HANCOCK JOHN CAPITAL SERIES, 485BPOS, 1996-03-28

HANCOCK JOHN CAPITAL SERIES
485BPOS, 1996-03-28

Previous: GUARDSMAN PRODUCTS INC, 10-K, 1996-03-28

Next: HEALTH CHEM CORP, 10-K, 1996-03-28

As filed with the Securities and Exchange Commission on March 28, 1996.
File No. 2-29502
File No. 811-1677
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A
-------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. 45 (X)
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 (X)
Amendment No. 24 (X)
-------
John Hancock Capital Series
(Exact Name of Registrant as Specified in Charter)
101 Huntington Avenue
Boston, Massachusetts 02199-7603
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, (617) 375-1700
-------
THOMAS H. DROHAN
Vice President and Secretary
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
(Name and Address of Agent for Service)
-------
It is proposed that this filing will become effective:
( ) Immediately upon filing pursuant to paragraph (b), of Rule 485
(X) On April 1, 1996 pursuant to paragraph (b), of Rule 485
( ) 60 days after filing pursuant to paragraph (a), of Rule 485
( ) On (date) pursuant to paragraph (a) of Rule 485.
-------

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
A rule 24f-2 Notice for the Registrant's most recent fiscal year on February 26,
1996.

<PAGE>

John Hancock Capital Series

CROSS REFERENCE SHEET

Pursuant to Rule 485(b) under the Securities Act of 1933

Item Number Statement of Additional
Form N-1A Part A Prospectus Caption Information Caption

1 Front Cover Page *

2 Expense Information; *
The Fund's Expenses;
Shares Price;
Additional Services and
Programs

3 The Fund's Financial *
History Performance

4 Investment Objectives and *
Policies; Organization and
Management of the Fund

5 Organization and Management *
of the Fund; The Fund's
Expenses

6 Organization and Management of *
Fund; Distribution and Taxes;
How to Redeem Shares;
Additional Services and Programs

7 Who Can Buy Shares; *
How to Buy Shares;
Shares Price; Additional
Services and Programs

8 How to Redeem Shares *

9 Not Applicable *

<PAGE>

Item Number
Form N-1A Part B. Prospectus Caption Statement of Additional
Information Caption

10 * Front Cover Page

11 * Table of Contents

12 * Organization of the Fund

13 * Investment Objective and
Policies; Investment
Restrictions

14 * Those Responsible for
Management

15 * Those Responsible for
Management

16 * Investment Advisory and
Other Services; Distribution
Contract; Transfer Agent
Services; Custody of Portfolio;
Independent Auditors

17 * Brokerage Allocation

18 * Description of the Fund's
Shares

19 * Net Asset Value; Additional
Services and Programs

20 * Tax Status

21 * Distribution Contract

22 * Calculation of Performance

23 * Financial Statements

<PAGE>

John Hancock
Growth Fund

Class A and Class B Shares
Prospectus
April 1, 1996

TABLE OF CONTENTS
Page
-------
Expense Information 2
The Fund's Financial Highlights 3
Investment Objective and Policies 4
Organization and Management of the Fund 5
Alternative Purchase Arrangements 6
The Fund's Expenses 8
Dividends and Taxes 9
Performance 10
How to Buy Shares 11
Share Price 12
How to Redeem Shares 17
Additional Services and Programs 19

This Prospectus sets forth information about John Hancock Growth Fund (the
"Fund"), a diversified series of John Hancock Capital Series (the "Trust "),
that you should know before investing. Please read and retain it for future
reference.

Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC"). You can obtain a copy of the Fund's Statement
of Additional Information, dated April 1, 1996, and incorporated by reference in
this Prospectus, free of charge by writing or telephoning: John Hancock Investor
Services Corporation, P.O. Box 9116, Boston, Massachusetts 02205-9116,
1-800-225-5291, (1-800-554-6713 TDD).

Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>

EXPENSE INFORMATION

The purpose of the following information is to help you understand the
various fees and expenses that you will bear, directly or indirectly, when you
purchase Fund shares. The operating expenses included in the table and
hypothetical example below are based on actual fees and expenses of the Fund's
Class A and Class B shares for the fiscal year ended December 31, 1995, adjusted
to reflect current fees and expenses. Actual fees and expenses may be greater or
less than those indicated.

Class A Class B
Shares Shares
------- ---------
Shareholder Transaction Expenses
Maximum sales charge imposed on purchases
(as a percentage of offering price) ................ 5.00% None
Maximum sales charge imposed on reinvested
dividends .......................................... None None
Maximum deferred sales charge ........................ None* 5.00%
Redemption fee+ ...................................... None None
Exchange fee ......................................... None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fee ....................................... 0.80% 0.80%
12b-1 fee** .......................................... 0.30% 1.00%
Other expenses ....................................... 0.40% 0.40%
Total Fund operating expenses ........................ 1.50% 2.20%

*No sales charge is payable at the time of purchase on investments in Class A
shares of $1 million or more, but a contingent deferred sales charge may be
imposed on these investments, as described below under the caption "Share
Price," in the event of certain redemption transactions within one year of
purchase.
**The amount of the 12b-1 fee used to cover service expenses will be up to 0.25%
of the Fund's average net assets, and the remaining portion will be used to
cover distribution expenses. See "The Fund's Expenses." +Redemption by wire
fee (currently $4.00) not included.

Example: 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
You would pay the following expenses for the
indicated period of years on a hypothetical
$1,000 investment, assuming a 5% annual return:
Class A shares $65 $95 $128 $220
Class B shares
--Assuming complete redemption at end of period ...... $72 $99 $138 $236
--Assuming no redemption ............................. $22 $69 $118 $236
</TABLE>

(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.)

The Fund's payment of a distribution fee may result in a long-term
shareholder indirectly paying more than the economic equivalent of the maximum
front-end sales charge permitted under the National Association of Securities
Dealers Rules of Fair Practice.

The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contract."

2
<PAGE>

THE FUND'S FINANCIAL HIGHLIGHTS

The following table of Financial Highlights has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose unqualified report is included
in the Fund's 1995 Annual Report and is included in the Statement of Additional
Information. Further information about the performance of the Fund is contained
in the Fund's Annual Report to shareholders, that may be obtained free of charge
by writing or telephoning John Hancock Investor Services Corporation ("Investor
Services") at the address or telephone number listed on the front page of this
Prospectus.

Selected data for each class of shares outstanding throughout each period
indicated is as follows:
<TABLE>
<CAPTION>

Year Ended December 31,
----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating
Performance
Net Asset Value,
Beginning of
Period $15.89 $17.40 $17.32 $17.48 $12.93 $ 15.18 $13.33 $12.34 $14.03 $14.50
------ ------ ------ ------ ------ ------- ------ ------ ------ ------
Net Investment
Income/(Loss) (0.09)(c) (0.10) (0.11) (0.06) 0.04 0.16 0.28 0.23 0.22 0.11
Net Realized and
Unrealized
Gain/(Loss) on
Investments 4.40 (1.21) 2.33 1.10 5.36 (1.47) 3.81 1.16 0.64 1.79
------ ------ ------ ------ ------ ------- ------ ------ ------ ------
Total from
Investment
Operations 4.31 (1.31) 2.22 1.04 5.40 (1.31) 4.09 1.39 0.86 1.90
------ ------ ------ ------ ------ ------- ------ ------ ------ ------
Less Distributions:
Dividends from Net
Investment Income -- -- -- -- (0.04) (0.16) (0.29) (0.23) (0.28) (0.17)
Distributions from
Net Realized Gain
on Investments Sold (0.69) (0.20) (2.14) (1.20) (0.81) (0.78) (1.95) (0.17) (2.27) (2.20)
------ ------ ------ ------ ------ ------- ------ ------ ------ ------
Total
Distributions (0.69) (0.20) (2.14) (1.20) (0.85) (0.94) (2.24) (0.40) (2.55) (2.37)
------ ------ ------ ------ ------ ------- ------ ------ ------ ------
Net Asset Value,
End of Period $19.51 $15.89 $17.40 $17.32 $17.48 $ 12.93 $15.18 $13.33 $12.34 $14.03
====== ====== ====== ====== ====== ======= ====== ====== ====== ======
Total Investment
Return at Net
Asset Value (g) 27.17% (7.50%) 13.03% 6.06% 41.68% (8.34)% 30.96% 11.23% 6.03% 13.83%
------ ------ ------ ------ ------ ------- ------ ------ ------ ------
Ratios and
Supplemental Data
Net Assets, End of
Period (000's
omitted) $241,700 $146,466 $162,937 $153,057 $145,287 $102,416 $105,014 $101,497 $86,426 $87,468
Ratio of Expenses
to Average Net
Assets 1.48% 1.65% 1.56% 1.60% 1.44% 1.46% 0.96% 1.06% 1.00% 1.03%
Ratio of Net
Investment
Income/(Loss) to
Average Net Assets (0.46%) (0.64%) (0.67%) (0.36%) 0.27% 1.12% 1.73% 1.76% 1.41% 0.77%
Portfolio Turnover
Rate 68%(e) 52% 68% 71% 82% 102% 61% 47% 68% 62%

1995 1994
---- ----
CLASS B (a)
Per Share Operating
Performance
Net Asset Value,
Beginning of
Period $ 15.83 $17.16(b)
------- ------
Net Investment Loss (0.26)(c) (0.20)(c)
Net Realized and
Unrealized Gain
(Loss) on
Investments 4.37 (0.93)
------- ------
Total from
Investment
Operations 4.11 (1.13)
------- ------
Less
Distributions:
Distributions from
Net Realized Gain
on Investments Sold (0.69) (0.20)
------- ------
Net Asset Value,
End of Period $ 19.25 $15.83
======= ======
Total Investment
Return at Net
Asset Value (g) 26.01% (6.56%)(f)
------- ------
Ratios and
Supplemental Data
Net Assets, End of
Period (000's
omitted) $15,913 $3,807
Ratio of Expenses
to Average Net
Assets 2.31% 2.38%(d)
Ratio of Net
Investment Loss
to Average Net
Assets (1.39%) (1.25%)(d)
Portfolio Turnover
Rate 68%(e) 52%
</TABLE>

(a) Class B shares commenced operations on January 3, 1994.
(b) Initial price at commencement of operations.
(c) On average month end shares outstanding.
(d) On an annualized basis.
(e) Portfolio turnover rate excludes merger activity.
(f) Not annualized.
(g) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.

3
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to seek long-term capital appreciation.

The Fund's investment objective is to achieve long-term appreciation of capital.
The Fund will diversify its investments among a number of industry groups
without concentration in any particular industry. There is no assurance that the
Fund will achieve its investment objective. The Fund believes its shares are
suitable for investment by those who are in search of above-average long-term
reward and can invest without concern for current income.

The Fund invests principally in common stocks (and in securities convertible
into or with rights to purchase common stocks) of companies which the Fund's
management believes offer outstanding growth potential over both the
intermediate and long term. John Hancock Advisers, Inc. (the "Adviser") will
pursue a strategy of investing in common stocks of those companies whose
five-year average operating earnings and revenue growth are at least two times
that of the economy, as measured by the Gross Domestic Product. Companies
selected will generally have positive operating earnings growth for five
consecutive years, although companies without a five-year record of positive
earnings growth may also be selected if, in the opinion of the Adviser, they
have significant growth potential. The Fund may invest up to 15% of its net
assets in securities having a limited or restricted market. The Adviser expects
that the median market capitalization of the portfolio will be over three
billion dollars.

Restricted Securities. The Fund may purchase restricted securities including
those eligible for resale to "qualified institutional buyers" pursuant to Rule
144A under the Securities Act of 1933 (the "Securities Act"). The Trustees will
monitor the Fund's investments in these securities, focusing on certain factors,
including valuation, liquidity and availability of information. Purchases of
restricted securities are subject to an investment restriction limiting all the
Fund's illiquid securities to not more than 15% of the Fund's net assets.

Lending of Securities. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. Government securities according to applicable regulatory requirements. The
Fund may reinvest any cash collateral in short-term securities. When the Fund
lends portfolio securities, there is a risk that the borrower may fail to return
the loaned securities. As a result, the Fund may incur a loss or, in the event
of the borrower's bankruptcy, may be delayed in or prevented from liquidating
the collateral. It is a fundamental policy of the Fund not to lend portfolio
securities having a total value in excess of 33-1/3% of its total assets.

Repurchase Agreements. The Fund may enter into repurchase agreements. In a
repurchase agreement, the Fund buys a security subject to the right and
obligation to sell it back to the seller at a higher price. These transactions
must be fully collateralized at all times, but involve some credit risk to the
Fund if the other party defaults on its obligation and the Fund is delayed in or
prevented from liquidating the collateral.

Foreign Issuers. The Fund may invest up to 15% of its assets in securities of
foreign issuers in the form of American Depositary Receipts (ADRs). ADRs
(sponsored or unsponsored) are receipts typically issued by an American bank or
trust company.

4
<PAGE>

They evidence ownership of underlying securities issued by a foreign corporation
and are designated for trading in United States securities markets. Issuers of
the shares underlying unsponsored ADRs are not contractually obligated to
disclose material information in the United States and, therefore, there may not
be a correlation between this information and the market value of an unsponsored
ADR.

When management believes that current market or economic conditions warrant, the
Fund temporarily may retain cash or invest in preferred stock, nonconvertible
bonds or other fixed-income securities. Fixed income securities in the Fund's
portfolio will generally be rated at least BBB by Standard & Poor's Ratings
Group ("S&P") or Baa by Moody's Investor's Service, Inc. ("Moody's"), or if
unrated, determined by the Adviser to be of comparable quality. The Fund may,
however, invest up to 5% of its net assets in lower rated securities, commonly
known as "junk bonds."

Investments in foreign securities may involve risks that are not present in
domestic investments.

The Fund follows certain policies, which may help to reduce investment risk.

Investment Restrictions. The Fund has adopted certain investment restrictions
that are detailed in the Statement of Additional Information, where they are
designated as fundamental or nonfundamental. The Fund's investment objective and
those fundamental restrictions may not be changed without shareholder approval.
All other investment policies and restrictions are nonfundamental and can be
changed by a vote of the Trustees without shareholder approval. The Fund's
portfolio turnover rates for recent years are shown in the section "The Fund's
Financial Highlights."

Brokers are chosen based on best price and execution.

When choosing brokerage firms to carry out the Fund's transactions, the Adviser
gives primary consideration to execution at the most favorable price, taking
into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sales of Fund shares. Pursuant
to procedures established by the Trustees, the Adviser may place securities
transactions with brokers affiliated with the Adviser. These brokers include
Tucker Anthony Incorporated, John Hancock Distributors, Inc. and Sutro &
Company, Inc. which are indirectly owned by John Hancock Mutual Life Insurance
Company (the "Life Company"), which in turn indirectly owns the Adviser.

ORGANIZATION AND MANAGEMENT OF THE FUND

The Trustees elect officers and retain the investment adviser who is responsible
for the day-to-day operations of the Fund, subject to the Trustees' policies and
supervision.

The Fund is a separate, diversified series of the Trust, an open-end management
investment company organized as a Delaware corporation in 1968 and reorganized
as a Massachusetts business trust in 1984. The Fund has an unlimited number of
authorized shares of beneficial interest. The Trust's Declaration of Trust
permits the Trustees to create and classify shares of beneficial interest into
separate series of the Trust without shareholder approval. As of the date of
this Prospectus, the Trustees have authorized the Fund and one other series.
Although additional series may be added in the future, the Trustees

5
<PAGE>

have no current intention of creating additional series of the Trust. The
Trust's Declaration of Trust also permits the Trustees to classify and
reclassify any series of shares of the Fund into one or more classes.

Accordingly, the Trustees have authorized the issuance of two classes of the
Fund, designated Class A and Class B. The shares of each class represent an
interest in the same portfolio of investments of the Fund. Each class has equal
rights as to voting, redemption, dividends and liquidation. However, each class
bears different distribution fees and Class A and Class B shareholders have
exclusive voting rights with respect to their distribution plans.

Shareholders have certain rights to remove Trustees. The Fund is not required
and does not intend to hold annual shareholder meetings, although special
meetings may be held for such purposes as electing or removing Trustees,
changing fundamental investment restrictions and policies or approving a
management contract. The Fund, under certain circumstances, will assist in
shareholder communications with other shareholders.

John Hancock Advisers, Inc. advises investment companies having a total asset
value of more than $16 billion.

The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the Life Company, a financial services company. It provides the Fund, and other
investment companies in the John Hancock group of funds, with investment
research and portfolio management services. John Hancock Funds, Inc. ("John
Hancock Funds") distributes shares for all of the John Hancock funds directly
and through selected broker-dealers ("Selling Brokers"). Certain Fund officers
are also officers of the Adviser and John Hancock Funds. Pursuant to an order
granted by the Securities and Exchange Commission, the Fund has adopted a
deferred compensation plan for its independent Trustees which allows Trustees'
fees to be invested by the Fund in other John Hancock funds.

Day-to-day management of the Fund is carried out by Bernice S. Behar, Senior
Vice President of the Adviser assisted by a team of portfolio managers and
analysts. She also manages John Hancock Emerging Growth Fund, John Hancock
Discovery Fund and John Hancock Global Marketplace Fund. Ms. Behar has been
with the Adviser since 1991 and prior to that was a portfolio manager and
investment analyst with Sanyo Securities America.

In order to avoid any conflict with portfolio trades for the Fund, the Adviser
and the Fund have adopted extensive restrictions on personal securities trading
by personnel of the Adviser and its affiliates. Some of these restrictions are:
pre-clearance for all personal trades and a ban on the purchase of initial
public offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.

ALTERNATIVE PURCHASE ARRANGEMENTS

An alternative purchase plan allows you to choose, the method of purchase that
is best for you.

6
<PAGE>

Shares"). If you do not specify on your account application the class of shares
you are purchasing, it will be assumed that you are investing in Class A shares.

Investments in Class A shares are subject to an initial sales charge.

Class A Shares. If you elect to purchase Class A shares, you will incur an
initial sales charge unless your purchase is $1 million or more. If you purchase
$1 million or more of Class A shares, you will not be subject to an initial
sales charge, but you will incur a sales charge if you redeem your shares within
one year of purchase. Class A shares are subject to ongoing distribution and
service fees at a combined annual rate of up to 0.30% of the Fund's average
daily net assets attributable to the Class A shares. Certain purchases of Class
A shares qualify for reduced initial sales charges. See "Share Price--Qualifying
for a Reduced Sales Charge."

Investments in Class B shares are subject to a contingent deferred sales charge.

Class B Shares. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
six years of purchase (the "contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all of
your dollars to work from the time your investment is made, but the higher
ongoing distribution fee will cause these shares to have higher expenses than
Class A shares. To the extent that any dividends are paid by the Fund, these
higher expenses will result in lower dividends than those paid on Class A
shares.

Class B shares are not available to full-service defined contribution plans
administered by Investor Services or the Life Company that had more than 100
eligible employees at the inception of the Fund account.

Factors to Consider in Choosing an Alternative

You should consider which class of shares would be more beneficial for you.

The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares, given the amount of your purchase, the length of time that
you expect to hold the shares and other circumstances. You should consider
whether, during the anticipated life of your Fund investment, the accumulated
CDSC and fees on Class B shares would be less than the initial sales charge and
accumulated fees on Class A shares purchased at the same time, and to what
extent this differential would be offset by the Class A shares' lower expenses.
To help you make this determination, the table under the caption "Expense
Information" on page 2 of this Prospectus shows examples of the charges
applicable to each class of shares. Class A shares will normally be more
beneficial if you qualify for a reduced sales charge. See "Share Price--
Qualifying for a Reduced Sales Charge".

Class A shares are subject to lower distribution and service fees and,
accordingly, pay correspondingly higher dividends per share, to the extent that
any dividends are paid. However, because initial sales charges are deducted at
the time of purchase, you would not have all of your funds invested initially
and, therefore, would initially own fewer shares. If you do not qualify for
reduced initial sales charges and expect to maintain your investment for an
extended period of time, you might consider purchasing Class A shares. This is
because the accumulated distribution and service charges on Class B shares may
exceed the initial sales charge and accumulated distribution and service charges
on Class A shares during the life of your investment.

Alternatively, you might determine that it is more advantageous to purchase
Class B shares to have all of your funds invested initially. However, you will
be subject to higher distribution fees and, for a six-year period, a CDSC.

7
<PAGE>

In the case of Class A shares, the distribution expenses that John Hancock Funds
incurs in connection with the sale of shares will be paid from the proceeds of
the initial sales charge and the ongoing distribution and service fees. In the
case of Class B shares, the expenses will be paid from the proceeds of the
ongoing distribution and service fees, as well as from the CDSC incurred upon
redemption within six years of purchase. The purpose and function of the Class B
shares' CDSC and ongoing distribution and service fees are the same as those of
the Class A shares' initial sales charge and ongoing distribution and service
fees.

Dividends, if any, on Class A and Class B shares will be calculated in the same
manner, at the same time, and on the same day. They will also be in the same
amount, except for differences resulting from each class bearing its own
distribution and service fees, and shareholder meeting expenses. See "Dividends
and Taxes."

THE FUND'S EXPENSES

For managing its investment and business affairs, the Fund pays a fee, to the
Adviser which for the 1995 year was 0.80% of the Fund's average net assets.

The investment management fee is higher than the fees paid to most mutual funds,
but comparable to fees paid by funds that invest in similar securities.

The Fund pays distribution and service fees for marketing and sales-related
shareholder servicing.

The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
these Plans, the Fund will pay distribution and service fees at an aggregate
annual rate of up to 0.30% of the Class A shares' average daily net assets and
an aggregate annual rate of up to 1.00% of the Class B shares' average daily net
assets. In each case, up to 0.25% is for service expenses and the remaining
amount is for distribution expenses. The distribution fees are used to reimburse
John Hancock Funds for its distribution expenses, including but not limited to:
(i) initial and ongoing sales compensation to Selling Brokers and others
(including affiliates of John Hancock Funds) engaged in the sale of Fund shares;
(ii) marketing, promotional and overhead expenses incurred in connection with
the distribution of Fund shares; and (iii) with respect to Class B shares only,
interest expenses on unreimbursed distribution expenses. The service fees will
be used to compensate Selling Brokers and others for providing personal and
account maintenance services to shareholders. In the event John Hancock Funds is
not fully reimbursed for payments it makes or expenses it incurs under the Class
A Plan, these expenses will not be carried beyond one year from the date they
were incurred. These unreimbursed expenses under the Class B Plan will be
carried forward together with interest on the balance of these unreimbursed
expenses. For the fiscal year ended December 31, 1995 an aggregate of $165,787
of distribution expenses or 2.01% of the average net assets of the Class B
shares of the Fund, was not reimbursed or recovered by the John Hancock Funds
through the receipt of deferred sales charges or 12b-1 fees in prior periods.

On March 5, 1996, the Trustees approved an administrative fee to reimburse the
Adviser for accounting services provided to the Fund. The fee, calculated at an
annual rate of 0.01875%, is retroactive to January 1, 1996.

8
<PAGE>

Information on the Fund's total expenses is in the Fund's Financial Highlights
section of the prospectus.

DIVIDENDS AND TAXES

Dividends. Dividends from the Fund's net investment income and capital gains are
generally declared and paid annually. Dividends are reinvested in additional
shares of your class unless you elect the option to receive them in cash. If you
elect the cash option and the U.S. Postal Service cannot deliver your checks,
your election will be converted to the reinvestment option. Because of the
higher expenses associated with Class B shares, any dividends on these shares
will be lower than those on the Class A shares. See "Share Price."

Taxation. Dividends from the Fund's net investment income, certain net foreign
currency gains, and net short-term capital gains are taxable to you as ordinary
income. Dividends from the Fund's net long-term capital gains are taxable as
long-term capital gain. These dividends are taxable whether received in cash or
reinvested in additional shares. Certain dividends paid in January of a given
year may be taxable as if you received them the previous December. Corporate
shareholders may be entitled to take a corporate dividends-received deduction
for dividends received by the Fund from U.S. domestic corporations, subject to
certain restrictions under the Internal Revenue Code of 1986, as amended (the
"Code"). The Fund will send you a statement by January 31 showing the tax status
of the dividends you received for the prior year.

The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Code. As a regulated investment
company, the Fund will not be subject to Federal income tax on any net
investment income and net realized capital gains that are distributed to its
shareholders within the time period prescribed by the Code. When you redeem
(sell) or exchange shares, you may realize a taxable gain or loss.

On the account application, you must certify that your social security or other
taxpayer identification number you provide is your correct and that you are not
subject to backup withholding of Federal income tax. If you do not provide this
information or are otherwise subject to backup withholding, the Fund may be
required to withhold 31% of your dividends and the proceeds of redemptions and
exchanges.

The Fund may be subject to foreign withholding taxes or other foreign taxes on
income (possibly including capital gains) on certain of its foreign investments.
This will reduce the yield on those investments. The Fund will not qualify to
pass such taxes through to its shareholders, who consequently will not include
them in income or be entitled to associated foreign tax credits or deductions.

In addition to Federal taxes, you may be subject to state, local or foreign
taxes with respect to your investment in and distributions from the Fund.
Non-U.S. shareholders and tax-exempt shareholders are subject to different tax
treatment not described above. You should consult your tax adviser for specific
advice.

9
<PAGE>

PERFORMANCE

The Fund may advertise its total return.

Total return shows the overall dollar or percentage change in value of a
hypothetical investment in the Fund, assuming the reinvestment of all dividends.
Cumulative total return shows the Fund's performance over a period of time.
Average annual total return shows the cumulative return of the Fund shares
divided over the number of years included in the period. Because average annual
total return tends to smooth out variations in the Fund's performance, you
should recognize that it is not the same as actual year-to-year results.

Total return calculations for Class A shares generally include the effect of
paying the maximum sales charge (except as shown in "The Fund's Financial
Highlights"). Investments at a lower sales charge would result in higher
performance figures. Total return for the Class B shares reflect the deduction
of the applicable CDSC imposed on a redemption of shares held for the applicable
period (except as shown in "The Fund's Financial Highlights"). All calculations
assume that all dividends are reinvested at net asset value on the reinvestment
dates during the periods. The total return of Class A and Class B shares will be
calculated separately and, because each class is subject to different expenses,
the total return may differ with respect to that class for the same period. The
relative performance of the Class A and Class B shares will be affected by a
variety of factors, including the higher operating expenses attributable to the
Class B shares, whether the Fund's investment performance is better in the
earlier or later portions of the period measured and the level of net assets of
the classes during the period. The Fund will include the total return of Class A
and Class B shares in any advertisement or promotional materials including Fund
performance data. The value of Fund's shares, when redeemed, may be more or less
than their original cost. Total return is an historical calculation and is not
an indication of future performance. See "Factors to Consider in Choosing an
Alternative."

10
<PAGE>

HOW TO BUY SHARES

Opening an account

- --------------------------------------------------------------------------------
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans).

Complete the Account Application attached to this Prospectus. Indicate whether
you are purchasing Class A or Class B shares. If you do not specify which class
of shares you are purchasing, Investor Services will assume that you are
investing in Class A shares.

- --------------------------------------------------------------------------------
By Check

1. Make your check payable to John Hancock Investor Services Corporation
("Investor") Services").

2. Deliver the completed application and check to your registered
representative or Selling Broker, or mail it directly to Investor Services.
- --------------------------------------------------------------------------------
By Wire

1. Obtain an account number by contacting your registered representative or
Selling Broker, or by calling 1-800-225-5291.

2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Growth Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered

3. Deliver the completed application to your registered representative or
Selling Broker, or mail it directly to Investor Services.
- --------------------------------------------------------------------------------
Monthly Automatic Accumulation Program (MAAP)

Buying additional Class A and Class B shares

1. Complete the "Automatic Investing" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which your
funds may be drawn.

2. The amount you elect to invest will be automatically withdrawn from your
bank or credit union account.
- --------------------------------------------------------------------------------
By Telephone

1. Complete the "Invest-By-Phone" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which your
funds may be drawn. Note that in order to invest by phone, your account
must be in a bank or credit union that is a member of the Automated
Clearing House system (ACH).

2. After your authorization form has been processed, you may purchase
additional Class A or Class B shares by calling Investor Services toll-free
at 1-800-225-5291.

3. Give the Investor Services representative the name(s) in which your account
is registered, the Fund name, the class of shares you own, your account
number and the amount you wish to invest.

4. Your investment normally will be credited to your account the business day
following your phone request.
- --------------------------------------------------------------------------------

By Check

1. Either complete the detachable stub included on your account statement or
include a note with your investment listing the name of the Fund, the class
of shares you own, your account number and the name(s) in which the account
is registered.

2. Make your check payable to John Hancock Investor Services Corporation

3. Mail the account information and check to:

John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling Broker.
- --------------------------------------------------------------------------------

11
<PAGE>
- --------------------------------------------------------------------------------
By Wire

Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Growth Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered
- --------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written
on foreign banks will delay purchases until U.S. funds are received, and a
collection charge may be imposed. Shares of the Fund are priced at the offering
price based on the net asset value computed after John Hancock Funds receives
notification of the dollar equivalent from the Fund's custodian bank. Wire
purchases normally take two or more hours to complete and, to be accepted the
same day, must be received by 4:00 p.m., New York time. Your bank may charge a
fee to wire funds. Telephone transactions are recorded to verify information.
Share certificates are not issued unless a request is made to Investor Services.
- --------------------------------------------------------------------------------

You will receive account statements that you should keep to help with your
personal recordkeeping.

You will receive a statement of your account after any transaction that affects
your share balance or registration (statements related to reinvestment of
dividends and automatic investment/withdrawal plans will be sent to you
quarterly). A tax information statement will be mailed to you by January 31 of
each year.

SHARE PRICE

The offering price of your shares is their net asset value plus a sales charge,
if applicable, which will vary with the purchase alternative you choose.

The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the net asset value of each class by the number of
outstanding shares of that class. The NAV of each class can differ. Securities
in the Fund's portfolio are valued on the basis of market quotations, valuations
provided by independent pricing services, or at fair value as determined in good
faith according to procedures approved by the Trustees. Short-term debt
investments maturing within 60 days are valued at amortized cost which the
Trustees have determined to approximate market value. Foreign securities are
valued on the basis of quotations from the primary market in which they are
traded, and are translated from the local currency into U.S. dollars using
current exchange rates. If quotations are not readily available, or the value
has been materially affected by events occurring after the closing of a foreign
market, assets are valued by a method that the Trustees believe accurately
reflects fair value. The NAV is calculated once daily as of the close of regular
trading on the New York Stock Exchange (the "Exchange") (generally at 4:00 p.m.,
New York time) on each day that the Exchange is open.

Shares of the Fund are sold at the offering price based on the NAV computed
after your investment request is received in good order by John Hancock Funds.
If you buy shares of the Fund through a Selling Broker, the Selling Broker must
receive your investment before the close of regular trading on the New York
Stock Exchange, and transmit it to John Hancock Funds before its close of
business, to receive that day's offering price.

Initial Sales Charge Alternative--Class A Shares. The offering price you pay for
Class A shares of the Fund equals the NAV plus a sales charge as follows:

12
<PAGE>

Sales Sales Combined Reallowance
Charge Charge Reallowance to Selling
as a as a and Service Brokers as a
Percentage Percentage Fee as a Percentage
Amount Invested of the of the Percentage of the
(Including Sales Offering Amount of Offering Offering
Charge) Price Invested Price(+) Price(*)
- --------------------- -------- -------- ----------- ------------
Less than $50,000 5.00% 5.26% 4.25% 4.01%
$50,000 to $99,999 4.50% 4.71% 3.75% 3.51%
$100,000 to $249,999 3.50% 3.63% 2.85% 2.61%
$250,000 to $499,999 2.50% 2.56% 2.10% 1.86%
$500,000 to $999,999 2.00% 2.04% 1.60% 1.36%
$1,000,000 and over 0.00%(**) 0.00%(**) (***) 0.00%(***)

(*)Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales charge.
A Selling Broker to whom substantially the entire sales charge is reallowed
or who receives these incentives may be deemed to be an underwriter under
the Securities Act of 1933.

(**)No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a CDSC may be imposed in the event of certain
redemption transactions made within one year of purchase.

(***)John Hancock Funds may pay a commission and the first year's service fee
(as described in (+) below) to Selling Brokers who initiate and are
responsible for purchases of $1 million or more in aggregate as follows: 1%
on sales to $4,999,999, 0.50% on the next $5 million and 0.25% on $10
million and over.

(+) At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance, in an amount equal to 0.25% of the net assets
invested in the Fund. Thereafter it pays the service fee periodically in
arrears in an amount up to 0.25% of the Fund's average annual net assets.
Selling Brokers receive the fee as compensation for providing personal and
account maintenance services to shareholders.

Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
shares of the Fund.

John Hancock Funds will pay certain affiliated Selling Brokers at an annual rate
of up to 0.05% of the daily net assets of the accounts attributable to these
brokers.

Under certain circumstances described below, investors in Class A shares may
be entitled to pay reduced sales charges. See "Qualifying For a Reduced Sales
Charge" below.

Contingent Deferred Sales Charge--Investments of $1 Million or More in Class A
Shares. Purchases of $1 million or more in Class A shares will be made at net
asset value with no initial sales charge, but if the shares are redeemed within
12 months after the end of the calendar month in which the purchase was made
(the CDSC period), CDSC will be imposed. The rate of the CDSC will depend on the
amount invested as follows:

Amount Invested CDSC Rate
- ----------------------------------- ----------
$1 million to $4,999,999 1.00%
Next $5 million to $9,999,999 0.50%
Amounts of $10 million and over 0.25%

Existing full service clients of the Life Company who were group annuity
contract holders as of September 1, 1994 and participant directed defined
contribution plans with at least 100 eligible employees at the inception of the
Fund account may purchase

13
<PAGE>

Class A shares with no initial sales charge. However, if the shares are redeemed
within 12 months after the end of the calendar year in which the purchase was
made, a CDSC will be imposed at the above rate.

The CDSC will be assessed on an amount equal to the lesser of the current market
value or the original purchase cost of the redeemed Class A shares. Accordingly,
no CDSC will be imposed on increases in account value above the initial purchase
price, including any dividends which have been reinvested in additional Class A
shares.

In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
Therefore, it will be assumed that the redemption is first made from any shares
in your account that are not subject to the CDSC. The CDSC is waived on
redemption in certain circumstances. See the discussion under "Waiver of
Contingent Deferred Sales Charges" below.

You may qualify for a reduced sales charge on your investments in Class A
shares.

Qualifying for a Reduced Sales Charge. If you invest more than $50,000 in Class
A shares of the Fund or a combination of funds in the John Hancock funds (except
money market funds), you may qualify for a reduced sales charge on your
investments in Class A shares through a LETTER OF INTENTION. You may also be
able to use the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE to take
advantage of the value of your previous investments in shares of John Hancock
funds in meeting the breakpoints for a reduced sales charge. For the
ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE, the applicable sales charge
will be based on the total of:

1. Your current purchase of Class A shares of the Fund;

2. The net asset value (at the close of business on the previous day) of (a)
all Class A shares of the Fund you hold, and (b) all Class A shares of any
other John Hancock funds you hold; and

3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."

Example:

If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000, and subsequently invest $30,000 in Class A shares of the Fund, the
sales charge on this subsequent investment would be 4.50% and not 5.00%. This is
the rate that would otherwise be applicable to investments of less than $50,000.
See "Initial Sales Charge Alternative--Class A Shares."

Class A shares may be available without a sales charge to certain individuals
and organizations.

If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:

(bullet) A Trustee or officer of the Trust; a Director or officer of the Adviser
and its affiliates or Selling Brokers; employees or sales representatives of any
of the foregoing; retired officers, employees and Directors of any of the
foregoing; a member of the immediate family of any of the foregoing; or any
fund, pension, profit sharing or other benefit plan for the individuals
described above.

(bullet) Any state, county, city or any instrumentality, department, authority
or agency of these entities that is prohibited by applicable investment laws
from paying a sales charge or commission when it purchases shares of any
registered investment management company.*

14
<PAGE>

(bullet) A bank, trust company, credit union, savings institution or other type
of depository institution, its trust departments or common trust funds (an
"eligible depository institution") if it is purchasing $1 million or more for
non-discretionary customers or accounts.*

(bullet) A broker, dealer, financial planner, consultant or registered
investment adviser that has entered into an agreement with John Hancock Funds
providing specifically for the use of Fund shares in fee-based investment
products or services made available to their clients.

(bullet) A former participant in an employee benefit plan with John Hancock
Funds, when he or she withdraws from his or her plan and transfers any or all of
his/her plan distributions directly to the Fund.

(bullet) A member of an approved affinity group financial services plan.*

- ----------
* For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.

Class A shares of the Fund may also be purchased without an initial sales charge
in connection with certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding companies.

Contingent Deferred Sales Charge Alternative--Class B Shares. Class B shares are
offered at net asset value per share without an initial sales charge, so that
your entire investment will go to work at the time of purchase. However, Class B
shares redeemed within six years of purchase will be subject to a CDSC at the
rates set forth below. The charge will be assessed on an amount equal to the
lesser of the current market value or the original purchase cost of the shares
being redeemed. Accordingly, you will not be assessed a CDSC on increases in
account value above the initial purchase price, including shares derived from
dividend reinvestment.

In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that your redemption comes first from shares you have held
beyond the six-year CDSC redemption period or those you acquired through
reinvestment of dividends and next from the shares you have held the longest
during the six-year period. The CDSC is waived on redemptions in certain
circumstances. See the discussion "Waiver of Contingent Deferred Sales Charges"
below.

Example:

You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and you have gained 10 additional shares through dividend reinvestment. If
you redeem 50 shares at this time, your CDSC will be calculated as follows:

15
<PAGE>

(bullet) Proceeds of 50 shares redeemed at $12 per share $ 600
(bullet) Minus proceeds of 10 shares not subject to CDSC
because they were acquired through dividend reinvestment
(10 X $12) -120
(bullet) Minus appreciation on remaining shares, also not subject
to CDSC (40 X $2) -80
-----
(bullet) Amount subject to CDSC $ 400

Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds uses
them to defray its expenses related to providing the Fund with distribution
services connected to the sale of Class B shares, such as compensating Selling
Brokers for selling these shares. The combination of the CDSC and the
distribution and service fees makes it possible for the Fund to sell Class B
shares without an initial sales charge.

The amount of the CDSC, if any, will vary depending on the number of years from
the time you purchase your Class B shares until the time you redeem them. Solely
for purposes of determining this holding period, any payments you make during
the month will be aggregated and deemed to have been made on the last day of the
month.

Contingent Deferred Sales
Year in Which Class B Shares Charge As a Percentage of
Redeemed Following Purchase Dollar Amount Subject to CDSC
- ------------------------------ --------------------------------
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None

A commission equal to 3.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for personal and
account maintenance services provided to shareholders during the twelve months
following the sale. Thereafter the service fee is paid in arrears.

Under certain circumstances, the CDSC on Class B and certain Class A share
redemptions will be waived.

Waiver of Contingent Sales Charges. The CDSC will be waived on redemptions of
Class B shares and Class A shares that are subject to a CDSC, unless
indicated otherwise, in these circumstances:

(bullet) Redemptions of Class B shares made under Systematic Withdrawal Plan
(see "How to Redeem Shares"), as long as your annual redemptions do not
exceed 10% of your account value at the time you established your
Systematic Withdrawal Plan and 10% of the value of your subsequent
investments (less redemptions) in that account at the time you notify
Investor Services. This waiver does not apply to Systematic Withdrawal
Plan redemptions of Class A shares that are subject to a CDSC.

(bullet) Redemptions made to effect distributions from an Individual Retirement
Account either before or after age 59-1/2, as long as the distributions
are based on the life expectancy or the joint-and-last survivor life
expectancy of you and your beneficiary. These distributions must be
free from penalty under the Code.

(bullet) Redemptions made to effect mandatory distributions under the Code after
age 70-1/2 from a tax-deferred retirement plan.

16
<PAGE>

(bullet) Redemptions made to effect distributions to participants or
beneficiaries from certain employer-sponsored retirement plans
including those qualified under Section 401(a) of the Code, custodial
accounts under Section 403(b)(7) of the Code and deferred compensation
plans under Section 457 of the Code. The waiver also applies to certain
returns of excess contributions made to these plans. In all cases, the
distributions must be free from penalty under the Code.

(bullet) Redemptions due to death or disability.

(bullet) Redemptions made under the Reinvestment Privilege, as described in
"Additional Services and Programs" of this Prospectus.

(bullet) Redemptions made pursuant to the Fund's right to liquidate your account
if you own fewer than 50 shares.

(bullet) Redemptions made in connection with certain liquidation, merger or
acquisition transactions involving other investment companies or
personal holding companies.

(bullet) Redemptions from certain IRA and retirement plans that purchased shares
prior to October 1, 1992.

If you qualify for a CDSC waiver under one of these situations, you must notify
Investor Services either directly or through your Selling Broker at the time you
make your redemption. The waiver will be granted once Investor Services has
confirmed that you are entitled to the waiver.

Conversion of Class B Shares. Your Class B shares, and an appropriate portion of
reinvested dividends on those shares, will be converted into Class A shares
automatically. This will occur no later than the month following eight years
after the shares were purchased, and will result in lower annual distribution
fees. If you exchanged Class B shares into this Fund from another John Hancock
fund, the calculation will be based on the time you purchased the shares in the
original fund. The Fund has been advised that the conversion of Class B shares
to Class A shares should not be taxable for Federal income tax purposes, nor
should it not change your tax basis or tax holding period for the converted
shares.

