<PAGE>
As filed with the Securities and Exchange Commission on February 28, 1996
File No. 2-92548
File No. 811-4079
- --------------------------------------------------------------------------------
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. 12 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 12 [X]
JOHN HANCOCK SPECIAL EQUITIES FUND
----------------------------------
(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
------------
Name and Address of Agent for Service:
------------------
Thomas H. Drohan
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, MA 02199
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
x on March 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 November 17,
1995.
<PAGE>
<TABLE>
CROSS REFERENCE SHEET
Pursuant to Rule 495(b) under the Securities Act of 1933
<CAPTION>
Item Number Statement of Additional
Form N-1A Part A Prospectus Caption Information Caption
---------------- ------------------ -------------------
<S> <C> <C>
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 *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item Number Statement of Additional
Form N-1A Part A Prospectus Caption Information Caption
---------------- ------------------ -------------------
<S> <C> <C>
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
</TABLE>
<PAGE>
JOHN HANCOCK
SPECIAL
EQUITIES
FUND
CLASS A AND CLASS B
PROSPECTUS
MARCH 1, 1996
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
Expense Information .................................................... 2
The Fund's Financial Highlights ........................................ 3
Investment Objective and Policies ...................................... 5
Organization and Management of the Fund ................................ 7
Alternative Purchase Arrangements ...................................... 8
The Fund's Expenses .................................................... 10
Dividends and Taxes .................................................... 10
Performance ............................................................ 12
How to Buy Shares ...................................................... 13
Share Price ............................................................ 14
How to Redeem Shares ................................................... 19
Additional Services and Programs ....................................... 22
This Prospectus sets forth information about John Hancock Special Equities
Fund (the "Fund"), a diversified fund, 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 March 1, 1996 and incorporated by reference
into 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 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 for the Class A
and Class B shares of the Fund for the fiscal year ended October 31, 1995.
Actual fees and expenses may be greater or less than those indicated.
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES* SHARES*
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (As a percentage of offering price) ............... 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 + ............................................................................ 0.82% 0.82%
12b-1 fee*** ................................................................................ 0.30% 1.00%
Other expenses .............................................................................. 0.36% 0.38%
Total Fund operating expenses ............................................................... 1.48% 2.20%
<FN>
* The information set forth in the foregoing table relates only to the Class A shares and Class B shares. As of the
date of this Prospectus, the Trustees have authorized the issuance of three classes of the Fund, designated as Class
A, Class B and Class C. Class C shares are only offered to certain institutional investors and are described in a
separate prospectus which can be obtained by calling John Hancock Investors Services Corporation at 1-800-437-9312.
** No sales charge is payable at the time of purchase on investments in Class A shares of $1 million or more, but for
these investments a contingent deferred sales charge may be imposed, 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.
++ The calculation of the management fee is based on average net assets for the fiscal year ended October 31, 1995. See
"The Fund's Expenses."
</FN>
<CAPTION>
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 ............................................................ $64 $ 94 $127 $218
Class B Shares
-- Assuming complete redemption at end of period ........................ $72 $ 99 $138 $235
-- Assuming no redemption ............................................... $22 $ 69 $118 $235
You would pay the following expenses for the indicated period of years on a hypothetical $1,000 investment in Class C shares,
assuming a 5% annual return; 1 year $10; 3 years $32; 5 years $56; and 10 years $124.
(This example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than
those shown.)
</TABLE>
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."
<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, which 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 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
CLASS A
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ............... $16.11 $16.13 $10.99 $ 9.71 $ 4.97 $ 6.38 $ 4.89 $ 4.30 $ 6.08 $ 5.21
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Investment Loss (a) ... (0.18)(b) (0.21)(b) (0.20)(b) (0.19)(b) (0.10) (0.12) 0.01 0.04 (0.03) (0.03)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Realized and Unrealized
Gain (Loss) on
Investments ............. 6.22 0.19 5.43 2.14 4.84 (1.27) 1.53 0.55 (1.26) 0.93
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations ............ 6.04 (0.02) 5.23 1.95 4.74 (1.39) 1.54 0.59 (1.29) 0.90
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from Net
Investment Income ....... -- -- -- -- -- (0.02) (0.05) -- -- (0.02)
Distributions from Net
Realized Gain on
Investments Sold ........ -- -- (0.09) (0.67) -- -- -- -- (0.45) (0.01)
Distributions from Capital
Paid-In ................. -- -- -- -- -- -- -- -- (0.04) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ..... -- -- (0.09) (0.67) -- (0.02) (0.05) -- (0.49) (0.03)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period .................. $22.15 $16.11 $16.13 $10.99 $ 9.71 $ 4.97 $ 6.38 $ 4.89 $ 4.30 $ 6.08
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Investment Return
at Net Asset Value
(a)(f) .............. 37.49% (0.12%) 47.83% 20.25% 95.37% (21.89%) 31.82% 13.72% (28.68%) 17.38%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period
(000's omitted) ........ $555,655 $310,625 $296,793 $44,665 $19,713 $8,166 $12,285 $11,714 $10,637 $13,780
Ratio of Expenses to
Average Net Assets (a) .. 1.48% 1.62% 1.84% 2.24% 2.75% 2.63% 1.50% 1.50% 1.50% 1.50%
Ratio of Net Investment
Income (Loss) to Average
Net Assets (a) .......... (0.97) (1.40%) (1.49%) (1.91%) (2.12%) (1.58%) 0.47% 0.82% (0.57%) (0.57%)
Portfolio Turnover Rate ... 82% 66% 33% 114% 163% 113% 115% 91% 93% 64%
<CAPTION>
CLASS B (c)
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period ............... $15.97 $16.08 $12.30
------ ------ ------
Net Investment Loss ....... (0.31)(b) (0.30)(b) (0.18)(b)
Net Realized and Unrealized
Gain on Investments ..... 6.15 0.19 3.96
------ ------ ------
Total from Investment
Operations ............ 5.84 (0.11) 3.78
------ ------ ------
Net Asset Value, End of
Period .................. $21.81 $15.97 $16.08
====== ====== ======
Total Investment Return
at Net Asset Value(f) 36.57% (0.68%) 30.73%(d)
----- ----- -----
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period
(000's omitted) ......... $454,934 $191,979 $158,281
Ratio of Expenses to
Average Net Assets ...... 2.20% 2.25% 2.34%*
Ratio of Net Investment
Loss to Average Net
Assets .................. (1.69%) (2.02%) (2.03%)*
Portfolio Turnover Rate ... 82% 66% 33%
<PAGE>
<CAPTION>
THE FUND'S FINANCIAL HIGHLIGHTS -- CONTINUED
YEAR ENDED OCTOBER 31,
----------------------
1995 1994 1993
----- ----- -----
CLASS C (e)
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period ............... $16.20 $16.14 $14.90
------ ------ ------
Net Investment Loss ....... (0.09)(b) (0.13)(b) (0.03)(b)
Net Realized and Unrealized
Gain on
Investments ............. 6.29 0.19 1.27
------ ------ ------
Total from Investment
Operations ............ 6.20 0.06 1.24
------ ------ ------
Net Asset Value, End of
Period .................. $22.40 $16.20 $16.14
====== ====== ======
Total Investment Return
at Net Asset Value(f) 38.27% 0.37% 8.32%(d)
------ ------ ------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period
(000's omitted) ......... $13,701 $ 7,123 $ 2,838
Ratio of Expenses to
Average Net Assets ...... 1.01% 1.11% 1.45%*
Ratio of Net Investment
Loss to Average Net
Assets .................. (0.50%) (0.89%) (1.35%)*
Portfolio Turnover Rate ... 82% 66% 33%
<FN>
* On an annualized basis.
(a) Reflects expense limitation in effect during the years ended October 31, 1986 through 1991 (see Note B to the
financial statements in the Statement of Additional Information). As a result of such limitations, expenses of the
Fund for the years ended October 31, 1991, 1990, 1989, 1988, 1987 and 1986 reflect reductions of $.002, $.02, $.03,
$.07, $.04 and $.09, respectively. Absent of such limitation, for the years ended Octoer 31, 1991, 1990, 1989, 1988,
1987 and 1986, the ratio of net expenses would have been 2.79%, 2.95%, 2.57%, 2.94%, 2.23% and 3.47%, respectively,
and the ratio of net investment income (loss) to average net assets would have been (2.16%), (1.90%), (0.60%),
(0.62%), (1.30%) and (2.55%), respectively. Without the limitation, total investment return would be lower.
(b) On average month end shares outstanding.
(c) Class B shares commenced operations on March 1, 1993.
(d) Not annualized.
(e) Class C shares commenced operations on September 1, 1993.
(f) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
</TABLE>
<PAGE>
THE FUND SEEKS GROWTH OF
CAPITAL BY INVESTING
PRIMARILY IN THE EQUITY
SECURITIES OF EMERGING
GROWTH AND SPECIAL
SITUATION COMPANIES.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek growth of capital by investing
in a diversified portfolio of equity securities consisting primarily of
emerging growth companies and of companies in "special situations,"
collectively referred to as "Special Equities." In seeking to achieve this
objective, the Fund will invest at least 65% of its total assets in Special
Equities. The potential for growth of capital will be the basis for selection
of portfolio securities. Current income will not be a factor in this
selection. The Fund's investments will be subject to the market fluctuation
and risks inherent in all securities. There is no assurance that the Fund will
achieve its investment objective.
THE FUND'S INVESTMENTS
IN SPECIAL EQUITIES WILL
BE PRIMARILY IN COMMON
STOCK BUT MAY ALSO
INCLUDE PREFERRED STOCK,
SECURITIES CONVERTIBLE
INTO COMMON STOCK,
RIGHTS, WARRANTS,
FOREIGN SECURITIES WITH
THE SAME CHARACTERISTICS
AS SPECIAL EQUITIES AND
AMERICAN DEPOSITARY
RECEIPTS (ADRS).
The Fund may also invest in:
-- equity securities of established companies that John Hancock Advisers,
Inc. (the "Adviser") believes to offer growth potential.
-- cash or investment grade corporate debt securities (debt securities
which have, at the time of purchase, a rating within the four highest
grades as determined by Moody's Investors Services, Inc. -- Aaa, Aa, A or
Baa or Standard & Poor's Rating Group -- AAA, AA, A or BBB), money market
instruments or securities of the United States Government or its agencies
or instrumentalities ("government securities"), for temporary defensive
purposes or to provide for anticipated redemptions of the Fund's shares.
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 Adviser will consider whatever action is appropriate consistent with
the Fund's investment objectives and policies.
THE FUND SEEKS TO
IDENTIFY EMERGING GROWTH
COMPANIES WHICH CAN SHOW
SUSTAINED INCREASES IN
EARNINGS.
The emerging growth companies whose securities are selected for the Fund's
portfolio will generally have annual gross sales of greater than $100 million,
although companies with smaller sales which, in the opinion of the Adviser,
have significant growth potential may also be selected. Thus, there is no
requirement that a company have annual sales of a pre-selected minimum amount
before the Fund will invest in its securities. In many cases, a company may
not yet be profitable when the Fund invests in its securities.
The Fund seeks emerging growth companies that either occupy a dominant
position in an emerging industry or have a significant and growing market
share in a large, fragmented industry. The Fund seeks to invest in those
companies with potential for high growth, stable earnings, ability to self-
finance, a position of industry leadership, and strong, visionary management.
The Adviser believes that, while these companies present above-average risks,
properly selected emerging growth companies have the potential to increase
their earnings at rates substantially in excess of the growth of earnings of
other companies. This increase in earnings is likely to enhance the value of
an emerging growth company's equity securities.
The Fund may invest in equity securities of companies in special situations
that the Adviser believes present opportunities for capital growth. A company
is in a "special situation" when an unusual and possibly non-repetitive
development is anticipated or is taking place. Since every special situation
involves, to some extent, a break with past experience, the uncertainties in
the appraisal of the future value of the company's equity securities and risk
of possible decline in value of the Fund's investment are significant.
The Fund may effect portfolio transactions without regard to holding periods,
if the Adviser judges these transactions to be advisable in light of a change
in circumstances of a particular company or within a particular industry or in
general market, economic or financial conditions. The Fund does not generally
consider the length of time it has held a particular security in making its
investment decisions. Portfolio turnover rates of the Fund for recent years
are shown in the section "The Fund's Financial Highlights."
THE FUND IS DESIGNED FOR
INVESTORS WHO ARE
WILLING TO ASSUME
GREATER THAN USUAL RISKS
IN THE HOPE OF REALIZING
GREATER THAN USUAL RETURNS.
The Fund is not intended as a complete investment program. The Fund's shares
are suitable for investment by persons who can invest without concern for
current income, who are in a financial position to assume above-average
investment risk, and who are prepared to experience above-average fluctuations
in net asset value over the intermediate and long term. Emerging growth
companies and companies in special situations will usually not pay dividends.
Generally, emerging growth companies will have high price/earnings ratios in
relation to the market. A high price/earnings ratio generally indicates that
the market value of a security is especially sensitive to developments that
could affect the company's potential for future earnings. These companies may
have limited product lines, market or financial resources, or they may be
dependent upon a limited management group. Emerging growth companies may have
operating histories of fewer than three years.
Full development of the potential of emerging growth companies frequently
takes time. For this reason, the Fund should be considered a long-term
investment and not a vehicle for seeking short-term profits and income.
The securities in which the Fund invests will often be traded in the over-the-
counter market or on a regional securities exchange and may not be traded
every day or in the volume typical of trading on a national securities
exchange. They may be subject to wide fluctuations in market value. The
trading market for any given security may be sufficiently thin as to make it
difficult for the Fund to dispose of a substantial block of such securities.
The disposition by the Fund of portfolio securities to meet redemptions or
otherwise may require the Fund to sell these securities at a discount from
market prices or during periods when, in the Adviser's judgment, such
disposition is not desirable or to make many small sales over a lengthy period
of time.
