- --------------------------------------------------------------------------------
JOHN HANCOCK
Growth
Funds
[LOGO] Prospectus
July 1, 1999
- --------------------------------------------------------------------------------
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these funds or determined whether the information in
this prospectus is adequate and accurate. Anyone who indicates otherwise is
committing a federal crime.
Core Growth Fund formerly Independence Growth Fund
Core Value Fund formerly Independence Value Fund
Financial Industries Fund
Large Cap Growth Fund formerly Growth Fund
Mid Cap Growth Fund formerly Special Opportunities Fund
Regional Bank Fund
Small Cap Growth Fund formerly Emerging Growth Fund
Small Cap Value Fund formerly Special Value Fund
Special Equities Fund
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
101 Huntington Avenue, Boston, Massachusetts 02199-7603
<PAGE>
Contents
- --------------------------------------------------------------------------------
A fund-by-fund summary of Core Growth Fund 4
goals, strategies, risks,
performance and expenses. Core Value Fund 6
Financial Industries Fund 8
Large Cap Growth Fund 10
Mid Cap Growth Fund 12
Regional Bank Fund 14
Small Cap Growth Fund 16
Small Cap Value Fund 18
Special Equities Fund 20
Policies and instructions for Your account
opening, maintaining and
closing an account in any Choosing a share class 22
growth fund. How sales charges are calculated 22
Sales charge reductions and waivers 23
Opening an account 24
Buying shares 25
Selling shares 26
Transaction policies 28
Dividends and account policies 28
Additional investor services 29
Further information on the Fund details
growth funds.
Business structure 30
Financial highlights 31
For more information back cover
<PAGE>
Overview
- --------------------------------------------------------------------------------
JOHN HANCOCK GROWTH FUNDS
These funds seek long-term growth by investing primarily in common stocks. Each
fund has its own strategy and its own risk profile.
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 may go up and down in value
RISKS OF MUTUAL FUNDS
Mutual funds are not bank deposits and are not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Because
you could lose money by investing in these funds, be sure to read all risk
disclosure carefully before investing.
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.
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] Main risks The major risk factors associated with the fund.
[Clip Art] Past performance The fund's total return, measured year-by-year and
over time.
[Clip Art] Your expenses The overall costs borne by an investor in the fund,
including sales charges and annual expenses.
3
<PAGE>
Core Growth Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks above-average total return. To pursue this goal, the
fund invests in a diversified portfolio of primarily large-capitalization stocks
and emphasizes stocks of companies with relatively high potential long-term
earnings growth. The portfolio's risk profile is substantially similar to that
of the Russell 1000 Growth Index.
The managers select from a menu of stocks of approximately 550 companies that
evolves over time. Approximately 40% to 50% of these companies also are included
in the Russell 1000 Growth Index. The subadviser's investment research team is
organized by industry and tracks these companies to develop earnings estimates
and five-year projections for growth. A series of proprietary computer models
use this in-house research to rank the stocks according to their combination of:
o value, meaning they appear to be underpriced
o momentum, meaning they show potential for strong growth
This process, together with a risk/return analysis against the Russell 1000
Growth Index, results in a portfolio of approximately 100 to 130 of the stocks
from the top 60% of the menu. The fund must sell any stocks that fall into the
bottom 20% of the menu.
In normal market conditions, the fund is almost entirely invested in stocks.
In abnormal market conditions, the fund may temporarily invest more than 35% of
assets in investment-grade short-term securities. In these and other cases, the
fund might not achieve its goal.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable dividends.
================================================================================
SUBADVISER
Independence Investment
Associates, Inc.
- -----------------------------------------------------------
Team responsible for day-to-day investment management
A subsidiary of John Hancock Mutual Life Insurance Company
Founded in 1982
Supervised by the adviser
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. The year-by-year and average annual figures are for Class I
shares, which are offered in a separate prospectus. Annual returns should be
substantially similar since all classes invest in the same portfolio. However,
Class I shares' average annual figures do not reflect sales charges or 12b-1
fees which will be imposed beginning July 1, 1999 for Class A, B and C shares.
Year-by-year, average annual and index figures do not reflect these charges and
would be lower if they did. All figures assume dividend reinvestment. Past
performance does not indicate future results.
- --------------------------------------------------------------------------------
Class I year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1996 1997 1998
20.52% 36.22% 37.94%
1999 total return as of March 31: 2.70%
Best quarter: Q4 '98, 27.44% Worst quarter: Q3 '98, -12.00%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
Life of
1 year Class I
Class I - began 10/2/95 37.94% 30.52%
Class A - began 7/1/99 -- --
Class B - began 7/1/99 -- --
Class C - began 7/1/99 -- --
Index 38.71% 29.73%
Index: Russell 1000 Growth Index, an unmanaged index of growth company stocks in
the Russell 1000 Index of the 1,000 largest-capitalization U.S. stocks.
4
<PAGE>
MAIN RISKS
[Clip Art] The value of your investment will go up and down in response to stock
market movements. Large-capitalization stocks as a group could fall out of favor
with the market, causing the fund to underperform funds that focus on small- or
medium-capitalization stocks. Also, large-capitalization growth stocks as a
group could fall out of favor with the market, causing the fund to underperform
funds that focus on large-capitalization value stocks.
The fund's management strategy will influence performance significantly. If the
investment research team's earnings estimates or projections turn out to be
inaccurate, or if the proprietary computer models do not perform as expected,
the fund could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o Foreign investments carry additional risks, including potentially inadequate
or inaccurate financial information and social or political upheavals.
================================================================================
YOUR EXPENSES
[Clip Art] Transaction expenses are charged directly to your account. Operating
expenses are paid from the fund's assets, and therefore are paid by shareholders
indirectly. Class A expense figures below show the expenses for the past year
adjusted to reflect any changes. Because Class A, Class B and Class C shares are
new, their expenses are based on Class I shares' expenses.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) on purchases
as a % of purchase price 5.00% none none
Maximum deferred sales charge (load)
(as a % of purchase or sales price, whichever is less) none(1) 5.00% 1.00%
<CAPTION>
- ---------------------------------------------------------------------------------
Annual operating expenses Class A Class B Class C
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fee 0.80% 0.80% 0.80%
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
Other expenses 1.18% 1.18% 1.18%
Total fund operating expenses 2.28% 2.98% 2.98%
Expense reimbursement (at least until 7/1/00) 1.03% 1.03% 1.03%
Net annual operating expenses 1.25% 1.95% 1.95%
</TABLE>
The hypothetical example below shows what your expenses would be after the
expense reimbursement (first year only) if you invested $10,000 over the time
frames indicated, assuming you reinvested all distributions and that the average
annual return was 5%. The example is for comparison only, and does not represent
the fund's actual expenses and returns, either past or future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A $621 $1,152 $1,708 $3,218
Class B - with redemption $698 $1,196 $1,817 $3,368
- without redemption $198 $ 896 $1,617 $3,368
Class C - with redemption $298 $ 896 $1,617 $3,529
- without redemption $198 $ 896 $1,617 $3,529
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
FUND CODES
Class A
- ---------------------------
Ticker --
CUSIP --
Newspaper --
SEC number 811-8852
JH fund number 79
Class B
- ---------------------------
Ticker --
CUSIP --
Newspaper --
SEC number 811-8852
JH fund number 179
Class C
- ---------------------------
Ticker --
CUSIP --
Newspaper --
SEC number 811-8852
JH fund number 579
5
<PAGE>
Core Value Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks above-average total return. To pursue this goal, the
fund invests in a diversified portfolio of primarily large-capitalization stocks
and emphasizes relatively undervalued stocks and high dividend yields. The
portfolio's risk profile is substantially similar to that of the Russell 1000
Value Index.
The managers select from a menu of stocks of approximately 550 companies that
evolves over time. Approximately 50% to 60% of these companies also are included
in the Russell 1000 Value Index. The subadviser's investment research team is
organized by industry and tracks these companies to develop earnings estimates
and five-year projections for growth. A series of proprietary computer models
use this in-house research to rank the stocks according to their combination of:
o value, meaning they appear to be underpriced
o momentum, meaning they show potential for strong growth
This process, together with a risk/return analysis against the Russell 1000
Value Index, results in a portfolio of approximately 100 to 130 of the stocks
from the top 60% of the menu. The fund must sell any stocks that fall into the
bottom 20% of the menu.
In normal market conditions, the fund is almost entirely invested in stocks.
In abnormal market conditions, the fund may temporarily invest more than 35% of
assets in investment-grade short-term securities. In these and other cases, the
fund might not achieve its goal.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable dividends.
================================================================================
SUBADVISER
Independence Investment
Associates, Inc.
- -----------------------------------------------------------
Team responsible for day-to-day investment management
A subsidiary of John Hancock Mutual Life Insurance Company
Founded in 1982
Supervised by the adviser
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. Class A average annual figures do not reflect sales charges,
which will be imposed beginning July 1, 1999. In addition, 12b-1 fees will be
imposed beginning July 1, 2000 for Class A. Year-by-year, average annual and
index figures do not reflect these charges and would be lower if they did. All
figures assume dividend reinvestment. Past performance does not indicate future
results.
- --------------------------------------------------------------------------------
Class A year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1996 1997 1998
20.66% 30.63% 18.79%
1999 total return as of March 31: 0.48%
Best quarter: Q4 '98, 18.79% Worst quarter: Q3 '98, -13.99%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
Life of
1 year Class A
Class A - began 10/2/95 18.79% 24.14%
Class B - began 7/1/99 -- --
Class C - began 7/1/99 -- --
Index 15.63% 24.29%
Index: Russell 1000 Value Index, an unmanaged index of value stocks in the
Russell 1000 Index of the 1,000 largest-capitalization U.S. stocks.
6
<PAGE>
MAIN RISKS
[Clip Art] The value of your investment will go up and down in response to stock
market movements. Large-capitalization stocks as a group could fall out of favor
with the market, causing the fund to underperform funds that focus on small- or
medium-capitalization stocks. Also, large-capitalization value stocks as a group
could fall out of favor with the market, causing the fund to underperform funds
that focus on large-capitalization growth stocks.
The fund's management strategy will influence performance significantly. If the
investment research team's earnings estimates or projections turn out to be
inaccurate, or if the proprietary computer models do not perform as expected,
the fund could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o Foreign investments carry additional risks, including potentially inadequate
or inaccurate financial information and social or political upheavals.
