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- ------------------As filed with the Securities and Exchange Commission on May 3, 2006.
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
FILE NUMBER 811-1677
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:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
JOHN HANCOCK FUNDS
December 30, 2003CAPITAL SERIES
(Name of Registrant as Specified in Its Charter)
JOHN HANCOCK CAPITAL SERIES
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6 (i) (1), or
14a-6 (i) (2) or Item 22(a) (2) or schedule 14A (sent by wire transmission).
[ ] Fee paid previously with preliminary materials.
[X] No fee required.
May 24, 2006
Dear Fellow Shareholder:
I am writing to ask for your vote on an important matter that will affectconcerning your
investment in the John Hancock U.S. Global Leaders Growth Fund.Hancock's mutual funds for which Independence Investment
LLC (Independence) serves as investment sub-adviser. The attached proxy
statement contains information about a proposal to retain Sustainable Growth
Advisers, L.P. (SGA)a successor entity,
with the same portfolio management staff as investment subadviserIndependence, as sub-adviser to your
fund. Another proposal would grant greater power to the Fund.trustees to retain
sub-advisers in the future without shareholder approval.
Why is a sub-adviserare changes being proposed?
John Hancock Funds believes that naming SGAIndependence has served as subadviserthe sub-adviser to John Hancock U.S.
Global Leaders GrowthCore Equity Fund,
John Hancock Independence Diversified Core Equity Fund II and John Hancock Small
Cap Fund, since 1992, 1995, and 1998 respectively. 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 of Convergent
("New Independence"). The same portfolio management team will manage your fund
at New Independence as currently manages your fund at Independence. John Hancock
Advisers, LLC believes that retaining New Independence as sub-adviser to your
fund is in the best interest of shareholders because it promotes the long-term
continuity of the Fund'syour fund's strategy and management. SGA was recently founded by George Fraise and Gordon Marchand who have been
associatedThe existing sub-advisory
contract with the fund since 2000 and 1995 (the Fund's inception),
respectively. SGAIndependence will continue the fund's investment philosophy and strategy
that Messrs. Fraise and Marchand implemented while principals of the Fund's
former sub-advisory firm Yeager, Wood & Marshall. Messrs. Fraise and Marchand
were recently joined by a third principal of SGA, Robert L. Rohn. Mr. Rohn has
been managing large-cap equity portfolios in a similar styleautomatically terminate due to the U.S. Global
Leaders Growth Fund for more than ten years.
Your Fund's trustees carefully reviewed information relating to SGA's
personnel, operations and financial condition, as well as the expertisechange in
control of its
principals and support team and the quality of its resources dedicated to
investment management. They also considered the historical performance record
of SGA's management team and the benefits of providing continuity of the
portfolio management team for the Fund, and determined to recommend the firm as
sub-adviser to the Fund.Independence.
No Impact on Fund Expenses
There will be no change to the Fund'syour fund's management fee as a result of the sub-investment management contract.new
sub-advisory agreements. Under the sub-investment management contract, John
Hancock Advisers, LLC will pay a percentage of its management fee to
SGA.Independence. The proxy statement includes details of the compensation
agreement.
Manager of Managers Policy
The board of trustees of your funds also propose that shareholders of each fund
approve a policy that will allow John Hancock Advisers, LLC and your board of
trustees to retain sub-advisers in the future without shareholder approval. This
authority will save the cost and time of a proxy solicitation in the future if
your board of trustees determines that it is appropriate to appoint a new
sub-adviser to any of the funds.
Your Vote Matters
After careful consideration, your Fund'sfund's trustees recommend you vote for this
proposal. The enclosed proxy statement contains further explanation and
important details of the sub-investment management contract, which I strongly
encourage you to read before voting. If approved by the shareholders, the
contract will become effective on February 16, 2004.July 14, 2006.
Your vote makes a difference, no matter what the size of your investment. Please
review the enclosed proxy materials and submit your vote promptly to help us
avoid the need for additional mailings at your Fund's expense. For your
convenience, you may vote one of three ways: via telephone by calling
the phone
number on your proxy card;1-XXX-XXX-XXXX; 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 8:00A.M.
and 8:00P.M. Eastern Time. I thank you for your prompt vote on this matter.
Sincerely,
/s/ Maureen Ford Goldfarb
Maureen Ford Goldfarb
Chairman andKeith Hartstein
Chief Executive Officer
260PXJohn Hancock Advisers, LLC
JOHN HANCOCK U.S. GLOBAL LEADERS GROWTHCORE EQUITY FUND
(a series of John Hancock Capital Series)
101 Huntington AvenueJOHN 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 0219902210
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 11, 2004
This is the formal agenda for your Fund's special meeting. It tells you what
matters will be voted on and the time and placeJuly 12, 2006
A joint Special Meeting of the meeting, in case you
want to attend in person.
To the shareholdersShareholders of John Hancock U.S. Global Leaders Growth Fund (the
"Fund"):
A special meeting of shareholders of your Fundeach fund will be held at 101 Huntington
Avenue,the funds'
offices located on the 14th floor at 601 Congress Street, Boston, Massachusetts,
on Wednesday, February 11, 2004July 12, 2006 at 9:00 A.M.a.m., Eastern time,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 a sub-investment management contractcontracts among John
Hancock Advisers, LLC, the Fundeach fund and Sustainable Growth Advisers, LP.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 to 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 December 17, 2003May 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,
Susan S. NewtonAlfred P. Ouellette
Assistant Secretary
December 30, 2003May 24, 2006
PROXY STATEMENT OF
JOHN HANCOCK U.S. GLOBAL LEADERS GROWTHCORE 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 proposal summarized below.
Your FundThe funds will furnish without charge a copy of itstheir most recent semi-annualsemiannual and
annual reportreports to any shareholder upon request. Shareholders who want to obtain
a copy of these reports should direct all written requests to the attention of
the Fund, 101 Huntington Avenue,their respective fund, 601 Congress Street, Boston, Massachusetts 0219902210 or
should call John Hancock Funds at 1-800-225-5291.
INTRODUCTION
This proxy statement is being used byat the board of trustees of your Fund
to solicit proxies to be voted at a special meeting of each fund's
shareholders of your
Fund. This meeting willto be held concurrently (collectively, the "Meeting") at the
principal executive offices of the Funds, 101 Huntington Avenue,funds, 601 Congress Street, Boston,
Massachusetts on Wednesday, February 11,
2004July 12, 2006 at 9:00 A.M.a.m., Eastern time. The purpose of the
meeting is to consider:
1. A proposal to approve a sub-investment management contract betweenamong John
Hancock Advisers, LLC, each fund and Independence Investments LLC.
2. A proposal to approve a policy allowing the Fundboard of trustees and Sustainable GrowthJohn
Hancock Advisers, LP.
2.LLC to retain sub-advisers to 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 Fundfund shareholders on
or about December 30, 2003.May 24, 2006.
Who is Eligible to Vote?
Shareholders of record on December 17, 2003May 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.
1
PROPOSAL 1
APPROVAL OF A NEW
SUB-INVESTMENT MANAGEMENT CONTRACT
John Hancock Advisers, LLC (the "Adviser""adviser") serves as your Fund'seach fund's investment
adviser and is responsible for providing the Fundeach fund with a continuous investment
program under an investment management contract (a "management contract") with
each fund. To manage the Fund.
Atday-to-day investment of each fund's assets, the
adviser has retained Independence as sub-adviser.
Independence is currently a meetingsubsidiary of your Fund's trustees held on December 16, 2003,Manulife Financial Corporation
("Manulife"). A subsidiary of Manulife has entered into an agreement with the
trustees, includingparent of Convergent Capital Management ("Convergent") pursuant to which
substantially all of the independent trustees (those who are not
"interested persons" as defined in the Investment Company Actassets of 1940, as
amendedIndependence will be transferred to a newly
formed subsidiary ("New Independence") of Convergent (the "1940 Act")), unanimously approved and voted to recommend that
shareholders of the Fund approve a new subadvisory contract (a "proposed
subadvisory contract") between the adviser, the Fund and Sustainable Growth
Advisers, LP ("SGA""Transaction"). The form of proposed subadvisory contract is attached to
this proxy statement as Exhibit A.
SGA was recently founded by George Fraise and Gordon Marchand who have
been associated with the Fund since 2000 and 1995 (the Fund's inception),
respectively. SGA will continue the Fund's investment philosophy and strategy
that Messrs. Fraise and Marchand implemented while principals of the Fund's
former sub-advisory firm Yeager, Wood & Marshall. Messrs. Fraise and Marchand
were recently joined by a third principal of SGA, Robert L. Rohn. Mr. Rohn has
been managing large-cap equity portfolios in a similar style to the U.S. Global
Leaders Growth Fund for more than ten years.
