Money Market Fund were outstanding during the period.
CASH MANAGEMENT FUND
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(As a percentage of offering price).................. None
Maximum sales charge imposed on reinvested dividends... None
Maximum deferred sales charge.......................... None
Redemption fees+....................................... None
Exchange fee........................................... None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management fees........................................ 0.40%
12b-1 fee (net of reduction)*.......................... 0.00%
Other expenses**....................................... 0.51%
Total Fund operating expenses (net of reduction)*...... 0.91%
<FN>
- ---------------
* The Fund and its distributor have agreed not to impose the Rule 12b-1 fee.
Absent such an agreement, the Rule 12b-1 fee would be 0.15% of average daily
net assets and total Fund operating expenses would be 1.06%.
** Other expenses include transfer agent, legal, audit, custody and other
expenses.
+ Redemption by wire fee (currently $4.00) not included.
</TABLE>
4
<PAGE> 12
MONEY MARKET FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(As a percentage of offering price).................. None None
Maximum sales charge imposed on reinvested dividends... None None
Maximum deferred sales charge.......................... None 5.00%
Redemption fees+....................................... None None
Exchange fee........................................... None None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management fee......................................... 0.50% 0.50%
12b-1 fee (net of reduction: Class A shares)*.......... 0.15% 1.00%
Other expenses**....................................... 0.56% 0.56%
Total Fund operating expenses
(net of reduction: Class A shares)***................ 1.21% 2.06%
<FN>
- ---------------
* The amount of the 12b-1 fee used to cover service expenses will be up to
0.15% and 0.25% of the Fund's average net assets attributable to Class A and
Class B shares, respectively, and any remaining portion (up to 0.75% with
respect to Class B shares) will be used to cover distribution expenses.
** Other expenses include transfer agent, legal, audit, custody and other
expenses.
*** Total Fund operating expenses in the table reflect the current agreement
between the Fund and its distributor. In the future, the Class A
distribution fee could increase to 0.25%, in which case the total Fund
operating expenses of Class A shares would be 1.31%.
+ Redemption by wire fee (currently $4.00) not included.
</TABLE>
MONEY MARKET FUND (PRO FORMA)
The table set forth below shows the pro forma operating expenses of Class A and
Class B shares of Money Market Fund which assumes that the Reorganization took
place on March 31, 1995. These expenses are based on fees and expenses incurred
during the Funds' most recently completed fiscal years.
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
------- -------
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management fee (net of reduction)...................... 0.40% 0.40%
12b-1 fee (net of reduction: Class A shares)*.......... 0.15% 1.00%
Other expenses**....................................... 0.44% 0.44%
Total Fund operating expenses
(net of reductions)***............................... 0.99% 1.84%
<FN>
- ---------------
* The amount of the 12b-1 fee used to cover service expenses will be up to
0.15% and 0.25% of the Fund's average net assets attributable to Class A and
Class B shares, respectively, and any remaining portion (up to 0.75% with
respect to Class B shares) will be used to cover distribution expenses.
</TABLE>
5
<PAGE> 13
** Other expenses include transfer agent, legal, audit, custody and other
expenses.
*** Total Fund operating expenses in the table reflect the current agreements to
limit the management fee and Class A distribution fee between the Fund and
its adviser and distributor, respectively. In the absence of such
agreements, the management fee could increase to 0.50% and the Class A
distribution fee could increase to 0.25%, in which case the total Fund
operating expenses of Class A shares and Class B shares would be 1.19% and
1.94%, respectively.
If the Reorganization is consummated, the actual total operating expenses of
Class A and Class B shares of Money Market Fund may vary from the pro forma
operating expenses indicated above due to changes in the net asset values of
Cash Management Fund and/or Money Market Fund between March 31, 1995 and the
Closing Date (defined below).
EXAMPLE
<TABLE>
The following example illustrates the expenses you would pay on a $1,000
investment under the existing fees for each of Cash Management Fund and Class A
and Class B shares of Money Market Fund and under the pro forma fees if the
Reorganization had occurred on March 31, 1995. The example assumes (1) a 5%
annual return and (2) redemption at the end of each time period.
<CAPTION>
CASH CLASS A CLASS B SHARES PRO FORMA PRO FORMA
MANAGEMENT SHARES MONEY SHARES MONEY CLASS A CLASS B
FUND MARKET FUND MARKET FUND SHARES SHARES
---------- ------------ -------------- --------- ---------
<S> <C> <C> <C> <C> <C>
1 year....... $ 9 $ 12 $ 71 $ 10 $ 68
3 years...... 29 38 95 32 88
5 years...... 50 67 131 55 120
10 years..... 112 147 217 121 194
</TABLE>
<TABLE>
Assuming there is no redemption at the end of each time period, the expenses you
would pay on the same investment would be as follows:
<CAPTION>
CASH CLASS A CLASS B SHARES PRO FORMA PRO FORMA
MANAGEMENT SHARES MONEY SHARES MONEY CLASS A CLASS B
FUND MARKET FUND MARKET FUND SHARES SHARES
---------- ------------ -------------- --------- ---------
<S> <C> <C> <C> <C> <C>
1 year....... $ 9 $ 12 $ 21 $ 10 $ 19
3 years...... 29 38 65 32 58
5 years...... 50 67 111 55 100
10 years..... 112 147 217 121 194
</TABLE>
The purpose of this example and the tables set forth above is to assist
investors in understanding the various costs and expenses of investing in shares
of each of the Funds and what such costs would be had the Reorganization
occurred. The example above should not be considered a representation of future
expenses of the Funds or of Money Market Fund after the Reorganization. Actual
expenses may vary from year to year and may be higher or lower than those shown
above.
THE FUNDS' INVESTMENT ADVISER
John Hancock Advisers, Inc. acts as investment adviser to both Cash Management
Fund and Money Market Fund.
6
<PAGE> 14
BUSINESS OF CASH MANAGEMENT FUND
Cash Management Fund is a diversified open-end management investment company
organized as a Massachusetts business trust in 1979. As of March 31, 1995, Cash
Management Fund's net assets were $255,237,358.
BUSINESS OF MONEY MARKET FUND
Money Market Fund is a diversified series of the Company, an open-end management
investment company organized as a Maryland corporation in 1987. As of March 31,
1995, Money Market Fund's net assets (attributable to Class B shares only) were
$62,118,754.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES OF CASH MANAGEMENT FUND AND
MONEY MARKET FUND
Cash Management Fund: The investment objective of Cash Management Fund is to
provide maximum current income, consistent with capital preservation and
liquidity. The Fund invests in high quality, U.S. dollar-denominated instruments
of U.S. and foreign issuers, including the following types of securities: U.S.
Government securities; bank investments (e.g., certificates of deposit and
bankers' acceptances issued by foreign branches of major U.S. and foreign
commercial banks and foreign banks with branch offices in the U.S.); commercial
paper and corporate obligations; repurchase agreements and time deposits.
At the time the Fund acquires its investments, they will be rated in one of the
two highest rating categories for short-term debt obligations assigned by at
least two nationally recognized statistical rating organizations (or one rating
organization if the obligation was rated by only one such organization). These
high quality securities are divided into "first tier" and "second tier"
securities. First tier securities have received the highest rating from at least
two rating organizations (or one, if only one has rated the security). Second
tier securities have received ratings within the two highest categories from at
least two rating agencies (or one, if only one has rated the security), but do
not qualify as first tier securities. The Fund may also purchase securities
which are unrated if the Adviser determines that such securities are of
comparable quality to rated securities. The Fund may not purchase any second
tier security if, as a result of its purchase (a) more than 5% of its total
assets would be invested in second tier securities or (b) more than 1% of its
total assets or $1 million (whichever is greater) would be invested in the
second tier securities of a single issuer.
All of the Fund's investments mature in 397 days or less. The Fund maintains an
average dollar-weighted portfolio maturity of 90 days or less.
Money Market Fund: The investment objective of Money Market Fund is also to
provide maximum current income, consistent with capital preservation and
liquidity. The Fund invests in money market instruments denominated in U.S.
dollars including, but not limited to, the following: U.S. Government, municipal
and foreign governmental securities; obligations of supranational organizations
(e.g., the World Bank and the International Monetary Fund); obligations of U.S.
and foreign banks and other lending institutions; corporate obligations; and
repurchase agreements and reverse repurchase agreements. As a fundamental
policy, the Fund may not invest more than 25% of its total assets in obligations
issued by foreign banks and foreign branches of U.S. banks when the Adviser has
7
<PAGE> 15
determined that the U.S. bank is not unconditionally responsible for the payment
obligations of the foreign branch.
Unlike Cash Management Fund, the Fund may lend its portfolio securities to
brokers, dealers and financial institutions on a collateralized basis. The Fund
runs the risk that the borrower will fail to return the borrowed securities or
that the borrower will become bankrupt. The Fund will not lend portfolio
securities having a total value in excess of 30% of its total assets.
In addition to lending its portfolio securities, the Fund, unlike Cash
Management Fund, may enter into reverse repurchase agreements and purchase
securities on a forward commitment or when-issued basis. Reverse repurchase
agreements involve leverage and expose the Fund to the risk that it will not
recover the cost of entering into a reverse repurchase agreement with the funds
it obtains and invests as a result of such transaction. Purchasing securities on
a forward commitment or when-issued basis exposes the Fund to a risk of loss if
the value of the securities purchased declines prior to the settlement date.
At the time the Fund acquires its investments, they will be rated in one of the
two highest rating categories for short-term debt obligations assigned by at
least two nationally recognized statistical rating organizations (or one rating
organization if the obligation was rated by only one such organization). These
high quality securities are divided into "first tier" and "second tier"
securities. First tier securities have received the highest rating from at least
two rating organizations (or one, if only one has rated the security). Second
tier securities have received ratings within the two highest categories from at
least two rating agencies (or one, if only one has rated the security), but do
not qualify as first tier securities. The Fund may also purchase securities
which are unrated if the Adviser determines that such securities are of
comparable quality to rated securities. The Fund may not purchase any second
tier security if, as a result of its purchase (a) more than 5% of its total
assets would be invested in second tier securities or (b) more than 1% of its
total assets or $1 million (whichever is greater) would be invested in the
second tier securities of a single issuer.
All of the Fund's investments mature in 397 days or less. The Fund maintains an
average dollar-weighted portfolio maturity of 90 days or less.
Cash Management Fund's investment objective is fundamental and may not be
changed without shareholder approval. Money Market Fund's investment objective
is non-fundamental and may be changed by a vote of the Fund's Board of
Directors. Prior to the implementation of a change to the investment objective
of Money Market Fund, the Fund's prospectus and statement of additional
information will be revised or supplemented.
In considering whether to approve the Reorganization, you should consider any
differences between the two Funds' investment policies. For a discussion of the
risks associated with an investment in the Funds, see "Risk Factors and Special
Considerations."
8
<PAGE> 16
<TABLE>
<CAPTION>
CASH MANAGEMENT FUND MONEY MARKET FUND
------------------------- -------------------------
<S> <C> <C>
Investment The Fund seeks to provide The Fund seeks to provide
Objective maximum current income, maximum current income,
(no change): consistent with capital consistent with capital
preservation and preservation and
liquidity. liquidity.
