HANCOCK JOHN STRATEGIC SERIES
485APOS, 2000-07-25
Previous: GE CAPITAL MORTGAGE SERVICES INC, 8-K, 2000-07-25
Next: HANCOCK JOHN STRATEGIC SERIES, 485APOS, EX-99.(B), 2000-07-25




                                                               FILE NO.  33-5186
                                                               FILE NO. 811-4651
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM N-1A
                                   ---------
                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933            (X)
                          Pre-Effective Amendment No.            ( )
                        Post-Effective Amendment No. 31          (X)
                          REGISTRATION STATEMENT UNDER
                       THE INVESTMENT COMPANY ACT OF 1940        (X)
                                Amendment No. 31                 (X)
                                   ---------
                          JOHN HANCOCK STRATEGIC SERIES
               (Exact Name of Registrant as Specified in Charter)
                             101 Huntington Avenue
                        Boston, Massachusetts 02199-7603
              (Address of Principal Executive Offices) (Zip Code)
                 Registrant's Telephone Number, (617) 375-1700
                                   ---------
                                 SUSAN S. NEWTON
                          Vice President and Secretary
                          John Hancock Advisers, Inc.
                             101 Huntington Avenue
                          Boston, Massachusetts 02199
                    (Name and Address of Agent for Service)
                                   ---------

                 APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:

It is proposed that this filing will become effective:
( )  immediately upon filing pursuant to paragraph (b) of Rule 485
( )  on (date) pursuant to paragraph (b) of Rule 485
( )  75 days after filing pursuant to paragraph (a) of Rule 485
(X)  on October 1, 2000 pursuant to paragraph (a) of Rule 485

If appropriate, check the following box:

[ ]  This post-effective amendment designates a new effective date for
     a previously filed post-effective amendment.

<PAGE>

                                                                    John Hancock
                                                                    Income Funds

                                                                      Prospectus


                                                                 October 1, 2000


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

                                                                       Bond Fund

                                                          Government Income Fund

                                                            High Yield Bond Fund

                                                    Intermediate Government Fund

                                                           Strategic Income Fund

INCPN
Draft: 7/19/00

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.


                                      [LOGO] JOHN HANCOCK FUNDS
                                             A Global Investment Management Firm
<PAGE>

Contents
--------------------------------------------------------------------------------

A fund-by-fund summary          Bond Fund                                      4
of goals, strategies, risks,
performance and expenses.       Government Income Fund                         6

                                High Yield Bond Fund                           8

                                Intermediate Government Fund                  10

                                Strategic Income Fund                         12

Policies and instructions for   Your account
opening, maintaining and        Choosing a share class                        14
closing an account in any       How sales charges are calculated              14
income fund.                    Sales charge reductions and waivers           15
                                Opening an account                            16
                                Buying shares                                 17
                                Selling shares                                18
                                Transaction policies                          20
                                Dividends and account policies                20
                                Additional investor services                  21

Further information on the      Fund details
income funds.                   Business structure                            22
                                Financial highlights                          23

                                For more information                  back cover

<PAGE>

Overview
--------------------------------------------------------------------------------

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.

JOHN HANCOCK INCOME FUNDS

These funds seek current income without sacrificing total return. Some of the
funds also invest for stability of principal. 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     are seeking a regular stream of income

o     want to diversify their portfolios

o     are seeking a mutual fund for the income portion of an asset allocation
      portfolio

o     are retired or nearing retirement

Income funds may NOT be appropriate if you:

o     are investing for maximum return over a long time horizon

o     require absolute stability of your principal

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 income funds are managed by John Hancock Advisers, Inc. Founded
in 1968, John Hancock Advisers is a wholly owned subsidiary of John Hancock
Financial Services, Inc. and manages more than $30 billion in assets.



                                                                               3
<PAGE>

Bond Fund

GOAL AND STRATEGY


[Clip Art] The fund seeks to generate a high level of current income consistent
with prudent investment risk. In pursuing this goal, the fund normally invests
at least 65% of assets in a diversified portfolio of debt securities. These
include corporate bonds and debentures as well as U.S. government and agency
securities. Most of these securities are investment grade, although the fund may
invest up to 25% of assets in high yield bonds rated as low as CC/Ca and their
unrated equivalents. There is no limit on the fund's average maturity.


In managing the fund's portfolio, the managers concentrate on sector allocation,
industry allocation and securities selection: deciding which types of bonds and
industries to emphasize at a given time, and then which individual bonds to buy.
When making sector and industry allocations, the managers try to anticipate
shifts in the business cycle, using top-down analysis to determine which sectors
and industries may benefit over the next 12 months.

In choosing individual securities, the managers use bottom-up research to find
securities that appear comparatively undervalued. The managers look at bonds of
all quality levels and maturities from many different issuers, potentially
including U.S. dollar-denominated securities of foreign governments and
corporations.

The fund intends to keep its exposure to interest rate movements generally in
line with those of its peers. The fund may use certain derivatives (investments
whose value is based on indices, securities or currencies), especially in
managing its exposure to interest rate risk, although it does not intend to use
them extensively.

Under normal conditions, the fund may not invest more than 10% of assets in cash
or cash equivalents.

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.


================================================================================

PORTFOLIO MANAGERS

James K. Ho, CFA
---------------------------------------
Executive vice president of adviser
Joined fund team in 1988
Joined adviser in 1985
Began business career in 1977

Benjamin A. Matthews
---------------------------------------
Vice president of adviser
Joined fund team in 1995
Joined adviser in 1995
Began business career in 1970

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
--------------------------------------------------------------------------------
 1990    1991     1992    1993    1994    1995     1996    1997    1998    1999
 6.68%  16.59%    8.19%  11.69%  -2.74%  19.46%    4.05%   9.64%   7.50%  -1.36%

2000 total return as of June 30: xxx%
Best quarter: Q2 '95, 6.57% Worst quarter: Q1 '94, -2.71%

--------------------------------------------------------------------------------
 Average annual total returns -- for periods ending 12/31/99
--------------------------------------------------------------------------------
                                                             Life of    Life of
                             1 year    5 year     10 year    Class B    Class C
 Class A                     -5.78%    6.67%      7.27%      --         --
 Class B - began 11/23/93    -6.67%    6.61%      --         5.14%      --
 Class C - began 10/1/98     -2.97%    --         --         --         -2.01%
 Index                       -1.95%    8.79%      8.68%      6.07%      -1.09%

Index: Lehman Brothers Corporate Bond Index, an unmanaged index of U.S.
corporate bonds and Yankee bonds.


4
<PAGE>

MAIN RISKS

[Clip Art] The major factors in this fund's performance are interest rates and
credit risk. When interest rates rise, bond prices generally fall. Generally, an
increase in the fund's average maturity will make it more sensitive to interest
rate risk.


The fund could lose money if any bonds it owns are downgraded in credit rating
or go into default. In general, high yield bonds (also known as "junk bonds")
have higher credit risks. If certain sectors or investments do not perform as
the fund expects, it 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     Junk bonds and foreign securities may make the fund more sensitive to
      market or economic shifts in the U.S. and abroad.

o     If interest rate movements cause the fund's mortgage-related and callable
      securities to be paid off substantially earlier or later than expected,
      the fund's share price or yield could be hurt.

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 losses.


Any U.S. government guarantees on portfolio securities do not apply to these
securities' market value or current yield, or to fund shares.

The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.

================================================================================


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.

--------------------------------------------------------------------------------
 Shareholder transaction expenses(1)          Class A      Class B      Class C
--------------------------------------------------------------------------------
 Maximum sales charge (load) on purchases
 as a % of purchase price                     4.50%        none         1.00%
 Maximum deferred sales charge (load)
 as a % of purchase or sale price,
 whichever is less                            none(2)      5.00%        1.00%

--------------------------------------------------------------------------------
 Annual operating expenses                    Class A      Class B      Class C
--------------------------------------------------------------------------------
 Management fee                               0.50%        0.50%        0.50%
 Distribution and service (12b-1) fees        0.30%        1.00%        1.00%
 Other expenses                               0.27%        0.27%        0.27%
 Total fund operating expenses                1.07%        1.77%        1.77%

 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                         $554         $775         $1,014       $1,697
 Class B - with redemption       $680         $857         $1,159       $1,899
         - without redemption    $180         $557         $  959       $1,899
 Class C - with redemption       $377         $652         $1,050       $2,163
         - without redemption    $278         $652         $1,050       $2,163

(1)   A $4.00 fee may be charged for wire redemptions.

(2)   Except for investments of $1 million or more; see "How sales charges are
      calculated."


FUND CODES

Class A
---------------------------------------
Ticker            JHNBX
CUSIP             410223101
Newspaper         BondA
SEC number        811-2402
JH fund number    21

Class B
---------------------------------------
Ticker            JHBBX
CUSIP             410223309
Newspaper         BondB
SEC number        811-2402
JH fund number    121

Class C
---------------------------------------
Ticker            JHCBX
CUSIP             410223200
Newspaper         --
SEC number        811-2402
JH fund number    521


                                                                               5
<PAGE>

Government Income Fund

GOAL AND STRATEGY

[Clip Art] The fund seeks a high level of current income consistent with
preservation of capital. Maintaining a stable share price is a secondary goal.
In pursuing these goals, the fund normally invests at least 80% of assets in
U.S. government and agency securities. There is no limit on the fund's average
maturity.

The fund may invest in higher-risk securities, including dollar-denominated
foreign government securities and asset-backed securities. It may also invest up
to 10% of assets in foreign governmental high-yield securities (junk bonds)
rated as low as B and their unrated equivalents.

In managing the fund's portfolio, the managers consider interest rate trends to
determine which types of bonds to emphasize at a given time. The fund typically
favors mortgage-related securities when it anticipates that interest rates will
be relatively stable, and favors U.S. Treasuries at other times. Because
high-yield bonds often respond to market movements differently from U.S.
government bonds, the fund may use them to manage volatility.

The fund may use certain derivatives (investments whose value is based on
indices, securities or currencies), especially in managing its exposure to
interest rate risk, although it does not intend to use them extensively.

In abnormal market conditions, the fund may temporarily invest more than 20% of
assets in high-quality 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 distributions.

================================================================================


PORTFOLIO MANAGERS

Barry H. Evans, CFA
---------------------------------------
Senior vice president of adviser
Joined fund team in 1995
Joined adviser in 1986
Began business career in 1986

Dawn Baillie
---------------------------------------
Joined fund team in 1998
Joined adviser in 1985
Began business 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 B year-by-year total returns -- calendar years
--------------------------------------------------------------------------------
 1990    1991     1992    1993    1994    1995     1996    1997    1998    1999
 6.98%  15.78%    5.30%   7.65%  -5.29%  17.71%    1.29%   8.67%   7.96%  -3.15%

2000 total return as of June 30: xxx%
Best quarter: Q3 '91, 6.57% Worst quarter: Q1 '94, -3.52%

--------------------------------------------------------------------------------
 Average annual total returns -- for periods ending 12/31/99
--------------------------------------------------------------------------------
                                                                         Life of
                                 1 year        5 year       10 year      Class A
 Class A - began 9/30/94         -6.82%        6.05%        --           5.75%
 Class B                         -7.74%        5.96%        5.99%        --
 Class C - began 4/1/99          --            --           --           --
 Index                           -2.23%        7.44%        7.48%        6.57%

Index: Lehman Brothers Government Bond Index, an unmanaged index of U.S.
Treasury and government agency bonds.


6
<PAGE>

MAIN RISKS

[Clip Art] The major factor in this fund's performance is interest rates. When
interest rates rise, bond prices generally fall. Generally, an increase in the
fund's average maturity will make it more sensitive to interest rate risk.

A fall in worldwide demand for U.S. government securities could also lower the
prices of these securities.

The fund could lose money if any bonds it owns are downgraded in credit rating
or go into default. In general, lower-rated bonds have higher credit risks. If
certain sectors or investments don't perform as the fund expects, it 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     If interest rate movements cause the fund's mortgage-related and callable
      securities to be paid off substantially earlier or later than expected,
      the fund's share price or yield could be hurt.

o     Junk bonds and foreign securities could make the fund more sensitive to
      market or economic shifts in the U.S. and abroad.

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 losses.


Any governmental guarantees on portfolio securities do not apply to these
securities' market value or current yield, or to fund shares.

================================================================================


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.

--------------------------------------------------------------------------------
 Shareholder transaction expenses(1)          Class A      Class B      Class C
--------------------------------------------------------------------------------
 Maximum sales charge (load) on purchases
 as a % of purchase price                     4.50%        none         1.00%
 Maximum deferred sales charge (load)
 as a % of purchase or sale price,
 whichever is less                            none(2)      5.00%        1.00%

--------------------------------------------------------------------------------
 Annual operating expenses                    Class A      Class B      Class C
--------------------------------------------------------------------------------
 Management fee                               0.63%        0.63%        0.63%
 Distribution and service (12b-1) fees        0.25%        1.00%        1.00%
 Other expenses                               0.25%        0.25%        0.25%
 Total fund operating expenses                1.13%        1.88%        1.88%
 Management fee reduction (at least
 until xx/xx/xx)                              0.13%        0.13%        0.13%
 Net annual operating expenses                1.00%        1.75%        1.75%

 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                         $547         $781         $1,032       $1,752
 Class B - with redemption       $678         $878         $1,204       $1,995
         - without redemption    $178         $578         $1,004       $1,995
 Class C - with redemption       $375         $673         $1,094       $2,269
         - without redemption    $276         $673         $1,094       $2,269

(1)   A $4.00 fee may be charged for wire redemptions.

(2)   Except for investments of $1 million or more; see "How sales charges are
      calculated."


FUND CODES

Class A
---------------------------------------
Ticker            JHGIX
CUSIP             41014P854
Newspaper         GvIncA
SEC number        811-3006
JH fund number    56

Class B
---------------------------------------
Ticker            TSGIX
CUSIP             41014P847
Newspaper         GvIncB
SEC number        811-3006
JH fund number    156

Class C
---------------------------------------
Ticker            --
CUSIP             41014P797
Newspaper         --
SEC number        811-3006
JH fund number    556


                                                                               7
<PAGE>

High Yield Bond Fund

GOAL AND STRATEGY


[Clip Art] The fund seeks to maximize current income without assuming undue
risk. Capital appreciation is a secondary goal. In pursuing these goals, the
fund normally invests at least 65% of assets in U.S. and foreign high yield
bonds rated BBB/Baa or lower and their unrated equivalents. The fund may invest
up to 30% of assets in high yield bonds rated CC/Ca and their unrated
equivalents. There is no limit on the fund's average maturity.


In managing the fund's portfolio, the managers concentrate on industry
allocation and securities selection: deciding which types of industries to
emphasize at a given time, and then which individual bonds to buy. The managers
use top-down analysis to determine which industries may benefit from current and
future changes in the economy.

In choosing individual securities, the managers use bottom-up research to find
securities that appear comparatively undervalued. The managers look at the
financial condition of the issuers as well as the collateralization and other
features of the securities themselves.

The managers also look at companies' financing cycles to determine which types
of securities (for example, bonds, preferred stocks or common stocks) to favor.
The fund typically invests in a broad range of industries, although it may
invest up to 40% of assets in electric utilities and telecommunications
companies.

The fund may use certain higher-risk investments, including derivatives
(investments whose value is based on indices, securities or currencies) and
restricted or illiquid securities. In addition, the fund may invest up to 20% of
net assets in U.S. and foreign 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.

================================================================================


PORTFOLIO MANAGERS

Arthur N. Calavritinos, CFA
---------------------------------------
Vice president of adviser
Joined fund team in 1995
Joined adviser in 1988
Began business career in 1986

Frederick L. Cavanaugh, Jr.
---------------------------------------
Senior vice president of adviser
Joined fund team in 1995
Joined adviser in 1986
Began business career in 1975

Janet L. Clay, CFA
---------------------------------------
Vice president of adviser
Joined fund team in 1998
Joined adviser in 1995
Began business career in 1990


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 B year-by-year total returns -- calendar years
--------------------------------------------------------------------------------
 1990    1991     1992    1993    1994    1995     1996    1997    1998    1999
-6.57%  33.84%   13.33%  21.40%  -6.06%  14.53%   15.13%  16.88% -11.88%  10.08%

2000 total return as of June 30: xxx%
Best quarter: Q1 '91, 13.37% Worst quarter: Q3 '98, -18.05%

--------------------------------------------------------------------------------
 Average annual total returns -- for periods ending 12/31/99
--------------------------------------------------------------------------------
                                                             Life of    Life of
                             1 year    5 year     10 year    Class A    Class C
 Class A - began 6/30/93     5.97%     8.22%      --         6.46%      --
 Class B                     5.18%     8.13%      9.23%      --         --
 Class C - began 5/1/98      9.10%     --         --         --         -6.27%
 Index                       2.39%     9.31%      10.72%     7.87%      0.31%

Index: Lehman Brothers High Yield Bond Index, an unmanaged index of high yield
bonds.


8
<PAGE>

MAIN RISKS

[Clip Art] The major factors in the fund's performance are interest rates and
credit risk. When interest rates rise, bond prices generally fall. Generally, an
increase in the fund's average maturity will make it more sensitive to interest
rate risk.


Credit risk depends largely on the perceived financial health of bond issuers.
In general, high yield bonds (also known as "junk bonds") have higher credit
risks. Junk bond prices can fall on bad news about the economy, an industry or a
company. Share price, yield and total return may fluctuate more than with less
aggressive bond funds.


The fund could lose money if any bonds it owns are downgraded in credit rating
or go into default. If certain industries or investments do not perform as the
fund expects, it 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 instability.


o     If interest rate movements cause the fund's callable securities to be paid
      off substantially earlier or later than expected, the fund's share price
      or yield could be hurt.

o     If the fund concentrates its investments in telecommunications or electric
      utilities, its performance could be tied more closely to those industries
      than to the market as a whole.

o     Stock investments may go down in value due to stock market movements or
      negative company or industry events.

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 losses.


The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.

================================================================================


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.

--------------------------------------------------------------------------------
 Shareholder transaction expenses(1)          Class A      Class B      Class C
--------------------------------------------------------------------------------
 Maximum sales charge (load) on purchases
 as a % of purchase price                     4.50%        none         1.00%
 Maximum deferred sales charge (load)
 as a % of purchase or sale price,
 whichever is less                            none(2)      5.00%        1.00%

--------------------------------------------------------------------------------
 Annual operating expenses                    Class A      Class B      Class C
--------------------------------------------------------------------------------
 Management fee                               0.51%        0.51%        0.51%
 Distribution and service (12b-1) fees        0.25%        1.00%        1.00%
 Other expenses                               0.22%        0.22%        0.22%
 Total fund operating expenses                0.98%        1.73%        1.73%

 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                         $545         $748         $  967       $1,597
 Class B - with redemption       $676         $845         $1,139       $1,842
         - without redemption    $176         $545         $  939       $1,842
 Class C - with redemption       $373         $639         $1,029       $2,121
         - without redemption    $274         $639         $1,029       $2,121

(1)   A $4.00 fee may be charged for wire redemptions.

(2)   Except for investments of $1 million or more; see "How sales charges are
      calculated."


FUND CODES

Class A
---------------------------------------
Ticker            JHHBX
CUSIP             41014P839
Newspaper         HiYldA
SEC number        811-3006
JH fund number    57

Class B
---------------------------------------
Ticker            TSHYX
CUSIP             41014P821
Newspaper         HiYldB
SEC number        811-3006
JH fund number    157

Class C
---------------------------------------
Ticker            JHYCX
CUSIP             41014P813
Newspaper         HiYldC
SEC number        811-3006
JH fund number    557


                                                                               9
<PAGE>

Intermediate Government Fund

GOAL AND STRATEGY

[Clip Art] The fund seeks a high level of current income consistent with
preservation of capital and maintenance of liquidity. In pursuing this goal, the
fund normally invests at least 80% of assets in U.S. government and agency
securities. Although the fund may invest in bonds of any maturity, it maintains
a dollar-weighted average maturity of between three and ten years.

In managing the fund's portfolio, the managers consider interest rate trends to
determine which types of bonds to emphasize at a given time. The managers
typically favor mortgage-related securities when they anticipate that interest
rates will be relatively stable, and favor U.S. Treasuries at other times. The
managers also invest in non-Treasury securities to enhance the fund's current
yields.

The fund may use certain derivatives (investments whose value is based on
indices or other securities), especially in managing its exposure to interest
rate risk. It may also invest up to 20% of assets in asset-backed or corporate
debt securities in the highest credit category (those rated AAA/Aaa and their
unrated equivalents).

In abnormal market conditions, the fund may temporarily invest more than 20% of
assets in high-quality 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 distributions.

================================================================================


PORTFOLIO MANAGERS

Barry H. Evans, CFA
---------------------------------------
Senior vice president of adviser
Joined fund team in 1995
Joined adviser in 1986
Began business career in 1986

Dawn Baillie
---------------------------------------
Joined fund team in 1998
Joined adviser in 1985
Began business 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 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
--------------------------------------------------------------------------------
                  1992    1993    1994    1995     1996    1997    1998    1999
                  6.56%   3.95%   1.07%  10.27%    3.32%   8.79%   8.58%  -1.06%

2000 total return as of June 30: xxx%
Best quarter: Q3 '98, 4.85% Worst quarter: Q1 '96, -1.35%

--------------------------------------------------------------------------------
 Average annual total returns -- for periods ending 12/31/99
--------------------------------------------------------------------------------
                                                            Life of      Life of
                                 1 year        5 year       Class A      Class B
 Class A - began 12/31/91        -4.06%        5.25%        4.72%        --
 Class B - began 12/31/91        -4.58%        5.15%        --           4.40%
 Class C - began 4/1/99          --            --           --           --
 Index 1                         -1.39%        6.63%        5.43%        5.43%
 Index 2                         -2.23%        7.44%        6.39%        6.39%

Index 1: Lipper Intermediate U.S. Government Index, an unmanaged index of
intermediate-term government bonds.

Index 2: Lehman Brothers Government Bond Index, an unmanaged index of U.S.
Treasury and government agency bonds.


10
<PAGE>

MAIN RISKS

[Clip Art] The major factor in this fund's performance is interest rates. When
interest rates rise, bond prices generally fall. Generally, an increase in the
fund's average maturity will make it more sensitive to interest rate risk.

A fall in worldwide demand for U.S. government securities could also lower the
prices of these securities.

The fund could lose money if any bonds it owns are downgraded in credit rating
or go into default. If certain sectors or investments do not perform as the fund
expects, it 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     If interest rate movements cause the fund's mortgage-related and callable
      securities to be paid off substantially earlier or later than expected,
      the fund's share price or yield could be hurt.

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 losses.


Any U.S. government guarantees on portfolio securities do not apply to these
securities' market value or current yield, or to fund shares.

================================================================================


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.

--------------------------------------------------------------------------------
 Shareholder transaction expenses(1)          Class A      Class B      Class C
--------------------------------------------------------------------------------
 Maximum sales charge (load) on purchases
 as a % of purchase price                     3.00%        none         1.00%
 Maximum deferred sales charge (load)
 as a % of purchase or sale price,
 whichever is less                            none(2)      3.00%        1.00%

--------------------------------------------------------------------------------
 Annual operating expenses                    Class A      Class B      Class C
--------------------------------------------------------------------------------
 Management fee                               0.40%        0.40%        0.40%
 Distribution and service (12b-1) fees        0.25%        1.00%        1.00%
 Other expenses                               0.37%        0.37%        0.37%
 Total fund operating expenses                1.02%        1.77%        1.77%

 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                         $401         $615         $  846       $1,510
 Class B - with redemption       $480         $757         $  959       $1,886
         - without redemption    $180         $557         $  959       $1,886
 Class C - with redemption       $377         $652         $1,050       $2,163
         - without redemption    $278         $652         $1,050       $2,163

(1)   A $4.00 fee may be charged for wire redemptions.
(2)   Except for investments of $1 million or more; see "How sales charges are
      calculated."


FUND CODES

Class A
---------------------------------------
Ticker            TAUSX
CUSIP             41014P102
Newspaper         IntGvA
SEC number        811-3006
JH fund number    55

Class B
---------------------------------------
Ticker            TSUSX
CUSIP             41014P201
Newspaper         IntGvB
SEC number        811-3006
JH fund number    155

Class C
---------------------------------------
Ticker            --
CUSIP             41014P789
Newspaper         --
SEC number        811-3006
JH fund number    555


                                                                              11
<PAGE>

Strategic Income Fund

GOAL AND STRATEGY

[Clip Art] The fund seeks a high level of current income. In pursuing this goal,
the fund invests primarily in the following types of securities:

o     foreign government and corporate debt securities from developed and
      emerging markets

o     U.S. government and agency securities


o     U.S. high yield bonds


The fund may also invest in preferred stock and other types of debt securities.

Although the fund invests in securities rated as low as CC/Ca and their unrated
equivalents, it generally intends to keep its average credit quality in the
investment-grade range. There is no limit on the fund's average maturity.

In managing the portfolio, the managers allocate assets among the three major
sectors based on analysis of economic factors such as projected international
interest rate movements, industry cycles and political trends. However, the
managers may invest up to 100% of assets in any one sector.

Within each sector, the managers look for securities that are appropriate for
the overall portfolio in terms of yield, credit quality, structure and industry
distribution. In selecting securities, relative yields and risk/reward ratios
are the primary considerations.

The fund may use certain higher-risk investments, including derivatives
(investments whose value is based on indices, securities or currencies) and
restricted or illiquid securities. In addition, the fund may invest up to 10% of
net assets in U.S. or foreign stocks.

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 distributions.

================================================================================


PORTFOLIO MANAGERS

Frederick L. Cavanaugh, Jr.
---------------------------------------
Senior vice president of adviser
Joined fund team in 1986
Joined adviser in 1986
Began business career in 1975

Arthur N. Calavritinos, CFA
---------------------------------------
Vice president of adviser
Joined fund team in 1995
Joined adviser in 1988
Began business career in 1986

Janet L. Clay, CFA
---------------------------------------
Vice president of adviser
Joined fund team in 1998
Joined adviser in 1995
Began business career in 1990

Daniel S. Janis
---------------------------------------
Second vice president of adviser
Joined fund team in 1999
Joined adviser in 1999
Began business 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 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
--------------------------------------------------------------------------------
 1990    1991     1992    1993    1994    1995     1996    1997    1998    1999
-9.83%  33.58%    7.68%  13.93%  -3.02%  18.73%   11.63%  12.67%   5.41%   3.35%

2000 total return as of June 30: xxx%
Best quarter: Q1 '91, 15.09% Worst quarter: Q3 '90, -6.68%

--------------------------------------------------------------------------------
 Average annual total returns -- for periods ending 12/31/99
--------------------------------------------------------------------------------
                                                             Life of    Life of
                             1 year    5 year     10 year    Class B    Class C
 Class A                     -1.34%    9.22%      8.34%      --         --
 Class B - began 10/4/93     -2.15%    9.19%      --         7.44%      --
 Class C - began 5/1/98       1.67%    --         --         --         2.10%
 Index                       -2.15%    7.61%      7.65%      5.38%      2.96%

Index: Lehman Brothers Government/Corporate Bond Index, an unmanaged index of
U.S. government, U.S. corporate and Yankee bonds.


12
<PAGE>

MAIN RISKS

[Clip Art] The fund's risk profile depends on its sector allocation. In general,
investors should expect fluctuations in share price, yield and total return that
are above average for bond funds.

When interest rates rise, bond prices generally fall. Generally, an increase in
the fund's average maturity will make it more sensitive to interest rate risk.

A fall in worldwide demand for U.S. government securities could also lower the
prices of these securities.