Prior to July 16, 2003, Yeager, Wood & Marshall, Inc. ("YWM") served as
investment adviser to the Fund. YWM was terminated as subadviser, and the
adviser conducted a due diligence review to find a suitable subadviser for the
Fund. At the completion of the due diligence process, the adviser determined
that shareholders of the Fund would be best served if the portfolio management
team that had been managing the Fund in the past continued to manage the Fund
going forward. As a result, George Fraise and Gordon Marchand, former principals
of YWM, were hired as employees of the adviser and appointed as the portfolio
managers of the Fund.
Messrs. Fraise and Marchand founded SGA and began operations in July 2003,
and will continue the Fund's investment philosophy and strategy SGA has added
resources that include the addition of a third principal to the firm, Robert L.
Rohn. Now that SGA's business has been firmly established, the
adviser believes that entering into a sub-investment managementretaining New Independence as sub-adviser to your fund is
in the best interest of shareholders because it promotes the long-term
continuity of your fund's investment strategy and management. The existing
sub-advisory contract with SGAIndependence will offer
continuityautomatically terminate due to the
change in control of management and give the Fund access to SGA's full research
capabilities and management expertise. (Upon approval of theIndependence.
The sub-advisory
agreement by the Fund's shareholders, Messrs. Fraise and Marchand will devote
their full time to SGA and will no longer be employees of the adviser.)
The subadvisory fees payable under theeach proposed subadvisorysub-investment management
contract will be borne by the adviser and not by a fund. This proposal will not
have any effect upon the Fund.fees paid by the funds to the 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 SGA.Independence. The
investment management fees payable by theeach Fund to the adviser under the
management contractcontracts will not change.
For a summary of the trustees' rationale for recommending that shareholders vote
to hire SGA,Independence, see "Analysis of Proposal and Review of Trustees" below.
2
About Sustainable Growth Advisers, LP
SGAIndependence Investment LLC
Independence Investment LLC ("Independence") located at 53 State Street, Boston,
MA 02109, is a Delaware limited partnershipthe subadviser to each fund. Independence was founded in 2003 to provide
investment advice to private accounts of institutional1982, and individual clients,
private investment companies, and mutual funds. George Fraise, Gordon Marchand
and Robert L. Rohn, each owns 331/3% of SGA. Total assets under management by
SGA principals as of October 31, 2003 were approximately $706 million. SGA does
not currently manage any other domestic investment company.
SGA is located at 1285 Avenue of Americas, 35th floor, New York, New York
10019.
The principal executive officers and members of the investment policy
committee of SGA are listed below, along with their principal occupations.
Name* Principal Occupation
- -------------------------------------- -------------------------------------------------
Gordon M. Marchand, CFA,CIC Portfolio Manager, Principal and Director of SGA
(Investment Policy Committee Member)
George P. Fraise Portfolio Manager, Principal and Director of SGA
(Investment Policy Committee Member)
Robert L. Rohn Portfolio Manager, Principal and Director of SGA
(Investment Policy Committee Member)
- ------------
* The business address of each person listed is 1285 Avenue of the Americas,
35th Floor, New York, New York 10019.
About the Adviser
John Hancock Advisers, LLC
is an indirect, wholly-owned subsidiary of John
Hancock Life Insurance Company (formerly John Hancock Mutual Life Insurance
Company)(the "Life Company"), a Massachusetts life insurance company chartered
in 1862, with national headquarters at John Hancock Place, Boston,
Massachusetts. As of September 30, 2003, the adviser hadManulife. At December 31, 2005,
Independence managed approximately $28$7.7 billion in assets under management,
including the Funds, accounts of or controlled by Manulife or its affiliates and
third party accounts.
About Convergent
Convergent 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 the 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
2
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, no unfair burden will be imposed on any of the funds for a period of two
years after the closing. The adviser expects the Transaction to close in the
second quarter of 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 Financial Corporation, a leading Canadian-based financial services
group 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 Financial and its subsidiaries were Cdn$ 372
billion (US$ 319 billion) as of December 31, 2005.
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 December 31, 2005 in its capacity as investment adviser to the
Fund and other funds and institutionalin the John Hancock group of funds, as well as privately managed accounts.
The Life Companyboard of trustees of each fund is wholly
owned by John Hancock Financial Services, Inc. ("John Hancock"), a Delaware
corporation organized in 1999. The Life Company is oneresponsible for overseeing the performance
of the most recognized
and respected financial institutions in the nation. With total assets under
management of approximately $140 billion as of September 30, 2003, the Life
Company is one of the ten largest life insurance companies in the United
States, and carries a high rating from Standard & Poor's and A.M. Best. Founded
in 1862, the Life Company has been serving clients for over 130 years. John
Hancock has entered into a merger agreement with Manulife Financial Corporation
("Manulife"), a Canadian financial services company. The merger is subject to
regulatory and shareholder approval. If approved, the merger, which is expected
to close by the end of the first half of 2004, will result in JHA becoming an
indirect subsidiary of Manulife. The principal executive officers of theeach fund's investment adviser and John Hancock Funds, LLC ("John Hancock Funds"), the Fund's
principal underwriter, are located at 101 Huntington Avenue, Boston, MA 02199.
3
determining whether to approve and renew
each fund's investment management contract.
The principal executive officer and the directors of the adviser are listed
below, along with their principal occupations.
- ------------------------------- ---------------------------------------------------------------------------------------
Name and Address Principal Occupation
- ----------------------- ------------------------------------------------------------------------------
Maureen Ford Goldfarb Executive------------------------------- ---------------------------------------------------------------------------------------
Keith F. Hartstein Senior Vice President, John HancockManulife Financial Services, Inc., JohnCorporation (since 2004); Director, Hancock Life Insurance Company; Chairman, Director,President
President and Chief 101 Huntington AvenueExecutive and Chief Executive Officer, the Adviser and The Berkeley Financial Group Inc.(holding company);
Boston, MA 02199 Chairman,Officer Director, President and Chief Executive Officer, John Hancock Funds; Chairman, Director, President
and Chief Executive Officer, Sovereign Asset Management CorporationLLC ("SAMCorp."Sovereign"); Director, John
Hancock Subsidiaries, Inc.; Independence Investment LLC and John Hancock
Signature Services, Inc. ("Signature Services"); Director, Chairman and President, NM Capital
Management, Inc. (NM Capital); Chairman, Investment Company Institute Board of GovernorsSales Force
Marketing Committee (since 2002)2003); Senior Vice President, MassMutual
Insurance Co. (until 1999).
David F. D'Alessandro Chairman, Chief Executive Officer and Director of John Hancock Financial
Director Services, Inc. and the Insurance Company; Chairman, John Hancock
John Hancock Place Subsidiaries, LLC; Director, The Berkeley Group, the Adviser and John
P.O. Box 111 Hancock Funds.
Boston, MA 02117
John M. DeCiccio Executive Vice President, and Chief Investment Officer, John Hancock
Director Financial Services, Inc.; Director, Executive Vice President and Chief
John Hancock Place Investment Officer, the Insurance Company; Chairman of the Committee of
P.O. Box 111 Finance of the Insurance Company; Director, John Hancock Subsidiaries,
Boston, MA 02117 LLC, Hancock Natural Resource Group, Independence Investment LLC,
Declaration Management & Research LLC, the Adviser and The Berkeley
Financial Group, Inc., John Hancock Funds Massachusetts Business
Development Corporation;(until 2005).
- ------------------------------- ---------------------------------------------------------------------------------------
John G. Vrysen Director, John Hancock Insurance Agency, Inc.
("Insurance Agency, Inc.") (until 1999).
Mark C. Lapman Chairman, President and Chief Executive Officer of Independence Investment
Director LLC; Director of The Berkeley Group, the Adviser and John Hancock Funds.
53 State Street
Boston, MA 02109
Jeanne M. Livermore Senior Vice President of the Insurance Company; Director of The Berkeley
Director Group, the Adviser and John Hancock Funds; Director of Insurance Agency
John Hancock Place (until May 1999).
P.O. Box 111
Boston, MA 02117
4
Name and Address Principal Occupation
- -------------------- ----------------------------------------------------------------------------
Thomas E. Moloney Senior Executive Vice President and Chief Financial Officer, of John Hancock
Director Financial Services, Inc.the adviser, Sovereign,
Executive Vice President and the Insurance Company; Director of The
John Hancock Place Berkeley Group the Adviser,and John Hancock Funds John Hancock Realty
P.O. Box 111 Services, John Hancock Canadian Holdings Limited, John Hancock
Boston, MA 02117 Reassurance Co., Ltd., and The Maritime Life Assurance Company; Director
and(since 2005); Vice President
Chief Financial Officer of John Hancock Subsidiaries, Inc.; Director of
Signature Services, Inc. (Chairman until February 2000), Director of
Insurance Agencyand General Manager, Fixed Annuities, U.S. Wealth Management (until May 1999).
