As filed with the Securities and Exchange Commission on May 24, 2006.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
JOHN HANCOCK EQUITY TRUST
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed per Exchange Act Rules 14a-6(i)(1) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offseting fee was paid previously.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
- --------------------------------------------------------------------------------
Important Information
- --------------------------------------------------------------------------------
[Logo]
John Hancock(R)
- --------------------
JOHN HANCOCK FUNDS
May 24, 2006
Dear Fellow Shareholder:
I am writing to ask for your vote on important matters concerning your
investment in John Hancock's mutual funds that are managed by Independence
Investment LLC ("Independence"). Independence has served as the sub-adviser to
John Hancock Core Equity Fund, John Hancock Independence Diversified Core
Equity Fund II and John Hancock Small Cap Fund for a number of years. The
attached proxy statement explains the proposals and I have provided a brief
overview of these matters below.
o Independence is currently a subsidiary of Manulife Financial Corporation
("Manulife"). Convergent Capital Management has entered into an agreement
with Manulife to transfer all of Independence's assets to a new subsidiary
to be formed at Convergent. This new subsidiary will be named "New
Independence."
o Your vote concerns retaining New Independence, the successor entity to
Independence, as your fund's sub-adviser. Under this arrangement, the
portfolio management team that currently manages your fund would continue
to manage it at New Independence. Your fund's management fees will not
change as a result of this new sub-advisory agreement.
o An additional proposal you are being asked to vote on would allow John
Hancock Advisers, LLC to appoint a new sub-adviser in the future without
shareholder approval. This would reduce the cost and time of a proxy
solicitation if your trustees determine it is appropriate to appoint a new
sub-adviser.
After careful consideration, your fund's trustees recommend you vote in favor
of these proposals. They believe retaining New Independence as the sub-adviser
to your fund is in the best interests of you and your fellow shareholders
because it promotes the long-term continuation of your fund's strategy and
management. In addition, voting for a policy that gives John Hancock Advisers,
LLC the authority to appoint a new sub-adviser without shareholder approval may
reduce future costs.
If approved by the shareholders, the proposed changes will be effective on July
14, 2006. I encourage you to read the proxy statement and vote promptly to help
us avoid the need for additional mailings at your fund's expense. Your vote
matters, no matter the size of your investment.
You may vote one of three ways: via telephone by calling 1-888-221-0697; via
mail by returning the enclosed voting card; or via the Internet by visiting
www.jhfunds.com and selecting the shareholder entryway.
If you have any questions or need additional information, please contact a John
Hancock Funds Customer Service Representative at 1-800-225-5291 between 8:00
A.M. and 7:00 P.M. Eastern Time. I thank you for your prompt attention to this
significant matter.
Sincerely,
/s/ Keith Hartstein
Keith Hartstein
Chief Executive Officer
John Hancock Advisers, LLC
JOHN HANCOCK CORE EQUITY FUND
(a series of John Hancock Capital Series)
JOHN HANCOCK INDEPENDENCE DIVERSIFIED CORE EQUITY FUND II
(a series of John Hancock Institutional Series Trust)
JOHN HANCOCK SMALL CAP FUND
(a series of John Hancock Equity Trust)
(collectively, the "funds")
601 Congress Street
Boston, MA 02210
Notice of Joint Special Meeting of Shareholders
to be Held July 12, 2006
A joint Special Meeting of Shareholders of each fund will be held at the funds'
offices located on the 14th floor at 601 Congress Street, Boston,
Massachusetts, on July 12, 2006 at 9:00 A.M., Eastern Time. The funds' Special
Meetings are expected to be held concurrently and are referred to collectively
as the "Meeting". The purpose of the Meeting is to consider and act upon the
following:
1. A proposal to approve sub-investment management contracts among John
Hancock Advisers, LLC, each fund and Independence Investments LLC. Your
board of trustees recommends that you vote FOR this proposal.
2. A proposal to approve a policy allowing the board of trustees and John
Hancock Advisers, LLC to retain sub-advisers for your fund without
shareholder approval. Your board of trustees recommend that you vote FOR
this proposal.
3. Any other business that may properly come before the meeting.
Shareholders of record as of the close of business on May 16, 2006 are entitled
to vote at the meeting and any related follow-up meetings.
Whether or not you expect to attend the meeting, please complete and return the
enclosed proxy card. Please take a few minutes to vote now.
By order of the board of trustees,
Alfred P. Ouellette
Assistant Secretary
May 24, 2006
PROXY STATEMENT OF
John Hancock Core Equity Fund
(a series of John Hancock Capital Series)
John Hancock Independence Diversified Core Equity Fund II
(a series of John Hancock Institutional Series Trust)
John Hancock Small Cap Fund
(a series of John Hancock Equity Trust)
(collectively, the "funds")
This proxy statement contains the information you should know before voting on
the proposals summarized below.
The funds will furnish without charge a copy of their most recent semiannual
and annual reports to any shareholder upon request. Shareholders who want to
obtain a copy of these reports should direct all written requests to the
attention of their respective fund, 601 Congress Street, Boston, Massachusetts
02210 or should call John Hancock Funds at 1-800-225-5291.
INTRODUCTION
This proxy statement is being used at the special meeting of each fund's
shareholders to be held concurrently (collectively, the "meeting") at the
principal executive offices of the funds, 601 Congress Street, 14th floor,
Boston, Massachusetts on July 12, 2006 at 9:00 A.M., Eastern Time. The purpose
of the meeting is to consider:
1. A proposal to approve a sub-investment management contract among John
Hancock Advisers, LLC, each fund and Independence Investments LLC.
2. A proposal to approve a policy allowing the board of trustees and John
Hancock Advisers, LLC to retain sub-advisers for your fund without
shareholder approval.
3. Any other business that may properly come before the meeting.
This proxy statement and the proxy card are being mailed to fund shareholders
on or about May 24, 2006.
Who is Eligible to Vote?
Shareholders of record on May 16, 2006 are entitled to attend and vote on each
proposal at the meeting or any adjourned meeting. Shareholders of each fund
will vote separately on each proposal and each proposal may be adopted
separately by each fund. Shareholders of each class of a fund will vote
together as a single class on each proposal. Each share is entitled to one
vote. Shares represented by properly executed proxies, unless revoked before or
at the meeting, will be voted according to shareholder instructions. If you
sign a proxy, but do not fill in a vote, your shares will be voted "for" the
proposals. If any other business comes before the meeting, your shares will be
voted at the discretion of the persons named as proxies.
PROPOSAL 1
Approval of a New Sub-Investment Management Contract
John Hancock Advisers, LLC (the "adviser") serves as each fund's investment
adviser and is responsible for providing each fund with a continuous investment
program under an investment management contract (a "management contract") with
each fund. To manage the day-to-day investment of each fund's assets, the
adviser has retained Independence Investment LLC ("Independence") as
sub-adviser.
Independence is currently a subsidiary of Manulife Financial Corporation
("Manulife"). A subsidiary of Manulife has entered into an agreement with the
parent of Convergent Capital Management ("Convergent") pursuant to which
substantially all of the assets of Independence will be transferred to a newly
formed subsidiary ("New Independence") of Convergent (the "Transaction"). The
adviser believes that retaining New Independence as sub-adviser to your fund is
in the best interest of your fund's shareholders because it promotes the
long-term continuity of your fund's investment strategy and management. The
existing sub-advisory contract with Independence will automatically terminate
due to the change in control of Independence.
The sub-advisory fees payable under each proposed sub-investment management
contract will be borne by the adviser and not by a fund. This proposal will not
have any effect upon the fees paid by the funds to the
1
adviser or the consideration paid to the sub-adviser by the adviser. The
adviser will be solely responsible for paying the proposed subadvisory fee to
New Independence. The investment management fees payable by each fund to the
adviser under the management contracts will not change.
For a summary of the trustees' rationale for recommending that shareholders
vote to hire Independence, see "Board Consideration of Approval of New
Sub-Investment Management Contracts" below.
About Independence and New Independence
Independence is located at 53 State Street, Boston, MA 02109 and is the
sub-adviser to each fund. Independence was founded in 1982 and is an indirect,
wholly-owned subsidiary of Manulife. As of March 31, 2006, Independence managed
approximately $8.0 billion in assets under management, including the funds,
accounts of or controlled by Manulife or its affiliates, and third party
accounts.
New Independence is located at 53 State Street, Boston, MA 02109 and is the
proposed new sub-adviser to each fund. New Independence is a newly created
subsidiary of Convergent.
The principal executive officer and the directors of Independence and New
Independence are listed below, along with their principal occupations.