THE FUND MAY EMPLOY
CERTAIN INVESTMENT
STRATEGIES TO HELP
ACHIEVE ITS INVESTMENT
OBJECTIVES.
FOREIGN SECURITIES. The Fund may invest in U.S. dollar-denominated securities
of foreign issuers which are traded in the United States. ADRs (sponsored and
unsponsored) are receipts typically issued by an American bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation, and are designed for trading in United States securities markets.
Issuers of 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 an unsponsored
ADR. Investment in foreign securities may involve risks not present in
domestic investments. Foreign companies may not be subject to accounting
standards or government supervision comparable to U.S. companies, and there is
often less publicly available information about their operations. They can
also be affected by political or financial instability abroad.
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 other restricted securities are subject to an investment
restriction limiting all illiquid securities held by the Fund 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 or
prevented from liquidating the collateral.
INVESTMENT RESTRICTIONS. The Fund has adopted certain investment restrictions
which are detailed in the Statement of Additional Information, where they are
designated as fundamental or non-fundamental. The Fund's investment objective
and those fundamental restrictions may not be changed without shareholder
approval. All other investment policies and restrictions are non-fundamental
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 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. They 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 diversified open-end management investment company organized as
a Massachusetts business trust in 1984. The Fund has an unlimited number of
authorized shares of beneficial interest. The Fund's Declaration of Trust
permits the Trustees to create and classify shares of beneficial interest into
separate series of the Fund. The Fund'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 three classes of the
Fund, designated as Class A, Class B, and Class C 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 of shares 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
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. The Adviser 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 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 Michael P. DiCarlo,
supported by an investment team of sector and global specialists from the
Adviser's equity group. Mr. DiCarlo also manages John Hancock Special
Opportunities Fund and oversees the Ad- viser's equity management operation.
Mr. DiCarlo is Executive Vice President of the Adviser and has been associated
with the Adviser since 1984.
In order to avoid conflicts 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
PAYMENT THAT IS BEST FOR YOU.
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 "Contingent 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.
INVESTMENTS IN CLASS A
SHARES OF THE FUND 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 .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.
Class B shares are not available to full-service defined contribution plans
administered by Investors Services or the Life Company that had more than 100
eligible employees at the inception of the Fund account.
YOU SHOULD CONSIDER
WHICH CLASS OF SHARES
WOULD BE MORE BENEFICIAL
INVESTMENT FOR YOU.
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE
The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares given the amount of purchase, the length of time you expect
to hold your 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".
Class A shares are subject to lower distribution and service fees and,
accordingly, pay correspondingly higher dividends per share, to the extent 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.
In the case of Class A shares, the distribution expenses that John Hancock
Funds incurs 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, 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 only 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 0.82% of the Fund's average daily net
assets. The investment management fee is higher than the fees paid to most
mutual funds but comparable to fees paid by those funds with investment
objectives similar to that of the Fund.
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 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 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 are paid to compensate
Selling Brokers and others 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 October 31, 1995 an aggregate of $15,131,619 of
distribution expenses or 5.42%, 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.
Information on the Fund's total expenses is in the Fund's Financial Highlights
section of the prospectus.
DIVIDENDS AND TAXES
Dividends from the Fund's net investment income and capital gains are
generally declared and paid at least 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 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 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 gains. These
dividends are taxable whether received in cash or reinvested in additional
shares. Certain dividends may be paid in January of a given year, but they 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 in 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 Internal Revenue Code of 1986, as
amended (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.
The Fund anticipates that it will be subject to foreign withholding taxes or
other foreign taxes on certain foreign investments which will reduce the yield
or return from these investments. However, if more than 50% of the Fund's
total assets at the close of its taxable year consists of stock or securities
of foreign corporations and if the Fund so elects, shareholders will include
in their gross incomes their pro-rata shares of qualified foreign taxes paid
by the Fund and may be entitled subject to certain conditions and limitations
under the Code, to claim a Federal income tax credit or deduction for their
share of these taxes.
On the account application, you must certify that your social security or
other taxpayer identification number you provide is 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 this withholding, the Fund may
be required to withhold 31% of your dividends and the proceeds of redemptions
and exchanges.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes with respect to your investments in and distributions from the Fund.
Non-U.S. shareholders and tax exempt shareholders are subject to a different
tax treatment not described above. In many states, a portion of the Fund's
dividends that represents interest received by the Fund on direct U.S.
Government Obligations may be exempt from tax. You should consult your tax
adviser for specific advice.
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 divided over
the number of years included in the period. Because average annual total
return tends to smooth out variations in 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 reflects 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, Class B and Class C in any
advertisement or promotional materials including Fund performance data. The
value of the 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."
<TABLE>
<CAPTION>
HOW TO BUY SHARES
- ------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT.
- ------------------------------------------------------------------------------------------------
<S> <C>
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation.
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 Equities 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.
- ----------------------------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS
A AND CLASS B SHARES.
- ----------------------------------------------------------------------------------------------------
MONTHLY AUTOMATIC 1. Complete the "Automatic Investing" and "Bank Information" sections
ACCUMULATION on the Account Privileges Application designating a bank account
PROGRAM (MAAP) 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,
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.
- ----------------------------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS
A AND CLASS B SHARES.
(CONTINUED)
- ----------------------------------------------------------------------------------------------------
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, 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.
- ----------------------------------------------------------------------------------------------------
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 Equities 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 or may not
charge a fee to wire funds. Telephone transactions are recorded to verify information. Share
certificates are not issued unless a request is made in writing to Investor Services.
- ------------------------------------------------------------------------------------------------
Institutional Investors: Certain institutional investors may purchase Class C shares of the
Fund, which have no sales charge or 12b-1 fee. See "Institutional Investors" for further
information.
- ------------------------------------------------------------------------------------------------
</TABLE>
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 THE NET
ASSET VALUE PLUS A SALES
CHARGE, IF APPLICABLE,
WHICH WILL VARY WITH THE
PURCHASE ALTERNATIVE YOU CHOOSE.
The net asset value per share (the "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 sevices or, at a 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 Board of 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:
<TABLE>
<CAPTION>
COMBINED
SALES CHARGE REALLOWANCE REALLOWANCE TO
SALES CHARGE AS A PERCENTAGE AND SERVICE FEE SELLING BROKER AS
AMOUNT INVESTED AS A PERCENTAGE OF THE AS A PERCENTAGE A PERCENTAGE OF
(INCLUDING SALES CHARGE) OF OFFERING PRICE AMOUNT INVESTED OF OFFERING PRICE(+) OFFERING 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%(***)
<FN>
(*) 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 up 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.
</TABLE>
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 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 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 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.
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 "Waiver of Contingent Deferred Sales
Charge" 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 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 the 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:
* 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 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.
* 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.*
* A bank, trust company, credit union, savings institution or other depository
institution, its trust departments or common trust funds if it is purchasing
$1 million or more for non-discretionary customers or accounts.*
* 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.
* 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.
* 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 a 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:
* Proceeds of 50 shares redeemed at $12 per share $600
* Minus proceeds of 10 shares not subject to CDSC because
they were acquired through dividend reinvestment (10 x $12) -120
* Minus appreciation on remaining shares, also not subject to
CDSC (40 x $2) - 80
----
* 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 in connection with the sale of the 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 the 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 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 AND CERTAIN
CLASS A 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 a
CDSC, unless indicated otherwise, in the circumstances defined below:
* 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 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.
* 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.
* Redemptions made to effect mandatory distributions under the Code after age
70 1/2 from a tax-deferred retirement plan.
* 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.
* Redemptions due to death or disability.
* Redemptions made under the Reinvestment Privilege, as described in
"Additional Services and Programs" of this Prospectus.
* Redemptions made pursuant to the Fund's right to liquidate your account if
you own fewer than 50 shares.
* Redemptions made in connection with certain liquidation, merger or
acquisition transactions involving other investment companies or personal
holding companies.
* Redemptions from certain IRA and retirement plans which 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, and should 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 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.
TO ASSURE ACCEPTANCE OF
YOUR REDEMPTION REQUEST,
PLEASE FOLLOW THESE
PROCEDURES.
- ------------------------------------------------------------------------------
BY TELEPHONE All Fund shareholders are eligible automatically for
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 1-800-338-8080.
- ------------------------------------------------------------------------------
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 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.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
TYPE OF REGISTRATION REQUIREMENTS
-------------------- ------------
<S> <C>
Individual, Joint Tenants, Sole A letter of instruction signed (with titles, where
Proprietorship, Custodial applicable) by all persons authorized to sign for
(Uniform Gifts or Transfer to the account, exactly as it is registered, with the
Minors Act), General Partners. 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.
- ----------------------------------------------------------------------------------------------------
</TABLE>
WHO MAY GUARANTEE YOUR
SIGNATURE.
- --------------------------------------------------------------------------------
A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the 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.
- --------------------------------------------------------------------------------
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 certified 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 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 any dividend reinvestments exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
- --------------------------------------------------------------------------------
<PAGE>
ADDITIONAL SERVICES AND PROGRAMS
EXCHANGE PRIVILEGE
YOU MAY EXCHANGE SHARES
OF THE FUND 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 which 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, the 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.
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 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 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 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 have the telephone exchange privilege.
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.
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 ALL OR
PART OF 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 previously charged,
and the reinvested shares will continue to be subject to a CDSC. The
holding period of the shares you acquired through reinvestment for purposes
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 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 Privilege Application which is attached to this Prospectus. You can
also obtain this application from 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 initial sales charges on your purchases of
Class A shares or 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.
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.
<PAGE>
JOHN HANCOCK SPECIAL EQUITIES 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 A PORTFOLIO
For: Service Information
Telephone Exchange call 1-800-225-5291
Telephone Redemption
Investment-by-Phone
For: TDD call 1-800-554-6713
JHD-- 1800P 3-96
JOHN HANCOCK
SPECIAL
EQUITIES
FUND
CLASS A AND B SHARES
PROSPECTUS
MARCH 1, 1996
A MUTUAL FUND SEEKING TO ACHIEVE GROWTH OF CAPITAL BY INVESTING IN A DIVERSIFIED
PORTFOLIO OF EQUITY SECURITIES PRIMARILY OF EMERGING GROWTH COMPANIES AND OF
COMPANIES IN SPECIAL SITUATIONS.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291
[recycle symbol] Printed on Recycled Paper
<PAGE>
JOHN HANCOCK SPECIAL EQUITIES FUND
CLASS A, CLASS B and CLASS C SHARES
Statement of Additional Information
March 1, 1996
This Statement of Additional Information provides information about
John Hancock Special Equities Fund (the "Fund") in addition to the information
that is contained in the Fund's Class A and Class B Shares Prospectus and Class
C Shares Prospectus (together, the "Prospectuses"), both dated March 1, 1996.
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Fund's 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 5
Ratings 8
Those Responsible for Management 10
Investment Advisory and Other Services 16
Distribution Contracts 19
Net Asset Value 21
Initial Sales Charge on Class A Shares 21
Deferred Sales Charge on Class B Shares 23
Special Redemptions 23
Additional Services and Programs 24
Description of the Fund's Shares 25
Tax Status 26
Calculation of Performance 28
Brokerage Allocation 30
Transfer Agent Services 31
Custody of Portfolio 31
Independent Auditors 32
Financial Statements --
ORGANIZATION OF THE FUND
John Hancock Special Equities Fund (the "Fund") is a diversified
open-end management investment company organized as a Massachusetts business
trust under the laws of The Commonwealth of Massachusetts. The Fund was
organized in 1984 by John Hancock Advisers, Inc. (the "Adviser"). The Adviser is
an indirect wholly-owned subsidiary of 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. On March 1, 1991, the Fund changed its name from "John Hancock
Special Equities Trust."
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek growth of capital by
investing in a diversified portfolio of equity securities consisting primarily
of emerging growth companies and of companies in "special situations,"
collectively referred to as "Special Equities." For a discussion of the Fund's
investment objective and policies, investors should refer to the description in
the Fund's Prospectuses under the caption "Investment Objective and Policies."
There is no assurance that the Fund will achieve its investment objective.
Although the Fund may receive current income from dividends, interest and other
sources, income is an incidental consideration to seeking capital growth.
The Fund will invest at least 65% of its total assets in Special
Equities. The balance of the Fund's portfolio may be invested in:
- equity securities of established companies believed by the Adviser to
offer growth potential.
- cash or high-quality corporate debt securities, money market
instruments or securities of the United States Government or its agencies or
instrumentalities ("government securities"), if, in the opinion of the Adviser,
prevailing economic or market conditions require a temporary defensive posture.
- cash, money market instruments and government securities, in such
proportions as the Trustees and the officers of the Fund deem appropriate to
provide for anticipated redemptions of the Fund's shares.
Special Equities, particularly equity securities of emerging growth
companies, may have limited marketability due to thin markets in which the
volume of trading for such securities is low or due to the fact that there are
only a few market makers for such securities. Such limited marketability may
make it difficult for the Fund to dispose of a large block of such securities.
To satisfy redemption requests or other needs for cash, the Fund may have to
sell these securities prematurely or at a discount from market prices or to make
many small and more costly sales over a lengthy period of time. Investments by
the Fund may be in existing as well as new issues of securities and may be
subject to wide fluctuations in market value. The Fund will not concentrate its
investments in any particular industry.
The Fund anticipates that its investments generally will be in
securities of companies which it considers to reflect the following
characteristics:
- Share prices which do not appear to take into account adequately the
underlying value of the company's assets or which appear to reflect substantial
undervaluation due to factors such as prospective reversal of an unfavorable
industry trend, lack of investor recognition or disappointing earnings believed
to be temporary in comparison with previous earnings trends;
- Growth potential due to technological advances or discoveries, new
methods in marketing or production, the offering of new or unique products or
services, changes in demand for products or services or other significant new
developments; or
- Existing, contemplated or possible changes in management or
management policies, corporate structure or control, capitalization or the
existence or possibility of some other circumstances which could be expected to
have a favorable impact on earnings or market price of such company's shares.