Robert H. Watts Senior2005);
Vice President, of the Insurance Company; ExecutiveOperations Manulife Wood Logan (until 2004).
- ------------------------------- ---------------------------------------------------------------------------------------
William H. King Vice President and Treasurer of Director Signator Investors, Inc.; Director and Executive Vice Presidenteach of the John Hancock Placefunds advised by the adviser;
Vice President and Treasurer Vice President and Assistant Treasuer, the adviser.
- ------------------------------- ---------------------------------------------------------------------------------------
Francis V. Knox, Jr. Vice President and Chief Compliance Officer for John Hancock Investment Company, John
Vice President and Chief Hancock Life Insurance Agency; Director of The Berkeley Group, the Adviser,Company (U.S.A.), John P.O. Box 111Hancock Life Insurance Company and John
Compliance Officer Hancock Funds (since 2005); Fidelity Investments - Vice President and Signature Services.
Boston, MA 02117Assistant
Treasurer, Fidelity Group of Funds (until 2004); Fidelity Investments - Vice
President and Ethics & Compliance Officer (until 2001).
- ------------------------------- ---------------------------------------------------------------------------------------
The Proposed Subadvisory Contract3
Investment Performance
The following is atable shows the investment performance for each of the funds
during the one, five and ten year periods ending March 31, 2006 and the
performance of the fund's benchmark index during the same period.
- -------------------------------------------------- ------------------------ ---------------------- -------------------
One year Five years Ten years
- -------------------------------------------------- ------------------------ ---------------------- -------------------
John Hancock Core Equity Fund Class A 6.07% 1.79% 6.82%
- -------------------------------------------------- ------------------------ ---------------------- -------------------
S&P 500 Total Return Index 11.73% 3.97% 8.95%
- -------------------------------------------------- ------------------------ ---------------------- -------------------
John Hancock Small Cap Fund Class A (began 12/16/98) 15.26% 13.26% N/A
- -------------------------------------------------- ------------------------ ---------------------- -------------------
Russell 2000 Total Return Index 25.85% 12.59% N/A
- -------------------------------------------------- ------------------------ ---------------------- -------------------
John Hancock Independence Diversified Core
Equity Fund II Class I 13.21% 4.81% 8.46%
- -------------------------------------------------- ------------------------ ---------------------- -------------------
S&P 500 Total Return Index 11.73% 3.97% 8.95%
- -------------------------------------------------- ------------------------ ---------------------- -------------------
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 material terms of the proposed subadvisory contract. In describing the proposed subadvisory contract with SGA,
this summarysub-investment management
contracts is qualified by reference to the representative form of proposed
subadvisorysub-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.
Compensation. The proposed subadvisory contract (the "contract") providessub-investment management contracts provide that SGA (the "subadviser")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,adviser, not the Fund,fund,
will pay the subadvisorysub-advisory fees.
The proposed subadvisory contract requiresfollowing table shows the adviser to pay monthly toinvestment management fee and the subadviser a subadvisorysub-advisory fee
which is accrued daily, and on an annual basis
is equal to (i) 35%for each of the gross management fee received by the Adviser forfunds, in each case expressed as a percentage of average daily
net assets less than $500,000,000; (ii) 30% ofand the gross
managementfees in dollars for the most recent fiscal year.
- ------------------------------------ ------------------------ --------------------- ------------------- --------------
Investment Management Sub-Advisory Investment Sub-Advisory
Fee Rate Fee Rate Management Fee Fee for the
for most recent most recent
fiscal year fiscal year
- ------------------------------------ ------------------------ --------------------- ------------------- --------------
- ------------------------------------ ------------------------ --------------------- ------------------- --------------
John Hancock Core Equity Fund 0.75% to $750M 35% of Adviser fee $2,792,282 $977,299
0.70% over $750M
- ------------------------------------ ------------------------ --------------------- ------------------- --------------
- ------------------------------------ ------------------------ --------------------- ------------------- --------------
John Hancock Small Cap Fund 0.90% to $1Billion 0.41% of average $1,151,996 $ ---
0.85% over $1Billion* daily net asset **
value
- ------------------------------------ ------------------------ --------------------- ------------------- --------------
- ------------------------------------ ------------------------ --------------------- ------------------- --------------
John Hancock Independence 0.50% to $1Billion 35% of Adviser fee $ 130,440 $ 45,654
Diversified Core Equity Fund II 0.45% over $1Billion
- ------------------------------------ ------------------------ --------------------- ------------------- --------------
* Effective 7/1/05.
** Independence waived the Sub-Advisory fee received by the Adviser for average daily net assets equal to
$500,000,000 and less than $1 billion; (iii) 25% of the gross management fee
received by the adviser for average daily net assets equal to $1 billion and
less than $1.5 billion; and (iv) 20% of the gross management fee received by the
Adviser for average daily net assets equal to or in excess of $1.5 billion. In
the event that, and each time that, prior to the fifth anniversary of the
effective date of the subadvisory agreement (the "Effective Date"), Messrs.
Fraise, Marchand or any person designated as a co-portfolio manager inthrough the Fund's prospectus (collectively, a "Co-portfolio Manager") ceases to be employed
by SGA, the monthly fee paid to SGA by the Adviser will be reduced by 20% of the
fee that SGA would otherwise earn for such monthly period under the subadvisory
agreement until SGA retains a new Co-portfolio Manager as a substitute for the
departed Co-portfolio Manager. In the event that, and each time that, prior to
the fifth anniversary of the Effective Date, SGA does not have an analyst
reasonably acceptable to the Adviser supporting the Co-portfolio Managers in the
management of the Fund, the quarterly fee paid to SGA will be reduced by 10% of
the fee that SGA would otherwise earn for such quarterly period until SGA
retains an analyst reasonably acceptable to the adviser.fiscal year
ended October 31, 2005.
4
Term. If approved by shareholders of the Fund, the proposed subadvisory
contractcontracts will each take effect as of February 16, 2004July 14, 2006 and will remain in effect
until June 30, 2005.2007. Thereafter, the proposed subadvisory contract will continue
in effect from year to year subject to the annual approval of its continuance as
described below under "Provisions Contained in the subadvisory Contract and in
the Management Contract."
5
Contract".
Limitation of Liability of Sub-Adviser. SGANew 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 Fundfunds or any of their
affiliates as a result of any error of judgment or mistake of law by SGANew
Independence with respect to the Fund,funds, except that nothing in the subadvisory
agreement will limit SGA'sNew Independence's liability for any and all losses or, claim based on (a) SGA's
causing the Fund to be in violation of any applicable federal or state law,
rule or regulation or any investment policy or restriction set forth in the
Fund's Prospectus or Statement of Additional Information or any written
policies, procedures, guidelines or instructions provided in writing to SGA by
the board of trustees or the adviser, (b) SGA's causing the Fund to fail to
satisfy the requirements of Subchapter M of the Code for qualification as a
regulated investment company, or (c) SGA'sNew 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
the subadvisory
agreement.
Provisions Contained in the Proposed Subadvisory Contract and the Management
Contracteach sub-investment management contract.
Termination, Continuance and Amendment. Except as described above for the
proposed subadvisoryEach sub-investment management contract
the contract continueswill 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) your Fund'seach fund's trustees, or (b) a majority of your Fund'seach fund's outstanding
voting securities, as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"). TheEach 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 the Fund'sa fund's outstanding voting securities, or by the adviser or
subadvisor. The sub-investment management contract terminates automatically in
the event of its assignment as defined in the 1940 Act, or in the event that the Adviseradviser ceases to act as
the Fund'sfund's investment adviser.
Use of Name "John Hancock." Under the management contract and the proposed
subadvisory contract, if the Adviser ceases to act as the Fund's investment
manager, the Fund (to the extent that it lawfully can) must cease to use any
name derived from the name "John Hancock" or any other name indicating that the
Fund is advised by or otherwise associated with the adviser.
The Management Contract
Under the Fund'seach fund's management contract, the Adviser,adviser, subject to the direction of
the trustees, provides the Fundeach fund with a continuous investment program for the
management of its assets, consistent with thesuch Fund's investment objective and
policies. The Adviseradviser furnishes the Fundeach fund with advice and recommendations
consistent with the investment policies of the Fundfund regarding the purchase,
holding and disposition of portfolio securities. The Adviser:adviser:
o advises the Fundfund in connection with policy decisions to be made by the
trustees;
o furnishes the Fundfund with research, economic and statistical data in
connection with the Fund's investments and policies;
o provides day-to-day administration;
o researchesinvestigates and conducts relations with issuers of securities to be
purchased by the Fund;fund;
o provides required reports and recommendations to the trustees and maintains
the records of the Fund;fund; and
o assists the Fundfund in any negotiations relating to the Fund'sfund's investments
with issuers, investment banking firms, securities brokers or dealers and
other institutions or investors.