================================================================================
YOUR EXPENSES
[Clip Art] Transaction expenses are charged directly to your account. Operating
expenses are paid from the fund's assets, and therefore are paid by shareholders
indirectly. Class A expense figures below show the expenses for the past year,
adjusted to reflect any changes. Because Class B and Class C shares are new,
their expenses are based on Class A shares' expenses.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) on purchases
as a % of purchase price 5.00% none none
Maximum deferred sales charge (load)
(as a % of purchase or sales price, whichever is less) none(1) 5.00% 1.00%
- ---------------------------------------------------------------------------------------------
Annual operating expenses Class A Class B Class C
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fee 0.80% 0.80% 0.80%
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
Other expenses 1.08% 1.08% 1.08%
Total fund operating expenses 2.18% 2.88% 2.88%
Distribution and service (12b-1) fee reduction (until 7/1/00) 0.30% -- --
Expense reimbursement (at least until 7/1/00) 0.93% 0.93% 0.93%
Net annual operating expenses 0.95% 1.95% 1.95%
</TABLE>
The hypothetical example below shows what your expenses would be after the fee
reduction and expense reimbursement (first year only) if you invested $10,000
over the time frames indicated, assuming you reinvested all distributions and
that the average annual return was 5%. The example is for comparison only, and
does not represent the fund's actual expenses and returns, either past or
future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A $592 $1,105 $1,643 $3,109
Class B - with redemption $698 $1,176 $1,777 $3,281
- without redemption $198 $ 876 $1,577 $3,281
Class C - with redemption $298 $ 876 $1,577 $3,443
- without redemption $198 $ 876 $1,577 $3,443
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
FUND CODES
Class A
- ---------------------------
Ticker --
CUSIP --
Newspaper --
SEC number 811-8852
JH fund number 88
Class B
- ---------------------------
Ticker --
CUSIP --
Newspaper --
SEC number 811-8852
JH fund number 188
Class C
- ---------------------------
Ticker --
CUSIP --
Newspaper --
SEC number 811-8852
JH fund number 588
7
<PAGE>
Financial Industries Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks capital appreciation. To pursue this goal, the fund
normally invests at least 65% of assets in U.S. and foreign financial services
companies, including banks, thrifts, finance companies, brokerage and advisory
firms, real estate-related firms and insurance companies.
In managing the portfolio, the managers concentrate primarily on stock selection
rather than industry allocation. The portfolio may include financial services
companies of all sizes and types.
In choosing individual stocks, the managers use fundamental financial analysis
to identify securities that appear comparatively undervalued. Given the
industrywide trend toward consolidation, the managers also seek out companies
that appear to be positioned for a merger. The managers generally gather
firsthand information about companies from interviews and company visits.
The fund may invest in U.S. and foreign bonds, including up to 5% of net assets
in junk bonds (those rated below BBB/Baa and their unrated equivalents). It may
also invest up to 15% of assets in investment-grade short-term securities.
The fund may make limited use of certain derivatives (investments whose value is
based on indices, securities or currencies).
In abnormal market conditions, the fund may temporarily invest up to 80% of
assets in investment-grade short-term securities. In these and other cases, the
fund might not achieve its goal.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable dividends.
================================================================================
PORTFOLIO MANAGERS
James K. Schmidt, CFA
- -----------------------------------
Executive vice president of adviser
Joined team in 1996
Joined adviser in 1985
Began career in 1979
Thomas M. Finucane
- -----------------------------------
Vice president of adviser
Joined team in 1996
Joined adviser in 1990
Began career in 1990
Thomas C. Goggins
- -----------------------------------
Senior vice president of adviser
Joined team in 1998
Joined adviser in 1995
Began career in 1981
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. The average annual figures reflect sales charges; the
year-by-year and index figures do not, and would be lower if they did. All
figures assume dividend reinvestment. Past performance does not indicate future
results.
- --------------------------------------------------------------------------------
Class A year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1997 1998
37.74% 4.86%
Best quarter: Q4 '98, 17.07% Worst quarter: Q3 '98, -20.12%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
Life of Life of
1 year Class A Class B
Class A - began 3/14/96 -0.40% 26.31% --
Class B - began 1/14/97 -0.87% -- 16.95%
Class C - began 3/1/99 -- -- --
Index 28.60% 28.17% 30.95%
Index: Standard & Poor's 500 Stock Index, an unmanaged index of 500 stocks.
8
<PAGE>
MAIN RISKS
[Clip Art] As with most growth funds, the value of your investment will go up
and down in response to stock market movements. Another major factor in this
fund's performance is the economic condition of the financial services sector.
The value of your investment may fluctuate more widely than it would in a fund
that is diversified across sectors.
When interest rates fall or economic conditions deteriorate, the stocks of
financial services companies often suffer greater losses than other stocks.
Rising interest rates can cut into profits by reducing the difference between
these companies' borrowing and lending rates.
The fund's management strategy will influence performance significantly. Stocks
of financial services companies as a group could fall out of favor with the
market, causing the fund to underperform funds that focus on other types of
stocks. Similarly, if the managers' stock selection strategy does not perform as
expected, the fund could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o Foreign investments carry additional risks, including potentially unfavorable
currency exchange rates, inadequate or inaccurate financial information and
social or political upheavals.
o In a down market, higher-risk securities and derivatives could become harder
to value or to sell at a fair price.
o Any bonds held by the fund could be downgraded in credit rating or go into
default. Bond prices generally fall when interest rates rise. Junk bond
prices can fall on bad news about the economy, an industry or a company.
o Certain derivatives could produce disproportionate gains or losses.
================================================================================
YOUR EXPENSES
[Clip Art] Transaction expenses are charged directly to your account. Operating
expenses are paid from the fund's assets, and therefore are paid by shareholders
indirectly. Because Class C shares are new, their expenses are based on Class B
expenses.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) on purchases
as a % of purchase price 5.00% none none
Maximum deferred sales charge (load)
as a % of purchase or sale price, whichever is less none(1) 5.00% 1.00%
<CAPTION>
- ----------------------------------------------------------------------------------------
Annual operating expenses Class A Class B Class C
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fee 0.76% 0.76% 0.76%
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
Other expenses 0.31% 0.31% 0.31%
Total fund operating expenses 1.37% 2.07% 2.07%
</TABLE>
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions and that the average annual return was 5%. The example is for
comparison only, and does not represent the fund's actual expenses and returns,
either past or future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A $633 $912 $1,212 $2,064
Class B - with redemption $710 $949 $1,314 $2,221
- without redemption $210 $649 $1,114 $2,221
Class C - with redemption $310 $649 $1,114 $2,400
- without redemption $210 $649 $1,114 $2,400
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
FUND CODES
Class A
- ---------------------------
Ticker FIDAX
CUSIP 409905502
Newspaper FinIndA
SEC number 811-3999
JH fund number 70
Class B
- ---------------------------
Ticker FIDBX
CUSIP 409905601
Newspaper FinIndB
SEC number 811-3999
JH fund number 170
Class C
- ---------------------------
Ticker --
CUSIP 409905874
Newspaper --
SEC number 811-3999
JH fund number 570
9
<PAGE>
Large Cap Growth Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term capital appreciation. To pursue this goal,
the fund normally invests at least 65% of assets in stocks of
large-capitalization companies (companies in the capitalization range of the
Standard & Poor's 500 Stock Index).
The fund generally invests in 30 to 60 U.S. companies that are diversified
across sectors. The fund has tended to emphasize, or overweight, certain sectors
such as health care, technology or consumer goods. These weightings may change
in the future.
In choosing individual stocks, the managers use fundamental financial analysis
to identify companies with:
o strong cash flows
o secure market franchises
o sales growth that outpaces their industries
The management team uses various means to assess the depth and stability of
companies' senior management, including interviews and company visits. The fund
favors companies for which the managers project at least 15% annual growth for
the next two years.
The fund may invest in certain other types of equity securities such as
preferred stocks. It may also invest up to 15% of assets in foreign securities.
In addition, it may make limited use of certain derivatives (investments whose
value is based on indices, securities or currencies).
In abnormal market conditions, the fund may temporarily invest more than 35% of
assets in investment-grade short-term securities. In these and other cases, the
fund might not achieve its goal.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable dividends.
================================================================================
PORTFOLIO MANAGERS
David L. Eisenberg, CFA
- -----------------------------------
Senior vice president of adviser
Joined team in 1999
Joined adviser in 1997
Began career in 1981
Geoffrey R. Plume, CFA
- -----------------------------------
Second vice president of adviser
Joined team in 1998
Joined adviser in 1996
Began career in 1987
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. The average annual figures reflect sales charges; the
year-by-year and index figures do not, and would be lower if they did. All
figures assume dividend reinvestment. Past performance does not indicate future
results.
- --------------------------------------------------------------------------------
Class A year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
30.96% -8.34% 41.68% 6.06% 13.03% -7.50% 27.17% 20.40% 16.70% 26.42%
Best quarter: Q4 '98, 22.38% Worst quarter: Q3 '90, -18.75%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
1 year 5 year 10 year
Class A 20.12% 14.67% 14.96%
Class B - began 1/3/94 20.54% 15.23% --
Class C - began 6/1/98 -- -- --
Index 28.60% 24.05% 18.95%
Index: Standard & Poor's 500 Stock Index, an unmanaged index of 500 stocks.
10
<PAGE>
MAIN RISKS
[Clip Art] As with most growth funds, the value of your investment will go up
and down in response to stock market movements. If the fund concentrates its
investments in certain sectors or companies, its performance could be tied more
closely to those sectors or companies than to the market as a whole.
The fund's management strategy will influence performance significantly.
Large-capitalization stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on small- or
medium-capitalization stocks. Similarly, if the managers' stock selection
strategy does not perform as expected, the fund could underperform its peers or
lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o Certain derivatives could produce disproportionate gains or losses.
o Foreign investments carry additional risks, including potentially unfavorable
currency exchange rates, inadequate or inaccurate financial information and
social or political upheavals.
o In a down market, higher-risk securities and derivatives could become harder
to value or to sell at a fair price.
