JOHN HANCOCK
Growth
Funds
[HANCOCK LOGO]
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Prospectus
November 1, 1998
This prospectus gives vital information about these funds. For your own benefit
and protection, please read it before you invest, and keep it on hand for future
reference.
Please note that these funds:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank or government agency
o are not guaranteed to achieve their goal(s)
Like all mutual fund shares, 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.
Emerging Growth Fund
Financial Industries Fund
Growth Fund
Regional Bank Fund
Special Equities Fund
Special Opportunities Fund
Special Value Fund
[HANCOCK LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
101 Huntington Avenue, Boston, Massachusetts 02199-7603
<PAGE>
Contents
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<S> <C> <C>
A fund-by-fund look at goals, Emerging Growth Fund 4
strategies, risks, expenses and
financial history. Financial Industries Fund 6
Growth Fund 8
Regional Bank Fund 10
Special Equities Fund 12
Special Opportunities Fund 14
Special Value Fund 16
Policies and instructions for opening, Your account
maintaining and closing an account
in any growth fund. Choosing a share class 19
How sales charges are calculated 19
Sales charge reductions and waivers 20
Opening an account 21
Buying shares 22
Selling shares 23
Transaction policies 25
Dividends and account policies 25
Additional investor services 26
Details that apply to the growth Fund details
funds as a group.
Business structure 27
Sales compensation 28
More about risk 30
For more information back cover
</TABLE>
<PAGE>
Overview
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FUND INFORMATION KEY
Concise fund-by-fund descriptions begin on the next page. Each description
provides the following information:
[Clip Art] Goal and strategy The fund's particular investment goals and the
strategies it intends to use in pursuing those goals.
[Clip Art] Portfolio securities The primary types of securities in which the
fund invests. Secondary investments are described in "More about risk" at the
end of the prospectus.
[Clip Art] Risk factors The major risk factors associated with the fund.
[Clip Art] Portfolio management The individual or group (including subadvisers,
if any) designated by the investment adviser to handle the fund's day-to-day
management.
[Clip Art] Expenses The overall costs borne by an investor in the fund,
including sales charges and annual expenses.
[Clip Art] Financial highlights A table showing the fund's financial performance
for up to ten years, by share class. A bar chart showing total return allows you
to compare the fund's historical risk level to those of other funds.
GOAL OF THE GROWTH FUNDS
John Hancock growth funds seek long-term growth by investing primarily in common
stocks. Each fund has its own strategy and its own risk/reward profile. Because
you could lose money by investing in these funds, be sure to read all risk
disclosure carefully before investing.
WHO MAY WANT TO INVEST
These funds may be appropriate for investors who:
o have longer time horizons
o are willing to accept higher short-term risk along with higher potential
long-term returns
o want to diversify their portfolios
o are seeking funds for the growth portion of an asset allocation portfolio
o are investing for retirement or other goals that are many years in the future
Growth funds may NOT be appropriate if you:
o are investing with a shorter time horizon in mind
o are uncomfortable with an investment that will go up and down in value
THE MANAGEMENT FIRM
All John Hancock growth funds are managed by John Hancock Advisers, Inc. Founded
in 1968, John Hancock Advisers is a wholly owned subsidiary of John Hancock
Mutual Life Insurance Company and manages more than $30 billion in assets.
<PAGE>
Emerging Growth Fund
REGISTRANT NAME: JOHN HANCOCK SERIES TRUST
TICKER SYMBOL CLASS A: TAEMX CLASS B: TSEGX CLASS C: N/A
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GOAL AND STRATEGY
[Clip Art] The fund seeks long-term capital appreciation. To pursue this goal,
the fund invests in emerging companies (market capitalization of less than $1
billion). Under normal circumstances, the fund invests at least 80% of assets in
a diversified portfolio of these companies. The fund looks for companies that
show rapid growth but are not yet widely recognized. The fund also may invest in
established companies that, because of new management, products or
opportunities, offer the possibility of accelerating earnings. The fund does not
invest for income.
PORTFOLIO SECURITIES
[Clip Art] The fund invests primarily in the common stocks of U.S. and foreign
emerging growth companies, although it may invest up to 20% of assets in other
types of companies. The fund may also invest in warrants, preferred stocks and
investment-grade convertible debt securities.
For liquidity and flexibility, the fund may place up to 20% of assets in cash or
in investment-grade short-term securities. In abnormal market conditions, it may
invest more assets in these securities as a defensive tactic. The fund also may
invest in certain higher-risk securities, and may engage in other investment
practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Stocks of emerging growth companies carry
higher risks than stocks of larger companies. This is because emerging growth
companies:
o may be in the early stages of development
o may be dependent on a small number of products or services
o may lack substantial capital reserves
o do not have proven track records
In addition, stocks of emerging companies are often traded in low volumes, which
can increase market and liquidity risks. Before you invest, please read "More
about risk" starting on page 30.
PORTFOLIO MANAGEMENT
[Clip Art] Bernice S. Behar, CFA, leads the fund's portfolio management team.
Other team members are managers Laura Allen, CFA and Anurag Pandit, CFA. Ms.
Behar, senior vice president, has been in the investment business since 1986 and
has managed the fund since 1996. Ms. Allen, senior vice president, has been in
the investment business since 1981 and joined the fund's management team in
1998. Mr. Pandit, vice president, has been in the investment business since 1984
and a member of the fund's team since 1996.
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INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past year, adjusted to reflect any
changes. Because no Class C shares were outstanding during the past year, Class
C expenses are based on Class B expenses. Future expenses may be greater or
less.
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Shareholder transaction expenses Class A Class B Class C
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Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none none
Maximum sales charge imposed on
reinvested dividends none none none
Maximum deferred sales charge none(1) 5.00% 1.00%
Redemption fee(2) none none none
Exchange fee none none none
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Annual fund operating expenses (as a % of average net assets)
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Management fee 0.75% 0.75% 0.75%
12b-1 fee(3) 0.25% 1.00% 1.00%
Other expenses 0.29% 0.29% 0.29%
Total fund operating expenses 1.29% 2.04% 2.04%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
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Share class Year 1 Year 3 Year 5 Year 10
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Class A shares $62 $87 $117 $198
Class B shares
Assuming redemption
at end of period $71 $94 $130 $217
Assuming no redemption $21 $64 $110 $217
Class C shares
Assuming redemption
at end of period $31 $64 $110 $237
Assuming no redemption $21 $64 $110 $237
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
4 EMERGING GROWTH FUND
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FINANCIAL HIGHLIGHTS [Clip Art] The figures below have been audited by the
fund's independent auditors, Ernst & Young LLP.
These figures reflect the fund's 4-1 stock split on May 1, 1998.
[The following information was represented by a bar graph in the printed
materials.]
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Volatility, as indicated by Class B 10/88 10/89 10/90 10/91 10/92 10/93 10/94 10/95(2) 10/96 10/97
year-by-year total investment return (%) 33.59 27.40 (11.82) 73.78 6.19 24.53 2.80 33.60 12.48 22.44
(scale varies from fund to fund)
</TABLE>
<TABLE>
<CAPTION>
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Class A - period ended: 10/91(1) 10/92 10/93 10/94 10/95(2) 10/96 10/97
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<S> <C> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $4.53 $4.82 $5.15 $6.47 $6.71 $9.02 $10.22
Net investment income (loss)(3) (0.01) (0.05) (0.04) (0.04) (0.07) (0.09) (0.07)
Net realized and unrealized gain
(loss) on investments 0.30 0.40 1.36 0.28 2.38 1.29 2.41
Total from investment operations 0.29 0.35 1.32 0.24 2.31 1.20 2.34
Less distributions:
Distributions from net realized gain on
investments sold -- (0.02) -- -- -- -- (0.21)
Total distributions -- (0.02) -- -- -- -- (0.21)
Net asset value, end of period $4.82 $5.15 $6.47 $6.71 $9.02 $10.22 $12.35
Total investment return at net asset
value(4) (%) 6.29 7.32 25.68 3.59 34.56 13.27 23.35
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 38,859 46,137 81,263 131,053 179,481 218,497 209,384
Ratio of expenses to average net assets (%) 0.33 1.67 1.40 1.44 1.38 1.32 1.29(5)
Ratio of net investment income (loss) to
average net assets (%) (0.15) (1.03) (0.70) (0.71) (0.83) (0.86) (0.57)
Portfolio turnover rate (%) 66 48 29 25 23 44 96
</TABLE>
<TABLE>
<CAPTION>
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Class B - period ended: 10/88 10/89 10/90 10/91 10/92 10/93
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<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $1.97 $2.64 $3.19 $2.77 $4.81 $5.09
Net investment income (loss)(3) 0.03 (0.02) (0.05) (0.08) (0.09) (0.09)
Net realized and unrealized gain (loss) on investments 0.64 0.71 (0.31) 2.12 0.39 1.33
Total from investment operations 0.67 0.69 (0.36) 2.04 0.30 1.24
Less distributions:
Dividends from net investment income -- (0.01) -- -- -- --
Distributions from net realized gain on investments sold -- (0.13) (0.06) -- (0.02) --
Total distributions -- (0.14) (0.06) -- (0.02) --
Net asset value, end of period $2.64 $3.19 $2.77 $4.81 $5.09 $6.33
Total investment return at net asset value(4) (%) 33.59 27.40 (11.82) 73.78 6.19 24.53
Total adjusted investment return at net asset value(4,6) (%) 31.00 27.37 -- -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 3,232 7,877 11,668 52,743 86,923 219,484
Ratio of expenses to average net assets (%) 3.05 3.48 3.11 2.85 2.64 2.28
Ratio of adjusted expenses to average net assets(7) (%) 5.64 3.51 -- -- -- --
Ratio of net investment income (loss) to average net assets (%) 0.81 (0.67) (1.64) (1.83) (1.99) (1.58)
Ratio of adjusted net investment income (loss) to
average net assets(7) (%) (1.78) (0.70) -- -- -- --
Portfolio turnover rate (%) 252 90 82 66 48 29
Fee reduction per share ($) 0.073 0.001 -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
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Class B - period ended: 10/94 10/95(2) 10/96 10/97
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<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $6.33 $6.51 $8.70 $9.78
Net investment income (loss)(3) (0.09) (0.11) (0.15) (0.14)
Net realized and unrealized gain (loss) on investments 0.27 2.30 1.23 2.29
Total from investment operations 0.18 2.19 1.08 2.15
Less distributions:
Dividends from net investment income -- -- -- --
Distributions from net realized gain on investments sold -- -- -- (0.21)
Total distributions -- -- -- (0.21)
Net asset value, end of period $6.51 $8.70 $9.78 $11.72
Total investment return at net asset value(4) (%) 2.80 33.60 12.48 22.44
Total adjusted investment return at net asset value(4,6) (%) -- -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 283,435 393,478 451,268 472,594
Ratio of expenses to average net assets (%) 2.19 2.11 2.05 2.02(5)
Ratio of adjusted expenses to average net assets(7) (%) -- -- -- --
Ratio of net investment income (loss) to average net assets (%) (1.46) (1.55) (1.59) (1.30)
Ratio of adjusted net investment income (loss) to
average net assets(7) (%) -- -- -- --
Portfolio turnover rate (%) 25 23 44 96
Fee reduction per share ($) -- -- -- --
</TABLE>
(1) Class A shares commenced operations on August 22, 1991. (Not annualized.)