The Fund is intended to provide an opportunity for investors who are
not ordinarily in a position to perform the specialized type of research or
analysis involved in investing in Special Equities and who may not be able to
invest sufficient assets in such companies to provide wide diversification.
The following is a description of the non-equity securities in which
the Fund may invest for defensive purposes or to provide for anticipated
redemptions of Fund shares:
Corporate debt securities are those corporate debt securities issued by
United States corporations payable in United States dollars. The Fund will only
invest in corporate debt securities which have, at the time of purchase, a
rating within the four highest grades as determined by Moody's Investors
Service, Inc. ("Moody's") (Aaa, Aa, A or Baa) or Standard & Poor's Rating Group
("S&P") (AAA, AA, A or BBB).
Money market instruments are either commercial paper (which refers to
promissory notes issued by corporations to finance their short-term credit
needs) or certificates of deposit (which are certificates issued against funds
deposited in a bank). The Fund will invest in commercial paper rated Prime-1 by
Moody's or A-1 by S&P. These commercial paper ratings are the highest assigned
by the two rating agencies. It will also invest in certificates of deposit which
are issued by U.S. banks having assets of $1 billion or more and which mature in
one year or less from the date of acquisition.
Government securities include Treasury Notes, Bonds and Bills which are
direct obligations of the U.S. Government backed by the full faith and credit of
the United States, and securities issued by agencies and instrumentalities of
the U.S. Government, which may be guaranteed by the United States Treasury or
supported by the issuer's right to borrow from the Treasury and may be backed by
the credit of the federal agency or instrumentality itself.
Repurchase Agreement Transactions. The Fund may enter into repurchase agreements
with respect to its portfolio securities. 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 a possible decline in the value of the underlying
securities during the period in which 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.
There may be additional risks inherent in the Fund's investment
objective and policies. Some of these risks are described in the Prospectuses
under the caption "Investment Objective and Policies." For example, if the Fund
were to assume substantial positions in particular securities with limited
trading markets, such positions could have an adverse effect upon the liquidity
and marketability of such securities and the Fund may not be able to dispose of
its holdings in these securities at then current market prices. Circumstances
could also exist (to satisfy redemption requests, for example) when portfolio
securities could have to be sold by the Fund at times which otherwise would be
considered disadvantageous so that the Fund would receive lower proceeds from
such sales than it might otherwise have expected to realize. Investment in
securities which are "restricted" in the hands of the Fund (see the discussion
below under the caption "Investment Restrictions") could involve added expense
to the Fund should the Fund be required to bear registration costs and could
involve delays in disposing of such securities. Such delays could have an
adverse effect upon the price and timing of sales of such securities and the
liquidity of the Fund with respect to redemptions.
The Fund may effect portfolio transactions without regard to holding
periods if, in the Adviser's judgment, such transactions are advisable in light
of a change in circumstances of a particular company or within a particular
industry or in general market, economic or financial conditions. Thus, the Fund
may at times make investments which result in recognition of short-term capital
gains. However, the Fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code")
and, accordingly, intends to limit its short-term trading so that less than 30%
of its gross income each taxable year will be derived from gains realized on the
sale or other disposition of securities held for less than three months. Fund to
be treated as a regulated investment company, may at certain times prevent the
Fund from realizing capital gains on securities held for less than three months.
See "Tax Status."
The rate of portfolio turnover cannot be predicted with assurance and
may vary from year to year. Future turnover rates will be governed by the
availability of investment opportunities, the desirability of continuing to hold
a portfolio security and cash requirements for redemptions of Fund shares. The
portfolio turnover rate for the years ended October 31, 1995, 1994, 1993, and
1992 was 82%, 66%, 33%, and 114%, respectively.
Debt Securities and Money Market Instruments. The Fund may purchase or sell debt
securities (including U.S. corporate bonds and notes, and obligations issued or
guaranteed by the U.S. or foreign governments or their agencies or
instrumentalities) and money market instruments (including short-term debt
obligations payable in U.S. dollars issued by certain banks, savings and loan
associations and corporations) without regard to the length of time the security
has been held to take advantage of short-term differentials in yields. The Fund
will only purchase securities meeting the requirements, including rating
qualifications, stated in the Prospectuses. See the discussion under "Ratings"
below. General changes in prevailing interest rates will affect the value of the
debt securities and money market instruments held by the Fund, the value of
which will vary inversely to the changes in such rates. For example, if interest
rates rise after a security is purchased, the value of the security would
decline.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions. The following investment restrictions will
not be changed without approval of a majority of the Fund's outstanding voting
securities which, as used in the Prospectuses and this Statement of Additional
Information, means approval by the lesser of (1) 67% or more of the Fund's
shares represented at a meeting if at least 50% of 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 restrictions:
The Fund may not:
(1) Issue senior securities, except as permitted by paragraphs (2), (6)
and (7) below. 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,
and forward foreign exchange contracts, forward commitments 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 (3) below, are not deemed
to be senior securities.
(2) 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.
(3) Pledge, mortgage or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) 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.
(4) 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.
(5) Purchase or sell real estate or any interest therein, except that
the Fund may invest in securities of corporate or governmental entities
secured by real estate or marketable interests therein or securities
issued by companies that invest in real estate or interests therein.
(6) 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.
(7) Invest in commodities or in commodity contracts or in puts, calls,
or combinations of both, except options on securities and securities
indices, futures contracts on securities and securities indices and
options on such futures, forward foreign exchange contracts, forward
commitments, securities index put or call warrants and repurchase
agreements entered into in accordance with the Fund's investment
policies.
(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) 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.
In connection with the lending of portfolio securities under item (6)
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.
Non-fundamental Investment Restrictions. The following restrictions are
designated as nonfundamental and may be changed by the Board of Trustees without
shareholder approval.
The Fund may not:
(a) 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.
(b) 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 and in
connection with transactions involving forward foreign currency
exchange contracts.
(c) 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.
(d) Purchase a security if, as a result, (i) more than 10% of the
Fund's 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 assets would be
invested in any one such investment company.
(e) Purchase securities of any issuer which, together with any
predecessor, has a record of less than three years' continuous
operations prior to the purchase if such purchase would cause
investments of the Fund in all such issuers to exceed 5% of the value
of the total assets of the Fund.
(f) Invest for the purpose of exercising control over or management of
any company.
(g) Purchase warrants of any issuer, if, as a result of such purchases,
more than 2% of the value of the Fund's total assets would be invested
in warrants which are not listed on the New York Stock Exchange or the
American Stock Exchange or more than 5% of the value of the total
assets of the Fund would be invested in warrants generally, whether or
not so listed. For these purposes, warrants are to be valued at the
lesser of cost or market, but warrants acquired by the Fund in units
with or attached to debt securities shall be deemed to be without
value.
(h) Purchase interests in oil, gas or other mineral leases or
exploration programs; however, this policy will not prohibit the
acquisition of securities of companies engaged in the production or
transmission of oil, gas, or other minerals.
(i) Invest more than (1) 10% of its total assets in securities which
are restricted under the Securities Act of 1933 (the "1933 Act")
(excluding securities eligible for resale pursuant to Rule 144A under
the 1933 Act) or (2) 15% of its total assets in such restricted
securities (including securities eligible for resale pursuant to Rule
144A).
(j) Purchase interests in real estate limited partnerships.
(k) 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 considers over-the-counter options to be illiquid securities
subject to the 15% limit.)
(l) The Fund may not purchase securities of any open-end investment
company except when such purchase is part of a plan of merger,
consolidation, reorganization or purchase of substantially all of the
assets of any other investment company.
(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 no longer require any such restrictive policy,
the Trustees may, at their sole discretion, revoke such policy. The Fund has
agreed with a state securities administrator that it will not purchase
securities of any open-end investment company except when such purchase is part
of a plan of merger, consolidation, reorganization or purchase of substantially
all of the assets of any other investment company.
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 or the total costs of the
Fund's assets will not be considered a violation of the restriction.
RATINGS
Bonds. As described in the Prospectuses, the Fund's investments in corporate
debt must be rated Baa or better by Moody's or BBB or better by S&P.
Moody's describes its ratings for corporate bonds as follows:
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment at some time in the future.
Bonds which are rated Baa are considered 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.
S&P describes its ratings for corporate bonds as follows:
AAA. Debt rated "AAA" has the highest rating by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA. Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small degree.
A. Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB. Debt rated "BBB" is regarded as having 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.
Commercial Paper. As described in the Fund's Prospectuses, the Fund may invest
in commercial paper which is rated A-1 by S&P or P-1 by Moody's.
Moody's ratings for commercial paper are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's highest commercial paper rating category is as
follows:
P-1. "Prime-1" indicates the highest quality repayment capacity of the
rated issues.
S&P commercial paper ratings are current assessments of the likelihood of timely
payment of debts having an original maturity of no more than 365 days. S&P's
highest commercial paper rating category is as follows:
A-1. This designation indicates that the degree of safety regarding
timely payment is very strong. Those issues determined to possess overwhelming
safety characteristics will be denoted with a plus (+) sign designation.
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").
The following table sets forth the principal occupation or employment of the
Trustees and principal officers of the Fund during the past five years:
<PAGE>
<TABLE>
<CAPTION>
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, the
101 Huntington Avenue Adviser and The Berkeley Financial Group
Boston, Massachusetts ("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).
<FN>
- --------------
*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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
Boston University of Law; Trustee, Brookline Savings Bank;
Boston, Massachusetts Director, Boston University Center for
Banking Law Studies (until 1990).
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.
<FN>
- ------------------
* 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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING THE PAST FIVE YEARS
---------------- ------------- --------------------------
<S> <C> <C>
*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.
Edward J. Spellman, CPA Trustee (4) Partner, KPMG Peat Marwick LLP (retired June
259C Commercial Bld. 1990).
Lauderdale, FL
*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).
*Anne C. Hodsdon 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.
*Thomas H. Drohan Senior Vice President and Senior Vice President and Secretary, the
101 Huntington Avenue Secretary Adviser.
Boston, Massachusetts
<FN>
- ------------------
* 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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING THE PAST FIVE YEARS
---------------- ------------- --------------------------
<S> <C> <C>
*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,
101 Huntington Avenue Secretary and Compliance the Adviser.
Boston, Massachusetts Officer
*James J. Stokowski Vice President and Treasurer Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts
<FN>
- ------------------
* 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.
</TABLE>
<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 two non-Independent
Trustees, Messrs. Boudreau and Scipione, and each of the officers of the Funds
are interested persons of the Adviser, are compensated by the Adviser and
receive no compensation from the Fund for their services.
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL FROM THE FUND AND JOHN
COMPENSATION ACCRUED AS PART OF BENEFITS UPON HANCOCK FUND COMPLEX
INDEPENDENT TRUSTEES FROM THE FUND* THE FUND'S EXPENSES* RETIREMENT TO TRUSTEES(1)
- -------------------- -------------- -------------------- ---------------- ----------------------
(Total of 19 Funds)
<S> <C> <C> <C> <C>
Dennis S. Aronowitz $ 8,203 $ - $ - $ 61,050
Richard P. Chapman, Jr. 2,416 5,787 - 62,800
William J. Cosgrove 2,666 5,531 - 61,050
Gail D. Fosler 7,953 - - 60,800
Bayard Henry 7,892 - - 58,850
Edward J. Spellman 8,203 - - 61,050
------- ------- ------- --------
$37,333 $11,324 $ - $365,600
*Compensation made for the fiscal year ended October 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.
</TABLE>
As of January 31, 1996, the officers and Trustees of the Fund as a group owned
less than 1% of the outstanding shares of the Fund. As of January 31, 1996, the
following shareholders beneficially owned 5% or more of the outstanding shares
of the Fund listed below:
<TABLE>
<CAPTION>
Number of Shares Percentage of Total
Name and Address of Beneficial Outstanding Shares of
of Shareholder Class of Shares Interest Owned the Class of the Fund
<S> <C> <C> <C>
Merrill Lynch Pierece Fenner & Smith, Inc. Class B 3,320,216 12.82%
Attn: Mutual Fund Operations
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
John Hancock As Agent for Ttee Argo Class C 501,915 46.77%
Systems Inc. 401K Plan
Attn: Kim Jackman, Tax Account
310 North Mary Avenue
Mailstop 3-1T
Sunnyvale, CA 94066-411
John Hancock Funds, Inc. Class C 370,589 34.53%
FBO Gilbane Building Company
Attn: Institutional Ret Services
c/o Beth Group-5th Floor
101 Huntington Avenue
Boston, MA 02199-7603
UST Inc. Class C 200,611 18.60%
c/o Wachovia Bank of NC
Attn: Teresa Almond
301 Main Street
Winston-Salem, NC 27150-0001
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Fund's Prospectuses, the Fund receives its
investment advice from the Adviser. Investors should refer to the Prospectuses
and below for a description of certain information concerning the investment
management contract.
Each of the Trustees and principal officers of the Fund who is also an
affiliated person of the Adviser is named above, together with the capacity in
which such person is affiliated with the Fund and the Adviser.
As described in the Fund's Prospectuses 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 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 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 to 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 Fund and pays for 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
Fund 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 provided by the investment management contract, the Fund pays the
Adviser monthly an investment management fee, which is based on a stated
percentage of the Fund's average of the daily net assets as follows:
Net Asset Value Annual Rate
--------------- -----------
First $250,000,000 0.85%
Amount Over $250,000,000 0.80%
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 October 31, 1995, the net assets of the Fund were $1,024,290,165.