================================================================================
YOUR EXPENSES
[Clip Art] Transaction expenses are charged directly to your account. Operating
expenses are paid from the fund's assets, and therefore are paid by shareholders
indirectly. Because Class C shares have a short history, their expenses are
based on Class B expenses.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) on purchases
as a % of purchase price 5.00% none none
Maximum deferred sales charge (load)
as a % of purchase or sale price, whichever is less none(1) 5.00% 1.00%
<CAPTION>
- ---------------------------------------------------------------------------------------
Annual operating expenses Class A Class B Class C
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fee 0.75% 0.75% 0.75%
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
Other expenses 0.33% 0.33% 0.33%
Total fund operating expenses 1.38% 2.08% 2.08%
</TABLE>
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions and that the average annual return was 5%. The example is for
comparison only, and does not represent the fund's actual expenses and returns,
either past or future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A $633 $915 $1,217 $2,075
Class B - with redemption $711 $952 $1,319 $2,231
- without redemption $211 $652 $1,119 $2,231
Class C - with redemption $311 $652 $1,119 $2,410
- without redemption $211 $652 $1,119 $2,410
FUND CODES
Class A
- ---------------------------
Ticker JHNGX
CUSIP 409906302
Newspaper LpCpGrA
SEC number 811-4630
JH fund number 20
Class B
- ---------------------------
Ticker JHGBX
CUSIP 409906401
Newspaper LpCpGrB
SEC number 811-4630
JH fund number 120
Class C
- ---------------------------
Ticker --
CUSIP 409906849
Newspaper --
SEC number 811-4630
JH fund number 520
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
11
<PAGE>
Mid Cap Growth Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks long- term capital appreciation. To pursue this goal,
the fund normally invests at least 65% of assets in stocks of
medium-capitalization companies (companies in the capitalization range of the
Russell Midcap Growth Index).
In managing the portfolio, the manager seeks to identify promising sectors for
investment. The manager considers broad economic trends, demographic factors,
technological changes, consolidation trends and legislative initiatives.
The fund normally invests at least 75% of assets in stocks of companies in up to
five economic sectors that appear to offer the highest earnings growth
potential. Although the fund concentrates on a few sectors, it diversifies
broadly within those sectors. At times, the fund may focus on a single sector.
The fund generally invests in more than 100 companies.
In choosing individual securities, the manager conducts fundamental financial
analysis to identify companies that appear able to sustain 15% annual earnings
growth for the next three to five years. The manager looks for companies with
growth stemming from a combination of gains in market share and increasing
operating efficiency. Before investing, the manager identifies a specific
catalyst for growth, such as a new product, business reorganization or merger.
The management team generally maintains personal contact with the senior
management of the companies the fund invests in.
The fund may invest in foreign stocks. It may also make limited use of certain
derivatives (investments whose value is based on indices, securities or
currencies).
In abnormal market conditions, the fund may temporarily invest more than 25% of
assets in investment-grade short-term securities. In these and other cases, the
fund might not achieve its goal.
PORTFOLIO MANAGER
Barbara C. Friedman, CFA
- -----------------------------------
Senior vice president of adviser
Joined team in 1998
Joined adviser in 1998
Began career in 1973
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with broad-based market
indices for reference). This information may help provide an indication of the
fund's risks. The average annual figures reflect sales charges; the year-by-year
and index figures do not, and would be lower if they did. All figures assume
dividend reinvestment. Past performance does not indicate future results.
- --------------------------------------------------------------------------------
Class A year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1994 1995 1996 1997 1998
-8.76% 34.24% 29.05% 2.37% 6.53%
Best quarter: Q4 '98, 22.66% Worst quarter: Q3 '98, -21.36%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
Life of Life of
1 year 5 year Class A Class B
Class A - began 11/1/93 1.24% 10.38% 9.89% --
Class B - began 11/1/93 0.85% 10.45% -- 10.08%
Class C - began 6/1/98 -- -- -- --
Index 1 28.60% 24.05% 23.25% 23.25%
Index 2 17.86% 17.34% 17.09% 17.09%
Index 1: Standard & Poor's 500 Stock Index, an unmanaged index of 500 stocks.
Index 2: Russell Midcap Growth Index, an unmanaged index containing those stocks
from the Russell Midcap Index with a greater-than-average growth orientation.
12
<PAGE>
MAIN RISKS
[Clip Art] As with most growth funds, the value of your investment will go up
and down in response to stock market movements. Stocks of medium-capitalization
companies tend to be more volatile than those of larger companies. Similarly,
medium- capitalization stocks are generally traded in lower volumes than
large-capitalization stocks.
Because the fund concentrates on a few sectors of the market, its performance
may be more volatile than that of a fund that invests across many sectors.
The fund's management strategy will influence performance significantly.
Medium-capitalization stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on other types of stocks.
Similarly, if the industries or companies the fund invests in do not perform as
expected, or if the manager's stock selection strategy does not perform as
expected, the fund could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o In a down market, higher-risk securities and derivatives could become harder
to value or to sell at a fair price.
o Certain derivatives could produce disproportionate gains or losses.
o Foreign investments carry additional risks, including potentially unfavorable
currency exchange rates, inadequate or inaccurate financial information and
social or political upheavals.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable dividends.
================================================================================
YOUR EXPENSES
[Clip Art] Transaction expenses are charged directly to your account. Operating
expenses are paid from the fund's assets, and therefore are paid by shareholders
indirectly. Because Class C shares have a short history, their expenses are
based on Class B expenses.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) on purchases
as a % of purchase price 5.00% none none
Maximum deferred sales charge (load)
as a % of purchase or sale price, whichever is less none(1) 5.00% 1.00%
<CAPTION>
- ---------------------------------------------------------------------------------------
Annual operating expenses Class A Class B Class C
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fee 0.80% 0.80% 0.80%
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
Other expenses 0.49% 0.49% 0.49%
Total fund operating expenses 1.59% 2.29% 2.29%
</TABLE>
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions and that the average annual return was 5%. The example is for
comparison only, and does not represent the fund's actual expenses and returns,
either past or future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A $654 $ 977 $1,322 $2,295
Class B - with redemption $732 $1,015 $1,425 $2,450
- without redemption $232 $ 715 $1,225 $2,450
Class C - with redemption $332 $ 715 $1,225 $2,626
- without redemption $232 $ 715 $1,225 $2,626
FUND CODES
Class A
- ---------------------------
Ticker SPOAX
CUSIP 409906807
Newspaper MdCpGrA
SEC number 811-4630
JH fund number 39
Class B
- ---------------------------
Ticker SPOBX
CUSIP 409906880
Newspaper MdCpGrB
SEC number 811-4630
JH fund number 139
Class C
- ---------------------------
Ticker --
CUSIP 409906823
Newspaper --
SEC number 811-4630
JH fund number 539
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
13
<PAGE>
Regional Bank Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term capital appreciation with moderate income
as a secondary objective. To pursue this goal, the fund normally invests at
least 65% of assets in a portfolio of stocks of regional banks and lending
institutions, including commercial and industrial banks, savings and loan
associations and bank holding companies. These financial institutions provide
full-service banking, have primarily domestic assets and are typically based
outside of money centers, such as New York City and Chicago.
In managing the portfolio, the managers concentrate primarily on stock
selection.
In choosing individual stocks, the managers use fundamental financial analysis
to identify securities that appear comparatively undervalued. The managers look
for low price/earnings (P/E) ratios, high-quality assets and sound loan review
processes. Given the industrywide trend toward consolidation, the managers also
seek out companies that appear to be positioned for a merger. The fund's
portfolio may be concentrated in geographic regions where consolidation activity
is high. The managers generally gather firsthand information about companies
from interviews and company visits.
The fund may also invest in other U.S. and foreign financial services companies,
such as lending companies and money center banks. The fund may invest up to 5%
of net assets in stocks of companies outside the financial services sector and
up to 5% of net assets in junk bonds (those rated below BBB/Baa and their
unrated equivalents).
The fund may make limited use of certain derivatives (investments whose value is
based on indices, securities or currencies).
In abnormal market conditions, the fund may temporarily invest up to 80% of
assets in investment-grade short-term securities. In these and other cases, the
fund might not achieve its goal.
================================================================================
PORTFOLIO MANAGERS
James K. Schmidt, CFA
- -----------------------------------
Executive vice president of adviser
Joined team in 1985
Joined adviser in 1985
Began career in 1979
Thomas M. Finucane
- -----------------------------------
Vice president of adviser
Joined team in 1990
Joined adviser in 1990 Began
career in 1990
Thomas C. Goggins
- -----------------------------------
Senior vice president of adviser
Joined team in 1998
Joined adviser in 1995
Began career in 1981
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. The average annual figures reflect sales charges; the
year-by-year and index figures do not, and would be lower if they did. All
figures assume dividend reinvestment. Past performance does not indicate future
results.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Class B year-by-year total returns -- calendar years
- ----------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17.34% -20.57% 63.78% 47.37% 20.51% -0.20% 47.56% 28.43% 52.84% 0.73%
</TABLE>
Best quarter: Q1 '91, 19.45% Worst quarter: Q3 '90, -20.91%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
Life of
1 year 5 year 10 year Class A
Class A - began 1/3/92 -3.66% 23.43% -- 26.31%
Class B -4.13% 23.66% 22.95% --
Class C - began 3/1/99 -- -- -- --
Index 28.60% 24.05% 18.95% 19.50%
Index: Standard & Poor's 500 Stock Index, an unmanaged index of 500 stocks.
14
<PAGE>
MAIN RISKS
[Clip Art] As with most growth funds, the value of your investment will go up
and down in response to stock market movements. Another major factor in this
fund's performance is the economic condition of the regional banking industry.
When interest rates fall or economic conditions deteriorate, regional bank
stocks often suffer greater losses than other stocks. Rising interest rates can
cut into profits by reducing the difference between these companies' borrowing
and lending rates.
The fund's management strategy will influence performance significantly. If the
fund concentrates its investments in regions that experience economic downturns,
performance could suffer. Regional bank stocks as a group could fall out of
favor with the market, causing the fund to underperform funds that focus on
other types of stocks. Similarly, if the managers' stock selection strategy does
not perform as expected, the fund could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o Foreign investments carry additional risks, including potentially unfavorable
currency exchange rates, inadequate or inaccurate financial information and
social or political upheavals.
o In a down market, higher-risk securities and derivatives could become harder
to value or to sell at a fair price.
o Any bonds held by the fund could be downgraded in credit rating or go into
default. Bond prices generally fall when interest rates rise. Junk bond
prices can fall on bad news about the economy, an industry or a company.
o Certain derivatives could produce disproportionate gains or losses.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable dividends.