HOW TO REDEEM SHARES

You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next NAV calculated after your redemption request is
received in good order by Investor Services, less any applicable CDSC. The Fund
may hold payment until it is reasonably satisfied that investments recently made
by check or Invest-by-Phone have been collected (which may take up to 10
calendar days).

Once your shares are redeemed, the Fund generally sends you payment on the next
business day. When you redeem your shares, you may realize a taxable gain or
loss depending usually on the difference between what you paid for them and what
you receive for them, subject to certain tax rules. Under unusual circumstances,
the Fund may suspend redemptions or postpone payment for up to three business
days or longer, as permitted by Federal securities laws.

17
<PAGE>
- --------------------------------------------------------------------------------

By Telephone

To assure acceptance of your redemption request, please follow these procedures.

All Fund shareholders are eligible automatically for the telephone redemption
privilege. Call 1-800-225-5291, from 8:00 A.M. to 4:00 P.M. (New York time),
Monday through Friday, excluding days on which the New York Stock Exchange is
closed. Investor Services employs the following procedures to confirm that
instructions received by telephone are genuine. Your name, the account number,
taxpayer identification number applicable to the account and other relevant
information may be requested. In addition, telephone instructions are recorded.

You may redeem up to $100,000 by telephone, but the address on the account must
not have changed for the last 30 days. A check will be mailed to the exact
name(s) and address shown on the account.

If reasonable procedures, such as those described above, are not followed, the
Fund may be liable for any loss due to unauthorized or fraudulent telephone
instructions. In all other cases, neither the Fund nor Investor Services will be
liable for any loss or expense for acting upon telephone instructions made
according to the telephone transaction procedures mentioned above.

Telephone redemption is not available for IRAs or other tax-qualified retirement
plans or shares of the Fund that are in certificate form.

During periods of extreme economic conditions or market changes, telephone
requests may be difficult to implement due to a large volume of calls. During
these times you should consider placing redemption requests in writing or using
EASI-Line. EASI-Line's telephone number is 1-800-538-8080.
- --------------------------------------------------------------------------------
By Wire

If you have a telephone redemption form on file with the Fund, redemption
proceeds of $1,000 or more can be wired on the next business day to your
designated bank account, and a fee (currently $4.00) will be deducted. You may
also use electronic funds transfer to your assigned bank account, and the funds
are usually collectable after two business days. Your bank may or may not charge
for this service. Redemptions of less than $1,000 will be sent by check or
electronic funds transfer.

This feature may be elected by completing the "Telephone Redemption" section on
the Account Privileges Application that is included with this Prospectus.
- --------------------------------------------------------------------------------
In Writing

Send a stock power or letter of instruction specifying the name of the Fund, the
dollar amount or the number of shares to be redeemed, your name, class of
shares, your account number and the additional requirements listed below that
apply to your particular account.
- --------------------------------------------------------------------------------
Type of Registration Requirements
- -------------------- ------------
Individual, Joint Tenants, Sole A letter of instruction signed
Proprietorship, Custodial (with titles where applicable) by
(Uniform Gifts or Transfer to all persons authorized to sign for
Minors Act), General Partners. the account, exactly as it is
registered with the signature(s)
guaranteed.

Corporation, Association A letter of instruction and a
corporate resolution, signed by
person(s) authorized to act on the
account, with the signature(s)
guaranteed.

Trusts A letter of instruction signed by
the Trustee(s) with the
signature(s) guaranteed. (If the
Trustee's name is not registered on
your account, also provide a copy
of the trust document, certified
within the last 60 days.)

If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
- --------------------------------------------------------------------------------

18
<PAGE>

Who may guarantee your signature

- --------------------------------------------------------------------------------
A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less, John
Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Investors Services: (i) a bank; (ii) a
securities broker or dealer, including a government or municipal securities
broker or dealer, that is a member of a clearing corporation or meets certain
net capital requirements; (iii) a credit union having authority to issue
signature guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national securities exchange, a registered securities exchange or a clearing
agency.
- --------------------------------------------------------------------------------
Through Your Broker Your broker may be able to initiate the redemption.
Contact him or her for instructions.
- --------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your stock
power or a letter of instruction. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares. You may not
redeem certificated shares by telephone.

Additional information about redemptions

Due to the proportionately high cost of maintaining smaller accounts, the Fund
reserves the right to redeem at net asset value all shares in an account which
holds fewer than 50 shares (except accounts under retirement plans) and to mail
the proceeds to the shareholder, or the transfer agent may impose an annual fee
of $10. No account will be involuntarily redeemed or additional fee imposed, if
the value of the account is in excess of the Fund's minimum initial investment.
No CDSC will be imposed on involuntary redemptions of shares.

Shareholders will be notified before these redemptions are to be made or this
fee is imposed, and will have 30 days to purchase additional shares to bring
their account balance up to the required minimum. Unless the number of shares
acquired by additional purchases and dividend reinvestments, exceeds the number
of shares redeemed, repeated redemptions from a smaller account may eventually
trigger this policy.

- --------------------------------------------------------------------------------

ADDITIONAL SERVICES AND PROGRAMS

Exchange Privilege

You may exchange shares of the Fund only for shares of the same class of another
John Hancock fund.

If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of investment
goals. Contact your registered representative or Selling Broker and request a
prospectus for the John Hancock funds that interest you. Read the prospectus
carefully before exchanging your shares. You can exchange shares of each class
of the Fund only for shares of the same class of another John Hancock fund. For
this purpose, John Hancock funds with only one class of shares will be treated
as Class A whether or not they have been so designated.

Exchanges between funds that are not subject to a CDSC are based on their
respective net asset values. No sales charge or transaction charge is imposed.
Class B shares of the Fund that are subject to a CDSC may be exchanged for Class
B shares of another John Hancock fund without incurring the CDSC; however these
shares will be subject to the CDSC schedule of the shares acquired (except that
exchanges into John Hancock Short-Term Strategic Income Fund, John Hancock
Intermediate Maturity Government Fund and John Hancock Limited-Term Government
Fund will be subject to the initial fund's CDSC). For purposes of computing the
CDSC payable upon redemption of shares acquired in an exchange, the holding
period of the original shares is added to the holding period of the shares
acquired in an exchange. However, if you exchange Class B shares purchased prior
to January 1, 1994 for Class B shares of any other John Hancock fund, you will
continue to be subject to the CDSC schedule that was in effect at your initial
purchase date.

19
<PAGE>

You may exchange Class B shares of the Fund into a John Hancock money market
fund at net asset value. However, you will continue to be subject to a CDSC upon
redemption.

The Fund reserves the right to require that you keep previously exchanged shares
(and reinvested dividends) in the Fund for 90 days before you are permitted a
new exchange. The Fund may also terminate or alter the terms of the exchange
privilege, upon 60 days' notice to shareholders.

An exchange of shares is treated as a redemption of shares of one fund and
the purchase of shares in another fund for Federal income tax purposes. An
exchange may result in a taxable gain or loss.

When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.

Under exchange agreements with John Hancock Funds, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and John Hancock Funds' right to reject or suspend
those exchanges at any time. Because of the restrictions and procedures under
those agreements, the exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders directly,
as described above.

Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely. The
Fund may also temporarily or permanently terminate the exchange privilege for
any person who makes seven or more exchanges out of the Fund per calendar year.
Accounts under common control or ownership will be aggregated for this purpose.
Although the Fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time.

By Telephone

1. When you complete the application for your initial purchase of Fund shares,
you automatically authorize exchanges by telephone unless you check the box
indicating that you do not wish to authorize telephone exchanges.

2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
service representative.

3. Your name, the account number, taxpayer identification number applicable
to the account and other relevant information may be requested. In
addition, telephone instructions are recorded.

20
<PAGE>

In Writing

1. In a letter request an exchange and list the following:
-- the name and class of the Fund whose shares you currently own
-- your account number
-- the name(s) in which the account is registered
-- the name of the fund in which you wish your exchange to be invested
-- the number of shares, all shares or the dollar amount you wish to exchange
Sign your request exactly as the account is registered.

2. Mail the request and information to:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116

Reinvestment Privilege

If you redeem shares of the Fund, you may be able to reinvest the proceeds in
shares of the Fund or another John Hancock fund without paying an additional
sales charge.

1. You will not be subject to a sales charge on Class A shares that you reinvest
in a John Hancock fund that is otherwise subject to a sales charge, as long
as you reinvest within 120 days from the redemption date. If you paid a CDSC
upon a redemption, you may reinvest at net asset value in the same class of
shares from which you redeemed within 120 days. Your account will be credited
with the amount of the CDSC previously charged, and the reinvested shares
will continue to be subject to a CDSC. The holding period of the shares
acquired through reinvestment, for the purpose of computing the CDSC payable
upon a subsequent redemption will include the holding period of the redeemed
shares.

2. Any portion of your redemption may be reinvested in the Fund shares or in
shares of other John Hancock funds, subject to the minimum investment limit
of that fund.

3. To reinvest, you must notify Investor Services in writing. Include the
Fund(s) name, account number and class from which your shares were originally
redeemed.

Systematic Withdrawal Plan

You can pay routine bills from your account, or make periodic disbursements from
your retirement account to comply with IRS regulations.

1. You can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You can
also obtain the application by calling your registered representative or by
calling 1-800-225-5291.

2. To be eligible, you must have at least $5,000 in your account.

3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis to yourself or any other designated
payee.

4. There is no limit on the number of payees you may authorize, but all
payments must be made at the same time or intervals.

5. It is not advantageous to maintain a Systematic Withdrawal Plan concurrently
with purchases of additional Class A or Class B shares because you may be
subject to an initial sales charge on your purchases of Class A shares or a
CDSC on your redemptions of Class B shares. In addition, your redemptions are
taxable events.

21
<PAGE>

6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks, or if deposits to a bank account are returned for any reason.

Monthly Automatic Accumulation Program (MAAP)

You can make automatic investments and simplify your investing.

1. You can authorize an investment to be withdrawn automatically each month on
your bank for investment in the Fund shares, under the "Automatic
Investing" and "Bank Information" sections of the Account Privileges
Application.

2. You can also authorize automatic investing through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.

3. You can terminate your Monthly Automatic Accumulation Program at any time.

4. There is no charge to you for this program, and there is no cost to the
Fund.

5. If you have payments withdrawn from a bank account and we are notified that
the account has been closed, your withdrawals will be discontinued.

Group Investment Program

Organized groups of at least four persons may establish accounts.

1. An individual account will be established for each participant, but the
initial sales charge for Class A shares will be based on the aggregate
dollar amount of all participants' investments. To determine how to qualify
for this program, contact your registered representative or call
1-800-225-5291.

2. The initial aggregate investment of all participants in the group must be
at least $250.

3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at
any time.

Retirement Plans

1. You may use the Fund for various types of qualified retirement plans,
including Individual Retirement Accounts, Keogh Plans (H.R. 10), Pension and
Profit Sharing Plans (including 401(k) plans), Tax-Sheltered Annuity
Retirement Plans (403(b) or TSA Plans) and Section 457 Plans.

2. The initial investment minimum or aggregate minimum for any of these plans is
$250. However, accounts being established as group IRA, SEP, SARSEP, TSA,
401(k) and Section 457 Plans will be accepted without an initial minimum
investment.

22
<PAGE>

(Notes)

<PAGE>

John Hancock Growth Fund

Investment Adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

Principal Distributor
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

Custodian
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110

Transfer Agent
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116

Independent Auditors
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For: Service Information
Telephone Exchange call 1-800-225-5291
Investment-by-Phone
Telephone Redemption
For: TDD call 1-800-554-6713

JHD 2000P 4/96

JOHN HANCOCK
GROWTH FUND

Class A and Class B Shares
Prospectus
April 1, 1996

A mutual fund seeking to achieve long-term capital appreciation.

101 Huntington Avenue
Boston, Massachusetts 02199-7603
Telephone 1-800-225-5291

(recycle) Printed on Recycled Paper

<PAGE>

JOHN HANCOCK GROWTH FUND
Class A and Class B Shares
Statement of Additional Information

April 1, 1996

This Statement of Additional Information provides information about John Hancock
Growth Fund (the "Fund") in addition to the information that is contained in the
Fund's Class A and Class B Shares Prospectus, dated April 1, 1996 (the
"Prospectus").

This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Prospectuses, copies of which can be obtained free of
charge by writing or telephoning:

John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-800-225-5291

TABLE OF CONTENTS

Statement of
Additional
Information Page

Organization of the Fund 2
Investment Objective and Policies 2
Investment Restrictions 4
Those Responsible for Management 7
Investment Advisory and
Other Services 11
Distribution Contract 13
Net Asset Value 14
Initial Sales Charge On Class A
Shares 15
Deferred Sales Charge On Class B
Shares 16
Special Redemptions 17
Additional Services and Programs 17
Description of the Fund's Shares 18
Tax Status 19
Calculation of Performance 22
Brokerage Allocation 23
Transfer Agent Services 25
Custody of Portfolio 25
Independent Auditors 25
Appendix 26
Financial Statements 27

<PAGE>

ORGANIZATION OF THE FUND

John Hancock Growth Fund (the "Fund") is organized as a separate, diversified
series of John Hancock Capital Series (the "Trust"), an open-end management
investment company organized as a Massachusetts business trust under the laws of
The Commonwealth of Massachusetts. The Trust was organized in 1984 by John
Hancock Advisers, Inc. (the "Adviser") as the successor to John Hancock Growth
Fund, Inc., a Delaware corporation organized in 1968 by the 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. The Adviser is an indirect wholly-owned subsidiary of the
Life Insurance Company. Prior to October 1, 1993, the Trust was known as "John
Hancock Growth Fund."

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to achieve long-term appreciation of
capital. The types of securities the Fund invests in are more fully described in
the Prospectus.

Purchases and sales of securities will be made whenever necessary in
management's view to achieve the objectives of the Fund. Management believes
that unsettled market and economic conditions during certain periods require
greater portfolio turnover in pursuing the Fund's objective than would otherwise
be the case.

Repurchase Agreements. A repurchase agreement is a contract under which the Fund
would acquire a security for a relatively short period (usually not more than
seven days) subject to the obligation of the seller to repurchase and the Fund
to resell such security at a fixed time and price (representing the Fund's cost
plus interest). The Fund will enter into repurchase agreements only with member
banks of the Federal Reserve System and with "primary dealers" in U.S.
Government securities. The Adviser will continuously monitor the
creditworthiness of the parties with whom the Fund enters into repurchase
agreements.

The Fund has established a procedure providing that the securities serving as
collateral for each repurchase agreement must be delivered to the Fund's
custodian either physically or in book-entry form and that the collateral must
be marked to market daily to ensure that each repurchase agreement is fully
collateralized at all times. In the event of bankruptcy or other default by a
seller of a repurchase agreement, the Fund could experience delays in
liquidating the underlying securities and could experience losses, including the
possible decline in the value of the underlying securities during the period
while the Fund seeks to enforce its rights thereto, possible subnormal levels of
income and lack of access to income during this period, and the expense of
enforcing its rights.

Restricted Securities. The Fund may invest in restricted securities, including
those eligible for resale to certain institutional investors pursuant to Rule
144A under the Securities Act of 1933 and foreign securities acquired in
accordance with Regulation S under the Securities Act of 1933. The Fund will not
invest more than 15% of its net assets in illiquid investments, which includes
repurchase agreements maturing in more than seven days, OTC options, securities
that are not readily marketable and restricted securities. However, if the Board
of Trustees determines, based upon a continuing review of the trading markets
for specific Rule 144A securities, that they are liquid then such securities may
be purchased without regard to the 15% limit. The Board of Trustees may adopt
guidelines and delegate to the Adviser the daily function of determining and

<PAGE>

monitoring the liquidity of restricted securities. The Board, however, will
retain sufficient oversight and be ultimately responsible for the
determinations. The Board will carefully monitor the Fund's investments in these
securities, focusing on such important factors, among others, as valuation,
liquidity and availability of information. This investment practice could have
the effect of increasing the level of illiquidity in the Fund to the extent that
qualified institutional buyers become for a time uninterested in purchasing
these restricted securities.

Lower Rated Bonds. The Fund may invest in debt securities rated as low as C by
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings Group
("S&P") and unrated securities deemed of equivalent quality by the Adviser.
These securities are speculative to a high degree and often have very poor
prospects of attaining real investment standing. Lower rated securities are
generally referred to as junk bonds. No more than 5% of the Fund's net assets,
however, will be invested in securities rated lower than BBB by S&P or Baa by
Moody's. In addition, no more than 5% of the Fund's net assets may be invested
in securities rated BBB or Baa and unrated securities deemed of equivalent
quality. See the Appendix attached to this Statement of Additional Information
which describes the characteristics of the securities in the various ratings
categories. The Fund may invest in comparable quality unrated securities which,
in the opinion of the Adviser, offer comparable yields and risks to those
securities which are rated.

Debt obligations rated in the lower ratings categories, or which are unrated,
involve greater volatility of price and risk of loss of principal and income. In
addition, lower ratings reflect a greater possibility of an adverse change in
financial condition affecting the ability of the issuer to make payments of
interest and principal. The high yield fixed income market is relatively new and
its growth occurred during a period of economic expansion. The market has not
yet been fully tested by an economic recession.

The market price and liquidity of lower rated fixed income securities generally
respond to short term corporate and market developments to a greater extent than
do the price and liquidity of higher rated securities because such developments
are perceived to have a more direct relationship to the ability of an issuer of
such lower rated securities to meet its ongoing debt obligations. The market
prices of zero coupon bonds are affected to a greater extent by interest rate
changes, and thereby tend to be more volatile than securities which pay interest
periodically. Increasing rate note securities are typically refinanced by the
issuers within a short period of time.

Reduced volume and liquidity in the high yield bond market or the reduced
availability of market quotations will make it more difficult to dispose of the
bonds and to value accurately the Fund's assets. The reduced availability of
reliable, objective data may increase the Fund's reliance on management's
judgment in valuing high yield bonds. In addition, the Fund's investments in
high yield securities may be susceptible to adverse publicity and investor
perceptions, whether or not justified by fundamental factors. The Fund's
investments, and consequently its net asset value, will be subject to the market
fluctuations and risks inherent in all securities.

3
<PAGE>

INVESTMENT RESTRICTIONS

Fundamental Investment Restrictions. The following investment restrictions will
not be changed without approval of the Fund's outstanding voting securities
which, as used in the Prospectus, means approval by the lesser of (1) 67% or
more of the Fund's shares represented at a meeting if at least 50% of the Fund's
outstanding shares are present in person or by proxy at the meeting or (2) 50%
of the Fund's outstanding shares.

The Fund observes the following fundamental investment restrictions.

The Fund may not:

(1) Purchase or sell real estate or any interest therein, except that the Fund
may invest in securities of corporate entities secured by real estate or
marketable interests therein or issued by companies that invest in real estate
or interests therein.

(2) Make loans, except that the Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Funds total
assets taken at market value, (2) enter into repurchase agreements, and (3)
purchase all or a portion of securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, bank loan participation
interests, bank certificates of deposit, bankers' acceptances, debentures or
other securities, whether or not the purchase is made upon the original issuance
of the securities.

(3) Invest in commodities or in commodity contracts or in puts, calls, or
combinations of both except options on securities, securities indices, currency
and other financial instruments, futures contracts on securities, securities
indices, currency and other financial instruments, options on such futures
contracts, forward commitments, forward foreign currency exchange contracts,
interest rate or currency swaps, securities index put or call warrants and
repurchase agreements entered into in accordance with the Fund's investment
policies.

(4) Purchase securities of an issuer (other than the U.S. Government, its
agencies or instrumentalities), if (i) such purchase would cause more than 5% of
the Fund's total assets taken at market value to be invested in the securities
of such issuer, or (ii) such purchase would at the time result in more than 10%
of the outstanding voting securities of such issuer being held by the Fund.

(5) Act as an underwriter, except to the extent that, in connection with the
disposition of portfolio securities, the Fund may be deemed to be an underwriter
for purposes of the Securities Act of 1933.

(6) Borrow money, except from banks as a temporary measure for extraordinary
emergency purposes in amounts not to exceed 33-1/3% of the Fund's total assets
(including the amount borrowed) taken at market value. The Fund will not use
leverage to attempt to increase income. The Fund will not purchase securities
while outstanding borrowings exceed 5% of the Fund's total assets.

4
<PAGE>

(7) Pledge, mortgage or hypothecate its assets, except to secure indebtedness
permitted by paragraph (6) above and then only if such pledging, mortgaging or
hypothecating does not exceed 33 1/3% of the Fund's total assets taken at market
value.

(8) Purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after such purchase, the value of
its investments in such industry would exceed 25% of its total assets taken at
market value at the time of each investment. This limitation does not apply to
investments in obligations of the U.S. Government or any of its agencies or
instrumentalities.

(9) Issue senior securities, except as permitted by paragraphs (2), (3) and (6)
above. For purposes of this restriction, the issuance of shares of beneficial
interest in multiple classes or series, the purchase or sale of options, futures
contracts and options on futures contracts, forward commitments, forward foreign
currency exchange contracts and repurchase agreements entered into in accordance
with the Fund's investment policy, and the pledge, mortgage or hypothecation of
the Fund's assets within the meaning of paragraph (7) above are not deemed to be
senior securities.

In connection with the lending of portfolio securities under item (2) above,
such loans must at all times be fully collateralized by cash or securities of
the U.S. Government or its agencies or instrumentalities, and the Fund's
custodian must take possession of the collateral either physically or in book
entry form. Any cash collateral will consist of short-term high quality debt
instruments. Securities used as collateral must be marked to market daily.

Nonfundamental Investment Restrictions

The following restrictions are designated as nonfundamental and may be changed
by the Trustees without shareholder approval.

The Fund may not:

(a) purchase securities on margin or make short sales, except in connection with
arbitrage transactions, or unless by virtue of its ownership of other
securities, the Fund has the right to obtain securities equivalent in kind and
amount to the securities sold and, if the right is conditional, the sale is made
upon the same conditions, except that the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities.

(b) purchase securities of any company with a record of less than three years'
continuous operation, if such purchase would cause the Fund's investment in such
company taken at cost to exceed 5% of the Fund's total assets taken at market
value.

(d) purchase a security if, as a result, (i) more than 10% of the Fund's total
assets would be invested in securities of other investment companies, (ii) such
purchase would result in more than 3% of the total outstanding voting securities
of any one such investment company being held by the Fund, or (iii) more than 5%
of the Fund's total assets would be invested in any securities of any one such
investment company. The Fund may not invest in the securities of any other
open-end investment company.

5
<PAGE>

(e) knowingly purchase or retain securities of an issuer if one or more of the
Trustees or officers of the Trust or directors or officers of the Adviser or any
investment management subsidiary of the Adviser individually owns beneficially
more than 0.5%, and together own beneficially more than 5%, of the securities of
such issuer.

(f) invest in interests in oil, gas or other mineral leases or exploration or
development programs, provided that this restriction shall not prohibit the
acquisition of securities of companies engaged in the production or transmission
of oil, gas or other minerals.

(g) purchase warrants if as a result (i) more than 5% of the Fund's net assets,
valued at the lower of cost or market value, would be invested in warrants or
(ii) more than 2% of its net assets would be invested in warrants, valued as
aforesaid, which are not traded on the New York Stock Exchange or American Stock
Exchange, provided that for these purposes, warrants acquired in units or
attached to securities will be deemed to be without value.

(h) purchase any security, including any repurchase agreement maturing in more
than seven days, which is not readily marketable, if more than 15% of the net
assets of the Fund, taken at market value, would be invested in such securities.
(The staff of the Securities and Exchange Commission may consider
over-the-counter options to be illiquid securities subject to the 15% limit).

(i) purchase interests in real estate limited partnerships.

(j) Notwithstanding any investment restriction to the contrary, the Fund may, in
connection with the John Hancock Group of Funds Deferred Compensation Plan for
Independent Trustees/Directors, purchase securities of other investment
companies within the John Hancock Group of Funds provided that, as a result, (i)
no more than 10% of the Fund's assets would be invested in securities of all
other investment companies, (ii) such purchase would not result in more than 3%
of the total outstanding voting securities of any one such investment company
being held by the Fund and (iii) no more than 5% of the Fund's assets would be
invested in any one such investment company.

In order to permit the sale of shares of the Fund in certain states, the
Trustees may, in their sole discretion, adopt restrictions or investment
policies more restrictive than those described above. Should the Trustees
determine that any such more restrictive policy is no longer in the best
interests of the Fund and its shareholders, the Fund may cease offering shares
in the state involved and the Trustees may revoke such restrictive policy.
Moreover, if the states involved shall no longer require any such restrictive
policy, the Trustees may, at their sole discretion, revoke such policy.

If a percentage restriction on investment or utilization of assets as set forth
above is adhered to at the time an investment is made, a later change in
percentage resulting from changes in the values of the Fund's assets will not be
considered a violation of the restriction.

6
<PAGE>

THOSE RESPONSIBLE FOR MANAGEMENT

The business of the Fund is managed by the Trustees of the Trust, who elect
officers who are responsible for the day-to-day operations of the Fund and who
execute policies formulated by the Trustees. Several of the officers and
Trustees of the Trust are also officers and directors of the Adviser or officers
and directors of the Fund's principal distributor, John Hancock Funds, Inc.
("John Hancock Funds").

Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------
<S> <C> <C>
*Edward J. Boudreau, Jr. Chairman (1,2) Chairman and Chief Executive Officer,
101 Huntington Avenue the Adviser and The Berkeley Financial
Boston, Massachusetts Group ("The Berkeley Group"); Chairman,
NM Capital Management, Inc. ("NM
Capital"); John Hancock Advisers
International Limited ("Advisers
International"); John Hancock Funds,
Inc., ("John Hancock Funds"); John
Hancock Investor Services Corporation
("Investor Services") and Sovereign
Asset Management Corporation ("SAMCorp")
(herein after the Adviser, The Berkeley
Group, NM Capital, Advisers
International, John Hancock Funds,
Investor Services and SAMCorp are
collectively referred to as the
"Affiliated Companies"); Chairman, First
Signature Bank & Trust; Director, John
Hancock Freedom Securities Corp., John
Hancock Capital Corp., New
England/Canada Business Council; Member,
Investment Company Institute Board of
Governors; Director, Asia Strategic
Growth Fund, Inc.; Trustee, Museum of
Science; President, the Adviser (until
July 1992). Chairman, John Hancock
Distributors, Inc. (until April, 1994).
</TABLE>

*An "interested person" of the Fund, as such term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act:).
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) A Member of the Audit and Administration Committees.

7
<PAGE>

Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------
<S> <C> <C>
Dennis S. Aronowitz Trustee (4) Professor of Law, Boston University School of
Boston University Law; Trustee, Brookline Savings Bank.
Boston, Massachusetts

Richard P. Chapman, Jr. Trustee (4) President, Brookline Savings Bank.
160 Washington Street
Brookline, Massachusetts

William J. Cosgrove Trustee (4) Vice President, Senior Banker and Senior
20 Buttonwood Place Credit Officer, Citibank, N.A. (retired
Saddle River, New Jersey September 1991); Executive Vice President,
Citadel Group Representatives, Inc.; Director,
the Hudson City Savings Bank.

Gail D. Fosler Trustee (4) Vice President and Chief Economist, The
4104 Woodbine Street Conference Board (non-profit economic and
Chevy Chase, MD business research).

Bayard Henry Trustee (4) Corporate Advisor; Director, Fiduciary Trust
31 Milk Street Company (a trust company); Director,
Boston, Massachusetts Groundwater Technology, Inc. (remediation);
Samuel Cabot, Inc.; Advisor, Kestrel Venture
Management.

*Richard S. Scipione Trustee (3) General Counsel, the Life Company; Director,
John Hancock Place the Adviser, the Affiliated Companies, John
P.O. Box 111 Hancock Distributors, Inc., JH Networking
Boston, Massachusetts Insurance Agency, Inc., John Hancock
Subsidiaries, Inc., SAMCorp, NM Capital and
John Hancock Property and Casualty Insurance
and its affiliates (until November, 1993);
Trustee, The Berkeley Group.
</TABLE>

* An "interested person" of the Fund, as such term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) A Member of the Audit and Administration Committees.

8
<PAGE>

Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------
<S> <C> <C>
Edward J. Spellman, CPA Trustee (4) Partner, KPMG Peat Marwick LLP (retired June
259C Commercial Bld. 1990).
Lauderdale, FL

*Anne C. Hodsdon Trustee and President (2) President and Chief Operating Officer, the
101 Huntington Avenue Adviser; Executive Vice President, the Adviser
Boston, Massachusetts (until December 1994); Senior Vice President;
the Adviser (until December 1993); Vice
President, the Adviser, until 1991.

*Robert G. Freedman Vice Chairman and Chief Vice Chairman and Chief Investment Officer,
101 Huntington Avenue Investment Officer (2) the Adviser; President, the Adviser (until
Boston, Massachusetts December 1994).

*Thomas H. Drohan Senior Vice President and Senior Vice President and Secretary, the
101 Huntington Avenue Secretary Adviser.
Boston, Massachusetts

*James B. Little Senior Vice President and Senior Vice President the Adviser.
101 Huntington Avenue Chief Financial Officer
Boston, Massachusetts

*John A. Morin Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts

*Susan S. Newton Vice President, Assistant Vice President and Assistant Secretary, the
101 Huntington Avenue Secretary and Compliance Adviser.
Boston, Massachusetts Officer

*James J. Stokowski Vice President and Vice President, the Adviser.
101 Huntington Avenue Treasurer
Boston, Massachusetts

</TABLE>
- -----------------
* An "interested person" of the Fund, as such term is defined in the Investment
Company Act.
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) A Member of the Audit and Administration Committees.

9
<PAGE>

All of the officers listed are officers or employees of the Adviser or the
Affiliated Companies. Some of the directors and officers may also be officers
and/or directors or trustees of one or more of the other funds for which the
Adviser serves as investment adviser.

The following table provides information regarding the compensation paid by the
Fund and the other investment companies in the John Hancock Fund Complex to the
Independent Trustees for their services for each Fund's fiscal year. The three
non-Independent Trustees, Ms. Hodsdon, Messrs. Boudreau and Scipione, and each
of the officers of the Funds are interested persons of the Adviser, are
compensated by the Adviser/or affiliated companies and receive no compensation
from the Fund for their services.

Pensions or Total Compensation
Retirement From the Fund and
Aggregate Benefits Accrued Estimated Annual John Hancock Fund
Compensation as Part of the Benefits Upon Complex to Trustees (1)
Independent Trustees From the Fund Fund's Expenses Retirement (Total of 19 Funds)
- -------------------- ------------- --------------- ---------- -------------------
<S> <C> <C> <C> <C>
Dennis S. Aronowitz $ 2,366 $------ $ 61,050
Richard P. Chapman, Jr. $ 722 $1,719- - $ 62,800
William J. Cosgrove $ 722 1,644 - $ 61,050
Gail D. Fosler $ 3,366 - - $ 60,800
Bayard Henry $ 2,282 - - $ 58,850
Edward J. Spellman $ 2,366 - $ 61,050
------- ------- --------
$10,824 $3,363 $------ $365,600

</TABLE>

*Compensation made for the fiscal year ended December 31, 1995
(1)The total compensation paid by the John Hancock Fund Complex to the
Independent Trustees is as of the calendar year ended December 31, 1995.

The nominees of the Funds may at times be the record holders of in excess of 5%
of shares of any one or more Funds by virtue of holding shares in "street name."
As of March 13, 1996 the officers and trustees of the Trusts as a group owned
less than 1% of the outstanding shares of each class of each of the Funds.

As of March 13, 1996 the following shareholders beneficially owned 5% of or more
of the outstanding shares of the Funds listed below:

<TABLE>
<CAPTION>
Number of shares Percentage of total
Fund and Class of beneficial outstanding shares of
Name and Address of Shareholder of Shares interest owned the class of the Fund
- ------------------------------- --------- -------------- ---------------------
<S> <C> <C> <C>
Continental Trust Cop. Cust Class B Shares 221,469 24.88%
C/F County Employee's
Annuity & Ben Fund of Cook
County IL., 231 LaSalle
Chicago, IL 60697-0001
</TABLE>

10
<PAGE>

INVESTMENT ADVISORY AND OTHER SERVICES

As described in the Prospectus, the Fund receives its investment advice from the
Adviser. Investors should refer to the Prospectus for a description of certain
information concerning the investment management contract. Each of the Trustees
and principal officers of the Trust who is also an affiliated person of the
Adviser is named above, together with the capacity in which such person is
affiliated with the Trust and the Adviser.

As described in the Prospectus under the caption "Organization and Management of
the Fund," the Fund has entered into an investment management contract with the
Adviser. Under the investment management contract, the Adviser provides the Fund
with (i) a continuous investment program, consistent with the Fund's stated
investment objective and policies, (ii) supervision of all aspects of the Fund's
operations except those that are delegated to a custodian, transfer agent or
other agent and (iii) such executive, administrative and clerical personnel,
officers and equipment as are necessary for the conduct of its business. The
Adviser is responsible for the management of the Fund's portfolio assets.

Securities held by the Fund may also be held by other funds or investment
advisory clients for which the Adviser or its affiliates provide investment
advice. Because of different investment objectives or other factors, a
particular security may be bought for one or more funds or clients when one or
more other funds or clients are selling the same security. If opportunities for
purchase or sale of securities by the Adviser for the Fund or for other funds or
clients for which the Adviser renders investment advice arise for consideration
at or about the same time, transactions in such securities will be made, insofar
as feasible, for the respective funds or clients in a manner deemed equitable to
all of them. To the extent that transactions on behalf of more than one client
of the Adviser or its affiliates may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse effect
on price.

No person other than the Adviser and its directors and employees regularly
furnishes advice to the Fund with respect to the desirability of the Fund's
investing in, purchasing or selling securities. The Adviser may from time to
time receive statistical or other similar factual information, and information
regarding general economic factors and trends, from the Life Company and its
affiliates.

Under the terms of the investment management contract with the Fund, the Adviser
provides the Fund with office space, supplies and other facilities required for
the business of the Fund. The Adviser pays the compensation of all other
officers and employees of the Trust, and pays the expenses of clerical services
relating to the administration of the Fund.

All expenses which are not specifically paid by the Adviser and which are
incurred in the operation of the Fund (including fees of Trustees of the Trust
who are not "interested persons," as such term is defined in the Investment
Company Act, but excluding certain distribution related activities required to
be paid by the Adviser or John Hancock Funds) and the continuous public offering
of the shares of the Fund are borne by the Fund.

As discussed in the Prospectus and as provided by the investment management
contract, the Fund pays the Adviser monthly an investment management fee, which
is accrued daily, based on a stated percentage of the average of the daily net
assets of the Fund as follows:

11
<PAGE>

Net Asset Value Annual Rate
--------------- -----------

First $250, 000, 0000 0.80%
Next $250,000,000 0.75%
Amount over $500,000,000 0.70%

From time to time, the Adviser may reduce its fee or make other arrangements to
limit the Fund's expenses to a specified percentage of average daily net assets.
The Adviser retains the right to re-impose a fee and recover any other payments
to the extent that, at the end of any fiscal year, the Fund's annual expenses
fall below this limit.

On December 31, 1995, the net assets of the Fund were $257,612,642. For the
years ended December 31, 1993, 1994 and 1995, the Adviser received fees of
$784,618, $1,231,294 and $1,561,020 respectively. The advisory fee reflect a
different advisory fee schedule that was in effect before January 1, 1994.

If the total of all ordinary business expenses of the Fund for any fiscal year
exceeds limitations prescribed in any state in which shares of the Fund are
qualified for sale, the fee payable to the Adviser will be reduced to the extent
required by these limitations. At this time, the most restrictive limit on
expenses imposed by a state requires that expenses charged to the Fund in any
fiscal year may not exceed 2 1/2% of the first $30,000,000 of the Fund's average
net assets, 2% of the next $70,000,000 of such net assets and 1 1/2% of the
remaining average net assets. When calculating the above limit, the Fund may
exclude interest, brokerage commissions and extraordinary expenses.

Pursuant to its investment management contract, 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 investment 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 reckless
disregard by the Adviser of its obligations and duties under the investment
management contract.

The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts 02199-7603,
was organized in 1968 and presently has more than $16 billion in assets under
management in its capacity as investment adviser to the Fund and the other
mutual funds and publicly traded investment companies in the John Hancock group
of funds having a combined total of over 1,080,000 shareholders. The Adviser is
an affiliate of the Life Company, one of the most recognized and respected
financial institutions in the nation. With total assets under management of $80
billion, the Life Company is one of the ten largest life insurance companies in
the United States, and carries high ratings with S&P's and A. M. Best's. Founded
in 1862, the Life Company has been serving clients for over 130 years.

Under the investment management contract, the Fund may use the name "John
Hancock" or any name derived from or similar to it only for so long as the
contract or any extension, renewal or amendment thereof remains in effect. If
the contract is no longer in effect, the Fund (to the extent that it lawfully
can) will cease to use such a name or any other name indicating that it is
advised by or otherwise connected with the Adviser. In addition, the Adviser or
the Life Company may grant the non-exclusive right to use the name "John
Hancock" or any similar name to any other corporation or entity, including but
not limited to any investment company of which the Life

<PAGE>

Company or any subsidiary or affiliate thereof or any successor to the business
of any subsidiary or affiliate thereof shall be the investment adviser.

The investment management contract and the distribution contract discussed below
continue in effect from year to year if approved annually by vote of a majority
of the Independent Trustees (as defined below), cast in person at a meeting
called for the purpose of voting on such approval, and by either the Trustees or
the holders of a majority of the Fund's outstanding voting securities. Each
contract automatically terminates upon assignment. Each contract may be
terminated without penalty on 60 days' notice at the option of either party to
the respective contract or by vote of a majority of the outstanding voting
securities of the Fund.

DISTRIBUTION CONTRACT

The Fund has a distribution contract with John Hancock Funds pertaining to each
class of shares. Under the contract, John Hancock Funds is obligated to use its
best efforts to sell shares on behalf of the Fund. Shares of the Fund are also
sold by selected broker-dealers (the "Selling Brokers") which have entered into
selling agency agreements with John Hancock Funds. John Hancock Funds accepts
orders for the purchase of the shares of the Fund which are continually offered
at net asset value next determined, plus any applicable sales charge. In
connection with the sale of Class A or Class B shares of the Fund, John Hancock
Funds and Selling Brokers receive compensation in the form of a sales charge
imposed, in the case of Class A shares, at the time of sale or, in the case of
Class B shares, on a deferred basis. The sales charges are listed in the Fund's
Class A and Class B Shares Prospectus (the "Class A and Class B Prospectus").

The Fund's Trustees adopted Distribution Plans with respect to Class A and Class
B shares (together, the "Plans") pursuant to Rule 12b-1 under the Investment
Company Act. Under the Plans, the Fund will pay distribution and service fees at
an aggregate annual rate of up to 0.30% and 1.00%, respectively, of the Fund's
daily net assets attributable to shares of that Class. However, the service fee
will not exceed 0.25% of the Fund's daily net assets attributable to each class
of shares. The distribution fees reimburse John Hancock Funds for its
distribution costs incurred in the promotion of sales of Fund shares, and the
service fees compensate Selling Brokers for providing personal and account
maintenance services to shareholders. In the event that John Hancock Funds is
not fully reimbursed for expenses incurred by it under the Class B Plan in any
fiscal year, John Hancock Funds may carry these expenses forward, provided,
however that the Trustees may terminate the Class B Plan and thus the Fund's
obligation to make further payments at any time. Accordingly, the Fund does not
treat unreimbursed expenses relating to the Class B shares as a liability of the
Fund. The Plans were approved by a majority of the voting securities of the
applicable class of the Fund. The Plans were approved by a majority of the
voting securities of the applicable class of the Fund. Both Plans and all
amendments were approved by a majority of the Trustees, including a majority of
the Trustees who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plans (the "Independent
Trustees"), by votes cast in person at meetings called for the purpose of voting
on these Plans.

Pursuant to the Plans, at least quarterly, John Hancock Funds provides the Fund
with a written report of the amounts expended under the Plan and the purpose for
which these expenditures were made. The Trustees review these reports on a
quarterly basis.

During the fiscal year ended December 31, 1995 the Fund paid Investor Services
the following amounts of expenses with respect to the Class A and Class B shares
of the Fund:

13
<PAGE>

<TABLE>
<CAPTION>
Expense Items

Printing and Expenses of
Mailing of John Hancock Interest
Prospectus to Compensation to Funds Carrying or
Advertising New Shareholders Selling Brokers Charges Other Finance
----------- ---------------- --------------- ------- -------------

<S> <C> <C> <C> <C> <C>
Growth Fund
Class A shares $52,118 $14,899 $394,891 $97,474 $ 0
Class B shares $10,264 $ 1,531 $ 40,221 $15,914 $14,661
</TABLE>

Each of the Plans provides that it will continue in effect only so long as its
continuance is approved at least annually by a majority of both the Trustees and
the Independent Trustees. Each of the Plans may be terminated without penalty
(a) by vote of a majority of the Independent Trustees, (b) by a majority of the
Fund's outstanding shares of the applicable class upon 60 days' written notice
to John Hancock Funds and (c) automatically in the event of assignment. Each of
the Plans further provides that it may not be amended to increase the maximum
amount of the fees for the services described therein without the approval of a
majority of the outstanding shares of the class of the Fund which has voting
rights with respect to the Plan. Each of the Plans provides that no material
amendment to the Plan will, in any event, be effective unless it is approved by
a vote of a majority of both the Trustees and the Independent Trustees of the
Fund. The holders of Class A and Class B shares have exclusive voting rights
with respect to the Plan applicable to their respective class of shares. In
adopting the Plans, the Trustees concluded that, in their judgment, there is a
reasonable likelihood that each of the Plans will benefit the holders of the
applicable class of shares of the Fund.