Primary The securities in which The Fund seeks to achieve
Investments: the Fund invests include its objective by
the following types of investing in money market
high quality, U.S. instruments including,
dollar-denominated but not limited to:
instruments of U.S. and
foreign issuers:
(1) U.S. Government, (1) U.S. Government
securities; municipal and foreign
governmental
securities;
(2) bank investments such (2) obligations of
as certificates of supranational
deposit and bankers' organizations (e.g.,
acceptances, issued the World Bank and
by foreign branches the International
of major American and Monetary Fund),
foreign commercial obligations of U.S.
banks and foreign and foreign banks and
banks with branch other lending
offices in the United institutions;
States;
(3) commercial paper and (3) corporate
corporate obligations; and
obligations;
(4) repurchase (4) repurchase
agreements; and agreements.
(5) time deposits.
Other None. The Fund may lend
Investments: portfolio securities,
enter into reverse
repurchase agreements and
purchase securities on a
forward commitment or
when-issued basis.
Fundamental No comparable As a fundamental policy,
Investment restriction. the Fund may not invest
more than 25% of its
Restrictions: total assets in
obligations issued by (1)
foreign banks and (2)
foreign branches of U.S.
banks if the Adviser has
determined that the U.S.
bank is not
unconditionally
responsible for the
payment obligations of
the foreign branch.
</TABLE>
9
<PAGE> 17
FORM OF ORGANIZATION
Cash Management Fund is a Massachusetts business trust organized in 1979. Money
Market Fund is one of six separate series of the Company, a Maryland corporation
organized in 1987. After the Reorganization, Cash Management Fund's shareholders
will become Class A shareholders of Money Market Fund and therefore will become
subject to Maryland law and the Company's Articles of Organization ("Articles").
Although there are some differences between the laws and organizational document
provisions applicable to each Fund with respect to rights of shareholders, the
only material differences relate to shareholder voting requirements. The
shareholder voting requirements differ as follows: (i) amending the Declaration
of Trust of Cash Management Fund requires the approval of the lesser of (a) 67%
or more of the shares present at a meeting, if more than 50% of the shares of
the Fund are present or represented by proxy, or (b) more than 50% of the
outstanding shares of the Fund, while amending the Articles of the Company
requires the vote of the majority of the Company's outstanding shares; (ii)
removing a Trustee of Cash Management Fund requires the vote of two-thirds of
all outstanding shares of the Fund, while removing a Director of the Company
requires the vote of the majority of the Company's outstanding shares; and (iii)
most other matters submitted to shareholders of Cash Management Fund require the
vote of a majority of shares present at a meeting at which there is a quorum,
while most other matters submitted to shareholders of Money Market Fund require
the vote of a majority of the outstanding shares of the Fund or the Company, as
appropriate.
Each share of a series of the Company represents an equal proportionate interest
in the assets belonging to that series. The liabilities attributable to Money
Market Fund are not charged against the assets of the other series of the
Company. Shares of Money Market Fund and each other series of the Company are
voted separately with respect to matters pertaining to that series, but all
shares vote together for the election of the Company's Directors and the
ratification of the Company's independent accountants.
Money Market Fund has authorized and outstanding Class A, Class B and Class S
shares of common stock. Cash Management Fund has authorized only one class of
shares. The shares of each class of Money Market Fund represent an interest in
the same portfolio of investments of that Fund. Except as stated below, each
class of Money Market Fund has equal rights as to voting, redemption, dividends
and liquidation. Each class of Money Market Fund bears different distribution
fees and may bear other expenses properly attributable to that class, has
different minimum investment requirements and may be entitled to different
services. Class S shares are offered only through certain brokers. Class A,
Class B and Class S shareholders of Money Market Fund have exclusive voting
rights with respect to the Rule 12b-1 distribution plan relating to their
respective class of shares. For additional discussion of Class B shares of Money
Market Fund, see the Money Market Fund Prospectus. For additional discussion of
Class S shares of Money Market Fund, see "Organization and Management of the
Fund" in the Money Market Fund Prospectus.
10
<PAGE> 18
SALES CHARGES AND DISTRIBUTION AND SERVICES FEES
Sales Charges. Shares of Cash Management Fund and Class A shares of Money
Market Fund are sold without a sales charge at their net asset value per share,
which will normally be $1.00.
Money Market Fund Class A Shares acquired by Cash Management Fund's shareholders
pursuant to the Reorganization will not be subject to any initial sales charge
or contingent deferred sales charge ("CDSC") at the time of the Reorganization.
Distribution and Service Fees. Both Funds have adopted distribution plans
pursuant to Rule 12b-1 under the Investment Company Act. Under these plans, each
Fund may pay fees to John Hancock Funds, Inc. ("John Hancock Funds") to
reimburse distribution and service expenses in connection with the Funds'
shares. With respect to shares of Cash Management Fund, these fees are payable
at an annual rate of up to 0.15% of the average daily net assets of the Fund.
Cash Management Fund and John Hancock Funds have agreed since 1983 not to impose
these fees. With respect to Money Market Fund Class A Shares, these fees are
payable at an annual rate of up to 0.15% of the average daily net assets
attributable to the Money Market Fund Class A Shares. In the future, the fee
with respect to Money Market Fund Class A Shares may increase to 0.25%.
PURCHASES AND EXCHANGES
Shares of Cash Management Fund and Class A shares of Money Market Fund may be
purchased through certain broker-dealers and through John Hancock Funds at their
net asset value per share, which will normally be $1.00. The minimum initial
investment in shares of Cash Management Fund is $1,500 ($250 for group
investments and $500 for retirement plans). The minimum initial investment in
Class A shares of Money Market Fund is $1,000 ($250 for group investments and
retirement plans). In anticipation of the Reorganization, after the Record Date,
no new accounts may be opened in Cash Management Fund. Existing shareholders of
Cash Management Fund may continue to acquire shares of the Fund after the Record
Date by direct purchase, through a monthly automatic accumulation plan and
through the reinvestment of dividends and distributions.
Shareholders of Cash Management Fund may exchange their shares for Class A
shares of other John Hancock funds at net asset value plus any front-end sales
charges which may be applicable to the fund into which the Cash Management Fund
shares are exchanged. For this purpose, the shares of John Hancock funds with
only one class of shares are treated as Class A shares whether or not they have
been so designated. Shares of Cash Management Fund acquired by exchanging shares
of other John Hancock funds that are subject to a CDSC may be exchanged at net
asset value only for Class B shares of another John Hancock fund. Shares of any
fund acquired by exchange that are subject to a CDSC will incur the CDSC upon
redemption. The rate of this charge will be the rate in effect for the exchanged
shares at the time of the exchange.
Class A shareholders of Money Market Fund may exchange their shares for Class A
shares of other John Hancock funds at net asset value plus any front-end sales
charges which may be applicable to the fund into which the Money Market Fund
Class A Shares are being exchanged. For this purpose, shares of John Hancock
funds with only one class of shares are treated as Class A shares
11
<PAGE> 19
whether or not they have been so designated. Class A shares of any fund acquired
by exchange that are subject to a CDSC will incur the CDSC upon redemption. The
rate of this charge will be the rate in effect for the Class A shares at the
time of the exchange.
If shareholders of Cash Management Fund vote to approve the Reorganization, each
shareholder of the Fund who acquired his or her shares of Cash Management Fund
as a result of an exchange from Class B shares of another John Hancock fund will
receive Money Market Fund Class A Shares in the Reorganization. These shares
will be subject to any applicable CDSC upon redemption and these shares may only
be exchanged for Class B shares of other John Hancock funds.
MANAGEMENT FEES
Cash Management Fund pays management fees to the Adviser as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
----------------- -----------
<S> <C>
First $250,000,000......................................... 0.40%
Next $250,000,000.......................................... 0.35%
Next $250,000,000.......................................... 0.30%
Amount over $750,000,000................................... 0.25%
</TABLE>
During the fiscal year ended September 30, 1994, Cash Management Fund paid
investment management fees of $816,306 to the Adviser.
Money Market Fund pays management fees to the Adviser as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
---------------- -----------
<S> <C>
First $500,000,000......................................... 0.500%
Next $250,000,000.......................................... 0.425%
Next $250,000,000.......................................... 0.375%
Next $500,000,000.......................................... 0.350%
Next $500,000,000.......................................... 0.325%
Next $500,000,000.......................................... 0.300%
Over $2,500,000,000........................................ 0.275%
</TABLE>
During the fiscal year ended October 31, 1994, Money Market Fund paid investment
management fees of $214,088 to its former investment adviser.
DISTRIBUTION PROCEDURES
It is the policy of both Funds to declare dividends daily and to pay dividends
monthly from net investment income. Each Fund also distributes annually all of
its other taxable income, including any net short-term and long-term capital
gains it has realized. Cash Management Fund will make, immediately prior to the
Closing Date (as defined below), a distribution of any net income and net
realized capital gains it has not yet distributed.
REINVESTMENT OPTIONS
Unless an election is made to receive cash, the shareholders of both Funds
automatically reinvest all of their respective dividends and capital gain
distributions in additional shares of the same class, if applicable, of the same
Fund. These reinvestments are made at the net asset value per share and are not
subject to any sales charge.
12
<PAGE> 20
REDEMPTION PROCEDURES
Shares of Cash Management Fund and Money Market Fund Class A Shares may be
redeemed on any day that the respective Fund is open for business at a price
equal to the net asset value of the shares next determined after receipt of a
redemption request in good order, less any applicable CDSC. Alternatively,
holders of Cash Management Fund shares and Money Market Fund Class A Shares may
sell their shares through securities dealers, who may charge a fee. Redemptions
and repurchases of Money Market Fund Class A Shares that are subject to a CDSC
and redemptions and repurchases of shares of Cash Management Fund received by an
exchange for shares of a John Hancock fund with a CDSC are subject to the
applicable CDSC, if any. Shares of Cash Management Fund may be redeemed up to
and including the Closing Date (as defined below).
REORGANIZATION
Effect of the Reorganization -- General. Pursuant to the terms of the
Agreement, the proposed Reorganization will consist of the acquisition by Money
Market Fund of all the assets of Cash Management Fund in exchange solely for (i)
the assumption by Money Market Fund of all the liabilities of Cash Management
Fund and (ii) the issuance of Money Market Fund Class A Shares equal to the
value of these assets, less the amount of these liabilities, to Cash Management
Fund. As part of the liquidation process, Cash Management Fund will immediately
distribute to its shareholders these Money Market Fund Class A Shares in
exchange for their shares of Cash Management Fund. Consequently, shareholders of
Cash Management Fund will become Class A shareholders of Money Market Fund. If
any Cash Management Fund shares were subject to a CDSC, then the Money Market
Fund Class A Shares received in exchange therefore will be subject to the same
CDSC, including all terms and conditions for computing and applying such CDSC.
After completion of the Reorganization, the existence of Cash Management Fund
will be terminated.
The Reorganization will become effective as of 5:00 p.m. on the closing date,
scheduled for November 17, 1995, or another date on or before December 31, 1995
as authorized representatives of the Funds may agree (the "Closing Date"). The
Money Market Fund Class A Shares issued to Cash Management Fund for distribution
to Cash Management Fund's shareholders will have an aggregate net asset value
equal to that of Cash Management Fund's shares. For purposes of the
Reorganization, the Funds' respective asset values will be determined as of the
close of business (4:00 p.m. Eastern Time) on the Closing Date.