================================================================================
YOUR EXPENSES
[Clip Art] Transaction expenses are charged directly to your account. Operating
expenses are paid from the fund's assets, and therefore are paid by shareholders
indirectly. Because Class C shares have a short history, their expenses are
based on Class B expenses.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) on purchases
as a % of purchase price 5.00% none none
Maximum deferred sales charge (load)
as a % of purchase or sale price, whichever is less none(1) 5.00% 1.00%
<CAPTION>
- ---------------------------------------------------------------------------------------
Annual operating expenses Class A Class B Class C
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fee 0.75% 0.75% 0.75%
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
Other expenses 0.19% 0.19% 0.19%
Total fund operating expenses 1.24% 1.94% 1.94%
</TABLE>
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions and that the average annual return was 5%. The example is for
comparison only, and does not represent the fund's actual expenses and returns,
either past or future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A $620 $874 $1,147 $1,925
Class B - with redemption $697 $909 $1,247 $2,083
- without redemption $197 $609 $1,047 $2,083
Class C - with redemption $297 $609 $1,047 $2,264
- without redemption $197 $609 $1,047 $2,264
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
FUND CODES
Class A
- ---------------------------
Ticker FRBAX
CUSIP 409905106
Newspaper RgBkA
SEC number 811-3999
JH fund number 1
Class B
- ---------------------------
Ticker FRBFX
CUSIP 409905205
Newspaper RgBkB
SEC number 811-3999
JH fund number 101
Class C
- ---------------------------
Ticker --
CUSIP 409905866
Newspaper --
SEC number 811-3999
JH fund number 501
15
<PAGE>
Small Cap Growth Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term capital appreciation. To pursue this goal,
the fund normally invests at least 80% of assets in stocks of U.S. emerging
growth companies with market capitalizations of no more than $1 billion. The
managers look 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.
In managing the portfolio, the managers emphasize diversification by sector and
company. The fund's investments by sector, or sector weightings, generally
reflect those of the Russell 2000 Growth Index. The fund normally invests in 150
to 220 companies.
In choosing individual securities, the managers use fundamental financial
analysis to identify rapidly growing companies. The managers favor companies
that dominate their market niches or are poised to become market leaders. They
look for strong senior management teams and coherent business strategies. They
generally maintain personal contact with the senior management of the companies
the fund invests in.
The fund may invest up to 20% of assets in other types of companies and certain
other types of equity securities such as preferred stock. The fund may make
limited use of certain derivatives (investments whose value is based on indices,
securities or currencies).
In abnormal market conditions, the fund may temporarily invest more than 20% of
assets in investment-grade short-term securities. In these and other cases, the
fund might not achieve its goal.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable dividends.
================================================================================
PORTFOLIO MANAGERS
Bernice S. Behar, CFA
- -----------------------------------
Senior vice president of adviser
Joined team in 1996
Joined adviser in 1991
Began career in 1986
Laura J. Allen, CFA
- -----------------------------------
Senior vice president of adviser
Joined team in 1998
Joined adviser in 1998
Began career in 1981
Anurag Pandit, CFA
- -----------------------------------
Vice president of adviser
Joined team in 1996
Joined adviser in 1996
Began career in 1984
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with broad-based market
indices for reference). This information may help provide an indication of the
fund's risks. The average annual figures reflect sales charges; the year-by-year
and index figures do not, and would be lower if they did. All figures assume
dividend reinvestment. Past performance does not indicate future results.
- --------------------------------------------------------------------------------
Class B year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
28.85% -1.15% 58.82% 12.13% 11.82% -1.49% 42.13% 12.95% 14.45% 11.65%
Best quarter: Q4 '98, 32.73% Worst quarter: Q3 '90, -23.09%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
Life of
1 year 5 year 10 year Class A
Class A - began 8/22/91 6.75% 14.76% -- 15.46%
Class B 10.29% 15.02% 17.75% --
Class C - began 6/1/98 -- -- -- --
Index 1 -2.55% 11.87% 12.92% 14.09%
Index 2 1.23% 10.22% 11.54% 11.25%
Index 1: Russell 2000 Index, an unmanaged index of 2,000 U.S.
small-capitalization stocks.
Index 2: Russell 2000 Growth Index, an unmanaged index containing those stocks
from the Russell 2000 Index with a greater-than-average growth orientation.
16
<PAGE>
MAIN RISKS
[Clip Art] As with most growth funds, the value of your investment will go up
and down in response to stock market movements. Because the fund concentrates on
emerging growth companies, its performance may be more volatile than that of a
fund that invests primarily in larger companies.
Stocks of smaller emerging growth companies are more risky than stocks of larger
companies. Many of these companies are young and have a limited track record.
Because their businesses frequently rely on narrow product lines and niche
markets, they can suffer severely from isolated business setbacks.
The fund's management strategy will influence performance significantly.
Emerging growth stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on other types of stocks.
Similarly, if the managers' stock selection strategy does not perform as
expected, the fund could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o In a down market, small-capitalization stocks, derivatives and other
higher-risk securities could become harder to value or to sell at a fair
price.
o Certain derivatives could produce disproportionate gains or losses.
o Foreign investments carry additional risks, including potentially unfavorable
currency exchange rates, inadequate or inaccurate financial information and
social or political upheavals.
================================================================================
YOUR EXPENSES
[Clip Art] Transaction expenses are charged directly to your account. Operating
expenses are paid from the fund's assets, and therefore are paid by shareholders
indirectly. Because Class C shares have a short history, their expenses are
based on Class B expenses.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) on purchases
as a % of purchase price 5.00% none none
Maximum deferred s ales charge (load)
as a % of purchase or sale price, whichever is less none(1) 5.00% 1.00%
<CAPTION>
- ----------------------------------------------------------------------------------------
Annual operating expenses Class A Class B Class C
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fee 0.75% 0.75% 0.75%
Distribution and service (12b-1) fees 0.25% 1.00% 1.00%
Other expenses 0.36% 0.36% 0.36%
Total fund operating expenses 1.36% 2.11% 2.11%
</TABLE>
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions and that the average annual return was 5%. The example is for
comparison only, and does not represent the fund's actual expenses and returns,
either past or future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A $632 $909 $1,207 $2,053
Class B - with redemption $714 $961 $1,334 $2,250
- without redemption $214 $661 $1,134 $2,250
Class C - with redemption $314 $661 $1,134 $2,441
- without redemption $214 $661 $1,134 $2,441
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
FUND CODES
Class A
- ---------------------------
Ticker TAEMX
CUSIP 478032105
Newspaper SmCpGrA
SEC number 811-3392
JH fund number 60
Class B
- ---------------------------
Ticker TSEGX
CUSIP 478032204
Newspaper SmCpGrB
SEC number 811-3392
JH fund number 160
Class C
- ---------------------------
Ticker --
CUSIP 478032501
Newspaper --
SEC number 811-3392
JH fund number 560
17
<PAGE>
Small Cap Value Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks capital appreciation. To pursue this goal, the fund
invests at least 65% of assets in stocks of companies with market
capitalizations under $1 billion.
In managing the portfolio, the managers emphasize a value-oriented approach to
individual stock selection. With the aid of proprietary financial models, the
management team looks for U.S. and foreign companies that are selling at what
appear to be substantial discounts to their long-term value. These companies
often have identifiable catalysts for growth, such as new products, business
reorganizations or mergers.
The managers use fundamental financial analysis of individual companies to
identify those with substantial cash flows, reliable revenue streams and strong
competitive positions. The strength of companies' management teams is also a key
selection factor. The fund diversifies across industry sectors.
The fund invests primarily in stocks of U.S. companies, but may invest up to 50%
of assets in foreign securities and up to 15% of net assets in bonds that may be
rated as low as CC/Ca and their unrated equivalents. (Bonds rated below BBB/Baa
are considered junk bonds.) The fund may also invest in certain other types of
equity and debt securities, and may make limited use of certain derivatives
(investments whose value is based on indices, securities or currencies).
In abnormal market conditions, the fund may temporarily invest extensively in
investment-grade short-term securities. In these and other cases, the fund might
not achieve its goal.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable dividends.
================================================================================
PORTFOLIO MANAGERS
Timothy E. Keefe, CFA
- -----------------------------------
Senior vice president of adviser
Joined team in 1996
Joined adviser in 1996
Began career in 1987
Timothy E. Quinlisk, CFA
- -----------------------------------
Second vice president of adviser
Joined team in 1998
Joined adviser in 1998
Began career in 1985
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. The average annual figures reflect sales charges; the
year-by-year and index figures do not, and would be lower if they did. All
figures assume dividend reinvestment. Past performance does not indicate future
results.
- --------------------------------------------------------------------------------
Class A year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1994 1995 1996 1997 1998
7.81% 20.26% 12.91% 25.25% -2.10%
Best quarter: Q4 '98, 21.34% Worst quarter: Q3 '98, -21.43%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
1 year 5 year
Class A - began 1/3/94 -7.02% 11.28%
Class B - began 1/3/94 -7.57% 11.36%
Class C - began 5/1/98 -- --
Index -2.55% 11.87%
Index: Russell 2000 Index, an unmanaged index of 2,000 U.S. small-capitalization
stocks.
18
<PAGE>
MAIN RISKS
[Clip Art] As with most growth funds, the value of your investment will go up
and down in response to stock market movements. Because the fund concentrates on
small-capitalization companies, its performance may be more volatile than that
of a fund that invests primarily in larger companies.
Stocks of smaller companies are more risky than stocks of larger companies. Many
of these companies are young and have a limited track record. Because their
businesses frequently rely on narrow product lines and niche markets, they can
suffer severely from isolated business setbacks.
The fund's management strategy will influence performance significantly.
Small-capitalization stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on other types of stocks.