When the Fund seeks an Independent Trustee to fill a vacancy or as a nominee for
election by shareholders, the selection or nomination of the Independent Trustee
is, under resolutions adopted by the Trustees contemporaneously with their
adoption of the Plans, committed to the discretion of the Committee on
Administration of the Trustees. The members of the Committee on Administration
are all Independent Trustees and are identified in this Statement of Additional
Information under the heading "Those Responsible for Management."

NET ASSET VALUE

For purposes of calculating the net asset value ("NAV") of a Fund's shares, the
following procedures are utilized wherever applicable.

Debt investment securities are valued on the basis of valuations furnished by a
principal market maker or a pricing service, both of which generally utilize
electronic data processing techniques to determine valuations for normal
institutional size trading units of debt securities without exclusive reliance
upon quoted prices.

Equity securities traded on a principal exchange or NASDAQ National Market
Issues are generally valued at last sale price on the day of valuation.
Securities in the aforementioned category for which no sales are reported and
other securities traded over-the-counter are generally valued at the last
available bid price.

14
<PAGE>

Short-term debt investments which have a remaining maturity of 60 days or less
are generally valued at amortized cost which approximates market value. If
market quotations are not readily available or if in the opinion of the Adviser
any quotation or price is not representative of true market value, the fair
value of the security may be determined in good faith in accordance with
procedures approved by the Trustees.

Any assets or liabilities expressed in terms of foreign currencies are
translated into U.S. dollars by the custodian bank based on London currency
exchange quotations as of 5:00 p.m., London time (12:00 noon, New York time) on
the date of a determination of a Fund's NAV.

A Fund will not price its securities on the following national holidays: New
Year's Day; Presidents' Day; Good Friday; Memorial Day; Independence Day; Labor
Day; Thanksgiving Day; and Christmas Day. On any day an international market is
closed and the New York Stock Exchange is open, any foreign securities will be
valued at the prior day's close with the current day's exchange rate. Trading of
foreign securities may take place on Saturdays and U.S. business holidays on
which a Fund's NAV is not calculated. Consequently, a Fund's portfolio
securities may trade and the NAV of the Fund's redeemable securities may be
significantly affected on days when a shareholder has no access to the Fund.

INITIAL SALES CHARGE ON CLASS A SHARES

The sales charges applicable to purchases of Class A shares of the Fund are
described in the Fund's Class A and Class B Prospectus. Methods of obtaining
reduced sales charges referred to generally in the Class A and Class B
Prospectus are described in detail below. In calculating the sales charge
applicable to current purchases of Class A shares of the Fund, the investor is
entitled to cumulate current purchases with the greater of the current value (at
offering price) of the Class A shares of the Fund owned by the investor, or if
Investor Services is notified by the investor's dealer or the investor at the
time of the purchase, the cost of the Class A shares owned.

Combined Purchases. In calculating the sales charge applicable to purchases of
Class A shares made at one time, the purchases will be combined if made by (a)
an individual, his spouse and their children under the age of 21, purchasing
securities for his or their own account, (b) a trustee or other fiduciary
purchasing for a single trust, estate or fiduciary account and (c) certain
groups of four or more individuals making use of salary deductions or similar
group methods of payment whose funds are combined for the purchase of mutual
fund shares. Further information about combined purchases, including certain
restrictions on combined group purchases, is available from Investor Services or
a Selling Broker's representative.

Without Sales Charges. As described in the Class A and Class B Prospectus, Class
A shares of the Fund may be sold without a sales charge to certain persons
described in the prospectus.

Accumulation Privilege. Investors (including investors combining purchases) who
are already Class A shareholders may also obtain the benefit of the reduced
sales charge by taking into account not only the amount then being invested but
also the purchase price or value of the Class A shares already held by such
person.

Combination Privilege. Reduced sales charges (according to the schedule set
forth in the Class A and Class B Prospectus) also are available to an investor
based on the aggregate amount of his concurrent and prior investments in Class A
shares of the Fund and shares of all other John Hancock funds which carry a
sales charge.

15
<PAGE>

Letter of Intention. The reduced sales charges are also applicable to
investments made over a specified period pursuant to a Letter of Intention (the
"LOI"), which should be read carefully prior to its execution by an investor.
The Fund offers two options regarding the specified period for making
investments under the LOI. All investors have the option of making their
investments over a specified period of thirteen (13) months. Investors who are
using the Fund as a funding medium for a qualified retirement plan, however, may
opt to make the necessary investments called for by the LOI over a forty-eight
(48) month period. These qualified retirement plans include group IRA, SEP,
SARSEP, TSA, 401(k), 403(b) and Section 457 plans. Such an investment (including
accumulations and combinations) must aggregate $50,000 or more invested during
the specified period from the date of the LOI or from a date within ninety (90)
days prior thereto, upon written request to Investor Services. The sales charge
applicable to all amounts invested under the LOI is computed as if the aggregate
amount intended to be invested had been invested immediately. If such aggregate
amount is not actually invested, the difference in the sales charge actually
paid and the sales charge payable had the LOI not been in effect is due from the
investor. However, for the purchases actually made within the specified period
(either 13 or 48 months) the sales charge applicable will not be higher than
that which would have applied (including accumulations and combinations) had the
LOI been for the amount actually invested.

The LOI authorizes Investor Services to hold in escrow sufficient Class A shares
(approximately 5% of the aggregate) to make up any difference in sales charges
on the amount intended to be invested and the amount actually invested, until
such investment is completed within the specified period, at which time the
escrow shares will be released. If the total investment specified in the LOI is
not completed, the Class A shares held in escrow may be redeemed and the
proceeds used as required to pay such sales charge as may be due. By signing the
LOI, the investor authorizes Investor Services to act as his attorney-in-fact to
redeem any escrowed Class A shares and adjust the sales charge, if necessary. An
LOI does not constitute a binding commitment by an investor to purchase, or by
the Fund to sell, any additional Class A shares and may be terminated at any
time.

DEFERRED SALES CHARGE ON CLASS B SHARES

Investments in Class B shares are purchased at net asset value per share without
the imposition of an initial sales charge so the Fund will receive the full
amount of the purchase payment.

Contingent Deferred Sales Charge. Class B shares which are redeemed within six
years of purchase will be subject to a contingent deferred sales charge ("CDSC")
at the rates set forth in the Class A and Class B Prospectus as a percentage of
the dollar amount subject to the CDSC. The charge will be assessed on an amount
equal to the lesser of the current market value or the original purchase cost of
the Class B shares being redeemed. Accordingly, no CDSC will be imposed on
increases in account value above the initial purchase prices, including Class B
shares derived from reinvestment of dividends or capital gains distributions.

The amount of the CDSC, if any, will vary depending on the number of years from
the time of payment for the purchase of Class B shares until the time of
redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchases of shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month.

Proceeds from the CDSC are paid to John Hancock Funds and are used in whole or
in part by John Hancock Funds to defray its expenses related to providing
distribution-related services to the

<PAGE>

Fund in connection with the sale of the Class B shares, such as the payment of
compensation to select Selling Brokers for selling Class B shares. The
combination of the CDSC and the distribution and service fees facilitates the
ability of the Fund to sell the Class B shares without a sales charge being
deducted at the time of the purchase. See the Class A and Class B Prospectus for
additional information regarding the CDSC.

SPECIAL REDEMPTIONS

Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed by the Trustees. When the shareholder were to sells
portfolio securities received in this fashion, he would incur a brokerage
charge. Any such securities would be valued for the purposes of making such
payment at the same value as used in determining net asset value. The Fund has,
however, elected to be governed by Rule 18f-1 under the Investment Company Act.
Under that rule, the Fund must redeem its shares for cash except to the extent
that the redemption payments to any shareholder during any 90-day period would
exceed the lesser of $250,000 or 1% of the Fund's net asset value at the
beginning of such period.

ADDITIONAL SERVICES AND PROGRAMS

Exchange Privilege. As describe d more fully in the Prospectuses, the Fund
permits exchanges of shares of any class of the Fund for shares of the same
class in any other John Hancock fund offering that class.

Systematic Withdrawal Plan. As described briefly in the Class A and Class B
Prospectus, the Fund permits the establishment of a Systematic Withdrawal Plan.
Payments under this plan represent proceeds from the redemption of shares of the
Fund. Since the redemption price of the shares of the Fund may be more or less
than the shareholder's cost, depending upon the market value of the securities
owned by the Fund at the time of redemption, the distribution of cash pursuant
to this plan may result in realization of gain or loss for purposes of Federal,
state and local income taxes. The maintenance of a Systematic Withdrawal Plan
concurrently with purchases of additional Class A or Class B shares of the Fund
could be disadvantageous to a shareholder because of the initial sales charge
payable on such purchases of Class A shares and the CDSC imposed on redemptions
of Class B shares and because redemptions are taxable events. Therefore, a
shareholder should not purchase Class A or Class B shares at the same time that
a Systematic Withdrawal Plan is in effect. The Fund reserves the right to modify
or discontinue the Systematic Withdrawal Plan of any shareholder on 30 days'
prior written notice to such shareholder, or to discontinue the availability of
such plan in the future. The shareholder may terminate the plan at any time by
giving proper notice to Investor Services.

Monthly Automatic Accumulation Program ("MAAP"). This program is explained fully
in the Class A and Class B Prospectus. The program, as it relates to automatic
investment checks, is subject to the following conditions:

The investments will be drawn on or about the day of the month indicated.

The privilege of making investments through the Monthly Automatic Accumulation
Program may be revoked by Investor Services without prior notice if any
investment is not honored by the shareholder's bank. The bank shall be under no
obligation to notify the shareholder as to the non-payment of any checks.

17
<PAGE>

The program may be discontinued by the shareholder either by calling Investor
Services or upon written notice to Investor Services which is received at least
five (5) business days prior to the due date of any investment.

Reinvestment Privilege. A shareholder who has redeemed Fund shares may, within
120 days after the date of redemption, reinvest without payment of a sales
charge any part of the redemption proceeds in shares of the same class of the
Fund or any of the other John Hancock funds, subject to the minimum investment
limit of that fund. The proceeds from the redemption of Class A shares may be
reinvested at net asset value without paying a sales charge in Class A shares of
the Fund or in Class A shares of any of the other John Hancock funds. If a CDSC
was paid upon a redemption, a shareholder may reinvest the proceeds from this
redemption at net asset value in additional shares of the class from which the
redemption was made. The shareholder's account will be credited with the amount
of any CDSC charged upon the prior redemption and the new shares will continue
to be subject to the CDSC. The holding period of the shares acquired through
reinvestment will, for purposes of computing the CDSC payable upon a subsequent
redemption, include the holding period of the redeemed shares. The Fund may
modify or terminate the reinvestment privilege at any time.

A redemption or exchange of Fund shares is a taxable transaction for Federal
income tax purposes even if the reinvestment privilege is exercised, and any
gain or loss realized by a shareholder on the redemption or other disposition of
Fund shares will be treated for tax purposes as described under the caption "Tax
Status."

DESCRIPTION OF THE FUND'S SHARES

The Trustees of the Trust are responsible for the management and supervision of
the Fund. The Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest of the Fund without
par value. Under the Declaration of Trust, the Trustees have the authority to
create and classify shares of beneficial interest in separate series, without
further action by shareholders. As of the date of this Statement of Additional
Information, the Trustees have authorized shares of the Fund and one other
series. Additional series may be added in the future. The Declaration of Trust
also authorizes the Trustees to classify and reclassify the shares of the Fund,
or any other series of the Trust, into one or more classes. As of the date of
this Statement of Additional Information, the Trustees have authorized the
issuance of two classes of shares of the Fund, designated as Class A and Class
B.

The shares of each class of the Fund represent an equal proportionate interest
in the aggregate net assets attributable to that class of the Fund. The holders
of Class A and Class B shares have certain exclusive voting rights on matters
relating to their respective Rule 12b-1 distribution plans. The different
classes of the Fund may bear different expenses relating to the cost of holding
shareholder meetings necessitated by the exclusive voting rights of any class of
shares.

Dividends paid by the Fund, if any, with respect to each class of shares will be
calculated in the same manner, at the same time and will be in the same amount,
except that (i) the distribution and service fees relating to Class A and Class
B shares will be borne exclusively by that class, (ii) Class B shares will pay
higher distribution and service fees than Class A shares and (iii) each of Class
A and Class B shares will bear any class expenses properly allocable to that
class of shares. Similarly, the net asset value per share may vary depending on
whether Class A shares or Class B shares are purchased.

<PAGE>

In the event of liquidation, shareholders of each class are entitled to share
pro rata in the net assets of the class of the Fund available for distribution
to these shareholders. Shares entitle their holders to one vote per share, are
freely transferable and have no preemptive, subscription or conversion rights.
When issued, shares are fully paid and non-assessable, except as set forth
below.

Unless otherwise required by the Investment Company Act or the Declaration of
Trust, the Trust has no intention of holding annual meetings of shareholders.
Trust shareholders may remove a Trustee by the affirmative vote of at least
two-thirds of the Trust's outstanding shares and the Trustees shall promptly
call a meeting for such purpose when requested to do so in writing by the record
holders of not less than 10% of the outstanding shares of the Trust.
Shareholders may, under certain circumstances, communicate with other
shareholders in connection with requesting a special meeting of shareholders.
However, at any time that less than a majority of the Trustees holding office
were elected by the shareholders, the Trustees will call a special meeting of
shareholders for the purpose of electing Trustees.

Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for acts or obligations
of the trust. However, the Fund's Declaration of Trust contains an express
disclaimer of shareholder liability for acts, obligations or affairs of the
Fund. The Declaration of Trust also provides for indemnification out of the
Fund's assets for all losses and expenses of any shareholder held personally
liable for reason of being or having been a shareholder. Liability is therefore
limited to circumstances in which the Fund itself would be unable to meet its
obligations, and the possibility of this occurrence is remote.

TAX STATUS

Each series of the Trust, including the Fund, is treated as a separate entity
for accounting and tax purposes. The Fund has qualified and intends to continue
to quilify as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code") and intends to continue
to so qualify for each taxable year. As such and by complying with the
applicable provisions of the Code regarding the sources of its income, the
timing of its distributions and the diversification of its assets, the Fund will
not be subject to Federal income tax on taxable income (including net realized
capital gains) which is distributed to shareholders at least annually in
accordance with the timing requirements of the Code.

The Fund will be subject to a four percent nondeductible Federal excise tax on
certain amounts not distributed (and not treated as having been distributed) on
a timely basis in accordance with annual minimum distribution requirements. The
Fund intends under normal circumstances to avoid liability for such tax by
satisfying such distribution requirements.

Distributions from the Fund's current or accumulated earnings and profits
("E&P"), as computed for Federal income tax purposes, will be taxable as
described in the Fund's Prospectus, whether taken in shares or in cash.
Distributions, if any, in excess of E&P will constitute a return of capital,
which will first reduce an investor's tax basis in Fund shares and thereafter
(after such basis is reduced to zero) will generally give rise to capital gains.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for Federal income tax purposes in each share so received
equal to the amount of cash that they would have received had they elected to
receive the distribution in cash, divided by the number of shares received.

The Fund may be subject to foreign taxes on its income from investments in
certain ADRs representing foreign securities. Tax conventions between certain
countries and the U.S. may

<PAGE>

reduce or eliminate such taxes. Because more than 50% of the Fund's assets at
the close of any taxable year will not consist of stocks or securities of
foreign corporation, the Fund will be unable to pass such taxes through to
shareholders (as additional income) along with a corresponding entitlement to a
foreign tax credit or deduction.

If the fund acquires ADRs representing stock in certain non-U.S. corporations
that receive at least 75% of their annual gross income from passive sources
(such as interest, dividends, rents royalties or capital gain) or hold at least
50% of their asset in investments producing such passive income ("passive
foreign investment companies'), the Fund could be subject to Federal income tax
and additional interest charges on "excess distributions" received from such
companies or gain from the sale of stock in such companies, even if all income
or gain actually received by the Fund is timely distributed to its shareholders.
The Fund would not be able to pass through to it shareholders any credit or
deduction for such a tax. Certain elections may, if available, ameliorate these
adverse tax consequences, but any such election would require the Fund to
recognize taxable income or gain without the concurrent receipt of cash. The
Fund may limit and/or manage its holdings in passive foreign investment
companies to minimize its tax liability or maximize its return for these
investments.

The amount of net realized capital gains, if any, in any given year will result
from sales of securities made with a view to the maintenance of a portfolio
believed by the Fund's management to be most likely to attain the Fund's
objective. Such sales, and any resulting gains or losses, may therefore vary
considerably from year to year. At the time of an investor's purchase of shares
of the Fund, a portion of the purchase price is often attributable to realized
or unrealized appreciation in the Fund's portfolio or undistributed taxable
income of the Fund. Consequently, subsequent distributions on those shares may
be taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares, and the distributions in reality represent a return of a portion of the
purchase price.

Upon a redemption of shares (including by exercise of the exchange privilege) a
shareholder will ordinarily realize a taxable gain or loss depending upon his
basis in his shares. Such gain or loss will be treated as capital gain or loss
if the shares are capital assets in the shareholder's hands and will be
long-term or short-term, depending upon the shareholder's holding period for the
shares. A sales charge paid in purchasing Class A shares of the Fund cannot be
taken into account for purposes of determining gain or loss on the redemption or
exchange of such shares within 90 days after their purchase to the extent Class
A shares of the Fund or another John Hancock fund are subsequently acquired
without payment of a sales charge pursuant to the reinvestment or exchange
privilege. This disregarded charge will result in an increase in the
shareholder's tax basis in the Class A shares subsequently acquired. Also, any
loss realized on a redemption or exchange may be disallowed to the extent the
shares disposed of are replaced with other shares of the Fund within a period of
61 days beginning 30 days before and ending 30 days after the shares are
disposed of, such as pursuant to the automatic dividend reinvestment plan. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized upon the redemption of shares with a tax
holding period of six months or less will be treated as a long-term capital loss
to the extent of any amounts treated as distributions of long-term capital gain
with respect to such shares.

20
<PAGE>

Although its present intention is to distribute all net capital gains, if any,
the Fund reserves the right to retain and reinvest all or any portion of the
excess, as computed for Federal income tax purposes, of net long-term capital
gain over net short-term capital loss in any year. The Fund will not in any
event distribute net long-term capital gains realized in any year to the extent
that a capital loss is carried forward from prior years against such gain. To
the extent such excess was retained and not exhausted by the carry forward of
prior years' capital losses, it would be subject to Federal income tax in the
hands of the Fund. Each shareholder would be treated for Federal income tax
purposes as if the Fund had distributed to him on the last day of its taxable
year his pro rata share of such excess, and he had paid his pro rata share of
the taxes paid by the Fund and reinvested the remainder in the Fund.
Accordingly, each shareholder would (a) include his pro rata share of such
excess as long-term capital gain in his return for his taxable year in which the
last day of the Fund's taxable year falls, (b) be entitled either to a tax
credit on his return for, or to a refund of, his pro rata share of the taxes
paid by the Fund, and (c) be entitled to increase the adjusted tax basis for his
shares in the Fund by the difference between his pro rata share of such excess
and his pro rata share of such taxes.

For Federal income tax purposes, the Fund is permitted to carry forward a net
capital loss in any year to offset net capital gains, if any, during the eight
years following the year of the loss. To the extent subsequent net capital gains
are offset by such losses, they would not result in Federal income tax liability
to the Fund and, as noted above, would not be distributed as such to
shareholders. Presently, there are no realized capital loss carry forwards
available to offset future net realized capital gains.

If the Fund invests in certain PIKs, zero coupon securities or certain
increasing rate securities (and, in general, any other securities with original
issue discount or with market discount if the Fund elects to include market
discount in income currently), the Fund will be required to accrue income on
such investments prior to the receipt of the corresponding cash payments.
However, the Fund must distribute, at least annually, all or substantially all
of its net income, including such accrued income, to shareholders to qualify as
a regulated investment company under the Code and avoid Federal income and
excise taxes. Therefore, the Fund may have to dispose of its portfolio
securities under disadvantageous circumstances to generate cash, or may have to
leverage itself by borrowing the cash, to satisfy distribution requirements.

Investment in debt obligations that are at risk of or in default present special
tax issues for the Fund. Tax rules are not entirely clear about issues such as
when the Fund may cease to accrue interest, original issue discount, or market
discount, when and to what extent deductions may be taken for bad debts or
worthless securities, how payments received on obligations in default should be
allocated between principal and income, and whether exchanges of debt
obligations in a workout context are taxable. These and other issues will be
addressed by the Fund, in the event it acquires or holds any such obligations,
in order to reduce the risk of distributing insufficient income to reserve its
status as a regulated investment company and seeks to avoid becoming subject to
Federal income or excise tax.

<PAGE>

deduction and, if they borrow to acquire such shares, may be denied a portion of
the dividends received deduction. The entire qualifying dividend, including the
otherwise-deductible amount, will be included in determining the excess (if any)
of a corporate shareholder's adjusted current earnings over its alternative
minimum taxable income, which may increase its alternative minimum tax
liability. Additionally, any corporate shareholder should consult its tax
adviser regarding the possibility that its basis in its shares may be reduced,
for Federal income tax purposes, by reason of "extraordinary dividends" received
with respect to the shares, for the purpose of computing its gain or loss on
redemption or other disposition of the shares.

Different tax treatment, including penalties on certain excess contributions and
deferrals, certain pre-retirement and post-retirement distributions and certain
prohibited transactions, is accorded to accounts maintained as qualified
retirement plans. Shareholders should consult their tax advisers for more
information.

The foregoing discussion relates solely to Federal income tax law as applicable
to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts or estates) subject to tax under such law.
The discussion does not address special tax rules applicable to certain classes
of investors, such as tax-exempt entities, insurance companies and financial
institutions. Dividends, capital gain distributions and ownership of or gains
realized on the redemption (including an exchanges) of shares of the Fund may
also be subject to state and local taxes. Shareholders should consult their own
tax advisers as to the Federal, state or local tax consequences of ownership of
shares of, and receipt of distributions from, the Fund in their particular
circumstances.

Non-U.S. investors not engaged in a U.S. trade or business with which their Fund
investment is effectively connected will be subject to U.S. Federal income tax
treatment that is different from that described above. These investors may be
subject to non-resident alien withholding tax at the rate of 30% (or a lower
rate under an applicable tax treaty) on amounts treated as ordinary dividends
from the Fund and, unless an effective IRS Form W-8 or authorized substitute is
on file, to 31% backup withholding on certain other payments from the Fund.
Non-U.S. investors should consult their tax advisers regarding such treatment
and the application of foreign taxes to an investment in the Fund.

The Fund is not subject to Massachusetts corporate excise or franchise taxes.
Provided that the Fund qualifies as a regulated investment company under the
Code, it will also not be required to pay any Massachusetts income tax.

CALCULATION OF PERFORMANCE

The average annual total return on Class A shares of the Fund for the 1 year, 5
year and 10 year periods ended December 31, 1995 was 20.82%, 13.69% and 11.76%,
respectively and reflect payment of the maximum sales charge of 5.0%. The
average annual total return on Class B shares of the Fund for the 1 year period
ended December 31, 1995 and since inception on January 1, 1994 was 21.01% and
6.69%, respectively, and reflects the applicable contingent deferred sales
charge.

Total return is computed by finding the average annual compounded rate of return
over the 1 year, 5 year and 10 year periods that would equate the initial amount
invested to the ending redeemable value according to the following formula:

22
<PAGE>

[GRAPHIC OMITTED]

Where:

P = a hypothetical initial investment of $1,000.

T = average annual total return.

n = number of years.

ERV = ending redeemable value of a hypothetical $1,000 investment
made at the beginning of the 1 year, 5 year, and 10 year
periods.

In the case of Class A shares or Class B shares, this calculation assumes the
maximum sales charge of 5.00% is included in the initial investment or the CDSC
is applied at the end of the period, respectively. This calculation also assumes
that all dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period.

In addition to average annual total returns, the Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Cumulative total returns may be quoted as a percentage or
as a dollar amount, and may be calculated for a single investment, a series of
investments and/or a series of redemptions over any time period. Total returns
may be quoted with or without taking the Fund's 5.00% sales charge on Class A
shares or the CDSC on Class B shares into account. The "distribution rate" is
determined by annualizing the result of dividing the declared dividends of the
Fund during the period stated by the maximum offering price or net asset value
at the end of the period. Excluding the Fund's sales charge on Class A shares
and the CDSC on Class B shares from a total return calculation produces a higher
total return figure.

From time to time, in reports and promotional literature, the Fund's total
return will be compared to indices of mutual funds such as Lipper Analytical
Services, Inc.'s "Lipper - Mutual Performance Analysis," a monthly publication
which tracks net assets, total return and yield equity mutual funds in the
United States. Ibottson and Associates, CDA Weisenberger and F.C. Towers are
also used for comparison purposes, as well as the Russell and Wilshire Indices.

Performance rankings and ratings reported periodically in national financial
publications such as MONEY Magazine, FORBES, BUSINESS WEEK, THE WALL STREET
JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRON'S may also be
utilized.

The performance of the Fund is not fixed or guaranteed. Performance quotations
should not be considered to be representations of performance of the Fund for
any period in the future. The performance of the Fund is a function of many
factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest; and changes
in operating expenses are all examples of items that can increase or decrease
the Fund's performance.

BROKERAGE ALLOCATION

Decisions concerning the purchase and sale of portfolio securities and the
allocation of brokerage commissions are made by the Adviser pursuant to
recommendations made by its investment

<PAGE>

committee, which consists of officers and directors of the Adviser and
affiliates and officers and Trustees who are interested persons of the Fund.
Orders for purchases and sales of securities are placed in a manner which, in
the opinion of the Adviser, will offer the best price and market for the
execution of each such transaction. Purchases from underwriters of portfolio
securities may include a commission or commissions paid by the issuer, and
transactions with dealers serving as market makers reflect a "spread."
Investments in debt securities are generally traded on a net basis through
dealers acting for their own account as principals and not as brokers; no
brokerage commissions are payable on such transactions.

The Fund's primary policy is to execute all purchases and sales of portfolio
instruments at the most favorable prices consistent with best execution,
considering all of the costs of the transaction including brokerage commissions.
This policy governs the selection of brokers and dealers and the market in which
a transaction is executed. Consistent with the foregoing primary policy, the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
and such other policies as the Trustees may determine, the Adviser may consider
sales of shares of the Fund as a factor in the selection of broker-dealers to
execute the Fund's portfolio transactions.

To the extent consistent with the foregoing, the Fund will be governed in the
selection of brokers and dealers, and the negotiation of brokerage commission
rates and dealer spreads, by the reliability and quality of the services,
including primarily the availability and value of research information and, to a
lesser extent, statistical assistance furnished to the Adviser of the Fund and
their value and expected contribution to the performance of the Fund. It is not
possible to place a dollar value on information and services to be received from
brokers and dealers, since it is only supplementary to the research efforts of
the Adviser. The receipt of research information is not expected to reduce
significantly the expenses of the Adviser. The research information and
statistical assistance furnished by brokers and dealers may benefit the Life
Insurance Company or other advisory clients of the Adviser, and, conversely,
brokerage commissions and spreads paid by other advisory clients of the Adviser
may result in research information and statistical assistance beneficial to the
Fund. The Fund will not make commitments to allocate portfolio transactions upon
any prescribed basis. While the Fund's officers will be primarily responsible
for the allocation of the Fund's brokerage business, their policies and
practices in this regard must be consistent with the foregoing and will at all
times be subject to review by the Trustees. For the years ended on December 31,
1995, 1994 and 1993, the Fund paid negotiated brokerage commissions in the
amount of $334,672, $236,226, and $244,879, respectively.

As permitted by Section 28(e) of the Securities Exchange Act of 1934, the Fund
may pay a broker which provides brokerage and research services to the Fund an
amount of disclosed commission in excess of the commission which another broker
would have charged for effecting that transaction. This practice is subject to a
good faith determination by the Trustees that such commission is reasonable in
light of the services provided and to such policies as the Trustees may adopt
from time to time. During the fiscal year ended December 31, 1995, the Fund
directed commissions in the amount of $46,158 to compensate brokers for research
services such as industry, economic and company reviews and evaluations of
securities.

The Adviser's indirect parent, the Life Company, is the indirect sole
shareholder of John Hancock Freedom Securities Corporation and its subsidiaries,
two of which, Tucker Anthony Incorporated ("Tucker Anthony") and Sutro &
Company, Inc. ("Sutro"), are broker-dealers ("Affiliated Brokers"). Pursuant to
procedures established by the Trustees and consistent with the above policy of
obtaining best net results, the Fund may execute portfolio transactions with or
through

24
<PAGE>

Tucker Anthony or Sutro. During the year ended December 31, 1995, the Fund did
not execute any portfolio transactions with Affiliated Brokers.

Any of the Affiliated Brokers may act as broker for the Fund on exchange
transactions, subject, however, to the general policy of the Fund set forth
above and the procedures adopted by the Trustees pursuant to the Investment
Company Act. Commissions paid to an Affiliated Broker must be at least as
favorable as those which the Trustees believe to be contemporaneously charged by
other brokers in connection with comparable transactions involving similar
securities being purchased or sold. A transaction would not be placed with an
Affiliated Broker if the Fund would have to pay a commission rate less favorable
than the Affiliated Broker's contemporaneous charges for comparable transactions
for its other most favored, but unaffiliated, customers, except for accounts for
which the Affiliated Broker acts as clearing broker for another brokerage firm,
and any customers of the Affiliated Broker not comparable to the Fund as
determined by a majority of the Trustees who are not "interested persons" (as
defined in the Investment Company Act) of the Fund, the Adviser or the
Affiliated Broker. Because the Adviser, which is affiliated with the Affiliated
Brokers, has, as an investment adviser to the Fund, the obligation to provide
investment management services, which include elements of research and related
investment skills, such research and related skills will not be used by the
Affiliated Broker as a basis for negotiating commissions at a rate higher than
that determined in accordance with the above criteria. The Fund will not effect
principal transactions with Affiliated Brokers.

TRANSFER AGENT SERVICES

John Hancock Investor Services Corporation, P.O. Box 9116, Boston, MA
02205-9116, a wholly owned indirect subsidiary of the Life Insurance Company, is
the transfer and dividend paying agent for the Fund. The Fund pays Investor
Services an annual fee for Class A of $16.00 per shareholder account and for
Class B shares of $18.50 plus certain out-of-pocket expenses. These expenses are
aggregated and charged to the Fund allocated to each class on the basis of the
relative net asset value.

CUSTODY OF PORTFOLIO

Portfolio securities of the Fund are held pursuant to a custodian agreement
between the Fund and Investors Bank & Trust Company, 24 Federal Street, Boston,
Massachusetts 02110. Under the custodian agreement, Investors Bank & Trust
Company performs custody, portfolio and fund accounting services.

INDEPENDENT AUDITORS

The independent auditors of the Fund are Ernst & Young LLP, 200 Clarendon
Street, Boston, Massachusetts 02116. Ernst & Young audits and renders an opinion
of the Fund's annual financial statements and prepares the Fund's annual Federal
income tax return.

25
<PAGE>

APPENDIX

Moody's describes its lower ratings for corporate bonds as follows:

Bonds which are rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Bonds which are rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.

Bonds which are rated Ca represented obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

S&P describes its lower ratings for corporate bonds as follows:

Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

Debt rated BB, B, CCC, or CC is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

Moody's describes its three highest ratings for commercial paper as follows:

26
<PAGE>

Issuers rated P-1 (or related supporting institutions) have a superior capacity
for repayment of short-term promissory obligations. P-1 repayment capacity will
normally be evidenced by the following characteristics: (1) leading market
positions in well-established industries; (2) high rates of return on funds
employed; (3) conservative capitalization structures with moderate reliance on
debt and ample asset protections; (4) broad margins in earnings coverage of
fixed financial charges and high internal cash generation; and (5) well
established access to a range of financial markets and assured sources of
alternate liquidity.

Issuers rated P- (or related supporting institutions) have a strong capacity for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

Issuers rated P-3 (or supporting institutions) have an acceptable ability for
repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.

S&P describes its three highest ratings for commercial paper as follows:

A-1. This designation indicated that the degree of safety regarding timely
payment is very strong.

A-2. Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for issues
designated A-1.

A-3. Issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.

27
<PAGE>
FINANCIAL STATEMENTS

John Hancock Funds - Growth Fund

THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON DECEMBER 31, 1995. YOU'LL
ALSO FIND THE NET ASSET VALUE PER SHARE AS OF THAT DATE.

<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks, preferred stock and
other investments (cost - $165,477,205) ................... $250,529,960
Publicly traded convertible bonds (cost - $650,000) ......... 712,563
Joint repurchase agreement (cost - $7,320,000) .............. 7,320,000
Corporate savings account ................................... 5,883
------------
258,568,406

Receivable for shares sold ................................... 10,795
Receivable for investments sold .............................. 4,273,499
Interest receivable .......................................... 8,649
Dividends receivable ......................................... 141,137
Other assets ................................................. 23,796
------------
Total Assets ............................... 263,026,282
------------------------------------------------------------
LIABILITIES:
Payable for shares repurchased ............................... 123
Payable for investments purchased ............................ 5,028,850
Payable to John Hancock Advisers, Inc. .......................
and affiliates - Note B ..................................... 267,247
Accounts payable and accrued expenses ........................ 117,421
------------
Total Liabilities .......................... 5,413,641
------------------------------------------------------------
NET ASSETS:
Capital paid-in .............................................. 172,385,747
Accumulated net realized gain on investments ................. 111,577
Net unrealized appreciation of investments ................... 85,115,318
------------
Net Assets ................................. $257,612,642
============================================================

NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding - unlimited number of shares
authorized with no par value, respectively)
Class A - $241,699,860/12,388,361 ............................ $ 19.51
==============================================================================
Class B - $15,912,782/826,498 ................................ $ 19.25
==============================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($19.51 x 105.26%) ................................. $ 20.54
==============================================================================

* On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
</TABLE>

THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES) FOR
THE PERIOD STATED.

<TABLE>
STATEMENT OF OPERATIONS
Year ended December 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $14,730) ..... $ 1,202,907
Interest .................................................... 785,627
-----------
1,988,534
-----------
Expenses:
Investment management fee - Note B ......................... 1,561,020
Distribution/service fee - Note B
Class A .................................................. 559,382
Class B .................................................. 82,591
Transfer agent fee - Note B ................................ 578,813
Printing ................................................... 46,658
Custodian fee .............................................. 43,950
Auditing fee ............................................... 32,214
Registration and filing fees ............................... 29,808
Trustees' fees ............................................. 15,625
Miscellaneous .............................................. 10,421
Legal fees ................................................. 1,633
-----------
Total Expenses ............................ 2,962,115
-----------------------------------------------------------
Net Investment Loss ....................... (973,581)
-----------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments sold ....................... 9,207,214
Change in net unrealized appreciation/depreciation
of investments ............................................. 30,638,725
-----------
Net Realized and Unrealized
Gain on Investments ....................... 39,845,939
-----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ................. $38,872,358
===========================================================
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>
FINANCIAL STATEMENTS

John Hancock Funds - Growth Fund

<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>

YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss ................................................ $ (973,581) $ (986,780)
Net realized gain (loss) on investments sold ....................... 9,207,214 1,529,276
Change in net unrealized appreciation/depreciation of investments .. 30,638,725 (13,091,731)
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations ... 38,872,358 (12,549,235)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gain on investments sold
Class A - ($0.6945 and $0.2020 per share, respectively) ........... (8,391,968) (1,850,208)
Class B** - ($0.6945 and $0.2020 per share, respectively) ......... (552,264) (43,984)
Class C*** - (none and $0.2020 per share, respectively) ........... -- (18,255)
------------- -------------
Total Distributions to Shareholders ............................. (8,944,232) (1,912,447)
------------- -------------

FROM FUND SHARE TRANSACTIONS -- NET* ................................. 75,837,052 2,086,820
------------- -------------
NET ASSETS:
Beginning of period ................................................ 151,847,464 164,222,326
------------- -------------
End of period ...................................................... $ 257,612,642 $ 151,847,464
============= =============
* ANALYSIS OF FUND SHARE TRANSACTIONS:
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,

-----------------------------------------------------------

1995 1994
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C>
<C> <C>
CLASS A
Shares sold ..................................................... 1,671,481 $ 32,932,574 4,198,071 $ 71,177,794
Shares issued in reorganization - Note D ........................ 3,788,495 77,588,384 -- --
Shares issued to shareholders in reinvestment of distributions .. 402,050 7,803,606 110,953 1,738,305
---------- ------------ ---------- ------------
5,862,026 118,324,564 4,309,024 72,916,099
Less shares repurchased ......................................... (2,691,827) (52,370,704) (4,457,375) (75,094,698)
---------- ------------ ---------- ------------
Net increase (decrease) ......................................... 3,170,199 $ 65,953,860 (148,351) $ (2,178,599)
========== ============ ========== ============
CLASS B **
Shares sold ..................................................... 333,335 $ 6,333,583 259,658 $ 4,192,534
Shares issued in reorganization - Note D ........................ 471,911 9,563,328 -- --
Shares issued to shareholders in reinvestment of distributions .. 27,495 526,875 2,737 42,721
---------- ------------ ---------- ------------
832,741 16,423,786 262,395 4,235,255
Less shares repurchased ......................................... (246,690) (4,843,723) (21,948) (347,495)
---------- ------------ ---------- ------------
Net increase .................................................... 586,051 $ 11,580,063 240,447 $ 3,887,760
========== ============ ========== ============
CLASS C ***
Shares sold ..................................................... 841 $ 15,270 30,518 $ 480,690
Shares issued to shareholders in reinvestment of distributions .. -- -- 1,121 17,646
---------- ------------ ---------- ------------
841 15,270 31,639 498,336
Less shares repurchased ......................................... (99,061) (1,712,141) (7,014) (120,677)
---------- ------------ ---------- ------------
Net increase (decrease) ......................................... (98,220) $ (1,696,871) 24,625 $ 377,659
========== ============ ========== ============
** Class B shares commenced operations on January 3, 1994.
*** All Class C shares were redeemed on March 31, 1995.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

FINANCIAL STATEMENTS

John Hancock Funds - Growth Fund

<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated: investment returns, key ratios and supplemental data are as
follows:
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,

-----------------------------------------------------------

1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C>
<C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period .......................... $ 15.89 $ 17.40 $ 17.32 $ 17.48 $ 12.93
-------- -------- -------- -------- --------
Net Investment Income (Loss) .................................. (0.09)(c) (0.10) (0.11) (0.06) 0.04
Net Realized and Unrealized Gain (Loss) on Investments ........ 4.40 (1.21) 2.33 1.10 5.36
-------- -------- -------- -------- --------
Total from Investment Operations ............................. 4.31 (1.31) 2.22 1.04 5.40
-------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income .......................... -- -- -- -- (0.04)
Distributions from Net Realized Gain on Investments Sold ...... (0.69) (0.20) (2.14) (1.20) (0.81)
-------- -------- -------- -------- --------
Total Distributions .......................................... (0.69) (0.20) (2.14) (1.20) (0.85)
-------- -------- -------- -------- --------
Net Asset Value, End of Period ................................ $ 19.51 $ 15.89 $ 17.40 $ 17.32 $ 17.48
======== ======== ======== ======== ========
Total Investment Return at Net Asset Value (g) ................ 27.17% (7.50%) 13.03% 6.06% 41.68%

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ..................... $241,700 $146,466 $162,937 $153,057 $145,287
Ratio of Expenses to Average Net Assets ....................... 1.48% 1.65% 1.56% 1.60% 1.44%
Ratio of Net Investment Income (Loss) to Average Net Assets ... (0.46%) (0.64%) (0.67%) (0.36%) 0.27%
Portfolio Turnover Rate ....................................... 68%(i) 52% 68% 71% 82%

CLASS B (a)
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period .......................... $ 15.83 $17.16(b)
------- ------
Net Investment Loss ........................................... (0.26)(c) (0.20)(c)
Net Realized and Unrealized Gain (Loss) on Investments ........ 4.37 (0.93)
------- ------
Total from Investment Operations ............................. 4.11 (1.13)
------- ------
Less Distributions:

Distributions from Net Realized Gain on Investments Sold ...... (0.69) (0.20)
------- ------
Net Asset Value, End of Period ................................ $ 19.25 $15.83
======= ======
Total Investment Return at Net Asset Value (g) ................ 26.01% (6.56%)(f)

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ..................... $15,913 $3,807
Ratio of Expenses to Average Net Assets ....................... 2.31% 2.38%(d)
Ratio of Net Investment Loss to Average Net Assets ............ (1.39%) (1.25%)(d)
Portfolio Turnover Rate ....................................... 68%(i) 52%
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>
FINANCIAL STATEMENTS

John Hancock Funds - Growth Fund

<TABLE>
FINANCIAL HIGHLIGHTS (continued)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>

YEAR ENDED
PERIOD ENDED DECEMBER 31, PERIOD ENDED
MARCH 31, 1995 1994 DECEMBER 31, 1993
-------------- ------------ -----------------
<S> <C> <C> <C>
CLASS C (e)
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ...................... $ 16.02 $ 17.46 $ 17.05(b)
--------- --------- ---------
Net Investment Income (Loss) .............................. 0.02(c) (0.01) (0.02)
Net Realized and Unrealized Gain (Loss) on Investments .... 1.28 (1.23) 2.57
--------- --------- ---------
Total from Investment Operations ......................... 1.30 (1.24) 2.55
--------- --------- ---------
Less Distributions:

Distributions from Net Realized Gain on Investments Sold .. -- (0.20) (2.14)
--------- --------- ---------
Net Asset Value, End of Period ............................ $ 17.32 $ 16.02 $ 17.46
========= ========= =========
Total Investment Return at Net Asset Value (g) ............ 8.11%(f) (7.07%) (15.18%)(f)

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ................. $ 1,672 $ 1,574 $ 1,285
Ratio of Expenses to Average Net Assets ................... 1.05%(d) 1.12% 1.05%(d)
Ratio of Net Investment Income (Loss) to Average Net Assets 0.44%(d) (0.08%) (0.17%)(d)
Portfolio Turnover Rate ................................... 39% 52% 68%

(a) Class B shares commenced operations on January 3, 1994.
(b) Initial price at commencement of operations.
(c) On average month end shares outstanding.
(d) On an annualized basis.
(e) Class C shares commenced operations on May 7, 1993. Net asset value and net assets at the end of the period
reflect amounts prior to the redemption of all shares on March 31, 1995.
(f) Not annualized.
(g) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(i) Portfolio turnover rate excludes merger activity.
</TABLE>

THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: NET INVESTMENT INCOME, GAINS (LOSSES),
DIVIDENDS AND TOTAL INVESTMENT RETURN OF THE FUND. IT SHOWS HOW THE FUND'S NET
ASSET VALUE FOR A SHARE HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD.
ADDITIONALLY, IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN THE
FINANCIAL STATEMENTS ARE EXPRESSED IN RATIO FORM.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

FINANCIAL STATEMENTS

John Hancock Funds - Growth Fund

THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
GROWTH FUND ON DECEMBER 31, 1995. IT'S DIVIDED INTO FIVE MAIN CATEGORIES: COMMON
STOCKS, PREFERRED STOCKS, OTHER INVESTMENTS, PUBLICLY TRADED CONVERTIBLE BONDS
AND SHORT-TERM INVESTMENTS. THE INVESTMENTS ARE FURTHER BROKEN DOWN BY INDUSTRY
GROUPS. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE
LISTED LAST.