Independence:
Name and Title Principal Occupation
- ---------------------------------------------------------------------------------------------------
Mark. C. Lapman Chief Executive Officer and President, Independence
Chief Executive Officer &
President, Director
- ---------------------------------------------------------------------------------------------------
Miriam F. Cooper, Executive Vice President and Chief Operating Officer, Independence
Executive Vice President &
Chief Operating Officer,
Director
- ---------------------------------------------------------------------------------------------------
John M. DeCiccio Retired
Director
- ---------------------------------------------------------------------------------------------------
Ronald J. McHugh Senior Vice President, John Hancock Life Insurance Company
Director
- ---------------------------------------------------------------------------------------------------
Norman Light Senior Vice President, Manulife Financial Corporation
Director
- ---------------------------------------------------------------------------------------------------
Leo DeBever Executive Vice President, Manulife Financial Corporation
Director
- ---------------------------------------------------------------------------------------------------
New Independence:
Name and Title Principal Occupation
- ---------------------------------------------------------------------------------------------------------
Mark. C. Lapman Chief Executive Officer and President, New Independence
Chief Executive Officer &
President, Director
- ---------------------------------------------------------------------------------------------------------
Miriam F. Cooper, Executive Vice President and Chief Operating Officer, New Independence
Executive Vice President &
Chief Operating Officer,
Director
- ---------------------------------------------------------------------------------------------------------
Richard T. Adler Chief Executive Officer and President, Convergent Capital Management, LLC
Director
- ---------------------------------------------------------------------------------------------------------
Vernon C. Kozlen Executive Vice President, City National Bank
Director
- ---------------------------------------------------------------------------------------------------------
Jon C. Hunt Chief Operating Officer, Convergent Capital Management, LLC
Director
- ---------------------------------------------------------------------------------------------------------
2
About Convergent
Convergent, located at 190 South LaSalle Street, Suite 2800, Chicago, Illinois
60603, is an investment management holding company that currently operates
through nine subsidiaries. Collectively, these Convergent subsidiaries have
assets under management of approximately $8.5 billion. Convergent is a
subsidiary of City National Corporation, a publicly traded financial services
company located in California.
About the Proposed Change in Control of Independence
The Transaction is structured as a sale of assets. New Independence will acquire
substantially all of the assets of Independence and assume many of
Independence's liabilities. New Independence will be a subsidiary of Convergent.
The transaction is not anticipated to have any effect upon the portfolio
management team or resources of the sub-adviser. The portfolio manager of each
fund has agreed to be an employee of New Independence. Under the agreement with
Convergent, all of the employees of Independence are to be offered employment
with New Independence. Independence believes that most of its employees,
including the portfolio managers and analysts responsible for each of the funds
and the executives responsible for the management of Independence, will become
employees of New Independence. The Transaction is not expected to result in any
material change in the manner in which New Independence conducts its business,
its compliance systems or resources, or its investment operations. There are no
plans for changes in the portfolio management team for the funds or in the
current executive management of Independence. No changes in investment process
or resources are anticipated to occur as a result of the Transaction.
In consideration for such transfer of assets and assumption of liabilities,
Convergent will pay Manulife a specified amount at closing. Manulife will also
receive additional consideration on certain anniversary dates of the closing to
the extent the revenue received by New Independence from the management of
proprietary accounts of Manulife and its affiliates or accounts for which
Manulife or its affiliates act as investment adviser, including the funds, meet
certain revenue targets. Consequently, while the contingent payments are not
dependent upon the approval or continuation of the sub-investment management
contracts with respect to any fund, the revenues earned by New Independence as
a result of its sub-advisory relationship with respect to the funds would count
towards the revenue target necessary to earn the contingent payments.
The closing of the Transaction is subject to a number of customary conditions,
including the requirement that the revenue run rate of New Independence from
consenting clients is not less than 77.5% of the historical revenue run rate of
Independence. However, the approval of new sub-investment management contracts
for the funds, while affecting the ability to achieve such revenue run rate, is
not a condition to the closing of the Transaction. Convergent and Manulife have
agreed that in order to comply with Section 15(f) under the Investment Company
Act of 1940, as amended ("the 1940 Act"), no unfair burden will be imposed on
any of the funds for a period of two years after the closing. In addition, each
fund's board of trustees currently complies with the requirements under Section
15(f)(1)(A) of the 1940 Act, which requires that at least 75% of the members of
the board are not "interested persons" of Independence or New Independence. The
adviser anticipates the Transaction to close on May 31, 2006, although there is
no assurance that the Transaction will be completed or as to the actual timing.
Nothing in the agreement between Manulife and Convergent imposes any
limitations upon the rights of the adviser to recommend termination of the
sub-investment management contract.
About the Adviser
The adviser is the investment adviser to each fund. John Hancock is a unit of
Manulife, a leading Canadian-based financial services group located at 200
Bloor Street East, Toronto, Ontario, Canada serving millions of customers in 19
countries and territories worldwide. Operating as Manulife Financial in Canada
and most of Asia, and primarily through John Hancock in the United States, the
company offers clients a diverse range of financial protection products and
wealth management services through its extensive network of employees, agents
and distribution partners. Funds under management by Manulife and its
subsidiaries were Cdn$ 386 billion (US$ 330 billion) as of March 31, 2006.
The adviser is located at 601 Congress Street, Boston, Massachusetts and was
organized in 1968. The adviser had approximately $28 billion in assets under
management as of March 31, 2006 in its capacity as investment adviser to the
funds in the John Hancock group of funds, as well as privately managed
accounts.
The board of trustees of each fund is responsible for overseeing the
performance of each fund's investment adviser and determining whether to
approve and renew each fund's investment management contract.
3
The principal executive officers and the directors of the adviser are listed
below, along with their principal occupations.
Name and Title Principal Occupation
- --------------------------------------------------------------------------------------------------------------------------------
James R. Boyle Chairman and Director, the adviser, The Berkeley Financial Group, LLC ("The Berkeley
Chairman and Director Group") (holding company) and John Hancock Funds, LLC ("John Hancock Funds");
President, John Hancock Annuities; Executive Vice President, John Hancock Life Insurance
Company (since June, 2004); President U.S. Annuities; Senior Vice President, The
Manufacturers Life Insurance Company (U.S.A.) (prior to 2004).
- --------------------------------------------------------------------------------------------------------------------------------
Keith F. Hartstein Senior Vice President, Manulife Financial Corporation (since 2004); Director, President and
Director, President and Chief Chief Executive Officer, the adviser and The Berkeley Group (holding company); Director,
Executive Officer President and Chief Executive Officer, John Hancock Funds; Director, President and Chief
Executive Officer, Sovereign Asset Management LLC ("Sovereign"); Director, John Hancock
Signature Services, Inc.; Director, Chairman and President, NM Capital Management, Inc.
(NM Capital); Chairman, Investment Company Institute Sales Force Marketing Committee
(since 2003); Executive Vice President, John Hancock Funds (until 2005).
- --------------------------------------------------------------------------------------------------------------------------------
John G. Vrysen Director, Executive Vice President and Chief Financial Officer, the adviser, Sovereign, The
Director, Executive Vice Berkeley Group and John Hancock Funds (since 2005); Vice President and General Manager,
President and Chief Fixed Annuities, U.S. Wealth Management (until 2005); Vice President, Operations Manulife
Financial Officer Wood Logan (until 2004).
- --------------------------------------------------------------------------------------------------------------------------------
William H. King Vice President and Treasurer of each of the John Hancock funds advised by the adviser;
Vice President and Treasurer Vice President and Assistant Treasurer, the adviser.
- --------------------------------------------------------------------------------------------------------------------------------
Francis V. Knox, Jr. Vice President and Chief Compliance Officer for Hancock Investment Company, John Hancock
Vice President and Chief Life Insurance Company (U.S.A.), John Hancock Life Insurance Company and John Hancock
Compliance Officer Funds (since 2005); Fidelity Investments -- Vice President and Assistant Treasurer, Fidelity
Group of Funds (until 2004); Fidelity Investments -- Vice President and Ethics & Compliance
Officer (until 2001).
- --------------------------------------------------------------------------------------------------------------------------------
Investment Performance
The following table shows the investment performance for each fund during the
one, five and ten year periods ended March 31, 2006 and the performance of each
fund's benchmark index during the same periods.