6
The Adviseradviser provides the Fundeach fund with office space, supplies and other facilities
required for the business of the Fund.funds. The Adviseradviser pays the compensation of all
officers and employees of the Fundfund and pays the expenses of clerical services
related to the administration of the Fund.funds. Other than expenses specifically
assumed by the adviser, all expenses incurred in the continuing operation of the
Fundfunds are borne by the Fund,each fund, including fees of the independent trustees and all
fees of lawyers and accountants.
The Fund pays an
investment management fee monthly to the adviser equivalent on an annual basis
to 0.75% of the average daily net asset value of the Fund.
The Adviser has voluntarily agreed to reduce management fees and other
expenses payable in order to limit the Fund's total operation expenses to
1.37%. This agreement may not be modified or discontinued by the adviser at
least until May 17, 2004. For the period from May 17, 2002 to December 31,
2002, the adviser received a fee of $944,765 after expense limitations.
The management contract and previous subadvisory contract were approved by
the Fund's trustees and shareholders.
Limitation of Liability. TheEach 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 contract.
AnalysisInterim Sub-Investment Management Contract
Under the Investment Company Act of Proposal1940 (the "1940 Act"), shareholders must
approve any new investment management and Reviewsub-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
5
shareholder approval if New Independence agrees to provide such services on the
same terms as Independence and approval of Trusteesthe new sub-investment management
contracts are submitted to shareholders within 150 days of the date New
Independence begins to manage the funds. Your trustees approved the appointment
of New Independence as interim sub-adviser on May 2, 2006.
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 approve by shareholders by [ ], 2006, 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 trustees have determined thatinterim agreement incorporates the terms of the proposed subadvisory
contractexisting sub-investment
management contraccts, which are fair and reasonable. In approving the proposed subadvisory
contract and recommending itsdiscussed above.
Board Consideration of approval by the shareholdersof New Sub-Investment Management Contracts
Section 15(c) of the Fund,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 trustees,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, 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, (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.
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
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 Boards noted
that with respect to Core Equity Fund, although the fund has underperformed
against its peer group over five and ten year period, 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 Diversified Core Equity, the Fund is in
the first or second quartile of its peer group for the one, three, five and ten
year period. With respect to the Small Cap Fund, the Fund's performance over the
five year period was in the first quartile of the peer group, with the shorter
term performance being below the peer group.
6
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. 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 shareholdersBoard
unanimously approved the approval of the Fundsub-investment management contracts.
Required vote
Approval of this proposal requires the affirmative of a majority of the
outstanding shares or 66 2/3% of the shares present at meeting if at least 50%
of the outstanding shares are present and took into account all factors they deemed
relevant.
In evaluatingentitled to vote at such meeting (a
"1940 Act Majority Vote"). If a fund does not approve this proposal, the
proposed subadvisorysub-investment management contract the trustees carefully
reviewed materials requested by the trustees relating to SGAwill terminate and its personnel,
operations and financial condition. The trustees considered the fact that in
recommending SGA, the adviser had conducted a search for a subadviser thatwill manage
the adviser believed would be appropriate for the Fund. The trustees also
considered the expertise of SGA's principals and support staff team and the
quality of its resources dedicated to investment management. In addition, the
trustees considered the historical performance record of SGA's management team
in managing investment companies and other client accounts with objectives
similar to those of the Fund and the benefits of providing continuity of the
portfolio management team for the Fund. The trustees also considered SGA's
financial condition and the reputation of its principals in the financial
community. The trustees also considered the reasonableness of the subadvisory
fee and the portion of the advisory fee that the adviser would retain for its
management, supervisory and other services to the Fund. In addition, the
trustees considered such other factors as they deemed relevant, including the
possibility of other benefits that may be realized by the Fund as a result of
SGA serving as the Fund's subadviser. Throughout the review process the
independent trustees were advised by their independent legal counsel, who was
not counsel to the Fund, the adviser or SGA.fund.
Trustees' Recommendation
The trustees, including all of the independent trustees, by a vote cast at a
meeting held on December 16, 2003May 2, 2006 unanimously approved and voted to recommend to the
shareholders of theeach Fund that theeach Fund adopt the proposed subadvisory
contract. If the Fund'sFunds' shareholders approve the proposed subadvisory contract,
that contract will take effect as of February 16, 2004.
7
July 14, 2006.
If the proposed subadvisory contract is not approved for thea Fund, thesuch 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 subadvisory contract.
7
PROPOSAL 2
APPROVAL OF A POLICY ALLOWING JOHN HANCOCK ADVISERS 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 the
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 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.
The Section 15 exemptive order
The John Hancock Funds may rely upon an exemptive order from the 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. 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 John Hancock Advisers 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 John Hancock Advisers 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
8
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 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 subadviser 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 fund through one or more sub-advisers which have
particular expertise in the type of investments on which the 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. If for example, is
the reason for proposal 1. 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 in favor of the proposed policy allowing John Hancock
Advisers 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 a majority50% of the votes entitled to be cast at the meeting will
constitute a quorum. Approval of the proposal requires the
affirmativeThe favorable vote of a majority of the shares of your fund outstanding and
entitled to vote. For this purpose, a joajority of the outstanding shares
of your fund means with respect to the proposal the voteFund is required for approval of the lesser of
(1) 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 (2) more than 50 of the outstanding shares of the fund.proposal.
Shares Quorum Voting
- --------------------------- -------------------------------------------------------------------------------- --------------------------------- -----------------------------------------
In General All shares "present" in person or by Shares "present" in person will be
votedor by proxy are counted toward a quorum.voted in person at the meeting. Shares
a quorum. present by proxy will be voted in
accordance with instructions.
- ------------------------------------------ --------------------------------- -----------------------------------------
Broker Non-Vote (where the underlying Considered "present" at meeting for Broker non-votes do not count as a vote
the underlying holder has not voted and the broker does for purposes of quorum "for" and effectively result in a vote
not voted and the broker "against."
does not have discretionary authority to vote "against."
the shares)
- ------------------------------------------ --------------------------------- -----------------------------------------
Proxy with No Voting Instruction (other Considered "present" at meeting for Voted "for" the proposal.
Instruction (other than Broker Non-Vote) for purposes of quorum
Broker Non-Vote)- ------------------------------------------ --------------------------------- -----------------------------------------
Vote to Abstain Considered "present" at meeting for Abstentions do not constitute a vote
for purposes of quorum "for" 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 and prospectus. Your
Fund will continue and the board of trustees will consider what further action
may be appropriate.
8
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;fund; by personnel of your Fund'sfund's investment adviser, John Hancock Advisers, LLC
and its 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 Fundfunds at a cost of
approximately $47,000,$ , to be paid by the adviser.Independence.
Revoking Proxies
A Fundfund 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 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 December 17, 2003May 16, 2006 (the "record date"), _________ shares_______________shares of beneficial
interest of yourSmall Cap Fund were outstanding; _______________shares of beneficial
interest of Core Equity Fund were outstanding; and _______________shares of
beneficial interest of Diversified Equity Fund were outstanding.
10
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 Fundfund that are
entitled to vote will be considered a quorum.
Other Business
The Fund's boardfunds' boards of trustees knows of no business to be presented for
consideration at the meeting other than the proposal. If other business is
properly brought before the meeting, proxies will be voted according to the best
judgment of the persons named as proxies.
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" the 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 Fundfund will set a new record
date), your Fundfund will give notice of the adjourned meeting to its shareholders.
9
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 thea
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 if 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 to you.
o Read the proxy statement and have your proxy card at hand.
11
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's Proposals
Your Fundfund 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 101 Huntington Avenue,601 Congress Street, Boston, Massachusetts 0219902210 within
a reasonable time before any meeting.