The fund could lose money if any bonds it owns are downgraded in credit rating
or go into default. In general, high yield bonds (also known as "junk bonds")
have higher credit risks, and their prices can fall on bad news about the
economy, an industry or a company. If certain allocation strategies or certain
industries or investments do not perform as the fund expects, it 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 instability. These risks are greater
      in emerging markets.


o     If interest rate movements cause the fund's callable securities to be paid
      off substantially earlier or later than expected, the fund's share price
      or yield could be hurt.

o     Stock investments may go down in value due to stock market movements or
      negative company or industry events.

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 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.

--------------------------------------------------------------------------------
 Shareholder transaction expenses(1)          Class A      Class B      Class C
--------------------------------------------------------------------------------
 Maximum sales charge (load) on purchases
 as a % of purchase price                     4.50%        none         1.00%
 Maximum deferred sales charge (load)
 as a % of purchase or sale price,
 whichever is less                            none(2)      5.00%        1.00%

--------------------------------------------------------------------------------
 Annual operating expenses                    Class A      Class B      Class C
--------------------------------------------------------------------------------
 Management fee                               0.38%        0.38%        0.38%
 Distribution and service (12b-1) fees        0.30%        1.00%        1.00%
 Other expenses                               0.21%        0.21%        0.21%
 Total fund operating expenses                0.89%        1.59%        1.59%

 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                         $537         $721         $  921       $1,497
 Class B - with redemption       $662         $802         $1,066       $1,702
         - without redemption    $162         $502         $  866       $1,702
 Class C - with redemption       $359         $597         $  957       $1,970
         - without redemption    $260         $597         $  957       $1,970

(1)   A $4.00 fee may be charged for wire redemptions.

(2)   Except for investments of $1 million or more; see "How sales charges are
      calculated."


FUND CODES

Class A
---------------------------------------
Ticker            JHFIX
CUSIP             410227102
Newspaper         StrIncA
SEC number        811-4651
JH fund number    91

Class B
---------------------------------------
Ticker            STIBX
CUSIP             410227300
Newspaper         StrIncB
SEC number        811-4651
JH fund number    191

Class C
---------------------------------------
Ticker            JSTCX
CUSIP             410227888
Newspaper         StrIncC
SEC number        811-4651
JH fund number    591


                                                                              13
<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, distribution and service of its shares. Your
financial representative can help you decide which share class is best for you.

--------------------------------------------------------------------------------
 Class A
--------------------------------------------------------------------------------

o     A front-end sales charge, as described at right.

o     Distribution and service (12b-1) fees of 0.25% (0.30% for Bond and
      Strategic Income).

--------------------------------------------------------------------------------
 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 either five years
      (Intermediate Government) or eight years (all other funds), thus reducing
      future annual expenses.

--------------------------------------------------------------------------------
 Class C
--------------------------------------------------------------------------------

o     A front-end sales charge, as described at right.


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, they may cost shareholders
more than other types of sales charges.

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.


Your broker receives a percentage of these sales charges and fees. In addition,
John Hancock Funds may pay significant compensation out of its own resources to
your broker.


Your broker or agent may charge you a fee to effect transactions in fund shares.

--------------------------------------------------------------------------------
HOW SALES CHARGES ARE CALCULATED


Class A and Class C Sales charges are as follows:


--------------------------------------------------------------------------------
 Sales charges - Intermediate Government
--------------------------------------------------------------------------------
                            As a % of       As a % of your
 Your investment            offering price  investment
 Up to $99,999              3.00%           3.09%
 $100,000 - $499,999        2.50%           2.56%
 $500,000 - $999,999        2.00%           2.04%
 $1,000,000 and over        See below

--------------------------------------------------------------------------------
 Sales charges - all other funds
--------------------------------------------------------------------------------
                            As a % of       As a % of your
 Your investment            offering price  investment
 Up to $99,999              4.50%           4.71%
 $100,000 - $249,999        3.75%           3.90%
 $250,000 - $499,999        2.75%           2.83%
 $500,000 - $999,999        2.00%           2.04%
 $1,000,000 and over        See below


--------------------------------------------------------------------------------
 Class C sales charges
--------------------------------------------------------------------------------
                            As a % of       As a % of your
 Your investment            offering price  investment
 Up to $1,000,000           1.00%           1.01%
 $1,000,000 and over        none


Investments of $1 million or more Class A and Class C shares are available with
no front-end sales charge. However, there is a contingent deferred sales charge
(CDSC) on any Class A shares sold within one year of purchase, as follows:

--------------------------------------------------------------------------------
 CDSC on $1 million+ investments - all funds
--------------------------------------------------------------------------------
                                            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 first 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.


14  YOUR ACCOUNT
<PAGE>

Class B Shares are offered at their net asset value per share, without any
initial sales charge.

Class B and Class C A CDSC may be charged if you sell Class B or Class C shares
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 Intermediate     CDSC on all
 Years after       Government shares        other fund shares
 purchase          being sold               being sold
 1st year          3.00%                    5.00%
 2nd year          2.00%                    4.00%
 3rd year          2.00%                    3.00%
 4th year          1.00%                    3.00%
 5th year          none                     2.00%
 6th year          none                     1.00%
 After 6th year    none                     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  15
<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 John Hancock 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)


Class C shares may be offered without front-end sales charges to various
individuals and institutions, including certain retirement plans.


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 a trust, corporate or power of attorney account. You must notify
      your financial representative or Signature Services if this information
      changes. For more details, 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.


16  YOUR ACCOUNT
<PAGE>

--------------------------------------------------------------------------------
 Buying shares
--------------------------------------------------------------------------------
            Opening an account            Adding to an account

By check

[Clip Art]  o Make out a check for the    o Make out a check for the investment
              investment amount,            amount payable to "John Hancock
              payable to "John Hancock      Signature Services, Inc."
              Signature Services,
              Inc."                       o Fill out the detachable investment
                                            slip from an account statement. If
            o Deliver the check and         no slip is available, include a note
              your completed                specifying the fund name, your share
              application to your           class, your account number and the
              financial                     name(s) in which the account is
              representative, or mail       registered.
              them to Signature
              Services (address           o Deliver the check and your
              below).                       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 Log on to www.jhfunds.com to process
              representative or             exchanges between funds.
              Signature Services to
              request an exchange.        o Call EASI-Line for automated service
                                            24 hours a day using your touch-tone
                                            phone at 1-800-338-8080.

                                          o Call your financial representative
                                            or Signature Services to request an
                                            exchange.


By wire

[Clip Art]  o Deliver your completed      o Instruct your bank to wire the
              application to your           amount of your investment to:
              financial                       First Signature Bank & Trust
              representative, or mail         Account # 900000260
              it to Signature                 Routing # 211475000
              Services.
                                          Specify the fund name, your share
            o Obtain your account         class, your account number and the
              number by calling your      name(s) in which the account is
              financial representative    registered. Your bank may charge a fee
              or Signature Services.      to wire funds.

            o Instruct your bank to
              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 Internet

[Clip Art]  See "By exchange" and "By     o Verify that your bank or credit
            wire."                          union is a member of the Automated
                                            Clearing House (ACH) system.

                                          o Complete the "Bank Information"
                                            section on your account application.

                                          o Log on to www.jhfunds.com to
                                            initiate purchases using your
                                            authorized bank account.


By phone

[Clip Art]  See "By exchange" and "By     o Verify that your bank or credit
            wire."                          union is a member of the Automated
                                            Clearing House (ACH) system.

                                          o Complete the "Bank Information"
                                            section on your account application.


                                          o Call EASI-Line for automated service
                                            24 hours a day using your touch-tone
                                            phone at 1-800-338-8080.


                                          o Call your financial representative
                                            or Signature Services between 8 A.M.
                                            and 4 P.M. Eastern Time on most
                                            business days.

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

--------------------------------------------------------------------------------
 Selling shares
--------------------------------------------------------------------------------
            Designed for                  To sell some or all of your shares

By letter

[Clip Art]  o Accounts of any type.       o Write a letter of instruction or
                                            complete a stock power indicating
            o Sales of any amount.          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 Internet

[Clip Art]   o Most accounts.              o Log on to www.jhfunds.com to
                                             initiate redemptions from your
             o Sales of up to $100,000.      funds.

By phone

[Clip Art]  o Most accounts.              o Call EASI-Line for automated service
                                            24 hours a day using your touch-tone
            o Sales of up to $100,000.      phone at 1-800-338-8080.

                                          o 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 Internet or
              sell any amount.              telephone redemption privilege is in
                                            place on an account, or to request
            o Requests by Internet or       the form to add it to an existing
              phone to sell up to           account, call Signature Services.
              $100,000.
                                          o Amounts of $1,000 or more will be
                                            wired on the next business day. A $4
                                            fee will be deducted from your
                                            account.

                                          o Amounts of less than $1,000 may be
                                            sent by EFT or by check. Funds from
                                            EFT transactions are generally
                                            available by the second business
                                            day. Your bank may charge a fee for
                                            this service.

By exchange


[Clip Art]  o Accounts of any type.       o Obtain a current prospectus for the
                                            fund into which you are exchanging
            o Sales of any amount.          by Internet or by calling your
                                            financial representative or
                                            Signature Services.

                                          o Log on to www.jhfunds.com to process
                                            exchanges between your funds.

                                          o Call EASI-Line for automated service
                                            24 hours a day using your touch-tone
                                            phone at 1-800-338-8080.

                                          o Call your financial representative
                                            or Signature Services to request an
                                            exchange.


By check

[Clip Art]  o Government Income,          o Request checkwriting on your account
              Intermediate Government       application.
              and Strategic Income
              only.                       o Verify that the shares to be sold
                                            were purchased more than 10 days
            o Any account with              earlier or were purchased by wire.
              checkwriting privileges.
                                          o Write a check for any amount over
            o Sales of over $100.           $100.


18  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, unless they were previously provided to Signature Services and are
still accurate. These items are shown in the table below. You may also need to
include a signature guarantee, which protects you against fraudulent orders. You
will need a signature guarantee if:

o     your address of record has changed within the past 30 days

o     you are selling more than $100,000 worth of shares

o     you are requesting payment other than by a check mailed to the address of
      record and payable to the registered owner(s)

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, or           o Letter of instruction.
UGMA/UTMA accounts (custodial accounts
for minors).                              o On the letter, the signatures 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, sole                 o Letter of instruction.
proprietorship, general partner or
association accounts.                     o Corporate business/organization
                                            resolution, certified within the
                                            past 12 months, or a John Hancock
                                            Funds 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 accounts.     o Letter of instruction.

                                          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 John
                                            Hancock Funds trust certification
                                            form.

                                          o Signature guarantee if applicable
                                            (see above).

Joint tenancy shareholders with rights    o Letter of instruction signed by
of survivorship whose co-tenants are        surviving tenant.
deceased.
                                          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, guardians   o Call 1-800-225-5291 for
and other sellers or account types not      instructions.
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 19
<PAGE>

--------------------------------------------------------------------------------
TRANSACTION POLICIES

Valuation of shares The net asset value (NAV) per share 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 fund may also value securities at fair value
if the value of these securities has been materially affected by events
occurring after the close of a foreign market. The funds may trade foreign bonds
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, accessing www.jhfunds.com 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
redemption 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. However, if the
new fund's CDSC rate is higher then the rate will increase. 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 who, 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 The funds no longer issue share certificates. Shares are
electronically recorded. Any existing certificated shares can only be sold by
returning the certificated shares 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 declare dividends daily and pay them monthly.
Capital gains, if any, are distributed annually, typically after the end of a
fund's fiscal year. Most of these funds' dividends are income dividends. Your
dividends begin accruing the day after the fund receives payment and continue
through the day your shares are actually sold.


20  YOUR ACCOUNT
<PAGE>

Dividend reinvestments Most investors have their dividends reinvested in
additional shares of the same fund and class. If you choose this option, or if
you do not indicate any choice, your dividends will be reinvested on the
dividend record date. Alternatively, you can choose to have a check for your
dividends mailed to you. However, if the check is not deliverable, your
dividends will be reinvested.

Taxability of dividends 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.



--------------------------------------------------------------------------------
ADDITIONAL INVESTOR SERVICES

Monthly Automatic Accumulation Program (MAAP) MAAP lets you set up regular
investments from your paycheck or bank account to the John Hancock fund(s) of
your choice. You determine the frequency and amount of your investments, and you
can terminate your program at any time. To establish:

o     Complete the appropriate parts of your account application.

o     If you are using MAAP to open an account, make out a check ($25 minimum)
      for your first investment amount payable to "John Hancock Signature
      Services, Inc." Deliver your check and application to your financial
      representative or Signature Services.

Systematic withdrawal plan This plan may be used for routine bill payments or
periodic withdrawals from your account. To establish:

o     Make sure you have at least $5,000 worth of shares in your account.

o     Make sure you are not planning to invest more money in this account
      (buying shares during a period when you are also selling shares of the
      same fund is not advantageous to you, because of sales charges).

o     Specify the payee(s). The payee may be yourself or any other party, and
      there is no limit to the number of payees you may have, as long as they
      are all on the same payment schedule.

o     Determine the schedule: monthly, quarterly, semi-annually, annually or in
      certain selected months.

o     Fill out the relevant part of the account application. To add a systematic
      withdrawal plan to an existing account, contact your financial
      representative or Signature Services.


Retirement plans John Hancock Funds offers a range of retirement plans,
including traditional and Roth IRAs, SIMPLE 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  21
<PAGE>

Fund details

--------------------------------------------------------------------------------
BUSINESS STRUCTURE

The diagram below shows the basic business structure used by the John Hancock
income 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 Government Income, High Yield Bond and Intermediate
Government 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 income funds last fiscal year are as follows:

--------------------------------------------------------------------------------
 Fund                                      % of net assets
--------------------------------------------------------------------------------
 Bond                                      0.50%
 Government Income                         0.50%
 High Yield Bond                           0.51%
 Intermediate Government                   0.40%
 Strategic Income                          0.38%

                                -----------------
                                  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.
             ------------------------------------------------------

                      ------------------------------------
                               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 the fund's NAV.
                      ------------------------------------

                                                                        Asset
                                                                      management

                      ------------------------------------
                                    Trustees

                         Oversee the funds' activities.
                      ------------------------------------


22  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.

Bond Fund

Figures audited by ___________________.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
 Class A - period ended:                                                     12/95             12/96           5/97(1)
--------------------------------------------------------------------------------------------------------------------------
 <S>                                                                     <C>               <C>            <C>
 Per share operating performance
 Net asset value, beginning of period                                       $13.90            $15.40         $14.90
 Net investment income (loss)                                                 1.12              1.09           0.44
 Net realized and unrealized gain (loss) on investments and financial
 futures contracts                                                            1.50             (0.50)         (0.12)
 Total from investment operations                                             2.62              0.59           0.32
 Less distributions:
    Dividends from net investment income                                     (1.12)            (1.09)         (0.44)
    Distributions from net realized gain on investments sold
    and financial futures contracts                                             --                --             --
    Total distributions                                                      (1.12)            (1.09)         (0.44)
 Net asset value, end of period                                             $15.40            $14.90         $14.78
 Total investment return at net asset value(3) (%)                           19.40              4.11           2.22(4)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                            1,535,204         1,416,116      1,361,924
 Ratio of expenses to average net assets (%)                                  1.13              1.14           1.11(5)
 Ratio of net investment income (loss) to average net assets (%)              7.58              7.32           7.38(5)
 Portfolio turnover rate (%)                                                   103(6)            123             58


<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
 Class A - period ended:                                                       5/98              5/99              5/00
---------------------------------------------------------------------------------------------------------------------------
 <S>                                                                      <C>               <C>                    <C>
 Per share operating performance
 Net asset value, beginning of period                                        $14.78            $15.25
 Net investment income (loss)                                                  1.05(2)           0.97(2)
 Net realized and unrealized gain (loss) on investments and financial
 futures contracts                                                             0.47             (0.49)
 Total from investment operations                                              1.52              0.48
 Less distributions:
    Dividends from net investment income                                      (1.05)            (0.97)
    Distributions from net realized gain on investments sold
    and financial futures contracts                                              --                --
    Total distributions                                                       (1.05)            (0.97)
 Net asset value, end of period                                              $15.25            $14.76
 Total investment return at net asset value(3) (%)                            10.54              3.11
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                             1,327,728         1,278,582
 Ratio of expenses to average net assets (%)                                   1.08              1.07
 Ratio of net investment income (loss) to average net assets (%)               6.90              6.35
 Portfolio turnover rate (%)                                                    198               228


<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
 Class B - period ended:                                                     12/95             12/96           5/97(1)
--------------------------------------------------------------------------------------------------------------------------
 <S>                                                                        <C>              <C>            <C>
 Per share operating performance
 Net asset value, beginning of period                                       $13.90            $15.40         $14.90
 Net investment income (loss)                                                 1.02              0.98           0.40
 Net realized and unrealized gain (loss) on investments and financial
 futures contracts                                                            1.50             (0.50)         (0.12)
 Total from investment operations                                             2.52              0.48           0.28
 Less distributions:
    Dividends from net investment income                                     (1.02)            (0.98)         (0.40)
    Distributions from net realized gain on investments sold
    and financial futures contracts                                             --                --             --
    Total distributions                                                      (1.02)            (0.98)         (0.40)
 Net asset value, end of period                                             $15.40            $14.90         $14.78
 Total investment return at net asset value(3) (%)                           18.66              3.38           1.93(4)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                               98,739           134,112        132,885
 Ratio of expenses to average net assets (%)                                  1.75              1.84           1.81(5)
 Ratio of net investment income (loss) to average net assets (%)              6.87              6.62           6.68(5)
 Portfolio turnover rate (%)                                                   103(6)            123             58

<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
 Class B - period ended:                                                       5/98              5/99              5/00
---------------------------------------------------------------------------------------------------------------------------
 <S>                                                                        <C>               <C>                  <C>
 Per share operating performance
 Net asset value, beginning of period                                        $14.78            $15.25
 Net investment income (loss)                                                  0.95(2)           0.86(2)
 Net realized and unrealized gain (loss) on investments and financial
 futures contracts                                                             0.47              0.49
 Total from investment operations                                              1.42              0.37
 Less distributions:
    Dividends from net investment income                                      (0.95)            (0.86)
    Distributions from net realized gain on investments sold
    and financial futures contracts                                              --                --
    Total distributions                                                       (0.95)            (0.86)
 Net asset value, end of period                                              $15.25            $14.76
 Total investment return at net asset value(3) (%)                             9.78              2.39
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                               165,983           238,591
 Ratio of expenses to average net assets (%)                                   1.78              1.77
 Ratio of net investment income (loss) to average net assets (%)               6.18              5.65
 Portfolio turnover rate (%)                                                    198               228
</TABLE>


                                                                 FUND DETAILS 23
<PAGE>

Bond Fund continued


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
 Class C - period ended:                                                                       5/99(7)         5/00
------------------------------------------------------------------------------------------------------------------------
 <S>                                                                                         <C>               <C>
 Per share operating performance
 Net asset value, beginning of period                                                        $15.61
 Net investment income (loss)(2)                                                               0.55
 Net realized and unrealized gain (loss) on investments and financial futures contracts       (0.85)
 Total from investment operations                                                             (0.30)
 Less distributions:
    Dividends from net investment income                                                      (0.55)
 Net asset value, end of period                                                              $14.76
 Total investment return at net asset value(3) (%)                                            (1.95)(4)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                                21,368
 Ratio of expenses to average net assets (%)                                                   1.77(5)
 Ratio of net investment income (loss) to average net assets (%)                               5.65(5)
 Portfolio turnover rate (%)                                                                    228
</TABLE>

(1)   Effective May 31, 1997, the fiscal year end changed from December 31 to
      May 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)   Portfolio turnover rate excludes merger activity.

(7)   Class C shares began operations on October 1, 1998.


24 FUND DETAILS
<PAGE>

Government Income Fund

Figures audited by __________________.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 Class A - period ended:                                                         10/95(1)           10/96              5/97(2)
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                           <C>                <C>               <C>
 Per share operating performance
 Net asset value, beginning of period                                            $8.75              $9.32             $9.07
 Net investment income (loss)                                                     0.72               0.65(3)           0.37(3)
 Net realized and unrealized gain (loss) on investments, options
 and financial futures contracts                                                  0.57              (0.25)            (0.14)
 Total from investment operations                                                 1.29               0.40              0.23
 Less distributions:
    Dividends from net investment income                                         (0.72)             (0.65)            (0.37)
 Net asset value, end of period                                                  $9.32              $9.07             $8.93
 Total investment return at net asset value(4,5) (%)                            (15.32)              4.49              2.57(6)
 Total adjusted investment return at net asset value(4,7) (%)                    15.28                 --                --
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                  470,569            396,323           359,758
 Ratio of expenses to average net assets(5) (%)                                   1.19               1.17              1.13(8)
 Ratio of adjusted expenses to average net assets (%)                               --                 --                --
 Ratio of net investment income (loss) to average net assets(5) (%)               7.38               7.10              7.06(8)
 Ratio of adjusted net investment income (loss) to average net assets (%)           --                 --                --
 Fee reduction per share(3) ($)                                                     --                 --                --
 Portfolio turnover rate (%)                                                       102(10)            106               129


<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
 Class A - period ended:                                                            5/98              5/99          5/00
------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                             <C>               <C>              <C>
 Per share operating performance
 Net asset value, beginning of period                                              $8.93             $9.25
 Net investment income (loss)                                                       0.62(3)           0.57(3)
 Net realized and unrealized gain (loss) on investments, options
 and financial futures contracts                                                    0.32             (0.23)
 Total from investment operations                                                   0.94              0.34
 Less distributions:
    Dividends from net investment income                                           (0.62)            (0.57)
 Net asset value, end of period                                                    $9.25             $9.02
 Total investment return at net asset value(4,5) (%)                               10.82              3.64
 Total adjusted investment return at net asset value(4,7) (%)                         --              3.59
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                    339,572           584,766
 Ratio of expenses to average net assets(5) (%)                                     1.10              1.05
 Ratio of adjusted expenses to average net assets (%)                                 --              1.10
 Ratio of net investment income (loss) to average net assets(5) (%)                 6.79              6.08
 Ratio of adjusted net investment income (loss) to average net assets (%)             --              6.03
 Fee reduction per share(3) ($)                                                       --              0.00(9)
 Portfolio turnover rate (%)                                                         106               161(10)


<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 Class B - period ended:                                                      10/95(1)              10/96           5/97(2)
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                           <C>                <C>               <C>
 Per share operating performance
 Net asset value, beginning of period                                            $8.75              $9.32             $9.08
 Net investment income (loss)                                                     0.65               0.58(3)           0.33(3)
 Net realized and unrealized gain (loss) on investments, options
 and financial futures contracts                                                  0.57              (0.24)            (0.15)
 Total from investment operations                                                 1.22               0.34              0.18
 Less distributions:
    Dividends from net investment income                                         (0.65)             (0.58)            (0.33)
    Distributions from net realized gain on investments sold                        --                 --                --
    Total distributions                                                          (0.65)             (0.58)            (0.33)
 Net asset value, end of period                                                  $9.32              $9.08             $8.93
 Total investment return at net asset value(4,5) (%)                             14.49               3.84              2.02(6)
 Total adjusted investment return at net asset value(4,7) (%)                    14.47                 --                --
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                  226,954            178,124           153,390
 Ratio of expenses to average net assets(5) (%)                                   1.89               1.90              1.86(8)
 Ratio of adjusted expenses to average net assets (%)                               --                 --                --
 Ratio of net investment income (loss) to average net assets(5) (%)               7.26               6.37              6.32(8)
 Ratio of adjusted net investment income (loss) to average net assets (%)           --                 --                --
 Fee reduction per share(3) ($)                                                     --                 --                --
 Portfolio turnover rate (%)                                                       102(10)            106               129

<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
 Class B - period ended:                                                             5/98              5/99
-------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                              <C>               <C>
 Per share operating performance
 Net asset value, beginning of period                                               $8.93             $9.25
 Net investment income (loss)                                                        0.55(3)           0.50(3)
 Net realized and unrealized gain (loss) on investments, options
 and financial futures contracts                                                     0.32             (0.23)
 Total from investment operations                                                    0.87              0.27
 Less distributions:
    Dividends from net investment income                                            (0.55)            (0.50)
    Distributions from net realized gain on investments sold                           --                --
    Total distributions                                                             (0.55)            (0.50)
 Net asset value, end of period                                                     $9.25             $9.02
 Total investment return at net asset value(4,5) (%)                                10.01              2.92
 Total adjusted investment return at net asset value(4,7) (%)                          --              2.87
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                     117,830           197,342
 Ratio of expenses to average net assets(5) (%)                                      1.85              1.74
 Ratio of adjusted expenses to average net assets (%)                                  --              1.79
 Ratio of net investment income (loss) to average net assets(5) (%)                  6.05              5.39
 Ratio of adjusted net investment income (loss) to average net assets (%)              --              5.34
 Fee reduction per share(3) ($)                                                        --              0.00(9)
 Portfolio turnover rate (%)                                                          106               161(10)
</TABLE>


                                                                FUND DETAILS  25

<PAGE>
Government Income Fund continued


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
 Class C - period ended:                                                                  5/99(11)        5/00
--------------------------------------------------------------------------------------------------------------------
 <S>                                                                                     <C>              <C>
 Per share operating performance
 Net asset value, beginning of period                                                    $9.15
 Net investment income (loss)(3)                                                          0.07
 Net realized and unrealized gain (loss) on investments, options
 and financial futures contracts                                                         (0.13)
 Total from investment operations                                                        (0.06)
 Less distributions:
    Dividends from net investment income                                                 (0.07)
 Net asset value, end of period                                                          $9.02
 Total investment return at net asset value(4) (%)                                       (0.65)(6)
 Total adjusted investment return at net asset value(4,7) (%)                            (0.66)(6)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                                9
 Ratio of expenses to average net assets (%)                                              1.80(8)
 Ratio of adjusted expenses to average net assets (%)                                     1.85(8)
 Ratio of net investment income (loss) to average net assets (%)                          5.33(8)
 Ratio of adjusted net investment income (loss) to average net assets (%)                 5.28(8)
 Fee reduction per share(3) ($)                                                           0.00(9)
 Portfolio turnover rate (%)                                                               161(10)
</TABLE>


(1)   On December 22, 1994, John Hancock Advisers, Inc. became the investment
      adviser of the fund.

(2)   Effective May 31, 1997, the fiscal year end changed from October 31 to May
      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)   Excludes interest expense, which equalled 0.01% and 0.04% for Class A for
      the years ended October 31, 1994 and 1995, respectively, and 0.01%, 0.01%
      and 0.02% for Class B for the years ended October 31, 1993, 1994 and 1995,
      respectively.

(6)   Not annualized.


(7)   Estimated total return calculation that does not take into consideration
      management fee reductions and other expense subsidies by the adviser
      during the periods shown.

(8)   Annualized.

(9)   Less than $0.01 per share.

(10)  Portfolio turnover rate excludes merger activity.

(11)  Class C shares began operations on April 1, 1999.