Fund One year Five years Ten years
- ---------------------------------------------------------------------------------
John Hancock Core Equity Fund 6.07% 1.79% 6.82%
Class A shares
- ---------------------------------------------------------------------------------
S&P 500 Total Return Index 11.73% 3.97% 8.95%
- ---------------------------------------------------------------------------------
John Hancock Small Cap Fund 15.26% 13.26% N/A*
Class A shares
- ---------------------------------------------------------------------------------
Russell 2000 Total Return Index 25.85% 12.59% N/A
- ---------------------------------------------------------------------------------
John Hancock Independence Diversified Core 13.21% 4.81% 8.46%
Equity Fund II Class I shares
- ---------------------------------------------------------------------------------
S&P 500 Total Return Index 11.73% 3.97% 8.95%
- ---------------------------------------------------------------------------------
* The fund's Class A shares commenced operations on December 16, 1998.
Terms of the Proposed and Existing Sub-Investment Management Contracts
The terms of each fund's proposed sub-investment management contracts are
substantially the same as the terms of the fund's existing sub-investment
management contracts, except for the dates of execution, effectiveness and
termination. The sub-advisory fees to be paid by the adviser to New
Independence under the proposed sub-investment management contracts are
identical to the fees under the existing sub-investment management contracts.
All the terms described below with respect to each fund's proposed
sub-investment management contract are contained in the fund's existing
sub-investment management contract. The following summary of the terms of the
proposed sub-investment management contracts is qualified by reference to the
representative form of proposed sub-investment management contract attached to
this proxy statement as Exhibit A. Because the proposed sub-investment
management contracts are substantially similar except for the sub-advisory fee
rates, only one representative form of proposed sub-investment management
contract for these funds is included as Exhibit A.
4
Compensation. The proposed sub-investment management contracts provide that New
Independence is required to pay all expenses that it incurs in connection with
the performance of its duties under the sub-investment management contract. The
sub-investment management contract also provides that the adviser, not the
fund, will pay the sub-advisory fees.
The following table shows the investment management fee and the sub-advisory
fee for each of the funds. The investment management fee is expressed as a
percentage of average daily net assets and the fees are in dollars for the most
recent fiscal year.
Investment Sub-Advisory
Management Fee Paid
Investment Fee Paid (for the most
Management Sub-Advisory (for most recently recently ended
Fund Fee Rate Fee Rate ended fiscal year) fiscal year)
- ---------------------------------------------------------------------------------------------------------------------------
John Hancock 0.75% up to $750 million 35% of investment $2,792,282 $ 977,299
Core Equity Fund 0.70% over $750 million management fee
- ---------------------------------------------------------------------------------------------------------------------------
John Hancock 0.90% up to $1 billion 0.41% of average daily $1,151,996 $ --**
Small Cap Fund 0.85% over $1 billion* net asset value
- ---------------------------------------------------------------------------------------------------------------------------
John Hancock 0.50% up to $1 billion 35% of investment $ 130,440 $ 45,654
Independence Diversified 0.45% over $1 billion management fee
Core Equity Fund II
- ---------------------------------------------------------------------------------------------------------------------------
* Effective 7/1/05.
** Independence waived the sub-advisory fee through the fund's fiscal year
ended October 31, 2005.
Term. If approved by shareholders of the fund, the proposed sub-investment
management contracts will each take effect as of July 14, 2006 and will remain
in effect until June 30, 2007. Thereafter, the proposed sub-investment
management contract will continue in effect from year to year subject to the
annual approval of its continuance as described below under "Termination,
Continuance and Amendment."
Limitation of Liability of Sub-Adviser. New Independence will not be liable for
any losses, claims, damages, liabilities or litigation (including legal and
other expenses) incurred or suffered by the adviser, the funds or any of their
affiliates as a result of any error of judgment or mistake of law by New
Independence with respect to the funds, except that nothing in the proposed
sub-investment management contract will limit New Independence's liability for
New Independence's willful misfeasance, bad faith or gross negligence generally
in the performance of its duties hereunder or its reckless disregard of its
obligations and duties under each sub-investment management contract.
Termination, Continuance and Amendment. Each sub-investment management contract
will continue in effect from year to year subject to annual approval of its
continuance by a majority of the independent trustees, cast in person at a
meeting called for the purpose of voting on such approval, and annual approval
by either (a) each fund's trustees, or (b) a majority of each fund's
outstanding voting securities, as defined in the 1940 Act. Each sub-investment
management contract may be terminated at any time without penalty on 60 days'
written notice by the trustees, by a vote of a majority of a fund's outstanding
voting securities, or by the adviser or sub-adviser. The sub-investment
management contract terminates automatically in the event of its assignment or
in the event that the adviser ceases to act as the fund's investment adviser.
The Management Contract
Under each fund's management contract, the adviser, subject to the direction of
the trustees, provides each fund with a continuous investment program for the
management of its assets, consistent with such fund's investment objective and
policies. The adviser furnishes each fund with advice and recommendations
consistent with the investment policies of the fund regarding the purchase,
holding and disposition of portfolio securities. The adviser:
o advises the fund in connection with policy decisions to be made by the
trustees;
o furnishes the fund with research, economic and statistical data in
connection with the fund's investments and policies;
o provides day-to-day administration;
o investigates and conducts relations with issuers of securities to be
purchased by the fund;
o provides required reports and recommendations to the trustees and maintains
the records of the fund; and
o assists the fund in any negotiations relating to the fund's investments
with issuers, investment banking firms, securities brokers or dealers and
other institutions or investors.
5
The adviser provides each fund with office space, supplies and other facilities
required for the business of the funds. The adviser pays the compensation of
all officers and employees of the fund and pays the expenses of clerical
services related to the administration of the funds. Other than expenses
specifically assumed by the adviser, all expenses incurred in the continuing
operation of the funds are borne by each fund, including fees of the
independent trustees and all fees of lawyers and accountants.
Limitation of Liability. Each management contract provides that the adviser is
not liable for any error of judgment or mistake of law or for any loss suffered
by the fund in connection with the matters to which the management contract
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the adviser in the performance of its duties or from
the reckless disregard of its obligations and duties under the management
contract.
Interim Sub-Investment Management Contract
Under the 1940 Act, shareholders must approve any new investment management and
sub-investment management contracts for the funds. However, Rule 15a-4 under
the 1940 Act permits your trustees to appoint New Independence as sub-adviser
on an interim basis without prior shareholder approval if New Independence
agrees to provide such services on the same terms as Independence and the new
sub-investment management contracts are approved by shareholders within 150
days of the date New Independence begins to manage the funds. On May 2, 2006,
your trustees approved the appointment of New Independence as interim
sub-adviser. The adviser anticipates the Transaction to close on May 31, 2006.
Upon the closing of the Transaction, New Independence would begin managing the
funds pursuant to the interim sub-investment management contract.
Because Manulife will be receiving consideration in connection with the
Transaction, any fees that New Independence would be entitled to under the
interim sub-investment management contract will be held in escrow by the funds
until shareholders approval is obtained. If New Independence is not approved as
sub-adviser to a fund, New Independence will not receive the fee under the
current sub-investment management contract but instead would be paid a fee
based upon New Independence's cost in managing the fund or the fee in the
interim sub-investment management contract if lower. If New Independence's
appointment as sub-adviser is not approved by shareholders within 150 days of
the closing of the Transaction, New Independence will no longer provide
sub-advisory services to the funds. Approval by shareholders of the new
sub-investment management contract with respect to a fund will also constitute
approval of the interim sub-investment management contract.
The interim sub-investment management contracts incorporate the terms of the
existing sub-investment management contracts, which are discussed above.
Board Consideration of Approval of New Sub-Investment Management Contracts
Section 15(c) of the 1940 Act requires that your trustees, including a majority
of the trustees who have no direct or indirect interest in the sub-investment
management contracts and are not "interested persons" of the funds, as defined
in the 1940 Act (the "Independent Trustees"), approve the adoption of each
sub-investment management contract with New Independence. At meetings held on
May 2, 2006, your trustees, including the Independent Trustees, considered the
factors and reached the conclusions described below relating to the selection
of New Independence as sub-adviser to the funds and the approval of the
sub-investment management contracts. During such meetings, the
Contracts/Operations Committee and the Independent Trustees also met in
executive sessions with their independent legal counsel. In evaluating the
sub-investment management contracts, the Board, including the
Contracts/Operations Committee and the Independent Trustees, reviewed a broad
range of information requested for this purpose by the Independent Trustees,
including but not limited to the following: (i) the investment performance of
each fund and a broader universe of relevant funds (the "Universe") selected by
Morningstar, an independent provider of investment company data, for a range of
periods, (ii) advisory, sub-advisory and other fees incurred by, and the
expense ratios of, each fund and a peer group of comparable funds selected by
Morningstar (the "Peer Group"), (iii) the fees of comparable portfolios of
other clients of New Independence, (iv) Independence's record of compliance
with applicable laws and regulations, including a report by the Chief
Compliance Officer on Independence's compliance program, with each fund's
investment policies and restrictions, and with the funds' Code of Ethics, and
the structure and responsibilities of the adviser's and sub-adviser's
compliance department, (v) the background and experience of senior management
and investment professionals of New Independence, including a review of the
educational and professional experience of senior management and the portfolio
managers of the funds and meeting with senior management of Independence, (vii)
the potential impact of the Transaction on the management and resources of New
Independence, and (vii) the nature, cost and character of sub-investment
management services provided by Independence.