Effect of the Reorganization -- Rule 12b-1 Fees and Management Fees. After the
Reorganization, the assets of Cash Management Fund acquired by Money Market Fund
will be subject to Money Market Fund's Rule 12b-1 fee of 0.15% of average daily
net assets attributable to Class A shares. The Reorganization will also have the
effect of increasing the management fee on assets of Cash Management Fund
acquired by Money Market Fund to an annual rate of 0.50% of average daily net
assets. However, if the Cash Management Fund's shareholders approve the
Reorganization, the Adviser has agreed to limit Money Market Fund's management
fee to an annual rate of 0.40% of the Fund's average daily net assets.
Furthermore, the Adviser has agreed not to terminate the
13
<PAGE> 21
agreement with respect to the management fee without the prior approval of the
Board of Trustees serving as such to a majority of the following investment
companies and their series (including successor funds thereto): John Hancock
Capital Series, John Hancock Income Securities Trust, John Hancock Investors
Trust, John Hancock Limited Term Government Fund, John Hancock Sovereign Bond
Fund, John Hancock Special Equities Fund, John Hancock Strategic Series, John
Hancock Tax-Exempt Income Fund, John Hancock Tax-Exempt Series Fund and John
Hancock World Fund.
As a result of the Reorganization, the assets of Money Market Fund Class A
shares attributable to Cash Management Fund will pay total annual operating
expenses of 0.99% after giving effect to the fee limitations. While higher than
the total operating expenses of Cash Management Fund, the Adviser believes that
this expense ratio is comparable to expense ratios paid by shareholders of other
money market funds with similar investment objectives and distribution systems.
The Adviser also believes that this expense ratio will over time be comparable
to or lower than the expense ratio that will be paid by Cash Management Fund's
shareholders if the Reorganization does not take place. As described above under
the caption "Summary -- Reasons for the Reorganization," the Adviser believes
that Money Market Fund with its modern distribution system that provides for
multiple classes of shares and the payment of Rule 12b-1 fees will effectively
compete with Cash Management Fund for investor resources and that the assets of
Cash Management Fund will decline over time. This decline in assets will cause
an increase in the total annual operating expenses of Cash Management Fund. The
Adviser believes that over time such an increase in Cash Management Fund's total
annual operating expenses is likely to match or exceed the total annual
operating expenses of Money Market Fund after the Reorganization. See "The
Funds' Expenses" for the comparative fee tables showing the amount of fees and
expenses payable by Cash Management Fund prior to the Reorganization and the pro
forma amount of fees and expenses proposed to be paid by Money Market Fund Class
A Shares after the Reorganization.
In approving the consequent increase in the management fee on the assets
attributable to Cash Management Fund, the Trustees of Cash Management Fund,
including those Trustees who are not "interested persons" of the Fund or the
Adviser (the "Independent Trustees"), took into account all such factors as they
deemed relevant. These factors included the fact that the Adviser has agreed to
limit the management fee of Money Market Fund to 0.40% of the Fund's average
daily net assets while continuing to provide the same high level of advisory
services to the Fund. The investment management fee schedule applicable to Cash
Management Fund was approved in 1979, prior to the imposition of more stringent
regulation of money market funds by the SEC. Managing a money market fund to
comply with the requirements of these regulations is more complex because of the
more sophisticated analysis required to evaluate the money market instruments
being considered for purchase. The Trustees also considered information obtained
from Lipper Analytical Services, Inc. relating to the investment management fees
and total expenses paid by other money market funds comparable to Cash
Management Fund and the performance of those other money market funds.
14
<PAGE> 22
Set forth below are: (i) Cash Management Fund's investment management fees,
expressed as dollar amounts for a one year period ending on March 31, 1995; (ii)
Money Market Fund's pro forma investment management fees attributable to Class A
shares which assume the Reorganization had taken place on March 31, 1995; and
(iii) the difference between the actual and pro forma fee figures, expressed
both as dollar amounts and as percentages of Cash Management Fund's actual
management fees as of that year.
INVESTMENT MANAGEMENT FEE
<TABLE>
<CAPTION>
ACTUAL PRO FORMA DIFFERENCE
- -------- ---------- ----------
<S> <C> <C>
After giving effect to the Adviser's
agreement to limit the management
fee:
$958,674 $958,674 $0
0%
Without giving effect to the Adviser's
agreement to limit the management
fee:
$958,674 $1,198,342 $ 239,668
25%
</TABLE>
The Independent Trustees also considered specific information provided by the
Adviser relating to the revenues, expenses and profitability attributable to the
management of the assets of Cash Management Fund before the Reorganization and
to the assets attributable to Cash Management Fund as part of the assets of
Money Market Fund after the Reorganization. The Adviser advised the Independent
Trustees that the data presented was based on internal allocations of costs and
revenues pursuant to methods which the Adviser believed to be reasonable.
However, different allocation methods might have produced different results. The
Independent Trustees also considered comparative information relating to the
profitability of other investment company investment managers. The Trustees
believe that the Adviser's profitability will not be unduly enhanced by
completion of the Reorganization on the terms set forth in this Prospectus/
Proxy Statement.
The Board of Trustees of Cash Management Fund, including the Independent
Trustees, approved the Reorganization, and determined that it was in the long-
term best interests of Cash Management Fund and that the interests of Cash
Management Fund's shareholders would not be diluted within the meaning of Rule
17a-8 of the Investment Company Act as a result of the Reorganization.
Similarly, the Company's Board of Directors, including the Directors not
affiliated with the Fund, approved the Reorganization, and determined that it
was in the best interests of Money Market Fund and that the interests of Money
Market Fund's shareholders would not be diluted within the meaning of Rule 17a-8
of the Investment Company Act as a result of the Reorganization.
Tax Considerations. The consummation of the Reorganization is subject to the
receipt of an opinion of Hale and Dorr, counsel to the Funds, satisfactory to
Cash Management Fund and the Company, on behalf of Money Market Fund, as set
forth in the Agreement and substantially to the effect that:
(a) The acquisition by Money Market Fund of all of the assets of Cash Management
Fund solely in exchange for the issuance of Money Market Fund Class A Shares to
Cash Management Fund and the assumption of all of Cash
15
<PAGE> 23
Management Fund's liabilities by Money Market Fund, followed by the distribution
by Cash Management Fund, in liquidation of Cash Management Fund, of Money Market
Fund Class A Shares to the shareholders of Cash Management Fund in exchange for
their shares of beneficial interest of Cash Management Fund and the termination
of Cash Management Fund, will constitute a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and Cash Management Fund and Money Market Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) no gain or loss will be recognized by Cash Management Fund upon (a) the
transfer of all of its assets to Money Market Fund solely in exchange for the
issuance of Money Market Fund Class A Shares to Cash Management Fund, and the
assumption of all of Cash Management Fund's liabilities by Money Market Fund;
and (b) the distribution by Cash Management Fund of these Money Market Fund
Class A Shares to the shareholders of Cash Management Fund;
(c) no gain or loss will be recognized by Money Market Fund upon the receipt of
Cash Management Fund's assets solely in exchange for the issuance of Money
Market Fund Class A Shares to Cash Management Fund and the assumption of all of
Cash Management Fund's liabilities by Money Market Fund;
(d) the basis of the assets of Cash Management Fund acquired by Money Market
Fund will be, in each instance, the same as the basis of those assets in the
hands of Cash Management Fund immediately prior to the transfer;
(e) the tax holding period of the assets of Cash Management Fund in the hands of
Money Market Fund will, in each instance, include Cash Management Fund's tax
holding period for those assets;
(f) the shareholders of Cash Management Fund will not recognize gain or loss
upon the exchange of all of their shares of beneficial interest of Cash
Management Fund solely for Money Market Fund Class A Shares as part of the
Reorganization;
(g) the basis of the Money Market Fund Class A Shares received by Cash
Management Fund shareholders in the Reorganization will be the same as the basis
of the Cash Management Fund Shares surrendered in exchange therefor; and
(h) the tax holding period of the Money Market Fund Class A Shares received by
Cash Management Fund shareholders will include, for each shareholder, the tax
holding period for the Cash Management Fund shares surrendered in exchange
therefor, provided the Cash Management Fund shares were held as capital assets
on the date of the exchange.
Should a favorable opinion of Hale and Dorr as to the above matters not be
available at the time of the Closing, the authorized representatives of the
Funds may proceed with the Reorganization on a taxable basis. In a
reorganization involving two money market funds, the tax consequences of a
taxable reorganization will be negligible.
16
<PAGE> 24
THE MEETING
Time, Place and Date. The Meeting will be held on Wednesday, November 15, 1995,
at 101 Huntington Avenue, Boston, Massachusetts 02199, at 9:15 a.m., Boston
time.
RECORD DATE
The Record Date for determining shareholders entitled to notice of and to vote
at the Meeting is September 29, 1995.
VOTE REQUIRED
Approval of the Agreement by the shareholders of Cash Management Fund requires
the affirmative vote of a majority of the shares of Cash Management Fund
outstanding and entitled to vote. For this purpose, a majority of the
outstanding shares of Cash Management Fund means the vote of the lesser of (i)
67% or more of the shares present at the Meeting, if the holders of more than
50% of the shares of the Fund are present or represented by proxy, or (ii) more
than 50% of the outstanding shares of the Fund. The Reorganization does not
require the approval of Money Market Fund's shareholders. See "Proposal to
Approve the Agreement and Plan of Reorganization -- Voting Rights and Required
Vote."
RISK FACTORS AND SPECIAL CONSIDERATIONS
The investment objectives of the Funds are identical and the investment policies
of the Funds are substantially similar. For this reason, the risks associated
with an investment in the Funds are substantially similar. Money Market Fund may
purchase securities on a forward commitment or when-issued basis, while Cash
Management Fund may not. Forward purchases of debt securities may increase Money
Market Fund's overall investment exposure and involve a risk of loss if the
value of the securities declines before the settlement date.
Each Fund is permitted to invest up to 10% of its net assets in illiquid
securities including repurchase agreements maturing in more than seven days,
restricted securities and securities not readily marketable.
Each Fund may invest in U.S. dollar-denominated instruments of foreign and U.S.
issuers. Foreign issuers may not be subject to accounting standards and
governmental supervision comparable to U.S. companies and there is often less
publicly available information about their operations. Foreign markets generally
provide less liquidity than U.S. markets (and thus greater price volatility),
and typically provide fewer regulatory protections for investors. In addition,
foreign branches of U.S. banks may be subject to less stringent reserve
requirements than domestic branches. U.S. branches of foreign banks and foreign
branches of U.S. banks may provide less public information than, and may not be
subject to the same accounting, auditing and financial recordkeeping standards
as, domestic banks.
Money Market Fund may not invest more than 25% of its total assets in
obligations issued by foreign banks and foreign branches of U.S. banks where the
Adviser has determined that the U.S. bank is not unconditionally responsible for
17
<PAGE> 25
the payment obligations of the branch. Cash Management Fund has no such
limitation.
Money Market Fund is authorized to invest up to one-third of its total assets in
reverse repurchase agreements while Cash Management Fund may not invest in such
instruments. The use of reverse repurchase agreements involves leverage.