Similarly, if the industries or companies the fund invests in do not perform as
expected, or if the managers' stock selection strategy does not perform as
expected, the fund could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o In a down market, small-capitalization stocks, derivatives and other
higher-risk securities could become harder to value or to sell at a fair
price.
o Certain derivatives could produce disproportionate gains or losses.
o Foreign investments carry additional risks, including potentially unfavorable
currency exchange rates, inadequate or inaccurate financial information and
social or political upheavals.
o Any bonds held by the fund could be downgraded in credit rating or go into
default. Bond prices generally fall when interest rates rise. Junk bond
prices can fall on bad news about the economy, an industry or a company.
================================================================================
YOUR EXPENSES
[Clip Art] Transaction expenses are charged directly to your account. Operating
expenses are paid from the fund's assets, and therefore are paid by shareholders
indirectly. Because Class C shares have a short history, their expenses are
based on Class B expenses.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) on purchases
as a % of purchase price 5.00% none none
Maximum deferred sales charge (load)
as a % of purchase or sale price, whichever is less none(1) 5.00% 1.00%
<CAPTION>
- --------------------------------------------------------------------------------------
Annual operating expenses Class A Class B Class C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fee 0.70% 0.70% 0.70%
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
Other expenses 0.62% 0.62% 0.62%
Total fund operating expenses 1.62% 2.32% 2.32%
</TABLE>
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions and that the average annual return was 5%. The example is for
comparison only, and does not represent the fund's actual expenses and returns,
either past or future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A $657 $ 986 $1,337 $2,326
Class B - with redemption $735 $1,024 $1,440 $2,481
- without redemption $235 $ 724 $1,240 $2,481
Class C - with redemption $335 $ 724 $1,240 $2,656
- without redemption $235 $ 724 $1,240 $2,656
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
FUND CODES
Class A
- ---------------------------
Ticker SPVAX
CUSIP 409905700
Newspaper SmCpVlA
SEC number 811-3999
JH fund number 37
Class B
- ---------------------------
Ticker SPVBX
CUSIP 409905809
Newspaper SmCpVlB
SEC number 811-3999
JH fund number 137
Class C
- ---------------------------
Ticker --
CUSIP 409905882
Newspaper --
SEC number 811-3999
JH fund number 537
19
<PAGE>
Special Equities Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term capital appreciation. To pursue this goal,
the fund normally invests at least 65% of assets in stocks of emerging growth
companies and companies in situations offering unusual or one-time
opportunities. Emerging growth companies tend to have small market
capitalizations, typically less than $1 billion.
In managing the portfolio, the managers focus on stock selection and then
consider sector and geographic diversification. The portfolio typically includes
80 to 100 companies. The types of high-growth companies targeted by the fund
tend to cluster in certain sectors, such as technology.
In choosing individual securities, the management team uses fundamental
financial analysis to identify companies with strong and accelerating earnings
growth. The managers favor companies that dominate their market niches or are
poised to become market leaders. The managers look for strong senior management
teams and coherent business strategies. They generally maintain personal contact
with the senior management of the companies the fund invests in.
The fund may invest in certain other types of equity securities such as
preferred stock. It may also invest in foreign securities. In addition, the fund
may make limited use of derivatives (investments whose value is based on
indices, securities or currencies).
In abnormal market conditions, the fund may temporarily invest more than 35% of
assets in investment-grade short-term securities. In these and other cases, the
fund might not achieve its goal.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable dividends.
================================================================================
PORTFOLIO MANAGERS
Laura J. Allen, CFA
- -----------------------------------
Senior vice president of adviser
Joined team in 1998
Joined adviser in 1998
Began career in 1981
Bernice S. Behar, CFA
- -----------------------------------
Senior vice president of adviser
Joined team in 1998
Joined adviser in 1991
Began career in 1986
Anurag Pandit, CFA
- -----------------------------------
Vice president of adviser
Joined team in 1998
Joined adviser in 1996
Began career in 1984
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with broad-based market
indices for reference). This information may help provide an indication of the
fund's risks. The average annual figures reflect sales charges; the year-by-year
and index figures do not, and would be lower if they did. All figures assume
dividend reinvestment. Past performance does not indicate future results.
- --------------------------------------------------------------------------------
Class A year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
27.87% -8.70% 84.49% 30.41% 19.74% 2.02% 50.44% 3.74% 4.90% -5.32%
Best quarter: Q1 '91, 32.31% Worst quarter: Q3 '98, -26.82%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
Life of
1 year 5 year 10 year Class B
Class A -10.04% 8.48% 17.58% --
Class B - began 3/1/93 -10.63% 8.54% -- 12.09%
Class C - began 3/1/99 -- -- -- --
Index 1 -2.55% 11.87% 12.92% 12.20%
Index 2 1.23% 10.22% 11.54% 10.76%
Index 1: Russell 2000 Index, an unmanaged index of 2,000 U.S.
small-capitalization stocks.
Index 2: Russell 2000 Growth Index, an unmanaged index containing those stocks
from the Russell 2000 Index with a greater-than-average growth orientation.
20
<PAGE>
MAIN RISKS
[Clip Art] As with most growth funds, the value of your investment will go up
and down in response to stock market movements. Because the fund concentrates on
small-capitalization companies, its performance may be more volatile than that
of a fund that invests primarily in larger companies.
Stocks of small-capitalization companies are more risky than stocks of larger
companies. Many of these companies are young and have a limited track record.
Because their businesses frequently rely on narrow product lines and niche
markets, they can suffer severely from isolated business setbacks.
Special-situation companies often have histories of uneven performance, and
circumstances that appear to offer opportunities for growth do not necessarily
lead to growth.
The fund's management strategy will influence performance significantly.
Small-capitalization stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on other types of stocks.
Similarly, if the managers' stock selection strategy does not perform as
expected, the fund could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o In a down market, small-capitalization stocks, derivatives and other
higher-risk securities could become harder to value or to sell at a fair
price.
o Certain derivatives could produce disproportionate gains or losses.
o Foreign investments carry additional risks, including potentially unfavorable
currency exchange rates, inadequate or inaccurate financial information and
social or political upheavals.
================================================================================
YOUR EXPENSES
[Clip Art] Transaction expenses are charged directly to your account. Operating
expenses are paid from the fund's assets, and therefore are paid by shareholders
indirectly. Because Class C shares are new, their expenses are based on Class B
expenses.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Shareholder transaction expenses Class A Class B Class C
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) on purchases
as a % of purchase price 5.00% none none
Maximum deferred sales charge (load)
as a % of purchase or sale price, whichever is less none(1) 5.00% 1.00%
<CAPTION>
- ----------------------------------------------------------------------------------------
Annual operating expenses Class A Class B Class C
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fee 0.81% 0.81% 0.81%
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
Other expenses 0.35% 0.35% 0.35%
Total fund operating expenses 1.46% 2.16% 2.16%
</TABLE>
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions and that the average annual return was 5%. The example is for
comparison only, and does not represent the fund's actual expenses and returns,
either past or future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Class A $641 $939 $1,258 $2,159
Class B - with redemption $719 $976 $1,359 $2,315
- without redemption $219 $676 $1,159 $2,315
Class C - with redemption $319 $676 $1,159 $2,493
- without redemption $219 $676 $1,159 $2,493
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
FUND CODES
Class A
- ---------------------------
Ticker JHNSX
CUSIP 410225106
Newspaper SpclEA
SEC number 811-4079
JH fund number 18
Class B
- ---------------------------
Ticker SPQBX
CUSIP 410225205
Newspaper SpclEB
SEC number 811-4079
JH fund number 118
Class C
- ---------------------------
Ticker --
CUSIP 410225403
Newspaper --
SEC number 811-4079
JH fund number 518
21
<PAGE>
Your account
- --------------------------------------------------------------------------------
CHOOSING A SHARE CLASS
Each share class has its own cost structure, including a Rule 12b-1 plan that
allows it to pay fees for the sale and distribution of its shares. Your
financial representative can help you decide which share class is best for you.
- --------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------
o Front-end sales charges, as described at right.
o Distribution and service (12b-1) fees of 0.30% (0.25% for Small Cap Growth).
- --------------------------------------------------------------------------------
Class B
- --------------------------------------------------------------------------------
o No front-end sales charge; all your money goes to work for you right away.
o Distribution and service (12b-1) fees of 1.00%.
o A deferred sales charge, as described on following page.
o Automatic conversion to Class A shares after eight years, thus reducing
future annual expenses.
- --------------------------------------------------------------------------------
Class C
- --------------------------------------------------------------------------------
o No front-end sales charge; all your money goes to work for you right away.
o Distribution and service (12b-1) fees of 1.00%.
o A 1.00% contingent deferred sales charge on shares sold within one year of
purchase.
o No automatic conversion to Class A shares, so annual expenses continue at the
Class C level throughout the life of your investment.
For actual past expenses of each share class, see the fund-by-fund information
earlier in this prospectus.
Because 12b-1 fees are paid on an ongoing basis, Class B and Class C
shareholders could end up paying more expenses over the long term than if they
had paid a sales charge.
Special Equities Fund offers Class Y shares and Core Growth Fund and Core Value
Fund offer Class I 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
- --------------------------------------------------------------------------------
CDSC on shares
Your investment 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.
22 YOUR ACCOUNT
<PAGE>
Class B and 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) on shares you sell within a certain time after you
bought them, as described in the tables below. 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 CDSCs are as follows:
- --------------------------------------------------------------------------------
Class B deferred charges
- --------------------------------------------------------------------------------
CDSC on shares
Years after purchase 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 6th year none
- --------------------------------------------------------------------------------
Class C deferred charges
- --------------------------------------------------------------------------------
Years after purchase CDSC
1st year 1.00%
After 1st year none
For purposes of these CDSCs, 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.
- --------------------------------------------------------------------------------
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 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, or 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 accounts 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
To utilize: if you think you may be eligible for a CDSC waiver, contact your
financial representative or Signature Services, or consult the SAI (see the back
cover of this prospectus).
YOUR ACCOUNT 23
<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 into 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 eligible employees
(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 (see the back cover of this prospectus).
- --------------------------------------------------------------------------------
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. You must submit additional documentation when
opening trust, corporate or power of attorney accounts. For more information,
please contact your financial representative or call Signature Services at
1-800-225-5291.