26  FUND DETAILS
<PAGE>

High Yield Bond Fund

Figures audited by ____________________.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
 Class A - period ended:                                                            10/95(1)       10/96              5/97(2)
------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                               <C>            <C>               <C>
 Per share operating performance
 Net asset value, beginning of period                                               $7.33          $7.20             $7.55
 Net investment income (loss)                                                        0.72           0.76(3)           0.45
 Net realized and unrealized gain (loss) on investments,
 financial futures contracts and foreign currency tranactions                       (0.12)          0.35              0.32
 Total from investment operations                                                    0.60           1.11              0.77
 Less distributions:
    Dividends from net investment income                                            (0.73)         (0.76)            (0.45)
    Distributions from net realized gain on investments sold                           --             --                --
    Total distributions                                                             (0.73)         (0.76)            (0.45)
 Net asset value, end of period                                                     $7.20          $7.55             $7.87
 Total investment return at net asset value(4) (%)                                   8.83          16.06             10.54(5)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                      26,452         52,792            97,925
 Ratio of expenses to average net assets (%)                                         1.16           1.10              1.05(6)
 Ratio of net investment income (loss) to average net assets (%)                    10.23          10.31             10.19(6)
 Portfolio turnover rate (%)                                                           98            113                78


<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
 Class A - period ended:                                                            5/98              5/99              5/00
---------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                             <C>               <C>                  <C>
 Per share operating performance
 Net asset value, beginning of period                                              $7.87             $8.26
 Net investment income (loss)                                                       0.78(3)           0.75(3)
 Net realized and unrealized gain (loss) on investments,
 financial futures contracts and foreign currency tranactions                       0.51             (1.59)
 Total from investment operations                                                   1.29             (0.84)
 Less distributions:
    Dividends from net investment income                                           (0.78)            (0.75)
    Distributions from net realized gain on investments sold                       (0.12)            (0.10)
    Total distributions                                                            (0.90)            (0.85)
 Net asset value, end of period                                                    $8.26             $6.57
 Total investment return at net asset value(4) (%)                                 17.03             (9.85)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                    273,277           285,184
 Ratio of expenses to average net assets (%)                                        0.97              0.98
 Ratio of net investment income (loss) to average net assets (%)                    9.33             10.94
 Portfolio turnover rate (%)                                                         100                56


<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 Class B - period ended:                                                           10/95(1)       10/96              5/97(2)
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                             <C>            <C>               <C>
 Per share operating performance
 Net asset value, beginning of period                                              $7.33          $7.20             $7.55
 Net investment income (loss)                                                       0.67           0.70(3)           0.42
 Net realized and unrealized gain (loss) on investments,
 financial futures contracts and foreign currency tranactions                      (0.13)          0.35              0.32
 Total from investment operations                                                   0.54           1.05              0.74
 Less distributions:
    Dividends from net investment income                                           (0.67)         (0.70)            (0.42)
    Distributions from net realized gain on investments sold                          --             --                --
    Total distributions                                                            (0.67)         (0.70)            (0.42)
 Net asset value, end of period                                                    $7.20          $7.55             $7.87
 Total investment return at net asset value(4) (%)                                  7.97          15.24             10.06(5)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                    180,586        242,944           379,024
 Ratio of expenses to average net assets (%)                                        1.89           1.82              1.80(6)
 Ratio of net investment income (loss) to average net assets (%)                    9.42           9.49              9.45(6)
 Portfolio turnover rate (%)                                                          98            113                78


<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
 Class B - period ended:                                                           5/98              5/99              5/00
--------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                            <C>               <C>                  <C>
 Per share operating performance
 Net asset value, beginning of period                                             $7.87             $8.26
 Net investment income (loss)                                                      0.71(3)           0.70(3)
 Net realized and unrealized gain (loss) on investments,
 financial futures contracts and foreign currency tranactions                      0.51             (1.59)
 Total from investment operations                                                  1.22             (0.89)
 Less distributions:
    Dividends from net investment income                                          (0.71)            (0.70)
    Distributions from net realized gain on investments sold                      (0.12)            (0.10)
    Total distributions                                                           (0.83)            (0.80)
 Net asset value, end of period                                                   $8.26             $6.57
 Total investment return at net asset value(4) (%)                                16.16            (10.54)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                   798,170           835,392
 Ratio of expenses to average net assets (%)                                       1.72              1.73
 Ratio of net investment income (loss) to average net assets (%)                   8.62             10.20
 Portfolio turnover rate (%)                                                        100                56
</TABLE>



                                                                 FUND DETAILS 27
<PAGE>

High Yield Bond Fund continued


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 Class C - period ended:                                                                    5/98(7)         5/99         5/00
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                                       <C>            <C>             <C>
 Per share operating performance
 Net asset value, beginning of period                                                      $8.45           $8.26
 Net investment income (loss)(3)                                                            0.06            0.70
 Net realized and unrealized gain (loss) on investments, financial futures contracts
 and foreign currency transactions                                                         (0.19)          (1.59)
 Total from investment operations                                                          (0.13)          (0.89)
 Less distributions:
    Dividends from net investment income                                                   (0.06)          (0.70)
    Distributions from net realized gain on investments sold                                  --           (0.10)
    Total distributions                                                                    (0.06)          (0.80)
 Net asset value, end of period                                                            $8.26           $6.57
 Total investment return at net asset value(4) (%)                                         (1.59)(5)      (10.54)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                              3,195          28,891
 Ratio of expenses to average net assets (%)                                                1.72(6)         1.73
 Ratio of net investment income (loss) to average net assets (%)                            6.70(6)        10.20
 Portfolio turnover rate (%)                                                                 100              56
</TABLE>

(1)   On December 22, 1994, John Hancock Advisers, Inc. became the investment
      adviser of the fund.

(2)   Effective May 31, 1997, the fiscal year end changed from October 31 to May
      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)   Annualized.

(7)   Class C shares began operations on May 1, 1998.


28  FUND DETAILS
<PAGE>

Intermediate Government Fund

Figures audited by ___________________.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
 Class A - period ended:                                                             3/96              3/97           5/97(1)
---------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                               <C>               <C>            <C>
 Per share operating performance
 Net asset value, beginning of period                                               $9.79             $9.69          $9.37
 Net investment income (loss)                                                        0.62              0.67           0.11(2)
 Net realized and unrealized gain (loss) on investments and
 financial futures contracts                                                        (0.08)            (0.25)          0.09
 Total from investment operations                                                    0.54              0.42           0.20
 Less distributions
    Dividends from net investment income                                            (0.64)            (0.66)         (0.11)
    Distributions from net realized gain on investments sold                           --             (0.08)            --
    Total distributions                                                             (0.64)            (0.74)         (0.11)
 Net asset value, end of period                                                     $9.69             $9.37          $9.46
 Total investment return at net asset value(3) (%)                                   5.60              4.56           2.13(5)
 Total adjusted investment return at net asset value(3,4) (%)                        4.83              4.19           1.93(5)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                      29,024            22,043         22,755
 Ratio of expenses to average net assets (%)                                         0.75(6)           0.75           0.75(7)
 Ratio of adjusted expenses to average net assets(8) (%)                             1.45(6)           1.12           1.92(7)
 Ratio of net investment income (loss) to average net assets (%)                     6.49              6.99           7.07(7)
 Ratio of adjusted net investment income (loss) to average assets(8) (%)             5.79              6.62           5.90(7)
 Fee reduction per share(2) ($)                                                      0.07              0.04           0.02
 Portfolio turnover rate (%)                                                          423(9)            427             77


<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
 Class A - period ended:                                                            5/98              5/99            5/00
-------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                             <C>               <C>                <C>
 Per share operating performance
 Net asset value, beginning of period                                              $9.46             $9.72
 Net investment income (loss)                                                       0.62(2)           0.59(2)
 Net realized and unrealized gain (loss) on investments and
 financial futures contracts                                                        0.26             (0.17)
 Total from investment operations                                                   0.88              0.42
 Less distributions
    Dividends from net investment income                                           (0.62)            (0.59)
    Distributions from net realized gain on investments sold                          --                --
    Total distributions                                                            (0.62)            (0.59)
 Net asset value, end of period                                                    $9.72             $9.55
 Total investment return at net asset value(3) (%)                                  9.56              4.33
 Total adjusted investment return at net asset value(3,4) (%)                       9.49                --
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                    163,358           168,826
 Ratio of expenses to average net assets (%)                                        1.09              1.03
 Ratio of adjusted expenses to average net assets(8) (%)                            1.16                --
 Ratio of net investment income (loss) to average net assets (%)                    6.43              6.03
 Ratio of adjusted net investment income (loss) to average assets(8) (%)            6.36                --
 Fee reduction per share(2) ($)                                                     0.01                --
 Portfolio turnover rate (%)                                                         250(9)            267


<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 Class B - period ended:                                                             3/96              3/97           5/97(1)
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                                <C>               <C>            <C>
 Per share operating performance
 Net asset value, beginning of period                                               $9.79             $9.69          $9.37
 Net investment income (loss)                                                        0.57              0.60           0.10(2)
 Net realized and unrealized gain (loss) on investments and
 financial futures contracts                                                        (0.10)            (0.24)          0.09
 Total from investment operations                                                    0.47              0.36           0.19
 Less distributions:
    Dividends from net investment income                                            (0.57)            (0.60)         (0.10)
    Distributions from net realized gain on investments sold                           --             (0.08)            --
    Total distributions                                                             (0.57)            (0.68)         (0.10)
 Net asset value, end of period                                                     $9.69             $9.37          $9.46
 Total investment return at net asset value(3) (%)                                   4.92              3.84           2.01(5)
 Total adjusted investment return at net asset value(3,4) (%)                        4.15              3.47           1.81(5)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                       8,532             6,779          6,451
 Ratio of expenses to average net assets (%)                                         1.40(6)           1.43           1.50(7)
 Ratio of adjusted expenses to average net assets(8) (%)                             2.10(6)           1.80           2.67(7)
 Ratio of net investment income (loss) to average net assets (%)                     5.80              6.30           6.04(7)
 Ratio of adjusted net investment income (loss) to average net assets(8) (%)         5.10              5.93           4.87(7)
 Fee reduction per share(2) ($)                                                      0.07              0.04           0.02
 Portfolio turnover rate (%)                                                          423(9)            427             77


<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 Class B - period ended:                                                             5/98              5/99              5/00
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                               <C>               <C>                 <C>
 Per share operating performance
 Net asset value, beginning of period                                               $9.46             $9.72
 Net investment income (loss)                                                        0.55(2)           0.52(2)
 Net realized and unrealized gain (loss) on investments and
 financial futures contracts                                                         0.26             (0.17)
 Total from investment operations                                                    0.81              0.35
 Less distributions:
    Dividends from net investment income                                            (0.55)            (0.52)
    Distributions from net realized gain on investments sold                           --                --
    Total distributions                                                             (0.55)            (0.52)
 Net asset value, end of period                                                     $9.72             $9.55
 Total investment return at net asset value(3) (%)                                   8.74              3.57
 Total adjusted investment return at net asset value(3,4) (%)                        8.67                --
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                      19,113            44,093
 Ratio of expenses to average net assets (%)                                         1.84              1.77
 Ratio of adjusted expenses to average net assets(8) (%)                             1.91                --
 Ratio of net investment income (loss) to average net assets (%)                     5.66              5.30
 Ratio of adjusted net investment income (loss) to average net assets(8) (%)         5.59                --
 Fee reduction per share(2) ($)                                                      0.01                --
 Portfolio turnover rate (%)                                                          250(9)            267
</TABLE>



                                                                 FUND DETAILS 29
<PAGE>
Intermediate Government Fund continued


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
 Class C - period ended:                                                                    5/99(10)       5/00
----------------------------------------------------------------------------------------------------------------------
 <S>                                                                                       <C>             <C>
 Per share operating performance
 Net asset value, beginning of period                                                      $9.66
 Net investment income (loss)(2)                                                            0.07
 Net realized and unrealized gain (loss) on investments and financial futures contracts    (0.11)
 Total from investment operations                                                          (0.04)
 Less distributions:
    Dividends from net investment income                                                   (0.07)
 Net asset value, end of period                                                            $9.55
 Total investment return at net asset value(3) (%)                                         (0.38)(5)
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                                                 28
 Ratio of expenses to average net assets (%)                                                1.77(7)
 Ratio of net investment income (loss) to average net assets (%)                            5.30(7)
 Portfolio turnover rate (%)                                                                 267
</TABLE>

(1)   Effective May 31, 1997, the fiscal year end changed from March 31 to May
      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)   An estimated total return calculation that does not take into
      consideration fee reductions by the adviser during the periods shown.

(5)   Not annualized.

(6)   Beginning on December 31, 1991 (commencement of operations) through March
      31, 1995, the expenses used in the ratios represented the expenses of the
      fund plus expenses incurred indirectly from John Hancock Adjustable U.S.
      Government Fund (the "Portfolio"), the mutual fund in which the fund
      invested all of its assets. The expenses used in the ratios for the fiscal
      year ended March 31, 1996 include the expenses of the Portfolio through
      September 22, 1995.

(7)   Annualized.

(8)   Unreimbursed, without fee reduction.

(9)   Portfolio turnover rate excludes merger activity.

(10)  Class C shares began operations on April 1, 1999.


30  FUND DETAILS
<PAGE>

Strategic Income Fund

Figures audited by _____________________________.


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
 Class A - period ended:                                                 5/96              5/97              5/98
----------------------------------------------------------------------------------------------------------------------
 <S>                                                                  <C>               <C>               <C>
 Per share operating performance
 Net asset value, beginning of period                                   $7.15             $7.27             $7.54
 Net investment income (loss)                                            0.66(1)           0.64(1)           0.64(1)
 Net realized and unrealized gain (loss) on investments,
 foreign currency transactions and financial futures contracts           0.12              0.27              0.34
 Total from investment operations                                        0.78              0.91              0.98
 Less distributions:
    Dividends from net investment income                                (0.66)            (0.64)            (0.64)
    Distributions from net realized gain on investments sold               --                --             (0.04)
    Distributions from capital paid-in                                     --                --                --
    Total distributions                                                 (0.66)            (0.64)            (0.68)
 Net asset value, end of period                                         $7.27             $7.54             $7.84
 Total investment return at net asset value(2) (%)                      11.37             12.99             13.43
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                         369,127           416,916           489,375
 Ratio of expenses to average net assets (%)                             1.03              1.00              0.92
 Ratio of net investment income (loss) to average net assets (%)         9.13              8.61              8.20
 Portfolio turnover rate (%)                                               78               132               112

<CAPTION>
-------------------------------------------------------------------------------------------------------
 Class A - period ended:                                                   5/99              5/00
-------------------------------------------------------------------------------------------------------
 <S>                                                                    <C>                  <C>
 Per share operating performance
 Net asset value, beginning of period                                     $7.84
 Net investment income (loss)                                              0.59(1)
 Net realized and unrealized gain (loss) on investments,
 foreign currency transactions and financial futures contracts            (0.38)
 Total from investment operations                                          0.21
 Less distributions:
    Dividends from net investment income                                  (0.59)
    Distributions from net realized gain on investments sold                 --
    Distributions from capital paid-in                                       --
    Total distributions                                                   (0.59)
 Net asset value, end of period                                           $7.46
 Total investment return at net asset value(2) (%)                         2.77
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                           540,956
 Ratio of expenses to average net assets (%)                               0.89
 Ratio of net investment income (loss) to average net assets (%)           7.71
 Portfolio turnover rate (%)                                                 55(3)

<CAPTION>
----------------------------------------------------------------------------------------------------------------------
 Class B - period ended:                                                 5/96              5/97              5/98
----------------------------------------------------------------------------------------------------------------------
 <S>                                                                  <C>               <C>               <C>
 Per share operating performance
 Net asset value, beginning of period                                   $7.15             $7.27             $7.54
 Net investment income (loss)                                            0.61(1)           0.59              0.59(1)
 Net realized and unrealized gain (loss) on investments,
 foreign currency transactions and financial futures contracts           0.12              0.27              0.34
 Total from investment operations                                        0.73              0.86              0.93
 Less distributions:
    Dividends from net investment income                                (0.61)            (0.59)            (0.59)
    Distributions from net realized gain on investments sold               --                --             (0.04)
    Distributions from capital paid-in                                     --                --                --
    Total distributions                                                 (0.61)            (0.59)            (0.63)
 Net asset value, end of period                                         $7.27             $7.54             $7.84
 Total investment return at net asset value(2) (%)                      10.61             12.21             12.64
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                         206,751           328,487           473,428
 Ratio of expenses to average net assets (%)                             1.73              1.70              1.62
 Ratio of net investment income (loss) to average net assets (%)         8.42              7.90              7.50
 Portfolio turnover rate (%)                                               78               132               112

<CAPTION>
--------------------------------------------------------------------------------------------------------
 Class B - period ended:                                                    5/99              5/00
--------------------------------------------------------------------------------------------------------
 <S>                                                                     <C>                  <C>
 Per share operating performance
 Net asset value, beginning of period                                      $7.84
 Net investment income (loss)                                               0.53(1)
 Net realized and unrealized gain (loss) on investments,
 foreign currency transactions and financial futures contracts             (0.38)
 Total from investment operations                                           0.15
 Less distributions:
    Dividends from net investment income                                   (0.53)
    Distributions from net realized gain on investments sold                  --
    Distributions from capital paid-in                                        --
    Total distributions                                                    (0.53)
 Net asset value, end of period                                            $7.46
 Total investment return at net asset value(2) (%)                          2.06
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                            619,446
 Ratio of expenses to average net assets (%)                                1.59
 Ratio of net investment income (loss) to average net assets (%)            7.01
 Portfolio turnover rate (%)                                                  55(3)

<CAPTION>
-----------------------------------------------------------------------------------------------------------------
 Class C - period ended:                                                 5/98(6)       5/99          5/00
-----------------------------------------------------------------------------------------------------------------
 <S>                                                                    <C>          <C>             <C>
 Per share operating performance
 Net asset value, beginning of period                                   $7.87         $7.84
 Net investment income (loss)(1)                                         0.05          0.53
 Net realized and unrealized gain (loss) on investments,
 foreign currency transactions and financial futures contracts          (0.03)(7)     (0.38)
 Total from investment operations                                        0.02          0.15
 Less distributions:
    Dividends from net investment income                                (0.05)        (0.53
 Net asset value, end of period                                         $7.84         $7.46
 Total investment return at net asset value(2) (%)                       0.23(4)       2.04
 Ratios and supplemental data
 Net assets, end of period (000s omitted) ($)                             601        22,434
 Ratio of expenses to average net assets (%)                             1.62(5)       1.59
 Ratio of net investment income (loss) to average net assets (%)         7.34(5)       7.01
 Portfolio turnover rate (%)                                              112            55(3)
</TABLE>

(1)   Based on the average of the shares outstanding at the end of each month.

(2)   Assumes dividend reinvestment and does not reflect the effect of sales
      charges.

(3)   Portfolio turnover rate excludes merger activity.

(4)   Not annualized.

(5)   Annualized.

(6)   Class C shares began operations on May 1, 1998.

(7)   The amount shown for a share outstanding does not correspond with the
      aggregate net gain (loss) on investments for the period ended May 31,
      1998, due to the timing of purchases and redemptions of fund shares in
      relation to fluctuating market values of the fund's investments.



                                                                FUND DETAILS  31
<PAGE>

For more information
--------------------------------------------------------------------------------

Two documents are available that offer further information on John Hancock
income 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.jhfunds.com

Or you may view or obtain these documents from the SEC:

In person: at the SEC's Public Reference Room in Washington, DC. For access to
the Reference Room call 1-202-942-8090

By mail: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-0102
(duplicating fee required)

By electronic request:
[email protected]
(duplicating fee required)

On the Internet: www.sec.gov

[LOGO] JOHN HANCOCK FUNDS                       John Hancock Funds, Inc.
       A Global Investment Management Firm      101 Huntington Avenue
                                                Boston MA 02199-7603

                                                (C)2000 John Hancock Funds, Inc.
                                                INCPN 10/00



<PAGE>

                                                                         7/13/00

                       JOHN HANCOCK STRATEGIC INCOME FUND

                       Class A, Class B and Class C Shares
                       Statement of Additional Information


                                 October 1, 2000


This Statement of Additional Information provides information about John Hancock
Strategic Income Fund (the "Fund") in addition to the information that is
contained in the combined Income Funds' current Prospectus (the "Prospectus").
The Fund is a diversified series portfolio of John Hancock Strategic Series (the
"Trust").

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

                      John Hancock Signature Services, Inc.
                         1 John Hancock Way, Suite 1000
                        Boston, Massachusetts 02217-1000
                                 1-800-225-5291

                                Table of Contents

                                                                            Page

Organization of the Fund                                                      2
Investment Objective and Policies                                             2
Investment Restrictions                                                      17
Those Responsible for Management                                             19
Investment Advisory and Other Services                                       25
Distribution Contracts                                                       27
Sales Compensation                                                           29
Net Asset Value                                                              31
Initial Sales Charge on Class A and Class C Shares                           31
Deferred Sales Charge on Class B and Class C Shares                          34
Special Redemptions                                                          38
Additional Services and Programs                                             38
Purchases and Redemptions Through Third Parties                              40
Description of the Fund's Shares                                             40
Tax Status                                                                   41
Calculation of Performance                                                   46
Brokerage Allocation                                                         48
Transfer Agent Services                                                      50
Custody of Portfolio                                                         50
Independent Auditors                                                         50
Appendix A-Description of Investment Risk                                   A-1
Appendix B-Description of Bond Ratings                                      B-1
Financial Statements                                                        F-1


                                       1
<PAGE>


ORGANIZATION OF THE FUND

The Fund is series of the  Trust,  an  open-end  investment  management  company
organized as a Massachusetts  business trust under the laws of The  Commonwealth
of Massachusetts. The Fund was organized in April 1986.


John Hancock Advisers, Inc. (the "Adviser") is the Fund's investment adviser.
The Adviser is an indirect wholly-owned subsidiary of John Hancock Life
Insurance Company (formerly John Hancock Mutual Life Insurance Company) (the
"Life Company"), a Massachusetts life insurance company chartered in 1862, with
national headquarters at John Hancock Place, Boston, Massachusetts. The Life
Company is wholly owned by John Hancock Financial Services, Inc., a Delaware
Corporation, organized in February, 2000.


INVESTMENT OBJECTIVE AND POLICIES

The following  information  supplements the discussion of the Fund's  investment
objective and policies discussed in the Prospectus.  Appendix B contains further
information  describing  investment  risks.  There is no assurance that the Fund
will achieve its investment  objective.  The investment objective is fundamental
and may only be change with shareholder approval.

The investment objective of the Fund is a high level of current income. The Fund
will seek to achieve its  investment  objective by investing  primarily  in: (i)
foreign  government  and  corporate  debt  securities,   (ii)  U.S.   Government
securities and (iii) lower-rated high yield high risk debt securities.

The Fund may  invest in all types of debt  securities.  The debt  securities  in
which the Fund may invest include bonds,  debentures,  notes (including variable
and floating rate  instruments),  preferred and  preference  stock,  zero coupon
bonds,   payment-in-kind   securities,    increasing   rate   note   securities,
participation interest,  multiple class pass through securities,  collateralized
mortgage   obligations,   stripped  debt   securities,   other   mortgage-backed
securities,  asset-backed securities and other derivative debt securities. Under
normal  circumstances,  the  Fund's  assets  will  be  invested  in  each of the
foregoing  three sectors.  However,  from time to time the Fund may invest up to
100% of its total  assets in any one sector.

The Fund may also invest up to 10% of net assets in U.S. and foreign common
stocks.

Lower Rated Securities. The higher yields and high income sought by the Fund are
generally  obtainable  from high  yield  risk  securities  in the  lower  rating
categories of the established rating services.  These securities are rated below
Baa by Moody's Investors  Service,  Inc.  ("Moody's") or below BBB by Standard &
Poor's  Ratings Group  ("Standard & Poor's").  The Fund may invest in securities
rated as low as Ca by Moody's or CC by  Standard  & Poor's,  which may  indicate
that the  obligations  are  speculative  to a high degree and in default.  Lower
rated  securities  are  generally  referred  to as junk  bonds.  See  Appendix B
attached to this  Statement of Additional  Information  for a description of the
characteristics of the various ratings categories.  The Fund is not obligated to
dispose of  securities  whose issuers  subsequently  are in default or which are
downgraded  below the minimum ratings noted above. The credit ratings of Moody's
and Standard & Poor's (the "Rating  Agencies"),  such as those ratings described
in this  Statement of Additional  Information,  may not be changed by the Rating
Agencies in a timely fashion to reflect  subsequent  economic events. The credit
ratings of securities do not evaluate  market risk.  The Fund may also invest in
unrated securities which, in the opinion of the Adviser, offer comparable yields
and risks to the rated securities in which the Fund may invest.

Ratings as Investment Criteria. In general, the ratings of Moody's and S&P
represent the opinions of these agencies as to the quality of the securities
which they rate. It should be emphasized however, that ratings are relative and
subjective and are not absolute standards of quality. These ratings will be used
by the Funds as initial criteria for the selection of portfolio securities.
Among the factors which will be considered are the long-term ability of the
issuer to pay principal and interest and general economic trends. Appendix B
contains further information concerning the rating of Moody's and S&P and their
significance. Subsequent to its purchase by the Fund, an issue of securities may
cease to be rated or its rating may be reduced below the minimum required for
purchase by the Fund. Neither of these events will require the sale of the
securities by the Fund.


                                       2
<PAGE>


Debt  securities  that are rated in the lower  rating  categories,  or which are
unrated,  involve greater  volatility of price and risk of loss of principal and
income. In addition,  lower ratings reflect a greater  possibility of an adverse
change in  financial  condition  affecting  the  ability  of the  issuer to make
payments of interest  and  principal.  The market  price and  liquidity of lower
rated fixed income  securities  generally  respond to  short-term  corporate and
market  developments  to a greater extent than the price and liquidity of higher
rated securities, because these developments are perceived to have a more direct
relationship  to the ability of an issuer of lower rated  securities to meet its
ongoing debt  obligations.  Although the Adviser  seeks to minimize  these risks
through   diversification,   investment   analysis  and   attention  to  current
developments  in  interest  rates  and  economic  conditions,  there  can  be no
assurance that the Adviser will be successful in limiting the Fund's exposure to
the risks  associated with lower rated  securities.  Because the Fund invests in
securities in the lower rated categories, the achievement of the Fund's goals is
more dependent on the Adviser's  ability than would be the case if the Fund were
investing in securities in the higher rated categories.

The Fund's  investments  in debt  securities  may include  increasing  rate note
securities,  zero coupon bonds and payment-in-kind bonds. Zero coupon bonds have
a  determined  interest  rate,  but payment of the  interest  is deferred  until
maturity of the bonds.  Payment- in-kind  securities pay interest in either cash
or additional  securities,  at the issuer's option,  for a specified period. The
market prices of zero coupon and payment-in-kind bonds are affected to a greater
extent by interest  rate  changes,  and thereby  tend to be more  volatile  than
securities  which pay interest  periodically  and in cash.  Increasing rate note
securities  are  typically  refinanced  by the issuers  within a short period of
time.

The market value of debt securities which carry no equity participation  usually
reflects yields  generally  available on securities of similar quality and type.
When such yields decline,  the market value of a portfolio  already  invested at
higher yields can be expected to rise if such  securities are protected  against
early call. In general,  in selecting  securities  for its  portfolio,  the Fund
intends to seek  protection  against  early  call.  Similarly,  when such yields
increase,  the market value of a portfolio  already invested at lower yields can
be expected to decline.  The Fund's  portfolio may include debt securities which
sell at substantial  discounts  from par. These  securities are low coupon bonds
which,  because of their  lower  acquisition  cost tend to sell on a yield basis
approximating current interest rates during periods of high interest rates.

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

Foreign Securities. The Fund may invest in debt obligations (which may be
denominated in the U.S. dollar or in non-U.S. currencies) issued or guaranteed
by foreign corporations, certain supranational entities (such as the World
Bank), and foreign governments (including political subdivisions having taxing
authority) or their agencies or instrumentalities. The Fund may also invest in
debt securities that are issued by U.S. corporations and denominated in non-U.S.
currencies. No more than 25% of the Fund's total assets, at the time of
purchase, will be invested in government securities of any one foreign country.