For the years ended October 31, 1993, 1994 and 1995 the Adviser received a fee
of $1,345,474, $3,458,972 and $5,538,912, respectively. The advisory fee figures
for 1993 and 1994 reflect the 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 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 to the Fund or its shareholders 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 which have 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 more than $80 billion, the Life Company is one of the ten
largest life insurance companies in the United States, and carries high ratings
from S&P and A.M. Best. 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 permitted by law)
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 nonexclusive 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 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.
DISTRIBUTION CONTRACT
The Fund has entered into a distribution contract pertaining to each
class of shares with John Hancock Funds. Under the contract, John Hancock Funds
is obligated to use its best efforts to sell shares of each class 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, 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 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. 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 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 Plans and the
purpose for which such expenditures were made. The Trustees review such reports
on a quarterly basis.
During the fiscal year ended October 31, 1995 the Funds paid John
Hancock Funds the following amounts of expenses with respect to the Class A and
Class B shares of the Fund:
<TABLE>
<CAPTION>
Expense Items
-------------
Printing and Interest
Mailing of Expenses of Carrying or
Prospectus to New Compensation to John Hancock Other Finance
Advertising Shareholders Selling Brokers Funds Charges
----------- ------------ --------------- ----- -------
Special Equities
- ----------------
<S> <C> <C> <C> <C> <C>
Class A shares $206,381 $14,418 $300,871 $ 642,239 $ 0
Class B shares $377,219 $26,575 $809,487 $ 1,122,932 $456,388
</TABLE>
Each of the Plans provides that it will continue in effect only as 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 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 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.
Class C shares of the Fund are not subject to any distribution plan.
Expenses associated with the obligation of John Hancock Funds to use its best
efforts to sell Class C shares will be paid by the Adviser or by John Hancock
Funds and will not be paid from the fees paid under Class A or Class B Plans.
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 caption "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.
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 any 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 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 or her 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 Charge. 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 a 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.
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), TSA 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 a number of Class A
shares (approximately 5% of the aggregate) sufficient 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 escrowed Class A 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 or her attorney-in-fact to redeem any escrowed Class A 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 Class A
shares and may be terminated at any time.
Because Class C shares are sold at net asset value without the
imposition of any sales charge, none of the privileges described under these
captions is available to Class C investors, with the following exception:
Combination Privilege. As is explained in the Prospectus for Class C shares, a
Class C investor may qualify for the minimum $1,000,000 investment (or such
other amount as may be determined by the Fund's officers) if the aggregate
amount of his or her current and prior investments in Class C shares of the Fund
and Class C shares of any other John Hancock fund exceeds $1,000,000.
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 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 increase
in account value 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 this number of
years, 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 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 sells portfolio
securities received in this fashion, he or she 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 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 Fund's Class A and Class
B Prospectus, the Fund permits the establishment of a Systematic Withdrawal
Plan. Payments under this plan represent proceeds arising from the redemption of
Fund shares. Since the redemption price of 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 as 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 more
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 shareholders' bank. The bank shall be under no
obligation to notify the shareholder as to the nonpayment 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 processing date of any investment.
Reinvestment Privilege. A shareholder who has redeemed shares of the Fund 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 in any of the other John Hancock funds, subject to the minimum
investment limit in 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 such 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
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 not authorized any additional
series other than the Fund, although they may do so in the future. The
Declaration of Trust also authorizes the Trustees to classify and reclassify the
shares of the Fund, or any new series of the Fund, into one or more classes. As
of the date of this Statement of Additional Information, the Trustees have
authorized the issuance of three classes of shares of the Fund, designated as
Class A, Class B, and Class C. 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.
Class C shares of the Fund are offered only to certain institutional
investors as described in the Fund's Prospectuses. Some individual investors who
are currently eligible to purchase Class A and Class B shares may also be
participants in "participant-directed plans" (as defined in the Prospectuses)
that are eligible to purchase Class C shares. 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 shares, Class B shares and Class C shares will bear any
other class expenses properly allocable to such class of shares, subject to the
conditions set forth in a private letter ruling that the Fund has received from
the Internal Revenue Service relating to its multiple-class structure.
Accordingly, it is expected that the net asset value per share of the Fund's
Class C shares will be higher than the net asset value per share of the Fund's
Class A and Class B shares, each of which has a Rule 12b-1 distribution plan and
sales load. Similarly, the net asset value per share may vary depending on
whether Class A or Class B shares are purchased.
In the event of liquidation, shareholders are entitled to share pro
rata in the net assets of the Fund available for distribution to such
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, by the Fund, except as set
forth below.
Unless otherwise required by the Investment Company Act or the
Declaration of Trust, the Fund has no intention of holding annual meetings of
shareholders. Fund shareholders may remove a Trustee by the affirmative vote of
at least two-thirds of the Fund'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 Fund.
Shareholders may, under certain circumstances, communicate with other
shareholders in connection with a request for 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 Fund. However, the Fund's Declaration of Trust contains an
express disclaimer of shareholder liability for acts, obligations and 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
The Fund has qualified and has elected to be treated 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, if any) which is
distributed to shareholders at least annually in accordance with the timing
requirements of the Code.
The Fund will be subject to a 4% 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 Prospectuses 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 they would have received had they elected to receive
the distribution in cash, divided by the number of shares received.
The amount of net realized capital gains, if any, in any given year
will vary depending upon the Adviser's current investment strategy and whether
the Adviser believes it to be in the best interest of the Fund to dispose of
portfolio securities that will generate capital gains. At the time of an
investor's purchase of Fund shares, 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 from such appreciation or income 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 portion of the purchase price.
Upon a redemption of shares (including by exercise of the exchange
privilege) a shareholder may 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 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 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 reinvestments. 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 at the time of redemption 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,
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 gain 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
carryforward 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 income 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 carryforward
a net realized 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 capital loss carryforwards
available to offset future net capital gains.
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.
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
Fund shares in order to qualify for the deduction and, if they borrow to acquire
Fund 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.
The foregoing discussion relates solely to U.S. Federal income tax law
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
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 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 the Fund in 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 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 affective IRS Form W-8 or authorized
substitute is on file, 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 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 life-of-fund periods ended October 31, 1995 was 30.60%, 35.29%,
and 17.22%, respectively, and reflect payment of the maximum sales charge of
5.00%.
The average annual total return on Class B shares of the Fund for the 1
year ended October 31, 1995 and since inception on March 1, 1993 was 31.57% and
23.04%, respectively and reflects the applicable CDSC. The average annual total
return on Class C shares of the Fund for the 1 year and since inception on
September 1, 1993 was 38.27% and 20.67%, respectively.
The Fund's total return is computed by finding the average annual
compounded rate of return over the 1 year, 5 year and life-of-fund periods that
would equate the initial amount invested to the ending redeemable value
according to the following formula:
[ GRAPHIC OMITTED ] T = (square root n) over (ERV / P) - 1
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 and life-of-fund periods.
This calculation assumes that all dividends and distributions are
reinvested at net asset value on the reinvestment dates during the period.
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 applied at the end of the period. This calculation 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. Excluding the Fund's sales load from the distribution rate produces a
higher rate.
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 5.0% 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 ranked or 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, Barron's, and Stanger's and 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 of
the Fund are made by officers of the Fund pursuant to recommendations made by an
investment committee of the Adviser, which consists of officers and directors of
the Adviser 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 officers of the Fund, 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 maker reflect a "spread." 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 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 make no commitment to allocate portfolio
transactions upon any prescribed basis. While the Adviser will be primarily
responsible for the allocation of the Fund's brokerage business, the policies
and practices of the Adviser 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 October 31, 1995, 1994 and 1993 the Fund paid negotiated
brokerage commissions of $468,191, $305,789 and $273,700, 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 price 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 October 31,
1995, the Fund paid $45,269 in 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 Company, is the indirect sole
shareholder of John Hancock Freedom Securities Corporation and its subsidiaries,
three of which, Tucker Anthony Incorporated, John Hancock Distributors, Inc. 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 year ended October 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 includes 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 Company, is the
transfer and dividend paying agent for the Fund. The Fund pays an annual fee of
$16.00 for each Class A shareholder and $18.50 for each Class B and the 0.10% of
the average daily net assets attributable to the Class C shares, plus certain
out-of-pocket expenses. These expenses are aggregated and charged to the Fund
and 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.
<PAGE>
INDEPENDENT AUDITORS
The independent auditors of the Fund are Ernst & Young LLP, 200
Clarendon Street, Boston, Massachusetts 02116. Ernst & Young LLP audits and
renders an opinion on the Fund's annual financial statements and prepares the
Fund's annual Federal income tax return.
y:\corpsec\n1A\sai\speceq\96march.doc
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Special Equities 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 OCTOBER 31, 1995. YOU'LL
ALSO FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER SHARE AS OF
THAT DATE.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks (cost - $631,871,804)...................... $ 939,645,456
Short-term notes (cost - $18,298,067).................... 18,298,067
Joint repurchase agreement (cost - $48,750,000) ......... 48,750,000
Corporate savings account................................ 701,702
--------------
1,007,395,225
Receivable for shares sold................................ 3,694,526
Receivable for investments sold........................... 26,705,928
Interest receivable....................................... 8,292
Dividends receivable...................................... 8,000
--------------
Total Assets............................ 1,037,811,971
------------------------------------------------------------
LIABILITIES:
Payable for shares repurchased............................ 603,440
Payable for investments purchased......................... 11,428,592
Payable to John Hancock Advisers, Inc. and
affiliates - Note B .................................... 1,274,959
Accounts payable and accrued expenses..................... 214,815
--------------
Total Liabilities....................... 13,521,806
------------------------------------------------------------
NET ASSETS:
Capital paid-in........................................... 693,050,656
Accumulated net realized gain on investments ............. 23,465,857
Net unrealized appreciation of investments ............... 307,773,652
--------------
Net Assets.............................. $1,024,290,165
============================================================
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)
Class A - $555,655,382/ 25,080,561........................ $ 22.15
==============================================================================
Class B - $454,934,305/ 20,862,546........................ $ 21.81
==============================================================================
Class C - $13,700,478/ 611,672............................ $ 22.40
==============================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - $(22.15 x 105.26)%.............................. $ 23.32
==============================================================================
</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.
<PAGE>
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS FOR THE PERIOD
STATED.
<TABLE>
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest............................................... $ 3,344,079
Dividends.............................................. 79,312
------------
3,423,391
------------
Expenses:
Investment management fee - Note B.................... 5,538,912
Distribution/service fee - Note B
Class A............................................. 1,163,909
Class B............................................. 2,792,602
Transfer agent fee - Note B........................... 1,894,790
Registration and filing fees.......................... 219,795
Custodian fee......................................... 133,764
Printing.............................................. 85,591
Trustees' fees........................................ 56,131
Auditing fee.......................................... 35,000
Miscellaneous......................................... 32,454
Legal fees............................................ 21,991
------------
Total Expenses....................... 11,974,939
------------------------------------------------------------
Net Investment Loss.................. (8,551,548)
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments sold. ................ 49,485,997
Change in net unrealized appreciation/depreciation
of investments ...................................... 186,642,714
------------
Net Realized and Unrealized
Gain on Investments ................. 236,128,711
------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ........... $227,577,163
============================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Special Equities Fund
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss ........................................................ $ (8,551,548) $ (7,073,460)
Net realized gain (loss) on investments sold ............................... 49,485,997 (20,708,728)
Change in net unrealized appreciation/depreciation of investments .......... 186,642,714 29,140,783
--------------- ---------------
Net Increase in Net Assets Resulting from Operations ...................... 227,577,163 1,358,595
--------------- ---------------
FROM FUND SHARE TRANSACTIONS -- NET* ......................................... 286,986,120 50,457,201
--------------- ---------------
NET ASSETS:
Beginning of period ........................................................ 509,726,882 457,911,086
--------------- ---------------
End of period .............................................................. $ 1,024,290,165 $ 509,726,882
=============== ===============
</TABLE>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------
1995 1994
------------------------------------ ------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold .......................... 30,038,347 $ 583,642,775 15,399,407 $ 233,394,230
Less shares repurchased .............. (24,245,104) (469,112,794) (14,507,334) (219,847,278)
------------- ------------- ------------- -------------
Net increase ......................... 5,793,243 $ 114,529,981 892,073 $ 13,546,952
============= ============= ============= =============
CLASS B
Shares sold .......................... 14,217,398 $ 274,338,380 4,220,733 $ 63,417,649
Less shares repurchased .............. (5,376,470) (105,131,366) (2,043,273) (30,587,828)
------------- ------------- ------------- -------------
Net increase ......................... 8,840,928 $ 169,207,014 2,177,460 $ 32,829,821
============= ============= ============= =============
CLASS C
Shares sold .......................... 242,819 $ 4,518,410 318,075 $ 4,881,336
Less shares repurchased .............. (70,748) (1,269,285) (54,405) (800,908)
------------- ------------- ------------- -------------
Net increase ......................... 172,071 $ 3,249,125 263,670 $ 4,080,428
============= ============= ============= =============
</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 YEAR. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, AND ANY INCREASE OR
DECREASE IN MONEY SHAREHOLDERS INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES
THE NUMBER OF FUND SHARES SOLD, REINVESTED AND REDEEMED DURING THE LAST TWO
PERIODS, ALONG WITH THE CORRESPONDING DOLLAR VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Special Equities 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
listed as follows:
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ................ $ 16.11 $ 16.13 $ 10.99 $ 9.71 $ 4.97
----------- ----------- ----------- -------- --------
Net Investment Loss (a) ............................. (0.18)(b) (0.21)(b) (0.20)(b) (0.19)(b) (0.10)
Net Realized and Unrealized Gain on Investments ..... 6.22 0.19 5.43 2.14 4.84
----------- ----------- ----------- -------- --------
Total from Investment Operations .................. 6.04 (0.02) 5.23 1.95 4.74
----------- ----------- ----------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold .................................. -- -- (0.09) (0.67) --
----------- ----------- ----------- -------- --------
Total Distributions ............................... -- -- (0.09) (0.67) --
----------- ----------- ----------- -------- --------
Net Asset Value, End of Period ...................... $ 22.15 $ 16.11 $ 16.13 $ 10.99 $ 9.71
=========== =========== =========== ======== ========
Total Investment Return at Net Asset Value (a)(f) ... 37.49% (0.12)% 47.83% 20.25% 95.37%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ........... $ 555,655 $ 310,625 $ 296,793 $ 44,665 $ 19,713
Ratio of Expenses to Average Net Assets (a) ......... 1.48% 1.62% 1.84% 2.24% 2.75%
Ratio of Net Investment Loss to Average Net
Assets (a) ........................................ (0.97)% (1.40)% (1.49)% (1.91)% (2.12)%
Portfolio Turnover Rate ............................. 82% 66% 33% 114% 163%
CLASS B (c)
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ................ $ 15.97 $ 16.08 $ 12.30
----------- ----------- -----------
Net Investment Loss ................................. (0.31)(b) (0.30)(b) (0.18)(b)
Net Realized and Unrealized Gain on Investments ..... 6.15 0.19 3.96
----------- ----------- -----------
Total from Investment Operations .................. 5.84 (0.11) 3.78
----------- ----------- -----------
Net Asset Value, End of Period ...................... $ 21.81 $ 15.97 $ 16.08
=========== =========== ===========
Total Investment Return at Net Asset Value (f) ...... 36.57% (0.68)% 30.73%(d)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ........... $ 454,934 $ 191,979 $ 158,281
Ratio of Expenses to Average Net Assets ............. 2.20% 2.25% 2.34%*
Ratio of Net Investment Loss to Average Net Assets .. (1.69)% (2.02)% (2.03)%*
Portfolio Turnover Rate ............................. 82% 66% 33%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Special Equities Fund
<TABLE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
CLASS C (e)
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period .......................... $ 16.20 $ 16.14 $ 14.90
---------- ---------- ----------
Net Investment Loss ........................................... (0.09)(b) (0.13)(b) (0.03)(b)
Net Realized and Unrealized Gain on Investments ............... 6.29 0.19 1.27
---------- ---------- ----------
Total from Investment Operations ............................ 6.20 0.06 1.24
---------- ---------- ----------
Net Asset Value, End of Period ................................ $ 22.40 $ 16.20 $ 16.14
========== ========== ==========
Total Investment Return at Net Asset Value (f) ................ 38.27% 0.37% 8.32%(d)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ..................... $ 13,701 $ 7,123 $ 2,838
Ratio of Expenses to Average Net Assets ....................... 1.01% 1.11% 1.45%*
Ratio of Net Investment Loss to Average Net Assets ............ (0.50)% (0.89)% (1.35)%*
Portfolio Turnover Rate ....................................... 82% 66% 33%
</TABLE>
* On an annualized basis.