4 Complete the appropriate parts of the account privileges 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.
24 YOUR ACCOUNT
<PAGE>
- --------------------------------------------------------------------------------
Buying shares
- --------------------------------------------------------------------------------
Opening an account Adding to an account
By check
[Clip Art] o Make out a check for o Make out a check for
the investment amount, the investment amount
payable to "John payable to "John
Hancock Signature Hancock Signature
Services, Inc." Services, Inc."
o Deliver the check and o Fill out the detachable
your completed investment slip from an
application to your account statement. If
financial no slip is available,
representative, or mail include a note
them to Signature specifying the fund
Services (address name, your share class,
below). 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 representative or
Signature Services to Signature Services to
request an exchange. request an exchange.
By wire
[Clip Art] o Deliver your completed o Instruct your bank to
application to your wire the amount of your
financial investment to:
representative, or mail First Signature Bank & Trust
it to Signature Account # 900000260
Services. Routing # 211475000
o Obtain your account Specify the fund name,
number by calling your your share class, your
financial account number and the
representative or name(s) in which the
Signature Services. account is registered.
Your bank may charge a fee
o Instruct your bank to to wire funds.
wire the amount of your
investment 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 o Verify that your bank
exchange." 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.
- -------------------------------------------
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 open or add to an account using the Monthly Automatic
Accumulation Program, see "Additional investor services."
YOUR ACCOUNT 25
<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
o Sales of any amount. a stock power
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
o Sales of up to your touch-tone phone,
$100,000. call the EASI-Line at
1-800-338-8080.
o To place your order,
call your financial
representative or
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 To verify that the
sell any amount telephone redemption
(accounts of any type). privilege is in place
on an account, or to
o Requests by phone to request the form to add
sell up to $100,000 it to an existing
(accounts with account, call Signature
telephone redemption Services.
privileges).
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
o Sales of any amount. into which you are
exchanging by calling
your financial
representative or
Signature Services.
o Call your financial
representative or
Signature Services to
request an exchange.
26 YOUR ACCOUNT
<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, unless they were previously provided
to Signature Services. 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)
You will need to obtain your signature guarantee from a member of the Signature
Guarantee Medallion Program. Most brokers and securities dealers are members of
this program. A notary public CANNOT provide a signature guarantee.
- --------------------------------------------------------------------------------
Seller Requirements for written requests
- --------------------------------------------------------------------------------
[Clip Art]
Owners of individual, joint, sole o Letter of instruction.
proprietorship, UGMA/UTMA
(custodial accounts for minors) or o On the letter, the
general partner accounts. signatures and titles of
all persons authorized to
sign for the account,
exactly as the account is
registered.
o Signature guarantee if
applicable (see above).
Owners of corporate or association o Letter of instruction.
accounts.
o Corporate resolution,
certified within the past
12 months, or a
business/organization
certification form.
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 o Letter of instruction.
accounts.
o On the letter, the
signature(s) of the
trustee(s).
o Copy of the trust document
certified within the past
12 months or a trust
certification form.
o Signature guarantee if
applicable (see above).
Joint tenancy shareholders with o Letter of instruction
rights of survivorship whose signed by surviving
co-tenants are deceased. 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, certified within
the past 12 months.
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.
- -------------------------------------------
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 27
<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). The funds use market prices in
valuing portfolio securities, but may use fair-value estimates if reliable
market prices are unavailable. The funds may trade foreign stock or other
portfolio securities on U.S. holidays and weekends, even though the funds'
shares will not be priced on those days. This may change a fund's NAV on days
when you cannot buy or sell shares.
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 Signature Services receives your
request in good order.
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. 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. Core Growth, Core Value and
Financial Industries funds typically pay income dividends annually. The other
funds do not usually pay income dividends. Most of these dividends are from
capital gains.
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
28 YOUR ACCOUNT
<PAGE>
mailed to you. However, if the check is not deliverable, your dividends will be
reinvested.
Taxability of dividends Dividends you receive from a fund, whether reinvested or
taken as cash, are generally considered taxable. Dividends from a fund's
short-term capital gains are taxable as ordinary income. Dividends from a fund's
long-term capital gains are taxable at a lower rate. Whether gains are
short-term or long-term depends on the fund's holding period. Some dividends
paid in January may be taxable as if they had been paid the previous December.
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.
Year 2000 compliance The adviser and the funds' service providers are taking
steps to address any year 2000-related computer problems. However, there is some
risk that these problems could disrupt the issuers in which the funds invest,
the funds' operations or financial markets generally.
- --------------------------------------------------------------------------------
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, Roth and Education IRAs, SIMPLE plans, SEPs, 401(k) plans
and other 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.
YOUR ACCOUNT 29
<PAGE>
Fund details
- --------------------------------------------------------------------------------
BUSINESS STRUCTURE
The diagram below shows the basic business structure used by the John Hancock
growth funds. Each fund's board of trustees oversees the fund's business
activities and retains the services of the various firms that carry out the
fund's operations.
The trustees of the Core Growth, Core Value, Financial Industries, Small Cap
Growth and Mid Cap Growth funds have the power to change these funds' respective
investment goals without shareholder approval.
Management fees The management fees paid to the investment adviser by the John
Hancock growth funds last fiscal year are as follows:
- --------------------------------------------------------------------------------
Fund % of net assets
- --------------------------------------------------------------------------------
Core Growth 0.00%
Core Value 0.00%
Financial Industries 0.76%
Large Cap Growth 0.75%
Mid Cap Growth 0.80%
Regional Bank 0.75%
Small Cap Growth 0.75%
Small Cap Value 0.09%
Special Equities 0.81%
[The following information was represented as a flow chart in the printed
material.]
-----------------
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.
Markets the funds and distributes shares
through selling brokers, financial planners
and other financial representatives.
-------------------------------------------------
------------------------------------------------------
Transfer agent
John Hancock Signature Services, Inc.
Handles shareholder services, including record-
keeping and statements, distribution of dividends,
and processing of buy and sell requests.
------------------------------------------------------
Asset
management
------------------------
Subadviser
Independent Investment
Associates, Inc.
53 State Street
Boston, MA 02109
------------------------
------------------------------------
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.
Holds the funds' assets, settles all
portfolio trades and collects most of
the valuation data required for
calculating each fund's NAV.
------------------------------------
------------------------------------
Trustees
Oversee the funds' activities.
------------------------------------
30 FUND DETAILS
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
These tables detail the performance of each fund's share classes, including
total return information showing how much an investment in the fund has
increased or decreased each year.
Core Growth Fund
The financial information presented is for periods prior to the creation of
Class A, B and C shares on July 1, 1999. The financial highlights for Class A, B
and C shares will differ due to the distribution fees.
Figures audited by Deloitte & Touche LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class I - period ended: 2/96(1) 2/97 2/98 2/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $9.29 $11.01 $14.88
Net investment income (loss)(2) 0.03 0.05 0.04 0.01
Net realized and unrealized gain (loss) on investments 0.81 2.16 4.34 3.40
Total from investment operations 0.84 2.21 4.38 3.41
Less distributions:
Dividends from net investment income (0.03) (0.04) (0.03) (0.02)
Distributions in excess of net investment income -- -- -- (0.00)(3)
Distributions from net realized gain on investments sold (0.02) (0.45) (0.48) (0.62)
Total distributions (0.05) (0.49) (0.51) (0.64)
Net asset value, end of period $9.29 $11.01 $14.88 $17.65
Total investment return at net asset value(4) (%) 9.94(5) 24.19 40.52 22.92
Total adjusted investment return at net asset value(4,6) (%) (5.63)(5) 17.40 37.95 21.89
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 549 883 4,605 7,855
Ratio of expenses to average net assets (%) 0.95(7) 0.95 0.95 0.95
Ratio of adjusted expenses to average net assets(8,9) (%) 38.57(7) 7.74 3.52 1.98
Ratio of net investment income (loss) to average net assets (%) 0.91(7) 0.49 0.34 0.06
Ratio of adjusted net investment income (loss) to average net assets(8,9) (%) (36.71)(7) (6.30) (2.23) (0.97)
Portfolio turnover rate (%) 21 142 91 54
Fee reduction per share(2) ($) 1.36 0.68 0.33 0.17
</TABLE>
(1) Began operations on October 2, 1995.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Total investment return assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation, which does not take into
consideration fee reductions by the adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
(9) Adjusted expenses as a percentage of average net assets are expected to
decrease and adjusted net income as a percentage of average net assets is
expected to increase as the net assets of the fund grow.
FUND DETAILS 31
<PAGE>
Core Value Fund
The financial information presented is for periods prior to reclassification as
Class A shares on July 1, 1999.
Figures audited by Deloitte & Touche LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 2/96(1) 2/97 2/98 2/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $9.47 $10.88 $13.93
Net investment income (loss)(2) 0.10 0.23 0.21 0.15
Net realized and unrealized gain (loss) on investments 0.96 1.77 3.33 1.23
Total from investment operations 1.06 2.00 3.54 1.38
Less distributions:
Dividends from net investment income (0.09) (0.19) (0.13) (0.18)
Distributions from net realized gain on investments sold -- (0.40) (0.36) (2.77)
Total distributions (0.09) (0.59) (0.49) (2.95)
Net asset value, end of period $9.47 $10.88 $13.93 $12.36
Total investment return at net asset value(3) (%) 12.52(4) 21.36 32.97 9.87
Total adjusted investment return at net asset value(3,5) (%) (1.18)(4) 15.92 32.02 8.94
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 682 1,323 7,747 6,685
Ratio of expenses to average net assets (%) 0.95(6) 0.95 0.95 0.95
Ratio of adjusted expenses to average net assets(7,8) (%) 34.06(6) 6.39 1.90 1.88
Ratio of net investment income (loss) to average net assets (%) 2.81(6) 2.26 1.60 1.03
Ratio of adjusted net investment income (loss) to average net assets(7,8) (%) (30.30)(6) (3.18) 0.65 0.10
Portfolio turnover rate (%) 12 66 119 61
Fee reduction per share(2) ($) 1.22 0.55 0.12 0.13
</TABLE>
(1) Began operations on October 2, 1995.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Total investment return assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation, which does not take into
consideration fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Adjusted expenses as a percentage of average net assets are expected to
decrease and adjusted net income as a percentage of average net assets is
expected to increase as the net assets of the fund grow.
32 FUND DETAILS
<PAGE>
Financial Industries Fund
Figures audited by PricewaterhouseCoopers LLP.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/96(1) 10/97 10/98
- -----------------------------------------------------------------------------------------------------------------------------------
<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 0.15
Net realized and unrealized gain (loss) on investments 2.51 3.77 0.52(3)
Total from investment operations 2.53 3.91 0.67
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 $14.80
Total investment return at net asset value(4) (%) 29.76(5) 37.19 4.66
Total adjusted investment return at net asset value(4,6) (%) 26.04(5) 36.92 --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 895 416,698 861,582
Ratio of expenses to average net assets (%) 1.20(7) 1.20 1.37
Ratio of adjusted expenses to average net assets(8) (%) 7.07(7) 1.47 --
Ratio of net investment income (loss) to average net assets (%) 0.37(7) 1.10 0.92
Ratio of adjusted net investment income (loss) to average net assets(8) (%) (5.50)(7) 0.83 --
Portfolio turnover rate (%) 31 6 30
Fee reduction per share(2) ($) 0.38 0.03 --
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/97(1) 10/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share operating performance
Net asset value, beginning of period $11.43 $14.18
Net investment income (loss)(2) 0.04 0.03
Net realized and unrealized gain (loss) on investments 2.71 0.54(3)
Total from investment operations 2.75 0.57
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 $14.70
Total investment return at net asset value(4) (%) 24.06(5) 3.95
Total adjusted investment return at net asset value(4,6) (%) 23.85(5) --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 1,308,946 2,603,021
Ratio of expenses to average net assets (%) 1.90(7) 2.07
Ratio of adjusted expenses to average net assets(8) (%) 2.17(7) --
Ratio of net investment income (loss) to average net assets (%) 0.40(7) 0.22
Ratio of adjusted net investment income (loss) to average net assets(8) (%) 0.13(7) --
Portfolio turnover rate (%) 6 30
Fee reduction per share(2) ($) 0.03 --
</TABLE>
(1) Class A and Class B shares began 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) Amount shown for a share outstanding does not correspond with aggregate net
gain (loss) on investments for the period ended October 31, 1998, due to the
timing of sales and repurchases of fund shares in relation to fluctuating
market values of the investments of the fund.
(4) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(5) Not annualized.
(6) An estimated total return calculation that does not take into consideration
fee reductions by the adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
FUND DETAILS 33
<PAGE>
Large Cap Growth Fund
Figures audited by Ernst & Young LLP.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Class A - period ended: 12/93 12/94 12/95 10/96(1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $17.32 $17.40 $15.89 $19.51
Net investment income (loss) (0.11) (0.10) (0.09)(2) (0.13)(2)
Net realized and unrealized gain (loss) on investments 2.33 (1.21) 4.40 3.90
Total from investment operations 2.22 (1.31) 4.31 3.77
Less distributions:
Distributions from net realized gain on investments sold (2.14) (0.20) (0.69) --
Net asset value, end of period $17.40 $15.89 $19.51 $23.28
Total investment return at net asset value(3) (%) 13.03 (7.50) 27.17 19.32(4)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 162,937 146,466 241,700 279,425
Ratio of expenses to average net assets (%) 1.56 1.65 1.48 1.48(5)
Ratio of net investment income (loss) to average net assets (%) (0.67) (0.64) (0.46) (0.73)(5)
Portfolio turnover rate (%) 68 52 68(6) 59
<CAPTION>
- ------------------------------------------------------------------------------------------
Class A - period ended: 10/97 10/98
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Per share operating performance
Net asset value, beginning of period $23.28 $24.37
Net investment income (loss) (0.12)(2) (0.11)(2)
Net realized and unrealized gain (loss) on investments 3.49 2.17
Total from investment operations 3.37 2.06
Less distributions:
Distributions from net realized gain on investments sold (2.28) (4.16)
Net asset value, end of period $24.37 $22.27
Total investment return at net asset value(3) (%) 16.05 9.80
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 303,067 381,591
Ratio of expenses to average net assets (%) 1.44 1.40
Ratio of net investment income (loss) to average net assets (%) (0.51) (0.50)
Portfolio turnover rate (%) 133 153(6)
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 12/94(7) 12/95 10/96(1) 10/97 10/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $17.16 $15.83 $19.25 $22.83 $23.70
Net investment income (loss)(2) (0.20) (0.26) (0.26) (0.27) (0.25)
Net realized and unrealized gain (loss) on investments (0.93) 4.37 3.84 3.42 2.09
Total from investment operations (1.13) 4.11 3.58 3.15 1.84
Less distributions:
Distributions from net realized gain on investments sold (0.20) (0.69) -- (2.28) (4.16)
Net asset value, end of period $15.83 $19.25 $22.83 $23.70 $21.38
Total investment return at net asset value(3) (%) (6.56)(4) 26.01 18.60(4) 15.33 9.04
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 3,807 15,913 25,474 36,430 217,448
Ratio of expenses to average net assets (%) 2.38(5) 2.31 2.18(5) 2.13 2.08
Ratio of net investment income (loss) to average net assets (%) (1.25)(5) (1.39) (1.42)(5) (1.20) (1.16)
Portfolio turnover rate (%) 52 68(6) 59 133 153(6)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C - period ended: 10/98(7)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Per share operating performance
Net asset value, beginning of period $21.43
Net investment income (loss)(2) (0.10)
Net realized and unrealized gain (loss) on investments 0.04
Total from investment operations (0.06)
Net asset value, end of period $21.37
Total investment return at net asset value(3) (%) (0.28)(4)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 152
Ratio of expenses to average net assets (%) 2.10(5)
Ratio of net investment income (loss) to average net assets (%) (1.14)(5)
Portfolio turnover rate (%) 153(6)
</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 and Class C shares began operations on January 3, 1994 and June 1,
1998, respectively.
34 FUND DETAILS
<PAGE>
Mid Cap Growth Fund
Figures audited by PricewaterhouseCoopers LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/94(1) 10/95 10/96 10/97 10/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $7.93 $9.32 $10.92 $11.40
Net investment income (loss)(2) (0.03) (0.07) (0.11) (0.06) (0.09)
Net realized and unrealized gain (loss) on investments (0.54) 1.46 3.34 1.00 (0.89)
Total from investment operations (0.57) 1.39 3.23 0.94 (0.98)
Less distributions:
Distributions from net realized gain on investments sold -- -- (1.63) (0.46) (1.31)
Net asset value, end of period $7.93 $9.32 $10.92 $11.40 $9.11
Total investment return at net asset value(3) (%) (6.71) 17.53 36.15 8.79 (9.40)
Total adjusted investment return at net asset value(3,4) (%) (6.83) -- -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 92,325 101,562 156,578 141,997 101,138
Ratio of expenses to average net assets (%) 1.50 1.59 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) (0.86)
Ratio of adjusted net investment (loss) to average net assets(5) (%) (0.53) -- -- -- --
Portfolio turnover rate (%) 57 155 240 317 168
Fee reduction per share ($) 0.01(2) -- -- -- --
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/94(1) 10/95 10/96 10/97 10/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $7.87 $9.19 $10.67 $11.03
Net investment income (loss)(2) (0.09) (0.13) (0.18) (0.13) (0.15)
Net realized and unrealized gain (loss) on investments (0.54) 1.45 3.29 0.95 (0.85)
Total from investment operations (0.63) 1.32 3.11 0.82 (1.00)
Less distributions:
Distributions from net realized gain on investments sold -- -- (1.63) (0.46) (1.31)
Net asset value, end of period $7.87 $9.19 $10.67 $11.03 $8.72
Total investment return at net asset value(3) (%) (7.41) 16.77 35.34 7.84 (9.97)
Total adjusted investment return at net asset value(3,4) (%) (7.53) -- -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 131,983 137,363 238,901 204,812 134,188
Ratio of expenses to average net assets (%) 2.22 2.30 2.29 2.28 2.27
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) (1.54)
Ratio of adjusted net investment (loss) to average net assets(5) (%) (1.25) -- -- -- --
Portfolio turnover rate (%) 57 155 240 317 168
Fee reduction per share ($) 0.01(2) -- -- -- --
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class C - period ended: 10/98(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Per share operating performance
Net asset value, beginning of period $9.99
Net investment income (loss)(2) (0.06)
Net realized and unrealized gain (loss) on investments (1.21)
Total from investment operations (1.27)
Net asset value, end of period $8.72
Total investment return at net asset value(3) (%) (12.71)(6)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 100
Ratio of expenses to average net assets (%) 2.29(7)
Ratio of net investment income (loss) to average net assets (%) (1.66)(7)
Portfolio turnover rate (%) 168
</TABLE>
(1) Class A and Class B shares began operations on November 1, 1993. Class C
shares began operations on June 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) 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.
(6) Not annualized.
(7) Annualized.
FUND DETAILS 35
<PAGE>
Regional Bank Fund
Figures audited by PricewaterhouseCoopers LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/94 10/95 10/96 10/97 10/98
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $21.62 $21.52 $27.14 $33.99 $48.73
Net investment income (loss)(1) 0.39 0.52 0.63 0.64 0.66
Net realized and unrealized gain (loss) on investments 0.91 5.92 7.04 15.02 1.99
Total from investment operations 1.30 6.44 7.67 15.66 2.65
Less distributions:
Dividends from net investment income (0.34) (0.48) (0.60) (0.61) (0.65)
Distributions from net realized gain on investments sold (1.06) (0.34) (0.22) (0.31) (0.39)
Total distributions (1.40) (0.82) (0.82) (0.92) (1.04)
Net asset value, end of period $21.52 $27.14 $33.99 $48.73 $50.34
Total investment return at net asset value(2) (%) 6.44 31.00 28.78 46.79 5.33
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 216,978 486,631 860,843 1,596,836 1,500,200
Ratio of expenses to average net assets (%) 1.34 1.39 1.36 1.30 1.24
Ratio of net investment income to average net assets (%) 1.78 2.23 2.13 1.55 1.23
Portfolio turnover rate (%) 13 14 8 5 5
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/94 10/95 10/96 10/97 10/98
- ------------------------------------------------------------------------------------------------------------------------------
<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)(1) 0.23 0.36 0.42 0.35 0.30
Net realized and unrealized gain (loss) on investments 0.91 5.89 7.01 14.95 1.97
Total from investment operations 1.14 6.25 7.43 15.30 2.27
Less distributions:
Dividends from net investment income (0.21) (0.32) (0.40) (0.34) (0.28)
Distributions from net realized gain on investments sold (1.06) (0.34) (0.22) (0.31) (0.39)
Total distributions (1.27) (0.66) (0.62) (0.65) (0.67)
Net asset value, end of period $21.43 $27.02 $33.83 $48.48 $50.08
Total investment return at net asset value(2) (%) 5.69 30.11 27.89 45.78 4.62
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 522,207 1,236,447 2,408,514 4,847,755 4,506,983
Ratio of expenses to average net assets (%) 2.06 2.09 2.07 2.00 1.92
Ratio of net investment income (loss) to average net assets (%) 1.07 1.53 1.42 0.84 0.56
Portfolio turnover rate (%) 13 14 8 5 5
</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.