10
OWNERSHIP OF SHARES IN THE FUNDS
To the knowledge of your Fund,the Funds, as of December 5, 2003,May 16, 2006, 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 Number of Shares Owned
John Hancock Small Cap Fund
- ---------------------------
Name and Address Number of Shares Owned
John Hancock Independence Diversified Core Equity Fund II
- ---------------------------------------------------------
Name and Address Number of Shares Owned
- ------------------ -----------------------
- ---------------------------------------------- ------------ ------------ ----------- ------------- -----------
Class A Class B Class C Class I Class R
- ---------------------------------------------- ------------ ------------ ----------- ------------- -----------
MLPF&S For The 13.12% 17.87% 32.80% -- --
Sole Benefit Of Its Customers
Attn: Fund Administration 97C55
4800 Deerlake Drive East 2nd Floor
Jacksonville FL 32246-6484
- ---------------------------------------------- ------------ ------------ ----------- ------------- -----------
Charles Schwab & Co. 7.08% -- -- -- --
101 Montgomery Street
San Francisco CA
- ---------------------------------------------- ------------ ------------ ----------- ------------- -----------
Citigroup Global Markets Inc -- 6.68% 10.43% -- --
333 West 34th Street
New York, New York 10001-2402
- ---------------------------------------------- ------------ ------------ ----------- ------------- -----------
Canal Securities Company -- -- -- 61.23% --
One Chemung Canal Plaza
Elmira NY 14901
- ---------------------------------------------- ------------ ------------ ----------- ------------- -----------
MCB Trust Services Custodian FBO -- -- -- 27.16% --
The Investment Incentive Plan
700 17th St Ste 150
Denver CO 80202-3531
- ---------------------------------------------- ------------ ------------ ----------- ------------- -----------
John Hancock Advisers LLC 100.0%
101 Huntington Avenue
Boston, MA 02199
- ---------------------------------------------- ------------ ------------ ----------- ------------- -----------
As of December 5, 2003,31, 2005, the trustees and officers of your Fundeach Trust owned in the
aggregate less than 1% of the outstanding shares of youreach Fund.
AVAILABLE INFORMATION
Your Fundfund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 and files reports,
proxy statements and other information with the SEC. These reports, proxy
statements and other information filed by your Fundfund 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.
1112
Exhibit A
JOHN HANCOCK CAPITALINSTITUTIONAL SERIES TRUST
SUB-INVESTMENT MANAGEMENT CONTRACT
AGREEMENT made this ___ day of _______, 2006, among John Hancock U.S. Global Leaders Growth Fund
Sub-Investment Management Contract
Dated February 16, 2004
12
JOHN HANCOCK ADVISERS,Advisers,
LLC, 101 Huntington Avenue
Boston, Massachusetts 02199
JOHN HANCOCK CAPITAL SERIESa Delaware limited liability company (the "Adviser"), Independence
Investment, LLC a Delaware limited liability company (the "Sub-adviser") and
John Hancock U.S. Global Leaders Growth Fund
101 Huntington Avenue
Boston, Massachusetts 02199
Sustainable Growth Advisers, LP
1285 Avenue of the Americas, 35th Floor
New York, NY 10019
Sub-Investment Management Contract
Ladies and Gentlemen:
John Hancock CapitalInstitutional Series (the "Trust") has been organized asTrust, a business trust under the laws of Thethe
Commonwealth of Massachusetts (the "Trust") on behalf of the John Hancock
Independence Diversified Core Equity Fund II (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 engageact 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
businessFund'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 anwhich shall be furnished
to the Sub-adviser promptly upon amendment;
iii. take whatever steps are necessary to implement the investment company.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
A-1
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 Trust's sharesSub-adviser, at its expense, will furnish all necessary investment and
management facilities, including salaries of beneficial interest
may be classified into series, each series representingpersonnel required for it to
execute its duties faithfully.
c. The Sub-adviser will select brokers and dealers to effect all transactions
subject to the entire undivided
interestfollowing 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 a separate portfolio of assets. Seriesaccordance
with such policies or practices as may be established or
terminatedby 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 action of the Board of Trustees of the Trust.
The Board of Trustees has established several seriesTrust, 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 Trust, including
John Hancock U.S. Global Leaders Growthbrokerage 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 (the "Fund").
The Trustees have selected John Hancock Advisers LLC (the "Adviser")as well as other clients of the
Sub-adviser, the Sub-adviser, to provide overall investment advicethe extent permitted by applicable laws
and management forregulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold 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 provide
certainits other services, under the termsclients.
e. The Sub-adviser will maintain all accounts, books and conditions provided in the
Investment Management Contract, dated as of the date hereof, between the Trust,
the Fund and the Adviser (the "Investment Management Contract").
The Adviser and the Trustees have selected Sustainable Growth Advisers, LP
(the "Sub-Adviser") to provide the Adviser and the Fundrecords with the advice and
services set forth below, and the Sub-Adviser is willing to provide such advice
and services, subject to the review of the Trustees and overall supervision of
the Adviser, under the terms and conditions set forth in this agreement (the
"Agreement"). The Sub-Adviser hereby represents and warrants that it is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended (the "Advisers Act"). Accordingly, the Trust, on behalf of the Fund,
and the Adviser agree with the Sub-Adviser as follows:
1. Investment Services. The Sub-Adviser will use its best efforts to
providerespect
to the Fund continuing and suitableas are required of an investment advice with respectsub-adviser of a registered
investment company pursuant to
investments, consistent with the investment policies, objectives and
restrictions of the Fund as set forth in the Fund's Prospectus and Statement of
Additional Information. In the performance of the Sub-Adviser's duties
hereunder, subject always to the Trust's and the Fund's organizational
documents as amended from time to time and the limitations set forth in the
Registration Statement of the Trust, on behalf of the Fund, as in effect from
time to time under the Securities Act of 1933, as amended (the "1933 Act"), and the Investment Company Act of 1940, as
amended (the "1940"Investment Company Act"), the
Sub-Adviser will, have investment discretion with respect to the Fund. In
performing the Sub-Adviser's obligations hereunder, the Sub-Adviser shall
comply with the provisions of the Declaration of Trust and By-laws, all laws
applicable to the Trust, the Fund or the Sub-Adviser's business, including, but
not limited to, the 1940 Act,Investment Advisers Act the 1933 Act, the Securities
Exchange Act of 1934,1940,
as amended (the "1934"Investment Advisers Act"), the Commodity Exchange Act and the rules and
13
regulations promulgated under such statutes and the investment objective,
policies and restrictions of the Fund, as each of the samethereunder.
f. The Sub-adviser shall be from time
to time in effect as set forth in the Fund's then current Prospectus and
Statement of Additional Information. The Sub-Adviser shall use its best efforts
to cause the Fund to comply with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), for qualification as a
regulated investment company. The Sub-Adviser shall also comply with such
policies, guidelines, procedures and instructions as the Adviser or the
Trustees may from time to time establish and deliver to the Sub-Adviser. No
supervisory activity undertaken by the Adviser shall limit the Sub-Adviser's
responsibility for the foregoing. No reference in this Agreement to the
Sub-Adviser's discretionary authority over the Fund's investments shall in any
way limit the right of the Adviser, in its sole discretion, to establish and
revise policies in connection with the management of the Fund's assets or
otherwise exercise its right to control the overall management of the Fund's
assets.
The Sub-Adviser will, at its own expense:
a. furnish the Adviser and the Fund with advice and recommendations,
consistent with the investment policies, objectives and restrictions
of the Fund as set forth in the Fund's Prospectus and Statement of
Additional Information, with respect to the purchase, holding and
disposition of portfolio securities;
b. furnish the Adviser and the Fund with advice as to the manner in which
voting rights, subscription rights, rights to consent to corporate
action and any other rights pertainingvote proxies relating to the Fund's assets shall be
exercised, the Fund having the responsibility to exercise such voting
and other rights;
c. furnish the Adviser and the Fund with research, economic and
statistical datainvestment
securities in connectionaccordance with the Fund's investmentsTrust's proxy voting policies and
investment policies,procedures, which are consistent withprovide that the past practices of
the Sub-Advisor with respect to the Fund regarding research, economics
and statistical data;
d. submit such reportsSub-adviser shall vote all proxies
relating to the valuation of the Fund's securities
as the Trustees or the Fund's Valuation Committee may reasonably
request and to monitor daily the value of all 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 particularconformance with Rule 206(4)-6 under the
value of any security that is priced at
fair value in accordanceInvestment Advisers Act. The Sub-adviser shall review its proxy voting
activities on a periodic basis with the Fund's valuation proceduresTrustees and immediately reportwith the Adviser.