(a) Reflects expense limitation in effect during the year ended October 31, 1991
(see Note B). As a result of such limitations, expenses of the Fund for the
year ended October 31, 1991 reflects a reduction of $.002. Absent of such
limitation, for the year ended October 31, 1991 the ratio of net expenses
would have been 2.79%, and the ratio of net investment loss to average net
assets would have been (2.16)%. Without the limitation, total investment
return would be lower.
(b) On average month end shares outstanding.
(c) Class B shares commenced operations on March 1, 1993.
(d) Not annualized.
(e) Class C shares commenced operations on September 1, 1993.
(f) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: INCOME, EXPENSES AND GAINS 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 - Special Equities Fund
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
SPECIAL EQUITIES FUND ON OCTOBER 31, 1995. IT'S DIVIDED INTO TWO MAIN
CATEGORIES:COMMON STOCKS AND SHORT-TERM INVESTMENTS. COMMON STOCKS ARE FURTHER
BROKEN DOWN BY INDUSTRY GROUP. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE
FUND'S "CASH" POSITION, ARE LISTED LAST.
<TABLE>
SCHEDULE OF INVESTMENTS
October 31, 1995
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
<S> <C> <C>
COMMON STOCKS
APPLIANCES - HOUSEHOLD (0.44)%
Fedders Corp. ............................. 475,000 $ 2,790,625
Fedders Corp. (Class A) ................... 415,625 1,766,406
------------
4,557,031
------------
BROADCASTING (0.44)%
American Radio Systems Corp. (Class A)** .. 200,000* 4,500,000
------------
COMPUTERS -- GRAPHICS (2.82)%
Diamond Multimedia Systems, Inc.** ........ 400,000* 11,800,000
S3, Inc.** ................................ 1,000,000* 17,125,000
------------
28,925,000
------------
COMPUTERS -- MINI/MICRO(1.63)%
ESS Technology, Inc.** .................... 400,000* 12,000,000
Vitesse Semiconductor Corp.** ............. 400,000* 4,700,000
------------
16,700,000
------------
COMPUTERS -- PHERIPHERAL (2.61)%
Adaptec, Inc.** ........................... 600,000 26,700,000
------------
COMPUTERS -- SERVICES (15.89)%
America Online, Inc.** .................... 650,000 52,000,000
C-Cube Microsystems, Inc.** ............... 325,000 22,465,625
Gandalf Technologies, Inc.** .............. 850,000* 4,834,375
Netscape Communications Corp.** ........... 450,000* 39,600,000
Spyglass Inc.** ........................... 180,000* 8,955,000
Transaction Network Services, Inc.** ...... 66,000* 1,518,000
UUNET Technologies, Inc.** ............... 550,000* 33,412,500
------------
162,785,500
------------
COMPUTERS -- SOFTWARE (19.48)%
Atria Software, Inc.** .................... 500,000* 17,875,000
Cognos, Inc.** ............................ 520,000* 16,575,000
Electronics for Imaging, Inc.** ........... 400,000 32,900,000
Harbinger Corp.** ......................... 100,000* 1,400,000
Intuit, Inc.** ............................ 322,600* 23,227,200
Macromedia, Inc.** ........................ 790,000* 29,230,000
Medic Computer Systems, Inc.** ............ 192,500* 10,250,625
Oak Technology, Inc.** .................... 500,000* 27,375,000
Softkey International, Inc.** ............. 600,000 18,900,000
Systemsoft Corp.** ........................ 300,000* 4,312,500
Transaction Systems Architects, Inc.** .... 358,700* 9,326,200
Wind River Systems** ...................... 300,000* 8,100,000
------------
199,471,525
------------
DIVERSIFIED OPERATIONS (0.53)%
On Assignment, Inc.** ..................... 200,000* 5,400,000
------------
DRUGS (1.14)%
Dura Pharmaceuticals, Inc.** .............. 400,000* 11,700,000
------------
ELECTRONICS (16.49)%
Altera Corp.** ............................ 350,000 21,175,000
Atmel Corp.** ............................. 800,000 25,000,000
Cypress Semiconductor Corp.** ............. 700,000 24,675,000
FSI International, Inc.** ................. 300,000* 7,125,000
Identix , Inc.** .......................... 337,800* 3,969,150
Linear Technology Corp. ................... 200,000 8,750,000
LSI Industries, Inc. ...................... 300,000* 5,025,000
Micron Technology, Inc. ................... 200,000* 14,125,000
Novellus Systems, Inc.** .................. 450,000 30,993,750
Ultratech Stepper, Inc.** ................. 100,000* 4,000,000
Vicor Corp.** ............................. 322,000* 6,580,875
VLSI Technology, Inc.,** .................. 254,000* 5,969,000
Xilinx, Inc.** ............................ 249,500 11,477,000
------------
168,864,775
------------
FINANCIAL/BUSINESS SERVICES (5.98)%
American Business Information, Inc.** ..... 311,250* 5,446,875
Credit Acceptance Corp.** ................. 850,000* 19,975,000
Physician Sales & Service, Inc.** ......... 900,000* 14,625,000
PMT Services, Inc.**+ ..................... 400,000* 10,750,000
US Order, Inc.** .......................... 700,000* 10,500,000
------------
61,296,875
------------
HEALTHCARE (5.62)%
Americal Oncology Resources, Inc.,** ...... 277,600* 9,716,000
Apria Healthcare Group, Inc.,**
(formerly Abbey Healthcare
Group, Inc.) ............................ 448,000* 9,688,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Special Equities Fund
<TABLE>
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
<S> <C> <C>
HEALTHCARE (CONTINUED)
Coventry Corp.** ........................ 325,000 $ 6,378,125
Health Management Systems, Inc.** ....... 225,000 7,200,000
Healthsource, Inc.** .................... 150,000 7,950,000
Physician Reliance Network, Inc.** ...... 500,000* 16,625,000
-----------
57,557,125
-----------
INSURANCE (1.22)%
Compdent Corp.** ........................ 400,000* 12,450,000
-----------
LEISURE & RECREATION (0.94)%
Ride, Inc.** ............................ 400,000* 9,650,000
-----------
MEDICAL/DENTAL (2.83)%
Gulf South Medical Supply, Inc.** ....... 650,000* 13,487,500
i-Stat Corp.** .......................... 500,000* 15,500,000
-----------
28,987,500
-----------
MOTION PICTURES (0.53)%
Regal Cinemas, Inc.,** .................. 137,600* 5,400,800
-----------
OIL & GAS (1.08)%
Cairn Energy USA, Inc.** ................ 393,400* 4,720,800
Pride Petroleum Services, Inc.** ........ 500,000* 4,375,000
Tetra Technologies, Inc.** ............. 150,000* 1,987,500
-----------
11,083,300
-----------
PUBLISHING (0.55)%
Desktop Data, Inc.** .................... 158,700* 5,673,525
-----------
RETAIL (6.21)%
CUC International, Inc.** ............... 900,000 31,162,500
Dollar Tree Stores, Inc.** ............. 167,500* 4,522,500
Men's Wearhouse Inc., (The)** ........... 200,000* 7,800,000
PetSmart, Inc.** ........................ 420,000 14,070,000
Seattle Filmworks, Inc.** ............... 300,000* 6,075,000
-----------
63,630,000
-----------
TELECOMMUNICATIONS (2.70)%
DSP Communications, Inc.** ............. 400,000* 14,500,000
EIS International, Inc.** ............... 250,000* 4,625,000
Global Village Communication, Inc.** .... 500,000 8,500,000
-----------
27,625,000
-----------
TEXTILES (2.61)%
Tommy Hilfiger Corp.** .................. 700,000 26,687,500
-----------
TOTAL COMMON STOCKS
(Cost $631,871,804) (91.74)% 939,645,456
-------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- ------------------- ---- --------------- -----
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (4.76)%
Investment in a joint repurchase
agreement transaction with
SBC Capital Markets Inc.
dated 10-31-95, due 11-01-95
(secured by U.S. Treasury Bond,
8.750% due 05-15-17 and
U.S. Treasury Note, 5.750%
due 09-30-97) -- Note A ............. 5.89% $48,750 $48,750,000
-------------
SHORT-TERM NOTES (1.78)%
Ford Motor Co., due 11-01-95 .......... 5.72 7,300 7,300,000
Merrill Lynch & Co., Inc., due 11-01-95 5.87 5,000 5,000,000
Merrill Lynch & Co., Inc., due 11-03-95 5.80 6,000 5,998,067
-------------
18,298,067
-------------
CORPORATE SAVINGS ACCOUNT (0.07)%
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00% .................. 701,702
-------------
TOTAL SHORT-TERM INVESTMENTS ........ (6.61)% 67,749,769
----- -------------
TOTAL INVESTMENTS ........ (98.35)% $1,007,395,225
======= =============
</TABLE>
- ---------------
* Securities, other than short-term investments, newly added to the portfolio
during the year ended October 31, 1995.
** Non-income producing security.
+ Denotes an affiliated company in which the Fund has ownership of at least 5%
of the voting securities. Investments in affiliates at October 31, 1995 were
as follows:
<TABLE>
<CAPTION>
AFFILIATE COST DIVIDEND INCOME
--------- ---- ---------------
<S> <C> <C>
PMT Services, Inc. $7,786,883 ****
</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 - Special Equities Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Special Equities Fund (the "Fund") is a diversified open-end
management investment company, registered under the Investment Company Act of
1940.
The Trustees have authorized the issuance of three classes of shares of the
Fund, designated as Class A, Class B and Class C 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 to such distribution plan. Class Aand Class B shares of the Fund
were reopened to new shareholders on February 15, 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 large 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.
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. Interest income on investment securities is
recorded on the accrual basis.
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 principals. Dividends paid by the Fund 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 the 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 calculated 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 appropriate net assets of each class and the specific expense rate(s)
applicable to each class.
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) 0.85% of the first $250,000,000 of the Fund's
average daily net asset value, and (b) 0.80% of the Fund's average daily net
asset value in excess of $250,000,000.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Special Equities Fund
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. Prior to January 1, 1995 JH
Funds was known as John Hancock Broker Distribution Services, Inc. For the
period ended October 31, 1995, net sales charges received with regard to sales
of Class A shares amounted to $4,505,322. Out of this amount, $685,379 was
retained and used for printing prospectuses, advertising, sales literature and
other purposes, $2,990,410 was paid as sales commissions to unrelated
broker-dealers and $829,533 was paid as sales commissions to sales personnel of
John Hancock Distributors, Inc. ("Distributors"), Tucker Anthony, Incorporated
("Tucker Anthony") and Sutro & Co., ("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% (4.0% on purchases made prior to January 1, 1994) 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 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 October 31, 1995, contingent deferred
sales charges paid to JH Funds amounted to $795,354.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans with
respect to Class A and Class B shares 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 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
Corporation ("Investor Services"), a wholly-owned subsidiary of The Berkeley
Financial Group. Prior to January 1, 1995, Investor Services was known as John
Hancock Fund Services, Inc.