6
Nature, Extent and Quality of Services. The Boards considered the ability of
New Independence, based on its resources, reputation and other attributes, to
attract and retain qualified investment professionals, including research,
advisory, and supervisory personnel. The Boards further considered the
compliance programs and compliance records of Independence. Based on the above
factors, together with those referenced below, the Boards concluded that,
within the context of its full deliberations, the nature, extent and quality of
the sub-investment advisory services provided to each fund by Independence were
sufficient to support appointment of New Independence as sub-adviser.
Fund Performance. The Boards considered the performance results for each fund
over various time periods. The Boards also considered these results in
comparison to the performance of the Universe, as well as the fund's benchmark
indices. Morningstar determined the Universe for each fund. The Board noted
that with respect to John Hancock Core Equity Fund, although the fund has
underperformed against its peer group over five and ten year periods, the fund
is in the first and second quartiles relative to its peer group over the one
and three year periods respectively. With respect to John Hancock Independence
Diversified Core Equity Fund II, the Board noted that the fund is in the first
or second quartile of its peer group over one, three, five and ten year
periods. With respect to the John Hancock Small Cap Fund, the Board noted that
the fund's performance over the five year period was in the first quartile of
the peer group, with the shorter term performance of the fund being below the
peer group.
Sub-Advisory Fee Rates. The Boards reviewed and considered the contractual
investment management fee rates payable by each fund to the adviser for
investment advisory services (the "Advisory Agreement Rate"). The Boards
received and considered information comparing the Advisory Agreement Rate with
those of the other funds in the Peer Group and determined that the subadvisory
fee paid to Independence was reasonable in light of the services provided to
the funds and the fees received by other subadvisers in the Peer Group. The
Boards also received and considered information regarding each fund's total
operating expense ratio and its various components, including contractual
advisory fees, actual advisory fees, non-management fees, Rule 12b-1 and
non-Rule 12b-1 service fees, transfer agent fees and custodian fees, including
and excluding Rule 12b-1 and non-Rule 12b-1 service fees. The Boards also
considered comparisons of these expenses to the expense information for the
Peer Group and the Universe. The Boards also received information about the
investment sub-advisory fee rate (the "Sub-Advisory Agreement Rate") payable by
the adviser to Independence. The Boards concluded that the Sub-Advisory
Agreement Rate was fair and equitable, based on its consideration of the
factors described above.
Information About Services to Other Clients. The Boards also received
information about the nature, extent and quality of services and fee rates
offered by Independence to its other clients, including other registered
investment companies, institutional investors and separate accounts. The Boards
concluded that the Sub-Advisory Agreement Rate was not unreasonable, taking
into account fee rates offered to others by New Independence and giving effect
to differences in services covered by such fee rates.
Other Factors and Broader Review. As discussed above, the Boards reviewed
detailed materials received from New Independence in connection with the
approval process under Section 15(c) of the 1940 Act. The Board also regularly
reviews and assesses the quality of the services that the funds receives
throughout the year.
After considering the above-described factors and based on its deliberations
and its evaluation of the information described above, the Boards concluded
that approval of the continuation of the sub-investment management contracts
(including the interim sub-investment management contracts) for each fund was
in the best interest of each fund and its shareholders. Accordingly, the Board
unanimously approved the approval of the sub-investment management contracts.
Required vote
Approval of this proposal requires the affirmative vote of either (i) a
majority of the outstanding shares entitled to vote, or (ii) 662/3% of the
shares present at the meeting, if at least 50% of the outstanding shares
entitled to vote are present at such meeting (a "1940 Act Majority Vote"),
whichever is less. If a fund does not approve this proposal, the interim
sub-investment management contract will terminate and the adviser will manage
the fund.
Trustees' Recommendation
The trustees, including all of the trustees who are not "interested persons"
(as defined in the 1940 Act) (the "Independent Trustees"), by a vote cast at an
in-person meeting held on May 2, 2006, unanimously approved and voted to
recommend to the shareholders of each fund that each fund adopts the proposed
sub-investment management contract. If the funds' shareholders approve the
proposed sub-investment management contract, the sub-investment management
contracts will take effect as of July 14, 2006.
7
If the proposed sub-investment management contract is not approved for a fund,
such fund's trustees will consider what action, if any, should be taken to
obtain subadvisory services for the fund.
The trustees of your fund recommend that the shareholders of your fund vote
"FOR" the proposed sub-investment management contract.
PROPOSAL 2
Approval of a Policy Allowing the Adviser and the Board of Trustees to Appoint
or Terminate Sub-advisers and to Approve Amendments to Sub-advisory Agreements
Without Shareholder Approval
Summary
At the board of trustees' meeting held on May 2, 2006, the trustees, including
the Independent Trustees, approved and recommended that shareholders of each
fund approve a policy to permit the adviser to appoint sub-advisers, to enter
into sub-advisory agreements, and to amend or terminate existing sub-advisory
agreements (including the sub-investment management contracts discussed in
Proposal 1) without further shareholder approval (the "sub-adviser approval
policy"). Any such appointment or termination would be subject to prior
approval of the board of trustees, including a majority of the Independent
Trustees.
Section 15 Exemptive Order
The John Hancock group of funds ("John Hancock Funds") may rely upon an
exemptive order from the Securities and Exchange Commission ("SEC") (the
"exemptive order") relieving them from certain provisions of Section 15(a) of
the 1940 Act in connection with the sub-adviser approval policy. The exemptive
order applies to John Hancock Funds that meet the conditions of the order, one
of which includes obtaining shareholder approval for this proposal. The
provisions of the 1940 Act require that shareholders of a mutual fund approve a
sub-advisory agreement with the sub-adviser and material amendments to an
existing sub-advisory agreement. If shareholders approve this proposal, the
adviser will be authorized, subject to approval by the board of trustees, to
evaluate, select and retain one or more sub-advisers for each fund, terminate
or replace any sub-adviser so approved or modify any sub-advisory agreement
with respect to any fund without obtaining further approval of the fund's
shareholders. The trustees and the adviser would be authorized to take such
actions whenever they determine that such actions will benefit a fund and its
shareholders.
Shareholder Approval Policy
The adviser has served as the investment adviser to each fund since its
inception, except for John Hancock Small Cap Fund for which the adviser has
served as investment adviser since 2004. The adviser represents that it has the
experience and expertise to evaluate, select and supervise sub-advisers who can
add value to shareholders' investments in the funds.
Approval of the sub-adviser approval policy will not affect any of the
requirements under the federal securities laws that govern any of the funds,
the adviser, any proposed sub-adviser, or any proposed sub-advisory agreement,
other than the requirement to have a sub-advisory agreement approved at a
meeting of the fund's shareholders. The board of trustees of each fund,
including the Independent Trustees, will continue to evaluate and approve all
new sub-advisory agreements between the adviser and any sub-adviser, as well as
all changes to any sub-advisory agreements. In addition, the fund and the
adviser will be subject to several conditions imposed by the SEC to ensure that
the interests of the fund's shareholders are adequately protected whenever the
adviser acts under the sub-adviser approval policy. Furthermore, within 90 days
of the adoption of or a change to the fund's sub-advisory arrangements, the
fund will provide you with an information statement that contains substantially
the same relevant information about the sub-adviser, the sub-advisory agreement
and the sub-advisory fee that the fund would be required to send to you in a
proxy statement. This information statement will permit the fund's shareholders
to determine if they are satisfied with the sub-advisory arrangement. If not
satisfied, the shareholders would be able to exchange their shares for another
fund or redeem their shares. Exchanges and redemptions may be subject to
transaction or distribution fees and generally are taxable transactions.
Shareholder approval of this proposal will not result in an increase or
decrease in the total amount of investment advisory fees paid by the fund to
the adviser. If the fund implements this policy, the adviser, pursuant to its
investment management contract with the fund, will continue, directly or
through sub-advisers, to provide the same level of management and
administrative services to the fund as it has always provided. The funds will
not be responsible for the payment of any sub-advisory fees.