A-2
3. COMPENSATION OF SUB-ADVISER
The Adviser will pay the Sub-adviser with respect to the AdviserFund the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUB-ADVISER
Neither the Sub-adviser nor any change in such fair value;
e. from time to timeof its directors, officers or at any time as reasonably requested by the
Adviser or the Trustees, make reportsemployees
shall be liable to the Adviser or the Trust of
the Sub-Adviser's performance of the foregoing services and the
compliance by theor Fund with applicable statutory and regulatory
requirements relating to the management of the Fund's assets and the
Fund's investment objectives, policies and restrictions and upon
request, which may be without notice, to make the Sub-Adviser's
records (relating to the services hereunder or otherwise), employees
and premises available for compliance audits (relating to any
applicable laws, rules regulations, procedures and/or policies) or
interviews relating to all of any portion of SGA's advisory business,
including its subadvisory relationship with JHA, by the Adviser or the
Fund's accountants or counsel;
f. subject to the supervision of the Adviser, maintain all books and
records with respect to the Fund's securities transactions required by
the 1940 Act, and preserve such records for the periods prescribed
therefor by the 1940 Act (the Sub-Adviser agrees that such records are
the property of the Trust and copies will be surrendered to the Trust
promptly upon request therefor);
g. cooperate with and provide reasonable assistance to the Adviser, the
Fund, the Fund's custodian and foreign sub-custodians, the Fund's
pricing agents and all other agents and representatives of the Fund
and the Adviser, furnish such information with respect to the Fund as
they may reasonably request from time
14
to time in the performance of their obligations, provide prompt
responses to reasonable requests made by such persons and establish
appropriate interfaces with each so as to promote the efficient
exchange of information and compliance with applicable laws and
regulations; and
h. cooperate generally with the Fund and the Adviser to provide
information reasonably requested by the Adviser which is necessary for
the preparation of registration statements and periodic reports to be
filed with the Securities and Exchange Commission ("SEC"), including
Form N-1A, periodic statements, shareholder communications and proxy
materials furnished to holders of shares of the Fund, filings with
state "blue sky" authorities and with United States agencies
responsible for tax matters, and other reports and filings of like
nature.
2. Expenses Paid by the Sub-Adviser. The Sub-Adviser will pay the cost of
maintaining the staff and personnel necessary for it to perform its obligations
under this Agreement, the expenses of office rent, telephone,
telecommunications and other facilities it is obligated to provide in order to
perform the services specified in Section 1, and any other expenses incurred by
it in connection with the performance of its duties hereunder.
3. Expenses of the Fund Not Paid by the Sub-Adviser. The Sub-Adviser will
not be required to pay any expenses of the Fund which this Agreement does not
expressly make payable by the Sub-Adviser. In particular, and without limiting
the generality of the foregoing but subject to the provisions of Section 2, the
Sub-Adviser will not be required to pay under this Agreement:
a. the compensation and expenses of Trustees and of independent advisers,
independent contractors, consultants, managers and other agents
employed by the Trust or the Fund other than through the Sub-Adviser;
b. legal, accounting and auditing fees and expenses of the Trust or the
Fund;
c. the fees and disbursements of custodians and depositories of the Trust
or the Fund's assets, transfer agents, disbursing agents, plan agents
and registrars;
d. taxes and governmental fees assessed against the Trust or the Fund's
assets and payable by the Trust or the Fund;
e. the cost of preparing and mailing dividends, distributions, reports,
notices and proxy materials to shareholders of the Trust or the Fund,
except that the Sub-Adviser shall bear the costs of providing the
information referred to in Section 1(h) to the Adviser;
f. brokers' commissions and underwriting fees; and
g. the expense of periodic calculations of the net asset value of the
shares of the Fund.
4. Compensation of the Sub-Adviser. Subject to Sections 4(b) and (c), for
all services to be rendered, facilities furnished and expenses paid or assumed
by the Sub-Adviser as herein provided for the Fund, the Adviser will pay the
Sub-Adviser monthly, in arrears, a fee equal on an annual basis to the
following percentages of the gross management fee received by the Adviser from
the Fund, which percentages are based on the Fund's average daily net assets:
(a) 35% of the gross management fee received by the Adviser for average daily
net assets less than $500 million; (b) 30% of the gross management fee received
by the Adviser for average daily net assets equal to $500 million and less than
$1 billion; (c) 25% of the gross management fee received by the Adviser for
average daily net assets equal to $1 billion and less than $1.5 billion; and
(d) 20% of the gross management fee received by the Adviser for average daily
net assets equal to or in excess of $1.5 billion. The "average daily net
assets" of the Fund shall be determined on the basis set forth in the Fund's
Prospectus or otherwise consistent with the
15
1940 Act and the regulations promulgated thereunder. The Sub-Adviser will
receive a pro rata portion of such fee for any periods in which the Sub-Adviser
advises the Fund less than a full month. The Fund shall not be liable to the
Sub-Adviser for the Sub-Adviser's compensation hereunder. Calculations of the
Sub-Adviser's fee will be based on average net asset values as provided by the
Adviser.
In the event that, and each time that, prior to the fifth anniversary of
the effective date of this Agreement (the "Effective Date"), George P. Fraise,
Gordon M. Marchand or any person designated as a co-portfolio Manager in the
Fund's prospectus (collectively, a "Co-portfolio Manager") ceases employment
with the Sub-Adviser, the month fee paid to the Sub-Adviser shall be reduced by
20% of the fee that the Sub-Adviser would otherwise earn for such monthly
period under this Agreement until the Sub-Adviser retains a new Co-portfolio
Manager as a substitute for the departed portfolio manager. In the event that,
and each time that, prior to the fifth anniversary of the Effective Date, the
Sub-Adviser does not have an analyst reasonably acceptable to the Adviser,
supporting the Co-portfolio Managers in the management of the Fund, the monthly
fee paid to the Sub-Adviser shall be reduced by 10% of the fee that the
Sub-Adviser would otherwise earn for such monthly period under this Agreement
until the Sub-Adviser retains an analyst reasonably acceptable to the Adviser.
No such substitute Co-portfolio Manager shall be selected without the written
consent of the Adviser, which consent shall not be unreasonably withheld. A pro
rata adjustment shall be made with respect to any month during which such
condition existed only for a portion of such month.
5. Other Activities of the Sub-Adviser and Its Affiliates. Nothing herein
contained shall prevent the Sub-Adviser or any associate of the Sub-Adviser
from engaging in any other business or from acting as investment adviser or
investment manager for any other person or entity. It is understood that
officers, directors and employees of the Sub-Adviser or its affiliates may
continue to engage in providing portfolio management services and advice to
other investment companies, whether or not registered, to other investment
advisory clients of the Sub-Adviser or its affiliates and to said affiliates
themselves.
6. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither the
Sub-Adviser nor any of its investment management subsidiaries nor any of such
investment management subsidiaries' directors, officers or employees will act
as principal or agent or receive any commission, except as may be permitted by
the 1940 Act and rules and regulations promulgated thereunder. The Sub-Adviser
shall not knowingly recommend that the Fund purchase, sell or retain securities
of any issuer in which the Sub-Adviser has a financial interest without
obtaining prior approval of the Adviser prior to the execution of any such
transaction.
Nothing herein contained shall limit or restrict the Sub-Adviser or any of
its officers, affiliates or employees from buying, selling or trading in any
securities for its or their own account or accounts. The Trust and Fund
acknowledge the Sub-Adviser and its officers, affiliates, and employees, and
its other clients may at any time have, acquire, increase, decrease or dispose
of positions in investments which are at the same time being acquired or
disposed of hereunder. The Sub-Adviser shall have no obligation to acquire with
respect to the Fund, a position in any investment which the Sub-Adviser, its
officers, affiliates or employees may acquire for its or their own accounts or
for the account of another client, if in the sole discretion of the
Sub-Adviser, it is not feasible or desirable to acquire a position in such
investment on behalf of the Fund. Nothing herein contained shall prevent the
Sub-Adviser from purchasing or recommending the purchase of a particular
security for one or more funds or clients while other funds or clients may be
selling the same security.
7. No Partnership or Joint Venture. The Trust, the Fund, the Adviser and
the Sub-Adviser are not partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or
16
joint venturers or impose any liability as such on any of them. The Sub-Adviser
is an independent contractor and is not an agent of either the Adviser or the
Fund.
8. Name of the Trust and the Fund. The Trust and the Fund may use the name
"John Hancock" or any name or names derived from or similar to the names "John
Hancock Advisers, LLC." or "John Hancock Life Insurance Company" only for so
long as the Investment Management Contract remains in effect. At such time as
such agreement shall no longer be in effect, the Trust and the Fund will (to
the extent that they lawfully can) cease to use such a name or any other name
indicating that the Fund is advised by or otherwise connected with the Adviser.
The Fund acknowledges that it has adopted the name John Hancock U.S. Global
Leaders Growth Fund through permission of John Hancock Life Insurance Company,
a Massachusetts insurance company, and agrees that John Hancock Life Insurance
Company reserves to itself and any successor to its business the right to grant
the nonexclusive right to use the name "John Hancock" or any similar name or
names to any other corporation or entity, including but not limited to any
investment company of which John Hancock Life Insurance Company or any
subsidiary or affiliate thereof shall be the investment adviser.