Prior to January 1, 1995, the Fund paid Investor Services a monthly transfer
agent fee equivalent, on an annual basis, to 0.40%, 0.42% and 0.10% of the
average daily net asset value of Class A, Class B and Class C shares of the
Fund, respectively, plus out-of-pocket expenses incurred by Fund Services on
behalf of the Fund. For the period January 1, 1995 through October 31, 1995,
Class A, Class B and Class C shares paid transfer agent fees based on the number
of shareholder accounts and certain out-of-pocket expenses. For the year ended
October 31, 1995 the transfer agent expense, calculated as a class specific
expense was $1,045,963 for Class A, $839,318 for Class B and $9,509 for Class C,
respectively.
<PAGE>
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. 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 will make investments into other John
Hancock funds, as applicable, to cover its liability for the
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds -- Special Equities Fund
deferred compensation. Investments to cover the Fund's deferred compensation
liability will be recorded on the Fund's books as an other asset. The deferred
compensation liability will be marked to market on a periodic basis and income
earned by the investment will be recorded on the Fund's books.
NOTE C --
INVESTMENT TRANSACTIONS:
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies and short-term securities, during the period
ended October 31, 1995, aggregated $738,929,047 and $513,809,441, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended October 31, 1995.
The cost of investments owned at October 31, 1995 (including the short-term
investments) for Federal income tax purposes was $698,919,871. Gross unrealized
appreciation and depreciation of investments aggregated $320,647,759 and
$12,874,107, respectively, resulting in net unrealized appreciation of
$307,773,652.
NOTE D --
RECLASSIFICATION OF ACCOUNTS
During the year ended October 31, 1995, the Fund has reclassified the
accumulated net investment loss of $8,551,548 to capital paid-in. This
represents the cumulative amount necessary to report these balances on a tax
basis, excluding certain temporary differences, as of October 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 the treatment of net operating losses in the
computation of distributable income and capital gains under federal tax rules
versus generally accepted accounting principle.
<PAGE>
John Hancock Funds -- Special Equities Fund
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of John Hancock Special Equities Fund
We have audited the accompanying statement of assets and liabilities of John
Hancock Special Equities Fund (the "Fund"), including the schedule of
investments, as of October 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
five years in the period 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
October 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 Special Equities Fund at October 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
December 15, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the taxable distribution of the Fund during its fiscal year ended
October 31, 1995.
The Fund has not paid any distributions of ordinary income, dividends or net
long-term capital gains during the fiscal year.
<PAGE>
PART C.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements included in the Registration Statement:
John Hancock Special Equities Fund
Statement of Assets and Liabilities as of October 31, 1995.
Statement of Operations for the year ended October 31, 1995
Statement of Changes in Net Assets for each of the two years in the
period ended October 31, 1995.
Financial Highlights for each of the 5 years ended October 31, 1995.
Schedule of Investments as of October 31, 1995.
Notes to Financial Statements.
(b) Exhibits:
Exhibits previously filed are incorporated herein by reference to the
filing containing such exhibit identified in the description to the
exhibit.
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 January 31, 1996 the number of record holders of shares of Registrant
was as follows:
TITLE NUMBER OF RECORD HOLDERS
----- ------------------------
Class A Class B Class C
------- ------- -------
John Hancock Special Equities Fund 56,958 47,971 4
ITEM 27. INDEMNIFICATION
(a) Under Registrant's Declaration of Trust. Section 4.3 of Registrant's
Declaration of Trust provides as follows:
"Indemnification of Trustees, Officers, Etc." The Trust shall indemnify each of
its Trustees, officers, employees and agents (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) against all liabilities and expenses, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by him or her in connection with
the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or legislative body in
which he or she may be or may have been involved as a party or otherwise or with
which he or she may be or may have been threatened. While acting as Trustee or
as an officer, employee or agent of the Trust or the Trustees, as the case may
be, or thereafter, by reason of his or her being or having been such a Trustee,
officer, employee or agent, except with respect to any matter as to which he or
she shall have been adjudicated not to have acted in good faith in the
reasonable belief that his or her action was in the best interests of the Trust,
provided that no individual shall be indemnified hereunder against any liability
to the Trust or the Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office, and provided further that as to any matter disposed of by
settlement or a compromise payment by such Trustee, officer, employee or agent,
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless there has been a
determination that such compromise is in the best interests of the Trust and
that such person appears to have acted in good faith in the reasonable belief
that his or her action was in the best interests of the Trust and did not engage
in willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office. All determinations that the
applicable standards of conduct have been met for indemnification hereunder
shall be made by (a) a majority vote of a quorum consisting of disinterested
Trustees who are not parties to the proceeding relating to indemnification, or
(b) if such quorum is not obtainable or, even if obtainable, if a majority vote
of such quorum so directs, by independent legal counsel in a written opinion, or
(c) a Majority Shareholder Vote (excluding Shares owned of record or
beneficially by such individual). The rights accruing to any Trustee, officer,
employee or agent under these provisions shall not exclude any other right to
which he may be lawfully entitled. The Trustees may make advance payments in
connection with the expense of defending any action with respect to which
indemnification might be sought under this Section 4.3, provided that the
indemnified Trustee, officer, employee or agent shall have given a written
undertaking to reimburse the Trust in the event it is subsequently determined
that he is not entitled to such indemnification.
(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.
(c) Under the By-Laws of the John Hancock Mutual Life Insurance Company (the
"Insurance Company"), John Hancock Funds and John Hancock Advisers, Inc.
(the "Adviser").
Section 9a 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 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 director, officer, employee or agent of
the Corporation, or is or was at any time since the inception of the
Corporation serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
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 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 a person."
Insofar as indemnification for liabilities under the Securities Act of 1933,
as amended (the "Act") may be permitted to Trustees, officers and controlling
persons of Registrant pursuant to Section 10.1 of the Registrant's By-Laws,
Section 13 of the Underwriting Agreement filed as Exhibit 6 to the original
Registration Statement, the By-Laws of the Registrant, the By-laws of the
Distributors, 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 ADVISER
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 Fund, John
Hancock Strategic Series, John Hancock Technology Series, Inc., 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.
(b) The following table lists, for each director and officer of John Hancock
Funds, the information indicated.
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------- --------------------- ---------------------
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
James V. Bowhers Executive Vice President None
101 Huntington Avenue
Boston, Massachusetts
Foster L. Aborn Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
David F. D'Alessandro Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Robert G. Freedman Director Vice Chairman and
101 Huntington Avenue Chief Invesment 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
David A. King Director and Senior None
101 Huntington Avenue Vice President
Boston, Massachusetts
James W. McLaughlin Senior Vice President and None
101 Huntington Avenue Chief Financial Officer
Boston, Massachusetts
James B. Little Senior Vice President Senior Vice President
101 Huntington Avenue and Chief Financial
Boston, Massachusetts Officer
Michael T. Carpenter Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
William S. Nichols Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
John A. Morin Vice President Vice President
101 Huntington Avenue
Boston, Massachusetts
Susan S. Newton Vice President and Vice President and
101 Huntington Avenue Secretary Secretary
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
John Goldsmith Director None
One Beacon Street
Boston, Massachusetts
Richard O. Hansen Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
William C. Fletcher Director None
53 State Street
Boston, Massachusetts
John M. DeCiccio Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
(c) None.
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.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(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.
<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 of
the requirements for effectiveness of this registration pursuant to Rule 485(b)
under 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 28th day of
February 1996.
JOHN HANCOCK SPECIAL EQUITIES FUND
By: *
-------------------------------
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
* Chairman
- ---------------------- (Principal Executive Officer)
Edward J. Boudreau, Jr.
Senior Vice President and Chief
/s/ James B. Little Financial Officer (Principal February 28, 1996
- ------------------- Financial and Accounting Officer)
James B. Little
*
- ------------------- Trustee
Dennis S. Aronowitz
*
- ---------------------- Trustee
Richard P. Chapman, Jr.
*
- ---------------------- Trustee
William J. Cosgrove
*
- ---------------------- Trustee
Gail D. Fosler
*
- ---------------------- Trustee
Bayard Henry
*
- ---------------------- Trustee
Richard S. Scipione
*
- ---------------------- Trustee
Edward J. Spellman
February 28, 1996
/s/ Thomas H. Drohan
- --------------------
*By: Thomas H. Drohan
(Attorney-in-Fact)
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NUMBER
99.B1 Declaration of Trust of Registrant as amended and
restated February 28, 1992.*
99.B2 By-Laws as adopted on December 8, 1993.*
99.B2.1 Amendment to By-Laws dated December 13, 1994.*
99.B3 None
99.B4 Specimen share certificate for the John Hancock Special
Equities Fund Classes A & B and C.*
99.B5 Investment Management Contract between Registrant and
John Hancock Advisers, Inc. dated January 1, 1994.*
99.B6 Distribution Agreement with Registrant and John Hancock
Broker Distribution Services, Inc. dated August 1, 1991.*
99.B6.1 Form of Soliciting Dealer Agreement between John Hancock
Broker Distribution Services, Inc. and Selected Dealers.*
99.B6.2 Form of Financial Institution Sales and Service Agreement.*
99.B7 None
99.B8 Master Custodian Agreement between Registrant and Investors
Bank & Trust Company dated December 15, 1992.*
99.B9 Transfer Agency and Service Agreement between Registrant and
John Hancock Fund Services, Inc. dated January 1, 1991.*
99.B10 Opinion and Consent of Ropes and Gray.*
99.B11 Consent of Ernst & Young LLP.+
99.B12 Financial Statement of the John Hancock Special Equities Fund
for the fiscal year ended October 31, 1995 included in Parts A
and B.+
99.B13 Subscription Agreement between Registrant and John Hancock
Advisers, Inc. dated December 17, 1984.*
<PAGE>
EXHIBIT NO. DESCRIPTION PAGE NUMBER
99.B14 None
99.B15 Class A Distribution Plan between John Hancock Special
Equities Fund and John Hancock Broker Services, Inc.*
99.B15.1 Class B Distribution Plan between John Hancock Special
Equities Fund and John Hancock Broker Services, Inc. *
99.B16 Schedule for Computation of total return.+
99.B17 Powers of Attorney dated November 20, 1984, dated July 22,
1985, dated May 17, 1988, dated November 15, 1988, dated May
17, 1991, May 21, 1984, June dated October 15, 1991, dated
January 1, 1994 and June 22, 1994.*
99.27Class A Financial Data Schedules-Class A
99.27Class B Financial Data Schedules-Class B
99.27Class C Financial Data Schedules-Class C
*Previously filed with Registration Statement and/or post-effective amendment
and incorporated by reference herein.
+Filed herewith.
Exhibit 99.11
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 Prospectus and "Independent Auditors" in the
Statement of Additional Information in Post-Effective Amendment No. 12 to
Registration Statement No. 2-92548 on Form N1-A of John Hancock Special Equities
Fund.
We also consent to the use of our report dated December 15, 1995, with respect
to the financial statements and financial highlights of John Hancock Special
Equities Fund, included in this form N1-A.
/s/ERNST & YOUNG LLP
Boston, Massachusetts
February 23, 1996
<PAGE>
Exhibit 99.16
<TABLE>
<CAPTION>
JOHN HANCOCK SPECIAL EQUITIES FUND (CLASS A) - SEC TOTAL RETURN
Initial Investment: $1,000.00
- ----------------------------- --------------------------------- -----------
Average Annual Total Return Investment Value at End of Period Cum. Return
<S> <C> <C> <C> <C>
10 Year Return: 17.22% 10 Year Value: $4,899.03 389.90%
5 Year Return: 35.29% 5 Year Value: $4,532.22 353.22%
1 Year Return: 30.60% 1 Year Value: $1,306.01 30.60%
- ----------------------------- --------------------------------- -----------
Mthly Return Mthly Value
------------ -----------
------------ -----------
<CAPTION>
Constant Sales Charge: 5.00%
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- -------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
2 / 4 / 85 $5.00 $5.26 5.00%
2 / 85 $4.99 $5.25 5.00%
3 / 85 $4.99 $5.25 5.00%
4 / 85 $5.00 $5.26 5.00%
5 / 85 $5.01 $5.27 5.00%
6 / 85 $5.21 $5.48 5.00%
7 / 85 $5.36 $5.64 5.00%
8 / 85 $5.37 $5.65 5.00%
9 / 85 $5.08 $5.35 5.00%
10 / 85 $5.21 $5.48 5.00%
11 / 85 $5.66 $5.96 5.00%
12 / 85 $6.05 $6.37 5.00%
1 / 86 $6.20 $6.53 5.00% 01/06/86 $0.03 $5.98 $0.01 Cap Gain
2 / 86 $6.57 $6.92 5.00%
3 / 86 $6.77 $7.13 5.00%
4 / 86 $6.93 $7.29 5.00%
5 / 86 $7.12 $7.49 5.00%
6 / 86 $7.21 $7.59 5.00%
7 / 86 $6.39 $6.73 5.00%
8 / 86 $6.58 $6.93 5.00%
9 / 86 $5.71 $6.01 5.00%
10 / 86 $6.08 $6.40 5.00%
11 / 86 $6.14 $6.46 5.00%
12 / 86 $5.71 $6.01 5.00% 12/15/86 $0.05 $5.74 $0.01 Cap Gain
1 / 87 $6.67 $7.02 5.00% $0.04 Ret. of Cap.