                                       3
<PAGE>


The Fund  may  also  invest  in  American  Depository  Receipts  ("ADRs").  ADRs
(sponsored and unsponsored) are receipts typically issued by an American bank or
trust company which  evidence  ownership of  underlying  securities  issued by a
foreign  corporation,  and are designed for trading in United States  securities
markets. Issuers of unsponsored ADRs are not contractually obligated to disclose
material  information in the United States, and,  therefore,  there may not be a
correlation between that information and the market value of an unsponsored ADR.

The percentage of the Fund's assets that will be allocated to foreign securities
will vary depending on the relative yields of foreign and U.S.  securities,  the
economies  of foreign  countries,  the  condition of such  countries'  financial
markets,  the interest rate climate of such  countries and the  relationship  of
such  countries'  currency to the U.S.  dollar.  These factors are judged on the
basis of fundamental  economic  criteria (e.g.,  relative  inflation  levels and
trends, growth rate forecasts, balance of payments status and economic policies)
as well as  technical  and  political  data.  The Fund may invest in any country
where the Adviser believes there is a potential to achieve the Fund's investment
objective.  Investments in securities of issuers in non-industrialized countries
generally involve more risk and may be considered highly speculative.

The value of portfolio securities denominated in foreign currencies may increase
or decrease in response  to changes in currency  exchange  rates.  The Fund will
incur costs in connection with converting between currencies.

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

If the Fund  enters into a forward  contract  requiring  it to purchase  foreign
currency,  the Fund will  segregate  cash or  liquid  securities  in a  separate
account in an amount equal to the value of the Fund's total assets  committed to
the consummation of such forward contract. Those assets will be valued at market
daily  and if the  value  of  the  assets  in  the  separate  account  declines,
additional cash or securities will be placed in the account so that the value of
the account will equal the amount of the Fund's  commitment with respect to such
contracts.

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


                                       4
<PAGE>


There is no  limitation  on the value of the Fund's assets that may be committed
to forward  contracts or on the term of a forward  contract.  In addition to the
risks described above, forward contracts are subject to the following additional
risks: (1) that a Fund's  performance  will be adversely  affected by unexpected
changes in  currency  exchange  rates;  (2) that the  counterparty  to a forward
contract will fail to perform its contractual obligations;  (3) that a Fund will
be unable to terminate or dispose of its position in a forward contract; and (4)
with respect to hedging  transactions in forward  contracts,  that there will be
imperfect  correlation  between price changes in the forward  contract and price
changes in the hedged portfolio assets.

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

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

These risks may be intensified in the case of investments in emerging markets or
countries  with limited or  developing  capital  markets.  These  countries  are
located in the Asia-Pacific region,  Eastern Europe, Latin and South America and
Africa. Security prices in these markets can be significantly more volatile than
in more developed countries,  reflecting the greater  uncertainties of investing
in less  established  markets  and  economies.  Political,  legal  and  economic
structures  in  many  of  these  emerging  market  countries  may be  undergoing
significant  evolution  and  rapid  development,  and they may lack the  social,
political,  legal  and  economic  stability  characteristic  of  more  developed
countries.  Emerging  market  countries may have failed in the past to recognize
private property rights. They may have relatively unstable governments,  present
the risk of nationalization of businesses, restrictions on foreign ownership, or
prohibitions on repatriation of assets, and may have less protection of property
rights than more developed countries. Their economies may be predominately based
on only a few industries, may be highly vulnerable to changes in local or global
trade  conditions,  and may suffer from  extreme and  volatile  debt  burdens or
inflation rates. Local securities markets may trade a small number of securities
and may be unable  to  respond  effectively  to  increases  in  trading  volume,
potentially  making prompt  liquidation  of  substantial  holdings  difficult or
impossible at times. The Fund may be required to establish  special custodial or
other  arrangements  before  making  certain  investments  in  these  countries.
Securities of issuers located in these countries may have limited  marketability
and may be subject to more abrupt or erratic price movements.

The Fund may acquire other restricted securities including securities for which
market quotations are not readily available. These securities may be sold only
in privately negotiated transactions or in public offerings with respect to
which a registration statement is in effect under the 1933 Act. Where
registration is required, the Fund may be obligated to pay all or part of the


                                       5
<PAGE>


registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell. Restricted securities will be priced at
fair market value as determined in good faith by the Fund's Trustees.

Repurchase  Agreements.  In a repurchase agreement the Fund would buy a security
for a  relatively  short period  (usually  not more than 7 days)  subject to the
obligation  to sell it back to the issuer at a fixed time and price plus accrued
interest.  The Fund will enter into repurchase agreements only with member banks
of the Federal  Reserve  System and with  "primary  dealers" in U.S.  Government
securities.  The Adviser will continuously  monitor the  creditworthiness of the
parties with whom the Fund enters into repurchase agreements.

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

Reverse Repurchase  Agreements.  The Fund may also enter into reverse repurchase
agreements  which  involve the sale of U.S.  Government  securities  held in its
portfolio to a bank with an agreement that the Fund will buy back the securities
at a fixed  future  date at a fixed  price plus an agreed  amount of  "interest"
which may be reflected in the repurchase price.  Reverse  repurchase  agreements
are  considered  to be  borrowings by the Fund.  Reverse  repurchase  agreements
involve the risk that the market value of securities  purchased by the Fund with
proceeds  of the  transaction  may  decline  below the  repurchase  price of the
securities  sold by the Fund which it is obligated to repurchase.  The Fund will
also  continue to be subject to the risk of a decline in the market value of the
securities sold under the agreements  because it will reacquire those securities
upon effecting  their  repurchase.  To minimize  various risks  associated  with
reverse repurchase  agreements,  the Fund will establish and maintain a separate
account consisting of liquid securities,  of any type or maturity,  in an amount
at least  equal to the  repurchase  prices of the  securities  (plus any accrued
interest  thereon) under such  agreements.  The Fund will not enter into reverse
repurchase agreements and other borrowings exceeding in the aggregate 33% of the
market value of its total  assets.  The Fund will enter into reverse  repurchase
agreements  only with federally  insured banks or savings and loan  associations
which are  approved in advance as being  creditworthy  by the Board of Trustees.
Under procedures  established by the Board of Trustees, the Adviser will monitor
the creditworthiness of the banks involved.

Restricted Securities. The Fund may purchase securities that are not registered
("restricted securities") under the Securities Act of 1933 ("1933 Act"),
including commercial paper issued in reliance on Section 4(2) of the 1933 act.
However, the Fund will not invest more than 15% of its net assets in illiquid
investments. If the Trustees determines, based upon a continuing review of the
trading markets for specific Section 4(2) paper or Rule 144A securities, that
they are liquid, they will not be subject to the 15% limit in illiquid
investments. The Trustees may adopt guidelines and delegate to the Adviser the
daily function of determining and monitoring the liquidity of restricted
securities. The Trustees, however, will retain sufficient oversight and be
ultimately responsible for the determinations. The Trustees will carefully
monitor the Fund's liquidity and availability of information. This investment
practice could have the effect of increasing the level of illiquidity in the
Fund if qualified institutional buyers become for a time uninterested in
purchasing these restricted securities.


                                       6
<PAGE>


Options on Securities,  Securities  Indices and Currency.  The Fund may purchase
and write (sell) call and put options on any  securities in which it may invest,
on any  securities  index based on  securities  in which it may invest or on any
currency in which Fund  investments  may be  denominated.  These  options may be
listed on national domestic securities exchanges or foreign securities exchanges
or traded in the  over-the-counter  market.  The Fund may write  covered put and
call options and purchase put and call  options to enhance  total  return,  as a
substitute  for the purchase or sale of  securities  or currency,  or to protect
against declines in the value of portfolio  securities and against  increases in
the cost of securities to be acquired.

Writing Covered Options.  A call option on securities or currency written by the
Fund obligates the Fund to sell  specified  securities or currency to the holder
of the option at a specified price if the option is exercised at any time before
the expiration  date. A put option on securities or currency written by the Fund
obligates the Fund to purchase specified  securities or currency from the option
holder at a specified  price if the option is  exercised  at any time before the
expiration  date.  Options  on  securities  indices  are  similar  to options on
securities,  except that the exercise of securities  index options requires cash
settlement  payments  and  does  not  involve  the  actual  purchase  or sale of
securities. In addition,  securities index options are designed to reflect price
fluctuations in a group of securities or segment of the securities market rather
than price  fluctuations in a single security.  Writing covered call options may
deprive  the Fund of the  opportunity  to profit  from an increase in the market
price of the securities or foreign  currency  assets in its  portfolio.  Writing
covered put options  may  deprive the Fund of the  opportunity  to profit from a
decrease in the market price of the securities or foreign  currency assets to be
acquired for its portfolio.

All call and put options written by the Fund are covered.  A written call option
or put  option  may be covered  by (i)  maintaining  cash or liquid  securities,
either of which may be quoted or  denominated  in any currency,  in a segregated
account with a value at least equal to the Fund's  obligation  under the option,
(ii) entering into an offsetting  forward  commitment and/or (iii) purchasing an
offsetting  option or any other option which, by virtue of its exercise price or
otherwise,  reduces the Fund's net exposure on its written  option  position.  A
written  call option on  securities  is  typically  covered by  maintaining  the
securities that are subject to the option in a segregated account.  The Fund may
cover call  options  on a  securities  index by owning  securities  whose  price
changes are expected to be similar to those of the underlying index.

The Fund may  terminate  its  obligations  under an exchange  traded call or put
option by purchasing an option identical to the one it has written.  Obligations
under  over-the-counter  options  may be  terminated  only by  entering  into an
offsetting  transaction with the counterparty to such option. Such purchases are
referred to as "closing purchase transactions."

Purchasing   Options.   The  Fund  would  normally   purchase  call  options  in
anticipation  of an  increase,  or put  options  in  anticipation  of a decrease
("protective puts"), in the market value of securities or currencies of the type
in which it may invest. The Fund may also sell call and put options to close out
its purchased options.

The purchase of a call option would  entitle the Fund, in return for the premium
paid, to purchase  specified  securities or currency at a specified price during
the option period. The Fund would ordinarily realize a gain on the purchase of a
call  option if,  during  the option  period,  the value of such  securities  or
currency  exceeded  the  sum  of  the  exercise  price,  the  premium  paid  and
transaction costs;  otherwise the Fund would realize either no gain or a loss on
the purchase of the call option.

The purchase of a put option would entitle the Fund, in exchange for the premium
paid, to sell specified securities or currency at a specified price during the
option period. The purchase of protective puts is designed to offset or hedge
against a decline in the market value of the Fund's portfolio securities or the
currencies in which they are denominated. Put options may also be purchased by
the Fund for the purpose of affirmatively benefiting from a decline in the price
of securities or currencies which it does not own. The Fund would ordinarily


                                       7
<PAGE>


realize a gain if, during the option period, the value of the underlying
securities or currency decreased below the exercise price sufficiently to cover
the premium and transaction costs; otherwise the Fund would realize either no
gain or a loss on the purchase of the put option. Gains and losses on the
purchase of put options may be offset by countervailing changes in the value of
the Fund's portfolio securities.

The Fund's options  transactions  will be subject to limitations  established by
each of the exchanges, boards of trade or other trading facilities on which such
options are traded.  These  limitations  govern the maximum number of options in
each class which may be written or  purchased  by a single  investor or group of
investors  acting in concert,  regardless  of whether the options are written or
purchased on the same or different  exchanges,  boards of trade or other trading
facilities or are held or written in one or more accounts or through one or more
brokers. Thus, the number of options which the Fund may write or purchase may be
affected by options written or purchased by other investment advisory clients of
the Adviser. An exchange, board of trade or other trading facility may order the
liquidation  of  positions  found to be in  excess of these  limits,  and it may
impose certain other sanctions.

Risks Associated with Options Transactions.  There is no assurance that a liquid
secondary  market on a domestic or foreign  options  exchange will exist for any
particular  exchange-traded  option or at any  particular  time.  If the Fund is
unable to effect a closing purchase  transaction with respect to covered options
it has written,  the Fund will not be able to sell the underlying  securities or
currencies  or dispose of assets held in a segregated  account until the options
expire or are  exercised.  Similarly,  if the Fund is unable to effect a closing
sale  transaction  with  respect to options it has  purchased,  it would have to
exercise  the options in order to realize any profit and will incur  transaction
costs upon the purchase or sale of underlying securities or currencies.

Reasons for the absence of a liquid  secondary market on an exchange include the
following:  (i) there may be insufficient  trading  interest in certain options;
(ii)  restrictions  may be imposed by an  exchange  on opening  transactions  or
closing  transactions  or  both;  (iii)  trading  halts,  suspensions  or  other
restrictions  may be imposed  with  respect to  particular  classes or series of
options;   (iv)  unusual  or  unforeseen   circumstances  may  interrupt  normal
operations  on an  exchange;  (v) the  facilities  of an exchange or the Options
Clearing  Corporation may not at all times be adequate to handle current trading
volume;  or (vi) one or more  exchanges  could,  for economic or other  reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options). If trading were discontinued,  the
secondary  market on that exchange (or in that class or series of options) would
cease to exist.  However,  outstanding  options on that  exchange  that had been
issued  by the  Options  Clearing  Corporation  as a result  of  trades  on that
exchange would continue to be exercisable in accordance with their terms.

The Fund's  ability to terminate  over-the-counter  options is more limited than
with  exchange-traded  options  and may  involve  the risk  that  broker-dealers
participating  in such  transactions  will not fulfill  their  obligations.  The
Adviser  will  determine  the  liquidity  of  each  over-the-counter  option  in
accordance with guidelines adopted by the Trustees.

The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The successful use of options
depends in part on the Adviser's ability to predict future price fluctuations
and, for hedging transactions, the degree of correlation between the options and
securities or currency markets.


                                       8
<PAGE>


Futures  Contracts and Options on Futures  Contracts.  To seek to increase total
return or hedge against changes in interest rates, securities prices or currency
exchange  rates,  the  Fund  may  purchase  and sell  various  kinds of  futures
contracts,  and  purchase  and  write  call and put  options  on  these  futures
contracts.  The Fund may also enter into closing purchase and sale  transactions
with respect to any of these contracts and options. The futures contracts may be
based on various  securities (such as U.S.  Government  securities),  securities
indices, foreign currencies and any other financial instruments and indices. All
futures  contracts  entered  into by the  Fund are  traded  on U.S.  or  foreign
exchanges  or boards of trade that are  licensed,  regulated  or approved by the
Commodity Futures Trading Commission ("CFTC").

Futures Contracts. A futures contract may generally be described as an agreement
between  two  parties  to buy  and  sell  particular  financial  instruments  or
currencies  for an agreed  price  during a  designated  month (or to deliver the
final cash settlement  price, in the case of a contract  relating to an index or
otherwise  not  calling  for  physical  delivery  at the end of  trading  in the
contract).

Positions taken in the futures markets are not normally held to maturity but are
instead liquidated through offsetting  transactions which may result in a profit
or a loss.  While  futures  contracts on  securities or currency will usually be
liquidated in this manner,  the Fund may instead make, or take,  delivery of the
underlying securities or currency whenever it appears economically  advantageous
to do so. A clearing  corporation  associated with the exchange on which futures
contracts are traded  guarantees  that, if still open, the sale or purchase will
be performed on the settlement date.

Hedging  and Other  Strategies.  Hedging is an attempt  to  establish  with more
certainty than would otherwise be possible the effective price or rate of return
on portfolio  securities or securities  that the Fund proposes to acquire or the
exchange  rate of  currencies  in  which  portfolio  securities  are  quoted  or
denominated.  When securities prices are falling,  the Fund can seek to offset a
decline in the value of its  current  portfolio  securities  through the sale of
futures  contracts.  When securities  prices are rising,  the Fund,  through the
purchase of futures contracts, can attempt to secure better rates or prices than
might later be  available in the market when it effects  anticipated  purchases.
The Fund may seek to offset  anticipated  changes in the value of a currency  in
which its portfolio securities,  or securities that it intends to purchase,  are
quoted or  denominated  by  purchasing  and selling  futures  contracts  on such
currencies.

The Fund may,  for  example,  take a "short"  position in the futures  market by
selling futures contracts in an attempt to hedge against an anticipated  decline
in market  prices or foreign  currency  rates that  would  adversely  affect the
dollar value of the Fund's  portfolio  securities.  Such futures  contracts  may
include  contracts  for the future  delivery of  securities  held by the Fund or
securities  with  characteristics  similar  to  those  of the  Fund's  portfolio
securities.  Similarly, the Fund may sell futures contracts on any currencies in
which its portfolio  securities  are quoted or denominated or in one currency to
hedge against fluctuations in the value of securities denominated in a different
currency if there is an established  historical  pattern of correlation  between
the two currencies.

If, in the opinion of the Adviser, there is a sufficient degree of correlation
between price trends for the Fund's portfolio securities and futures contracts
based on other financial instruments, securities indices or other indices, the
Fund may also enter into such futures contracts as part of its hedging strategy.
Although under some circumstances prices of securities in the Fund's portfolio
may be more or less volatile than prices of such futures contracts, the Adviser
will attempt to estimate the extent of this volatility difference based on
historical patterns and compensate for any differential by having the Fund enter
into a greater or lesser number of futures contracts or by attempting to achieve
only a partial hedge against price changes affecting the Fund's portfolio
securities.


                                       9
<PAGE>


When a short hedging  position is successful,  any  depreciation in the value of
portfolio  securities will be substantially  offset by appreciation in the value
of the futures position.  On the other hand, any  unanticipated  appreciation in
the value of the Fund's portfolio  securities would be substantially offset by a
decline in the value of the futures position.

On other  occasions,  the Fund may take a "long" position by purchasing  futures
contracts.  This  would be done,  for  example,  when the Fund  anticipates  the
subsequent purchase of particular securities when it has the necessary cash, but
expects the prices or currency  exchange  rates then available in the applicable
market to be less favorable than prices that are currently  available.  The Fund
may  also  purchase  futures  contracts  as a  substitute  for  transactions  in
securities or foreign currency,  to alter the investment  characteristics  of or
currency  exposure  associated with portfolio  securities or to gain or increase
its exposure to a particular securities market or currency.

Options on Futures Contracts. The Fund may purchase and write options on futures
for the same purposes as its transactions in futures contracts.  The purchase of
put and call options on futures  contracts will give the Fund the right (but not
the obligation) for a specified price to sell or to purchase,  respectively, the
underlying  futures  contract  at any time  during  the  option  period.  As the
purchaser  of an option on a futures  contract,  the Fund obtains the benefit of
the futures position if prices move in a favorable direction but limits its risk
of loss in the event of an unfavorable price movement to the loss of the premium
and transaction costs.

The writing of a call option on a futures contract generates a premium which may
partially offset a decline in the value of the Fund's assets.  By writing a call
option, the Fund becomes  obligated,  in exchange for the premium (upon exercise
of the option) to sell a futures contract if the option is exercised,  which may
have a value higher than the exercise  price.  Conversely,  the writing of a put
option on a futures  contract  generates a premium which may partially offset an
increase in the price of securities that the Fund intends to purchase.  However,
the Fund becomes  obligated  (upon exercise of the option) to purchase a futures
contract  if the  option is  exercised,  which may have a value  lower  than the
exercise  price.  The loss incurred by the Fund in writing options on futures is
potentially unlimited and may exceed the amount of the premium received.

The  holder or writer of an option  on a  futures  contract  may  terminate  its
position by selling or purchasing an offsetting option of the same series. There
is no guarantee  that such  closing  transactions  can be  effected.  The Fund's
ability to establish  and close out positions on such options will be subject to
the development and maintenance of a liquid market.

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


                                       10
<PAGE>


To the  extent  that the Fund  engages  in  nonhedging  transactions  in futures
contracts  and options on futures,  the  aggregate  initial  margin and premiums
required to establish these  nonhedging  positions will not exceed 5% of the net
asset  value of the Fund's  portfolio,  after  taking  into  account  unrealized
profits and losses on any such  positions and excluding the amount by which such
options were in-the-money at the time of purchase.

Transactions  in futures  contracts  and  options on futures  involve  brokerage
costs,  require  margin  deposits  and,  in the case of  contracts  and  options
obligating the Fund to purchase  securities or  currencies,  require the Fund to
establish a segregated  account  consisting  of cash or liquid  securities in an
amount equal to the underlying value of such contracts and options.

While  transactions  in futures  contracts  and  options  on futures  may reduce
certain risks,  these  transactions  themselves  entail certain other risks. For
example,  unanticipated changes in interest rates, securities prices or currency
exchange rates may result in a poorer overall  performance  for the Fund than if
it had not entered into any futures contracts or options transactions.

Perfect correlation between the Fund's futures positions and portfolio positions
will be impossible to achieve. In the event of an imperfect  correlation between
a futures  position and a portfolio  position which is intended to be protected,
the desired  protection  may not be obtained and the Fund may be exposed to risk
of loss.  In  addition,  it is not  possible to hedge  fully or protect  against
currency fluctuations  affecting the value of securities  denominated in foreign
currencies  because the value of such  securities  is likely to  fluctuate  as a
result of independent factors not related to currency fluctuations.

Some futures  contracts or options on futures may become  illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit trading in a futures  contract or related  option,
which may make the  instrument  temporarily  illiquid  and  difficult  to price.
Commodity exchanges may also establish daily limits on the amount that the price
of a  futures  contract  or  related  option  can vary from the  previous  day's
settlement  price.  Once the daily limit is reached,  no trades may be made that
day at a price  beyond the limit.  This may  prevent  the Fund from  closing out
positions and limiting its losses.

Forward Commitment and When-Issued Securities.  The Fund may purchase securities
on a when-issued or forward commitment basis. "When-issued" refers to securities
whose terms are available and for which a market exists, but which have not been
issued.  The Fund will  engage  in  when-issued  transactions  with  respect  to
securities  purchased for its portfolio in order to obtain what is considered to
be an  advantageous  price  and  yield  at  the  time  of the  transaction.  For
when-issued  transactions,  no payment is made until  delivery  is due,  often a
month or more after the purchase. In a forward commitment transaction,  the Fund
contracts  to  purchase  securities  for a fixed  price at a future  date beyond
customary settlement time.

When the Fund engages in forward  commitment and  when-issued  transactions,  it
relies on the seller to consummate the transaction. The failure of the issuer or
seller to  consummate  the  transaction  may  result in the  Fund's  losing  the
opportunity  to obtain a price  and yield  considered  to be  advantageous.  The
purchase  of  securities  on a  when-issued  or  forward  commitment  basis also
involves a risk of loss if the value of the  security to be  purchased  declines
prior to the settlement date.

On the date the Fund enters into an agreement to purchase securities on a
when-issued or forward commitment basis, the Fund will segregate in a separate
account cash or liquid securities equal in value to the Fund's commitment. These
assets will be valued daily at market, and additional cash or securities will be
segregated in a separate account to the extent that the total value of the
assets in the account declines below the amount of the when-issued commitments.
Alternatively, the Fund may enter into offsetting contracts for the forward sale
of other securities that it owns.


                                       11
<PAGE>


Borrowing.  The Fund may borrow  money in an amount  that does not exceed 33% of
its total assets.  Borrowing by the Fund involves leverage, which may exaggerate
any  increase  or  decrease  in the Fund's  investment  performance  and in that
respect may be  considered a  speculative  practice.  The interest that the Fund
must pay on any borrowed money,  additional fees to maintain a line of credit or
any minimum  average  balances  required to be maintained are  additional  costs
which will reduce or eliminate  any potential  investment  income and may offset
any capital  gains.  Unless the  appreciation  and income,  if any, on the asset
acquired with borrowed  funds exceed the cost of borrowing,  the use of leverage
will diminish the investment performance of the Fund.

Short  Sales.  The Fund may  engage in short  sales in order to  profit  from an
anticipated  decline  in the value of a  security.  The Fund may also  engage in
short sales to attempt to limit its exposure to a possible market decline in the
value of its portfolio  securities  through short sales of securities  which the
Adviser  believes  possess  volatility  characteristics  similar to those  being
hedged.  To effect such a  transaction,  the Fund must borrow the security  sold
short to make  delivery to the buyer.  The Fund then is obligated to replace the
security  borrowed  by  purchasing  it at  the  market  price  at  the  time  of
replacement.  Until the security is replaced, the Fund is required to pay to the
lender any accrued  interest or dividends  and may be required to pay a premium.
The Fund may only make short sales  "against the box," meaning that the Fund, by
virtue of its ownership of other securities,  has the right to obtain securities
equivalent  in kind and  amount  to the  securities  sold  and,  if the right is
conditional, the sale is made upon the same conditions.

The Fund will realize a gain if the security  declines in price between the date
of the short sale and the date on which the Fund replaces the borrowed security.
On the other  hand,  the Fund will incur a loss as a result of the short sale if
the price of the security  increases between those dates. The amount of any gain
will be decreased,  and the amount of any loss  increased,  by the amount of any
premium or interest or dividends  the Fund may be required to pay in  connection
with a short sale.  The  successful use of short selling as a hedging device may
be adversely affected by imperfect correlation between movements in the price of
the security sold short and the securities being hedged.

Under  applicable  guidelines  of the staff of the SEC,  if the Fund  engages in
short sales, it must put in a segregated account (not with the broker) an amount
of cash or liquid  securities  equal to the  difference  between  (a) the market
value of the securities  sold short (b) any cash or U.S.  Government  securities
required to be deposited as collateral  with the broker in  connection  with the
short sale (not including the proceeds from the short sale). In addition,  until
the Fund replaces the borrowed  security,  it must daily maintain the segregated
account  at such a level  that  the  amount  deposited  in it  plus  the  amount
deposited  with the broker as collateral  will equal the current market value of
the securities sold short.

Short selling may produce higher than normal portfolio turnover which may result
in increased transaction costs to the Fund.

U.S. Governmental Securities. Certain U.S. Government securities, including U.S.
Treasury bills, notes and bonds, and Government National Mortgage Association
mortgage-backed certificates ("Ginnie Maes"), are supported by the full faith
and credit of the United States. Certain other U.S. Government securities,
issued or guaranteed by Federal agencies or government sponsored enterprises,
are not supported by the full faith and credit of the United States, but may be
supported by the right of the issuer to borrow from the U.S. Treasury. These
securities include obligations of instrumentalities such as the Federal Home
Loan Mortgage Corporation ("Freddie Macs"), the Federal National Mortgage
Association ("Fannie Maes") and the Student Loan Marketing Association ("Sallie
Maes"). No assurance can be given that the U.S. Government will provide
financial support to these Federal agencies, authorities, instrumentalities and
government sponsored enterprises in the future.  Any governmental guarantees on
portfolio securities do not apply to these securities' market value or current
yield, or to the fund shares.


                                       12
<PAGE>


Mortgage-Backed  Securities.  Ginnie  Maes,  Freddie  Macs and  Fannie  Maes are
mortgage-backed securities which provide monthly payments that are, in effect, a
"pass- through" of the monthly  interest and principal  payments  (including any
pre-payments)  made by the individual  borrowers on the pooled  mortgage  loans.
Collateralized Mortgage Obligations ("CMOs"), in which the Fund may also invest,
are  securities   issued  by  a  U.S.   Government   instrumentality   that  are
collateralized by a portfolio of mortgages or mortgage-backed securities. During
periods of declining  interest rates,  principal and interest on mortgage-backed
securities may be prepaid at  faster-than-expected  rates. The proceeds of these
prepayments  typically  can  only  be  invested  in  lower-yielding  securities.
Therefore,  mortgage-backed  securities  may be less  effective  at  maintaining
yields  during  periods  of  declining  interest  rates  than  traditional  debt
securities of similar maturity.  U.S. Government agencies and  instrumentalities
include,  but are not limited to,  Federal Farm Credit Banks,  Federal Home Loan
Banks,  the Federal Home Loan Mortgage  Corporation,  the Student Loan Marketing
Association,  and the Federal National  Mortgage  Association.  Some obligations
issued by an agency or  instrumentality  may be  supported by the full faith and
credit of the U.S. Treasury.