(2) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the fund.
(3) Based on the average of the shares outstanding at the end of each month.
(4) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(5) Expense ratios do not include interest expense due to bank loans, which
amounted to less than $0.01 per share.
(6) An estimated total return calculation that does not take into consideration
fee reductions by the adviser during the periods shown.
(7) Unreimbursed, without fee reduction.
EMERGING GROWTH FUND 5
<PAGE>
Financial Industries Fund
REGISTRANT NAME: JOHN HANCOCK INVESTMENT TRUST II
TICKER SYMBOL CLASS A: FIDAX CLASS B: FIDBX
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GOAL AND STRATEGY
[Clip Art] The fund seeks capital appreciation. To pursue this goal, the fund
invests in U.S. and foreign financial services companies. These include banks,
thrifts, finance companies, brokerage and advisory firms, real estate-related
firms and insurance companies.
Under normal circumstances, the fund invests at least 65% of assets in these
companies.
PORTFOLIO SECURITIES
[Clip Art] The fund invests primarily in the common stocks of U.S. and foreign
companies. It may also invest in warrants, preferred stocks and debt securities.
The fund may invest up to 5% of net assets in junk bonds.
For liquidity and flexibility, the fund may place up to 15% of net assets in
cash or in investment-grade short-term securities. In abnormal market
conditions, it may invest up to 80% in these securities as a defensive tactic.
The fund may also invest in certain higher-risk securities, and may engage in
other investment practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Because the fund concentrates in a single
sector, its performance is largely dependent on the sector's performance, which
may differ from that of the overall stock market. Falling interest rates or
deteriorating economic conditions can adversely affect the performance of
financial services companies' stocks, while rising interest rates will cause a
decline in the value of any debt securities the fund holds. Before you invest,
please read "More about risk" starting on page 30.
PORTFOLIO MANAGEMENT
[Clip Art] James K. Schmidt, CFA, leads the fund's management team. Mr. Schmidt,
executive vice president, has been in the investment business since 1979 and has
served as the fund's portfolio manager since inception. Other portfolio managers
on the team are Thomas Finucane, vice president, who has been in the investment
business since joining the adviser in 1990 and Thomas Goggins, senior vice
president, who has been in the investment business since 1986 and joined the
adviser in 1995.
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INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the 1997 fiscal year, adjusted to
reflect any changes. Future expenses may be greater or less.
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Shareholder transaction expenses Class A Class B
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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(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
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Annual fund operating expenses (as a % of average net assets)
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Management fee 0.79% 0.79%
12b-1 fee(3) 0.30% 1.00%
Other expenses 0.38% 0.38%
Total fund operating expenses 1.47% 2.17%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
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Share class Year 1 Year 3 Year 5 Year 10
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Class A shares $64 $94 $126 $217
Class B shares
Assuming redemption
at end of period $72 $98 $136 $232
Assuming no redemption $22 $68 $116 $232
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
6 FINANCIAL INDUSTRIES FUND
<PAGE>
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FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, PricewaterhouseCoopers LLP.
[The following information was represented by a bar graph in the printed
materials.]
Volatility, as indicated by Class A 10/96 10/97 4/98
year-by-year total investment return (%) 29.76(4) 37.19 21.21
(scale varies from fund to fund) six
months
<TABLE>
<CAPTION>
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Class A - period ended: 10/96(1) 10/97 4/98(8)
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<S> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $11.03 $14.26
Net investment income (loss)(2) 0.02 0.14 0.06
Net realized and unrealized gain (loss) on investments 2.51 3.77 2.95
Total from investment operations 2.53 3.91 3.01
Less distributions:
Dividends from net investment income -- (0.03) (0.11)
Distributions from net realized gain on investments sold -- (0.65) (0.02)
Total distributions -- (0.68) (0.13)
Net asset value, end of period $11.03 $14.26 $17.14
Total investment return at net asset value(3) (%) 29.76(4) 37.19 21.21(4)
Total adjusted investment return at net asset value(3,5) (%) 26.04(4) 36.92 --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 895 416,698 1,067,667
Ratio of expenses to average net assets (%) 1.20(6) 1.20 1.36(6)
Ratio of adjusted expenses to average net assets(7) (%) 7.07(6) 1.47 --
Ratio of net investment income (loss) to average net assets (%) 0.37(6) 1.10 0.82(6)
Ratio of adjusted net investment income (loss) to average net assets(7) (%) (5.50)(6) 0.83 --
Portfolio turnover rate (%) 31 6 12
Fee reduction per share(2) ($) 0.38 0.03 --
</TABLE>
<TABLE>
<CAPTION>
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Class B - period ended: 10/97(1) 4/98(8)
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<S> <C> <C>
Per share operating performance
Net asset value, beginning of period $11.43 $14.18
Net investment income (loss)(2) 0.04 0.01
Net realized and unrealized gain (loss) on investments 2.71 2.94
Total from investment operations 2.75 2.95
Less distributions:
Dividends from net investment income -- (0.03)
Distributions from net realized gain on investments sold -- (0.02)
Total distributions -- (0.05)
Net asset value, end of period $14.18 $17.08
Total investment return at net asset value(3) (%) 24.06(4) 20.78(4)
Total adjusted investment return at net asset value(3,5) (%) 23.85(4) --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 1,308,946 2,698,471
Ratio of expenses to average net assets (%) 1.90(6) 2.06(6)
Ratio of adjusted expenses to average net assets(7) (%) 2.17(6) --
Ratio of net investment income (loss) to average net assets (%) 0.40(6) 0.12(6)
Ratio of adjusted net investment income (loss) to average net assets(7) (%) 0.13(6) --
Portfolio turnover rate (%) 6 12
Fee reduction per share(2) ($) 0.03 --
</TABLE>
(1) Class A and Class B shares commenced operations on March 14, 1996 and
January 14, 1997, respectively.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) An estimated total return calculation that does no take into consideration
fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Unaudited.
FINANCIAL INDUSTRIES FUND 7
<PAGE>
Growth Fund
REGISTRANT NAME: JOHN HANCOCK INVESTMENT TRUST III
TICKER SYMBOL CLASS A: JHNGX CLASS B: JHGBX CLASS C: N/A
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GOAL AND STRATEGY
[Clip Art] The fund seeks long-term capital appreciation. To pursue this goal,
the fund invests in stocks that are diversified with regard to industries and
issuers. The fund favors stocks of companies whose operating earnings and
revenues have grown more than twice as fast as the gross domestic product over
the past five years, although not all stocks in the fund's portfolio will meet
this criterion.
PORTFOLIO SECURITIES
[Clip Art] The portfolio invests primarily in the common stocks of U.S.
companies. It may also invest in warrants, preferred stocks and convertible debt
securities.
For liquidity and flexibility, the fund may invest up to 35% of net assets in
investment-grade short-term securities. In abnormal market conditions, it may
invest more than 35% in these securities as a defensive tactic. The fund may
also invest in certain higher-risk securities, and may engage in other
investment practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. To the extent that the fund invests in
higher-risk securities, it takes on additional risks that could adversely affect
its performance. Before you invest, please read "More about risk" starting on
page 30.
PORTFOLIO MANAGEMENT
[Clip Art] Benjamin A. Hock, Jr., CFA, has led the fund's portfolio management
team since May 1998. A senior vice president of the adviser since 1994, Mr. Hock
has been in the investment business for over 25 years.
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INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past year, adjusted to reflect any
changes. Because no Class C shares were outstanding during the past year, Class
C expenses are based on Class B expenses. Future expenses may be greater or
less.
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Shareholder transaction expenses Class A Class B Class C
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Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none none
Maximum sales charge imposed on
reinvested dividends none none none
Maximum deferred sales charge none(1) 5.00% 1.00%
Redemption fee(2) none none none
Exchange fee none none none
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Annual fund operating expenses (as a % of average net assets)
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Management fee 0.75% 0.75% 0.75%
12b-1 fee(3) 0.30% 1.00% 1.00%
Other expenses 0.35% 0.35% 0.35%
Total fund operating expenses 1.40% 2.10% 2.10%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
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Share class Year 1 Year 3 Year 5 Year 10
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Class A shares $64 $92 $123 $210
Class B shares
Assuming redemption
at end of period $71 $96 $133 $225
Assuming no redemption $21 $66 $113 $225
Class C shares
Assuming redemption
at end of period $31 $66 $113 $243
Assuming no redemption $21 $66 $113 $243
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
8 GROWTH FUND
<PAGE>
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FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, Ernst & Young LLP.
[The following information was represented by a bar graph in the printed
materials.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Volatility, as indicated by Class A 12/87 12/88 12/89 12/90 12/91 12/92 12/93 12/94 12/95 10/96(1) 10/97
year-by-year total investment return (%) 6.03 11.23 30.96 (8.34) 41.68 6.06 13.03 (7.50) 27.17 19.32(4) 16.05
(scale varies from fund to fund)
</TABLE>
<TABLE>
<CAPTION>
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Class A - period ended: 12/87 12/88 12/89 12/90 12/91 12/92
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<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $14.03 $12.34 $13.33 $15.18 $12.93 $17.48
Net investment income (loss) 0.22 0.23 0.28 0.16 0.04 (0.06)
Net realized and unrealized gain (loss) on investments 0.64 1.16 3.81 (1.47) 5.36 1.10
Total from investment operations 0.86 1.39 4.09 (1.31) 5.40 1.04
Less distributions:
Dividends from net investment income (0.28) (0.23) (0.29) (0.16) (0.04) --
Distributions from net realized gain on
investments sold (2.27) (0.17) (1.95) (0.78) (0.81) (1.20)
Total distributions (2.55) (0.40) (2.24) (0.94) (0.85) (1.20)
Net asset value, end of period $12.34 $13.33 $15.18 $12.93 $17.48 $17.32
Total investment return at net asset value(3) (%) 6.03 11.23 30.96 (8.34) 41.68 6.06
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 86,426 101,497 105,014 102,416 145,287 153,057
Ratio of expenses to average net assets (%) 1.00 1.06 0.96 1.46 1.44 1.60
Ratio of net investment income (loss) to average
net assets (%) 1.41 1.76 1.73 1.12 0.27 (0.36)
Portfolio turnover rate (%) 68 47 61 102 82 71
</TABLE>
<TABLE>
<CAPTION>
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Class A - period ended: 12/93 12/94 12/95 10/96(1) 10/97
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<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $17.32 $17.40 $15.89 $19.51 $23.28
Net investment income (loss) (0.11) (0.10) (0.09)(2) (0.13)(2) (0.12)(2)
Net realized and unrealized gain (loss) on investments 2.33 (1.21) 4.40 3.90 3.49
Total from investment operations 2.22 (1.31) 4.31 3.77 3.37
Less distributions:
Dividends from net investment income -- -- -- -- (2.28)
Distributions from net realized gain on
investments sold (2.14) (0.20) (0.69) -- --
Total distributions (2.14) (0.20) (0.69) -- --
Net asset value, end of period $17.40 $15.89 $19.51 $23.28 $24.37
Total investment return at net asset value(3) (%) 13.03 (7.50) 27.17 19.32(4) 16.05
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 162,937 146,466 241,700 279,425 303,067
Ratio of expenses to average net assets (%) 1.56 1.65 1.48 1.48(5) 1.44
Ratio of net investment income (loss) to average
net assets (%) (0.67) (0.64) (0.46) (0.73)(5) (0.51)
Portfolio turnover rate (%) 68 52 68(6) 59 133
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Class B - period ended: 12/94(7) 12/95 10/96(1) 10/97
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $17.16 $15.83 $19.25 $22.83
Net investment income (loss) (2) (0.20) (0.26) (0.26) (0.27)
Net realized and unrealized gain (loss) on investments (0.93) 4.37 3.84 3.42
Total from investment operations (1.13) 4.11 3.58 3.15
Less distributions:
Distributions from net realized gain on
investments sold (0.20) (0.69) -- (2.28)
Net asset value, end of period $15.83 $19.25 $22.83 $23.70
Total investment return at net asset value(3) (%) (6.56)(4) 26.01 18.60(4) 15.33
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 3,807 15,913 25,474 36,430
Ratio of expenses to average net assets (%) 2.38(5) 2.31 2.18(5) 2.13
Ratio of net investment income (loss) to
average net assets (%) (1.25)(5) (1.39) (1.42)(5) (1.20)
Portfolio turnover rate (%) 52 68(6) 59 133
</TABLE>
(1) Effective October 31, 1996, the fiscal year end changed from December 31 to
October 31.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) Annualized.