2 / 87 $7.06 $7.43 5.00%
3 / 87 $7.19 $7.57 5.00%
4 / 87 $7.10 $7.47 5.00%
5 / 87 $7.16 $7.54 5.00%
6 / 87 $6.95 $7.32 5.00%
7 / 87 $6.99 $7.36 5.00%
8 / 87 $7.10 $7.47 5.00%
9 / 87 $6.93 $7.29 5.00%
10 / 87 $4.30 $4.53 5.00% 10/28/87 $0.44 $4.30 $0.44 Cap Gain
11 / 87 $3.89 $4.09 5.00%
12 / 87 $4.23 $4.45 5.00%
1 / 88 $4.31 $4.54 5.00%
2 / 88 $4.70 $4.95 5.00%
3 / 88 $4.80 $5.05 5.00%
4 / 88 $4.96 $5.22 5.00%
5 / 88 $4.79 $5.04 5.00%
6 / 88 $5.27 $5.55 5.00%
7 / 88 $5.09 $5.36 5.00%
8 / 88 $4.90 $5.16 5.00%
9 / 88 $4.99 $5.25 5.00%
10 / 88 $4.89 $5.15 5.00%
11 / 88 $4.80 $5.05 5.00%
12 / 88 $5.05 $5.32 5.00% 12/29/88 $0.05 $5.09
1 / 89 $5.35 $5.63 5.00%
2 / 89 $5.28 $5.56 5.00%
3 / 89 $5.41 $5.69 5.00%
4 / 89 $5.84 $6.15 5.00%
5 / 89 $6.23 $6.56 5.00%
6 / 89 $6.00 $6.32 5.00%
7 / 89 $6.44 $6.78 5.00%
8 / 89 $6.65 $7.00 5.00%
9 / 89 $6.66 $7.01 5.00%
10 / 89 $6.38 $6.72 5.00%
11 / 89 $6.48 $6.82 5.00%
12 / 89 $6.44 $6.78 5.00% 12/29/89 $0.02 $6.42
1 / 90 $5.75 $6.05 5.00%
2 / 90 $5.87 $6.18 5.00%
3 / 90 $6.23 $6.56 5.00%
4 / 90 $6.13 $6.45 5.00%
5 / 90 $6.86 $7.22 5.00%
6 / 90 $6.90 $7.26 5.00%
7 / 90 $6.50 $6.84 5.00%
8 / 90 $5.67 $5.97 5.00%
9 / 90 $5.11 $5.38 5.00%
10 / 90 $4.97 $5.23 5.00%
11 / 90 $5.46 $5.75 5.00%
12 / 90 $5.88 $6.19 5.00%
1 / 91 $6.57 $6.92 5.00%
2 / 91 $7.05 $7.42 5.00%
3 / 91 $7.78 $8.19 5.00%
4 / 91 $7.75 $8.16 5.00%
5 / 91 $8.23 $8.66 5.00%
6 / 91 $7.80 $8.21 5.00%
7 / 91 $8.48 $8.93 5.00%
8 / 91 $9.01 $9.48 5.00%
9 / 91 $9.34 $9.83 5.00%
10 / 91 $9.71 $10.22 5.00%
11 / 91 $9.42 $9.92 5.00%
12 / 91 $10.21 $10.75 5.00% 12/31/91 $0.67 $10.69 $0.67 Cap Gain
1 / 92 $10.71 $11.27 5.00%
2 / 92 $11.01 $11.59 5.00%
3 / 92 $10.46 $11.01 5.00%
4 / 92 $9.91 $10.43 5.00%
5 / 92 $9.78 $10.29 5.00%
6 / 92 $9.28 $9.77 5.00%
7 / 92 $9.94 $10.46 5.00%
8 / 92 $9.51 $10.01 5.00%
9 / 92 $10.09 $10.62 5.00%
10 / 92 $10.99 $11.57 5.00%
11 / 92 $12.66 $13.33 5.00%
12 / 92 $13.22 $13.92 5.00% 12/23/92 $0.09 $12.54 $0.09 Cap Gain
1 / 93 $13.31 $14.01 5.00%
2 / 93 $12.30 $12.95 5.00%
3 / 93 $12.97 $13.65 5.00%
4 / 93 $12.59 $13.25 5.00%
5 / 93 $13.59 $14.31 5.00%
6 / 93 $14.20 $14.95 5.00%
7 / 93 $14.26 $15.01 5.00%
8 / 93 $15.00 $15.79 5.00%
9 / 93 $15.76 $16.59 5.00%
10 / 93 $16.13 $16.98 5.00%
11 / 93 $15.03 $15.82 5.00%
12 / 93 $15.83 $16.66 5.00%
1 / 94 $16.17 $17.02 5.00%
2 / 94 $15.96 $16.80 5.00%
3 / 94 $14.68 $15.45 5.00%
4 / 94 $15.21 $16.01 5.00%
5 / 94 $14.41 $15.17 5.00%
6 / 94 $13.47 $14.18 5.00%
7 / 94 $13.71 $14.43 5.00%
8 / 94 $15.03 $15.82 5.00%
9 / 94 $15.27 $16.07 5.00%
10 / 94 $16.11 $16.96 5.00%
11 / 94 $15.69 $16.52 5.00%
12 / 94 $16.15 $17.00 5.00%
1 / 95 $15.67 $16.49 5.00%
2 / 95 $16.68 $17.56 5.00%
3 / 95 $17.10 $18.00 5.00%
4 / 95 $17.03 $17.93 5.00%
5 / 95 $16.91 $17.80 5.00%
6 / 95 $19.00 $20.00 5.00%
7 / 95 $21.76 $22.91 5.00%
8 / 95 $21.92 $23.07 5.00%
9 / 95 $22.06 $23.22 5.00%
10 / 95 $22.15 $23.32 5.00%
End of Period (update for formulas above):
$22.15
- -------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
JOHN HANCOCK SPECIAL EQUITIES FUND (CLASS A) - SEC TOTAL RETURN [continued]
Initial Investment: $1,000.00
- ----------------------------- --------------------------------- -----------
Average Annual Total Return Investment Value at End of Period Cum. Return
<S> <C> <C> <C> <C>
10 Year Return: 17.22% 10 Year Value: $4,899.03 389.90%
5 Year Return: 35.29% 5 Year Value: $4,532.22 353.22%
1 Year Return: 30.60% 1 Year Value: $1,306.01 30.60%
- ----------------------------- --------------------------------- -----------
Mthly Return Mthly Value
------------ -----------
------------ -----------
<CAPTION>
Constant Sales Charge: 5.00%
10-Year 5-Year 1-Year
---------------------------------------------------------------------------------------
Month Dividend # Shares Shares Dividend # Shares Shares Dividend # Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding $ Value
- -----------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 / 4 / 85 $0.00
2 / 85 $0.00
3 / 85 $0.00
4 / 85 $0.00
5 / 85 $0.00
6 / 85 $0.00
7 / 85 $0.00
8 / 85 $0.00
9 / 85 $0.00
10 / 85 182.482 $950.73
11 / 85 $0.00 0.000 182.482 $1,032.85
12 / 85 $0.00 0.000 182.482 $1,104.02
1 / 86 $6.33 1.059 183.541 $1,137.95
2 / 86 $0.00 0.000 183.541 $1,205.86
3 / 86 $0.00 0.000 183.541 $1,242.57
4 / 86 $0.00 0.000 183.541 $1,271.94
5 / 86 $0.00 0.000 183.541 $1,306.81
6 / 86 $0.00 0.000 183.541 $1,323.33
7 / 86 $0.00 0.000 183.541 $1,172.83
8 / 86 $0.00 0.000 183.541 $1,207.70
9 / 86 $0.00 0.000 183.541 $1,048.02
10 / 86 $0.00 0.000 183.541 $1,115.93
11 / 86 $0.00 0.000 183.541 $1,126.94
12 / 86 $8.81 1.535 185.076 $1,056.78
1 / 87 $0.00 0.000 185.076 $1,234.46
2 / 87 $0.00 0.000 185.076 $1,306.64
3 / 87 $0.00 0.000 185.076 $1,330.70
4 / 87 $0.00 0.000 185.076 $1,314.04
5 / 87 $0.00 0.000 185.076 $1,325.14
6 / 87 $0.00 0.000 185.076 $1,286.28
7 / 87 $0.00 0.000 185.076 $1,293.68
8 / 87 $0.00 0.000 185.076 $1,314.04
9 / 87 $0.00 0.000 185.076 $1,282.58
10 / 87 $81.43 18.938 204.014 $877.26
11 / 87 $0.00 0.000 204.014 $793.61
12 / 87 $0.00 0.000 204.014 $862.98
1 / 88 $0.00 0.000 204.014 $879.30
2 / 88 $0.00 0.000 204.014 $958.87
3 / 88 $0.00 0.000 204.014 $979.27
4 / 88 $0.00 0.000 204.014 $1,011.91
5 / 88 $0.00 0.000 204.014 $977.23
6 / 88 $0.00 0.000 204.014 $1,075.15
7 / 88 $0.00 0.000 204.014 $1,038.43
8 / 88 $0.00 0.000 204.014 $999.67
9 / 88 $0.00 0.000 204.014 $1,018.03
10 / 88 $0.00 0.000 204.014 $997.63
11 / 88 $0.00 0.000 204.014 $979.27
12 / 88 $10.71 2.104 206.118 $1,040.90
1 / 89 $0.00 0.000 206.118 $1,102.73
2 / 89 $0.00 0.000 206.118 $1,088.30
3 / 89 $0.00 0.000 206.118 $1,115.10
4 / 89 $0.00 0.000 206.118 $1,203.73
5 / 89 $0.00 0.000 206.118 $1,284.12
6 / 89 $0.00 0.000 206.118 $1,236.71
7 / 89 $0.00 0.000 206.118 $1,327.40
8 / 89 $0.00 0.000 206.118 $1,370.68
9 / 89 $0.00 0.000 206.118 $1,372.75
10 / 89 $0.00 0.000 206.118 $1,315.03
11 / 89 $0.00 0.000 206.118 $1,335.64
12 / 89 $3.61 0.562 206.680 $1,331.02
1 / 90 $0.00 0.000 206.680 $1,188.41
2 / 90 $0.00 0.000 206.680 $1,213.21
3 / 90 $0.00 0.000 206.680 $1,287.62
4 / 90 $0.00 0.000 206.680 $1,266.95
5 / 90 $0.00 0.000 206.680 $1,417.82
6 / 90 $0.00 0.000 206.680 $1,426.09
7 / 90 $0.00 0.000 206.680 $1,343.42
8 / 90 $0.00 0.000 206.680 $1,171.88
9 / 90 $0.00 0.000 206.680 $1,056.13
10 / 90 $0.00 0.000 206.680 191.205 $1,027.20
11 / 90 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,128.47
12 / 90 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,215.28
1 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,357.89
2 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,457.09
3 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,607.97
4 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,601.77
5 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,700.98
6 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,612.10
7 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,752.65
8 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,862.19
9 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,930.39
10 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $2,006.86
11 / 91 $0.00 0.000 206.680 $0.00 0.000 191.205 $1,946.93
12 / 91 $138.04 12.913 219.593 $127.71 11.946 203.151 $2,242.04
1 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,351.84
2 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,417.72
3 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,296.94
4 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,176.17
5 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,147.62
6 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,037.82
7 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,182.75
8 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,088.33
9 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,215.69
10 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,413.33
11 / 92 $0.00 0.000 219.593 $0.00 0.000 203.151 $2,780.05
12 / 92 $19.84 1.582 221.175 $18.35 1.464 204.615 $2,923.93
1 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $2,943.84
2 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $2,720.45
3 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $2,868.64
4 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $2,784.59
5 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,005.77
6 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,140.69
7 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,153.96
8 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,317.63
9 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,485.72
10 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,567.55
11 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,324.26
12 / 93 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,501.20
1 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,576.40
2 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,529.95
3 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,246.85
4 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,364.07
5 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,187.13
6 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $2,979.23
7 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,032.31
8 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,324.26
9 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $3,377.34
10 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 58.962 $3,563.13
11 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $3,470.24
12 / 94 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $3,571.98
1 / 95 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $3,465.81
2 / 95 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $3,689.20
3 / 95 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $3,782.09
4 / 95 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $3,766.61
5 / 95 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $3,740.07
6 / 95 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $4,202.33
7 / 95 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $4,812.77
8 / 95 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $4,848.16
9 / 95 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $4,879.12
10 / 95 $0.00 0.000 221.175 $0.00 0.000 204.615 $0.00 0.000 58.962 $4,899.03
End of Period (update for formulas above):
221.175 204.615 58.962
- -----------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
JOHN HANCOCK SPECIAL EQUITIES FUND (CLASS B) - SEC TOTAL RETURN
Initial Investment: $1,000.00
- ----------------------------------------- -------------------------------------------- ------------------
Average Annual Total Return Investment Value at End of Period Cum. Return
------------------
CDSC Excluding With
Excluding With Excluding % CDSC Ending CDSC CDSC
CDSC CDSC CDSC CDSC Amount Value
<C> <C> <C> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A N/A 0.00% N/A N/A N/A
5 Year Return: N/A N/A N/A 2.00% N/A N/A N/A
2.68 Year Return: 23.83% 23.04% $1,773.17 3.00% $30.00 $1,743.17 77.32% 74.32%
1 Year Return: 36.57% 31.57% $1,365.68 5.00% $50.00 $1,315.68 36.57% 31.57%
- ----------------------------------------- -------------------------------------------- ------------------
<CAPTION>
Constant Sales Charge: N/A
10-Year
-----------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
2/26/93 $12.30 $12.30 N/A
3 / 93 $12.97 $12.97 N/A
4 / 93 $12.59 $12.59 N/A
5 / 93 $13.58 $13.58 N/A
6 / 93 $14.18 $14.18 N/A
7 / 93 $14.23 $14.23 N/A
8 / 93 $14.96 $14.96 N/A
9 / 93 $15.72 $15.72 N/A
10 / 93 $16.08 $16.08 N/A
11 / 93 $14.97 $14.97 N/A
12 / 93 $15.76 $15.76 N/A
1 / 94 $16.09 $16.09 N/A
2 / 94 $15.88 $15.88 N/A
3 / 94 $14.59 $14.59 N/A
4 / 94 $15.11 $15.11 N/A
5 / 94 $14.30 $14.30 N/A
6 / 94 $13.37 $13.37 N/A
7 / 94 $13.61 $13.61 N/A
8 / 94 $14.91 $14.91 N/A
9 / 94 $15.15 $15.15 N/A
10 / 94 $15.97 $15.97 N/A
11 / 94 $15.55 $15.55 N/A
12 / 94 $15.99 $15.99 N/A
1 / 95 $15.51 $15.51 N/A
2 / 95 $16.49 $16.49 N/A
3 / 95 $16.91 $16.91 N/A
4 / 95 $16.82 $16.82 N/A