9. Limitation of Liability of Sub-Adviser. The Sub-Adviser shall not be
liable for any losses, claims, damages, liabilities or litigation (including
legal and other expenses) incurred or suffered by the Adviser, the Trust, the
Fund or any of their affiliates as a result of any error of judgment or
mistake of law or for any loss suffered by the Sub-AdviserAdviser, Trust or Fund in
connection with respectthe matters to the Fund, except that nothing inwhich this Agreement shall operate or purport to operate in any way to exculpate, waive or
limit the liability of the Sub-Adviserrelates, except for and the Sub-Adviser shall indemnify
and hold harmless the Adviser, the Trust, the Fund and all affiliated persons
thereof (within the meaning of Section 2(a)(3) of the 1940 Act) and all
controlling persons (as described in Section 15 of the 1933 Act) (collectively,
the "Adviser Indemnitees") against any and all losses
claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which any of the Adviser Indemnities may become subject under the 1933 Act, the
1940 Act, the Advisers Act, or under any other statute, at common law or
otherwise arising out of or based on (a) the Sub-Adviser's causing the Fund to
be in violation of any applicable federal or state law, rule or regulation or
any investment policy or restriction set forth in the Fund's Prospectus or
Statement of Additional Information or any written policies, procedures,
guidelines or instructions provided in writing to the Sub-Adviser by the
Trustees or the Adviser, (b) the Sub-Adviser's causing the Fund to fail to
satisfy the requirements of Subchapter M of the Code for qualification as a
regulated investment company, or (c) the Sub-Adviser'sresulting from willful misfeasance, bad faith or gross negligence generally in the
performance of, its duties hereunder
or itsfrom the reckless disregard of, the duties of the Sub-adviser
or any of its obligationsdirectors.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents, members and dutiesshareholders
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.
10. Duration and TerminationAgreement any information, reports or other material
which any such body, by reason of this Agreement.Agreement, may request or require
pursuant to applicable laws and regulations.
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall remainbecome 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 _______ __, 2006. The
Agreement will continue in force until June 30, 2005;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 terminate unlessbe effective with respect to the Fund if a majority of the outstanding
A-3
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.
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 is approved prior to June 30, 2005 and
annually thereafter inor of a new contract with the manner requiredSub-adviser or a
different adviser or sub-adviser or other definitive action; provided, that the
compensation received by the 1940 Act or the rules and
interpretive positionsSub-adviser in respect of the SECFund during such
period is in compliance with Rule 15a-4 under the 1940Investment Company Act.
This Agreement may on 30
days' written notice, be terminated at any time, without the payment of any
penalty, as to the Fund by the Trustees of the Trust or by the Fund by vote of a
majority of the outstanding voting securities of the Fund, by the Trustees oron sixty days'
written notice to the Adviser and may be
terminated upon 90 daysthe Sub-adviser, or by the Adviser or
Sub-adviser on sixty days' written notice by the Sub-Adviser. Termination of this
Agreement with respect to the Fund shall not be deemed toTrust and the other party. This
Agreement will automatically terminate, or
otherwise invalidate any provisionswithout the payment of any contract between the Sub-Adviser and
any other series of the Trust. This Agreement shall automatically terminatepenalty, in
the event of its assignment or upon termination of(as defined in the Investment Management
Contract. In interpreting the provisions of this Section 10, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"assignment," "interested person"Company Act) or "voting security"), shall be applied.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the
17
change, waiver, discharge or termination is sought, and no amendment, transfer,
assignment, sale, hypothecation or pledge of this Agreement shall be effective
until approved in the
manner required byevent the 1940 Act oradvisory agreement between the rulesAdviser and interpretive positions of the SEC under the 1940 Act.
12. Provision of Certain Information by the Sub-Adviser.Trust terminates for
any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUB-ADVISER
The Sub-AdviserSub-adviser will promptly notify the Adviser and the Trust in writing
of the occurrence of any of the following events:
a. the Sub-AdviserSub-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-AdviserSub-adviser is required to be registered as an investment adviser in order
to perform its obligations under this Agreement;
b. the Sub-AdviserSub-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 Fund (excluding class action suitsTrust; and
c. any change in which the Fund is a
member of the plaintiff class by reason of the Fund's ownership of
shares in the defendant)actual control or the compliance by the Sub-Adviser with the
federal or state securities laws (including, but not limited to,
promptly notifying the Adviser in writing of any SEC examinations of
the Sub-Adviser and the Sub-Adviser promptly providing to the Adviser
a copy of any and all SEC exam findings together with a copy of the
Sub-Adviser's responses thereto);
c. the controlling stockholder or senior management of the Sub-Adviser
changes, there is otherwise an actual change in control (whether
through sale of allSub-adviser or substantially all the
assetsportfolio manager of the Sub-AdviserFund.
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.
A-4
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 material change in managementfund 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) or an
"assignment" (as defined inSub-adviser.
11. AMENDMENTS TO THE AGREEMENT
This Agreement (with the 1940 Act) has orexception 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 proposed to occur;
d. any occurrencespecifically 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 event that would disqualify the Sub-Adviser from
serving as a Sub-Adviser with respectparty to the Fund; or
e. any representation of the Sub-Adviser under this Agreement is no
longer truecast in
all material respects.
13. Representations and Acknowledgementsperson at a meeting called for the purpose of Sub-Adviser. The Sub-Adviser
hereby warrants and represents to the Adviser that (i) it has obtained all
applicable licenses, permits, registrations and approvals that mayvoting on such approval. Any
required shareholder approval shall be required
in order to serve in its designated capacitieseffective with respect to the Fund including, but not limitedif a
majority of the outstanding voting securities of the Fund votes to registration underapprove the
Advisers Act, andamendment. No amendment shall continue to keep current such license, permits, registrations and approvals for
so long as this Agreementbe effective unless it is in effectwriting and shall comply insigned by
all material
respects with all laws applicable to its operations duringparties hereto.
12. ENTIRE AGREEMENT
This Agreement contains the term of this
Agreement; (ii) it is not prohibited by the Advisers Act or other applicable
lawsentire understanding and regulations from performing the services contemplated by this
Agreement; and (iii) this Agreement has been duly and validly authorized,
executed and delivered on behalf of the Sub-Adviser and is a valid and binding agreement of the
Sub-Adviser enforceable against itparties.
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 its
terms, except as enforceability maythis paragraph.
15. SEVERABILITY
Should any portion of this Agreement for any reason be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and limitations on the availability of equitable remedies.
The Sub-Adviser represents that it has provided the Adviser with a
complete copy of its Form ADV as currently in effect and will promptly provide
the Adviser with copies of all amendments and supplements thereto. Such ADV, as
amended and supplemented from time to time, does not and shall not contain a
material misstatement of the information requiredheld to be stated therein.
The Sub-Adviser has reviewed the Registration Statement, and any
amendmentsvoid in
law or supplements thereto, of the Fund as filed with the SEC and
represents and warrants that with respect to disclosure about the Sub-Adviser
or information relating directly or indirectly to the Sub-Adviser, such
Registration Statement, amendment and/or supplement contain, as of the date
thereof, no untrue statement of any material fact and does not omit any state-
18
ment of material fact that was required to be stated therein or necessary to
make the statements contained therein not misleading.
14. Representations and Acknowledgements of Adviser. The Adviser hereby
warrants and represents to the Sub-Adviser that (i) it has obtained all
applicable licenses, permits, registrations and approvals that may be required
in order to serve in its designated capacities with respect to the Fund,
including, but not limited to registration under the Advisers Act, and shall
continue to keep current such license, permits, registrations and approvals for
so long asequity, this Agreement is in effect; and (ii) this Agreement has been duly
and validly authorized, executed and delivered on behalf of the Adviser and is
a valid and binding agreement of the Adviser enforceable against it in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and limitations on the availability of equitable
remedies.
The Adviser represents that it has provided the Sub-Adviser with a
complete copy of its Form ADV as currently in effect and will promptly provide
the Sub-Adviser with copies of all amendments and supplements thereto. Such
ADV, as amended and supplemented from time to time, does not and shall not
contain a material misstatement of the information required to be stated
therein.
The Adviser has reviewed the Registration Statement, and any amendments or
supplements thereto, of the Fund as filed with the SEC and represents and
warrants that with respect to disclosure about the Adviser or information
relating directly or indirectly to the Adviser, such Registration Statement,
amendment and/or supplement contain, as of the date thereof, no untrue
statement of any material fact and does not omit any statement of material fact
that was required to be stated therein or necessary to make the statements
contained therein not misleading.
15. Insurance. The Sub-Adviser will maintain at all times insurance
coverage for errors and omissions from a nationally recognized insurance
company with a claims paying rating of at least AA (or equivalent) in an amount
of coverage not less than $1 million (including a deductible not in excess of
$100,000) and other terms to which the Adviser shall not reasonably object. JHA
shall have the right to require SGA to increase the amount of such insurance
coverage (and to specify the amount of such increase) and/or to add JHA and/or
the Fund as co-insureds under the policy, and SGA shall effect such changes in
insurance coverage requested by JHA within 90 days of receiving notice of the
request from JHA. Upon execution of the Subadvisory Agreement, SGA shall
deliver to JHA an insurance binder which contains an endorsement providing at
least 30 days advance notice of amendment or cancellation of such insurance.