The exemptive relief applies to at least the following situations: (1) the
adviser determines to retain a sub-adviser for all or a portion of any fund's
assets; (2) a sub-adviser is removed for substandard performance; (3) an
individual
8
acting as a fund's portfolio manager moves from employment with one sub-adviser
to another firm, which the adviser then appoints as a sub-adviser; (4) there is
a change of control of a sub-adviser; (5) the adviser decides to diversify a
fund's management by adding an additional sub-advisers; (6) there is a change
in investment style of a fund; and (7) the adviser negotiates a reduction (or
the sub-adviser negotiates an increase) in the sub-advisory fee that the
adviser pays to a sub-adviser. If the adviser negotiates a decrease in the
compensation that it pays any sub-adviser and effectively retains more of the
advisory fee for itself, no shareholder action would be required. The
sub-adviser approval policy will not be used to approve any sub-adviser that is
affiliated with Manulife, as that term is used in the 1940 Act, or to
materially amend any sub-advisory agreement with an affiliated sub-adviser.
Reasons for Requesting Section 15 Exemptive Relief
The trustees believe that it is in the best interest of each fund and its
shareholders to allow the adviser the flexibility to provide its investment
advisory services to the funds through one or more sub-advisers which have
particular expertise in the type of investments on which a fund focuses. In
addition, the trustees believe that providing the adviser with maximum
flexibility to select, supervise and evaluate sub-advisers -- without incurring
the necessary delay or expense of obtaining further shareholder approval -- is
in the best interest of each fund's shareholders because it will allow the fund
to operate more efficiently. Currently, in order for the adviser to appoint a
sub-adviser or materially modify a sub-advisory agreement, the fund must call
and hold a shareholder meeting of the fund, create and distribute proxy
materials, and solicit votes from the fund's shareholders. This process is
time-intensive, costly and slow. Without the delay inherent in holding
shareholder meetings, the adviser would be able to act more quickly to appoint
a sub-adviser when the trustees and the adviser feel that the appointment would
benefit a fund.
Also, the trustees believe that it is appropriate to vest the selection,
supervision and evaluation of the sub-advisers in the adviser (subject to
review by the board of trustees) in light of the adviser's expertise in
investment management and its ability to select the most appropriate
sub-adviser(s). The trustees believe that many investors choose to invest in
the funds because of the adviser's investment management experience and
expertise. The adviser believes that, if it becomes appropriate to appoint a
sub-adviser to a fund, it can use this experience and expertise in evaluating
and choosing sub-advisers who can add the most value to your investment in that
fund. The adviser also has experience in retaining and supervising
sub-advisers.
Finally, the trustees will provide sufficient oversight of the sub-adviser
approval policy to ensure that shareholders' interests are protected whenever
the adviser selects a sub-adviser or modifies a sub-advisory agreement. The
board, including a majority of the Independent Trustees, will continue to
evaluate and approve all new sub-advisory agreements as well as any
modification to existing sub-advisory agreements. In their review, the trustees
will analyze all factors that they consider to be relevant to the
determination, including the nature, quality and scope of services provided by
the sub-advisers. The trustees will compare the investment performance of the
assets managed by the sub-adviser with other accounts with similar investment
objectives managed by other advisers and will review the sub-adviser's
compliance with federal securities laws and regulations. Each sub-advisory
agreement will be subject to all provisions of the 1940 Act, except for the
specific provisions of the 1940 Act from which the exemptive order provides
relief.
Required vote
Approval of this proposal requires the affirmative 1940 Act Majority Vote (as
defined in Proposal 1 above) of the fund's outstanding shares. If a fund does
not approve this proposal, the sub-adviser approval policy will not be adopted
with respect to that fund and decisions regarding a proposed sub-adviser or a
material change to a sub-advisory agreement will continue to require
shareholder approval.
Recommendation
For the reasons set forth above, the trustees of your fund unanimously
recommend that shareholders vote FOR the proposed policy allowing the adviser
and the board of trustees to appoint or terminate sub-advisers and to approve
amendments to sub-advisory agreements without shareholder approval.
9
VOTING RIGHTS AND REQUIRED VOTE
Each share of your fund is entitled to one vote and each fractional share shall
be entitled to a proportionate fractional vote. A quorum is required to conduct
business at the meeting. The presence in person or by proxy of shareholders
entitled to cast 50% of the votes entitled to be cast at the meeting will
constitute a quorum. A 1940 Act Majority Vote of your fund's shareholders is
required for the approval of each proposal.
Shares Quorum Voting
- ---------------------------------------------------------------------------------------------------------------------------------
In General All shares "present" in person or by proxy Shares "present" in person will be voted
are counted toward a quorum. in person at the meeting. Shares present
by proxy will be voted in accordance
with instructions.
- ---------------------------------------------------------------------------------------------------------------------------------
Broker Non-Vote (where the Considered "present" at meeting for purposes Broker non-votes do not count as a vote
underlying holder has not of quorum "for" and effectively result in a vote "against."
voted and the broker does
not have discretionary
authority to vote the shares)
- ---------------------------------------------------------------------------------------------------------------------------------
Proxy with No Voting Considered "present" at meeting for purposes Voted "for" the proposal.
Instruction (other than of quorum
Broker Non-Vote)
- ---------------------------------------------------------------------------------------------------------------------------------
Vote to Abstain Considered "present" at meeting for purposes Abstentions do not constitute a vote "for"
of quorum and effectively result in a vote "against."
- ---------------------------------------------------------------------------------------------------------------------------------
If the required approval of shareholders is not obtained, the meeting may be
adjourned as more fully described in this proxy statement. Your fund will
continue to be managed by the adviser and the board of trustees will consider
what further action may be appropriate.
INFORMATION CONCERNING THE MEETING
Solicitation of Proxies
In addition to the mailing of these proxy materials, proxies may be solicited
by telephone, by fax or in person by the trustees, officers and employees of
your fund; by personnel of the adviser and your fund's transfer agent, John
Hancock Signature Services, Inc. ("JHSS"); or by broker-dealer firms. JHSS,
together with a third party solicitation firm, has agreed to provide proxy
solicitation services to the funds at a cost of approximately $40,000 to be
paid by Independence.
Revoking Proxies
A fund shareholder signing and returning a proxy has the power to revoke it at
any time before it is exercised:
o By filing a written notice of revocation with John Hancock Signature
Services, Inc., 1 John Hancock Way, Suite 1000, Boston, MA 02217-1000,
or
o By returning a duly executed proxy with a later date that is received
by the fund before the time of the meeting, or
o If a shareholder has executed a proxy but is present at the meeting
and wishes to vote in person, by notifying the secretary of your fund
(without complying with any formalities) at any time before it is
voted.
Being present at the meeting alone does not revoke a previously executed and
returned proxy.
Outstanding Shares and Quorum
As of May 16, 2006 (the "record date"), 20,098,733 shares of beneficial
interest of John Hancock Small Cap Fund were outstanding; 11,161,752 shares of
beneficial interest of John Hancock Core Equity Fund were outstanding; and
8,289,108 shares of beneficial interest of John Hancock Independence
Diversified Core Equity Fund II were outstanding.
Only shareholders of record on the record date are entitled to notice of and to
vote at the meeting. A majority of the outstanding shares of your fund that are
entitled to vote will be considered a quorum.
Other Business
Each fund's board of trustees knows of no business to be presented for
consideration at the meeting other than Proposal 1 and Proposal 2. If other
business is properly brought before the meeting, proxies will be voted
according to the best judgment of the persons named as proxies.
10
Adjournments
If, by the time scheduled for the meeting, a quorum of shareholders is not
present or if a quorum is present but sufficient votes "for" a proposal have
not been received, the persons named as proxies may propose one or more
adjournments of the meeting to another date and time, and the meeting may be
held as adjourned within a reasonable time after the date set for the original
meeting without further notice. Any such adjournment will require the
affirmative vote of a majority of the votes cast on the question in person or
by proxy at the session of the meeting to be adjourned. The persons named as
proxies will vote all proxies in favor of the adjournment that voted in favor
of the proposal or that abstained. They will vote against such adjournment
those proxies required to be voted against the proposal. Broker non-votes will
be disregarded in the vote for adjournment. If the adjournment requires setting
a new record date or the adjournment is for more than 60 days from the original
meeting (in which case the board of trustees of your fund will set a new record
date), your fund will give notice of the adjourned meeting to its shareholders.
Telephone Voting
In addition to soliciting proxies by mail, by fax or in person, your fund(s)
may also arrange to have votes recorded by telephone by officers and employees
of your fund(s) or by personnel of the adviser or transfer agent or a third
party solicitation firm. The telephone voting procedure is designed to verify 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.
o A shareholder will be called on a recorded line at the telephone
number in a fund's account records and will be asked to provide the
shareholder's social security number or other identifying information.
o The shareholder will then be given an opportunity to authorize proxies
to vote his or her shares at the meeting in accordance with the
shareholder's instructions.
o To ensure that the shareholder's instructions have been recorded
correctly, the shareholder will also receive a confirmation of the
voting instructions by mail with a toll-free number to call the voting
information contained in the confirmation is incorrect.
o 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.