<TABLE>
SCHEDULE OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- ------
<S> <C> <C>
COMMON STOCKS
AEROSPACE (0.53%)
Thiokol Corp. ................................. 40,000* $ 1,355,000
-----------
BANKS (1.41%)
Chase Manhattan Corp. ......................... 60,000* 3,637,500
-----------
BEVERAGES (2.31%)
Coca-Cola Co. (The) ........................... 80,000 5,940,000
-----------
BROADCASTING (0.72%)
Capital Cities /ABC, Inc. ..................... 15,000* 1,850,625
-----------
CHEMICALS (2.08%)
Eastman Chemical Co. .......................... 20,000* 1,252,500
Millipore Corp. ............................... 100,000* 4,112,500
-----------
5,365,000
-----------
COMPUTERS (8.14%)
Cognex Corp. * * .............................. 120,000* 4,170,000
Compaq Computer Corp. * * ..................... 80,000* 3,840,000
Hewlett-Packard Co. ........................... 20,000* 1,675,000
Lexmark International Group, Inc. .............
(Class A) * * ................................ 80,000* 1,460,000
Seagate Technology, Inc. * * .................. 70,000* 3,325,000
Silicon Graphics, Inc. * * .................... 70,000* 1,925,000
Sun Microsystems, Inc. * * .................... 100,000* 4,562,500
-----------
20,957,500
-----------
COSMETICS & TOILETRIES (3.37%)
Estee Lauder Cos., Inc. (Class A) * * ......... 84,600* 2,950,425
Gillette Co. (The) ............................ 110,000 5,733,750
-----------
8,684,175
-----------
DIVERSIFIED OPERATIONS (0.19%)
ITT Industries, Inc. .......................... 20,000* 480,000
-----------
DRUGS (7.88%)
Johnson & Johnson ............................. 65,000 5,565,625
Merck & Co., Inc. ............................. 100,000* 6,575,000
Pfizer, Inc. .................................. 60,000 3,780,000
Schering-Plough Corp. ......................... 80,000* 4,380,000
-----------
20,300,625
-----------
ELECTRONICS (14.28%)
Adaptec, Inc. * * ............................. 140,000 5,740,000
Altera Corp. * * .............................. 25,000* 1,243,750
Applied Materials, Inc. * * ................... 80,000* 3,150,000
Bay Networks, Inc. * * ........................ 112,500* 4,626,562
Benchmarq Microelectronics, * * ............... 75,000* 609,375
Cisco Systems, Inc. * * ....................... 60,000 4,477,500
Duracell International, Inc. .................. 90,000* 4,657,500
Intel Corp. ................................... 30,000* 1,702,500
LSI Logic Corp. * * ........................... 60,000* 1,965,000
Molex, Inc. ................................... 50,000* 1,587,500
Molex, Inc. (Class A) ......................... 93,750 2,871,094
Vishay Intertechnology, Inc. * * .............. 132,300 4,167,450
-----------
36,798,231
-----------
FINANCIAL/BUSINESS SERVICES (8.08%)
Capital One Financial Corp. ................... 60,000* 1,432,500
Dean Witter Discover & Co. .................... 50,000* 2,350,000
Edwards (A.G.), Inc. .......................... 45,000* 1,074,375
First Data Corp. .............................. 40,000* 2,675,000
MBNA Corp. .................................... 120,000 4,425,000
Paychex, Inc. ................................. 177,500 8,852,812
-----------
20,809,687
-----------
FOOD (2.77%)
ConAgra, Inc. ................................. 40,000* 1,650,000
Kellogg Co. ................................... 50,000* 3,862,500
Nabisco Holdings Corp. (Class A) .............. 50,000* 1,631,250
-----------
7,143,750
-----------
HEALTHCARE (10.10%)
Amgen, Inc. * * ............................... 70,000* 4,156,250
Boston Scientific Corp. * * ................... 25,000* 1,225,000
Cardinal Health, Inc. * * ..................... 82,500 4,516,875
HBO & Co. ..................................... 85,000 6,513,125
Health Management Associates, Inc. ............
(Class A) * * ................................ 195,000 5,094,375
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

FINANCIAL STATEMENTS

John Hancock Funds - Growth Fund

<TABLE>
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- ------
<S> <C> <C>
HEALTHCARE (CONTINUED)
Heart Technology, Inc. * * .................. 30,000* $ 986,250
IDEXX Laboratories, Inc. * * ................ 75,000* 3,525,000
-----------
26,016,875
-----------
HOTELS & MOTELS (0.37%)
Marriott International, Inc. ................ 25,000* 956,250
-----------
INSURANCE (0.38%)
ITT Hartford Group, Inc. * * ................ 20,000* 967,500
-----------
LEISURE & RECREATION (3.54%)
Disney (Walt) Co., (The) .................... 70,000 4,130,000
ITT Corp. * * ............................... 20,000* 1,060,000
PolyGram N.V. American Depository
Receipt, (ADR) ............................. 75,000 3,937,500
-----------
9,127,500
-----------
LINEN SUPPLY (1.55%)
Cintas Corp. ................................ 90,000 4,005,000
-----------
NURSING HOMES (3.26%)
Health Care & Retirement Corp. * * .......... 130,000 4,550,000
Manor Care, Inc. ............................ 110,000 3,850,000
-----------
8,400,000
-----------
OIL / GAS (4.73%)
Diamond Offshore Drilling, * *............... 100,000* 3,375,000
Halliburton Co. ............................. 50,000* 2,531,250
Reading & Bates Corp. * * ................... 100,000* 1,500,000
Schlumberger Ltd. ........................... 35,000* 2,423,750
Western Atlas, Inc. * * ..................... 46,600* 2,353,300
-----------
12,183,300
-----------
PUBLISHING (1.94%)
News Corp. Ltd. (The) (ADR) ................. 125,000 2,671,875
Scholastic Corp. * * ........................ 30,000* 2,332,500
-----------
5,004,375
-----------
RETAIL (9.69%)
Borders Group, Inc. * * ..................... 125,000* 2,312,500
Circuit City Stores, Inc. ................... 54,700* 1,511,087
CUC International, Inc. * * ................. 142,500 4,862,812
Landry's Seafood Restaurants, Inc. * * ...... 120,000* 2,047,500
McDonald's Corp. ............................ 120,000 5,415,000
Men's Wearhouse, Inc. (The) * * ............. 45,000* 1,158,750
PetSmart, Inc. * * .......................... 100,000* 3,100,000
Walgreen Co. ................................ 100,000* 2,987,500
Wal-Mart Stores, Inc. ....................... 70,000 1,566,250
-----------
24,961,399
-----------
SOFTWARE (4.98%)
America Online, Inc. * * .................... 120,000 4,500,000
Electronic Arts, Inc. * * ................... 40,000* 1,045,000
Microsoft Corp. * * ......................... 25,000* 2,193,750
Oracle Corp. * * ............................ 120,000* 5,085,000
------------
12,823,750
------------
TELECOMMUNICATIONS (4.95%)
Airtouch Communications, Inc. * * ........... 90,000 2,542,500
AT&T Corp. .................................. 25,000* 1,618,750
Ericsson (L.M.) Telephone Co., (Class B)
(ADR) * * .................................. 104,500* 2,037,750
Motorola, Inc. .............................. 60,400 3,442,800
Nokia Corp. (Class A) (ADR) ................. 80,000* 3,110,000
------------
12,751,800
------------
TOTAL COMMON STOCK
(Cost $165,395,830) (97.25%) 250,519,842
--------- ------------

PREFERRED STOCK
ELECTRONICS (0.00%)
Teledyne, Inc., Ser E, $1.20 ................ 700* 10,063
------------
TOTAL PREFERRED STOCK
(Cost $10,500) (0.00%) 10,063
--------- ------------

OTHER INVESTMENT
DRUGS (0.00%)
Lilly (Eli) & Co., Contingent
Payment Units ** ........................... 14,000 55
------------
TOTAL OTHER INVESTMENT
(Cost $70,875) (0.00%) 55
--------- ------------
TOTAL COMMON STOCKS,
PREFERRED STOCK AND
OTHER INVESTMENT
(Cost $165,477,205) (97.25%) 250,529,960
--------- ------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

FINANCIAL STATEMENTS

John Hancock Funds - Growth Fund

<TABLE>
<CAPTION>
INTEREST S&P PAR VALUE MARKET
ISSUER, DESCRIPTION RATE RATING*** (000'S OMITTED) VALUE
- ------------------- ---- --------- --------------- -----
<S> <C> <C> <C> <C>
PUBLICLY TRADED CONVERTIBLE BONDS
Toys/Games/Hobby Products (0.28%)
Hasbro, Inc.
Conv. Sub.
Note 11-15-98.................. 6.00% A- $ 650 $ 712,563
------------
TOTAL PUBLICLY TRADED
CONVERTIBLE BONDS
(Cost $650,000) (0.28%) 712,563
------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (2.84%)
Investment in a joint repurchase
agreement transaction with
SBC Capital Markets, Inc.
Dated 12-29-95, due 01-02-96
(secured by U.S. Treasury
Bonds, 10.375% due
11-15-12 and 7.50%
due 11-15-16).................. 5.90 7,320 7,320,000
------------
CORPORATE SAVINGS ACCOUNT (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.00% 5,883
------------
TOTAL SHORT-TERM INVESTMENTS (2.84%) 7,325,883
------- ------------
TOTAL INVESTMENTS (100.37%) $258,568,406
======= ============

* Securities, other than short-term investments, newly added to the portfolio
during the year ended December 31, 1995.
** Non-income producing security.
*** Credit rating is unaudited.
</TABLE>

The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Growth Fund

NOTE A --
ACCOUNTING POLICIES

John Hancock Capital Series (the "Trust"), is an open-end management investment
company, registered under the Investment Company Act of 1940. The Trust consists
of two series portfolios: John Hancock Growth Fund (the "Fund") and John Hancock
Special Value Fund. The investment objective of the Fund is to achieve long-term
appreciation of capital by diversifying its investments among a number of
industry groups without concentration in any particular industry.

The Trustees have authorized the issuance of two classes of the Fund,
designated as Class A and Class B shares. The shares of each class represent an
interest in the same portfolio of investments of the Fund and have equal rights
to voting, redemptions, dividends and liquidation, except that certain expenses,
subject to the approval of the Trustees, may be applied differently to each
class of shares in accordance with current regulations of the Securities and
Exchange Commission. Shareholders of a class which bears distribution/service
expenses under terms of a distribution plan, have exclusive voting rights
regarding such distribution plan. Class C shares were outstanding in the current
fiscal year during the period from January 1, 1995 through March 31, 1995, but
were abolished by the Trustees on May 1, 1995. Significant accounting policies
of the Fund are as follows:

VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value.

JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring that
the agreement is fully collateralized at all times.

INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis for both financial
reporting and federal income tax purposes.

FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.

DIVIDENDS, DISTRIBUTIONS AND INTEREST Interest income on investment securities
is recorded on the accrual basis. Foreign income may be subject to foreign
withholding taxes which are accrued as applicable.

The Fund records all distributions to shareholders from net investment income
and realized gains on the ex-dividend date. Such distributions are determined in
conformity with income tax regulations, which may differ from generally accepted
accounting principles. Dividends paid by the Fund, if any, with respect to each
class of shares will be calculated in the same manner, at the same time and will
be in the same amount, except for effect of expenses that may be applied
differently to each class as explained previously.

EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual Fund. Expenses which are not readily identifiable to a specific
Fund are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative sizes of the Fund.

CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution/service fees if any, are calculated daily at the class level based
on the appropriated net assets of each class and the specific expense rate(s)
applicable to each class.

16
<PAGE>

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Growth Fund

NOTE B --
MANAGEMENT FEE AND TRANSACTIONS WITH
AFFILIATES AND OTHERS

Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program equivalent, on
an annual basis, to the sum of (a) 0.80% of the first $250,000,000 of the Fund's
average daily net asset value, (b) 0.75% of the next $250,000,000 and (c) 0.70%
of the Fund's average daily net asset value in excess of $500,000,000.

In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive state
limit where the Fund is registered to sell shares of beneficial interest, the
fee payable to the Adviser will be reduced to the extent of such excess and the
Adviser will make additional arrangements necessary to eliminate any remaining
excess expenses. The current limits are 2.5% of the first $30,000,000 of the
Fund's average daily net asset value, 2.0% of the next $70,000,000 and 1.5% of
the remaining average daily net asset value.

The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. For the period ended December
31, 1995, net sales charges received with regard to sales of Class A shares
amounted to $376,267. Out of this amount, $59,781 was retained and used for
printing prospectuses, advertising, sales literature, and other purposes,
$20,565 was paid as sales commissions to unrelated broker-dealers, and $295,921
was paid as sales commissions to personnel of John Hancock Distributors, Inc.
("Distributors"), Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro &
Co., Inc. ("Sutro"), all of which are broker-dealers. The Adviser's indirect
parent, John Hancock Mutual Life Insurance Company, is the indirect sole
shareholder of Distributors and John Hancock Freedom Securities Corporation and
its subsidiaries, which include Tucker Anthony and Sutro.

Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds and are used in whole or in part to defray
its expenses related to providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended December 31,
1995, contingent deferred sales charges amounted to $16,695.

In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan with
respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments to JH Funds for
distribution and service expenses at an annual rate not to exceed 0.30% of Class
A average daily net assets and 1.00% of Class B average daily net assets to
reimburse JH Funds for its distribution/service costs. Up to a maximum of 0.25%
of such payments may be service fees as defined by the amended Rules of Fair
Practice of the National Association of Securities Dealers. Under the amended
Rules of Fair Practice, curtailment of a portion of the Fund's 12b-1 payments
could occur under certain circumstances.

The Fund has a transfer agent agreement with John Hancock Investor Services
Corp. ("Investor Services"), a wholly-owned subsidiary of The Berkeley Financial
Group. For the period January 1, 1995 through September 30, 1995 Class A and
Class B shares paid transfer agent fees based on the number of shareholder
accounts and certain out-of-pocket expenses. Class C shares paid a monthly
transfer agent fee equivalent, on an annual basis, to 0.10% of the average daily
net asset value of Class C shares of the Fund. For the nine months ended
September 30, 1995 the transfer agent expense, calculated as a class specific
expense was $385,350 for Class A, $22,387 for Class B and $408 for Class C
shares, respectively. Effective October 1, 1995, transfer agent expense is a
fund expense.

Messrs. Edward J. Boudreau, Jr and Richard S. Scipione are directors and/or
officers of the Adviser and/or its affiliates, as well as Trustees of the Fund.
John Hancock Mutual Life Insurance Company owns 400,000 Class A shares of
beneficial interest of the Fund. The compensation of unaffiliated Trustees is
borne by the Fund. Effective with the fees paid for 1995, the unaffiliated
Trustees may elect to defer for tax purposes their receipt of this compensation
under the John

<PAGE>

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Growth Fund

Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments
into other John Hancock funds, as applicable, to cover its liability with regard
to the deferred compensation. Investments to cover the Fund's deferred
compensation liability are recorded on the Fund's books as an other asset. The
deferred compensation liability is marked to market on a periodic basis and
income earned by the investment is recorded on the Fund's books.

NOTE C --
INVESTMENT TRANSACTIONS

Purchases and proceeds from sales of securities, other than short-term
obligations, during the period ended December 31, 1995 aggregated $107,466,892
and $116,529,822, respectively.

The cost of investments owned at December 31, 1995 (excluding the corporate
savings account), for Federal income tax purposes was $173,452,018. Gross
unrealized appreciation and depreciation of investments aggregated $88,383,168
and $3,272,662, respectively, resulting in net unrealized appreciation of
$85,110,506.

NOTE D --
REORGANIZATION

On September 8, 1995, the shareholders of John Hancock Capital Growth Fund
(JHCGF) approved a plan of reorganization between JHCGF and the Fund providing
for the transfer of substantially all of the assets and liabilities of JHCGF to
the Fund in exchange solely for Class A and Class B shares of the Fund. The
acquisition was accounted for as a tax free exchange of 3,788,495 Class A
shares, and 471,911 Class B shares of John Hancock Growth Fund for the net
assets of JHCGF, which amounted to $77,588,384 and $9,563,328 for Class A and B
shares, respectively, including $20,624,702 of unrealized appreciation, at the
close of business on September 15, 1995.

NOTE E --
RECLASSIFICATION OF CAPITAL ACCOUNTS

During the year ended December 31, 1995, the Fund has reclassified the
accumulated net investment loss $973,581 to capital paid-in. This represents the
cumulative amount necessary to report these balances on a tax basis, excluding
certain temporary differences, as of December 31, 1995. Additional adjustments
may be needed in subsequent reporting periods. These reclassifications, which
have no impact on the net asset value of the Fund, are primarily attributable to
certain differences in the computation of distributable income and capital gains
under federal tax rules versus generally accepted accounting principles.

<PAGE>

John Hancock Funds - Growth Fund

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS To the Trustees and
Shareholders of John Hancock Capital Series -- John Hancock Growth Fund

We have audited the accompanying statement of assets and liabilities of John
Hancock Growth Fund (the "Fund'), one of the portfolios constituting John
Hancock Capital Series, including the schedule of investments, as of December
31, 1995, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers, or other
appropriate auditing procedures when replies from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of John
Hancock Growth Fund portfolio of John Hancock Capital Series at December 31,
1995, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated periods, in conformity with generally
accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
February 9, 1996

TAX INFORMATION NOTICE (UNAUDITED)

For Federal Income Tax purposes, the following information is furnished with
respect to the taxable distributions of the Fund for its fiscal year ended
December 31, 1995.

The Fund designated a distribution to shareholders $8,944,000 as long-term
capital gain dividends. Shareholders were mailed a 1995 U.S. Treasury Department
Form 1099-DIV in January 1996 representing their proportionate share.

United States Government Obligations:None of the 1995 income earned by the
Fund was derived from obligations of the U.S. government or its agencies. The
Fund did not have any assets invested in U.S. Treasury bonds, bills, notes or
other U.S. Government Agencies at year end.

For the fiscal year ending December 31, 1995 none of the distributions
qualify for the dividends received deduction available to corporations.

For specific information on exemption provisions in your state, consult your
local tax office or your tax adviser.

19
<PAGE>

John Hancock
Special Value Fund

Class A and Class B Shares
Prospectus
April 1, 1996

TABLE OF CONTENTS
Page
-------
Expense Information 2
The Fund's Financial Highlights 3
Investment Objective and Policies 4
Organization and Management of the Fund 8
Alternative Purchase Arrangements 9
The Fund's Expenses 11
Dividends and Taxes 12
Performance 13
How to Buy Shares 13
Share Price 15
How to Redeem Shares 20
Additional Services and Programs 22

This Prospectus sets forth information about John Hancock Special Value
Fund (the "Fund"), a diversified series of John Hancock Capital Series (the
"Trust") that you should know before investing. Please read and retain it for
future reference.

Additional information about the Fund has been filed with the Securities
and Exchange Commission (the "SEC"). You can obtain a copy of the Fund's
Statement of Additional Information, dated April 1, 1996, and incorporated by
reference in this Prospectus, free of charge by writing to or by telephoning:
John Hancock Investor Services Corporation, Post Office Box 9116, Boston,
Massachusetts 02205-9116, 1-800-225-5291 (1-800-554-6713 TDD).

Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other agency.

<PAGE>

EXPENSE INFORMATION

The purpose of the following information is to help you understand the
various fees and expenses you will bear, directly or indirectly, when you
purchase Fund shares. The operating expenses included in the table and
hypothetical example below are based on actual fees and expenses of the
Fund's Class A and Class B shares for the Fund's fiscal year ended December
31, 1995, adjusted to reflect current fees and expenses. Actual fees and
expenses may be greater or less than those indicated.

Class A Class B
Shares Shares
------- ---------
Shareholder Transaction Expenses
Maximum sales charge imposed on purchases
(As a percentage of offerin price) 5.00% None
Maximum sales charge imposed on reinvested dividends None None
Maximum deferred sales charge None* 5.00%
Redemption fee+ None None
Exchange fee None None
Annual Fund Operating Expenses (As a percentage of average
net assets)
Management fee (net of expense reduction)*** 0.00% 0.00%
12b-1 fee** 0.30% 1.00%
Other expenses (net of expense reduction)*** 0.71% 0.71%
Total Fund operating expenses (net of expense reduction)*** 1.01% 1.71%

*No sales charge is payable at the time of purchase on investments in Class
A shares of $1 million or more, but a contingent deferred sales charge of
up to 1.00% may be imposed on these investments, as described under the
caption "Share Price," in the event of certain redemption transactions
within one year of purchase.
**The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Fund's average net assets, and the remaining portion will be
used to cover distribution expenses. Distribution expenses under the Class
A Plan are not carried beyond one year from the date these expenses were
incurred. Unreimbursed expenses under the Class B Plan will be carried
forward with interest. See "The Fund's Expenses."
+Redemption by wire fee (currently $4.00) not included.
***Total Fund operating expenses in the table reflect estimated expenses, net
of the Advisers reduction of the management fee and other expenses (but
not including the transfer agent fee and the 12b-1 fee) in excess of 0.40%
of the Fund's average net assets. Without this fee reduction, the expenses
shown for Class A and Class B shares, respectively, would be: Management
fee, 0.70% and 0.70%, other expenses 0.90% and 0.90% and total expenses
1.90% and 2.60%. The Adviser reserves the right to terminate this fee
reduction in the future.

1 3 5 10
Example Year Years Years Years
You would pay the following expenses for the
indicated period of years on a hypothetical
$1,000 investment, assuming a 5% annual
return:
Class A Shares $60 $81 $103 $167
Class B Shares
--Assuming complete redemption at end of
period $67 $84 $113 $183
--Assuming no redemption $17 $54 $ 93 $183

(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.)

The Fund's payment of a distribution fee may result in a long-term
shareholder indirectly paying more than the economic equivalent of the
maximum front-end sales charge permitted under the National Association of
Securities Dealers Rules of Fair Practice.

The management and 12b-1 fees referenced above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement
of Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contract."

2
<PAGE>

THE FUND'S FINANCIAL HIGHLIGHTS

The following table of Financial Highlights has been audited by Ernst &
Young LLP, the Fund's independent auditors whose unqualified report is
included in the Fund's 1995 Annual Report and is included in the Statement of
Additional Information. Further information about the performance of the Fund
is contained in the Fund's Annual Report to Shareholders, that may be
obtained free of charge by writing or telephoning John Hancock Investor
Services Corporation ("Investor Services") at the address or telephone number
listed on the front page of this Prospectus.

Selected data for each class of shares outstanding throughout each period
indicated is as follows:
<TABLE>
<CAPTION>

For the Period
Year Ended January 3, 1994
December 31, (Commencement of Operations)
CLASS A 1995 to December 31, 1994
------------ ----------------------------
<S> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 8.99 $ 8.50(e)
------- ------
Net Investment Income 0.21(b) 0.18(b)
Net Realized and Unrealized Gain on Investments 1.60 0.48
------- ------
Total from Investment Operations 1.81 0.66
------- ------
Less Distributions:
Dividends from Net Investment Income (0.20) (0.17)
Distributions from Net Realized Gain on Investments Sold (0.21) --
------- ------
Total Distributions (0.41) (0.17)
------- ------
Net Asset Value, End of Period $ 10.39 $ 8.99
======= ======
Total Investment Return at Net Asset Value (d) 20.26% 7.81%(c)
Total Adjusted Investment Return at Net Asset Value (a) 19.39% 7.30%(c)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $12,845 $4,420
Ratio of Expenses to Average Net Assets** 0.98% 0.99%*
Ratio of Adjusted Expenses to Average Net Assets (a) 1.85% 4.98%*
Ratio of Net Investment Income to Average Net Assets 2.04% 2.10%*
Ratio of Adjusted Net Investment Income (Loss) to Average
Net Assets (a) 1.17% (1.89%)*
Portfolio Turnover Rate 9% 0.3%
**Expense Reimbursement Per Share $ 0.09(b) $ 0.34(b)

CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 9.00 $ 8.50(e)
------- ------
Net Investment Income 0.12(b) 0.13(b)
Net Realized and Unrealized Gain on Investments 1.59 0.48
------- ------
Total from Investment Operations 1.71 0.61
------- ------
Less Distributions:
Dividends from Net Investment Income (0.12) (0.11)
Distributions from Net Realized Gain on Investments Sold (0.21) --
Total Distributions (0.33) (0.11)
Net Asset Value, End of Period $ 10.38 $ 9.00
======= ======
Total Investment Return at Net Asset Value (d) 19.11% 7.15%(c)
Total Adjusted Investment Return at Net Asset Value (a) 18.24% 6.64%(c)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $16,994 $3,296
Ratio of Expenses to Average Net Assets** 1.73% 1.72%*
Ratio of Adjusted Expenses to Average Net Assets (a) 2.60% 5.71%*
Ratio of Net Investment Income to Average Net Assets 1.21% 1.53%*
Ratio of Adjusted Net Investment Income (Loss) to Average Net
Assets (a) 0.34% (2.46%)*
Portfolio Turnover Rate 9% 0.3%
**Expense Reimbursement Per Share $ 0.09(b) $ 0.34(b)
</TABLE>

* On an annualized basis.
(a) On an unreimbursed basis.
(b) On average month end shares outstanding.
(c) Not annualized.
(d) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(e) Initial price to commence operations.

3
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to seek capital appreciation with income as a
secondary objective.

The Fund's investment objective is to seek capital appreciation with income as a
secondary consideration. The Fund will seek to achieve its objective by
investing primarily in equity securities that are undervalued when compared to
alternative equity investments. There is no assurance that the Fund will achieve
its investment objective.

The Fund will emphasize equity securities that are undervalued compared to
alternative equity investments.

The equity securities in which the Fund will invest consist of common stocks,
preferred stocks, convertible debt securities and warrants of U.S. and foreign
issuers. In selecting equity securities for the Fund, John Hancock Advisers,
Inc. (the "Adviser") and NM Capital Management Inc. (the "Sub-Adviser" and
together with the Adviser, the "Advisers") emphasize issuers whose equity
securities trade at market to book value ratios lower than comparable issuers or
the Standard & Poor's Composite Index. The Fund's portfolio securities will also
include those considered by the Advisers to have the potential for capital
appreciation due to potential recognition of earnings power or asset value which
is not fully reflected in such securities' current market value. The Advisers
attempt to identify investments that have characteristics, such as high relative
value, intrinsic value, going concern value, net asset value and replacement
book value, that are believed to limit sustained downside price risk. This is
generally referred to as the "margin of safety" concept. The Advisers also
consider an issuer's financial strength, competitive position, projected future
earnings and dividends and other investment criteria. These securities are
collectively referred to as "Special Value" securities.

The Fund's investment policy reflects the Advisers' belief that, while the
securities markets tend to be efficient, sufficiently persistent price anomalies
exist which the strategically disciplined active equity manager can exploit in
seeking to achieve an above-average rate of return. Based on this premise, the
Advisers have adopted a strategy of investing in low market to book value, out
of favor, stocks.

The Fund may invest in the securities of both larger and smaller companies.

The Fund's investments may include securities of both large, widely traded
companies and smaller, less well known issuers. Higher risks are often
associated with investments in companies with smaller market capitalizations.
These companies may have limited product lines, markets and financial resources,
or they may be dependent upon smaller or inexperienced management groups. In
addition, trading volume of these securities may be limited, and historically
the market price for these securities has been more volatile than securities of
companies with greater capitalization. However, securities of companies with
smaller capitalization may offer greater potential for capital appreciation,
since they may be overlooked and thus undervalued by investors.

The Fund may also invest in fixed income securities.

The Fund may also invest in fixed income securities, consisting of U.S.
Government securities and convertible and non-convertible corporate preferred
stocks and debt securities. The market value of fixed income securities varies
inversely with changes in the prevailing levels of interest rates. The market
value of convertible securities, while influenced by the prevailing level of
interest rates, is also affected by the changing value of the equity securities
into which they are convertible. The Fund may purchase fixed income debt
securities with stated maturities of up to thirty years. The corporate fixed
income securities in which the Fund may invest, including convertible

4
<PAGE>

debt securities and preferred stock, will be rated at least BBB by Standard &
Poors' Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's") or,
if unrated, determined to be of comparable quality by the Advisers. Under normal
market conditions, the Fund's investments in fixed income securities are not
expected to exceed 10% of the Fund's net assets. Debt securities rated Baa or
BBB are considered medium grade obligations with speculative characteristics,
and adverse economic conditions or changing circumstances may weaken capacity to
pay interest and repay principal. If the rating of a debt security is reduced
below Baa or BBB, the Advisers will sell it when it is appropriate consistent
with the Fund's investment objective and policies.

When the Advisers believe unfavorable investment conditions exist requiring the
Fund to assume a temporary defensive investment posture, the Fund may hold cash
or invest all or a portion of its assets in short-term instruments which are
rated A-1 by S&P or P-1 by Moody's.

The Fund may employ certain investment strategies to help achieve its investment
objective.

Foreign Securities. The Fund may invest up to 50% of its assets in securities of
foreign issuers, including American Depositary Receipts ("ADRs"). ADRs
(sponsored or unsponsored) are receipts typically issued by an American bank or
trust company. They evidence ownership of underlying securities issued by a
foreign corporation, and are designed for trading in United States securities
markets. Issuers of the shares underlying unsponsored ADRs are not contractually
obligated to disclose material information in the United States and, therefore,
there may not be a correlation between that information and the market value of
the unsponsored ADR.

Foreign Currencies. The Fund will not speculate in foreign currencies or in
forward foreign currency exchange contracts, but will enter into these
transactions only in connection with its hedging strategy, to protect against
changes in foreign currency exchange rates. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date at a price set at the time of the contract. Although certain
strategies could minimize the risk of loss due to a decline in the value of the
hedged foreign currency, they could also limit any potential gain that might
result from an increase in the value of the currency in which the hedged
security is quoted or denominated.

Futures Contracts and Options on Futures. The Fund may buy and sell stock index
and other financial futures contracts and options on futures contracts to hedge
against changes in securities prices, interest rates and currency exchange rates
and other market conditions or for speculative purposes. The potential loss
incurred by the Fund in writing options on futures is unlimited and may exceed
the amount of the premium received. The Fund's futures contracts and options on
futures will be traded on a U.S. or foreign commodity exchange or board of
trade. The Fund will not engage in a futures or options transaction for
speculative purposes, if immediately thereafter, the sum of initial margin
deposits on the existing positions and premiums required to establish its
speculative positions exceeds 5% of the Fund's net assets. The Fund intends to
comply with the CFTC regulations with respect to its speculative transactions.
These regulations are discussed further in the Statement of Additional
Information.

5
<PAGE>

Options Transactions Within Prescribed Limitations. The Fund may write (sell)
listed and over-the-counter covered call and put options on securities in which
it may invest, and on indices composed of securities in which it may invest, on
up to 100% of its net assets. The Fund may also purchase put and call options on
these securities and indices. All call options written by the Fund are covered,
this means that the Fund will own the securities subject to the option so long
as the option is outstanding. All put options written by the Fund are also
covered, which means that the Fund will have deposited with its custodian cash
liquid high grade debt securities with a value at least equal to the exercise
price of the put option. Call and put options written by the Fund will also be
considered to be covered to the extent that the Fund's liabilities under these
options are wholly or partially offset by its rights under call and put options
that it purchases. The Fund will treat purchased over-the-counter options and
assets used to cover written over-the-counter options as illiquid securities.
However, with respect to options written with primary dealers in U.S. Government
securities pursuant to an agreement requiring a closing purchase transaction at
a formula price, the amount of illiquid securities may be calculated with
reference to the formula price.

While transactions in options and futures contracts may reduce certain risks,
these transactions entail other risks. Certain risks arise due to the imperfect
correlations between movements in the price of options and futures contracts and
the movements in the prices of the underlying securities or currency. In
addition, the Fund could be prevented from opening, or realizing the benefits of
closing out, a futures or options position because of position limits or limits
on daily price fluctuations imposed by an exchange. There can be no assurance
that a liquid secondary market will exist for any option or futures contract.
The Fund's ability to hedge successfully will depend on the Advisers' ability to
predict accurately the future direction of securities and currency markets and
interest rates. Transactions in futures contracts involve brokerage costs,
require margin deposits and require the Fund to segregate liquid high grade debt
securities in an amount equal to the value of the contracts.

Lending of Securities. The Fund may lend portfolio securities to brokers,
dealers and financial institutions if the loan is collateralized by cash or U.S.
Government securities according to applicable regulatory requirements. The Fund
may reinvest any cash collateral in short-term securities. When the Fund lends
portfolio securities, there is a risk that the borrower may fail to return the
loaned securities. As a result, the Fund may incur a loss or, in the event of
the borrower's bankruptcy, may be delayed in or prevented from liquidating the
collateral. It is a fundamental policy of the Fund not to lend portfolio
securities having a total value in excess of 33-1/3% of its total assets.

Restricted Securities. The Fund may purchase restricted securities, including
those eligible for resale to "qualified institutional buyers" pursuant to Rule
144A under the Securities Act of 1933 (the "Securities Act"). The Trustees will
monitor the Fund's investments in these securities, focusing on certain factors,
including valuation, liquidity and availability of information. Purchases of
restricted securities are subject to an investment restriction limiting all the
Fund's illiquid securities to not more than 15% of the Fund's net assets.

6
<PAGE>

Repurchase Agreements, Forward Commitments and When-Issued Securities. The Fund
may enter into repurchase agreements and may purchase securities on a forward
commitment or when-issued basis. In a repurchase agreement, the Fund buys a
security subject to the right and obligation to sell it back at a higher price.
These transactions must be fully collateralized at all times, but involve some
credit risk to the Fund if the other party defaults on its obligation and the
Fund is delayed in or prevented from liquidating the collateral. The Fund will
segregate in a separate account cash or liquid, high grade debt securities equal
in value to its forward commitments and when-issued securities. Purchasing
securities for future delivery or on a when-issued basis may increase the Fund's
overall investment exposure, and involves a risk of loss if the value of the
securities declines before the settlement date.

Although the Fund does not intend to invest for the purpose of seeking
short-term profits, the Fund's particular portfolio securities may be changed
without regard to their holding period (subject to certain tax restrictions)
when the Advisers deem that this action is appropriate in view of a change in
the issuer's financial or business operations or changes in general market
conditions. It is anticipated that, under normal market conditions, the Fund's
annual portfolio turnover rate will be less than 100%.

Investments in foreign securities may involve risks that are not present in
domestic investments.

Global Risks. Investments in foreign securities may involve risks not present in
domestic investments due to exchange controls, less publicly available
information, more volatile or less liquid securities markets, and the
possibility of expropriation, confiscatory taxation or political, economic or
social instability. There may be difficulty in enforcing legal rights outside
the United States. Some foreign companies are not subject to the same uniform
financial reporting requirements, accounting standards and government
supervision as domestic companies, and foreign exchange markets are regulated
differently from the American stock market. Security trading practices abroad
may offer less protection to investors such as the Fund. In addition, foreign
securities may be denominated in the currency of the country in which the issuer
is located. Consequently, changes in foreign exchange rates will affect the
value of the Fund's shares and dividends. Finally, the expense ratios of
international funds generally are higher than those of domestic funds. This is
because there are greater costs associated with maintaining custody of foreign
securities, and the increased research necessary for international investing.

These risks may be intensified in the case of investments in emerging markets or
countries with limited or developing capital markets. These countries are
located in the Asia-Pacific region, Eastern Europe, Latin and South America and
Africa. Security prices in these markets can be significantly more volatile than
in more developed countries, reflecting the greater uncertainties of investing
in less established markets and economies. Political, legal and economic
structures in many of these emerging market countries may be undergoing
significant evolution and rapid development, and they may lack the social,
political, legal and economic stability characteristic of more developed
countries. Emerging market countries may have failed in the past to recognize
private property rights. They may have relatively unstable governments, present
the risk of nationalization of businesses, restrictions on foreign ownership, or
prohibitions on repatriation of assets, and may have less protection of property
rights than more developed countries. Their economies may be predominatly based

7
<PAGE>

on only a few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt burdens,
unstable currencies or inflation rates. Local securities markets may trade a
small number of securities and may be unable to respond effectively to increases
in trading volume, potentially making prompt liquidation of substantial holdings
difficult or impossible at times. The Fund may be required to establish special
custodial or other arrangements before making certain investments in those
countries. Securities of issuers located in these countries may have limited
marketability and may be subject to more abrupt or erratic price movements.

The Fund follows certain policies which may help to reduce investment risk.

Investment Restrictions. The Fund has adopted certain investment restrictions
that are detailed in the Statement of Additional Information, where they are
designated as fundamental or nonfundamental. The Fund's investment objective and
those fundamental restrictions may not be changed without shareholder approval.
All other investment policies and restrictions are nonfundamental and can be
changed by a vote of the Trustees without shareholder approval. The Fund's
portfolio turnover rate is shown in the section "The Fund's Financial
Highlights."

Brokers are chosen based on best price and execution.

When choosing brokerage firms to carry out the Fund's transactions, the Adviser
gives primary consideration to execution at the most favorable prices, taking
into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sales of Fund shares. Pursuant
to procedures established by the Trustees, the Adviser may place securities
transactions with brokers affiliated with the Adviser. These brokers include
Tucker, Anthony Incorporated, John Hancock Distributors, Inc. and Sutro &
Company, Inc. which are indirectly owned by John Hancock Mutual Life Insurance
Company (the "Life Company"), which in turn indirectly owns the Adviser.

ORGANIZATION AND MANAGEMENT OF THE FUND

The Trustees elect officers and retain the investment adviser who is responsible
for the day-to-day operations of the Fund, subject to the Trustees' policies and
supervision.

The Fund is a separate, diversified portfolio of the Trust, an open-end
management investment company organized as a Delaware corporation, then
reorganized as a Massachusetts business trust in 1984. The Trust has an
unlimited number of authorized shares of beneficial interest. The Trust's
Declaration of Trust permits the Trustees, without shareholder approval, to
create and classify shares of beneficial interest into separate series of the
Trust. As of the date of this Prospectus, the Trustees have authorized the Fund
and one other series. Additional series may be added in the future. The Trust's
Declaration of Trust also permits the Trustees to classify and reclassify any
series or portfolio of shares into one or more classes.

Accordingly, the Trustees have authorized the issuance of two classes of the
Fund, designated as Class A and Class B shares. The shares of each class
represent an interest in the same portfolio of investments of the Fund and have
equal rights as to voting, redemption, dividends and liquidation. However, each
class bears different distribution fees and Class A and Class B shareholders
have exclusive voting rights with respect to their distribution plans.

Shareholders have certain voting rights to remove Trustees. The Fund is not
required and does not intend to hold annual meetings of shareholders,
although special meetings

8
<PAGE>

may be held for such purposes as electing or removing Trustees, changing
fundamental investment restrictions and policies or approving a management
contract. The Fund, under certain circumstances, will assist in shareholder
communications with other shareholders.

John Hancock Advisers, Inc. advises investment companies having a total asset
value of more than $16 billion.