(6) Excludes merger activity.
(7) Class B shares commenced operations on January 3, 1994.
GROWTH FUND 9
<PAGE>
Regional Bank Fund
REGISTRANT NAME: JOHN HANCOCK INVESTMENT TRUST II
TICKER SYMBOL CLASS A: FRBAX CLASS B: FRBFX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term capital appreciation. To pursue this goal,
the fund invests in regional banks and lending institutions, including:
o commercial and industrial banks
o savings and loan associations
o bank holding companies
These financial institutions provide full-service banking, have primarily
domestic assets and are typically based outside of New York City and Chicago.
They may or may not be members of the Federal Reserve, and their deposits may or
may not be FDIC-insured.
Under normal circumstances, the fund invests at least 65% of assets in these
companies; it may invest up to 35% of assets in other financial services
companies, including lending companies and money center banks. The fund may
invest up to 5% of net assets in stocks of non-financial services companies and
up to 5% in junk bonds issued by banks.
Because regional banks typically pay regular dividends, moderate income is an
investment goal.
PORTFOLIO SECURITIES
[Clip Art] The fund invests primarily in the common stocks of U.S. companies. It
may also invest in warrants, preferred stocks and investment-grade convertible
debt securities, as well as foreign stocks. For liquidity and flexibility, the
fund may place up to 15% of net assets in cash or in investment-grade short-term
securities. In abnormal market conditions, it may invest up to 80% in these
securities as a defensive tactic. The fund may also invest in certain
higher-risk securities, and may engage in other investment practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Because the fund concentrates in a single
industry, its performance is largely dependent on the industry's performance,
which may differ in direction and degree from that of the overall stock market.
Falling interest rates or deteriorating economic conditions can adversely affect
the performance of bank stocks, while rising interest rates will cause a decline
in the value of any debt securities the fund holds. Before you invest, please
read "More about risk" starting on page 30.
PORTFOLIO MANAGEMENT
[Clip Art] James K. Schmidt, CFA, leads the fund's management team. Mr. Schmidt,
executive vice president, has been in the investment business since 1979 and has
served as the fund's portfolio manager since 1985. Other portfolio managers on
the team are Thomas Finucane, vice president, who has been in the investment
business since joining the adviser in 1990 and Thomas Goggins, senior vice
president, who has been in the investment business since 1986 and joined the
adviser in 1995.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the 1997 fiscal year, adjusted to
reflect any changes. Future expenses may be greater or less.
- --------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B
- --------------------------------------------------------------------------------
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(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
- --------------------------------------------------------------------------------
Annual fund operating expenses (as a % of average net assets)
- --------------------------------------------------------------------------------
Management fee 0.75% 0.75%
12b-1 fee(3) 0.30% 1.00%
Other expenses 0.25% 0.25%
Total fund operating expenses 1.30% 2.00%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
- --------------------------------------------------------------------------------
Share class Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A shares $63 $89 $118 $199
Class B shares
Assuming redemption
at end of period $70 $93 $128 $214
Assuming no redemption $20 $63 $108 $214
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
10 REGIONAL BANK FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, PricewaterhouseCoopers LLP.
[The following information was represented by a bar graph in the printed
materials.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Volatility, as indicated by Class B 10/88 10/89 10/90 10/91 10/92 10/93 10/94 10/95 10/96 10/97 4/98(6)
year-by-year total investment return (%) 36.89 20.46 (32.29) 75.35 37.20 36.71 5.69 30.11 27.89 45.78 19.96
(scale varies from fund to fund) six
months
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/92(1) 10/93 10/94 10/95
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $13.47 $17.47 $21.62 $21.52
Net investment income (loss) 0.21 0.26(2) 0.39(2) 0.52(2)
Net realized and unrealized gain (loss) on investments 3.98 5.84 0.91 5.92
Total from investment operations 4.19 6.10 1.30 6.44
Less distributions:
Dividends from net investment income (0.19) (0.26) (0.34) (0.48)
Distributions from net realized gain on investments sold -- (1.69) (1.06) (0.34)
Total distributions (0.19) (1.95) (1.40) (0.82)
Net asset value, end of period $17.47 $21.62 $21.52 $27.14
Total investment return at net asset value(3) (%) 31.26(4) 37.45 6.44 31.00
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 31,306 94,158 216,978 486,631
Ratio of expenses to average net assets (%) 1.41(5) 1.35 1.34 1.39
Ratio of net investment income to average net assets (%) 1.64(5) 1.29 1.78 2.23
Portfolio turnover rate (%) 53 35 13 14
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/96 10/97 4/98(6)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $27.14 $33.99 $48.73
Net investment income (loss) 0.63(2) 0.64(2) 0.33(2)
Net realized and unrealized gain (loss) on investments 7.04 15.02 9.55
Total from investment operations 7.67 15.66 9.88
Less distributions:
Dividends from net investment income (0.60) (0.61) (0.31)
Distributions from net realized gain on investments sold (0.22) (0.31) (0.39)
Total distributions (0.82) (0.92) (0.70)
Net asset value, end of period $33.99 $48.73 $57.91
Total investment return at net asset value(3) (%) 28.78 46.79 20.37(4)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 860,843 1,596,836 1,927,955
Ratio of expenses to average net assets (%) 1.36 1.30 1.25(5)
Ratio of net investment income to average net assets (%) 2.13 1.55 1.23(5)
Portfolio turnover rate (%) 8 5 6
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/88 10/89 10/90 10/91 10/92 10/93
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $10.02 $11.89 $13.00 $8.13 $13.76 $17.44
Net investment income (loss) 0.16 0.20 0.30 0.29 0.18 0.15(2)
Net realized and unrealized gain (loss)
on investments 3.12 2.02 (4.19) 5.68 4.56 5.83
Total from investment operations 3.28 2.22 (3.89) 5.97 4.74 5.98
Less distributions:
Dividends from net investment income (0.15) (0.16) (0.19) (0.34) (0.28) (0.17)
Distributions from net realized gain on
investments sold (1.26) (0.95) (0.76) -- (0.78) (1.69)
Distributions from capital paid-in -- -- (0.03) -- -- --
Total distributions (1.41) (1.11) (0.98) (0.34) (1.06) (1.86)
Net asset value, end of period $11.89 $13.00 $8.13 $13.76 $17.44 $21.56
Total investment return at net asset value(3) (%) 36.89 20.46 (32.29) 75.35 37.20 36.71
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 50,965 81,167 38,992 52,098 56,016 171,808
Ratio of expenses to average net assets (%) 2.17 1.99 1.99 2.04 1.96 1.88
Ratio of net investment income (loss) to average
net assets (%) 1.50 1.67 2.51 2.65 1.21 0.76
Portfolio turnover rate (%) 87 85 56 75 53 35
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/94 10/95 10/96 10/97 4/98(6)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $21.56 $21.43 $27.02 $33.83 $48.48
Net investment income (loss) 0.23(2) 0.36(2) 0.42(2) 0.35(2) 0.15(2)
Net realized and unrealized gain (loss)
on investments 0.91 5.89 7.01 14.95 9.49
Total from investment operations 1.14 6.25 7.43 15.30 9.64
Less distributions:
Dividends from net investment income (0.21) (0.32) (0.40) (0.34) (0.13)
Distributions from net realized gain on
investments sold (1.06) (0.34) (0.22) (0.31) (0.39)
Distributions from capital paid-in -- -- -- -- --
Total distributions (1.27) (0.66) (0.62) (0.65) (0.52)
Net asset value, end of period $21.43 $27.02 $33.83 $48.48 $57.60
Total investment return at net asset value(3) (%) 5.69 30.11 27.89 45.78 19.96(4)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 522,207 1,236,447 2,408,514 4,847,755 5,818.310
Ratio of expenses to average net assets (%) 2.06 2.09 2.07 2.00 1.91(5)
Ratio of net investment income (loss) to average
net assets (%) 1.07 1.53 1.42 0.84 0.57(5)
Portfolio turnover rate (%) 13 14 8 5 6
</TABLE>
(1) Class A shares commenced operations on January 3, 1992.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) Annualized.
(6) Unaudited.
REGIONAL BANK FUND 11
<PAGE>
Special Equities Fund
REGISTRANT NAME: JOHN HANCOCK SPECIAL EQUITIES FUND
TICKER SYMBOL CLASS A: JHNSX CLASS B: SPQBX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term capital appreciation. To pursue this goal,
the fund invests in small-capitalization companies and companies in situations
offering unusual or non-recurring opportunities. Under normal circumstances, the
fund invests at least 65% of assets in a diversified portfolio of these
companies. The fund looks for companies that dominate an emerging industry or
hold a growing market share in a fragmented industry, and that have demonstrated
annual earnings and revenue growth of at least 25%, self-financing capabilities
and strong management. The fund does not invest for income.
PORTFOLIO SECURITIES
[Clip Art] The fund invests primarily in the common stocks of U.S. and foreign
companies. It may also invest in warrants, preferred stocks and investment-grade
convertible debt securities.
For liquidity and flexibility, the fund may place up to 35% of assets in cash or
in investment-grade short-term securities. In abnormal market conditions, it may
invest more than 35% in these securities as a defensive tactic. The fund also
may invest in certain higher-risk securities, and may engage in other investment
practices.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Stocks of small-capitalization and
special-situation companies carry higher risks than stocks of larger companies.
This is because these companies:
o may lack proven track records
o may be dependent on a small number of products or services
o may be undercapitalized
o may have highly priced stocks that are sensitive to adverse news
In addition, stocks of these companies are often traded in low volumes, which
can increase market and liquidity risks. Before you invest, please read "More
about risk" starting on page 30.