Internet Voting
You will also have the opportunity to submit your voting instructions via the
Internet by utilizing a program provided through a vendor. Voting via the
Internet will not affect your right to vote in person if you decide to attend
the meting. Do not mail the proxy card if you are voting via the Internet. To
vote via the Internet, you will need the "control number" that appears on your
proxy card. These Internet voting procedures are designed to authenticate
shareholder identities, to allow shareholders give their voting instructions,
and to confirm that shareholders instructions have been recorded properly. If
you are voting via the Internet you should understand that there may be costs
associated with electronic access, such as usage charges from Internet access
providers and telephone companies, that must be borne by you.
o Read the proxy statement and have your proxy card at hand.
o Go to the Web site on the proxy card.
o Enter the control number found on your proxy card.
o Follow the instructions on the Web site. Please call us at
1-800-225-5291 if you have any problems.
o To insure that your instructions have been recorded correctly, you
will receive a confirmation of your voting instructions immediately
after your submission and also by e-mail if chosen.
Shareholder Proposals
Your fund is not required and does not intend, to hold meetings of shareholders
each year. Instead, meetings will be held only when and if required. Any
shareholders desiring to present a proposal for consideration at the next
meeting for shareholders must submit the proposal in writing, so that it is
received by your fund at 601 Congress Street, Boston, Massachusetts 02210
within a reasonable time before any meeting.
11
OWNERSHIP OF SHARES IN THE FUNDS
To the knowledge of the funds, as of May 16, 2006 (the record date), the
following persons owned of record or beneficially 5% or more of the fund's
outstanding shares:
John Hancock Core Equity Fund
- -----------------------------------------------------------------------------------------
Name and Address Class A Class B Class C Class I
MLPF&S 5.54% 5.81% 11.94% --
For the sole benefit of its customers
Attention: Fund Administration
4800 Deer Lake Drive East, 2nd Fl
Jacksonville, FL 32246-6484
- -----------------------------------------------------------------------------------------
MG Trust Services Custodian -- -- -- 99.31%
FOB Perkin Elmer
700 17th Street, Suite 150
Denver, CO 80202-3502
- -----------------------------------------------------------------------------------------
John Hancock Small Cap Fund
- -----------------------------------------------------------------------------------------
Name and Address Class A Class B Class C Class I
Charles Schwab & Co. Inc. 7.99% -- -- --
Reinvest Account
Attention: Mutual Funds
101 Montgomery Street
San Francisco, CA
Jupiter & Co. 5.43% -- -- --
c/o Investors Bank & Trust Co.
P.O. Box 9130
Boston, MA
MLPF&S -- 14.81% 19.36% --
For the sole benefit of its customers
Attention: Fund Administration
4800 Deer Lake Drive East 2nd Fl
Jacksonville, FL
Citigroup Global Markets Inc -- -- 8.55% --
333 West 34th Street
New York, NY
State Street Bank & Trust as TTEE -- -- -- 43.34%
Vought Aircraft Industries 401(k)
105 Rosemont Rd
Westwood, MA
Letort Management & Trust Co -- -- -- 12.31%
3130 Morningside Dr
Camp Hill PA
Bank of America NA Custodian -- -- -- 6.96%
Diocesan Invest Trust of RI
P.O. Box 831575
Dallas, Tx
Wells Fargo Bank NA -- -- -- 6.56%
Universal Hospital
SVCS EMP PEN P
P.O. Box 1533
Minneapolis, MN
12
John Hancock Independence Diversified Core Equity Fund II
- -----------------------------------------------------------------------------------------
Name and Address Class I
Peter Kamin 32.49%
Knowles Electronics, Inc.
Pension Trust
1151 Maplewood Drive
Itasca, IL 60143-2058
MG Trust Services Custodian 18.61%
FBODerlan Precision Gear
VOL Savings
700 17th St, Ste 150
Denver, CO 80202-3502
MG Trust Services Custodian 12.64%
FBO The Investment Incentive Plan
700 17th St, Ste 150
Denver, CO 80202-3502
MCB Trust Services Custodian 10.01%
FBO Cape Ann Local Lodge #2654
401K Plan
700 17th St, Ste 150
Denver, CO 80202-3502
MG Trust Services Custodian 9.83%
FBO ACP-ASIM A
700 17th St, Ste 150
Denver, CO 80202-3502
MG Trust Services Custodian 6.53%
FBO Manistique Papers Inc.
401K, 700 17th St Ste 150
Denver, CO 80202-3502
As of December 31, 2005, the trustees and officers of each trust owned in the
aggregate less than 1% of the outstanding shares of each fund.
AVAILABLE INFORMATION
Your fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the 1940 Act and files reports, proxy statements and
other information with the SEC. These reports, proxy statements and other
information filed by your fund can be inspected and copied (for a duplication
fee) at the public reference facilities of the SEC at 450 Fifth Street, N.W.,
Washington, D.C., and at the Midwest Regional Office (500 West Madison Street,
Suite 1400, Chicago, Illinois). Copies of these materials 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. In addition, copies of these
documents may be viewed on-screen or downloaded from the SEC's Internet site at
http://www.sec.gov.
13
EXHIBIT A
JOHN HANCOCK ___________ TRUST
SUB-INVESTMENT MANAGEMENT CONTRACT
AGREEMENT made this ___ day of _______, 2006, among John Hancock Advisers, LLC,
a Delaware limited liability company (the "Adviser"), Independence Investment,
LLC a Delaware limited liability company (the "Sub-adviser") and John Hancock
___________ Trust, a business trust under the laws of the Commonwealth of
Massachusetts (the "Trust") on behalf of John Hancock ________ Fund (the
"Fund"), a series of the Trust. In consideration of the mutual covenants
contained herein, the parties agree as follows:
1. APPOINTMENT OF SUB-ADVISER
The Sub-adviser undertakes to act as investment sub-adviser to the Fund
and, subject to the supervision and control of the Trustees of the Trust
and the terms of this Agreement, to manage the investment and reinvestment
of the assets of the Fund. The Sub-adviser will be an independent
contractor and will have no authority to act for or represent the Trust,
the Fund or the Adviser in any way except as expressly authorized in this
Agreement or another writing by the Trust or the Adviser.
2. SERVICES TO BE RENDERED BY THE SUB-ADVISER TO THE TRUST AND THE FUND
a. Subject always to the direction and control of the Trustees of the
Trust, the Sub-adviser shall have investment discretion over the
assets of the Fund and will manage the investments and determine the
composition of these assets in accordance with the Trust's
registration statement, as amended. In fulfilling its obligations to
manage the investments and reinvestments of the assets of the Fund,
the Sub-adviser will:
i. obtain and evaluate pertinent economic, statistical, financial
and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Fund's portfolio or are under consideration for
inclusion in the Fund's portfolio;
ii. formulate and implement a continuous investment program for the
Fund that is consistent with the investment objectives and
related investment policies for the Fund as described in the
Trust's registration statement, as amended, copies of which shall
be furnished to the Sub-adviser promptly upon amendment;
iii. take whatever steps are necessary to implement the investment
program by the purchase and sale of securities, including the
placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust and to the Adviser
with respect to the implementation of the investment program; and
v. provide assistance to the Trust's custodian regarding the fair
value of securities held by the Fund for which market quotations
are not readily available.
b. The Sub-adviser, at its expense, will furnish all necessary investment
and management facilities, including salaries of personnel required
for it to execute its duties faithfully.
c. The Sub-adviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Sub-adviser will
place all necessary orders with brokers, dealers, or issuers and will
negotiate brokerage commissions, if applicable. The Sub-adviser is
directed at all times to seek to execute brokerage transactions for
the Fund in accordance with such policies or practices as may be
established by the Trustees and described in the Trust's registration
statement, as amended, and consistent with its fiduciary obligation to
seek best execution. Subject to policies established from time to time
by the Board of Trustees of the Trust, the Sub-adviser may pay a
broker-dealer which provides research and brokerage services a higher
spread or commission for a particular transaction than otherwise might
have been charged by another broker-dealer if the Sub-adviser
determines that the higher spread or commission is reasonable in
relation to the value of the brokerage and research services that such
broker-dealer provides, viewed in terms of either the particular
transaction or the Sub-adviser's overall responsibilities with respect
to accounts managed by the Sub-adviser. The Sub-adviser may use for
the benefit of the Sub-adviser's other clients, or make available to
companies affiliated with the Sub-adviser or to its directors for the
benefit of their clients, any such brokerage and research services
that the Sub-adviser obtains from brokers or dealers.
d. On occasions when the Sub-adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other
clients of the Sub-adviser, the Sub-adviser, to the extent permitted
by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities to be purchased or sold
A-1
to attempt to obtain a more favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in
the transaction, will be made by the Sub-adviser in the manner the
Sub-adviser considers to be the equitable and consistent with its
fiduciary obligations to the Fund and to its other clients.
e. The Sub-adviser will maintain all accounts, books and records with
respect to the Fund as are required of an investment sub-adviser of a
registered investment company pursuant to the Investment Company Act
of 1940, as amended (the "Investment Company Act") and Investment
Advisers Act of 1940, as amended (the "Investment Advisers Act") and
the rules thereunder.
f. The Sub-adviser shall vote proxies relating to the Fund's investment
securities in accordance with the Trust's proxy voting policies and
procedures, which provide that the Sub-adviser shall vote all proxies
relating to securities held by the Fund and, subject to the Trust's
policies and procedures, shall use proxy voting policies and
procedures adopted by the Sub-adviser in conformance with Rule
206(4)-6 under the Investment Advisers Act. The Sub-adviser shall
review its proxy voting activities on a periodic basis with the
Trustees and with the Adviser.