A real estate mortgage  investment conduit, or REMIC, is a private entity formed
for the purpose of holding a fixed pool of  mortgages  secured by an interest in
real property, and of issuing multiple classes of interests therein to investors
such as the Fund. The Fund may consider REMIC securities as possible investments
when the mortgage  collateral is insured,  guaranteed or otherwise backed by the
U.S.  Government or one or more of its agencies or  instrumentalities.  The Fund
will not  invest in  "residual"  interests  in REMIC's  because  of certain  tax
disadvantages for regulated investment companies that own such interests.

Risks  of  Mortgage-Backed   Securities.   Different  types  of  mortgage-backed
securities  are subject to  different  combinations  of  prepayment,  extension,
interest  rate and/or other market  risks.  Conventional  mortgage  pass-through
securities and  sequential  pay CMOs are subject to all of these risks,  but are
typically not leveraged.  PACs,  TACs and other senior classes of sequential and
parallel pay CMOs involve less  exposure to  prepayment,  extension and interest
rate risk than other mortgage-backed securities,  provided that prepayment rates
remain within expected prepayment ranges or "collars."

The value of  mortgage-backed  securities  may also  change due to shifts in the
market's  perception  of issuers.  In  addition,  regulatory  or tax changes may
adversely   affect   the   mortgage-backed   securities   market   as  a  whole.
Non-government  mortgage-backed  securities  may offer higher  yields than those
issued by government entities,  but also may be subject to greater price changes
than government issues.

Mortgage "Dollar Roll" Transactions. The Fund may enter into mortgage "dollar
roll" transactions with selected banks and broker-dealers pursuant to which the
Fund sells mortgage-backed securities and simultaneously contracts to repurchase
substantially similar (same type, coupon and maturity) securities on a specified
future date. The Fund will only enter into covered rolls. A "covered roll" is a
specific type of dollar roll for which there is an offsetting cash position or a
cash equivalent security position which matures on or before the forward
settlement date of the dollar roll transaction. Covered rolls are not treated as
a borrowing or other senior security and will be excluded from the calculation
of the Fund's borrowing and other senior securities. For financial reporting and
tax purposes, the Fund treats mortgage dollar rolls as two separate
transactions; one involving the purchase of a security and a separate
transaction involving a sale.


                                       13
<PAGE>


Asset-Backed  Securities.  The  Fund may  invest  a  portion  of its  assets  in
asset-backed securities. Asset-backed securities are often subject to more rapid
repayment  than their  stated  maturity  date would  indicate as a result of the
pass-through of prepayments of principal on the underlying loans. During periods
of  declining  interest  rates,  prepayment  of  loans  underlying  asset-backed
securities  can be expected to  accelerate.  Accordingly,  the Fund's ability to
maintain  positions in these  securities  will be affected by  reductions in the
principal amount of such securities resulting from prepayments,  and its ability
to  reinvest  the  returns  of  principal  at  comparable  yields is  subject to
generally prevailing interest rates at that time.

Credit  card  receivables  are  generally  unsecured  and  the  debtors  on such
receivables  are  entitled  to the  protection  of a number of state and federal
consumer  credit  laws,  many of which  give such  debtors  the right to set-off
certain  amounts  owed on the credit  cards,  thereby  reducing the balance due.
Automobile  receivables  generally are secured,  but by automobiles  rather than
residential  real property.  Most issuers of automobile  receivables  permit the
loan services to retain possession of the underlying obligations. If the service
were to sell  these  obligations  to  another  party,  there is a risk  that the
purchaser  would  acquire an  interest  superior  to that of the  holders of the
asset-backed  securities.  In addition,  because of the large number of vehicles
involved in a typical issuance and technical  requirements under state laws, the
trustee  for the  holders of the  automobile  receivables  may not have a proper
security  interest  in  the  underlying  automobiles.  Therefore,  there  is the
possibility that, in some cases, recoveries on repossessed collateral may not be
available to support payments on these securities.

Structured  or Hybrid  Notes.  The Fund may invest in  "structured"  or "hybrid"
notes.  The  distinguishing  feature of a structured  or hybrid note is that the
amount  of  interest  and/or  principal  payable  on the  note is  based  on the
performance of a benchmark asset or market other than fixed income securities or
interest  rates.  Examples of these  benchmark  include stock  prices,  currency
exchange rates and physical  commodity  prices.  Investing in a structured  note
allows  the Fund to gain  exposure  to the  benchmark  market  while  fixing the
maximum  loss that the Fund may  experience  in the event that  market  does not
perform as expected. Depending on the terms of the note, the Fund may forego all
or part of the  interest  and  principal  that would be payable on a  comparable
conventional  note; the Fund's loss cannot exceed this foregone  interest and/or
principal. An investment in structured or hybrid notes involves risks similar to
those associated with a direct investment in the benchmark asset.

Participation  Interests.  Participation  interests,  which may take the form of
interests in, or assignments of certain loans,  are acquired from banks who have
made these loans or are members of a lending  syndicate.  The Fund's investments
in  participation  interests may be subject to its 15% limitation on investments
in illiquid securities.

Swaps,  Caps,  Floors  and  Collars.  As one way of  managing  its  exposure  to
different  types of  investments,  the Fund may enter into  interest rate swaps,
currency swaps,  and other types of swap  agreements  such as caps,  collars and
floors.  In a typical  interest  rate  swap,  one party  agrees to make  regular
payments equal to a floating interest rate times a "notional  principal amount,"
in return  for  payments  equal to a fixed  rate  times the same  amount,  for a
specified period of time. If a swap agreement  provides for payment in different
currencies, the parties might agree to exchange the notional principal amount as
well.  Swaps may also depend on other  prices or rates,  such as the value of an
index or mortgage prepayment rates.

In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap and
selling a floor.


                                       14
<PAGE>


Swap agreements will tend to shift the Fund's investment  exposure from one type
of investment to another.  For example,  if the Fund agreed to exchange payments
in dollars for payments in a foreign currency,  the swap agreement would tend to
decrease the Fund's exposure to U.S. interest rates and increase its exposure to
foreign  currency and interest rates.  Caps and floors have an effect similar to
buying or writing  options.  Depending on how they are used, swap agreements may
increase or decrease  the overall  volatility  of a Fund's  investments  and its
share price and yield.

Swap agreements are sophisticated  hedging  instruments that typically involve a
small  investment  of cash  relative to the  magnitude  of risks  assumed.  As a
result,  swaps can be highly volatile and may have a considerable  impact on the
Fund's  performance.  Swap  agreements  are  subject  to  risks  related  to the
counterpart's  ability to perform, and may decline in value if the counterpart's
credit worthiness deteriorates.  The Fund may also suffer losses if it is unable
to  terminate  outstanding  swap  agreements  or  reduce  its  exposure  through
offsetting transactions. The Fund will maintain in a segregated account with its
custodian,  cash or liquid,  high grade debt securities equal to the net amount,
if any,  of the  excess of the  Fund's  obligations  over its  entitlement  with
respect to swap, cap, collar or floor transactions.

Pay-In-Kind,  Delayed and Zero Coupon Bonds. The Fund may invest in pay-in-kind,
delayed and zero coupon bonds.  These are  securities  issued at a discount from
their face  value  because  interest  payments  are  typically  postponed  until
maturity.  The amount of the discount rate varies depending on factors including
the time remaining until  maturity,  prevailing  interest rates,  the security's
liquidity and the issuer's  credit quality.  These  securities also may take the
form of debt  securities that have been stripped of their interest  payments.  A
portion of the discount with respect to stripped tax-exempt  securities or their
coupons  may be  taxable.  The market  prices in  pay-in-kind,  delayed and zero
coupon bonds  generally  are more  volatile  than the market prices of interest-
bearing  securities  and are likely to respond to a grater  degree to changes in
interest rates than  interest-bearing  securities having similar  maturities and
credit quality.  The Fund's investments in pay-in-kind,  delayed and zero coupon
bonds may  require  the Fund to sell  certain  of its  portfolio  securities  to
generate  sufficient cash to satisfy certain income  distribution  requirements.
See "Tax Status."

Brady Bonds. The Fund may invest in so-called "Brady Bonds" and other sovereign
debt securities of countries that have restructured or are in the process of
restructuring sovereign debt pursuant to the Brady Plan. Brady Bonds are debt
securities described as part of a restructuring plan created by U.S. Treasury
Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to
restructure their outstanding external indebtedness (generally, commercial bank
debt). In restructuring its external debt under the Brady Plan framework, a
debtor nation negotiates with its existing bank lenders as well as multilateral
institutions such as the World Bank and the International Monetary Fund (the
"IMF"). The Brady Plan facilitate the exchange of commercial bank debt for newly
issued (known as Brady Bonds). The World Bank and IMF provide funds pursuant to
loan agreements or other arrangements which enable the debtor nation to
collateralize the new Brady Bonds or to repurchase outstanding bank debt at a
discount. Under these arrangements IMF debtor nations are required to implement
of certain domestic monetary and fiscal reforms. These reforms have included the
liberalization of trade and foreign investment, the privatization of state-owned
enterprises and the setting of targets for public spending and borrowing. These
policies and programs promote the debtor country's ability to service its
external obligations and promote its economic growth and development. The Brady
Plan only sets forth general guiding principles for economic reform and debt
reduction, emphasizing that solutions must be negotiated on a case-by-case basis
between debtor nations and their creditors. The Adviser believes that economic
reforms undertaken by countries in connection with the issuance of Brady Bonds
make the debt of countries which have issued or have announced plans to issue
Brady Bonds an attractive opportunity for investment.


                                       15
<PAGE>


Brady Bonds may involve a high degree of risk,  may be in default or present the
risk of  default.  Agreements  implemented  under  the  Brady  Plan to date  are
designed to achieve debt and  debt-service  reduction  through  specific options
negotiated by a debtor  nation with its  creditors.  As a result,  the financial
packages offered by each country differ.  The types of options have included the
exchange of  outstanding  commercial  bank debt for bonds issued at 100% of face
value of such debt, bonds issued at a discount of face value of such debt, bonds
bearing an interest rate which  increases over time and bonds issued in exchange
for the advancement of new money by existing  lenders.  Certain Brady Bonds have
been collateralized as to principal due at maturity by U.S. Treasury zero coupon
bonds with a maturity equal to the final maturity of such Brady Bonds,  although
the  collateral  is not available to investors  until the final  maturity of the
Brady Bonds.  Collateral  purchases  are financed by the IMF, the World Bank and
the debtor  nations'  reserves.  In  addition,  the first two or three  interest
payments  on  certain  types of Brady  Bonds  may be  collateralized  by cash or
securities agreed upon by creditors.  Although Brady Bonds may be collateralized
by U.S.  Government  securities,  repayment  of  principal  and  interest is not
guaranteed by the U.S. Government.

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

Rights  and  Warrants.  The Fund may  purchase  warrants  and  rights  which are
securities  permitting,  but  not  obligating,  their  holder  to  purchase  the
underlying  securities at a predetermined price subject to the Fund's Investment
Restrictions.  Generally,  warrants and stock purchase  rights do not carry with
them the right to receive  dividends or exercise  voting  rights with respect to
the underlying securities, and they do not represent any rights in the assets of
the issuer.  As a result, an investment in warrants and rights may be considered
to entail greater  investment risk than certain other types of  investments.  In
addition,  the value of warrants and rights does not necessarily change with the
value of the underlying securities, and they cease to have value if they are not
exercised  on or prior to their  expiration  date.  Investment  in warrants  and
rights increases the potential profit or loss to be realized from the investment
of a given  amount of the Fund's  assets as  compared  with  investing  the same
amount in the underlying stock.

Time Deposits.  The Securities and Exchange  Commission  ("SEC")  considers time
deposits with periods of greater than seven days to be illiquid,  subject to the
restriction  that  illiquid  securities  are  limited to no more than 15% of the
Fund's net assets.

Short Term Trading and Portfolio Turnover. Short-term trading means the purchase
and subsequent sale of a security after it has been held for a relatively brief
period of time. The Fund may engage in short-term trading in response to stock
market conditions, changes in interest rates or other economic trends and
developments or to take advantage of yield disparities between fixed income
securities in order to realize capital gains or improve income. Short-term
trading may have the effect of increasing portfolio turnover rate. A high rate
of portfolio turnover (100% or greater) involves correspondingly greater
brokerage expenses. The Fund's portfolio rate is set forth in the table under
the caption "Financial Highlights" in the Prospectus.


                                       16
<PAGE>


INVESTMENT RESTRICTIONS

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

The Fund observes the  fundamental  restrictions  listed in item (1) through (9)
below. The Fund may not:

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

(2)      Borrow  money in  amounts  exceeding  33% of the  Fund's  total  assets
         (including the amount borrowed) taken at market value. Interest paid on
         borrowing will reduce income available to shareholders.

(3)      Pledge,   mortgage  or  hypothecate   its  assets,   except  to  secure
         indebtedness  permitted  by  paragraph  (2) above and then only if such
         pledging,  mortgaging or  hypothecating  does not exceed 33 1/3% of the
         fund's total assets taken at market value.

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

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

(6)      Make loans,  except that the Fund (1) may lend portfolio  securities in
         accordance  with the Fund's  investment  policies  up to 33 1/3% of the
         Fund's total assets taken at market  value,  (2) enter into  repurchase
         agreements,  and (3)  purchase all or a portion of an issue of publicly
         distributed debt securities,  bank loan participation  interests,  bank
         certificates  of deposit,  bankers'  acceptances,  debentures  or other
         securities,  whether  or not the  purchase  is made  upon the  original
         issuance of the securities.

(7)      Buy  or  sell  commodity   contracts,   except  futures   contracts  on
         securities,  securities  indices  and  currency  and  options  on  such
         futures,   forward  foreign  currency   exchange   contracts,   forward
         commitments,  and repurchase agreements entered into in accordance with
         the Fund's investment policies.

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


                                       17
<PAGE>


(9)      Purchase securities of an issuer (other than the U.S. Government, its
         agencies or instrumentalities), if

(i)      more than 5% of the Fund's  total assets taken at market value would be
         invested in the securities of such issuer, except that up to 25% of the
         Fund's total assets may be invested in securities  issued or guaranteed
         by any foreign government or its agencies or instrumentalities, or,

(ii)     such purchase would at the time result in more than 10% of the
         outstanding  voting securities of such issuer being held by the Fund.

In  connection  with the lending of portfolio  securities  under item (6) above,
such loans must at all times be fully  collateralized  and the Fund's  custodian
must take possession of the collateral  either physically or in book entry form.
Securities used as collateral must be marked to market daily.

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

The Fund may not:

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

(b)      Purchase   securities  on  margin  (except  that  it  may  obtain  such
         short-term   credits  as  may  be  necessary   for  the   clearance  of
         transactions  in  securities  and  forward  foreign  currency  exchange
         contracts and may make margin payments in connection with  transactions
         in futures  contracts  and  options on  futures) or make short sales of
         securities unless by virtue of its ownership of other  securities,  the
         Fund has the right to obtain  securities  equivalent in kind and amount
         to the securities  sold and, if the right is  conditional,  the sale is
         made upon the same conditions.

(c)      Purchase a security if, as a result, (i) more than 10% of the
         Fund's total assets would be invested in the securities of other
         investment companies, (ii) the Fund would hold more than 3% of the
         total outstanding voting securities of any one investment company, or
         (iii) more than 5% of the Fund's total assets would be invested in the
         securities of any one investment company. These limitations do not
         apply to (a) the investment of cash collateral, received by the Fund in
         connection with lending the Fund's portfolio securities, in the
         securities of open-end investment companies or (b) the purchase of
         shares of any investment company in connection with a merger,
         consolidation, reorganization or purchase of substantially all of the
         assets of another investment company. Subject to the above percentage
         limitations, the Fund may, in connection with the John Hancock Group of
         Funds Deferred Compensation Plan for Independent Trustees/Directors,
         purchase securities of other investment companies within the John
         Hancock Group of Funds.

(d)      Invest for the purpose of exercising control over or management of any
         company.

(e)      Invest more than 15% of its net assets in illiquid securities.



                                       18
<PAGE>


In addition, the Fund complies with the following  nonfundamental  limitation on
its investments:

Exercise any conversion,  exchange or purchase rights  associated with corporate
debt  securities  in the  portfolio  if,  at the time,  the value of all  equity
interests would exceed 10% of the Fund's total assets taken at market value.

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


The Fund will invest only in countries on the Adviser's Approved Country
Listing.


THOSE RESPONSIBLE FOR MANAGEMENT

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


                                       19
<PAGE>


<TABLE>
<CAPTION>


                                     Positions Held             Principal Occupation(s)
Name and Address                     With the Company           During the Past Five Years
----------------                     ----------------           --------------------------
     <S>                                    <C>                            <C>

Stephen L. Brown*                    Trustee and Chairman       Chairman and Director, John Hancock
John Hancock Place                                              Life Insurance Company (CEO until
P.O. Box 111                                                    June 2000), John Hancock Financial
Boston, MA 02117                                                Services, Inc. (CEO until June
July 1937                                                       2000); John Hancock Advisers, Inc.
                                                                (the Adviser), John Hancock Funds,
                                                                Inc. (John Hancock Funds), The
                                                                Berkeley Financial Group, Inc. (The
                                                                Berkeley Group); Director, John
                                                                Hancock Subsidiaries, Inc.; John
                                                                Hancock Signature Services, Inc.
                                                                (Signature Services) (until January
                                                                1997); John Hancock Insurance
                                                                Agency, Inc.; (Insurance Agency),
                                                                (until May 1999); Independence
                                                                Investment Associates, Inc.,
                                                                Independence International
                                                                Associates, Inc,, Independence
                                                                Fixed Income Associates, Inc.;
                                                                Insurance Marketplace Standards
                                                                Association, Committee for Economic
                                                                Development, Ionics, Inc. (since
                                                                June 2000), Aspen Technology, Inc.
                                                                (since June 2000), Jobs for
                                                                Massachusetts, Federal Reserve Bank
                                                                of Boston (until March 1999);
                                                                Financial Institutions Center
                                                                (until May 1996), Freedom Trail
                                                                Foundation (until December 1996)
                                                                Beth Israel Hospital and
                                                                Corporation (until November 1996);
                                                                Director and Member (Beth
                                                                Israel/Deaconess Care Group),
                                                                Member, Commercial Club of Boston,
                                                                President (until April 1996);
                                                                Trustee, Wang Center for the
                                                                Performing Arts, Alfred P. Sloan
                                                                Foundation, John Hancock Asset
                                                                Management (until March 1997);
                                                                Member, Boston Compact Committee,
                                                                Mass. Capital Resource Company;
                                                                Chairman, Boston Coordinating
                                                                Committee ("The Vault") (until
                                                                April 1997).

Maureen R. Ford *                    Trustee, Vice Chairman,    President, Broker/Dealer
101 Huntington Avenue                President and Chief        Distributor, John Hancock Life
Boston, MA  02199                    Executive Officer (1,2)    Insurance Company; Vice Chairman,
March 1950                                                      Director, President and Chief
                                                                Executive Officer, the Adviser, The
                                                                Berkeley Group, John Hancock Funds;
                                                                Chairman, Director and President,
                                                                Insurance Agency, Inc.; Chairman,
                                                                Director and Chief Executive
                                                                Officer, Sovereign Asset Management
                                                                Corporation (SAMCorp.); Senior Vice
                                                                President, MassMutual Insurance Co.
                                                                (until 1999); Senior Vice
                                                                President, Connecticut Mutual
                                                                Insurance Co. (until 1996).


-------------------
*   Trustee may be deemed to be an "interested person" of the Fund as defined in
    the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
    exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.



                                       20
<PAGE>



                                     Positions Held             Principal Occupation(s)
Name and Address                     With the Company           During the Past Five Years
----------------                     ----------------           --------------------------
     <S>                                    <C>                            <C>

Dennis S. Aronowitz                  Trustee                    Professor of Law, Emeritus, Boston
1216 Falls Boulevard                                            University School of Law (as of
Fort Lauderdale, FL  33327                                      1996); Director, Brookline
June 1931                                                       Bankcorp.

Richard P. Chapman, Jr.              Trustee (1)                Chairman, President, and Chief
160 Washington Street                                           Executive Officer, Brookline
Brookline, MA  02147                                            Bankcorp. (lending); Director,
February 1935                                                   Lumber Insurance Companies (fire
                                                                and casualty insurance); Trustee,
                                                                Northeastern University
                                                                (education); Director, Depositors
                                                                Insurance Fund, Inc. (insurance).

William J. Cosgrove                  Trustee                    Vice President, Senior Banker and
20 Buttonwood Place                                             Senior Credit Officer, Citibank,
Saddle River, NJ  07458                                         N.A. (retired September 1991);
January 1933                                                    Executive Vice President, Citadel
                                                                Group Representatives, Inc.;
                                                                Trustee, the Hudson City Savings
                                                                Bank (since 1995).

Leland O. Erdahl                     Trustee                    Director of Uranium Resources
279 Cielo Azul                                                  Corporation, Hecla Mining Company,
Corrales, NM 87048                                              Canyon Resources Corporation and
December 1928                                                   Apollo Gold, Inc.; Director
                                                                Original Sixteen to One Mines, Inc.
                                                                (until 1999); Management Consultant
                                                                (from 1984-1987 and 1991-1998);
                                                                Director, Freeport-McMoran Copper &
                                                                Gold, Inc. (until 1997); Vice
                                                                President, Chief Financial Officer
                                                                and Director of Amax Gold, Inc.
                                                                (until 1998).

Richard A. Farrell                   Trustee                    President of Farrell, Healer & Co.,
The Venture Capital of New England                              (venture capital management firm)
70 Walnut Street, Suite 120                                     (since 1980); Prior to 1980, headed
Wellesley Hills, MA  02481                                      the venture capital group at Bank
November 1932                                                   of Boston Corporation.

Gail D. Fosler                       Trustee                    Senior Vice President and Chief
4104 Woodbine Street                                            Economist, The Conference Board
Chevy Chase, MD 20815                                           (non-profit economic and business
December 1947                                                   research); Director, Unisys Corp.;
                                                                Director DHS Singapore (Financial
                                                                Services) H.B. Fuller Company; and
                                                                DBS Holdings (Singapore) (Banking
                                                                and Financial Services); Director,
                                                                National Bureau of Economic
                                                                Research (academic).


-------------------
*   Trustee may be deemed to be an "interested person" of the Fund as defined in
    the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
    exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.


                                       21
<PAGE>



                                     Positions Held             Principal Occupation(s)
Name and Address                     With the Company           During the Past Five Years
----------------                     ----------------           --------------------------
     <S>                                    <C>                            <C>

William F. Glavin                    Trustee                    President Emeritus, Babson College
120 Paget Court - John's Island                                 (as of 1997); Vice Chairman, Xerox
Vero Beach, FL 32963                                            Corporation (until June 1989);
March 1932                                                      Director, Caldor Inc., Reebok, Inc.
                                                                (since 1994) and Inco Ltd.

Dr. John A. Moore                    Trustee                    President and Chief Executive
1045 No Utah #310                                               Officer, Institute for Evaluating
Arlington, VA 22201                                             Health Risks, (nonprofit
February 1939                                                   institution) (since September
                                                                1989).

Patti McGill Peterson                Trustee                    Executive Director, Council for
Council For International Exchange                              International Exchange of Scholars
of Scholars                                                     (since January 1998), Vice
3007 Tilden Street, N.W.                                        President, Institute of
Washington, D.C.  20008                                         International Education (since
May 1943                                                        January 1998); Senior Fellow,
                                                                Cornell Institute of Public
                                                                Affairs, Cornell University (until
                                                                December 1997); President Emerita
                                                                of Wells College and St. Lawrence
                                                                University; Director, Niagara
                                                                Mohawk Power Corporation (electric
                                                                utility).

John W. Pratt                        Trustee                    Professor of Business
2 Gray Gardens East                                             Administration Emeritus, Harvard
Cambridge, MA  02138                                            University Graduate School of
September 1931                                                  Business Administration (as of June
                                                                1998).


Richard S. Scipione *                Trustee (1)                General Counsel, John Hancock Life
John Hancock Place                                              Insurance Company; Director, the
P.O. Box 111                                                    Adviser, John Hancock Funds,
Boston, MA  02117                                               Signator Investors, Inc., John
August 1937                                                     Hancock Subsidiaries, Inc.,
                                                                SAMCorp., NM Capital, The Berkeley
                                                                Group, JH Networking Insurance
                                                                Agency, Inc.; Insurance Agency,
                                                                Inc. (until June 1999), Signature
                                                                Services (until January 1997).

William L. Braman                    Executive Vice President   Executive Vice President and Chief
101 Huntington Avenue                and Chief Investment       Investment Officer, each of the
Boston, MA 02199                     Officer                    John Hancock Funds; Executive Vice
December 1953                                                   President and Chief Investment
                                                                Officer, Barring Asset Management,
                                                                London UK (until May 2000).


-------------------
*   Trustee may be deemed to be an "interested person" of the Fund as defined in
    the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
    exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.


                                       22
<PAGE>



                                     Positions Held             Principal Occupation(s)
Name and Address                     With the Company           During the Past Five Years
----------------                     ----------------           --------------------------
     <S>                                    <C>                            <C>

Osbert M. Hood                       Executive Vice President   Executive Vice President and Chief
101 Huntington Avenue                and Chief Financial        Financial Officer, each of the John
Boston, MA  02199                    Officer (2)                Hancock Funds; Executive Vice
August 1952                                                     President, Treasurer and Chief
                                                                Financial Officer of the Adviser,
                                                                the Berkeley Group, John Hancock
                                                                Funds, SAMCorp. And NM Capital;
                                                                Senior Vice President, Chief
                                                                Financial Officer and Treasurer,
                                                                Signature Services; Director
                                                                Indocam Japan Limited; Vice
                                                                President and Chief Financial
                                                                Officer, John Hancock Mutual Life
                                                                Insurance Company, Retail Sector
                                                                (until 1997).

Susan S. Newton                      Vice President,            Vice President and Chief Legal
101 Huntington Avenue                Secretary and Chief        Officer the Adviser; John Hancock
Boston, MA 02199                     Legal Officer              Funds; Vice President Signature
March 1950                                                      Services (until May 2000), The
                                                                Berkeley Group, NM Capital and
                                                                SAMCorp.

James J. Stokowski                   Vice President,            Vice President, the Adviser.
101 Huntington Avenue                Treasurer and Chief
Boston, MA  02199                    Accounting Officer
November 1946

Thomas H. Connors                    Vice President and         Vice President and Compliance
101 Huntington Avenue                Compliance Officer         Officer, the Adviser; Vice
Boston, MA  02199                                               President, John Hancock Funds, Inc.
September 1959



-------------------
*   Trustee may be deemed to be an "interested person" of the Fund as defined in
    the Investment Company Act of 1940.
(1) Member of the Executive Committee. The Executive Committee may generally
    exercise most of the powers of the Board of Trustees.
(2) A member of the Investment Committee of the Adviser.
</TABLE>


                                       23
<PAGE>


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


                                 Aggregate           Total Compensation From
                                 Compensation        the Fund and John Hancock
Independent Trustees             From the Fund(1)    Fund Complex to Trustees(2)
--------------------             ----------------    ---------------------------

Dennis S. Aronowitz              $                    $  75,250
Richard P. Chapman, Jr.*                                 75,250
William J. Cosgrove*                                     72,250
Douglas M. Costle (3)                                    56,000
Leland O. Erdahl                                         72,350
Richard A. Farrell                                       75,250
Gail D. Fosler                                           72,250
William F. Glavin*                                       68,100
Dr. John A. Moore*                                       72,350
Patti McGill Peterson                                    75,350
John W. Pratt                                            72,250
                                                         ------
Total                            $                     $786,650

(1)      Compensation is for the fiscal year ended May 31, 2000.