The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the John Hancock Mutual Life Insurance Company, a financial services company. It
manages the investment operations of the Fund and provides the Fund, and other
investment companies in the John Hancock group of funds, with investment
research and portfolio management services. Pursuant to a Subadvisory Agreement
between the Adviser and NM Capital Management, Inc. (the "Sub-Adviser"), the
Sub-Adviser, subject to the overall responsibility of the Adviser, manages the
composition of the Fund's portfolio.

Organized in 1977, the Sub-Adviser is also an indirect subsidiary of John
Hancock Mutual Life Insurance Company and provides investment advice and
advisory services to private accounts totalling approximately $1.3 billion.

The Sub-Adviser's investment decisions are made by a portfolio management team
consisting of three people. Thomas S. Christopher has over twenty-five years of
experience in investment management, including trust and investment counseling,
and has been with the Sub-Adviser since 1985. Charles H. Womack also has over
twenty years of investment management experience and a background in investment
counseling, portfolio analysis and institutional sales. He has been with the
Sub-Adviser since 1986. Angela J. Bristow serves as Senior Equity Analyst and
Equity Strategist. She has been with the Sub-Adviser since 1991 and has over
thirteen years of investment experience.

John Hancock Funds, Inc. ("John Hancock Funds") distributes shares for all of
the John Hancock funds through selected broker-dealers ("Selling Brokers").
Certain Fund officers are also officers of the Adviser and John Hancock Funds.
Pursuant to an order granted by the Securities and Exchange Commission, the Fund
has adopted a deferred compensation plan for its independent Trustees which
allows Trustees' fees to be invested by the Fund in other John Hancock funds.

An alternative purchase plan allows you to choose the method of purchase that is
best for you.

ALTERNATIVE PURCHASE ARRANGEMENTS

You can purchase shares of the Fund at a price equal to their net asset value
per share, plus a sales charge. At your election, this charge may be imposed
either at the time of the purchase (See "Initial Sales Charge Alternative--Class
A shares") or on a contingent deferred basis (See "Deferred Sales Charge
Alternative--Class B shares"). If you do not specify on your account application
the class of shares you are purchasing, it will be assumed that you are
investing in Class A shares.

9
<PAGE>

Investments in Class A shares are subject to an initial sales charge.

Class A Shares. If you elect to purchase Class A shares, you will incur an
initial sales charge unless the amount you purchase is $1 million or more. If
you purchase $1 million or more of Class A shares, you will not be subject to an
initial sales charge, but you will incur a sales charge if you redeem your
shares within one year of purchase. Class A shares are subject to ongoing
distribution and service fees at a combined annual rate of up to 0.30% of the
Fund's average daily net assets attributable to the Class A shares. Certain
purchases of Class A shares qualify for reduced initial sales charges. See
"Share Price--Qualifying for a Reduced Sales Charge."

Investments in Class B shares are subject to a contingent deferred sales charge.

Class B Shares. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
six years of purchase (the "contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all of
your dollars to work from the time you make your investment, but the higher
ongoing distribution fee will cause these shares to have higher expenses than
Class A shares. To the extent that any dividends are paid by the Fund, these
higher expenses will also result in lower dividends than those paid on Class A
shares.

Factors to Consider in Choosing an Alternative

You should consider which class of shares would be more beneficial for you.

The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares given the amount of your purchase, the length of time you
expect to hold the shares and other circumstances. You should consider whether,
during the anticipated life of your Fund investment, the CDSC and accumulated
fees on Class B shares would be less than the initial sales charge and
accumulated fees on Class A shares purchased at the same time, and to what
extent this differential would be offset by the Class A shares' lower expenses.
To help you make this determination, the table under the caption "Expense
Information" on page 2 of this Prospectus shows examples of the charges
applicable to each class of shares. Class A shares will normally be more
beneficial if you qualify for a reduced sales charge. See "Share
Price--Qualifying for a Reduced Sales Charge."

10
<PAGE>

In the case of Class A shares, distribution expenses incurred by John Hancock
Funds in connection with the sale of the shares will be paid from the proceeds
of the initial sales charge and the ongoing distribution and service fees. In
the case of Class B shares, expenses will be paid from the proceeds of the
ongoing distribution and service fees, as well as from the CDSC incurred upon
redemption within six years of purchase. The purpose and function of the CDSC
and ongoing distribution and service fees with respect to the Class B shares are
the same as those of the initial sales charge and ongoing distribution and
service fees with respect to the Class A shares.

Dividends if any, on Class A and Class B shares will be calculated in the same
manner, at the same time and on the same day. They will also be in the same
amount, except for differences resulting from each class bearing its own
distribution and service fees, and shareholder meeting expenses. See "Dividends
and Taxes."

THE FUND'S EXPENSES

For managing its investment and business affairs, the Fund pays a fee to the
Adviser which for the 1995 year was 0.00% of the Fund's average net assets after
the reduction by the Adviser. The Fund is not responsible for payment of the
Sub-Adviser's fee.

The Adviser has voluntarily agreed to reduce Fund expenses, including the
management fee (but not including the transfer agent fee and the 12b-1 fee), to
0.40% of the Fund's average daily net assets. The Adviser reserves the right to
terminate this voluntary reduction in the future.

The Fund pays distribution and service fees for marketing and sales-related
shareholder servicing.

The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). Under the Plans the Fund will pay distribution and service fees at
an aggregate annual rate of up to 0.30% of the average daily net assets
attributable to the Class A shares and an aggregate annual rate of up to 1.00%
of the average daily net assets attributable to the Class B shares. In each
case, up to 0.25% is for service expenses and the remaining amount is for
distribution expenses. The distribution fees will be used to reimburse John
Hancock Funds for its distribution expenses, including but not limited to: (i)
initial and ongoing sales compensation to Selling Brokers and others (including
affiliates of John Hancock Funds) engaged in the sale of Fund shares, (ii)
marketing, promotional and overhead expenses incurred in connection with the
distribution of Fund shares and (iii) with respect to Class B shares only,
interest expenses on unreimbursed distribution expenses. The service fees will
be used to compensate Selling Brokers and others for providing personal and
account maintenance services to shareholders. In the event John Hancock Funds is
not fully reimbursed for payments it makes or expenses it incurs under the Class
A Plan, these expenses will not be carried beyond one year from the date these
expenses were incurred. However, unreimbursed expenses under the Class B Plan
will be carried forward together with interest at a discount from the market
interest rates on the balance of these unreimbursed expenses. For the period
ended December 31, 1995 an aggregate of $807,110 of distribution expenses or
7.5% of the average net assets of the Class B shares of the Fund, was not
reimbursed or recovered by John Hancock Funds through the receipt of deferred
sales charges or 12b-1 fees in prior periods.

11
<PAGE>

Information on the Fund's total expenses is in the Fund's Financial Highlights
section of this Prospectus.

DIVIDENDS AND TAXES

Dividends. Dividends from the Fund's net investment income are generally
declared quarterly. Capital gains, if any, are generally declared annually.
Dividends are reinvested in additional shares of your class unless you elect the
option to receive cash. If you elect the cash option and the U.S. Postal Service
cannot deliver your checks, your election will be converted to the reinvestment
option. Because of the higher expenses associated with Class B shares, any
dividend on these shares will be lower than those on the Class A shares. See
"Share Price."

Taxation. Dividends from the Fund's net investment income, certain net foreign
currency gains, and net short-term capital gains are taxable to you as ordinary
income. Dividends from the Fund's net long-term capital gains are taxable as
long-term capital gain. These dividends are taxable whether you take them in
cash or reinvest in additional shares. Certain dividends paid in January of a
given year may be taxable as if you received them the previous December.
Corporate shareholders may be entitled to take the corporate dividends received
deduction for dividends received by the Fund from U.S. domestic corporations,
subject to certain restrictions under the Internal Revenue Code of 1986, as
amended (the "Code"). The Fund will send you a statement by January 31 showing
the tax status of the dividends you received for the prior year.

In addition to Federal taxes, you may be subject to state, local or foreign
taxes, with respect to your investment in and distributions from the Fund.
Non-U.S. shareholders and tax-exempt shareholders are subject to different tax
treatment not described above. You should consult your tax adviser for specific
advice.

12
<PAGE>

PERFORMANCE

The Fund may advertise its total return.

The Fund's total return shows the overall dollar or percentage change in value
of a hypothetical investment in the Fund, assuming the reinvestment of all
dividends. Cumulative total return shows the Fund's performance over a period of
time. Average annual total return shows the cumulative return of the Fund shares
divided over the number of years included in the period. Because average annual
total return tends to smooth out variations in the Fund's performance, you
should recognize that it is not the same as actual year-to-year results.

Total return calculations for Class A shares generally include the effect of
paying the maximum sales charge (except as shown in "The Fund's Financial
Highlights"). Investments at lower sales charges would result in higher
performance figures. Total return for the Class B shares reflect the deduction
of the applicable CDSC imposed on a redemption of shares held for the applicable
period (except as shown in "The Fund's Financial Highlights"). All calculations
assume that all dividends are reinvested at net asset value on the reinvestment
dates during the periods. The total return of Class A and Class B shares will be
calculated separately and, because each class is subject to different expenses,
the total return may differ with respect to that class for the same period. The
relative performance of the Class A and Class B shares will be affected by a
variety of factors, including the higher operating expenses attributable to the
Class B shares, whether the Fund's investment performance is better in the
earlier or later portions of the period measured and the level of net assets of
the classes during the period. The Fund will include the total return of Class A
and Class B shares in any advertisement or promotional materials including Fund
performance data. The value of Fund's shares, when redeemed, may be more or less
than their original cost. Total return is an historical calculation and is not
an indication of future performance. See "Factors to Consider in Choosing an
Alternative."

HOW TO BUY SHARES

Opening an account.

The minimum initial investment in Class A and B shares is $1,000 ($250 for group
investments and retirement plans). Complete the Account Application attached to
this Prospectus. Indicate whether you are purchasing Class A or Class B shares.
If you do not specify which class of shares you are purchasing, it will be
assumed that you are investing in Class A shares.
- --------------------------------------------------------------------------------
By Check

1. Make your check payable to John Hancock Investor Services Corporation
("Investor Services").

2. Deliver the completed application and check to your registered
representative or Selling Broker or mail it directly to Investor Services.

- --------------------------------------------------------------------------------
By Wire

1. Obtain an account number by contacting your registered representative or
Selling Broker or by calling 1-800-225-5291.

2. Instruct your bank to wire funds to:

First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Special Value Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered.

3. Deliver the completed application to your registered representative or
Selling Broker or mail it directly to Investor Services.

- --------------------------------------------------------------------------------

13
<PAGE>

Buying additional shares

- --------------------------------------------------------------------------------
Monthly Automatic Accumulation Program (MAAP)

1. Complete the "Automatic Investing" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which funds
may be drawn.

1. Complete the "Invest-By-Phone" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which funds
may be drawn. Note that in order to invest by phone, your account must be
in a bank or credit union that is a member of the Automated Clearing House
system (ACH).

2. After your authorization form has been processed, you may purchase
additional Class A or Class B shares by calling Investor Services toll-free
at 1-800-225-5291.

3. Give the Investor Services representative the name(s) in which your account
is registered, the Fund name, the class of shares you own, your account
number, and the amount you wish to invest.

4. Your investment normally will be credited to your account the business day
following your phone request.
- --------------------------------------------------------------------------------
By Check

2. Make your check payable to John Hancock Investor Services Corporation.

3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling Broker.
- --------------------------------------------------------------------------------
By Wire

Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Special Value Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered.

Other Requirements. All purchases must be made in U.S. dollars. Checks written
on foreign banks will delay purchases until U.S. funds are received and a
collection charge may be imposed. Shares of the Fund are priced at the offering
price based on the net asset value computed after John Hancock Funds receives
notification of the dollar equivalent from the Fund's custodian bank. Wire
purchases normally take two or more hours to complete and, to be accepted the
same day, must be received by 4:00 P.M., New York time. Your bank may charge a
fee to wire funds. Telephone transactions are recorded to verify information.
Certificates are not issued unless a request is made in writing to Investor
Services.
- --------------------------------------------------------------------------------

You will receive account statements that you should keep to help with your
personal recordkeeping.

14
<PAGE>

SHARE PRICE

The offering price of your shares is their net asset value plus a sales charge,
if applicable, which will vary with the purchase alternative you choose.

The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the net assets of each class by the number of outstanding
shares of that class. The NAV of each class can differ. Securities in the Fund's
portfolio are valued on the basis of market quotations, valuations provided by
independent pricing services, or at fair value as determined in good faith
according to procedures approved by the Trustees. Short-term debt investments
maturing within 60 days are valued at amortized cost, which the Trustees have
determined approximates market value. Foreign securities are valued on the basis
of quotations from the primary market in which they are traded and are
translated from the local currency into U.S. dollars using current exchange
rates. If accurate quotations are not readily available, or the value has been
materially affected by events occurring after the closing of a foreign market,
assets are valued by a method that the Trustees believe accurately reflects fair
value. The NAV is calculated once daily as of the close of regular trading on
the New York Stock Exchange (the "Exchange") (generally at 4:00 P.M., New York
time) on each day that the Exchange is open.

Initial Sales Charge Alternative--Class A Shares. The offering price you pay
for Class A shares of the Fund equals the NAV plus a sales charge as follows:

Sales Sales Combined
Charge Charge Reallowance Reallowance
as a as a and Service to Selling
Percentage Percentage Fee as a Broker as a
Amount Invested of of the Percentage of Percentage
(Including Sales Offering Amount Offering of Offering
Charge) Price Invested Price(+) Price(*)
- --------------------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Less than $50,000 5.00% 5.26% 4.25% 4.01%
$50,000 to $99,999 4.50% 4.71% 3.75% 3.51%
$100,000 to $249,999 3.50% 3.63% 2.85% 2.61%
$250,000 to $499,999 2.50% 2.56% 2.10% 1.86%
$500,000 to $999,999 2.00% 2.04% 1.60% 1.36%
$1,000,000 and over 0.00%(**) 0.00%(**) (***) 0.00%(***)
</TABLE>

(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales charge.
A Selling Broker to whom substantially the entire sales charge is reallowed
may be deemed to be an underwriter under the Securities Act of 1933.

(**) No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a CDSC may be imposed in the event of certain
redemption transactions made within one year of purchase.

(***)John Hancock Funds may pay a commission and the first year's service fee
(as described in (+) below) to Selling Brokers who initiate and are
responsible for purchases of $1 million or more in the aggregate as
follows: 1% on sales to $4,999,999, 0.50% on the next $5 million and 0.25%
on $10 million and over.

15
<PAGE>

(+) At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance, in an amount equal to 0.25% of the net
assets invested in the Fund. Thereafter, it pays the service fee
periodically in arrears in an amount up to 0.25% of the Fund's average
annual net assets. Selling Brokers receive the fee as compensation for
providing personal and account maintenance services to shareholders.

Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
Class A shares of the Fund.

John Hancock Funds will pay certain affiliated Selling Brokers at an annual rate
of up to 0.05% of the daily net assets of accounts attributable to these
brokers.

Under certain circumstances described below, investors in Class A shares may be
entitled to pay reduced sales charges. See "Qualifying For a Reduced Sales
Charge".

Contingent Deferred Sales Charge--Investments of $1 million or more in Class A
Shares. Purchases of $1 million or more of Class A shares will be made at net
asset value with no initial sales charge, but if the shares are redeemed within
12 months after the end of the calendar month in which the purchase was made
(the CDSC period), a CDSC will be imposed. The rate of the CDSC will depend on
the amount invested as follows:

Amount Invested CDSC Rate
--------------- ---------
$1 million to $4,999,999 1.00%
Next $5 million to $9,999,999 0.50%
Amounts of $10 million and over 0.25%

Existing full service clients of John Hancock Mutual Life Insurance Company
(the "Life Company") who were group annuity contract holders as of September
1, 1994, and participant directed defined contribution plans with at least
100 eligible employees at the inception of the Fund account, may purchase
Class A shares with no initial sales charge. However if the shares are
redeemed within 12 months after the end of the calendar year in which the
purchase was made, a CDSC will be imposed at the above rate.

The CDSC will be assessed on an amount equal to the lesser of the current
market value or the original purchase cost of the redeemed Class A shares
redeemed. Accordingly, no CDSC will be imposed on increases in account value
above the initial purchase price, including any dividends which have been
reinvested in additional Class A shares.

In determining whether a CDSC applies to a redemption, the calculation will
be determined in a manner that results in the lowest possible rate being
charged. Therefore, it will be assumed that the redemption is first made from
any shares in your account that are not subject to the CDSC. The CDSC is
waived on redemption in certain circumstances. See the discussion under
"Waiver of Contingent Deferred Sales Charges."

16
<PAGE>

You may qualify for a reduced sales charge on your investment in Class A shares.

Qualifying For a Reduced Sales Charge. If you invest more than $50,000 in
Class A shares of the Fund or a combination of funds in the John Hancock
funds (except money market funds), you may qualify for a reduced sales charge
on your investments in Class A shares through a LETTER OF INTENTION. You may
also be able to use the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE to
take advantage of the value of your previous investments in Class A shares of
the John Hancock funds in meeting the breakpoints for a reduced sales charge.
For the COMBINATION PRIVILEGE and ACCUMULATION PRIVILEGE, the applicable
sales charge will be based on the total of:

1. Your current purchase of Class A shares of the Fund;

2. The net asset value (at the close of business on the previous day) of (a)
all Class A shares of the Fund you hold, and (b) all Class A shares of any
other John Hancock fund you hold; and

3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."

Example:
If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000 and, subsequently, invested $30,000 in Class A shares of the Fund, the
sales charge on this subsequent investment would be 4.50% and not 5.00%. This is
the rate that would otherwise be applicable to investments of less than $50,000.
See "Initial Sales Charge Alternative--Class A Shares."

Class A shares may be available without a sales charge to certain individuals
and organizations.

If you fall under one of the following categories, you may purchase Class A
shares of the Fund without paying a sales charge:

[bullet] A Trustee or officer of the Trust; a Director or officer of the
Advisers and their affiliates or Selling Brokers; employees or sales
representatives of any of the foregoing; retired officers, employees
or Directors of any of the foregoing; a member of the immediate
family of any of the foregoing; or any Fund, pension, profit sharing
or other benefit plan for the individuals described above.

[bullet] Any state, county, city or any instrumentality, department,
authority, or agency of these entities which is prohibited by
applicable investment laws from paying a sales charge or commission
when it purchases shares of any registered investment management
company.*

[bullet] A bank, trust company, credit union, savings institution or other
type of depository institution, its trust departments or common
trust funds if it is purchasing $1 million or more for
non-discretionary customers or accounts.*

[bullet] A broker, dealer, financial planner, consultant or registered
investment adviser that has entered into an agreement with John
Hancock Funds providing specifically for the use of Fund shares in
fee-based investment products or services made available to their
clients.

[bullet] A former participant in an employee benefit plan with John Hancock
Funds, when he or she withdraws from his or her plan and transfers
any or all of his or her plan distributions directly to the Fund.

[bullet] A member of an approved affinity group financial services plan.*

- ----------
*For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.

17
<PAGE>

Class A shares may be purchased without a sales charge by clients of the
Sub-Adviser if funds are transferred directly to the Fund from accounts managed
by the Sub-Adviser.

Contingent Deferred Sales Charge Alternative--Class B Shares. Class B shares are
offered at net asset value per share without an initial sales charge, so that
your entire initial investment will go to work at the time of purchase. However,
Class B shares redeemed within six years of purchase will be subject to a CDSC
at the rates set forth below. The charge will be assessed on an amount equal to
the lesser of the current market value or the original purchase cost of the
shares being redeemed. Accordingly, you will not be assessed a CDSC on increases
in account value above the initial purchase price, including shares derived from
dividend reinvestments.

In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that your redemption comes first from shares you have held
beyond the six-year CDSC redemption period or those you acquired through
dividend reinvestment, and next from the shares you have held the longest during
the six-year period. The CDSC is waived on redemptions in certain circumstances.
See the discussion "Waiver of Contingent Deferred Sales Charge" below.

Example:

(bullet) Proceeds of 50 shares redeemed at $12 per share $ 600
(bullet) Minus proceeds of 10 shares not subject to CDSC because
they were acquired through dividend reinvestment (10 x $12) -120
(bullet) Minus appreciation on remaining shares, also not subject
to CDSC (40 x $2) -80
-----
(bullet) Amount subject to CDSC $ 400

Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds uses
them to defray its expenses related to providing the Fund with distribution
services connected to the sale of the Class B shares, such as compensating
selected Selling Brokers for selling these shares. The combination of the CDSC
and the distribution and service fees makes it possible for the Fund to sell
Class B shares without an initial sales charge.

The amount of the CDSC, if any, will vary depending on the number of years from
the time you purchase your Class B shares until the time you redeem them. Solely

18
<PAGE>

for purposes of determining this holding period, any payments you make during
the month will be aggregated and deemed to have been made on the last day of the
month.

Year In Which Contingent Deferred Sales
Class B Shares Redeemed Charge As a Percentage of
Following Purchase Dollar Amount Subject to CDSC
- ---------------------------- --------------------------------
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None

A commission equal to 3.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for the provision of
personal and account maintenance services to shareholders during the twelve
months following the sale, and thereafter the service fee is paid in arrears.

Under certain circumstances, the CDSC on Class B share redemptions will be
waived.

Waiver of Contingent Deferred Sales Charge. The CDSC will be waived on
redemptions of Class B shares and of Class A shares that are subject to CDSC,
unless indicated otherwise, in these circumstances:

[bullet] Redemptions of Class B shares made under a Systematic Withdrawal
Plan (see "How To Redeem Shares"), as long as your annual
redemptions do not exceed 10% of your account value at the time you
established your Systematic Withdrawal Plan and 10% of the value of
your subsequent investments (less redemptions) in that account at
the time you notify Investor Services. This waiver does not apply to
Systematic Withdrawal Plan redemptions of Class A shares that are
subject to a CDSC.

[bullet] Redemptions made to effect distributions from an Individual
Retirement Account either before or after age 59-1/2, as long as the
distributions are based on your life expectancy or the
joint-and-last survivor life expectancy of you and your beneficiary.
These distributions must be free from penalty under the Code.

[bullet] Redemptions made to effect mandatory distributions under the Code
after age 70-1/2 from a tax-deferred retirement plan.

[bullet] Redemptions made to effect distributions to participants or
beneficiaries from certain employer-sponsored retirement plans,
including those qualified under Section 401(a) of the Code,
custodial accounts under Section 403(b)(7) of the Code and deferred
compensation plans under Section 457 of the Code. The waiver also
applies to certain returns of excess contributions made to these
plans. In all cases, the distributions must be free from penalty
under the Code.

[bullet] Redemptions due to death or disability.

[bullet] Redemptions made under the Reinvestment Privilege, as described in
"Additional Services and Programs" of this Prospectus.

[bullet] Redemptions made pursuant to the Fund's right to liquidate your
account if you own fewer than 50 shares.

[bullet] Redemptions made under certain liquidation, merger or acquisition
transactions involving other investment companies or personal
holding companies.

19
<PAGE>

[bullet] Redemptions from certain IRA and retirement plans that purchased
shares prior to October 1, 1992.

[bullet] If you qualify for a CDSC waiver under one of these situations, you
must notify Fund Services either directly or through your Selling
Broker at the time you make your redemption. The waiver will be
granted once Investor Services has confirmed that you are entitled
to the waiver.

Conversion of Class B Shares. Your Class B shares, and an appropriate portion
of reinvested dividends on those shares, will be converted into Class A
shares automatically. This will occur no later than the month following eight
years after the shares were purchased, and will result in lower annual
distribution fees. If you exchanged Class B shares into this Fund from
another John Hancock fund, the calculation will be based on the time you
purchased the shares in the original fund. The Fund has been advised that the
conversion of Class B shares to Class A shares should not be taxable for
Federal income tax purposes, nor should it change your tax basis or tax
holding period for the converted shares.

HOW TO REDEEM SHARES

To assure acceptance of your redemption request, please follow these procedures.

You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next NAV calculated after your redemption request is
received in good order by Investor Services less any applicable CDSC. The Fund
may hold payment until it is reasonably satisfied that investments recently made
by check or Invest-by-Phone have been collected (which may take up to 10
calendar days).

Once your shares are redeemed, the Fund generally sends you payment on the
next business day. When you redeem your shares, you may realize a taxable
gain or loss depending on the difference between what you paid for your
shares and what you receive for them, subject to certain tax rules. Under
unusual circumstances, the Fund may suspend redemptions or postpone payment
for up to three business days or longer, as permitted by Federal securities
laws.

- --------------------------------------------------------------------------------

By Telephone All Fund shareholders are eligible automatically for the
telephone redemption privilege. Call 1-800-225-5291, from
8:00 A.M. to 4:00 P.M. (New York time), Monday through
Friday, excluding days on which the New York Stock Exchange
is closed. Investor Services employs the following
procedures to confirm that instructions received by
telephone are genuine. Your name, the account number,
taxpayer identification number applicable to the account and
other relevant information may be requested. In addition,
telephone instructions are recorded.

You may redeem up to $100,000 by telephone, but the address
on the account must not have changed for the last 30 days. A
check will be mailed to the exact name(s) and address shown
on the account.

If reasonable procedures, such as those described above, are
not followed, the Fund may be liable for any loss due to
unauthorized or fraudulent telephone instructions. In all
other cases, neither the Fund nor Investor Services will be
liable for any loss or expense for acting upon telephone
instructions made according to with the telephone
transaction procedures mentioned above.

Telephone redemption is not available for IRAs or other
tax-qualified retirement plans or shares of the Fund that
are in certificate form.
- --------------------------------------------------------------------------------

20
<PAGE>
- --------------------------------------------------------------------------------

During periods of extreme economic conditions or market
changes, telephone requests may be difficult to implement
due to a large volume of calls. During these times, you
should consider placing redemption requests in writing or
using EASI-Line. EASI-Line's telephone number is
1-800-338-8080.

- --------------------------------------------------------------------------------
By Wire If you have a telephone redemption form on file with the
Fund, redemption proceeds of $1,000 or more can be wired on
the next business day to your designated bank account and a
fee (currently $4.00) will be deducted. You may also use
electronic funds transfer to your assigned bank account and
the funds are usually collectible after two business days.
Your bank may or may not charge for this service.
Redemptions of less than $1,000 will be sent by check or
electronic funds transfer.
This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
that is included with Prospectus.
- --------------------------------------------------------------------------------

In Writing Send a stock power or "letter of instruction" specifying the
name of the Fund, the dollar amount or the number of shares
to be redeemed, your name, class of shares, your account
number and the additional requirements listed below that
apply to your particular account.

- --------------------------------------------------------------------------------
Type of Registration Requirements
- -------------------- ------------
Individual, Joint Tenants, Sole A letter of instruction signed (with
Proprietorship, Custodial titles where applicable) by all persons
(Uniform Gifts or Transfer to authorized to sign for the account,
Minors Act), General Partners. exactly as it is registered with the
signature(s) guaranteed.

Corporation, Association A letter of instruction and a corporate
resolution, signed by person(s)
authorized to act on the account with
the signature(s) guaranteed.

Trusts A letter of instruction signed by the
Trustee(s) with a signature guarantee.
(If the Trustee's name is not
registered on your account, also
provide a copy of the trust document,
certified within the last 60 days.)

If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.

- --------------------------------------------------------------------------------
Who may guarantee your signature.

A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less, John
Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Investor Services: (i) a bank; (ii) a securities
broker or dealer, including a government or municipal securities broker or
dealer, that is a member of a clearing corporation or meets certain net capital
requirements; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national securities exchange, a registered securities exchange or a clearing
agency.

- --------------------------------------------------------------------------------

Additional information about redemptions.

Through Your Broker Your broker may be able to initiate the redemption.
Contact your broker for instructions.
- --------------------------------------------------------------------------------

21
<PAGE>

- --------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your stock
power or a letter of instruction. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares. You may not
redeem certificated shares by telephone.

Due to the proportionately high cost of maintaining smaller accounts, the Fund
reserves the right to redeem at net asset value all shares in an account which
holds fewer than 50 shares (except accounts under retirement plans) and to mail
the proceeds to the shareholder, or the transfer agent may impose an annual fee
of $10.00. No account will be involuntarily redeemed or any additional fee
imposed, if the value of the account is in excess of the Fund's minimum initial
investment. No CDSC will be imposed on involuntary redemptions of shares.
- --------------------------------------------------------------------------------

Shareholders will be notified before these redemptions are to be made or this
fee is imposed, and will have 30 days to purchase additional shares to bring
their account balance up to the required minimum. Unless the number of shares
acquired by additional purchase and any dividend reinvestments, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.

- --------------------------------------------------------------------------------
ADDITIONAL SERVICES AND PROGRAMS

Exchange Privilege

You may exchange shares of the Fund for shares of the Fund for shares of the
same class of another John Hancock fund.

Exchanges between funds that are not subject to a CDSC are based on their
respective net asset values. No sales charge or transaction charge is imposed.
Class B shares of the Fund that are subject to a CDSC may be exchanged into
Class B shares of another John Hancock fund without incurring the CDSC; however,
these shares will be subject to the CDSC schedule of the shares acquired (except
exchanges into John Hancock Short-Term Strategic Income Fund, John Hancock
Intermediate Maturity Government Fund and John Hancock Limited-Term Government
Fund will be subject to the initial Fund's CDSC). For purposes of computing the
CDSC payable upon redemption of shares acquired in an exchange, the holding
period of the original shares is added to the holding period of the shares
acquired in an exchange. However, if you exchange Class B shares purchased prior
to January 1, 1994 for Class B shares of any other John Hancock fund, you will
be subject to the CDSC schedule that was in effect at your initial purchase
date.

You may exchange Class B shares of the Fund into shares of a John Hancock
money market fund at net asset value. However, you will continue to be
subject to a CDSC upon redemption.

The Fund reserves the right to require you to keep previously exchanged
shares (and reinvested dividends) in the Fund for 90 days before you are
permitted to execute a new exchange. The Fund may also terminate or alter the
terms of the exchange privilege upon 60 days' notice to shareholders.

22
<PAGE>

An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares in another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.

When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.

Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely. The
Fund may also temporarily or permanently terminate the exchange privilege for
any person who makes seven or more exchanges out of the Fund per calendar year.
Accounts under common control or ownership will be aggregated for this purpose.
Although the Fund will attempt to give prior notice whenever it is reasonably
able to do so, it may impose these restrictions at any time.

By Telephone

2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
representative.

3. Your name, the account number, taxpayer identification number applicable to
the account and other relevant information may be requested. In addition,
telephone instructions are recorded.

In Writing

1. In a letter request an exchange and list the following:

--the name and class of the fund whose shares you currently own
--your account number
--the name(s) in which the account is registered
--the name of the fund in which you wish your exchange to be invested
--the number of shares, all shares or the dollar amount you wish to
exchange

Sign your request exactly as the account is registered.

23
<PAGE>

2. Mail the request and information to:

John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116

Reinvestment Privilege

If you redeem shares of the Fund, you may be able to reinvest the proceeds in
shares of this Fund or another John Hancock fund without paying an additional
sales charge.

1. You will not be subject to a sales charge on Class A shares that you
reinvest in a John Hancock fund that is otherwise subject to a sales
charge, as long as you reinvest within 120 days from the redemption date.
If you paid a CDSC upon a redemption, you may reinvest at net asset value
in the same class of shares from which you redeemed within 120 days. Your
account will be credited with the amount of the CDSC that was charged
previously, and the reinvested shares will continue to be subject to a
CDSC. For purposes of computing the CDSC payable upon a subsequent
redemption, the holding period of the shares you acquired through
reinvestment will include the holding period of the redeemed shares.

2. Any portion of your redemption may be reinvested in the Fund shares or in
shares of other John Hancock funds, subject to the minimum investment limit
of that fund.

3. To reinvest, you must notify Investor Services in writing. Include the
Fund(s) name, account number and class from which your shares were
originally redeemed.

Systematic Withdrawal Plan

You can pay routine bills from your account or make periodic disbursements from
your retirement account to comply with IRS regulations.

1. You can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You
can also obtain the application by calling your registered representative
or by calling 1-800-225-5291.

2. To be eligible, you must have at least $5,000 in your account.

3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis, to yourself or any other
designated payee.

4. There is no limit on the number of payees you may authorize, but all
payments must be made at the same time or intervals.

5. It is not advantageous to maintain a Systematic Withdrawal Plan
concurrently with purchases of additional Class A or Class B shares because
you may be subject to an initial sales charge on your purchases of Class A
shares or to a CDSC on your redemptions of Class B shares. In addition,
your redemptions are taxable events.

6. Redemptions will be discontinued if the U.S. Postal service cannot deliver
your checks, or if deposits to a bank account are returned for any reason.

Monthly Automatic Accumulation Program (MAAP)

You can make automatic investments and simplify your investing.

1. You can authorize an investment to be withdrawn automatically each month from
your bank for investment in Fund shares under the "Automatic Investing" and
"Bank Information" sections of the Account Privileges Application.

24
<PAGE>

2. You can also authorize automatic investing through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.

3. You can terminate your Monthly Automatic Accumulation Program at any time.

4. There is no charge to you for this program, and there is no cost to the
Fund.

5. If you have payments withdrawn from a bank account and we are notified that
the account has been closed, your withdrawals will be discontinued.

Group Investment Program

Organized groups of at least four persons may establish accounts.

2. The initial aggregate investment of all participants in the group must be
at least $250.

3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at
any time.

Retirement Plans

1. You may use the Fund for various types of qualified retirement plans,
including Individual Retirement Accounts, Keogh Plans (H.R. 10), Pension
and Profit-Sharing Plans (including 401(k) plans), Tax Sheltered Annuity
Retirement Plans (403(b) or TSA plans) and Section 457 Plans.

2. The initial investment minimum or aggregate minimum for any of these plans
is $250. However, accounts being established as group IRA, SEP, SARSEP,
TSA, 401(k) and Section 457 Plans will be accepted without an initial
minimum investment.

25
<PAGE>

(Notes)

<PAGE>

(Notes)

<PAGE>

JOHN HANCOCK SPECIAL VALUE FUND
Investment Adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

Sub-Adviser
NM Capital Management Inc.
6501 Americas Parkway, Suite 950
Albuquerque, N.M. 87110-5372

Principal Distributor
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

Custodian
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110

Transfer Agent
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116

Independent Auditors
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For: Service Information
Telephone Exchange call 1-800-225-5291
Telephone Redemption
Investment-by-Phone
TDD call 1-800-554-6713

JHD-3700P 4/96

JOHN HANCOCK
SPECIAL VALUE
FUND

Class A and Class B Shares
Prospectus
April 1, 1996

A mutual fund seeking capital appreciation with income as a secondary
consideration.

101 Huntington Avenue
Boston, Massachusetts 02199-7603
Telephone 1-800-225-5291

[Recycle logo] Printed on recycled paper using soybean ink

<PAGE>

JOHN HANCOCK SPECIAL VALUE FUND
CLASS A AND B SHARES
Statement of Additional Information

April 1, 1996

This Statement of Additional Information provides information about
John Hancock Special Value Fund (the "Fund") in addition to the information that
is contained in the Fund's Class A and Class B Prospectus, (the "Prospectus"),
each dated April 1, 1996.

This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus, a copy of which can be obtained free
of charge by writing or telephoning:

John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-800-225-5291

TABLE OF CONTENTS

Statement of Additional
Information
Page

ORGANIZATION OF THE FUND 2
INVESTMENT OBJECTIVE AND POLICIES 2
CERTAIN INVESTMENT PRACTICES 3
INVESTMENT RESTRICTIONS 11
THOSE RESPONSIBLE FOR MANAGEMENT 14
INVESTMENT ADVISORY AND OTHER SERVICES 20
DISTRIBUTION CONTRACT 23
NET ASSET VALUE 24
INITIAL SALES CHARGE ON CLASS A SHARES 25
DEFERRED SALES CHARGE ON CLASS B SHARES 27
SPECIAL REDEMPTIONS 27
ADDITIONAL SERVICES AND PROGRAMS 28
DESCRIPTION OF THE FUND'S SHARES 29
TAX STATUS 30
CALCULATION OF PERFORMANCE 34
BROKERAGE ALLOCATION 35
TRANSFER AGENT SERVICES 37
CUSTODY OF PORTFOLIO 37
INDEPENDENT AUDITORS 37
FINANCIAL STATEMENTS 38

ORGANIZATION OF THE FUND

John Hancock Special Value Fund (the "Fund") is organized as a
separate, diversified series of John Hancock Capital Series (the "Trust"), an
open-end management investment company which is organized as a Massachusetts
business trust under the laws of The Commonwealth of Massachusetts. The Trust
was organized in 1984 by John Hancock Advisers, Inc. (the "Adviser") as the
successor to John Hancock Growth Fund, Inc., a Delaware corporation organized in
1968 by the John Hancock Mutual Life Insurance Company (the "Life Insurance
Company"), a Massachusetts life insurance company chartered in 1862 with
national headquarters at John Hancock Place, Boston, Massachusetts. Prior to
October 1, 1993 the Trust was known as "John Hancock Growth Fund."

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to seek capital appreciation
with income a secondary consideration. The Fund will seek to achieve its
objective by investing in securities, primarily equity securities, that are
undervalued compared to alternative equity investments. There can be no
assurance that the objective of the Fund will be realized. See "Investment
Objective and Policies" in the Fund's Prospectus.

The equity securities in which the Fund will invest include common
stocks, preferred stocks, convertible debt securities and warrants of U.S. and
foreign issuers. In selecting equity securities for the Fund, the Adviser and NM
Capital Management, Inc. (the "Sub-Adviser" and together with the Adviser, the
"Advisers") emphasize issuers whose equity securities trade at market to book
value ratios lower than comparable issuers or the Standard & Poor's Composite
Index. The Fund's portfolio securities will also include equity securities
considered by the Advisers to have the potential for capital appreciation due to
potential recognition of earnings power or asset value which is not fully
reflected in such securities current market value. The Advisers attempt to
identify investments which possess characteristics which will tend to limit
sustained downside price risk, generally referred to as the "margin of safety"
concept. The Advisers also consider an issuer's financial strength, competitive
position, projected future earnings and dividends and other investment criteria.

The Fund's investment policy reflects the Advisers' belief that while
the securities markets tend to be efficient, sufficiently persistent price
anomalies exist which the strategically disciplined active equity manager can
attempt to exploit in seeking to achieve an above average rate of return. Based
on this premise, the Advisers have adopted a strategy of investing in low market
to book value, out of favor, stocks.

The Fund's investments may include securities of both large, widely
traded companies and smaller, less well known issuers. Higher risks are often
associated with investments in companies with smaller market capitalization's.
These companies may have limited product lines, markets and financial resources,
or they may be dependent upon smaller or inexperienced management groups. In
addition, trading volume of such securities may be limited, and historically the
market price for such securities has been more volatile than securities of
companies with greater

2
<PAGE>

capitalization. However, securities of companies with smaller capitalization may
offer greater potential for capital appreciation since they may be overlooked
and thus undervalued by investors.

CERTAIN INVESTMENT PRACTICES

When-Issued Securities. "When-issued" refers to securities whose terms are
available and for which a market exists, but which have not yet been issued. No
payment is made with respect to a when-issued transaction, until delivery is
due, often a month or more after the purchase.

The Fund may engage in when-issued transactions with respect to
securities purchased for its portfolio in order to obtain an advantageous price
and yield at the time of the transactions. When the Fund engages in a
when-issued transaction, it relies on the seller to consummate the transaction.
The failure of the issuer or seller to consummate the transaction may result in
the Fund's losing the opportunity to obtain a price and yield considered to be
advantageous. On the date the Fund enters into an agreement to purchase
securities on a when-issued basis, the Fund will segregate in a separate account
cash or liquid, high grade debt securities (i.e., securities rated in one of the
top three ratings categories by Moody's Investors Service, Inc. or Standard &
Poor's Ratings Group) equal in value to the when-issued commitment. These assets
will be valued daily at market, and additional cash or liquid, high grade debt
securities will be segregated in a separate account to the extent that the total
value of the assets in the account declines below the amount of the when-issued
commitment.

Repurchase Agreements. A repurchase agreement is a contract under which the Fund
would acquire a security for a relatively short period (usually not more than 7
days) subject to the obligation of the seller to repurchase and the Fund to
resell such security at a fixed time and price (representing the Fund's cost
plus interest). The Fund will enter into repurchase agreements only with member
banks of the Federal Reserve System and with "primary dealers" in U.S.
Government securities. The Advisers will continuously monitor the
creditworthiness of the parties with whom the Fund enters into repurchase
agreements. The Fund has established a procedure providing that the securities
serving as collateral for each repurchase agreement must be delivered to the
Fund's custodian either physically or in book-entry form and that the collateral
must be marked to market daily to ensure that each repurchase agreement is fully
collateralized at all times. In the event of bankruptcy or other default by a
seller of a repurchase agreement, the Fund could experience delays in
liquidating the underlying securities and could experience losses, including the
possible decline in the value of the underlying securities during the period
while the Fund seeks to enforce its rights thereto, possible subnormal levels of
income and lack of access to income during this period, and the expense of
enforcing its rights.