3. COMPENSATION OF SUB-ADVISER
The Adviser will pay the Sub-adviser with respect to the Fund the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUB-ADVISER
Neither the Sub-adviser nor any of its directors, officers or employees
shall be liable to the Adviser or the Trust or Fund for any error of
judgment or mistake of law or for any loss suffered by the Adviser, Trust
or Fund in connection with the matters to which this Agreement relates,
except for losses resulting from willful misfeasance, bad faith or gross
negligence in the performance of, or from the reckless disregard of, the
duties of the Sub-adviser or any of its directors.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents, members and shareholders
of the Trust are or may be interested in the Sub-adviser as trustees,
officers, partners, shareholders, directors, members or otherwise; that
employees, agents, shareholders, directors, members and partners of the
Sub-adviser are or may be interested in the Trust as trustees, officers,
shareholders, members or otherwise; that the Sub-adviser may be interested
in the Trust; and that the existence of any such dual interest shall not
affect the validity hereof or of any transactions hereunder, except as
otherwise provided in the Agreement and Declaration of Trust of the Trust
and the limited liability company agreement of the Sub-adviser,
respectively, or by specific provision of applicable law.
6. REGULATION
The Sub-adviser shall comply with all applicable laws and regulations in
providing the services contemplated hereunder. Without limiting the
foregoing, the Sub-adviser shall provide all information reasonably
requested of it by the Board of Trustees of the Trust in accordance with
its duty to do so under Section 15(c) of the Investment Company Act and the
Sub-adviser shall submit to all regulatory and administrative bodies having
jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body, by reason of
this Agreement, may request or require pursuant to applicable laws and
regulations.
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to the Fund on the later
of (i) its execution, (ii) the date of the meeting of the Board of Trustees
of the Trust, at which meeting this Agreement is approved as described
below and (iii) immediately following the close of business on _________,
2007. The Agreement will continue in effect with respect to the Fund for a
period more than two years from its effective date only so long as such
continuance is specifically approved at least annually either by the
Trustees of the Trust or by a majority of the outstanding voting securities
of the Fund, provided that in either event such continuance shall also be
approved by the vote of a majority of the Trustees of the Trust who are not
interested persons (as defined in the Investment Company Act) of any party
to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. Any required shareholder approval of the Agreement
or of any continuance of the Agreement shall be effective with respect to
the Fund if a majority of the outstanding voting securities of the series
(as defined in Rule 18f-2(h) under the Investment Company Act) of shares of
the Fund votes to approve the Agreement or its continuance.
A-2
If any required shareholder approval of this Agreement or any continuance
of the Agreement is not obtained, the Sub-adviser will continue to act as
investment sub-adviser with respect to the Fund pending the required
approval of the Agreement or its continuance or of a new contract with the
Sub-adviser or a different adviser or sub-adviser or other definitive
action; provided, that the compensation received by the Sub-adviser in
respect of the Fund during such period is in compliance with Rule 15a-4
under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of any
penalty, as to the Fund by the Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Fund, on sixty days'
written notice to the Adviser and the Sub-adviser, or by the Adviser or
Sub-adviser on sixty days' written notice to the Trust and the other party.
This Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment
Company Act) or in the event the advisory agreement between the Adviser and
the Trust terminates for any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUB-ADVISER
The Sub-adviser will promptly notify the Adviser and the Trust in writing
of the occurrence of any of the following events:
a. the Sub-adviser fails to be registered as an investment adviser
under the Investment Advisers Act or under the laws of any
jurisdiction in which the Sub-adviser is required to be
registered as an investment adviser in order to perform its
obligations under this Agreement;
b. the Sub-adviser is served or otherwise receives notice of any
action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, public board or body, involving
the affairs of the Trust; and
c. any change in actual control or management of the Sub-adviser or
the portfolio manager of the Fund.
9. SERVICES TO OTHER CLIENTS
The Adviser understands, and has advised the Trust's Board of Trustees,
that the Sub-adviser now acts, or may in the future act, as an investment
adviser to fiduciary and other managed accounts and as investment adviser
or sub-adviser to other investment companies. Further, the Adviser
understands, and has advised the Trust's Board of Trustees, that the
Sub-adviser and its affiliates may give advice and take action for other
accounts, including investment companies, which differs from advice given
or the timing or nature of action taken for the Fund. The Sub-adviser is
not obligated to initiate transactions for the Fund in any security that
the Sub-adviser, its partners, affiliates or employees may purchase or sell
for their own accounts or other clients.
10. CONSULTATION WITH OTHER SUB-ADVISERS
As required by Rule 17a-10 under the Investment Company Act, the
Sub-adviser is prohibited from consulting with the entities listed below
concerning transactions for the Fund in securities or other assets:
1. other sub-advisers to the Fund
2. other sub-advisers to any other fund
3. other sub-advisers to a fund under common control with the Fund
provided, however, the Sub-adviser may consult with any entity listed above
that is an affiliate of the Sub-adviser.
11. AMENDMENTS TO THE AGREEMENT
This Agreement (with the exception of Appendix A, which may be amended by
the Adviser and the Sub-adviser from time to time) may be amended by the
parties hereto only if such amendment is specifically approved by the vote
of a majority of the Trustees of the Trust and by the vote of a majority of
the Trustees of the Trust who are not interested persons of any party to
this Agreement cast in person at a meeting called for the purpose of voting
on such approval. Any required shareholder approval shall be effective with
respect to the Fund if a majority of the outstanding voting securities of
the Fund votes to approve the amendment. No amendment shall be effective
unless it is in writing and signed by all parties hereto.
12. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
A-3
13. HEADINGS
The headings in the sections of this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
14. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or
delivery service providing the sender with notice of receipt. Notice shall
be deemed given on the date delivered or mailed in accordance with this
paragraph.
15. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void in
law or in equity, this Agreement shall be construed, insofar as is
possible, as if such portion had never been contained herein.
16. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of
the applicable provisions of the Investment Company Act. To the extent that
the laws of The Commonwealth of Massachusetts, or any of the provisions in
this Agreement, conflict with applicable provisions of the Investment
Company Act, the latter shall control.
17. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust of the Trust, a copy of which,
together with all amendments thereto (the "Declaration"), is on file in the
office of the Secretary of The Commonwealth of Massachusetts, provides that
the name of the Trust refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or personally; and no
Trustee, shareholder, officer, employee or agent of the Trust shall be held
to any personal liability, nor shall resort be had to their private
property, for the satisfaction of any obligation or claim, in connection
with the affairs of the Trust or the Fund thereof, but only the assets
belonging to the Trust, or the Fund with respect to which such obligation
or claim arose, shall be liable.
18. CONFIDENTIALITY OF FUND HOLDINGS
The Sub-adviser agrees to treat the portfolio security positions of the
Fund as confidential information in accordance with the Trust's "Policy
Regarding Disclosure of Fund Holdings," as such policy may be amended from
time to time, and to prohibit its employees from trading on any such
confidential information. The policy and any such amendment shall not be
binding upon the Sub-adviser until a copy has been provided to the
Sub-adviser.