MANAGEMENT/SUBADVISER
[Clip Art] Laura Allen, CFA, leads the fund's portfolio management team. Other
team members are Bernice S. Behar, CFA, and Anurag Pandit, CFA. Ms. Allen,
senior vice president, joined the adviser in 1998. She has been in the
investment business since 1981. Ms. Behar, senior vice president, joined the
adviser in 1991 and has been in the investment business since 1986. Mr. Pandit,
vice president, joined the adviser in 1996 and has been in the investment
business since 1984. Each joined the fund's management team in 1998.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past year, adjusted to reflect any
changes. Future expenses may be greater or less.
- --------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B
- --------------------------------------------------------------------------------
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(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
- --------------------------------------------------------------------------------
Annual fund operating expenses (as a % of average net assets)
- --------------------------------------------------------------------------------
Management fee(3) 0.81% 0.81%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.32% 0.38%
Total fund operating expenses 1.43% 2.19%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
- --------------------------------------------------------------------------------
Share class Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A shares $64 $93 $124 $213
Class B shares
Assuming redemption
at end of period $72 $99 $137 $233
Assuming no redemption $22 $69 $117 $233
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Includes a subadviser fee equal to 0.25% of the fund`s net assets.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
12 SPECIAL EQUITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, Ernst & Young LLP.
[The following information was represented by a bar graph in the printed
materials.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Volatility, as indicated by Class A 10/88 10/89 10/90 10/91 10/92 10/93 10/94 10/95 10/96 10/97
year-by-year total investment return (%) 13.72 31.82 (21.89) 95.37 20.25 47.83 (0.12) 37.49 12.96 7.30
(scale varies from fund to fund)
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/88 10/89 10/90 10/91 10/92
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $4.30 $4.89 $6.38 $4.97 $9.71
Net investment income (loss) 0.04 0.01 (0.12) (0.10) (0.19)(1)
Net realized and unrealized gain (loss) on investments 0.55 1.53 (1.27) 4.84 2.14
Total from investment operations 0.59 1.54 (1.39) 4.74 1.95
Less distributions:
Dividends from net investment income -- (0.05) (0.02) -- --
Distributions from net realized gain on investments sold -- -- -- -- (0.67)
Total distributions -- (0.05) (0.02) -- (0.67)
Net asset value, end of period $4.89 $6.38 $4.97 $9.71 $10.99
Total investment return at net asset value(2) (%) 13.72 31.82 (21.89) 95.37 20.25
Total adjusted investment return at net asset value(2,3) 12.28 30.75 (22.21) 95.33 --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 11,714 12,285 8,166 19,713 44,665
Ratio of expenses to average net assets (%) 1.50 1.50 2.63 2.75 2.24
Ratio of adjusted expenses to average net assets(4) (%) 2.94 2.57 2.95 2.79 --
Ratio of net investment income (loss) to average net assets (%) 0.82 0.47 (1.58) (2.12) (1.91)
Ratio of adjusted net investment income (loss) to average
net assets(4) (%) (0.62) (0.60) (1.90) (2.16) --
Portfolio turnover rate (%) 91 115 113 163 114
Fee reduction per share ($) 0.07 0.03 0.02 0.002 --
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/93 10/94 10/95 10/96 10/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $10.99 $16.13 $16.11 $22.15 $24.53
Net investment income (loss) (0.20)(1) (0.21)(1) (0.18)(1) (0.22)(1) (0.29)(1)
Net realized and unrealized gain (loss) on investments 5.43 0.19 6.22 3.06 2.08
Total from investment operations 5.23 (0.02) 6.04 2.84 1.79
Less distributions:
Dividends from net investment income -- -- -- -- --
Distributions from net realized gain on investments sold (0.09) -- -- (0.46) --
Total distributions (0.09) -- -- (0.46) --
Net asset value, end of period $16.13 $16.11 $22.15 $24.53 $26.32
Total investment return at net asset value(2) (%) 47.83 (0.12) 37.49 12.96 7.30
Total adjusted investment return at net asset value(2,3) -- -- -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 296,793 310,625 555,655 972,312 807,371
Ratio of expenses to average net assets (%) 1.84 1.62 1.48 1.42 1.43
Ratio of adjusted expenses to average net assets(4) (%) -- -- -- -- --
Ratio of net investment income (loss) to average net assets (%) (1.49) (1.40) (0.97) (0.89) (1.18)
Ratio of adjusted net investment income (loss) to average
net assets(4) (%) -- -- -- -- --
Portfolio turnover rate (%) 33 66 82 59 41
Fee reduction per share ($) -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/93(5) 10/94 10/95 10/96 10/97
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $12.30 $16.08 $15.97 $21.81 $23.96
Net investment income (loss)(1) (0.18) (0.30) (0.31) (0.40) (0.46)
Net realized and unrealized gain (loss) on investments 3.96 0.19 6.15 3.01 2.02
Total from investment operations 3.78 (0.11) 5.84 2.61 1.56
Less distributions:
Distributions from net realized gain on investments sold -- -- -- (0.46) --
Net asset value, end of period $16.08 $15.97 $21.81 $23.96 $25.52
Total investment return at net asset value(2) (%) 30.73(6) (0.68) 36.57 12.09 6.51
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 158,281 191,979 454,934 956,374 951,449
Ratio of expenses to average net assets (%) 2.34(7) 2.25 2.20 2.16 2.19
Ratio of net investment income (loss) to average net assets (%) (2.03)(7) (2.02) (1.69) (1.65) (1.95)
Portfolio turnover rate (%) 33 66 82 59 41
</TABLE>
(1) Based on the average of the shares outstanding at the end of each month.
(2) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(3) An estimated total return calculation that does not take into consideration
fee reductions by the adviser during the periods shown.
(4) Unreimbursed, without fee reduction.
(5) Class B shares commenced operations on March 1, 1993.
(6) Not annualized.
(7) Annualized.
SPECIAL EQUITIES FUND 13
<PAGE>
Special Opportunities Fund
REGISTRANT NAME: JOHN HANCOCK INVESTMENT TRUST III
TICKER SYMBOL CLASS A: SPOAX CLASS B: SPOBX CLASS C: N/A
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term capital appreciation. To pursue this goal,
the fund invests in those economic sectors that appear to have a higher than
average earning potential.
Under normal circumstances, at least 75% of the fund's equity securities is
invested within five or fewer sectors (e.g., financial services, energy,
technology). At times, the fund may focus on a single sector. The fund first
determines the inclusion and weighting of sectors, using macroeconomic as well
as other factors, then selects portfolio securities by seeking the most
attractive companies. The fund may add or drop sectors.
PORTFOLIO SECURITIES
[Clip Art] The fund invests primarily in common stocks of U.S. and foreign
companies of any size. It may also invest in warrants, preferred stocks,
convertible debt securities, U.S. Government securities and corporate bonds
rated at least BBB/Baa or equivalent, and may invest in certain higher-risk
securities. The fund also may make short sales of securities, and may engage in
other investment practices.
For liquidity and flexibility, the fund may place assets in cash or invest in
investment-grade short-term securities.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. By focusing on a relatively small number
of sectors or issuers, the fund runs the risk that any factor influencing those
sectors or issuers will have a major effect on performance. The fund may invest
in companies with smaller market capitalizations, which represent higher
near-term risks than larger capitalization companies. These factors make the
fund likely to experience higher volatility than most other types of growth
funds. Before you invest, please read "More about risk" starting on page 30.
PORTFOLIO MANAGEMENT
[Clip Art] Barbara C. Friedman, CFA, is leader of the fund's portfolio
management team. A senior vice president of the adviser, Ms. Friedman has been a
member of the management team since joining John Hancock Funds in January 1998.
Ms. Friedman has been in the investment business since 1973.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the past year, adjusted to reflect any
changes. Because no Class C shares were outstanding during the past year, Class
C expenses are based on Class B expenses. Future expenses may be greater or
less.
- --------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- --------------------------------------------------------------------------------
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% none none
Maximum sales charge imposed on
reinvested dividends none none none
Maximum deferred sales charge none(1) 5.00% 1.00%
Redemption fee(2) none none none
Exchange fee none none none
- --------------------------------------------------------------------------------
Annual fund operating expenses (as a % of average net assets)
- --------------------------------------------------------------------------------
Management fee 0.80% 0.80% 0.80%
12b-1 fee(3) 0.30% 1.00% 1.00%
Other expenses 0.49% 0.49% 0.49%
Total fund operating expenses 1.59% 2.29% 2.29%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
- --------------------------------------------------------------------------------
Share class Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A shares $65 $98 $132 $229
Class B shares
Assuming redemption
at end of period $73 $102 $143 $245
Assuming no redemption $23 $72 $123 $245
Class C shares
Assuming redemption
at end of period $33 $72 $123 $263
Assuming no redemption $23 $72 $123 $263
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
14 SPECIAL OPPORTUNITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, PricewaterhouseCoopers LLP.
[The following information was represented by a bar graph in the printed
materials.]
Volatility, as indicated by Class A 10/94(1) 10/95 10/96 10/97
year-by-year total investment return (%) (6.71) 17.53 36.15 8.79
(scale varies from fund to fund)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/94(1) 10/95 10/96 10/97
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $7.93 $9.32 $10.92
Net investment income (loss)(2) (0.03) (0.07) (0.11) (0.06)
Net realized and unrealized gain (loss) on investments (0.54) 1.46 3.34 1.00
Total from investment operations (0.57) 1.39 3.23 0.94
Less distributions:
Distributions from net realized gain on investments sold -- -- (1.63) (0.46)
Net asset value, end of period $7.93 $9.32 $10.92 $11.40
Total investment return at net asset value(3) (%) (6.71) 17.53 36.15 8.79
Total adjusted investment return at net asset value(3,4) (%) (6.83) -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 92,325 101,562 156,578 141,997
Ratio of expenses to average net assets (%) 1.50 1.59 1.59 1.59
Ratio of adjusted expenses to average net assets(5) (%) 1.62 -- -- --
Ratio of net investment income (loss) to average net assets (%) (0.41) (0.87) (1.00) (0.57)
Ratio of adjusted net investment (loss) to average net assets(5) (%) (0.53) -- -- --
Portfolio turnover rate (%) 57 155 240 317
Fee reduction per share ($) 0.01(2) -- -- --
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/94(1) 10/95 10/96 10/97
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $7.87 $9.19 $10.67
Net investment income (loss)(2) (0.09) (0.13) (0.18) (0.13)
Net realized and unrealized gain (loss) on investments (0.54) 1.45 3.29 0.95
Total from investment operations (0.63) 1.32 3.11 0.82
Less distributions:
Distributions from net realized gain on investments sold -- -- (1.63) (0.46)
Net asset value, end of period $7.87 $9.19 $10.67 $11.03
Total investment return at net asset value(3) (%) (7.41) 16.77 35.34 7.84
Total adjusted investment return at net asset value(3,4) (%) (7.53) -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 131,983 137,363 238,901 204,812
Ratio of expenses to average net assets (%) 2.22 2.30 2.29 2.28
Ratio of adjusted expenses to average net assets(5) (%) 2.34 -- -- --
Ratio of net investment income (loss) to average net assets (%) (1.13) (1.55) (1.70) (1.25)
Ratio of adjusted net investment (loss) to average net assets(5) (%) (1.25) -- -- --
Portfolio turnover rate (%) 57 155 240 317
Fee reduction per share ($) 0.01(2) -- -- --
</TABLE>
(1) Class A and B shares commenced operations on November 1, 1993.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) An estimated total return calculation that does not take into consideration
fee reductions by the adviser during the periods shown.