Restricted Securities. The Fund may invest in restricted securities eligible for
resale to certain institutional investors pursuant to Rule 144A under the
Securities Act of 1933 and foreign securities acquired in accordance with
Regulation S under the Securities Act of 1933. The Fund will not invest more
than 15% of its net assets in illiquid investments, which include repurchase
agreements maturing in more than seven days, OTC options, securities that are
not readily marketable and restricted securities. However, if the Trustees
determines, based upon a continuing review of the trading markets for specific
Rule 144A securities, that they are liquid

<PAGE>

then such securities may be purchased without regard to the 15% limit. The
Trustees may adopt guidelines and delegate to the Advisers the daily function of
determining and monitoring the liquidity of restricted securities. The Trustees,
however, will retain sufficient oversight and be ultimately responsible for the
determinations. The Trustees will carefully monitor the Fund's investments in
these securities, focusing on such important factors, among others, as
valuation, liquidity and availability of information. This investment practice
could have the effect of increasing the level of illiquidity in the Fund if that
qualified institutional buyers become for a time uninterested in purchasing
these restricted securities.

Financial Futures Contracts. The Fund may hedge its portfolio by selling or
purchasing financial futures contracts as an offset against the effect of
expected changes in interest rates or in security or foreign currency values.
Although other techniques could be used to reduce the Fund's exposure to
interest rate, securities market and currency fluctuations, the Fund may be able
to hedge its exposure more effectively and at a lower cost by using financial
futures contracts. The Fund will enter into financial futures contracts for
hedging purposes and for speculative purposes to the extent permitted by
regulations of the Commodity Futures Trading Commission ("CFTC").

Financial futures contracts have been designed by boards of trade which
have been designated "contract markets" by the CFTC. Futures contracts are
traded on these markets in a manner that is similar to the way a stock is traded
on a stock exchange. The boards of trade, through their clearing corporations,
guarantee that the contracts will be performed. It is expected that if new types
of financial futures contracts are developed and traded the Fund may engage in
transactions in such contracts.

Although some financial futures contracts by their terms call for
actual delivery or acceptance of financial instruments, in most cases the
contracts are closed out prior to delivery by offsetting purchases or sales of
matching financial futures contracts (same exchange, underlying security or
currency and delivery month). Other financial futures contracts, such as futures
contracts on securities indices, by their terms call for cash settlements. If
the offsetting purchase price is less than the Fund's original sale price, the
Fund realizes a gain, or if it is more, the Fund realizes a loss. Conversely, if
the offsetting sale price is more than the Fund's original purchase price, the
Fund realizes a gain, or if it is less, the Fund realizes a loss. The Fund's
transaction costs must also be included in these calculations. The Fund will pay
a commission in connection with each purchase or sale of financial futures
contracts, including a closing transaction. For a discussion of the Federal
income tax considerations of trading in financial futures contracts, see the
information under the caption "Tax Status" below.

At the time the Fund enters into a financial futures contract, it is
required to deposit with its custodian a specified amount of cash or U.S.
Government securities, known as "initial margin," ranging upward from 1.1% of
the value of the financial futures contract being traded. The margin required
for a financial futures contract is set by the board of trade or exchange on
which the contract is traded and may be modified during the term of the
contract. The initial margin is in the nature of a performance bond or good
faith deposit on the financial futures contract which is returned to the Fund
upon termination of the contract, assuming all contractual obligations have been
satisfied. The Fund expects to earn interest income on its initial margin
deposits. Each day,

<PAGE>

the futures contract is valued at the official settlement price of the board of
trade or exchange on which it is traded. Subsequent payments, known as
"variation margin," to and from the broker are made on a daily basis as the
market price of the financial futures contract fluctuates. This process is known
as "mark to market." Variation margin does not represent a borrowing or lending
by the Fund but is instead a settlement between the Fund and the broker of the
amount one would owe the other if the financial futures contract expired. In
computing net asset value, the Fund will mark to the market its open financial
futures positions.

Successful hedging depends on the extent of correlation between the
market for the underlying securities and the futures contract market for those
securities. There are several factors that will probably prevent this
correlation from being perfect, and even a correct forecast of general interest
rate, securities market or currency rates may not result in a successful hedging
transaction. There are significant differences between the securities or
currency markets and the futures markets which could create an imperfect
correlation between the markets and which could affect the success of a given
hedge. The degree of imperfection of correlation depends on circumstances such
as: variations in speculative market demand for financial futures and debt and
equity securities, including technical influences in futures trading and
differences between the financial instruments being hedged and the instruments
underlying the standard financial futures contracts available for trading in
such respects as interest rate levels, maturities and creditworthiness of
issuers. The degree of imperfection may be increased where the underlying debt
securities are lower-rated, and, thus, subject to greater fluctuation in price
than higher-rated securities.

A decision as to whether, when and how to hedge involves the exercise
of skill and judgment, and even a well-conceived hedge may be unsuccessful to
some degree because of market behavior or unexpected interest rate, securities
market or currency trends. The Fund will bear the risk that the price of the
securities being hedged will not move in complete correlation with the price of
the futures contracts used as a hedging instrument. Although the Advisers
believe that the use of financial futures contracts will benefit the Fund, an
incorrect prediction could result in a loss on both the hedged securities or
currency in the Fund's portfolio and the futures position so that the Fund's
return might have been better had hedging not been attempted. However, in the
absence of the ability to hedge, the Advisers might have taken portfolio actions
in anticipation of the same market movements with similar investment results
but, presumably, at greater transaction costs. The low margin deposits required
for futures transactions permit an extremely high degree of leverage. A
relatively small movement in the price of instruments underlying a futures
contract may result in losses or gains in excess of the amount invested.

Futures exchanges may limit the amount of fluctuation permitted in
certain futures contract prices during a single trading day. The daily limit
establishes the maximum amount the price of a futures contract may vary either
up or down from the previous day's settlement price, at the end of the current
trading session. Once the daily limit has been reached in a futures contract
subject to the limit, no more trades may be made on that day at a price beyond
that limit. The daily limit governs only price movements during a particular
trading day and, therefore, does not limit potential losses because the limit
may work to prevent the liquidation of unfavorable positions. For example,
futures prices have occasionally moved to the daily limit for several

<PAGE>

consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses.

Finally, although the Fund engages in financial futures transactions
only on boards of trade or exchanges where there appears to be an adequate
secondary market, there is no assurance that a liquid market will exist for a
particular futures contract at any given time. The liquidity of the market
depends on participants closing out contracts rather than making or taking
delivery. In the event participants decide to make or take delivery, liquidity
in the market could be reduced. In addition, the Fund could be prevented from
executing a buy or sell order at a specified price or closing out a position due
to limits on open positions or daily price fluctuation limits imposed by the
exchanges or boards of trade. If the Fund cannot close out a position, it will
be required to continue to meet margin requirements until the position is
closed.

Options on Financial Futures Contracts. The Fund may purchase and write call and
put options on futures contracts. An option on a futures contract gives the
purchaser the right, in return for the premium paid, to assume a position in a
futures contract at a specified exercise price at any time during the period of
the option. Upon exercise, the writer of the option delivers the futures
contract to the holder at the exercise price. The Fund would be required to
deposit with its custodian initial and variation margin with respect to put and
call options on futures contracts written by it. Options on futures contracts
involve risks similar to the risks relating to transactions in financial futures
contracts. Also, an option purchased by the Fund may expire worthless, in which
case the Fund would lose the premium it paid for the option.

Other Considerations. The Fund will engage in futures transactions for bona fide
hedging or speculative purposes to the extent permitted by CFTC regulations. The
Fund will determine that the price fluctuations in the futures contracts and
options on futures used for hedging purposes are substantially related to price
fluctuations in securities held by the Fund or which it expects to purchase.
Except as stated below, the Fund's futures transactions will be entered into for
traditional hedging purposes -- i.e., futures contracts will be sold to protect
against a decline in the price of securities that the Fund owns, or futures
contracts will be purchased to protect the Fund against an increase in the price
of securities or the currency in which they are denominated it intends to
purchase. As evidence of this hedging intent, the Fund expects that on 75% or
more of the occasions on which it takes a long futures or option position
(involving the purchase of futures contracts), the Fund will have purchased, or
will be in the process of purchasing, equivalent amounts of related securities
or assets denominated in the related currency in the cash market at the time
when the futures or, option position is closed out. However, in particular
cases, when it is economically advantageous for a Fund to do so, a long futures
position may be terminated or an option may expire without the corresponding
purchase of securities or other assets.

As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits the Fund to elect to comply with a
different test, under which the aggregate initial margin and premiums required
to establish speculative positions in futures contracts and options on futures
will not exceed 5% of the net asset value of the Fund's portfolio, after taking
into account unrealized profits and losses on any such positions and excluding
the amount by

<PAGE>

which such options were in-the-money at the time of purchase. The Fund will
engage in transactions in futures contracts only to the extent such transactions
are consistent with the requirements of the Internal Revenue Code for
maintaining its qualification as a regulated investment company for federal
income tax purposes.

When the Fund purchases a financial futures contract, writes a put
option thereon or purchases a call option thereon, an amount of cash or high
grade, liquid debt securities will be deposited in a segregated account with the
Fund's custodian that, together with the amount of initial and variation margin
held in the account of its broker, equals the market value of the futures
contract.

Options Transactions. The Fund may write listed and over-the-counter covered
call options and covered put options on securities in order to earn additional
income from the premiums received. In addition, the Fund may purchase listed and
over-the-counter call and put options. The extent to which covered options will
be used by the Fund will depend upon market conditions and the availability of
alternative strategies. The Fund may write listed covered and over-the-counter
call and put options on up to 100% of its net assets.

The Fund will write listed and over-the-counter call options only if
they are "covered", which means that the Fund owns or has the immediate right to
acquire the securities underlying the options without additional cash
consideration upon conversion or exchange of other securities held in its
portfolio. A call option written by the Fund will also be "covered" if the Fund
holds on a share-for-share basis a covering call on the same securities where
(i) the exercise price of the covering call held is equal to or less than the
exercise price of the call written or the difference is maintained by the Fund
in cash or high grade, liquid debt securities in a segregated account with the
Fund's custodian, and (ii) the covering call expires at the same time as the
call written. If a covered call option is not exercised, the Fund would keep
both the option premium and the underlying security. If the covered call option
written by the Fund is exercised and the exercise price, less the transaction
costs, exceeds the cost of the underlying security, the Fund would realize a
gain in addition to the amount of the option premium it received. If the
exercise price, less transaction costs, is less than the cost of the underlying
security, the Fund's loss would be reduced by the amount of the option premium.

The Fund will write a covered put option only with respect to
securities it intends to acquire for the Fund's portfolio and will maintain in a
segregated account with the Fund's custodian cash or high grade, liquid debt
securities with a value equal to the price at which the underlying security may
be sold to the Fund in the event the put option is exercised by the purchaser.
The Fund can also write a "covered" put option by purchasing on a
share-for-share basis a put on the same security as the put written by the Fund
if the exercise price of the covering put held is equal to or greater than the
exercise price of the put written and the covering put expires at the same time
or later than the put written.

In writing listed and over-the-counter covered put options on
securities, the Fund would earn income from the premiums received. If a covered
put option is not exercised, the Fund would keep the option premium and the
assets maintained to cover the option. If the option is

<PAGE>

exercised and the exercise price, including transaction costs, exceed the market
price of the underlying security, the Fund would have an unrealized loss, but
the amount of the loss would be reduced by the amount of the option premium.

If the writer of an exchange-traded option wishes to terminate his
obligation prior to its exercise, it may effect a "closing purchase
transaction". This is accomplished by buying an option of the same series as the
option previously written. The effect of the purchase is that the Fund's
position will be offset by the Options Clearing Corporation. The Fund may not
effect a closing purchase transaction after it has been notified of the exercise
of an option. There is no guarantee that a closing purchase transaction can be
effected. Although the Fund will generally write only those options for which
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange or board of trade will exist for any
particular option or at any particular time, and for some options no secondary
market on an exchange may exist.

In the case of a written call option, effecting a closing transaction
will permit the Fund to write another call option on the underlying security
with either a different exercise price, expiration date or both. In the case of
a written put option, it will permit the Fund to write another put option to the
extent that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction will permit the
cash or proceeds from the concurrent sale of any securities subject to the
option to be used for other investments. If the Fund desires to sell a
particular security from its portfolio on which it has written a call option, it
will effect a closing transaction prior to or concurrent with the sale of the
security.

The Fund will realize a gain from a closing transaction if the cost of
the closing transaction is less than the premium received from writing the
option. The Fund will realize a loss from a closing transaction if the cost of
the closing transaction is more than the premium received for writing the
option. However, because increases in the market price of a call option will
generally reflect increases in the market price of the underlying security, any
loss resulting from the repurchase of a call option is likely to be offset in
whole or in part by appreciation of the underlying security owned by the Fund.

Over-the-Counter Options. The Fund may engage in options transactions on
exchanges and in the over-the-counter markets. In general, exchange-traded
options are third-party contracts (i.e. performance of the parties' obligations
is guaranteed by an exchange or clearing corporation) with standardized strike
prices and expiration dates. Over-the-counter ("OTC") transactions are two-party
contracts with price and terms negotiated by the buyer and seller. The Fund will
acquire only those OTC options for which the Advisers believe the Fund can
receive on each business day at least two separate bids or offers (one of which
will be from an entity other than a party to the option) or those OTC options
valued by an independent pricing service. The Fund will write and purchase OTC
options only with member banks of the Federal Reserve System and primary dealers
in U.S. Government securities or their affiliates. The Securities and Exchange
Commission (the "SEC") takes the position that OTC options are illiquid
securities subject to the Fund's 15% limitation on illiquid securities. The SEC
allows the Fund to exclude from the 15% limitation on illiquid securities a
portion of the value of the OTC options written by the Fund, provided that
certain conditions are met. First, the other party to the OTC options has to be
a

<PAGE>

primary U.S. Government securities dealer designated as such by the Federal
Reserve Bank. Second, the Fund would have an absolute contractual right to
repurchase the OTC options at a formula price. If the above conditions are met,
a Fund must treat as illiquid only that portion of the OTC option's value (and
the value of its underlying securities) which is equal to the formula price for
repurchasing the OTC option, less the OTC option's intrinsic value.

Government Securities. Certain U.S. Government securities, including U.S.
Treasury bills, notes and bonds, and Government National Mortgage Association
certificates ("Ginnie Maes"), are supported by the full faith and credit of the
United States. Certain other U.S. Government securities, issued or guaranteed by
Federal agencies or government sponsored enterprises, are not supported by the
full faith and credit of the United States, but may be supported by the right of
the issuer to borrow from the U.S. Treasury. These securities include
obligations of the Federal Home Loan Mortgage Corporation ("Freddie Macs"), and
obligations supported by the credit of the instrumentality, such as Federal
National Mortgage Association Bonds ("Fannie Maes"). No assurance can be given
that the U.S. Government will provide financial support to such Federal
agencies, authorities, instrumentalities and government sponsored enterprises in
the future.

Ginnie Maes, Freddie Macs and Fannie Maes are mortgage-backed
securities which provide monthly payments which are, in effect, a "pass-through"
of the monthly interest and principal payments (including any prepayments) made
the by individual borrowers on the pooled mortgage loans. Collateralized
mortgage obligations ("CMOs") in which the Fund may invest are securities issued
by a U.S. Government instrumentality that are collateralized by a portfolio of
mortgages or mortgage-backed securities. Mortgage-backed securities may be less
effective than traditional debt obligations of similar maturity at maintaining
yields during periods of declining interest rates.

Forward Foreign Currency Transactions. The Fund's foreign currency exchange
transactions may be conducted on a spot (i.e., cash) basis at the spot rate for
purchasing or selling currency prevailing in the foreign exchange market. The
Fund may also deal in forward foreign currency exchange contracts involving
currencies of the different countries in which it will invest as a hedge against
possible variations in the foreign exchange rate between these currencies. This
is accomplished through contractual agreements to purchase or sell a specified
currency at a specified future date and price set at the time of the contract.
The Fund's dealings in forward foreign currency exchange contracts will be
limited to hedging either specified transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward foreign currency
contracts with respect to specific receivables or payables of the Fund accruing
in connection with the purchase and sale of its portfolio securities denominated
in foreign currencies. Portfolio hedging is the use of forward foreign currency
contracts to offset portfolio security positions denominated or quoted in such
foreign currencies. The Fund will not attempt to hedge all of its foreign
portfolio positions and will enter into such transactions only to the extent, if
any, deemed appropriate by the Advisers. The Fund will not engage in speculative
forward foreign currency exchange transactions.

If the Fund purchases a forward contract, its custodian bank will
segregate cash or high grade, liquid debt securities in a separate account of
the Fund in an amount equal to the value of

<PAGE>

the Fund's total assets committed to the consummation of such forward contract.
Those assets will be valued at market daily and if the value of the securities
in the separate account declines, additional cash or securities will be placed
in the account so that the value of the account will be equal to the amount of
the Fund's commitment with respect to such contracts.

Hedging against a decline in the value of currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency rises. Moreover, it may
not be possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.

The cost to the Fund of engaging in foreign currency exchange
transactions varies with such factors as the currency involved, the length of
the contract period and the market conditions then prevailing. Since
transactions in foreign currency are usually conducted on a principal basis, no
fees or commissions are involved.

Investment in Foreign Securities. Investments in foreign securities may involve
risks and considerations not present in domestic investments. Since foreign
securities generally may be quoted and pay interest or dividends in foreign
currencies, the value of the assets of the Fund as measured in U.S. dollars will
be affected favorably or unfavorably by changes in the relationship of the U.S.
dollar and other currency rates. The Fund may incur costs in connection with the
conversion of foreign currencies into U.S. dollars and may be adversely affected
by restrictions on the conversion or transfer of foreign currencies. In
addition, there may be less publicly available information about foreign
companies than U.S. companies. Foreign companies may not be subject to
accounting, auditing, and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies.

Foreign securities markets, while growing in volume, have for the most
part substantially less volume than U.S. securities markets and securities of
foreign companies are generally less liquid and at times their prices may be
more volatile than securities of comparable U.S. companies. Foreign stock
exchanges, brokers and listed companies are generally subject to less government
supervision and regulation than those in the U.S. The customary settlement time
for U.S. securities, is less frequent than in the U.S., which could affect the
liquidity of the Fund's investments.

In some countries, there is the possibility of expropriation or
confiscatory taxation, seizure or nationalization of foreign bank deposits or
other assets, establishment of exchange controls, the adoption of foreign
government restrictions or other adverse political, social or diplomatic
developments that could affect investments in these nations.

<PAGE>

INVESTMENT RESTRICTIONS

The Fund observes the following fundamental investment restrictions.

The Fund may not:
(1) Purchase or sell real estate or any interest therein, except that the
Fund may invest in securities of corporate entities secured by real
estate or marketable interests therein or issued by companies that
invest in real estate or interests therein and may hold and sell real
estate acquired by the Fund as the result of ownership of securities.

(2) Make loans, except that the Fund may lend portfolio securities in
accordance with the Fund's investment policies. The Fund does not, for
this purpose, consider repurchase agreements, the purchase of all or a
portion of an issue of publicly distributed bonds, bank loan
participation agreements, bank certificates of deposit, bankers'
acceptances, debentures or other securities, whether or not the
purchase is made upon the original issuance of the securities, to be
the making of a loan.

(3) Invest in commodities or in commodity contracts or in puts, calls, or
combinations of both except options on securities, securities indices,
currency and other financial instruments, futures contracts on
securities, securities indices, currency and other financial
instruments, options on such futures contracts, forward commitments,
forward foreign currency exchange contracts, interest rate or currency
swaps, securities index put or call warrants and repurchase agreements
entered into in accordance with the Fund's investment policies.

(4) Purchase securities of an issuer (other than the U.S. Government, its
agencies or instrumentalities), if (i) such purchase would cause more
than 5% of the Fund's total assets taken at market value to be invested
in the securities of such issuer, or (ii) such purchase would at the
time result in more than 10% of the outstanding voting securities of
such issuer being held by the Fund.

(5) Act as an underwriter, except to the extent that, in connection with
the disposition of portfolio securities, the Fund may be deemed to be
an underwriter for purposes of the Securities Act of 1933.

(6) Borrow money, except from banks as a temporary measure for
extraordinary emergency purposes in amounts not to exceed 33 1/3% of
the Fund's total assets (including the amount borrowed) taken at market
value. The Fund will not use leverage to attempt to

<PAGE>

increase income. The Fund will not purchase securities while outstanding
borrowings exceed 5% of the Fund's total assets.

(7) Pledge, mortgage or hypothecate its assets, except to secure
indebtedness permitted by paragraph (6) above and then only if such
pledging, mortgaging or hypothecating does not exceed 33 1/3% of the
Fund's total assets taken at market value.

(8) Purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after such purchase, the
value of its investments in such industry would exceed 25% of its total
assets taken at market value at the time of each investment. This
limitation does not apply to investments in obligations of the U.S.
Government or any of its agencies or instrumentalities.

(9) Issue senior securities, except as permitted by paragraphs (2), (3) and
(6) above. For purposes of this restriction, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or sale
of options, futures contracts and options on futures contracts, forward
commitments, forward foreign currency exchange contracts and repurchase
agreements entered into in accordance with the Fund's investment
policy, and the pledge, mortgage or hypothecation of the Fund's assets
within the meaning of paragraph (7) above are not deemed to be senior
securities.

In connection with the lending of portfolio securities under item (2)
above, such loans must at all times be fully collateralized and the Fund's
custodian must take possession of the collateral either physically or in book
entry form. Securities used as collateral must be marked to market daily.

Nonfundamental Investment Restrictions

The following restrictions are designated as nonfundamental and may be
changed by the Trustees without shareholder approval.

The Fund may not:

(a) purchase securities on margin or make short sales, except margin
deposits in connection with transactions in options, futures contracts,
options on futures contracts and other arbitrage transactions, or
unless by virtue of its ownership of other securities, the Fund has the
right to obtain without payment of additional consideration, securities
equivalent in kind and amount to the securities sold and, if the right
is conditional, the sale is made upon the same conditions, except that
a Fund may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities.

(b) purchase securities of any issuer which, together with any predecessor,
has a record of less than three years' continuous operation prior to
the purchase if such purchase would cause the Fund's investment in all
such issuers to exceed 5% of the value of the Fund's total assets.

12
<PAGE>

(d) purchase a security if, as a result, (i) more than 10% of the Fund's
assets would be invested in securities of closed-end investment
companies, (ii) such purchase would result in more than 3% of the total
outstanding voting securities of any one such closed-end investment
company being held by the Fund, or (iii) more than 5% of the Fund's
assets would be invested in any securities of any closed-end investment
company; provided, however, the Fund can exceed such limitations in
connection with a plan of merger or consolidation with or acquisition
of substantially all the assets of such other closed-end investment
company. The Fund may not invest in the securities of any other
open-end investment company, except in connection with a plan of merger
or consolidation with or acquisition of substantially all the assets of
such other open-end investment company.

(e) knowingly purchase or retain securities of an issuer if one or more of
the Trustees or officers of the Fund or directors or officers of the
Adviser or any investment management subsidiary of the Adviser
individually owns beneficially more than 0.5%, and together own
beneficially more than 5%, of the securities of such issuer.

(f) invest in interests in oil, gas or other mineral exploration or
development programs; provided, however, that this restriction shall
not prohibit the acquisition of securities of companies engaged in the
production or transmission of oil, gas or other minerals.

(g) purchase warrants if as a result (i) more than 5% of the Fund's net
assets, valued at the lower of cost or market value, would be invested
in warrants or (ii) more than 2% of its net assets would be invested in
warrants, valued as aforesaid, which are not traded on the New York
Stock Exchange or American Stock Exchange; provided that for these
purposes, warrants are to be valued at the lesser of cost or market,
but warrants acquired in units or attached to securities will be deemed
to be without value.

(h) Purchase any security, including any repurchase agreement maturing in
more than seven days, which is not readily marketable, if more than 15%
of the net assets of the Fund, taken at market value, would be invested
in such securities.

(i) Participate on a joint or joint-and-several basis in any securities
trading account. The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the
management of the Adviser to save commissions or to average prices
among them is not deemed to result in a joint securities trading
account.

(j) Invest more than 10% of its total assets in restricted securities,
excluding restricted securities eligible for resale pursuant to Rule
144A under the Securities Act of 1933; provided, however, that no more
than 15% of the Fund's total assets may be invested in restricted
securities including restricted securities eligible for resale under
Rule 144A.

(k) Purchase interests in real estate limited partnerships.

13
<PAGE>

(l) Purchase puts, calls, straddles, spreads or any combination thereof if
by reason of a purchase the Fund's aggregate investment in these
instruments would exceed 5% of its total assets.

(m) Notwithstanding any investment restriction to the contrary, the Fund
may, in connection with the John Hancock group of Funds Deferred
Compensation Plan for Independent Trustees/Directors, purchase
securities of other investment companies within the John Hancock Group
of Funds provided that, as a result, (i) no more than 10% of the Fund's
assets would be invested in securities of all other investment
companies, (ii) such purchase would not result in more than 3% of the
total outstanding voting securities of any one such investment company
being held by the Fund and (iii) no more than 5% of the Fund's assets
would be invested in any one such investment company.

In order to permit the sale of shares of the Fund in certain states,
the Trustees may, in their sole discretion, adopt restrictions or investment
policies more restrictive than those described above. Should the Trustees
determine that any such more restrictive policy is no longer in the best
interests of the Fund and its shareholders, the Fund may cease offering shares
in the state involved and the Trustees may revoke such restrictive policy.
Moreover, if the states involved shall no longer require any such restrictive
policy, the Trustees may, at their sole discretion, revoke such policy.

If a percentage restriction on investment or utilization of assets as
set forth above is adhered to at the time an investment is made, a later change
in percentage resulting from changes in the values of the Fund's assets will not
be considered a violation of the restriction.

THOSE RESPONSIBLE FOR MANAGEMENT

The business of the Fund is managed by its Trustees who elect officers
who are responsible for the day-to-day operations of the Fund and who execute
policies formulated by the Trustees. Several of the officers and Trustees of the
Fund are also officers and directors of the Adviser or officers and directors of
the Fund's principal distributor, John Hancock Funds, Inc. ("John Hancock
Funds").

<PAGE>

Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------

*Edward J. Boudreau, Jr. Chairman (1,2) Chairman and Chief
101 Huntington Avenue Executive Officer, the
Boston, Massachusetts Adviser and The Berkeley
Financial Group ("The
Berkeley Group");
Chairman, NM Capital
Management, Inc. ("NM
Capital"); John Hancock
Advisers International
Limited ("Advisers
International"); John
Hancock Funds, Inc.,
("John Hancock Funds");
John Hancock Investor
Services Corporation
("Investor Services") and
Sovereign Asset Management
Corporation ("SAMCorp")
(herein after the Adviser,
The Berkeley Group, NM
Capital, Advisers
International, John
Hancock Funds, Investor
Services and SAMCorp are
collectively referred to
as the "Affiliated
Companies"); Chairman,
First Signature Bank &
Trust; Director, John
Hancock Freedom Securities
Corp., John Hancock
Capital Corp., New
England/Canada Business
Council; Member,
Investment Company
Institute Board of
Governors; Director, Asia
Strategic Growth Fund,
Inc.; Trustee, Museum of
Science; President, the
Adviser (until July 1992).
Chairman, John Hancock
Distributors, Inc. (until
April, 1994).

<PAGE>

Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------

Dennis S. Aronowitz Trustee (4) Professor of Law, Boston
Boston University University School of Law;
Boston, Massachusetts Trustee, Brookline Savings
Bank.

Richard P. Chapman, Jr. Trustee (4) President, Brookline
160 Washington Street Savings Bank.
Brookline, Massachusetts

William J. Cosgrove Trustee (4) Vice President, Senior
20 Buttonwood Place Banker and Senior Credit
Saddle River, New Jersey Officer, Citibank, N.A.
(retired September 1991);
Executive Vice President,
Citadel Group
Representatives, Inc.;
Director, the Hudson City
Savings Bank.

Gail D. Fosler Trustee (4) Vice President and Chief
4104 Woodbine Street Economist, The Conference
Chevy Chase, MD Board (non-profit economic
and business research).

Bayard Henry Trustee (4) Corporate Advisor;
31 Milk Street Director, Fiduciary Trust
Boston, Massachusetts Company (a trust company);
Director, Groundwater
Technology, Inc.
(remediation); Samuel
Cabot, Inc.; Advisor,
Kestrel Venture
Management.

- ------------------
* An "interested person" of the Fund, as such term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) A Member of the Audit and Administration Committees.

16
<PAGE>

Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------

*Richard S. Scipione Trustee (3) General Counsel, the Life
John Hancock Place Company; Director, the
P.O. Box 111 Adviser, the Affiliated
Boston, Massachusetts Companies, John Hancock
Distributors, Inc., JH
Networking Insurance
Agency, Inc., John Hancock
Subsidiaries, Inc.,
SAMCorp, NM Capital and
John Hancock Property and
Casualty Insurance and its
affiliates (until
November, 1993); Trustee,
The Berkeley Group.

Edward J. Spellman, CPA Trustee (4) Partner, KPMG Peat Marwick
259C Commercial Bld. LLP (retired June 1990).
Lauderdale, FL

*Anne C. Hodsdon Trustee and President and Chief
101 Huntington Avenue President (2) Operating Officer, the
Boston, Massachusetts Adviser; Executive Vice
President, the Adviser
(until December 1994);
Senior Vice President; the
Adviser (until December
1993); Vice President, the
Adviser (until 1991).

*Robert G. Freedman Vice Chairman and Vice Chairman and Chief
101 Huntington Avenue Chief Investment Investment Officer, the
Boston, Massachusetts Officer (2) Adviser; President, the
Adviser (until December
1994).

*Thomas H. Drohan Senior Vice Senior Vice President and
101 Huntington Avenue President and Secretary, the Adviser.
Boston, Massachusetts Secretary

- ------------------
* An "interested person" of the Fund, as such term is defined in the Investment
Company Act.
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) A Member of the Audit and Administration Committees.

17
<PAGE>

Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------

*James B. Little Senior Vice President Senior Vice President the
101 Huntington Avenue and Chief Financial Adviser.
Boston, Massachusetts Officer

*John A. Morin Vice President Vice President, the
101 Huntington Avenue Adviser.
Boston, Massachusetts

*Susan S. Newton Vice President, Vice President and
101 Huntington Avenue Assistant Secretary and Assistant Secretary, the
Boston, Massachusetts Compliance Officer Adviser.

*James J. Stokowski Vice President and Vice President, the
101 Huntington Avenue Treasurer Adviser.
Boston, Massachusetts

18
<PAGE>

All of the officers listed are officers or employees of the Adviser
or the Affiliated Companies. Some of the Trustees and officers may also be
officers and/or directors and/or Trustees of one or more other funds for which
the Adviser serves as investment adviser.

The following table provides information regarding the compensation
paid by the Fund and the other investment companies in the John Hancock Fund
Complex to the Independent Trustees for their services. The three
non-Independent Trustees, Ms. Hodsdon, Messrs. Boudreau and Scipione, and each
of the officers of the Funds are interested persons of the Adviser, are
compensated by the Adviser/ or affiliated companies and receive no compensation
from the Fund for their services.

Total Compensation
Pension or Retirement From the Fund and
Aggregate Benefits Accrued as Estimated Annual John Hancock Fund
Compensation Part of the Fund's Benefits Upon Complex to
From the Fund Expenses Retirement Trustees(1)
------------- -------- ---------- -----------

(Total of 19 Funds)
<S> <C> <C> <C> <C>
Independent Trustees
Dennis S. Aronowitz $154 $ - $-- $ 61,050
Richard P. Chapman, Jr. 71 87 62,800
William J. Cosgrove 71 83 61,050
Gail D. Fosler 154 60,800
Bayard Henry 144 58,850
Edward J. Spellman 154 61,050
---- ---- --- --------
$748 $170 $-- $365,600
</TABLE>

*Compensation made for the fiscal year ended December 31, 1995.
(1)The total compensation paid by the John Hancock Fund Complex to the
Independent Trustees is as of the calendar year ended December 31, 1995.

The nominees of the Funds may at times be the record holders of in
excess of 5% of shares of any one or more Funds by virtue of holding shares in
"street name." As of March 13, 1996 the officers and trustees of the Trusts as a
group owned less than 1% of the outstanding shares of each class of each of the
Funds.

19
<PAGE>

As of March 13, 1996 the following shareholders beneficially owned 5%
of or more of the outstanding shares of the Funds listed below:
<TABLE>
<CAPTION>

Percentage of total
Number of shares outstanding shares
Fund and Class of beneficial of the class of
Name and Address of Shareholder of Shares interest owned the Fund
- ------------------------------- --------- -------------- --------
<S> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith Inc. Class B shares 131,696 7.61%
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
</TABLE>

INVESTMENT ADVISORY,
SUB-ADVISORY AND OTHER SERVICES

As described in the Prospectuses, the Fund receives its investment
advice from the Advisers. Investors should refer to the applicable Prospectus
for a description of certain information concerning the investment management
and investment sub-advisory contracts. Each of the Trustees and principal
officers of the Fund who is also an affiliated person of the Advisers is named
above, together with the capacity in which such person is affiliated with the
Fund and the Advisers.

As described in the Prospectuses under the caption "Organization and
Management of the Fund," the Fund has entered into an investment management
contract with the Adviser and an investment sub-advisory contract with the
Sub-Adviser. Under the investment management contract, the Adviser provides the
Fund with (i) a continuous investment program, consistent with the Fund's stated
investment objective and policies, (ii) supervision of all aspects of the Fund's
operations except those that are delegated to a custodian, transfer agent or
other agent and (iii) such executive, administrative and clerical personnel,
officers and equipment as are necessary for the conduct of its business. The
Adviser is responsible for the management of the Fund's portfolio assets.

The Adviser has entered into a sub-investment management contract with
the Sub-Adviser under which the Sub-Adviser, subject to the review of the
Trustees and the over-all supervision of the Adviser, is responsible for
managing the investment operations of the Fund and the composition of the Fund's
portfolio and furnishing the Fund with advice and recommendations with respect
to investments, investment policies and the purchase and sale of securities.

Securities held by the Fund may also be held by other funds or
investment advisory clients for which the Advisers or their affiliates provide
investment advice. Because of different investment objectives or other factors,
a particular security may be bought for one or more funds or clients when one or
more other funds or clients are selling the same security. If opportunities for
purchase or sale of securities by the Advisers for the Fund or for other funds
or clients for which one of the Advisers renders investment advice arise for
consideration at or about the same

<PAGE>

time, transactions in such securities will be made, insofar as feasible, for the
respective funds or clients in a manner deemed equitable to all of them. To the
extent that transactions on behalf of more than one client of one of the
Advisers or their affiliates may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse effect
on price.

No person other than the Advisers and their directors and employees
regularly furnishes advice to the Fund with respect to the desirability of the
Fund's investing in, purchasing or selling securities. The Advisers may from
time to time receive statistical or other similar factual information, and
information regarding general economic factors and trends, from the Life
Insurance Company and its affiliates.

Under the terms of the investment management contract with the Fund,
the Adviser provides the Fund with office space, supplies and other facilities
required for the business of the Fund. The Adviser pays the compensation of all
other officers and employees of the Trust, and pays the expenses of clerical
services relating to the administration of the Fund.

All expenses which are not specifically paid by the Adviser and which
are incurred in the operation of the Fund (including fees of Trustees of the
Trust who are not "interested persons," as such term is defined in the
Investment Company Act, but excluding certain distribution related activities
required to be paid by the Adviser or John Hancock Funds) and the continuous
public offering of the shares of the Fund are borne by the Fund.

As discussed in the Prospectuses and as provided by the investment
management contract, the Fund pays the Adviser monthly an investment management
fee, which is accrued daily, of 0.70% of the average of the daily net assets of
the Fund. For its sub-advisory services, the Adviser pays the Sub-Adviser
monthly a sub-advisory fee of 40% of the fee received by the Adviser for
managing the Fund. The Fund is not responsible for payment of the Sub-Adviser's
fee.

The Adviser has voluntarily agreed to limit Fund expenses, including
the management fee (but not including the transfer agent fee and the 12b-1 fee),
to 0.40% of the Fund's average daily net assets. The Adviser reserves the right
to terminate this voluntary limitation in the future.

If the total of all ordinary business expenses of the Fund for any
fiscal year exceeds limitations prescribed in any state in which shares of the
Fund are qualified for sale, the fee payable to the Adviser will be reduced to
the extent required by these limitations. At this time, the most restrictive
limit on expenses imposed by a state requires that expenses charged to the Fund
in any fiscal year may not exceed 2 1/2% of the first $30,000,000 of the Fund's
average net assets, 2% of the next $70,000,000 of such net assets and 1 1/2% of
the remaining average net assets. When calculating the above limit, the Fund may
exclude interest, brokerage commissions and extraordinary expenses.

21
<PAGE>

On December 31, 1995, the net assets of the Fund were $29,838,736. For
the year ended December 31, 1995 and the period ended December 31, 1994, the
adviser's management fee was $140,122 and $18,489 respectively, prior to expense
reduction.

Pursuant to the investment management contract and sub-advisory
contract, the Adviser and Sub-Adviser are not liable to the Fund for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which their respective contract relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser or the Sub-Adviser in the performance of their duties or from their
reckless disregard of their obligations and duties under the applicable
contract.

The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and presently has more than $16 billion in
assets under management in its capacity as investment adviser to the Fund and
the other mutual funds and publicly traded investment companies in the John
Hancock group of funds having a combined total of over 1,080,000 shareholders.
The Adviser is an affiliate of the Life Company, one of the most recognized and
respected financial institutions in the nation. The Sub-Adviser is also an
indirect subsidiary of the Life Company and provides investment management
advisory services for institutional and individual investors. The Sub-Adviser
managed approximately $1.3 billion in assets. With total assets under management
of approximately $80 billion, the Life Company is one of the ten largest life
insurance companies in the United States, and carries the highest ratings from
S&P's and A.M. Best's. Founded in 1862, the Life Insurance Company has been
serving clients for over 130 years.

Under the investment management contract, the Fund may use the name
"John Hancock" or any name derived from or similar to it only for so long as the
contract or any extension, renewal or amendment thereof remains in effect. If
the contract is no longer in effect, the Fund (to the extent that it lawfully
can) will cease to use such a name or any other name indicating that it is
advised by or otherwise connected with the Adviser. In addition, the Adviser or
the Life Company may grant the non-exclusive right to use the name "John
Hancock" or any similar name to any other corporation or entity, including but
not limited to any investment company of which the Life Company or any
subsidiary or affiliate thereof or any successor to the business of any
subsidiary or affiliate thereof shall be the investment adviser.

The investment management contract, the investment sub-advisory
contract and the distribution contract discussed below continue in effect from
year to year if approved annually by vote of a majority of the Fund's Trustees
who are not interested persons of one of the parties to the contract, cast in
person at a meeting called for the purpose of voting on such approval, and by
either the Fund's Trustees or the holders of a majority of the Fund's
outstanding voting securities. Each of these contracts automatically terminates
upon assignment. Each contract may be terminated without penalty on 60 days'
notice at the option of either party to the respective contract or by vote of a
majority of the outstanding voting securities of the Fund.

22
<PAGE>

DISTRIBUTION CONTRACT

The Fund has a distribution contract with John Hancock Funds. Under the
contract, John Hancock Funds is obligated to use its best efforts to sell shares
of the Fund. Shares of the Fund are sold by selected broker-dealers (the
"Selling Brokers") which have entered into selling agency agreements with John
Hancock Funds. John Hancock Funds accepts orders for the purchase of the shares
of the Fund which are continually offered at net asset value next determined
plus any applicable sales charge. In connection with the sale of Class A or
Class B shares of the Fund, John Hancock Funds and Selling Brokers receive
compensation in the form of a sales charge imposed, in the case of Class A
shares, at the time of sale or, in the case of Class B shares, on a deferred
basis. The sales charges are discussed further in the Fund's Class A and Class B
Prospectus.

The Fund's Trustees adopted Distribution Plans with respect to Class A
and Class B shares (the "Plans"), pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Plans, the Fund will pay distribution and service
fees for Class A and Class B shares, at an aggregate annual rate of up to 0.30%
and 1.00%, respectively, of the Fund's daily net assets. However, the amount of
the service fee will not exceed 0.25% of the Fund's average daily net assets
attributable to each class of shares. The distribution fees reimburse John
Hancock Funds for its distribution costs incurred in the promotion of sales of
Fund shares, and the service fees compensate Selling Brokers for providing
personal and account maintenance services to shareholders. In the event that the
Distributors are not fully reimbursed for expenses they incur under the Class B
Plan in any fiscal year, the Distributors may carry these expenses forward,
provided, however, that the Trustees may terminate the Class B Plan and thus any
Fund's obligation to make further payments at any time. Accordingly, the Funds
does not treat unreimbursed expenses relating to the Class B shares as a
liability. The Plans were approved by a majority of the voting securities of the
applicable class of the Fund. The Plans have also been approved by a majority of
the Trustees, including a majority of the Trustees who are not interested
persons of the Fund and who have no direct or indirect financial interest in the
operation of the Plan (the "Independent Trustees"), by votes cast in person at
meetings called for the purpose of voting on such Plans.

Pursuant to the Plans, at least quarterly, John Hancock Funds provides
the Fund with a written report of the amounts expended under the Plans and the
purpose for which these expenditures were made. The Trustees review these
reports on a quarterly basis.

23
<PAGE>

During the fiscal year ended December 31, 1995, the Fund paid
Investor Services the following amounts of expenses with respect to the Class A
shares and Class B shares of the Fund:
<TABLE>
<CAPTION>

Expense Items

Printing and Interest
Mailing of Expenses of Carrying or
Prospectus to Compensation to John Hancock Other Finance
Advertising New Shareholders Selling Brokers Funds Charges
----------- ---------------- --------------- ----- -------
<S> <C> <C> <C> <C> <C>
Special Value
Class A shares $12,428 $1,300 $ 1,605 $12,438 $ 0
Class B shares $40,449 $2,812 $14,029 $41,007 $9,306
</TABLE>

Each of the Plans provides that it will continue in effect only so long
as its continuance is approved at least annually by a majority of both the
Trustees and the Independent Trustees. Each of the Plans provides that it may be
terminated without penalty (a) by vote of a majority of the Independent
Trustees, (b) by a vote of a majority of the Fund's outstanding shares of the
applicable class in each case upon 60 days' written notice to John Hancock Funds
and (c) automatically in the event of assignment. Each of the Plans further
provides that it may not be amended to increase the maximum amount of the fees
for the services described therein without the approval of a majority of the
outstanding shares of the class of the Fund which has voting rights with respect
to the Plan. And finally, each of the Plans provides that no material amendment
to the Plan will, in any event, be effective unless it is approved by a majority
vote of both the Trustees and the Independent Trustees of the Fund. The holders
of Class A shares and Class B shares have exclusive voting rights with respect
to the Plan applicable to their respective class of shares. In adopting the
Plans, the Trustees concluded that, in their judgment, there is a reasonable
likelihood that each Plan will benefit the holders of the applicable class of
shares of the Fund.

When the Fund seeks an Independent Trustee to fill a vacancy or as a
nominee for election by shareholders, the selection or nomination of the
Independent Trustee is, under resolutions adopted by the Trustees
contemporaneously with their adoption of the Plans, committed to the discretion
of the Committee on Administration of the Trustees. The members of the Committee
on Administration are all Independent Trustees and are identified in this
Statement of Additional Information under the heading "Those Responsible for
Management."

NET ASSET VALUE

For purposes of calculating the net asset value ("NAV") of a Fund's
shares, the following procedures are utilized wherever applicable.

24
<PAGE>

Debt investment securities are valued on the basis of valuations
furnished by a principal market maker or a pricing service, both of which
generally utilize electronic data processing techniques to determine valuations
for normal institutional size trading units of debt securities without exclusive
reliance upon quoted prices.

INITIAL SALES CHARGE ON CLASS A SHARES

The sales charges applicable to purchases of Class A shares of the Fund
are described in the Class A and Class B Prospectus. Methods of obtaining
reduced sales charges referred to generally in the Class A and Class B
Prospectus are described in detail below. In calculating the sales charge
applicable to current purchases of Class A shares of the Fund, the investor is
entitled to cumulate current purchases with the greater of the current value (at
offering price) of the Class A shares of the Fund, or if Investor Services is
notified by the investor's dealer or the investor at the time of the purchase,
the cost of the Class A shares owned.

<PAGE>

combined purchases, including certain restrictions on combined group purchases,
is available from Investor Services or a Selling Broker's representative.

Without Sales Charges. As described in the Class A and Class B Prospectus, Class
A shares of the Fund may be sold without a sales charge to certain persons
described in the Prospectus.

Accumulation Privilege. Investors (including investors combining purchases) who
are already Class A shareholders may also obtain the benefit of the reduced
sales charge by taking into account not only the amount then being invested but
also the purchase price or current value of the Class A shares already held by
such person.

Letter of Intention. The reduced sales charges are also applicable to
investments made over a thirteen-month period pursuant to a Letter of Intention
(the "LOI"), which should be read carefully prior to its execution by an
investor. The Fund offers two options regarding the specified period for making
investments under the LOI. All investors have the option of making their
investments over a specified period of thirteen (13) months. Investors who are
using the Fund as a funding medium for a qualified retirement plan, however, may
opt to make the necessary investments called for by the LOI over a forty-eight
(48) month period. These qualified retirement plans include group IRA, SEP,
SARSEP, TSA and 401(k), 403(b) and 457 plans. Such an investment (including
accumulations and combinations) must aggregate $50,000 or more invested during
the specified period from the date of the LOI or from a date within ninety (90)
days prior thereto, upon written request to Investor Services. The sales charge
applicable to all amounts invested under the LOI is computed as if the aggregate
amount intended to be invested had been invested immediately. If such aggregate
amount is not actually invested, the difference in the sales charge actually
paid and the sales charge payable had the LOI not been in effect is due from the
investor. However, for the purchases actually made within the specified period
(either 13 or 48 months) the sales charge applicable will not be higher than
that which would have applied (including accumulations and combinations) had the
LOI been for the amount actually invested.

The LOI authorizes Investor Services to hold in escrow sufficient Class
A shares (approximately 5% of the aggregate) to make up any difference in sales
charges on the amount intended to be invested and the amount actually invested,
until such investment is completed within the specified period, at which time
the escrow shares will be released. If the total investment specified in the LOI
is not completed, the Class A shares held in escrow may be redeemed and the
proceeds used as required to pay such sales charge as may be due. By signing the
LOI, the investor authorizes Investor Services to act as his attorney-in-fact to
redeem any escrowed shares and adjust the sales charge, if necessary. A LOI does
not constitute a binding commitment by an investor to purchase, or by the Fund
to sell, any additional shares and may be terminated at any time.

26
<PAGE>

DEFERRED SALES CHARGE ON CLASS B SHARES

Investments in Class B shares are purchased at net asset value per
share without the imposition of an initial sales charge so that the Fund will
receive the full amount of the purchase payment.

Contingent Deferred Sales Charge. Class B shares which are redeemed within six
years of purchase will be subject to a contingent deferred sales charge ("CDSC")
at the rates set forth in the Prospectus as a percentage of the dollar amount
subject to the CDSC. The charge will be assessed on an amount equal to the
lesser of the current market value or the original purchase cost of the Class B
shares being redeemed. Accordingly, no CDSC will be imposed on increases in
account value above the initial purchase prices, including Class B shares
derived from reinvestment of dividends or capital gains distributions.

The amount of the CDSC, if any, will vary depending on the number of
years from the time of payment for the purchase of Class B shares until the time
of redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchases of shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month.

Proceeds from the CDSC are paid to Investor Services and are used in
whole or in part by Investor Services to defray its expenses related to
providing distribution-related services to the Fund in connection with the sale
of the Class B shares, such as the payment of compensation to select Selling
Brokers for selling Class B shares. The combination of the CDSC and the
distribution and service fees facilitates the ability of the Fund to sell the
Class B shares without a sales charge being deducted at the time of the
purchase. See the Class A and Class B Prospectus for additional information
regarding the CDSC.

SPECIAL REDEMPTIONS

Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed by the Trustees. When the shareholder were to sells
portfolio securities received in this fashion he would incur a brokerage charge.
Any such securities would be valued for the purposes of making such payment at
the same value as used in determining net asset value. The Fund has, however,
elected to be governed by Rule 18f-1 under the Investment Company Act. Under
that rule, the Fund must redeem its shares for cash except to the extent that
the redemption payments to any shareholder during any 90-day period would exceed
the lesser of $250,000 or 1% of the Fund's net asset value at the beginning of
such period.

27
<PAGE>

ADDITIONAL SERVICES AND PROGRAMS

Exchange Privilege. As described more fully in the Prospectuses, the Fund
permits exchanges of shares of any class of the Fund for shares of the same
class in any other John Hancock fund offering that class.

Systematic Withdrawal Plan. As described briefly in the Class A and Class B
Prospectus, the Fund permits the establishment of a Systematic Withdrawal Plan.
Payments under this plan represent proceeds from the redemption of Fund shares.
Since the redemption price of the Fund shares may be more or less than the
shareholder's cost, depending upon the market value of the securities owned by
the Fund at the time of redemption, the distribution of cash pursuant to this
plan may result in realization of gain or loss for purposes of Federal, state
and local income taxes. The maintenance of a Systematic Withdrawal Plan
concurrently with purchases of additional Class A or Class B shares of the Fund
could be disadvantageous to a shareholder because of the initial sales charge
payable on purchases of Class A shares and the CDSC imposed on redemptions of
Class B shares and because redemptions are taxable events. Therefore, a
shareholder should not purchase Class A or Class B shares at the same time that
a Systematic Withdrawal Plan is in effect. The Fund reserves the right to modify
or discontinue the Systematic Withdrawal Plan of any shareholder on 30 days'
prior written notice to such shareholder, or to discontinue the availability of
such plan in the future. The shareholder may terminate the plan at any time by
giving proper notice to Investor Services.

Monthly Automatic Accumulation Program ("MAAP"). This program applies solely to
Class A shares of the Fund and is explained more fully in the Class A and Class
B Prospectus and the Account Privilege Application. The program, as it relates
to automatic investment checks, is subject to the following conditions:

The investments will be drawn on or about the day of the month
indicated.

The privilege of making investments through the Monthly Automatic
Accumulation Program may be revoked by Investor Services without prior notice if
any investment is not honored by the shareholder's bank. The bank shall be under
no obligation to notify the shareholder as to the non-payment of any checks.

The program may be discontinued by the shareholder either by calling
Investor Services or upon written notice to Investor Services which is received
at least five (5) business days prior to the due date of any investment.

<PAGE>

shareholder may reinvest the proceeds from this redemption at net asset value in
additional shares of the class from which the redemption was made. The
shareholder's account will be credited with the amount of any CDSC charge upon
the prior redemption and the new shares will continue to be subject to the CDSC.
The holding period of the shares acquired through reinvestment will, for
purposes of computing the CDSC payable upon a subsequent redemption, include the
holding period of the redeemed shares. The Fund may modify or terminate the
reinvestment privilege at any time.

A redemption or exchange of Fund shares is a taxable transaction for
Federal income tax purposes even if the reinvestment privilege is exercised, and
any gain or loss realized by a shareholder on the redemption or other
disposition of Fund shares will be treated for tax purposes as described under
the caption "Tax Status."

DESCRIPTION OF THE FUND'S SHARES

The Trustees of the Fund are responsible for the management and
supervision of the Fund. The Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest of the
Trust without par value. Under the Declaration of Trust, the Trustees have the
authority to create and classify shares of beneficial interest in separate
series, without further action by shareholders. As of the date of this Statement
of Additional Information, the Trustees have authorized shares of the Fund and
one other series. Additional series may be added in the future. The Declaration
of Trust also authorizes the Trustees to classify and reclassify the shares of
the Fund, or any other series of the Trust, into one or more classes. As of the
date of this Statement of Additional Information, the Trustees have authorized
the issuance of two classes of shares of the Fund, designated as Class A and
Class B.

The shares of each class of the Fund represent an equal proportionate
interest in the aggregate net assets attributable to that class of the Fund.
Holders of Class A shares and Class B shares have certain exclusive voting
rights on matters relating to their respective distribution plans. The different
classes of the Fund may bear different expenses relating to the cost of holding
shareholder meetings necessitated by the exclusive voting rights of any class of
shares.

Dividends paid by the Fund, if any, with respect to each class of
shares will be calculated in the same manner, at the same time and on the same
day and will be in the same amount, except that (i) the distribution and service
fees relating to Class A and Class B shares will be borne exclusively by that
class (ii) Class B shares will pay higher distribution and service fees than
Class A shares and (iii) each of Class A shares and Class B shares will bear any
other class expenses properly allocable to such class of shares. Similarly, the
net asset value per share may vary depending on whether Class A shares or Class
B shares are purchased.

In the event of liquidation, shareholders of each class are entitled to
share pro rata in the net assets of the class of the Fund available for
distribution to these shareholders. Shares entitle their holders to one vote per
share, are freely transferable and have no preemptive, subscription or
conversion rights. When issued, shares are fully paid and non-assessable except
as set forth below.

29
<PAGE>

Unless otherwise required by the Investment Company Act or the
Declaration of Trust, the Trust has no intention of holding annual meetings of
shareholders. Trust shareholders may remove a Trustee by the affirmative vote of
at least two-thirds of the Trust's outstanding shares and the Trustees shall
promptly call a meeting for such purpose when requested to do so in writing by
the record holders of not less than 10% of the outstanding shares of the Trust.
Shareholders may, under certain circumstances, communicate with other
shareholders in connection with requesting a special meeting of shareholders.
However, at any time that less than a majority of the Trustees holding office
were elected by the shareholders, the Trustees will call a special meeting of
shareholders for the purpose of electing Trustees.

Under Massachusetts law, shareholders of a Massachusetts business trust
could, under certain circumstances, be held personally liable for acts or
obligations of the trust. However, the Fund's Declaration of Trust contains an
express disclaimer of shareholder liability for acts, obligations or affairs of
the Fund. The Declaration of Trust also provides for indemnification out of the
Fund's assets for all losses and expenses of any shareholder held personally
liable by reason of being or having been a shareholder. Liability is therefore
limited to circumstances in which the Fund itself would be unable to meet its
obligations, and the possibility of this occurrence is remote.

TAX STATUS

Each series of the Trust, including the Fund, is treated as a separate
entity for accounting and tax purposes. The Fund has qualified and intends to
continue to qualify as a "regulated investment company" under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). As such and by
complying with the applicable provisions of the Code regarding the sources of
its income, the timing of its distributions and the diversification of its
assets, the Fund will not be subject to Federal income tax on taxable income
(including net realized capital gains) which is distributed to shareholders at
least annually in accordance with the timing requirements of the Code.

The Fund will be subject to a four percent nondeductible Federal excise
tax on certain amounts not distributed (and not treated as having been
distributed) on a timely basis in accordance with annual minimum distribution
requirements. The Fund intends under normal circumstances to avoid liability for
this tax by satisfying such distribution requirements.

Distributions from the Fund's current or accumulated earnings and
profits ("E&P"), as computed for Federal income tax purposes, will be taxable as
described in the Fund's Prospectus, whether taken in shares or in cash.
Distributions, if any, in excess of E&P will constitute a return of capital,
which will first reduce an investor's tax basis in Fund shares and thereafter
(after such basis is reduced to zero) will generally give rise to capital gains.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for Federal income tax purposes in each share so received
equal to the amount of cash that they would have received had they elected to
receive cash, divided by the number of shares received.

30
<PAGE>

Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, certain foreign currency options and futures contracts, forward
foreign currency contracts, foreign currencies, or payables or receivables
denominated in a foreign currency are subject to Section 988 of the Code, which
generally causes such gains and losses to be treated as ordinary income and
losses and may affect the amount, timing and character of distributions to
shareholders. Any such transactions that are not directly-related to the Fund's
investment in stock or securities, possibly including certain currency positions
or derivatives not used for hedging purposes, may increase the amount of gain it
is deemed to recognize from the sale of certain investments held for less than
three months, which gain is limited under the Code to less than 30% of its
annual gross income, and may under future Treasury regulations produce income
not among the types of "qualifying income" from which the Fund must derive at
least 90% of its annual gross income. If the net foreign exchange loss for a
year treated as ordinary loss under Section 988 were to exceed the Fund's
investment company taxable income, i.e. all of the Fund's net income other that
any excess of net long-term capital gain over net short-term capital loss,
(computed without regard to such a loss but after considering the post-October
loss regulations) the resulting overall ordinary loss for such a year would not
be deductible by the Fund or its shareholders in future years.

The Fund may be subject to foreign taxes on its income from certain
foreign securities. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. Because more than 50% of the Fund's assets at
the close of any taxable year will not consist of stocks or securities of
foreign corporations, the Fund will be unable to pass such taxes through to
shareholders (as additional income) along with a corresponding entitlement to a
foreign tax credit or deduction. If the Fund acquires stock in certain non-U.S.
corporations that receive at least 75% of their annual gross income from passive
sources (such as interest, dividends, rents, royalties or capital gain) or hold
at least 50% of their assets in investments producing such passive income
("passive foreign investment companies"), the Fund could be subject to Federal
income tax and additional interest charges on "excess distributions" received
from such companies or gain from the sales of stock in such companies, even if
all income or gain actually received by the Fund is timely distributed to its
shareholders any credit or deduction for such a tax. Certain elections may, of
available, ameliorate these adverse tax consequences, but any such election
would required the Fund to recognize taxable income or gain without the
concurrent receipt of cash. The Fund may limit and/or manage its holdings in
passive foreign investment companies to minimize its tax liability or maximize
its return from these investments.

The amount of net realized capital gains, if any, in any given year
will vary depending upon the Advisers' current investment strategy and whether
the Advisers believe it to be in the best interest of the Fund to dispose of
portfolio securities that will generate capital gains or enter into transactions
in certain options or futures. At the time of an investor's purchase of shares
of the Fund, a portion of the purchase price is often attributable to realized
or unrealized appreciation in the Fund's portfolio or undistributed taxable
income of the Fund. Consequently, subsequent distributions on these shares may
be taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for
those shares and the distributions in reality represent a return of a portion of
the purchase price.

31
<PAGE>

Upon a redemption of shares (including by exercise of the exchange
privilege) a shareholder will ordinarily realize a taxable gain or loss
depending upon his basis in his shares. This gain or loss will be treated as
capital gain or loss if the shares are capital assets in the shareholder's hands
and will be long-term or short-term, depending upon the shareholder's tax
holding period for the shares. A sales charge paid in purchasing Class A shares
of the Fund cannot be taken into account for purposes of determining gain or
loss on the redemption or exchange of such shares within 90 days after their
purchase to the extent Class A shares of the Fund or another John Hancock fund
are subsequently acquired without payment of a sales charge pursuant to the
reinvestment or exchange privilege. This disregarded charge will result in an
increase in the shareholder's tax basis in the Class A shares subsequently
acquired. Also, any loss realized on a redemption or exchange may be disallowed
for tax purposes to the extent the shares disposed of are replaced with other
shares of the Fund within a period of 61 days beginning 30 days before and
ending 30 days after the shares are disposed of, such as pursuant to the
automatic dividend reinvestment Plan. In such a case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss. Any loss realized upon
the redemption of shares with a tax holding period of six months or less will be
treated as a long-term capital loss to the extent of any amounts treated as
distributions of long-term capital gain with respect to such shares.

Although its present intention is to distribute all net capital gains
annually, if any, the Fund reserves the right to retain and reinvest all or any
portion of the excess, as computed for Federal income tax purposes, of net
long-term capital gain over net short-term capital loss in any year. The Fund
will not in any event distribute net long-term capital gains realized in any
year to the extent that a capital loss is carried forward from prior years
against such gain. To the extent such excess was retained and not exhausted by
the carry forward of prior years' capital losses, it would be subject to Federal
income tax in the hands of the Fund. Each shareholder would be treated for
Federal income tax purposes as if the Fund had distributed to him on the last
day of its taxable year his pro rata share of such excess, and he had paid his
pro rata share of the taxes paid by the Fund and reinvested the remainder in the
Fund. Accordingly, each shareholder would (a) include his pro rata share of such
excess as long-term capital gain in his tax return for his taxable year in which
the last day of the Fund's taxable year falls, (b) be entitled either to a tax
credit on his return for, or to a refund of, his pro rata share of the taxes
paid by the Fund, and (c) be entitled to increase the adjusted tax basis for his
shares in the Fund by the difference between his pro rata share of such excess
and the pro rata share of such taxes.

For Federal income tax purposes, the Fund is permitted to carry forward
a net capital loss in any year to offset net realized capital gains, if any,
during the eight years following the year of the loss. To the extent subsequent
net capital gains are offset by such losses, they would not result in Federal
income tax liability to the Fund and, as noted above, would not be distributed
to shareholders. Presently, there are no capital loss carry forwards to offset
future net realized capital gains.

Limitations imposed by the Code on regulated investment companies like
the Fund may restrict the Fund's ability to enter into futures and options
transactions and currency forward contracts. The options and futures
transactions and certain forward, currency transactions undertaken by the Fund
may cause the Fund to recognize gains or losses from marking to market

<PAGE>

even though its positions have not been sold or terminated and affect the
character as long-term or short-term (or, in the case of certain currency
forwards options and futures, as ordinary income or loss) and timing of some
gains and losses realized by the Fund. Also, certain of the Fund's losses on its
transactions involving options, futures or forward contracts and/or offsetting
portfolio positions may be deferred rather than being taken into account
currently in calculating the Fund's taxable income. These transactions may
therefore affect the amount, timing and character of the Fund's distributions to
shareholders. Some of the applicable tax rules may be modified if the Fund is
eligible and chooses to make one or more of certain tax elections that may be
available. The Fund will take into account the special tax rules applicable to
options, futures or forward contracts (including consideration of any available
elections) in order to minimize any potential adverse tax consequences.

For purposes of the dividends-received deduction available to
corporations, dividends received by the Fund, if any, from U.S. domestic
corporations in respect of the stock of such corporations held by the Fund, for
U.S. Federal income tax purposes, for at least 46 days (91 days in the case of
certain preferred stock) and distributed and designated by the Fund may be
treated as qualifying dividends. Corporate shareholders must meet the minimum
holding period requirement stated above (46 or 91 days) with respect to their
shares of the Fund in order to qualify for the deduction and, if they borrow to
acquire such shares, may be denied a portion of the dividends received
deduction. The entire qualifying dividend, including the otherwise-deductible
amount, will be included in determining the excess (if any) of a corporate
shareholder's adjusted current earnings over its alternative minimum taxable
income, which may increase its alternative minimum tax liability, if any.
Additionally, any corporate shareholder should consult its tax adviser regarding
the possibility that its tax basis in its Fund shares may also be reduced, for
Federal income tax purposes, by reason of "extraordinary dividends" received
with respect to the shares, for the purpose of computing its gain or loss on
redemption or other disposition of the shares.

Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.

The foregoing discussion relates solely to U.S. Federal income tax laws
as applicable to U.S. persons (i.e., U.S. citizens or residents and U.S.
domestic corporations, partnerships, trusts or estates) subject to tax under the
laws. The discussion does not address special tax rules applicable to certain
classes of investors, such as tax-exempt entities, insurance companies and
financial institutions. Dividends, capital gain distributions and ownership of
or gains realized on the redemption (including an exchange) of shares of the
Fund may also be subject to state and local taxes. Shareholders should consult
their own tax advisers as to the Federal, state or local tax consequences of
ownership of shares of and receipt of distributions from the Fund in their
particular circumstances.

Non-U.S. investors not engaged in a U.S. trade or business with which
their Fund investment is effectively connected will be subject to U.S. Federal
income tax treatment that is

<PAGE>

different from that described above. These investors may be subject to
non-resident alien withholding tax at the rate of 30% (or a lower rate under an
applicable tax treaty) on amounts treated as ordinary dividends from the Fund
and, unless an effective IRS Form W-8 or authorized substitute is on file, to
31% backup withholding on certain other payments from the Fund. Non-U.S.
investors should consult their tax advisers regarding such treatment and the
application of foreign taxes to an investment in the Fund.

The Fund is not subject to Massachusetts corporate excise or franchise
taxes. Provided that the Fund qualifies as a regulated investment company under
the Code, it will also not be required to pay any Massachusetts income tax.

CALCULATION OF PERFORMANCE

The average annual total return of the Class A shares of the Fund,
for the one year period ended December 31, 1995 and since commencement of
operations, January 3, 1994 was 14.28% and 11.01%, respectively.

The average annual total return of the Class B shares of the fund for
the one year period ended December 31, 1995 and since commencement of
operations, January 3, 1994 was 14.11% and 10.78%, respectively.

The Fund's total return is computed by finding the average annual
compounded rate of return over the 1 year, 5 year and 10 year periods that would
equate the initial amount invested to the ending redeemable value according to
the following formula:

[GRAPHIC OMITTED]

Where:

P = a hypothetical initial investment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 investment made at
the beginning of the 1 year, 5 year and 10 year periods.

In the case of Class A shares or Class B shares, this calculation
assumes the maximum sales charge is included in the initial investment or the
CDSC is applied at the end of the period. This calculation also assumes that all
dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period.

The "distribution rate" is determined by annualizing the result of
dividing the declared dividends of the Fund during the period stated by the
maximum offering price or net asset value at the end of the period.

34
<PAGE>

In addition to average annual total returns, the Fund may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Cumulative total returns may be quoted as a
percentage or as a dollar amount, and may be calculated for a single investment,
a series of investments and/or a series of redemptions over any time period.
Total returns may be quoted with or without taking the Fund's sales charge on
Class A shares or the CDSC on Class B shares into account. Excluding the Fund's
sales charge on Class A shares and the CDSC on Class B shares from a total
return calculation produces a higher total return figure.

From time to time, in reports and promotional literature, the Fund's
total return will be compared to indices of mutual funds such as Lipper
Analytical Services, Inc.'s "Lipper - Mutual Performance Analysis," a monthly
publication which tracks net assets, total return and yield on equity mutual
funds in the United States. Ibottson and Associates, CDA Weisenberger and F.C.
Towers are also used for comparison purposes, as well as the Russell and
Wilshire Indices.

Performance rankings and ratings reported periodically in national
financial publications such as MONEY Magazine, FORBES, BUSINESS WEEK, THE WALL
STREET JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRON'S may also be
utilized.

The performance of the Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representations of performance of the
Fund for any period in the future. The performance of the Fund is a function of
many factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest; and changes
in operating expenses are all examples of items that can increase or decrease
the Fund's performance.

BROKERAGE ALLOCATION

Decisions concerning the purchase and sale of portfolio securities and
the allocation of brokerage commissions are made by the Adviser pursuant to
recommendations made by its investment committee, which consists of officers and
directors of the Advisers and affiliates and officers and Trustees who are
interested persons of the Fund. Orders for purchases and sales of securities are
placed in a manner which, in the opinion of the Adviser, will offer the best
price and market for the execution of each such transaction. Purchases from
underwriters of portfolio securities may include a commission or commission paid
by the issuer and transactions with dealers serving as market makers reflect a
"spread." Investments in debt securities are generally traded on a net basis
through dealers acting for their own account as principals and not as brokers;
no brokerage commissions are payable on such transactions.

The Fund's primary policy is to execute all purchases and sales of
portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the transaction including brokerage
commissions. This policy governs the selection of brokers and dealers and the
market in which a transaction is executed. Consistent with the foregoing primary
policy, the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. and other

<PAGE>

policies that the Trustees may determine, the Advisers may consider sales of
shares of the Fund as a factor in the selection of broker-dealers to execute the
Fund's portfolio transactions.

To the extent consistent with the foregoing, the Fund will be governed
in the selection of brokers and dealers, and the negotiation of brokerage
commission rates and dealer spreads, by the reliability and quality of the
services, including primarily the availability and value of research information
and to a lesser extent statistical assistance furnished to the Adviser or the
Fund, and their value and expected contribution to the performance of the Fund.
It is not possible to place a dollar value on information and services to be
received from brokers and dealers, since it is only supplementary to the
research efforts of the Adviser. The receipt of research information is not
expected to reduce significantly the expenses of the Adviser. The research
information and statistical assistance furnished by brokers and dealers may
benefit the Life Insurance Company or other advisory clients of the Adviser,
and, conversely, brokerage commissions and spreads paid by other advisory
clients of the Adviser may result in research information and statistical
assistance beneficial to the Fund. The Fund will not make commitments to
allocate portfolio transactions upon any prescribed basis. While the Fund's
officers will be primarily responsible for the allocation of the Fund's
brokerage business, their policies and practices in this regard must be
consistent with the foregoing and will at all times be subject to review by the
Trustees. For the year ended on December 31, 1995 and 1994, the Fund paid
negotiated brokerage commissions of $78,514 and $24,810, respectively.

As permitted by Section 28(e) of the Securities Exchange Act of 1934,
the Fund may pay a broker which provides brokerage and research services to the
Fund an amount of disclosed commission in excess of the commission which another
broker would have charged for effecting that transaction. This practice is
subject to a good faith determination by the Trustees that the price is
reasonable in light of the services provided and to policies the Trustees may
adopt from time to time. During the period ended December 31, 1995, the paid no
commissions to compensate brokers for research services such as industry and
company reviews and evaluations of the securities.

The Adviser's indirect parent, the Life Insurance Company, is the
indirect sole shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, two of which, Tucker Anthony Incorporated, John Hancock
Distributors, and Sutro & Company, Inc., are broker-dealers ("Affiliated
Brokers"). Pursuant to procedures established by the Trustees and consistent
with the above policy of obtaining best net results, the Fund may execute
portfolio transactions with or through affiliated Brokers. During the period
ended December 31, 1995, the Fund did not execute any portfolio transactions
with affiliated Brokers.

<PAGE>

charged by other brokers in connection with comparable transactions involving
similar securities being purchased or sold. A transaction would not be placed
with an Affiliated Broker if the Fund would have to pay a commission rate less
favorable than the Affiliated Broker's contemporaneous charges for comparable
transactions for its other most favored, but unaffiliated, customers except for
accounts for which the Affiliated Broker acts as clearing broker for another
brokerage firm, and any customers of the Affiliated Broker not comparable to the
Fund as determined by a majority of the Trustees who are not "interested
persons" (as defined in the Investment Company Act) of the Fund, the Adviser or
the Affiliated Broker. Because the Adviser, which is affiliated with the
Affiliated Brokers, has, as an investment adviser to the Fund, the obligation to
provide investment management services, which include elements of research and
related investment skills, such research and related skills will not be used by
the Affiliated Broker as a basis for negotiating commissions at a rate higher
than that determined in accordance with the above criteria. The Fund will not
effect principal transactions with Affiliated Brokers.

TRANSFER AGENT SERVICES

John Hancock Investors Services, Inc., P.O. Box 9116, Boston, MA
02205-9116, a wholly owned indirect subsidiary of the Life Insurance Company, is
the transfer and dividend paying agent for the Fund. The Fund pays Investor
Services an annual fee for Class A of $16.00 per shareholder account and for
Class B shares of $18.50 plus certain out-of-pocket expenses. These expenses are
aggregated and charged to the Fund allocated to each class on the basis of the
relative net asset values.

CUSTODY OF PORTFOLIO

Portfolio securities of the Fund are held pursuant to a custodian
agreement between the Fund and Investors Bank & Trust Company, 24 Federal
Street, Boston, Massachusetts 02110. Under the custodian agreement, Investors
Bank & Trust Company performs custody, portfolio and fund accounting services.

INDEPENDENT AUDITORS

The independent auditors of the Fund are Ernst & Young LLP, 200
Clarendon Street, Boston, Massachusetts 02116. Ernst & Young audits and renders
an opinion of the Fund's annual financial statements and prepares the Fund's
annual Federal income tax return.

37
<PAGE>

FINANCIAL STATEMENTS

JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<TABLE>
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks (cost - $25,534,477) ...................... $27,844,901
Joint repurchase agreement (cost - $1,879,000) .......... 1,879,000
Corporate savings account ............................... 2,262
-----------
29,726,163
Receivable for shares sold ............................... 47,567
Interest receivable ...................................... 941
Dividends receivable ..................................... 43,110
Receivable from John Hancock Advisers, Inc. - Note B ..... 80,937
Deferred organization expenses - Note A .................. 67,935
Other assets ............................................. 171
-----------
Total Assets ........................... 29,966,824
------------------------------------------------------------
LIABILITIES:
Payable for shares repurchased ........................... 46,547
Payable to John Hancock Advisers, Inc. ...................
and affiliates - Note B ................................. 29,321
Accounts payable and accrued expenses .................... 52,220
-----------
Total Liabilities ...................... 128,088
------------------------------------------------------------
NET ASSETS:
Capital paid-in .......................................... 27,528,025
Accumulated net realized gain on investments ............. 191
Net unrealized appreciation of investments ............... 2,310,424
Undistributed net investment income ...................... 96
-----------
Net Assets ............................. $29,838,736
============================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial interest outstanding -
unlimited number of shares authorized with no par value, respectively)
Class A - $12,844,767/1,236,642 .......................... $ 10.39
================================================================================
Class B - $16,993,969/1,636,520 .......................... $ 10.38
================================================================================
MAXIMUM OFFERING PRICE PER SHARE *
Class A - ($10.39 x 105.26%) ............................. $ 10.94
================================================================================
</TABLE>

* On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.

THE STATEMENT OF OPERATIONS SUMMARIZED THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS FOR THE PERIOD
STATED.

STATEMENT OF OPERATIONS
Year ended December 31, 1995
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $5,468) $ 475,099
Interest ............................................. 121,481
----------
596,580
----------
Expenses:
Investment management fee - Note B .................. 140,122
Distribution/service fee - Note B
Class A ........................................... 27,771
Class B ........................................... 107,603
Transfer agent fee - Note B ......................... 61,844
Registration and filing fees ........................ 30,613
Custodian fee ....................................... 29,858
Printing ............................................ 23,024
Organization expense - Note A ....................... 22,560
Auditing fee ........................................ 7,214
Miscellaneous ....................................... 987
Trustees' fees ...................................... 621
----------
Total Expenses ..................... 452,217
Less Expenses Reimbursable
by John Hancock Advisers, Inc. -
Note B ............................. (174,925)
----------
Net Expenses ....................... 277,292
----------------------------------------------------
Net Investment Income .............. 319,288
----------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments sold ................ 591,659
Change in net unrealized appreciation/depreciation
of investments ...................................... 2,253,318
----------
Net Realized and Unrealized
Gain on Investments ................ 2,844,977
----------------------------------------------------
Net Increase in Net Assets
Resulting from Operations .......... $3,164,265
====================================================
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>
FINANCIAL STATEMENTS

JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

STATEMENT OF CHANGES IN NET ASSETS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

FOR THE PERIOD
JANUARY 3, 1994
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
1995 DECEMBER 31, 1994
------------ -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ....................................................................... $ 319,288 $ 51,170
Net realized gain on investments sold ....................................................... 591,659 --
Change in net unrealized appreciation/depreciation of investments ........................... 2,253,318 57,106
------------ ----------
Net Increase in Net Assets Resulting from Operations ....................................... 3,164,265 108,276
------------ ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($0.1978 and $0.1687 per share, respectively) .................................... (194,536) (49,463)
Class B - ($0.1215 and $0.1050 per share, respectively) .................................... (141,070) (18,717)
Distributions from net realized gain on investments sold
Class A - ($0.2115 and none per share, respectively) ....................................... (255,578) --
Class B - ($0.2115 and none per share, respectively) ....................................... (335,890) --
------------ ----------
Total Distributions to Shareholders ...................................................... (927,074) (68,180)
------------ ----------

FROM FUND SHARE TRANSACTIONS -- NET* .......................................................... 19,885,478 7,175,971
------------ ----------

NET ASSETS:
Beginning of period ......................................................................... 7,716,067 --
Initial Investment by John Hancock Advisers, Inc. ........................................... -- 400,000
Initial Investment by NM Capital Management, Inc. ........................................... -- 100,000
----------- ----------
End of period (including undistributed net investment income of $96 and none, respectively).. $29,838,736 $7,716,067
=========== ==========
</TABLE>

THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, DISTRIBUTIONS PAID TO
SHAREHOLDERS, AND ANY INCREASE DUE TO REINVESTMENT OF DISTRIBUTIONS IN THE FUND.
THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES OUTSTANDING AT THE BEGINNING
OF THE PERIOD, REINVESTED AND OUTSTANDING AT THE END OF THE PERIOD, FOR THE LAST
TWO PERIODS.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>
FINANCIAL STATEMENTS

JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
* ANALYSIS OF FUND SHARE TRANSACTIONS:

<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 3, 1994
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
1995 DECEMBER 31, 1994
------------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- ----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold .................................................. 1,025,002 $10,116,634 478,011 $4,269,587
Shares issued to shareholders in reinvestment of distributions 39,907 410,057 4,403 39,080
--------- ----------- ------- ----------
1,064,909 10,526,691 482,414 4,308,667
Less shares repurchased ...................................... (319,719) (3,191,389) (49,786) (445,803)
--------- ----------- ------- ----------
745,190 7,335,302 432,628 3,862,864
Initial Investment by John Hancock Advisers, Inc. ............ -- -- 47,059 400,000
Initial Investment by NM Capital Management, Inc. ............ -- -- 11,765 100,000
--------- ----------- ------- ----------
Net increase ................................................. 745,190 $ 7,335,302 491,452 $4,362,864
========= =========== ======= ==========

CLASS B
Shares sold .................................................. 1,444,369 $14,296,298 390,508 $3,529,419
Shares issued to shareholders in reinvestment of distributions 39,383 406,436 1,918 17,065
--------- ----------- ------- ----------
1,483,752 14,702,734 392,426 3,546,484
Less shares repurchased ...................................... (213,668) (2,152,558) (25,990) (233,377)
--------- ----------- ------- ----------
Net increase ................................................. 1,270,084 $12,550,176 366,436 $3,313,107
========= =========== ======= ==========
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>
FINANCIAL STATEMENTS

JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD JANUARY 3, 1994
DECEMBER 31, (COMMENCEMENT OF OPERATIONS)
1995 TO DECEMBER 31, 1994
------------ ------------------------------
<S> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ................................... $ 8.99 $ 8.50(e)
------- ------
Net Investment Income .................................................. 0.21(b) 0.18(b)
Net Realized and Unrealized Gain on Investments ........................ 1.60 0.48
------- ------
Total from Investment Operations ...................................... 1.81 0.66
------- ------
Less Distributions:
Dividends from Net Investment Income ................................... (0.20) (0.17)
Distributions from Net Realized Gain on Investments Sold ............... (0.21) --
------- ------
Total Distributions ................................................... (0.41) (0.17)
------- ------
Net Asset Value, End of Period ......................................... $ 10.39 $ 8.99
======= ======
Total Investment Return at Net Asset Value (d) ........................ 20.26% 7.81%(c)
Total Adjusted Investment Return at Net Asset Value (a) ............... 19.39% 7.30%(c)

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .............................. $12,845 $4,420
Ratio of Expenses to Average Net Assets ** ............................. 0.98% 0.99%*
Ratio of Adjusted Expenses to Average Net Assets (a) ................... 1.85% 4.98%*
Ratio of Net Investment Income to Average Net Assets ................... 2.04% 2.10%*
Ratio of Adjusted Net Investment Income (Loss) to Average Net Assets (a) 1.17% (1.89%)*
Portfolio Turnover Rate ................................................ 9% 0.3%
**Expense Reimbursement Per Share ...................................... $ 0.09(b) $ 0.34(b)
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>
FINANCIAL STATEMENTS

JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

FINANCIAL HIGHLIGHTS (CONTINUED)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD JANUARY 3, 1994
DECEMBER 31, (COMMENCEMENT OF OPERATIONS)
1995 TO DECEMBER 31, 1994
------------ ------------------------------
<S> <C> <C>
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ................................... $ 9.00 $ 8.50(e)
------- ------
Net Investment Income .................................................. 0.12(b) 0.13(b)
Net Realized and Unrealized Gain on Investments ........................ 1.59 0.48
------- ------
Total from Investment Operations ...................................... 1.71 0.61
------- ------
Less Distributions:
Dividends from Net Investment Income ................................... (0.12) (0.11)
Distributions from Net Realized Gain on Investments Sold ............... (0.21) --
------- ------
Total Distributions ................................................... (0.33) (0.11)
------- ------
Net Asset Value, End of Period ......................................... $ 10.38 $ 9.00
======= ======
Total Investment Return at Net Asset Value (d) ........................ 19.11% 7.15%(c)
Total Adjusted Investment Return at Net Asset Value (a) ............... 18.24% 6.64%(c)

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .............................. $16,994 $3,296
Ratio of Expenses to Average Net Assets ** ............................. 1.73% 1.72%*
Ratio of Adjusted Expenses to Average Net Assets (a) ................... 2.60% 5.71%*
Ratio of Net Investment Income to Average Net Assets ................... 1.21% 1.53%*
Ratio of Adjusted Net Investment Income (Loss) to Average Net Assets (a) 0.34% (2.46%)*
Portfolio Turnover Rate ................................................ 9% 0.3%
**Expense Reimbursement Per Share ...................................... $ 0.09(b) $ 0.34(b)
</TABLE>

* On an annualized basis.
(a) On an unreimbursed basis.
(b) On average month end shares outstanding.
(c) Not annualized.
(d) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(e) Initial price to commence operations.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>
FINANCIAL STATEMENTS

JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY
SPECIAL VALUE FUND ON DECEMBER 31, 1995. IT'S DIVIDED INTO TWO MAIN
CATEGORIES:COMMON STOCKS AND SHORT-TERM INVESTMENTS. THE COMMON STOCKS ARE
FURTHER BROKEN DOWN BY INDUSTRY GROUPS. SHORT-TERM INVESTMENTS, WHICH REPRESENT
THE FUND'S "CASH" POSITION, ARE LISTED LAST.