Leverage allows any investment gains made with the additional monies received to
increase the net asset value of a Fund's shares. However, if the additional
monies received are invested in ways that do not fully recover the costs to a
Fund of these transactions, the net asset value of that Fund may fall faster
than otherwise would have been the case.
Money Market Fund may lend portfolio securities to brokers, dealers and
financial institutions if the loan is collateralized by cash or U.S. Government
securities according to applicable regulatory requirements. The Fund may
reinvest any cash collateral in short-term securities. When the Fund lends
portfolio securities, there is a risk that the borrower may fail to return the
loaned securities. As a result, the Fund may incur a loss or in the event of the
borrower's bankruptcy, the Fund may be delayed in or prevented from liquidating
the collateral. It is a fundamental policy of the Fund not to lend portfolio
securities having a total value in excess of 30% of its total assets. Cash
Management Fund may not lend its portfolio securities.
INFORMATION CONCERNING THE MEETING
SOLICITATION, REVOCATION AND USE OF PROXIES
A majority of Cash Management Fund's outstanding shares that are entitled to
vote will be a quorum for the transaction of business. A Cash Management Fund
shareholder executing and returning a proxy has the power to revoke it at any
time before it is exercised, by filing a written notice of revocation with Cash
Management Fund's transfer agent, Investor Services, P.O. Box 9116, Boston,
Massachusetts 02205-9116, or by returning a duly executed proxy with a later
date before the time of the Meeting. Any shareholder who has executed a proxy
but is present at the Meeting and wishes to vote in person may revoke his or her
proxy by notifying the Secretary of Cash Management Fund (without complying with
any formalities) at any time before it is voted. Presence at the Meeting alone
will not serve to revoke a previously executed and returned proxy.
If a quorum is not present in person or by proxy at the time any session of the
Meeting is called to order, the persons named as proxies may vote those proxies
that have been received to adjourn the Meeting to a later date. If a quorum is
present but there are not sufficient votes in favor of the Proposal, the persons
named as proxies may propose one or more adjournments of the Meeting to permit
further solicitation of proxies with respect to the Proposal. Any adjournment
will require the affirmative vote of a majority of the shares of Cash Management
Fund, represented in person or by proxy, at the session of the Meeting to be
adjourned. If an adjournment of the Meeting is proposed because there are not
sufficient votes in favor of the Reorganization, the persons named as proxies
will vote those proxies in favor of the Reorganization in favor of adjournment,
and will vote those proxies against the Reorganization against adjournment.
18
<PAGE> 26
In addition to the solicitation of proxies by mail or in person, Cash Management
Fund may also arrange to have votes recorded by telephone by officers and
employees of the Fund or by personnel of the Adviser or Investor Services. The
telephone voting procedure is designed to authenticate a shareholder's identity,
to allow a shareholder to authorize the voting of shares in accordance with the
shareholder's instructions and to confirm that the voting instructions have been
properly recorded. If these procedures were subject to a successful legal
challenge, such votes would not be counted at the Meeting. The Fund has not
sought to obtain an opinion of counsel on this matter and is unaware of any such
challenge at this time. A shareholder will be called on a recorded line at the
telephone number in the Fund's account records and will be asked the
shareholder's Social Security number or other identifying information. The
shareholder will then be given an opportunity to authorize proxies to vote his
shares at the Meeting in accordance with the shareholder's instructions. To
ensure that the shareholder's instructions have been recorded correctly, the
shareholder will also receive a confirmation of the voting instructions in the
mail. A special toll-free number will be available in case the voting
information contained in the confirmation is incorrect. If the shareholder
decides after voting by telephone to attend the Meeting, the shareholder can
revoke the proxy at that time and vote the shares at the Meeting.
OUTSTANDING SHARES AND COMMON STOCK
At the close of business on August 31, 1995, 249,936,674 shares of beneficial
interest of Cash Management Fund were outstanding and entitled to vote. Only
Cash Management Fund shareholders of record at the close of business on the
Record Date are entitled to notice of and to vote at the Meeting and any
adjournment of the Meeting. As of August 31, 1995, 48,338,563 Class B shares of
common stock of Money Market Fund were outstanding. No Class A or Class S shares
of Money Market Fund were outstanding on August 31, 1995.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF CASH
MANAGEMENT FUND AND MONEY MARKET FUND
To the knowledge of Cash Management Fund, as of August 31, 1995, no person owned
of record or beneficially 5% or more of the outstanding shares of Cash
Management Fund.
To the knowledge of the Company, as of August 31, 1995, no person owned of
record or beneficially 5% or more of the outstanding Class B shares of Money
Market Fund.
As of August 31, 1995, the Trustees and officers of Cash Management Fund, as a
group, owned in the aggregate less than 1% of the outstanding shares of
beneficial interest of Cash Management Fund. As of August 31, 1995, the
Directors and officers of the Company, as a group, owned in the aggregate less
than 1% of the outstanding Class B shares of common stock of Money Market Fund.
19
<PAGE> 27
PROPOSAL TO APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION
The shareholders of Cash Management Fund are being asked to approve the
Agreement, a copy which is attached as EXHIBIT A. The Reorganization will
consist of: (a) the transfer of all of Cash Management Fund's assets to Money
Market Fund, in exchange solely for the issuance of Money Market Fund Class A
Shares to Cash Management Fund and the assumption of Cash Management Fund's
liabilities by Money Market Fund, (b) the subsequent distribution by Cash
Management Fund, as part of its liquidation, of the Money Market Fund Class A
Shares to Cash Management Fund's shareholders and (c) the termination of Cash
Management Fund's existence. The Money Market Fund Class A Shares issued upon
the consummation of the Reorganization will have an aggregate net asset value
equal to that of Cash Management Fund's shares. As noted above, the asset values
of Cash Management Fund and Money Market Fund will be determined at the close of
business (4:00 p.m. Eastern Time) on the Closing Date for purposes of the
Reorganization. See "Description of Agreement" below.
Pursuant to the Agreement, Cash Management Fund will liquidate and distribute
the Money Market Fund Class A Shares received, as described above, pro rata to
the shareholders of record determined as of the close of regular trading on the
New York Stock Exchange on the Closing Date. The result of the transfer of
assets will be that Money Market Fund will add to its portfolio the net assets
of Cash Management Fund. Shareholders of Cash Management Fund will become Class
A shareholders of Money Market Fund. If any Cash Management Fund shares were
subject to a CDSC, then the Money Market Fund Class A Shares received in
exchange therefore will be subject to the same CDSC, including all terms and
conditions for computing and applying such CDSC.
The Agreement and the Reorganization were approved by the Board of Trustees of
Cash Management Fund at a meeting held on August 28, 1995. The Agreement and the
Reorganization were approved by the Board of Directors of the Company on behalf
of Money Market Fund at a meeting held on September 11, 1995. In connection with
their approval of the Reorganization, the Board of Trustees considered several
matters described in greater detail above under the caption "Summary -- Reasons
for the Proposed Reorganization."
The Board of Trustees also considered the fact that the Adviser and John Hancock
Funds will receive certain benefits from the Reorganization. The consolidated
portfolio management effort might result in time savings for the Adviser and the
preparation of fewer prospectuses, reports and regulatory filings. The Trustees,
however, do not believe that this consideration will amount to a significant
economic benefit. As described above under the caption "Summary --
Reorganization -- Effect of the Reorganization-Rule 12b-1 Fees and Management
Fees," the imposition of the Rule 12b-1 fee on that portion of assets
contributed to Money Market Fund by Cash Management Fund will immediately result
in an increase in revenues attributable to Rule 12b-1 fees for John Hancock
Funds. However, those revenues will be used to reimburse John Hancock Funds for
its distribution related activities on behalf of Money Market Fund and to
compensate selling brokers for their account maintenance services on behalf of
Money Market Fund shareholders.
20
<PAGE> 28
BOARDS' EVALUATION AND RECOMMENDATION
On the basis of the factors described above and other factors, the Board of
Trustees, including a majority of the Trustees who are not "interested persons"
(as defined in the Investment Company Act) of the Fund, determined that the
Reorganization is in the long-term best interests of Cash Management Fund and
that the interests of Cash Management Fund's shareholders will not be diluted
within the meaning of Rule 17a-8 of the Investment Company Act as a result of
the Reorganization. On the same basis, the Board of Directors of the Company,
including a majority of the Directors who are not "interested persons" (as
defined in the Investment Company Act) of the Fund, determined that the
Reorganization is in the best interests of Money Market Fund and that the
interests of Money Market Fund's shareholders will not be diluted within the
meaning of Rule 17a-8 of the Investment Company Act as a result of the
Reorganization.
THE TRUSTEES OF JOHN HANCOCK CASH MANAGEMENT FUND RECOMMEND THAT THE
SHAREHOLDERS OF JOHN HANCOCK CASH MANAGEMENT FUND VOTE FOR THE PROPOSAL TO
APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
DESCRIPTION OF AGREEMENT
The following description of the Agreement is a summary, does not purport to be
complete, and is subject in all respects to the provisions of the Agreement, and
is qualified in its entirety by reference to the Agreement. A copy of the
Agreement is attached to this Proxy Statement and Prospectus as EXHIBIT A and
should be read in its entirety. Paragraph references are to appropriate
provisions of the Agreement.
Method of Carrying Out Reorganization. If Cash Management Fund shareholders
approve the Agreement, the Reorganization will be consummated promptly after the
various conditions to the obligations of each of the parties are satisfied (see
Agreement, paragraphs 6 through 8). The Reorganization will be completed on the
Closing Date (as defined above).
On the Closing Date, Cash Management Fund will transfer all of its assets to
Money Market Fund in exchange for Money Market Fund Class A Shares with an
aggregate net asset value equal to the value of the assets delivered, less the
liabilities of Cash Management Fund assumed, as of the close of business on the
Closing Date (see Agreement, paragraphs 1 and 2).
The value of Cash Management Fund's assets and Money Market Fund's net asset
values per Class A share will be determined according to the valuation
procedures set forth in Cash Management Fund's Declaration of Trust and By-Laws
and in the Money Market Fund Prospectus, respectively (see "Share Price" in the
Money Market Fund Prospectus). No initial sales charge or CDSC will be imposed
upon delivery of the Money Market Fund Class A Shares in exchange for the assets
of Cash Management Fund.
Surrender of Share Certificates. Cash Management Fund shareholders whose shares
are represented by one or more share certificates should, prior to the Closing
Date, either surrender their certificates to Cash Management Fund or deliver to
Cash Management Fund an affidavit with respect to lost certificates, in the form
and accompanied by the surety bonds that Cash Management Fund may require
(collectively, an "Affidavit"). On the Closing Date, all certificates
21
<PAGE> 29
which have not been surrendered will be deemed to be cancelled, will no longer
evidence ownership of Cash Management Fund's shares and will evidence ownership
of Money Market Fund Class A Shares. Shareholders may not redeem or transfer
Money Market Fund Class A Shares received in the Reorganization until they have
surrendered their Cash Management Fund share certificates or delivered an
Affidavit relating to them. Money Market Fund will not issue share certificates
in the Reorganization.
Conditions Precedent to Closing. The obligation of Cash Management Fund to
consummate the Reorganization is subject to the satisfaction of certain
conditions precedent, including the Company's performance of all acts and
undertakings required under the Agreement and the receipt of all consents,
orders and permits necessary to consummate the Reorganization (see Agreement,
paragraphs 6 through 8).
