John Hancock Closed-End Funds Auction Preferred Shares Update

BOSTON, Feb. 26 /PRNewswire-FirstCall/ -- John Hancock Advisers, LLC has provided an update pertaining to recent developments affecting the auction preferred shares market.

Recently, there has been a great deal of attention focused on a disruption in the market for auction preferred shares (APS), which are leveraged funding vehicles for closed-end funds. An imbalance of buyers and sellers of APS has caused auctions of these senior equity securities, including those of several John Hancock closed-end funds, to fail. In order to fully understand what has happened, why it happened and the impact this has on John Hancock closed-end funds, it is important to keep the following points in mind:

-- This is an industry-wide issue impacting all securities that use an
auction process and impacting substantially all leveraged closed-end
funds.

-- An auction failure is not synonymous with a default. When an auction
fails, closed-end funds continue to pay dividends to all APS holders.
These dividends are paid at a specified maximum rate which is typically
set at a premium over prevailing short-term rates.

-- The issue is a liquidity issue related to the ability of auction
preferred shareholders to sell their shares in the auction process. It
is not an issue of credit quality.

-- There have been no defaults on John Hancock Auction Preferred Shares.
John Hancock's APS continue to be highly rated -- AAA or AA.

-- There has been no immediate negative impact on common shareholders of
John Hancock closed-end funds. Our leveraged closed-end fund
shareholders continue to benefit from an attractive spread between the
short-term rates our funds are paying on APS and the returns our funds
are earning on the securities they hold. It is important to note that
given the recent aggressive interest rate cuts by the Fed, short-term
interest rates today are relatively low.

-- John Hancock continues to closely monitor overall developments at this
time and is working to help restore liquidity in the APS market.

With share prices typically starting at $25,000, APS investors tend to be high net worth investors and institutions. APS have traditionally been an attractive investment because of their attractive yields and high credit quality. Until recently, liquidity has been another attractive attribute of APS. However, the recent failures of auctions have disrupted liquidity for APS shareholders. This situation is one result of the sub prime crisis that hit in late summer 2007, creating a ripple effect in the auction preferred share market. A failed auction, which is not a default, occurs when there are more sellers than buyers and because of this, auction preferred shareholders may not be able to sell all of their shares. Instead, they are forced to hold their shares until the next successful clearing auction, sell them to another buyer in the secondary market, or simply hold them. When an auction fails, a maximum rate is applied to the APS to compensate the investor for having to hold the shares. For John Hancock's AAA rated APS, this maximum rate is the higher of 125 basis points over or 125% of 30 day commercial paper except for the Patriot Premium Dividend Fund II APS which are AA rated and carry a maximum rate of the higher of 150 basis points over or 150% of 60 day LIBOR.

When a leveraged closed-end fund is first issued there is first an initial public offering for common shares and then a second public offering of APS. The amount of APS a leveraged fund can issue will vary within the limits of what is legally permitted. The APS, which are short-term focused investments, carry an interest rate that is tied to a broad based short-term financial rate such as LIBOR or commercial paper. The interest rate is then reset periodically through an auction process. Leveraged closed-end fund common shareholders benefit from APS, as any spread between the short-term rate the fund pays auction preferred shareholders and the return earned on securities held by the fund is passed through to the common shareholders, thus enhancing their yield. This continues to be the case today for John Hancock closed-end fund shareholders. Although the fund's share price is not directly affected by the APS market, common shareholders may experience a higher degree of volatility as investors react to the news.

Management is actively evaluating options that may restore liquidity to APS holders and will continue to monitor developments in the APS market.

About Manulife Financial and John Hancock

John Hancock Funds, the mutual fund business unit of John Hancock Financial Services, offers a broad array of investment products, including open-end and closed-end funds, privately managed accounts, 529 plans and retirement accounts to retail and institutional investors. As of December 31, 2007, investors entrusted John Hancock Funds with approximately $56.8 billion in assets. Additional information about John Hancock Funds can be found on the website: http://www.jhfunds.com/.

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 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$396 billion (US$401 billion) as of December 31, 2007. Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '0945' on the SEHK. Manulife Financial can be found on the Internet at http://www.manulife.com/.

The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers a broad range of financial products and services, including life insurance, fixed and variable annuities, mutual funds, 401(k) plans, long term care insurance, college savings, and other forms of business insurance.

First Call Analyst:
FCMN Contact:

Source: John Hancock Advisers, LLC

CONTACT: Kimberley Dietrich of John Hancock Advisers, LLC,
+1-617-663-4217, kdietrich@jhancock.com

Web site: http://www.jhfunds.com/
http://www.manulife.com/

2008-02-26 18:15:30 0298935 PRNEWSWIRE