SCHEDULE OF INVESTMENTS
December 31, 1995
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

<TABLE>
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- ------
<S> <C> <C>
COMMON STOCKS
AIRCRAFT (7.21%)
AAR Corp. .................................. 30,000 $ 660,000
Boeing Co. (The) ........................... 10,800 846,450
Thiokol Corp. .............................. 19,000 643,625
-----------
2,150,075
-----------
BEVERAGES (4.75%)
Coors (Adolph) Co. Class B ................. 64,000 1,416,000
-----------
CHEMICALS (1.73%)
LeaRonal, Inc. ............................. 22,500 517,500
-----------
DIVERSIFIED OPERATIONS (6.98%)
Hanson PLC, American Depositary Receipts ... 48,000 732,000
Horsham Corp. .............................. 100,000* 1,350,000
-----------
2,082,000
-----------
FOODS (9.80%)
Archer-Daniels-Midland Co. ................. 59,445 1,070,010
Dole Food Co. .............................. 20,500 717,500
Savannah Foods & Industries, Inc............ 100,000* 1,137,500
-----------
2,925,010
-----------
LEISURE & RECREATION (7.26%)
Outboard Marine Corp. ...................... 56,700 1,155,262
Russ Berrie & Co., Inc. .................... 80,000 1,010,000
-----------
2,165,262
-----------
MACHINERY (3.00%)
Harnischfeger Industries, Inc. ............. 11,700 389,025
Twin Disc, Inc. ............................ 22,200 505,050
-----------
894,075
-----------
OFFICE EQUIPMENT & SUPPLIES (2.14%)
Cross (A.T.) Co. ........................... 42,300 639,788
-----------
OIL & GAS (11.21%)
Cooper Cameron Corp.** ..................... 50,000* 1,775,000
Daniel Industries .......................... 78,300 1,115,775
Parker Drilling Co.** ...................... 74,200 454,475
-----------
3,345,250
-----------
PAPER (5.47%)
Crown Vantage, Inc.** ...................... 1,140* 16,245
Gibson Greetings, Inc.** ................... 50,900 814,400
Glatfelter (P.H.) Co. ...................... 30,700 525,738
James River Corp. of Virginia .............. 11,400 275,025
-----------
1,631,408
-----------
POLLUTION CONTROL (3.13%)
Calgon Carbon Corp. ........................ 77,800 $ 933,600
-----------
PUBLISHING (2.04%)
Times Mirror Co. (The) Class A ............. 18,000* 609,750
-----------
REAL ESTATE (3.20%)
Castle & Cooke, Inc.** ..................... 6,833* 114,458
Tejon Ranch Co. ............................ 58,000* 841,000
-----------
955,458
-----------
RETAIL (8.36%)
Great Atlantic & Pacific Tea Co., Inc. (The) 29,000* 667,000
Mercantile Stores Co., Inc. ................ 18,000 832,500
Ross Stores, Inc. .......................... 52,000* 994,500
-----------
2,494,000
-----------
SHOES (3.25%)
Brown Group, Inc. .......................... 68,000 969,000
-----------
TELECOMMUNICATIONS (0.45%)
ANTEC Corp.** .............................. 7,500* 135,000
-----------
TEXTILE (5.61%)
Delta Woodside Industries, Inc. ............ 53,800 356,425
Garan Inc. ................................. 78,000* 1,316,250
-----------
1,672,675
-----------
TRANSPORTATION - SHIP (4.37%)
Overseas Shipholding Group, Inc. ........... 68,700 1,305,300
-----------
UTILITIES (3.36%)
Destec Energy, Inc.** ...................... 73,000* 1,003,750
-----------
TOTAL COMMON STOCKS
(Cost $25,534,477) .......... (93.32%) 27,844,901
------ -----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>
FINANCIAL STATEMENTS

JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

<TABLE>
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- ------------------- -------- --------------- ------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (6.30%)
Investment in a joint repurchase
agreement transaction with SBC
Capital Markets Inc.- Dated 12-29-95,
Due 01-02-96 (secured by U.S.
Treasury Bonds, 10.375%
Due 11-15-12 and 7.50%
Due 11-15-16) - Note A ............... 5.90% $ 1,879 $ 1,879,000
-----------
CORPORATE SAVINGS ACCOUNT (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.00% .................................... 2,262
-----------
TOTAL SHORT-TERM INVESTMENTS ...................... (6.30%) 1,881,262
------- -----------
TOTAL INVESTMENTS ...................... (99.62%) $29,726,163
======= ===========
</TABLE>

* Securities, other than short-term investments, newly added to the portfolio
during the year ended December 31, 1995.

** Non-income producing security

The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.

SEE NOTES TO FINANCIAL STATEMENTS.

15
<PAGE>
NOTES TO FINANCIAL STATEMENTS

JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

NOTE A --
ACCOUNTING POLICIES

John Hancock Capital Series (the "Trust"), is an open-end management investment
company, registered under the Investment Company Act of 1940. The Trust consists
of two series portfolios: John Hancock Special Value Fund (the "Fund") and John
Hancock Growth Fund. The investment objective of the Fund is to seek capital
appreciation with income as a secondary consideration by investing primarily in
equity securities that are undervalued when compared to alternative equity
investments.

The Trustees have authorized the issuance of two classes of the Fund,
designated as Class A and Class B shares. The shares of each class represent an
interest in the same portfolio of investments of the Fund and have equal rights
to voting, redemptions, dividends and liquidation, except that certain expenses,
subject to the approval of the Trustees, may be applied differently to each
class of shares in accordance with current regulations of the Securities and
Exchange Commission. Shareholders of a class which bears distribution/service
expenses under terms of a distribution plan, have exclusive voting rights
regarding such distribution plan. Significant accounting policies of the Fund
are as follows:

FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all its taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.

DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date or, in the case of some foreign securities,
on the date thereafter when the Fund is made aware of the dividend. Interest
income on investment securities is recorded on the accrual basis. Foreign income
may be subject to foreign withholding taxes which are accrued as applicable.

The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions are
determined in conformity with income tax regulations, which may differ from
generally accepted accounting principles. Dividends paid by the Fund, if any,
with respect to each class of shares will be calculated in the same manner, at
the same time and will be in the same amount, except for effect of expenses that
may be applied differently to each class as explained previously.

CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets

16
<PAGE>
NOTES TO FINANCIAL STATEMENTS

JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

of the respective classes. Distribution/service fees if any, are calculated
daily at the class level based on the appropriated net assets of each class and
the specific expense rate(s) applicable to each class.

FOREIGN CURRENCY TRANSLATION All assets or liabilities initially expressed in
terms of foreign currencies are translated into U.S. dollars based on London
currency exchange quotations as of 5:00 p.m., London time, on the date of any
determination of the net asset value of the Fund. Transactions affecting
statement of operations accounts and net realized gain/loss on investments are
translated at the rates prevailing at the dates of the transactions.

The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.

Reported net realized foreign exchange gains or losses arise from sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities, resulting
from changes in the exchange rate.

ORGANIZATION EXPENSE Expenses incurred in connection with the organization of
the Fund have been capitalized and are being charged to the Fund's operations
ratably over a five-year period that began with the commencement of investment
operations of the Fund.

NOTE B --
MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES AND OTHERS

Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser, for a continuous investment program equivalent,
on an annual basis, to the sum of 0.70% of the Fund's average daily net asset
value. Pursuant to a subadvisory agreement between the Adviser and an affiliated
company of the Adviser, NM Capital Management, Inc. (the "Sub-Adviser"), the
Adviser pays the Sub-Adviser 40% of the fee received by the Adviser for managing
the Fund. The Fund is not responsible for the sub-advisory fee.

The Adviser has agreed to limit Fund expenses, including the management fee
(but not including the transfer agent fee and the 12b-1 fee), to 0.40% of the
Fund's average daily net assets. Accordingly, for the period ended December 31,
1995, the reduction in the Fund's expenses collectively with any additional
amounts not borne by the Fund by virtue of the expense limit amounted to
$174,925. The Adviser reserves the right to terminate this limitation in the
future.

The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. For the period ended December
31, 1995, net sales charges received with regard to sales of Class A shares
amounted to $234,230. Out of this amount, $20,231 was retained and used for
printing prospectuses, advertising, sales literature, and other purposes,
$23,541 was paid as sales commissions to unrelated broker-dealers, and $190,458
was paid as sales commissions to personnel of John Hancock Distributors, Inc.
("Distributors"), Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro &
Co., Inc. ("Sutro"), all of which are broker-dealers. The Adviser's indirect
parent, John Hancock Mutual Life Insurance Company, is the indirect sole
shareholder of Distributors and John Hancock Freedom Securities Corporation and
its subsidiaries, which include Tucker Anthony and Sutro.

<PAGE>
NOTES TO FINANCIAL STATEMENTS

JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

The Fund has a transfer agent agreement with John Hancock Investor Services
Corp. ("Investor Services"), a wholly-owned subsidiary of The Berkeley Financial
Group. Prior to October 1, 1995, the Fund paid transfer agent fees as a class
specific expense based on the number of shareholder accounts and certain
out-of-pocket expenses. For the nine months ended September 30, 1995 the
transfer agent expense, calculated as a class specific expense was $18,656 for
Class A and $26,509 for Class B shares, respectively. Effective October 1, 1995
transfer agent expense is a fund expense.

Messrs. Edward J. Boudreau, Jr and Richard S. Scipione are directors and/or
officers of the Adviser and/or its affiliates, as well as Trustees of the Fund.
The compensation of unaffiliated Trustees is borne by the Fund. The Adviser and
NM Capital Management, Inc. own 47,062 and 11,765 Class A shares of beneficial
interest of the Fund, respectively. Effective with the fees paid for 1995, the
unaffiliated Trustees may elect to defer for tax purposes their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund makes investments into other John Hancock funds, as applicable, to
cover its liability for the deferred compensation. Investments to cover the
Fund's deferred compensation liability are recorded on the Fund's books as an
other asset. The deferred compensation liability is marked to market on a
periodic basis and income earned by the investment is recorded on the Fund's
books.

NOTE C --
INVESTMENT TRANSACTIONS

Purchases and proceeds from sales of securities, other than short-term
obligations, during the period ended December 31, 1995 aggregated $19,670,125
and $1,671,523, respectively.

The cost of investments owned at December 31, 1995 (excluding the corporate
savings account), for Federal income tax purposes was $27,413,477. Gross
unrealized appreciation and depreciation of investments aggregated $3,534,808
and $1,224,384, respectively, resulting in net unrealized appreciation of
$2,310,424.

NOTE D --
RECLASSIFICATION OFCAPITALACCOUNTS

During the year ended December 31, 1995, the Fund has reclassified $16,414 from
capital paid-in to net investment income. This represents the cumulative amount
necessary to report these balances on a tax basis as of December 31, 1995.
Additional adjustments may be needed in subsequent reporting periods. These
reclassifications, which have no impact on the net asset value of the Fund, are
primarily attributable to certain differences in the computation of
distributable income and capital gains under federal tax rules versus generally
accepted accounting principles.

<PAGE>
JOHN HANCOCK FUNDS - SPECIAL VALUE FUND

REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS

To the Trustees and Shareholders of
John Hancock Capital Series --
John Hancock Special Value Fund

We have audited the accompanying statement of assets and liabilities of John
Hancock Special Value Fund (the "Fund'), one of the portfolios constituting John
Hancock Capital Series, including the schedule of investments, as of December
31, 1995, and the related statement of operations for the year then ended, the
statement of changes in net assets and financial highlights for the year ended
December 31, 1995 and for the period from January 3, 1994 (commencement of
operations) to December 31, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
John Hancock Special Value Fund portfolio of John Hancock Capital Series at
December 31, 1995, the results of its operations for the year then ended and,
the changes in its net assets and financial highlights for the year ended
December 31, 1995 and for the period from January 3, 1994 (commencement of
operations) to December 31, 1994, in conformity with generally accepted
accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
February 9, 1996

TAX INFORMATION NOTICE (UNAUDITED)

For Federal Income Tax purposes, the following information is furnished with
respect to the distributions of the Fund for its fiscal year ended December 31,
1995.

The Fund designated a distribution to shareholders $94,695 as long-term
capital gain dividends. Shareholders were mailed a 1995 U.S. Treasury Department
Form 1000-DIV in January 1996 representing their proportionate share.

United States Government Obligations: None of the 1995 income earned by the
Fund was derived from obligations of the U.S. government or its agencies. The
Fund did not have any assets invested in U.S. Treasury bonds, bills, notes or
other U.S. Government Agencies at year end.

With respect to the Fund's ordinary taxable income for the fiscal year ended
December 31, 1995, 53.54% of the dividends qualify for the corporate dividends
received deduction.

For specific information on exemption provisions in your state, consult your
local tax office or your tax adviser.

<PAGE>

PART C.

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements included in the Registration Statement:

John Hancock Growth Fund
------------------------

Statement of Assets and Liabilities as of December 31, 1995.
Statement of Operations of the year ended December 31, 1995.
Statement of Changes in Net Asset for each of the two years ended December 31.
Notes to Financial Statements.
Financial Highlights for each of the 10 years ended December 31, 1995.
Schedule of Investments as of December 31, 1995.

John Hancock Special Value Fund
-------------------------------

Statement of Assets and Liabilities as of December 31, 1995.
Statement of Operations of the year ended December 31, 1995.
Statement of Changes in Net Asset for each of the two years ended December 31.
Notes to Financial Statements.
Financial Highlights for each of the 2 years, and the period ended December
31, 1995.
Schedule of Investments as of December 31, 1995.

(b) Exhibits:

The exhibits to this Registration Statement are listed in the Exhibit
Index hereto and are incorporated herein by reference.

Item 25. Persons Controlled by or under Common Control with Registrant

No person is directly or indirectly controlled by or under common
control with Registrant.

Item 26. Number of Holders of Securities

As of March 13, 1996, the number of record holders of shares of
Registrant was as follows:

Title of Class Number of Record Holders
GROWTH FUND

Class A Shares - 29,838
Class B Shares - 1,717

C-1
<PAGE>

SPECIAL VALUE FUND

Class A Shares - 1,398
Class B Shares - 1,866

Item 27. Indemnification

Section 4.3 of Registrant's Declaration of Trust provides that (i)
every person who is, or has been, a Trustee, officer, employee or agent
of the Trust (including any individual who serves at its request as
director, officer, partner, trustee or the like of another organization
in which it has any interest as a shareholder, creditor or otherwise)
shall be indemnified by the Trust, or by one or more Series thereof if
the claim arises from his or her conduct with respect to only such
Series, to the fullest extent permitted by law against all liability
and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof; and that (ii) the words "claim,"
"action," "suit," or "proceeding" shall apply to all claims, actions,
suits or proceedings (civil, criminal, or other, including appeals),
actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.

However, no indemnification shall be provided to a Trustee or officer
(i) against any liability to the Trust, a Series thereof or the
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office; (ii) with respect to any matter as to which he shall
have been finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of the Trust
or a Series thereof; (iii) in the event of a settlement or other
disposition not involving a final adjudication resulting in a payment
by a Trustee or officer, unless there has been a determination that
such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office by (A) a court by (B) a majority of the Non-
interested trustees or independent legal counsel, or (C) a vote of the
majority of the Fund's outstanding shares.

The rights of indemnification may be insured against by policies
maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a person who has ceased to be such
Trustee or officer and shall inure to the benefit of the heirs,
executors, administrators and assigns of such a person. Nothing
contained herein shall affect any rights to indemnification to which
personnel of the Trust or any Series thereof other than Trustees and
officers may be entitled by contract or otherwise under law.

Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding may be advanced by the Trust or a Series
thereof before final disposition, if the

C-2
<PAGE>

recipient undertakes to repay the amount if it is ultimately determined
that he is not entitled to indemnification, provided that either:

(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust
or Series thereof shall be insured against losses arising out
of any such advances; or (ii) a majority of the Non-interested
Trustees acting on the matter (provided that a majority of the
Non-interested Trustees act on the matter) or an independent
legal counsel in a written opinion shall determine, based upon
a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to
indemnification.

For purposes of indemnification Non-interested Trustee" is one
who (i) is not an "Interested Person" of the Trust (including
anyone who has been exempted from being an "Interested Person"
by any rule, regulation or order of the Commission), and (ii)
is not involved in the claim, action, suit or proceeding.

(b) Under the Distribution Agreement. Under Section 12 of the
Distribution Agreement, John Hancock Funds, Inc. ("John Hancock Funds" ) has
agreed to indemnify the Registrant and its Trustees, officers and controlling
persons against claims arising out of certain acts and statements of John
Hancock Funds.

Section 9(a) of the By-Laws of the Insurance Company provides, in effect,
that the Insurance Company will, subject to limitations of law, indemnify each
present and former director, officer and employee of the of the Insurance
Company who serves as a Trustee or officer of the Registrant at the direction or
request of the Insurance Company against litigation expenses and liabilities
incurred while acting as such, except that such indemnification does not cover
any expense or liability incurred or imposed in connection with any matter as to
which such person shall be finally adjudicated not to have acted in good faith
in the reasonable belief that his action was in the best interests of the
Insurance Company. In addition, no such person will be indemnified by the
Insurance Company in respect of any liability or expense incurred in connection
with any matter settled without final adjudication unless such settlement shall
have been approved as in the best interests of the Insurance Company either by
vote of the Board of Directors at a meeting composed of directors who have no
interest in the outcome of such vote, or by vote of the policyholders. The
Insurance Company may pay expenses incurred in defending an action or claim in
advance of its final disposition, but only upon receipt of an undertaking by the
person indemnified to repay such payment if he should be determined to be
entitled to indemnification.

Article IX of the respective By-Laws of John Hancock Funds and the
Adviser provide as follows:

"Section 9.01. Indemnity: Any person made or threatened to be made a party to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was at any time since the
inception of the Corporation a serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint

C-3

<PAGE>

venture, trust or other enterprise, shall be indemnified by the Corporation
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and the liability was not
incurred by reason of gross negligence or reckless disregard of the duties
involved in the conduct of his office, and expenses in connection therewith may
be advanced by the Corporation, all to the full extent authorized by the law."

"Section 9.02. Not Exclusive; Survival of Rights: The indemnification provided
by Section 9.01 shall not be deemed exclusive of any other right to which those
indemnified may be entitled, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such as person."

Insofar as indemnification for liabilities under the Securities Act of 1933 (the
"Act") may be permitted to Trustees, officers and controlling persons of
Registrant pursuant to the Registrant's Amended and Restated Articles of
Incorporation, Article 10.1 of the Registrant's By-Laws, The Underwriting
Agreement, the By-Laws of John Hancock Funds, the Adviser, or the Insurance
Company or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

Item 28. Business and Other Connections of Investment Advisers

For information as to the business, profession, vocation or employment
of a substantial nature of each of the officers and Directors of the Investment
Adviser, reference is made to Forms ADV (801-8124) filed under the Investment
Advisers Act of 1940, herein incorporated by reference.

Item 29. Principal Underwriters

(a) John Hancock Funds acts as principal underwriter for the Registrant and also
serves as principal underwriter or distributor of shares for John Hancock Cash
Reserve, Inc., John Hancock Bond Fund, John Hancock Current Interest, John
Hancock Series, Inc., John Hancock Tax-Free Bond Fund, John Hancock California
Tax-Free Income Fund, John Hancock Capital Series, John Hancock Limited-Term
Government Fund, John Hancock Tax-Exempt Income Fund, John Hancock Sovereign
Investors Fund, Inc., John Hancock Special Equities Fund, John Hancock Sovereign
Bond Fund, John Hancock Tax-Exempt Series, John Hancock Strategic Series, John
Hancock Technology Series, Inc. and John Hancock World Fund, John Hancock
Investment Trust, John Hancock Institutional Series Trust, Freedom Investment
Trust, Freedom Investment Trust II and Freedom Investment Trust III.

C-4

<PAGE>

(b) The following table lists, for each director and officer of John
Hancock Funds, the information indicated.
<TABLE>

Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <C> <C>
Edward J. Boudreau, Jr. Chairman, President and Chairman
101 Huntington Avenue Chief Executive Officer
Boston, Massachusetts

Robert H. Watts Director, Executive Vice None
John Hancock Place President and Chief
P.O. Box 111 Compliance Officer
Boston, Massachusetts

Robert G. Freedman Director Vice President, Chief
101 Huntington Avenue Investment Officer
Boston, Massachusetts

Stephen M. Blair Executive Vice President None
101 Huntington Avenue
Boston, Massachusetts

Thomas H. Drohan Senior Vice President Senior Vice President
101 Huntington Avenue and Secretary
Boston, Massachusetts

James W. McLaughlin Senior Vice President and None
101 Huntington Avenue Chief Financial Officer
Boston, Massachusetts

David A. King Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts

William S. Nichols Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts

James B. Little Senior Vice President Senior Vice President and
101 Huntington Avenue Chief Financial Officer
Boston, Massachusetts

Michael T. Carpenter Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts

Anthony P. Petrucci Senior vice President None
101 Huntington Avenue
Boston, Massachusetts

Charles H. Womack Senior Vice President None
6501 Americas Parkway
Suite 950
Albuquerque, New Mexico

C-5
<PAGE>

Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant

John A. Morin Vice President Vice President
101 Huntington Avenue
Boston, Massachusetts

Susan S. Newton Vice President and Secretary Vice President,
101 Huntington Avenue Assistant Secretary
Boston, Massachusetts and Compliance Officer

Keith Harstein Vice President None
101 Huntington Avenue
Boston, Massachusetts

Griselda Zyman Vice President None
101 Huntington Avenue
Boston, Massachusetts

Christopher M. Meyer Treasurer None
101 Huntington Avenue
Boston, Massachusetts

Stephen L. Brown Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Thomas E. Moloney Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Jeanne M. Livermore Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Richard S. Scipione Director Trustee
John Hancock Place
P.O. Box 111
Boston, Massachusetts

C-6

<PAGE>

Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant

John Goldsmith Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Richard O. Hansen Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

John M. DeCiccio Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Foster Aborn Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

William C. Fletcher Director None
53 State Street
Boston, Massachusetts

David F. D'Alessandro Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

James V. Bowhers Executive Vice President None
101 Huntington Avenue
Boston, Massachusetts
</TABLE>

C-7

<PAGE>

Item 30. Location of Accounts and Records

Registrant maintains the records required to be maintained by it under
Rules 31a-1 (a), 31a-a(b), and 31a-2(a) under the Investment Company
Act of 1940 as its principal executive offices at 101 Huntington
Avenue, Boston Massachusetts 02199-7603. Certain records, including
records relating to Registrant's shareholders and the physical
possession of its securities, may be maintained pursuant to Rule 31a-3
at the main office of Registrant's Transfer Agent and Custodian.

Item 31. Management Services

Not applicable.

C-8

<PAGE>

Item 32. Undertakings

(a) Registrant undertakes to comply with Section 16(c) of the
Investment Company Act of 1940, as amended which relates to the assistance to be
rendered to shareholders by the Trustees of the Trust in calling a meeting of
shareholders for the purpose of voting upon the question of the removal of a
trustee.

(b) Not applicable.

(c) Registrant hereby undertakes to furnish each person to whom a
prospectus with respect to a series of the Registrant is delivered with
a copy of the latest annual report to shareholders with respect to that
series upon request and without charge.

C-9

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) unless the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston, and the Commonwealth of Massachusetts on the
day of March 26, 1996.

JOHN HANCOCK CAPITAL SERIES

By: Edward J. Boudreau, Jr.*
----------------------------
Edward J. Boudreau, Jr.
Chairman

Pursuant to the requirements of the Securities Act of 1933, the
Registration has been signed below by the following persons in the capacities
and on the dates indicated.

Signature Title Date

Edward J. Boudreau, Jr.*
- ------------------------ Chairman
Edward J. Boudreau, Jr. (Principal Executive Officer)

/s/James B. Little
- ------------------------
James B. Little Senior Vice President and Chief March 26, 1996
Financial Officer (Principal
Financial and Accounting Officer)

Dennis S. Aronowitz*
- ------------------------ Trustee
Dennis S. Aronowitz

Richard P. Chapman, Jr.*
- ------------------------ Trustee
Richard P. Chapman, Jr.

William J. Cosgrove*
- ------------------------ Trustee
William J. Cosgrove

C-10

<PAGE>

Signature Title Date

Gail D. Fosler*
- ------------------------ Trustee
Gail D. Fosler

Bayard Henry*
- ------------------------ Trustee
Bayard Henry

Anne C. Hodsdon*
- ------------------------
Anne C. Hodsdon

Richard S. Scipione*
- ------------------------ Trustee
Richard S. Scipione

Edward J. Spellman*
- ------------------------ Trustee
Edward J. Spellman

*By: /s/Thomas H. Drohan March 26, 1996
-------------------
Thomas H. Drohan,
Attorney-in-Fact

C-11

<PAGE>

POWER OF ATTORNEY

The undersigned Trustee of John Hancock Capital Series, John Hancock
Limited Term Government Fund, John Hancock Sovereign Bond Fund, John Hancock
Special Equities Fund, John Hancock Strategic Series, John Hancock Tax-Exempt
Income Fund, and John Hancock World Fund, each a Massachusetts business trust,
does hereby severally constitute and appoint Edward J. Boudreau, Jr., Susan S.
Newton, and James B. Little, and each acting singly, to be my true, sufficient
and lawful attorneys, with full power to each of them, and each acting singly,
to sign for me, in my name and in the capacity indicated below, any Registration
Statement on Form N-1A and any Registration Statement on Form N-14 to be filed
by the Trust under the Investment Company Act of 1940, as amended ( the "1940
Act"), and under the Securities Act of 1933, as amended (the "1933 Act"), and
any and all amendments to said Registration Statements, with respect to the
offering of shares and any and all other documents and papers relating thereto,
and generally to do all such things in my name and on my behalf in the capacity
indicated to enable the Trust to comply with the 1940 Act and the 1933 Act, and
all requirements of the Securities and Exchange Commission thereunder, hereby
ratifying and confirming my signature as it may be signed by said attorneys or
each of them to any such Registration Statements and any and all amendments
thereto.

IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the 5th day of March, 1996.

/s/Anne C. Hodsdon

Anne C. Hodsdon, Trustee

<PAGE>

John Hancock Capital Series

EXHIBIT INDEX

Exhibit No. Exhibit Description Page Number

99.B1 Amended and Restated Declaration of Trust of
Registrant dated February 28, 1992.*

99.B1.1 Amendment to Declaration of Trust dated September 14,
1993.*

99.B1.2 Amendment to the Declaration Trust Agreement Abolition
of Class C Shares of Beneficial Interest of John Hancock
Growth Fund dated May 1, 1995.+

99.B1.3 Amendment to the Declaration of Trust Amending Number
of Trustees and Appointing Individual to Fill a Vacancy
dated March 5, 1996.+

99.B2 Amended and Restated By-Laws of Registrant as adopted on
December 8, 1993.*

99.B2.1 Amendment to By -Laws dated December 13, 1994.*

99.B2.2 Amendment to By-Laws dated March 6, 1996.+

99.B4 Specimen share certificate for the Registrant.*

99.B5 Investment Management Contract between Registrant and
John Hancock Advisers, Inc. dated January 1, 1994.*

99.B5.1 Sub-Investment Management Contract between Registrant
and NM Capital Management Inc.*

99.B6 Distribution Agreement with Registrant and John Hancock
Broker Distribution Services, Inc. dated August 1, 1991.*

99.B6.1 Amendment No. 1 to Distribution Agreement with Registrant
and John Hancock Broker Distribution Services, Inc.*

99.B6.2 Form of Soliciting Dealer Agreement between John Hancock
Broker Distribution Services, Inc. and Selected Dealers.*

99.B6.3 Form of Financial Institution Sales and Service
Agreement.*

99.B7 None

99.B8 Master Custodian Agreement between John Hancock Mutual
Funds and Investors Bank and Trust Company dated December
15, 1992.*

99.B9 Transfer Agency Agreement between Registrant and John
Hancock Fund Services, Inc. dated January 1, 1991. *

99.B9.1 Amendment No.1 to Transfer Agency and Service Agreement
between Registrant and John Hancock Fund Services, Inc.
dated October 1, 1993.*

99.B.10 None

99.B11 Auditor's Consent.+

99.B12 Financial Statement of the John Hancock Growth Fund for
the fiscal year ended December 31, 1995 included in Parts
A and B.

99.B12.1 Financial Statement of the John Hancock Special Value
Fund for the fiscal year ended December 31, 1995 included
in Parts A and B.

99.B13 None

99.B14 None

99.B15 Class A Distribution Plan between John Hancock Growth Fund
and John Hancock Broker Services, Inc.*

99.B.15.1 Class B Distribution Plan between John Hancock Growth Fund
and John Hancock Broker Services, Inc.*

99.B15.2 Class A Distribution Plan between John Hancock Special
Value Fund and John Hancock Broker Services, Inc.*

99.B.15.3 Class B Distribution Plan between John Hancock Special
Value Fund and John Hancock Broker Services, Inc.*

99.B.16 Schedule for Computation of Yield and Total Return.*

99.B.17 Powers of Attorney dated December 13, 1984, April 23,
1988, April 23, 1987, November 15, 1988, May 17, 1988,
October 23, 1990, October 15, 1991, January 1 1994.*

99.27.1A Growth Fund
99.27.1B Growth Fund
99.27.2A Special Value
99.27.2B Special Value

* Previously filed with Registration Statement and post-effective amendment and
incorporated by reference herein.

+ Filed herewith.

JOHN HANCOCK CAPITAL SERIES

Abolition of Class C Shares

of Beneficial Interest of

John Hancock Growth Fund
John Hancock Special Value Fund
(each a "Fund" and collectively the "Funds"),

The undersigned, being a majority of the Trustees of John Hancock
Capital Series, a Massachusetts business Trust (the "Trust"), acting pursuant to
the Amended and Restated Declaration of Trust dated February 28, 1992 of the
Trust, as amended from time to time (the "Declaration of Trust"), do hereby
abolish the class of shares of beneficial interest of the Funds previously
established and designated as "Class C Shares" and in connection therewith do
hereby extinguish any and all rights and preferences of such Class C Shares as
set forth in the Declaration of Trust and the Trust's Registration Statement on
Form N-1A. The abolition of the Class C shares of the Fund is effective as of
May 1, 1995.

The Declaration of Trust is hereby amended to the extent necessary to
reflect the abolition of Class C Shares.

Capitalized terms not otherwise defined herein shall have the meaning
set forth in the Declaration of Trust.

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this instrument the
1st day of May, 1995.

/s/ Edward J. Boudreau, Jr. /s/ Dennis S. Aronowitz
- --------------------------- -----------------------
Edward J. Boudreau, Jr. Dennis S. Aronowitz
as Trustee, not individually as Trustee, not individually
34 Swan Road 1216 Falls Boulevard
Winchester, MA 01890 Fort Lauderdale, FL 33327

/s/ Richard P. Chapman, Jr.
- --------------------------- -----------------------
Richard P. Chapman, Jr. Edward J. Spellman
as Trustee, not individually as Trustee, not individually
P.O. Box F, 160 Washington Street 259C Commercial Bld.
Brookline, MA 02147 Suite 200
Lauderdale by the Sea, FL

/s/ William J. Cosgrove /s/ Gail D. Fosler
- --------------------------- -----------------------
William J. Cosgrove Gail D. Fosler
as Trustee, not individually as Trustee, not individually
20 Buttonwood Place 4104 Woodbine Street
Saddle River, NJ 07458 Chevy Chase, MD 20815

- --------------------------- -----------------------
Bayard Henry Richard S. Scipione
as Trustee, not individually as Trustee, not individually
214A Allandale Road 4 Sentinel Road
Chestnut Hill, MA 02167-3200 Hingham, MA 02043

<PAGE>

The Declaration, a copy of which, together with all amendments thereto,
is on file in the office of the Secretary of State of The Commonwealth of
Massachusetts, provides that no Trustee, officer, employee or agent of the Trust
or any Series thereof shall be subject to any personal liability whatsoever to
any Person, other than to the Trust or its shareholders, in connection with
Trust Property or the affairs of the Trust, save only that arising from bad
faith, willful misfeasance, gross negligence or reckless disregard of his/her
duties with respect to such Person; and all such Persons shall look solely to
the Trust Property, or to the Trust Property of one or more specific Series of
the Trust if the claim arises from the conduct of such Trustee, officer,
employee or agent with respect to only such Series, for satisfaction of claims
of any nature arising in connection with the affairs of the Trust.

JOHN HANCOCK CAPITAL SERIES

Instrument Amending Number of Trustees
and Appointing Individual to Fill a Vacancy

The undersigned, constituting a majority of the Trustees of John
Hancock Capital Series, a Massachusetts business trust (the "Trust"), acting
pursuant to the Amended and Restated Declaration of Trust dated February 28,
1992 of the Trust, as amended from time to time, do hereby:

a) amend Section 2.12, effective March 5, 1996, to read as follows:

Section 2.12. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument
signed by a majority of the Trustees, provided, however, that the
number of Trustees shall in no event be less than two (2).

b) appoint Anne C. Hodsdon to fill a vacancy, such appointment to
become effective upon such individual accepting in writing such
appointment and agreeing to be bound by the terms of the Declaration of
Trust and such individual to hold office until his successor is elected
and qualified or until the earlier occurrence of any of the events
specified in the first sentence of Section 2.15 of the Declaration of
Trust.

IN WITNESS WHEREOF, the undersigned being at least a majority of the
Trustees of the Trust, have executed this amendment as of the 5th day of March,
1996.

/s/Dennis S. Aronowitz
- ---------------------- ----------------------
Dennis S. Aronowitz Gail D. Fosler

/s/Edward J. Boudreau, Jr.
- ---------------------- ----------------------
Edward J. Boudreau, Jr. Bayard Henry

/s/ Richard P. Chapman, Jr. /s/Richard S. Scipione
- ---------------------- ----------------------
Richard P. Chapman, Jr. Richard S. Scipione

/s/William J. Cosgrove /s/ Edward J. Spellman
- ---------------------- ----------------------
William J. Cosgrove Edward J. Spellman

COMMONWEALTH OF MASSACHUSETTS )
)ss
COUNTY OF SUFFOLK )

Then personally appeared the above-named Edward J. Boudreau, Jr.,
Dennis S. Aronowitz, Richard P. Chapman, Jr., William J. Cosgrove, Richard S.
Scipione, and Edward J. Spellman, who each acknowledged the foregoing instrument
to be his or her fee act and deed, before me, this 5th day of March 1996.

/s/ Ann Marie Kalapinski
------------------------
Notary Public

My Commission Expires:10/20/00

John Hancock Capital Series
John Hancock Income Securities Trust
John Hancock Investors Trust
John Hancock Limited Term Government Fund
John Hancock Sovereign Bond Fund
John Hancock Special Equities Fund
John Hancock Strategic Series
John Hancock Tax-Exempt Income Fund
John Hancock World Fund

CONSIDERATION OF PROPOSAL TO AMEND THE BY-LAWS,
EFFECTIVE MARCH 6, 1996

RESOLVED, that the By-Laws of the Trust be and hereby are amended to
delete Article IV, Sub-Section 5.1 of the By-Laws and replace it with the
following:

Executive Committees and Other Committees

Section 5.1. How Constituted. The Trustees may, by resolution,
designate one or more committees, including an Executive Committee, an Audit
Committee and an Administration Committee, each consisting of at least two
Trustees. The Trustees may, by resolution, designate one or more alternate
members of any committee to serve in the absence of any member or other
alternate member of such committee. Each member and alternate member of a
committee shall be a Trustee and shall hold office at the pleasure of the
Trustees. The Chairman of the Board shall be a member of the Executive
Committee.

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the references to our firm under the captions "The Fund's
Financial Highlights" in the Class A and Class B Shares Prospectuses and
"Independent Auditors" in the Class A and Class B Shares Statements of
Additional Information and to the use of our reports on the financial statements
and financial highlights of John Hancock Growth Fund and the John Hancock
Special Value Fund (the two portfolios constituting John Hancock Capital Series)
dated February 9, 1996, in this Post-Effective Amendment Number 45 to
Registration Statement (Form N-1A No. 2-29502) dated April 1, 1996.

/s/Ernst & Young LLP

Ernst & Young LLP
Boston, Massachusetts
March 22, 1996

<ARTICLE> 6

<SERIES>
<NUMBER> 011
<NAME> JOHN HANCOCK GROWTH FUND - CLASS A

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 173,447,205
<INVESTMENTS-AT-VALUE> 258,562,523
<RECEIVABLES> 4,434,080
<ASSETS-OTHER> 29,679
<OTHER-ITEMS-ASSETS> 85,113,318
<TOTAL-ASSETS> 263,026,282
<PAYABLE-FOR-SECURITIES> 5,028,850
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 384,791
<TOTAL-LIABILITIES> 5,413,641
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 172,385,747
<SHARES-COMMON-STOCK> 12,388,361
<SHARES-COMMON-PRIOR> 9,218,162
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 111,577
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 85,115,318
<NET-ASSETS> 257,612,642
<DIVIDEND-INCOME> 1,202,907
<INTEREST-INCOME> 785,627
<OTHER-INCOME> 0
<EXPENSES-NET> 2,962,115
<NET-INVESTMENT-INCOME> (973,581)
<REALIZED-GAINS-CURRENT> 9,207,214
<APPREC-INCREASE-CURRENT> 30,638,725
<NET-CHANGE-FROM-OPS> 38,872,358
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 8,391,968
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,459,976
<NUMBER-OF-SHARES-REDEEMED> 2,691,827
<SHARES-REINVESTED> 902,050
<NET-CHANGE-IN-ASSETS> 105,765,178
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (151,405)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,561,020
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,962,115
<AVERAGE-NET-ASSETS> 186,460,651
<PER-SHARE-NAV-BEGIN> 15.89
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> 4.40
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.69)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.51
<EXPENSE-RATIO> 1.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> JOHN HANCOCK GROWTH FUND - CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 173,447,205
<INVESTMENTS-AT-VALUE> 258,562,523
<RECEIVABLES> 4,434,080
<ASSETS-OTHER> 29,679
<OTHER-ITEMS-ASSETS> 85,113,318
<TOTAL-ASSETS> 263,026,282
<PAYABLE-FOR-SECURITIES> 5,028,850
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 384,791
<TOTAL-LIABILITIES> 5,413,641
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 172,385,747
<SHARES-COMMON-STOCK> 826,498
<SHARES-COMMON-PRIOR> 240,447
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 111,577
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 85,115,318
<NET-ASSETS> 257,612,642
<DIVIDEND-INCOME> 1,202,907
<INTEREST-INCOME> 785,627
<OTHER-INCOME> 0
<EXPENSES-NET> 2,962,115
<NET-INVESTMENT-INCOME> (973,581)
<REALIZED-GAINS-CURRENT> 9,207,214
<APPREC-INCREASE-CURRENT> 30,638,725
<NET-CHANGE-FROM-OPS> 38,872,358
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 552,264
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 805,246
<NUMBER-OF-SHARES-REDEEMED> 246,690
<SHARES-REINVESTED> 27,495
<NET-CHANGE-IN-ASSETS> 105,765,178
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (151,405)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,561,020
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,962,115
<AVERAGE-NET-ASSETS> 8,259,125
<PER-SHARE-NAV-BEGIN> 15.83
<PER-SHARE-NII> (0.26)
<PER-SHARE-GAIN-APPREC> 4.37
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.69)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.25
<EXPENSE-RATIO> 2.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> JOHN HANCOCK SPECIAL VALUE FUND - CLASS A

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 27,413,477
<INVESTMENTS-AT-VALUE> 29,723,901
<RECEIVABLES> 172,555
<ASSETS-OTHER> 70,368
<OTHER-ITEMS-ASSETS> 2,310,424
<TOTAL-ASSETS> 29,966,824
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 128,088
<TOTAL-LIABILITIES> 128,088
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,528,025
<SHARES-COMMON-STOCK> 1,236,642
<SHARES-COMMON-PRIOR> 491,452
<ACCUMULATED-NII-CURRENT> 96
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 191
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,310,424
<NET-ASSETS> 29,838,736
<DIVIDEND-INCOME> 475,099
<INTEREST-INCOME> 121,481
<OTHER-INCOME> 0
<EXPENSES-NET> 277,292
<NET-INVESTMENT-INCOME> 319,288
<REALIZED-GAINS-CURRENT> 591,659
<APPREC-INCREASE-CURRENT> 2,253,318
<NET-CHANGE-FROM-OPS> 3,164,265
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 194,536
<DISTRIBUTIONS-OF-GAINS> 255,578
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,025,002
<NUMBER-OF-SHARES-REDEEMED> 319,719
<SHARES-REINVESTED> 39,907
<NET-CHANGE-IN-ASSETS> 22,122,669
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 140,122
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 452,217
<AVERAGE-NET-ASSETS> 9,257,046
<PER-SHARE-NAV-BEGIN> 8.99
<PER-SHARE-NII> 0.21
<PER-SHARE-GAIN-APPREC> 1.60
<PER-SHARE-DIVIDEND> 0.20
<PER-SHARE-DISTRIBUTIONS> 0.21
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.39
<EXPENSE-RATIO> 0.98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> JOHN HANCOCK SPECIAL VALUE FUND - CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 27,413,477
<INVESTMENTS-AT-VALUE> 29,723,901
<RECEIVABLES> 172,555
<ASSETS-OTHER> 70,368
<OTHER-ITEMS-ASSETS> 2,310,424
<TOTAL-ASSETS> 29,966,824
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 128,088
<TOTAL-LIABILITIES> 128,088
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,528,025
<SHARES-COMMON-STOCK> 1,636,520
<SHARES-COMMON-PRIOR> 366,436
<ACCUMULATED-NII-CURRENT> 96
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 191
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,310,424
<NET-ASSETS> 29,838,736
<DIVIDEND-INCOME> 475,099
<INTEREST-INCOME> 121,481
<OTHER-INCOME> 0
<EXPENSES-NET> 277,292
<NET-INVESTMENT-INCOME> 319,288
<REALIZED-GAINS-CURRENT> 591,659
<APPREC-INCREASE-CURRENT> 2,253,318
<NET-CHANGE-FROM-OPS> 3,164,265
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 141,070
<DISTRIBUTIONS-OF-GAINS> 335,890
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,444,369
<NUMBER-OF-SHARES-REDEEMED> 213,668
<SHARES-REINVESTED> 39,838
<NET-CHANGE-IN-ASSETS> 22,122,669
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 140,122
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 452,217
<AVERAGE-NET-ASSETS> 10,760,345
<PER-SHARE-NAV-BEGIN> 9.00
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> 1.59
<PER-SHARE-DIVIDEND> 0.12
<PER-SHARE-DISTRIBUTIONS> 0.21
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.38
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>