The obligation of Money Market Fund to consummate the Reorganization is subject
to the satisfaction of certain conditions precedent, including Cash Management
Fund's performance of all acts and undertakings to be performed under the
Agreement, the receipt of certain documents and financial statements from Cash
Management Fund, and the receipt of all consents, orders and permits necessary
to consummate the Reorganization (see Agreement, paragraphs 6 through 8).
The obligations of both parties are subject to the receipt of approval and
authorization of the Agreement by the requisite vote of the holders of the
outstanding shares of beneficial interest of Cash Management Fund in accordance
with the provisions of the Fund's Declaration of Trust, as amended, and By-Laws
(as described in the section captioned "Voting Rights and Required Vote") and
the receipt of a favorable opinion of Hale and Dorr as to the federal income tax
consequences of the Reorganization. (See Agreement, paragraph 8).
Termination of Agreement. The Agreement may be terminated, whether or not
approval of Cash Management Fund's shareholders has been obtained, by mutual
agreement of the parties. In addition, either party may terminate its
obligations under the Agreement at or prior to the Closing Date, because of a
material breach by the other party of any representations, warranties or
agreements contained in the Agreement, or if a condition precedent in the
Agreement has not been met.
Expenses of the Reorganization. Money Market Fund and Cash Management Fund will
each be responsible for its own expenses incurred in connection with entering
into and carrying out the provisions of the Agreement, whether or not the
Reorganization is consummated.
Tax Considerations. The consummation of the Reorganization is subject to the
receipt of a favorable opinion of Hale and Dorr, counsel to the Funds,
satisfactory to Cash Management Fund and to the Company on behalf of Money
Market Fund and described above under the caption "Summary --
Reorganization -- Tax Considerations." Should a favorable opinion of Hale and
Dorr as to the above matters not be available at the time of the Closing, the
authorized representatives of the Funds may proceed with the Reorganization on a
taxable basis. In a reorganization involving two money market funds, the tax
consequences of a taxable reorganization will be negligible.
22
<PAGE> 30
VOTING RIGHTS AND REQUIRED VOTE
Each Cash Management Fund share is entitled to one vote. Approval of the
Proposal requires the affirmative vote of a majority of the shares of Cash
Management Fund outstanding and entitled to vote. For this purpose, a majority
of the outstanding shares of Cash Management Fund means the vote of the lesser
of (i) 67% or more of the shares of the Fund present at the Meeting, if the
holders of more than 50% of the shares of the Fund are present or represented by
proxy, or (ii) more than 50% of the outstanding shares of the Fund.
Shares of beneficial interest of Cash Management Fund represented in person or
by proxy, including shares which abstain or do not vote with respect to the
Proposal, will be counted for purposes of determining whether a quorum is
present at the Meeting. Accordingly, an abstention from voting has the same
effect as a vote against the Proposal. However, if a broker or nominee holding
shares in "street name" indicates on the proxy card that it does not have
discretionary authority to vote on the Proposal, those shares will not be
considered as present and entitled to vote with respect to the Proposal.
Accordingly, a "broker non-vote" has no effect on the voting in determining
whether the Proposal has been adopted pursuant to clause (i) in the immediately
preceding paragraph, provided that the holders of more than 50% of the
outstanding shares (excluding the "broker non-votes") are present or
represented. However, for purposes of determining whether the Agreement has been
adopted pursuant to clause (ii) in the immediately preceding paragraph, a
"broker non-vote" has the same effect as a vote against the Agreement because
shares represented by a "broker non-vote" are considered to be outstanding
shares.
If the requisite approval of shareholders is not obtained, Cash Management Fund
will continue to engage in business as a registered open-end, management
investment company and the Board of Trustees will consider what further action
may be appropriate.
CAPITALIZATION
The following table sets forth the capitalization of each Fund as of March 31,
1995, and the pro forma combined capitalization of both Funds as if the
Reorganization had occurred on such date. With respect to Money Market Fund, the
table includes only Class B shares as no Class A shares were outstanding on
March 31, 1995. The table reflects pro forma exchange ratios of approximately
one Money Market Fund share being issued for each share of Cash Management Fund.
If the Reorganization is consummated, the actual exchange ratios on the Closing
Date are not expected to vary from those indicated.
<TABLE>
<CAPTION>
MONEY MARKET
CASH FUND (CLASS B PRO FORMA
MANAGEMENT FUND SHARES) COMBINED
--------------- ------------- ------------
<S> <C> <C> <C>
Net Assets................... $ 255,237,358 $62,118,754 $317,356,112
Net Asset Value Per Share.... $ 1.00 $ 1.00 $ 1.00
Shares Outstanding........... 255,237,358 62,118,754 317,356,112
</TABLE>
23
<PAGE> 31
COMPARATIVE PERFORMANCE INFORMATION
YIELD AND EFFECTIVE YIELD
The following table shows the average yield and effective yield achieved by each
Fund for the seven day and twelve month periods ended March 31, 1995. These
figures are computed in accordance with the SEC's standard formula.
<TABLE>
<CAPTION>
AVERAGE YIELD EFFECTIVE YIELD
------------------------------ ------------------------------
SEVEN DAYS THIRTY DAYS SEVEN DAYS THIRTY DAYS
ENDED ENDED ENDED ENDED
FUND MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995
- ----------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash Management
Fund................. 5.35% 5.33% 5.49% 5.46%
Money Market Fund
(Class B)............ 4.00% 3.99% 4.06% 4.05%
</TABLE>
BUSINESS OF CASH MANAGEMENT FUND
GENERAL
For a discussion of the organization and operation of Cash Management Fund, see
"Investment Objective and Policies" and "Organization and Management of the
Fund" in the Cash Management Fund Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
For a discussion of Cash Management Fund's investment objective and policies,
see "Investment Objective and Policies" in the Cash Management Fund Prospectus.
TRUSTEES
For a discussion of the responsibilities of the Board of Trustees, see
"Organization and Management of the Fund" in the Cash Management Fund
Prospectus.
INVESTMENT ADVISER AND DISTRIBUTOR
For a discussion regarding Cash Management Fund's investment adviser and
distributor, see "Organization and Management of the Fund," "How to Buy Shares"
and "Share Price" in the Cash Management Fund Prospectus.
EXPENSES
For a discussion of Cash Management Fund's expenses, see "Expense Information"
and "The Fund's Expenses" in the Cash Management Fund Prospectus.
CUSTODIAN AND TRANSFER AGENT
Cash Management Fund's custodian is State Street Bank and Trust Company. Cash
Management Fund's transfer agent is John Hancock Investor Services Corporation.
CASH MANAGEMENT FUND SHARES
For a discussion of Cash Management Fund's shares of beneficial interest, see
"Organization and Management of the Fund" in the Cash Management Fund
Prospectus.
PURCHASE OF CASH MANAGEMENT FUND SHARES
For a discussion of how shares of Cash Management Fund may be purchased or
exchanged, see "How to Buy Shares" and "Additional Services and Programs" in
24
<PAGE> 32
the Cash Management Fund Prospectus. In anticipation of the Reorganization,
after the Record Date, no new accounts may be opened in Cash Management Fund.
Existing shareholders of Cash Management Fund may continue to acquire shares of
the Fund after the Record Date by direct purchase, through a monthly automatic
accumulation plan and through reinvestment of dividends and distributions.
REDEMPTION OF CASH MANAGEMENT FUND SHARES
For a discussion of how shares of Cash Management Fund may be redeemed (other
than in the Reorganization), see "How to Redeem Shares" in the Cash Management
Fund Prospectus. Cash Management Fund shareholders whose shares are represented
by share certificates will be required to surrender their certificates for
cancellation or deliver an affidavit of loss accompanied by an adequate surety
bond to Investor Services in order to redeem Money Market Fund Class A Shares
received in the Reorganization.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For a discussion of Cash Management Fund's policy with respect to dividends,
distributions and taxes, see "Dividends and Taxes" in the Cash Management Fund
Prospectus.
BUSINESS OF MONEY MARKET FUND
For a discussion of the organization and current operation of Money Market Fund,
see "Investment Objective and Policies" and "Organization and Management of the
Fund" in the Money Market Fund Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
For a discussion of Money Market Fund's investment objective and policies, see
"Investment Objective and Policies" in the Money Market Fund Prospectus.
DIRECTORS
For a discussion of the responsibilities of the Board of Directors, see
"Organization and Management of the Fund" in the Money Market Fund Prospectus.
INVESTMENT ADVISER AND DISTRIBUTOR
For a discussion regarding Money Market Fund's investment adviser and
distributor, see "Organization and Management of the Fund," "How to Buy Shares"
and "Share Price" in the Money Market Fund Prospectus.
EXPENSES
For a discussion of Money Market Fund's expenses, see "Expense Information" and
"The Fund's Expenses" in the Money Market Fund Prospectus.
CUSTODIAN AND TRANSFER AGENT
Money Market Fund's custodian is State Street Bank and Trust Company. Money
Market Fund's transfer agent is John Hancock Investor Services Corporation.
MONEY MARKET FUND SHARES
For a discussion of Money Market Fund Shares, see "Organization and Management
of the Fund" in the Money Market Fund Prospectus.
25
<PAGE> 33
PURCHASE OF MONEY MARKET FUND SHARES
For a discussion of how Class A and Class B shares of Money Market Fund may be
purchased or exchanged, see "How to Buy Shares" and "Additional Services and
Programs" in the Money Market Fund Prospectus.
REDEMPTION OF MONEY MARKET FUND SHARES
For a discussion of how Class A and Class B shares of Money Market Fund may be
redeemed, see "How to Redeem Shares" in the Money Market Fund Prospectus. Former
shareholders of Cash Management Fund whose shares are represented by share
certificates will be required to surrender their certificates for cancellation
or deliver an affidavit of loss accompanied by an adequate surety bond to
Investor Services in order to redeem Money Market Fund Class A Shares received
in the Reorganization.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For a discussion of Money Market Fund's policy with respect to dividends,
distributions and taxes, see "Dividends and Taxes" in the Money Market Fund
Prospectus.
EXPERTS
The respective financial statements and the financial highlights of Money Market
Fund as of October 31, 1994 and for the year then ended and Cash Management Fund
as of September 30, 1994 and for the year then ended, incorporated by reference
into the Proxy Statement and Prospectus, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon appearing in the
Statement of Additional Information, and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
AVAILABLE INFORMATION
Each Fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the Investment Company Act, and in accordance therewith
files reports, proxy statements and other information with the SEC. These
reports, proxy statements and other information filed by Cash Management Fund
and the Company, on behalf of Money Market Fund, can be inspected
and copied (at prescribed rates) at the public reference facilities of the SEC
at 450 Fifth Street, N.W., Washington, D.C., and at the following regional
offices: Chicago (500 West Madison Street, Suite 1400, Chicago, Illinois); and
New York (7 World Trade Center, Suite 1300, New York, New York). Copies of such
material can also be obtained by mail from the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
26
<PAGE> 34
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this 9th day
of October, 1995, by and between John Hancock Series, Inc., a Maryland
corporation (the "Company"), on behalf of John Hancock Money Market Fund (the
"Acquiring Fund") and John Hancock Cash Management Fund (the "Acquired Fund"), a
Massachusetts business trust, each with their principal place of business at 101
Huntington Avenue, Boston, Massachusetts 02199. The Acquiring Fund and the
Acquired Fund are sometimes referred to collectively herein as the "Funds" and
individually as a "Fund."