5 / 95 $16.70 $16.70 N/A
6 / 95 $18.74 $18.74 N/A
7 / 95 $21.46 $21.46 N/A
8 / 95 $21.60 $21.60 N/A
9 / 95 $21.73 $21.73 N/A
10 / 95 $21.81 $21.81 N/A
0.000
End of Period (update for formulas above):
$21.81
<PAGE>
<CAPTION>
JOHN HANCOCK SPECIAL EQUITIES FUND (CLASS B) - SEC TOTAL RETURN [continued]
Initial Investment: $1,000.00
- ----------------------------------------- -------------------------------------------- ------------------
Average Annual Total Return Investment Value at End of Period Cum. Return
------------------
CDSC Excluding With
Excluding With Excluding % CDSC Ending CDSC CDSC
CDSC CDSC CDSC CDSC Amount Value
<C> <C> <C> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A N/A 0.00% N/A N/A N/A
5 Year Return: N/A N/A N/A 2.00% N/A N/A N/A
2.68 Year Return: 23.83% 23.04% $1,773.17 3.00% $30.00 $1,743.17 77.32% 74.32%
1 Year Return: 36.57% 31.57% $1,365.68 5.00% $50.00 $1,315.68 36.57% 31.57%
- ----------------------------------------- -------------------------------------------- ------------------
<CAPTION>
Constant Sales Charge: N/A
5-Year 3-Year 1-Year
------------------------------------------------------------------------------------------------
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares Ending
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding $Value CDSC $Value
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2/26/93 81.301 $1,000.00 $30.00 $970.00
3 / 93 $0.00 0.000 81.301 $1,054.47 $30.00 $1,024.47
4 / 93 $0.00 0.000 81.301 $1,023.58 $30.00 $993.58
5 / 93 $0.00 0.000 81.301 $1,104.07 $30.00 $1,074.07
6 / 93 $0.00 0.000 81.301 $1,152.85 $30.00 $1,122.85
7 / 93 $0.00 0.000 81.301 $1,156.91 $30.00 $1,126.91
8 / 93 $0.00 0.000 81.301 $1,216.26 $30.00 $1,186.26
9 / 93 $0.00 0.000 81.301 $1,278.05 $30.00 $1,248.05
10 / 93 $0.00 0.000 81.301 $1,307.32 $30.00 $1,277.32
11 / 93 $0.00 0.000 81.301 $1,217.08 $30.00 $1,187.08
12 / 93 $0.00 0.000 81.301 $1,281.30 $30.00 $1,251.30
1 / 94 $0.00 0.000 81.301 $1,308.13 $30.00 $1,278.13
2 / 94 $0.00 0.000 81.301 $1,291.06 $30.00 $1,261.06
3 / 94 $0.00 0.000 81.301 $1,186.18 $30.00 $1,156.18
4 / 94 $0.00 0.000 81.301 $1,228.46 $30.00 $1,198.46
5 / 94 $0.00 0.000 81.301 $1,162.60 $30.00 $1,132.60
6 / 94 $0.00 0.000 81.301 $1,086.99 $30.00 $1,056.99
7 / 94 $0.00 0.000 81.301 $1,106.51 $30.00 $1,076.51
8 / 94 $0.00 0.000 81.301 $1,212.20 $30.00 $1,182.20
9 / 94 $0.00 0.000 81.301 $1,231.71 $30.00 $1,201.71
10 / 94 $0.00 0.000 81.301 62.617 $1,298.38 $30.00 $1,268.38
11 / 94 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,264.23 $30.00 $1,234.23
12 / 94 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,300.00 $30.00 $1,270.00
1 / 95 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,260.98 $30.00 $1,230.98
2 / 95 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,340.65 $30.00 $1,310.65
3 / 95 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,374.80 $30.00 $1,344.80
4 / 95 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,367.48 $30.00 $1,337.48
5 / 95 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,357.73 $30.00 $1,327.73
6 / 95 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,523.58 $30.00 $1,493.58
7 / 95 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,744.72 $30.00 $1,714.72
8 / 95 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,756.10 $30.00 $1,726.10
9 / 95 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,766.67 $30.00 $1,736.67
10 / 95 $0.00 0.000 81.301 $0.00 0.000 62.617 $1,773.17 $30.00 $1,743.17
0.000 81.301 62.617
<PAGE>
<CAPTION>
JOHN HANCOCK SPECIAL EQUITIES FUND (CLASS C) - SEC TOTAL RETURN
Initial Investment: $1,000.00
- --------------------------------- --------------------------------- -----------
Average Annual Total Return Investment Value at End of Period Cum. Return
<S> <C> <C> <C> <C>
10 Year Return: N/A 10 Year Value: $0.00 NA
5 Year Return: N/A 5 Year Value: $0.00 NA
2.17 Year Return: 20.67% 3 Year Value: $1,503.35 50.34%
1 Year Return: 38.27% 1 Year Value: $1,382.71 38.27%
- --------------------------------- --------------------------------- -----------
Constant Sales Charge: 0.00%
<CAPTION>
- --------------------------------------------------------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- --------------------------------------------------------------------------------
<C> <C> <C> <C>
9/1/ 93 $14.90 $14.90 0.00%
9 / 93 $15.50 $15.50 0.00%
10 / 93 $16.14 $16.14 0.00%
11 / 93 $15.04 $15.04 0.00%
12 / 93 $15.85 $15.85 0.00%
1 / 94 $16.19 $16.19 0.00%
2 / 94 $15.99 $15.99 0.00%
3 / 94 $14.70 $14.70 0.00%
4 / 94 $15.25 $15.25 0.00%
5 / 94 $14.44 $14.44 0.00%
6 / 94 $13.51 $13.51 0.00%
7 / 94 $13.77 $13.77 0.00%
8 / 94 $15.10 $15.10 0.00%
9 / 94 $15.35 $15.35 0.00%
10 / 94 $16.20 $16.20 0.00%
11 / 94 $15.80 $15.80 0.00%
12 / 94 $16.26 $16.26 0.00%
1 / 95 $15.79 $15.79 0.00%
2 / 95 $16.81 $16.81 0.00%
3 / 95 $17.25 $17.25 0.00%
4 / 95 $17.18 $17.18 0.00%
5 / 95 $17.07 $17.07 0.00%
6 / 95 $19.18 $19.18 0.00%
7 / 95 $21.99 $21.99 0.00%
8 / 95 $22.15 $22.15 0.00%
9 / 95 $22.31 $22.31 0.00%
10 / 95 $22.40 $22.40 0.00%
- --------------------------------------------------------------------------------------
End of Period (update for formulas above):
$22.40
<PAGE>
<CAPTION>
JOHN HANCOCK SPECIAL EQUITIES FUND (CLASS C) - SEC TOTAL RETURN [continued]
Initial Investment: $1,000.00
- --------------------------------- --------------------------------- -----------
Average Annual Total Return Investment Value at End of Period Cum. Return
<S> <C> <C> <C> <C>
10 Year Return: N/A 10 Year Value: $0.00 NA
5 Year Return: N/A 5 Year Value: $0.00 NA
2.17 Year Return: 20.67% 3 Year Value: $1,503.35 50.34%
1 Year Return: 38.27% 1 Year Value: $1,382.71 38.27%
- --------------------------------- --------------------------------- -----------
Constant Sales Charge: 0.00%
<CAPTION>
3-Year 1-Year
- ----------------------------------------------------------------------------------------
Month Dividend # Shares Shares Dividend # Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding $ Value
- ----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
9/1/ 93 67.114 $1,000.00
9 / 93 $0.00 0.000 67.114 $1,040.27
10 / 93 $0.00 0.000 67.114 $1,083.22
11 / 93 $0.00 0.000 67.114 $1,009.39
12 / 93 $0.00 0.000 67.114 $1,063.76
1 / 94 $0.00 0.000 67.114 $1,086.58
2 / 94 $0.00 0.000 67.114 $1,073.15
3 / 94 $0.00 0.000 67.114 $986.58
4 / 94 $0.00 0.000 67.114 $1,023.49
5 / 94 $0.00 0.000 67.114 $969.13
6 / 94 $0.00 0.000 67.114 $906.71
7 / 94 $0.00 0.000 67.114 $924.16
8 / 94 $0.00 0.000 67.114 $1,013.42
9 / 94 $0.00 0.000 67.114 $1,030.20
10 / 94 $0.00 0.000 67.114 61.728 $1,087.25
11 / 94 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,060.40
12 / 94 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,091.27
1 / 95 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,059.73
2 / 95 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,128.19
3 / 95 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,157.72
4 / 95 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,153.02
5 / 95 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,145.64
6 / 95 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,287.25
7 / 95 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,475.84
8 / 95 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,486.58
9 / 95 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,497.31
10 / 95 $0.00 0.000 67.114 $0.00 0.000 61.728 $1,503.35
67.114 61.728
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> FDS - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 698,919,871
<INVESTMENTS-AT-VALUE> 1,006,693,523
<RECEIVABLES> 30,416,746
<ASSETS-OTHER> 701,702
<OTHER-ITEMS-ASSETS> 307,773,652
<TOTAL-ASSETS> 1,037,811,971
<PAYABLE-FOR-SECURITIES> 11,428,592
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,093,214
<TOTAL-LIABILITIES> 13,521,806
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 693,050,656
<SHARES-COMMON-STOCK> 25,080,561
<SHARES-COMMON-PRIOR> 19,287,318
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,465,857
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 307,773,652
<NET-ASSETS> 1,024,290,165
<DIVIDEND-INCOME> 79,312
<INTEREST-INCOME> 3,344,079
<OTHER-INCOME> 0
<EXPENSES-NET> 11,974,939
<NET-INVESTMENT-INCOME> (8,551,548)
<REALIZED-GAINS-CURRENT> 49,485,997
<APPREC-INCREASE-CURRENT> 186,642,714
<NET-CHANGE-FROM-OPS> 227,577,163
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30,038,347
<NUMBER-OF-SHARES-REDEEMED> 24,245,104
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 514,563,283
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (26,020,140)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,538,912
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,974,939
<AVERAGE-NET-ASSETS> 387,883,861
<PER-SHARE-NAV-BEGIN> 16.11
<PER-SHARE-NII> (0.18)
<PER-SHARE-GAIN-APPREC> 6.22
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.15
<EXPENSE-RATIO> 1.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> FDS - CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 698,919,871
<INVESTMENTS-AT-VALUE> 1,006,693,523
<RECEIVABLES> 30,416,746
<ASSETS-OTHER> 701,702
<OTHER-ITEMS-ASSETS> 307,773,652
<TOTAL-ASSETS> 1,037,811,971
<PAYABLE-FOR-SECURITIES> 11,428,592
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,093,214
<TOTAL-LIABILITIES> 13,521,806
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 693,050,656
<SHARES-COMMON-STOCK> 20,862,546
<SHARES-COMMON-PRIOR> 12,021,618
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,465,857
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 307,773,652
<NET-ASSETS> 1,024,290,165
<DIVIDEND-INCOME> 79,312
<INTEREST-INCOME> 3,344,079
<OTHER-INCOME> 0
<EXPENSES-NET> 11,974,939
<NET-INVESTMENT-INCOME> (8,551,548)
<REALIZED-GAINS-CURRENT> 49,485,997
<APPREC-INCREASE-CURRENT> 186,642,714
<NET-CHANGE-FROM-OPS> 227,577,163
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,217,398
<NUMBER-OF-SHARES-REDEEMED> 5,376,470
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 514,563,283
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (26,020,140)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,538,912
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,974,939
<AVERAGE-NET-ASSETS> 279,269,522
<PER-SHARE-NAV-BEGIN> 15.97
<PER-SHARE-NII> (0.31)
<PER-SHARE-GAIN-APPREC> 6.15
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.81
<EXPENSE-RATIO> 2.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 003
<NAME> FDS - CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 698,919,871
<INVESTMENTS-AT-VALUE> 1,006,693,523
<RECEIVABLES> 30,416,746
<ASSETS-OTHER> 701,802
<OTHER-ITEMS-ASSETS> 307,773,652
<TOTAL-ASSETS> 1,037,811,971
<PAYABLE-FOR-SECURITIES> 11,428,592
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,093,214
<TOTAL-LIABILITIES> 13,521,806
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 693,050,656
<SHARES-COMMON-STOCK> 611,672
<SHARES-COMMON-PRIOR> 439,601
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,465,857
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 307,773,652
<NET-ASSETS> 1,024,290,165
<DIVIDEND-INCOME> 79,312
<INTEREST-INCOME> 3,344,079
<OTHER-INCOME> 0
<EXPENSES-NET> 11,974,939
<NET-INVESTMENT-INCOME> (8,551,548)
<REALIZED-GAINS-CURRENT> 49,485,997
<APPREC-INCREASE-CURRENT> 186,642,714
<NET-CHANGE-FROM-OPS> 227,577,163
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 242,819
<NUMBER-OF-SHARES-REDEEMED> 70,748
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 514,563,283
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (26,020,140)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,538,912
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,974,939
<AVERAGE-NET-ASSETS> 9,509,294
<PER-SHARE-NAV-BEGIN> 16.20
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> 6.29
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.40
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