36 FUND DETAILS
<PAGE>
Small Cap Growth Fund
Figures audited by Ernst & Young LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A(1) - period ended: 10/94 10/95(2) 10/96 10/97 10/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $6.47 $6.71 $9.02 $10.22 $12.35
Net investment income (loss)(3) (0.04) (0.07) (0.09) (0.07) (0.08)
Net realized and unrealized gain (loss) on investments 0.28 2.38 1.29 2.41 (1.34)
Total from investment operations 0.24 2.31 1.20 2.34 (1.42)
Less distributions:
Distributions from net realized gain on investments sold -- -- -- (0.21) (2.52)
Net asset value, end of period $6.71 $9.02 $10.22 $12.35 $8.41
Total investment return at net asset value(4) (%) 3.59 34.56 13.27 23.35 (14.14)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 131,053 179,481 218,497 209,384 179,700
Ratio of expenses to average net assets (%) 1.44 1.38 1.32 1.29(5) 1.36(5)
Ratio of net investment income (loss) to average net assets (%) (0.71) (0.83) (0.86) (0.57) (1.02)
Portfolio turnover rate (%) 25 23 44 96 103
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B(1) - period ended: 10/94 10/95(2) 10/96 10/97 10/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $6.33 $6.51 $8.70 $9.78 $11.72
Net investment income (loss)(3) (0.09) (0.11) (0.15) (0.14) (0.15)
Net realized and unrealized gain (loss) on investments 0.27 2.30 1.23 2.29 (1.24)
Total from investment operations 0.18 2.19 1.08 2.15 (1.39)
Less distributions:
Distributions from net realized gain on investments sold -- -- -- (0.21) (2.52)
Net asset value, end of period $6.51 $8.70 $9.78 $11.72 $7.81
Total investment return at net asset value(4) (%) 2.80 33.60 12.48 22.44 (14.80)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 283,435 393,478 451,268 472,594 361,992
Ratio of expenses to average net assets (%) 2.19 2.11 2.05 2.02(5) 2.07(5)
Ratio of net investment income (loss) to average net assets (%) (1.46) (1.55) (1.59) (1.30) (1.73)
Portfolio turnover rate (%) 25 23 44 96 103
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class C - period ended: 10/98(6)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Per share operating performance
Net asset value, beginning of period $8.96
Net investment income (loss)(3) (0.03)
Net realized and unrealized gain (loss) on investments (1.12)
Total from investment operations (1.15)
Net asset value, end of period $7.81
Total investment return at net asset value(4) (%) (12.83)(7)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 468
Ratio of expenses to average net assets (%) 2.11(5,8)
Ratio of net investment income (loss) to average net assets (%) (1.86)(8)
Portfolio turnover rate (%) 103
</TABLE>
(1) All per share amounts and net asset values have been restated to reflect the
four-for-one stock split effective May 1, 1998.
(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) Class C shares began operations on June 1, 1998.
(7) Not annualized.
(8) Annualized.
FUND DETAILS 37
<PAGE>
Small Cap Value Fund
Figures audited by Ernst & Young LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 12/94(1) 12/95 12/96 12/97 10/98(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<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)(3) 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 (1.47)
Total from investment operations 0.66 1.81 1.31 2.58 (1.45)
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 $10.82
Total investment return at net asset value(4) (%) 7.81(5) 20.26 12.91 25.25 (11.82)(5)
Total adjusted investment return at net asset value(4,6) (%) 7.30(5) 19.39 12.20 24.65 (12.33)(5)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 4,420 12,845 15,853 20,961 22,528
Ratio of expenses to average net assets (%) 0.99(7) 0.98 0.99 0.99 1.01(7)
Ratio of adjusted expenses to average net assets(8) (%) 4.98(7) 1.85 1.70 1.59 1.62(7)
Ratio of net investment income (loss) to average net assets (%) 2.10(7) 2.04 1.31 0.47 0.25(7)
Ratio of adjusted net investment income (loss) to average net assets(8) (%) (1.89)(7) 1.17 0.60 (0.13) (0.36)(7)
Portfolio turnover rate (%) 0.3 9 72 140 69
Fee reduction per share(3) ($) 0.34 0.09 0.08 0.07 0.06
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 12/94(1) 12/95 12/96 12/97 10/98(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<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)(3) 0.13 0.12 0.07 (0.03) (0.04)
Net realized and unrealized gain (loss) on investments 0.48 1.59 1.17 2.53 (1.46)
Total from investment operations 0.61 1.71 1.24 2.50 (1.50)
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 $10.71
Total investment return at net asset value(4) (%) 7.15(5) 19.11 12.14 24.41 (12.29)(5)
Total adjusted investment return at net asset value(4,6) (%) 6.64(5) 18.24 11.43 23.81 (12.80)(5)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 3,296 16,994 22,097 35,033 30,637
Ratio of expenses to average net assets (%) 1.72(7) 1.73 1.69 1.69 1.71(7)
Ratio of adjusted expenses to average net assets(8) (%) 5.71(7) 2.60 2.40 2.29 2.32(7)
Ratio of net investment income (loss) to average net assets (%) 1.53(7) 1.21 0.62 (0.24) (0.45)(7)
Ratio of adjusted net investment income (loss) to average net assets(8) (%) (2.46)(7) 0.34 (0.09) (0.84) (1.06)(7)
Portfolio turnover rate (%) 0.3 9 72 140 69
Fee reduction per share(3) ($) 0.34 0.09 0.08 0.07 0.06
</TABLE>
38 FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class C - period ended: 10/98(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Per share operating performance
Net asset value, beginning of period $13.39
Net investment income (loss)(3) (0.03)
Net realized and unrealized gain (loss) on investments (2.65)
Total from investment operations (2.68)
Net asset value, end of period $10.71
Total investment return at net asset value(4) (%) (20.01)(5)
Total adjusted investment return at net asset value(4,6) (%) (20.32)(5)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) $422
Ratio of expenses to average net assets (%) 1.71(7)
Ratio of adjusted expenses to average net assets(8) (%) 2.32(7)
Ratio of net investment income (loss) to average net assets (%) (0.54)(7)
Ratio of adjusted net investment income (loss) to average net assets(8) (%) (1.15)(7)
Portfolio turnover rate (%) 69
Fee reduction per share(3) ($) 0.04
</TABLE>
(1) Class A and Class B shares began operations on January 3, 1994. Class C
shares began operations on May 1, 1998.
(2) Effective October 31, 1998, the fiscal year end changed from December 31 to
October 31.
(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) Not annualized.
(6) An estimated total return calculation that does not take into consideration
fee reductions by the adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
FUND DETAILS 39
<PAGE>
Special Equities Fund
Figures audited by Ernst & Young LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A - period ended: 10/94 10/95 10/96 10/97 10/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $16.13 $16.11 $22.15 $24.53 $26.32
Net investment income (loss)(1) (0.21) (0.18) (0.22) (0.29) (0.27)
Net realized and unrealized gain (loss) on investments 0.19 6.22 3.06 2.08 (5.84)
Total from investment operations (0.02) 6.04 2.84 1.79 (6.11)
Less distributions:
Distributions from net realized gain on investments sold -- -- (0.46) -- --
Net asset value, end of period $16.11 $22.15 $24.53 $26.32 $20.21
Total investment return at net asset value(2) (%) (0.12) 37.49 12.96 7.30 (23.21)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 310,625 555,655 972,312 807,371 453,919
Ratio of expenses to average net assets (%) 1.62 1.48 1.42 1.43 1.41
Ratio of net investment income (loss) to average net assets (%) (1.40) (0.97) (0.89) (1.18) (1.09)
Portfolio turnover rate (%) 66 82 59 41 107
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B - period ended: 10/94 10/95 10/96 10/97 10/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $16.08 $15.97 $21.81 $23.96 $25.52
Net investment income (loss)(1) (0.30) (0.31) (0.40) (0.46) (0.45)
Net realized and unrealized gain (loss) on investments 0.19 6.15 3.01 2.02 (5.62)
Total from investment operations (0.11) 5.84 2.61 1.56 (6.07)
Less distributions:
Distributions from net realized gain on investments sold -- -- (0.46) -- --
Net asset value, end of period $15.97 $21.81 $23.96 $25.52 $19.45
Total investment return at net asset value(2) (%) (0.68) 36.57 12.09 6.51 (23.79)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 191,979 454,934 956,374 951,449 460,971
Ratio of expenses to average net assets (%) 2.25 2.20 2.16 2.19 2.16
Ratio of net investment income (loss) to average net assets (%) (2.02) (1.69) (1.65) (1.95) (1.84)
Portfolio turnover rate (%) 66 82 59 41 107
</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.
40 FUND DETAILS
<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, a discussion of the market conditions and
investment strategies that significantly affected performance, as well as the
auditors' report (in annual report only).
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains more detailed information on all aspects of the funds. The
current annual report is included in the SAI.
A current SAI has been filed with the Securities and Exchange Commission and is
incorporated by reference into (is legally a part of) this prospectus.
To request a free copy of the current annual/semiannual report or the SAI,
please contact John Hancock:
By mail:
John Hancock Signature
Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
By phone: 1-800-225-5291
By EASI-Line: 1-800-338-8080
By TDD: 1-800-544-6713
On the Internet: www.jhancock.com/funds
Or you may view or obtain these documents from the SEC:
In person: at the SEC's Public Reference Room in Washington, DC
By phone: 1-800-SEC-0330
By mail: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
On the Internet: www.sec.gov
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
101 Huntington Avenue
Boston, Massachusetts
02199-7603
(C) 1999 John Hancock Funds, Inc.
GROPN 7/99
John Hancock(R)