This Agreement is intended to be and is adopted as a plan of "reorganization,"
as such term is used in Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). The reorganization will consist of the transfer of all of
the assets of the Acquired Fund to the Acquiring Fund in exchange solely for the
issuance of Class A shares of common stock, $.01 par value, of the Acquiring
Fund (the "Acquiring Fund Class A Shares") to the Acquired Fund and the
assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund,
followed by the distribution by the Acquired Fund, on or promptly after the
Closing Date hereinafter referred to, of the Acquiring Fund Class A Shares to
the shareholders of the Acquired Fund in liquidation and termination of the
Acquired Fund as provided herein, all upon the terms and conditions set forth in
this Agreement.
In consideration of the premises of the covenants and agreements hereinafter set
forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF ACQUIRING FUND CLASS A SHARES; LIQUIDATION OF THE
ACQUIRED FUND
1.1 The Acquired Fund will transfer all of its assets (consisting, without
limitation, of portfolio securities and instruments, dividends and interest
receivables, cash and other assets), as set forth in the statement of assets
and liabilities referred to in Paragraph 7.2 hereof (the "Statement of
Assets and Liabilities"), to the Acquiring Fund free and clear of all liens
and encumbrances, except as otherwise provided herein, in exchange for (i)
the assumption by the Acquiring Fund of the known and unknown liabilities of
the Acquired Fund, including the liabilities set forth in the Statement of
Assets and Liabilities (the "Acquired Fund Liabilities"), which shall be
assigned and transferred to the Acquiring Fund by the Acquired Fund and
assumed by the Acquiring Fund, and (ii) delivery by the Acquiring Fund to
the Acquired Fund, for distribution pro rata by the Acquired Fund to its
shareholders in proportion to their respective ownership of shares of
beneficial interest of the Acquired Fund, as of the close of business on the
closing date (the "Closing Date"), of a number of the Acquiring Fund Class A
Shares having an aggregate net asset value equal to the value of the assets,
less such liabilities (herein referred to as the "net value of the assets"),
assumed, assigned and delivered, all determined as provided in Paragraph 2.1
hereof and as of a date and time as specified therein. Such transactions
shall take
A-1
<PAGE> 35
place at the closing provided for in Paragraph 3.1 hereof (the "Closing").
All computations shall be provided by State Street Bank and Trust Company
(the "Custodian"), as custodian and pricing agent for the Acquiring Fund and
the Acquired Fund.
1.2 The Acquired Fund has provided the Acquiring Fund with a list of the current
securities holdings of the Acquired Fund as of the date of execution of this
Agreement. The Acquired Fund reserves the right to sell any of these
securities (except to the extent sales may be limited by representations
made in connection with issuance of the tax opinion provided for in
paragraph 8.6 hereof) but will not, without the prior approval of the
Acquiring Fund, acquire any additional securities other than securities of
the type in which the Acquiring Fund is permitted to invest.
1.3 The Acquiring Fund and the Acquired Fund shall each bear its own expenses in
connection with the transactions contemplated by this Agreement.
1.4 On or as soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Acquired Fund will liquidate and distribute pro
rata to shareholders of record (the "Acquired Fund shareholders"),
determined as of the close of regular trading on the New York Stock Exchange
on the Closing Date, the Acquiring Fund Class A Shares received by the
Acquired Fund pursuant to Paragraph 1.1 hereof. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring Fund
Class A Shares then credited to the account of the Acquired Fund on the
books of the Acquiring Fund, to open accounts on the share records of the
Acquiring Fund in the names of the Acquired Fund shareholders and
representing the respective pro rata number of Acquiring Fund Class A Shares
due such shareholders. All Acquired Fund shareholders will receive Acquiring
Fund Class A Shares. If shares of the Acquired Fund acquired in an exchange
from another mutual fund are subject to a contingent deferred sales charge
("CDSC") immediately prior to the Closing, the successor Acquiring Fund
Class A Shares received in the Reorganization shall be subject to the same
CDSC, including all terms and conditions for computing and applying such
CDSC. The Acquiring Fund shall not issue certificates representing Acquiring
Fund Class A Shares in connection with such exchange.
1.5 The Acquired Fund shareholders holding certificates representing their
ownership of shares of beneficial interest of the Acquired Fund shall
surrender such certificates or deliver an affidavit with respect to lost
certificates in such form and accompanied by such surety bonds as the
Acquired Fund may require (collectively, an "Affidavit"), to John Hancock
Investor Services Corporation prior to the Closing Date. Any Acquired Fund
share certificate which remains outstanding on the Closing Date shall be
deemed to be cancelled, shall no longer evidence ownership of shares of
beneficial interest of the Acquired Fund and shall evidence ownership of
Acquiring Fund Class A Shares. Unless and until any such certificate shall
be so surrendered or an Affidavit relating thereto shall be delivered,
dividends and other distributions payable by the Acquiring Fund subsequent
to the Liquidation Date with respect to Acquiring Fund Class A Shares shall
be paid to the holder of such certificate(s), but such shareholders may not
redeem or transfer Acquiring Fund Class A Shares received in the
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<PAGE> 36
Reorganization. The Acquiring Fund will not issue stock certificates in the
Reorganization.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund Class A Shares in
a name other than the registered holder of the Acquired Fund Shares on the
books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund
Class A Shares are to be issued and transferred.
1.7 The existence of the Acquired Fund shall be terminated as promptly as
practicable following the Liquidation Date.
1.8 Any reporting responsibility of the Acquired Fund, including, but not
limited to, the responsibility for filing of regulatory reports, tax
returns, or other documents with the Securities and Exchange Commission (the
"Commission"), any state securities commissions, and any federal, state or
local tax authorities or any other relevant regulatory authority, is and
shall remain the responsibility of the Acquired Fund.
2. VALUATION
2.1 The net asset values of the Acquiring Fund Class A Shares and the net values
of the assets and liabilities of the Acquired Fund to be transferred or
assumed shall, in each case, be determined as of the close of business (4:00
p.m. Boston time) on the Closing Date. The net asset values of the Acquiring
Fund Class A Shares shall be computed by the Custodian in the manner set
forth in the Company's Articles of Organization ("Articles"), as amended, or
By-laws and the Acquiring Fund's then-current prospectus and statement of
additional information and shall be computed in each case to not fewer than
four decimal places. The net values of the assets of the Acquired Fund to be
transferred shall be computed by the Custodian by calculating the value of
the assets transferred by the Acquired Fund and by subtracting therefrom the
amount of the liabilities assigned and transferred to and assumed by the
Acquiring Fund on the Closing Date, said assets and liabilities to be valued
in the manner set forth in the Acquired Fund's thencurrent prospectus and
statement of additional information and shall be computed in each case to
not fewer than four decimal places.
2.2 The number of Acquiring Fund Class A Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's assets shall
be determined by dividing the value of the Acquired Fund's assets, less the
liabilities assumed by the Acquiring Fund, by the Acquiring Fund's net asset
value per Class A share, all as determined in accordance with Paragraph 2.1
hereof.
2.3 All computations of value shall be made by the Custodian in accordance with
its regular practice under Rule 2a-7.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be November 17, 1995 or such other date on or before
December 31, 1995 as the parties may agree. The Closing shall be held as of
5:00 p.m. at the offices of the Company, 101 Huntington Avenue,
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Boston, Massachusetts 02199, or at such other time and/or place as the
parties may agree.
3.2 Portfolio securities that are not held in book-entry form in the name of the
Custodian as record holder for the Acquired Fund shall be presented by the
Acquired Fund to the Custodian for examination no later than five business
days preceding the Closing Date. Portfolio securities which are not held in
book-entry form shall be delivered by the Acquired Fund to the Custodian for
the account of the Acquiring Fund on the Closing Date, duly endorsed in
proper form for transfer, in such condition as to constitute good delivery
thereof in accordance with the custom of brokers, and shall be accompanied
by all necessary federal and state stock transfer stamps or a check for the
appropriate purchase price thereof. Portfolio securities held of record by
the Custodian in book-entry form on behalf of the Acquired Fund shall be
delivered to the Acquiring Fund by the Custodian by recording the transfer
of beneficial ownership thereof on its records. The cash delivered shall be
in the form of currency or by the Custodian crediting the Acquiring Fund's
account maintained with the Custodian with immediately available funds.
3.3 In the event that on the Closing Date (a) the New York Stock Exchange shall
be closed to trading or trading thereon shall be restricted or (b) trading
or the reporting of trading on said Exchange or elsewhere shall be disrupted
so that accurate appraisal of the value of the net assets of the Acquiring
Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored; provided that if
trading shall not be fully resumed and reporting restored on or before
December 31, 1995, this Agreement may be terminated by the Acquiring Fund or
by the Acquired Fund upon the giving of written notice to the other party.