(2)      The total  compensation  paid by the John  Hancock  Fund Complex to the
         Independent  Trustees is as of the  calendar  year ended  December  31,
         1999. As of that, date there were sixty-seven funds in the John Hancock
         Fund  Complex,  with  each of these  Independent  Trustees  serving  on
         thirty-three funds.

         *As of May  31,  2000  the  value  of the  aggregate  accrued  deferred
         compensation amount from all funds in the John Hancock Fund Complex for
         Mr.  Chapman was  $81,203 and for Mr.  Cosgrove  was  $182,174  and Mr.
         Glavin  was  $248,920  and for Dr.  Moore was  $166,978  under the John
         Hancock Deferred Compensation Plan for Independent Trustees.

         **As of  December  31,  1999,  Mr.  Costle  retired  as  Trustee of the
         Complex.


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


                                       24
<PAGE>



As of June 30, 2000, the officers and Trustees of the Fund as a group
beneficially owned less than 1% of the outstanding shares of the Fund. As of
that date, the following shareholders beneficially owned 5% of or more of the
outstanding shares of the Funds listed below:

                                                       Percentage of Total
                                                       Outstanding Shares of the
Name and Address of Shareholders    Class of Shares    Class of the Fund
--------------------------------   -----------------   -------------------------
MLPF&S For The Sole                       B                       15.16%
Benefit of Its Customers
Attn Fund Administration
4800 Deer Lake Drive East
Jacksonville FL 32246-6484

MLPF&S For The Sole                       C                       17.37%
Benefit of Its Customers
Attn Fund Administration
4800 Deer Lake Drive East
Jacksonville FL 32246-6484


INVESTMENT ADVISORY AND OTHER SERVICES

The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts 02199-7603,
was  organized in 1968 and has more than $30 billion in assets under  management
in its  capacity  as  investment  adviser to the Fund and the other funds in the
John  Hancock  group of  funds as well as  retail  and  institutional  privately
managed  accounts.  The Adviser is an affiliate of the Life Company,  one of the
most recognized and respected  financial  institutions in the nation. With total
assets  under  management  of $100  billion,  the Life Company is one of the ten
largest life insurance  companies in the United States, and carries high ratings
from Standard & Poor's and A.M. Best. Founded in 1862, the Life Company has been
serving clients for over 130 years.


The Fund has entered  into an  investment  management  contract  (the  "Advisory
Agreement")  with the Adviser,  which was  approved by the Fund's  shareholders.
Pursuant to the Advisory Agreement,  the Adviser will: (a) furnish  continuously
an  investment  program  for the  Fund and  determine,  subject  to the  overall
supervision and review of the Trustees,  which investments  should be purchased,
held,  sold or exchanged,  and (b) provide  supervision  over all aspects of the
Fund's  operations  except those which are  delegated  to a custodian,  transfer
agent or other agent.

The Fund bears all costs of its organization and operation, including but not
limited to expenses of preparing, printing and mailing all shareholders'
reports, notices, prospectuses, proxy statements and reports to regulatory
agencies, expenses relating to the issuance, registration and qualification of
shares; government fees; interest charges; expenses of furnishing to
shareholders their account statements; taxes; expenses of redeeming shares;
brokerage and other expenses connected with the execution of portfolio
securities transactions; expenses pursuant to the Fund's plan of distribution;
fees and expenses of custodians including those for keeping books and accounts,
maintaining a committed line of credit and calculating the net asset value of
shares; fees and expenses of transfer agents and dividend disbursing agents;
legal, accounting, financial, management, tax and auditing fees and expenses of
the Fund (including an allocable portion of the cost of the Adviser's employees
rendering such services to the Fund); the compensation and expenses of Trustees
who are not otherwise affiliated with the Trust, the Adviser or any of their
affiliates; expenses of Trustees' and shareholders' meetings; trade association
membership; insurance premiums; and any extraordinary expenses.


                                       25
<PAGE>


As compensation for its services under the Advisory Agreement, the Fund pays the
Adviser monthly a fee, based on a stated  percentage of the average of the daily
net assets the Fund as follows:

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

First $100,000,000                           0.60%
Next  $150,000,000                           0.45%
Next  $250,000,000                           0.40%
Next  $150,000,000                           0.35%
Amount over $650,000,000                     0.30%

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


For the years ended May 31, 1998, 1999 and 2000 the Adviser received a fee of
$3,388,285, $4,078,633 and $ , respectively.


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


Pursuant to its Advisory Agreement, the Adviser is not liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which the Advisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its duties or from reckless disregard by the
Adviser of its obligations and duties under the Advisory Agreement.


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

The continuation of the Advisory Agreement and Distribution Agreement was
approved by all of the Trustees. The Advisory Agreement and the Distribution
Agreement will continue in effect from year to year, provided that its
continuance is approved annually both (i) by the holders of a majority of the
outstanding voting securities of the Trust or by the Trustees, and (ii) by a
majority of the Trustees who are not parties to the Agreement or "interested
persons" of any such parties. Both Agreements may be terminated on 60 days
written notice by either party or by vote of a majority of the outstanding
voting securities of the Fund and will terminate automatically if assigned.


                                       26
<PAGE>



Accounting and Legal Services Agreement.  The Trust, on behalf of the Fund, is a
party to an Accounting and Legal Services  Agreement with the Adviser.  Pursuant
to this agreement,  the Adviser  provides the Fund with certain tax,  accounting
and  legal  services.  For the  fiscal  year  ended  May 31,  1998,1999  and $ ,
respectively, the Fund paid the Adviser $150,061, $157,696, $ for services under
this Agreement.

Personnel  of the  Adviser and its  affiliates  may trade  securities  for their
personal accounts. The Fund also may hold, or may be buying or selling, the same
securities.  To prevent the Fund from being  disadvantaged,  the Adviser and its
affiliates  and the Fund  have  adopted  a code of ethics  which  restricts  the
trading activity of those personnel.

DISTRIBUTION CONTRACTS

The Fund has a  Distribution  Agreement  with  John  Hancock  Funds.  Under  the
agreement,  John  Hancock  Funds is  obligated  to use its best  efforts to sell
shares of each class on behalf of the Fund.  Shares of the Fund are also sold by
selected  broker-dealers (the "Selling Brokers") which have entered into selling
agency agreements with John Hancock Funds.  These Selling Brokers are authorized
to designate other  intermediaries  to receive purchase and redemption orders on
behalf of the Fund.  John Hancock Funds  accepts  orders for the purchase of the
shares of the Fund  which  are  continually  offered  at net  asset  value  next
determined,  plus any applicable  sales charge,  if any. In connection  with the
sale of Fund shares, John Hancock Funds and Selling Brokers receive compensation
from a sales charge imposed,  in the case of Class A and C shares at the time of
sale. In the case of Class B or Class C shares, the broker receives compensation
immediately but John Hancock Funds is compensated on a deferred basis.

Total  underwriting  commissions  for sales of the Fund's Class A shares for the
fiscal years ended May 31, 1998, 1999 and 2000 were $2,351,277, $2,771,216 and $
, respectively.  Of such amounts, $279,714, $222,127 and $ , respectively,  were
retained by John  Hancock  Funds in 1998,  1999 and 2000.  The  remainder of the
underwriting commissions were reallowed to dealers.

The Fund's Trustees adopted Distribution Plans with respect to each class of
shares (the "Plans"), pursuant to Rule 12b-1 under the Investment Company Act of
1940. Under the Plans, the Fund will pay distribution and service fees at an
aggregate annual rate of up to 0.30% for Class A shares and 1.00% for Class B
and Class C shares of the Fund's average daily net assets attributable to shares
of that class. However, the service fee will not exceed 0.25% of the Fund's
average daily net assets attributable to each class of shares. The distribution
fees will be used to reimburse John Hancock Funds for its distribution expenses,
including but not limited to: (i) initial and ongoing sales compensation to
Selling Brokers and others engaged in the sale of Fund shares, (ii) marketing,
promotional and overhead expenses incurred in connection with the distribution
of Fund shares, and (iii) with respect to Class B and Class C shares only,
interest expenses on unreimbursed distribution expenses. The service fees will
be used to compensate Selling Brokers and others for providing personal and
account maintenance services to shareholders. In the event that John Hancock
Funds is not fully reimbursed for payments it makes or expenses it incurs under
the Class A Plan, these expenses will not be carried beyond one year from the
date they were incurred. Unreimbursed expenses under the Class B and Class C


                                       27
<PAGE>


Plans will be carried forward together with interest on the balance of these
unreimbursed expenses. The Fund does not treat unreimbursed expenses under Class
B and Class C Plans as a liability of the Fund, because the Trustees may
terminate the Class B and/or Class C Plans at any time. For the period ended May
31, 2000 an aggregate of $ of distribution expenses or % of the average net
assets of the Class B shares of the Fund was not reimbursed or recovered by John
Hancock Funds through the receipt of deferred sales charges or 12b-1 fees in
prior periods. For the period ended May 31, 2000 an aggregate of $ of
distribution expenses or % of the average net assets of the Class C shares of
the Fund was not reimbursed or recovered by John Hancock Funds through the
receipt of deferred sales charges or 12b-1 fees.


The Plans were approved by a majority of the voting  securities of the Fund. The
Plans and all amendments were approved by the Trustees,  including a majority of
the Trustees who are not  interested  persons of the Fund and who have no direct
or indirect  financial  interest in the operation of the Plans (the "Independent
Trustees"), by votes cast in person at meetings called for the purpose of voting
on these Plans.

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

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

Amounts paid to John  Hancock  Funds by any class of shares of the Fund will not
be used to pay the expenses  incurred  with respect to any other class of shares
of the Fund;  provided,  however,  that expenses  attributable  to the Fund as a
whole will be allocated,  to the extent permitted by law, according to a formula
based upon gross  sales  dollars  and/or  average  daily net assets of each such
class,  as may be  approved  from  time to time  by  vote of a  majority  of the
Trustees.  From time to time,  the Fund may  participate  in joint  distribution
activities  with other Funds and the costs of those  activities will be borne by
each Fund in  proportion  to the relative  net asset value of the  participating
Funds.


During the fiscal year ended May 31, 2000, the Fund paid John Hancock Funds the
following amounts of expenses in connection with their services for the Fund.


                                       28
<PAGE>

<TABLE>
<CAPTION>


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


Class A Shares           $                $                  $                   $                  $        0
Class B Shares           $                $                  $                   $                  $
Class C Shares           $                $                  $                   $                  $        0

SALES COMPENSATION

As part of their business  strategies,  the Fund, along with John Hancock Funds,
pay compensation to financial services firms that sell the Fund's shares.  These
firms  typically  pass along a portion of this  compensation  to your  financial
representative.

The two primary sources of compensation payments are (1) the 12b-1 fees that are
paid out of the Fund's assets and (2) sales charges paid by investors. The sales
charges and 12b-1 fees are detailed in the  prospectus  and under  "Distribution
Contracts:  in this Statement of Additional  Information.  The portions of these
expenses  that are reallowed to financial  services  firms are shown on the next
page.

Whenever  you make an  investment  in the  fund,  the  financial  services  firm
receives a  reallowance,  as described  below.  The firm also receives the first
year's  service  fee at this  time.  Beginning  with the  second  year  after an
investment is made,  the financial  services firm receives an annual service fee
of 0.25% of its total  eligible fund net assets.  This fee is paid  quarterly in
arrears by the Fund.

In addition, from time to time, John Hancock Funds, at its expense, may provide
significant additional compensation to financial services firms which sell or
arrange for the sale of shares of the Fund. Such compensation provided by John
Hancock Funds may include, for example, financial assistance to financial
services firms in connection with their conferences or seminars, sales or
training programs for invited registered representatives and other employees,
payment for travel expenses, including lodging, incurred by registered
representatives and other employees for such seminars or training programs,
seminars for the public, advertising and sales campaigns regarding one or more
Funds, and/or other financial services firms-sponsored events or activities.
From time to time, John Hancock Funds may make expense reimbursements for
special training of a financial services firm's registered representatives and
other employees in group meetings or to help pay the expenses of sales contests.
Other compensation, such as asset retention fees, finder's fees and
reimbursement for wire transfer fees, may be offered to the extent not
prohibited by law or any self-regulatory agency, such as the NASD.


                                       29
<PAGE>


                                                                                 First year
                                Sales charge            Maximum                  service fee        Maximum
                                paid by investors       reallowance              (% of net          total compensation (1)
Class A investments             (% of offering price)   (% of offering price)    investment) (3)    (% of offering price)
-------------------             ---------------------   ---------------------    ---------------    ---------------------
       <S>                               <C>                     <C>                    <C>                  <C>

Up to $99,999                   4.50%                   3.76%                    0.25%              4.00%
$100,000 - $249,999             3.75%                   3.01%                    0.25%              3.25%
$250,000 - $499,999             2.75%                   2.06%                    0.25%              2.30%
$500,000 - $999,999             2.00%                   1.51%                    0.25%              1.75%

Regular investments of
Class A shares of
$1 million or more (4)
----------------------

First $1M - $4,999,999         --                       0.75%                    0.25%              1.00%
Next $1M - $5M above that      --                       0.25%                    0.25%              0.50% (2)
Next $1 or more above that     --                       0.00%                    0.25%              0.25% (2)

Retirement investments of
Class A shares of $1
million or more*
----------------

First $1M - $24,999,999                                 0.75%                    0.25%              1.00%
Next $25M -$49,999,999                                  0.25%                    0.25%              0.50%
Next $1 or more above that                              0.00%                    0.25%              0.25%

                                                                                 First year
                                                        Maximum                  service fee        Maximum total
                                                        reallowance              (% of net          compensation (1)
Class B investments                                     (% of offering price)    investment) (3)    (% of offering price)
-------------------                                     ---------------------    ---------------    --------------------

All investments                                         3.75%                    0.25%              4.00%

                                                                                 First year
                                                        Maximum                  service fee        Maximum total
                                                        reallowance              (% of net          compensation (1)
Class C investments                                     (% of offering price)    investment) (3)    (% of offering price)
-------------------                                     ---------------------    ---------------    ---------------------

Amounts purchased at NAV
                                --                      0.75%                    0.25%              1.00%
All other amounts               1.00%                   1.75%                    0.25%              2.00%
</TABLE>

(1) Reallowance percentages and service fee percentages are calculated from
different amounts, and therefore may not equal total compensation percentages if
combined using simple addition.

(2) For Group Investment Program sales, the maximum total compensation for
investments of $1 million or more is 1.00% of the offering price (one year CDSC
of 1.00% applies for each sale).

(3) After first year subsequent service fees are paid quarterly in arrears.

(4) Includes new investments aggregated with investments since the last annual
reset. John Hancock Funds may take recent redemptions into account in
determining if an investment qualifies as a new investment.


                                       30
<PAGE>


CDSC revenues collected by John Hancock Funds may be used to pay commissions
when there is no initial sales charge.

*Retirement investments only. These include traditional and Roth IRAs, SIMPLE
IRAs, SIMPLE 401(k), Rollover IRA, TSA, 457, 403(b), 401(k), Money Purchase
Pension Plan, profit-sharing plan and other retirement plans as described in the
Internal Revenue Code.


NET ASSET VALUE

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

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

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

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

Foreign securities are valued on the basis of quotations from the primary market
in which  they are  traded.  Any  assets or  liabilities  expressed  in terms of
foreign  currencies are translated into U.S. dollars by the custodian bank based
on London currency exchange  quotations as of 5:00 p.m. London time (12:00 noon,
New York time) on the date of any  determination  of a Fund's NAV. If quotations
are not readily available,  or the value has been materially  affected by events
occurring after the closing of a foreign  market,  assets are valued by a method
that the Trustees believe accurately reflects fair value.

The NAV for each fund and class is determined  each business day at the close of
regular  trading on the New York Stock  Exchange  (typically  4:00 p.m.  Eastern
Time) by dividing a class's net assets by the number of its shares  outstanding.
On any day an international  market is closed and the New York Stock Exchange is
open,  any foreign  securities  will be valued at the prior day's close with the
current day's  exchange  rate.  Trading of foreign  securities may take place on
Saturdays and U.S.  business holidays on which the Fund's NAV is not calculated.
Consequently,  the  Fund's  portfolio  securities  may  trade and the NAV of the
Fund's  redeemable  securities  may be  significantly  affected  on days  when a
shareholder has no access to the Fund.


INITIAL SALES CHARGE ON CLASS A AND CLASS C SHARES


Shares of the Fund are offered at a price equal to their net asset value plus a
sales charge which, at the option of the purchaser, may be imposed either at the
time of purchase (the "initial sales charge alternative") or on a contingent
deferred basis (the "deferred sales charge alternative"). The fund no longer
issues share certificates. Shares are electronically recorded. The Trustees
reserve the right to change or waive the Fund's minimum investment requirements
and to reject any order to purchase shares (including purchase by exchange) when
in the judgment of the Adviser such rejection is in the Fund's best interest.


                                       31
<PAGE>



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


Without Sales Charges.  Class A shares may be offered  without a front-end sales
charge or contingent  deferred sales charge ("CDSC") to various  individuals and
institutions as follows:


         o A Trustee or officer of the Trust;  a Director or officer of the
         Adviser  and its  affiliates  or Selling  Brokers;  employees  or sales
         representatives of any of the foregoing; retired officers, employees or
         Directors of any of the  foregoing;  a member of the  immediate  family
         (spouse,  children,  grandchildren,  mother, father,  sister,  brother,
         mother-in-law,  father-in-law,   daughter-in-law,   son-in-law,  niece,
         nephew,  grandparents  and  same-sex  domestic  partner)  of any of the
         foregoing;  or any fund, pension,  profit sharing or other benefit plan
         for the individuals described above.


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

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

         o A member of a class action lawsuit against  insurance  companies
         who is investing settlement proceeds.


         o  Retirement  plans  participating  in  Merrill  Lynch  servicing
         programs,  if the  Plan has  more  than $3  million  in  assets  or 500
         eligible employees at the date the Plan Sponsor signs the Merrill Lynch
         Recordkeeping  Service  Agreement.   See  you  Merril  Lynch  financial
         cosultant for further information.


         o   Retirement  plans  investing   through  the  PruArray  Program
         sponsored by Prudential Securities.

         o Pension plans  transferring  assets from a John Hancock variable
         annuity  contract  to the Fund  pursuant  to an  exemptive  application
         approved by the Securities Exchange Commission.



         o Existing full service clients of the Life Company who were group
         annuity  contract  holders as of  September  1, 1994,  and  participant
         directed retirement plans with at least 100 eligible employees at the
         inception of the Fund  account.  Each of these  investors  may purchase
         Class A shares with no initial sales charge. However, if the shares are
         redeemed  within 12 months after the end of the calendar  year in which
         the purchase was made, a CDSC will be imposed at the following rate:


                                       32
<PAGE>



            Amount Invested                                   CDSC Rate
            ---------------                                   ---------

           $1 to $4,999,999                                     1.00%
           Next $5 million to $9,999,999                        0.50%
           Amounts of $10 million and over                      0.25%


Class C shares may be offered without a front-end sales charge to:

o             Retirement  plans  for  which  John  Hancock  Signature   Services
              performs employer  sponsored plan recordkeeping  services.  (These
              types of plans include  401(k),  money  purchase  pension,  profit
              sharing and SIMPLE 401k.)

o             An investor  who buys  through a Merrill  Lynch  omnibus  account.
              However,  a CDSC may apply if the shares are sold within 12 months
              of purchase.

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


Combination  Privilege.  In calculating the sales charge applicable to purchases
of Class A shares  made at one time,  the  purchases  will be combined to reduce
sales charges if made by (a) an individual, his or her spouse and their children
under the age of 21, purchasing  securities for his or their own account,  (b) a
trustee or other  fiduciary  purchasing for a single trust,  estate or fiduciary
account,  and (c) groups  which  qualify for the Group  Investment  Program (see
below). A company's (not an individual's) qualified and non-qualified retirement
plan  investments can be combined to take advantage of this  privilege.  Further
information about combined purchases, including certain restrictions on combined
group  purchases,  is available  from Signature  Services or a Selling  Broker's
representative.

Accumulation Privilege.  Investors (including investors combining purchases) who
are  already  Class A  shareholders  may also  obtain the benefit of the reduced
sales charge by taking into account not only the amount being  invested but also
the investor's  purchase price or current account value of the Class A shares of
all John Hancock  funds which carry a sales charge  already held by such person.
Class A shares of John Hancock  money market funds will only be eligible for the
accumulation privilege if the investor has previously paid a sales charge on the
amount of those shares. Retirement plan investors may include the value of Class
B shares if Class B shares held are greater  than $1 million.  Retirement  plans
must notify  Signature  Services to utilize.  A company's (not an  individual's)
qualified and non-qualified  retirement plan investments can be combined to take
advantage of this privilege.

Group Investment Program. Under the Combination and Accumulation Privileges, all
members of a group may combine their  individual  purchases of Class A shares to
potentially  qualify for breakpoints in the sales charge schedule.  This feature
is  provided  to any  group  which (1) has been in  existence  for more than six
months,  (2) has a  legitimate  purpose  other than the  purchase of mutual fund
shares at a discount for its members,  (3) utilizes salary  deduction or similar
group methods of payment, and (4) agrees to allow sales materials of the fund in
its mailings to members at a reduced or no cost to John Hancock Funds.


Letter of Intention. The reduced sales charges are also applicable to
investments in shares made over a specified period pursuant to a Letter of
Intention (the "LOI"), which should be read carefully prior to its execution by
an investor. The Fund offers two options regarding the specified period for
making investments under the LOI. All investors have the option of making their
investments over a specified period of thirteen (13) months. Investors who are
using the Fund as a funding medium for a retirement plan, however, may opt to
make the necessary investments called for by the LOI over a forty-eight (48)
month period. These retirement plans include traditional and Roth IRAs, SEP,
SARSEP, 401(k), 403(b) (including TSAs), SIMPLE IRA, SIMPLE 401(k), Money
Purchase Pension, Profit Sharing and Section 457 plans. An individual's
non-qualified and qualified retirement plans investments cannot be combined to
satisfy an LOI of 48 months. Such an investment (including accumulations and


                                       33
<PAGE>


combinations but not including reinvested dividends) must aggregate $100,000 or
more invested during the specified period from the date of the LOI or from a
date within ninety (90) days prior thereto, upon written request to Signature
Services. The sales charge applicable to all amounts invested under the LOI is
computed as if the aggregate amount intended to be invested had been invested
immediately. If such aggregate amount is not actually invested, the difference
in the sales charge actually paid and the sales charge payable had the LOI not
been in effect is due from the investor. However, for the purchases actually
made within the specified period (either 13 or 48 months) the sales charge
applicable will not be higher than that which would have applied (including
accumulations and combinations) had the LOI been for the amount actually
invested.


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

DEFERRED SALES CHARGE ON CLASS B AND CLASS C SHARES


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


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

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

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

In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that your redemption comes first from shares you have held
beyond the six-year CDSC redemption period for Class B or one year CDSC
redemption period for Class C or those you acquired through dividend and capital
gain reinvestment, and next from the shares you have held the longest during the
six-year period for Class B shares. For this purpose, the amount of any increase
in a share's value above its initial purchase price is not regarded as a share
exempt from CDSC. Thus, when a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.


                                       34
<PAGE>


When requesting a redemption for a specific dollar amount please indicate if you
require the proceeds to equal the dollar  amount  requested.  If not  indicated,
only the  specified  dollar  amount will be redeemed  from your  account and the
proceeds will be less any applicable CDSC.

Example:


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


    oProceeds of 50 shares redeemed at $12 per shares (50 x 12)         $600.00
    o*Minus Appreciation ($12 - $10) x 100 shares                       (200.00)
    o Minus proceeds of 10 shares not subject to
      CDSC (dividend reinvestment)                                      (120.00)
                                                                         ------
    oAmount subject to CDSC                                            $ 280.00

    *The appreciation is based on all 100 shares in the account not just
     the shares being redeemed.

Proceeds  from the CDSC are paid to John Hancock  Funds and are used in whole or
in part by John  Hancock  Funds to defray  its  expenses  related  to  providing
distribution-related  services  to the Fund in  connection  with the sale of the
Class B and Class C shares,  such as the  payment of  compensation  to  selected
Selling  Brokers for selling Class B and Class C shares.  The combination of the
CDSC and the  distribution  and service fees facilitates the ability of the Fund
to sell the Class B and Class C shares  without a sales charge being deducted at
the time of the purchase.

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

For all account types:

*        Redemptions made pursuant to the Fund's right to liquidate your account
         if you own shares worth less than $1,000.

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

*        Redemptions due to death or disability. (Does not apply to trust
         accounts unless trust is being dissolved.)

*        Redemptions  made under the  Reinstatement  Privilege,  as described in
         "Sales Charge Reductions and Waivers" of the Prospectus.

*        Redemptions  of Class B (but not Class C) shares  made under a periodic
         withdrawal  plan,  or  redemptions  for fees  charged  by  planners  or
         advisors for advisory  services,  as long as your annual redemptions do
         not exceed 12% of your account value,  including reinvested  dividends,
         at the time you  established  your periodic  withdrawal plan and 12% of
         the value of subsequent  investments (less redemptions) in that account
         at the time you notify  Investor  Services.  (Please note,  this waiver
         does not apply to periodic  withdrawal  plan  redemptions of Class A or
         Class C shares that are subject to a CDSC.)


                                       35
<PAGE>


*        Redemptions  by  Retirement   plans   participating  in  Merrill  Lynch
         servicing  programs,  if the Plan has less than $3 million in assets or
         500 eligible  employees at the date the Plan Sponsor  signs the Merrill
         Lynch Recordkeeping Service Agreement.  See you Merrill Lynch financial
         consultant for further information.

*        Redemptions by Class A shares by retirement plans that invested through
         the PruArray Program sponsored by Prudential Securities.

*        Redemptions of Class A shares by retirement plans at John Hancock for
         which John Hancock is the recordkeeper.

For Retirement  Accounts (such as traditional and Roth IRAs,  SIMPLE IRA, SIMPLE
401(k),  Rollover IRA, TSA, 457,  403(b),  401(k),  Money Purchase Pension Plan,
Profit-Sharing  Plan and other plans as described in the Internal  Revenue Code)
unless otherwise noted.


*        Redemptions made to effect mandatory or life expectancy distributions
         under the Internal Revenue Code.


*        Returns of excess contributions made to these plans.

*        Redemptions   made  to  effect   distributions   to   participants   or
         beneficiaries  from employer  sponsored  retirement plans under section
         401(a) (such as Money Purchase Pension Plans and  Profit-Sharing/401(k)
         Plans), 457 and 408 (SEPs and SIMPLE IRAs of the Internal Revenue Code.

*        Redemptions from certain IRA and retirement plans that purchased shares
         prior to October 1, 1992 and  certain IRA plans that  purchased  shares
         prior to May 15, 1995.

Please see matrix for some examples.