Such notice shall be provided directly from the insurance company to JHA.
16. Governing Law. This Agreement shall be governedconstrued, insofar as is possible, as
if such portion had never been contained herein.
A-5
16. GOVERNING LAW
The provisions of this Agreement shall be construed and construedinterpreted in
accordance with the laws of theThe Commonwealth of Massachusetts.
17. Severability. TheMassachusetts, or any of the
applicable provisions of this Agreement are independentthe Investment Company Act. To the extent that the laws
of and
separable from each other, and no provision shall be affectedThe Commonwealth of Massachusetts, or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be deemed invalid or unenforceable in whole or in part.
18. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect. Thisin this
Agreement, may be executed simultaneously in two or more counterparts, eachconflict with applicable provisions of whichthe Investment Company Act,
the latter shall be deemed an original, but allcontrol.
17. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust of the Trust, a copy of which,
together shall constitute
one andwith all amendments thereto (the "Declaration"), is on file in the
same instrument. The name John Hancock Capital Series is the
designationoffice of the Trustees under the Amended and Restated Declaration of Trust
dated February 28, 1992, as amended from time to time. The Declaration of Trust
has been filed with the Secretary of The Commonwealth of 19
Massachusetts. The obligationsMassachusetts, 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 Fund are not personally
binding upon,Trust shall be held to any personal liability,
nor shall resort be had to thetheir private property, for the satisfaction of any
obligation or claim, in connection with the affairs of the
Trustees, shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. The Trust or the Fund
shall not be liable forthereof, but only the obligations of any other series of the Trust.
Any information supplied by the Sub-Adviser, which is not otherwise in the
public domain, in connection with the performance of its duties hereunder isassets belonging to
be regarded as confidential and for use only by the Fund and/or its agents, and
only in connection with the Fund and its investments. Any information supplied
by the Trust, or the Advisor,Fund with respect to
which is not otherwisesuch 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 the public domain, in
connectionaccordance with the Trust's "Policy
Regarding Disclosure of Fund orHoldings," 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
Adviser isSub-adviser until a copy has been provided to be regarded as confidential and
for use only by the Sub-Adviser and/or its agents, and only in connection withSub-adviser.
19. COMPLIANCE
Upon execution of this Agreement, the Sub-Adviser's services under this Agreement. Any party in receipt of
confidential informationSub-adviser shall use reasonable precautions (substantially
identical to those used in safeguarding of its own confidential information)
that its directors/trustees, officers, employees and advisors abide by these
confidentiality provisions. Each of the Trust,provide the Adviser
and the Sub-Adviser
acknowledge thatTrust with the restrictions contained inSub-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 Section 17(b) are necessary
forAgreement, the protectionSub-adviser shall
promptly submit to the Trust and the Adviser: (i) any material changes to the
Compliance Policies, (ii) notification of the businesscommencement of any regulatory
examination of the other parties heretoSub-adviser and are
considered to be reasonable fordocumentation describing the results of any
such purpose. Eachexamination 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 Adviser
and Sub-Adviser agree that any breachCompliance Policies or of the Sub-adviser's code
of ethics. Throughout the term of this Section 17(b) is likely to causeAgreement, the other parties hereto substantial and irrevocable damage and therefore, in
the event of such breach, in addition to any other remedies it may have at law
or in equity, the non-breach partySub-adviser shall be entitled to specific performance
and other injunctive relief. The provisions of this Section 18(b) shall survive
any termination of this Agreement.
This Agreement represents the entire agreement between the parties hereto
with respect to the subject matter hereof and supercedes all prior oral and
written negotiations, commitments and understandings between the parties;
provided that this Agreement shall not supercede or modify the obligations ofprovide
the Adviser and the Sub-AdviserTrust 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
MasterInvestment Company Act.
(THE REMAINDER OF THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)
A-6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement which obligations
shall remain in full force and effect.
Yours very truly,to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
JOHN HANCOCK CAPITALADVISERS, LLC
By:
Name:
Title:
JOHN HANCOCK INSTITUTIONAL SERIES TRUST
on behalf of John Hancock U.S. Global Leaders
GrowthIndependence
Diversified Core Equity Fund II
By:
------------------------Name:
Title:
INDEPENDENCE INVESTMENT, LLC
By:
Name:
Title:
A-7
APPENDIX A
The foregoing contract
is hereby agreedSub-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"):
Fund Percentage of Advisory Fee Payable to the Adviser
- ---- -------------------------------------------------
John Hancock Independence Diversified Core Equity Fund II 35%
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 hereof.
SUSTAINABLE GROWTH ADVISERS, LP JOHN HANCOCK ADVISERS, LLC
By: ------------------------ By: ------------------------
Name Name:
By: ------------------------
Name:
By: ------------------------
Name
20to 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-8
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
JOHN HANCOCK US GLOBAL LEADERS GROWTHCORE EQUITY FUND
SPECIAL MEETING OF SHAREHOLDERS -FEBRUARY 11, 2004- July 12, 2006
PROXY SOLICITATION BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Maureen Ford
Goldfarb,Keith F.
Hartstein, Alfred P. Ouellette and William H. King, and Susan S. Newton, with full power of
substitution in each, to vote all the shares of beneficial interest of John
Hancock U.S.
Global Leaders GrowthCore Equity Fund ("U.S. Global Leaders GrowthCore Equity Fund") which the undersigned is (are)
entitled to vote at the Special Meeting of Shareholders (the "Meeting") of U.S. Global Leaders GrowthCore
Equity Fund to be held at 101 Huntington
Avenue,601 Congress Street, Boston, Massachusetts, 02199, on February 11, 2004July
12, 2006 at 9:10:00 a.m., EasternBoston 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 December
30, 2003May 24, 2006 is hereby acknowledged. If not revoked,
this proxy shall be voted for the proposal.
Date________________________________, 2004Date , 2006
--------------------------
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
-------------------------------------------
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Signature(s)
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!
SPECIFY YOUR PROMPT RESPONSE WILL SAVE YOUR FUNDDESIRED ACTION BY A CHECK MARK IN THE EXPENSE OF ADDITIONAL MAILINGSAPPROPRIATE SPACE. THIS PROXY
WILL BE VOTED IN FAVOR OROF (FOR) A PROPOSAL 1 IF NO SPECIFICATION IS MADE BELOW. AS
TO ANY OTHER MATTER, THE PROXY OR PROXIES WILL VOTE IN ACCORDANCE WITH THEIR
BEST JUDGEMENT.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOXBOXES BELOW.
(1): To A proposal to approve a new sub-investment management contractcontact among John
Hancock Advisers, LLC.LLC, John Hancock Core Equity Fund ("Core Equity
Fund"), U.S. Global Leaders Growthand Independence Investment LLC.
FOR |_| AGAINST |_| ABSTAIN |_|
(2) A proposal to approve a policy allowing Core Equity Fund's Board of
Trustees and John Hancock Advisers, LLC to retain sub-advisers to Core
Equity Fund and Sustainable Growth
Advisers, LP.without shareholder approval.
FOR |_| AGAINST |_| ABSTAIN |_|
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THIS CARD.
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THE TRUSTEES RECOMMEND A VOTE "FOR" THE FOLLOWING PROPOSAL.PROPOSALS.
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(1) A proposal to approve a new sub-investment management oFOR oAGAINST oABSTAIN
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U.S. Global Leaders Growthand Independence Investment LLC.
Proposal 2. [ ]FOR [ ]AGAINST [ ]ABSTAIN
(2) A proposal to approve a policy allowing Core Equity Fund's Board of
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Equity Fund and
Sustainable Growth Advisers, LP.without shareholder approval.
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THE TRUSTEES RECOMMEND A VOTE "FOR" THE FOLLOWING PROPOSAL.PROPOSALS.
Proposal 1. To[ ]FOR [ ]AGAINST [ ]ABSTAIN
(1) A proposal to approve a new sub-investment management oFOR
contractcontact among John
Hancock Advisers, LLC.LLC, John Hancock Core Equity Fund ("Core Equity Fund"),
U.S. Global Leaders Growthand Independence Investment LLC.
Proposal 2. [ ]FOR [ ]AGAINST [ ]ABSTAIN
(2) A proposal to approve a policy allowing Core Equity Fund's Board of
Trustees and John Hancock Advisers, LLC to retain sub-advisers to Core
Equity Fund and
Sustainable Growth Advisers, LP.without shareholder approval.
Please refer to the proxy statement for discussion of each of these matters.
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