3.4 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding
and nonresident alien withholding status of the Acquired Fund shareholders
and the number of outstanding shares of the Acquired Fund owned by each such
shareholder, all as of the close of business on the Closing Date, certified
by its Treasurer, Secretary or other authorized officer (the "Shareholder
List"). The Acquiring Fund shall issue and deliver to the Acquired Fund a
confirmation evidencing the Acquiring Fund Class A Shares to be credited on
the Closing Date, or provide evidence satisfactory to the Acquired Fund that
such Acquiring Fund Class A Shares have been credited to the Acquired Fund's
account on the books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, stock
certificates, receipts or other documents as such other party or its counsel
may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Acquired Fund represents, warrants and covenants to the Acquiring Fund
as follows:
(a) The Acquired Fund is a voluntary association with transferable shares of
the type commonly referred to as a business trust, duly organized and
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validly existing under the laws of The Commonwealth of Massachusetts and
has the power to own all of its properties and assets and, subject to
approval by the shareholders of the Acquired Fund, to carry out the
transactions contemplated by this Agreement. The Acquired Fund is not
required to qualify to do business in any jurisdiction in which it is
not so qualified or where failure to qualify would subject it to any
material liability or disability. The Acquired Fund has all necessary
federal, state and local authorizations to own all of its properties and
assets and to carry on its business as now being conducted;
(b) The Acquired Fund is a registered investment company classified as a
management company and its registration with the Commission as an
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), is in full force and effect. The Acquired Fund is a
diversified fund;
(c) The Acquired Fund is not, and the execution, delivery and performance of
its obligations under this Agreement will not result, in violation of
any provision of the Acquired Fund's Declaration of Trust, as amended,
or By-Laws or of any agreement, indenture, instrument, contract, lease
or other undertaking to which the Acquired Fund is a party or by which
it is bound;
(d) Except as otherwise disclosed in writing and accepted by the Acquiring
Fund, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is currently
pending or threatened against the Acquired Fund or any of the Acquired
Fund's properties or assets. The Acquired Fund knows of no facts which
might form the basis for the institution of such proceedings, and the
Acquired Fund is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects the Acquired Fund's business or its
ability to consummate the transactions herein contemplated;
(e) The Acquired Fund has no material contracts or other commitments (other
than this Agreement or agreements for the purchase of securities entered
into in the ordinary course of business and consistent with its
obligations under this Agreement) which will not be terminated without
liability to the Acquired Fund at or prior to the Closing Date;
(f) The unaudited statement of assets and liabilities, including the
schedule of investments, of the Acquired Fund as of March 31, 1995 and
the related statement of operations (copies of which have been furnished
to the Acquiring Fund) present fairly in all material respects the
financial condition of the Acquired Fund as of March 31, 1995 and the
results of its operations for the period then ended in accordance with
generally accepted accounting principles consistently applied, and there
were no known actual or contingent liabilities of the Acquired Fund as
of the respective dates thereof not disclosed therein;
(g) Since March 31, 1995, there has not been any material adverse change in
the Acquired Fund's financial condition, assets, liabilities, or
business other than changes occurring in the ordinary course of
business, or any
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<PAGE> 39
incurrence by the Acquired Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund;
(h) At the date hereof and by the Closing Date, all federal, state and other
tax returns and reports, including information returns and payee
statements, of the Acquired Fund required by law to have been filed or
furnished by such dates shall have been filed or furnished, and all
federal, state and other taxes, interest and penalties shall have been
paid so far as due, or provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge no such return
is currently under audit and no assessment has been asserted with
respect to such returns or reports;
(i) The Acquired Fund has elected to be treated as a regulated investment
company for federal income tax purposes, has qualified as such for each
taxable year of its operation and will qualify as such as of the Closing
Date with respect to its final taxable year ending on the Closing Date;
(j) The authorized capital of the Acquired Fund consists of unlimited number
of shares of beneficial interest, no par value. There is only one class
of shares of the Acquired Fund. All issued and outstanding shares of
beneficial interest of the Acquired Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid and
nonassessable by the Acquired Fund. All of the issued and outstanding
shares of beneficial interest of the Acquired Fund will, at the time of
Closing, be held by the persons and in the amounts and classes set forth
in the Shareholder List submitted to the Acquiring Fund pursuant to
Paragraph 3.4 hereof. The Acquired Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of
its shares of beneficial interest, nor is there outstanding any security
convertible into any of its shares of beneficial interest;
(k) At the Closing Date, the Acquired Fund will have good and marketable
title to the assets to be transferred to the Acquiring Fund pursuant to
Paragraph 1.1 hereof, and full right, power and authority to sell,
assign, transfer and deliver such assets hereunder, and upon delivery
and payment for such assets, the Acquiring Fund will acquire good and
marketable title thereto subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the Securities
Act of 1933, as amended (the "1933 Act");
(l) The execution, delivery and performance of this Agreement have been duly
authorized by all necessary action on the part of the Acquired Fund, and
this Agreement constitutes a valid and binding obligation of the
Acquired Fund enforceable in accordance with its terms, subject to the
approval of the Acquired Fund's shareholders;
(m) The information to be furnished by the Acquired Fund to the Acquiring
Fund for use in applications for orders, registration statements, proxy
materials and other documents which may be necessary in connection with
the transactions contemplated hereby shall be accurate and
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<PAGE> 40
complete and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable thereto;
(n) The proxy statement of the Acquired Fund (the "Proxy Statement") to be
included in the Registration Statement referred to in Paragraphs 4.2(c)
and 5.7 hereof (other than written information furnished by the
Acquiring Fund for inclusion therein, as covered by the Acquiring Fund's
warranty in Paragraph 4.2(m) hereof), on the effective date of the
Registration Statement, on the date of the meeting of the Acquired Fund
shareholders and on the Closing Date, shall not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading;
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquired
Fund of the transactions contemplated by this Agreement;
(p) All of the issued and outstanding shares of beneficial interest of the
Acquired Fund have been offered for sale and sold in conformity with all
applicable federal and state securities laws;
(q) The prospectus of the Acquired Fund, dated February 1, 1995 (the
"Acquired Fund Prospectus"), previously furnished to the Acquiring Fund,
does not contain any untrue statements of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were
made, not misleading.
4.2 The Company on behalf of the Acquiring Fund represents, warrants and
covenants to the Acquired Fund as follows:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland and has the power
to own all of its properties and assets and to carry out the Agreement.
Neither the Company nor the Acquiring Fund is required to qualify to do
business in any jurisdiction in which it is not so qualified or where
failure to qualify would subject it to any material liability or
disability. The Company has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on
its business as now being conducted;
(b) The Company is a registered investment company classified as a
management company and its registration with the Commission as an
investment company under the 1940 Act is in full force and effect. The
Acquiring Fund is a diversified series of the Company;
(c) The prospectus (the "Acquiring Fund Prospectus") and statement of
additional information for Class A and Class B shares of the Acquiring
Fund, each dated September 12, 1995, and any amendments or supplements
thereto on or prior to the Closing Date, and the Registration Statement
on Form N-14 to be filed in connection with this Agreement (the
"Registration Statement") (other than written information furnished by
the Acquired Fund for inclusion therein, as covered by
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<PAGE> 41
the Acquired Fund's warranty in Paragraph 4.1(m) hereof) will conform in
all material respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission thereunder,
the Acquiring Fund Prospectus does not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and the
Registration Statement will not include any untrue statement of material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(d) At the Closing Date, the Company on behalf of the Acquiring Fund will
have good and marketable title to the assets of the Acquiring Fund;
(e) The Company and the Acquiring Fund are not, and the execution, delivery
and performance of their obligations under this Agreement will not
result, in violation of any provisions of the Company's Articles, as
amended, or By-Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Company or the
Acquiring Fund is a party or by which the Company or the Acquiring Fund
is bound;
(f) Except as otherwise disclosed in writing and accepted by the Acquired
Fund, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is currently
pending or threatened against the Company or the Acquiring Fund or any
of the Acquiring Fund's properties or assets. The Company knows of no
facts which might form the basis for the institution of such
proceedings, and neither the Company nor the Acquiring Fund is a party
to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects the
Acquiring Fund's business or its ability to consummate the transactions
herein contemplated;
(g) The unaudited statement of assets and liabilities, including the
schedule of investments, of the Acquiring Fund as of April 30, 1995 and
the related statement of operations (copies of which have been furnished
to the Acquired Fund), present fairly in all material respects the
financial condition of the Acquiring Fund as of April 30, 1995 and the
results of its operations for the period then ended in accordance with
generally accepted accounting principles consistently applied, and there
were no known actual or contingent liabilities of the Acquiring Fund as
of the respective dates thereof not disclosed herein;
(h) Since April 30, 1995, there has not been any material adverse change in
the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of
business, or any incurrence by the Company on behalf of the Acquiring
Fund of indebtedness maturing more than one year from the date such
indebtedness was incurred, except as disclosed to and accepted by the
Acquired Fund;
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<PAGE> 42
(i) The Acquiring Fund has elected to be treated as a regulated investment
company for federal income tax purposes, has qualified as such for each
taxable year of its operation and will qualify as such as of the Closing
Date;
(j) The authorized capital of the Company consists of six billion five
hundred million (6,500,000,000) shares of common stock, par value $.01
per share, divided into six series, including the Acquiring Fund. The
shares of the Acquiring Fund are divided into three classes, Class A,
Class B and Class S. All issued and outstanding shares of common stock
of the Acquiring Fund are, and at the Closing Date will be, duly and
validly issued and outstanding, fully paid and nonassessable by the
Company. The Acquiring Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any of its shares
of common stock, nor is there outstanding any security convertible into
any of its shares of common stock;
(k) The execution, delivery and performance of this Agreement has been duly
authorized by all necessary action on the part of the Company on behalf
of the Acquiring Fund, and this Agreement constitutes a valid and
binding obligation of the Acquiring Fund enforceable in accordance with
its terms;
(l) The Acquiring Fund Class A Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement, when so issued
and delivered, will be duly and validly issued shares of common stock of
the Acquiring Fund and will be fully paid and nonassessable by the
Company;
(m) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements, proxy materials and
other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and
shall comply in all material respects with federal securities and other
laws and regulations applicable thereto; and
(n) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquiring
Fund of the transactions contemplated by the Agreement, except for the
registration of the Acquiring Fund Class A Shares under the 1933 Act,
the 1940 Act and under state securities laws.
5. COVENANTS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
5.1 Except as expressly contemplated herein to the contrary, the Acquired Fund
and the Company, on behalf of Acquiring Fund, will operate their respective
businesses in the ordinary course between the date hereof and the Closing
Date, it being understood that such ordinary course of business will include
customary dividends and distributions and any other distributions necessary
or desirable to avoid federal income or excise taxes.
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<PAGE> 43
5.2 The Acquired Fund will call a meeting of the Acquired Fund shareholders to
consider and act upon this Agreement and to take all other action necessary
to obtain approval of the transactions contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring Fund Class A Shares to be
issued hereunder are not being acquired by the Acquired Fund for the purpose
of making any distribution thereof other than in accordance with the terms
of this Agreement.
5.4 The Acquired Fund will provide such information within its possession or
reasonably obtainable as the Company on behalf of the Acquiring Fund
requests concerning the beneficial ownership of the Acquired Fund's shares
of beneficial interest.
5.5 Subject to the provisions of this Agreement, the Acquiring Fund and the
Acquired Fund each shall take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate the transactions contemplated by this Agreement.
5.6 The Acquired Fund shall furnish to the Company on behalf of the Acquiring
Fund on the Closing Date the Statement of Assets and Liabilities of the
Acquired Fund as of the Closing Date, which statement shall be prepared in
accordance with generally accepted accounting principles consistently
applied and shall be certified by the Acquired Fund's Treasurer or Assistant
Treasurer. As promptly as practicable but in any case within 60 days after
the Closing Date, the Acquired Fund shall furnish to the Acquiring Fund, in
such form as is reasonably satisfactory to the Company, a statement of the
earnings and profits of the Acquired Fund for federal income tax purposes
and of any capital loss carryovers and other items that will be carried over
to the Acquiring Fund as a result of Section 381 of the Code, and which
statement will be certified by the President of the Acquired Fund.
5.7 The Company on behalf of the Acquiring Fund will prepare and file with the
Commission the Registration Statement in compliance with the 1933 Act and
the 1940 Act in connection with the issuance of the Acquiring Fund Class A
Shares as contemplated herein.