19. COMPLIANCE
Upon execution of this Agreement, the Sub-adviser shall provide the Adviser
and the Trust with the Sub-adviser's written policies and procedures
("Compliance Policies") as required by Rule 206(4)-7 under the Investment
Advisers Act. Throughout the term of this Agreement, the Sub-adviser shall
promptly submit to the Trust and the Adviser: (i) any material changes to
the Compliance Policies, (ii) notification of the commencement of any
regulatory examination of the Sub-adviser and documentation describing the
results of any such examination and of any periodic testing of the
Compliance Policies, and (iii) notification of any material compliance
matter that relates to the services provided by the Sub-adviser to the
Trust, including but not limited to any material violation of the
Compliance Policies or of the Sub-adviser's code of ethics. Throughout the
term of this Agreement, the Sub-adviser shall provide the Adviser and the
Trust with any certifications, information and access to personnel and
resources (including those resources that will permit testing of the
Compliance Policies by the Adviser) that the Trust and/or the Adviser may
reasonably request to enable the Trust to comply with Rule 38a-1 under the
Investment Company Act.
(THE REMAINDER OF THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)
A-4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal by their duly authorized officers as of the date first mentioned
above.
JOHN HANCOCK ADVISERS, LLC
By:
----------------------------------------
Name:
Title:
JOHN HANCOCK _______ TRUST
on behalf of John Hancock ___________ Fund
By:
-----------------------------------------
Name:
Title:
INDEPENDENCE INVESTMENT, LLC
By:
-----------------------------------------
Name:
Title:
A-5
APPENDIX A
The Sub-adviser shall serve as investment sub-adviser for the Fund listed below.
The Adviser will pay the Sub-adviser, as full compensation for all services
provided under this Agreement with respect to the Fund, the fee computed
separately for such Fund at an annual rate as follows (the "Sub-adviser Fee"):
Percentage of Advisory
Fee Payable to
Fund the Adviser
- --------------------------------------------------------------------------------
John Hancock _________ Fund ____%
- --------------------------------------------------------------------------------
The Sub-adviser Fee for the Fund shall be accrued for each calendar day, and
the sum of the daily fee accruals shall be paid quarterly to the Sub-adviser
within 30 calendar days of the end of each quarter. The daily fee accruals will
be computed by multiplying the fraction of one over the number of calendar days
in the year by the applicable Sub-adviser Fee, and multiplying this product by
the net assets of the Fund. The Adviser shall provide the Sub-adviser with such
information as the Sub-adviser may reasonably request supporting the
calculation of the fees paid to it hereunder. Fees shall be paid either by wire
transfer or check, as directed by the Sub-adviser.
If this Agreement becomes effective or terminates, or if the manner of
determining the applicable Sub-adviser Fee changes, before the end of any
quarter, the fee (if any) for the period from the effective date to the end of
such quarter or from the beginning of such quarter to the date of termination
or from the beginning of such quarter to the date of such change, as the case
may be, shall be pro rated according to the proportion which such period bears
to the full quarter in which such effectiveness or termination or change
occurs.
A-6
----------------------------------------
Thank
You
for mailing
your proxy
card promptly!
----------------------------------------
[Logo]
John Hancock(R)
[Graphic] John Hancock Funds, LLC
WORLDWIDE SPONSOR MEMBER NASD
601 Congress Street
Boston, MA 02210-2805
1-800-225-5291
1-800-554-6713 TDD
1-800-338-8080 EASI-Line
www.jhfunds.com
INDPX 5/06
VOTE THIS PROXY CARD TODAY!
- --------------------------------------------------------------------------------
THREE EASY WAYS TO VOTE YOUR PROXY
Read the Proxy Statement and have the Proxy card at hand.
TELEPHONE: Call 1-888-221-0697 and follow the simple instructions.
INTERNET: Go to www.jhfunds.com/proxy and follow the on-line directions.
MAIL: Vote, sign, date and return your proxy by mail.
If you vote by Telephone or Internet, do not mail your proxy.
- --------------------------------------------------------------------------------
JOHN HANCOCK SMALL CAP FUND
SPECIAL MEETING OF SHAREHOLDERS - July 12, 2006
PROXY SOLICITATION BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Keith F.
Hartstein, Alfred P. Ouellette and William H. King, with full power of
substitution in each, to vote all the shares of beneficial interest of the above
referenced Fund (the "Fund") which the undersigned is (are) entitled to vote at
the Special Meeting of Shareholders (the "Meeting") of the Fund to be held at
601 Congress Street, Boston, Massachusetts, on July 12, 2006 at 9:00 a.m.,
Boston time, and at any adjournment(s) of the Meeting. All powers may be
exercised by a majority of all proxy holders or substitutes voting or acting,
or, if only one votes and acts, then by that one. Receipt of the Proxy Statement
dated May 24, 2006 is hereby acknowledged. If not revoked, this proxy shall be
voted for the proposal.
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
Date , 2006
----------------------------------------
--------------------------------------------------
--------------------------------------------------
Signature(s) (sign in the box)
NOTE: Signature(s) should agree with the name(s)
printed herein. When signing as attorney,
executor, administrator, trustee or guardian, please
give your full name 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.
VOTE THIS PROXY CARD TODAY!
Please fill in box as shown using black or blue ink or number 2 pencil. PLEASE
DO NOT USE FINE POINT PENS. |X|
SPECIFY YOUR DESIRED ACTION BY A CHECK MARK IN THE APPROPRIATE SPACE. THIS PROXY
WILL BE VOTED IN FAVOR OF (FOR) A PROPOSAL IF NO SPECIFICATION IS MADE BELOW. AS
TO ANY OTHER MATTER, THE PROXY OR PROXIES WILL VOTE IN ACCORDANCE WITH THEIR
BEST JUDGEMENT.
(1) To approve a sub-investment management contract among John Hancock
Advisers, LLC, the Fund, and Independence Investment LLC.
FOR |_| AGAINST |_| ABSTAIN |_|
(2) To approve a policy allowing the Fund's Board of Trustees and John Hancock
Advisers, LLC to retain sub-advisers to the Fund without shareholder
approval.
FOR |_| AGAINST |_| ABSTAIN |_|
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THIS CARD.
JH 7/2006 lp
- -----------------------------------------------------------------------
Internet Proxy Voting Service
- -----------------------------------------------------------------------
Please Enter Control Number from Your Proxy Card: [ ][ ] [ ] [ ] [ ]
Check here [ ] to vote all proposals as the Board recommends, then click the
VOTE button below.
-OR-
To vote each proposal separately, click the VOTE button only.
[VOTE}
proxyweb.com is a service of: MIS, an ADP company
Full service proxy specialists
This site is best viewed using Netscape Version 4.7 or Internet Explorer version
5.0 or higher and using a display resolution of 800 x 600.
John Hancock
- ------------
JOHN HANCOCK FUNDS
Internet Proxy Voting Services
Proxy Voting Form
John Hancock
Small Cap Fund
THE TRUSTEES RECOMMEND A VOTE "FOR" THE FOLLOWING PROPOSALS.
Proposal 1. [ ]FOR [ ]AGAINST [ ]ABSTAIN
(1) To approve a sub-investment management contract among John Hancock
Advisers, LLC, the Fund, and Independence Investment LLC.
Proposal 2. [ ]FOR [ ]AGAINST [ ]ABSTAIN
(2) To approve a policy allowing the Fund's Board of Trustees and John Hancock
Advisers, LLC to retain sub-advisers to the Fund without shareholder
approval.
- --------------------------------------------------------------------------------
Please refer to the proxy statement for discussion of each of these matters. If
no specification is made on a proposal, the proposal will be voted "FOR".
- --------------------------------------------------------------------------------
To receive an optional email confirmation, please enter your email address here:
[ ]
Please review your selections carefully before voting.
If you vote more than once on the same Proxy, only your last (most recent) vote
will be considered valid.
Press this button to {SUBMIT] your Proxy Vote.
John Hancock
- ------------
JOHN HANCOCK FUNDS
Internet Proxy Voting Services
Proxy Voting Form
John Hancock
Small Cap Fund
- -----------------------------------------------------------------------
Thank You! Your vote has been submitted
- -----------------------------------------------------------------------
THE TRUSTEES RECOMMEND A VOTE "FOR" THE FOLLOWING PROPOSALS.
Proposal 1. [ ]FOR [ ]AGAINST [ ]ABSTAIN
(1) To approve a sub-investment management contract among John Hancock
Advisers, LLC, the Fund, and Independence Investment LLC.
Proposal 2. [ ]FOR [ ]AGAINST [ ]ABSTAIN
(2) To approve a policy allowing the Fund's Board of Trustees and John Hancock
Advisers, LLC to retain sub-advisers to the Fund without shareholder
approval.
Please refer to the proxy statement for discussion of each of these matters.
- -----------------------------------------------------------------------
[Change Vote] [Printer Friendly Confirmation] [Vote Another Proxy]
[Exit Internet Proxy Voting Service]