                                       36
<PAGE>

<TABLE>
<CAPTION>

         <S>                   <C>               <C>               <C>             <C>                 <C>

----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Type of                 401 (a) Plan      403 (b)           457              IRA, IRA          Non-retirement
Distribution            (401 (k), MPP,                                       Rollover
                        PSP) 457 & 408
                        (SEPs & Simple
                        IRAs)
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Death or Disability     Waived            Waived            Waived           Waived            Waived
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Over 70 1/2             Waived            Waived            Waived           Waived for        12% of account
                                                                             mandatory         value annually
                                                                             distributions     in periodic
                                                                             or 12% of         payments
                                                                             account value
                                                                             annually in
                                                                             periodic
                                                                             payments.
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Between 59 1/2          Waived            Waived            Waived           Waived for Life   12% of account
and 70 1/2                                                                   Expectancy or     value annually
                                                                             12% of account    in periodic
                                                                             value annually    payments
                                                                             in periodic
                                                                             payments.
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Under 59 1/2            Waived for        Waived for        Waived for       Waived for        12% of account
(Class B only)          annuity           annuity           annuity          annuity           value annually
                        payments (72t)    payments (72t)    payments (72t)   payments (72t)    in periodic
                        or 12% of         or 12% of         or 12% of        or 12% of         payments
                        account value     account value     account value    account value
                        annually in       annually in       annually in      annually in
                        periodic          periodic          periodic         periodic
                        payments.         payments.         payments.        payments.
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Loans                   Waived            Waived            N/A              N/A               N/A
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Termination of Plan     Not Waived        Not Waived        Not Waived       Not Waived        N/A
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Hardships               Waived            Waived            Waived           N/A               N/A
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Qualified Domestic      Waived            Waived            Waived           N/A               N/A
Relations Orders
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Termination of          Waived            Waived            Waived           N/A               N/A
Employment Before
Normal Retirement Age
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
Return of Excess        Waived            Waived            Waived           Waived            N/A
----------------------- ----------------- ----------------- ---------------- ----------------- ----------------
</TABLE>

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


                                       37
<PAGE>


SPECIAL REDEMPTIONS

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

ADDITIONAL SERVICES AND PROGRAMS

Exchange Privilege.  The Fund permits exchanges of shares of any class of a fund
for shares of the same class in any other John Hancock fund offering that class.

Exchanges  between funds with shares that are not subject to a CDSC are based on
their  respective net asset values.  No sales charge or  transactions  charge is
imposed.  Shares of the Fund which are subject to a CDSC may be  exchanged  into
shares of any of the other John Hancock funds that are subject to a CDSC without
incurring the CDSC; however,  the shares acquired in an exchange will be subject
to the CDSC schedule of the shares acquired if and when such shares are redeemed
(except that shares  exchanged into John Hancock 500 Index Fund and John Hancock
Intermediate  Government  Fund will retain the exchanged  fund's CDSC schedule).
For purposes of computing the CDSC payable upon redemption of shares acquired in
an exchange,  the holding period of the original  shares is added to the holding
period of the shares acquired in an exchange.

If a shareholder exchanges Class B shares purchased prior to January 1, 1994 for
Class B shares of any other John Hancock fund, the acquired shares will continue
to be subject to the CDSC schedule that was in effect when the exchanged  shares
were purchased.

The Fund  reserves the right to require that  previously  exchanged  shares (and
reinvested  dividends)  be in the  Fund  for 90 days  before  a  shareholder  is
permitted a new exchange.

The Fund may  refuse  any  exchange  order.  The Fund may  change or cancel  its
exchange policies at any time, upon 60 days' notice to its shareholders.

An exchange of shares is treated as a  redemption  of shares of one fund and the
purchase of shares of another for Federal  Income Tax purposes.  An exchange may
result in a taxable gain or loss. See "TAX STATUS".

Systematic Withdrawal Plan. The Fund permits the establishment of a Systematic
Withdrawal Plan. Payments under this plan represent proceeds arising from the
redemption of Fund shares which may result in realization of gain or loss for
purposes of Federal, state and local income taxes. The maintenance of a
Systematic Withdrawal Plan concurrently with purchases of additional shares of
the Fund could be disadvantageous to a shareholder because of the initial sales
charge payable on purchases of Class A shares and the CDSC imposed on
redemptions of Class B and Class C shares and because redemptions are taxable
events. Therefore, a shareholder should not purchase shares at the same time
that a Systematic Withdrawal Plan is in effect. The Fund reserves the right to
modify or discontinue the Systematic Withdrawal Plan of any shareholder on 30
days' prior written notice to such shareholder, or to discontinue the
availability of such plan in the future. The shareholder may terminate the plan
at any time by giving proper notice to Signature Services.


                                       38
<PAGE>


Monthly Automatic Accumulation Program (MAAP). The program is explained in the
Prospectus. The program, as it relates to automatic investment checks, is
subject to the following conditions:

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

The privilege of making investments through the MAAP may be revoked by Signature
Services without prior notice if any check is not honored by your bank. The bank
shall be under no obligation to notify the  shareholder as to the non-payment of
any checks.

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

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

To protect the interests of other investors in the Fund, the Fund may cancel the
reinvestment  privilege  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. Also, the Fund may refuse any reinvestment
request.

The Fund may change or cancel the reinvestment privilege at any time.

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

Retirement plans participating in Merrill Lynch's servicing programs:

Class A shares  are  available  at net asset  value for plans with $3 million in
plan assets or 500 eligible  employees  at the date the Plan  Sponsor  signs the
Merrill Lynch Recordkeeping Service Agreement.  If the plan does not meet either
of these limits, Class A shares are not available.

For participating retirement plans investing in Class B share, shares will
convert to Class A shares after eight years, or sooner if the plan attains
assets of $5 million (by means of a CDSC-free redemption/purchase at net asset
value).


                                       39
<PAGE>



PURCHASES AND REDEMPTIONS THROUGH THIRD PARTIES

Shares of the Fund may be purchased or redeemed through certain  broker-dealers.
Brokers  may charge for their  services  or place  limitations  on the extent to
which  you may use the  services  of the  Fund.  The Fund will be deemed to have
received  a  purchase  or  redemption  order when an  authorized  broker,  or if
applicable,  a broker's authorized designee,  receives the order. If a broker is
an  agent  or  designee  of the  Fund,  orders  are  processed  at the NAV  next
calculated  after the broker  receives the order.  The broker must segregate any
orders it  receives  after the close of  regular  trading  on the New York Stock
Exchange  and  transmit  those  orders  to the  Fund for  execution  at NAV next
determined.  Some brokers that maintain nominee accounts with the Fund for their
clients charge an annual fee on the average net assets held in such accounts for
accounting,  servicing,  and distribution  services they provide with respect to
the underlying Fund shares. The Adviser,  the Fund, and John Hancock Funds, Inc.
(the Fund's principal distributor), share in the expense of these fees.


DESCRIPTION OF THE FUND'S SHARES

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

The  shares  of the  Fund  represent  an  equal  proportionate  interest  in the
aggregate net assets attributed to that class of the Fund. Holders of each class
of shares each have certain exclusive voting rights on matters relating to their
respective  distribution  plans.  The  different  classes  of the  Fund may bear
different  expenses  relating  to  the  cost  of  holding  shareholder  meetings
necessitated by the exclusive voting rights of any class of shares.

Dividends paid by the Fund, if any, with respect to each class of shares will be
calculated in the same manner,  at the same time and on the same day and will be
in the same amount, except for differences resulting from the facts that (i) the
distribution  and service fees relating to each class will be borne  exclusively
by that class; (ii) Class B and Class C shares will pay higher  distribution and
service  fees than Class A shares;  and (iii) each class of shares will bear any
class  expenses  properly  allocable  to that  class of  shares,  subject to the
conditions   the  Internal   Revenue   Service   imposes  with  respect  to  the
multiple-class  structures.  Similarly,  the net asset  value per share may vary
depending on which class of shares are  purchased.  No interest  will be paid on
uncashed dividend or redemption checks.

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

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


                                       40
<PAGE>


Under Massachusetts law,  shareholders of a Massachusetts  business trust could,
under certain  circumstances,  be held personally liable for acts or obligations
of the trust.  However,  the Fund's  Declaration  of Trust  contains  an express
disclaimer  of  shareholder  liability for acts,  obligations  or affairs of the
Fund.  The  Declaration  of Trust also provides for  indemnification  out of the
Fund's  assets for all losses and expenses of any  shareholder  held  personally
liable by reason of being or having been a shareholder. The Declaration of Trust
also provides that no series of the Trust shall be liable for the liabilities of
any other series.  Liability is therefore  limited to circumstances in which the
Fund itself would be unable to meet its obligations, and the possibility of this
occurrence is remote.

The Fund reserves the right to reject any  application  which conflicts with the
Fund's  internal  policies or the  policies of any  regulatory  authority.  John
Hancock Funds does not accept  starter,  credit card or third party checks.  All
checks  returned by the post office as  undeliverable  will be reinvested at net
asset  value in the fund or funds from which a  redemption  was made or dividend
paid. Information provided on the account application may be used by the Fund to
verify the accuracy of the  information or for  background or financial  history
purposes.  A joint account will be administered as a joint tenancy with right of
survivorship,  unless the joint owners notify Signature  Services of a different
intent.  A shareholder's  account is governed by the laws of The Commonwealth of
Massachusetts.  For telephone transactions the transfer agent will take measures
to verify the identity of the caller,  such as asking for name,  account number,
Social Security or other taxpayer ID number and other relevant  information.  If
appropriate  measures are taken,  the transfer agent is not  responsible for any
losses that may occur to any account due to an unauthorized telephone call. Also
for your protection  telephone  transactions are not permitted on accounts whose
names or addresses have changed within the past 30 days. Proceeds from telephone
transactions can only be mailed to the address of record.

Selling activities for the Fund may not take place outside the U.S. except with
U.S. military bases, APO addresses and U.S. diplomats. Brokers of record on
Non-U.S. investors' accounts with foreign mailing addresses are required to
certify that all sales activities have occurred, and in the future will occur,
only in the U.S. A foreign corporation may purchase shares of the Fund only if
it has a U.S. mailing address.

TAX STATUS

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

The Fund will be subject to a 4%  non-deductible  Federal  excise tax on certain
amounts not distributed (and not treated as having been distributed) on a timely
basis in accordance  with annual  minimum  distribution  requirements.  The Fund
intends under normal  circumstances  to seek to avoid or minimize  liability for
such tax by satisfying such distribution requirements.

Distributions from the Fund's current or accumulated earnings and profits
("E&P") will be taxable under the Code for investors who are subject to tax. If
these distributions are paid from the Fund's "investment company taxable
income," they will be taxable as ordinary income; and if they are paid from the
Fund's "net capital gain," they will be taxable as capital gain. (Net capital
gain is the excess (if any) of net long-term capital gain over net short-term


                                       41
<PAGE>


capital loss, and investment company taxable income is all taxable income and
capital gains, other than those gains and losses included in computing net
capital gain, after reduction by deductible expenses.) Some distributions may be
paid in January but may be taxable to shareholders as if they had been received
on December 31 of the previous year. The tax treatment described above will
apply without regard to whether distributions are received in cash or reinvested
in additional shares of the Fund.

Distributions,  if any,  in excess of E&P will  constitute  a return of  capital
under the Code, which will first reduce an investor's  federal tax basis in Fund
shares and then, to the extent such basis is exceeded,  will generally give rise
to capital gains.  Shareholders who have chosen automatic  reinvestment of their
distributions  will have a federal tax basis in each share received  pursuant to
such a  reinvestment  equal to the amount of cash they would have  received  had
they  elected  to receive  the  distribution  in cash,  divided by the number of
shares received in the reinvestment.

Foreign  exchange  gains and  losses  realized  by the Fund in  connection  with
certain  transactions  involving foreign  currency-denominated  debt securities,
certain foreign currency options,  foreign currency forward  contracts,  foreign
currencies,  or payables or receivables  denominated  in a foreign  currency are
subject to Section 988 of the Code, which generally causes such gains and losses
to be treated as ordinary  income and losses and may affect the  amount,  timing
and  character  of  distributions  to  shareholders.   Transactions  in  foreign
currencies  that are not directly  related to the Fund's  investment in stock or
securities, including speculative currency positions could under future Treasury
regulations produce income not among the types of "qualifying income" from which
the Fund must derive at least 90% of its gross income for each taxable  year. If
the net foreign  exchange loss for a year treated as ordinary loss under Section
988 were to exceed the Fund's investment company taxable income computed without
regard to such loss, the resulting overall ordinary loss for such year would not
be deductible by the Fund or its shareholders in future years.

The Fund may be  subject  to  withholding  and other  taxes  imposed  by foreign
countries  with  respect  to its  investments  in foreign  securities.  Some tax
conventions  between certain countries and the U.S. may reduce or eliminate such
taxes. Investors may be entitled to claim U.S. foreign tax credits or deductions
with respect to foreign income taxes or certain other foreign taxes  ("qualified
foreign  taxes"),   paid  by  the  Fund,   subject  to  certain  holding  period
requirements  and limitations  contained in the Code, if the Fund so elects.  If
more  than 50% of the  value of the  Fund's  total  assets  at the  close of any
taxable year consists of stock or securities of foreign  corporations,  the Fund
may file an  election  with  the  Internal  Revenue  Service  pursuant  to which
shareholders  of the Fund will be  required  to (i)  include in  ordinary  gross
income (in addition to taxable  dividends and distributions  actually  received)
their pro rata shares of  qualified  foreign  taxes paid by the Fund even though
not actually  received by them, and (ii) treat such respective pro rata portions
as qualified foreign income taxes paid by them.

If the Fund makes this election, shareholders may then deduct such pro rata
portions of qualified foreign taxes in computing their taxable incomes, or,
alternatively, use them as foreign tax credits, subject to applicable
limitations, against their U.S. Federal income taxes. Shareholders who do not
itemize deductions for Federal income tax purposes will not, however, be able to
deduct their pro rata portion of qualified foreign taxes paid by the Fund,
although such shareholders will be required to include their share of such taxes
in gross income. Shareholders who claim a foreign income tax credit for such
foreign taxes may be required to treat a portion of dividends received from the


                                       42
<PAGE>


Fund as a separate category of income for purposes of computing the limitations
on the foreign tax credit. Tax-exempt shareholders will ordinarily not benefit
from this election. Each year (if any) that the Fund files the election
described above, its shareholders will be notified of the amount of (i) each
shareholder's pro rata share of qualified foreign income taxes paid by the Fund
and (ii) the portion of Fund dividends which represents income from each foreign
country. If the Fund does not satisfy the 50% requirement described above or
otherwise does not make the election, the Fund will deduct the foreign taxes it
pays in determining the amount it has available for distribution to
shareholders, and shareholders will not include these foreign taxes in their
income, nor will they be entitled to any tax deductions or credits with respect
to such taxes.

The amount of the Fund's net realized  capital gains,  if any, in any given year
will vary depending upon the Adviser's current  investment  strategy and whether
the  Adviser  believes  it to be in the best  interest of the Fund to dispose of
portfolio  securities and/or engage in options,  futures or forward transactions
that will  generate  capital gains or engage in certain  other  transactions  or
derivatives.  At the time of an investor's purchase of Fund shares, a portion of
the purchase price is often attributable to realized or unrealized  appreciation
in  the  Fund's  portfolio  or   undistributed   taxable  income  of  the  Fund.
Consequently, subsequent distributions on those shares from such appreciation or
income  may be  taxable  to such  investor  even if the net  asset  value of the
investor's  shares  is,  as a result  of the  distributions,  reduced  below the
investor's cost for such shares,  and the  distributions in reality  represent a
return of a portion of the purchase price.

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

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


                                       43
<PAGE>


For Federal  income tax  purposes,  the Fund is permitted to carry forward a net
realized  capital loss in any year to offset net capital gains,  if any,  during
the eight years  following  the year of the loss. To the extent  subsequent  net
capital gains are offset by such losses, they would not result in Federal income
tax liability to the Fund and, as noted above,  would not be distributed as such
to  shareholders.  The  Fund  has  $15,375,362  of  capital  loss  carryforwards
available, to the extent provided by regulations,  to offset future net realized
capital gains. These carryforwards expire at various amounts and times from 2003
through 2004.

Only a small portion, if any, of the distributions from the Fund may qualify for
the dividends-  received deduction for corporations,  subject to the limitations
applicable  under the Code.  The  qualifying  portion  is  limited  to  properly
designated  distributions  attributed  to  dividend  income  (if  any)  the Fund
receives from certain stock in U.S.  domestic  corporations and the deduction is
subject to holding period requirements and debt-financing  limitations under the
Code.

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

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

The Fund is required to accrue income on any debt securities that have more than
a de minimus amount of original issue discount (or debt securities acquired at a
market  discount,  if the Fund  elects  to  include  market  discount  in income
currently) prior to the receipt of the corresponding cash payments.  The mark to
market or  constructive  sale  rules  applicable  to certain  options,  futures,
forwards,  short  sales  or other  transactions  may  also  require  the Fund to
recognize  income or gain  without a concurrent  receipt of cash.  Additionally,
some countries  restrict  repatriation which may make it difficult or impossible
for the Fund to obtain  cash  corresponding  to its  earnings or assets in those
countries.  However,  the Fund must distribute to shareholders  for each taxable
year  substantially all of its net income and net capital gains,  including such
income or gain, to qualify as a regulated investment company and avoid liability
for any federal income or excise tax. Therefore, the Fund may have to dispose of
its portfolio securities under  disadvantageous  circumstances to generate cash,
or borrow cash, to satisfy these distribution requirements.

A state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent (if any) the Fund's distributions
are derived from interest on (or, in the case of intangible property taxes, the
value of its assets is attributable to) certain U.S. Government obligations,
provided in some states that certain thresholds for holdings of such obligations
and/or reporting requirements are satisfied. The Fund will not seek to satisfy
any threshold or reporting requirements that may apply in particular taxing
jurisdictions, although the Fund may in its sole discretion provide relevant
information to shareholders.


                                       44
<PAGE>


The Fund will be required to report to the Internal  Revenue Service (the "IRS")
all taxable  distributions to  shareholders,  as well as gross proceeds from the
redemption  or exchange  of Fund  shares,  except in the case of certain  exempt
recipients,  i.e.,  corporations  and certain other investors  distributions  to
which are exempt from the information  reporting  provisions of the Code.  Under
the backup withholding  provisions of Code Section 3406 and applicable  Treasury
regulations,  all such reportable  distributions  and proceeds may be subject to
backup  withholding  of  federal  income  tax at the  rate of 31% in the case of
non-exempt shareholders who fail to furnish the Fund with their correct taxpayer
identification number and certain  certifications  required by the IRS or if the
IRS or a broker  notifies the Fund that the number  furnished by the shareholder
is  incorrect  or that the  shareholder  is subject to backup  withholding  as a
result of failure to report interest or dividend income.  The Fund may refuse to
accept an application that does not contain any required taxpayer identification
number or  certification  that the number  provided  is  correct.  If the backup
withholding  provisions are  applicable,  any such  distributions  and proceeds,
whether taken in cash or  reinvested  in shares,  will be reduced by the amounts
required  to be  withheld.  Any  amounts  withheld  may be  credited  against  a
shareholder's U.S. federal income tax liability.  Investors should consult their
tax advisers about the applicability of the backup withholding provisions.

The Fund may be  required to account for its  transactions  in forward  rolls or
swaps,  caps, floors and collars in a manner that, under certain  circumstances,
may limit the extent of its  participation in such  transactions.  Additionally,
the Fund may be required to  recognize  gain,  but not loss,  if a swap or other
transaction  is  treated  as a  constructive  sale of an  appreciated  financial
position in the Fund's portfolio. The Fund may have to sell portfolio securities
under disadvantageous circumstances to generate cash, or borrow cash, to satisfy
these distribution requirements.

Limitations imposed by the Code on regulated  investment companies like the Fund
may restrict the Fund's ability to enter into options,  future, foreign currency
positions, and foreign currency forward contracts.

Certain options,  futures and forward foreign currency  contracts  undertaken by
the Fund may cause the Fund to recognize  gains or losses from marking to market
even  though  its  positions  have not been sold or  terminated  and  affect the
character  as  long-term  or short-  term (or,  in the case of foreign  currency
contracts,  as  ordinary  income or loss) and  timing of some  gains and  losses
realized by the Fund. Additionally,  the Fund may be required to recognize gain,
but not loss,  if an  option,  short sale or other  transaction  is treated as a
constructive sale of an appreciated  financial position in the Fund's portfolio.
Also,  certain  of the  Fund's  losses on its  transactions  involving  options,
futures or forward contracts and/or offsetting or successor  portfolio positions
may be deferred  rather than being taken into account  currently in  calculating
the Fund's taxable income or gains.  Certain of such transactions may also cause
the Fund to dispose of  investments  sooner than would  otherwise have occurred.
These transactions may therefore affect the amount,  timing and character of the
Fund's  distributions  to  shareholders.  The Fund will take  into  account  the
special tax rules (including consideration of available elections) applicable to
options,  futures  and  forward  contracts  in  order  to seek to  minimize  any
potential adverse tax consequences.

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


                                       45
<PAGE>


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

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

CALCULATION OF PERFORMANCE


For the 30-day period ended May 31, 2000, the Fund's annualized yields for Class
A,  Class B and Class C shares of the Fund  were %, % and %,  respectively.  The
average  annual  total  returns on Class A shares of the Fund for the 1 year,  5
year and 10 year period ended May 31, 2000 were %, % and %, respectively.

The average annual total returns for the 1-year,  5 year and since  inception on
October 4, 1993 for Class B shares were %, % and %, respectively.

The  average  total  returns for the 1-year and since  inception  on May 1, 1998
periods for Class C shares were % and %, respectively.


The Fund advertises yield,  where  appropriate.  The Fund's yield is computed by
dividing net investment  income per share  determined for a 30-day period by the
maximum  offering price per share (which  includes the full sales charge) on the
last day of the period and  annualizing  the result.  While this is the standard
accounting  method for calculating  yield, it does not reflect the fund's actual
bookkeeping;  as a  result,  the  income  reported  or paid by the  Fund  may be
different.  The Fund's  yield is computed  according to the  following  standard
formula:

                                       6
          Yield = 2 ( [ ( a - b ) + 1 ] - 1 )
                         -------
                           cd


Where:

a =      dividends and interest earned during the period.
b =      net expenses accrued during the period.
c =      the average daily number of Fund shares outstanding during the period
         that would be entitled to receive dividends.
d =      the maximum offering price per share on the last day of the period
         (NAV where applicable).

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


                                       46
<PAGE>


                        n ______
                   T = \ / ERV/P - 1


Where:

P =           a hypothetical initial investment of $1,000.
T =           average annual total return.
n =           number of years.
ERV =         ending  redeemable value of a hypothetical  $1,000 investment
              made at the beginning of the 1 year. 5 year and 10 year periods.

Because each class has its own sales charge and fee structure,  the classes have
different  performance  results.  In the case of each  class,  this  calculation
assumes the maximum  sales charge is included in the initial  investment  or the
CDSC applied at the end of the period,  respectively.  This calculation  assumes
that all dividends and  distributions  are  reinvested at net asset value on the
reinvestment dates during the period.  The "distribution  rate" is determined by
annualizing the result of dividing the declared dividends of the Fund during the
period stated by the maximum offering price or net asset value at the end of the
period.  Excluding the Fund's sales charge from the distribution rate produces a
higher rate.

In addition to average  annual total returns,  the Fund may quote  unaveraged or
cumulative total returns  reflecting the simple change in value of an investment
over a stated period.  Cumulative total returns may be quoted as a percentage or
as a dollar amount, and may be calculated for a single  investment,  a series of
investments, and/or a series of redemptions, over any time period. Total returns
may be quoted with or without  taking the Fund's  sales charge on Class A shares
or the CDSC on Class B or Class C shares  into  account.  Excluding  the  Fund's
sales  charge on Class A shares and the CDSC on Class B or Class C shares from a
total return calculation produces a higher total return figure.

From time to time, in reports and promotional  literature,  the Fund's yield and
total  return  will be  compared  to  indices of mutual  funds and bank  deposit
vehicles such as Lipper Analytical Services,  Inc.'s "Lipper - Fixed Income Fund
Performance  Analysis," a monthly  publication  which  tracks net assets,  total
return,  and yield on fixed income mutual funds in the United  States.  Ibottson
and Associates,  CDA  Weisenberger  and F.C. Towers are also used for comparison
purposes,  as well as the Russell and Wilshire Indices.  Comparisons may also be
made to bank  certificates  of deposit  ("CD's") which differ from mutual funds,
such as the  Fund,  in  several  ways.  The  interest  rate  established  by the
sponsoring  bank is fixed for the term of a CD.  There are  penalties  for early
withdrawal from CDs, and the principal on a CD is insured.


Performance rankings and ratings reported periodically in and excerpts from,
national financial publications such as MONEY MAGAZINE, FORBES, BUSINESS WEEK,
THE WALL STREET JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRON'S,
etc. will also be utilized. The Fund's promotional and sales literature may make
reference to the Fund's "beta." Beta reflects the market-related risk of the
Fund by showing how responsive the Fund is to the market.


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


                                       47
<PAGE>


BROKERAGE ALLOCATION

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

In the U.S. Government  securities market,  securities are generally traded on a
"net" basis with  dealers  acting as principal  for their own account  without a
stated commission,  although the price of the security usually includes a profit
to the  dealer.  On  occasion,  certain  money  market  instruments  and  agency
securities  may be  purchased  directly  from  the  issuer,  in  which  case  no
commissions  or  premiums  are paid.  In other  countries,  both debt and equity
securities  are traded on exchanges at fixed  commission  rates.  Commissions on
foreign  transactions are generally higher than the negotiated  commission rates
available  in the U.S.  There  is  generally  less  government  supervision  and
regulation of foreign stock exchanges and broker-dealers than in the U.S.

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


To the extent  consistent  with the foregoing,  the Fund will be governed in the
selection of brokers and dealers,  and the  negotiation of brokerage  commission
rates and dealer  spreads,  by the  reliability  and  quality  of the  services,
including primarily the availability and value of research  information and to a
lesser extent statistical  assistance  furnished to the Adviser of the Fund, and
their value and expected  contribution to the performance of the Fund. It is not
possible to place a dollar value on information and services to be received from
brokers and dealers,  since it is only  supplementary to the research efforts of
the  Adviser.  The receipt of  research  information  is not  expected to reduce
significantly  the  expenses  of  the  Adviser.  The  research  information  and
statistical  assistance  furnished  by brokers  and dealers may benefit the Life
Company or other advisory  clients of the Adviser,  and,  conversely,  brokerage
commissions and spreads paid by other advisory clients of the Adviser may result
in research information and statistical  assistance  beneficial to the Fund. The
Fund  will  make no  commitment  to  allocate  portfolio  transactions  upon any
prescribed  basis.  While the Fund's officers will be primarily  responsible for
the allocation of the Fund's brokerage business, their policies and practices in
this  regard  must be  consistent  with the  foregoing  and will at all times be
subject to review by the  Trustees.  For the fiscal years ended on May 31, 1998,
1999 and 2000, the Fund paid negotiated  brokerage  commissions in the amount of
$34,000, $39,350 and $ , respectively.

As permitted by Section 28(e) of the Securities Exchange Act of 1934, the Fund
may pay to a broker which provides brokerage and research services to the Fund
an amount of disclosed commission in excess of the commission which another
broker would have charged for effecting that transaction. This practice is
subject to a good faith determination by the Trustees that such price is
reasonable in light of the services provided and to such policies as the
Trustees may adopt from time to time. During the fiscal year ended May 31, 2000,
the Fund directed no commissions to compensate brokers for research services
such as industry, economic and company reviews and evaluations of securities.