5.8 The Acquired Fund will prepare a Proxy Statement, to be included in the
Registration Statement in compliance with the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act and the
rules and regulations thereunder (collectively, the "Acts") in connection
with the special meeting of shareholders of the Acquired Fund to consider
approval of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRED FUND
The obligations of the Acquired Fund to complete the transactions provided for
herein shall be, at its election, subject to the performance by the Company on
behalf of the Acquiring Fund of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition thereto, the following
further conditions:
6.1 All representations and warranties of the Company on behalf of the Acquiring
Fund contained in this Agreement shall be true and correct in all
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<PAGE> 44
material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date
with the same force and effect as if made on and as of the Closing Date; and
6.2 The Company on behalf of the Acquiring Fund shall have delivered to the
Acquired Fund a certificate executed in its name by the Company's President
or Vice President and its Treasurer or Assistant Treasurer, in form and
substance satisfactory to the Acquired Fund and dated as of the Closing
Date, to the effect that the representations and warranties of the Company
on behalf of the Acquiring Fund made in this Agreement are true and correct
at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other matters as
the Acquired Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY ON BEHALF OF THE ACQUIRING
FUND
The obligations of the Company on behalf of the Acquiring Fund to complete the
transactions provided for herein shall be, at its election, subject to the
performance by the Acquired Fund of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions:
7.1 All representations and warranties of the Acquired Fund contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as
if made on and as of the Closing Date;
7.2 The Acquired Fund shall have delivered to the Company on behalf of the
Acquiring Fund the Statement of Assets and Liabilities of the Acquired Fund,
together with a list of its portfolio securities showing the federal income
tax bases and holding periods of such securities, as of the Closing Date,
certified by the Treasurer or Assistant Treasurer of the Acquired Fund;
7.3 The Acquired Fund shall have delivered to the Company on behalf of the
Acquiring Fund on the Closing Date a certificate executed in the name of the
Acquired Fund by a President or Vice President and a Treasurer or Assistant
Treasurer of the Acquired Fund, in form and substance satisfactory to the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired Fund in this Agreement are
true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and as to such
other matters as the Company on behalf of the Acquiring Fund shall
reasonably request; and
7.4 At or prior to the Closing Date, the Acquired Fund's investment adviser, or
an affiliate thereof, shall have made all payments, or applied all credits,
to the Acquired Fund required by any applicable contractual or state-imposed
expense limitation.
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<PAGE> 45
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY, THE ACQUIRING
FUND AND THE ACQUIRED FUND
The obligations of the Company, the Acquiring Fund and the Acquired Fund
hereunder are each subject to the further conditions that on or before the
Closing Date:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of
beneficial interest of the Acquired Fund in accordance with the provisions
of the Acquired Fund's Declaration of Trust, as amended, and By-Laws, and
certified copies of the resolutions evidencing such approval by the Acquired
Fund's shareholders shall have been delivered by the Acquired Fund to the
Company on behalf of the Acquiring Fund;
8.2 On the Closing Date no action, suit or other proceeding shall be pending
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain changes or other relief in connection with, this
Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and permits of
federal, state and local regulatory authorities (including those of the
Commission and of state Blue Sky and securities authorities, including "no-
action" positions of such federal or state authorities) deemed necessary by
the Acquired Fund and the Company to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of
the Acquiring Fund or the Acquired Fund, provided that either party hereto
may waive any such conditions for itself;
8.4 The Registration Statement shall have become effective under the 1933 Act
and the 1940 Act and no stop orders suspending the effectiveness thereof
shall have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or
be pending, threatened or contemplated under the 1933 Act or the 1940 Act;
8.5 The Acquired Fund shall have distributed to its shareholders all of its
investment company taxable income (as defined in Section 852(b)(2) of the
Code) for its taxable year ending on the Closing Date and all of its net
capital gain (as such term is used in Section 852(b)(3)(C) of the Code),
after reduction by any available capital loss carryforward, for its taxable
year ending on the Closing Date; and
8.6 The parties shall have received an opinion of Messrs. Hale and Dorr,
satisfactory to the Acquired Fund and the Company on behalf of the Acquiring
Fund, substantially to the effect that for federal income tax purposes:
(a) The acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund
Class A Shares to the Acquired Fund and the assumption of all of the
Acquired Fund Liabilities by the Acquiring Fund, followed by the
distribution by the Acquired Fund, in liquidation of the Acquired Fund,
of Acquiring Fund Class A Shares to the shareholders of the Acquired
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<PAGE> 46
Fund in exchange for their shares of beneficial interest of the Acquired
Fund and the termination of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and
the Acquired Fund and the Acquiring Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired Fund upon (i) the
transfer of all of its assets to the Acquiring Fund solely in exchange
for the issuance of Acquiring Fund Class A Shares to the Acquired Fund
and the assumption of all of the Acquired Fund Liabilities by the
Acquiring Fund; and (ii) the distribution by the Acquired Fund of such
Acquiring Fund Class A Shares to the shareholders of the Acquired Fund;
(c) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for the
issuance of the Acquiring Fund Class A Shares to the Acquired Fund and
the assumption of all of the Acquired Fund Liabilities by the Acquiring
Fund;
(d) The basis of the assets of the Acquired Fund acquired by the Acquiring
Fund will be, in each instance, the same as the basis of those assets in
the hands of the Acquired Fund immediately prior to the transfer;
(e) The tax holding period of the assets of the Acquired Fund in the hands
of the Acquiring Fund will, in each instance, include the Acquired
Fund's tax holding period for those assets;
(f) The shareholders of the Acquired Fund will not recognize gain or loss
upon the exchange of all of their shares of the Acquired Fund solely for
Acquiring Fund Class A Shares as part of the transaction;
(g) The basis of the Acquiring Fund Class A Shares received by the Acquired
Fund shareholders in the transaction will be the same as the basis of
the shares of beneficial interest of the Acquired Fund surrendered in
exchange therefor; and
(h) The tax holding period of the Acquiring Fund Class A Shares received by
the Acquired Fund shareholders will include, for each shareholder, the
tax holding period for the shares of the Acquired Fund surrendered in
exchange therefor, provided that the Acquired Fund shares were held as
capital assets on the date of the exchange.
The Company, on behalf of the Acquiring Fund, and the Acquired Fund, agree to
make and provide representations with respect to the Acquiring Fund and the
Acquired Fund, respectively, which are reasonably necessary to enable Hale and
Dorr to deliver an opinion substantially as set forth in this Paragraph 8.6.
9. BROKERAGE FEES AND EXPENSES
9.1 The Company, on behalf of the Acquiring Fund, and the Acquired Fund,
represent and warrant to the Acquired Fund and the Acquiring Fund,
respectively, that there are no brokers or finders entitled to receive any
payments in connection with the transactions provided for herein.
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<PAGE> 47
9.2 The Acquiring Fund and the Acquired Fund shall each be liable solely for its
own expenses incurred in connection with entering into and carrying out the
provisions of this Agreement whether or not the transactions contemplated
hereby are consummated.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Company, on behalf of the Acquiring Fund, and the Acquired Fund agree
that neither party has made any representation, warranty or covenant not
set forth herein or referred to in Paragraph 4 hereof and that this
Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this Agreement
or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Company, on
behalf of the Acquiring Fund, and the Acquired Fund. In addition, either
party may at its option terminate this Agreement at or prior to the Closing
Date:
(a) because of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be performed at or
prior to the Closing Date;
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which
reasonably appears will not or cannot be met;
(c) by resolution of the Company's Board of Directors if circumstances
should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the
Acquiring Fund's shareholders; or
(d) by resolution of the Acquired Fund's Board of Trustees if circumstances
should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the Acquired
Fund's shareholders.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Company, the Acquiring Fund or the Acquired
Fund, or the Directors, Trustees or officers of the Company or the Trust,
but each party shall bear the expenses incurred by it incidental to the
preparation and carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon by the authorized officers of the Trust and the Company.
However, following the meeting of shareholders of the Acquired Fund held
pursuant to Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for determining the
number of Acquiring Fund Class A Shares to be received by the Acquired Fund
shareholders under this Agreement to the detriment of such shareholders without
A-14
<PAGE> 48
their further approval; provided that nothing contained in this Article 12 shall
be construed to prohibit the parties from amending this Agreement to change the
Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any provisions
of this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy or certified mail addressed to the Acquiring Fund or to the Acquired
Fund, each at 101 Huntington Avenue, Boston, Massachusetts 02199, Attention:
President, and, in either case, with copies to Hale and Dorr, 60 State Street,
Boston, Massachusetts 02109, Attention: Pamela J. Wilson, Esq.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts.
14.4 This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
hereof or of any rights or obligations hereunder shall be made by any party
without the prior written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to confer upon or
give any person, firm or corporation, other than the parties hereto and
their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
A-15
<PAGE> 49
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first set forth above by its President or Vice President
and has caused its corporate seal to be affixed hereto.
JOHN HANCOCK SERIES, INC. on behalf of
JOHN HANCOCK MONEY MARKET FUND
By: /s/ Anne C. Hodsdon
---------------------------------------------------------------------------
Name: Anne C. Hodsdon
Title: President
JOHN HANCOCK CASH MANAGEMENT FUND
By: /s/ Thomas H. Drohan
---------------------------------------------------------------------------
Name: Thomas H. Drohan
Title: Senior Vice President
A-16
<PAGE> 50
[LOGO] JOHN HANCOCK FUNDS VOTE THIS PROXY CARD TODAY!
A GLOBAL INVESTMENT MANAGEMENT FIRM YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
- -------------------------------------------------------------------------------
JOHN HANCOCK CASH MANAGEMENT FUND
101 HUNTINGTON AVENUE, BOSTON, MASSACHUSETTS 02199
SPECIAL MEETING OF THE SHAREHOLDERS -- NOVEMBER 15, 1995
PROXY SOLICITATION BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward J.
Boudreau, Jr., Thomas H. Drohan and James B. Little, with full power of
substitution in each, to vote all the shares of beneficial interest of John
Hancock Cash Management Fund ("Cash Management Fund" or the "Fund") which the
undersigned is (are) entitled to vote at the Special Meeting of Shareholders
(the "Meeting") of Cash Management Fund to be held at 101 Huntington Avenue,
Boston, Massachusetts, on November 15, 1995 at 9:15 a.m., Boston time, and at
any adjournment of the Meeting. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting, or, if only one votes and
acts, then by that one. Receipt of the Proxy Statement dated October 9, 1995 is
hereby acknowledged. If not revoked, this proxy shall be voted:
PLEASE SIGN, DATE AND
RETURN PROMPTLY IN
ENCLOSED ENVELOPE
Date , 1995
NOTE: Signature(s) should agree with
name(s) printed herein. When signing
as attorney, executor, administrator,
trustee or guardian, please give your
full title as such. If a corporation,
please sign in full corporate name by
president or other authorized officer.
If a partnership, please sign in
partnership name by authorized person.
--------------------------------------
Signature(s)
<PAGE> 51
[LOGO] JOHN HANCOCK FUNDS VOTE THIS PROXY CARD TODAY!
A GLOBAL INVESTMENT MANAGEMENT FIRM YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
- -------------------------------------------------------------------------------
THIS PROXY SHALL BE VOTED IN FAVOR OF (FOR) PROPOSALS 1 AND 2 IF NO
SPECIFICATION IS MADE BELOW. AS TO ANY OTHER MATTER, SAID PROXY OR PROXIES
SHALL VOTE IN ACCORDANCE WITH THEIR BEST JUDGEMENT. Please vote by filling in
the appropriate box below, as shown, using blue or black ink or dark pencil. Do
not use red ink. [X]
FOR AGAINST ABSTAIN
1. To approve an Agreement and Plan of [ ] [ ] [ ]
Reorganization between John Hancock Series,
Inc., on behalf of John Hancock Money Market
Fund and Cash Management Fund, providing for
John Hancock Money Market Fund's acquisition of
all Cash Management Fund's assets in exchange
solely for the assumption of Cash Management
Fund's liabilities and the issuance of Class A
shares of John Hancock Money Market Fund to
Cash Management Fund for distribution to its
shareholders.
2. In their discretion of said proxy or proxies, to
act upon such other matters as may properly
come before the Meeting or any adjournment of
the Meeting.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THIS CARD.