(5) Unreimbursed, without fee reduction.
SPECIAL OPPORTUNITIES FUND 15
<PAGE>
Special Value Fund
REGISTRANT NAME: JOHN HANCOCK INVESTMENT TRUST II
TICKER SYMBOL CLASS A: SPVAX CLASS B: SPVBX CLASS C: N/A
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[Clip Art] The fund seeks capital appreciation. To pursue this goal, the fund
invests primarily in stocks that appear comparatively undervalued and are out of
favor. The fund looks for small-size companies with total market capitalization
of $1 billion or less, whose earnings power or asset value does not appear to be
reflected in their current stock price, and whose stocks therefore have
potential for appreciation. The fund may not invest more than 25% of assets in
any one industry.
PORTFOLIO SECURITIES
[Clip Art] The fund invests primarily in the common stocks of U.S. companies. It
may also invest in warrants, preferred stocks and convertible securities.
The fund may invest up to 50% of assets in foreign securities, including
American Depository Receipts. The fund may invest up to 15% of net assets in
junk bonds, including convertible securities, that may be rated as low as CC/Ca
and their unrated equivalents. To a limited extent, the fund also may invest in
certain higher-risk securities and may engage in other investment practices.
For temporary defensive purposes, the fund may invest some or all of its assets
in investment-grade short-term securities.
RISK FACTORS
[Clip Art] As with any growth fund, the value of your investment will fluctuate.
Even comparatively undervalued stocks typically fall in price during broad
market declines. Small- and medium-sized company stocks, which may comprise a
significant portion of the fund's portfolio, tend to be more volatile than the
market as a whole.
To the extent that it invests in certain securities, the fund may be affected by
additional risks:
o foreign securities: currency, information, natural event and political risks
o junk bonds: above-average credit, market and other risks
These risks are defined in "More about risks" starting on page 30. Please read
"More about risk" carefully before investing.
PORTFOLIO MANAGEMENT
[Clip Art] Timothy E. Keefe, CFA, has been the leader of the fund's portfolio
management team since August 1996. He is a senior vice president of the adviser.
He joined John Hancock Funds in July 1996 and has been in the investment
business since 1987.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[Clip Art] Fund investors pay various expenses, either directly or indirectly.
The figures below show the expenses for the 1997 fiscal year, adjusted to
reflect any changes. Class C expenses are based on Class B expenses as no Class
C shares were issued or outstanding during the past year. Future expenses may be
greater or less.
- --------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- --------------------------------------------------------------------------------
Maximum sales charge imposed
on purchases (as a percentage
of offering price) 5.00% none none
Maximum sales charge imposed on
reinvested dividends none none none
Maximum deferred sales charge none(1) 5.00% 1.00%
Redemption fee(2) none none none
Exchange fee none none none
- --------------------------------------------------------------------------------
Annual fund operating expenses (as a % of average net assets)
- --------------------------------------------------------------------------------
Management fee (after
expense limitation)(3) 0.10% 0.10% 0.10%
12b-1 fee(4) 0.30% 1.00% 1.00%
Other expenses 0.59% 0.59% 0.59%
Total fund operating expenses
(after limitation)(3) 0.99% 1.69% 1.69%
Example The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
- --------------------------------------------------------------------------------
Share class Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A shares $60 $80 $102 $165
Class B shares
Assuming redemption
at end of period $67 $83 $112 $181
Assuming no redemption $17 $53 $92 $181
Class C shares
Assuming redemption
at end of period $27 $53 $92 $200
Assuming no redemption $17 $53 $92 $200
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Reflects the adviser's agreement to limit expenses (except for 12b-1 and
transfer agent expenses). Without this limitation, management fees would be
0.70% for each class and total fund operating expenses would be 1.59% for
Class A and 2.29% for Class B and Class C. The adviser may terminate this
limitation in the future.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
16 SPECIAL VALUE FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[Clip Art] The figures below have been audited by the fund's independent
auditors, Ernst & Young LLP.
[The following information was represented by a bar graph in the printed
materials.]
Volatility, as indicated by Class A 12/94(1) 12/95 12/96 12/97 6/98(8)
year-by-year total investment return (%) 7.81(4) 20.26 12.91 25.25 2.69(4)
(scale varies from fund to fund) six
months
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 12/94(1) 12/95 12/96 12/97 6/98(8)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $8.99 $10.39 $10.32 $12.27
Net investment income (loss)(2) 0.18 0.21 0.14 0.06 0.02
Net realized and unrealized gain (loss) on investments 0.48 1.60 1.17 2.52 0.31
Total from investment operations 0.66 1.81 1.31 2.58 0.33
Less distributions:
Dividends from net investment income (0.17) (0.20) (0.14) (0.03) --
Distributions from net realized gain on investments sold -- (0.21) (1.24) (0.60) --
Total distributions (0.17) (0.41) (1.38) (0.63) --
Net asset value, end of period $8.99 $10.39 $10.32 $12.27 $12.60
Total investment return at net asset value(3) (%) 7.81(4) 20.26 12.91 25.25 2.69(4)
Total adjusted investment return at net asset value(3,5) (%) 7.30(4) 19.39 12.20 24.65 2.41(4)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 4,420 12,845 15,853 20,961 26,307
Ratio of expenses to average net assets (%) 0.99(6) 0.98 0.99 0.99 0.99(6)
Ratio of adjusted expenses to average net assets(7) (%) 4.98(6) 1.85 1.70 1.59 1.55(6)
Ratio of net investment income (loss) to average net assets (%) 2.10(6) 2.04 1.31 0.47 0.33(6)
Ratio of adjusted net investment income (loss) to average net
assets(7) (%) (1.89)(6) 1.17 0.60 (0.13) (0.23)(6)
Portfolio turnover rate (%) 0.3 9 72 140 28
Fee reduction per share (2) ($) 0.34 0.09 0.08 0.07 0.04
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 12/94(1) 12/95 12/96 12/97 6/98(8)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $9.00 $10.38 $10.31 $12.21
Net investment income (loss)(2) 0.13 0.12 0.07 (0.03) (0.02)
Net realized and unrealized gain (loss) on investments 0.48 1.59 1.17 2.53 0.30
Total from investment operations 0.61 1.71 1.24 2.50 0.28
Less distributions:
Dividends from net investment income (0.11) (0.12) (0.07) -- --
Distributions from net realized gain on investments sold -- (0.21) (1.24) (0.60) --
Total distributions (0.11) (0.33) (1.31) (0.60) --
Net asset value, end of period $9.00 $10.38 $10.31 $12.21 $12.49
Total investment return at net asset value(3) (%) 7.15(4) 19.11 12.14 24.41 2.29(4)
Total adjusted investment return at net asset value(3,5) (%) 6.64(4) 18.24 11.43 23.81 2.01(4)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 3,296 16,994 22,097 35,033 41,361
Ratio of expenses to average net assets (%) 1.72(6) 1.73 1.69 1.69 1.69(6)
Ratio of adjusted expenses to average net assets(7) (%) 5.71(6) 2.60 2.40 2.29 2.25(6)
Ratio of net investment income (loss) to average net assets (%) 1.53(6) 1.21 0.62 (0.24) (0.37)(6)
Ratio of adjusted net investment income (loss) to average net
assets(7) (%) (2.46)(6) 0.34 (0.09) (0.84) (0.93)(6)
Portfolio turnover rate (%) 0.3 9 72 140 28
Fee reduction per share (2)($) 0.34 0.09 0.08 0.07 0.04
</TABLE>
SPECIAL VALUE FUND 17
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class C - period ended: 6/98(1,8)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Per share operating performance
Net asset value, beginning of period $13.39
Net investment income (loss)(2) (0.01)
Net realized and unrealized gain (loss) on investments (0.89)
Total from investment operations (0.90)
Net asset value, end of period $12.49
Total investment return at net asset value(3) (%) (6.72)(4)
Total adjusted investment return at net asset value(3,5) (%) (6.81)(4)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 117
Ratio of expenses to average net assets (%) 1.69(6)
Ratio of adjusted expenses to average net assets(7) (%) 2.25(6)
Ratio of net investment income (loss) to average net assets (%) (0.31)(6)
Ratio of adjusted net investment income (loss) to average net assets(7) (%) (0.87)(6)
Portfolio turnover rate (%) 28
Fee reduction per share (2) ($) 0.01
</TABLE>
(1) Class A and Class B shares commenced operations on January 3, 1994 and
Class C commenced operations on May 1, 1998.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) An estimated total return calculation that does not take into consideration
fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Unaudited.
18 SPECIAL VALUE FUND
<PAGE>
Your account
- --------------------------------------------------------------------------------
CHOOSING A SHARE CLASS
All John Hancock growth funds offer two classes of shares, Class A and Class B.
In addition, Class C shares are available for Emerging Growth Fund, Growth Fund,
Special Opportunities Fund and Special Value Fund. Each class has its own cost
structure, as outlined below, allowing you to choose the one that best meets
your requirements. For more details, see "How sales charges are calculated."
Your financial representative can help you decide which share class is best for
you.
- --------------------------------------------------------------------------------
Class A - for all funds
- --------------------------------------------------------------------------------
o Front-end sales charges. There are several ways to reduce these
charges, described under "Sales charge reductions and waivers" on the
following page.
o Lower annual expenses than Class B and Class C shares.
- --------------------------------------------------------------------------------
Class B - for all funds
- --------------------------------------------------------------------------------
o No front-end sales charge; all your money goes to work for you right
away.
o Higher annual expenses than Class A shares.
o A contingent deferred sales charge that declines from 5% over six
years.
o Automatic conversion to Class A shares after eight years, thus
reducing future annual expenses.
- --------------------------------------------------------------------------------
Class C - for selected funds
- --------------------------------------------------------------------------------
Applies to Emerging Growth Fund, Growth Fund, Special Opportunities Fund and
Special Value Fund.
o No front-end sales charge; all your money goes to work for you right
away.
o Higher annual expenses than Class A shares.
o A 1% contingent deferred sales charge on shares sold within one year
of purchase.
o No automatic conversion to Class A shares, so the fund's annual
expenses continue at the same level throughout the life of your
investment.
For actual past expenses of Class A and Class B shares, see the fund-by-fund
information earlier in this prospectus.
Special Equities Fund offers Class Y shares, which have their own expense
structure and are available to financial institutions only. Call Signature
Services for more information (see back cover of this prospectus).
Investors purchasing $1 million or more of Class B or Class C shares may want to
consider the lower operating expenses of Class A shares.
- --------------------------------------------------------------------------------
HOW SALES CHARGES ARE CALCULATED
Class A Sales charges are as follows:
- --------------------------------------------------------------------------------
Class A sales charges
- --------------------------------------------------------------------------------
As a % of As a % of your
Your investment offering price investment
Up to $49,999 5.00% 5.26%
$50,000 - $99,999 4.50% 4.71%
$100,000 - $249,999 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 and over See below
Investments of $1 million or more Class A shares are available with no front-end
sales charge. However, there is a contingent deferred sales charge (CDSC) on any
shares sold within one year of purchase, as follows:
- --------------------------------------------------------------------------------
CDSC on $1 million+ investments
- --------------------------------------------------------------------------------
Your investment CDSC on shares being sold
First $1M - $4,999,999 1.00%
Next $1 - $5M above that 0.50%
Next $1 or more above that 0.25%
For purposes of this CDSC, all purchases made during a calendar month are
counted as having been made on the LAST day of that month.
The CDSC is based on the lesser of the original purchase cost or the current
market value of the shares being sold, and is not charged on shares you acquired
by reinvesting your dividends. To keep your CDSC as low as possible, each time
you place a request to sell shares we will first sell any shares in your account
that are not subject to a CDSC.
YOUR ACCOUNT 19
<PAGE>
Class B Shares are offered at their net asset value per share, without any
initial sales charge. However, you may be charged a contingent deferred sales
charge (CDSC) on shares you sell within six years of buying them. There is no
CDSC on shares acquired through reinvestment of dividends. The CDSC is based on
the original purchase cost or the current market value of the shares being sold,
whichever is less. The longer the time between the purchase and the sale of
shares, the lower the rate of the CDSC:
- --------------------------------------------------------------------------------
Class B deferred charges
- --------------------------------------------------------------------------------
Years after purchase CDSC on shares being sold
1st year 5.00%
2nd year 4.00%
3rd or 4th year 3.00%
5th year 2.00%
6th year 1.00%
After 6 years None
For purposes of this CDSC, all purchases made during a calendar month are
counted as having been made on the FIRST day of that month.
CDSC calculations are based on the number of shares involved, not on the value
of your account. To keep your CDSC as low as possible, each time you place a
request to sell shares we will first sell any shares in your account that carry
no CDSC. If there are not enough of these to meet your request, we will sell
those shares that have the lowest CDSC.
Class C Shares are offered at their net asset value per share, without any
initial sales charge. However, you may be charged a contingent deferred sales
charge (CDSC) of 1% on shares you sell within one year of purchase. There is no
CDSC on shares acquired through reinvestment of dividends. The CDSC is based on
the original purchase cost or the current market value of the shares being sold,
whichever is less.
CDSC calculations are based on the number of shares involved, not on the value
of your account. Each time you place a request to sell shares we will first sell
any shares in your account that carry no CDSC.
For purposes of this CDSC, all purchases made during a calendar month are
counted as having been made on the FIRST day of that month.
- --------------------------------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
Reducing your Class A sales charges There are several ways you can combine
multiple purchases of Class A shares of John Hancock funds to take advantage of
the breakpoints in the sales charge schedule. The first three ways can be
combined in any manner.
o Accumulation Privilege -- lets you add the value of any Class A shares you
already own to the amount of your next Class A investment for purposes of
calculating the sales charge. Retirement plans investing $1 million in Class
B shares may add that value to Class A purchases to calculate sales charges.
o Letter of Intention -- lets you purchase Class A shares of a fund over a
13-month period and receive the same sales charge as if all shares had been
purchased at once.
o Combination Privilege -- lets you combine Class A shares of multiple funds
for purposes of calculating the sales charge.
To utilize: complete the appropriate section of your application, contact your
financial representative or Signature Services, or consult the SAI (see the back
cover of this prospectus).
Group Investment Program A group may be treated as a single purchaser under the
accumulation and combination privileges. Each investor has an individual
account, but the group's investments are lumped together for sales charge
purposes, making the investors potentially eligible for reduced sales charges.
There is no charge, no obligation to invest (although initial investments must
total at least $250) and individual investors may close their account at any
time.
To utilize: contact your financial representative or Signature Services to find
out how to qualify, or consult the SAI (see the back cover of this prospectus).
CDSC waivers As long as Signature Services is notified at the time you sell, the
CDSC for each share class will generally be waived in the following cases:
o to make payments through certain systematic withdrawal plans
o to make certain distributions from a retirement plan
o because of shareholder death or disability
o to purchase a John Hancock Declaration annuity
To utilize: if you think you may be eligible for a CDSC waiver, contact your
financial representative or Signature Services, or consult the SAI.
20 YOUR ACCOUNT
<PAGE>
Reinstatement privilege If you sell shares of a John Hancock fund, you may
reinvest some or all of the proceeds in the same share class of any John Hancock
fund within 120 days without a sales charge, as long as Signature Services is
notified before you reinvest. If you paid a CDSC when you sold your shares, you
will be credited with the amount of the CDSC. All accounts involved must have
the same registration.
To utilize: contact your financial representative or Signature Services.
Waivers for certain investors Class A shares may be offered without front-end
sales charges or CDSCs to various individuals and institutions, including:
o selling brokers and their employees and sales representatives
o financial representatives utilizing fund shares in fee-based investment
products under signed agreement with John Hancock Funds
o fund trustees and other individuals who are affiliated with these or other
John Hancock funds
o individuals transferring assets from an employee benefit plan with John
Hancock Funds into an individual account in a John Hancock fund
o certain insurance company contract holders (one-year CDSC usually applies)
o participants in certain retirement plans with at least 100 members
(one-year CDSC applies)
To utilize: if you think you may be eligible for a sales charge waiver, contact
Signature Services, or consult the SAI.
- --------------------------------------------------------------------------------
OPENING AN ACCOUNT
1 Read this prospectus carefully.
2 Determine how much you want to invest. The minimum initial investments for
the John Hancock funds are as follows:
o non-retirement account: $1,000
o retirement account: $250
o group investments: $250
o Monthly Automatic Accumulation Plan (MAAP): $25 to open; you must
invest at least $25 a month
o fee-based clients of selling brokers who placed at least $2 billion in
John Hancock funds: $250
3 Complete the appropriate parts of the account application, carefully
following the instructions. If you have questions, please contact your
financial representative or call Signature Services at 1-800-225-5291.
4 Complete the appropriate parts of the account privileges section of the
application. By applying for privileges now, you can avoid the delay and
inconvenience of having to file an additional application if you want to
add privileges later.
5 Make your initial investment using the table on the next page. You and your
financial representative can initiate any purchase, exchange or sale of
shares.
YOUR ACCOUNT 21
<PAGE>
- --------------------------------------------------------------------------------
Buying shares
- --------------------------------------------------------------------------------
Opening an account Adding to an account
By check
[Clip art] o Make out a check for the o Make out a check for the
investment amount, payable to investment amount payable
"John Hancock Signature to "John Hancock Signature
Services, Inc." Services, Inc."
o Deliver the check and your o Fill out the detachable
completed application to your investment slip from an
financial representative, or account statement. If no
mail them to Signature Services slip is available, include
(address below). a note specifying the fund
name, your share class,
your account number and
the name(s) in which the
account is registered.
o Deliver the check and your
investment slip or note to
your financial
representative, or mail
them to Signature Services
(address below).
By exchange
[Clip art] o Call your financial o Call your financial
representative or Signature representative or Signature
Services to request an Services to request an
exchange. exchange.
By wire
[Clip art] o Deliver your completed o Instruct your bank to wire
application to your financial the amount of your
representative, or mail investment to:
it to Signature Services. First Signature Bank &
Trust
Account # 900000260
o Obtain your account number Routing # 211475000
by calling your financial Specify the fund name, your
representative or share class, your account
Signature Services. number and the name(s)
in which the account is
o Instruct your bank to wire registered. Your bank may
the amount of your investment charge a fee to wire funds.
to:
First Signature Bank & Trust
Account # 900000260
Routing # 211475000
Specify the fund name, your
choice of share class, the new
account number and the name(s)
in which the account is
registered. Your bank may charge
a fee to wire funds.
By phone
[Clip art] See "By wire" and "By exchange." o Verify that your bank or
credit union is a member of
the Automated Clearing
House (ACH) system.
o Complete the "Invest-By-
Phone" and "Bank
Information" sections on
your account application.
o Call Signature Services to
verify that these features
are in place on your account.
o Tell the Signature Services
representative the fund name,
your share class, your
account number, the name(s)
in which the account is
registered and the amount
of your investment.
To open or add to an account using the Monthly Automatic Accumulation Program,
see "Additional investor services."
22 YOUR ACCOUNT
<PAGE>
- --------------------------------------------------------------------------------
Selling shares
- --------------------------------------------------------------------------------
Designed for To sell some or all of your shares
By letter
[Clip art] o Accounts of any type. o Write a letter of instruction
or complete a stock power
o Sales of any amount. indicating the fund name, your
share class, your account
number, the name(s) in which
the account is registered and
the dollar value or number of
shares you wish to sell.
o Include all signatures and any
additional documents that may
be required (see next page).
o Mail the materials to Signature
Services.
o A check will be mailed to the
name(s) and address in which
the account is registered, or
otherwise according to your
letter of instruction.
By phone
[Clip art] o Most accounts. o For automated service 24 hours
a day using your touch-tone
o Sales of up to $100,000. phone, call the EASI-Line at
1-800-338-8080.
o To place your order with a
representative at John Hancock
Funds, call Signature Services
between 8 A.M. and 4 P.M.
Eastern Time on most business
days.
By wire or electronic funds transfer (EFT)
[Clip art] o Requests by letter to o Fill out the "Telephone
sell any amount (accounts Redemption" section of your
of any type). new account application.
o Requests by phone to sell o To verify that the telephone
up to $100,000 (accounts redemption privilege is in
with telephone redemption place on an account, or to
privileges). request the forms to add it
to an existing account, call
Signature Services.
o Amounts of $1,000 or more will
be wired on the next business
day. A $4 fee will be deducted
from your account.
o Amounts of less than $1,000
may be sent by EFT or by check.
Funds from EFT transactions
are generally available by
the second business day.
Your bank may charge a fee
for this service.
By exchange
[Clip art] o Accounts of any type. o Obtain a current prospectus for
the fund into which you are
o Sales of any amount. exchanging by calling your
financial representative or
Signature Services.
o Call your financial
representative or Signature
Services to request an exchange.
- ---------------------------------------------
Address
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
Phone number
1-800-225-5291
Or contact your financial representative
for instructions and assistance.
- ---------------------------------------------
To sell shares through a systematic withdrawal plan, see "Additional investor
services."
YOUR ACCOUNT 23
<PAGE>
Selling shares in writing In certain circumstances, you will need to make your
request to sell shares in writing. You may need to include additional items with
your request, as shown in the table below. You may also need to include a
signature guarantee, which protects you against fraudulent orders. You will need
a signature guarantee if:
o your address of record has changed within the past 30 days
o you are selling more than $100,000 worth of shares
o you are requesting payment other than by a check mailed to the address of
record and payable to the registered owner(s)
The signature guarantee must be from a member of the Signature Guarantee
Medallion Program (generally, a broker or securities dealer). We may refuse any
other source. A notary public CANNOT provide a signature guarantee.
- --------------------------------------------------------------------------------
Seller Requirements for written requests
[Clip art]
- --------------------------------------------------------------------------------
Owners of individual, joint, o Letter of instruction.
sole proprietorship, UGMA/UTMA o On the letter, the signatures and
(custodial accounts for minors) titles of all persons authorized to
or general partner accounts. sign for the account, exactly as
the account is registered.
o Signature guarantee if applicable
(see above).
Owners of corporate or o Letter of instruction.
association accounts. o Corporate resolution, certified
within the past 12 months.
o On the letter and the resolution,
the signature of the person(s)
authorized to sign for the account.
o Signature guarantee if applicable
(see above).
Owners or trustees of trust accounts. o Letter of instruction.
o On the letter, the signature(s) of
the trustee(s).
o If the names of all trustees are not
on the account, please also provide a
copy of the trust document certified
within the past 12 months.
o Signature guarantee if applicable
(see above).
Joint tenancy shareholders whose o Letter of instruction signed by
co-tenants are deceased. surviving tenant.
o Copy of death certificate.
o Signature guarantee if applicable
(see above).
Executors of shareholder estates. o Letter of instruction signed by
executor.
o Copy of order appointing executor.
o Signature guarantee if applicable
(see above).
Administrators, conservators, o Call 1-800-225-5291 for
guardians and other sellers or instructions.
account types not listed above.
24 YOUR ACCOUNT
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION POLICIES
Valuation of shares The net asset value per share (NAV) for each fund and class
is determined each business day at the close of regular trading on the New York
Stock Exchange (typically 4 P.M. Eastern Time) by dividing a class's net assets
by the number of its shares outstanding.
Buy and sell prices When you buy shares, you pay the NAV plus any applicable
sales charges, as described earlier. When you sell shares, you receive the NAV
minus any applicable deferred sales charges.
Execution of requests Each fund is open on those days when the New York Stock
Exchange is open, typically Monday through Friday. Buy and sell requests are
executed at the next NAV to be calculated after your request is accepted by
Signature Services.
At times of peak activity, it may be difficult to place requests by phone.
During these times, consider using EASI-Line or sending your request in writing.
In unusual circumstances, any fund may temporarily suspend the processing of
sell requests, or may postpone payment of proceeds for up to three business days
or longer, as allowed by federal securities laws.
Telephone transactions For your protection, telephone requests may be recorded
in order to verify their accuracy. In addition, Signature Services will take
measures to verify the identity of the caller, such as asking for name, account
number, Social Security or other taxpayer ID number and other relevant
information. If appropriate measures are taken, Signature Services is not
responsible for any losses that may occur to any account due to an unauthorized
telephone call. Also for your protection, telephone transactions are not
permitted on accounts whose names or addresses have changed within the past 30
days. Proceeds from telephone transactions can only be mailed to the address of
record.
Exchanges You may exchange shares of one John Hancock fund for shares of the
same class of any other, generally without paying any additional sales charges.
The registration for both accounts involved must be identical. Class B and Class
C shares will continue to age from the original date and will retain the same
CDSC rate as they had before the exchange, except that the rate will change to
the new fund's rate if that rate is higher. A CDSC rate that has increased will
drop again with a future exchange into a fund with a lower rate.
To protect the interests of other investors in the fund, a fund may cancel the
exchange privileges of any parties that, in the opinion of the fund, are using
market timing strategies or making more than seven exchanges per owner or
controlling party per calendar year. A fund may also refuse any exchange order.
A fund may change or cancel its exchange policies at any time, upon 60 days'
notice to its shareholders.
Certificated shares Most shares are electronically recorded. If you wish to have
certificates for your shares, please write to Signature Services. Certificated
shares can only be sold by returning the certificates to Signature Services,
along with a letter of instruction or a stock power and a signature guarantee.
Sales in advance of purchase payments When you place a request to sell shares
for which the purchase money has not yet been collected, the request will be
executed in a timely fashion, but the fund will not release the proceeds to you
until your purchase payment clears. This may take up to ten business days after
the purchase.
- --------------------------------------------------------------------------------
DIVIDENDS AND ACCOUNT POLICIES
Account statements In general, you will receive account statements as follows:
o after every transaction (except a dividend reinvestment) that affects your
account balance
o after any changes of name or address of the registered owner(s)
o in all other circumstances, every quarter
Every year you should also receive, if applicable, a Form 1099 tax information
statement, mailed by January 31.
Dividends The funds generally distribute most or all of their net earnings in
the form of dividends.Any capital gains are distributed annually. Regional Bank
Fund typically pays income dividends quarterly and Financial Industries Fund
typically pays income dividends annually. The other funds do not usually pay
income dividends.
YOUR ACCOUNT 25
<PAGE>
Dividend reinvestments Most investors have their dividends reinvested in
additional shares of the same fund and class. If you choose this option, or if
you do not indicate any choice, your dividends will be reinvested on the
dividend record date. Alternatively, you can choose to have a check for your
dividends mailed to you. However, if the check is not deliverable, your
dividends will be reinvested.
Taxability of dividends As long as a fund meets the requirements for being a
tax-qualified regulated investment company, which each fund has in the past and
intends to in the future, it pays no federal income tax on the earnings it
distributes to shareholders.
Consequently, dividends you receive from a fund, whether reinvested or taken as
cash, are generally considered taxable. Dividends from a fund's long-term
capital gains are taxable as capital gains; dividends from other sources are
generally taxable as ordinary income.
Some dividends paid in January may be taxable as if they had been paid the
previous December. Corporations may be entitled to take a dividends-received
deduction for a portion of certain dividends they receive.
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category, although you should verify your tax liability with
your tax professional.
Taxability of transactions Any time you sell or exchange shares, it is
considered a taxable event for you. Depending on the purchase price and the sale
price of the shares you sell or exchange, you may have a gain or a loss on the
transaction. You are responsible for any tax liabilities generated by your
transactions.
Small accounts (non-retirement only) If you draw down a non-retirement account
so that its total value is less than $1,000, you may be asked to purchase more
shares within 30 days. If you do not take action, your fund may close out your
account and mail you the proceeds. Alternatively, Signature Services may charge
you $10 a year to maintain your account. You will not be charged a CDSC if your
account is closed for this reason, and your account will not be closed if its
drop in value is due to fund performance or the effects of sales charges.
- --------------------------------------------------------------------------------
ADDITIONAL INVESTOR SERVICES
Monthly Automatic Accumulation Program (MAAP) MAAP lets you set up regular
investments from your paycheck or bank account to the John Hancock fund(s) of
your choice. You determine the frequency and amount of your investments, and you
can terminate your program at any time. To establish:
o Complete the appropriate parts of your account application.
o If you are using MAAP to open an account, make out a check ($25 minimum) for
your first investment amount payable to "John Hancock Signature Services,
Inc." Deliver your check and application to your financial representative or
Signature Services.
Systematic withdrawal plan This plan may be used for routine bill payments or
periodic withdrawals from your account. To establish:
o Make sure you have at least $5,000 worth of shares in your account.
o Make sure you are not planning to invest more money in this account (buying
shares during a period when you are also selling shares of the same fund is
not advantageous to you, because of sales charges).
o Specify the payee(s). The payee may be yourself or any other party, and there
is no limit to the number of payees you may have, as long as they are all on
the same payment schedule.
o Determine the schedule: monthly, quarterly, semi-annually, annually or in
certain selected months.
o Fill out the relevant part of the account application. To add a systematic
withdrawal plan to an existing account, contact your financial representative
or Signature Services.
Retirement plans John Hancock Funds offers a range of retirement plans,
including Traditional and Roth IRAs, SIMPLE IRAs, SIMPLE 401(k)s, SEPs, 401(k)s,
money purchase pension and profit-sharing plans. Using these plans, you can
invest in any John Hancock fund (except tax-free income funds) with a low
minimum investment of $250 or, for some group plans, no minimum investment at
all. To find out more, call Signature Services at 1-800-225-5291.
26 YOUR ACCOUNT
<PAGE>
Fund details
- --------------------------------------------------------------------------------
BUSINESS STRUCTURE
How the funds are organized Each John Hancock growth fund is an open-end
management investment company or a series of such a company.
Each fund is supervised by a board of trustees, an independent body that has
ultimate responsibility for the fund's activities. The board retains various
companies to carry out the fund's operations, including the investment adviser,
custodian, transfer agent and others (see diagram). The board has the right, and
the obligation, to terminate the fund's relationship with any of these companies
and to retain a different company if the board believes it is in the
shareholders' best interests.
At a mutual fund's inception, the initial shareholder (typically the adviser)
appoints the fund's board. Thereafter, the board and the shareholders determine
the board's membership. The boards of the John Hancock growth funds may include
individuals who are affiliated with the investment adviser. However, the
majority of board members must be independent.
The funds do not hold annual shareholder meetings, but may hold special meetings
for such purposes as electing or removing board members, changing fundamental
policies, approving a management contract or approving a 12b-1 plan (12b-1 fees
are explained in "Sales compensation").
[The information below was represented by a flow chart in the printed
materials.]
-----------------
Shareholders
-----------------
Distribution and
shareholder services
-------------------------------------------------
Financial services firms and
their representatives
Advise current and prospective share-
holders on their fund investments, often
in the context of an overall financial plan.
-------------------------------------------------
-------------------------------------------------
Principal distributor
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
Markets the funds and distributes shares
through selling brokers, financial planners
and other financial representatives.
-------------------------------------------------
------------------------------------------------------
Transfer agent
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
Handles shareholder services, including record-
keeping and statements, distribution of dividends
and processing of buy and sell requests.
------------------------------------------------------
------------------------------------
Investment adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
Manages the funds' business and
investment activities.
------------------------------------
------------------------------------
Custodian
Investors Bank & Trust Co.
200 Clarendon Street
Boston, MA 02116
Holds the funds' assets, settles all
portfolio trades and collects most of
the valuation data required for
calculating each fund's NAV.
------------------------------------
Asset
management
------------------------------------
Trustees
Oversee the funds' activities.
------------------------------------
FUND DETAILS 27
<PAGE>
Accounting compensation The funds compensate the adviser for performing tax and
financial management services. Annual compensation is not expected to exceed
0.02% of each fund's average net assets.
Portfolio trades In placing portfolio trades, the adviser may use brokerage
firms that market the fund's shares or are affiliated with John Hancock Mutual
Life Insurance Company, but only when the adviser believes no other firm offers
a better combination of quality execution (i.e., timeliness and completeness)
and favorable price.
Investment goals Except for Emerging Growth Fund, Financial Industries Fund and
Special Opportunities Fund, each fund's investment goal is fundamental and may
only be changed with shareholder approval.
Diversification All of the growth funds are diversified.
- --------------------------------------------------------------------------------
SALES COMPENSATION
As part of their business strategies, the funds, along with John Hancock Funds,
pay compensation to financial services firms that sell the funds' shares. These
firms typically pass along a portion of this compensation to your financial
representative.
Compensation payments originate from two sources: from sales charges and from
12b-1 fees that are paid out of the funds' assets ("12b-1" refers to the federal
securities regulation authorizing annual fees of this type). The 12b-1 fee rates
vary by fund and by share class, according to Rule 12b-1 plans adopted by the
funds. The sales charges and 12b-1 fees paid by investors are detailed in the
fund-by-fund information. The portions of these expenses that are reallowed to
financial services firms are shown on the next page.
Distribution fees may be used to pay for sales compensation to financial
services firms, marketing and overhead expenses and, for Class B and Class C
shares, interest expenses.
- --------------------------------------------------------------------------------
Class B unreimbursed distribution expenses(1)
- --------------------------------------------------------------------------------
Unreimbursed As a % of
Fund expenses net assets
Emerging Growth $ 12,476,287 2.75%
Financial Industries $ 7,546,464 1.29%
Growth $ 162,442 0.51%
Regional Bank $ 58,931,361 1.55%
Special Equities $ 4,156,261 0.45%
Special Opportunities $ 7,659,598 3.39%
Special Value $ 913,269 3.44%
(1) As of the most recent fiscal year end covered by each fund's financial
highlights. These expenses may be carried forward indefinitely.
Class C Class C shares began operations after the 1997 fiscal year. Therefore,
there are no unreimbursed expenses to report.
Initial compensation Whenever you make an investment in a fund or funds, the
financial services firm receives either a reallowance from the initial sales
charge or a commission, as described below. The firm also receives the first
year's service fee at this time.
Annual compensation Beginning with the second year after an investment is made,
the financial services firm receives an annual service fee of 0.25% of its total
eligible net assets. This fee is paid quarterly in arrears.
Financial services firms selling large amounts of fund shares may receive extra
compensation. This compensation, which John Hancock funds pays out of its own
resources, may include asset retention fees as well as reimbursement for
marketing expenses.
28 FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Class A investments
- ----------------------------------------------------------------------------------------------------------------------------
Maximum
Sales charge reallowance First year Maximum
paid by investors or commission service fee total compensation(1)
(% of offering price) (% of offering price) (% of net investment) (% of offering price)
<S> <C> <C> <C> <C>
Up to $49,999 5.00% 4.01% 0.25% 4.25%
$50,000 - $99,999 4.50% 3.51% 0.25% 3.75%
$100,000 - $249,999 3.50% 2.61% 0.25% 2.85%
$250,000 - $499,999 2.50% 1.86% 0.25% 2.10%
$500,000 - $999,999 2.00% 1.36% 0.25% 1.60%
Regular investments of
$1 million or more
First $1M - $4,999,999 -- 0.75% 0.25% 1.00%
Next $1 - $5M above that -- 0.25% 0.25% 0.50%
Next $1 or more above that -- 0.00% 0.25% 0.25%
Waiver investments(2) -- 0.00% 0.25% 0.25%
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Class B investments
- ----------------------------------------------------------------------------------------------------------------------------
Maximum
reallowance First year Maximum
or commission service fee total compensation
(% of offering price) (% of net investment) (% of offering price)
<S> <C> <C> <C>
All amounts 3.75% 0.25% 4.00%
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Class C investments
- ----------------------------------------------------------------------------------------------------------------------------
Maximum
reallowance First year Maximum
or commission service fee total compensation
(% of offering price) (% of net investment) (% of offering price)
<S> <C> <C> <C>
All amounts 0.75% 0.25% 1.00%
</TABLE>
(1) Reallowance/commission percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition.
(2) Refers to any investments made by municipalities, financial institutions,
trusts and affinity group members that take advantage of the sales charge
waivers described earlier in this prospectus.
CDSC revenues collected by John Hancock Funds may be used to pay commissions
when there is no initial sales charge.
FUND DETAILS 29
<PAGE>
- --------------------------------------------------------------------------------
MORE ABOUT RISK
A fund's risk profile is largely defined by the fund's primary securities and
investment practices. You may find the most concise description of each fund's
risk profile in the fund-by-fund information.
The funds are permitted to utilize -- within limits established by the trustees
- -- certain other securities and investment practices that have higher risks and
opportunities associated with them. To the extent that a fund utilizes these
securities or practices, its overall performance may be affected, either
positively or negatively. On the following page are brief descriptions of these
securities and practices, along with the risks associated with them. The funds
follow certain policies that may reduce these risks.
As with any mutual fund, there is no guarantee that the performance of a John
Hancock growth fund will be positive over any period of time -- days, months or
years. However, stock funds as a category have historically performed better
over the long term than bond or money market funds.
- --------------------------------------------------------------------------------
TYPES OF INVESTMENT RISK
Correlation risk The risk that changes in the value of a hedging instrument will
not match those of the asset being hedged (hedging is the use of one investment
to offset the effects of another investment). Incomplete correlation can result
in unanticipated risks.
Credit risk The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation.
Currency risk The risk that fluctuations in the exchange rates between the U.S.
dollar and foreign currencies may negatively affect an investment. Adverse
changes in exchange rates may erode or reverse any gains produced by foreign
currency denominated investments and may widen any losses.
Information risk The risk that key information about a security or market is
inaccurate or unavailable.
Interest rate risk The risk of market losses attributable to changes in interest
rates. With fixed-rate securities, a rise in interest rates typically causes a
fall in values, while a fall in rates typically causes a rise in values.
Leverage risk Associated with securities or practices (such as borrowing) that
multiply small index or market movements into large changes in value.
o Hedged When a derivative (a security whose value is based on another security
or index) is used as a hedge against an opposite position that the fund also
holds, any loss generated by the derivative should be substantially offset by
gains on the hedged investment, and vice versa. While hedging can reduce or
eliminate losses, it can also reduce or eliminate gains.
o Speculative To the extent that a derivative is not used as a hedge, the fund
is directly exposed to the risks of that derivative. Gains or losses from
speculative positions in a derivative may be substantially greater than the
derivative's original cost.
Liquidity risk The risk that certain securities may be difficult or impossible
to sell at the time and the price that the seller would like. The seller may
have to lower the price, sell other securities instead or forego an investment
opportunity, any of which could have a negative effect on fund management or
performance.
Management risk The risk that a strategy used by a fund's management may fail to
produce the intended result. Common to all mutual funds.
Market risk The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations may cause a security to
be worth less than the price originally paid for it, or less than it was worth
at an earlier time. Market risk may affect a single issuer, industry, sector of
the economy or the market as a whole. Common to all stocks and bonds and the
mutual funds that invest in them.
Natural event risk The risk of losses attributable to natural disasters, crop
failures and similar events.
Opportunity risk The risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are tied up in less advantageous
investments.
Political risk The risk of losses attributable to government or political
actions, from changes in tax or trade statutes to governmental collapse and war.
Valuation risk The risk that a fund has valued certain of its securities at a
higher price than it can sell them for.
Year 2000 risk The risk that the funds' operations could be disrupted by year
2000-related computer system problems. Although the adviser and the funds'
service providers are taking steps to address this issue, there may still be
some risk of adverse effects. Common to all mutual funds.
30 FUND DETAILS
<PAGE>
- --------------------------------------------------------------------------------
Higher-risk securities and practices
- --------------------------------------------------------------------------------
This table shows each fund's investment limitations as a percentage of portfolio
assets. In each case the principal types of risk are listed (see previous page
for definitions). Numbers in this table show allowable usage only; for actual
usage, consult the fund's annual/semiannual reports.
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
* No policy limitation on usage; fund may be using currently
o Permitted, but has not typically been used
- -- Not permitted
<TABLE>
<CAPTION>
Emerging Financial Regional Special Special Special
Growth Industries Growth Bank Equities Opportunities Value
- ------------------------------------------------------------------------------------------------------------------------------------
Investment practices
<S> <C> <C> <C> <C> <C> <C> <C>
Borrowing; reverse repurchase agreements
The borrowing of money from banks or through
reverse repurchase agreements. Leverage, credit risks. 33.3 33 33.3 5 33.3 33.3 33.3
Repurchase agreements The purchase of a security
that must later be sold backto the seller at the
same price plus interest. Credit risk. * * * * * * *
Securities lending The lending of securities to
financial institutions, which provide cash or
government securities as collateral. Credit risk. 30 33.3 33.3 -- 33.3 33.3 33.3
Short sales The selling of securities which have
been borrowed on the expectation that the market
price will drop.
o Hedged. Hedged leverage, market, correlation,
liquidity, opportunity risks. o o o -- o * o
o Speculative. Speculative leverage, market,
liquidity risks. -- o o -- o 5 o
Short-term trading Selling a security soon after
purchase. A portfolio engaging in short-term
trading will have higher turnover and transaction
expenses. Market risk. * * * * * * *
When-issued securities and forward commitments
The purchase or sale of securities for delivery
at a future date; market value may change before
delivery. Market, opportunity, leverage risks. * * * * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Conventional securities
Non-investment-grade securities Securities rated
below BBB/Baa are considered junk bonds. Credit,
market, interest rate, liquidity, valuation,
information risks. 10 5 5 5 -- -- 15
Foreign equities
o Stocks issued by foreign companies. Market,
currency, information, natural event, political
risks. * * 15 o * * 50
o American or European depository receipts, which
are dollar-denominated securities typically
issued by American or European banks and are
based on ownership of securities issued by
foreign companies. Market, currency,
information, natural event, political risks. * * 15 o * * 50
Restricted and illiquid securities Securities not
traded on the open market. May include illiquid
Rule 144A securities. Liquidity, valuation, market
risks. 10 15 15 15 15 15 15
- ------------------------------------------------------------------------------------------------------------------------------------
Leveraged derivative securities
Financial futures and options; securities and index
options Contracts involving the right or obligation
to deliver or receive assets or money depending on the
performance of one or more assets or an economic index.
o Futures and related options. Interest rate, currency,
market, hedged or speculative leverage, correlation,
liquidity, opportunity risks. * o o -- o * *
o Options on securities and indices. Interest rate,
currency, market, hedged or speculative leverage,
correlation, liquidity, credit, opportunity risks. * o o o o * *
Currency contracts Contracts involving the right or
obligation to buy or sell a given amount of foreign
currency at a specified price and future date.
o Hedged. Currency, hedged leverage, correlation,
liquidity, opportunity risks. * o * -- o * *
o Speculative. Currency, speculative leverage,
liquidity risks. -- o -- -- o -- --
</TABLE>
FUND DETAILS 31
<PAGE>
For more information
- --------------------------------------------------------------------------------
Two documents are available that offer further information on John Hancock
growth funds:
ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS
Includes financial statements, detailed performance information, portfolio
holdings, a statement from portfolio management and the auditor's report.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains more detailed information on all aspects of the funds. The
current annual/semiannual report is included in the SAI.
A current SAI has been filed with the Securities and Exchange Commission and is
incorporated by reference (is legally a part of this prospectus). You may visit
the Securities and Exchange Commission's Internet website (www.sec.gov) to view
the SAI, material incorporated by reference and other information.
To request a free copy of the current annual/semiannual report or SAI, please
write or call:
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
Telephone: 1-800-225-5291
EASI-Line: 1-800-338-8080
TDD: 1-800-544-6713
Internet: www.jhancock.com/funds
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
101 Huntington Avenue
Boston, Massachusetts 02199-7603
John Hancock (R) (C) 1996 John Hancock Funds, Inc.
GROPN 11/98