                                       48
<PAGE>


The Adviser's indirect parent, the Life Company, is the indirect sole
shareholder of Signator Investors, Inc., a broker-dealer (until January 1, 1999,
John Hancock Distributors, Inc.) "Signator" or "Affiliated Broker"). Pursuant to
procedures determined by the Trustees and consistent with the above policy of
obtaining best net results, the Fund may execute portfolio transactions with or
through Affiliated Brokers. For the fiscal years ended May 31, 1998, 1999 and
2000, the Fund did not execute any portfolio transactions with Affiliated
Brokers.


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

Other investment  advisory clients advised by the Adviser may also invest in the
same  securities as the Fund. When these clients buy or sell the same securities
at  substantially  the same time, the Adviser may average the transactions as to
price and  allocate the amount of  available  investments  in a manner which the
Adviser believes to be equitable to each client,  including the Fund. Because of
this,  client  accounts in a particular  style may sometimes not sell or acquire
securities  as quickly or at the same prices as they might if each were  managed
and traded individually.

For purchases of equity securities, when a complete order is not filled, a
partial allocation will be made to each account pro rata based on the order
size. For high demand issues (for example, initial public offerings), shares
will be allocated pro rata by account size as well as on the basis of account
objective, account size ( a small account's allocation may be increased to
provide it with a meaningful position), and the account's other holdings. In
addition, an account's allocation may be increased if that account's portfolio
manager was responsible for generating the investment idea or the portfolio
manager intends to buy more shares in the secondary market. For fixed income
accounts, generally securities will be allocated when appropriate among accounts
based on account size, except if the accounts have different objectives or if an
account is too small to get a meaningful allocation. For new issues, when a
complete order is not filled, a partial allocation will be made to each account
pro rata based on the order size. However, if a partial allocation is too small
to be meaningful, it may be reallocated based on such factors as account
objectives, strategies, duration benchmarks and credit and sector exposure. For
example, value funds will likely not participate in initial public offerings as
frequently as growth funds. In some instances, this investment procedure may
adversely affect the price paid or received by the Fund or the size of the
position obtainable for it. On the other hand, to the extent permitted by law,
the Adviser may aggregate securities to be sold or purchased for the Fund with
those to be sold or purchased for other clients managed by it in order to obtain
best execution.


                                       49
<PAGE>


TRANSFER AGENT SERVICES

John Hancock Signature  Services,  Inc., 1 John Hancock Way, Suite 1000, Boston,
MA 02217-1000,  a wholly-owned  indirect  subsidiary of the Life Company, is the
transfer  and  dividend  paying  agent  for the Fund.  The Fund  pays  Signature
Services an annual fee of $20.00 for each Class A  shareholder  account,  $22.50
for each Class B  shareholder  account  and $21.50 for each Class C  shareholder
account.  The Fund pays certain  out-of-pocket  expenses and these  expenses are
aggregated  and charged to the Fund and  allocated to each class on the basis of
their relative net asset values.

CUSTODY OF PORTFOLIO

Portfolio  securities  of the Fund are held  pursuant to a  custodian  agreement
between the Fund and  Investors  Bank & Trust  Company,  200  Clarendon  Street,
Boston, MA 02116. Under the custodian agreement,  Investors Bank & Trust Company
performs custody, portfolio and fund accounting services.

INDEPENDENT AUDITORS

The independent auditors of the Fund are __________________________, 160 Federal
Street,  Boston,  Massachusetts  02110.  ___________________________  audits and
renders an opinion on the Fund's annual  financial  statements,  and reviews the
Fund's annual Federal income tax return.



                                       50
<PAGE>


APPENDIX-A

MORE ABOUT RISK

A fund's risk profile is largely defined by the fund's principal  securities and
investment  practices.  You may find the most concise  description of the fund's
risk profile in the prospectus.

A fund is permitted to utilize -- within limits  established  by the trustees --
certain other  securities  and  investment  practices that have higher risks and
opportunities  associated  with them. To the extent that the fund utilizes these
securities  or  practices,  its  overall  performance  may be  affected,  either
positively  or  negatively.  On the  following  pages are brief  definitions  of
certain  associated  risks with them,  with examples of related  securities  and
investment  practices included in brackets.  See the "Investment  Objectives and
Policies" and "Investment Restrictions" sections of this Statement of Additional
Information  for a  description  of this Fund's  investment  policies.  The fund
follows certain policies that may reduce these risks.

As with any mutual fund, there is no guarantee that the fund will earn income or
show a positive total return over any period of time -- days, months or years.

TYPES OF INVESTMENT RISK

Correlation risk The risk that changes in the value of a hedging instrument will
not match those of the asset being hedged  (hedging is the use of one investment
to offset the effects of another investment).  Incomplete correlation can result
in unanticipated risks. (e.g., currency contracts,  futures and related options,
options on securities and indices, swaps, caps, floors and collars).

Credit risk The risk that the issuer of a  security,  or the  counterparty  to a
contract,  will  default  or  otherwise  become  unable  to  honor  a  financial
obligation.  (e.g., non-  investment-grade debt securities,  borrowing;  reverse
repurchase  agreements,  covered mortgage dollar roll  transactions,  repurchase
agreements,  securities lending, brady bonds, foreign debt securities,  in-kind,
delayed   and   zero   coupon   debt   securities,    asset-backed   securities,
mortgage-backed  securities,  participation  interest,  options  on  securities,
structured securities and swaps, caps floors and collars).

Currency risk The risk that  fluctuations in the exchange rates between the U.S.
dollar and foreign  currencies  may  negatively  affect an  investment.  Adverse
changes in  exchange  rates may erode or reverse  any gains  produced by foreign
currency-denominated  investments, and may widen any losses.(e.g.,  foreign debt
securities, currency contracts, swaps, caps, floors and collars).

Extension  risk The risk that an unexpected  rise in interest  rates will extend
the life of a  mortgage-backed  security  beyond the expected  prepayment  time,
typically  reducing the security's  value.(e.g.  mortgage-backed  securities and
structured securities).

Interest rate risk The risk of market losses attributable to changes in interest
rates. With fixed-rate  securities,  a rise in interest rates typically causes a
fall in values, while a fall in rates typically causes a rise in values.  (e.g.,
non-investment-grade debt securities, covered mortgage dollar roll transactions,
brady bonds,  foreign  debt  securities,  in-kind,  delayed and zero coupon debt
securities, asset-backed securities,  mortgage-backed securities,  participation
interest, swaps, caps, floors and collars).

Leverage risk  Associated  with securities or practices (such as borrowing) that
multiply  small index or market  movements  into large  changes in value.  (e.g.
borrowing;   reverse  repurchase   agreements,   covered  mortgage  dollar  roll
transactions,   when-issued   securities  and  forward   commitments,   currency
contracts,   financial  futures  and  options;  securities  and  index  options,
structured securities, swaps, caps, floors and collars).


                                      A-1
<PAGE>


o   Hedged  When a  derivative  (a  security  whose  value is  based on  another
    security or index) is used as a hedge against an opposite  position that the
    fund  also  holds,   any  loss  generated  by  the   derivative   should  be
    substantially  offset by gains on the  hedged  investment,  and vice  versa.
    While  hedging  can  reduce  or  eliminate  losses,  it can also  reduce  or
    eliminate gains.

o   Speculative To the extent that a derivative is not used as a hedge, the fund
    is directly  exposed to the risks of that  derivative.  Gains or losses from
    speculative  positions in a derivative may be substantially greater than the
    derivative's original cost.

Liquidity  risk The risk that certain  securities may be difficult or impossible
to sell at the time and the price that the  seller  would  like.  The seller may
have to lower the price, sell other securities  instead, or forego an investment
opportunity,  any of which could have a negative  effect on fund  management  or
performance. (e.g. non-investment-grade debt securities, restricted and illiquid
securities,   mortgage-backed   securities,   participation  interest,  currency
contracts, futures and related options; securities and index options, structured
securities, swaps, caps, floors and collars).

Management risk The risk that a strategy used by a fund's management may fail to
produce the intended result. Common to all mutual funds.

Market risk The risk that the market  value of a security  may move up and down,
sometimes rapidly and unpredictably.  Market risk may affect a single issuer, an
industry,  a sector of the bond  market or the market as a whole.  Common to all
stocks  and bonds and the  mutual  funds  that  invest  in them.  (e.g.  covered
mortgage dollar roll transactions,  short-term trading,  when-issued  securities
and forward commitments, brady bonds, foreign debt securities,  in-kind, delayed
and zero coupon debt securities,  restricted and illiquid securities, rights and
warrants,  financial  futures and options;  and  securities  and index  options,
structured securities).

Natural event risk The risk of losses  attributable to natural  disasters,  crop
failures and similar events.

Opportunity  risk The risk of missing out on an investment  opportunity  because
the assets  necessary to take  advantage of it are tied up in less  advantageous
investments.(e.g.   covered  mortgage  dollar  roll  transactions,   when-issued
securities and forward  commitments,  currency contracts,  financial futures and
options; securities and securities and index options).

Political risk The risk of losses attributable to government or political
actions, from changes in tax or trade statutes to governmental collapse and war.
(e.g., brady bonds and foreign debt securities).

Prepayment risk The risk that unanticipated prepayments may occur during periods
of falling interest rates, reducing the value of mortgage-backed securities.
(e.g., mortgage backed securities).

Valuation  risk The risk that a fund has valued  certain of its  securities at a
higher  price  than it can  sell  them  for.  (e.g.,  non-investment-grade  debt
securities,  participation interest,  structured securities, swaps, caps, floors
and collars).


                                      A-2
<PAGE>


APPENDIX-B

As described in the Statement of  Additional  Information,  the debt  securities
offering the high current  income sought by the Fund are ordinarily in the lower
rating  categories  (that its,  rated Baa or lower by Moody's or BBB or lower by
Standard & Poor's, or are unrated).

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

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

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

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

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

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

Standard & Poor's describes its lower ratings for corporate bonds as follows:

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

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

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

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


                                      B-1
<PAGE>


Standard & Poor's  describes its three highest  ratings for commercial  paper as
follows:

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

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

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

Issuers rated P-2 (or related  supporting  institutions)  have a strong capacity
for  repayment  of  short-term  promissory  obligations.  This will  normally be
evidenced  by many of the  characteristics  cited above but to a lesser  degree.
Earnings  trends and  coverage  ratios,  while  sound,  will be more  subject to
variation. Capitalization characteristics,  while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

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


                                      B-2
<PAGE>


FINANCIAL STATEMENTS

















                                      F-1
<PAGE>


                          JOHN HANCOCK STRATEGIC SERIES

                                     PART C.


OTHER INFORMATION

Item. 23.   Exhibits:

The  exhibits to this  Registration  Statement  are listed in the Exhibit  Index
hereto and are incorporated herein by reference.

Item 24.   Persons Controlled by or under Common Control with Registrant.

No person is directly or indirectly  controlled by or under common  control with
Registrant.

Item. 25.  Indemnification.

Indemnification  provisions  relating to the  Registrant's  Trustees,  officers,
employees  and agents is set forth in Article  VII of the  Registrant's  By Laws
included as Exhibit 2 herein.

Under Section 12 of the Distribution Agreement,  John Hancock Funds, Inc. ("John
Hancock  Funds")  has  agreed to  indemnify  the  Registrant  and its  Trustees,
officers and controlling  persons against claims arising out of certain acts and
statements of John Hancock Funds.

Section 9(a) of the By-Laws of John Hancock Life Insurance Company ("the
Insurance Company") provides, in effect, that the Insurance Company will,
subject to limitations of law, indemnify each present and former director,
officer and employee of the Insurance Company who serves as a Trustee or officer
of the Registrant at the direction or request of the Insurance Company against
litigation expenses and liabilities incurred while acting as such, except that
such indemnification does not cover any expense or liability incurred or imposed
in connection with any matter as to which such person shall be finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Insurance Company. In addition, no such
person will be indemnified by the Insurance Company in respect of any final
adjudication unless such settlement shall have been approved as in the best
interests of the Insurance Company either by vote of the Board of Directors at a
meeting composed of directors who have no interest in the outcome of such vote,
or by vote of the policyholders. The Insurance Company may pay expenses incurred
in defending an action or claim in advance of its final disposition, but only
upon receipt of an undertaking by the person indemnified to repay such payment
if he should be determined not to be entitled to indemnification.

Article IX of the  respective  By-Laws of John  Hancock  Funds and John  Hancock
Advisers, Inc. ("the Adviser") provide as follows:

                                      C-1

<PAGE>

"Section  9.01.  Indemnity.  Any person made or threatened to be made a party to
any action,  suit or proceeding,  whether  civil,  criminal,  administrative  or
investigative,  by reason  of the fact  that he is or was at any time  since the
inception  of the  Corporation  a  director,  officer,  employee or agent of the
Corporation  or is or was at any time  since the  inception  of the  Corporation
serving at the request of the  Corporation as a director,  officer,  employee or
agent  of  another  corporation,  partnership,  joint  venture,  trust  or other
enterprise,  shall be indemnified by the Corporation against expenses (including
attorney's fees),  judgments,  fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and the  liability  was not  incurred  by reason of gross
negligence  or reckless  disregard of the duties  involved in the conduct of his
office, and expenses in connection therewith may be advanced by the Corporation,
all to the full extent authorized by the law."

"Section 9.02. Not Exclusive;  Survival of Rights: The indemnification  provided
by Section 9.01 shall not be deemed  exclusive of any other right to which those
indemnified may be entitled, and shall continue as to a person who has ceased to
be a director,  officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person."

Insofar as indemnification for liabilities under the Securities Act of 1933 (the
"Act") may be  permitted to Trustees,  officers and  controlling  persons of the
Registrant pursuant to the Registrant's Declaration of Trust and By-Laws of John
Hancock  Funds,  the  Adviser,  or  the  Insurance  Company  or  otherwise,  the
Registrant  has been advised that in the opinion of the  Securities and Exchange
Commission  such  indemnification  is against policy as expressed in the Act and
is,  therefore,  unenforceable.  In the event  that a claim for  indemnification
against  such  liabilities  (other  than the  payment by the  Registrant  in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
Trustee,  officer or controlling  person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether indemnification by it is against public policy
as expressed in the Act and will be governed by the final  adjudication  of such
issue.

Item 26.  Business and Other Connections of Investment Advisers.

For  information  as to the  business,  profession,  vocation or employment of a
substantial  nature  of each  of the  officers  and  Directors  of the  Adviser,
reference is made to Form ADV (801-8124) filed under the Investment Advisers Act
of 1940, which is incorporated herein by reference.

Item 27.  Principal Underwriters.

(a) John Hancock Funds acts as principal underwriter for the Registrant and also
serves as principal underwriter or distributor of shares for John Hancock Cash
Reserve, Inc., John Hancock Bond Trust, John Hancock Current Interest, John
Hancock Series Trust, John Hancock Tax-Free Bond Trust, John Hancock California
Tax-Free Income Fund, John Hancock Capital Series, John Hancock Sovereign Bond
Fund, John Hancock Tax-Exempt Series, John Hancock Strategic Series, John
Hancock World Fund, John Hancock Equity Fund, John Hancock Investment


                                      C-2
<PAGE>


Trust, John Hancock Institutional Series Trust, John Hancock Investment Trust II
and John Hancock Investment Trust III.

(b) The  following  table lists,  for each  director and officer of John Hancock
Funds, the information indicated.




                                      C-3
<PAGE>

<TABLE>
<CAPTION>


       Name and Principal                                               Positions and Offices
       ------------------                                               ---------------------
        Business Address           Positions and Offices                   with Registrant
        ----------------           ---------------------                   ---------------
                                      with Underwriter
                                      ----------------
          <S>                              <C>                                  <C>

Stephen L. Brown                   Director and Chairman                  Trustee and Chairman
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Maureen R. Ford               Director, Vice Chairman, President      Trustee, Vice Chairman, President
101 Huntington Avenue               and Chief Executive                  and Chief Executive Officer
Boston, Massachusetts                    Officer

Robert H. Watts                    Director, Executive Vice                  None
John Hancock Place                   President and Chief
P.O. Box 111                         Compliance Officer
Boston, Massachusetts

Osbert M. Hood                     Executive Vice President and        Executive Vice President and
101 Huntington Avenue               Chief Financial Officer            Chief Financial Officer
Boston, Massachusetts                   and Treasurer

David A. King                              Director                          None
380 Stuart Street
Boston, Massachusetts

</TABLE>


                                      C-4
<PAGE>


<TABLE>
<CAPTION>


       Name and Principal                                               Positions and Offices
       ------------------                                               ---------------------
        Business Address           Positions and Offices                 with Registrant
        ----------------           ---------------------                ---------------
                                     With Underwriter
                                     ----------------
          <S>                                <C>                                     <C>

Susan S. Newton                        Vice President                Vice President, Chief Legal
101 Huntington Avenue                  and Secretary                   Officer and Secretary
Boston, Massachusetts

Thomas E. Moloney                      Director                              None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Jeanne M. Livermore                    Director                              None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Richard S. Scipione                    Director                              Trustee
John Hancock Place
P.O. Box 111
Boston, Massachusetts
</TABLE>

                                      C-5

<PAGE>

<TABLE>
<CAPTION>


       Name and Principal                                               Positions and Offices
       ------------------                                               ---------------------
        Business Address           Positions and Offices                  with Registrant
        ----------------           ---------------------                  ---------------
                                     With Underwriter
                                     ----------------
          <S>                           <C>                                     <C>

John M. DeCiccio                       Director                              None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

David F. D'Alessandro                  Director                              None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

James V. Bowhers                      President                              None
101 Huntington Avenue
Boston, Massachusetts

Keith F. Hartstein                  Senior Vice President                    None
101 Huntington Avenue
Boston, Massachusetts

J. William Bennintende                Vice President                         None
101 Huntington Avenue
Boston, Massachusetts

Kathleen M. Graveline               Senior Vice President                    None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Peter F. Mawn                       Senior Vice President                    None
John Hancock Place
P.O. Box 111
Boston, Massachusetts




                                      C-6
<PAGE>

Karen F. Walsh                        Vice President                         None
101 Huntington Avenue
Boston, Massachusetts

Gary Cronin                           Vice President                         None
101 Huntington Avenue
Boston, Massachusetts

Kristine McManus                      Vice President                         None
101 Huntington Avenue
Boston, Massachusetts

Thomas H. Connors                     Vice President                    Vice President and
101 Huntington Avenue                 and Compliance                    Compliance Officer
Boston, Massachusetts                 Officer

         (c)      None.
</TABLE>

Item 28. Location of Accounts and Records.

         The  Registrant  maintains the records  required to be maintained by it
         under Rules 31a-1 (a),  31a-a(b),  and  31a-2(a)  under the  Investment
         Company  Act  of  1940  at  its  principal  executive  offices  at  101
         Huntington Avenue,  Boston Massachusetts  02199-7603.  Certain records,
         including  records  relating  to  Registrant's   shareholders  and  the
         physical  possession of its securities,  may be maintained  pursuant to
         Rule  31a-3 at the main  office  of  Registrant's  Transfer  Agent  and
         Custodian.

Item 29.  Management Services.

          Not applicable.

Item 30.  Undertakings.

          Not applicable

                                      C-7
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston, and The Commonwealth of Massachusetts on the
25th day of July, 2000.

                                           JOHN HANCOCK STRATEGIC SERIES

                                     By:              *
                                           --------------------------
                                           Stephen L. Brown
                                           Chairman and Trustee

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>

     Signature                              Title                          Date
     ---------                              -----                          ----

<S>                              <C>                                  <C>

         *                       Trustee and Chairman                    July 25, 2000
-------------------------
Stephen L. Brown

         *
-------------------------        Trustee, Vice Chairman, President
Maureen R. Ford                  and Chief Executive Officer

         *
-------------------------        Executive Vice President and
Osbert M. Hood                   Chief Financial Officer


/s/James J. Stokowski            Vice President, Treasurer
-------------------------        (Principal Accounting Officer)
James J. Stokowski

         *                       Trustee
-------------------------
Dennis S. Aronowitz

         *                       Trustee
-------------------------
Richard P. Chapman, Jr.

         *                       Trustee
-------------------------
William J. Cosgrove

         *                       Trustee
-------------------------
Leland O. Erdahl


                                      C-8
<PAGE>




         *                       Trustee
-------------------------
Richard A. Farrell

         *                       Trustee
-------------------------
Gail D. Fosler

         *                       Trustee
-------------------------
William F. Glavin

         *                       Trustee
-------------------------
John A. Moore

         *                       Trustee
-------------------------
Patti McGill Peterson

         *                       Trustee
-------------------------
John W. Pratt

         *                       Trustee
-------------------------
Richard S. Scipione


By:      /s/Susan S. Newton                                           July 25, 2000
         ------------------
         Susan S. Newton,
         Attorney-in-Fact
         Powers of Attorney
         filed herewith




                                      C-9

<PAGE>

John Hancock Capital Series                 John Hancock Sovereign Bond Fund
John Hancock Declaration Trust              John Hancock Special Equities Fund
John Hancock Income Securities Trust        John Hancock Strategic Series
John Hancock Investment Trust II            John Hancock Tax-Exempt Series Fund
John Hancock Investment Trust III           John Hancock World Fund
John Hancock Investors Trust


                                POWER OF ATTORNEY
                                -----------------

         The undersigned Trustee/Officer of each of the above listed Trusts,
each a Massachusetts business trust, does hereby severally constitute and
appoint Susan S. Newton and James J. STOKOWSKI, and each acting singly, to be my
true, sufficient and lawful attorneys, with full power to each of them, and each
acting singly, to sign for me, in my name and in the capacity indicated below,
any Registration Statement on Form N-1A and any Registration Statement on Form
N-14 to be filed by the Trust under the Investment Company Act of 1940, as
amended (the "1940 Act"), and under the Securities Act of 1933, as amended (the
"1933 Act"), and any and all amendments to said Registration Statements, with
respect to the offering of shares and any and all other documents and papers
relating thereto, and generally to do all such things in my name and on my
behalf in the capacity indicated to enable the Trust to comply with the 1940 Act
and the 1933 Act, and all requirements of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
said attorneys or each of them to any such Registration Statements and any and
all amendments thereto.

         IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the 7th day of December, 1999.


/s/Stephen L. Brown                                           /s/William F. Glavin
-------------------                                           --------------------
Stephen L. Brown, as Trustee and Chairman                     William F. Glavin

/s/Maureen R. Ford                                            /s/Anne C. Hodsdon
------------------                                            ------------------
Maureen R. Ford, as Trustee,                                  Anne C. Hodsdon, as Trustee and President
Vice Chairman, Chief Executive Officer

/s/Dennis S. Aronowitz                                        /s/Osbert M. Hood
----------------------                                        -----------------
Dennis S. Aronowitz                                           Osbert M. Hood, as Chief Financial Officer

/s/Richrd P. Chapman                                          /s/John A. Moore
--------------------                                          ----------------
Richard P. Chapman, Jr.                                       John A. Moore

/s/William J. Cosgrove                                        /s/Patti McGill Peterson
----------------------                                        ------------------------
William J. Cosgrove                                           Patti McGill Peterson

/s/Leland O. Erdahl                                           /s/John W. Pratt
-------------------                                           ----------------
Leland O. Erdahl                                              John W. Pratt

/s/Richard A. Farrell                                         /s/Richard S. Scipione
---------------------                                         ----------------------
Richard A. Farrell                                            Richard S. Scipione

/s/Gail D. Fosler
-----------------
Gail D. Fosler

<PAGE>


                          John Hancock Strategic Series

                               (File no. 33-5186)

                                INDEX TO EXHIBITS


99.(a)   Amended and Restated Declaration of Trust of John Hancock Strategic
         Series dated June 8, 1999.******

99.(b)   Instrument Fixing the Number of Trustees and appointing Individual to
         Fill Vacancy.+

99.(b)   By-Laws.  Amended and Restated By-Laws dated December 3, 1996.****

99.(c)   Instruments Defining Rights of Securities Holders.  See exhibits 99.(a)
         and 99.(b).

99.(d)   Investment Advisory Contracts.  Investment Advisory Agreement between
         John Hancock  Strategic Income Fund and John Hancock Advisers, Inc.
         dated January 1, 1994.*

99.(e)   Underwriting Contracts.  Distribution Agreement between John Hancock
         Funds, Inc. (formerly named John Hancock Broker Distribution Services,
         Inc. and the Registrant dated August 1, 1991.*

99.(e).1 Form of Soliciting Dealer Agreement between John Hancock Broker
         Distribution Services, Inc. and Selected Dealers.******

99.(e).2 Form of Financial Institution Sales and Service Agreement between John
         Hancock Funds, Inc. and the John Hancock funds.*

99.(e).3 Amendment to Distribution Agreement between Registrant and John Hancock
         Funds, Inc. dated August 30, 1996.****

99.(f)   Bonus or Profit Sharing Contracts.  Not Applicable.

99.(g)   Custodian Agreements. Master Custodian Agreement between John Hancock
         Mutual Funds and Investors Bank and Trust Company dated
         March 9, 1999.******

99.(h)   Other Material Contracts.  Amended and Restated Master Transfer Agency
         and Service Agreement between John Hancock  Funds and John Hancock
         Signature Services, Inc. dated June 1, 1998.*

99.(h).1 Accounting and Legal Services Agreement between John Hancock Advisers,
         Inc. and Registrant as of January 1 1996.*****

99.(i)   Legal Opinion.+


<PAGE>

99.(j)   Other Opinions.

99.(k)   Omitted Financial Statements.  Not Applicable.

99.(l)   Initial Capital Agreements.  Not Applicable.

99.(m)   Rule 12b-1 Plans.  Class A Distribution Plan between John Hancock
         Strategic Income Fund and John Hancock Funds, Inc. dated January 1,
         1994.*

99.(m).1 Class B Distribution Plan between John Hancock Strategic Income Fund
         and John Hancock Funds, Inc. December 8, 1998.******

99.(m).2 Class C Distribution Plan between John Hancock Strategic Income Fund
         and John Hancock Funds, Inc. dated May 1, 1998. *****

99.(n)   Not Applicable

99.(o)   John  Hancock  Funds Class A, Class B and Class C amended and  restated
         Multiple  Class Plan pursuant to Rule 18f-3 for John Hancock  Strategic
         Income Fund dated May 1, 1998.*****

99.(p)   Code of Ethics: John Hancock Advisers and each of the John Hancock
         Funds.+

*        Previously filed electronically with Registration Statement and/or post
         -effective amendment no. 21 file nos. 811-6451 and 33-5186 on June 29,
         1995, accession number 0000950146-95-000353.

**       Previously filed electronically with Registration Statement and/or
         post-effective amendment no. 22 file nos. 811-6451 and 33-5186 on
         February 9, 1996, accession number 0000950146-95-000519.

***      Previously filed electronically with Registration Statement and/or
         post-effective amendment no. 24 file nos. 811-6451 and 33-5186 on
         August 29, 1996, accession number 0001010521-96-000150.

****     Previously filed electronically with Registration Statement and/or
         post-effective amendment no. 25 file nos. 811-6451 and 33-5186 on
         February 27, 1997, accession number 0001010521-97-00230.

*****    Previously filed electronically with Registration Statement and/or
         post-effective amendment no. 28, file nos. 811-6451 and 33-5186 on
         July 6, 1998, accession number 0001010521-98-000286.

******   Previously filed electronically with Registration Statement and/or
         post-effective amendment no. 30, file nos. 811-6451 and 33-5186 on
         September 27, 1999, accession number 0001010521-99-000343.

+        Filed herewith.
</TABLE>





© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission